LIBERTY PROPERTY TRUST
S-3, 2000-05-17
REAL ESTATE INVESTMENT TRUSTS
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<PAGE>

As filed with the Securities and Exchange Commission, via EDGAR, on May 17, 2000
                                                       REGISTRATION NO. 333-
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                           ---------------------------

                                    FORM S-3
                             REGISTRATION STATEMENT
                                      Under
                           THE SECURITIES ACT OF 1933

                           ---------------------------

                             Liberty Property Trust
             (Exact name of Registrant as specified in its charter)

                           ---------------------------


              Maryland                                       23-7768996
    (State or other jurisdiction                          (I.R.S. Employer
  of incorporation or organization)                     Identification Number)

                           ---------------------------

              65 Valley Stream Parkway, Malvern, Pennsylvania 19355
                                 (610) 648-1700
          (Address, including zip code, and telephone number, including
             area code, of Registrant's principal executive offices)

                           ---------------------------

                             James J. Bowes, Esquire
                            65 Valley Stream Parkway
                           Malvern, Pennsylvania 19355
                                 (610) 648-1700
            (Name, address, including zip code, and telephone number,
                   including area code, of agent for service)

                           ---------------------------

      Approximate date of commencement of the proposed sale to the public:
     From time to time after this Registration Statement becomes effective.

                           ---------------------------

         If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [ ]

         If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box:
[x]
<PAGE>

         If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering:
[ ]
   --------

         If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering: [ ]
                                    ----------

         If delivery of the prospectus is expected to be made pursuant to Rule
434 under the Securities Act, please check the following box: [ ]

                           ---------------------------

                         CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
========================================================================================================================
                                                                                      Proposed
                                                                 Proposed              Maximum
                                              Amount             Maximum              Aggregate           Amount of
         Title of Shares to be                to be           Offering Price          Offering           Registration
              Registered                    Registered         Per Unit (1)           Price (1)              Fee
- ------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>                <C>                   <C>                  <C>
Common Shares of Beneficial
  Interest, $0.001 par value (2).....        116,649            $24.84375             $2,897,999             $766
========================================================================================================================
</TABLE>

(1)  Estimated solely for the purpose of computing the registration fee,
     pursuant to Rule 457(g) under the Securities Act, and, in accordance with
     Rule 457(c) under the Securities Act, based on the average of the high and
     low reported sale prices of the common shares of beneficial interest of
     Liberty Property Trust on the New York Stock Exchange on May 11, 2000.

(2)  Includes rights to purchase Series A Junior Participating Preferred Shares
     of the Trust. No separate consideration is paid for these rights and, as a
     result, the registration fee for these rights is included in the fee for
     the common shares.

         The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.

================================================================================
<PAGE>

The information in this prospectus is not complete and may be changed or
supplemented. We cannot sell any of the securities described in this prospectus
until the registration statement that we have filed to cover the securities has
become effective under the rules of the Securities and Exchange Commission. This
prospectus is not an offer to sell the securities, nor is it a solicitation of
an offer to buy the securities, in any state where an offer or sale of the
securities is not permitted.

                              Subject to Completion
                    Preliminary Prospectus dated May 17, 2000

PROSPECTUS

                                 116,649 SHARES
                             LIBERTY PROPERTY TRUST
                      COMMON SHARES OF BENEFICIAL INTEREST

         This prospectus may be used only in connection with the resale by
several of our shareholders, from time to time, of up to 116,649 of our common
shares. These common shares will be sold by the shareholders for their own
accounts, and we will not receive any proceeds from the sale of these common
shares. These shareholders received the common shares exchange for units of
limited partnership interest in our operating partnership, Liberty Property
Limited Partnership.

         These shareholders may offer the common shares to purchasers in
transactions on the New York Stock Exchange, in negotiated transactions or by
other methods, and may offer the common shares at varying prices. For a fuller
description of the various methods by which the common shares may be sold, see
the section of this prospectus entitled "Plan of Distribution."

         The common shares are traded on the New York Stock Exchange under the
symbol "LRY."

         See "Risk Factors" beginning on page 4 of this prospectus for a
description of risks that should be considered by purchasers of the common
shares.

         Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the securities described in this
prospectus or passed upon the accuracy or adequacy of this prospectus. Any
representation to the contrary is a criminal offense.














               The date of this prospectus is ____________, 2000.
<PAGE>

                              ABOUT THIS PROSPECTUS

         This prospectus describes an offering of our common shares. As we
describe below in the section entitled "Where to Find Additional Information,"
we have filed and plan to continue to file other documents with the SEC that
contain information about us. Before you decide whether to invest in the common
shares, you should read this prospectus and the information we otherwise file
with the SEC.

                      WHERE TO FIND ADDITIONAL INFORMATION

         We are required by federal securities laws to file certain information
with the SEC. You can read and copy this material at the SEC's public reference
room, located at 450 Fifth Street, N.W., Washington, DC 20549. Please call the
SEC at (800) 732- 0330 for information on how the public reference room
operates. Also, you can access this material on the SEC's Internet website, at
http://www.sec.gov.

         We will also send you copies of the material we file with the SEC, free
of charge, upon your request. Please call or write our Investor Relations
department at:

         65 Valley Stream Parkway
         Malvern, Pennsylvania 19355
         Telephone No.: (610) 648-1700

         The SEC allows us to "incorporate by reference" into this prospectus
certain important information about us. This means that the information in this
prospectus is not complete, and you should read the information incorporated by
reference for more detail. We incorporate by reference in two ways. First, we
list certain documents that we have already filed with the SEC. The information
in these documents is considered part of this prospectus. Second, we may in the
future file additional documents with the SEC. When filed, the information in
these documents will update and supersede the current information in, and
incorporated by reference in, this prospectus.

         We incorporate by reference the documents listed below, and any other
documents we file with the SEC under Section 13(a), 13(c), 14 or 15 of the
Securities Exchange Act of 1934 until the offering described in this prospectus
is completed:


          (a)  Our Annual Report on Form 10-K for the fiscal year ended December
               31, 1999;

          (b)  Our Quarterly Report on Form 10-Q for the fiscal quarter ended
               March 31, 2000;

          (c)  The description of the Trust's common shares contained in the
               Registration Statement on Form 8-A of the Trust registering such
               securities under Section 12 of the Securities Exchange Act of
               1934; and

                                                        -2-
<PAGE>

          (d)  The description of the Trust's preferred share purchase rights
               contained in the Registration Statement on Form 8-A of the Trust
               registering such securities under Section 12 of the Securities
               Exchange Act of 1934.

         This prospectus is part of our registration statement. We have filed
the registration statement with the SEC under the Securities Act of 1933 to
register the common shares that we are offering by this prospectus. Not all of
the information in the registration statement appears in this prospectus. For
more detail, you can read the entire registration statement, and all of the
exhibits filed with it, at the SEC's offices or website as described above.

         You should rely on the information that is in this prospectus, or
incorporated by reference. You should not, however, assume that the information
that appears directly in this prospectus is accurate or complete as of any date
other than the date on the front cover.



























                                       -3-
<PAGE>

                                  RISK FACTORS

         We are a Maryland real estate investment trust, a "REIT," that conducts
substantially all of our business through Liberty Property Limited Partnership,
our "Operating Partnership." When we use the terms "we," "us," "our," and the
"Trust," we are referring to ourselves.

         Investing in the common shares can involve various risks. We have
described below the risks that we believe are material to your investment
decision.

Risks that are Generally Applicable to Investments in Companies that Own,
Operate and Develop Real Estate

         We Depend on Our Tenants and Our Ability to Renew Leases and Relet
Space. Our cash flow from operations depends on our ability to lease space to
tenants, on economically favorable terms, in our properties currently in
operation and those under development. If our tenants do not renew their leases
as they expire, we may not be able to relet the space. Some leases that are
renewed, and some new leases for space that we relet, may have terms that are
less economically favorable to us than current lease terms, or may require us to
incur significant costs, such as for renovations. These events could adversely
affect our cash flow from operations and our ability to make expected
distributions to shareholders.

         Our cash flow from operations also could be adversely affected if one
or more significant tenants fail to pay rent or become bankrupt. Also, if a
tenant defaults on a lease, we may experience delays and costs in enforcing our
rights as landlord.

         We could also be adversely affected by various facts and events over
which we have no control, such as:

o    a lack of demand for space in the areas where our properties are located

o    inability to attract tenants

o    economic or physical decline of the areas where our properties are located

o    physical damage to our properties

o    the national, state and local economic climate and real estate conditions,
     such as oversupply of or reduced demand for space and changes in market
     rental rates

o    the need to periodically renovate, repair and relet our space

o    increasing operating costs, including real estate taxes and utilities,
     which may not be passed through to tenants

o    defaults by our tenants or their failure to pay rent on a timely basis

o    uninsured losses

         A significant portion of our expenses of real estate investments, such
as mortgage and debt service payments, real estate taxes, insurance and
maintenance costs, are generally not reduced when circumstances cause a decrease
in income from our properties.

         There are Risks Associated with Acquiring and Developing Properties. We
intend to continue to acquire and develop properties. Our development and
acquisition activities include the risks that:

                                       -4-
<PAGE>

o    our construction and leasing up of a property may not be completed on
     schedule, which could result in increased debt service expenses and
     construction costs

o    we may exceed our original or budgeted estimates, possibly making the
     property uneconomical

o    some acquisitions and developments may fail to perform in accordance with
     our expectations

o    we may have to abandon some development projects

         Our development activities are also subject to risks relating to our
inability to obtain, or delays in obtaining, all necessary zoning, land-use,
building, occupancy and other required governmental permits and authorizations.

