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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2007
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 |
For the transition period from to
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Commission file
number 001-9106 (Brandywine Realty Trust)
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000-24407 (Brandywine Operating Partnership, L.P.) |
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Brandywine Realty Trust
Brandywine Operating Partnership, L.P.
(Exact name of registrant as specified in its charter)
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MARYLAND (Brandywine Realty Trust)
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23-2413352 |
DELAWARE (Brandywine Operating Partnership L.P.)
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23-2862640 |
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(State or other jurisdiction of
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(I.R.S. Employer Identification No.) |
Incorporation or organization) |
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555 East Lancaster Avenue |
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Radnor, Pennsylvania
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19087 |
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(Address of principal executive offices)
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(Zip Code) |
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Registrants telephone number, including area code
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(610) 325-5600 |
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Securities registered pursuant to Section 12(b) of the Act: |
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Name of each exchange |
Title of each class
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on which registered |
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Common Shares of Beneficial Interest,
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New York Stock Exchange |
par value $0.01 per share |
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(Brandywine Realty Trust) |
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7.50% Series C Cumulative Redeemable
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New York Stock Exchange |
Preferred Shares of Beneficial Interest |
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par value $0.01 per share |
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(Brandywine Realty Trust) |
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7.375% Series D Cumulative Redeemable
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New York Stock Exchange |
Preferred Shares of Beneficial Interest |
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par value $0.01 per share |
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(Brandywine Realty Trust) |
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Securities registered pursuant to Section 12(g) of the Act:
Units of General Partnership Interest (Brandywine Operating Partnership, L.P.)
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of
the Securities Act.
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Brandywine Realty Trust
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Yes þ No o |
Brandywine Operating Partnership, L.P.
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Yes þ No o |
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or
Section 15(d) of the Act.
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Brandywine Realty Trust
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Yes o No þ |
Brandywine Operating Partnership, L.P.
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Yes o No þ |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
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Brandywine Realty Trust
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Yes þ No o |
Brandywine Operating Partnership, L.P.
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Yes þ No o |
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is
not contained herein, and will not be contained, to the best of Registrants knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. 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):
Brandywine Realty Trust:
Large accelerated filer þ Accelerated filer o Non-accelerated filer o Smaller reporting
company o
(Do
not check if a smaller reporting company)
Brandywine Operating Partnership, L.P.:
Large accelerated filer o Accelerated filer þ Non-accelerated filer o Smaller reporting
company o
(Do
not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).
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Brandywine Realty Trust
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Yes o No þ |
Brandywine Operating Partnership, L.P.
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Yes o No þ |
The aggregate market value of the Common Shares of Beneficial Interest held by non-affiliates of
Brandywine Realty Trust as of the last day of the registrants most recently completed second
fiscal quarter was $2.5 billion. The aggregate market value has been computed by reference to the
closing price of the Common Shares of Beneficial Interest on the New York Stock Exchange on such
date. An aggregate of 87,054,956 Common Shares of Beneficial Interest were outstanding as of February
22, 2008.
As of June 30, 2007, the aggregate market value of the 2,143,021 common units of limited
partnership (Units) held by non-affiliates of Brandywine Operating Partnership, L.P. was
$61,247,543 million based upon the last reported sale price of $28.58 per share on the New York
Stock Exchange on June 29, 2007 of the Common Shares of Beneficial Interest of Brandywine Realty
Trust, the sole general partner of Brandywine Operating Partnership, L.P. (For this computation,
the Registrant has excluded the market value of all Units beneficially owned by Brandywine Realty
Trust.)
Documents Incorporated By Reference
Portions of the proxy statement for the 2008 Annual Meeting of Shareholders of Brandywine Realty Trust
are incorporated by reference into Part III of this Form 10-K.
The exhibit index as required by Item 601(a) of Regulation S-K is included in Item 15 of Part IV of
this report.
TABLE OF CONTENTS
FORM 10-K
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Filing Format
This combined Form 10-K is being filed separately by Brandywine Realty Trust and Brandywine
Operating Partnership, L.P.
Forward-Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking
statements. This Annual Report on Form 10-K and other materials filed by us with the SEC (as well
as information included in oral or other written statements made by us) contain statements that are
forward-looking, including statements relating to business and real estate development activities,
acquisitions, dispositions, future capital expenditures, financing sources, governmental regulation
(including environmental regulation) and competition. We intend such forward-looking statements to
be covered by the safe-harbor provisions of the 1995 Act. The words anticipate, believe,
estimate, expect, intend, will, should and similar expressions, as they relate to us, are
intended to identify forward-looking statements. Although we believe that the expectations
reflected in such forward-looking statements are based on reasonable assumptions, we can give no
assurance that our expectations will be achieved. As forward-looking statements, these statements
involve important risks, uncertainties and other factors that could cause actual results to differ
materially from the expected results and, accordingly, such results may differ from those expressed
in any forward-looking statements made by us or on our behalf. Factors that could cause actual
results to differ materially from our expectations include, but are not limited to:
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changes in general economic conditions; |
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changes in local real estate conditions (including changes in rental rates and the
number of properties that compete with our properties); |
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changes in the economic conditions affecting industries in which our principal
tenants compete; |
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our failure to lease unoccupied space in accordance with our projections; |
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our failure to re-lease occupied space upon expiration of leases; |
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the bankruptcy of major tenants; |
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changes in prevailing interest rates; |
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the unavailability of equity and debt financing; |
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failure of acquisitions to perform as expected; |
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unanticipated costs associated with, and integration of, our acquisitions; |
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unanticipated costs to complete and lease-up pending developments; |
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impairment charges; |
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increased costs for, or lack of availability of, adequate insurance, including for
terrorist acts; |
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demand for tenant services beyond those traditionally provided by landlords; |
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potential liability under environmental or other laws; |
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earthquakes and other natural disasters; |
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complex regulations relating to our status as a REIT and to our acquisition,
disposition and development activities; |
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inability to complete acquisitions that may be necessary to complete 1031
transactions or provide required tax protection under existing agreements; |
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the adverse consequences of our failure to qualify as a REIT; and |
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the impact of newly adopted accounting principles on our accounting policies and on
period-to-period comparisons of financial results. |
Given these uncertainties, and the other risks identified in the Risk Factors section and
elsewhere in this Annual Report on Form 10-K, we caution readers not to place undue reliance on
forward-looking statements. We assume no obligation to update or supplement forward-looking
statements that become untrue because of subsequent events.
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PART I
Item 1. Business
Introduction
The terms we, us, our or the Company refer to Brandywine Realty Trust, a Maryland real
estate investment trust, individually or together with its consolidated subsidiaries, including
Brandywine Operating Partnership, L.P. (the Operating Partnership), a Delaware limited
partnership.
We are a self-administered and self-managed real estate investment trust, or REIT, active in
acquiring, developing, redeveloping, leasing and managing office and industrial properties. As of
December 31, 2007, we owned 216 office properties, 23 industrial facilities and one mixed-use
property (which we refer to collectively as the Properties) containing an aggregate of
approximately 24.9 million net rentable square feet. We also have seven properties under
development and seven properties under redevelopment containing an aggregate of 3.7 million net
rentable square feet. As of December 31, 2007, we consolidated three office properties owned by
real estate ventures containing 0.4 million net rentable square feet. Therefore, as of December
31, 2007 we own and consolidated 257 properties with an aggregate of 29.0 million net rentable
square feet. As of December 31, 2007, we owned economic interests in 14 unconsolidated real estate
ventures that contain approximately 4.4 million net rentable square feet (collectively, the Real
Estate Ventures). In addition, as of December 31, 2007, we
owned approximately 417 acres of undeveloped land. The Properties and the properties owned by the Real Estate Ventures are located
in or nearby Philadelphia, PA, Wilmington, DE, Southern and Central New Jersey, Richmond, VA,
Metropolitan Washington, D.C., Austin, TX and Oakland and San Diego, CA. In addition to managing
properties that we own and consolidated, as of December 31, 2007, we were managing approximately
14.5 million square feet of office and industrial properties for third parties and Real Estate
Ventures. Unless otherwise indicated, all references to square feet represent net rentable area.
Organization
Brandywine Realty Trust was organized and commenced its operations in 1986 as a Maryland REIT.
Brandywine Realty Trust owns its assets and conducts its operations through the Operating
Partnership and subsidiaries of the Operating Partnership. Brandywine Realty Trust controls the
Operating Partnership as its sole general partner and as of December 31, 2007 owned a 95.8%
interest in the Operating Partnership. The holders of the remaining interests in the Operating
Partnership, consisting of Class A units of limited partnership interest, have the right to require
redemption of their units at any time. At our option, we may satisfy the redemption either for an
amount, per unit, of cash equal to the then market price of one Brandywine common share (based on
the prior ten-day trading average) or for one Brandywine common share. Our structure as an
UPREIT is designed, in part, to permit persons contributing properties to us to defer some or all
of the tax liability they might otherwise incur in a sale of properties.
Our executive offices are located at 555 East Lancaster Avenue, Radnor, Pennsylvania 19087 and our
telephone number is (610) 325-5600. We have regional offices in Mount Laurel, New Jersey;
Philadelphia, Pennsylvania; Richmond, Virginia; Falls Church, Virginia; Austin, Texas; Dallas,
Texas; Oakland, California; and Carlsbad, California. We have an internet website at
www.brandywinerealty.com. We are not incorporating by reference into this Annual Report on Form
10-K any material from our website. The reference to our website is an inactive textual reference
to the uniform resource locator (URL) and is for your reference only.
2007 Transactions
Real Estate Acquisitions/Dispositions
In 2007, we acquired seven office properties containing 1.6 million net rentable square feet and a
4.9 acre parcel of land and a 90 year ground lease interest in a
2.54 acre parcel of land. We also acquired the 49% minority interest in one of our previously consolidated real estate ventures that
owned 10 office properties containing an aggregate of 1.1 million net rentable square feet. We
sold 49 properties containing an aggregate of 5.2 million net rentable square feet and eight land
parcels containing an aggregate 56.2 acres, as indicated below:
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On December 19, 2007, the Company formed G&I Interchange Office LLC, a new joint venture
(the Venture) with G&I VI Investment Interchange Office LLC (G&I VI), an investment
vehicle advised by DRA Advisors LLC. The Venture included interests in 29 office
properties which were located in various counties in Pennsylvania, containing an aggregate
of 1,616,227 net rentable square feet. The Company transferred or contributed 100% interests
in 26 properties and transferred to the Venture an 89% interest in three of the properties with the
remaining 11% interest in the three properties subject to a put/call at fixed prices after
three years. In connection with the formation, the Company effectively transferred an 80%
interest in the venture to G&I IV for cash and the venture borrowed approximately $184.0
million in third party financing the aggregate proceeds of which were distributed to the
Company. The Company used the net proceeds of approximately $230.9
million that it received in this transaction to reduce outstanding indebtedness under our
unsecured revolving credit facility. The Company was hired by the Venture
to perform property management and leasing services. |
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On November 30, 2007, we sold 111/113 Pencader Drive, an office property located in
Newark, Delaware containing 52,665 net rentable square feet, for a sales price of $5.1
million. |
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On November 15, 2007, we sold 2490 Boulevard of the Generals, an office property located
in West Norriton, Pennsylvania containing 20,600 net rentable square feet, for a sales
price of $1.5 million. |
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On September 7, 2007, we sold seven land parcels located in the Iron Run Business Park
in Lehigh County, Pennsylvania containing an aggregate 51.5 acres of land, for an aggregate
sales price of $6.6 million. |
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On July 19, 2007, we acquired the United States Post Office building, an office property
located in Philadelphia, Pennsylvania containing 862,692 net rentable square feet, for an
aggregate purchase price of $28.0 million. We intend to redevelop the building into office
space for lease to the Internal Revenue Service (IRS). As part of the acquisition, we
also acquired a 90 year ground lease interest in an adjacent parcel of ground of
approximately 2.54 acres, commonly referred to as the postal annex. We are currently
demolishing the existing structure located on the postal annex and intend to rebuild a
parking facility containing approximately 733,000 square feet that will be used primarily
by the IRS employees upon their move into the planned space at the Post Office building.
The remaining postal annex ground leased parcels can accommodate additional office, retail,
hotel and residential development and we are currently in the planning stage with respect
to these parcels. |
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On July 19, 2007, we acquired five office properties containing 508,607 net rentable
square feet and a 4.9 acre land parcel in the Boulders office park in Richmond, Virginia
for an aggregate purchase price of $96.3 million. We funded a portion of the purchase
price using the remaining proceeds from the sale of the 10 office properties located in
Reading and Harrisburg, Pennsylvania in March 2007. |
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On May 10, 2007, we acquired Lake Merritt Tower, an office property located in Oakland,
California containing 204,278 net rentable square feet for an aggregate contracted purchase
price of $72.0 million. A portion of the proceeds from the sale of 10 office properties
located in Reading and Harrisburg, Pennsylvania in March 2007 was used to fully fund this
purchase. |
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On April 30, 2007, we sold Cityplace Center, an office property located in Dallas, Texas
containing 1,295,832 net rentable square feet, for a sales price of $115.0 million. |
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On March 30, 2007, we sold 10 office properties located in Reading and Harrisburg,
Pennsylvania containing 940,486 net rentable square feet, for an aggregate sales price of
$112.0 million. We structured this transaction to qualify as a like-kind exchange under
Section 1031 of the Internal Revenue Code and the cash from the sale was held by a qualified intermediary
for purposes of accomplishing the like-kind exchange as noted in the above transactions. |
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On March 30, 2007, we sold 1007 Laurel Oak, an office property located in Voorhees, New
Jersey containing 78,205 net rentable square feet, for a sales price of $7.0 million. |
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On March 1, 2007, we acquired the 49% minority interest in one of our previously
consolidated real estate ventures that owned 10 office properties containing an aggregate
of 1.1 million net rentable square feet for a purchase price of $63.7 million. |
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On January 31, 2007, we sold George Kachel Farmhouse, an office property located in
Reading, Pennsylvania containing 1,664 net rentable square feet, for a sales price of $0.2
million. |
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On January 19, 2007, we sold four office properties located in Dallas, Texas containing
1,091,186 net rentable square feet and a 4.7 acre land parcel, for an aggregate sales price
of $107.1 million. |
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On January 18, 2007, we sold Norriton Office Center, an office property located in East
Norriton, Pennsylvania containing 73,394 net rentable square feet, for a sales price of
$7.8 million. |
Developments
In 2007 we placed in service six office properties that we developed or redeveloped and that
contain an aggregate of 1,048,409 net rentable square feet. We place a property in service at the
earlier of (i) the date at which we estimate the property to be 95% occupied and (ii) one year from
the project completion date. At December 31, 2007, we had 14 properties under development or
redevelopment that contain an aggregate of 3.7 million net rentable square feet at an estimated
total development cost of $718.3 million. We expect to place these projects in service at dates
between the third quarter of 2008 and the third quarter of 2010.
Unsecured Debt Financings
On October 15, 2007, we entered into a term loan agreement that provides for an unsecured term loan
in the amount of $150.0 million. We used the proceeds of this loan to pay down a portion of the
outstanding amount on our revolving credit facility. The term loan matures on October 18, 2010 and
may be extended at our option for two one-year periods but not beyond the maturity date of our
revolving credit facility.
On June 29, 2007, we amended our $600.0 million unsecured revolving credit facility (the Credit
Facility). The amendment extended the maturity date of the Credit Facility from December 22, 2009
to June 29, 2011 (subject to an extension of one year, at our option, upon our payment of an
extension fee equal to 15 basis points of the committed amount under the Credit Facility). The
amendment also reduced the per annum variable interest rate on outstanding balances from Eurodollar
plus 0.80% to Eurodollar plus 0.725% per annum. In addition, the amendment reduced the quarterly
facility fee from 20 basis points to 17.5 basis points per annum. The interest rate and facility
fee are subject to adjustment upon a change in our unsecured debt ratings. The amendment also
lowered to 7.50% from 8.50% the capitalization rate used in the calculation of several of the
financial covenants; increased our swing loan availability from $50.0 million to $60.0 million; and
increased the number of competitive bid loan requests available to us from two to four in any 30
day period. Borrowings are always available to the extent of borrowing
capacity at the stated rates, however, the competitive bid feature allows banks that are part of the lender consortium under
the Credit Facility to bid to make loans to us at a reduced
Eurodollar rate. We have the option to increase the Credit Facility
to $800.0 million subject to the absence of any defaults and our ability to acquire
additional commitments from our existing lenders or new lenders.
On April 30, 2007, we consummated the public offering of $300 million aggregate principal amount of
unsecured 5.70% Guaranteed Notes due 2017 and used the net proceeds from this offering to reduce
borrowings under the Credit Facility.
In April 2007, we entered into a $20.0 million Sweep Agreement to be used for cash management
purposes. Borrowings under the Sweep Agreement bear interest at one-month LIBOR plus 0.75%.
On November 29, 2006, we called for redemption of our $300 million Floating Rate Guaranteed Notes
due 2009 and repaid these notes on January 2, 2007 in accordance with the November call using
proceeds from our Credit Facility. As a result of the early repayment of these notes, we incurred
accelerated amortization of $1.4 million in associated deferred financing costs in the fourth
quarter 2006.
On October 4, 2006, we sold $300 million aggregate principal amount of unsecured 3.875%
Exchangeable Guaranteed Notes due 2026 in reliance upon an exemption from registration rights under
Rule 144A under the Securities Act of 1933 and sold an additional $45 million of 3.875%
Exchangeable Guaranteed Notes due 2026 on October 16, 2006 to cover over-allotments. We have
registered the resale of the exchangeable notes. At certain
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times and upon certain events, the notes are exchangeable for cash up to their principal amount
and, with respect to the remainder, if any, of the exchange value in excess of such principal
amount, cash or our common shares. The initial exchange rate is 25.4065 shares per $1,000
principal amount of notes (which is equivalent to an initial exchange price of $39.36 per share).
We may not redeem the notes prior to October 20, 2011 (except to preserve our status as a REIT for
U.S. federal income tax purposes), but we may redeem the notes at any time thereafter, in whole or
in part, at a redemption price equal to the principal amount of the notes to be redeemed plus
accrued and unpaid interest. In addition, on October 20, 2011, October 15, 2016 and October 15,
2021 as well as upon the occurrence of certain change in control transactions prior to October 20,
2011, holders of notes may require us to repurchase all or a portion of the notes at a purchase
price equal to the principal amount of the notes to be purchased plus accrued and unpaid interest.
We used net proceeds from the notes to repurchase approximately $60.0 million of common shares at a
price of $32.80 per share and for general corporate purposes, including the repayment of
outstanding borrowings under the Credit Facility.
On March 28, 2006, we consummated the public offering of $850 million of unsecured notes,
consisting of (1) $300 million aggregate principal amount of Floating Rate Guaranteed Notes due
2009, (2) $300 million aggregate principal amount of 5.75% Guaranteed Notes due 2012 and (3) $250
million aggregate principal amount of 6.00% Guaranteed Notes due 2016. We used the net proceeds
from this offering to repay a $750 million unsecured term loan and to reduce borrowings under the
Credit Facility.
The Operating Partnership is the issuer of our unsecured notes, and Brandywine Realty Trust has
fully and unconditionally guaranteed the payment of principal and interest on the notes.
Business Objective and Strategies for Growth
Our business objective is to deploy capital effectively to maximize our return on investment and
thereby maximize our total return to shareholders. To accomplish this objective we seek to:
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maximize cash flow through leasing strategies designed to capture rental growth as
rental rates increase and as below-market leases are renewed; |
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attain a high tenant retention rate by providing a full array of property management and
maintenance services and tenant service programs responsive to the varying needs of our
diverse tenant base; |
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increase the economic diversification of our tenant base while maximizing economies of
scale; |
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as warranted by market conditions, deploy our land inventory and seek new land parcels
on which to develop high-quality office and industrial properties to service our tenant
base; |
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capitalize on our redevelopment expertise to selectively acquire, redevelop and
reposition properties in desirable locations; |
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acquire high-quality office and industrial properties and portfolios of such properties
at attractive yields in markets that we expect will experience economic growth; |
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form joint venture opportunities with high-quality partners having attractive real
estate holdings or significant financial resources; and |
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utilize our reputation as a full-service real estate development and management
organization to identify opportunities that will expand our business and create long-term
value. |
We expect to concentrate our real estate activities in markets where we believe that:
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current and projected market rents and absorption statistics justify construction
activity; |
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we can maximize market penetration by accumulating a critical mass of properties and
thereby enhance operating efficiencies; |
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barriers to entry (such as zoning restrictions, utility availability, infrastructure
limitations, development moratoriums and limited developable land) will create supply
constraints on office and industrial space; and |
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there is potential for economic growth, particularly job growth and industry
diversification. |
Operating Strategy
We believe that we are well positioned in our current markets and have the expertise to take
advantage of both development and acquisition opportunities in new markets that have healthy
long-term fundamentals and strong growth projections. This capability, combined with what we
believe is a conservative financial structure, allows us to concentrate our growth efforts towards
selective development alternatives and acquisition opportunities. These abilities are integral to
our strategy of having a geographically and physically diverse portfolio of assets, which will meet
the needs of our tenants. We have also expanded our overall development pipeline and are pursuing
acquisitions of sites on which we can capitalize on our own development and market expertise.
We expect that selective development of new office properties will continue to be important to the
growth of our portfolio over the next several years. We use experienced on site construction
superintendents, operating under the supervision of project managers and senior management, to
control the construction process and mitigate the various risks associated with real estate
development. We believe we understand and effectively manage the risks associated with development
and construction, and these risks are justified by higher potential yields.
We expect to continue to operate in markets where we have a concentration advantage due to
economies of scale. We believe that where possible, it is best to operate with a strong base of
properties in order to benefit from the personnel allocation and the market strength associated
with managing several properties in the same market. However, we intend to selectively dispose of
properties and redeploy capital if we determine a property cannot meet long term earnings growth
expectations. We believe that recycling capital is an important aspect of maintaining the overall
quality of our portfolio.
Policies With Respect To Certain Activities
The following is a discussion of our investment, financing and other policies. These policies have
been determined by our Board of Trustees and our Board may revise these policies without a vote of
shareholders.
Investments in Real Estate or Interests in Real Estate
We may develop, purchase or lease income-producing properties for long-term investment, expand and
improve the properties presently owned or other properties purchased, or sell such properties, in
whole or in part, as circumstances warrant. Although there is no limitation on the types of
development activities that we may undertake, we expect that our development activities will meet
current market demand and will generally be on a build-to-suit basis
for particular tenants, where a significant portion of the building
is pre-leased before construction begins, or where we believe that
market demand is strong enough to commence speculative developments. We continue
to participate with other entities in property ownership through joint ventures or other types of
co-ownership. Our equity investments may be subject to existing or future mortgage financing and
other indebtedness that will have priority over our equity investments.
Securities of or Interests in Entities Primarily Engaged in Real Estate Activities and Other
Issuers
Subject to the percentage of ownership limitations and gross income tests necessary for REIT
qualification, we may invest in securities of other REITs, other entities engaged in real estate
activities or securities of other issuers. We may enter into joint ventures or partnerships for
the purpose of obtaining an equity interest in a particular property. We do not currently intend
to invest in the securities of other issuers except in connection with joint ventures or
acquisitions of indirect interests in properties.
Investments in Real Estate Mortgages
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While our current portfolio consists of, and our business objectives emphasize, equity investments
in commercial real estate, we may, at the discretion of management or our Board of Trustees, invest
in other types of equity real estate investments, mortgages and other real estate interests. We do
not presently intend to invest to a significant extent in mortgages or deeds of trust, but may
invest in participating mortgages if we conclude that we may benefit from the cash flow or any
appreciation in the value of the property securing a mortgage.
Dispositions
Our disposition of properties is based upon managements periodic review of our portfolio and the
determination by management or our Board of Trustees that a disposition would be in our best
interests.
Financing Policies
A primary objective of our financing policy has been to manage our financial position to allow us
to raise capital from a variety of sources at competitive rates. Our mortgages, credit facilities
and unsecured debt securities contain customary restrictions and limitations on our ability to
incur indebtedness. Our charter documents do not limit the indebtedness that we may incur. Our
financing strategy is to maintain a strong and flexible financial position by limiting our debt to
a prudent level and minimizing our variable interest rate exposure. We intend to finance future
growth with the most advantageous source of capital available to us at the time of an acquisition.
These sources may include selling common stock, preferred stock, debt securities, depository shares
or warrants through public offerings or private placements, utilizing availability under our
unsecured revolving credit facilities or incurring additional indebtedness through secured or
unsecured borrowings either or through mortgages with recourse limited to specific properties. To
qualify as a REIT, we must distribute to our shareholders each year at least ninety percent of our
net taxable income, excluding any net capital gain. This distribution requirement makes it
unlikely that we will be able to fund future capital needs, including for acquisitions and
developments, substantially from income from operations. Therefore, we expect to continue to rely
on third party sources of capital to fund future capital needs.
Working Capital Reserves
We maintain working capital reserves and access to borrowings in amounts that our management
determines to be adequate to meet our normal contingencies.
Policies with Respect to Other Activities
We expect to issue additional common and preferred shares of beneficial interest in the future and
may authorize our Operating Partnership to issue additional common and preferred units of limited
partnership interest, including to persons who contribute their interests in properties to us in
exchange for such units. We have not engaged in trading, underwriting or agency distribution or
sale of securities of unaffiliated issuers and we do not intend to do so. At all times, we intend
to make investments consistent with our qualification as a REIT, unless because of circumstances or
changes in the Internal Revenue Code of 1986, as amended (or the Treasury Regulations), our Board
of Trustees determines that it is no longer in our best interests to qualify as a REIT. We may
make loans to third parties, including to joint ventures in which we participate. We intend to
make investments in such a way that we will not be treated as an investment company under the
Investment Company Act of 1940.
Management Activities
We provide
third-party real estate management services primarily through five subsidiaries
(collectively, the Management Companies): Brandywine Realty Services Corporation (BRSCO), BTRS,
Inc. (BTRS), Brandywine Properties I Limited, Inc.
(BPI), BDN Brokerage LLC (BBL) and Brandywine Properties Management,
L.P. (BPM). BRSCO, BTRS and BPI are taxable REIT
subsidiaries. The Operating Partnership currently owns,
directly and indirectly, 100% of each of BRSCO, BTRS, BPI, BBL and BPM.
As of December 31, 2007, the Management Companies were managing properties containing an aggregate
of approximately 43.0 million net rentable square feet, of which approximately 28.5 million net
rentable square feet related to Properties owned by us and approximately 14.5 million net rentable
square feet of properties owned by third parties and unconsolidated Real Estate Ventures.
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Geographic Segments
As of December 31, 2007 we were managing our portfolio within seven segments: (1) Pennsylvania,
(2) New Jersey/Delaware, (3) Richmond, Virginia, (4) CaliforniaNorth, (5) CaliforniaSouth, (6)
Metropolitan Washington D.C and (7) Southwest. The Pennsylvania segment includes properties in
Chester, Delaware, Berks, Bucks, Cumberland, Dauphin, Lehigh and Montgomery counties in the
Philadelphia suburbs and the City of Philadelphia in Pennsylvania. The New Jersey/Delaware segment includes properties in
counties in the southern and central part of New Jersey including Burlington, Camden and Mercer
counties and the state of Delaware. The Richmond, Virginia segment includes properties primarily
in Albemarle, Chesterfield and Henrico counties, the City of Richmond and Durham, North Carolina.
The CaliforniaNorth segment includes properties in the City of Oakland and Concord. The
CaliforniaSouth segment includes properties in the City of
Carlsbad and Rancho Bernardo . The
Metropolitan Washington, D.C. segment includes properties in Northern Virginia and suburban
Maryland. The Southwest segment includes properties in Travis county of Texas. Our corporate
group is responsible for cash and investment management, development of certain real estate
properties during the construction period and general support functions.
Competition
The real estate business is highly competitive. Our properties compete for tenants with similar
properties primarily on the basis of location, total occupancy costs (including base rent and
operating expenses), services provided, and the design and condition of the improvements. We also
face competition when attempting to acquire or develop real estate, including competition from
domestic and foreign financial institutions, other REITs, life insurance companies, pension funds,
partnerships and individual investors. Additionally, our ability to compete depends upon trends in
the economies of our markets, investment alternatives, financial condition and operating results of
current and prospective tenants, availability and cost of capital, construction and renovation
costs, land availability, our ability to obtain necessary construction approvals, taxes,
governmental regulations, legislation and population trends.
Insurance
We
maintain commercial general liability and all-risk property insurance on our properties. We intend to
obtain similar coverage for properties we acquire in the future. There are certain
types of losses, generally of a catastrophic nature, such as losses from war, terrorism,
environmental issues, floods, hurricanes and earthquakes that may be subject to limitations in
certain areas or which may be uninsurable risks. We exercise our discretion in determining amounts, coverage limits and
deductibility provisions of insurance, with a view to maintaining appropriate insurance on our
investments at a reasonable cost and on suitable terms. If we suffer a substantial loss, our
insurance coverage may not be sufficient to pay the full current market value or current
replacement cost of our lost investment. Inflation, changes in building codes and ordinances,
environmental considerations and other factors also might make it impractical to use insurance
proceeds to fully replace or restore a property after it has been damaged or destroyed.
Employees
As of December 31, 2007, we had 562 full-time
employees, including 43 union employees.
Government Regulations Relating to the Environment
Many laws and governmental regulations relating to the environment apply to us and changes in these
laws and regulations, or their interpretation by agencies and the courts, occur frequently and may
adversely affect us.
Existing conditions at some of our Properties. Independent environmental consultants have
conducted Phase I or similar environmental site assessments on our properties. We generally obtain
these assessments prior to the acquisition of a property and may later update them as required for
subsequent financing of the property or as requested by a tenant. Site assessments are generally
performed to ASTM standards then existing for Phase I site assessments, and typically include a
historical review, a public records review, a visual inspection of the surveyed site, and the
issuance of a written report. These assessments do not generally include any soil samplings or
subsurface investigations. Depending on the age of the property, the Phase I may have included an
assessment of asbestos-containing materials. For properties where asbestos-containing materials
were identified or suspected, an
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operations and maintenance plan was generally prepared and implemented. See Note 2 to our
consolidated financial statements for our evaluation in accordance with FIN 47, Accounting for
Conditional Asset Retirement Obligations.
Historical operations at or near some of our properties, including the operation of underground
storage tanks, may have caused soil or groundwater contamination. We are not aware of any such
condition, liability or concern by any other means that would give rise to material, uninsured
environmental liability. However, the assessments may have failed to reveal all environmental
conditions, liabilities or compliance concerns; there may be material environmental conditions,
liabilities or compliance concerns that a review failed to detect or which arose at a property
after the review was completed; future laws, ordinances or regulations may impose material
additional environmental liability; and current environmental conditions at our Properties may be
affected in the future by tenants, third parties or the condition of land or operations near our
Properties, such as the presence of underground storage tanks. We cannot be certain that costs of
future environmental compliance will not affect our ability to make distributions to our
shareholders.
Use of hazardous materials by some of our tenants. Some of our tenants handle hazardous substances
and wastes on our properties as part of their routine operations. Environmental laws and
regulations may subject these tenants, and potentially us, to liability resulting from such
activities. We generally require our tenants, in their leases, to comply with these environmental
laws and regulations and to indemnify us for any related liabilities. These tenants are primarily
involved in the life sciences and the light industrial and warehouse business. We are not aware of
any material noncompliance, liability or claim relating to hazardous or toxic substances or
petroleum products in connection with any of our Properties, and we do not believe that on-going
activities by our tenants will have a material adverse effect on our operations.
Costs related to government regulation and private litigation over environmental matters. Under
environmental laws and regulations, we may be liable for the costs of removal, remediation or
disposal of hazardous or toxic substances present or released on our Properties. These laws could
impose liability without regard to whether we are responsible for, or knew of, the presence or
release of the hazardous materials. Government investigations and remediation actions may entail
substantial costs and the presence or release of hazardous substances on a property could result in
governmental cleanup actions or personal injury or similar claims by private plaintiffs.
Potential environmental liabilities may exceed our environmental insurance coverage limits. We
carry what we believe to be sufficient environmental insurance to cover potential liability for
soil and groundwater contamination, mold impact, and the presence of asbestos-containing materials
at the affected sites identified in our environmental site assessments. Our insurance policies are
subject to conditions, qualifications and limitations. Therefore, we cannot provide any assurance
that our insurance coverage will be sufficient to cover all liabilities for losses.
Other
We do not have any foreign operations and our business is not seasonal. Our operations are not
dependent on a single tenant or a few tenants and no single tenant accounted for more than 10% of
our total 2007 revenue.
Code of Conduct
We maintain a Code of Business Conduct and Ethics applicable to our Board and all of our officers
and employees, including our principal executive officer, principal financial officer, principal
accounting officer, controller and persons performing similar functions. A copy of our Code of
Business Conduct and Ethics is available on our website, www.brandywinerealty.com. In addition to
being accessible through our website, copies of our Code of Business Conduct and Ethics can be
obtained, free of charge, upon written request to Investor Relations, 555 East Lancaster Avenue,
Suite 100, Radnor, PA 19087. Any amendments to or waivers of our Code of Business Conduct and
Ethics that apply to our principal executive officer, principal financial officer, principal
accounting officer, controller and persons performing similar functions and that relate to any
matter enumerated in Item 406(b) of Regulation S-K promulgated by the SEC will be disclosed on our
website.
Corporate Governance Principles and Board Committee Charters
Our Corporate Governance Principles and the charters of the Audit Committee, Compensation Committee
and Corporate Governance Committee of the Board of Trustees of Brandywine Realty Trust and
additional information regarding our corporate governance are available on our website,
www.brandywinerealty.com. In addition to being
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accessible through our website, copies of our Corporate Governance Principles and charters of our
Board Committees can be obtained, free of charge, upon written request to Investor Relations, 555
Lancaster Avenue, Radnor, PA 19087.
Availability of SEC Reports
We file annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K
and other information with the SEC. Members of the public may read and copy materials that we file
with the SEC at the SECs Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549.
Members of the public may also obtain information on the Public Reference Room by calling the SEC
at 1-800-732-0330. The SEC also maintains an Internet web site that contains reports, proxy and
information statements and other information regarding issuers, including us, that file
electronically with the SEC. The address of that site is http://www.sec.gov. Our annual reports
on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K and other information
filed by us with the SEC are available, without charge, on our Internet web site,
http://www.brandywinerealty.com, as soon as reasonably practicable after they are filed
electronically with the SEC. Copies are also available, without charge, from Secretary, Brandywine
Realty Trust, 555 East Lancaster Avenue, Suite 100, Radnor, PA 19087.
Item 1A. Risk Factors
Our performance is subject to risks associated with our properties and with the real estate
industry.
Our economic performance and the value of our real estate assets, and consequently the value of our
securities, are subject to the risk that if our properties do not generate revenues sufficient to
meet our operating expenses, including debt service and capital expenditures, our cash flow and
ability to pay distributions to our shareholders will be adversely affected. Events or conditions
beyond our control that may adversely affect our operations or the value of our properties include:
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downturns in the national, regional and local economic climate including increases in
the unemployment rate and inflation; |
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competition from other office, industrial and commercial buildings; |
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local real estate market conditions, such as oversupply or reduction in demand for
office, or other commercial or industrial space; |
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changes in interest rates and availability of financing; |
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vacancies, changes in market rental rates and the need to periodically repair, renovate
and re-lease space; |
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increased operating costs, including insurance expense, utilities, real estate taxes,
janitorial costs, state and local taxes, labor shortages and heightened security costs; |
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civil disturbances, earthquakes and other natural disasters, or terrorist acts or acts
of war which may result in uninsured or underinsured losses; |
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significant expenditures associated with each investment, such as debt service payments,
real estate taxes, insurance and maintenance costs which are generally not reduced when
circumstances cause a reduction in revenues from a property; and |
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declines in the financial condition of our tenants and our ability to collect rents from
our tenants. |
We
may experience increased operating costs, which might reduce our
profitability.
