-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AbsiX2Ag4ksFGA7wMLAS4AZPMHFHxgck5cUr8/+2asLX2EIIyIJPXklpV4kqeyyU z0ghqv19FAmjZr50qqBshw== 0000921112-96-000013.txt : 19961220 0000921112-96-000013.hdr.sgml : 19961220 ACCESSION NUMBER: 0000921112-96-000013 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961219 ITEM INFORMATION: Acquisition or disposition of assets FILED AS OF DATE: 19961219 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: LIBERTY PROPERTY TRUST CENTRAL INDEX KEY: 0000921112 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 232766549 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13130 FILM NUMBER: 96682966 BUSINESS ADDRESS: STREET 1: 65 VALLEY STREAM PARKWAY STREET 2: STE 100 CITY: MALVERN STATE: PA ZIP: 19355 BUSINESS PHONE: 6106481700 MAIL ADDRESS: STREET 1: 65 VALLEY STREAM PKWY STREET 2: SUITE 100 CITY: MALVERN STATE: PA ZIP: 19355 FORMER COMPANY: FORMER CONFORMED NAME: ROUSE & ASSOCIATES PROPERTY TRUST DATE OF NAME CHANGE: 19940421 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LIBERTY PROPERTY LIMITED PARTNERSHIP CENTRAL INDEX KEY: 0000921113 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 237768996 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 033-77082 FILM NUMBER: 96682967 BUSINESS ADDRESS: STREET 1: 65 VALLEY STREAM PARKWAY STREET 2: STE 100 CITY: MALVERN STATE: PA ZIP: 19355 BUSINESS PHONE: 6106481700 MAIL ADDRESS: STREET 1: 65 VALLEY STREAM PKWY STREET 2: SUITE 100 CITY: MALVERN STATE: PA ZIP: 19355 FORMER COMPANY: FORMER CONFORMED NAME: ROUSE & ASSOCIATES LTD PART DATE OF NAME CHANGE: 19940331 8-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20546 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): December 10, 1996 LIBERTY PROPERTY TRUST LIBERTY PROPERTY LIMITED PARTNERSHIP ------------------------------------ (Exact name of registrant as specified in its charter) MARYLAND 1-13130 23-7768996 PENNSYLVANIA 1-13132 23-2766549 - --------------------------- ------------- ------------------- State or other jurisdiction (Commission (I.R.S. Employer of incorporation) File Number) Identification No.) 65 VALLEY STREAM PARKWAY, SUITE 100 MALVERN, PENNSYLVANIA 19355 - --------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (610) 648-1700 ITEM 5: OTHER EVENTS - ----------------------- Liberty Property Limited Partnership, a Pennsylvania limited partnership (the "Operating Partnership"), acquired eighteen properties from unrelated parties during the period from January 1, 1996 to December 10, 1996. In addition, the Operating Partnership is contractually obligated to close on, has completed the due diligence on, and anticipates closing on one additional property prior to December 31, 1996. Collectively, the properties acquired and the property which is anticipated to be acquired prior to December 31, 1996 are referred to as the "Acquired Properties." Liberty Property Trust, a Maryland real estate investment trust (the "Trust") owns an approximate 89.87% interest in the Operating Partnership (as of September 30, 1996) (the Trust and the Operating Partnership are collectively referred to as the "Company"): Although the acquisitions do not involve a significant amount of assets or involve the acquisition of a business as such terms are used in Form 8-K, pursuant to Rule 3-14 of Regulation S-X, audited and unaudited historical financial information concerning certain of the Acquired Properties is provided in Item 7 of this Current Report on Form 8-K. Additionally, certain pro forma financial information is provided in Item 7. The combined financial statements of the ten properties, listed in paragraph A below for the year ended December 31, 1995 and representing a majority of all properties acquired through December 10, 1996 have been audited (the "Section A Properties"). The combined financial statements of the Section A Properties for the period from January 1, 1996 to September 30, 1996 have not been audited. Paragraph B below lists the Section B Properties (the "Section B Properties") which are the remaining properties acquired by the Company during 1996. The pro forma financial information reflects certain of the incremental effects of the Acquired Properties on the financial statements of the Trust and the Operating Partnership. A. THE SECTION A PROPERTIES - ---------------------------- The Section A Properties consist of nine acquired properties and one acquisition which the Operating Partnership is obligated to close on, has completed the due diligence relating to and anticipates closing on prior to December 31, 1996: Completed Acquisitions: 901 Route 73, a 39,434 square foot office building in Marlton, New Jersey, on March 12, 1996 for $3.0 million. 1500 Route 73 North, a 62,069 square foot office building in Marlton, New Jersey, on May 8, 1996 for $3.4 million. -2- 111-195 Witmer Road, a 55,354 square foot five-building office project in Horsham, Pennsylvania, on May 17, 1996 for $3.4 million. 