þ | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended June 30, 2013 |
o | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from to |
MARYLAND (Brandywine Realty Trust) | 23-2413352 | |
DELAWARE (Brandywine Operating Partnership L.P.) | 23-2862640 | |
(State or other jurisdiction of | (I.R.S. Employer | |
Incorporation or organization) | Identification No.) | |
555 East Lancaster Avenue | ||
Radnor, Pennsylvania | 19087 | |
(Address of principal executive offices) | (Zip Code) |
Brandywine Realty Trust | Yes þ No o | |
Brandywine Operating Partnership, L.P. | Yes þ No o |
Brandywine Realty Trust | Yes þ No o | |
Brandywine Operating Partnership, L.P. | Yes þ No o |
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer þ | Smaller reporting company o |
Brandywine Realty Trust | Yes o No þ | |
Brandywine Operating Partnership, L.P. | Yes o No þ |
• | facilitate a better understanding by the investors of the Parent Company and the Operating Partnership by enabling them to view the business as a whole in the same manner as management views and operates the business; |
• | remove duplicative disclosures and provide a more straightforward presentation in light of the fact that a substantial portion of the disclosure applies to both the Parent Company and the Operating Partnership; and |
• | create time and cost efficiencies through the preparation of one combined report instead of two separate reports. |
• | Consolidated Financial Statements; |
• | Parent Company’s and Operating Partnership’s Equity; and |
• | Liquidity and Capital Resources in the Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
Page | |
Brandywine Realty Trust | |
Brandywine Operating Partnership, L.P. | |
Exhibit 10.1 | |
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 |
Item 1. | — Financial Statements |
June 30, 2013 | December 31, 2012 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
Real estate investments: | |||||||
Rental properties | $ | 4,620,460 | $ | 4,726,169 | |||
Accumulated depreciation | (967,726 | ) | (954,665 | ) | |||
Operating real estate investments, net | 3,652,734 | 3,771,504 | |||||
Construction-in-progress | 51,260 | 48,950 | |||||
Land inventory | 94,444 | 102,439 | |||||
Total real estate investments, net | 3,798,438 | 3,922,893 | |||||
Cash and cash equivalents | 215,948 | 1,549 | |||||
Accounts receivable, net | 11,834 | 13,232 | |||||
Accrued rent receivable, net | 124,341 | 122,066 | |||||
Investment in real estate ventures, at equity | 176,875 | 193,555 | |||||
Deferred costs, net | 119,917 | 122,243 | |||||
Intangible assets, net | 59,919 | 70,620 | |||||
Notes receivable | 7,026 | 7,226 | |||||
Other assets | 52,091 | 53,325 | |||||
Total assets | $ | 4,566,389 | $ | 4,506,709 | |||
LIABILITIES AND BENEFICIARIES’ EQUITY | |||||||
Mortgage notes payable | $ | 437,618 | $ | 442,974 | |||
Unsecured credit facility | — | 69,000 | |||||
Unsecured term loans | 450,000 | 450,000 | |||||
Unsecured senior notes, net of discounts | 1,492,127 | 1,503,356 | |||||
Accounts payable and accrued expenses | 70,434 | 71,579 | |||||
Distributions payable | 25,587 | 23,652 | |||||
Deferred income, gains and rent | 81,903 | 82,947 | |||||
Acquired lease intangibles, net | 30,455 | 33,859 | |||||
Other liabilities | 44,196 | 55,826 | |||||
Total liabilities | 2,632,320 | 2,733,193 | |||||
Commitments and contingencies (Note 17) | |||||||
Brandywine Realty Trust’s equity: | |||||||
Preferred Shares (shares authorized-20,000,000): | |||||||
6.90% Series E Preferred Shares, $0.01 par value; issued and outstanding- 4,000,000 in 2013 and 2012 | 40 | 40 | |||||
Common Shares of Brandywine Realty Trust’s beneficial interest, $0.01 par value; shares authorized 200,000,000; 156,662,644 and 143,538,733 issued and outstanding in 2013 and 2012, respectively | 1,565 | 1,434 | |||||
Additional paid-in capital | 2,967,790 | 2,780,194 | |||||
