LIBERTY PROPERTY TRUST (Form: 10-Q, Received: 08/06/2010 09:02:01)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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


		For the quarterly period ended June 30, 2010


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 name of registrants as specified in their governing documents)


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

(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

500 Chesterfield Parkway Malvern, Pennsylvania		19355

(Address of Principal Executive Offices)		(Zip Code)

Registrants’ Telephone Number, Including Area Code (610) 648-1700

Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve (12) months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past ninety (90) days. Yes þ No o

Indicate by check mark whether the registrant 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 the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. (See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act). (Check one):


Large Accelerated Filer þ		Accelerated Filer o		Non-Accelerated Filer o (Do not check if a smaller reporting company)		Smaller Reporting Company o

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

On August 3, 2010, 113,749,354 Common Shares of Beneficial Interest, par value $0.001 per share, of Liberty Property Trust were outstanding.

Liberty Property Trust/Liberty Property Limited Partnership
Form 10-Q for the period ended June 30, 2010


Index	Page

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

Condensed consolidated balance sheets of Liberty Property Trust at June 30, 2010 and December 31, 2009		4

Condensed consolidated statements of operations of Liberty Property Trust for the three months ended June 30, 2010 and June 30, 2009		5

Condensed consolidated statements of operations of Liberty Property Trust for the six months ended June 30, 2010 and June 30, 2009		6

Condensed consolidated statement of equity of Liberty Property Trust for the six months ended June 30, 2010		7

Condensed consolidated statements of cash flows of Liberty Property Trust for the six months ended June 30, 2010 and June 30, 2009		8

Notes to condensed consolidated financial statements of Liberty Property Trust		9

Condensed consolidated balance sheets of Liberty Property Limited Partnership at June 30, 2010 and December 31, 2009		18

Condensed consolidated statements of operations of Liberty Property Limited Partnership for the three months ended June 30, 2010 and June 30, 2009		19

Condensed consolidated statements of operations of Liberty Property Limited Partnership for the six months ended June 30, 2010 and June 30, 2009		20

Condensed consolidated statement of equity of Liberty Property Limited Partnership for the six months ended June 30, 2010		21

Condensed consolidated statements of cash flows of Liberty Property Limited Partnership for the six months ended June 30, 2010 and June 30, 2009		22

Notes to condensed consolidated financial statements of Liberty Property Limited Partnership		23

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		32

Item 3. Quantitative and Qualitative Disclosures about Market Risk		44

Item 4. Controls and Procedures		44


Index	Page

PART II. OTHER INFORMATION		45

Item 1. Legal Proceedings		45

Item 1A. Risk Factors		45

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		45

Item 3. Defaults Upon Senior Securities		45

Item 4. Removed and Reserved		45

Item 5. Other Information		45

Item 6. Exhibits		46

Signatures for Liberty Property Trust		48

Signatures for Liberty Property Limited Partnership		49

Exhibit Index		50

Exhibit 10.18
Exhibit 10.19
Exhibit 12.1
Exhibit 31.1
Exhibit 31.2
Exhibit 31.3
Exhibit 31.4
Exhibit 32.1
Exhibit 32.2
Exhibit 32.3
Exhibit 32.4
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

CONDENSED CONSOLIDATED BALANCE SHEETS OF LIBERTY PROPERTY TRUST

(In thousands, except share and unit amounts)


	June 30, 2010			December 31, 2009
	(Unaudited)
ASSETS
Real estate:
Land and land improvements	$	858,919		$	850,559
Building and improvements		4,364,449			4,289,932
Less accumulated depreciation		(1,036,823	)		(973,624	)


Operating real estate		4,186,545			4,166,867

Development in progress		7,951			66,714
Land held for development		210,748			218,633


Net real estate		4,405,244			4,452,214

Cash and cash equivalents		39,541			237,446
Restricted cash		36,351			42,232
Accounts receivable		6,657			6,057
Deferred rent receivable		102,544			95,527
Deferred financing and leasing costs, net of accumulated amortization (2010, $118,545; 2009, $108,403)		131,880			134,309
Investments in and advances to unconsolidated joint ventures		172,586			175,584
Prepaid expenses and other assets		58,289			85,574


Total assets	$	4,953,092		$	5,228,943


LIABILITIES
Mortgage loans	$	352,019		$	473,993
Unsecured notes		1,842,882			1,842,882
Credit facility		50,000			140,000
Accounts payable		36,772			31,195
Accrued interest		31,294			31,251
Dividend and distributions payable		55,718			55,402
Other liabilities		133,281			171,051


Total liabilities		2,501,966			2,745,774

EQUITY
Liberty Property Trust shareholders’ equity
Common shares of beneficial interest, $.001 par value, 183,987,000 shares authorized; 114,642,717 (includes 1,249,909 in treasury) and 113,875,211 (includes 1,249,909 in treasury) shares issued and outstanding as of June 30, 2010 and December 31, 2009, respectively		115			114
Additional paid-in capital		2,530,789			2,509,704
Accumulated other comprehensive (loss) income		(3,195	)		2,339
Distributions in excess of net income		(382,461	)		(337,911	)
Common shares in treasury, at cost, 1,249,909 shares as of June 30, 2010 and December 31, 2009		(51,951	)		(51,951	)

Total Liberty Property Trust shareholders’ equity		2,093,297			2,122,295

Noncontrolling interest — operating partnership
3,943,224 and 4,011,354 common units outstanding as of June 30, 2010 and December 31, 2009, respectively 2009, respectively December 31, 2008, respectively		69,113			72,294
9,740,000 preferred units outstanding as of June 30, 2010 and December 31, 2009		287,959			287,959
Noncontrolling interest — consolidated joint ventures		757			621


Total equity		2,451,126			2,483,169


Total liabilities and equity	$	4,953,092		$	5,228,943

See accompanying notes.

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


	Three Months Ended
	June 30, 2010			June 30, 2009
OPERATING REVENUE
Rental	$	130,509		$	129,352
Operating expense reimbursement		54,469			54,205

Total operating revenue		184,978			183,557


OPERATING EXPENSE
Rental property		34,659			34,770
Real estate taxes		22,402			21,773
General and administrative		12,567			11,655
Depreciation and amortization		43,873			42,005

Total operating expenses		113,501			110,203


Operating income		71,477			73,354

OTHER INCOME (EXPENSE)
Interest and other income		2,681			2,511
Debt extinguishment gain		—			563
Interest expense		(39,144	)		(36,755	)


Total other income (expense)		(36,463	)		(33,681	)


Income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures		35,014			39,673

Gain (loss) on property dispositions		2,242			(2,050	)
Income taxes		(503	)		(127	)
Equity in earnings of unconsolidated joint ventures		783			1,192


Income from continuing operations		37,536			38,688

Discontinued operations (including net gain on property dispositions of $2,408 and $3,670 for the three months ended June 30, 2010 and 2009, respectively)		2,478			4,524


Net income		40,014			43,212
Noncontrolling interest — operating partnership		(6,421	)		(6,597	)
Noncontrolling interest — consolidated joint ventures		(148	)		56


Net income available to common shareholders	$	33,445		$	36,671


Earnings per common share
Basic:
Income from continuing operations	$	0.28		$	0.31
Income from discontinued operations		0.02			0.04


Income per common share — basic	$	0.30		$	0.35


Diluted:
Income from continuing operations	$	0.27		$	0.31
Income from discontinued operations		0.02			0.04


Income per common share — diluted	$	0.29		$	0.35


Distributions per common share	$	0.475		$	0.475


Weighted average number of common shares outstanding
Basic		112,644			105,768
Diluted		113,380			106,245

Amounts attributable to common shareholders
Income from continuing operations	$	31,050		$	32,307
Discontinued operations		2,395			4,364

Net income available to common shareholders	$	33,445		$	36,671


See accompanying notes.

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


	Six Months Ended
	June 30, 2010			June 30, 2009
OPERATING REVENUE
Rental	$	260,578		$	257,064
Operating expense reimbursement		113,202			111,465

Total operating revenue		373,780			368,529


OPERATING EXPENSE
Rental property		75,073			73,151
Real estate taxes		44,910			43,546
General and administrative		27,441			27,212
Depreciation and amortization		86,804			84,575

Total operating expenses		234,228			228,484


Operating income		139,552			140,045

OTHER INCOME (EXPENSE)
Interest and other income		5,471			5,606
Debt extinguishment gain		—			1,092
Interest expense		(77,773	)		(73,946	)

Total other income (expense)		(72,302	)		(67,248	)


Income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures		67,250			72,797

Gain (loss) on property dispositions		3,010			(2,344	)
Income taxes		(955	)		(344	)
Equity in earnings of unconsolidated joint ventures		1,177			1,609


Income from continuing operations		70,482			71,718

Discontinued operations (including net gain on property dispositions of $5,270 and $3,869 for the six months ended June 30, 2010 and 2009, respectively)		5,354			5,336


Net income		75,836			77,054
Noncontrolling interest — operating partnership		(12,704	)		(12,914	)
Noncontrolling interest — consolidated joint ventures		(136	)		420


Net income available to common shareholders	$	62,996		$	64,560


Earnings per common share
Basic:
Income from continuing operations	$	0.51		$	0.58
Income from discontinued operations		0.05			0.05


Income per common share — basic	$	0.56		$	0.63


Diluted:
Income from continuing operations	$	0.51		$	0.57
Income from discontinued operations		0.05			0.05


Income per common share — diluted	$	0.56		$	0.62


Distributions per common share	$	0.95		$	0.95


Weighted average number of common shares outstanding
Basic		112,512			103,244
Diluted		113,182			103,625

Amounts attributable to common shareholders
Income from continuing operations	$	57,822		$	59,418
Discontinued operations		5,174			5,142

Net income available to common shareholders	$	62,996		$	64,560

See accompanying notes.

CONDENSED CONSOLIDATED STATEMENT OF EQUITY OF LIBERTY PROPERTY TRUST
(UNAUDITED AND IN THOUSANDS)


					Accumulated									Total			Noncontroll-			Noncontroll-
	Common				Other									Liberty			ing interest-			ing interest-			Noncontroll-
	Shares of		Additional		Comprehensive			Distributions			Common			Property Trust			operating			operating			ing Interest-
	Beneficial		Paid-In		(loss)			in Excess of			Shares Held			Shareholders’			partnership-			partnership -			consolidated
	Interest		Capital		Income			Net Income			in Treasury			Equity			Common			Preferred			joint ventures		Total Equity

Balance at January 1, 2010	$	114	$	2,509,704	$	2,339		$	(337,911	)	$	(51,951	)	$	2,122,295		$	72,294		$	287,959		$	621	$	2,483,169

Net proceeds from the issuance of Common Shares		1		11,657		—			—			—			11,658			—			—			—		11,658

Net income		—		—		—			62,996			—			62,996			2,198			10,506			136		75,836
Distributions		—		—		—			(107,546	)		—			(107,546	)		(3,959	)		(10,506	)		—		(122,011	)
Noncash compensation		—		8,201		—			—			—			8,201			—			—			—		8,201
Foreign currency translation adjustment		—		—		(5,534	)		—			—			(5,534	)		(193	)		—			—		(5,727	)
Redemption of noncontrolling interests — common units		—		1,227		—			—			—			1,227			(1,227	)		—			—		—


Balance at June 30, 2010	$	115	$	2,530,789	$	(3,195	)	$	(382,461	)	$	(51,951	)	$	2,093,297		$	69,113		$	287,959		$	757	$	2,451,126

See accompanying notes.

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


	Six Months Ended
	June 30, 2010			June 30, 2009
OPERATING ACTIVITIES
Net income	$	75,836		$	77,054
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		86,853			86,306
Amortization of deferred financing costs		3,354			2,439
Debt extinguishment gain		—			(1,092	)
Equity in earnings of unconsolidated joint ventures		(1,177	)		(1,609	)
Distributions from unconsolidated joint ventures		517			663
Gain on property dispositions		(8,280	)		(1,526	)
Noncash compensation		8,201			9,790
Changes in operating assets and liabilities:
Restricted cash		5,000			970
Accounts receivable		(609	)		6,208
Deferred rent receivable		(7,155	)		(5,677	)
Prepaid expenses and other assets		1,966			18,806
Accounts payable		5,718			2,979
Accrued interest		43			(5,159	)
Other liabilities		(22,059	)		(15,793	)

Net cash provided by operating activities		148,208			174,359


INVESTING ACTIVITIES
Investment in properties		(49,316	)		(35,812	)
Investments in and advances to unconsolidated joint ventures		(280	)		(4,017	)
Distributions from unconsolidated joint ventures		3,177			18,379
Net proceeds from disposition of properties/land		27,752			80,333
Net proceeds from (advances on) grant receivable/escrow		22,969			(9,848	)
Investment in development in progress		(7,919	)		(50,385	)
Investment in land held for development		(2,683	)		(26,980	)
Investment in deferred leasing costs		(14,467	)		(12,020	)

Net cash used in investing activities		(20,767	)		(40,350	)


FINANCING ACTIVITIES
Net proceeds from issuance of Common Shares		11,691			218,970
Repayments of unsecured notes		—			(285,268	)
Proceeds from mortgage loans		635			317,213
Repayments of mortgage loans		(122,608	)		(43,029	)
Proceeds from credit facility		90,000			199,150
Repayments on credit facility		(180,000	)		(319,150	)
Increase in deferred financing costs		(8	)		(5,743	)
Distribution paid on Common Shares		(107,197	)		(96,350	)
Distribution paid on units		(14,531	)		(14,452	)

Net cash used in financing activities		(322,018	)		(28,659	)


Net (decrease) increase in cash and cash equivalents		(194,577	)		105,350
(Decrease) increase in cash and cash equivalents related to foreign currency translation		(3,328	)		3,392
Cash and cash equivalents at beginning of period		237,446			15,794

Cash and cash equivalents at end of period	$	39,541		$	124,536

See accompanying notes.

Liberty Property Trust

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2010

Note 1: Organization and Basis of Presentation

Organization

Liberty Property Trust (the “Trust”) is a self-administered and self-managed Maryland real estate investment trust (a “REIT”). Substantially all of the Trust’s assets are owned directly or indirectly, and substantially all of the Trust’s operations are conducted directly or indirectly, by Liberty Property Limited Partnership (the “Operating Partnership” and, collectively with the Trust and their consolidated subsidiaries, the “Company”). The Trust is the sole general partner and also a limited partner of the Operating Partnership, owning 96.6% of the common equity of the Operating Partnership at June 30, 2010. The Company provides leasing, property management, development, acquisition and other tenant-related services for a portfolio of industrial and office properties which are located principally within the Mid-Atlantic, Southeastern, Midwestern and Southwestern United States and the United Kingdom. See a description of the Company’s markets in Note 2 to the Company’s financial statements.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Trust and its subsidiaries, including the Operating Partnership, have been prepared in accordance with United States generally accepted accounting principles (“US GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by US GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K of the Trust and the Operating Partnership for the year ended December 31, 2009. In the opinion of management, all adjustments (consisting solely of normal recurring adjustments) necessary for a fair presentation of the financial statements for these interim periods have been included. The results of interim periods are not necessarily indicative of the results to be obtained for a full fiscal year. Certain amounts from prior periods have been reclassified to conform to the current period presentation.

Income per Common Share

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


	For the Three Months Ended June 30, 2010						For the Three Months Ended June 30, 2009
			Weighted						Weighted
			Average						Average
	Income		Shares				Income		Shares
	(Numerator)		(Denominator)		Per Share		(Numerator)		(Denominator)		Per Share
Basic income from continuing operations
Income from continuing operations net of noncontrolling interest	$	31,050		112,644	$	0.28	$	32,307		105,768	$	0.31

Dilutive shares for long-term compensation plans		—		736				—		477


Diluted income from continuing operations
Income from continuing operations net of noncontrolling interest and assumed conversions		31,050		113,380	$	0.27		32,307		106,245	$	0.31


Basic income from discontinued operations
Discontinued operations net of noncontrolling interest		2,395		112,644	$	0.02		4,364		105,768	$	0.04

Dilutive shares for long-term compensation plans		—		736				—		477


Diluted income from discontinued operations
Discontinued operations net of noncontrolling interest		2,395		113,380	$	0.02		4,364		106,245	$	0.04


Basic income per common share
Net income available to common shareholders		33,445		112,644	$	0.30		36,671		105,768	$	0.35

Dilutive shares for long-term compensation plans		—		736				—		477


Diluted income per common share
Net income available to common shareholders and assumed conversions	$	33,445		113,380	$	0.29	$	36,671		106,245	$	0.35


	For the Six Months Ended June 30, 2010						For the Six Months Ended June 30, 2009
			Weighted						Weighted
			Average						Average
	Income		Shares				Income		Shares
	(Numerator)		(Denominator)		Per Share		(Numerator)		(Denominator)		Per Share
Basic income from continuing operations
Income from continuing operations net of noncontrolling interest	$	57,822		112,512	$	0.51	$	59,418		103,244	$	0.58

Dilutive shares for long-term compensation plans		—		670				—		381


Diluted income from continuing operations
Income from continuing operations net of noncontrolling interest and assumed conversions		57,822		113,182	$	0.51		59,418		103,625	$	0.57


Basic income from discontinued operations
Discontinued operations net of noncontrolling interest		5,174		112,512	$	0.05		5,142		103,244	$	0.05

Dilutive shares for long-term compensation plans		—		670				—		381


Diluted income from discontinued operations
Discontinued operations net of noncontrolling interest		5,174		113,182	$	0.05		5,142		103,625	$	0.05


Basic income per common share
Net income available to common shareholders		62,996		112,512	$	0.56		64,560		103,244	$	0.63

Dilutive shares for long-term compensation plans		—		670				—		381


Diluted income per common share
Net income available to common shareholders and assumed conversions	$	62,996		113,182	$	0.56	$	64,560		103,625	$	0.62

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. The amounts of anti-dilutive options that were excluded from the computation of diluted income per common share for the three and six months ended June 30, 2010 were 1,513,000 and 1,473,000, respectively, as compared to 2,666,000 and 2,857,000, respectively, for the same periods in 2009.

During the three and six months ended June 30, 2010, 113,000 and 127,000 common shares, respectively, were issued upon the exercise of options.

Foreign Currency Translation

The functional currency of the Company’s United Kingdom operations is pounds sterling. The Company translates the financial statements for the United Kingdom operations into US dollars. Gains and losses resulting from this translation do not impact the results of operations and are included in accumulated other comprehensive (loss) income as a separate component of shareholders’ equity. A proportionate amount of gain or loss is allocated to noncontrolling interest-common units. Accumulated other comprehensive (loss) income consists solely of the foreign currency translation adjustments described above. Other comprehensive loss for the three and six months ended June 30, 2010 was $1.1 million and $5.7 million, respectively, as compared to other comprehensive income of $10.8 million and $9.5 million, respectively, for the same periods in 2009. 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) income and noncontrolling interest-common units.

Note 2: Segment Information

The Company operates its portfolio of properties primarily throughout the Mid-Atlantic, Southeastern, Midwestern and Southwestern United States. Additionally, the Company owns certain assets in the United Kingdom. The Company reviews the performance of the portfolio on a geographical basis. As such, the following regions are considered the Company’s reportable segments:


Reportable Segments		Markets

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

The Company’s reportable segments are distinct business units which are each managed separately in order to concentrate market knowledge within a geographic area. Within these reportable segments, the Company derives its revenues from its two product types: industrial properties and office properties.

The Company evaluates performance of the reportable segments based on property level operating income, which is calculated as rental revenue and operating expense reimbursement less rental property expenses and real estate taxes. The accounting policies of the reportable segments are the same as those for the Company on a consolidated basis.

The operating information by segment is as follows (in thousands):

FOR THE THREE MONTHS ENDED JUNE 30, 2010


	Northeast
			Lehigh/										Phila-
	Southeastern		Central		New								delphia/		United
	PA		PA		Jersey		Midwest		Mid-Atlantic		South		D.C.		Kingdom		Total
Operating revenue	$	44,161	$	24,546	$	7,833	$	19,377	$	33,733	$	47,063	$	7,255	$	1,010	$	184,978
Rental property expenses and real estate taxes		13,777		6,064		2,895		7,247		9,402		16,063		1,392		221		57,061


Property level operating income	$	30,384	$	18,482	$	4,938	$	12,130	$	24,331	$	31,000	$	5,863	$	789		127,917


Interest and other income																		2,681
Interest expense																		(39,144	)
General and administrative																		(12,567	)
Depreciation and amortization																		(43,873	)

Income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures																		35,014
Gain on property dispositions																		2,242
Income taxes																		(503	)
Equity in earnings of unconsolidated joint ventures																		783
Discontinued operations																		2,478


Net income																	$	40,014

FOR THE THREE MONTHS ENDED JUNE 30, 2009


	Northeast
			Lehigh/										Phila-
	Southeastern		Central		New								delphia/		United
	PA		PA		Jersey		Midwest		Mid-Atlantic		South		D.C.		Kingdom		Total
Operating revenue	$	45,131	$	24,583	$	7,531	$	20,725	$	33,283	$	46,121	$	5,048	$	1,135	$	183,557
Rental property expenses and real estate taxes		13,965		6,409		2,760		7,681		9,253		15,022		1,193		260		56,543


Property level operating income	$	31,166	$	18,174	$	4,771	$	13,044	$	24,030	$	31,099	$	3,855	$	875		127,014


Interest and other income																		2,511
Debt extinguishment gain																		563
Interest expense																		(36,755	)
General and administrative																		(11,655	)
Depreciation and amortization																		(42,005	)

Income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures																		39,673
Loss on property dispositions																		(2,050	)
Income taxes																		(127	)
Equity in earnings of unconsolidated joint ventures																		1,192
Discontinued operations																		4,524


Net income																	$	43,212

FOR THE SIX MONTHS ENDED JUNE 30, 2010


	Northeast
			Lehigh/										Phila-
	Southeastern		Central		New								delphia/		United
	PA		PA		Jersey		Midwest		Mid-Atlantic		South		D.C.		Kingdom		Total
Operating revenue	$	90,414	$	50,249	$	15,837	$	38,875	$	69,160	$	92,972	$	14,228	$	2,045	$	373,780
Rental property expenses and real estate taxes		29,654		13,333		6,259		15,077		20,564		31,741		2,904		451		119,983


Property level operating income	$	60,760	$	36,916	$	9,578	$	23,798	$	48,596	$	61,231	$	11,324	$	1,594		253,797


Interest and other income																		5,471
Interest expense																		(77,773	)
General and administrative																		(27,441	)
Depreciation and amortization																		(86,804	)

Income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures																		67,250
Gain on property dispositions																		3,010
Income taxes																		(955	)
Equity in earnings of unconsolidated joint ventures																		1,177
Discontinued operations																		5,354


Net income																	$	75,836

FOR THE SIX MONTHS ENDED JUNE 30, 2009


	Northeast
			Lehigh/										Phila-
	Southeastern		Central		New								delphia/		United
	PA		PA		Jersey		Midwest		Mid-Atlantic		South		D.C.		Kingdom		Total
Operating revenue	$	91,858	$	49,626	$	15,345	$	41,389	$	67,175	$	91,117	$	9,783	$	2,236	$	368,529
Rental property expenses and real estate taxes		29,519		13,978		5,928		15,258		19,977		29,174		2,373		490		116,697


Property level operating income	$	62,339	$	35,648	$	9,417	$	26,131	$	47,198	$	61,943	$	7,410	$	1,746		251,832


Interest and other income																		5,606
Debt extinguishment gain																		1,092
Interest expense																		(73,946	)
General and administrative																		(27,212	)
Depreciation and amortization																		(84,575	)


Income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures																		72,797
Loss on property dispositions																		(2,344	)
Income taxes																		(344	)
Equity in earnings of unconsolidated joint ventures																		1,609
Discontinued operations																		5,336


Net income																	$	77,054

Note 3: Accounting for the Impairment or Disposal of Long-Lived Assets

The operating results and gain/(loss) on disposition of real estate for properties sold and held for sale are reflected in the condensed consolidated statements of operations as discontinued operations. Prior period financial statements have been adjusted for discontinued operations. The proceeds from dispositions of operating properties with no continuing involvement for the three and six months ended June 30, 2010 were $10.2 million and $16.5 million, respectively, as compared to $34.7 million and $69.5 million, respectively for the same periods in 2009.

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


	Three Months Ended						Six Months Ended
	June 30, 2010			June 30, 2009			June 30, 2010			June 30, 2009
Revenues	$	309		$	3,991		$	822		$	9,359
Operating expenses		(144	)		(1,281	)		(527	)		(3,421	)
Interest expense		(22	)		(845	)		(43	)		(2,337	)
Depreciation and amortization		(73	)		(1,011	)		(168	)		(2,134	)

Income before property dispositions	$	70		$	854		$	84		$	1,467

Interest expense is allocated to discontinued operations. The allocation of interest expense to discontinued operations was based on the ratio of net assets sold (without continuing involvement) to the sum of total net assets plus consolidated debt.

Asset Impairment

During the three and six months ended June 30, 2010, the Company recognized impairment charges of $400,000 related to a portfolio of properties in the Company’s Philadelphia/D.C. segment. During the three and six months ended June 30, 2009, the Company recognized impairments totaling $3.9 million and $4.5 million, respectively. For the three months ended June 30, 2009, $1.1 million in impairment related to a property in the Northeast segment, $331,000 related to a property in the Midwest segment, and $2.4 million related to a property in the Philadelphia/D.C. segment. For the six months ended June 30, 2009, $1.1 million in impairment related to a property in the Northeast segment, $113,000 related to a parcel of land in the Northeast segment, $89,000 related to a portfolio of properties in the Mid-Atlantic segment, $822,000 related to properties in the Midwest segment and $2.4 million related to a property in the Philadelphia/D.C. segment.

For the three and six months ended June 30, 2010, $400,000 in impairment was included in the caption gain (loss) on property dispositions in the Company’s statements of operations. For the three months ended June 30, 2009, $1.5 million in impairment related to properties sold was included in the caption discontinued operations in the Company’s statement of operations and $2.4 million in impairment was included in the caption gain (loss) on property dispositions in the Company’s statement of operations. For the six months ended June 30, 2009, $1.5 million in impairment related to properties sold was included in the caption discontinued operations in the Company’s statement of operations and $3.0 million in impairment was included in the caption gain (loss) on property dispositions in the Company’s statement of operations. The Company determined these impairments through a comparison of the aggregate future cash flows (including quoted offer prices) to be generated by the properties to the carrying value of the properties. The Company has evaluated each of the properties and land held for development and has determined that there are no additional valuation adjustments necessary at June 30, 2010.

Note 4: Noncontrolling interests

Noncontrolling interests in the accompanying financial statements represent the interests of the common and preferred units in Liberty Property Limited Partnership not held by the Trust. In addition, noncontrolling interests include third-party ownership interests in consolidated joint venture investments.

Common units

The common units outstanding as of June 30, 2010 have the same economic characteristics as common shares of the Trust. The 3,943,224 outstanding common units 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 3,943,224 outstanding common units based on the closing price of the shares of the Company at June 30, 2010 was $113.8 million.

Preferred units

The Company has outstanding the following cumulative redeemable preferred units of the Operating Partnership (the “Preferred Units”):


					Liquidation		Dividend			Redeemable
Issue	Amount		Units		Preference		Rate			As of		Exchangeable after
	(in 000’s)
Series B	$	95,000		3,800	$	25		7.45	%		8/31/09	8/31/13 into Series B Cumulative Redeemable Preferred Shares of the Trust

Series E	$	20,000		400	$	50		7.00	%		6/16/10	6/16/15 into Series E Cumulative Redeemable Preferred Shares of the Trust

Series F	$	50,000		1,000	$	50		6.65	%		6/30/10	12/12/15 into Series F Cumulative Redeemable Preferred Shares of the Trust

Series G	$	27,000		540	$	50		6.70	%		12/15/11	12/15/16 into Series G Cumulative Redeemable Preferred Shares of the Trust

Series H	$	100,000		4,000	$	25		7.40	%		8/21/12	8/21/17 into Series H Cumulative Redeemable Preferred Shares of the Trust

The Preferred Units are callable at the Operating Partnership’s option after a stated period of time. The Trust as the sole general partner of the Operating Partnership may at its option elect to settle the redemption for cash or through the exchange on a one-for-one basis with unregistered preferred shares of the Trust.

Note 5: Indebtedness

Mortgage Loans
In April 2010, the Company used available cash and proceeds from its $600 million Credit Facility to repay $119.3 million principal value of mortgage loans. The weighted average interest rate of these loans as of March 31, 2010 was 7.3%. The mortgages encumbered certain of the Company’s operating properties with a net book value of $216.8 million. The Company incurred a $1.2 million prepayment penalty and wrote off $936,000 in deferred financing costs in conjunction with the prepayment of these loans. These costs are included as interest expense in the accompanying statements of operations.

Note 6: Disclosure of Fair Value of Financial Instruments

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 June 30, 2010 and December 31, 2009. 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, 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 was greater than the aggregate carrying value by approximately $136.8 million and $33.5 million at June 30, 2010 and December 31, 2009, respectively. The fair value of the Company’s long-term debt is estimated using actual trading prices (where available) and using discounted cash flow analysis based on the borrowing rates currently available to the Company for loans with similar terms and maturities where actual trading prices are not available.

Disclosure about fair value of financial instruments is based on pertinent information available to management as of June 30, 2010 and December 31, 2009. Although as of the date of this report, management is not aware of any factors that would significantly affect the fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since June 30, 2010 and current estimates of fair value may differ significantly from the amounts presented herein.

Note 7: Recently Issued Accounting Standards

Beginning with the first quarter of 2010, the Company is required to conduct an ongoing assessment to determine whether each entity in which it has an equity interest is a variable interest entity that should be consolidated if certain qualitative factors indicate that the Company has the controlling interest. This accounting change is required to be retroactively applied for all periods presented. The adoption of the requirement did not have a material impact on the Company’s financial statements.

Note 8: Supplemental Disclosure to Statements of Cash Flows

The following are supplemental disclosures to the statements of cash flows for the six months ended June 30, 2010 and 2009 (amounts in thousands):


Non-cash activity	2010		2009

Write-off of fully depreciated property and deferred costs	$	16,912	$	17,476

CONDENSED CONSOLIDATED BALANCE SHEETS OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
(In thousands, except unit amounts)


	June 30, 2010			December 31, 2009
	(Unaudited)
ASSETS
Real estate:
Land and land improvements	$	858,919		$	850,559
Building and improvements		4,364,449			4,289,932
Less accumulated depreciation		(1,036,823	)		(973,624	)


Operating real estate		4,186,545			4,166,867

Development in progress		7,951			66,714
Land held for development		210,748			218,633


Net real estate		4,405,244			4,452,214

Cash and cash equivalents		39,541			237,446
Restricted cash		36,351			42,232
Accounts receivable		6,657			6,057
Deferred rent receivable		102,544			95,527
Deferred financing and leasing costs, net of accumulated amortization (2010, $118,545; 2009, $108,403)		131,880			134,309
Investments in and advances to unconsolidated joint ventures		172,586			175,584
Prepaid expenses and other assets		58,289			85,574


Total assets	$	4,953,092		$	5,228,943


LIABILITIES
Mortgage loans	$	352,019		$	473,993
Unsecured notes		1,842,882			1,842,882
Credit facility		50,000			140,000
Accounts payable		36,772			31,195
Accrued interest		31,294			31,251
Distributions payable		55,718			55,402
Other liabilities		133,281			171,051


Total liabilities		2,501,966			2,745,774

OWNERS’ EQUITY
General partner’s equity — common units, 114,642,717 and 113,875,211 units outstanding as of June 30, 2010 and December 31, 2009, respectively		2,093,297			2,122,295

Limited partners’ equity — 3,943,224 and 4,011,354 common units outstanding as of June 30, 2010 and December 31, 2009, respectively		69,113			72,294
— 9,740,000 preferred units outstanding as of June 30, 2010 and December 31, 2009		287,959			287,959
Noncontrolling interest — consolidated joint ventures		757			621


Total owners’ equity		2,451,126			2,483,169


Total liabilities and owners’ equity	$	4,953,092		$	5,228,943

See accompanying notes.

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


	Three Months Ended
	June 30, 2010			June 30, 2009
OPERATING REVENUE
Rental	$	130,509		$	129,352
Operating expense reimbursement		54,469			54,205

Total operating revenue		184,978			183,557


OPERATING EXPENSE
Rental property		34,659			34,770
Real estate taxes		22,402			21,773
General and administrative		12,567			11,655
Depreciation and amortization		43,873			42,005

Total operating expenses		113,501			110,203


Operating income		71,477			73,354

OTHER INCOME (EXPENSE)
Interest and other income		2,681			2,511
Debt extinguishment gain		—			563
Interest expense		(39,144	)		(36,755	)

Total other income (expense)		(36,463	)		(33,681	)

Income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures		35,014			39,673
Gain (loss) on property dispositions		2,242			(2,050	)
Income taxes		(503	)		(127	)
Equity in earnings of unconsolidated joint ventures		783			1,192


Income from continuing operations		37,536			38,688

Discontinued operations (including net gain on property dispositions of $2,408 and $3,670 for the three months ended June 30, 2010 and 2009, respectively)		2,478			4,524


Net income		40,014			43,212

Noncontrolling interest — consolidated joint ventures		(148	)		56
Preferred unit distributions		(5,253	)		(5,253	)


Income available to common unitholders	$	34,613		$	38,015


Earnings per common unit
Basic:
Income from continuing operations	$	0.28		$	0.31
Income from discontinued operations		0.02			0.04


Income per common unit — basic	$	0.30		$	0.35


Diluted:
Income from continuing operations	$	0.27		$	0.31
Income from discontinued operations		0.02			0.04


Income per common unit — diluted	$	0.29		$	0.35


Distributions per common unit	$	0.475		$	0.475


Weighted average number of common units outstanding
Basic		116,587			109,785
Diluted		117,323			110,262

Net income allocated to general partners	$	33,445		$	36,671
Net income allocated to limited partners		6,421			6,597

See accompanying notes.

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


	Six Months Ended
	June 30, 2010			June 30, 2009
OPERATING REVENUE
Rental	$	260,578		$	257,064
Operating expense reimbursement		113,202			111,465

Total operating revenue		373,780			368,529


OPERATING EXPENSE
Rental property		75,073			73,151
Real estate taxes		44,910			43,546
General and administrative		27,441			27,212
Depreciation and amortization		86,804			84,575

Total operating expenses		234,228			228,484


Operating income		139,552			140,045

OTHER INCOME (EXPENSE)
Interest and other income		5,471			5,606
Debt extinguishment gain		—			1,092
Interest expense		(77,773	)		(73,946	)

Total other income (expense)		(72,302	)		(67,248	)

Income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures		67,250			72,797
Gain (loss) on property dispositions		3,010			(2,344	)
Income taxes		(955	)		(344	)
Equity in earnings of unconsolidated joint ventures		1,177			1,609


Income from continuing operations		70,482			71,718

Discontinued operations (including net gain on property dispositions of $5,270 and $3,869 for the six months ended June 30, 2010 and 2009, respectively)		5,354			5,336


Net income		75,836			77,054

Noncontrolling interest — consolidated joint ventures		(136	)		420
Preferred unit distributions		(10,506	)		(10,506	)


Income available to common unitholders	$	65,194		$	66,968


Earnings per common unit
Basic:
Income from continuing operations	$	0.51		$	0.58
Income from discontinued operations		0.05			0.05


Income per common unit — basic	$	0.56		$	0.63


Diluted:
Income from continuing operations	$	0.51		$	0.57
Income from discontinued operations		0.05			0.05


Income per common unit — diluted	$	0.56		$	0.62


Distributions per common unit	$	0.95		$	0.95


Weighted average number of common units outstanding
Basic		116,464			107,263
Diluted		117,134			107,644

Net income allocated to general partners	$	62,996		$	64,560
Net income allocated to limited partners		12,704			12,914

See accompanying notes.

CONDENSED CONSOLIDATED STATEMENT OF OWNERS’ EQUITY OF LIBERTY PROPERTY LIMITED PARTNERSHIP
(UNAUDITED AND IN THOUSANDS)


				Limited			Limited
				Partners’			Partners’			Noncontrolling
	General			Equity–			Equity–			Interest–		Total
	Partner’s			Common			Preferred			Consolidated		Owners’
	Equity			Units			Units			Joint Ventures		Equity

Balance at January 1, 2010	$	2,122,295		$	72,294		$	287,959		$	621	$	2,483,169

Contributions from partners		19,859			—			—			—		19,859
Distributions to partners		(107,546	)		(3,959	)		(10,506	)		—		(122,011	)
Foreign currency translation adjustment		(5,534	)		(193	)		—			—		(5,727	)
Net income		62,996			2,198			10,506			136		75,836
Redemption of limited partners common units for common shares		1,227			(1,227	)		—			—		—


Balance at June 30, 2010	$	2,093,297		$	69,113		$	287,959		$	757	$	2,451,126

See accompanying notes.

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


	Six Months Ended
	June 30, 2010			June 30, 2009
OPERATING ACTIVITIES
Net income	$	75,836		$	77,054
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		86,853			86,306
Amortization of deferred financing costs		3,354			2,439
Debt extinguishment gain		—			(1,092	)

Equity in earnings of unconsolidated joint ventures		(1,177	)		(1,609	)

Distributions from unconsolidated joint ventures		517			663
Gain on property dispositions		(8,280	)		(1,526	)
Noncash compensation		8,201			9,790
Changes in operating assets and liabilities:
Restricted cash		5,000			970
Accounts receivable		(609	)		6,208
Deferred rent receivable		(7,155	)		(5,677	)
Prepaid expenses and other assets		1,966			18,806
Accounts payable		5,718			2,979
Accrued interest		43			(5,159	)
Other liabilities		(22,059	)		(15,793	)

Net cash provided by operating activities		148,208			174,359


INVESTING ACTIVITIES
Investment in properties		(49,316	)		(35,812	)
Investments in and advances to unconsolidated joint ventures		(280	)		(4,017	)
Distributions from unconsolidated joint ventures		3,177			18,379
Net proceeds from disposition of properties/land		27,752			80,333
Net proceeds from (advances on) grant receivable/escrow		22,969			(9,848	)
Investment in development in progress		(7,919	)		(50,385	)
Investment in land held for development		(2,683	)		(26,980	)
Investment in deferred leasing costs		(14,467	)		(12,020	)

Net cash used in investing activities		(20,767	)		(40,350	)


FINANCING ACTIVITIES
Repayments of unsecured notes		—			(285,268	)
Proceeds from mortgage loans		635			317,213
Repayments of mortgage loans		(122,608	)		(43,029	)
Proceeds from credit facility		90,000			199,150
Repayments on credit facility		(180,000	)		(319,150	)
Increase in deferred financing costs		(8	)		(5,743	)
Capital contributions		11,691			218,970
Distributions to partners		(121,728	)		(110,802	)

Net cash used in financing activities		(322,018	)		(28,659	)


Net (decrease) increase in cash and cash equivalents		(194,577	)		105,350
(Decrease) increase in cash and cash equivalents related to foreign currency translation		(3,328	)		3,392
Cash and cash equivalents at beginning of period		237,446			15,794

Cash and cash equivalents at end of period	$	39,541		$	124,536

See accompanying notes.

Liberty Property Limited Partnership

Notes to Condensed Consolidated Financial Statements (Unaudited)
June 30, 2010

Note 1: Organization and Basis of Presentation

Organization
Liberty Property Trust (the “Trust”) is a self-administered and self-managed Maryland real estate investment trust (a “REIT”). Substantially all of the Trust’s assets are owned directly or indirectly, and substantially all of the Trust’s operations are conducted directly or indirectly, by Liberty Property Limited Partnership (the “Operating Partnership” and, collectively with the Trust and their consolidated subsidiaries, the “Company”). The Trust is the sole general partner and also a limited partner of the Operating Partnership, owning 96.6% of the common equity of the Operating Partnership at June 30, 2010. The Company provides leasing, property management, development, acquisition and other tenant-related services for a portfolio of industrial and office properties which are located principally within the Mid-Atlantic, Southeastern, Midwestern and Southwestern United States and the United Kingdom. See a description of the Company’s markets in Note 2 to the Company’s financial statements.

Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of the Operating Partnership and its subsidiaries have been prepared in accordance with United States generally accepted accounting principles (“US GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by US GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K of the Trust and the Operating Partnership for the year ended December 31, 2009. In the opinion of management, all adjustments (consisting solely of normal recurring adjustments) necessary for a fair presentation of the financial statements for these interim periods have been included. The results of interim periods are not necessarily indicative of the results to be obtained for a full fiscal year. Certain amounts from prior periods have been reclassified to conform to the current period presentation.

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


	For the Three Months Ended June 30, 2010							For the Three Months Ended June 30, 2009
				Weighted							Weighted
	Income			Average Units				Income			Average Units
	(Numerator)			(Denominator)		Per Unit		(Numerator)			(Denominator)		Per Unit
Income from continuing operations net of noncontrolling interest	$	37,388						$	38,744
Less: Preferred unit distributions		(5,253	)						(5,253	)


Basic income from continuing operations
Income from continuing operations available to common unitholders		32,135			116,587	$	0.28		33,491			109,785	$	0.31

Dilutive units for long-term compensation plans		—			736				—			477


Diluted income from continuing operations
Income from continuing operations available to common unitholders and assumed conversions		32,135			117,323	$	0.27		_33,491			110,262	$	0.31


Basic income from discontinued operations
Discontinued operations		2,478			116,587	$	0.02		4,524			109,785	$	0.04

Dilutive units for long-term compensation plans		—			736				—			477


Diluted income from discontinued operations
Discontinued operations		2,478			117,323	$	0.02		4,524			110,262	$	0.04


Basic income per common unit
Income available to common unitholders		34,613			116,587	$	0.30		38,015			109,785	$	0.35


Diluted units for long-term compensation plans		—			736				—			477


Diluted income per common unit
Income available to common unitholders and assumed conversions	$	34,613			117,323	$	0.29	$	38,015			110,262	$	0.35


	For the Six Months Ended June 30, 2010							For the Six Months Ended June 30, 2009
				Weighted							Weighted
	Income			Average Units				Income			Average Units
	(Numerator)			(Denominator)		Per Unit		(Numerator)			(Denominator)		Per Unit
Income from continuing operations net of noncontrolling interest	$	70,346						$	72,138
Less: Preferred unit distributions		(10,506	)						(10,506	)


Basic income from continuing operations

Income from continuing operations available to common unitholders		59,840			116,464	$	0.51		61,632			107,263	$	0.58

Dilutive units for long-term compensation plans		—			670				—			381


Diluted income from continuing operations
Income from continuing operations available to common unitholders and assumed conversions		59,840			117,134	$	0.51		_61,632			107,644	$	0.57


Basic income from discontinued operations
Discontinued operations		5,354			116,464	$	0.05		5,336			107,263	$	0.05

Dilutive units for long-term compensation plans		—			670				—			381


Diluted income from discontinued operations
Discontinued operations		5,354			117,134	$	0.05		5,336			107,644	$	0.05


Basic income per common unit

Income available to common unitholders		65,194			116,464	$	0.56		66,968			107,263	$	0.63


Diluted units for long-term compensation plans		—			670				—			381


Diluted income per common unit
Income available to common unitholders and assumed conversions	$	65,194			117,134	$	0.56	$	66,968			107,644	$	0.62

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. The amounts of anti-dilutive options that were excluded from the computation of diluted income per common share for the three and six months ended June 30, 2010 were 1,513,000 and 1,473,000, respectively, as compared to 2,666,000 and 2,857,000, respectively, for the same periods in 2009.

During the three and six months ended June 30, 2010, 113,000 and 127,000 common shares, respectively, were issued upon the exercise of options.

Foreign Currency Translation
The functional currency of the Company’s United Kingdom operations is pounds sterling. The Company translates the financial statements for the United Kingdom operations into US dollars. Gains and losses resulting from this translation do not impact the results of operations and are included in general partner’s equity — common units and limited partners’ equity-common units. Other comprehensive loss for the three and six months ended June 30, 2010 was $1.1 million and $5.7 million, respectively, as compared to other comprehensive income of $10.8 million and $9.5 million, respectively, for the same periods in 2009. Upon sale or upon complete or substantially complete liquidation of a foreign investment, the gain or loss on the sale will include the cumulative translation adjustments that have been previously recorded in general partner’s equity-common units and limited partners’ equity — common units.

Note 2: Segment Information


Reportable Segments		Markets

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

The operating information by segment is as follows (in thousands):

FOR THE THREE MONTHS ENDED JUNE 30, 2010


	Northeast
			Lehigh/										Phila-
	Southeastern		Central		New				Mid-				delphia/		United
	PA		PA		Jersey		Midwest		Atlantic		South		D.C.		Kingdom		Total
Operating revenue	$	44,161	$	24,546	$	7,833	$	19,377	$	33,733	$	47,063	$	7,255	$	1,010	$	184,978
Rental property expenses and real estate taxes		13,777		6,064		2,895		7,247		9,402		16,063		1,392		221		57,061


Property level operating income	$	30,384	$	18,482	$	4,938	$	12,130	$	24,331	$	31,000	$	5,863	$	789		127,917


Interest and other income																		2,681
Interest expense																		(39,144)
General and administrative																		(12,567)
Depreciation and amortization																		(43,873)

Income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures																		35,014
Gain on property dispositions																		2,242
Income taxes																		(503)
Equity in earnings of unconsolidated joint ventures																		783
Discontinued operations																		2,478


Net income																	$	40,014

FOR THE THREE MONTHS ENDED JUNE 30, 2009


	Northeast
			Lehigh/										Phila-
	Southeastern		Central		New				Mid-				delphia/		United
	PA		PA		Jersey		Midwest		Atlantic		South		D.C.		Kingdom		Total
Operating revenue	$	45,131	$	24,583	$	7,531	$	20,725	$	33,283	$	46,121	$	5,048	$	1,135	$	183,557
Rental property expenses and real estate taxes		13,965		6,409		2,760		7,681		9,253		15,022		1,193		260		56,543


Property level operating income	$	31,166	$	18,174	$	4,771	$	13,044	$	24,030	$	31,099	$	3,855	$	875		127,014


Interest and other income																		2,511
Debt extinguishment gain																		563
Interest expense																		(36,755)
General and administrative																		(11,655)
Depreciation and amortization																		(42,005)

Income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures																		39,673
Loss on property dispositions																		(2,050)
Income taxes																		(127)
Equity in earnings of unconsolidated joint ventures																		1,192
Discontinued operations																		4,524


Net income																	$	43,212

FOR THE SIX MONTHS ENDED JUNE 30, 2010


	Northeast
			Lehigh/										Phila-
	Southeastern		Central		New				Mid-				delphia/		United
	PA		PA		Jersey		Midwest		Atlantic		South		D.C.		Kingdom		Total
Operating revenue	$	90,414	$	50,249	$	15,837	$	38,875	$	69,160	$	92,972	$	14,228	$	2,045	$	373,780
Rental property expenses and real estate taxes		29,654		13,333		6,259		15,077		20,564		31,741		2,904		451		119,983


Property level operating income	$	60,760	$	36,916	$	9,578	$	23,798	$	48,596	$	61,231	$	11,324	$	1,594		253,797


Interest and other income																		5,471
Interest expense																		(77,773)
General and administrative																		(27,441)
Depreciation and amortization																		(86,804)

Income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures																		67,250
Gain on property dispositions																		3,010
Income taxes																		(955)
Equity in earnings of unconsolidated joint ventures																		1,177
Discontinued operations																		5,354


Net income																	$	75,836

FOR THE SIX MONTHS ENDED JUNE 30, 2009


	Northeast
			Lehigh/										Phila-
	Southeastern		Central		New				Mid-				delphia/		United
	PA		PA		Jersey		Midwest		Atlantic		South		D.C.		Kingdom		Total
Operating revenue	$	91,858	$	49,626	$	15,345	$	41,389	$	67,175	$	91,117	$	9,783	$	2,236	$	368,529
Rental property expenses and real estate taxes		29,519		13,978		5,928		15,258		19,977		29,174		2,373		490		116,697


Property level operating income	$	62,339	$	35,648	$	9,417	$	26,131	$	47,198	$	61,943	$	7,410	$	1,746		251,832


Interest and other income																		5,606
Debt extinguishment gain																		1,092
Interest expense																		(73,946)
General and administrative																		(27,212)
Depreciation and amortization																		(84,575)

Income before property dispositions, income taxes and equity in earnings of unconsolidated joint ventures																		72,797
Loss on property dispositions																		(2,344)
Income taxes																		(344)
Equity in earnings of unconsolidated joint ventures																		1,609
Discontinued operations																		5,336


Net income																	$	77,054

Note 3: Accounting for the Impairment or Disposal of Long-Lived Assets

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


	Three Months Ended						Six Months Ended
	June 30, 2010			June 30, 2009			June 30, 2010			June 30, 2009

Revenues	$	309		$	3,991		$	822		$	9,359
Operating expenses		(144	)		(1,281	)		(527	)		(3,421	)
Interest expense		(22	)		(845	)		(43	)		(2,337	)
Depreciation and amortization		(73	)		(1,011	)		(168	)		(2,134	)

Income before property dispositions	$	70		$	854		$	84		$	1,467

Asset Impairment
During the three and six months ended June 30, 2010, the Company recognized impairment charges of $400,000 related to a portfolio of properties in the Company’s Philadelphia/D.C. segment. During the three and six months ended June 30, 2009, the Company recognized impairments totaling $3.9 million and $4.5 million, respectively. For the three months ended June 30, 2009, $1.1 million in impairment related to a property in the Northeast segment, $331,000 related to a property in the Midwest segment, and $2.4 million related to a property in the Philadelphia/D.C. segment. For the six months ended June 30, 2009, $1.1 million in impairment related to a property in the Northeast segment, $113,000 related to a parcel of land in the Northeast segment, $89,000 related to a portfolio of properties in the Mid-Atlantic segment, $822,000 related to properties in the Midwest segment and $2.4 million related to a property in the Philadelphia/D.C. segment.

Note 4: Limited partners’ equity

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 Company and certain subsequent acquisitions. The common units outstanding as of June 30, 2010 have the same economic characteristics as common shares of the Trust. The 3,943,224 outstanding common units are the limited partners’ equity — common units held by persons and entities other than Liberty Property Trust, the general partner of Liberty Property Limited 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 Liberty Property Trust and the common units held by persons and entities other than Liberty Property Trust are counted in the weighted average number of common units outstanding during any given period. The 3,943,224 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 3,943,224 outstanding common units at June 30, 2010 based on the closing price of the shares of the Company at June 30, 2010 was $113.8 million.

Preferred units
The Company has outstanding the following cumulative redeemable preferred units of the Operating Partnership (the “Preferred Units”):


					Liquidation		Dividend			Redeemable
Issue	Amount		Units		Preference		Rate			As of		Exchangeable after
	(in 000’s)
Series B	$	95,000		3,800	$	25		7.45	%		8/31/09	8/31/13 into Series B Cumulative Redeemable Preferred Shares of the Trust

Series E	$	20,000		400	$	50		7.00	%		6/16/10	6/16/15 into Series E Cumulative Redeemable Preferred Shares of the Trust

Series F	$	50,000		1,000	$	50		6.65	%		6/30/10	12/12/15 into Series F Cumulative Redeemable Preferred Shares of the Trust

Series G	$	27,000		540	$	50		6.70	%		12/15/11	12/15/16 into Series G Cumulative Redeemable Preferred Shares of the Trust

Series H	$	100,000		4,000	$	25		7.40	%		8/21/12	8/21/17 into Series H Cumulative Redeemable Preferred Shares of the Trust

The Preferred Units are callable at the Operating Partnership’s option after a stated period of time. The Trust as the sole general partner of the Operating Partnership may at its option elect to settle the redemption for cash or through the exchange on a one-on-one basis with unregistered preferred shares of the Trust.

Note 5: Indebtedness

Note 6: Disclosure of Fair Value of Financial Instruments

Note 7: Recently Issued Accounting Standards

Note 8: Supplemental Disclosure to Statements of Cash Flows

The following are supplemental disclosures to the statements of cash flows for the six months ended June 30, 2010 and 2009 (amounts in thousands):


Non-cash activity	2010		2009
Write-off of fully depreciated property and deferred costs	$	16,912	$	17,476

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

OVERVIEW

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

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

As of June 30, 2010, the Company owned and operated 346 industrial and 291 office properties (the “Wholly Owned Properties in Operation”) totaling 64.5 million square feet. In addition, as of June 30, 2010, the Company owned one property under development, which when completed is expected to comprise 75,000 square feet (the “Wholly Owned Property under Development”), and 1,343 acres of developable land, substantially all of which is zoned for commercial use. Additionally, as of June 30, 2010, the Company had an ownership interest, through unconsolidated joint ventures, in 48 industrial and 49 office properties totaling 14.2 million square feet (the “JV Properties in Operation” and, together with the Wholly Owned Properties in Operation, the “Properties in Operation”), and one property under development, which when completed is expected to comprise 176,000 square feet (the “JV Property under Development” and, together with the Wholly Owned Property under Development, the “Properties under Development”). The Company also has an ownership interest through unconsolidated joint ventures in 627 acres of developable land, substantially all of which is zoned for commercial use.

The Company focuses on creating value for shareholders and increasing profitability and cash flow. With respect to its Properties in Operation, the Company endeavors to maintain high occupancy levels while increasing rental rates and controlling costs. The Company pursues development opportunities that it believes will create value and yield acceptable returns. The Company also acquires properties that it believes will create long-term value, and disposes of properties that no longer fit within the Company’s strategic objectives or in situations where it can optimize cash proceeds. The Company’s operating results depend primarily upon income from rental operations and are substantially influenced by rental demand for the Properties in Operation. Continued weakness in the economy has had a negative impact on the Company’s business. Although credit market conditions have somewhat improved for the Company, continued general credit constraints in the economy, as well as persistent high levels of unemployment, present challenges relating to the pricing of commercial real estate and demand for the Company’s products.

Consistent with the current reduced level of economic growth in the United States, rental demand for the Properties in Operation remained weak for the three months ended June 30, 2010 even though improved when compared to the three months ended June 30, 2009. The Company leased 4.1 million square feet in its Properties in Operation during the three months ended June 30, 2010 and attained occupancy of 90.2% for the Wholly Owned Properties in Operation and 81.5% for the JV Properties in Operation for a combined occupancy of 88.7% for the Properties in Operation, all as of that date. At December 31, 2009, occupancy for the Wholly Owned Properties in Operation was 89.5% and for the JV Properties in Operation was 87.7% for a combined occupancy for the Properties in Operation of 89.2%. The Company believes that straight line rents on renewal and replacement leases for 2010 will on average be 10% to 15% lower than rents on expiring leases. Furthermore, the Company believes that average occupancy for its Properties in Operation will not increase or decrease by more than 1% for 2010 compared to 2009.

WHOLLY OWNED CAPITAL ACTIVITY

Acquisitions

The Company did not acquire any operating properties during the six months ended June 30, 2010. For 2010, the Company anticipates that wholly owned property acquisitions will range from no acquisitions to acquisitions of up to $100 million.

