Form 10-K
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, 2009
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
Commission file number 001-9106 (Brandywine Realty Trust)
000-24407 (Brandywine Operating Partnership, L.P.)
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)
DELAWARE (Brandywine Operating Partnership L.P.)
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23-2413352
23-2862640 |
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(State or other jurisdiction of
Incorporation or organization)
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(I.R.S. Employer Identification No.) |
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555 East Lancaster Avenue
Radnor, Pennsylvania
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19087 |
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(Address of principal executive offices)
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(Zip Code) |
Registrants telephone number, including area code (610) 325-5600
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 |
Common Shares of Beneficial Interest,
par value $0.01 per share
(Brandywine Realty Trust)
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New York Stock Exchange |
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7.50% Series C Cumulative Redeemable Preferred
Shares of Beneficial Interest
par value $0.01 per share
(Brandywine Realty Trust)
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New York Stock Exchange |
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7.375% Series D Cumulative Redeemable Preferred
Shares of Beneficial Interest
par value $0.01 per share
(Brandywine Realty Trust)
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New York Stock Exchange |
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 o No þ |
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 whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files).
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Brandywine Realty Trust
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Yes o No o |
Brandywine Operating Partnership, L.P.
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Yes o 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. þ
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
Brandywine Operating Partnership, L.P.:
Large accelerated filer o Accelerated filer o Non-accelerated filer þ Smaller reporting company o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).
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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 $924.5 million. 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 128,647,297 Common Shares of Beneficial Interest were
outstanding as of February 23, 2010.
As of June 30, 2009, the aggregate market value of the 1,896,552 common units of limited
partnership (Units) held by non-affiliates of Brandywine Operating Partnership, L.P. was $14.1
million based upon the last reported sale price of $7.45 per share on the New York Stock Exchange
on June 30, 2009 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 2010 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
-2-
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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the continuing impact of the recent credit crisis and global economic slowdown,
which is having and may continue to have negative effect on the following, among other
things: |
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the fundamentals of our business, including overall market
occupancy, demand for office space and rental rates; |
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the financial condition of our tenants, many of which are
financial, legal and other professional firms, our lenders, counterparties to our
derivative financial instruments and institutions that hold our cash balances and
short-term investments, which may expose us to increased risks of default by
these parties; |
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availability of financing on attractive terms or at all, which may
adversely impact our future interest expense and our ability to pursue
acquisition and development opportunities and refinance existing debt; and |
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a decline in real estate asset valuations, which may limit our
ability to dispose of assets at attractive prices or obtain or maintain debt
financing secured by our properties or on an unsecured basis. |
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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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the unavailability of equity and debt financing, particularly in light of the
current economic environment; |
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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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tenant defaults and the bankruptcy of major tenants; |
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changes in prevailing interest rates; |
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risks associated with interest rate hedging contracts and the effectiveness of such
arrangements; |
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failure of acquisitions to perform as expected; |
-3-
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unanticipated costs associated with the acquisition, integration and operation of,
our acquisitions; |
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unanticipated costs to complete, lease-up and operate our developments and
redevelopments; |
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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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risks associated with actual or threatened terrorist attacks; |
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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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failure or bankruptcy of real estate venture partners; |
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inability of real estate venture partners to fund venture obligations; |
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failure of dispositions to close in a timely manner; |
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failure of buyers of properties from us to comply with terms of their financing or
other agreements with us; |
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earthquakes and other natural disasters; |
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risks associated with the unforeseen impact of climate change including existing and
pending laws and regulations governing climate changes to our business operations and
tenants; |
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risks associated with federal, state and local tax audits; |
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complex regulations relating to our status as a REIT and 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.
-4-
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, that provides
leasing, property management, development, redevelopment, acquisition and other tenant-related
services for a portfolio of office, mixed-use and industrial properties. As of December 31, 2009,
we owned 212 office properties, 22 industrial facilities and three mixed-use properties
(collectively, the Properties) containing an aggregate of approximately 23.3 million net rentable
square feet. We also have two properties under development and three properties under
redevelopment containing an aggregate of 1.9 million net rentable square feet. As of December 31,
2009, we consolidated three office properties owned by real estate ventures containing 0.4 million
net rentable square feet. Therefore, as of December 31, 2009 we own and consolidated 245
properties with an aggregate of 25.6 million net rentable square feet. As of December 31, 2009, we
owned economic interests in 11 unconsolidated real estate ventures that contain approximately 4.2
million net rentable square feet (collectively, the Real Estate Ventures). In addition, as of
December 31, 2009, we owned approximately 479 acres of undeveloped land. The Properties and the
properties owned by the Real Estate Ventures are located in or near Philadelphia, Pennsylvania,
Metropolitan Washington, D.C., Southern and Central New Jersey, Richmond, Virginia, Wilmington,
Delaware, Austin, Texas and Oakland, Carlsbad and Rancho Bernardo, California. In addition to
managing properties that we own and consolidated, as of December 31, 2009, we were managing
approximately 8.9 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, 2009 owned a 97.9%
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, Suite 100, Radnor, Pennsylvania
19087 and our telephone number is (610) 325-5600. We have offices in Philadelphia, Pennsylvania;
Falls Church, Virginia; Mount Laurel, New Jersey; Richmond, Virginia; Austin, 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.
-5-
2009 Transactions
Real Estate Acquisitions/Dispositions
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On October 13, 2009, we sold a condominium unit consisting of 40,508 square feet and an
undivided interest in an office building in Lawrenceville, New Jersey, for a sales price of
$7.9 million. |
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On October 1, 2009, we sold two office properties, totaling 473,658 net rentable square
feet in Trenton, New Jersey for a stated sales price of $85.0 million. We provided to the
buyer a $22.5 million seven-year, approximately 6.00% cash pay/7.64% accrual second
mortgage loan. |
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On April 29, 2009, we sold 7735 Old Georgetown Road, a 122,543 net rentable square feet
office property located in Bethesda, Maryland, for a sales price of $26.5 million. |
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On March 16, 2009, we sold 305 Harper Drive, a 14,980 net rentable square feet office
property located in Moorestown, New Jersey, for a sales price of $1.1 million. |
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On February 4, 2009, we sold two office properties, totaling 66,664 net rentable square
feet in Exton, Pennsylvania, for an aggregate sales price of $9.0 million. |
Developments and Redevelopments
In 2009, we placed in service four office properties that we developed or redeveloped and that
contain an aggregate of 0.4 million net rentable square feet. We place a property in service at
the earlier of (i) the date the property reaches 95% occupancy and (ii) one year from the project
completion date. At December 31, 2009, we had five properties under development or redevelopment
that contain an aggregate of 1.9 million net rentable square feet at an estimated total development
and redevelopment cost (including estimated tenant improvements) of $396.0 million. We expect to
place these projects in service at dates between the first quarter of 2010 and the second quarter
of 2011.
Current Economic Climate
Deteriorating economic conditions have resulted in a reduction of the availability of financing and
higher borrowing costs. These factors, coupled with a slowing economy, have reduced the volume of
real estate transactions and created credit stresses on most businesses. We believe that vacancy
rates may increase through 2010 and possibly beyond as the current economic climate negatively
impacts tenants in our Properties.
We expect that the impact of the current state of the economy, including rising unemployment and
the unprecedented volatility and illiquidity in the financial and credit markets, will continue to
have a dampening effect on the fundamentals of our business, including increases in past due
accounts, tenant defaults, lower occupancy and reduced effective rents. These conditions would
negatively affect our future net income and cash flows and could have a material adverse effect on
our financial condition. We believe that the quality of our assets and our strong balance sheet
will enable us to raise secured and unsecured debt capital from banks, pension funds and life
insurance companies, although these sources are lending fewer dollars, under stricter terms and at
higher interest rates, and there can be no assurance that we will be able to borrow funds on terms
that are economically attractive or at all.
Unsecured Debt Activity
During the year ended December 31, 2009, we repurchased $444.7 million of our unsecured Notes in a
series of transactions which are summarized in the table below:
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Repurchase |
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Deferred Financing |
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Notes |
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Amount |
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Principal |
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Gain |
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Amortization |
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2009 4.500% Notes |
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$ |
92,736 |
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$ |
94,130 |
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$ |
1,377 |
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88 |
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2010 5.625% Notes |
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71,414 |
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76,999 |
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5,565 |
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215 |
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2012 5.750% Notes |
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109,104 |
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112,175 |
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2,610 |
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361 |
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2014 5.400% Notes |
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6,329 |
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7,319 |
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961 |
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28 |
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3.875% Notes |
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136,880 |
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154,070 |
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12,664 |
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1,289 |
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$ |
416,463 |
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$ |
444,693 |
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$ |
23,177 |
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$ |
1,981 |
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We funded these repurchases from a combination of proceeds from asset sales, cash flow from
operations and borrowings under our unsecured revolving credit facility.
On September 25, 2009, we consummated a registered public offering of $250.0 million in aggregate
principal amount of our 7.50% senior unsecured notes due 2015. The notes were priced at 99.412% of
their face amount with a yield to maturity of 7.625%, representing a spread at the time of pricing
of 5.162% to the yield on the August 2014 Treasury note. The notes have been reflected net of
discount of $1.4 million in the consolidated balance sheet as of December 31, 2009. The net
proceeds which amounted to $247.0 million after deducting underwriting discounts and offering
expenses were used to repay our indebtedness under our $600.0 million unsecured revolving credit
facility (the Credit Facility) and for general corporate purposes.
We also continue to utilize our Credit Facility for general corporate purposes, including the
acquisitions, developments and redevelopments of properties and repayment of other debt, including
the Notes shown in the table above. The Credit Facility matures on June 29, 2011 (subject to a one
year extension right, at our option, upon our payment of an extension fee equal to 15 basis points
of the committed amount under the Credit Facility). The per annum variable interest rate on
outstanding balances is LIBOR plus 0.725% and the quarterly facility fee is set at 17.5 basis
points per annum. The interest rate and facility fee are subject to adjustment upon a change in
our unsecured debt ratings. In addition, the capitalization rate used in the calculation of several
of the financial covenants in the Credit Facility is 7.50% and our swing loan availability under
the Credit Facility is at $60 million. We are allowed four competitive bid loan requests in any 30
day period. Borrowings are 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 LIBOR 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 and new lenders.
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) 95% of our funds from operations. The Credit Facility includes 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 specified 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 and non-financial covenants as
of December 31, 2009. We continuously monitor our compliance with all covenants. Certain
covenants restrict our ability to obtain alternative sources of capital. While we believe that we will
remain in compliance with our covenants, a continued slow-down in the economy and continued
decrease in availability of debt financing could result in non-compliance with covenants and an
event of default under the loan.
On April 18, 2008, we exercised the accordion feature on our $150.0 million unsecured term loan
that we entered into on October 15, 2007 and funded an additional $33.0 million, bringing our total
outstanding balance to $183.0 million. All outstanding borrowings under the term loan bear
interest at a periodic rate of LIBOR plus 80 basis points. We used the net proceeds of the term
loan increase to reduce indebtedness under our unsecured revolving Credit Facility.
In April 2007, we entered into a $20.0 million Sweep Agreement (the Sweep Agreement) to be used
for cash management purposes. Borrowings under the Sweep Agreement bear interest at one-month LIBOR
plus 0.75%. The Sweep Agreement terminated in April 2009.
Secured Debt Activity
On April 1, 2009, we closed on an $89.8 million first mortgage financing on our Two Logan Square
property located in Philadelphia, PA. This loan bears interest at 7.57% per annum and has a
seven-year term with three years of interest only payments with principal payments based on a
thirty-year amortization schedule. We used $68.5 million in net proceeds to repay without penalty
the balance of the former Two Logan Square first mortgage loan and
$21.3 million for general
corporate purposes including the repayment of existing indebtedness.
-7-
On June 29, 2009, we entered into a forward financing commitment to borrow up to $256.5 million
under two separate loans at a per annum interest rate of 5.93%. The loans, when funded, will be
secured by mortgages on the 30th Street Post Office (the Post Office project), the Cira South
Garage (the garage project) projects and by the leases of space at these facilities upon the
completion of these projects. Of the total borrowings, $209.7 million and $46.8 million will be
allocated to the Post Office project and to the garage project, respectively. In order for funding
to occur we need to meet conditions which primarily relate to the completion of the projects and
the commencement of the rental payments from the respective leases on these properties.
On July 7, 2009, we closed on a $60.0 million first mortgage financing on our One Logan Square
property located in Philadelphia, PA. The new loan bears interest at a floating rate of LIBOR plus
350 basis points (subject to a LIBOR floor) and has a seven-year term with three years of interest
only payments with principal payments based on a thirty-year amortization schedule at a 7.5% rate.
We used the loan proceeds for general corporate purposes including repayment of existing
indebtedness.
Additional Financing Activity
In June 2009, we sold 40,250,000 common shares for net proceeds of approximately $242.3 million.
We used the net proceeds to reduce indebtedness under our Credit Facility and for general corporate
purposes
In December 2009, we received the second contribution under the historic tax credit transaction
that we entered into in 2008 with US Bancorp amounting to $23.8 million.
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 above and 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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form joint venture opportunities with high-quality partners having attractive
real estate holdings or significant financial resources; |
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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; and |
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increase the economic diversification of our tenant base while maximizing
economies of scale. |
Based on the current economic environment we consider the following to be important objectives,
however, such objectives may be considered more long term in nature than they have been previously:
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to acquire and develop high-quality office and industrial properties at
attractive yields in markets that we expect will experience economic growth and where we
can achieve operating efficiencies; |
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to deploy our land inventory for development of high-quality office and
industrial properties; and |
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to capitalize on our redevelopment expertise to selectively develop, redevelop
and reposition properties in desirable locations. |
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. |
-8-
Operating Strategy
In this current economic environment, 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.
Our broader strategy remains focused on continuing to enhance liquidity and strengthen our balance
sheet through capital retention, targeted sales activity and management of our existing and
prospective liabilities.
In the long term, we believe that we are well positioned in our current markets and have the
expertise to take advantage of both development and acquisition opportunities, as warranted by
market and economic conditions, 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, should allow us to achieve disciplined growth. 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 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.
In order to fund developments, redevelopments and acquisitions, as well as refurbish and improve
existing Properties, we must use excess cash from operations after satisfying our dividend and
other requirements. The availability of funds for new investments and maintenance of existing
Properties depends in large measure on capital markets and liquidity factors over which we can
exert little control. Past events, including failures and near failures of a number of large
financial service companies, have made the capital markets increasingly volatile. As a result, many
property owners are finding financing to be increasingly expensive and difficult to obtain. In
addition, downgrades of our public debt ratings by Standard & Poors, Moodys Investor Service and
Fitch could increase our cost of capital.
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. We
continue to participate with other entities in property ownership through existing 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.
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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
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. From time to time, we provide
seller financing to buyers of our properties. We do this when the buyer requires additional funds
for the purchase and provision of seller financing will be beneficial to us and the buyer compared
to a mortgage loan from a third party lender.
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. We intend to use selective dispositions to fund our capital and refinancing needs.
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 restrictions 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 and future
maturing debt with the most advantageous source of capital then available to us. These sources may
include selling common or preferred equity and debt securities sold through public offerings or
private placements, utilizing availability under our unsecured revolving credit facility or
incurring additional indebtedness through secured or unsecured borrowings. 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 limits our ability to fund future
capital needs, including for acquisitions and developments, 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.
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Policies with Respect to Other Activities
We expect to issue additional common and preferred equity 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. 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 and to buyers of our real
estate. 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 wholly-owned subsidiaries
(collectively, the Management Companies). As of December 31, 2009, the Management Companies were
managing properties containing an aggregate of approximately 34.0 million net rentable square feet,
of which approximately 25.2 million net rentable square feet related to Properties owned by us and
approximately 8.9 million net rentable square feet related to properties owned by third parties and
unconsolidated Real Estate Ventures.