Our properties are subject to increases in operating expenses such as for cleaning, electricity,
heating, ventilation and air conditioning, administrative costs and other costs associated with
security, landscaping and repairs and maintenance of our properties. In general, under our leases
with tenants, we pass through all or a portion of these costs to them. We cannot assure you,
however, that tenants will actually bear the full burden of these higher costs, or that such
increased costs will not lead them, or other prospective tenants, to seek office space elsewhere.
If operating expenses increase, the availability of other comparable office space in our core
geographic markets might
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limit our ability to increase rents; if operating expenses increase without a corresponding
increase in revenues, our profitability could diminish and limit our ability to make distributions
to shareholders.
Our
investment in property development or redevelopment may be more
costly or difficult to complete than we anticipate.
We intend to continue to develop properties where market conditions warrant such investment. Once
made, these investments may not produce results in accordance with our expectations. Risks
associated with our development and construction activities include:
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the unavailability of favorable financing alternatives in the private and public debt
markets; |
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having debt capacity sufficient to pay development costs; |
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unprecedented market volatility in the share price of REITs; |
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dependence on the financial services sector as part of our tenant base; |
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construction costs exceeding original estimates due to rising interest rates, diminished
availability of materials and labor, and increases in the costs of materials and labor; |
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construction and lease-up delays resulting in increased debt service, fixed expenses and
construction or renovation costs; |
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expenditure of funds and devotion of managements time to projects that we do not
complete; |
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the unavailability or scarcity of utilities; |
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occupancy rates and rents at newly completed properties may fluctuate depending on a
number of factors, including market and economic conditions, resulting in lower than
projected rental rates and a corresponding lower return on our investment; |
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complications (including building moratoriums and anti-growth legislation) in obtaining
necessary zoning, occupancy and other governmental permits; and |
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increased use restrictions by local zoning or planning authorities limiting our ability
to develop and impacting the size of developments. |
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The disruption in the debt capital markets could adversely affect us.
Since mid-2007, there has been a marked deterioration in the credit markets affecting the
availability of credit, the terms on which it can be sourced and the overall cost of debt capital.
This could negatively affect us by:
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Reducing the availability of potential bidders to bid attractively for our for-sale
properties or to close on sales at all; |
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Increasing the cost of debt we use to finance our ongoing operations and fund our
development and redevelopment activities, thereby increasing their costs and reducing the
associated returns; and |
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Preventing us from accessing necessary debt capital on a timely basis leading us to
consider potentially more dilutive capital transactions such as undesirable sales of
properties or securities. |
We face risks associated with property acquisitions.
We have in the past acquired, and intend in the future to acquire, properties and portfolios of
properties, including large portfolios that would increase our size and potentially alter our
capital structure. Although we believe that the acquisitions that we have completed in the past
and that we expect to undertake in the future have, and will, enhance our future financial
performance, the success of such transactions is subject to a number of factors, including the risk
that:
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we may not be able to obtain financing for acquisitions on favorable terms; |
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acquired properties may fail to perform as expected; |
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the actual costs of repositioning or redeveloping acquired properties may be higher than
our estimates; |
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acquired properties may be located in new markets where we may have limited knowledge
and understanding of the local economy, an absence of business relationships in the area or
unfamiliarity with local governmental and permitting procedures; and |
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we may not be able to efficiently integrate acquired properties, particularly portfolios
of properties, into our organization and manage new properties in a way that allows us to
realize cost savings and synergies. |
We acquired in the past and in the future may acquire properties or portfolios of properties
through tax deferred contribution transactions in exchange for partnership interests in our
Operating Partnership. This acquisition structure has the effect, among other factors, of reducing
the amount of tax depreciation we can deduct over the tax life of the acquired properties, and
typically requires that we agree to protect the contributors ability to defer recognition of
taxable gain through restrictions on our ability to dispose of the acquired properties and/or the
allocation of partnership debt to the contributors to maintain their tax bases. These restrictions
on dispositions could limit our ability to sell an asset during a specified time, or on terms, that
would be favorable absent such restrictions.
Acquired properties may subject us to known and unknown liabilities.
Properties that we acquire may be subject to known and unknown liabilities for which we would have
no recourse, or only limited recourse, to the former owners of such properties. As a result, if a
liability were asserted against us based upon ownership of an acquired property, we might be
required to pay significant sums to settle it, which could adversely affect our financial results
and cash flow. Unknown liabilities relating to acquired properties could include:
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liabilities for clean-up of pre-existing disclosed or undisclosed environmental
contamination; |
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claims by tenants, vendors or other persons arising on account of actions or omissions
of the former owners of the properties; and |
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liabilities incurred in the ordinary course of business. |
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We agreed not to sell certain of our properties and to maintain indebtedness subject to guarantees.
We agreed not to sell some of our properties for varying periods of time, in transactions that
would trigger taxable income to the former owners, and we may enter into similar arrangements as a
part of future property acquisitions. One of these tax protection agreements is with one of our
current trustees. These agreements generally provide that we may dispose of the subject properties
only in transactions that qualify as tax-free exchanges under Section 1031 of the Internal Revenue
Code or in other tax deferred transactions. Such transactions can be difficult to complete and can
result in the property acquired in exchange for the disposed of property inheriting the tax
attributes (including tax protection covenants) of the disposed of property. Violation of these
tax protection agreements would impose significant costs on us. As a result, we are restricted
with respect to decisions related to financing, encumbering, expanding or selling of these
properties.
We have also entered into agreements that provide prior owners of properties with the right to
guarantee specific amounts of indebtedness and, in the event that the specific indebtedness that
they guarantee is repaid or reduced, we would be required to provide substitute indebtedness for
them to guarantee. These agreements may hinder actions that we may otherwise desire to take to
repay or refinance guaranteed indebtedness because we would be required to make payments to the
beneficiaries of such agreements if we violate these agreements.
We may be unable to renew leases or re-lease space as leases expire; certain leases may expire
early.
If tenants do not renew their leases upon expiration, we may be unable to re-lease the space. Even
if the tenants do renew their leases or if we can re-lease the space, the terms of renewal or
re-leasing (including the cost of required renovations) may be less favorable than current lease
terms. Certain leases grant the tenants an early termination right upon payment of a termination
penalty or if certain lease terms are not complied with.
We face significant competition from other real estate developers.
We compete with real estate developers, operators and institutions for tenants and acquisition and
development opportunities. Some of these competitors have significantly greater financial
resources than we have. Such competition may reduce the number of suitable investment
opportunities available to us, may interfere with our ability to attract and retain tenants and may
increase vacancies, which could result in increased supply and lower market rental rates, reducing
our bargaining leverage and adversely affect our ability to improve our operating leverage. In
addition, some of our competitors may be willing (e.g., because their properties may have vacancy
rates higher than those for our properties) to make space available at lower rental rates or with
higher tenant concession percentages than available space in our properties. We cannot assure you
that this competition will not adversely affect our cash flow and our ability to make distributions
to shareholders.
Changes in market conditions including capitalization rates applied in real estate acquisitions
could impact our ability to grow through acquisitions.
We selectively pursue acquisitions in our core markets when long-term yields make acquisitions
attractive. We compete with numerous property owners for the acquisition of real estate
properties. Some of these competitors may be willing to accept lower yields on their investments
impacting our ability to acquire real estate assets and thus limit our external growth. We cannot
assure you that this competition will not adversely affect our cash flow and our ability to make
distributions to shareholders.
Property ownership through joint ventures may limit our ability to act exclusively in our interest.
We develop and acquire properties in joint ventures with other persons or entities when we believe
circumstances warrant the use of such structures. As of December 31, 2007, we had investments in
14 unconsolidated real estate ventures and three additional real estate ventures that are
consolidated in our financial statements. Our investments in the 14 unconsolidated real
estate ventures aggregated approximately $71.6 million (net of returns of investment amounts) as of
December 31, 2007. We could become engaged in a dispute with one or more of our joint venture
partners that might affect our ability to operate a jointly-owned property. Moreover, our joint
venture partners may, at any time, have business, economic or other objectives that are
inconsistent with our objectives, including objectives that relate to the appropriate timing and
terms of any sale or refinancing of a property. In some instances, our joint venture partners may
have competing interests in our markets that could create conflicts of interest. If the objectives
of our joint venture partners or the lenders to our joint ventures are inconsistent with our own
objectives, we may not be able to act exclusively in our interests.
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Because real estate is illiquid, we may not be able to sell properties when appropriate.
Real estate investments generally, and in particular large office and industrial/flex properties
like those that we own, often cannot be sold quickly. Consequently, we may not be able to alter
our portfolio promptly in response to changes in economic or other conditions. In addition, the
Internal Revenue Code limits our ability to sell properties that we have held for fewer than four
years without resulting in adverse consequences to our shareholders. Furthermore, properties that
we have developed and have owned for a significant period of time or that we acquired in exchange
for partnership interests in our operating partnership often have a low tax basis. If we were to
dispose of any of these properties in a taxable transaction, we may be required under provisions of
the Internal Revenue Code applicable to REITs to distribute a significant amount of the taxable
gain to our shareholders and this could, in turn, impact our cash flow. In some cases, tax
protection agreements with third parties will prevent us from selling certain properties in a
taxable transaction without incurring substantial costs. In addition, purchase options and rights
of first refusal held by tenants or partners in joint ventures may also limit our ability to sell
certain properties. All of these factors reduce our ability to respond to changes in the
performance of our investments and could adversely affect our cash flow and ability to make
distributions to shareholders as well as the ability of someone to purchase us, even if a purchase
were in our shareholders best interests.
We may suffer adverse consequences due to the financial difficulties, bankruptcy or insolvency of
our tenants.
If one or more of our tenants were to experience financial difficulties, including bankruptcy,
insolvency or a general downturn in their business, there could be an adverse effect on our
financial performance and distributions to shareholders. We cannot assure you that any tenant that
files for bankruptcy protection will continue to pay us rent. A bankruptcy filing by or relating
to one of our tenants or a lease guarantor would bar efforts by us to collect pre-bankruptcy debts
from that tenant or lease guarantor, or its property, unless we receive an order permitting us to
do so from the bankruptcy court. In addition, we cannot evict a tenant solely because of
bankruptcy. The bankruptcy of a tenant or lease guarantor could delay our efforts to collect past
due balances under the relevant leases, and could ultimately preclude collection of these sums. If
a lease is assumed by the tenant in bankruptcy, all pre-bankruptcy balances due under the lease
must be paid to us in full. If, however, a lease is rejected by a tenant in bankruptcy, we would
have only a general unsecured claim for damages. Any such unsecured claim would only be paid to
the extent that funds are available and only in the same percentage as is paid to all other holders
of unsecured claims. Restrictions under the bankruptcy laws further limit the amount of any other
claims that we can make if a lease is rejected. As a result, it is likely that we would recover
substantially less than the full value of the remaining rent during the term.
Some potential losses are not covered by insurance.
We currently carry comprehensive all-risk property, rental loss insurance and commercial general
liability coverage on all of our properties. We believe the policy specifications and insured
limits of these policies are adequate and appropriate. There are, however, types of losses, such
as lease and other contract claims, biological, radiological and nuclear hazards and acts of war
that generally are not insured. We cannot assure you that we will be able to renew insurance
coverage in an adequate amount or at reasonable prices. In addition, insurance companies may no
longer offer coverage against certain types of losses, such as losses due to earthquake, terrorist
acts and mold, or, if offered, these types of insurance may be prohibitively expensive. Should an
uninsured loss or a loss in excess of insured limits occur, we could lose all or a portion of the
capital we have invested in a property, as well as the anticipated future revenue from the
property. In such an event, we might nevertheless remain obligated for any mortgage debt or other
financial obligations related to the property. We cannot assure you that material losses in excess
of insurance proceeds will not occur in the future. If any of our properties were to experience a
catastrophic loss, it could seriously disrupt our operations, delay revenue and result in large
expenses to repair or rebuild the property. Such events could adversely affect our cash flow and
ability to make distributions to shareholders.
Terrorist attacks and other acts of violence or war may adversely impact our performance and may
affect the markets on which our securities are traded.
Terrorist attacks against our properties, or against the United States or our interests, may
negatively impact our operations and the value of our securities. Attacks or armed conflicts could
result in increased operating costs; for example, it might cost more in the future for building
security, property and casualty insurance, and property maintenance. As a result of terrorist
activities and other market conditions, the cost of insurance coverage for our properties could
also increase. We might not be able to pass through the increased costs associated with such
increased security measures and insurance to our tenants, which could reduce our profitability and
cash flow.
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Furthermore, any terrorist attacks or armed conflicts could result in increased volatility in or
damage to the United States and worldwide financial markets and economy. Such adverse economic
conditions could affect the ability of our tenants to pay rent and our costs of capitals, which
could have a negative impact on our results.
Our ability to make distributions is subject to various risks.
Historically, we have paid quarterly distributions to our shareholders. Our ability to make
distributions in the future will depend upon:
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the operational and financial performance of our properties; |
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capital expenditures with respect to existing, developed and newly acquired properties; |
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general and administrative costs associated with our operation as a publicly-held REIT; |
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the amount of, and the interest rates on, our debt; and |
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the absence of significant expenditures relating to environmental and other regulatory
matters. |
Certain of these matters are beyond our control and any significant difference between our
expectations and actual results could have a material adverse effect on our cash flow and our
ability to make distributions to shareholders.
Changes in the law may adversely affect our cash flow.
Because increases in income and service taxes are generally not passed through to tenants under
leases, such increases may adversely affect our cash flow and ability to make expected
distributions to shareholders. Our properties are also subject to various regulatory requirements,
such as those relating to the environment, fire and safety. Our failure to comply with these
requirements could result in the imposition of fines and damage awards and could result in a
default under some of our tenant leases. Moreover, the costs to comply with any new or different
regulations could adversely affect our cash flow and our ability to make distributions. Although
we believe that our properties are in material compliance with all such requirements, we cannot
assure you that these requirements will not change or that newly imposed requirements will not
require significant expenditures in order to be compliant.
The terms and covenants relating to our indebtedness could adversely impact our economic
performance.
Like other real estate companies which incur debt, we are subject to risks associated with debt
financing, such as the insufficiency of cash flow to meet required debt service payment obligations
and the inability to refinance existing indebtedness. If our debt cannot be paid, refinanced or
extended at maturity, we may not be able to make distributions to shareholders at expected levels
or at all. Furthermore, an increase in our interest expense could adversely affect our cash flow
and ability to make distributions to shareholders. If we do not meet our debt service obligations,
any properties securing such indebtedness could be foreclosed on, which would have a material
adverse effect on our cash flow and ability to make distributions and, depending on the number of
properties foreclosed on, could threaten our continued viability.
Our credit facilities and the indenture governing our unsecured public debt securities contain (and
any new or amended facility will contain) customary restrictions, requirements and other
limitations on our ability to incur indebtedness, including total debt to asset ratios, secured
debt to total asset ratios, debt service coverage ratios and minimum ratios of unencumbered assets
to unsecured debt which we must maintain. Our ability to borrow under our credit facilities and
our term loan is (and any new or amended facility will be) subject to compliance with such
financial and other covenants. In the event that we fail to satisfy these covenants, we would be
in default under the credit facilities and indenture and may be required to repay such debt with
capital from other sources. Under such circumstances, other sources of capital may not be
available to us, or may be available only on unattractive terms.
Increases in interest rates on variable rate indebtedness will increase our interest expense, which
could adversely affect our cash flow and ability to make distributions to shareholders. Rising
interest rates could also restrict our ability to refinance existing debt when it matures. In
addition, an increase in interest rates could decrease the amounts that third parties are willing
to pay for our assets, thereby limiting our ability to alter our portfolio promptly in relation to
economic or other conditions. We entered into and may, from time to time, enter into agreements
such
-19-
as interest rate hedges, swaps, floors, caps and other interest rate hedging contracts with respect
to a portion of our variable rate debt. Although these agreements may lessen the impact of rising
interest rates on us, they also expose us to the risk that other parties to the agreements will not
perform or that we cannot enforce the agreements.
Our degree of leverage could limit our ability to obtain additional financing or affect the market
price of our equity shares or debt securities.
Our degree of leverage could affect our ability to obtain additional financing for working capital
expenditures, development, acquisitions or other general corporate purposes. Our senior unsecured
debt is currently rated investment grade by the three major rating agencies. We cannot, however,
assure you that we will be able to maintain this rating. In the event that our unsecured debt is
downgraded from the current rating, we would likely incur higher borrowing costs and the market
prices of our common shares and debt securities might decline. Our degree of leverage could also
make us more vulnerable to a downturn in business or the economy generally.
Potential liability for environmental contamination could result in substantial costs.
Under various federal, state and local laws, ordinances and regulations, we may be liable for the
costs to investigate and remove or remediate hazardous or toxic substances on or in our properties,
often regardless of whether we know of or are responsible for the presence of these substances.
These costs may be substantial. While we do maintain environmental insurance, we can not be
assured that our insurance coverage will be sufficient to protect us from all of the aforesaid
remediation costs. Also, if hazardous or toxic substances are present on a property, or if we fail
to properly remediate such substances, our ability to sell or rent the property or to borrow using
that property as collateral may be adversely affected.
Additionally, we develop, manage, lease and/or operate various properties for third parties.
Consequently, we may be considered to have been or to be an operator of these properties and,
therefore, potentially liable for removal or remediation costs or other potential costs that could
relate to hazardous or toxic substances.
An earthquake or other natural disasters could adversely affect our business.
Some of our properties are located in California which is a high risk geographical area for
earthquakes or other natural disasters. Depending upon its magnitude, an earthquake could severely
damage our properties which would adversely affect our business. We maintain earthquake insurance
for our California properties and the resulting business interruption. We cannot assure you that
our insurance will be sufficient if there is a major earthquake.
Americans with Disabilities Act compliance could be costly.
The Americans with Disabilities Act of 1990, as amended (ADA) requires that all public
accommodations and commercial facilities, including office buildings, meet certain federal
requirements related to access and use by disabled persons. Compliance with ADA requirements could
involve the removal of structural barriers from certain disabled persons entrances which could
adversely affect our financial condition and results of operations. Other federal, state and local
laws may require modifications to or restrict further renovations of our properties with respect to
such accesses. Although we believe that our properties are in material compliance with present
requirements, noncompliance with the ADA or similar or related laws or regulations could result in
the United States government imposing fines or private litigants being awarded damages against us.
In addition, changes to existing requirements or enactments of new requirements could require
significant expenditures. Such costs may adversely affect our cash flow and ability to make
distributions to shareholders.
Our status as a REIT (or any of our REIT subsidiaries) is dependent on compliance with federal
income tax requirements.
If we (or any of our REIT subsidiaries) fail to qualify as a REIT, we or the affected REIT
subsidiaries would be subject to federal income tax at regular corporate rates. Also, unless the
IRS granted us or our affected REIT subsidiaries, as the case may be, relief under certain
statutory provisions, we or it would remain disqualified as a REIT for four years following the
year it first failed to qualify. If we or any of our REIT subsidiaries fails to qualify as a REIT,
we or they would be required to pay significant income taxes and would, therefore, have less money
available for investments or for distributions to shareholders. This would likely have a material
adverse effect on the value of the combined companys securities. In addition, we or our affected
REIT subsidiaries would no longer be required to make any distributions to shareholders.
-20-
Failure of the Operating Partnership (or a subsidiary partnership) to be treated as a partnership
would have serious adverse consequences to our shareholders. If the IRS were to successfully
challenge the tax status of the Operating Partnership or any of its subsidiary partnerships for
federal income tax purposes, the Operating Partnership or the affected subsidiary partnership would
be taxable as a corporation. In such event we would cease to qualify as a REIT and the imposition
of a corporate tax on the Operating Partnership or a subsidiary partnership would reduce the amount
of cash available for distribution from the Operating Partnership to us and ultimately to our
shareholders.
Even if we qualify as a REIT, we will be required to pay certain federal, state and local taxes on
our income and properties. In addition, our taxable REIT subsidiaries will be subject to federal,
state and local income tax at regular corporate rates on their net taxable income derived from
management, leasing and related service business. If we have net income from a prohibited
transaction, such income will be subject to a 100% tax.
We face possible state and local tax audits.
Because we are organized and qualify as a REIT, we are generally not subject to federal income
taxes, but are subject to certain state and local taxes. In the normal course of business, certain
entities through which we own real estate either have undergone, or are currently undergoing, tax
audits. Although we believe that we have substantial arguments in favor of our positions in the
ongoing audits, in some instances there is no controlling precedent or interpretive guidance on the
specific point at issue. Collectively, tax deficiency notices received to date from the
jurisdictions conducting the ongoing audits have not been material. However, there can be no
assurance that future audits will not occur with increased frequency or that the ultimate result of
such audits will not have a material adverse effect on our results of operations.
Competition for skilled personnel could increase labor costs.
We compete with various other companies in attracting and retaining qualified and skilled
personnel. We depend on our ability to attract and retain skilled management personnel who are
responsible for the day-to-day operations of our company. Competitive pressures may require that
we enhance our pay and benefits package to compete effectively for such personnel. We may not be
able to offset such added costs by increasing the rates we charge tenants. If there is an increase
in these costs or if we fail to attract and retain qualified and skilled personnel, our business
and operating results could be harmed.
We are dependent upon our key personnel.
We are dependent upon our key personnel whose continued service is not guaranteed. We are
dependent on our executive officers for strategic business direction and real estate experience.
Although we believe that we could find replacements for these key personnel, loss of their services
could adversely affect our operations.
Although we have an employment agreement with Gerard H. Sweeney, our President and Chief Executive
Officer, for a term extending to February 9, 2010, this agreement does not restrict his ability to
become employed by a competitor following the termination of his employment. We do not have key
man life insurance coverage on our executive officers.
Certain limitations will exist with respect to a third partys ability to acquire us or effectuate
a change in control.
Limitations imposed to protect our REIT status. In order to protect us against the loss of our
REIT status, our Declaration of Trust limits any shareholder from owning more than 9.8% in value of
our outstanding shares, subject
to certain exceptions. The ownership limit may have the effect of precluding acquisition of
control of us. If anyone acquires shares in excess of the ownership limit, we may:
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consider the transfer to be null and void; |
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not reflect the transaction on our books; |
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institute legal action to stop the transaction; |
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not pay dividends or other distributions with respect to those shares; |
-21-
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not recognize any voting rights for those shares; and |
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consider the shares held in trust for the benefit of a person to whom such shares may be
transferred. |
Limitation due to our ability to issue preferred shares. Our Declaration of Trust authorizes our
Board of Trustees to cause us to issue preferred shares, without limitation as to amount and
without shareholder consent. Our Board of Trustees is able to establish the preferences and rights
of any preferred shares issued and these shares could have the effect of delaying or preventing
someone from taking control of us, even if a change in control were in our shareholders best
interests.
Limitation imposed by the Maryland Business Combination Law. The Maryland General Corporation Law,
as applicable to Maryland REITs, establishes special restrictions against business combinations
between a Maryland REIT and interested shareholders or their affiliates unless an exemption is
applicable. An interested shareholder includes a person who beneficially owns, and an affiliate or
associate of the trust who, at any time within the two-year period prior to the date in question,
was the beneficial owner of, ten percent or more of the voting power of our then-outstanding voting
shares. Among other things, Maryland law prohibits (for a period of five years) a merger and
certain other transactions between a Maryland REIT and an interested shareholder unless the board
of trustees had approved the transaction before the party became an interested shareholder. The
five-year period runs from the most recent date on which the interested shareholder became an
interested shareholder. Thereafter, any such business combination must be recommended by the board
of trustees and approved by two super-majority shareholder votes unless, among other conditions,
the common shareholders receive a minimum price for their shares and the consideration is received
in cash or in the same form as previously paid by the interested shareholder for our shares or
unless the board of trustees approved the transaction before the party in question became an
interested shareholder. The business combination statute could have the effect of discouraging
offers to acquire us and of increasing the difficulty of consummating any such offers, even if the
acquisition would be in our shareholders best interests.
Maryland Control Share Acquisition Act. Maryland law provides that control shares of a REIT
acquired in a control share acquisition shall have no voting rights except to the extent approved
by a vote of two-thirds of the vote eligible to be cast on the matter under the Maryland Control
Share Acquisition Act. Control Shares means shares that, if aggregated with all other shares
previously acquired by the acquirer or in respect of which the acquirer is able to exercise or
direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle
the acquirer to exercise voting power in electing trustees within one of the following ranges of
voting power: one-tenth or more but less than one-third, one-third or more but less than a majority
or a majority or more of all voting power. Control shares do not include shares the acquiring
person is then entitled to vote as a result of having previously obtained shareholder approval. A
control share acquisition means the acquisition of control shares, subject to certain exceptions.
If voting rights or control shares acquired in a control share acquisition are not approved at a
shareholders meeting, then subject to certain conditions and limitations the issuer may redeem any
or all of the control shares for fair value. If voting rights of such control shares are approved
at a shareholders meeting and the acquirer becomes entitled to vote a majority of the shares
entitled to vote, all other shareholders may exercise appraisal rights. Any control shares
acquired in a control share acquisition which are not exempt under our Bylaws are subject to the
Maryland Control Share Acquisition Act. Our Bylaws contain a provision exempting from the control
share acquisition statute any and all acquisitions by any person of our shares. We cannot assure
you that this provision will not be amended or eliminated at any time in the future.
Advance Notice Provisions for Shareholder Nominations and Proposals. Our bylaws require advance
notice for shareholders to nominate persons for election as trustees at, or to bring other business
before, any meeting of our shareholders. This bylaw provision limits the ability of shareholders
to make nominations of persons for election as trustees or to introduce other proposals unless we
are notified in a timely manner prior to the meeting.
Many factors can have an adverse effect on the market value of our securities.
A number of factors might adversely affect the price of our securities, many of which are beyond
our control. These factors include:
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increases in market interest rates, relative to the dividend yield on our shares. If
market interest rates go up, prospective purchasers of our securities may require a higher
yield. Higher market interest rates would not, however, result in more funds for us to
distribute and, to the contrary, would likely increase our |
-22-
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borrowing costs and potentially
decrease funds available for distribution. Thus, higher market interest rates could cause
the market price of our common shares to go down; |
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anticipated benefit of an investment in our securities as compared to investment in
securities of companies in other industries (including benefits associated with tax
treatment of dividends and distributions); |
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perception by market professionals of REITs generally and REITs comparable to us in
particular; |
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level of institutional investor interest in our securities; |
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relatively low trading volumes in securities of REITs; |
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our results of operations and financial condition; and |
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investor confidence in the stock market generally. |
The market value of our common shares is based primarily upon the markets perception of our growth
potential and our current and potential future earnings and cash distributions. Consequently, our
common shares may trade at prices that are higher or lower than our net asset value per common
share. If our future earnings or cash distributions are less than expected, it is likely that the
market price of our common shares will diminish.
Additional issuances of equity securities may be dilutive to shareholders.
The interests of our shareholders could be diluted if we issue additional equity securities to
finance future developments or acquisitions or to repay indebtedness. Our Board of Trustees may
authorize the issuance of additional equity securities without shareholder approval. Our ability
to execute our business strategy depends upon our access to an appropriate blend of debt financing,
including unsecured lines of credit and other forms of secured and unsecured debt, and equity
financing, including the issuance of common and preferred equity.
The issuance of preferred securities may adversely affect the rights of holders of our common
shares.
Because our Board of Trustees has the power to establish the preferences and rights of each class
or series of preferred shares, we may afford the holders in any series or class of preferred shares
preferences, distributions, powers and rights, voting or otherwise, senior to the rights of holders
of common shares. Our Board of Trustees also has the power to establish the preferences and rights
of each class or series of units in Brandywine Operating Partnership, and may afford the holders in
any series or class of preferred units preferences, distributions, powers and rights, voting or
otherwise, senior to the rights of holders of common units.
The acquisition of new properties or the development of new properties which lack operating history
with us may give rise to difficulties in predicting revenue potential.
We will continue to acquire additional properties and seek to develop our existing land holdings
strategically. These acquisitions and developments could fail to perform in accordance with
expectations. If we fail to accurately estimate occupancy levels, operating costs or costs of
improvements to bring an acquired property or a development
property up to the standards established for our intended market position, the performance of the
property may be below expectations. Acquired properties may have characteristics or deficiencies
affecting their valuation or revenue potential that we have not yet discovered. We cannot assure
you that the performance of properties acquired or developed by us will increase or be maintained
under our management.
Our performance is dependent upon the economic conditions of the markets in which our properties
are located.
Our
properties are located in Pennsylvania, New Jersey, Delaware, Maryland, Virginia,
Texas, and California. Like other real estate markets, these commercial real estate markets have
experienced economic downturns in the past, and future declines in 2008 in any of these economies
or real estate markets could adversely affect cash available for distribution. Our financial
performance and ability to make distributions to our shareholders will be particularly sensitive to
the economic conditions in these markets. The local economic climate, which may be adversely
impacted by business layoffs or downsizing, industry slowdowns, changing demographics and other
factors, and local real estate conditions, such as oversupply of or reduced demand for office,
industrial
-23-
and other competing commercial properties, may affect revenues and the value of
properties, including properties to be acquired or developed. We cannot assure you that these
local economies will grow in the future.
Item 1B. Unresolved Staff Comments
None
Item 2. Properties
Property Acquisitions
We acquired the following properties during the year ended December 31, 2007:
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Month of |
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# of |
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Rentable Square |
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Purchase |
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Acquisition |
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Property/Portfolio Name |
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Location |
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Buildings |
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Feet/ Acres |
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Price |
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(in 000s) |
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Office: |
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Mar-07 |
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Brandywine
Office Investors, L.P. |
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Various |
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10 |
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1,098,340 |
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$ |
63,731 |
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May-07 |
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155 Grand Avenue |
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Oakland, CA |
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1 |
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204,278 |
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72,000 |
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Jul-07 |
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The Boulders |
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Richmond, VA |
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5 |
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508,607 |
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95,000 |
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Jul-07 |
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Post Office/IRS |
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Philadelphia, PA |
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1 |
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862,692 |
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28,000 |
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Jul-07 |
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Cira South Garage |
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Philadelphia, PA |
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733,000 |
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(a) |
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Total Office Properties Acquired |
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17 |
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3,406,917 |
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$ |
258,731 |
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Land Parcels: |
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Jul-07 |
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Boulders land |
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Richmond, VA |
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4.9 |
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1,250 |
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Total Land Acquired |
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4.9 |
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$ |
1,250 |
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(a) |
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Property to be constructed by us on land subject to a ground lease |
The purchase prices above do not include transaction costs.
Development Properties Placed in Service
We placed in service the following properties during the year ended December 31, 2007:
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Month Placed |
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# of |
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Rentable |
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in Service |
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Property/Portfolio Name |
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Location |
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Buildings |
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Square Feet |
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Office: |
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Jun-07 |
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555 Lancaster Avenue |
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Radnor, PA |
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1 |
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242,099 |
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Sep-07 |
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150 Radnor Chester Road |
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Radnor, PA |
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1 |
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339,198 |
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Sep-07 |
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170 Radnor Chester Road |
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Radnor, PA |
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1 |
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69,787 |
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Sep-07 |
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Three Paragon Place |
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Richmond, VA |
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1 |
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74,604 |
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Dec-07 |
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130 Radnor Chester Road |
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Radnor, PA |
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1 |
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71,349 |
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Dec-06 |
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201 King of Prussia Road |
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Radnor, PA |
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1 |
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251,372 |
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Total Properties Placed
in Service |
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6 |
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1,048,409 |
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We place a property under development in service on the earlier of (i) once a property reaches 95%
occupancy and (ii) one year after the completion of shell construction.
-24-
Property Sales
We sold the following properties during the year ended December 31, 2007:
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Month of |
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# of |
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Rentable Square |
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Sales |
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Sale |
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Property/Portfolio Name |
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Location |
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Bldgs. |
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Feet/ Acres |
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Price |
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(in 000s) |
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Office: |
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Jan-07 |
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Norriton Office Center |
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East Norriton, PA |
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1 |
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73,394 |
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$ |
7,785 |
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Jan-07 |
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Park West |
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Dallas, TX |
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4 |
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1,091,186 |
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105,000 |
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Jan-07 |
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George Kachel Farmhouse |
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Reading, PA |
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1 |
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1,664 |
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245 |
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Mar-07 |
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Reading/Harrisburg |
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Reading and Harrisburg, PA |
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10 |
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940,486 |
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112,000 |
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Mar-07 |
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1007 Laurel Oak |
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Voorhees, NJ |
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1 |
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78,205 |
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7,000 |
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Apr-07 |
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Cityplace |
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Dallas, TX |
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1 |
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1,295,832 |
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115,000 |
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Nov-07 |
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2490 Boulevard of the Generals |
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West Norriton, PA |
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1 |
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20,600 |
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1,458 |
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Nov-07 |
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111/113 Pencader Drive |
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Newark, DE |
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1 |
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52,665 |
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5,135 |
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Dec-07 |
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G&I VI Interchange Office, LLC |
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Various |
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29 |
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1,616,227 |
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242,150 |
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Total Office Properties Sold |
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49 |
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5,170,259 |
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$ |
595,773 |
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Land Parcels: |
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Jan-07 |
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Park West Land |
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Dallas, TX |
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4.7 |
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$ |
2,100 |
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Sep-07 |
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Iron Run Land Parcels |
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Lehigh County, PA |
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51.5 |
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6,600 |
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Total Land Sold |
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56.2 |
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$ |
8,700 |
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Properties
As of December 31, 2007, we owned 216 office properties, 23 industrial facilities and one mixed-use
property that contain an aggregate of approximately 24.9 million net rentable square feet. We also
have seven properties under development and seven properties under redevelopment containing an
aggregate 3.7 million net rentable square feet. The properties are located in and surrounding
Philadelphia, PA, Wilmington, DE, Southern and Central New Jersey, Richmond, VA, Metropolitan
Washington, D.C., Austin, TX, and Oakland and Rancho Bernardo, CA. As of December 31, 2007, the
Properties were approximately 93.9% occupied by 1,650 tenants and had an average age of
approximately 17.8 years. The office properties are primarily suburban office
buildings containing an average of approximately 109,857 net rentable square feet. The industrial
properties accommodate a variety of tenant uses, including light manufacturing, assembly,
distribution and warehousing. We carry comprehensive liability, fire,
extended coverage and rental loss insurance covering all of the Properties, with policy
specifications and insured limits which we believe are adequate.
We had the following projects in development or redevelopment as of December 31, 2007:
-25-
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% |
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Leased |
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Projected |
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|
|
|
|
Rentable |
|
as of |
|
|
In-Service |
|
Project Name |
|
Location |
|
Square Feet |
|
12/31/07 |
|
|
Date (a) |
|
Under Development: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
South Lake at Dulles Corner |
|
Herndon, VA |
|
267,350 |
|
|
0.0 |
% |
|
|
Q409 |
|
Park on Barton Creek |
|
Austin, TX |
|
213,255 |
|
|
30.7 |
% |
|
|
Q209 |
|
Metroplex I |
|
Plymouth Meeting, PA |
|
120,877 |
|
|
9.3 |
% |
|
|
Q109 |
|
1200 Lenox Drive |
|
Lawrenceville, NJ |
|
71,250 |
|
|
0.0 |
% |
|
|
Q109 |
|
2100 Franklin |
|
Oakland, CA |
|
213,905 |
|
|
0.0 |
% |
|
|
Q109 |
|
Post Office/IRS |
|
Philadelphia, PA |
|
862,692 |
|
|
100.0 |
% |
|
|
Q310 |
|
Cira South Garage |
|
Philadelphia, PA |
|
733,000 |
|
|
66.7 |
% |
|
|
Q310 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,482,329 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Under Redevelopment: |
|
|
|
|
|
|
|
|
|
|
|
|
100 Lenox Drive |
|
Lawrenceville, NJ |
|
92,980 |
|
|
0.0 |
% |
|
|
Q209 |
|
Atrium I |
|
Mount Laurel, NJ |
|
97,158 |
|
|
50.9 |
% |
|
|
Q408 |
|
One Rockledge Associates |
|
Bethesda, MD |
|
160,173 |
|
|
57.0 |
% |
|
|
Q109 |
|
Delaware Corporate Center II |
|
Wilmington, DE |
|
95,514 |
|
|
67.4 |
% |
|
|
Q308 |
|
Radnor Corporate Center I |
|
Radnor, PA |
|
190,219 |
|
|
65.9 |
% |
|
|
Q109 |
|
1333 Broadway |
|
Oakland, CA |
|
239,830 |
|
|
72.5 |
% |
|
|
Q109 |
|
300 Delaware Avenue |
|
Wilmington, DE |
|
298,071 |
|
|
78.0 |
% |
|
|
Q209 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,173,945 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,656,274 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Projected in-service date represents the earlier of (i) the date at which the property is
estimated to be 95% occupied
or (ii) one year from the project completion date. |
As of
December 31, 2007, the above 14 projects accounted for $249.8 million of the $402.3 million
of construction in process on our consolidated balance sheet.
