-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HWkibJReNa0YAKEBIkL8pg7ZcuxEe+IMVln76u9SSeAkRMMPLmNTTPfTNBtWXAso t2KmxrtAWvr9s63XdqJuQQ== 0000893220-03-000896.txt : 20030513 0000893220-03-000896.hdr.sgml : 20030513 20030513120951 ACCESSION NUMBER: 0000893220-03-000896 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20030331 FILED AS OF DATE: 20030513 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LIBERTY PROPERTY LIMITED PARTNERSHIP CENTRAL INDEX KEY: 0000921113 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 232766549 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-13132 FILM NUMBER: 03694574 BUSINESS ADDRESS: STREET 1: 65 VALLEY STREAM PKWY STREET 2: STE 100 CITY: MALVERN STATE: PA ZIP: 19355 BUSINESS PHONE: 6106481700 MAIL ADDRESS: STREET 1: 65 VALLEY STREAM PKWY STREET 2: SUITE 100 CITY: MALVERN STATE: PA ZIP: 19355 FORMER COMPANY: FORMER CONFORMED NAME: ROUSE & ASSOCIATES LTD PART DATE OF NAME CHANGE: 19940331 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LIBERTY PROPERTY TRUST CENTRAL INDEX KEY: 0000921112 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 237768996 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-13130 FILM NUMBER: 03694573 BUSINESS ADDRESS: STREET 1: 65 VALLEY STREAM PKWY STREET 2: STE 100 CITY: MALVERN STATE: PA ZIP: 19355 BUSINESS PHONE: 6106481700 MAIL ADDRESS: STREET 1: 65 VALLEY STREAM PKWY STREET 2: SUITE 100 CITY: MALVERN STATE: PA ZIP: 19355 FORMER COMPANY: FORMER CONFORMED NAME: ROUSE & ASSOCIATES PROPERTY TRUST DATE OF NAME CHANGE: 19940421 10-Q 1 w86212e10vq.htm FORM 10-Q LIBERTY PROPERTY TRUST e10vq
 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

     
(Mark One)
   
þ
  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 
    For the quarterly period ended March 31, 2003
 
or
 
o
   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 
    For the transition period from           to
     
Commission file numbers:
   1-13130 (Liberty Property Trust)
    1-13132 (Liberty Property Limited Partnership)

Liberty Property Trust

Liberty Property Limited Partnership
(Exact name of registrants as specified in their governing documents)
     
Maryland (Liberty Property Trust)   23-7768996
Pennsylvania (Liberty Property Limited Partnership)   23-2766549
(State or other jurisdiction
of incorporation or organization)		   (I.R.S. Employer
Identification Number)
 
65 Valley Stream Parkway, Suite 100,
Malvern, Pennsylvania		  
19355
(Address of Principal Executive Offices)
   (Zip Code)

Registrants’ telephone number, including area code

(610) 648-1700

      Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve (12) months (or for such shorter period that the registrants were required to file such reports) and (2) have been subject to such filing requirements for the past ninety (90) days.     Yes þ          No o

      Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).     Yes þ          No o

      On May 7, 2003, 78,388,170 Common Shares of Beneficial Interest, par value $.001 per share, of Liberty Property Trust were outstanding.

 

LIBERTY PROPERTY TRUST/LIBERTY PROPERTY LIMITED PARTNERSHIP

FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31, 2003

             
Index Page
Part I.
  Financial Information        
Item 1.
  Financial Statements (unaudited)        
    Consolidated balance sheets of Liberty Property Trust at March 31, 2003 and December 31, 2002     2  
    Consolidated statements of operations of Liberty Property Trust for the three months ended March 31, 2003 and March 31, 2002     3  
    Consolidated statements of cash flows of Liberty Property Trust for the three months ended March 31, 2003 and March 31, 2002     4  
    Notes to Consolidated Financial Statements for Liberty Property Trust     5  
    Consolidated balance sheets of Liberty Property Limited Partnership at March 31, 2003 and December 31, 2002     9  
    Consolidated statements of operations of Liberty Property Limited Partnership for the three months ended March 31, 2003 and March 31, 2002     10  
    Consolidated statements of cash flows of Liberty Property Limited Partnership for the three months ended March 31, 2003 and March 31, 2002     11  
    Notes to Consolidated Financial Statements for Liberty Property Limited Partnership     12  
Item 2.
  Management’s Discussion and Analysis of Financial Condition and Results of Operations     16  
Item 3.
  Quantitative and Qualitative Disclosures about Market Risks     22  
Item 4.
  Controls and Procedures     22  
Part II.
  Other Information     23  
Signatures for Liberty Property Trust     25  
Certifications for Liberty Property Trust     26  
Signatures for Liberty Property Limited Partnership     28  
Certifications for Liberty Property Limited Partnership     29  
Exhibit Index     31  

1

 

CONSOLIDATED BALANCE SHEETS OF LIBERTY PROPERTY TRUST

(In thousands, except share amounts)
                   
March 31, December 31,
2003 2002
(Unaudited)
ASSETS
                
Real estate:
               
 
Land and land improvements
  $ 525,896     $ 504,808  
 
Buildings and improvements
    3,129,640       3,048,676  
 
Less accumulated depreciation
    (509,438 )     (485,206 )
     
     
 
Operating real estate
    3,146,098       3,068,278  
Development in progress
    90,100       163,379  
Land held for development
    164,661       163,142  
     
     
 
Net real estate
    3,400,859       3,394,799  
Cash and cash equivalents
    29,840       11,071  
Accounts receivable
    14,479       14,349  
Deferred financing and leasing costs, net of accumulated amortization (2003, $77,659; 2002, $75,833)
    80,196       71,544  
Investment in unconsolidated joint ventures
    16,163       14,963  
Prepaid expenses and other assets
    124,303       120,335  
     
     
 
Total assets
  $ 3,665,840     $ 3,627,061  
     
     
 
 
LIABILITIES
                
Mortgage loans
  $ 314,341     $ 315,263  
Unsecured notes
    1,428,739       1,418,924  
Credit facility
    158,000       132,000  
Accounts payable
    27,520       24,116  
Accrued interest
    19,958       32,571  
Dividend payable
    48,488       48,040  
Other liabilities
    93,746       96,119  
     
     
 
Total liabilities
    2,090,792       2,067,033  
 
Minority interest
    206,992       208,439  
 
SHAREHOLDERS’ EQUITY
                
Common shares of beneficial interest, $.001 par value, 191,200,000 shares authorized, 77,384,198 (includes 59,100 in treasury) and 76,484,612 (includes 59,100 in treasury) shares issued and outstanding as of March 31, 2003 and December 31, 2002, respectively
    77       76  
Additional paid-in capital
    1,436,023       1,410,900  
Unearned compensation
    (5,708 )     (1,750 )
Distributions in excess of net income
    (61,009 )     (56,310 )
Common shares in treasury, at cost, 59,100 shares as of March 31, 2003 and December 31, 2002
    (1,327 )     (1,327 )
     
     
 
Total shareholders’ equity
    1,368,056       1,351,589  
     
     
 
Total liabilities and shareholders’ equity
  $ 3,665,840     $ 3,627,061  
     
     
 

See accompanying notes.

2

 

CONSOLIDATED STATEMENTS OF OPERATIONS OF LIBERTY PROPERTY TRUST

(Unaudited and in thousands, except per share amounts)
                   
Three Months Ended
March 31, March 31,
2003 2002
REVENUE
                
Rental
  $ 113,391     $ 105,821  
Operating expense reimbursement
    44,075       40,104  
Equity in earnings of unconsolidated joint ventures
    442       —  
Interest and other
    1,847       1,550  
     
     
 
Total revenue
    159,755       147,475  
     
     
 
EXPENSES
                
Rental property
    32,420       27,506  
Real estate taxes
    14,854       14,342  
Interest
    30,607       27,862  
General and administrative
    6,433       5,961  
Depreciation and amortization
    29,020       26,273  
     
     
 
Total expenses
    113,334       101,944  
     
     
 
Income before property dispositions and minority interest
    46,421       45,531  
Gain (loss) on property dispositions
    598       (518 )
Minority interest
    (5,607 )     (4,642 )
     
     
 
Income from continuing operations
    41,412       40,371  
Discontinued operations net of minority interest (including net gain on property dispositions of $163 for the quarter ended March 31, 2003 and $1,389 for the quarter ended March 31, 2002)
    175       1,829  
     
     
 
Net income
    41,587       42,200  
Preferred share distributions
    —       2,750  
     
     
 
Income available to common shareholders
  $ 41,587     $ 39,450  
     
     
 
Earnings per share
                
 
Basic:
               
 
Income from continuing operations
  $ .54     $ .51  
 
Income from discontinued operations
    .00       .02  
     
     
 
 
Income per common share — basic
  $ .54     $ .53  
     
     
 
 
Diluted:
               
 
Income from continuing operations
  $ .53     $ .51  
 
Income from discontinued operations
    .00       .02  
     
     
 
 
Income per common share — diluted
  $ .53     $ .53  
     
     
 
Distributions per common share
  $ .60     $ .59  
     
     
 
Weighted average number of common shares outstanding
               
 
Basic
    76,814       73,899  
 
Diluted
    77,851       75,103  
     
     
 

See accompanying notes.

