10-Q

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, 2005

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	(I.R.S. Employer
of incorporation or organization)	Identification Number)
500 Chesterfield Parkway,
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 3, 2005, 87,044,077 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 period ended March 31, 2005

Index		Page
Part I.	Financial Information
Item 1.	Financial Statements (unaudited)
	Condensed consolidated balance sheets of Liberty Property Trust at March 31, 2005 and December 31, 2004		3
	Condensed consolidated statements of operations of Liberty Property Trust for the three months ended March 31, 2005 and March 31, 2004		4
	Condensed consolidated statements of cash flows of Liberty Property Trust for the three months ended March 31, 2005 and March 31, 2004		5
	Notes to Condensed consolidated financial statements of Liberty Property Trust		6
	Condensed consolidated balance sheets of Liberty Property Limited Partnership at March 31, 2005 and December 31, 2004		10
	Condensed consolidated statements of operations of Liberty Property Limited Partnership for the three months ended March 31, 2005 and March 31, 2004		11
	Condensed consolidated statements of cash flows of Liberty Property Limited Partnership for the three months ended March 31, 2005 and March 31, 2004		12
	Notes to Condensed consolidated financial statements of Liberty Property Limited Partnership		13
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		16
Item 3.	Quantitative and Qualitative Disclosures about Market Risks		23
Item 4.	Controls and Procedures		23
Part II.	Other Information		24
Signatures for Liberty Property Trust			26
Signatures for Liberty Property Limited Partnership			27
Exhibit Index			28
AMENDED AND RESTATED SHARE INCENTIVE PLAN
CERTIFICATIONS OF CEO REQUIRED BY RULE 13A-14(A)
CERTIFICATIONS OF CFO REQUIRED BY RULE 13A-14(A)
CERTIFICATIONS OF CEO REQUIRED BY RULE 13A-14(A)
CERTIFICATIONS OF CFO REQUIRED BY RULE 13A-14(A)
CERTIFICATIONS OF CEO REQUIRED BY RULE 13A-14(B)
CERTIFICATIONS OF CFO REQUIRED BY RULE 13A-14(B)
CERTIFICATIONS OF CEO REQUIRED BY RULE 13A-14(B)
CERTIFICATIONS OF CFO REQUIRED BY RULE 13A-14(B)

2

CONDENSED CONSOLIDATED BALANCE SHEETS OF LIBERTY PROPERTY TRUST
(In thousands, except share amounts)

	March 31, 2005			December 31, 2004
	(Unaudited)
ASSETS
Real estate:
Land and land improvements	$	631,989		$	625,035
Building and improvements		3,660,806			3,629,508
Less accumulated depreciation		(713,406	)		(695,410	)
Operating real estate		3,579,389			3,559,133
Development in progress		184,209			81,099
Land held for development		169,397			171,122
Net real estate		3,932,995			3,811,354
Cash and cash equivalents		36,783			33,667
Restricted cash		17,932			34,626
Accounts receivable		16,042			21,502
Deferred rent receivable		68,594			66,528
Deferred financing and leasing costs, net of accumulated amortization (2005, $97,675; 2004, $91,117)		118,197			107,148
Investments in unconsolidated joint ventures		33,284			24,372
Prepaid expenses and other assets		52,652			63,630
Total assets	$	4,276,479		$	4,162,827
LIABILITIES
Mortgage loans	$	372,660		$	366,171
Unsecured notes		1,755,000			1,455,000
Credit facility		125,000			312,000
Accounts payable		21,822			24,288
Accrued interest		22,661			34,994
Dividend payable		54,933			54,485
Other liabilities		106,138			111,764
Total liabilities		2,458,214			2,358,702
Minority interest		205,165			207,866
SHAREHOLDERS’ EQUITY
Common shares of beneficial interest, $.001 par value, 191,200,000 shares authorized, 86,604,902 (includes 59,100 in treasury) and 85,734,136 (includes 59,100 in treasury) shares issued and outstanding as of March 31, 2005 and December 31, 2004, respectively		86			86
Additional paid-in capital		1,742,972			1,708,573
Accumulated other comprehensive income		22,869			25,105
Unearned compensation		(10,796	)		(6,846	)
Distributions in excess of net income		(140,704	)		(129,332	)
Common shares in treasury, at cost, 59,100 shares as of March 31, 2005 and December 31, 2004		(1,327	)		(1,327	)
Total shareholders’ equity		1,613,100			1,596,259
Total liabilities and shareholders’ equity	$	4,276,479		$	4,162,827

See accompanying notes.

3

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS OF LIBERTY PROPERTY TRUST
(Unaudited and in thousands, except per share amounts)

	Three Months Ended
	March 31, 2005			March 31, 2004
OPERATING REVENUE
Rental	$	121,819		$	114,610
Operating expense reimbursement		49,581			45,552
Total operating revenue		171,400			160,162
OPERATING EXPENSE
Rental property		38,259			34,292
Real estate taxes		15,960			15,557
General and administrative		8,313			8,482
Depreciation and amortization		35,100			32,298
Total operating expenses		97,632			90,629
Operating income		73,768			69,533
OTHER INCOME (EXPENSE)
Interest and other income		1,451			2,717
Interest expense		(33,188	)		(30,252	)
Total other income (expense)		(31,737	)		(27,535	)
Income before property dispositions, income taxes, minority interest and equity in earnings (loss) of unconsolidated joint ventures		42,031			41,998
Loss on property dispositions, including impairment		(280	)		(330	)
Income taxes		(534	)		(389	)
Minority interest		(4,249	)		(4,563	)
Equity in earnings (loss) of unconsolidated joint ventures		2,020			(405	)
Income from continuing operations		38,988			36,311
Discontinued operations, net of minority interest (including net gain on property dispositions of $7,051 and $2,097 for the three months ended March 31, 2005 and 2004)		6,613			2,360
Net income	$	45,601		$	38,671
Earnings per common share
Basic:
Income from continuing operations	$	0.45		$	0.43
Income from discontinued operations		0.08			0.03
Income per common share – basic	$	0.53		$	0.46
Diluted:
Income from continuing operations	$	0.45		$	0.42
Income from discontinued operations		0.07			0.03
Income per common share – diluted	$	0.52		$	0.45
Distributions per common share	$	0.61		$	0.605
Weighted average number of common shares outstanding
Basic		85,867			83,480
Diluted		87,274			85,102

See accompanying notes.

4

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS OF LIBERTY PROPERTY TRUST
(Unaudited and in thousands)

	Three Months Ended
	March 31, 2005			March 31, 2004
OPERATING ACTIVITIES
Net income	$	45,601		$	38,671
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		35,386			32,841
Amortization of deferred financing costs		1,152			1,041
Equity in earnings (loss) of unconsolidated joint ventures		(2,020	)		405
Minority interest in net income		4,518			4,667
Gain on property dispositions		(6,771	)		(1,767	)
Noncash compensation		1,486			938
Changes in operating assets and liabilities:
Restricted cash		16,484			(7,404	)
Accounts receivable		5,434			(4,051	)
Deferred rent receivable		(2,066	)		(2,632	)
Prepaid expenses and other assets		(14,551	)		(4,002	)
Accounts payable		(2,427	)		20,802
Accrued interest		(12,333	)		(11,845	)
Other liabilities		(5,288	)		(5,334	)
Net cash provided by operating activities		64,605			62,330
INVESTING ACTIVITIES
Investment in properties		(65,706	)		(18,833	)
Investment in unconsolidated joint ventures		(12,780	)		(1,596	)
Distributions from unconsolidated joint ventures		4,325			248
Proceeds from disposition of properties/land		28,429			6,063
Investment in development in progress		(25,329	)		(19,681	)
Investment in land held for development		(45,695	)		(5,543	)
Increase in deferred leasing costs		(14,376	)		(4,740	)
Net cash used in investing activities		(131,132	)		(44,082	)
FINANCING ACTIVITIES
Net proceeds from issuance of common shares		22,291			35,371
Proceeds from issuance of unsecured notes		296,424			—
Proceeds from mortgage loans		—			5,953
Repayments of mortgage loans		(4,239	)		(8,061	)
Proceeds from credit facility		136,500			65,500
Repayments on credit facility		(323,500	)		(49,500	)
Increase in deferred financing costs		(6	)		(571	)
Distributions paid on common shares		(52,248	)		(50,146	)
Contributions from minority interests		108			132
Distributions paid on units		(4,927	)		(5,290	)
Net cash provided by (used in) financing activities		70,403			(6,612	)
Increase in cash and cash equivalents		3,876			11,636
(Decrease) increase related to foreign currency translation		(760	)		1,060
Cash and cash equivalents at beginning of period		33,667			21,809
Cash and cash equivalents at end of period	$	36,783		$	34,505
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS
Write-off of fully depreciated property and deferred costs	$	11,435		$	698
Acquisition of properties		(11,827	)		(11,305	)
Assumption of mortgage loans		11,827			11,305

See accompanying notes.

5

Liberty Property Trust
Notes to Condensed Consolidated Financial Statements (Unaudited)
March 31, 2005

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, the Operating Partnership and their respective subsidiaries are 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, 2004. 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 Common Share

The following table sets forth the computation of basic and diluted income per common share for the three months ended March 31, 2005 and 2004 (in thousands except per share amounts):

	For the Three Months Ended March 31, 2005						For the Three Months Ended March 31, 2004
			Weighted						Weighted
			Average						Average
	Income		Shares		Per		Income		Shares		Per
	(Numerator)		(Denominator)		Share		(Numerator)		(Denominator)		Share
Basic income from continuing operations
Income from continuing operations	$	38,988		85,867	$	0.45	$	36,311		83,480	$	0.43
Dillutive shares for long-term compensation plans		—		1,407				—		1,622
Diluted income from continuing operations
Income from continuing operations and assumed conversions		38,988		87,274	$	0.45		36,311		85,102	$	0.42
Basic income from discontinued operations
Discontinued operations net of minority interest		6,613		85,867	$	0.08		2,360		83,480	$	0.03
Dillutive shares for long-term compensation plans		—		1,407				—		1,622
Diluted income from discontinued operations
Discontinued operations net of minority interest		6,613		87,274	$	0.07		2,360		85,102	$	0.03
Basic income per common share
Net income		45,601		85,867	$	0.53		38,671		83,480	$	0.46
Dillutive shares for long-term compensation plans		—		1,407				—		1,622
Diluted income per common share
Net income and assumed conversions	$	45,601		87,274	$	0.52	$	38,671		85,102	$	0.45

6

Stock Based Compensation

At March 31, 2004, 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. Effective January 1, 2003, the Company adopted the fair value recognition provisions of the Financial Accounting Standards Board’s (“FASB”) Statement of Financial Accounting Standards (“SFAS”) No. 123, “Accounting for Stock-Based Compensation,” prospectively for all employee option 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 the three months ended March 31, 2005 and 2004 is less than that which would have been recognized if the fair value based method had been applied to all option awards since the original effective date of SFAS No. 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 option awards in each period (in thousands, except per share amount).

	Three Months Ended March 31,
	2005			2004
Net income	$	45,601		$	38,671
Add: Share-based employee compensation expense included in reported net income		102			37
Deduct: Total share-based employee compensation expense determined under fair value based method for all awards		(225	)		(310	)
Pro forma net income	$	45,478		$	38,398
Income per common share:
Basic – as reported	$	0.53		$	0.46
Basic – pro forma	$	0.53		$	0.46
Diluted – as reported	$	0.52		$	0.45
Diluted – pro forma	$	0.52		$	0.45

Foreign Operations

The functional currency for the Company’s United Kingdom operation is pounds sterling. The financial statements for the United Kingdom operation are translated into US dollars prior to the consolidation of these financial statements with those of the Company. Gains and losses resulting from this translation are included in accumulated other comprehensive income as a separate component of shareholders’ equity. Other comprehensive loss was $2.2 million for the three months ended March 31, 2005 and other comprehensive income was $4.5 million for the three months ended March 31, 2004.

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 96.1% and 95.8% of the common equity of the Operating Partnership at March 31, 2005 and 2004, respectively. 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 Mid-Atlantic, Southeastern and Midwestern United States.