Deferred compensation payable in common shares | 5,516 | 5,352 | |||||
Common shares in grantor trust, 315,753 in 2013 and 290,745 in 2012 | (5,516 | ) | (5,352 | ) | |||
Cumulative earnings | 490,754 | 479,734 | |||||
Accumulated other comprehensive loss | (4,601 | ) | (15,918 | ) | |||
Cumulative distributions | (1,541,896 | ) | (1,493,206 | ) | |||
Total Brandywine Realty Trust’s equity | 1,913,652 | 1,752,278 | |||||
Non-controlling interests | 20,417 | 21,238 | |||||
Total equity | 1,934,069 | 1,773,516 | |||||
Total liabilities and equity | $ | 4,566,389 | $ | 4,506,709 |
For the three-month periods ended | For the six-month periods ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Revenue: | |||||||||||||||
Rents | $ | 116,334 | $ | 109,713 | $ | 231,201 | $ | 218,704 | |||||||
Tenant reimbursements | 19,565 | 18,229 | 39,916 | 36,885 | |||||||||||
Termination fees | 410 | 101 | 906 | 1,591 | |||||||||||
Third party management fees, labor reimbursement and leasing | 3,153 | 2,872 | 6,389 | 6,014 | |||||||||||
Other | 1,457 | 888 | 2,330 | 2,399 | |||||||||||
Total revenue | 140,919 | 131,803 | 280,742 | 265,593 | |||||||||||
Operating Expenses: | |||||||||||||||
Property operating expenses | 39,490 | 36,363 | 78,908 | 74,223 | |||||||||||
Real estate taxes | 14,215 | 13,508 | 28,552 | 26,977 | |||||||||||
Third party management expenses | 1,363 | 1,264 | 2,788 | 2,514 | |||||||||||
Depreciation and amortization | 49,300 | 47,476 | 98,846 | 95,350 | |||||||||||
General and administrative expenses | 7,335 | 6,079 | 13,886 | 12,129 | |||||||||||
Total operating expenses | 111,703 | 104,690 | 222,980 | 211,193 | |||||||||||
Operating income | 29,216 | 27,113 | 57,762 | 54,400 | |||||||||||
Other Income (Expense): | |||||||||||||||
Interest income | 122 | 1,838 | 180 | 2,320 | |||||||||||
Interest expense | (30,437 | ) | (32,981 | ) | (61,351 | ) | (67,125 | ) | |||||||
Interest expense — amortization of deferred financing costs | (1,183 | ) | (1,261 | ) | (2,344 | ) | (2,572 | ) | |||||||
Interest expense — financing obligation | (211 | ) | (196 | ) | (429 | ) | (378 | ) | |||||||
Equity in income of real estate ventures | 1,508 | 838 | 3,043 | 882 | |||||||||||
Gain from remeasurement of investment in a real estate venture | 7,847 | — | 7,847 | — | |||||||||||
Net gain (loss) on real estate venture transactions | 3,683 | (11 | ) | 3,683 | (11 | ) | |||||||||
Loss on early extinguishment of debt | (1,113 | ) | (1,250 | ) | (1,116 | ) | (1,498 | ) | |||||||
Income (loss) from continuing operations | 9,432 | (5,910 | ) | 7,275 | (13,982 | ) | |||||||||
Discontinued operations: | |||||||||||||||
Income from discontinued operations | 8 | 2,535 | 780 | 5,275 | |||||||||||
Net gain (loss) on disposition of discontinued operations | (2,260 | ) | 10,177 | 3,044 | 24,845 | ||||||||||
Total discontinued operations | (2,252 | ) | 12,712 | 3,824 | 30,120 | ||||||||||
Net income | 7,180 | 6,802 | 11,099 | 16,138 | |||||||||||
Net (income) loss from discontinued operations attributable to non-controlling interests — LP units | 26 | (232 | ) | (51 | ) | (551 | ) | ||||||||
Net (income) loss attributable to non-controlling interests — LP units | (88 | ) | 201 | (39 | ) | 386 | |||||||||
Net (income) loss attributable to non-controlling interests | (62 | ) | (31 | ) | (90 | ) | (165 | ) | |||||||
Net income attributable to Brandywine Realty Trust | 7,118 | 6,771 | 11,009 | 15,973 | |||||||||||
Distribution to Preferred Shares | (1,725 | ) | (3,049 | ) | (3,450 | ) | (5,047 | ) | |||||||
Preferred share redemption charge | — | (2,090 | ) | — | (2,090 | ) | |||||||||
Amount allocated to unvested restricted shareholders | (85 | ) | (95 | ) | (193 | ) | (191 | ) | |||||||
Net income attributable to Common Shareholders of Brandywine Realty Trust | $ | 5,308 | $ | 1,537 | $ | 7,366 | $ | 8,645 | |||||||
Basic income (loss) per Common Share: | |||||||||||||||
