þ | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended September 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 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 |
September 30, 2013 | December 31, 2012 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
Real estate investments: | |||||||
Operating properties | $ | 4,631,910 | $ | 4,726,169 | |||
Accumulated depreciation | (998,409 | ) | (954,665 | ) | |||
Operating real estate investments, net | 3,633,501 | 3,771,504 | |||||
Construction-in-progress | 52,702 | 48,950 | |||||
Land inventory | 94,097 | 102,439 | |||||
Total real estate investments, net | 3,780,300 | 3,922,893 | |||||
Cash and cash equivalents | 185,517 | 1,549 | |||||
Accounts receivable, net | 13,718 | 13,232 | |||||
Accrued rent receivable, net | 128,232 | 122,066 | |||||
Assets held for sale, net | 2,371 | — | |||||
Investment in real estate ventures, at equity | 194,572 | 193,555 | |||||
Deferred costs, net | 126,260 | 122,243 | |||||
Intangible assets, net | 54,457 | 70,620 | |||||
Notes receivable | 7,026 | 7,226 | |||||
Other assets | 65,689 | 53,325 | |||||
Total assets | $ | 4,558,142 | $ | 4,506,709 | |||
LIABILITIES AND BENEFICIARIES’ EQUITY | |||||||
Mortgage notes payable | $ | 434,895 | $ | 442,974 | |||
Unsecured credit facility | — | 69,000 | |||||
Unsecured term loans | 450,000 | 450,000 | |||||
Unsecured senior notes, net of discounts | 1,492,296 | 1,503,356 | |||||
Accounts payable and accrued expenses | 89,087 | 71,579 | |||||
Distributions payable | 25,579 | 23,652 | |||||
Deferred income, gains and rent | 69,637 | 82,947 | |||||
Acquired lease intangibles, net | 28,500 | 33,859 | |||||
Other liabilities | 46,990 | 55,826 | |||||
Total liabilities | 2,636,984 | 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; 156,703,790 and 143,538,733 issued and outstanding in 2013 and 2012, respectively | 1,565 | 1,434 | |||||
Additional paid-in capital | 2,970,576 | 2,780,194 | |||||
Deferred compensation payable in common shares | 5,431 | 5,352 | |||||
Common shares in grantor trust, 313,023 in 2013 and 290,745 in 2012 | (5,431 | ) | (5,352 | ) | |||
Cumulative earnings | 501,735 | 479,734 | |||||
Accumulated other comprehensive loss | (5,825 | ) | (15,918 | ) | |||
Cumulative distributions | (1,567,202 | ) | (1,493,206 | ) | |||
Total Brandywine Realty Trust’s equity | 1,900,889 | 1,752,278 | |||||
Non-controlling interests | 20,269 | 21,238 | |||||
Total equity | 1,921,158 | 1,773,516 | |||||
Total liabilities and equity | $ | 4,558,142 | $ | 4,506,709 |
Three-month periods ended | Nine-month periods ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Revenue: | |||||||||||||||
Rents | $ | 116,479 | $ | 108,658 | $ | 347,680 | $ | 327,362 | |||||||
Tenant reimbursements | 20,699 | 20,294 | 60,615 | 57,179 | |||||||||||
Termination fees | 2,040 | 931 | 2,946 | 2,522 | |||||||||||
Third party management fees, labor reimbursement and leasing | 3,263 | 3,007 | 9,652 | 9,021 | |||||||||||
Other | 975 | 1,630 | 3,305 | 4,029 | |||||||||||
Total revenue | 143,456 | 134,520 | 424,198 | 400,113 | |||||||||||
Operating Expenses: | |||||||||||||||
Property operating expenses | 40,661 | 38,783 | 119,522 | 112,961 | |||||||||||
Real estate taxes | 14,190 | 13,486 | 42,706 | 40,430 | |||||||||||
Third party management expenses | 1,317 | 1,298 | 4,105 | 3,812 | |||||||||||
Depreciation and amortization | 50,613 | 46,955 | 149,423 | 142,262 | |||||||||||
General and administrative expenses | 6,436 | 6,080 | 20,322 | 18,209 | |||||||||||
Total operating expenses | 113,217 | 106,602 | 336,078 | 317,674 | |||||||||||