3

 

CONSOLIDATED STATEMENTS OF CASH FLOWS OF LIBERTY PROPERTY TRUST

(Unaudited and in thousands)
                   
Three Months Ended
March 31, March 31,
2003 2002
OPERATING ACTIVITIES
                
Net income
  $ 41,587     $ 42,200  
Adjustments to reconcile net income to net cash provided by operating activities:
               
 
Depreciation and amortization
    29,029       26,506  
 
Amortization of deferred financing costs
    913       908  
 
Equity in earnings of unconsolidated joint ventures
    (442 )     —  
 
Minority interest in net income
    5,615       4,734  
 
Gain on property dispositions
    (761 )     (871 )
 
Noncash compensation
    419       1,188  
Changes in operating assets and liabilities:
               
 
Accounts receivable
    (130 )     (6,273 )
 
Prepaid expenses and other assets
    (4,362 )     (4,362 )
 
Accounts payable
    3,404       (742 )
 
Accrued interest
    (12,613 )     (12,117 )
 
Other liabilities
    (2,373 )     1,646  
     
     
 
Net cash provided by operating activities
    60,286       52,817  
     
     
 
INVESTING ACTIVITIES
                
Investment in properties
    (21,588 )     (18,987 )
Investment in unconsolidated joint ventures, net
    (758 )     —  
Proceeds from disposition of properties/land
    5,040       14,924  
Investment in development in progress
    (11,409 )     (33,490 )
Investment in land held for development
    (925 )     (9,796 )
Increase in deferred leasing costs
    (5,122 )     (4,562 )
     
     
 
Net cash used in investing activities
    (34,762 )     (51,911 )
     
     
 
FINANCING ACTIVITIES
                
Net proceeds from issuance of common shares
    19,841       15,317  
Proceeds from issuance of unsecured notes
    3,683       —  
Proceeds from mortgage loans
    100       9,695  
Repayments of mortgage loans
    (1,892 )     (1,896 )
Proceeds from credit facility
    202,000       40,000  
Repayments on credit facility
    (176,000 )     (10,000 )
Increase in deferred financing costs
    (2,492 )     —  
Distributions paid on common shares
    (45,806 )     (43,430 )
Distributions paid on preferred shares
    —       (2,750 )
Distributions paid on units
    (6,189 )     (5,032 )
     
     
 
Net cash (used in) provided by financing activities
    (6,755 )     1,904  
     
     
 
Increase in cash and cash equivalents
    18,769       2,810  
Cash and cash equivalents at beginning of year
    11,071       19,390  
     
     
 
Cash and cash equivalents at end of year
  $ 29,840     $ 22,200  
     
     
 
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS
                
Write-off of fully depreciated property and deferred costs
  $ 3,962     $ 649  
Acquisition of properties
    (870 )     —  
Assumption of mortgage loans
    870       —  
     
     
 

See accompanying notes.

4

 

LIBERTY PROPERTY TRUST

 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
March 31, 2003
 
Note 1: Basis of Presentation

      The accompanying unaudited consolidated financial statements of Liberty Property Trust (the “Trust”) and its subsidiaries, including Liberty Property Limited Partnership (the “Operating Partnership”) (the Trust, Operating Partnership and their respective subsidiaries referred to collectively as the “Company”), have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by US GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K of the Trust and the Operating Partnership for the year ended December 31, 2002. In the opinion of management, all adjustments (consisting solely of normal recurring adjustments) necessary for a fair presentation of the financial statements for these interim periods have been included. The results of interim periods are not necessarily indicative of the results to be obtained for a full fiscal year. Certain amounts from prior periods have been reclassified to conform to current period presentation.

Income Per Share

      The following table sets forth the computation of basic and diluted income per common share for the three months ended March 31, 2003 and 2002 (in thousands except per share amounts):
                                                 
For the Three Months Ended March 31, 2003 For the Three Months Ended March 31, 2002
Weighted Weighted Per
Income Average Shares Per Share Income Average Shares Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
Net income
  $ 41,587                     $ 42,200                  
Less: Preferred share distributions
    —                       (2,750 )                
     
                     
                 
Basic income per common share
                                               
Income available to common shareholders
    41,587       76,814     $ .54       39,450       73,899     $ .53  
                     
                     
 
Dilutive shares for long-term compensation plans
    —       1,037               —       1,204          
     
     
             
     
         
Diluted income per common share
                                               
Income available to common shareholders and assumed conversions
  $ 41,587       77,851     $ .53     $ 39,450       75,103     $ .53  
     
     
     
     
     
     
 

Stock Based Compensation

      At March 31, 2003, the Company had a share-based employee compensation plan. Prior to 2003, the Company accounted for the plan under the recognition and measurement provisions of APB Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations. No share-based employee compensation cost is reflected in 2002 net income, as all options granted under this plan had an exercise price equal to the market value of the underlying common share on the date of grant. Effective January 1, 2003, the Company adopted the fair value recognition provisions of FASB Statement No. 123, Accounting for Stock-Based Compensation, prospectively to all employee awards granted, modified, or settled after January 1, 2003. Option awards under the Company’s plan vest over three years. Therefore, the cost related to share-based employee compensation included in the determination of net income for 2002 and 2003 is less than that which would have been recognized if the fair value based method had been applied to all awards since the original

5

 

LIBERTY PROPERTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

effective date of Statement 123. The following table illustrates the effect on net income and earnings per share if the fair value based method had been applied to all outstanding and unvested awards in each period.

     

                   
Three Months Ended
March 31,
2003 2002
(In thousands)
Income available to common shareholders
  $ 41,587     $ 39,450  
Add: Share-based employee compensation expense included in reported net income
    9       —  
Deduct: Total share-based employee compensation expense determined under fair value based method for all awards
    (500 )     (462 )
     
     
 
Pro forma net income
  $ 41,096     $ 38,988  
     
     
 
Earnings per share:
               
 
Basic — as reported
  $ .54     $ .53  
 
Basic — pro forma
  $ .54     $ .53  
 
Diluted — as reported
  $ .53     $ .53  
 
Diluted — pro forma
  $ .53     $ .52  
 
Note 2: Organization

      The Trust is a self-administered and self-managed Maryland real estate investment trust (a “REIT”). Substantially all of the Trust’s assets are owned directly or indirectly, and substantially all of the Trust’s operations are conducted directly or indirectly, by the Operating Partnership. The Trust is the sole general partner and also a limited partner of the Operating Partnership, owning 95.5% of the common equity of the Operating Partnership at March 31, 2003. The Company provides leasing, property management, development, acquisition, and other tenant-related services for a portfolio of industrial and office properties which are located principally within the Southeastern, Mid-Atlantic and Midwestern United States.

Note 3:     Segment Information

      The Company reviews the performance of the portfolio on a geographical basis. The following regions are considered the Company’s reportable segments: Southeastern Pennsylvania; New Jersey; Lehigh Valley, Pennsylvania; Virginia; the Carolinas; Jacksonville, Florida; Minneapolis, Minnesota; Detroit, Michigan; and all others combined (including Maryland; Tampa, Florida; South Florida; and the United Kingdom). The Company’s reportable segments are distinct business units which are each managed separately in order to concentrate market knowledge within a geographical area. Within these reportable segments, the Company derives its revenues from its two product types: industrial properties and office properties.