Continuing operations | $ | 0.05 | $ | (0.08 | ) | $ | 0.02 | $ | (0.15 | ) | |||||
Discontinued operations | (0.02 | ) | 0.09 | 0.03 | 0.21 | ||||||||||
$ | 0.03 | $ | 0.01 | $ | 0.05 | $ | 0.06 | ||||||||
Diluted income (loss) per Common Share: | |||||||||||||||
Continuing operations | $ | 0.05 | $ | (0.08 | ) | $ | 0.02 | $ | (0.15 | ) | |||||
Discontinued operations | (0.02 | ) | 0.09 | 0.03 | 0.21 | ||||||||||
$ | 0.03 | $ | 0.01 | $ | 0.05 | $ | 0.06 | ||||||||
Basic weighted average shares outstanding | 155,347,384 | 143,300,637 | 149,508,957 | 143,060,796 | |||||||||||
Diluted weighted average shares outstanding | 156,691,201 | 143,300,637 | 150,666,245 | 143,060,796 | |||||||||||
Net income (loss) attributable to Brandywine Realty Trust | |||||||||||||||
Loss from continuing operations | $ | 9,344 | $ | (5,709 | ) | $ | 7,236 | $ | (13,596 | ) | |||||
Income (loss) from discontinued operations | (2,226 | ) | 12,480 | 3,773 | 29,569 | ||||||||||
Net income | $ | 7,118 | $ | 6,771 | $ | 11,009 | $ | 15,973 |
For the three-month periods ended | For the six-month periods ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net income | $ | 7,180 | $ | 6,802 | $ | 11,099 | $ | 16,138 | |||||||
Comprehensive income (loss): | |||||||||||||||
Unrealized gain (loss) on derivative financial instruments | 9,491 | (10,650 | ) | 11,283 | (10,623 | ) | |||||||||
Reclassification of realized losses on derivative financial instruments to operations, net (1) | 66 | 76 | 168 | 124 | |||||||||||
Unrealized loss on available-for-sale securities | — | (65 | ) | — | (65 | ) | |||||||||
Total comprehensive income (loss) | 9,557 | (10,639 | ) | 11,451 | (10,564 | ) | |||||||||
Comprehensive income (loss) | 16,737 | (3,837 | ) | 22,550 | 5,574 | ||||||||||
Comprehensive (income) loss attributable to non-controlling interest | (169 | ) | 163 | (221 | ) | 29 | |||||||||
Comprehensive income (loss) attributable to Brandywine Realty Trust | $ | 16,568 | $ | (3,674 | ) | $ | 22,329 | $ | 5,603 |
Number of Preferred Shares | Par Value of Preferred Shares | Number of Common Shares | Number of Rabbi Trust/Deferred Compensation Shares | Common Shares of Brandywine Realty Trust’s beneficial interest | Additional Paid-in Capital | Deferred Compensation Payable in Common Shares | Common Shares in Grantor Trust | Cumulative Earnings | Accumulated Other Comprehensive Income (Loss) | Cumulative Distributions | Non-Controlling Interests | Total | ||||||||||||||||||||||||||||||||||||
BALANCE, December 31, 2012 | 4,000,000 | $ | 40 | 143,538,733 | 290,745 | $ | 1,434 | $ | 2,780,194 | $ | 5,352 | $ | (5,352 | ) | $ | 479,734 | $ | (15,918 | ) | $ | (1,493,206 | ) | $ | 21,238 | $ | 1,773,516 | ||||||||||||||||||||||
Net income | 11,011 | 88 | 11,099 | |||||||||||||||||||||||||||||||||||||||||||||
Comprehensive income | 11,317 | 134 | 11,451 | |||||||||||||||||||||||||||||||||||||||||||||
Issuance of Common Shares of Beneficial Interest | 12,650,000 | 127 | 181,907 | 182,034 | ||||||||||||||||||||||||||||||||||||||||||||
Equity issuance costs | (380 | ) | (380 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Conversion of LP Units to Common Shares | 81,998 | 1 | 1,240 | — | (1,241 | ) | — | |||||||||||||||||||||||||||||||||||||||||
Bonus Share Issuance | 27,918 | 361 | 361 | |||||||||||||||||||||||||||||||||||||||||||||
Vesting of Restricted Shares | 147,495 | 7,050 | 2 | (904 | ) | (902 | ) | |||||||||||||||||||||||||||||||||||||||||
Restricted Share Amortization | 1,703 | 1,703 | ||||||||||||||||||||||||||||||||||||||||||||||
Vesting of Restricted Performance Units | 26,067 | (160 | ) | (160 | ) | |||||||||||||||||||||||||||||||||||||||||||
Restricted Performance Units Amortization | 2,411 | 2,411 | ||||||||||||||||||||||||||||||||||||||||||||||
Restricted Share Forfeitures | 9 | 9 | ||||||||||||||||||||||||||||||||||||||||||||||
Exercise of Stock Options | 166,620 | 1 | 1,760 | 1,761 | ||||||||||||||||||||||||||||||||||||||||||||