Operating income | 30,239 | 27,918 | 88,120 | 82,439 | |||||||||||
Other Income (Expense): | |||||||||||||||
Interest income | 268 | 311 | 448 | 2,631 | |||||||||||
Historic tax credit transaction income | 11,853 | 11,840 | 11,853 | 11,840 | |||||||||||
Interest expense | (30,338 | ) | (32,620 | ) | (91,689 | ) | (99,745 | ) | |||||||
Interest expense — amortization of deferred financing costs | (1,158 | ) | (1,218 | ) | (3,502 | ) | (3,790 | ) | |||||||
Interest expense — financing obligation | (264 | ) | (230 | ) | (693 | ) | (608 | ) | |||||||
Equity in income of real estate ventures | 714 | 500 | 3,757 | 1,382 | |||||||||||
Gain from remeasurement of investment in a real estate venture | — | — | 7,847 | — | |||||||||||
Net gain on real estate venture transactions | — | — | 3,683 | — | |||||||||||
Net loss on sale of undepreciated real estate | (129 | ) | — | (129 | ) | — | |||||||||
Loss on real estate venture formation | — | (950 | ) | — | (950 | ) | |||||||||
Loss on early extinguishment of debt | (11 | ) | (51 | ) | (1,127 | ) | (1,549 | ) | |||||||
Income (Loss) from continuing operations | 11,174 | 5,500 | 18,568 | (8,350 | ) | ||||||||||
Discontinued operations: | |||||||||||||||
Income (Loss) from discontinued operations | (70 | ) | 1,649 | 590 | 6,803 | ||||||||||
Net gain (loss) on disposition of discontinued operations | (16 | ) | 9,940 | 3,029 | 34,774 | ||||||||||
Total discontinued operations | (86 | ) | 11,589 | 3,619 | 41,577 | ||||||||||
Net income | 11,088 | 17,089 | 22,187 | 33,227 | |||||||||||
Net (income) loss from discontinued operations attributable to non-controlling interests — LP units | 1 | (211 | ) | (48 | ) | (760 | ) | ||||||||
Net (income) loss attributable to non-controlling interests — LP units | (106 | ) | (49 | ) | (147 | ) | 335 | ||||||||
Net income attributable to non-controlling interests | (105 | ) | (260 | ) | (195 | ) | (425 | ) | |||||||
Net income attributable to Brandywine Realty Trust | 10,983 | 16,829 | 21,992 | 32,802 | |||||||||||
Distribution to Preferred Shares | (1,725 | ) | (2,785 | ) | (5,175 | ) | (7,832 | ) | |||||||
Preferred share redemption charge | — | — | — | (2,090 | ) | ||||||||||
Amount allocated to unvested restricted shareholders | (85 | ) | (95 | ) | (278 | ) | (286 | ) | |||||||
Net income attributable to Common Shareholders of Brandywine Realty Trust | $ | 9,173 | $ | 13,949 | $ | 16,539 | $ | 22,594 | |||||||
Basic income (loss) per Common Share: | |||||||||||||||
Continuing operations | $ | 0.06 | $ | 0.02 | $ | 0.09 | $ | (0.13 | ) | ||||||
Discontinued operations | — | 0.08 | 0.02 | 0.29 | |||||||||||
$ | 0.06 | $ | 0.10 | $ | 0.11 | $ | 0.16 | ||||||||
Diluted income (loss) per Common Share: | |||||||||||||||
Continuing operations | $ | 0.06 | $ | 0.02 | $ | 0.09 | $ | (0.13 | ) | ||||||
Discontinued operations | — | 0.08 | 0.02 | 0.29 | |||||||||||
$ | 0.06 | $ | 0.10 | $ | 0.11 | $ | 0.16 | ||||||||
Basic weighted average shares outstanding | 156,703,348 | 143,424,485 | 151,933,441 | 143,182,911 | |||||||||||
Diluted weighted average shares outstanding | 157,992,082 | 144,128,010 | 153,142,825 | 143,182,911 | |||||||||||
Net income (loss) attributable to Brandywine Realty Trust | |||||||||||||||
Net income (loss) from continuing operations | $ | 11,068 | $ | 5,451 | $ | 18,421 | $ | (8,015 | ) | ||||||
Income (Loss) from discontinued operations | (85 | ) | 11,378 | 3,571 | 40,817 | ||||||||||
Net income | $ | 10,983 | $ | 16,829 | $ | 21,992 | $ | 32,802 |
Three-month periods ended | Nine-month periods ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net income | $ | 11,088 | $ | 17,089 | $ | 22,187 | $ | 33,227 | |||||||