Geographic Segments
As of December 31, 2009, we were managing our portfolio within six segments: (1) Pennsylvania, (2)
Metropolitan Washington D.C, (3) New Jersey/Delaware, (4) Richmond, Virginia, (5) Austin, TX and
(6) California. The Pennsylvania segment includes properties in Chester, Delaware, Bucks and
Montgomery counties in the Philadelphia suburbs and the City of Philadelphia in Pennsylvania. The
Metropolitan Washington, D.C. segment includes properties in Northern Virginia and suburban
Maryland. The New Jersey/Delaware segment includes properties in Burlington, Camden and Mercer
counties and counties in the southern and central part of New Jersey and in New Castle county in the state of Delaware. The
Richmond, Virginia segment includes properties primarily in Albemarle, Chesterfield, Goochland and
Henrico counties and Durham, North Carolina. The Austin, Texas segment includes properties in
Coppell and Austin. The California segment includes properties in Oakland, Concord, Carlsbad and
Rancho Bernardo. Our corporate group is responsible for cash and investment management,
development of 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 types of
losses, generally of a catastrophic nature, such as losses from war, terrorism, environmental
issues, floods, hurricanes and earthquakes that are 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.
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Employees
As of December 31, 2009, we had 402 full-time employees, including 25 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 operations and maintenance plan was generally prepared and
implemented. See Note 2 to our consolidated financial statements for our evaluation in accordance
with the accounting standard governing 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 businesses. 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.
Potential environmental liabilities may adversely impact our ability to use or sell assets. The
presence of contamination or the failure to remediate contamination may impair our ability to sell
or lease real estate or to borrow using the real estate as collateral.
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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 2009 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 Executive Committee, 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 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, Suite 100, 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, free of charge, upon written request to
Investor Relations, Brandywine Realty Trust, 555 East Lancaster Avenue, Suite 100, Radnor, PA
19087.
Item 1A. Risk Factors
Our results from operations and ability to make distributions on our equity and to pay debt service
on our indebtedness may be affected by the risk factors set forth below. All investors should
consider the following risk factors before deciding to purchase our securities.
Adverse economic and geopolitical conditions could have a material adverse effect on our results of
operations, financial condition and our ability to pay distributions to you.
Our business is affected by the unprecedented volatility and illiquidity in the financial and
credit markets, the general global economic recession, and other market or economic challenges
experienced by the U.S. economy or the real estate industry as a whole. Our portfolio consists
primarily of office buildings (as compared to a more diversified real estate portfolio). If
economic conditions persist or deteriorate, then our results of operations, financial condition,
financial results and ability to service current debt and to pay distributions to our shareholders
may be adversely affected by the following, among other potential conditions:
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significant job losses in the financial and professional services industries may occur,
which may decrease demand for our office space, causing market rental rates and
property values to be negatively impacted; |
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our ability to borrow on terms and conditions that we find acceptable, or at all, may be
limited, which could reduce our ability to complete development opportunities and refinance
existing debt; |
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reduce our returns from both our existing operations and our development activities and
increase our future interest expense; |
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reduced values of our properties may limit our ability to dispose of assets at
attractive prices or to obtain debt financing secured by our properties and may reduce the
availability of unsecured loans; |
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the value and liquidity of our short-term investments and cash deposits could be reduced
as a result of a deterioration of the financial condition of the institutions that hold our
cash deposits or the institutions or assets in which we have made short-term investments,
the dislocation of the markets for our short-term investments, increased volatility in
market rates for such investments or other factors; |
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reduced liquidity in debt markets and increased credit risk premiums for certain market
participants may impair our ability to access capital; and |
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one or more lenders under our line of credit could refuse or be unable to fund their
financing commitment to us and we may not be able to replace the financing commitment of
any such lenders on favorable terms, or at all. |
These conditions, which could have a material adverse effect on our results of operations,
financial condition and ability to pay distributions, may continue or worsen in the future.
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, mixed use, industrial and commercial buildings; |
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local real estate market conditions, such as oversupply or reduction in demand for
office, industrial or commercial 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. |
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The disruption in the debt capital markets could adversely affect us.
The capital and credit markets have experienced significant volatility and disruption, particularly
in the latter half of 2008 and in the first quarter of 2009. In some cases, the markets have
produced downward pressure on stock prices and credit availability for certain issuers without regard to those
issuers underlying financial strength. This resulted in a 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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increasing our costs to finance our ongoing operations and fund our development and
redevelopment activities; |
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reducing the availability of potential bidders for, and the amounts offered for, any
properties we may wish to sell; 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 equity securities. |
We may suffer adverse consequences due to the financial difficulties, bankruptcy or insolvency of
our tenants.
The current economic conditions have caused some of our tenants to experience financial
difficulties. If 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 general, 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.
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, term loan and the indenture governing our unsecured public debt securities
contain (and any new or amended facility will contain) 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 is
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, the term loan and the
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. In addition, the mortgages on our properties contain customary covenants such
as those that limit our ability, without the prior consent of the lender, to further mortgage the
applicable property or to discontinue insurance coverage. If we breach covenants in our secured
debt agreements, the lenders can declare a default and take possession of the property securing the
defaulted loan.
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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 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 BB+ by Fitch Ratings, Baa3 by Moodys Investor Services and BBB- by
Standard & Poors. 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.
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 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 sufficient capital 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. |
We face risks associated with property acquisitions.
We have in the past acquired, and may in the future 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 have 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. 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 sold 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
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 we fail to comply with certain material lease terms. Our inability to renew or
release spaces and the early expiration of certain leases could affect our ability to make
distributions to shareholders.
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 may 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.
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, 2009, we had investments in
11 unconsolidated real estate ventures and three additional real estate ventures that are
consolidated in our financial statements. Our net investments in the 11 unconsolidated real estate
ventures aggregated approximately $75.5 million as of December 31, 2009. 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.
Furthermore, if the current constrained credit conditions in the capital markets persist or
deteriorate further, the value of our investments could deteriorate and we could be required to
reduce the carrying value of our equity method investments if a loss in the carrying value of the
investment is other than a temporary decline pursuant to the accounting standard governing the
equity method of accounting for investments in common stock.
-18-
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. The capitalization rates at which properties
may be sold are generally higher than historic rates, thereby reducing our potential proceeds from
sale. 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 potential 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.
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. If one or more of our insurance providers were to
fail to pay a claim as a result of insolvency, bankruptcy or otherwise, the nonpayment of such
claims could have an adverse effect on our financial condition and results of operations. In
addition, if one or more of our insurance providers were to become subject to insolvency,
bankruptcy or other proceedings and our insurance policies with the provider were terminated or
cancelled as a result of those proceedings, we cannot guarantee that we would be able to find
alternative coverage in adequate amounts or at reasonable prices. In such case, we could experience
a lapse in any or adequate insurance coverage with respect to one or more properties and be exposed to
potential losses relating to any claims that may arise during such period of lapsed or inadequate
coverage.
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. 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 cost of
capital, 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; |
-19-
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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.
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.
Other laws and regulations govern indoor and outdoor air quality including those that can require
the abatement or removal of asbestos-containing materials in the event of damage, demolition,
renovation or remodeling and also govern emissions of and exposure to asbestos fibers in the air.
The maintenance and removal of lead paint and certain electrical equipment containing
polychlorinated biphenyls (PCBs) and underground storage tanks are also regulated by federal and
state laws. We are also subject to risks associated with human exposure to chemical or biological
contaminants such as molds, pollens, viruses and bacteria which, above certain levels, can be
alleged to be connected to allergic or other health effects and symptoms in susceptible
individuals. We could incur fines for environmental compliance and be held liable for the costs of
remedial action with respect to the foregoing regulated substances or tanks or related claims
arising out of environmental contamination or human exposure to contamination at or from our
properties.
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.
-20-
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.
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 federal, 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. 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. There can be no assurance that these or future audits will not have a material adverse
effect on our results of operations. We are currently being audited by the Internal Revenue
Service for our 2004 tax year. The audit concerns the tax treatment of a transaction in September
2004 in which we acquired a portfolio of properties through the acquisition of a limited
partnership. At this time it does not appear that an adjustment would result in a material tax
liability for us. However, an adjustment could raise a question as to whether a contributor of
partnership interests in the 2004 transaction could assert a claim against us under the tax
protection agreement entered into as part of the transaction.
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.
Loss of their services could adversely affect our operations.
-21-
Although we have an employment agreement with Gerard H. Sweeney, our President and Chief Executive
Officer, for a term extending to February 9, 2011, 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; |
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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.
-22-
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 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.
-23-
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 may continue to acquire additional properties and may seek to develop our existing land holdings
strategically as warranted by market conditions. 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 been
impacted by the recent economic downturns, and future declines in 2010 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 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 did not acquire any properties during the year ended December 31, 2009.
Development and Redevelopment Properties Placed in Service
We placed in service the following office properties during the year ended December 31, 2009:
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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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Jul-09 |
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One Rockledge Associates |
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Bethesda, MD |
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1 |
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160,173 |
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Jul-09 |
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Delaware Corporate Center II |
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Wilmington, DE |
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1 |
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95,514 |
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Jul-09 |
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Atrium I |
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Mount Laurel, NJ |
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1 |
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99,668 |
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Oct-09 |
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100 Lenox Drive |
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Lawrenceville, NJ |
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1 |
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50,942 |
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Total Properties Placed in Service |
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4 |
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406,297 |
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We place a property under development in service on the date the property reaches 95% occupancy.
Property Sales
We sold the following office properties during the year ended December 31, 2009:
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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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Feb-09 |
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748 and 855 Springdale Drive |
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Exton, PA |
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2 |
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66,664 |
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$ |
8,950 |
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Mar-09 |
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305 Harper Drive |
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Moorestown, NJ |
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1 |
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14,980 |
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1,100 |
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Apr-09 |
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7735 Georgetown Road |
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Bethesda, MD |
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1 |
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122,543 |
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26,500 |
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Oct-09 |
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Trenton Office Properties |
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Trenton, NJ |
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2 |
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473,658 |
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85,000 |
(b) |
Oct-09 |
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100 Lenox Drive (a) |
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Lawrenceville, NJ |
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1 |
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40,508 |
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7,900 |
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Total Office Properties Sold |
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7 |
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718,353 |
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$ |
129,450 |
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(a)- |
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Pertains to the sale of a condominium interest in an office building. |
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Recorded in accordance with the installment sales method of accounting. |
Properties
As of December 31, 2009, we owned 212 office properties, 22 industrial facilities and three
mixed-use properties that contain an aggregate of approximately 23.3 million net rentable square
feet. We also have two properties under development and three properties under redevelopment
containing an aggregate 1.9 million net rentable square feet. As of December 31, 2009, we
consolidated three office properties owned by real estate ventures containing 0.4 million net
rentable square feet. The properties are located in and surrounding Philadelphia, PA, Metropolitan
Washington, D.C., Southern and Central New Jersey, Richmond, VA, Wilmington, DE, Austin, TX, and
Oakland, Concord, Carlsbad and Rancho Bernardo, CA. As of December 31, 2009, the Properties were
approximately 88.2% occupied by 1,357 tenants and had an average age of approximately 18.5 years.
The office properties are primarily suburban office buildings containing an average of
approximately 0.1 million 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.
-25-
We had the following projects in development or redevelopment as of December 31, 2009:
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% |
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Leased |
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|
|
|
Rentable |
|
|
as of |
|
|
Stabilization |
|
Project Name |
|
Location |
|
|
Square Feet |
|
|
12/31/09 |
|
|
Date (a) |
|
Under Development: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Post Office/IRS |
|
Philadelphia, PA |
|
|
862,692 |
|
|
|
100.0 |
% |
|
|
Q3 10 |
|
Cira South Garage |
|
Philadelphia, PA |
|
|
553,421 |
|
|
|
92.6 |
% |
|
|
Q3 10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,416,113 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Under Redevelopment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Radnor Corporate Center I |
|
Radnor, PA |
|
|
190,219 |
|
|
|
89.7 |
% |
|
|
Q1 10 |
|
300 Delaware Avenue |
|
Wilmington, DE |
|
|
298,071 |
|
|
|
71.9 |
% |
|
|
Q2 10 |
|
Juniper Street (b) |
|
Philadelphia, PA |
|
|
|
|
|
|
N/A |
|
|
|
Q2 11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
488,290 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,904,403 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Projected stabilization date represents the date the property reaches 95%
occupancy. |
|
(b) |
|
This pertains to the redevelopment of a 220 space parking garage. |
As of
December 31, 2009, the above five projects accounted for $239.9 million of the $272.0 million
of construction in progress shown on our consolidated balance sheet.
As of December 31, 2009, we expect our development and redevelopment costs, including estimated
tenant improvements, for these five projects to aggregate $396.0 million.