Note 3: Segment Information

The Company operates its portfolio of properties primarily throughout the Mid-Atlantic, Southeastern and Midwestern United States. Additionally, the Company owns certain assets in the United Kingdom. The Company reviews the performance of the portfolio on a geographical basis. As such, the following regions are considered the Company’s reportable segments:

7

Reportable Segments	Markets
Delaware Valley	Southeastern Pennsylvania; New Jersey
Midwest	Lehigh Valley, Pennsylvania; Michigan; Minnesota; Milwaukee; Chicago
Mid-Atlantic	Maryland; Piedmont Triad, N.C.; Greenville, S.C.; Richmond; Virginia Beach
Florida	Jacksonville; Orlando; Boca Raton; Tampa; Texas
United Kingdom	County of Kent

The Company’s reportable segments are distinct business units which are each managed separately in order to concentrate market knowledge within a geographic 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, 2005
	Delaware Valley				Midwest
	Southeastern				Lehigh								United
	Pennsylvania		Other		Valley		Other		Mid-Atlantic		Florida		Kingdom		Total
Operating revenue	$	47,735	$	9,848	$	21,422	$	29,787	$	32,466	$	24,415	$	5,727	$	171,400
Rental property expenses and real estate taxes		15,653		3,778		5,850		10,997		9,481		7,331		1,129		54,219
Property level operating income	$	32,082	$	6,070	$	15,572	$	18,790	$	22,985	$	17,084	$	4,598	$	117,181
Interest and other income																1,451
Interest expense																(33,188	)
General and administrative																(8,313	)
Depreciation and amortization																(35,100	)
Income before property dispositions, income taxes, minority interest and equity in earnings (loss) of unconsolidated joint ventures																42,031
Gain on property dispositions																(280	)
Income taxes																(534	)
Minority interest																(4,249	)
Equity in earnings (loss) of unconsolidated joint ventures																2,020
Discontinued operations, net of minority interest																6,613
Net income															$	45,601

For the Three Months Ended March 31, 2004
	Delaware Valley				Midwest
	Southeastern				Lehigh								United
	Pennsylvania		Other		Valley		Other		Mid-Atlantic		Florida		Kingdom		Total
Operating revenue	$	45,810	$	8,794	$	18,663	$	29,889	$	29,617	$	22,900	$	4,489	$	160,162
Rental property expenses and real estate taxes		14,175		3,224		5,717		10,545		8,337		6,634		1,217		49,849
Property level operating income	$	31,635	$	5,570	$	12,946	$	19,344	$	21,280	$	16,266	$	3,272	$	110,313
Interest and other income																2,717
Interest expense																(30,252	)
General and administrative																(8,482	)
Depreciation and amortization																(32,298	)
Income before property dispositions, income taxes, minority interest and equity in earnings (loss) of unconsolidated joint ventures																41,998
Loss on property dispositions																(330	)
Income taxes																(389	)
Minority interest																(4,563	)
Equity in earnings (loss) of unconsolidated joint ventures																(405	)
Discontinued operations, net of minority interest																2,360
Net income															$	38,671

8

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 three months ended March 31, 2005 were $29.3 million as compared to $5.5 million for the same period in 2004. 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, 2005			March 31, 2004
Revenues	$	968		$	2,125
Operating expenses		(643	)		(786	)
Interest expense		(259	)		(483	)
Depreciation and amortization		(235	)		(489	)
(Loss) income before minority interest	$	(169	)	$	367

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: Impact of Recently Issued Accounting Standards

In March 2005, the Financial Accounting Standards Board issued FASB Staff Position (FSP) FIN 46(R)-5, Implicit Variable Interests under FASB No. 46 (revised December 2003), Consolidation of Variable Interest Entities (VIE’s). The consolidation requirements of FIN 46(R)-5 are clarified under FSP FIN 46(R)-5 and expanded to include implicit variable interest as potential VIE’s. The consolidation requirements of FSP FIN 46(R)-5 apply to the first reporting period beginning after March 3, 2005. The Company was not materially impacted by the provisions of FSP FIN 46(R)-5.

Note 6: Unsecured Notes

In February 2005, the Company issued $300 million of 5.125% senior unsecured notes maturing on March 2, 2015. The proceeds from this issuance were used to pay down outstanding borrowings under the Company’s unsecured credit facility and for general corporate purposes.

9

CONDENSED CONSOLIDATED BALANCE SHEETS OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
(In thousands)

	March 31, 2005			December 31, 2004
	(Unaudited)
ASSETS
Real estate:
Land and land improvements	$	631,989		$	625,035
Building and improvements		3,660,806			3,629,508
Less accumulated depreciation		(713,406	)		(695,410	)
Operating real estate		3,579,389			3,559,133
Development in progress		184,209			81,099
Land held for development		169,397			171,122
Net real estate		3,932,995			3,811,354
Cash and cash equivalents		36,783			33,667
Restricted cash		17,932			34,626
Accounts receivable		16,042			21,502
Deferred rent receivable		68,594			66,528
Deferred financing and leasing costs, net of accumulated amortization (2005, $97,675; 2004, $91,117)		118,197			107,148
Investments in unconsolidated joint ventures		33,284			24,372
Prepaid expenses and other assets		52,652			63,630
Total assets	$	4,276,479		$	4,162,827
LIABILITIES
Mortgage loans	$	372,660		$	366,171
Unsecured notes		1,755,000			1,455,000
Credit facility		125,000			312,000
Accounts payable		21,822			24,288
Accrued interest		22,661			34,994
Distribution payable		54,933			54,485
Other liabilities		106,138			111,764
Total liabilities		2,458,214			2,358,702
Minority interest		4,076			3,980
OWNERS’ EQUITY
General partner’s equity – common units		1,613,100			1,596,259
Limited partners’ equity – preferred units		135,471			135,471
– common units		65,618			68,415
Total owners’ equity		1,814,189			1,800,145
Total liabilities and owners’ equity	$	4,276,479		$	4,162,827

See accompanying notes.

10

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
(Unaudited and in thousands, except per unit amounts)

	Three Months Ended
	March 31, 2005			March 31, 2004
OPERATING REVENUE
Rental	$	121,819		$	114,610
Operating expense reimbursement		49,581			45,552
Total operating revenue		171,400			160,162
OPERATING EXPENSE
Rental property		38,259			34,292
Real estate taxes		15,960			15,557
General and administrative		8,313			8,482
Depreciation and amortization		35,100			32,298
Total operating expenses		97,632			90,629
Operating income		73,768			69,533
OTHER INCOME (EXPENSE)
Interest and other income		1,451			2,717
Interest expense		(33,188	)		(30,252	)
Total other income (expense)		(31,737	)		(27,535	)
Income before property dispositions, income taxes, minority interest and equity in earnings (loss) of unconsolidated joint ventures		42,031			41,998
Loss on property dispositions		(280	)		(330	)
Income taxes		(534	)		(389	)
Minority interest		13			131
Equity in earnings (loss) of unconsolidated joint ventures		2,020			(405	)
Income from continuing operations		43,250			41,005
Discontinued operations (including net gain on property dispositions of $7,051 and $2,097 for the three months ended March 31, 2005 and 2004)		6,882			2,464
Net income		50,132			43,469
Preferred unit distributions		2,676			3,104
Income available to common unitholders	$	47,456		$	40,365
Earnings per common unit
Basic:
Income from continuing operations	$	0.45		$	0.43
Income from discontinued operations		0.08			0.03
Income per common unit – basic	$	0.53		$	0.46
Diluted:
Income from continuing operations	$	0.45		$	0.42
Income from discontinued operations		0.07			0.03
Income per common unit – diluted	$	0.52		$	0.45
Distributions per common unit	$	0.61		$	0.605
Weighted average number of common units outstanding
Basic		89,533			87,178
Diluted		90,940			88,800

See accompanying notes.

11

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
(Unaudited and in thousands)

	Three Months Ended
	March 31, 2005			March 31, 2004
OPERATING ACTIVITIES
Net income	$	50,132		$	43,469
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		35,386			32,841
Amortization of deferred financing costs		1,152			1,041
Equity in earnings (loss) of unconsolidated joint ventures		(2,020	)		405
Minority interest in net income		(13	)		(131	)
Gain on property dispositions		(6,771	)		(1,767	)
Noncash compensation		1,486			938
Changes in operating assets and liabilities:
Restricted cash		16,484			(7,404	)
Accounts receivable		5,434			(4,051	)
Deferred rent receivable		(2,066	)		(2,632	)
Prepaid expenses and other assets		(14,551	)		(4,002	)
Accounts payable		(2,427	)		20,802
Accrued interest		(12,333	)		(11,845	)
Other liabilities		(5,288	)		(5,334	)
Net cash provided by operating activities		64,605			62,330
INVESTING ACTIVITIES
Investment in properties		(65,706	)		(18,833	)
Investment in unconsolidated joint ventures		(12,780	)		(1,596	)
Distributions from unconsolidated joint ventures		4,325			248
Proceeds from disposition of properties/land		28,429			6,063
Investment in development in progress		(25,329	)		(19,681	)
Investment in land held for development		(45,695	)		(5,543	)
Increase in deferred leasing costs		(14,376	)		(4,740	)
Net cash used in investing activities		(131,132	)		(44,082	)
FINANCING ACTIVITIES
Proceeds from issuance of unsecured notes		296,424			—
Proceeds from mortgage loans		—			5,953
Repayments of mortgage loans		(4,239	)		(8,061	)
Proceeds from credit facility		136,500			65,500
Repayments on credit facility		(323,500	)		(49,500	)
Increase in deferred financing costs		(6	)		(571	)
Capital contributions		22,291			35,371
Distributions to partners		(57,067	)		(55,304	)
Net cash provided by (used in) financing activities		70,403			(6,612	)
Increase in cash and cash equivalents		3,876			11,636
(Decrease) increase related to foreign currency translation		(760	)		1,060
Cash and cash equivalents at beginning of period		33,667			21,809
Cash and cash equivalents at end of period	$	36,783		$	34,505
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS
Write-off of fully depreciated property and deferred costs	$	11,435		$	698
Acquisition of properties		(11,827	)		(11,305	)
Assumption of mortgage loans		11,827			11,305

See accompanying notes.

12

Liberty Property Limited Partnership
Notes to Condensed Consolidated Financial Statements (Unaudited)
March 31, 2005

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 Liberty Property Trust (the “Trust”) and the Operating Partnership for the year ended December 31, 2004. 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 Common Unit

The following table sets forth the computation of basic and diluted income per common unit for the three months ended March 31, 2005 and 2004 (in thousands, except per unit amounts):

	For the Three Months Ended March 31, 2005							For the Three Months Ended March 31, 2004
				Weighted							Weighted
				Average							Average
	Income			Units		Per		Income			Units		Per
	(Numerator)			(Denominator)		Unit		(Numerator)			(Denominator)		Unit
Income from continuing operations	$	43,250						$	41,005
Less: Preferred unit distributions		(2,676	)						(3,104	)
Basic income from continuing operations
Income from continuing operations available to common unitholders		40,574			89,533	$	0.45		37,901			87,178	$	0.43
Dillutive units for long-term compensation plans		—			1,407				—			1,622
Diluted income from continuing operations
Income from continuing operations available to common unitholders and assumed conversions		40,574			90,940	$	0.45		37,901			88,800	$	0.42
Basic income from discontinued operations
Discontinued operations		6,882			89,533	$	0.08		2,464			87,178	$	0.03
Dillutive units for long-term compensation plans		—			1,407				—			1,622
Diluted income from discontinued operations
Discontinued operations		6,882			90,940	$	0.07		2,464			88,800	$	0.03
Basic income per common unit
Income available to common unitholders		47,456			89,533	$	0.53		40,365			87,178	$	0.46
Dillutive units for long-term compensation plans		—			1,407				—			1,622
Diluted income per common unit
Income available to common unitholders and assumed conversions	$	47,456			90,940	$	0.52	$	40,365			88,800	$	0.45

Foreign Operations

The functional currency for the Company’s United Kingdom operation is pounds sterling. The financial statements for the United Kingdom operation are translated into US dollars prior to the consolidation of these financial statements with those of the Company. Gains and losses resulting from this translation are included in accumulated other comprehensive income as a component of owners’ equity. Other comprehensive loss was $2.2 million for the three months ended March 31, 2005 and other comprehensive income was $4.5 million for the three months ended March 31, 2004.