As of
December 31, 2007, we expect our total development cost for these 14 projects, including an estimate
of the tenant improvement costs, to be approximately $718.3 million.
The following table sets forth information with respect to our operating properties at December 31,
2007:
-26-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Base Rent |
|
|
Annualized |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net |
|
|
Percentage |
|
|
for the Twelve |
|
|
Rental Rate |
|
|
|
|
|
|
|
|
|
|
|
Year |
|
|
Rentable |
|
|
Leased as of |
|
|
Months Ended |
|
|
as of |
|
|
|
|
|
|
|
|
|
|
|
Built/ |
|
|
Square |
|
|
December 31, |
|
|
December 31, |
|
|
December 31, |
|
Property Name |
|
Location |
|
State |
|
|
Renovated |
|
|
Feet |
|
|
2007 (a) |
|
|
2007 (b) (000s) |
|
|
2007 (c) |
|
CALIFORNIA NORTH SEGMENT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Kaiser Plaza |
|
Oakland |
|
CA |
|
|
1970 |
|
|
|
530,850 |
|
|
|
94.0 |
% |
|
$ |
16,232 |
|
|
$ |
35.04 |
|
2101 Webster Street |
|
Oakland |
|
CA |
|
|
1985 |
|
|
|
464,424 |
|
|
|
93.7 |
% |
|
|
12,210 |
|
|
|
30.86 |
|
1901 Harrison Street |
|
Oakland |
|
CA |
|
|
1985 |
|
|
|
272,100 |
|
|
|
98.8 |
% |
|
|
7,622 |
|
|
|
33.12 |
|
155 Grand Avenue |
|
Oakland |
|
CA |
|
|
1990 |
|
|
|
204,278 |
|
|
|
98.0 |
% |
|
|
4,088 |
|
|
|
35.90 |
|
1220 Concord Avenue |
|
Concord |
|
CA |
|
|
1984 |
|
|
|
175,153 |
|
|
|
100.0 |
% |
|
|
2,944 |
|
|
|
22.38 |
|
1200 Concord Avenue |
|
Concord |
|
CA |
|
|
1984 |
|
|
|
175,103 |
|
|
|
100.0 |
% |
|
|
4,155 |
|
|
|
24.99 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CALIFORNIA SOUTH SEGMENT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5780 & 5790 Feet Street |
|
Carlsbad |
|
CA |
|
|
1999 |
|
|
|
121,381 |
|
|
|
94.2 |
% |
|
|
3,284 |
|
|
|
31.94 |
|
5900 & 5950 La Place Court |
|
Carlsbad |
|
CA |
|
|
1988 |
|
|
|
80,506 |
|
|
|
96.4 |
% |
|
|
1,881 |
|
|
|
24.26 |
|
16870 West Bernardo Drive |
|
San Diego |
|
CA |
|
|
2002 |
|
|
|
68,708 |
|
|
|
82.4 |
% |
|
|
2,032 |
|
|
|
33.63 |
|
5963 La Place Court |
|
Carlsbad |
|
CA |
|
|
1987 |
|
|
|
61,587 |
|
|
|
65.5 |
% |
|
|
1,191 |
|
|
|
25.96 |
|
2035 Corte Del Nogal |
|
Carlsbad |
|
CA |
|
|
1991 |
|
|
|
53,982 |
|
|
|
100.0 |
% |
|
|
1,158 |
|
|
|
23.26 |
|
5973 Avendia Encinas |
|
Carlsbad |
|
CA |
|
|
1986 |
|
|
|
51,695 |
|
|
|
100.0 |
% |
|
|
1,373 |
|
|
|
27.25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
METROPOLITAN WASHINGTON D.C.
REGION SEGMENT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7101 Wisconsin Avenue |
|
Bethesda |
|
MD |
|
|
1975 |
|
|
|
223,054 |
|
|
|
95.4 |
% |
|
|
5,073 |
|
|
|
26.54 |
|
2273 Research Boulevard |
|
Rockville |
|
MD |
|
|
1999 |
|
|
|
147,689 |
|
|
|
98.4 |
% |
|
|
3,967 |
|
|
|
26.28 |
|
2275 Research Boulevard |
|
Rockville |
|
MD |
|
|
1990 |
|
|
|
147,650 |
|
|
|
88.6 |
% |
|
|
3,545 |
|
|
|
13.10 |
|
2277 Research Boulevard |
|
Rockville |
|
MD |
|
|
1986 |
|
|
|
137,045 |
|
|
|
100.0 |
% |
|
|
3,099 |
|
|
|
|
|
11720 Beltsville Drive |
|
Beltsville |
|
MD |
|
|
1987 |
|
|
|
128,903 |
|
|
|
78.6 |
% |
|
|
2,013 |
|
|
|
19.70 |
|
7735 Old Georgetown Road |
|
Bethesda |
|
MD |
|
|
1964/1997 |
|
|
|
122,543 |
|
|
|
95.0 |
% |
|
|
3,168 |
|
|
|
31.07 |
|
11700 Beltsville Drive |
|
Beltsville |
|
MD |
|
|
1981 |
|
|
|
96,843 |
|
|
|
68.6 |
% |
|
|
1,431 |
|
|
|
21.59 |
|
11710 Beltsville Drive |
|
Beltsville |
|
MD |
|
|
1987 |
|
|
|
81,281 |
|
|
|
67.6 |
% |
|
|
860 |
|
|
|
23.52 |
|
11740 Beltsville Drive |
|
Beltsville |
|
MD |
|
|
1987 |
|
|
|
6,783 |
|
|
|
100.0 |
% |
|
|
153 |
|
|
|
22.76 |
|
1676 International Drive |
|
McLean |
|
VA |
|
|
1999 |
|
|
|
299,388 |
|
|
|
100.0 |
% |
|
|
9,283 |
|
|
|
33.01 |
|
2340 Dulles Corner Boulevard |
|
Herndon |
|
VA |
|
|
1987 |
|
|
|
264,405 |
|
|
|
100.0 |
% |
|
|
7,954 |
|
|
|
28.01 |
|
2291 Wood Oak Drive |
|
Herndon |
|
VA |
|
|
1999 |
|
|
|
227,574 |
|
|
|
100.0 |
% |
|
|
5,326 |
|
|
|
28.89 |
|
1900 Gallows Road |
|
Vienna |
|
VA |
|
|
1989 |
|
|
|
202,684 |
|
|
|
100.0 |
% |
|
|
4,244 |
|
|
|
23.99 |
|
3130 Fairview Park Drive |
|
Falls Church |
|
VA |
|
|
1999 |
|
|
|
180,645 |
|
|
|
73.7 |
% |
|
|
4,335 |
|
|
|
35.27 |
|
3141 Fairview Park Drive |
|
Falls Church |
|
VA |
|
|
1988 |
|
|
|
180,611 |
|
|
|
96.9 |
% |
|
|
4,458 |
|
|
|
25.65 |
|
2355 Dulles Corner Boulevard |
|
Herndon |
|
VA |
|
|
1988 |
|
|
|
179,334 |
|
|
|
99.4 |
% |
|
|
4,432 |
|
|
|
24.43 |
|
2411 Dulles Corner Park |
|
Herndon |
|
VA |
|
|
1990 |
|
|
|
176,618 |
|
|
|
100.0 |
% |
|
|
5,342 |
|
|
|
27.86 |
|
1880 Campus Commons Drive |
|
Reston |
|
VA |
|
|
1985 |
|
|
|
172,448 |
|
|
|
100.0 |
% |
|
|
3,112 |
|
|
|
20.57 |
|
2121 Cooperative Way |
|
Herndon |
|
VA |
|
|
2000 |
|
|
|
161,274 |
|
|
|
91.4 |
% |
|
|
4,329 |
|
|
|
28.45 |
|
8260 Greensboro Drive |
|
McLean |
|
VA |
|
|
1980 |
|
|
|
159,498 |
|
|
|
100.0 |
% |
|
|
3,722 |
|
|
|
24.64 |
|
2251 Corporate Park Drive |
|
Herndon |
|
VA |
|
|
2000 |
|
|
|
158,016 |
|
|
|
100.0 |
% |
|
|
5,425 |
|
|
|
35.44 |
|
12015 Lee Jackson
Memorial Highway |
|
Fairfax |
|
VA |
|
|
1985 |
|
|
|
153,255 |
|
|
|
97.1 |
% |
|
|
3,478 |
|
|
|
24.50 |
|
13880 Dulles Corner Lane |
|
Herndon |
|
VA |
|
|
1997 |
|
|
|
151,747 |
|
|
|
100.0 |
% |
|
|
4,686 |
|
|
|
32.55 |
|
8521 Leesburg Pike |
|
Vienna |
|
VA |
|
|
1984 |
|
|
|
149,743 |
|
|
|
97.9 |
% |
|
|
3,236 |
|
|
|
25.88 |
|
2201 Cooperative Way |
|
Herndon |
|
VA |
|
|
1990 |
|
|
|
138,806 |
|
|
|
100.0 |
% |
|
|
3,829 |
|
|
|
29.84 |
|
11781 Lee Jackson
Memorial Highway |
|
Fairfax |
|
VA |
|
|
1982 |
|
|
|
130,935 |
|
|
|
96.1 |
% |
|
|
3,021 |
|
|
|
23.54 |
|
13825 Sunrise Valley Drive |
|
Herndon |
|
VA |
|
|
1989 |
|
|
|
104,150 |
|
|
|
100.0 |
% |
|
|
2,484 |
|
|
|
25.99 |
|
198 Van Buren Street |
|
Herndon |
|
VA |
|
|
1996 |
|
|
|
98,934 |
|
|
|
100.0 |
% |
|
|
2,677 |
|
|
|
28.63 |
|
196 Van Buren Street |
|
Herndon |
|
VA |
|
|
1991 |
|
|
|
97,781 |
|
|
|
66.6 |
% |
|
|
1,885 |
|
|
|
29.68 |
|
4401 Fair Lakes Court |
|
Fairfax |
|
VA |
|
|
1988 |
|
|
|
55,972 |
|
|
|
89.1 |
% |
|
|
1,314 |
|
|
|
25.15 |
|
-27-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Base Rent |
|
|
Annualized |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net |
|
|
Percentage |
|
|
for the Twelve |
|
|
Rental Rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year |
|
Rentable |
|
|
Leased as of |
|
|
Months Ended |
|
|
as of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Built/ |
|
Square |
|
|
December 31, |
|
|
December 31, |
|
|
December 31, |
|
Property Name |
|
|
|
|
|
Location |
|
State |
|
|
Renovated |
|
Feet |
|
|
2007 (a) |
|
|
2007 (b) (000s) |
|
|
2007 (c) |
|
PENNSYLVANIA SEGMENT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2929 Arch Street |
|
|
(d |
) |
|
Philadelphia |
|
PA |
|
|
2006 |
|
|
|
729,897 |
|
|
|
99.3 |
% |
|
|
24,029 |
|
|
|
32.98 |
|
100 North 18th Street |
|
|
(e |
) |
|
Philadelphia |
|
PA |
|
|
1988 |
|
|
|
702,286 |
|
|
|
98.7 |
% |
|
|
20,596 |
|
|
|
30.37 |
|
130 North 18th Street |
|
|
|
|
|
Philadelphia |
|
PA |
|
|
1998 |
|
|
|
594,361 |
|
|
|
98.5 |
% |
|
|
12,706 |
|
|
|
27.23 |
|
150 Radnor Chester Road |
|
|
|
|
|
Radnor |
|
PA |
|
|
1983 |
|
|
|
339,198 |
|
|
|
100.0 |
% |
|
|
7,999 |
|
|
|
18.94 |
|
201 King of Prussia Road |
|
|
|
|
|
Radnor |
|
PA |
|
|
2001 |
|
|
|
251,372 |
|
|
|
84.1 |
% |
|
|
5,066 |
|
|
|
23.83 |
|
555 Lancaster Avenue |
|
|
|
|
|
Radnor |
|
PA |
|
|
1973 |
|
|
|
242,099 |
|
|
|
99.5 |
% |
|
|
6,067 |
|
|
|
27.99 |
|
401 Plymouth Road |
|
|
|
|
|
Plymouth Meeting |
|
PA |
|
|
2001 |
|
|
|
201,883 |
|
|
|
96.9 |
% |
|
|
6,123 |
|
|
|
31.50 |
|
Philadelphia Marine Center |
|
|
(d |
) |
|
Philadelphia |
|
PA |
|
Various |
|
|
|
181,900 |
|
|
|
91.2 |
% |
|
|
1,479 |
|
|
|
4.56 |
|
101 West Elm Street |
|
|
|
|
|
W. Conshohocken |
|
PA |
|
|
1999 |
|
|
|
175,009 |
|
|
|
95.8 |
% |
|
|
3,805 |
|
|
|
23.74 |
|
Four Radnor Corporate Center |
|
|
|
|
|
Radnor |
|
PA |
|
|
1995 |
|
|
|
165,138 |
|
|
|
93.3 |
% |
|
|
2,944 |
|
|
|
21.74 |
|
Five Radnor Corporate Center |
|
|
|
|
|
Radnor |
|
PA |
|
|
1998 |
|
|
|
164,577 |
|
|
|
83.1 |
% |
|
|
4,417 |
|
|
|
30.85 |
|
751-761 Fifth Avenue |
|
|
|
|
|
King Of Prussia |
|
PA |
|
|
1967 |
|
|
|
158,000 |
|
|
|
100.0 |
% |
|
|
543 |
|
|
|
3.64 |
|
630 Allendale Road |
|
|
|
|
|
King of Prussia |
|
PA |
|
|
2000 |
|
|
|
150,000 |
|
|
|
100.0 |
% |
|
|
3,722 |
|
|
|
26.04 |
|
640 Freedom Business Center |
|
|
(d |
) |
|
King Of Prussia |
|
PA |
|
|
1991 |
|
|
|
132,000 |
|
|
|
65.3 |
% |
|
|
1,757 |
|
|
|
23.37 |
|
52 Swedesford Square |
|
|
|
|
|
East Whiteland Twp. |
|
PA |
|
|
1988 |
|
|
|
131,017 |
|
|
|
100.0 |
% |
|
|
2,806 |
|
|
|
23.10 |
|
400 Berwyn Park |
|
|
|
|
|
Berwyn |
|
PA |
|
|
1999 |
|
|
|
124,182 |
|
|
|
100.0 |
% |
|
|
3,267 |
|
|
|
27.45 |
|
Three Radnor Corporate Center |
|
|
|
|
|
Radnor |
|
PA |
|
|
1998 |
|
|
|
119,194 |
|
|
|
77.6 |
% |
|
|
2,857 |
|
|
|
32.96 |
|
101 Lindenwood Drive |
|
|
|
|
|
Malvern |
|
PA |
|
|
1988 |
|
|
|
118,121 |
|
|
|
85.5 |
% |
|
|
2,337 |
|
|
|
21.02 |
|
7130 Ambassador Drive |
|
|
(f |
) |
|
Allentown |
|
PA |
|
|
1991 |
|
|
|
114,049 |
|
|
|
100.0 |
% |
|
|
430 |
|
|
|
5.27 |
|
300 Berwyn Park |
|
|
|
|
|
Berwyn |
|
PA |
|
|
1989 |
|
|
|
108,619 |
|
|
|
100.0 |
% |
|
|
2,242 |
|
|
|
23.56 |
|
442 Creamery Way |
|
|
(f |
) |
|
Exton |
|
PA |
|
|
1991 |
|
|
|
104,500 |
|
|
|
100.0 |
% |
|
|
598 |
|
|
|
6.71 |
|
Two Radnor Corporate Center |
|
|
|
|
|
Radnor |
|
PA |
|
|
1998 |
|
|
|
100,973 |
|
|
|
91.4 |
% |
|
|
2,498 |
|
|
|
30.99 |
|
301 Lindenwood Drive |
|
|
|
|
|
Malvern |
|
PA |
|
|
1984 |
|
|
|
97,813 |
|
|
|
97.3 |
% |
|
|
1,907 |
|
|
|
20.64 |
|
1 West Elm Street |
|
|
|
|
|
W. Conshohocken |
|
PA |
|
|
1999 |
|
|
|
97,737 |
|
|
|
79.7 |
% |
|
|
2,744 |
|
|
|
26.91 |
|
555 Croton Road |
|
|
|
|
|
King of Prussia |
|
PA |
|
|
1999 |
|
|
|
96,909 |
|
|
|
79.4 |
% |
|
|
2,226 |
|
|
|
31.51 |
|
500 North Gulph Road |
|
|
|
|
|
King Of Prussia |
|
PA |
|
|
1979 |
|
|
|
93,082 |
|
|
|
76.5 |
% |
|
|
838 |
|
|
|
18.26 |
|
620 West Germantown Pike |
|
|
|
|
|
Plymouth Meeting |
|
PA |
|
|
1990 |
|
|
|
90,183 |
|
|
|
87.1 |
% |
|
|
1,795 |
|
|
|
27.68 |
|
610 West Germantown Pike |
|
|
|
|
|
Plymouth Meeting |
|
PA |
|
|
1987 |
|
|
|
90,152 |
|
|
|
91.1 |
% |
|
|
1,610 |
|
|
|
28.41 |
|
630 West Germantown Pike |
|
|
|
|
|
Plymouth Meeting |
|
PA |
|
|
1988 |
|
|
|
89,925 |
|
|
|
56.5 |
% |
|
|
1,428 |
|
|
|
28.04 |
|
600 West Germantown Pike |
|
|
|
|
|
Plymouth Meeting |
|
PA |
|
|
1986 |
|
|
|
89,681 |
|
|
|
83.3 |
% |
|
|
1,795 |
|
|
|
26.02 |
|
630 Freedom Business Center |
|
|
(d |
) |
|
King Of Prussia |
|
PA |
|
|
1989 |
|
|
|
86,683 |
|
|
|
100.0 |
% |
|
|
1,966 |
|
|
|
25.48 |
|
620 Freedom Business Center |
|
|
(d |
) |
|
King Of Prussia |
|
PA |
|
|
1986 |
|
|
|
86,570 |
|
|
|
100.0 |
% |
|
|
1,760 |
|
|
|
22.50 |
|
1200 Swedsford Road |
|
|
|
|
|
Berwyn |
|
PA |
|
|
1994 |
|
|
|
86,000 |
|
|
|
100.0 |
% |
|
|
1,785 |
|
|
|
24.75 |
|
595 East Swedesford Road |
|
|
|
|
|
Wayne |
|
PA |
|
|
1998 |
|
|
|
81,890 |
|
|
|
100.0 |
% |
|
|
1,750 |
|
|
|
21.84 |
|
1050 Westlakes Drive |
|
|
|
|
|
Berwyn |
|
PA |
|
|
1984 |
|
|
|
80,000 |
|
|
|
100.0 |
% |
|
|
1,818 |
|
|
|
|
|
One Progress Drive |
|
|
|
|
|
Horsham |
|
PA |
|
|
1986 |
|
|
|
79,204 |
|
|
|
100.0 |
% |
|
|
841 |
|
|
|
13.45 |
|
1060 First Avenue |
|
|
|
|
|
King Of Prussia |
|
PA |
|
|
1987 |
|
|
|
77,718 |
|
|
|
73.2 |
% |
|
|
1,383 |
|
|
|
18.48 |
|
741 First Avenue |
|
|
|
|
|
King Of Prussia |
|
PA |
|
|
1966 |
|
|
|
77,184 |
|
|
|
100.0 |
% |
|
|
580 |
|
|
|
8.89 |
|
1040 First Avenue |
|
|
|
|
|
King Of Prussia |
|
PA |
|
|
1985 |
|
|
|
75,488 |
|
|
|
78.7 |
% |
|
|
1,416 |
|
|
|
21.99 |
|
200 Berwyn Park |
|
|
|
|
|
Berwyn |
|
PA |
|
|
1987 |
|
|
|
75,025 |
|
|
|
100.0 |
% |
|
|
1,585 |
|
|
|
24.10 |
|
1020 First Avenue |
|
|
|
|
|
King Of Prussia |
|
PA |
|
|
1984 |
|
|
|
74,556 |
|
|
|
100.0 |
% |
|
|
1,608 |
|
|
|
19.25 |
|
1000 First Avenue |
|
|
|
|
|
King Of Prussia |
|
PA |
|
|
1980 |
|
|
|
74,139 |
|
|
|
87.7 |
% |
|
|
1,057 |
|
|
|
20.17 |
|
436 Creamery Way |
|
|
|
|
|
Exton |
|
PA |
|
|
1991 |
|
|
|
72,300 |
|
|
|
96.2 |
% |
|
|
679 |
|
|
|
14.30 |
|
130 Radnor Chester Road |
|
|
|
|
|
Radnor |
|
PA |
|
|
1983 |
|
|
|
71,349 |
|
|
|
100.0 |
% |
|
|
583 |
|
|
|
|
|
170 Radnor Chester Road |
|
|
|
|
|
Radnor |
|
PA |
|
|
1983 |
|
|
|
69,787 |
|
|
|
92.6 |
% |
|
|
1,560 |
|
|
|
17.98 |
|
14 Campus Boulevard |
|
|
|
|
|
Newtown Square |
|
PA |
|
|
1998 |
|
|
|
69,542 |
|
|
|
100.0 |
% |
|
|
832 |
|
|
|
|
|
500 Enterprise Road |
|
|
|
|
|
Horsham |
|
PA |
|
|
1990 |
|
|
|
66,751 |
|
|
|
0.0 |
% |
|
|
495 |
|
|
|
|
|
575 East Swedesford Road |
|
|
|
|
|
Wayne |
|
PA |
|
|
1985 |
|
|
|
66,265 |
|
|
|
89.8 |
% |
|
|
1,168 |
|
|
|
22.79 |
|
429 Creamery Way |
|
|
|
|
|
Exton |
|
PA |
|
|
1996 |
|
|
|
63,420 |
|
|
|
100.0 |
% |
|
|
790 |
|
|
|
16.49 |
|
-28-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Base Rent |
|
|
Annualized |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net |
|
|
Percentage |
|
|
for the Twelve |
|
|
Rental Rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year |
|
|
Rentable |
|
|
Leased as of |
|
|
Months Ended |
|
|
as of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Built/ |
|
|
Square |
|
|
December 31, |
|
|
December 31, |
|
|
December 31, |
|
Property Name |
|
|
|
|
|
Location |
|
State |
|
|
Renovated |
|
|
Feet |
|
|
2007 (a) |
|
|
2007 (b) (000s) |
|
|
2007 (c) |
|
610 Freedom Business Center |
|
|
(d |
) |
|
King Of Prussia |
|
PA |
|
|
1985 |
|
|
|
62,991 |
|
|
|
54.9 |
% |
|
|
1,386 |
|
|
|
22.23 |
|
925 Harvest Drive |
|
|
|
|
|
Blue Bell |
|
PA |
|
|
1990 |
|
|
|
62,957 |
|
|
|
96.1 |
% |
|
|
1,207 |
|
|
|
21.30 |
|
980 Harvest Drive |
|
|
|
|
|
Blue Bell |
|
PA |
|
|
1988 |
|
|
|
62,379 |
|
|
|
100.0 |
% |
|
|
1,383 |
|
|
|
23.19 |
|
426 Lancaster Avenue |
|
|
|
|
|
Devon |
|
PA |
|
|
1990 |
|
|
|
61,102 |
|
|
|
100.0 |
% |
|
|
1,213 |
|
|
|
18.48 |
|
1180 Swedesford Road |
|
|
|
|
|
Berwyn |
|
PA |
|
|
1987 |
|
|
|
60,371 |
|
|
|
100.0 |
% |
|
|
1,847 |
|
|
|
32.41 |
|
1160 Swedesford Road |
|
|
|
|
|
Berwyn |
|
PA |
|
|
1986 |
|
|
|
60,099 |
|
|
|
100.0 |
% |
|
|
1,451 |
|
|
|
25.04 |
|
100 Berwyn Park |
|
|
|
|
|
Berwyn |
|
PA |
|
|
1986 |
|
|
|
57,731 |
|
|
|
100.0 |
% |
|
|
1,103 |
|
|
|
22.95 |
|
440 Creamery Way |
|
|
|
|
|
Exton |
|
PA |
|
|
1991 |
|
|
|
57,218 |
|
|
|
100.0 |
% |
|
|
648 |
|
|
|
14.10 |
|
640 Allendale Road |
|
|
(f |
) |
|
King of Prussia |
|
PA |
|
|
2000 |
|
|
|
56,034 |
|
|
|
100.0 |
% |
|
|
350 |
|
|
|
8.01 |
|
565 East Swedesford Road |
|
|
|
|
|
Wayne |
|
PA |
|
|
1984 |
|
|
|
55,979 |
|
|
|
98.6 |
% |
|
|
985 |
|
|
|
20.44 |
|
650 Park Avenue |
|
|
|
|
|
King Of Prussia |
|
PA |
|
|
1968 |
|
|
|
54,338 |
|
|
|
97.1 |
% |
|
|
796 |
|
|
|
16.08 |
|
855 Springdale Drive |
|
|
|
|
|
Exton |
|
PA |
|
|
1986 |
|
|
|
53,500 |
|
|
|
73.5 |
% |
|
|
324 |
|
|
|
16.71 |
|
910 Harvest Drive |
|
|
|
|
|
Blue Bell |
|
PA |
|
|
1990 |
|
|
|
52,611 |
|
|
|
100.0 |
% |
|
|
1,040 |
|
|
|
19.11 |
|
680 Allendale Road |
|
|
|
|
|
King Of Prussia |
|
PA |
|
|
1962 |
|
|
|
52,528 |
|
|
|
100.0 |
% |
|
|
544 |
|
|
|
13.34 |
|
2240/50 Butler Pike |
|
|
|
|
|
Plymouth Meeting |
|
PA |
|
|
1984 |
|
|
|
52,229 |
|
|
|
100.0 |
% |
|
|
1,119 |
|
|
|
21.48 |
|
920 Harvest Drive |
|
|
|
|
|
Blue Bell |
|
PA |
|
|
1990 |
|
|
|
51,875 |
|
|
|
100.0 |
% |
|
|
971 |
|
|
|
19.99 |
|
486 Thomas Jones Way |
|
|
|
|
|
Exton |
|
PA |
|
|
1990 |
|
|
|
51,372 |
|
|
|
92.0 |
% |
|
|
716 |
|
|
|
18.77 |
|
660 Allendale Road |
|
|
(f |
) |
|
King of Prussia |
|
PA |
|
|
1962 |
|
|
|
50,635 |
|
|
|
100.0 |
% |
|
|
365 |
|
|
|
9.45 |
|
875 First Avenue |
|
|
|
|
|
King Of Prussia |
|
PA |
|
|
1966 |
|
|
|
50,000 |
|
|
|
100.0 |
% |
|
|
1,038 |
|
|
|
21.41 |
|
630 Clark Avenue |
|
|
|
|
|
King Of Prussia |
|
PA |
|
|
1960 |
|
|
|
50,000 |
|
|
|
100.0 |
% |
|
|
301 |
|
|
|
8.19 |
|
620 Allendale Road |
|
|
|
|
|
King Of Prussia |
|
PA |
|
|
1961 |
|
|
|
50,000 |
|
|
|
100.0 |
% |
|
|
988 |
|
|
|
22.59 |
|
15 Campus Boulevard |
|
|
|
|
|
Newtown Square |
|
PA |
|
|
2002 |
|
|
|
49,621 |
|
|
|
100.0 |
% |
|
|
1,018 |
|
|
|
21.77 |
|
479 Thomas Jones Way |
|
|
|
|
|
Exton |
|
PA |
|
|
1988 |
|
|
|
49,264 |
|
|
|
100.0 |
% |
|
|
795 |
|
|
|
16.90 |
|
17 Campus Boulevard |
|
|
|
|
|
Newtown Square |
|
PA |
|
|
2001 |
|
|
|
48,565 |
|
|
|
100.0 |
% |
|
|
1,224 |
|
|
|
28.48 |
|
11 Campus Boulevard |
|
|
|
|
|
Newtown Square |
|
PA |
|
|
1998 |
|
|
|
47,699 |
|
|
|
100.0 |
% |
|
|
1,009 |
|
|
|
23.62 |
|
456 Creamery Way |
|
|
|
|
|
Exton |
|
PA |
|
|
1987 |
|
|
|
47,604 |
|
|
|
100.0 |
% |
|
|
363 |
|
|
|
8.16 |
|
585 East Swedesford Road |
|
|
|
|
|
Wayne |
|
PA |
|
|
1998 |
|
|
|
43,683 |
|
|
|
100.0 |
% |
|
|
1,001 |
|
|
|
25.40 |
|
1100 Cassett Road |
|
|
|
|
|
Berwyn |
|
PA |
|
|
1997 |
|
|
|
43,480 |
|
|
|
100.0 |
% |
|
|
1,106 |
|
|
|
29.74 |
|
467 Creamery Way |
|
|
|
|
|
Exton |
|
PA |
|
|
1988 |
|
|
|
42,000 |
|
|
|
77.3 |
% |
|
|
422 |
|
|
|
16.70 |
|
1336 Enterprise Drive |
|
|
|
|
|
West Goshen |
|
PA |
|
|
1989 |
|
|
|
39,330 |
|
|
|
100.0 |
% |
|
|
796 |
|
|
|
23.04 |
|
600 Park Avenue |
|
|
|
|
|
King Of Prussia |
|
PA |
|
|
1964 |
|
|
|
39,000 |
|
|
|
100.0 |
% |
|
|
545 |
|
|
|
15.15 |
|
412 Creamery Way |
|
|
|
|
|
Exton |
|
PA |
|
|
1999 |
|
|
|
38,098 |
|
|
|
100.0 |
% |
|
|
769 |
|
|
|
22.06 |
|
18 Campus Boulevard |
|
|
|
|
|
Newtown Square |
|
PA |
|
|
1990 |
|
|
|
37,374 |
|
|
|
100.0 |
% |
|
|
601 |
|
|
|
22.67 |
|
457 Creamery Way |
|
|
|
|
|
Exton |
|
PA |
|
|
1990 |
|
|
|
36,019 |
|
|
|
100.0 |
% |
|
|
386 |
|
|
|
15.85 |
|
100 Arrandale Boulevard |
|
|
|
|
|
Exton |
|
PA |
|
|
1997 |
|
|
|
34,931 |
|
|
|
100.0 |
% |
|
|
456 |
|
|
|
15.71 |
|
300 Lindenwood Drive |
|
|
|
|
|
Malvern |
|
PA |
|
|
1991 |
|
|
|
33,000 |
|
|
|
100.0 |
% |
|
|
216 |
|
|
|
21.90 |
|
2260 Butler Pike |
|
|
|
|
|
Plymouth Meeting |
|
PA |
|
|
1984 |
|
|
|
31,892 |
|
|
|
100.0 |
% |
|
|
663 |
|
|
|
21.16 |
|
120 West Germantown Pike |
|
|
|
|
|
Plymouth Meeting |
|
PA |
|
|
1984 |
|
|
|
30,574 |
|
|
|
100.0 |
% |
|
|
459 |
|
|
|
21.38 |
|
468 Thomas Jones Way |
|
|
|
|
|
Exton |
|
PA |
|
|
1990 |
|
|
|
28,934 |
|
|
|
100.0 |
% |
|
|
550 |
|
|
|
18.50 |
|
1700 Paoli Pike |
|
|
|
|
|
Malvern |
|
PA |
|
|
2000 |
|
|
|
28,000 |
|
|
|
100.0 |
% |
|
|
505 |
|
|
|
22.22 |
|
140 West Germantown Pike |
|
|
|
|
|
Plymouth Meeting |
|
PA |
|
|
1984 |
|
|
|
25,357 |
|
|
|
89.6 |
% |
|
|
513 |
|
|
|
24.22 |
|
481 John Young Way |
|
|
|
|
|
Exton |
|
PA |
|
|
1997 |
|
|
|
19,275 |
|
|
|
100.0 |
% |
|
|
405 |
|
|
|
22.88 |
|
100 Lindenwood Drive |
|
|
|
|
|
Malvern |
|
PA |
|
|
1985 |
|
|
|
18,400 |
|
|
|
100.0 |
% |
|
|
319 |
|
|
|
20.38 |
|
748 Springdale Drive |
|
|
|
|
|
Exton |
|
PA |
|
|
1986 |
|
|
|
13,950 |
|
|
|
77.7 |
% |
|
|
197 |
|
|
|
19.52 |
|
200 Lindenwood Drive |
|
|
|
|
|
Malvern |
|
PA |
|
|
1984 |
|
|
|
12,600 |
|
|
|
65.3 |
% |
|
|
123 |
|
|
|
19.17 |
|
111 Arrandale Road |
|
|
|
|
|
Exton |
|
PA |
|
|
1996 |
|
|
|
10,479 |
|
|
|
100.0 |
% |
|
|
198 |
|
|
|
18.72 |
|
-29-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Base Rent |
|
|
Annualized |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net |
|
|
Percentage |
|
|
for the Twelve |
|
|
Rental Rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year |
|
|
Rentable |
|
|
Leased as of |
|
|
Months Ended |
|
|
as of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Built/ |
|
|
Square |
|
|
December 31, |
|
|
December 31, |
|
|
December 31, |
|
Property Name |
|
|
|
|
|
Location |
|
State |
|
|
Renovated |
|
|
Feet |
|
|
2007 (a) |
|
|
2007 (b) (000s) |
|
|
2007 (c) |
|
NEW JERSEY/DELAWARE SEGMENT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50 East State Street |
|
|
|
|
|
Trenton |
|
NJ |
|
|
1989 |
|
|
|
305,884 |
|
|
|
91.3 |
% |
|
|
5,240 |
|
|
|
30.51 |
|
10000 Midlantic Drive |
|
|
|
|
|
Mt. Laurel |
|
NJ |
|
|
1990 |
|
|
|
182,931 |
|
|
|
96.4 |
% |
|
|
2,519 |
|
|
|
24.41 |
|
1009 Lenox Drive |
|
|
|
|
|
Lawrenceville |
|
NJ |
|
|
1989 |
|
|
|
180,460 |
|
|
|
92.2 |
% |
|
|
4,248 |
|
|
|
29.66 |
|
33 West State Street |
|
|
|
|
|
Trenton |
|
NJ |
|
|
1988 |
|
|
|
167,774 |
|
|
|
99.6 |
% |
|
|
2,976 |
|
|
|
32.00 |
|
525 Lincoln Drive West |
|
|
|
|
|
Marlton |
|
NJ |
|
|
1986 |
|
|
|
165,956 |
|
|
|
95.1 |
% |
|
|
3,250 |
|
|
|
24.03 |
|
Main Street Plaza 1000 |
|
|
|
|
|
Voorhees |
|
NJ |
|
|
1988 |
|
|
|
162,364 |
|
|
|
93.9 |
% |
|
|
3,274 |
|
|
|
24.87 |
|
457 Haddonfield Road |
|
|
|
|
|
Cherry Hill |
|
NJ |
|
|
1990 |
|
|
|
121,737 |
|
|
|
100.0 |
% |
|
|
2,751 |
|
|
|
24.89 |
|
2000 Midlantic Drive |
|
|
|
|
|
Mt. Laurel |
|
NJ |
|
|
1989 |
|
|
|
121,658 |
|
|
|
100.0 |
% |
|
|
1,913 |
|
|
|
24.77 |
|
700 East Gate Drive |
|
|
|
|
|
Mt. Laurel |
|
NJ |
|
|
1984 |
|
|
|
119,272 |
|
|
|
93.5 |
% |
|
|
2,135 |
|
|
|
25.14 |
|
2000 Lenox Drive |
|
|
|
|
|
Lawrenceville |
|
NJ |
|
|
2000 |
|
|
|
119,114 |
|
|
|
100.0 |
% |
|
|
3,209 |
|
|
|
31.75 |
|
989 Lenox Drive |
|
|
|
|
|
Lawrenceville |
|
NJ |
|
|
1984 |
|
|
|
112,055 |
|
|
|
100.0 |
% |
|
|
2,626 |
|
|
|
29.50 |
|
993 Lenox Drive |
|
|
|
|
|
Lawrenceville |
|
NJ |
|
|
1985 |
|
|
|
111,124 |
|
|
|
100.0 |
% |
|
|
2,882 |
|
|
|
29.84 |
|
1000 Howard Boulevard |
|
|
|
|
|
Mt. Laurel |
|
NJ |
|
|
1988 |
|
|
|
105,312 |
|
|
|
100.0 |
% |
|
|
|
|
|
|
23.17 |
|
100 Brandywine Boulevard |
|
|
|
|
|
Newtown |
|
PA |
|
|
2002 |
|
|
|
102,000 |
|
|
|
100.0 |
% |
|
|
2,681 |
|
|
|
26.36 |
|
997 Lenox Drive |
|
|
|
|
|
Lawrenceville |
|
NJ |
|
|
1987 |
|
|
|
97,277 |
|
|
|
100.0 |
% |
|
|
2,390 |
|
|
|
27.98 |
|
1120 Executive Boulevard |
|
|
|
|
|
Mt. Laurel |
|
NJ |
|
|
1987 |
|
|
|
95,278 |
|
|
|
97.4 |
% |
|
|
1,485 |
|
|
|
22.28 |
|
15000 Midlantic Drive |
|
|
|
|
|
Mt. Laurel |
|
NJ |
|
|
1991 |
|
|
|
84,056 |
|
|
|
100.0 |
% |
|
|
1,215 |
|
|
|
20.69 |
|
220 Lake Drive East |
|
|
|
|
|
Cherry Hill |
|
NJ |
|
|
1988 |
|
|
|
78,509 |
|
|
|
87.3 |
% |
|
|
1,272 |
|
|
|
23.69 |
|