Comprehensive income (loss): | |||||||||||||||
Unrealized gain (loss) on derivative financial instruments | (1,302 | ) | (4,222 | ) | 9,978 | (14,780 | ) | ||||||||
Reclassification of realized losses on derivative financial instruments to operations, net (1) | 64 | 76 | 232 | 200 | |||||||||||
Unrealized gain on available-for-sale securities | — | 65 | — | — | |||||||||||
Total comprehensive income (loss) | (1,238 | ) | (4,081 | ) | 10,210 | (14,580 | ) | ||||||||
Comprehensive income | 9,850 | 13,008 | 32,397 | 18,647 | |||||||||||
Comprehensive (income) attributable to non-controlling interest | (91 | ) | (186 | ) | (312 | ) | (158 | ) | |||||||
Comprehensive income (loss) attributable to Brandywine Realty Trust | $ | 9,759 | $ | 12,822 | $ | 32,085 | $ | 18,489 |
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 | 21,992 | 195 | 22,187 | |||||||||||||||||||||||||||||||||||||||||||||
Comprehensive income | 10,093 | 117 | 10,210 | |||||||||||||||||||||||||||||||||||||||||||||
Issuance of Common Shares of Beneficial Interest | 12,650,000 | 127 | 181,907 | 182,034 | ||||||||||||||||||||||||||||||||||||||||||||
Equity issuance costs | (382 | ) | (382 | ) | ||||||||||||||||||||||||||||||||||||||||||||
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 | 2,565 | 2,565 | ||||||||||||||||||||||||||||||||||||||||||||||
Vesting of Restricted Performance Units | 53,134 | 27,067 | (160 | ) | (160 | ) | ||||||||||||||||||||||||||||||||||||||||||
Restricted Performance Units Amortization | 3,718 | 3,718 | ||||||||||||||||||||||||||||||||||||||||||||||
Restricted Share Forfeitures | 9 | 9 | ||||||||||||||||||||||||||||||||||||||||||||||
Exercise of Stock Options | 207,941 | 1 | 2,237 | 2,238 | ||||||||||||||||||||||||||||||||||||||||||||
Stock Option Amortization | 546 | 546 | ||||||||||||||||||||||||||||||||||||||||||||||
Share Issuance from/to Deferred Compensation Plan | (4,838 | ) | (11,839 | ) | 79 | (79 | ) | — | ||||||||||||||||||||||||||||||||||||||||
Trustee Fees Paid in Shares | 1,409 | 20 | 20 | |||||||||||||||||||||||||||||||||||||||||||||
Adjustment to Non-controlling Interest | (766 | ) | 766 | — | ||||||||||||||||||||||||||||||||||||||||||||
Preferred Share distributions | (5,175 | ) | (5,175 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Distributions declared ($0.15 per share) | (68,821 | ) | (806 | ) | (69,627 | ) | ||||||||||||||||||||||||||||||||||||||||||
BALANCE, September 30, 2013 | 4,000,000 | $ | 40 | 156,703,790 | 313,023 | $ | 1,565 | $ | 2,970,576 | $ | 5,431 | $ | (5,431 | ) | $ | 501,735 | $ | (5,825 | ) | $ | (1,567,202 | ) | $ | 20,269 | $ | 1,921,158 |
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 | 32,804 | 423 | 33,227 | |||||||||||||||||||||||||||||||||||||||||||||
Comprehensive loss | (14,377 | ) | (203 | ) | (14,580 | ) | ||||||||||||||||||||||||||||||||||||||||||
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 | 1 | 149 | (49 | ) | (332 | ) | (231 | ) | |||||||||||||||||||||||||||||||||||||||
Bonus Share Issuance | 35,703 | 387 | 387 | |||||||||||||||||||||||||||||||||||||||||||||
Vesting of Restricted Shares | 280,851 | 9,036 | 3 | (1,294 | ) | (1,291 | ) | |||||||||||||||||||||||||||||||||||||||||
Restricted Share Amortization | 2,138 | 2,138 | ||||||||||||||||||||||||||||||||||||||||||||||
Vesting of Restricted Performance Units | 249,797 | 2 | (1,331 | ) | (1,329 | ) | ||||||||||||||||||||||||||||||||||||||||||
Restricted Performance Units Amortization | 1,926 | 1,926 | ||||||||||||||||||||||||||||||||||||||||||||||