Dispositions

Disposition activity allows the Company to, among other things, (1) reduce its holdings in certain markets and product types within a market; (2) lower the average age of the portfolio; (3) optimize the cash proceeds from the sale of certain assets; and (4) obtain funds for investment activities. During the three months ended June 30, 2010, the Company realized proceeds of $10.2 million from the sale of two operating properties representing 72,000 square feet and 12 acres of land. During the six months ended June 30, 2010, the Company realized proceeds of $16.5 million from the sale of four operating properties representing 150,000 square feet and 12 acres of land. The Company’s original guidance for 2010 suggested that it would realize proceeds of approximately $75 million to $125 million from the sale of operating properties. The Company currently believes that it will not reach the low end of this range.

Development

During the three months ended June 30, 2010, the Company brought into service one Wholly Owned Property under Development representing 211,000 square feet and a Total Investment, as defined below, of $45.7 million, and did not initiate any development. During the six months ended June 30, 2010, the Company brought into service two Wholly Owned Properties under Development representing 306,000 square feet and a Total Investment of $70.5 million, and did not initiate any development. As of June 30, 2010, the projected Total Investment of the Wholly Owned Property under Development was $12.4 million. For 2010, the Company expects to bring into service operating properties representing between $75 million and $100 million of Total Investment. Although the Company continues to pursue development opportunities, current market conditions are not generally favorable for speculative development. Any development starts for 2010 likely will be substantially pre-leased.

The “Total Investment” for a Property is defined as the Property’s purchase price plus closing costs (for development properties and land) and management’s estimate, as determined at the time of acquisition, of the cost of necessary building improvements in the case of acquisitions, or land costs and land and building improvement costs in the case of development projects, and, where appropriate, other development costs and carrying costs.

JOINT VENTURE CAPITAL ACTIVITY

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

Acquisitions

During the three and six months ended June 30, 2010, none of the unconsolidated joint ventures in which the Company held an interest acquired any properties. For 2010, the Company believes that none of the unconsolidated joint ventures in which the Company holds an interest will acquire any properties.

Dispositions

During the three and six months ended June 30, 2010, none of the unconsolidated joint venture in which the Company held an interest disposed of any properties. For 2010, the Company does not anticipate that any unconsolidated joint ventures in which it holds an interest will dispose of any operating properties.

Development

During the three and six months ended June 30, 2010, an unconsolidated joint ventures in which the Company held an interest brought one JV Property under Development into service representing 464,000 square feet and a Total Investment of $25.1 million. As of June 30, 2010, the projected Total Investment of the JV Property under Development was $134.0 million. For 2010, the Company expects unconsolidated joint ventures in which it holds an interest to bring into service between $125 million and $175 million of Total Investment in operating properties.

PROPERTIES IN OPERATION

The composition of the Company’s Properties in Operation as of June 30, 2010 and 2009 was as follows (in thousands, except dollars and percentages):


	Net Rent
	Per Square Foot				Total Square Feet				Percent Occupied
	June 30,				June 30,				June 30,
	2010		2009		2010		2009		2010			2009

Wholly Owned Properties in Operation:
Industrial-Distribution	$	4.37	$	4.34		31,572		31,502		90.8	%		88.5	%
Industrial-Flex	$	9.00	$	9.18		11,233		11,497		88.5	%		87.9	%
Office	$	14.35	$	14.35		21,734		21,272		90.3	%		92.1	%

	$	8.52	$	8.60		64,539		64,271		90.2	%		89.6	%


Joint Venture Properties in Operation:
Industrial-Distribution	$	3.86	$	4.23		9,505		8,316		77.3	%		87.7	%
Industrial-Flex	$	22.03	$	27.86		171		171		81.9	%		81.3	%
Office	$	23.54	$	25.00		4,574		4,575		90.1	%		89.9	%

	$	11.06	$	11.91		14,250		13,062		81.5	%		88.4	%


Properties in Operation:
Industrial-Distribution	$	4.27	$	4.32		41,077		39,818		87.7	%		88.3	%
Industrial-Flex	$	9.18	$	9.43		11,404		11,668		88.4	%		87.8	%
Office	$	15.94	$	16.20		26,308		25,847		90.2	%		91.7	%

	$	8.94	$	9.15		78,789		77,333		88.7	%		89.4	%

Geographic segment data for the three months ended June 30, 2010 and 2009 are included in Note 2 to the Company’s financial statements.

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 global, national and regional economic conditions; rental demand; the Company’s ability to identify, and enter into agreements with suitable joint venture partners in situations where it believes such arrangements are advantageous; the Company’s ability to identify and secure additional properties and sites, both for itself and the joint ventures to which it is a party, that meet its criteria for acquisition or development; the effect of prevailing market interest rates; risks related to the integration of the operations of entities that we have acquired or may acquire; risks related to litigation; and other risks described from time to time in the Company’s filings with the SEC. Given these uncertainties, readers are cautioned not to place undue reliance on such statements.

Critical Accounting Policies and Estimates

Refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2009 for a discussion of critical accounting policies which include capitalized costs, revenue recognition, allowance for doubtful accounts, impairment of real estate, intangibles and investments in unconsolidated joint ventures. During the three months ended June 30, 2010, there were no material changes to these policies.

Results of Operations

The following discussion is based on the consolidated financial statements of the Company. It compares the results of operations of the Company for the three and six months ended June 30, 2010 with the results of operations of the Company for the three and six months ended June 30, 2009. As a result of the varying levels of development, acquisition and disposition activities by the Company in 2010 and 2009, the overall operating results of the Company during such periods are not directly comparable. However, certain data, including the Same Store comparison, do lend themselves to direct comparison.

This information should be read in conjunction with the accompanying condensed consolidated financial statements and notes included elsewhere in this report.

Comparison of Three and Six Months Ended June 30, 2010 to Three and Six Months Ended June 30, 2009

Overview

The Company’s average gross investment in operating real estate owned for the three months ended June 30, 2010 increased to $5,191.6 million from $4,971.1 million for the three months ended June 30, 2009. This increase in operating real estate resulted in increases in rental revenue, operating expense reimbursement, real estate taxes and depreciation and amortization expense. For the six months ended June 30, 2010, the Company’s average gross investment in operating real estate owned increased to $5,146.0 million from $4,945.6 million for the six months ended June 30, 2009. This increase in operating real estate resulted in increases in rental revenue, operating expense reimbursement, rental property expenses, real estate taxes and depreciation and amortization expense.

Total operating revenue increased to $185.0 million for the three months ended June 30, 2010 from $183.6 million for the three months ended June 30, 2009. The $1.4 million increase was primarily due to the increase in investment in operating real estate and an increase in “Termination Fees,” which totaled $1.5 million for the three months ended June 30, 2010 as compared to $0.8 million for the same period in 2009. Total operating revenue increased to $373.8 million for the six months ended June 30, 2010 from $368.5 million for the six months ended June 30, 2009. The $5.3 million increase was primarily due to the increase in investment in operating real estate and an increase in “Termination Fees,” which totaled $3.2 million for the six months ended June 30, 2010 as compared to $1.1 million for the same period in 2009. Termination Fees are fees that the Company agrees to accept in consideration for permitting certain tenants to terminate their leases prior to the contractual expiration date. Termination Fees are included in rental revenue and if a property is sold, related termination fees are included in discontinued operations.

Segments

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

Property Level Operating Income:


	Three Months Ended				Percentage			Six Months Ended				Percentage
	June 30,				Increase			June 30,				Increase
	2010		2009		(Decrease)			2010		2009		(Decrease)
Northeast
- Southeastern PA	$	30,384	$	31,166		(2.5	%)	$	60,760	$	62,339		(2.5	%)
- Lehigh/Central PA		18,482		18,174		1.7	%		36,916		35,648		3.6	%
- New Jersey		4,938		4,771		3.5	%		9,578		9,417		1.7	%
Midwest		12,130		13,044		(7.0%	) (1)		23,798		26,131		(8.9%	) (1)
Mid-Atlantic		24,331		24,030		1.3	%		48,596		47,198		3.0	%
South		31,000		31,099		(0.3	%)		61,231		61,943		(1.1	%)

Philadelphia		5,863		3,855		52.1%	(2)		11,324		7,410		52.8%	(2)
United Kingdom		789		875		(9.8	%)		1,594		1,746		(8.7	%)

Total property level operating income	$	127,917	$	127,014		0.7	%	$	253,797	$	251,832		0.8	%


(1)		The change was primarily due to a decrease in occupancy. This decrease was partially offset by an increase in average gross investment in operating real estate and an increase in rental rates in 2010.

(2)		The change was primarily due to an increase in average gross investment in operating real estate and rental rates.

Same Store

Property level operating income, exclusive of Termination Fees, for the Same Store properties decreased to $120.1 million for the three months ended June 30, 2010 from $124.1 million for the three months ended June 30, 2009, on a straight line basis (which recognizes rental revenue evenly over the life of the lease), and decreased to $118.2 million for the three months ended June 30, 2010 from $120.3 million for the three months ended June 30, 2009 on a cash basis. These decreases of 3.2% and 1.8%, respectively, are primarily due to a decrease in occupancy in the Company’s office portfolio.

Property level operating income, exclusive of Termination Fees, for the Same Store properties decreased to $238.8 million for the six months ended June 30, 2010 from $247.3 million for the six months ended June 30, 2009, on a straight line basis (which recognizes rental revenue evenly over the life of the lease), and decreased to $235.0 million for the six months ended June 30, 2010 from $239.8 million for the six months ended June 30, 2009 on a cash basis. These decreases of 3.4% and 2.0%, respectively, are primarily due to a decrease in occupancy in the Company’s office portfolio.

Management generally considers the performance of the Same Store properties to be a useful financial performance measure because the results are directly comparable from period to period. Management further believes that the performance comparison should exclude Termination Fees since they are more event specific and are not representative of ordinary performance results. In addition, Same Store property level operating income and Same Store cash basis property level operating income exclusive of Termination Fees is considered by management to be a more reliable indicator of the portfolio’s baseline performance. The Same Store properties consist of the 621 properties totaling approximately 61.4 million square feet owned on January 1, 2009, excluding properties sold through June 30, 2010.

Set forth below is a schedule comparing the property level operating income, on a straight line basis and on a cash basis, for the Same Store properties for the three and six months ended June 30, 2010 and 2009. Same Store property level operating income and cash basis property level operating income are non-GAAP measures and do not represent income before 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” section), GAAP net income and cash flow from operating activities, investing activities and financing activities when considering the Company’s operating performance. Also, set forth below is a reconciliation of Same Store property level operating income and cash basis property level operating income to net income (in thousands).


	Three Months Ended						Six Months Ended
	June 30, 2010			June 30, 2009			June 30, 2010			June 30, 2009
Same Store:
Rental revenue	$	122,698		$	126,478		$	245,150		$	252,757
Operating expenses:
Rental property expense		34,155			35,107			73,720			74,137
Real estate taxes		21,095			20,847			42,331			41,770
Operating expense recovery		(52,605	)		(53,546	)		(109,703	)		(110,404	)

Unrecovered operating expenses		2,645			2,408			6,348			5,503


Property level operating income		120,053			124,070			238,802			247,254
Less straight line rent		1,841			3,752			3,778			7,462


Cash basis property level operating income	$	118,212		$	120,318		$	235,024		$	239,792


Reconciliation of non-GAAP financial measure — Same Store:
Cash basis property level operating income	$	118,212		$	120,318		$	235,024		$	239,792
Straight line rent		1,841			3,752			3,778			7,462

Property level operating income		120,053			124,070			238,802			247,254
Property level operating income — properties purchased or developed subsequent to January 1, 2009		6,395			2,119			11,768			3,453
Termination fees		1,469			825			3,227			1,125
General and administrative expense		(12,567	)		(11,655	)		(27,441	)		(27,212	)
Depreciation and amortization expense		(43,873	)		(42,005	)		(86,804	)		(84,575	)
Other income (expense)		(36,463	)		(33,681	)		(72,302	)		(67,248	)
Gain (loss) on property dispositions		2,242			(2,050	)		3,010			(2,344	)
Income taxes		(503	)		(127	)		(955	)		(344	)
Equity in earnings of unconsolidated joint ventures		783			1,192			1,177			1,609
Discontinued operations (1)		2,478			4,524			5,354			5,336


Net income	$	40,014		$	43,212		$	75,836		$	77,054


(1)		Includes Termination Fees of $227,000 for the three and six months ended June 30, 2009.

General and Administrative

General and administrative expenses increased to $12.6 million for the three months ended June 30, 2010 compared to $11.7 million for the three months ended June 30, 2009 and increased to $27.4 million for the six months ended June 30, 2010 compared to $27.2 million for the six months ended June 30, 2009. These increases were primarily due to a decrease in costs capitalized related to development activity. These increases for the six-month periods were offset by a decrease in expenses associated with the Company’s Long Term Incentive Compensation Plan.

Depreciation and Amortization

Depreciation and amortization increased to $43.9 million for the three months ended June 30, 2010 from $42.0 million for the three months ended June 30, 2009 and $86.8 million for the six months ended June 30, 2010 from $84.6 million for the six months ended June 30, 2009. These increases were primarily due to the increased investment in operating real estate.

Interest Expense

Interest expense increased to $39.1 million for the three months ended June 30, 2010 from $36.8 million for the three months ended June 30, 2009. This increase was primarily related to the prepayment of $119.3 million of mortgage loans during the three months ended June 30, 2010. The Company incurred a $1.2 million prepayment penalty and wrote off $936,000 in deferred financing costs in conjunction with the prepayment of these loans. The increase was also related to a decrease in interest capitalized due to a decrease in development activity. The effect of the loan prepayment and the decrease in interest capitalized was partially offset by a decrease in interest expense associated with the decrease in the average debt outstanding to $2,297.7 million for the three months ended June 30, 2010 from $2,513.2 million for the three months ended June 30, 2009. The weighted average interest rate remained relatively unchanged at 6.3% for the three months ended June 30, 2010 compared to 6.4% for the three months ended June 30, 2009. Interest expense increased to $77.8 million for the six months ended June 30, 2010 from $73.9 million for the six months ended June 30, 2009. This increase was primarily related to the loan prepayment noted above and a decrease in interest capitalized due to a decrease in development activity. The effect of the loan prepayment and the decrease in interest capitalized was partially offset by a decrease in interest expense associated with the decrease in the average debt outstanding to $2,350.8 million for the six months ended June 30, 2010 from $2,538.8 million for the six months ended June 30, 2009. The weighted average interest rate remained unchanged at 6.3% for both periods.

Interest expense allocated to discontinued operations for the three months ended June 30, 2010 and 2009 was $22,000 and $845,000, respectively, and for the six months ended June 30, 2010 and 2009 was $43,000 and $2.3 million, respectively. These decreases were due to the decrease in the level of dispositions in 2010 compared to 2009.

Other

Gain (loss) on property dispositions increased to a gain of $2.2 million for the three months ended June 30, 2010 from a loss of $2.1 million for the three months ended June 30, 2009 and to a gain of $3.0 million for the six months ended June 30, 2010 from a loss of $2.3 million for the six months ended June 30, 2009. These increases were primarily due to impairments recognized on certain of the Company’s properties in 2009 in connection with sales activities.

During the three months ended June 30, 2009, the Company purchased $3.5 million principal amount of its 7.25% March 2011 senior unsecured notes and $4.9 million principal amount of its 6.375% August 2012 senior unsecured notes. These notes were purchased at an aggregate $0.6 million discount. During the six months ended June 30, 2009, the Company purchased $6.9 million principal amount of its 8.50% August 2010 senior unsecured notes, $3.5 million principal amount of its 7.25% March 2011 senior unsecured notes and $4.9 million principal amount of its 6.375% August 2012 senior unsecured notes. These notes were purchased at an aggregate $1.1 million discount. These discounts are included as a debt extinguishment gain in the Company’s statements of operations. There were no similar transactions during the three and six months ended June 30, 2010.

Income from discontinued operations decreased to $2.5 million for the three months ended June 30, 2010 from $4.5 million for the three months ended June 30, 2009 and increased to $5.4 million for the six months ended June 30, 2010 from $5.3 million for the six months ended June 30, 2009. The decrease for the three month periods was due to a decrease in gains recognized on sales which were $2.4 million for the three months ended June 30, 2010 and $3.7 million for the three months ended June 30, 2009. This increase for the six month periods was due to an increase in gains recognized on sales which were $5.3 million for the six months ended June 30, 2010 compared to $3.9 million for the six months ended June 30, 2009.

As a result of the foregoing, the Company’s net income decreased to $40.0 million for the three months ended June 30, 2010 from $43.2 million for the three months ended June 30, 2009 and decreased to $75.8 million for the six months ended June 30, 2010 from $77.1 million for the six months ended June 30, 2009.

Liquidity and Capital Resources

Overview

The Company has historically accessed capital primarily from the public unsecured debt markets and the equity markets. The uncertainty in the global credit markets that existed in early 2009 has eased considerably for issuers such as the Company. The Company believes that its traditional access to capital through the unsecured debt market is currently available. Additionally, the Company’s sources of capital include proceeds from the disposition of properties, equity contributions from joint venture partners and net cash provided by operating activities. The Company also expects to incur variable rate debt, including borrowings under the Company’s credit facility, from time to time.

Activity

As of June 30, 2010, the Company had cash and cash equivalents of $75.9 million, including $36.4 million in restricted cash.

Net cash flow provided by operating activities decreased to $148.2 million for the six months ended June 30, 2010 from $174.4 million for the six months ended June 30, 2009. This $26.2 million decrease was primarily due to a decrease in operating results and fluctuations in operating assets and liabilities during the respective periods. The decrease in operating results is due to a decrease in same store performance which is primarily attributable to the decrease in occupancy, primarily in the office portfolio. Net cash flow provided by operating activities is the primary source of liquidity to fund distributions to shareholders and for recurring capital expenditures and leasing transaction costs for the Company’s Wholly Owned Properties in Operation. To date during 2010 the performance of the Company’s business is generally consistent with its expectations. The Company anticipates moderate increases in occupancy during the second half of 2010 and further increases in occupancy in 2011. Currently the amount the Company distributes as dividends to its shareholders exceeds the net cash provided by its operating activities less costs associated with lease transactions. The Company believes that the anticipated increases in occupancy in the remainder of 2010 and 2011 should provide for sufficient net cash to cover the cost of the dividend at some point in 2011. However, should this increased occupancy not occur or our operating results are otherwise adversely affected, the Company might need to re-evaluate the amount of the quarterly dividend.

Net cash used in investing activities was $20.8 million for the six months ended June 30, 2010 compared to $40.4 million for the six months ended June 30, 2009. This $19.6 million decrease primarily resulted from the reduction of expenditures on the Company’s development pipeline and land held for development. Net cash used in investing activities also decreased due to the change in net proceeds received from (advances on) a grant receivable and an escrow in 2010. Offsetting these decreases was a decrease in net proceeds from the disposition of properties and land.

Net cash used in financing activities was $322.0 million for the six months ended June 30, 2010 compared to $28.7 million for the six months ended June 30, 2009. This $293.3 million increase was primarily due to the net proceeds received in 2009 from the issuance of shares pursuant to the Company’s continuous equity offering program. Additionally during 2010 the Company prepaid $119.3 million of mortgage loans and repaid its credit facility in the net amount of $90 million with cash on hand. 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 funds its development and acquisitions with long-term capital sources and proceeds from the disposition of properties. For the three months ended June 30, 2010, a portion of these activities were funded through a $600 million Credit Facility (the “Credit Facility”). The interest rate on borrowings under the Credit Facility fluctuates based upon ratings from Moody’s Investors Service, Inc. (“Moody’s”), Standard and Poor’s Ratings Group (“S&P”) and Fitch, Inc. (“Fitch”). The current ratings for the Company’s senior unsecured debt are Baa2, BBB and BBB+ from Moody’s, S&P and Fitch, respectively. At these ratings, the interest rate for borrowings under the Credit Facility is 65 basis points over LIBOR. The Company has exercised its one year renewal option and the Credit Facility now expires in January 2011. The Company is currently in negotiations for a credit facility to replace the expiring Credit Facility. In light of the anticipated demands of the Company’s capital plan, the Company expects to reduce the amount of credit facility to approximately $500 million. A closing on the replacement credit facility is expected to take place in the third quarter of 2010. Although still in negotiation, the Company anticipates that the interest rate on borrowings under the replacement credit facility will be higher than the interest rate on the expiring Credit Facility. Similar facilities that other borrowers have recently obtained have required rates equal to 200-300 basis points over LIBOR.

Additionally, the Company has entered into an agreement to fund its planned improvements for the Kings Hill Phase 2 land development project. At June 30, 2010, the Company hadn’t drawn any of a £7 million revolving credit facility. The facility expires on November 22, 2011.

The Company uses debt financing to lower its overall cost of capital in an attempt to increase the return to shareholders. The Company staggers its debt maturities and maintains debt levels it considers to be prudent. In determining its debt levels, the Company considers various financial measures including the debt to gross assets ratio and the fixed charge coverage ratio. As of June 30, 2010 the Company’s debt to gross assets ratio was 37.5% and for the six months ended June 30, 2010 the fixed charge coverage ratio was 2.6x. Debt to gross assets equals total long-term debt, borrowings under the Credit Facility divided by total assets plus accumulated depreciation. The fixed charge coverage ratio equals income from continuing operations before property dispositions, including operating activity from discontinued operations, plus interest expense and depreciation and amortization, divided by interest expense, including capitalized interest, plus distributions on preferred units.

As of June 30, 2010, $352.0 million in mortgage loans and $1,842.9 million in unsecured notes were outstanding with a weighted average interest rate of 6.41%. The interest rates on $2,151.3 million of mortgage loans and unsecured notes are fixed and range from 5.00% to 8.75%. For $43.6 million of mortgage loans, the interest rate floats at a spread to LIBOR. The interest rate on these loans at June 30, 2010 was 5.15%. The weighted average remaining term for the mortgage loans and unsecured notes is 4.3 years.

The scheduled principal amortization and maturities of the Company’s mortgage loans, unsecured notes and the Credit Facility and the related weighted average interest rates as of June 30, 2010 are as follows (in thousands, except percentages):


	MORTGAGES											WEIGHTED
	PRINCIPAL		PRINCIPAL			UNSECURED		CREDIT				AVERAGE
	AMORTIZATION		MATURITIES			NOTES		FACILITY		TOTAL		INTEREST RATE
2010 (6 months)	$	3,217	$	4,736		$	169,739	$	—	$	177,692		8.37	%
2011		5,948		10,511			246,500		50,000		312,959		6.09	%
2012		4,605		72,433	(1)		230,100		—		307,138		6.29	%
2013		4,027		4,510			—		—		8,537		5.79	%
2014		4,398		2,684			200,000		—		207,082		5.67	%
2015		3,932		44,469			300,000		—		348,401		5.25	%
2016		2,461		182,318			300,000		—		484,779		6.11	%
2017		1,770		—			296,543		—		298,313		6.62	%
2018 & thereafter		—		—			100,000		—		100,000		7.50	%

	$	30,358	$	321,661		$	1,842,882	$	50,000	$	2,244,901		6.29	%


(1)		There are two one — year extensions for $42,310 of mortgages.

General

The Company has continued to focus on the performance of the Same Store portfolio. In addition, the Company has continued to pursue development and acquisition opportunities and the strategic disposition of certain properties. The Company endeavors to maintain high occupancy levels while increasing rental rates and controlling costs, though the current economic environment and weak real estate fundamentals have pressured occupancy and created a declining rental rate environment.

The expiring square feet and annual net rent by year for the Properties in Operation as of June 30, 2010 are as follows (in thousands except number of tenants and % of Annual Rent):


	Industrial-Distribution									Industrial-Flex									Office									Total
	Number						% of			Number						% of			Number						% of			Number						% of
	of		Square		Annual		Annual			of		Square		Annual		Annual			of		Square		Annual		Annual			of		Square		Annual		Annual
	Tenants		Feet		Rent		Rent			Tenants		Feet		Rent		Rent			Tenants		Feet		Rent		Rent			Tenants		Feet		Rent		Rent
Wholly Owned Properties in Operation:
2010		21		806	$	3,419		2.3	%		61		710	$	6,265		6.3	%		159		1,216	$	15,270		4.8	%		241		2,732	$	24,954		4.4	%
2011		61		3,026		13,563		9.1	%		131		1,412		12,424		12.4	%		252		1,918		26,827		8.3	%		444		6,356		52,814		9.2	%
2012		54		5,032		22,920		15.5	%		125		1,715		15,907		15.9	%		253		2,332		38,754		12.0	%		432		9,079		77,581		13.6	%
2013		47		2,808		13,389		9.0	%		102		1,621		15,674		15.6	%		201		2,323		37,494		11.7	%		350		6,752		66,557		11.7	%
2014		34		2,741		13,817		9.3	%		69		964		9,954		9.9	%		147		2,798		43,464		13.5	%		250		6,503		67,235		11.8	%
2015		33		4,070		18,847		12.7	%		63		1,045		10,746		10.7	%		135		2,536		36,490		11.3	%		231		7,651		66,083		11.6	%
2016		17		2,062		10,345		7.0	%		25		709		7,673		7.7	%		57		1,656		29,368		9.1	%		99		4,427		47,386		8.3	%
2017		12		1,761		8,981		6.0	%		26		701		7,707		7.7	%		30		647		11,097		3.4	%		68		3,109		27,785		4.9	%
2018		13		1,731		10,983		7.4	%		11		344		2,926		2.9	%		26		930		17,778		5.5	%		50		3,005		31,687		5.5	%
2019		10		1,323		7,745		5.2	%		4		247		3,248		3.2	%		29		1,500		30,433		9.5	%		43		3,070		41,426		7.2	%
Thereafter		16		3,318		24,446		16.5	%		12		476		7,707		7.7	%		44		1,767		35,136		10.9	%		72		5,561		67,289		11.8	%


Total		318		28,678	$	148,455		100.0	%		629		9,944	$	100,231		100.0	%		1,333		19,623	$	322,111		100.0	%		2,280		58,245	$	570,797		100.0	%


Joint Venture Properties in Operation:
2010		3		263	$	1,216		3.5	%		—		—	$	—		0.0	%		38		207	$	4,047		3.4	%		41		470	$	5,263		3.3	%
2011		10		1,027		3,874		11.3	%		1		11		281		7.7	%		36		479		12,236		10.3	%		47		1,517		16,391		10.5	%
2012		8		356		1,614		4.7	%		5		68		1,717		47.4	%		20		219		5,106		4.3	%		33		643		8,437		5.4	%
2013		7		936		3,616		10.6	%		—		—		—		0.0	%		13		146		3,570		3.0	%		20		1,082		7,186		4.6	%
2014		7		1,125		5,194		15.2	%		2		25		674		18.6	%		20		394		10,534		8.9	%		29		1,544		16,402		10.5	%
2015		5		741		3,326		9.7	%		—		—		—		0.0	%		22		198		4,609		3.9	%		27		939		7,935		5.1	%
2016		7		552		3,114		9.1	%		1		36		953		26.3	%		17		506		12,500		10.5	%		25		1,094		16,567		10.6	%
2017		4		720		3,350		9.8	%		—		—		—		0.0	%		5		200		4,695		4.0	%		9		920		8,045		5.1	%
2018		5		726		3,964		11.6	%		—		—		—		0.0	%		12		48		1,665		1.4	%		17		774		5,629		3.6	%
2019		1		500		3,151		9.2	%		—		—		—		0.0	%		15		203		5,853		4.9	%		16		703		9,004		5.7	%
Thereafter		3		401		1,818		5.3	%		—		—		—		0.0	%		16		1,522		53,918		45.4	%		19		1,923		55,736		35.6	%


Total		60		7,347	$	34,237		100.0	%		9		140	$	3,625		100.0	%		214		4,122	$	118,733		100.0	%		283		11,609	$	156,595		100.0	%

The scheduled deliveries of the 251,000 square feet of Properties under Development as of June 30, 2010 are as follows (dollars in thousands):


		Square Feet
	Scheduled	Industrial-		Industrial						Percent			Total
	In-Service Date	Distribution		- Flex		Office		Total		Leased			Investment
Wholly Owned Property under Development	3rd Quarter 2010		—		—		75,000		75,000		100.0	%	$	12,384

	TOTAL		—		—		75,000		75,000		100.0	%	$	12,384


Joint Venture Property under Development	3rd Quarter 2010		—		—		176,058		176,058		53.2	%	$	133,984

	TOTAL		—		—		176,058		176,058		53.2	%	$	133,984


Total Properties under Development	TOTAL		—		—		251,058		251,058		67.2	%	$	146,368

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

Calculation of Funds from Operations

The National Association of Real Estate Investment Trusts (“NAREIT”) has issued a standard definition for Funds from operations (as defined below). The SEC has agreed to the disclosure of this non-GAAP financial measure on a per share basis in its Release No. 34-47226, Conditions for Use of Non-GAAP Financial Measures. The Company believes that the calculation of Funds from operations is helpful to investors and management as it is a measure of the Company’s operating performance that excludes depreciation and amortization and gains and losses from property dispositions. As a result, year over year comparison of Funds from operations reflects the impact on operations from trends in occupancy rates, rental rates, operating costs, development activities, general and administrative expenses, and interest costs, providing perspective not immediately apparent from net income. In addition, management believes that Funds from operations provides useful information to the investment community about the Company’s financial performance when compared to other REITs since Funds from operations is generally recognized as the standard for reporting the operating performance of a REIT. Funds from operations available to common shareholders is defined by NAREIT as net income (computed in accordance with generally accepted accounting principles (“GAAP”)), excluding gains (or losses) from sales of property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Funds from operations available to common shareholders does not represent net income as defined by GAAP and does not necessarily indicate that cash flows will be sufficient to fund cash needs. It should not be considered as an alternative to net income as an indicator of the Company’s operating performance or to cash flows as a measure of liquidity.

Funds from operations (“FFO”) available to common shareholders also does not represent cash flows generated from operating, investing or financing activities as defined by GAAP. Funds from operations available to common shareholders for the three and six months ended June 30, 2010 and 2009 are as follows (in thousands, except per share amounts):


	Three Months Ended						Six Months Ended
	June 30, 2010			June 30, 2009			June 30, 2010			June 30, 2009
Reconciliation of net income to FFO — basic

Net Income available to common shareholders	$	33,445		$	36,671		$	62,996		$	64,560


Basic — Income available to common shareholders		33,445			36,671			62,996			64,560

*Basic — income available to common shareholders per weighted average share*	$	0.30		$	0.35		$	0.56		$	0.63

Adjustments:
Depreciation and amortization of unconsolidated joint ventures		3,395			4,132			7,454			8,122
Depreciation and amortization		43,271			42,364			85,720			85,386
Gain on property dispositions		(2,746	)		(5,067	)		(5,410	)		(5,375	)
Noncontrolling interest share in addback for depreciation and amortization and gain on property dispositions		(1,476	)		(1,467	)		(2,954	)		(3,204	)

Funds from operations available to common shareholders — basic	$	75,889		$	76,633		$	147,806		$	149,489


*Basic Funds from operations available to common shareholders per weighted average share*	$	0.67		$	0.72		$	1.31		$	1.45

Reconciliation of net income to FFO — diluted:

Net Income	$	33,445		$	36,671		$	62,996		$	64,560

Diluted — income available to common shareholders		33,445			36,671			62,996			64,560
*Diluted — income available to common shareholders per weighted average share*	$	0.29		$	0.35		$	0.56		$	0.62

Adjustments:
Depreciation and amortization of unconsolidated joint ventures		3,395			4,132			7,454			8,122
Depreciation and amortization		43,271			42,364			85,720			85,386
Gain on property dispositions		(2,746	)		(5,067	)		(5,410	)		(5,375	)
Noncontrolling interest less preferred share distributions		1,168			1,345			2,198			2,409


Funds from operations available to common shareholders — diluted	$	78,533		$	79,445		$	152,958		$	155,102


*Diluted Funds from operations available to common shareholders per weighted average share*	$	0.67		$	0.72		$	1.31		$	1.44

Reconciliation of weighted average shares:
Weighted average common shares — all basic calculations		112,644			105,768			112,512			103,244
Dilutive shares for long term compensation plans		736			477			670			381


Diluted shares for net income calculations		113,380			106,245			113,182			103,625
Weighted average common units		3,943			4,017			3,952			4,019


Diluted shares for Funds from operations calculations		117,323			110,262			117,134			107,644

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 utilities, substantially all of the tenants’ leases require the tenants to absorb these costs as part of their rental obligations. In addition, inflation also may have the effect of increasing market rental rates.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

There have been no material changes to the Company’s exposure to market risk since its Annual Report on Form 10-K for the year ended December 31, 2009.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of its disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that its disclosure controls and procedures, as of the end of the period covered by this report, are functioning effectively to provide reasonable assurance that information required to be disclosed by the Company in its reports filed or submitted under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in SEC’s rules and forms and (ii) accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Controls

There were no changes in the Company’s internal control over financial reporting during the quarter ended June 30, 2010 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The Company has been substituted for Republic Property Trust, a Maryland real estate investment trust, and Republic Property Limited Partnership, a Delaware limited partnership, (together, “Republic”) as a party to certain litigation as a result of the Company’s acquisition of Republic on October 4, 2007.

The litigation is described in the Company’s 2009 Annual Report on Form 10-K. On July 12, 2010, the Superior Court for the District of Columbia, in the matter of Steven A. Grigg v. Liberty Property Trust, granted the Company’s Motion for Summary Judgment in part and denied it in part. The result of the action was to dismiss Mr. Grigg’s claims that he was entitled to a severance payment under his employment agreement because (a) he had terminated his employment contract for “Good Reason” (as defined in the employment contract) or (b) the Company had terminated his employment “Without Cause.” However, the Court did find that a genuine issue of material fact exists as to Mr. Grigg’s claim as to a breach by the Company of its duty of good faith and fair dealing under the employment contract. Mr. Grigg has petitioned the court to reconsider its ruling. Other than as noted above, there were no material developments in this litigation during the three months ended June 30, 2010.

While management currently believes that resolving these matters will not have a material adverse impact on our financial position, our results of operations or our cash flows, the litigation noted above is subject to inherent uncertainties and management’s view of these matters may change in the future. Were an unfavorable final outcome to occur, there exists the possibility of a material adverse impact on our financial position and the results of operations for the period in which the effect becomes capable of being reasonably estimated.

Item 1A. Risk Factors

There have been no material changes to the risk factors disclosed in Item 1A of Part 1 “Risk Factors,” in our Form 10-K for the year ended December 31, 2009.

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

None.

Item 3. Defaults upon Senior Securities

None.

Item 4. Removed and Reserved

Item 5. Other Information

None.

Item 6. Exhibits

Note to Exhibits: Exhibits 10.18 and 10.19 were filed with the Registrants’ Annual Report on Form 10-K for the fiscal year ended December 31, 2007. The Registrants are refiling these exhibits solely to include certain schedules and exhibits that were omitted from the exhibits as filed. Confidential treatment has been granted by the Securities and Exchange Commission with respect to portions of these exhibits pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended, and the Registrants have submitted an application for confidential treatment with respect to portions of the schedules and exhibits that have been added in this filing.


10.18 +		Agreement of Limited Partnership of Liberty Washington, L.P. by and between Liberty Washington Venture, LLC and New York State Common Retirement Fund dated as of October 4, 2007.

10.19 +		Contribution Agreement among New York State Common Retirement Fund and Liberty Property Limited Partnership and Liberty Washington, L.P. dated October 4, 2007.

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

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

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

31.3*		Certification of the Chief Executive Officer of Liberty Property Trust, in its capacity as the general partner of Liberty Property Limited Partnership, required by Rule 13a-14(a) under the Securities Exchange Act of 1934.

31.4*		Certification of the Chief Financial Officer of Liberty Property Trust, in its capacity as the general partner of Liberty Property Limited Partnership, required by Rule 13a-14(a) under the Securities Exchange Act of 1934.

32.1*		Certification of the Chief Executive Officer of Liberty Property Trust required under Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)

32.2*		Certification of the Chief Financial Officer of Liberty Property Trust required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)

32.3*		Certification of the Chief Executive Officer of Liberty Property Trust, in its capacity as the general partner of Liberty Property Limited Partnership, required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)


32.4*		Certification of the Chief Financial Officer of Liberty Property Trust, in its capacity as the general partner of Liberty Property Limited Partnership, required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)

101.INS		XBRL Instance Document (furnished herewith).

101.SCH		XBRL Taxonomy Extension Schema Document (furnished herewith).

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document (furnished herewith).

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document (furnished herewith).

101.LAB		XBRL Extension Labels Linkbase (furnished herewith).

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document (furnished herewith).


*		Filed herewith.

+		The Registrants have submitted an application for confidential treatment with respect to portions of this exhibit pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

SIGNATURES

Pursuant to the requirements 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


/s/ WILLIAM P. HANKOWSKY		August 6, 2010
William P. Hankowsky		Date
President and Chief Executive Officer

/s/ GEORGE J. ALBURGER, JR.		August 6, 2010
George J. Alburger, Jr.		Date
Executive Vice President and Chief Financial Officer

SIGNATURES

Pursuant to the requirements 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


BY:		Liberty Property Trust
		General Partner


/s/ WILLIAM P. HANKOWSKY		August 6, 2010
William P. Hankowsky		Date
President and Chief Executive Officer

/s/ GEORGE J. ALBURGER, JR.		August 6, 2010
George J. Alburger, Jr.		Date
Executive Vice President and Chief Financial Officer

EXHIBIT INDEX


EXHIBIT NO.				DESCRIPTION

10.18 +				Agreement of Limited Partnership of Liberty Washington, L.P. by and between Liberty Washington Venture, LLC and New York State Common Retirement Fund dated as of October 4, 2007.

10.19 +				Contribution Agreement among New York State Common Retirement Fund and Liberty Property Limited Partnership and Liberty Washington, L.P. dated October 4, 2007.

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

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

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

31.3				Certification of the Chief Executive Officer of Liberty Property Trust, in its capacity as the general partner of Liberty Property Limited Partnership, required by Rule 13a-14(a) under the Securities Exchange Act of 1934.

31.4				Certification of the Chief Financial Officer of Liberty Property Trust, in its capacity as the general partner of Liberty Property Limited Partnership, required by Rule 13a-14(a) under the Securities Exchange Act of 1934.

32.1				Certification of the Chief Executive Officer of Liberty Property Trust required under Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)

32.2				Certification of the Chief Financial Officer of Liberty Property Trust required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)

32.3				Certification of the Chief Executive Officer of Liberty Property Trust, in its capacity as the general partner of Liberty Property Limited Partnership, required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)


EXHIBIT NO.				DESCRIPTION

32.4				Certification of the Chief Financial Officer of Liberty Property Trust, in its capacity as the general partner of Liberty Property Limited Partnership, required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)

101.INS				XBRL Instance Document (furnished herewith).

101.SCH				XBRL Taxonomy Extension Schema Document (furnished herewith).

101.CAL				XBRL Taxonomy Extension Calculation Linkbase Document (furnished herewith).

101.DEF				XBRL Taxonomy Extension Definition Linkbase Document (furnished herewith).

101.LAB				XBRL Extension Labels Linkbase (furnished herewith).

101.PRE				XBRL Taxonomy Extension Presentation Linkbase Document (furnished herewith).


+		The Registrants have submitted an application for confidential treatment with respect to portions of this exhibit pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Exhibit 10.18

AGREEMENT OF LIMITED PARTNERSHIP

LIBERTY WASHINGTON, LP

TABLE OF CONTENTS


	Page
ARTICLE I CERTAIN DEFINITIONS		1
ARTICLE II ORGANIZATION AND PURPOSE		12
2.01 Continuation of the Company		12
2.02 Name of Company		13
2.03 Principal Place of Business		13
2.04 Purpose		13
2.05 Exclusive Activities of Company		13
2.06 No Payment of Individual Obligations		13
2.07 Title to Assets		13
2.08 Term		13
2.09 Representations and Warranties		13
ARTICLE III CAPITAL		14
3.01 Initial Capital Contributions; Other Related Transactions		14
3.02 Additional Capital Contributions		15
3.03 Failure to Make Capital Contribution		15
3.04 Capital Accounts		16
3.05 Negative Capital Accounts		17
3.06 Return of Capital; No Interest on Amounts in Capital Account		17
ARTICLE IV ALLOCATIONS		17
4.01 Allocation of Profits and Losses		17
4.02 Special Allocations		18
4.03 Curative Allocations		19
4.04 Other Allocation Rules		20


	Page
4.05 Tax Allocations: Code Section 704(c)		20
ARTICLE V DISTRIBUTIONS		20
5.01 Net Cash Receipts		20
5.02 Cash Flow from Liquidating Sale		21
5.03 Distributions on Liquidation		21
5.04 Distributions in Kind		22
5.05 REIT Distributions		22
5.06 Offsets		22
ARTICLE VI MANAGEMENT		23
6.01 Management and Control of Company Business		23
6.02 Delegation; Standards; Indemnification		25
6.03 Annual Business Plan		27
6.04 Matters Requiring Approval of NYSCRF		28
6.05 Hazardous Materials		30
6.06 Emergency Actions		30
6.07 Regular Meetings		31
6.08 Special Meetings		31
6.09 Third Parties		31
6.10 Other Activities of Partners		32
6.11 Withholding of Tax on Certain Company Distributions		32
6.12 Unrelated Business Taxable Income		33
6.13 Prohibited Transactions		34
6.14 Deemed Approval		35
6.15 Reporting Requirements		35
6.16 Action by Partners		36

- ii -


	Page
6.17 Right to Disclose Information		36
6.18 Contracts with Affiliates		36
6.19 Loan Provisions		36
6.20 Project Financing		37
6.21 Title Holding Subsidiaries		38
6.22 Ratification of Recitals		39
ARTICLE VII COMPENSATION OF PARTNERS; PAYMENT OF COMPANY EXPENSES		39
7.01 Compensation from Company		39
7.02 Company Expenses		39
ARTICLE VIII COMPANY BOOKS, RECORDS AND STATEMENTS		40
8.01 Books and Records		40
8.02 Method of Accounting		40
8.03 Fidelity and Other Bonds		40
8.04 Financial Statements; Appraisals and Other Information		40
8.05 Bank Accounts		42
8.06 Tax Matters		42
8.07 Certain Elections		43
ARTICLE IX DEFAULT PROVISIONS		44
9.01 Events of Default		44
9.02 Grace Period		44
9.03 Remedies Reserved		45
ARTICLE X TRANSFER OF PARTNERSHIP INTERESTS; SALE OF PROPERTY		45
10.01 Transfer		45
10.02 Approved Transfers		45
10.03 Withdrawal of a Partner		46

- iii -


	Page
10.04 Admission of Transferee as a Partner		47
10.05 Admission of Additional Partners		47
ARTICLE XI DISSOLUTION AND LIQUIDATION		48
11.01 No Dissolution, etc		48
11.02 Events Causing Dissolution		48
11.03 Rights to Continue Business of Company		48
11.04 Dissolution		49
11.05 Liquidation		49
11.06 Reasonable Time for Winding Up		49
11.07 Termination of Company		49
ARTICLE XII BUY-SELL		49
12.01 Invoking the Buy-Sell Provision		49
12.02 Closing		50
12.03 Assumption of Company’s Obligations		51
12.04 Payment of Debts		51
12.05 Assignment of Rights or Dissolution		51
ARTICLE XIII ACQUISITIONS, NEW DEVELOPMENTS AND REDEVELOPMENTS		51
13.01 Exclusive Operations		51
13.02 Yield Parameters		51
13.03 New Acquisitions		51
13.04 Initiation of New Developments and Redevelopments		53
13.05 Development Management Guaranty		53
13.06 Disapproval of Proposed New Development or Redevelopment		53
13.07 First Refusal and Repurchase Rights		54
ARTICLE XIV MISCELLANEOUS PROVISIONS		55

- iv -


	Page
14.01 Additional Actions and Documents		55
14.02 Notices		55
14.03 Survival and Reliance		56
14.04 Waivers		56
14.05 Exercise of Rights		56
14.06 Binding Effect		56
14.07 Limitation on Benefits of this Agreement		56
14.08 Amendment Procedure		56
14.09 Entire Agreement		56
14.10 Pronouns, Time		57
14.11 Headings		57
14.12 Governing Law		57
14.13 Partner’s Representatives		57
14.14 Execution in Counterparts		57
14.15 Affirmative Action Policy		57
14.16 Advisor		57
14.17 Insurance		58
14.18 Legal Representation of the Company		58
14.19 Special Covenants		58


Exhibit A -		Form of Development Management Agreement
Exhibit B -		Form of Management and Leasing Agreement
Exhibit C -		List of Contributed Properties
Exhibit D -		Current Debt of the Company
Exhibit E -		Business Plan for 2007
Exhibit F -		Reserved
Exhibit G -		Form of Leasing Update

- v -


Exhibit H -		Recitals
Exhibit I -		Initial Yield Parameters
Exhibit J -		Report of Independent Public Accountants
Exhibit K -		Due Diligence for New Acquisitions
Exhibit L -		Due Diligence for New Developments and Redevelopments
Exhibit M -		Insurance Requirements

-vi-

AGREEMENT OF LIMITED PARTNERSHIP

LIBERTY WASHINGTON, LP

THIS AGREEMENT OF LIMITED PARTNERSHIP is made and entered into as of the 4th day of October, 2007 (the “Effective Date”), by and between LIBERTY WASHINGTON VENTURE, LLC , a Delaware limited liability company (“General Partner”) as general partner, and NEW YORK STATE COMMON RETIREMENT FUND , as limited partner (“NYSCRF”), (General Partner and NYSCRF are sometimes referred to collectively as “Partners”).

NOW, THEREFORE, in consideration of the covenants and agreements hereinafter set forth, the parties hereby agree as follows:

ARTICLE I

CERTAIN DEFINITIONS

Unless the context otherwise specifies or requires, the terms defined in this Article I shall, for the purposes of this Agreement, have the meaning herein specified. Unless otherwise specified, all references herein to Articles or Sections are to Articles or Sections of this Agreement.

“ Acquisition Plan ” shall have the meaning set forth in Section 13.03 .

“ Act ” means the Delaware Revised Uniform Limited Partnership Act, as amended from time to time (or any corresponding provisions of succeeding law).

“ Additional Capital Contributions ” means, with respect to any Partner, the total amount contributed to the Company by such Partner pursuant to Section 3.02(a) .

“ Adjusted Capital Account Deficit ” means, with respect to any Partner, the deficit balance in such Partner’s Capital Account as of the end of the relevant Fiscal Year or period, after (a) crediting to such Capital Account any amounts which such Partner is deemed to be obligated to restore to the Company pursuant to the next-to-last sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), and (b) debiting to such Capital Account the items described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6). The foregoing definition is intended to comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

“ Advisor ” has the meaning set forth in Section 14.16 .

“ Affiliate ” means, when used with reference to a specific Person, any Person directly or indirectly controlling, controlled by, or under common control with the Person in question. As used in this definition, the terms “controlling”, “controlled” and “control” mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and

policies of a Person, whether through the ownership of voting securities, by contract, or otherwise.

“ Agreement ” means this Agreement of Limited Partnership of Washington, LP, as amended from time to time.

“ Approved Vendor ” means general contractors, subcontractors, surveyors, title companies, environmental consultants, material suppliers, engineers and other professionals of good standing and reputation in the geographic region where the Property is located.

“ Annual Business Plan ” has the meaning set forth in Section 6.03 .

“ Auditor ” shall mean such national firm of independent certified public accountants which shall be selected by the General Partner and reasonably approved by NYSCRF and engaged annually to audit the books and records of the Company and prepare the tax returns of the Company. The initial Auditor shall be Ernst & Young LLP.

“ Bankrupt ” and “ Bankruptcy ” each have the meaning set forth in Section 11.02 .

“ Business Day ” means Monday through Friday of each week, except that a legal holiday recognized as such in any of the States of Illinois, New York, Virginia or Pennsylvania, or the District of Columbia, shall not be regarded as a Business Day.

“ Call for Capital ” has the meaning set forth in Section 3.02(b) .

“ Capital Account ” means the Capital Account maintained for each Partner pursuant to Section 3.04 .

“ Capital Contributions ” means, with respect to any Partner, the total amount contributed to the capital of the Company by such Partner pursuant to Sections 3.01, 3.02 and 3.03(b) .

“ Capital Transaction ” means the sale, exchange, condemnation (or similar eminent domain taking or disposition in lieu thereof), destruction by casualty, financing or refinancing, or disposition of the Property or any portion thereof.

“ Cause ” means [The confidential material contained herein has been omitted and has been separately filed with the Commission.]

“ Code ” means the Internal Revenue Code of 1986, as amended from time to time (or any corresponding provisions of succeeding law). References to Sections of the Code are to those in effect on the date of this Agreement and shall include any corresponding future provision of the Code.

“ Company ” means Liberty Washington, LP, a Delaware limited partnership governed by this Agreement, as it may from time to time be reconstituted.

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“ Company Minimum Gain ” has the meaning set forth in Regulations Sections 1.704-2(b)(2) and 1.704-2(d).

“ Contributed Entities ” means the entities identified as such on Exhibit C .

“ Contributed Interests ” means those ownership interests in the Contributed Entities held by Liberty Property Limited Partnership, which are being contributed to the Company by or on behalf of the General Partner pursuant to the Contribution Agreement, as identified on Exhibit C .

“ Contribution Agreement ” means that certain Contribution Agreement dated on or about the date of this Agreement by and among LPLP, NYSCRF and the Company, pursuant to which LPLP is contributing the Contributed Interests to the Company on behalf of the General Partner, and the General Partner is receiving a credit to its Capital Account pursuant to Section 3.01 .

“ Cost Overrun ” has the meaning set forth in the Development Management Agreement.

“ DC Metropolitan Area ” shall mean (i) the District of Columbia, (ii) those portions of the State of Maryland located within the Interstate 495 “Beltway”, and (iii) the Counties of Loudon, Fairfax and Arlington, Virginia

“ Default ” has the meaning set forth in Section 9.01 .

“ Depreciation ” means, for each Fiscal Year or other period, an amount equal to the depreciation, amortization, or other cost recovery deduction allowable with respect to an asset for such Year or period, except that if the Gross Asset Value of an asset differs from its adjusted basis for Federal income tax purposes at the beginning of such Year or period, then Depreciation shall be an amount which bears the same ratio to such beginning Gross Asset Value as the Federal income tax depreciation, amortization, or other cost recovery deduction for such Year or period bears to such beginning adjusted tax basis; provided, however, that if the adjusted tax basis for Federal income tax purposes of an asset at the beginning of such Year or period is zero, then Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the General Partner.

“ Development Management Agreement ” means an agreement, in substantially the form attached hereto as Exhibit A , to be entered into between the Company or its Subsidiaries that own Property, and the General Partner (or its Affiliate) from time to time in connection with New Developments in accordance with ARTICLE XIII, as such agreement may be amended from time to time as permitted herein.

“ Effective Date ” shall have the meaning set forth in the Preamble to this Agreement.

“ Entities ” shall mean collectively the Contributed Entities and the Purchased Entities.

“ ERISA ” means the Employee Retirement Income Security Act of 1974 and the regulations issued thereunder, as amended from time to time, and any successor to such Act.

“ Extraordinary Cash Flow ” means the cash proceeds (including, but not limited to, any applicable condemnation, insurance and refinancing proceeds) realized by the Company as a

- 3 -

result of a Capital Transaction, increased by the cash interest payments received on such proceeds, decreased by the sum of the following: (i) any amounts applied in repayment of any approved debt, (ii) the amount of such proceeds used, set aside or committed by the Company for repair or replacement of any portion of the Property; (iii) any expenses, costs or liabilities incurred by the Company in effecting or obtaining any such Capital Transaction or the proceeds thereof (including, without limitation, attorneys’ fees, court costs, brokerage fees, commissions, title insurance and survey costs, recording fees, and transfer taxes), all of which expenses, costs and liabilities shall be paid from the gross amount of such cash proceeds to the extent thereof.

“ Final Plans and Specifications ” means the plans and specifications submitted to NYSCRF by the Company to support a request by the General Partner to commence a New Development in accordance with the Preliminary Plans and Specifications and approved by NYSCRF.

“ Final Project Budget ” means, as to each New Development, the total budget for the construction and leasing of each New Development prepared by the General Partner in accordance with the Preliminary Project Budget and approved by NYSCRF.

“ Fiscal Year ” means the calendar year.

“ Functional Office Property ” means a Property other than a Redevelopment Property that is acquired, directly or indirectly, at any time by the Company and which at the time of its acquisition is improved with an existing office building.

“ General Partner ” means Liberty Washington Venture, LLC.

“ Gross Asset Value ” means, with respect to any asset, such asset’s adjusted basis for Federal income tax purposes, with the following modifications:

(a) The initial Gross Asset Value of any asset contributed by a Partner to the Company shall be the gross fair market value of such asset, as determined by the contributing Partner and the General Partner, or where the General Partner is the contributing Partner, by the contributing Partner and NYSCRF. The initial Gross Asset Value of the Interests are set forth on Exhibit C .

(b) The Gross Asset Values of all Company assets shall be adjusted to equal their respective gross fair market values, as determined by the General Partner subject to the approval of NYSCRF, which shall not unreasonably be withheld, as of the following times: (i) the acquisition of an additional interest in the Company by any new or existing Partner in exchange for more than a de minimis Capital Contribution; (ii) the distribution by the Company to a Partner of more than a de minimis amount of property as consideration for an interest in the Company; and (iii) the liquidation of the Company within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g); provided, however that adjustments pursuant to clauses (i) and (ii) above shall be made only if the General Partner reasonably determines that such adjustments are necessary or appropriate to reflect the relative economic interests of the Partners in the Company.

- 4 -

(c) The Gross Asset Value of any Company asset distributed to any Partner shall be adjusted to equal the gross fair market value of such asset on the date of distribution as determined in accordance with Section 5.04 .

(d) The Gross Asset Values of each of the Properties contributed or sold to the Company as of the Effective Date, and the components thereof, shall be the amounts set forth next to the name of the Property on Exhibits C and D hereto, subject to adjustment of such Exhibits to reflect subsequent transactions and the determination of Gross Asset Values as provided for herein.

(e) The Gross Asset Values of Company assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m), for purposes of paragraph (f) of the definition of Profits and Losses and for purposes of Section 4.02(h) hereof; provided, however, that Gross Asset Values shall not be adjusted pursuant to this subparagraph (e) to the extent the General Partner determines that an adjustment pursuant to subparagraph (b ) above in this definition is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this subparagraph (e) .

(f) If the Gross Asset Value of an asset has been determined or adjusted pursuant to this Section, then such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset for purposes of computing Profits and Losses.

(g) This definition of Gross Asset Value is intended to comply with the Internal Revenue Code, with particular adherence to the provisions of Code Section 704(b) and the Regulations thereunder.

“ Guarantors ” shall have the meaning set forth in Section 6.20 .