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Note 2: Organization

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, the Operating Partnership and their respective subsidiaries, are referred to collectively as, the “Company”). The Trust is the sole general partner and also a limited partner of the Operating Partnership, owning 96.1% and 95.8% of the common equity of the Operating Partnership at March 31, 2005 and 2004, respectively. 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 Mid-Atlantic, Southeastern and Midwestern United States.

Note 3: Segment Information

The Company operates its portfolio of properties primarily throughout the Mid-Atlantic, Southeastern and Midwestern United States. Additionally, the Company owns certain assets in the United Kingdom. The Company reviews the performance of the portfolio on a geographical basis, as such, the following regions are considered the Company’s reportable segments:

Reportable Segments	Markets
Delaware Valley	Southeastern Pennsylvania; New Jersey
Midwest	Lehigh Valley, Pennsylvania; Michigan; Minnesota; Milwaukee; Chicago
Mid-Atlantic	Maryland; Piedmont Triad, N.C.; Greenville, S.C.; Richmond; Virginia Beach
Florida	Jacksonville; Orlando; Boca Raton; Tampa; Texas
United Kingdom	County of Kent

The Company’s reportable segments are distinct business units which are each managed separately in order to concentrate market knowledge within a geographic 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 for the Operating Partnership by segment is as follows (in thousands):

For the Three Months Ended March 31, 2005
	Delaware Valley				Midwest
	Southeastern				Lehigh								United
	Pennsylvania		Other		Valley		Other		Mid-Atlantic		Florida		Kingdom		Total
Operating revenue	$	47,735	$	9,848	$	21,422	$	29,787	$	32,466	$	24,415	$	5,727	$	171,400
Rental property expenses and real estate taxes		15,653		3,778		5,850		10,997		9,481		7,331		1,129		54,219
Property level operating income	$	32,082	$	6,070	$	15,572	$	18,790	$	22,985	$	17,084	$	4,598	$	117,181
Interest and other income																1,451
Interest expense																(33,188	)
General and administrative																(8,313	)
Depreciation and amortization																(35,100	)
Income before property dispositions, income taxes, minority interest and equity in earnings (loss) of unconsolidated joint ventures																42,031
Loss on property dispositions																(280	)
Income taxes																(534	)
Minority interest																13
Equity in earnings (loss) of unconsolidated joint ventures																2,020
Discontinued operations																6,882
Preferred unit distributions																(2,676	)
Income available to common unitholders															$	47,456

14

For the Three Months Ended March 31, 2004
	Delaware Valley				Midwest
	Southeastern				Lehigh								United
	Pennsylvania		Other		Valley		Other		Mid-Atlantic		Florida		Kingdom		Total
Operating revenue	$	45,810	$	8,794	$	18,663	$	29,889	$	29,617	$	22,900	$	4,489	$	160,162
Rental property expenses and real estate taxes		14,175		3,224		5,717		10,545		8,337		6,634		1,217		49,849
Property level operating income	$	31,635	$	5,570	$	12,946	$	19,344	$	21,280	$	16,266	$	3,272	$	110,313
Interest and other income																2,717
Interest expense																(30,252	)
General and administrative																(8,482	)
Depreciation and amortization																(32,298	)
Income before property dispositions, income taxes, minority interest and equity in earnings (loss) of unconsolidated joint ventures																41,998
Loss on property dispositions																(330	)
Income taxes																(389	)
Minority interest																131
Equity in earnings (loss) of unconsolidated joint ventures																(405	)
Discontinued operations																2,464
Preferred unit distributions																(3,104	)
Income available to common unitholders															$	40,365

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 three months ended March 31, 2005 were $29.3 million as compared to $5.5 million for the same period in 2004. 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, 2005			March 31, 2004
Revenues	$	968		$	2,125
Operating expenses		(643	)		(786	)
Interest expense		(259	)		(483	)
Depreciation and amortization		(235	)		(489	)
(Loss) income	$	(169	)	$	367

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: Impact of Recently Issued Accounting Standards

In March 2005, the Financial Accounting Standards Board issued FASB Staff Position (FSP) FIN 46(R)-5, Implicit Variable Interests under FASB No. 46 (revised December 2003), Consolidation of Variable Interest Entities (VIE’s). The consolidation requirements of FIN 46(R)-5 are clarified under FSP FIN 46(R)-5 and expanded to include implicit variable interest as potential VIE’s. The consolidation requirements of FSP FIN 46(R)-5 apply to the first reporting period beginning after March 3, 2005. The Company was not materially impacted by the provisions of FSP FIN 46(R)-5.

Note 6: Unsecured Notes

In February 2005, the Company issued $300 million of 5.125% senior unsecured notes maturing on March 2, 2015. The proceeds from this issuance were used to pay down outstanding borrowings under the Company’s unsecured credit facility and for general corporate purposes.

15

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

Overview

The Company has an ownership interest in and operates 441 industrial and 283 office properties located primarily in the Mid-Atlantic, Southeastern and Midwestern United States (the “Properties in Operation”) totaling 61.9 million square feet. In addition, as of March 31, 2005, the Company had 20 properties under development (the “Properties under Development” and, together with the Properties in Operation, the “Properties”) and owned 1,652 acres of land, substantially all of which is zoned for commercial use. Included within the 441 industrial properties above are 27 properties comprising 3.2 million square feet and included within the land above are 268 acres of developable land all owned by unconsolidated joint ventures.

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 acceptable returns. The Company also acquires properties which it believes will create long-term value, and disposes of Properties which 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 2005 the Company continued to experience the effects of the generally slow real estate economy that has persisted since 2002. This economy has presented a particularly difficult real estate market for landlords. These circumstances impacted many aspects of the Company’s business.

Revenue from the Properties in Operation which represents over 90% of the Company’s revenue, was subjected to market conditions characterized by an oversupply of leaseable space and soft demand. These conditions resulted in downward pressure on rental rates and upward pressure on lease transaction costs. In the face of these conditions, the Company successfully leased 2.3 million square feet during the three months ended March 31, 2005 and attained occupancy of 91.3% as of that date, which it believes represents performance which is substantially better than market. The Company believes that these trends for the Properties in Operation (i.e., oversupply of leaseable space, downward pressure on rents, upward pressure on transaction costs), which have persisted in 2003 and 2004, will continue in the aggregate for the remainder of 2005, notwithstanding improvements in some markets. Although rental rates in certain markets are starting to stabilize and there will be selected increases in rents on renewal or replacement leases, generally rents on renewal or replacement leases for 2005 will be less than rents on expiring leases.

During the three months ended March 31, 2005, conditions for the acquisition of properties were very competitive. The Company, however, acquired five buildings representing 1.0 million square feet and a Total Investment of $64.6 million. These acquisitions generally served to increase the presence or balance the product mix in markets the Company believes to have significant potential. For 2005, the Company believes that property acquisitions will be in the $200 to $300 million range and certain of the acquired properties will be either vacant or under leased. The Company believes that these properties are more attractively priced and will positively contribute to earnings upon lease up and stabilization.

Dispositions of Properties which no longer fit within the Company’s strategic objectives or in situations where the Company can optimize cash proceeds continued in the first quarter of 2005. During the first quarter, the Company sold two operating properties representing 294,000 square feet for proceeds of $29.3 million. In addition, an unconsolidated joint venture in which the Company has a 25% interest sold three properties representing 397,000 square feet for proceeds to the joint venture of $21.1 million. The Company anticipates that dispositions will be in the $75 to $150 million range in 2005.

In 2005, the Company continued to pursue development opportunities. During the first quarter of 2005, the Company brought into service one development property representing 31,000 square feet and a Total Investment of $3.6 million and initiated $508.4 million in real estate development, including the Comcast Center as described below. The Company believes that in 2005 build-to-suit activity will continue and that conditions in certain markets may continue to support the initiation of inventory projects (i.e., projects that are less than 75% leased prior to the commencement of construction). In January 2005, the Company commenced construction of a 1.2 million square foot, $437 million office tower in Philadelphia’s central business district it refers to as “Comcast Center.” Comcast Corporation has signed a lease for 534,000 square feet of space in this office tower.

16

The composition of the Company’s Properties in Operation as of March 31, 2005 and 2004 is as follows (in thousands, except dollars and percentages):

	Net Rent
	Per Square Foot				Total Square Feet				Percent Occupied
	March 31,				March 31,				March 31,
	2005		2004		2005		2004		2005			2004
Industrial-Distribution	$	4.27	$	4.41		29,200		25,068		93.3	%		93.0	%
Industrial-Flex	$	8.86	$	8.75		13,249		13,411		89.7	%		91.6	%
Office	$	14.37	$	14.34		19,499		18,903		89.5	%		89.4	%
	$	8.35	$	8.62		61,948		57,382		91.3	%		91.5	%

Geographic segment data for the three months ended March 31, 2005 and 2004 are 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,” “hopes” 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 identify and secure additional properties and sites that meet its criteria for acquisition or development; the availability and cost of capital; 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 (“SEC”). Given these uncertainties, readers are cautioned not to place undue reliance on such statements.

Critical Accounting Policies and Estimates

Refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004 for a discussion of critical accounting policies which include capitalized costs, allowances for doubtful accounts, impairment of real estate and intangibles. During the three months ended March 31, 2005 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, 2005 with the results of operations of the Company for the three months ended March 31, 2004. As a result of the varying levels of development, acquisition and disposition activities by the Company in 2005 and 2004, 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 condensed consolidated financial statements and notes included elsewhere in this report.

Comparison of Three Months Ended March 31, 2005 to Three Months Ended March 31, 2004.
The Company’s average gross investment in operating real estate owned for the three months ended March 31, 2005 increased to $4,273.7 million from $3,947.4 million at March 31, 2004. This increase resulted from the increased investment in real estate acquired or developed, partially offset by Property dispositions. This increased investment in operating real estate resulted in increases in rental revenue, rental property operating expenses and real estate taxes, and depreciation and amortization expense.

Total operating revenue increased to $171.4 million for the three months ended March 31, 2005 from $160.2 million for the three months ended March 31, 2004. This $11.2 million increase was primarily due to the net increase in investment in real estate. “Termination fees” which totaled $2.0 million for the three months ended March 31, 2005 as compared to $1.8 million for the same period in 2004 accounted for $0.2 million of the increase. “Termination Fees” are fees that the Company agrees to accept in consideration for permitting certain tenants to terminate their leases prior to the contractual expiration date. Termination Fees are included in rental revenue.

17

The Company evaluates the performance of the Properties in Operation by reportable segment (see Note 3 to the Company’s financial statements). The property level operating income for the Lehigh Valley and United Kingdom segments increased by 20.3% and 40.5%, respectively, for the three months ended March 31, 2005 as compared to 2004. There was no significant change in property level operating income for the Company’s other segments. The increase in the Lehigh Valley segment is primarily due to the delivery of $26.5 million in completed developments and property acquisitions of $91.6 million in 2004. The increase in the United Kingdom segment is primarily due to an increase in occupancy.

Property level operating income, exclusive of Termination Fees, for the Same Store properties decreased to $107.5 million for the three months ended March 31, 2005 from $108.5 million for the three months ended March 31, 2004, on a straight line basis (which recognizes rental revenue evenly over the life of the lease) and decreased to $105.2 million for the three months ended March 31, 2005 from $105.7 million for the three months ended March 31, 2004 on a cash basis. These decreases of 0.9% and 0.4%, respectively, were primarily due to decreases in rental rates. At March 31, 2005, the occupancy of the Same Store portfolio increased to 92.6% as compared to 92.5% at March 31, 2004.

Management generally considers the performance of the Same Store properties to be a useful financial performance measure because the results are directly comparable from period to period. Management further believes that the performance comparison should exclude Termination Fees since they are more event specific and are not representative of ordinary performance results. In addition, Same Store property level operating income exclusive of Termination Fees is considered, by management, to be a more reliable indicator of the portfolio’s baseline performance. The Same Store properties consist of the 660 properties totaling approximately 52.6 million square feet owned since January 1, 2004.

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, 2005 and 2004. Same Store property level operating income is a non-GAAP measure and does not represent income before property dispositions, income taxes and minority interest because it does not reflect the consolidated operations of the Company. Investors should review Same Store results, along with Funds from operations (see Liquidity and Resource section), GAAP net income and cash flow from operating activities, investing activities and financing activities when trying to understand the Company’s operating performance. Also, set forth below is a reconciliation of Same Store property level operating income to net income.