-26-
The following table sets forth information with respect to our core properties at December 31,
2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
2009 (a) |
|
|
2009
(b) (000s) |
|
|
2009 (c) |
|
PENNSYLVANIA SEGMENT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2929 Arch Street |
|
|
(d |
) |
|
Philadelphia |
|
PA |
|
|
2005 |
|
|
|
729,897 |
|
|
|
100.0 |
% |
|
$ |
24,315 |
|
|
$ |
35.11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100 North 18th Street |
|
|
(e |
) |
|
Philadelphia |
|
PA |
|
|
1988 |
|
|
|
703,386 |
|
|
|
96.3 |
% |
|
|
20,546 |
|
|
|
31.40 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
130 North 18th Street |
|
|
|
|
|
Philadelphia |
|
PA |
|
|
1983 |
|
|
|
594,755 |
|
|
|
100.0 |
% |
|
|
12,492 |
|
|
|
28.50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150 Radnor Chester Road |
|
|
|
|
|
Radnor |
|
PA |
|
|
2004 |
|
|
|
340,262 |
|
|
|
100.0 |
% |
|
|
9,572 |
|
|
|
29.41 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
201 King of Prussia Road |
|
|
|
|
|
Radnor |
|
PA |
|
|
2001 |
|
|
|
251,372 |
|
|
|
86.5 |
% |
|
|
6,119 |
|
|
|
28.68 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
555 Lancaster Avenue |
|
|
|
|
|
Radnor |
|
PA |
|
|
1973 |
|
|
|
242,099 |
|
|
|
99.9 |
% |
|
|
6,381 |
|
|
|
28.41 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
401 Plymouth Road |
|
|
|
|
|
Plymouth Meeting |
|
PA |
|
|
2001 |
|
|
|
201,883 |
|
|
|
100.0 |
% |
|
|
6,122 |
|
|
|
32.83 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Philadelphia Marine Center |
|
|
(d |
) |
|
Philadelphia |
|
PA |
|
Various |
|
|
181,900 |
|
|
|
100.0 |
% |
|
|
1,243 |
|
|
|
5.51 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101 West Elm Street |
|
|
|
|
|
W. Conshohocken |
|
PA |
|
|
1999 |
|
|
|
175,009 |
|
|
|
85.4 |
% |
|
|
4,026 |
|
|
|
26.53 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Four Radnor Corporate Center |
|
|
|
|
|
Radnor |
|
PA |
|
|
1995 |
|
|
|
165,138 |
|
|
|
89.3 |
% |
|
|
3,058 |
|
|
|
25.30 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Five Radnor Corporate Center |
|
|
|
|
|
Radnor |
|
PA |
|
|
1998 |
|
|
|
164,577 |
|
|
|
90.5 |
% |
|
|
4,372 |
|
|
|
32.37 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
751-761 Fifth Avenue |
|
|
|
|
|
King Of Prussia |
|
PA |
|
|
1967 |
|
|
|
158,000 |
|
|
|
100.0 |
% |
|
|
574 |
|
|
|
3.64 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
630 Allendale Road |
|
|
|
|
|
King of Prussia |
|
PA |
|
|
2000 |
|
|
|
150,000 |
|
|
|
100.0 |
% |
|
|
3,722 |
|
|
|
27.03 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
640 Freedom Business Center |
|
|
(d |
) |
|
King Of Prussia |
|
PA |
|
|
1991 |
|
|
|
132,000 |
|
|
|
86.7 |
% |
|
|
2,187 |
|
|
|
24.31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52 Swedesford Square |
|
|
|
|
|
East Whiteland Twp. |
|
PA |
|
|
1988 |
|
|
|
131,017 |
|
|
|
100.0 |
% |
|
|
2,972 |
|
|
|
24.01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
400 Berwyn Park |
|
|
|
|
|
Berwyn |
|
PA |
|
|
1999 |
|
|
|
124,182 |
|
|
|
100.0 |
% |
|
|
3,276 |
|
|
|
28.98 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4000 Chemical Road |
|
|
|
|
|
Plymouth Meeting |
|
PA |
|
|
2007 |
|
|
|
120,877 |
|
|
|
74.8 |
% |
|
|
1,345 |
|
|
|
18.48 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Radnor Corporate Center |
|
|
|
|
|
Radnor |
|
PA |
|
|
1998 |
|
|
|
119,463 |
|
|
|
89.3 |
% |
|
|
2,715 |
|
|
|
25.07 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101 Lindenwood Drive |
|
|
|
|
|
Malvern |
|
PA |
|
|
1988 |
|
|
|
118,121 |
|
|
|
44.6 |
% |
|
|
1,609 |
|
|
|
21.24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
181 Washington Street |
|
|
(h |
) |
|
Conshohocken |
|
PA |
|
|
1999 |
|
|
|
115,122 |
|
|
|
68.5 |
% |
|
|
2,904 |
|
|
|
28.23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300 Berwyn Park |
|
|
|
|
|
Berwyn |
|
PA |
|
|
1989 |
|
|
|
108,619 |
|
|
|
44.3 |
% |
|
|
1,204 |
|
|
|
21.23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
442 Creamery Way |
|
|
(f |
) |
|
Exton |
|
PA |
|
|
1991 |
|
|
|
104,500 |
|
|
|
100.0 |
% |
|
|
598 |
|
|
|
6.79 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Two Radnor Corporate Center |
|
|
|
|
|
Radnor |
|
PA |
|
|
1998 |
|
|
|
100,973 |
|
|
|
56.4 |
% |
|
|
1,572 |
|
|
|
21.85 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
301 Lindenwood Drive |
|
|
|
|
|
Malvern |
|
PA |
|
|
1984 |
|
|
|
97,813 |
|
|
|
93.7 |
% |
|
|
1,856 |
|
|
|
17.40 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 West Elm Street |
|
|
|
|
|
W. Conshohocken |
|
PA |
|
|
1999 |
|
|
|
97,737 |
|
|
|
79.7 |
% |
|
|
2,080 |
|
|
|
27.06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
555 Croton Road |
|
|
|
|
|
King of Prussia |
|
PA |
|
|
1999 |
|
|
|
96,909 |
|
|
|
90.3 |
% |
|
|
2,264 |
|
|
|
29.40 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500 North Gulph Road |
|
|
|
|
|
King Of Prussia |
|
PA |
|
|
1979 |
|
|
|
93,082 |
|
|
|
90.3 |
% |
|
|
1,402 |
|
|
|
18.99 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
620 West Germantown Pike |
|
|
|
|
|
Plymouth Meeting |
|
PA |
|
|
1990 |
|
|
|
90,183 |
|
|
|
74.2 |
% |
|
|
1,399 |
|
|
|
24.44 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
610 West Germantown Pike |
|
|
|
|
|
Plymouth Meeting |
|
PA |
|
|
1987 |
|
|
|
90,152 |
|
|
|
76.2 |
% |
|
|
1,610 |
|
|
|
27.47 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
630 West Germantown Pike |
|
|
|
|
|
Plymouth Meeting |
|
PA |
|
|
1988 |
|
|
|
89,925 |
|
|
|
97.2 |
% |
|
|
1,969 |
|
|
|
27.51 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
600 West Germantown Pike |
|
|
|
|
|
Plymouth Meeting |
|
PA |
|
|
1986 |
|
|
|
89,681 |
|
|
|
83.4 |
% |
|
|
1,482 |
|
|
|
25.18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
630 Freedom Business Center |
|
|
(d |
) |
|
King Of Prussia |
|
PA |
|
|
1989 |
|
|
|
86,683 |
|
|
|
92.1 |
% |
|
|
1,660 |
|
|
|
24.25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1200 Swedesford Road |
|
|
|
|
|
Berwyn |
|
PA |
|
|
1994 |
|
|
|
86,622 |
|
|
|
76.5 |
% |
|
|
1,366 |
|
|
|
29.20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
620 Freedom Business Center |
|
|
(d |
) |
|
King Of Prussia |
|
PA |
|
|
1986 |
|
|
|
86,570 |
|
|
|
100.0 |
% |
|
|
1,748 |
|
|
|
24.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200 Barr Harbour Drive |
|
|
(h |
) |
|
Conshohocken |
|
PA |
|
|
1998 |
|
|
|
86,021 |
|
|
|
100.0 |
% |
|
|
2,484 |
|
|
|
30.35 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
595 East Swedesford Road |
|
|
|
|
|
Wayne |
|
PA |
|
|
1998 |
|
|
|
81,890 |
|
|
|
100.0 |
% |
|
|
1,750 |
|
|
|
23.01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1050 Westlakes Drive |
|
|
|
|
|
Berwyn |
|
PA |
|
|
1984 |
|
|
|
80,000 |
|
|
|
100.0 |
% |
|
|
1,984 |
|
|
|
25.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One Progress Drive |
|
|
|
|
|
Horsham |
|
PA |
|
|
1986 |
|
|
|
79,204 |
|
|
|
100.0 |
% |
|
|
845 |
|
|
|
13.45 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1060 First Avenue |
|
|
(e |
) |
|
King Of Prussia |
|
PA |
|
|
1987 |
|
|
|
77,718 |
|
|
|
100.0 |
% |
|
|
1,061 |
|
|
|
21.47 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
741 First Avenue |
|
|
|
|
|
King Of Prussia |
|
PA |
|
|
1966 |
|
|
|
77,184 |
|
|
|
100.0 |
% |
|
|
580 |
|
|
|
9.10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1040 First Avenue |
|
|
(e |
) |
|
King Of Prussia |
|
PA |
|
|
1985 |
|
|
|
75,488 |
|
|
|
84.8 |
% |
|
|
1,287 |
|
|
|
23.18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200 Berwyn Park |
|
|
|
|
|
Berwyn |
|
PA |
|
|
1987 |
|
|
|
75,025 |
|
|
|
100.0 |
% |
|
|
1,296 |
|
|
|
19.20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1020 First Avenue |
|
|
(e |
) |
|
King Of Prussia |
|
PA |
|
|
1984 |
|
|
|
74,556 |
|
|
|
100.0 |
% |
|
|
1,608 |
|
|
|
20.25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1000 First Avenue |
|
|
(e |
) |
|
King Of Prussia |
|
PA |
|
|
1980 |
|
|
|
74,139 |
|
|
|
86.7 |
% |
|
|
1,367 |
|
|
|
22.93 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
436 Creamery Way |
|
|
|
|
|
Exton |
|
PA |
|
|
1991 |
|
|
|
72,300 |
|
|
|
96.2 |
% |
|
|
726 |
|
|
|
14.53 |
|
-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 |
|
|
2009 (a) |
|
|
2009 (b) (000s) |
|
|
2009 (c) |
|
130 Radnor Chester Road |
|
|
|
|
|
Radnor |
|
PA |
|
|
2004 |
|
|
|
71,349 |
|
|
|
100.0 |
% |
|
|
2,150 |
|
|
|
31.35 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
170 Radnor Chester Road |
|
|
|
|
|
Radnor |
|
PA |
|
|
2004 |
|
|
|
69,787 |
|
|
|
92.6 |
% |
|
|
1,597 |
|
|
|
25.21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14 Campus Boulevard |
|
|
|
|
|
Newtown Square |
|
PA |
|
|
1998 |
|
|
|
69,542 |
|
|
|
100.0 |
% |
|
|
1,815 |
|
|
|
25.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500 Enterprise Road |
|
|
|
|
|
Horsham |
|
PA |
|
|
1990 |
|
|
|
66,751 |
|
|
|
0.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
575 East Swedesford Road |
|
|
|
|
|
Wayne |
|
PA |
|
|
1985 |
|
|
|
66,265 |
|
|
|
100.0 |
% |
|
|
1,235 |
|
|
|
28.53 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
429 Creamery Way |
|
|
|
|
|
Exton |
|
PA |
|
|
1996 |
|
|
|
63,420 |
|
|
|
100.0 |
% |
|
|
790 |
|
|
|
16.72 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
610 Freedom Business Center |
|
|
(d |
) |
|
King Of Prussia |
|
PA |
|
|
1985 |
|
|
|
62,991 |
|
|
|
88.9 |
% |
|
|
720 |
|
|
|
23.43 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
925 Harvest Drive |
|
|
|
|
|
Blue Bell |
|
PA |
|
|
1990 |
|
|
|
62,957 |
|
|
|
96.7 |
% |
|
|
1,032 |
|
|
|
21.23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
980 Harvest Drive |
|
|
|
|
|
Blue Bell |
|
PA |
|
|
1988 |
|
|
|
62,379 |
|
|
|
100.0 |
% |
|
|
1,383 |
|
|
|
24.16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
426 Lancaster Avenue |
|
|
|
|
|
Devon |
|
PA |
|
|
1990 |
|
|
|
61,102 |
|
|
|
100.0 |
% |
|
|
1,213 |
|
|
|
19.90 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1180 Swedesford Road |
|
|
|
|
|
Berwyn |
|
PA |
|
|
1987 |
|
|
|
60,371 |
|
|
|
100.0 |
% |
|
|
1,880 |
|
|
|
33.08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1160 Swedesford Road |
|
|
|
|
|
Berwyn |
|
PA |
|
|
1986 |
|
|
|
60,099 |
|
|
|
100.0 |
% |
|
|
1,493 |
|
|
|
26.04 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100 Berwyn Park |
|
|
|
|
|
Berwyn |
|
PA |
|
|
1986 |
|
|
|
57,731 |
|
|
|
42.7 |
% |
|
|
735 |
|
|
|
21.99 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
440 Creamery Way |
|
|
|
|
|
Exton |
|
PA |
|
|
1991 |
|
|
|
57,218 |
|
|
|
88.8 |
% |
|
|
790 |
|
|
|
16.85 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
640 Allendale Road |
|
|
(f |
) |
|
King of Prussia |
|
PA |
|
|
2000 |
|
|
|
56,034 |
|
|
|
100.0 |
% |
|
|
350 |
|
|
|
8.60 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
565 East Swedesford Road |
|
|
|
|
|
Wayne |
|
PA |
|
|
1984 |
|
|
|
55,979 |
|
|
|
83.4 |
% |
|
|
818 |
|
|
|
22.64 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
650 Park Avenue |
|
|
|
|
|
King Of Prussia |
|
PA |
|
|
1968 |
|
|
|
54,338 |
|
|
|
100.0 |
% |
|
|
822 |
|
|
|
17.10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
910 Harvest Drive |
|
|
|
|
|
Blue Bell |
|
PA |
|
|
1990 |
|
|
|
52,611 |
|
|
|
100.0 |
% |
|
|
1,040 |
|
|
|
20.23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
680 Allendale Road |
|
|
|
|
|
King Of Prussia |
|
PA |
|
|
1962 |
|
|
|
52,528 |
|
|
|
0.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2240/50 Butler Pike |
|
|
|
|
|
Plymouth Meeting |
|
PA |
|
|
1984 |
|
|
|
52,229 |
|
|
|
100.0 |
% |
|
|
1,102 |
|
|
|
22.59 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
920 Harvest Drive |
|
|
|
|
|
Blue Bell |
|
PA |
|
|
1990 |
|
|
|
51,875 |
|
|
|
100.0 |
% |
|
|
1,009 |
|
|
|
21.19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
486 Thomas Jones Way |
|
|
|
|
|
Exton |
|
PA |
|
|
1990 |
|
|
|
51,372 |
|
|
|
69.1 |
% |
|
|
619 |
|
|
|
21.09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
660 Allendale Road |
|
|
(f |
) |
|
King of Prussia |
|
PA |
|
|
1962 |
|
|
|
50,635 |
|
|
|
0.0 |
% |
|
|
93 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
875 First Avenue |
|
|
|
|
|
King Of Prussia |
|
PA |
|
|
1966 |
|
|
|
50,000 |
|
|
|
100.0 |
% |
|
|
1,037 |
|
|
|
22.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
67.0 |
% |
|
|
536 |
|
|
|
16.06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15 Campus Boulevard |
|
|
|
|
|
Newtown Square |
|
PA |
|
|
2002 |
|
|
|
49,621 |
|
|
|
100.0 |
% |
|
|
1,018 |
|
|
|
25.62 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
479 Thomas Jones Way |
|
|
|
|
|
Exton |
|
PA |
|
|
1988 |
|
|
|
49,264 |
|
|
|
63.0 |
