e10vq

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2008


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to


		Commission file numbers:		1-13130 (Liberty Property Trust)
				1-13132 (Liberty Property Limited Partnership)

LIBERTY PROPERTY TRUST
LIBERTY PROPERTY LIMITED PARTNERSHIP

(Exact name of registrants as specified in their governing documents)


MARYLAND (Liberty Property Trust)		23-7768996
PENNSYLVANIA (Liberty Property Limited Partnership)		23-2766549

(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer
		Identification Number)
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 a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ

Accelerated filer o

Non-accelerated filer o
(Do not check if a smaller reporting company)

Smaller reporting company o

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

On November 4, 2008, 98,157,642 Common Shares of Beneficial Interest, par value $0.001 per share, of Liberty Property Trust were outstanding.


Index		Page

Exhibit Index			45
	STATEMENT RE: COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO COMBINED FIXED CHARGES
	CERTIFICATION OF CEO OF LIBERTY PROPERTY TRUST REQUIRED BY RULE 13A-14(A)
	CERTIFICATION OF CFO OF LIBERTY PROPERTY TRUST REQUIRED BY RULE 13A-14(A)
	CERTIFICATION OF CEO OF LIBERTY PROPERTY TRUST, IN ITS CAPACITY AS THE GENERAL PARTNER OF LIBERTY PROPERTY LIMITED PARTNERSHIP, REQUIRED BY RULE 13A-14(A)
	CERTIFICATION OF CFO OF LIBERTY PROPERTY TRUST, IN ITS CAPACITY AS THE GENERAL PARTNER OF LIBERTY PROPERTY LIMITED PARTNERSHIP, REQUIRED BY RULE 13A-14(A)
	CERTIFICATION OF CEO OF LIBERTY PROPERTY TRUST REQUIRED BY RULE 13A-14(B)
	CERTIFICATION OF CFO OF LIBERTY PROPERTY TRUST REQUIRED BY RULE 13A-14(B)
	CERTIFICATION OF CEO OF LIBERTY PROPERTY TRUST, IN ITS CAPACITY AS THE GENERAL PARTNER OF LIBERTY PROPERTY LIMITED PARTNERSHIP, REQUIRED BY RULE 13A-14(B)
	CERTIFICATION OF CFO OF LIBERTY PROPERTY TRUST, IN ITS CAPACITY AS THE GENERAL PARTNER OF LIBERTY PROPERTY LIMITED PARTNERSHIP, REQUIRED BY RULE 13A-14(B)

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

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


	September 30, 2008			December 31, 2007
	(Unaudited)
ASSETS
Real estate:
Land and land improvements	$	805,797		$	795,939
Building and improvements		4,235,427			4,432,690
Less accumulated depreciation		(956,732	)		(863,193	)


Operating real estate		4,084,492			4,365,436

Development in progress		294,227			328,138
Land held for development		227,003			247,124


Net real estate		4,605,722			4,940,698

Cash and cash equivalents		29,278			37,989
Restricted cash		41,638			34,567
Accounts receivable		18,782			17,405
Deferred rent receivable		82,653			80,087
Deferred financing and leasing costs, net of accumulated amortization (2008, $136,565; 2007, $119,721)		132,023			144,684
Investments in and advances to unconsolidated joint ventures		255,317			278,383
Assets held for sale		2,145			2,192
Prepaid expenses and other assets		99,139			107,932


Total assets	$	5,266,697		$	5,643,937


LIABILITIES
Mortgage loans	$	205,450		$	243,169
Unsecured notes		2,155,000			2,155,000
Credit facility		370,000			622,960
Accounts payable		54,302			44,666
Accrued interest		38,063			39,725
Dividend and distributions payable		60,991			59,849
Other liabilities		207,395			268,926


Total liabilities		3,091,201			3,434,295

Minority interest		369,839			372,621

SHAREHOLDERS’ EQUITY
Common shares of beneficial interest, $.001 par value, 183,987,000 shares authorized; 94,645,598 (includes 1,249,909 in treasury) and 92,817,879 (includes 1,249,909 in treasury) shares issued and outstanding as of September 30, 2008 and December 31, 2007, respectively		94			93
Additional paid-in capital		2,037,360			1,984,141
Accumulated other comprehensive income		10,750			21,378
Distributions in excess of net income		(190,596	)		(116,640	)
Common shares in treasury, at cost, 1,249,909 shares as of September 30, 2008 and December 31, 2007		(51,951	)		(51,951	)


Total shareholders’ equity		1,805,657			1,837,021


Total liabilities and shareholders’ equity	$	5,266,697		$	5,643,937

See accompanying notes.

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


	Three Months Ended
	September 30, 2008			September 30, 2007
OPERATING REVENUE
Rental	$	131,042		$	122,864
Operating expense reimbursement		57,935			52,254

Total operating revenue		188,977			175,118


OPERATING EXPENSE
Rental property		38,468			36,121
Real estate taxes		22,305			19,299
General and administrative		13,145			13,142
Depreciation and amortization		44,695			40,146

Total operating expenses		118,613			108,708


Operating income		70,364			66,410

OTHER INCOME (EXPENSE)
Interest and other income		3,333			2,443
Interest expense		(38,909	)		(33,043	)

Total other income (expense)		(35,576	)		(30,600	)

Income before property dispositions, income taxes, minority interest and equity in earnings of unconsolidated joint ventures		34,788			35,810
Gain on property dispositions		463			190
Income taxes		(308	)		1,022
Minority interest		(6,947	)		(5,671	)
Equity in earnings (loss) of unconsolidated joint ventures		470			(29	)


Income from continuing operations		28,466			31,322

Discontinued operations, net of minority interest (including net gain on property dispositions of $10,232 and $4,145 for the three months ended September 30, 2008 and 2007, respectively)		10,088			5,852


Net income	$	38,554		$	37,174


Earnings per common share
Basic:
Income from continuing operations	$	0.30		$	0.35
Income from discontinued operations		0.11			0.06


Income per common share — basic	$	0.41		$	0.41


Diluted:
Income from continuing operations	$	0.30		$	0.35
Income from discontinued operations		0.11			0.06


Income per common share — diluted	$	0.41		$	0.41


Distributions per common share	$	0.625		$	0.625


Weighted average number of common shares outstanding
Basic		92,928			90,905
Diluted		93,369			91,367

See accompanying notes.

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


	Nine Months Ended
	September 30, 2008			September 30, 2007
OPERATING REVENUE
Rental	$	392,650		$	352,262
Operating expense reimbursement		173,337			152,908

Total operating revenue		565,987			505,170


OPERATING EXPENSE
Rental property		114,717			106,165
Real estate taxes		66,615			53,494
General and administrative		40,178			38,866
Depreciation and amortization		132,021			112,897

Total operating expenses		353,531			311,422


Operating income		212,456			193,748

OTHER INCOME (EXPENSE)
Interest and other income		9,459			7,837
Interest expense		(118,336	)		(88,641	)

Total other income (expense)		(108,877	)		(80,804	)

Income before property dispositions, income taxes, minority interest and equity in earnings of unconsolidated joint ventures		103,579			112,944
Gain on property dispositions		1,939			1,641
Income taxes		(1,372	)		508
Minority interest		(19,948	)		(17,154	)
Equity in earnings of unconsolidated joint ventures		1,857			1,026


Income from continuing operations		86,055			98,965

Discontinued operations, net of minority interest (including net gain on property dispositions of $13,635 and $24,376 for the nine months ended September 30, 2008 and 2007, respectively)		14,089			30,334


Net income	$	100,144		$	129,299


Earnings per common share
Basic:
Income from continuing operations	$	0.93		$	1.09
Income from discontinued operations		0.15			0.33


Income per common share – basic	$	1.08		$	1.42


Diluted:
Income from continuing operations	$	0.93		$	1.08
Income from discontinued operations		0.15			0.33


Income per common share – diluted	$	1.08		$	1.41


Distributions per common share	$	1.875		$	1.865


Weighted average number of common shares outstanding
Basic		92,324			91,179
Diluted		92,626			91,905

See accompanying notes.

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


	Nine Months Ended
	September 30, 2008			September 30, 2007
OPERATING ACTIVITIES
Net income	$	100,144		$	129,299
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		132,106			119,378
Amortization of deferred financing costs		3,327			3,002
Equity in earnings of unconsolidated joint ventures		(1,857	)		(1,026	)
Distributions from unconsolidated joint ventures		700			—
Minority interest in net income		20,583			18,542
Gain on property dispositions		(15,574	)		(26,017	)
Noncash compensation		7,793			6,691
Changes in operating assets and liabilities:
Restricted cash		(9,755	)		25,861
Accounts receivable		(7,763	)		(2,770	)
Deferred rent receivable		(9,627	)		(5,140	)
Prepaid expenses and other assets		(28,533	)		(25,736	)
Accounts payable		10,512			28,004
Accrued interest		(1,662	)		(6,474	)
Other liabilities		(7,546	)		10,616

Net cash provided by operating activities		192,848			274,230


INVESTING ACTIVITIES
Investment in properties		(87,245	)		(265,150	)
Investments in and advances to unconsolidated joint ventures		(5,580	)		(22,854	)
Distributions from unconsolidated joint ventures		64,321			1,934
Net proceeds from disposition of properties/land		347,360			284,616
Investment in development in progress		(166,718	)		(354,841	)
Investment in land held for development		(38,370	)		(104,336	)
Investment in deferred leasing costs		(23,610	)		(36,095	)

Net cash provided by (used in) investing activities		90,158			(496,726	)


FINANCING ACTIVITIES
Net proceeds from issuance of common shares		45,690			53,754
Purchase of treasury shares		—			(50,624	)
Net proceeds from issuance of preferred units		—			99,957
Redemption of preferred units		—			(23,650	)
Net proceeds from issuance of unsecured notes		—			446,205
Repayments of unsecured notes		—			(250,000	)
Repayments of mortgage loans		(37,437	)		(8,118	)
Proceeds from credit facility		438,700			917,750
Repayments on credit facility		(538,700	)		(791,750	)
Increase in deferred financing costs		(25	)		(967	)
Distribution paid on common shares		(172,953	)		(169,745	)
Distribution paid on units		(23,628	)		(19,838	)

Net cash (used in) provided by financing activities		(288,353	)		202,974


Net decrease in cash and cash equivalents		(5,347	)		(19,522	)
(Decrease) increase in cash and cash equivalents related to foreign currency translation		(3,364	)		1,816
Cash and cash equivalents at beginning of period		37,989			53,737

Cash and cash equivalents at end of period	$	29,278		$	36,031

See accompanying notes.

Liberty Property Trust
Notes to Condensed Consolidated Financial Statements (Unaudited)
September 30, 2008

Note 1: Organization and Basis of Presentation

Organization

Liberty Property Trust (the “Trust”) is a self-administered and self-managed Maryland real estate investment trust (a “REIT”). Substantially all of the Trust’s assets are owned directly or indirectly, and substantially all of the Trust’s operations are conducted directly or indirectly, by Liberty Property Limited Partnership (the “Operating Partnership” and, collectively with the Trust and their consolidated subsidiaries, the “Company”). The Trust is the sole general partner and also a limited partner of the Operating Partnership, owning 95.7% of the common equity of the Operating Partnership at September 30, 2008. 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, Midwestern and Southwestern United States and the United Kingdom. See a description of the Company’s markets in Note 2 to the Company’s financial statements.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Trust and its subsidiaries, including the Operating Partnership, have been prepared in accordance with United States generally accepted accounting principles (“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, 2007. 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 the current period presentation.

