10-K 1 lpt1231201710k.htm 10-K Document

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
 
 
 
þ
 
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2017
OR
 
 
 
o
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
 
 
 
 
 
 
Commission file numbers:
 
1-13130 (Liberty Property Trust)
 
 
1-13132 (Liberty Property Limited Partnership)
 
LIBERTY PROPERTY TRUST
 
LIBERTY PROPERTY LIMITED PARTNERSHIP
(Exact Names of Registrants as Specified in Their Governing Documents)
 
 
 
 
 
 
MARYLAND (Liberty Property Trust)
 
23-7768996
PENNSYLVANIA (Liberty Property Limited Partnership)
 
23-2766549
 
 
 
(State or Other Jurisdiction
 
(I.R.S. Employer
of Incorporation or Organization)
 
Identification Number)
 
 
 
500 Chesterfield Parkway
 
 
Malvern, Pennsylvania
 
19355
 
 
 
(Address of Principal Executive Offices)
 
(Zip Code)
Registrants' Telephone Number, including Area Code (610) 648-1700
Securities registered pursuant to Section 12(b) of the Act:
 
 
 
 
 
 
 
 
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS
 
ON WHICH REGISTERED
 
 
 
Common Shares of Beneficial Interest,
 
 
$0.001 par value
 
 
(Liberty Property Trust)
 
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
YES þ NO o
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.
YES o NO þ
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 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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that registrant was required to submit and post such files.) þ
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulations S-K is not contained herein, and will not be contained, to the best of the Registrants' knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. (See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act). (Check one):
Large Accelerated Filer
x
Accelerated Filer
o
Non-Accelerated Filer
o(Do not check if a smaller reporting company)
Smaller Reporting Company
o
 
 
Emerging Growth Company
o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes  o    No  x
Indicate by check mark if the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES o NO þ
The aggregate market value of the Common Shares of Beneficial Interest, $0.001 par value (the "Common Shares"), of Liberty Property Trust held by non-affiliates of Liberty Property Trust was $5.9 billion, based upon the closing price of $40.71 on the New York Stock Exchange composite tape on June 30, 2017. Non-affiliate ownership is calculated by excluding all Common Shares that may be deemed to be beneficially owned by executive officers and trustees, without conceding that any such person is an "affiliate" for purposes of the federal securities laws.
Number of Common Shares outstanding as of February 26, 2018: 147,460,813
Documents Incorporated by Reference
Portions of the proxy statement for the annual meeting of shareholders of Liberty Property Trust to be held in May 2018 are incorporated by reference into Part III of this Form 10-K.



EXPLANATORY NOTE


This report combines the annual reports on Form 10-K for the period ended December 31, 2017 of Liberty Property Trust and Liberty Property Limited Partnership. Unless stated otherwise or the context otherwise requires, references to the “Trust” mean Liberty Property Trust and its consolidated subsidiaries, and references to the “Operating Partnership” mean Liberty Property Limited Partnership and its consolidated subsidiaries. The terms the “Company,” “we,” “our” and “us” mean the Trust and the Operating Partnership, collectively.

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, the Operating Partnership, a Pennsylvania limited partnership.

The Trust is the sole general partner and also a limited partner of the Operating Partnership, owning 97.7% of the common equity of the Operating Partnership at December 31, 2017. The common units of limited partnership interest in the Operating Partnership (the “Common Units”), other than those owned by the Trust, are exchangeable on a one-for-one basis (subject to anti-dilution protections) for the Trust's common shares of beneficial interest, $0.001 par value per share (the “Common Shares”).

The financial results of the Operating Partnership are consolidated into the financial statements of the Trust. The Trust has no significant assets other than its investment in the Operating Partnership. The Trust and the Operating Partnership are managed and operated as one entity. The Trust and the Operating Partnership have the same managers.

The Trust's sole business purpose is to act as the general partner of the Operating Partnership. Net proceeds from equity issuances by the Trust are contributed to the Operating Partnership in exchange for partnership units. The Trust itself does not issue any indebtedness, but guarantees certain of the unsecured debt of the Operating Partnership.

We believe combining the annual reports on Form 10-K of the Trust and the Operating Partnership into this single report results in the following benefits:
•
enhances investors' understanding of the Trust and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;
•
eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the Company's disclosure applies to both the Trust and the Operating Partnership; and
•
creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.

To help investors understand the significant differences between the Trust and the Operating Partnership, this report presents the following separate sections for each of the Trust and the Operating Partnership:
•
consolidated financial statements;
•
the following notes to the consolidated financial statements;
◦
Income per Common Share of the Trust and Income per Common Unit of the Operating Partnership;
◦
Noncontrolling Interests of the Trust and Limited Partners' Equity and Noncontrolling Interest of the Operating Partnership

This report also includes separate Item 9A. Controls and Procedures sections and separate Exhibit 31 and 32 certifications for each of the Trust and the Operating Partnership in order to establish that the Chief Executive Officer and the Chief Financial Officer of each entity have made the requisite certifications and that the Trust and Operating Partnership are compliant with Rule 13a-15 and Rule 15d-15 of the Securities Exchange Act of 1934, as amended.


2

INDEX
 
Index
 
Page
 
 
 
PART I.
 
 
 
 
 
Item 1.
 
 
 
Item 1A.
 
 
 
Item 1B.
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
PART II
 
 
 
 
 
Item 5.
 
 
 
Item 6.
 
 
 
Item 7.
 
 
 
Item 7A.
 
 
 
Item 8.
 
 
 
Item 9.
 
 
 
Item 9A.
 
 
 
Item 9B.
 
 
 
PART III
 
 
 
 
 
Item 10.
 
 
 
Item 11.
 
 
 
Item 12.
 
 
 
Item 13.
 
 
 
Item 14.
 
 
 
PART IV
 
 
 
 
 
Item 15.
 
 
 
Item 16.
 
 
 
 
 
 
 
 
 
 
 
 



3


----------
The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. Certain information included in this Annual Report on Form 10-K and other materials filed or to be filed by the Company (as defined herein) with the Securities and Exchange Commission (“SEC”) (as well as information included in oral statements or other written statements made or to be made by the Company) contain statements that are or will be forward-looking, such as statements relating to rental operations, business and property development activities, joint venture relationships, acquisitions and dispositions (including related pro forma financial information), future capital expenditures, financing sources and availability, litigation and the effects of regulation (including environmental regulation) and competition. These forward-looking statements generally are accompanied by words such as “believes,” “anticipates,” “expects,” “estimates,” “should,” “seeks,” “intends,” “planned,” “outlook” and “goal” or similar expressions. Although the Company believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, the Company can give no assurance that its expectations will be achieved. As forward-looking statements, these statements involve important risks, uncertainties and other factors that could cause actual results to differ materially from the expected results and, accordingly, such results may differ from those expressed in any forward-looking statements made by, or on behalf of the Company. The Company assumes no obligation to update or supplement forward looking statements that become untrue because of subsequent events. These risks, uncertainties and other factors include, without limitation, uncertainties affecting real estate businesses generally (such as entry into new leases, renewals of leases and dependence on tenants' business operations), risks relating to our ability to maintain and increase property occupancy and rental rates, risks relating to the continued repositioning of the Company's portfolio, risks relating to construction and development activities, risks relating to acquisition and disposition activities, risks relating to the integration of the operations of entities that we have acquired or may acquire, risks relating to joint venture relationships and any possible need to perform under certain guarantees that we have issued or may issue in connection with such relationships, risks related to properties developed by the Company on a fee basis, risks associated with tax abatement, tax credit programs, or other government incentives, possible environmental liabilities, risks relating to leverage and debt service (including availability of financing terms acceptable to the Company and sensitivity of the Company's operations and financing arrangements to fluctuations in interest rates), dependence on the primary markets in which the Company's properties are located, the existence of complex regulations relating to status as a real estate investment trust (“REIT”) and the adverse consequences of the failure to qualify as a REIT, risks relating to litigation and the potential adverse impact of market interest rates on the market price for the Company's securities. See “Management's Discussion and Analysis of Financial Condition and Results of Operations - Forward-Looking Statements.”



4

PART I
ITEM 1. BUSINESS
The Company
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 its subsidiary, Liberty Property Limited Partnership, a Pennsylvania limited partnership (the "Operating Partnership" and, together with the Trust and their consolidated subsidiaries, the "Company").
The Company completed its initial public offering in 1994 to continue and expand the commercial real estate business of Rouse & Associates, a Pennsylvania general partnership, and certain affiliated entities (collectively, the "Predecessor"), which was founded in 1972. As of December 31, 2017, the Company owned and operated 461 industrial and 48 office properties (the "Wholly Owned Properties in Operation") totaling 87.3 million square feet. In addition, as of December 31, 2017, the Company owned 20 properties under development, which when completed are expected to comprise 5.6 million square feet (the "Wholly Owned Properties under Development"). The Company owned 10 properties held for redevelopment (the "Wholly Owned Properties held for Redevelopment") totaling 1.0 million square feet and 1,563 acres of developable land, substantially all of which is zoned for commercial use. Additionally, as of December 31, 2017, the Company had an ownership interest, through unconsolidated joint ventures, in 47 industrial and 18 office properties totaling 14.3 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 552,000 square feet and a 217-room Four Seasons Hotel (the "JV Properties under Development" and, collectively with the Wholly Owned Properties under Development, the "Properties under Development", one property held for redevelopment, totaling 48,000 square feet (the "JV Property Held for Redevelopment" and, collectively with the Wholly Owned Properties held for Redevelopment, the "Properties Held for Redevelopment" and, collectively with the Properties in Operation and the Properties under Development, the "Properties"), and 347 acres of developable land, substantially all of which is zoned for commercial use.
The Company provides leasing, property management, development and other tenant-related services for the Properties. The industrial Properties consist of a variety of warehouse, distribution, service, assembly, light manufacturing and research and development facilities. They include both single-tenant and multi-tenant facilities, with most designed flexibly to accommodate various types of tenants, space requirements and industrial uses. The Company's office Properties consist of metro-office buildings and multi-story and single-story office buildings located principally in suburban mixed-use developments or office parks. Substantially all of the Properties are located in prime business locations within established business communities. The Company’s strategy with respect to product and market selection favors industrial properties and markets with strong demographic and economic fundamentals, and to a lesser extent, metro-office properties. The Company also believes that long-term trends generally indicate potential erosion in the value of certain suburban office properties. Accordingly, the Company announced a strategic shift whereby it plans to divest of its remaining suburban office properties, and to reinvest those proceeds in acquisitions in targeted industrial markets and new development. Additionally, from time to time, the Company develops properties on a fee basis for unrelated third parties or joint ventures in which the Company holds an interest. In these cases the Company typically agrees to be responsible for all aspects of the development of the project and to guarantee the timely lien-free completion of construction of the project and the payment of certain cost overruns incurred in the development of the project.
The Trust is the sole general partner and also a limited partner of the Operating Partnership, owning 97.7% of the common equity of the Operating Partnership at December 31, 2017. The common units of limited partnership interest in the Operating Partnership (the "Common Units"), other than those owned by the Trust, are exchangeable on a one-for-one basis (subject to anti-dilution protections) for the Trust's common shares of beneficial interest, $0.001 par value per share (the "Common Shares"). As of December 31, 2017, the Common Units held by the limited partners were exchangeable for 3.5 million Common Shares. The ownership of the holders of Common Units is reflected on the Trust's financial statements as “noncontrolling interest- operating partnership” as a component of total equity. The ownership of the holders of Common Units not owned by the Trust is reflected on the Operating Partnership's financial statements as “limited partners' equity” as a component of total owners' equity.
In addition to this Annual Report on Form 10-K, the Company files with or furnishes to the SEC periodic and current reports, proxy statements and other information. The Company makes these documents available on its website, www.libertyproperty.com, free of charge, as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC. Any document the Company files with or furnishes to the SEC is available to read and copy at the SEC's Public Reference Room at 100 F Street, NE, Room 1580, Washington, D.C. 20549. Further information about the public reference facilities is available by calling the SEC at (800) SEC-0330. These documents also may be accessed on the SEC's website, http://www.sec.gov.
Also posted on the Company's website is the Company's Code of Conduct, which applies to all of its employees and also serves as a code of ethics for its chief executive officer, chief financial officer and persons performing similar functions. The Company will send the Code of Conduct, free of charge, to anyone who requests a copy in writing from its Investor Relations Department

5

at the address set forth on the cover of this filing. The Company intends to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding any amendments to or waivers of the Code of Conduct by posting the required information in the Corporate Governance page in the Investors section of its website.
Management and Employees
As of February 23, 2018, the Company's 295 employees operated under the direction of 16 senior executives, who have been affiliated with the Company and the Predecessor for an average of 20 years. The Company and the Predecessor have developed and managed commercial real estate for the past 45 years. The Company maintains an in-house leasing and property management staff which the Company believes enables it to better understand the characteristics of the local markets in which it operates, to respond quickly and directly to tenant needs and to better identify local real estate opportunities. In certain circumstances the Company also engages and directs the activities of third party property managers and leasing agents.
Segments and Markets
At December 31, 2017, the Company's reportable segments were based on the Company's method of internal reporting and were as follows:
•Carolinas/Richmond;
•Chicago/Minneapolis;
•Florida;
•Houston;
•Lehigh/Central PA;
•Philadelphia;
•Southeastern PA; and
•United Kingdom.
Certain other segments are aggregated into an "Other" category which includes the reportable segments: Arizona; Atlanta; Cincinnati/Columbus/Indianapolis; Dallas; DC Metro; New Jersey; Southern California.
Business Objective and Strategies for Growth
The Company's business objective is to maximize long-term profitability for its shareholders by operating as a leader in commercial real estate through the ownership, management, development and acquisition of superior industrial and, to a lesser extent, office properties. The Company intends to achieve this objective by owning and operating industrial properties nationally and owning and operating office properties in focused metro-office markets (primarily, metropolitan Philadelphia). The Company believes that pursuing this objective will provide the benefits of enhanced investment opportunities, economies of scale, risk diversification, access to capital and the ability to attract and retain personnel. The Company also strives to provide an exceptional and positive tenant experience. The Company is committed to developing and owning high-performing sustainable buildings and operating an energy-efficient portfolio. In pursuing its business objective, the Company seeks to achieve a combination of internal and external growth, maintain a conservative balance sheet and pursue a strategy of financial flexibility.
Products
The Company strives to be a high quality provider of two products: industrial and office. The Company's strategy with respect to product and market selection generally favors industrial properties and markets with strong demographic and economic fundamentals, and to a lesser extent, metro-office properties. However, consistent with the Company's strategy and market opportunities, the Company may pursue industrial and office products other than those noted above. In addition, the Company also develops properties on a fee basis for unrelated third parties or unconsolidated joint ventures in which the Company has an interest.
Markets
The Company owns and operates industrial properties nationally and owns and operates office properties in focused metro-office markets. Additionally, the Company owns certain assets in the United Kingdom. Generally, the Company seeks to have a presence in each market sufficient for the Company to compete effectively in that market. The Company gathers information from internal sources and independent third parties and analyzes this information to support its evaluation of current and new markets and market conditions.

6

Organizational Plan
The Company seeks to maintain a management organization that facilitates efficient execution of the Company's strategy. As part of this effort, the Company pursues a human resources plan designed to create and maintain a highly effective real estate company through recruiting, training and retaining capable people. The structure is designed to support a local entrepreneurial platform operating within a value-added corporate structure. The Company seeks to provide management and all employees with technology tools to enhance competitive advantage and more effectively execute on strategic and operational goals.
Internal Growth Strategies
The Company seeks to maximize the profitability of its Properties by endeavoring to maintain high occupancy levels while obtaining competitive rental rates, controlling costs and focusing on customer service efforts.
Maintain High Occupancies
The Company believes that the quality and diversity of its tenant base and its strategy of operating in multiple markets is integral to achieving its goal of attaining high occupancy levels for its portfolio. The Company targets financially stable tenants in an effort to minimize uncertainty relating to the ability of the tenants to meet their lease obligations.
Cost Controls
The Company seeks to identify best practices to apply throughout the Company in order to enhance cost savings and other efficiencies. The Company also employs an annual capital improvement and preventative maintenance program designed to reduce operating costs and maintain the long-term value of the Properties in Operation.
Customer Service
The Company seeks to achieve high tenant retention through a comprehensive customer service program, which is designed to provide an exceptional and positive tenant experience. The customer service program establishes best practices and provides an appropriate customer feedback process. The Company believes that the program has been helpful in increasing tenant satisfaction.
High Performance Buildings
The Company is committed to the sustainable design, development and operation of its portfolio. The Company strives to create work environments that limit resource consumption, improve building performance and promote human health and productivity. The Company believes that sustainable, high performance buildings and environmentally responsible business practices are not only good for the environment, but that they also create value for the Company's tenants and shareholders.
The Company's efforts have included research, development, and deployment of sustainable building strategies and technologies, tenant education and outreach and education, and LEED accreditation for its development, property management and leasing staff.
The Company has utilized the U.S. Green Building Council's LEED rating system and the U.S. Department of Energy's ENERGY STAR system to drive energy efficiency and sustainable construction across its buildings and operations. As of December 31, 2017, either directly or through equity interests in unconsolidated joint ventures, the Company owns or has under construction 90 LEED buildings and has one building in the United Kingdom constructed under the international BREEAM standards. The Company has 44 ENERGY STAR-certified buildings and pursues energy and water efficient performance in the Properties in Operation. It is the Company's intention to obtain LEED or UK equivalent accreditation for all of its development properties.
External Growth Strategies
The Company seeks to enhance its long-term profitability through the development, acquisition and disposition of properties either directly or through joint ventures. The Company also considers acquisitions of real estate operating companies.
Wholly Owned Properties
Development
The Company's development investment strategy focuses primarily on the development of high-quality industrial properties within its existing markets and, to a lesser extent, office properties in metropolitan Philadelphia. When the Company's marketing efforts identify opportunities, the Company will consider pursuing such opportunities outside of the Company's established markets. The Company and its Predecessor have developed over 85 million square feet of commercial real estate during the past 45 years. The Company's development activities generally fall into two categories: build-to-suit projects and projects built for inventory (projects that are less than 75% pre-leased prior to commencement of construction). The Company develops build-to-suit projects for

7

existing and new tenants. The Company also builds properties for inventory where the Company has identified sufficient demand at market rental rates to justify such construction.
During the year ended December 31, 2017, the Company brought into service 17 wholly owned inventory projects totaling 2.9 million square feet and representing an aggregate Total Investment of $259.0 million. As of December 31, 2017, these completed development properties were 83.7% leased.
As of December 31, 2017, the Company had 20 Wholly Owned Properties under Development, which are expected to comprise, upon completion, 5.6 million square feet and are expected to represent a Total Investment of $526.7 million. These Wholly Owned Properties under Development were 50.2% pre-leased as of December 31, 2017. The scheduled deliveries of the 5.6 million square feet of Wholly Owned Properties under Development are as follows (in thousands, except percentages):
 
 
SQUARE FEET
 
PERCENT PRE-LEASED
 
TOTAL
SCHEDULED IN-SERVICE DATE
 
INDUSTRIAL
 
OFFICE
 
TOTAL
 
DECEMBER 31, 2017
 
INVESTMENT
 1st Quarter, 2018
 
101

 
236

 
337

 
100.0
%
 
$
71,386

 2nd Quarter, 2018
 
1,790

 
175

 
1,965

 
95.6
%
 
195,706

 3rd Quarter, 2018
 
881

 
—

 
881

 
56.6
%
 
65,934

 4th Quarter, 2018
 
1,100

 
—

 
1,100

 
—
%
 
84,085

 1st Quarter, 2019
 
546

 
—

 
546

 
21.1
%
 
51,722

 2nd Quarter, 2019
 
201

 
—

 
201

 
—
%
 
24,132

 3rd Quarter, 2019
 
600

 
—

 
600

 
—
%
 
33,746

TOTAL
 
5,219

 
411

 
5,630

 
50.2
%
 
$
526,711

 
 
 
 
 
 
 
 
 
 
 
“Total Investment” for a Property Under Development is defined as the sum of the land costs and the costs of land improvements, building and building improvements, lease transaction costs, and where appropriate, other development costs and carrying costs. 
The Company believes that, because it is a fully integrated real estate firm, its base of commercially zoned land provides a competitive advantage for future development activities. As of December 31, 2017, the Company owned 1,563 acres of land held for development, substantially all of which is zoned for commercial use. Substantially all of the land is located adjacent to or within existing industrial or business parks with site improvements, such as public sewers, water and utilities, available for service. The Company estimates that its land holdings would support, as and when developed, approximately 18.1 million square feet. The Company's investment in land held for development as of December 31, 2017 was $330.7 million.
Through a development agreement with Philadelphia Industrial Development Corporation, the Company has development rights for 135 acres of land located at the Navy Yard in Philadelphia. The Company estimates that these 135 acres would support, as and when developed, approximately 2.4 million square feet.
Through a development agreement with Kent County Council, the Company develops commercial buildings at Kings Hill, a 650-acre mixed use development site in the County of Kent, England. The Company also is the project manager for the installation of infrastructure on the site and receives a portion of the proceeds from the sale of land parcels to home builders. The site has planning consent and available land for approximately 1.35 million square feet of commercial space of which approximately 1.0 million square feet had been built as of December 31, 2017. During 2015, the Company obtained planning consent for a further 635 homes at Kings Hill, taking the total consent to 3,486 homes of which 2,836 had been sold as of December 31, 2017.
Acquisitions/Dispositions
The Company seeks to acquire properties consistent with its business objectives and strategy. The Company executes its acquisition strategy by purchasing properties that the Company believes will create shareholder value over the long-term.
During the year ended December 31, 2017, the Company acquired eight operating properties for a purchase price of $256.4 million. These properties contain 1.9 million square feet and were 94.6% leased as of December 31, 2017. The Company also acquired nine parcels of land totaling 253 acres for an aggregate purchase price of $40.0 million.
The Company disposes of properties and land held for development that no longer fit within the Company's strategic plan, or with respect to which the Company believes it can optimize cash proceeds. The Company may also, from time to time, sell properties to its tenants pursuant to purchase options contained in their leases. During the year ended December 31, 2017, the Company sold 10 Wholly Owned Properties containing an aggregate of 2.3 million square feet as well as 113 acres of land for aggregate proceeds of $367.3 million.

8

Joint Venture Properties
The Company, from time to time, considers joint venture opportunities with institutional investors or other real estate companies. Joint venture partnerships provide the Company with additional sources of capital to share investment risk and fund capital requirements. In some instances, joint venture partnerships provide the Company with additional local market or product type expertise.
As of December 31, 2017, the Company had investments in and advances to unconsolidated joint ventures totaling $288.5 million (see Note 7 to the Company's Consolidated Financial Statements).
Development
During the year ended December 31, 2017, an unconsolidated joint venture in which the Company held an interest brought into service a build to suit project totaling 154,000 square feet and representing a Total Investment of $11.6 million. As of December 31, 2017, this completed development property was 100.0% leased. As of December 31, 2017, the Company had one JV Property under Development, which is expected to comprise, upon completion, 302,000 square feet and is expected to represent a Total Investment of $21.1 million. This JV Property under Development was not pre-leased as of December 31, 2017.
In addition, joint ventures in which the Company held an interest continued the development of the Comcast Technology Center. During the year ended December 31, 2017, 1.1 million square feet of office space representing a Total Investment by the joint ventures of $599.6 million was brought into service. The remaining 250,000 square feet of office space and the 217-room Four Seasons hotel representing a Total Investment by the joint ventures of $354.1 million was included as JV Properties under Development as of December 31, 2017.
As of December 31, 2017, unconsolidated joint ventures in which the Company held an interest owned 347 acres of land held for development. Substantially all of the land held for development and the land related to the leasehold interest is zoned for commercial use and is located adjacent to or within existing industrial or business parks with site improvements, such as public sewers, water and utilities, available for service. The Company estimates that its joint venture land holdings and leasehold interest would support, as and when developed, approximately 6.3 million square feet.
Acquisitions/Dispositions
During the year ended December 31, 2017, an unconsolidated joint venture in which the Company held a 20% interest acquired one redevelopment property that contained 48,000 square feet for a purchase price of $15.0 million and was 100% leased.
During the year ended December 31, 2017, none of the unconsolidated joint ventures in which the Company holds an interest sold any operating properties or land parcels.

ITEM 1A. RISK FACTORS
The Company's results of operations and the ability to make distributions to our shareholders and service our indebtedness may be affected by the risk factors set forth below. (The Company refers to itself as "we," "us" or "our" in the following risk factors.) This section contains some forward looking statements. You should refer to the explanation of the qualifications and limitations on forward-looking statements in Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations.
Risks Related to Our Business
The Company's business is subject to the risks in this section.
Unfavorable events affecting our existing tenants and potential tenants, or negative market conditions that may affect our existing tenants and potential tenants, could have an adverse impact on our ability to attract new tenants, relet space, collect rent or renew leases, and thus could have a negative effect on our cash flow from operations.
Our cash flow from operations depends on our ability to lease space to tenants on economically favorable terms. Therefore, we could be adversely affected by various factors and events over which we have limited control, such as:
•
lack of demand for space in the areas where our Properties are located
•
inability to retain existing tenants and attract new tenants
•
oversupply of or reduced demand for space and changes in market rental rates

9

•
defaults by our tenants or their failure to pay rent on a timely basis
•
the need to periodically renovate and repair our space
•
physical damage to our Properties
•
economic or physical decline of the areas where our Properties are located
•
potential risk of functional obsolescence of our Properties over time
If a tenant is unable to pay rent due to us, we may be forced to evict the tenant, or engage in other remedies, which may be expensive and time consuming and may adversely affect our net income, shareholders' equity and cash distributions to shareholders.
If our tenants do not renew their leases as they expire, we may not be able to rent the space. Furthermore, leases that are renewed, and some new leases for space that is relet, may have terms that are less economically favorable to us than current lease terms, or may require us to incur significant costs, such as for renovations, tenant improvements or lease transaction costs.
Any of these events could adversely affect our cash flow from operations and our ability to make expected distributions to our shareholders and service our indebtedness.
A significant portion of our costs, such as real estate taxes, insurance costs, and debt service payments, generally are not reduced when circumstances cause a decrease in cash flow from our Properties.
We may face risks associated with our current business strategy.
As previously reported, and as further summarized below in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” we undertook several significant transactions in recent years, consistent with our strategy to favor industrial properties and markets with strong demographic and economic fundamentals and, to a lesser extent, metro-office properties. We also believe that long-term trends indicate potential erosion in certain suburban office properties. Accordingly, we announced a strategic shift whereby we expect to substantially divest of our remaining suburban office properties, and reinvest those proceeds in acquisitions in targeted industrial markets and new development.
While management believes that this strategy will be in the best long-term interests of the Company and its shareholders,  in the near term, this strategy will be dilutive to operating cash flow and we cannot assure you that this strategy will produce the intended benefit, or when, if ever, those intended benefits will be achieved.   This strategy poses certain risks, including without limitation the following:
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for similar investment dollars, rental income from industrial properties is generally less in the short term than rental income generated from suburban office properties
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our expectation of increasing demand and increasing stability of value in the industrial sector and metro-office sector may not materialize
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the relative advantages in the ownership of industrial properties and metro-office properties as opposed to suburban office properties will be affected by variable and unpredictable macro-economic and global conditions that are outside of our control
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our identification of markets with strong demographic and economic fundamentals may prove erroneous, due to macro-economic and global conditions that are outside of our control
Failure of our strategy to achieve the intended benefits could have a material adverse effect on our results of operations, financial condition and liquidity.
We may not be able to compete successfully with other entities that operate in our industry.
We experience a great deal of competition in attracting tenants for our Properties and in locating land to develop and properties to acquire.
In our effort to lease our Properties, we compete for tenants with a broad spectrum of other landlords in each of our markets. These competitors include, among others, publicly-held REITs, privately-held entities, individual property owners and tenants who wish to sublease their space. Some of these competitors may be able to offer prospective tenants more attractive financial or other terms than we are able to offer.

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We may experience increased operating costs, which could adversely affect our operations.
Our Properties are subject to increases in operating expenses such as real estate taxes, insurance, cleaning, electricity, heating, ventilation and air conditioning, general and administrative costs and other costs associated with security, landscaping, repairs and maintenance. While our current tenants generally are obligated to pay a significant portion of these costs, there is no assurance that these tenants will make such payments or agree to pay these costs upon renewal or that new tenants will agree to pay these costs. If operating expenses increase in our markets, we may not be able to increase rents or reimbursements in all of these markets so as to meet increased expenses without simultaneously decreasing occupancy rates. If this occurs, our ability to make distributions to shareholders and service our indebtedness could be adversely affected.
Our ability to achieve growth in operating income depends in part on our ability to develop properties, which may suffer under certain circumstances.
We intend to continue to develop properties when warranted by market conditions. Our general construction and development activities include the risks that:
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construction and leasing of a property may not be completed on schedule, which could result in increased expenses and construction costs, and would result in reduced profitability
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construction costs may exceed our original estimates due to increases in interest rates and increased materials, labor or other costs, possibly making the property unprofitable or less profitable than projected because we may not be able to increase rents to compensate for the increase in construction costs
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we may be unable to obtain, or may face delays in obtaining, required zoning, land-use, building, occupancy, and other governmental permits and authorizations, which could result in increased costs and could require us to abandon our activities entirely with respect to a project
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we may abandon development opportunities after we begin to explore them and as a result, we may fail to recover costs already incurred. If we alter or discontinue our development efforts, costs of the investment may need to be expensed rather than capitalized and we may determine the investment is impaired, resulting in a loss
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we may expend funds on and devote management's time to projects that we do not complete
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occupancy rates and rents at newly completed properties may not meet our expectations. This may result in lower than projected occupancy and rental rates with the result that our investment is not profitable or less profitable than projected
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we may incur losses under construction warranties, guaranties and delay damages under our contracts with tenants and other customers.

We face risks when we develop properties on a fee basis for joint ventures in which we hold an interest or for unrelated third parties.

We develop properties, from time to time, on a fee basis for joint ventures in which we hold an interest or for unrelated third parties, in addition to developing properties to be wholly owned in our own portfolio. In these cases we typically agree to be responsible for all aspects of the development of the project and to guarantee the timely lien-free completion of construction of the project and the payment, subject to certain exceptions, of cost overruns incurred in the development of the project. For example, in addition to the Comcast Technology Center project discussed below, in 2016 we entered into an agreement to develop a corporate headquarters office building for American Water Works, Inc. in Camden, New Jersey for an estimated total building cost of $145.1 million, plus overall project infrastructure in the amount of $28.0 million. If we encounter construction delays or unexpected costs in the development of these projects or other similar projects, the resulting additional costs incurred and potential payments to the customer would adversely affect our cash flow and net income.
Our development of Comcast Technology Center exposes us to certain risks.
In 2014, the Company entered into two joint ventures with Comcast Corporation for the purpose of developing and owning the Comcast Technology Center located in Philadelphia, Pennsylvania as part of a mixed-use development. The 60-story building will include 1.3 million square feet of leasable office space and a 217-room Four Seasons Hotel.   Projected costs for this development, exclusive of tenant-funded interior improvements, are anticipated to be approximately $953.7 million. The Company's investment in the project is expected to be approximately $190.7 million with 20% ownership interests in both joint ventures. The two joint ventures have engaged the Company as the developer of the project pursuant to a Development Agreement by which the Company agrees, in consideration for a development fee, to be responsible for all aspects of the development of the project and to guarantee the timely lien-free completion of construction of the project and the payment, subject to certain exceptions, of any cost overruns incurred in the development of the project. To mitigate this risk, the Company entered into guaranteed maximum price contracts with a third party contractor to construct the project. Comcast Corporation has entered into a lease for 100% of the office space in the building.

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Development of a project such as the Comcast Technology Center is subject to the general development and construction risks noted above.  Those risks are magnified by the size of the project, and include construction risks and cost overrun risks associated with a construction project with the engineering and design complexities of a high rise mixed-use building.  If we fail to complete the development of the project in compliance with the deadlines set forth in the lease with Comcast Corporation, or if the costs of development exceed the budgets agreed upon by the joint ventures, the Company could be liable for substantial damages and costs. We have recently been notified that there are additional construction costs in connection with the project. Until such time as we receive appropriate information concerning the amount and nature of these additional costs and we have an opportunity to investigate them, it is not possible to estimate the amount of possible additional costs, if any, that the Company may incur in connection with its guarantee beyond the obligations of the contractor under its guaranteed maximum price contracts. There is also additional risk associated with ownership of a hotel, with which our employees have limited experience.
We face risks associated with property acquisitions.
We acquire individual properties and portfolios of properties, in some cases through the acquisition of operating entities, and intend to continue to do so when circumstances warrant.
Our acquisition activities and their success are generally subject to the following risks:
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when we are able to locate a desirable property, competition from other real estate investors may significantly increase the purchase price
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acquired properties may fail to perform as expected
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the actual costs of repositioning or redeveloping acquired properties may be higher than our estimates
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acquired properties may be located in new markets where we face risks associated with an incomplete knowledge or understanding of the local market, a limited number of established business relationships in the area and a relative unfamiliarity with local governmental and permitting procedures
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we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties and operating entities, into our existing operations, and as a result, our results of operations and financial condition could be adversely affected
We may acquire properties subject to liabilities and without any recourse, or with only limited recourse, with respect to unknown liabilities. As a result, if a liability were asserted against us based upon ownership of those properties, we might have to pay substantial sums to settle it, which could adversely affect our cash flow.
Many of our Properties are concentrated in our primary markets, and we therefore may suffer economic harm as a result of adverse conditions in those markets.
Our Properties are located principally in specific geographic areas. Due to the concentration of our Properties in these areas, performance is dependent on economic conditions in these areas.

The value and the marketability of some of our Properties may be reduced as the result of the expiration or loss of local tax abatements, tax credit programs, or other governmental incentives.

Certain of our Properties have the benefit of governmental tax incentives aimed at inducing office or industrial users to relocate to incentivize development in areas and neighborhoods which have not historically seen robust commercial development. These incentives typically have specific sunset provisions and may be subject to governmental discretion in the eligibility or award of the applicable incentives. For example, the Pennsylvania Keystone Opportunity Zones applicable to our Properties in the Philadelphia Navy Yard Corporate Center expire on December 31, 2018 or December 31, 2025 (as applicable) and the Grow NJ tax credit program applicable to our properties in the Camden Waterfront project expires on July 31, 2019 and is subject to the approval of each project by certain agencies and officers of the State of New Jersey. The expiration of these incentive programs or the inability of potential tenants or users to be eligible for or to obtain governmental approval of the incentives may have an adverse effect on the value of our Properties and on our cash flow and net income, and may result in impairment charges.


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Our Properties may be subject to impairment charges.

We continually evaluate the recoverability of the carrying value of our Properties, whether Development Properties (including land held for development), Properties Held for Redevelopment or Properties in Operation, as well as land and infrastructure being developed on a fee basis (including our Camden, NJ waterfront project), under generally accepted accounting principles. Factors considered in evaluating impairment of our Properties include significant declines in operating revenues, recurring operating losses and other significant adverse changes in general market conditions, and, in the case of Development Properties (including land held for development as well as land and infrastructure being developed on a fee basis), the abandonment of a project or the determination by management that future development is unlikely to occur or is unlikely to produce adequate cash flows to recover the carrying value of the Property. Generally, a Property held for investment is not considered impaired if the undiscounted estimated future cash flows of the Property over its estimated holding period are in excess of the Property’s net book value at the balance sheet date. If held for sale, a Property is not considered impaired unless its estimated fair value (less costs to sell) is less than the Property's book value at the balance sheet date. Assumptions used to estimate market values, annual and residual cash flows and estimated holding period of such assets require the judgment of management.

There can be no assurance that we will not take additional charges in the future related to the impairment of our Properties. We believe we have applied reasonable estimates and judgments in determining the proper classification of our Properties. However, these estimates require the use of estimated market values, which are difficult to assess. Should external or internal circumstances change, requiring the need to shorten holding periods or adjust the estimated future cash flows of certain Properties, we could be required to record additional impairment charges. Any future impairment could have a material adverse effect on our results of operations and funds from operations.
We may not be able to access financial markets to obtain capital on a timely basis, or on acceptable terms.
Our ability to access the public debt and equity markets depends on a variety of factors, including:
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general economic conditions affecting these markets
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our own financial structure and performance
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the market's opinion of REITs in general
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the market's opinion of REITs that own properties similar to ours
We may suffer adverse effects as a result of the terms of and covenants relating to our indebtedness.
Required payments on our indebtedness generally are not reduced if the economic performance of our portfolio of Properties declines. If the economic performance of our Properties declines, net income, cash flow from operations and cash available for distribution to shareholders will be reduced. If payments on debt cannot be made, we could sustain a loss, or in the case of mortgages, suffer foreclosures by mortgagees or suffer judgments. Further, some obligations, including our $930 million of aggregate credit facilities and $2.3 billion in unsecured notes issued in past public offerings, contain cross-default and/or cross-acceleration provisions, which means that a default on one obligation may constitute a default on other obligations.
Our credit facilities and unsecured debt securities contain customary restrictions, requirements and limitations on our ability to incur indebtedness, including total debt to total asset ratios, secured debt to total asset ratios, debt service coverage ratios and minimum ratios of unencumbered assets to unsecured debt which we must maintain. Our continued ability to borrow under our $930 million of aggregate credit facilities is subject to compliance with our financial and other covenants. In addition, our failure to comply with such covenants could cause a default under these credit facilities, and we may then be required to repay such debt with capital from other sources. Under those circumstances, other sources of capital may not be available to us, or be available only on unattractive terms.
Our degree of leverage could limit our ability to obtain additional financing.
Our degree of leverage could affect our ability to obtain additional financing for working capital, capital expenditures, acquisitions, development or other general corporate purposes. Our senior unsecured debt is currently rated investment grade by the three major rating agencies. However, there can be no assurance we will be able to maintain this rating, and in the event our senior debt is downgraded from its current rating, we would likely incur higher borrowing costs. Our degree of leverage could also make us more vulnerable to a downturn in business or the economy generally.
Further issuances of equity securities may be dilutive to our existing shareholders.
The interests of our existing shareholders could be diluted if we issue additional equity securities to finance future developments, acquisitions, or repay indebtedness. Our Board of Trustees can authorize the issuance of additional securities without shareholder

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approval. Our ability to execute our business strategy depends on our access to an appropriate blend of debt financing, including unsecured lines of credit and other forms of secured and unsecured debt, and equity financing, including issuances of common and preferred equity.
An increase in interest rates would increase our interest costs on variable rate debt and could adversely impact our ability to refinance existing debt or dispose of properties in accordance with our strategy.
We currently have, and may incur more, indebtedness that bears interest at variable rates. Accordingly, if interest rates increase, so will our interest costs, which would adversely affect our cash flow and our ability to pay principal and interest on our debt and our ability to make distributions to our shareholders. Further, rising interest rates could limit our ability to refinance existing debt when it matures.
From time to time, we enter into interest rate swap agreements and other interest rate hedging contracts, including swaps, caps and floors. While these agreements are intended to lessen the impact of rising interest rates on us, they also expose us to the risks that the other parties to the agreements might not perform, or that we could incur significant costs associated with the settlement of the agreements, or that the agreements might be unenforceable and the underlying transactions would fail to qualify as highly-effective cash flow hedges under guidance included in ASC 815 “Derivatives and Hedging.”
In addition, an increase in interest rates could decrease the amounts third parties are willing to pay for our assets, thereby limiting our ability to change our portfolio promptly in response to changes in economic or other conditions.
Property ownership through joint ventures will limit our ability to act exclusively in our interests and may require us to depend on the financial performance of our co-venturers.
From time to time we invest in joint ventures in which we do not hold a controlling interest. These investments involve risks that do not exist with properties in which we own a controlling interest, including the possibility that our partners may, at any time, have business, economic or other objectives that are inconsistent with our objectives. In instances where we lack a controlling interest, our partners may be in a position to require action that is contrary to our objectives. While we seek to negotiate the terms of these joint ventures in a way that secures our ability to act in our best interests, there can be no assurance that those terms will be sufficient to fully protect us against actions contrary to our interests. If the objectives of our partners are inconsistent with ours, we may not in every case be able to act exclusively in our interests.
Additionally, our joint venture partners may experience financial difficulties or change their investment philosophies. This may impair their ability to meet their obligations to the joint venture, such as with respect to providing additional capital, if required. If such a circumstance presented itself we may be required to perform on their behalf, if possible, or suffer a loss of all or a portion of our investment in the joint venture.
We could suffer adverse effects if were to experience security breaches through cyber attacks.
We are subject to risks from security breaches and other significant disruptions of our information technology networks and related systems, which are essential to our business operations. Such breaches and disruptions may occur through cyber attacks or cyber intrusions over the Internet, persons inside our organization or persons with access to systems inside our organization. Certain of our tenants are in the financial and retail industries, which have been particular targets of cyber attacks, and as a result, we may be especially likely to be targeted by cyber attacks. We cannot provide assurance that our activities to maintain the security and integrity of our networks and related systems will be effective. A security breach involving our networks and related systems could disrupt our operations in numerous ways, including by creating difficulties for our tenants that may reflect poorly on us.

We may be adversely affected by trends in the office real estate industry

Telecommuting, flexible work schedules, open workspaces and teleconferencing are becoming more common.  These practice enable businesses to reduce their space requirements.  There is also an increasing trend among some businesses to utilize shared office space and co-working spaces.  A continuation of the movement towards these practices could over time erode the overall demand for office space and, in turn, place downward pressure on occupancy, rental rates and property valuations. 
Risks Related to the Real Estate Industry
Real estate investments are illiquid, and we may not be able to sell our Properties if and when we determine it is appropriate to do so.
Real estate generally cannot be sold quickly. We may not be able to dispose of our Properties promptly in response to economic or other conditions. In addition, provisions of the Internal Revenue Code of 1986, as amended (the "Code"), limit a REIT's ability

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to sell properties in some situations when it may be economically advantageous to do so, thereby adversely affecting returns to shareholders and adversely impacting our ability to meet our obligations to the holders of other securities.
We may experience economic harm if any damage to our Properties is not covered by insurance.
We believe all of our Properties are adequately insured with carriers that are adequately capitalized. However, we cannot guarantee that the limits of our current policies will be sufficient in the event of a catastrophe to our Properties or that carriers will be able to honor their obligations. Our existing property and liability policies expire during 2018. We cannot guarantee that we will be able to renew or duplicate our current coverages in adequate amounts or at reasonable prices.
We may suffer losses that are not covered under our comprehensive liability, fire, extended coverage and rental loss insurance policies. For example, we may not be insured for losses resulting from acts of war, certain acts of terrorism, or from certain liabilities. If an uninsured loss or a loss in excess of insured limits should occur, we would nevertheless remain liable for the loss, which could adversely affect cash flow from operations.
Potential liability for environmental contamination could result in substantial costs.
Under federal, state and local environmental laws, ordinances and regulations, we may be required to investigate and clean up the effects of releases of hazardous or toxic substances or petroleum products at our Properties simply because of our current or past ownership or operation of the real estate. If unidentified environmental problems arise, we may have to make substantial payments which could adversely affect our cash flow and our ability to make distributions to our shareholders because:
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as owner or operator, we may have to pay for property damage and for investigation and clean-up costs incurred in connection with the contamination
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the law typically imposes clean-up responsibility and liability regardless of whether the owner or operator knew of or caused the contamination
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even if more than one person may be responsible for the contamination, each person who shares legal liability under the environmental laws may be held responsible for all of the clean-up costs
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governmental entities and third parties may sue the owner or operator of a contaminated site for damages and costs
These costs could be substantial. The presence of hazardous or toxic substances or petroleum products or the failure to properly remediate contamination may materially and adversely affect our ability to borrow against, sell or rent an affected property. In addition, applicable environmental laws create liens on contaminated sites in favor of the government for damages and costs it incurs in connection with a contamination. Changes in laws increasing the potential liability for environmental conditions existing at our Properties may result in significant unanticipated expenditures.
Substantially all of the Company's properties and land were subject to environmental assessments obtained in contemplation of their acquisition by the Company or obtained by predecessor owners prior to the sale of the property or land to the Company. These assessments generally include a visual inspection of the properties and the surrounding areas, an examination of current and historical uses of the properties and the surrounding areas and a review of relevant state, federal and historical documents, but do not involve invasive techniques such as soil and ground water sampling. Where appropriate, on a property-by-property basis, our practice is to have these consultants conduct additional testing, including sampling for asbestos, for lead in drinking water, for soil contamination where underground storage tanks are or were located or where other past site usages create a potential environmental problem, and for contamination in groundwater. Even though these environmental assessments are conducted, there is still the risk that:
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the environmental assessments and updates will not identify all potential environmental liabilities
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a prior owner created a material environmental condition that is not known to us or the independent consultants preparing the assessments
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new environmental liabilities have developed since the environmental assessments were conducted
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future uses or conditions such as changes in applicable environmental laws and regulations could result in environmental liability for us
While we test indoor air quality on a regular basis and have an ongoing maintenance program in place to address this aspect of property operations, inquiries about indoor air quality may necessitate special investigation and, depending on the results, remediation. Indoor air quality issues can stem from inadequate ventilation, chemical contaminants from indoor or outdoor sources, pollen, viruses and bacteria. Indoor exposure to chemical or biological contaminants above certain levels can be alleged to be connected to allergic reactions or other health effects and symptoms in susceptible individuals. If these conditions were to occur at one of our Properties, we may need to undertake a targeted remediation program, including without limitation, steps to increase

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indoor ventilation rates and eliminate sources of contaminants. Such remediation programs could be costly, necessitate the temporary relocation of some or all of the Property's tenants or require rehabilitation of the affected Property.
Our Properties may contain or develop harmful mold, which could lead to liability for adverse health effects and costs of remediating the problem.
When excessive moisture accumulates in buildings or on building materials, mold growth may occur, particularly if the moisture problem remains undiscovered or is not addressed over a period of time. Some molds may produce airborne toxins or irritants. Concern about indoor exposure to mold has been increasing as exposure to mold may cause a variety of adverse health effects and symptoms, including allergic or other reactions. As a result, the presence of significant mold at any of our Properties could require us to undertake a costly remediation program to contain or remove the mold from the affected Property. In addition, the presence of significant mold could expose us to liability from our tenants, employees of our tenants and others if property damage or health concerns arise.
Compliance with the Americans with Disabilities Act and fire, safety and other regulations may require us to make expenditures that adversely impact our operating results.
All of our Properties are required to comply with the Americans with Disabilities Act ("ADA"). The ADA generally requires that buildings be made accessible to people with disabilities. Compliance with the ADA requirements could require removal of access barriers, and non-compliance could result in imposition of fines by the United States government or an award of damages to private litigants, or both. Expenditures related to complying with the provisions of the ADA could adversely affect our results of operations and financial condition and our ability to make distributions to shareholders. In addition, we are required to operate our Properties in compliance with fire and safety regulations, building codes and other land use regulations, as they may be adopted by governmental agencies and bodies and become applicable to our Properties. We may be required to make substantial capital expenditures to comply with those requirements and these expenditures could have a material adverse effect on our operating results and financial condition, as well as our ability to make distributions to shareholders.
Terrorist attacks and other acts of violence or war may adversely impact our operating results and may affect markets on which our securities are traded.
Terrorist attacks against our Properties, or against the United States or United Kingdom or the interests of the United States or United Kingdom generally, may negatively affect our operations and investments in our securities. Attacks or armed conflicts could have a direct adverse impact on our Properties or operations through damage, destruction, loss or increased security costs. Any terrorism insurance that we obtain may be insufficient to cover the loss for damages to our Properties as a result of terrorist attacks.
Furthermore, any terrorist attacks or armed conflicts could result in increased volatility in or damage to financial markets in the United States or the United Kingdom or the worldwide economy. Adverse economic conditions could affect the ability of our tenants to pay rent, which could have an adverse impact on our operating results.
Risks Related to Our Organization and Structure
We have elected REIT status under the federal tax laws and could suffer adverse consequences if we fail to qualify as a REIT.
We have elected REIT status under federal tax laws and have taken the steps known to us to perfect that status, but we cannot be certain that we qualify or that we will remain qualified. Qualification as a REIT involves the application of highly technical and complex provisions of the Code, as to which there are only limited judicial or administrative interpretations. The complexity of these provisions and of the related regulations is greater in the case of a REIT that holds its assets in partnership form, as we do. Moreover, no assurance can be given that new tax laws will not significantly affect our qualification as a REIT or the federal income tax consequences of such qualification. New laws could be applied retroactively, which means that past operations could be found to be in violation, which would have a negative effect on the business.
If we fail to qualify as a REIT in any taxable year, the distributions to shareholders would not be deductible when computing taxable income. If this happened, we would be subject to federal income tax on our taxable income at regular corporate rates. Also, we could be prevented from qualifying as a REIT for the four years following the year in which we were disqualified. Further, if we requalified as a REIT after failing to qualify, we might have to pay the full corporate-level tax on any unrealized gain in our assets during the period we were not qualified as a REIT. We would then have to distribute to our shareholders the earnings we accumulated while we were not qualified as a REIT. These additional taxes would reduce our funds available for distribution to our shareholders. In addition, while we were disqualified as a REIT, we would not be required by the Code to make distributions to our shareholders. A failure by the Company to qualify as a REIT and the resulting requirement to pay taxes and interest (and

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perhaps penalties) would cause us to default under various agreements to which we are a party, including under our credit facility, and would have a material adverse effect on our business, prospects, results of operations, earnings, financial condition and our ability to make distributions to shareholders.
Future economic, market, legal, tax or other considerations may lead our Board of Trustees to authorize the revocation of our election to qualify as a REIT. A revocation of our REIT status would require the consent of the holders of a majority of the voting interests of all of our outstanding Common Shares.
Certain trustees and officers of the Trust may not have the same interests as shareholders as to certain tax laws.
Certain trustees and officers of the Trust own Common Units. These units may be exchanged for our Common Shares. The trustees and officers who own those units and have not yet exchanged them for our Common Shares may suffer different and more adverse tax consequences than holders of our Common Shares suffer in certain situations:
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when certain of our Properties are sold
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when debt on those Properties is refinanced
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if we are involved in a tender offer or merger
Because these officers own units and face different consequences than shareholders do, the Trust and those trustees and officers may have different objectives as to these transactions than shareholders do.
Certain aspects of our organization could have the effect of restricting or preventing a change of control of our Company, which could have an adverse effect on the price of our shares.
Our charter contains an ownership limit on shares. To qualify as a REIT, five or fewer individuals cannot own, directly or indirectly, more than 50% in value of the outstanding shares of beneficial interest. To this end, our Declaration of Trust, among other things, generally prohibits any holder of the Trust's shares from owning more than 5% of the Trust's outstanding shares of beneficial interest, unless that holder gets the consent from our Board of Trustees. This limitation could prevent the acquisition of control of the Company by a third party without the consent from our Board of Trustees.
We can issue preferred shares. Our Declaration of Trust authorizes our Board of Trustees to establish the preferences and rights of any shares issued. The issuance of preferred shares could have the effect of delaying, making more difficult or preventing a change of control of the Company, even if a change in control were in the shareholder's interest.
There are limitations on acquisition of and changes in control pursuant to, and fiduciary protections of the Board under Maryland law. The Maryland General Corporation Law ("MGCL") contains provisions which are applicable to the Trust as if the Trust were a corporation. Among these provisions is a section, referred to as the "control share acquisition statute," which eliminates the voting rights of shares acquired in quantities so as to constitute "control shares," as defined under the MGCL. The MGCL also contains provisions applicable to us that are referred to as the "business combination statute," which would generally limit business combinations between the Company and any 10% owners of the Trust's shares or any affiliate thereof. Further, Maryland law provides broad discretion to the Board with respect to its fiduciary duties in considering a change in control of our Company, including that the Board is subject to no greater level of scrutiny in considering a change in control transaction than with respect to any other act by the Board. Finally, the "unsolicited takeovers" provisions of the MGCL permit the Board, without shareholder approval and regardless of what is currently provided in our Declaration of Trust or By-Laws, to implement takeover defenses that our Company does not yet have, including permitting only the Board to fix the size of the Board and permitting only the Board to fill a vacancy on the Board. All of these provisions may have the effect of inhibiting a third party from making an acquisition proposal for our Company or of delaying, deferring or preventing a change in control of the Company under circumstances that otherwise could provide the holders of Common Shares with the opportunity to realize a premium over the then current market price.
Various factors out of our control could hurt the market value of our publicly traded securities.
The value of our publicly traded securities depends on various market conditions, which may change from time to time. In addition to general economic and market conditions and our particular financial condition and performance, the value of our publicly traded securities could be affected by, among other things, the extent of institutional investor interest in us and the market's opinion of REITs in general and, in particular, REITs that own and operate properties similar to ours.
The market value of the equity securities of a REIT may be based primarily upon the market's perception of the REIT's growth potential and its current and future cash distributions, and may be secondarily based upon factors such as the real estate market value of the underlying assets. The failure to meet the market's expectations with regard to future earnings and cash distributions likely would adversely affect the market price of publicly traded securities. Our payment of future dividends will be at the discretion

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of our Board of Trustees and will depend on numerous factors including our cash flow, financial condition and capital requirements, annual distribution requirements under the REIT provisions of the Code, the general economic environment and such other factors as our Board of Trustees deems relevant.
Rising market interest rates could make an investment in publicly traded securities less attractive. If market interest rates increase, purchasers of publicly traded securities may demand a higher annual yield on the price they pay for their securities. This could adversely affect the market price of publicly traded securities.

On December 22, 2017, H.R. 1, commonly referred to as the Tax Cuts and Jobs Act (the “Act”), was signed into law by President Donald J. Trump, making significant changes to the Internal Revenue Code of 1986, as amended (the "Code").