440 and 460 East Swedesford Road, a 141,573 square foot two- building office project in King of Prussia, Pennsylvania, on June 20, 1996 for $10.7 million. 2460 and 2490 General Armistead Avenue, a 57,642 square foot two-building industrial-flex project in King of Prussia, Pennsylvania, on June 28, 1996 for $1.8 million. 300 and 400 Welsh Road, a 60,184 square foot two-building office project in Horsham, Pennsylvania on June 28, 1996 for $4.1 million. 83, 85 and 87 South Commerce Way, a 62,755 square foot three- building office project in Bethlehem, Pennsylvania on June 28, 1996 for $3.9 million. 3501 Riga Boulevard, a 57,220 square foot industrial-flex building in Tampa, Florida on August 1, 1996 for $3.8 million. Two Walnut Grove Drive, an 81,846 square foot office building along with 19.4 acres of land in Horsham, Pennsylvania on December 10, 1996 for $12.5 million. Additional Property: 200, 220 and 240 Gibraltar Road, a 192,000 square foot three- building office project in Horsham, Pennsylvania for $18.8 million. B. THE SECTION B PROPERTIES - ---------------------------- The Section B Properties consist of nine acquired properties, (the "Section B Properties"): 510-512 Sharptown Road, a 98,156 square foot two-building industrial-distribution project in Bridgeport, New Jersey on March 12, 1996 for $2.9 million. 263 Quigley Boulevard and 34 Blevins Drive, a 93,522 square foot two-building industrial-distribution and industrial-flex project in New Castle, Delaware on September 16, 1996 for $3.1 million. 4200 Oakleys Court, an 80,000 square foot industrial- distribution project in Richmond, Virginia on September 30, 1996 for $3.1 million. The project also includes 23.3 acres of adjacent vacant land. -3- 1821 Battery Dantzler Road, a 129,600 square foot industrial- distribution project in Chester, Virginia on September 30, 1996 for $3.4 million. The project also includes .1 acre of adjacent vacant land. 5000 Cox Road, a 58,367 square foot industrial-flex building in Glen Allen, Virginia on September 30, 1996 for $4.8 million. The project also includes 4.4 acres of adjacent vacant land. 510 and 520 Eastpark Court, a 196,102 square foot two-building industrial-flex and industrial-distribution project in Sandston, Virginia on September 30, 1996 for $8.2 million. The project includes 22.4 acres of adjacent vacant land. 7248 Industrial Boulevard, a 495,000 square foot industrial- distribution project in Allentown, Pennsylvania on November 13, 1996 for $15.8 million. 111 Kelsey Lane, a 60,200 square foot industrial-flex project in Tampa, Florida on November 14, 1996 for $1.8 million. 104 Gaither Drive, a 45,390 square foot industrial-distribution project in Mount Laurel, New Jersey on November 20, 1996 for $1.3 million. The properties were acquired for cash using funds provided by the Company's revolving line of credit. The costs shown above for each acquisition represent the initial cost at the time of acquisition. The Company believes these acquisitions are consistent with the Company's objective of becoming the preeminent real estate operating company focusing on suburban industrial and office properties in the Southeastern and Mid-Atlantic States. Factors considered by the Company in determining the price to be paid for the properties included their historical and expected cash flow, the nature of tenants and terms of leases in place, occupancy rates, opportunities for alternative and new tenancies, current operating costs and real estate taxes on the properties and anticipated changes therein under Company ownership, physical condition and locations of the properties, the anticipated effect to the Company's financial results (particularly funds from operations), the ability to sustain and potentially increase its distributions to Company shareholders, and other factors. The Company took into consideration the capitalization rates at which it believed other comparable buildings were recently sold, but determined the price it was willing to pay primarily on factors discussed above relating to the properties themselves and their fit into the Company's operations. The Company, after investigation of the properties, is not aware of any material fact other than those enumerated above, that would cause the financial information reported not to be necessarily indicative of future operating results. -4- ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS - ------------------------------------------ PAGE ----- (a) Combined Statement of Operating Revenues and Certain Operating Expenses of the Section A Properties Report of Independent Auditors........................ 6 Combined Statement of Operating Revenues and Certain Operating Expenses for the Section A Properties for the nine months ended September 30, 1996 (unaudited) and for the year ended December 31, 1995.............................................. 