      The Company evaluates the performance of the reportable segments based on property level operating income, which is calculated as rental revenue and operating expense reimbursement less rental property

6

 

LIBERTY PROPERTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

expenses and real estate taxes. The accounting policies of the reportable segments are the same as those for the Company on a consolidated basis. The operating information by segment is as follows (in thousands):

                                                                                 
For the Three Months Ended March 31, 2003
SE Pennsyl. New Jersey Lehigh Valley Virginia The Carolinas Jacksonville Minnesota Michigan All Others Total
Real estate related revenues
  $ 54,126     $ 8,722     $ 15,094     $ 12,640     $ 8,873     $ 12,092     $ 12,536     $ 16,021     $ 17,362     $ 157,466  
Rental property expenses and real estate taxes
    15,509       3,325       4,390       3,440       2,521       3,284       4,675       5,017       5,113       47,274  
     
     
     
     
     
     
     
     
     
     
 
Property level operating income
  $ 38,617     $ 5,397     $ 10,704     $ 9,200     $ 6,352     $ 8,808     $ 7,861     $ 11,004     $ 12,249       110,192  
     
     
     
     
     
     
     
     
     
         
Other income/expenses, net
                                                                            63,771  
                                                                             
 
Income before property dispositions and minority interest
                                                                            46,421  
Gain on disposition of properties
                                                                            598  
Minority interest
                                                                            (5,607 )
Discontinued operations net of minority interest
                                                                            175  
                                                                             
 
Income available to common shareholders
                                                                          $ 41,587  
                                                                             
 
                                                                                 
For the Three Months Ended March 31, 2002
SE Pennsyl. New Jersey Lehigh Valley Virginia The Carolinas Jacksonville Minnesota Michigan All Others Total
Real estate related revenues
  $ 44,965     $ 11,539     $ 14,637     $ 12,430     $ 9,029     $ 11,308     $ 12,354     $ 15,030     $ 14,633     $ 145,925  
Rental property expenses and real estate taxes
    12,788       3,690       3,248       3,165       2,717       2,615       4,527       4,852       4,246       41,848  
     
     
     
     
     
     
     
     
     
     
 
Property level operating income
  $ 32,177     $ 7,849     $ 11,389     $ 9,265     $ 6,312     $ 8,693     $ 7,827     $ 10,178     $ 10,387       104,077  
     
     
     
     
     
     
     
     
     
         
Other income/expenses, net
                                                                            58,546  
                                                                             
 
Income before property dispositions and minority interest
                                                                            45,531  
Loss on disposition of properties
                                                                            (518 )
Minority interest
                                                                            (4,642 )
Discontinued operations net of minority interest
                                                                            1,829  
Preferred share distributions
                                                                            (2,750 )
                                                                             
 
Income available to common shareholders
                                                                          $ 39,450  
                                                                             
 
 
Note 4: SFAS No. 144, “Accounting For The Impairment Or Disposal Of Long-Lived Assets”

      In accordance with SFAS No. 144 which the Company adopted on January 1, 2002, net income and gain/(loss) on the disposition of real estate for properties sold subsequent to December 31, 2001 are reflected in the consolidated statements of operations as discontinued operations. The proceeds from the disposition of properties for the quarters ended March 31, 2003 and 2002 were $3.7 million and $12.8 million, respectively.

7

 

LIBERTY PROPERTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Below is a summary of the results of operations of the properties disposed of through the respective disposition dates (in thousands):

                 
Three Months Ended
March 31, March 31,
2003 2002
Revenues
  $ 48     $ 1,104  
Operating expenses
    (4 )     (144 )
Interest expense
    (15 )     (195 )
Depreciation and amortization
    (9 )     (233 )
     
     
 
Income from operations
  $ 20     $ 532  
     
     
 

      Gain or loss on disposition on sales of land and development properties continue to be reflected as a component of income from continuing operations.

Note 5:     Credit Facility

      During the three months ended March 31, 2003, the Company replaced its unsecured revolving credit facility with a new facility which matures in January 2006. Capacity under the facility was reduced from $450 million to $350 million. Based on the Company’s present ratings, borrowings under the facility are priced at LIBOR plus 70 basis points reduced from LIBOR plus 105 basis points for the facility prior to its renewal.

 
Note 6: Impact of Recently Issued Accounting Standards

      In January 2003, the FASB issued Financial Interpretation No. 46 (“FIN No. 46”), “Consolidation of Variable Interest Entities.” The consolidation requirements of FIN No. 46 apply immediately to variable interest entities created after January 31, 2003 and applies to existing variable interest entities in the first fiscal year or interim period beginning after June 15, 2003. FIN No. 46 requires that a variable interest entity be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity’s activities or is entitled to receive a majority of the entity’s residual returns or both. It is likely that Rouse Kent Limited (“RKL”) will be consolidated into the Company’s financial statements either through the exercise of the Company’s option to buy, or through the adoption of the provisions of FIN No. 46. RKL is a full service real estate development company which, together with its affiliates, owns six properties comprising 210,000 leasable square feet. The Company does not expect its financial position or results of operations to be materially affected by this potential consolidation.

8

 

CONSOLIDATED BALANCE SHEETS OF

LIBERTY PROPERTY LIMITED PARTNERSHIP

(In thousands)
                   
Three Months Ended
March 31, December 31,
2003 2002
(Unaudited)
ASSETS
Real estate:
               
 
Land and land improvements
  $ 525,896     $ 504,808  
 
Buildings and improvements
    3,129,640       3,048,676  
 
Less accumulated depreciation
    (509,438 )     (485,206 )
     
     
 
Operating real estate
    3,146,098       3,068,278  
Development in progress
    90,100       163,379  
Land held for development
    164,661       163,142  
     
     
 
Net real estate
    3,400,859       3,394,799  
Cash and cash equivalents
    29,840       11,071  
Accounts receivable
    14,479       14,349  
Deferred financing and leasing costs, net of accumulated amortization (2003, $77,659; 2002, $75,833)
    80,196       71,544  
Investment in unconsolidated joint ventures
    16,163       14,963  
Prepaid expenses and other assets
    124,303       120,335  
     
     
 
Total assets
  $ 3,665,840     $ 3,627,061  
     
     
 
LIABILITIES
Mortgage loans
  $ 314,341     $ 315,263  
Unsecured notes
    1,428,739       1,418,924  
Credit facility
    158,000       132,000  
Accounts payable
    27,520       24,116  
Accrued interest
    19,958       32,571  
Distribution payable
    48,488       48,040  
Other liabilities
    93,746       96,119  
     
     
 
Total liabilities
    2,090,792       2,067,033  
Minority interest
    6,758       7,054  
OWNERS’ EQUITY
General partner’s equity — common units
    1,368,056       1,351,589  
Limited partners’ equity — preferred units
    135,471       135,471  
                                 — common units
    64,763       65,914  
     
     
 
Total owners’ equity
    1,568,290       1,552,974  
     
     
 
Total liabilities and owners’ equity
  $ 3,665,840     $ 3,627,061  
     
     
 

See accompanying notes.

9

 

CONSOLIDATED STATEMENTS OF OPERATIONS OF

LIBERTY PROPERTY LIMITED PARTNERSHIP

(Unaudited and in thousands)
                   
Three Months Ended
March 31, 2003 March 31, 2002
REVENUE
                
Rental
  $ 113,391     $ 105,821  
Operating expense reimbursement
    44,075       40,104  
Equity in earnings of unconsolidated joint ventures
    442       —  
Interest and other
    1,847       1,550  
     
     
 
Total revenue
    159,755       147,475  
     
     
 
EXPENSES
                
Rental property
    32,420       27,506  
Real estate taxes
    14,854       14,342  
Interest expense
    30,607       27,862  
General and administrative
    6,433       5,961  
Depreciation and amortization
    29,020       26,273  
     
     
 
Total expenses
    113,334       101,944  
     
     
 
Income before property dispositions and minority interest
    46,421       45,531  
Gain (loss) on property dispositions
    598       (518 )
Minority interest
    (518 )     —  
     
     
 
Income from continuing operations
    46,501       45,013  
Discontinued operations (including net gain on property dispositions of $163 for the quarter ended March 31, 2003 and $1,389 for the quarter ended March 31, 2002)
    183       1,921  
     
     
 
Net income
    46,684       46,934  
Preferred unit distributions
    (3,104 )     (5,403 )
     
     
 
Income available to common unitholders
  $ 43,580     $ 41,531  
     
     
 
Earnings per common unit:
                
 
Basic:
               
 
Income from continuing operations
  $ .54     $ .51  
 
Income from discontinued operations
    .00       .02  
     
     
 
 
Income per common unit — basic
  $ .54     $ .53  
     
     
 
 
Diluted:
               
 
Income from continuing operations
  $ .53     $ .51  
 
Income from discontinued operations
    .00       .02  
     
     
 
 
Income per common unit — diluted
  $ .53     $ .53  
     
     
 
Weighted average number of common units outstanding
               
 
Basic
    80,525       77,819  
 
Diluted
    81,562       79,023  
     
     
 

See accompanying notes.