10 Lake Center Drive |
|
|
|
|
|
Marlton |
|
NJ |
|
|
1989 |
|
|
|
76,359 |
|
|
|
94.1 |
% |
|
|
1,339 |
|
|
|
21.41 |
|
200 Lake Drive East |
|
|
|
|
|
Cherry Hill |
|
NJ |
|
|
1989 |
|
|
|
76,352 |
|
|
|
88.1 |
% |
|
|
1,462 |
|
|
|
25.26 |
|
1400 Howard Boulevard |
|
|
|
|
|
Mt. Laurel |
|
NJ |
|
|
1995/2005 |
|
|
|
75,590 |
|
|
|
100.0 |
% |
|
|
1,431 |
|
|
|
23.60 |
|
Three Greentree Centre |
|
|
|
|
|
Marlton |
|
NJ |
|
|
1984 |
|
|
|
69,300 |
|
|
|
98.6 |
% |
|
|
1,360 |
|
|
|
24.07 |
|
9000 Midlantic Drive |
|
|
|
|
|
Mt. Laurel |
|
NJ |
|
|
1989 |
|
|
|
67,299 |
|
|
|
100.0 |
% |
|
|
836 |
|
|
|
25.27 |
|
6 East Clementon Road |
|
|
|
|
|
Gibbsboro |
|
NJ |
|
|
1980 |
|
|
|
66,236 |
|
|
|
87.1 |
% |
|
|
862 |
|
|
|
19.22 |
|
701 East Gate Drive |
|
|
|
|
|
Mt. Laurel |
|
NJ |
|
|
1986 |
|
|
|
61,794 |
|
|
|
93.5 |
% |
|
|
1,093 |
|
|
|
19.99 |
|
210 Lake Drive East |
|
|
|
|
|
Cherry Hill |
|
NJ |
|
|
1986 |
|
|
|
60,604 |
|
|
|
97.3 |
% |
|
|
1,218 |
|
|
|
23.38 |
|
308 Harper Drive |
|
|
|
|
|
Moorestown |
|
NJ |
|
|
1976 |
|
|
|
59,500 |
|
|
|
79.5 |
% |
|
|
935 |
|
|
|
23.47 |
|
305 Fellowship Drive |
|
|
|
|
|
Mt. Laurel |
|
NJ |
|
|
1980 |
|
|
|
56,824 |
|
|
|
100.0 |
% |
|
|
1,122 |
|
|
|
23.06 |
|
Two Greentree Centre |
|
|
|
|
|
Marlton |
|
NJ |
|
|
1983 |
|
|
|
56,075 |
|
|
|
64.6 |
% |
|
|
710 |
|
|
|
22.94 |
|
309 Fellowship Drive |
|
|
|
|
|
Mt. Laurel |
|
NJ |
|
|
1982 |
|
|
|
55,911 |
|
|
|
96.9 |
% |
|
|
1,194 |
|
|
|
26.82 |
|
One Greentree Centre |
|
|
|
|
|
Marlton |
|
NJ |
|
|
1982 |
|
|
|
55,838 |
|
|
|
95.4 |
% |
|
|
1,046 |
|
|
|
21.63 |
|
8000 Lincoln Drive |
|
|
|
|
|
Marlton |
|
NJ |
|
|
1997 |
|
|
|
54,923 |
|
|
|
100.0 |
% |
|
|
1,003 |
|
|
|
19.30 |
|
307 Fellowship Drive |
|
|
|
|
|
Mt. Laurel |
|
NJ |
|
|
1981 |
|
|
|
54,485 |
|
|
|
92.1 |
% |
|
|
1,020 |
|
|
|
25.28 |
|
303 Fellowship Drive |
|
|
|
|
|
Mt. Laurel |
|
NJ |
|
|
1979 |
|
|
|
53,768 |
|
|
|
90.6 |
% |
|
|
1,003 |
|
|
|
23.40 |
|
1000 Bishops Gate |
|
|
|
|
|
Mt. Laurel |
|
NJ |
|
|
2005 |
|
|
|
53,281 |
|
|
|
100.0 |
% |
|
|
1,208 |
|
|
|
23.51 |
|
1000 Lenox Drive |
|
|
|
|
|
Lawrenceville |
|
NJ |
|
|
1982 |
|
|
|
52,264 |
|
|
|
100.0 |
% |
|
|
1,329 |
|
|
|
29.60 |
|
2 Foster Avenue |
|
|
(f |
) |
|
Gibbsboro |
|
NJ |
|
|
1974 |
|
|
|
50,761 |
|
|
|
100.0 |
% |
|
|
167 |
|
|
|
5.39 |
|
4000 Midlantic Drive |
|
|
|
|
|
Mt. Laurel |
|
NJ |
|
|
1998 |
|
|
|
46,945 |
|
|
|
100.0 |
% |
|
|
657 |
|
|
|
23.22 |
|
Five Eves Drive |
|
|
|
|
|
Marlton |
|
NJ |
|
|
1986 |
|
|
|
45,564 |
|
|
|
100.0 |
% |
|
|
828 |
|
|
|
20.64 |
|
161 Gaither Drive |
|
|
|
|
|
Mount Laurel |
|
NJ |
|
|
1987 |
|
|
|
44,739 |
|
|
|
75.1 |
% |
|
|
484 |
|
|
|
21.62 |
|
Main Street Piazza |
|
|
|
|
|
Voorhees |
|
NJ |
|
|
1990 |
|
|
|
44,708 |
|
|
|
89.6 |
% |
|
|
695 |
|
|
|
20.56 |
|
30 Lake Center Drive |
|
|
|
|
|
Marlton |
|
NJ |
|
|
1986 |
|
|
|
40,287 |
|
|
|
100.0 |
% |
|
|
526 |
|
|
|
18.95 |
|
-30-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Base Rent |
|
|
Annualized |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net |
|
|
Percentage |
|
|
for the Twelve |
|
|
Rental Rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year |
|
Rentable |
|
|
Leased as of |
|
|
Months Ended |
|
|
as of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Built/ |
|
Square |
|
|
December 31, |
|
|
December 31, |
|
|
December 31, |
|
Property Name |
|
|
|
|
|
Location |
|
State |
|
|
Renovated |
|
Feet |
|
|
2007 (a) |
|
|
2007 (b) (000s) |
|
|
2007 (c) |
|
20 East Clementon Road Name |
|
|
|
|
|
Gibbsboro |
|
NJ |
|
|
1986 |
|
|
|
38,260 |
|
|
|
93.5 |
% |
|
|
540 |
|
|
|
16.13 |
|
Two Eves Drive |
|
|
|
|
|
Marlton |
|
NJ |
|
|
1987 |
|
|
|
37,532 |
|
|
|
88.3 |
% |
|
|
568 |
|
|
|
19.18 |
|
304 Harper Drive |
|
|
|
|
|
Moorestown |
|
NJ |
|
|
1975 |
|
|
|
32,978 |
|
|
|
100.0 |
% |
|
|
686 |
|
|
|
24.51 |
|
Main Street Promenade |
|
|
|
|
|
Voorhees |
|
NJ |
|
|
1988 |
|
|
|
31,445 |
|
|
|
86.8 |
% |
|
|
442 |
|
|
|
19.22 |
|
Four B Eves Drive |
|
|
|
|
|
Marlton |
|
NJ |
|
|
1987 |
|
|
|
27,011 |
|
|
|
99.4 |
% |
|
|
395 |
|
|
|
16.63 |
|
815 East Gate Drive |
|
|
|
|
|
Mt. Laurel |
|
NJ |
|
|
1986 |
|
|
|
25,500 |
|
|
|
100.0 |
% |
|
|
240 |
|
|
|
17.80 |
|
817 East Gate Drive |
|
|
|
|
|
Mt. Laurel |
|
NJ |
|
|
1986 |
|
|
|
25,351 |
|
|
|
78.5 |
% |
|
|
142 |
|
|
|
15.73 |
|
Four A Eves Drive |
|
|
|
|
|
Marlton |
|
NJ |
|
|
1987 |
|
|
|
24,687 |
|
|
|
100.0 |
% |
|
|
361 |
|
|
|
16.28 |
|
1 Foster Avenue |
|
|
(f |
) |
|
Gibbsboro |
|
NJ |
|
|
1972 |
|
|
|
24,255 |
|
|
|
100.0 |
% |
|
|
62 |
|
|
|
4.75 |
|
4 Foster Avenue |
|
|
(f |
) |
|
Gibbsboro |
|
NJ |
|
|
1974 |
|
|
|
23,372 |
|
|
|
100.0 |
% |
|
|
156 |
|
|
|
9.19 |
|
7 Foster Avenue |
|
|
|
|
|
Gibbsboro |
|
NJ |
|
|
1983 |
|
|
|
22,158 |
|
|
|
100.0 |
% |
|
|
387 |
|
|
|
22.23 |
|
10 Foster Avenue |
|
|
|
|
|
Gibbsboro |
|
NJ |
|
|
1983 |
|
|
|
18,651 |
|
|
|
92.9 |
% |
|
|
249 |
|
|
|
18.12 |
|
305 Harper Drive |
|
|
|
|
|
Moorestown |
|
NJ |
|
|
1979 |
|
|
|
14,980 |
|
|
|
100.0 |
% |
|
|
127 |
|
|
|
9.85 |
|
5 U.S. Avenue |
|
|
(f |
) |
|
Gibbsboro |
|
NJ |
|
|
1987 |
|
|
|
5,000 |
|
|
|
100.0 |
% |
|
|
24 |
|
|
|
4.40 |
|
50 East Clementon Road |
|
|
|
|
|
Gibbsboro |
|
NJ |
|
|
1986 |
|
|
|
3,080 |
|
|
|
100.0 |
% |
|
|
148 |
|
|
|
56.41 |
|
5 Foster Avenue |
|
|
|
|
|
Gibbsboro |
|
NJ |
|
|
1968 |
|
|
|
2,000 |
|
|
|
100.0 |
% |
|
|
7 |
|
|
|
|
|
920 North King Street |
|
|
|
|
|
Wilmington |
|
DE |
|
|
1989 |
|
|
|
203,328 |
|
|
|
96.7 |
% |
|
|
4,495 |
|
|
|
25.93 |
|
400 Commerce Drive |
|
|
|
|
|
Newark |
|
DE |
|
|
1997 |
|
|
|
154,086 |
|
|
|
100.0 |
% |
|
|
2,274 |
|
|
|
15.07 |
|
One Righter Parkway |
|
|
(d |
) |
|
Wilmington |
|
DE |
|
|
1989 |
|
|
|
104,761 |
|
|
|
98.4 |
% |
|
|
2,412 |
|
|
|
22.57 |
|
200 Commerce Drive |
|
|
|
|
|
Newark |
|
DE |
|
|
1998 |
|
|
|
68,034 |
|
|
|
100.0 |
% |
|
|
1,327 |
|
|
|
18.95 |
|
100 Commerce Drive |
|
|
|
|
|
Newark |
|
DE |
|
|
1989 |
|
|
|
62,787 |
|
|
|
99.8 |
% |
|
|
1,190 |
|
|
|
20.51 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOUTHWEST SEGMENT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1250 Capital of Texas Highway South |
|
|
|
|
|
Austin |
|
TX |
|
|
1984 |
|
|
|
269,759 |
|
|
|
93.3 |
% |
|
|
3,377 |
|
|
|
22.52 |
|
1301 Mopac Expressway |
|
|
|
|
|
Austin |
|
TX |
|
|
2001 |
|
|
|
222,815 |
|
|
|
100.0 |
% |
|
|
4,369 |
|
|
|
30.45 |
|
1501 South Mopac Expressway |
|
|
|
|
|
Austin |
|
TX |
|
|
1999 |
|
|
|
198,872 |
|
|
|
98.3 |
% |
|
|
2,782 |
|
|
|
25.24 |
|
1601 Mopac Expressway |
|
|
|
|
|
Austin |
|
TX |
|
|
2000 |
|
|
|
195,639 |
|
|
|
100.0 |
% |
|
|
3,032 |
|
|
|
25.48 |
|
1221 Mopac Expressway |
|
|
|
|
|
Austin |
|
TX |
|
|
2001 |
|
|
|
173,302 |
|
|
|
97.8 |
% |
|
|
3,440 |
|
|
|
31.52 |
|
1801 Mopac Expressway |
|
|
|
|
|
Austin |
|
TX |
|
|
1999 |
|
|
|
58,576 |
|
|
|
100.0 |
% |
|
|
989 |
|
|
|
29.86 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RICHMOND, VA SEGMENT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
600 East Main Street |
|
|
|
|
|
Richmond |
|
VA |
|
|
1986 |
|
|
|
420,575 |
|
|
|
92.7 |
% |
|
|
6,974 |
|
|
|
19.24 |
|
300 Arboretum Place |
|
|
|
|
|
Richmond |
|
VA |
|
|
1988 |
|
|
|
212,647 |
|
|
|
96.1 |
% |
|
|
3,801 |
|
|
|
19.55 |
|
6800 Paragon Place |
|
|
|
|
|
Richmond |
|
VA |
|
|
1986 |
|
|
|
145,127 |
|
|
|
95.7 |
% |
|
|
2,757 |
|
|
|
19.85 |
|
6802 Paragon Place |
|
|
|
|
|
Richmond |
|
VA |
|
|
1989 |
|
|
|
143,585 |
|
|
|
100.0 |
% |
|
|
2,282 |
|
|
|
16.23 |
|
7501 Boulders View Drive |
|
|
|
|
|
Richmond |
|
VA |
|
|
1990 |
|
|
|
136,942 |
|
|
|
91.5 |
% |
|
|
1,111 |
|
|
|
19.90 |
|
2511 Brittons Hill Road |
|
|
(f |
) |
|
Richmond |
|
VA |
|
|
1987 |
|
|
|
132,548 |
|
|
|
100.0 |
% |
|
|
674 |
|
|
|
6.40 |
|
2100-2116 West Laburnam Avenue |
|
|
|
|
|
Richmond |
|
VA |
|
|
1976 |
|
|
|
127,142 |
|
|
|
80.7 |
% |
|
|
1,824 |
|
|
|
15.49 |
|
1957 Westmoreland Street |
|
|
(f |
) |
|
Richmond |
|
VA |
|
|
1975 |
|
|
|
121,815 |
|
|
|
100.0 |
% |
|
|
1,102 |
|
|
|
8.44 |
|
7300 Beaufont Springs Drive |
|
|
|
|
|
Richmond |
|
VA |
|
|
2000 |
|
|
|
120,665 |
|
|
|
100.0 |
% |
|
|
1,148 |
|
|
|
19.96 |
|
1025 Boulders Parkway |
|
|
|
|
|
Richmond |
|
VA |
|
|
1994 |
|
|
|
93,143 |
|
|
|
97.9 |
% |
|
|
808 |
|
|
|
19.09 |
|
2201-2245 Tomlynn Street |
|
|
(f |
) |
|
Richmond |
|
VA |
|
|
1989 |
|
|
|
85,860 |
|
|
|
89.0 |
% |
|
|
509 |
|
|
|
7.92 |
|
7401 Beaufont Springs Drive |
|
|
|
|
|
Richmond |
|
VA |
|
|
1998 |
|
|
|
82,639 |
|
|
|
87.3 |
% |
|
|
631 |
|
|
|
19.42 |
|
7325 Beaufont Springs Drive |
|
|
|
|
|
Richmond |
|
VA |
|
|
1999 |
|
|
|
75,218 |
|
|
|
100.0 |
% |
|
|
682 |
|
|
|
19.81 |
|
6806 Paragon Place |
|
|
|
|
|
Richmond |
|
VA |
|
|
2007 |
|
|
|
74,604 |
|
|
|
95.9 |
% |
|
|
1,395 |
|
|
|
22.17 |
|
100 Gateway Centre Parkway |
|
|
|
|
|
Richmond |
|
VA |
|
|
2001 |
|
|
|
74,585 |
|
|
|
53.6 |
% |
|
|
12 |
|
|
|
8.50 |
|
9011 Arboretum Parkway |
|
|
|
|
|
Richmond |
|
VA |
|
|
1991 |
|
|
|
73,174 |
|
|
|
100.0 |
% |
|
|
1,140 |
|
|
|
17.88 |
|
-31-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Base Rent |
|
|
Annualized |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net |
|
|
Percentage |
|
|
for the Twelve |
|
|
Rental Rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year |
|
Rentable |
|
|
Leased as of |
|
|
Months Ended |
|
|
as of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Built/ |
|
Square |
|
|
December 31, |
|
|
December 31, |
|
|
December 31, |
|
Property Name |
|
|
|
|
|
Location |
|
State |
|
|
Renovated |
|
Feet |
|
|
2007 (a) |
|
|
2007 (b) (000s) |
|
|
2007 (c) |
|
4805 Lake Brooke Drive |
|
|
|
|
|
Glen Allen |
|
VA |
|
|
1996 |
|
|
|
61,249 |
|
|
|
100.0 |
% |
|
|
853 |
|
|
|
16.65 |
|
9100 Arboretum Parkway |
|
|
|
|
|
Richmond |
|
VA |
|
|
1988 |
|
|
|
57,917 |
|
|
|
96.3 |
% |
|
|
917 |
|
|
|
18.00 |
|
2812 Emerywood Parkway |
|
|
|
|
|
Henrico |
|
VA |
|
|
1980 |
|
|
|
56,984 |
|
|
|
100.0 |
% |
|
|
841 |
|
|
|
|
|
2277 Dabney Road |
|
|
(f |
) |
|
Richmond |
|
VA |
|
|
1986 |
|
|
|
50,400 |
|
|
|
100.0 |
% |
|
|
266 |
|
|
|
7.49 |
|
9200 Arboretum Parkway |
|
|
|
|
|
Richmond |
|
VA |
|
|
1988 |
|
|
|
49,542 |
|
|
|
71.4 |
% |
|
|
486 |
|
|
|
14.65 |
|
9210 Arboretum Parkway |
|
|
|
|
|
Richmond |
|
VA |
|
|
1988 |
|
|
|
48,012 |
|
|
|
100.0 |
% |
|
|
676 |
|
|
|
14.42 |
|
2212-2224 Tomlynn Street |
|
|
(f |
) |
|
Richmond |
|
VA |
|
|
1985 |
|
|
|
45,353 |
|
|
|
100.0 |
% |
|
|
220 |
|
|
|
7.21 |
|
2221-2245 Dabney Road |
|
|
(f |
) |
|
Richmond |
|
VA |
|
|
1994 |
|
|
|
45,250 |
|
|
|
86.2 |
% |
|
|
267 |
|
|
|
7.83 |
|
2251 Dabney Road |
|
|
(f |
) |
|
Richmond |
|
VA |
|
|
1983 |
|
|
|
42,000 |
|
|
|
100.0 |
% |
|
|
184 |
|
|
|
6.00 |
|
2161-2179 Tomlynn Street |
|
|
(f |
) |
|
Richmond |
|
VA |
|
|
1985 |
|
|
|
41,550 |
|
|
|
100.0 |
% |
|
|
256 |
|
|
|
7.86 |
|
2256 Dabney Road |
|
|
(f |
) |
|
Richmond |
|
VA |
|
|
1982 |
|
|
|
33,413 |
|
|
|
100.0 |
% |
|
|
218 |
|
|
|
8.02 |
|
2246 Dabney Road |
|
|
(f |
) |
|
Richmond |
|
VA |
|
|
1987 |
|
|
|
33,271 |
|
|
|
100.0 |
% |
|
|
285 |
|
|
|
10.64 |
|
2244 Dabney Road |
|
|
(f |
) |
|
Richmond |
|
VA |
|
|
1993 |
|
|
|
33,050 |
|
|
|
100.0 |
% |
|
|
298 |
|
|
|
10.86 |
|
9211 Arboretum Parkway |
|
|
|
|
|
Richmond |
|
VA |
|
|
1991 |
|
|
|
30,791 |
|
|
|
89.9 |
% |
|
|
376 |
|
|
|
14.23 |
|
2248 Dabney Road |
|
|
(f |
) |
|
Richmond |
|
VA |
|
|
1989 |
|
|
|
30,184 |
|
|
|
94.8 |
% |
|
|
163 |
|
|
|
8.48 |
|
2130-2146 Tomlynn Street |
|
|
(f |
) |
|
Richmond |
|
VA |
|
|
1988 |
|
|
|
29,700 |
|
|
|
100.0 |
% |
|
|
258 |
|
|
|
10.85 |
|
2120 Tomlyn Street |
|
|
(f |
) |
|
Richmond |
|
VA |
|
|
1986 |
|
|
|
23,850 |
|
|
|
100.0 |
% |
|
|
144 |
|
|
|
8.13 |
|
2240 Dabney Road |
|
|
(f |
) |
|
Richmond |
|
VA |
|
|
1984 |
|
|
|
15,389 |
|
|
|
100.0 |
% |
|
|
139 |
|
|
|
11.20 |
|
4364 South Alston Avenue |
|
|
|
|
|
Durham |
|
NC |
|
|
1985 |
|
|
|
56,601 |
|
|
|
100.0 |
% |
|
|
1,132 |
|
|
|
20.54 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUBTOTAL FULLY OWNED
PROPERTIES / WEIGHTED AVG. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,883,344 |
|
|
|
94.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1177 East Belt Line Road |
|
|
|
|
|
Coppell |
|
TX |
|
|
1998 |
|
|
|
150,000 |
|
|
|
100.0 |
% |
|
|
1,833 |
|
|
|
12.87 |
|
181 Washington Street |
|
|
|
|
|
Conshohocken |
|
PA |
|
|
1999 |
|
|
|
115,122 |
|
|
|
88.2 |
% |
|
|
3,020 |
|
|
|
28.95 |
|
200 Barr Harbour Drive |
|
|
|
|
|
Conshohocken |
|
PA |
|
|
1998 |
|
|
|
86,425 |
|
|
|
100.0 |
% |
|
|
2,098 |
|
|
|
33.08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUBTOTAL CONSOLIDATED JOINT VENTURES / WEIGHTED AVG. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
351,547 |
|
|
|
96.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300 Delaware Avenue |
|
|
|
|
|
Wilmington |
|
DE |
|
|
1989 |
|
|
|
298,071 |
|
|
|
78.0 |
% |
|
|
3,046 |
|
|
|
17.22 |
|
1333 Broadway |
|
|
|
|
|
Oakland |
|
CA |
|
|
1972 |
|
|
|
237,246 |
|
|
|
72.5 |
% |
|
|
4,555 |
|
|
|
26.33 |
|
One Radnor Corporate Center |
|
|
|
|
|
Radnor |
|
PA |
|
|
1998 |
|
|
|
185,166 |
|
|
|
65.9 |
% |
|
|
3,983 |
|
|
|
34.69 |
|
6600 Rockledge Drive |
|
|
(d |
) |
|
Bethesda |
|
MD |
|
|
1981 |
|
|
|
160,173 |
|
|
|
57.7 |
% |
|
|
1,192 |
|
|
|
|
|
1000 Atrium Way |
|
|
|
|
|
Mt. Laurel |
|
NJ |
|
|
1989 |
|
|
|
97,158 |
|
|
|
50.9 |
% |
|
|
847 |
|
|
|
20.14 |
|
Two Righter Parkway |
|
|
(d |
) |
|
Wilmington |
|
DE |
|
|
1987 |
|
|
|
95,514 |
|
|
|
67.4 |
% |
|
|
186 |
|
|
|
|
|
100 Lenox Drive |
|
|
|
|
|
Lawrenceville |
|
NJ |
|
|
1991 |
|
|
|
92,980 |
|
|
|
0.0 |
% |
|
|
|
|
|
|
|
|
SUBTOTAL REDEVELOPMENT PROPERTIES / WEIGHTED AVG. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,166,308 |
|
|
|
62.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-32-
|
|
|
(a) |
|
Calculated by dividing net rentable square feet included in leases signed on or before
December 31, 2007 at the property by the aggregate net rentable square feet of the property. |
|
(b) |
|
Total Base Rent for the twelve months ended December 31, 2007 represents base rents
received during such period, excluding tenant reimbursements, calculated in accordance with
generally accepted accounting principles (GAAP) determined on a straight-line basis. |
|
(c) |
|
Average Annualized Rental Rate is calculated as follows: (i) for office leases written on
a triple net basis, the sum of the annualized contracted base rental rates payable for all
space leased as of December 31, 2007 plus the 2007 budgeted operating expenses excluding
tenant electricity; and (ii) for office leases written on a full service basis, the annualized
contracted base rent payable for all space leased as of December 31, 2007. In both cases, the
annualized rental rate is divided by the total square footage leased as of December 31, 2007
without giving effect to free rent or scheduled rent increases that would be taken into
account under GAAP. |
|
(d) |
|
These properties are subject to a ground lease with a third party. |
|
(e) |
|
We hold our interest in Two Logan Square (100 North 18th Street) primarily through
our ownership of second and third mortgages that are secured by this property and that are
junior to a first mortgage with a third party. Our ownership of these two mortgages currently
provides us with all of the cash flows from Two Logan Square after the payment of operating
expenses and debt service on the first mortgage. |
|
(f) |
|
These properties are industrial facilities. |
The following table shows information regarding rental rates and lease expirations for the
Properties at December 31, 2007 and assumes that none of the tenants exercise renewal options or
termination rights, if any, at or prior to scheduled expirations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Final |
|
Percentage |
|
|
|
|
|
|
|
|
Rentable |
|
Final |
|
Annualized |
|
of Total Final |
|
|
|
|
Number of |
|
Square |
|
Annualized |
|
Base Rent |
|
Annualized |
|
|
Year of |
|
Leases |
|
Footage |
|
Base Rent |
|
Per Square |
|
Base Rent |
|
|
Lease |
|
Expiring |
|
Subject to |
|
Under |
|
Foot Under |
|
Under |
|
|
Expiration |
|
Within the |
|
Expiring |
|
Expiring |
|
Expiring |
|
Expiring |
|
Cumulative |
December 31, |
|
Year |
|
Leases |
|
Leases (a) |
|
Leases |
|
Leases |
|
Total |
2008 |
|
|
406 |
|
|
|
2,893,658 |
|
|
|
$57,606,004 |
|
|
|
$19.91 |
|
|
|
9.9 |
% |
|
|
9.9 |
% |
2009 |
|
|
353 |
|
|
|
3,384,497 |
|
|
|
76,409,406 |
|
|
|
22.58 |
|
|
|
13.1 |
% |
|
|
23.0 |
% |
2010 |
|
|
320 |
|
|
|
3,744,780 |
|
|
|
84,549,839 |
|
|
|
22.58 |
|
|
|
14.5 |
% |
|
|
37.5 |
% |
2011 |
|
|
242 |
|
|
|
3,371,149 |
|
|
|
77,695,968 |
|
|
|
23.05 |
|
|
|
13.3 |
% |
|
|
50.8 |
% |
2012 |
|
|
221 |
|
|
|
2,445,311 |
|
|
|
61,109,061 |
|
|
|
24.99 |
|
|
|
10.5 |
% |
|
|
61.2 |
% |
2013 |
|
|
92 |
|
|
|
1,429,059 |
|
|
|
33,865,946 |
|
|
|
23.70 |
|
|
|
5.8 |
% |
|
|
67.0 |
% |
2014 |
|
|
75 |
|
|
|
1,540,578 |
|
|
|
37,747,376 |
|
|
|
24.50 |
|
|
|
6.5 |
% |
|
|
73.5 |
% |
2015 |
|
|
37 |
|
|
|
1,393,137 |
|
|
|
33,395,384 |
|
|
|
23.97 |
|
|
|
5.7 |
% |
|
|
79.2 |
% |
2016 |
|
|
38 |
|
|
|
845,779 |
|
|
|
19,878,591 |
|
|
|
23.50 |
|
|
|
3.4 |
% |
|
|
82.6 |
% |
2017 |
|
|
44 |
|
|
|
1,405,511 |
|
|
|
40,341,917 |
|
|
|
28.70 |
|
|
|
6.9 |
% |
|
|
89.6 |
% |
2018 and thereafter |
|
|
43 |
|
|
|
2,157,325 |
|
|
|
60,950,626 |
|
|
|
28.25 |
|
|
|
10.4 |
% |
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,871 |
|
|
|
24,610,784 |
|
|
|
$583,550,118 |
|
|
|
$23.71 |
|
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Final Annualized Base Rent for each lease scheduled to expire represents the cash rental
rate of base rents, excluding tenant reimbursements, in the final month prior to expiration
multiplied by 12. Tenant reimbursements generally include payment of real estate taxes,
operating expenses and common area maintenance and utility charges. |
-33-
At December 31, 2007, the Properties were leased to 1,650 tenants that are engaged in a variety of
businesses. The following table sets forth information regarding leases at the Properties with the
20 tenants with the largest amounts leased based upon Annualized Base Rent as of December 31,
2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average |
|
Aggregate |
|
Percentage |
|
Annualized |
|
Percentage of Aggregate |
|
|
Number |
|
Remaining |
|
Leased |
|
of Aggregate |
|
Base |
|
Annualized |
|
|
of |
|
Lease Term |
|
Square |
|
Leased |
|
Rent (in |
|
Base |
Tenant Name (a) |
|
Leases |
|
in Months |
|
Feet |
|
Square Feet |
|
000) (b) |
|
Rent |
Kaiser Foundation Health Plan |
|
|
2 |
|
|
|
35 |
|
|
|
483,893 |
|
|
|
2.0 |
% |
|
$ |
15,395 |
|
|
|
3.0 |
% |
Northrop Grumman Corporation |
|
|
6 |
|
|
|
82 |
|
|
|
533,873 |
|
|
|
2.2 |
% |
|
|
14,677 |
|
|
|
2.9 |
% |
Pepper Hamilton LLP |
|
|
2 |
|
|
|
82 |
|
|
|
305,198 |
|
|
|
1.2 |
% |
|
|
9,981 |
|
|
|
2.0 |
% |
State of New Jersey |
|
|
7 |
|
|
|
152 |
|
|
|
441,488 |
|
|
|
1.8 |
% |
|
|
8,945 |
|
|
|
1.8 |
% |
Dechert LLP |
|
|
2 |
|
|
|
127 |
|
|
|
242,288 |
|
|
|
1.0 |
% |
|
|
7,833 |
|
|
|
1.5 |
% |
Wells Fargo Bank, N.A. |
|
|
6 |
|
|
|
34 |
|
|
|
376,721 |
|
|
|
1.5 |
% |
|
|
7,832 |
|
|
|
1.5 |
% |
Verizon |
|
|
6 |
|
|
|
34 |
|
|
|
410,035 |
|
|
|
1.7 |
% |
|
|
7,633 |
|
|
|
1.5 |
% |
Bearingpoint, Inc. |
|
|
3 |
|
|
|
74 |
|
|
|
269,431 |
|
|
|
1.1 |
% |
|
|
7,570 |
|
|
|
1.5 |
% |
Wachovia Corporation |
|
|
11 |
|
|
|
97 |
|
|
|
274,749 |
|
|
|
1.1 |
% |
|
|
7,430 |
|
|
|
1.5 |
% |
Lockheed Martin |
|
|
9 |
|
|
|
38 |
|
|
|
548,579 |
|
|
|
2.2 |
% |
|
|
7,193 |
|
|
|
1.4 |
% |
General Services Administration U.S. Govt. |
|
|
18 |
|
|
|
34 |
|
|
|
348,699 |
|
|
|
1.4 |
% |
|
|
6,663 |
|
|
|
1.3 |
% |
Computer Associates International |
|
|
2 |
|
|
|
35 |
|
|
|
255,572 |
|
|
|
1.0 |
% |
|
|
5,968 |
|
|
|
1.2 |
% |
AT&T |
|
|
7 |
|
|
|
15 |
|
|
|
270,732 |
|
|
|
1.1 |
% |
|
|
5,730 |
|
|
|
1.1 |
% |
Blank Rome LLP |
|
|
1 |
|
|
|
169 |
|
|
|
239,236 |
|
|
|
1.0 |
% |
|
|
4,548 |
|
|
|
0.9 |
% |
Marsh USA, Inc. |
|
|
3 |
|
|
|
18 |
|
|
|
154,797 |
|
|
|
0.6 |
% |
|
|
4,532 |
|
|
|
0.9 |
% |
Computer Sciences |
|
|
5 |
|
|
|
59 |
|
|
|
252,765 |
|
|
|
1.0 |
% |
|
|
4,341 |
|
|
|
0.9 |
% |
Omnicare Clinical Research |
|
|
1 |
|
|
|
31 |
|
|
|
150,000 |
|
|
|
0.6 |
% |
|
|
3,749 |
|
|
|
0.7 |
% |
Deltek Systems, Inc. |
|
|
3 |
|
|
|
51 |
|
|
|
116,172 |
|
|
|
0.5 |
% |
|
|
3,516 |
|
|
|
0.7 |
% |
Woodcock Washburn, LLC |
|
|
1 |
|
|
|
168 |
|
|
|
109,323 |
|
|
|
0.4 |
% |
|
|
3,498 |
|
|
|
0.7 |
% |
KPMG, LLP |
|
|
2 |
|
|
|
31 |
|
|
|
95,690 |
|
|
|
0.4 |
% |
|
|
3,466 |
|
|
|
0.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Total/Weighted Average |
|
|
97 |
|
|
|
67 |
|
|
|
5,879,241 |
|
|
|
23.8 |
% |
|
$ |
140,500 |
|
|
|
27.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
The identified tenant includes affiliates in certain circumstances. |
|
(b) |
|
Annualized Base Rent represents the monthly Base Rent, excluding tenant reimbursements, for
each lease in effect at December 31, 2007 multiplied by 12. Tenant reimbursements generally
include payment of real estate taxes, operating expenses and common area maintenance and
utility charges. |
Real Estate Ventures
As of December 31, 2007, we had an aggregate investment of approximately $71.6 million in 14
unconsolidated Real Estate Ventures (net of returns of investment). We formed these ventures with
unaffiliated third parties, or acquired them, to develop office properties or to acquire land in
anticipation of possible development of office properties or properties we owned. Ten of the Real
Estate Ventures own 44 office buildings that contain an aggregate of approximately 4.4 million net
rentable square feet, one Real Estate Venture developed a hotel property that contains 137 rooms,
one Real Estate Venture constructed and sold condominiums in Charlottesville, VA and two Real
Estate Ventures are in the planning stages of office developments in Conshohocken, PA and
Charlottesville, VA.