7 Notes to Combined Statement of Operating Revenues and Certain Operating Expenses for the Section A Properties for the nine months ended September 30, 1996 (unaudited) and for the year ended December 31, 1995................................. 8-10 (b) Pro Forma Financial Information (unaudited) Liberty Property Trust...................................... 11 Pro Forma Condensed Consolidated Balance Sheet as of September 30, 1996................................ 12 Pro Forma Consolidated Statement of Operations for the nine months ended September 30, 1996.......... 13 Notes to Pro Forma Condensed Consolidated Financial Statements as of and for the nine months ended September 30, 1996................................ 14-15 Pro Forma Consolidated Statement of Operations for the year ended December 31, 1995.................. 16 Notes to Pro Forma Consolidated Statement of Operations for the year ended December 31, 1995... 17 Liberty Property Limited Partnership........................ 18 Pro Forma Condensed Consolidated Balance Sheet as of September 30, 1996................................ 19 Pro Forma Consolidated Statement of Operations for the nine months ended September 30, 1996.......... 20 Notes to Pro Forma Condensed Consolidated Financial Statements as of and for the nine months ended September 30, 1996................................ 21-22 Pro Forma Consolidated Statement of Operations for the year ended December 31, 1995.................. 23 Notes to Pro Forma Consolidated Statement of Operations for the year ended December 31, 1995... 24 (c) Exhibits 23.0 Consent of Independent Auditors................ 26 -5- REPORT OF INDEPENDENT AUDITORS To The Board of Trustees and Shareholders Liberty Property Trust We have audited the accompanying Combined Statement of Operating Revenues and Certain Operating Expenses of the Section A Properties, as defined in Note 1 for the year ended December 31, 1995. This financial statement is the responsibility of the management of the Section A Properties. Our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement. An audit also includes assessing the accounting principles used and significant estimates made by management; as well as evaluating the overall presentation of the financial statement. We believe that our audit provides a reasonable basis for our opinion. The accompanying Combined Statement of Operating Revenues and Certain Operating Expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission (for inclusion in the Current Report on Form 8-K of Liberty Property Trust and Liberty Property Limited Partnership) and, as described in Note 1, is not intended to be a complete presentation of the Section A Properties' revenues and expenses. In our opinion, the Combined Statement of Operating Revenues and Certain Operating Expenses referred to above presents fairly, in all material respects, the Combined Operating Revenues and Certain Operating Expenses described in Note 1 of the Section A Properties, for the year ended December 31, 1995, in conformity with generally accepted accounting principles. /s/ FEGLEY & ASSOCIATES Plymouth Meeting, Pennsylvania FEGLEY & ASSOCIATES December 2, 1996 -6- COMBINED STATEMENT OF OPERATING REVENUES AND CERTAIN OPERATING EXPENSES FOR THE SECTION A PROPERTIES FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 (UNAUDITED) AND THE YEAR ENDED DECEMBER 31, 1995 (IN THOUSANDS) NINE MONTHS ENDED YEAR ENDED SEPTEMBER 30, DECEMBER 31, 1996 1995 ------------- ------------ Operating revenues: Rental $ 5,458 $ 6,947 Operating expense reimbursement 3,066 3,818 ------------ ------------ Total operating revenues 8,524 10,765 ------------ ------------ Certain operating expenses: Rental property expenses 2,162 2,769 Real estate taxes 953 1,121 ------------ ------------ Total certain operating expenses 3,115 3,890 ------------ ------------ Operating revenues in excess of certain operating expenses $ 5,409 $ 6,875 ============ ============ The accompanying notes are an integral part of this combined statement. -7- NOTES TO THE COMBINED STATEMENT OF OPERATING REVENUES AND CERTAIN OPERATING EXPENSES FOR THE SECTION A PROPERTIES FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 (UNAUDITED) AND THE YEAR ENDED DECEMBER 31, 1995 (IN THOUSANDS) 1. Summary of Significant Accounting Policies - ---------------------------------------------- The Combined Statement of Operating Revenues and Certain Operating Expenses (see "Basis of Presentation" below) includes the combined operations of nine of the properties acquired by Liberty Property Limited Partnership (the "Operating Partnership") during the period from January 1, 1996 through December 10, 1996 and one additional property which the Operating Partnership is contractually obligated to close on, has completed the due diligence on, and anticipates closing prior to December 31, 1996 (the "Section A Properties"), as described below. Liberty Property Trust (the "Company") owns an approximate 89.87% partners' interest in the Operating Partnership (as of September 30, 1996) (the Trust and the Operating