	Three Months Ended March 31,
	2005			2004
	(in thousands)
Same Store:
Rental revenue	$	111,727		$	111,925
Operating expenses:
Rental property expense		36,907			34,007
Real estate taxes		14,767			15,209
Operating expense recovery		(47,448	)		(45,769	)
Unrecovered operating expenses		4,226			3,447
Property level operating income		107,501			108,478
Less straight line rent		2,258			2,796
Cash basis property level operating income	$	105,243		$	105,682
Reconciliation of non-GAAP financial measure:
Property level operating income – same store	$	107,501		$	108,478
Property level operating income – properties purchased or developed subsequent to January 1, 2004		7,681			15
Termination fees		1,999			1,820
General and administrative expense		(8,313	)		(8,482	)
Depreciation and amortization expense		(35,100	)		(32,298	)
Other income (expense)		(31,737	)		(27,535	)
Loss on property dispositions		(280	)		(330	)
Income taxes		(534	)		(389	)
Minority interest		(4,249	)		(4,563	)
Equity in earnings (loss) of unconsolidated joint ventures		2,020			(405	)
Discontinued operations, net of minority interest		6,613			2,360
Net income	$	45,601		$	38,671

18

General and administrative expenses decreased to $8.3 million for the three months ended March 31, 2005 from $8.5 million for the three months ended March 31, 2004. Increases in salaries and increases in personnel consistent with the increase in the number of properties and the size of the Company were offset by decreases in costs relating to the Company’s investment in its enterprise resource planning software.

Depreciation and amortization increased to $35.1 million for the three months ended March 31, 2005 from $32.3 million for the three months ended March 31, 2004. The increase was primarily due to the increase in gross investment in operating real estate during the respective periods and particularly the increased investment in leasing costs, which are amortized over a relatively shorter period than buildings and improvements.

Interest expense increased to $33.2 million for the three months ended March 31, 2005 from $30.3 million for the three months ended March 31, 2004. This increase was due to an increase in the average debt outstanding for the respective periods, which was $2,192.9 million in 2005 and $1,899.5 million in 2004. The effect of the increases in the average debt outstanding was offset by decreases in the weighted average interest rates for the periods, to 6.63% in 2005 from 6.80% in 2004.

Costs directly related to the development of rental properties and land being readied for development are capitalized. Capitalized development costs include interest, development related salaries, property taxes, insurance and other directly identifiable costs during the period of development. Capitalized interest for the three months ended March 31, 2005 was $3.6 million as compared to $3.5 million for the three months ended March 31, 2004. Capitalized development related salaries and benefits historically represent approximately 1% of the cost of developed properties brought into service.

As a result of the foregoing, the Company’s net income increased to $45.6 million for the three months ended March 31, 2005 from $38.7 million for the three months ended March 31, 2004.

Liquidity and Capital Resources

As of March 31, 2005, the Company had cash and cash equivalents of $54.7 million, including $17.9 million in restricted cash.

Net cash flow provided by operating activities increased to $64.6 million for the three months ended March 31, 2005 from $62.3 million for the three months ended March 31, 2004. This $2.3 million increase was due to increased cash flow from operating properties due to the greater number of properties owned in 2005 compared to 2004 and also 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 increased to $131.1 million for the three months ended March 31, 2005 from $44.1 million for the three months ended March 31, 2004. This $87.0 million increase primarily resulted from an increased investment in properties and an increased investment in land held for development compared to 2004 partially offset by an increase in proceeds from the disposition of properties and land.

Net cash provided by financing activities was $70.4 million for the three months ended March 31, 2005 compared to $6.6 million used for the three months ended March 31, 2004. This $77.0 million change was primarily due to the issuance of $300 million of unsecured notes in 2005 offset by net activity on the unsecured credit facility. 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.

The Company funds its development and acquisitions with long-term capital sources including proceeds from the disposition of Properties. For the three months ended March 31, 2005, these activities were funded through a $450 million Credit Facility (the “$450 million Credit Facility”). The interest rate on borrowings under the credit facility fluctuate 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 $450 million

19

Credit Facility is 70 basis points over LIBOR. The $450 million Credit Facility expires in January 2006, and has a one year extension option.

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, 2005 the Company’s debt to gross assets ratio was 45.1%, and for the three months ended March 31, 2005, the earnings to fixed charge coverage ratio was 2.8x. Debt to gross assets equals total long-term debt and borrowings under the $450 million Credit Facility divided by total assets plus accumulated depreciation. Earnings to fixed charges equals income from continuing operations 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.

As of March 31, 2005, $372.7 million in mortgage loans and $1,755.0 million in unsecured notes were outstanding with a weighted average interest rate of 6.9%. The interest rates on $2,055.4 million of mortgage loans and unsecured notes are fixed and range from 5.125% to 9.75%. Interest rates on $72.3 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 6.1 years.

The scheduled maturities and principal amortization of the Company’s mortgage loans, unsecured notes and borrowings under the $450 million Credit Facility and the related weighted average interest rates as of March 31, 2005 are as follows (in thousands, except percentages):

	MORTGAGES										WEIGHTED
	PRINCIPAL		PRINCIPAL		UNSECURED		CREDIT				AVERAGE
	AMORTIZATION		MATURITIES		NOTES		FACILITY		TOTAL		INTEREST RATE
2005 (9 months)	$	6,627	$	145,615	$	—	$	—	$	152,242		7.22	%
2006		6,767		70,775		100,000		125,000		302,542		5.48	%
2007		5,855		1,553		100,000		—		107,408		7.26	%
2008		5,512		34,824		—		—		40,336		7.12	%
2009		3,110		46,164		270,000		—		319,274		7.78	%
2010		2,121		4,747		200,000		—		206,868		8.41	%
2011		1,713		3,533		250,000		—		255,246		7.26	%
2012		684		33,060		235,000		—		268,744		6.47	%
2014		—		—		200,000		—		200,000		5.65	%
2015		—		—		300,000		—		300,000		5.13	%
2018		—		—		100,000		—		100,000		7.50	%
	$	32,389	$	340,271	$	1,755,000	$	125,000	$	2,252,660		6.68	%

The Company anticipates that it will refinance or retire these maturities through its available source of capital.

General

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

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The expiring square feet and annual net rent by year for the Properties in Operation as of March 31, 2005 are as follows (in thousands):

	Industrial-				Industrial-
	Distribution				Flex				Office				Total
	Square		Annual		Square		Annual		Square		Annual		Square		Annual
	Feet		Net Rent		Feet		Net Rent		Feet		Net Rent		Feet		Net Rent
2005 (9 months)		2,037	$	9,760		1,493	$	11,879		2,532	$	36,767		6,062	$	58,406
2006		3,479		13,625		2,176		20,034		1,546		21,807		7,201		55,466
2007		3,582		16,580		1,842		16,982		1,916		27,560		7,340		61,122
2008		4,382		18,260		2,160		20,449		2,429		36,312		8,971		75,021
2009		2,829		13,842		1,523		14,708		2,696		42,566		7,048		71,116
2010		1,175		6,154		913		9,250		1,247		20,812		3,335		36,216
Thereafter		9,754		51,794		1,784		21,495		5,081		94,990		16,619		168,279
TOTAL		27,238	$	130,015		11,891	$	114,797		17,447	$	280,814		56,576	$	525,626

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 4.1 million square feet of Properties under Development as of March 31, 2005 are as follows (dollars in thousands):

	Square Feet
Scheduled	Industrial-		Industrial-						Percent			Total
In-Service Date	Distribution		Flex		Office		Total		Leased			Investment
2nd Quarter 2005		—		59,080		74,099		133,179		88.8	%	$	14,519
3rd Quarter 2005		117,603		—		35,157		152,760		91.9	%		16,515
4th Quarter 2005		1,133,600		—		100,000		1,233,600		91.7	%		81,062
1st Quarter 2006		—		59,080		102,000		161,080		44.0	%		21,178
2nd Quarter 2006		25,000		83,200		872,158		980,358		2.3	%		46,907
3rd Quarter 2006		—		34,500		88,855		123,355		11.2	%		20,754
4th Quarter 2006		—		—		64,515		64,515		—			11,464
Thereafter		—		—		1,239,818		1,239,818		43.1	%		437,347
TOTAL		1,276,203		235,860		2,576,602		4,088,665		49.7	%	$	649,746

The Company’s existing sources of capital include the public debt and equity markets, proceeds from Property dispositions, equity contributions by joint venture partners and net cash provided from operating activities. Additionally, the Company expects to incur variable rate debt, including borrowings under the $450 million Credit Facility, from time to time.

In February 2005, the Company consummated the sale of $300 million principal amount of 5.125% senior unsecured notes due 2015. The aggregate net proceeds from such issuance was approximately $296.4 million. The Company used the aggregate net proceeds to pay down outstanding borrowings under the $450 million Credit Facility and for general corporate purposes.

The Company has an effective S-3 shelf registration statement on file with the SEC (the “Shelf Registration Statement”). As of May 3, 2005, pursuant to the Shelf Registration Statement, the Trust had the capacity to issue up to $586.1 million in equity securities and the Operating Partnership had the capacity to issue up to $306.2 million in debt securities.

Investment in Unconsolidated Joint Ventures

As of March 31, 2005, the Company had investments in unconsolidated joint ventures, totaling $33.3 million.

Calculation of Funds from Operations

The National Association of Real Estate Investment Trusts (“NAREIT”) has issued a standard definition for Funds from operations (as defined below). The SEC has agreed to the disclosure of this non-GAAP financial measure on a per share basis in its Release No. 34-47226, Conditions for Use of Non-GAAP Financial Measures. The Company believes that the calculation of Funds from operations is helpful to investors and management as it is a measure of the Company’s operating performance that excludes depreciation and amortization and gains and losses from property dispositions. As a result, year over year comparison of Funds from operations reflects the impact on operations from trends in occupancy rates, rental rates, operating costs, development activities, general and administrative expenses, and interest costs, providing perspective not immediately apparent from net income. In addition, management believes that Funds from operations provides useful information to the investment community about the Company’s financial performance when compared to other REITs since Funds from operations is generally recognized as the standard for reporting the operating

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performance of a REIT. Funds from operations available to common shareholders 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 available to common shareholders 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 available to common shareholders also does not represent cash flows generated from operating, investing or financing activities as defined by GAAP. Funds from operations (“FFO”) available to common shareholders for the three months ended March 31, 2005, and 2004 are as follows (in thousands, except per share amounts):

	Three Months Ended
	March 31,
	2005			2004
Basic — Income available to common shareholders	$	45,601		$	38,671
Basic – income available to common shareholders per weighted average share	$	.53		$	.46
Adjustments:
Depreciation and amortization of unconsolidated joint ventures		366			886
Depreciation and amortization		34,698			32,012
Gain on property dispositions		(8,867	)		(1,767	)
Minority interest share in addback for depreciation and amortization and gain on property dispositions		(1,024	)		(1,311	)
Funds from operations available to common shareholders — basic	$	70,774		$	68,491
Basic Funds from operations available to common shareholders per weighted average share	$	.82		$	.82
Reconciliation of net income to FFO – diluted:
Diluted – income available to common shareholders	$	45,601		$	38,671
Diluted – income available to common shareholders per weighted average share	$	.52		$	.45
Adjustments:
Depreciation and amortization of unconsolidated joint ventures		366			886
Depreciation and amortization		34,698			32,012
Gain on property dispositions		(8,867	)		(1,767	)
Minority interest less preferred share distributions		1,855			1,694
Funds from operations available to common shareholders – diluted	$	73,653		$	71,496
Diluted Funds from operations available to common shareholders per weighted average share	$	.81		$	.81
Reconciliation of weighted average shares:
Weighted average common shares – all basic calculations		85,867			83,480
Dilutive shares for long term compensation plans		1,407			1,622
Diluted shares for net income calculations		87,274			85,102
Weighted average common units		3,666			3,698
Diluted shares for Funds from operations calculations		90,940			88,800

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 $450 million Credit Facility bears interest at a variable rate; therefore, the amount of interest payable under the $450 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.

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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, 2004.