Relevant changes include, but are not limited to, the following:

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Reduces the federal corporate income tax rate from 35% to 21% (including with respect to our taxable REIT subsidiaries (“TRSs”)) for tax years beginning after December 31, 2017;
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Restricts the deductibility of interest expense by businesses (generally, to 30% of the business’ adjusted taxable income) except, among others, “real property businesses” electing out of such restriction; and while generally, we expect our business to qualify as a “real property business”, we have not yet determined whether the Company and/or our TRSs can and/or will make such an election going forward;
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Reduces the rate of U.S. federal withholding tax on distributions made to non-U.S. shareholders by a REIT that are attributable to gains from the sale or exchange of U.S. real property interests from 35% to 21%;
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Generally, reduces the highest marginal income tax rate for individuals to 37% from 39.6%;
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Generally, allows a deduction for individuals equal to 20% of ordinary dividends distributed by a REIT (excluding capital gain dividends and qualified dividend income), generally resulting in a maximum effective federal income tax rate applicable to such dividends of 29.6% as compared to 37% prior to the enactment of this provision of the Act; and
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Limits certain deductions for individuals, including deductions for state and local income taxes, and eliminates deductions for miscellaneous itemized deductions (including certain investment expenses).

Under the Act, many of the provisions, in particular those affecting individual taxpayers, expire at the end of 2025.  While many of the provisions contained in the Act generally appear to be favorable with respect to REITs, the extensive changes to non-REIT provisions in the Code may have unanticipated effects on the Company and/or our shareholders.  Moreover, Congressional leaders have recognized that the process of adopting extensive tax legislation in a short amount of time may have led to a need to amend or supplement the legislation which can only be accomplished through additional tax legislation.  At this point, it is unclear whether Congress will address these issues or when the Treasury Department (“Treasury”) and/or the Internal Revenue Service (“IRS”) will issue administrative guidance.

As a result, the Company’s taxable income and/or the amount of distributions to our shareholders required in order to maintain our REIT status, and our relative tax advantage as a REIT, may significantly change and/or be adversely impacted over time.  Further, the Act is a complex set of revisions to the current U.S. federal income tax laws which have the potential to impact certain classes of taxpayers and/or industries differently, and will require subsequent and substantial rulemaking, guidance and interpretation in a number of areas by both the Treasury and the IRS.  The long-term impact of the Act on the overall economy, government revenues, our tenants, the Company and the overall real estate industry cannot be reasonably predicted at this early stage of the new law’s implementation.  As a result, we cannot reasonably provide any assurance at this time that the Act will not adversely impact the Company, our shareholders and/or the price of our securities moving forward.
We do not have a shareholder rights plan but are not precluded from adopting one.
Although we do not have a shareholder rights plan, we are not prohibited from adopting, without shareholder approval, a shareholder rights plan that may discourage any potential acquirer from acquiring more than a specific percentage of our outstanding Common Shares since, upon this type of acquisition without approval of our Board of Trustees, all other common shareholders would have the right to purchase a specified amount of Common Shares at a substantial discount from market price.
Transactions by the Trust or the Operating Partnership could adversely affect debt holders.
Except with respect to several covenants limiting the incurrence of indebtedness and a covenant requiring the Operating Partnership to maintain a certain unencumbered total asset value, our indentures do not contain any additional provisions that would protect holders of the Operating Partnership's debt securities in the event of (i) a highly leveraged transaction involving the Operating Partnership, (ii) a change of control or (iii) certain reorganizations, restructurings, mergers or similar transactions involving the Operating Partnership or the Trust.

18

ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
The Wholly Owned Properties in Operation, as of December 31, 2017, consisted of 461 industrial and 48 office properties. Single tenants occupy 197 Wholly Owned Properties in Operation. These tenants generally require a reduced level of service in connection with the operation or maintenance of these properties. The remaining 312 Wholly Owned Properties in Operation are multi-tenant properties for which the Company renders a range of building, operating and maintenance services.
As of December 31, 2017, the industrial Wholly Owned Properties in Operation were 97.1% leased. The average building size for the industrial Wholly Owned Properties in Operation was approximately 181,000 square feet. As of December 31, 2017, the office Wholly Owned Properties in Operation were 94.4% leased. The average building size for the office Wholly Owned Properties in Operation was approximately 85,000 square feet.
The JV Properties in Operation, as of December 31, 2017, consisted of 47 industrial and 18 office properties. Single tenants occupy 27 JV Properties in Operation. These tenants generally require a reduced level of service in connection with the operation or maintenance of these properties. The remaining 38 JV Properties in Operation are multi-tenant properties for which the Company renders a range of building, operating and maintenance services.
As of December 31, 2017, the industrial JV Properties in Operation were 96.3% leased. The average building size for the industrial JV Properties in Operation was approximately 234,000 square feet. As of December 31, 2017, the office JV Properties in Operation were 97.1% leased. The average building size for the office JV Properties in Operation was approximately 182,000 square feet.
As of December 31, 2017, the industrial Properties in Operation were 97.0% leased. The average building size for the industrial Properties in Operation was approximately 186,000 square feet. As of December 31, 2017, the office Properties in Operation were 95.6% leased. The average building size for the office Properties in Operation was approximately 112,000 square feet.
A complete listing of the Wholly Owned Properties in Operation appears as Schedule III to the financial statements of the Company included in this Annual Report on Form 10-K. The table below sets forth certain information on the Company's Properties in Operation as of December 31, 2017 (in thousands, except percentages).

19

 
 
Type
 
Net Rent(1)
 
Straight Line Rent and Operating Expense Reimbursement (2)
 
Square Feet
 
% Leased
Wholly Owned Properties in Operation
 
 
 
 
 
 
Carolinas/Richmond
 
Industrial
 
$
58,306

 
$
74,988

 
13,052

 
95.8
%
 
 
Office
 
—

 
—

 
—

 
—

 
 
Total
 
58,306

 
74,988

 
13,052

 
95.8
%
 
 
 
 
 
 
 
 
 
 
 
Chicago/Minneapolis
 
Industrial
 
43,611

 
61,247

 
9,757

 
97.6
%
 
 
Office
 
1,463

 
3,855

 
345

 
100.0
%
 
 
Total
 
45,074

 
65,102

 
10,102

 
97.7
%
 
 
 
 
 
 
 
 
 
 
 
Florida
 
Industrial
 
43,286

 
59,407

 
6,818

 
97.0
%
 
 
Office
 
2,090

 
2,548

 
151

 
100.0
%
 
 
Total
 
45,376

 
61,955

 
6,969

 
97.0
%
 
 
 
 
 
 
 
 
 
 
 
Houston
 
Industrial
 
39,608

 
60,085

 
7,648

 
92.7
%
 
 
Office
 
—

 
—

 
—

 
—
%
 
 
Total
 
39,608

 
60,085

 
7,648

 
92.7
%
 
 
 
 
 
 
 
 
 
 
 
Lehigh/Central PA
 
Industrial
 
116,764

 
147,413

 
24,236

 
100.0
%
 
 
Office
 
—

 
—

 
—

 
—

 
 
Total
 
116,764

 
147,413

 
24,236

 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
Philadelphia
 
Industrial
 
8,768

 
11,923

 
626

 
100.0
%
 
 
Office
 
25,184

 
34,902

 
884

 
96.4
%
 
 
Total
 
33,952

 
46,825

 
1,510

 
97.9
%
 
 
 
 
 
 
 
 
 
 
 
SE Pennsylvania
 
Industrial
 
6,756

 
8,716

 
553

 
97.4
%
 
 
Office
 
31,471

 
42,573

 
1,848

 
93.4
%
 
 
Total
 
38,227

 
51,289

 
2,401

 
94.3
%
 
 
 
 
 
 


 
 
 
 
United Kingdom
 
Industrial
 
10,586

 
11,571

 
1,428

 
100.0
%
 
 
Office
 
2,650

 
3,418

 
138

 
78.2
%
 
 
Total
 
13,236

 
14,989

 
1,566

 
98.7
%
 
 
 
 
 
 
 
 
 
 
 
Other
 
Industrial
 
84,369

 
112,280

 
19,102

 
95.7
%
 
 
Office
 
12,063

 
17,418

 
716

 
92.7
%
 
 
Total
 
96,432

 
129,698

 
19,818

 
95.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TOTAL
 
Industrial
 
412,054

 
547,630

 
83,220

 
97.1
%
 
 
Office
 
74,921

 
104,714

 
4,082

 
94.4
%
 
 
Total
 
$
486,975

 
$
652,344

 
87,302

 
97.0
%
 
 
 
 
 
 
 
 
 
 
 
Joint Venture Properties in Operation (3)
 
 
 
 
 
 
 
 
Industrial
 
$
47,677

 
$
66,462

 
11,019

 
96.3
%
 
 
Office
 
96,936

 
154,167

 
3,277

 
97.1
%
 
 
Total
 
$
144,613

 
$
220,629

 
14,296

 
96.5
%
 
 
 
 
 
 
 
 
 
 
 

(1)
Net rent represents the contractual rent per square foot multiplied by the tenant's square feet leased at December 31, 2017 for tenants in occupancy. As of December 31, 2017, average net rent per square foot for the Wholly Owned Properties in Operation was $5.75 and for the Joint Venture Properties in Operation was $10.48. Net rent does not include the tenant's obligation to pay property operating expenses and real estate taxes. If a tenant at December 31, 2017 was within a free rent period its rent would equal zero for the purposes of this metric.
(2)
Straight line rent and operating expense reimbursement represents the straight line rent including operating expense recoveries per square foot multiplied by the tenant's square feet leased at December 31, 2017 for tenants in occupancy. As of December 31, 2017, average straight line rent and operating expense reimbursement per square foot for the Wholly Owned Properties in Operation was $7.70 and for the Joint Venture Properties in Operation was $15.99.
(3)
Joint Venture Properties in Operation represent the 65 properties owned by unconsolidated joint ventures in which the Company has an interest.

20

The expiring number of tenants, square feet and annual rent by year for the Properties in Operation as of December 31, 2017 are as follows (in thousands except number of tenants and % of annual rent):
 
 
Industrial
 
Office
 
Total
 
 
Number of Tenants
 
Square Feet
 
Net Rent (1)
 
% of Annual Rent
 
Number of Tenants
 
Square Feet
 
Net Rent (1)
 
% of Annual Rent
 
Number of Tenants
 
Square Feet
 
Net Rent (1)
 
% of Annual Rent
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Wholly Owned Properties in Operation:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2018
 
187

 
8,441

 
$
41,135

 
8.8
%
 
17

 
286

 
$
5,132

 
5.6
%
 
204

 
8,727

 
$
46,267

 
8.3
%
2019
 
205

 
11,867

 
63,910

 
13.7
%
 
29

 
237

 
5,223

 
5.7
%
 
234

 
12,104

 
69,133

 
12.4
%
2020
 
201

 
14,568

 
79,815

 
17.1
%
 
24

 
330

 
7,674

 
8.4
%
 
225

 
14,898

 
87,489

 
15.6
%
2021
 
152

 
8,146

 
46,427

 
9.9
%
 
12

 
177

 
3,496

 
3.8
%
 
164

 
8,323

 
49,923

 
8.9
%
2022
 
173

 
13,018

 
79,525

 
17.0
%
 
11

 
455

 
8,534

 
9.3
%
 
184

 
13,473

 
88,059

 
15.7
%
2023
 
70

 
3,796

 
23,660

 
5.1
%
 
12

 
420

 
9,728

 
10.6
%
 
82

 
4,216

 
33,388

 
6.0
%
2024
 
36

 
5,018

 
28,186

 
6.0
%
 
7

 
273

 
5,811

 
6.4
%
 
43

 
5,291

 
33,997

 
6.1
%
2025
 
29

 
3,391

 
18,801

 
4.0
%
 
1

 
14

 
230

 
0.3
%
 
30

 
3,405

 
19,031

 
3.4
%
2026
 
24

 
2,790

 
18,298

 
3.9
%
 
8

 
827

 
14,595

 
16.0
%
 
32

 
3,617

 
32,893

 
5.9
%
2027
 
26

 
3,667

 
23,540

 
5.0
%
 
4

 
64

 
1,216

 
1.3
%
 
30

 
3,731

 
24,756

 
4.4
%
Thereafter
 
22

 
6,122

 
44,495

 
9.5
%
 
16

 
772

 
29,718

 
32.6
%
 
38

 
6,894

 
74,213

 
13.3
%
Total
 
1,125

 
80,824

 
$
467,792

 
100.0
%
 
141

 
3,855

 
$
91,357

 
100.0
%
 
1,266

 
84,679

 
$
559,149

 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Joint Venture Properties in Operation:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2018
 
15

 
1,971

 
$
8,535

 
16.0
%
 
18

 
422

 
$
13,379

 
9.7
%
 
33

 
2,393

 
$
21,914

 
11.4
%
2019
 
7

 
783

 
4,189

 
7.8
%
 
14

 
72

 
1,982

 
1.4
%
 
21

 
855

 
6,171

 
3.2
%
2020
 
10

 
2,215

 
9,215

 
17.2
%
 
6

 
50

 
1,388

 
1.0
%
 
16

 
2,265

 
10,603

 
5.5
%
2021
 
6

 
526

 
2,853

 
5.3
%
 
11

 
81

 
2,911

 
2.1
%
 
17

 
607

 
5,764

 
3.0
%
2022
 
17

 
2,134

 
10,219

 
19.1
%
 
13

 
117

 
3,524

 
2.5
%
 
30

 
2,251

 
13,743

 
7.2
%
2023
 
4

 
585

 
3,363

 
6.3
%
 
11

 
1,227

 
48,466

 
35.0
%
 
15

 
1,812

 
51,829

 
27.0
%
2024
 
6

 
527

 
3,134

 
5.9
%
 
4

 
21

 
867

 
0.6
%
 
10

 
548

 
4,001

 
2.1
%
2025
 
—

 
—

 
—

 
—
%
 
2

 
22

 
1,092

 
0.8
%
 
2

 
22

 
1,092

 
0.6
%
2026
 
1

 
614

 
3,987

 
7.5
%
 
2

 
15

 
533

 
0.4
%
 
3

 
629

 
4,520

 
2.4
%
2027
 
2

 
241

 
1,797

 
3.4
%
 
2

 
6

 
183

 
0.1
%
 
4

 
247

 
1,980

 
1.0
%
Thereafter
 
5

 
1,019

 
6,189

 
11.5
%
 
11

 
1,149

 
64,000

 
46.4
%
 
16

 
2,168

 
70,189

 
36.6
%
Total
 
73

 
10,615

 
$
53,481

 
100.0
%
 
94

 
3,182

 
$
138,325

 
100.0
%
 
167

 
13,797

 
$
191,806

 
100.0
%

(1)
Net rent represents the contractual rent per square foot multiplied by the tenants' square feet leased on the date of lease expiration for the tenants in occupancy on December 31, 2017. Net rent does not include the tenant's obligation to pay property operating expenses and real estate taxes.

21

The table below highlights, for the Properties in Operation, the Company's top ten industrial tenants and top ten office tenants as of December 31, 2017. The table reflects, for the tenants in the JV Properties in Operation, the Company's ownership percentage of the respective joint venture.
 
 
Percentage of
Top 10 Industrial Tenants
 
Annual Rent
Amazon.com
 
2.1
%
Home Depot USA, Inc.
 
1.7
%
The Proctor & Gamble Distributing LLC
 
1.4
%
XPO Last Mile, Inc.
 
1.3
%
Ryder Integrated Logistics, Inc.
 
1.3
%
Wakefern Food Corp.
 
1.2
%
Kellogg Sales Company
 
1.1
%
Geodis Logistics LLC
 
1.1
%
Broder Bros., Co.
 
0.9
%
The Clorox Company
 
0.9
%
 
 
13.0
%
 
 
 
 
 
Percentage of
Top 10 Office Tenants
 
Annual Rent
The Vanguard Group, Inc.
 
4.2
%
Comcast Corporation
 
2.7
%
GlaxoSmithKline LLC
 
1.5
%
United States of America
 
1.2
%
The Pennsylvania Hospital
 
0.8
%
Yellow Book USA, Inc.
 
0.7
%
Deutsche Post DHL Group
 
0.6
%
Centene Management Company, LLC
 
0.5
%
Franklin Square Holdings, LP
 
0.5
%
Thomas Jefferson University Hospitals
 
0.4
%
 
 
13.1
%
The table below details the vacancy activity for the Properties in Operation during the year ended December 31, 2017:
 
Year Ended
 
December 31, 2017
 
Square Feet
 
Wholly Owned Properties in Operation
 
JV Properties in Operation
 
Properties in Operation
Vacancy Activity
 
 
 
 
 
Vacancy at January 1, 2017
3,043,270

 
535,259

 
3,578,529

Acquisitions
46

 
—

 
46

Completed development
583,334

 
—

 
583,334

Dispositions
(293,112
)
 
—

 
(293,112
)
Expirations
18,600,917

 
1,863,092

 
20,464,009

Property structural changes/other
(6,377
)
 
(588
)
 
(6,965
)
Leasing activity
(19,305,466
)
 
(1,896,219
)
 
(21,201,685
)
Vacancy at December 31, 2017
2,622,612

 
501,544

 
3,124,156

 
 
 
 
 
 
Lease transaction costs per square foot (1)
$
2.71

 
$
3.53

 
$
2.78

(1)
Transaction costs include tenant improvement and lease transaction costs.

ITEM 3. LEGAL PROCEEDINGS
The Company was not a party to any material litigation as of December 31, 2017.

22


ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.

23

PART II
ITEM 5. MARKET FOR THE REGISTRANTS' COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND RELATED ISSUER PURCHASES OF EQUITY SECURITIES
The Common Shares are traded on the New York Stock Exchange under the symbol "LPT." There is no established public trading market for the Common Units. The following table sets forth, for the calendar quarters indicated, the high and low closing prices of the Common Shares on the New York Stock Exchange, and the dividends declared per Common Share for such calendar quarter.
 
 
High
 
Low
 
Dividends Declared Per Common Share
2017
 
 
 
 
 
 
Fourth Quarter
 
$
45.29

 
$
41.24

 
$
0.40

Third Quarter
 
43.35

 
40.36

 
0.40

Second Quarter
 
42.48

 
38.73

 
0.40

First Quarter
 
40.85

 
37.56

 
0.40

2016
 
 
 
 
 
 
Fourth Quarter
 
$
40.66

 
$
36.37

 
$
0.475

Third Quarter
 
42.25

 
38.95

 
0.475

Second Quarter
 
39.72

 
33.12

 
0.475

First Quarter
 
33.46

 
27.30

 
0.475

As of February 23, 2018, the Common Shares were held by 857 holders of record. Since its initial public offering in 1994, the Company has paid regular and uninterrupted quarterly dividends.
In February 2018, the Board of Trustees declared a dividend of $0.40 per share to be paid in April 2018. The payment of future dividends by the Company will be at the discretion of the Board of Trustees and will depend on numerous factors including the Company's cash flow, its financial condition, capital requirements, annual distribution requirements under the REIT provisions of the Code, the general economic environment and such other factors as the Board of Trustees deems relevant. The Company’s Board of Trustees reviews the dividend quarterly, and there can be no assurance about the amount of future quarterly distribution payments.

24

The following line graph compares the cumulative total shareholder return on Common Shares for the period beginning December 31, 2012 and ended December 31, 2017 with the cumulative total return on the Standard and Poor's 500 Stock Index ("S&P 500") and the NAREIT Equity REIT Total Return Index ("NAREIT Index") over the same period. Total return values for the S&P 500, the NAREIT Index and the Company's Common Shares were calculated based on cumulative total return assuming the investment of $100 in the NAREIT Index, the S&P 500 and the Company's Common Shares on December 31, 2012, and assuming reinvestment of dividends in all cases.

mdachart2017.jpg

The performance graph above is being furnished as part of this Annual Report solely in accordance with the requirement under Rule 14a-3(b)(9) to furnish the Company’s stockholders with such information and, therefore, is not deemed to be filed, or incorporated by reference in any filing, by the Company or the Operating Partnership under the Securities Act of 1933 or the Securities Exchange Act of 1934.


25

ITEM 6. SELECTED FINANCIAL DATA
The following tables set forth Selected Financial Data for the Trust and the Operating Partnership as of and for the five years ended December 31, 2017. The information set forth below should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the financial statements and notes thereto appearing elsewhere in this report. Certain amounts from prior years have been reclassified to conform to current-year presentation.
Operating Data
 
YEAR ENDED DECEMBER 31,
(In thousands, except per share data)
 
2017
 
2016
 
2015
 
2014
 
2013
Total operating revenue
 
$
719,778

 
$
710,698

 
$
773,960

 
$
756,620

 
$
610,529

Income from continuing operations
 
$
271,066

 
$
354,154

 
$
235,359

 
$
162,208

 
$
85,186

Income from discontinued operations
 
$
18,979

 
$
11,991

 
$
10,565

 
$
62,263

 
$
134,833

Net income
 
$
290,045

 
$
366,145

 
$
245,924

 
$
224,471

 
$
220,019

Basic income per common share/unit:
 
 
 
 
 
 
 
 
 
 
  Income from continuing operations
 
$
1.79

 
$
2.36

 
$
1.55

 
$
1.07

 
$
0.60

  Income from discontinued operations
 
$
0.13

 
$
0.08

 
$
0.07

 
$
0.41

 
$
1.01

  Income available to common shareholders/unitholders
 
$
1.92

 
$
2.44

 
$
1.62

 
$
1.48

 
$
1.61

Diluted income per common share/unit:
 
 
 
 
 
 
 
 
 
 
  Income from continuing operations
 
$
1.78

 
$
2.35

 
$
1.54

 
$
1.07

 
$
0.60

  Income from discontinued operations
 
$
0.13

 
$
0.08

 
$
0.07

 
$
0.41

 
$
1.00

  Income available to common shareholders/unitholders
 
$
1.91

 
$
2.43

 
$
1.61

 
$
1.48

 
$
1.60

Dividends paid per common share
 
$
1.675

 
$
1.90

 
$
1.90

 
$
1.90

 
$
1.90

Trust - weighted average number of shares outstanding - basic (1)
 
146,742

 
146,204

 
148,243

 
147,216

 
130,180

Trust - weighted average number of shares outstanding - diluted (2)
 
147,541

 
146,889

 
148,843

 
147,886

 
130,909

Operating Partnership - weighted average number of units outstanding - basic (1)
 
150,270

 
149,740

 
151,783

 
150,770

 
133,858

Operating Partnership - weighted average number of units outstanding - diluted (2)
 
151,069

 
150,425

 
152,383

 
151,440

 
134,587

 
 
 
 
 
 
 
 
 
 
 
Balance Sheet Data
 
DECEMBER 31,
(In thousands)
 
2017
 
2016
 
2015
 
2014
 
2013
Net real estate
 
$
5,365,870

 
$
5,114,990

 
$
5,714,502

 
$
5,743,573

 
$
5,527,393

Total assets
 
$
6,439,757

 
$
5,992,813

 
$
6,557,629

 
$
6,612,014

 
$
6,759,062

Total indebtedness
 
$
2,909,545

 
$
2,556,936

 
$
3,147,016

 
$
3,149,873

 
$
3,237,021

Liberty Property Trust shareholders' equity
 
$
3,087,358

 
$
3,003,391

 
$
2,972,581

 
$
3,046,961

 
$
3,056,059

Owners' equity (Liberty Property Limited Partnership)
 
$
3,148,366

 
$
3,062,923

 
$
3,030,254

 
$
3,106,312

 
$
3,117,062

 
 
 
 
 
 
 
 
 
 
 
Other Data
 
YEAR ENDED DECEMBER 31,
(Dollars in thousands)
 
2017
 
2016
 
2015
 
2014
 
2013
Net cash provided by operating activities
 
$
336,631

 
$
341,062

 
$
379,121

 
$
311,140

 
$
340,509

Net cash (used in) provided by investing activities
 
$
(465,652
)
 
$
614,927

 
$
(89,660
)
 
$
(106,337
)
 
$
(1,197,914
)
Net cash provided by (used in) financing activities
 
$
96,231

 
$
(939,507
)
 
$
(331,860
)
 
$
(326,843
)
 
$
999,619

NAREIT Funds from operations available to common shareholders - diluted (3)
 
$
390,644

 
$
356,895

 
$
410,993

 
$
375,678

 
$
335,535

Total leaseable square footage of Wholly Owned Properties in Operation at end of period (in thousands)
 
87,302

 
86,037

 
89,718

 
91,258

 
89,528

Total leaseable square footage of JV Properties in Operation at end of period (in thousands)
 
14,296

 
13,060

 
14,018

 
14,297

 
13,491

Wholly Owned Properties in Operation at end of period
 
509

 
505

 
610

 
669

 
712

JV Properties in Operation at end of period
 
65

 
63

 
81

 
83

 
79

Wholly Owned Properties in Operation percentage leased at end of period
 
97
%
 
96
%
 
94
%
 
93
%
 
91
%
JV Properties in Operation percentage leased at end of period
 
97
%
 
96
%
 
93
%
 
92
%
 
92
%

(1)
Basic weighted average number of shares includes vested Common Shares (Liberty Property Trust) or Common Units (Liberty Property Limited Partnership) outstanding during the year.

26

(2)
Diluted weighted average number of shares includes the vested and unvested Common Shares (Liberty Property Trust) or Common Units (Liberty Property Limited Partnership) outstanding during the year as well as the dilutive effect of outstanding options.
(3)
The National Association of Real Estate Investment Trusts ("NAREIT") has issued a standard definition for Funds from operations (as defined below). The Securities and Exchange Commission has agreed to the disclosure of this non-US GAAP financial measure on a per share basis in its Release No. 34-47226, Conditions for Use of Non-US GAAP Financial Measures. The Company believes that the calculation of NAREIT 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 NAREIT 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 NAREIT Funds from operations provides useful information to the investment community about the Company's financial performance when compared to other REITs since NAREIT Funds from operations is generally recognized as the standard for reporting the operating performance of a REIT. NAREIT Funds from operations available to common shareholders is defined by NAREIT as net income (computed in accordance with generally accepted accounting principles ("US GAAP")), excluding gains (or losses) from sales of property and impairment - real estate assets, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. NAREIT Funds from operations available to common shareholders does not represent net income or cash flows from operations as defined by US 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. NAREIT Funds from operations available to common shareholders also does not represent cash flows generated from operating, investing or financing activities as defined by US GAAP. A reconciliation of NAREIT Funds from operations to net income may be found in Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations.

27


Item 7. 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 owns and operates industrial properties nationally and owns and operates office properties in a focused group of office markets. Additionally, the Company owns certain assets in the United Kingdom.
As of December 31, 2017, the Company owned and operated 461 industrial and 48 office properties (the “Wholly Owned Properties in Operation”) totaling 87.3 million square feet. In addition, as of December 31, 2017, the Company owned 20 properties under development, which when completed are expected to comprise 5.6 million square feet (the “Wholly Owned Properties under Development”). The Company owned 10 properties held for redevelopment (the "Wholly Owned Properties held for Redevelopment") totaling 1.0 million square feet and 1,563 acres of developable land, substantially all of which is zoned for commercial use. Additionally, as of December 31, 2017, the Company had an ownership interest, through unconsolidated joint ventures, in 47 industrial and 18 office properties totaling 14.3 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 552,000 square feet and a 217-room Four Seasons Hotel (the "JV Properties under Development" and, collectively with the Wholly Owned Properties under Development, the "Properties under Development"). One property held for redevelopment, totaling 48,000 square feet (the "JV Property Held for Redevelopment" and, collectively with the Wholly Owned Properties held for Redevelopment, the "Properties Held for Redevelopment" and, collectively with the Properties in Operation and the Properties under Development, the "Properties"), and 347 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 maximizing 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 strategy with respect to product and market selection favors industrial properties and markets with strong demographic and economic fundamentals, and to a lesser extent, metro-office properties. The Company also believes that long-term trends generally indicate potential erosion in the value of certain suburban office properties. Accordingly, the Company announced a strategic shift whereby it plans to divest of its remaining suburban office properties, and to reinvest those proceeds in acquisitions in targeted industrial markets and new development. The Company anticipates that this strategy will yield benefits over time, including a higher rate of rental growth and a lower level of lease transaction costs and other capital costs for industrial properties as opposed to suburban office properties. The Company believes that this strategy has resulted in an improvement in the average quality and geographic location of the Company’s properties. The Company believes that the benefits of the strategy will greatly outweigh the short-term reduction in net cash from operating activities that has resulted from the disposition of the suburban office assets. There can be no assurance, however, that the benefits of the Company's strategy will be realized.
The Company’s operating results depend primarily upon income from rental operations and are substantially influenced by rental demand for the Properties in Operation. During the year ended December 31, 2017, straight line rents on renewal and replacement leases were on average 14.2% higher than rents on expiring leases. During the year ended December 31, 2017, the Company leased 25.2 million square feet and, as of that date, attained occupancy of 97.0% for the Wholly Owned Properties in Operation and 96.5% for the JV Properties in Operation for a combined occupancy of 96.9% for the Properties in Operation. At December 31, 2016, occupancy for the Wholly Owned Properties in Operation was 96.4% and for the JV Properties in Operation was 95.9% for a combined occupancy for the Properties in Operation of 96.4%.
Based on the Company's current outlook, the Company anticipates that property level operating income for the Same Store (defined below) group of properties will increase for the full year 2018, compared to 2017, driven primarily by new and renewal leases being executed at higher rental rates than those of expiring leases, particularly for the Company's industrial properties. The Company expects Same Store occupancy levels to remain relatively consistent with those in 2017.
The assumptions presented above are forward-looking and are based on the Company’s future view of market and general economic conditions, as well as other risks outlined below under the caption “Forward-Looking Statements.”  There can be no assurance

28

that the Company’s actual results will not differ materially from assumptions set forth above.  The Company assumes no obligation to update these assumptions in the future.
Wholly Owned Capital Activity
Acquisitions
During the year ended December 31, 2017, the Company acquired eight operating properties for an aggregate purchase price of $256.4 million. These properties contain an aggregate of 1.9 million square feet of leaseable space and were 94.6% leased as of December 31, 2017. The Company also acquired nine parcels of land totaling 253 acres for an aggregate purchase price of $40.0 million.
Dispositions
During the year ended December 31, 2017, the Company sold 10 Wholly Owned Properties containing an aggregate of 2.3 million square feet as well as 113 acres of land for aggregate proceeds of $367.3 million.
Development
During the year ended December 31, 2017, the Company brought into service 17 Wholly Owned Properties under Development representing 2.9 million square feet and a Total Investment of $259.0 million. As of December 31, 2017, the Company had 20 Wholly Owned Properties under Development, which are expected to comprise, upon completion, 5.6 million square feet and are expected to represent a Total Investment of $526.7 million. These Wholly Owned Properties under Development were 50.2% pre-leased as of December 31, 2017.
“Total Investment” for a Property Under Development is defined as the sum of the land costs and the costs of land improvements, building and building improvements, lease transaction costs, and where appropriate, other development costs and carrying costs. 
Unconsolidated Joint Venture Activity
The Company periodically enters into unconsolidated joint venture relationships in connection with the execution of its real estate operating strategy.
Acquisitions/Dispositions
During the year ended December 31, 2017, an unconsolidated joint venture in which the Company holds a 20% interest acquired one redevelopment property for a purchase price of $15.0 million. This property, which contains 48,000 square feet of leaseable space, was 100% occupied as of December 31, 2017.
During the year ended December 31, 2017, none of the unconsolidated joint ventures in which the Company holds an interest sold any operating properties or land parcels.
Consistent with the Company's strategy, from time to time the Company may consider selling assets to or purchasing assets from an unconsolidated joint venture in which the Company holds an interest.
Development
During the year ended December 31, 2017, an unconsolidated joint venture in which the Company held an interest brought into service a built to suit project totaling 154,000 square feet and representing a Total Investment of $11.6 million. As of December 31, 2017, this completed development property was 100.0% leased. As of December 31, 2017, the Company had one JV Property under Development, which is expected to comprise, upon completion, 302,000 square feet and is expected to represent a Total Investment of $21.1 million. This JV Property under Development was not pre-leased as of December 31, 2017.
In addition, joint ventures in which the Company held an interest continued the development of the Comcast Technology Center. During the year ended December 31, 2017, 1.1 million square feet of office space representing a Total Investment by the joint ventures of $599.6 million was brought into service. The remaining 250,000 square feet of office space and the 217-room Four Seasons hotel representing an aggregate Total Investment by the joint ventures of $354.1 million was included as JV Properties under Development as of December 31, 2017.


29

Forward-Looking Statements
When used throughout this report, the words "believes," "anticipates," "estimates" 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 continue to implement its plans for repositioning the portfolio; 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 in Item 1A. Risk Factors and, 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
The Company's discussion and analysis of its financial condition and results of operations are based upon the Company's consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles ("US GAAP"). The preparation of these financial statements requires the Company to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. The Company bases these estimates, judgments and assumptions on historical experience and on other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.
The following critical accounting policies discussion reflects what the Company believes are the more significant estimates, assumptions and judgments used in the preparation of its Consolidated Financial Statements. This discussion of critical accounting policies is intended to supplement the description of the accounting policies in the footnotes to the Company's Consolidated Financial Statements and to provide additional insight into the information used by management when evaluating significant estimates, assumptions and judgments. For further discussion of our significant accounting policies, see Note 2 to the Consolidated Financial Statements included in this report.
Capitalized Costs
Acquisition costs related to the purchase of vacant operating properties and land are capitalized and included in net real estate.  During the year ended December 31, 2015 and the nine months ended September 30, 2016, acquisition costs related to the purchase of operating properties with in-place tenants were expensed as incurred. Acquisition-related expenses for the nine months ended September 30, 2016 and the year ended December 31, 2015 were $172,000 and $365,000, respectively. As described further in Note 2 to the Company's Consolidated Financial Statements, on October 1, 2016, the Company early adopted ASU 2017-01, Clarifying the Definition of a Business, which stipulates that acquisition costs related to the purchase of operating properties with in-place leases should also be capitalized.
The Company capitalizes costs associated with development and redevelopment activities, capital improvements, tenant improvements, and leasing activities, including compensation costs. Expenditures directly related to the improvement of real estate, including interest and other costs capitalized on development and redevelopment projects and land being readied for development, are included in net real estate and are stated at cost. The Company considers a development property substantially complete upon the completion of tenant build-out, but no later than one year after the completion of major construction activity. These capitalized costs include pre-construction costs essential to the development of the property, construction costs, interest costs, real estate taxes, development related compensation and other costs incurred during the period of development. The determination to capitalize rather than expense costs requires the Company to evaluate the status of the development activity. The total of capitalized compensation costs directly related to the development, redevelopment, capital improvements, and tenant improvements for the years ended December 31, 2017, 2016 and 2015 was $5.5 million, $7.2 million and $5.5 million, respectively.
Certain employees of the Company are compensated for leasing services related to the Company's properties. The compensation directly related to signed leases is capitalized and amortized as a deferred leasing cost. The total of this capitalized compensation was $3.6 million, $3.8 million and $4.6 million for the years ended December 31, 2017, 2016 and 2015, respectively.
Capitalized interest for the years ended December 31, 2017, 2016 and 2015 was $21.0 million, $24.1 million and $16.7 million, respectively.

30

Revenue Recognition
Rental revenue is recognized on a straight line basis over the noncancelable terms of the respective leases. Deferred rent receivable represents the amount by which straight line rental revenue exceeds rents currently billed in accordance with the lease agreements. Above-market and below-market lease values for acquired properties are recorded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management's estimate of fair market lease rates for each corresponding in-place lease. The capitalized above or below-market lease values are amortized as a component of rental revenue over the remaining term of the respective leases and any bargain renewal option periods, where appropriate.
Revenue and expense associated with service fee development is accounted for under the percentage of completion method. Revenues are recognized on the percentage of completion method based on applicable costs incurred with respect to each development agreement. The Company uses the relative sales value method to allocate costs and recognize profits from service fee development. Under the relative sales value method, estimates of aggregate project revenues and aggregate project costs are used to determine the allocation of project cost of sales and the resulting profit in each accounting period. In subsequent periods, cost of sale allocations and the resulting profits are adjusted to reflect changes in the actual and estimated costs and revenues of each project. Provisions for estimated losses on uncompleted contracts are recognized immediately in the period in which such losses are determined.
Allowance for Doubtful Accounts
The Company continually monitors the liquidity and creditworthiness of its tenants. Based on these reviews, provisions are established, and an allowance for doubtful accounts for estimated losses resulting from the inability of its tenants to make required rental payments is maintained. As of December 31, 2017 and 2016, the Company's allowance for doubtful accounts totaled $6.6 million and $7.3 million, respectively. The Company recognized bad debt expense of $0.6 million, $0.6 million and $2.0 million for the years ended December 31, 2017, 2016 and 2015, respectively.
Impairment of Real Estate
The Company evaluates its real estate investments upon the occurrence of significant adverse changes in operations to assess whether any impairment indicators are present that could affect the recovery of the recorded value. Indicators the Company uses to determine whether an impairment evaluation is necessary include the low occupancy level of the property, holding period for the property, strategic decisions regarding future development plans for a property under development and land held for development and other market factors. If impairment indicators are present, the Company performs an undiscounted cash flow analysis and compares the net carrying amount of the property to the property's estimated undiscounted future cash flow over the anticipated holding period. The Company assesses the expected undiscounted cash flows based upon a number of assumptions that are subject to economic and market uncertainties including, among others, demand for space, competition for tenants, current market rental rates, changes in market rental rates, operating costs, capitalization rates and holding periods. For these assumptions, the Company considers its experience and historical performance in the various markets and data provided by market research organizations. If any real estate investment is considered impaired, the carrying value of the property is written down to its estimated fair value.If held for sale, a property is not considered impaired unless its estimated fair value (less costs to sell) is less than the property's book value at the balance sheet date. The Company estimates fair value based on the discounting of future expected cash flows at a risk adjusted interest rate. During the years ended December 31, 2017, 2016 and 2015, the Company recognized impairment losses of $10.6 million, $3.9 million and $18.2 million, respectively. The determination of whether an impairment exists requires the Company to make estimates, judgments and assumptions about the future cash flows. The Company has applied reasonable estimates and judgments in determining the level of impairments recognized. Should external or internal circumstances change requiring the need to shorten the holding periods or adjust the estimated future cash flows of the Company’s assets, the Company could be required to record impairment charges in the future.

31

Intangibles
The Company allocates the purchase price of real estate acquired to land, building and improvements and intangibles based on the relative fair value of each component. The value ascribed to in-place leases is based on the rental rates for the existing leases compared to the Company's estimate of the market lease rates for leases of similar terms and present valuing the difference based on an interest rate which reflects the risks associated with the leases acquired. Origination values are also assigned to in-place leases, and, where appropriate, value is assigned to customer relationships. Origination cost estimates include the costs to execute leases with terms similar to the remaining lease terms of the in-place leases, including leasing commissions, legal and other related expenses. Additionally, the Company estimates carrying costs during the expected lease-up periods including real estate taxes, other operating expenses and lost rentals at contractual rates. Such amounts are also included in origination costs. The amounts allocated to the intangible relating to in-place leases, which are included in deferred financing and leasing costs or in other liabilities in the accompanying consolidated balance sheets, are amortized to rental income for market rental rate intangibles and to depreciation and amortization for origination costs on a straight line basis over the remaining term of the related leases. In the event that a tenant terminates its lease, the unamortized portion of the intangible is written off.
Investments in Unconsolidated Joint Ventures
The Company analyzes its investments in joint ventures to determine if the joint venture is considered a variable interest entity and would require consolidation. The Company accounts for its investments in unconsolidated joint ventures using the equity method of accounting as the Company exercises significant influence over, but does not control, these entities. These investments are recorded initially at cost and subsequently adjusted for equity in earnings and cash contributions and distributions.
On a periodic basis, management assesses whether there are any indicators that the value of the Company's investments in unconsolidated joint ventures may be impaired. An investment is impaired if management's estimate of the value of the investment is less than the carrying value of the investment, and such decline in value is deemed to be other than temporary. To the extent impairment has occurred, the loss is measured as the excess of the carrying amount of the investment over the estimated fair value of the investment.
Management estimated the fair value of its ownership interest in the joint ventures considering the estimated fair value of the real estate assets owned by the joint ventures and the related indebtedness as well as the working capital assets and liabilities of the joint ventures and the terms of the related joint venture agreements. The Company's estimates of fair value of the real estate assets are based on a discounted cash flow analysis incorporating a number of assumptions that are subject to economic and market uncertainties including, among others, demand for space, competition for tenants, current market rental rates, changes in market rental rates, operating costs, capitalization rates, holding periods and discount rates. For these assumptions, the Company considered its experience and historical performance in the various markets and data provided by market research organizations. In assessing whether an impairment is other-than-temporary, the Company considers several factors. The longevity and severity of the impairment are considered as well as the expected time for recovery of value to occur, if ever.
During the years ended December 31, 2017 and 2015 the Company concluded that certain of the properties owned by the Liberty Washington, LP joint venture were impaired and the joint venture recorded an impairment charge. The Company's share of these impairment charges were $4.0 million and $11.5 million, respectively, and are reflected in equity in earnings of unconsolidated joint ventures in the Company's 2017 and 2015 consolidated statement of comprehensive income.
There were no impairments recorded by the unconsolidated joint ventures in which the Company held an interest during the year ended December 31, 2016.
Derivative Instruments and Hedging Activities
Derivative instruments and hedging activities require management to make judgments on the nature of its derivatives and their effectiveness as hedges. These judgments determine if the changes in fair value of the derivative instruments are reported in the consolidated statements of comprehensive income as a component of net income or as a component of other comprehensive income and as a component of equity on the Consolidated Balance Sheets. While management believes its judgments are reasonable, a change in a derivative’s effectiveness as a hedge could materially affect expenses, net income and equity.

32

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 year ended December 31, 2017 with the results of operations of the Company for the year ended December 31, 2016, and the results of operations of the Company for the year ended December 31, 2016 with the results of operations of the Company for the year ended December 31, 2015. As a result of the varying levels of development, acquisition and disposition activities by the Company in 2017, 2016 and 2015, the overall operating results of the Company during such periods are not directly comparable. However, certain data, including the Same Store (as defined below) comparison, do lend themselves to direct comparison.
This information should be read in conjunction with the accompanying consolidated financial statements and notes included elsewhere in this report.
Comparison of Year Ended December 31, 2017 to Year Ended December 31, 2016
Rental Revenue
Rental revenue was $486.2 million for the year ended December 31, 2017 compared to $519.4 million for the same period in 2016. This decrease of $33.2 million was primarily due to the net result of decreased rental revenue related to $1.2 billion of property dispositions since January 1, 2016, offset by increased rental revenue related to acquisitions and completed development for the same period and an increase of $9.8 million related to the Company's Same Store portfolio (see below).
Operating Expense Reimbursement
Operating expense reimbursement was $150.9 million for the year ended December 31, 2017 compared to $178.4 million for the same period in 2016. This decrease of $27.5 million was primarily due to lower reimbursements associated with an aggregate decrease of $33.2 million in rental property expense and real estate taxes (as detailed below).
Rental Property Expense
Rental property expense was $66.0 million for the year ended December 31, 2017 compared to $94.2 million for the same period in 2016. This decrease of $28.2 million was primarily due to a reduction in expense resulting from the sale of suburban office and high finish flex properties partially offset by increased expenses resulting from the acquisition and completed development of industrial properties. Rental property expense includes utilities, insurance, janitorial, landscaping, snow removal and other costs necessary to maintain a property.
Real Estate Taxes
Real estate taxes were $90.2 million for the year ended December 31, 2017 compared to $95.2 million for the same period in 2016. This decrease of $5.0 million was primarily due to the net result of decreased real estate taxes related to property dispositions since January 1, 2016, offset by increased real estate taxes related to acquisitions and completed development for the same period. The decrease was also offset by higher real estate tax assessments for the Company's Same Store properties.
Segments
The Company evaluates the performance of the Wholly Owned Properties in Operation in terms of net operating income by reportable segment (see Note 18 to the Company’s Consolidated Financial Statements for a reconciliation of this measure to net income). Net operating income includes operating revenue from external customers, rental property expense, real estate taxes, amortization of lease transaction costs and other operating expenses which relate directly to the management and operation of the assets within each reportable segment. The following table identifies changes in reportable segment net operating income (dollars in thousands):

33

Reportable Segment Net Operating Income:
 
Year Ended December 31,
 
PERCENTAGE
INCREASE
(DECREASE)
 
 
2017
 
2016
 
 
 
 
 
 
 
 
 
Carolinas/Richmond
$
53,132

 
$
46,170

 
15.1
%
(1) 
Chicago/Minneapolis
39,231

 
45,258

 
(13.3
%)
(2) 
Florida
39,850

 
62,177

 
(35.9
%)
(2) 
Houston
32,300

 
32,499

 
(0.6
%)
 
Lehigh/Central PA
119,304

 
102,209

 
16.7
%
(1) 
Philadelphia
35,279

 
30,862

 
14.3
%
(1) 
Southeastern PA
35,641

 
53,947

 
(33.9
%)
(2) 
United Kingdom
7,657

 
6,390

 
19.8
%
(3) 
Other
86,127

 
89,274

 
(3.5
%)
 
Total reportable segment net operating income
$
448,521

 
$
468,786

 
(4.3
%)
 

(1)
The increase was primarily due to an increase in average gross investment in operating real estate.
(2)
The decrease was primarily due to a decrease in average gross investment in operating real estate offset by an increase in occupancy.
(3)
The increase was primarily due to an increase in the foreign exchange rate.

Same Store
Property level operating income, exclusive of termination fees, for the Same Store properties is identified in the table below.
The Same Store results were affected by changes in occupancy and rental rates as detailed below for the respective periods.
 
Year Ended
 
December 31,
 
2017
 
2016
Average occupancy %
96.5
%
 
96.3
%
Average rental rate - cash basis (1)
$
5.64

 
$
5.51

Average rental rate - straight line basis (2)
$
7.56

 
$
7.43

(1)
Represents the average contractual rent per square foot for the year ended December 31, 2017 or 2016 for tenants in occupancy in the Same Store properties. Cash basis rent does not include the tenant's obligation to pay property operating expenses and real estate taxes. If a tenant was within a free rent period its rent would equal zero for purposes of this metric.
(2)
Represents the average straight line rent and operating expense reimbursement per square foot for the year ended December 31, 2017 or 2016 for tenants in occupancy in 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. In addition, Same Store property level operating income and Same Store cash basis property level operating income are considered by management to be more reliable indicators of the portfolio’s baseline performance. The Same Store properties consist of the 468 properties totaling approximately 78.8 million square feet owned on January 1, 2016. Properties that were acquired, or on which development was completed, during the years ended December 31, 2017 and 2016 are excluded from the Same Store properties. Properties that were acquired, or on which development was completed, are included in Same Store properties when they have been purchased in the case of acquisitions, and placed into service in the case of completed development, prior to the beginning of the earliest period presented in the comparison. The 10 properties sold during the year ended December 31, 2017 and the 125 properties sold during 2016 are also excluded.
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 years ended December 31, 2017 and 2016. Same Store property level operating income and cash basis property level operating income are non-US GAAP measures and do not represent income before gain on property dispositions, income taxes and equity in earnings of unconsolidated joint ventures because they do not reflect the consolidated operations of the Company. Investors should review Same Store results, along with Funds from operations (see “Liquidity and Capital Resources” below), US GAAP net income and cash flow from operating activities, investing activities and financing activities when considering

34

the Company’s operating performance. Also set forth below is a reconciliation of Same Store property level operating income and cash basis property level operating income to net income (in thousands).
 
Year Ended
 
December 31, 2017
 
December 31, 2016
Reconciliation of non-US GAAP financial measure – Same Store:
 
 
 
Net income
$
290,045

 
$
366,145

Discontinued operations (1)
(18,979
)
 
(11,991
)
Equity in earnings of unconsolidated joint ventures
(17,155
)
 
(21,970
)
Income taxes
1,992

 
1,971

Gain on property dispositions
(100,387
)
 
(219,270
)
Interest expense
88,857

 
112,299

Loss on debt extinguishment
49

 
27,099

Interest and other income
(7,778
)
 
(13,817
)
Impairment charges - real estate assets
3,946

 
3,879

Development service fee expense
85,805

 
12,165

Depreciation and amortization expense
175,137

 
196,705

Expensed pursuit costs
5,066

 
1,016

General and administrative expense
56,975

 
67,088

Development service fee income
(82,673
)
 
(12,941
)
Termination fees (2)
(4,016
)
 
(4,220
)
Non-same store property level operating income - continuing operations
(34,080
)
 
(74,604
)
Same store property level operating income
442,804

 
429,554

Straight line rent
(10,593
)
 
(11,663
)
Same store cash basis property level operating income
$
432,211

 
$
417,891

 
 
 
 
Same Store:
 
 
 
Rental revenue
$
442,269

 
$
432,481

Operating expenses:
 
 
 
Rental property expense
67,241

 
70,324

Real estate taxes
76,232

 
74,685

Operating expense recovery
(144,008
)
 
(142,082
)
Unrecovered operating expenses
(535
)
 
2,927

Property level operating income
442,804

 
429,554

Less straight line rent
10,593

 
11,663

Cash basis property level operating income
$
432,211

 
$
417,891

 
(1) Includes termination fees of $124,000 and $254,000 for the years ended December 31, 2017 and 2016, respectively.
(2) 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.

Development Service Fee Income and Expense
In the fourth quarter of 2016, the Company entered into an agreement relating to the fee development of an office building at its Camden Waterfront project in Camden, NJ. Project revenues and related costs and expenses are presented on a gross basis as "Development service fee income" and "Development service fee expense" in the Consolidated Statements of Comprehensive Income. Additionally, at the same time, the Company began classifying development fees and expenses relating to its fee development arrangements for certain unconsolidated joint venture projects in a manner consistent with the Camden Waterfront project described above. Previously, development service fee income relating to the Company's unconsolidated joint ventures had been classified as other income and development service fee expense had been classified as general and administrative expense in amounts as follows:


35

 
Nine months ended
 
 
September 30, 2016
 
Other income
$
3,789

 
General and administrative expense
$
3,210

 

Development Service fee activity was a net loss of $3.1 million during the year ended December 31, 2017 as compared to a net gain of $0.8 million for the year ended December 31, 2016. This decrease was primarily due to additional expenses the Company accrued in 2017 in its Philadelphia reportable segment.

General and Administrative

General and administrative expenses decreased to $57.0 million for the year ended December 31, 2017 compared to $67.1 million for the year ended December 31, 2016. This decrease was partially due to certain expenses which were classified as development service fee expense on the Company's consolidated statements of comprehensive income for the year ended December 31, 2017 and the partial year ended December 31, 2016, as described above. This decrease was also due to a decrease in compensation costs, including severance costs, associated primarily with headcount reductions in connection with real estate sales during 2016. Additionally, during 2017 the Company reclassed certain legal costs thereby reducing general and administrative expense.
General and administrative expenses include salaries, wages and incentive compensation for general and administrative staff along with related costs, consulting, marketing, public company expenses and other general and administrative costs.
Expensed pursuit costs
Expensed pursuit costs increased to $5.1 million for the year ended December 31, 2017 compared to $1.0 million for the year ended December 31, 2016. These increases were primarily due to the write-off of costs associated with certain planned development projects which were terminated.
Depreciation and Amortization
Depreciation and amortization decreased to $175.1 million for the year ended December 31, 2017 from $196.7 million for the year ended December 31, 2016. This decrease was primarily due to the net result of decreased depreciation and amortization related to property dispositions since January 1, 2016 offset by increased depreciation and amortization related to acquisitions and completed development for the same period. The decrease was also due to a reduction in amortization of in-place lease intangibles.
Impairment - Real Estate Assets
Impairment - real estate assets remained unchanged at $3.9 million for the years ended December 31, 2017 and December 31, 2016. In 2016, the Company recognized impairments related to certain properties in the Company's Chicago/Minneapolis reportable segment. These properties were subsequently sold. In 2017, the Company recognized an impairment charge related to land held for development in the Company's Houston reportable segment. This property was subsequently sold.

Interest Expense
Interest expense decreased to $88.9 million for the year ended December 31, 2017 from $112.3 million for the year ended December 31, 2016. This decrease was due to the decrease in the average debt outstanding to $2,756.0 million for the year ended December 31, 2017 from $3,077.7 million for the year ended December 31, 2016 as well as a decrease in the weighted average interest rate to 3.9% for the year ended December 31, 2017 from 4.2% for the year ended December 31, 2016. The decrease was partially offset by a decrease in interest capitalized to $21.0 million for the year ended December 31, 2017 compared to $24.1 million for the year ended December 31, 2016.
Equity in Earnings of Unconsolidated Joint Ventures
Equity in earnings of unconsolidated joint ventures decreased to $17.2 million for the year ended December 31, 2017 compared to $22.0 million for the year ended December 31, 2016. This decrease was primarily due to a decrease in gain on sale of operating properties, a decrease in gain on debt forgiveness and an increase in impairment charges - real estate assets by unconsolidated joint ventures in which the Company holds an interest. The Company's share of recognized gain was $7.3 million for the year ended December 31, 2016 compared to $3.0 million for 2017. The Company's share of debt forgiveness gains was $4.2 million for the year ended December 31, 2016. There were no such gains in 2017. The Company's share of impairment charges - real estate assets was $4.0 million for the year ended December 31, 2017. There were no such charges in 2016.

