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 5, 2007		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 $0.67 per share for the quarter ended December 31, 2006, compared to $1.20 per share (diluted) for the quarter ended December 31, 2005, and $2.95 per share (diluted) for the full year 2006 compared to $2.82 per share (diluted) for 2005. Net income for the fourth quarter of 2006 includes gains on the sale of properties of $0.28 per share, net of tax, compared with $0.88 per share in gains for the same period in 2005.

Funds from operations available to common shareholders (diluted) (“FFO”) for the fourth quarter of 2006 was $0.76 per share, compared to $0.77 per share for the fourth quarter of 2005. For the year ended December 31, 2006, FFO per share was $3.12, compared to $3.20 per share for 2005. Operating results for the fourth quarter of 2006 include termination fees of $0.8 million or approximately $0.01 per share and impairment charges of $4.2 million or approximately $0.04 per share. A reconciliation of GAAP net income to FFO is included in the financial tables accompanying this press release.

“The fourth quarter of 2006 capped a year of rising confidence, solid execution, and strengthening results” said Bill Hankowsky, Liberty’s chairman and chief executive officer. “During 2006 we increased occupancy by 200 basis points, rents continue to rise, and the result is that same store NOI growth is increasing. Our development pipeline is at an all-time high in terms of investment, and is exceptionally well leased. And we continue to take advantage of the market’s appetite for real estate to sell properties at very attractive prices, constantly repositioning the portfolio for added value.”

Portfolio Performance

Leasing:At December 31, 2006 Liberty’s in-service portfolio of 65.3 million square feet was 94.2% occupied, compared to 93.1% at the end of the third quarter. During the quarter, Liberty completed lease transactions totaling five million square feet of space.

Same Store Performance:Property level operating income for same store properties increased by 6.9% on a cash basis and by 5.7% on a straight line basis for the fourth quarter of 2006 compared to the same quarter in 2005, and increased by 3.4% on a cash basis and 2.8% on a straight line basis for the full year 2006 compared to 2005.

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Liberty Property Trust Fourth Quarter 2006 Results -2-

Real Estate Investments

Development:During the fourth quarter, Liberty brought into service four development properties totaling 625,000 square feet. At quarter-end the properties were 93.9% leased at a yield of 8.8% on the company’s investment of $51.2 million.

During the fourth quarter, Liberty began development of eight properties totaling one million square feet, with an expected total investment of $62 million. The properties consist of:

• in the Lehigh Valley, Pennsylvania; a 188,000 square foot distribution center, 100% leased to Uline, Inc.;

• in Orlando, Florida, three flex properties totaling 116,000 square feet for Liberty’s wholly-owned portfolio, and two distribution properties totaling 296,000 square feet at Airport Industrial Park of Orlando, a project in which Liberty holds a 50% interest;

• a 75,000 square foot flex building in Bloomington, Minnesota, a market in which significant leasing gains during the past three quarters have resulted in virtually no vacancy in Liberty’s portfolio; and

• a 341,000 square foot distribution building in Greensboro, North Carolina.

As of December 31, 2006, Liberty had 7.4 million square feet of wholly-owned and joint venture properties under development. This activity represents a total investment of $1.0 billion, with an expected yield of 8.7%. The properties were 50.1% leased at year-end.

Acquisitions:During the fourth quarter, Liberty acquired seven properties for $117.5 million. The properties include six office properties in Tampa, Florida totaling 551,000 square feet and a 74,000 square foot distribution building in Houston, Texas.

Dispositions:During the fourth quarter, Liberty sold four properties containing 685,000 square feet, for $107 million. The properties sold consist of a 252,000 square foot office building in Allentown, Pennsylvania; a 315,000 square foot distribution building, also in Allentown; a 108,000 square foot office building in Overland Park, Kansas and a small flex building in Madison Heights, Michigan.

Subsequent Events:Subsequent to the end of the fourth quarter, Liberty purchased 115 acres of land for industrial development in Phoenix, Arizona, and will be opening a full service office to service this new market in the company’s portfolio. Liberty completed its first development in Arizona, a 123,000 square foot office building, in 2006.