Exercise of Stock Options | 165,159 | 2 | 746 | 748 | ||||||||||||||||||||||||||||||||||||||||||||
Stock Option Amortization | 1,121 | 1,121 | ||||||||||||||||||||||||||||||||||||||||||||||
Share Issuance from/to Deferred Compensation Plan | (5,564 | ) | (10,937 | ) | (279 | ) | 279 | — | ||||||||||||||||||||||||||||||||||||||||
Trustee Fees Paid in Shares | 1,336 | 15 | 15 | |||||||||||||||||||||||||||||||||||||||||||||
Adjustment to Non-controlling Interest | 358 | (347 | ) | 11 | ||||||||||||||||||||||||||||||||||||||||||||
Preferred Share distributions | (7,832 | ) | (7,832 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Preferred Share redemption charges | (2,090 | ) | (2,090 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Distributions declared ($0.15 per share) | (64,804 | ) | (1,233 | ) | (66,037 | ) | ||||||||||||||||||||||||||||||||||||||||||
BALANCE, September 30, 2012 | 6,300,000 | $ | 63 | 143,438,501 | 290,745 | $ | 1,432 | $ | 2,828,722 | $ | 5,352 | $ | (5,352 | ) | $ | 510,093 | $ | (20,456 | ) | $ | (1,467,058 | ) | $ | 31,413 | $ | 1,884,209 |
Nine-month periods ended | |||||||
September 30, | |||||||
2013 | 2012 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 22,187 | $ | 33,227 | |||
Adjustments to reconcile net income to net cash from operating activities: | |||||||
Depreciation and amortization | 151,066 | 150,362 | |||||
Amortization of deferred financing costs | 3,502 | 3,790 | |||||
Amortization of debt discount/(premium), net | 1,112 | 1,095 | |||||
Amortization of stock compensation costs | 5,510 | 3,740 | |||||
Shares used for employee taxes upon vesting of share awards | (1,062 | ) | (2,232 | ) | |||
Straight-line rent income | (16,337 | ) | (17,792 | ) | |||
Amortization of acquired above (below) market leases to rental revenue, net | (5,372 | ) | (4,468 | ) | |||
Straight-line ground rent expense | 1,286 | 1,423 | |||||
Provision for doubtful accounts | 1,777 | 1,363 | |||||
Net gain on sale of interests in real estate | (3,044 | ) | (34,773 | ) | |||
Loss on real estate venture formation | — | 950 | |||||
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 | 1,127 | 1,549 | |||||
Historic tax credit transaction income | (11,853 | ) | (11,840 | ) | |||
Real estate venture income in excess of distributions | (2,371 | ) | (1,024 | ) | |||
Deferred financing obligation | (1,392 | ) | (1,314 | ) | |||
Changes in assets and liabilities: | |||||||
Accounts receivable | (287 | ) | 1,580 | ||||
Other assets | (5,758 | ) | (7,200 | ) | |||
Accounts payable and accrued expenses | 14,684 | 9,565 | |||||
Deferred income, gains and rent | 1,265 | (4,681 | ) | ||||
Other liabilities | 1,718 | (1,175 | ) | ||||
Net cash from operating activities | 146,228 | 122,145 | |||||
Cash flows from investing activities: | |||||||
Acquisition of properties | (20,758 | ) | (9,226 | ) | |||
Investments in available-for-sale securities | — | (98,250 | ) | ||||
Proceeds from the sale of available-for-sale securities | — | 98,250 | |||||
Sales of properties, net | 145,931 | 170,918 | |||||
Distribution of sales proceeds from real estate ventures | 16,963 | — | |||||
Proceeds from repayment of mortgage notes receivable | 200 | 23,930 | |||||
Capital expenditures for tenant improvements | (64,481 | ) | (64,527 | ) | |||
Capital expenditures for redevelopments | (5,288 | ) | (9,122 | ) | |||
Capital expenditures for developments | (5,399 | ) | — | ||||
Reimbursement from real estate venture for pre-formation development costs | 1,976 | — | |||||
Advances for purchase of tenant assets, net of repayments | (420 | ) | (13 | ) | |||