Stock Option Amortization | 377 | 377 | ||||||||||||||||||||||||||||||||||||||||||||||
Share Issuance from/to Deferred Compensation Plan | 22,404 | 17,958 | 164 | (164 | ) | — | ||||||||||||||||||||||||||||||||||||||||||
Trustee Fees Paid in Shares | 1,409 | 20 | 20 | |||||||||||||||||||||||||||||||||||||||||||||
Adjustment to Non-controlling Interest | (739 | ) | 739 | — | ||||||||||||||||||||||||||||||||||||||||||||
Preferred Share distributions | (3,450 | ) | (3,450 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Distributions declared ($0.15 per share) | (45,240 | ) | (541 | ) | (45,781 | ) | ||||||||||||||||||||||||||||||||||||||||||
BALANCE, June 30, 2013 | 4,000,000 | $ | 40 | 156,662,644 | 315,753 | $ | 1,565 | $ | 2,967,790 | $ | 5,516 | $ | (5,516 | ) | $ | 490,754 | $ | (4,601 | ) | $ | (1,541,896 | ) | $ | 20,417 | $ | 1,934,069 |
Number of Preferred Shares | Par Value of Preferred Shares | Number of Common Shares | Number of Rabbi Trust/Deferred Compensation Shares | Common Shares of Brandywine Realty Trust’s beneficial interest | Additional Paid-in Capital | Deferred Compensation Payable in Common Shares | Common Shares in Grantor Trust | Cumulative Earnings | Accumulated Other Comprehensive Income (Loss) | Cumulative Distributions | Non-Controlling Interests | Total | ||||||||||||||||||||||||||||||||||||
BALANCE, December 31, 2011 | 4,300,000 | $ | 43 | 142,690,755 | 292,646 | $ | 1,424 | $ | 2,776,197 | $ | 5,631 | $ | (5,631 | ) | $ | 477,338 | $ | (6,079 | ) | $ | (1,392,332 | ) | $ | 33,105 | $ | 1,889,696 | ||||||||||||||||||||||
Net income | 15,973 | 165 | 16,138 | |||||||||||||||||||||||||||||||||||||||||||||
Comprehensive loss | (10,370 | ) | (194 | ) | (10,564 | ) | ||||||||||||||||||||||||||||||||||||||||||
Issuance of Preferred Shares | 4,000,000 | 40 | 96,810 | 96,850 | ||||||||||||||||||||||||||||||||||||||||||||
Preferred Share Issuance Costs | (610 | ) | (610 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Redemption of Preferred Shares | (2,000,000 | ) | (20 | ) | (47,890 | ) | (47,910 | ) | ||||||||||||||||||||||||||||||||||||||||
Conversion of LP Units to Common Shares | 20,464 | 149 | (45 | ) | (332 | ) | (228 | ) | ||||||||||||||||||||||||||||||||||||||||
Bonus Share Issuance | 35,703 | 387 | 387 | |||||||||||||||||||||||||||||||||||||||||||||
Vesting of Restricted Shares | 280,851 | 9,036 | 3 | (1,295 | ) | (1,292 | ) | |||||||||||||||||||||||||||||||||||||||||
Restricted Share Amortization | 1,426 | 1,426 | ||||||||||||||||||||||||||||||||||||||||||||||
Vesting of Restricted Performance Units | 249,797 | 3 | (1,332 | ) | (1,329 | ) | ||||||||||||||||||||||||||||||||||||||||||
Restricted Performance Units Amortization | 1,205 | 1,205 | ||||||||||||||||||||||||||||||||||||||||||||||
Exercise of Stock Options | 94,429 | 1 | 274 | 275 | ||||||||||||||||||||||||||||||||||||||||||||
Stock Option Amortization | 747 | 747 | ||||||||||||||||||||||||||||||||||||||||||||||
Share Issuance from/to Deferred Compensation Plan | (5,389 | ) | (8,560 | ) | (195 | ) | 195 | — | ||||||||||||||||||||||||||||||||||||||||
Trustee Fees Paid in Shares | 1,336 | 15 | 15 | |||||||||||||||||||||||||||||||||||||||||||||
Adjustment to Non-controlling Interest | 392 | (379 | ) | 13 | ||||||||||||||||||||||||||||||||||||||||||||
Preferred Share distributions | (5,047 | ) | (5,047 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Preferred Share redemption charges | (2,090 | ) | (2,090 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Distributions declared ($0.15 per share) | (43,193 | ) | (760 | ) | (43,953 | ) | ||||||||||||||||||||||||||||||||||||||||||
BALANCE, June 30, 2012 | 6,300,000 | $ | 63 | 143,367,946 | 293,122 | $ | 1,431 | $ | 2,826,475 | $ | 5,436 | $ | (5,436 | ) | $ | 493,266 | $ | (16,449 | ) | $ | (1,442,662 | ) | $ | 31,605 | $ | 1,893,729 |
Six-month periods ended | |||||||