Liberty sold 18 properties in Michigan in January, and the company anticipates that the majority of its portfolio in this market will be sold during the next five quarters, and Liberty will discontinue operations in this market. Liberty’s Michigan sales activity was the primary contributor to the $0.04 per share impairment charge recognized in the fourth quarter.

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Liberty Property Trust Fourth Quarter 2006 Results -3-

Financing and Balance Sheet Management

During the fourth quarter, Liberty took advantage of its superior balance sheet to access attractive financing opportunities. The proceeds of these transactions were used to repay borrowings under the company’s unsecured credit facility and for general corporate purposes. The company:

• satisfied a $100 million 6.95% medium term note and issued a $300 million ten year, 5.50% senior unsecured note; and

• raised $27 million through the placement of 6.70% Series G Cumulative Redeemable Preferred Units.

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 65 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 Investors section of the Company’s web site atwww.libertyproperty.com. 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 tojleonard@libertyproperty.com.

Liberty will host a conference call during which management will discuss fourth quarter results, on Tuesday, February 6, 2007, 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: 4395176. The call can also be accessed via the Internet on the Investors page of Liberty’s web site atwww.libertyproperty.com for one week following the call.

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Liberty Property Trust Fourth Quarter 2006 Results -4-

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, 2006

(In thousands, except per share amounts)

	Quarter Ended						Year Ended
	December 31, 2006			December 31, 2005			December 31, 2006			December 31, 2005
	(Unaudited)
Operating Revenue
Rental	$	120,686		$	113,269		$	464,714		$	451,608
Operating expense reimbursement		55,016			47,248			202,005			181,886
Total operating revenue		175,702			160,517			666,719			633,494
Operating Expenses
Rental property		37,406			34,107			139,055			130,353
Real estate taxes		19,451			17,930			71,652			64,879
General and administrative		12,558			10,809			45,991			38,099
Depreciation and amortization		37,433			36,384			144,692			135,846
Total operating expenses		106,848			99,230			401,390			369,177
Operating Income		68,854			61,287			265,329			264,317
Other Income/Expense
Interest and other		2,628			2,293			9,591			8,008
Interest		(30,456	)		(30,373	)		(119,584	)		(119,614	)
Total other income/expense		(27,828	)		(28,080	)		(109,993	)		(111,606	)
Income before property dispositions, income taxes, minority interest and equity in earnings of unconsolidated joint ventures		41,026			33,207			155,336			152,711
Gain on property dispositions		371			89,204			17,628			85,593
Income taxes		(303	)		(12,586	)		(288	)		(14,827	)
Minority interest		(5,146	)		(7,468	)		(20,411	)		(21,176	)
Equity in earnings of unconsolidated joint ventures		182			108			1,432			2,540
Income from continuing operations		36,130			102,465			153,697			204,841
Discontinued operations net of minority interest (including net gain on property dispositions of $25,032 and $3,965 for the quarters ended December 31, 2006 and 2005 and $112,620 and $36,617 for the twelve month periods ended December 31, 2006 and 2005)		24,684			4,851			112,877			44,510
Net Income	$	60,814		$	107,316		$	266,574		$	249,351
Basic income per common share
Continuing operations	$	0.40		$	1.16		$	1.72		$	2.36
Discontinued operations	$	0.27		$	0.06		$	1.26		$	0.51
Total basic income per common share	$	0.67		$	1.22		$	2.98		$	2.87
Diluted income per common share
Continuing operations	$	0.40		$	1.15		$	1.70		$	2.32
Discontinued operations	$	0.27		$	0.05		$	1.25		$	0.50
Total diluted income per common share	$	0.67		$	1.20		$	2.95		$	2.82
Weighted average shares
Basic		90,272			87,922			89,313			86,986
Diluted		91,386			89,302			90,492			88,376

Liberty Property Trust
Statement of Funds From Operations
December 31, 2006
(Unaudited and in thousands, except per share amounts)