Income per Common Share

The following table sets forth the computation of basic and diluted income per common share (in thousands except per share amounts):


	For the Three Months Ended September 30, 2008						For the Three Months Ended September 30, 2007
			Weighted						Weighted
			Average						Average
	Income		Shares				Income		Shares
	(Numerator)		(Denominator)		Per Share		(Numerator)		(Denominator)		Per Share
Basic income from continuing operations
Income from continuing operations	$	28,466		92,928	$	0.30	$	31,322		90,905	$	0.35

Diluted shares for long-term compensation plans		—		441				—		462


Diluted income from continuing operations
Income from continuing operations and assumed conversions		28,466		93,369	$	0.30		31,322		91,367	$	0.35


Basic income from discontinued operations
Discontinued operations net of minority interest		10,088		92,928	$	0.11		5,852		90,905	$	0.06

Dilutive shares for long-term compensation plans		—		441				—		462


Diluted income from discontinued operations
Discontinued operations net of minority interest		10,088		93,369	$	0.11		5,852		91,367	$	0.06


Basic income per common share
Net income		38,554		92,928	$	0.41		37,174		90,905	$	0.41

Dilutive shares for long-term compensation plans		—		441				—		462


Diluted income per common share
Net income and assumed conversions	$	38,554		93,369	$	0.41	$	37,174		91,367	$	0.41


	For the Nine Months Ended September 30, 2008						For the Nine Months Ended September 30, 2007
			Weighted						Weighted
			Average						Average
	Income		Shares				Income		Shares
	(Numerator)		(Denominator)		Per Share		(Numerator)		(Denominator)		Per Share
Basic income from continuing operations
Income from continuing operations	$	86,055		92,324	$	0.93	$	98,965		91,179	$	1.09

Diluted shares for long-term compensation plans		—		302				—		726


Diluted income from continuing operations
Income from continuing operations and assumed conversions		86,055		92,626	$	0.93		98,965		91,905	$	1.08


Basic income from discontinued operations
Discontinued operations net of minority interest		14,089		92,324	$	0.15		30,334		91,179	$	0.33

Dilutive shares for long-term compensation plans		—		302				—		726


Diluted income from discontinued operations
Discontinued operations net of minority interest		14,089		92,626	$	0.15		30,334		91,905	$	0.33


Basic income per common share
Net income		100,144		92,324	$	1.08		129,299		91,179	$	1.42

Dilutive shares for long-term compensation plans		—		302				—		726


Diluted income per common share
Net income and assumed conversions	$	100,144		92,626	$	1.08	$	129,299		91,905	$	1.41

Foreign Currency Translation

The functional currency of the Company’s United Kingdom operations is pounds sterling. The Company translates the financial statements for the United Kingdom operations into US dollars. Gains and losses resulting from this translation do not impact the results of operations and are included in accumulated other comprehensive income as a separate component of shareholders’ equity. Accumulated other comprehensive income consists solely of the foreign currency translation adjustments described. Other comprehensive loss for the three and nine months ended September 30, 2008 was $11.0 million and $10.6 million, respectively, as compared to other comprehensive income of $1.8 million and $4.0 million, respectively, for the same periods in 2007. Upon sale or upon complete or substantially complete liquidation of a foreign investment, the gain or loss on the sale will include the cumulative translation adjustments that have been previously recorded in accumulated other comprehensive income.

Note 2: Segment Information

The Company operates its portfolio of properties primarily throughout the Mid-Atlantic, Southeastern, Midwestern and Southwestern 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/Central PA; Minnesota; Milwaukee; Chicago
Mid-Atlantic		Maryland; Carolinas; Richmond; Virginia Beach
South		Jacksonville; Orlando; Boca Raton; Tampa; Texas; Arizona
Philadelphia		Comcast Center; Northern Virginia/Washington, D.C.
United Kingdom		County of Kent; West Midlands

Commencing with the results for the three months ended March 31, 2008, the Company began to report the results of the Arizona market as part of the “South” reportable segment rather than listing Arizona as its own reportable segment, as it had been presented in 2007. As required by SFAS No. 131 (“SFAS No. 131”) “Disclosure about Segments of an Enterprise and Related Information,” consolidated financial statements issued by the Company in the future will reflect modifications to the Company’s reportable segments resulting from the change described above, including reclassification of all comparative prior period segment information.

The Company reflected $360.3 million in operating real estate assets as of December 31, 2007 for the Philadelphia segment in its Annual Report on Form 10-K. At September 30, 2008, the Philadelphia segment held no operating real estate assets. See Note 4: Joint Ventures.

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 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 SEPTEMBER 30, 2008


	delaware valley				midwest
	southeastern				lehigh /				mid-				phila-			united
	pennsylvania		other		central pa		other		atlantic		South		delphia			kingdom		total
Operating revenue	$	44,425	$	14,581	$	24,362	$	21,338	$	37,938	$	45,298	$	7		$	1,028	$	188,977

Rental property expenses and real estate taxes		14,534		5,155		5,944		8,007		11,870		14,952		(10	)		321		60,773


Property level operating income	$	29,891	$	9,426	$	18,418	$	13,331	$	26,068	$	30,346	$	17		$	707		128,204


Interest and other income		3,333
Interest expense		(38,909	)
General and administrative		(13,145	)
Depreciation and amortization		(44,695	)


Income before property dispositions, income taxes, minority interest and equity in earnings of unconsolidated joint ventures		34,788
Gain on property dispositions		463
Income taxes		(308	)
Minority interest		(6,947	)
Equity in earnings of unconsolidated joint ventures		470
Discontinued operations		10,088

Net income	$	38,554

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2007


	delaware valley				midwest
	southeastern				lehigh /				mid-				phila-		united
	pennsylvania		other		central pa		Other		atlantic		South		delphia		kingdom		total
Operating revenue	$	42,546	$	13,356	$	23,373	$	21,621	$	33,765	$	39,117	$	382	$	958	$	175,118

Rental property expenses and real estate taxes		13,962		4,383		5,915		7,134		9,939		13,800		83		204		55,420


Property level operating income	$	28,584	$	8,973	$	17,458	$	14,487	$	23,826	$	25,317	$	299	$	754		119,698


Interest and other income																		2,443
Interest expense																		(33,043	)
General and administrative																		(13,142	)
Depreciation and amortization																		(40,146	)


Income before property dispositions, income taxes, minority interest and equity in loss of unconsolidated joint ventures																		35,810
Gain on property dispositions																		190
Income taxes																		1,022
Minority interest																		(5,671	)
Equity in loss of unconsolidated joint ventures																		(29	)
Discontinued operations																		5,852


Net income																	$	37,174

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008


	delaware valley				midwest
	southeastern				lehigh /				mid-				phila-		united
	pennsylvania		other		central pa		other		atlantic		South		delphia		kingdom		total
Operating revenue	$	132,915	$	42,379	$	74,436	$	62,938	$	111,059	$	128,093	$	10,687	$	3,480	$	565,987
Rental property expenses and real estate taxes		43,092		14,493		20,165		23,877		32,826		43,171		2,769		939		181,332


Property level operating income	$	89,823	$	27,886	$	54,271	$	39,061	$	78,233	$	84,922	$	7,918	$	2,541		384,655


Interest and other income																		9,459
Interest expense																		(118,336	)
General and administrative																		(40,178	)
Depreciation and amortization																		(132,021	)


Income before property dispositions, income taxes, minority interest and equity in earnings of unconsolidated joint ventures																		103,579
Gain on property dispositions																		1,939
Income taxes																		(1,372	)
Minority interest																		(19,948	)
Equity in earnings of unconsolidated joint ventures																		1,857
Discontinued operations																		14,089


Net income																	$	100,144

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007


	delaware valley				midwest
	southeastern				lehigh /				mid-				phila-		united
	pennsylvania		other		central pa		other		atlantic		South		delphia		kingdom		total
Operating revenue	$	127,690	$	39,691	$	67,114	$	60,436	$	97,341	$	110,571	$	382	$	1,945	$	505,170

Rental property expenses and real estate taxes		42,811		12,669		17,280		20,630		29,334		36,320		85		530		159,659


Property level operating income (loss)	$	84,879	$	27,022	$	49,834	$	39,806	$	68,007	$	74,251	$	297	$	1,415		345,511


Interest and other income																		7,837
Interest expense																		(88,641	)
General and administrative																		(38,866	)
Depreciation and amortization																		(112,897	)


Income before property dispositions, income taxes, minority interest and equity in earnings of unconsolidated joint ventures																		112,944
Gain on property dispositions																		1,641
Income taxes																		508
Minority interest																		(17,154	)
Equity in earnings of unconsolidated joint ventures																		1,026
Discontinued operations																		30,334


Net income																	$	129,299

Note 3: SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”

In accordance with SFAS No. 144, the operating results and gain/(loss) on disposition of real estate for properties sold and held for sale are reflected in the condensed consolidated statements of operations as discontinued operations. Prior period financial statements have been adjusted for discontinued operations. The proceeds from dispositions of operating properties with no continuing involvement for the three and nine months ended September 30, 2008 were $30.7 million and $39.4 million, respectively, as compared to $93.1 million and $275.0 million, respectively, for the same periods in 2007.

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


	Three Months Ended						Nine Months Ended
	September 30, 2008			September 30, 2007			September 30, 2008			September 20, 2007
Revenues	$	1,236		$	9,290		$	4,259		$	33,438
Operating expenses		(577	)		(3,920	)		(1,847	)		(13,524	)
Interest expense		(96	)		(1,214	)		(457	)		(4,930	)
Depreciation and amortization		(255	)		(2,180	)		(866	)		(7,638	)

Income before property dispositions and minority interest	$	308		$	1,976		$	1,089		$	7,346

One property totaling 55,000 square feet located in the Company’s Midwest segment is considered to be held for sale as of September 30, 2008.

Interest expense is allocated to discontinued operations as permitted under EITF Issue 87-24, “Allocation of Interest to Discontinued Operations,” and such interest expense has been included in computing income from discontinued operations. The allocation of interest expense to discontinued operations was based on the ratio of net assets sold (without continuing involvement) to the sum of total net assets plus consolidated debt.

Note 4: Joint Ventures

The Company has an interest in several unconsolidated joint ventures which are described in its 2007 Annual Report on Form 10-K. Joint ventures in which the Company has an interest which were either formed or had significant activity during 2007 or 2008 are as follows:

Liberty/Commerz 1701 JFK Boulevard, LP

On April 13, 2006, the Company entered into a joint venture pursuant to which it sold an 80% interest in the equity of Comcast Center, a 1.25 million square foot office tower the Company was developing in Philadelphia, Pennsylvania. The transaction valued the property at $512 million. Upon signing the joint venture agreement and through March 30, 2008, the criteria for sale recognition in accordance with SFAS No. 66, “Accounting for the Sales of Real Estate” (“SFAS No. 66”) had not been met and the transaction was accounted for as a financing arrangement.