% |
|
|
556 |
|
|
|
18.04 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17 Campus Boulevard |
|
|
|
|
|
Newtown Square |
|
PA |
|
|
2001 |
|
|
|
48,565 |
|
|
|
100.0 |
% |
|
|
1,202 |
|
|
|
30.39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11 Campus Boulevard |
|
|
|
|
|
Newtown Square |
|
PA |
|
|
1998 |
|
|
|
47,699 |
|
|
|
100.0 |
% |
|
|
1,111 |
|
|
|
25.75 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
456 Creamery Way |
|
|
|
|
|
Exton |
|
PA |
|
|
1987 |
|
|
|
47,604 |
|
|
|
100.0 |
% |
|
|
372 |
|
|
|
6.68 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
585 East Swedesford Road |
|
|
|
|
|
Wayne |
|
PA |
|
|
1998 |
|
|
|
43,683 |
|
|
|
100.0 |
% |
|
|
771 |
|
|
|
27.01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1100 Cassett Road |
|
|
|
|
|
Berwyn |
|
PA |
|
|
1997 |
|
|
|
43,480 |
|
|
|
100.0 |
% |
|
|
1,106 |
|
|
|
32.09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
467 Creamery Way |
|
|
|
|
|
Exton |
|
PA |
|
|
1988 |
|
|
|
42,000 |
|
|
|
100.0 |
% |
|
|
568 |
|
|
|
19.31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1336 Enterprise Drive |
|
|
|
|
|
West Goshen |
|
PA |
|
|
1989 |
|
|
|
39,330 |
|
|
|
100.0 |
% |
|
|
796 |
|
|
|
24.10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
600 Park Avenue |
|
|
|
|
|
King Of Prussia |
|
PA |
|
|
1964 |
|
|
|
39,000 |
|
|
|
100.0 |
% |
|
|
545 |
|
|
|
16.17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
412 Creamery Way |
|
|
|
|
|
Exton |
|
PA |
|
|
1999 |
|
|
|
38,098 |
|
|
|
86.0 |
% |
|
|
591 |
|
|
|
17.71 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18 Campus Boulevard |
|
|
|
|
|
Newtown Square |
|
PA |
|
|
1990 |
|
|
|
37,374 |
|
|
|
85.3 |
% |
|
|
702 |
|
|
|
20.62 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
457 Creamery Way |
|
|
|
|
|
Exton |
|
PA |
|
|
1990 |
|
|
|
36,019 |
|
|
|
100.0 |
% |
|
|
285 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100 Arrandale Boulevard |
|
|
|
|
|
Exton |
|
PA |
|
|
1997 |
|
|
|
34,931 |
|
|
|
100.0 |
% |
|
|
456 |
|
|
|
17.43 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300 Lindenwood Drive |
|
|
|
|
|
Malvern |
|
PA |
|
|
1991 |
|
|
|
33,000 |
|
|
|
100.0 |
% |
|
|
794 |
|
|
|
23.41 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2260 Butler Pike |
|
|
|
|
|
Plymouth Meeting |
|
PA |
|
|
1984 |
|
|
|
31,892 |
|
|
|
100.0 |
% |
|
|
658 |
|
|
|
22.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
120 West Germantown Pike |
|
|
|
|
|
Plymouth Meeting |
|
PA |
|
|
1984 |
|
|
|
30,574 |
|
|
|
100.0 |
% |
|
|
528 |
|
|
|
19.75 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
468 Thomas Jones Way |
|
|
|
|
|
Exton |
|
PA |
|
|
1990 |
|
|
|
28,934 |
|
|
|
100.0 |
% |
|
|
550 |
|
|
|
19.50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1700 Paoli Pike |
|
|
|
|
|
Malvern |
|
PA |
|
|
2000 |
|
|
|
28,000 |
|
|
|
0.0 |
% |
|
|
378 |
|
|
|
|
|
|
140 West Germantown Pike |
|
|
|
|
|
Plymouth Meeting |
|
PA |
|
|
1984 |
|
|
|
25,357 |
|
|
|
76.0 |
% |
|
|
383 |
|
|
|
25.12 |
|
-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 |
|
|
2009 (a) |
|
|
2009 (b) (000s) |
|
|
2009 (c) |
|
481 John Young Way |
|
|
|
|
|
Exton |
|
PA |
|
|
1997 |
|
|
|
19,275 |
|
|
|
100.0 |
% |
|
|
510 |
|
|
|
26.07 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100 Lindenwood Drive |
|
|
|
|
|
Malvern |
|
PA |
|
|
1985 |
|
|
|
18,400 |
|
|
|
100.0 |
% |
|
|
357 |
|
|
|
20.03 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200 Lindenwood Drive |
|
|
|
|
|
Malvern |
|
PA |
|
|
1984 |
|
|
|
12,600 |
|
|
|
0.0 |
% |
|
|
99 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
111 Arrandale Road |
|
|
|
|
|
Exton |
|
PA |
|
|
1996 |
|
|
|
10,479 |
|
|
|
100.0 |
% |
|
|
198 |
|
|
|
18.74 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUBTOTAL/WEIGHTED AVG PENNSYLVANIA SEGMENT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,446,776 |
|
|
|
90.6 |
% |
|
|
195,842 |
|
|
|
21.06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
METROPOLITAN WASHINGTON D.C. SEGMENT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1676 International Drive |
|
|
|
|
|
McLean |
|
VA |
|
|
1999 |
|
|
|
299,387 |
|
|
|
93.8 |
% |
|
|
8,877 |
|
|
|
30.87 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13820 Sunrise Valley Drive |
|
|
|
|
|
Herndon |
|
VA |
|
|
2007 |
|
|
|
268,240 |
|
|
|
100.0 |
% |
|
|
4,676 |
|
|
|
27.76 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2340 Dulles Corner Boulevard |
|
|
|
|
|
Herndon |
|
VA |
|
|
1987 |
|
|
|
264,405 |
|
|
|
100.0 |
% |
|
|
8,077 |
|
|
|
31.18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2291 Wood Oak Drive |
|
|
|
|
|
Herndon |
|
VA |
|
|
1999 |
|
|
|
227,574 |
|
|
|
100.0 |
% |
|
|
5,332 |
|
|
|
30.16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7101 Wisconsin Avenue |
|
|
|
|
|
Bethesda |
|
MD |
|
|
1975 |
|
|
|
223,054 |
|
|
|
98.0 |
% |
|
|
6,848 |
|
|
|
33.33 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1900 Gallows Road |
|
|
|
|
|
Vienna |
|
VA |
|
|
1989 |
|
|
|
210,632 |
|
|
|
64.8 |
% |
|
|
3,957 |
|
|
|
26.04 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3130 Fairview Park Drive |
|
|
|
|
|
Falls Church |
|
VA |
|
|
1999 |
|
|
|
180,645 |
|
|
|
78.6 |
% |
|
|
5,055 |
|
|
|
32.81 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3141 Fairview Park Drive |
|
|
|
|
|
Falls Church |
|
VA |
|
|
1988 |
|
|
|
180,611 |
|
|
|
90.4 |
% |
|
|
4,209 |
|
|
|
28.33 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2355 Dulles Corner Boulevard |
|
|
|
|
|
Herndon |
|
VA |
|
|
1988 |
|
|
|
179,176 |
|
|
|
84.0 |
% |
|
|
4,918 |
|
|
|
32.48 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2411 Dulles Corner Park |
|
|
|
|
|
Herndon |
|
VA |
|
|
1990 |
|
|
|
176,618 |
|
|
|
100.0 |
% |
|
|
5,697 |
|
|
|
32.24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1880 Campus Commons Drive |
|
|
|
|
|
Reston |
|
VA |
|
|
1985 |
|
|
|
172,448 |
|
|
|
100.0 |
% |
|
|
3,112 |
|
|
|
22.18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2121 Cooperative Way |
|
|
|
|
|
Herndon |
|
VA |
|
|
2000 |
|
|
|
161,275 |
|
|
|
83.5 |
% |
|
|
4,024 |
|
|
|
31.86 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6600 Rockledge Drive |
|
|
(d |
) |
|
Bethesda |
|
MD |
|
|
1981 |
|
|
|
160,173 |
|
|
|
57.7 |
% |
|
|
2,960 |
|
|
|
30.55 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8260 Greensboro Drive |
|
|
|
|
|
McLean |
|
VA |
|
|
1980 |
|
|
|
158,961 |
|
|
|
76.7 |
% |
|
|
3,230 |
|
|
|
26.27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2251 Corporate Park Drive |
|
|
|
|
|
Herndon |
|
VA |
|
|
2000 |
|
|
|
158,016 |
|
|
|
100.0 |
% |
|
|
5,190 |
|
|
|
34.40 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12015 Lee Jackson Memorial Highway |
|
|
|
|
|
Fairfax |
|
VA |
|
|
1985 |
|
|
|
153,255 |
|
|
|
100.0 |
% |
|
|
3,756 |
|
|
|
27.50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13880 Dulles Corner Lane |
|
|
|
|
|
Herndon |
|
VA |
|
|
1997 |
|
|
|
151,747 |
|
|
|
100.0 |
% |
|
|
4,686 |
|
|
|
36.65 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8521 Leesburg Pike |
|
|
|
|
|
Vienna |
|
VA |
|
|
1984 |
|
|
|
150,897 |
|
|
|
71.0 |
% |
|
|
3,548 |
|
|
|
28.68 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2273 Research Boulevard |
|
|
|
|
|
Rockville |
|
MD |
|
|
1999 |
|
|
|
147,689 |
|
|
|
98.4 |
% |
|
|
4,348 |
|
|
|
33.88 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2275 Research Boulevard |
|
|
|
|
|
Rockville |
|
MD |
|
|
1990 |
|
|
|
147,650 |
|
|
|
100.0 |
% |
|
|
3,716 |
|
|
|
30.56 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2201 Cooperative Way |
|
|
|
|
|
Herndon |
|
VA |
|
|
1990 |
|
|
|
138,806 |
|
|
|
85.7 |
% |
|
|
3,896 |
|
|
|
34.95 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2277 Research Boulevard |
|
|
|
|
|
Rockville |
|
MD |
|
|
1986 |
|
|
|
137,045 |
|
|
|
100.0 |
% |
|
|
3,360 |
|
|
|
29.78 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11781 Lee Jackson Memorial Highway |
|
|
|
|
|
Fairfax |
|
VA |
|
|
1982 |
|
|
|
130,935 |
|
|
|
97.8 |
% |
|
|
3,193 |
|
|
|
26.29 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11720 Beltsville Drive |
|
|
|
|
|
Beltsville |
|
MD |
|
|
1987 |
|
|
|
128,903 |
|
|
|
71.6 |
% |
|
|
2,320 |
|
|
|
24.54 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13825 Sunrise Valley Drive |
|
|
|
|
|
Herndon |
|
VA |
|
|
1989 |
|
|
|
104,150 |
|
|
|
12.4 |
% |
|
|
651 |
|
|
|
25.61 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
198 Van Buren Street |
|
|
|
|
|
Herndon |
|
VA |
|
|
1996 |
|
|
|
98,934 |
|
|
|
93.5 |
% |
|
|
2,957 |
|
|
|
33.80 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
196 Van Buren Street |
|
|
|
|
|
Herndon |
|
VA |
|
|
1991 |
|
|
|
97,781 |
|
|
|
57.9 |
% |
|
|
2,019 |
|
|
|
32.27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11700 Beltsville Drive |
|
|
|
|
|
Beltsville |
|
MD |
|
|
1981 |
|
|
|
96,843 |
|
|
|
98.2 |
% |
|
|
2,104 |
|
|
|
22.81 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11710 Beltsville Drive |
|
|
|
|
|
Beltsville |
|
MD |
|
|
1987 |
|
|
|
81,281 |
|
|
|
100.0 |
% |
|
|
1,864 |
|
|
|
26.01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4401 Fair Lakes Court |
|
|
|
|
|
Fairfax |
|
VA |
|
|
1988 |
|
|
|
55,972 |
|
|
|
100.0 |
% |
|
|
1,377 |
|
|
|
27.97 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11740 Beltsville Drive |
|
|
|
|
|
Beltsville |
|
MD |
|
|
1987 |
|
|
|
6,783 |
|
|
|
100.0 |
% |
|
|
140 |
|
|
|
25.81 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUBTOTAL/WEIGHTED AVG METROPOLITAN WASHINGTON D.C. SEGMENT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,849,886 |
|
|
|
88.5 |
% |
|
|
120,097 |
|
|
|
29.60 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEW JERSEY/DELAWARE SEGMENT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
920 North King Street |
|
|
|
|
|
Wilmington |
|
DE |
|
|
1989 |
|
|
|
203,328 |
|
|
|
96.7 |
% |
|
|
4,583 |
|
|
|
27.32 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10000 Midlantic Drive |
|
|
|
|
|
Mt. Laurel |
|
NJ |
|
|
1990 |
|
|
|
183,147 |
|
|
|
97.5 |
% |
|
|
2,577 |
|
|
|
26.42 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1009 Lenox Drive |
|
|
|
|
|
Lawrenceville |
|
NJ |
|
|
1989 |
|
|
|
180,734 |
|
|
|
92.4 |
% |
|
|
4,273 |
|
|
|
28.37 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
525 Lincoln Drive West |
|
|
|
|
|
Marlton |
|
NJ |
|
|
1986 |
|
|
|
165,956 |
|
|
|
90.2 |
% |
|
|
2,866 |
|
|
|
24.72 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Main Street Plaza 1000 |
|
|
|
|
|
Voorhees |
|
NJ |
|
|
1988 |
|
|
|
162,364 |
|
|
|
71.2 |
% |
|
|
2,733 |
|
|
|
27.28 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-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 |
|
|
2009 (a) |
|
|
2009 (b) (000s) |
|
|
2009 (c) |
|
400 Commerce Drive |
|
|
|
|
|
Newark |
|
DE |
|
|
1997 |
|
|
|
154,086 |
|
|
|
100.0 |
% |
|
|
2,321 |
|
|
|
16.10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
457 Haddonfield Road |
|
|
|
|
|
Cherry Hill |
|
NJ |
|
|
1990 |
|
|
|
121,737 |
|
|
|
89.7 |
% |
|
|
2,536 |
|
|
|
22.82 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2000 Midlantic Drive |
|
|
|
|
|
Mt. Laurel |
|
NJ |
|
|
1989 |
|
|
|
121,658 |
|
|
|
61.3 |
% |
|
|
1,036 |
|
|
|
25.32 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
700 East Gate Drive |
|
|
|
|
|
Mt. Laurel |
|
NJ |
|
|
1984 |
|
|
|
119,272 |
|
|
|
84.8 |
% |
|
|
1,805 |
|
|
|
22.24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2000 Lenox Drive |
|
|
|
|
|
Lawrenceville |
|
NJ |
|
|
2000 |
|
|
|
119,114 |
|
|
|
100.0 |
% |
|
|
3,230 |
|
|
|
30.73 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
989 Lenox Drive |
|
|
|
|
|
Lawrenceville |
|
NJ |
|
|
1984 |
|
|
|
112,055 |
|
|
|
52.2 |
% |
|
|
2,155 |
|
|
|
29.93 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
993 Lenox Drive |
|
|
|
|
|
Lawrenceville |
|
NJ |
|
|
1985 |
|
|
|
111,124 |
|
|
|
100.0 |
% |
|
|
2,889 |
|
|
|
28.83 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1000 Howard Boulevard |
|
|
|
|
|
Mt. Laurel |
|
NJ |
|
|
1988 |
|
|
|
105,312 |
|
|
|
95.7 |
% |
|
|
1,845 |
|
|
|
23.90 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One Righter Parkway |
|
|
(d |
) |
|
Wilmington |
|
DE |
|
|
1989 |
|
|
|
104,761 |
|
|
|
97.0 |
% |
|
|
2,359 |
|
|
|
24.74 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1000 Atrium Way |
|
|
|
|
|
Mt. Laurel |
|
NJ |
|
|
1989 |
|
|
|
99,668 |
|
|
|
96.2 |
% |
|
|
1,412 |
|
|
|
23.63 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
997 Lenox Drive |
|
|
|
|
|
Lawrenceville |
|
NJ |
|
|
1987 |
|
|
|
97,277 |
|
|
|
79.7 |
% |
|
|
2,226 |
|
|
|
27.25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Two Righter Parkway |