         We anticipate that future acquisitions and developments will be
financed through secured or unsecured financing, including our $450 million
credit facility. Also, we intend to sell securities in the capital markets. It
is possible that financing on desirable terms may become unavailable, and that
we would not be able to continue our acquisitions and development. If this
occurred, our ability to distribute cash to our shareholders might be adversely
affected. Also, our newly developed or acquired properties could be foreclosed
on.

         If any particular property that we develop is not successful, we could
lose more than we invested in that property.

         Real Estate Investments Are Illiquid, and We May Not Be Able to Sell
Properties When Appropriate. Real estate generally cannot be sold quickly. We
may not be able to alter our portfolio of properties promptly in response to
economic or other conditions. In addition, provisions of the Internal Revenue
Code limit a REIT's ability to sell properties in some situations when it may be
economically advantageous to do so, thereby adversely affecting returns to our
shareholders.

         We Experience Competition in Our Industry. We experience a great deal
of competition in locating land to develop, properties to acquire and tenants
for properties. If the availability of land for development or high quality
properties to acquire in our markets continues to diminish, our operating
results could be adversely affected.

         Increasing Operating Costs Could Adversely Affect Cash Flow. Our
properties are subject to operating risks common to commercial real estate, any
and all of which could adversely affect occupancy or rental rates. Our
properties are subject to increases in our operating expenses such as cleaning,
electricity, heating, ventilation and air conditioning; elevator repair and
maintenance; insurance and administrative costs; and other costs associated with
security, landscaping, repairs and maintenance of our properties. While our
tenants generally are currently obligated to pay a portion of these costs, there
is no assurance that tenants will agree to pay these costs upon renewal or that
new tenants will agree to pay these costs initially. Even if operating expenses
increase in some or all of our markets, we may not be able to increase rents in
all of these markets so as to meet increased expenses without at the same time
decreasing occupancy rates. If this occurs, our ability to pay distributions to
our shareholders and service our indebtedness could be adversely affected.

                                       -5-
<PAGE>

         Some Potential Losses Are Not Covered by Insurance. We carry
comprehensive liability, fire, extended coverage and rental loss insurance on
all of our properties. However, losses arising from acts of war or relating to
pollution are not generally insured because they are either uninsurable or not
economically insurable. If an uninsured loss or a loss in excess of insured
limits should occur, we could lose our capital invested in a property, as well
as any future revenue from the property. We would nevertheless remain obligated
on any mortgage indebtedness or other obligations related to the property.

         There are Possible Environmental Liabilities in our Operations. Various
federal, state and local laws, ordinances and regulations designed to protect
the environment may require us to investigate and clean up damage to our
properties from hazardous materials. These environmental laws often impose
liability regardless of whether we knew of, or were responsible for, the damage.
Also, the presence of hazardous materials on a property, or the damage caused by
those materials, may make it impossible to sell or rent the property or use it
as collateral. Our liability for the costs of cleaning up environmental damage
is generally not limited under environmental laws and could exceed the value of
the property and/or our aggregate assets. Also, private plaintiffs can sue us
for personal injury or other causes of action if hazardous materials are found
on our properties.

         We may incur environmental liability on some of our properties, and may
have to comply with rules and regulations regarding business-related activities
on our properties as they affect the environment. Our failure to comply with
those requirements could result in difficulty in leasing or selling any affected
property or in our incurrence of monetary penalties and fines in addition to the
costs necessary to attain compliance.

Debt Servicing and Refinancing, Increases in Interest Rates and Financial
Covenants Could Adversely Affect Out Economic Performance

         We May Not be Able to Access Financial Markets to Obtain Capital. In
order to qualify as a REIT for federal income tax purposes, we are required to
distribute 95% of our taxable income (90% of our taxable income for taxable
years beginning after December 31, 2000) to our shareholders each year. As a
result, we rely on third party capital sources for many of our capital needs,
including capital for acquisitions and development. The public debt and equity
markets are among the sources we rely on. There is no guarantee that we will be
able to access these markets, or any other source of capital. Our ability to
access the public equity and debt markets depends on a variety of factors,
including:

o    general economic conditions affecting these markets

o    our own financial structure and performance

o    the market's opinion of REITs in general

o    the market's opinion of REITs that own properties like ours

         We Are Indebted to Various Lenders and May Suffer Adverse Effects as a
Result of the Terms of this Debt. Our required payments on the mortgages and
other indebtedness on some of our properties generally are not reduced if the
economic performance of the property declines. If the economic performance of a
property declines, our income, cash from operations and cash available for

                                       -6-
<PAGE>

distribution to our shareholders will be reduced. If we cannot make payments on
our debt, we could sustain a loss, suffer foreclosures by mortgagees or suffer
judgments against us.

         Further, some of our obligations, including the exchangeable
subordinated debentures due in 2001 of our operating partnership and our credit
facility, contain cross-default and/or cross-acceleration provisions, which
means that a default on one obligation may constitute a default on other
obligations. The exchangeable subordinated debentures are exchangeable for our
common shares, and depending on how may debentures are exchanged prior to the
time they mature, we may not have sufficient cash to repay the principal due on
the debentures upon their maturity. If this happens, we would be forced to meet
our obligations through refinancings, which may not be available on attractive
terms.

         Also, some of our indebtedness, including the credit facility, bears
interest at variable rates and we therefore are at risk of increasing interest
rates. If interest rates increase, we may not be able to refinance the credit
facility, or any other indebtedness, on attractive terms. We also may not be
able to refinance any indebtedness we incur in the future.

         Finally, we may not be able to obtain funds by selling assets or
raising equity to make required payments on maturing indebtedness.

         Rising Market Interest Rates Could Adversely Affect Cash Flow.
Increases in interest rates could increase our operating partnership's interest
expense, which could adversely affect its ability to service its indebtedness or
to pay distributions to our shareholders. Outstanding advances under the credit
facility bear interest at variable rates. In addition, we may incur indebtedness
in the future that also bears interest at a variable rate.

There are Risks in Entering New Markets

         At times we may attempt to expand our operations into markets where we
don't currently operate. When we determine whether to enter a new market, we
consider the market's demographics, job growth, employment, real estate
fundamentals and competition. We may not be able to find attractive new markets,
and we may not achieve our anticipated results in the new markets we do enter.
If this occurs, our cash from operations may be adversely affected.

We Depend on Conditions in Our Primary Markets

         Our properties are located principally in the Southeastern,
Mid-Atlantic and Mid-Western United States, and our performance is therefore
dependent on economic conditions in these regions. Like much of the country,
these regions have experienced periods of economic decline.

We are Required to Comply with Various Tax Laws

         We Could Suffer Adverse Consequences if We Fail to Qualify as a REIT.
Although we believe that we qualify as a REIT under federal tax laws, we cannot
be certain that we in fact qualify, or that we will remain qualified.
Qualification as a REIT involves the application of highly technical and complex
provisions of the Internal Revenue Code, as to which there are only limited
judicial or administrative interpretations. The complexity of these provisions
and of the related income tax regulations is greater in the case of a REIT that
holds its assets in partnership form, as we do. Moreover, no assurance can be

                                       -7-
<PAGE>

given that new tax laws will not significantly affect our qualification as a
REIT or the federal income tax consequences of such qualification. New laws
could be applied retroactively, which means that our past operations could be
found to be in violation, which would have a negative effect on our business.
Presently, we have no reason to expect a change in the tax laws that would
significantly and adversely affect our qualification and operation as a REIT.

         If we fail to qualify as a REIT in any taxable year, we would not be
able to deduct our distributions to shareholders when computing our taxable
income. If this happened, we would be subject to federal income tax on our
taxable income at regular corporate rates. Also, we could be prevented from
qualifying as a REIT for the four years following the year in which we were
disqualified. Further, if we requalified as a REIT after failing to qualify, we
might have to pay the full corporate-level tax on any unrealized gain in our
assets during the period we were not qualified as a REIT. We would then have to
distribute to our shareholders the earnings we accumulated while we were not
qualified as a REIT. These additional taxes would reduce our funds available for
distribution to our shareholders for each of the years involved. In addition,
while we were disqualified as a REIT, we would not be required by the Internal
Revenue Code to make distributions to our shareholders.

         Although we intend to continue to operate and qualify as a REIT, future
economic, market, legal, tax or other considerations may cause our Board of
Trustees to revoke our election to qualify as a REIT. This decision requires the
consent of the holders of a majority of the voting interests of all of our
outstanding common shares.

         For more information about federal income tax law as it affects us,
including a discussion of the qualification of the Operating Partnership as a
partnership for federal income tax purposes, see "Federal Income Tax
Considerations with Respect to the Trust and the Operating
Partnership--Classification as a Partnership" in the Registration Statement we
incorporate by reference in this Prospectus.

         Certain of Our Officers and Trustees May Not Have the Same Interests as
Our Shareholders as to Certain Tax Laws. Certain of our officers and trustees
own units of limited partnership interest in the Operating Partnership. These
units may be exchanged for our common shares. The officers and trustees who own
those units and have not yet exchanged them for our common shares may suffer
different and more adverse tax consequences than holders of our common shares
suffer in certain situations:

o    when certain of our properties are sold

o    when debt on those properties is refinanced

o    if we are involved in a tender offer or merger

The Trust also owns units in the Operating Partnership. Because the Trust, as
well as its trustees and officers who own units, face different consequences
than our shareholders do, the Trust and those trustees and officers may have
different objectives as to these transactions than our shareholders do.

                                       -8-
<PAGE>

There are Limitations on the Change of Control of the Trust

         There is an Ownership Limit on Our Shares. To qualify as a REIT, five
or fewer individuals cannot own, directly or indirectly, more than 50% in value
of our outstanding shares of beneficial interest. To this end, our Declaration
of Trust, among other things, generally prohibits any holder of our shares from
owning more than 5.0% of our outstanding shares of beneficial interest, unless
that holder gets the consent of our Board of Trustees. This limitation could
prevent the acquisition of control of the Trust by a third party without the
consent of our Board of Trustees.