10

 

CONSOLIDATED STATEMENTS OF CASH FLOWS OF

LIBERTY PROPERTY LIMITED PARTNERSHIP

(Unaudited and in thousands)
                   
Three Months Ended
March 31, 2003 March 31, 2002
OPERATING ACTIVITIES
                
Net income
  $ 46,684     $ 46,934  
Adjustments to reconcile net income to net cash provided by operating activities:
               
 
Depreciation and amortization
    29,029       26,506  
 
Amortization of deferred financing costs
    913       908  
 
Equity in earnings of unconsolidated joint ventures
    (442 )     —  
 
Minority interest in net income
    518       —  
 
Gain on property dispositions
    (761 )     (871 )
 
Noncash compensation
    419       1,188  
Changes in operating assets and liabilities:
               
 
Accounts receivable
    (130 )     (6,273 )
 
Prepaid expenses and other assets
    (4,362 )     (4,362 )
 
Accounts payable
    3,404       (742 )
 
Accrued interest
    (12,613 )     (12,117 )
 
Other liabilities
    (2,373 )     1,646  
     
     
 
Net cash provided by operating activities
    60,286       52,817  
     
     
 
INVESTING ACTIVITIES
                
Investment in properties
    (21,588 )     (18,987 )
Investment in unconsolidated joint ventures, net
    (758 )     —  
Proceeds from disposition of properties/land
    5,040       14,924  
Investment in development in progress
    (11,409 )     (33,490 )
Increase in land held for development
    (925 )     (9,796 )
Increase in deferred leasing costs
    (5,122 )     (4,562 )
     
     
 
Net cash used in investing activities
    (34,762 )     (51,911 )
     
     
 
FINANCING ACTIVITIES
                
Proceeds from issuance of unsecured notes
    3,683       —  
Proceeds from mortgage loans
    100       9,695  
Repayments of mortgage loans
    (1,892 )     (1,896 )
Proceeds from credit facility
    202,000       40,000  
Repayments on credit facility
    (176,000 )     (10,000 )
Increase in deferred financing costs
    (2,492 )     —  
Capital contributions
    19,841       15,317  
Distributions to partners
    (51,995 )     (51,212 )
     
     
 
Net cash (used in) provided by financing activities
    (6,755 )     1,904  
     
     
 
Increase in cash and cash equivalents
    18,769       2,810  
Cash and cash equivalents at beginning of year
    11,071       19,390  
     
     
 
Cash and cash equivalents at end of year
  $ 29,840     $ 22,200  
     
     
 
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS
                
Write-off of fully depreciated property and deferred costs
  $ 3,962     $ 649  
Acquisition of properties
    (870 )     —  
Assumption of mortgage loans
    870       —  
     
     
 

See accompanying notes.

11

 

LIBERTY PROPERTY LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)
March 31, 2003
 
Note 1: Basis of Presentation

      The accompanying unaudited consolidated financial statements of Liberty Property Limited Partnership (the “Operating Partnership”) and its direct and indirect subsidiaries, have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by US GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K of the Trust and the Operating Partnership for the year ended December 31, 2002. In the opinion of management, all adjustments (consisting solely of normal recurring adjustments) necessary for a fair presentation of the financial statements for these interim periods have been included. The results of interim periods are not necessarily indicative of the results to be obtained for a full fiscal year. Certain amounts from prior periods have been reclassified to conform to current period presentation.

Income Per Unit

      The following table sets forth the computation of basic and diluted income per common unitholder for the three months ended March 31, 2003 and 2002 (in thousands except per unit amounts):
                                                 
For the Three Months Ended March 31, 2003 For the Three Months Ended March 31, 2002
Weighted Weighted
Average Average
Income Units Per Unit Income Units Per Unit
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
Net income
  $ 46,684                     $ 46,934                  
Less: Preferred unit distributions
    (3,104 )                     (5,403 )                
     
                     
                 
Basic income per common unit
                                               
Income available to common unitholders
    43,580       80,525     $ .54       41,531       77,819     $ .53  
                     
                     
 
Dilutive shares for long-term compensation plans
    —       1,037               —       1,204          
     
     
             
     
         
Diluted income per common unit
                                               
Income available to common unitholders
  $ 43,580       81,562     $ .53     $ 41,531       79,023     $ .53  
     
     
     
     
     
     
 
 
Note 2: Organization

      Liberty Property Trust (the “Trust”), the general partner of Liberty Property Limited Partnership, is a self-administered and self-managed Maryland real estate investment trust (a “REIT”). Substantially all of the Trust’s assets are owned directly or indirectly, and substantially all of the Trust’s operations are conducted directly or indirectly, by the Operating Partnership (the Trust, Operating Partnership and their respective subsidiaries, referred to collectively as, the “Company”). The Trust is the sole general partner and also a limited partner of the Operating Partnership, owning 95.5% of the common equity of the Operating Partnership at March 31, 2003. The Company provides leasing, property management, development, acquisition, and other tenant-related services for a portfolio of industrial and office properties which are located principally within the Southeastern, Mid-Atlantic and Midwestern United States.

12

 

LIBERTY PROPERTY LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 
Note 3: Segment Information

      The Company reviews the performance of the portfolio on a geographical basis. The following regions are considered the Company’s reportable segments: Southeastern Pennsylvania; New Jersey; Lehigh Valley, Pennsylvania; Virginia; the Carolinas; Jacksonville, Florida; Minneapolis, Minnesota; Detroit, Michigan; and all others combined (including Maryland; Tampa, Florida; South Florida; and the United Kingdom). The Company’s reportable segments are distinct business units which are each managed separately in order to concentrate market knowledge within a geographical area. Within these reportable segments, the Company derives its revenues from its two product types: industrial properties and office properties.

      The Company evaluates the performance of the reportable segments based on property level operating income, which is calculated as rental revenue and operating expense reimbursement less rental property expenses and real estate taxes. The accounting policies of the reportable segments are the same as those for the Company on a consolidated basis. The operating information by segment is as follows (in thousands):

                                                                                 
For the Three Months Ended March 31, 2003
SE Pennsyl. New Jersey Lehigh Valley Virginia The Carolinas Jacksonville Minnesota Michigan All Others Total
Real estate related revenues
  $ 54,126     $ 8,722     $ 15,094     $ 12,640     $ 8,873     $ 12,092     $ 12,536     $ 16,021     $ 17,362     $ 157,466  
Rental property expenses and real estate taxes
    15,509       3,325       4,390       3,440       2,521       3,284       4,675       5,017       5,113       47,274  
     
     
     
     
     
     
     
     
     
     
 
Property level operating income
  $ 38,617     $ 5,397     $ 10,704     $ 9,200     $ 6,352     $ 8,808     $ 7,861     $ 11,004     $ 12,249       110,192  
     
     
     
     
     
     
     
     
     
         
Other income/expenses, net
                                                                            63,771  
                                                                             
 
Income before property dispositions and minority interest
                                                                            46,421  
Gain on disposition of properties
                                                                            598  
Minority interest
                                                                            (518 )
Discontinued operations
                                                                            183  
Preferred unit distributions
                                                                            (3,104 )
                                                                             
 
Net income available to common unitholders
                                                                          $ 43,580  
                                                                             
 

13

 

LIBERTY PROPERTY LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

                                                                                 
For the Three Months Ended March 31, 2002
SE Pennsyl. New Jersey Lehigh Valley Virginia The Carolinas Jacksonville Minnesota Michigan All Others Total
Real estate related revenues
  $ 44,965     $ 11,539     $ 14,637     $ 12,430     $ 9,029     $ 11,308     $ 12,354     $ 15,030     $ 14,633     $ 145,925  
Rental property expenses and real estate taxes
    12,788       3,690       3,248       3,165       2,717       2,615       4,527       4,852       4,246       41,848  
     
     
     
     
     