Partnership are collectively referred to as the "Company"). THE SECTION A PROPERTIES - ------------------------ PROPERTY NAME LOCATION DESCRIPTION - ---------------------- ----------------------- -------------------- Completed Acquisitions: 901 Route 73 Marlton, New Jersey One multi-story office building 39,434 square feet 1500 Route 73 North Marlton, New Jersey One multi-story office building 62,069 square feet 111-195 Witmer Road Horsham, Pennsylvania Five, one-story office buildings 55,354 square feet 440 and 460 East King of Prussia, Two multi-story Swedesford Road Pennsylvania office buildings 141,573 square feet 2460 and 2490 General King of Prussia, Two one-story Armistead Avenue Pennsylvania industrial-flex buildings 57,642 square feet -8- 300 and 400 Welsh Road Horsham, Pennsylvania Two multi-story office buildings 60,184 square feet 83, 85 and 87 South Commerce Way Bethlehem, Pennsylvania Three, one-story office buildings 62,755 square feet 3501 Riga Boulevard Tampa, Florida One, one-story industrial-flex building 57,220 square feet Two Walnut Grove Drive Horsham, Pennsylvania One multi-story office building 81,846 square feet Additional Property: - -------------------- 200, 220 and 240 Gibraltar Road Horsham, Pennsylvania Three multi-story office buildings 192,000 square feet USE OF ESTIMATES - ---------------- Generally accepted accounting principles required management to make estimates and assumptions in preparing financial statements. Those estimates and assumptions affect the reported revenues and expenses. BASIS OF PRESENTATION - --------------------- The Combined Statement of Operating Revenues and Certain Operating Expenses is presented in conformity with Rule 3-14 of the Securities and Exchange Commission. Accordingly, depreciation, interest and income taxes are not presented. The Company is not aware of any factors relating to the Section A Properties that would cause the reported financial information not to be indicative of future operating results. General company overhead has not been allocated to the Section A Properties. The financial information presented for the nine months ended September 30, 1996 is unaudited. In the opinion of management, the unaudited financial information contains all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the Combined Statements of Revenues and Certain Operating Expenses for the Section A Properties. -9- All of the properties, with the exception of 3501 Riga Boulevard, and 2460 and 2490 General Armistead Avenue, which are industrial-flex space, consist of multi-tenant commercial office space leased to tenants under leases with varying terms. Tenant renewal options are available. Two Walnut Grove Drive includes two additional parcels of land approximating 19.4 acres. REVENUE RECOGNITION - ------------------- Base rental income attributable to leases is recorded when due from tenants. The leases also typically provide for tenant reimbursement of common area maintenance and other operating expenses which are included in the accompanying Combined Statement of Operating Revenue and Certain Operating Expenses as operating expense reimbursements. 2. MINIMUM FUTURE RENTALS - --------------------------- Future minimum rental payments due from tenants of the Section A Properties under non-cancellable operating leases as of December 31, 1995 are as follows (in thousands): 1996 $ 6,873 1997 5,835 1998 5,043 1999 3,910 2000 3,324 Thereafter 1,355 ------- Total $26,340 ======= -10- LIBERTY PROPERTY TRUST PRO FORMA FINANCIAL INFORMATION (UNAUDITED) The unaudited, pro forma condensed consolidated balance sheet as of September 30, 1996 reflects the incremental effect of the Acquired Properties described in Item 5 as if the acquisitions occurring after September 30, 1996 had occurred on September 30, 1996. The accompanying unaudited, pro forma consolidated statement of operations for the nine months ended September 30, 1996 and the year ended December 31, 1995 reflect the incremental effect of the Acquired Properties, as if such acquisitions had occurred on January 1, 1995. These statements should be read in conjunction with respective consolidated financial statements and notes thereto included in the Company's Quarterly Report on Form 10- Q for the quarter ended September 30, 1996 and its Annual Report on Form 10-K for the year ended December 31, 1995. In the opinion of management, the unaudited, pro forma consolidated financial information provides for all adjustments necessary to reflect the effects of the Acquired Properties. These pro forma statements may not necessarily be indicative of the results that would have actually occurred if the acquisition of the Acquired Properties had been in effect on the date indicated, nor does it purport to represent the financial position, results of operations or cash flows for future periods. -11- LIBERTY PROPERTY TRUST PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1996 (UNAUDITED, IN