June 30, | |||||||
2013 | 2012 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 11,099 | $ | 16,138 | |||
Adjustments to reconcile net income to net cash from operating activities: | |||||||
Depreciation and amortization | 100,459 | 101,624 | |||||
Amortization of deferred financing costs | 2,344 | 2,572 | |||||
Amortization of debt discount/(premium), net | 748 | 745 | |||||
Amortization of stock compensation costs | 4,048 | 2,433 | |||||
Shares used for employee taxes upon vesting of share awards | (1,061 | ) | (2,234 | ) | |||
Straight-line rent income | (11,250 | ) | (12,861 | ) | |||
Amortization of acquired above (below) market leases to rental revenue, net | (3,556 | ) | (2,922 | ) | |||
Straight-line ground rent expense | 894 | 949 | |||||
Provision for doubtful accounts | 997 | 962 | |||||
Net gain on sale of interests in real estate | (3,044 | ) | (24,834 | ) | |||
Net gain on real estate venture transactions | (3,683 | ) | — | ||||
Gain from remeasurement of investment in a real estate venture | (7,847 | ) | — | ||||
Loss on early extinguishment of debt | 1,116 | 1,498 | |||||
Real estate venture income in excess of distributions | (2,031 | ) | (590 | ) | |||
Deferred financing obligation | (896 | ) | (825 | ) | |||
Changes in assets and liabilities: | |||||||
Accounts receivable | 2,035 | 3,561 | |||||
Other assets | 6,589 | 5,260 | |||||
Accounts payable and accrued expenses | (1,252 | ) | (11,546 | ) | |||
Deferred income, gains and rent | 608 | (2,871 | ) | ||||
Other liabilities | 474 | (1,438 | ) | ||||
Net cash from operating activities | 96,791 | 75,621 | |||||
Cash flows from investing activities: | |||||||
Acquisition of properties | (20,758 | ) | (9,226 | ) | |||
Investments in available-for-sale securities | — | (98,744 | ) | ||||
Proceeds from the sale of available-for-sale securities | — | 56,322 | |||||
Sales of properties, net | 145,931 | 120,957 | |||||
Distribution of sales proceeds from real estate ventures | 16,963 | — | |||||
Proceeds from repayment of mortgage notes receivable | 200 | 23,931 | |||||
Capital expenditures for tenant improvements | (46,828 | ) | (48,591 | ) | |||
Capital expenditures for redevelopments | (4,676 | ) | (3,110 | ) | |||
Capital expenditures for developments | (72 | ) | — | ||||
Reimbursement from real estate venture for pre-formation development costs | 1,976 | — | |||||
Advances for purchase of tenant assets, net of repayments | (693 | ) | 283 | ||||
Investment in unconsolidated Real Estate Ventures | (12,568 | ) | (18,617 | ) | |||
Cash distributions from unconsolidated real estate ventures | 3,445 | 1,723 | |||||
Leasing costs | (14,313 | ) | (14,940 | ) | |||
Net cash from investing activities | 68,607 | 9,988 | |||||
Cash flows from financing activities: | |||||||
Proceeds from Unsecured Term Loans | — | 600,000 | |||||
Proceeds from Credit Facility borrowings | 186,000 | 21,500 | |||||
Repayments of Credit Facility borrowings | (255,000 | ) | (297,000 | ) | |||
Repayments of mortgage notes payable | (5,537 | ) | (6,028 | ) | |||
Deferred financing obligation non-cash interest expense | 466 | 468 | |||||
Net proceeds from issuance of common shares | 181,527 | — | |||||
Net proceeds from issuance of preferred shares | — | 96,240 | |||||
Redemption of preferred shares | — | (50,188 | ) | ||||
Repayments of unsecured notes | (12,912 | ) | (167,371 | ) | |||
Repayments of unsecured term loan | — | (37,500 | ) |
Net settlement of hedge transactions | — | (74 | ) | ||||
Debt financing costs | (6 | ) | (8,431 | ) | |||
Exercise of stock options | 1,762 | 276 | |||||
Distributions paid to shareholders | (46,745 | ) | (47,059 | ) | |||
Distributions to noncontrolling interest | (554 | ) | (797 | ) | |||
Net cash from financing activities | 49,001 | 104,036 | |||||
Increase in cash and cash equivalents | 214,399 | 189,645 | |||||
Cash and cash equivalents at beginning of period | 1,549 | 410 | |||||