     
     
     
     
     
 
Property level operating income
  $ 32,177     $ 7,849     $ 11,389     $ 9,265     $ 6,312     $ 8,693     $ 7,827     $ 10,178     $ 10,387       104,077  
     
     
     
     
     
     
     
     
     
         
Other income/expenses, net
                                                                            58,546  
                                                                             
 
Income before property dispositions and minority interest
                                                                            45,531  
Loss on disposition of properties
                                                                            (518 )
Minority interest
                                                                            —  
Discontinued operations net of minority interest
                                                                            1,921  
Preferred unit distributions
                                                                            (5,403 )
                                                                             
 
Net Income available to common unitholders
                                                                          $ 41,531  
                                                                             
 
 
Note 4: SFAS No. 144, “Accounting For The Impairment Or Disposal Of Long-Lived Assets”

      In accordance with SFAS No. 144 which the Company adopted on January 1, 2002, net income and gain/(loss) on the disposition of real estate for properties sold subsequent to December 31, 2001 are reflected in the consolidated statements of operations as discontinued operations. The proceeds from the disposition of properties for the quarter ended March 31, 2003 and 2002 were $3.7 million, and $12.8 million, respectively. Below is a summary of the results of operations of the properties disposed of through the respective disposition dates (in thousands):

                 
Three Months Ended
March 31, March 31,
2003 2002
Revenues
  $ 48     $ 1,104  
Operating expenses
    (4 )     (144 )
Interest expense
    (15 )     (195 )
Depreciation and amortization
    (9 )     (233 )
     
     
 
Income from operations
  $ 20     $ 532  
     
     
 

      Gain or loss on disposition on sales of land and development properties continues to be reflected as a component of income from continuing operations.

14

 

LIBERTY PROPERTY LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 
Note 5: Credit Facility

      During the three months ended March 31, 2003, the Company replaced its unsecured revolving credit facility with a new facility which matures in January 2006. Capacity under the facility was reduced from $450 million to $350 million. Based on the Company’s present ratings, borrowings under the facility are priced at LIBOR plus 70 basis points reduced from LIBOR plus 105 basis points for the facility prior to its renewal.

 
Note 6: Impact of Recently Issued Accounting Standards

      In January 2003, the FASB issued Financial Interpretation No. 46 (“FIN No. 46”), “Consolidation of Variable Interest Entities.” The consolidation requirements of FIN No. 46 apply immediately to variable interest entities created after January 31, 2003 and applies to existing variable interest entities in the first fiscal year or interim period beginning after June 15, 2003. FIN No. 46 requires that a variable interest entity be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity’s activities or is entitled to receive a majority of the entity’s residual returns or both. It is likely that Rouse Kent Limited (“RKL”) will be consolidated into the Company’s financial statements either through the exercise of the Company’s option to buy, or through the adoption of the provisions of FIN No. 46. RKL is a full service real estate development company which, together with its affiliates, owns six properties comprising 210,000 leaseable square feet. The Company does not expect its financial position or results of operations to be materially affected by this potential consolidation.

15

 

 
Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

      The Company owns and operates office and industrial real estate. As of March 31, 2003, the Company’s portfolio consisted of 659 industrial and office properties (the “Properties in Operation”) totaling approximately 51.8 million square feet. In addition, the Company had six properties under development (the “Properties under Development” and, together with the Properties in Operation, the “Properties”) and owned 980 acres of land, substantially all of which is zoned for commercial use.

      The Company focuses on creating value for shareholders and increasing profitability and cash flow. With respect to its Properties in Operation, the Company endeavors to maintain high occupancy levels while increasing rental rates. The Company pursues development opportunities that it believes will create value and yield high returns. The Company also acquires properties that it believes will create long-term value, and disposes of Properties that no longer fit within the Company’s strategic objectives or in situations where it can optimize cash proceeds. The Company’s operating results depend primarily upon income from rental operations and are substantially influenced by rental demand for the Properties in Operation.

      In 2002 and the first quarter of 2003, the continued general slowdown in the economy negatively affected occupancy rates. Additionally, the imbalance between supply of and demand for rental properties resulted in a decline in market rental rates. Although the Company has realized increases on some renewal and replacement leases, the negative occupancy and rental rate trend has been continuing for several quarters and as a result, property level operating income from the “Same Store” group of properties, exclusive of termination fees, has decreased. Additionally, tenant improvement and lease transaction costs on renewal and replacement leases have increased.

      The continued economic slowdown has also limited the Company’s ability to achieve growth in operating income from its development activity. The decline in demand for real estate has reduced the amount of development the Company is undertaking. The size of the development pipeline has continued to decrease as speculative development has been significantly reduced and build-to-suit activity has declined.

      As noted above, the Company also seeks to acquire and dispose of Properties in appropriate circumstances. The Company anticipates that it will continue to pursue select acquisition and disposition opportunities during 2003.

      The composition of the Company’s Properties in Operation as of March 31, 2003 and 2002 is as follows (in thousands, except dollars and percentages):

                                                                 
Net Rent Percent of Total Percent
Per Square Foot Total Square Feet Square Feet Occupied
March 31, March 31, March 31, March 31,
Type 2003 2002 2003 2002 2003 2002 2003 2002
Industrial — Distribution
  $ 4.52     $ 4.52       20,619       21,206       39.8 %     42.3 %     88.0 %     97.7 %
Industrial — Flex
  $ 8.82     $ 8.79       13,469       12,866       26.0 %     25.7 %     90.4 %     90.4 %
Office
  $ 14.23     $ 13.95       17,674       16,084       34.2 %     32.0 %     89.0 %     91.6 %
     
     
     
     
     
     
     
     
 
    $ 8.98     $ 8.53       51,762       50,156       100.0 %     100.0 %     89.0 %     93.9 %
     
     
     
     
     
     
     
     
 

      Geographic segment data for the three months ended March 31, 2003 is included in Note 3 to the Liberty Property Trust and Liberty Property Limited Partnership financial statements.

Forward-Looking Statements

      When used throughout this report, the words “believes,” “anticipates,” and “expects” and similar expressions are intended to identify forward-looking statements. Such statements indicate that assumptions have been used that are subject to a number of risks and uncertainties which could cause actual financial results or management plans and objectives to differ materially from those projected or expressed herein, including: the effect of national and regional economic conditions; rental demand; the Company’s ability to

16

 

identify and secure additional properties and sites that meet its criteria for acquisition or development; the availability and cost of capital; and the effect of prevailing market interest rates; and other risks described from time to time in the Company’s filings with the Securities and Exchange Commission. Given these uncertainties, readers are cautioned not to place undue reliance on such statements.

Critical Accounting Policies

      Refer to the Company’s 2002 Annual Report on Form 10-K for a discussion of critical account policies which include capitalized costs, allowances for doubtful accounts and impairment of real estate. During the three months ended March 31, 2003, there were no material changes to these policies.

Results of Operations

      The following discussion is based on the consolidated financial statements of the Company. It compares the results of operations of the Company for the three months ended March 31, 2003 with the results of operations of the Company for the three months ended March 31, 2002. As a result of the varying level of development, acquisition and disposition activities by the Company in 2003 and 2002, the overall operating results of the Company during such periods are not directly comparable. However, certain data, including the “Same Store” comparison, do lend themselves to direct comparison.

      This information should be read in conjunction with the accompanying consolidated financial statements and notes included elsewhere in this report.

 
Comparison of Three Months Ended March 31, 2003 to the Three Months Ended March 31, 2002

      Total revenue (principally rental revenue and operating expense reimbursement) increased to $159.8 million for the three months ended March 31, 2003 from $147.5 million for the three months ended March 31, 2002. This increase was primarily due to an increase in lease termination fees of approximately $6.1 million. The remaining increase resulted from the net increased investment in properties developed or acquired, net of dispositions during the years 2002 and 2003. The average gross investment in operating real estate owned for the three months ended March 31, 2003 was $3,604.5 million as compared to $3,370.9 million for the three months ended March 31, 2002.

      The operating expense recovery percentage (the ratio of operating expense reimbursement to rental property expenses and real estate taxes) decreased to 93.2% for the three months ended March 31, 2003 from 95.8% for the three months ended March 31, 2002, due to the decrease in average occupancy from period to period. Average occupancy for the three months ended March 31, 2003 was 89.8% as compared to 94.0% for the three months ended March 31, 2002.