         We Have a Staggered Board and Certain Restrictive Nominating
Procedures. Our Board of Trustees has three classes of trustees. The term of
office of one class expires each year. Trustees for each class are elected for
three-year terms as that class' term expires. The terms of the Class I, Class II
and Class III trustees expire in 2001, 2002 and 2003, respectively. Any nominee
for trustee must be selected under the nominating provisions contained in our
Declaration of Trust and By-Laws. The staggered terms for trustees and the
nominating procedures may affect our shareholders' ability to take control of
the Trust, even if a change in control was in the shareholders' interest.

         Our Board Can Issue Preferred Shares. Our Declaration of Trust
authorizes our Board of Trustees to issue preferred shares of beneficial
interest and to establish the preferences and rights of any shares issued. The
issuance of preferred shares could have the effect of delaying or preventing a
change of control of the Trust, even if a change in control was in the
shareholders' interest.

         We Have a Poison Pill. Under our shareholder rights plan, rights are
issued along with each common share. Holders of these rights can purchase from
us, under certain conditions, a portion of a preferred share of beneficial
interest, or receive our common shares, or common shares of an entity acquiring
us, or other consideration, having a value equal to twice the exercise price of
the right. The exercise price of the right is $200. This arrangement is often
called a "poison pill." Our poison pill could have the effect of delaying or
preventing a change of control of the Trust, even if a change in control was in
the shareholders' interest.

         Limitations on Acquisition of and Changes in Control Pursuant to
Maryland Law. The Maryland General Corporation Law contains provisions which are
applicable to us as if we were a corporation. Among these provisions is a
section, referred to as the "control share acquisition statute," which
eliminates the voting rights of shares acquired in quantities so as to
constitute "control shares," as defined under the MGCL. The MGCL also contains
provisions applicable to us that are referred to as the "business combination
statute," which would generally limit business combinations between the Trust
and any 10% owners of the Trust's shares or any affiliate thereof. These
provisions may have the effect of inhibiting a third party from making an
acquisition proposal for the Trust or of delaying, deferring or preventing a
change in control of our company under circumstances that otherwise could
provide the holders of our common shares with the opportunity to realize a
premium over the then current market price.

Various Factors Could Hurt the Market Value of Our Publicly Traded Securities

         Market Conditions Could Change for the Worse. As with other publicly
traded securities, the value of our publicly traded securities depends on
various market conditions, which may change from time to time. In addition to

                                       -9-
<PAGE>

general economic and market conditions and our particular financial condition
and performance, the value of our publicly traded securities could be affected
by, among other things, the extent of institutional investor interest in us and
the market's opinion of REITs in general and, in particular, REITs that own and
operate properties similar to ours.

         The market value of the equity securities of a REIT may be based
primarily upon the market's perception of the REIT's growth potential and its
current and future cash distributions, and may be secondarily based upon the
real estate market value of the underlying assets. Our failure to meet the
market's expectations with regard to future earnings and cash distributions
likely would adversely affect the market price of our common shares.

         Rising Market Interest Rates Could Harm the Market Prices of Our
Securities. If market interest rates increase, purchasers of our common shares
may demand a higher annual yield on the price they pay for their shares. This
could adversely affect the market price of our common shares.



We Make Forward-looking Statements Which May Not Come True

         The Private Securities Litigation Reform Act of 1995 provides us with a
"safe harbor" for forward-looking statements we make. This means that we may not
be liable to our shareholders if the projections we make about our future
operations or performance do not come true. Certain materials that we have filed
or will file with the SEC, and that we incorporate by reference in this
prospectus, contain forward-looking statements. These may include projections
about the performance of properties we acquire (including pro forma financial
information that we file about those properties) and other business development
activities. We may also make forward-looking statements about future capital
expenditures, access to financing sources, the effects of regulations (including
environmental regulations) and competition in our operations. These
forward-looking statements involve important risks and uncertainties that could
significantly affect our future results, which may not meet our expectations.
Among other things, these risks and uncertainties could include the types of
risks discussed in this "Risk Factors" section.

                                   THE COMPANY

         We (or, as we sometimes refer to ourselves, the "Trust") are a
self-administered and self-managed Maryland real estate investment trust
("REIT") that was formed to continue and expand the commercial real estate
business of Rouse & Associates, a developer and manager of commercial real
estate in the Southeastern, Mid-Atlantic and West Coast markets, founded in
1972. We provide leasing, property management, acquisition, development,
construction and design management and other related services to our portfolio
of industrial and office properties.

         On a consolidated basis, substantially all of our assets are owned
directly or indirectly by, and all of our operations are conducted directly or
indirectly by, Liberty Property Limited Partnership (the "Operating
Partnership"). We are the sole general partner and also a limited partner of the
Operating Partnership. Unless the context otherwise requires, as used in this
prospectus, (i) the term "Operating Partnership" includes Liberty Property
Limited Partnership and its subsidiaries (and, where the context indicates, its

                                      -10-
<PAGE>

predecessor entities, Rouse & Associates, a Pennsylvania general partnership,
and certain affiliated entities) and (ii) the term "Company" includes the Trust
and the Operating Partnership.

         The Company's executive offices are located at 65 Valley Stream
Parkway, Malvern, Pennsylvania 19355. The telephone number is (610) 648-1700.
The Company maintains offices in each of its primary markets.

                              SELLING SHAREHOLDERS

         The following table contains information as to the beneficial ownership
of the common shares by the shareholders referred to on the cover of this
prospectus (the "Selling Shareholders"). This information is given as of the
date of this prospectus. Once the offering described in this prospectus is
completed, and assuming the sale by the Selling Shareholders of all of the
common shares available for resale under this prospectus, the Selling
Shareholders will own less than 1% of the outstanding common shares.

<TABLE>
<CAPTION>
                                              Pre-Offering                                       Post-Offering (1)
                                 Total Number of                                       Total Number of
                                  Common Shares                          Common         Common Shares
                                  Beneficially         Percentage        Shares         Beneficially         Percentage
     Selling Shareholder              Owned           of Class (2)       Offered            Owned           of Class (2)
     -------------------         ---------------      ------------       -------      -----------------     ------------
<S>                                                                      <C>                                     <C>
Apex Asset Management
Corporation..................       85,051                  *            85,051               0                  0%
NWBC Associates, Inc.........       28,191                  *            28,191               0                  0%
330 Associates, Inc..........        3,407                  *             3,407               0                  0%
</TABLE>

- -------------------

* Indicates less than one percent.

(1)      Assumes the sale of all common shares offered by this prospectus by
         each Selling Shareholder to third parties unaffiliated with the Selling
         Shareholders.

(2)      These percentages are calculated in accordance with Section 13(d) of
         the Exchange Act and the rules thereunder.

         The Selling Shareholders have not had any material relationship with
the Company or any of its affiliates within the past three years other than as a
result of the ownership of the units of limited partnership interest in exchange
for which the common shares were issued.

         Under the terms of a Registration Rights Agreement entered into by the
Company and the Selling Shareholders at the time the Selling Shareholders
received the units which they exchanged for the common shares, the Company
agreed to register the common shares for resale by the Selling Shareholders to
permit the resale of the common shares from time to time in the market or in
privately-negotiated transactions. The Company will prepare and file any
amendments and supplements to the registration statement that may be necessary
in accordance with the rules and regulations of the Securities Act to keep the
registration statement effective for the period reasonably necessary for the
Selling Shareholders to complete their proposed offering of the common shares.

         The Company has agreed to bear certain expenses (other than broker
discounts, commissions and the Selling Shareholders' legal fees, if any) in
connection with the registration of these common shares.


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

         The following summary of the material federal income tax considerations
with respect to the Trust and the Operating Partnership regarding the offering
of the common shares is based on current law, is for general information only
and is not intended as tax advice. The tax treatment of a holder of any of the
common shares will vary depending on such holder's particular situation, and
this summary is addressed only to holders that hold the common shares as capital
assets and does not attempt to address all aspects of federal income taxation
relating to holders of the common shares. Nor does it discuss all of the aspects
of federal income taxation that may be relevant to certain types of holders
(including insurance companies, tax-exempt entities, financial institutions or
broker-dealers, foreign corporations and persons who are not citizens or
residents of the United States) who are subject to special treatment under the
federal income tax laws.