Investment in unconsolidated real estate ventures | (30,142 | ) | (49,763 | ) | |||
Cash distributions from unconsolidated real estate ventures | 3,661 | 2,779 | |||||
Leasing costs | (25,704 | ) | (22,111 | ) | |||
Net cash from investing activities | 16,539 | 42,865 | |||||
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 | (8,351 | ) | (9,209 | ) | |||
Deferred financing obligation non-cash interest expense | 697 | 701 | |||||
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 | (13,027 | ) | (167,841 | ) | |||
Repayments of unsecured term loan | — | (37,500 | ) | ||||
Net settlement of hedge transactions | — | (74 | ) | ||||
Debt financing costs | (6 | ) | (8,462 | ) | |||
Exercise of stock options | 2,240 | 748 | |||||
Distributions paid to shareholders | (72,061 | ) | (71,523 | ) | |||
Distributions to noncontrolling interest | (818 | ) | (1,196 | ) | |||
Net cash from financing activities | 21,201 | 76,196 | |||||
Increase in cash and cash equivalents | 183,968 | 241,206 | |||||
Cash and cash equivalents at beginning of period | 1,549 | 410 | |||||
Cash and cash equivalents at end of period | $ | 185,517 | $ | 241,616 | |||
Supplemental disclosure: | |||||||
Cash paid for interest, net of capitalized interest during the nine months ended September 30, 2013 and 2012 of $2,012 and $1,978, respectively | $ | 76,528 | $ | 83,618 | |||
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 | 1,210 | (1,270 | ) | ||||
Change in capital expenditures financed through retention payable at period end | (736 | ) | 284 | ||||
Change in unfunded tenant allowance | (811 | ) | (1,411 | ) |
September 30, 2013 | December 31, 2012 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
Real estate investments: | |||||||
Operating properties | $ | 4,631,910 | $ | 4,726,169 | |||
Accumulated depreciation | (998,409 | ) | (954,665 | ) | |||
Operating real estate investments, net | 3,633,501 | 3,771,504 | |||||
Construction-in-progress | 52,702 | 48,950 | |||||
Land inventory | 94,097 | 102,439 | |||||
Total real estate investments, net | 3,780,300 | 3,922,893 | |||||
Cash and cash equivalents | 185,517 | 1,549 | |||||
Accounts receivable, net | 13,718 | 13,232 | |||||
Accrued rent receivable, net | 128,232 | 122,066 | |||||
Assets held for sale, net | 2,371 | — | |||||
Investment in real estate ventures, at equity | 194,572 | 193,555 | |||||
Deferred costs, net | 126,260 | 122,243 | |||||
Intangible assets, net | 54,457 | 70,620 | |||||
Notes receivable | 7,026 | 7,226 | |||||
Other assets | 65,689 | 53,325 | |||||
Total assets | $ | 4,558,142 | $ | 4,506,709 | |||
LIABILITIES AND EQUITY | |||||||
Mortgage notes payable | $ | 434,895 | $ | 442,974 | |||
Unsecured credit facility | — | 69,000 | |||||
Unsecured term loans | 450,000 | 450,000 | |||||
Unsecured senior notes, net of discounts | 1,492,296 | 1,503,356 | |||||
Accounts payable and accrued expenses | 89,087 | 71,579 | |||||
Distributions payable | 25,579 | 23,652 | |||||
Deferred income, gains and rent | 69,637 | 82,947 | |||||
Acquired lease intangibles, net | 28,500 | 33,859 | |||||
Other liabilities | 46,990 | 55,826 | |||||
Total liabilities | 2,636,984 | 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 | 26,290 | 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, 156,703,790 and 143,538,733 units issued and outstanding in 2013 and 2012, respectively | 1,804,378 | 1,666,341 | |||||
Accumulated other comprehensive loss | (6,360 | ) | (16,452 | ) | |||
Total Brandywine Operating Partnership, L.P.’s equity | 1,894,868 | 1,746,739 | |||||
Total liabilities and partners’ equity | $ | 4,558,142 | $ | 4,506,709 |
