Liberty Property Trust (LPT) 8-K Liberty Property Trust Announces Fourth Quarter and Full Year Results

Press Release

For Immediate Release	Inquiries:	Jeanne A. Leonard
February 6, 2006		Liberty Property Trust
		610/648-1704

LIBERTY PROPERTY TRUST ANNOUNCES
FOURTH QUARTER AND FULL YEAR RESULTS

Malvern, PA — Liberty Property Trust (NYSE:LRY) reported that net income per common share (diluted) was $1.20 per share for the quarter ended December 31, 2005, compared to $.53 per share (diluted) for the quarter ended December 31, 2004, and $2.82 per share (diluted) for the full year 2005 compared to $1.88 per share (diluted) for 2004.

Funds from operations available to common shareholders (diluted) (“FFO”) for the fourth quarter of 2005 was $.77 per share, compared to $.81 per share for the fourth quarter of 2004. For the year ended December 31, 2005, FFO per share was $3.20, compared to $3.25 per share for 2004. A reconciliation of GAAP net income to FFO is included in the financial tables accompanying this press release.

Net income for the fourth quarter of 2005 includes gains on the sale of properties of $78.7 million, net of tax, or $.88 per share.

“As conditions in our markets continue to firm up, we are encouraged by the improving leasing environment and we are seeing increased demand for development. In 2006 we expect to see the continued narrowing of the gap between rents on expiring leases and new leases, and a continued expansion of our development pipeline,” said Bill Hankowsky, Liberty’s chairman and chief executive officer. “We also believe that it is in our shareholders’ best interest to take advantage of the market’s appetite for acquisitions, and we will continue to harvest some of the value we’ve created and upgrade our portfolio through dispositions. Thus, we anticipate that 2006 will provide a very strong foundation for growth in 2007 and beyond.”

Real Estate Investments

Development: During the fourth quarter, Liberty brought into service three development properties totaling 1.3 million square feet. The properties were 98.2percent leased at year-end and were yielding 9.3percent on the company’s investment of $82.2 million.

During the fourth quarter, Liberty committed to the development of five properties totaling 678,000 square feet, with an expected total investment of $40.9 million. The properties include a 424,000 square foot distribution project and a pre-leased 25,000 building expansion in the Detroit Metro Airport industrial market; a 150,000 square foot distribution facility in High Point, North Carolina; a 50,000 square foot office building in Chesapeake, Virginia, and a 29,000 square foot office project in Milwaukee, Wisconsin. Both office projects are 100percent leased.

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LRY Fourth Quarter 2005 Results
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As of year end, Liberty had 5.6 million square feet under development. These properties were 43.5 percent leased at December 31, 2005, and Liberty expects to earn a return of 9.1percent on its total investment of $815.5 million.

Acquisitions: During the fourth quarter, Liberty acquired seven properties for a total investment of $99.5 million. These properties, which contain 1.3 million square feet, are 41.7 percent leased, with a current yield of 5.4 percent and a projected stabilized yield of 8.8 percent.

Dispositions: During the fourth quarter, Liberty sold 20 properties containing 771,000 square feet, and 102 acres of land for $52 million. The properties sold consist of 16 flex properties in Madison Heights, Michigan; a 220,000 square foot office building in Jacksonville, Florida; a 115,000 square foot distribution building in Middletown, PA; a 78,000 square foot flex building in Eden Prairie, Minnesota; and a 52,000 square foot flex building in Orlando, Florida.

Liberty also sold 15 properties to a joint venture in which Liberty retains a 20percent ownership position, for $219.7 million. The properties total 535,000 square feet and represent the majority of Liberty’s properties at Kings Hill in West Malling, United Kingdom.

Portfolio Performance

Leasing: At December 31, 2005, Liberty’s in-service portfolio of 64 million square feet was 92.2 percent occupied. During the year, Liberty completed lease transactions totaling 18.4 million square feet of space.

Same Store Performance: Property level operating income for same store properties decreased by 2.0 percent on a cash basis and by 2.6 percent on a straight line basis for the fourth quarter of 2005 compared to the same quarter in 2004, and decreased by 0.3 percent on a cash basis and 1.2 percent on a straight line basis for the full year 2005 compared to 2004.

Financing and Balance Sheet Management

During the fourth quarter, Liberty obtained a new, four-year, $600 million unsecured revolving credit facility replacing a $450 million unsecured revolving credit facility due January 16, 2006. The credit facility has an accordion feature for an additional $200 million. Based on the company’s present ratings, borrowings under the credit facility are currently priced at LIBOR plus 65 basis points.

Subsequent Events

Subsequent to the end of the fourth quarter, Liberty sold four office buildings totaling 132,000 square feet in Newport News, Virginia and a six-building flex/warehouse portfolio totaling 633,000 square feet in the Richmond, Virginia area for an aggregate sales price of $55 million. The company also announced it will be purchasing a convention center in Fort Washington, Pennsylvania, in June of this year and will be redeveloping the property into 450,000 square feet of offices for GMAC Mortgage Corporation.