“ Hazardous Materials ” mean (i) any “hazardous waste” as defined by the Resource Conservation and Recovery Act of 1976 (42 U.S.C. Section 6901 et seq .), as amended from time to time, and regulations promulgated thereunder (“RCRA”); (ii) any “hazardous substance” as defined by the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. Section 9601 et seq .), as amended from time to time, and regulations promulgated thereunder (“CERCLA”) (including petroleum-based products as described therein); (iii) other petroleum and petroleum-based products; (iv) asbestos in any quantity or form which would subject it to regulation under any applicable Hazardous Materials Law (hereinafter defined); (v) polychlorinated biphenyls; (vi) any substance, the presence of which on the Property is prohibited by any Hazardous Materials Law; (vii) any “extremely hazardous substance” or “hazardous chemical” as those terms are defined in the Emergency Planning and Community Right-To-Know Act (42 U.S.C. Section 11001 et seq.) as amended from time to time, and regulations promulgated thereunder; (viii) any “chemical substance” as that term is defined in the Toxic Substances Control Act (15 U.S.C. Section 2601) as amended from time to time, and regulations promulgated thereunder; (ix) any hazardous substances identified under the

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law of the state in which the Property is located; and (x) any other substance, including toxic substances, which, by any Hazardous Materials Laws, requires special handling in its collection, storage, treatment, management, recycling or disposal.

“ Hazardous Materials Law ” means all Governmental Requirements, including, without limitation, RCRA and CERCLA, relating to the handling, storage, existence of or otherwise regulating any hazardous wastes, hazardous substances, toxic substances, radioactive materials, pollutants, chemicals, contaminants or industrial substances or relating to the removal or remediation of any of the foregoing.

“ Indemnified Party ” has the meaning set forth in Section 6.02(f) .

“ Initial Properties ” means the Properties owned by the Entities on the date that the Interests are acquired by the Company pursuant to the Contribution Agreement.

“ Interests ” shall mean collectively the Contributed Interests and the Purchased Interests.

“ IRR ” means the annualized discount rate, compounded as of the last day of each calendar month, which equates the sum of the present value of all contributions made by a Partner to the Company with the sum of the present value of all distributions made to such Partner by the Company (including distributions of Net Operating Cash Receipts and distributions of Extraordinary Cash Flow and the value of any distributions in kind made in accordance with Section 5.04 ), as calculated by reputable and generally accepted financial software applications (such as Microsoft Excel, Lotus 123 and Argus or, if they are no longer available or generally accepted, such other financial applications as from time to time have the general acceptance of the real estate finance community). For purposes of the foregoing, all contributions and distributions made prior to the date of this Agreement shall be deemed to have been made on the date of this Agreement.

“ Lakeside, LLC ” shall have the meaning set forth in the Recitals to this Agreement.

“ Liberty Loan ” shall have the meaning set forth in the Recitals to this Agreement.

“ Liberty Loan Documents ” shall have the meaning set forth in the Recitals to this Agreement.

“ Liquidating Sale ” means the sale of substantially all of the then remaining Properties, either in one transaction or in a series of related transactions.

“ Liquidation ” means (a) when used with reference to the Company, the earlier of (i) the date upon which the Company is terminated under Code Section 708(b)(1)(A), (ii) the date upon which the Company ceases to be a going concern, or (iii) the date upon which the Company dissolves in accordance with ARTICLE XI, and (b) when used with reference to a Partner, the earlier of (i) the date upon which there is a liquidation of such Partner, or (ii) the date upon which there is a liquidation of such Partner’s Partnership Interest for purposes of Code Section 761(d).

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“ LPLP ” means Liberty Property Limited Partnership, a Pennsylvania limited partnership and the sole member of the General Partner.

“ Management and Leasing Agreement ” means the Agreement by and between the Company, or its Subsidiary that owns Property, and Manager attached hereto as Exhibit B , as amended from time to time as permitted herein.

“ Manager ” means Liberty Property Limited Partnership, a Pennsylvania limited partnership (an Affiliate of General Partner), or its Affiliate.

“ Merger ” means that certain merger between Republic Property Trust, RPLP, Liberty Property Trust, Liberty Acquisition LLC and Liberty Property Limited Partnership pursuant to that certain Agreement of Plan and Merger dated July 23, 2007.

“ Merger Loan ” shall have the meaning set forth in the Recitals to this Agreement.

“ Net Cash Receipts ” means the sum of Net Operating Cash Receipts and Extraordinary Cash Flow for the applicable period.

“ Net Operating Cash Receipts ” means, for any period subject to annual audit as contemplated by Section 8.04(a) below, the excess of (a) gross cash receipts from operations (excluding cash proceeds from Capital Transactions and any security or lease deposits until forfeited or otherwise applied to rent due under the leases) of the Company during such period in excess of (b) the aggregate of (i) all operating costs and expenses during such period (not including interest on borrowed money) of the Company paid in cash during such period (without deduction for any charge for cost recovery, depreciation or other expenses not paid in cash), (ii) the cost of debt service, including both interest and principal reductions and any applicable fees under any approved debt (including, without limitation, the Liberty Loan) paid during such period, and (iii) principal and interest on any Tax Payment Loan. Any increase, from the previous period to the period under determination, in the amounts of reserves and working capital as reasonably determined by the General Partner in accordance with the Annual Business Plan shall be treated as a deduction from Net Operating Cash Receipts for the latter period; and any decrease, from the previous period to the period under determination, in the amounts of reserves and working capital as reasonably determined by the General Partner in accordance with the Annual Business Plan shall be treated as an addition to Net Operating Cash Receipts for the latter period.

“ New Development ” means any new improvements constructed by the Company pursuant to ARTICLE XIII in accordance with the Annual Business Plan or a Development Plan on any Vacant Land Property owned, directly or indirectly, by the Company.

“ New Development Property ” means a Property on which the Company has developed a New Development at any time during the term of this Agreement.

“ Non-Recourse Carveouts ” shall have the meaning set forth in Section 6.20 .

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“ Nonrecourse Deductions ” has the meaning set forth in Regulations Section 1.704-2(b)(1). The amount of Nonrecourse Deductions for a Fiscal Year shall be determined in accordance with the provisions of Regulations Section 1.704-2(c).

“ Nonrecourse Liability ” has the meaning set forth in Regulations Section 1.704-2(b)(3).

“ Partner ” or “ Partners ” means General Partner, NYSCRF and such successors, assigns or additional Partners as may be admitted to the Company pursuant to the terms of this Agreement.

“ Partner Nonrecourse Debt ” has the meaning set forth in Regulations Section 1.704-2(b)(4).

“ Partner Nonrecourse Debt Minimum Gain ” means an amount, with respect to each Partner Nonrecourse Debt, equal to the Company Minimum Gain that would result if such Partner Nonrecourse Debt were treated as a Nonrecourse Liability, determined in accordance with Regulations Section 1.704-2(i)(3).

“ Partner Nonrecourse Deductions ” has the meaning set forth in Regulations Sections 1.704-2(i)(1) and 1.704-2(i)(2).

“ Partnership Interest ” means, as to any Partner, all of the interest of such Partner in the Company including, without limitation, such Partner’s right to a distributive share of the profits, losses, and distributions of the Company and to a distributive share of Company Assets.

“ Percentage Interest ” means, as of the Effective Date, seventy-five percent (75%) for NYSCRF and twenty-five percent (25%) for General Partner respectively, unless and until changed as provided in this Agreement.

“ Performance Standards ” means (i) achieving leasing rates on renewals and new leases at each Property substantially consistent with market rates for similar properties in such submarket, (ii) achieving and maintaining occupancy rates on average for the Properties in a submarket substantially consistent with occupancy rates for similar type properties in such submarket, (iii) maintaining in each Fiscal Year on a Company wide basis non-reimbursed capital expenditures at or below the amounts budgeted in the approved Annual Business Plan, (iv) timely delivery of financial and managerial reports in accordance with the provisions of Section 8.04 and (v) performance substantially economically consistent with the Annual Business Plan.

“ Person ” means any individual, corporation, association, company, limited liability company, joint venture, trust, estate, or other entity or organization.

“ Preliminary Plans and Specifications ” means the plans and specifications submitted to NYSCRF by the Company to support a request by the General Partner to commence a New Development or the redevelopment of a Redevelopment Property.

“ Preliminary Project Budget ” means the budget for a New Development submitted to NYSCRF by the Company to support a request by the General Partner to commence a New Development or the redevelopment of a Redevelopment Property, including a pro forma operating budget.

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“ Prime Rate ” means the prime rate published by the Wall Street Journal, or any successor publication reasonably approved by the Partners, from time to time.

“ Profits ” and “ Losses ” means, for each Fiscal Year or other period, an amount equal to the Company’s taxable income or loss for such Year or period, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss, or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments:

(a) Any income of the Company that is exempt from Federal income tax and not otherwise taken into account in computing Profits or Losses pursuant to this Section shall be added to such taxable income or loss;

(b) Any expenditures of the Company described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Profits or Losses pursuant to this Section, shall be subtracted from such taxable income or loss;

(c) In the event the Gross Asset Value of any Company Asset is adjusted pursuant to any provision of this Agreement in accordance with the definition of “Gross Asset Value” above, the amount of such adjustment shall be taken into account as gain or loss from the disposition of such Asset for purposes of computing Profits or Losses;

(d) Gain or loss resulting from any disposition of property with respect to which gain or loss is recognized for Federal income tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value;

(e) In lieu of the depreciation, amortization, and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such Fiscal Year or other period, computed in accordance with the definition of “Depreciation” above;

(f) To the extent an adjustment to the adjusted tax basis of any Company Asset pursuant to Code Section 734(b) or Code Section 743(b) is required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(2) or (4) to be taken into account in determining Capital Accounts as a result of a distribution other than in liquidation of a Partner’s interest in the Company, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of such asset) or loss (if the adjustment decreases the basis of such asset) from the disposition of such asset and shall be taken into account for purposes of computing Profits or Losses;

(g) Notwithstanding any other provision of this Section, any items, which are specially allocated pursuant to Section 4.02 , or Section 4.04 shall not be taken into account in computing Profits or Losses; and

(h) The amounts of the items of Company income, gain, loss, or deduction available to be specially allocated pursuant to Sections 4.02 and 4.03 but not previously taken

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into account because of the restrictions of paragraph (g) shall be determined by applying rules analogous to those set forth in this Section.

“ Project Financing ” shall have the meaning set forth in Section 6.20 .

“ Property ” or “ Properties ” means each and all of the real estate including, but not limited to (i) the land and improvements thereon owned, directly or indirectly, by the Entities and acquired by the Company by contribution of the Contributed Interests pursuant to the Contribution Agreement and purchase of the Purchased Interests as described in the Recitals to this Agreement, (ii) all additional real estate acquired in accordance with the Annual Business Plan or an Acquisition Plan, and (iii) all improvements, fixtures and personal property owned, directly or indirectly, by the Company and located thereon, in each case until disposed of by the Company in accordance with this Agreement. The present and future Properties are comprised of New Development Properties, Redevelopment Properties, Functional Office Properties, and Vacant Land Properties.

“ Purchase Money Loan Documents ” shall have the meaning set forth in the Recitals to this Agreement.

“ Purchase Money Note ” shall have the meaning set forth in the Recitals to this Agreement.

“ Purchase Price ” shall have the meaning set forth in the Recitals to this Agreement.

“ Purchased Entities ” shall have the meaning set forth in the Recitals to this Agreement.

“ Purchased Interests ” shall have the meaning set forth in the Recitals to this Agreement..

“ Recitals ” means the recitals set forth on Exhibit H attached hereto.

“ Recourse Obligations ” shall have the meaning set forth in Section 6.20 .

“ Redevelopment Property ” means an improved Property or a land position acquired by the Company that the Partners mutually agree should be considered as such due to any one or more of the following factors: existing occupancy; anticipated tenant expirations; amount of capital expenditures intended to be invested to rehabilitate the Property, or; the anticipated yields on the investment. The Partners acknowledge that among the Initial Properties, 1129 29th Avenue and the potential additional Floor Area Ratio that may become available in Republic Park are deemed to be Redevelopment Property

“ Regulations ” means the Income Tax Regulations promulgated under the Code as such regulations may be amended from time to time (including Temporary Regulations). References to Sections of the Regulations are to those in effect on the date of this Agreement and shall include any corresponding future provision of the Regulations.

“ Regulatory Allocations ” has the meaning set forth in Section 4.03 .

“ REIT ” means a “real estate investment trust” within the meaning of the Code.

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“ RPLP ” means Republic Property Limited Partnership, a Delaware limited partnership.

“ Section 12.01 Notice ” means the notice given pursuant to Section 12.01 of this Agreement.

“ Subsidiary ” means any entity taxable as a company for federal income tax purposes in which the Company owns any direct or indirect interest in the profits, losses or capital of the entity.

“ Tax Matters Partner ” has the meaning set forth in Section 8.06(b) .

“ Tax Payment Loan ” has the meaning set forth in Section 6.11(a) .

“ Title Holding Subsidiary ” has the meaning set forth in Section 6.21.

“ Transfer ” has the meaning set forth in Section 10.01(a)

“ Transferee Partner ” means any Partner who has acquired any Partnership Interest by transfer or otherwise from any other Partner.

“ UBTI ” means unrelated business taxable income within the meaning of Section 512 of the Code.

“ Unleveraged Development IRR ” shall mean the IRR for all contributions by and all distributions to NYSCRF with respect solely to New Development Properties, Redevelopment Properties and Vacant Land Properties, calculated based on the assumptions that: (a) all funds borrowed by the Company from third parties from the execution of this Agreement through the Liquidating Sale with respect to such Properties shall be treated as though such funds had been obtained by the Company as Capital Contributions from the Partners in proportion to their respective Percentage Interests at the time of each such borrowing by the Company, (b) all payments of principal and interest on such borrowed funds with respect to such Properties shall be treated as though such payments had been distributed by the Company to the Partners in proportion to their respective Percentage Interests at the time of each such payment, and (c) all such borrowed funds to the extent not theretofore repaid shall be treated as having been repaid at the time of calculation. If a contribution, distribution or third-party loan relates partly to one or more New Development Properties, Redevelopment Properties and Vacant Land Properties, and partly to one or more Functional Office Properties, the amount thereof (or the amount of principal or interest relating thereto, in the case of a third-party loan) shall be allocated in an equitable manner based on the extent to which the respective class of Properties contributed to or was responsible for the amount in question.

“ Unleveraged IRR Target ” shall be satisfied if, in connection with a Liquidating Sale, both of the following are true: [The confidential material contained herein has been omitted and has been separately filed with the Commission.]

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“ Unleveraged Functional Office IRR ” shall mean the IRR for all contributions by and all distributions to NYSCRF with respect solely to Functional Office Properties, calculated based on the assumptions that: (a) all funds borrowed by the Company from third parties from the execution of this Agreement through the Liquidating Sale with respect to such Properties shall be treated as though such funds had been obtained by the Company as Capital Contributions from the Partners in proportion to their respective Percentage Interests at the time of each such borrowing by the Company, (b) all payments of principal and interest on such borrowed funds with respect to such Properties shall be treated as though such payments had been distributed by the Company to the Partners in proportion to their respective Percentage Interests at the time of each such payment, and (c) all such borrowed funds to the extent not theretofore repaid shall be treated as having been repaid at the time of calculation. If a contribution, distribution or third-party loan relates partly to one or more New Development Properties, Redevelopment Properties and Vacant Land Properties, and partly to one or more Functional Office Properties, the amount thereof (or the amount of principal or interest relating thereto, in the case of a third-party loan) shall be allocated in an equitable manner based on the extent to which the respective class of Properties contributed to or was responsible for the amount in question.

“ Unreturned Capital Contribution ” means the cumulative Capital Contributions of a Partner, reduced, but not below $0, by the cumulative amounts distributed to that Partner pursuant to Section 5.02(a) hereof.

“ Vacant Land Property ” means a Property which is acquired at any time by the Company and which is either (a) unimproved except for site work, or (b) improved with buildings or structures which pursuant to the Acquisition Plan relating to such Property are planned to be substantially demolished by the Company.

“ WillowWood, LLC ” shall have the meaning set forth in the Recitals to this Agreement.

ARTICLE II

ORGANIZATION AND PURPOSE

2.01 Continuation of the Company . A Certificate of Limited Partnership has been filed with the State of Delaware and a certificate to do business has been filed with the State of Virginia and the District of Columbia. The Partners hereby form the Company as a limited partnership pursuant to the provisions of the Act and enter into this Agreement in order to establish the rights, duties, and relationship of the Partners. The General Partner shall cause the Company to continuously maintain in the State of Delaware a registered agent and registered office for services of process, and to continuously maintain the Company’s qualification to do business in the State of Virginia, the District of Columbia and, if the Company or its Subsidiaries own Property in Maryland, the State of Maryland. If the laws of any jurisdiction in which the Company transacts business so require, the General Partner shall file, with the appropriate office in that jurisdiction, all documents necessary for the Company to qualify to transact business. The Partners shall execute, acknowledge, and cause to be filed for record, in the place or places

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and manner prescribed by law, any amendments to this Agreement as may be required, either by the Act, by the laws of any jurisdiction in which the Company transacts business, or by this Agreement, to reflect changes in the information contained herein or otherwise to comply with the requirements of law for the continuation, preservation, and operation of the Company as a partnership under the Act.

2.02 Name of Company . The name of the Company shall be Liberty Washington, LP, and all business of the Company shall be conducted in such name.

2.03 Principal Place of Business . The principal place of business of the Company shall be located at 500 Chesterfield Parkway, Malvern, PA 19355, or such other place or places as the General Partner may from time to time determine, provided that the General Partner shall give written notice thereof to the Partners within five (5) days after the effective date of any such change. The General Partner may establish and maintain such other offices and additional places of business of the Company as it deems appropriate.

2.04 Purpose . The purpose of the Company shall be: (a) to acquire, own, develop, re-develop, improve, operate, lease and manage office properties in the DC Metropolitan Area, (b) to sell and otherwise dispose of any or all such properties, (c) to undertake any and all actions necessary or incidental to any of the foregoing activities, and (d) to take or cause to be taken all actions and to perform or cause to be performed all functions necessary or appropriate to promote the business of the Company and to realize and carry out its purposes.

2.05 Exclusive Activities of Company . Except as otherwise provided in this Agreement, the Company shall not engage in any other activity or business other than as specified under Section 2.04 , and no Partner shall have any authority to hold itself out as the agent of any other Partner or as a Partner of the Company with respect to any other business or activity.

2.06 No Payment of Individual Obligations . The Partners shall use the Company’s credit and assets solely for the benefit of the Company. No asset of the Company shall be transferred or encumbered for or in payment of any individual obligation of any Partner.

2.07 Title to Assets . All Company assets shall be owned by and held in the name of the Company or in the name of a wholly-owned subsidiary of the Company. No Partner shall have any ownership interest in any Company asset in its individual name or right, and each Partner’s interest in the Company shall be personal property for all purposes.

2.08 Term . The Company shall continue in perpetuity unless and until the Company is dissolved and liquidated in accordance with the provisions of ARTICLE XI.

2.09 Representations and Warranties.

(a) Each Partner hereby represents and warrants to the Company and to the other Partners that:

(i) it is duly organized, validly existing, and in good standing under applicable law, it has full and unrestricted right, authority and power to enter into this Agreement

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and to perform its obligations hereunder; this Agreement constitutes a valid and binding obligation of such Partner, enforceable in accordance with its terms; and

(ii) the representations and warranties made by such Partner in the Contribution Agreement are true and correct in all material respects on and as of the date of this Agreement.

(b) The representations and warranties made by each Partner under Section 2.09(a)(i) shall be deemed to have been remade by such Partner as of the date of each Call for Capital and each Capital Contribution pursuant to such Call, and shall survive the dissolution and liquidation of the Company or such Partner.

ARTICLE III

CAPITAL

3.01 Initial Capital Contributions; Other Related Transactions . In accordance with the Contribution Agreement, the following events and transactions have occurred, or will occur, on or before the Effective Date:

(a) On or before the Effective Date, NYSCRF has made a contribution to the Company in the amount of $415,063,748.00, which amount shall be credited to NYSCRF’s Capital Account.

(b) On or before the Effective Date, LPLP, on behalf of the General Partner, has contributed or shall contribute and convey the Contributed Interests to the Company, in satisfaction of the Merger Loan, to the extent thereof, and the balance as a contribution to the capital of the Company. The Contributed Interests shall be free and clear of all liens, security interests, pledges, assignments, claims, options, encumbrances, charges, commitments, and equitable interests or rights of others, of any kind whatsoever, other than the Liberty Loan. On the Effective Date, the Property owned directly or indirectly by the Contributed Entities shall be free and clear of all mortgages and other liens and encumbrances, except for the Assumed Financing (defined below) or as otherwise approved under the Contribution Agreement. Simultaneously with the contribution to the Company of the Contributed Interests, LPLP has or shall contribute to the Company, on behalf of the General Partner, the lender’s rights and interests in and to the Purchase Money Loan Documents. The foregoing contributions described in this Section 3.01(b) have an aggregate value for purposes of this Agreement of $138,354,583.00, which amount shall be credited to the Capital Account of the General Partner.

(c) Certain of the Properties owned (directly or indirectly) by certain of the Entities have existing mortgage financing with those lenders, and in those amounts, identified on Exhibit D hereto (the “Assumed Financing”). By acceptance of the contribution of the Contributed Interests to the Company and the purchase of the Purchased Interests by the Company, the Company shall be deemed to have assumed the Assumed Financing.

(d) By virtue of the assignment to, and assumption by, the Company of the Liberty Loan Documents, as described in the Recitals to this Agreement, the Company shall be

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deemed to have obtained secured financing in the principal amount of $59,500,000.00. The principal amount of, and interests securing the Liberty Loan are depicted on Exhibit D .

(e) The Partners acknowledge that the contribution amounts set forth in Section 3.01(a) and Section 3.01(b) include estimated closing costs of the Company, and the Partners intend to adjust their initial capital contributions based on a reconciliation and proration of such costs undertaken post-Closing in accordance with the Contribution Agreement.

3.02 Additional Capital Contributions.

(a) NYSCRF and the General Partner shall each make Additional Capital Contributions to the Company in proportion to their Percentage Interests from time to time as may be required to (i) fund the costs of development, construction and lease-up (net of the proceeds of any third-party debt incurred for such development activities) of any New Development or Redevelopment pursuant to ARTICLE XIII (but not including Cost Overruns which shall be the responsibility of the Development Manager under the Development Management Agreement), or (ii) fund the acquisition costs (net of the proceeds of any third-party debt incurred for such acquisition) of any additional Property acquired by the Company in accordance with a jointly-approved Acquisition Plan adopted pursuant to Section 13.03 . The Partners expect and intend that, except in the case of the development, construction and lease-up costs of the New Developments and Redevelopments and the acquisition costs for additional property acquisitions, any cash requirements of the Company will be provided from the rentals received by the Company and, if approved by the Partners, by loans from one or more Partners, at such Partners’ option, and loans from third parties, and no Partner shall be required to make any additional capital contribution to the Company therefor.

(b) When required pursuant to Section 3.02(a) , each Partner shall contribute in cash its respective Additional Capital Contribution to the Company on not less than ten (10) days prior written notice after the General Partner’s call therefor (each a “Call for Capital”).

(c) If any amounts shall become due and payable under the Purchase Money Loan Documents, the General Partner shall make an Additional Capital Contribution to the Company equal to twenty-five percent (25%) of all such amounts.

3.03 Failure to Make Capital Contribution . If any Partner fails to make any Capital Contribution required to be made by such Partner under Section 3.01 or Section 3.02 within 10 days after the same becomes due and payable (the “Defaulting Partner”), one or more of the other Partners (the “Contributing Partner”) may (but without obligation to do so), within 15 days after the expiration of said 10-day period, contribute to the Company an additional amount equal to the Defaulting Partner’s unpaid Capital Contribution and elect to treat such contribution as provided in either Section 3.03(a) or Section 3.03(b) . If the Contributing Partner fails to make such election within said 15-day period, it shall be deemed to have elected to treat such contribution as provided in Section 3.03(b) .

(a) The Contributing Partner may treat such contribution as a loan to the Defaulting Partner (to be due and payable solely out of distributions otherwise payable to the Defaulting Partner hereunder) followed by a contribution of the proceeds thereof to the Company

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to fund the Capital Contribution otherwise required to be made from the Defaulting Partner. Until the loan to the Defaulting Partner shall have been repaid together with interest at the rate equal to the Prime Rate plus five percentage points, or the maximum rate permitted under applicable law, whichever is less, calculated upon the outstanding principal balance of such loan as of the first day of each month, all distributions otherwise to be made to the Defaulting Partner hereunder shall be distributed, for the Defaulting Partner’s account, by payment of the same to the Contributing Partner, and shall be applied against the balance owed by the Defaulting Partner to the Contributing Partner.

(b) [The confidential material contained herein has been omitted and has been separately filed with the Commission.]

(c) Any change in Percentage Interests pursuant to this Section 3.03(b) shall not affect the amount of any Partner’s Capital Contributions for purposes of determining the amount to which such Partner is entitled pursuant to Section 5.02(a) , to the extent attributable to Section 5.02(a) .

3.04 Capital Accounts.

(a) The Company shall establish and maintain a separate Capital Account for each Partner in accordance with the following provisions:

(i) To each Partner’s Capital Account there shall be credited (A) the amount of money contributed by such Partner to the Company, (B) the fair market value of property contributed by such Partner to the Company (net of any liabilities secured by such property that the Company is considered to assume or take subject to under Code Section 752) (the Partners agreeing that the fair market value of the Properties contributed by the General Partner to the Partnership on the date of this Agreement have fair market values equal to their Gross Asset Value as set forth in Section 3.01 ), and (C) such Partner’s distributive share of Profits and any items in the nature of income or gain which are specially allocated to such Partner pursuant to ARTICLE IV; and

(ii) To each Partner’s Capital Account there shall be debited (A) the amount of money distributed to such Partner by the Company, (B) the fair market value of any

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Company Asset distributed to such Partner by the Company (net of any liabilities secured by such Asset that such Partner is considered to assume or take subject to under Code Section 752), and (C) such Partner’s distributive share of Losses and any items in the nature of expenses or losses which are properly allocated to such Partner pursuant to any Section of ARTICLE IV.

The foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Regulations Section 1.704-1(b), and shall be interpreted and applied in a manner consistent with such Regulations. In the event the General Partner shall determine that it is prudent to modify the manner in which the Capital Accounts, or any debits or credits thereto, are computed in order to comply with such Regulations, the General Partner may make such modification, provided that it will not have any adverse effect on the amounts distributable to any Partner pursuant to this Agreement. The General Partner also shall (1) make any adjustments that are necessary or appropriate to maintain equality between the combined Capital Accounts of the Partners and the total amount of Company capital reflected on the Company’s balance sheet, as computed for book purposes in accordance with Regulations Section 1.704-1(b)(2)(iv)(g), and (2) make any appropriate modifications in the event unanticipated events might otherwise cause this Agreement not to comply with Regulations Section 1.704-1(b) subject, however, to the limitation on modifications having any adverse effect on amounts to be distributed to a Partner as provided in the preceding sentence. Any questions with respect to a Partner’s Capital Account shall be resolved by the General Partner in its reasonable discretion, applying principles consistent with this Agreement.

(b) Any transferee of a portion or all of a Partner’s Partnership Interest shall succeed to the Capital Account of the transferor Partner to the extent it relates to the Partnership Interest transferred.

3.05 Negative Capital Accounts . Except to the extent Partners are required to make contributions to the capital of the Company under Section 3.01 and Section 3.02 , no Partner shall be required to pay to the Company or to any other Partner any deficit or negative balance which may exist in such Partner’s Capital Account from time to time or upon Liquidation of the Company. A negative Capital Account shall not be considered a loan from or an asset of the Company.

3.06 Return of Capital; No Interest on Amounts in Capital Account . Except upon dissolution of the Company or as may be expressly set forth in this Agreement, no Partner shall have the right to demand or receive the return of any of its aggregate Capital Contributions or any part of its Capital Account or be entitled to receive any interest on its Capital Contributions or its outstanding Capital Account balance.

ARTICLE IV

ALLOCATIONS

4.01 Allocation of Profits and Losses.

(a) After giving effect to the allocations required by Section 4.03 of this Agreement, if any, and subject to the other limitations in this ARTICLE IV, Profits and Losses

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for any taxable year of the Partnership shall be allocated to the Capital Accounts of the Partners so as to produce, as nearly as possible, Capital Account balances for the Partners (taking into account all prior allocations and distributions) which equal the amount to which the Partners would be entitled as a liquidating distribution from the Partnership upon a hypothetical liquidation in which the net proceeds were distributed in accordance with the priorities set forth in Section 5.02 and as if the net proceeds available for distribution were an amount equal to the aggregate positive balance in the Partners’ Capital Accounts computed after taking into account all allocations of Profits and Losses (or items thereof) for the taxable year, including those pursuant to this Section 4.01 .

(b) If the allocation of all or any portion of Partnership Losses for a taxable year (or items thereof) would cause or increase a negative balance in the Adjusted Capital Account of any Limited Partner, such Loss (or item thereof) shall be allocated to those Limited Partners, if any, having positive remaining Adjusted Capital Account balances. Any remaining amount of such Partnership Losses (or items thereof) shall be allocated 100 percent (100%) to the General Partner.

4.02 Special Allocations . The following special allocations shall be made in the following order:

(a) Except as otherwise provided in Regulations Section 1.704-2(f), notwithstanding any other provision of this ARTICLE IV, if there is a net decrease in Company Minimum Gain with respect to any Fiscal Year, each Partner shall be specially allocated items of Company income and gain for such Year (and, if necessary, subsequent Fiscal Years) in an amount equal to such Partner’s share of the net decrease in Company Minimum Gain, determined in accordance with Regulations Section 1.704-2(g). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Partner pursuant thereto. The items to be so allocated shall be determined in accordance with Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2). This Section 4.03(a) is intended to comply with the minimum gain chargeback requirement in Regulations Section 1.704-2(f) and shall be interpreted consistently therewith.

(b) Except as otherwise provided in Regulations Section 1.704-2(i)(4), notwithstanding any other provisions of this ARTICLE IV, if there is a net decrease in Partner Nonrecourse Debt Minimum Gain attributable to a Partner Nonrecourse Debt during any Fiscal Year, each Person who has a share of the Partner Nonrecourse Debt Minimum Gain attributable to such Partner Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)(5), shall be specially allocated items of Company income and gain for such Year (and, if necessary, subsequent Fiscal Years) in an amount equal to such Partner’s share of the net decrease in Partner Nonrecourse Debt Minimum Gain attributable to such Partner Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)(4). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Partner pursuant thereto. The items to be so allocated shall be determined in accordance with Regulations Sections 1.704-2(i)(4) and 1.704-2(j)(2). This Section 4.02(b) is intended to comply with the minimum gain chargeback requirement in Regulations Section 1.704-2(i)(4) and shall be interpreted consistently therewith.

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(c) In the event any Partner unexpectedly receives any adjustments, allocations or distributions described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Company income and gain shall be specially allocated to such Partner in an amount and manner sufficient to eliminate, to the extent required by the Regulations, the Adjusted Capital Account Deficit of such Partner as quickly as possible, provided that an allocation pursuant to this Section 4.02(c) shall be made if and only to the extent that such Partner would have an Adjusted Capital Account Deficit after all other allocations provided for in this ARTICLE IV have been tentatively made as if this Section 4.02(c) were not in this Agreement.

(d) In the event any Partner has a deficit Capital Account at the end of any Company Fiscal Year which is in excess of the sum such Partner is obligated, or is deemed to be obligated, to restore pursuant to the next-to-last sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such Partner shall be specially allocated items of Company income and gain in the amount of such excess as quickly as possible, provided that an allocation pursuant to this Section 4.02(d) shall be made if and only to the extent that such Partner would have a deficit Capital Account in excess of such sum after all other allocations provided for in this ARTICLE IV have been tentatively made as if this Section 4.02(d) and Section 4.02(c) were not in this Agreement.

(e) In the event that the Profits available to be allocated to the Partners for any Fiscal Year pursuant to Section 4.01 are less than the maximum amount otherwise allocable to them pursuant thereto, then there shall be specially allocated to the Partners items of Company income and gain equal to such maximum amount.

(f) Nonrecourse Deductions for any Fiscal Year or other period shall be specially allocated among the Partners in the same manner as if they were Losses for such Year or period.

(g) Any Partner Nonrecourse Deductions for any Fiscal Year shall be specially allocated to the Partner who bears the economic risk of loss with respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions are attributable in accordance with Regulations Section 1.704-2(i)(1).

(h) To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Code Section 734(b) or Code Section 743(b) is required pursuant to Regulations Sections 1.704-1(b)(2)(iv)(m) (2) or (4) to be taken into account in determining Capital Accounts as the result of a distribution to a Partner in complete liquidation of such Partner’s interest in the Company, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be specially allocated to the Partners in a manner consistent with the manner in which their Capital Accounts are required to be so adjusted.

4.03 Curative Allocations . The allocations set forth in Section 4.02 , other than Section 4.02(e) (the “Regulatory Allocations”), are intended to comply with certain requirements of the Regulations. It is the intent of the Partners that, to the extent possible, all Regulatory Allocations shall be offset either with other Regulatory Allocations or with special allocations of other items

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of Company income, gain, loss, or deduction pursuant to this Section 4.03 . Therefore, notwithstanding any other provision of this ARTICLE IV (other than the Regulatory Allocations), the General Partner shall make such offsetting special allocations of Company income, gain, loss, or deduction in whatever manner it determines appropriate so that, after such offsetting allocations are made, each Partner’s Capital Account balance is, to the extent possible, equal to the Capital Account balance such Partner would have had if the Regulatory Allocations were not part of this Agreement and all Company items were allocated pursuant to Sections 4.01 , and 4.04 . In exercising its discretion under this Section 4.03 , the General Partner shall take into account future Regulatory Allocations under Sections 4.02(a) and (b) that, although not yet made, are likely to offset other Regulatory Allocations previously made under Sections 4.02(f) and 4.02(g) .

4.04 Other Allocation Rules.

(a) For purposes of determining the Profits, Losses, or any other items allocable to any period, Profits, Losses, and any such other items shall be determined on a daily, monthly, or other basis, as determined by the General Partner using any permissible method under Code Section 706 and the Regulations thereunder.

(b) Except as otherwise provided in this Agreement, all items of Company income, gain, loss, deduction, and any other allocations not otherwise provided for shall be divided among the Partners in the same proportions as they share Profits and Losses, as the case may be, for the year.

4.05 Tax Allocations: Code Section 704(c) . In accordance with Code Section 704(c) and the Regulations thereunder, income, gain, loss, and deduction with respect to any property contributed to the capital of the Company shall, solely for tax purposes, be allocated among the Partner so as to take account of any variation between the adjusted basis of such property to the Company for federal income tax purposes and its initial Gross Asset Value (computed in accordance with the definition of “Gross Asset Value” above). In the event the Gross Asset Value of any Company asset is adjusted pursuant to any provision of this Agreement in accordance with such definition, subsequent allocations of income, gain, loss and deduction with respect to such asset shall take into account any variation between the adjusted basis of such asset for Federal income tax purposes and its Gross Asset Value in the same manner as under Code Section 704(c) and the Regulations thereunder. Any elections or other decisions relating to such allocations shall be made by the General Partner in accordance with the “Traditional Method” described in Regulations Section 1.704-3(b). Allocations pursuant to this Section 4.05 are solely for purposes of Federal, state, and local taxes and shall not affect, or in any way be taken into account in computing, any Partner’s Capital Account or share of Profits, Losses or other items, or distributions pursuant to any provision of this Agreement.

ARTICLE V

DISTRIBUTIONS

5.01 Net Cash Receipts . Subject to year end adjustments based on annual audit contemplated at Section 8.04 below and in the definition of Net Operating Cash Receipts, and

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the corresponding adjustment of distributions as soon as practicable after such audit, Net Cash Receipts (including, without limitation, Extraordinary Cash Flow from Capital Transactions that do not constitute a Liquidating Sale – e.g., the sale of one or more, but less than all, of the Properties) shall be distributed by the Company to the Partners in proportion to their Percentage Interests [The confidential material contained herein has been omitted and has been separately filed with the Commission.], by wire transfer to an account as directed from time to time by each of the Partners. Concurrently with each such distribution the General Partner shall provide to each Partner an explanation of the sources of such Net Cash Receipts, detailed on a Property-by-Property basis.

5.02 Cash Flow from Liquidating Sale . Except as provided in Section 5.03 , Extraordinary Cash Flow from a Liquidating Sale shall be distributed by the Company in the following order of priority:

(a) First, to the Partners until the Partners have received distributions pursuant to this Section 5.02(a) equal to the amount of their Unreturned Capital Contributions (and in the same proportion as the Unreturned Capital Contribution of a Partner bears to the aggregate Unreturned Capital Contributions of all Partners) until the Unreturned Capital Contribution amount of each Partner equals $0.00;

(b) Next, to the Partners in the amount needed to cause the aggregate distributions to meet the Unleveraged IRR Target amount, and in the same proportion as the Percentage Interests of the Partners at the time of the distribution.

(c) Next, the balance, if any, [The confidential material contained herein has been omitted and has been separately filed with the Commission.]% to NYSCRF and [The confidential material contained herein has been omitted and has been separately filed with the Commission.]% to the General Partner; provided, however, that if such balance consists, in whole or in part, of Extraordinary Cash Flow from New Development Properties, Redevelopment Properties or Vacant Land Properties (as determined in accordance with the allocation rules set forth in the definition of Unleveraged Development IRR) (such portion of the balance being referred to herein as the “Development Portion”), then the Development Portion shall instead be distributed as follows if either of the following conditions is met: [The confidential material contained herein has been omitted and has been separately filed with the Commission.]

5.03 Distributions on Liquidation . If prior to a Liquidating Sale the Company shall have undergone one or more Capital Transactions with respect to which the Extraordinary Cash Flow would have been eligible, if it had been received in a Liquidating Sale as of the date of such Capital Transaction, for distribution pursuant to Section 5.02(c) , then, upon the subsequent occurrence of an actual Liquidating Sale, the Partners shall re-calculate the Partners’ respective distributions of Extraordinary Cash Flow resulting from such Capital Transaction or Capital Transactions pursuant to Section 5.02 rather than Section 5.01, and NYSCRF shall pay to the General Partner a sum (the “True-up Sum”) equal to that portion of the distributions made to NYSCRF on account of such Capital Transaction or Capital Transactions which is to be re-allocated to the General Partner pursuant to this Section 5.03 . Notwithstanding any provision in this Agreement which might otherwise operate to limit the liability of a Partner for any other purpose, such provision shall not limit the liability of NYSCRF for its obligation to pay the True-

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up Sum in accordance with the provisions of this Section 5.03 . NYSCRF shall be personally liable for the True-up Sum.

5.04 Distributions in Kind . All distributions shall be made in cash and no Company assets shall be distributed in kind without the consent of all of the Partners except as provided in Section 10.02(a) . Any assets distributed in kind shall be valued for such purpose at their fair market value as of the date of distribution as determined by an independent appraiser selected by the General Partner with the approval of NYSCRF, and shall be treated for the purposes of this ARTICLE V as if the Company had sold such assets at such value and distributed the proceeds of such sale to the Partner or Partners receiving such assets.

5.05 REIT Distributions. At the option of the General Partner, the Company shall take, and the General Partner is authorized to take, reasonable action which in the opinion of tax counsel selected by the General Partner and reasonably acceptable to NYSCRF, is necessary and consistent with the General Partner’s (or its Affiliate’s) qualification as a REIT, to distribute sufficient amounts pursuant to this ARTICLE V to enable the General Partner to pay shareholder dividends that will (i) enable the General Partner to satisfy the requirements for qualifying as a REIT under the Code and Regulations; and (ii) enable the General Partner (or its Affiliate that is a REIT) to avoid any material federal income or excise tax liability of the General Partner (or its Affiliate that is a REIT) as a result of its status as a REIT, assuming for purposes of this determination that the only items on the federal income tax return of the General Partner (or such Affiliate that is a REIT) are the items shown on its Schedule K-1 received from the Company and all cash distributions received from the Company (less a reasonable allowance for non-deductible administrative costs) have been paid as dividends to the shareholders of the General Partner on the day after such distributions are received from the Company. Any distribution made pursuant to this Section 5.05 shall be made to all Partners in accordance with ARTICLE V. In no event shall NYSCRF incur any cost or expense as a result of this Section 5.05 .

5.06 Offsets .

(a) Provided that the Manager under the Management and Leasing Agreement is an Affiliate of the General Partner, then in the event that any amounts due from the Manager to the Company under the Management and Leasing Agreement are unpaid and overdue, NYSCRF may cause the Company, after notice to the Manager, to offset the unpaid portion of such amounts claimed against the Manager against amounts due to the General Partner under this Agreement, and further provided that if there is any dispute between the Manager and the Company or NYSCRF as to whether the claim against the Manager is valid, the amount sought to be withheld shall be escrowed until the first to occur of the matter being resolved or the Manager, after written notice from the Company, no longer contesting the validity of the claim, with the interest earned thereon being paid to the party who is ultimately determined to be entitled to the amount claimed or, if it is determined that each party is entitled to a portion of the amount in dispute, pro rata based on the amount paid to each.

(b) Provided that the Development Manager under the Development Management Agreement is an Affiliate of the General Partner, then in the event that any amounts due from the Development Manager to the Company under the Development Management Agreement are unpaid and overdue, NYSCRF may cause the Company, after notice to the

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Development Manager, to offset the unpaid portion of such amounts claimed against the Development Manager against amounts due to the General Partner under this Agreement, and further provided that if there is any dispute between the Development Manager and the Company or NYSCRF as to whether the claim against the Development Manager is valid, the amount sought to be withheld shall be escrowed until the first to occur of the matter being resolved or the Development Manager, after written notice from the Company, no longer contesting the validity of the claim, with the interest earned thereon being paid to the party who is ultimately determined to be entitled to the amount claimed or, if it is determined that each party is entitled to a portion of the amount in dispute, pro rata based on the amount paid to each.

(c) Provided that the General Partner is an Affiliate of LPLP, in the event that NYSCRF obtains a final non-appealable judgment against LPLP under the Contribution Agreement that is not paid when due, NYSCRF may cause the Company to offset the unpaid portion of such judgment against amounts due to the General Partner under this Agreement.

ARTICLE VI

MANAGEMENT

6.01 Management and Control of Company Business.

(a) Subject to the limitations and restrictions set forth in Section 6.04 and elsewhere in this Agreement and subject to and consistent with the Annual Business Plan, the General Partner shall have full, exclusive, and complete discretion to manage and control the business and affairs of the Company and shall have all of the rights, powers, authorities and discretions necessary to carry out the purposes of the Company which may be possessed by a General Partner under the Act, exercisable without the consent or approval of any Partner, including without limitation, the right, power, authority and discretion to:

(i) Borrow money and issue evidences of indebtedness, and secure the same by mortgages, deeds of trust, security interests, pledges, or other liens on all or any part of the Company’s assets, provided that such financing shall expressly provide that NYSCRF has no personal liability for the obligations of the Company (unless NYSCRF agrees in writing to waive the requirement that such language be set forth in the documents), and further provided that the total outstanding principal amount of mortgage debt secured by all the Properties shall not at the time of issuance of such debt [The confidential material contained herein has been omitted and has been separately filed with the Commission.]. The Partners expressly acknowledge and agree that the Assumed Financing and the Liberty Loan have been authorized by the Partners.

(ii) Operate, manage, maintain, use, lease and sublease Company assets;

(iii) Employ or retain such persons (any of whom may be Affiliates of a Partner, including the General Partner or an Affiliate of the General Partner, subject to the limitations contained in Section 6.02(e) ) as may be necessary or appropriate for the conduct of the Company’s business, including permanent, temporary, or part-time employees and

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independent attorneys, accountants, architects, engineers, consultants, contractors and other professionals, and delegate to them any of its rights, powers, authorizations, discretions, duties and responsibilities;

(iv) Renegotiate with borrowers or lenders for the purchase or repayment of loans at discounted amounts or modifications in the terms of loans;

(v) Acquire, own, hold, construct, reconstruct, develop, redevelop, rehabilitate, sell, exchange, transfer, or otherwise deal in assets and property as may be necessary or convenient for the purposes and business of the Company;

(vi) Sell, publicly or privately, contract to sell and grant options to purchase any Company asset, for such prices and upon such terms and conditions, whether for cash or deferred payments, as it determines;

(vii) Incur expenses and enter into, guarantee, perform, and carry out contracts or commitments of any kind, assume obligations, and execute, deliver, acknowledge, and file documents in furtherance of the purposes and business of the Company;

(viii) Obtain and maintain insurance against liability or other loss with respect to the activities and assets of the Company;

(ix) Pay, collect, compromise, arbitrate, litigate, or otherwise adjust, contest, or settle any and all claims or demands of or against the Company;

(x) Invest in interest-bearing accounts and short-term investments, including, without limitation, bankers’ acceptances, obligations of Federal, state, and local governments and their agencies, money market funds registered under the Investment Company Act of 1940, high-grade commercial paper, and time deposits and certificates of deposit of commercial banks or savings banks;

(xi) Exercise the rights of the Company, and perform the obligations of the Company, under all covenants, declarations, easements and restrictions encumbering or benefiting the Properties;

(xii) Form direct or indirect wholly-owned Subsidiaries of the Company to the extent necessary or desirable in connection with obtaining construction or permanent financing permitted herein, and to remove and replace the manager of any such Subsidiary of the Company which is a limited liability company and amend any organizational document governing such Subsidiary; and

(xiii) Engage in any other kinds of activities and enter into and perform any other obligations necessary to, in connection with, or incidental to, the accomplishment of the purposes and business of the Company, so long as such activities and obligations may be lawfully engaged in or performed by a Company under the Act.

The acts of the General Partner shall bind the Company when within the scope of the General Partner’s authority.

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(b) NYSCRF is an investor only and shall have no right to participate in the management or control of the business or affairs of the Company, or to sign for or bind the Company; provided, however, that NYSCRF shall have the approval rights set forth in Section 6.04 and elsewhere in this Agreement.

6.02 Delegation; Standards; Indemnification.

(a) Subject to the terms of this Agreement, the General Partner may, at any time, delegate any of its powers, duties and responsibilities to an Affiliate. Any delegation pursuant to this Section 6.02(a) shall not, however, relieve the General Partner of any of its obligations hereunder.

(b) The Company shall enter into, or cause its Subsidiary that owns Property to enter into:

(i) a Development Management Agreement with the General Partner or its Affiliate to oversee the construction and development of each New Development and each Redevelopment; and

(ii) a Management and Leasing Agreement with the General Partner or its Affiliate to cover the management and leasing of each Property owned, directly or indirectly, by the Partnership. The management fees, leasing commissions and finders’ fees payable for the services shall be as set forth in the Management and Leasing Agreement provided that such fees shall not at any time exceed the then current market rates for such services in the area in which the affected Property is located. Notwithstanding the foregoing, in the event that lender approval is not obtained for the assumption of any of the Assumed Financing prior to the contribution or sale of the applicable Entity to the Company, the then-existing management agreement for such Entity (the “Existing Management Agreement”) shall remain in place and effective until such approval is obtained or such Assumed Financing is paid off, defeased or refinanced; provided, however, that as between the “Manager” and the “Owner” under such Existing Management Agreement, the fees and obligations set forth in the form of Management and Leasing Agreement attached hereto as Exhibit B shall control. By executing this Agreement on behalf of the General Partner, LPLP hereby consents to and agrees to be bound by the immediately preceding sentence.

(c) It is the intention of the Partners that, to the extent feasible, all other actions taken on behalf of the Company shall be taken by the General Partner or its authorized delegates, subject to the provisions of this Agreement and the approval rights of NYSCRF pursuant to Section 6.04 .

(d) The General Partner shall perform its duties hereunder with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims, for the exclusive benefit and protection of the Company, except that the General Partner shall not be required to diversify the Company’s assets.

(e) In the performance of its duties and responsibilities and the exercise of its right, power, authority and discretion under this Agreement:

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(i) the General Partner shall act solely in the interests of the Company; and

(ii) neither the General Partner nor any Affiliate of the General Partner shall (A) deal with the assets of the Company in its own interests or for its own account; (B) in any capacity act in any transaction involving the Company on behalf of any party whose interests are adverse to the interests of the Company; or (C) receive any compensation or consideration for its own personal account from any party dealing with the Company or proposing to deal with the Company in connection with a transaction involving any portion or all of the Property (other than fees for the rendering of maintenance services to the Properties as approved in the Annual Business Plan, provided that the cost of such services will be reimbursed to the General Partner at a rate equal to the General Partner’s direct costs for those services, plus a reasonable allocation of overhead related to providing such services).

(f) The Company (but not any Partner) shall indemnify, defend and hold harmless the General Partner and the trustees, officers, directors and employees of the General Partner and its Affiliates (collectively the “Indemnified Party”) in the event it was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative by reason of any acts or omissions, or alleged acts or omissions, arising out of the activities of the Indemnified Party on behalf of the Company, or in furtherance of the interests of the Company, against any and all costs, losses, damages or expenses of any nature whatsoever for which such Indemnified Party has not otherwise been reimbursed (including attorneys’ fees, judgments, fines and accounts paid in settlement) actually and reasonably incurred by the Indemnified Party in connection with such action, suit or proceeding so long as the Indemnified Party reasonably believed that its actions were within the scope of this Agreement and the Indemnified Party did not act fraudulently or in bad faith or in a manner constituting negligence or willful misconduct or in breach of the standards set forth in Section 6.02(d) , or violate securities laws or criminal laws. The termination of any action, suit or proceeding by judgment, order, settlement or upon a plea of nolo contendere or its equivalent shall not of itself (except insofar as such judgment, order, settlement or plea shall itself specifically provide) create a presumption that the Indemnified Party acted fraudulently or in bad faith or acted in a manner constituting negligence or willful misconduct. The indemnification rights of the Indemnified Party set forth in this Section 6.02(f) shall be cumulative of and in addition to, any and all rights, remedies, and recourse to which it shall be entitled whether pursuant to the provisions of this Agreement, at law, or in equity.

(g) To the extent permitted by applicable law and except as otherwise provided in this Agreement, the General Partner shall not be answerable for the default or misconduct of any third party agent, investment advisory service, attorney, appraiser, consultant, contractor, engineer, real estate managing agent, accountant or bookkeeper if such Person is not an Affiliate of the General Partner and if selected by the General Partner with reasonable care, unless the General Partner knowingly participates in such wrongdoing, has actual knowledge thereof and fails to take reasonable remedial action, or through negligence in the performance of its own specific responsibilities under this Agreement has enabled such wrongdoing to occur.

(h) Neither the Company nor any Partner shall have any claim against the General Partner by reason of any act or omission of the General Partner, nor against NYSCRF by

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reason of any act or omission of NYSCRF, except where such claim is based on gross negligence, actual fraud, material, deliberate or willful breach of this Agreement, or intentional tortious misconduct. Notwithstanding anything to the contrary contained herein or in any other agreement executed in connection herewith, but subject to the last sentence of Section 5.03 , the General Partner expressly agrees that NYSCRF shall not be liable personally or otherwise for any breach or default by NYSCRF under this Agreement or any other agreement executed in connection with this Agreement, except to the extent of, and only to the extent of, the NYSCRF’s Partnership Interest in the Company. Except only for NYSCRF’s Partnership Interest in the Company, no assets of NYSCRF may be liened, encumbered, attached, levied or executed upon to satisfy any liability of or judgment against NYSCRF arising out of this Agreement or any other agreement executed in connection with this Agreement.

6.03 Annual Business Plan. The Annual Business Plan shall be the blue print for the management of the business of the Company. The Annual Business Plan for calendar year 2007 is attached hereto as Exhibit E . No later than [The confidential material contained herein has been omitted and has been separately filed with the Commission.], and each [The confidential material contained herein has been omitted and has been separately filed with the Commission.] thereafter, the General Partner shall prepare and deliver to NYSCRF for its review and approval a proposed Annual Business Plan for the next Fiscal Year. NYSCRF shall, within [The confidential material contained herein has been omitted and has been separately filed with the Commission.] days after receipt, provide the General Partner with written comments thereto, and if the Annual Business Plan for the succeeding year is not previously agreed to, the parties shall meet no later than [The confidential material contained herein has been omitted and has been separately filed with the Commission.] of the then current year to agree on such Annual Business Plan. If for any reason at the beginning of any year the Annual Business Plan for such year has not been agreed to, the Company shall continue to operate in accordance with the Annual Business Plan for the prior year, except that [The confidential material contained herein has been omitted and has been separately filed with the Commission.]. Each Annual Business Plan shall, among other information, contain the following information, consistent with the form attached hereto as Exhibit E :

(a) a summary of the conditions of the leasing, sales and development marketplace in the DC Metropolitan Area (and the General Partner shall forward to NYSCRF copies of marketing reports prepared by third-party real estate firms received by the General Partner summarizing the conditions of leasing and development in the marketplace for commercial office properties in which the various portions of the Property are located);

(b) the annual operating budget, which shall include the estimated revenues and expenses (including debt service), any anticipated Call for Capital pursuant to Section 3.02(a) and the regular capital expenditures, all for the ensuing Fiscal Year, and a leasing plan for each of the Properties (which leasing plan shall include any proposed changes to the standard form lease; tenant requirements and rental rates; estimated improvements; costs of re-tenanting; leasing commissions; and other non-recurring extraordinary capital expenditures, if any, for the affected Property);

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(d) the recommendation of the General Partner with respect to debt financing to be issued by the Company in the ensuing Fiscal Year;

(e) the recommendation of the General Partner with respect to the sale of any one or more of the Properties in the ensuing Fiscal Year

(f) the recommendation of the General Partner with respect to any New Developments to be initiated in the ensuing Fiscal Year, together with a summary of all ongoing development activities under any Development Management Agreements then in effect, and a proposed development budget for all such recommended and ongoing projects; and

(g) such additional information as may be necessary or appropriate to fully inform the Partners of all matters relevant to the Company and, if their approval is required, to enable the Partners to make an informed decision with respect to their approval of such Plan, or as any Partner shall reasonably have requested;

(h) and whenever necessary to reflect a material change in any of the information contained in the Annual Business Plan as last submitted to NYSCRF, the General Partner shall submit such changes to NYSCRF for its approval, and upon such approval, such amended Plan shall become the Annual Business Plan.

6.04 Matters Requiring Approval of NYSCRF . In addition to any other matter pertaining to the Company set forth herein that requires the approval of NYSCRF and in addition to the right of NYSCRF pursuant to Section 6.18 , the following actions or decisions with respect to or affecting the Company or Company’s assets shall require the approval of NYSCRF prior to any action by the General Partner (except to the extent that the matter in question is included in, and budgeted for or permitted by, other than in the case of Section 6.04(k) , the then applicable Annual Business Plan):

[The confidential material contained herein has been omitted and has been separately filed with the Commission.]

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6.05 Hazardous Materials . The General Partner shall not knowingly conduct or authorize and shall use its reasonable efforts to prevent a release of Hazardous Materials at any of the Properties and shall promptly notify NYSCRF in writing of any pending or threatened investigation or inquiry by any governmental authority in connection with any Hazardous Materials relating to a Property or of the occurrence of a release of Hazardous Materials at any Property. The General Partner shall promptly notify NYSCRF in writing if the General Partner becomes aware of any release of Hazardous Materials in violation of law originating on the Property, or of any such release originating in a neighboring property that threatens the Property.