36

Equity in earnings of unconsolidated joint ventures was also impacted by changes in the gain on the sale of land leasehold interests by an unconsolidated joint venture in which the Company holds an interest. The Company's share of these gains was $8.0 million for the year ended December 31, 2017 compared to $3.5 million for the year ended December 31, 2016, respectively.
Other
Gain on property dispositions decreased to $100.4 million for the year ended December 31, 2017 from $219.3 million for the year ended December 31, 2016. This decrease resulted from the volume and composition of sales in 2017 as compared to 2016.
Discontinued Operations
A summary of the results of operations for the properties classified as discontinued operations through the respective disposition dates (if applicable) is as follows (in thousands):
 
 
For the Year Ended
 
 
 
 
December 31, 2017
 
December 31, 2016
 
 
Revenues
 
$
34,035

 
$
36,010

 
 
Operating expenses
 
(14,014
)
 
(12,989
)
 
 
Depreciation and amortization
 
(6,753
)
 
(8,385
)
 
 
Impairment charges - real estate assets
 
(6,686
)
 
—

 
 
Interest and other income
 
58

 
133

 
 
Interest expense
 
(2,239
)
 
(2,778
)
 
 
Net income before gain on property dispositions
 
4,401

 
11,991

 
 
Gain on property dispositions
 
14,578

 
—

 
 
Net income
 
$
18,979

 
$
11,991

 
 

Changes in discontinued operations are reflective of the period of time the properties were held during the respective periods. Certain properties were sold and therefore contributed to a portion of a period and certain properties were complete and stabilized during a period therefore also contributing to a portion of a period. Additionally during 2017, the Company recognized an impairment on a property which was subsequently sold.
As a result of the foregoing, the Company’s net income decreased to $290.0 million for the year ended December 31, 2017 from $366.1 million for the year ended December 31, 2016.
Comparison of Year Ended December 31, 2016 to Year Ended December 31, 2015
Rental Revenue
Rental revenue was $519.4 million for the year ended December 31, 2016 compared to $561.4 million for the same period in 2015. This decrease of $42.1 million was primarily due to the net result of decreased rental revenue related to property dispositions since January 1, 2015 offset by increased rental revenue related to acquisitions and completed development for the same period, as well as an increase of $9.3 million related to the Company's Same Store portfolio (see below).
Operating Expense Reimbursement
Operating expense reimbursement was $178.4 million for the year ended December 31, 2016 compared to $212.5 million for the same period in 2015. This decrease of $34.0 million was primarily due to lower reimbursements associated with an aggregate decrease of $36.3 million in rental property expense and real estate taxes (as detailed below).
Rental Property Expense
Rental property expense was $94.2 million for the year ended December 31, 2016 compared to $124.0 million for the same period in 2015. This decrease of $29.8 million was primarily due to a reduction in expense resulting from the sale of suburban office and high finish flex properties partially offset by increased expenses resulting from the acquisition and completed development of industrial properties. Rental property expense includes utilities, insurance, janitorial, landscaping, snow removal and other costs necessary to maintain a property.
Real Estate Taxes
Real estate taxes were $95.2 million for the year ended December 31, 2016 compared to $101.6 million for the same period in 2015. This decrease of $6.4 million was primarily due to the net result of decreased real estate taxes related to property dispositions since January 1, 2015 offset by increased real estate taxes related to acquisitions and completed development for the same period.

37

Segments
The Company evaluates the performance of the Wholly Owned Properties in Operation in terms of net operating income by reportable segment (see Note 18 to the Company’s Consolidated Financial Statements for a reconciliation of this measure to net income). Net operating income includes operating revenue from external customers, rental property expense, real estate taxes, amortization of lease transaction costs and other operating expenses which relate directly to the management and operation of the assets within each reportable segment. The following table identifies changes in reportable segment net operating income (dollars in thousands):

Reportable Segment Net Operating Income:
 
Year Ended December 31,
 
PERCENTAGE
INCREASE
(DECREASE)
 
 
2016
 
2015
 
 
 
 
 
 
 
 
 
Carolinas/Richmond
$
46,170

 
$
47,849

 
(3.5
%)
 
Chicago/Minneapolis
45,258

 
44,963

 
0.7
%
 
Florida
62,177

 
77,283

 
(19.5
%)
(1) 
Houston
32,499

 
31,159

 
4.3
%
 
Lehigh/Central PA
102,209

 
94,972

 
7.6
%
 
Philadelphia
30,862

 
29,679

 
4.0
%
 
Southeastern PA
53,947

 
80,458

 
(33.0
%)
(1) 
United Kingdom
6,390

 
10,486

 
(39.1
%)
(2) 
Other
89,274

 
87,925

 
1.5
%
 
Total reportable segment net operating income
$
468,786

 
$
504,774

 
(7.1
%)
 


(1)
The decrease was primarily due to a decrease in average gross investment in operating real estate.
(2)
The decrease was primarily due to a decrease in the foreign exchange rate.

Prior Year Same Store
Property level operating income, exclusive of termination fees, for the Prior Year Same Store properties is identified in the table below.
The Prior Year Same Store results were affected by changes in occupancy and rental rates as detailed below for the respective periods as well as the decrease in the non-recovered portion of the snow removal costs and other weather-related expenses for the respective periods.
 
Year Ended
 
December 31,
 
2016
 
2015
Average occupancy %
96.5
%
 
94.6
%
Average rental rate - cash basis (1)
$
5.62

 
$
5.59

Average rental rate - straight line basis (2)
$
7.57

 
$
7.54

(1)
Represents the average contractual rent per square foot for the year ended December 31, 2016 or 2015 for tenants in occupancy in the Same Store properties. Cash basis rent does not include the tenant's obligation to pay property operating expenses and real estate taxes. If a tenant was within a free rent period its rent would equal zero for purposes of this metric.
(2)
Represents the average straight line rent and operating expense reimbursement per square foot for the year ended December 31, 2016 or 2015 for tenants in occupancy in 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. In addition, Same Store property level operating income and Same Store cash basis property level operating income are considered by management to be more reliable indicators of the portfolio’s baseline performance. The Same Store properties consist of the 467 properties totaling approximately 76.3 million

38

square feet owned on January 1, 2015. Properties that were acquired, or on which development was completed, during the years ended December 31, 2016 and 2015 are excluded from the Same Store properties. Properties that were acquired, or on which development was completed, are included in Same Store when they have been purchased in the case of acquisitions, and placed into service in the case of completed development, prior to the beginning of the earliest period presented in the comparison. The 125 properties sold during the year ended December 31, 2016 and the 81 properties sold during 2015 are also excluded.
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 years ended December 31, 2016 and 2015. Same Store property level operating income and cash basis property level operating income are non-US GAAP measures and do not represent income before gain on property dispositions, income taxes and equity in earnings of unconsolidated joint ventures because they do not reflect the consolidated operations of the Company. Investors should review Same Store results, along with Funds from operations (see “Liquidity and Capital Resources” below), US 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 and cash basis property level operating income to net income (in thousands).
 
Year Ended
 
December 31, 2016
 
December 31, 2015
Reconciliation of non-US GAAP financial measure – Same Store:
 
 
 
Net income
$
366,145

 
$
245,924

Discontinued operations (1)
(11,991
)
 
(10,565
)
Equity in earnings of unconsolidated joint ventures
(21,970
)
 
(3,149
)
Income taxes
1,971

 
2,673

Gain on property dispositions
(219,270
)
 
(100,314
)
Interest expense
112,299

 
133,557

Loss on debt extinguishment
27,099

 
—

Interest and other income
(13,817
)
 
(23,758
)
Impairment charges - real estate assets
3,879

 
17,215

Development service fee expense
12,165

 
—

Depreciation and amortization expense
196,705

 
217,864

Expensed pursuit costs
1,016

 
605

General and administrative expense
67,088

 
68,264

Development service fee income
(12,941
)
 
—

Termination fees (2)
(4,220
)
 
(6,963
)
Non-same store property level operating income - continuing operations
(80,382
)
 
(129,203
)
Same store property level operating income
423,776

 
412,150

Straight line rent
(9,234
)
 
(11,200
)
Same store cash basis property level operating income
$
414,542

 
$
400,950

 
 
 
 
Prior Year Same Store:
 
 
 
Rental revenue
$
427,048

 
$
417,782

Operating expenses:
 
 
 
Rental property expense
71,795

 
74,558

Real estate taxes
74,052

 
72,048

Operating expense recovery
(142,575
)
 
(140,974
)
Unrecovered operating expenses
3,272

 
5,632

Property level operating income
423,776

 
412,150

Less straight line rent
9,234

 
11,200

Cash basis property level operating income
$
414,542

 
$
400,950

 
(1) Includes termination fees of $254,000 for the year ended December 31, 2016. There were no termination fees in discontinued operations in 2015.
(2) 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.

39


Development Service Fee Income and Expense
In the fourth quarter of 2016, the Company entered into an agreement relating to the fee development of an office building at its Camden Waterfront project in Camden, NJ. Project revenues and related costs and expenses are presented on a gross basis as "Development service fee income" and "Development service fee expense" in the Consolidated Statements of Comprehensive Income. Additionally, at the same time, the Company began classifying development fees and expenses relating to its fee development arrangements for certain unconsolidated joint venture projects in a manner consistent with the Camden Waterfront project described above. Previously, development service fee income relating to the Company's unconsolidated joint ventures had been classified as other income and development service fee expense had been classified as general and administrative expense in amounts as follows:

 
Nine months ended
 
Year ended
 
September 30, 2016
 
December 31, 2015
Other income
$
3,789

 
$
6,159

General and administrative expense
$
3,210

 
$
3,730


General and Administrative

General and administrative expenses decreased to $67.1 million for the year ended December 31, 2016 compared to $68.3 million for the year ended December 31, 2015. This decrease was partially due to certain expenses which were classified as development service fee expense on the Company's consolidated statements of comprehensive income for the partial year ended December 31, 2016, as described above. The decrease was also partially due to a decrease in compensation costs other than severance charges. These decreases were partially offset by an increase of $3.5 million in compensation costs due to severance charges. General and administrative expenses include salaries, wages and incentive compensation for general and administrative staff along with related costs, consulting, marketing, public company expenses, costs associated with the acquisition of properties and other general and administrative costs.
Depreciation and Amortization
Depreciation and amortization decreased to $196.7 million for the year ended December 31, 2016 from $217.9 million for the year ended December 31, 2015. This decrease was primarily due to the net result of decreased depreciation and amortization related to property dispositions since January 1, 2015 offset by increased depreciation and amortization related to acquisitions and completed development for the same period. The decrease was also due to a reduction in amortization of in-place lease intangibles.
Impairment - Real Estate Assets
Impairment - real estate assets decreased to $3.9 million for the year ended December 31, 2016 compared to $17.2 million for the year ended December 31, 2015. The Company recognized impairments related to certain properties in the Company's Maryland, Richmond/Hampton Roads, Cincinnati/Columbus/Indianapolis and Southeastern PA reportable segments in 2015. The properties related to the Richmond/Hampton Roads reportable segment were subsequently sold. In 2016, the Company recognized impairments related to certain properties in the Company's Minnesota and Chicago-Wisconsin reportable segments. These properties were subsequently sold.

Interest Expense
Interest expense decreased to $112.3 million for the year ended December 31, 2016 from $133.6 million for the year ended December 31, 2015. This decrease was due to the decrease in the average debt outstanding to $3,077.7 million for the year ended December 31, 2016 from $3,202.3 million for the year ended December 31, 2015 as well as a decrease in the weighted average interest rate to 4.2% for the year ended December 31, 2016 from 4.6% for the year ended December 31, 2015. The decrease was also due to an increase in interest capitalized to $24.1 million for the year ended December 31, 2016 compared to $16.7 million for the year ended December 31, 2015.

40

Equity in Earnings of Unconsolidated Joint Ventures
Equity in earnings of unconsolidated joint ventures increased to $22.0 million for the year ended December 31, 2016 compared to $3.1 million for the year ended December 31, 2015. This increase was primarily due to an increase in the net effect of gain on sale of operating properties offset by impairment losses and also due to gain on debt forgiveness by unconsolidated joint ventures in which the Company holds an interest. The Company's share of gain on sale related to unconsolidated joint ventures was $7.3 million for the year ended December 31, 2016 compared to impairment losses of $11.3 million for the year ended December 31 2015. The Company's share of debt forgiveness gains was $4.2 million for the year ended December 31, 2016. There were no such gains in 2015. These results were also impacted by gains on the sale of land leasehold interests by an unconsolidated joint venture in which the Company holds an interest. The Company's share of these gains was $3.5 million for the year ended December 31, 2016 compared to $5.0 million for the year ended December 31, 2015.
Other
Gain on property dispositions increased to $219.3 million for the year ended December 31, 2016 from $100.3 million for the year ended December 31, 2015. This increase resulted from the volume and composition of sales in 2016 as compared to 2015.
Discontinued Operations
A summary of the results of operations for the properties classified as discontinued operations through the respective disposition dates (if applicable) is as follows (in thousands):
 
 
For the Year Ended
 
 
 
December 31, 2016
 
December 31, 2015
 
Revenues
 
$
36,010

 
$
34,813

 
Operating expenses
 
(12,989
)
 
(12,309
)
 
Depreciation and amortization
 
(8,385
)
 
(8,711
)
 
Impairment charges - real estate assets
 
—

 
(1,029
)
 
Interest and other income
 
133

 
23

 
Interest expense
 
(2,778
)
 
(2,222
)
 
Net income
 
$
11,991

 
$
10,565

 

Changes in discontinued operations are reflective of the period of time the properties were held during the respective periods. Certain properties were complete and stabilized during a period therefore contributed to a portion of a period. Additionally during 2015, the Company recognized an impairment on a property held for redevelopment.
As a result of the foregoing, the Company’s net income increased to $366.1 million for the year ended December 31, 2016 from $245.9 million for the year ended December 31, 2015.
Liquidity and Capital Resources
Overview
The Company seeks to maintain a conservative balance sheet and pursue a strategy of financial flexibility. The Company's liquidity requirements include operating and general and administrative expenses, shareholder distributions, funding its investment in development properties and joint ventures and satisfying interest requirements and debt maturities. The Company believes that proceeds from operating activities, asset sales, its available cash, borrowing capacity from its Credit Facilities (as defined below) and its other sources of capital including the public debt and equity markets will provide it with sufficient funds to satisfy these obligations.
Activity
As of December 31, 2017, the Company had cash and cash equivalents of $25.7 million, including $13.8 million in restricted cash.
Net cash provided by operating activities increased to $336.6 million for the year ended December 31, 2017 from $341.1 million for the year ended December 31, 2016. This $4.5 million increase was primarily due fluctuations in operating assets and liabilities. Net cash flow provided by operating activities is the primary source of liquidity to fund dividends to shareholders, recurring capital expenditures and leasing transaction costs for the Company’s Wholly Owned Properties in Operation.

41

Net cash used in investing activities was $465.7 million for the year ended December 31, 2017 compared to net cash provided by investing activities of $614.9 million for the year ended December 31, 2016. This $1,080.6 million difference was primarily due to the net proceeds from dispositions less cash paid for acquisitions which was $123.5 million in 2017 as compared to $1.2 billion in 2016. During 2016 the Company sold a portfolio of properties for $969 million.
Net cash provided by financing activities was $96.2 million for the year ended December 31, 2017 compared to net cash used in financing activities of $939.5 million for the year ended December 31, 2015. This $1,035.7 million change was primarily due to net debt repayment activity associated with the dispositions described above. Net cash used in financing activities includes proceeds from the issuance of equity and debt, net of debt repayments, equity repurchases and shareholder distributions.
The Company is a party to a credit facility with a maximum availability of $800 million (the "Facility") and a working capital line of credit for $30 million (the "Credit Facilities"). The Company also has a delayed draw term loan (the "DDTL") facility for aggregate borrowings of $100 million (together the "Facilities"). The Facilities expire in October 2021 and have two six-month extensions at the Company's option. The interest rate on borrowings under the Facilities fluctuates based upon ratings from Moody's Investor Services, Inc., Standard and Poor's Ratings Group and Fitch, Inc. Based upon the Company’s current credit ratings, borrowings under the Credit Facilities bear interest at LIBOR plus 0.875%. There is also currently a 0.15% annual facility fee on the aggregate loan commitments of the Credit Facilities. The DDTL currently bears interest at LIBOR plus 0.95%. The Facility contains a competitive bid option, whereby participating lenders bid on the interest rate to be charged. This feature is available for up to 50% of the amount of the Facility. As of December 31, 2017, the Company had $358.9 million outstanding borrowings and $5.1 million of letters of credit issued under the Credit Facilities.
In March 2015, the Company used proceeds from its existing unsecured credit facility together with available cash on hand to repay $300 million of 5.125% senior unsecured notes due March 2015.
In March 2015, the Company issued $400 million of 3.75% senior unsecured notes due 2025. The net proceeds from this issuance were used to repay borrowings under the Company's unsecured credit facility and for general corporate purposes.
In August 2015, the Company used proceeds from its unsecured credit facility to prepay in full without penalty a $105.8 million 7.0% mortgage loan due February 2016.
In December 2015, the Company used proceeds from its unsecured credit facility to prepay in full without penalty a $59.7 million 7.5% mortgage loan due March 2016 and to satisfy $16.0 million in unsecured notes bearing interest at 3.4% due December 2015.
During the year ended December 31, 2015, the Company purchased an aggregate of 2.3 million common shares of the Company for $71.8 million as part of a share repurchase plan.
In September 2016, the Company issued $400 million of 3.25% senior unsecured notes due 2026. The Company used a substantial portion of the net proceeds from these notes to prepay its 5.5% Senior Notes due December 2016 in the amount of $300 million. This prepayment resulted in a $3.8 million loss on debt extinguishment.
In November 2016, the Company used cash generated by the sale of properties (see above) to prepay its 6.625% senior notes due October 2017 in the amount of $296.5 million and its 7.5% medium term notes due January 2018 in the amount of $100.0 million. This prepayment resulted in a $23.3 million loss on debt extinguishment.
During the year ended December 31, 2016, the Company purchased an aggregate of 1.4 million common shares for $40.9 million as part of a share repurchase plan.
In October 2017, the Company replaced its existing $800 million credit facility with the new $800 million Facility and the $100 million DDTL.

In October 2017, the Company entered into a working capital line of credit for aggregate borrowings of up to $30 million.

The Company funds its development activities and acquisitions with long-term capital sources and proceeds from the disposition of properties. For the year ended December 31, 2017, a portion of these activities were funded through the existing credit facility and the Credit Facilities.
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 December 31, 2017, the Company’s debt to gross assets ratio was 38.8% and for the year ended December 31, 2017, the fixed charge coverage ratio was 3.9x. Debt to gross assets equals total long-term debt and borrowings under the Facilities divided by total assets plus accumulated depreciation. The fixed charge coverage ratio equals net income before property dispositions plus

42

interest expense, depreciation and amortization (including the Company's pro rata share of depreciation and amortization related to unconsolidated joint ventures) and impairment - real estate assets (including the Company's pro rata share of impairment - real estate assets related to unconsolidated joint ventures), divided by interest expense, including capitalized interest, plus distributions on preferred units.
As of December 31, 2017, $262.1 million (including $96.2 million fixed via a swap arrangement - see Note 20 to the Company's Consolidated Financial Statements) in mortgage loans and $2.3 billion in unsecured notes were outstanding with a weighted average interest rate of 3.97%. The interest rates on $2,562.1 million of mortgage loans and unsecured notes are fixed (including those fixed via swap agreements) and range from 3.0% to 4.8%. The weighted average remaining term for the mortgage loans and unsecured notes is 5.7 years.
 The Company's contractual obligations, as of December 31, 2017, were as follows (in thousands):
 
 
PAYMENTS DUE BY PERIOD
 
 
 
 
LESS THAN 1
 
 
 
 
 
MORE THAN
Contractual Obligations (1)
 
TOTAL
 
YEAR
 
1-3 YEARS
 
3-5 YEARS
 
5 YEARS
Long-term debt (2)
 
$
3,517,421

 
$
146,938

 
$
691,065

 
$
980,067

 
$
1,699,351

Land purchase obligations
 
60,909

 
32,925

 
27,984

 
—

 
—

Operating lease obligations
 
45,611

 
2,536

 
4,345

 
5,012

 
33,718

Share of debt of unconsolidated joint ventures (2)
 
258,227

 
71,650

 
47,344

 
11,064

 
128,169

Tenant contractual obligations
 
18,643

 
18,643

 
—

 
—

 
—

Share of tenant contractual obligations of unconsolidated joint ventures
 
982

 
982

 
—

 
—

 
—

Letters of credit
 
5,105

 
5,105

 
—

 
—

 
—

Land improvement and renovation commitments
 
10,503

 
10,503

 
—

 
—

 
—

Development in progress
 
126,213

 
124,888

 
1,325

 
—

 
—

Development commitment (3)
 
92,150

 
92,150

 
—

 
—

 
—

Share of development in progress of unconsolidated joint ventures
 
12,327

 
12,327

 
—

 
—

 
—

Total
 
$
4,148,091

 
$
518,647

 
$
772,063

 
$
996,143

 
$
1,861,238


(1)
The Company is contractually committed to build a minimum of 60,000 square feet of building space every two years at the Navy Yard Corporate Center in Philadelphia, with certain rights to defer these biennial requirements.  The failure by the Company to meet these milestones could result in the loss of the Company’s exclusive development rights with respect to the Navy Yard Corporate Center.
(2)
Includes principal and interest payments. Interest payments assume borrowings under the Facilities and interest rates remain at the December 31, 2017 level until maturity.
(3)
Included in the development commitment is approximately $176.9 million in costs related to the Company's agreement to develop, on a fee basis, an office building and infrastructure improvements for American Water Works in Camden, New Jersey, of which $102.9 million has been incurred. This includes a commitment to build a 140,000 square foot industrial building pursuant to a pre-lease.


General
The Company believes that its existing sources of capital will provide sufficient funds to finance its continued development and acquisition activities. The Company's existing sources of capital include the public debt and equity markets, proceeds from secured financing of properties, proceeds from property dispositions, equity capital from joint venture partners, remaining capacity of $125.0 million under the Company's at-the-market equity offering program and net cash provided by operating activities. Additionally, the Company expects to incur variable rate debt, including borrowings under the Facilities, from time to time.
The Company's annual Common Share dividend paid was $1.675 per share in 2017 and $1.90 per share in 2016 and 2015. The Company's quarterly dividend was reduced to $0.40 per share ($1.60 per share annualized) beginning with its quarterly dividend payable in April 2017. Future distribution payments by the Company will be paid at the discretion of the Board of Trustees and will depend on the Company's actual funds from operations and cash flows, the Company’s financial condition and capital requirements, the annual distribution requirements under the REIT provisions of the Internal Revenue Code and other factors that the Board of Trustees deems relevant. The Company’s Board of Trustees reviews the dividend quarterly, and there can be no assurance about the amount of future quarterly distribution payments.
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.
Off-Balance Sheet Arrangements
As of December 31, 2017, the Company had investments in and advances to unconsolidated joint ventures totaling $288.5 million (see Note 7 to the Company's Consolidated Financial Statements included in this report).

43

Calculation of Funds from Operations
The National Association of Real Estate Investment Trusts (“NAREIT”) has issued a standard definition for NAREIT Funds from operations (as defined below). The SEC has agreed to the disclosure of this non-US GAAP financial measure on a per share basis in its Release No. 34-47226, Conditions for Use of Non-US GAAP Financial Measures. The Company believes that the calculation of NAREIT 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 operating property dispositions. As a result, year over year comparison of NAREIT 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 NAREIT Funds from operations provides useful information to the investment community about the Company’s financial performance when compared to other REITs since NAREIT Funds from operations is generally recognized as the standard for reporting the operating performance of a REIT. NAREIT Funds from operations available to common shareholders is defined by NAREIT as net income (computed in accordance with generally accepted accounting principles (“US GAAP”)), excluding gains (or losses) from sales of property and impairment - real estate assets, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. NAREIT Funds from operations available to common shareholders does not represent net income or cash flows from operations as defined by US 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. NAREIT Funds from operations available to common shareholders also does not represent cash flows generated from operating, investing or financing activities as defined by US GAAP.



44

A reconciliation of NAREIT Funds from operations (“FFO”) available to common shareholders to Net income available to common shareholders for the year ended December 31, 2017, 2016, and 2015 is as follows (in thousands, except per share amounts):
 
Year Ended December 31,
 
2017
 
2016
 
2015
Reconciliation of net income available to common shareholders to NAREIT FFO available to common shareholders - basic:
 
 
 
 
 
Net income available to common shareholders
$
282,340

 
$
356,817

 
$
239,483

Basic - income available to common shareholders
282,340

 
356,817

 
239,483

Basic - income available to common shareholders per weighted average share
$
1.92

 
$
2.44

 
$
1.62

Adjustments:
 
 
 
 
 
Depreciation and amortization of unconsolidated joint ventures
10,155

 
11,014

 
11,638

Depreciation and amortization
180,117

 
203,626

 
224,917

Gain on property dispositions / impairment - real estate assets of unconsolidated joint ventures
2,972

 
(7,012
)
 
11,305

Gain on property dispositions / impairment - depreciable real estate assets continuing operations
(83,800
)
 
(216,148
)
 
(82,070
)
Gain on property dispositions / impairment - depreciable real estate assets discontinued operations
(7,892
)
 
—

 
—

Noncontrolling interest share in addback for depreciation and amortization and gain on property dispositions / impairment - real estate assets
(2,379
)
 
192

 
(3,845
)
NAREIT Funds from operations available to common shareholders – basic
$
381,513

 
$
348,489

 
$
401,428

Basic NAREIT Funds from operations available to common shareholders per weighted average share
$
2.60

 
$
2.38

 
$
2.71

Reconciliation of net income available to common shareholders to NAREIT FFO available to common shareholders - diluted:
 
 
 
 
 
Net income available to common shareholders
$
282,340

 
$
356,817

 
$
239,483

Diluted - income available to common shareholders
282,340

 
356,817

 
239,483

Diluted - income available to common shareholders per weighted average share
$
1.91

 
$
2.43

 
$
1.61

Adjustments:
 
 
 
 
 
Depreciation and amortization of unconsolidated joint ventures
10,155

 
11,014

 
11,638

Depreciation and amortization
180,117

 
203,626

 
224,917

Gain on property dispositions / impairment - real estate assets of unconsolidated joint ventures
2,972

 
(7,012
)
 
11,305

Gain on property dispositions / impairment - depreciable real estate assets continuing operations
(83,800
)
 
(216,148
)
 
(82,070
)
Gain on property dispositions / impairment - depreciable real estate assets discontinued operations
(7,892
)
 
—

 
—

Noncontrolling interest less preferred share distributions
6,752

 
8,598

 
5,720

NAREIT Funds from operations available to common shareholders - diluted
$
390,644

 
$
356,895

 
$
410,993

Diluted NAREIT Funds from operations available to common shareholders per weighted average share
$
2.59

 
$
2.37

 
$
2.70

Reconciliation of weighted average shares:
 
 
 
 
 
Weighted average common shares - all basic calculations
146,742

 
146,204

 
148,243

Dilutive shares for long term compensation plans
799

 
685

 
600

Diluted shares for net income calculations
147,541

 
146,889

 
148,843

Weighted average common units
3,528

 
3,536

 
3,540

Diluted shares for NAREIT Funds from operations calculations
151,069

 
150,425

 
152,383


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. To the extent an increase in inflation would result in increased operating costs, such as insurance, real estate taxes and

45

utilities, the majority 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 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The following discussion about the Company's risk management includes forward-looking statements that involve risks and uncertainties. Actual results could differ materially from the results discussed in the forward-looking statements.
The carrying value of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, accrued interest, dividends and distributions payable and other liabilities are reasonable estimates of fair value because of the short-term nature of these instruments. The fair value of the Company's long-term debt, which is based on estimates by management and on rates quoted on December 31, 2017 for comparable loans, is greater than the aggregate carrying value by approximately $76.7 million at December 31, 2017.
The Company's primary market risk exposure is to changes in interest rates. The Company is exposed to market risk related to its Credit Facility and certain other indebtedness as discussed in "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources."
The Company also uses long-term and medium-term debt as a source of capital. These debt instruments are typically issued at fixed interest rates. When these debt instruments mature, the Company typically refinances such debt at then-existing market interest rates which may be more or less than the interest rates on the maturing debt. In addition, the Company may attempt to reduce interest rate risk associated with an issuance of new debt. Our interest rate risk objective is to limit the impact of interest rate changes on earnings and cash flows and lower our overall borrowing costs. To achieve these objectives, from time to time the Company enters into interest rate hedge contracts such as collars, swaps, caps and treasury lock agreements in order to mitigate our interest rate risk with respect to various debt instruments. The Company does not hold or issue these derivative contracts for trading or speculative purposes.
If the interest rates for variable rate debt were 100 basis points higher or lower during 2017, the Company's interest expense would have increased or decreased by $1.9 million. If the interest rate for the fixed rate debt maturing in 2018 had been 100 basis points higher or lower than its current rate of 3.0%, the Company's interest expense would have increased or decreased by $210,000.
The sensitivity analysis above assumes no changes in the Company's financial structure. It also does not consider future fluctuations in interest rates or the specific actions that might be taken by management to mitigate the impact of such fluctuations.
The Company is also exposed to currency risk on its net investment in the United Kingdom. The Company does not believe that this currency risk exposure is material to its financial statements.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and financial statement schedule of Liberty Property Trust and Liberty Property Limited Partnership and the reports thereon of Ernst & Young LLP, an independent registered public accounting firm, with respect thereto are filed as part of this Annual Report on Form 10-K.




46

Management's Annual Report on Internal Control Over Financial Reporting
The Trust's management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a - 15 (f) and 15d - 15(f). The Trust's internal control system was designed to provide reasonable assurance to the Trust's management and Board of Trustees regarding the preparation and fair presentation of published financial statements.
Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we assessed the effectiveness of the Trust's internal control over financial reporting as of December 31, 2017. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework (2013 Framework). Based on our assessment we believe that, as of December 31, 2017, the Trust's internal control over financial reporting is effective based on those criteria.
The Trust's independent registered public accounting firm, Ernst & Young LLP, has issued an attestation report on the Trust's internal control over financial reporting, which is included in this Annual Report on Form 10-K.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.























47

Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Trustees of Liberty Property Trust
Opinion on Internal Control over Financial Reporting
We have audited Liberty Property Trust’s internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Liberty Property Trust (the “Trust”) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Trust as of December 31, 2017 and 2016, the related consolidated statements of comprehensive income, equity, and cash flows for each of the three years in the period ended December 31, 2017, and the related notes and schedules listed in the Index at Item 15 and our report dated February 28, 2018 expressed an unqualified opinion thereon.
Basis for Opinion
The Trust’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Trust’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
February 28, 2018

48

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Trustees of Liberty Property Trust
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Liberty Property Trust (the “Trust”) as of December 31, 2017 and 2016, the related consolidated statements of comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2017, and the related notes and schedules listed in the Index at Item 15 (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Trust at December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Trust’s internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 28, 2018 expressed an unqualified opinion thereon.
Adoption of New Accounting Standard
As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for determining whether an acquisition is an asset or a business effective October 1, 2016 due to the early adoption of Accounting Standards Update No. 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business” .
Basis for Opinion
These financial statements are the responsibility of the Trust’s management. Our responsibility is to express an opinion on the Trust’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Trust in accordance with the U.S federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and preforming procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Ernst & Young LLP
We have served as the Trust’s auditor since 1993.
Philadelphia, Pennsylvania                         
February 28, 2018


49

Management's Annual Report on Internal Control Over Financial Reporting
The Operating Partnership's management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15 (f) and 15d-15(f). The Operating Partnership's internal control system was designed to provide reasonable assurance to the Operating Partnership's management regarding the preparation and fair presentation of published financial statements.
Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we assessed the effectiveness of the Operating Partnership's internal control over financial reporting as of December 31, 2017. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework (2013 Framework). Based on our assessment we believe that, as of December 31, 2017, the Operating Partnership's internal control over financial reporting is effective based on those criteria.
The Operating Partnership's independent registered public accounting firm, Ernst & Young LLP, has issued an attestation report on the Operating Partnership's internal control over financial reporting, which is included in this Annual Report on Form 10-K.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

50

Report of Independent Registered Public Accounting Firm

To the Partners of Liberty Property Limited Partnership
Opinion on Internal Control over Financial Reporting
We have audited Liberty Property Limited Partnership’s internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Liberty Property Limited Partnership (the “Operating Partnership”) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Operating Partnership as of December 31, 2017 and 2016, the related consolidated statements of comprehensive income, owners’ equity, and cash flows for each of the three years in the period ended December 31, 2017, and the related notes and schedules listed in the Index at Item 15 and our report dated February 28, 2018 expressed an unqualified opinion thereon.
Basis for Opinion
The Operating Partnership’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Operating Partnership’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP
Philadelphia, Pennsylvania

February 28, 2018

51

Report of Independent Registered Public Accounting Firm

The Partners of Liberty Property Limited Partnership
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Liberty Property Limited Partnership (the “Operating Partnership”) as of December 31, 2017 and 2016, the related consolidated statements of comprehensive income, owners’ equity and cash flows for each of the three years in the period ended December 31, 2017, and the related notes and schedules listed in the Index at Item 15 (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Operating Partnership at December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Operating Partnership’s internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 28, 2018 expressed an unqualified opinion thereon.
Adoption of New Accounting Standard
As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for determining whether an acquisition is an asset or a business effective October 1, 2016 due to the early adoption of Accounting Standards Update No. 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business”.
Basis for Opinion
These financial statements are the responsibility of the Operating Partnership’s management. Our responsibility is to express an opinion on the Operating Partnership’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Operating Partnership in accordance with the U.S federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and preforming procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Ernst & Young LLP
We have served as the Operating Partnership’s auditor since 1993.
Philadelphia, Pennsylvania                         
February 28, 2018


52

CONSOLIDATED BALANCE SHEETS OF LIBERTY PROPERTY TRUST
(In thousands, except share and unit amounts)
 
 
December 31,
 
2017
 
2016
ASSETS
 
 
 
Real estate:
 
 
 
Land and land improvements
$
1,153,680

 
$
1,060,065

Building and improvements
4,443,583

 
4,298,012

Less accumulated depreciation
(940,613
)
 
(847,106
)
Operating real estate
4,656,650

 
4,510,971

Development in progress
378,472

 
267,450

Land held for development
330,748

 
336,569

Net real estate
5,365,870

 
5,114,990

Cash and cash equivalents
11,882

 
43,642

Restricted cash
13,803

 
12,383

Accounts receivable, net
11,230

 
13,365

Deferred rent receivable, net
115,141

 
102,878

Deferred financing and leasing costs, net
159,250

 
147,038

Investments in and advances to unconsolidated joint ventures
288,456

 
245,078

Assets held for sale
182,228

 
164,888

Prepaid expenses and other assets
291,897

 
148,551

Total assets
$
6,439,757

 
$
5,992,813

LIABILITIES
 
 
 
Mortgage loans, net
$
267,093

 
$
276,650

Unsecured notes, net
2,283,513

 
2,280,286

Credit facilities
358,939

 
—

Accounts payable
79,605

 
64,951

Accrued interest
21,796

 
21,878

Dividend and distributions payable
60,330

 
71,501

Other liabilities
208,027

 
199,008

Liabilities held for sale
4,551

 
8,079

Total liabilities
3,283,854

 
2,922,353

Noncontrolling interest - operating partnership - 301,483 preferred units outstanding as of December 31, 2017 and December 31, 2016
7,537

 
7,537

EQUITY
 
 
 
Liberty Property Trust shareholders’ equity
 
 
 
Common shares of beneficial interest, $.001 par value, 283,987,000 shares authorized; 147,450,691 and 146,993,018 shares issued and outstanding as of December 31, 2017 and December 31, 2016, respectively
147

 
147

Additional paid-in capital
3,674,978

 
3,655,910

Accumulated other comprehensive loss
(37,797
)
 
(56,031
)
Distributions in excess of net income
(549,970
)
 
(596,635
)
Total Liberty Property Trust shareholders’ equity
3,087,358

 
3,003,391

Noncontrolling interest – operating partnership
 
 
 
3,520,205 and 3,530,031 common units outstanding as of December 31, 2017 and December 31, 2016, respectively
56,159

 
54,631

Noncontrolling interest – consolidated joint ventures
4,849

 
4,901

Total equity
3,148,366

 
3,062,923

Total liabilities, noncontrolling interest - operating partnership and equity
$
6,439,757

 
$
5,992,813


See accompanying notes.

53

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME OF LIBERTY PROPERTY TRUST
(In thousands, except per share amounts)
 
Year Ended December 31,
 
2017
 
2016
 
2015
OPERATING REVENUE
 
 
 
 
 
Rental
$
486,195

 
$
519,368

 
$
561,434

Operating expense reimbursement
150,910

 
178,389

 
212,526

Development service fee income
82,673


12,941


—

Total operating revenue
719,778

 
710,698

 
773,960

OPERATING EXPENSE
 
 
 
 
 
Rental property
66,018

 
94,177

 
123,997

Real estate taxes
90,187

 
95,202

 
101,647

General and administrative
56,975

 
67,088

 
68,264

Expensed pursuit costs
5,066

 
1,016

 
605

Depreciation and amortization
175,137

 
196,705

 
217,864

Development service fee expense
85,805

 
12,165

 
—

Impairment - real estate assets
3,946

 
3,879

 
17,215

Total operating expense
483,134

 
470,232

 
529,592

Operating income
236,644

 
240,466

 
244,368

OTHER INCOME (EXPENSE)
 
 
 
 
 
Interest and other income
7,778

 
13,817

 
23,758

Loss on debt extinguishment
(49
)
 
(27,099
)
 
—

Interest expense
(88,857
)
 
(112,299
)
 
(133,557
)
Total other income (expense)
(81,128
)
 
(125,581
)
 
(109,799
)
Income before gain on property dispositions, income taxes and equity in earnings of unconsolidated joint ventures
155,516

 
114,885

 
134,569

Gain on property dispositions
100,387

 
219,270

 
100,314

Income taxes
(1,992
)
 
(1,971
)
 
(2,673
)
Equity in earnings of unconsolidated joint ventures
17,155

 
21,970

 
3,149

Income from continuing operations
271,066

 
354,154

 
235,359

Discontinued operations (including net gain on property dispositions of $14,578 for the year ended December 31, 2017)
18,979

 
11,991

 
10,565

Net income
290,045

 
366,145

 
245,924

Noncontrolling interest – operating partnership
(7,224
)
 
(9,070
)
 
(6,192
)
Noncontrolling interest – consolidated joint ventures
(481
)
 
(258
)
 
(249
)
Income available to common shareholders
$
282,340

 
$
356,817

 
$
239,483

Net income
$
290,045

 
$
366,145

 
$
245,924

Other comprehensive income (loss) - foreign currency translation
18,066

 
(34,744
)
 
(12,540
)
Other comprehensive income (loss) - derivative instruments
605

 
410

 
(488
)
Other comprehensive loss
18,671

 
(34,334
)
 
(13,028
)
Total comprehensive income
308,716

 
331,811

 
232,896

Less: comprehensive income attributable to noncontrolling interest
(8,142
)
 
(8,519
)
 
(6,135
)
Comprehensive income attributable to common shareholders
$
300,574

 
$
323,292

 
$
226,761

Earnings per common share
 
 
 
 
 
Basic:
 
 
 
 
 
Income from continuing operations
$
1.79

 
$
2.36

 
$
1.55

Income from discontinued operations
0.13

 
0.08

 
0.07

Income per common share – basic
$
1.92

 
$
2.44

 
$
1.62

Diluted:
 
 
 
 
 
Income from continuing operations
$
1.78

 
$
2.35

 
$
1.54

Income from discontinued operations
0.13

 
0.08

 
0.07

Income per common share – diluted
$
1.91

 
$
2.43

 
$
1.61

Weighted average number of common shares outstanding
 
 
 
 
 
Basic
146,742

 
146,204

 
148,243

Diluted
147,541

 
146,889

 
148,843

Amounts attributable to common shareholders
 
 
 
 
 
Income from continuing operations
$
263,805

 
$
345,108

 
$
229,164

Discontinued operations
18,535

 
11,709

 
10,319

Net income available to common shareholders
$
282,340

 
$
356,817

 
$
239,483

See accompanying notes.

54

CONSOLIDATED STATEMENTS OF EQUITY OF LIBERTY PROPERTY TRUST
(In thousands, except share amounts)
 
 
NUMBER OF COMMON SHARES
 
COMMON SHARES OF BENEFICIAL INTEREST
 
ADDITIONAL PAID-IN CAPITAL
 
ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME
 
DISTRIBUTIONS IN EXCESS OF NET INCOME
 
TOTAL LIBERTY PROPERTY TRUST SHAREHOLDERS’ EQUITY
 
NONCONTROLLING INTEREST - OPERATING PARTNERSHIP
 
NONCONTROLLING INTEREST - CONSOLIDATED JOINT VENTURES
 
TOTAL EQUITY
 
NONCONTROLLING INTEREST - OPERATING PARTNERSHIP (MEZZANINE)
Balance at January 1, 2015
 
148,557,270

 
$
149

 
$
3,688,644

 
$
(9,784
)
 
$
(632,048
)
 
$
3,046,961

 
$
55,432

 
$
3,919

 
$
3,106,312

 
$
7,537

Net proceeds from the issuance of common shares
 
1,328,017

 
—

 
38,797

 
—

 
—

 
38,797

 
—

 
—

 
38,797

 
—

Net income
 


 
—

 
—

 
—

 
239,483

 
239,483

 
5,720

 
249

 
245,452

 
472

Distributions
 


 
—

 
—

 
—

 
(282,123
)
 
(282,123
)
 
(6,868
)
 
(249
)
 
(289,240
)
 
(472
)
Share repurchase
 
(2,321,794
)
 
(1
)
 
(71,801
)
 
—

 
—

 
(71,802
)
 
—

 
—

 
(71,802
)
 
—

Share-based compensation
 


 
—

 
13,763

 
—

 
—

 
13,763

 
—

 
—

 
13,763

 
—

Other comprehensive income - foreign currency translation
 


 
—

 
—

 
(12,245
)
 
—

 
(12,245
)
 
(295
)
 
—

 
(12,540
)
 
—

Other comprehensive income - derivative instruments
 
 
 
—

 
—

 
(477
)
 
—

 
(477
)
 
(11
)
 
—

 
(488
)
 
—

Redemption of noncontrolling interests – common units
 
14,491

 
—

 
224

 
—

 
—

 
224

 
(224
)
 
—

 
—

 
—

Balance at December 31, 2015
 
147,577,984

 
148

 
3,669,627

 
(22,506
)
 
(674,688
)
 
2,972,581

 
53,754

 
3,919

 
3,030,254

 
7,537

Net proceeds from the issuance of common shares
 
802,834

 
—

 
13,029

 
—

 
—

 
13,029

 
—

 
—

 
13,029

 
—

Net income
 


 
—

 
—

 
—

 
356,817

 
356,817

 
8,598

 
258

 
365,673

 
472

Distributions
 


 
—

 
—

 
—

 
(278,764
)
 
(278,764
)
 
(6,780
)
 
(258
)
 
(285,802
)
 
(472
)
Share repurchase
 
(1,396,844
)
 
(1
)
 
(40,895
)
 
—

 
—

 
(40,896
)
 
—

 
—

 
(40,896
)
 
—

Share-based compensation
 


 
—

 
15,699

 
—

 
—

 
15,699

 
—

 
—

 
15,699

 
—

Other comprehensive loss - foreign currency translation
 


 
—

 
—

 
(33,925
)
 
—

 
(33,925
)
 
(819
)
 
—

 
(34,744
)
 
—

Other comprehensive loss - derivative instruments
 


 
—

 
—

 
400

 
—

 
400

 
10

 
—

 
410

 
—

Acquisition of noncontrolling interests
 
 
 
—

 
(1,682
)
 
—

 
—

 
(1,682
)
 
—

 
982

 
(700
)
 
—

Redemption of noncontrolling interests – common units
 
9,044

 
—

 
132

 
—

 
—

 
132

 
(132
)
 
—

 
—

 
—

Balance at December 31, 2016
 
146,993,018

 
147

 
3,655,910

 
(56,031
)
 
(596,635
)
 
3,003,391

 
54,631

 
4,901

 
3,062,923

 
7,537

Net proceeds from the issuance of common shares
 
447,847

 
—

 
8,808

 
—

 
—

 
8,808

 
—

 
—

 
8,808

 
—

Net income
 


 
—

 
—

 
—

 
282,340

 
282,340

 
6,752

 
481

 
289,573

 
472

Distributions
 


 
—

 
—

 
—

 
(235,675
)
 
(235,675
)
 
(5,509
)
 
(533
)
 
(241,717
)
 
(472
)
Share-based compensation
 


 
—

 
10,108

 
—

 
—

 
10,108

 
—

 
—

 
10,108

 
—

Other comprehensive loss - foreign currency translation
 


 
—

 
—

 
17,643

 
—

 
17,643

 
423

 
—

 
18,066

 
—

Other comprehensive loss - derivative instruments
 
 
 
—

 
—

 
591

 
—

 
591

 
14

 
—

 
605

 
—

Redemption of noncontrolling interests – common units
 
9,826

 
—

 
152

 
—

 
—

 
152

 
(152
)
 
—

 
—

 
—

Balance at December 31, 2017
 
147,450,691

 
$
147

 
$
3,674,978

 
$
(37,797
)
 
$
(549,970
)
 
$
3,087,358

 
$
56,159

 
$
4,849

 
$
3,148,366

 
$
7,537


See accompanying notes.

55

CONSOLIDATED STATEMENTS OF CASH FLOWS OF LIBERTY PROPERTY TRUST
(In thousands)
 
 
Year Ended December 31,
 
2017
 
2016
 
2015
OPERATING ACTIVITIES
 
 
 
 
 
Net income
$
290,045

 
$
366,145

 
$
245,924

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
 
Depreciation and amortization
183,887

 
207,673

 
229,779

Amortization of deferred financing costs
3,750

 
3,974

 
4,395

Expensed pursuit costs
5,066

 
1,016

 
605

Impairment - real estate assets, including discontinued operations
10,632

 
3,879

 
18,244

Loss on debt extinguishment
49

 
27,099

 
—

Equity in earnings of unconsolidated joint ventures
(17,155
)
 
(21,970
)
 
(3,149
)
Distributions from unconsolidated joint ventures
—

 
—

 
2,444

Gain on property dispositions
(114,965
)
 
(219,270
)
 
(100,314
)
Share-based compensation
14,119

 
19,850

 
17,152

              Other
824

 
(6,128
)
 
(9,937
)
Changes in operating assets and liabilities:
 
 
 
 
 
Accounts receivable
3,512

 
421

 
1,009

Deferred rent receivable
(19,605
)
 
(16,927
)
 
(23,167
)
Prepaid expenses and other assets
(33,663
)
 
(32,442
)
 
(15,145
)
Accounts payable
10,151

 
8,943

 
1,822

Accrued interest
(82
)
 
(4,276
)
 
1,641

Other liabilities
66

 
3,075

 
7,818

Net cash provided by operating activities
336,631


341,062


379,121

INVESTING ACTIVITIES
 
 
 
 
 
Investment in properties – acquisitions
(255,639
)
 
(9,216
)
 
(111,811
)
Investment in properties – other
(56,104
)
 
(55,406
)
 
(77,626
)
Investments in and advances to unconsolidated joint ventures
(46,567
)
 
(70,581
)
 
(43,676
)
Distributions from unconsolidated joint ventures
21,042

 
63,048

 
33,195

Net proceeds from disposition of properties/land
379,139

 
1,192,918

 
530,440

Investment in development in progress
(260,447
)
 
(342,489
)
 
(210,677
)
Investment in land held for development
(105,564
)
 
(107,400
)
 
(150,523
)
Payment of deferred leasing costs
(37,678
)
 
(32,682
)
 
(48,672
)
Increase in escrows
(108,420
)
 
(25,254
)
 
(8,216
)
Other
4,586

 
1,989

 
(2,094
)
Net cash (used in) provided by investing activities
(465,652
)

614,927


(89,660
)
FINANCING ACTIVITIES
 
 
 
 
 
Net proceeds from issuance of common shares
8,808

 
13,029

 
38,797

Share repurchases, including shares related to tax withholdings
(5,107
)
 
(46,268
)
 
(76,035
)
Proceeds from unsecured notes
—

 
396,648

 
398,576

Repayments of unsecured notes including prepayment premium
—

 
(723,368
)
 
(316,000
)
Repayments of mortgage loans
(7,795
)
 
(29,538
)
 
(175,364
)
Proceeds from credit facility
835,036

 
591,300

 
1,122,700

Repayments on credit facility
(476,097
)
 
(850,300
)
 
(1,030,700
)
Payment of deferred financing costs
(5,190
)
 
(3,550
)
 
(3,656
)
Distribution paid on common shares
(246,589
)
 
(279,248
)
 
(282,582
)
Distribution paid on units/noncontrolling interests
(6,835
)
 
(8,212
)
 
(7,596
)
Net cash provided by (used in) financing activities
96,231


(939,507
)

(331,860
)
Net (decrease) increase in cash, cash equivalents and restricted cash
(32,790
)
 
16,482

 
(42,399
)
Increase (decrease) in cash, cash equivalents and restricted cash related to foreign currency translation
2,450

 
(4,828
)
 
(2,901
)
Cash, cash equivalents and restricted cash at beginning of year
56,025

 
44,371

 
89,671

Cash, cash equivalents and restricted cash at end of year
$
25,685

 
$
56,025

 
$
44,371

See accompanying notes.

56

CONSOLIDATED BALANCE SHEETS OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
(In thousands, except unit amounts)
 
 
December 31,
 
2017
 
2016
ASSETS
 
 
 
Real estate:
 
 
 
Land and land improvements
$
1,153,680

 
$
1,060,065

Building and improvements
4,443,583

 
4,298,012

Less accumulated depreciation
(940,613
)
 
(847,106
)
Operating real estate
4,656,650

 
4,510,971

Development in progress
378,472

 
267,450

Land held for development
330,748

 
336,569

Net real estate
5,365,870

 
5,114,990

Cash and cash equivalents
11,882

 
43,642

Restricted cash
13,803

 
12,383

Accounts receivable, net
11,230

 
13,365

Deferred rent receivable, net
115,141

 
102,878

Deferred financing and leasing costs, net
159,250

 
147,038

Investments in and advances to unconsolidated joint ventures
288,456

 
245,078

Assets held for sale
182,228

 
164,888

Prepaid expenses and other assets
291,897

 
148,551

Total assets
$
6,439,757

 
$
5,992,813

LIABILITIES
 
 
 
Mortgage loans, net
$
267,093

 
$
276,650

Unsecured notes, net
2,283,513

 
2,280,286

Credit facilities
358,939

 
—

Accounts payable
79,605

 
64,951

Accrued interest
21,796

 
21,878

Distributions payable
60,330

 
71,501

Other liabilities
208,027

 
199,008

Liabilities held for sale
4,551

 
8,079

Total liabilities
3,283,854

 
2,922,353

Limited partners' equity - 301,483 preferred units outstanding as of December 31, 2017 and December 31, 2016
7,537

 
7,537

OWNERS’ EQUITY
 
 
 
General partner’s equity - 147,450,691 and 146,993,018 common units outstanding as of December 31, 2017 and December 31, 2016, respectively
3,087,358

 
3,003,391

Limited partners’ equity – 3,520,205 and 3,530,031 common units outstanding as of December 31, 2017 and December 31, 2016, respectively
56,159

 
54,631

Noncontrolling interest – consolidated joint ventures
4,849

 
4,901

Total owners’ equity
3,148,366

 
3,062,923

Total liabilities, limited partners' equity and owners’ equity
$
6,439,757

 
$
5,992,813


See accompanying notes.

57

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
(In thousands, except per unit amounts)
 
Year Ended December 31,
 
2017
 
2016
 
2015
OPERATING REVENUE
 
 
 
 
 
Rental
$
486,195

 
$
519,368

 
$
561,434

Operating expense reimbursement
150,910

 
178,389

 
212,526

Development service fee income
82,673

 
12,941

 
—

Total operating revenue
719,778

 
710,698

 
773,960

OPERATING EXPENSE
 
 
 
 
 
Rental property
66,018

 
94,177

 
123,997

Real estate taxes
90,187

 
95,202

 
101,647

General and administrative
56,975

 
67,088

 
68,264

Expensed pursuit costs
5,066

 
1,016

 
605

Depreciation and amortization
175,137

 
196,705

 
217,864

Development service fee expense
85,805

 
12,165

 
—

Impairment - real estate assets
3,946

 
3,879

 
17,215

Total operating expense
483,134

 
470,232

 
529,592

Operating income
236,644

 
240,466

 
244,368

OTHER INCOME (EXPENSE)
 
 
 
 
 
Interest and other income
7,778

 
13,817

 
23,758

Loss on debt extinguishment
(49
)
 
(27,099
)
 
—

Interest expense
(88,857
)
 
(112,299
)
 
(133,557
)
Total other income (expense)
(81,128
)
 
(125,581
)
 
(109,799
)
Income before gain on property dispositions, income taxes and equity in earnings of unconsolidated joint ventures
155,516

 
114,885

 
134,569

Gain on property dispositions
100,387

 
219,270

 
100,314

Income taxes
(1,992
)
 
(1,971
)
 
(2,673
)
Equity in earnings of unconsolidated joint ventures
17,155

 
21,970

 
3,149

Income from continuing operations
271,066

 
354,154

 
235,359

Discontinued operations (including net gain on property dispositions of $14,578 for the year ended December 31, 2017)
18,979

 
11,991

 
10,565

Net income
290,045

 
366,145

 
245,924

Noncontrolling interest – consolidated joint ventures
(481
)
 
(258
)
 
(249
)
Preferred unit distributions
(472
)
 
(472
)
 
(472
)
Income available to common unitholders
$
289,092

 
$
365,415

 
$
245,203

 
 
 
 
 
 
Net income
$
290,045

 
$
366,145

 
$
245,924

Other comprehensive income (loss) - foreign currency translation
18,066

 
(34,744
)
 
(12,540
)
Other comprehensive income (loss) - derivative instruments
605

 
410

 
(488
)
Other comprehensive loss
18,671

 
(34,334
)
 
(13,028
)
Total comprehensive income
$
308,716

 
$
331,811

 
$
232,896

Earnings per common unit
 
 
 
 
 
Basic:
 
 
 
 
 
Income from continuing operations
$
1.79

 
$
2.36

 
$
1.55

Income from discontinued operations
0.13

 
0.08

 
0.07

Income per common unit - basic
$
1.92

 
$
2.44

 
$
1.62

Diluted:
 
 
 
 
 
Income from continuing operations
$
1.78

 
$
2.35

 
$
1.54

Income from discontinued operations
0.13

 
0.08

 
0.07

Income per common unit - diluted
$
1.91

 
$
2.43

 
$
1.61

Weighted average number of common units outstanding
 
 
 
 
 
Basic
150,270

 
149,740

 
151,783

Diluted
151,069

 
150,425

 
152,383

 
 
 
 
 
 
Net income allocated to general partners
$
282,340

 
$
356,817

 
$
239,483

Net income allocated to limited partners
7,224

 
9,070

 
6,192

See accompanying notes.