THOUSANDS) LIBERTY ACQUIRED PROPERTY HISTORICAL PROPERTIES TRUST CONSOLIDATED ---------- ----------- ------------ ASSETS: Investment in real estate, net $ 946,789 $ 50,069 $ 996,858 Cash and cash equivalents 7,973 - 7,973 Deferred financing and leasing costs, net 23,745 - 23,745 Other assets 44,632 - 44,632 ---------- ----------- ----------- Total assets $1,023,139 $ 50,069 $ 1,073,208 ========== =========== =========== LIABILITIES: Mortgage loans $ 203,221 $ - $ 203,221 Subordinated debentures 183,625 - 183,625 Line of credit 176,618 50,069 226,687 Other liabilities 51,001 - 51,001 ---------- ----------- ----------- Total liabilities 614,465 50,069 664,534 ---------- ----------- ----------- MINORITY INTEREST 41,399 - 41,399 ---------- ----------- ----------- SHAREHOLDERS' EQUITY: Common shares 31 - 31 Additional paid-in capital 359,472 - 359,472 Unearned compensation (1,636) - (1,636) Retained earnings 9,408 - 9,408 ---------- ----------- ----------- Total shareholders' equity 367,275 - 367,275 ---------- ----------- ----------- Total liabilities and shareholders' equity $1,023,139 $ 50,069 $ 1,073,208 ========== =========== =========== The accompanying notes are an integral part of this unaudited, pro forma condensed consolidated financial statement. -12- LIBERTY PROPERTY TRUST PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 (UNAUDITED AND IN THOUSANDS, EXCEPT PER SHARE AMOUNT)
LIBERTY ACQUIRED PRO PROPERTY HISTORICAL PROPERTIES FORMA TRUST ADJUSTMENTS CONSOLIDATED ---------- ----------- ------------ ------------ REVENUE Rental $ 82,019 $ 8,174 $ - $ 90,193 Operation expense reim- bursement 26,463 3,552 - 30,015 Management fees 1,190 - - 1,190 Interest and other 3,080 - - 3,080 ---------- ----------- ------------ ------------ Total revenue 112,752 11,726 - 124,478 ---------- ----------- ------------ ------------ OPERATING EXPENSES Rental property expenses 22,158 2,449 - 24,607 Real estate taxes 8,176 1,325 - 9,501 General and administrative 5,681 - - 5,681 Depreciation and amorti- zation 20,435 - 1,736 22,171 ---------- ----------- ------------ ------------ Total operating expenses 56,450 3,774 1,736 61,960 ---------- ----------- ------------ ------------ Operating income 56,302 7,952 (1,736) 62,518 Premium on debenture con- version 1,027 - - 1,027 Interest expense 28,274 - 4,750 33,024 ---------- ----------- ------------ ------------ Income (loss) before minority interest 27,001 7,952 (6,486) 28,467 Minority interest 2,833 806 (657) 2,982 ---------- ----------- ------------ ------------ Net income (loss) $ 24,168 $ 7,146 $ (5,829) $ 25,485 ========== =========== ============ ============ Net income per common share - primary $ .87 ============ Weighted average number of common shares out- standing 29,176 ============ The accompanying notes are an integral part of this unaudited, proforma consolidated financial statement. -13- LIBERTY PROPERTY TRUST NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 (Unaudited, dollars in thousands) Reflects historical financial information of the Company as of September 30, 1996 and for the nine months ended September 30, 1996. Reflects the cost basis of the properties acquired subsequent to September 30, 1996. PROPERTY ACQUISITION DATE COST - ---------------------------------- ---------------- ---------- 7248 Industrial Boulevard November 13, 1996 $ 15,759 111 Kelsey Lane November 14, 1996 1,780 104 Gaither Drive November 20, 1996 1,280 Two Walnut Grove Drive December 10, 1996 12,500 200, 220 and 240 Gibraltar N/A 18,750 ---------- Total $ 50,069 ========== Represents draws on the Company's line of credit to fund the acquisitions subsequent to September 30, 1996. Reflects the incremental addition of revenues and certain expenses of the Acquired Properties in order to reflect a full nine months of operations for these acquisitions. NINE MONTHS ENDED SEPTEMBER 30, 1996 ------------------------- TOTAL SECTION A SECTION B ACQUIRED PROPERTIES PROPERTIES PROPERTIES ---------- ---------- ---------- Revenues: Rental $ 5,458 $ 2,716 $ 8,174 Operating expense reimbursement 3,066 486 3,552 Certain operating expenses: Rental property expenses 2,162 287 2,449 Real estate taxes 953 372 1,325 -14- Reflects incremental depreciation of the Acquired Properties based on asset lives of 40 years. Reflects an incremental increase in interest expense from the assumed borrowings of $106.3 million on the line of credit to fund the purchase of the Acquired Properties. Reflects the allocation of the pro forma adjustment to minority interest based upon pro forma minority interest in the Operating Partnership of approximately 10.13%. The Company's pro forma taxable income for the nine month period ended September 30, 1996 is approximately $21,004 which has been calculated as pro forma income from operations of approximately $25,485 plus GAAP depreciation and amortization of $22,171 less tax basis depreciation and amortization and other tax differences of approximately $26,652.