As of December 31, 2007, we also had investments in three Real Estate Ventures that are considered
to be variable interest entities under FIN 46R and of which we are the primary beneficiary. The
financial information for these three real estate ventures is consolidated into our financial
statements as of December 31, 2007.
We account for our remaining non-controlling interests in the Real Estate Ventures using the equity
method. Our non-controlling ownership interests range from 5% to 50%, subject to specified
priority allocations in certain of the Real Estate Ventures. Our investments, initially recorded
at cost, are subsequently adjusted for our share of the Real Estate Ventures income or loss and
contributions to capital and distributions.
As of
December 31, 2007, we had guaranteed repayment of approximately $0.3 million of loans for the
Real Estate Ventures. We also provide customary environmental
indemnities and completion guarantees in
-34-
connection with construction and permanent financing both for our own account and on
behalf of the Real Estate Ventures.
Item 3. Legal Proceedings
We are involved from time to time in litigation, including tenant disputes and disputes arising out
of agreements to purchase or sell properties. Given the nature of our business activities, we
generally consider these lawsuits to be routine to the conduct of our business. Because of the
very nature of litigation, including its adversarial nature and the jury system, we cannot predict
the result of any lawsuit.
Lawsuits have been brought against owners and managers of multifamily and office properties that
assert claims of personal injury and property damage caused by the presence of mold in the
properties. We have been named as a defendant in two lawsuits in the State of New Jersey that
allege personal injury as a result of the presence of mold. In 2005, one of these lawsuits was
dismissed by way of summary judgment with prejudice. The plaintiffs seek unspecified damages in
the remaining lawsuit. We referred this lawsuit to our environmental insurance carrier and, as of
the date of this Form 10-K, the insurance carrier is continuing to defend this claim.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of our shareholders during the fourth quarter of the year ended
December 31, 2007.
PART II
Item 5. Market for Registrants Common Equity and Related Shareholder Matters and Issuer Purchases
of Equity Securities
Our common shares are traded on the New York Stock Exchange (NYSE) under the symbol BDN. There
is no established trading market for the Class A units of the Operating Partnership. On February
22, 2008, there were 702 holders of record of our common
shares and 49 holders of record of
the Class A units (in addition to Brandywine Realty Trust). On February 22, 2008, the last
reported sales price of the common shares on the NYSE was $16.71. The following table sets forth
the quarterly high and low closing sales price per common share reported on the NYSE for the
indicated periods and the distributions paid by us with respect to each such period.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share Price |
|
Share Price |
|
Distributions |
|
|
High |
|
Low |
|
Declared For Quarter |
First Quarter 2006 |
|
$ |
31.90 |
|
|
$ |
28.94 |
|
|
$ |
0.44 |
|
Second Quarter 2006 |
|
$ |
32.17 |
|
|
$ |
27.65 |
|
|
$ |
0.44 |
|
Third Quarter 2006 |
|
$ |
33.83 |
|
|
$ |
30.98 |
|
|
$ |
0.44 |
|
Fourth Quarter 2006 |
|
$ |
35.37 |
|
|
$ |
31.55 |
|
|
$ |
0.44 |
|
First Quarter 2007 |
|
$ |
36.14 |
|
|
$ |
32.04 |
|
|
$ |
0.44 |
|
Second Quarter 2007 |
|
$ |
33.79 |
|
|
$ |
28.43 |
|
|
$ |
0.44 |
|
Third Quarter 2007 |
|
$ |
28.58 |
|
|
$ |
23.35 |
|
|
$ |
0.44 |
|
Fourth Quarter 2007 |
|
$ |
26.86 |
|
|
$ |
17.78 |
|
|
$ |
0.44 |
|
For each quarter during 2007 and 2006, the Operating Partnership paid a cash distribution to
holders of its Class A units equal in amount to the dividends paid on the Companys common shares
for such quarter.
In connection with our January 5, 2006 merger with Prentiss Properties Trust, we declared a
dividend of $0.02 per common share on December 21, 2005, paid on January 17, 2006 to shareholders
of record on January 4, 2006.
-35-
In order to maintain the status of Brandywine Realty Trust as a REIT, we must make annual
distributions to shareholders of at least 90% of our taxable income (not including net capital
gains). Future distributions will be declared at the discretion of our Board of Trustees and will
depend on our actual cash flow, our financial condition, capital requirements, the annual
distribution requirements under the REIT provisions of the Internal Revenue Code of 1986 and such
other factors as our Board deems relevant.
The following table provides information as of December 31, 2007 with respect to compensation plans
under which our equity securities are authorized for issuance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) |
|
|
|
|
|
|
|
|
|
Number of securities |
|
|
|
(a) |
|
|
(b) |
|
|
remaining available for |
|
|
|
Number of securities to be |
|
|
Weighted-average |
|
|
future issuance under |
|
|
|
issued upon exercise of |
|
|
exercise price of |
|
|
equity compensation plans |
|
|
|
outstanding options, |
|
|
outstanding options, |
|
|
(excluding securities |
|
Plan category |
|
warrants and rights |
|
|
warrants and rights |
|
|
reflected in column (a)) |
|
Equity compensation
plans approved by
security holders
(1) |
|
|
1,070,099 |
|
|
$ |
26.13 |
(2) |
|
|
4,168,364 |
|
Equity compensation
plans not approved
by security holders |
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
1,070,099 |
|
|
$ |
26.13 |
|
|
|
4,168,364 |
|
|
|
|
(1) |
|
Relates to our Amended and Restated 1997 Long-Term Incentive Plan. In May 2007, the
Companys shareholders approved an amendment to the Companys Amended and Restated 1997
Long-Term Incentive Plan (the 1997 Plan). The amendment provided for the merger of the
Prentiss Properties Trust 2005 Share Incentive Plan (the Prentiss 2005 Plan) with and into
the 1997 Plan, thereby transferring into the 1997 Plan all of the shares that remained
available for award under the Prentiss 2005 Plan. The Company had previously assumed the
Prentiss 2005 Plan, together with other Prentiss incentive plans, as part of the Companys
January 2006 acquisition of Prentiss Properties Trust (Prentiss). The 1997 Plan reserves
500,000 common shares solely for awards under options and share appreciation rights that have
an exercise or strike price at least equal to the market price of the common shares on the
date of award and the remaining shares under the 1997 Plan are available for any type of
award, including restricted share and performance share awards and options. Incentive stock
options may not be granted with an exercise price that is lower than the market price of the
common shares on the grant date. All options awarded by the Company to date are non-qualified
stock options that generally had an initial vesting schedule that ranged from two to ten
years. |
|
(2) |
|
Weighted-average exercise price of outstanding options; excludes restricted common shares. |
-36-
|
|
|
|
|
The following table presents information related to our share repurchases: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchased as Part of |
|
Shares that May Yet Be |
|
|
Total Number of |
|
Average Price Paid |
|
Publicly Announced |
|
Purchased Under the |
Period |
|
Shares Purchased |
|
per Share |
|
Plans or Programs |
|
Plans or Programs (a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
January 2007 |
|
|
39,957 |
(b) |
|
$ |
32.65 |
|
|
|
|
|
|
|
2,319,800 |
|
February 2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,319,800 |
|
March 2007 |
|
|
1,301,000 |
|
|
|
34.34 |
|
|
|
1,301,000 |
|
|
|
1,018,800 |
|
April 2007 |
|
|
265,000 |
|
|
|
33.38 |
|
|
|
265,000 |
|
|
|
753,800 |
|
May 2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
753,800 |
|
June 2007 |
|
|
1,128 |
(b) |
|
|
29.47 |
|
|
|
|
|
|
|
753,800 |
|
July 2007 |
|
|
214,600 |
|
|
|
27.50 |
|
|
|
214,600 |
|
|
|
539,200 |
|
August 2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
539,200 |
|
September 2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
539,200 |
|
October 2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
539,200 |
|
November 2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
539,200 |
|
December 2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
539,200 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
1,821,685 |
|
|
|
|
|
|
|
1,780,600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
On May 2, 2006, our Board of Trustees authorized an increase in the number of common shares that we may
repurchase, whether in open-market or privately negotiated
transactions. The Board authorized us to purchase up
to an aggregate of 3,500,000 common shares (inclusive of remaining share repurchase availability under the Boards
prior authorization from September 2001). There is no expiration date on the share repurchase program and the Board
can cancel this program at any time. |
|
(b) |
|
Represents Common Shares cancelled by the Company upon vesting of restricted Common Shares previously
awarded to Company employees in satisfaction of tax withholding obligations. |
-37-
SHARE PERFORMANCE GRAPH
The Securities and Exchange Commission requires us to present a chart comparing the cumulative
total shareholder return on the common shares with the cumulative total shareholder return of (i) a
broad equity index and (ii) a published industry or peer group index. The following chart compares
the cumulative total shareholder return for the common shares with the cumulative shareholder
return of companies on (i) the S&P 500 Index (ii) the Russell 2000 and (iii) the NAREIT ALL-REIT
Total Return Index as provided by NAREIT for the period beginning December 31, 2002 and ending
December 31, 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period Ending |
|
Index |
|
12/31/02 |
|
|
12/31/03 |
|
|
12/31/04 |
|
|
12/31/05 |
|
|
12/31/06 |
|
12/31/07 |
|
|
Brandywine Realty Trust |
|
|
100.00 |
|
|
|
131.76 |
|
|
|
153.70 |
|
|
|
155.32 |
|
|
|
192.74 |
|
|
|
110.30 |
|
S&P 500 |
|
|
100.00 |
|
|
|
128.68 |
|
|
|
142.69 |
|
|
|
149.70 |
|
|
|
173.34 |
|
|
|
182.86 |
|
Russell 2000 |
|
|
100.00 |
|
|
|
147.25 |
|
|
|
174.24 |
|
|
|
182.18 |
|
|
|
215.64 |
|
|
|
212.26 |
|
NAREIT All Equity REIT Index |
|
|
100.00 |
|
|
|
137.13 |
|
|
|
180.44 |
|
|
|
202.38 |
|
|
|
273.34 |
|
|
|
230.45 |
|
-38-
Item 6. Selected Financial Data
The following table sets forth selected financial and operating data and should be read in
conjunction with the financial statements and related notes and Managements Discussion and
Analysis of Financial Condition and Results of Operations included in this Annual Report on Form
10-K. The selected data have been revised to reflect the reclassification of losses from early
extinguishments of debt, in accordance with SFAS No. 145, and the disposition of all properties
since January 1, 2003, which have been reclassified as discontinued operations for all periods
presented in accordance with SFAS No. 144.
Brandywine Realty Trust
(in thousands, except per common share data and number of properties)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
2007 |
|
2006 |
|
2005 |
|
2004 |
|
2003 |
|
|
|
Operating Results |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
$ |
683,972 |
|
|
$ |
630,285 |
|
|
$ |
364,435 |
|
|
$ |
299,618 |
|
|
$ |
274,809 |
|
Income (loss) from continuing operations |
|
|
28,761 |
|
|
|
(18,729 |
) |
|
|
32,778 |
|
|
|
49,559 |
|
|
|
65,424 |
|
Net income |
|
|
56,453 |
|
|
|
10,482 |
|
|
|
42,767 |
|
|
|
60,301 |
|
|
|
86,678 |
|
Income allocated to Common Shares |
|
|
48,461 |
|
|
|
2,490 |
|
|
|
34,775 |
|
|
|
55,081 |
|
|
|
54,174 |
|
Income from continuing operations per Common Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.24 |
|
|
$ |
(0.30 |
) |
|
$ |
0.44 |
|
|
$ |
0.94 |
|
|
$ |
0.85 |
|
Diluted |
|
$ |
0.24 |
|
|
$ |
(0.30 |
) |
|
$ |
0.44 |
|
|
$ |
0.93 |
|
|
$ |
0.85 |
|
Earnings per Common Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.56 |
|
|
$ |
0.03 |
|
|
$ |
0.62 |
|
|
$ |
1.15 |
|
|
$ |
1.43 |
|
Diluted |
|
$ |
0.55 |
|
|
$ |
0.03 |
|
|
$ |
0.62 |
|
|
$ |
1.15 |
|
|
$ |
1.43 |
|
Cash distributions declared per Common Share |
|
$ |
1.76 |
|
|
$ |
1.76 |
|
|
$ |
1.78 |
(a) |
|
$ |
1.76 |
|
|
$ |
1.76 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate investments, net of
accumulated depreciation |
|
$ |
4,656,925 |
|
|
$ |
4,739,726 |
|
|
$ |
2,541,486 |
|
|
$ |
2,363,865 |
|
|
$ |
1,695,355 |
|
Total assets |
|
|
5,214,099 |
|
|
|
5,509,018 |
|
|
|
2,805,745 |
|
|
|
2,633,984 |
|
|
|
1,855,776 |
|
Total indebtedness |
|
|
3,100,969 |
|
|
|
3,152,230 |
|
|
|
1,521,384 |
|
|
|
1,306,669 |
|
|
|
867,659 |
|
Total liabilities |
|
|
3,386,745 |
|
|
|
3,487,101 |
|
|
|
1,663,022 |
|
|
|
1,444,116 |
|
|
|
950,431 |
|
Minority interest |
|
|
84,119 |
|
|
|
123,991 |
|
|
|
37,859 |
|
|
|
42,866 |
|
|
|
133,488 |
|
Convertible preferred shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,500 |
|
Beneficiaries equity |
|
|
1,743,235 |
|
|
|
1,897,926 |
|
|
|
1,104,864 |
|
|
|
1,147,002 |
|
|
|
771,857 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating activities |
|
|
219,817 |
|
|
|
241,566 |
|
|
|
125,147 |
|
|
|
152,890 |
|
|
|
118,793 |
|
Investing activities |
|
|
44,473 |
|
|
|
(915,794 |
) |
|
|
(252,417 |
) |
|
|
(682,652 |
) |
|
|
(34,068 |
) |
Financing activities |
|
|
(284,069 |
) |
|
|
692,433 |
|
|
|
119,098 |
|
|
|
536,556 |
|
|
|
(102,974 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property
Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of properties owned at year end |
|
|
257 |
|
|
|
313 |
|
|
|
251 |
|
|
|
246 |
|
|
|
234 |
|
Net rentable square feet owned at year end |
|
|
28,888 |
|
|
|
31,764 |
|
|
|
19,600 |
|
|
|
19,150 |
|
|
|
15,733 |
|
|
|
|
(a) |
|
Includes $0.02 special distribution declared in December 2005 for shareholders of record for the period
January 1, 2006 through January 4, 2006 (pre-Prentiss merger period). |
-39-
Brandywine
Operating Partnership, L.P.
(in thousands, except per unit data and number of properties)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
2007 |
|
2006 |
|
2005 |
|
2004 |
|
2003 |
|
|
|
Operating Results |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
$ |
683,972 |
|
|
$ |
630,285 |
|
|
$ |
364,435 |
|
|
$ |
299,618 |
|
|
$ |
274,809 |
|
Income (loss) from continuing operations |
|
|
29,672 |
|
|
|
(19,975 |
) |
|
|
33,667 |
|
|
|
51,930 |
|
|
|
74,367 |
|
Net income |
|
|
58,599 |
|
|
|
10,626 |
|
|
|
44,013 |
|
|
|
63,081 |
|
|
|
96,467 |
|
Income from
continuing operations per Common Partnership Unit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.24 |
|
|
$ |
(0.30 |
) |
|
$ |
0.44 |
|
|
$ |
0.93 |
|
|
$ |
0.87 |
|
Diluted |
|
$ |
0.24 |
|
|
$ |
(0.30 |
) |
|
$ |
0.44 |
|
|
$ |
0.93 |
|
|
$ |
0.87 |
|
Earnings per Common Partnership Units |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.56 |
|
|
$ |
0.03 |
|
|
$ |
0.62 |
|
|
$ |
1.15 |
|
|
$ |
1.43 |
|
Diluted |
|
$ |
0.55 |
|
|
$ |
0.03 |
|
|
$ |
0.62 |
|
|
$ |
1.14 |
|
|
$ |
1.43 |
|
Cash
distributions declared per Common Partnership Unit |
|
$ |
1.76 |
|
|
$ |
1.76 |
|
|
$ |
1.78 |
(a) |
|
$ |
1.76 |
|
|
$ |
1.76 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate investments, net of
accumulated depreciation |
|
$ |
4,656,925 |
|
|
|
4,739,726 |
|
|
|
2,541,486 |
|
|
|
2,363,865 |
|
|
|
1,695,355 |
|
Total assets |
|
|
5,214,099 |
|
|
|
5,509,018 |
|
|
|
2,805,745 |
|
|
|
2,633,984 |
|
|
|
1,855,776 |
|
Total indebtedness |
|
|
3,100,969 |
|
|
|
3,152,230 |
|
|
|
1,521,384 |
|
|
|
1,306,669 |
|
|
|
867,659 |
|
Total liabilities |
|
|
3,386,745 |
|
|
|
3,487,101 |
|
|
|
1,662,967 |
|
|
|
1,443,934 |
|
|
|
951,484 |
|
Series B Preferred Units |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
97,500 |
|
Redeemable limited partnership units |
|
|
68,819 |
|
|
|
131,711 |
|
|
|
54,300 |
|
|
|
60,586 |
|
|
|
46,505 |
|
Partners equity |
|
|
1,758,535 |
|
|
|
1,855,770 |
|
|
|
1,088,478 |
|
|
|
1,129,464 |
|
|
|
760,287 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating activities |
|
|
219,817 |
|
|
|
241,566 |
|
|
|
125,147 |
|
|
|
152,890 |
|
|
|
118,793 |
|
Investing activities |
|
|
44,473 |
|
|
|
(915,794 |
) |
|
|
(252,417 |
) |
|
|
(682,652 |
) |
|
|
(34,068 |
) |
Financing activities |
|
|
(284,069 |
) |
|
|
692,433 |
|
|
|
119,098 |
|
|
|
536,556 |
|
|
|
(102,974 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of properties owned at year end |
|
|
257 |
|
|
|
313 |
|
|
|
251 |
|
|
|
246 |
|
|
|
234 |
|
Net rentable square feet owned at year end |
|
|
28,888 |
|
|
|
31,764 |
|
|
|
19,600 |
|
|
|
19,150 |
|
|
|
15,733 |
|
|
|
|
(a) |
|
Includes $0.02 special distribution declared in December 2005 for
unitholders of record for the period
January 1, 2006 through January 4, 2006 (pre-Prentiss merger period). |
-40-
Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the consolidated financial statements
appearing elsewhere herein and is based primarily on our consolidated financial statements for the
years ended December 31, 2007, 2006 and 2005.
OVERVIEW
As of December 31, 2007 we managed our portfolio within seven geographic segments: (1)
Pennsylvania, (2) New Jersey/Delaware, (3) Richmond, Virginia, (4) CaliforniaNorth, (5)
CaliforniaSouth, (6) Metropolitan Washington, D.C. and (7) Southwest. The Pennsylvania segment
includes properties in Chester, Delaware, Berks, Bucks, Cumberland, Dauphin, Lehigh and Montgomery
counties in the Philadelphia suburbs and the City fo Philadelphia in Pennsylvania. The New Jersey/Delaware segment includes
properties in counties in the southern and central part of New Jersey including Burlington, Camden
and Mercer counties and the state of Delaware. The Richmond, Virginia segment includes properties
primarily in Albemarle, Chesterfield and Henrico counties, the City of Richmond and Durham, North
Carolina. The CaliforniaNorth segment includes properties in the City of Oakland and Concord.
The CaliforniaSouth segment includes properties in the City of
Carlsbad and Rancho Bernardo. The
Metropolitan Washington, D.C. segment includes properties in Northern Virginia and suburban
Maryland. The Southwest segment includes properties in Travis county of Texas.
We receive income primarily from rental revenue (including tenant reimbursements) from our
properties and, to a lesser extent, from the management of properties owned by third parties and
from investments in the Real Estate Ventures.
Our financial performance is dependent upon the demand for office, industrial and other commercial
space in our markets and prevailing interest rates.
As we seek to increase revenue through our operating activities, our management also seeks to
minimize operating risks, including (i) tenant rollover risk, (ii) tenant credit risk and (iii)
development risk.
Tenant Rollover Risk:
We are subject to the risk that tenant leases, upon expiration, are not renewed, that space may not
be relet, or that the terms of renewal or reletting (including the cost of renovations) may be less
favorable to us than the current lease terms. Leases accounting for approximately 9.9% of our
aggregate final annualized base rents as of December 31, 2007 (representing approximately 10.0% of
the net rentable square feet of the Properties) expire without penalty in 2008. We maintain an
active dialogue with our tenants in an effort to maximize lease renewals. Our retention rate for
leases that were scheduled to expire in 2007 was 72.8%. If we are unable to renew leases or relet
space under expiring leases, at anticipated rental rates, or if tenants terminate their leases
early, our cash flow would be adversely impacted.
Tenant Credit Risk:
In the event of a tenant default, we may experience delays in enforcing our rights as a landlord
and may incur substantial costs in protecting our investment. Our management regularly evaluates
our accounts receivable reserve policy in light of our tenant base and general and local economic
conditions. Our accounts receivable allowance was $10.2 million or 9.2% of total receivables
(including accrued rent receivable) as of December 31, 2007 compared to $9.3 million or 9.0% of
total receivables (including accrued rent receivable) as of December 31, 2006.
Development Risk:
As of December 31, 2007, we had in development or redevelopment 14 sites aggregating approximately
3.7 million square feet. We estimate the total cost of these projects to be $718.3 million and we
had incurred
$425.1 million of these costs as of December 31, 2007. We
are actively marketing space at these
projects to prospective tenants but can provide no assurance as to the timing or terms of any
leases of space
-41-
at these projects. As of December 31, 2007, we owned approximately 417 acres of
undeveloped land. Risks associated with development of this land include construction cost
increases or overruns and construction delays, insufficient occupancy rates, building moratoriums
and inability to obtain necessary zoning, land-use, building, occupancy and other required
governmental approvals.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Managements Discussion and Analysis of Financial Condition and Results of Operations discusses our
consolidated financial statements, which have been prepared in accordance with accounting
principles generally accepted in the United States of America. The preparation of financial
statements in conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the reported amounts of
assets, liabilities, and the disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses for the reporting periods.
Certain accounting policies are considered to be critical accounting policies, as they require
management to make assumptions about matters that are highly uncertain at the time the estimate is
made and changes in the accounting estimate are reasonably likely to occur from period to period.
Management believes the following critical accounting policies reflect our more significant
judgments and estimates used in the preparation of our consolidated financial statements. For a
summary of all of our significant accounting policies, see Note 2 to our consolidated financial
statements included elsewhere in this report.
Revenue Recognition
We recognize rental revenue on the straight-line basis from the later of the date of the
commencement of the lease or the date of acquisition of the property subject to existing leases,
which averages minimum rents over the terms of the leases. Certain lease agreements contain
provisions that require tenants to reimburse a pro rata share of real estate taxes and common area
maintenance costs.
Real Estate Investments
Real estate investments are carried at cost. We record acquisition of real estate investments
under the purchase method of accounting and allocate the purchase price to land, buildings and
intangible assets on a relative fair value basis. Depreciation is computed using the straight-line
method over the useful lives of buildings and capital improvements (5 to 55 years) and over the
shorter of the lease term or the life of the asset for tenant improvements. Direct construction
costs related to the development of Properties and land holdings are capitalized as incurred. We
expense routine repair and maintenance expenditures and capitalize those items that extend the
useful lives of the underlying assets.
Real Estate Ventures
When we obtain an economic interest in an entity, we evaluate the entity to determine if the entity
is deemed a variable interest entity (VIE), and if we are deemed to be the primary beneficiary,
in accordance with FASB Interpretation No.46R, Consolidation of Variable Interest Entities (FIN
46R). If the entity is not deemed to be a VIE, and we serve as the general partner within the
entity, we evaluate to determine if our presumed control as the general partner is overcome by the
kick out rights and other substantive participating rights of the limited partners in accordance
with EITF 04-05, Determining Whether a General Partner, or the General Partners as a Group,
Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights
(EITF 04-05).
We consolidate (i) entities that are VIEs and of which we are deemed to be the primary beneficiary
and (ii) entities that are non-VIEs which we control. Entities that we account for under the
equity method (i.e., at cost, increased or decreased by our share of earnings or losses, less
distributions) include (i) entities that are VIEs and of which we are not deemed the primary
beneficiary and (ii) entities that are non-VIEs which we do not control, but over which we have the
ability to exercise significant influence. We will reconsider our determination of whether an
entity is a VIE and who the primary beneficiary is if events occur that are likely to cause a
change in the original determinations.
-42-
Impairment of Long-Lived Assets
Our management reviews investments in real estate and real estate ventures for impairment if facts
and circumstances indicate that the carrying value of such assets may not be recoverable.
Measurement of any impairment loss is based on the fair value of the asset, determined using
customary valuation techniques, such as the present value of expected future cash flows.
In accordance with SFAS No. 144 (SFAS 144), Accounting for the Impairment or Disposal of
Long-Lived Assets, long-lived assets, such as real estate investments and purchased intangibles
subject to amortization, are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset to estimated
undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an
asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by
which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed
of would be separately presented in the balance sheet and reported at the lower of the carrying
amount or fair value less costs to sell, and are no longer depreciated. The assets and liabilities
relating to assets classified as held-for-sale would be presented separately in the appropriate
asset and liability sections of the balance sheet.
Income Taxes
The Company has elected to be treated as a REIT under Sections 856 through 860 of the Internal
Revenue Code of 1986, as amended (the Code). In addition, the Company has several subsidiary
REITs. In order to maintain their qualification as a REIT, the Company and each of its REIT
subsidiaries are required to, among other things, distribute at least 90% of their REIT taxable
income to its stockholders and meet certain tests regarding the nature of its income and assets.
As REITs, the Company and its REIT subsidiaries are not subject to federal income tax with respect
to the portion of its income that meets certain criteria and is distributed annually to the
stockholders. Accordingly, no provision for federal income taxes is included in the accompanying
consolidated financial statements with respect to the operations of these REITs. The Company and
its REIT subsidiaries intend to continue to operate in a manner that allows them to continue to
meet the requirements for taxation as REITs. Many of these requirements, however, are highly
technical and complex. If the Company or one of its REIT subsidiaries were to fail to meet these
requirements, the Company would be subject to federal income tax. The Company is subject to
certain state and local taxes. Provision for such taxes has been included in general and
administrative expenses in the Companys Consolidated Statements of Operations and Comprehensive
Income.
The Company may elect to treat one or more of its subsidiaries as a taxable REIT subsidiary
(TRS). In general, a TRS of the Company may perform additional services for our tenants and
generally may engage in any real estate or non-real estate related business (except for the
operation or management of health care facilities or lodging facilities or the provision to any
person, under a franchise, license or otherwise, of rights to any brand name under which any
lodging facility or health care facility is operated). A TRS is subject to corporate federal
income tax. The Company has elected to treat certain of its corporate subsidiaries as TRSs, these
entities provide third party property management services and certain services to tenants that
could not otherwise be provided. At December 31, 2007, our TRSs had tax net operating loss (NOL)
carryforward of approximately $2.5 million, expiring from 2013 to 2020. We have ascribed a full
valuation allowance to our net deferred tax assets.
We adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income
Taxes, an Interpretation of FASB Statement No. 109 (FIN 48) on January 1, 2007. As a result of
the implementation of FIN 48, we recognized no material adjustments regarding our tax accounting
treatment. We expect to recognize interest and penalties, to the extent incurred related to
uncertain tax positions, if any, as income tax expense, which would be included in general and
administrative expense.
Allowance for Doubtful Accounts
We maintain an allowance for doubtful accounts that represents an estimate of losses that may be
incurred from the inability of tenants to make required payments. The allowance is an estimate
based on two
calculations that are combined to determine the total amount reserved. First, we evaluate specific
accounts
-43-
where we have determined that a tenant may have an inability to meet its financial
obligations. In these situations, we use our judgment, based on the facts and circumstances, and
records a specific reserve for that tenant against amounts due to reduce the receivable to the
amount that we expect to collect. These reserves are re-evaluated and adjusted as additional
information becomes available. Second, a reserve is established for all tenants based on a range
of percentages applied to receivable aging categories. If the financial condition of our tenants
were to deteriorate, additional allowances may be required.
Deferred Costs
We incur direct costs related to the financing, development and leasing of our properties.
Management exercises judgment in determining whether such costs meet the criteria for
capitalization or must be expensed. Capitalized financing fees are amortized over the related loan
term and capitalized leasing costs are amortized over the related lease term. Management
re-evaluates the remaining useful lives of leasing costs as the creditworthiness of our tenants and
economic and market conditions change.
Purchase Price Allocation
We allocate the purchase price of properties to net tangible and identified intangible assets
acquired based on fair values. Above-market and below-market in-place lease values for acquired
properties are recorded based on the present value (using an interest rate which reflects the risks
associated with the leases acquired) of the difference between (i) the contractual amounts to be
paid pursuant to the in-place leases and (ii) our estimate of the fair market lease rates for the
corresponding in-place leases, measured over a period equal to the remaining non-cancellable term
of the lease. Capitalized above-market lease values are amortized as a reduction of rental income
over the remaining non-cancellable terms of the respective leases. Capitalized below-market lease
values are amortized as an increase of rental income over the remaining non-cancellable terms of
the respective leases, including any fixed-rate renewal periods.
Other intangible assets also include amounts representing the value of tenant relationships and
in-place leases based on our evaluation of the specific characteristics of each tenants lease and
our overall relationship with the respective tenant. We estimate the cost to execute leases with
terms similar to the remaining lease terms of the in-place leases, include leasing commissions,
legal and other related expenses. This intangible asset is amortized to expense over the remaining
term of the respective leases. We estimate fair value through methods similar to those used by
independent appraisers or by using independent appraisals. Factors that we consider in our analysis
include an estimate of the carrying costs during the expected lease-up periods considering current
market conditions and costs to execute similar leases. We also consider information obtained about
each property as a result of our pre-acquisition due diligence, marketing and leasing activities in
estimating the fair value of the tangible and intangible assets acquired. In estimating carrying
costs, we include real estate taxes, insurance and other operating expenses and estimates of lost
rentals at market rates during the expected lease-up periods, which primarily range from three to
twelve months.
Characteristics that we consider in allocating value to our tenant relationships include the nature
and extent of our business relationship with the tenant, growth prospects for developing new
business with the tenant, the tenants credit quality and expectations of lease renewals. The value
of tenant relationship intangibles is amortized over the remaining initial lease term and expected
renewals, but in no event longer than the remaining depreciable life of the building. The value of
in-place leases is amortized over the remaining non-cancellable term of the respective leases and
any fixed-rate renewal periods.
In the event that a tenant terminates its lease, the unamortized portion of each intangible,
including market rate adjustments, in-place lease values and tenant relationship values, would be
charged to expense.
-44-
RESULTS OF OPERATIONS
Comparison of the Year Ended December 31, 2007 to the Year Ended December 31, 2006
The table below shows selected operating information for the Same Store Properties and the Total
Portfolio. The Same Store Properties consists of 228 properties containing an aggregate of
approximately 22.5 million net rentable square feet that we owned for the entire twelve-month
periods ended December 31, 2007 and substantially all of the period ended December 31, 2006. We
consider the properties that we acquired in the Prentiss merger on January 5, 2006 as part of our
Same Store Portfolio and, therefore, the results of operations for the year ended December 31, 2006
do not include four days of activity. This table also includes a reconciliation from the Same
Store Properties to the Total Portfolio (i.e., all properties owned by us as of December 31, 2007
and 2006) by providing information for the properties which were acquired, under development,
redevelopment or placed into service and administrative/elimination information for the years ended
December 31, 2007 and 2006.
The Total Portfolio net income presented in the table agrees to the net income of Brandywine Realty
Trust. The only difference between the reported net income of Brandywine Realty Trust and
Brandywine Operating Partnership is the allocation of the minority interest attributable to
continuing and discontinued operations for limited partnership units of the Operating Partnership
that is reflected in the statement of operations for Brandywine Realty Trust.