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

                                      -11-
<PAGE>

Taxation of the Trust

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

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

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

         As a REIT, the Trust generally is not subject to federal corporate
income taxes on its net income that it currently distributes to shareholders.
This treatment substantially eliminates the "double taxation" (at the corporate
and shareholder levels) that generally results from investment in a corporation.
However, the Trust will be subject to federal income or excise tax as follows.
First, the Trust will be taxed at regular corporate rates on any undistributed
real estate investment trust taxable income, including undistributed net capital
gains. Second, under certain circumstances, the Trust may be subject to the
"alternative minimum tax" on its items of tax preference. Third, if the Trust
has (i) net income from the sale or other disposition of "foreclosure property"
(generally property acquired by a REIT upon the default by a debtor with respect
to indebtedness secured by the property or upon the default by a lessee where
the REIT was the lessor) which is held primarily for sale to customers in the
ordinary course of business or (ii) other nonqualifying income from foreclosure
property, it will be subject to tax at the highest corporate tax rate on such
income. Fourth, if the Trust has net income from "prohibited transactions"
(which are, in general, certain sales or other dispositions of property held
primarily for sale to customers in the ordinary course of business, other than
foreclosure property and, effective for the Trust's taxable year ending December
31, 1998 and thereafter, dispositions of property that occur due to involuntary
conversion), such income will be subject to a 100% tax. Fifth, if the Trust
should fail to satisfy the 75% gross income test or the 95% gross income test
(discussed

                                      -12-
<PAGE>

below), but has nonetheless maintained its qualification as a REIT because
certain other requirements have been met, it will be subject to a 100% tax on an
amount equal to (i) the gross income attributable to the greater of the amount
by which the Trust fails the 75% test or the 95% test in the taxable year,
multiplied by (ii) a fraction generally intended to reflect the Trust's
profitability. Sixth, if the Trust should fail to distribute during each
calendar year at least the sum of (i) 85% of its REIT ordinary income for such
year, (ii) 95% of its REIT capital gain net income for such year, and (iii) any
undistributed taxable income from prior periods, the Trust would be subject to a
4% excise tax on the excess of such required distribution over the amounts
actually distributed. Seventh, if the Trust acquires any asset from a
corporation, where some or all of the gain from the taxable disposition of the
asset would have been taxable to the corporation, in a transaction in which the
basis of the asset in the Trust's hands is determined by reference to the basis
of the asset (or any other property) in the hands of such corporation, and the
Trust recognizes gain on the disposition of such asset during the 10-year period
following acquisition of the asset, then, pursuant to guidelines issued by the
Internal Revenue Service (the "IRS"), to the extent of the "built-in gain" (the
excess of the fair market value of the asset on the date acquired over its
adjusted tax basis at that date in the case of assets acquired from a C
corporation), such gain will be subject to tax at the Trust level at the highest
regular corporate rate. The result described above with respect to the
recognition of built-in gain assumes the Trust is eligible to make, and makes,
an election pursuant to IRS Notice 88-19 or the temporary or final regulations
issued under Section 337(d) of the code.

Requirements for Qualification

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

         The Trust has satisfied and will continue to satisfy conditions (1)
through (6) above. In making the "five or fewer individuals" determination, if
treating interests in the Operating Partnership that can be converted into
shares of the Trust as converted into outstanding shares would cause the Trust
to fail that test, the interests are deemed to have been converted. In addition,
the Declaration of Trust provides for restrictions regarding transfer of its
shares, in order to assist the Trust in continuing to satisfy the share
ownership requirements described in (5) and (6) above. Such transfer
restrictions are included in the Declaration of Trust, filed as an exhibit to a
report incorporated by reference herein. See "Incorporation of Certain Documents
by Reference."

                                      -13-
<PAGE>

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

         In the case of a REIT which is a partner in a partnership, Treasury
Regulations provide that the REIT will be deemed to own its proportionate share
of the assets of the partnership and will be deemed to be entitled to the income
of the partnership attributable to such share. In addition, the character of the
assets and gross income of the partnership retain the same character in the
hands of the REIT for purposes of Section 856 of the Code, including satisfying
the gross income tests and the asset tests described below. Thus, the Trust's
proportionate share of the assets, liabilities and items of income of the
Operating Partnership and the other partnerships through which the Trust's
properties are owned (the "Property Partnerships") will be treated as assets,
liabilities and items of income of the Trust for purposes of applying the
requirements described herein. The references to the gross income or assets of
the Trust, as discussed immediately below in "Income Tests" and "Assets Tests,"
include the Trust's proportionate share of the gross income or assets, as the
case may be, of the Operating Partnership and the Property Partnerships.

Income Tests

         For the Trust to maintain its qualification as a REIT, the Trust must
satisfy two tests based on the nature of the underlying gross income. These
requirements must be satisfied annually. First, at least 75% of the Trust's
gross income (excluding gross income from prohibited transactions) for each
taxable year must consist of income derived directly or indirectly from
investments relating to real property or mortgages on real property (including
"rents from real property" and, in certain circumstances, interest) or certain
types of "qualified temporary investment income." Second, at least 95% of the
Trust's gross income (excluding gross income from prohibited transactions) for
each taxable year must be derived from such real property investments, and from
dividends, other types of interest, and gain from the sale or disposition of
stock or securities or from any combination of the foregoing. For taxable years
ending on or before December 31, 1997, short-term gain from the sale or other
disposition of stock or securities, gain from prohibited transactions and gain
on the sale or other disposition of real property held for less than four years
(apart from involuntary conversions and sales of foreclosure property) must
represent less than 30% of the Trust's gross income (including gross income from
prohibited transactions) for each taxable year.

         Rents received by the Trust will qualify as "rents from real property"
in satisfying the gross income requirements for a REIT described above provided
that several conditions are met. First, the amount of rent must not be based in

                                      -14-
<PAGE>

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

         For taxable years beginning after December 31, 2000, rent received from
a taxable REIT subsidiary will, under certain circumstances, qualify as rents
from real property even if the Trust owns more than 10% of the voting power or
value of such subsidiary.

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

         Effective for the Trust's taxable years beginning on or after January
1, 1998, the Trust is permitted to render a de minimis amount of impermissible
services to tenants, or in connection with the management of a property
(together, "Impermissible Services"), without otherwise qualifying rents from
the property being classified as not "rents from real property." In order to
qualify for this de minimis exception, the amount received by the Trust for
Impermissible Services with respect to any property for any taxable year may not
exceed 1% of all amounts received or accrued by the Trust during such taxable
year with respect to such property. For purposes of the foregoing, the amount
treated as "received" by the Trust for Impermissible Services will not be less
than 150% of the Trust's direct cost in rendering such service. However, the
amount of any income that the Trust receives for Impermissible Services will not
be treated as "rents from real property" for purposes of the gross income tests.
The Trust does not believe that the level of its gross income from Impermissible
Services, if any, would cause the Trust to violate the 1% safe harbor as to any
property.


                                      -15-
<PAGE>

         The Operating Partnership may receive fees in consideration of the
performance of management and administrative services with respect to any
properties that are not owned entirely by the Operating Partnership. Although a
portion of such management and administrative fees generally will not constitute
"qualifying income" for purposes of the 75% and 95% gross income tests, the
Trust Management believes that the aggregate amount of such fees, if any (plus
any income from Impermissible Services and other nonqualifying income), in any
taxable year will not cause the Trust to fail the 75% and 95% gross income
tests.

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

         Generally, the failure to satisfy either or both of the 75% and 95%
gross income tests will cause the REIT status of the Trust to terminate with the
taxable year in which the failure occurs. Relief from the adverse consequences
of such failure is available if the Trust's failure to meet such tests was due
to reasonable cause and not willful neglect, the Trust attaches a schedule of
the nature and the sources of its gross income to its income tax return, and any
incorrect information set forth on the schedule is not due to fraud with intent
to evade tax. It is not possible to state whether, in all circumstances, the
Trust would be entitled to the benefit of these relief provisions. As discussed
above in "Taxation of the Trust," even if these relief provisions apply, a tax
would be imposed with respect to the excess of 75% or 95% of the Trust's gross
income over the Trust's qualifying income in the relevant category, whichever is
greater.


Asset Tests

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

         For taxable years beginning after December 31, 2000, not more than 20%
of the Trust's total assets may constitute securities issued by taxable REIT
subsidiaries, and of the investments included in the 25% asset category, the
value of any one issuer's securities, other than securities issued by another
REIT or by a taxable REIT subsidiary, owned by the Trust, may not exceed 5% of
the value of the Trust's total assets and the Trust may not own more than 10% of
the vote or value of the outstanding securities of any one issuer, except for
issuers that are taxable REIT subsidiaries. For these purposes, a taxable REIT
subsidiary is any corporation in which the Trust owns an interest, that joins
with the Trust in making an election to be treated as a taxable REIT subsidiary,
and that does not engage in certain activities.

         The Operating Partnership owns 8.0% of the voting common stock and 100%
of the non-voting common stock of Liberty Property Development Corp. ("Liberty
Development") and none of the voting common stock and 100% of the non-voting
common stock of Liberty Property Development Corp.-II ("Development-II" and,
together with Liberty Development, the "Development Companies"). By virtue of

                                      -16-
<PAGE>

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

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

Annual Distribution Requirements

         To qualify as a REIT, the Trust is required to distribute dividends
(other than capital gain dividends) to its stockholders in an amount at least
equal to (A) the sum of (i) 95% (90% for taxable years beginning after December
31, 2000) of the "REIT taxable income" of the Trust (computed without regard to
the dividends paid deduction and the Trust's net capital gain) and (ii) 95% (90%
for taxable years beginning after December 31, 2000) of the net taxable income
(after tax), if any, from foreclosure property, minus (B) the sum of certain
items of noncash income. Such distributions must be paid in the taxable year to
which they relate, or in the following taxable year if declared before the Trust
timely files its tax return for such year and if paid on or before the first
regular dividend payment after such declaration. To the extent the Trust does
not distribute all of the net

                                      -17-
<PAGE>

capital gain or distributes at least 95% (90% for taxable years beginning after
December 31, 2000), but less than 100%, of its "REIT taxable income," as
adjusted, it will be subject to tax on the undistributed amount at the regular
corporate tax rates applicable to such income. Furthermore, if the Trust should
fail to distribute during each calendar year at least the sum of (i) 85% of its
REIT ordinary income for such year, (ii) 95% of its REIT capital gain income for
such year, and (iii) any undistributed taxable income from prior periods, the
Trust would be subject to a 4% excise tax on the excess of such required
distribution over the amounts actually distributed.