6.06 Emergency Actions . In the event that it is necessary to make expenditures which are not provided for in the Annual Business Plan, or to take any other action which requires the approval of NYSCRF under Section 6.04 , but which is required under emergency court order, executive order or legislation, or which the General Partner, in good faith, believes appropriate in an emergency to avoid risk to life or health or facilitate the preservation of any portion or all

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of the Company’s assets, and the General Partner reasonably determines that there is insufficient time to obtain such approval and that any delay in making such expenditures or taking such action could result in a violation of law or materially adversely affect the value of the Company assets or could materially increase the risk to life or health, then the General Partner shall be authorized to bind the Company for any expenditures or in any other action taken on behalf of the Company in such emergency. The General Partner shall notify NYSCRF of any exercise of its power and authority under this Section as soon as practicable thereafter.

6.07 Regular Meetings.

(a) The Partners shall meet annually at a time and place determined by the General Partner and reasonably approved by NYSCRF, for a report on the current Fiscal Year’s activities, a review of the most recent financial statements and, when available, a presentation of the next Fiscal Year’s Annual Business Plan, as well as to consider and decide such matters as may be specified by the General Partner or by prior written notice from any Partner to the General Partner. Without limiting the foregoing, the annual meetings shall include a discussion and analysis of (i) anticipated acquisitions and development activities for the ensuing year, and (ii) whether the Company should continue to hold or should sell each Property and any changes in the projected period of continuing to hold any portion or all of the Property. Reasonable notice shall be provided to the Partners of the time and place of such meeting and the matters to be decided or discussed. Any proposal requiring action of the Partners shall be provided to the Partners a minimum of ten (10) business days prior to such meeting. Participation in meetings may be by means of conference telephone call or similar telecommunications whereby all individuals participating in the meeting can hear, and speak to, each other at the same time.

(b) Voting shall take place at meetings, provided, however, that any Partner may, at any time and without a meeting therefor, notify the General Partner of its vote on any matter requiring such vote, and the General Partner shall tabulate the vote and notify the Partners of such vote promptly thereafter. Voting under this Agreement shall take place in writing and the General Partner shall thereafter confirm the result of the vote of the Partners on any matter in writing.

(c) Any action which may be taken by the Partners at any meeting may be taken without a meeting pursuant to written consent of all of the Partners.

6.08 Special Meetings . Any Partner may call a special meeting of the Partners at any time. All of the provisions set forth above with respect to regular meetings shall also apply to any special meetings.

6.09 Third Parties . Notwithstanding anything to the contrary contained herein, the General Partner may execute a certificate that, except in the case of any matter which requires the approval of NYSCRF pursuant to Section 6.04 , may be conclusively relied upon by any third party (without any further inquiry whatsoever) stating that any action or proposed action does not require the approval or consent of the Partners under this Agreement or that such approval or consent has been obtained, and any action taken by the General Partner in connection therewith shall in fact be the act of, and bind, the Company. The foregoing shall not relieve the General Partner from any liability it may have to the Company or the Partners if, in fact, such action or

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proposed action did require the approval or consent of any Partner and such consent or approval was not obtained.

6.10 Other Activities of Partners . Any Partner and its Affiliates may have other business interests and may engage in other business ventures of any nature or description whatsoever, whether presently existing or hereafter created, and whether or not competitive with the business of the Company or any Partner, provided, however, that during the term of this Agreement the General Partner and its Affiliates shall not acquire or own any office property in the DC Metropolitan Area, except as permitted in ARTICLE XIII below. The rights of NYSCRF under this Section 6.10 are personal to NYSCRF and shall not be enforceable by any assignee or transferee, whether voluntarily or involuntarily or by operation of law, of the rights of NYSCRF under this Agreement, other than a transferee of NYSCRF pursuant to Section 10.02(b) .

6.11 Withholding of Tax on Certain Company Distributions.

(a) Unless treated as a Tax Payment Loan, any amount paid by the Company for or with respect to any Partner on account of any withholding tax or other tax payable with respect to the income, profits or distributions of the Company pursuant to the Code, the Regulations or any state or local statute, regulation or ordinance requiring such payment (a “Withholding Tax Act”) shall be treated as a distribution to such Partner for all purposes of this Agreement, consistent with the character or source of the income, profits or cash that gave rise to the payment or withholding obligation. To the extent that the amount required to be remitted by the Company under the Withholding Tax Act exceeds the amount then otherwise distributable to such Partner, unless and to the extent that funds shall have been provided by such Partner pursuant to the last sentence of this Section 6.11(a) , the excess shall constitute a loan from the Company to such Partner (a “Tax Payment Loan”). Any such Tax Payment Loan shall be payable upon demand and shall bear interest, from the date that the Company makes the payment to the relevant taxing authority, at the lesser of: (i) the Prime Rate plus two percentage points per annum, or (ii) the highest rate permitted by applicable law, compounded monthly (but in no event higher than the highest interest rate permitted by applicable law). During such time as any Tax Payment Loan to any Partner (or the interest thereon) remains unpaid, all future distributions otherwise to be made to such Partner under this Agreement shall be distributed for such Partner’s account by applying the amount of any such distributions first to the payment of any unpaid interest on such Tax Payment Loan and then to the repayment of the principal thereof, and no such future distributions shall be paid to such Partner until all of such principal and interest has been paid in full, but all such amounts shall, for purposes of this Agreement, be treated as a distribution to such Partner. If the amount required to be remitted by the Company under the Withholding Tax Act exceeds the amount then otherwise distributable to a Partner, the Company shall notify such Partner at least five (5) Business Days in advance of the date upon which the Company would be required to make a Tax Payment Loan under this Section 6.11(a) (the “Tax Payment Loan Date”) and provide such Partner the opportunity to pay to the Company on or before the Tax Payment Loan Date, all or a portion of such deficit. If any Tax Payment Loan is not fully repaid before the earlier of (a) removal of the Partner receiving the Tax Payment Loan, or (b) liquidation of the Company, such Partner shall remit any remaining portion of the principal and interests payable on the Tax Payment Loan to the Company.

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(b) The General Partner shall have the authority to take all actions necessary to enable the Company to comply with the provisions of any Withholding Tax Act applicable to the Company and to carry out the provisions of this Section 6.11 . Nothing in this Section 6.11 shall create any obligation on the General Partner to advance funds to the Company or to borrow funds from third parties in order to make any payments on account of any liability of the Company under a Withholding Tax Act.

6.12 Unrelated Business Taxable Income . The General Partner shall use commercially reasonable efforts to avoid taking any action which it knows or reasonably should know would (a) cause any indebtedness of the Company to not qualify for the exception to “acquisition indebtedness” under Code Section 514(c)(9)(A), or (b) otherwise cause NYSCRF to have a substantial risk of recognizing UBTI (assuming, for this purpose, that NYSCRF is an organization subject to the tax imposed by Code Section 511(a)(1)), provided that any transaction which General Partner determines will create UBTI for NYSCRF shall require NYSCRF’s prior approval. By way of example and without limiting the generality of the foregoing, the General Partner shall use its best efforts to ensure that:

(a) With respect to any lease executed on behalf of the Company:

(i) The determination of the amount of rent shall not be expressed in whole or in part as a percentage of the income or profits derived by the lessee from the space leased (other than an amount based on a fixed percentage or percentages of gross receipts or gross sales);

(ii) Not more than ten percent (10%) of the rent shall be expressly attributable to personal property, determined at the time the personal property is placed in service by the lessee (and not by reference to any allocation contained in the lease documents);

(iii) If subleasing is permitted, the Company may not share in any net profit derived by the tenant from any sublease, and the tenant thereunder may not sublease all or any portion of its leasehold interest in violation of paragraph ( i );

(iv) No services shall be performed for the tenant other than services usually or customarily rendered to tenants in connection with office space; and

(v) All tenant payments under the lease shall be designated as “rent” or “additional rent”.

(b) The General Partner shall not engage in, or cause the Company to engage in, any activity that would cause all or any part of the Property to be considered stock in trade or other property of a kind which would properly be includable in inventory if on hand at the close of the taxable year or property held primarily for sale to customers in the ordinary course of a trade or business of the Company. NYSCRF acknowledges that a decision to sell or otherwise dispose of any property of the Company may cause the Company to engage in commercially reasonable sales activities and the Company and the General Partner are authorized to engage in such activities with respect to Company property to the extent that such sale is authorized or permitted under this Agreement.

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(i) The price for any acquired or improved real property will be fixed at the time of the acquisition of the property or the time of the completion of any such improvement;

(ii) The amount of any indebtedness or any other amount payable with respect to such indebtedness, or the time for making any payment of any such amount, shall not be dependent, in whole or in part, upon any revenue, income, or profits derived from such real property;

(iii) Any property acquired by the Company will not be subsequently leased to the seller or to any person who bears a relationship to such seller that is described in Code Section 267(b) or 707(b);

(iv) Any property of the Company will neither be acquired from nor leased to a person that bears a relationship to the Limited Partner or the Company which is described in subparagraph (C), (E) or (G) of Code Section 4975(e)(2) or a person that bears a relationship, which is described in subparagraph (F) or (H) of Code Section 4975(e)(2), to any person described in subparagraph (C), (E), or (G) of Code Section 4975(e)(2);

(v) The Company will not incur indebtedness from any person described in Sections 6.12(c)(iii) or 6.12(c)(iv) in connection with any acquisition or any improvement to property; and

(vi) The provisions of this Section 6.12(c) are intended to comply with the requirements of Code Section 514(c)(9)(B) and should be construed thusly.

With respect to the foregoing: (A) NYSCRF acknowledges that the requirements of Section 6.12(a) above are satisfied with respect to all existing leases of space in the Properties in effect as of the date of this Agreement and with respect to the standard forms of “Multi-Tenant Office Lease” and “Single-Tenant Office Lease” generally utilized by Affiliates of the General Partner, copies of which the General Partner has previously provided to NYSCRF; and (B) the General Partner shall notify NYSCRF of any proposed changes in the structure or operation of the Company not set forth in the Annual Business Plan that might cause the Company or NYSCRF to incur UBTI, and such change shall not be made without the prior approval of NYSCRF.

6.13 Prohibited Transactions.

(a) The General Partner shall use best efforts to avoid taking action which it knows or reasonably should know would constitute a prohibited transaction (within the meaning of Code Section 4975(c)) and would cause NYSCRF (assuming, for this purpose, that NYSCRF is a “plan” within the meaning of Code Section 4975(e)(1)) or any Person who is a disqualified person (within the meaning of Code Section 4975(e)(2)) with respect to NYSCRF to incur a tax under Code Section 4975, without NYSCRF’s prior approval.

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(b) Notwithstanding any other provisions of this Agreement, other than Section 6.13(a) , or any non-mandatory provision of the Act, any action of the General Partner on behalf of the Company or any decision by the General Partner to refrain from acting on behalf of the Company, based on an opinion of tax counsel selected by the General Partner and reasonably acceptable to NYSCRF that such action or omission is necessary or advisable in order to: (i) protect the ability of Liberty Property Trust, a Maryland real estate investment trust which is the general partner of the sole member of Liberty Washington Venture, LLC, to continue to qualify as a REIT under the Code, or (ii) avoid Liberty Property Trust incurring any material taxes under Section 857 or Section 4981 of the Code, is expressly authorized under this Agreement and is deemed approved by all of the Partners.

(c) At any time when a direct or indirect beneficial interest in the Company is owned by an entity that has elected to be taxed as a REIT under the Code, neither the Company nor any Subsidiary shall without the prior written consent of Liberty: (i) acquire any asset that is not described in Section 856(c)(4)(a) of the Code or any successor provision; (ii) enter into a loan secured by an interest in real property in which the Company would receive income from a “shared appreciation provision” as defined in Section 856(j)(5) of the Code; (iii) enter into a loan in which the interest income depends, directly or indirectly, in whole or in part, on the income or profits of any person for purposes of Section 856(f) of the Code; (iv) enter into any lease involving real property where any portion of the rents would be excluded from the definition of “rents from real property” under Section 856(d)(2) of the Code; or (v) sell any property which, when sold, would constitute property described in Section 1221(1) of the Code, except when the net selling price is less than $10,000. Notwithstanding the foregoing, if any of the provisions of Sections 856 or 857 of the Code are amended so that one of the requirements in clauses (i) through (v) above becomes irrelevant to the qualification of a REIT as a REIT under the Code and will not cause adverse tax consequences to a REIT if the requirement is not complied with, such provision shall no longer apply to the Company.

(d) In making any determinations under this Agreement in which the classification of any entity as a “real estate investment trust” for federal income tax purposes is relevant, such determination or calculation shall be made by assuming that only the items reported on such entity’s federal income tax return are the items reported on the Partner’s Schedule K-1 received from the Company (or the entity’s distributive share of such items).

6.14 Deemed Approval . NYSCRF shall be deemed to have approved and the General Partner shall not have any liability or responsibility under either Section 6.12 or Section 6.13 , to the extent that the action which caused the Company or NYSCRF to incur UBTI or which constituted a prohibited transaction (a) received the approval of NYSCRF where such approval is required under this Agreement, or (b) resulted from the Company’s failure to take any action proposed by the General Partner and submitted to NYSCRF, if such failure was because such proposed action did not receive the approval of NYSCRF.

6.15 Reporting Requirements . In addition to any other reporting obligations of the General Partner contained in this Agreement, the General Partner shall:

(a) (1) notify NYSCRF of any material fire or other material damage to the Property, and in such event, arrange for an insurance adjuster reasonably acceptable to NYSCRF

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to view the Property before repairs are started, but in no event shall Manager settle any losses, complete loss reports, adjust losses or endorse loss drafts in excess of $250,000 without NYSCRF’s prior consent; and (2) promptly notify NYSCRF after the General Partner becomes aware of any significant personal injury or property damage occurring to or claimed by any tenant or third party on or with respect to the Property;

(b) notify NYSCRF of the commencement of any action, suit or proceeding against NYSCRF, or against Manager with respect to the operations of the Property, or otherwise affecting the Property, other than routine tort claims covered by insurance;

(c) on or before the 15 ^th day of each month, prepare and submit to NYSCRF a progress report on leasing activities at the Property for the preceding period, such report to be in the format customarily used by the General Partner and its Affiliates for its own portfolio; and

(d) notify NYSCRF when the General Partner receives written notice of any material violation of law at any portion of the Property, as well as provide NYSCRF with evidence that the non-compliance has been remedied.

6.16 Action by Partners . Except as otherwise provided in this Agreement, any action required or permitted to be taken by the Partners shall require the unanimous consent or approval of the Partners, unless otherwise required by the Act.

6.17 Right to Disclose Information . The General Partner shall not be in breach of its obligations under this Agreement or any other obligations or duties to NYSCRF at law or in equity (whether under a theory of fiduciary duty or otherwise) if the General Partner or its Affiliates files this Agreement (and some or all of the exhibits hereto) as an exhibit to a filing it may make with the Securities Exchange Commission or makes disclosures regarding the transactions governed by this Agreement to the extent the General Partner or its Affiliates reasonably believe necessary to enable the General Partner or its Affiliates to comply with federal and state securities laws and the regulations of the Securities Exchange Commission, the rules of any stock exchange, or in connection with any filing or registration made by Liberty Property Trust, an Affiliate of the General Partner, as the issuer of publicly traded securities, or as part of information provided to its investors and/or financial analysts.

6.18 Contracts with Affiliates . NYSCRF, acting alone, shall have the right on behalf of the Company to send any notice of default or termination, to institute or settle legal proceedings and/or to take such other action as may be necessary or appropriate to enforce the rights and protect the interests of the Company pursuant to any agreement with the General Partner or an Affiliate of the General Partner or with respect to any other rights or remedies of the Company running against or in connection with the General Partner or Affiliate of the General Partner.

6.19 Loan Provisions .

(a) Each Partner shall, in its reasonable discretion, cooperate to amend this Agreement and the Certificate of Limited Partnership if required to comply with the requirements of any lender providing mortgage financing to the Company in accordance with this Agreement.

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(b) The Partners acknowledge that the Liberty Loan was provided to the Company, and that (with the consent of NYSCRF, as set forth in Section 6.04(l) ) future financing may be provided to the Company or any Entity, and/or serviced by an Affiliate of the General Partner (the “Affiliate Lender”). As a result, the interests of the Affiliate Lender, in its capacity as a lender, may be different from, or in conflict with, the interests of the Partners or the interests of the Company or any of their respective Affiliates. In recognition of the foregoing and in consideration of the Affiliate Lender providing or facilitating any such loan, the Partners acknowledge and agree that the Affiliate Lender is and will be entitled to enforce its rights under any existing or future loan (and ancillary security) documents with the Company and/or any Entity and will be entitled to pursue any and all remedies to which it is entitled (including calling a default under, accelerating or foreclosing on any collateral securing, such loan) even if doing so would be detrimental to or create a conflict with the Company and/or such Entity or any of its Partners, and each of the Partners waives, to the fullest extent permitted by law, (i) any right to object to such enforcement, (ii) any right to assert a claim against the General Partner or its Affiliates as a result of such conflict of interest, and (iii) any claim for a breach of fiduciary duty, duty of loyalty, lender liability, equitable subordination or other claims relating to or arising from the fact that the Affiliate Lender and its Affiliates would have an interest, directly or indirectly, as both a creditor and a Partner of the Company. In addition, the classification and treatment for income tax purposes of the Liberty Loan and any other financing provided by an Affiliate of the General Partner as non-recourse debt or non-recourse liability shall be made and governed by the Code.

6.20 Project Financing .

(a) The Partners expect that the Company will obtain, or cause certain of the Entities to obtain, debt financing in such amounts, from such lenders, with such security and on such terms and conditions as shall be determined in accordance with this Agreement (collectively with the Assumed Financing, the “Project Financing”).

(b) All Project Financing will be non-recourse to the Company and to all Partners, except that the General Partner may elect, in its sole discretion, to provide one or more guarantors (the “Guarantors”) acceptable to the lender to be personally liable for: (i) fraud, environmental liability, misapplication of tenant security deposits and other types of liabilities (collectively the “Non-Recourse Carve Outs”) to be set forth in the documents and instruments evidencing the Project Financing, pursuant to provisions acceptable to the Guarantors; and/or (ii) for such other liabilities, if any, under the loan as the Guarantors may elect in their sole discretion, pursuant to documents acceptable to the Guarantors. The personal obligations of the Guarantors as set forth in such loan documents are referred to herein as the “Recourse Obligations.” The Partners confirm that LPLP serves as the Guarantor of the Recourse Obligations with respect to the Assumed Financing and, with respect to the Assumed Financing for WillowWood I-II, Liberty Property Trust also serves as a Guarantor of the Recourse Obligations.

(c) With respect to all sums that at any time may be paid by a Guarantor on account of the Recourse Obligations, the Partners agree that: (i) the Company shall indemnify, defend and hold the Guarantor harmless from and against all such liabilities and all costs and expenses arising therefrom, (ii) NYSCRF shall indemnify, defend and hold the Guarantor

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harmless from and against all such liabilities and all costs and expenses arising from the gross negligence, actual fraud, material, deliberate and willful breach of this Agreement, or intentional tortious misconduct of NYSCRF that triggers liability under the Recourse Obligations, and (iii) the Guarantor shall be subrogated to the rights of the holder of the Project Financing with respect thereto; provided, however, that the foregoing provisions of (i) and (ii) above shall not apply to any liabilities, costs or expenses of the Guarantor resulting from its or its Affiliate’s gross negligence, actual fraud, material, deliberate or willful breach of this Agreement, its guaranty of the Recourse Obligations or any other documents evidencing the Project Financing, or intentional tortious misconduct; and provided further that subrogation rights of the Guarantor shall be totally subordinated in all respect to the rights of the holder of the Project Financing and shall not be enforceable until satisfaction of all obligations of the Company and the borrower Entity under the Project Financing.

(d) At any time while the Recourse Obligations are outstanding in whole or in part, the Company shall not be authorized to take, and the General Partner shall not permit the Company or any Entity to take, any action that would result in the triggering of liability under the Non-Recourse Carve Outs, without the prior written consent of the Guarantors, which may be withheld for any reason or no reason. Without limiting the generality of the foregoing, without the consent of the Guarantors, the Company and the Entity shall not be authorized to commence and the General Partner shall not commence, any voluntary proceeding for bankruptcy, reorganization or similar relief, and shall not consent to any involuntary petition for such relief if such action would trigger any liability under the Recourse Obligations. The Partners expressly waive any rights that they may have at any time, whether under a theory of fiduciary duty or under any other legal or equitable principle, to compel the Partnership or the Entity to commence a voluntary bankruptcy proceeding or themselves to initiate an involuntary bankruptcy proceeding, or to assert any claims against the General Partner or its Affiliates for the failure to file a voluntary proceeding.

6.21 Title Holding Subsidiaries . Title to each Property may be held by a separate, single purpose, limited liability company or partnership that is wholly owned by, and whose only members, partners and/or managers are, the Company and other limited liability companies wholly owned (directly or indirectly) by the Company (each a “Title Holding Subsidiary”). It shall be the General Partner’s duty and responsibility to duly form and maintain each Title Holding Subsidiary and cause each Title Holding Subsidiary to be and remain in good standing in its state of organization and qualified to do business in each jurisdiction in which it owns property or otherwise conducts business, to obtain appropriate employer and/or tax identification numbers (to the extent required) for the Title Holding Subsidiary, and the like. The rights, duties, responsibilities and authority of the Partners with respect to Title Holding Subsidiaries and Properties owned through a Title Holding Subsidiary shall be identical to their respective rights, duties, responsibilities and authority with respect to the Company and Properties owned directly by the Company. Any provision of this Agreement giving the Partners the right or authority to take any action or refrain from taking any action, or cause the Company to take any action or refrain from taking any action, shall be interpreted to give them the identical right or authority with respect to the appropriate Title Holding Subsidiary. Any provision of this Agreement imposing any duty or responsibility on the Partners, or limiting their respective rights or authority, with respect to Properties owned directly by the Company shall be interpreted to impose the identical duty, responsibility or limitation on them with respect to Properties owned

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through a Title Holding Subsidiary. The operating agreement for each Title Holding Subsidiary shall be in a form approved by the Partners.

6.22 Ratification of Recitals . The Recitals set forth on Exhibit H to this Agreement are incorporated herein by reference. The Partners hereby ratify and consent to the transactions described in the Recitals to this Agreement.

ARTICLE VII

COMPENSATION OF PARTNERS; PAYMENT OF COMPANY EXPENSES

7.01 Compensation from Company . The Company shall pay to the General Partner (or its Affiliate) the sum of [The confidential material contained herein has been omitted and has been separately filed with the Commission.] annually as an administrative fee in compensation for the General Partner’s services required hereunder. Except as aforesaid and as provided in Section 7.02 , no Partner shall receive any compensation from the Company for any services rendered in its capacity as a Partner. Nothing contained herein shall prevent (i) a Partner from receiving reasonable compensation for any services rendered to the Company in a non-Partner capacity or from receiving distributions under ARTICLE V, (ii) the General Partner or its Affiliate from receiving fees pursuant to the Development Management Agreement, or (iii) the General Partner or its Affiliate from receiving fees for managing or leasing all or a portion of the Property pursuant to the Management and Leasing Agreement.

7.02 Company Expenses.

(a) The Management and Leasing Agreement shall require the General Partner or its Affiliate, at its expense and without reimbursement from the Company, to provide the Company with adequate personnel and office space and all necessary office furnishings and equipment and shall pay the salaries and other compensation of such personnel and the cost of telephone service, heat and other utilities and other items of an overhead and administrative nature.

(b) The Company shall bear all other costs and expenses incurred in connection with the management and operation of the business and affairs of the Company, or in carrying out the business, purposes, and objectives of the Company, including without limitation, costs associated with a proposed transaction that is not consummated for any reason whatsoever. Without limiting the foregoing, the Company shall bear the costs of all third-party vendors who provide services to the Company (including without limitation auditors, tax consultants and attorneys). Subject to Sections 6.04(a) and 6.04(b) to the extent the General Partner or its Affiliates are able to provide such services to the Company, the General Partner may (subject to the prior approval of NYSCRF) provide such service to the Company, and the Company will compensate the General Partner or its Affiliates at a level that will reimburse the direct costs of those services, plus a reasonable allocation of overhead related to providing such services.

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ARTICLE VIII

COMPANY BOOKS, RECORDS AND STATEMENTS

8.01 Books and Records . The General Partner shall establish and maintain accurate, full and complete Company records and books of account showing assets, liabilities and the Capital Accounts of the Partners, revenues and expenditures, and all other aspects of the operations, transactions and cash flows of the Company in accordance with generally accepted accounting practices and principles consistently applied. The Company shall use the standard accounting software utilized by the General Partner and its Affiliates for properties in their own portfolio to keep the accounting books and records of the Company. The General Partner shall also maintain books sufficient to show the computation of any fees payable pursuant to the Management and Leasing Agreement and the Development Management Agreement. The Company’s books and accounts shall be maintained at the principal office of the Company, with copies thereof at such other place or places, if any, as may be required by law, and any Partner shall have access to the Company books during ordinary business hours.

8.02 Method of Accounting . The Company shall use generally accepted accounting principles, consistently applied, unless otherwise required by applicable law. Any other or supplemental accounting practices or policies shall be subject to the reasonable approval of NYSCRF.

8.03 Fidelity and Other Bonds . If requested by either Partner, the General Partner shall obtain or cause to be obtained, at the Company’s expense, fidelity and other bonds with reputable surety companies covering all persons who are signatories on bank accounts of the Company, which bonds shall indemnify and defend the Partners against any loss resulting from fraud, theft, dishonesty or other wrongful acts of such persons and shall be in form and substance satisfactory to the Partners.

8.04 Financial Statements; Appraisals and Other Information . The General Partner shall cause the Company to deliver, timely, to NYSCRF, the following:

(a) On an annual basis within sixty (60) days after the close of each Fiscal Year, annual audited statements of the operation of the Company, including the following:

(i) Balance Sheet prepared on an accrual basis;

(ii) Income Statement prepared on an accrual basis;

(iii) Statement of Cash Flows;

(iv) Statement of Changes in Partners’ Equity; and

(v) Notes to the financial statements as appropriate;

all certified to be correct by the General Partner, together with the opinion of the Auditor with respect thereto, containing a detailed explanation of all qualifications, if any, contained in such opinion. If the General Partner is aware that the Auditor’s opinion will be issued with

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qualifications, the General Partner shall cause drafts of the opinion and the financial statements to be forwarded to NYSCRF promptly after receipt of such drafts by the General Partner.

(vi) Such additional financial statements, reports and other information as NYSCRF may reasonably request; and

(vii) Report of Independent Public Accountants in substantially the form shown in the Exhibit J .

(b) On a monthly basis, by the [The confidential material contained herein has been omitted and has been separately filed with the Commission.] business day of each calendar month for the preceding calendar month, the following, unaudited, but all in reasonable detail and certified to be correct by the General Partner, and in an electronic format on a Property-by-Property basis:

(i) A current rent roll in form satisfactory to NYSCRF;

(ii) Balance Sheet, prepared on an accrual basis;

(iii) Income Statement, prepared on an accrual basis;

(iv) Budgetary operating statement on a consolidated basis for all Properties, showing variances from the operating budget together with explanations of any variances in excess of the greater of $5,000 in any line item or 5% of the annual amount budgeted for such line item;

(v) A Leasing Update in substantially the format attached hereto as Exhibit G ; and

(vi) Such interim financial statements, reports and other information as NYSCRF may reasonably request.

(c) No later than thirty-five (35) days after the end of each quarter of each Fiscal Year, the General Partner shall prepare and submit to the Partners an unaudited income statement and balance sheet as of the end of such quarter and a statement of the Capital Accounts for each Partner, and a report on all lawsuits filed by and served or threatened in writing against the Company, the General Partner or the Property during such prior quarter.

(d) To the extent any of the financial statements or reports provided pursuant to paragraphs (b) or (c) above (other than the statement of Capital Accounts) is presented on a consolidated basis as among all the Properties, the General Partner shall also cause such statements and reports to be broken down on a Property-by-Property basis.

(e) On an annual basis, promptly after the filing thereof, copies of all tax returns or information returns of the Company to the extent necessary to show any income, distributions, payments, deductions, or expenses related to or arising out of the ownership or operation of a Project. At least thirty (30) days prior to filing, the General Partner shall provide drafts of all tax returns to NYSCRF.

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(f) Within fifteen (15) days after the end of a policy year or policy term for each policy of insurance required to be maintained with respect to the Property, a written report or certificate showing the following:

(i) The name of the insurer;

(ii) The risks insured;

(iii) The amount of coverage provided by the policy;

(iv) The expiration date of the policy; and

(v) For insurance covering property damage, the property insured, the then-current replacement cost of such property, and the basis upon which such cost was calculated provided that no appraisal shall be required for such report or certificate.

(g) The General Partner shall cause the Properties to be appraised by an independent qualified appraiser designated by the General Partner (i) at the expense of the Company at such times as any secured lender requires, and (ii) at any other time whenever requested to do so by any Partner, at the expense of such Partner.

(h) The General Partner shall cooperate with, and assist NYSCRF in obtaining, at the expense of NYSCRF, any information that it requests in order to properly value the Company’s assets and its Partnership Interest. Such information may include, by way of illustration, information obtainable from an environmental investigation or other physical inspection of the Properties.

(i) NYSCRF shall have the right, at its sole expense, to cause an audit of the records of the Company to be conducted by accountants selected by NYSCRF. In the event that such audit discloses that any payments or reimbursements in favor of NYSCRF or the Company should be adjusted by five percent (5%) or more, the General Partner shall reimburse NYSCRF for its reasonable out of pocket costs incurred in conducting the audit.

8.05 Bank Accounts . All funds received by the Company shall be deposited in the name of the Company in such checking and savings accounts, time deposits or certificates of deposit, or other accounts or instruments at such financially sound commercial banks, savings banks and savings and loan institutions not then controlled, directly or indirectly, by the General Partner and its Affiliates, as may be designated by the General Partner. The signatories for such accounts and instruments shall be representatives of the General Partner.

8.06 Tax Matters.

(a) The General Partner shall cause to be prepared and filed timely all informational and other tax returns required to be filed by the Company, and shall deliver copies thereof to the Partners promptly thereafter. All such returns shall be prepared by or reviewed by the Auditor.

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(b) The General Partner is hereby designated as the “Tax Matters Partner” under Code Section 6231(a)(7). The Tax Matters Partner shall manage audits of the Company conducted by the Internal Revenue Service or other governmental agency pursuant to the audit procedures under the Code and the regulations issued thereunder, provided that the Tax Matters Partner shall not settle any matter with the Internal Revenue Service or other governmental agency without the consent of NYSCRF, which consent shall not be unreasonably withheld. The Company, through the Tax Matters Partner, is authorized to cooperate with and to monitor the Internal Revenue Service in any audit that the Internal Revenue Service may conduct of the Company’s books and records and information or other returns filed by the Company. The Tax Matters Partner shall take all actions necessary to preserve the rights of the Partners with respect to audits and shall provide the Partners with any notices of such proceedings and other information as required by law. The Tax Matters Partner shall keep the Partners timely informed of its activities under this Section. The Company, through the Tax Matters Partner, may similarly cooperate with and monitor any audit by any other governmental authority and prepare and file protests or other appropriate responses to such audits. All costs incurred in connection with the foregoing activities, including legal and accounting costs, shall be borne by the Company. Any additional expenses with respect to judicial review of adverse determinations in connection with any such tax audits or the defense of any Partner against any claim asserted by the Internal Revenue Service or other tax authority of additional tax liability arising out of its ownership of its interest in the Company shall be borne by the Partner who wishes to proceed with such judicial review or defense. Unless otherwise expressly prohibited or restricted pursuant to this Agreement, the Tax Matters Partner may make, refrain from making, or revoke any and all tax elections which it may deem appropriate, in its sole discretion, on behalf of the Company.

(c) Neither the Company nor any Partner shall take any action that would result in the Company being taxed as other than a “partnership” for federal income tax purposes, including (but not limited to) electing to be taxed as other than a “partnership” by making such an election on Form 8832, “Entity Classification Election.”

8.07 Certain Elections.

(a) In the event that a distribution of any of the Company’s assets is made in the manner provided in Code Section 734, where a transfer of an interest in the Company permitted by this Agreement is made in the manner provided in Code Section 743, or in any other circumstance permitting an election to be made under Section 754 of the Code, then, upon the request and at the expense of any Partner, the Company shall file an election under Code Section 754, in accordance with procedures set forth in the applicable Regulations. The Partners’ Capital Accounts shall be adjusted in accordance with Regulations Section 1.704-1(b)(2)(iv)(m). Each Partner shall provide the Company with all information necessary to give effect to any election under Code Section 754.

(b) In the event of any change in the Code or Regulations which could affect any Partner and with respect to which the Company may elect to either have such change apply, or not apply, then the Company will make such election or not make such election in a manner that the tax provisions contained in this Agreement shall remain in effect unless all of the Partners agree that the Company should make such election or not make such election in another

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manner; provided, however, that if NYSCRF (at its expense) obtains an opinion, from recognized tax counsel selected by NYSCRF and reasonably satisfactory to the General Partners, that solely on account of the Company’s making the election or the Company’s failing to make the election will (based upon the assumptions set forth in Section 6.12) cause (i) the allocations to NYSCRF under ARTICLE IV to be UBTI, (ii) NYSCRF no longer to be a “qualified organization” (within the meaning of Code Section 514(c)(9)(C)), or (iii) any indebtedness of the Company to not qualify for the exceptions to “acquisition indebtedness” under Code Section 514(c)(9)(A), then the Company shall make such election or refrain from making such election in the manner specified by NYSCRF, and the Partners shall promptly modify this Agreement in a manner to maintain as nearly as possibly the same economic effect on the Partners as would have existed had such election been made or not been made, as the case may be, to the maximum extent permitted by applicable law, but in no event shall such change have a negative economic impact on the General Partner.

(c) ERISA Representations . NYSCRF, in connection with representations made or that may be made to one or more Lenders regarding the status of the Company as not being an employee benefit plan as defined in ERISA, and regarding the Company’s assets not being considered to be “plan assets” pursuant to certain Department of Labor Regulations, represents and warrants to the Company and the General Partner that NYSCRF is a governmental plan as defined in section 3(32) of ERISA.

ARTICLE IX

DEFAULT PROVISIONS

9.01 Events of Default . The occurrence of any one or more of the following events (each a “Default”) caused or suffered by any Partner shall constitute a default (subject to the grace periods provided for herein) under this Agreement:

(a) The failure of such Partner to pay any portion of any Capital Contribution required to be made by it within ten (10) days of the date when due;

(b) The failure of such Partner to perform or comply with any of the material covenants, conditions and agreements of this Agreement or the Contribution Agreement to be performed or complied with by such Partner other than as set forth in ( a ) above and to cure such failure within the time specified in Section 9.02 ;

(d) In the case of the General Partner, the attachment, execution or other judicial seizure of more than $50,000 of such General Partner’s assets related to the Company, which attachment, execution or seizure remains undischarged after fifteen (15) days, unless (i) such Partner posts a sufficient bond within such fifteen (15) day period or (ii) such attachment, execution or seizure does not have a material effect on such Partner’s ability to satisfy its obligations hereunder.

9.02 Grace Period . With respect to any Default under Section 9.01(b) , the Partner causing or suffering such Default shall have a grace period of [The confidential material contained herein has been omitted and has been separately filed with the Commission.] days after receipt of

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written notice of such Default to cure such Default, provided, however, that (a) if such Default is curable but cannot with due diligence and in good faith be cured within such [The confidential material contained herein has been omitted and has been separately filed with the Commission.] day period and (b) if such Partner forthwith upon notice of such Default commences and proceeds with due diligence and in good faith to cure such Default and thereafter completes the full cure of such Default, the grace period with respect to such Default shall be extended for such period as may be necessary for the curing of such Default with due diligence and in good faith, not to exceed [The confidential material contained herein has been omitted and has been separately filed with the Commission.] days.

9.03 Remedies Reserved . Upon any Default by any Partner, such Partner shall no longer have the right to vote on, consent to, approve or otherwise take part in any decision of the Partners, and, in addition, the other Partners shall each have the rights and remedies specified herein as well as those available to non-defaulting Partners as a matter of law or equity; provided, however, that if the defaulting Partner is the General Partner, then it shall continue to have all of the management rights of the General Partner under this Agreement, and provided further than if the default by the General Partner constitutes fraud, the General Partner’s management of the affairs of the Company shall be subject to the reasonable oversight of the Advisor.

ARTICLE X

TRANSFER OF PARTNERSHIP INTERESTS;
SALE OF PROPERTY

10.01 Transfer.

(a) The term “Transfer,” when used with respect to a Partnership Interest, shall include any direct or indirect sale, assignment, gift, bequest, succession through intestacy, pledge, hypothecation, mortgage, exchange, or other disposition, except that such term shall not include: (i) any pledge or mortgage of a Partnership Interest or other hypothecation of or granting of a security interest in a Partnership Interest in connection with any financing obtained by or on behalf of the Company and approved pursuant to Section 6.04(l) of this Agreement, or (ii) the sale, issuance, assignment, gift, bequest, succession through intestacy, pledge, hypothecation, mortgage, exchange, or other disposition of shares of beneficial interest in Liberty Property Trust or of limited partnership units in Liberty Property Limited Partnership (or their respective successors through merger, consolidation or sale of all or substantially all of the assets or beneficial interests). For purposes of the foregoing, a change in the trustee of any trust that is a Partner or an Affiliate of any Partner shall not be treated as a Transfer.

(b) Except as provided in Section 10.02 , no Partner may Transfer its Partnership Interest, in whole or in part, directly or indirectly, without the approval of the other Partners and, if required by any loan documents entered into by the Company, any third party lender. Any Transfer or purported Transfer of any Partnership Interest not made in accordance with the foregoing shall be null and void and in breach of this Agreement.

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10.02 Approved Transfers.

(a) Anything in Section 10.01 to the contrary notwithstanding, the General Partner may, without the consent of the other Partner, undergo a Transfer, in whole but not in part: [The confidential material contained herein has been omitted and has been separately filed with the Commission.]

(b) Anything in Section 10.01 to the contrary notwithstanding, NYSCRF may, without the consent of the other Partner [The confidential material contained herein has been omitted and has been separately filed with the Commission.]

(c) Upon any Transfer undertaken in accordance with Section 10.02 , the transferring Partner shall promptly deliver to the non-transferring Partner (i) an assignment and assumption agreement, in form and substance reasonably acceptable to the non-transferring Partner, whereby the transferring Partner assigns, and the transferee accepts and assumes, all of the transferring Partner’s rights, obligations and liabilities hereunder, and (ii) the other instruments contemplated by Sections 10.04(b)-(f) ; provided the requirements of Section 10.04(a) shall not apply to any such Transfer. Upon the delivery to the non-transferring Partner of the instruments referenced in clauses (i) and (ii) above, if the transfer results in a new Partner (as opposed to the acquisitions of interests in the existing Partner), the transferring Partner shall withdraw from the Company in accordance with Section 10.03 and be released from all liability hereunder, and the transferee shall be deemed admitted as a Partner pursuant to Section 10.04 and shall be deemed to have assumed all of the rights, duties, obligations and liabilities of the transferring Partner under this Agreement.

(d) Anything in this Section 10.02 , or otherwise in this Agreement, to the contrary notwithstanding, no Transfer or assignment of a Partnership Interest shall be made (i) if such Transfer is effectuated through an “established securities market” or a “secondary market” (or the substantial equivalent thereof) within the meaning of Section 7704 of the Code or such Transfer causes the Company to be taxed as a “publicly traded partnership” as such term is defined in Sections 469(k)(2) or 7704(b) of the Code; or (ii) if such Transfer, in the opinion of counsel selected by the General Partner and reasonably acceptable to NYSCRF, would not allow Liberty Property Trust to continue to be taxed as a REIT under the Code or would subject Liberty Property Trust to any material taxes under Sections 857 or 4981 of the Code..

10.03 Withdrawal of a Partner . A Partner may voluntarily withdraw from the Company only upon a Transfer of all of such Partner’s Partnership Interest in accordance with this

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ARTICLE X. If any Partner withdraws from the Company in violation of this Agreement, it shall not be entitled to any distributions from the Company as a result of such withdrawal, but shall remain entitled to those distributions it would be entitled to receive had the withdrawal not occurred.

10.04 Admission of Transferee as a Partner . Any Person to whom all of a Partnership Interest has been transferred pursuant to Section 10.01(b) or Section 10.02 shall be admitted as a substituted Partner as a result of such transfer to the extent of the Partnership Interest so transferred only upon the satisfaction of all of the following conditions:

(a) The unanimous approval of the other Partners, provided however, that no Partner shall unreasonably withhold its approval to any transferee becoming a substituted Partner if such transferee in the reasonable judgment of the General Partner has (together with any guarantor of its obligations) a net worth sufficient to fund any outstanding obligations it might have under this Agreement and expressly agrees in writing to fulfill such obligations;

(b) Such transferee’s written acceptance of, and written agreement to be bound by, all of the terms and provisions of this Agreement;

(c) Reasonable evidence of the authority of such transferee to become a Partner and to be bound by all of the terms and provisions of this Agreement;

(d) The approval of any third party lender if required by any loan documents entered into by the Company;

(e) An opinion of counsel reasonably satisfactory to counsel for the Company that such transfer, and the transferee’s participation in the Company as a Partner, will not (A) adversely affect the status of a Partner as a REIT (if it is not the transferor), or (B) violate any then applicable Federal or other securities laws or the rules and regulations of the Securities and Exchange Commission or the securities commission of any other jurisdiction; and

(f) The satisfaction of such additional requirements as any Partner may reasonably determine to assure itself that neither it nor the Company will incur any new or additional liability or obligation as a result of such transfer or purchase.

Anything herein to the contrary notwithstanding, any transferee who does not become a substituted Partner shall be only entitled to receive the share of Profits, Losses and distributions of the Company to which the transferor was entitled with respect to the Partnership Interest so transferred, and shall not have any right to vote on, consent to, approve or otherwise take part in any decision of the Partners, or to any of the other rights associated with the ownership of such Partnership Interest.

10.05 Admission of Additional Partners . Notwithstanding anything to the contrary contained in this Agreement, no Person may be admitted as an additional Partner without the unanimous approval of each the Partners, which approval may be withheld in the sole discretion of such Partner.

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ARTICLE XI

DISSOLUTION AND LIQUIDATION

11.01 No Dissolution, etc . The Company shall not be dissolved by the admission of any new or additional Partner, and the Partners hereby waive any right they may have to seek a partition of the Company Assets or to dissolve the Company except in accordance with this Agreement.

11.02 Events Causing Dissolution . Subject to Section 11.03 , the Company shall be dissolved and its affairs wound up upon the occurrence of any of the following events:

(a) The sale or other disposition by the Company of all or substantially all of the Company’s assets and the collection of all amounts derived from any such sale or other disposition, including all amounts payable to the Company under any promissory notes or other evidences of indebtedness taken by the Company in connection with such sale or other disposition (unless the General Partner shall elect, with the approval of NYSCRF, to distribute such indebtedness to the Partners in liquidation);

(b) The withdrawal (except in accordance with Section 10.03) , liquidation, dissolution or Bankruptcy of the General Partner; or

(c) The occurrence of any event not specified above that, under the Act or other applicable laws, would cause the dissolution of the Company or that would make it unlawful for the business of the Company to be continued.

For purposes of this Agreement, the term “Bankruptcy” shall mean, and a Partner shall be deemed “Bankrupt” upon, (i) the entry of a final and appealable decree or order for relief of such Partner by a court of competent jurisdiction in any involuntary case involving such Partner under any bankruptcy, insolvency, or other similar law now or hereafter in effect and the expiration of the applicable appeals period without any appeal being filed; (ii) the appointment of a receiver, liquidator, assignee for the benefit of creditors, custodian, trustee, sequestrator, or other similar agent for such Partner or for any substantial part of such Partner’s assets or property; (iii) the entry of a final non-appealable order for the winding up or liquidation of such Partner’s affairs by a court of competent jurisdiction in any involuntary case involving such Partner under any bankruptcy, insolvency, or other similar law now or hereafter in effect; (iv) the filing with respect to such Partner of a petition in any such involuntary bankruptcy case which petition remains undismissed for a period of 90 days; (v) the commencement by such Partner of a voluntary case under any bankruptcy, insolvency, or other similar law now or hereafter in effect; (vi) the consent by such Partner to the entry of an order for relief in an involuntary case under any such law or to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator, or other similar agent for such Partner or for any substantial part of such Partner’s assets or property; or (vii) the making by such Partner of any general assignment for the benefit of creditors.

11.03 Rights to Continue Business of Company . Upon an event described in Sections 11.02(a) , 11.02(b) or 11.02(c) (but not an event described in Section 11.02(c) that makes it

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unlawful for the business of the Company to be continued), the Company thereafter shall be dissolved and liquidated unless, within 90 days after the event described in such Section, an election to reconstitute and continue the business of the Company shall be made in writing by all of the Partners.

11.04 Dissolution . Except as otherwise provided in Section 11.02 and Section 11.03 , upon the dissolution of the Company, the General Partner (or if the dissolution is caused by the withdrawal or Bankruptcy of the General Partner, then the Person designated as liquidating trustee by the remaining Partners, which liquidating trustee shall have all of the powers of the General Partner under this Agreement for purposes of winding up the affairs of the Company) shall promptly notify the Partners of such dissolution.

11.05 Liquidation.

(a) Except as otherwise provided in Section 11.03 , upon the dissolution of the Company, the General Partner (or other Person responsible for winding up the affairs of the Company) shall proceed without any unnecessary delay to sell or otherwise liquidate the Company’s assets and pay or make due provision for the payment of all debts, liabilities, and obligations of the Company.

(b) After adequate provision has been made for the payment of all debts, liabilities, and obligations of the Company, the General Partner (or other Person responsible for winding up the affairs of the Company) shall distribute the net liquidation proceeds to the Partners in accordance with ARTICLE V.

11.06 Reasonable Time for Winding Up . A reasonable time shall be allowed for the orderly winding up of the business and affairs of the Company and the liquidation of its assets pursuant to Section 11.05 in order to minimize any losses otherwise attendant upon such a winding up.

11.07 Termination of Company . Except as otherwise provided in this Agreement, the Company shall terminate when all of the Company’s assets shall have been converted into cash and the net proceeds therefrom, as well as any other liquid assets of the Company, after payment of or due provision for the payment of all debts, liabilities, and obligations of the Company, shall have been distributed to the Partners as provided for in Section 11.05 , and all instruments recorded or filed in the manner required by the Act.

ARTICLE XII

BUY-SELL

12.01 [The confidential material contained herein has been omitted and has been separately filed with the Commission.]

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12.02 [The confidential material contained herein has been omitted and has been separately filed with the Commission.]

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12.03 [The confidential material contained herein has been omitted and has been separately filed with the Commission.]

12.04 [The confidential material contained herein has been omitted and has been separately filed with the Commission.]

12.05 [The confidential material contained herein has been omitted and has been separately filed with the Commission.]

ARTICLE XIII

ACQUISITIONS, NEW DEVELOPMENTS AND REDEVELOPMENTS

13.01 Exclusive Operations Except as expressly provided for in this ARTICLE XIII, neither the General Partner nor its Affiliates shall, directly or indirectly, purchase, develop or redevelop office properties within the DC Metropolitan Area.

13.02 Yield Parameters . The Company’s initial yield parameters are summarized in Exhibit I . Modification of these parameters shall be subject to the approval of both the General Partner and NYSCRF.

13.03 New Acquisitions .

(a) The General Partner may propose from time to time in a written recommendation (an “Acquisition Plan”) to NYSCRF that the Partnership acquire from a third party one or more of the following: (i) land in the DC Metropolitan Area that is suitably zoned and entitled (with the exception of site plan approval and building permits) for development as an office building and which upon acquisition by the Company would be treated as a Vacant Land Property under this Agreement, (ii) land and improvements in the DC Metropolitan Area that are intended to be rehabilitated as a Redevelopment Property, or (iii) a Functional Office Property in the DC Metropolitan Area. The Acquisition Plan shall contain: (i) the maximum purchase price the General Partner would cause the Company to pay for the subject property, (ii) a description of the office market within which such property or properties are located, (iii) a summary of the existing leases (if any) of space within such property or properties, and (iv) with

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respect only to an Acquisition Plan relating to a proposed Redevelopment Property, a preliminary capital budget for the renovation costs and a preliminary estimate of the stabilized rentals projected to be generated from such property after completion of the renovations. NYSCRF will respond with its approval or disapproval of each Acquisition Plan (or of each property that is the subject thereof, if more than one) within twenty-five (25) days after receipt of the Acquisition Plan (and NYSCRF shall have the full 25 day period to respond and elect to participate in the project even if a shorter period is indicated or identified by the Acquisition Plan). If NYSCRF fails to respond in such twenty-five (25) day period, it shall be deemed to have disapproved such Acquisition Plan. The Company shall not undertake the acquisition of any land or buildings unless the acquisition has been recommended by the General Partner and approved by NYSCRF, either pursuant to the Annual Budget process or pursuant to an Acquisition Plan. Due diligence respecting the acquisition of Vacant Land, property suitable as Redevelopment Property and Functional Office Property shall be undertaken in accordance with the procedures set forth on Exhibit K .

(b) If the General Partner identifies land in the DC Metropolitan Area that may be suitable for development as an office building but requires rezoning or other entitlements that are not available as a matter of right as a condition to such a development and use (a “Speculative Parcel”), the General Partner (or its Affiliate) shall be free to acquire the Speculative Parcel for its own account and to pursue all appropriate rezoning, variances or other entitlements necessary for such development and use. If the General Partner subsequently determines that the necessary entitlements will not be readily obtainable or that the Speculative Parcel is not otherwise suitable or feasible for development as an office building, the General Partner (or its Affiliate) shall be free to sell the Speculative Parcel to any third party on terms acceptable to the General Partner and such third party. If the General Partner subsequently obtains the necessary entitlements for development and use of the Speculative Parcel as an office building, the General Partner (or its Affiliate) shall offer the Speculative Parcel for sale to the Company at a price equal to the fair market value of the Speculative Parcel, and the General Partner shall prepare and submit to NYSCRF an Acquisition Plan with respect thereto. The General Partner and NYSCRF shall endeavor in good faith to agree upon the fair market value of the Speculative Parcel (as approved with such entitlements), but in no event shall the fair market value of the Speculative Parcel be less than the sum of (i) the purchase price paid therefor by the General Partner, plus (ii) all carrying costs incurred with respect to the Speculative Parcel, plus (iii) all out of pocket costs incurred by the General Partner to obtain the necessary entitlements. If the parties fail to agree on the fair market value of the Speculative Parcel within sixty (60) days after the submission of the aforementioned Acquisition Plan, the parties shall endeavor in good faith to select a qualified appraiser with substantial appraisal experience in the DC Metropolitan Area commercial real estate market to determine the fair market value of the Speculative Parcel, and the determination of such appraiser shall be final. If the parties do not agree on the designation of a single appraiser, each party shall appoint a separate qualified appraiser, and the appraisers so appointed shall mutually select a third qualified appraiser with substantial appraisal experience in the DC Metropolitan Area commercial real estate market, and the determination of fair market value by such third appraiser shall be final

(c) If NYSCRF disapproves the acquisition of the Speculative Parcel or a parcel identified as the subject of an Acquisition Plan (an “Acquisition Parcel”) by the Company, the General Partner (or its Affiliate) shall be free to acquire and develop the Speculative Parcel

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or Acquisition Parcel for its own account substantially in accordance with the information submitted to NYSCRF in the Acquisition Plan.

13.04 Initiation of New Developments and Redevelopments . Upon the General Partner’s determination that it is appropriate to initiate a New Development on any of the Vacant Land Properties or to initiate the rehabilitation of a Redevelopment Property (a “Redevelopment”), the General Partner shall so notify NYSCRF in writing, which notice shall be accompanied by the following (collectively, a “Development Plan”): (a) Preliminary Plans and Specifications, (b) leasing commitments, if any, (c) a Preliminary Project Budget, including a pro forma operating budget, (d) a description of the office market and leasing conditions for the market in which the New Development or Redevelopment is located, (e) a proposed Sources and Uses of Funds, identifying any construction financing proposed by the General Partner for funding some or all of the costs of such project, and (f) any other information in the General Partner’s or its Affiliates’ possession which would be relevant to NYSCRF’s decision to approve the Company’s proceeding with such New Development or Redevelopment. Within thirty-five (35) days after receipt, NYSCRF shall elect either (i) to fund its Percentage Interest of the cost of the New Development or Redevelopment pursuant to Section 3.02(a) and approve the General Partner or its Affiliate acting as Development Manager pursuant to a Development Management Agreement, or (ii) to permit the General Partner or its Affiliate to develop the designated site for its own account. If NYSCRF fails to respond within such thirty-five-day period, it shall be deemed to have made the election under clause (ii) above. Due diligence respecting the construction of improvements on Vacant Land shall be undertaken in accordance with the procedures set forth on Exhibit L .

13.05 [The confidential material contained herein has been omitted and has been separately filed with the Commission.]

13.06 Disapproval of Proposed New Development or Redevelopment . If NYSCRF does not approve a New Development or Redevelopment, the General Partner or its Affiliate may, within thirty (30) days after NYSCRF has disapproved the New Development or Redevelopment or after expiration of the period during which NYSCRF is required to notify the General Partner of its approval, purchase the Vacant Land Property or Redevelopment Property (whichever is appropriate) on which the New Development or Redevelopment was proposed by the General Partner, for purposes of developing it in accordance with the Development Plan that was submitted to NYSCRF under Section 13.04 . The purchase price (the “GP Price”) shall be the sum of (i) the cost to the Company for such Property, (ii) all non-interest carrying costs incurred by the Company related to its ownership of such Property such as real estate taxes, security, maintenance and insurance, (iii) interest on the amount referenced in (i) at the simple rate of

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seven percent (7%) per annum from the date of the Company’s acquisition of the subject Property, and (iv) all transfer costs incurred as part of the conveyance, with the exception of title costs and transfer taxes, which shall be shared by the Company and the General Partner, as seller and buyer respectively, in a manner consistent with local custom.

13.07 First Refusal and Repurchase Rights . With respect to any New Development or Redevelopment that is disapproved (or deemed disapproved) by NYSCRF pursuant to Section 13.04 and with respect to which the General Partner or its Affiliate has elected to purchase the underlying Property as permitted in Section 13.06 , the Company and NYSCRF shall have the following rights, which will be memorialized in an instrument placed of record against the Property being transferred:

(a) [The confidential material contained herein has been omitted and has been separately filed with the Commission.]

(b) [The confidential material contained herein has been omitted and has been separately filed with the Commission.]

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ARTICLE XIV

MISCELLANEOUS PROVISIONS

14.01 Additional Actions and Documents . Each Partner shall take or cause to be taken such further actions and shall execute, acknowledge, deliver, and file such further documents and instruments, and use reasonable efforts to obtain such consents, as may be necessary or as may be reasonably requested in order to maintain the Company pursuant to the terms and conditions of this Agreement.