Three-month periods ended | Nine-month periods ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Revenue: | |||||||||||||||
Rents | $ | 116,479 | $ | 108,658 | $ | 347,680 | $ | 327,362 | |||||||
Tenant reimbursements | 20,699 | 20,294 | 60,615 | 57,179 | |||||||||||
Termination fees | 2,040 | 931 | 2,946 | 2,522 | |||||||||||
Third party management fees, labor reimbursement and leasing | 3,263 | 3,007 | 9,652 | 9,021 | |||||||||||
Other | 975 | 1,630 | 3,305 | 4,029 | |||||||||||
Total revenue | 143,456 | 134,520 | 424,198 | 400,113 | |||||||||||
Operating Expenses: | |||||||||||||||
Property operating expenses | 40,661 | 38,783 | 119,522 | 112,961 | |||||||||||
Real estate taxes | 14,190 | 13,486 | 42,706 | 40,430 | |||||||||||
Third party management expenses | 1,317 | 1,298 | 4,105 | 3,812 | |||||||||||
Depreciation and amortization | 50,613 | 46,955 | 149,423 | 142,262 | |||||||||||
General & administrative expenses | 6,436 | 6,080 | 20,322 | 18,209 | |||||||||||
Total operating expenses | 113,217 | 106,602 | 336,078 | 317,674 | |||||||||||
Operating income | 30,239 | 27,918 | 88,120 | 82,439 | |||||||||||
Other Income (Expense): | |||||||||||||||
Interest income | 268 | 311 | 448 | 2,631 | |||||||||||
Historic tax credit transaction income | 11,853 | 11,840 | 11,853 | 11,840 | |||||||||||
Interest expense | (30,338 | ) | (32,620 | ) | (91,689 | ) | (99,745 | ) | |||||||
Interest expense — amortization of deferred financing costs | (1,158 | ) | (1,218 | ) | (3,502 | ) | (3,790 | ) | |||||||
Interest expense — financing obligation | (264 | ) | (230 | ) | (693 | ) | (608 | ) | |||||||
Equity in income of real estate ventures | 714 | 500 | 3,757 | 1,382 | |||||||||||
Gain from remeasurement of investment in a real estate venture | — | — | 7,847 | — | |||||||||||
Net gain on real estate venture transactions | — | — | 3,683 | — | |||||||||||
Net loss on sale of undepreciated real estate | (129 | ) | — | (129 | ) | — | |||||||||
Loss on real estate venture formation | — | (950 | ) | — | (950 | ) | |||||||||
Loss on early extinguishment of debt | (11 | ) | (51 | ) | (1,127 | ) | (1,549 | ) | |||||||
Gain (Loss) from continuing operations | 11,174 | 5,500 | 18,568 | (8,350 | ) | ||||||||||
Discontinued operations: | |||||||||||||||
Income (Loss) from discontinued operations | (70 | ) | 1,649 | 590 | 6,803 | ||||||||||
Net gain (loss) on disposition of discontinued operations | (16 | ) | 9,940 | 3,029 | 34,774 | ||||||||||
Total discontinued operations | (86 | ) | 11,589 | 3,619 | 41,577 | ||||||||||
Net income | 11,088 | 17,089 | 22,187 | 33,227 | |||||||||||
Distribution to Preferred Units | (1,725 | ) | (2,785 | ) | (5,175 | ) | (7,832 | ) | |||||||
Preferred unit redemption charge | — | — | — | (2,090 | ) | ||||||||||
Amount allocated to unvested restricted unitholders | (85 | ) | (95 | ) | (278 | ) | (286 | ) | |||||||
Net income attributable to Common Partnership Unitholders of Brandywine Operating Partnership, L.P. | $ | 9,278 | $ | 14,209 | $ | 16,734 | $ | 23,019 | |||||||
Basic income (loss) per Common Partnership Unit: | |||||||||||||||
Continuing operations | $ | 0.06 | $ | 0.02 | $ | 0.09 | $ | (0.13 | ) | ||||||
Discontinued operations | — | 0.08 | 0.02 | 0.29 | |||||||||||
$ | 0.06 | $ | 0.10 | $ | 0.11 | $ | 0.16 | ||||||||
Diluted income (loss) per Common Partnership Unit: | |||||||||||||||
Continuing operations | $ | 0.06 | $ | 0.02 | $ | 0.09 | $ | (0.13 | ) | ||||||
Discontinued operations | — | 0.08 | 0.02 | 0.29 | |||||||||||
$ | 0.06 | $ | 0.10 | $ | 0.11 | $ | 0.16 | ||||||||