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

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

Failure to Qualify

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

                                      -18-
<PAGE>

Other Tax Considerations

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

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

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

Tax Aspects of the Trust's Investments in Partnerships

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

                                      -19-
<PAGE>

Classification as a Partnership

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

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

         If for any reason the Operating Partnership or a Property Partnership
were taxable as a corporation rather than as a partnership for federal income
tax purposes, the Trust would not be able to satisfy the income and asset
requirements for status as a REIT. In addition, any change in the Operating
Partnership's status or that of a Property Partnership for tax purposes might be
treated as a taxable event, in which case the Trust might incur a tax liability

                                      -20-
<PAGE>

without any related cash distribution. See "--Taxation of the Trust," above.
Further, items of income and deduction for the Operating Partnership or a
Property Partnership would not pass through to the respective partners, and the
partners would be treated as stockholders for tax purposes. Each Partnership
would be required to pay income tax at regular corporate tax rates on its net
income and distributions to partners would constitute dividends that would not
be deductible in computing the Partnership's taxable income.

Income Taxation of the Partnerships

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

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

         Partnership Allocations

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

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

         Tax Allocations With Respect to Pre-Contribution Gain

         Pursuant to Section 704(c) of the Code, income, gain, loss, and
deduction attributable to appreciated property that is contributed to a
partnership in exchange for an interest in the partnership must be allocated for
federal income tax purposes in a manner such that the contributor is charged
with the unrealized gain associated with the property at the time of the
contribution. The amount of such unrealized gain is generally equal to the
difference between the fair market value of the contributed property at the time
of contribution and the adjusted tax basis of such property at the time of
contribution (the "Book-Tax Difference"). In general, the fair market value of
the properties owned (directly or indirectly) by the Trust and interests in
Property Partnerships contributed to the Operating Partnership has been
substantially in excess of their respective adjusted tax bases. The partnership
agreements of each of the Operating Partnership and the Property Partnerships

                                      -21-
<PAGE>

require that allocations attributable to each item of contributed property be
made so as to allocate the tax depreciation available with respect to such
property first to the partners other than the partner that contributed the
property, to the extent of, and in proportion to, their book depreciation, and
then, if any tax depreciation remains, to the partner that contributed the
property. Upon the disposition of any item of contributed property, any gain
attributable to the "built-in" gain of the property at the time of contribution
would be allocated for tax purposes to the contributing partner. These
allocations are intended to be consistent with the Treasury Regulations under
Section 704(c) of the Code.

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

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

         Basis in Operating Partnership Interest

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

         If the allocation of the Trust's distributive share of the Operating
Partnership's loss would reduce the adjusted tax basis of the Trust's
partnership interest in the Operating Partnership below zero, the loss is
deferred until such time as the recognition of such loss would not reduce the
Trust's adjusted tax basis below zero. To the extent that the Operating
Partnership's distributions, or any decrease in the Trust's share of the
indebtedness of the Operating Partnership or a Property Partnership (each such
decrease being considered a constructive cash distribution to the partners),
would reduce the Trust's adjusted tax basis below zero, such distributions
(including such constructive distributions) would be includible as taxable

                                      -22-
<PAGE>

income to the Trust in the amount of such excess. Such distributions and
constructive distributions would normally be characterized as capital gain, and
if the Trust's partnership interest in the Operating Partnership has been held
for longer than the long-term capital gain holding period (currently, one year),
the distributions and constructive distributions would constitute long-term
capital gain. Based on Treasury Regulations to be issued, the tax rates
applicable to such capital gain will likely vary depending on the precise amount
of time such interest has been held by the Trust and the nature of the Operating
Partnership's property. Based on certain undertakings by limited partners of the
Operating Partnership, the Exchangeable Subordinated Debentures issued by the
Operating Partnership are allocated for purposes of Section 752 of the Code
disproportionately in favor of certain limited partners.

Sale of the Partnerships' Property

         Generally, any gain realized by the Operating Partnership or a Property
Partnership on the sale of property held by the Operating Partnership or a
Property Partnership, or on the sale of partnership interests in the Property
Partnerships, if the property or partnership interests are held for more than
one year, will be long-term capital gain (except for any portion of such gain
that is treated as depreciation or cost recovery recapture), and may result in
capital gain distributions to the shareholders. See "--Taxation of Taxable
Domestic Shareholders," below.

         The Trust's share of any gain realized on the sale of any property held
by the Operating Partnership or a Property Partnership as inventory or other
property held primarily for sale to customers in the ordinary course of the
trade or business of any of the Operating Partnership or the Property
Partnerships will, however, be treated as income from a prohibited transaction
that is subject to a 100% penalty tax. Under existing law, whether property is
held as inventory or primarily for sale to customers in the ordinary course of a
trade or business is a question of fact that depends on all the facts and
circumstances with respect to the particular transaction. The Operating
Partnership and the Property Partnerships intend to hold their properties for
investment with a view to long-term appreciation, to engage in the business of
acquiring, developing, owning and operating their properties and to make such
occasional sales of such properties, including peripheral land, as are
consistent with the investment objectives of the Trust and the Operating
Partnership. Complete assurance cannot be given, however, that the Trust will be
able to avoid owning property that may be characterized as property held
"primarily for sale to customers in the ordinary course of business."

Taxation of Taxable Domestic Shareholders

         As long as the Trust qualifies as a REIT, distributions made to the
Trust's taxable U.S. shareholders out of current or accumulated earnings and
profits (and not designated as capital gain dividends) will be taken into
account by such U.S. shareholders as ordinary income and will not be eligible
for the dividends received deduction for corporations. Distributions that are
designated as capital gain dividends will be taxed as gain from the sale or
exchange of a capital asset held for more than one year (to the extent they do
not exceed the Trust's actual net capital gain for the taxable year) without
regard to the period for which the shareholder has held its stock. Subject to
certain limitations, the Trust may further designate capital gain dividends as a
"20% rate gain distribution" or an "unrecaptured section 1250 gain
distribution," in which case such dividends will be taxable

                                      -23-
<PAGE>

to recipient individual shareholders when received at tax rates of 20% and 25%,
respectively. Corporate shareholders may be required to treat up to 20% of
certain capital gain dividends as ordinary income.

         Distributions in excess of current and accumulated earnings and profits
will not be taxable to a shareholder to the extent that they do not exceed the
adjusted basis of the shareholder's shares, but rather will reduce the adjusted
basis of such shares. To the extent that such distributions exceed the adjusted
basis of a shareholder's shares, they will be included in income as short-term,
mid-term or long-term capital gain (depending on the length of time the shares
have been held) assuming the shares are a capital asset in the hands of the
shareholder. In addition, any dividend declared by the Trust in October,
November or December of any year payable to a shareholder of record on a
specified date in any such month shall be treated as both paid by the Trust and
received by the shareholder on December 31 of such year, provided that the
dividend is actually paid by the Trust during January of the following calendar
year. Shareholders may not include in their individual income tax returns any
net operating losses or capital losses of the Trust.

         In general, a domestic shareholder will realize capital gain or loss on
the disposition of common shares equal to the difference between (i) the amount
of cash and the fair market value of any property received on such disposition,
and (ii) the shareholder's adjusted basis of such common shares. Subject to
certain exceptions, the maximum rate of tax on net capital gains of individuals,
trusts and estates from the sale or exchange of capital assets held for more
than one year is 20%. Any loss upon a sale or exchange of shares by a
shareholder who has held such shares for six months or less (after applying
certain holding-period rules) will be treated as a long-term capital loss to the
extent of distributions from the Trust required to be treated by such
shareholder as long-term capital gain.

         Effective for its taxable years beginning on or after January 1, 1998,
the Trust may elect to retain its net long-term capital gains recognized during
a taxable year ("Retained Gains") and pay a corporate-level tax on such Retained
Gains. Corporations are currently subject to a maximum 35 percent tax on
recognized capital gains. A shareholder owning the Trust's shares of beneficial
interest on December 31 of any taxable year in which the Trust has Retained
Gains would be required to include in gross income such shareholder's
proportionate share of the Retained Gains (as designated by the Trust in a
notice mailed to shareholders within 60 days following the end of the taxable
year). The amount of any corporate-level tax paid by the Trust in respect of the
Retained Gains (the "Trust Tax") would be treated as having been paid by the
shareholders of the Trust and each shareholder would receive a credit for such
shareholder's share of the Trust Tax. A shareholder's basis in his shares of
beneficial interest would increase by the excess of such shareholder's
proportionate share of the Retained Gains over the shareholder's share of the
Trust Tax. Unless the Retained Gains were treated as actually distributed, it is
possible that the Retained Gains might be subject to the Excise Tax.

                                      -24-
<PAGE>

Backup Withholding

         The Trust will report to its U.S. shareholders and the IRS the amount
of distributions paid during each calendar year, and the amount of tax withheld,
if any. Under the backup withholding rules, a shareholder may be subject to
backup withholding at the rate of 31% with respect to distributions paid unless
such shareholder (a) is a corporation or comes within certain other exempt
categories and, when required, demonstrates this fact or (b) provides a taxpayer
identification number, certifies as to no loss of exemption from backup
withholding, and otherwise complies with applicable requirements of the backup
withholding rules. A shareholder that does not provide the Trust with his
correct taxpayer identification number may also be subject to penalties imposed
by the IRS. Any amount paid as backup withholding will be creditable against the
shareholder's income tax liability. In addition, the Trust may be required to
withhold a portion of capital gain distributions to shareholders who fail to
certify their non-foreign status to the Trust. The United States Treasury has
recently issued final regulations (the "Final Regulations") which affect the
procedures regarding the withholding and information reporting rules discussed
above. In general, the Final Regulations do not alter the substantive
withholding and information reporting requirements but unify current
certification procedures and forms and clarify and modify reliance standards.
The Final Regulations are generally effective for payments made on or after
January 1, 1999, subject to certain transition rules. Prospective investors
should consult their own tax advisors concerning the adoption of the Final
Regulations and the potential effect on their ownership of common shares. See
"-- Taxation of Foreign Shareholders."