-15- LIBERTY PROPERTY TRUST PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1995 (UNAUDITED AND IN THOUSANDS, EXCEPT PER SHARE AMOUNT)
LIBERTY ACQUIRED PROPERTY HISTORICAL PROPERTIES PRO FORMA TRUST ADJUSTMENTS CONSOLIDATED ---------- ----------- ------------ ------------ REVENUE Rental $ 89,163 $ 10,386 $ - $ 99,549 Operation expense reim- bursement 24,604 4,439 - 29,043 Management fees 734 - - 734 Interest and other 2,540 - - 2,540 ---------- ----------- ------------ ------------ Total revenue 117,041 14,825 - 131,866 ---------- ----------- ------------ ------------ OPERATING EXPENSES Rental property expenses 20,010 2,965 - 22,975 Real estate taxes 9,304 1,618 - 10,922 General and administrative 5,212 - - 5,212 Depreciation and amorti- zation 22,518 - 2,653 25,171 ---------- ----------- ------------ ------------ Total operating expenses 57,044 4,583 2,653 64,280 ---------- ----------- ------------ ------------ Operating income 59,997 10,242 (2,653) 67,586 Interest expense 37,688 - 7,510 45,198 ---------- ----------- ------------ ------------ Income (loss) before minority interest 22,309 10,242 (10,163) 22,388 Minority interest 2,843 1,117 (1,109) 2,851 ---------- ----------- ------------ ------------ Net income (loss) $ 19,466 $ 9,125 $ (9,054) $ 19,537 ========== =========== ============ ============ Net income per common share - primary $ .89 ============ Weighted average number of common shares out- standing 21,838 ============ The accompanying notes are an integral part of this unaudited, proforma consolidated financial statement. -16- LIBERTY PROPERTY TRUST NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1995 (Unaudited, dollars in thousands) Reflects the historical consolidated statement of operations of the Company for the year ended December 31, 1995. Reflects the addition of revenues and certain expenses of the Acquired Properties required in order to reflect a full year of operations for these acquisitions. TOTAL SECTION A SECTION B ACQUIRED PROPERTIES PROPERTIES PROPERTIES ---------- ---------- ---------- Revenues: Rental $ 6,947 $ 3,439 $ 10,386 Operating expense reimbursement 3,818 621 4,439 Certain operating expenses: Rental property expenses 2,769 196 2,965 Real estate taxes 1,121 497 1,618 Reflects depreciation of the Acquired Properties based on asset lives of 40 years. Reflects an increase in interest expense from the assumed borrowings of $106.3 on the line of credit to fund the purchase of the Acquired Properties. Reflects the allocation of the pro forma adjustment to minority interest based upon pro forma minority interest in the Operating Partnership of approximately 10.91%. The Company's pro forma taxable income for the year ended December 31, 1995 is approximately $20,528 which has been calculated as pro forma income from operations of approximately $19,537 plus GAAP depreciation and amortization of $25,171 less tax basis depreciation and amortization and other tax differences of approximately $24,180.
-17- LIBERTY PROPERTY LIMITED PARTNERSHIP PRO FORMA FINANCIAL INFORMATION (UNAUDITED) The unaudited, pro forma condensed consolidated balance sheet as of September 30, 1996 reflects the incremental effect of the Acquired Properties described in Item 5 as if the acquisitions occurring after September 30, 1996 had occurred on September 30, 1996. The accompanying unaudited, pro forma consolidated statement of operations for the nine months ended September 30, 1996 and the year ended December 31, 1995 reflect the incremental effect of the Acquired Properties, as if such acquisitions had occurred on January 1, 1995. These statements should be read in conjunction with respective consolidated financial statements and notes thereto included in the Company's Quarterly Report on Form 10- Q for the quarter ended September 30, 1996 and its Annual Report on Form 10-K for the year ended December 31, 1995. In the opinion of management, the unaudited, pro forma consolidated financial information provides for all adjustments necessary to reflect the effects of the Acquired Properties. These pro forma statements may not necessarily be indicative of the results that would have actually occurred if the acquisition of the Acquired Properties had been in effect on the date indicated, nor does it purport to represent the financial position, results of operations or cash flows for future periods. -18- LIBERTY PROPERTY LIMITED PARTNERSHIP PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1996 (UNAUDITED, IN THOUSANDS) LIBERTY PROPERTY ACQUIRED LIMITED HISTORICAL PROPERTIES PARTNERSHIP CONSOLIDATED ---------- ----------- ------------ ASSETS: Investment