58

CONSOLIDATED STATEMENTS OF OWNERS’ EQUITY OF LIBERTY PROPERTY LIMITED PARTNERSHIP
(In thousands, except unit amounts)
 
 
GENERAL PARTNER'S COMMON UNITS
 
LIMITED PARTNERS' COMMON UNITS
 
GENERAL
PARTNER’S
EQUITY
 
LIMITED
PARTNERS’
EQUITY  –
COMMON
UNITS
 
NONCONTROLLING
INTEREST –
CONSOLIDATED
JOINT VENTURES
 
TOTAL
OWNERS’
EQUITY
 
LIMITED PARTNERS' EQUITY - PREFERRED
Balance at January 1, 2015
148,557,270

 
3,553,566

 
$
3,046,961

 
$
55,432

 
$
3,919

 
$
3,106,312

 
$
7,537

Contributions from partners
1,328,017

 


 
52,560

 
—

 
—

 
52,560

 
—

Distributions to partners
 
 


 
(282,123
)
 
(6,868
)
 
(249
)
 
(289,240
)
 
(472
)
Unit repurchase
(2,321,794
)
 
 
 
(71,802
)
 
—

 
—

—

(71,802
)
 
—

Other comprehensive loss - foreign currency translation
 
 


 
(12,245
)
 
(295
)
 
—

 
(12,540
)
 
—

Other comprehensive loss - derivative instruments
 
 
 
 
(477
)
 
(11
)
 
—

 
(488
)
 
—

Net income
 
 


 
239,483

 
5,720

 
249

 
245,452

 
472

Redemption of limited partners common units for common shares
14,491

 
(14,491
)
 
224

 
(224
)
 
—

 
—

 
—

Balance at December 31, 2015
147,577,984

 
3,539,075

 
2,972,581

 
53,754

 
3,919

 
3,030,254

 
7,537

Contributions from partners
802,834

 


 
28,728

 
—

 
—

 
28,728

 
—

Distributions to partners
 
 


 
(278,764
)
 
(6,780
)
 
(258
)
 
(285,802
)
 
(472
)
Unit repurchase
(1,396,844
)
 
 
 
(40,896
)
 
—

 
—

 
(40,896
)
 
—

Other comprehensive loss - foreign currency translation
 
 


 
(33,925
)
 
(819
)
 
—

 
(34,744
)
 
—

Other comprehensive loss - derivative instruments
 
 
 
 
400

 
10

 
—

 
410

 
—

Net income
 
 


 
356,817

 
8,598

 
258

 
365,673

 
472

Acquisition of noncontrolling interests
 
 
 
 
(1,682
)
 
—

 
982

 
(700
)
 
—

Redemption of limited partners common units for common shares
9,044

 
(9,044
)
 
132

 
(132
)
 
—

 
—

 
—

Balance at December 31, 2016
146,993,018

 
3,530,031

 
3,003,391

 
54,631

 
4,901

 
3,062,923

 
7,537

Contributions from partners
447,847

 


 
18,916

 
—

 
—

 
18,916

 
—

Distributions to partners
 
 


 
(235,675
)
 
(5,509
)
 
(533
)
 
(241,717
)
 
(472
)
Other comprehensive loss - foreign currency translation
 
 


 
17,643

 
423

 
—

 
18,066

 
—

Other comprehensive loss - derivative instruments
 
 
 
 
591

 
14

 
—

 
605

 
—

Net income
 
 


 
282,340

 
6,752

 
481

 
289,573

 
472

Redemption of limited partners common units for common shares
9,826

 
(9,826
)
 
152

 
(152
)
 
—

 
—

 
—

Balance at December 31, 2017
147,450,691

 
3,520,205

 
$
3,087,358

 
$
56,159

 
$
4,849

 
$
3,148,366

 
$
7,537


See accompanying notes.

59

CONSOLIDATED STATEMENTS OF CASH FLOWS OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
(In thousands)
 
 
Year Ended December 31,
 
2017
 
2016
 
2015
OPERATING ACTIVITIES
 
 
 
 
 
Net income
$
290,045

 
$
366,145

 
$
245,924

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
 
Depreciation and amortization
183,887

 
207,673

 
229,779

Amortization of deferred financing costs
3,750

 
3,974

 
4,395

Expensed pursuit costs
5,066

 
1,016

 
605

Impairment charges - real estate assets, including discontinued operations
10,632

 
3,879

 
18,244

Loss on debt extinguishment
49

 
27,099

 
—

Equity in earnings of unconsolidated joint ventures
(17,155
)
 
(21,970
)
 
(3,149
)
Distributions from unconsolidated joint ventures
—

 
—

 
2,444

Gain on property dispositions
(114,965
)
 
(219,270
)
 
(100,314
)
Noncash compensation
14,119

 
19,850

 
17,152

         Other
824

 
(6,128
)
 
(9,937
)
Changes in operating assets and liabilities:
 
 
 
 
 
Accounts receivable
3,512

 
421

 
1,009

Deferred rent receivable
(19,605
)
 
(16,927
)
 
(23,167
)
Prepaid expenses and other assets
(33,663
)
 
(32,442
)
 
(15,145
)
Accounts payable
10,151

 
8,943

 
1,822

Accrued interest
(82
)
 
(4,276
)
 
1,641

Other liabilities
66

 
3,075

 
7,818

Net cash provided by operating activities
336,631

 
341,062

 
379,121

INVESTING ACTIVITIES
 
 
 
 
 
Investment in properties – acquisitions
(255,639
)
 
(9,216
)
 
(111,811
)
Investment in properties – other
(56,104
)
 
(55,406
)
 
(77,626
)
Investments in and advances to unconsolidated joint ventures
(46,567
)
 
(70,581
)
 
(43,676
)
Distributions from unconsolidated joint ventures
21,042

 
63,048

 
33,195

Net proceeds from disposition of properties/land
379,139

 
1,192,918

 
530,440

Investment in development in progress
(260,447
)
 
(342,489
)
 
(210,677
)
Investment in land held for development
(105,564
)
 
(107,400
)
 
(150,523
)
Payment of deferred leasing costs
(37,678
)
 
(32,682
)
 
(48,672
)
Increase in escrows
(108,420
)
 
(25,254
)
 
(8,216
)
Other
4,586

 
1,989

 
(2,094
)
Net cash (used in) provided by investing activities
(465,652
)
 
614,927

 
(89,660
)
FINANCING ACTIVITIES
 
 
 
 
 
Proceeds from unsecured notes
—

 
396,648

 
398,576

Repayments of unsecured notes including prepayment premium
—

 
(723,368
)
 
(316,000
)
Repayments of mortgage loans
(7,795
)
 
(29,538
)
 
(175,364
)
Proceeds from credit facility
835,036

 
591,300

 
1,122,700

Repayments on credit facility
(476,097
)
 
(850,300
)
 
(1,030,700
)
Payment of deferred financing costs
(5,190
)
 
(3,550
)
 
(3,656
)
Capital contributions
8,808

 
13,029

 
38,797

Distributions to partners/noncontrolling interests
(258,531
)
 
(333,728
)
 
(366,213
)
Net cash provided by (used in) financing activities
96,231

 
(939,507
)
 
(331,860
)
Net (decrease) increase in cash, cash equivalents and restricted cash
(32,790
)
 
16,482

 
(42,399
)
Increase (decrease) in cash, cash equivalents and restricted cash related to foreign currency translation
2,450

 
(4,828
)
 
(2,901
)
Cash, cash equivalents and restricted cash at beginning of year
56,025

 
44,371

 
89,671

Cash, cash equivalents and restricted cash at end of year
$
25,685

 
$
56,025

 
$
44,371


See accompanying notes.

60

Liberty Property Trust and Liberty Property Limited Partnership
Notes to Consolidated Financial Statements
December 31, 2017
1.     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 its subsidiary, Liberty Property Limited Partnership, a Pennsylvania limited partnership (the “Operating Partnership” and, together 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 97.7% of the common equity of the Operating Partnership at December 31, 2017. The Company owns and operates industrial properties nationally and owns and operates office properties in a focused group of office markets. Additionally, the Company owns certain assets in the United Kingdom. Unless otherwise indicated, the notes to the Consolidated Financial Statements apply to both the Trust and the Operating Partnership. The terms the "Company,” “we,” “our” and “us” means the Trust and Operating Partnership collectively.

The Operating Partnership is a variable interest entity ("VIE") of the Trust as the limited partners do not have substantive kick-out or participating rights. The Trust is the primary beneficiary of the Operating Partnership as it has the power to direct the activities of the Operating Partnership and the rights to absorb 97.7% of the net income of the Operating Partnership. The Trust has no significant assets or liabilities other than its investment in the Operating Partnership. As the Operating Partnership is already consolidated in the balance sheets of the Trust, the identification of this entity as a VIE has no impact on the consolidated financial statements of the Trust. In addition, the Company holds a 20% interest in Liberty/Comcast 1701 JFK Boulevard, LP which was determined to be a VIE. The Company determined that it is not the primary beneficiary as the Company and its third party partner share control of the joint venture. The Company's maximum exposure to loss is equal to its equity investment in the joint venture which was $17.3 million and $18.7 million as of December 31, 2017 and 2016, respectively.
All square footage amounts are unaudited.
2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles ("US GAAP") requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
Principles of Consolidation
The consolidated financial statements of the Company include the Trust, the Operating Partnership, wholly owned subsidiaries and those subsidiaries in which the Company owns a majority voting interest with the ability to control operations of the subsidiaries and where no approval, veto or other important rights have been granted to the noncontrolling shareholders. The Company consolidates joint ventures that are considered to be variable interest entities (“VIEs”) where we are the primary beneficiary. The Company (i) evaluates the sufficiency of the total equity investment at risk, (ii) reviews the voting rights and decision-making authority of the equity investment holders as a group and whether there are any guaranteed returns, protection against losses, or capping of residual returns within the group and (iii) establishes whether activities within the venture are on behalf of an investor with disproportionately few voting rights in making this VIE determination. To the extent that the Company (i) is the sole entity that has the power to direct the activities of the VIE and (ii) has the obligation or rights to absorb the VIE's losses or receive its benefits, then the Company would be the primary beneficiary and would consolidate the VIE.
All significant intercompany transactions and accounts have been eliminated.
Reclassifications
Certain amounts from prior years have been reclassified to conform to current-year presentation including reclassifying the accompanying consolidated balance sheets for assets held for sale and the consolidated statements of comprehensive income for discontinued operations.
In 2017, the Company began to separately classify expensed pursuit costs in the Consolidated Statements of Comprehensive Income. These costs, which were reclassed retrospectively for all periods, were formerly classified as general and administrative expense.


61

Concentration of Credit Risk
As of December 31, 2017, wholly owned properties were leased to 1,091 customers. The geographic locations that comprise greater than 10% of our rental and other revenues were Lehigh Valley/Central PA and Philadelphia. Our customers engage in a wide variety of businesses. No single customer generated more than 4.6% of our consolidated operating rental revenues during 2017.
Real Estate and Depreciation
The properties are recorded at cost and are depreciated using the straight line method over their estimated useful lives. The estimated useful lives are as follows:
Building and improvements
 
40 years (blended)
Capital improvements
 
15 - 20 years
Equipment
 
5 - 10 years
Tenant improvements
 
Term of the related lease
The Company capitalizes costs associated with development and redevelopment activities, capital improvements, tenant improvements and leasing activities, including compensation costs. Expenditures directly related to the improvement of real estate, including interest and other costs capitalized on development and redevelopment projects and land being readied for development, are included in net real estate and are stated at cost. The Company considers a development property substantially complete upon the completion of tenant build-out, but no later than one year after the completion of major construction activity. These capitalized costs include pre-construction costs essential to the development of the property, construction costs, interest costs, real estate taxes, development related compensation and other costs incurred during the period of development. The determination to capitalize rather than expense costs requires the Company to evaluate the status of the development activity. The total of capitalized compensation costs directly related to development, redevelopment, capital improvements, and tenant improvements for the years ended December 31, 2017, 2016 and 2015 was $5.5 million, $7.2 million and $5.5 million, respectively. Construction related payables at December 31, 2017 and 2016 were $49.3 million and $37.1 million, respectively.
The Company allocates the purchase price of real estate acquired to land, building and improvements and intangibles based on the relative fair value of each component. Lease values for acquired properties are determined based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management's estimate of fair market lease rates for each corresponding in-place lease ("Market Value Intangible"). Origination values are also assigned to in-place leases, and, where appropriate, value is assigned to customer relationships ("Origination Value Intangible").
Acquisition-related costs for vacant properties are capitalized and included in net real estate at cost. Beginning on October 1, 2016, acquisition-related costs for properties with in-place leases deemed to be asset acquisitions are also capitalized and included in net real estate at cost. Expenditures for maintenance and repairs are charged to operations as incurred.
The Company depreciates the amounts allocated to building and improvements over 40 years and amortizes the amounts allocated to intangibles relating to in-place leases, which are included in deferred financing and leasing costs and other liabilities in the accompanying consolidated balance sheets, over the remaining term of the related leases. Market Value Intangible amortization is recorded as rental revenue. Origination Value Intangible amortization is recorded as depreciation and amortization. This calculation includes both the remaining noncancelable period and any bargain renewal option periods.
Once a property is designated as held for sale, no further depreciation expense is recorded.
The Company evaluates its real estate investments upon occurrence of a significant adverse change in its operations to assess whether any impairment indicators are present that affect the recovery of the recorded value. If indicators of impairment are identified, the Company estimates the future undiscounted cash flows from the use and eventual disposition of the property and compares this amount to the carrying value of the property. If any real estate investment is considered impaired, a loss is recognized to reduce the carrying value of the property to its estimated fair value. If held for sale, a property is not considered impaired unless its estimated fair value (less costs to sell) is less than the property's book value at the balance sheet date.
Investments in Unconsolidated Joint Ventures
The Company accounts for its investments in unconsolidated joint ventures using the equity method of accounting as the Company exercises significant influence, but does not control these entities.

62

Under the equity method of accounting, the net equity investment of the Company is reflected in the accompanying consolidated balance sheets and the Company's share of net income from the joint ventures is included in the accompanying consolidated statements of comprehensive income.
On a periodic basis, management assesses whether there are any indicators that the value of the Company's investments in unconsolidated joint ventures may be other-than-temporarily-impaired. An investment is impaired only if management's estimate of the value of the investment is less than the carrying value of the investment, and such decline in value is deemed to be other-than-temporary. To the extent impairment has occurred, the loss is measured as the excess of the carrying amount of the investment over the estimated fair value of the investment. The estimated fair value of the investments is determined using a discounted cash flow model which is a Level 3 valuation under ASC 820, "Fair Value Measurement." The Company considers a number of assumptions that are subject to economic and market uncertainties including, among others, demand for space, competition for tenants, changes in market rental rates, operating costs, capitalization rates, holding periods and discount rates.
No other-than-temporary impairment losses on the Company's investments in unconsolidated joint ventures were recognized during the years ended December 31, 2015, 2016 or 2017.
Cash and Cash Equivalents
Highly liquid investments with a maturity of three months or less when purchased are classified as cash equivalents.
Restricted Cash
Restricted cash includes tenant security deposits and escrow funds that the Company maintains pursuant to certain mortgage loans. Restricted cash also includes the undistributed proceeds from the sale of residential land in Kent County, United Kingdom.
Accounts Receivable/Deferred Rent Receivable
The Company's accounts receivable are comprised of rents and charges for property operating costs due from tenants. The Company's deferred rent receivable represents the cumulative difference between rent revenue recognized on a straight line basis and contractual payments due under the terms of tenant leases. The Company periodically performs a detailed review of amounts due from tenants to determine if accounts receivable and deferred rent receivable balances are collectible. Based on this review, accounts receivable and deferred rent receivable are reduced by an allowance for doubtful accounts. The Company considers tenant credit quality and payment history and general economic conditions in determining the allowance for doubtful accounts. If the accounts receivable balance or the deferred rent receivable balance is subsequently deemed uncollectible, the receivable and allowance for doubtful account balance are written off.
The allowance for doubtful accounts at December 31, 2017 and 2016 was $6.6 million and $7.3 million, respectively. The Company recognized bad debt expense of $0.6 million, $0.6 million and $2.0 million for the years ended December 31, 2017, 2016 and 2015, respectively.
Revenue Recognition
The Company earns rental income under operating leases with tenants. Rental income is recognized on a straight line basis over the applicable non-cancelable lease term. Operating expense reimbursements consisting of amounts due from tenants for real estate taxes, utilities and other recoverable costs are recognized as revenue in the period in which the corresponding expenses are incurred.
The Company considers any renewal options in determining the lease term. To the extent a lease includes a tenant option to renew or extend the duration of the lease at a fixed or determinable rental rate, the Company evaluates whether or not that option represents a bargain renewal option by analyzing if there is reasonable assurance at lease inception that the tenant will exercise the option because the rental rate is sufficiently lower than the expected rental rate for equivalent property under similar terms and conditions at the exercise date.
Termination fees (included in rental revenue) are fees that the Company has agreed to accept in consideration for permitting certain tenants to terminate their lease prior to the contractual expiration date. The Company recognizes termination fees during the period that landlord services are rendered in accordance with Securities and Exchange Commission Staff Accounting Bulletin 104, "Revenue Recognition," after the following conditions are met:
a.
the termination agreement is executed,
b.
the termination fee is determinable, and
c.
collectability of the termination fee is assured.

63

In the fourth quarter of 2016, the Company entered into an agreement relating to the fee development of an office building at its Camden Waterfront project in Camden, NJ. Project revenues and related costs and expenses are presented on a gross basis as "Development service fee income" and "Development service fee expense" in the Consolidated Statements of Comprehensive Income. Additionally, at the same time, the Company began classifying development fees and expenses relating to its fee development arrangements for certain unconsolidated joint venture projects in a manner consistent with the Camden project described above. Previously, development service fee income relating to its unconsolidated joint ventures had been classified as other income and development service fee expense had been classified as general and administrative expense in amounts as follows:

 
Nine months ended
 
Year ended
 
 
September 30, 2016
 
December 31, 2015
 
 
(unaudited)
 
 
 
Other income
$
3,789

 
$
6,159

 
General and administrative expense
$
3,210

 
$
3,730

 
Revenue and expense associated with service fee development is accounted for under the percentage of completion method. Revenues are recognized on the percentage of completion method based on applicable costs incurred with respect to each development agreement. The Company uses the relative sales value method to allocate costs and recognize profits from service fee development. Under the relative sales value method, estimates of aggregate project revenues and aggregate project costs are used to determine the allocation of project cost of sales and the resulting profit in each accounting period. In subsequent periods, cost of sale allocations and the resulting profits are adjusted to reflect changes in the actual and estimated costs and revenues of each project. Provisions for estimated losses on uncompleted contracts are recognized immediately in the period in which such losses are determined.
Deferred Financing and Leasing Costs
Costs incurred in connection with the financing of the credit facilities or leasing are capitalized and amortized on a straight line basis over the term of the related loan or lease. Costs incurred in connection with the financing of mortgage loans or unsecured notes are reported as a deduction from the face amount of that liability and amortized on a straight line basis over the term of the related loan. Deferred financing cost amortization is reported as interest expense.
Certain employees of the Company are compensated for leasing services related to the Company's properties. The compensation directly related to these leasing services is capitalized and amortized as a deferred leasing cost over the term of the related lease. The total of this capitalized compensation was $3.6 million, $3.8 million and $4.6 million for the years ended December 31, 2017, 2016 and 2015, respectively.
Fair Value of Financial Instruments
ASC 820, Fair Value Measurements and Disclosures, gives guidance on the fair value measurement of a financial asset or liability. Inputs used to develop fair value are classified in one of three categories: Level 1 inputs (quoted prices (unadjusted) in active markets for identical assets or liabilities), Level 2 inputs (inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly) and Level 3 inputs (unobservable inputs for the asset or liability).
The following disclosure of estimated fair value was determined by management using available market information and appropriate valuation methodologies. However, considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, the following estimates are not necessarily indicative of the amounts the Company could have realized on disposition of the financial instruments at December 31, 2017 and December 31, 2016. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.
The carrying value of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, accrued interest, dividend and distributions payable and other liabilities are reasonable estimates of fair value because of the short-term nature of these instruments. The carrying value of the outstanding amounts under the Company's credit facilities is also a reasonable estimate of fair value because interest rates float at a rate based on LIBOR.
The Company determines the fair value of its interest rate swaps by using the standard methodology of netting discounted future fixed cash payments with the discounted expected variable cash receipts. These variable cash receipts of interest rate swaps are based on expectations of future LIBOR interest rates (forward curves) estimated by observing market LIBOR interest rate curves. This is a Level 2 fair value calculation. Also, credit valuation adjustments are factored into the fair value calculations to account

64

for potential nonperformance risk. These credit valuation adjustments were concluded to be not significant inputs for the fair value calculations for the periods presented. See Note 20 - Derivative Instruments.
The Company used a discounted cash flow model to determine the estimated fair value of its debt as of December 31, 2017 and December 31, 2016. This is a Level 3 fair value calculation. The inputs used in preparing the discounted cash flow model include actual maturity dates and scheduled cash flows as well as estimates for market value discount rates. The Company updates the discounted cash flow model on a quarterly basis to reflect any changes in the Company's debt holdings and changes to discount rate assumptions.  
The following summarizes the fair value of the Company's mortgage loans and unsecured notes at December 31, 2016 and December 31, 2017 (in thousands):
        
 
 
Mortgage Loans
 
Unsecured Notes
 
 
Carrying Value
 
Fair Value
 
Carrying Value
 
Fair Value
As of December 31, 2016
 
$
276,650

 
$
286,684

 
$
2,280,286

 
$
2,340,762

As of December 31, 2017
 
$
267,093

 
$
267,298

 
$
2,283,513

 
$
2,359,998

Income Taxes
The Company has elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code"). As a result, the Company generally is not subject to federal income taxation at the corporate level to the extent it distributes annually at least 100% of its REIT taxable income, as defined in the Code, to its shareholders and satisfies certain other organizational and operational requirements. The Company has met these requirements and, accordingly, no provision has been made for federal income taxes in the accompanying consolidated financial statements. If the Company fails to qualify as a REIT in any taxable year, the Company will be subject to federal income tax on its taxable income at regular corporate rates (including any alternative minimum tax) and may not be able to qualify as a REIT for the four subsequent taxable years. Even as a REIT, the Company may still be subject to certain state and local income and property taxes, and to federal income and excise taxes on undistributed taxable income. The Company has considered the provisions of the Tax Cuts and Jobs Act (the "TCJA"), which was signed into law on December 22, 2017 and which generally takes effect for taxable years beginning on or after January 1, 2018, and does not expect the TCJA to have a material impact on its overall business operations or ability to continue to qualify as a REIT.
Several of the Company's subsidiaries are taxable REIT subsidiaries (each a "TRS") and are subject to federal and state income taxes separate from the Company. In general, a TRS may perform additional services for tenants and generally may engage in real estate or non-real estate businesses that are not permitted REIT activities. The Company itself is also subject to tax in certain states and the United Kingdom. Accordingly, the Company recognizes federal, state and foreign income taxes in accordance with US GAAP, as applicable. In addition, the TCJA implemented a one-time deemed repatriation tax on offshore corporate profits, including any such profits which the Company may have accumulated over the years in its offshore TRSs, at the reduced rates of 15.5% on cash assets and 8% on noncash assets.  The Company has reviewed its accumulated offshore earnings through December 31, 2017 and does not expect this provision of the TCJA will have a material impact on the Company’s overall financial condition or results of operation.
There are no uncertain tax positions or possibly significant unrecognized tax benefits that are reasonably expected to occur within the next 12 months. The Company's policy is to recognize interest accrued related to unrecognized benefits in interest expense and penalties in other expense. There were no interest or penalties deducted in any of the years ended December 31, 2017, 2016 and 2015 and no interest and penalties accrued at December 31, 2017 or December 31, 2016 which related to any uncertain tax positions or significant unrecognized tax benefits.
Certain of the Company's TRSs had net operating loss ("NOL") carryforwards available of approximately $40.6 million as of December 31, 2017. The TCJA reduced the corporate federal tax rate in the U.S. to 21.0% effective for tax years beginning after December 31, 2017. As such, deferred tax assets and liabilities, where applicable, were remeasured using the lower corporate federal tax rate at December 31, 2017. These NOL carryforwards begin to expire in 2018. After taking into consideration future taxable income and consistent with prior periods, the Company has determined that a valuation allowance for the full carrying value of NOL carryforwards is appropriate.
The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, certain state and local jurisdictions, the United Kingdom and (in prior years) Luxembourg. With few exceptions, the Company and its subsidiaries are no longer subject to examination by taxing authorities in these jurisdictions for years prior to 2011.

65

The Federal tax cost basis of the wholly owned real estate was $6.8 billion and $6.5 billion at December 31, 2017 and 2016, respectively.
Share-Based Compensation
Share-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as expense over the employees' requisite service period. The Company recognizes forfeitures on share based compensation as they occur.
Expensed Pursuit Costs
The Company capitalizes pre-development costs incurred in pursuit of new development opportunities for which the Company currently believes future development is probable. Future development is dependent upon various factors, including zoning and regulatory approval, rental market conditions and construction costs. Initial pre-development costs incurred for pursuits for which future development is not yet considered probable are expensed as incurred. In addition, if the status of a future development by the Company is no longer probable, any capitalized pre-development costs are written off with a charge to expense.
Derivative Financial Instruments
We borrow funds at a combination of fixed and variable rates. Borrowings under our revolving credit facility and certain bank mortgage loans bear interest at variable rates. Our long-term debt typically bears interest at fixed rates. Our interest rate risk management objectives are to limit generally the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs. To achieve these objectives, from time to time, we enter into interest rate hedge contracts such as collars, swaps, caps and treasury lock agreements in order to mitigate our interest rate risk with respect to various debt instruments. We generally do not hold or issue these derivative contracts for trading or speculative purposes. The interest rate on all of our variable rate debt is generally adjusted at one or three month intervals, subject to settlements under interest rate hedge contracts.
Interest rate swaps involve the receipt of variable-rate amounts from a counterparty in exchange for making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive loss (for the Trust) and general partner's equity and limited partners' equity - common units (for the Operating Partnership) and is subsequently reclassified into interest expense in the period that the hedged forecasted transaction affects earnings.
Foreign Currency
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. For the Trust, gains and losses resulting from this translation are included in accumulated other comprehensive loss as a separate component of shareholders' equity and a proportionate amount of gain or loss is allocated to noncontrolling interest - operating partnership - common units. For the Operating Partnership, gains and losses resulting from this translation are included in general partner's equity and limited partners' equity - common units. Upon sale or upon complete or substantially complete liquidation of the Company's foreign investment, the gain or loss on the sale will include the cumulative translation adjustments that have been previously recorded in accumulated other comprehensive loss and noncontrolling interest - operating partnership - common units (for the Trust) and in general partner's equity and limited partners' equity - common units (for the Operating Partnership).
Comprehensive Income
Comprehensive income, as reflected on the consolidated statements of comprehensive income, is defined as all changes in equity during each period except for those resulting from investments by or distributions to shareholders. Accumulated other comprehensive loss, as reflected on the Company's consolidated balance sheets and consolidated statements of equity, reflects the effective portion of the cumulative changes in the fair value of derivatives in qualifying cash flow hedge relationships as well as gains and losses resulting from foreign currency translation.
Sales of Real Estate
The Company accounts for the sale of real estate assets and any related gain recognition in accordance with the accounting guidance applicable to sales of real estate, which establishes standards for recognition of profit on all real estate sales transactions, other than retail land sales. The Company recognizes the sale, and associated gain or loss from the disposition, provided that the earnings process is complete and the Company is not obligated to perform significant activities after the sale.
Earnings Per Share of the REIT
Basic earnings per share is calculated by dividing the income available to common shareholders for the period by the weighted average number of common shares outstanding during the period using the two class method. Diluted earnings per share is calculated

66

by dividing the net income available to common shareholders for the period by the weighted average number of common and dilutive securities outstanding during the period.
Earnings Per Unit of the Operating Partnership
Basic earnings per unit is calculated by dividing the income available to common unitholders for the period by the weighted average number of common units outstanding during the period using the two class method. Diluted earnings per unit is calculated by dividing the income available to common unitholders for the period by the weighted average number of common and dilutive securities outstanding during the period.
Recently Issued Accounting Standards
In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"), which supersedes nearly all existing revenue recognition guidance (except revenue in the scope of other accounting standards, including standards related to leasing). Subsequently, the FASB issued the following standards related to ASU 2014-09: ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations; ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing; ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients; and ASU 2017-13, Revenue from Contracts with Customers (Topic 606): Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments (collectively, the “New Revenue Standards”).
The New Revenue Standards clarify the required factors that an entity must consider when recognizing revenue and require additional disclosures concerning contracts with customers, judgments concerning revenue recognition, and assets recognized for the costs to obtain or fulfill a contract. The Company concluded that there are no revenue streams from its lease agreements that are covered by the New Revenue Standards with the exception of non-lease components as further discussed below. Once the new guidance setting forth principles for the recognition, measurement, presentation and disclosure of leases goes into effect on January 1, 2019, the Company believes that the New Revenue Standards will apply to components of revenue due under leases that are deemed to be non-lease components (such as common area maintenance and provision of utilities), which could affect the recognition pattern for such revenue.
The Company has completed its evaluation of the New Revenue Standards' impact on its remaining revenue streams. The Company adopted this standard effective January 1, 2018 using the modified retrospective approach, which requires applying the new standard to all existing contracts not yet completed as of the effective date and recording a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The New Revenue Standards will not have a material impact on the measurement and recognition of gains and losses on the sale of properties. The New Revenue Standards will not have a material impact on the amount and timing of recognizing its development service fee income, which is currently accounted for under the percentage of completion method based on applicable costs incurred and estimated to be incurred. The Company has completed its evaluation of the standard's impact on its revenue streams. The Company does not believe the adoption of the New Revenue Standards will have a material impact on the consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, Leases ("ASU 2016-02"). ASU 2016-02 amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU 2016-02 is effective for the Company beginning January 1, 2019. Early adoption of ASU 2016-02 is permitted. The standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. For leases in which the Company is the lessor, the standard requires that the lease and non-lease components of the lease agreement should be separated. Revenue related to the lease component of the contract will be recognized on a straight-line basis, while revenue related to the non-lease component will be recognized under the provisions of the New Revenue Standards. For lease agreements longer than one year in which the Company is the lessee, the Company will measure the present value of the future lease payments and recognize a right-of-use asset and corresponding lease liability on its balance sheet. In addition, the new standard states that only direct leasing costs may be capitalized. The Company is evaluating the impact ASU 2016-02 will have on its financial position and results of operations.
In March 2016, the FASB issued ASU 2016-05, Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships ("ASU 2016-05"). ASU 2016-05 states that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument under FASB Topic 815 does not, in and of itself, require dedesignation of that hedging relationship provided that all other hedge accounting criteria continue to be met. The Company adopted ASU 2016-05 beginning January 1, 2017 on a prospective basis. The adoption of ASU 2016-05 did not have a material impact on its financial position and results of operations.

67

In March 2016, the FASB issued ASU 2016-09. ASU 2016-09 is designed to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The Company adopted ASU 2016-09 beginning January 1, 2017. Certain amendments in the standard were applied retrospectively and certain amendments were applied prospectively. The adoption of ASU 2016-09 did not have a material impact on its financial position and results of operations. The impact of the implementation of ASU 2016-09 is shown in the table below.
In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). ASU 2016-15 is designed to clarify how entities should classify cash receipts and cash payments in the statement of cash flows. ASU 2016-15 is effective for the Company beginning January 1, 2018. Early adoption of ASU 2016-15 is permitted. The standard requires retrospective application unless it is impracticable to do so. The Company is evaluating the impact ASU 2016-15 will have on its statement of cash flows.
In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230) - Restricted Cash (“ASU 2016-18”) , which requires that restricted cash and cash equivalents be included with cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts shown on the consolidated statements of cash flows. The new standard is effective for public entities for fiscal years beginning after December 15, 2017 and for interim periods therein, with early adoption permitted. The Company adopted ASU 2016-18 as of December 31, 2017.
The impact of the implementation of ASU 2016-18 and ASU 2016-09 was as follows:
 
Year Ended December 31,
 
2017
 
2016
 
2015
 
Net cash provided by operating activities (prior to adoption of ASU 2016-09 and ASU 2016-18)
$
331,337

 
$
333,021

 
$
385,366

 
Impact of including restricted cash with cash and cash equivalents
187

 
2,669

 
(10,478
)
 
Impact of including shares related to tax withholdings in financing activities
5,107

 
5,372

 
4,233

 
Net cash provided by operating activities (after adoption of ASU 2016-09 and ASU 2016-18)
$
336,631

 
$
341,062

 
$
379,121

 
 
 
 
 
 
 
 
Net cash (used in) provided by investing activities (prior to adoption of ASU 2016-18)
$
(465,652
)
 
$
613,402

 
$
(89,660
)
 
Impact of including restricted cash with cash and cash equivalents
—

 
1,525

 
—

 
Net cash (used in) provided by investing activities (after adoption of ASU 2016-18)
$
(465,652
)
 
$
614,927

 
$
(89,660
)
 
 
 
 
 
 
 
 
Net cash provided by (used in) financing activities (prior to adoption of ASU 2016-09)
$
101,338

 
$
(934,135
)
 
$
(327,627
)
 
Impact of including shares related to tax withholdings in financing activities
(5,107
)
 
(5,372
)
 
(4,233
)
 
Net cash provided by (used in) financing activities (prior to adoption of ASU 2016-09)
$
96,231

 
$
(939,507
)
 
$
(331,860
)
 

In February 2017, the FASB issued ASU 2017-05, Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets ("ASU 2017-05"). ASU 2017-05 is designed to provide guidance on how to recognize gain and losses on sales, including partial sale, of nonfinancial assets to noncustomers. The Company adopted ASU 2017-05 effective January 1, 2018 on a modified retrospective method and the adoption will not have a material effect on the Company’s consolidated financial statements.
In May 2017, the FASB issued ASU 2017-09, Scope of Modification Accounting ("ASU 2017-09"). ASU 2017-09 clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. ASU 2017-09 is effective for the Company beginning January 1, 2018. Early adoption is permitted. The new guidance will be applied prospectively to awards modified on or after the adoption date. The Company does not believe the adoption of the ASU 2017-09 will have a material impact on the consolidated financial statements.
In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities ("ASU 2017-12"). ASU 2017-12 is designed to better align a company’s financial reporting for hedging activities with the economic objectives of those activities. ASU 2017-12 is effective for the Company beginning January 1, 2019. Early adoption is permitted using a modified retrospective transition method. This adoption method will require the Company to recognize the cumulative effect of initially applying ASU 2017-12 as an adjustment to accumulated other comprehensive income with a corresponding adjustment to the opening balance of retained earnings as of the beginning of the fiscal year that an entity adopts the update. The Company is evaluating the impact ASU 2017-12 will have on the Company's financial position and results of operations.

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3.     INCOME PER COMMON SHARE OF THE TRUST

The following table sets forth the computation of basic and diluted income per common share of the Trust (in thousands except per share amounts):
 
2017
 
2016
 
Income
(Numerator)
 
Weighted
Average
Shares
(Denominator)
 
Per Share
 
Income
(Numerator)
 
Weighted
Average
Shares
(Denominator)
 
Per Share
Income from continuing operations net of noncontrolling interest - basic
$
263,805

 
146,742

 
$
1.79

 
$
345,108

 
146,204

 
$
2.36

Dilutive shares for long-term compensation plans
—

 
799

 
 
 
—

 
685

 
 
Income from continuing operations net of noncontrolling interest - diluted
$
263,805

 
147,541

 
$
1.78

 
$
345,108

 
146,889

 
$
2.35

Discontinued operations net of noncontrolling interest - basic
$
18,535

 
146,742

 
$
0.13

 
$
11,709

 
146,204

 
$
0.08

Dilutive shares for long-term compensation plans
—

 
799

 
 
 
—

 
685

 
 
Discontinued operations net of noncontrolling interest - diluted
$
18,535

 
147,541

 
$
0.13

 
$
11,709

 
146,889

 
$
0.08

Net income available to common shareholders - basic
$
282,340

 
146,742

 
$
1.92

 
$
356,817

 
146,204

 
$
2.44

Dilutive shares for long-term compensation plans
—

 
799

 
 
 
—

 
685

 
 
Net income available to common shareholders - diluted
$
282,340

 
147,541

 
$
1.91

 
$
356,817

 
146,889

 
$
2.43

 
2015
 
Income
(Numerator)
 
Weighted
Average
Shares
(Denominator)
 
Per Share
Income from continuing operations net of noncontrolling interest - basic
$
229,164

 
148,243

 
$
1.55

Dilutive shares for long-term compensation plans
—

 
600

 
 
Income from continuing operations net of noncontrolling interest - diluted
$
229,164

 
148,843

 
$
1.54

Discontinued operations net of noncontrolling interest - basic
$
10,319

 
148,243

 
$
0.07

Dilutive shares for long-term compensation plans
—

 
600

 
 
Discontinued operations net of noncontrolling interest - diluted
$
10,319

 
148,843

 
$
0.07

Net income available to common shareholders - basic
$
239,483

 
148,243

 
$
1.62

Dilutive shares for long-term compensation plans
—

 
600

 
 
Net income available to common shareholders - diluted
$
239,483

 
148,843

 
$
1.61


Dilutive shares for long-term compensation plans represent the unvested common shares outstanding during the year as well as the dilutive effect of outstanding options. There were no anti-dilutive options in 2017. The amounts of anti-dilutive options that were excluded from the computation of diluted income per common share as the exercise price was higher than the average share price of the Company in 2016 and 2015 were 0.8 million and 1.5 million, respectively.

69

During the years ended December 31, 2017, 2016 and 2015, 193,000, 369,000 and 65,000 common shares, respectively, were issued upon the exercise of options.
During the years ended December 31, 2017, 2016 and 2015, individuals acquired 9,826, 9,044 and 14,491 common shares, respectively, in exchange for the same number of common units. These individuals acquired these common units in connection with their contributions to the Operating Partnership of certain assets in prior years. The exchange of common shares for the common units is exempt from the registration requirement of the Securities Act of 1933, as amended, pursuant to Section 4(2) thereunder.
During the years ended December 31, 2017, 2016 and 2015, declared dividends per common share were $1.60, $1.90 and $1.90, respectively.


70

4.    INCOME PER COMMON UNIT OF THE OPERATING PARTNERSHIP

The following table sets forth the computation of basic and diluted income per common unit of the Operating Partnership (in thousands, except per unit amounts):
 
 
2017
 
2016
 
Income
(Numerator)
 
Weighted
Average Units
(Denominator)
 
Per Unit
 
Income
(Numerator)
 
Weighted
Average Units
(Denominator)
 
Per Unit
Income from continuing operations - net of noncontrolling interest - consolidated joint ventures
$
270,585

 
 
 
 
 
$
353,896

 
 
 
 
Less: Preferred unit distributions
(472
)
 
 
 
 
 
(472
)
 
 
 
 
Income from continuing operations available to common unitholders - basic
$
270,113

 
150,270

 
$
1.79

 
$
353,424

 
149,740

 
$
2.36

Dilutive units for long-term compensation plans
—

 
799

 
 
 
—

 
685

 
 
Income from continuing operations available to common unitholders - diluted
$
270,113

 
151,069

 
$
1.78

 
$
353,424

 
150,425

 
$
2.35

Income from discontinued operations - basic
$
18,979

 
150,270

 
$
0.13

 
$
11,991

 
149,740

 
$
0.08

Dilutive units for long-term compensation plans
 
 
799

 
 
 
 
 
685

 
 
Income from discontinued operations - diluted
$
18,979

 
151,069

 
$
0.13

 
$
11,991

 
150,425

 
$
0.08

Income available to common unitholders - basic
$
289,092

 
150,270

 
$
1.92

 
$
365,415

 
149,740

 
$
2.44

Dilutive units for long-term compensation plans
 
 
799

 
 
 
 
 
685

 
 
Income available to common unitholders - diluted
$
289,092

 
151,069

 
$
1.91

 
$
365,415

 
150,425

 
$
2.43



71

 
2015
 
Income
(Numerator)
 
Weighted
Average Units
(Denominator)
 
Per Unit
Income from continuing operations net of noncontrolling interest - consolidated joint ventures
$
235,110

 
 
 
 
Less: Preferred unit distributions
(472
)
 
 
 
 
Income from continuing operations available to common unitholders - basic
$
234,638

 
151,783

 
$
1.55

Dilutive units for long-term compensation plans
—

 
600

 
 
Income from continuing operations available to common unitholders - diluted
$
234,638

 
152,383

 
$
1.54

Income from discontinued operations - basic
$
10,565

 
151,783

 
$
0.07

Dilutive units for long-term compensation plans
—

 
600

 
 
Income from discontinued operations - diluted
$
10,565

 
152,383

 
$
0.07

Income available to common unitholders - basic
$
245,203

 
151,783

 
$
1.62

Dilutive units for long-term compensation plans
—

 
600

 
 
Income available to common unitholders - diluted
$
245,203

 
152,383

 
$
1.61


Dilutive units for long-term compensation plans represent the unvested common units outstanding during the year as well as the dilutive effect of outstanding options. There were no anti-dilutive options in 2017. The amounts of anti-dilutive options that were excluded from the computation of diluted income per common unit as the exercise price was higher than the average unit price of the Company in 2016 and 2015 were 0.8 million and 1.5 million, respectively.
During the years ended December 31, 2017, 2016 and 2015, 193,000, 369,000 and 65,000 common units, respectively, were issued upon the exercise of options.
During the years ended December 31, 2017, 2016 and 2015, individuals acquired 9,826, 9,044 and 14,491 common shares of the Trust in exchange for the same number of common units of the Operating Partnership. These individuals acquired these common units in connection with their contributions to the Operating Partnership of certain assets in prior years. The exchange of common shares for the common units is exempt from the registration requirement of the Securities Act of 1933, as amended, pursuant to Section 4(2) thereunder.
During the years ended December 31, 2017, 2016 and 2015, declared dividends per common unit were $1.60, $1.90 and $1.90, respectively.

72


5.     ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table sets forth the components of Accumulated Other Comprehensive Loss (in thousands):

 
 
December 31,
 
 
2017
 
2016
Foreign Currency Translation:
 
 
 
 
     Beginning balance
 
$
(56,767
)
 
$
(22,023
)
     Translation adjustment
 
18,066

 
(34,744
)
     Ending balance
 
(38,701
)
 
(56,767
)
 
 
 
 
 
Derivative Instruments:
 
 
 
 
     Beginning balance
 
(455
)
 
(865
)
     Unrealized loss
 
152

 
(659
)
     Reclassification adjustment (1)
 
453

 
1,069

     Ending balance
 
150

 
(455
)
Total accumulated other comprehensive loss
 
(38,551
)
 
(57,222
)
Less: portion included in noncontrolling interest – operating partnership
 
754

 
1,191

Total accumulated other comprehensive loss included in shareholders' equity
 
$
(37,797
)
 
$
(56,031
)

(1)
Amounts reclassified out of Accumulated Other Comprehensive Loss/General & Limited Partner's Equity into contractual interest expense.
6.     REAL ESTATE
The Company owns and operates industrial and office properties. The carrying value of these operating properties by type as of December 31, 2017 and 2016 is as follows (in thousands):
 
 
Land
 
Building
 
 
 
 
 
 
and Land
 
and
 
 
 
Accumulated
 
 
Improvements
 
Improvements
 
Total
 
Depreciation
2017
 
 
 
 
 
 
 
 
Industrial properties
 
$
1,001,454

 
$
3,873,830

 
$
4,875,284

 
$
814,301

Office properties
 
152,226

 
569,753

 
721,979

 
126,312

 
 
 
 
 
 
 
 
 
2017 Total
 
$
1,153,680

 
$
4,443,583

 
$
5,597,263

 
$
940,613

 
 
 
 
 
 
 
 
 
2016
 
 
 
 
 
 
 
 
Industrial properties
 
$
914,428

 
$
3,725,331

 
$
4,639,759

 
$
719,658

Office properties
 
145,637

 
572,681

 
718,318

 
127,448

 
 
 
 
 
 
 
 
 
2016 Total
 
$
1,060,065

 
$
4,298,012

 
$
5,358,077

 
$
847,106

Depreciation expense was $148.9 million, $166.8 million and $181.0 million for the years ended December 31, 2017, 2016 and 2015, respectively.

73

Information on the operating properties the Company sold during the years ended December 31, 2017, 2016 and 2015 is as follows:
2017 Sales
Reportable Segment
 
Number of Buildings
 
Acres of Developable Land (unaudited)
 
Leaseable Square Feet (unaudited)
 
Gross Proceeds (in thousands)
Chicago/Minneapolis
 
3

 
—

 
136,110

 
$
8,917

Florida
 
—

 
16

 
—

 
13,256

Houston
 
1

 
42

 
206,808

 
36,145

Lehigh/Central PA
 
2

 
44

 
1,683,876

 
249,045

Southeastern PA
 
4

 
3

 
313,410

 
56,156

Other
 
—

 
8

 
—

 
3,739

Total
 
10

 
113

 
2,340,204

 
$
367,258

2016 Sales
Reportable Segment
 
Number of Buildings
 
Acres of Developable Land (unaudited)
 
Leaseable Square Feet (unaudited)
 
Gross Proceeds (in thousands)
Chicago/Minneapolis
 
24

 
5

 
2,037,275

 
$
199,825

Florida
 
51

 
12

 
3,509,641

 
505,828

Lehigh/Central PA
 
1

 
—

 
120,777

 
11,200

Philadelphia
 
—

 
1

 
—

 
2,640

Southeastern PA
 
31

 
—

 
2,165,002

 
266,821

Other
 
18

 
18

 
1,631,295

 
224,241

Total
 
125

 
36

 
9,463,990

 
$
1,210,555


2015 Sales
Reportable Segment
 
Number of Buildings
 
Acres of Developable Land (unaudited)
 
Leaseable Square Feet (unaudited)
 
Gross Proceeds (in thousands)
Carolinas/Richmond
 
22

 
3

 
1,319,299

 
$
110,054

Chicago/Minneapolis
 
2

 
—

 
222,642

 
25,700

Florida
 
4

 
—

 
874,125

 
55,425

Southeastern PA
 
46

 
20

 
2,724,489

 
316,583

Other
 
7

 
—

 
569,618

 
37,371

Total
 
81

 
23

 
5,710,173

 
$
545,133



Included in the sales for the year ended December 31, 2015 are 22 properties and three acres of land in the Carolinas/Richmond segment that the Company sold for $110.3 million to a firm in which the brother of David L. Lingerfelt, a member of the Company's Board of Trustees, has an equity interest.
During the year ended December 31, 2015, the Company completed a portfolio sale consisting of 41 properties and 20 acres of land in the Southeastern PA segment. As of December 31, 2016, the Company had deferred gain recognition related to this sale in the amount of $14.3 million which is recorded in other liabilities on the accompanying consolidated balance sheets. During the year ended December 31, 2017, the contingency related to the portfolio sale was settled and the Company recognized the deferred gain in the accompanying statements of comprehensive income.


74


Information on the operating properties and land parcels the Company acquired during the years ended December 31, 2017, 2016 and 2015 is as follows:
2017 Acquisitions
Reportable Segment
 
Number of Buildings
 
Acres of Developable Land (unaudited)
 
Leaseable Square Feet (unaudited)
 
Purchase Price
 
 
 
 
 
 
 
 
(in thousands)
Carolinas/Richmond
 
—

 
11

 
—

 
$
1,242

Lehigh/Central PA
 
—

 
95

 
—

 
17,798

United Kingdom
 
—

 
35

 
—

 
12,550

Other
 
8

 
113

 
1,861,879

 
264,808

Total
 
8

 
254

 
1,861,879

 
$
296,398

2016 Acquisitions
Reportable Segment
 
Number of Buildings
 
Acres of Developable Land (unaudited)
 
Leaseable Square Feet (unaudited)
 
Purchase Price
 
 
 
 
 
 
 
 
(in thousands)
Carolinas/Richmond
 
—

 
13

 
—

 
$
2,251

Chicago/Minneapolis
 
1

 
6

 
73,160

 
11,064

Lehigh/Central PA
 
—

 
76

 
—

 
15,395

Philadelphia
 
—

 
6

 
—

 
13,943

Southeastern PA
 
—

 
8

 
—

 
3,344

Other
 
—

 
108

 
—

 
14,895

Total
 
1

 
217

 
73,160

 
$
60,892


2015 Acquisitions
Reportable Segment
 
Number of Buildings
 
Acres of Developable Land (unaudited)
 
Leaseable Square Feet (unaudited)
 
Purchase Price
 
 
 
 
 
 
 
 
(in thousands)
Carolinas/Richmond
 
—

 
94

 
—

 
$
1,727

Chicago/Minneapolis
 
1

 
188

 
197,956

 
24,541

Houston
 
3

 
139

 
921,196

 
86,497

Lehigh/Central PA
 
—

 
281

 
—

 
62,402

Other
 
1

 
56

 
410,059

 
45,248

Total
 
5

 
758

 
1,529,211

 
$
220,415


Subsequent to December 31, 2017, the Company closed on the acquisition of a 400,000 square foot property in its Southern California segment for a Total Investment of $92.7 million.
7.     INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES
Listed below are the unconsolidated joint ventures in which the Company has a noncontrolling interest. The Company receives fees from these joint ventures for services it provides. These services include property management, leasing, development and administration. These fees are generally included in interest and other income in the accompanying consolidated statements of

75

comprehensive income. For the three months ended December 31, 2016, the Company began including development-related fees in development service income in the consolidated statements of comprehensive income. The Company may also receive a promoted interest if certain return thresholds are met. The accounting policies for the unconsolidated joint ventures in which the Company has a noncontrolling interest are the same as those for the Company.
On a periodic basis, management assesses whether there are any indicators that the value of the properties owned by the unconsolidated joint ventures may be impaired. As detailed below, management has determined that certain assets are impaired as the unconsolidated joint ventures dispose of and anticipate the potential disposition of certain properties prior to the end of their remaining useful lives.
Liberty Venture I, LP
As of December 31, 2017, the Company had a 25% interest in Liberty Venture I, LP, an entity engaged in the ownership of industrial properties in New Jersey. This joint venture is part of the Company's New Jersey reportable segment.
As of December 31, 2017, the joint venture owned 28 industrial properties totaling 4.5 million square feet. The joint venture also had one property under development, which is expected to comprise, upon completion, 302,000 square feet and is expected to represent a Total Investment of $21.1 million.
During the year ended December 31, 2015, the joint venture realized gross proceeds of $8.5 million from the sale of one property totaling 198,000 square feet.
The Company had a receivable from Liberty Venture I, LP for $223,000 and $250,000 as of December 31, 2017 and 2016, respectively. This related party receivable is reflected as prepaid expenses and other assets in the Company's consolidated balance sheets.
The Company recognized $1.6 million, $2.3 million and $1.6 million in fees for services during the years ended December 31, 2017, 2016 and 2015, respectively.
Kings Hill Unit Trust
As of December 31, 2017, the Company had a 20% interest in Kings Hill Unit Trust, an entity engaged in the ownership of office properties in the County of Kent, United Kingdom. This joint venture is part of the Company's United Kingdom reportable segment.
As of December 31, 2017, the joint venture owned 14 office properties totaling 489,000 square feet. A cash sweep of net cash flow is required to be implemented under the mortgage loan encumbering such properties until such time as a loan-to-value milestone is satisfied. In lieu thereof, the joint venture and the bank have agreed to a partial pay down of the mortgage loan in 2018.
The Company had notes receivable from Kings Hill Unit Trust for an aggregate of $4.7 million and $4.1 million as of December 31, 2017 and 2016, respectively. The note receivable bears interest at a rate of 10% and is due in November 2020. These related party receivables are reflected in investments in and advances to unconsolidated joint ventures in the Company's consolidated balance sheets.
The Company had a receivable from Kings Hill Unit Trust for $122,000 and $121,000 as of December 31, 2017 and 2016, respectively. This related party receivable is reflected as prepaid expenses and other assets in the Company's consolidated balance sheets.
The Company recognized $302,000, $293,000 and $304,000 in fees for services during the years ended December 31, 2017, 2016 and 2015, respectively.
Liberty Illinois, LP
As of December 31, 2017, the Company had a 25% interest in Liberty Illinois, LP, an entity primarily engaged in the ownership of industrial properties in Illinois. This joint venture is part of the Company's Chicago/Minneapolis reportable segment.
As of December 31, 2017, the joint venture owned 12 industrial properties totaling 4.9 million square feet and 248 acres of developable land.
During the year ended December 31, 2016, the joint venture sold four properties containing 636,000 square feet for $32.5 million. The Company's share of gain on property dispositions was $1.0 million and is included in equity in earnings of unconsolidated joint ventures in the accompanying consolidated statements of comprehensive income.