Taxation of Tax-exempt Shareholders

         Generally, distributions to a tax-exempt entity from a real estate
investment trust do not constitute unrelated business taxable income, as defined
in Section 512(a) of the Code ("UBTI"), provided that the tax-exempt entity has
not financed its acquisition of its shares with "acquisition indebtedness"
within the meaning of the Code and the shares are not otherwise used in an
unrelated trade or business of the tax-exempt entity. Thus, distributions by the
Trust to shareholders that are tax-exempt should not be taxable as UBTI,
provided that no acquisition indebtedness was incurred with respect to such
shares.

         Some or all of the distributions by a real estate investment trust to a
tax-exempt employee's pension fund that owns more than 10% in value of the real
estate investment trust would be treated as UBTI if the real estate investment
trust constitutes a "pension-held REIT" and if other conditions are met. In
order to constitute a "pension-held REIT" the real estate investment trust must
meet the test for classification as a real estate investment trust only because
tax-exempt pension funds are not treated as a single individual for purposes of
the "five-or-fewer" rule (see "Risk Factors --Limitations on Changes in Control
- -- Ownership Limit") and either (A) one pension fund owns more than 25% in value
of the real estate investment trust or (B) one or more pension funds (holding at
least 10% in value of the real estate investment trust each) own, in the
aggregate, more than 50% of the value of the real estate investment trust. In
addition, the gross income of the real estate investment trust derived from
activities that would constitute unrelated trades or businesses, computed as if
the REIT was a "qualified trust," must be at least five percent of the gross
income of the real estate investment trust in the taxable year in which the
distributions are made. The ownership limitations in the Declaration of Trust
(assuming no waiver by the Board of Trustees) would prevent the Trust from being
classified as a "pension-held REIT."

                                      -25-
<PAGE>

Taxation of Foreign Shareholders

         The rules governing United States federal income taxation of
nonresident alien individuals, foreign corporations, foreign partnerships and
other foreign shareholders (collectively, "Non-U.S. Shareholders") are complex,
and no attempt will be made herein to provide more than a summary of the rules.
Prospective Non-U.S. Shareholders should consult with their own tax advisors to
determine the impact of federal, state and local income tax laws with regard to
an investment in the common shares offered hereby, including any reporting
requirements, as well as the tax treatment of such an investment under their
home country laws. If income from the investment in the common shares offered
hereby is treated as "effectively connected" with the Non-U.S. Shareholder's
conduct of a United States trade or business or attributable to a permanent
establishment that the Non-U.S. Shareholder maintains in the U.S. that is
required by an applicable income tax treaty as a condition for subjecting the
Non-U.S. Shareholder to tax on a "net income basis," the Non-U.S. Shareholder
generally will be subject to a tax at graduated rates, in the same manner as
U.S. shareholders are taxed with respect to the dividends (and may also be
subject to the 30% "branch profits" tax in the case of a shareholder that is a
foreign corporation). The remainder of this discussion assumes that the
distributions do not constitute "effectively connected" income. Prospective
investors whose investment in common shares may be "effectively connected" with
the conduct of a United States trade or business should consult their own tax
advisors as to the tax consequences thereof.

         Distributions by the Trust that are not attributable to gain from sales
or exchanges by the Trust of United States real property interests and not
designated by the Trust as capital gains dividends will be treated as dividends
of ordinary income to the extent that they are made out of current or
accumulated earnings and profits of the Trust. Such distributions, ordinarily,
will be subject to a withholding tax equal to 30% of the gross amount of the
distribution unless an applicable tax treaty reduces or eliminates that tax.
Distributions in excess of current and accumulated earnings and profits of the
Trust will not be taxable to a shareholder to the extent that such distributions
do not exceed the adjusted basis of the shareholder's shares, but rather will
reduce the adjusted basis of such shares. To the extent that distributions in
excess of current accumulated earnings and profits exceed the adjusted basis of
a Non-U.S. Shareholder's shares, such distributions will give rise to tax
liability if the Non-U.S. Shareholder would otherwise be subject to tax on any
gain from the sale or disposition of his shares in the Trust, as described
below. The Trust expects to withhold United States income tax at the rate of 30%
on the gross amount of any distributions made to a Non-U.S. Shareholder unless
(i) a lower treaty rate applies and the Non-U.S. Shareholder files all necessary
forms required to establish eligibility for the lower rate and provides
certification as to such eligibility, if necessary, or (ii) the Non-U.S.
Shareholder files an IRS Form W8-ECI with the Trust certifying that the
investment to which the distribution relates is "effectively connected" to a
United States trade or business of such Non-U.S. Shareholder. Lower treaty rates
generally applicable to dividend income may not necessarily apply to
distributions from a REIT, such as the Trust. If it cannot be determined at the
time a distribution is made whether or not such distribution will be in excess
of current and accumulated earnings and profits, the distributions will be
subject to withholding at the same rate as dividends. Effective for
distributions made after August 20, 1996, the Trust is obligated to withhold 10%
of the amount of any distribution in excess of the Trust's current and
accumulated earnings and profits. However, amounts withheld

                                      -26-
<PAGE>

are refundable if it is subsequently determined that the distribution was in
excess of current and accumulated earnings and profits of the Trust and the
amount withheld exceeded the Non-U.S. Shareholders' United States tax liability,
if any.

         For any year in which the Trust qualifies as a REIT, distributions that
are attributable to gain from sales or exchanges by the Trust of United States
real property interests will be taxed to a Non-U.S. Shareholder under the
provisions of the Foreign Investment in Real Property Tax Act of 1980
("FIRPTA"). Under FIRPTA, these distributions are taxed to a Non-U.S.
Shareholder as if the gain were "effectively connected" with a United States
business. Non-U.S. Shareholders would be taxed at the normal capital gain rates
applicable to domestic shareholders (subject to applicable alternative minimum
tax and a special alternative minimum tax in the case of nonresident alien
individuals), without regard to whether such distributions are designated by the
Trust as capital gain dividends. Also, distributions subject to FIRPTA may be
subject to a 30% "branch profits" tax in the hands of a foreign corporate
shareholder not entitled to treaty exemption. The Trust is required by
applicable income tax regulations that have been promulgated under the Code (the
"Treasury Regulations") to withhold 35% of any distribution that could be
designated by the Trust as a capital gains dividend. This amount is creditable
against the Non-U.S. Shareholder's FIRPTA tax liability.

         Gain recognized by a Non-U.S. Shareholder upon a sale of shares
generally will not be taxed under FIRPTA if the Trust is a "domestically
controlled REIT," defined generally as a REIT in which at all times during a
specified testing period less than 50% in value of the stock was held directly
or indirectly by foreign persons. The Trust currently is a "domestically
controlled REIT," and anticipates continuing to be so classified, and therefore
the sale of the common shares offered hereby should not be subject to taxation
under FIRPTA. However, because the common shares will be publicly traded, no
assurance can be given that the Trust will continue to so qualify.
Notwithstanding the foregoing, any gain not otherwise subject to FIRPTA will be
taxable to a Non-U.S. Shareholder if (i) investment in the shares is effectively
connected with the Non-U.S. Shareholder's United States trade or business, in
which case the Non-U.S. Shareholder will be subject to the same treatment as
U.S. shareholders with respect to the gain (a shareholder that is a foreign
corporation may also be subject to the 30% "branch profits" tax), or (ii) the
Non-U.S. Shareholder is a nonresident alien individual who was present in the
United States for 183 days or more during the taxable year and has a "tax home"
in the United States or maintains an office or a fixed place of business in the
United States to which the gain is attributable, in which case the nonresident
alien individual will be subject to a 30% tax on the individual's capital gains.
If the gain on the sale of shares were to be subject to taxation under FIRPTA,
the Non-U.S. Shareholder will be subject to the same treatment as U.S.
shareholders with respect to the gain (subject to applicable alternative minimum
tax and a special alternative minimum tax in the case of nonresident alien
individuals and, in the case of foreign corporations, subject to the possible
application of the 30% "branch profits" tax).

         If the proceeds of a disposition of common shares are paid by or
through a United States office of a broker, the payment is subject to
information reporting requirements and to backup withholding unless the
disposing Non-U.S. Shareholder certifies as to his name, address, and non-United
States status or otherwise establishes an exemption. Generally, United States
information reporting and backup withholding will not apply to the payment of
disposition proceeds if the payment is made outside the United States through a
non-United States broker. United States information reporting (but not backup

                                      -27-
<PAGE>

withholding) will apply, however, to a payment of disposition proceeds outside
the United States if (i) the payment is made through an office outside the
United States that is either (a) a United States person, (b) a foreign person
that derives 50% or more of its gross income for certain periods from the
conduct of a trade or business in the United States, (c) a foreign partnership
which is owned 50% or more by United States persons or is engaged in United
States trade or business, (d) a United States branch of a foreign bank or
foreign insurance company or (e) a "controlled foreign corporation" for United
States federal income tax purposes, and (ii) the broker fails to obtain
documentary evidence that the Shareholder is a Non-U.S. Shareholder and that
certain conditions are met or that the Non-U.S. Shareholder is otherwise
entitled to an exemption. The Final Regulations, issued by the United States
Treasury on October 6, 1997, affect the rules applicable to payments to foreign
persons. In general, the Final Regulations do not alter the substantive
withholding and information reporting requirements but unify current
certification procedures and forms and clarify and modify reliance standards.
The Final Regulations also address certain issues relating to intermediary
certification procedures designed to simplify compliance by withholding agents.
The Final Regulations are generally effective for payments made on or after
January 1, 2001, subject to certain transition rules. Prospective investors
should consult their own tax advisors concerning the adoption of the Final
Regulations and the potential effect on their ownership of the common shares.