Cash and cash equivalents at end of period | $ | 215,948 | $ | 190,055 | |||
Supplemental disclosure: | |||||||
Cash paid for interest, net of capitalized interest during the six months ended June 30, 2013 and 2012 of $1,305 and $1,207, respectively | $ | 67,844 | $ | 69,480 | |||
Supplemental disclosure of non-cash activity: | |||||||
Change in operating real estate related to a non-cash acquisition of an operating property | (21,649 | ) | — | ||||
Change in intangible assets, net related to non-cash acquisition of an operating property | (3,517 | ) | — | ||||
Change in acquired lease intangibles, net related to non-cash acquisition of an operating property | 462 | — | |||||
Change in investments in joint venture related to non-cash acquisition of property | 13,040 | — | |||||
Change in operating real estate related to non-cash adjustment to land | (4,386 | ) | — | ||||
Change in investments in real estate ventures related to a contribution of land | (6,058 | ) | — | ||||
Change in capital expenditures financed through accounts payable at period end | (1,227 | ) | (1,735 | ) | |||
Change in capital expenditures financed through retention payable at period end | (348 | ) | 56 | ||||
Change in unfunded tenant allowance | (244 | ) | (1,144 | ) |
June 30, 2013 | December 31, 2012 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
Real estate investments: | |||||||
Operating properties | $ | 4,620,460 | $ | 4,726,169 | |||
Accumulated depreciation | (967,726 | ) | (954,665 | ) | |||
Operating real estate investments, net | 3,652,734 | 3,771,504 | |||||
Construction-in-progress | 51,260 | 48,950 | |||||
Land inventory | 94,444 | 102,439 | |||||
Total real estate investments, net | 3,798,438 | 3,922,893 | |||||
Cash and cash equivalents | 215,948 | 1,549 | |||||
Accounts receivable, net | 11,834 | 13,232 | |||||
Accrued rent receivable, net | 124,341 | 122,066 | |||||
Investment in real estate ventures, at equity | 176,875 | 193,555 | |||||
Deferred costs, net | 119,917 | 122,243 | |||||
Intangible assets, net | 59,919 | 70,620 | |||||
Notes receivable | 7,026 | 7,226 | |||||
Other assets | 52,091 | 53,325 | |||||
Total assets | $ | 4,566,389 | $ | 4,506,709 | |||
LIABILITIES AND EQUITY | |||||||
Mortgage notes payable | $ | 437,618 | $ | 442,974 | |||
Unsecured credit facility | — | 69,000 | |||||
Unsecured term loans | 450,000 | 450,000 | |||||
Unsecured senior notes, net of discounts | 1,492,127 | 1,503,356 | |||||
Accounts payable and accrued expenses | 70,434 | 71,579 | |||||
Distributions payable | 25,587 | 23,652 | |||||
Deferred income, gains and rent | 81,903 | 82,947 | |||||
Acquired lease intangibles, net | 30,455 | 33,859 | |||||
Other liabilities | 44,196 | 55,826 | |||||
Total liabilities | 2,632,320 | 2,733,193 | |||||
Commitments and contingencies (Note 17) | |||||||
Redeemable limited partnership units at redemption value; 1,763,739 and 1,845,737 issued and outstanding in 2013 and 2012, respectively | 26,241 | 26,777 | |||||
Brandywine Operating Partnership, L.P.’s equity: | |||||||
6.90% Series E-Linked Preferred Mirror Units; issued and outstanding- 4,000,000 in 2013 and 2012 | 96,850 | 96,850 | |||||
General Partnership Capital, 156,662,644 and 143,538,733 units issued and outstanding in 2013 and 2012, respectively | 1,815,979 | 1,666,341 | |||||
Accumulated other comprehensive loss | (5,001 | ) | (16,452 | ) | |||
Total Brandywine Operating Partnership, L.P.’s equity | 1,907,828 | 1,746,739 | |||||
Total liabilities and partners’ equity | $ | 4,566,389 | $ | 4,506,709 |
For the three-month periods ended | For the six-month periods ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Revenue: | |||||||||||||||
Rents | $ | 116,334 | $ | 109,713 | $ | 231,201 | $ | 218,704 | |||||||
Tenant reimbursements | 19,565 | 18,229 | 39,916 | 36,885 | |||||||||||
Termination fees | 410 | 101 | 906 | 1,591 | |||||||||||