Item 4: Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of its disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that its disclosure controls and procedures, as of the end of the period covered by this report, are functioning effectively to provide reasonable assurance that information required to be disclosed by the Company in its reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that are filed or submitted under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

A controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

Changes in Internal Controls

There were no changes in the Company’s internal control over financial reporting during the quarter ended March 31, 2005 that have materially affected or are reasonable likely to materially affect the Company’s internal control over financial reporting.

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Part II: Other Information

Item 1.	Legal Proceedings
	None.
Item 2.	Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities
	In February, 2005, certain individuals acquired a total of 150,000 common shares of beneficial interest of Liberty Property Trust in exchange for the same number of units of limited partnership interest in Liberty Property Limited Partnership. Such persons acquired these units of limited partnership interest in connection with their contribution to the Operating Partnership of certain assets in 1998. The exchange of the common shares of beneficial interest for the units of limited partnership interest is exempt from the registration requirement of the Securities Act of 1933, as amended, pursuant to Section 4 (2) thereunder.
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
	4.1	Eighth Supplemental Indenture, dated as of March 1, 2005, between Liberty Property Limited Partnership, as Issuer, and Bank One Trust Company, as Trustee (Incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K/A of the Registrants, filed with the Securities and Exchange Commission on March 1, 2005).
	10.1.1*†	Liberty Property Trust Amended and Restated Share Incentive Plan dated as of March 15, 2005.
	10.1.2†	Description of Compensation of Non-Employee Trustees (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of the Registrants, filed with the Securities and Exchange Commission on February 23, 2005).
	10.2†	Form of Restricted Share Grant under the Liberty Property Trust Amended and Restated Share Incentive Plan (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of the Registrants, filed with the Securities and Exchange Commission on February 24, 2005).
	10.3†	Form of Option Grant under the Liberty Property Trust Amended and Restated Share Incentive Plan (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K of the Registrants, filed with the Securities and Exchange Commission on February 24, 2005).
	10.4†	Certain Elements of the Liberty Property Trust Executive Compensation Program (Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K of the Registrants, filed with the Securities and Exchange Commission on February 24, 2005).
	31.1*	Certifications of the Chief Executive Officer of Liberty Property Trust required by Rule 13a-14(a) under the Securities Exchange Act of 1934.
	31.2*	Certifications of the Chief Financial Officer of Liberty Property Trust required by Rule 13a-14(a) under the Securities Exchange Act of 1934.

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31.3*	Certifications of the Chief Executive Officer of Liberty Property Trust, in its capacity as the general partner of Liberty Property Limited Partnership, required by Rule 13a-14(a) under the Securities Exchange Act of 1934.
31.4*	Certifications of the Chief Financial Officer of Liberty Property Trust, in its capacity as the general partner of Liberty Property Limited Partnership, required by Rule 13a-14(a) under the Securities Exchange Act of 1934.
32.1*	Certifications of the Chief Executive Officer of Liberty Property Trust required under Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)
32.2*	Certifications of the Chief Financial Officer of Liberty Property Trust required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)
32.3*	Certifications of the Chief Executive Officer of Liberty Property Trust, in its capacity as the general partner of Liberty Property Limited Partnership, required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)
32.4*	Certifications of the Chief Financial Officer of Liberty Property Trust, in its capacity as the general partner of Liberty Property Limited Partnership, required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)

*	Filed herewith.
†	Represents a compensatory plan or arrangement.

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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	May 6, 2005
William P. Hankowsky	Date
President and Chief Executive Officer
/s/ GEORGE J. ALBURGER, JR.	May 6, 2005
George J. Alburger, Jr.	Date
Executive Vice President and Chief Financial Officer

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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	May 6, 2005
William P. Hankowsky	Date
President and Chief Executive Officer
/s/ GEORGE J. ALBURGER, JR.	May 6, 2005
George J. Alburger, Jr.	Date
Executive Vice President and Chief Financial Officer

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EXHIBIT INDEX

EXHIBIT NO.	DESCRIPTION
10.1.1†	Liberty Property Trust Amended and Restated Share Incentive Plan dated as of March 15, 2005.
31.1	Certifications of the Chief Executive Officer of Liberty Property Trust required by Rule 13a-14(a) under the Securities Exchange Act of 1934.
31.2	Certifications of the Chief Financial Officer of Liberty Property Trust required by Rule 13a-14(a) under the Securities Exchange Act of 1934.
31.3	Certifications of the Chief Executive Officer of Liberty Property Trust, in its capacity as the general partner of Liberty Property Limited Partnership, required by Rule 13a-14(a) under the Securities Exchange Act of 1934.
31.4	Certifications of the Chief Financial Officer of Liberty Property Trust, in its capacity as the general partner of Liberty Property Limited Partnership, required by Rule 13a-14(a) under the Securities Exchange Act of 1934.
32.1	Certifications of the Chief Executive Officer of Liberty Property Trust required under Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)
32.2	Certifications of the Chief Financial Officer of Liberty Property Trust required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)
32.3	Certifications of the Chief Executive Officer of Liberty Property Trust, in its capacity as the general partner of Liberty Property Limited Partnership, required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)
32.4	Certifications of the Chief Financial Officer of Liberty Property Trust, in its capacity as the general partner of Liberty Property Limited Partnership, required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)

†  Represents a Compensatory plan or arrangement.

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EX-10.1.1

Exhibit 10.1.1

LIBERTY PROPERTY TRUST

AMENDED AND RESTATED SHARE INCENTIVE PLAN

     1. Purpose. The Liberty Property Trust Amended and Restated Share Incentive Plan (the “Plan”) is intended to recognize the contributions made to Liberty Property Trust (the “Company”) by key employees, consultants and advisors of the Company or an Affiliate (including employees who are members of the Board of Trustees) of the Company or any Affiliate, to provide such persons with additional incentive to devote themselves to the future success of the Company or an Affiliate, and to improve the ability of the Company or an Affiliate to attract, retain, and motivate individuals upon whom the Company’s sustained growth and financial success depend, by providing such persons with an opportunity to acquire or increase their proprietary interest in the Company through receipt of rights to acquire common shares of beneficial interest, $.001 par value per share (the “Shares”), in the Company, and through transfers of Shares subject to conditions of forfeiture. In addition, the Plan is intended as an additional incentive to members of the Board of Trustees (the “Trustees”) who are not employees of the Company or an Affiliate to serve on the Board of Trustees and to devote themselves to the future success of the Company by providing them with an opportunity to acquire or increase their proprietary interest in the Company through the receipt of Options to acquire Shares.

     2. Definitions. Unless the context clearly indicates otherwise, the following terms shall have the following meanings:

     (a) “Affiliate” means a corporation which is a parent corporation or a subsidiary corporation with respect to the Company within the meaning of Section 424(e) or (f) of the Code. In addition, “Affiliate” means any other entity in which the Company owns an interest which would be an Affiliate as defined in the preceding sentence but for the fact that such entity is not a corporation. Employees of any such non-corporate affiliate shall not be granted ISOs under the Plan.

     (b) “Award” means a grant of Shares subject to conditions of forfeiture made pursuant to the terms of the Plan.

     (c) “Award Agreement” means the agreement between the Company and a Grantee with respect to an Award made pursuant to the Plan.

     (d) “Awardee” means a person to whom an Award has been granted pursuant to the Plan.

     (e) “Board of Trustees” means the Board of Trustees of the Company.

     (f) “Change of Control” has the meaning as set forth in Section 10 of the Plan.

     (g) “Code” means the Internal Revenue Code of 1986, as amended.

     (h) “Committee” has the meaning set forth in Section 3 of the Plan.

     (i) “Company” means Liberty Property Trust, a Maryland real estate investment trust.

     (j) “Disability” has the meaning set forth in Section 22(e)(3) of the Code.

     (k) “Fair Market Value” has the meaning set forth in Subsection 8(b) of the Plan.

     (l) “Grantee” means a person to whom an Option or an Award has been granted pursuant to the Plan.

     (m) “ISO” means an Option granted under the Plan which is intended to qualify as an “incentive stock option” within the meaning of Section 422(b) of the Code.

     (n) “Non-employee Trustee “ means a member of the Board of Trustees who is not an employee of the Company or an Affiliate and who qualifies both as a “non-employee director” as that term is used in Rule 16b-3 and as an “outside director” as that term is used in applicable IRS regulations promulgated under Code Section 162(m).

     (o) “Non-Executive Officer Award Committee” has the meaning set forth in Section 3 of the Plan.

     (p) “Non-qualified Stock Option” means an Option granted under the Plan which is not intended to qualify, or otherwise does not qualify, as an “incentive stock option” within the meaning of Section 422(b) of the Code.

     (q) “Option” means either an ISO or a Non-qualified Stock Option granted under the Plan.

     (r) “Optionee” means a person to whom an Option has been granted under the Plan, which Option has not been exercised and has not expired or terminated.

2

     (s) “Option Document” means the document described in Section 8 or Section 9 of the Plan, as applicable, which sets forth the terms and conditions of each grant of Options.

     (t) “Option Price” means the price at which Shares may be purchased upon exercise of an Option, as calculated pursuant to Subsection 8(b) or Subsection 9(a) of the Plan.

     (u) “Restricted Share” means a Share subject to conditions of forfeiture and transfer granted to any person pursuant to an Award under the Plan.

     (v) “Retirement” shall mean a termination of an Optionee’s employment or services for the Company or an Affiliate at any time after such Optionee has (i) reached age 65, (ii) attained age 55 with at least 10 years of employment or services for the Company or an Affiliate, or (iii) attained an age of 55 or greater which when combined with the Optionee’s years of employment or services for the Company or an Affiliate equals 65.

     (w) “Rule 16b-3” means Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended, or any successor rule.

     (x) “Section 16 Officer” means any person who is an “officer” within the meaning of Rule 16a-1(f) promulgated under the Securities Exchange Act of 1934, as amended, or any successor rule.

     (y) “Shares” means the shares of beneficial interest, $.01 par value per share, of the Company.

     (z) “Trustee” means a member of the Board of Trustees.

3. Administration of the Plan. The Plan shall be administered by the Board of Trustees of the Company if all members of the Board of Trustees are Non-employee Trustees; provided, however, that the Board of Trustees may designate a committee or committee(s) of the Board of Trustees composed of two or more of its Trustees to administer the Plan in its stead. If any member of the Board of Trustees is not a Non-employee Trustee, the Board of Trustees shall (i) designate a committee composed of two or more Trustees, each of whom is a Non-employee Trustee (the “Non-employee Trustee Committee”), to operate and administer the Plan in its stead, (ii) designate two committees to operate and administer the Plan in its stead, one of such committees composed of two or more of its Non-employee Trustees (the “Non-employee Trustee Committee”) to operate and administer the Plan with respect to the Company’s Section 16 Officers and the Trustees who are not members of the Non-employee Trustee Committee, and another committee composed of two or more Trustees (which may include Trustees who are not Non-employee Trustees) to operate and administer the Plan with respect to persons other than Section 16 Officers or Trustees or (iii) designate only one committee composed of two or more Non-employee Trustees (the “Non-employee

3

Trustee Committee”) to operate and administer the Plan with respect to the Company’s Section 16 Officers and Trustees (other than those Trustees serving on the Non-employee Trustee Committee) and itself operate and administer the Plan with respect to persons other than Section 16 Officers or Trustees. Any of such committees designated by the Board of Trustees, and the Board of Trustees itself in its administrative capacity with respect to the Plan, is referred to as the “Committee.” In addition, with respect to employees who are not executive officers of the Company, the Board of Trustees may delegate certain Committee powers to a “Non-Executive Officer Award Committee,” which may consist of any one or more Trustees, pursuant to the provisions of Section 17 hereof. With the exception of the timing of grants of Options, the price at which Shares may be purchased, and the number of Shares covered by Options granted to each member of the Non-employee Trustee Committee, all of which shall be as specifically set forth in Section 9, the other provisions set forth herein, as it pertains to members of the Non-employee Trustee Committee, shall be administered by the Board of Trustees.

     (a) Meetings. The Committee shall hold meetings at such times and places as it may determine. Acts approved at a meeting by a majority of the members of the Committee or acts approved in writing by the unanimous consent of the members of the Committee shall be the valid acts of the Committee.