                              PLAN OF DISTRIBUTION

         The Company has been advised by the Selling Shareholders that the
Selling Shareholders may sell the common shares from time to time in
transactions on the NYSE, in negotiated transactions, or otherwise, or by a
combination of these methods, at fixed prices which may be changed, at market
prices at the time of sale, at prices related to market prices or at negotiated
prices. The Selling Shareholders may effect these transactions by selling the
common shares to or through broker-dealers, who may receive compensation in the
form of discounts, concessions or commissions from the Selling Shareholders or
the purchasers of the common shares for whom the broker-dealer may act as an
agent or to whom they may sell the common shares as a principal, or both. The
compensation to a particular broker-dealer may be in excess of customary
commissions.

         The Selling Shareholders and broker-dealers who act in connection with
the sale of the common shares may be deemed to be "underwriters" within the
meaning of the Securities Act, and any commissions received by such
broker-dealers and profits on any resale of the common shares as a principal may
be deemed to be underwriting discounts and commissions under the Securities Act.

         Any broker-dealer participating in such transactions as agent may
receive commissions from the Selling Shareholders (and, if they act as agent for
the purchaser of the common shares, from such purchaser). Broker-dealers may
agree with the Selling Shareholders to sell a specified number of common shares
at a stipulated price per share, and, to the extent such a broker-dealer is
unable to do so acting as agent for the Selling Shareholders, to purchase as
principal any unsold common shares at the price required to fulfill the
broker-dealer commitment to the Selling Shareholders. Broker-dealers who acquire
common shares from the Selling Shareholders as principal may thereafter resell
such Shares from time to time in transactions (which may involve crosses and
block transactions and which may involve sales to and through other
broker-dealers, including transactions of the nature described above) in the
over-the-counter market, in negotiated transactions or otherwise at market
prices prevailing at the time of sale or at negotiated prices, and in connection
with such resales may pay to or receive from the purchasers of those common
shares commissions computed as described above. To the extent required under the
Securities Act, a supplemental prospectus will be filed, disclosing (a) the name
of any such broker-dealers; (b) the number of common shares involved; (c) the
price at which these common shares are to be sold; (d) the commissions paid or
discounts or concessions allowed to such broker-dealers, where applicable; (e)
that such broker-dealers did not conduct any investigation to verify the
information set out or incorporated by reference in this prospectus, as
supplemented; and (f) other facts material to the transaction.

         Under applicable rules and regulations under the Exchange Act, any
person engaged in a distribution of the common shares may not simultaneously
engage in market making activities with respect to those securities for a period
beginning when that person becomes a distribution participant and ending upon
that person's completion of participation in a distribution, including
stabilization activities in the common shares to effect syndicate covering
transactions, to impose penalty bids or to effect passive market making bids. In
addition and without limiting the foregoing, in connection with transactions in
the common shares, the Selling Shareholders will be subject to applicable
provisions of the Exchange Act and the rules and regulations thereunder,
including, without limitation, Rule 10b-5 and, insofar as the Selling
Shareholders are participants in a distribution, Regulation M and Rules 100,
101, 102, 103, 104 and 105 thereof. All of the foregoing may affect the
marketability of the common shares.


                                      -28-
<PAGE>

         The Selling Shareholders will pay all commissions and certain other
expenses associated with the sale of the common shares. The common shares
offered hereby are being registered pursuant to contractual obligations of the
Company, and the Company has paid the expenses of the preparation of this
prospectus. The Company has also agreed to indemnify the Selling Shareholders
with respect to the common shares offered hereby against certain liabilities,
including, without limitation, certain liabilities under the Securities Act, or,
if such indemnity is unavailable, to contribute toward amounts required to be
paid in respect of such liabilities.

         The common shares are listed on the NYSE.

                                  LEGAL MATTERS

         Saul, Ewing, Remick & Saul LLP, Baltimore, Maryland, has rendered an
opinion with respect to the legality of the common shares offered hereby. The
statements in this prospectus under the caption "Federal Income Tax
Considerations with Respect to the Trust and the Operating Partnership" and the
other statements herein relating to the Trust's qualification as a real estate
investment trust have been passed upon for the Trust by Wolf, Block, Schorr and
Solis-Cohen LLP, Philadelphia, Pennsylvania, although such firm has rendered no
opinion as to matters involving the imposition of non-U.S. taxes on the
operations of, and distributions of payments from, the Trust's United Kingdom
affiliate.

                                     EXPERTS

         The consolidated financial statements and schedule of Liberty Property
Trust appearing in Liberty Property Trust's Annual Report (Form 10-K) for the
year ended December 31, 1999, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their reports thereon included therein and
incorporated herein by reference. Such financial statements and schedule are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.

                                      -29-
<PAGE>

================================================================================
NO DEALER, SALES PERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS. IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE COMMON SHARES OFFERED
HEREBY IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT
THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN
THE AFFAIRS OF THE COMPANY SINCE ITS DATE.




                                TABLE OF CONTENTS

                                   PROSPECTUS
                                                                           PAGE
About This Prospectus....................................................    2
Where to Find Additional Information.....................................    2
Risk Factors.............................................................    4
The Company..............................................................   10
Selling Shareholders.....................................................   11
Federal Income Tax Considerations with Respect to the Trust and the
  Operating Partnership..................................................   11
Plan of Distribution.....................................................   28
Legal Matters............................................................   29
Experts..................................................................   29

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

                                      -30-
<PAGE>

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


                                 116,649 SHARES







                                     LIBERTY
                                 PROPERTY TRUST





                                  COMMON SHARES
                             OF BENEFICIAL INTEREST








                                  ------------

                                   PROSPECTUS



                                     , 2000


                                  ------------


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

                                      -31-
<PAGE>

                 PART II. INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

         The following table sets forth the costs and expenses of the sale and
distribution of the Securities being registered, all of which are being borne by
the Trust.

         Securities and Exchange Commission registration fee.........$   766
         Legal fees and expenses.....................................  8,000
         Accounting fees and expenses................................  5,000
         Miscellaneous...............................................      0
                                                                     -------
         Total                                                       $13,766
                                                                     =======

         All expenses except the Securities and Exchange Commission registration
fee are estimated.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

         Under Section 8-301(15) and 2-418 of the Maryland General Corporation
Law, as amended, the Trust has the power to indemnify trustees and officers
under certain prescribed circumstances (including when authorized by a majority
vote of a quorum of disinterested trustees, by a majority vote of a committee of
two or more disinterested trustees, by independent legal counsel, or by
shareholders) and, subject to certain limitations (including, unless otherwise
determined by the proper court, when such trustee or officer is adjudged liable
to the Trust), against certain costs and expenses, including attorneys' fees
actually and reasonably incurred in connection with any action, suit or
proceeding, whether civil, criminal, administrative or investigative, to which
any of them is a party by reason of his or her being a trustee or officer of the
Trust if it is determined that he or she acted in accordance with the applicable
standard of conduct set forth in such statutory provisions including when such
trustee or officer acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the Trust's best interests, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his or her conduct was unlawful.

         Article XII of the Trust's By-laws provides that the Trust has the
power to indemnify trustees, officers and shareholders of the Trust against
expenses (including legal fees) reasonably incurred by any of them in connection
with the successful defense of a proceeding to which such person was made a
party by reason of such status, whether the success of such defense was on the
merits or otherwise, to the maximum extent permitted by law. The trustees,
officers and shareholders of the Trust also have the right, in certain
circumstances, to be paid in advance for expenses incurred in connection with
any such proceedings.

                                      -32-
<PAGE>

ITEM 16. EXHIBITS.

         Item     Description
         ----     -----------

         4        Rights Agreement, dated as of December 17, 1997, by and
                  between the Trust and the Rights Agent (including as Exhibit A
                  thereto the Form of Articles Supplementary Relating to
                  Designation, Preferences, and Rights of Series A Junior
                  Participating Preferred Shares of Liberty Property Trust, as
                  Exhibit B thereto the Form of Rights Certificate and as
                  Exhibit C thereto the Summary of Rights to Purchase Series A
                  Junior Participating Preferred Shares). (Incorporated by
                  reference to Exhibit 1 to the Trust's Registration Statement
                  on Form 8-A filed with Commission on December 23, 1997).

         5        Opinion of Saul, Ewing, Remick & Saul LLP

         23.1     Consent of Ernst & Young LLP.

         23.2     Consent of Saul, Ewing, Remick & Saul LLP (included in
                  Exhibit 5).

         24       Powers of Attorney (included on signature pages included in
                  this Registration Statement).

ITEM 17. UNDERTAKINGS.

         (a)      The undersigned Registrant hereby undertakes:

                  (1) To file, during any period in which offers or sales are
         being made, a post-effective amendment to this Registration Statement:

                      (i)      To include any prospectus required by Section
                  10(a)(3) of the Securities Act;

                      (ii)     To reflect in the Prospectus any facts or events
                  arising after the effective date of the Registration Statement
                  (or the most recent post-effective amendment thereof) which,
                  individually or in the aggregate, represent a fundamental
                  change in the information set forth in the Registration
                  Statement. Notwithstanding the foregoing, any increase or
                  decrease in volume of securities offered (if the total dollar
                  value of securities offered would not exceed that which was
                  registered) and any deviation from the low or high end of the
                  estimated maximum offering range may be reflected in the form
                  of prospectus filed with the Commission pursuant to Rule
                  424(b) if, in the aggregate, the changes in volume and price
                  represent no more than a 20 percent change in the maximum
                  aggregate offering price set forth in the "Calculation of
                  Registration Fee" table in the effective Registration
                  Statement;

                                      -32-
<PAGE>

                      (iii)    To include any material information with
                  respect to the plan of distribution not previously disclosed
                  in the Registration Statement or any material change to such
                  information in the Registration Statement;

         provided, however, that paragraphs (i) and (ii) of this paragraph do
         not apply if the information required to be included in a
         post-effective amendment by those paragraphs is contained in periodic
         reports filed with or furnished to the Commission by the Registrant
         pursuant to Section 13 or Section 15(d) of the Exchange Act that are
         incorporated by reference in the Registration Statement.