14.02 Notices . All notices, demands, requests or other communications (collectively, “Notices”) which may be or are required to be given, served, or sent by any party to any other party pursuant to this Agreement shall be in writing and shall be hand delivered or mailed by first-class, registered or certified mail, return receipt requested, postage prepaid, or transmitted by telegram, facsimile transmission (at the number set forth below on the signature page, with the original to be sent the same day by mail as provided above) or by Federal Express or other recognized overnight delivery service addressed to the recipient at its address set forth below (or at such other address as the recipient may have theretofore designated in writing). Each Notice which shall be hand delivered or mailed in the manner described shall be deemed sufficiently given, served, sent, received, or delivered for all purposes at such time as it is delivered to the addressee (with the return receipt, the delivery receipt, or the affidavit of messenger being deemed conclusive (but not exclusive) evidence of such delivery or at such time as delivery is refused by the addressee upon presentation). Each Notice which shall be by facsimile transmission in the manner described above shall be deemed sufficiently given, served, sent, received, or delivered for all purposes at such time as the original is delivered to the addressee or delivery is refused by the addressee. Subject to the above, all Notices shall be addressed as follows:

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(a) If to the Company, at the Company’s principal office, with copies to each Partner; and

(b) If to any Partner, at the address set forth below its name on the execution page of this Agreement, or to such other address as any Partner may specify for itself by written notice given in accordance with this Section.

14.03 Survival and Reliance . All covenants, agreements, statements, representations, warranties, and indemnities made in this Agreement shall survive the execution and delivery of this Agreement and the termination of the Company, and may be relied upon by each of the Partners.

14.04 Waivers . Except as otherwise provided herein, neither the waiver by a Partner of a breach of or a default under any of the provisions of this Agreement, nor the failure of a Partner, on one or more occasions, to enforce any of the provisions of this Agreement or to exercise any right, remedy, or privilege hereunder shall thereafter be construed as a waiver of any subsequent breach or default of a similar nature, or as a waiver of any such provisions, rights, remedies, or privileges hereunder.

14.05 Exercise of Rights . Except as expressly provided herein, no failure or delay on the part of a Partner or the Company in exercising any right, power, or privilege hereunder and no course of dealing between the Partners or between a Partner and the Company shall operate as a waiver thereof and no single or partial exercise of any right, power, or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. Except as otherwise provided herein, any Partner shall have the right to seek specific performance of the duties and obligations set forth in this Agreement. The rights and remedies herein are cumulative and not exclusive of any other rights or remedies which a Partner or the Company would otherwise have at law or in equity or otherwise.

14.06 Binding Effect . Subject to any provisions hereof restricting assignment, this Agreement shall be binding upon and shall inure to the benefit of the Partners and their respective successors and assigns.

14.07 Limitation on Benefits of this Agreement . No person or entity other than the Partners and the Company is or shall be entitled to bring any action to enforce any provision of this Agreement against any Partner or the Company. All covenants, undertakings, and agreements set forth in this Agreement shall be solely for the benefit of, and shall be enforceable only by, the Partners (or their respective successors and assigns as permitted hereunder) and the Company.

14.08 Amendment Procedure . Any amendment to this Agreement shall be in writing and require the unanimous approval of all of the Partners.

14.09 Entire Agreement . This Agreement contains the entire agreement among the Partners with respect to the transactions contemplated herein, and supersedes all prior oral or written agreements, commitments, or understandings with respect to the matters provided for herein.

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14.10 Pronouns, Time . All pronouns and terms hereof and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular, or plural, as the identity of the person or entity may require. If any period or time set forth in this Agreement begins, ends or occurs on a day other than a Business Day, then such period or time shall instead begin, end or occur on the next Business Day.

14.11 Headings . Article and Section headings contained in this Agreement are inserted for convenience of reference only, shall not be deemed to be a part of this Agreement for any purpose, and shall not in any way define or affect the meaning, construction, or scope of any of the provisions hereof.

14.12 Governing Law . This Agreement, the rights and obligations of the parties hereto, and any claims or disputes relating thereto, shall be governed by and construed in accordance with the laws of the State of Delaware (but not including the choice of law rules thereof).

14.13 Partner’s Representatives . Each Partner shall at all times designate at least one individual as its representative for the purposes of communicating with the Company and the other Partners. The Company and each Partner shall be entitled to rely (and shall be protected in such reliance) on communications from any such representative with respect to required consents and approvals and other required or desired matters arising under this Agreement. Any Partner may designate one or more replacement representatives for itself by written notice to the other Partners. The initial representative of each Partner is set forth below such Partner’s signature on the execution page of this Agreement.

14.14 Execution in Counterparts . To facilitate execution, this Agreement may be executed in as many counterparts as may be required, and it shall not be necessary that the signatures of all persons required to bind any party appear on each counterpart, but it shall be sufficient that the signature of, or on behalf of, each party, or that the signatures of the Persons required to bind any party, appear on one or more of the counterparts. All counterparts shall collectively constitute a single agreement. It shall not be necessary in making proof of this Agreement to produce or account for more than a number of counterparts containing the respective signatures of, or on behalf of, all of the parties hereto. Faxed or electronically delivered signatures shall be enforceable as originals against the party delivering such signatures.

14.15 Affirmative Action Policy . The Partners recognize the benefits of affirmative action in fostering opportunities for the equal participation of minority and women-owned business enterprises, and minority and women employees and principals are given the opportunity to participate in the performance of contracts entered into by the Company. This Company believes the opportunity for full participation in the free enterprise system by persons traditionally, socially and economically disadvantaged is essential to obtain social and economic equality. Accordingly, it is the policy of the Company to foster and promote the participation of such individuals and business enterprises in its contracts. The Company expects all concerned to afford all persons equal employment opportunities without discrimination.

14.16 Advisor . NYSCRF has informed the General Partner, and the General Partner acknowledges, that NYSCRF has engaged the services of Heitman Capital Management LLC (who, together with any other entity hereafter appointed by Limited Partner, is referred to herein

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as “Advisor”) in connection with this Agreement. NYSCRF has named Anthony Ferrante, Jerome J. Claeys and Howard Edelman (representatives of Advisor) to act as its representatives. The General Partner agrees that, notwithstanding the identification of the representatives of NYSCRF, other individuals representing NYSCRF (individually, a “CRF Representative” and, collectively, “CRF Representatives”) shall be entitled to participate in meetings and other communications between any the General Partner and NYSCRF, and that any information provided to NYSCRF’s representatives shall concurrently be provided to any CRF Representative identified in writing to the General Partner. The General Partner shall have the right to rely on the written approval or disapproval of any matter from the NYSCRF representatives identified in this Section or otherwise designated by NYSCRF and identified to the General Partner in writing.

14.17 Insurance. The Company shall maintain, or cause its Affiliate to maintain, insurance on the Properties of such types and in such amounts and with such insurers as the General Partner and NYSCRF shall reasonably agree. Such insurance shall conform to the minimum standards for property, commercial general liability and fidelity insurance identified in Exhibit M . Any decision to insure the Properties below these minimum standards shall be subject to the approval of both the General Partner and NYSCRF.

14.18 Legal Representation of the Company . Wolf, Block, Schorr and Solis-Cohen LLP (“Wolf Block”) represented the General Partner in the preparation and negotiation of this Agreement, and the parties agree that such representation will not disqualify Wolf Block from representing the Company. Furthermore, if Wolf Block is engaged by the Company to represent the Company, Wolf Block will not be disqualified from thereafter representing the General Partner or its Affiliate; provided, however, that the foregoing shall not apply to waive any objection NYSCRF may have with respect to the representation by Wolf Block of (i) the General Partner or its Affiliate in litigation against the Company, or (ii) the Company in litigation against the General Partner or its Affiliate.

14.19 Special Covenants . So long as any of the Properties is subject to mortgage financing requiring the borrower to be a “single purpose entity”, the Company shall cause the Subsidiary that is the subject of such loan to comply with (and to the extent required by the applicable loan documents, the Company shall comply with) the single purpose entity requirements set forth in the loan document for such financing.

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IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to be duly executed on its behalf, as of the day and year first above set forth.


PARTNER	PERCENTAGE INTEREST

NEW YORK STATE
COMMON RETIREMENT FUND		75	%

Thomas P. Dinapoli, Comptroller of the
State of New York, as Trustee of the
Common Retirement Fund


By:		/s/ NICK SMIRENSKY
		Name: Nick Smirensky
		Title: Deputy Comptroller

Addresses for Notices:

New York State Common Retirement Fund
c/o Office of the State Comptroller
59 Maiden Lane, 30 ^th Floor
New York, NY 10038-4502
Attn: Assistant Comptroller for Real Estate
Fax No.: 212-383-1331
Telephone No.: 212-383-1508

with copies to:

New York State Common Retirement Fund
c/o Office of the State Comptroller
59 Maiden Lane, 30 ^th Floor
New York, NY 10038-4502
Attn: Assistant Deputy Counsel
Fax No.: 212-681-1331
Telephone No.: 212-383-1330

with copies to:

Cox, Castle & Nicholson LLP
2049 Century Park East, 28th Floor
Los Angeles, CA 90067-3284
Attn: Amy H. Wells, Esq.
Fax No.: 310-277-7889
Telephone No.: 310-284-2233

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with copies to:

Heitman Capital Management LLC
191 North Wacker Drive
Suite 2500
Chicago, IL 60606
Attn: Jerome Claeys
Fax No.: 312-251-5445
Telephone No.: 312-541-6740

and with copies to:

Heitman Capital Management LLC
191 North Wacker Drive
Suite 2500
Chicago, IL 60606
Attn: Anthony Ferrante
Fax No.: (312) 541-6789
Telephone No.: (312) 251-5458

[Signatures Continued on Next Page]

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[Signatures Continued from Previous Page]


PARTNER	PERCENTAGE INTEREST

LIBERTY WASHINGTON VENTURE, LLC		25	%

By Liberty Property Limited Partnership,
its sole member

By Liberty Property Trust,
its sole general partner


By:		/s/ MICHAEL T. HAGAN
Name:		MICHAEL T. HAGAN
Title:		CHIEF INVESTMENT OFFICER

By:		/s/ WILLIAM P. HANKOWSKY
Name:		WILLIAM P. HANKOWSKY
Title:		CHAIRMAN, PRESIDENT AND CEO

Addresses for Notices:

500 Chesterfield Parkway
Great Valley Corporate Center
Malvern, PA 19355
Attn: Michael T. Hagan
Fax No. 610-644-4129
Telephone No. 610-648-1716

with copy to:

Wolf, Block, Schorr and Solis-Cohen
1650 Arch Street, 22nd Floor
Philadelphia, PA 19103-2097
Attention: Herman C. Fala
Facsimile: 215-405-2976

- 61 -

Exhibit A

DEVELOPMENT MANAGEMENT AGREEMENT

This Development Management Agreement (this “ Agreement ”), dated as of the day of , 200 by and among (“ Owner ”), and Liberty Property Limited Partnership, a Pennsylvania limited partnership (“ Development Manager ”).

W I T N E S S E T H :

WHEREAS, Owner owns one or more [unimproved parcels of land] [improved parcels of land intended for redevelopment] located in , and more particularly described on Exhibit A attached hereto and made a part hereof (the “ Property ”);

WHEREAS, in accordance with the terms and provisions of Owner’s Partnership Agreement, Owner has elected to develop or redevelop one or more office buildings (the “ Improvements ”) on the Property;

WHEREAS, the phrases “develop” and “development” as used in this Agreement shall be deemed to include the redevelopment of a Redevelopment Property (as defined in the Partnership Agreement) as context may require;

WHEREAS, Development Manager is an Affiliate of the general partner of Owner; and

WHEREAS, Owner wishes to engage Development Manager to perform the services set forth herein relating to the Project and Development Manager is willing to accept such engagement, all upon the terms and conditions hereinafter set forth.

NOW, THEREFORE, for Ten Dollars ($10.00) in hand paid and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Owner and Development Manager hereby agree as follows (all capitalized terms contained in this Agreement and not otherwise defined herein are defined in Article XII below):

AGREEMENTS :

ARTICLE I

Appointment and Term of Development Manager

Owner hereby engages Development Manager as the manager for the development of the Improvements on the Property upon the terms and conditions herein stated. Development Manager shall perform the Services for the benefit of Owner in accordance with the terms and provisions of this Agreement. The term of this Agreement shall commence on the date hereof and shall end on the date upon which the construction of the Improvements on the Property is complete, unless this Agreement is sooner terminated in accordance with the terms hereof.

ARTICLE II

Services of Development Manager

2.1 Generally . Provided Owner makes funds available and pays the fees and costs contemplated herein in accordance with the terms of this Agreement (which shall be a condition precedent to Development Manager’s obligations hereunder), Development Manager shall perform the following Services in connection with the Project:

2.1.1 Project Budget . Prepare and obtain approval by Owner (which approval shall be in writing if the General Partner is no longer the general partner of Owner) of the Final Project Budget within thirty (30) days after receipt of the last GMP Contract, which Final Project Budget shall set forth the estimated costs in no less detail than the following components: (i) building costs (allocated among the major trades), (ii) site costs, (iii) the Hard Cost Contingency, (iv) Soft Costs (on a line item basis), (v) tenant improvement costs and/or allowances, and (vi) leasing commissions and finders’ fees, and be in a form acceptable to the Construction Lender (if any) for the Project.

2.1.2 Design Related Duties .

(a)

Coordinate the production of the Final Plans and Specifications for the Improvements;

(b)

Endeavor to obtain all drawings and engineering and architectural renderings and other drawings and specifications prepared for the Improvements in accordance with the Construction Schedule;

(c)

Review with the Owner and obtain Owner’s approval of (x) any material changes in scope to the Improvements, and (y) all material changes to the Final Plans and Specifications;

(d)

Review with Owner and obtain Owner’s approval of all material changes to the Construction Contracts;

(e)

Submit the Final Plans and Specifications to the General Contractor for bid to obtain GMP Contracts covering various portions of the Work;

(f)

Coordinate and monitor (1) the application for governmental permits and approvals required for the construction of the Improvements, and (2) the compliance with the terms and conditions contained in any such governmental permit or approval, in any insurance policy required under this Agreement and affecting or covering the Improvements or in any surety bond obtained by General Contractor or subcontractor in connection with the Improvements; and

(g)

Coordinate and monitor efforts by the Architect to comply with all applicable Laws, provided that the ultimate responsibility for such compliance shall rest with the Architect.

(h)

For purposes of Subsections 2.1.2(c) and 2.1.2(d), a “material change” shall mean a change not otherwise approved by Owner which results in Cost Overruns or which results in an increase to any line item in the Final Project Budget in excess of Twenty Five Thousand Dollars ($25,000).

2.1.3 Construction Related Duties .

(a)

Finalize and deliver for signature the GMP Contracts and other Construction Contracts and coordinate, administer and perform the applicable obligations of Owner under the Construction Contracts, provided that all of the GMP Contracts shall be with the General Contractor and be a guaranteed maximum price contract covering the applicable portion of the Work;

(b) Cause the preparation of a Construction Schedule;

(c)

Coordinate, administer and implement (x) the application and approval process in connection with the issuance of building permits, partial building permits, and temporary or final certificates of occupancy, and (y) the making of any periodic inspections required by governmental officials and/or Owner’s and Construction Lender’s inspectors;

(d)

Review all proposed changes and change orders to any Construction Contract;

(e)

Identify, analyze and provide recommendations to the Owner with respect to alternative courses of action for unforeseen conditions, such as material shortages, work stoppages and/or accidents or casualties, as they occur;

(f)

Review payment applications submitted by any contractors, obtain Certificates for Payment from the Architect, obtain and review partial lien waivers, and provide recommendations to Owner, all as more particularly described in Section 2.1.4 ;

(g)

Cause the preparation and adoption by General Contractor of all required punch lists for finalizing the Work, coordinate the activities of contractors to facilitate the satisfactory completion of all the Work (including procurement of equipment manuals, warranties and guaranties for the equipment installed in the buildings) and coordinate the waiver or release of all lien rights;

(h)

Assist in bidding and award of subcontracts and advise Owner as to any changes in the Final Project Budget or the Final Plans and Specifications resulting therefrom;

(i)

Assist Architect in monitoring performance of the Work for compliance with the Final Plans and Specifications;

(j)

Prepare monthly progress reports for Owner (which shall include revisions to the Construction Schedule, if necessary), identifying performance against the Construction Schedule, actual versus estimated percentage completion for each component of the Improvements, and any change in the Construction Schedule which the General Contractor is requesting. The requirements of this Section 2.1.3(j) may be satisfied by the submission by Development Manager of the following materials:

(i)

an Internal Draw Request (as defined in Section 2.3.1) accompanied by copies of all backup invoices and the General Contractor’s application for payment; and

(ii)

copies of project meeting minutes (among Development Manager, the General Contractor and such other parties as Development Manager may elect) describing the status of the Project (including timing of construction in relation to the Construction Schedule); and

(k)

Advise Owner of any delays known or anticipated in meeting the Construction Schedule and of the actual dates on which the various stages of construction as indicated on the Construction Schedule are started and completed.

2.1.4 General Duties .

(a)

Coordinate and administer the submission of applications to, and negotiations with, utility companies and municipal and governmental authorities for agreements relating to the installation of utility and other services to the Improvements;

(b)

Assist contractors in their efforts to arrange for performance and/or payment bonds(s) with respect to any part of the Work, but only to the extent such bonds are required by Owner;

(c)

Verify that the Architects, engineers, General Contractor and other contractors employed by the Development Manager in connection with the Improvements are covered by liability insurance and worker’s compensation insurance in amounts and coverages satisfactory to Owner, with waivers of subrogation and contractual indemnification coverages satisfactory to Owner, to the extent commercially reasonably available;

(d)

Hold monthly job meetings with the General Contractor (and other contractors and subcontractors on an as-needed basis) or as otherwise requested by Owner during the construction phase of the Improvements, with Owner and Architect to review the progress of construction toward completion of the Improvements;

(e)

Review all applications for payment and supporting documentation prepared by the General Contractor and others performing work or furnishing materials for the Improvements, and deliver copies of all such applications for payment to Owner and Architect;

(f)

Retain or hire all necessary third parties (including, by way of example and not by way of limitation, contractors, engineers, surveyors, architects, accountants, attorneys, consultants and other qualified personnel), in order to accomplish the duties of Development Manager as set forth herein;

(g)

In the event of an emergency at the Improvements, take any action in good faith believed by Development Manager to be required under the circumstances to protect Owner’s interest in the Improvements;

(h)

Effect, institute and supervise all Work, including mechanical systems, plumbing systems, building construction, landscaping, signage and sitework, all in accordance with the Final Plans and Specifications as well as any changes in scope initiated by Owner;

	(i)		Perform all other obligations provided elsewhere in this Agreement to be performed by Development Manager or reasonably believed by Development Manager to be desirable, necessary or appropriate to carry out its duties hereunder;

	(j)		Process monthly draw requests; and

(k)

Evaluate and make recommendations to Owner pertaining to changes which do not constitute Permitted Changes.

All contracts with third parties for the benefit of the Improvements shall be signed by the Owner. Development Manager shall perform its duties and services in a commercially reasonable manner consistent with the management standards applicable to similar office properties. Development Manager covenants that it will manage the construction pursuant to the terms of this Agreement and at the direction and expense of Owner.

2.2 Project Budget; Cost Overruns . Development Manager will supervise the Project to assure that the cost of the Work performed under those construction cost line items denoted on the preliminary project budget for the Project, as finally determined in the Final Project Budget for the Project, are in the aggregate equal to or less than the amounts set forth in such Final Project Budget. To the extent there are Cost Overruns (other than Cost Overruns for tenant improvements and leasing commissions), Development Manager shall promptly pay the same or, if the amount is being contested, provide adequate security therefor, including satisfying the requirements of any Construction Lender; provided, however, that Development Manager shall not be responsible for the cost of any change orders required, or Cost Overruns incurred, due to subsurface conditions at the Property of an unusual nature, unusually severe weather conditions, labor disputes (unless resulting from company-wide labor difficulties specific to Development Manager and its affiliates), unavailability of materials or labor (unless resulting from Development Manager’s lack of reasonable diligence in ordering or procuring same), war, terrorism or acts of God, other matters beyond the reasonable control of Development Manager, or otherwise initiated by Owner and not consented to by Development Manager, unless such change orders are required for the Improvements to comply with Law effective prior to the date hereof. In addition, Development Manager shall promptly pay Owner all costs incurred by Owner as a result of Development Manager’s breach of this Agreement (including but not limited to costs incurred by Owner as a result of Development Manager’s negligent acts or omissions). The Final Project Budget shall constitute a major control pursuant to which Development Manager shall manage the development and construction of the applicable Improvements. Consequently, (i) no expense may be incurred or commitment made by Development Manager which exceeds the amount allocated to that expense category in the approved Final Project Budget without Owner’s consent, provided that if the Final Project Budget, after reallocation as provided herein, remains in balance, any actual savings in any line item or amounts shown in the contingency line item may be used to offset overruns in other line items and to pay for any Permitted Changes (provided that amounts contained in the tenant improvement and leasing commissions line items may not be reallocated to pay for any such overruns), and (ii) the entire Final Project Budget shall not be exceeded without the prior consent of Owner. For purposes hereof Owner shall be deemed to approve any changes in the Final Project Budget to the extent such changes directly result from changes to Construction Contracts, if such changes to the Construction Contracts are signed by Owner. If substantial discrepancies in the Final Project Budget occur or are anticipated by Development Manager, Development Manager shall notify Owner immediately of the expected discrepancies and, if requested by Owner, prepare and submit to Owner a detailed analysis of the anticipated impact of the discrepancies. Any change to the Final Project Budget requires approval of the Owner, in Owner’s sole and absolute discretion except as provided herein, and, in the event General Partner is no longer the general partner of Owner, or if such change will result in Cost Overruns, Owner’s approval must be set forth in writing.

2.3 Draw Process . Development Manager shall be responsible for coordinating all construction draws, and until the opening of the applicable Construction Loan (if any), the draw process shall be controlled by the provisions of this Section 2.3 . Thereafter, this Section shall be deemed modified to the extent required by the Construction Lender. Draws to finance the construction on the Improvements shall be made no more often than monthly, commencing approximately one (1) month after the commencement of construction of such Improvements and terminating upon completion of the Work and issuance of the last certificate of occupancy required by Law for full occupancy of the Improvements. Funds requested under each draw shall be used solely to pay for construction, fixturing and soft costs related to the Improvements that are consistent with the terms of this Agreement. Draw requests for the Project shall be made as follows:

2.3.1 So long as General Partner is the general partner of Owner, the following procedure shall apply:

(a)

The General Contractor’s application for payment and other invoices shall be submitted to Development Manager (and to the Architect with respect to the General Contractor’s application for payment) no later than the tenth (10th) day of the month following the month in which the work which is the subject of such application for payment or invoices was completed;

(b)

Development Manager shall review the General Contractor’s application for payment and all other invoices, and the Architect shall review the General Contractor’s application for payment, and to the extent such are approved by Development Manager and the Architect, Development Manager shall submit a draw request in Development Manager’s customary internal form (an “ Internal Draw Request ”) to Owner no later than the twenty-first (21st) day of the month following the month in which the work which is the subject of such Internal Draw Request was completed;

(c)

Owner shall pay the entire amount of the Internal Draw Request for distribution no later than ten (10) business days after the Internal Draw Request is submitted to Owner.

2.3.2 Notwithstanding the foregoing provisions of Section 2.3.1, if General Partner is no longer the general partner of the Owner, then the following procedure shall apply:

(a)

within ten (10) days after a draw is requested, Development Manager will submit a draw request to the Owner in such detail as Owner may reasonably require designated to the attention of Anthony Ferrante. Such draw request shall include:

(i)

an Application and Certificate for Payment (AIA Document G702), or other document acceptable to the Owner, containing a certification by the General Contractor and the applicable Architect that construction to the date of the draw request is in accordance with the Final Plans and Specifications and, if applicable, any recommendations contained in the approved soils report;

(ii)

a copy of the General Contractor’s application for payment, including the General Contractor’s and subcontractors’ conditional lien waivers on progress payments;

(iii)

the General Contractor’s and subcontractors’ unconditional lien waivers for progress payments made from the previous draw;

(iv)

a line by line comparison of the budgeted versus the actual costs and estimate of the percentage of completion for the Work item covered by such line item; and

(v)

all other documents and information reasonably required by Owner.

(b)

Owner shall review the draw request and contact Development Manager as soon as reasonably practicable in the event Owner has any questions regarding the draw request or disputes any of the items for which payment is requested. In the event Owner and Development Manager are unable to agree on the draw request within twenty (20) days after such is submitted to Owner, the matter shall be submitted to the Architect, whose decision regarding the draw request shall be binding upon Owner and Development Manager so that by the tenth (10th) day of the following month, Owner shall have approved (or, in the case of a dispute submitted to the Architect for resolution, Owner shall be deemed to have approved) the draw request and shall pay the entire approved amount of the draw for distribution to the General Contractor and subcontractors.

2.4 Employees . Development Manager shall select, employ, pay, supervise and discharge all employees, independent contractors, and personnel necessary for the performance of Development Manager’s duties pursuant to the terms hereof, all at the sole cost and expense of the Development Manager. All personnel used by Development Manager in the construction and operation of the Improvements shall be employees of Development Manager, employees of an Affiliate of Development Manager or independent contractors and not employees of the Owner. If General Partner is no longer the general partner of Owner, members of the project team down to the level of the on-site project manager shall be subject to Owner’s approval.

2.5 Payments . Development Manager shall check and verify all bills received for services, work and supplies ordered in connection with the construction on the Improvements. If such bills relate to materials supplied or work performed on the Improvements, Development Manager shall obtain all necessary lien waivers evidencing payment of such obligations.

2.6 Items to be Obtained by Development Manager . Development Manager shall obtain or cause to be obtained all licenses, permits or other instruments required for construction of the Improvements or any portion thereof at Owner’s expense. All such licenses and permits relating to construction of the Improvements shall be set forth in the Final Project Budget and shall be obtained in Owner’s name.

2.7 Completion Guaranty . Prior to the commencement of construction of the Project, Development Manager shall execute in favor of Owner (and deliver to Owner) (i) a completion guaranty for the Project in the form attached as Exhibit B hereto and made a part hereof (the “Completion Guaranty”) and (ii) an opinion, in a form reasonably accepted to NYSCRF, from General Partner’s counsel that the Completion Guaranty is duly authorized, executed and enforceable in accordance with its terms.

2.8 Approval of Owner . Notwithstanding anything contained in this Agreement to the contrary, where any matter set forth in this Agreement requires the “approval of Owner” (or words of similar meaning), then (A) so long as General Partner is the general partner of Owner, such approval shall be deemed given unless Owner notifies Development Manager in writing that such approval is not given, and (B) in the event General Partner is no longer the general partner of Owner, then such matter shall be deemed approved by Owner if approved by Owner’s then-current general partner.

ARTICLE III

Compensation of Development Manager

3.1 As compensation for Development Manager’s development management services rendered under this Agreement with respect to a New Development Property or Redevelopment Property (as such terms are defined in the Partnership Agreement), Development Manager shall be paid the following fees: [select applicable provision]

(a)

[for any Project where the Improvements will cost less than [*], Development Manager will receive a fee in the amount of [*] of the Hard Costs line item in the Final Project Budget for such Project;

(b)

for any Project where the Improvements will cost between [*] and [*] Development Manager will receive a fee in the amount of [*] of the Hard Costs line item in the Final Project Budget for such Project; and

(c)

for any Project where the Improvements will cost more than [*], Development Manager will receive a fee in the amount of [*] of the Hard Costs line item in the Final Project Budget for such Project.]

3.2 The fee payable to Development Manager in connection with the Project shall be payable in equal monthly installments over the period for the Project development as set forth in the Construction Schedule for the Project. Development Manager shall not be reimbursed for any employee costs, overhead costs or office equipment, stationery, postage, telephone, bank charges, travel and all other administration expenses.

The confidential information contained herein has been omitted and separately filed with the staff.

ARTICLE IV

Compliance With Laws

4.1 Generally. Development Manager and Owner shall each comply with and abide by (and shall cause all contractors on the Improvements to comply with and abide by) all Laws with respect to the Project, all at Owner’s expense unless such failure is the result of a breach of Development Manager’s obligations hereunder. If Development Manager receives any notice of a violation of any Law with respect to the Project, Development Manager shall promptly notify Owner and furnish copies of such notice and provide Owner with a budget to remedy the violation, which budget shall require Owner’s approval. The cost to cure shall become part of Total Project Costs for the Project. Development Manager shall remedy the noncompliance and use commercially reasonable efforts to avoid any penalty to which Owner may be subject by reason of the noncompliance and except (A) with respect to non-compliance resulting from actions or omissions by Owner or for which Owner is responsible, (B) with respect to non-compliance which results from changes in applicable Law which take effect after Owner’s approval of the Final Project Budget, and (C) to the extent the cost to remedy plus any penalties results in a Cost Overrun for the Project (unless such Cost Overruns are required to cure a breach by Development Manager of its obligations under this Section 4.1), Development Manager shall promptly fund the cost of the same. Development Manager shall provide Owner with evidence that the noncompliance has been remedied.

4.2 Environmental Matters. Except only for such of its employees, if any, as are fully qualified to do so, Development Manager shall not direct, suffer or permit any of its employees to at any time handle, use, manufacture, store or dispose of any Hazardous Materials by or under any Environmental Laws in or about the Improvements, nor shall Development Manager suffer or permit to the extent within Development Manager’s reasonable control, any Hazardous Materials to be used in any manner not fully in compliance with all Environmental Laws or for any Hazardous Materials to be present in the Improvements at levels or in a manner which exceeds a relevant standard or otherwise requires remediation under Environmental Laws (“ Contamination ”). Notwithstanding the foregoing, Development Manager may handle, store, use or dispose of Hazardous Materials to the extent customary and necessary for the performance of Development Manager’s duties hereunder, provided that Development Manager shall always handle, store, use and dispose of any such Hazardous Materials in a safe and lawful manner and never allow Contamination of the Property. Furthermore, to the extent Contamination exists in any Improvements, Development Manager, at Owner’s expense, unless Development Manager has breached this Agreement relative to its obligations hereunder pertaining to Hazardous Materials, shall be responsible for the proper remediation of such Contamination in accordance with a remediation plan approved by Owner and in accordance with all applicable laws, ordinances and codes, employing approved contractors and requiring that any Hazardous Materials removed from the site be disposed of in compliance with all applicable laws.

4.3 Environmental Indemnification. Development Manager shall protect, defend, indemnify and hold Owner and its officers, partners, members, managers, employees and agents harmless from and defend them against any and all loss, claims, liability or costs (including, without limitation, court costs and attorney’s fees) incurred by reason of any failure of Development Manager to fully comply with all applicable Environmental Laws or other governmental requirements with respect to the Project unless such failure is a result of Owner, after written notice, not making funds available therefor, or except to the extent approved by Owner, the presence, handling, use or disposition in or from the Improvements of any Hazardous Materials (even though permissible under all applicable Environmental Laws) caused by Development Manager (expressly excluding any pre-existing condition). The provisions of this Section shall survive the termination of this Agreement only with respect to any claims or liability arising from or related to actions occurring prior to such termination. The acceptance by or on behalf of Owner, or failure by or on behalf of Owner to object to, any Services performed by or for Development Manager shall not supersede or diminish any obligation or duty of Development Manager with respect to such Services or render Owner or its respective officers, partners, members, managers, employees and agents, responsible for any injury or damage suffered by any party arising out of any act or omission of Development Manager or any subcontractor or sub-subcontractor in the performance of such Services. Notwithstanding the foregoing, Development Manager shall not be answerable for the default or misconduct of any environmental consultant, contractor or engineer, if such environmental consultant, contractor or engineer were selected and retained by the Development Manager with the same care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a similar capacity and familiar with those matters would use in the conduct of a similar enterprise with similar aims and in accordance with this Agreement, unless the Development Manager knowingly participates in such default or misconduct or fails to take reasonable remedial action, or through negligence in the performance of its own specific responsibilities hereunder has enabled such default or misconduct to occur.

ARTICLE V

Accounting and Financial Matters

5.1 Books and Records . Development Manager shall keep or cause to be kept at the Development Manager’s place of business suitable records necessary with regard to the Services provided hereunder, including all contracts and sub-contracts and one original of each contract and any other agreement relating to the development of the Property. Such records shall be open to inspection by Owner or its representatives at any reasonable time. Upon the effective termination date of this Agreement, all of such records shall be delivered to Owner.

ARTICLE VI

Insurance and Indemnity

6.1 Indemnification of Owner . Development Manager shall indemnify and defend Owner and its Affiliates, together with the past, present and future shareholders, beneficiaries, directors, trustees, partners, members, officers, agents and employees of each of them, against and hold Owner and such other entities and persons harmless from any and all losses, costs, claims, damages, liabilities and expenses, including, without limitation, reasonable attorneys’ fees, arising directly or indirectly out of (i) any default by Development Manager under the provisions of this Agreement, or (ii) any negligence or willful misconduct of Development Manager or any of its agents or employees, in connection with this Agreement or Development Manager’s services or work hereunder, whether within or beyond the scope of its duties or authority hereunder. The provisions of this Section 6.1 shall survive the termination of this Agreement only with respect to claims arising from or related to actions occuring prior to the termination hereof. Notwithstanding the foregoing, Development Manager shall not be answerable for the default or misconduct of any agent, consultant, contractor, engineer, attorney, accountant or bookkeeper or other professional, if any such agent, consultant, contractor, engineer, attorney, accountant or bookkeeper or other professional shall have been selected and retained by the Development Manager with the same care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a similar capacity and familiar with those matters would use in the conduct of a similar enterprise with similar aims and in accordance with this Agreement, unless the Development Manager knowingly participates in such default or misconduct or fails to take reasonable remedial action, or through negligence in the performance of its own specific responsibilities hereunder has enabled such default or misconduct to occur.

6.2 Indemnification of Development Manager . Owner shall indemnify and defend Development Manager and its Affiliates together with the past, present and future shareholders, directors, trustees, beneficiaries, partners, members, officers, agents and employees of each of them, against and hold Development Manager and such other entities and persons harmless from any and all losses, costs, claims, damages, liabilities and expenses, including, without limitation, reasonable attorneys’ fee, arising directly or indirectly out of (i) any default by Owner under the provisions of this Agreement, or (ii) any negligence or willful misconduct of Owner or any of its partners (other than a partner that is an Affiliate of Development Manager), in connection with its obligations under this Agreement. The provisions of this Section 6.2 shall survive the termination of this Agreement.

6.3 Development Manager’s Insurance Responsibility . Development Manager shall maintain or cause to be maintained, at its sole cost and expense, (i) all legally required insurance coverage relating to its employees, including, but not limited to, Workers Compensation, Employer’s Liability and Non-Occupational Disability Insurance, (ii) commercial general liability with a per occurrence limit of not less than $1,000,000 and $2,000,000 general aggregate; and (iii) business auto liability with a per accident limit of not less than $1,000,000 overing all owned, non-owned and hired vehicles used in connection with the Improvements.

6.4 Evidence of Insurance . In the event General Partner is no longer the general partner of Owner, Development Manager will provide Owner with certificates of insurance or other satisfactory documentation which evidence that the insurance required under this Agreement is in full force and effect at all times. Policies required to be obtained hereunder shall name Owner as an additional insured party and must be endorsed to provide that thirty (30) days’ advance written notice of cancellation or material change will be given to Owner and Manager. All policies to be obtained pursuant to this Article VI shall contain waivers of subrogation rights, to the extent readily available for a minimal additional premium. Owner and Development Manager hereby waive any and all claims and causes of action against each other to the extent covered by insurance. All insurance required to be carried by Development Manager, any contractor or subcontractor shall be written with companies having a rating in the Best’s Key Rating Guide of A: VIII or better and reasonably acceptable to Owner which companies shall be licensed to do business in the State where the Improvements are located; provided that if Construction Lender requires higher standards for insurance than those set forth in this sentence, all insurance shall comply with such higher standards.

6.5 Contract Documents . Development Manager shall cause to be inserted in any contract in connection with the Improvements provisions to the effect that the other contracting party shall indemnify and save harmless Development Manager and Owner from and against all claims, losses and liability resulting from any damage to the Improvements or injury to, or death of, persons caused or occasioned by or in connection with or arising out of any action or omissions of said contracting party or its employees or agents, and from and against all costs, fees, and attorneys expenses in connection therewith.

6.6 Contractor’s and Subcontractors’ Insurance . Prior to permitting any contractor (or subcontractor hired by Development Manager) to enter upon the Improvements, or any part thereof, to commence any work therein, and for the duration of the contract, the Development Manager shall use commercially reasonable efforts to obtain copies of such contractor’s or subcontractor’s insurance as follows:

Worker’s Compensation, Employer’s Liability, Automobile Liability and Commercial General Liability Insurance (including blanket contractual coverage), the last named policy to include the interests of the Owner and Development Manager as additional insureds and for not less than a combined single limit of $2,000,000 per occurrence bodily injury and property damage, unless lower limits are approved beforehand by Owner.

6.7 Development Manager’s Duties in Case of Loss . Development Manager shall:

(a)

notify Owner of any fire or other damage to the Improvements, Owner to arrange for an insurance adjuster to view the Improvements before repairs are started, but in no event shall Development Manager settle any losses, complete loss reports, adjust losses or endorse loss drafts without Owner’s prior consent; and

(b)

promptly notify Owner of any personal injury or property damage occurring to or on the Improvements.

ARTICLE VII

Notices

7.1 All Notices . Any notice, request, demand, instruction or other communication to be given to either party hereunder, except those required to be delivered at the Closing, shall be in writing, and shall be deemed to be delivered (a) upon receipt, if delivered by facsimile, (b) upon receipt if hand delivered, (c) on the first business day after having been delivered to a national overnight air courier service, or (d) three business days after deposit in registered or certified mail, return receipt requested, addressed as follows:


		If to Owner:		Liberty Washington, LP c/o Liberty Property Trust 500 Chesterfield Parkway Great Valley Corporate Center Malvern, Pennsylvania 19355 Attention: Michael T. Hagan Chief Investment Officer Fax: 610-644-4129

		with additional copies to:		New York State Common Retirement Fund c/o Office of the State Comptroller 59 Maiden Lane, 30 ^th Floor New York, NY 10038-4502 Attn: Assistant Deputy Counsel Fax No.: 212-681-1331 Telephone No.: 212-383-1508

		with additional copies to:		New York State Common Retirement Fund c/o Office of the State Comptroller 59 Maiden Lane, 30 ^th Floor New York, NY 10038-4502 Attn: Assistant Deputy Counsel Fax No.: 212-681-1331 Telephone No.: 212-383-2509

		with additional copies to:		Heitman Capital Management LLC 191 North Wacker Drive Suite 2500 Chicago, IL 60606 Attn: Jerome Claeys Fax No.: 312-251-5445 Telephone No.: 312-541-6740


		and with additional copies to:		Heitman Capital Management LLC 191 North Wacker Drive Suite 2500 Chicago, IL 60606 Attn: Anthony Ferrante Fax No.: (312) 541-6789 Telephone No.: (312) 251-5458

		and with additional copies to:		Cox, Castle & Nicholson LLP 2049 Century Park East, 28th Floor Los Angeles, CA 90067-3284 Attn: Amy H. Wells, Esq. Fax No.: 310-277-7889 Telephone No.: 310-284-2233

		If to Development Manager:		Liberty Property Limited Partnership c/o Liberty Property Trust 500 Chesterfield Parkway Great Valley Corporate Center Malvern, Pennsylvania 19355 Attention: Mr. Michael T. Hagan Fax: 610-644-4129

		and with additional copies to:		Wolf, Block, Schorr and Solis Cohen LLP 1650 Arch Street, 22nd Floor Philadelphia, Pennsylvania 19103-2097 Attention: Herman C. Fala, Esq. Fax: 215-405-2976

ARTICLE VIII

Assignment

8.1 This Agreement may be assigned by Development Manager to an Affiliate of Development Manager without Owner’s prior written consent, provided such assignment shall not release Development Manager from liability hereunder. Any purported assignment or delegation of Development Manager’s duties to a non-Affiliate entity without Owner’s consent shall be void and of no effect. In the event Owner sells the Improvements and seeks to assign this Agreement to the purchaser, Development Manager shall have the option to terminate this Agreement as of the date of such purchase.

ARTICLE IX

Relationship of Parties

9.1 Nature of Relationship . In taking any action pursuant to this Agreement, Development Manager will be acting only as independent contractor, with authority to act in accordance with the terms of this Agreement and nothing explicit or implied in this Agreement shall be construed as creating a partnership or joint venture or agency or an employment relationship between Development Manager (or any person employed by Development Manager) and Owner or any other relationship between the parties hereto except that of Owner and independent contractor. Development Manager acknowledges and agrees that it shall act as an independent contractor hereunder with respect to Owner in connection with Development Manager’s obligations under this Agreement. In the event that for any reason Development Manager is deemed to be the agent of Owner, such agency shall be deemed coupled with an interest in Owner (consisting only of the interest in Owner then held by the General Partner that is an Affiliate of Development Manager) and irrevocable.

9.2 Communications Between Parties . Owner relies on Development Manager to direct and control all construction at the Improvements; provided, however, Owner reserves the right to communicate directly with the contractor and sub-contractors, Development Manager’s accountant or accountants working on Improvements and all tenants and all other parties contracting with Owner with respect to the Improvements.

9.3 Confidentiality . Development Manager shall maintain the confidentiality of all matters pertaining to this Agreement, except as may be required by law; provided, however, that Development Manager shall not be in breach of its obligations under this Agreement or any other obligations or duties to Owner, or its partners, at law or in equity (whether under a theory of fiduciary duty or otherwise) if Development Manager or its Affiliates files this Agreement (and some or all of the exhibits hereto) as an exhibit to a filing it may make with the Securities Exchange Commission or makes disclosures regarding the transactions governed by this Agreement to the extent Development Manager or its Affiliates reasonably believe necessary to enable Development Manager or its Affiliates to comply with federal and state securities laws and the regulations of the Securities Exchange Commission, the rules of any stock exchange, or in connection with any filing or registration made by Liberty Property Trust, an Affiliate of Development Manager, as the issuer of publicly traded securities, or as part of information provided to its investors and/or financial analysts.

ARTICLE X

Defaults and Termination

10.1 Default by Development Manager . Development Manager shall be deemed to be in default hereunder in the event: (i) Development Manager shall fail to keep, observe or perform any covenant, agreement, term or provision of this Agreement to be kept, observed or performed by the Development Manager and such default shall continue for a period of thirty (30) days after notice thereof by Owner to Development Manager, which notice shall to the extent information is reasonably available to Owner specify the nature of the default and possible cures thereof, provided that, unless such failure is not susceptible to cure, if within such thirty (30) day period Development Manager commences curing and continues diligently to cure such failure, then Development Manager shall have a total of ninety (90) days in which to cure such failure; (ii) a receiver is appointed to take possession of the assets of Development Manager or a general assignment by Development Manager for the benefit of creditors, or any action taken or suffered by Development Manager under any insolvency, bankruptcy, reorganization, moratorium, or other debtor-relief act or statute; or (iii) the dissolution of Development Manager. Upon the occurrence of an event of default by Development Manager, and, with respect to (i) above, if General Partner is no longer the general partner of Owner, Owner shall be entitled to terminate this Agreement, effective ten (10) days after notice to Development Manager of Owner’s intention to terminate this Agreement, and upon any such termination, Owner shall have the right to pursue any remedy it may have at law or in equity.

10.2 Default by Owner . Owner shall be deemed to be in default hereunder in the event: (i) Owner shall fail to keep, observe or perform any covenant, agreement, term or provision of this Agreement to be kept, observed or performed by the Owner and such default shall continue for a period of (A) ten (10) days in the case of a monetary default or (B) thirty (30) days for a non-monetary default after notice thereof by Development Manager to Owner, which notice shall to the extent information is reasonably available to Development Manager specify the nature of the default and possible cure thereof, provided that, unless such failure is not susceptible to cure, if within such thirty (30) day period for a non-monetary default Owner commences curing and continues diligently to cure such failure, then Owner shall have a total of ninety (90) days in which to cure such failure; (ii) a receiver is appointed to take possession of the assets of Owner or an assignment by Owner for the benefit of creditors, or any action taken or suffered by Owner under any insolvency, bankruptcy, reorganization, moratorium, or other debtor-relief act or statute; or (iii) of the dissolution of Owner. Upon the occurrence of an event of default by Owner, Development Manager shall be entitled to terminate this Agreement, effective ten (10) days after notice to Owner of Development Manager’s intention to terminate this Agreement, and upon any such termination, Development Manager shall have the right to pursue any remedy it may have at law or in equity.

10.3 Certain Rights of NYSCRF . In the event that Developer and/or the general partner of Owner are the subject of a bankruptcy proceeding or similar proceeding in insolvency (including receivership or the making of an assignment for the benefit of creditors), and if by reason of such proceeding the New York State Common Retirement Fund (“NYSCRF”) in its capacity as a limited partner of Owner, is unable to exercise its rights under Section 6.18 of the Owner’s Agreement of Limited Partnership (respecting the enforcement of remedies under this Agreement) NYSCRF shall be deemed to be a third party beneficiary of this Agreement solely for the purpose of enforcing the remedies of the Owner set forth in Section 10.1 above. This Section 10.3 shall be void and of no further force or effect if, as and when NYSCRF is no longer a limited partner in Owner.

10.4 Orderly Transition . In the event of any termination of this Agreement, Development Manager shall use its commercially reasonable efforts to effect an orderly transition of development of the Property to Owner or an agent designated by Owner and to cooperate with Owner, at Owner’s expense, or such agent.

10.5 Final Settlement of Accounts . Upon the termination of this Agreement, Development Manager promptly shall:

10.5.1 account for all fees and reimbursements owing to Development Manager to the date of termination, whereupon Owner shall pay all such sums to Development Manager;

10.5.2 deliver to Owner or to such other person as Owner shall designate, all materials, supplies, equipment, keys, original leases, contracts, documents, books and records pertaining to this Agreement and the Property, to the extent belonging to Owner; and

10.5.3 assign without warranty or recourse existing contracts and permits in the name of Development Manager relating to the Property to Owner or to such party as Owner shall designate.

ARTICLE XI

Miscellaneous

11.1 Governing Law . This Agreement shall be construed and enforceable in accordance with the laws of the State of Delaware.

11.2 Entire Agreement . This Agreement contains the entire agreement between the parties and the same shall not be amended, modified or canceled except in writing signed by the party to be charged.

11.3 Time of Essence . Time is of the essence of this Agreement.

11.4 Successors and Assigns . All terms, conditions and agreements herein set forth shall inure to the benefit of, and be binding upon the parties and their respective permitted successors and assigns.

11.5 Waiver . The failure of either party to insist upon strict performance of any term or provision of this Agreement or to exercise any option, right or remedy herein contained, shall not be construed as a waiver or as a relinquishment for the future of such term, provision, option, right or remedy, but the same shall continue and remain in full force and effect. No waiver by either party of any term or provision hereof shall be deemed to have been made unless expressed in writing and signed by such party.

11.6 Partial Invalidity . If any portion of this Agreement shall be decreed invalid by the judgment of a court, this Agreement shall be construed as if such portion had not been inserted herein except when such construction would constitute a substantial deviation from the general intent and purpose of this Agreement.

11.7 ERISA and Unrelated Business Taxable Income . Development Manager agrees to use commercially reasonable efforts to act in accordance with the fiduciary standards of the ERISA, to the extent Development Manager is subject thereto as a result of services rendered pursuant to this Agreement. Development Manager shall use its reasonable efforts to avoid taking any action that would generate unrelated business taxable income under the Code for any of the partners of the Owner. Development Manager shall abide by any and all procedures established by Owner to avoid prohibited transactions under ERISA and unrelated business taxable income under the Code.

11.8 Limitation on Owner’s Liability . The obligations of Owner are intended to be binding only on the assets of the Owner and shall not be personally binding upon, nor shall any resort be had to, the private properties of its constituent partners, directors, shareholders, trustees, beneficiaries, officers, members or managers, or any employees or agents of any of them.

11.9 Limitation on Development Manager’s Liability . The obligations of Development Manager are intended to be binding only on the assets of the Development Manager and shall not be personally binding upon, nor shall any resort be had to, the private properties of its shareholders, trustees, beneficiaries, directors, officer, employees or agents provided, however, the Owner shall retain the right, after notice to the Development Manager, to offset any amounts claimed against Development Manager hereunder against amounts due General Partner under the Partnership Agreement, provided if there is any dispute as to whether the claim against Development Manager is valid the amount sought to be withheld shall be escrowed until the first to occur of the matter being resolved or Development Manager, after written notice from Owner, no longer contesting the validity of the claim with the interest earned thereon being paid to the party who is ultimately determined to be entitled to the amount claimed or if it is determined that each party is entitled to a portion of the amount in dispute, prorata based on the amount paid to each.

11.10 Non-Discrimination Policy. Development Manager agrees that it will not deny the benefits of this Agreement to any person, nor discriminate against any employee or applicant for employment because of race, color, religion, sex, national origin, age or any other applicable protected classification. Development Manager will take affirmative action to insure that the evaluation and treatment of employees are free from such discrimination. Development Manager, unless exempt, further agrees to abide by the terms of all applicable Federal, state and local non-discrimination provisions, including but not limited to 41 CFR Sec. 60-1.4, such non-discrimination provisions being incorporated herein by reference. Development Manager shall include this Non-Discrimination Policy clause in the contract with the General Contractor, and shall direct the General Contractor to cause such clause to be included in all subcontracts to do work under this Agreement, and will notify all labor organizations with which it has a collective bargaining agreement of the obligations hereunder.

11.11 Development Manager’s Representations and Warranties . To the extent any representation, warranty or other statement contained in this Section 11.11 only is limited by the phrase “to the knowledge of” or other words of similar import, it shall mean the actual knowledge of [Michael Hagan, Chief Investment Officer and Richard Casey, Director of Due Diligence] , each without any additional inquiry. Development Manager represents and warrants to Owner as follows:

(a) Existence; Authority . The execution and delivery of, and Development Manager’s performance under, this Agreement are within Development Manager’s powers and have been duly authorized by all requisite action. This Agreement constitutes the legal, valid and binding obligation of Development Manager, enforceable in accordance with its terms, subject to laws applicable generally to creditor’s rights. Performance of this Agreement by Development Manager will not result in any breach of, or constitute any default under, or result in the imposition of any lien or encumbrance upon the Improvements under any agreement or other instrument to which Development Manager is a party or by which Development Manager is bound.

(b) Litigation; No Consent . There is no pending or, to Development Manager’s knowledge, threatened litigation or administrative proceedings which could materially and adversely affect the ability of Development Manager to perform any of its obligations hereunder. No consent or approval of any person or entity or of any governmental authority is required with respect to the execution and delivery of this Agreement by Development Manager or the consummation by Development Manager of the transactions contemplated hereby or the performance by Development Manager of its obligations hereunder.

ARTICLE XII
Definitions

12.1 “ Affiliate ” means, when used with reference to a specific Person, any Person directly or indirectly controlling, controlled by, or under common control with the Person in question. As used in this definition, the terms “controlling”, “controlled” and “control” mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise.

12.2 “ Architect ” means, for any Improvements to be constructed on the Property, an architect selected by Development Manager and approved by Owner.

12.3 “ Code ” means the Internal Revenue Code of 1986, as amended.

12.4 “ Construction Contracts ” mean all contracts and purchase orders with the General Contractor, including the GMP Contracts, and specialty trade contractors and suppliers as necessary to cause the construction of the Improvements.

12.5 “ Construction Lender ” means the lender which provides the Construction Loan for the Project.

12.6 “ Construction Loan ” means the loan which provides the funds necessary to pay for construction of the Improvements forming part of the Project.

12.7 “ Construction Schedule ” means the schedule for completion of the various stages of the Work under the various GMP Contracts for the Project to be prepared by the Development Manager and shall include therein each major event expected during the construction of the applicable Improvements.

12.8 “ Cost Overruns ” mean all cost to complete the Improvements comprising a particular Project, including all amounts expended under the applicable GMP Contracts (but excluding financing fees and interest expended for the applicable Construction Loan, real estate taxes, legal fees and insurance costs, and tenant improvement and leasing commission costs), in excess of the sum of (i) such costs as shown in the Final Project Budget for Hard Costs and Soft Costs for the Project, and (ii) the amounts remaining in the Hard Cost Contingency for the Project, respectively.

12.9 “ DC Metropolitan Area ” has the meaning ascribed to it in the Partnership Agreement.

12.10 “ Development Manager ” means Liberty Property Limited Partnership.

12.11 “ Environmental Laws ” means all Federal, state and local laws and ordinances relating to the protection of the environment or the keeping, use or disposition of Hazardous Materials, substances, or wastes, presently in effect or hereafter adopted, all amendments thereto, and all rules and regulations issued pursuant to any of the foregoing.

12.12 “ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

12.13 “ Final Plans and Specifications ” means the plans and specifications submitted pursuant to Section 2.1.2(a) for the construction of the Improvements comprising the Project, as approved by Owner.

12.14 “ Final Project Budget ” means the final project budget, as approved by Owner, for completion of the applicable Improvements in accordance with the Final Plans and Specifications for the Project.

12.15 “ General Contractor ” means the entity selected by the Development Manager to serve as general contractor for the Project.

12.16 “ General Partner ” means Liberty Washington Venture, LLC, a Delaware limited liability company.

12.17 “ GMP Contract ” means each of the guaranteed maximum price contracts to be entered into with the General Contractor for portions of the Work.

12.18 “ Hard Costs ” means the costs shown in the Final Project Budget for all Work to be performed to construct and complete the applicable Improvements, including (but not limited to) the various GMP Contracts.

12.19 “ Hard Cost Contingency ” means the amount shown as such in the preliminary project budget to cover Hard Costs in excess of those shown in the Final Project Budget for the Work to be performed under the various GMP Contracts for the Project.

12.20 “ Hazardous Materials ” means any flammable, explosives, radioactive materials, hazardous wastes or materials, toxic wastes or materials, or other similar substances, petroleum products or derivatives or any substance subject to regulation pursuant to Environmental Laws.

12.21 “ Law” or “Laws” means all laws, ordinances, statues, rules, regulations and codes pertaining to the Improvements, including any determinations of all Federal, state, county or municipal authorities having jurisdiction over the Improvements.

12.22 “ Owner ” means .

12.23 “ Partnership Agreement ” means the Agreement of Limited Partnership of Liberty Washington, LP dated , 2007, as amended from time to time, establishing the Owner.

12.24 “ Permitted Changes ” means those changes in the Work from what is called for under the Final Plans and Specifications for the Project and which are either deemed authorized under this Agreement or are otherwise approved in writing by Owner.

12.25 “ Project ” means (i) the development and construction of the Improvements on the Property.

12.26 “ Purchase Agreement ” means the Contribution Agreement dated , 2007, among Owner, Liberty Property Limited Partnership (“ LPLP ”) and New York State Common Retirement Fund.

12.27 “ Services ” means the development management services described in Article II .

12.28 “ Soft Costs ” means the costs shown in the Final Project Budget for all costs that are not Hard Costs for the Project, such as leasing fees, financing costs, and interest on the applicable Construction Loan.