      Rental property and real estate tax expenses increased to $47.3 million for the three months ended March 31, 2003 from $41.8 million for the three months ended March 31, 2002. This increase is due to the increase in the investment in Properties owned during the respective periods and because of the increased snow removal and utility costs relating to 2003’s severe winter.

      Property level operating income, exclusive of lease termination fees, for the “Same Store” properties (properties owned since January 1, 2002) decreased to $94.3 million for the three months ended March 31, 2003 from $99.1 million for the three months ended March 31, 2002, on a straight line basis (which recognizes rental revenue evenly over the life of the lease), and decreased to $92.3 million for the three months ended March 31, 2003 from $96.7 million for the three months ended March 31, 2002, on a cash basis. These decreases of 4.8% and 4.6%, respectively, are primarily due to decreases in occupancy. At March 31, 2003, the occupancy of the Same Store portfolio was 90.3% as compared to 94.1% at March 31, 2002.

17

 

      Set forth below is a schedule comparing the property level operating income, on a straight line basis and on a cash basis, for the Same Store properties for the three months ended March 31, 2003 and 2002 (in thousands):

                                   
Straight Line Basis Cash Basis
Three Months Ended Three Months Ended
March 31, March 31, March 31, March 31,
2003 2002 2003 2002
Rental revenue
  $ 97,611     $ 100,328     $ 95,590     $ 97,974  
Operating expenses:
                               
 
Rental property expense
    31,059       26,407       31,059       26,407  
 
Real estate taxes
    13,303       13,033       13,303       13,033  
 
Operating expense recovery
    (41,070 )     (38,186 )     (41,070 )     (38,186 )
     
     
     
     
 
Unrecovered operating expenses
    3,292       1,254       3,292       1,254  
     
     
     
     
 
Property level operating income
  $ 94,319     $ 99,074     $ 92,298     $ 96,720  
     
     
     
     
 

      General and administrative expenses increased to $6.4 million for the three months ended March 31, 2003 from $6.0 million for the three months ended March 31, 2002. These increases are primarily due to an increase in costs related to the United Kingdom operations.

      Depreciation and amortization expenses increased to $29.0 million for the three months ended March 31, 2003 from $26.3 million for the three months ended March 31, 2002. This increase is due to the increase in the investment in Properties owned during the respective periods.

      Interest expense increased to $30.6 million for the three months ended March 31, 2003 from $27.9 million for the three months ended March 31, 2002. This increase is due to an increase in the average debt outstanding for the respective periods, which was $1,883.6 million in 2003 and $1,772.0 million in 2002. Interest expense also increased because less interest was capitalized for the first quarter of 2003 compared to 2002 due to the decrease in development in progress. These increases were partially offset by decreases in the weighted average interest rates for the periods, to 6.98% in 2003 from 7.23% in 2002.

      Costs directly related to the development of rental properties and land being readied for development are capitalized. Capitalized development costs include interest, salaries, property taxes, insurance and other directly identifiable costs during the period of development. Capitalized salaries and benefits historically represent approximately 1% of the cost of developed properties brought into service. These amounts are not included in general and administrative expenses as discussed above. Capitalized interest for the three months ended March 31, 2003 was $3.2 million as compared to $5.0 million for the three months ended March 31, 2002. Included in capitalized interest costs are the interest costs relating to the Company’s $59.3 million investment (as of March 31, 2003) in its proposed downtown Philadelphia office tower.

      Implementation of SFAS No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets” requires that the operating results for real estate sold after December 31, 2001 should be reflected as discontinued operations. Sales occurring before December 31, 2001, as well as sales of land and development properties, continue to be reflected as a component of income from continuing operations.

      In the three months ended March 31, 2003, the Company realized a net gain on property dispositions of $598,000, due to the sale of one parcel of land and additional proceeds from the sale of a property developed for sale in the United Kingdom with a joint venture partner, for an aggregate of $1.4 million. In the three months ended March 31, 2002, the Company realized a loss on property dispositions of $518,000 due to the sale of two parcels of land for an aggregate of $1.4 million.

      In accordance with SFAS No. 144, net income and gain/(loss) on dispositions of real estate for properties sold subsequent to December 31, 2001 are reflected in the consolidated statements of operations as discontinued operations for all periods presented. The decrease in income from discontinued operations of $1.7 million for the three months ended March 31, 2003, as compared to the same period in 2002, is primarily

18

 

due to the larger gain on the disposition of the properties sold in the three months ended March 31, 2002 as compared to the three months ended March 31, 2003.

      As a result of the foregoing, the Company’s net income increased to $41.6 million for the three months ended March 31, 2003 from $39.5 million for the three months ended March 31, 2002.

Liquidity and Capital Resources

      As of March 31, 2003, the Company had cash and cash equivalents of $29.8 million including $3.7 million in cash held in escrow for the payment of real estate taxes.

      Net cash flow provided by operating activities increased to $60.3 million for the three months ended March 31, 2003 from $52.8 million for the three months ended March 31, 2002. This $7.5 million increase was primarily due to fluctuations in operating assets and liabilities during the respective periods. Net cash flow provided by operations is the primary source of liquidity to fund distributions to shareholders and for the recurring capital expenditures and leasing transaction costs for the Company’s Properties in Operation.

      Net cash used in investing activities decreased to $34.8 million for the three months ended March 31, 2003 from $51.9 million for the three months ended March 31, 2002. This decrease primarily resulted from a decrease in investment in development in progress and land held for development in 2003, which is consistent with the diminished opportunity to develop property due to the general slowdown in the economy. This decrease is partially offset by the reduced level of disposition activity during 2003.

      Net cash used in financing activities increased to $6.8 million for the three months ended March 31, 2003 as compared to cash provided by financing activities of $1.9 million for the three months ended March 31, 2002. This $8.7 million decrease was primarily due to costs incurred related to the restructuring of the Company’s credit facility as well as a reduced level of net borrowings under mortgage and unsecured notes obligations. Net cash provided by or used in financing activities includes proceeds from the issuance of equity and debt net of debt repayments and shareholder distributions. Cash provided by financing activities is a source of capital utilized by the Company to fund investment activities and the decrease in such funding activities for 2003 is consistent with the decrease in the level of the Company’s investment activities as described above.

      The Company believes that its undistributed cash flow from operations is adequate to fund its operating needs.

      The Company funds its development and acquisitions with long-term capital sources including proceeds from the disposition of Properties. For the year ended December 31, 2002, these activities were funded through a $450 million unsecured credit facility (the “$450 million Credit Facility”), which was replaced in January 2003, with the $350 million Credit Facility. The interest rate on borrowings under the $350 million Credit Facility fluctuates based upon ratings from Moody’s Investors Service, Inc. (“Moody’s”), Standard and Poor’s Ratings Group (“S&P”) and Fitch, Inc. (“Fitch”). The current ratings for the Company’s senior unsecured debt are Baa2, BBB and BBB from Moody’s, S&P and Fitch, respectively. At these ratings, the interest rate for borrowings under the $350 million Credit Facility is 70 basis points over LIBOR. The $350 million Credit Facility expires in January 2006.

      The Company uses debt financing to lower its overall cost of capital in an attempt to increase the return to shareholders. The Company staggers its debt maturities and maintains debt levels it considers to be prudent. In determining its debt levels, the Company considers various financial measures including the debt to gross assets ratio and the earnings to fixed charge coverage ratio. As of March 31, 2003 the Company’s debt to gross assets ratio was 45.5%, and the earnings to fixed charge coverage ratio was 2.9x. Debt to gross assets equals total long-term debt and borrowings under the $350 million Credit Facility divided by total assets plus accumulated depreciation. Earnings to fixed charges equals income before property dispositions and minority interest, including operating activity from discontinued operations, plus interest expense and depreciation and amortization divided by interest expense, including capitalized interest, plus distributions on preferred shares and units.