|
|
(d |
) |
|
Wilmington |
|
DE |
|
|
1987 |
|
|
|
95,514 |
|
|
|
80.9 |
% |
|
|
1,780 |
|
|
|
25.10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1120 Executive Boulevard |
|
|
|
|
|
Mt. Laurel |
|
NJ |
|
|
1987 |
|
|
|
95,278 |
|
|
|
100.0 |
% |
|
|
1,592 |
|
|
|
27.94 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15000 Midlantic Drive |
|
|
|
|
|
Mt. Laurel |
|
NJ |
|
|
1991 |
|
|
|
84,056 |
|
|
|
77.8 |
% |
|
|
879 |
|
|
|
22.43 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
220 Lake Drive East |
|
|
|
|
|
Cherry Hill |
|
NJ |
|
|
1988 |
|
|
|
78,509 |
|
|
|
69.8 |
% |
|
|
1,200 |
|
|
|
22.37 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10 Lake Center Drive |
|
|
|
|
|
Marlton |
|
NJ |
|
|
1989 |
|
|
|
76,359 |
|
|
|
90.6 |
% |
|
|
1,186 |
|
|
|
21.19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200 Lake Drive East |
|
|
|
|
|
Cherry Hill |
|
NJ |
|
|
1989 |
|
|
|
76,352 |
|
|
|
83.2 |
% |
|
|
1,506 |
|
|
|
25.47 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1200 Lenox Drive |
|
|
|
|
|
Lawrenceville |
|
NJ |
|
|
2007 |
|
|
|
75,000 |
|
|
|
61.0 |
% |
|
|
1,055 |
|
|
|
24.59 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Greentree Centre |
|
|
|
|
|
Marlton |
|
NJ |
|
|
1984 |
|
|
|
69,300 |
|
|
|
98.6 |
% |
|
|
1,331 |
|
|
|
24.86 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200 Commerce Drive |
|
|
|
|
|
Newark |
|
DE |
|
|
1998 |
|
|
|
68,034 |
|
|
|
100.0 |
% |
|
|
1,327 |
|
|
|
20.07 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9000 Midlantic Drive |
|
|
|
|
|
Mt. Laurel |
|
NJ |
|
|
1989 |
|
|
|
67,299 |
|
|
|
100.0 |
% |
|
|
836 |
|
|
|
26.85 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6 East Clementon Road |
|
|
|
|
|
Gibbsboro |
|
NJ |
|
|
1980 |
|
|
|
66,236 |
|
|
|
96.5 |
% |
|
|
979 |
|
|
|
29.92 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100 Commerce Drive |
|
|
|
|
|
Newark |
|
DE |
|
|
1989 |
|
|
|
62,787 |
|
|
|
92.6 |
% |
|
|
1,094 |
|
|
|
21.04 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
701 East Gate Drive |
|
|
|
|
|
Mt. Laurel |
|
NJ |
|
|
1986 |
|
|
|
61,794 |
|
|
|
75.8 |
% |
|
|
708 |
|
|
|
22.95 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
210 Lake Drive East |
|
|
|
|
|
Cherry Hill |
|
NJ |
|
|
1986 |
|
|
|
60,604 |
|
|
|
89.2 |
% |
|
|
924 |
|
|
|
23.41 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
308 Harper Drive |
|
|
|
|
|
Moorestown |
|
NJ |
|
|
1976 |
|
|
|
59,500 |
|
|
|
56.8 |
% |
|
|
508 |
|
|
|
22.96 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
305 Fellowship Drive |
|
|
|
|
|
Mt. Laurel |
|
NJ |
|
|
1980 |
|
|
|
56,824 |
|
|
|
100.0 |
% |
|
|
1,101 |
|
|
|
24.08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Two Greentree Centre |
|
|
|
|
|
Marlton |
|
NJ |
|
|
1983 |
|
|
|
56,075 |
|
|
|
76.1 |
% |
|
|
448 |
|
|
|
22.01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
309 Fellowship Drive |
|
|
|
|
|
Mt. Laurel |
|
NJ |
|
|
1982 |
|
|
|
55,911 |
|
|
|
82.1 |
% |
|
|
846 |
|
|
|
25.79 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One Greentree Centre |
|
|
|
|
|
Marlton |
|
NJ |
|
|
1982 |
|
|
|
55,838 |
|
|
|
65.8 |
% |
|
|
684 |
|
|
|
22.08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8000 Lincoln Drive |
|
|
|
|
|
Marlton |
|
NJ |
|
|
1997 |
|
|
|
54,923 |
|
|
|
100.0 |
% |
|
|
1,040 |
|
|
|
13.63 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
307 Fellowship Drive |
|
|
|
|
|
Mt. Laurel |
|
NJ |
|
|
1981 |
|
|
|
54,485 |
|
|
|
60.3 |
% |
|
|
704 |
|
|
|
26.61 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
303 Fellowship Drive |
|
|
|
|
|
Mt. Laurel |
|
NJ |
|
|
1979 |
|
|
|
53,768 |
|
|
|
70.7 |
% |
|
|
637 |
|
|
|
22.72 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1000 Bishops Gate |
|
|
|
|
|
Mt. Laurel |
|
NJ |
|
|
2005 |
|
|
|
53,281 |
|
|
|
100.0 |
% |
|
|
1,208 |
|
|
|
25.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1000 Lenox Drive |
|
|
|
|
|
Lawrenceville |
|
NJ |
|
|
1982 |
|
|
|
52,264 |
|
|
|
100.0 |
% |
|
|
1,329 |
|
|
|
29.52 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100 Lenox Drive |
|
|
|
|
|
Lawrenceville |
|
NJ |
|
|
1991 |
|
|
|
50,942 |
|
|
|
100.0 |
% |
|
|
681 |
|
|
|
16.51 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2 Foster Avenue |
|
|
(f |
) |
|
Gibbsboro |
|
NJ |
|
|
1974 |
|
|
|
50,761 |
|
|
|
94.6 |
% |
|
|
195 |
|
|
|
4.58 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4000 Midlantic Drive |
|
|
|
|
|
Mt. Laurel |
|
NJ |
|
|
1998 |
|
|
|
46,945 |
|
|
|
100.0 |
% |
|
|
657 |
|
|
|
24.48 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Five Eves Drive |
|
|
|
|
|
Marlton |
|
NJ |
|
|
1986 |
|
|
|
45,564 |
|
|
|
100.0 |
% |
|
|
730 |
|
|
|
22.35 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
161 Gaither Drive |
|
|
|
|
|
Mount Laurel |
|
NJ |
|
|
1987 |
|
|
|
44,739 |
|
|
|
96.4 |
% |
|
|
603 |
|
|
|
21.82 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Main Street Piazza |
|
|
|
|
|
Voorhees |
|
NJ |
|
|
1990 |
|
|
|
44,708 |
|
|
|
89.6 |
% |
|
|
663 |
|
|
|
19.27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30 Lake Center Drive |
|
|
|
|
|
Marlton |
|
NJ |
|
|
1986 |
|
|
|
40,287 |
|
|
|
91.3 |
% |
|
|
652 |
|
|
|
19.46 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20 East Clementon Road |
|
|
|
|
|
Gibbsboro |
|
NJ |
|
|
1986 |
|
|
|
38,260 |
|
|
|
74.7 |
% |
|
|
359 |
|
|
|
19.86 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Two Eves Drive |
|
|
|
|
|
Marlton |
|
NJ |
|
|
1987 |
|
|
|
37,532 |
|
|
|
62.0 |
% |
|
|
416 |
|
|
|
18.94 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
304 Harper Drive |
|
|
|
|
|
Moorestown |
|
NJ |
|
|
1975 |
|
|
|
32,978 |
|
|
|
83.6 |
% |
|
|
512 |
|
|
|
24.30 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Main Street Promenade |
|
|
|
|
|
Voorhees |
|
NJ |
|
|
1988 |
|
|
|
31,445 |
|
|
|
80.0 |
% |
|
|
355 |
|
|
|
14.94 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Four B Eves Drive |
|
|
|
|
|
Marlton |
|
NJ |
|
|
1987 |
|
|
|
27,011 |
|
|
|
100.0 |
% |
|
|
408 |
|
|
|
17.40 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
815 East Gate Drive |
|
|
|
|
|
Mt. Laurel |
|
NJ |
|
|
1986 |
|
|
|
25,500 |
|
|
|
65.1 |
% |
|
|
296 |
|
|
|
17.94 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
817 East Gate Drive |
|
|
|
|
|
Mt. Laurel |
|
NJ |
|
|
1986 |
|
|
|
25,351 |
|
|
|
100.0 |
% |
|
|
268 |
|
|
|
13.88 |
|
-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 |
|
|
2009 (a) |
|
|
2009 (b) (000s) |
|
|
2009 (c) |
|
Four A Eves Drive |
|
|
|
|
|
Marlton |
|
NJ |
|
|
1987 |
|
|
|
24,687 |
|
|
|
100.0 |
% |
|
|
311 |
|
|
|
16.81 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Foster Avenue |
|
|
(f |
) |
|
Gibbsboro |
|
NJ |
|
|
1972 |
|
|
|
24,255 |
|
|
|
100.0 |
% |
|
|
95 |
|
|
|
4.58 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4 Foster Avenue |
|
|
(f |
) |
|
Gibbsboro |
|
NJ |
|
|
1974 |
|
|
|
23,372 |
|
|
|
100.0 |
% |
|
|
159 |
|
|
|
7.78 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7 Foster Avenue |
|
|
|
|
|
Gibbsboro |
|
NJ |
|
|
1983 |
|
|
|
22,158 |
|
|
|
61.8 |
% |
|
|
300 |
|
|
|
21.37 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10 Foster Avenue |
|
|
|
|
|
Gibbsboro |
|
NJ |
|
|
1983 |
|
|
|
18,651 |
|
|
|
90.4 |
% |
|
|
194 |
|
|
|
18.47 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5 U.S. Avenue |
|
|
(f |
) |
|
Gibbsboro |
|
NJ |
|
|
1987 |
|
|
|
5,000 |
|
|
|
100.0 |
% |
|
|
24 |
|
|
|
5.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50 East Clementon Road |
|
|
|
|
|
Gibbsboro |
|
NJ |
|
|
1986 |
|
|
|
3,080 |
|
|
|
100.0 |
% |
|
|
174 |
|
|
|
56.41 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5 Foster Avenue |
|
|
|
|
|
Gibbsboro |
|
NJ |
|
|
1968 |
|
|
|
2,000 |
|
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUBTOTAL/WEIGHTED AVG NEW JERSEY/DELAWARE SEGMENT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,416,810 |
|
|
|
87.3 |
% |
|
|
73,800 |
|
|
|
22.07 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RICHMOND, VA SEGMENT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300 Arboretum Place |
|
|
|
|
|
Richmond |
|
VA |
|
|
1988 |
|
|
|
212,698 |
|
|
|
94.5 |
% |
|
|
3,378 |
|
|
|
18.05 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6800 Paragon Place |
|
|
|
|
|
Richmond |
|
VA |
|
|
1986 |
|
|
|
144,722 |
|
|
|
85.5 |
% |
|
|
2,571 |
|
|
|
20.64 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6802 Paragon Place |
|
|
|
|
|
Richmond |
|
VA |
|
|
1989 |
|
|
|
143,567 |
|
|
|
89.4 |
% |
|
|
2,262 |
|
|
|
18.23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7501 Boulders View Drive |
|
|
|
|
|
Richmond |
|
VA |
|
|
1990 |
|
|
|
137,283 |
|
|
|
62.7 |
% |
|
|
1,980 |
|
|
|
17.65 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2511 Brittons Hill Road |
|
|
(f |
) |
|
Richmond |
|
VA |
|
|
1987 |
|
|
|
132,548 |
|
|
|
100.0 |
% |
|
|
678 |
|
|
|
6.65 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2100-2116 West Laburnam Avenue |
|
|
|
|
|
Richmond |
|
VA |
|
|
1976 |
|
|
|
127,929 |
|
|
|
89.3 |
% |
|
|
1,568 |
|
|
|
14.51 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1957 Westmoreland Street |
|
|
(g |
) |
|
Richmond |
|
VA |
|
|
1975 |
|
|
|
121,815 |
|
|
|
0.0 |
% |
|
|
184 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7300 Beaufont Springs Drive |
|
|
|
|
|
Richmond |
|
VA |
|
|
2000 |
|
|
|
120,665 |
|
|
|
100.0 |
% |
|
|
2,573 |
|
|
|
22.03 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1025 Boulders Parkway |
|
|
|
|
|
Richmond |
|
VA |
|
|
1994 |
|
|
|
93,143 |
|
|
|
98.8 |
% |
|
|
1,826 |
|
|
|
20.43 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2201-2245 Tomlynn Street |
|
|
(f |
) |
|
Richmond |
|
VA |
|
|
1989 |
|
|
|
85,860 |
|
|
|
91.9 |
% |
|
|
473 |
|
|
|
8.33 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7401 Beaufont Springs Drive |
|
|
|
|
|
Richmond |
|
VA |
|
|
1998 |
|
|
|
82,639 |
|
|
|
73.4 |
% |
|
|
1,311 |
|
|
|
20.62 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7325 Beaufont Springs Drive |
|
|
|
|
|
Richmond |
|
VA |
|
|
1999 |
|
|
|
75,218 |
|
|
|
100.0 |
% |
|
|
1,554 |
|
|
|
22.29 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100 Gateway Centre Parkway |
|
|
|
|
|
Richmond |
|
VA |
|
|
2001 |
|
|
|
74,991 |
|
|
|
67.2 |
% |
|
|
520 |
|
|
|
16.81 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6806 Paragon Place |
|
|
|
|
|
Richmond |
|
VA |
|
|
2007 |
|
|
|
74,480 |
|
|
|
100.0 |
% |
|
|
1,754 |
|
|
|
24.61 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9011 Arboretum Parkway |
|
|
|
|
|
Richmond |
|
VA |
|
|
1991 |
|
|
|
73,183 |
|
|
|
93.0 |
% |
|
|
1,292 |
|
|
|
18.72 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4805 Lake Brooke Drive |
|
|
|
|
|
Glen Allen |
|
VA |
|
|
1996 |
|
|
|
60,867 |
|
|
|
100.0 |
% |
|
|
1,057 |
|
|
|
19.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9100 Arboretum Parkway |
|
|
|
|
|
Richmond |
|
VA |
|
|
1988 |
|
|
|
57,974 |
|
|
|
93.7 |
% |
|
|
864 |
|
|
|
16.24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2812 Emerywood Parkway |
|
|
|
|
|
Henrico |
|
VA |
|
|
1980 |
|
|
|
56,984 |
|
|
|
87.4 |
% |
|
|
857 |
|
|
|
15.46 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4364 South Alston Avenue |
|
|
|
|
|
Durham |
|
NC |
|
|
1985 |
|
|
|
56,601 |
|
|
|
100.0 |
% |
|
|
1,132 |
|
|
|
21.37 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2277 Dabney Road |
|
|
(f |
) |
|
Richmond |
|
VA |
|
|
1986 |
|
|
|
50,400 |
|
|
|
100.0 |
% |
|
|
267 |
|
|
|
7.40 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9200 Arboretum Parkway |
|
|
|
|
|
Richmond |
|
VA |
|
|
1988 |
|
|
|
49,542 |
|
|
|
100.0 |
% |
|
|
467 |
|
|
|
17.04 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9210 Arboretum Parkway |
|
|
|
|
|
Richmond |
|
VA |
|
|
1988 |
|
|
|
48,012 |
|
|
|
89.5 |
% |
|
|
563 |
|
|
|
14.85 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2212-2224 Tomlynn Street |
|
|
(f |
) |
|
Richmond |
|
VA |
|
|
1985 |
|
|
|
45,353 |
|
|
|
100.0 |
% |
|
|
230 |
|
|
|
7.55 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2221-2245 Dabney Road |
|
|
(f |
) |
|
Richmond |
|
VA |
|
|
1994 |
|
|
|
45,250 |
|
|
|
86.2 |
% |
|
|
234 |
|
|
|
7.80 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2251 Dabney Road |
|
|
(f |
) |
|
Richmond |
|
VA |
|
|
1983 |
|
|
|
42,000 |
|
|
|
100.0 |
% |
|
|
209 |
|
|
|
6.77 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2161-2179 Tomlynn Street |
|
|
(f |
) |
|
Richmond |
|
VA |
|
|
1985 |
|
|
|
41,550 |
|
|
|
100.0 |
% |
|
|
273 |
|
|
|
8.45 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2256 Dabney Road |
|
|
(f |
) |
|
Richmond |
|
VA |
|
|
1982 |
|
|
|
33,413 |
|
|
|
100.0 |