     (b) Grants and Awards. Except with respect to Options granted under Subsection 8(j) and to Non-employee Trustee Committee Members pursuant to Section 9, the Committee shall from time to time at its discretion direct the Company to grant Options and Awards pursuant to the terms of the Plan. The Committee shall have plenary authority to (i) determine the persons to whom, and the times at which Options and Awards are to be granted as well as the terms applicable to Options and Awards, (ii) determine the type of Option to be granted and the number of Shares subject thereto, (iii) determine the Awardees to whom, and the times at which, Restricted Shares are granted, the number of Shares awarded, and the purchase price per Share, if any, and (iv) approve the form and terms and conditions of the Option Documents and Award Agreements; all subject, however, to the express provisions of the Plan. In making such determinations, the Committee may take into account the nature of the Grantee’s services and responsibilities, the Grantee’s present and potential contribution to the Company’s success and such other factors as it may deem relevant. Notwithstanding the foregoing, grants of Options to Non-employee Trustee Committee Members shall be made exclusively in accordance with Section 9 and such other provisions of the Plan that specifically apply to such Options. The interpretation and construction by the Committee of any provisions of the Plan or of any Option or Award granted under it shall be final, binding and conclusive.

     (c) Exculpation. No member of the Committee shall be personally liable for monetary damages as such for any action taken or any failure to take any action in connection with the administration of the Plan or the granting of Options or Awards thereunder unless (i) the member of the Committee has breached or failed to perform the duties of his office under applicable law and (ii)

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the breach or failure to perform constitutes self-dealing, willful misconduct or recklessness; provided, however, that the provisions of this Subsection 3(c) shall not apply to the responsibility or liability of a member of the Committee pursuant to any criminal statute or to the liability of a member of the Committee for the payment of taxes pursuant to local, state or federal law.

     (d) Indemnification. Service on the Committee shall constitute service as a member of the Board of Trustees. Each member of the Committee shall be entitled without further act on his part to indemnity from the Company to the fullest extent provided by applicable law and the Company’s Declaration of Trust and/or By-laws in connection with or arising out of any action, suit or proceeding with respect to the administration of the Plan or the granting of Options or Awards thereunder in which he or she may be involved by reason of his or her being or having been a member of the Committee, whether or not he or she continues to be such member of the Committee at the time of the action, suit or proceeding.

     4. Grants and Awards under the Plan. Options under the Plan may be in the form of a Non-qualified Stock Option, an ISO, or Awards of Restricted Shares, or any combination thereof, at the discretion of the Committee.

     5. Eligibility. All key employees, consultants and advisors of the Company or an Affiliate and members of the Board of Trustees shall be eligible to receive Options and Awards hereunder. The Committee, in its sole discretion, shall determine whether an individual qualifies as a key employee. Notwithstanding anything to the contrary contained herein, consultants and advisors shall only be eligible to receive Options or Awards provided bona fide services shall be rendered by such persons, and such services are not in connection with a capital raising transaction.

     6. Shares Subject to the Plan. The aggregate maximum number of Shares for which Options or Awards may be granted pursuant to the Plan (including Shares for which Options or Awards were granted under the Plan prior to this restatement) is Eleven Million Four Hundred Twenty-Six Thousand Two Hundred Fifty Six (11,426,256), subject to adjustment as provided in Section 11 of the Plan. The Shares shall be issued from authorized and unissued Shares or Shares held in or hereafter acquired for the treasury of the Company. If an Option terminates or expires without having been fully exercised for any reason, or if Shares granted pursuant to an Award have been conveyed back to the Company pursuant to the terms of an Award Agreement, the Shares for which the Option was not exercised or the Shares that were conveyed back to the Company may again be the subject of one or more Options or Awards granted pursuant to the Plan.

     7. Term of the Plan. The amended and restated Plan is effective as of March 23, 2004 (the “Approval Date”), subject to the approval of the amended and restated Plan within twelve months after the Approval Date by a majority of the votes cast at a duly called meeting of the shareholders at which a quorum representing a majority of all outstanding voting interests of the Company is, either in person or by proxy, present and

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voting, or by a method and in a degree that would be treated as adequate under applicable state law in the case of an action requiring shareholder approval. No Option or Award may be granted under the Plan ten years after the Approval Date.

     8. Option Documents and Terms. Each Option granted under the Plan shall be a Non-qualified Stock Option unless the Option shall be specifically designated at the time of grant to be an ISO for federal income tax purposes. To the extent any Option designated an ISO is determined for any reason not to qualify as an incentive stock option within the meaning of Section 422 of the Code, such Option shall be treated as a Non- qualified Stock Option for all purposes under the provisions of the Plan. Options granted pursuant to the Plan shall be evidenced by the Option Documents in such form as the Committee shall from time to time approve, which Option Documents shall comply with and be subject to the following terms and conditions and such other terms and conditions as the Committee shall from time to time require which are not inconsistent with the terms of the Plan. However, the provisions of this Section 8 shall not be applicable to Options granted to non-employee members of the Board of Trustees, except as otherwise provided in Subsection 9(c).

     (a) Number of Option Shares. Each Option Document shall state the number of Shares to which it pertains. An Optionee may receive more than one Option, which may include Options which are intended to be ISO’s and Options which are not intended to be ISO’s, but only on the terms and subject to the conditions and restrictions of the Plan. Notwithstanding anything to the contrary contained herein, no employee shall be granted Options to acquire more than Seven Hundred Fifty Thousand (750,000) Shares during any calendar year.

     (b) Option Price. Each Option Document shall state the Option Price which, for a Non-qualified Stock Option, may be less than, equal to, or greater than the Fair Market Value of the Shares on the date the Option is granted and, for an ISO, shall be at least 100% of the Fair Market Value of the Shares on the date the Option is granted as determined by the Committee in accordance with this Subsection 8(b); provided, however, that if an ISO is granted to an Optionee who then owns, directly or by attribution under Section 424(d) of the Code, interests in the Company or any parent or subsidiary corporation possessing more than ten percent of the total combined voting power of all classes of interests of the Company or such parent or subsidiary, then the Option Price shall be at least 110% of the Fair Market Value of the Shares on the date the Option is granted. If the Shares are traded in a public market, then the Fair Market Value per Share shall be, if the Shares are listed on a national securities exchange or included in the NASDAQ National Market System, the last reported sale price thereof on the relevant date, or, if the Shares are not so listed or included (or if there was no reported sale on the relevant date), the mean between the last reported “bid” and “asked” prices thereof on the relevant date, as reported on NASDAQ or by the exchange, as applicable, or, if not so reported, as reported by the National Daily Quotation Bureau, Inc. or as reported in a customary financial reporting service, as applicable, or, in the event such method of determination of fair market value is

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determined to be inaccurate or such information as is needed for such determination as set forth above is not available, as the Committee determines in good faith.

     (c) Exercise. No Option shall be deemed to have been exercised prior to the receipt by the Company of written notice of such exercise and of payment in full of the Option Price for the Shares to be purchased. Each such notice shall specify the number of Shares to be purchased and shall (unless the Shares are covered by a then current registration statement or qualified Offering Statement under Regulation A under the Securities Act of 1933, as amended (the “Act”), contain the Optionee’s acknowledgment in form and substance satisfactory to the Company that (a) such Shares are being purchased for investment and not for distribution or resale (other than a distribution or resale which, in the opinion of counsel satisfactory to the Company, may be made without violating the registration provisions of the Act), (b) the Optionee has been advised and understands that (i) the Shares have not been registered under the Act and are “restricted securities” within the meaning of Rule 144 under the Act and are subject to restrictions on transfer and (ii) the Company is under no obligation to register the Shares under the Act or to take any action which would make available to the Optionee any exemption from such registration, (c) such Shares may not be transferred without compliance with all pplicable federal and state securities laws, and (d) an appropriate legend referring to the foregoing restrictions on transfer and any other restrictions imposed under the Option Documents may be endorsed on the certificates. Notwithstanding the foregoing, if the Company determines that issuance of Shares should be delayed pending (A) registration under federal or state securities laws, (B) the receipt of an opinion of counsel satisfactory to the Company that an appropriate exemption from such registration is available, (C) the listing or inclusion of the Shares on any securities exchange or an automated quotation system or (D) the consent or approval of any governmental regulatory body whose consent or approval is deemed necessary in connection with the issuance of such Shares, the Company may defer exercise of any Option granted hereunder until any of the events described in this sentence has occurred.

     (d) Medium of Payment. An Optionee shall pay for Shares (i) in cash, (ii) by certified or cashier’s check payable to the order of the Company, or (iii) by such other mode of payment as the Committee may approve, including payment through a broker in accordance with procedures permitted by Regulation T of the Federal Reserve Board. Furthermore, the Committee may provide in an Option Document that payment may be made in whole or in part in Shares held by the Optionee. If payment is made in whole or in part in Shares, then the Optionee shall deliver to the Company certificates registered in the name of such Optionee representing the Shares owned by such Optionee, free of all liens, claims and encumbrances of every kind and having an aggregate Fair Market Value on the date of delivery that is at least as great as the Option Price of the Shares (or relevant portion thereof) with respect to which such Option is to be exercised by

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the payment in Shares, endorsed in blank or accompanied by stock powers duly endorsed in blank by the Optionee. In the event that certificates for Shares delivered to the Company represent a number of Shares in excess of the number of Shares required to make payment for the Option Price of the Shares (or relevant portion thereof) with respect to which such Option is to be exercised by payment in Shares, the certificate or certificates issued to the Optionee shall represent (i) the Shares in respect of which payment is made, and (ii) such excess number of Shares. Notwithstanding the foregoing, the Committee may impose from time to time such limitations and prohibitions on the use of Shares to exercise an Option as it deems appropriate.

     (e) Termination of Options.

     (i) No Option shall be exercisable after the first to occur of the following:

     (A) Expiration of the Option term specified in the Option Document, which, in the case of an ISO, shall not occur after (1) ten years from the date of grant, or (2) five years from the date of grant of an ISO if the Optionee on the date of grant owns, directly or by attribution under Section 424(d) of the Code, interests in the Company or any parent or subsidiary corporation possessing more than ten percent (10%) of the total combined voting power of all classes of interests of the Company or such parent or subsidiary;

     (B) The third month anniversary of the date of termination of the Optionee’s services or employment with the Company or an Affiliate for any reason other than death, Disability or Retirement, or the thirty-sixth month anniversary of the date of termination of the Optionee’s services or employment with the Company or an Affiliate as a result of the Optionee’s death, Disability or Retirement;

     (C) A finding by the Committee, after full consideration of the facts presented on behalf of both the Company and the Optionee, that the Optionee has breached his or her employment or service contract with the Company or an Affiliate, or has been engaged in disloyalty to the Company or an Affiliate, including, without limitation, fraud, embezzlement, theft, commission of a felony or proven dishonesty in the course of his or her employment or service, or has disclosed trade secrets or confidential information of the Company or an Affiliate. In such event, in addition to immediate termination of the Option, the Optionee shall automatically forfeit all Shares for which the Company has not yet delivered the Share certificates upon refund by the Company of the

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Option Price. Notwithstanding anything herein to the contrary, the Company may withhold delivery of Share certificates pending the resolution of any inquiry that could lead to a finding resulting in a forfeiture;

     (D) The date, if any, set by the Board of Trustees as an accelerated expiration date in the event of the liquidation or dissolution of the Company; or

     (E) The occurrence of such other event or events as may be set forth in the Option Document as causing an accelerated expiration of the Option.

     (ii) Notwithstanding the foregoing, the Committee may extend the period during which all or any portion of an Option may be exercised to a date no later than the Option term specified in the Option Document pursuant to Subsection 8(e)(i)(A), provided that any change pursuant to this Subsection 8(e)(ii) which would cause an ISO to become a Non-qualified Stock Option may be made only with the consent of the Optionee.

     (iii) The terms of an executive severance agreement or other agreement between the Company and an Optionee, approved by the Committee, whether entered into prior or subsequent to the grant of an Option, which provide for Option exercise dates later than those set forth in Subsection 8(e)(i) but permitted by this Subsection 8(e)(ii) shall be deemed to be Option terms approved by the Committee and consented to by the Optionee.