76

The Company had a receivable from Liberty Illinois, LP for $5,000 and $132,000 as of December 31, 2017 and 2016, respectively. This related party receivable is reflected as prepaid expenses and other assets in the Company's consolidated balance sheets.
The Company recognized $0.9 million, $1.0 million and $1.3 million in fees for services during the years ended December 31, 2017, 2016 and 2015, respectively.
Liberty Washington, LP
As of December 31, 2017, the Company had a 25% interest in Liberty Washington, LP, an entity engaged in the ownership of office properties in Washington, D.C (and formerly Northern Virginia). This joint venture's properties are part of the Company's DC Metro reportable segment. During the year ended December 31, 2016, the Company divested itself of properties in this joint venture that were located in Northern Virginia (see below). These properties had been part of a reportable segment classified as Other.
As of December 31, 2017, the joint venture owned two office properties totaling 451,000 square feet.
During the year ended December 31, 2017, the Company concluded that a property owned by this joint venture had an indicator of impairment as it anticipated a shortened hold period, major lease expiration and significant capital investment. The joint venture recognized impairment charges of $15.9 million. The Company's share of this impairment charge was $4.0 million. The impairment charges were related to the Company's DC Metro reportable segment and the Company's share was included in equity in earnings of unconsolidated joint ventures in the accompanying consolidated statements of comprehensive income. The Company determined these impairments based on estimated future discounted cash flows. This is a Level 3 fair value calculation.
During the year ended December 31, 2016, the joint venture sold 12 properties located in Northern Virginia containing 1.2 million square feet and 6.0 acres of land for $187.2 million.
During the year ended December 31, 2016, due to adverse conditions in the Northern Virginia office market, six properties containing 698,000 square feet were transferred to mortgage lenders in satisfaction of an aggregate of $112.5 million in nonrecourse mortgage loans that were secured by the properties. The book values of these properties had been written down to fair value in prior periods.
Because these loans were nonrecourse, the Company believes that the transfers described above will not have an ongoing effect on its operating results or financial condition.
The Company's share of gain from property dispositions and extinguishment of debt is included in equity in earnings of unconsolidated joint ventures in the accompanying consolidated statements of comprehensive income. During the year ended December 31, 2016, the Company's share of gain from extinguishment of debt was $4.2 million. The Company's share of gain on property dispositions for the year ended December 31, 2016 was $6.0 million.
During the year ended December 31, 2015, the joint venture realized gross proceeds of $5.0 million from the sale of one property totaling 80,000 square feet.
The Company had a receivable from Liberty Washington, LP for $316,000 and $322,000 as of December 31, 2017 and 2016, respectively. This related party receivable is reflected as prepaid expenses and other assets in the Company's consolidated balance sheets.
During the year ended December 31, 2015, the Company concluded that certain of the properties owned by this joint venture were impaired and the joint venture recognized impairment charges of $56.8 million. The Company's share of this impairment charge was $11.5 million. The impairment charges were related to the Company's Northern Virginia reportable segment and the Company's share was included in equity in earnings of unconsolidated joint ventures in the accompanying consolidated statements of comprehensive income. The Company determined these impairments based on third party offer prices. This is a Level 2 fair value calculation.
The Company recognized $1.1 million, $2.0 million and $4.8 million in fees for services during the years ended December 31, 2017, 2016 and 2015, respectively.

77

Liberty/Comcast 1701 JFK Boulevard, LP
As of December 31, 2017, the Company had a 20% interest in Liberty/Comcast 1701 JFK Boulevard LP ("Liberty/Comcast"), formerly known as Liberty/Commerz 1701 JFK Boulevard, LP, an entity engaged in the ownership of a 1.25 million square foot office tower in Philadelphia, Pennsylvania. During the year ended December 31, 2015, the limited partnership agreement was amended to replace the general partner and admit a new general partner. As a result of this amendment the Company determined that this joint venture is a VIE. Because the Company and its third party partner share control of the joint venture as both parties have the power to direct its activities, the Company determined that it is not the primary beneficiary and that the equity method of accounting is appropriate. This joint venture is part of the Company's Philadelphia reportable segment.
The Company had a payable to this joint venture for $59,000 as of both December 31, 2017 and 2016. This related party payable is reflected in investments in and advances to unconsolidated joint ventures in the Company's consolidated balance sheets.
The Company had a receivable from this joint venture for $272,000 and $401,000 as of December 31, 2017 and 2016, respectively. This related party receivable is reflected in prepaid expenses and other assets in the Company's consolidated balance sheets.
The Company recognized $2.7 million, $2.7 million and $2.7 million in fees for services during the years ended December 31, 2017, 2016 and 2015, respectively.
Subsequent to December 31, 2017, the joint venture paid in full the $305.2 million mortgage loan on the office building. This was funded through loans from the joint venture partners in proportion to their ownership interests.
Liberty Property 18th & Arch LP and Liberty Property 18th & Arch Hotel, LP
On June 30, 2014, the Company entered into two joint ventures for the purpose of developing and owning the Comcast Technology Center (the "Project") located in Philadelphia, Pennsylvania as part of a mixed-use development. The 60-story building will include 1.3 million square feet of leasable office space (the "Office") and a 217-room Four Seasons Hotel (the "Hotel") (collectively, "Liberty Property 18th and Arch"). Project costs for the development of the Project, exclusive of tenant-funded interior improvements, are anticipated to be approximately $953.7 million.  The Company's investment in the project is expected to be approximately $190.7 million with 20% ownership interests in both joint ventures. As of December 31, 2017, the Company's investment in these joint ventures was $177.8 million and is reflected in investments in and advances to unconsolidated joint ventures in the Company's consolidated balance sheet. These joint ventures are part of the Company's Philadelphia reportable segment.
During the year ended December 31, 2017, the joint venture for Liberty Property 18th & Arch brought into service 1.1 million square feet of office space representing a Total Investment of $599.6 million. The remaining 250,000 square feet of office space and the 217-room Four Seasons hotel representing an aggregate Total Investment of $354.1 million continued to be developed by the joint ventures as of December 31, 2017.
The two joint ventures have engaged the Company as the developer of the Project pursuant to a Development Agreement by which the Company agrees, in consideration for a development fee, to be responsible for all aspects of the development of the Project and to guarantee the timely lien-free completion of construction of the Project as well as the payment, subject to certain exceptions, of any cost overruns incurred in the development of the Project. To mitigate its risk, the Company entered into guaranteed maximum price contracts with a third party contractor to construct the Project. The Company is accounting for the development of the Project using the percentage of completion method. The Company recognized a loss of $3.5 million for the year ended December 31, 2017, and income of $0.6 million and $1.6 million for the years ended December 31, 2016 and 2015, respectively, in developer service fee income, net of developer service fee expense and other related expenses. The Company believes it has applied reasonable estimates and judgments in determining the amount of estimated development costs for the Project. The Company has recently been notified, however, that there are additional construction costs in connection with the Project. Until such time as the Company receives appropriate information concerning the amount and nature of these additional costs and has an opportunity to investigate them, it is not possible to estimate the amount of possible additional costs, if any, that the Company may incur in connection with its guarantee beyond the obligations of the contractor under its guaranteed maximum price contracts.

The Company had a receivable from this joint venture of $466,000 and $1.3 million as of December 31, 2017 and 2016, respectively. This receivable is included in prepaid expenses and other assets in the Company's consolidated balance sheets.
During the year ended December 31, 2016, the joint venture sold three residential condominium units located on the 45th floor containing 14,700 square feet for $14.3 million. The Company's share of gain on property dispositions was $0.3 million and is included in equity in earnings of unconsolidated joint ventures in the accompanying consolidated statements of comprehensive income.

78

The Company will manage and lease the Office and Four Seasons Hotels Limited will manage the Hotel. The Company recognized $230,000, $75,000 and $75,000 in related fee income during the years ended December 31, 2017, 2016 and 2015, respectively.
Other Joint Ventures
As of December 31, 2017, the Company had a 50% ownership interest in three additional unconsolidated joint ventures. One of these joint ventures has seven operating properties and an investment in land held for development and is part of the Company's Florida reportable segment. One of these joint ventures sold its real estate assets in 2016 and was part of the Company's United Kingdom reportable segment. The sales price was $13.7 million and the Company's share of the loss on sale was $6,000. This amount is included in equity in earnings of unconsolidated joint ventures in the accompanying consolidated statements of comprehensive income.
One joint venture has a leasehold interest and does not operate or own operating properties and is part of the Company's United Kingdom reportable segment. The Company had a note payable due to this joint venture of $2.5 million and $2.3 million as of December 31, 2017 and 2016, respectively. The note payable is interest free and is due upon written notice from the joint venture. This related party payable is reflected in investments in and advances to unconsolidated joint ventures in the Company's consolidated balance sheets.
Additionally, as of December 31, 2017, the Company had a 20% ownership interest in an unconsolidated joint venture that acquired one redevelopment property comprising 48,000 square feet for $15.0 million. This joint venture also owns one acre of developable land and is part of the Company's Philadelphia reportable segment.
The Company's share of each of the joint venture's earnings is included in equity in earnings of unconsolidated joint ventures in the accompanying consolidated statements of comprehensive income.
Summary Financial Data
The condensed balance sheets as of December 31, 2017 and 2016 and condensed statements of operations for the years ended December 31, 2017, 2016 and 2015 for Liberty Venture I LP, Kings Hill Unit Trust, Liberty Illinois, LP, Liberty Washington LP, Liberty/Comcast, Liberty Property 18th & Arch, and the other unconsolidated joint ventures are as follows (in thousands):
Condensed Balance Sheets:
 
December 31, 2017
 
Liberty
 
Kings Hill
 
Liberty
 
Liberty
 
Liberty/
 
Liberty Property
 
 
 
 
 
Venture I, LP
 
Unit Trust
 
Illinois, LP
 
Washington, LP
 
Comcast
 
18th & Arch (2)
 
Other
 
Total
Real estate assets
$
229,600

 
$
152,998

 
$
252,593

 
$
274,847

 
$
496,210

 
$
551,874

 
$
98,589

 
$
2,056,711

Accumulated depreciation
(48,629
)
 
(30,028
)
 
(57,444
)
 
(49,106
)
 
(138,943
)
 
(4,070
)
 
(10,995
)
 
(339,215
)
   Real estate assets, net
180,971

 
122,970

 
195,149

 
225,741

 
357,267

 
547,804

 
87,594

 
1,717,496

Development in progress
18,337

 
—

 
—

 
—

 
—

 
289,767

 
—

 
308,104

Land held for development
—

 
—

 
33,500

 
—

 
—

 
—

 
41,075

 
74,575

Other assets
20,722

 
10,957

 
16,337

 
18,566

 
49,755

 
98,191

 
24,263

 
238,791

   Total assets
$
220,030

 
$
133,927

 
$
244,986

 
$
244,307

 
$
407,022

 
$
935,762

 
$
152,932

 
$
2,338,966

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt
$
166,295

 
$
92,131

 
$
138,869

 
$
102,624

 
$
305,223

 
$
—

 
$
63,999

 
$
869,141

Other liabilities
4,117

 
28,056

 
7,548

 
4,954

 
9,488

 
102,982

 
8,420

 
165,565

Equity
49,618

 
13,740

 
98,569

 
136,729

 
92,311

 
832,780

 
80,513

 
1,304,260

   Total liabilities and equity
$
220,030

 
$
133,927

 
$
244,986

 
$
244,307

 
$
407,022

 
$
935,762

 
$
152,932

 
$
2,338,966

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Company's net investment in unconsolidated joint ventures (1)
$
10,425

 
$
6,100

 
$
14,980

 
$
34,107

 
$
17,307

 
$
177,843

 
$
27,694

 
$
288,456



79

 
December 31, 2016
 
Liberty
 
Kings Hill
 
Liberty
 
Liberty
 
Liberty/
 
Liberty Property
 
 
 
 
 
Venture I, LP
 
Unit Trust
 
Illinois, LP
 
Washington, LP
 
Comcast
 
18th and Arch (2)
 
Other
 
Total
Real estate assets
$
226,313

 
$
137,960

 
$
251,765

 
$
289,627

 
$
495,842

 
$
—

 
$
71,722

 
$
1,473,229

Accumulated depreciation
(42,779
)
 
(26,872
)
 
(51,901
)
 
(44,235
)
 
(125,014
)
 
—

 
(9,702
)
 
(300,503
)
   Real estate assets, net
183,534

 
111,088

 
199,864

 
245,392

 
370,828

 
—

 
62,020

 
1,172,726

Development in progress
6,886

 
—

 
—

 
—


—

 
671,032

 
—

 
677,918

Land held for development
—

 
—

 
31,567

 
—

 
—

 
—

 
42,259

 
73,826

Other assets
23,494

 
9,603

 
19,036

 
18,749

 
48,074

 
52,053

 
29,654

 
200,663

   Total assets
$
213,914

 
$
120,691

 
$
250,467

 
$
264,141

 
$
418,902

 
$
723,085

 
$
133,933

 
$
2,125,133

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt
$
154,386

 
$
83,846

 
$
137,294

 
$
103,667

 
$
309,475

 
$
—

 
$
57,660

 
$
846,328

Other liabilities
6,673

 
24,513

 
8,433

 
4,385

 
9,964

 
95,574

 
17,155

 
166,697

Equity
52,855

 
12,332

 
104,740

 
156,089

 
99,463

 
627,511

 
59,118

 
1,112,108

   Total liabilities and equity
$
213,914

 
$
120,691

 
$
250,467

 
$
264,141

 
$
418,902

 
$
723,085

 
$
133,933

 
$
2,125,133

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Company's net investment in unconsolidated joint ventures (1)
$
11,175

 
$
5,349

 
$
15,339

 
$
38,863

 
$
18,688

 
$
132,952

 
$
22,712

 
$
245,078




Condensed Statements of Operations:
 
Year Ended December 31, 2017
 
Liberty
 
Kings Hill Unit
 
Liberty
 
Liberty
 
Liberty/
 
Liberty Property
 
 
 
 
 
Venture I, LP
 
Trust
 
Illinois, LP
 
Washington, LP
 
Comcast
 
18th & Arch (2)
 
Other (3)
 
Total
Total revenue
$
31,079

 
$
12,976

 
$
23,711

 
$
25,439

 
$
65,372

 
$
16,544

 
$
11,118

 
$
186,239

Operating expense
8,101

 
4,756

 
7,989

 
9,147

 
26,474

 
3,417

 
3,365

 
63,249

Net operating income
22,978

 
8,220

 
15,722

 
16,292

 
38,898

 
13,127

 
7,753

 
122,990

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Interest
(5,801
)
 
(2,329
)
 
(5,882
)
 
(4,065
)
 
(19,411
)
 
—

 
(2,807
)
 
(40,295
)
Depreciation and amortization
(7,598
)
 
(3,238
)
 
(6,918
)
 
(5,926
)
 
(14,485
)
 
(4,077
)
 
(2,124
)
 
(44,366
)
Other income (expense)
(100
)
 
(4
)
 
(71
)
 
(65
)
 
(325
)
 
(547
)
 
15,549

 
14,437

Gain (loss) on sale/impairment
—

 
—

 
—

 
(15,910
)
 
—

 
30

 
—

 
(15,880
)
Net income (loss)
$
9,479

 
$
2,649

 
$
2,851

 
$
(9,674
)
 
$
4,677

 
$
8,533

 
$
18,371

 
$
36,886

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Company's equity in earnings (loss) of unconsolidated joint ventures
$
2,914

 
$
660

 
$
2,118

 
$
(1,941
)
 
$
1,659

 
$
1,782

 
$
9,963

 
$
17,155

 

80

 
Year Ended December 31, 2016
 
Liberty
 
Kings Hill Unit
 
Liberty
 
Liberty
 
Liberty/
 
Liberty Property
 
 
 
 
 
Venture I, LP
 
Trust
 
Illinois, LP
 
Washington, LP
 
Comcast
 
18th & Arch (2)
 
Other (3)
 
Total
Total revenue
$
25,149

 
$
11,926

 
$
26,599

 
$
39,727

 
$
65,587

 
$
—

 
$
9,888

 
$
178,876

Operating expense
6,835

 
4,854

 
9,961

 
15,935

 
26,761

 
280

 
2,801

 
67,427

Net operating income
18,314

 
7,072

 
16,638

 
23,792

 
38,826

 
(280
)
 
7,087

 
111,449

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest
(4,182
)
 
(2,554
)
 
(7,243
)
 
(10,866
)
 
(19,737
)
 
—

 
(2,462
)
 
(47,044
)
Depreciation and amortization
(6,375
)
 
(3,557
)
 
(7,589
)
 
(10,750
)
 
(14,513
)
 
—

 
(1,925
)
 
(44,709
)
Other income (expense)
50

 
(77
)
 
64

 
257

 
(213
)
 
1,270

 
7,123

 
8,474

Gain (loss) on sale/impairment
—

 
—

 
4,068

 
40,943

 
—

 
—

 
(11
)
 
45,000

Net income
$
7,807

 
$
884

 
$
5,938

 
$
43,376

 
$
4,363

 
$
990

 
$
9,812

 
$
73,170

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Company's equity in earnings (loss) of unconsolidated joint ventures
$
2,332

 
$
275

 
$
2,065

 
$
10,857

 
$
1,594

 
$
213

 
$
4,634

 
$
21,970


 
Year Ended December 31, 2015
 
Liberty
 
Kings Hill Unit
 
Liberty
 
Liberty
 
Liberty/
 
Liberty Property
 
 
 
 
 
Venture I, LP
 
Trust
 
Illinois, LP
 
Washington, LP
 
Comcast
 
18th & Arch (2)
 
Other (3)
 
Total
Total revenue
$
23,708

 
$
12,602

 
$
26,085

 
$
71,101

 
$
68,444

 
$
—

 
$
9,387

 
$
211,327

Operating expense
7,977

 
5,261

 
9,303

 
27,384

 
29,692

 
221

 
2,727

 
82,565

Net operating income
15,731

 
7,341

 
16,782

 
43,717

 
38,752

 
(221
)
 
6,660

 
128,762

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest
(5,415
)
 
(6,116
)
 
(8,441
)
 
(17,353
)
 
(19,936
)
 
—

 
(2,248
)
 
(59,509
)
Depreciation and amortization
(6,399
)
 
(3,954
)
 
(7,406
)
 
(20,725
)
 
(14,442
)
 
—

 
(1,840
)
 
(54,766
)
Other income (expense)
68

 
45,604

 
29

 
531

 
(227
)
 
30

 
9,925

 
55,960

Income (loss) from discontinued operations
760

 
—

 
—

 
(56,792
)
 
—

 
—

 
—

 
(56,032
)
Net income (loss)
$
4,745

 
$
42,875

 
$
964

 
$
(50,622
)
 
$
4,147

 
$
(191
)
 
$
12,497

 
$
14,415

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Company's equity in earnings (loss) of unconsolidated joint ventures
$
1,540

 
$
(425
)
 
$
807

 
$
(7,314
)
 
$
2,053

 
$
(29
)
 
$
6,517

 
$
3,149


(1)
Differences between the Company's net investment in unconsolidated joint ventures and its underlying equity in the net assets of the venture are primarily a result of impairments related to the Company's investment in unconsolidated joint ventures, the deferral of gains associated with the sales of properties to joint ventures in which the Company retains an ownership interest and loans made to the joint ventures by the Company. These adjustments have resulted in an aggregate difference reducing the Company's investments in unconsolidated joint ventures by $3.0 million and $1.4 million as of December 31, 2017 and 2016, respectively. Differences between historical cost basis and the basis reflected at the joint venture level (other than loans) are typically depreciated over the life of the related asset.
(2)
Represents the combined results of two joint ventures related to the property at 18th and Arch Streets, Philadelphia.
(3)
Other income/(expense) for this group of joint ventures reflects gains related to the sales of land leasehold interests totaling $16.0 million, $7.1 million and $9.9 million for the years ended December 31, 2017, 2016 and 2015, respectively.

81

8.     DEFERRED FINANCING AND LEASING COSTS
Deferred financing and leasing costs were comprised of the following as of December 31, 2017 and 2016 (in thousands):
 
December 31,
 
2017
 
2016
Deferred financing costs
$
17,044

 
$
11,917

Deferred leasing costs
198,767

 
179,161

Market value intangible
18,802

 
19,451

Origination value intangible
90,116

 
83,485

 
324,729

 
294,014

Accumulated amortization:
 
 
 
Deferred financing costs
11,002

 
10,152

Deferred leasing costs
80,434

 
70,842

Market value intangible
14,324

 
12,625

Origination value intangible
59,719

 
53,357

 
165,479

 
146,976

Deferred financing and leasing costs, net
$
159,250

 
$
147,038

Amortization of deferred financing costs was $3.8 million, $4.0 million and $4.4 million for the years ended December 31, 2017, 2016 and 2015, respectively. Amortization of deferred leasing costs and origination value intangible was $31.6 million, $37.1 million and $44.2 million for the years ended December 31, 2017, 2016 and 2015, respectively.
As of December 31, 2017, the remaining weighted-average amortization period was 3.2 years for market value intangible and 5.5 years for origination value intangible.
The table above includes market value intangible assets. There were also $9.6 million and $4.4 million of unamortized market value intangible liabilities as of December 31, 2017 and 2016, respectively. These liabilities are included as other liabilities in the accompanying consolidated balance sheets of the Company. Amortization of the aggregate asset and liability for market value intangible was an expense of $1.3 million, $1.6 million and $1.9 million for the years ended December 31, 2017, 2016, and 2015, respectively. These amounts were included as a decrease in rental revenue in the accompanying consolidated statements of comprehensive income.
The aggregate amortization of net market value intangible assets and liabilities is a decrease (increase) in rental revenue over the next five years and thereafter as follows (in thousands):
2018
$
242

2019
(265
)
2020
(858
)
2021
(891
)
2022
(762
)
Thereafter
(2,637
)
Total
$
(5,171
)
The aggregate amortization expense for origination value intangible asset for the next five years and thereafter is as follows (in thousands):
2018
$
9,748

2019
6,437

2020
3,664

2021
2,839

2022
2,158

Thereafter
5,551

Total
$
30,397


82

9.     INDEBTEDNESS
Overview
Indebtedness consists of mortgage loans, unsecured notes, and borrowings under the Company's Credit Facilities (see below). The weighted average interest rates for the years ended December 31, 2017, 2016 and 2015 were 3.8%, 4.3% and 4.6%, respectively. Interest costs during the years ended December 31, 2017, 2016 and 2015 in the amount of $21.0 million, $24.1 million and $16.7 million, respectively, were capitalized. Cash paid for interest for the years ended December 31, 2017, 2016 and 2015 was $111.8 million, $142.7 million and $149.6 million, respectively.
The Company is subject to financial covenants contained in some of its debt agreements, the most restrictive of which are detailed below under the heading "Credit Facilities." As of December 31, 2017, the Company was in compliance with all financial and non-financial covenants.
The scheduled principal amortization and maturities of the Company's mortgage loans, unsecured notes outstanding and the Credit Facilities (as defined below) and the related weighted average interest rates at December 31, 2017 are as follows (in thousands, except percentages):
 
 
 
 
 
 
 
 
 
 
 
 
Weighted
 
 
Mortgages
 
 
 
 
 
 
 
Average
 
 
Principal
 
Principal
 
Unsecured
 
Credit
 
 
 
Interest
 
 
Amortization
 
Maturities
 
Notes
 
Facilities
 
Total
 
Rate
2018
 
$
6,565

 
$
26,995

 
$
—

 
$
—

 
$
33,560

 
3.20
%
2019
 
6,504

 
50,043

 
—

 
—

 
56,547

 
3.95
%
2020
 
3,539

 
67,361

 
350,000

 
—

 
420,900

 
4.66
%
2021
 
2,504

 
65,009

 
—

 
358,939

 
426,452

 
2.62
%
2022
 
2,172

 
—

 
400,000

 
—

 
402,172

 
4.13
%
2023
 
2,281

 
—

 
300,000

 
—

 
302,281

 
3.39
%
2024
 
2,395

 
—

 
450,000

 
—

 
452,395

 
4.40
%
2025
 
2,503

 
—

 
400,000

 
—

 
402,503

 
3.76
%
2026
 
2,494

 
1,946

 
400,000

 
—

 
404,440

 
3.26
%
2027 and thereafter
 
19,800

 
—

 
—

 
—

 
19,800

 
4.84
%
Subtotal
 
$
50,757

 
$
211,354

 
$
2,300,000

 
$
358,939

 
$
2,921,050

 
3.77
%
Reconciling items (1)
 
4,982

 
—

 
(16,487
)
 
—

 
(11,505
)
 
 
Total for consolidated balance sheet
 
$
55,739

 
$
211,354

 
$
2,283,513

 
$
358,939

 
$
2,909,545

 
 
(1)
Includes deferred financing costs, premium/discount and market adjustments.
Mortgage Loans and Unsecured Notes
Mortgage loans with maturities ranging from 2018 to 2033 were collateralized by and in some instances cross-collateralized by properties with a net book value of $491.7 million as of December 31, 2017.
The interest rates on $2,562.1 million of mortgage loans (including $96.2 million fixed via a swap arrangement - see Footnote 20 - Derivative Instruments) and unsecured notes are fixed and range from 3.0% to 4.8%. The weighted average remaining term for the mortgage loans and unsecured notes is 5.5 years.

83

Credit Facilities

The Company has maintained an unsecured credit facility throughout 2015, 2016 and 2017. During that period the Company has replaced, restated and amended its credit facility. This activity has resulted in changes to borrowing capacity, due dates, borrowing costs and covenant calculations. As replaced, restated and amended these credit facilities are referred to below as the "Credit Facility." The Credit Facility includes a revolving credit facility for aggregate borrowings of $800 million and a delayed draw term loan facility for aggregate borrowings of $100 million. The interest rate on borrowings under the Credit Facility fluctuates based upon ratings from Moody’s Investors Service, Inc., Standard and Poor’s Ratings Group and Fitch, Inc. Based on the Company's ratings as of December 31, 2017, borrowings under the revolving credit facility currently bear interest at LIBOR plus 0.875% and the delayed draw term loan facility bear interest at LIBOR plus 0.95%. The Credit Facility also contains an annual facility fee, the rate of which is currently 0.15% of the aggregate loan commitments. The Credit Facility provides for the interest rate and facility fee rate to be adjusted up or down based on changes in the credit ratings on the Company's senior unsecured debt. The Credit Facility expires in October 2021 and has two six-month extensions at the Company's option, subject to the payment of a stated fee. The Credit Facility contains a competitive bid option, whereby participating lenders bid on the interest rate to be charged. This feature is available for up to 50% of the amount of the revolving facility. There were $355.0 million borrowings outstanding under the revolving credit facility and no borrowings under the delayed draw term loan facility as of December 31, 2017. As of December 31, 2017, letters of credit to third parties totaling $5.1 million had been issued for the account of the Company under this Credit Facility. The Credit Facility contains financial covenants, certain of which are set forth below:
•
total debt to total assets may not exceed 0.60:1;
•
adjusted earnings before interest, taxes, depreciation and amortization to fixed charges may not be less than 1.50:1;
•
unsecured debt to unencumbered asset value must equal or be less than 60%
•
secured debt to total asset value must equal or be less than 35%; and
•
unencumbered adjusted net operating income to unsecured interest expense must equal or exceed 175%.

In October 2017, the Company entered into a credit agreement for a working capital facility for aggregate borrowings of up to $30 million. This facility has the same maturity date, facility fee and interest rate borrowing terms as the revolving credit facility described above. There were $3.9 million in borrowings outstanding under the working capital facility as of December 31, 2017.

Activity

In September 2016, the Company issued $400 million of 3.25% senior unsecured notes due 2026. The Company used a substantial portion of the net proceeds from these notes to prepay its 5.5% Senior Notes due December 2016 in the amount of $300 million. This prepayment resulted in a $3.8 million loss on debt extinguishment.

In November 2016, the Company used cash generated by the sale of properties (see Note 6) to prepay its 6.625% senior notes due October 2017 in the amount of $296.5 million and its 7.5% medium term notes due January 2018 in the amount of $100.0 million. This prepayment resulted in a $23.6 million loss on debt extinguishment.

In October 2017, the Company replaced its existing $800 million Credit Facility with a new $800 million revolving credit facility and a $100 million delayed draw term loan facility. Additionally, the Company entered into a working capital facility for aggregate borrowings of up to $30 million.
10.     LEASING ACTIVITY
Future minimum rental payments due from tenants under noncancelable operating leases as of December 31, 2017 are as follows (in thousands):
2018
 
$
493,131

2019
 
462,698

2020
 
394,462

2021
 
334,969

2022
 
273,715

Thereafter
 
1,102,030

Total
 
$
3,061,005

In addition to minimum rental payments, most leases require the tenants to pay for their pro rata share of specified operating expenses. These payments are included as operating expense reimbursement in the accompanying consolidated statements of comprehensive income.

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11.     NONCONTROLLING INTEREST - OPERATING PARTNERSHIP / LIMITED PARTNERS' EQUITY - PREFERRED UNITS
As of December 31, 2017, the Company had outstanding the following cumulative preferred units of the Operating Partnership:
ISSUE
 
AMOUNT
 
UNITS
 
LIQUIDATION
PREFERENCE
 
DIVIDEND
RATE
 
 
(in 000’s)
 
 
 
 
Series I-2
 
$
7,537

 
301

 
$25
 
6.25
%
The preferred units are putable at the holder's option at any time and are callable at the Operating Partnership's option after a stated period of time for cash.
Preferred distributions related to the Series I units were $472,000 for each of the years ended December 31, 2017, 2016 and 2015.

12.     SHAREHOLDERS' EQUITY - TRUST
Common Shares
The Company paid to holders of its common shares and holders of its common units distributions of $252.3 million, $285.9 million and $289.3 million during the years ended December 31, 2017, 2016 and 2015, respectively. On a per share basis, the Company paid common share and common unit distributions of $1.675 during the year ended December 31, 2017 and $1.90 during each of the years ended December 31, 2016 and 2015.
The following unaudited table summarizes the taxability of common share distributions (taxability for 2017 is estimated):
 
 
2017
 
2016
 
2015
 
 
 
 
 
 
 
Ordinary dividend
 
$
1.5369

 
$
1.0319

 
$
1.4348

Qualified dividend
 
0.0150

 
0.0013

 
—

Capital gain - 20%
 
0.0482

 
—

 
0.1112

IRC Sec 1250 unrecaptured gain - 25%
 
0.0749

 
0.6176

 
0.3372

Return of capital
 
—

 
0.2492

 
0.0168

Total
 
$
1.6750

 
$
1.9000

 
$
1.9000


The Company's tax return for the year ended December 31, 2017 has not been filed. The taxability information presented for the 2017 distributions is based upon the best available data at the time of this filing. In addition, certain of the Company's prior federal income tax returns may still be subject to examination by various taxing authorities. Because the application of tax laws and regulations is susceptible to varying interpretations, the taxability of distributions being reported here could be changed at a later date as a result of an examination and final determination by such taxing authorities.
Common units
The common units of the Operating Partnership not held by the Trust outstanding as of December 31, 2017 have the same economic characteristics as common shares of the Trust. The 3,520,205 outstanding common units of the Operating Partnership not held by the Trust share proportionately in the net income or loss and in any distributions of the Operating Partnership. The common units of the Operating Partnership not held by the Trust are redeemable at any time at the option of the holder. The Trust, as the sole general partner of the Operating Partnership, may at its option elect to settle the redemption in cash or through the exchange on a one-for-one basis with unregistered common shares of the Trust. The market value of the 3,520,205 outstanding common units based on the closing price of the common shares of the Company at December 31, 2017 was $151.4 million.
No common units were issued in connection with acquisitions during 2017, 2016 or 2015.

85

Dividend Reinvestment and Share Purchase Plan
The Company has a Dividend Reinvestment and Share Purchase Plan under which holders of common shares may elect to automatically reinvest their distributions in additional common shares and may make optional cash payments for additional common shares. The Company may issue additional common shares or repurchase common shares in the open market for purposes of satisfying its obligations under the Dividend Reinvestment and Share Purchase Plan. During the years ended December 31, 2017, 2016, and 2015, 42,366, 56,426, and 1,036,437 common shares, respectively, were issued through the Dividend Reinvestment and Share Purchase Plan. The Company used the proceeds to pay down outstanding borrowings under the Company's existing credit facility and for general corporate purposes.
Continuous Equity Offering
The Company has a continuous equity offering program in place for up to $200 million of equity, of which $125.0 million remains available. The Company did not sell any common shares pursuant to its continuous equity offering program during 2017, 2016 or 2015.
Noncontrolling Interest - Consolidated Joint Ventures
Noncontrolling interest - consolidated joint ventures includes third-party ownership interests in consolidated joint venture investments.
Share Repurchase
In August 2015, the Company’s Board of Trustees authorized a share repurchase plan under which the Company may purchase up to $250 million of the Company’s outstanding common shares. Purchases made pursuant to the program will be made in either the open market or in privately negotiated transactions from time to time as permitted by securities laws and other legal requirements.
During the years ended December 31, 2016 and 2015, the Company purchased an aggregate of 1.4 million and 2.3 million common shares, respectively, for $40.9 million and $71.8 million, respectively, as part of the share repurchase plan. There were no share repurchases under this plan in 2017.
In September 2017, the Company's Board of Trustees re-authorized this plan for up to $250 million of the Company's outstanding shares. No purchases have been made as of December 31, 2017 under this re-authorized plan.

13.     OWNERS' EQUITY - OPERATING PARTNERSHIP

Common Units

General and limited partners' equity - common units relates to limited partnership interests of the Operating Partnership issued in connection with the formation of the Operating Partnership and certain subsequent acquisitions. The common units outstanding as of December 31, 2017 have the same economic characteristics as common shares of the Trust. The 3,520,205 outstanding common units are the limited partners' equity - common units held by persons and entities other than the Trust, the general partner of the Operating Partnership, which holds a number of common units equal to the number of outstanding common shares of beneficial interest. Both the common units held by the Trust and the common units held by persons and entities other than the Trust are counted in the weighted average number of common units outstanding during any given period. The 3,520,205 outstanding common units share proportionately in the net income or loss and in any distributions of the Operating Partnership and are exchangeable into the same number of common shares of the Trust. The market value of the 3,520,205 outstanding common units at December 31, 2017 based on the closing price of the common shares of the Company at December 31, 2017 was $151.4 million.
No common units were issued in connection with acquisitions during 2017, 2016 or 2015.

Dividend Reinvestment and Share Purchase Plan
The Company has a Dividend Reinvestment and Share Purchase Plan under which holders of common shares may elect to automatically reinvest their distributions in additional common shares and may make optional cash payments for additional common shares. The Company may issue additional common shares or repurchase common shares in the open market for purposes of satisfying its obligations under the Dividend Reinvestment and Share Purchase Plan. During the years ended December 31, 2017, 2016, and 2015, 42,366, 56,426, and 1,036,437 common shares, respectively, were issued through the Dividend Reinvestment and Share Purchase Plan. A corresponding number of common units were issued by the Operating Partnership. The Company used the proceeds to pay down outstanding borrowings under the Company's existing credit facility and for general corporate purposes.

86

Noncontrolling Interest - Consolidated Joint Ventures
Noncontrolling interest - consolidated joint ventures includes third-party ownership interests in consolidated joint venture investments.
Share Repurchase
In August 2015, the Company’s Board of Trustees authorized a share repurchase plan under which the Company may purchase up to $250 million of the Company’s outstanding common shares. Purchases made pursuant to the program will be made in either the open market or in privately negotiated transactions from time to time as permitted by securities laws and other legal requirements.
During the years ended December 31, 2016 and 2015, the Company purchased an aggregate of 1.4 million and 2.3 million common shares, respectively, for $40.9 million and $71.8 million, respectively, as part of the share repurchase plan. In connection with these repurchases, an equal number of common units were repurchased by the Operating Partnership from the Trust. There were no share repurchases under this plan in 2017.
In September 2017, the Company's Board of Trustees re-authorized this plan for up to $250 million of the Company's outstanding shares. No purchases have been made as of December 31, 2017 under this re-authorized plan.

14.     EMPLOYEE BENEFIT PLANS
The Company maintains a 401(k) plan for the benefit of its employees. The Company matches the employees' contributions up to 3% of the employees' salary and may also make annual discretionary contributions. Total 401(k) expense recognized by the Company was $755,000, $874,000 and $1,038,000 for the years ended December 31, 2017, 2016 and 2015, respectively.
15.     SHARE-BASED COMPENSATION
Compensation Plans
The Company has a share-based compensation plan (the "Plan") which is utilized to compensate key employees and non-employee trustees. The plan was last amended and restated in 2014. Pursuant to the Plan, grants of stock options, restricted shares and restricted stock units have been made. The Company has authorized the grant of shares and options under the Plan of up to 21.1 million common shares of the Company.
The Company capitalized $1.1 million, $1.2 million and $0.9 million in share-based compensation costs for the years ended December 31, 2017, 2016, and 2015, respectively.
Options
All options granted have a 10-year term and most options vest and are expensed over a 3-year period, with options to purchase up to 20% of the shares exercisable after the first anniversary, up to 50% after the second anniversary and 100% after the third anniversary of the date of grant.
Share-based compensation cost related to options for the years ended December 31, 2017, 2016 and 2015 was $73,000, $0.2 million and $1.5 million, respectively.
The fair value of share option awards is estimated on the date of the grant using the Black-Scholes option valuation model. The following weighted-average assumptions were utilized in calculating the fair value of options granted during the periods indicated:
 
 
Year Ended December 31, 2015
Risk-free interest rate
 
1.8%
Dividend yield
 
5.2%
Historical volatility factor
 
0.24
Weighted-average expected life
 
7 years
The historical volatility factor is based on the Company's historical monthly share prices. The weighted-average expected life is based on the contractual term of the options as well as the historical periods held before exercise.
A summary of the Company's share option activity and related information for the year ended December 31, 2017 follows:

87

 
 
Options (000s)
 
Weighted Average Exercise Price
Outstanding January 1, 2017
 
1,927

 
$
36.02

Exercised
 
(193
)
 
34.72

Forfeited
 
(153
)
 
48.58

Outstanding December 31, 2017
 
1,581

 
$
34.97

Exercisable at December 31, 2017
 
1,417

 
$
34.95

The weighted average fair value of options granted during the year ended December 31, 2015 was $4.11. No new options were granted during the years ended December 31, 2017 and 2016. Exercise prices for options outstanding as of December 31, 2017 ranged from $20.32 to $39.59. At December 31, 2017, the weighted average remaining contractual life of the options outstanding and exercisable was 4.7 years and 4.4 years, respectively.
During the years ended December 31, 2017, 2016 and 2015, the total intrinsic value of share options exercised (the difference between the market price at exercise and the price paid by the individual to exercise the option) was $1.4 million, $3.5 million and $0.4 million, respectively. As of December 31, 2017, 1.4 million options outstanding and exercisable had an exercise price lower than the closing price of the Company's common shares. The aggregate intrinsic value of these options was $11.4 million at that date. The total cash received from the exercise of options for the years ended December 31, 2017, 2016 and 2015 was $6.7 million, $14.4 million and $2.1 million, respectively.
As of December 31, 2017, there were no unrecognized compensation costs related to nonvested options granted under the Plan.
Long Term Incentive Shares ("LTI")
During January 2017, 2016 and 2015, restricted LTI share grants made under the Plan were valued at the grant date fair value, which is the market price of the underlying common shares. LTI share grants after February 2017 were valued at the average closing price of the Company's shares for the trading days included within the 30-calendar-day period prior to and including the date of grant. The shares vest over either a 3-year or 5-year period beginning with the first anniversary of the grant and subject to certain accelerated vesting due to the age and years of service of certain employees.
During 2017, 2016 and 2015, the Company granted restricted stock units to the executive officers pursuant to the Plan.
For the chief executive officer's award, a portion of the restricted stock units will vest up to 272% at the end of a 3-year period. For the other executives, a portion of the restricted stock units will vest up to 200% at the end of a 3-year period. A portion ("First Portion") of the award vests based on how the Company's total return compares to the average total returns of a selected group of peer companies. The grant date fair value of the First Portion was calculated based on a Monte Carlo simulation model and was determined to be 132%, 174% and 110% of the market value of a common share as of the grant date ("Market Value") for the chief executive officer and 105%, 136% and 90% of the Market Value for the other executives for the 2017, 2016 and 2015 grants, respectively. A separate grant was made to the Company's Chief Financial Officer in 2016 when he joined the Company, and the grant date fair value of this award's First Portion was determined to be 160% of the Market Value as of the grant date. The First Portion is amortized over the respective 3-year period subject to certain accelerated vesting due to the age and years of service of certain executive officers.
For the 2015 grant, another portion of the award vests based on the Company's funds from operations. Targets are established for each of the 3 years in the relevant award period. Depending on how each year's performance compares to the projected performance for that year, the restricted stock units are deemed earned and will vest at the end of the award period. The fair value of this portion is based on the market value of a common share as of the grant date and is being amortized to expense during the period from grant date to the vesting dates, adjusting for the expected level of vesting that is anticipated to occur at those dates also subject to certain accelerated vesting provisions as described above. This component of the award was discontinued with the 2016 award.
For the 2016 and 2017 awards, the second portion of the award for the executive officers, other than the Chief Financial Officer's 2016 award, vests at the end of three years based on continued employment. The second portion of the Chief Financial Officer's award vests ratably over three years. For the 2017 award, the second portion of the award for the executive officers vests at the end of three years based on continued employment.

88

The key assumptions used in the Monte Carlo simulations are as follows:
 
Year Ended December 31,
 
2017
 
2016
 
2015
Risk-free interest rate
1.43%
 
1.01%
 
0.99%
Volatility
20%
 
19%
 
17%
The volatility factor is based on the Company's historical daily share prices.
Share-based compensation cost related to restricted LTI share grants for the years ended December 31, 2017, 2016 and 2015 was $11.3 million, $12.2 million and $10.0 million, respectively.
The Company's restricted LTI share activity for the year ended December 31, 2017 is as follows:
 
 
Shares (000s)
 
Weighted Avg. Grant Date Fair value
Nonvested at January 1, 2017
 
812

 
$
34.71

Granted
 
310

 
39.93

Vested
 
(330
)
 
35.57

Forfeited
 
(17
)
 
35.07

Nonvested at December 31, 2017
 
775

 
$
36.43

The weighted average fair value of restricted shares granted during the years ended December 31, 2017, 2016 and 2015 was $39.93, $32.48 and $35.14 per share, respectively. As of December 31, 2017, there was $7.6 million of total unrecognized compensation cost related to nonvested shares granted under the Plan. That cost is expected to be recognized over a weighted average period of 1.0 year. The total fair value of restricted shares vested during the years ended December 31, 2017, 2016 and 2015 was $11.7 million, $9.0 million and $7.4 million, respectively.
Bonus Shares
During the years ended December 31, 2017, 2016 and 2015, the Plan provided that employees of the Company could elect to receive bonuses or commissions in the form of common shares in lieu of cash ("Bonus Shares"). By making such election, the employee received shares equal to 120% of the cash value of the bonus or commission, for up to $50,000 of such bonus or commission, and 100% thereof for amounts exceeding $50,000, in each case reduced by applicable withholding tax. Bonus Shares issued for the years ended December 31, 2017, 2016 and 2015 were 51,416, 140,376 and 111,700, respectively. Share-based compensation cost related to Bonus Shares for the years ended December 31, 2017, 2016 and 2015 was $2.0 million, $4.7 million and $3.9 million, respectively.
Profit Sharing
The Plan provides that employees of the Company, below the officer level, may receive up to 5% of base pay in the form of cash contributions to an investment account depending on Company performance. Compensation cost related to the profit sharing plan for the years ended December 31, 2017, 2016 and 2015 was $730,000, $669,000 and $965,000, respectively.
Remaining Reserved Common Shares under the Plan
An additional 5,049,687, 5,264,285 and 5,574,605 common shares were reserved for issuance for future grants under the Plan at December 31, 2017, 2016 and 2015, respectively.
Employee Share Purchase Plan
The Company registered 750,000 common shares under the Securities Act of 1933, as amended, in connection with an employee share purchase plan ("ESPP"). The ESPP enables eligible employees to purchase shares of the Company, in amounts up to 10% of the employee's salary, at a 15% discount to fair market value. There were 10,410, 11,022 and 13,127 shares issued, in accordance with the ESPP, during the years ended December 31, 2017, 2016 and 2015, respectively. Share-based compensation cost related to the ESPP for the years ended December 31, 2017, 2016 and 2015 was $80,000, $122,000 and $62,000, respectively.

89

16.     COMMITMENTS AND CONTINGENCIES
Environmental Matters
Substantially all of the Company's properties and land were subject to Phase I Environmental Assessments and when appropriate Phase II Environmental Assessments (collectively, the “Environmental Assessments”) obtained in contemplation of their acquisition by the Company or obtained by predecessor owners prior to the sale of the property or land to the Company. The Environmental Assessments did not reveal, nor is the Company aware of, any non-compliance with environmental laws, environmental liability or other environmental claim that the Company believes would likely have a material adverse effect on the Company.
Operating Ground Lease Agreements
Future minimum rental payments under the terms of all non-cancelable operating ground leases under which the Company is the lessee, as of December 31, 2017, were as follows (in thousands): 
Year
Amount
2018
$
1,771

2019
1,766

2020
1,766

2021
1,766

2022
1,720

2023 though 2067
33,160

Total
$
41,949

Operating ground lease expense incurred by the Company during the years December 31, 2017, 2016 and 2015 totaled $102,000, $1.0 million and $815,000, respectively.
Legal Matters
From time to time, the Company is a party to a variety of legal proceedings, claims and assessments arising in the normal course of business. The Company believes that as of December 31, 2017 there were no legal proceedings, claims or assessments expected to have a material adverse effect on the Company’s business or financial statements.
Other
As of December 31, 2017, the Company had letter of credit obligations of $5.1 million related to development requirements. The Company believes that it is remote that there will be a draw upon these letter of credit obligations.
As of December 31, 2017, the Company had 20 buildings under development. These buildings are expected to contain a total of 5.6 million square feet of leaseable space and represent an anticipated aggregate investment of $526.7 million. At December 31, 2017, Development in Progress totaled $378.5 million. In addition, as of December 31, 2017, the Company had invested $13.9 million in deferred leasing costs related to these development buildings.
As of December 31, 2017, the Company was committed to $10.5 million in improvements on certain buildings and land parcels.
As of December 31, 2017, the Company was obligated to pay for tenant improvements not yet completed for a maximum of $18.6 million.
As of December 31, 2017, the Company was committed to $60.9 million in future land purchases. The Company expects to complete $32.9 million in future land purchases during the year ended December 31, 2018, with the remaining $28.0 million complete during 2019. In addition, pursuant to a 140,000 square foot lease that the Company has executed, the Company has agreed to start the development of a 140,000 square foot industrial building.
Unconsolidated joint ventures in which the Company holds an interest, and, in another case, an unrelated third party, have engaged the Company as the developer of their development properties pursuant to development agreements. Under these agreements, the Company agrees, in consideration for a development fee, to be responsible for all aspects of the development of the properties and to guarantee the timely lien-free completion of construction of the properties as well as the payment, subject to certain exceptions, of any cost overruns incurred in the development of the properties. To mitigate its risk, in each case, the Company entered into guaranteed maximum price contracts with a third party contractor to construct the properties. The Company believes

90

it has applied reasonable estimates and judgments in determining the amount of estimated development costs for the properties. As discussed in Note 7, however, the Company has recently been notified that there are additional construction costs in connection with one of the development properties held in unconsolidated joint ventures in which it holds an interest. Until such time as the Company receives appropriate information concerning the amount and nature of these additional costs and has an opportunity to investigate them, it is not possible to estimate the amount of possible additional costs, if any, that the Company may incur in connection with its guarantee beyond the obligations of the contractor under its guaranteed maximum price contracts.
As of December 31, 2017, the Company was developing three buildings for its unconsolidated joint ventures which represented an anticipated aggregate investment by the joint ventures of $375.2 million. As of December 31, 2017, the Company was also committed to approximately $176.9 million in costs related to its agreement to develop, on a fee basis, an office building and infrastructure improvements for American Water Works in Camden, New Jersey. As of December 31, 2017, $102.9 million of these costs had been incurred.

The Company maintains cash and cash equivalents at financial institutions. The combined account balances at each institution typically exceed FDIC insurance coverage and, as a result, there is a concentration of credit risk related to amounts on deposit in excess of FDIC insurance coverage. The Company believes the risk is not significant.
17.     QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

A summary of quarterly results of operations for the years ended December 31, 2017 and 2016 follows (in thousands, except for per share data):
 
 
QUARTER ENDED
 
 
DEC. 31,
 
SEPT. 30,
 
JUNE 30,
 
MAR. 31,
 
DEC. 31,
 
SEPT. 30,
 
JUNE 30,
 
MAR. 31,
 
 
2017
 
2017
 
2017
 
2017
 
2016
 
2016
 
2016
 
2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating revenue
 
$
192,803

 
$
184,511

 
$
174,888

 
$
167,576

 
$
169,733

 
$
181,967

 
$
178,033

 
$
180,965

Income from continuing operations
 
114,463

 
63,968

 
50,510

 
42,125

 
197,038

 
51,675

 
48,815

 
56,626

Discontinued operations
 
17,361

 
(2,809
)
 
2,308

 
2,119

 
3,253

 
4,059

 
2,242

 
2,437

Net income
 
131,824

 
61,159

 
52,818

 
44,244

 
200,291

 
55,734

 
51,057

 
59,063

Income per common share - basic (1)
 
0.87

 
0.41

 
0.35

 
0.29

 
1.33

 
0.37

 
0.34

 
0.39

Income per common share - diluted (1)
 
0.87

 
0.40

 
0.35

 
0.29

 
1.33

 
0.37

 
0.34

 
0.39


(1)
The sum of quarterly financial data may vary from the annual data due to rounding.
18.     SEGMENT INFORMATION

The Company owns and operates industrial properties nationally and owns and operates office properties in a focused group of office markets. Additionally, the Company owns certain assets in the United Kingdom. At December 31, 2017, the Company's reportable segments were based on the Company's method of internal reporting and were as follows:

•Carolinas/Richmond;
•Chicago/Minneapolis;
•Florida;
•Houston;
•Lehigh/Central PA;
•Philadelphia;
•Southeastern PA; and
•United Kingdom.


91

Certain other segments are aggregated into an "Other" category which includes the reportable segments: Arizona; Atlanta; Cincinnati/Columbus/Indianapolis; Dallas; DC Metro; New Jersey; and Southern California.
Comparative prior periods have been restated to reflect current segment disclosures.

The Company evaluates the performance of its reportable segments based on net operating income. Net operating income includes operating revenue from external customers, real estate taxes, amortization of lease transaction costs and other operating expenses which relate directly to the management and operation of the assets within each reportable segment.

The Company's accounting policies for the segments are the same as those used in the Company's consolidated financial statements.
There are no material inter-segment transactions.

92

The operating information by reportable segment is as follows (in thousands):
 
 
 
 Year ended
 
 
 
 December 31,
 
 
 
2017
 
2016
 
2015
Operating revenue
 
 
 
 
 
 
 
Carolinas/Richmond
 
$
74,158

 
$
66,270

 
$
71,950

 
Chicago/Minneapolis
 
64,706

 
84,028

 
85,363

 
Florida
 
59,526

 
99,733

 
127,184

 
Houston
 
59,957

 
59,582

 
54,031

 
Lehigh/Central PA
 
163,026

 
141,046

 
133,473

 
Philadelphia
 
45,504

 
41,838

 
40,490

 
Southeastern PA
 
59,762

 
91,656

 
147,712

 
United Kingdom
 
13,917

 
13,376

 
15,135

 
Other
 
130,724

 
136,521

 
133,345

Segment-level operating revenue
 
671,280

 
734,050

 
808,683

 
 
 
 
 
 
 
 
 Reconciliation to total operating revenues
 
 
 
 
 
 
 
 Development service fee income (1)
 
82,673

 
12,941

 
—

 
 Discontinued operations
 
(34,035
)
 
(36,010
)
 
(34,813
)
 
 Other
 
(140
)
 
(283
)
 
90

 Total operating revenue
 
$
719,778

 
$
710,698

 
$
773,960

 
 
 
 
 
 
 
 
 Net operating income
 
 
 
 
 
 
 
 
Carolinas/Richmond
 
$
53,132

 
$
46,170

 
$
47,849

 
Chicago/Minneapolis
 
39,231

 
45,258

 
44,963

 
Florida
 
39,850

 
62,177

 
77,283

 
Houston
 
32,300

 
32,499

 
31,159

 
Lehigh/Central PA
 
119,304

 
102,209

 
94,972

 
Philadelphia
 
35,279

 
30,862

 
29,679

 
Southeastern PA
 
35,641

 
53,947

 
80,458

 
United Kingdom
 
7,657

 
6,390

 
10,486

 
Other
 
86,127

 
89,274

 
87,925

Segment-level net operating income
 
448,521

 
468,786

 
504,774

 
 
 
 
 
 
 
 
 Reconciliation to income from continuing operations
 
 
 
 
 
 
 
 Interest expense (2)
 
(91,096
)
 
(115,077
)
 
(135,779
)
 
 Loss on debt extinguishment
 
(49
)
 
(27,099
)
 
—

 
 Depreciation/amortization expense (2) (3)
 
(132,613
)
 
(152,556
)
 
(166,500
)
 
 Impairment - real estate assets (2)
 
(10,632
)
 
(3,879
)
 
(18,244
)
 
 Gain on property dispositions
 
100,387

 
219,270

 
100,314

 
 Equity in earnings of unconsolidated joint ventures
 
17,155

 
21,970

 
3,149

 
 General and administrative expense (2) (3)
 
(45,191
)
 
(44,341
)
 
(43,924
)
 
 Expensed pursuit costs
 
(5,006
)
 
(1,016
)
 
(605
)
 
 Discontinued operations excluding gain on property dispositions
 
(4,401
)
 
(11,991
)
 
(10,565
)
 
 Income taxes (3)
 
(240
)
 
47

 
(2,351
)
 
 Other
 
(5,769
)
 
40

 
5,090

 Income from continuing operations
 
$
271,066

 
$
354,154

 
$
235,359

(1) Prior to the fourth quarter of 2016, development service fee income had been classified as other income and development service fee expense had been classified as general and administrative expense. See Note 2.
(2) Includes activity on discontinued operations.
(3) Excludes costs which are included in determining segment-level net operating income.