in real estate, net $ 946,789 $ 50,069 $ 996,858 Cash and cash equivalents 7,973 - 7,973 Deferred financing and leasing costs, net 23,745 - 23,745 Other assets 44,632 - 44,632 ---------- ----------- ----------- Total assets $1,023,139 $ 50,069 $ 1,073,208 ========== =========== =========== LIABILITIES: Mortgage loans $ 203,221 $ - $ 203,221 Subordinated debentures 183,625 - 183,625 Line of credit 176,618 50,069 226,687 Other liabilities 51,001 - 51,001 ---------- ----------- ----------- Total liabilities 614,465 50,069 664,534 ---------- ----------- ----------- OWNERS' EQUITY: General partner's equity 367,275 - 367,275 Limited partners' equity 41,399 - 41,399 ---------- ----------- ----------- Total owners' equity 408,674 - 408,674 ---------- ----------- ----------- Total liabilities and owners' equity $1,023,139 $ 50,069 $ 1,073,208 ========== =========== =========== The accompanying notes are an integral part of this unaudited, pro forma condensed consolidated financial statement. -19- LIBERTY PROPERTY LIMITED PARTNERSHIP PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 (UNAUDITED AND IN THOUSANDS)
LIBERTY PROPERTY ACQUIRED LIMITED HISTORICAL PROPERTIES PRO FORMA PARTNERSHIP ADJUSTMENTS CONSOLIDATED ---------- ----------- ------------ ------------ REVENUE Rental $ 82,019 $ 8,174 $ - $ 90,193 Operation expense reim- bursement 26,463 3,552 - 30,015 Management fees 1,190 - - 1,190 Interest and other 3,080 - - 3,080 ---------- ----------- ------------ ------------ Total revenue 112,752 11,726 - 124,478 ---------- ----------- ------------ ------------ OPERATING EXPENSES Rental property expenses 22,158 2,449 - 24,607 Real estate taxes 8,176 1,325 - 9,501 General and administrative 5,681 - - 5,681 Depreciation and amorti- zation 20,435 - 1,736 22,171 ---------- ----------- ------------ ------------ Total operating expenses 56,450 3,774 1,736 61,960 ---------- ----------- ------------ ------------ Operating income 56,302 7,952 (1,736) 62,518 Premium on debenture con- version 1,027 - - 1,027 Interest expense 28,274 - 4,750 33,024 ---------- ----------- ------------ ------------ Net income (loss) $ 27,001 $ 7,952 $ (6,486) $ 28,467 ========== =========== ============ ============ Net income (loss) allocated to general partner $ 24,168 $ 7,146 $ (5,829) $ 25,485 Net income (loss) allocated to limited partners 2,833 806 (657) 2,982 ========== =========== ============ ============ The accompanying notes are an integral part of this unaudited, proforma consolidated financial statement. -20- LIBERTY PROPERTY LIMITED PARTNERSHIP NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 (Unaudited, dollars in thousands) Reflects historical financial information of the Company as of September 30, 1996 and for the nine months ended September 30, 1996. Reflects the cost basis of the properties acquired subsequent to September 30, 1996. PROPERTY ACQUISITION DATE COST - ---------------------------------- ---------------- ---------- 7248 Industrial Boulevard November 13, 1996 $ 15,759 111 Kelsey Lane November 14, 1996 1,780 104 Gaither Drive November 20, 1996 1,280 Two Walnut Grove Drive December 10, 1996 12,500 200, 220 and 240 Gibraltar N/A 18,750 ---------- Total $ 50,069 ========== Represents draws on the Company's line of credit to fund the acquisitions subsequent to September 30, 1996. Reflects the incremental addition of revenues and certain expenses of the Acquired Properties in order to reflect a full nine months of operations for these acquisitions. NINE MONTHS ENDED SEPTEMBER 30, 1996 ------------------------- TOTAL SECTION A SECTION B ACQUIRED PROPERTIES PROPERTIES PROPERTIES ---------- ---------- ---------- Revenues: Rental $ 5,458 $ 2,716 $ 8,174 Operating expense reimbursement 3,066 486 3,552 Certain operating expenses: Rental property expenses 2,162 287 2,449 Real estate taxes 953 372 1,325 -21- Reflects incremental depreciation of the Acquired Properties based on asset lives of 40 years. Reflects an incremental increase in interest expense from the assumed borrowings of $106.3 million on the line of credit to fund the purchase of the Acquired Properties. Reflects the allocation of the pro forma adjustment to the net income allocated to the limited partners based upon pro forma ownership in the Operating Partnership. The Company's pro forma taxable income for the nine month period ended September 30, 1996 is approximately $23,594 which has been calculated as pro forma income from operations of approximately $28,467 plus GAAP depreciation and amortization of $22,171 less tax basis depreciation and amortization and other tax differences of approximately $27,044.