On March 31, 2008, a $324 million, ten-year secured permanent financing at a rate of 6.15% for Comcast Center was funded. The proceeds from this financing were used to pay down outstanding borrowings on the Company’s credit facility.

On March 31, 2008, all conditions for sale treatment as outlined in SFAS No. 66 were satisfied and the Company recognized the sale of Comcast Center to an unconsolidated joint venture. Profit on the transaction has been deferred until the costs of the project can be reasonably estimated.

As of September 30, 2008, the Company had a $14.8 million receivable from this joint venture. This related party receivable is due to the funding of joint venture development costs and is reflected in prepaid expenses and other assets on the Company’s consolidated balance sheets.

Liberty Washington, LP

On October 4, 2007, the Company acquired Republic Property Trust, a Maryland real estate investment trust and Republic Property Limited Partnership, a Delaware limited partnership and Republic’s operating partnership (together, “Republic”) for $916 million. The acquisition of Republic was completed through the merger of Republic with a wholly owned subsidiary of the Company and the merger of Republic’s operating partnership with the Company’s Operating Partnership. Republic operated a portfolio consisting of 2.4 million square feet of office space and six acres of developable land in the Northern Virginia and Washington, D.C. markets. Additionally, Republic was developing a property that, when completed, is expected to contain an additional 176,000 square feet of office space.

Concurrently, the Company formed a joint venture with New York State Common Retirement Fund to own and manage the Republic portfolio. The joint venture, in which the Company holds a 25% interest, purchased the Republic real estate assets for $900 million. The acquisition of Republic resulted in the Company recording $16 million in goodwill and other intangibles.

Blythe Valley JV Sarl

On September 7, 2007, the Company entered into a joint venture to acquire Blythe Valley Park, West Midlands, UK for $325 million. The park consists of 491,000 square feet of operating properties and 98 acres of developable land. The Company holds a $4.1 million note receivable from Blythe Valley JV Sarl and has a 20% interest in the joint venture.

Note 5: Recently Issued Accounting Standards

SFAS No. 157

In September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 157, “Fair Value Measurements” (“SFAS No. 157”), which defines fair value, establishes a framework for consistently measuring fair value under US GAAP and expands disclosures about fair value measurements. The Company adopted the provisions of SFAS No. 157 on January 1, 2008. The adoption of this statement did not have a material effect on the Company’s financial position or results of operations.

SFAS No. 159

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS No. 159”). SFAS No. 159 provides companies with an option to report selected financial assets and liabilities at fair value and establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities. The Company adopted the provisions of SFAS No. 159 on January 1, 2008. The adoption of this statement did not have a material effect on the Company’s financial position or results of operations.

SFAS No. 141(R)

In December 2007, the FASB issued SFAS No. 141(R), “Applying the Acquisition Method” (“SFAS No. 141(R)”). This statement changes the accounting for acquisitions specifically eliminating the step acquisition model, changing the recognition of contingent consideration from being recognized when it is probable to being recognized at the time of acquisition, disallowing the capitalization of transaction costs and delays when restructurings related to acquisitions can be recognized. SFAS No. 141(R) is effective for fiscal years beginning after December 15, 2008 and will impact the accounting for acquisitions made beginning January 1, 2009. The Company is currently assessing the potential impact that the adoption of SFAS No. 141(R) will have on its financial position and results of operations.

SFAS No. 160

In December 2007, the FASB issued SFAS No. 160, “Accounting for Noncontrolling Interests” (“SFAS No. 160”). Under this statement, noncontrolling interests are considered equity and thus the Company’s practice of reporting minority interests in the mezzanine section of the balance sheet will be eliminated. Also, under SFAS No. 160, net income will encompass the total income of all consolidated subsidiaries and there will be separate disclosure on the face of the statement of operations of the attribution of that income between controlling and noncontrolling interests. Last, increases and decreases in noncontrolling interests will be treated as equity transactions. The standard is effective on January 1, 2009. The Company is currently assessing the potential impact that the adoption of SFAS No. 160 will have on its financial position and results of operations.

FSP EITF 03-6-1

In June 2008, the FASB issued FASB Staff Position (“FSP”) Emerging Issues Task Force (“EITF”) 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities”. The FSP states that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. FSP EITF 03-6-1 is effective for fiscal years beginning after December 15, 2008. The Company is currently assessing the potential impact that the adoption of FSP EITF 03-6-1 will have on its financial position and results of operations.

Note 6: Supplemental Disclosure to Statements of Cash Flows

The following are supplemental disclosures to the statements of cash flows for the nine months ended September 30, 2008 and 2007 (amounts in thousands):


Non-cash activity	2008			2007
Write-off of fully depreciated property and deferred costs	$	20,692		$	71,305
Increase in investment in unconsolidated joint ventures		(35,172	)		—
Disposition of properties/development in progress		173,624			—
Disposition of deferred leasing/financing costs		12,526			—
Reduction of accounts receivable		7,854			—
Reduction of deferred rent receivable		6,580			—
Reduction of prepaid and other assets		38,486			—
Reduction of Credit Facility		(152,960	)		—
Reduction of other liabilities		(50,938	)		—
Assumption of mortgage loans		—			54,126

Note 7: Subsequent Events

On October 8, 2008, the Company closed on the sale, through a registered public offering, of 4,750,000 common shares. Net proceeds from the offering were $149.5 million. The proceeds from this offering were used to repay borrowings under the Company’s unsecured credit facility and for general corporate purposes.

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


	September 30, 2008			December 31, 2007
	(Unaudited)
ASSETS
Real estate:
Land and land improvements	$	805,797		$	795,939
Building and improvements		4,235,427			4,432,690
Less accumulated depreciation		(956,732	)		(863,193	)


Operating real estate		4,084,492			4,365,436

Development in progress		294,227			328,138
Land held for development		227,003			247,124


Net real estate		4,605,722			4,940,698

Cash and cash equivalents		29,278			37,989
Restricted cash		41,638			34,567
Accounts receivable		18,782			17,405
Deferred rent receivable		82,653			80,087
Deferred financing and leasing costs, net of accumulated amortization (2008, $136,565; 2007, $119,721)		132,023			144,684
Investments in and advances to unconsolidated joint ventures		255,317			278,383
Assets held for sale		2,145			2,192
Prepaid expenses and other assets		99,139			107,932


Total assets	$	5,266,697		$	5,643,937


LIABILITIES
Mortgage loans	$	205,450		$	243,169
Unsecured notes		2,155,000			2,155,000
Credit facility		370,000			622,960
Accounts payable		54,302			44,666
Accrued interest		38,063			39,725
Distributions payable		60,991			59,849
Other liabilities		207,395			268,926


Total liabilities		3,091,201			3,434,295

Minority interest		944			517

OWNERS’ EQUITY
General partner’s equity — common units		1,805,657			1,837,021
Limited partners’ equity — preferred units		287,960			287,960
— common units		80,935			84,144


Total owners’ equity		2,174,552			2,209,125


Total liabilities and owners’ equity	$	5,266,697		$	5,643,937

See accompanying notes.

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


	Three Months Ended
	September 30, 2008			September 30, 2007
OPERATING REVENUE
Rental	$	131,042		$	122,864
Operating expense reimbursement		57,935			52,254

Total operating revenue		188,977			175,118


OPERATING EXPENSE
Rental property		38,468			36,121
Real estate taxes		22,305			19,299
General and administrative		13,145			13,142
Depreciation and amortization		44,695			40,146

Total operating expenses		118,613			108,708


Operating income		70,364			66,410

OTHER INCOME (EXPENSE)
Interest and other income		3,333			2,443
Interest expense		(38,909	)		(33,043	)

Total other income (expense)		(35,576	)		(30,600	)

Income before property dispositions, income taxes, minority interest and equity in earnings (loss) of unconsolidated joint ventures		34,788			35,810
Gain on property dispositions		463			190
Income taxes		(308	)		1,022
Minority interest		(400	)		11
Equity in earnings (loss) of unconsolidated joint ventures		470			(29	)


Income from continuing operations		35,013			37,004

Discontinued operations (including net gain on property dispositions of $10,232 and $4,145 for the three months ended September 30, 2008 and 2007, respectively)		10,540			6,121


Net income		45,553			43,125

Preferred unit distributions		(5,253	)		(4,246	)


Income available to common unitholders	$	40,300		$	38,879


Earnings per common unit
Basic:
Income from continuing operations	$	0.30		$	0.35
Income from discontinued operations		0.11			0.06


Income per common unit — basic	$	0.41		$	0.41


Diluted:
Income from continuing operations	$	0.30		$	0.35
Income from discontinued operations		0.11			0.06


Income per common unit — diluted	$	0.41		$	0.41


Distributions per common unit	$	0.625		$	0.625


Weighted average number of common units outstanding
Basic		97,118			95,095
Diluted		97,559			95,557

See accompanying notes.

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


	Nine Months Ended
	September 30, 2008			September 30, 2007
OPERATING REVENUE
Rental	$	392,650		$	352,262
Operating expense reimbursement		173,337			152,908

Total operating revenue		565,987			505,170


OPERATING EXPENSE
Rental property		114,717			106,165
Real estate taxes		66,615			53,494
General and administrative		40,178			38,866
Depreciation and amortization		132,021			112,897

Total operating expenses		353,531			311,422


Operating income		212,456			193,748

OTHER INCOME (EXPENSE)
Interest and other income		9,459			7,837
Interest expense		(118,336	)		(88,641	)

Total other income (expense)		(108,877	)		(80,804	)

Income before property dispositions, income taxes, minority interest and equity in earnings of unconsolidated joint ventures		103,579			112,944
Gain on property dispositions		1,939			1,641
Income taxes		(1,372	)		508
Minority interest		(298	)		(45	)
Equity in earnings of unconsolidated joint ventures		1,857			1,026


Income from continuing operations		105,705			116,074

Discontinued operations (including net gain on property dispositions of $13,635 and $24,376 for the nine months ended September 30, 2008 and 2007, respectively)		14,724			31,722


Net income		120,429			147,796

Preferred unit distributions		(15,759	)		(11,874	)
Excess of preferred unit redemption over carrying amount		—			(696	)


Income available to common unitholders	$	104,670		$	135,226


Earnings per common unit
Basic:
Income from continuing operations	$	0.93		$	1.09
Income from discontinued operations		0.15			0.33


Income per common unit — basic	$	1.08		$	1.42


Diluted:
Income from continuing operations	$	0.93		$	1.08
Income from discontinued operations		0.15			0.33
	`

Income per common unit — diluted	$	1.08		$	1.41


Distributions per common unit	$	1.875		$	1.865


Weighted average number of common units outstanding
Basic		96,514			95,369
Diluted		96,816			96,095

See accompanying notes.