19

 

      As of March 31, 2003, $314.3 million in mortgage loans and $1,428.7 million in unsecured notes were outstanding with a weighted average interest rate of 7.4%. The interest rates on $1,719.5 million of mortgage loans and unsecured notes are fixed and range from 0% to 8.8%. Interest rates on $23.5 million of mortgage loans float with the base rate of the respective lending bank or a municipal bond index. The weighted average remaining term for the mortgage loans and unsecured notes is 6.4 years. The scheduled maturities of principal amortization of the Company’s mortgage loans, unsecured notes and borrowings under the $350 million Credit Facility and the related weighted average interest rates as of March 31, 2003 are as follows (in thousands, except percentages):

                                                 
Mortgages
Weighted
Principal Principal Unsecured Credit Average
Amortization Maturities Notes Facility Total Interest Rate
2003 (9 months)
  $ 5,774     $ 3,840     $ 73,739     $ —     $ 83,353       7.2 %
2004
    8,176       33,258       100,000       —       141,434       7.0 %
2005
    7,099       115,039       —       —       122,138       7.6 %
2006
    5,010       30,098       100,000       158,000       293,108       4.4 %
2007
    4,552       —       100,000       —       104,552       7.3 %
2008
    4,248       29,268       —       —       33,516       7.2 %
2009
    2,015       42,119       270,000       —       314,134       7.8 %
2010
    1,348       —       200,000       —       201,348       8.5 %
2011
    1,098       3,533       250,000       —       254,631       7.3 %
2012
    192       17,674       235,000       —       252,866       6.5 %
2018
    —       —       100,000       —       100,000       7.5 %
     
     
     
     
     
     
 
    $ 39,512     $ 274,829     $ 1,428,739     $ 158,000     $ 1,901,080       6.9 %
     
     
     
     
     
     
 

      For the remainder of 2003, $73.7 million principal amount of 7.2% unsecured debt will mature. The Company anticipates that it will refinance or retire these maturities through its available sources of capital.

General

      The Company has continued to pursue development and acquisition opportunities and the strategic disposition of certain properties. In addition, the Company has continued to focus on the performance of the Same Store portfolio. The Company attempts to outperform in its markets by maintaining higher than market occupancy levels and obtaining higher than market rental rates.

      The expiring square feet and annual net rent by year for the Properties in Operation as of March 31, 2003 are as follows (in thousands):

                                                                 
Industrial —
Distribution Industrial — Flex Office Total
Square Annual Square Annual Square Annual Square Annual
Year Feet Net Rent Feet Net Rent Feet Net Rent Feet Net Rent
2003 (9 months)
    1,354     $ 5,926       1,730     $ 14,626       1,585     $ 20,460       4,669     $ 41,012  
2004
    2,059       10,232       2,078       17,622       1,829       27,378       5,966       55,232  
2005
    2,092       11,454       1,781       15,818       2,936       41,803       6,809       69,075  
2006
    2,161       9,485       1,858       19,877       1,131       16,875       5,150       46,237  
2007
    2,468       11,276       1,280       12,470       1,722       26,688       5,470       50,434  
2008
    1,782       8,280       1,570       15,779       1,891       28,698       5,243       52,757  
Thereafter
    6,223       35,212       1,883       20,692       4,637       84,623       12,743       140,527  
     
     
     
     
     
     
     
     
 
Total
    18,139     $ 91,865       12,180     $ 116,884       15,731     $ 246,525       46,050     $ 455,274  
     
     
     
     
     
     
     
     
 

20

 

      The Company believes that its existing sources of capital will provide sufficient funds to finance its continued development and acquisition activities. The scheduled deliveries of the 822,000 square feet of Properties under Development as of March 31, 2003 are as follows (in thousands, except percentages):

                                                 
Square Feet Percent
Leased
Industrial — Industrial — March 31, Total
Scheduled In-Service Date Distribution Flex Office Total 2003 Investment
2nd Quarter 2003
    —       —       252       252       85.3 %   $ 60,262  
3rd Quarter 2003
    134       —       68       202       66.5 %     41,363  
1st Quarter 2004
    262       75       —       337       100.0 %     14,934  
3rd Quarter 2004
    —       —       31       31       42.9 %     4,869  
     
     
     
     
     
     
 
Total
    396       75       351       822       85.1 %   $ 121,428  
     
     
     
     
     
     
 

      The Company’s existing sources of capital include the public debt and equity markets, proceeds from Property dispositions and net cash provided by operating activities. Additionally, the Company expects to incur variable rate debt, including borrowings under the $350 million Credit Facility from time to time.

      The Board of Trustees has authorized a share repurchase program under which the Company may purchase up to $100 million of the Company’s Common Shares, preferred shares or convertible debentures. Through March 31, 2003, the Company purchased 59,100 Common Shares and purchased convertible debentures exchangeable into 877,950 Common Shares. The total cost for the purchase of the Common Shares and convertible debentures was approximately $21.9 million. The convertible debentures expired in 2001.

      The Company has an effective S-3 shelf registration statement on file with the Securities and Exchange Commission (the “Shelf Registration Statement”). As of May 7, 2003, pursuant to the Shelf Registration Statement, the Trust had the capacity to issue up to $688.4 million in equity securities and the Operating Partnership had the capacity to issue up to $324.3 million in debt securities.

Related Party Transactions

      Pursuant to agreements, the Company provides management services with respect to RKL (see Note 6 to the Liberty Property Trust and Liberty Property Limited Partnership financial statements), which is currently owned by certain affiliates of the Company. For the three months ended March 31, 2003, the fees for these services were $150,000. The Company pays a fee to RKL for management services which it provides for the Company’s properties owned in the United Kingdom. For the three months ended March 31, 2003, the fees for these services were $119,000. The Company had accounts receivable and loans receivable from RKL and affiliates with balances of $987,000 and $25.0 million, respectively, as of March 31, 2003. The Company recognized interest income on notes receivable from RKL of $853,000 for the three months ended March 31, 2003. The Company has the option to purchase this affiliate for nominal consideration. It is likely that RKL will be consolidated into the Company’s financial statements either through exercise of the option to buy, or through the adoption of FIN No. 46, as defined in Note 6 of the Company’s financial statements. The Company does not expect its financial position or results of operations to be materially affected by this potential consolidation.

Investment in Unconsolidated Joint Ventures

      In 2002 the Company partnered with the Public Employees’ Retirement Association of Colorado on a $123 million joint venture consisting of the Company’s southern New Jersey industrial portfolio. The Company sold or contributed 28 distribution Properties totaling approximately 3.1 million leasable square feet and approximately 43 acres of developable land. The Company retained a 25% ownership interest in the venture, and realized proceeds of approximately $109 million from the transaction. The Company will receive development, leasing and property management fees, and may receive a promoted interest if certain return thresholds are met. The venture is financed with approximately 60% leverage.

21

 

Calculation of Funds from Operations

      Management generally considers Funds from operations (as defined below) a useful financial performance measure of the operating performance of an equity REIT. Funds from operations is defined by NAREIT as net income (computed in accordance with generally accepted accounting principles (“GAAP”)), excluding gains (or losses) from sales of property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Funds from operations does not represent net income or cash flows from operations as defined by GAAP and does not necessarily indicate that cash flows will be sufficient to fund cash needs. It should not be considered as an alternative to net income as an indicator of the Company’s operating performance or to cash flows as a measure of liquidity. Funds from operations also does not represent cash flows generated from operating, investing or financing activities as defined by GAAP. Funds from operations for the three months ended March 31, 2003 and 2002 are as follows:

                   
Three Months Ended
March 31, March 31,
2003 2002
(In thousands)
Income available to common shareholders
  $ 41,587     $ 39,450  
Adjustments:
               
 
Minority interest less preferred unit distributions
    1,993       2,081  
 
Depreciation and amortization
    28,463       26,078  
 
Depreciation and amortization of unconsolidated joint ventures
    166       —  
 
Gain on disposition of properties
    (178 )     (871 )
     
     
 
Funds from operations
  $ 72,031     $ 66,738  
     
     
 

Inflation

      Inflation has remained relatively low during the last three years, and as a result, it has not had a significant impact on the Company during this period. The $350 million Credit Facility bears interest at a variable rate; therefore, the amount of interest payable under the $350 million Credit Facility will be influenced by changes in short-term interest rates, which tend to be sensitive to inflation. To the extent an increase in inflation would result in increased operating costs, such as in insurance, real estate taxes and utilities, substantially all of the tenants’ leases require the tenants to absorb these costs as part of their rental obligations. In addition, inflation also may have the effect of increasing market rental rates.

 
Item 3:      Quantitative and Qualitative Disclosures about Market Risk

      There have been no material changes to the Company’s exposure to market risk since its Annual Report on Form 10-K for the year ended December 31, 2002.