-22- LIBERTY PROPERTY LIMITED PARTNERSHIP PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1995 (UNAUDITED AND IN THOUSANDS)
LIBERTY PROPERTY ACQUIRED LIMITED HISTORICAL PROPERTIES PRO FORMA PARTNERSHIP ADJUSTMENTS CONSOLIDATED ---------- ----------- ------------ ------------ REVENUE Rental $ 89,163 $ 10,386 $ - $ 99,549 Operation expense reim- bursement 24,604 4,439 - 29,043 Management fees 734 - - 734 Interest and other 2,540 - - 2,540 ---------- ----------- ------------ ------------ Total revenue 117,041 14,825 - 131,866 ---------- ----------- ------------ ------------ OPERATING EXPENSES Rental property expenses 20,010 2,965 - 22,975 Real estate taxes 9,304 1,618 - 10,922 General and administrative 5,212 - - 5,212 Depreciation and amorti- zation 22,518 - 2,653 25,171 ---------- ----------- ------------ ------------ Total operating expenses 57,044 4,583 2,653 64,280 ---------- ----------- ------------ ------------ Operating income 59,997 10,242 (2,653) 67,586 Interest expense 37,688 - 7,510 45,198 ---------- ----------- ------------ ------------ Net income (loss) $ 22,309 $ 10,242 $ (10,163) $ 22,388 ========== =========== ============ ============ Net income (loss) allocated to general partner $ 19,466 $ 9,125 $ (9,054) $ 19,537 Net income (loss) allocated to limited partners 2,843 1,117 (1,109) 2,851 ========== =========== ============ ============ The accompanying notes are an integral part of this unaudited, proforma consolidated financial statement. -23- LIBERTY PROPERTY LIMITED PARTNERSHIP NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1995 (Unaudited, dollars in thousands) Reflects the historical consolidated statement of operations of the Company for the year ended December 31, 1995. Reflects the addition of revenues and certain expenses of the Acquired Properties required in order to reflect a full year of operations for these acquisitions. TOTAL SECTION A SECTION B ACQUIRED PROPERTIES PROPERTIES PROPERTIES ---------- ---------- ---------- Revenues: Rental $ 6,947 $ 3,439 $ 10,386 Operating expense reimbursement 3,818 621 4,439 Certain operating expenses: Rental property expenses 2,769 196 2,965 Real estate taxes 1,121 497 1,618 Reflects depreciation of the Acquired Properties based on asset lives of 40 years. Reflects an increase in interest expense from the assumed borrowings of $106.3 on the line of credit to fund the purchase of the Acquired Properties. Reflects the allocation of the pro forma adjustment to the net income allocated to the limited partners, based upon pro forma ownership in the Operating Partnership. The Company's pro forma taxable income for the year ended December 31, 1995 is approximately $25,494 which has been calculated as pro forma income from operations of approximately $22,388 plus GAAP depreciation and amortization of $25,171 less tax basis depreciation and amortization and other tax differences of approximately $22,065.
-24- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, each Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized. LIBERTY PROPERTY TRUST Dated: December 19, 1996 BY: /s/ JOSEPH P. DENNY -------------------------------------- NAME: Joseph P. Denny TITLE: President LIBERTY PROPERTY LIMITED PARTNERSHIP BY: LIBERTY PROPERTY TRUST, SOLE GENERAL PARTNER Dated: December 19, 1996 BY: /s/ JOSEPH P. DENNY -------------------------------------- NAME: Joseph P. Denny TITLE: President -25- EX-23 2 EXHIBIT 23.0 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement (Form S-3 No. 33-94782) and related Prospectus of Liberty Property Trust and Liberty Property Limited Partnership and to the incorporation by reference in the Registration Statement (Form S-3 No. 333-14139) and related Prospectus of Liberty Property Trust, of our report dated December 2, 1996, with respect to the Combined Statement of Operating Revenues and Certain Operating Expenses for the Section A Properties included in the Current Report on Form 8-K of Liberty Property Trust and Liberty Property Limited Partnership dated December 10, 1996, filed with the Securities and Exchange Commission. /s/ FEGLEY & ASSOCIATES Plymouth Meeting, Pennsylvania FEGLEY & ASSOCIATES December 16, 1996 -26- -----END PRIVACY-ENHANCED MESSAGE-----