93

The amount of depreciation and amortization expense related to tenant improvement and lease transaction costs within each reporting segment for the net operating income calculation is as follows (in thousands):

 
 
 Year ended
 
 
 December 31,
 
 
2017
 
2016
 
2015
Carolinas/Richmond
 
$
5,061

 
$
4,944

 
$
5,307

Chicago/Minneapolis
 
4,306

 
5,858

 
6,147

Florida
 
4,084

 
6,605

 
9,407

Houston
 
5,071

 
4,713

 
4,466

Lehigh/Central PA
 
14,371

 
12,262

 
11,641

Philadelphia
 
2,754

 
2,706

 
2,220

Southeastern PA
 
3,582

 
6,134

 
12,346

United Kingdom
 
339

 
259

 
292

Other
 
9,843

 
9,792

 
8,249

Depreciation and amortization of tenant improvement and lease transaction costs
 
$
49,411

 
$
53,273

 
$
60,075


The Company's operating revenue by product type and by reportable segment for the years ended December 31, 2017, 2016 and 2015 is as follows (in thousands):

 
Year Ended
 
December 31, 2017
 
December 31, 2016
 
December 31, 2015
 
Industrial
 
Office
 
Total
 
Industrial
 
Office
 
Total
 
Industrial
 
Office
 
Total
Carolinas/Richmond
$
74,158

 
$
—

 
$
74,158

 
$
66,270

 
$
—

 
$
66,270

 
$
62,075

 
$
9,875

 
$
71,950

Chicago/Minneapolis
60,826

 
3,880

 
64,706

 
65,007

 
19,021

 
84,028

 
62,152

 
23,211

 
85,363

Florida
56,923

 
2,603

 
59,526

 
66,028

 
33,705

 
99,733

 
67,149

 
60,035

 
127,184

Houston
58,606

 
1,351

 
59,957

 
58,370

 
1,212

 
59,582

 
53,802

 
229

 
54,031

Lehigh/Central PA
163,026

 
—

 
163,026

 
138,766

 
2,280

 
141,046

 
131,168

 
2,305

 
133,473

Philadelphia
11,914

 
33,590

 
45,504

 
12,842

 
28,996

 
41,838

 
11,809

 
28,681

 
40,490

Southeastern PA
8,925

 
50,837

 
59,762

 
19,448

 
72,208

 
91,656

 
28,457

 
119,255

 
147,712

United Kingdom
10,369

 
3,548

 
13,917

 
10,775

 
2,601

 
13,376

 
12,104

 
3,031

 
15,135

Other
102,457

 
28,267

 
130,724

 
91,762

 
44,759

 
136,521

 
86,180

 
47,165

 
133,345

 
$
547,204

 
$
124,076

 
671,280

 
$
529,268

 
$
204,782

 
734,050

 
$
514,896

 
$
293,787

 
808,683

Reconciliation to total operating revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Development service fee income
 
 
 
82,673

 
 
 
 
 
12,941

 
 
 
 
 
—

   Discontinued operations
 
 
 
 
(34,035
)
 
 
 
 
 
(36,010
)
 
 
 
 
 
(34,813
)
   Corporate other
 
 
 
 
(140
)
 
 
 
 
 
(283
)
 
 
 
 
 
90

Total operating revenue
 
 
 
 
$
719,778

 
 
 
 
 
$
710,698

 
 
 
 
 
$
773,960




94

The Company's total assets by reportable segment as of December 31, 2017 and 2016 is as follows (in thousands):

 
As of December 31,
 
2017
 
2016
Carolinas/Richmond
$
543,922

 
$
503,920

Chicago/Minneapolis
615,186

 
616,298

Florida
533,861

 
514,431

Houston
498,584

 
530,438

Lehigh/Central PA
1,210,746

 
1,311,815

Philadelphia
665,843

 
557,510

Southeastern PA
241,128

 
262,155

United Kingdom
251,824

 
189,766

Other
1,807,653

 
1,403,431

Segment-level total assets
6,368,747

 
5,889,764

Corporate Other
71,010

 
103,049

Total assets
$
6,439,757

 
$
5,992,813


The Company's real estate assets by reportable segment as of December 31, 2017 and 2016 is as follows (in thousands):
 
As of December 31,
 
2017
 
2016
Carolinas/Richmond
$
491,634

 
$
482,736

Chicago/Minneapolis
557,776

 
565,062

Florida
483,315

 
476,046

Houston
456,591

 
463,739

Lehigh/Central PA
1,118,802

 
1,234,091

Philadelphia
277,153

 
332,933

Southeastern PA
19,352

 
123,093

United Kingdom
191,542

 
149,082

Other
1,769,705

 
1,288,208

Total real estate assets
$
5,365,870

 
$
5,114,990


The Company incurred the following costs related to its long-lived assets for the years ended December 31, 2017, 2016 and 2015 (in thousands):
 
 
Year Ended December 31,
 
 
2017
 
2016
 
2015
Costs incurred on long-lived assets
 
 
 
 
 
 
Carolinas/Richmond
$
31,958

 
$
51,647

 
$
31,175

 
Chicago/Minneapolis
14,246

 
29,317

 
54,742

 
Florida
23,832

 
38,312

 
43,594

 
Houston
17,522

 
25,831

 
98,559

 
Lehigh/Central PA
89,304

 
176,386

 
165,319

 
Philadelphia
30,685

 
57,691

 
34,122

 
Southeastern PA
9,737

 
4,824

 
5,700

 
United Kingdom
10,501

 
11,492

 
12,960

 
Other
404,253

 
107,500

 
125,412

Total costs incurred on long-lived assets
$
632,038

 
$
503,000

 
$
571,583


19.     ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS
In 2017, the Company initiated a strategic shift whereby it plans to divest of its remaining suburban office properties. The Company determined that the strategic shift would have a major effect on its operations and financial results. As such, properties sold or met the criteria to be classified as held for sale within the new corporate strategy were classified within discontinued operations. Consistent with the held for sale criteria these properties are expected to be sold within one year. As the result of the classification

95

within discontinued operations, the in-service assets and liabilities of this portfolio are required to be presented as held for sale for all prior periods presented in our Consolidated Balance Sheets. Operating results pertaining to these properties were reclassified to discontinued operations for all prior periods presented in our Consolidated Statements of Comprehensive Income.
The following table illustrates the number of sold or held-for-sale properties included in, or excluded from, discontinued operations in this report:
 
 
Held for Sale as of December 31, 2017
 
Sold during the year ended December 31, 2017
 
Total
Properties included in discontinued operations
 
25

 
2

 
27

Properties included in continuing operations
 
2

 
8

 
10

Properties sold or classified as held for sale
 
27

 
10

 
37

The 25 properties held for sale in discontinued operations as of December 31, 2017 and one property sold during the year ended December 31, 2017 were located in the Company's Southeastern PA reportable segment. The remaining property in discontinued operations that was sold during the year ended December 31, 2017 was located in the Company's Houston reportable segment.
A summary of the results of operations for the properties classified as discontinued operations through the respective disposition dates is as follows (in thousands):
 
 
For the Year Ended
 
 
 
December 31, 2017
 
December 31, 2016
 
December 31, 2015
 
Revenues
 
$
34,035

 
$
36,010

 
$
34,813

 
Operating expenses
 
(14,014
)
 
(12,989
)
 
(12,309
)
 
Depreciation and amortization
 
(6,753
)
 
(8,385
)
 
(8,711
)
 
Impairment charges - real estate assets
 
(6,686
)
 
—

 
(1,029
)
 
Interest and other income
 
58

 
133

 
23

 
Interest expense
 
(2,239
)
 
(2,778
)
 
(2,222
)
 
Net income before gain on property dispositions
 
4,401

 
11,991

 
10,565

 
Gain on property dispositions
 
14,578

 
—

 
—

 
Net income
 
18,979

 
11,991

 
10,565

 
Noncontrolling interest - operating partnership
 
(444
)
 
(282
)
 
(246
)
 
Income available to common shareholders
 
$
18,535

 
$
11,709

 
$
10,319

 

Interest expense has been allocated to discontinued operations. The allocation of interest expense to discontinued operations was based on the ratio of net assets sold and held for sale (without continuing involvement) to the sum of total net assets plus consolidated debt.
Capital expenditures on a cash basis for the year ended December 31, 2017, 2016 and 2015 were $8.1 million, $1.5 million and $9.9 million, respectively, related to properties within discontinued operations.
In October 2016, the Company completed the sale of a portfolio of 108 properties totaling approximately 7.6 million square feet and 26.7 acres of land for $969 million for a net gain of $179.1 million. As this sale did not represent a strategic shift for the Company, it is not classified as discontinued operations
A summary of net income (excluding gain on sale) related to this portfolio is as follows (in thousands):

 
 
Year Ended December 31,
 
 
2016
 
2015
Net income
 
$
48,609

 
$
58,792

Noncontrolling interest - operating partnership
 
(1,142
)
 
(1,370
)
Income available to common shareholders
 
$
47,467

 
$
57,422



96

Assets Held for Sale
As of December 31, 2017, 27 operating properties were classified as held for sale, of which 25 operating properties met the criteria to be classified within discontinued operations. Also as of December 31, 2017, two operating properties and 9 acres of land held for development were classified as held for sale and classified within continuing operations.
The following table illustrates aggregate balance sheet information for all held-for-sale properties (in thousands):
 
December 31, 2017
 
December 31, 2016
 
Included in Continuing Operations
 
Included in Discontinued Operations
 
Total
 
Included in Continuing Operations
 
Included in Discontinued Operations
 
Total
Land and land improvements
$
3,476

 
$
25,848

 
$
29,324

 
$
—

 
$
34,406

 
$
34,406

Buildings and improvements
80,738

 
163,195

 
243,933

 
—

 
217,833

 
217,833

Land held for development
863

 
—

 
863

 
4,548

 
—

 
4,548

Accumulated depreciation
(11,785
)
 
(98,346
)
 
(110,131
)
 
—

 
(106,933
)
 
(106,933
)
Deferred financing and leasing costs, net
2,210

 
3,502

 
5,712

 
—

 
6,355

 
6,355

Other assets
5,137

 
7,390

 
12,527

 
—

 
8,679

 
8,679

Total assets held for sale
$
80,639

 
$
101,589

 
$
182,228

 
$
4,548

 
$
160,340

 
$
164,888

 
 
 
 
 
 
 
 
 
 
 
 
Total liabilities held for sale
$
1,153

 
$
3,398

 
$
4,551

 
$
—

 
$
8,079

 
$
8,079


In January 2018, 14 properties totaling 641,000 square feet which were held for sale and classified in discontinued operation in the Company's Southeastern PA segment as of December 31, 2017 were sold for $76.9 million.
Asset Impairment
The Company disposes of and anticipates the potential disposition of certain properties prior to the end of their remaining useful lives. During the years ended December 31, 2017, 2016 and 2015, the Company recognized impairment losses of $10.6 million, $3.9 million and $18.2 million, respectively. The impairment losses are for operating properties or land parcels and were in the reportable segments and for the amounts as indicated below (in thousands):
 
 
Year Ended December 31,
Reportable Segment
 
2017
 
2016
 
2015
Carolinas/Richmond
 
$
—

 
$
—

 
$
13,755

Houston
 
10,632

 
—

 
—

Chicago/Minneapolis
 
—

 
3,879

 
—

Southeastern PA
 
—

 
—

 
2,328

Other
 
—

 
—

 
2,161

Total
 
$
10,632

 
$
3,879

 
$
18,244


For the year ended December 31, 2017, $6.7 million in impairments related to properties sold were included in discontinued operations and $3.9 million in impairment - real estate assets, related to land held for development, in the Company's consolidated statements of comprehensive income. For the year ended December 31, 2015, $1.0 million in impairments related to properties sold were included in discontinued operations in the Company's consolidated statements of comprehensive income and $1.0 million in impairment - real estate assets, related to land held for development, in the Company's consolidated statements of comprehensive income. The Company determined these impairments based on third party offer prices and quoted offer prices for comparable transactions which are Level 2 and Level 3 inputs, respectively, according to the fair value hierarchy established in ASC 820. These measurements have occurred throughout the respective periods as circumstances arise, and the resulting estimates of fair value are not necessarily reflective of measurements at the period’s end. The Company has evaluated each of its properties and land held for development and has determined that there were no additional valuation adjustments necessary at December 31, 2017. The Company applied reasonable estimates and judgments in determining the level of impairments recognized. Should external or internal circumstances change requiring the need to shorten the holding periods or adjust the estimated future cash flows of the Company’s assets, the Company could be required to record impairment charges in the future.

97

20.     DERIVATIVE INSTRUMENTS
The Company borrows funds at a combination of fixed and variable rates. Borrowings under the Company's credit facilities and certain bank mortgage loans bear interest at variable rates. Our long-term debt typically bears interest at fixed rates. The Company's interest rate risk management objectives are to limit generally the impact of interest rate changes on earnings and cash flows and to lower the Company's overall borrowing costs. To achieve these objectives, from time to time, the Company enters into interest rate hedge contracts such as collars, swaps, caps and treasury lock agreements in order to mitigate our interest rate risk with respect to various debt instruments. The Company generally does not hold or issue these derivative contracts for trading or speculative purposes. The interest rate on all of the Company's variable rate debt is generally adjusted at one or three month intervals, subject to settlements under interest rate hedge contracts.
Interest rate swaps involve the receipt of variable-rate amounts from a counterparty in exchange for making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive loss (for the Trust) and general partner's equity and limited partners' equity - common units (for the Operating Partnership) and is subsequently reclassified into interest expense in the period that the hedged forecasted transaction affects earnings.
The Company determines the fair value of its interest rate swaps by using the standard methodology of netting discounted future fixed cash payments with the discounted expected variable cash receipts. These variable cash receipts of interest rate swaps are based on expectations of future LIBOR interest rates (forward curves) estimated by observing market LIBOR interest rate curves. This is a Level 2 fair value calculation. Also, credit valuation adjustments are factored into the fair value calculations to account for potential nonperformance risk. These credit valuation adjustments were concluded to be not significant inputs for the fair value calculations for the periods presented.
The Company holds an interest in three interest rate swap contracts (“Swaps”) that eliminate the impact of changes in interest rates on the payments required under variable rate mortgages that were also assumed. The Swaps had aggregate notional amounts of $96.2 million and $98.9 million at December 31, 2017 and 2016, respectively, and expire at various dates between 2018 and 2020.
The Company accounts for the effective portion of changes in the fair value of a derivative in accumulated other comprehensive loss and subsequently reclassifies the effective portion to earnings over the term that the hedged transaction affects earnings. The Company accounts for the ineffective portion of changes in the fair value of a derivative directly in earnings.
The following table presents the location in the financial statements of the gains or losses recognized related to the Company’s cash flow hedges for the year ended December 31, 2017, 2016, and 2015 (in thousands):
 
Year Ended
 
December 31, 2017
 
December 31, 2016
 
December 31, 2015
Amount of gain (loss) related to the effective portion recognized in other comprehensive income (loss)
$
176

 
$
(648
)
 
$
(1,884
)
Amount of loss related to the effective portion reclassified to interest expense
$
(453
)
 
$
(1,069
)
 
$
(1,396
)
Amount of gain (loss) related to the ineffective portion recognized in interest expense
$
168

 
$
(48
)
 
$
(91
)
The fair value of the interest rate swaps in the amount of $2.2 million and $4.9 million as of December 31, 2017 and 2016, respectively, is included in other liabilities in the accompanying consolidated balance sheets. The Company estimates that $77,000 will be reclassified from accumulated other comprehensive loss as a decrease to interest expense over the next twelve months.
The Company has agreements with its derivative counterparties that contain a provision whereby if the Company defaults on any of its indebtedness, including defaults where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its derivative obligations. If the Company were to breach any of the contractual provisions of the derivative contracts, it would be required to settle its obligations under the agreements at their termination value including accrued interest for approximately $2.3 million.

98

21. SUPPLEMENTAL DISCLOSURE TO CONSOLIDATED STATEMENT OF CASH FLOWS
The following are supplemental disclosures to the statements of cash flows for the years ended December 31, 2017, 2016 and 2015 (amounts in thousands):
 
 
2017
 
2016
 
2015
Write-off of fully depreciated/amortized property and deferred costs - properties included in continuing operations
$
16,568

 
$
23,331

 
$
27,202

Write-off of fully depreciated/amortized property and deferred costs - properties included in discontinued operations
15,368

 
18,075

 
15,137

Write-off of depreciated property and deferred costs due to sale/demolition - properties included in continuing operations
15,760

 
461,480

 
252,017

Write-off of depreciated property and deferred costs due to sale/demolition - properties included in discontinued operations
17,335

 
—

 
—

Write-off of costs related to early debt extinguishment
—

 
219

 
—

Changes in accrued development capital expenditures - properties included in continuing operations
12,341

 
(11,274
)
 
12,935

Changes in accrued development capital expenditures - properties included in discontinued operations
—

 
(94
)
 
(971
)
Unrealized gain (loss) on cash flow hedge
605

 
410

 
(488
)
Capitalized equity-based compensation
1,096

 
1,221

 
876

Redemption of noncontrolling interests - common units
152

 
132

 
—


Amounts paid in cash for deferred leasing costs incurred in connection with signed leases with tenants are paid in conjunction with improving (acquiring) property, plant and equipment. Such costs are not contained within net real estate. However, they are integral to the completion of a tenant lease and ultimately are related to the improvement and thus the value of the Company’s property, plant and equipment. They are therefore included in investing activities in the Company’s consolidated statements of cash flows.


99

Liberty Property Trust and Liberty Property Limited Partnership
Schedule II (in thousands)

The following table details the activity for the allowance for doubtful accounts.
 
Balance at December 31, 2016
 
Additions
 
Deductions
 
Balance at December 31, 2017
Allowance for Doubtful Accounts - Straight Line Rent
$
530

 
$
1,729

 
$
(1,710
)
 
$
549

Allowance for Doubtful Accounts - Accounts Receivable
6,802

 
7,248

 
(7,987
)
 
6,063

Total
$
7,332

 
$
8,977

 
$
(9,697
)
 
$
6,612

 
 
 
 
 
 
 
 
 
Balance at December 31, 2015
 
Additions
 
Deductions
 
Balance at December 31, 2016
Allowance for Doubtful Accounts - Straight Line Rent
$
581

 
$
824

 
$
(875
)
 
$
530

Allowance for Doubtful Accounts - Accounts Receivable
6,317

 
4,950

 
(4,465
)
 
6,802

Total
$
6,898

 
$
5,774

 
$
(5,340
)
 
$
7,332

 
 
 
 
 
 
 
 
 
Balance at December 31, 2014
 
Additions
 
Deductions
 
Balance at December 31, 2015
Allowance for Doubtful Accounts - Straight Line Rent
$
910

 
$
1,233

 
$
(1,562
)
 
$
581

Allowance for Doubtful Accounts - Accounts Receivable
6,490

 
4,246

 
(4,419
)
 
6,317

Total
$
7,400

 
$
5,479

 
$
(5,981
)
 
$
6,898





100

LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances (1)
 
 Land
 
 Building
 
 Costs Capitalized Subsequent to Acquisition (2)
 
Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2017
 
 
 Accumulated Depreciation 12/31/2017
 
Date of Construction or Acquisition
 
Depreciable life (years)
 OPERATING PROPERTIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1467 Perryman Road
Aberdeen, MD
 
$
—


$
12,052,635

 
$
—

 
$
35,353,684

 
$
12,334,030

 
 
$
35,072,289

 
$
47,406,319

 
 
$
3,266,781

 
2014
 
5 - 40
1501 Perryman Road
Aberdeen, MD
 
—

  
5,813,324

 
18,874,059

 
6,381,862

 
5,816,839

 
 
25,252,406

 
31,069,245

 
 
7,510,366

 
2005
 
5 - 40
869 S Route 53
Addison, IL
 
—

  
1,194,223

 
4,201,881

 
85,733

 
1,194,223

 
 
4,287,615

 
5,481,838

 
 
553,871

 
2013
 
5 - 40
901 S Route 53
Addison, IL
 
—

  
2,055,066

 
5,984,093

 
880,440

 
2,055,066

 
 
6,864,533

 
8,919,599

 
 
964,359

 
2013
 
5 - 40
8620 Congdon Hill Drive
Alburtis, PA

—

  
38,328,000


—


36,639,297


38,328,000



36,639,297


74,967,297



1,625,979


2015

5 - 40
200 Boulder Drive
Allentown, PA
 
—

  
4,722,683

 
18,922,645

 
967,059

 
4,722,683

 
 
19,889,704

 
24,612,387

 
 
6,690,719

 
2004
 
5 - 40
250 Boulder Drive
Allentown, PA
 
—

  
3,599,936

 
12,099,145

 
2,200,244

 
3,717,733

 
 
14,181,592

 
17,899,325

 
 
5,557,571

 
2004
 
5 - 40
400 Nestle Way
Allentown, PA
 
—

  
8,065,500

 
—

 
29,708,283

 
8,184,096

 
 
29,589,687

 
37,773,783

 
 
15,721,633

 
1997
 
5 - 40
650 Boulder Drive
Allentown, PA
 
—

  
5,208,248

 
—

 
32,432,054

 
9,961,788

 
 
27,678,514

 
37,640,302

 
 
10,591,886

 
2002
 
5 - 40
651 Boulder Drive
Allentown, PA
 
—

  
4,308,646

 
—

 
17,846,386

 
4,308,646

 
 
17,846,386

 
22,155,032

 
 
9,669,809

 
2000
 
5 - 40
700 Nestle Way
Allentown, PA
 
—

  
3,473,120

 
—

 
20,307,750

 
4,174,970

 
 
19,605,900

 
23,780,870

 
 
11,018,939

 
1998
 
5 - 40
705 Boulder Drive
Allentown, PA
 
—

  
10,594,027

 
—

 
28,815,711

 
10,596,767

 
 
28,812,971

 
39,409,738

 
 
15,981,798

 
2001
 
5 - 40
7165 Ambassador Drive
Allentown, PA
 
—

  
792,999

 
—

 
4,694,984

 
804,848

 
 
4,683,135

 
5,487,983

 
 
2,146,445

 
2002
 
5 - 40
7248 Industrial Boulevard
Allentown, PA
 
—


2,670,849

 
13,307,408

 
4,629,975

 
2,670,673

 
 
17,937,559

 
20,608,232

 
 
9,398,129

 
1988
 
5 - 40
7339 Industrial Boulevard
Allentown, PA
 
—

  
1,187,776

 
—

 
7,592,938

 
1,197,447

 
 
7,583,267

 
8,780,714

 
 
4,174,870

 
1996
 
5 - 40
7437 Industrial Boulevard
Allentown, PA
 
—


717,488

 
5,022,413

 
3,450,291

 
726,651

 
 
8,463,540

 
9,190,191

 
 
5,460,929

 
1976
 
5 - 40
8014 Industrial Boulevard
Allentown, PA
 
—


4,019,258

 
—

 
11,192,116

 
3,645,117

 
 
11,566,257

 
15,211,374

 
 
5,409,248

 
1999
 
5 - 40
8150 Industrial Boulevard
Allentown, PA
 
—


2,564,167

 
—

 
9,480,757

 
2,571,466

 
 
9,473,458

 
12,044,924

 
 
3,917,347

 
2002
 
5 - 40
8250 Industrial Boulevard
Allentown, PA
 
—


1,025,667

 
—

 
5,255,168

 
1,035,854

 
 
5,244,981

 
6,280,835

 
 
1,966,477

 
2002
 
5 - 40
8400 Industrial Boulevard
Allentown, PA
 
—


6,725,948

 
—

 
27,404,693

 
7,521,211

 
 
26,609,430

 
34,130,641

 
 
8,076,494

 
2005
 
5 - 40
6330 Hedgewood Drive
Allentown, PA
 
—


531,268

 
—

 
6,075,126

 
532,047

 
 
6,074,347

 
6,606,394

 
 
4,051,848

 
1988
 
5 - 40
6350 Hedgewood Drive
Allentown, PA
 
—


360,027

 
—

 
4,526,417

 
560,691

 
 
4,325,753

 
4,886,444

 
 
2,607,549

 
1989
 
5 - 40
6370 Hedgewood Drive
Allentown, PA
 
—

  
540,795

 
—

 
4,121,409

 
541,459

 
 
4,120,745

 
4,662,204

 
 
2,579,828

 
1990
 
5 - 40
6390 Hedgewood Drive
Allentown, PA
 
—

  
707,203

 
—

 
3,372,168

 
707,867

 
 
3,371,504

 
4,079,371

 
 
1,929,807

 
1990
 
5 - 40
6520 Stonegate Drive
Allentown, PA
 
—

  
453,315

 
—

 
1,571,738

 
484,361

 
 
1,540,692

 
2,025,053

 
 
713,180

 
1996
 
5 - 40
6540 Stonegate Drive
Allentown, PA
 
—

  
422,042

 
—

 
5,337,554

 
422,730

 
 
5,336,866

 
5,759,596

 
 
3,119,448

 
1988
 
5 - 40
6560 Stonegate Drive
Allentown, PA
 
—

  
458,281

 
—

 
3,856,829

 
458,945

 
 
3,856,165

 
4,315,110

 
 
2,331,497

 
1989
 
5 - 40
6580 Snowdrift Road
Allentown, PA
 
—

  
388,328

 
—

 
4,877,166

 
389,081

 
 
4,876,413

 
5,265,494

 
 
3,220,831

 
1988
 
5 - 40

101

LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances (1)
 
 Land
 
 Building
 
 Costs Capitalized Subsequent to Acquisition (2)
 
Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2017
 
 
 Accumulated Depreciation 12/31/2017
 
Date of Construction or Acquisition
 
Depreciable life (years)
 OPERATING PROPERTIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7620 Cetronia Road
Allentown, PA
 
—

  
1,091,806

 
3,851,456

 
446,341

 
1,093,724

 
 
4,295,879

 
5,389,603

 
 
2,379,820

 
1990
 
5 - 40
3095 Presidential Drive
Atlanta, GA
 
—

  
200,351

 
1,729,161

 
254,912

 
200,351

 
 
1,984,073

 
2,184,424

 
 
342,828

 
2013
 
5 - 40
3097 Presidential Drive
Atlanta, GA
 
—

  
188,680

 
1,721,048

 
377,679

 
188,680

 
 
2,098,727

 
2,287,407

 
 
252,522

 
2013
 
5 - 40
7030 Buford Highway NE
Atlanta, GA
 
—

 *
919,850

 
4,051,340

 
938,092

 
919,850

 
 
4,989,432

 
5,909,282

 
 
864,963

 
2013
 
5 - 40
Barton 150
Barton Under Needwood, UK
 
—

  
2,196,955

 
13,643,981

 
(2,911,461
)
 
1,793,045

 
 
11,136,430

 
12,929,475

 
 
1,423,910

 
2013
 
5 - 40
1055-1071 Kingsland Drive
Batavia, IL
 
—

  
727,294

 
2,367,529

 
686,813

 
727,294

 
 
3,054,342

 
3,781,636

 
 
517,875

 
2013
 
5 - 40
4606 Richlynn Drive
Belcamp, MD
 
—

  
299,600

 
1,818,861

 
722,992

 
299,600

 
 
2,541,853

 
2,841,453

 
 
1,167,850

 
1985
 
5 - 40
11800 Baltimore Avenue
Beltsville,MD
 
—

  
2,769,962

 
1,829,028

 
257,575

 
2,663,725

 
 
2,192,841

 
4,856,566

 
 
392,541

 
2013
 
5 - 40
11850 Baltimore Avenue
Beltsville,MD
 
—

  
3,595,044

 
2,415,132

 
164,695

 
3,457,162

 
 
2,717,709

 
6,174,871

 
 
621,879

 
2013
 
5 - 40
11900 Baltimore Avenue
Beltsville,MD
 
—

  
3,492,036

 
2,024,038

 
521,421

 
3,358,104

 
 
2,679,391

 
6,037,495

 
 
673,883

 
2013
 
5 - 40
12104 Indian Creek Court
Beltsville,MD
 
—

  
2,021,752

 
2,503,802

 
301,581

 
2,021,752

 
 
2,805,383

 
4,827,135

 
 
632,738

 
2013
 
5 - 40
12200 Indian Creek Court
Beltsville,MD
 
—

  
1,347,882

 
1,460,291

 
624,034

 
1,347,882

 
 
2,084,325

 
3,432,207

 
 
374,847

 
2013
 
5 - 40
12240 Indian Creek Court
Beltsville,MD
 
—

  
1,479,307

 
2,159,997

 
791,326

 
1,479,307

 
 
2,951,324

 
4,430,631

 
 
491,902

 
2013
 
5 - 40
1071 Thorndale Avenue
Bensenville,IL
 
—

  
2,173,006

 
2,280,788

 
279,995

 
2,016,715

 
 
2,717,074

 
4,733,789

 
 
487,001

 
2013
 
5 - 40
1260-1274 Ellis Street
Bensenville,IL
 
—

 *
2,298,560

 
4,020,382

 
360,477

 
2,298,560

 
 
4,380,859

 
6,679,419

 
 
753,050

 
2013
 
5 - 40
371-377 Meyer Road
Bensenville,IL
 
—

 *
1,903,423

 
3,563,953

 
581,985

 
1,903,423

 
 
4,145,938

 
6,049,361

 
 
646,670

 
2013
 
5 - 40
850-880 Devon Ave
Bensenville,IL
 
—

 *
2,958,756

 
7,959,013

 
780,767

 
2,958,756

 
 
8,739,780

 
11,698,536

 
 
1,397,398

 
2013
 
5 - 40
10 Emery Street
Bethlehem, PA
 
—


5,591,216

 
32,941,818

 
8,086,723

 
8,947,574

 
 
37,672,183

 
46,619,757

 
 
4,444,772

 
2014
 
5 - 40
2785 Commerce Center Boulevard
Bethlehem, PA
 
—

  
11,961,623

 
—

 
46,710,814

 
12,009,985

 
 
46,662,452

 
58,672,437

 
 
5,682,988

 
2011
 
5 - 40
1455 Remington Boulevard
Bolingbrook, IL
 
—

  
2,501,294

 
10,704,719

 
2,027

 
2,501,294

 
 
10,706,746

 
13,208,040

 
 
1,443,812

 
2012
 
5 - 40
150 E Crossroads Parkway
Bolingbrook, IL
 
—

 *
3,078,949

 
14,143,377

 
1,304,570

 
3,078,949

 
 
15,447,947

 
18,526,896

 
 
2,279,751

 
2013
 
5 - 40
553 S Joliet Ave
Bolingbrook, IL
 
—

 *
3,764,831

 
15,109,947

 
2,608,351

 
3,764,831

 
 
17,718,298

 
21,483,129

 
 
2,927,857

 
2013
 
5 - 40
400 Boulder Drive
Breinigsville, PA
 
—

  
2,859,106

 
—

 
12,523,348

 
2,865,575

 
 
12,516,879

 
15,382,454

 
 
3,591,183

 
2003
 
5 - 40
8201 Industrial Boulevard
Breinigsville, PA
 
—

  
2,089,719

 
—

 
9,254,674

 
2,222,168

 
 
9,122,225

 
11,344,393

 
 
2,117,229

 
2006
 
5 - 40
8451 Willard Drive
Breinigsville, PA
 
—

  
8,752,708

 
—

 
40,892,454

 
11,511,499

 
 
38,133,663

 
49,645,162

 
 
11,459,148

 
2007
 
5 - 40
860 Nestle Way
Breinigsville, PA
 
—

  
8,118,881

 
18,885,486

 
7,523,072

 
8,118,881

 
 
26,408,558

 
34,527,439

 
 
10,705,203

 
2004
 
5 - 40
3525 Gravel Springs Road
Buford, GA
 
—

  
1,391,065

 
—

 
5,767,546

 
1,629,677

 
 
5,528,934

 
7,158,611

 
 
81,499

 
2015
 
5 - 40

102

LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances (1)
 
 Land
 
 Building
 
 Costs Capitalized Subsequent to Acquisition (2)
 
Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2017
 
 
 Accumulated Depreciation 12/31/2017
 
Date of Construction or Acquisition
 
Depreciable life (years)
 OPERATING PROPERTIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3535 Gravel Springs Road
Buford, GA
 
—

  
2,807,020

 
—

 
9,348,803

 
3,077,350

 
 
9,078,473

 
12,155,823

 
 
85,572

 
2015
 
5 - 40
1485 Dennison Circle
Carlisle, PA
 
—

  
4,249,868

 
13,886,039

 
2,345,375

 
4,095,262

 
 
16,386,020

 
20,481,282

 
 
6,860,959

 
2004
 
5 - 40
40 Logistics Drive
Carlisle, PA
 
—

  
7,981,850

 
—

 
33,019,624

 
8,081,272

 
 
32,920,202

 
41,001,474

 
 
5,205,564

 
2011
 
5 - 40
135-195 East Elk Trail
Carol Stream, IL
 
—

  
4,873,094

 
12,430,320

 
2,711,700

 
4,873,094

 
 
15,142,020

 
20,015,114

 
 
1,653,950

 
2013
 
5 - 40
515 Kehoe Boulevard
Carol Stream, IL
 
—

  
5,523,427

 
14,581,705

 
1,018,131

 
5,523,427

 
 
15,599,836

 
21,123,263

 
 
1,794,650

 
2013
 
5 - 40
1413 Bradley Lane
Carrollton, TX
 
—

 *
247,477

 
2,028,322

 
83,692

 
247,477

 
 
2,112,014

 
2,359,491

 
 
335,971

 
2013
 
5 - 40
3200 Belmeade Drive
Carrollton, TX
 
—

  
1,042,453

 
8,027,974

 
545,748

 
1,042,453

 
 
8,573,722

 
9,616,175

 
 
1,203,243

 
2013
 
5 - 40
16325 S Avalon Blvd
Carson, CA
 
—

 
26,432,369

 
19,669,675

 
288,256

 
26,432,369

 
 
19,957,931

 
46,390,300

 
 
90,391

 
2017
 
5 - 40
1475 Nitterhouse Dr
Chambersburg, PA
 
—

  
7,081,007

 
39,002,011

 
2,094,847

 
7,081,007

 
 
41,096,858

 
48,177,865

 
 
6,065,304

 
2013
 
5 - 40
95 Kriner Road
Chambersburg, PA
 
—

  
8,695,501

 
—

 
35,060,794

 
9,407,871

 
 
34,348,424

 
43,756,295

 
 
9,231,761

 
2006
 
5 - 40
9000 109th Street
Champlin, MN
 
—

  
1,251,043

 
11,662,995

 
120,863

 
1,251,043

 
 
11,783,858

 
13,034,901

 
 
2,132,475

 
2011
 
5 - 40
11701 Goodrich Drive
Charlotte, NC
 
—

  
2,054,621

 
6,356,151

 
630,877

 
2,054,621

 
 
6,987,027

 
9,041,648

 
 
1,347,806

 
2013
 
5 - 40
12810 Virkler Drive
Charlotte, NC
 
—

  
475,368

 
2,367,586

 
882,005

 
476,262

 
 
3,248,696

 
3,724,958

 
 
563,666

 
2010
 
5 - 40
2700 Hutchison McDonald Road
Charlotte, NC
 
—

  
912,500

 
4,721,259

 
346,813

 
912,500

 
 
5,068,072

 
5,980,572

 
 
917,487

 
2011
 
5 - 40
2701 Hutchison McDonald Road
Charlotte, NC
 
—

  
1,275,000

 
4,649,750

 
646,264

 
1,275,000

 
 
5,296,014

 
6,571,014

 
 
985,434

 
2011
 
5 - 40
2730 Hutchison McDonald Road
Charlotte, NC
 
—

  
1,878,750

 
10,129,499

 
33,298

 
1,878,750

 
 
10,162,797

 
12,041,547

 
 
1,712,638

 
2011
 
5 - 40
2801 Hutchison McDonald Road
Charlotte, NC
 
—

  
1,065,000

 
6,975,250

 
650,916

 
1,065,000

 
 
7,626,166

 
8,691,166

 
 
1,243,976

 
2011
 
5 - 40
3000 Crosspoint Center Lane
Charlotte, NC
 
—

  
1,831,250

 
10,779,412

 
1,101,098

 
1,831,250

 
 
11,880,510

 
13,711,760

 
 
2,074,452

 
2011
 
5 - 40
3005 Crosspoint Center Lane
Charlotte, NC
 
—

  
1,990,000

 
6,561,540

 
1,169,814

 
1,990,000

 
 
7,731,354

 
9,721,354

 
 
1,329,779

 
2011
 
5 - 40
4045 Perimeter West Drive
Charlotte, NC
 
—

  
1,418,928

 
7,511,050

 
632,664

 
1,418,928

 
 
8,143,714

 
9,562,642

 
 
1,414,308

 
2011
 
5 - 40
4047 Perimeter West Drive
Charlotte, NC
 
—

  
1,279,004

 
—

 
6,399,609

 
1,279,004

 
 
6,399,609

 
7,678,613

 
 
1,083,916

 
2011
 
5 - 40
4525 Statesville Road
Charlotte, NC
 
—

  
841,250

 
5,279,315

 
317,199

 
837,144

 
 
5,600,620

 
6,437,764

 
 
958,955

 
2011
 
5 - 40
4835 Sirona Drive
Charlotte, NC
 
3,315,149


690,750

 
5,086,388

 
133,402

 
690,750

 
 
5,219,790

 
5,910,540

 
 
763,314

 
2012
 
5 - 40
4925 Sirona Drive
Charlotte, NC
 
3,339,557


603,003

 
4,969,011

 
147,245

 
603,003

 
 
5,116,256

 
5,719,259

 
 
829,242

 
2012
 
5 - 40
5032 Sirona Drive
Charlotte, NC

—


1,416,763


—


9,031,057


1,416,763



9,031,057


10,447,820



469,576


2015

5 - 40
5033 Sirona Drive
Charlotte, NC
 
2,845,006


509,247

 
4,710,218

 
183,930

 
613,962

 
 
4,789,433

 
5,403,395

 
 
756,635

 
2012
 
5 - 40
5039 Sirona Drive
Charlotte, NC
 
—


1,027,500

 
6,172,807

 
63,150

 
1,027,500

 
 
6,235,957

 
7,263,457

 
 
512,634

 
2014
 
5 - 40
8910 Pioneer Avenue
Charlotte, NC
 
—

  
527,873

 
4,959,206

 
360,851

 
527,873

 
 
5,320,057

 
5,847,930

 
 
814,596

 
2011
 
5 - 40

103

LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances (1)
 
 Land
 
 Building
 
 Costs Capitalized Subsequent to Acquisition (2)
 
Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2017
 
 
 Accumulated Depreciation 12/31/2017
 
Date of Construction or Acquisition
 
Depreciable life (years)
 OPERATING PROPERTIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8916 Pioneer Avenue
Charlotte, NC
 
—

  
557,730

 
5,785,333

 
534,333

 
557,730

 
 
6,319,666

 
6,877,396

 
 
1,149,035

 
2011
 
5 - 40
8924 Pioneer Avenue
Charlotte, NC

—

  
654,713


5,365,823


(57,050
)

654,713



5,308,773


5,963,486



135,996


2016

5 - 40
2601 Indian River Road
Chesapeake, VA
 
—

 *
1,711,746

 
10,418,032

 
494,065

 
1,711,746

 
 
10,912,097

 
12,623,843

 
 
1,619,711

 
2013
 
5 - 40
1540 S 54th Avenue
Cicero, IL
 
—

  
3,540,236

 
20,130,552

 
930,603

 
3,540,236

 
 
21,061,155

 
24,601,391

 
 
3,002,292

 
2013
 
5 - 40
4650 Lake Forest Drive
Cincinnati, OH
 
—

  
1,030,242

 
4,003,024

 
365,499

 
1,030,242

 
 
4,368,522

 
5,398,764

 
 
700,153

 
2013
 
5 - 40
4750 Lake Forest Drive
Cincinnati, OH
 
—

  
1,138,166

 
5,914,789

 
230,664

 
1,138,166

 
 
6,145,453

 
7,283,619

 
 
938,347

 
2013
 
5 - 40
9645 Gerwig Lane
Columbia, MD
 
—

  
1,915,960

 
6,461,228

 
322,982

 
1,915,960

 
 
6,784,210

 
8,700,170

 
 
1,097,619

 
2013
 
5 - 40
2550 John Glenn Avenue
Columbus, OH
 
—

  
540,601

 
5,129,342

 
1,072,989

 
540,601

 
 
6,202,331

 
6,742,932

 
 
823,054

 
2013
 
5 - 40
3800 Twin Creeks Drive
Columbus, OH
 
—

  
549,393

 
4,643,302

 
497,947

 
549,393

 
 
5,141,249

 
5,690,642

 
 
735,305

 
2013
 
5 - 40
330 South Royal Lane
Coppell, TX
 
—

  
2,091,426

 
—

 
11,407,128

 
2,091,426

 
 
11,407,128

 
13,498,554

 
 
876,255

 
2014
 
5 - 40
455 Airline Drive
Coppell, TX
 
—

 *
312,701

 
2,311,531

 
489,922

 
312,701

 
 
2,801,453

 
3,114,154

 
 
475,079

 
2013
 
5 - 40
2130 Baldwin Avenue
Crofton, MD
 
—

  
3,172,032

 
7,350,782

 
419,529

 
3,172,032

 
 
7,770,311

 
10,942,343

 
 
1,188,917

 
2013
 
5 - 40
11020 Holly Lane
Dayton, MN
 
—

  
2,536,731

 
—

 
12,722,576

 
2,536,731

 
 
12,722,576

 
15,259,307

 
 
475,069

 
2016
 
5 - 40
329-333 Herrod Blvd
Dayton, NJ
 
—

 *
4,039,559

 
20,863,051

 
2,286,868

 
4,039,559

 
 
23,149,919

 
27,189,478

 
 
3,326,807

 
2013
 
5 - 40
1250 Hall Court
Deer Park, TX
 
—

  
829,570

 
4,778,327

 
121,291

 
831,611

 
 
4,897,577

 
5,729,188

 
 
1,442,762

 
2006
 
5 - 40
333 Howard Avenue
Des Plaines, IL
 
—


7,928,724

 
—

 
14,264,248

 
7,928,724

 
 
14,264,248

 
22,192,972

 
 
832,239

 
2016
 
5 - 40
1680 Executive Drive
Duluth, GA
 
—

  
1,928,412

 
4,651,819

 
617,290

 
1,928,412

 
 
5,269,109

 
7,197,521

 
 
1,077,104

 
2013
 
5 - 40
1700 Executive Drive
Duluth, GA
 
—

  
1,082,072

 
2,496,599

 
573,982

 
1,082,072

 
 
3,070,581

 
4,152,653

 
 
621,884

 
2013
 
5 - 40
2670 Breckinridge Blvd
Duluth, GA
 
—

  
1,676,415

 
4,567,592

 
927,539

 
1,676,415

 
 
5,495,132

 
7,171,547

 
 
878,785

 
2013
 
5 - 40
170 Parkway West
Duncan, SC
 
—

  
598,348

 
3,643,756

 
573,870

 
598,918

 
 
4,217,056

 
4,815,974

 
 
1,316,005

 
2006
 
5 - 40
190 Parkway West
Duncan, SC
 
—

  
551,663

 
3,310,993

 
251,604

 
552,211

 
 
3,562,048

 
4,114,259

 
 
1,067,706

 
2006
 
5 - 40
265 Parkway East
Duncan, SC
 
—

  
901,444

 
5,751,389

 
193,675

 
902,374

 
 
5,944,134

 
6,846,508

 
 
2,077,614

 
2006
 
5 - 40
285 Parkway East
Duncan, SC
 
—

  
975,433

 
5,851,990

 
525,729

 
976,393

 
 
6,376,759

 
7,353,152

 
 
1,901,005

 
2006
 
5 - 40
1000 Parliament Court
Durham, NC
 
—


2,229,000

 
7,064,506

 
792,599

 
2,229,000

 
 
7,857,105

 
10,086,105

 
 
791,102

 
2014
 
5 - 40
4226 Surles Court
Durham, NC
 
—


1,440,000

 
7,932,265

 
289,576

 
1,440,000

 
 
8,221,841

 
9,661,841

 
 
954,792

 
2014
 
5 - 40
4227 Surles Court
Durham, NC
 
—


1,500,000

 
5,624,030

 
235,182

 
1,500,000

 
 
5,859,211

 
7,359,211

 
 
534,911

 
2014
 
5 - 40
4234 Surles Court
Durham, NC
 
—


1,440,000

 
7,356,161

 
(78,204
)
 
1,440,000

 
 
7,277,957

 
8,717,957

 
 
768,425

 
2014
 
5 - 40
4300 Emperor Center
Durham, NC
 
—


1,576,500

 
4,240,961

 
5,859

 
1,576,500

 
 
4,246,820

 
5,823,320

 
 
424,518

 
2014
 
5 - 40
1951 TW Alexander Drive
Durham, NC
 
—

 
1,115,595

 
—

 
3,618,500

 
1,324,734

 
 
3,409,361

 
4,734,095

 
 
68,813

 
2015
 
5 - 40

104

LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances (1)
 
 Land
 
 Building
 
 Costs Capitalized Subsequent to Acquisition (2)
 
Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2017
 
 
 Accumulated Depreciation 12/31/2017
 
Date of Construction or Acquisition
 
Depreciable life (years)
 OPERATING PROPERTIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1953 TW Alexander Drive
Durham, NC
 
—

 
2,402,820

 
—

 
6,583,503

 
2,853,273

 
 
6,133,050

 
8,986,323

 
 
103,698

 
2015
 
5 - 40
1957 TW Alexander Drive
Durham, NC

—

  
1,844,943


—


7,946,981


3,091,046



6,700,878


9,791,924



206,273


2015

5 - 40
3169 Dodd Road
Eagan, MN
 
—

  
988,594

 
6,586,907

 
394,649

 
988,594

 
 
6,981,556

 
7,970,150

 
 
1,123,900

 
2012
 
5 - 40
3711 Kennebec Drive
Eagan, MN
 
—

  
999,702

 
4,042,589

 
(2,670
)
 
999,702

 
 
4,039,919

 
5,039,621

 
 
721,854

 
2011
 
5 - 40
917 Lone Oak Road
Eagan, MN
 
—

 *
1,493,115

 
6,120,455

 
976,663

 
1,493,115

 
 
7,097,118

 
8,590,233

 
 
1,159,254

 
2013
 
5 - 40
10301-10305 West 70th Street
Eden Prairie, MN
 
—

  
120,622

 
1,085,226

 
310,448

 
118,300

 
 
1,397,996

 
1,516,296

 
 
699,145

 
1984
 
5 - 40
10321 West 70th Street
Eden Prairie, MN
 
—

  
145,198

 
1,305,700

 
616,746

 
142,399

 
 
1,925,245

 
2,067,644

 
 
968,278

 
1984
 
5 - 40
10333 West 70th Street
Eden Prairie, MN
 
—

  
110,746

 
995,868

 
285,918

 
108,610

 
 
1,283,922

 
1,392,532

 
 
656,683

 
1984
 
5 - 40
10349-10357 West 70th Street
Eden Prairie, MN
 
—

  
275,903

 
2,481,666

 
954,195

 
270,584

 
 
3,441,180

 
3,711,764

 
 
1,842,058

 
1985
 
5 - 40
10365-10375 West 70th Street
Eden Prairie, MN
 
—

  
291,077

 
2,618,194

 
1,585,889

 
285,464

 
 
4,209,696

 
4,495,160

 
 
1,900,290

 
1985
 
5 - 40
10393-10394 West 70th Street
Eden Prairie, MN
 
—

  
269,618

 
2,423,318

 
2,527,379

 
264,419

 
 
4,955,896

 
5,220,315

 
 
2,194,769

 
1985
 
5 - 40
7075 Flying Cloud Drive
Eden Prairie, MN
 
—

  
10,232,831

 
10,855,851

 
4,057,532

 
9,967,306

 
 
15,178,907

 
25,146,213

 
 
3,578,639

 
2007
 
5 - 40
7078 Shady Oak Road
Eden Prairie, MN
 
—

  
343,093

 
3,085,795

 
1,624,923

 
336,481

 
 
4,717,330

 
5,053,811

 
 
2,636,995

 
1985
 
5 - 40
1 Truman Drive South
Edison, NJ
 
—

 
27,862,573

 
19,426,947

 
703,083

 
27,862,573

 
 
20,130,030

 
47,992,603

 
 
19,993

 
2017
 
5 - 40
2250 Arthur Avenue
Elk Grove, IL
 
—

  
1,403,196

 
2,386,396

 
149,289

 
1,403,196

 
 
2,535,685

 
3,938,881

 
 
392,856

 
2013
 
5 - 40
6600 Business Parkway
Elkridge, MD
 
—

  
3,680,220

 
14,671,910

 
703,042

 
3,680,220

 
 
15,374,952

 
19,055,172

 
 
1,968,894

 
2013
 
5 - 40
6675 Business Parkway
Elkridge, MD
 
—

 *
2,421,854

 
9,730,192

 
695,870

 
2,421,854

 
 
10,426,062

 
12,847,916

 
 
1,338,178

 
2013
 
5 - 40
7351 Coca Cola Drive
Elkridge, MD
 
—

  
1,897,044

 
—

 
7,419,134

 
3,023,417

 
 
6,292,761

 
9,316,178

 
 
1,996,209

 
2006
 
5 - 40
21705-21707 Mississippi Street
Elwood, IL
 
—

  
10,594,259

 
30,329,802

 
1,557,857

 
10,594,259

 
 
31,887,660

 
42,481,919

 
 
5,256,343

 
2011
 
5 - 40
27143 Elwood International Port Road
Elwood, IL
 
—

  
6,022,000

 
5,612,934

 
587,921

 
6,022,000

 
 
6,200,855

 
12,222,855

 
 
1,087,835

 
2011
 
5 - 40
1800 Donaldson Road
Erlanger, KY
 
—

  
—

 
13,211,604

 
762,210

 
—

 
 
13,973,814

 
13,973,814

 
 
3,972,728

 
2011
 
5 - 40
6880 Fairfield Drive
Fairfield, OH
 
—

  
412,136

 
3,029,177

 
146,616

 
412,136

 
 
3,175,793

 
3,587,929

 
 
450,893

 
2013
 
5 - 40
7000-7018 Fairfield Business
Fairfield, OH
 
—

  
367,925

 
2,205,817

 
177,833

 
386,928

 
 
2,364,647

 
2,751,575

 
 
325,215

 
2013
 
5 - 40
10721 Jasmine Street
Fontana, CA
 
—


11,427,061

 
23,784,779

 
3,739,838

 
11,427,061

 
 
27,524,617

 
38,951,678

 
 
1,817,042

 
2015
 
5 - 40
2000 Southpointe Dr
Forest Park, GA
 
—

  
756,221

 
9,115,626

 
662,099

 
756,221

 
 
9,777,725

 
10,533,946

 
 
1,464,610

 
2013
 
5 - 40
1400 NW 65th Place
Fort Lauderdale, FL
 
—

  
545,480

 
2,540,210

 
86,121

 
545,480

 
 
2,626,331

 
3,171,811

 
 
341,109

 
2013
 
5 - 40
6500 NW 12th Avenue
Fort Lauderdale, FL
 
—

  
—

 
3,064,734

 
521,736

 
—

 
 
3,586,470

 
3,586,470

 
 
540,454

 
2013
 
5 - 40
6501 NW 12th Avenue
Fort Lauderdale, FL
 
—

  
519,984

 
2,677,465

 
312,381

 
519,984

 
 
2,989,846

 
3,509,830

 
 
346,270

 
2013
 
5 - 40
6600 NW 12th Avenue
Fort Lauderdale, FL
 
—

  
—

 
2,988,181

 
267,630

 
—

 
 
3,255,811

 
3,255,811

 
 
505,594

 
2013
 
5 - 40

105

LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances (1)
 
 Land
 
 Building
 
 Costs Capitalized Subsequent to Acquisition (2)
 
Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2017
 
 
 Accumulated Depreciation 12/31/2017
 
Date of Construction or Acquisition
 
Depreciable life (years)
 OPERATING PROPERTIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
11222 Melrose Avenue
Franklin Park, IL
 
—

  
2,999,106

 
4,658,605

 
104,074

 
2,999,106

 
 
4,762,679

 
7,761,785

 
 
292,028

 
2016
 
5 - 40
9601 Cosner Drive
Fredericksburg, VA
 
—

  
475,262

 
3,917,234

 
387,315

 
475,262

 
 
4,304,549

 
4,779,811

 
 
2,372,215

 
1995
 
5 - 40
5410 - 5430 Northwest 33rd Avenue
Ft. Lauderdale, FL
 
—

  
603,776

 
4,176,238

 
1,990,114

 
625,111

 
 
6,145,017

 
6,770,128

 
 
3,281,803

 
1985
 
5 - 40
12601 Industry Street
Garden Grove, CA
 
—

  
2,048,143

 
1,088,697

 
70,611

 
2,048,143

 
 