Third party management fees, labor reimbursement and leasing | 3,153 | 2,872 | 6,389 | 6,014 | |||||||||||
Other | 1,457 | 888 | 2,330 | 2,399 | |||||||||||
Total revenue | 140,919 | 131,803 | 280,742 | 265,593 | |||||||||||
Operating Expenses: | |||||||||||||||
Property operating expenses | 39,490 | 36,363 | 78,908 | 74,223 | |||||||||||
Real estate taxes | 14,215 | 13,508 | 28,552 | 26,977 | |||||||||||
Third party management expenses | 1,363 | 1,264 | 2,788 | 2,514 | |||||||||||
Depreciation and amortization | 49,300 | 47,476 | 98,846 | 95,350 | |||||||||||
General & administrative expenses | 7,335 | 6,079 | 13,886 | 12,129 | |||||||||||
Total operating expenses | 111,703 | 104,690 | 222,980 | 211,193 | |||||||||||
Operating income | 29,216 | 27,113 | 57,762 | 54,400 | |||||||||||
Other Income (Expense): | |||||||||||||||
Interest income | 122 | 1,838 | 180 | 2,320 | |||||||||||
Interest expense | (30,437 | ) | (32,981 | ) | (61,351 | ) | (67,125 | ) | |||||||
Interest expense — amortization of deferred financing costs | (1,183 | ) | (1,261 | ) | (2,344 | ) | (2,572 | ) | |||||||
Interest expense — financing obligation | (211 | ) | (196 | ) | (429 | ) | (378 | ) | |||||||
Equity in income of real estate ventures | 1,508 | 838 | 3,043 | 882 | |||||||||||
Gain from remeasurement of investment in a real estate venture | 7,847 | — | 7,847 | — | |||||||||||
Net gain (loss) on real estate venture transactions | 3,683 | (11 | ) | 3,683 | (11 | ) | |||||||||
Loss on early extinguishment of debt | (1,113 | ) | (1,250 | ) | (1,116 | ) | (1,498 | ) | |||||||
Gain (Loss) from continuing operations | 9,432 | (5,910 | ) | 7,275 | (13,982 | ) | |||||||||
Discontinued operations: | |||||||||||||||
Income from discontinued operations | 8 | 2,535 | 780 | 5,275 | |||||||||||
Net gain (loss) on disposition of discontinued operations | (2,260 | ) | 10,177 | 3,044 | 24,845 | ||||||||||
Total discontinued operations | (2,252 | ) | 12,712 | 3,824 | 30,120 | ||||||||||
Net income | 7,180 | 6,802 | 11,099 | 16,138 | |||||||||||
Distribution to Preferred Units | (1,725 | ) | (3,049 | ) | (3,450 | ) | (5,047 | ) | |||||||
Preferred unit redemption charge | — | (2,090 | ) | — | (2,090 | ) | |||||||||
Amount allocated to unvested restricted unitholders | (85 | ) | (95 | ) | (193 | ) | (191 | ) | |||||||
Net income attributable to Common Partnership Unitholders of Brandywine Operating Partnership, L.P. | $ | 5,370 | $ | 1,568 | $ | 7,456 | $ | 8,810 | |||||||
Basic income (loss) per Common Partnership Unit: | |||||||||||||||
Continuing operations | $ | 0.05 | $ | (0.08 | ) | $ | 0.02 | $ | (0.15 | ) | |||||
Discontinued operations | (0.02 | ) | 0.09 | 0.03 | 0.21 | ||||||||||
$ | 0.03 | $ | 0.01 | $ | 0.05 | $ | 0.06 | ||||||||
Diluted income (loss) per Common Partnership Unit: | |||||||||||||||
Continuing operations | $ | 0.05 | $ | (0.08 | ) | $ | 0.02 | $ | (0.15 | ) | |||||
Discontinued operations | (0.02 | ) | 0.09 | 0.03 | 0.21 | ||||||||||
$ | 0.03 | $ | 0.01 | $ | 0.05 | $ | 0.06 | ||||||||
Basic weighted average common partnership units outstanding | 157,131,697 | 145,958,358 | 151,323,813 | 145,721,890 | |||||||||||
Diluted weighted average common partnership units outstanding | 158,475,514 | 145,958,358 | 152,481,101 | 145,721,890 | |||||||||||
Net income (loss) attributable to Brandywine Operating Partnership, L.P. | |||||||||||||||
Income (Loss) from continuing operations | $ | 9,432 | $ | (5,910 | ) | $ | 7,275 | $ | (13,982 | ) | |||||
Income (Loss) from discontinued operations | (2,252 | ) | 12,712 | 3,824 | 30,120 | ||||||||||
Net income | $ | 7,180 | $ | 6,802 | $ | 11,099 | $ | 16,138 |
For the three-month periods ended | For the six-month periods ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net income | $ | 7,180 | $ | 6,802 | $ | 11,099 | $ | 16,138 | |||||||
Comprehensive income (loss): | |||||||||||||||