% |
|
|
232 |
|
|
|
8.84 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2246 Dabney Road |
|
|
(f |
) |
|
Richmond |
|
VA |
|
|
1987 |
|
|
|
33,271 |
|
|
|
100.0 |
% |
|
|
287 |
|
|
|
11.11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2244 Dabney Road |
|
|
(f |
) |
|
Richmond |
|
VA |
|
|
1993 |
|
|
|
33,050 |
|
|
|
100.0 |
% |
|
|
297 |
|
|
|
11.52 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9211 Arboretum Parkway |
|
|
|
|
|
Richmond |
|
VA |
|
|
1991 |
|
|
|
30,791 |
|
|
|
63.1 |
% |
|
|
330 |
|
|
|
13.87 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2248 Dabney Road |
|
|
(f |
) |
|
Richmond |
|
VA |
|
|
1989 |
|
|
|
30,184 |
|
|
|
100.0 |
% |
|
|
194 |
|
|
|
9.03 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2130-2146 Tomlynn Street |
|
|
(f |
) |
|
Richmond |
|
VA |
|
|
1988 |
|
|
|
29,700 |
|
|
|
57.6 |
% |
|
|
179 |
|
|
|
11.75 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2120 Tomlyn Street |
|
|
(f |
) |
|
Richmond |
|
VA |
|
|
1986 |
|
|
|
23,850 |
|
|
|
100.0 |
% |
|
|
133 |
|
|
|
7.67 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2240 Dabney Road |
|
|
(f |
) |
|
Richmond |
|
VA |
|
|
1984 |
|
|
|
15,389 |
|
|
|
100.0 |
% |
|
|
138 |
|
|
|
11.85 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUBTOTAL/WEIGHTED AVG RICHMOND, VA SEGMENT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,484,922 |
|
|
|
86.3 |
% |
|
|
31,867 |
|
|
|
14.03 |
|
-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 |
|
|
2009 (a) |
|
|
2009 (b) (000s) |
|
|
2009 (c) |
|
CALIFORNIA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
155 Grand Avenue |
|
|
|
|
|
Oakland |
|
CA |
|
|
1990 |
|
|
|
200,996 |
|
|
|
71.7 |
% |
|
|
4,128 |
|
|
|
36.10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1220 Concord Avenue |
|
|
|
|
|
Concord |
|
CA |
|
|
1984 |
|
|
|
175,153 |
|
|
|
100.0 |
% |
|
|
2,944 |
|
|
|
22.46 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1200 Concord Avenue |
|
|
|
|
|
Concord |
|
CA |
|
|
1984 |
|
|
|
175,103 |
|
|
|
100.0 |
% |
|
|
4,161 |
|
|
|
26.44 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5780 & 5790 Fleet Street |
|
|
|
|
|
Carlsbad |
|
CA |
|
|
1999 |
|
|
|
121,381 |
|
|
|
68.3 |
% |
|
|
2,834 |
|
|
|
33.25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5900 & 5950 La Place Court |
|
|
|
|
|
Carlsbad |
|
CA |
|
|
1988 |
|
|
|
80,506 |
|
|
|
80.5 |
% |
|
|
1,727 |
|
|
|
25.38 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16870 West Bernardo Drive |
|
|
|
|
|
Rancho Bernardo |
|
CA |
|
|
2002 |
|
|
|
68,708 |
|
|
|
69.6 |
% |
|
|
1,331 |
|
|
|
31.25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5963 La Place Court |
|
|
|
|
|
Carlsbad |
|
CA |
|
|
1987 |
|
|
|
61,587 |
|
|
|
54.0 |
% |
|
|
804 |
|
|
|
24.19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2035 Corte Del Nogal |
|
|
|
|
|
Carlsbad |
|
CA |
|
|
1991 |
|
|
|
53,982 |
|
|
|
53.7 |
% |
|
|
698 |
|
|
|
14.25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5973 Avendia Encinas |
|
|
|
|
|
Carlsbad |
|
CA |
|
|
1986 |
|
|
|
51,695 |
|
|
|
79.6 |
% |
|
|
1,132 |
|
|
|
28.59 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUBTOTAL/WEIGHTED AVG CALIFORNIA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
989,111 |
|
|
|
80.2 |
% |
|
|
19,759 |
|
|
|
26.88 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AUSTIN, TX |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1250 Capital of Texas Highway South |
|
|
|
|
|
Austin |
|
TX |
|
|
1984 |
|
|
|
270,711 |
|
|
|
82.3 |
% |
|
|
3,360 |
|
|
|
24.13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1301 Mopac Expressway |
|
|
|
|
|
Austin |
|
TX |
|
|
2001 |
|
|
|
222,580 |
|
|
|
99.8 |
% |
|
|
4,320 |
|
|
|
31.54 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3711 South Mopac Expressway |
|
|
|
|
|
Austin |
|
TX |
|
|
2007 |
|
|
|
205,195 |
|
|
|
93.5 |
% |
|
|
2,230 |
|
|
|
17.03 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1601 Mopac Expressway |
|
|
|
|
|
Austin |
|
TX |
|
|
2000 |
|
|
|
195,639 |
|
|
|
100.0 |
% |
|
|
2,966 |
|
|
|
27.23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1501 South Mopac Expressway |
|
|
|
|
|
Austin |
|
TX |
|
|
1999 |
|
|
|
195,324 |
|
|
|
94.5 |
% |
|
|
2,609 |
|
|
|
26.89 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1221 Mopac Expressway |
|
|
|
|
|
Austin |
|
TX |
|
|
2001 |
|
|
|
173,302 |
|
|
|
93.0 |
% |
|
|
3,127 |
|
|
|
32.64 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1177 East Belt Line Road |
|
|
(h |
) |
|
Coppell |
|
TX |
|
|
1998 |
|
|
|
150,000 |
|
|
|
100.0 |
% |
|
|
1,833 |
|
|
|
14.87 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1801 Mopac Expressway |
|
|
|
|
|
Austin |
|
TX |
|
|
1999 |
|
|
|
58,576 |
|
|
|
100.0 |
% |
|
|
975 |
|
|
|
28.23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUBTOTAL/WEIGHTED AVG AUSTIN, TX |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,471,327 |
|
|
|
94.3 |
% |
|
|
21,420 |
|
|
|
25.32 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUBTOTAL FULLY OWNED PROPERTIES / WEIGHTED AVG. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,658,832 |
|
|
|
88.9 |
% |
|
|
462,785 |
|
|
|
21.79 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2970 Market Street |
|
|
|
|
|
Philadelphia |
|
PA |
|
|
N/A |
|
|
|
862,692 |
|
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2930 Chestnut Street |
|
|
|
|
|
Philadelphia |
|
PA |
|
|
N/A |
|
|
|
553,421 |
|
|
|
92.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300 Delaware Avenue |
|
|
|
|
|
Wilmington |
|
DE |
|
|
1989 |
|
|
|
298,071 |
|
|
|
71.9 |
% |
|
|
2,967 |
|
|
|
17.94 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One Radnor Corporate Center |
|
|
|
|
|
Radnor |
|
PA |
|
|
1998 |
|
|
|
190,219 |
|
|
|
89.7 |
% |
|
|
3,839 |
|
|
|
21.98 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Juniper Street |
|
|
|
|
|
Philadelphia |
|
PA |
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUBTOTAL DEVELOPMENT/REDEVELOPMENT PROPERTIES / WEIGHTED AVG. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,904,403 |
|
|
|
92.4 |
% |
|
|
6,806 |
|
|
|
7.98 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL CORE PORTFOLIO |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,563,235 |
|
|
|
89.2 |
% |
|
|
469,591 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Calculated by dividing net rentable square feet included in leases signed on or before
December 31, 2009 at the property by the aggregate net rentable square feet of the property. |
|
(b) |
|
Total Base Rent for the twelve months ended December 31, 2009 represents base rents earned
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, 2009 plus the prorata 2009
budgeted operating expense recoveries 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, 2009. In both cases, the
annualized rental rate is divided by the total square footage leased as of December 31, 2009
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. |
|
(g) |
|
Property sold on January 14, 2010. |
|
(h) |
|
Property owned by consolidated real estate venture. |
-32-
The following table shows information regarding rental rates and lease expirations for the
Properties at December 31, 2009 and assumes that none of the tenants exercises 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 |
|
2010 |
|
|
|
390 |
|
|
|
2,978,553 |
|
|
|
61,524,591 |
|
|
|
20.66 |
|
|
|
12.1 |
% |
|
|
12.1 |
% |
2011 |
|
|
|
299 |
|
|
|
3,201,307 |
|
|
|
70,464,819 |
|
|
|
22.01 |
|
|
|
13.8 |
% |
|
|
25.9 |
% |
2012 |
|
|
|
230 |
|
|
|
2,479,141 |
|
|
|
60,450,938 |
|
|
|
24.38 |
|
|
|
11.9 |
% |
|
|
37.7 |
% |
2013 |
|
|
|
172 |
|
|
|
2,261,892 |
|
|
|
46,619,815 |
|
|
|
20.61 |
|
|
|
9.1 |
% |
|
|
46.9 |
% |
2014 |
|
|
|
175 |
|
|
|
2,409,842 |
|
|
|
54,612,455 |
|
|
|
22.66 |
|
|
|
10.7 |
% |
|
|
57.6 |
% |
2015 |
|
|
|
108 |
|
|
|
1,950,515 |
|
|
|
49,022,957 |
|
|
|
25.13 |
|
|
|
9.6 |
% |
|
|
67.2 |
% |
2016 |
|
|
|
73 |
|
|
|
1,129,774 |
|
|
|
28,292,757 |
|
|
|
25.04 |
|
|
|
5.5 |
% |
|
|
72.8 |
% |
2017 |
|
|
|
57 |
|
|
|
1,394,958 |
|
|
|
38,941,266 |
|
|
|
27.92 |
|
|
|
7.6 |
% |
|
|
80.4 |
% |
2018 |
|
|
|
36 |
|
|
|
1,014,518 |
|
|
|
29,958,725 |
|
|
|
29.53 |
|
|
|
5.9 |
% |
|
|
86.3 |
% |
2019 |
|
|
|
34 |
|
|
|
927,351 |
|
|
|
32,733,953 |
|
|
|
35.30 |
|
|
|
6.4 |
% |
|
|
92.7 |
% |
2020 and thereafter |
|
|
|
32 |
|
|
|
1,413,069 |
|
|
|
37,181,075 |
|
|
|
26.31 |
|
|
|
7.4 |
% |
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,606 |
|
|
|
21,160,920 |
|
|
$ |
509,803,351 |
|
|
$ |
24.09 |
|
|
|
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 a portion of
real estate taxes, operating expenses and common area maintenance and utility charges. |
At December 31, 2009, our Properties were leased to 1,357 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, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of |
|
|
|
|
|
|
|
Average |
|
|
Aggregate |
|
|
Percentage |
|
|
Annualized |
|
|
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 |
|
Northrop Grumman Corporation |
|
|
6 |
|
|
|
73 |
|
|
|
469,116 |
|
|
|
2.2 |
% |
|
$ |
13,787 |
|
|
|
3.0 |
% |
Pepper Hamilton LLP |
|
|
2 |
|
|
|
59 |
|
|
|
309,042 |
|
|
|
1.5 |
% |
|
|
10,604 |
|
|
|
2.3 |
% |
Wells Fargo Bank, N.A. |
|
|
15 |
|
|
|
20 |
|
|
|
475,326 |
|
|
|
2.2 |
% |
|
|
10,336 |
|
|
|
2.2 |
% |
Lockheed Martin |
|
|
9 |
|
|
|
32 |
|
|
|
577,251 |
|
|
|
2.7 |
% |
|
|
9,594 |
|
|
|
2.1 |
% |
Time Warner Cable, Inc. |
|
|
1 |
|
|
|
115 |
|
|
|
266,899 |
|
|
|
1.3 |
% |
|
|
8,307 |
|
|
|
1.8 |
% |
Dechert LLP |
|
|
1 |
|
|
|
118 |
|
|
|
218,565 |
|
|
|
1.0 |
% |
|
|
7,213 |
|
|
|
1.6 |
% |
KPMG, LLP |
|
|
2 |
|
|
|
55 |
|
|
|
245,828 |
|
|
|
1.2 |
% |
|
|
7,047 |
|
|
|
1.5 |
% |
Verizon |
|
|
4 |
|
|
|
15 |
|
|
|
302,087 |
|
|
|
1.4 |
% |
|
|
5,995 |
|
|
|
1.3 |
% |
Lincoln National Management Co. |
|
|
1 |
|
|
|
127 |
|
|
|
193,626 |
|
|
|
0.9 |
% |
|
|
5,952 |
|
|
|
1.3 |
% |
Computer Associates International |
|
|
1 |
|
|
|
112 |
|
|
|
227,574 |
|
|
|
1.1 |
% |
|
|
5,604 |
|
|
|
1.2 |
% |
Blank Rome LLP |
|
|
1 |
|
|
|
145 |
|
|
|
239,236 |
|
|
|
1.1 |
% |
|
|
5,529 |
|
|
|
1.2 |
% |
Computer Sciences |
|
|
6 |
|
|
|
44 |
|
|
|
276,410 |
|
|
|
1.3 |
% |
|
|
4,811 |
|
|
|
1.0 |
% |
AT&T |
|
|
5 |
|
|
|
87 |
|
|
|
144,451 |
|
|
|
0.7 |
% |
|
|
4,067 |
|
|
|
0.9 |
% |
General Services Administration U.S. Govt. |
|
|
12 |
|
|
|
58 |
|
|
|
169,128 |
|
|
|
0.8 |
% |
|
|
3,925 |
|
|
|
0.8 |
% |
Omnicare Clinical Research |
|
|
1 |
|
|
|
7 |
|
|
|
150,000 |
|
|
|
0.7 |
% |
|
|
3,899 |
|
|
|
0.8 |
% |
Marsh USA, Inc. |
|
|
2 |
|
|
|
43 |
|
|
|
128,589 |
|
|
|
0.6 |
% |
|
|
3,839 |
|
|
|
0.8 |
% |
Hewlett Packard |
|
|
2 |
|
|
|
78 |
|
|
|
141,339 |
|
|
|
0.7 |
% |
|
|
3,803 |
|
|
|
0.8 |
% |
Deltek Systems, Inc. |
|
|
3 |
|
|
|
27 |
|
|
|
116,172 |
|
|
|
0.5 |
% |
|
|
3,696 |
|
|
|
0.8 |
% |
Woodcock Washburn, LLC |
|
|
1 |
|
|
|
144 |
|
|
|
109,323 |
|
|
|
0.5 |
% |
|
|
3,608 |
|
|
|
0.8 |
% |
National Rural Utilities Cooperative |
|
|
1 |
|
|
|
22 |
|
|
|
107,228 |
|
|
|
0.6 |
% |
|
|
3,438 |
|
|
|
0.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Total/Weighted Average |
|
|
76 |
|
|
|
60 |
|
|
|
4,867,190 |
|
|
|
23.0 |
% |
|
$ |
125,054 |
|
|
|
27.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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, 2009 multiplied by 12. Tenant reimbursements generally
include payment of a portion of real estate taxes, operating expenses and common area
maintenance and utility charges. |
-33-
Real Estate Ventures
As of December 31, 2009, we had investments in three real estate ventures that are considered to be
variable interest entities under the accounting standard for consolidation and of which we are the
primary beneficiary. We consolidate these three real estate ventures into our financial
statements.
As of December 31, 2009, we also had an aggregate investment of approximately $75.5 million in our
11 actively operating unconsolidated Real Estate Ventures (net of returns of investment). We
entered into these ventures with unaffiliated third parties to develop office properties or to
acquire land in anticipation of possible development of office properties. Ten of the Real Estate
Ventures own 45 office buildings that contain an aggregate of approximately 4.2 million net
rentable square feet and one Real Estate Venture developed a hotel property that contains 137 rooms
in Conshohocken, PA.
We account for our investments in these Real Estate Ventures using the equity method. Our
ownership interests range from 3% 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, unless we have no intent or obligation to fund losses in which case our investment
would not go below zero.