-45-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired/Completed |
|
|
Development/Redevelopment |
|
|
Other |
|
|
|
|
|
|
Same Store Properties |
|
Properties |
|
|
Properties (a) |
|
|
(Eliminations) (b) |
|
|
All Properties |
|
|
|
|
|
|
|
|
|
|
Increase/ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase/ |
|
(dollars in thousands) |
|
2007 |
|
|
2006 |
|
|
(Decrease) |
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
|
(Decrease) |
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash rents |
|
$ |
422,709 |
|
|
$ |
417,427 |
|
|
$ |
5,282 |
|
|
$ |
66,306 |
|
|
$ |
25,311 |
|
|
$ |
13,142 |
|
|
$ |
21,756 |
|
|
$ |
20,979 |
|
|
$ |
20,188 |
|
|
$ |
523,136 |
|
|
$ |
484,682 |
|
|
$ |
38,454 |
|
Straight-line rents |
|
|
12,808 |
|
|
|
15,214 |
|
|
|
(2,406 |
) |
|
|
13,367 |
|
|
|
11,558 |
|
|
|
1,122 |
|
|
|
532 |
|
|
|
626 |
|
|
|
82 |
|
|
|
27,923 |
|
|
|
27,386 |
|
|
|
537 |
|
Rents FAS 141 |
|
|
8,561 |
|
|
|
7,331 |
|
|
|
1,230 |
|
|
|
1,388 |
|
|
|
584 |
|
|
|
1,506 |
|
|
|
(701 |
) |
|
|
|
|
|
|
|
|
|
|
11,455 |
|
|
|
7,214 |
|
|
|
4,241 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total rents |
|
|
444,078 |
|
|
|
439,972 |
|
|
|
4,106 |
|
|
|
81,061 |
|
|
|
37,453 |
|
|
|
15,770 |
|
|
|
21,587 |
|
|
|
21,605 |
|
|
|
20,270 |
|
|
|
562,514 |
|
|
|
519,282 |
|
|
|
43,232 |
|
Tenant reimbursements |
|
|
72,521 |
|
|
|
69,378 |
|
|
|
3,143 |
|
|
|
5,675 |
|
|
|
2,370 |
|
|
|
3,298 |
|
|
|
3,260 |
|
|
|
3,910 |
|
|
|
3,809 |
|
|
|
85,404 |
|
|
|
78,817 |
|
|
|
6,587 |
|
Termination fees |
|
|
9,137 |
|
|
|
6,625 |
|
|
|
2,512 |
|
|
|
809 |
|
|
|
100 |
|
|
|
238 |
|
|
|
506 |
|
|
|
52 |
|
|
|
|
|
|
|
10,236 |
|
|
|
7,231 |
|
|
|
3,005 |
|
Third party
management fees, labor reimbursement and leasing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,691 |
|
|
|
19,453 |
|
|
|
19,691 |
|
|
|
19,453 |
|
|
|
238 |
|
Other |
|
|
2,488 |
|
|
|
2,815 |
|
|
|
(327 |
) |
|
|
361 |
|
|
|
121 |
|
|
|
(31 |
) |
|
|
58 |
|
|
|
3,309 |
|
|
|
2,508 |
|
|
|
6,127 |
|
|
|
5,502 |
|
|
|
625 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
|
528,224 |
|
|
|
518,790 |
|
|
|
9,434 |
|
|
|
87,906 |
|
|
|
40,044 |
|
|
|
19,275 |
|
|
|
25,411 |
|
|
|
48,567 |
|
|
|
46,040 |
|
|
|
683,972 |
|
|
|
630,285 |
|
|
|
53,687 |
|
|
Operating Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property operating expenses |
|
|
159,265 |
|
|
|
154,340 |
|
|
|
4,925 |
|
|
|
24,105 |
|
|
|
13,547 |
|
|
|
8,944 |
|
|
|
9,640 |
|
|
|
(3,184 |
) |
|
|
(5,603 |
) |
|
|
189,130 |
|
|
|
171,924 |
|
|
|
17,206 |
|
Real estate taxes |
|
|
52,227 |
|
|
|
51,311 |
|
|
|
916 |
|
|
|
6,438 |
|
|
|
3,531 |
|
|
|
2,408 |
|
|
|
2,219 |
|
|
|
3,822 |
|
|
|
3,747 |
|
|
|
64,895 |
|
|
|
60,808 |
|
|
|
4,087 |
|
Management expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,361 |
|
|
|
10,675 |
|
|
|
10,361 |
|
|
|
10,675 |
|
|
|
(314 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal |
|
|
211,492 |
|
|
|
205,651 |
|
|
|
5,841 |
|
|
|
30,543 |
|
|
|
17,078 |
|
|
|
11,352 |
|
|
|
11,859 |
|
|
|
10,999 |
|
|
|
8,819 |
|
|
|
264,386 |
|
|
|
243,407 |
|
|
|
20,979 |
|
Net operating income |
|
|
316,732 |
|
|
|
313,139 |
|
|
|
3,593 |
|
|
|
57,363 |
|
|
|
22,966 |
|
|
|
7,923 |
|
|
|
13,552 |
|
|
|
37,568 |
|
|
|
37,221 |
|
|
|
419,586 |
|
|
|
386,878 |
|
|
|
32,708 |
|
Administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,144 |
|
|
|
|
|
|
|
28,182 |
|
|
|
29,644 |
|
|
|
(1,462 |
) |
Depreciation and amortization |
|
|
178,561 |
|
|
|
180,081 |
|
|
|
(1,520 |
) |
|
|
37,543 |
|
|
|
15,539 |
|
|
|
11,459 |
|
|
|
12,167 |
|
|
|
14,749 |
|
|
|
22,923 |
|
|
|
242,312 |
|
|
|
230,710 |
|
|
|
11,602 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income (loss) |
|
$ |
138,171 |
|
|
$ |
133,058 |
|
|
$ |
5,113 |
|
|
$ |
19,820 |
|
|
$ |
7,427 |
|
|
$ |
(3,536 |
) |
|
$ |
1,385 |
|
|
$ |
(5,325 |
) |
|
$ |
14,298 |
|
|
$ |
149,092 |
|
|
$ |
126,524 |
|
|
$ |
22,568 |
|
|
|
|
|
|
Number of properties |
|
|
225 |
|
|
|
|
|
|
|
|
|
|
|
18 |
|
|
|
|
|
|
|
14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
257 |
|
|
|
|
|
|
|
|
|
Square feet (in thousands) |
|
|
21,943 |
|
|
|
|
|
|
|
|
|
|
|
3,292 |
|
|
|
|
|
|
|
3,653 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,888 |
|
|
|
|
|
|
|
|
|
Other Income (Expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,040 |
|
|
|
9,513 |
|
|
|
(5,473 |
) |
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(162,675 |
) |
|
|
(171,177 |
) |
|
|
8,502 |
|
Interest expense Deferred financing costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,496 |
) |
|
|
(4,607 |
) |
|
|
111 |
|
Loss on settlement of treasury lock agreements |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,698 |
) |
|
|
|
|
|
|
(3,698 |
) |
Equity in income of real estate ventures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,955 |
|
|
|
2,165 |
|
|
|
4,790 |
|
Net gain on disposition of depreciated real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,498 |
|
|
|
|
|
|
|
40,498 |
|
Net gain on disposition of undepreciated real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
421 |
|
|
|
14,190 |
|
|
|
(13,769 |
) |
Gain on termination of purchase contract |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,147 |
|
|
|
(3,147 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before minority interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,137 |
|
|
|
(20,245 |
) |
|
|
50,382 |
|
Minority interest partners share of consolidated real estate ventures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(465 |
) |
|
|
270 |
|
|
|
(735 |
) |
Minority interest attributable to continuing operations LP units |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(911 |
) |
|
|
1,246 |
|
|
|
(2,157 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,761 |
|
|
|
(18,729 |
) |
|
|
47,490 |
|
Income (loss) from discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,692 |
|
|
|
29,211 |
|
|
|
(1,519 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
56,453 |
|
|
$ |
10,482 |
|
|
$ |
45,971 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
0.56 |
|
|
$ |
0.03 |
|
|
$ |
0.53 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPLANATORY NOTES |
|
(a) |
- |
Results include: seven developments and seven redevelopment properties. |
|
(b) |
- |
Represents certain revenues and expenses at the corporate level as well as various intercompany costs that are eliminated in consolidation and third-party management fees. Also included are revenues and expenses from the 29 DRA properties. |
-46-
Total Revenue
Cash rents from the Total Portfolio increased by $38.5 million from 2006 to 2007, primarily
reflecting:
|
1) |
|
An additional $5.3 million at the Same Store Portfolio from increased
occupancy and increased rents received on lease renewals. |
|
|
2) |
|
An additional $41.0 million from six properties that we acquired during 2007
and six development/redevelopment properties (including additional occupancy at Cira
Centre) that we completed and placed in service in 2007 and two that were
placed in service in December 2006. |
|
|
3) |
|
These increases were offset by the decrease of $8.6 million in cash rents at
our development/redevelopment properties primarily as a result of six buildings, which
are now included in redevelopment, that were occupied during 2006. |
Our rents at the Total Portfolio that we recognized from the net amortization of above and below
market leases at acquired properties, in conformity with SFAS No. 141, increased by $4.2 million
primarily as a result of $1.2 million of above market leases in our Same Store Portfolio being
fully amortized and the acquisition of eight properties during 2007. Two of these properties are
included in the Development/Redevelopment properties.
Tenant
reimbursements at the Total Portfolio increased by $6.6 million primarily as a result of
increased operating expenses of $21.0 million.
Operating Expenses and Real Estate Taxes
Property
operating expenses, including real estate taxes, at the Total
Portfolio increased by $21.0
million from 2006 to 2007, primarily reflecting:
|
1) |
|
An increase of $5.8 million at the Same Store Portfolio, primarily due to increased
occupancy and real estate tax reassessments. Increased occupancy at our properties causes
an increase in the amount of expense incurred for utilities, security, and janitorial
services. |
|
|
2) |
|
The incurrence of $13.5 million of property operating expenses for six of the
properties acquired during 2007 and eight development/redevelopment properties that we
completed and placed in service during or after December 2006. |
Depreciation and Amortization Expense
Depreciation and amortization increased by $11.6 million in 2007 compared to 2006, primarily
reflecting:
|
1) |
|
The incurrence of $22.0 million of depreciation and amortization expense on account
of six properties that we acquired during 2007 and eight development/redevelopment
properties (including additional occupancy at Cira Centre) that we completed and placed in
service during or after December 2006. |
|
|
2) |
|
This increase was offset by $11.9 million of accelerated depreciation expense for one
of our properties (50 E. Swedesford Road) which was demolished as part of an office park
development in suburban Philadelphia during 2006. This property is
included in Development/Redevelopment Properties. |
|
|
3) |
|
The increase is also offset by a decrease of $1.5 million in our Same Store
Portfolio. This decrease is the result of assets within our Same
Store Portfolio being
fully amortized subsequent to 2006. |
Administrative Expenses
Our administrative expenses decreased by approximately $1.5 million in 2007 compared to 2006,
primarily reflecting higher costs that we incurred in 2006 as part of our integration activities
following our January 2006 merger with Prentiss partially offset by the severance costs incurred in
the third quarter of 2007.
Interest Income/ Expense
-47-
We used our investment in marketable securities to pay down defeased debt in the fourth quarter of
2006. This pay down caused a decrease $6.0 million in interest income. This decrease was
partially offset by the amount of interest income earned on funds held in escrow with a qualified
intermediary as part of completed 1031 like-kind transactions.
Interest expense decreased by $8.5 million primarily due to an increase in capitalized interest of
$7.9 million during 2007 compared to 2006. The increased amount of capitalized interest is the
result of a greater number of development and redevelopment projects and increased project funding
for those projects that are under development in both periods. At December 31, 2007, we had seven
projects under development and seven projects under redevelopment with total project costs on which
we are presently capitalizing interest of $249.8 million. As of December 31, 2006, we had six
projects under development and three projects under redevelopment with total project costs on which
we were capitalizing interest through that date of $141.2 million.
This decrease was offset by increased interest expense on our unsecured debt based on the timing of
the issuances of unsecured debt during 2007 and 2006 as noted in the liquidity and capital
resources section below.
Loss on Settlement of Treasury Lock Agreements
In July 2007, in anticipation of an expected debt offering, we entered into four treasury lock
agreements. The treasury lock agreements were designated as cash flow hedges on interest rate risk
and qualified for hedge accounting. The agreements were settled on September 21, 2007, the
original termination date of each agreement, at a total cost of $3.7 million. During the fourth
quarter of 2007, we determined that the planned debt issuance was not probable and recorded $3.7 million as an
expense for the residual balance of $3.7 million.
Equity in income of Real Estate Ventures
The increase of $4.8 million over 2006 is primarily due to a distribution of $3.9 million received
as a result of our residual profit interest in a Real Estate Venture and the completion of an
office property that was placed in service by a Real Estate Venture during 2007.
Net gain on disposition of depreciated real estate
As more fully discussed in Note 3 to our Consolidated Financial Statements, we recognized a gain on
the partial transfer of interests in properties to which we retained a significant continuing
involvement with the properties through our joint venture interest
and our management and leasing services. As a result of this
continuing involvement, we have determined that the gain on
disposition and the operations of the properties should not be included in discontinued operations.
Net gain on disposition of undepreciated real estate
This line represents the gain recorded in each year for undeveloped land parcels that were sold.
The parcels are not included in discontinued operations since they were not developed prior to
sale. We sold seven land parcels in 2007 and three in 2006.
Gain on termination of purchase contract
We held a fifty percent economic interest in an approximately 141,724 square foot office building
located at 101 Paragon Drive, Montvale, New Jersey. The remaining fifty percent interest was held
by Donald E. Axinn, one of the Companys Trustees. Although we and Mr. Axinn had each committed to
provide one half of the $11 million necessary to repay the mortgage loan secured by this property
at the maturity of the loan, in February 2006 an unaffiliated third party entered into an agreement
to purchase this property for $18.3 million. As a result of the purchase by an unaffiliated third
party during August 2006, we recognized a $3.1 million gain
on termination of our under a
1998 contribution agreement, modified in 2005, that entitled us to
the fifty percent interest in
the joint venture to operate the property.
-48-
Minority Interest-partners share of consolidated Real Estate Ventures
Minority interest-partners share of consolidated Real Estate Ventures represents the portion of
income from our consolidated Real Estate Ventures that is allocated to our minority interest
partners.
As of December 31, 2007 we held an ownership interest in three properties through consolidated Real
Estate Ventures, compared to 14 properties owned by consolidated Real Estate Ventures at December
31, 2006.
On March 1, 2007, we acquired the 49% minority interest in one of our consolidated real estate
ventures that owned 10 office properties containing an aggregate of 1.1 million net rentable square
feet for a purchase price of $63.7 million.
Minority Interest attributable to continuing operations LP units
Minority interest attributable to continuing operations LP units, represents the equity in loss
(income) attributable to the portion of the Operating Partnership not owned by us. Minority
interests owned 4.2% and 4.6% of the Operating Partnership as of December 31, 2007 and 2006,
respectively.
Discontinued Operations
During 2007, we sold one property in East Norriton, PA, five properties in Dallas, TX, 11
properties in Reading and Harrisburg, PA, one in Voorhees, NJ, one property in West Norriton, PA
and one property in Newark, DE. These properties had total revenue of $14.6 million, operating
expenses of $11.4 million, gains on sale of $25.7 million and minority interest attributable to
discontinued operations of $1.2 million.
The December 31, 2006 amount is reclassified to include the operations of the properties sold
during 2007, as well as the 23 properties that were sold during the year ended December 31, 2006.
Therefore, the discontinued operations amount for the year-ended 2006 includes 43 properties with
total revenue of $92.7 million, operating expenses of $79.3 million, interest expense of $0.8
million and minority interest of $1.9 million. The eight properties that were sold in the first
quarter of 2006 did not have gains on sale since such properties were acquired as part of the
Prentiss merger and the value ascribed to those properties in purchase accounting was approximately
the fair value amount for which the properties were sold.
Net Income
Net income
increased by $47.5 million from 2006 primarily as a result of an
increase of $22.6
million in Operating Income and the gain on disposition of
depreciated real estate of $40.5 million noted
above. These increases are offset by the gain on sale of undepreciated real estate of $14.2
million and gain on termination of our purchase contract of $3.1 million earned in 2006. Net income is
significantly impacted by depreciation of operating properties and amortization of acquired
intangibles. These charges do not affect our ability to pay dividends and may not be comparable to
those of other real estate companies. Such charges can be expected to continue until the values
ascribed to the lease intangibles are fully amortized. These intangibles are amortizing over the
related lease terms or estimated duration of the tenant relationship.
Earnings per Common Share
Earnings per share (diluted and basic) were $0.56 for 2007 as compared to (diluted and basic) of
$0.03 for 2006 as a result of the factors described above and a decrease in the average number of
common shares outstanding. The decrease in the average number of common shares outstanding is the
result of 1.8 million shares repurchased in 2007 and 1.2 million shares that we repurchased in
2006. This decrease in the number of shares was partially offset by the issuance of shares upon
option exercises and restricted share vesting.
-49-
RESULTS OF OPERATIONS
Comparison of the Year Ended December 31, 2006 to the Year Ended December 31, 2005
The table below shows selected operating information for the Same Store Properties and the Total
Portfolio. The Same Store Properties consists of 234 properties containing an aggregate of
approximately 17.5 million net rentable square feet that we owned for the entire twelve-month
periods ended December 31, 2006 and 2005. This table also includes a reconciliation from the Same
Store Properties to the Total Portfolio (i.e., all properties owned by us as of December 31, 2006
and 2005) by providing information for the properties which were acquired, sold, or placed into
service and administrative/elimination information for the years ended December 31, 2006 and 2005.
The Total Portfolio net income presented in the table agrees to the net income of Brandywine Realty
Trust. The only difference between the reported net income of Brandywine Realty Trust and
Brandywine Operating Partnership is the allocation of the minority interest attributable to
continuing and discontinued operations for limited partnership units of the Operating Partnership
that is reflected in the statement of operations for Brandywine Realty Trust.
-50-
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Acquired |
|
|
Development |
|
|
Other/ |
|
|
|
|
|
Same
Store Properties |
|
Properties |
|
|
Properties (a) |
|
|
Eliminations (b) |
|
|
All Properties |
|
|
|
|
|
|
|
|
|
|
Increase/ |
|
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|
|
|
|
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|
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|
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|
|
|
|
Increase/ |
|
(dollars in thousands) |
|
2006 |
|
|
2005 |
|
|
(Decrease) |
|
|
2006 |
|
|
2005 |
|
|
2006 |
|
|
2005 |
|
|
2006 |
|
|
2005 |
|
|
2006 |
|
|
2005 |
|
|
(Decrease) |
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash rents |
|
$ |
296,811 |
|
|
$ |
292,439 |
|
|
$ |
4,372 |
|
|
$ |
200,753 |
|
|
$ |
1,342 |
|
|
$ |
24,163 |
|
|
$ |
8,400 |
|
|
$ |
(912 |
) |
|
$ |
297 |
|
|
$ |
520,815 |
|
|
$ |
302,478 |
|
|
$ |
218,337 |
|
Straight-line rents |
|
|
8,636 |
|
|
|
11,141 |
|
|
|
(2,505 |
) |
|
|
9,111 |
|
|
|
165 |
|
|
|
11,504 |
|
|
|
2,984 |
|
|
|
|
|
|
|
|
|
|
|
29,251 |
|
|
|
14,290 |
|
|
|
14,961 |
|
Rents - FAS 141 |
|
|
2,713 |
|
|
|
1,546 |
|
|
|
1,167 |
|
|
|
7,405 |
|
|
|
(33 |
) |
|
|
(249 |
) |
|
|
(243 |
) |
|
|
1 |
|
|
|
180 |
|
|
|
9,870 |
|
|
|
1,450 |
|
|
|
8,420 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total rents |
|
|
308,160 |
|
|
|
305,126 |
|
|
|
3,034 |
|
|
|
217,269 |
|
|
|
1,474 |
|
|
|
35,418 |
|
|
|
11,141 |
|
|
|
(911 |
) |
|
|
477 |
|
|
|
559,936 |
|
|
|
318,218 |
|
|
|
241,718 |
|
Tenant reimbursements |
|
|
48,086 |
|
|
|
46,705 |
|
|
|
1,381 |
|
|
|
28,698 |
|
|
|
98 |
|
|
|
3,007 |
|
|
|
1,130 |
|
|
|
679 |
|
|
|
629 |
|
|
|
80,470 |
|
|
|
48,562 |
|
|
|
31,908 |
|
Other (c) |
|
|
9,499 |
|
|
|
8,153 |
|
|
|
1,346 |
|
|
|
2,195 |
|
|
|
|
|
|
|
108 |
|
|
|
613 |
|
|
|
10,593 |
|
|
|
5,078 |
|
|
|
22,395 |
|
|
|
13,844 |
|
|
|
8,551 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
|
365,745 |
|
|
|
359,984 |
|
|
|
5,761 |
|
|
|
248,162 |
|
|
|
1,572 |
|
|
|
38,533 |
|
|
|
12,884 |
|
|
|
10,361 |
|
|
|
6,184 |
|
|
|
662,801 |
|
|
|
380,624 |
|
|
|
282,177 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property operating expenses |
|
|
114,455 |
|
|
|
112,656 |
|
|
|
1,799 |
|
|
|
72,798 |
|
|
|
552 |
|
|
|
14,454 |
|
|
|
7,614 |
|
|
|
(13,706 |
) |
|
|
(9,630 |
) |
|
|
188,001 |
|
|
|
111,192 |
|
|
|
76,809 |
|
Real estate taxes |
|
|
36,682 |
|
|
|
34,387 |
|
|
|
2,295 |
|
|
|
24,422 |
|
|
|
190 |
|
|
|
4,124 |
|
|
|
3,320 |
|
|
|
356 |
|
|
|
283 |
|
|
|
65,584 |
|
|
|
38,180 |
|
|
|
27,404 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal |
|
|
151,137 |
|
|
|
147,043 |
|
|
|
4,094 |
|
|
|
97,220 |
|
|
|
742 |
|
|
|
18,578 |
|
|
|
10,934 |
|
|
|
(13,350 |
) |
|
|
(9,347 |
) |
|
|
253,585 |
|
|
|
149,372 |
|
|
|
104,213 |
|
|
|
|
|
|
Net operating income |
|
|
214,608 |
|
|
|
212,941 |
|
|
|
1,667 |
|
|
|
150,942 |
|
|
|
830 |
|
|
|
19,955 |
|
|
|
1,950 |
|
|
|
23,711 |
|
|
|
15,531 |
|
|
|
409,216 |
|
|
|
231,252 |
|
|
|
177,964 |
|
|
|
|
|
|
Administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,647 |
|
|
|
17,982 |
|
|
|
29,647 |
|
|
|
17,982 |
|
|
|
11,665 |
|
Depreciation and amortization |
|
|
113,247 |
|
|
|
101,074 |
|
|
|
12,173 |
|
|
|
117,175 |
|
|
|
461 |
|
|
|
15,313 |
|
|
|
5,326 |
|
|
|
2,394 |
|
|
|
2,257 |
|
|
|
248,129 |
|
|
|
109,118 |
|
|
|
139,011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income (loss) |
|
$ |
101,361 |
|
|
$ |
111,867 |
|
|
$ |
(10,506 |
) |
|
$ |
33,767 |
|
|
$ |
369 |
|
|
$ |
4,642 |
|
|
$ |
(3,376 |
) |
|
$ |
(8,330 |
) |
|
$ |
(4,708 |
) |
|
$ |
131,440 |
|
|
$ |
104,152 |
|
|
$ |
27,288 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of properties |
|
|
234 |
|
|
|
|
|
|
|
|
|
|
|
62 |
|
|
|
|
|
|
|
17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
313 |
|
|
|
|
|
|
|
|
|
Square feet (in thousands) |
|
|
17,533 |
|
|
|
|
|
|
|
|
|
|
|
11,261 |
|
|
|
|
|
|
|
2,970 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,764 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,513 |
|
|
|
1,370 |
|
|
|
8,143 |
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(171,177 |
) |
|
|
(70,152 |
) |
|
|
(101,025 |
) |
Interest expense Deferred Financing Costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,607 |
) |
|
|
(3,766 |
) |
|
|
(841 |
) |
Equity in income of real estate ventures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,165 |
|
|
|
3,172 |
|
|
|
(1,007 |
) |
Net gain on sales of interests in real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,190 |
|
|
|
4,640 |
|
|
|
9,550 |
|
Gain on termination of purchase contract |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,147 |
|
|
|
|
|
|
|
3,147 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before minority interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(15,329 |
) |
|
|
39,416 |
|
|
|
(54,745 |
) |
Minority interest - partners share of consolidated real estate ventures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
270 |
|
|
|
|
|
|
|
270 |
|
Minority interest attributable to continuing operations LP units |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,028 |
|
|
|
(1,237 |
) |
|
|
2,265 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(14,031 |
) |
|
|
38,179 |
|
|
|
(52,210 |
) |
Income (loss) from discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,513 |
|
|
|
4,588 |
|
|
|
19,925 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
10,482 |
|
|
$ |
42,767 |
|
|
$ |
(32,285 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
0.03 |
|
|
$ |
0.62 |
|
|
$ |
(0.59 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPLANATORY NOTES |
|
(a) |
|
- Results include: nine developments/redevelopments, four lease-up assets and three properties placed in service |
|
(b) |
|
- Represents certain revenues and expenses at the corporate level as well as various intercompany costs that are eliminated in consolidation and third-party management fees |
|
(c) |
|
- Includes net termination fee income of $6,133 for 2006 and $5,583 for 2005 for the same store property portfolio and $948 for 2006 for the acquired properties |
-51-
Total Revenue
Revenue increased by $282.2 million primarily due to the acquired properties (primarily Prentiss),
which represents $246.6 million of this increase. The increase is also the result of 4 properties
placed in service, including Cira Centre, which contributed $25.7 million to this increase.
The increase in total revenue from our same store properties of $5.8 million is primarily
attributable to increased occupancy as well as increased tenant reimbursements resulting from
higher property operating expenses.
Operating Expenses and Real Estate Taxes
Property operating expenses increased by $76.3 million primarily due to the acquisition of Prentiss
and other properties, which represents $72.2 million of this increase. Property operating expenses
attributable to the increased occupancy of Cira Centre and other completed developments resulted in
an additional $6.8 million of property operating expense.
Real estate taxes increased by $27.4 million primarily due to the acquisition of Prentiss and other
properties, which represents $24.2 million of this increase. The remainder of the increase
primarily is the result of increased real estate tax assessments in our same store portfolio and
properties placed in service.
Depreciation and Amortization Expense
Depreciation and amortization increased by $139.0 million primarily due to the acquisition of
Prentiss and other properties, which increased total portfolio depreciation expense by $116.7
million. A significant portion of the increase, $11.9 million, is also due to accelerated
depreciation expense associated with the demolition of one of our properties as part of an office
park development in suburban Philadelphia. This property was part of our same store portfolio;
therefore the remaining increase in depreciation and amortization for our same store portfolio is
$0.3 million. This increase resulted from the timing of assets being placed in service upon
completion of tenant improvement and capital improvement projects subsequent to the end of the nine
month period ending September 30, 2005. The depreciation and amortization for our development
properties increased by $10.0 million as a result of timing of the properties being completed and
placed into service.
Administrative Expenses
Administrative expenses increased by approximately $11.9 million primarily due to the acquisition
of Prentiss. Of this increase, $3.6 million was primarily attributable to increased payroll and
related costs associated with employees that we hired as part of the acquisition of Prentiss. We
also incurred an additional $4.1 million in professional fees in connection with our merger
integration activities. The remainder of the increase reflects other increased costs of the
combined companies which includes an increase in deferred compensation expense of $2.2 million.
Interest Income/ Expense
Interest expense and deferred financing costs increased by approximately $101.9 million primarily
as a result of 14 fixed rate mortgages, three unsecured notes, and one note secured by U.S.
treasury notes (PPREFI debt) that we assumed or entered into to finance the Prentiss merger. The
mortgages assumed have maturity dates ranging from 2009 through 2016 and the unsecured notes have
maturities ranging from 2008 through 2035.
The PPREFI debt had a maturity of February 2007, but we elected to prepay this debt in November
2006.
The PPREFI debt was defeased by Prentiss in the fourth quarter of 2005 and was secured by an
investment in U.S. treasury notes. The interest earned on the treasury notes is included in
interest income and
-52-
substantially offsets the amount of interest expense incurred on the PPREFI debt, resulting in an
immaterial amount of net interest expense incurred. The increase of $8.1 million in interest
income is primarily attributable to the interest income earned on these treasury notes.
See the Notes to Consolidated Financial in Part IV, Item 15 for details of our mortgage
indebtedness and unsecured notes outstanding.
Gain on termination of purchase contract
We held a fifty percent economic interest in an approximately 141,724 square foot office building
located at 101 Paragon Drive, Montvale, New Jersey. The remaining fifty percent interest was held
by Donald E. Axinn, one of the Companys Trustees. Although we and Mr. Axinn had each committed to
provide one half of the $11 million necessary to repay the mortgage loan secured by this property
at the maturity of the loan, in February 2006 an unaffiliated third party entered into an agreement
to purchase this property for $18.3 million. As a result of the purchase by an unaffiliated third
party during August 2006, we recognized a $3.1 million gain on termination of our rights under a
1998 contribution agreement, modified in 2005, that entitled us to
the fifty percent interest in
the joint venture to operate the property.
Minority Interest-partners share of consolidated real estate ventures
Minority interest-partners share of consolidated real estate ventures represents the portion of
income from our consolidated joint ventures that is allocated to our minority interest partners.
As of December 31, 2006 we held an ownership interest in 15 properties through consolidated Real
Estate Ventures, compared to two properties owned by consolidated Real Estate Ventures at December
31, 2005.
Minority Interest attributable to continuing operations LP units
Minority interest attributable to continuing operations LP units represents the equity in loss
(income) attributable to the portion of the Operating Partnership not owned by us. The increase
from the prior year is primarily the result of the fact that at December 31, 2006 the LP units
share in our net loss from continuing operations compared to their share of net income from
continuing operations in the prior year. Minority interests owned 4.6% and 3.4% of the Operating
Partnership as of December 31, 2006 and 2005, respectively. The change in minority interest
ownership is primarily the result of the Class A units that we issued in the Prentiss acquisition.
Discontinued Operations
Income from discontinued operations increased by $19.9 million from the prior year as a result of
the sale of eight properties in Chicago, IL, five in Dallas, TX, and one in Allen, TX that we
acquired in the Prentiss acquisition. We also sold five properties that were previously included
in our same store portfolio. These 19 properties combined had net income of $7.7 million and gain
on sale of $20.2 million during the year ended December 31, 2006 before minority interest.
Included in the gain on sale amount was $1.8 million attributable to minority interest in the
Chicago property that was sold by one of our consolidated Real Estate Ventures.
Net Income
Net income declined by $32.3 million in the year ended December 31, 2006, compared to the same
period in 2005 as increased revenues in 2006 were offset by increases in operating expenses
(primarily depreciation and amortization) and financing costs. All major financial statement
captions increased as a result of our acquisition of Prentiss and the related financing required to
complete the transaction. A significant element of these increases relate to additional
depreciation and amortization charges from the significant property additions (including both the
TRC acquisition in 2004 and the Prentiss acquisition) and the values ascribed to related acquired
intangibles (e.g., in-place leases). These charges do not affect our
-53-
ability to pay dividends and may not be comparable to those of other real estate companies that
have not made such acquisitions. Such charges can be expected to continue until the values
ascribed to the lease intangibles are fully amortized. These intangibles are amortizing over the
related lease terms or estimated tenant relationship. In addition, a significant portion of the
decrease in net income is attributable to the $11.9 million in depreciation expense described in
the Depreciation and Amortization Expense section above.
Earnings per Common Share
Earnings per common share of $0.03 for the year ended December 31, 2006 as compared to earnings per
common share of $0.62 in 2005 declined as a result of the factors described in Net Income above
and an increase in the average number of common shares outstanding. We issued 34.6 million common
shares in our acquisition of Prentiss.
LIQUIDITY AND CAPITAL RESOURCES
General
Our principal liquidity needs for the next twelve months are as follows:
|
|
|
fund normal recurring expenses, |
|
|
|
|
fund capital expenditures, including capital and tenant improvements and leasing costs, |
|
|
|
|
fund development and redevelopment costs, |
|
|
|
|
fund new property acquisitions, and |
|
|
|
|
fund distributions declared by our Board of Trustees, including the minimum
distribution required to maintain our REIT qualification under the Internal Revenue Code. |
We believe that our liquidity needs will be satisfied through cash flows generated by our operating
and financing activities. Rental revenue, expense recoveries from tenants, and other income from
operations are our principal sources of cash that we use to pay operating expenses, debt service,
recurring capital expenditures and the minimum distributions required to maintain our REIT
qualification. We seek to increase cash flows from our properties by maintaining quality standards
for our properties that promote high occupancy rates and permit increases in rental rates while
reducing tenant turnover and controlling operating expenses. Our revenue also includes third-party
fees generated by our property management, leasing, development and construction businesses. We
believe our revenue, together with proceeds from equity and debt financings, will continue to
provide funds for our short-term liquidity needs. However, material changes in our operating or
financing activities may adversely affect our net cash flows. Such changes, in turn, would
adversely affect our ability to fund distributions, debt service payments and tenant improvements.
In addition, a material adverse change in our cash provided by operations would affect the
financial performance covenants under our unsecured credit facility and unsecured notes.
Our principal liquidity needs for periods beyond twelve months are for costs of developments,
redevelopments, property acquisitions, scheduled debt maturities, major renovations, expansions,
leasing commissions, tenant improvements and capital improvements. We draw on multiple financing
sources to fund our long-term capital needs. We use our credit facility for general business
purposes, including the acquisition, development and redevelopment of properties and the repayment
of other debt. In October 2007, we entered into a $150.0 million unsecured term loan, in April
2007 and March 2006, we sold $300.0 million and $850.0 million, respectively of unsecured notes and
in September and October 2006, we sold an aggregate of
$345.0 million of exchangeable unsecured notes. As of
December 31, 2007 we also had approximately $611.9 million
of mortgage loans. We expect to continue to use the
debt and equity markets for our long-term capital needs.
Our ability to incur additional debt is dependent upon a number of factors, including our credit
ratings, the value of our unencumbered assets, our degree of leverage and borrowing restrictions
imposed by our current lenders. We currently have investment grade ratings for prospective
unsecured debt offerings from
-54-
three major rating agencies. If a rating agency were to downgrade our credit rating, our access to
capital in the unsecured debt market would be more limited and the interest rate under our existing
credit facility and term loan would increase.
Our ability to sell common and preferred shares is dependent on, among other things, general market
conditions for REITs, market perceptions about our company and the current trading price of our
shares. We regularly analyze which source of capital is most advantageous to us at any particular
point in time. The equity markets may not be consistently available on terms that we consider
attractive.
The asset sales during 2006 and 2007 have also been a significant source of cash. During 2007, we
sold 49 properties containing an aggregate of 5.2 million net rentable square feet and eight land
parcels containing an aggregate 56.2 acres for aggregate proceeds of $604.5 million. We have
several options for the use of proceeds from asset sales, including the acquisition of assets in our core
markets, repayment of debt and repurchase of our shares.
Cash Flows
The following summary discussion of our cash flows is based on the consolidated statement of cash
flows included in our consolidated financial statements and is not meant to be an all-inclusive
discussion of the changes in our cash flows for the periods presented.
As of December 31, 2007 and 2006, we maintained cash and cash equivalents of $5.6 million and $25.4
million, respectively. This $19.8 million decrease was the result of the following changes in cash
flow from our various activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007 |
|
|
2006 |
|
|
2005 |
|
Operating |
|
$ |
219,817 |
|
|
$ |
241,566 |
|
|
$ |
125,147 |
|
Investing |
|
|
44,473 |
|
|
|
(915,794 |
) |
|
|
(252,417 |
) |
Financing |
|
|
(284,069 |
) |
|
|
692,433 |
|
|
|
119,098 |
|
|
|
|
|
|
|
|
|
|
|
Net cash flows |
|
$ |
(19,779 |
) |
|
$ |
18,205 |
|
|
$ |
(8,172 |
) |
|
|
|
|
|
|
|
|
|
|
Our principal source of cash flows is from the operation of our properties. The decrease in cash
flows from operating activities was primarily the result of the timing of the cash receipts from
our tenants and cash expenditures in the normal course of operations of our properties. The
decrease in cash from operations is also a result of the timing of property sales during the year.
As we have sold more properties than we have acquired in 2007, our cash related to property
operations has decreased.
The decrease in cash outflows from investing activities was primarily attributable to our
acquisition of Prentiss on January 5, 2006 and other property acquisitions during year ended
December 31, 2006 resulting in a cash outflow of $1,167.1 million compared to the $88.9 million
outflow we incurred during the year ended December 31, 2007 for acquisitions. During 2007, we
acquired the ownership interest of our minority interest partner in a previously consolidated real
estate venture for $63.7 million. These outflows were
offset by net proceeds on property sales of $472.6 million and $347.7 million for the years ended
December 31, 2007 and 2006, respectively.
Decreased cash flow from financing activities was primarily attributable to our repurchase of 1.8
million shares for $59.4 million during the year ended December 31, 2007 compared to our issuance
of $850.0 million of unsecured notes for the same period in 2006. During the year ended December
31, 2007, we repaid our $300.0 million 2009 three year floating rate note, issued in March 2006,
using proceeds from our Credit Facility. We also issued $300.0 million of unsecured notes during
the year ended December 31, 2007 and used those proceeds to pay-down indebtedness on our Credit
Facility. We also used the proceeds from the unsecured term loan of $150.0 million that we
entered into in October 2007 to pay-down indebtedness on our Credit Facility.
-55-
Capitalization
Indebtedness
On October 15, 2007, we entered into a term loan agreement that provides for an unsecured term loan
in the amount of $150.0 million. We used the proceeds to reduce
outstanding indebtedness under our revolving credit facility. The term loan matures on October 18, 2010 and may be
extended at our option for two one-year periods but not beyond the maturity date of our revolving
credit facility.