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LRY Fourth Quarter 2005 Results
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About the Company

Liberty Property Trust (NYSE:LRY) is a leader in commercial real estate, serving customers in the United States and United Kingdom, through the development, acquisition, ownership and management of superior office and industrial properties. Liberty’s 64 million square foot portfolio includes more than 700 properties which provide office, distribution and light manufacturing facilities to 2,100 tenants.

Additional information about the Company, including Liberty’s Quarterly Supplemental Package with detailed financial information is available in the Investor section of the Company’s web site atwww.libertyproperty.com. The fourth quarter supplemental package will be available on-line the evening of February 6, 2006. If you are unable to access the web site, a copy of the supplemental package may be obtained by contacting Liberty by phone at 610-648-1708, or by e-mail toeshoemaker@libertyproperty.com.

Liberty will host a conference call during which management will discuss fourth quarter results, on Tuesday, February 7, 2006, at 2:00 p.m. eastern time. To access the conference call in the United States or Canada, please dial 1-888-870-2815. For international access, dial 706-643-7691. No password or code is needed. A replay of the call will be available by dialing 1-800-642-1687 for US/Canada participants or 706-645-9291 for international participants. A passcode is needed for the replay: 3687865. The call can also be accessed live via the Internet on the Investor Relations page of Liberty’s web site atwww.libertyproperty.com for one week following the call.

The statements contained in this press release may include forward-looking statements within the meaning of the federal securities law. Although Liberty believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be achieved. As forward-looking statements, these statements involve risks, uncertainties and other factors that could cause actual results to differ materially from the expected results. These factors include, without limitation, the 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, the financial condition of tenants, the uncertainties of real estate development and construction activity, the costs and availability of financing, the effects of local economic and market conditions, regulatory changes, potential liability relative to environmental matters and other risks and uncertainties detailed in the company’s filings with the Securities and Exchange Commission. The company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

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Liberty Property Trust
Statement of Operations
December 31, 2005
(Unaudited and in thousands, except per share amounts)

	Quarter Ended						Year Ended
	December 31, 2005			December 31, 2004			December 31, 2005			December 31, 2004
	(Unaudited)
Operating Revenue
Rental	$	121,467		$	115,787		$	486,121		$	452,753
Operating expense reimbursement		50,421			45,076			194,609			175,574
Total operating revenue		171,888			160,863			680,730			628,327
Operating Expenses
Rental property		37,132			32,734			142,838			128,005
Real estate taxes		18,783			15,937			68,865			62,809
General and administrative		10,816			8,345			38,138			33,759
Depreciation and amortization		39,121			33,813			146,526			129,298
Total operating expenses		105,852			90,829			396,367			353,871
Operating Income		66,036			70,034			284,363			274,456
Other Income/Expense
Interest and other		2,411			2,424			8,622			7,290
Interest		(32,843	)		(30,380	)		(129,617	)		(116,630	)
Total other income/expense		(30,432	)		(27,956	)		(120,995	)		(109,340	)
Income before property dispositions, income taxes, minority interest and equity in earnings of unconsolidated joint ventures		35,604			42,078			163,368			165,116
Gain on property dispositions, including impairment		89,203			777			84,295			496
Income taxes		(12,586	)		(441	)		(14,827	)		(1,820	)
Minority interest		(7,560	)		(4,134	)		(21,538	)		(17,478	)
Equity in earnings of unconsolidated joint ventures		108			(102	)		2,540			(775	)
Income from continuing operations		104,769			38,178			213,838			145,539
Discontinued operations net of minority interest (including net gain on property dispositions of $3,966 and $7,339 for the quarters ended December 31, 2005 and 2004 and $37,915 and $11,603 for the years ended December 31, 2005 and 2004)		2,547			7,761			35,513			15,904
Net income	$	107,315		$	45,939		$	249,352		$	161,443
Basic income per common share
Continuing operations	$	1.19		$	0.45		$	2.46		$	1.72
Discontinued operations	$	0.03		$	0.09		$	0.41		$	0.19
Total basic income per common share	$	1.22		$	0.54		$	2.87		$	1.91
Diluted income per common share
Continuing operations	$	1.17		$	0.44		$	2.42		$	1.69
Discontinued operations	$	0.03		$	0.09		$	0.40		$	0.18
Total diluted income per common share	$	1.20		$	0.53		$	2.82		$	1.88
Weighted average shares
Basic		87,922			85,349			86,986			84,534
Diluted		89,302			86,845			88,376			86,024

Liberty Property Trust
Statement of Funds From Operations
December 31, 2005
(Unaudited and in thousands, except per share amounts)