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


	Nine Months Ended
	September 30, 2008			September 30, 2007
OPERATING ACTIVITIES
Net income	$	120,429		$	147,796
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		132,106			119,378
Amortization of deferred financing costs		3,327			3,002
Equity in earnings of unconsolidated joint ventures		(1,857	)		(1,026	)
Distributions from unconsolidated joint ventures		700			—
Minority interest in net income		298			45
Gain on property dispositions		(15,574	)		(26,017	)
Noncash compensation		7,793			6,691
Changes in operating assets and liabilities:
Restricted cash		(9,755	)		25,861
Accounts receivable		(7,763	)		(2,770	)
Deferred rent receivable		(9,627	)		(5,140	)
Prepaid expenses and other assets		(28,533	)		(25,736	)
Accounts payable		10,512			28,004
Accrued interest		(1,662	)		(6,474	)
Other liabilities		(7,546	)		10,616

Net cash provided by operating activities		192,848			274,230


INVESTING ACTIVITIES
Investment in properties		(87,245	)		(265,150	)
Investments in and advances to unconsolidated joint ventures		(5,580	)		(22,854	)
Distributions from unconsolidated joint ventures		64,321			1,934
Net proceeds from disposition of properties/land		347,360			284,616
Investment in development in progress		(166,718	)		(354,841	)
Investment in land held for development		(38,370	)		(104,336	)
Investment in deferred leasing costs		(23,610	)		(36,095	)

Net cash provided by (used in) investing activities		90,158			(496,726	)


FINANCING ACTIVITIES
Net proceeds from issuance of preferred units		—			99,957
Redemption of preferred units		—			(23,650	)
Net proceeds from issuance of unsecured notes		—			446,205
Repayments of unsecured notes		—			(250,000	)
Repayments of mortgage loans		(37,437	)		(8,118	)
Proceeds from credit facility		438,700			917,750
Repayments on credit facility		(538,700	)		(791,750	)
Increase in deferred financing costs		(25	)		(967	)
Capital contributions		45,690			53,754
Distribution to partners		(196,581	)		(240,207	)


Net cash (used in) provided by financing activities		(288,353	)		202,974

Net decrease in cash and cash equivalents		(5,347	)		(19,522	)
(Decrease) increase in cash and cash equivalents related to foreign currency translation		(3,364	)		1,816
Cash and cash equivalents at beginning of period		37,989			53,737

Cash and cash equivalents at end of period	$	29,278		$	36,031

See accompanying notes.

Liberty Property Limited Partnership
Notes to Condensed Consolidated Financial Statements (Unaudited)
September 30, 2008

Note 1: Organization and Basis of Presentation

Organization

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Operating Partnership and its subsidiaries have been prepared in accordance with United States generally accepted accounting principles (“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, 2007. 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 the current period presentation.

Income per Common Unit
The following table sets forth the computation of basic and diluted income per common unit (in thousands, except per unit amounts):


	For the Three Months Ended September 30, 2008							For the Three Months Ended September 30, 2007
				Weighted							Weighted
	Income			Average Units				Income			Average Units
	(Numerator)			(Denominator)		Per Unit		(Numerator)			(Denominator)		Per Unit
Income from continuing operations	$	35,013						$	37,004
Less: Preferred unit distributions		(5,253	)						(4,246	)


Basic income from continuing operations

Income from continuing operations available to common unitholders		29,760			97,118	$	0.30		32,758			95,095	$	0.35

Dilutive units for long-term compensation plans		—			441				—			462


Diluted income from continuing operations
Income from continuing operations available to common unitholders and assumed conversions		29,760			97,559	$	0.30		32,758			95,557	$	0.35


Basic income from discontinued operations
Discontinued operations		10,540			97,118	$	0.11		6,121			95,095	$	0.06

Dilutive units for long-term compensation plans		—			441				—			462


Diluted income from discontinued operations
Discontinued operations		10,540			97,559	$	0.11		6,121			95,557	$	0.06


Basic income per common unit
Income available to common unitholders		40,300			97,118	$	0.41		38,879			95,095	$	0.41


Diluted units for long-term compensation plans		—			441				—			462


Diluted income per common unit
Income available to common unitholders and assumed conversions	$	40,300			97,559	$	0.41	$	38,879			95,557	$	0.41


	For the Nine Months Ended September 30, 2008							For the Nine Months Ended September 30, 2007
				Weighted							Weighted
	Income			Average Units				Income			Average Units
	(Numerator)			(Denominator)		Per Unit		(Numerator)			(Denominator)		Per Unit
Income from continuing operations	$	105,705						$	116,074
Less: Preferred unit distributions		(15,759	)						(11,874	)
Less: Excess of preferred unit redemption over carrying amount		—							(696	)


Basic income from continuing operations

Income from continuing operations available to common unitholders		89,946			96,514	$	0.93		103,504			95,369	$	1.09

Dilutive units for long-term compensation plans		—			302				—			726


Diluted income from continuing operations
Income from continuing operations available to common unitholders and assumed conversions		89,946			96,816	$	0.93		103,504			96,095	$	1.08

Basic income from discontinued operations
Discontinued operations		14,724			96,514	$	0.15		31,722			95,369	$	0.33


Dilutive units for long-term compensation plans		—			302				—			726


Diluted income from discontinued operations
Discontinued operations		14,724			96,816	$	0.15		31,722			96,095	$	0.33


Basic income per common unit
Income available to common unitholders		104,670			96,514	$	1.08		135,226			95,369	$	1.42


Diluted units for long-term compensation plans		—			302				—			726


Diluted income per common unit
Income available to common unitholders and assumed conversions	$	104,670			96,816	$	1.08	$	135,226			96,095	$	1.41

Foreign Currency Translation

The functional currency of the Company’s United Kingdom operations is pounds sterling. The Company translates the financial statements for the United Kingdom operations into US dollars. Gains and losses resulting from this translation do not impact the results of operations and are included in general partner’s equity — common units. Other comprehensive loss for the three and nine months ended September 30, 2008 was $11.0 million and $10.6 million, respectively, as compared to other comprehensive income of $1.8 million and $4.0 million, respectively, for the same periods in 2007. Upon sale or upon complete or substantially complete liquidation of a foreign investment, the gain or loss on the sale will include the cumulative translation adjustments that have been previously recorded in general partner’s equity-common units.

Note 2: Segment Information


Reportable Segments		Markets
Delaware Valley		Southeastern Pennsylvania; New Jersey
Midwest		Lehigh/Central PA; Minnesota; Milwaukee; Chicago
Mid-Atlantic		Maryland; Carolinas; Richmond; Virginia Beach
South		Jacksonville; Orlando; Boca Raton; Tampa; Texas; Arizona
Philadelphia		Comcast Center; Northern Virginia/Washington, D.C.
United Kingdom		County of Kent; West Midlands

reportable segment, as it had been presented in 2007. As required by SFAS No. 131 (“SFAS No. 131”) “Disclosure about Segments of an Enterprise and Related Information,” consolidated financial statements issued by the Company in the future will reflect modifications to the Company’s reportable segments resulting from the change described above, including reclassification of all comparative prior period segment information.

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2008


	delaware valley				midwest
	southeastern				lehigh /								phila-			united
	pennsylvania		other		central pa		other		mid-atlantic		South		delphia			kingdom		total
Operating revenue	$	44,425	$	14,581	$	24,362	$	21,338	$	37,938	$	45,298	$	7		$	1,028	$	188,977
Rental property expenses and real estate taxes		14,534		5,155		5,944		8,007		11,870		14,952		(10	)		321		60,773


Property level operating income	$	29,891	$	9,426	$	18,418	$	13,331	$	26,068	$	30,346	$	17		$	707		128,204


Interest and other income																			3,333
Interest expense																			(38,909	)
General and administrative																			(13,145	)
Depreciation and amortization																			(44,695	)


Income before property dispositions, income taxes, minority interest and equity in earnings of unconsolidated joint ventures																			34,788
Gain on property dispositions																			463
Income taxes																			(308	)
Minority interest																			(400	)
Equity in earnings of unconsolidated joint ventures																			470
Discontinued operations																			10,540


Net income																		$	45,553

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2007


	delaware valley				midwest
	southeastern				lehigh /				mid-				phila-		united
	pennsylvania		other		central pa		Other		atlantic		South		delphia		kingdom		total
Operating revenue	$	42,546	$	13,356	$	23,373	$	21,621	$	33,765	$	39,117	$	382	$	958	$	175,118
Rental property expenses and real estate taxes		13,962		4,383		5,915		7,134		9,939		13,800		83		204		55,420

Property level operating income	$	28,584	$	8,973	$	17,458	$	14,487	$	23,826	$	25,317	$	299	$	754		119,698


Interest and other income																		2,443
Interest expense																		(33,043	)
General and administrative																		(13,142	)
Depreciation and amortization																		(40,146	)


Income before property dispositions, income taxes, minority interest and equity in loss of unconsolidated joint ventures																		35,810
Gain on property dispositions																		190
Income taxes																		1,022
Minority interest																		11
Equity in loss of unconsolidated joint ventures																		(29	)
Discontinued operations																		6,121


Net income																	$	43,125

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008


	delaware valley				midwest
	southeastern				lehigh /								phila-		united
	pennsylvania		other		central pa		other		mid-atlantic		South		delphia		kingdom		total
Operating revenue	$	132,915	$	42,379	$	74,436	$	62,938	$	111,059	$	128,093	$	10,687	$	3,480	$	565,987
Rental property expenses and real estate taxes		43,092		14,493		20,165		23,877		32,826		43,171		2,769		939		181,332


Property level operating income	$	89,823	$	27,886	$	54,271	$	39,061	$	78,233	$	84,922	$	7,918	$	2,541		384,655


Interest and other income																		9,459
Interest expense																		(118,336	)
General and administrative																		(40,178	)
Depreciation and amortization																		(132,021	)


Income before property dispositions, income taxes, minority interest and equity in earnings of unconsolidated joint ventures																		103,579
Gain on property dispositions																		1,939
Income taxes																		(1,372	)
Minority interest																		(298	)
Equity in earnings of unconsolidated joint ventures																		1,857
Discontinued operations																		14,724


Net income																	$	120,429

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007


	delaware valley				midwest
	southeastern				lehigh /				mid-				phila-		united
	pennsylvania		other		central pa		other		atlantic		South		delphia		kingdom		total
Operating revenue	$	127,690	$	39,691	$	67,114	$	60,436	$	97,341	$	110,571	$	382	$	1,945	$	505,170
Rental property expenses and real estate taxes		42,811		12,669		17,280		20,630		29,334		36,320		85		530		159,659

Property level operating income	$	84,879	$	27,022	$	49,834	$	39,806	$	68,007	$	74,251	$	297	$	1,415		345,511


Interest and other income																		7,837
Interest expense																		(88,641	)
General and administrative																		(38,866	)
Depreciation and amortization																		(112,897	)


Income before property dispositions, income taxes, minority interest and equity in earnings of unconsolidated joint ventures																		112,944
Gain on property dispositions																		1,641
Income taxes																		508
Minority interest																		(45	)
Equity in earnings of unconsolidated joint ventures																		1,026
Discontinued operations																		31,722


Net income																	$	147,796

Note 3: SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”

In accordance with SFAS No. 144, the operating results and gain/(loss) on disposition of real estate for properties sold and held for sale are reflected in the condensed consolidated statements of operations as discontinued operations. Prior year financial statements have been adjusted for discontinued operations. The proceeds from dispositions of operating properties with no continuing involvement for the three and nine months ended September 30, 2008 were $30.7 million and $39.4 million, respectively, as compared to $93.1 million and $275.0 million, respectively, for the same periods in 2007.