                  (2) That, for the purpose of determining any liability under
         the Securities Act, each such post-effective amendment shall be deemed
         to be a new registration statement relating to the securities offered
         therein, and the offering of such securities at that time shall be
         deemed to be the initial bona fide offering thereof.

                  (3) To remove from registration by means of a post-effective
         amendment any of the securities being registered which remain unsold at
         the termination of the offering.

         (b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in the Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

         (c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to trustees, officers or controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a trustee, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
trustee, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

                                      -33-
<PAGE>

                        SIGNATURES AND POWERS OF ATTORNEY

         Pursuant to the requirements of the Securities Act of 1933, as amended,
the undersigned Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Malvern, Commonwealth of Pennsylvania,
on the 19th day of April, 2000.


                                                LIBERTY PROPERTY TRUST



                                                By: /s/ Willard G. Rouse III
                                                    ------------------------
                                                    Willard G. Rouse III
                                                    President and
                                                    Chief Executive Officer

         KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Willard G. Rouse III and George J.
Alburger, Jr., his or her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him or her and in his or her
name, place and stead, in any and all capacities, to sign any and all amendments
to this Registration Statement, and any additional related registration
statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as
amended (including post-effective amendments to the Registration Statement and
any such related registration statements), and to file the same, with all
exhibits thereto, and any other documents in connection therewith, granting unto
said attorneys-in-fact and agents full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or their substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.

         Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities with the above Registrant and on the dates indicated.

<TABLE>
<CAPTION>
Signature                             Title                                     Date
- ---------                             -----                                     ----
<S>                                   <C>                                       <C>
/s/ Willard G. Rouse III              Chairman of the Board of Trustees,        April 19, 2000
- ------------------------------
Willard G. Rouse III                  President and Chief Executive Officer
                                      (Principal Executive Officer)


/s/ George J. Alburger, Jr.           Chief Financial Officer                   April 19, 2000
- ------------------------------
George J. Alburger, Jr.               (Principal Financial and
                                      Accounting Officer)
</TABLE>

                                      -34-
<PAGE>

<TABLE>
<CAPTION>
Signature                             Title                                     Date
- ---------                             -----                                     ----
<S>                                   <C>                                       <C>
/s/ Frederick F. Buchholz             Trustee                                   April 19, 2000
- -----------------------------
Frederick F. Buchholz



/s/ Thomas C. DeLoach, Jr.            Trustee                                   April 19, 2000
- ---------------------------
Thomas C. DeLoach, Jr.



/s/ Joseph P. Denny                   Trustee                                   April 19, 2000
- --------------------------------
Joseph P. Denny



/s/ J. Anthony Hayden                 Trustee                                   April 19, 2000
- ------------------------------
J. Anthony Hayden



/s/ M. Leanne Lachman                 Trustee                                   April 19, 2000
- -----------------------------
M. Leanne Lachman



/s/ David L. Lingerfelt               Trustee                                   April 19, 2000
- ---------------------------------
David L. Lingerfelt



/s/ John A. Miller                    Trustee                                   April 19, 2000
- -----------------------------------
John A. Miller



/s/ Stephen B. Siegel                 Trustee                                   April 19, 2000
- ---------------------------------
Stephen B. Siegel

                                      -35-
</TABLE>


<PAGE>

                                                                  Exhibit 23.1




                         CONSENT OF INDEPENDENT AUDITORS


We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3 No. 333-00000) and related Prospectus of
Liberty Property Trust and to the incorporation by reference therein of our
report dated February 8, 2000, with respect to the consolidated financial
statements and schedule of Liberty Property Trust included in its Annual Report
(Form 10-K) for the year ended December 31, 1999, filed with the Securities and
Exchange Commission.

                                                    /s/ Ernst & Young LLP


Philadelphia, Pennsylvania
May 11, 2000


<PAGE>

                                                                    Exhibit 23.2

                                 LAW OFFICES OF
                          SAUL, EWING WEINBERG & GREEN
                                    --------
                         SAUL, EWING, REMICK & SAUL LLP
                            100 SOUTH CHARLES STREET
                         BALTIMORE, MARYLAND 21201-2773
                                 (410) 332-8600
                                    --------

                                  May 16, 2000

Liberty Property Trust
65 Valley Stream Parkway, Suite 100
Malvern, PA  19355

                  RE:      Liberty Property Trust
                           Registration Statement on Form S-8
                           ----------------------------------

Ladies and Gentlemen:

         We have acted as Maryland counsel for Liberty Property Trust, a
Maryland real estate investment trust (the "Company"), in connection with
certain matters of Maryland law arising out of the registration of 116,649
common shares of beneficial interest of the Company, $0.001 par value (the
"Shares"), proposed to be offered for resale from time to time, together or
separately, at prices and on terms to be determined at the time of offering
pursuant to a registration statement on Form S-3 (the "S-3 Registration
Statement") and the prospectus contained in the S-3 Registration Statement (the
"S-3 Prospectus").

         In connection with our representation of the Company and as a basis for
the opinions hereinafter set forth, we have examined originals or photostatic
copies of the following documents (hereinafter collectively referred to as the
"Documents"):

         a.  The S-3 Registration Statement, in the form filed by the Company
             with the Securities and Exchange Commission (the "Commission")
             under the Securities Act of 1933 (the "Act");

         b.  The S-3 Prospectus;

         c.  The Amended and Restated Declaration of Trust of the Company
             recorded on May 29, 1997 (the "Declaration of Trust");

         d.  Articles Supplementary of the Company recorded on August 7, 1997,
             Articles Supplementary of the Company recorded on December 23,
             1997, Articles Supplementary of the Company recorded on July 28,
             1999, and Articles Supplementary of the Company recorded on April
             18, 2000 (the "Articles Supplementary");


<PAGE>


Liberty Property Trust
May 16, 2000
Page 2

         e.  The Bylaws of the Company;

         f.  A certificate executed by James J. Bowes, Esquire, Secretary of the
             Company, dated May 15, 2000, as to the adoption of resolutions by
             the Board of Trustees of the Company dated April 19, 2000; and

         g.  Such other documents and matters as we have deemed necessary and
             appropriate to express the opinions set forth in this letter,
             subject to the limitations, assumptions and qualifications noted
             below.

         In expressing the opinion set forth below, we have assumed, and so far
as is known to us there are no facts inconsistent with, the following:

         1. Each of the parties (other than the Company) executing any of the
Documents has duly and validly executed and delivered each of the Documents to
which such party is a signatory, and such party's obligations set forth therein
are legal, valid and binding and are enforceable in accordance with all stated
terms except as limited (a) by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other laws relating to or affecting the
enforcement of creditors' rights or (b) by general equitable principles;

         2. Each individual executing any of the Documents on behalf of a party
is duly authorized and legally competent to do so;

         3. All Documents submitted to us as originals are authentic. All
Documents submitted to us as certified or photostatic copies conformed to the
original documents. All signatures on all such documents are genuine. All public
records reviewed or relied upon by us or on our behalf are true and complete.
All statements and information contained in the Documents are true and complete;

         4. There will be no changes in applicable law between the date of this
opinion and any date of issuance or delivery of the Shares;

         5. At the time of delivery of the Shares, all contemplated additional
actions shall have been taken and the authorization of the issuance of the
Shares will not have been modified or rescinded;

         6. The issuance, execution and delivery of the Shares, and the
compliance by the Company with the terms of the Shares, will not violate any
then-applicable law or result in a default under, breach of, or violation of any
provision of any instrument or agreement then binding on the Company, or any
restriction imposed by any court or governmental body having jurisdiction over
the Company;

         7. The consideration received or proposed to be received for the
issuance and sale of the Shares as contemplated by the Second Restated and
Amended Agreement of Limited Partnership of Liberty Property Limited
Partnership, as amended (the "Partnership Agreement") is not less than the par
value per share; and


<PAGE>


Liberty Property Trust
May 16, 2000
Page 3


         8. The aggregate number of shares of the Company which would be
outstanding after the issuance of any of the Shares and any other
contemporaneously issued or reserved common shares or preferred shares, together
with the number of common shares and preferred shares previously issued and
outstanding and the number of common shares and preferred shares previously
reserved for issuance upon the conversion or exchange of other securities issued
by the Company or Liberty Property Limited Partnership, a Pennsylvania limited
partnership of whom the Company is the sole general partner, does not exceed the
number of then-authorized shares of the Company.

         On the basis of the foregoing, and subject to the qualifications and
limitations stated herein, it is our opinion that:

         When and if the Shares have been issued and delivered in the manner and
for the consideration contemplated by the Partnership Agreement, those Shares
will be validly issued, fully paid and nonassessable.

         The foregoing opinion is limited to the laws of the State of Maryland
and we do not express any opinion herein concerning any other law. We assume no
obligation to supplement this opinion if any applicable law changes after the
date hereof or if we become aware of any facts that might change the opinions
expressed herein after the date hereof.

         We hereby consent to the filing of this opinion as an exhibit to the
S-3 Registration Statement and to the use of the name of our firm therein. In
giving this consent, we do not admit that we are within the category of persons
whose consent is required by Section 7 of the Securities Act of 1933.

                                           Very truly yours,

                                           SAUL, EWING, REMICK & SAUL LLP



                                           By:  /s/ John J. Ghingher, III
                                                -------------------------------
                                                John J. Ghingher, III, Partner



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