On June 29, 2007, we amended our $600.0 million unsecured revolving credit facility (the Credit
Facility). The amendment extended the maturity date of the Credit Facility from December 22, 2009
to June 29, 2011 (subject to an extension of one year, at our option, upon our payment of an
extension fee equal to 15 basis points of the committed amount under the Credit Facility). The
amendment also reduced the per annum variable interest rate on outstanding balances from Eurodollar
plus 0.80% to Eurodollar plus 0.725% per annum. In addition, the amendment reduced the quarterly
facility fee from 20 basis points to 17.5 basis points per annum. The interest rate and facility
fee are subject to adjustment upon a change in our unsecured debt ratings. The amendment also
lowered to 7.50% from 8.50% the capitalization rate used in the calculation of several of the
financial covenants; increased our swing loan availability from $50.0 million to $60.0 million; and
increased the number of competitive bid loan requests available to us from two to four in any 30
day period. Borrowings are always available to the extent of borrowing capacity at the stated
rates, however, the competitive bid feature allows banks that are part of the lender consortium
under the Credit Facility to bid to make loans to us at a reduced
Eurodollar rate. We have the option to increase the Credit Facility
to $800.0 million subject to the absence of any default and our ability
to acquire additional commitments from our existing lenders or new lenders.
On April 30, 2007, we consummated the public offering of $300.0 million aggregate principal amount
of unsecured 5.70% Guaranteed Notes due 2017 and used the net proceeds from this offering to reduce
borrowings under the Credit Facility.
In April 2007, we entered into a $20.0 million Sweep Agreement to be used for cash management
purposes. Borrowings under the Sweep Agreement bear interest at one-month LIBOR plus 0.75% per
annum.
On November 29, 2006, we called for redemption of our $300.0 million Floating Rate Guaranteed Notes
due 2009 and repaid these notes on January 2, 2007 in accordance with the November call using
proceeds from our Credit Facility. As a result of the early repayment of these notes, we incurred
accelerated amortization of $1.4 million in associated deferred financing costs in the fourth
quarter 2006. We funded the prepayments of these notes from borrowings under our Credit Facility
and there were no penalties associated with these prepayments.
On October 4, 2006, we sold $300.0 million aggregate principal amount of unsecured 3.875%
Exchangeable Guaranteed Notes due 2026 in reliance upon an exemption from registration rights under
Rule 144A under the Securities Act of 1933 and sold an additional $45.0 million of 3.875%
Exchangeable Guaranteed Notes due 2026 on October 16, 2006 to cover over-allotments. We have
registered the resale of the exchangeable notes. At certain times and upon certain events, the
notes are exchangeable for cash up to their principal amount and, with respect to the remainder, if
any, of the exchange value in excess of such principal amount, cash or our common shares. The
initial exchange rate is 25.4065 shares per $1,000 principal amount of notes (which is equivalent
to an initial exchange price of $39.36 per share). We may not redeem the notes prior to October
20, 2011 (except to preserve our status as a REIT for U.S. federal income tax purposes), but we may
redeem the notes at any time thereafter, in whole or in part, at a redemption price equal to the
principal amount of the notes to be redeemed plus accrued and unpaid interest. In addition, on
October 20, 2011, October 15, 2016 and October 15, 2021 as well as upon the occurrence of certain
change in control transactions prior to October 20, 2011, holders of notes may require us to
repurchase all or a portion of the notes at a purchase price equal to the principal amount of the
notes to be purchased plus accrued and unpaid interest. We used net proceeds from the notes to
repurchase
-56-
approximately $60.0 million of common shares at a price of $32.80 per share and for
general corporate purposes, including the repayment of outstanding borrowings under the Credit
Facility.
On March 28, 2006, we consummated the public offering of $850.0 million of unsecured notes,
consisting of (1) $300.0 million aggregate principal amount of Floating Rate Guaranteed Notes due
2009, (2) $300.0 million aggregate principal amount of 5.75% Guaranteed Notes due 2012 and (3)
$250.0 million aggregate principal amount of 6.00% Guaranteed Notes due 2016. We used the net
proceeds from this offering to repay a $750.0 million unsecured term loan and to reduce borrowings
under the Credit Facility.
The Operating Partnership is the issuer of our unsecured notes, and Brandywine Realty Trust has
fully and unconditionally guaranteed the payment of principal and interest on the notes.
As of December 31, 2007, we had approximately $3.1 billion of outstanding indebtedness. The table
below summarizes our mortgage notes payable, our unsecured notes, and our revolving credit facility
at December 31, 2007 and 2006:
|
|
|
|
|
|
|
|
|
|
|
December 31 |
|
|
|
2007 |
|
|
2006 |
|
|
|
(dollars in thousands) |
|
Balance: |
|
|
|
|
|
|
|
|
Fixed rate |
|
$ |
2,741,632 |
|
|
$ |
2,718,171 |
|
Variable rate |
|
|
359,337 |
|
|
|
439,162 |
|
|
|
|
|
|
|
|
Total |
|
$ |
3,100,969 |
|
|
$ |
3,157,333 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent of Total Debt: |
|
|
|
|
|
|
|
|
Fixed rate |
|
|
88.4 |
% |
|
|
86.1 |
% |
Variable rate |
|
|
11.6 |
% |
|
|
13.9 |
% |
|
|
|
|
|
|
|
Total |
|
|
100 |
% |
|
|
100 |
% |
|
|
|
|
|
|
|
Weighted-average interest rate at period end: |
|
|
|
|
|
|
|
|
Fixed rate |
|
|
5.5 |
% |
|
|
5.6 |
% |
Variable rate |
|
|
5.8 |
% |
|
|
6.0 |
% |
Total |
|
|
5.6 |
% |
|
|
5.7 |
% |
The variable rate debt shown above generally bears interest based on various spreads over a LIBOR
term periodically selected by us.
We use credit facility borrowings for general business purposes, including the acquisition,
development and redevelopment of properties and the repayment of other debt. We have an option to
increase the maximum borrowings under the Credit Facility to $800 million subject to the absence of
any defaults and our ability to obtain additional commitments from our existing or new lenders.
Our interest rate incurred under our revolving credit facility and term loan is subject to
modification depending on our rating status with qualified agencies.
As of December 31, 2007, we had $120 million of borrowings and $13.5 million of letters of credit
outstanding under the Credit Facility, leaving $466.5 million of unused availability. For the
years ended December 31, 2007 and 2006, our weighted average interest rates, including the effects
of interest rate hedges discussed in Note 9 to the consolidated financial statements included
herein, and including both the new Credit Facility and prior credit facility, were 6.25% and 5.93 %
per annum, respectively.
-57-
The Credit Facility contains financial and non-financial covenants, including covenants that relate
to our incurrence of additional debt; the granting of liens; consummation of mergers and
consolidations; the disposition of assets and interests in subsidiaries; the making of loans and
investments; and the payment of dividends. The restriction on dividends permits us to pay
dividends to the greater of (i) an amount required for us to retain our qualification as a REIT and
(ii) otherwise limits dividends to 95% of our funds from operations. The Credit Facility also
contains financial covenants that require us to maintain an interest coverage ratio, a fixed charge
coverage ratio, an unsecured debt ratio and an unencumbered cash flow ratio above certain specified
minimum levels; to maintain net worth above an amount determined on a specified formula; and to
maintain a leverage ratio and a secured debt ratio below certain maximum levels. Another financial
covenant limits the ratio of unsecured debt to unencumbered properties. We were in compliance with
all financial covenants as of December 31, 2007.
The indenture under which we issued our unsecured notes, and the note purchase agreement that
governs an additional $113.0 million of 4.34% unsecured notes that mature in December 2008, contain
financial covenants, including (1) a leverage ratio not to exceed 60%, (2) a secured debt leverage
ratio not to exceed 40%, (3) a debt service coverage ratio of greater than 1.5 to 1.0 and (4) an
unencumbered asset value of not less than 150% of unsecured debt. We were in compliance with all
covenants as of December 31, 2007.
We have mortgage loans that are collateralized by certain of our properties. Payments on mortgage
loans are generally due in monthly installments of principal and interest, or interest only.
We intend to refinance or repay our mortgage loans as they mature, primarily through the use of
unsecured debt or equity.
Our charter documents do not limit the amount or form of indebtedness that we may incur, and our
policies on debt incurrence are solely within the discretion of our Board, subject to financial
covenants in the Credit Facility, indenture and other credit agreements.
As of
December 31, 2007, we had guaranteed repayment of approximately $0.3 million of loans on
behalf of certain Real Estate Ventures. See Item 2. Properties Real Estate Ventures. We also
provide customary environmental indemnities and completion guarantees in connection with
construction and permanent financing both for our own account and on behalf of certain of the Real
Estate Ventures.
Share Repurchases
We maintain a share repurchase program under which our Board has authorized us to repurchase our
common shares from time to time. Our Board initially authorized this program in 1998 and has
periodically replenished capacity under the program, including, most recently, on May 2, 2006 when
our Board restored capacity to 3.5 million common shares. During 2007, we repurchased
approximately 1.8 million common shares under this program at an average price of $33.36 per share,
leaving approximately 0.5 million shares in remaining capacity at December 31, 2007. Our Board has
not limited the duration of the program; however, it may be terminated at any time.
Off-Balance Sheet Arrangements
We are not dependent on any off-balance sheet financing arrangements for liquidity. Our
off-balance sheet arrangements are discussed in Note 4 to the financial statements, Investment in
Unconsolidated Real Estate Ventures. Additional information about the debt of our unconsolidated
Real Estate Ventures is included in Item 2 Properties.
-58-
Shelf Registration Statement
We maintain a shelf registration statement for the issuance of common shares, preferred shares,
depositary shares and warrants and unsecured debt securities. Subject to our ongoing compliance
with securities laws, and if warranted by market conditions, we may offer and sell equity and debt
securities from time to time under the registration statement.
Short- and Long-Term Liquidity
We believe that our cash flow from operations is adequate to fund our short-term liquidity
requirements. Cash flow from operations is generated primarily from rental revenues and operating
expense reimbursements from tenants and management services income from providing services to third
parties. We intend to use these funds to meet short-term liquidity needs, which are to fund
operating expenses, debt service requirements, recurring capital expenditures, tenant allowances,
leasing commissions and the minimum distributions required to maintain our REIT qualification under
the Internal Revenue Code.
We expect to meet our long-term liquidity requirements, such as for property acquisitions,
development, investments in real estate ventures, scheduled debt maturities, major renovations,
expansions and other significant capital improvements, through cash from operations, borrowings
under the Credit Facility, additional unsecured and secured indebtedness, the issuance of equity
securities, contributions from joint venture investors and proceeds from asset dispositions.
Inflation
A majority of our leases provide for reimbursement of real estate taxes and operating expenses
either on a triple net basis or over a base amount. In addition, many of our office leases provide
for fixed base rent increases. We believe that inflationary increases in expenses will be
partially offset by expense reimbursement and contractual rent increases.
Commitments and Contingencies
The following table outlines the timing of payment requirements related to our contractual
commitments as of December 31, 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments by Period (in thousands) |
|
|
|
|
|
|
|
Less than |
|
|
|
|
|
|
|
|
|
|
More than |
|
|
|
Total |
|
|
1 Year |
|
|
1-3 Years |
|
|
3-5 Years |
|
|
5 Years |
|
Mortgage notes payable (a) |
|
$ |
601,833 |
|
|
$ |
22,278 |
|
|
$ |
230,145 |
|
|
$ |
183,313 |
|
|
$ |
166,097 |
|
Revolving credit facility |
|
|
130,727 |
|
|
|
10,727 |
|
|
|
|
|
|
|
120,000 |
|
|
|
|
|
Unsecured term loan |
|
|
150,000 |
|
|
|
|
|
|
|
150,000 |
|
|
|
|
|
|
|
|
|
Unsecured debt (a, |
|
|
2,211,610 |
|
|
|
113,000 |
|
|
|
575,000 |
|
|
|
645,000 |
|
|
|
878,610 |
|
Ground leases (b) |
|
|
302,096 |
|
|
|
1,736 |
|
|
|
4,304 |
|
|
|
4,636 |
|
|
|
291,420 |
|
Interest expense |
|
|
917,108 |
|
|
|
161,258 |
|
|
|
284,222 |
|
|
|
236,432 |
|
|
|
235,196 |
|
Development contracts (c) |
|
|
22,188 |
|
|
|
15,941 |
|
|
|
6,247 |
|
|
|
|
|
|
|
|
|
Other liabilities |
|
|
1,798
|
|
|
|
|
|
|
|
1,110 |
|
|
|
|
|
|
|
688 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
4,337,360 |
|
|
$ |
324,940 |
|
|
$ |
1,251,028 |
|
|
$ |
1,189,381 |
|
|
$ |
1,572,011 |
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(a) |
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Amounts do not include unamortized discounts and/or premiums. |
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(b) |
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Future minimum rental payments under the terms of all non-cancelable ground leases under which we are
the lessee are expensed on a straight-line basis regardless of when payments are due. Certain of the land leases provide for prepayment
of rent on a present value basis using a fixed discount rate. Further, certain of the
land lease for properties (currently under development) provide for
contingent rent participation by the lessor in certain capital
transactions and net operating cash flows of the property after
certain returns are achieved by us. Such amounts if any, will be
reflected as contingent rent when incurred.
The leases also provide for payment by us of certain operating cost relating to the land, primarily real estate taxes.
The above schedule of future minimum rental payments does not included any contingent rent amounts nor any reimbursed expenses. |
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(c) |
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Represents contractual obligations for certain development
projects and does not contemplate all costs expected to be incurred
for such developments. |
As part of our September 2004 acquisition of a portfolio of properties from The Rubenstein Company
(which we refer to as the TRC acquisition), we agreed to issue to the sellers up to a maximum of
$9.7 million of Class A Units of the Operating Partnership if certain of the acquired properties
achieve at least 95% occupancy prior to September 21, 2007. The maximum number of Units that we
agreed to issue declined monthly and as of December 31, 2007 we had no further obligation
whatsoever.
-59-
As part of the TRC acquisition, we acquired our interest in Two
Logan Square, a 696,477 square foot
office building in Philadelphia, primarily through our ownership of a second and third mortgage
secured by this property. This property is consolidated as the
borrower is a variable interest entity and we,
through our ownership of the second and third mortgages
are the primary beneficiary. We currently do not expect to take title to Two Logan Square until, at
the earliest, September 2019. If we take fee title to Two Logan Square upon a foreclosure of our
mortgage, we have agreed to pay an unaffiliated third party that holds a residual interest in the
fee owner of this property an amount equal to $0.6 million (if we must pay a state and local
transfer upon taking title) and $2.9 million (if no transfer tax is payable upon the transfer).
As part of our 2006 acquisition of Prentiss Properties Trust, the TRC acquisition in 2004 and
several of our other transactions, we agreed not to sell certain of the properties we acquired in
transactions that would trigger taxable income to the former owners.
In the case of the TRC
acquisition, we agreed not to sell acquired properties for periods up to 15 years from
the acquisition date as follows: 201 King of Prussia Road, 555 East
Lancaster Avenue and 300 Delaware Avenue (January 2008); One Rodney Square and 130/150/170 Radnor Financial Center
(January 2015); and One Logan Square, Two Logan Square and Radnor Corporate Center (January
2020). In the Prentiss acquisition, we assumed the obligation of Prentiss not to sell Concord
Airport Plaza before March 2018 and 6600 Rockledge before July 2008. We also agreed not sell 14
other properties that contain an aggregate of 1.2 million square feet for periods that expire by
the end of 2008. Our agreements generally provide that we may dispose of the subject properties
only in transactions that qualify as tax-free exchanges under Section 1031 of the Internal Revenue
Code or in other tax deferred transactions. If we were to sell a restricted property before
expiration of the restricted period in a non-exempt transaction, we would be required to make
significant payments to the parties who sold us the applicable property on account of tax
liabilities triggered to them.
We invest in our properties and regularly incur capital expenditures in the ordinary course to
maintain the properties. We believe that such expenditures enhance our competitiveness. We also
enter into construction, utility and service contracts in the ordinary course of business which may
extend beyond one year. These contracts typically provide for cancellation with insignificant or
no cancellation penalties.
Interest Rate Risk and Sensitivity Analysis
The analysis below presents the sensitivity of the market value of our financial instruments to
selected changes in market rates. The range of changes chosen reflects our view of changes which
are reasonably possible over a one-year period. Market values are the present value of projected
future cash flows based on the market rates chosen.
Our financial instruments consist of both fixed and variable rate debt. As of December 31, 2007,
our consolidated debt consisted of $61.2 million in fixed rate mortgages, $120 million borrowings
under our Credit Facility, $11 million of swing line borrowings, $150 million borrowings in an unsecured term loan and $2.1 billion in
unsecured notes (net of discounts) of which $2.0 billion are
fixed rate borrowings and $79 million
are variable rate borrowings. All financial instruments were entered into for other than trading
purposes and the net market value of these financial instruments is referred to as the net
financial position. Changes in interest rates have different impacts on the fixed and variable
rate portions of our debt portfolio. A change in interest rates on the fixed portion of the debt
portfolio impacts the net financial instrument position, but has no impact on interest incurred or
cash flows. A change in interest rates on the variable portion of the debt portfolio impacts the
interest incurred and cash flows, but does not impact the net financial instrument position.
In November 2007, we entered into an interest rate swap agreement that is designated as a cash flow hedge of interest rate risk and qualified for hedge accounting. The interest rate swap is for a notional amount of $25.0 million at a fixed rate of 3.747% with a maturity date of October 18, 2010 and will be used to hedge the risk of interest cash outflows on unsecured variable rate debt.
In October 2007, we entered into an interest rate swap agreement that is designated as a cash flow hedge of interest rate risk and qualified for hedge accounting. The interest rate swap is for a notional amount of $25.0 million at a fixed rate of 4.415% with a maturity date of October 18, 2010 and will be used to hedge the risk of interest cash outflows on unsecured variable rate debt. The fair value of the hedge at December 31, 2007 was $(0.5) million and is included in other liabilities and accumulated other comprehensive income in the accompanying consolidated balance sheet.
In September 2007, we entered into an interest rate swap agreement that is designated as a cash flow hedge of interest rate risk and qualified for hedge accounting. The interest rate swap has a starting notional amount of $63.7 million increasing to a maximum amount of
$155.0 million, at a fixed rate of 4.709% with a maturity date of October 18, 2010 and will be used to hedge the risk of interest cash outflows on unsecured variable rate debt. The fair value of the hedge at December 31, 2007 was $(2.7) million and is included in other liabilities and accumulated other comprehensive income in the accompanying consolidated balance sheet.
If market rates of interest on our variable rate debt increase by 1%, the increase in annual
interest expense on our variable rate debt would decrease future earnings and cash flows by
approximately $2.5 million net of the hedged portion of variable
rate debt. If market rates of interest on our variable rate debt decrease by 1%,
the decrease in interest expense on our variable rate debt would increase future earnings and cash
flows by approximately $2.5 million net of the hedged portion of variable rate debt.
If market rates of interest increase by 1%, the fair value of our outstanding fixed-rate debt would
decrease by approximately $86.9 million. If market rates of interest decrease by 1%, the fair
value of our outstanding fixed-rate mortgage debt would increase by
approximately $92.1 million.
-60-
As of December 31, 2007, based on prevailing interest rates and credit spreads, the fair value of
our unsecured notes and fixed rate mortgages was $2.6 billion.
Item 7A. Quantitative and Qualitative Disclosure About Market Risk
See discussion in Managements Discussion and Analysis included in Item 7 herein.
Item 8. Financial Statements and Supplementary Data
The financial statements and supplementary financial data of Brandywine Realty Trust and Brandywine
Operating Partnership, L.P. and the reports thereon of PricewaterhouseCoopers LLP with respect
thereto are listed under Item 15(a) and filed as part of this Annual Report on Form 10-K. See Item
15.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None
Item 9A. Controls and Procedures
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
Under the supervision and with the participation of each registrants management, including its
principal executive officer and principal financial officer, each registrants management conducted
an evaluation of the registrants disclosure controls and procedures, as such term is defined under
Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the Exchange
Act). Based on this evaluation, the principal executive officer and the principal financial
officer of each registrant concluded that each registrants disclosure controls and procedures were
effective as of the end of the period covered by this annual report.
Managements Report on Internal Control Over Financial Reporting
The management of each registrant is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f).
Under the supervision and with the participation of each registrants management, including its
principal executive officer and principal financial officer, each registrants management conducted
an evaluation of the effectiveness of the registrants internal control over financial reporting
based on the framework in Internal Control Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission. Based on this evaluation under the framework
in Internal Control Integrated Framework, each registrants management concluded that the
registrants internal control over financial reporting was effective as of December 31, 2007.
Management of each registrant has excluded our investments in Four and Six Tower Bridge Associates
from its evaluation of the effectiveness of internal control over financial reporting as of
December 31, 2007 because we do not have the right or authority to assess the internal controls of
the individual entities and we also lack the ability, in practice, to make the assessment. Four
and Six Tower Bridge Associates are two real estate partnerships, created prior to December 15,
2003, which we consolidate under Financial Accounting Standards Board Interpretation (FIN) 46R,
Consolidation of Variable Interest Entities. The total assets and total revenue of Four and Six
Tower Bridge Associates represent, in the aggregate, less than
1% of our consolidated total assets and consolidated total revenue as of and for the year ended
December 31, 2007.
-61-
The effectiveness of each registrants internal control over financial reporting as of December 31,
2007 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting
firm, as stated in their reports which are included herein.
Changes in Internal Control over Financial Reporting.
There have not been any changes in either registrants internal control over financial reporting
(as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth
fiscal quarter to which this report relates that have materially affected, or are reasonably likely
to materially affect, either registrants internal control over financial reporting.
Item 9B. Other Information
None
PART III
Item 10. Directors and Executive Officers of the Registrant
Incorporated herein by reference to the Companys definitive proxy statement to be filed with
respect to its 2008 Annual Meeting of Shareholders.
Item 11.
Executive Compensation
Incorporated herein by reference to the Companys definitive proxy statement to be filed with
respect to its 2008 Annual Meeting of Shareholders.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder
Matters
Incorporated herein by reference to the Companys definitive proxy statement to be filed with
respect to its 2008 Annual Meeting of Shareholders.
Item 13. Certain Relationships and Related Transactions
Incorporated herein by reference to the Companys definitive proxy statement to be filed with
respect to its 2008 Annual Meeting of Shareholders.
Item 14. Principal Accountant Fees and Services
Incorporated herein by reference to the Companys definitive proxy statement to be filed with
respect to its 2008 Annual Meeting of Shareholders.
PART IV
Item 15. Exhibits and Financial Statement Schedules.
(a) 1. and 2. Financial Statements and Schedules
The financial statements and schedules of Brandywine Realty Trust and Brandywine Operating
Partnership listed below are filed as part of this annual report on the pages indicated.
-62-
Index to Financial Statements and Schedules
BRANDYWINE REALTY TRUST
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Page |
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Report of Independent Registered Public Accounting Firm |
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F-1 |
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F-3 |
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F-4 |
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F-5 |
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F-6 |
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F-7 |
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F-8 |
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F-42 |
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F-43 |
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BRANDYWINE OPERATING PARTNERSHIP, L.P.
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Page |
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Report of Independent Registered Public Accounting Firm |
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F-48 |
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F-50 |
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F-51 |
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F-52 |
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F-53 |
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F-54 |
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F-55 |
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F-91 |
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F-92 |
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-63-
3. Exhibits
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Exhibits No. |
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Description |
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2
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Agreement and Plan of Merger dated as of October 3, 2005 by and among Brandywine Realty Trust,
Brandywine Operating Partnership, L.P., Brandywine Cognac I, LLC, Brandywine Cognac II, LLC,
Prentiss Properties Trust and Prentiss Properties Acquisition Partners, L.P. (previously filed
as an exhibit to Brandywine Realty Trusts Form 8-K dated October 4, 2005 and incorporated
herein by reference) |
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3.1.1
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Amended and Restated Declaration of Trust of Brandywine Realty Trust (amended and restated as of
May 12, 1997) (previously filed as an exhibit to Brandywine Realty Trusts Form 8-K dated June
9, 1997 and incorporated herein by reference) |
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3.1.2
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Articles of Amendment to Declaration of Trust of Brandywine Realty Trust (September 4, 1997)
(previously filed as an exhibit to Brandywine Realty Trusts Form 8-K dated September 10, 1997
and incorporated herein by reference) |
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3.1.3
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Articles of Amendment to Declaration of Trust of Brandywine Realty Trust (previously filed as an
exhibit to Brandywine Realty Trusts Form 8-K dated June 3, 1998 and incorporated herein by
reference) |
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3.1.4
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Articles Supplementary to Declaration of Trust of Brandywine Realty Trust (September 28, 1998)
(previously filed as an exhibit to Brandywine Realty Trusts Form 8-K dated October 13, 1998 and
incorporated herein by reference) |
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3.1.5
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Articles of Amendment to Declaration of Trust of Brandywine Realty Trust (March 19, 1999)
(previously filed as an exhibit to Brandywine Realty Trusts Form 10-K for the fiscal year ended
December 31, 1998 and incorporated herein by reference) |
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3.1.6
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Articles Supplementary to Declaration of Trust of Brandywine Realty Trust (April 19, 1999)
(previously filed as an exhibit to Brandywine Realty Trusts Form 8-K dated April 26, 1999 and
incorporated herein by reference) |
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3.1.7
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Articles Supplementary to Declaration of Trust of Brandywine Realty Trust (December 30, 2003)
(previously filed as an exhibit to Brandywine Realty Trusts Form 8-A dated December 29, 2003
and incorporated herein by reference) |
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3.1.8
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Articles Supplementary to Declaration of Trust of Brandywine Realty Trust (February 5, 2004)
(previously filed as an exhibit to Brandywine Realty Trusts Form 8-A dated February 5, 2004 and
incorporated herein by reference) |
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3.1.9
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Articles of Amendment to Declaration of Trust of Brandywine Realty Trust (October 3, 2005)
(previously filed as an exhibit to Brandywine Realty Trusts Form 8-K dated October 4, 2005 and
incorporated herein by reference) |
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3.1.10
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Second Amended and Restated Partnership Agreement of Brandywine Realty Services Partnership
(previously filed as an exhibit to Brandywine Realty Trusts Registration statement of Form S-11
(File No. 33-4175) and incorporated herein by reference) |
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3.1.11
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Amended and Restated Articles of Incorporation of Brandywine Realty Services Corporation
(previously filed as an exhibit to Brandywine Realty Trusts Form 10-K for the fiscal year ended
December 31, 2002 and incorporated herein by reference) |
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3.1.12
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Amended and Restated Agreement of Limited Partnership of Brandywine Operating Partnership, L.P.
(the Operating Partnership) (previously filed as an exhibit to Brandywine Realty Trusts Form
8-K dated December 17, 1997 and incorporated herein by reference) |
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3.1.13
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First Amendment to Amended and Restated Agreement of Limited Partnership of Brandywine Operating
Partnership, L.P. (previously filed as an exhibit to Brandywine Realty Trusts Form 8-K dated
December 17, 1997 and incorporated herein by reference) |
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3.1.14
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Second Amendment to the Amended and Restated Agreement of Limited Partnership Agreement of
Brandywine Operating Partnership, L.P. (previously filed as an exhibit to Brandywine Realty
Trusts Form 8-K dated April 13, 1998 and incorporated herein by reference) |
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3.1.15
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Third Amendment to the Amended and Restated Agreement of Limited Partnership of Brandywine
Operating Partnership, L.P. (previously filed as an exhibit to Brandywine Realty Trusts Form
8-K dated May 14, 1998 and incorporated herein by reference) |
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3.1.16
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Fourth Amendment to the Amended and Restated Agreement of Limited Partnership of Brandywine
Operating Partnership, L.P. (previously filed as an exhibit to Brandywine Realty Trusts Form
8-K dated October 13, 1998 and incorporated herein by reference) |
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3.1.17
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Fifth Amendment to the Amended and Restated Agreement of Limited Partnership of Brandywine
Operating Partnership, L.P. (previously filed as an exhibit to Brandywine Realty Trusts Form
8-K dated October 13, 1998 and incorporated herein by reference) |
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3.1.18
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Sixth Amendment to the Amended and Restated Agreement of Limited Partnership of Brandywine
Operating Partnership, L.P. (previously filed as an exhibit to Brandywine Realty Trusts Form
8-K dated October 13, 1998 and incorporated herein by reference) |
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3.1.19
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Seventh Amendment to the Amended and Restated Agreement of Limited Partnership of Brandywine
Operating Partnership, L.P. (previously filed as an exhibit to Brandywine Realty Trusts Form
10-K for the fiscal year ended December 31, 2003 and incorporated herein by reference) |
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3.1.20
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Eighth Amendment to the Amended and Restated Agreement of Limited Partnership of Brandywine
Operating Partnership, L.P. (previously filed as an exhibit to Brandywine Realty Trusts Form
10-K for the fiscal year ended December 31, 2003 and incorporated herein by reference) |
-64-
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Exhibits No. |
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Description |
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3.1.21
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Ninth Amendment to the Amended and Restated Agreement of Limited Partnership of Brandywine
Operating Partnership, L.P. (previously filed as an exhibit to Brandywine Realty Trusts Form
10-K for the fiscal year ended December 31, 2003 and incorporated herein by reference) |
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3.1.22
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Tenth Amendment to the Amended and Restated Agreement of Limited Partnership of Brandywine
Operating Partnership, L.P. (previously filed as an exhibit to Brandywine Realty Trusts Form
10-K for the fiscal year ended December 31, 2003 and incorporated herein by reference) |
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3.1.23
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Eleventh Amendment to the Amended and Restated Agreement of Limited Partnership of Brandywine
Operating Partnership, L.P. (previously filed as an exhibit to Brandywine Realty Trusts Form
10-K for the fiscal year ended December 31, 2003 and incorporated herein by reference) |
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3.1.24
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Twelfth Amendment to the Amended and Restated Agreement of Limited Partnership of Brandywine
Operating Partnership, L.P. (previously filed as an exhibit to Brandywine Realty Trusts Form
10-K for the fiscal year ended December 31, 2003 and incorporated herein by reference) |
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3.1.25
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Thirteenth Amendment to the Amended and Restated Agreement of Limited Partnership of Brandywine
Operating Partnership, L.P. (previously filed as an exhibit to Brandywine Realty Trusts Form
8-K dated September 21, 2004 and incorporated herein by reference) |
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3.1.26
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Fourteenth Amendment to the Amended and Restated Agreement of Limited Partnership of Brandywine
Operating Partnership, L.P. (previously filed as an exhibit to Brandywine Realty Trusts Form
8-K dated January 10, 2006 and incorporated herein by reference) |
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3.1.27
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Fifteenth Amendment to the Amended and Restated Agreement of Limited Partnership of Brandywine
Operating Partnership, L.P. (previously filed as an exhibit to Brandywine Realty Trusts Form
8-K dated August 18, 2006 and incorporated herein by reference) |
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3.1.28
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List of partners of Brandywine Operating Partnership, L.P. |
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3.2
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Amended and Restated Bylaws of Brandywine Realty Trust (previously filed as an exhibit to
Brandywine Realty Trusts Form 8-K dated October 14, 2003 and incorporated herein by reference) |
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4.1
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Form of 7.50% Series C Cumulative Redeemable Preferred Share Certificate (previously filed as an
exhibit to Brandywine Realty Trusts Form 8-A dated December 29, 2003 and incorporated herein by
reference) |
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4.2
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Form of 7.375% Series D Cumulative Redeemable Preferred Share Certificate (previously filed as
an exhibit to Brandywine Realty Trusts Form 8-A dated February 5, 2004 and incorporated herein
by reference) |
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4.3.1
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Indenture dated October 22, 2004 by and among Brandywine Operating Partnership, L.P., Brandywine
Realty Trust, certain subsidiaries of Brandywine Operating Partnership, L.P. named therein and
The Bank of New York, as Trustee (previously filed as an exhibit to Brandywine Realty Trusts
Form 8-K dated October 22, 2004 and incorporated herein by reference) |
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4.3.2
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First Supplemental Indenture dated as of May 25, 2005 by and among Brandywine Operating
Partnership, L.P., Brandywine Realty Trust, certain subsidiaries of Brandywine Operating
Partnership, L.P. named therein and The Bank of New York, as Trustee (previously filed as an
exhibit to Brandywine Realty Trusts Form 8-K dated May 26, 2005 and incorporated herein by
reference) |
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4.3.3
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Second Supplemental Indenture dated as of October 4, 2006 by and among Brandywine Operating
Partnership, L.P., Brandywine Realty Trust and the Bank of New York, as Trustee (previously
filed as an exhibit to Brandywine Realty Trusts Form 8-K dated October 4, 2006 and incorporated
herein by reference) |
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4.4
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Form of $275,000,000 4.50% Guaranteed Note due 2009 (previously filed as an exhibit to
Brandywine Realty Trusts Form 8-K dated October 22, 2004 and incorporated herein by reference) |
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4.5
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Form of $250,000,000 5.40% Guaranteed Note due 2014 (previously filed as an exhibit to
Brandywine Realty Trusts Form 8-K dated October 22, 2004 and incorporated herein by reference) |
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4.6
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Form of $300,000,000 5.625% Guaranteed Note due 2010 (previously filed as an exhibit to
Brandywine Realty Trusts Form 8-K dated December 20, 2005 and incorporated herein by reference) |
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4.7
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Form of $300,000,000 aggregate principal amount of Floating Rate Guaranteed Note due 2009
(previously filed as an exhibit to Brandywine Realty Trusts Form 8-K dated March 28, 2006 and
incorporated herein by reference). |
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4.8
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Form of $300,000,000 aggregate principal amount of 5.75% Guaranteed Note due 2012 (previously
filed as an exhibit to Brandywine Realty Trusts Form 8-K dated March 28, 2006 and incorporated
herein by reference). |
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4.9
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Form of $250,000,000 aggregate principal amount of 6.00% Guaranteed Note due 2016 (previously
filed as an exhibit to Brandywine Realty Trusts Form 8-K dated March 28, 2006 and incorporated
herein by reference). |
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4.10
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Form of 3.875% Exchangeable Guaranteed Notes due 2026 (previously filed as an exhibit to
Brandywine Realty Trusts Form 8-K dated October 4, 2006 and incorporated herein by reference) |
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4.11
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Form of $300,000,000 aggregate principal amount of 5.70% Guaranteed Notes due 2017 (previously
filed as an exhibit to Brandywine Realty Trusts Form 8-K dated April 30, 2007 and incorporated
herein by reference) |
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10.1
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Second Amended and Restated Revolving Credit Agreement dated as of June 29, 2007 (previously
filed as an exhibit to Brandywine Realty Trusts Form 8-K dated June 29, 2007 and incorporated
herein by reference) |
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10.2
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Term Loan Agreement dated as of October 15, 2007 (previously filed as an exhibit to Brandywine
Realty Trusts Form 8-K dated October 16, 2007 and incorporated herein by reference) |
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10.3
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Term Loan Agreement dated as of January 5, 2006 (previously filed as an exhibit to Brandywine
Realty Trusts Form 8-K dated January 10, 2006 and incorporated herein by reference) |
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10.4
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Note Purchase Agreement dated as of November 15, 2004 (previously filed as an exhibit to
Brandywine Realty Trusts Form 8-K dated November 15, 2004 and incorporated herein by reference) |
-65-
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Exhibits No. |
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Description |
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10.5
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Tax Indemnification Agreement dated May 8, 1998, by and between Brandywine Operating
Partnership, L.P. and the parties identified on the signature page (previously filed as an
exhibit to Brandywine Realty Trusts Form 8-K dated May 14, 1998 and incorporated herein by
reference) |
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10.6
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Contribution Agreement dated as of July 10, 1998 (with Donald E. Axinn) (previously filed as an
exhibit to Brandywine Realty Trusts Form 8-K dated July 30, 1998 and incorporated herein by
reference) |
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10.7
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First Amendment to Contribution Agreement (with Donald E. Axinn) (previously filed as an exhibit
to Brandywine Realty Trusts Form 8-K dated October 13, 1998 and incorporated herein by
reference) |
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10.8
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Form of Donald E. Axinn Options** (previously filed as an exhibit to Brandywine Realty Trusts
Form 8-K dated July 30, 1998 and incorporated herein by reference) |
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10.9
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Modification Agreement dated as of June 20, 2005 between Brandywine Operating Partnership, L.P.
and Donald E. Axinn (previously filed as an exhibit to Brandywine Realty Trusts Form 8-K dated
June 21, 2005 and incorporated herein by reference) |
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10.10
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Contribution Agreement dated August 18, 2004 with TRC Realty, Inc.-GP, TRC-LB LLC and TRC
Associates Limited Partnership (previously filed as an exhibit to Brandywine Realty Trusts Form
8-K dated August 19, 2004 and incorporated herein by reference) |
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10.11
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|
Registration Rights Agreement (previously filed as an exhibit to Brandywine Realty Trusts Form
8-K dated September 21, 2004 and incorporated herein by reference) |
|
|
|
10.12
|
|
Tax Protection Agreement (previously filed as an exhibit to Brandywine Realty Trusts Form 8-K
dated September 21, 2004 and incorporated herein by reference) |
|
|
|
10.13
|
|
Registration Rights Agreement dated as of October 3, 2005 (previously filed as an exhibit to
Brandywine Realty Trusts Form 8-K dated October 4, 2005 and incorporated herein by reference) |
|
|
|
10.14
|
|
Letter to Cohen & Steers Capital Management, Inc. (previously filed as an exhibit to Brandywine
Realty Trusts Form 10-Q for the quarter ended June 30, 2003 and incorporated herein by
reference) |
|
|
|
10.15
|
|
Sales Agreement with Brinson Patrick Securities Corporation (previously filed as an exhibit to
Brandywine Realty Trusts Form 8-K dated November 29, 2004 and incorporated herein by reference) |
|
|
|
10.16
|
|
Registration Rights Agreement dated as of October 4, 2006 relating to 3.875% Exchangeable
Guaranteed Notes due 2026 (previously filed as an exhibit to Brandywine Realty Trusts Form 8-K
dated October 4, 2006 and incorporated herein by reference) |
|
|
|
10.17
|
|
Common Share Delivery Agreement (previously filed as an exhibit to Brandywine Realty Trusts
Form 8-K dated October 4, 2006 and incorporated herein by reference) |
|
|
|
10.18
|
|
2006 Amended and Restated Agreement dated as of January 5, 2006 with Anthony A. Nichols, Sr.**
(previously filed as an exhibit to Brandywine Realty Trusts Form 8-K dated January 10, 2006 and
incorporated herein by reference) |
|
|
|
10.19
|
|
Amended and Restated Employment Agreement dated as of February 9, 2007 of Gerard H. Sweeney**
(previously filed as an exhibit to Brandywine Realty Trusts Form
8-K dated February 14, 2007 and incorporated herein by reference) |
|
|
|
10.20
|
|
Employment Agreement with Howard M. Sipzner** (previously filed as an exhibit to Brandywine
Realty Trusts Form 8-K dated December 12, 2006 and incorporated herein by reference) |
|
|
|
10.21
|
|
Employment Agreement with Darryl M. Dunn** (previously filed as an exhibit to Brandywine Realty
Trusts Form 8-K dated January 10, 2007 and incorporated herein by reference) |
|
|
|
10.22
|
|
Consulting Agreement with Michael V. Prentiss** (previously filed as an exhibit to Brandywine
Realty Trusts Form 8-K dated January 10, 2006 and incorporated herein by reference) |
|
|
|
10.23
|
|
Consulting Agreement with Thomas F. August** (previously filed as an exhibit to Brandywine
Realty Trusts Form 8-K dated January 10, 2006 and incorporated herein by reference) |
|
|
|
10.24
|
|
Third Amended and Restated Employment Agreement with Michael V. Prentiss**(previously filed as
an exhibit to Brandywine Realty Trusts Form 8-K dated January 10, 2006 and incorporated herein
by reference) |
|
|
|
10.25
|
|
First Amendment to the Third Amended and Restated Employment Agreement with Michael V.