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


	Three Months Ended						Nine Months Ended
	September 30, 2008			September 30, 2007			September 30, 2008			September 30, 2007
Revenues	$	1,236		$	9,290		$	4,259		$	33,438
Operating expenses		(577	)		(3,920	)		(1,847	)		(13,524	)
Interest expense		(96	)		(1,214	)		(457	)		(4,930	)
Depreciation and amortization		(255	)		(2,180	)		(866	)		(7,638	)

Income before property dispositions and minority interest	$	308		$	1,976		$	1,089		$	7,346

One property totaling 55,000 square feet located in the Company’s Midwest segment is considered to be held for sale as of September 30, 2008.

Interest expense is allocated to discontinued operations as permitted under EITF Issue 87-24, "Allocation of Interest to Discontinued Operations,” and such interest expense has been included in computing income from discontinued operations. The allocation of interest expense to discontinued operations was based on the ratio of net assets sold (without continuing involvement) to the sum of total net assets plus consolidated debt.

Note 4: Joint Ventures

Liberty/Commerz 1701 JFK Boulevard, LP

On March 31, 2008, a $324 million, ten year secured permanent financing at a rate of 6.15% for Comcast Center was funded. The proceeds from this financing were used to pay down outstanding borrowings on the Company’s credit facility.

Liberty Washington, LP

Blythe Valley JV Sarl

Note 5: Recently Issued Accounting Standards

SFAS No. 157

SFAS No. 159

SFAS No. 141(R)

SFAS No. 160

In December 2007, the FASB issued SFAS No. 160, “Accounting for Noncontrolling Interests” (“SFAS No. 160”). Under this statement, noncontrolling interests are considered equity and thus the Company’s practice of reporting minority interests in the mezzanine section of the balance sheet will be eliminated. Also, under SFAS No. 160, net income will encompass the total income of all consolidated subsidiaries and there will be separate disclosure on the face of the statement of operations of the attribution of that income between controlling and noncontrolling interests. Last, increases and decreases in noncontrolling interests will be treated as equity transactions. The standard is effective for the year ending December 31, 2009. The Company is currently assessing the potential impact that the adoption of SFAS No. 160 will have on its financial position and results of operations.

Note 6: Supplemental Disclosure to Statements of Cash Flows

The following are supplemental disclosures to the statements of cash flows for the nine months ended September 30, 2008 and 2007 (amounts in thousands):


Non-cash activity	2008			2007
Write-off of fully depreciated property and deferred costs	$	20,692		$	71,305
Increase in investment in unconsolidated joint ventures		(35,172	)		—
Disposition of properties/development in progress		173,624			—
Disposition of deferred leasing/financing costs		12,526			—
Reduction of accounts receivable		7,854			—
Reduction of deferred rent receivable		6,580			—
Reduction of prepaid and other assets		38,486			—
Reduction of credit facility		(152,960	)		—
Reduction of other liabilities		(50,938	)		—
Assumption of mortgage loans		—			54,126

Note 7: Subsequent Events

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

OVERVIEW

Liberty Property Trust (the “Trust”) is a self-administered and self-managed Maryland real estate investment trust (“REIT”). Substantially all of the Trust’s assets are owned directly or indirectly, and substantially all of the Trust’s operations are conducted directly or indirectly, by its subsidiary, Liberty Property Limited Partnership, a Pennsylvania limited partnership (the “Operating Partnership” and, collectively with the Trust and their consolidated subsidiaries, the “Company”).

The Company operates primarily in the Mid-Atlantic, Southeastern, Midwestern and Southwestern United States. Additionally, the Company owns certain assets in the United Kingdom.

As of September 30, 2008, the Company owned and operated 357 industrial and 297 office properties (the “Wholly Owned Properties in Operation”) totaling 62.9 million square feet. In addition, as of September 30, 2008, the Company owned 20 properties under development, which when completed are expected to comprise 5.0 million square feet (the “Wholly Owned Properties under Development”) and 1,352 acres of developable land, substantially all of which is zoned for commercial use. Additionally, as of September 30, 2008, the Company had an ownership interest, through unconsolidated joint ventures, in 46 industrial and 49 office properties totaling 13.1 million square feet (the “JV Properties in Operation” and, together with the Wholly Owned Properties in Operation, the “Properties in Operation”), three properties under development, which when completed are expected to comprise 865,000 square feet (the “JV Properties under Development” and, together with the Wholly Owned Properties under Development, the “Properties under Development”). The Company also has an ownership interest through unconsolidated joint ventures in 684 acres of developable land, substantially all of which is zoned for commercial use.

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

Consistent with the slow down in the economy, rental demand for the Properties in Operation declined for the nine months ended September 30, 2008 as compared to the year ended December 31, 2007. Despite this trend, the Company successfully leased 4.0 million square feet during the three months ended September 30, 2008 and attained occupancy of 91.4% for the Wholly Owned Properties in Operation and 94.7% for the Joint Venture Properties in Operation for a combined occupancy of 92.0% for the Properties in Operation as of that date. Occupancy for the combined portfolio at December 31, 2007 was 92.9%.

GUIDANCE

The Company’s guidance for 2009 is premised on assumptions about the economy, the resulting demand for product and the availability of capital. The Company believes that average occupancy for its Properties in Operation will not increase or decrease by more than 1% for 2009 compared to 2008. Furthermore, the Company believes that straight line rents on renewal and replacement leases for 2009 will on average be 4% to 6% greater than rents on expiring leases.

The slow down in the economy together with the tightening of the credit markets has curtailed capital investment activity. Consistent with this situation, the Company’s revised guidance for 2008 and its guidance for 2009 acquisition and disposition activity is significantly less than its original guidance for 2008. The Company’s guidance for its 2008 and 2009 capital activity is as follows:


Category	2008 Original Guidance	2008 Revised Guidance	2009 Guidance
Wholly Owned Acquisitions	$100-$200 million	$17 million	$—
Wholly Owned Dispositions	$250-$350 million	$104 million	$125-$200 million
Wholly Owned Development Deliveries (1)	$200-$300 million	$200 million	$250-$350 million
Joint Venture Acquisitions	$200-$250 million	$—	$50-$100 million
Joint Venture Dispositions	$—	$—	$—
Joint Venture Development Deliveries (1)	$50-$70 million	$45 million	$100-$175 million


(1)		Excluding Comcast Center

WHOLLY OWNED CAPITAL ACTIVITY

Acquisitions

During the nine months ended September 30, 2008, conditions for the acquisition of properties were unsettled because of adverse events in the credit markets. During the three and nine months ended September 30, 2008, the Company acquired one property representing 107,000 square feet for a Total Investment, as defined below, of $17.0 million. “Total Investment” for a property is defined as the property’s purchase price plus closing costs and management’s estimate, as determined at the time of acquisition, of the cost of necessary building improvements in the case of acquisitions, or land costs and land and building improvement costs in the case of development projects, and, where appropriate, other development costs and carrying costs.

Dispositions

During the nine months ended September 30, 2008, market conditions for dispositions were unsettled, which the Company again attributes to adverse events in the credit markets. Disposition activity allows the Company to, among other things, (1) reduce its holdings in certain markets and product types within a market; (2) lower the average age of the portfolio; and (3) take advantage of favorable market conditions to optimize the cash proceeds from the sale of certain assets. During the three months ended September 30, 2008, the Company realized proceeds of $30.7 million from the sale of six operating properties representing 254,000 square feet. From January 1, 2008 to September 30, 2008, the Company realized proceeds of $41.8 million from the sale of eight operating properties representing 359,000 square feet and 13 acres of land.

Development

The Company continues to pursue development opportunities. During the three months ended September 30, 2008, the Company brought into service six Wholly Owned Properties under Development representing 1.0 million square feet and a Total Investment of $62.0 million, and initiated $46.3 million in real estate development. During the nine months ended September 30, 2008, the Company brought into service 13 Wholly Owned Properties under Development representing 2.1 million square feet and a Total Investment of $132.1 million, and initiated $186.7 million in real estate development. As of September 30, 2008, the projected Total Investment of the Wholly Owned Properties under Development was $437.5 million.

JOINT VENTURE CAPITAL ACTIVITY

The Company periodically enters into joint venture relationships in connection with the execution of its real estate operating strategy.

Acquisitions

During the nine months ended September 30, 2008, none of the unconsolidated joint ventures in which the Company held an interest acquired any properties.

Dispositions

During the nine months ended September 30, 2008, a joint venture in which the Company holds a 50% interest realized proceeds of $1.4 million from the sale of one acre of land.

Development

During the three months ended September 30, 2008, a joint venture in which the Company holds a 50% interest brought into service two Joint Venture Properties under Development representing 296,000 square feet and a Total Investment of $19.1 million. During the nine months ended September 30, 2008, joint ventures in which the Company holds a 50% interest brought into service three Joint Venture Properties under Development representing 351,000 square feet and a Total Investment of $42.5 million. As of September 30, 2008, the projected Total Investment of Joint Venture Properties under Development was $162.3 million.

Liberty/Commerz 1701 JFK Boulevard, LP

On April 13, 2006, the Company entered into a joint venture pursuant to which it sold an 80% interest in the equity of Comcast Center, a 1.25 million square foot office tower the Company was developing in Philadelphia, Pennsylvania. The transaction valued the property at $512 million. Upon signing the joint venture agreement and through March 30, 2008, the criteria for sale recognition in accordance with SFAS No. 66, “Accounting for the Sale of Real Estate” (“SFAS 66”) had not been met and the transaction was accounted for as a financing arrangement.

During the nine months ended September 30, 2008, the Company brought into service the final 306,000 square feet of Comcast Center equaling $124.1 million of Total Investment.

PROPERTIES IN OPERATION

The composition of the Company’s Properties in Operation as of September 30, 2008 and 2007 is as follows (in thousands, except dollars and percentages):


	Net Rent
	Per Square Foot				Total Square Feet				Percent Occupied
	September 30				September 30				September 30
	2008		2007		2008		2007		2008			2007
Wholly Owned Properties in Operation:
Industrial-Distribution	$	4.51	$	4.23		29,809		27,729		90.9	%		94.5	%
Industrial-Flex	$	9.21	$	8.87		11,520		12,207		89.4	%		91.1	%
Office	$	14.17	$	13.60		21,548		21,529		93.2	%		91.9	%

	$	8.73	$	8.38		62,877		61,465		91.4	%		92.9	%


	Net Rent
	Per Square Foot				Total Square Feet				Percent Occupied
	September 30				September 30				September 30
	2008		2007		2008		2007		2008			2007
Joint Venture Properties in Operation:
Industrial-Distribution	$	4.03	$	3.69		8,316		7,705		97.0	%		93.3	%
Industrial-Flex	$	30.47	$	30.04		171		171		89.5	%		89.4	%
Office	$	24.68	$	31.04		4,581		855		90.8	%		90.7	%

	$	11.30	$	6.79		13,068		8,731		94.7	%		93.0	%


	Net Rent
	Per Square Foot				Total Square Feet				Percent Occupied
	September 30				September 30				September 30
	2008		2007		2008		2007		2008			2007
Properties in Operation:
Industrial-Distribution	$	4.40	$	4.11		38,125		35,434		92.2	%		94.2	%
Industrial-Flex	$	9.52	$	9.16		11,691		12,378		89.4	%		91.1	%
Office	$	15.98	$	14.24		26,129		22,384		92.8	%		91.9	%

	$	9.18	$	8.18		75,945		70,196		92.0	%		92.9	%

Geographic segment data for the three and nine months ended September 30, 2008 and 2007 are included in Note 2 to the Company’s financial statements.