Unrealized gain (loss) on derivative financial instruments | 9,491 | (10,650 | ) | 11,283 | (10,623 | ) | |||||||||
Reclassification of realized losses on derivative financial instruments to operations, net (1) | 66 | 76 | 168 | 124 | |||||||||||
Unrealized loss on available-for-sale securities | — | (65 | ) | — | (65 | ) | |||||||||
Total comprehensive income (loss) | 9,557 | (10,639 | ) | 11,451 | (10,564 | ) | |||||||||
Comprehensive income (loss) attributable to Brandywine Operating Partnership, L.P. | $ | 16,737 | $ | (3,837 | ) | $ | 22,550 | $ | 5,574 |
Six-month periods ended | |||||||
June 30, | |||||||
2013 | 2012 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 11,099 | $ | 16,138 | |||
Adjustments to reconcile net income to net cash from operating activities: | |||||||
Depreciation and amortization | 100,459 | 101,624 | |||||
Amortization of deferred financing costs | 2,344 | 2,572 | |||||
Amortization of debt discount/(premium), net | 748 | 745 | |||||
Amortization of stock compensation costs | 4,048 | 2,433 | |||||
Shares used for employee taxes upon vesting of share awards | (1,061 | ) | (2,234 | ) | |||
Straight-line rent income | (11,250 | ) | (12,861 | ) | |||
Amortization of acquired above (below) market leases, net | (3,556 | ) | (2,922 | ) | |||
Straight-line ground rent expense | 894 | 949 | |||||
Provision for doubtful accounts | 997 | 962 | |||||
Net gain on sale of interests in real estate | (3,044 | ) | (24,834 | ) | |||
Net gain on real estate venture transaction | (3,683 | ) | — | ||||
Gain on remeasurement of investment in a real estate venture | (7,847 | ) | — | ||||
Loss on early extinguishment of debt | 1,116 | 1,498 | |||||
Real estate venture income in excess of distributions | (2,031 | ) | (590 | ) | |||
Deferred financing obligation | (896 | ) | (825 | ) | |||
Changes in assets and liabilities: | |||||||
Accounts receivable | 2,035 | 3,561 | |||||
Other assets | 6,589 | 5,260 | |||||
Accounts payable and accrued expenses | (1,252 | ) | (11,546 | ) | |||
Deferred income, gains and rent | 608 | (2,871 | ) | ||||
Other liabilities | 474 | (1,438 | ) | ||||
Net cash from operating activities | 96,791 | 75,621 | |||||
Cash flows from investing activities: | |||||||
Acquisition of properties | (20,758 | ) | (9,226 | ) | |||
Investments in available-for-sale securities | — | (98,744 | ) | ||||
Proceeds from sale of available-for-sale securities | — | 56,322 | |||||
Sales of properties, net | 145,931 | 120,957 | |||||
Distribution of sales proceeds from real estate ventures | 16,963 | — | |||||
Proceeds from repayment of mortgage notes receivable | 200 | 23,931 | |||||
Capital expenditures for tenant improvements | (46,828 | ) | (48,591 | ) | |||
Capital expenditures for redevelopments | (4,676 | ) | (3,110 | ) | |||
Capital expenditures for developments | (72 | ) | — | ||||
Reimbursement from real estate venture for pre-formation development costs | 1,976 | — | |||||
Advances for purchase of tenant assets, net of repayments | (693 | ) | 283 | ||||
Investment in unconsolidated Real Estate Ventures | (12,568 | ) | (18,617 | ) | |||
Cash distributions from unconsolidated Real Estate Ventures | 3,445 | 1,723 | |||||
Leasing costs | (14,313 | ) | (14,940 | ) | |||
Net cash from investing activities | 68,607 | 9,988 | |||||
Cash flows from financing activities: | |||||||
Proceeds from Unsecured Term Loans | — | 600,000 | |||||
Proceeds from Credit Facility borrowings | 186,000 | 21,500 | |||||
Repayments of Credit Facility borrowings | (255,000 | ) | (297,000 | ) | |||
Repayments of mortgage notes payable | (5,537 | ) | (6,028 | ) | |||
Deferred financing obligation non-cash interest expense | 466 | 468 | |||||
Net proceeds from issuance of common units | 181,527 | — | |||||
Net proceeds from issuance of preferred units | — | 96,240 | |||||
Redemption of preferred units | — | (50,188 | ) | ||||
Repayments of unsecured notes | (12,912 | ) | (167,371 |