Prentiss** (previously filed as an exhibit to Brandywine Realty Trusts Form 8-K dated January
10, 2006 and incorporated herein by reference) |
|
|
|
10.26
|
|
Second Amendment to the Third Amended and Restated Employment Agreement with Michael V.
Prentiss** (previously filed as an exhibit to Brandywine Realty Trusts Form 8-K dated January
10, 2006 and incorporated herein by reference) |
|
|
|
10.27
|
|
Amended and Restated Employment Agreement with Thomas F. August** (previously filed as an
exhibit to Brandywine Realty Trusts Form 8-K dated January 10, 2006 and incorporated herein by
reference) |
|
|
|
10.28
|
|
First Amendment to the Amended and Restated Employment Agreement with Thomas F. August**
(previously filed as an exhibit to Brandywine Realty Trusts Form 8-K dated January 10, 2006 and
incorporated herein by reference) |
|
|
|
10.29
|
|
Second Amendment to the Amended and Restated Employment Agreement with Thomas F. August**
(previously filed as an exhibit to Brandywine Realty Trusts Form 8-K dated January 10, 2006 and
incorporated herein by reference) |
|
|
|
10.30
|
|
Employment Letter Agreement with Robert K. Wiberg dated January 15, 2008**(previously filed as
an exhibit to Brandywine Realty Trusts Form 8-K dated January 22, 2008 and incorporated herein
by reference) |
|
|
|
10.31
|
|
Change in Control and Severance Protection Agreement with Robert K. Wiberg**(previously filed as
an exhibit to Brandywine Realty Trusts Form 8-K dated January 22, 2008 and incorporated herein
by reference) |
|
|
|
10.32
|
|
Form of Acknowledgment and Waiver Agreement** (previously filed as an exhibit to Brandywine
Realty Trusts Form 8-K dated January 10, 2006 and incorporated herein by reference) |
-66-
|
|
|
Exhibits No. |
|
Description |
|
|
|
10.33
|
|
Amended and Restated 1997 Long-Term Incentive Plan** (previously filed as an exhibit to
Brandywine Realty Trusts Form 10-Q for the quarter ended March 31, 2007 and incorporated herein
by reference) |
|
|
|
10.34
|
|
Amended and Restated Executive Deferred Compensation Plan effective March 25, 2004** (previously
filed as an exhibit to Brandywine Realty Trusts Form 10-Q for the quarter ended March 31, 2004
and incorporated herein by reference) |
|
|
|
10.35
|
|
Amended and Restated Executive Deferred Compensation Plan effective January 1, 2006**
(previously filed as an exhibit to Brandywine Realty Trusts Form 8-K dated December 26, 2006
and incorporated herein by reference) |
|
|
|
10.36
|
|
2007 Non-Qualified Employee Share Purchase Plan** (previously filed as an exhibit to Brandywine
Realty Trusts Form 10-Q for the quarter ended March 31, 2007 and incorporated herein by
reference) |
|
|
|
10.37
|
|
2004 Restricted Share Award to Gerard H. Sweeney** (previously filed as an exhibit to Brandywine
Realty Trusts Form 10-Q for the quarter ended March 31, 2004 and incorporated herein by
reference) |
|
|
|
10.38
|
|
Form of 2004 Restricted Share Award to executive officers (other than the President and Chief
Executive Officer)** (previously filed as an exhibit to Brandywine Realty Trusts Form 10-Q for
the quarter ended March 31, 2004 and incorporated herein by reference) |
|
|
|
10.39
|
|
Form of 2004 Restricted Share Award to non-executive trustee (Wyche Fowler)** (previously filed
as an exhibit to Brandywine Realty Trusts Form 8-K dated December 22, 2004 and incorporated
herein by reference) |
|
|
|
10.40
|
|
2005 Restricted Share Award to Gerard H. Sweeney** (previously filed as an exhibit to Brandywine
Realty Trusts Form 8-K dated February 15, 2005 and incorporated herein by reference) |
|
|
|
10.41
|
|
Form of 2005 Restricted Share Award to executive officers (other than the President and Chief
Executive Officer)** (previously filed as an exhibit to Brandywine Realty Trusts Form 8-K dated
February 15, 2005 and incorporated herein by reference) |
|
|
|
10.42
|
|
Form of 2005 Restricted Share Award to non-executive trustees** (previously filed as an exhibit
to Brandywine Realty Trusts Form 8-K dated May 26, 2005 and incorporated herein by reference) |
|
|
|
10.43
|
|
2006 Restricted Share Award to Gerard H. Sweeney** (previously filed as an exhibit to Brandywine
Realty Trusts Form 8-K dated February 15, 2006 and incorporated herein by reference) |
|
|
|
10.44
|
|
Form of 2006 Restricted Share Award to executive officers (other than the President and Chief
Executive Officer)** (previously filed as an exhibit to Brandywine Realty Trusts Form 8-K dated
February 15, 2006 and incorporated herein by reference) |
|
|
|
10.45
|
|
Form of 2006 Restricted Share Award to non-executive trustees** (previously filed as an exhibit
to Brandywine Realty Trusts Form 10-Q for the quarter ended March 31, 2006 and incorporated
herein by reference) |
|
|
|
10.46
|
|
Form of 2007 Restricted Share Award to non-executive trustee**(previously filed as an exhibit to
Brandywine Realty Trusts Form 10-Q for the quarter ended March 31, 2007 and incorporated herein
by reference) |
|
|
|
10.47
|
|
Performance Share Award to Howard M. Sipzner ** (previously filed as an exhibit to Brandywine
Realty Trusts Form 8-K dated December 12, 2006 and incorporated herein by reference) |
|
|
|
10.48
|
|
2007 Performance Share Award to Gerard H. Sweeney** (previously filed as an exhibit to
Brandywine Realty Trusts Form 8-K dated February 14, 2007 and incorporated herein by reference) |
|
|
|
10.49
|
|
Form of 2007 Performance Share Award to executive officers (other than the President and Chief
Executive Officer)** (previously filed as an exhibit to Brandywine Realty Trusts Form 8-K dated
February 14, 2007 and incorporated herein by reference) |
|
|
|
10.50
|
|
Form of Severance Agreement for executive officers** (previously filed as an exhibit to
Brandywine Realty Trusts Form 8-K dated February 15, 2005 and incorporated herein by reference) |
|
|
|
10.51
|
|
Change of Control Agreement with Howard M. Sipzner** (previously filed as an exhibit to
Brandywine Realty Trusts Form 8-K dated December 12, 2006 and incorporated herein by reference) |
|
|
|
10.52
|
|
Summary of Trustee Compensation** (previously filed as an exhibit to Brandywine Realty Trusts
Form 8-K dated March 17, 2006 and incorporated herein by reference) |
|
|
|
10.53
|
|
Prentiss Properties Trust 1996 Share Incentive Plan** (previously filed as an exhibit to
Brandywine Realty Trusts Form 8-K dated January 10, 2006 and incorporated herein by reference) |
|
|
|
10.54
|
|
First Amendment to the Prentiss Properties Trust 1996 Share Incentive Plan**(previously filed as
an exhibit to Brandywine Realty Trusts Form 8-K dated January 10, 2006 and incorporated herein
by reference) |
|
|
|
10.55
|
|
Second Amendment to the Prentiss Properties Trust 1996 Share Incentive Plan**(previously filed
as an exhibit to Brandywine Realty Trusts Form 8-K dated January 10, 2006 and incorporated
herein by reference) |
|
|
|
10.56
|
|
Amendment No. 3 to the Prentiss Properties Trust 1996 Share Incentive Plan**(previously filed as
an exhibit to Brandywine Realty Trusts Form 8-K dated January 10, 2006 and incorporated herein
by reference) |
|
|
|
10.57
|
|
Fourth Amendment to the Prentiss Properties Trust 1996 Share Incentive Plan** (previously filed
as an exhibit to Brandywine Realty Trusts Form 8-K dated January 10, 2006 and incorporated
herein by reference) |
|
|
|
10.58
|
|
Amendment No. 5 to the Prentiss Properties Trust 1996 Share Incentive Plan** (previously filed
as an exhibit to Brandywine Realty Trusts Form 8-K dated January 10, 2006 and incorporated
herein by reference) |
|
|
|
10.59
|
|
Sixth Amendment to the Prentiss Properties Trust 1996 Share Incentive Plan** (previously filed
as an exhibit to Brandywine Realty Trusts Form 8-K dated January 10, 2006 and incorporated
herein by reference) |
|
|
|
10.60
|
|
Prentiss Properties Trust 2005 Share Incentive Plan** (previously filed as an exhibit to
Brandywine Realty Trusts Form 8-K dated January 10, 2006 and incorporated herein by reference) |
|
|
|
10.61
|
|
Amended and Restated Prentiss Properties Trust Trustees Share Incentive Plan**(previously filed
as an exhibit to Brandywine Realty Trusts Form 8-K dated January 10, 2006 and incorporated
herein by reference) |
-67-
|
|
|
Exhibits No. |
|
Description |
|
|
|
10.62
|
|
Amendment No. 1 to the Amended and Restated Prentiss Properties Trust Trustees Share Incentive
Plan** (previously filed as an exhibit to Brandywine Realty Trusts Form 8-K dated January 10,
2006 and incorporated herein by reference) |
|
|
|
10.63
|
|
Second Amendment to the Amended and Restated Prentiss Properties Trust Trustees Share Incentive
Plan** (previously filed as an exhibit to Brandywine Realty Trusts Form 8-K dated January 10,
2006 and incorporated herein by reference) |
|
|
|
10.64
|
|
Form of Restricted Share Award** (previously filed as an exhibit to Brandywine Realty Trusts
Form 8-K dated January 10, 2006 and incorporated herein by reference) |
|
|
|
10.65
|
|
2006 Long-Term Outperformance Compensation Program (previously filed as an exhibit to Brandywine
Realty Trusts Form 8-K dated September 1, 2006 and incorporated herein by reference) |
|
|
|
12.1
|
|
Statement re Computation of Ratios of Brandywine Realty Trust |
|
|
|
12.2
|
|
Statement re Computation of Ratios of Brandywine Operating Partnership, L.P. |
|
|
|
14.1
|
|
Code of Business Conduct and Ethics (previously filed as an exhibit to Brandywine Realty Trusts
Form 8-K dated December 22, 2004 and incorporated herein by reference) |
|
|
|
21
|
|
List of subsidiaries |
|
|
|
23.1
|
|
Consent of PricewaterhouseCoopers LLP relating to financial statements of Brandywine Realty Trust |
|
|
|
23.2
|
|
Consent of PricewaterhouseCoopers LLP relating to financial statements of Brandywine Operating
Partnership, L.P. |
|
|
|
31.1
|
|
Certifications of the Chief Executive Officer of Brandywine Realty Trust required by Rule
13a-14(a) under the Securities Exchange Act of 1934. |
|
|
|
31.2
|
|
Certifications of the Chief Financial Officer of Brandywine Realty Trust required by Rule
13a-14(a) under the Securities Exchange Act of 1934. |
|
|
|
31.3
|
|
Certifications of the Chief Executive Officer of Brandywine Realty Trust in its capacity as the
general partner of Brandywine Operating Partnership, L.P., required by Rule 13a-14(a) under the
Securities Exchange Act of 1934. |
|
|
|
31.4
|
|
Certifications of the Chief Financial Officer of Brandywine Realty Trust, in its capacity as the
general partner of Brandywine Operating Partnership, L.P., required by Rule 13a-14(a) under the
Securities Exchange Act of 1934. |
|
|
|
32.1
|
|
Certifications of the Chief Executive Officer of Brandywine Realty Trust required under Rule
13a-14(b) of the Securities Exchange Act of 1934. |
|
|
|
32.2
|
|
Certifications of the Chief Financial Officer of Brandywine Realty Trust required by Rule
13a-14(b) under the Securities Exchange Act of 1934. |
|
|
|
32.3
|
|
Certifications of the Chief Executive Officer of Brandywine Realty Trust, in its capacity as the
general partner of Brandywine Operating Partnership, L.P., required by Rule 13a-14(b) under the
Securities Exchange Act of 1934. |
|
|
|
32.4
|
|
Certifications of the Chief Financial Officer of Brandywine Realty Trust, in its capacity as the
general partner of Brandywine Operating Partnership, L.P., required by Rule 13a-14(b) under the
Securities Exchange Act of 1934. |
|
|
|
** |
|
Management contract or compensatory plan or arrangement. |
|
(c)(1)
|
|
The Financial Statements of G
& I Interchange Office, LLC will be filed on Form 10-K/A by March 31, 2008. |
-68-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
|
|
|
|
|
|
BRANDYWINE REALTY TRUST
|
|
|
By: |
/s/ Gerard H. Sweeney
|
|
|
|
Gerard H. Sweeney |
|
|
|
President and Chief Executive Officer |
|
|
Date: February 28, 2008
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the registrant and in the capacities and on the dates
indicated.
|
|
|
|
|
Signature |
|
Title |
|
Date |
|
|
Chairman of the Board and Trustee
|
|
February 28, 2008 |
Walter DAlessio |
|
|
|
|
|
|
|
|
|
/s/ Gerard H. Sweeney
Gerard H. Sweeney
|
|
President, Chief Executive
Officer and Trustee (Principal Executive Officer)
|
|
February 28, 2008 |
|
|
|
|
|
/s/ Howard M. Sipzner
Howard M. Sipzner
|
|
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
|
|
February 28, 2008 |
|
|
|
|
|
/s/ Darryl M. Dunn
Darryl M. Dunn
|
|
Vice President, Chief Accounting
Officer & Treasurer (Principal
Accounting Officer)
|
|
February 28, 2008 |
|
|
|
|
|
/s/ D. Pike Aloian
|
|
Trustee
|
|
February 28, 2008 |
D. Pike Aloian |
|
|
|
|
|
|
|
|
|
/s/ Donald E. Axinn
|
|
Trustee
|
|
February 28, 2008 |
Donald E. Axinn |
|
|
|
|
|
|
|
|
|
/s/ Wyche Fowler
|
|
Trustee
|
|
February 28, 2008 |
Wyche Fowler |
|
|
|
|
|
|
|
|
|
/s/ Michael J. Joyce
|
|
Trustee
|
|
February 28, 2008 |
Michael J. Joyce |
|
|
|
|
|
|
|
|
|
/s/ Anthony A. Nichols, Sr.
|
|
Trustee
|
|
February 28, 2008 |
Anthony A. Nichols, Sr. |
|
|
|
|
|
|
|
|
|
/s/ Charles P. Pizzi
|
|
Trustee
|
|
February 28, 2008 |
Charles P. Pizzi |
|
|
|
|
-69-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
|
|
|
|
|
|
BRANDYWINE OPERATING PARTNERSHIP, L.P.
|
|
|
By: |
Brandywine Realty Trust, its General Partner
|
|
|
|
|
|
|
|
|
|
By: |
/s/ Gerard H. Sweeney
|
|
|
|
Gerard H. Sweeney |
|
|
|
President and Chief Executive Officer |
|
Date: February 28, 2008
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the registrant and in the capacities and on the dates
indicated.
|
|
|
|
|
Signature |
|
Title |
|
Date |
/s/ Walter DAlessio
Walter DAlessio
|
|
Chairman of the Board and Trustee
|
|
February 28, 2008 |
|
|
|
|
|
/s/ Gerard H. Sweeney
Gerard H. Sweeney
|
|
President, Chief Executive
Officer and Trustee (Principal
Executive Officer)
|
|
February 28, 2008 |
|
|
|
|
|
/s/ Howard M. Sipzner
Howard M. Sipzner
|
|
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
|
|
February 28, 2008 |
|
|
|
|
|
/s/ Darryl M. Dunn
Darryl M. Dunn
|
|
Vice President, Chief Accounting
Officer & Treasurer (Principal
Accounting Officer)
|
|
February 28, 2008 |
|
|
|
|
|
/s/ D. Pike Aloian
|
|
Trustee
|
|
February 28, 2008 |
D. Pike Aloian |
|
|
|
|
|
|
|
|
|
/s/ Donald E. Axinn
|
|
Trustee
|
|
February 28, 2008 |
Donald E. Axinn |
|
|
|
|
|
|
|
|
|
/s/ Wyche Fowler
|
|
Trustee
|
|
February 28, 2008 |
Wyche Fowler |
|
|
|
|
|
|
|
|
|
/s/ Michael J. Joyce
|
|
Trustee
|
|
February 28, 2008 |
Michael J. Joyce |
|
|
|
|
|
|
|
|
|
/s/ Anthony A. Nichols, Sr.
|
|
Trustee
|
|
February 28, 2008 |
Anthony A. Nichols, Sr. |
|
|
|
|
|
|
|
|
|
/s/ Charles P. Pizzi
|
|
Trustee
|
|
February 28, 2008 |
Charles P. Pizzi |
|
|
|
|
-70-
Report of
Independent Registered Public Accounting Firm
To Board
of Trustees and Shareholders of Brandywine Realty Trust:
In our opinion, the consolidated financial statements listed in the index appearing under Item
15(a)(1) present fairly, in all material respects, the financial position of Brandywine Realty
Trust and its subsidiaries (the "Company") at December 31, 2007 and 2006, and the results of
their operations and their cash flows for each of the three years in the period ended December
31, 2007 in conformity with accounting principles generally accepted in the United States of
America. In addition, in our opinion, the financial statement schedules listed in the index
appearing under Item 15(a)(2) present fairly, in all material respects, the information set forth
therein when read in conjunction with the related consolidated financial statements. Also in our
opinion, the Company maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2007, based on criteria established in Internal Control -
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO). The Company's management is responsible for these financial statements and financial
statement schedules, for maintaining effective internal control over financial reporting and for
its assessment of the effectiveness of internal control over financial reporting, included in
Management's Report on Internal Control over Financial Reporting appearing under Item 9A. Our
responsibility is to express opinions on these financial statements, on the financial statement
schedules, and on the Company's internal control over financial reporting based on our integrated
audits. We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the financial statements are free of
material misstatement and whether effective internal control over financial reporting was
maintained in all material respects. Our audits of the financial statements included examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. Our audit of internal control over
financial reporting included obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists, and testing and evaluating the
design and operating effectiveness of internal control based on the assessed risk. Our audits
also included performing such other procedures as we considered necessary in the circumstances.
We believe that our audits provide a reasonable basis for our
opinions.
A companys internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the
preparation of
F - 1
financial statements for external purposes in accordance with generally accepted accounting
principles. A company's internal control over financial reporting includes those policies and
procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting principles, and that
receipts and expenditures of the company are being made only in accordance with authorizations
of management and directors of the company; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial
statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because of changes in conditions, or
that the degree of compliance with the policies or procedures may
deteriorate.
As described in Managements Report on
Internal Control Over Financial Reporting,
management has excluded the Companys investments in Four and Six Tower Bridge
Associates from its assessment of internal control over financial reporting as of December 31, 2007
because the Company does not have the right and authority to assess the internal control over
financial reporting of the individual entities and it lacks the ability to influence or modify the
internal control over financial reporting of the individual entities. Four and Six Tower Bridge
Associates are two real estate partnerships, created prior to December 13, 2003, which the
Company started consolidating under Financial Accounting Standards Board Interpretation No. 46R,
Consolidation of Variable Interest Entities on March 31, 2004. We have also
excluded Four and Six Tower Bridge Associates from our audit of internal control over
financial reporting. The total assets and total revenue of Four and Six Tower Bridge Associates
represent, in the aggregate less than 1% and 1%, respectively, of the Companys consolidated
financial statement amounts as of and for the year ended December 31,
2007.
/s/ PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
February 27, 2008
F - 2
BRANDYWINE REALTY TRUST
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share information)
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
2007 |
|
|
2006 |
|
ASSETS |
|
|
|
|
|
|
|
|
Real estate investments: |
|
|
|
|
|
|
|
|
Operating properties |
|
$ |
4,813,563 |
|
|
$ |
4,927,305 |
|
Accumulated depreciation |
|
|
(558,908 |
) |
|
|
(515,698 |
) |
|
|
|
|
|
|
|
Operating real estate investments, net |
|
|
4,254,655 |
|
|
|
4,411,607 |
|
Development land and construction-in-progress |
|
|
402,270 |
|
|
|
328,119 |
|
|
|
|
|
|
|
|
Total real estate invesmtents, net |
|
|
4,656,925 |
|
|
|
4,739,726 |
|
Cash and cash equivalents |
|
|
5,600 |
|
|
|
25,379 |
|
Accounts receivable, net |
|
|
17,057 |
|
|
|
19,957 |
|
Accrued rent receivable, net |
|
|
83,098 |
|
|
|
71,589 |
|
Asset held for sale |
|
|
|
|
|
|
126,016 |
|
Investment in real estate ventures, at equity |
|
|
71,598 |
|
|
|
74,574 |
|
Deferred costs, net |
|
|
87,123 |
|
|
|
73,708 |
|
Intangible assets, net |
|
|
218,149 |
|
|
|
281,251 |
|
Other assets |
|
|
74,549 |
|
|
|
96,818 |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
5,214,099 |
|
|
$ |
5,509,018 |
|
|
|
|
|
|
|
|
LIABILITIES AND BENEFICIARIES EQUITY |
|
|
|
|
|
|
|
|
Mortgage notes payable |
|
$ |
611,898 |
|
|
$ |
883,920 |
|
Unsecured term loan |
|
|
150,000 |
|
|
|
|
|
Unsecured notes |
|
|
2,208,344 |
|
|
|
2,208,310 |
|
Unsecured credit facility |
|
|
130,727 |
|
|
|
60,000 |
|
Accounts payable and accrued expenses |
|
|
80,732 |
|
|
|
108,400 |
|
Distributions payable |
|
|
42,368 |
|
|
|
42,760 |
|
Tenant security deposits and deferred rents |
|
|
65,241 |
|
|
|
55,697 |
|
Acquired below market leases, net of accumulated amortization of $36,544 and $26,009 |
|
|
67,281 |
|
|
|
92,527 |
|
Other liabilities |
|
|
30,154 |
|
|
|
14,661 |
|
Mortgage notes payable and other liabilities held for sale |
|
|
|
|
|
|
20,826 |
|
|
|
|
|
|
|
|
Total liabilities |
|
|
3,386,745 |
|
|
|
3,487,101 |
|
Minority interest partners share of consolidated real estate ventures |
|
|
|
|
|
|
34,428 |
|
Minority interest LP units |
|
|
84,119 |
|
|
|
89,563 |
|
Commitments
and contingencies (Note 19) |
|
|
|
|
|
|
|
|
Beneficiaries equity: |
|
|
|
|
|
|
|
|
Preferred Shares (shares authorized-20,000,000): |
|
|
|
|
|
|
|
|
7.50% Series C Preferred Shares, $0.01 par value; issued and outstanding-
2,000,000 in 2007 and 2006 |
|
|
20 |
|
|
|
20 |
|
7.375% Series D Preferred Shares, $0.01 par value; issued and outstanding-
2,300,000 in 2007 and 2006 |
|
|
23 |
|
|
|
23 |
|
Common Shares of beneficial interest, $0.01 par value; shares authorized
200,000,000; 88,623,635 and 88,327,041 issued in 2007 and 2006, respectively
and 87,015,600 and 88,327,041 outstanding in 2007 and 2006, respectively |
|
|
870 |
|
|
|
883 |
|
Additional paid-in capital |
|
|
2,319,410 |
|
|
|
2,311,541 |
|
Common shares in treasury, at cost, 1,599,637 shares at December 31, 2007 |
|
|
(53,449 |
) |
|
|
|
|
Cumulative earnings |
|
|
480,217 |
|
|
|
423,764 |
|
Accumulated other comprehensive income (loss) |
|
|
(1,885 |
) |
|
|
1,576 |
|
Cumulative distributions |
|
|
(1,001,971 |
) |
|
|
(839,881 |
) |
|
|
|
|
|
|
|
Total beneficiaries equity |
|
|
1,743,235 |
|
|
|
1,897,926 |
|
|
|
|
|
|
|
|
Total liabilities, minority interest and beneficiaries equity |
|
$ |
5,214,099 |
|
|
$ |
5,509,018 |
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these consolidated financial statements.
F - 3
BRANDYWINE REALTY TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS
(in
thousands, except share and per share information)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years ended December 31, |
|
|
|
2007 |
|
|
2006 |
|
|
2005 |
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
Rents |
|
$ |
562,514 |
|
|
$ |
519,282 |
|
|
$ |
302,530 |
|
Tenant reimbursements |
|
|
85,404 |
|
|
|
78,817 |
|
|
|
48,069 |
|
Termination fees |
|
|
10,236 |
|
|
|
7,231 |
|
|
|
6,083 |
|
Third party management fees, labor reimbursement and leasing |
|
|
19,691 |
|
|
|
19,453 |
|
|
|
3,582 |
|
Other |
|
|
6,127 |
|
|
|
5,502 |
|
|
|
4,171 |
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
|
683,972 |
|
|
|
630,285 |
|
|
|
364,435 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Property operating expenses |
|
|
189,130 |
|
|
|
171,924 |
|
|
|
103,968 |
|
Real estate taxes |
|
|
64,895 |
|
|
|
60,808 |
|
|
|
36,356 |
|
Management expenses |
|
|
10,361 |
|
|
|
10,675 |
|
|
|
1,394 |
|
Depreciation and amortization |
|
|
242,312 |
|
|
|
230,710 |
|
|
|
106,175 |
|
Administrative expenses |
|
|
28,182 |
|
|
|
29,644 |
|
|
|
17,982 |
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
|
534,880 |
|
|
|
503,761 |
|
|
|
265,875 |
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
|
149,092 |
|
|
|
126,524 |
|
|
|
98,560 |
|
Other Income (Expense): |
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
4,040 |
|
|
|
9,513 |
|
|
|
1,370 |
|
Interest expense |
|
|
(162,675 |
) |
|
|
(171,177 |
) |
|
|
(70,380 |
) |
Interest
expense - Deferred financing costs |
|
|
(4,496 |
) |
|
|
(4,607 |
) |
|
|
(3,540 |
) |
Loss on settlement of treasury lock agreements |
|
|
(3,698 |
) |
|
|
|
|
|
|
|
|
Equity in income of real estate ventures |
|
|
6,955 |
|
|
|
2,165 |
|
|
|
3,171 |
|
Net gain on sale of interests in depreciated real estate |
|
|
40,498 |
|
|
|
|
|
|
|
|
|
Net gain on sale of interests in undepreciated real estate |
|
|
421 |
|
|
|
14,190 |
|
|
|
4,640 |
|
Gain on termination of purchase contract |
|
|
|
|
|
|
3,147 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before minority interest |
|
|
30,137 |
|
|
|
(20,245 |
) |
|
|
33,821 |
|
Minority
interest - partners share of consolidated real estate ventures |
|
|
(465 |
) |
|
|
270 |
|
|
|
|
|
Minority
interest attributable to continuing operations - LP units |
|
|
(911 |
) |
|
|
1,246 |
|
|
|
(1,043 |
) |
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations |
|
|
28,761 |
|
|
|
(18,729 |
) |
|
|
32,778 |
|
Discontinued operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations |
|
|
3,184 |
|
|
|
12,597 |
|
|
|
8,150 |
|
Net gain on disposition of discontinued operations |
|
|
25,743 |
|
|
|
20,243 |
|
|
|
2,196 |
|
Minority
interest - partners share of consolidated real estate ventures |
|
|
|
|
|
|
(2,239 |
) |
|
|
|
|
Minority
interest attributable to discontinued operations - LP units |
|
|
(1,235 |
) |
|
|
(1,390 |
) |
|
|
(357 |
) |
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations |
|
|
27,692 |
|
|
|
29,211 |
|
|
|
9,989 |
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
56,453 |
|
|
|
10,482 |
|
|
|
42,767 |
|
Income allocated to Preferred Shares |
|
|
(7,992 |
) |
|
|
(7,992 |
) |
|
|
(7,992 |
) |
|
|
|
|
|
|
|
|
|
|
Income allocated to Common Shares |
|
$ |
48,461 |
|
|
$ |
2,490 |
|
|
$ |
34,775 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per Common Share: |
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
|
$ |
0.24 |
|
|
$ |
(0.30 |
) |
|
$ |
0.44 |
|
Discontinued operations |
|
|
0.32 |
|
|
|
0.33 |
|
|
|
0.18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
0.56 |
|
|
$ |
0.03 |
|
|
$ |
0.62 |
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per Common Share: |
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
|
$ |
0.24 |
|
|
$ |
(0.30 |
) |
|
$ |
0.44 |
|
Discontinued operations |
|
|
0.32 |
|
|
|
0.32 |
|
|
|
0.18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
0.55 |
|
|
$ |
0.03 |
|
|
$ |
0.62 |
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per common share |
|
$ |
1.76 |
|
|
$ |
1.76 |
|
|
$ |
1.78 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average shares outstanding |
|
|
87,272,148 |
|
|
|
89,552,301 |
|
|
|
55,846,268 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average shares outstanding |
|
|
87,321,276 |
|
|
|
90,070,825 |
|
|
|
56,104,588 |
|
The accompanying notes are an integral part of these consolidated financial statements.
F - 4
BRANDYWINE REALTY TRUST
CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE (LOSS) INCOME
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years ended December 31, |
|
|
|
2007 |
|
|
2006 |
|
|
2005 |
|
Net income |
|
$ |
56,453 |
|
|
$ |
10,482 |
|
|
$ |
42,767 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain (loss) on derivative financial instruments |
|
|
(3,600 |
) |
|
|
1,330 |
|
|
|
(713 |
) |
Less:
minority interest - consolidated real estate venture partners share of
unrealized gain (loss) on derivative financial instruments |
|
|
|
|
|
|
(302 |
) |
|
|
|
|
Settlement of treasury locks |
|
|
(3,860 |
) |
|
|
|
|
|
|
|
|
Settlement of forward starting swaps |
|
|
1,148 |
|
|
|
3,266 |
|
|
|
240 |
|
Reclassification of realized (gains)/losses on derivative financial
instruments to operations, net |
|
|
3,436 |
|
|
|
122 |
|
|
|
450 |
|
Unrealized gain (loss) on available-for-sale securities |
|
|
(585 |
) |
|
|
328 |
|
|
|
(16 |
) |
|
|
|
|
|
|
|
|
|
|
Total other comprehensive income (loss) |
|
|
(3,461 |
) |
|
|
4,744 |
|
|
|
(39 |
) |
|
|
|
|
|
|
|
|
|
|
Comprehensive income |
|
$ |
52,992 |
|
|
$ |
15,226 |
|
|
$ |
42,728 |
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
F - 5
BRANDYWINE REALTY TRUST
CONSOLIDATED STATEMENTS OF BENEFICIARIES EQUITY
For the years ended December 31, 2007, 2006 and 2005
(in thousands, except number of shares)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
Number of |
|
Par Value of |
|
|
Number of |
|
|
Par Value of |
|
|
|
|
|
|
Par Value of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
Preferred C |
|
Preferred C |
|
|
Preferred D |
|
|
Preferred D |
|
|
Number of |
|
|
Common |
|
|
AdditionalPaid-in |
|
|
Common Shares in |
|
|
Employee |
|
|
Cumulative |
|
|
Comprehensive |
|
|
Cumulative |
|
|
|
|
|
|
Shares |
|
Shares |
|
|
Shares |
|
|
Shares |
|
|
Common Shares |
|
|
Shares |
|
|
Capital |
|
|
Treasury |
|
|
Stock Loans |
|
|
Earnings |
|
|
Income (Loss) |
|
|
Distributions |
|
|
Total |
|
BALANCE, December 31, 2004
|
|
|
2,000,000 |
|
|
$ |
20 |
|
|
|
2,300,000 |
|
|
$ |
23 |
|
|
|
55,292,752 |
|
|
$ |
553 |
|
|
$ |
1,347,072 |
|
|
$ |
|
|
|
$ |
(421 |
) |
|
$ |
370,515 |
|
|
$ |
(3,130 |
) |
|
$ |
(567,630 |
) |
|
$ |
1,147,002 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,767 |
|
|
|
|
|
|
|
|
|
|
|
42,767 |
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(39 |
) |
|
|
|
|
|
& |