Forward-Looking Statements

When used throughout this report, the words “believes,” “anticipates” and “expects” and similar expressions are intended to identify forward-looking statements. Such statements indicate that assumptions have been used that are subject to a number of risks and uncertainties that 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 enter into agreements with, suitable joint venture partners in situations where it believes such arrangements are advantageous; the Company’s ability to identify and secure additional properties and sites, both for itself and the joint ventures to which it is a party, that meet its criteria for acquisition or development; the availability and cost of capital; the effect of prevailing market interest rates; risks related to the integration of the operations of entities that we have acquired or may acquire; risks related to litigation; and other risks described from time to time in the Company’s filings with the 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, 2007 for a discussion of critical accounting policies which include capitalized costs, revenue recognition, allowance for doubtful accounts, impairment of real estate and intangibles. During the three months ended September 30, 2008, 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 and nine months ended September 30, 2008 with the results of operations of the Company for the three and nine months ended September 30, 2007. As a result of the varying levels of development, acquisition and disposition activities by the Company in 2008 and 2007, 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 and Nine Months Ended September 30, 2008 to Three and Nine Months Ended September 30, 2007

Overview

The Company’s average gross investment in operating real estate owned for the three months ended September 30, 2008 increased to $4,994.0 million from $4,647.3 million for the three months ended September 30, 2007, and for the nine months ended September 30, 2008 increased to $5,107.2 million from $4,413.0 million for the nine months ended September 30, 2007. These increases in operating real estate resulted in increases in rental revenue, operating expense reimbursement, rental property operating expenses, real estate taxes and depreciation and amortization expense.

Total operating revenue increased to $189.0 million for the three months ended September 30, 2008 from $175.1 million for the three months ended September 30, 2007 and increased to $566.0 million for the nine months ended September 30, 2008 from $505.2 million for the nine months ended September 30, 2007. The $13.9 million increase during the three months ended September 30, 2008 compared to the same period in 2007 was primarily due to the increase in investment in operating real estate and the increase in operating revenue from the Same Store group of properties, discussed below. These increases were partially offset by a decrease in “Termination Fees”, which totaled $1.2 million for the three months ended September 30, 2008 as compared to $1.9 million for the same period in 2007. The $60.8 million increase during the nine months ended September 30, 2008 compared to the same period in 2007 was primarily due to the increase in investment in operating real estate and the increase in operating revenue from the Same Store group of properties, discussed below, and an increase in Termination Fees, which totaled $3.2 million for the nine months ended September 30, 2008 as compared to $3.1 million for the same period in 2007. 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.

Segments

The Company evaluates the performance of the Properties in Operation by reportable segment (see Note 2 to the Company’s financial statements for a reconciliation to net income). The following table identifies changes in reportable segments (dollars in thousands):

Property Level Operating Income:


	Three Months Ended							Nine Months Ended
	September 30, 2008		September 30, 2007		% inc (dec)			September 30, 2008		September 30, 2007		% inc (dec)
Delaware Valley
- SE Pennsylvania	$	29,891	$	28,584		4.6	% (1)	$	89,823	$	84,879		5.8	% (1)
- Other		9,426		8,973		5.0	% (2)		27,886		27,022		3.2	% (2)
Midwest
- Lehigh/Central PA		18,418		17,458		5.5	% (3)		54,271		49,834		8.9	% (3)
- Other		13,331		14,487		(8.0	%) (4)		39,061		39,806		(1.9	%) (4)
Mid-Atlantic		26,068		23,826		9.4	% (5)		78,233		68,007		15.0	% (5)
South		30,346		25,317		19.9	% (5)		84,922		74,251		14.4	% (3)
Philadelphia		17		299		(94.3	%) (6)		7,918		297		2,566.0	% (6)
United Kingdom		707		754		(6.2	%)		2,541		1,415		79.6	% (1)

Totals	$	128,204	$	119,698		7.1	%	$	384,655	$	345,511		11.3	%


(1)		The increases for the three and/or nine months ended September 30, 2008 versus the three and/or nine months ended September 30, 2007 were primarily due to an increase in average gross investment in operating real estate. This increase was partially offset by a decrease in occupancy and a decrease in rental rates during 2008.

(2)		The increases for the three and nine months ended September 30, 2008 versus the three and nine months ended September 30, 2007 were primarily due to an increase in average gross investment in operating real estate, an increase in rental rates and an increase in occupancy during 2008 compared to 2007.

(3)		The increases for the three and/or nine months ended September 30, 2008 versus the three and/or nine months ended September 30, 2007 were primarily due to an increase in average gross investment in operating real estate and an increase in rental rates during 2008. The increases were partially offset by a decrease in occupancy in 2008 compared to 2007.

(4)		The decreases for the three and nine months ended September 30, 2008 versus the three and nine months ended September 30, 2007 were primarily due to a decrease in occupancy during 2008. These decreases were partially offset by an increase in average gross investment in operating real estate and an increase in rental rates in 2008 compared to 2007.

(5)		The increases for the three and/or nine months ended September 30, 2008 versus the three and/or nine months ended September 30, 2007 were primarily due to an increase in average gross investment in operating real estate, an increase in rental rates and an increase in occupancy during 2008 compared to 2007.

(6)		Fluctuations for the three-month period and for the nine-month period were due to the effect of Comcast Center operation during the relevant periods. Comcast Center was a wholly owned 1,250,000 square foot development property which came into service incrementally from the third quarter of 2007 through the first quarter of 2008. On March 31, 2008, the Company recognized the sale of Comcast Center to an unconsolidated joint venture.

Same Store

Property level operating income, exclusive of Termination Fees, for the Same Store properties decreased to $109.3 million for the three months ended September 30, 2008 from $110.6 million for the three months ended September 30, 2007 on a straight line basis (which recognizes rental revenue evenly over the life of the lease) and remained the same at $108.9 million for the three months ended September 30, 2008 and the three months ended September 30, 2007 on a cash basis. The decrease of 1.2% on a straight line basis was primarily due to a decrease in occupancy for the Same Store properties.

Property level operating income, exclusive of Termination Fees, for the Same Store properties decreased to $328.3 million for the nine months ended September 30, 2008 from $331.2 million for the nine months ended September 30, 2007 on a straight line basis (which recognizes rental revenue evenly over the life of the lease) and decreased to $325.8 million for the nine months ended September 30, 2008 from $325.9 million for the nine months ended September 30, 2007 on a cash basis. These decreases of 0.9% and 0.02%, respectively, were primarily due to a decrease in occupancy for the Same Store properties.

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 593 properties totaling approximately 53.5 million square feet owned on January 1, 2007 and excluding properties sold through September 30, 2008.

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 and nine months ended September 30, 2008 and 2007. Same Store property level operating income is a non-GAAP measure and does not represent income before property dispositions, income taxes, minority interest and equity in earnings of unconsolidated joint ventures 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 Capital Resources” section), GAAP net income and cash flow from operating activities, investing activities and financing activities when considering the Company’s operating performance. Also, set forth below is a reconciliation of Same Store property level operating income to net income (in thousands).


	Three Months Ended						Nine Months Ended
	September 30, 2008			September 30, 2007			September 30, 2008			September 30, 2007
Same Store:
Rental revenue	$	111,784		$	112,700		$	335,173		$	336,139
Operating expenses:
Rental property expense		36,273			35,838			106,997			105,916
Real estate taxes		18,939			16,776			57,230			49,476
Operating expense recovery		(52,727	)		(50,557	)		(157,361	)		(150,490	)

Unrecovered operating expenses		2,485			2,057			6,866			4,902


Property level operating income		109,299			110,643			328,307			331,237
Less straight line rent		352			1,768			2,469			5,338


Cash basis property level operating income	$	108,947		$	108,875		$	325,838		$	325,899


Reconciliation of non-GAAP financial measure:
Property level operating income — Same Store	$	109,299		$	110,643		$	328,307		$	331,237
Property level operating income — properties purchased or developed subsequent to January 1, 2007		17,655			7,190			53,156			11,124
Termination fees		1,250			1,865			3,192			3,150
General and administrative expense		(13,145	)		(13,142	)		(40,178	)		(38,866	)
Depreciation and amortization expense		(44,695	)		(40,146	)		(132,021	)		(112,897	)
Other income (expense)		(35,576	)		(30,600	)		(108,877	)		(80,804	)
Gain on property dispositions		463			190			1,939			1,641
Income taxes		(308	)		1,022			(1,372	)		508
Minority interest		(6,947	)		(5,671	)		(19,948	)		(17,154	)
Equity in earnings of unconsolidated joint ventures		470			(29	)		1,857			1,026
Discontinued operations, net of minority interest		10,088			5,852			14,089			30,334


Net income	$	38,554		$	37,174		$	100,144		$	129,299

General and Administrative

General and administrative expenses remained the same at $13.1 million for the three months ended September 30, 2008 compared to the three months ended September 30, 2007. General and administrative expenses increased to $40.2 million for the nine months ended September 30, 2008 from $38.9 million for the nine months ended September 30, 2007. Increases during the respective periods were primarily due to increases in costs related to compensation expense and increases in personnel consistent with the size and complexity of the Company. The increase for the three-month comparative periods was partially offset by decreases in other expenses, primarily cancelled project expense.

Depreciation and Amortization

Depreciation and amortization increased to $44.7 million for the three months ended September 30, 2008 from $40.1 million for the three months ended September 30, 2007 and increased to $132.0 million for the nine months ended September 30, 2008 from $112.9 million for the nine months ended September 30, 2007. These increases were primarily due to the increase in gross investment in operating real estate during the respective periods and particularly the increased investment in tenant improvement costs, which is depreciated over a shorter period than buildings.

Interest Expense

Interest expense increased to $38.9 million for the three months ended September 30, 2008 from $33.0 million for the three months ended September 30, 2007 and increased to $118.3 million for the nine months ended September 30, 2008 as compared to $88.6 million for the nine months ended September 30, 2007. These increases were related to an increase in the average debt outstanding, which was $2,734.0 million for the three months ended September 30, 2008, compared to $2,721.9 million for the three months ended September 30, 2007 and $2,894.8 million for the nine months ended September 30, 2008 compared to $2,592.1 million for the nine months ended September 30, 2007 and a decrease in capitalized interest costs primarily due to Comcast Center coming into service in late 2007 and in early 2008. The effect of the increase in the average debt outstanding and the decrease in capitalized interest costs was partially offset by a decrease in the weighted average interest rate to 6.1% for the three months ended September 30, 2008 from 6.5% for the three months ended September 30, 2007 and to 6.2% for the nine months ended September 30, 2008 from 6.5% for the nine months ended September 30, 2007.

Interest expense allocated to discontinued operations for the three months ended September 30, 2008 and 2007 was $0.1 million and $1.2 million, respectively, and for the nine months ended September 30, 2008 and 2007 was $0.5 million and $4.9 million, respectively. These decreases were due to the decrease in the level of dispositions in 2008 compared to 2007.