	Quarter Ended										Year Ended
	December 31, 2005					December 31, 2004					December 31, 2005					December 31, 2004
				Per					Per					Per					Per
				Weighted					Weighted					Weighted					Weighted
				Average					Average					Average					Average
	Dollars			Share		Dollars			Share		Dollars			Share		Dollars			Share
Reconciliation of net income to FFO — basic:
Basic — income available to common shareholders	$	107,316		$	1.22	$	45,939		$	0.54	$	249,351		$	2.87	$	161,443		$	1.91
Adjustments:
Depreciation and amortization of unconsolidated joint ventures		373					555					1,316					2,566
Depreciation and amortization		38,889					34,784					147,669					133,682
Gain on property dispositions, net of income tax		(79,224	)				(9,519	)				(114,381	)				(13,502	)
Minority interest share in addback for depreciation and amortization and gain on property dispositions, net of income tax		1,531					(1,058	)				(1,363	)				(5,093	)
Funds from operations available to common shareholders — basic	$	68,885		$	0.78	$	70,701		$	0.83	$	282,592		$	3.25	$	279,096		$	3.30
Reconciliation of net income to FFO — diluted:
Diluted — income available to common shareholders	$	107,316		$	1.20	$	45,939		$	0.53	$	249,351		$	2.82	$	161,443		$	1.88
Adjustments:
Depreciation and amortization of unconsolidated joint ventures		373					555					1,316					2,566
Depreciation and amortization		38,889					34,784					147,669					133,682
Gain on property dispositions, net of income tax		(79,224	)				(9,519	)				(114,381	)				(13,502	)
Minority interest excluding preferred unit distributions and excess of preferred redemption over carrying amount		4,273					1,962					10,018					6,955
Funds from operations available to common shareholders — diluted	$	71,627		$	0.77	$	73,721		$	0.81	$	293,973		$	3.20	$	291,144		$	3.25
Reconciliation of weighted average shares:
Weighted average common shares — all basic calculations		87,922					85,349					86,986					84,534
Dilutive shares for long term compensation plans		1,380					1,496					1,390					1,490
Diluted shares for net income calculations		89,302					86,845					88,376					86,024
Weighted average common units		3,518					3,668					3,555					3,676
Diluted shares for funds from operations calculations		92,820					90,513					91,931					89,700

The Company believes that the calculation of Funds from operations is helpful to investors and management as it is a measure of the Company’s operating performance that excludes depreciation and amortization and gains and losses from property dispositions. As a result, year over year comparison of Funds from operations reflects the impact on operations from trends in occupancy rates, rental rates, operating costs, development activities, general and administrative expenses, and interest costs, providing perspective not immediately apparent from net income. In addition, management believes that Funds from operations provides useful information to the investment community about the Company’s financial performance when compared to other REIT’s since Funds from operations is generally recognized as the standard for reporting the operating performance of a REIT. Funds from operations available to common shareholders is defined by NAREIT as net income (computed in accordance with generally accepted accounting principles (“GAAP”)), excluding gains (or losses) from sales of property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Funds from operations available to common shareholders does not represent net income or cash flows from operations as defined by GAAP and does not necessarily indicate that cash flows will be sufficient to fund cash needs. It should not be considered as an alternative to net income as an indicator of the Company’s operating performance or to cash flows as a measure of liquidity. Funds from operations available to common shareholders also does not represent cash flows generated from operating, investing or financing activities as defined by GAAP.

Liberty Property Trust
Balance Sheet
December 31, 2005
(In thousands, except share amounts)

	December 31, 2005			December 31, 2004
Assets
Real estate:
Land and land improvements	$	629,962		$	622,987
Building and improvements		3,730,481			3,616,204
Less: accumulated depreciation		(748,818	)		(692,649	)
Operating real estate		3,611,625			3,546,542
Development in progress		324,924			81,099
Land held for development		158,653			171,122
Net real estate		4,095,202			3,798,763
Cash and cash equivalents		61,629			33,667
Restricted cash		29,085			34,626
Accounts receivable		19,529			21,502
Deferred rent receivable		72,818			66,528
Deferred financing and leasing costs, net of accumulated amortization (2005, $106,752; 2004, $91,117)		121,085			106,940
Investment in unconsolidated joint ventures		33,522			24,372
Assets held for sale		12,654			12,799
Prepaid expenses and other assets		52,005			63,630
Total assets	$	4,497,529		$	4,162,827
Liabilities
Mortgage loans	$	238,728		$	366,171
Unsecured notes		1,755,000			1,455,000
Credit facility		255,450			312,000
Accounts payable		32,919			24,288
Accrued interest		34,892			34,994
Dividend payable		56,490			54,485
Other liabilities		161,735			111,764
Total liabilities		2,535,214			2,358,702
Minority interest		253,133			207,866
Shareholders’ Equity
Common shares of beneficial interest, $.001 par value, 191,200,000 shares authorized, 88,415,764 (includes 59,100 in treasury) and 85,734,380 (includes 59,100 in treasury) shares issued and outstanding as of December 31, 2005 and 2004, respectively		88			86
Additional paid-in capital		1,799,068			1,701,727
Accumulated other comprehensive income		9,906			25,105
Distributions in excess of net income		(98,553	)		(129,332	)
Common shares in treasury, at cost, 59,100 shares as of December 31, 2005 and 2004, respectively		(1,327	)		(1,327	)
Total shareholders’ equity		1,709,182			1,596,259
Total liabilities & shareholders’ equity	$	4,497,529		$	4,162,827