1,159,308

 
3,207,451

 
 
276,355

 
2013
 
5 - 40
12641 Industry Street
Garden Grove, CA
 
—

  
3,766,822

 
2,539,214

 
133,026

 
3,766,822

 
 
2,672,240

 
6,439,062

 
 
408,964

 
2013
 
5 - 40
12681-12691 Pala Drive
Garden Grove, CA
 
—


5,221,102

 
3,225,596

 
83,715

 
5,220,148

 
 
3,310,265

 
8,530,413

 
 
359,715

 
2014
 
5 - 40
850 S Jupiter Road
Garland, TX
 
—

  
799,707

 
6,122,065

 
506,894

 
799,707

 
 
6,628,959

 
7,428,666

 
 
1,005,200

 
2013
 
5 - 40
2510 W Main Street
Grand Prairie, TX
 
—

 *
1,785,741

 
11,158,818

 
1,677,983

 
1,785,741

 
 
12,836,801

 
14,622,542

 
 
2,144,063

 
2013
 
5 - 40
4251 North Highway 121
Grapevine, TX
 
—

 *
1,165,780

 
7,799,270

 
422,871

 
1,165,780

 
 
8,222,140

 
9,387,920

 
 
1,322,370

 
2013
 
5 - 40
1150 Pleasant Ridge Road
Greensboro, NC
 
—

  
1,547,811

 
—

 
14,336,534

 
3,712,683

 
 
12,171,662

 
15,884,345

 
 
2,930,846

 
2006
 
5 - 40
25 Brookfield Oaks Drive
Greenville, SC
 
—


288,823

 
3,441,512

 
(60,552
)
 
288,823

 
 
3,380,960

 
3,669,783

 
 
386,571

 
2014
 
5 - 40
45 Brookfield Oaks Drive
Greenville, SC
 
—

  
818,114

 
—

 
4,737,211

 
825,529

 
 
4,729,796

 
5,555,325

 
 
1,273,122

 
2006
 
5 - 40
2011 Southtech Drive
Greenwood, IN
 
—

  
223,702

 
3,574,142

 
348,881

 
223,702

 
 
3,923,023

 
4,146,725

 
 
673,141

 
2013
 
5 - 40
2121 Southtech Drive
Greenwood, IN
 
—

  
272,823

 
3,606,920

 
425,631

 
272,823

 
 
4,032,552

 
4,305,375

 
 
868,917

 
2013
 
5 - 40
800 Commerce Parkway West Dr
Greenwood, IN
 
—

  
1,374,664

 
29,963,830

 
2,112,538

 
1,374,664

 
 
32,076,368

 
33,451,032

 
 
4,662,009

 
2013
 
5 - 40
110 Caliber Ridge Dr
Greer, SC
 
—

  
555,549

 
—

 
6,339,922

 
1,241,531

 
 
5,653,940

 
6,895,471

 
 
472,790

 
2014
 
5 - 40
120 Caliber Ridge Dr
Greer, SC
 
—

  
1,243,100

 
—

 
6,603,603

 
1,255,751

 
 
6,590,952

 
7,846,703

 
 
516,447

 
2016
 
5 - 40
130 Caliber Ridge Dr
Greer, SC
 
—

  
1,171,160

 
—

 
6,045,497

 
1,183,811

 
 
6,032,846

 
7,216,657

 
 
326,307

 
2016
 
5 - 40
140 Caliber Ridge Drive
Greer, SC
 
—

  
1,243,100

 
—

 
6,460,810

 
1,255,751

 
 
6,448,159

 
7,703,910

 
 
594,631

 
2013
 
5 - 40
2988 Green Road
Greer, SC
 
—

 
2,271,948

 
—

 
6,598,421

 
2,095,033

 
 
6,775,336

 
8,870,369

 
 
56,411

 
2016
 
5 - 40
125 Caliber Ridge Drive
Greer, SC
 
—

  
464,237

 
—

 
5,840,213

 
1,311,956

 
 
4,992,494

 
6,304,450

 
 
1,143,185

 
2007
 
5 - 40
2727 London Groveport Road
Groveport, OH
 
—

  
1,875,607

 
11,937,935

 
1,594,848

 
1,875,607

 
 
13,532,783

 
15,408,390

 
 
2,154,022

 
2013
 
5 - 40
11835 Newgate Boulevard
Hagerstown, MD
 
—


14,121,622

 
—

 
23,024,333

 
14,121,622

 
 
23,024,333

 
37,145,955

 
 
2,135,910

 
2014
 
5 - 40
11841 Newgate Boulevard
Hagerstown, MD
 
—

  
3,356,207

 
—

 
30,679,055

 
9,741,685

 
 
24,293,577

 
34,035,262

 
 
6,578,678

 
2008
 
5 - 40
1560 Hunter Road
Hanover Park, IL
 
—

 *
2,639,734

 
12,310,741

 
1,072,313

 
2,639,734

 
 
13,383,054

 
16,022,788

 
 
1,884,363

 
2013
 
5 - 40
1575 Hunter Road
Hanover Park, IL
 
—

 *
3,293,284

 
17,235,926

 
1,174,459

 
3,293,284

 
 
18,410,385

 
21,703,669

 
 
2,655,120

 
2013
 
5 - 40
7361 Coca Cola Drive
Hanover, MD
 
—

  
2,245,187

 
—

 
9,668,306

 
3,822,710

 
 
8,090,783

 
11,913,493

 
 
1,741,059

 
2004
 
5 - 40

106

LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances (1)
 
 Land
 
 Building
 
 Costs Capitalized Subsequent to Acquisition (2)
 
Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2017
 
 
 Accumulated Depreciation 12/31/2017
 
Date of Construction or Acquisition
 
Depreciable life (years)
 OPERATING PROPERTIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7460 New Ridge Road
Hanover, MD
 
—

  
3,785,446

 
—

 
8,128,924

 
3,796,023

 
 
8,118,347

 
11,914,370

 
 
587,264

 
2013
 
5 - 40
7462 New Ridge Road
Hanover, MD
 
—

  
4,059,337

 
—

 
7,491,548

 
4,070,629

 
 
7,480,256

 
11,550,885

 
 
511,893

 
2013
 
5 - 40
500 McCarthy Drive
Harrisburg, PA
 
—

  
5,194,872

 
19,991,436

 
5,020,100

 
5,687,013

 
 
24,519,395

 
30,206,408

 
 
9,042,285

 
2005
 
5 - 40
600 Industrial Drive
Harrisburg, PA
 
—

  
7,743,800

 
—

 
27,803,943

 
9,368,557

 
 
26,179,186

 
35,547,743

 
 
7,808,361

 
2005
 
5 - 40
7195 Grayson Road
Harrisburg, PA
 
—

  
464,534

 
6,066,272

 
251,813

 
464,534

 
 
6,318,085

 
6,782,619

 
 
850,896

 
2013
 
5 - 40
7253 Grayson Road
Harrisburg, PA
 
—

  
954,130

 
10,585,367

 
583,272

 
954,130

 
 
11,168,639

 
12,122,769

 
 
1,466,551

 
2013
 
5 - 40
12537 Cerise Avenue
Hawthorne, CA
 
—

  
2,203,194

 
5,758,809

 
1,461,971

 
2,203,194

 
 
7,220,780

 
9,423,974

 
 
728,059

 
2013
 
5 - 40
1010 Petersburg Road
Hebron, KY
 
—

  
305,471

 
5,434,505

 
(819,546
)
 
305,471

 
 
4,614,959

 
4,920,430

 
 
729,928

 
2013
 
5 - 40
785 Lindbergh Court
Hebron, KY
 
—

  
401,410

 
3,087,899

 
511,831

 
401,410

 
 
3,599,730

 
4,001,140

 
 
851,287

 
2013
 
5 - 40
805 Lindbergh Court
Hebron, KY
 
—

  
292,096

 
2,502,486

 
163,832

 
292,096

 
 
2,666,317

 
2,958,413

 
 
460,511

 
2013
 
5 - 40
825 Lindbergh Court
Hebron, KY
 
—

  
370,149

 
3,095,116

 
435,793

 
370,149

 
 
3,530,910

 
3,901,059

 
 
599,942

 
2013
 
5 - 40
845 Lindbergh Court
Hebron, KY
 
—

  
444,318

 
3,811,889

 
316,672

 
444,318

 
 
4,128,561

 
4,572,879

 
 
666,370

 
2013
 
5 - 40
4198 Eagle Hill Drive
High Point, NC
 
—

  
94,274

 
—

 
6,276,671

 
791,880

 
 
5,579,065

 
6,370,945

 
 
1,621,575

 
2005
 
5 - 40
4183 Eagle Hill Drive
High Point, NC
 
—

  
122,203

 
—

 
3,214,906

 
526,266

 
 
2,810,843

 
3,337,109

 
 
1,311,124

 
2001
 
5 - 40
4189 Eagle Hill Drive
High Point, NC
 
—

  
100,106

 
—

 
3,584,103

 
431,106

 
 
3,253,103

 
3,684,209

 
 
1,652,112

 
2001
 
5 - 40
4193 Eagle Hill Drive
High Point, NC
 
—

  
107,586

 
—

 
3,391,727

 
505,700

 
 
2,993,613

 
3,499,313

 
 
968,743

 
2004
 
5 - 40
4328, 4336 Federal Drive
High Point, NC
 
—


521,122

 
—

 
5,624,655

 
825,092

 
 
5,320,685

 
6,145,777

 
 
2,596,135

 
1995
 
5 - 40
4344 Federal Drive
High Point, NC
 
—

  
484,001

 
—

 
3,152,416

 
173,623

 
 
3,462,794

 
3,636,417

 
 
1,866,989

 
1996
 
5 - 40
4380 Federal Drive
High Point, NC
 
—

  
282,996

 
—

 
2,209,713

 
283,368

 
 
2,209,341

 
2,492,709

 
 
1,199,039

 
1997
 
5 - 40
4388 Federal Drive
High Point, NC
 
—

  
143,661

 
—

 
1,214,818

 
132,655

 
 
1,225,824

 
1,358,479

 
 
653,753

 
1997
 
5 - 40
4475 Premier Drive
High Point, NC
 
—

  
748,693

 
—

 
6,806,962

 
1,525,421

 
 
6,030,234

 
7,555,655

 
 
1,429,865

 
2006
 
5 - 40
4485 Premier Drive
High Point, NC

—

  
1,827,595


—


6,507,936


1,827,595



6,507,936


8,335,531



174,125


2015

5 - 40
4500 Green Point Drive
High Point, NC
 
—

  
230,622

 
—

 
2,757,316

 
231,692

 
 
2,756,246

 
2,987,938

 
 
1,618,070

 
1989
 
5 - 40
4501 Green Point Drive
High Point, NC
 
—

  
319,289

 
—

 
3,133,118

 
320,450

 
 
3,131,957

 
3,452,407

 
 
1,976,183

 
1989
 
5 - 40
4523 Green Point Drive
High Point, NC
 
—

  
234,564

 
—

 
3,319,368

 
235,698

 
 
3,318,234

 
3,553,932

 
 
2,236,810

 
1988
 
5 - 40
4524 Green Point Drive
High Point, NC
 
—

  
182,810

 
—

 
2,838,325

 
183,888

 
 
2,837,247

 
3,021,135

 
 
1,804,718

 
1989
 
5 - 40
Unit 5 Logix Road
Hinckley, UK
 
—

  
10,547,677

 
29,691,911

 
(7,396,097
)
 
8,608,489

 
 
24,235,002

 
32,843,491

 
 
3,350,056

 
2013
 
5 - 40

107

LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances (1)
 
 Land
 
 Building
 
 Costs Capitalized Subsequent to Acquisition (2)
 
Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2017
 
 
 Accumulated Depreciation 12/31/2017
 
Date of Construction or Acquisition
 
Depreciable life (years)
 OPERATING PROPERTIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1000 South Loop West
Houston, TX
 
—

 *
509,351

 
3,549,504

 
938,122

 
509,351

 
 
4,487,626

 
4,996,977

 
 
835,033

 
2013
 
5 - 40
10241 W Little York Rd
Houston, TX
 
—

  
558,491

 
5,740,552

 
139,500

 
558,491

 
 
5,880,052

 
6,438,543

 
 
753,250

 
2013
 
5 - 40
10245 W Little York Rd
Houston, TX
 
—

  
426,927

 
3,460,513

 
380,296

 
426,927

 
 
3,840,809

 
4,267,736

 
 
795,963

 
2013
 
5 - 40
10301 Round Up Lane
Houston, TX
 
—

  
545,501

 
2,927,700

 
961,929

 
545,501

 
 
3,889,628

 
4,435,129

 
 
585,432

 
2010
 
5 - 40
10305 Round Up Lane
Houston, TX
 
—

  
1,340,609

 
7,489,720

 
2,951,546

 
1,340,609

 
 
10,441,265

 
11,781,874

 
 
2,361,657

 
2010
 
5 - 40
1050 Greens Parkway
Houston, TX
 
—

  
973,482

 
—

 
3,531,792

 
992,093

 
 
3,513,181

 
4,505,274

 
 
252,833

 
2013
 
5 - 40
10607 Haddington Drive
Houston, TX
 
—

 *
201,469

 
1,631,561

 
132,748

 
201,469

 
 
1,764,310

 
1,965,779

 
 
282,662

 
2013
 
5 - 40
10735 West Little York Road
Houston, TX
 
—

  
1,110,988

 
6,351,946

 
3,147,449

 
1,135,483

 
 
9,474,900

 
10,610,383

 
 
3,426,368

 
2000
 
5 - 40
10739 West Little York Road
Houston, TX
 
—

  
797,931

 
5,950,894

 
339,014

 
799,560

 
 
6,288,279

 
7,087,839

 
 
2,419,437

 
1999
 
5 - 40
11201 Greens Crossing Boulevard
Houston, TX
 
—

  
1,006,194

 
5,412,584

 
2,620,073

 
1,008,542

 
 
8,030,309

 
9,038,851

 
 
2,509,545

 
2007
 
5 - 40
11220 Ella Boulevard
Houston, TX
 
—

  
1,505,855

 
—

 
7,417,101

 
1,534,644

 
 
7,388,312

 
8,922,956

 
 
529,511

 
2013
 
5 - 40
1283 N Post Oak Rd
Houston, TX
 
—

 *
80,730

 
870,656

 
145,557

 
80,730

 
 
1,016,213

 
1,096,943

 
 
178,472

 
2013
 
5 - 40
1287 N Post Oak Rd
Houston, TX
 
—

 *
146,654

 
1,620,780

 
55,679

 
146,654

 
 
1,676,458

 
1,823,112

 
 
280,919

 
2013
 
5 - 40
1291 N Post Oak Rd
Houston, TX
 
—

 *
510,102

 
4,129,042

 
586,888

 
510,102

 
 
4,715,930

 
5,226,032

 
 
757,450

 
2013
 
5 - 40
1416 N Sam Houston Parkway E
Houston, TX
 
—

 *
218,850

 
1,639,902

 
558,311

 
218,850

 
 
2,198,212

 
2,417,062

 
 
407,593

 
2013
 
5 - 40
1420 N Sam Houston Parkway E
Houston, TX
 
—

 *
211,279

 
1,554,156

 
262,982

 
211,279

 
 
1,817,138

 
2,028,417

 
 
253,509

 
2013
 
5 - 40
14200 Hollister Road
Houston, TX
 
—

  
1,396,794

 
—

 
4,960,376

 
1,699,632

 
 
4,657,538

 
6,357,170

 
 
658,529

 
2011
 
5 - 40
1424 N Sam Houston Parkway E
Houston, TX
 
—

 *
283,107

 
2,077,323

 
413,088

 
283,107

 
 
2,490,411

 
2,773,518

 
 
377,599

 
2013
 
5 - 40
1428 N Sam Houston Parkway E
Houston, TX
 
—

 *
367,446

 
1,952,453

 
461,116

 
367,446

 
 
2,413,568

 
2,781,014

 
 
323,367

 
2013
 
5 - 40
14300 Hollister Road
Houston, TX
 
—

 *
1,377,193

 
—

 
5,680,144

 
1,405,899

 
 
5,651,438

 
7,057,337

 
 
677,019

 
2014
 
5 - 40
14400 Hollister Road
Houston, TX
 
—

 *
1,830,419

 
—

 
7,240,317

 
1,861,540

 
 
7,209,196

 
9,070,736

 
 
1,763,306

 
2012
 
5 - 40
15102 Sommermeyer St
Houston, TX
 
—

  
755,121

 
3,155,774

 
247,670

 
755,121

 
 
3,403,444

 
4,158,565

 
 
585,277

 
2013
 
5 - 40
15150 Sommermeyer St
Houston, TX
 
—

  
418,580

 
1,564,587

 
246,785

 
418,580

 
 
1,811,372

 
2,229,952

 
 
320,777

 
2013
 
5 - 40
16330 Central Green Boulevard
Houston, TX
 
—

  
1,540,109

 
—

 
8,529,156

 
1,966,472

 
 
8,102,793

 
10,069,265

 
 
824,138

 
2014
 
5 - 40
16405 Air Center Boulevard
Houston, TX
 
—

  
438,853

 
3,030,396

 
932,746

 
438,853

 
 
3,963,142

 
4,401,995

 
 
1,923,396

 
1997
 
5 - 40
16420 West Hardy Road
Houston, TX
 
—

  
529,876

 
3,267,872

 
405,454

 
529,876

 
 
3,673,326

 
4,203,202

 
 
603,596

 
2013
 
5 - 40
16445 Air Center Boulevard
Houston, TX
 
—

  
363,339

 
2,509,186

 
332,364

 
363,339

 
 
2,841,550

 
3,204,889

 
 
1,391,813

 
1997
 
5 - 40

108

LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances (1)
 
 Land
 
 Building
 
 Costs Capitalized Subsequent to Acquisition (2)
 
Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2017
 
 
 Accumulated Depreciation 12/31/2017
 
Date of Construction or Acquisition
 
Depreciable life (years)
 OPERATING PROPERTIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1646 Rankin Road
Houston, TX
 
—

  
329,961

 
—

 
5,128,643

 
592,234

 
 
4,866,370

 
5,458,604

 
 
1,625,011

 
2005
 
5 - 40
1655 Townhurst Drive
Houston, TX
 
—

 *
197,226

 
935,036

 
528,775

 
197,226

 
 
1,463,811

 
1,661,037

 
 
331,956

 
2013
 
5 - 40
16580 Air Center Boulevard
Houston, TX
 
—

  
289,000

 
3,559,857

 
1,318,020

 
289,000

 
 
4,877,878

 
5,166,878

 
 
2,054,844

 
1997
 
5 - 40
16602 Central Green Boulevard
Houston, TX
 
—

  
284,403

 
—

 
5,462,115

 
503,779

 
 
5,242,739

 
5,746,518

 
 
1,629,717

 
2005
 
5 - 40
16605 Air Center Boulevard
Houston, TX
 
—

  
298,999

 
—

 
3,424,045

 
496,186

 
 
3,226,858

 
3,723,044

 
 
1,272,564

 
2002
 
5 - 40
1665 Townhurst Drive
Houston, TX
 
—

 *
452,439

 
2,016,585

 
532,837

 
452,439

 
 
2,549,421

 
3,001,860

 
 
340,160

 
2013
 
5 - 40
16680 Central Green Boulevard
Houston, TX
 
—

  
311,952

 
—

 
3,714,436

 
492,869

 
 
3,533,519

 
4,026,388

 
 
863,726

 
2001
 
5 - 40
16685 Air Center Boulevard
Houston, TX
 
—

  
414,691

 
—

 
2,455,433

 
414,691

 
 
2,455,433

 
2,870,124

 
 
820,383

 
2004
 
5 - 40
1755 Trans Central Drive
Houston, TX
 
—

  
293,534

 
3,036,269

 
1,254,342

 
306,147

 
 
4,277,998

 
4,584,145

 
 
1,661,466

 
1999
 
5 - 40
4301 S Pinemont Dr
Houston, TX
 
—

 *
226,973

 
1,174,979

 
142,669

 
226,973

 
 
1,317,648

 
1,544,621

 
 
279,123

 
2013
 
5 - 40
4401 S Pinemont Dr
Houston, TX
 
—

 *
244,240

 
1,412,622

 
164,426

 
244,240

 
 
1,577,048

 
1,821,288

 
 
322,106

 
2013
 
5 - 40
4501 S Pinemont Dr
Houston, TX
 
—

 *
252,907

 
1,504,053

 
106,793

 
252,907

 
 
1,610,846

 
1,863,753

 
 
223,579

 
2013
 
5 - 40
5200 N. Sam Houston Parkway
Houston, TX
 
—

  
1,519,458

 
7,135,548

 
3,704,347

 
1,520,074

 
 
10,839,279

 
12,359,353

 
 
3,591,298

 
2007
 
5 - 40
5250 N. Sam Houston Parkway
Houston, TX
 
—

  
2,173,287

 
8,868,256

 
2,845,225

 
2,173,942

 
 
11,712,826

 
13,886,768

 
 
2,982,334

 
2007
 
5 - 40
5500 N. Sam Houston Parkway West
Houston, TX
 
—

  
1,243,541

 
—

 
6,356,567

 
1,513,152

 
 
6,086,956

 
7,600,108

 
 
1,284,483

 
2011
 
5 - 40
8017 Pinemont Drive
Houston, TX
 
—

  
900,953

 
5,323,727

 
442,546

 
900,953

 
 
5,766,273

 
6,667,226

 
 
756,953

 
2013
 
5 - 40
8272 El Rio Street
Houston, TX
 
—

 *
530,494

 
4,108,626

 
302,930

 
530,494

 
 
4,411,556

 
4,942,050

 
 
669,352

 
2013
 
5 - 40
8282 El Rio Street
Houston, TX
 
—

 *
450,422

 
3,304,942

 
1,085,091

 
450,422

 
 
4,390,033

 
4,840,455

 
 
770,811

 
2013
 
5 - 40
8301 Fallbrook Drive
Houston, TX
 
—

  
4,515,862

 
—

 
26,996,308

 
7,083,514

 
 
24,428,656

 
31,512,170

 
 
6,261,457

 
2006
 
5 - 40
8303 Fallbrook Drive
Houston, TX
 
—

  
4,613,370

 
—

 
16,413,097

 
4,858,863

 
 
16,167,604

 
21,026,467

 
 
998,943

 
2013
 
5 - 40
850 Greens Parkway
Houston, TX
 
—

  
2,893,405

 
11,593,197

 
2,915,414

 
2,899,861

 
 
14,502,154

 
17,402,015

 
 
3,779,158

 
2007
 
5 - 40
860 Greens Parkway
Houston, TX
 
—

  
1,399,365

 
6,344,650

 
1,637,084

 
1,374,012

 
 
8,007,087

 
9,381,099

 
 
2,105,831

 
2007
 
5 - 40
8801-19 & 8821-49 Fallbrook Drive
Houston, TX
 
—

  
2,290,001

 
15,297,141

 
4,097,089

 
2,290,002

 
 
19,394,229

 
21,684,231

 
 
6,703,077

 
2000
 
5 - 40
8802-8824 Fallbrook Drive
Houston, TX
 
—

  
2,774,995

 
6,364,767

 
2,050,563

 
2,775,021

 
 
8,415,303

 
11,190,324

 
 
2,583,641

 
2004
 
5 - 40
8825-8839 N Sam Houston Pkwy
Houston, TX
 
—

  
638,453

 
3,258,815

 
740,807

 
638,477

 
 
3,999,597

 
4,638,074

 
 
1,428,818

 
2004
 
5 - 40
8850-8872 Fallbrook Drive
Houston, TX
 
—

  
504,317

 
2,878,351

 
1,952,678

 
504,341

 
 
4,831,005

 
5,335,346

 
 
1,740,453

 
2004
 
5 - 40
16200 Central Green Blvd
Houston, TX
 
—

  
1,748,348

 
—

 
9,342,218

 
2,120,319

 
 
8,970,247

 
11,090,566

 
 
1,448,476

 
2012
 
5 - 40

109

LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances (1)
 
 Land
 
 Building
 
 Costs Capitalized Subsequent to Acquisition (2)
 
Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2017
 
 
 Accumulated Depreciation 12/31/2017
 
Date of Construction or Acquisition
 
Depreciable life (years)
 OPERATING PROPERTIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5430 FAA Boulevard
Irving, TX
 
—

 
2,245,346

 
—

 
11,190,939

 
3,198,031

 
 
10,238,254

 
13,436,285

 
 
101,529

 
2015
 
5 - 40
951 Valleyview Lane
Irving, TX
 
—

 
3,899,824

 
—

 
14,284,349

 
5,554,903

 
 
12,629,270

 
18,184,173

 
 
225,454

 
2015
 
5 - 40
Cabot III UK1B01
Isle of Man, UK
 
—

  
11,888,058

 
35,003,668

 
(8,785,443
)
 
9,702,442

 
 
28,403,841

 
38,106,283

 
 
3,449,692

 
2013
 
5 - 40
1011 N Hilltop Drive
Itasca, IL
 
—

  
842,043

 
984,087

 
206,081

 
842,043

 
 
1,190,168

 
2,032,211

 
 
190,943

 
2013
 
5 - 40
1035 N Hilltop Drive
Itasca, IL
 
—

  
875,172

 
2,071,051

 
125,154

 
875,172

 
 
2,196,206

 
3,071,378

 
 
291,896

 
2013
 
5 - 40
1549 W Glenlake Avenue
Itasca, IL
 
—

  
1,339,627

 
3,763,288

 
197,452

 
1,339,627

 
 
3,960,739

 
5,300,366

 
 
559,334

 
2013
 
5 - 40
901 N Hilltop Drive
Itasca, IL
 
—

  
866,378

 
2,112,616

 
47,981

 
866,378

 
 
2,160,597

 
3,026,975

 
 
272,326

 
2013
 
5 - 40
925 N Hilltop Drive
Itasca, IL
 
—

  
945,251

 
2,010,181

 
47,544

 
945,251

 
 
2,057,725

 
3,002,976

 
 
257,674

 
2013
 
5 - 40
8241 Sandy Court
Jessup, MD
 
—

  
1,246,618

 
6,844,393

 
1,272,078

 
1,246,618

 
 
8,116,470

 
9,363,088

 
 
1,105,430

 
2013
 
5 - 40
8242 Sandy Court
Jessup, MD
 
—

  
1,488,746

 
9,072,440

 
1,482,236

 
1,488,746

 
 
10,554,676

 
12,043,422

 
 
1,556,327

 
2013
 
5 - 40
8246 Sandy Court
Jessup, MD
 
—

  
590,922

 
3,374,522

 
466,278

 
590,922

 
 
3,840,800

 
4,431,722

 
 
452,630

 
2013
 
5 - 40
1305 Chastain Road NW
Kennesaw, GA
 
—

 *
808,159

 
5,712,959

 
1,092,163

 
808,159

 
 
6,805,122

 
7,613,281

 
 
1,171,981

 
2013
 
5 - 40
1325 Chastain Road NW
Kennesaw, GA
 
—

 *
1,612,924

 
9,771,680

 
1,602,887

 
1,612,924

 
 
11,374,567

 
12,987,491

 
 
2,161,272

 
2013
 
5 - 40
3600 Cobb International Bld NW
Kennesaw, GA
 
—

  
716,860

 
6,962,212

 
620,396

 
716,860

 
 
7,582,609

 
8,299,469

 
 
1,236,095

 
2013
 
5 - 40
Unit 1 Bear Way
Kettering, UK
 
—

  
10,849,890

 
36,219,855

 
(8,632,899
)
 
8,855,141

 
 
29,581,705

 
38,436,846

 
 
3,855,300

 
2013
 
5 - 40
650 Swedesford Road
King of Prussia, PA
 
—

 
464,382

 
6,722,830

 
312,687

 
464,382

 
 
7,035,517

 
7,499,899

 
 
3,807,524

 
2013
 
5 - 40
680 Swedesford Road
King of Prussia, PA
 
—

  
952,361

 
6,722,830

 
7,218,586

 
952,361

 
 
13,941,416

 
14,893,777

 
 
7,812,014

 
1971
 
5 - 40
1770 Interstate Drive
Lakeland, FL
 
—

  
650,000

 
5,444,220

 
436

 
650,000

 
 
5,444,656

 
6,094,656

 
 
746,367

 
2012
 
5 - 40
1200 Claybrick Road
Landover,MD
 
—

 
6,876,500

 
—

 
5,392,716

 
4,997,416

 
 
7,271,800

 
12,269,216

 
 
122,940

 
2016
 
5 - 40
5801 Columbia Park Road
Landover,MD
 
—

  
1,187,620

 
4,598,346

 
122,220

 
1,187,620

 
 
4,720,566

 
5,908,186

 
 
4,720,184

 
2013
 
5 - 40
11425 State Highway 225
LaPorte, TX
 
—

  
975,974

 
3,409,036

 
100,980

 
977,542

 
 
3,508,447

 
4,485,989

 
 
1,095,249

 
2006
 
5 - 40
11503 State Highway 225
LaPorte, TX
 
—

  
2,561,931

 
9,695,493

 
276,527

 
2,566,047

 
 
9,967,904

 
12,533,951

 
 
2,946,740

 
2006
 
5 - 40
1701 South 16th St
LaPorte, TX
 
—

  
4,063,262

 
18,719,368

 
339,178

 
4,063,262

 
 
19,058,546

 
23,121,808

 
 
1,326,243

 
2015
 
5 - 40
1801 South 16th Street
LaPorte, TX
 
—

 
3,794,963

 
—

 
24,116,063

 
5,421,262

 
 
22,489,764

 
27,911,026

 
 
48,880

 
2016
 
5 - 40
1842 South 16th St
LaPorte, TX
 
—

  
2,226,284

 
11,976,185

 
20,231

 
2,226,284

 
 
11,996,415

 
14,222,699

 
 
904,697

 
2015
 
5 - 40
1902 South 16th St
LaPorte, TX
 
—

  
2,369,095

 
14,119,020

 
1,131

 
2,369,095

 
 
14,120,151

 
16,489,246

 
 
1,118,950

 
2015
 
5 - 40
640 S State Road 39
Lebanon,IN
 
—

  
1,612,787

 
18,065,552

 
1,219,356

 
1,612,787

 
 
19,284,908

 
20,897,695

 
 
3,004,444

 
2013
 
5 - 40

110

LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances (1)
 
 Land
 
 Building
 
 Costs Capitalized Subsequent to Acquisition (2)
 
Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2017
 
 
 Accumulated Depreciation 12/31/2017
 
Date of Construction or Acquisition
 
Depreciable life (years)
 OPERATING PROPERTIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7528 Walker Way
Lehigh, PA
 
—

  
893,441

 
—

 
5,712,528

 
779,330

 
 
5,826,639

 
6,605,969

 
 
2,282,849

 
2004
 
5 - 40
8301 Industrial Boulevard
Lehigh, PA
 
—

  
11,249,550

 
—

 
49,196,411

 
11,254,716

 
 
49,191,245

 
60,445,961

 
 
14,179,681

 
2005
 
5 - 40
8500 Willard Drive
Lehigh, PA
 
—


6,398,815

 
—

 
33,823,153

 
11,355,974

 
 
28,865,994

 
40,221,968

 
 
6,248,053

 
2004
 
5 - 40
8742 Congdon Hill Dr
Lower Macungie, PA

—

  
22,444,500


20,222,582


1,171,671


22,444,500



21,394,253


43,838,753



941,498


2016

5 - 40
7533 Industrial Parkway
Lower Macungie, PA
 
—

  
5,603,460

 
18,807,987

 
1,860,270

 
5,603,460

 
 
20,668,257

 
26,271,717

 
 
3,672,813

 
2011
 
5 - 40
10 Great Valley Parkway
Malvern, PA
 
—

  
823,540

 
1,341,376

 
248,078

 
832,244

 
 
1,580,750

 
2,412,994

 
 
1,425,276

 
2003
 
5 - 40
100 Chesterfield Parkway
Malvern, PA
 
—

  
1,320,625

 
—

 
7,423,695

 
1,891,736

 
 
6,852,584

 
8,744,320

 
 
3,942,208

 
1998
 
5 - 40
1001 Cedar Hollow Road
Malvern, PA
 
—

  
1,436,814

 
—

 
17,007,048

 
1,676,470

 
 
16,767,392

 
18,443,862

 
 
9,118,790

 
1998
 
5 - 40
12,14,16 Great Valley Parkway
Malvern, PA
 
—

  
130,689

 
—

 
1,329,277

 
128,767

 
 
1,331,199

 
1,459,966

 
 
1,195,890

 
1982
 
5 - 40
14 Lee Boulevard
Malvern, PA
 
—

  
664,282

 
—

 
5,976,172

 
643,892

 
 
5,996,562

 
6,640,454

 
 
4,257,492

 
1988
 
5 - 40
18 Great Valley Parkway
Malvern, PA
 
—

  
394,036

 
3,976,221

 
(1,229,185
)
 
397,293

 
 
2,743,779

 
3,141,072

 
 
2,743,556

 
1980
 
5 - 40
311 Technology Drive
Malvern, PA
 
—

  
397,131

 
—

 
2,710,751

 
397,948

 
 
2,709,934

 
3,107,882

 
 
2,514,676

 
1984
 
5 - 40
425 Old Morehall Road
Malvern, PA
 
—


3,847,501

 
—

 
45,862,512

 
9,953,208

 
 
39,756,805

 
49,710,013

 
 
3,688,031

 
2014
 
5 - 40
50 Morehall Road
Malvern, PA
 
—

  
849,576

 
—

 
14,132,756

 
1,337,076

 
 
13,645,256

 
14,982,332

 
 
7,765,736

 
1997
 
5 - 40
60 Morehall Road
Malvern, PA
 
—

  
865,424

 
9,285,000

 
1,476,443

 
884,974

 
 
10,741,893

 
11,626,867

 
 
6,133,475

 
1989
 
5 - 40
600 Chesterfield Parkway
Malvern, PA
 
—

  
2,013,750

 
—

 
9,308,073

 
2,695,891

 
 
8,625,932

 
11,321,823

 
 
4,702,546

 
1999
 
5 - 40
700 Chesterfield Parkway
Malvern, PA
 
—

  
2,013,750

 
—

 
9,147,731

 
2,683,149

 
 
8,478,332

 
11,161,481

 
 
4,633,824

 
1999
 
5 - 40
1169 Canton Rd
Marietta, GA
 
—

 *
1,232,219

 
17,897,326

 
439,054

 
1,232,219

 
 
18,336,380

 
19,568,599

 
 
2,404,742

 
2013
 
5 - 40
65 Brookfield Oaks Drive
Mauldin, SC
 
—

  
557,174

 
—

 
2,605,186

 
506,318

 
 
2,656,042

 
3,162,360

 
 
469,821

 
2004
 
5 - 40
75 Brookfield Oaks Drive
Mauldin, SC
 
—

  
419,731

 
—

 
2,360,850

 
430,909

 
 
2,349,672

 
2,780,581

 
 
811,157

 
2003
 
5 - 40
126-132 Liberty Industrial Pkw
McDonough, GA
 
—

  
600,666

 
4,184,131

 
573,605

 
600,666

 
 
4,757,735

 
5,358,401

 
 
1,011,099

 
2013
 
5 - 40
95-115 Liberty Industrial Pkwy
McDonough, GA
 
—

  
660,420

 
4,785,127

 
1,752,845

 
660,420

 
 
6,537,972

 
7,198,392

 
 
1,005,026

 
2013
 
5 - 40
11150 NW 122nd Street
Medley, FL
 
—

  
6,627,899

 
—

 
12,263,754

 
6,627,899

 
 
12,263,754

 
18,891,653

 
 
638,054

 
2014
 
5 - 40
11250 NW 122nd Street
Medley, FL
 
—

  
4,798,886

 
—

 
9,229,788

 
4,798,886

 
 
9,229,788

 
14,028,674

 
 
442,152

 
2016
 
5 - 40
11401 NW 134th Street
Medley, FL
 
—

 *
5,558,619

 
17,678,237

 
980,129

 
5,558,619

 
 
18,658,366

 
24,216,985

 
 
2,703,407

 
2013
 
5 - 40
11450 NW 122nd Street
Medley, FL
 
—

 *
1,623,293

 
—

 
11,366,493

 
3,919,238

 
 
9,070,548

 
12,989,786

 
 
661,827

 
2013
 
5 - 40
11440 NW 122 Street
Miami, FL
 
—

 
5,636,564

 
—

 
10,787,507

 
5,944,709

 
 
10,479,362

 
16,424,071

 
 
135,226

 
2016
 
5 - 40

111

LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances (1)
 
 Land
 
 Building
 
 Costs Capitalized Subsequent to Acquisition (2)
 
Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2017
 
 
 Accumulated Depreciation 12/31/2017
 
Date of Construction or Acquisition
 
Depreciable life (years)
 OPERATING PROPERTIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
456 International Parkway
Minooka, IL
 
—

  
3,862,683

 
14,357,981

 
4,629,086

 
3,862,683

 
 
18,987,067

 
22,849,750

 
 
2,656,638

 
2012
 
5 - 40
21 S Middlesex Avenue
Monroe Township, NJ
 
—

 *
2,097,170

 
9,715,401

 
562,568

 
2,097,170

 
 
10,277,969

 
12,375,139

 
 
1,693,385

 
2013
 
5 - 40

112

LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances (1)
 
 Land
 
 Building
 
 Costs Capitalized Subsequent to Acquisition (2)
 
Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2017
 
 
 Accumulated Depreciation 12/31/2017
 
Date of Construction or Acquisition
 
Depreciable life (years)
 OPERATING PROPERTIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4 S Middlesex Avenue
Monroe Township, NJ
 
—

 *
2,263,153

 
10,261,759

 
1,026,738

 
2,263,153

 
 
11,288,497

 
13,551,650

 
 
1,657,916

 
2013
 
5 - 40
230 Moonachie Ave
Moonachie, NJ
 
—

 
4,031,058

 
2,775,467

 
45,946

 
4,031,058

 
 
2,821,413

 
6,852,471

 
 
36,357

 
2017
 
5 - 40
250 Moonachie Ave
Moonachie, NJ
 
—

 
10,435,430

 
7,272,539

 
131,978

 
10,435,430

 
 
7,404,517

 
17,839,947

 
 
96,404

 
2017
 
5 - 40
22750 Cactus Avenue
Moreno Valley, CA
 
—

 
9,404,283

 
24,380,934

 
1,853,966

 
9,408,276

 
 
26,230,907

 
35,639,183

 
 
2,458,100

 
2014
 
5 - 40
323 Park Knoll Drive
Morrisville, NC
 
—

 
1,071,600

 
4,397,807

 
1,030,423

 
1,071,600

 
 
5,428,230

 
6,499,830

 
 
1,560,466

 
2010
 
5 - 40
324 Park Knoll Drive
Morrisville, NC
 
—

  
1,449,092

 
4,424,932

 
330,650

 
1,449,450

 
 
4,755,224

 
6,204,674

 
 
1,398,371

 
2007
 
5 - 40
619 Distribution Drive
Morrisville, NC
 
—

  
1,031,430

 
5,655,167

 
769,814

 
1,031,685

 
 
6,424,726

 
7,456,411

 
 
1,793,552

 
2007
 
5 - 40
627 Distribution Drive
Morrisville, NC
 
—

  
1,061,370

 
5,152,110

 
384,204

 
1,061,632

 
 
5,536,052

 
6,597,684

 
 
1,524,610

 
2007
 
5 - 40
1775 Hillcrest Rd
Norcross, GA
 
—

 
1,318,956

 
4,379,239

 
351

 
1,318,956

 
 
4,379,590

 
5,698,546

 
 
—

 
2017
 
5 - 40
1879 Lamont Avenue
Odenton, MD
 
—

 *
1,976,000

 
8,099,579

 
2,067,394

 
2,011,030

 
 
10,131,943

 
12,142,973

 
 
3,497,401

 
2004
 
5 - 40
350 Winmeyer Avenue
Odenton, MD
 
—

  
1,778,400

 
7,289,165

 
1,702,845

 
1,809,927

 
 
8,960,483

 
10,770,410

 
 
2,799,293

 
2004
 
5 - 40
4000 E Airport Drive
Ontario, CA
 
—

  
2,686,533

 
10,125,772

 
658,692

 
2,686,533

 
 
10,784,464

 
13,470,997

 
 
1,483,811

 
2013
 
5 - 40
1000 Gills Drive
Orlando, FL
 
—

  
415,906

 
—

 
2,711,665

 
435,400

 
 
2,692,171

 
3,127,571

 
 
702,354

 
2006
 
5 - 40
10003 Satellite Boulevard
Orlando, FL
 
—

  
680,312

 
2,120,754

 
1,351,516

 
680,312

 
 
3,472,270

 
4,152,582

 
 
1,492,523

 
2003
 
5 - 40
10511 & 10611 Satellite Boulevard
Orlando, FL
 
—

  
517,554

 
2,568,186

 
701,878

 
522,991

 
 
3,264,627

 
3,787,618

 
 
1,701,375

 
1985
 
5 - 40
10771 Palm Bay Drive
Orlando, FL
 
—

  
664,605

 
—

 
2,515,852

 
685,383

 
 
2,495,074

 
3,180,457

 
 
969,898

 
2001
 
5 - 40
1090 Gills Drive
Orlando, FL
 
—

  
878,320

 
2,558,833

 
3,837,116

 
878,320

 
 
6,395,949

 
7,274,269

 
 
1,496,145

 
2003
 
5 - 40
1600-1650 Central Florida Parkway
Orlando, FL
 
—

  
518,043

 
2,561,938

 
966,443

 
518,043

 
 
3,528,381

 
4,046,424

 
 
1,887,708

 
1962
 
5 - 40
1902 Cypress Lake Drive
Orlando, FL
 
—

  
523,512

 
3,191,790

 
1,529,900

 
538,512

 
 
4,706,690

 
5,245,202

 
 
2,379,793

 
1989
 
5 - 40
2000 Park Oaks Avenue
Orlando, FL
 
—

 *
913,201

 
6,818,610

 
993,925

 
913,201

 
 
7,812,535

 
8,725,736

 
 
1,131,776

 
2013
 
5 - 40
2202 Taft-Vineland Road
Orlando, FL
 
—

  
1,283,713

 
—

 
7,315,647

 
1,283,713

 
 
7,315,647

 
8,599,360

 
 
3,147,459

 
2004
 
5 - 40
2212 Taft Vineland Road
Orlando, FL
 
—

  
838,853

 
—

 
4,084,873

 
767,953

 
 
4,155,773

 
4,923,726

 
 
1,408,619

 
2006
 
5 - 40
2256 Taft-Vineland Road
Orlando, FL
 
—

  
467,296

 
—

 
2,856,883

 
825,673

 
 
2,498,506

 
3,324,179

 
 
965,372

 
2005
 
5 - 40
2351 Investors Row
Orlando, FL
 
—

  
2,261,924

 
7,496,249

 
1,892,529

 
2,271,785

 
 
9,378,917

 
11,650,702

 
 
3,062,843

 
2004
 
5 - 40
2400 South Lake Orange Drive
Orlando, FL
 
—

  
385,964

 
—

 
3,247,268

 
642,427

 
 
2,990,805

 
3,633,232

 
 
1,441,537

 
2001
 
5 - 40
2412 Sand Lake Road
Orlando, FL
 
—

  
1,236,819

 
3,243,314

 
4,569,481

 
1,244,667

 
 
7,804,947

 
9,049,614

 
 
1,078,475

 
2012
 
5 - 40
2416 Lake Orange Drive
Orlando, FL
 
—

  
535,964

 
—

 
3,817,081

 
704,800

 
 
3,648,245

 
4,353,045

 
 
1,848,025

 
2002
 
5 - 40
6200 Lee Vista Boulevard
Orlando, FL
 
—

  
1,435,301

 
6,174,642

 
701,669

 
1,435,301

 
 
6,876,311

 
8,311,612

 
 
2,236,259

 
2006
 
5 - 40
6989 Lee Vista Boulevard
Orlando, FL
 
—

  
903,701

 
—

 
5,673,463

 
925,671

 
 
5,651,493

 
6,577,164

 
 
2,321,511

 
2001
 
5 - 40

113

LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances (1)
 
 Land
 
 Building
 
 Costs Capitalized Subsequent to Acquisition (2)
 
Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2017
 
 
 Accumulated Depreciation 12/31/2017
 
Date of Construction or Acquisition
 
Depreciable life (years)
 OPERATING PROPERTIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6918 Presidents Drive
Orlando, FL
 
—

  
872,550

 
2,526,043

 
738,036

 
872,550

 
 
3,264,079

 
4,136,629

 
 
407,627

 
2012
 
5 - 40
6923 Lee Vista Boulevard
Orlando, FL
 
—

  
903,701

 
—

 
3,394,043

 
830,953

 
 
3,466,791

 
4,297,744

 
 
911,447

 
2006
 
5 - 40
7022 TPC Drive
Orlando, FL
 
—

  
1,443,510

 
6,775,194

 
666,574

 
1,457,286

 
 
7,427,993

 
8,885,279

 
 
2,162,331

 
2006
 
5 - 40
7100 TPC Drive
Orlando, FL
 
—

  
1,431,489

 
8,002,539

 
1,221,160

 
1,445,807

 
 
9,209,381

 
10,655,188

 
 
2,510,571

 
2006
 
5 - 40
7101 TPC Drive
Orlando, FL
 
—

  
1,553,537

 
5,702,243

 
635,492

 
1,570,863

 
 
6,320,409

 
7,891,272

 
 
1,789,479

 
2006
 
5 - 40
7315 Kingspointe Parkway
Orlando, FL
 
—

  
1,931,697

 
6,388,203

 
2,921,391

 
1,932,004

 
 
9,309,287

 
11,241,291

 
 
3,939,705

 
2004
 
5 - 40
851 Gills Drive
Orlando, FL
 
—

  
332,992

 
—

 
2,800,846

 
373,500

 
 
2,760,338

 
3,133,838

 
 
717,909

 
2006
 
5 - 40
950 Gills Drive
Orlando, FL
 
—

  
443,989

 
—

 
2,817,379

 
464,800

 
 
2,796,568

 
3,261,368

 
 
664,304

 
2006
 
5 - 40
9550 Satellite Boulevard
Orlando, FL
 
—

  
574,831

 
—

 
2,690,726

 
587,319

 
 
2,678,238

 
3,265,557

 
 
1,422,420

 
1999
 
5 - 40
9700 Satellite Boulevard
Orlando, FL
 
—

  
252,850

 
1,297,923

 
185,218

 
252,850

 
 
1,483,141

 
1,735,991

 
 
744,969

 
1989
 
5 - 40
9600 Satellite Boulevard
Orlando, FL
 
—

  
405,362

 
1,146,546

 
451,093

 
405,362

 
 
1,597,639

 
2,003,001

 
 
775,969

 
1989
 
5 - 40
1 Crescent Drive
Philadelphia, PA
 
—

  
567,280

 
—

 
15,193,253

 
347,892

 
 
15,412,641

 
15,760,533

 
 
4,588,553

 
2004
 
5 - 40
3 Crescent Drive
Philadelphia, PA
 
—

 
214,726

 
—

 
24,170,214

 
417,823

 
 
23,967,117

 
24,384,940

 
 
4,631,085

 
2008
 
5 - 40
1200 Intrepid Avenue
Philadelphia, PA
 
—

 
404,883

 
—

 
29,737,547

 
455,507

 
 
29,686,923

 
30,142,430

 
 
548,890

 
2015
 
5 - 40
150 Rouse Blvd
Philadelphia, PA
 
—

 
567,531

 
—

 
14,215,415

 
569,349

 
 
14,213,597

 
14,782,946

 
 
2,222,385

 
2011
 
5 - 40
201 Rouse Blvd
Philadelphia, PA
 
—

 
243,905

 
—

 
22,536,140

 
449,013

 
 
22,331,032

 
22,780,045

 
 
2,045,156

 
2013
 
5 - 40
351 Rouse Blvd
Philadelphia, PA
 
—

 
359,864

 
—

 
16,741,665

 
367,016

 
 
16,734,513

 
17,101,529

 
 
468,293

 
2015
 
5 - 40
4000 South 26th Street
Philadelphia, PA
 
—

 
1,255,507

 
—

 
10,817,040

 
1,142,358

 
 
10,930,189

 
12,072,547

 
 
789,639

 
2014
 
5 - 40
4020 South 26th Street
Philadelphia, PA
 
—

 
51,784

 
—

 
7,165,713

 
616,467

 
 
6,601,030

 
7,217,497

 
 
1,042,441

 
2011
 
5 - 40
4050 South 26th Street
Philadelphia, PA
 
—

 
46,301

 
—

 
7,164,435

 
616,670

 
 
6,594,066

 
7,210,736

 
 
1,278,766

 
2011
 
5 - 40
4300 South 26th Street
Philadelphia, PA
 
—

  
402,673

 
—

 
34,857,088

 
413,030

 
 
34,846,731

 
35,259,761

 
 
7,526,028

 
2008
 
5 - 40
4701 League Island Boulevard
Philadelphia, PA
 
—


419,107

 
—

 
13,301,142

 
435,763

 
 
13,284,486

 
13,720,249

 
 
688,698

 
2016
 
5 - 40
4751 League Island Boulevard
Philadelphia, PA
 
—

  
992,965

 
331,924

 
7,830,302

 
613,248

 
 
8,541,943

 
9,155,191

 
 
3,262,455

 
2003
 
5 - 40
4775 League Island Blvd.
Philadelphia, PA
 
—

 
891,892

 
—

 
5,579,310

 
366,982

 
 
6,104,220

 
6,471,202

 
 
1,639,085

 
2006
 
5 - 40
8th & Walnut Streets
Philadelphia, PA
 
38,446,743

 *
734,275

 
—

 
45,400,360

 
—

 
 
46,134,635

 
46,134,635

 
 
4,515,020

 
2011
 
5 - 40
2626 South 7th Street
Phoenix, AZ
 
—

  
2,519,510

 
3,798,560

 
3,685,037

 
2,519,510

 
 
7,483,597

 
10,003,107

 
 
1,336,897

 
2012
 
5 - 40
563 South 63rd Avenue
Phoenix, AZ
 
—

  
5,523,427

 
14,581,705

 
12,213,826

 
5,636,070

 
 
26,682,888

 
32,318,958

 
 
3,051,216

 
2013
 
5 - 40
1500 S 71st Avenue
Phoenix, AZ
 
—

 
4,234,407

 
—

 
10,162,853

 
3,333,729

 
 
11,063,531

 
14,397,260

 
 
155,768

 
2016
 
5 - 40
7205 W Buckeye Rd
Phoenix, AZ
 
—

 
2,514,425

 
—

 
10,725,015

 
2,514,425

 
 
10,725,015

 
13,239,440

 
 
155,365

 
2016
 
5 - 40

114

LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances (1)
 
 Land
 
 Building
 
 Costs Capitalized Subsequent to Acquisition (2)
 
Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2017
 
 
 Accumulated Depreciation 12/31/2017
 
Date of Construction or Acquisition
 
Depreciable life (years)
 OPERATING PROPERTIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1000 Klein Road
Plano, TX
 
—

  
706,660

 
5,894,330

 
221,055

 
706,660

 
 
6,115,386

 
6,822,046

 
 
828,306

 
2013
 
5 - 40
1901 10th Street
Plano, TX
 
—

 *
555,168

 
6,401,789

 
618,010

 
555,168

 
 
7,019,799

 
7,574,967

 
 
1,037,479

 
2013
 
5 - 40
1909 10th Street
Plano, TX
 
—

 *
551,706

 
5,797,440

 
328,067

 
551,706

 
 
6,125,507

 
6,677,213

 
 
880,200

 
2013
 
5 - 40
3605 East Plano Parkway
Plano, TX
 
—

  
1,047,996

 
9,218,748

 
1,970,974

 
1,047,996

 
 
11,189,721

 
12,237,717

 
 
1,820,188

 
2013
 
5 - 40
3701 East Plano Parkway
Plano, TX
 
—

  
877,564

 
7,460,686

 
773,494

 
877,564

 
 
8,234,179

 
9,111,743

 
 
1,150,031

 
2013
 
5 - 40
800 Klein Road
Plano, TX
 
—

  
580,456

 
5,681,283

 
1,595,423

 
580,456

 
 
7,276,706

 
7,857,162

 
 
973,045

 
2013
 
5 - 40
900 Klein Road
Plano, TX
 
—

  
723,534

 
6,004,923

 
378,359

 
723,534

 
 
6,383,282

 
7,106,816

 
 
989,893

 
2013
 
5 - 40
9801 80th Avenue
Pleasant Prairie, WI
 
—

  
1,692,077

 
7,934,794

 
58,937

 
1,689,726

 
 
7,996,082

 
9,685,808

 
 
3,807,978

 
1994
 
5 - 40
14630-14650 28th Avenue North
Plymouth, MN
 
—

  
198,205

 
1,793,422

 
1,097,124

 
198,205

 
 
2,890,545

 
3,088,750

 
 
1,499,797

 
1978
 
5 - 40
2920 Northwest Boulevard
Plymouth, MN
 
—

  
392,026

 
3,433,678

 
773,681

 
384,235

 
 
4,215,150

 
4,599,385

 
 
2,058,675

 
1997
 
5 - 40
5905 Trenton Lane North
Plymouth, MN
 
—

  
1,616,360

 
4,487,462

 
735,642

 
1,616,360

 
 
5,223,103

 
6,839,463

 
 
865,378

 
2013
 
5 - 40
6055 Nathan Lane North
Plymouth, MN
 
—

  
1,327,017

 
4,527,404

 
826,105

 
1,327,017

 
 
5,353,509

 
6,680,526

 
 
837,746

 
2013
 
5 - 40
1400 SW 6th Court
Pompano Beach, FL
 
—

  
1,157,049

 
4,620,956

 
1,351,035

 
1,157,049

 
 