Other

Costs directly related to the development of Properties under Development and land being readied for development are capitalized. Capitalized development costs include interest, development-related salaries and benefits, property taxes, insurance and other directly identifiable costs incurred during the period of development. Capitalized development-related salaries and benefits historically represent approximately 1% to 2% of the cost of developed properties.

Gain on property dispositions increased to $463,000 for the three months ended September 30, 2008 compared to $190,000 for the three months ended September 30, 2007 and to $1.9 million for the nine months ended September 30, 2008 compared to $1.6 million for the nine months ended September 30, 2007. The increases for the three-month and nine-month periods were due to an increase in recognition of gains on the sale of land.

Income from discontinued operations increased to $10.1 million for the three months ended September 30, 2008 compared to $5.9 million for the three months ended September 30, 2007 and decreased to $14.1 million for the nine months ended September 30, 2008 compared to $30.3 million for the nine months ended September 30, 2007. The increase for the three-month period was primarily due to the increase in gains recognized on sales which were $10.2 million for the three months ended September 30, 2008 compared to $4.1 million for the three months ended September 30, 2007. The decrease for the nine months was primarily due to the decrease in gains recognized on sales which were $13.6 million for the nine months ended September 30, 2008 compared to $24.4 million for the nine months ended September 30, 2007.

As a result of the foregoing, the Company’s net income increased to $38.6 million for the three months ended September 30, 2008 from $37.2 million for the three months ended September 30, 2007 and decreased to $100.1 million for the nine months ended September 30, 2008 from $129.3 million for the nine months ended September 30, 2007.

Liquidity and Capital Resources

As of September 30, 2008, the Company had cash and cash equivalents of $70.9 million, including $41.6 million in restricted cash.

Net cash flow provided by operating activities decreased to $192.8 million for the nine months ended September 30, 2008 from $274.2 million for the nine months ended September 30, 2007. This $81.4 million decrease was primarily due to a change in restricted cash and the timing of payments on account. The change in restricted cash is due to the restriction of funds in the United Kingdom for the payment of infrastructure costs. Net cash flow provided by operating activities 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 Wholly Owned Properties in Operation. The current net cash flow is not sufficient to cover these items. The shortfall for 2008 is estimated to be less than the low end of guidance which is $20 million to $25 million. The Company anticipates covering this shortfall through additional borrowings and asset dispositions.

Net cash provided by investing activities was $90.2 million for the nine months ended September 30, 2008 compared to net cash used of $496.7 million for the nine months ended September 30, 2007. This $586.9 million change primarily resulted from an increase in net proceeds from the disposition of properties/land and a decrease in investment in properties, development in progress and land held for development. Net cash from the disposition of properties was provided primarily through the sale of Comcast Center to an unconsolidated joint venture. The joint venture obtained the funds to purchase the property through the funding of a $324 million permanent financing. See Note 4 to the Company’s financial statements.

Net cash used in financing activities was $288.4 million for the nine months ended September 30, 2008 compared to net cash provided of $203.0 million for the nine months ended September 30, 2007. This $491.4 million change was primarily due to the decreased net borrowings on unsecured debt including unsecured notes and the credit facility during the nine months ended September 30, 2008 due to decreased investment activity during 2008. Net cash provided by or used in financing activities includes proceeds from the issuance of equity and debt, net of debt repayments and equity repurchases 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 and proceeds from the disposition of properties. For the nine months ended September 30, 2008, a significant portion of these activities were funded through a $600 million Credit Facility (the “Credit Facility”). The interest rate on borrowings under the Credit Facility fluctuates based upon ratings from Moody’s Investors Service, Inc. (“Moody’s”), Standard and Poor’s Ratings Group (“S&P”) and Fitch, Inc. (“Fitch”). The current ratings for the Company’s senior unsecured debt are Baa2, BBB and BBB+ from Moody’s, S&P and Fitch, respectively. At these ratings, the interest rate for borrowings under the Credit Facility is 65 basis points over LIBOR. The Credit Facility contains an accordion feature whereby the Company may borrow an additional $200 million. The Credit Facility expires in January 2010, and has a one-year extension option.

Additionally, the Company has entered into an agreement to fund its planned improvements for the Kings Hill Phase 2 land development project. At September 30, 2008, the Company had drawn £1.7 million from a £7 million revolving credit facility. The facility expires on November 22, 2011.

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 fixed charge coverage ratio. As of September 30, 2008 the Company’s debt to gross assets ratio was 43.9%, and for the nine months ended September 30, 2008, the fixed charge coverage ratio was 2.4x. Debt to gross assets equals total long-term debt, borrowings under the Credit Facility divided by total assets plus accumulated depreciation. The fixed charge coverage ratio 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 units.

As of September 30, 2008, $205.5 million in mortgage loans and $2,155.0 million in unsecured notes were outstanding with a weighted average interest rate of 6.6%. The interest rates on $2,357.4 million of mortgage loans and unsecured notes are fixed and range from 5.00% to 8.75%. The weighted average remaining term for these mortgage loans and unsecured notes is 5.1 years.

The scheduled principal amortization and maturities of the Company’s mortgage loans, unsecured notes outstanding and the Credit Facility and the related weighted average interest rates as of September 30, 2008 are as follows (in thousands, except percentages):


	MORTGAGES										WEIGHTED
	PRINCIPAL		PRINCIPAL		UNSECURED		CREDIT				AVERAGE
	AMORTIZATION		MATURITIES		NOTES		FACILITY		TOTAL		INTEREST RATE
2008 (3 months)	$	2,049	$	—	$	—	$	—	$	2,049		6.95	%
2009		6,589		46,314		270,000		—		322,903		7.76	%
2010		5,823		4,736		200,000		370,000		580,559		5.16	%
2011		5,160		13,765		250,000		—		268,925		7.24	%
2012		4,336		32,875		235,000		—		272,211		6.47	%
2013		3,857		4,510		—		—		8,367		5.79	%
2014		3,888		2,684		200,000		—		206,572		5.66	%
2015		3,336		44,469		300,000		—		347,805		5.25	%
2016		2,409		16,880		300,000		—		319,289		5.55	%
2017		1,770		—		300,000		—		301,770		6.62	%
2018 & thereafter		—		—		100,000		—		100,000		7.50	%


	$	39,217	$	166,233	$	2,155,000	$	370,000	$	2,730,450		6.15	%

Mortgage loans and unsecured notes totaling approximately $325 million are due from October 1, 2008 through December 31, 2009. The Company intends to satisfy these maturities and its other obligations which are primarily completion of its development properties from a variety of sources. These sources include borrowing capacity under its Credit Facility, proceeds to be realized from the sale of real estate assets and the $149.5 million which the Company received on October 8, 2008 as net proceeds from the sale in a registered public offering of 4,750,000 common shares.

The Company has historically sourced capital from the public debt markets. The liquidity disruption in today’s credit markets has caused spreads on public debt to widen significantly. Spreads are also wider and funds less available for other sources of debt funding such as: accordion features on credit facilities, term loans and traditional secured financing.

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 endeavors to maintain high occupancy levels while increasing rental rates and controlling costs.

The expiring square feet and annual net rent by year for the Properties in Operation as of September 30, 2008 are as follows (in thousands):


	Industrial-				Industrial-
	Distribution				Flex				Office				Total
Wholly Owned Properties	Square		Annual		Square		Annual		Square		Annual		Square		Annual
in Operation:	Feet		Rent		Feet		Rent		Feet		Rent		Feet		Rent
2008 (3 months)		562	$	2,665		252	$	2,286		546	$	7,829		1,360	$	12,780
2009		3,070		13,197		1,652		15,141		2,685		39,225		7,407		67,563
2010		3,313		16,057		1,722		16,649		2,989		43,073		8,024		75,779
2011		2,989		13,666		1,281		13,233		2,313		35,694		6,583		62,593
2012		4,738		23,368		1,522		15,032		2,279		39,982		8,539		78,382
2013		2,011		10,177		1,308		13,813		2,540		42,588		5,859		66,578
Thereafter		10,409		58,265		2,563		30,540		6,740		115,320		19,712		204,125

TOTAL		27,092	$	137,395		10,300	$	106,694		20,092	$	323,711		57,484	$	567,800


	Industrial-				Industrial-
	Distribution				Flex				Office				Total
Joint Venture Properties	Square		Annual		Square		Annual		Square		Annual		Square		Annual
in Operation:	Feet		Rent		Feet		Rent		Feet		Rent		Feet		Rent
2008 (3 months)		319	$	1,089		4	$	132		124	$	2,976		447	$	4,197
2009		1,350		5,440		11		287		506		11,533		1,867		17,260
2010		1,073		4,354		24		796		415		9,270		1,512		14,420
2011		938		3,950		11		335		452		11,112		1,401		15,397
2012		297		1,454		63		1,900		180		4,943		540		8,297
2013		534		2,316		—		—		248		6,105		782		8,421
Thereafter		3,557		18,299		39		1,212		2,236		75,626		5,832		95,137

TOTAL		8,068	$	36,902		152	$	4,662		4,161	$	121,565		12,381	$	163,129


	Industrial-				Industrial-
	Distribution				Flex				Office				Total
Properties	Square		Annual		Square		Annual		Square		Annual		Square		Annual
in Operation:	Feet		Rent		Feet		Rent		Feet		Rent		Feet		Rent
2008 (3 months)		881	$	3,754		256	$	2,418		670	$	10,805		1,807	$	16,977
2009		4,420		18,637		1,663		15,428		3,191		50,758		9,274		84,823
2010		4,386		20,411		1,746		17,445		3,404		52,343		9,536		90,199
2011		3,927		17,616		1,292		13,568		2,765		46,806		7,984		77,990
2012		5,035		24,822		1,585		16,932		2,459		44,925		9,079		86,679
2013		2,545		12,493		1,308		13,813		2,788		48,693		6,641		74,999
Thereafter		13,966		76,564		2,602		31,752		8,976		190,946		25,544		299,262

TOTAL		35,160	$	174,297		10,452	$	111,356		24,253	$	445,276		69,865	$	730,929

The scheduled deliveries of the 5.0 million square feet of Properties under Development as of September 30, 2008 are as follows (dollars in thousands):


		Square Feet
	Scheduled	Industrial-		Industrial-						Percent			Total
	In-Service Date	Distribution		Flex		Office		Total		Leased			Investment
Wholly Owned Properties under Development	4th Quarter 2008		963,540		—		103,295		1,066,835		9.8	%	$	66,980
	1st Quarter 2009		—		—		170,427		170,427		72.5	%		32,446
	2nd Quarter 2009		920,400		126,000		77,708		1,124,108		4.8	%		73,179
	3rd Quarter 2009		654,040		68,700		333,006		1,055,746		24.0	%		118,429
	4th Quarter 2009		345,500		—		104,494		449,994		87.9	%		75,935
	2nd Quarter 2010		—		—		95,261		95,261		38.3	%		24,236
	3rd Quarter 2010		—		—		211,236		211,236		50.8	%		46,266

	TOTAL		2,883,480		194,700		1,095,427		4,173,607		25.8	%	$	437,471


Joint Venture Properties under Development	4th Quarter 2009		225,000		—		176,394		401,394		1.2	%		138,275
	1st Quarter 2010		463,636		—		—		463,636		—			24,008

	TOTAL		688,636		—		176,394		865,030		0.6	%	$	162,283


Total Properties under Development	TOTAL		3,572,116		194,700		1,271,821		5,038,637		21.4	%	$	599,754

The Company has an effective S-3 shelf registration statement on file with the SEC pursuant to which the Trust and the Operating Partnership may issue an unlimited amount of equity securities and debt securities.