12.29 “ Total Project Costs ” means all actual costs for the construction of the applicable Improvements in accordance with the Final Plans and Specifications for the Project and lease-up of the Improvements, including all Hard Costs and Soft Costs actually incurred.

12.30 “ Work ” means all construction and other activities required under the Construction Contracts for the Project, including all labor, materials, equipment and other services to be furnished thereunder to complete the Improvements in accordance with the applicable Final Plans and Specifications.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

OWNER :




By:

		Name:
		Title:


DEVELOPMENT MANAGER :

LIBERTY PROPERTY LIMITED PARTNERSHIP

By:		Liberty Property Trust,
		its general partner

By:

		Name:
		Title:

EXHIBIT A

LEGAL DESCRIPTION OF
THE PROPERTY

EXHIBIT B

FORM OF COMPLETION GUARANTY

COMPLETION GUARANTY

THIS COMPLETION GUARANTY (this “ Guaranty ”), made as of the day of , 200 , by LIBERTY PROPERTY LIMITED PARTNERSHIP , a Pennsylvania limited partnership, with a mailing address of 500 Chesterfield Parkway, Malvern, Pennsylvania 19355 (“ Guarantor ”), to and for the benefit of , (“ Owner ”), with a mailing address of 500 Chesterfield Parkway, Malvern, Pennsylvania 19355.

WITNESSETH :

WHEREAS , Owner and Guarantor entered into a Development Management Agreement dated , 2007 (the “ Agreement ”), pursuant to the terms of which Guarantor has agreed to develop Improvements on the Property. A copy of the Agreement is attached as Exhibit A hereto and made a part hereof. All capitalized terms used in this Guaranty and not otherwise defined herein shall have the meanings ascribed to such terms in the Agreement; and

WHEREAS , pursuant to the requirements of Section 2.7 of the Agreement, Guarantor is providing this Guaranty for the benefit of Owner with respect to the development of the Project.

NOW, THEREFORE FOR VALUE RECEIVED , and in consideration of the foregoing Recitals and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties hereto agree as follows:

AGREEMENTS

1. Completion Guaranty .

(a) Guarantor hereby unconditionally guarantees: (i) the lien-free completion of the Work (1) on the Project substantially in accordance with the Final Plans and Specifications therefor; and (2) on or before the completion date set forth in the Construction Schedule for the Project; (ii) the payment of all Cost Overruns (subject to the limitations set forth in Section 2.2 of the Agreement) and (iii) payment to Owner of all costs incurred by Owner as a result of Development Manager’s breach of the Agreement (including but not limited to costs incurred by Owner as a result of Development Manager’s negligent acts or omissions) (collectively the “ Guaranteed Liabilities ”). For purposes hereof, Cost Overruns shall not include costs incurred due to subsurface conditions at the Property of an unusual nature, unusually severe weather conditions, labor disputes (unless resulting from company-wide labor difficulties specific to Guarantor and its affiliates), unavailability of materials or labor (unless resulting from Guarantor’s lack of reasonable diligence in ordering or procuring same), war, terrorism or acts of God, or other matters beyond the reasonable control of Guarantor (“ Force Majeure ”)

(b) Guarantor further agrees to pay all expenses legal and/or otherwise (including but not limited to court costs and reasonable attorneys’ fees and expenses), paid or incurred by Owner in endeavoring to collect the Guaranteed Liabilities, or any part hereof, or in enforcing this Guaranty or in defending any suit based on any act of commission or omission of Owner with respect to this Guaranty or in connection with any Recovery Claim (as hereinbelow defined) (the “ Enforcement Costs ”). The Guaranteed Liabilities and the Enforcement Costs are collectively referred to as the “ Guaranteed Obligations .”

(c) Notwithstanding Section 1(a) above, Guarantor’s obligation to perform the Guaranteed Obligations is subject to Force Majeure and is conditioned on Owner advancing or causing to be advanced on a monthly or other basis as required under the general construction contract or the Development Management Agreement: (i) all Project Costs as set forth in the Project Budget, and (ii) all increases in the Project Costs resulting from (A) change orders or other changes in the Work initiated or approved by Owner (other than change orders approved by Owner, where such change orders are intended to cure a breach by Guarantor of its obligations under the Development Management Agreement), (B) any breach by Owner of its obligations under the Development Management Agreement or general construction contract or other actions of Owner that result in increased costs of the Work or delays in completion thereof, and (C) Force Majeure; provided that so long as Liberty Washington Venture, LLC (“General Partner”) is the general partner of Liberty Washington, LP (the “Joint Venture”), the failure of General Partner to fund its share of the amounts described in clauses (i) and (ii) above (in accordance with the provisions of the Joint Venture’s partnership agreement) shall not relieve Guarantor of its obligations under this Guaranty.

2. Continuing Guaranty . This Guaranty includes any and all Guaranteed Obligations arising under successive transactions entered into between Owner and Guarantor continuing, compromising, extending, increasing, modifying, releasing, or renewing the Guaranteed Obligations or other terms and conditions thereof, or creating new or additional Guaranteed Obligations after prior Guaranteed Obligations have been satisfied in whole or in part. To the maximum extent permitted by law, Guarantor hereby waives any right to revoke this Guaranty.

3. Termination of Guaranty . In the event that the Agreement is terminated for any reason, this Guaranty shall automatically terminate contemporaneously therewith; provided, however, that Guarantor shall remain liable for any Guaranteed Liabilities which arise prior to the termination of the Agreement.

4. Primary Obligations . This Guaranty is a primary and original obligation of Guarantor, is not merely the creation of a surety relationship, and is an absolute, unconditional, and continuing guaranty of payment and performance which shall remain in full force and effect without respect to future changes in conditions, including any change of law, subject to Paragraph 1(c) above. Guarantor agrees that its liability hereunder shall be immediate and shall not be contingent upon the exercise or enforcement of any lien or realization upon any security or collateral Owner may at any time possess. Guarantor consents and agrees that Owner shall be under no obligation to marshal any assets of Guarantor or any other guarantor in favor of Guarantor, or against or in payment of any or all of the Guaranteed Obligations.

5. Waivers .

(a) Guarantor hereby waives: (1) notice of acceptance hereof; (2) notice of the amount of the Guaranteed Obligations, subject, however, to Guarantor’s right to make inquiry of Owner to ascertain the amount of the Guaranteed Obligations at any reasonable time; (3) notice of any fact that might increase Guarantor’s risk hereunder; (4) notice of presentment for payment, demand, protest, and notice thereof as to any promissory notes or other instruments, writing or agreements evidencing Guaranteed Obligations; and (5) all other notices (except if such notice is specifically required to be given to Guarantor hereunder) and demands to which Guarantor might otherwise be entitled.

(b) Guarantor hereby waives: (1) any rights to assert against Owner any defense (legal or equitable), setoff, counterclaim, or claim which Guarantor may now or at any time hereafter have against any party liable to Owner (other than the defense that the Guaranteed Obligations shall have been fully and finally performed and indefeasibly paid); (2) any defense, setoff, counterclaim, or claim, of any kind or nature, arising directly or indirectly from the present or future lack of enforceability of the Guaranteed Obligations; and (3) the benefit of any statute of limitations affecting Guarantor’s liability hereunder or the enforcement thereof, and any act which shall defer or delay the operation of any statute of limitations applicable to the Guaranteed Obligations shall similarly operate to defer or delay the operation of such statute of limitations applicable to Guarantor’s liability hereunder. Without limiting the generality of the foregoing or any other provisions of this Guaranty, Guarantor agrees that this Guaranty shall not be discharged, limited, impaired or affected by the operation of any present or future provision of the United States Bankruptcy Code or similar statute, or from the decision of any court, including, but not limited to, any proceedings with respect to the voluntary or involuntary liquidation, dissolution, sale or other disposition of all or substantially all the assets, the marshalling of assets and liabilities, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, imposition or readjustment of, or other similar proceeding affecting Guarantor or any guarantors of the Guaranteed Obligations or any of their respective assets, it being expressly understood and agreed that no such proceeding shall affect, modify, limit or discharge the liability or obligation of Guarantor hereunder in any manner whatsoever, and that Guarantor shall continue to remain absolutely liable under this Guaranty to the same extent, and in the same manner, as if such proceeding had not been instituted.

6. Releases . No release or discharge of any other guarantor, or of any other person or entity, whether primarily or secondarily liable for or obligated with respect to the Guaranteed Obligations, or the institution of bankruptcy, receivership, insolvency, reorganization, dissolution or liquidation proceeding by or against any other guarantor or any other person or entity, or the entry of any restraining or other order in any such proceeding, shall release or discharge Guarantor, any other guarantor of the Guaranteed Obligations, or any other person, firm or corporation liable to Owner of the Guaranteed Obligations, unless and until all of the Guaranteed Obligations shall have been fully performed and paid.

7. Recovery Claim . Should a claim (“ Recovery Claim ”) be made upon Owner at any time for recovery of any amount received by Owner in payment of the Guaranteed Obligations (whether received from Guarantor pursuant hereto, or otherwise) and should Owner repay all or part of said amount by reason of (a) any judgment, decree, or order of any court or administrative body having jurisdiction over Owner or any of its property; or (b) any reasonable settlement or compromise of any such Recovery Claim effected by Owner with the claimant, Guarantor shall remain liable to Owner of the amount so repaid to the same extent as if such amount had never originally been received by Owner, notwithstanding any termination hereof or the return of this document to Guarantor.

8. Omitted.

9. Payments; Application . All payments to be made hereunder by Guarantor shall be made in lawful money of the United States of America at the time of payment, shall be made in immediately available funds, and shall be made without deduction (whether for taxes or otherwise) of offset. All payments made by Guarantor hereunder shall be applied as follows; first, to all cost and expenses (including, but not limited to, reasonable attorney’s fees, expenses and court costs) incurred by Owner in enforcing this Guaranty or in collecting the Guaranteed Obligations; second, to all accrued and unpaid interest and fees owing to Owner constituting Guaranteed Obligations, if any; and third, to the balance of the Guaranteed Obligations.

10. Notices . Any notice or other communication required or permitted to be given shall be in writing addressed to the respective party as set forth above, and shall be deemed to be delivered (a) upon receipt, if delivered by facsimile, (b) upon receipt if hand delivered, (c) on the first business day after having been delivered to a national overnight air courier service, or (d) three business days after deposit in registered or certified mail, return receipt requested. Except as otherwise specifically required herein, notice of the exercise of any right or option granted to Owner by this Guaranty is not required to be given.

11. Cumulative Remedies . No remedy under this Guaranty is intended to be exclusive of any other remedy, but each and every remedy shall be cumulative and in addition to any and every remedy given hereunder and those provide by law or in equity. No delay or omission by Owner to exercise any right under this Guaranty shall impair any such right nor be construed to be a waiver thereof. No failure on the part of Owner to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right.

12. Interpretation and Severability of Provisions . The headings of sections and paragraphs in this Guaranty are for convenience of reference only and shall not be construed in any way to limit or define the content, scope or intent of the provisions hereof. As used in this Guaranty, the singular shall include the plural, and masculine, feminine and neuter pronouns shall be fully interchangeable, where the context so requires. Whenever the words “including”, “including” or “includes” are used in this Guaranty, they should be interpreted in a non-exclusive manner as though the words, “without limitation”, immediately following the same. Wherever possible, each provision of this Guaranty shall be interpreted in such manner as to be effective and valid under applicable law. If any provision of this Guaranty is prohibited or unenforceable under applicable law, such provision shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof.

13. Entire Agreement; Amendments . This Guaranty constitutes the entire agreement between Guarantor and Owner pertaining to the subject matter contained herein, and may not be altered, amended, or modified, nor may any provision hereof be waived or noncompliance therewith consented to, except by means of a writing executed by Guarantor as to which such consent or waiver is applicable and by Owner. Any such alteration, amendment, modification, waiver, or consent shall be effective only to the extent specified therein and for the specific purpose of which it is given. No course of dealing and no delay or waiver of any right or default under this Guaranty shall be deemed a waiver of any other similar or dissimilar right or default or otherwise prejudice the right and remedies hereunder.

14. Successors and Assigns . This Guaranty shall be binding upon Guarantor’s representatives, successors, and assigns and shall inure to the benefit of the successors and assigns of Owner.

15. Choice of Law and Venue . THE VALIDITY OF THIS GUARANTY, ITS CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT, AND THE RIGHTS OF GUARANTOR AND OWNER SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. TO THE MAXIMUM EXTENT PERMITTED BY LAW, GUARANTOR HEREBY AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS GUARANTY SHALL BE TRIED AND DETERMINED ONLY IN THE STATE OF DELAWARE OR AT THE SOLE OPTION OF OWNER IN ANY OTHER COURT IN WHICH OWNER SHALL INITIATE LEGAL OR EQUITABLE PROCEEDING AND WHICH HAS SUBJECT MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY. TO THE MAXIMUM EXTENT PERMITTED BY LAW, GUARANTOR HEREBY EXPRESSLY WAIVES ANY RIGHT IT MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION.

16. Waiver of Jury Trial . TO THE MAXIMUM EXTENT PERMITTED BY LAW, GUARANTOR AND OWNER HEREBY EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY ACTION, CAUSE OF ACTION, CLAIM, DEMAND, OR PROCEEDING ARISING UNDER OR WITH RESPECT TO THIS GUARANTY, OR IN ANY WAY CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE DEALINGS OF GUARANTOR OR OWNER WITH RESPECT TO THIS GUARANTY, OR THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE. TO THE MAXIMUM EXTENT PERMITTED BY LAW, GUARANTOR AND OWNER HEREBY AGREE THAT ANY SUCH ACTION, CAUSE OF ACTION, CLAIM, DEMAND, OR PROCEEDING SHALL BE DECIDED BY A COURT TRIAL WITHOUT A JURY AND THAT OWNER MAY FILE A COPY OF THIS GUARANTY WITH ANY COURT OR OTHER TRIBUNAL AS WRITTEN EVIDENCE OF THE CONSENT OF GUARANTOR TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.

17. Counterparts . This Guaranty may be executed by the parties hereto in counterpart with the same force and effect as if all parties hereto had executed the same instrument.

IN WITNESS WHEREOF, Guarantor has executed and delivered this Guaranty as of the date set forth in the first paragraph hereof.


		LIBERTY PROPERTY LIMITED PARTNERSHIP, a Pennsylvania limited partnership

		By:		Liberty Property Trust, its general partner

		By:

				Name:
				Title:

EXHIBIT A

Exhibit B

MANAGEMENT AND LEASING AGREEMENT

THIS MANAGEMENT AND LEASING AGREEMENT (this “Agreement”) is dated as of , 2007 between , a Delaware limited liability company, (“Owner”) and Liberty Property Limited Partnership, a Pennsylvania limited partnership (“Manager”).

W I T N E S S E T H :

WHEREAS, Owner is the owner of certain real properties and the buildings situated thereon located at the addresses set forth on Exhibit A attached hereto and made a part hereof (collectively, the “Property”); and

WHEREAS, Owner wishes to engage Manager to perform the services set forth herein and Manager is willing to accept such engagement, all upon the terms and conditions hereinafter set forth.

NOW, THEREFORE, Owner and Manager hereby agree as follows:

ARTICLE I

Appointment and Term of Manager

Owner hereby engages Manager as the manager of the Property upon the terms and conditions herein stated, for a term that shall commence on the date of this Agreement and shall terminate as a whole only pursuant to Section 12.2 hereof or, as to any particular Property, upon the sale of the Property by Owner.

ARTICLE II

Services of Manager

2.1 Generally . Manager shall manage, operate, maintain, lease and repair the Property and develop, institute and follow programs and policies to facilitate the operation of the Property, in compliance with Owner’s directives. Manager shall perform its duties and services in a commercially reasonable manner consistent with the standards of other buildings similar to the Property (“Professional Standard”). Manager covenants that it will operate the Property pursuant to the terms of this Agreement and in accordance with the annual budget and leasing plan prepared by Owner and delivered to Manager from time to time.

2.2 Bank Accounts and Collection of Income .

On or before the execution hereof, Owner shall establish and designate a bank account or accounts for the Properties (the “Trust Account”). Manager may endorse any and all checks drawn to the order of Owner for deposit in the Trust Account. Manager shall have the power to draw on the Trust Account for the purpose of paying operating expenses (including, without limitation, debt service and capital expenditures), the Management Compensation to Manager, any other amounts payable pursuant to this Agreement, and net amounts of gross income to Owner in accordance with the terms of this Agreement.

Owner hereby authorizes Manager to request, demand, collect, receive and receipt for all rent, charges and other monies payable with respect to the Property. Promptly upon receipt thereof, Manager shall deposit all income collected from the Property into the Trust Account; it being understood that all funds so deposited in the Trust Account shall be held in trust for Owner. To the extent required by the leases, Manager shall prepare and deliver monthly invoices to tenants of the Property for amounts due under their leases.

2.3 Employees . Manager shall, at Owner’s sole cost and expense, select, employ, pay, supervise and discharge all employees, independent contractors, and personnel necessary for the operation, maintenance, and protection of the Property. All personnel used by Manager in the operation of the Property shall be employees of Manager, employees of an Affiliate of Manager or independent contractors. Manager shall, upon Owner’s request and at Owner’s cost, bond by a crime coverage bond Manager and (to the extent specifically requested by Owner) those employees and officers of Manager who may handle, have access to, or be responsible for, Owner’s monies. Each such bond shall be in a minimum amount of $500,000 and Owner shall be furnished with a certificate of each bond.

2.4 Repairs and Maintenance . Manager shall effect, institute and supervise all ordinary decorations, construction, maintenance, repairs and alterations including, without limitation, the administration of a preventative maintenance program for all mechanical, electrical and plumbing systems and equipment for the Property, and shall arrange for all required services, including, without limitation, window cleaning, heating, air conditioning, ventilation and building maintenance, and make all repairs under the leases which are the obligation of Owner to the tenants of the Property, in all cases in accordance with the Professional Standard.

2.5 Contracts . Manager shall negotiate, and shall execute in Owner’s name (or shall present to Owner for execution), contracts pertaining to the operation, maintenance and service of the Property, including utility agreements; provided , however , that (i) any such contract having a term in excess of one year must be terminable by Owner on no more than 30 days’ notice without cause (excluding security and alarm contracts, elevator maintenance contracts and other contracts that are not customarily terminable on 30 days notice); and (ii) the services are competitively priced. Manager shall use commercially reasonable efforts to contract with qualified businesses owned by minorities, women and disabled veterans.

2.6 Supplies and Inventory . Manager shall purchase in an economical manner all supplies and materials which in the normal course of business are necessary and proper to maintain and operate the Property. Manager shall use commercially reasonable efforts to obtain for Owner the benefit of discounts and volume purchasing economies available to Manager and will credit the same to Owner. All purchases of personal property shall provide that title to such items shall be in the sole name of Owner.

2.7 Payments . Manager shall check and verify all bills received for services, work and supplies ordered in connection with the maintenance and operation of the Property and pay or cause to be paid from the Trust Account all such bills, including utility charges, water charges, insurance premiums and real estate taxes. Manager shall not delay paying any bill so as to incur penalties or interest charges.

2.8 Items to be Obtained by Manager . Manager shall obtain all licenses, permits or other instruments required for the operation of the Property or any portion thereof at Owner’s expense. All such licenses and permits relating to the Property shall be obtained in Owner’s name.

ARTICLE III

Leasing and Lease Obligations

3.1 General . Manager agrees to take all actions reasonably necessary to lease the Property in accordance with commercially reasonable standards for properties of comparable size and quality. These actions shall include, but shall not be limited to, preparing (or causing to be prepared) promotional materials regarding the Property, negotiating and executing, in Owner’s name, contracts and listing agreements with third-party brokers for the purpose of procuring prospective tenants, cooperating with outside brokers who represent prospective tenants, and aiding Owner and its representatives in preparations of plans and specifications and negotiating leases and other documents necessary for the leasing of the Property. Manager shall negotiate the lease of the space available in the Property, if vacant or about to become vacant. Manager is authorized to negotiate, and execute in Owner’s name (or present to Owner for execution), leases for the Property and to collect on behalf of Owner all sums due under leases at the Property. Manager shall comply with any special requirements relating to leasing and other matters which may arise as a result of any agreements or covenants by which Owner may be bound. Manager shall investigate all references of prospective tenants and exercise reasonable efforts to secure financial information from the prospective tenants.

3.2 Commissions . In consideration of Manager’s leasing services rendered under this Agreement, Owner shall pay to Manager a commission (“Leasing Commission”) at rates shown on Exhibit B titled “Schedule of Commissions.”

(i)

The term “Gross Rent” shall mean all rent coming due from tenants under the leases including minimum annual rent (including fixed step ups in rent), additional rent, percentage rent and operating expenses. For purposes of calculating any Leasing Commissions under this Agreement (but not for purposes of calculating the Management Compensation), Gross Rent shall exclude CPI increases in rent.

(ii)

The Leasing Commission determined pursuant to this paragraph and Exhibit B hereof shall be paid as follows:

(1) With respect to Leasing Commissions arising from the initial consummation of a lease, fifty percent (50%) of the Leasing Commission shall be paid promptly upon (A) delivery of a fully executed lease by Owner to tenant, and payment of any security deposit and prepaid rent as provided for in the lease, and (B) the balance within thirty (30) days after tenant accepts the premises and has paid the first monthly installment of rent.

(2) With respect to Leasing Commissions arising from a tenant exercising an option to extend the term of its lease or otherwise renewing an existing lease, the full commission shall be paid upon the commencement of such extension or renewal term.

(3) With respect to Leasing Commissions arising from a tenant expanding the size of its premises (pursuant to an expansion option or otherwise), the full commission shall be paid promptly upon the tenant accepting the expansion premises.

(iii)

Notwithstanding the termination hereof, Owner agrees to pay a commission in accordance with the provisions of this Agreement for any lease which is fully executed as of the termination date herein (including commissions due upon an extension of the term or upon an expansion of the premises pursuant to the terms of the lease that are in effect at the time of termination of this Agreement) in accordance with Subsection 3.2(ii) above.

(iv)

Owner shall pay all commissions due to third party brokers engaged by tenants and to whom a commission is owed with respect to any lease at the Property. Manager shall be responsible to pay (out of the Leasing Commissions) any commission owed to any listing broker engaged by Manager to provide leasing services to the Property.

ARTICLE IV

Allocation and Payment of Expenses

4.1 Generally Paid by Owner . Except as set forth in Section 4.2, all obligations, costs or expenses incurred by Manager in the performance of its obligations pursuant to Article II shall be borne by Owner, including without limitation Manager’s administrative costs and the salaries and fringe benefits of Manager’s employees involved in the management or operation of the Property.

4.2 Manager’s Costs . Manager shall not be reimbursed for any of its:

(a) salaries and fringe benefits for Manager’s employees to the extent they are not engaged in the management or operation of the Property; and

(b) office equipment, stationary, postage, telephone, utilities and all other administration expenses except to the extent located on site and used of the operation of the Property.

4.3 Payments . Any payments to be made by Manager for the account of Owner shall be made out of the Trust Account. Manager shall promptly notify Owner if Manager believes there are insufficient funds in the Trust Account to pay all amounts to be paid hereunder. In the event there are insufficient funds in the Trust Account to pay all amounts to be paid hereunder, the Manager may, at Manager’s option: (i) advance the amount of such shortfall for the account of Owner, whereupon Owner shall promptly reimburse Manager for the funds so advanced, together with simple interest thereon at an annual rate equal to seven and one-half percent (7.5%) commencing on the day such advance was made (the “Default Rate”); or (ii) make the payments due hereunder in the order Manager shall deem appropriate, and withhold any such payments to the extent funds in the Trust Account are insufficient to make such payments. Owner shall indemnify and defend Manager, together with its past, present and future officers, partners, directors, trustees, beneficial owners, shareholders, agents and employees, against and hold Manager and such other parties harmless from any and all losses, costs, claims, damages, liabilities and expenses, including without limitation reasonable attorneys’ fees and the fees of other professionals, arising directly or indirectly as a result of Owner’s failure to provide such additional funds and Manager’s application of existing funds.

4.4 Advances and Reimbursements . Manager shall not be required to make any advance to, or for the account of Owner, or to pay any amount except out of funds held or provided as aforesaid, nor shall Manager be required to incur any extraordinary obligation unless Owner shall furnish Manager with necessary funds for the discharge thereof.

ARTICLE V

Compensation of Manager

As compensation for Manager’s management services rendered under this Agreement, Owner shall pay to Manager (in addition to the Leasing Commissions described in Article III of this Agreement) compensation equal to [select the applicable provision]

(a) [The confidential material contained herein has been omitted and has been separately filed with the commission.] of the Gross Operating Income from the Property for the initial properties, except the Republic Building;

(b) [The confidential material contained herein has been omitted and has been separately filed with the commission.] of the Gross Operating Income from the Property for the Republic Building and future-acquired single-tenant properties; and

(c) [The confidential material contained herein has been omitted and has been separately filed with the commission.] of the Gross Operating Income from the Property for future-acquired multi-tenant properties ] (the “Management Compensation”).

For purposes of this Agreement, the term “Gross Operating Income” shall mean all revenues generated by the Property from whatever source (including, without limitation, all rent, additional rent and tenant pass-throughs), excluding therefrom only the proceeds of any financing, refinancing or sale of the Property. The Management Compensation for each calendar month shall be payable to Manager on the twenty-fifth (25th) day of such month (prorated for any partial month).

ARTICLE VI

Compliance With Laws

To the extent not required to be performed by tenants, Manager shall, at Owner’s expense, comply with and abide by determinations and ordinances pertaining to the Property of any Federal, state or municipal authority having jurisdiction thereof of which Manager is aware, including, without limitation, the Occupational Safety and Health Act. Manager shall remedy any noncompliance and use commercially reasonable efforts to avoid any penalty to which Owner may be subject by reason of the noncompliance.

ARTICLE VII

Accounting and Financial Matters

7.1 Books and Records . Manager shall keep or cause to be kept at the Manager’s place of business suitable books of control and account showing all receipts, expenditures and all other records necessary or convenient for the recording of the results of operations of the Property and one original of each contract, occupancy lease, maintenance agreement and any other agreement relating to the Property. Such accounts, books and records shall be open to inspection by Owner or its representatives at any reasonable time. Upon the effective termination date of this Agreement, all of such books and records shall be delivered to Owner. Manager shall cooperate with Owner’s accountants and auditors in the annual audit of books of account of Owner and in the preparation and filing of Federal, State, City and any other income and other tax returns required by any governmental authority.

7.2 Fiscal Year . The fiscal year for the Property shall commence on January 1 and expire on December 31.

ARTICLE VIII

Insurance and Indemnity

8.1 Indemnification of Manager . Owner shall indemnify and defend Manager, together with its past, present and future officers, partners, directors, shareholders, trustees, beneficial owners, agents and employees, against and hold Manager and such other parties harmless from any and all losses, costs, claims, damages, liabilities and expenses, including without limitation reasonable attorneys’ fees, arising directly or indirectly out of any matter related to the Property or any action taken by Manager within the scope of its duties or authority under this Agreement, excluding only such of the foregoing as result from (i) any default by Manager under the provisions of this Agreement or (ii) any gross negligence or willful misconduct of Manager, its beneficiaries, advisors, officers, partners, directors, agents or employees. The provisions of this Section 8.1 shall survive the termination of this Agreement.

8.2 Indemnification of Owner . Manager shall indemnify and defend Owner, together with the past, present and future trustees, beneficiaries, advisers, partners, directors, officers, shareholders, agents and employees of each of them, against and hold Owner and such other entities and persons harmless from any and all losses, costs, claims, damages, liabilities and expenses, including, without limitation, reasonable attorneys’ fee, arising directly or indirectly out of (i) any default by Manager under the provisions of this Agreement or (ii) any gross negligence or willful misconduct of Manager or any of its beneficiaries, advisers, officers, partners, directors, agents or employees, in connection with this Agreement or Manager’s services or work hereunder, whether within or beyond the scope of its duties or authority hereunder. The provisions of this Section 8.2 shall survive the termination of this Agreement.

8.3 Manager’s Insurance Responsibility . Manager shall maintain or cause to be maintained, at its sole cost and expense, (i) all legally required insurance coverage relating to its employees, including, but not limited to, Workers Compensation, Employers Liability and Non-Occupational Disability Insurance; (ii) commercial general liability with a per occurrence limit of not less than $1,000,000 and $2,000,000 general aggregate; (iii) business auto liability with a per accident limit of not less than $1,000,000 covering all owned, non-owned and hired vehicles used in connection with the Property; and (iv) professional liability insurance with a per occurrence limit of not less than $2,000,000. Manager shall also maintain Errors and Omissions Insurance in the amount of $1,000,000 covering all officers, agents and employees of Manager. The Errors and Omissions Insurance shall protect the assets of Owner against losses from the negligent acts, errors and omissions of such persons. Manager may maintain the aforesaid insurance under blanket or umbrella policies of insurance.

8.4 Owner’s Insurance Responsibility . Owner shall maintain commercial general liability insurance coverage (including blanket contractual automobile non-ownership and personal injury liability) with a combined single limit of not less than $2,000,000 per occurrence for bodily injury and property damage, as well as all policies and amounts of insurance required to be carried by the Landlord under leases in effect at the Property from time to time.

8.5 Evidence of Insurance . Manager and Owner will provide each other with certificates of insurance or other satisfactory documentation which evidence that the insurance required under this Agreement is in full force and effect at all times. Policies required to be obtained pursuant to Section 8.3 must be endorsed to provide that 30 days’ advance written notice of cancellation or material change will be given to Owner. Policies required to be obtained pursuant to Section 8.4 shall provide that Manager shall be an additional insured. All policies of casualty or property insurance to be obtained pursuant to this Article VIII shall contain waivers of subrogation rights, to the extent readily available for a minimal additional premium; and Owner hereby waives any and all claims and causes of action against Manager to the extent covered by insurance.

8.6 Contract Documents . Manager shall use commercially reasonable efforts to cause to be inserted in any new service and supply contract prepared or executed by Manager in connection with the Property provisions to the effect that the other contracting party shall indemnify, defend and save harmless Manager and Owner from and against all claims, losses and liability resulting from any damage to or injury to, or death of, persons or property caused or occasioned by or in connection with or arising out of any action or omissions of said contracting party or its employees or agents, and from and against all costs, fees, and attorneys expenses in connection therewith.

Prior to permitting any contractor, subcontractor or vendor to enter upon the Property, or any part thereof, to commence any work therein, and for the duration of the contract, the Manager shall use commercially reasonable efforts to obtain copies of such contractor’s, subcontractor’s or vendor’s certificates of insurance as follows:

Worker’s Compensation, Employers Liability, Automobile Liability and Commercial General Liability Insurance (including blanket contractual coverage) the last named policy to include the interests of the Owner and Manager as additional insured and for not less than a combined single limit of $2,000,000 per occurrence bodily injury and property damage, unless lower limits are prior approved by Owner’s insurance representatives.

8.7 Insurance Companies . All insurance required to be carried by Manager and Owner shall be written with companies having a rating in the Best’s key Rating Guide of A:VIII or better and shall be licensed to do business in the state in which the Property is located.

ARTICLE IX

Notices

All notices, consents, demands, designations, requests, approvals and other communications permitted or required to be given under this Agreement shall be in writing and shall be hand delivered or sent by United States registered or certified mail, return receipt requested, postage prepaid or overnight courier or by facsimile transmission with a copy by mail and addressed, as the case may be:


		To Owner:		c/o Liberty Washington, LP 500 Chesterfield Parkway Great Valley Corporate Center Malvern, PA 19355 Attn: Mr. Michael T. Hagan Fax: (610) 644-4129

				New York State Common Retirement Fund c/o Office of the State Comptroller 59 Maiden Lane, 30 ^th Floor New York, NY 10038-4502 Attn: Assistant Deputy Comptroller Fax No.: 212-681-1331 Telephone No.: 212-383-1508

				with copies to:

				New York State Common Retirement Fund


				c/o Office of the State Comptroller 59 Maiden Lane, 30 ^th Floor New York, NY 10038-4502 Attn: Assistant Deputy Counsel Fax No.: 212-681-1331 Telephone No.: 212-383-2509

				with copies to:

				Cox, Castle & Nicholson LLP 2049 Century Park East, 28th Floor Los Angeles, CA 90067-3284 Attn: Amy H. Wells, Esq. Fax No.: 310-277-7889 Telephone No.: 310-284-2233

				with copies to:

				Heitman Capital Management LLC 191 North Wacker Drive Suite 2500 Chicago, IL 60606 Attn: Jerome Claeys Fax No.: 312-251-5445 Telephone No.: 312-541-6740

				and with copies to:

				Heitman Capital Management LLC 191 North Wacker Drive Suite 2500 Chicago, IL 60606 Attn: Anthony Ferrante Fax No.: (312) 541-6789 Telephone No.: (312) 251-5458

		To Manager:		c/o Liberty Property Trust 500 Chesterfield Parkway Great Valley Corporate Center Malvern, PA 19355 Attn: Michael T. Hagan Fax No. (610) 644-4129 Telephone No. (610) 648-1716

				and with copies to:


				Wolf, Block, Schorr and Solis-Cohen LLP 1650 Arch Street, 22nd Floor Philadelphia, PA 19103-2097 Attn: Herman C. Fala, Esquire Fax No: (215) 405-2976 Telephone No: (215) 977-2076

Any notice or communication which is hand delivered shall be deemed to have been given on the day it is delivered or, if mailed as above provided, shall be deemed to have been given on the third business day after the day on which it shall have been so mailed or on the next business day after delivery to an overnight courier.

ARTICLE X

Assignment

This Agreement may not be assigned by Manager nor shall Manager delegate any of its duties hereunder without Owner’s prior written consent except to an Affiliate of Manager (which assignment shall not relieve Manager of its liability hereunder). The engagement by Manager of attorneys, accountants, engineers, contractors and other professionals shall not be deemed to be a delegation of Manager’s duties hereunder. Any purported assignment without such consent shall be void and of no effect. In the event Owner sells the Property and seeks to assign this Agreement to the purchaser, Manager shall have the option to terminate this Agreement as of the date of such purchase.

ARTICLE XI

Relationship of Parties

11.1 Nature of Relationship . In taking any action pursuant to this Agreement, Manager will be acting only as independent contractor, and not as an agent, with limited authority to act in Owner’s name only in accordance with the terms of this Agreement and nothing explicit or implied in this Agreement shall be construed as creating a partnership, joint venture, employment or agency relationship between Manager (or any person employed by Manager) and Owner or any other relationship between the parties hereto and Owner and Manager each hereby expressly disavow any agency or other relationship between Owner and Manager except that of Owner and independent contractor. Manager acknowledges and agrees that it shall act as an independent contractor hereunder with respect to Owner in connection with Manager’s obligations under this Agreement. Without limiting the generality of the foregoing, the parties acknowledge that Manager holds a direct or indirect partnership interest in Liberty Washington, LP, the direct or indirect owner of Owner, and agree that if, for any reason, Manager is deemed to be an agent of Owner, such agency shall be deemed coupled with an interest in Owner (consisting only of the interest in Liberty Washington, LP then held by the Affiliate of Manager) and irrevocable.

11.2 Communications Between Parties . Owner relies on Manager to direct and control all operations at the Property; provided, however , Owner reserves the right to communicate directly with the on-site building manager, Manager’s accountant or accountants working on Property matters and other employees with respect to financial matters, all tenants and tenants’ representatives, all lease prospects, all advertising, management, cleaning and servicing firms doing work for the Property, and all parties contracting with Owner or Manager with respect to the Property.

11.3 Confidentiality . Manager shall maintain the confidentiality of all matters pertaining to this Agreement and all financial operations and transactions relating to the Property, except as may be required by law; provided, however, that Manager shall not be in breach of its obligations under this Agreement or any other obligations or duties to Owner, or its partners, at law or in equity (whether under a theory of fiduciary duty or otherwise) if Manager or its Affiliates files this Agreement (and some or all of the exhibits hereto) as an exhibit to a filing it may make with the Securities Exchange Commission or makes disclosures regarding the transactions governed by this Agreement to the extent the Manager or its Affiliates reasonably believe necessary to enable the Manager or its Affiliates to comply with federal and state securities laws and the regulations of the Securities Exchange Commission, the rules of any stock exchange, or in connection with any filing or registration made by Liberty Property Trust, an Affiliate of Manager, as the issuer of publicly traded securities, or as part of information provided to its investors and/or financial analysts.

ARTICLE XII

Defaults and Termination

12.1 Default by Manager . Manager shall be deemed to be in default hereunder in the event: (i) Manager shall fail to keep, observe or perform any material covenant, agreement, term or provision of this Agreement to be kept, observed or performed by Manager and such default shall continue for a period of thirty (30) days after written notice thereof by Owner to Manager; provided, however, that if such failure is not susceptible of cure within such thirty (30) day period and Manager has commenced and is diligently attempting to cure such failure, then Manager shall have an additional sixty (60) days in which to cure such failure; or (ii) a receiver is appointed to take possession of the assets of Manager or an assignment by Manager for the benefit of creditors, or any action taken or suffered by Manager under any insolvency, bankruptcy, reorganization, moratorium, or other debtor-relief act or statute. Upon the occurrence of an event of default by Manager, Owner shall be entitled to seek specific performance of this Agreement, but in no event shall Owner be entitled to terminate this Agreement except as set forth in Section 12.2 below.

12.2 Ownership Interests in Owner . In the event that Liberty Property Limited Partnership or its permitted assignee hereunder, or an Affiliate of such parties, no longer has a direct or indirect ownership interest in Owner, then either Owner or Manager shall be entitled to terminate this Agreement upon written notice to the other.

12.3 Orderly Transition . In the event of any termination of this Agreement, Manager shall use its commercially reasonable efforts to effect an orderly transition of the management and operation of the Property to Owner or an agent designated by Owner and to cooperate with Owner, at Owner’s expense, or such agent.

12.4 Final Settlement of Accounts . Upon the termination of this Agreement, Manager promptly shall:

(a)

account for and deliver to Owner all receipts, charges and income from the Property and other monies of Owner in Manager’s possession;

(b)

deliver to Owner as received any monies due Owner under this Agreement but received after such termination;

(c)

deliver to Owner or to such other person as Owner shall designate, all materials, supplies, equipment, keys, original leases, contracts, documents, books and records pertaining to this Agreement and the Property;

(d)

assign without warranty or recourse existing contracts and permits in the name of Manager relating to the Property to Owner or to such party as Owner shall designate; and

(e)

within 30 days after the effective date of termination of this Agreement, cause to be furnished to Owner a summary of the then-current leasing status of the Property.

12.5 Default by Owner . In the event Owner fails to pay any commission or Management Compensation due to Manager hereunder (except where such failure is the result of a failure by Liberty Washington Venture, LLC, the general partner of Owner [the “General Partner"], to provide funds to Owner in accordance with Owner’s Agreement of Limited Partnership of even date herewith, as amended from time to time the [“Partnership Agreement"], Manager shall have all of its remedies available at law or in equity. Additionally, if Owner fails to provide funds necessary for Manager to carry out its duties hereunder (except for the reasons stated in the parenthetical to the foregoing sentence), Manager may advance such funds for the account of Owner and Owner shall promptly thereafter reimburse such funds to Manager together with interest thereon at the Default Rate. In no event shall Manager be entitled to terminate this Agreement except in accordance with Section 12.2 above.

ARTICLE XIII

Legal Proceedings

13.1 Cooperation by Manager and Owner . Manager and Owner shall fully cooperate, and shall cause their respective employees to fully cooperate, at Owner’s expense, in connection with the prosecution or defense of all legal proceedings affecting the Property; provided, that in the event a court of applicable jurisdiction rules that Manager or its officers, partners, directors, shareholders, trustees, beneficial owners, agents or employees has engaged in gross negligence or willful misconduct with respect to the subject of such proceedings, Manager shall reimburse Owner for its reasonable attorney fees and costs incurred in prosecuting such proceedings.

ARTICLE XIV

Miscellaneous

14.1 Governing Law . This Agreement shall be construed and enforceable in accordance with the laws of the state where the Property is located.

14.2 Entire Agreement . This Agreement contains the entire agreement between the parties and the same shall not be amended, modified or cancelled except in writing signed by the party to be charged.

14.3 Successors and Assigns . All terms, conditions and agreements herein set forth shall inure to the benefit of, and be binding upon the parties and their respective permitted successors and assigns.

14.4 Waiver . The failure of either party to insist upon strict performance of any term or provision of this Agreement or to exercise any option, right or remedy herein contained, shall not be construed as a waiver or as a relinquishment for the future of such term, provision, option, right or remedy, but the same shall continue and remain in full force and effect. No waiver by either party of any term or provision hereof shall be deemed to have been made unless expressed in writing and signed by such party.

14.5 Partial Invalidity . If any portion of this Agreement shall be decreed invalid by the judgment of a court, this Agreement shall be construed as if such portion had not been inserted herein except when such construction would constitute a substantial deviation from the general intent and purpose of this Agreement.

14.6 ERISA and Unrelated Business Taxable Income . Manager agrees to use commercially reasonable efforts to act in accordance with the fiduciary standards of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) to the extent Manager is subject thereto as a result of services rendered pursuant to this Agreement. Manager shall use its commercially reasonable efforts to avoid taking any action that would subject Owner to the tax on unrelated business taxable income under the Internal Revenue Code, as it exists at the time such action is taken (the “Code”). Manager shall abide by any and all procedures established by Owner to avoid prohibited transactions under ERISA and unrelated business taxable income under the Code.

14.7 Limitation on Owner’s Liability . The obligations of Owner are intended to be binding only on the Property and shall not be personally binding upon, nor shall any resort be had to, the private properties of its trustees, beneficiaries, advisers, officers, directors, or shareholders, as applicable, or its investment manager, or the general partners, officers, directors, or shareholders thereof, as applicable, or any employees or agents of any of them.

14.8 Waiver of Liens . Manager, for itself and any other party acting or claiming through or under Manager, for and in consideration of this Agreement, does hereby waive and relinquish all right to file a mechanics’ or other lien, claim or notice of intention to file any lien or claim, and does hereby covenant, promise and agree that no mechanics’ lien or claim or other lien or claim of any kind whatsoever shall be filed or maintained against the Property or the improvements thereon by or in the name of Manager or anyone acting or claiming to act by or through Manager.

14.9 Affiliates . As used herein, the term Affiliate shall mean a party controlling, controlled by or under common control with the party in question.

14.10 Limitation on Manager’s Liability . The obligations of Manager are intended to be binding only on the assets of the Manager and shall not be personally binding upon, nor shall any resort be had to, the private properties of its shareholders, trustees, beneficiaries, directors, officers, employees or agents, provided, however, the Owner shall retain the right, after notice to the Manager, to offset any amounts claimed against Manager hereunder against amounts due General Partner under the Partnership Agreement, and further provided that if there is any dispute as to whether the claim against Manager is valid, the amount sought to be withheld shall be escrowed until the first to occur of the matter being resolved or Manager, after written notice from Owner, no longer contesting the validity of the claim, with the interest earned thereon being paid to the party who is ultimately determined to be entitled to the amount claimed or, if it is determined that each party is entitled to a portion of the amount in dispute, pro rata based on the amount paid to each.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

OWNER:

___________________________________,
a Delaware limited liability company


		By:

				Name:
				Its:

MANAGER:

Liberty Property Limited Partnership,
a Pennsylvania limited partnership

By: Liberty Property Trust, its general partner


		By:

				Name:
				Its:

EXHIBIT A

PROPERTY ADDRESSES

EXHIBIT B

SCHEDULE OF COMMISSIONS

NEW TENANT, WITH NO OUTSIDE BROKER PARTICIPATION:

Years 1-5 — [*] of Gross Rent Any additional Year of the original term thereafter — [*] of Gross Rent

NEW TENANT, WITH OUTSIDE BROKER PARTICIPATION:

Years 1-5 — [*] of Gross Rent, to be paid [*] to Manager and [*] to the outside broker

Any additional Year of the original term thereafter — [*] of Gross Rent, to be paid [*] to Manager and [*] to the outside broker

RENEWAL/EXPANSION TENANT, WITH NO OUTSIDE BROKER PARTICIPATION:

Years 1-5 — [*] of Gross Rent

Any additional Year of the original term thereafter — [*] of Gross Rent

RENEWAL/EXPANSION TENANT, WITH OUTSIDE BROKER PARTICIPATION:

Years 1-5 — [*] of Gross Rent, to be paid [*] to Manager and [*] to the outside broker

Any additional Year of the original term thereafter — [*] of Gross Rent, to be paid [*] to Manager and [*] to the outside broker

The confidential information contained herein has been omitted and separately filed with the staff.

EXHIBIT C

List of Entities/Interests and Gross Asset Values


		GROSS ASSET VALUE OF
		CONTRIBUTED
CONTRIBUTED INTERESTS	PROPERTY	INTERESTS
RKB Pender, LLC (100%)	Pender Business Park	$	[*]
	3922-28 Pender Drive,
	Fairfax, VA

RKB CP IV, LLC (100%)	Corporate Pointe IV	$	[*]
	14111 Park Meadow Drive,
	Chantilly, VA

RKB Corporate Oaks, LLC (100%)	Corporate Oaks	$	[*]
	625 Herndon Parkway,
	Herndon, VA

RPB WillowWood I, LLC (100%)	WillowWood I and II,	$	[*]
	10300 and 10306 Eaton
	Place, Fairfax, VA

RPB WillowWood II, LLC (100%)

Republic Park, LLC (100%)	Republic Park (1 - 7)	$	[*]
	13605-15-25-35-45-55-65
	Dulles Technology Drive,
	Herndon, VA

	Republic Park (8)
	13461 Sunrise Valley
	Drive, Herndon, VA

RKB Lakeside Manager LLC	Lakeside I & II	$	[*]
(100%) (Owns 0.01% of RKB	14104 and 14120
Lakeside, LLC)	Newbrook Drive,
	Chantilly, VA

RKB Lakeside, LLC (99.9%)

RKB WillowWood Manager, LLC	WillowWood III and IV	$	[*]
(100%) (Owns 1% of RKB	10304 and 10302 Eaton
WillowWood, LLC)	Place, Fairfax, VA

RKB WillowWood, LLC (99%)


*		The confidential information contained herein has been omitted and separately filed with the staff.


		GROSS ASSET VALUE OF
		CONTRIBUTED
CONTRIBUTED INTERESTS	PROPERTY	INTERESTS
RPT Presidents Park, LLC	Presidents Park I, II & III	$	[*]
(99%) (Owns 100% of	13861 Sunrise Valley Drive
Presidents Park I, LLC;	13865 Sunrise Valley Drive
Presidents Park II, LLC;	2525 Network Place
and Presidents Park III, LLC)	Herndon, VA
RPT Presidents Park Manager
LLC (100%) (Owns 1% of RPT
Presidents Park, LLC)


		GROSS ASSET VALUE OF
		CONTRIBUTED
PURCHASED INTERESTS	PROPERTY	INTERESTS
RPLP I, LLC (100%) (GP and 1%	The Republic Building	$	[*]
owner of RPT 1425 Investors, L.P.)	1425 New York Avenue, NW
RPT 1425 Investors, L.P. (99%) (RPT 1425 Investors, L.P.	Washington, DC
owns 100% of RPT 1425 Holdings LLC. RPT 1425 Holdings LLC owns 100% of RPT 1425 New York Avenue LLC))

Republic 20th Street, LLC (100%)	1129 20th Street, NW	$	[*]
	Washington, DC

		TOTAL:

		$	*[]**


*		The confidential material contained herein has been omitted and has been separately filed with the staff.

EXHIBIT D

Current Debt of the Company

Assumed Financing


			PRINCIPAL LOAN
			BALANCE BEING
BORROWER ENTITY	PROPERTY	LENDER	ASSUMED
RKB Pender LLC	Pender Business Park	Capmark Finance,	$	[*]
	3922-28 Pender Drive,	Inc., as Master
	Fairfax, VA	Servicer for JP
		Morgan Chase Bank

RKB CP IV LLC	Corporate Pointe IV	Wells Fargo Bank,	$	[*]
	14111 Park Meadow	N.A., successor by
	Drive, Chantilly, VA	merger to Wells
		Fargo Bank
		Minnesota, N.A., as
		Trustee for the
		Registered Holders
		of Credit Suisse
		First Boston
		Mortgage Securities
		Corp., Commercial
		Mortgage
		Pass-Through
		Certificates,
		Series 2001-CP4

RPT 1425 New York	The Republic Building	LaSalle Bank	$	[*]
Avenue LLC	1425 New York	National
	Avenue, NW	Association, as
	Washington, DC	Trustee for the
		Registered Holders
		of Greenwich
		Capital Commercial
		Funding Corp.,
		Commercial Mortgage
		Trust 2005-GG5,
		Commercial Mortgage
		Pass-Through
		Certificates,
		Series 2005-GG5

RKB Corporate Oaks	Corporate Oaks	KeyBank National	$	[*]
LLC	625 Herndon Parkway,	Association
	Herndon, VA


*		The confidential material contained herein has been omitted and has been separately filed with the staff.


			PRINCIPAL LOAN
			BALANCE BEING
BORROWER ENTITY	PROPERTY	LENDER	ASSUMED
RPB WillowWood I LLC	WillowWood I and II	Wachovia Bank,	$	[*]
and	10300 and 10306 Eaton	National
RPB WillowWood II	Place, Fairfax, VA	Association, as
LLC		Servicer for Lehman
		Brothers Bank FSB

Republic Park LLC	Republic Park (1 - 7)	KeyBank Real Estate	$	[*]
	13605-15-25-35-45-55-65	Capital,
	Dulles Technology	Sub-Servicer for
	Drive, Herndon, VA	Lehman Brothers-UBS
	and	Commercial Mortgage
	Republic Park (8)	Pass-Through
	13461 Sunrise Valley	Certificates,
	Drive, Herndon, VA	Series 2006-C7

			TOTAL:

			$	*[]**

Liberty Loan


BORROWER ENTITY	INTERESTS PLEDGED	LENDER	PRINCIPAL
Liberty Washington,	RKB Lakeside, LLC	Liberty Property	$	[*]
LP (by assignment	And	Limited Partnership
as described in the	RKB WillowWood, LLC	(by assignment as
Recitals to this		described in the
Agreement)		Recitals to this
		Agreement)


*		The confidential information contained herein has been omitted and has been separately filed with the staff.

EXHIBIT E

Annual Business Plan
for 2007

(Final Budget to be Attached by Agreement of the Parties Prior to Execution of this Agreement)

EXHIBIT F

(Reserved)

EXHIBIT G

Form of Leasing Update

To be agreed upon by the parties at signing.

EXHIBIT H

Recitals

A. On the day prior to the Effective Date, NYSCRF contributed the sum of $415,063,748.00 to the Company.

B. On the Effective Date, the following transactions occurred in the following order:

(i) First, prior to completion of the Merger, the Company entered into one or more agreements with RPLP whereby RPLP agreed to sell, and the Company agreed to purchase, 100% of the ownership interests (the “Purchased Interests”) in Republic 20th Street, LLC, a Delaware limited liability company, RPLP I, LLC, a Delaware limited liability company, and RPT 1425 Investors, LP, a Delaware limited partnership (collectively, the “Purchased Entities”), for an aggregate amount equal to $76,540,000.00 (the “Purchase Price”).

(ii) Second, prior to completion of the Merger, the Company closed on the purchase of the Purchased Interests. The consideration for such purchase was a purchase money promissory note from the Company to RPLP in the full amount of the Purchase Price. The promissory note described in this Recital B(ii) is referred to herein as the “Purchase Money Note”. The Purchase Money Note was nonrecourse to the Company and was secured by a pledge by the Company of its ownership interests in Republic 20th Street LLC and Liberty Property Philadelphia Limited Partnership. The Purchase Money Note, together with the documents securing the Purchase Money Note, are referred to herein collectively as the “Purchase Money Loan Documents”. Immediately upon issuance of the Purchase Money Note, RPLP conveyed the Purchased Interests to the Company.

(iii) Third, prior to completion of the Merger, the General Partner made a loan to RPLP in the aggregate amount of $59,500,000.00 (the “Liberty Loan”). The Liberty Loan was nonrecourse to RPLP, secured by a pledge by RPLP to the General Partner of all of RPLP’s interests in RKB Lakeside LLC, a Delaware limited liability company (“Lakeside, LLC”), and RKB WillowWood LLC, a Delaware limited liability company (“WillowWood, LLC”), and evidenced by a promissory note and a loan and security agreement (the “Liberty Loan Documents”). Prior to completion of the Merger, RPLP applied the proceeds of the Liberty Loan to defease the existing mortgage loans that encumber the assets owned by Lakeside, LLC and WillowWood, LLC.

(iv) Fourth, prior to completion of the Merger, the Company made a loan to LPLP in an amount equal to $415,063,748.00 (the “Merger Loan”), which was fully recourse to LPLP and evidenced by a promissory note from LPLP to the Company. LPLP used the proceeds of the Merger Loan to complete the Merger.

(v) Fifth, immediately after completion of the Merger, LPLP contributed the Contributed Interests and its interests in and to the Purchase Money Loan Documents to the Company on behalf of the General Partner, subject to the Liberty Loan, in satisfaction of the Merger Loan, to the extent thereof, and the balance as a contribution to the capital of the Company. Contemporaneously with the contribution of the Contributed Interests to the Company, LPLP assigned, and the Company assumed, all of LPLP’s interests and obligations as borrower under the Liberty Loan Documents, including the obligation to make payments under the note evidencing the Liberty Loan.

EXHIBIT I

Initial Yield Parameters

The Venture will be subject to minimum projected hurdle levels of return for acquisitions of existing buildings or for development land as follows:

The minimum projected initial stabilized unleveraged capitalization rate (“cap rate”) for existing buildings in Northern Virginia will be [*] and in the District of Columbia will be [*], while the minimum unleveraged internal rate of return (“IRR”) for existing buildings in Northern Virginia will be [*] and in the District of Columbia will be [*].

The minimum projected initial stabilized unleveraged cap rate for to-be-developed or to-be-redeveloped buildings in Northern Virginia will be [*] and in the District of Columbia will be [*], while the minimum unleveraged IRR for to-be-developed or to-be-redeveloped buildings in Northern Virginia [*] and in the District of Columbia will be [*].


*		The confidential information contained herein has been omitted and has been separately filed with the staff.

EXHIBIT J

Report of Independent Accountants

To the partners of Liberty Washington, LP

In planning and performing our audit of the consolidated financial statements of Liberty Washington, LP for the year ended December 31, 200_____, we considered its internal control to determine our auditing procedures for the purpose of expressing our opinion on the consolidated financial statements and not to provide assurance on internal control. Our consideration of internal control would not necessarily disclose all matters in internal control that might be material weaknesses under standards established by the American Institute of Certified Public Accountants. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements caused by errors or fraud in amounts that would be material in relation to the consolidated financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. However, we noted no matters involving internal control and its operation that we consider to be material weaknesses as defined above.

This report is intended solely for the information and use of the partners of Liberty Washington, LP, management, and others within the organization and is not intended to be and should not be used by anyone other than these specified parties.

We would be pleased to discuss the above matters or to respond to any questions, at your convenience.