As of December 31, 2009, we had guaranteed repayment of approximately $2.1 million of loans for the
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 the Real Estate Ventures.
|
|
|
Item 3. |
|
Legal Proceedings |
We are involved from time to time in legal proceedings, including tenant disputes, employee
disputes, disputes arising out of agreements to purchase or sell properties and disputes relating
to state and local taxes. We generally consider these disputes to be routine to the conduct of our
business and management believes that the final outcome of such proceedings will not have a
material adverse effect on our financial position, results of operations or liquidity.
|
|
|
Item 4. |
|
Submission of Matters to a Vote of Security Holders |
We did not submit any matters to a vote of our shareholders during the fourth quarter of the year
ended December 31, 2009.
-34-
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
23, 2010, there were 713 holders of record of our common shares and 43 holders of record of the
Class A units (in addition to Brandywine Realty Trust). On
February 23, 2010, the last reported
sales price of the common shares on the NYSE was $11.09. The following table sets forth the
quarterly high and low 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 |
|
|
Paid During Quarter |
|
|
|
|
|
|
|
|
|
|
First Quarter 2008 |
|
$ |
19.39 |
|
|
$ |
15.70 |
|
|
$ |
0.44 |
|
Second Quarter 2008 |
|
$ |
19.86 |
|
|
$ |
15.76 |
|
|
$ |
0.44 |
|
Third Quarter 2008 |
|
$ |
18.30 |
|
|
$ |
13.48 |
|
|
$ |
0.44 |
|
Fourth Quarter 2008 |
|
$ |
15.22 |
|
|
$ |
3.73 |
|
|
$ |
0.44 |
|
First Quarter 2009 |
|
$ |
7.36 |
|
|
$ |
2.52 |
|
|
$ |
0.30 |
|
Second Quarter 2009 |
|
$ |
7.45 |
|
|
$ |
2.91 |
|
|
$ |
0.10 |
|
Third Quarter 2009 |
|
$ |
11.46 |
|
|
$ |
6.61 |
|
|
$ |
0.10 |
|
Fourth Quarter 2009 |
|
$ |
11.85 |
|
|
$ |
9.48 |
|
|
$ |
0.10 |
|
For each quarter in 2009 and 2008, the Operating Partnership paid a cash distribution per Class A
unit in an amount equal to the dividend paid on a common share for each such quarter.
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, financial condition and 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.
On December 8, 2009, our Board of Trustees declared a quarterly dividend distribution of $0.15 per
common share that was paid on January 20, 2010. Our Board of Trustees has adopted a dividend
policy designed to match our distributions to our projected, normalized taxable income for 2010.
We will continue to evaluate the potential of paying such dividends in stock versus cash. Our
Board of Trustees has made no determination on our future dividend composition.
On June 24, 2009, we filed with the NYSE our annual CEO Certification and Annual Written
Affirmation pursuant to Section 303A.12 of the NYSE Listed Company Manual, each certifying that we
were in compliance with all of the listing standards of the NYSE.
-35-
The following table provides information as of December 31, 2009 with respect to compensation plans
under which our equity securities are authorized for issuance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
|
(b) |
|
|
(c) |
|
|
|
|
|
|
|
|
|
Number of securities |
|
|
|
|
|
|
|
|
|
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) |
|
|
2,404,566 |
|
|
$ |
15.48 |
|
|
|
1,828,124 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation
plans not approved
by security holders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
2,404,566 |
|
|
$ |
15.48 |
|
|
|
1,828,124 |
|
|
|
|
(1) |
|
Relates to our Amended and Restated 1997 Long-Term Incentive Plan. In May 2007, our
shareholders approved an amendment to our 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. We had previously assumed the Prentiss 2005 Plan, together with other
Prentiss incentive plans, as part of our 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 below the
market price of the common shares on the grant date. To date we have awarded incentive stock
options and non-qualified stock options that generally have a ten year term and vest over a
one to three year period. |
-36-
The following table presents information related to our share repurchases during the year
ended December. 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 2009 |
|
|
25,755 |
(b) |
|
$ |
6.96 |
|
|
|
|
|
|
|
539,200 |
|
February 2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
539,200 |
|
March 2009 |
|
|
5,008 |
(b) |
|
|
2.52 |
|
|
|
|
|
|
|
539,200 |
|
April 2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
539,200 |
|
May 2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
539,200 |
|
June 2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
539,200 |
|
July 2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
539,200 |
|
August 2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
539,200 |
|
September 2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
539,200 |
|
October 2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
539,200 |
|
November 2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
539,200 |
|
December 2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
539,200 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
30,763 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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. Such
shares do not impact the total number of shares that may yet be purchased under the share
repurchase program. |
-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, 2004 and ending
December 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period Ending |
|
Index |
|
12/31/04 |
|
|
12/31/05 |
|
|
12/31/06 |
|
|
12/31/07 |
|
|
12/31/08 |
|
|
12/31/09 |
|
Brandywine Realty Trust |
|
|
100.00 |
|
|
|
101.06 |
|
|
|
125.40 |
|
|
|
71.76 |
|
|
|
34.33 |
|
|
|
55.96 |
|
S&P 500 |
|
|
100.00 |
|
|
|
104.91 |
|
|
|
121.48 |
|
|
|
128.16 |
|
|
|
80.74 |
|
|
|
102.11 |
|
Russell 2000 |
|
|
100.00 |
|
|
|
104.55 |
|
|
|
123.76 |
|
|
|
121.82 |
|
|
|
80.66 |
|
|
|
102.58 |
|
NAREIT All Equity
REIT Index |
|
|
100.00 |
|
|
|
112.16 |
|
|
|
151.49 |
|
|
|
127.72 |
|
|
|
79.53 |
|
|
|
101.79 |
|
-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 disposition of all properties since January
1, 2005, which have been reclassified as discontinued operations for all periods presented in
accordance with the accounting standard governing discontinued operations. The selected financial
data have also been revised to reflect the impact of the retrospective adoption of the accounting
standard for convertible debt, non-controlling interest and the accounting standard for earnings
per share disclosures related to non-forfeitable dividend rights for unvested shares. Please refer
to Note 2 of the Consolidated Financial Statements of each registrant for additional information.
Brandywine Realty Trust
(in thousands, except per common share data and number of properties)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
2009 |
|
|
2008 (a) |
|
|
2007 (a) |
|
|
2006 (a) |
|
|
2005 (a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Results |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
$ |
582,219 |
|
|
$ |
589,421 |
|
|
$ |
604,811 |
|
|
$ |
551,367 |
|
|
$ |
340,190 |
|
Income (loss) from continuing operations |
|
|
5,648 |
|
|
|
1,422 |
|
|
|
9,333 |
|
|
|
(37,420 |
) |
|
|
23,849 |
|
Net income |
|
|
8,089 |
|
|
|
38,525 |
|
|
|
55,335 |
|
|
|
10,949 |
|
|
|
43,550 |
|
Income allocated to Common Shares |
|
|
(245 |
) |
|
|
28,462 |
|
|
|
44,124 |
|
|
|
332 |
|
|
|
33,626 |
|
Income (loss) from continuing operations
per Common Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.02 |
) |
|
$ |
(0.08 |
) |
|
$ |
|
|
|
$ |
(0.51 |
) |
|
$ |
0.26 |
|
Diluted |
|
$ |
(0.02 |
) |
|
$ |
(0.08 |
) |
|
$ |
|
|
|
$ |
(0.51 |
) |
|
$ |
0.26 |
|
Earnings per Common Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
|
|
|
$ |
0.33 |
|
|
$ |
0.50 |
|
|
$ |
|
|
|
$ |
0.60 |
|
Diluted |
|
$ |
|
|
|
$ |
0.33 |
|
|
$ |
0.50 |
|
|
$ |
|
|
|
$ |
0.60 |
|
Cash distributions paid per Common Share |
|
$ |
0.60 |
|
|
$ |
1.76 |
|
|
$ |
1.76 |
|
|
$ |
1.76 |
|
|
$ |
1.78 |
(b) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate investments, net of
accumulated depreciation |
|
$ |
4,164,992 |
|
|
$ |
4,191,367 |
|
|
$ |
4,657,333 |
|
|
$ |
4,739,726 |
|
|
$ |
2,541,486 |
|
Total assets |
|
|
4,663,750 |
|
|
|
4,742,619 |
|
|
|
5,213,968 |
|
|
|
5,508,479 |
|
|
|
2,805,745 |
|
Total indebtedness |
|
|
2,454,577 |
|
|
|
2,741,495 |
|
|
|
3,081,949 |
|
|
|
3,133,934 |
|
|
|
1,521,384 |
|
Total liabilities |
|
|
2,742,010 |
|
|
|
3,020,121 |
|
|
|
3,363,759 |
|
|
|
3,462,272 |
|
|
|
1,662,844 |
|
Noncontrolling interest |
|
|
38,308 |
|
|
|
52,961 |
|
|
|
84,076 |
|
|
|
123,630 |
|
|
|
37,749 |
|
Brandywine Realty Trusts equity |
|
|
1,883,432 |
|
|
|
1,669,537 |
|
|
|
1,766,133 |
|
|
|
1,922,577 |
|
|
|
1,105,152 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating activities |
|
$ |
220,405 |
|
|
$ |
233,867 |
|
|
$ |
224,805 |
|
|
$ |
238,299 |
|
|
$ |
125,147 |
|
Investing activities |
|
|
(102,549 |
) |
|
|
164,046 |
|
|
|
39,162 |
|
|
|
(912,813 |
) |
|
|
(252,417 |
) |
Financing activities |
|
|
(120,213 |
) |
|
|
(399,589 |
) |
|
|
(283,746 |
) |
|
|
692,719 |
|
|
|
119,098 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of properties owned at year end |
|
|
245 |
|
|
|
248 |
|
|
|
257 |
|
|
|
313 |
|
|
|
251 |
|
Net rentable square feet owned at year end |
|
|
25,563 |
|
|
|
26,257 |
|
|
|
28,888 |
|
|
|
31,764 |
|
|
|
19,600 |
|
|
|
|
(a) |
|
Net income has been increased/(reduced) by $(5.0)
million, $(1.4) million, $1.1 million and $1.2 million for the years ended December 31, 2008, 2007,
2006 and 2005, respectively, related to the retrospective adoption of the standards for convertibe
debt and non-controlling interest discussed in Note 2 of the Consolidated Financial Statements.
Total assets as of December 31, 2008, 2007, 2006 have also been increased/(reduced) by $0.3
million, $(0.1) million, and $(0.5) million, respectively. as a result of the retrospective
adoption of the accounting standard for convertible debt. Total liabilities as of December 31,
2008, 2007 and 2006 have also been increased/(reduced) by $(12.2) million, $(19.0) million and
$(23.4) million, respectively as a result of the retrospective adoption of the accounting standard
for convertible debt. Accordingly, total equity as of December 31, 2008, 2007, 2006 and 2005 have
been increased/(reduced) by $65.7 million, $102.9 million,
$146.9 million and $37.7 million,
respectively as result of these retrospective adjustments for convertible debt and noncontrolling
interests. The debt impacted by the adoption of the accounting standard for convertible debt was
issued in October 2006. We reclassified tenant reimbursements that
are payable to tenants of $4.7 million to accounts payable and
accrued expenses from accounts receivable, net at December
31, 2008. |
|
(b) |
|
Includes $0.02 special distribution declared in December 2006 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, |
|
2009 |
|
|
2008 (a) |
|
|
2007 (a) |
|
|
2006 (a) |
|
|
2005 (a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Results |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
$ |
582,219 |
|
|
$ |
589,421 |
|
|
$ |
604,811 |
|
|
$ |
551,367 |
|
|
$ |
340,190 |
|
Income (loss) from continuing operations |
|
|
5,648 |
|
|
|
1,422 |
|
|
|
9,333 |
|
|
|
(37,420 |
) |
|
|
23,849 |
|
Net income |
|
|
8,089 |
|
|
|
38,525 |
|
|
|
55,335 |
|
|
|
10,949 |
|
|
|
43,550 |
|
Income from continuing operations per |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Partnership Unit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.02 |
) |
|
$ |
(0.08 |
) |
|
$ |
0.01 |
|
|
$ |
(0.49 |
) |
|
$ |
0.26 |
|
Diluted |
|
$ |
(0.02 |
) |
|
$ |
(0.08 |
) |
|
$ |
0.01 |
|
|
$ |
(0.49 |
) |
|
$ |
0.26 |
|
Earnings per Common Partnership Units |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
|
|
|
$ |
0.33 |
|
|
$ |
0.49 |
|
|
$ |
0.03 |
|
|
$ |
0.60 |
|
Diluted |
|
$ |
|
|
|
$ |
0.33 |
|
|
$ |
0.49 |
|
|
$ |
0.03 |
|
|
$ |
0.60 |
|
Cash distributions paid per Common |
|
$ |
0.60 |
|
|
$ |
1.76 |
|
|
$ |
1.76 |
|
|
$ |
1.76 |
|
|
$ |
1.78 |
(b) |
Partnership Unit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate investments, net of
accumulated depreciation |
|
$ |
4,164,992 |
|
|
$ |
4,191,367 |
|
|
$ |
4,657,333 |
|
|
$ |
4,739,726 |
|
|
$ |
2,541,486 |
|
Total assets |
|
|
4,663,750 |
|
|
|
4,742,619 |
|
|
|
5,213,968 |
|
|
|
5,508,479 |
|
|
|
2,805,745 |
|
Total indebtedness |
|
|
2,454,577 |
|
|
|
2,741,495 |
|
|
|
3,081,949 |
|
|
|
3,133,935 |
|
|
|
1,521,384 |
|
Total liabilities |
|
|
2,742,010 |
|
|
|
3,020,121 |
|
|
|
3,363,759 |
|
|
|
3,462,272 |
|
|
|
1,662,844 |
|
Redeemable limited partnership units |
|
|
44,620 |
|
|
|
54,166 |
|
|
|
90,151 |
|
|
|
96,544 |
|
|
|
85,694 |
|
Non-controlling
interest |
|
|
65 |
|
|
|
|
|
|
|
28 |
|
|
|
34,414 |
|
|
|
|
|
Brandywine Operating Partnerships equity |
|
|
1,877,055 |
|
|
|
1,668,332 |
|
|
|
1,760,030 |
|
|
|
1,915,249 |
|
|
|
1,057,207 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating activities |
|
$ |
220,405 |
|
|
$ |
233,867 |
|
|
$ |
224,805 |
|
|
$ |
238,299 |
|
|
$ |
125,147 |
|
Investing activities |
|
|
(102,549 |
) |
|
|
164,046 |
|
|
|
39,162 |
|
|
|
(912,813 |
) |
|
|
(252,417 |
) |
Financing activities |
|
|
(120,213 |
) |
|
|
(399,589 |
) |
|
|
(283,746 |
) |
|
|
692,719 |
|
|
|
119,098 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of properties owned at year end |
|
|
245 |
|
|
|
248 |
|
|
|
257 |
|
|
|
313 |
|
|
|
251 |
|
Net rentable square feet owned at year end |
|
|
25,563 |
|
|
|
26,257 |
|
|
|
28,888 |
|
|
|
31,764 |
|
|
|
19,600 |
|
|
|
|
(a) |
|
Net income has been increased/(reduced) by $(6.3)
million, $(3.5) million, and $1.0 million for the years ended December 31, 2008, 2007, and 2006
respectively, related to the retrospective adoption of the accounting standards for convertibe debt
and non-controlling interest discussed in Note 2 of the Consolidated Financial Statements. Total
assets as of December 31, 2008, 2007, 2006 have also been increased/(reduced) by $0.3 million,
$(0.1) million, and $(0.5) million, respectively. as a result of the retrospective adoption of the
accounting standard for convertible debt. Total liabilities as of December 31, 2008, 2007 and 2006
have also been increased/(reduced) by $(12.2) million, $(19.0)
million and $(23.4) million,
respectively as a result of the retrospective adoption of the accounting standard for convertible
debt. Redeemable limited partnership units as of December 31, 2008, 2007,
2006 and 2005 have also been increased/(reduced) by $32.5 million, $21.3 million, $(35.2) million
and $31.4 million, respectively, as a result of the restrospective adoption of the accounting
standard for the classification and measurement of redeemable securities which also became
effective upon the adoption of the accounting standard for noncontrolling interest. Accordingly,
total equity as of December 31, 2008, 2007, 2006 and 2005 have been increased/(reduced) by $(20.0)
million, $(2.3) million, $92.1 million and $(31.4) million, respectively as a result of these
retrospective adjustments. The debt impacted by the adoption of the accounting standard for
convertible debt was obtained in October 2006. We
reclassified tenant reimbursements that are payable to tenants of
$4.7 million to accounts payable and accrued expenses from accounts receivable, net at December 31, 2008. |
|
(b) |
|
Includes $0.02 special distribution declared in December 2006 for shareholders 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, 2009, 2008 and 2007.