     (iv) Unless otherwise expressly permitted in the Option Document, no Option granted pursuant to this Section 8 shall be exercisable following the termination of the Optionee’s services as a member of the Board of Trustees or employment with the Company or any Affiliate for any reason other than death, Disability, or Retirement with respect to any Shares in excess of those which could have been acquired by exercise of the Option on the date of such termination of services or employment. Unless otherwise specified in the Option Document, upon termination of the Optionee’s services as a member of the Board of Trustees or employment with the Company or any Affiliate as a result of death, Disability, or Retirement, the portion of the Option not exercisable upon such termination shall become exercisable.

     (f) Transfers. No Option granted under the Plan may be transferred, except by will or by the laws of descent and distribution. During the lifetime of the person to whom an Option is granted, such Option may be exercised only by such person. Notwithstanding the foregoing, (1) a Non-qualified Stock Option

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may be transferred pursuant to the terms of a “qualified domestic relations order,” within the meaning of Sections 401(a)(13) and 414(p) of the Code or within the meaning of Title I of the Employee Retirement Income Security Act of 1974, as amended, and (2) the Committee may provide, in an Option Document, that an Optionee may transfer Options to his or her children, grandchildren or spouse or to one or more trusts for the benefit of such family members or to partnerships in which such family members are the only partners (a “Family Transfer”), provided that the Optionee receives no consideration for such Family Transfer and the Option Documents relating to Options transferred in such Family Transfer continue to be subject to the same terms and conditions that were applicable to such Options immediately prior to the Family Transfer.

     (g) Limitation on ISO Grants. In no event shall the aggregate Fair Market Value of the Shares with respect to which ISOs issued under the Plan and incentive stock options issued under any other incentive stock option plans of the Company or its Affiliates which are exercisable for the first time by the Optionee during any calendar year exceed $100,000. Any ISOs issued in excess of this limitation shall be treated as Non-qualified Stock Options issued under the Plan. For purposes of this subsection 8(g), the Fair Market Value of Shares shall be determined as of the date of grant of the ISO or other incentive stock option.

     (h) Other Provisions. Subject to the provisions of the Plan, the Option Documents shall contain such other provisions including, without limitation, provisions authorizing the Committee to accelerate the exercisability of all or any portion of an Option granted pursuant to the Plan, additional restrictions upon the exercise of the Option or additional limitations upon the term of the Option, as the Committee shall deem advisable.

     (i) Amendment. Subject to the provisions of the Plan, the Committee shall have the right to amend Option Documents issued to an Optionee, subject to the Optionee’s consent if such amendment is not favorable to the Optionee, except that the consent of the Optionee shall not be required for any amendment made pursuant to Subsection 8(e)(i)(C) or Section 10 of the Plan, as applicable.

     (j) Five or Fewer. No Options shall be granted under the Plan if, taking into account the grant of such options, five or fewer individuals would own more than 50% of the outstanding Shares, as computed for purposes of Code Section 856(h).

     9. Special Provisions Relating to Grants of Options to Non-Employee Members of the Board of Trustees. Options granted pursuant to the Plan to non-employee members of the Board of Trustees shall be granted, without any further action by the Committee, in accordance with the terms and conditions set forth in this Section 9. Options granted pursuant to this Section 9 shall be evidenced by Option Documents in such form as the Committee shall from time to time approve, which Option Documents shall comply with and be subject to the following terms and conditions and such other terms and conditions

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as the Committee shall from time to time require which are not inconsistent with the terms of the Plan and would not cause a Non-employee Trustee to lose his or her status as a “non-employee director” (as that term is used for purposes of Rule 16b-3) due to the grant of Options to such person pursuant to this Section 9.

     (a) Timing of Grants; Number of Shares Subject of Options; Exercisability of Options; Option Price. Each non-employee member of the Board of Trustees shall be granted annually, commencing on the date of the initial public offering of Shares, and on each anniversary of such date thereafter, an Option to purchase five thousand (5,000) Shares provided such person is a member of the Board of Trustees on such grant date. Each such Option shall be a Non-qualified Stock Option exercisable with respect to twenty percent (20%) of the Shares subject to such Option after the first anniversary of the date of grant, exercisable with respect to fifty percent (50%) of the Shares after the second anniversary of the date of grant, and fully exercisable after the third anniversary of the date of grant. The Option Price shall be equal to the Fair Market Value of the Shares on the date the Option is granted.

     (b) Termination of Options Granted Pursuant to Section 9. No Option granted pursuant to this Section 9 shall be exercisable after the first to occur of the following:

     (i) The tenth anniversary of the date of grant.

     (ii) The third month anniversary of the date of termination of the Optionee’s services as a member of the Board of Trustees for any reason other than death, Disability or Retirement, or the thirty-sixth month anniversary of the date of termination of the Optionee’s services as a member of the Board of Trustees as a result of the Optionee’s death, Disability or Retirement.

     Except as provided in Subsection 8(e)(iv), no Option granted pursuant to this Section 9 shall be exercisable following the termination of the Optionee’s services as a member of the Board of Trustees with respect to any Shares in excess of those which could have been acquired by exercise of the Option on the date of such termination of services.

     (c) Applicability of Section 8 to Options Granted Pursuant to Section 9. The following provisions of Section 8 shall be applicable to Options granted pursuant to this Section 9: Subsection 8(a) (provided that all Options granted pursuant to this Section 9 shall be Non-qualified Stock Options); the last sentence of Subsection 8(b); Subsection 8(c); Subsection 8(d) (provided that Option Documents relating to Options granted pursuant to this Section 9 shall provide that payment may be made in whole or in part in Shares); and Subsection 8(f) (provided that Option Documents relating to Options granted pursuant to this Section 9 shall not permit Family Transfers).

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     10. Change of Control. In the event of a Change of Control, the Committee may take whatever action it deems necessary or desirable with respect to the Options and Awards outstanding (other than Options granted pursuant to Subsection 8(j) and Section 9), including, without limitation, accelerating the expiration or termination date in the respective Option Documents to a date no earlier than thirty (30) days after notice of such acceleration is given to the Optionees. The Committee shall have the authority to set forth in each individual Option Document or Grant Agreement the effect of a Change of Control on the provisions of the Option Document or Grant Agreement including, but not limited to, provisions relating to the exercise of Options or the lapse of the restrictions on Restricted Shares. Any amendment to this Section 10 which diminishes the rights of Optionees, shall not be effective with respect to Options outstanding at the time of adoption of such amendment, whether or not such outstanding Options are then exercisable.

     A “Change of Control” shall be deemed to have occurred upon the earliest to occur of the following events: (i) the date on which the shareholders of the Company (or the Board of Trustees, if shareholder action is not required) approve a plan or other arrangement pursuant to which the Company will be dissolved or liquidated, or (ii) the date on which the transactions contemplated by a definitive agreement to sell or otherwise dispose of substantially all of the assets of the Company are consummated, other than a transaction in which the holders of the Shares immediately prior to the transaction will have at least fifty percent (50%) of the voting power of the acquiring entity’s voting securities immediately after such transaction (without regard to such holders’ ownership of such acquiring entity’s voting securities immediately before or contemporaneously with such transaction), which voting securities are to be held by such holders immediately following such transaction in substantially the same proportion among themselves as such holders’ ownership of the Shares immediately before such transaction, or (iii) the first date on which (A) the transactions contemplated by a definitive agreement to merge or consolidate the Company with or into the other constituent entity, or to merge such other entity with or into the Company, have been consummated, other than, in any such case, a merger or consolidation of the Company in which the holders of the Shares immediately prior to the merger or consolidation will have at least fifty percent (50%) of the voting power of the surviving entity’s voting securities immediately after such merger or consolidation (without regard to such holders’ ownership of such acquiring entity’s voting securities immediately before or contemporaneously with such merger or consolidation), which voting securities are to be held by such holders immediately following such merger or consolidation in substantially the same proportion among themselves as such holders’ ownership of the Shares immediately before such merger or consolidation, and (B) members of the Board of Trustees prior to the consummation of such merger or consolidation cease to constitute a majority of the Board of Trustees, or (iv) the date on which any entity, person or group, within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of 1934, as amended (other than the Company or any Subsidiary or any employee benefit plan sponsored or maintained by the Company or any Subsidiary), shall have become the beneficial owner of, or shall have obtained voting control over, more than

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twenty percent (20%) of the outstanding Shares (without regard to any contractual or other restriction on the conversion or other exchange of securities into or for Shares), or (v) the first day after which a majority of the members of the Board of Trustees shall have been members of the Board of Trustees for less than two (2) years, unless the nomination for election of each new trustee who was not a trustee at the beginning of such two (2)-year period was approved by a vote of at least two-thirds of the trustees then still in office who were trustees at the beginning of such period.

     11. Adjustments on Changes in Capitalization.

     (a) Corporate Transactions. In the event that the outstanding Shares are changed by reason of a reorganization, merger, consolidation, recapitalization, reclassification, stock split-up, combination or exchange of shares and the like (not including the issuance of Shares on the conversion of other securities of the Company which are outstanding on the date of grant and which are convertible into Shares) or dividends payable in Shares, an equitable adjustment shall be made by the Committee in the aggregate number of Shares available under the Plan and in the number of Shares and price per Share subject to outstanding Options. Unless the Committee makes other provisions for the equitable settlement of outstanding options, if the Company shall be reorganized, consolidated, or merged with another corporation, or if all or substantially all of the assets of the Company shall be sold or exchanged, an Optionee shall at the time of issuance of the Shares under such corporate event be entitled to receive upon the exercise of his or her Option the same number and kind of shares or the same amount of property, cash or securities as he or she would have been entitled to receive upon the occurrence of any such corporate event as if he or she had been, immediately prior to such event, the holder of the number of             shares covered by his or her Option.

     (b) Proportionate Application. Any adjustment under this Section 11 in the number of Shares subject to Options shall apply proportionately to only the unexercised portion of any Option granted hereunder. If fractions of a Share would result from any such adjustment, the adjustment shall be revised to the next lower whole number of Shares.

     (c) Committee Authority. The Committee shall have authority to determine the adjustments to be made under this Section, and any such determination by the Committee shall be final, binding and conclusive.

     12. Terms and Conditions of Awards. Awards granted pursuant to the Plan shall be evidenced by written Award Agreements in such form as the Committee shall from time to time approve, which Award Agreements shall comply with and be subject to the following terms and conditions and such other terms and conditions which the Committee shall from time to time require which are not inconsistent with the terms of the Plan. The Committee may, in its sole discretion, shorten or waive any term or condition with respect to all or any portion of any Award. Notwithstanding the

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foregoing, all restrictions shall lapse or terminate with respect to Restricted Shares upon the death or Disability of the Awardee. The total number of Shares which may be granted pursuant to Awards under the Plan shall not exceed Two Million (2,000,000).

     (a) Number of Shares. Each Award Agreement shall state the number of Shares to which it pertains.

     (b) Purchase Price. Each Award Agreement shall specify the purchase price, if any, which applies to the Award. If the Board of Trustees specifies a purchase price, the Awardee shall be required to make payment on or before the date specified in the Award Agreement. An Awardee shall pay for such Shares (i) in cash, (ii) by certified check payable to the order of the Company, or (iii) by such other mode of payment as the Committee may approve.

     (c) Restrictions on Transfer and Forfeitures. A share certificate representing the Restricted Shares granted to an Awardee shall be registered in the Awardee’s name but shall be held in escrow by the Company or an appropriate officer of the Company, together with an undated share transfer power executed by the Awardee with respect to each share certificate representing Restricted Shares in such Awardee’s name. The Awardee shall generally have the rights and privileges of a shareholder as to such Restricted Shares including the right to vote such Restricted Shares and to receive and retain all cash dividends with respect to such Shares, except that the following restrictions shall apply: (i) the Awardee shall not be entitled to delivery of the certificate until the expiration or termination of any period designated by the Committee (“Restricted Period”) and the satisfaction of any other conditions prescribed by the Committee; and (ii) all distributions with respect to the Restricted Shares other than cash dividends, such as share dividends, share splits or distributions of property, and any distributions (other than cash dividends) subsequently made with respect to other distributions, shall be delivered to the Company or an appropriate officer of the Company, together with appropriate share transfer powers or other instruments of transfer signed and delivered to the Company or appropriate officer of the Company by the Awardee, to be held by the Company or appropriate officer of the Company and released to either the Awardee or the Company, as the case may be, together with the Shares to which they relate; (iii) the Awardee will have no right to sell, exchange, transfer, pledge, hypothecate or otherwise dispose of any of the Restricted Shares or distributions (other than cash dividends) with respect thereto; and (iv) all of the Restricted Shares shall be forfeited and all rights of the Awardee with respect to such Restricted Shares shall terminate without further obligation on the part of the Company unless the Awardee has remained a regular full-time employee of the Company or an Affiliate, any of its subsidiaries or any parent or any combination thereof until the expiration or termination of the Restricted Period and the satisfaction of any other conditions prescribed by the Committee applicable to such Restricted Share. Upon the forfeiture of any Restricted Share, such forfeited shares shall be transferred to the Company without further action by the Awardee.