5,971,991

 
7,129,040

 
 
2,947,077

 
1986
 
5 - 40
1405 SW 6th Court
Pompano Beach, FL
 
—

  
392,138

 
1,565,787

 
443,631

 
392,138

 
 
2,009,419

 
2,401,557

 
 
1,046,464

 
1985
 
5 - 40
1500 SW 5th Court
Pompano Beach, FL
 
—

  
972,232

 
3,892,085

 
1,423,097

 
972,232

 
 
5,315,182

 
6,287,414

 
 
2,445,184

 
1957
 
5 - 40
1501 SW 5th Court
Pompano Beach, FL
 
—

  
203,247

 
811,093

 
369,074

 
203,247

 
 
1,180,168

 
1,383,415

 
 
612,674

 
1990
 
5 - 40
1601 SW 5th Court
Pompano Beach, FL
 
—

  
203,247

 
811,093

 
208,337

 
203,247

 
 
1,019,431

 
1,222,678

 
 
476,637

 
1990
 
5 - 40
1651 SW 5th Court
Pompano Beach, FL
 
—

  
203,247

 
811,093

 
154,527

 
203,247

 
 
965,621

 
1,168,868

 
 
450,544

 
1990
 
5 - 40
2201-2215 NW 30th Place
Pompano Beach, FL
 
—

  
1,120,328

 
3,427,358

 
131,858

 
1,120,328

 
 
3,559,216

 
4,679,544

 
 
484,217

 
2013
 
5 - 40
2250-2270 NW 30th Place
Pompano Beach, FL
 
—

  
993,015

 
2,423,174

 
135,867

 
993,015

 
 
2,559,041

 
3,552,056

 
 
381,687

 
2013
 
5 - 40
2280-2300 NW 30th Place
Pompano Beach, FL
 
—

  
906,947

 
2,157,802

 
189,366

 
906,947

 
 
2,347,169

 
3,254,116

 
 
377,549

 
2013
 
5 - 40
2301-2329 NW 30th Place
Pompano Beach, FL
 
—

  
1,268,707

 
3,079,811

 
124,704

 
1,268,707

 
 
3,204,515

 
4,473,222

 
 
437,326

 
2013
 
5 - 40
3000 NW 25th Avenue
Pompano Beach, FL
 
—

  
1,087,554

 
2,897,117

 
156,810

 
1,087,554

 
 
3,053,927

 
4,141,481

 
 
466,741

 
2013
 
5 - 40
3001-3037 NW 25th Avenue
Pompano Beach, FL
 
—

  
1,548,542

 
3,512,041

 
338,715

 
1,548,542

 
 
3,850,757

 
5,399,299

 
 
663,071

 
2013
 
5 - 40
3012-3050 NW 25th Avenue
Pompano Beach, FL
 
—

  
1,112,781

 
2,763,862

 
225,157

 
1,112,781

 
 
2,989,018

 
4,101,799

 
 
478,959

 
2013
 
5 - 40
595 SW 13th Terrace
Pompano Beach, FL
 
—

  
359,933

 
1,437,116

 
720,423

 
359,933

 
 
2,157,539

 
2,517,472

 
 
1,259,729

 
1984
 
5 - 40
601 SW 13th Terrace
Pompano Beach, FL
 
—

  
164,413

 
655,933

 
279,401

 
164,413

 
 
935,334

 
1,099,747

 
 
536,076

 
1984
 
5 - 40
605 SW 16th Terrace
Pompano Beach, FL
 
—

  
310,778

 
1,238,324

 
294,980

 
310,178

 
 
1,533,904

 
1,844,082

 
 
672,829

 
1965
 
5 - 40
2459 Almond Avenue
Redlands, CA
 
 
 
3,810,171

 
11,979,923

 
140,915

 
3,810,171

 
 
12,120,838

 
15,931,009

 
 
112,006

 
2017
 
5 - 40

115

LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances (1)
 
 Land
 
 Building
 
 Costs Capitalized Subsequent to Acquisition (2)
 
Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2017
 
 
 Accumulated Depreciation 12/31/2017
 
Date of Construction or Acquisition
 
Depreciable life (years)
 OPERATING PROPERTIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1221 N Alder Ave
Rialto, CA
 
 
 
17,280,833

 
72,740,859

 
5,825

 
17,280,833

 
 
72,746,684

 
90,027,517

 
 
14,606

 
2017
 
5 - 40
1920 West Baseline Rd
Rialto, CA
 
—


9,361,943

 
17,970,709

 
454,600

 
9,411,621

 
 
18,375,631

 
27,787,252

 
 
1,430,709

 
2014
 
5 - 40
301 Hill Carter Parkway
Richmond, VA
 
—

  
659,456

 
4,836,010

 
160,298

 
659,456

 
 
4,996,308

 
5,655,764

 
 
2,886,300

 
1989
 
5 - 40
4101-4127 Carolina Avenue
Richmond, VA
 
—

  
310,854

 
2,279,597

 
1,910,263

 
310,854

 
 
4,189,860

 
4,500,714

 
 
1,969,050

 
1973
 
5 - 40
4201-4261 Carolina Avenue
Richmond, VA
 
—

  
693,203

 
5,083,493

 
2,158,077

 
693,203

 
 
7,241,570

 
7,934,773

 
 
4,258,125

 
1975
 
5 - 40
4263-4299 Carolina Avenue
Richmond, VA
 
—

  
256,203

 
2,549,649

 
3,110,924

 
256,203

 
 
5,660,573

 
5,916,776

 
 
2,854,983

 
1976
 
5 - 40
4263F-N. Carolina Avenue
Richmond, VA
 
—

  
91,476

 
—

 
1,969,181

 
91,599

 
 
1,969,058

 
2,060,657

 
 
1,069,559

 
1975
 
5 - 40
4301-4335 Carolina Avenue
Richmond, VA
 
—

  
223,696

 
1,640,435

 
2,945,635

 
223,696

 
 
4,586,070

 
4,809,766

 
 
2,149,270

 
1978
 
5 - 40
4337-4379 Carolina Avenue
Richmond, VA
 
—

  
325,303

 
2,385,557

 
1,426,384

 
325,303

 
 
3,811,941

 
4,137,244

 
 
1,949,170

 
1979
 
5 - 40
4401-4445 Carolina Avenue
Richmond, VA
 
—

  
615,038

 
4,510,272

 
590,263

 
615,038

 
 
5,100,535

 
5,715,573

 
 
2,849,707

 
1988
 
5 - 40
4447-4491 Carolina Avenue
Richmond, VA
 
—

  
454,056

 
2,729,742

 
561,739

 
454,056

 
 
3,291,481

 
3,745,537

 
 
1,924,513

 
1987
 
5 - 40
4501-4549 Carolina Avenue
Richmond, VA
 
—

  
486,166

 
3,565,211

 
588,371

 
486,166

 
 
4,153,582

 
4,639,748

 
 
2,416,513

 
1981
 
5 - 40
4551-4593 Carolina Avenue
Richmond, VA
 
—

  
474,360

 
3,478,646

 
1,022,000

 
474,360

 
 
4,500,646

 
4,975,006

 
 
2,819,618

 
1982
 
5 - 40
4601-4643 Carolina Avenue
Richmond, VA
 
—

  
652,455

 
4,784,675

 
1,194,888

 
652,455

 
 
5,979,563

 
6,632,018

 
 
3,375,244

 
1985
 
5 - 40
4645-4683 Carolina Avenue
Richmond, VA
 
—

  
404,616

 
2,967,187

 
640,579

 
404,616

 
 
3,607,766

 
4,012,382

 
 
2,066,465

 
1985
 
5 - 40
4717-4729 Eubank Road
Richmond, VA
 
—

  
449,447

 
3,294,697

 
2,231,233

 
452,263

 
 
5,523,114

 
5,975,377

 
 
3,101,325

 
1978
 
5 - 40
510 Eastpark Court
Richmond, VA
 
—

  
261,961

 
2,110,874

 
435,046

 
262,210

 
 
2,545,671

 
2,807,881

 
 
1,452,681

 
1989
 
5 - 40
520 Eastpark Court
Richmond, VA
 
—

  
486,118

 
4,083,582

 
707,346

 
486,598

 
 
4,790,448

 
5,277,046

 
 
2,478,123

 
1989
 
5 - 40
530 Eastpark Court
Richmond, VA
 
—

  
266,883

 
—

 
2,609,290

 
334,772

 
 
2,541,401

 
2,876,173

 
 
1,320,396

 
1999
 
5 - 40
540 Eastpark Court
Richmond, VA
 
—

  
742,300

 
—

 
5,433,803

 
1,066,839

 
 
5,109,264

 
6,176,103

 
 
1,278,890

 
2007
 
5 - 40
5600-5626 Eastport Boulevard
Richmond, VA
 
—

  
489,941

 
3,592,900

 
653,447

 
489,941

 
 
4,246,347

 
4,736,288

 
 
2,315,211

 
1989
 
5 - 40
5601-5659 Eastport Boulevard
Richmond, VA
 
—

  
705,660

 
—

 
4,775,225

 
720,100

 
 
4,760,785

 
5,480,885

 
 
2,656,819

 
1996
 
5 - 40
5650-5674 Eastport Boulevard
Richmond, VA
 
—

  
644,384

 
4,025,480

 
911,909

 
644,384

 
 
4,937,389

 
5,581,773

 
 
2,587,321

 
1990
 
5 - 40
5700 Eastport Boulevard
Richmond, VA
 
—

  
408,729

 
2,697,348

 
1,248,597

 
408,729

 
 
3,945,945

 
4,354,674

 
 
2,349,031

 
1990
 
5 - 40
5701-5799 Eastport Boulevard
Richmond, VA
 
—

  
694,644

 
—

 
5,793,328

 
700,503

 
 
5,787,469

 
6,487,972

 
 
2,741,387

 
1998
 
5 - 40
5800 Eastport Boulevard
Richmond, VA
 
—


604,146

 
—

 
7,591,578

 
604,146

 
 
7,591,578

 
8,195,724

 
 
419,106

 
2016
 
5 - 40
5900 Eastport Boulevard
Richmond, VA
 
—

  
676,661

 
—

 
5,033,575

 
687,898

 
 
5,022,338

 
5,710,236

 
 
2,731,296

 
1997
 
5 - 40
6000 Eastport Blvd
Richmond, VA
 
—

  
872,901

 
—

 
7,490,690

 
901,666

 
 
7,461,925

 
8,363,591

 
 
1,844,704

 
1997
 
5 - 40
6530 Judge Adams Road
Rock Creek, NC
 
—

  
305,821

 
—

 
4,984,310

 
335,061

 
 
4,955,070

 
5,290,131

 
 
2,445,869

 
1999
 
5 - 40

116

LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances (1)
 
 Land
 
 Building
 
 Costs Capitalized Subsequent to Acquisition (2)
 
Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2017
 
 
 Accumulated Depreciation 12/31/2017
 
Date of Construction or Acquisition
 
Depreciable life (years)
 OPERATING PROPERTIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6532 Judge Adams Road
Rock Creek, NC
 
—

  
354,903

 
—

 
4,029,460

 
399,988

 
 
3,984,375

 
4,384,363

 
 
2,132,455

 
1997
 
5 - 40
13098 George Weber Drive
Rogers, MN
 
—


895,811

 
6,004,189

 
342,789

 
895,811

 
 
6,346,978

 
7,242,789

 
 
1,131,645

 
2011
 
5 - 40
13220 Wilfred Lane
Rogers, MN
 
—


508,532

 
—

 
11,262,730

 
1,396,324

 
 
10,374,938

 
11,771,262

 
 
1,167,513

 
2014
 
5 - 40
13225 Brockton Lane
Rogers, MN
 
—


1,048,093

 
—

 
10,465,007

 
1,066,159

 
 
10,446,941

 
11,513,100

 
 
1,095,596

 
2014
 
5 - 40
1070 Windham Parkway
Romeoville, IL
 
—


8,672,143

 
24,144,864

 
1,240,599

 
8,672,143

 
 
25,385,463

 
34,057,606

 
 
3,444,236

 
2012
 
5 - 40
1550 Central Avenue
Roselle, IL
 
—

 *
2,884,492

 
10,439,793

 
1,445,451

 
2,884,492

 
 
11,885,244

 
14,769,736

 
 
1,757,721

 
2013
 
5 - 40
1135 Aviation Place
San Fernando, CA
 
—


3,035,034

 
2,844,962

 
460,883

 
3,035,034

 
 
3,305,845

 
6,340,879

 
 
520,419

 
2013
 
5 - 40
5800 Technology Boulevard
Sandston, VA
 
—


1,741,867

 
—

 
12,042,698

 
1,744,160

 
 
12,040,405

 
13,784,565

 
 
426,034

 
2016
 
5 - 40
8715 Bollman Place
Savage, MD
 
—


1,263,237

 
2,633,210

 
216,780

 
1,263,237

 
 
2,849,990

 
4,113,227

 
 
423,573

 
2013
 
5 - 40
8501 East Raintree Drive
Scottsdale, AZ
 
—


4,076,412

 
—

 
27,623,368

 
4,115,137

 
 
27,584,643

 
31,699,780

 
 
10,010,208

 
2005
 
5 - 40
1150 Gateway Drive
Shakopee, MN
 
—


1,126,865

 
5,684,178

 
208,099

 
1,126,865

 
 
5,892,277

 
7,019,142

 
 
797,282

 
2012
 
5 - 40
5555 12th Avenue East
Shakopee, MN
 
—


887,285

 
5,321,200

 
706,086

 
887,285

 
 
6,027,286

 
6,914,571

 
 
938,514

 
2012
 
5 - 40
5651 Innovation Boulevard
Shakopee, MN
 
—


1,551,579

 
9,541,234

 
1,836,241

 
1,552,083

 
 
11,376,971

 
12,929,054

 
 
620,019

 
2015
 
5 - 40
12110 Champion Way
Sharonville, OH
 
—


1,337,271

 
6,135,118

 
619,579

 
1,337,271

 
 
6,754,698

 
8,091,969

 
 
1,079,960

 
2013
 
5 - 40
9300 Olde Scotland Road
Shippensburg, PA
 
—


10,232,633

 
—

 
84,620,569

 
12,933,027

 
 
81,920,175

 
94,853,202

 
 
8,405,238

 
2014
 
5 - 40
3990 Heritage Oak Court
Simi Valley, CA
 
—


1,964,140

 
10,667,267

 
348,024

 
1,964,140

 
 
11,015,291

 
12,979,431

 
 
1,442,290

 
2013
 
5 - 40
3654-3668 Swenson Avenue
St. Charles, IL
 
—


643,639

 
1,645,058

 
241,111

 
643,639

 
 
1,886,169

 
2,529,808

 
 
272,149

 
2013
 
5 - 40
3701 Illinois Ave
St. Charles, IL
 
—


672,500

 
1,288,924

 
136,087

 
672,500

 
 
1,425,011

 
2,097,511

 
 
239,510

 
2013
 
5 - 40
3950-3980 Swenson Avenue
St. Charles, IL
 
—


851,080

 
3,027,753

 
194,238

 
851,080

 
 
3,221,991

 
4,073,071

 
 
499,121

 
2013
 
5 - 40
1501 102nd Avenue North
St. Petersburg, FL
 
—

 *
283,474

 
2,230,868

 
175,893

 
283,474

 
 
2,406,760

 
2,690,234

 
 
343,528

 
2013
 
5 - 40
1527 102nd Avenue North
St. Petersburg, FL
 
—

 *
374,284

 
2,987,226

 
269,805

 
374,284

 
 
3,257,031

 
3,631,315

 
 
458,272

 
2013
 
5 - 40
1551 102nd Avenue North
St. Petersburg, FL
 
—

 *
699,797

 
5,214,438

 
1,049,801

 
699,797

 
 
6,264,239

 
6,964,036

 
 
958,613

 
2013
 
5 - 40
6900 Harbour View Boulevard
Suffolk, VA
 
—


904,052

 
—

 
8,905,485

 
807,006

 
 
9,002,531

 
9,809,537

 
 
2,821,271

 
2006
 
5 - 40
6920 Harbour View Boulevard
Suffolk, VA
 
—


603,391

 
—

 
6,811,694

 
2,628,635

 
 
4,786,450

 
7,415,085

 
 
826,103

 
2005
 
5 - 40
6950 Harbour View Blvd
Suffolk, VA
 
—


929,844

 
—

 
6,399,035

 
794,848

 
 
6,534,031

 
7,328,879

 
 
2,021,547

 
2004
 
5 - 40
1516 Fryar Avenue
Sumner, WA
 
—


1,675,402

 
5,079,543

 
889,814

 
1,675,402

 
 
5,969,357

 
7,644,759

 
 
1,021,745

 
2013
 
5 - 40
3401-3409 Cragmont Drive
Tampa, FL
 
—

  
556,952

 
3,849,236

 
39,335

 
556,952

 
 
3,888,571

 
4,445,523

 
 
505,356

 
2012
 
5 - 40
3502 Riga Boulevard
Tampa, FL
 
—

  
201,600

 
1,263,131

 
239,882

 
201,600

 
 
1,503,013

 
1,704,613

 
 
181,319

 
2012
 
5 - 40
3505 Cragmont Drive
Tampa, FL
 
—

  
936,336

 
7,155,520

 
1,886

 
936,336

 
 
7,157,406

 
8,093,742

 
 
1,016,212

 
2012
 
5 - 40

117

LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances (1)
 
 Land
 
 Building
 
 Costs Capitalized Subsequent to Acquisition (2)
 
Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2017
 
 
 Accumulated Depreciation 12/31/2017
 
Date of Construction or Acquisition
 
Depreciable life (years)
 OPERATING PROPERTIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3608 Queen Palm Drive
Tampa, FL
 
—

  
650,384

 
4,764,301

 
169,104

 
650,384

 
 
4,933,405

 
5,583,789

 
 
679,515

 
2012
 
5 - 40
5250 Eagle Trail Drive
Tampa, FL
 
—

  
952,860

 
—

 
3,636,749

 
952,860

 
 
3,636,749

 
4,589,609

 
 
1,710,467

 
1998
 
5 - 40
5501-5519 Pioneer Park Boulevard
Tampa, FL
 
—

  
162,000

 
1,613,000

 
997,161

 
262,416

 
 
2,509,745

 
2,772,161

 
 
1,486,601

 
1981
 
5 - 40
5690-5694 Crenshaw Street
Tampa, FL
 
—

  
181,923

 
1,812,496

 
1,023,603

 
181,923

 
 
2,836,099

 
3,018,022

 
 
1,441,409

 
1979
 
5 - 40
8110 Anderson Road
Tampa, FL
 
—

  
912,663

 
5,425,143

 
357,958

 
912,663

 
 
5,783,101

 
6,695,764

 
 
884,161

 
2012
 
5 - 40
8130 Anderson Road
Tampa, FL
 
—

  
655,668

 
4,132,076

 
135,482

 
655,668

 
 
4,267,558

 
4,923,226

 
 
640,520

 
2012
 
5 - 40
9020 King Palm Drive
Tampa, FL
 
—

  
1,718,496

 
11,697,381

 
913,458

 
1,718,496

 
 
12,610,839

 
14,329,335

 
 
1,699,170

 
2012
 
5 - 40
9110 King Palm Drive
Tampa, FL
 
—

  
1,203,200

 
7,979,540

 
764,935

 
1,203,200

 
 
8,744,475

 
9,947,675

 
 
1,144,622

 
2012
 
5 - 40
9203 King Palm Drive
Tampa, FL
 
—

  
754,832

 
4,966,864

 
(33,052
)
 
754,832

 
 
4,933,812

 
5,688,644

 
 
705,090

 
2012
 
5 - 40
9319 Peach Palm Drive
Tampa, FL
 
—

  
612,536

 
4,168,473

 
10,035

 
612,536

 
 
4,178,508

 
4,791,044

 
 
553,112

 
2012
 
5 - 40
9704 Solar Drive
Tampa, FL
 
—

  
374,548

 
1,354,800

 
763,058

 
374,548

 
 
2,117,858

 
2,492,406

 
 
260,248

 
2012
 
5 - 40
9945 Currie Davis Drive
Tampa, FL
 
—

  
1,134,286

 
9,241,807

 
381,604

 
1,134,286

 
 
9,623,410

 
10,757,696

 
 
1,384,379

 
2013
 
5 - 40
1850 W. Rio Salado Parkway
Tempe, AZ
 
—

  
3,975,600

 
—

 
23,099,819

 
3,975,600

 
 
23,099,819

 
27,075,419

 
 
1,824,610

 
2013
 
5 - 40
1858 E Encanto Dr
Tempe, AZ
 
—

 *
877,611

 
4,485,427

 
412,814

 
877,611

 
 
4,898,241

 
5,775,852

 
 
736,485

 
2013
 
5 - 40
1910 W. Rio Salado Parkway
Tempe, AZ
 
—


4,693,504

 
—

 
24,629,008

 
4,693,504

 
 
24,629,008

 
29,322,512

 
 
1,755,471

 
2016
 
5 - 40
1930 W Rio Salado Pkwy
Tempe, AZ
 
—

 
4,069,890

 
—

 
24,158,460

 
4,069,890

 
 
24,158,460

 
28,228,350

 
 
702,240

 
2015
 
5 - 40
2040 W Rio Salado Parkway
Tempe, AZ

—

  
3,225,000


—


12,531,731


3,225,000



12,531,731


15,756,731



547,526


2015

5 - 40
475 W Vaughn St
Tempe, AZ
 
—

  
1,112,245

 
2,260,348

 
292,646

 
1,112,245

 
 
2,552,994

 
3,665,239

 
 
430,748

 
2013
 
5 - 40
921 South Park Lane
Tempe, AZ
 
—

  
1,192,820

 
1,580,155

 
481,163

 
1,192,820

 
 
2,061,319

 
3,254,139

 
 
472,215

 
2011
 
5 - 40
8313 West Pierce Street
Tolleson, AZ
 
—

  
2,295,090

 
9,079,811

 
4,106,812

 
2,295,090

 
 
13,186,623

 
15,481,713

 
 
4,180,357

 
2007
 
5 - 40
8591 West Washington Street
Tolleson, AZ
 
—

  
1,574,912

 
7,308,021

 
416,866

 
1,574,912

 
 
7,724,887

 
9,299,799

 
 
1,174,021

 
2012
 
5 - 40
8601 West Washington Street
Tolleson, AZ
 
—

  
1,524,603

 
6,352,070

 
725,161

 
1,524,603

 
 
7,077,231

 
8,601,834

 
 
1,343,235

 
2012
 
5 - 40
5111 S Royal Atlanta Drive
Tucker, GA
 
—

 *
435,776

 
1,875,685

 
499,788

 
435,776

 
 
2,375,474

 
2,811,250

 
 
429,327

 
2013
 
5 - 40
5151 S Royal Atlanta Drive
Tucker, GA
 
—

 *
345,061

 
1,428,840

 
328,461

 
345,061

 
 
1,757,301

 
2,102,362

 
 
330,717

 
2013
 
5 - 40
1100 17th Street NW
Washington, DC
 
—

  
16,558,660

 
32,223,978

 
4,819,314

 
16,558,660

 
 
37,043,292

 
53,601,952

 
 
7,352,708

 
2011
 
5 - 40
2100 M Street NW
Washington, DC
 
—

  
70,000,000

 
55,123,783

 
1,912,347

 
70,000,000

 
 
57,036,130

 
127,036,130

 
 
8,404,405

 
2013
 
5 - 40
1400 Powis Court
West Chicago, IL
 
—

  
578,314

 
2,448,562

 
73,579

 
578,314

 
 
2,522,141

 
3,100,455

 
 
337,290

 
2013
 
5 - 40
1 Kings Hill Avenue
West Malling, UK
 
—

  
4,288,389

 
—

 
7,930,852

 
3,381,307

 
 
8,837,934

 
12,219,241

 
 
2,698,820

 
2006
 
5 - 40
42 Kings Hill Avenue
West Malling, UK
 
—

  
5,397,739

 
—

 
10,206,094

 
3,670,842

 
 
11,932,991

 
15,603,833

 
 
3,132,365

 
2005
 
5 - 40
Liberty Square, Block 1
West Malling, UK
 
—

  
159,232

 
1,622,551

 
658,791

 
271,905

 
 
2,168,670

 
2,440,575

 
 
697,578

 
2006
 
5 - 40

118

LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances (1)
 
 Land
 
 Building
 
 Costs Capitalized Subsequent to Acquisition (2)
 
Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2017
 
 
 Accumulated Depreciation 12/31/2017
 
Date of Construction or Acquisition
 
Depreciable life (years)
 OPERATING PROPERTIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liberty Square, Block 2
West Malling, UK
 
—

  
199,150

 
1,614,217

 
689,302

 
340,070

 
 
2,162,599

 
2,502,669

 
 
674,983

 
2006
 
5 - 40
Liberty Square, Block 3
West Malling, UK
 
—

  
129,830

 
1,141,141

 
479,536

 
221,698

 
 
1,528,809

 
1,750,507

 
 
471,382

 
2006
 
5 - 40
Liberty Square, Block 5
West Malling, UK
 
—

  
71,377

 
735,993

 
298,534

 
121,883

 
 
984,021

 
1,105,904

 
 
303,533

 
2006
 
5 - 40
29 Liberty Square
West Malling, UK

—

  
165,363


1,139,928


25,834


168,913



1,162,211


1,331,124



43,922


2016

5 - 40
1400 Northpoint Parkway
West Palm Beach, FL
 
—

 *
2,454,972

 
5,312,829

 
376,958

 
2,454,972

 
 
5,689,787

 
8,144,759

 
 
931,000

 
2013
 
5 - 40
300 Northpoint Parkway
West Palm Beach, FL
 
—

 *
1,177,064

 
2,102,451

 
160,551

 
1,177,064

 
 
2,263,002

 
3,440,066

 
 
358,777

 
2013
 
5 - 40
400 Northpoint Parkway
West Palm Beach, FL
 
—

 *
1,029,595

 
1,728,187

 
180,766

 
1,029,595

 
 
1,908,953

 
2,938,548

 
 
312,382

 
2013
 
5 - 40
6017 Southern Blvd
West Palm Beach, FL
 
—

 
4,513,860

 
—

 
9,167,515

 
4,513,860

 
 
9,167,515

 
13,681,375

 
 
38,247

 
2016
 
5 - 40
6035 Southern Blvd
West Palm Beach, FL
 
—

 
2,499,894

 
—

 
5,401,996

 
2,499,984

 
 
5,401,906

 
7,901,890

 
 
24,187

 
2016
 
5 - 40
2935 West Corporate Lakes Blvd
Weston, FL
 
—

 *
4,682,521

 
25,905,126

 
1,435,528

 
4,682,521

 
 
27,340,654

 
32,023,175

 
 
3,358,697

 
2013
 
5 - 40
2945 West Corporate Lakes Blvd
Weston, FL
 
—

 *
2,345,242

 
13,973,766

 
293,777

 
2,345,242

 
 
14,267,543

 
16,612,785

 
 
1,709,525

 
2013
 
5 - 40
43-47 Hintz Road
Wheeling, IL
 
—

  
2,051,093

 
18,283,480

 
539,342

 
2,051,093

 
 
18,822,823

 
20,873,916

 
 
2,475,574

 
2013
 
5 - 40
Worcester 1 - Plot 4
Worcester, UK
 
—

 
843,256

 
—

 
4,234,133

 
1,175,040

 
 
3,902,349

 
5,077,389

 
 
12,897

 
2016
 
5 - 40
Subtotal Operating Real Estate
 
 
$
47,946,455

 
$
1,099,713,438

 
$
2,336,140,008

 
$
2,161,408,921

 
$
1,153,680,251

 
 
$
4,443,582,109

 
$
5,597,262,360

 
 
$
940,612,342

 
 
 
 

119

LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances (1)
 
 Land
 
 Building
 
 Costs Capitalized Subsequent to Acquisition (2)
 
Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2017
 
 
 Accumulated Depreciation 12/31/2017
 
Date of Construction or Acquisition
 
Depreciable life (years)
Development Properties
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 2250 East Bardin Road
Arlington, TX
 
—

 
4,754,659

 
—

 
24,262,394

 
—

 
 
29,017,052

 
29,017,052

 
 
—

 
2017
 
 N/A
 350 North York Road
Bensenville, IL
 
—

 
3,043,130

 
—

 
4,388,458

 
—

 
 
7,431,588

 
7,431,588

 
 
—

 
2017
 
 N/A
100 Carolina Way
Carlisle, PA
 
—

 
10,830,187

 
—

 
21,472,109

 
—

 
 
32,302,296

 
32,302,296

 
 
—

 
2017
 
 N/A
1955 TW Alexander Drive
Durham, NC
 
—

 
758,503

 
—

 
7,481,188

 
—

 
 
8,239,691

 
8,239,691

 
 
—

 
2017
 
 N/A
1075 King George Post Road
Edison, NJ
 
—

 
—

 
—

 
13,168,246

 
—

 
 
13,168,246

 
13,168,246

 
 
—

 
2016
 
 N/A
1720 West 135th Street
Gardena, CA
 
—

 
7,423,389

 
—

 
12,948,990

 
—

 
 
20,372,379

 
20,372,379

 
 
—

 
2017
 
 N/A
2980 Green Road
Greer, SC
 
—

 
16,338

 
—

 
5,441,655

 
—

 
 
5,457,993

 
5,457,993

 
 
—

 
2017
 
 N/A
7157 Ridge Road
Hanover, MD
 
—

 
3,875,203

 
—

 
4,929,287

 
—

 
 
8,804,490

 
8,804,490

 
 
—

 
2017
 
 N/A
650 Swedesford Road
King of Prussia, PA
 
—

 
488,529

 
—

 
7,914,012

 
—

 
 
8,402,541

 
8,402,541

 
 
—

 
2017
 
 N/A
1200 Claybrick Road
Landover, MD
 
—

 
6,876,500

 
—

 
942,883

 
—

 
 
7,819,383

 
7,819,383

 
 
—

 
2016
 
 N/A
1806 Highway 146th South
LaPorte, TX
 
—

 
1,055,035

 
—

 
1,838,576

 
—

 
 
2,893,611

 
2,893,611

 
 
—

 
2017
 
 N/A
1814 Highway 146th South
LaPorte, TX
 
—

 
1,420,014

 
—

 
433,719

 
—

 
 
1,853,733

 
1,853,733

 
 
—

 
2017
 
 N/A
1302 Wharton Weems Blvd
LaPorte, TX
 
—

 
4,378,890

 
—

 
2,263,432

 
—

 
 
6,642,322

 
6,642,322

 
 
—

 
2017
 
 N/A
875 Maxham Road
Lithia Springs, GA
 
—

 
445,493

 
—

 
11,272,084

 
—

 
 
11,717,577

 
11,717,577

 
 
—

 
2017
 
 N/A
11430 NW 122 Street
Medley, FL
 
—

 
5,790,968

 
—

 
8,969,067

 
—

 
 
14,760,035

 
14,760,035

 
 
—

 
2017
 
 N/A
8801 Congdon Hill Drive
Mertztown, PA
 
—

 
23,016,646

 
—

 
47,804,802

 
—

 
 
70,821,448

 
70,821,448

 
 
—

 
2016
 
 N/A
1050 Constitution Avenue
Philadelphia, PA
 
—

 
1,969,501

 
—

 
37,458,724

 
—

 
 
39,428,225

 
39,428,225

 
 
—

 
2015
 
 N/A
1500 S 71st Avenue
Phoenix, AZ
 
—

 
4,234,407

 
—

 
4,648,512

 
—

 
 
8,882,919

 
8,882,919

 
 
—

 
2016
 
 N/A
3929 Shutterfly Road
Charlotte, NC
 
—

 
592,233

 
—

 
10,093,931

 
—

 
 
10,686,164

 
10,686,164

 
 
—

 
2016
 
 N/A
9724 Alabama Street
San Bernardino, CA
 
—

 
4,140,486

 
—

 
8,367,860

 
—

 
 
12,508,346

 
12,508,346

 
 
—

 
2017
 
 N/A
1870 W Rio Salado Parkway
Tempe, AZ
 
—

 
2,272,702

 
—

 
42,762,030

 
—

 
 
45,034,732

 
45,034,732

 
 
—

 
2016
 
 N/A
Worcester 2
Worcester, UK

—


3,172,249


—


9,054,991


—



12,227,240


12,227,240



—


2016

 N/A
Subtotal Development in Progress
 
$
—

 
$
90,555,062

 
$
—

 
$
287,916,950

 
$
—

 
 
$
378,472,011

 
$
378,472,011

 
 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


120


LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances (1)
 
 Land
 
 Building
 
  Costs Capitalized Subsequent to Acquisition (2)
 
 Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2017
 
 
 Accumulated Depreciation 12/31/2017
 
Date of Construction or Acquisition
 
 Depreciable life (years)
LAND HELD FOR DEVELOPMENT
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mill Creek Road Land East
Allentown, PA
 
—

 
7,175,000

 
—

 
—

 
7,175,000

 
 
—

 
7,175,000

 
 
—

 
2017
 
 N/A
100 and 160 Dulty's Lane Land
Burlington, NJ
 
—

 
3,746,363

 
—

 
387,026

 
4,133,389

 
 
—

 
4,133,389

 
 
—

 
2017
 
 N/A
180 Dulty's Lane Land
Burlington, NJ

—


2,866,850


—


329,151


3,196,001



—


3,196,001



—


2016

 N/A
Butts County Land
Butts County, GA
 
—

 
2,866,568

 
—

 
1,926,717

 
4,793,285

 
 
—

 
4,793,285

 
 
—

 
2017
 
 N/A
Camden Town Center Land
Camden, NJ

—


11,303,073


—


10,252,135


21,555,208



—


21,555,208



—


2016

 N/A
12912 Virkler Drive Land
Charlotte, NC
 
—

 
208,646

 
—

 
88,354

 
297,000

 
 
—

 
297,000

 
 
—

 
2010
 
 N/A
Shopton Ridge Business Park Land
Charlotte, NC
 
—

 
644,925

 
—

 
1,859,095

 
2,504,020

 
 
—

 
2,504,020

 
 
—

 
2014
 
 N/A
Mountain Creek Business Park L
Dallas, TX

—


7,984,928


—


5,022,735


13,007,663



—


13,007,663



—


2016

 N/A
Holly Lane North Land
Dayton, MN
 
—

 
889,205

 
—

 
181,612

 
1,070,817

 
 
—

 
1,070,817

 
 
—

 
2014
 
 N/A
French Lake Land
Dayton/Rogers, MN
 
—

 
13,513,632

 
—

 
7,385,459

 
20,899,091

 
 
—

 
20,899,091

 
 
—

 
2015
 
 N/A
Flying Cloud Drive Land
Eden Prairie, MN
 
—

 
2,051,631

 
—

 
4,369,545

 
6,421,176

 
 
—

 
6,421,176

 
 
—

 
2007
 
 N/A
Camelback 303 Business Center Land
Goodyear, AZ
 
—

 
16,857,556

 
—

 
4,352,280

 
21,209,836

 
 
—

 
21,209,836

 
 
—

 
2007
 
 N/A
Pleasant Ridge Road Land
Greensboro, NC
 
—

 
564,535

 
—

 
2,976,650

 
3,541,185

 
 
—

 
3,541,185

 
 
—

 
2006
 
 N/A
Arundel Ridge Land
Hanover, MD
 
—

 
3,371,183

 
—

 
(583,887
)
 
2,787,296

 
 
—

 
2,787,296

 
 
—

 
2008
 
 N/A
Interwood Land
Houston, TX
 
—

 
5,160,668

 
—

 
29,015

 
5,189,683

 
 
—

 
5,189,683

 
 
—

 
2012
 
 N/A
Rankin Road Land
Houston, TX
 
—

 
5,756,865

 
—

 
382,693

 
6,139,558

 
 
—

 
6,139,558

 
 
—

 
2007
 
 N/A
Richey Road Land
Houston, TX
 
—

 
26,135,466

 
—

 
7,024,965

 
33,160,431

 
 
—

 
33,160,431

 
 
—

 
2014
 
 N/A
Cabin Branch Road Land
Hyattsville, MD
 
—

 
507,337

 
—

 
3,099

 
510,436

 
 
—

 
510,436

 
 
—

 
2017
 
 N/A
Frye Road and Valley View Lane Land
Irving, TX
 
—

 
1,917,440

 
—

 
962,176

 
2,879,616

 
 
—

 
2,879,616

 
 
—

 
2014
 
 N/A
Rouse Kent Limited
Kent, UK
 
—

 
—

 
—

 
35,246,308

 
35,246,308

 
 
—

 
35,246,308

 
 
—

 
2012
 
 N/A
Port Crossing Commerce Center Land
La Porte, TX
 
—

 
9,401,409

 
—

 
1,382,139

 
10,783,548

 
 
—

 
10,783,548

 
 
—

 
2015
 
 N/A
Commodore Business Park
Logan, NJ
 
—

 
792,118

 
—

 
1,455,989

 
2,248,107

 
 
—

 
2,248,107

 
 
—

 
1995
 
 N/A
Spring Creek Land
Lower Macungie Twp, PA
 
—

 
33,567,060

 
—

 
8,106,014

 
41,673,074

 
 
—

 
41,673,074

 
 
—

 
2013
 
 N/A
380 Old Morehall Road
Malvern, PA
 
—

 
1,344,809

 
—

 
—

 
1,344,809

 
 
—

 
1,344,809

 
 
—

 
2012
 
 N/A
6 Great Valley Parkway Land
Malvern, PA
 
—

 
603,050

 
—

 
2,598,259

 
3,201,309

 
 
—

 
3,201,309

 
 
—

 
2015
 
 N/A
Old Morehall Rd Land (Morelli)
Malvern, PA

—


3,343,863


—


33,548


3,377,411



—


3,377,411



—


2016

 N/A
Miami International Tradeport Land
Medley, FL
 
—

 
9,202,254

 
—

 
15,840,193

 
25,042,447

 
 
—

 
25,042,447

 
 
—

 
2011
 
 N/A

121

LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
 AS OF DECEMBER 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Initial Cost
 
 
 
 Gross Amount Carried at End of Period
 
 
 
 
 
 
 
 Project
 Location
 
 Encumbrances (1)
 
 Land
 
 Building
 
  Costs Capitalized Subsequent to Acquisition (2)
 
 Land and Improvements
 
 
 Building and Improvements
 
 Total 12/31/2017
 
 
 Accumulated Depreciation 12/31/2017
 
Date of Construction or Acquisition
 
 Depreciable life (years)
LAND HELD FOR DEVELOPMENT
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
557 Nazareth Pike Land
Nazareth, PA
 
—

 
4,667,646

 
—

 
532,716

 
5,200,362

 
 
—

 
5,200,362

 
 
—

 
2013
 
 N/A
Southern Boulevard Land
Palm Beach County, FL
 
—

 
8,051,351

 
—

 
5,160,487

 
13,211,838

 
 
—

 
13,211,838

 
 
—

 
2014
 
 N/A
Buckeye Logistics Center West Land
Phoenix, AZ
 
—

 
6,173,841

 
—

 
4,014,937

 
10,188,778

 
 
—

 
10,188,778

 
 
—

 
2013
 
 N/A
Woodlands Center Land
Sandston, VA
 
—

 
148,314

 
—

 
21,717

 
170,031

 
 
—

 
170,031

 
 
—

 
1996
 
 N/A
Northsight Land
Scottsdale, AZ
 
—

 
6,176,464

 
—

 
2,204,597

 
8,381,061

 
 
—

 
8,381,061

 
 
—

 
2005
 
 N/A
Suffolk Land
Suffolk, VA
 
—

 
2,715,714

 
—

 
823,895

 
3,539,609

 
 
—

 
3,539,609

 
 
—

 
2006
 
 N/A
6119 W. Linebaugh Avenue
Tampa, FL
 
—

 
180,136

 
—

 
30,499

 
210,635

 
 
—

 
210,635

 
 
—

 
2000
 
 N/A
Legacy Park Land
Tampa, FL
 
—

 
3,289,423

 
—

 
3,168,809

 
6,458,232

 
 
—

 
6,458,232

 
 
—

 
2006
 
 N/A
 Subtotal Land Held for Development
 
 
$
—

 
$
203,179,323

 
$
—

 
$
127,568,927

 
$
330,748,250

 
 
$
—

 
$
330,748,250

 
 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total All Properties
 
 
$
47,946,455

 
$
1,393,447,823

 
$
2,336,140,008

 
$
2,576,894,798

 
$
1,484,428,501

 
 
$
4,822,054,120

 
$
6,306,482,621

 
 
$
940,612,342

 
 
 
 

* Denotes property is collateralized under mortgages with Athene, New York Life and Wells Fargo totaling $214.2 million.
(1) Does not include deferred financing costs and market adjustments.
(2) Includes foreign currency changes and write-offs of certain fully depreciated assets and net of impairment charges.

122

SCHEDULE III
LIBERTY PROPERTY TRUST AND LIBERTY PROPERTY LIMITED PARTNERSHIP
REAL ESTATE AND ACCUMULATED DEPRECIATION
(In thousands)
A summary of activity for real estate and accumulated depreciation is as follows:
 
 
Year Ended December 31,
 
 
2017
 
2016
 
2015
REAL ESTATE:
 
 
 
 
 
 
Balance at beginning of year
 
$
5,962,096

 
$
6,777,467

 
$
6,846,182

Additions
 
675,868

 
470,812

 
553,651

Disposition of property
 
(331,481
)
 
(1,286,183
)
 
(622,366
)
 
 
 
 
 
 
 
Balance at end of year
 
$
6,306,483

 
$
5,962,096

 
$
6,777,467

 
 
 
 
 
 
 
ACCUMULATED DEPRECIATION:
 
 
 
 
 
 
Balance at beginning of year
 
$
847,106

 
$
1,062,964

 
$
1,102,609

Depreciation expense
 
149,044

 
168,077

 
182,011

Disposition of property
 
(55,537
)
 
(383,935
)
 
(221,656
)
 
 
 
 
 
 
 
Balance at end of year
 
$
940,613

 
$
847,106

 
$
1,062,964

 


123

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Controls and Procedures with respect to the Trust
(a) Evaluation of Disclosure Controls and Procedures
The Trust’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 Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on this evaluation, the Trust’s Chief Executive Officer and Chief Financial Officer have concluded that the Trust’s disclosure controls and procedures, as of the end of the period covered by this report, were effective to provide reasonable assurance that information required to be disclosed by the Trust 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 Trust’s management, including its principal executive and principal financial officers, or persons performing similar function, as appropriate to allow timely decisions regarding required disclosure.
(b) Changes in Internal Control Over Financial Reporting
There were no changes in the Trust’s internal control over financial reporting during the quarter ended December 31, 2017 that have materially affected or are reasonable likely to materially affect the Company’s internal control over financial reporting.
Controls and Procedures with respect to the Operating Partnership
(a) Evaluation of Disclosure Controls and Procedures
The Trust’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, on behalf of the Trust in its capacity as the general partner of the Operating Partnership, evaluated the effectiveness of its disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on this evaluation, the Trust’s Chief Executive Officer and Chief Financial Officer have concluded that the Operating Partnership’s disclosure controls and procedures, as of the end of the period covered by this report, were effective to provide reasonable assurance that information required to be disclosed by the Operating Partnership 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 Trust’s management, including its principal executive and principal financial officers, or persons performing similar function, as appropriate to allow timely decisions regarding required disclosure.
(b) Changes in Internal Control Over Financial Reporting
There were no changes in the Operating Partnership’s internal control over financial reporting during the quarter ended December 31, 2017 that have materially affected or are reasonable likely to materially affect the Operating Partnership’s internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None.

124

PART III
ITEM 10. TRUSTEES, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by Item 10 shall be included in the Proxy Statement to be filed relating to the Company's 2018 Annual Meeting of Shareholders and is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 shall be included in the Proxy Statement to be filed relating to the Company's 2018 Annual Meeting of Shareholders and is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS

The information required by Item 12 shall be included in the Proxy Statement to be filed relating to the Company's 2018 Annual Meeting of Shareholders and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND TRUSTEE INDEPENDENCE

The information required by Item 13 shall be included in the Proxy Statement to be filed relating to the Company's 2018 Annual Meeting of Shareholders and is incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by Item 14 shall be included in the Proxy Statement to be filed relating to the Company's 2018 Annual Meeting of Shareholders and is incorporated herein by reference.

PART IV


ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following consolidated financial statements of Liberty Property Trust and Liberty Property Limited Partnership are included in Item 8.

1. REPORTS OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM AND CONSOLIDATED FINANCIAL STATEMENTS

Management's Annual Report on Internal Control Over Financial Reporting - Liberty Property Trust

Reports of Independent Registered Public Accounting Firm - Liberty Property Trust

Management's Annual Report on Internal Control Over Financial Reporting - Liberty Property Limited Partnership

Reports of Independent Registered Public Accounting Firm - Liberty Property Limited Partnership

Financial Statements - Liberty Property Trust

Balance Sheets:
Liberty Property Trust Consolidated as of December 31, 2017 and 2016

Statements of Comprehensive Income:
Liberty Property Trust Consolidated for the years ended December 31, 2017 , 2016 and 2015

Statements of Equity:
Liberty Property Trust Consolidated for the years ended December 31, 2017 , 2016 and 2015


125

Statements of Cash Flows:
Liberty Property Trust Consolidated for the years ended December 31, 2017 , 2016 and 2015

Financial Statements - Liberty Property Limited Partnership

Balance Sheets:
Liberty Property Limited Partnership Consolidated as of December 31, 2017 and 2016

Statements of Comprehensive Income:
Liberty Property Limited Partnership Consolidated for the years ended December 31, 2017 , 2016 and 2015

Statements of Owners' Equity:
Liberty Property Limited Partnership Consolidated for the years ended December 31, 2017 , 2016 and 2015

Statements of Cash Flows:
Liberty Property Limited Partnership Consolidated for the years ended December 31, 2017 , 2016 and 2015

Notes to Consolidated Financial Statements

2.    FINANCIAL STATEMENT SCHEDULES:

Schedule II - Allowance for Doubtful Accounts for Liberty Property Trust and Liberty Property Limited Partnership

Schedule III - Real Estate and Accumulated Depreciation as of December 31, 2017 for Liberty Property Trust and Liberty Property Limited Partnership

All other schedules are omitted because they are either not required or the required information is shown in the financial statements or notes thereto.



126

3.    EXHIBITS

The following exhibits are filed herewith or are incorporated by reference to exhibits previously filed.

Exhibit No.
Description
 
 
2.1+$
 
 
2.2
 
 
3.1.1
 
 
3.1.2
 
 
3.1.3
 
 
3.1.4
 
 
3.1.5
 
 
3.1.6
 
 
3.1.7
 
 
3.1.8
 
 
3.1.9

127

 
 
3.1.10
 
 
3.1.11
 
 
3.1.12
 
 
3.1.13
 
 
3.1.14
 
 
3.1.15
 
 
3.1.16
 
 
3.1.17
 
 
3.1.18
 
 
3.1.19
 
 
3.1.20
 
 
3.1.21
 
 

128

3.1.22
 
 
3.1.23
 
 
3.1.24
 
 
3.1.25
 
 
3.1.26
 
 
3.1.27
 
 
3.1.28*
 
 
3.1.29
 
 
 
 
4.1
 
 
4.2
 
 
4.3

 
 

129

4.4
 
 
4.5
 
 
4.6

 
 
4.7
 
 
4.8
 
 
10.1@
 
 
10.2
 
 
10.3
 
 
10.4
 
 
10.5
Contribution Agreement among the Trust, the Operating Partnership and the Contributing Owners described therein, related to the Lingerfelt Properties (Incorporated by reference to Exhibit 10.1 filed with the Registrants' Current Report on Form 8-K filed with the Commission on March 3, 1995).
 
 
10.6@
 
 

130

10.7@
 
 
10.8@
 
 
10.9@
 
 
10.10@
 
 
10.11@
 
 
10.12.1+
 
 
10.12.2+
 
 
10.13+
 
 
10.14+
 
 
10.15++
 
 
10.16+
 
 
10.17+
 
 
10.18+

131

 
 
10.19@

 
 
12*
 
 
21*
 
 
23.1*
 
 
23.2*
 
 
31.1*
 
 
31.2*
 
 
31.3*
 
 
31.4*
 
 
32.1**
 
 
32.2**
 
 
32.3**
 
 
32.4**
 
 
101.INS*
XBRL Instance Document.
 
 

132

101.SCH*
XBRL Taxonomy Extension Schema Document.
 
 
101.CAL*
XBRL Taxonomy Extension Calculation Linkbase Document.
 
 
101.DEF*
XBRL Taxonomy Extension Definition Linkbase Document.
 
 
101.LAB*
XBRL Extension Labels Linkbase.
 
 
101.PRE*
XBRL Taxonomy Extension Presentation Linkbase Document.
 
____________
*
Filed herewith.
 
 
**
Furnished herewith
 
 
+
Confidential treatment has been granted by the Securities and Exchange Commission with respect to portions of this exhibit pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.
 
 
'++
Confidential treatment has been requested from the Securities and Exchange Commission with respect to portions of this exhibit pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.
 
 
@
Compensatory plan or arrangement.
 
 
$
The Company will file supplementally a copy of any omitted schedule to the Securities and Exchange Commission upon request.


133

ITEM 16. FORM 10-K SUMMARY
None.


134

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

LIBERTY PROPERTY TRUST

Date: February 28, 2018                    By: /s/ WILLIAM P. HANKOWSKY
-----------------------------------------------
WILLIAM P. HANKOWSKY
CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.


/s/  WILLIAM P. HANKOWSKY
Chairman of the Board of Trustees, President and Chief Executive Officer (Principal Executive Officer)
February 28, 2018
William P. Hankowsky
 
 
 
 
 

/s/ CHRISTOPHER J. PAPA
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
February 28, 2018
Christopher J. Papa
 
 
 
 
 

/s/ MARY BETH MORRISSEY
Chief Accounting Officer (Principal Accounting Officer)
February 28, 2018
                 Mary Beth Morrissey
 
 
 
 
 
/s/  M. LEANNE LACHMAN
Trustee
February 28, 2018
M. Leanne Lachman
 
 
 
 
 
/s/  FREDERICK F. BUCHHOLZ
Trustee
February 28, 2018
Frederick F. Buchholz
 
 
 
 
 
/s/  DAVID L. LINGERFELT
Trustee
February 28, 2018
David L. Lingerfelt
 
 
 
 
 
/s/  THOMAS C. DELOACH, JR.
Trustee
February 28, 2018
Thomas C. DeLoach, Jr.
 
 
 
 
 
/s/  DANIEL P. GARTON
Trustee
February 28, 2018
Daniel P. Garton
 
 
 
 
 
/s/ ANTONIO F. FERNANDEZ
Trustee
February 28, 2018
Antonio F. Fernandez
 
 
 
 
 
/s/ KATHERINE E. DIETZE
Trustee
February 28, 2018
Katherine E. Dietze
 
 
 
 
 
/s/ FREDRIC J. TOMCZYK
Trustee
February 28, 2018
Fredric J. Tomczyk
 
 
 
 
 
/s/ MARGUERITE M. NADER
Trustee
February 28, 2018
Marguerite M. Nader
 
 

135

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

LIBERTY PROPERTY LIMITED PARTNERSHIP

Date: February 28, 2018                    By: /s/ WILLIAM P. HANKOWSKY
----------------------------------------------
WILLIAM P. HANKOWSKY
CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.


/s/  WILLIAM P. HANKOWSKY
Chairman of the Board of Trustees, President and Chief Executive Officer (Principal Executive Officer)
February 28, 2018
William P. Hankowsky
 
 
 
 
 

/s/ CHRISTOPHER J. PAPA
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
February 28, 2018
Christopher J. Papa
 
 
 
 
 

/s/ MARY BETH MORRISSEY
Chief Accounting Officer (Principal Accounting Officer)
February 28, 2018
Mary Beth Morrissey
 
 
 
 
 
/s/  M. LEANNE LACHMAN
Trustee
February 28, 2018
M. Leanne Lachman
 
 
 
 
 
/s/  FREDERICK F. BUCHHOLZ
Trustee
February 28, 2018
Frederick F. Buchholz
 
 
 
 
 
/s/  DAVID L. LINGERFELT
Trustee
February 28, 2018
David L. Lingerfelt
 
 
 
 
 
/s/  THOMAS C. DELOACH, JR.
Trustee
February 28, 2018
Thomas C. DeLoach, Jr.
 
 
 
 
 
/s/  DANIEL P. GARTON
Trustee
February 28, 2018
Daniel P. Garton
 
 
 
 
 
/s/ ANTONIO F. FERNANDEZ
Trustee
February 28, 2018
Antonio F. Fernandez
 
 
 
 
 
/s/ KATHERINE E. DIETZE
Trustee
February 28, 2018
Katherine E. Dietze
 
 
 
 
 
/s/ FREDRIC J. TOMCZYK
Trustee
February 28, 2018
Fredric J. Tomczyk
 
 
 
 
 
/s/ MARGUERITE M. NADER
Trustee
February 28, 2018
Marguerite M. Nader
 
 

136

EXHIBIT INDEX
EXHIBIT
NO.
 
 
 
3.1.28
 
 
10.15++
 
 
12
 
 
21
 
 
23.1
 
 
23.2
 
 
31.1
 
 
31.2
 
 
31.3
 
 
31.4
 
 
32.1
 
 
32.2
 
 
32.3
 
 
32.4
 
 
101.INS
XBRL Instance Document.
 
 
101.SCH
XBRL Taxonomy Extension Schema Document.
 
 
101.CAL
 
 
101.DEF
 
 
101.LAB
XBRL Extension Labels Linkbase.
 
 
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document.
 
 

137

'++
Confidential treatment has been requested from the Securities and Exchange Commission with respect to portions of this exhibit pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

138