EXHIBIT K

DUE DILIGENCE AND CLOSING PROCEDURES FOR ACQUISITION OF VACANT
LAND, LAND AND IMPROVEMENTS SUITABLE FOR BEING REHABILITATED AS
REDEVELOPMENT PROPERTY, AND FUNCTIONAL OFFICE PROPERTY

[The confidential information contained herein has been omitted and separately filed with the staff.]

EXHIBIT L

DUE DILIGENCE AND CLOSING PROCEDURES FOR NEW DEVELOPMENT AND
REDEVELOPMENT PROPERTY

[The confidential information contained herein has been omitted and separately filed with the staff.]

EXHIBIT M

Insurance Requirements

GENERAL REQUIREMENTS

•

Insurance companies must have an AM Best Rating of A/10 or higher for Primary Property, Liability and Umbrella policies up to $100 million and A/8 for policies in excess of $25 million in limits.

•

CRF entities should be named as Insureds on all policies and Loss Payee on Property policies.

•

All cancellation clauses must reflect at least 60 days written notice to CRF, except for non-payment — 15 days if available, otherwise 10 days.

•

Insurance companies must be licensed to do business in states where exposures exist.

•

Certificates and copies of all policies must be submitted to CRF or whomever they designate.

•

Confirmation of all renewals must be provided within 5 days of the renewal.

REQUIREMENTS FOR PROPERTY INSURANCE

Coverage

“All Risk” on all real property and personal property, loss of income (rents — at least one year) and extra expense.

1. Extensions

•

Flood, including back up of sewers and drains, seepage, and surface water

•

Earthquake

•

Increased cost of construction

•

Building ordinance or Law

•

Demolition

•

Pollution clean up for contamination of covered property as a result of a covered peril

•

Extended period of indemnity, 180 days

•

Joint loss clause (if boiler is written separately)

•

Terrorism for both certified and non-certified acts

•

Off premises power interruption both direct and indirect

2. Valuation Clauses

•

Replacement cost on real and personal property

•

Actual loss sustained on loss of rents, extra expense

3. Limits

Must reflect values of properties; if written on a blanket basis, blanket limit must reflect total values at risk; or if written on a loss limit basis, loss limit must be secured to reflect total insured values (TIV) within any geographic area subject to a single catastrophic event. If written on a per occurrence loss limit basis for “All Risk perils”, the word “occurrence” shall not be defined unless the definition is acceptable to CRF; sublimits for Flood and Earthquake must reflect probable maximum loss (PML).

4. Deductibles


Maximum deductibles

“All Risk”	$	25,000

Flood	$	100,000		(In a flood zone, higher deductibles are acceptable, up to the maximum that can be bought back in Federal program.)

Earthquake	$	100,000		(In California, Washington state and the “New Madrid Fault”, no greater than 5% of individual building value and 5% of 12 months of business revenue for properties, unless such coverage is not reasonably available.

Windstorm		2	%

REQUIREMENTS FOR BOILER & MACHINERY

Coverage

Coverage must be provided for direct damage and loss of income due to any accident to boiler and/or air conditioning equipment.

1. Extensions

•

Water damage

•

Expediting expenses

•

Ammonia contamination

•

Building ordinance

•

Joint loss clause (if applicable)

•

Hazardous substance clean up for contamination of covered property from a covered peril

•

Terrorism for both certified and non-certified acts

•

Off Premise Power interruption

•

Extended period of indemnity — 60 days

2. Valuation

•

Replacement cost of property

•

Actual loss sustained on business income

3. Limits

•

Must reflect values of properties

Deductibles

	•		Maximum deductibles

			Direct damage — $10,000

			Loss of Income — 24 hours

- ii -

REQUIREMENTS FOR COMMERCIAL GENERAL LIABILITY


	Combined Single
	Limit
1. Coverage/Limit
• General aggregate other than Products/Completed Operations	$	2,000,000
• Products/Completed Operations aggregate		1,000,000
• Personal and advertising injury (any one person)		1,000,000
• Each occurrence		1,000,000
• Fire/explosion damage legal liability (any one fire/explosion		100,000
• Medical expense (any one person) (except residential where coverage is $0)		5,000

2. Extensions
• Aggregate must be on a per location basis
• Notice of occurrence
• Knowledge of occurrence
• Unintentional errors and omissions
• Pollution from hostile fire, building heating equipment
• Cross Liability — severability of interest
• Delete contractual exclusion on personal injury coverage part
• Terrorism for both certified and non-certified acts
• No exclusion for lead, mold and fungus

REQUIREMENTS FOR EXCESS LIABILITY

Coverage must be written on an Umbrella form for the lead carrier. All excess layers (if any) should be written on a follow form basis.


1. Limits
• Minimum acceptable limit is $50,000,000

2. Extensions
• Terrorism for both certified and non-certified acts
• Policy should be excess of Commercial General Liability, Automobile and Employers Liability

- iii -

REQUIREMENTS FOR ENVIRONMENTAL LIABILITY

Coverage is to include remediation legal liability, pollution, legal liability and legal defense.

•

Both 1 ^st and 3 ^rd party coverage

•

Mold and Fungus — if excluded under Property and/or liability policies

Limits — minimum $5,000,000

- iv -

REQUIREMENTS FOR CRIME/FIDELITY INSURANCE

Coverage must be provided for acts of dishonesty by employees which result in a loss to CRF, including the following:

		Employee dishonesty

		Money and securities — in

		Money and securities — out

In addition:

		Forgery or Alteration

		Computer fraud


1. Limits
• Dishonesty		- a minimum of 4 months’ income
• Money and Securities		- maximum cash exposure
• Forgery or alteration		- same limit as dishonesty
• Computer Fraud		- same limit as dishonesty

2. Maximum Deductibles
• Dishonesty, forgery and computer fraud		- $50,000
• Money and securities		- $1,000

3. Comments

Since this policy is typically written in the name of Advisor, CRF must have confirmation that the policy covers property of CRF if a loss should occur.

REQUIREMENTS FOR WORKERS COMPENSATION INSURANCE

Statutory Benefits


Employers Liability Limits
• Bodily Injury by accident occurrence		- $1,000,000 each occurrence
• Bodily Injury by disease		- $1,000,000 policy limit
• Bodily Injury by disease		- $1,000,000 each employee

REQUIREMENTS FOR PROFESSIONAL LIABILITY

Errors & Omissions Liability coverage
The Limit should be at least $2,000,000
Maximum deductible of $50,000

- v -

Exhibit 10.19

CONTRIBUTION AGREEMENT

AMONG

NEW YORK STATE COMMON RETIREMENT FUND

AND

LIBERTY PROPERTY LIMITED PARTNERSHIP

AND

LIBERTY WASHINGTON, LP

TABLE OF CONTENTS


		Page
1.	CONTRIBUTION OF OWNERSHIP INTERESTS		1
	1.1 Description of the Ownership Interests		1
	1.2 Description of the Property		1
	1.3 Schedule of Parcels		2
	1.4 Value of the Interests		2
2.	FORMATION OF THE COMPANY; CONTRIBUTIONS; CLOSING PROCEDURES		2
	2.1 Contribution Procedures		2
	2.2 Tax Treatment		3
3.	PRE-CLOSING MATTERS		3
	3.1 Information Provided to NYSCRF		3
	3.2 Additional Service Contracts		3
	3.3 Additional Tenant Leases		3
	3.4 Existing Loans		3
	3.5 Estoppel Letters		4
4.	REPRESENTATIONS, WARRANTIES AND COVENANTS		4
	4.1 Liberty’s Representations and Warranties		4
	4.2 Delivery of Documents		8
	4.3 Knowledge Defined		8
	4.4 Liberty’s Covenants		8
	4.5 Indemnity For Breach by Liberty		10
	4.6 NYSCRF’s Representations and Warranties		10
5.	CONDITIONS OF CLOSING		11
	5.1 Closing Conditions For NYSCRF’s Benefit; Removal of a Parcel		11


		Page
	5.2 Conditions Precedent for Liberty’s Benefit		12
6.	CLOSING		13
	6.1 Closing		13
	6.2 Title Insurance		15
	6.3 Delivery of Documents, Possession, Keys and Other Items		15
	6.4 Closing Costs; Transfer Taxes		15
7.	PRORATIONS		16
	7.1 Initial Proration		16
	7.2 Adjustments; Reproration		17
	7.3 Indemnity		17
8.	SURVIVAL		18
	8.1 Survival		18
9.	COMMISSIONS		18
	9.1 Liberty’s Indemnity		18
	9.2 NYSCRF’s Indemnity		18
10.	FURTHER INSTRUMENTS		19
11.	TERMINATION AND REMEDIES		19
	11.1 Liberty’s Default		19
	11.2 NYSCRF’s Default		19
	11.3 Costs and Expenses; Limitation		20
	11.4 Limitation of NYSCRF Liability		20
12.	RISK OF LOSS		20
13.	PROVISIONS REGARDING HAZARDOUS SUBSTANCES		21
	13.1 Definitions		21
	13.2 Liberty’s Environmental Representations and Warranties		22


		Page
	13.3 Environmental Covenant		22
	13.4 Environmental Indemnification		22
14.	NO ASSUMPTION		24
	14.1 No Assumption		24
15.	NOTICES		24
	15.1 Notices		24
16.	MISCELLANEOUS		25
	16.1 Entire Agreement		25
	16.2 Counterparts		25
	16.3 Time of the Essence		25
	16.4 Assignment		25
	16.5 Dates		26
	16.6 Binding on Successors and Assigns		26
	16.7 Records		26
	16.8 Confidentiality and Public Disclosure		26
	16.9 Termination		26
	16.10 Reporting Person		26
	16.11 Paragraph Headings		26
	16.12 Facsimile Signatures		26
	16.13 Exculpation		27
	16.14 AS IS		27
	16.15 Governing Law		28
	16.16 Receipt of Written Notice Defined		28

CONTRIBUTION AGREEMENT

THIS CONTRIBUTION AGREEMENT (the “ Agreement ”) is entered into among NEW YORK STATE COMMON RETIREMENT FUND (“ NYSCRF ”), LIBERTY PROPERTY LIMITED PARTNERSHIP, a Pennsylvania limited partnership (“ Liberty ”), and LIBERTY WASHINGTON, LP, a Delaware limited partnership (the “ Company ”).

1. CONTRIBUTION OF OWNERSHIP INTERESTS

1.1 Description of the Ownership Interests . In consideration of the terms and conditions hereinafter set forth, Liberty shall contribute, or cause to be contributed, to the Company, all of Liberty’s ownership interests (the “ Contributed Interests ”) in certain of those entities identified on Exhibit A attached hereto (each a “ Contributed Entity ” and collectively, the “ Contributed Entities ”), including, without limitation, the following:

(a) Liberty’s voting, approval and consent rights with respect to the Contributed Entities, whether under the Contributed Entities’ Operating Agreements (as defined in Section 4.1(a)(ii) ) or state law;

(b) Liberty’s rights to cash flow distributions, and other payments or distributions of capital, return on capital, reimbursements, repayments, fees, surplus, profits, sales proceeds or borrowings of or from the Contributed Entities (whether during the term of the Contributed Entities or in connection with the liquidation of the Contributed Entities), to the extent arising from and after the Closing Date; and

(c) Liberty’s right to any allocations of tax items of the Contributed Entities that accrue for tax purposes on or after the Closing Date (as defined in Section 6.1 ).

The terms Purchased Entities (as defined in Schedule 2.1(b)(ii) attached hereto) and Contributed Entities are sometimes referred to herein individually as an “ Entity ” and collectively as the “ Entities ”.

1.2 Description of the Property . Each Entity owns, directly or indirectly, either solely or together with another Entity, one or more office properties as expressly identified on Exhibit A attached hereto, including all of the following described property with respect to the applicable office property (collectively, the “ Property ”):

(a) Land . The real property at the addresses identified on Exhibit B attached hereto and more fully described on Exhibit B attached hereto, together with all rights and appurtenances pertaining to such real property, including, without limitation, all cross access/reciprocal access easements and any and all right, title, and interest of the Entities in and to adjacent roads, alleys, easements, streets and ways (collectively, the “ Land ”);

(b) Improvements . All physical improvements, structures and fixtures owned by the Entities and placed, constructed or installed on the Land (collectively, the “ Improvements ”);

(c) Tenant Leases . The Entities’ interest in leases and rental agreements with tenants occupying space situated in the Improvements or otherwise having contractual rights with regard to use of the Land or the Improvements as of the Closing Date (collectively, the “ Tenant Leases ”), and all existing unapplied security deposits or like payments, if any, paid

by tenants under the Tenant Leases or other security provided in connection with the Tenant Leases and identified on the Rent Roll (as defined in Section 4.1 hereof);

(d) Service Contracts . The Entities’ interest in all (i) management and/or brokerage contracts relating to the Land or Improvements; (ii) maintenance, repair, service and pest control contracts relating to the Land or Improvements; and (iii) other contracts pursuant to which services or goods are provided to the Land or Improvements, not to include any management agreement affecting the Land or Improvements (collectively, the “ Service Contracts ”);

(e) Warranties, etc . The Entities’ interest in all warranties, guaranties and bonds relating to the Land and the Improvements;

(f) Plans . All site plans, surveys, plans and specifications, floor plans, art work, brochures, and tenant correspondence files in each Entity’s possession or in the possession of Liberty’s leasing and management agents for the Property and which relate specifically to the Land or the Improvements; and

(g) Intangible Property . All intangible property owned or held by the Entities or in which an Entity has an interest, if any, and the right to the use thereof, including but not limited to, the Entities’ rights under governmental permits or approvals (to the extent same are assignable) and the right to the use of (without warranty as to exclusivity or otherwise) the names, trade marks, trade names and telephone numbers and listings employed exclusively in connection with the Land or the Improvements or the operations thereon (the “ Intangible Property ”).

1.3 Schedule of Parcels . The Property consists of separate parcels, each of which is identified on Exhibit A hereto and referred to herein individually as a “ Parcel ”, and collectively as the “ Parcels ”. Each Parcel is owned directly or indirectly by the Entity identified on Exhibit A .

1.4 Value of the Interests . The Parties acknowledge and agree that the Interests, as hereinafter defined, have the gross value ascribed to them on Exhibit A , which ascribed value is referred to herein as the “ Gross Asset Value ”.

2. FORMATION OF THE COMPANY; CONTRIBUTIONS; CLOSING PROCEDURES

2.1 Contribution Procedures . When the conditions to Closing (as defined in Section 6.1 ) set forth in Sections 5.1 and 5.2 have been satisfied or waived by the party for whose benefit the conditions are included, the following shall occur:

(a) Formation of Company . The parties shall execute and deliver the Limited Partnership Agreement of the Company in the form of Exhibit F (the “ Partnership Agreement ”). Liberty hereby designates Liberty Washington Venture, LLC (the “ LLC ”) to receive the general partnership interests in the Company to which Liberty is entitled by reason of its contributions hereunder. The LLC has filed or caused to be filed the certificate of limited partnership for the Company with the Secretary of State of the Sate of Delaware on September 21, 2007.

(b) Capital Contributions .

(i) On the day prior to the Closing Date, subject to the adjustments provided for herein, in consideration of the terms and conditions set forth herein,

NYSCRF shall contribute cash to the Company an amount (herein referred to as the “ Contribution Amount ”) equal to $415,063,748.00.

(ii) On the Closing Date, the parties shall undertake the Additional Closing Procedures described on Schedule 2. 1(b)(ii) attached hereto, in the order set forth therein. The transactions described in Schedule 2. 1(b)(ii) shall result in Liberty making a capital contribution to the Company on behalf of the LLC in the aggregate amount of $138,354,583.00.

(d) Management and Leasing Agreement . Immediately following the completion of the contributions referred to in Section 2.1(b) above, the Company shall cause its subsidiaries that own the Parcels to enter into a Management and Leasing Agreement in the form of Exhibit G , attached hereto, for its respective parcel (the “ Management Agreement ”). Notwithstanding the foregoing, in the event that lender approval is not obtained for the assumption of any of the Assumed Financing (as defined in Section 3.4 ) prior to the contribution or sale of the applicable Entity to the Company, the then-existing management agreement for such Entity (the “ Existing Management Agreement ”) shall remain in place and effective until such approval is obtained or such Assumed Financing is paid off, defeased or refinanced; provided, however, that as between the Manager and the “Owner” under such Existing Management Agreement, the fees and obligations set forth in the form of Management and Leasing Agreement attached hereto as Exhibit G shall control.

2.2 Tax Treatment . Upon completion of the events described in Section 2.1 , except as otherwise provided herein, the transaction contemplated hereby will be treated, for federal income tax purposes, as a contribution to the Company of a twenty-five percent (25%) undivided interest in the Contributed Interests in exchange for an interest in the Company and a sale to the Company of a seventy-five percent (75%) undivided interest in the Contributed Interests in exchange for an amount realized equal to the amount of the Merger Loan (and all other indebtedness or liabilities to which the Contributed Interests are subject or treated as subject for tax purposes).

3. PRE-CLOSING MATTERS

3.1 Information Provided to NYSCRF . NYSCRF acknowledges that Liberty has furnished or made available to NYSCRF all of the items described on Exhibit D attached hereto (collectively, the “ Due Diligence Items ”).

3.2 Additional Service Contracts . From and after the date hereof, and continuing until Closing or the earlier termination of this Agreement (in whole or, with respect to any Interest being terminated pursuant to this Agreement, in part), Liberty shall not enter into any new Service Contracts with respect to the Property without the prior consent of NYSCRF, which consent shall not be unreasonably withheld, conditioned or delayed.

3.3 Additional Tenant Leases . From and after the date hereof, and continuing until Closing or the earlier termination of this Agreement (in whole or, with respect to any Contributed Interest being terminated pursuant to this Agreement, in part), Liberty shall not enter into any new Tenant Leases with respect to the Property without the prior consent of NYSCRF, which consent shall not be unreasonably withheld, conditioned or delayed.

3.4 Existing Loans . Nine (9) of the Parcels are currently encumbered by mortgage loans, and one (1) Contributed Entity currently maintains a secured revolving line of credit, each as more particularly shown on Schedule 3.4 attached hereto (collectively, the “ Existing Loans " ) . Liberty intends to undertake the following actions with respect to the Existing Loans at

or before Closing, all at the sole cost and expense of the Company: (i) the construction loan currently encumbering 1129 20th Street, NW will be repaid in full; (ii) the line of credit will be repaid in full; (iii) the mortgage loans currently encumbering Lakeside I & II and WillowWood III & IV will be defeased in accordance with the procedures described in Schedule 2. 1(b)(ii) ; and (iv) the remaining Existing Loans will remain in place and will be “assumed” by the Company. The Existing Loans described in Clauses (i)-(iii) above are referred to herein as the “ Satisfied Loans ” , and the Existing Loans described in Clause (iv) above are referred to herein as the “ Assumed Financing ” . The Assumed Financing and the Liberty Loan are referred to herein collectively as the “ Permanent Financing ”.

3.5 Estoppel Letters . Liberty shall use diligent efforts to obtain and deliver to NYSCRF, on or before the Closing Date, estoppel letters, substantially in the form of Exhibit J attached hereto, or, in the case of leases with the General Services Administration (the “ GSA ”), a Lease Status Report in the GSA’s standard form, executed by tenants occupying more than 25,000 square feet of the Property on the date of this Agreement.

4. REPRESENTATIONS, WARRANTIES AND COVENANTS

4.1 Liberty’s Representations and Warranties . Liberty represents and warrants to NYSCRF (and to the Company, as of the Closing Date) as follows (which representations and warranties shall be true and correct as of the date hereof and as of the Closing):

(a) Entities .

(i) Each Entity is a duly formed, validly existing limited liability company or limited partnership organized under the laws of the State of Delaware and is duly qualified or registered to do business in the Commonwealth of Virginia or the District of Columbia, as applicable based upon the location of the Parcel owned by such Entity, if any.

(ii) The limited liability company agreement or partnership agreement, whichever is applicable (the “ Operating Agreements ”), of each Entity is in full force and effect, has not been modified, supplemented, amended or terminated and, together with the applicable Certificate of Formation or Certificate of Limited Partnership, constitutes the sole agreement and understanding (written or oral) among the parties thereto with respect to the applicable Entity. A true and correct copy of the Operating Agreement of each Entity has been delivered to NYSCRF.

(iii) On the Closing Date, Liberty will be the only beneficial and legal owner of the Contributed Interests, free and clear of all liens, security interests, pledges, assignments, claims, options, encumbrances, charges, commitments, and equitable interests or rights of others, of any kind whatsoever, other than the Assumed Financing and the Merger Loan.

(iv) Neither Liberty nor any Entity is the subject of any bankruptcy or other insolvency proceeding.

(v) The Entities have no assets other than their direct or indirect interest in the Property as shown on Exhibit A , and, where applicable, direct or indirect ownership interests in Entities that own the Property.

(vi) The Entities have not conducted any business that is unrelated to their respective ownership of the Property and, where applicable, direct or indirect ownership interests in Entities that own the Property.

(vii) No Entity employs employees who manage, maintain or service the Property and whom the Company would be obligated to employ subsequent to Closing. There are no collective bargaining agreements or other similar contracts or agreements with any labor union or bargaining unit respecting the Property or the Entities.

(viii) None of the Entities is a “foreign person” within the meaning of Sections 1445 and 7701 the Internal Revenue Code of 1986, as amended (hereinafter, the “ Code ”).

(ix) The Entities are not delinquent in filing any tax returns which are required to have been filed by them. The Entities have no outstanding liability for any Taxes (as hereinafter defined), with the exception of Tax for the current tax year that are to be allocated between Seller and Buyer as set forth in Section 7.1(f) . “Tax” means any federal, state, county, provincial, local or foreign income, gross receipts, sales, use, ad valorem , employment, severance, transfer, gains, profits, excise, franchise, property, capital stock, premium, minimum and alternative minimum or other taxes, fees, levies, duties, assessments or charges of any kind or nature whatsoever imposed by any government, any governmental entity, department, commission, board, agency or instrumentality, and any court, tribunal or judicial body, in each case whether federal, state, county, provincial, local or foreign (“ Governmental Authority ”), whether such Tax is payable directly or by withholding, together with any interest, penalties (civil or criminal), additions to or additional amounts imposed by, any Governmental Authority with respect thereto.

(b) Property .

(i) Title . Each Entity or its subsidiary that is the fee owner of the Parcel in question, holds or will hold as of Closing, a title insurance policy insuring fee simple ownership of the Land and the Improvements for its respective Parcel. To Liberty’s knowledge, the Entities do not own or lease any personal property in connection with the Land and Improvements.

(ii) Litigation . There is no pending nor, to Liberty’s knowledge, threatened litigation or administrative proceedings that, if resolved adversely to Liberty or any Entity would adversely affect title to the Property or any part thereof or the ability of Liberty to perform any of its obligations hereunder or the use of the Property by the Company as it is presently being used or otherwise materially and adversely affect the Property, except as set forth on Schedule 4. 1(b)(ii) (the “ Existing Litigation ”).

(iii) Notice of Liens . Liberty has not received written notice of the intention of any governmental authority to file or impose any liens (other than statutory liens for real estate taxes not yet due and payable) or special assessments against any of the Property, nor, to Liberty’s knowledge, do there currently exist any facts or circumstances that would allow any governmental authority the right to file or impose such liens or assessments.

(iv) Schedule of Leases; Rent Roll; Tenant Leases . To Liberty’s knowledge, the Schedule of Lease Documents (the “ Schedule of Leases ”) provided to NYSCRF pursuant to Section 3.1 hereof is a complete and correct list of all Tenant Leases and amendments thereto in effect as of the date of this Agreement. To Liberty’s knowledge, the rent roll provided to NYSCRF pursuant to Section 3.1 hereof (the “ Rent Roll ”) sets forth with respect to each of the Tenant Leases in effect on the date hereof (i) the square footage of the space covered thereby, (ii) the expiration date of the term thereof, (iii) the rents and other charges payable thereunder, (iv) the amount of the security deposit thereunder, if any, and (v) any brokerage or leasing fees due and payable thereunder. To Liberty’s knowledge, no Tenant Lease has been modified, altered or amended in any respect except as set forth in the Schedule of

Leases. To Liberty’s knowledge, there are no leases, tenancies or other rights of occupancy or use for any portion of the Property other than pursuant to Tenant Leases, copies of which have been delivered to NYSCRF.

(v) Encumbrances on Tenant Leases . To Liberty’s knowledge, subject to the Assumed Financing, none of the Tenant Leases and none of the rents or other amounts payable thereunder has been assigned, pledged or encumbered by Liberty, except for any assignment, pledge or encumbrance that Liberty will cause to be terminated or released at or prior to Closing.

(vi) Brokerage or Leasing Commissions . Except as disclosed on the Rent Roll, to Liberty’s knowledge, no brokerage or leasing commissions or other compensations are due or payable by Liberty to any person, firm, corporation, partnership, limited liability company or other entity (each a “ Person ”) with respect to or on account of the current term of any of the Tenant Leases. Except as disclosed in the Rent Roll or set forth in the Tenant Leases, to Liberty’s knowledge, no brokerage or leasing commissions or other compensations are due or payable by the landlord on any extension or expansion of any Tenant Lease.

(vii) Obligations to Tenants under Tenant Leases . Except as set forth on Schedule 4. 1(b)(vii) attached hereto, with respect to tenants in occupancy under Tenant Leases as of the Closing Date, to Liberty’s knowledge, there are no unperformed obligations to provide any tenant under any Tenant Lease with any painting, repair, alteration, carpeting, appliance or any other equipment or work of any kind, under any Tenant Lease or under any other oral or written agreement whatsoever that would excuse such tenant from accepting its Premises under the terms of its lease, except for obligations (i) that will be performed and paid for by Liberty before the Closing or (ii) to complete any portion of the Premises covered by the Tenant Lease not yet occupied by the tenant thereunder and not required to be completed under the terms of the Tenant Lease as of the Closing Date or pursuant to renewal rights under Tenant Leases.

(viii) Enforceability of Tenant Leases . To Liberty’s knowledge, each of the Tenant Leases is valid and subsisting and in full force and effect in accordance with its terms, provisions and conditions and constitutes the legal, valid, binding and enforceable obligation of the tenant thereunder, subject to laws applicable generally to creditor’s rights. As of the date of this Agreement, neither Liberty nor, to the knowledge of Liberty, the tenant is in material default thereunder. To Liberty’s knowledge, as of the date of this Agreement, (i) each tenant under a Tenant Lease scheduled to be in possession as of the date hereof has accepted the premises covered by its Tenant Lease and is in possession of such premises in accordance with its Tenant Lease, and (ii) all initial installation work, if any, required of Liberty in order for the tenant to accept the premises then in actual occupancy by a tenant under the terms of its lease has been fully performed, paid for and accepted by each such tenant. To Liberty’s knowledge, no tenant under a Tenant Lease that has been signed as of the date hereof has any pending litigation, offsets or counterclaims against Liberty that, if successfully asserted, would reduce the rent payable thereunder or result in the cancellation or termination thereof. No tenant has given any written notice to Liberty of such tenant’s intention of instituting litigation with respect to any Tenant Lease or terminating its tenancy. Each of the representations and warranties set forth in this Section 4.1(viii) is subject to the matters disclosed on Schedule 4.1(viii) attached hereto.

(ix) Agreements to Acquire or Possess the Property . Except as set forth in the Tenant Leases, to Liberty’s knowledge, no tenant or other occupant under the Tenant Leases and no other Person (other than, pursuant to this Agreement, the Company) has any right or option to acquire any fee or leasehold ownership interest in the Property, or any part thereof, from Liberty or any Entity. Neither Liberty nor, to Liberty’s knowledge, any Entity has entered

into any agreement with any Person granting the right to possess the Property, other than (i) tenants in possession pursuant to the Tenant Leases described in the Schedule of Leases, (ii) tenants under Tenant Leases entered into by the Entities after the date hereof in accordance with Section 3.3 ; or (iii) matters of public record.

(x) Defects; Violations; Condemnation Proceedings . With respect to the Property, neither Liberty nor, to Liberty’s knowledge, any Entity has received any written notice from any insurance company, governmental agency or any other Person of (i) any condition, defect, or inadequacy affecting the Property that, if not corrected, would result in termination of insurance coverage or materially increase its cost, (ii) any pending or threatened condemnation proceedings, or (iii) any proceedings that could or would reasonably be likely to cause the change or other material modification of the zoning classification or other legal requirements, applicable to the Property or any part thereof which would materially and adversely affect the Property. To Liberty’s knowledge, there does not exist any court order, nor does there exist any restriction or restrictive covenant (save and except matters of public record and all laws, statutes, ordinances and regulations of applicable governmental authorities) or other private or public limitation, that is reasonably likely to materially and adversely affect the use of the Property as presently being operated.

(xi) Mechanic’s Liens . At Closing, except for payments currently due or to become due under existing contracts for tenant improvements under the Tenant Leases in force and effect as of the date hereof and except for any payments currently due or to become due under the construction contracts for the development of the Parcel located at 1129 20th Street, NW, Washington, D.C., to Liberty’s knowledge, there will not be any unpaid charges, debts, liabilities, claims or obligations of Liberty or any Entity arising from the construction, occupancy, ownership, use or operation of the Property which could give rise to any mechanics’ or materialmen’s or other statutory liens against any of the Property that will not be paid by Liberty or an Entity at the Closing (or bonded over in a manner reasonably acceptable to NYSCRF and the Title Company and in accordance with the provisions of any applicable statutes or regulations or affirmatively insured against by the Title Company to NYSCRF’s reasonable satisfaction or for which Liberty may be willing to escrow funds, to the reasonable satisfaction of NYSCRF).

(xii) Governmental Requirements . Neither Liberty nor, to Liberty’s knowledge, any Entity has received a written notice from any Governmental Authority asserting a violation of any uncured restrictive covenants, deed restrictions or zoning requirements or other applicable Governmental Requirements (as defined in Section 13.1(a) hereof) affecting the Property.

(xiii) Streets and Highways . Neither Liberty nor, to Liberty’s knowledge, any Entity has received a written notice of any existing plans to widen, modify or realign any street adjoining the Property.

(xiv) Unfulfilled Binding Commitments . No commitments have been made by Liberty nor, to Liberty’s knowledge, any Entity to any Governmental Authority, utility company, school board, church or other religious body, or any homeowners or homeowners’ association, or any other organization, group or individual, relating to the Property (other than with respect to any declaration in place at the Property) that would impose an obligation upon the Company or its successors or assigns to make any contribution or dedications of money or land or to construct, install or maintain any improvements of a public or private nature on or off the Property, except for obligations due under the Tenant Leases and all recorded instruments.

(xv) Service Contracts, Tenant Leases, etc . To Liberty’s knowledge, there are no other contracts (including collective bargaining agreements), other than the Service Contracts, the Tenant Leases and matters of public record, that materially and adversely affect the Property or the operation thereof except as provided to NYSCRF pursuant to Section 3.1 .

(i) Existence; Authority . Liberty has been formed as a limited partnership under the laws of the Commonwealth of Pennsylvania and is in good standing under the laws of such commonwealth. The execution and delivery of, and Liberty’s performance under, this Agreement are within Liberty’s powers and have been duly authorized by all requisite action. The Persons executing this Agreement on behalf of Liberty have the authority to do so. This Agreement constitutes the legal, valid and binding obligation of Liberty and is enforceable against Liberty in accordance with its terms, subject to laws applicable generally to creditor’s rights. Except to the extent lender approval for the assumption by the Company of the Assumed Financing is not obtained prior to Closing, performance of this Agreement will not result in any breach of, or constitute any default under, or result in the imposition of any lien or encumbrance upon the Property under, any agreement or other instrument to which Liberty is a party or by which Liberty or the Property is bound. Except as disclosed on Exhibit H hereto, no consent or approval of any Person, Entity or of any Governmental Authority is required with respect to the execution and delivery of this Agreement by Liberty or the consummation by Liberty of the transactions contemplated hereby or the performance by Liberty of its obligations hereunder.

(ii) Foreign Person . Liberty is not a “foreign person” within the meaning of Sections 1445 and 7701 of the Code.

4.2 Delivery of Documents . To Liberty’s knowledge, all of the Leases, Service Contracts and financial information pertaining to the Property (collectively, the “ Documents ”) submitted by or on behalf of Liberty to NYSCRF hereunder that Liberty or Liberty’s employees or agents prepared shall be true, correct and complete in all material respects. Liberty has no knowledge that any of the Documents submitted by or on behalf of Liberty to NYSCRF hereunder which were prepared by third parties contain material inaccuracies or omissions. The copies of Documents submitted shall be complete and correct copies of the documents in Liberty’s possession.

4.3 Knowledge Defined . Whenever a representation or warranty is made herein as being “to the knowledge of” or “known” to Liberty, or phrases of similar import, such phrase shall mean facts actually known to the following officers of Liberty on the date hereof without any independent investigation: Michael Hagan, Chief Investment Officer, and Richard Casey, Director of Due Diligence.

4.4 Liberty’s Covenants . Liberty hereby covenants and agrees with NYSCRF that, after the date of this Agreement and until the earlier of the termination of this Agreement or the Closing:

(a) No Assignment or Transfer . Liberty shall not convey the Contributed Interests in the Contributed Property except to NYSCRF or its permitted assigns, and Liberty shall not make any material amendments to the Operating Agreements nor cause any alterations to any portion of the Property except as otherwise expressly permitted under this Agreement.

(b) Operation and Management of the Property . From Liberty’s acquisition of the Contributed Interests and until the Closing, Liberty shall cause the Property to be operated and maintained in at least the same quality and manner as Republic operated and maintained the

Property prior to the date hereof. Without the prior written consent of NYSCRF, Liberty will not initiate or permit any zoning reclassification of the Property or seek any variance under existing zoning ordinances applicable to the Property to use or permit the use of the Property in such a manner that would result in such use becoming a nonconforming use under applicable zoning ordinances or other Governmental Requirements. Liberty will not impose any restrictive covenants or encumbrances (other than Tenant Leases) on the Property or execute or file any subdivision plat affecting the Property without the prior written consent of NYSCRF.

(c) Insurance . Liberty hereby agrees that from Liberty’s acquisition of the Contributed Interests and until the Closing, it will maintain, or cause to be maintained, in full force and effect full replacement value and/or all risk fire and extended coverage insurance upon the Property and public liability insurance with respect to damage or injury to persons or property occurring on the Property in such amounts as is maintained by Republic on the date of this Agreement (such amounts to be increased, if necessary, upon further construction).

(d) No Solicitation . Liberty, on behalf of itself, its agents, contractors and representatives, agrees that from the date hereof until the earlier of the Closing or the date that this Agreement is terminated, it will not accept any offers to purchase or otherwise acquire the Entities or the Property from any party other than the Company or NYSCRF and will not market the Entities or the Property to any other parties.

(e) Condemnation; Injury; Damages . Promptly upon obtaining knowledge of the institution of any proceedings for the condemnation of the Property, or any portion thereof, or any other proceedings arising out of injury or damage to the Property, or any portion thereof, Liberty will notify NYSCRF of the pendency of such proceedings.

(f) Governmental Requirements; Litigation . Liberty will advise NYSCRF promptly of any litigation, arbitration or administrative hearing concerning or affecting the Property or the ownership and/or operation thereof of which Liberty has actual knowledge or written notice.

(g) Liens . Except for the liens of the Assumed Financing and liens that Liberty shall be obligated to release at or prior to Closing, Liberty shall not grant, consent or permit the filing of any lien or encumbrance against the Property or any portion thereof subsequent to the date hereof. Liberty will not, without the prior written consent of NYSCRF, sell, lease, exchange, assign, transfer, convey or otherwise dispose of all or any part of the Property or any interest therein, or permit any of the foregoing, except pursuant to Tenant Leases and other leases approved in writing in advance by NYSCRF pursuant to the terms hereof.

(h) Existence . Liberty will continuously maintain Liberty’s existence as a limited partnership. From and after Liberty’s acquisition of the Contributed Interests and until the Closing, Liberty will continuously maintain the Entities’ existence as limited liability companies or limited partnerships, as applicable.

(i) Books and Records . From and after Liberty’s acquisition of the Contributed Interests and until the Closing, Liberty will keep or cause to be kept accurate books and records of the operation of the Property in substantially the same manner as Liberty or its predecessors in interest have maintained such books and records prior to the date of this Agreement, and in which full, true and correct entries shall be made as soon as reasonably practical as to all operations on the Property, and all such books and records shall at all times during reasonable business hours be subject to inspection by NYSCRF and its duly authorized representatives, subject to Republic’s approval.

(j) Tenant Improvements; Leasing Commissions . After Closing, Liberty shall, at Liberty’s sole cost and expense, cause the completion of the tenant improvement work listed on Schedule 4.4(j) in accordance with terms of the applicable lease or other agreement giving rise to the obligation. Furthermore, Liberty shall be solely responsible for the payment of those leasing commissions listed on Schedule 4.4(j) . This Section 4.4(j) shall survive Closing.

(k) Severance Payments . Liberty shall, at Liberty’s sole cost and expense, pay any and all severance payments to any employee or former employee of RPLP, or any Entity, triggered by the transactions contemplated by this Agreement. This Section 4.4(k) shall survive Closing.

(l) Existing Litigation . Liberty agrees to indemnify, defend and hold NYSCRF and the Company harmless from and against any claim, loss, cost or damage arising by reason of the Existing Litigation. This Section 4.4(l) shall survive Closing.

4.5 Indemnity For Breach by Liberty . Subject to the other provisions hereof (including the provisions of Section 11.1 ), if Closing occurs, Liberty shall indemnify NYSCRF and the Company and their successors and assigns, against and shall defend and hold NYSCRF and the Company and their successors and assigns, harmless from, all costs, expenses, and actual damages, including reasonable attorneys’ fees, that NYSCRF, the Company and/or NYSCRF’s or the Company’s successors or assigns actually incur because of any breach of any of the representations, warranties or covenants of Liberty herein contained incurred prior to [The confidential material contained herein has been omitted and has been separately filed with the Commission.] after the Closing. Notwithstanding the foregoing, if NYSCRF has actual knowledge of any such breach prior to Closing and nonetheless proceeds with the Closing, then in such event any such breach shall be deemed waived by NYSCRF. NYSCRF and the Company hereby specifically waive any and all rights which they may have to exemplary, punitive or consequential damages as a result of Liberty’s default under this Agreement.

4.6 NYSCRF’s Representations and Warranties . NYSCRF represents and warrants to Liberty as follows (which representations and warranties shall be true and correct as of the date hereof and as of the Closing Date):

(a) Authority . NYSCRF has duly and validly authorized and executed this Agreement, and it has full right, title, power and authority to enter into this Agreement and to carry out all of its terms;

(b) No Violation; Consent . The execution and delivery by NYSCRF of, consummation of transactions provided for in, and compliance by NYSCRF with all of the provisions of this Agreement will not violate the organizational documents of NYSCRF and do not require any approval or consent of any trustee or holders of any of its debt (except for approvals already obtained).

(c) Sophisticated Investor . NYSCRF is a sophisticated investor experienced in commercial real estate investments. NYSCRF has sufficient experience of and knowledge about the operations of multi-tenant commercial properties to be able to exercise its approval powers in this Agreement and under the Partnership Agreement in a commercially reasonable manner and without delay.

(d) Indemnity For Breach by NYSCRF . Subject to the other provisions hereof (including the provisions of Section 11.2 ), if Closing occurs NYSCRF shall indemnify Liberty and the Company and their successors and assigns, against and shall defend and hold Liberty and the Company and their successors and assigns, harmless from, all costs, expenses, and actual damages, including reasonable attorneys’ fees, that Liberty, the Company and/or Liberty’s or the Company’s successors or assigns actually incur because of any breach of any of

the representations, warranties or covenants of NYSCRF herein contained incurred prior to one (1) year after the Closing. Notwithstanding the foregoing, if Liberty has actual knowledge of any such breach prior to Closing and nonetheless proceeds with the Closing, then in such event any such breach shall be deemed waived by Liberty. Liberty and the Company hereby specifically waive any and all rights that they may have to exemplary, punitive or consequential damages as a result of NYSCRF’s default under this Agreement.

5. CONDITIONS OF CLOSING

5.1 Closing Conditions For NYSCRF’s Benefit . The obligations of NYSCRF to consummate the transaction contemplated hereby are subject to the following conditions, any of which, if not fulfilled by the Closing or as otherwise provided herein, shall entitle NYSCRF (at its option) to terminate this Agreement as provided below:

(a) Merger . All conditions to the merger of RPLP with and into Liberty (the “ Merger ”), as well as the merger of Republic Property Trust with and into Liberty Acquisition LLC (the REIT Merger ”), pursuant to that certain Agreement of Plan and Merger, dated as of July 23, 2007 (the “ Merger Agreement ”), shall have been satisfied in accordance with the terms of the Merger Agreement.

(b) Absence of Judicial Action . The transactions contemplated under this Agreement to be effected on the Closing Date shall not have been restrained or prohibited by any injunction or order or judgment rendered by any court or other governmental agency of competent jurisdiction and no proceeding shall have been instituted and be pending in which any creditor of Liberty or any other Person seeks to restrain such transactions or otherwise to attach any of the Property, provided that any such proceeding or action contemplated by this Section 5.1(a) shall not be deemed to include any proceeding or action brought by, through or under NYSCRF.

(c) Representations and Warranties . All representations and warranties made by Liberty herein shall at the time of Closing be true and correct in all material respects.

(d) Absence of Litigation . On the Closing Date, Liberty shall have received no written notice of any litigation pending or threatened against the Entities or the Property that, if resolved adversely to the Entities or the Property, would have a material adverse effect on the Entities or the Property, except for litigation related to the matters disclosed on Schedule 4.1(b)(ii) .

(e) Covenants of Liberty . On the Closing Date, all of the covenants and agreements herein on the part of Liberty to be complied with or performed on or before the Closing Date shall have been fully complied with and performed in all material respects, and there shall exist no material default or material breach by Liberty under this Agreement.

(f) Insolvency . On the Closing Date, Liberty and the Entities shall not be insolvent ( i.e ., unable to pay its debts as they become due), shall not have been held or alleged to have made a transfer in fraud of creditors and shall not have made a general assignment for the benefit of creditors.

(g) Receiver . On the Closing Date, neither a receiver nor a trustee nor a custodian shall have been appointed for, or shall have taken possession of, all or substantially all of the assets of Liberty or any Entity or any of the Property, either in a proceeding brought by Liberty or in a proceeding brought against Liberty or an Entity.

(h) Bankruptcy . On the Closing Date, neither Liberty nor any Entity shall have filed a petition for relief under the Federal Bankruptcy Code or any other present or future federal or state insolvency, bankruptcy or similar law (all of the foregoing hereinafter collectively called “ Applicable Bankruptcy Law ”) nor shall an involuntary petition for relief have been filed against Liberty or any Entity under any Applicable Bankruptcy Law and not been dismissed, nor shall any order for relief naming Liberty or an Entity have been entered under any Applicable Bankruptcy Law, nor shall any composition, rearrangement, extension, reorganization or other relief of debtors now or hereafter existing have been requested or consented to by Liberty or any Entity.

(i) Execution . On the Closing Date, neither the Property nor any part thereof or any interest therein shall have been taken by execution or other process of law in any action against Liberty or an Entity.

(j) Completion of the Partnership Agreement . All Exhibits not attached to the form of the Partnership Agreement attached hereto as Exhibit F shall have been completed and such Exhibits reasonably approved by Liberty and NYSCRF.

(k) Owner’s Policies . On the Closing Date, the Title Company shall be unconditionally committed to deliver the Owner’s Policy to each Entity (or its subsidiary) that directly owns Property, in accordance with Section 6.2 .

If any one or more of the above conditions is not satisfied by the Closing Date, NYSCRF may at its option either (i) waive such remaining conditions and proceed to Closing; or (ii) if such failure is not satisfied prior to closing on the Merger, NYSCRF may terminate this Agreement by written notice thereof to Liberty and, except for such obligations and indemnities that expressly survive the termination of this Agreement, the parties shall have no further right or obligation hereunder; provided, however , if such failure to satisfy any condition is a result of a default or breach by Liberty under this Agreement, NYSCRF shall also have the rights provided under Section 11.1(b) hereof.

5.2 Conditions Precedent for Liberty’s Benefit . The obligations of Liberty to consummate the transactions contemplated hereby are subject to the following conditions which, if not fulfilled by the Closing or as otherwise provided herein, shall entitle Liberty, at its option, to terminate the Agreement:

(a) Merger . All conditions to the Merger and the REIT Merger shall have been satisfied in accordance with the terms of the Merger Agreement.

(b) Covenants of NYSCRF . All of the covenants and agreements herein on the part of NYSCRF to be complied with or performed on or before the Closing Date shall have been fully complied with and performed.

(c) Representations and Warranties . All representations and warranties made by NYSCRF herein shall have been and remain true and correct in all material respects.

(d) Completion of the Partnership Agreement . All exhibits not attached to the form of the Partnership Agreement attached hereto as Exhibit F shall be completed and such Exhibits reasonably approved by Liberty and NYSCRF.

(e) Absence of Judicial Action . The transactions contemplated under this Agreement to be effected on the Closing Date shall not have been restrained or prohibited by any injunction or order or judgment rendered by any court or other governmental agency of competent jurisdiction.

(f) Owner’s Policies . On the Closing Date, the Title Company shall be unconditionally committed to deliver the Owner’s Policy to each Entity (or its subsidiary) that directly owns Property, in accordance with Section 6.2 .

6. CLOSING

6.1 Closing . The closing of the transactions contemplated herein shall be held on the date of the Merger (the “ Closing Date ” or the “ Closing ”), unless otherwise specified herein. The Closing shall be held at the Philadelphia, Pennsylvania offices of Wolf, Block, Schorr and Solis-Cohen LLP, or at such other location as may be acceptable to Liberty and NYSCRF, or at the election of either party, by delivery of documents in escrow to the Title Company together with escrow instructions that otherwise comport with the terms of this Agreement.

(a) Liberty Closing Obligations . At the Closing, Liberty shall deliver or cause to be delivered executed counterparts of the Partnership Agreement and the Management Agreement.

(b) Liberty Closing Documents . At or before Closing (as the case may be pursuant to this Agreement), Liberty shall deliver or cause to be delivered for the benefit of the Company the items specified herein (with copies to NYSCRF) and the following documents and instruments, each duly executed and, where necessary, acknowledged:

(i) a promissory note for the Merger Loan;

(ii) an assignment and assumption agreement (the “ Liberty Loan Assignment ”) in the form of Exhibit K attached hereto, whereby Liberty assigns, and the Company assumes, all of the rights and obligations of the borrower under the Liberty Loan Documents;

(iii) one or more assignment of interests (the “ Assignments ”) in the form of Exhibit E attached hereto, dated as of the Closing Date, conveying the Contributed Interests to the Company;

(iv) the Purchase Money Loan Documents, and an assignment to the Company of the lender’s rights thereunder;

(v) copies of the assignments of the Purchased Interests to the Company;

(vi) if necessary, tenant notification agreements, dated the Closing Date, containing Liberty’s authorization to the tenants of the Property for payment of rental directly to the Company or the Company’s managing agent, in form acceptable to NYSCRF and Liberty (the “ Tenant Notices ”);

(vii) a Schedule of Leases and Rent Roll for the Property that is current as of August 31, 2007, containing all the matters described in Section 4.1(b)(iv) , certified by Liberty to Liberty’s knowledge, to be true, complete and correct in all material respects as of the Closing Date and showing no changes in the Schedule of Leases and Rent Roll, except for additional Tenant Leases, terminations of Tenant Leases that have expired by their terms, terminations of Tenant Leases for reasons other than the expiration of their terms not in excess of, in the aggregate, [The confidential material contained herein has been omitted and has been separately filed with the Commission.] square feet of gross leaseable area, and other changes approved by NYSCRF in writing or otherwise permitted pursuant to the terms hereof, or that do not constitute a material adverse effect;

(viii) evidence reasonably acceptable to the Title Company authorizing the consummation by Liberty of the transactions contemplated hereby and the execution and delivery of the closing documents on behalf of Liberty;

(ix) such documents, if any, as may be required to assign or withdraw Liberty’s right to use the trade names, if any, of the Property;

(x) an executed certificate with respect to Liberty’s non-foreign status sufficient to comply with the requirements of Section 1445 of the Code, commonly known as the Foreign Investment in Real Property Tax Act of 1980, and regulations applicable thereto;

(xi) an executed copy of Internal Revenue Service Form 1099 as required by the Tax Reform Act of 1986, and all regulations applicable thereto;

(xii) copies of executed Tenant Leases, to the extent in Liberty’s control and not previously delivered to NYSCRF;

(xiii) executed counterparts of the Partnership Agreement; and

(xiv) executed counterparts of the Management Agreement.

(c) NYSCRF Closing Obligations . At or before the Closing (as the case may be pursuant to this Agreement), NYSCRF, or its permitted assignee, shall do the following:

(i) on the day before the Closing, deposit with LaSalle Bank National Association (the Transfer Agent for the Merger) the Contribution Amount, adjusted as provided herein, by wire transfer in immediately available funds; and

(ii) on the day of Closing, deliver executed counterparts of the Partnership Agreement.

(d) Company Obligations . At or prior to Closing (as the case may be pursuant to this Agreement), NYSCRF and Liberty shall cause the Company to assume all obligations of Liberty under the Operating Agreements, and the Assumed Financing pursuant to the forms of documents referenced in Section 6.1(b) . In addition, at Closing, NYSCRF and Liberty shall cause the Company to do the following:

(i) deliver evidence acceptable to the Title Company and reasonably acceptable to Liberty, authorizing the consummation by the Company of the transactions contemplated hereby and the execution and delivery of the closing documents on behalf of the Company;

(ii) execute and deliver the agreements of sale contemplated by the Recitals, if any;

(iii) deliver the Purchase Money Loan Documents to RPLP in accordance with the Recitals, if any;

(iv) execute and deliver an assignment and assumption agreement sufficient for the Company to acquire the Purchased Interests pursuant to the Recitals, if applicable;

(v) fund the Merger Loan;

(vi) execute and deliver the Liberty Loan Assignment; and

(vii) deliver executed counterparts of the Management Agreement.

To the extent the consent of NYSCRF is required under the Partnership Agreement or otherwise in order for the Company to perform any of the foregoing actions or deliver any of any of the above items, NYSCRF hereby consents.

(e) Further Assurances . At the Closing, the Company, Liberty and NYSCRF shall execute and deliver, or cause to be executed or delivered, such other instruments and documents as may be necessary in order to complete the Closing of the transactions contemplated hereunder, the form and content of which shall be reasonably acceptable to Liberty and NYSCRF.

(f) Delivery of Closing Documents . The Company, Liberty and NYSCRF acknowledge and agree to use commercially reasonable efforts to execute and deliver to the Title Company to hold in escrow all documents required to be delivered at the Closing pursuant to this Section 6.1 at least two (2) business days prior to the Closing Date.

6.2 Title Insurance . At the Closing, Commonwealth Land Title Insurance Company (the “ Title Company ”) shall furnish each Entity (or its subsidiary that is the direct owner of Property) with an owner’s policy of title insurance (an “ Owner’s Policy ”) that substantially conforms to the marked-up title commitments previously delivered by Liberty to NYSCRF. The Owner’s Policies to be issued at Closing shall contain (to the extent available in the applicable jurisdiction): (i) an affirmative endorsement insuring the Company that there are no violations of any restrictive covenants affecting the Property, (ii) an access endorsement insuring vehicular and pedestrian access to all contiguous streets from all present points of entry; (iii) a contiguity endorsement, if applicable; (iv) a survey endorsement; (v) a location endorsement; (vi) an endorsement deleting the creditor’s rights exception; (vii) a non-imputation endorsement; and (viii) a zoning endorsement (completed structures, including parking and loading dock). The Title Company has executed the joinder attached to this Agreement to evidence its agreement to, among other things, the provisions of this Section 6.2 .

6.3 Delivery of Documents, Possession, Keys and Other Items . At the Closing, Liberty shall (i) provide the Company with the originals of all available documents within Liberty’s possession or control, copies of which were provided to NYSCRF pursuant to Section 3.1 hereof, and (ii) deliver or cause to be delivered to the Company all books and records in Liberty’s possession pertaining to the Entities. All such documents which are located at the Property may be delivered with the Property. Any other such documents shall be made available to the Company by Liberty at a mutually convenient time and place, and Liberty may retain additional copies of such items as it deems necessary or convenient. NYSCRF acknowledges that the Company and Liberty have the same principal offices and that no physical transfer of such documents will be required.

6.4 Closing Costs; Transfer Taxes .

(a) [The confidential material contained herein has been omitted and has been separately filed with the Commission.]

(c) Liberty and NYSCRF each shall pay their respective legal fees incurred in negotiating this Agreement, the Partnership Agreement and related joint venture documents.

(d) In the event of any post-Closing increase or decrease in the amount of transfer tax payable hereunder, the parties hereto shall pay or be reimbursed for such increase or decrease, as the case may be, in accordance with, and in proportion to, each party’s obligation as set forth in this Section 6.4 . This Section 6.4(d) shall survive Closing.

7. PRORATIONS

7.1 Initial Proration . Within [The confidential material contained herein has been omitted and has been separately filed with the Commission.] days after the Closing Date, the parties shall prorate the following items as of the Closing Date:

(a) Taxes . All real estate taxes with respect to the Property shall be prorated between Liberty and the Company as of the Closing Date.

(b) Rents. Rent shall be prorated as of the Closing Date, except that no proration shall be made for rents delinquent as of the Closing Date (hereinafter called the “Delinquent Rents”). The Company shall have no liability to Liberty for the Delinquent Rents and shall have no obligation to collect same, provided, however , amounts collected by the Company or the Entities from tenants owing Delinquent Rents shall be applied first to rents owed by such tenant accruing from and after the Closing Date and then to Delinquent Rents. Any such amounts applicable to Delinquent Rents received by the Company or the Entities shall be forwarded to Liberty within fifteen (15) days of receipt thereof. Liberty reserves the right to pursue legal remedies against tenants owing Delinquent Rents so long as pursuit of its legal remedies does not cause the tenant to be evicted.

(c) Operating Costs . All operating expenses, including utilities (to the extent not paid directly by tenants), maintenance and other operating costs and expenses incurred by the Entities in connection with the ownership, operation, maintenance and management of the Property shall be prorated between Liberty and the Company as of the Closing.

(d) Insurance Premiums . Insurance premiums shall be prorated as of the Closing Date.

(e) Other Income and Expenses . All other income from, and expenses of, the Property, including but not limited to public utility charges, maintenance charges and service

charges, shall be prorated as of the Closing Date and the Company shall assume such expenses for periods subsequent to Closing.

(f) Federal, State and Local Taxes . To the maximum extent permissible, for Federal, State and local tax purposes the parties will cause the Entities and their subsidiaries to treat the Closing Date as the beginning of a fiscal period. Liberty will file all returns and pay all taxes owing for periods through the day preceding the Closing Date and the Company will file all returns and pay all taxes owing for periods beginning with the Closing Date. If and to the extent that such filing of separate returns is not permitted by any taxing authority, and as to any tax that applies to a period both before and after the Closing Date, the parties will cooperate in the furnishing of information necessary to the preparation and filing of returns, and will pay their respective shares of tax liability in proportion to their respective shares of the thing taxed (for example, gross receipts or net income). The obligations of the parties hereunder shall survive Closing until each such tax return has been filed, all such taxes owing have been paid and such returns and payments are no longer subject to contest by the taxing authority. Notwithstanding the foregoing, for tax purposes, closing shall be deemed to occur at 11:59 p.m. (local Washington, D.C. time) on the day preceding the Closing Date.