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     (d) Lapse of Restrictions. Upon the expiration or termination of the Restricted Period and the satisfaction of any other conditions prescribed by the Committee as provided for in the Plan, the restrictions applicable to the Restricted Share shall lapse and a stock certificate for the number of shares of Common Stock with respect to which the restrictions have lapsed shall be delivered, free of all such restrictions, except any that may be imposed by law, to the Awardee or the beneficiary or estate, as the case may be. The Company shall not be required to deliver any fractional share of Common Stock but will pay, in lieu thereof, the fair market value (determined as of the date the restrictions lapse) of such fractional share to the Awardee or the Awardee’s beneficiary or estate, as the case may be. The Award may provide for the lapse of restrictions on transfer and forfeiture conditions in installments. Notwithstanding the foregoing, unless the Shares are covered by a then current registration statement or a Notification under Regulation A under the Act, the Company may require as a condition to the transfer of Share certificates to an Awardee under this Subsection 12(d) that the Awardee provide the Company with an acknowledgment in form and substance satisfactory to the Company that (a) such Shares are being purchased for investment and not for distribution or resale (other than a distribution or resale which, in the opinion of counsel satisfactory to the Company, may be made without violating the registration provisions of the Act), (b) the Optionee has been advised and understands that (i) the Shares have not been registered under the Act and are “restricted securities” within the meaning of Rule 144 under the Act and are subject to restrictions on transfer and (ii) the Company is under no obligation to register the Shares under the Act or to take any action which would make available to the Optionee any exemption from such registration, (c) such Shares may not be transferred without compliance with all applicable federal and state securities laws, and (d) an appropriate legend referring to the foregoing restrictions on transfer may be endorsed on the certificates. Notwithstanding the foregoing, if the Company determines that the transfer of Share certificates should be delayed pending (A) registration under federal or state securities laws, (B) the receipt of an opinion of counsel satisfactory to the Company that an appropriate exemption from such registration is available, (C) the listing or inclusion of the Shares on any securities exchange or an automated quotation system or (D) the consent or approval of any governmental regulatory body whose consent or approval is necessary in connection with the issuance of such Shares, the Company may defer transfer of Share certificates hereunder until any of the events described in this sentence has occurred.

     (e) Section 83(b) Election. An Awardee who files an election with the Internal Revenue Service to include the fair market value of any Restricted Share in gross income while they are still subject to restrictions shall promptly furnish the Company with a copy of such election together with the amount of any federal, state, local or other taxes required to be withheld to enable the Company to claim an income tax deduction with respect to such election.

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     (f) Rights as Shareholder. Upon payment of the purchase price, if any, for Shares covered by an Award and compliance with the acknowledgment requirement of subsection 12(d), the Grantee shall have all of the rights of a shareholder with respect to the Shares covered thereby, including the right to vote the Shares and receive all dividends and other distributions paid or made with respect thereto, except to the extent otherwise provided by the Committee or in the Award Agreement.

     (g) Amendment. Subject to the provisions of the Plan, the Committee shall have the right to amend Awards issued to an Awardee, subject to the Awardee’s consent if such amendment is not favorable to the Awardee, except that the consent of the Awardee shall not be required for any amendment made pursuant to Section 10 of the Plan.

     13. Amendment of the Plan. The Board of Trustees of the Company may amend the Plan from time to time in such manner as it may deem advisable. Nevertheless, the Board of Trustees of the Company may not change the class of individuals eligible to receive an ISO or increase the maximum number of Shares as to which Options or Awards may be granted without obtaining approval, within twelve months before or after such action, by vote of a majority of the votes cast at a duly called meeting of the shareholders at which a quorum representing a majority of all outstanding voting interests of the Company is, either in person or by proxy, present and voting on the matter, or by a method and in a degree that would be treated as adequate under applicable state law in the case of an action requiring shareholder approval. No amendment to the Plan shall adversely affect any outstanding Option or Award, however, without the consent of the Grantee.

     14. No Commitment to Retain. The grant of an Option or an Award pursuant to the Plan shall not be construed to imply or to constitute evidence of any agreement, express or implied, on the part of the Company or any Affiliate to retain the Grantee in the employ of the Company or an Affiliate and/or as a member of the Company’s Board of Trustees or in any other capacity.

     15. Withholding of Taxes. Whenever the Company proposes or is required to deliver or transfer Shares in connection with an Award or the exercise of an Option, the Company shall have the right to (a) require the recipient to remit or otherwise make available to the Company an amount sufficient to satisfy any federal, state and/or local withholding tax requirements prior to the delivery or transfer of any certificate or certificates for such Shares or (b) take whatever other action it deems necessary to protect its interests with respect to its tax liabilities. The Company’s obligation to make any delivery or transfer of Shares shall be conditioned on the Grantee’s compliance, to the Company’s satisfaction, with any withholding requirement.

     16. Interpretation. The Plan is intended to enable transactions under the Plan with respect to Trustees and officers (within the meaning of Section 16(a) under the Securities Exchange Act of 1934, as amended) to satisfy the conditions of Rule 16b-3; to

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the extent that any provision of the Plan would cause a conflict with such conditions or would cause the administration of the Plan as provided in Section 3 to fail to satisfy the conditions of Rule 16b-3, such provision shall be deemed null and void to the extent permitted by applicable law. This section shall not be applicable if no class of the Company’s equity securities is then registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended.

     17. Non-Executive Officer Award Committee. The Board of Trustees may establish a Non-Executive Officer Award Committee which, notwithstanding anything in this Plan to the contrary, shall have the power, solely with respect to employees of the Company who are not executive officers of the Company, to make Awards, subject to the following terms and limitations:

     (a) The Non-Executive Officer Award Committee may make Awards only to employees who are not executive officers of the Company.

     (b) The maximum number of Shares that may be awarded by the Non-Executive Officer Award Committee during any calendar year is 8,000. The maximum number of Shares that may be granted with respect to any one Award is 1,000. No individual may receive in excess of two Awards made by the Non-Executive Officer Award Committee in any calendar year.

     (c) The Non-Executive Officer Award Committee may set such vesting terms with respect to the Awards as it deems appropriate.

     (d) In all other respects, the Awards made by the Non-Executive Officer Award Committee shall be governed by the terms of the Award Agreement relating to the Award, as appropriate and in the form then authorized by the Committee.

     (e) The powers of the Non-Executive Officer Award Committee shall be as enumerated in this section; the Non-Executive Officer Award Committee shall not otherwise perform the functions of the Committee under this Plan.

     (f) The Committee may also make Awards to non-executive officer employees in accordance with the provisions of the Plan.

17

EX-31.1

Exhibit 31.1

LIBERTY PROPERTY TRUST

CERTIFICATIONS REQUIRED BY
RULE 13a-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934

I, William P. Hankowsky, certify that:

1.	I have reviewed this Form 10-Q of Liberty Property Trust;
2.	Based on my knowledge, this 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 report;
3.	Based on my knowledge, the financial statements, and other financial information included in this 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 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-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;
b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting,

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

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 6, 2005

/s/ WILLIAM P. HANKOWSKY

William P. Hankowsky

Chairman, President and Chief Executive Officer

EX-31.2

Exhibit 31.2

LIBERTY PROPERTY TRUST

CERTIFICATIONS REQUIRED BY
RULE 13a-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934

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

1.	I have reviewed this Form 10-Q of Liberty Property Trust;
2.	Based on my knowledge, this 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 report;
3.	Based on my knowledge, the financial statements, and other financial information included in this 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 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-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13 a-15(f) and 15d-15(f)) for the registrant and have:

a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;
b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation ; and
d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

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

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; 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 over financial reporting; and

Date: May 6, 2005

/s/ GEORGE J. ALBURGER, JR.

George J. Alburger, Jr.

Executive Vice President and Chief Financial Officer

EX-31.3

Exhibit 31.3

LIBERTY PROPERTY LIMITED PARTNERSHIP

CERTIFICATIONS REQUIRED BY
RULE 13a-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934

I, William P. Hankowsky, certify that:

1.	I have reviewed this Form 10-Q of Liberty Property Limited Partnership;
2.	Based on my knowledge, this 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 report;
3.	Based on my knowledge, the financial statements, and other financial information included in this 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 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-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;
b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principals;
c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting,

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

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 6, 2005

/s/ WILLIAM P. HANKOWSKY

William P. Hankowsky

Chairman, President and Chief Executive Officer of Liberty Property Trust, its sole general partner

EX-31.4

Exhibit 31.4

LIBERTY PROPERTY LIMITED PARTNERSHIP

CERTIFICATIONS REQUIRED BY
RULE 13a-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934

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

1.	I have reviewed this Form 10-Q of Liberty Property Limited Partnership;
2.	Based on my knowledge, this 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 report;
3.	Based on my knowledge, the financial statements, and other financial information included in this 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 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-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;
b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation ; and
d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

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

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting; and

Date: May 6, 2005

/s/ GEORGE J. ALBURGER, JR. 

George J. Alburger, Jr.

Executive Vice President and Chief Financial Officer of Liberty Property Trust, its sole general partner

EX-32.1

Exhibit 32.1

LIBERTY PROPERTY TRUST

CERTIFICATIONS REQUIRED BY
RULE 13a-14(b) UNDER THE SECURITIES EXCHANGE ACT OF 1934

     In connection with the Quarterly Report of Liberty Property Trust (the “Company”) on Form 10-Q for the quarterly period ended March 31, 2005, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, WILLIAM P. HANKOWSKY, Chairman, President and Chief Executive Officer of the Company, certify, in connection with Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended, 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

Chairman, President and Chief Executive Officer

Date: May 6, 2005

EX-32.2

Exhibit 32.2

LIBERTY PROPERTY TRUST

CERTIFICATIONS REQUIRED BY
RULE 13a-14(b) UNDER THE SECURITIES EXCHANGE ACT OF 1934

     In connection with the Quarterly Report of Liberty Property Trust (the “Company”) on Form 10-Q for the quarterly period ended March 31, 2005, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, GEORGE J. ALBURGER, JR., Executive Vice President and Chief Financial Officer of the Company, certify, in connection with Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended , 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.

Executive Vice President and Chief Financial Officer

Date: May 6, 2005

EX-32.3

Exhibit 32.3

LIBERTY PROPERTY LIMITED PARTNERSHIP

CERTIFICATIONS REQUIRED BY
RULE 13a-14(b) UNDER THE SECURITIES EXCHANGE ACT OF 1934

     In connection with the Quarterly Report of Liberty Property Trust (the “Company”) on Form 10-Q for the quarterly period ended March 31, 2005, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, WILLIAM P. HANKOWSKY, Chairman, President and Chief Executive Officer of Liberty Property Trust (the sole general partner of the Company), certify, in connection with Rule 13a-14(b) under the Securities Exchange Act of 1934, 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

Chairman, President and Chief Executive Officer of Liberty Property Trust, its sole general partner

Date: May 6, 2005

EX-32.4

Exhibit 32.4

LIBERTY PROPERTY LIMITED PARTNERSHIP

CERTIFICATIONS REQUIRED BY
RULE 13a-14(b) UNDER THE SECURITIES EXCHANGE ACT OF 1934

     In connection the Quarterly Report of Liberty Property Trust (the “Company”) on Form 10-Q for the quarterly period ended March 31, 2005, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, GEORGE J. ALBURGER, JR., Executive Vice President and Chief Financial Officer of Liberty Property Trust (the sole general partner of the Company), certify, in connection with Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended, 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.

Executive Vice President and Chief Financial Officer
of Liberty Property Trust, its sole general partner

Date: May 6, 2005