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 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 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 (“FFO”) available to common shareholders also does not represent cash flows generated from operating, investing or financing activities as defined by GAAP. Funds from operations available to common shareholders for the three and nine months ended September 30, 2008 and 2007 are as follows (in thousands, except per share amounts):


	Three Months Ended						Nine Months Ended
	September 30, 2008			September 30, 2007			September 30, 2008			September 30, 2007
Reconciliation of net income to FFO — basic

Net Income	$	38,554		$	37,174		$	100,144		$	129,299

Basic — Income available to common shareholders		38,554			37,174			100,144			129,299
*Basic — income available to common shareholders per weighted average share*	$	0.41		$	0.41		$	1.08		$	1.42

Adjustments:
Depreciation and amortization of unconsolidated joint ventures		4,331			1,134			12,208			2,819
Depreciation and amortization		44,173			41,715			130,803			118,704
Gain on property dispositions		(10,542	)		(5,302	)		(14,674	)		(27,238	)
Minority interest share in addback for depreciation and amortization and gain on property dispositions		(1,629	)		(1,648	)		(5,538	)		(4,132	)

Funds from operations available to common shareholders — basic	$	74,887		$	73,073		$	222,943		$	219,452


*Basic Funds from operations available to common shareholders per weighted average share*	$	0.81		$	0.80		$	2.41		$	2.41

Reconciliation of net income to FFO - diluted:

Net Income	$	38,554		$	37,174		$	100,144		$	129,299

Diluted — income available to common shareholders		38,554			37,174			100,144			129,299
*Diluted — income available to common shareholders per weighted average share*	$	0.41		$	0.41		$	1.08		$	1.41

Adjustments:
Depreciation and amortization of unconsolidated joint ventures		4,331			1,134			12,208			2,819
Depreciation and amortization		44,173			41,715			130,803			118,704
Gain on property dispositions		(10,542	)		(5,302	)		(14,674	)		(27,238	)
Minority interest less preferred share distributions and excess of preferred unit redemption over carrying amount		1,746			1,705			4,526			5,927


Funds from operations available to common shareholders — diluted	$	78,262		$	76,426		$	233,007		$	229,511


*Diluted Funds from operations available to common shareholders per weighted average share*	$	0.80		$	0.80		$	2.41		$	2.39

Reconciliation of weighted average shares:
Weighted average common shares — all basic calculations		92,928			90,905			92,324			91,179
Dilutive shares for long term compensation plans		441			462			302			726


Diluted shares for net income calculations		93,369			91,367			92,626			91,905
Weighted average common units		4,190			4,190			4,190			4,190


Diluted shares for Funds from operations calculations		97,559			95,557			96,816			96,095

Inflation

Inflation has remained relatively low in recent years, and as a result, it has not had a significant impact on the Company during this period. In the past 12 months there has been a dramatic increase in the price of oil and other commodities which could result in an increase in inflation. However, weakness in the national economy has resulted in Federal Reserve Board action designed to discourage increases in interest rates. To the extent an increase in inflation would result in increased operating costs, such as insurance, real estate taxes and utilities, substantially all of the tenants’ leases require the tenants to absorb these costs as part of their rental obligations. In addition, inflation also may have the effect of increasing market rental rates.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

There have been no material changes to the Company’s exposure to market risk since its Annual Report on Form 10-K for the year ended December 31, 2007.

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 (i) recorded, processed, summarized and reported within the time periods specified in SEC’s rules and forms and (ii) 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.

Changes in Internal Controls

There were no changes in the Company’s internal control over financial reporting during the quarter ended September 30, 2008 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The Company has been substituted for Republic as a party to certain litigation as a result of the Company’s acquisition of Republic on October 4, 2007. The litigation arises out of a dispute between Republic and certain parties, two of whom were members of Republic’s Board of Trustees and “founders” of Republic. The dispute includes claims arising from the termination of a development arrangement in West Palm Beach, Florida and an attempt by Republic to acquire a certain office property from an entity controlled by the aforementioned related parties pursuant to an option agreement entered into at the time of Republic’s formation. The litigation has been summarized in previous filings. Material developments in the litigation are summarized below.

As noted in prior filings, Republic filed a lawsuit against Messrs. Kramer and Grigg and Republic Properties Corporation in the United States District Court (“the Court”) for the District of Columbia. Republic Property Corporation, Messrs. Kramer and Grigg filed motions to dismiss this lawsuit. On March 31, 2008, the Court granted the motion to dismiss. The Company filed a motion for reconsideration of the grant of the motion to dismiss on April 14, 2008. On April 28, 2008, Republic Property Corporation and Messrs. Kramer and Grigg filed their opposition to the Company’s motion and on May 8, 2008 the Company replied to their opposition. On August 13, 2008, the Court denied the motion for reconsideration. The Company has appealed the Court’s decision.

As noted in prior filings, Republic filed a lawsuit against 25 Massachusetts Avenue Property LLC (the “Owner”) of Republic Square I in the Court of Chancery in the State of Delaware. The matter was tried in 2007. On April 7, 2008, the Court of Chancery issued an opinion concluding that neither party is entitled to relief and ordering that the Lis Pendens be lifted. On April 15, 2008, the Owner filed a notice of appeal from dismissal of its counterclaims. The parties have fully briefed the Owner’s appeal to the Delaware Supreme Court, to which all appeals are made. Oral argument of this matter is scheduled for November 12, 2008.

Item 1A. Risk Factors

There have been no material changes to the risk factors disclosed in Item 1A of Part 1 “Risk Factors,” in our Form 10-K for the year ended December 31, 2007, with the exception of the following:

Recent uncertainty in the global credit markets could adversely affect our business and financial condition.

The global credit markets have experienced significant dislocations and liquidity disruptions in 2008, which has caused the spreads on prospective debt financings to widen considerably. These circumstances have materially impacted liquidity in the debt markets, making financing terms for borrowers less attractive, and in certain cases have resulted in the unavailability of certain types of debt financing. Continued uncertainty in the credit markets may negatively impact our ability to access additional debt financing or to refinance existing debt maturities on favorable terms or at all, which could negatively affect our ability to fund current and future expansion and build outs of existing properties, as well as future acquisitions and development. A prolonged downturn in the credit markets may cause us to seek alternative sources of potentially less attractive financing, and may require us to adjust our business plan accordingly. The uncertainty in the credit markets could make it more challenging for us to carry out our financing objectives.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults upon Senior Securities

None.

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

None.

Item 6. Exhibits


12.1*		Statement Re: Computation of Ratio of Earnings to Fixed Charges and Ratio of Earnings to Combined Fixed Charges.

31.1*		Certification of the Chief Executive Officer of Liberty Property Trust required by Rule 13a-14(a) under the Securities Exchange Act of 1934.

31.2*		Certification of the Chief Financial Officer of Liberty Property Trust required by Rule 13a-14(a) under the Securities Exchange Act of 1934.

31.3*		Certification 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*		Certification 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*		Certification 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*		Certification 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*		Certification 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*		Certification 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.

EXHIBIT INDEX


EXHIBIT
NO.		DESCRIPTION

12.1		Statement Re: Computation of Ratio of Earnings to Fixed Charges and Ratio of Earnings to Combined Fixed Charges.

31.1		Certification of the Chief Executive Officer of Liberty Property Trust required by Rule 13a-14(a) under the Securities Exchange Act of 1934.

31.2		Certification of the Chief Financial Officer of Liberty Property Trust required by Rule 13a-14(a) under the Securities Exchange Act of 1934.

31.3		Certification 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		Certification 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		Certification 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		Certification 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		Certification 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		Certification 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.)


LIBERTY PROPERTY TRUST

/s/ WILLIAM P. HANKOWSKY William P. Hankowsky		November 7, 2008 Date
President and Chief Executive Officer

/s/ GEORGE J. ALBURGER, JR. George J. Alburger, Jr.		November 7, 2008 Date
Executive Vice President and Chief Financial Officer


LIBERTY PROPERTY LIMITED PARTNERSHIP

BY:Liberty Property Trust
General Partner

/s/ WILLIAM P. HANKOWSKY William P. Hankowsky		November 7, 2008 Date
President and Chief Executive Officer

/s/ GEORGE J. ALBURGER, JR. George J. Alburger, Jr.		November 7, 2008 Date
Executive Vice President and Chief Financial Officer


	Nine months ended September 30, 2008
Earnings before fixed charges:
Income before allocation of minority interest and income from investments in unconsolidated subsidiaries	$	109,667
Add: Interest expense		114,888
Depreciation expense on cap’d interest		862
Amortization of deferred financing costs		3,448


Earnings before fixed charges	$	228,865


Fixed charges:
Interest expense	$	114,888
Amortization of deferred financing charges		3,448
Capitalized interest		16,793


Fixed charges		135,129


Preferred share distributions		—
Preferred unit distributions		15,759


Combined fixed charges	$	150,888


Ratio of earnings to fixed charges		1.69


Ratio of earnings to combined fixed charges		1.52


Date: November 7, 2008	By:	/s/ WILLIAM P. HANKOWSKY
		William P. Hankowsky
		Chairman, President and Chief Executive Officer


Date: November 7, 2008	By:	/s/ GEORGE J. ALBURGER, JR. George J. Alburger, Jr.
		Executive Vice President and Chief Financial Officer


Index		Page

PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Condensed consolidated balance sheets of Liberty Property Trust at September 30, 2008 and December 31, 2007		4

	Condensed consolidated statements of operations of Liberty Property Trust for the three months ended September 30, 2008 and September 30, 2007		5

	Condensed consolidated statements of operations of Liberty Property Trust for the nine months ended September 30, 2008 and September 30, 2007		6

	Condensed consolidated statements of cash flows of Liberty Property Trust for the nine months ended September 30, 2008 and September 30, 2007		7

	Notes to condensed consolidated financial statements of Liberty Property Trust		8

	Condensed consolidated balance sheets of Liberty Property Limited Partnership at September 30, 2008 and December 31, 2007		15

	Condensed consolidated statements of operations of Liberty Property Limited Partnership for the three months ended September 30, 2008 and September 30, 2007		16

	Condensed consolidated statements of operations of Liberty Property Limited Partnership for the nine months ended September 30, 2008 and September 30, 2007		17

	Condensed consolidated statements of cash flows of Liberty Property Limited Partnership for the nine months ended September 30, 2008 and September 30, 2007		18

	Notes to condensed consolidated financial statements of Liberty Property Limited Partnership		19

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		27

Item 3.	Quantitative and Qualitative Disclosures about Market Risk		39

Item 4.	Controls and Procedures		39

PART II.	OTHER INFORMATION		40

Item 1.	Legal Proceedings		40

Item 1A.	Risk Factors		40

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		40

Item 3.	Defaults Upon Senior Securities		40

Item 4.	Submission of Matters to a Vote of Security Holders		40

Item 5.	Other Information		41

Item 6.	Exhibits		42

Signatures for Liberty Property Trust			43

Signatures for Liberty Property Limited Partnership			44