(g) Assumed Financing. Interest, credits, costs and expenses (other than the costs and expenses described in Section 6.4(b)(iii), which shall be the sole obligation of the Company) related to the Assumed Financing will be adjusted and apportioned between Liberty and the Company in accordance with the following: (i) prepaid interest will be paid to Liberty by the Company and accrued, but unpaid interest will be paid by Liberty with both to be apportioned as of the day preceding the Closing Date; and (ii) Liberty will be entitled to receive the amounts (including accrued interest) of any escrow and other sums on deposit with a lender under the Assumed Financing (including any escrow reserves) when disbursed by the holder of such Assumed Financing.

7.2 Adjustments; Reproration . After receipt of final financial statements for the Entities for the current year or applicable fiscal period, Liberty shall prepare and present to NYSCRF a calculation of the reproration of the profits and losses of the Entities to be passed through to the Company. The parties shall make the appropriate adjusting payment between them within 30 days after presentment to NYSCRF of Liberty’s calculation. This provision shall survive the Closing.

7.3 Indemnity .

(a) Except for items to be prorated and reprorated by Liberty and NYSCRF pursuant to this Article 7 , Liberty hereby assumes full responsibility for any and all demands, claims, legal or administrative proceedings, losses, liabilities, damages, penalties, fines, liens, judgments, costs or expenses whatsoever (including, without limitation, attorneys’ fees and costs), whether direct or indirect, known or unknown, foreseen or unforeseen, that may arise on account of or in any way be connected with the ownership of the Interests, Entities or the Property first arising or accruing prior to the Closing Date, including, without limitation, the Existing Litigation. Liberty also agrees to indemnify, defend and hold the Company and NYSCRF harmless from any claims, liabilities or costs (including reasonable attorneys’ fees) arising from Liberty’s failure to perform said obligations.

(b) Except for items to be prorated and reprorated by Liberty and NYSCRF pursuant to this Article 7 , the Company hereby assumes full responsibility for any and all demands, claims, legal or administrative proceedings, losses, liabilities, damages, penalties, fines, liens, judgments, costs or expenses whatsoever (including, without limitation, attorneys’ fees and costs), whether direct or indirect, known or unknown, foreseen or unforeseen (“Losses

and Liabilities”), which may arise on account of or in any way be connected with the ownership of the Property first arising or accruing on or after to the Closing Date, excluding, however, any Liberty Losses and Liabilities (hereinafter defined). The Company also agrees to indemnify, defend and hold Liberty harmless from any claims, liabilities or costs (including reasonable attorneys’ fees) arising from the Company’s failure to perform said obligations, provided the same do not arise on account of Liberty Losses and Liabilities. As used herein, “Liberty Losses and Liabilities” are any Losses and Liabilities which may arise on account of or in any way be connected with any action by Liberty or the LLC (a) that was not taken in the reasonable belief that it was within their scope of authority under the Partnership Agreement, (b) constituting fraud, bad faith, negligence or willful misconduct, or a breach of the standards set forth in Section 6.02(d) of the Partnership Agreement, or (c) in violation of securities laws or criminal laws.

8. SURVIVAL

8.1 Surviva l. Except as otherwise expressly provided herein, all warranties representations, covenants, obligations and agreements contained in this Agreement shall survive the execution and delivery of this Agreement and shall survive the Closing for a period of one (1) year and any right of action for the breach of any representation, warranty or covenant contained herein shall not merge with the Assignment but shall survive the Closing for such one (1) year period and may be enforced by the Company. In addition to all other remedies that NYSCRF and/or the Company may have at law or in equity, the Company may offset any final, non-appealable judgment it obtains against Liberty against any distributions due to Liberty from the Company. Notwithstanding anything contained in this Agreement to the contrary, the representations and warranties contained in Section 4.1(a) shall survive the Closing.

9. COMMISSIONS

9.1 Liberty’s Indemnity . LIBERTY SHALL INDEMNIFY NYSCRF AND THE COMPANY AND HOLD AND DEFEND NYSCRF AND THE COMPANY HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS, LOSSES, LIABILITIES, DAMAGES, DEMANDS, COSTS AND EXPENSES (INCLUDING ACTUAL, REASONABLE ATTORNEYS’ FEES AT OR BEFORE THE TRIAL LEVEL AND ANY APPELLATE PROCEEDINGS) ARISING OUT OF ANY CLAIM MADE BY ANY REALTOR, BROKER, FINDER, OR ANY OTHER INTERMEDIARY WHO CLAIMS TO HAVE BEEN ENGAGED, CONTRACTED OR UTILIZED BY LIBERTY IN CONNECTION WITH THE TRANSACTIONS THAT ARE THE SUBJECT MATTER OF THIS AGREEMENT. THIS INDEMNIFICATION SHALL SURVIVE THE CLOSING.

9.2 NYSCRF’s Indemnity . NYSCRF SHALL INDEMNIFY, HOLD HARMLESS AND DEFEND LIBERTY AND THE COMPANY FROM AND AGAINST ANY AND ALL CLAIMS, LOSSES, LIABILITIES, DAMAGES, DEMANDS, COSTS AND EXPENSES (INCLUDING ACTUAL, REASONABLE ATTORNEYS’ FEES AT OR BEFORE THE TRIAL LEVEL AND ANY APPELLATE PROCEEDINGS) ARISING OUT OF ANY CLAIM MADE BY ANY REALTOR, BROKER, FINDER OR ANY OTHER INTERMEDIARY WHO CLAIMS TO HAVE BEEN ENGAGED, CONTRACTED OR UTILIZED BY NYSCRF IN CONNECTION WITH THE TRANSACTIONS THAT ARE THE SUBJECT MATTER OF

THIS AGREEMENT, INCLUDING WITHOUT LIMITATION ANY AND ALL FEES PAYABLE TO HEITMAN CAPITAL MANAGEMENT LLC IN CONNECTION WITH THE TRANSACTIONS THAT ARE THE SUBJECT MATTER OF THIS AGREEMENT. THIS INDEMNIFICATION SHALL SURVIVE THE CLOSING.

10. FURTHER INSTRUMENTS

Liberty will, whenever reasonably requested by NYSCRF, and NYSCRF will, whenever reasonably requested by Liberty, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, any and all conveyances, assignments and all other instruments and documents as may be reasonably necessary in order to complete the transaction herein provided and to carry out the terms and provisions of this Agreement.

11. TERMINATION AND REMEDIES

11.1 Liberty’s Default .

(a) Subject to the provisions of Section 11.1(b) below, if Liberty has not terminated this Agreement pursuant to any of the provisions hereof authorizing such termination, and if prior to or at the Closing Liberty defaults hereunder or shall have failed to have performed any of the material covenants and/or agreements contained herein that are to be performed by Liberty at or prior to the Closing, or if any warranty or representation made by Liberty herein is not true and correct in all material respects, NYSCRF may, at its option, as its sole and exclusive remedies, either (i) seek specific performance of this Agreement, or (ii) terminate this Agreement.

(b) Notwithstanding anything in Section 11.1(a) to the contrary, NYSCRF will, prior to the exercise of the remedies contained in Section 11.1(a) , give Liberty written notice (“ NYSCRF’s Default Notice ”) specifying the nature of such default. Until the date that is five (5) days after receipt of NYSCRF’s Default Notice, Liberty may, at its option, elect to cure such default or waive the option to cure the default; provided, however , Liberty’s failure to give NYSCRF written notice of its election within this time period shall be deemed an election by Liberty to waive its right to cure the default. If Liberty waives or is deemed to have waived its right to cure the default, NYSCRF shall thereafter be entitled to exercise the remedies in accordance with the terms of Section 11.1(a) . If Liberty elects to cure the default specified in NYSCRF’s Default Notice, Liberty shall commence to cure such default within fifteen (15) days from the date of such election and diligently pursue such cure to completion within forty-five (45) days (“ Liberty’s Cure Period ”). If Liberty fails to cure such default within Liberty’s Cure Period to NYSCRF’s reasonable satisfaction, NYSCRF may exercise its remedies in accordance with the terms of Section 11.1(a) hereof.

11.2 NYSCRF’s Default .

(a) If NYSCRF has not terminated this Agreement pursuant to any of the provisions hereof authorizing such termination and NYSCRF defaults hereunder and fails to perform any of the covenants and/or agreements contained herein which are to be performed by NYSCRF, Liberty shall be entitled to, at its option, as its sole and exclusive remedies either (i) seek specific performance of this Agreement, or (ii) terminate this Agreement.

(b) Notwithstanding anything in Section 11.2(a) to the contrary, Liberty will, prior to the exercise of the remedies contained in Section 11.2(a) , give NYSCRF written notice (“ Liberty’s Default Notice ”) specifying the nature of such default. Until the date that is five (5)

days after receipt of Liberty’s Default Notice, NYSCRF may, at its option, elect to cure such default or waive the option to cure the default; provided, however , NYSCRF’s failure to give Liberty written notice of its election within this time period shall be deemed an election by NYSCRF to waive its right to cure the default. If NYSCRF waives or is deemed to have waived its right to cure the default, Liberty shall thereafter be entitled to exercise the remedies in accordance with the terms of Section 11.2(a) . If NYSCRF elects to cure the default specified in Liberty’s Default Notice, NYSCRF shall commence to cure such default within fifteen (15) days from the date of such election and shall thereafter diligently pursue such cure to completion within forty-five (45) days (“ NYSCRF’s Cure Period ”). If NYSCRF is unable to cure such default within NYSCRF’s Cure Period to Liberty’s reasonable satisfaction, Liberty may exercise its remedies in accordance with the terms of Section 11.2(a) hereof.

11.3 Costs and Expenses; Limitation . In the event of any default or alleged default by either Liberty or NYSCRF hereunder that results in a party seeking to exercise its rights or remedies pursuant to Section 11.1 or Section 11.2 above, the prevailing party under this Agreement shall be able to recover from the non-prevailing party on demand all actual, reasonable and necessary out-of-pocket expenses actually paid or incurred by the prevailing party in connection with the exercise of its remedies hereunder including, without limitation, reasonable attorneys’ fees. In no event shall either party hereto, or any direct or indirect partner, member, shareholder, beneficiary, owner or affiliate thereof, or any officer, director, employee, trustee, or agent of any of the foregoing or any affiliate or controlling person thereof, be liable to any indemnified party in contract, tort or otherwise with respect to any indirect, consequential, punitive or exemplary damages arising from or relating to this Agreement or any closing document.

11.4 Limitation of NYSCRF Liability . Notwithstanding anything to the contrary contained herein or in any other agreement executed in connection herewith, Liberty and the Company expressly agree that NYSCRF shall not be liable personally or otherwise for any breach or default by NYSCRF under this Agreement or any other agreement executed in connection with this Agreement, except to the extent of, and only to the extent of, the NYSCRF’s Partnership Interest in the Company. Except only for NYSCRF’s Partnership Interest in the Company, no assets of NYSCRF may be liened, encumbered, attached, levied or executed upon to satisfy any liability of or judgment against NYSCRF arising out of this Agreement or any other agreement executed in connection with this Agreement. This Section 11.4 shall survive Closing.

12. RISK OF LOSS

If, prior to Closing, the Property or any part thereof shall be condemned or destroyed or materially damaged by fire or other casualty (that is, damage or destruction that NYSCRF reasonably estimates will cost in excess of [The confidential material contained herein has been omitted and has been separately filed with the Commission.] to repair or restore or that materially impedes access to the Property or any material part thereof), NYSCRF shall elect to do one of the following, which election shall be made not later than the later of (i) ten (10) days prior to Closing, or (ii) ten (10) days following the date NYSCRF receives written notice of the condemnation or material damage: (A) terminate this Agreement as to the Contributed Entity that owns the affected Parcel only, whereupon the parties shall negotiate an equitable reduction in the Contribution Amount hereunder or, if the parties do not reach agreement on such a reduction within thirty (30) days after such casualty, NYSCRF shall be entitled to terminate this Agreement in its entirety; or (B) consummate the transaction contemplated by this Agreement without terminating this Agreement as to the affected Parcel notwithstanding such condemnation, destruction or material damage. If NYSCRF elects to consummate the

transaction contemplated by this Agreement without terminating this Agreement as to the Contributed Entity that owns the affected Parcel, the Company shall be entitled to receive all of the condemnation proceeds or settle the loss under all policies of insurance applicable to the destruction or damage and receive all of the proceeds of insurance applicable thereto, and Liberty shall, at Closing and thereafter, execute and deliver to the Company all required proofs of loss, assignments of claims and other similar items. If there is any other damage or destruction (that is, damage or destruction that NYSCRF reasonably estimates will cost [The confidential material contained herein has been omitted and has been separately filed with the Commission.] or less to repair or restore, or that does not materially impede access to the Property or any material part thereof), Liberty shall either completely repair or cause to be repaired such damage prior to Closing in a manner reasonably satisfactory to NYSCRF or, at NYSCRF’s option, assign all insurance claims pertaining to such damage or destruction to the Company by executing and delivering to the Company at Closing and thereafter all required proofs of loss, assignments of claims and other similar items.

Notwithstanding anything herein, Liberty shall be entitled to receive and retain, and shall not be required to assign, any insurance proceeds for loss of the rents to have been paid prior to Closing.

13. PROVISIONS REGARDING HAZARDOUS SUBSTANCES

13.1 Definitions . Unless the context otherwise specifies or requires, the following terms shall have the respective meanings herein specified:

(a) The term “ Governmental Requirements ” shall mean all laws, ordinances, statutes, codes, rules, regulations, orders and decrees of the United States, the state, the county, the city, or any other political subdivision in which the Property is located, and any other political subdivision, agency or instrumentality exercising jurisdiction over Liberty or the Property, including Hazardous Materials Laws.

(b) The term “ Hazardous Materials ” shall mean (i) any “hazardous waste” as defined by the Resource Conservation and Recovery Act of 1976 (42 U.S.C. Section 6901 et seq.), as amended from time to time, and regulations promulgated thereunder (“ RCRA ”); (ii) any “hazardous substance” as defined by the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. Section 9601 et seq.), as amended from time to time, and regulations promulgated thereunder (“ CERCLA ”) (including petroleum-based products as described therein); (iii) other petroleum and petroleum-based products; (iv) asbestos in any quantity or form which would subject it to regulation under any applicable Hazardous Materials Law (hereinafter defined); (v) polychlorinated biphenyls; (vi) any substance, the presence of which on the Property is prohibited by any Hazardous Materials Law; (vii) any “extremely hazardous substance” or “hazardous chemical” as those terms are defined in the Emergency Planning and Community Right-To-Know Act (42 U.S.C. Section 11001 et seq.) as amended from time to time, and regulations promulgated thereunder (“ EPCRA ”); (viii) any “chemical substance” as that term is defined in the Toxic Substances Control Act (15 U.S.C. Section 2601) as amended from time to time, and regulations promulgated thereunder (“ TSCA ”); (ix) any hazardous substances identified under the law of the state in which the Property is located; and (x) any other substance, including toxic substances, that, by any Hazardous Materials Laws, requires special handling in its collection, storage, treatment, management, recycling or disposal. Hazardous Materials shall not include consumer products, office supplies, and cleaning and maintenance supplies stored and used in the ordinary course of operation of the Property and in compliance with applicable Hazardous Materials Laws.

(c) The term “ Hazardous Materials Laws ” shall mean all Governmental Requirements, including, without limitation, RCRA and CERCLA, relating to the handling, storage, existence of or otherwise regulating any hazardous wastes, hazardous substances, toxic substances, radioactive materials, pollutants, chemicals, contaminants or industrial substances or relating to the removal or remediation of any of the foregoing.

(d) “ Losses ” means any and all losses, liabilities, damages (whether actual, consequential, punitive or otherwise denominated), demands, claims, actions, judgments, causes of action, assessments, fines, penalties, costs, and out-of-pocket expenses (including, without limitation, attorneys’ fees and the fees of environmental consultants), of any and every kind or character, foreseeable and unforeseeable, liquidated and contingent, proximate and remote.

(e) The terms “release,” “disposal,” “storage” and “treatment” shall have the meaning set forth in CERCLA, RCRA, the regulations promulgated thereunder and any other similar Hazardous Materials Laws.

13.2 Liberty’s Environmental Representations and Warranties . Liberty hereby represents and warrants to NYSCRF that except as set forth on Exhibit I or in those certain Phase I Environmental Site Assessments delivered to NYSCRF by Liberty and listed on Schedule 13.2 attached hereto (collectively, the “ Environmental Reports ”):

(a) Liberty has not received any written notice of any civil, criminal or administrative suit, claim, hearing, violation, investigation, proceeding or demand against the Property or against Liberty or the Company with respect to the Property relating in any way to a release or use of Hazardous Materials or compliance with Hazardous Materials Laws.

(b) Liberty has received no written notice that the Property violates Hazardous Materials Laws.

(d) Liberty has received no written notice asserting that there are Hazardous Materials on, in or under the Property in violation of any Hazardous Materials Laws.

(e) The Property has never been used by Liberty, or to Liberty’s best knowledge, by any third parties, to generate, treat, store, dispose of or transport Hazardous Materials in quantities that require remediation under, or are otherwise in violation of, any Hazardous Materials Laws.

13.3 Environmental Covenant . Liberty shall not knowingly conduct or authorize Hazardous Materials Contamination at the Property occurring after the date hereof and on or prior to the Closing Date, and shall promptly notify NYSCRF in writing of any existing or pending investigation or inquiry by any governmental authority in connection with any Hazardous Materials Laws relating to the Property of which Liberty has received written notice or has actual knowledge (as defined in Section 4.3 ).

13.4 Environmental Indemnification .

(a) Liberty hereby agrees to indemnify, defend and hold harmless NYSCRF and the Company from and against any Losses arising out of any material misrepresentation by Liberty in the representations and warranties set forth in Section 13.2 or by any willful breach of the covenants set forth in Section 13.3 .

(b) Assumption of Defense .

(i) If a party entitled to indemnification hereunder (the “ Indemnified Party ”) notifies the party liable for such indemnification (the “ Indemnifying Party ”) of any claim, demand, action, administrative or legal proceeding, investigation or allegation adverse to the Indemnified Party and as to which the indemnity provided for in Section 13.4(a) applies (a “ Potential Claim ”), Indemnifying Party shall assume on behalf of Indemnified Party and conduct with due diligence and in good faith the investigation and defense thereof and the response thereto and shall be entitled, at Indemnifying Party’s sole discretion, to settle or otherwise dispose of any such Potential Claim; provided, that Indemnifying Party shall have the right to cure such matter that is the subject of the Potential Claim (subject to the rights of the owner of the Property at the time of such cure to approve the manner of such cure) if such cure will not result in additional liability or material loss of rights to Indemnified Party, and provided further that Indemnified Party have the right to be represented by advisory counsel of its own selection and at its own expense; and provided further, that if any such claim, demand, action, proceeding, investigation or allegation involves both Indemnifying Party and Indemnified Party and Indemnified Party shall have reasonably concluded that there may be legal defenses available to it which are inconsistent with or in addition to those available to Indemnifying Party, then Indemnified Party shall have the right to select separate counsel reasonably acceptable to Indemnifying Party to participate in the investigation and defense of and response to such claim, demand, action, proceeding, investigation or allegation on its own behalf at Indemnifying Party’s expense.

(ii) If any claim, demand, action, proceeding, investigation or allegation arises as to which the indemnity provided for in this Section 13.4 applies, and Indemnifying Party fails to assume as soon as reasonably practical the defense of Indemnified Party, then Indemnified Party may contest (or, with the prior written consent of Indemnifying Party, settle) the claim, demand, action, proceeding, investigation or allegation at Indemnifying Party’s expense using counsel selected by Indemnified Party and reasonably acceptable to Indemnifying Party.

(c) Notice of Losses . If Indemnified Party receives a written notice of Losses that Indemnified Party believes are covered by this Section 13.4 , then Indemnified Party shall promptly furnish a copy of such notice to Indemnifying Party. The failure to so provide a copy of the notice to Indemnifying Party shall not excuse Indemnifying Party from its obligations under this Section 13.4 ; provided, that if Indemnifying Party is unaware of the matters described in the notice and such failure renders unavailable defenses that Indemnifying Party might otherwise assert, or precludes actions that Indemnifying Party might otherwise take to minimize its obligations hereunder, then Indemnifying Party shall be excused from its obligation to indemnify Indemnified Party against assessments, fines, costs and expenses, if any, which would not have been incurred but for such failure. For example, if Indemnified Party fails to provide Indemnifying Party with a copy of a notice of an obligation covered by the indemnity set out in Sections 13.4(a) and Indemnifying Party is not otherwise already aware of such obligation, and if as a result of such failure Indemnified Party becomes liable for penalties and interest covered by the indemnity in excess of the penalties and interest that would have accrued if Indemnifying Party had been promptly provided with a copy of the notice, then Indemnifying Party will be excused from any obligation to Indemnified Party to pay the excess and Indemnified Party shall indemnify Indemnifying Party with respect to any such excess.

(d) Rights Cumulative . The rights of NYSCRF and the Company under this Article 13 shall be in addition to any other rights and remedies of NYSCRF and the Company against Liberty pursuant to CERCLA and NYSCRF and the Company each expressly retain any right of reimbursement or contribution thereunder.

14. NO ASSUMPTION

14.1 No Assumption . The Company is not and is not deemed to be, a successor of Liberty, it being understood that Liberty is contributing to and the Company is acquiring only the Contributed Interests and the Purchase Money Loan Documents, subject to the Merger Loan, the Liberty Loan and the Assumed Financing, and the rights and obligations arising thereunder; and it is expressly understood and agreed that, except as may otherwise be expressly provided in this Agreement and in the documents delivered at the Closing, NYSCRF has not and does not hereby assume or agree to assume any liability whatsoever of Liberty.

15. NOTICES

15.1 Notices . Any notice, request, demand, instruction or other communication to be given to either party hereunder, except those required to be delivered at the Closing, shall be in writing, and shall be deemed to be delivered (a) upon receipt, if delivered by facsimile, (b) upon receipt or rejection if sent by hand delivery or (c) upon delivery to a nationally recognized overnight air courier service such as UPS or Federal Express, each addressed as follows:


		If to NYSCRF:		New York State Common Retirement Fund
				c/o Office of the State Comptroller
				59 Maiden Lane, 30 ^th Floor
				New York, NY 10038-4502
				Attn: Assistant Comptroller for Real Estate
				Fax No.: 212-383-1331
				Telephone No.: 212-383-1508

		with additional copies to:		New York State Common Retirement Fund
				c/o Office of the State Comptroller
				59 Maiden Lane, 30 ^th Floor
				New York, NY 10038-4502
				Attn: Assistant Deputy Counsel
				Fax No.: 212-681-1331
				Telephone No.: 212-383-1330

		with additional copies to:		Heitman Capital Management LLC
				191 North Wacker Drive
				Suite 2500
				Chicago, IL 60606
				Attn: Jerome Claeys
				Fax No.: 312-251-5445
				Telephone No.: 312-541-6740

		with additional copies to:		Cox, Castle & Nicholson LLP
				2049 Century Park East, 28th Floor
				Los Angeles, CA 90067-3284
				Attn: Amy H. Wells, Esq.
				Fax No.: 310-277-7889
				Telephone No.: 310-284-2233


		and with additional copies to:		Heitman Capital Management LLC
				191 North Wacker Drive
				Suite 2500
				Chicago, IL 60606
				Attn: Anthony Ferrante
				Fax No.: (312) 541-6789
				Telephone No.: (312) 251-5458

		If to Liberty:		Liberty Property Limited Partnership
				500 Chesterfield Parkway
				Malvern, Pennsylvania 19355
				Attention: Mr. Michael T. Hagan
				Fax: 610-644-4129
				Phone No: (610) 648-1716

		with additional copies to:		Wolf Block Schorr and Solis-Cohen LLP
				1650 Arch Street, 22nd Floor
				Philadelphia, Pennsylvania 19103-2097
				Attention: Herman C. Fala, Esquire
				Fax: 215-405-2976
				Phone No.: 215-977-2076

Any notice under this Agreement delivered prior to Closing by Liberty to NYSCRF or by NYSCRF to Liberty shall be deemed to be simultaneously delivered to and received by the Company.

16. MISCELLANEOUS

16.1 Entire Agreement . This Agreement and the exhibits attached hereto contain the entire agreement between the parties and supersede all prior and contemporaneous agreements or understandings. No modification or amendment of this Agreement shall be of any force or effect unless made in writing and executed by NYSCRF, Liberty and the Company.

16.2 Counterparts . This Agreement may be executed in any number of counterparts which together shall constitute the agreement of the parties.

16.3 Time of the Essence Time is of the essence with respect to the performance of all obligations provided herein and the consummation of all transactions contemplated hereby.

16.4 Assignment . This Agreement, and the rights and obligations of NYSCRF hereunder, may be assigned by NYSCRF at any time without the consent of Liberty to any wholly owned affiliate of NYSCRF. Upon any such assignment by NYSCRF, NYSCRF shall remain liable for all of its obligations hereunder. In the event of any such assignment, Liberty agrees to close the transaction contemplated hereunder with the assignee of NYSCRF. Liberty may not assign this Agreement without the prior written consent of NYSCRF.

16.5 Dates . Whenever any determination is to be made or action is to be taken on a date specified in this Agreement, if such date shall fall on Saturday, Sunday or legal holiday under the laws of the Commonwealth of Virginia or District of Columbia, then in such event said date shall be extended to the next day which is not a Saturday, Sunday or legal holiday. All references in this Agreement to “the date hereof,” “the date of this Agreement” or similar references shall be deemed to refer to the date on which this Agreement has been executed and delivered by Liberty and NYSCRF.

16.6 Binding on Successors and Assigns . This Agreement and the terms and provisions hereof shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns whenever the context so requires or admits.

16.7 Records . NYSCRF shall not file this Agreement, nor any memorandum hereof, in any public records without the prior written consent of Liberty, and any such memorandum which is filed without such consent shall be, in Liberty’s sole discretion, automatically deemed null and void; provided that Liberty may file a copy of this Agreement as an exhibit to a filing it may make with the Securities and Exchange Commission (the “ SEC ”).

16.8 Confidentiality and Public Disclosure . NYSCRF shall hold, and shall instruct all of its employees and agents to hold, all information furnished to it pursuant to this Agreement, and all information which it obtains pursuant to its inspection, testings and investigations undertaken in connection herewith in confidence except as and to the extent required by law. Liberty and NYSCRF covenant and agree that, prior to Closing, they will not issue any press releases or otherwise disclose the existence or terms of this Agreement and that they will each hold this Agreement and the particulars thereof and the parties thereto in confidence, except with the reasonable approval of the other party hereto and except as may be required by law, provided that the foregoing will not restrict the ability of Liberty to file this Agreement (and some or all of the exhibits) as an exhibit to a filing it may make with the SEC and to make disclosures regarding the transactions provided for by this Agreement to the extent Liberty reasonably believes necessary to enable Liberty to comply with securities laws and SEC regulations, the rules of any stock exchange, or the requirements of any filing or registration made by Liberty Property Trust as the issuer of publicly traded securities or as part of information provided to its investors and/or financial analysts. Liberty and NYSCRF shall work to prepare a joint press release, to be issued at Closing, respecting the transactions contemplated by this Agreement.

16.9 Termination . Upon any termination permitted under the terms of this Agreement, NYSCRF and Liberty shall be automatically released and discharged from all further liability and obligations under and in connection with this Agreement, subject however, to the express provisions of this Agreement that provide for survival of certain agreements and indemnities. No termination of this Agreement shall be effective unless executed by the terminating party and delivered to the other party.

16.10 Reporting Person . The Title Company is hereby designated as the “Reporting Person” pursuant to Section 6045 of the Code and the regulations promulgated thereunder.

16.11 Paragraph Headings . .The paragraph headings contained in the Agreement are for convenience only and shall in no way enlarge or limit the scope or meaning of the various and several paragraphs hereof.

16.12 Facsimile Signatures . Executed facsimile or electronically delivered copies of this Agreement shall be binding upon the parties herein, and facsimile or electronically delivered signatures appearing hereon shall be deemed to be original signatures. Following execution by facsimile or electronic delivery by both parties, NYSCRF shall execute four (4) originals of this Agreement and forward them by overnight courier to Liberty; Liberty shall execute such

counterparts and deliver two of the same to NYSCRF the day following receipt thereof from NYSCRF.

16.13 Exculpation .

(a) No recourse shall be had for any obligation of Liberty under this Agreement or under any document executed in connection herewith or pursuant hereto, or for any claim based thereon or otherwise in respect thereof, against any past, present or future trustee, partner, officer or employee of Liberty, whether by virtue of any statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being expressly waived and released by NYSCRF and the Company and all parties claiming by, through or under NYSCRF or the Company.

(b) No recourse shall be had for any obligation of NYSCRF under this Agreement or under any document executed in connection herewith or pursuant hereto, or for any claim based thereon or otherwise in respect thereof, against any past, present or future trustee, shareholder, officer or employee of NYSCRF, whether by virtue of any statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being expressly waived and released by Liberty and the Company and all parties claiming by, through or under Liberty or the Company.

16.14 AS IS . THE PROPERTY IS BEING CONVEYED TO THE COMPANY (BY CONTRIBUTION OF THE CONTRIBUTED INTERESTS AND PURCHASE OF THE PURCHASED INTERESTS) ON AN “AS IS, WHERE IS” BASIS, AND LIBERTY MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE PROPERTY, THE PHYSICAL CONDITION, FITNESS FOR USE, TITLE OR ANY OTHER MATTER RELATING TO THE PROPERTY, EXCEPT AS EXPRESSLY AND SPECIFICALLY SET FORTH IN THIS AGREEMENT. NYSCRF REPRESENTS THAT IT IS KNOWLEDGEABLE OF REAL ESTATE AND THAT IT IS RELYING SOLELY ON ITS OWN EXPERTISE, THAT OF NYSCRF’S CONSULTANTS, AND THE REPRESENTATIONS AND WARRANTIES OF LIBERTY CONTAINED IN THIS AGREEMENT, SUBJECT, HOWEVER, TO THE LIMITATIONS CONTAINED HEREIN UPON SUCH REPRESENTATIONS AND WARRANTIES, AND THAT LIBERTY HAS OR SHALL HAVE AFFORDED NYSCRF WITH A FULL AND COMPLETE OPPORTUNITY TO MAKE ITS OWN INDEPENDENT INVESTIGATION OF THE PROPERTY AND ALL MATTERS PERTAINING THERETO DURING THE INSPECTION PERIOD INCLUDING, BUT NOT LIMITED TO, THE PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF AND, UPON CLOSING, SHALL ASSUME THE RISK THAT ADVERSE MATTERS, INCLUDING, BUT NOT LIMITED TO, ADVERSE PHYSICAL AND ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY NYSCRF’S INSPECTIONS AND INVESTIGATIONS. NYSCRF ACKNOWLEDGES AND AGREES THAT, UPON CLOSING, LIBERTY SHALL CONVEY TO THE COMPANY, BY CONVEYANCE OF THE CONTRIBUTED INTERESTS, THE PROPERTY “AS IS, WHERE IS” WITH ALL FAULTS, AND THERE ARE NO ORAL AGREEMENTS, WARRANTIES OR REPRESENTATIONS (EXCEPT AS HEREIN SPECIFICALLY PROVIDED), COLLATERAL TO OR AFFECTING ANY OF THE PROPERTY BY LIBERTY, ANY AGENT OF LIBERTY OR ANY THIRD PARTY. NYSCRF EXPRESSLY AGREES THAT THE TERMS AND CONDITIONS OF THIS PARAGRAPH SHALL SURVIVE THE CLOSING OR TERMINATION OF THIS AGREEMENT AND NOT MERGE THEREIN AND LIBERTY IS NOT LIABLE OR BOUND IN ANY MANNER BY ANY VERBAL OR WRITTEN STATEMENTS, REPRESENTATIONS, OR INFORMATION PERTAINING TO THE PROPERTY FURNISHED BY ANY REAL ESTATE BROKER, AGENT, EMPLOYEE,

SERVANT OR OTHER PERSON, UNLESS THE SAME ARE SPECIFICALLY SET FORTH OR REFERRED TO IN THIS AGREEMENT.

16.15 Governing Law . This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware and the laws of the United States applicable to transactions in Virginia and the District of Columbia without regard to the principles of conflicts of laws of any jurisdiction.

16.16 Receipt of Written Notice Defined . Whenever in this Agreement the statement is made that Liberty has or has not received written notice of certain matters (such as, by way of example and not limitation, in Sections 4.1(b) or 13 ), “receipt of written notice” by Liberty, and words of similar import, shall mean the receipt of written notice by Liberty Property Trust or Liberty prior to the closing of the REIT Merger, and under no circumstances shall delivery of written notice to Republic Property Trust or its affiliates prior to the completion of the REIT Merger be deemed or imputed to be receipt of written notice by Liberty for purposes of this Agreement or the transactions contemplated hereby.

IN WITNESS WHEREOF, the parties have executed this Contribution Agreement as of the dates set forth below.

EXECUTED by NYSCRF on the 4 ^th day of October , 2007.


NEW YORK STATE COMMON RETIREMENT FUND Thomas P. Dinapoli, Comptroller of the State of New York, as Trustee of the Common Retirement Fund
By:	/s/ NICK SMIRENSKY
	Name:	Nick Smirensky
	Title:	Deputy Comptroller

EXECUTED by Liberty on the 1 ^st day of October , 2007.


		LIBERTY:

		LIBERTY PROPERTY LIMITED PARTNERSHIP, a Pennsylvania limited partnership

		By:		Liberty Property Trust, its general partner

		By:		/s/ MICHAEL T. HAGAN
		Name:		MICHAEL T. HAGAN
		Title:		CHIEF INVESTMENT OFFICER

		By:		/s/ WILLIAM P. HANKOWSKY
		Name:		WILLIAM P. HANKOWSKY
		Title:		CHAIRMAN, PRESIDENT AND CEO

EXECUTED by the Company on the 1st day of October_, 2007.


		THE COMPANY:

		LIBERTY WASHINGTON, LP

		By: Liberty Washington Venture, LLC, its general partner

		By: Liberty Property Limited Partnership, its sole member

		By: Liberty Property Trust, its general partner

		By:		/s/ MICHAEL T. HAGAN
		Name:		MICHAEL T. HAGAN
		Title:		CHIEF INVESTMENT OFFICER

		By:		/s/ WILLIAM P. HANKOWSKY
		Name:		WILLIAM P. HANKOWSKY
		Title:		CHAIRMAN, PRESIDENT AND CEO

The undersigned hereby acknowledges receipt of a fully executed original counterpart of this Agreement and agrees to perform the functions of Title Company hereunder as of the 2 ^nd day of Oct , 2007. The undersigned further assumes the duties of the “Reporting Person” as described in Section 6045 of the Code and the regulations promulgated thereunder.


		TITLE COMPANY:

		COMMONWEALTH LAND TITLE INSURANCE COMPANY

		By:		/s/ ANDREA B. CONNORS
		Name:		ANDREA B. CONNORS
		Title:		VP/OFFICE MANAGER

EXHIBIT A

PARCELS, ENTITIES, GROSS ASSET VALUE OF INTERESTS, PERMANENT FINANCING

GROSS ASSET

CONTRIBUTED

VALUE OF

PERMANENT

PARCEL

ENTITY

INTERESTS

FINANCING

Pender Business Park

RKB Pender LLC

100

[*]

3922-28 Pender Drive,
Fairfax, VA

Corporate Pointe IV

RKB CP IV LLC

100

[*]

14111 Park Meadow Drive,
Chantilly, VA

The Republic Building

RPT 1425 Investors, L.P.*

(Purchased Entity

)*****

[*]

1425 New York Avenue, NW

RPLP I, LLC

Washington, DC

Corporate Oaks

RKB Corporate Oaks LLC

100

[*]

625 Herndon Parkway,
Herndon, VA

WillowWood I and II

RPB WillowWood I LLC

100

[*]

10300 and 10306 Eaton

and

100

Place, Fairfax, VA

WillowWood II LLC

Republic Park (1 - 7)

Republic Park LLC

100

[*]

13605-15-25-35-45-55-65
Dulles Technology Drive,
Herndon, VA
Republic Park (8)
13461 Sunrise Valley
Drive, Herndon, VA

Lakeside I & II

RKB Lakeside LLC**

99.9

[*]

(allocation of the

14104 and 14120

RKB Lakeside Manager LLC

100

[*]

Newbrook Drive,
Chantilly,VA

Liberty Loan applicable to this Parcel)

WillowWood III and IV

RKB WillowWood LLC***

[*]

(allocation of the

10304 and 10302 Eaton Place,

RKB WillowWood Manager LLC

100

[*]

Fairfax, VA

Liberty Loan applicable to this Parcel)

President’s Park I, II & III

RPT President’s Park LLC****

[*]

13861 Sunrise Valley Drive

RPT Presidents Park Manager LLC

100

13865 Sunrise Valley Drive
2525 Network Place
Herndon, VA

1129 20th Street, NW

Republic 20th Street, LLC

(Purchased Entity

)*****

[*]

Washington, DC

TOTAL:

[*]


*		The Republic Building is owned by RPT 1425 New York Avenue LLC, of which RPT 1425 Holdings LLC is the sole member. RPT 1425 Investors, L.P. is the sole member of RPT 1425 Holdings LLC.

**		Lakeside I & II are owned by RKB Lakeside LLC. RKB Lakeside Manager LLC owns the remaining 0.1% interest in RKB Lakeside LLC.

***		WillowWood III & IV are owned by RKB Willow Wood LLC. RKB Willow Wood Manager LLC owns the remaining 1% interest in RKB WillowWood LLC.

****		RPT Presidents Park LLC owns 100% of the interests in Presidents Park I LLC, Presidents Park II LLC and Presidents Park III LLC, which entities own Presidents Park I, II & III, respectively. RPT Presidents Park Manager LLC owns the remaining 1% interest in RPT Presidents Park LLC.

*****		Not a Contributed Entity.


*		The confidential information contained herein has been omitted and separately filed with the Staff.

EXHIBIT B
LEGAL DESCRIPTIONS

[omitted]

EXHIBIT C

(Reserved)

EXHIBIT D
DUE DILIGENCE ITEMS

[The confidential information contained herein has been omitted and separately filed with the Staff.]

EXHIBIT E

ASSIGNMENT OF CONTRIBUTED INTERESTS

[omitted]

EXHIBIT F
PARTNERSHIP AGREEMENT

[see Exhibit 10.18]

EXHIBIT G
MANAGEMENT AND LEASING AGREEMENT

[see Exhibit A to Exhibit 10.18]

EXHIBIT H
REQUIRED APPROVALS

Lender approval of assumption by the Company of the Assumed Financing.

EXHIBIT I
ENVIRONMENTAL MATTERS EFFECTING THE PROPERTY
BUT NOT DISCLOSED IN THE ENVIRONMENTAL REPORTS

[The confidential treatment contained herein has been omitted and separately filed with the Staff.]

EXHIBIT J
FORM OF ESTOPPEL CERTIFICATE

[omitted]

EXHIBIT K

LIBERTY LOAN ASSIGNMENT

ASSIGNMENT AND ASSUMPTION OF LOAN

THIS AGREEMENT, made this 4th day of October, 2007, between Liberty Property Limited Partnership, a Pennsylvania limited partnership, as successor by merger to Republic Property Limited Partnership, a Delaware limited partnership, having its principal business office at 500 Chesterfield Parkway, Malvern, PA 19355 (“ Assignor ”), Liberty Washington, LP a Delaware limited partnership, having its principal business office at 500 Chesterfield Parkway, Malvern, PA 19355 (“ Assignee ”) and Liberty Washington Venture, LLC, having its principal business office at 500 Chesterfield Parkway, Malvern, PA 19355 (“ Lender ”).

BACKGROUND OF THE TRANSACTION

A. Lender made a loan (“ Loan ”) in the sum of Fifty Nine Million Five Hundred Thousand Dollars ($59,500,000) to Assignor evidenced by a $59,500,000 Mortgage Note dated October 4, 2007 (“ Note ”) from Assignor to Lender.

B. The Note is secured by a Loan and Security Agreement dated October 4, 2007 (the “ Loan Agreement ”) by which Assignor pledged all of Assignor’s right, title and interest in the outstanding membership interest of RKB Lakeside LLC and RKB WillowWood LLC (the “ Pledged Interests ”). The Note and Loan Agreement are collectively called the “ Loan Documents ”.

C. Assignor and Assignee have entered into a Contribution Agreement dated October 4, 2007 pursuant to which Assignor has agreed to contribute to Assignee, among other things, the Pledged Interests, subject to the Loan.

NOW THEREFORE, Assignee, and Assignor, intending to be legally bound hereby and for good and valuable consideration, receipt of which is hereby acknowledged, covenant and agree as follows:

1. Assignment and Assumption of Loan .

(a) Assignor hereby assigns and Assignee hereby accepts and assumes all of Assignor’s rights and obligations under the Loan Documents (including, without limitation, the obligation to pay all installments of principal and interest and other sums which are due or become due thereunder), and Assignee hereby agrees that Lender may enforce directly against Assignee all of the obligations under the Loan Documents as if Assignee were the original signatory to the Loan Documents.

(b) Lender hereby releases Assignor from all obligations under the Loan Documents whether arising before or after the date hereof.

2. Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the parties hereto and there successors and assigns.

3. Amendment . This Agreement may not be amended or modified except in a writing.

4. Governing Law . This Agreement shall be governed and construed in accordance with the laws of the State of Delaware.

[SIGNATURES FOLLOW ON NEXT PAGE]

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.


	ASSIGNOR: LIBERTY PROPERTY LIMITED PARTNERSHIP, a Pennsylvania limited partnership
	By:	Liberty Property Trust, its general partner


	By:
		Name:
		Title:


	ASSIGNEE: LIBERTY WASHINGTON, LP, a Delaware limited partnership By: Liberty Washington Venture, LLC, its general partner By: Liberty Property Limited Partnership, its sole member By: Liberty Property Trust, its general partner
	By:
		Name:
		Title:

[Signatures continue on next page]

[Continuation of signatures to the Assignment and Assumption of Loan]


	LENDER: LIBERTY WASHINGTON VENTURE, LLC, a Delaware limited liability company By: Liberty Property Limited Partnership, its sole member By: Liberty Property Trust, its general partner
	By:
		Name:
		Title:

EXHIBIT L

TERMS OF THE LIBERTY LOAN


Loan Amount:		$59,500,000

Interest Rate:		5.25% per annum.

Loan Term:		September 1, 2008 [note: 60 days beyond longer of the defeased loans]

Prepayment:		Permitted in whole or in part at any time without penalty.

Amortization:		None.

Compounding:		None.

Reserves:		None.

Recourse:		Non-Recourse.

Security:		Pledge of interests in RKB Lakeside LLC and RKB WillowWood LLC.

SCHEDULE 2.1(b)(ii)
ADDITIONAL CLOSING PROCEDURES

1. First, prior to completion of the Merger (as defined in Section 5.1(a) ) the Company shall enter into one or more agreements with Republic Property Limited Partnership (“ RPLP ”) whereby RPLP agrees to sell, and the Company agrees to purchase, 100% of RPLP’s ownership interests in Republic 20th Street LLC, a Delaware limited liability company, RPLP I LLC, a Delaware limited liability company, and RPT 1425 Investors, LP, a Delaware limited partnership, for a combined purchase price (the “ Purchase Price ”) of $76,540,000.00. The interests to be conveyed pursuant to this Paragraph are referred to herein collectively as the “ Purchased Interests ”. The Purchased Interests and the Contributed Interests are sometimes referred to herein collectively as the “ Interests ”. Republic 20 ^th Street LLC, RPLP I LLC and RPT 1425 Investors, LP are referred to herein collectively as the “ Purchased Entities ”.

2. Second, prior to completion of the Merger, the Company shall close on the purchase of the Purchased Interests. The consideration for such purchase shall be a purchase money promissory note from the Company to RPLP in the amount of the Purchase Price. The promissory note described in this Paragraph is referred to herein as the “ Purchase Money Note ”). Immediately upon issuance of the Purchase Money Note, Liberty shall use diligent efforts to cause RPLP to convey the Purchased Interests to the Company. The Purchase Money Note will be non-recourse to the Company and shall be secured by a pledge from the Company of its ownership interests in Republic 20th Street LLC and Liberty Property Philadelphia Limited Partnership. The Purchase Money Note, together with the corresponding security agreement and other applicable loan documents, if any, are referred herein collectively as the “ Purchase Money Loan Documents ”. The Company’s Partnership Agreement shall provide that Liberty will contribute 25% of any amounts payable under the Purchase Price to the Company if, as and when the amounts payable under the Purchase Money Note become due.

3. Third, prior to completion of the Merger, Liberty shall cause the LLC to make a loan to RPLP (the “ Liberty Loan ”) in the amount of $59,500,000.00 and reflecting the business terms set forth on Exhibit L attached hereto. The Liberty Loan shall be non-recourse to RPLP, secured by a pledge from RPLP if its interests in RKB Lakeside LLC, a Delaware limited liability company (“ Lakeside, LLC ”), and RKB WillowWood LLC, a Delaware limited liability company ( “ Willowwood, LLC ” ), and evidenced by a promissory note and a loan and security agreement from RPLP to the LLC (collectively, the “ Liberty Loan Documents ” ). Prior to completion of the Merger, Liberty shall use diligent efforts to cause RPLP to apply the proceeds of the Liberty Loan to defease the existing mortgage loans currently held by Lakeside, LLC and WillowWood, LLC.

4. Fourth, prior to completion of the Merger, the Company shall make a loan to Liberty in an amount equal to $415,063,748.00 (the “ Merger Loan ”), which shall be fully recourse to Liberty and evidenced by a promissory note from Liberty to the Company. Liberty shall loan a portion of the Merger Loan proceeds to its general partner, Liberty Property Trust, and thereafter Liberty and Liberty Property Trust shall use the proceeds of the Merger Loan to complete the Merger.

5. Fifth, immediately after completion of the Merger, Liberty shall contribute, convey and assign the Contributed Interests and the Purchase Money Loan Documents to the Company, subject to the Liberty Loan and in satisfaction of the Merger Loan, to the extent thereof, and the balance as a contribution to the capital of the Company, and otherwise in accordance with the terms of this Agreement. Contemporaneously with the contribution of the Contributed Interests to the Company, Liberty shall assign, and the Company shall assume, all of LPLP’s interests and obligations as borrower under the Liberty Loan Documents, including the obligation to make payments under the note evidencing the Liberty Loan. The Contributed Interests shall be free and clear of all liens, security interests, pledges, assignments, claims, options, encumbrances, charges, commitments, and equitable interests or rights of others, of any kind whatsoever, other than the Liberty Loan. The Property owned, directly or indirectly, by the Entities shall be free and clear of all mortgages and other liens and encumbrances (other than the Assumed Financing and the exceptions shown on the marked up title commitments previously delivered to NYSCRF, and neither the Company nor NYSCRF shall incur any costs of removing any such mortgages, liens or encumbrances.

SCHEDULE 3.4
MORTGAGE LOANS

ASSUMED FINANCING


PROPERTY	AMOUNT

Pender Business Park	$	[*]
3922-28 Pender Drive, Fairfax, VA

Corporate Pointe IV	$	[*]
14111 Park Meadow Drive, Chantilly, VA

The Republic Building	$	[*]
1425 New York Avenue, NW Washington, DC

Corporate Oaks	$	[*]
625 Herndon Parkway, Herndon, VA

WillowWood I and II,	$	[*]
10300 and 10306 Eaton Place, Fairfax, VA

Republic Park (1 - 7)	$	[*]
13605-15-25-35-45-55-65 Dulles Technology Drive, Herndon, VA Republic Park (8) 13461 Sunrise Valley Drive, Herndon, VA


*		The confidential information contained herein has been omitted and separately filed with the Staff.

SATISFIED LOANS


PROPERTY	AMOUNT

WillowWood III and IV	$	[*]
10304 and 10302 Eaton Place, Fairfax, VA (To be defeased)
Lakeside I & II	$	[*]
14104 and 14120 Newbrook Drive, Chantilly, VA (To be defeased)
1129 20th Street, NW	$	[*]
Washington, DC	(Construction
(To be repaid)	Loan)

REVOLVING LINE OF CREDIT


Presidents Park I, II & III	$	[*]
13861 Sunrise Valley Drive 13865 Sunrise Valley Drive 2525 Network Place Herndon, VA (To be repaid)


*		The confidential information contained herein has been omitted and separately filed with the Staff.

SCHEDULE 4.1(b)(ii)
MATERIAL LITIGATION

Litigation disclosed by the Proxy Statement of Republic Property Trust dated August 27, 2007.

SCHEDULE 4.1(b)(vii)
OUTSTANDING OBLIGATIONS UNDER TENANT LEASES

[The confidential information contained herein has been omitted and separately filed with the Staff.]

SCHEDULE 4.1(a)(viii)
MATTERS RESPECTING TENANT LEASES

[The confidential information contained herein has been omitted and separately filed with the Staff.]

SCHEDULE 4.4(j)
LIBERTY OBLIGATION
TENANT IMPROVEMENTS; LEASING COMMISSIONS

[The confidential information contained herein has been omitted and separately filed with the Staff.]

SCHEDULE 13.2
ENVIRONMENTAL REPORTS

[The confidential information contained herein has been omitted and separately filed with the Staff.]

EXHIBIT 12.1 — STATEMENT RE: COMPUTATION OF RATIO
OF EARNINGS TO FIXED CHARGES
AND RATIO OF EARNINGS TO COMBINED FIXED CHARGES

LIBERTY PROPERTY TRUST / LIBERTY PROPERTY LIMITED PARTNERSHIP
(Amounts in thousands except ratio amounts)


	Six months ended June 30, 2010

Earnings before fixed charges:
Income before allocation of noncontrolling interest and income from investments in unconsolidated subsidiaries	$	72,999
Add: Interest expense		74,328
Depreciation expense on cap’d interest		830
Amortization of deferred financing costs		3,445


Earnings before fixed charges	$	151,602


Fixed charges:
Interest expense	$	74,328
Amortization of deferred financing charges		3,445
Capitalized interest		353


Fixed charges		78,126


Preferred share distributions		—
Preferred unit distributions		10,506


Combined fixed charges	$	88,632


Ratio of earnings to fixed charges		1.94


Ratio of earnings to combined fixed charges		1.71

Exhibit 31.1

LIBERTY PROPERTY TRUST

CERTIFICATIONS REQUIRED BY
RULE 13a-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934

I, William P. Hankowsky, certify that:

1. I have reviewed this Form 10-Q of Liberty Property Trust;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting,

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: August 6, 2010	By:	/s/ WILLIAM P. HANKOWSKY
		William P. Hankowsky
		Chairman, President and Chief Executive Officer

Exhibit 31.2

LIBERTY PROPERTY TRUST

CERTIFICATIONS REQUIRED BY
RULE 13a-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934

I, George J. Alburger, Jr., certify that:

1. I have reviewed this Form 10-Q of Liberty Property Trust;

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: August 6, 2010	By:	/s/ GEORGE J. ALBURGER, JR.
		George J. Alburger, Jr.
		Executive Vice President and Chief Financial Officer

Exhibit 31.3

LIBERTY PROPERTY LIMITED PARTNERSHIP

CERTIFICATIONS REQUIRED BY
RULE 13a-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934

I, William P. Hankowsky, certify that:

1. I have reviewed this Form 10-Q of Liberty Property Limited Partnership;

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: August 6, 2010	By:	/s/ WILLIAM P. HANKOWSKY
		William P. Hankowsky
		Chairman, President and Chief Executive Officer of Liberty Property Trust, the Registrant’s sole general partner

Exhibit 31.4

LIBERTY PROPERTY LIMITED PARTNERSHIP

CERTIFICATIONS REQUIRED BY
RULE 13a-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934

I, George J. Alburger, Jr., certify that:

1. I have reviewed this Form 10-Q of Liberty Property Limited Partnership;

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: August 6, 2010	By:	/s/ GEORGE J. ALBURGER, JR.
		George J. Alburger, Jr.
		Executive Vice President and Chief Financial Officer of Liberty Property Trust, the Registrant’s sole general partner

Exhibit 32.1

LIBERTY PROPERTY TRUST

CERTIFICATIONS REQUIRED BY
RULE 13a-14(b) UNDER THE SECURITIES EXCHANGE ACT OF 1934

In connection with the Quarterly Report of Liberty Property Trust (the “Company”) on Form 10-Q for the quarterly period ended June 30, 2010 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, WILLIAM P. HANKOWSKY, President and Chief Executive Officer of the Company, certify in connection with Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended, that based on my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.


/s/ WILLIAM P. HANKOWSKY
William P. Hankowsky
Chairman, President and Chief Executive Officer

Date: August 6, 2010

Exhibit 32.2

LIBERTY PROPERTY TRUST

CERTIFICATIONS REQUIRED BY
RULE 13a-14(b) UNDER THE SECURITIES EXCHANGE ACT OF 1934

In connection with the Quarterly Report of Liberty Property Trust (the “Company”) on Form 10-Q for the quarterly period ended June 30, 2010, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, GEORGE J. ALBURGER, JR., Executive Vice President and Chief Financial Officer of the Company, certify in connection with Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended, that based on my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.


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

Date: August 6, 2010

Exhibit 32.3

LIBERTY PROPERTY LIMITED PARTNERSHIP

CERTIFICATIONS REQUIRED BY
RULE 13a-14(b) UNDER THE SECURITIES EXCHANGE ACT OF 1934

In connection with the Quarterly Report of Liberty Property Limited Partnership (the “Company”) on Form 10-Q for the quarterly period ended June 30, 2010, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, WILLIAM P. HANKOWSKY, President and Chief Executive Officer of Liberty Property Trust (the sole general partner of the Company), certify in connection with Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended, that based on my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.


/s/ WILLIAM P. HANKOWSKY
William P. Hankowsky
Chairman, President and Chief Executive Officer
of Liberty Property Trust, the Company’s sole general partner

Date: August 6, 2010

Exhibit 32.4

LIBERTY PROPERTY LIMITED PARTNERSHIP

CERTIFICATIONS REQUIRED BY
RULE 13a-14(b) UNDER THE SECURITIES EXCHANGE ACT OF 1934

In connection with the Quarterly Report of Liberty Property Limited Partnership (the “Company”) on Form 10-Q for the quarterly period ended June 30, 2010, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, GEORGE J. ALBURGER, JR., Executive Vice President and Chief Financial Officer of Liberty Property Trust (the sole general partner of the Company), certify in connection with Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended, that based on my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.


/s/ GEORGE J. ALBURGER, JR.
George J. Alburger, Jr.
Executive Vice President and Chief Financial Officer
of Liberty Property Trust, the Company’s sole general partner

Date: August 6, 2010