	Quarter Ended										Year Ended
	December 31, 2006					December 31, 2005					December 31, 2006					December 31, 2005
				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	$	60,814		$	0.67	$	107,316		$	1.22	$	266,574		$	2.98	$	249,351		$	2.87
Adjustments:
Depreciation and amortization of unconsolidated joint ventures		763					373					2,871					1,316
Depreciation and amortization		37,802					38,889					149,606					147,669
Gain on property dispositions		(29,549	)				(79,224	)				(136,036	)				(114,381	)
Minority interest share in addback for depreciation and amortization and gain on property dispositions		(398	)				1,531					(877	)				(1,363	)
Funds from operations available to common shareholders — basic	$	69,432		$	0.77	$	68,885		$	0.78	$	282,138		$	3.16	$	282,592		$	3.25
Reconciliation of net income to FFO — diluted:
Diluted — income available to common shareholders	$	60,814		$	0.67	$	107,316		$	1.20	$	266,574		$	2.95	$	249,351		$	2.82
Adjustments:
Depreciation and amortization of unconsolidated joint ventures		763					373					2,871					1,316
Depreciation and amortization		37,802					38,889					149,606					147,669
Gain on property dispositions		(29,549	)				(79,224	)				(136,036	)				(114,381	)
Minority interest excluding preferred unit distributions and excess of preferred redemption over carrying amount		2,805					4,273					11,786					10,018
Funds from operations available to common shareholders — diluted	$	72,635		$	0.76	$	71,627		$	0.77	$	294,801		$	3.12	$	293,973		$	3.20
Reconciliation of weighted average shares:
Weighted average common shares — all basic calculations		90,272					87,922					89,313					86,986
Dilutive shares for long term compensation plans		1,114					1,380					1,179					1,390
Diluted shares for net income calculations		91,386					89,302					90,492					88,376
Weighted average common units		4,195					3,518					3,895					3,555
Diluted shares for funds from operations calculations		95,581					92,820					94,387					91,931

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, 2006
(In thousands, except share amounts)

	December 31, 2006			December 31, 2005
Assets
Real estate:
Land and land improvements	$	678,075		$	620,355
Building and improvements		3,814,437			3,664,036
Less: accumulated depreciation		(806,309	)		(732,439	)
Operating real estate		3,686,203			3,551,952
Development in progress		538,303			324,924
Land held for development		195,332			158,653
Net real estate		4,419,838			4,035,529
Cash and cash equivalents		53,737			61,629
Restricted cash		55,671			29,085
Accounts receivable		23,189			14,761
Deferred rent receivable		71,894			72,818
Deferred financing and leasing costs, net of accumulated amortization (2006, $100,406; 2005, $108,103)		129,745			122,994
Investment in unconsolidated joint ventures		47,196			33,522
Assets held for sale		40,715			73,211
Prepaid expenses and other assets		68,306			56,773
Total assets	$	4,910,291		$	4,500,322
Liabilities
Mortgage loans	$	185,978		$	238,728
Unsecured notes		1,955,000			1,755,000
Credit facility		246,960			255,450
Accounts payable		40,633			32,919
Accrued interest		36,297			34,892
Dividend payable		58,961			56,490
Other liabilities		217,131			164,528
Total liabilities		2,740,960			2,538,007
Minority interest		297,727			253,133
Shareholders’ Equity
Common shares of beneficial interest, $.001 par value, 193,787,000 shares authorized, 90,972,979 (includes 59,100 in treasury) and 88,415,764 (includes 59,100 in treasury) shares issued and outstanding as of December 31, 2006 and December 31, 2005, respectively		91			88
Additional paid-in capital		1,906,403			1,799,068
Accumulated other comprehensive income		20,323			9,906
Distributions in excess of net income		(53,886	)		(98,553	)
Common shares in treasury, at cost, 59,100 shares as of December 31, 2006 and December 31, 2005, respectively		(1,327	)		(1,327	)
Total shareholders’ equity		1,871,604			1,709,182
Total liabilities & shareholders’ equity	$	4,910,291		$	4,500,322