Basic weighted average common partnership units outstanding | 158,467,087 | 146,082,206 | 153,731,070 | 145,842,872 | |||||||||||
Diluted weighted average common partnership units outstanding | 159,755,821 | 146,785,731 | 154,940,454 | 145,842,872 | |||||||||||
Net income (loss) attributable to Brandywine Operating Partnership, L.P. | |||||||||||||||
Income (Loss) from continuing operations | $ | 11,174 | $ | 5,500 | $ | 18,568 | $ | (8,350 | ) | ||||||
Income (Loss) from discontinued operations | (86 | ) | 11,589 | 3,619 | 41,577 | ||||||||||
Net income | $ | 11,088 | $ | 17,089 | $ | 22,187 | $ | 33,227 |
Three-month periods ended | Nine-month periods ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net income | $ | 11,088 | $ | 17,089 | $ | 22,187 | $ | 33,227 | |||||||
Comprehensive income (loss): | |||||||||||||||
Unrealized gain (loss) on derivative financial instruments | (1,302 | ) | (4,222 | ) | 9,978 | (14,780 | ) | ||||||||
Reclassification of realized losses on derivative financial instruments to operations, net (1) | 64 | 76 | 232 | 200 | |||||||||||
Unrealized gain on available-for-sale securities | — | 65 | — | — | |||||||||||
Total comprehensive income (loss) | (1,238 | ) | (4,081 | ) | 10,210 | (14,580 | ) | ||||||||
Comprehensive income attributable to Brandywine Operating Partnership, L.P. | $ | 9,850 | $ | 13,008 | $ | 32,397 | $ | 18,647 |
Nine-month periods ended | |||||||
September 30, | |||||||
2013 | 2012 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 22,187 | $ | 33,227 | |||
Adjustments to reconcile net income to net cash from operating activities: | |||||||
Depreciation and amortization | 151,066 | 150,362 | |||||
Amortization of deferred financing costs | 3,502 | 3,790 | |||||
Amortization of debt discount/(premium), net | 1,112 | 1,095 | |||||
Amortization of stock compensation costs | 5,510 | 3,740 | |||||
Shares used for employee taxes upon vesting of share awards | (1,062 | ) | (2,232 | ) | |||
Straight-line rent income | (16,337 | ) | (17,792 | ) | |||
Amortization of acquired above (below) market leases, net | (5,372 | ) | (4,468 | ) | |||
Straight-line ground rent expense | 1,286 | 1,423 | |||||
Provision for doubtful accounts | 1,777 | 1,363 | |||||
Net gain on sale of interests in real estate | (3,044 | ) | (34,773 | ) | |||
Loss on real estate venture formation | — | 950 | |||||
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 | 1,127 | 1,549 | |||||
Historic tax credit transaction income | (11,853 | ) | (11,840 | ) | |||
Real estate venture income in excess of distributions | (2,371 | ) | (1,024 | ) | |||
Deferred financing obligation | (1,392 | ) | (1,314 | ) | |||
Changes in assets and liabilities: | |||||||
Accounts receivable | (287 | ) | 1,580 | ||||
Other assets | (5,758 | ) | (7,200 | ) | |||
Accounts payable and accrued expenses | 14,684 | 9,565 | |||||
Deferred income, gains and rent | 1,265 | (4,681 | ) | ||||
Other liabilities | 1,718 | (1,175 | ) | ||||
Net cash from operating activities | 146,228 | 122,145 | |||||
Cash flows from investing activities: | |||||||
Acquisition of properties | (20,758 | ) | (9,226 | ) | |||
Investments in available-for-sale securities | — | (98,250 | ) | ||||
Proceeds from sale of available-for-sale securities | — | 98,250 | |||||
Sales of properties, net | 145,931 | 170,918 | |||||
Distribution of sales proceeds from real estate ventures | 16,963 | — | |||||
Proceeds from repayment of mortgage notes receivable | 200 | 23,930 | |||||
Capital expenditures for tenant improvements | (64,481 | ) | (64,527 | ) | |||
Capital expenditures for redevelopments | (5,288 | ) | (9,122 |