 
Item 4:      Controls and Procedures

Evaluation of Disclosure Controls and Procedures

      We maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in the reports we file with the SEC is recorded, processed, summarized and reported within the time periods specified in the rules of the SEC. Within 90 days prior to the filing of this Quarterly Report on Form 10-Q, we carried out an evaluation, under the supervision and the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the design and operation of these disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective in alerting them in a timely manner to material information relating to the Company required to be included in our periodic SEC filings.

22

 

Changes in Internal Controls

      There are no significant changes in internal controls or other factors that could significantly affect our internal controls subsequent to the date of our evaluation.

PART II:     OTHER INFORMATION

 
Item 1.      Legal Proceedings

      None.

 
Item 2.      Changes in Securities and Use of Proceeds

      None.

 
Item 3.      Defaults upon Senior Securities

      None.

 
Item 4.      Submission of Matters to a Vote of Security Holders

      None.

 
Item 5.      Other Information

      None.

 
Item 6.      Exhibits and Reports on Form 8-K

      a.     Exhibits

     
10.1
  Credit Agreement, dated as of January 16, 2003, by and among the Operating Partnership, the Trust, certain affiliated co-borrowers, the Banks named therein and Fleet National Bank, as agent for itself and the other lending institutions. (Incorporated by reference to Exhibit 10.10 filed with the Registrants’ Annual Report on Form 10-K for the year ended December 31, 2002).
10.2
  Multi-Currency Credit Agreement, dated as of January 16, 2003, by and among the Operating Partnership, the Trust, certain affiliated co-borrowers, the Banks named therein and Fleet National Bank, as agent for itself and the other lending institutions. (Incorporated by reference to Exhibit 10.1 filed with the Registrants’ Annual Report on Form 10-K for the year ended December 31, 2002).
99.1*
  Certification of the Chief Executive Officer of Liberty Property Trust pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.2*
  Certification of the Chief Financial Officer of Liberty Property Trust pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.3*
  Certification of the Chief Executive Officer of Liberty Property Trust, in its capacity as the general partner of Liberty Property Limited Partnership, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.4*
  Certification of the Chief Financial Officer of Liberty Property Trust, in its capacity as of the general partner of Liberty Property Limited Partnership, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*  Filed herewith

23

 

      b.     Reports of Form 8-K

      During the quarter ended March 31, 2003 the Registrant filed the following Current Reports on Form 8-K:

  1. Current Report on Form 8-K dated January 14, 2003 reporting Items 5 and 7 containing as Exhibits the Underwriting Agreement dated January 10, 2003 among the Registrants and the Underwriters (as defined therein) and a Statement Re: Computation of Ratio of Earnings to Fixed Charges.
 
  2. Current Report on Form 8-K dated February 11, 2003 reporting items 7 and 9 and containing as an Exhibit the Press Release dated February 10, 2003 issued by Liberty Property Trust and Liberty Property Limited Partnership.

24

 

SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

  LIBERTY PROPERTY TRUST
 
  /s/ WILLIAM P. HANKOWSKY
 
  William P. Hankowsky
  President and Chief Executive Officer

Date: May 7, 2003

  /s/ GEORGE J. ALBURGER, JR.
 
  George J. Alburger, Jr.
  Executive Vice President and Chief Financial Officer

Date: May 7, 2003

25

 

CERTIFICATION

I, William P. Hankowsky, certify that:

  1. I have reviewed this Quarterly Report on Form 10-Q of Liberty Property Trust;
 
  2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
 
  3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
 
  4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

          a)  designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

          b)  evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

          c)  presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

  5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

          a)  all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

          b)  any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

  6. The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

  By:  /s/ WILLIAM P. HANKOWSKY
 
  William P. Hankowsky
  President and Chief Executive Officer

Date: May 7, 2003

26

 

CERTIFICATION

I, George J. Alburger, Jr., certify that:

  1. I have reviewed this Quarterly Report on Form 10-Q of Liberty Property Trust;
 
  2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
 
  3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
 
  4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

          a)  designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

          b)  evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

          c)  presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

  5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

          a)  all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

          b)  any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

  6. The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

  /s/ GEORGE J. ALBURGER, JR.
 
  George J. Alburger, Jr.
  Executive Vice President and Chief Financial Officer

Date: May 7, 2003

27

 

SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

  LIBERTY PROPERTY LIMITED PARTNERSHIP

  By: LIBERTY PROPERTY TRUST
  General Partner
 
  /s/ WILLIAM P. HANKOWSKY
 
  William P. Hankowsky
  President and Chief Executive Officer

Date: May 7, 2003

  /s/ GEORGE J. ALBURGER, JR.
 
  George J. Alburger, Jr.
  Executive Vice President and Chief Financial Officer

Date: May 7, 2003

28

 

CERTIFICATION

I, William P. Hankowsky, certify that:

  1. I have reviewed this Quarterly Report on Form 10-Q of Liberty Property Limited Partnership;
 
  2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
 
  3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
 
  4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

          a)  designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

          b)  evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

          c)  presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

  5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

          a)  all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

          b)  any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

  6. The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

  By:  /s/ WILLIAM P. HANKOWSKY
 
  William P. Hankowsky
  President and Chief Executive Officer of
  Liberty Property Trust, its sole general partner

Date: May 7, 2003

29

 

CERTIFICATION

I, George J. Alburger, Jr., certify that:

  1. I have reviewed this Quarterly Report on Form 10-Q of Liberty Property Limited Partnership;
 
  2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
 
  3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
 
  4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

          a)  designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

          b)  evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

          c)  presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

  5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

          a)  all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

          b)  any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

  6. The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

  By:  /s/ GEORGE J. ALBURGER, JR.
 
  George J. Alburger, Jr.
  Executive Vice President and Chief Financial Officer of Liberty Property Trust,
  its sole general partner

Date: May 7, 2003

30

 

EXHIBIT INDEX

         
Exhibit
No. Description
  99.1     Certification of the Chief Executive Officer of Liberty Property Trust pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
  99.2     Certification of the Chief Financial Officer of Liberty Property Trust pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
  99.3     Certification of the Chief Executive Officer of Liberty Property Trust, in its capacity as the general partner of Liberty Property Limited Partnership, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
  99.4     Certification of the Chief Financial Officer of Liberty Property Trust, in its capacity as the general partner of Liberty Property Limited Partnership, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

31 EX-99.1 3 w86212exv99w1.htm CERTIFICATION OF C.E.O. exv99w1

 

Exhibit 99.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Liberty Property Trust (the “Company”) on Form 10-Q for the period ended March 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, WILLIAM P. HANKOWSKY, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that based on my knowledge:

     (1)  The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

     (2)  The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

     
/s/ WILLIAM P. HANKOWSKY
William P. Hankowsky
Chief Executive Officer		    

EX-99.2 4 w86212exv99w2.htm CERTIFICATION OF THE C.F.O. exv99w2

 

Exhibit 99.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Liberty Property Trust (the “Company”) on Form 10-Q for the period ended March 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, GEORGE J. ALBURGER, JR., Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that based on my knowledge:

     (1)  The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

     (2)  The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

     
/s/ GEORGE J. ALBURGER, JR.
George J. Alburger, Jr.
Chief Financial Officer		    

EX-99.3 5 w86212exv99w3.htm CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER exv99w3

 

Exhibit 99.3

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Quarterly Report of Liberty Property Limited Partnership (the “Company”) on Form 10-Q for the period ended March 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, WILLIAM P. HANKOWSKI, Chief Executive Officer of Liberty Property Trust (the sole general partner of the Company), certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that based on my knowledge:

     (1)  The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

     (2)  The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

     
/s/ WILLIAM P. HANKOWSKY
William P. Hankowsky
Chief Executive Officer of Liberty Property Trust,
the sole general partner of the Company		    

EX-99.4 6 w86212exv99w4.htm CERTIFICATION OF THE CHIEF FINANCIAL OFFICER exv99w4

 

Exhibit 99.4

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Quarterly Report of Liberty Property Limited Partnership (the “Company”) on Form 10-Q for the period ended March 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, GEORGE J. ALBURGER, JR., Chief Financial Officer of Liberty Property Trust (the sole general partner of the Company), certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that based on my knowledge:

     (1)  The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

     (2)  The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

     
/s/ GEORGE J. ALBURGER, JR.
George J. Alburger, Jr.
Chief Financial Officer of Liberty Property Trust,
the sole general partner of the Company		    

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