OVERVIEW
As of December 31, 2009, we managed our portfolio within six geographic segments: (1) Pennsylvania,
(2) Metropolitan Washington D.C, (3) New Jersey/Delaware, (4) Richmond, Virginia, (5) Austin, Texas
and (6) California. The Pennsylvania segment includes properties in Chester, Delaware, Bucks, and
Montgomery counties in the Philadelphia suburbs and the City of Philadelphia in Pennsylvania. The
Metropolitan Washington, D.C. segment includes properties in Northern Virginia and suburban
Maryland. The New Jersey/Delaware segment includes properties in Burlington, Camden and Mercer
counties and counties in the southern and central part of New Jersey and in New Castle county in
the state of Delaware. The Richmond, Virginia segment includes properties primarily in Albemarle,
Chesterfield, Goochland and Henrico counties and Durham, North Carolina. The California segment
includes properties in Oakland, Concord, Carlsbad and Rancho Bernardo. The Austin, Texas segment
includes properties in Austin and Coppell.
We generate cash and revenue from leases of space at our properties and, to a lesser extent, from
the management of properties owned by third parties and from investments in the Real Estate
Ventures. Factors that we evaluate when leasing space include rental rates, costs of tenant
improvements, tenant creditworthiness, current and expected operating costs, the length of the
lease, vacancy levels and demand for office and industrial space. We also generate cash through
sales of assets, including assets that we do not view as core to our portfolio, either because of
location or expected growth potential, and assets that are commanding premium prices from third
party investors.
Factors that May Influence Future Results of Operations
Global Market and Economic Conditions
In the U.S., recent market and economic conditions have been unprecedented and challenging with
tighter credit conditions and slower growth. As a result of these market conditions, the cost and
availability of credit has been and may continue to be adversely affected by illiquid credit
markets and wider credit spreads. Concern about the stability of the markets generally and the
strength of counterparties specifically has led many lenders and institutional investors to reduce,
and in some cases, cease to provide funding to borrowers. Continued turbulence in the U.S. and
international markets and economies may adversely affect our liquidity and financial condition, and
the liquidity and financial condition of our tenants. If these market conditions continue, they
may limit our ability and the ability of our tenants, to timely refinance maturing liabilities and
access the capital markets to meet liquidity needs.
Real Estate Asset Valuation
General economic conditions and the resulting impact on market conditions or a downturn in tenants
businesses may adversely affect the value of our assets. Periods of economic slowdown or recession
in the U.S., declining demand for leased office, mixed use, or industrial properties and/or a
decrease in market rental rates and/or market values of real estate assets in our submarkets could
have a negative impact on the value of our assets, including the value of our properties and
related tenant improvements. If we were required under GAAP to write down the carrying value of
any of our properties to the lower of cost or fair value due to impairment, or if as a result of an
early lease termination we were required to remove or dispose of material amounts of tenant
improvements that are not reusable to another tenant, our financial condition and results of
operations would be negatively affected.
Leasing Activity and Rental Rates
The amount of net rental income generated by our properties depends principally on our ability to
maintain the occupancy rates of currently leased space and to lease currently available space,
newly developed or redeveloped properties and space available from unscheduled lease terminations.
The amount of rental income we generate also depends on our ability to maintain or increase rental
rates in our submarkets. Negative trends in one or more of these factors could adversely affect
our rental income in future periods.
-41-
Development and Redevelopment Programs
Historically, a significant portion of our growth has come from our development and redevelopment
efforts. We have a proactive planning process by which we continually evaluate the size, timing,
costs and scope of our development and redevelopment programs and, as necessary, scale activity to
reflect the economic conditions and the real estate fundamentals that exist in our strategic
submarkets. Given the economic conditions, we do not intend to commence new development or
redevelopment projects in the near future. We believe that our current capital plan allows for us
to continue the development and redevelopment projects that are currently underway.
We believe that a portion of our future potential growth will continue to come from our newly
developed or redeveloped properties once current economic conditions normalize. However, we
anticipate that the general economic conditions and the resulting impact on conditions in our core
markets will delay timing and reduce the scope of our development program in the near future, which
will further impact the average development and redevelopment asset balances qualifying for
interest and other carry cost capitalization. We cease capitalizing such costs once a project does
not qualify for interest and other carry cost capitalization under GAAP.
In addition, we may be unable to lease committed development or redevelopment properties at
expected rental rates or within projected timeframes or complete development or redevelopment
properties on schedule or within budgeted amounts, which could adversely affect our financial
condition, results of operations and cash flow.
Financial and Operating Performance
Our financial and operating performance is dependent upon the demand for office, industrial and
other commercial space in our markets, our leasing results, our acquisition, disposition and
development activity, our financing activity, our cash requirements and economic and market
conditions, including prevailing interest rates.
In seeking to increase revenue through our operating, financing and investment activities, we also
seek 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 12.1% of our
aggregate final annualized base rents as of December 31, 2009 (representing approximately 11.7% of
the net rentable square feet of the Properties) expire without penalty in 2010. 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 2009 was 66.9%. 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 $16.4 million
or 14.29% of total receivables
(including accrued rent receivable) as of December 31, 2009
compared to $15.5 million or 13.09% of
total receivables (including accrued rent receivable) as of December 31, 2008.
If economic conditions persist or deteriorate further, we may experience increases in past due
accounts, defaults, lower occupancy and reduced effective rents. This condition would negatively
affect our future net income and cash flows and could have a material adverse effect on our
financial condition.
Development Risk:
At December 31, 2009, we were proceeding on two developments and three redevelopments sites
aggregating 1.9 million square feet with total projected costs of $396.0 million of which $142.6
million remained to be funded. These amounts include $355.5 million of total project costs for the
combined 30th Street Post Office (100% pre-leased to the Internal Revenue Service) and
Cira South Garage (92.6% pre-leased to the Internal Revenue Service) in Philadelphia, Pennsylvania
of which $128.5 million remained to be funded at December 31, 2009. We are also finishing the
lease-up of eight recently completed developments for which we expect
to spend an additional $8.8 million in 2010. 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 at these projects.
-42-
As of December 31, 2009, we owned approximately 479 acres of undeveloped land. When the market
recovers, we will look to opportunistically dispose of those parcels that we do not anticipate
developing. For the parcels of land that we ultimately develop, we would be subject to risks
associated with development of this land including 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 discuss 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. Lease incentives, which are included as
reductions of rental revenue are recognized on a straight-line basis over the term of the lease.
Certain lease agreements contain provisions that require tenants to reimburse a pro rata share of
real estate taxes and common area maintenance costs. For certain leases in the portfolio, there
are significant assumptions and judgments made by management in determining the lease term such as
when termination options are provided to the tenant. The lease term impacts the period over which
minimum rents are determined and recorded and also considers the period over which lease related
costs are amortized. In addition, our rental revenue is impacted by our determination of whether
the improvements made by us or the tenant are landlord assets. The determination of whether an
asset is a landlord asset requires judgment and principally considers whether improvements would be
utilizable by another tenant upon move out by the existing tenant. To the extent they are
determined not to be landlord assets, and we fund them, they are considered as lease incentives.
To the extent the tenant funds the improvements that we consider to be landlord assets, we treat
them as deferred revenue which is amortized to revenue over the lease term.
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.
Capitalized costs include pre-construction costs essential to the development of the property,
development and constructions costs, interest, property taxes, insurance, salaries and other
project costs during the period of development. Estimates and judgments are required in
determining when capitalization of certain costs such as interest should commence and cease. 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 the accounting standard for the consolidation of variable interest entities.
This accounting standard requires significant use of judgments and estimates in determining its
application. 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 same accounting standard.
-43-
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.
On a periodic basis, management assesses whether there are any indicators that the value of our
investments in unconsolidated joint ventures may be impaired. An investment is impaired only if
managements estimate of the value of the investment is less than the carrying value of the
investment, and such decline in value is deemed to be other than temporary. To the extent
impairment has occurred, the loss shall be measured as the excess of the carrying amount of the
investment over the fair value of the investment. Our estimates of value for each investment
(particularly in commercial real estate joint ventures) are based on a number of assumptions that
are subject to economic and market uncertainties including, among others, demand for space,
competition for tenants, changes in market rental rates, and operating costs. As these factors are
difficult to predict and are subject to future events that may alter managements assumptions;
accordingly, the values estimated by management in its impairment analyses may not be realized.
Impairment of Long-Lived Assets
We review long-lived assets whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. The review of recoverability is based on an estimate of
the future undiscounted cash flows (excluding interest charges) expected to result from the
long-lived assets use and eventual disposition. These cash flows consider factors such as
expected future operating income, trends and prospects, as well as the effects of leasing demand,
competition and other factors. If impairment exists due to the inability to recover the carrying
value of a long-lived asset, an impairment loss is recorded to the extent that the carrying value
exceeds the estimated fair-value of the property. We are required to make subjective assessments
as to whether there are impairments in the values of the investments in long-lived assets. These
assessments have a direct impact on our net income because recording an impairment loss results in
an immediate negative adjustment to net income. The evaluation of anticipated cash flows is highly
subjective and is based in part on assumptions regarding future occupancy, rental rates and capital
requirements that could differ materially from actual results in future periods. There were also
operating properties evaluated as they have been identified for potential sale. No impairment was
determined; however, if actual cashflows or the estimated holding periods change, an impairment
could be recorded in the future and it could be material. Although our strategy is generally to
hold our properties over the long-term, we will dispose of properties to meet our liquidity needs
or for other strategic needs. If our strategy changes or market conditions otherwise dictate an
earlier sale date, an impairment loss may be recognized to reduce the property to the lower of the
carrying amount or fair value less costs to sell, and such loss could be material. If we determine
that impairment has occurred, the affected assets must be reduced to their fair-value.
Where properties have been identified as having a potential for sale, additional judgments are
required related to the determination as to the appropriate period over which the undiscounted cash
flows should include the operating cash flows and the amount included as the estimated residual
value. Management determines the amounts to be included based on a probability weighted cash flow.
This requires significant judgment. In some cases, the results of whether an impairment is
indicated are sensitive to changes in assumptions input into the estimates, including the hold
period until expected sale. At December 31, 2009, we performed an impairment assessment of our
land holdings as management determined that a sale scenario was the most likely source of future
cash flows for certain of the land parcels aggregating to total cost
of $15.7 million which is included in
land inventory. This impairment assessment required management to estimate the expected proceeds
from sale at some point in the future, to determine whether an impairment was indicated. This
estimate requires significant judgment. If our expectations as to the
expected sales proceeds, or timing of the anticipated sale change based on market conditions or
otherwise, our evaluation of impairment could be different and such differences could be material.
During the first quarter of 2009, we determined that one of our properties, during our testing for
impairment under the held and used model, had a historical cost greater than the probability
weighted undiscounted cash flows. Accordingly, an impairment on the property of $3.7 million was
recorded to reduce its carrying value to an amount based on
managements estimate of the current fair value. This property was sold in the second quarter. We
also recorded an impairment on properties designated as held for sale at June 30, 2008 of $6.85
million; these properties were sold during the last quarter of 2008. During our impairment review
for the remaining part of 2009, it was determined that no additional impairment charges were
necessary.
-44-
Income Taxes
We have 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, we have several subsidiary REITs. In order to
maintain our qualification as a REIT, we and each of our REIT subsidiaries are required to, among
other things, distribute at least 90% of our REIT taxable income to our stockholders and meet
certain tests regarding the nature of its income and assets. As REITs, we and our REIT
subsidiaries are not subject to federal income tax with respect to the portion of our 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. We and our REIT subsidiaries intend to continue to
operate in a manner that allows us to continue to meet the requirements for taxation as REITs.
Many of these requirements, however, are highly technical and complex. If we or one of our REIT
subsidiaries were to fail to meet these requirements, we would be subject to federal income tax.
We may elect to treat one or more of our subsidiaries as a taxable REIT subsidiary (TRS). In
general, a TRS 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. We have elected to treat certain of
our corporate subsidiaries as TRSs; these entities provide third party property management services
and certain services to tenants that could not otherwise be provided.
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 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 record 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, particularly internal 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.
-45-
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.
RESULTS OF OPERATIONS
Comparison of the Year Ended December 31, 2009 to the Year Ended December 31, 2008
The table below shows selected operating information for the Same Store Property Portfolio and
the Total Portfolio. The Same Store Property Portfolio consists of 232 properties containing an
aggregate of approximately 22.6 million net rentable square feet that we owned for the entire
twelve-month periods ended December 31, 2009 and 2008. This table also includes a reconciliation
from the Same Store Property Portfolio to the Total Portfolio net income (i.e., all properties
owned by us during the twelve-month periods ended December 31, 2009 and 2008) by providing
information for the properties which were acquired, under development (including lease-up assets)
or placed into service and administrative/elimination information for the twelve-month periods
ended December 31, 2009 and 2008 (in thousands).
The Total Portfolio net income presented in the table is equal 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 non-controlling interest attributable to
continuing and discontinued operations for limited partnership units that is on the statement of
operations for Brandywine Realty Trust.
-46-
Comparison of twelve-months ended December 31, 2009 to the twelve-months ended December 31,
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired/Completed |
|
|
Development/Redevelopment |
|
|
Other/ |
|
|
|
|
|
|
Same Store Property Portfolio |
|
|
Properties |
|
|
Properties (a) |
|
|
(Eliminations) (b) |
|
|
Total Portfolio |
|
|
|
|
|
|
|
|
|
|
|
Increase/ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase/ |
|
(dollars in thousands) |
|
2009 |
|
|
2008 |
|
|
(Decrease) |
|
|
2009 |
|
|
2008 |
|
|
2009 |
|
|
2008 |
|
|
2009 |
|
|
2008 |
|
|
2009 |
|
|
2008 |
|
|
(Decrease) |
|
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash rents |
|
$ |
445,370 |
|
|
$ |
450,291 |
|
|
$ |
(4,921 |
) |
|
$ |
6,739 |
|
|
$ |
902 |
|
|
$ |
13,187 |
|
|
$ |
12,156 |
|
|
$ |
(2,413 |
) |
|
$ |
(2,940 |
) |
|
$ |
462,883 |
|
|
$ |
460,409 |
|
|
$ |
2,474 |
|
Straight-line rents |
|
|
5,471 |
|
|
|
14,102 |
|
|
$ |
(8,631 |
) |
|
|
2,567 |
|
|
|
322 |
|
|
|
664 |
|
|
|
1,123 |
|
|
|
|
|
|
|
|
|
|
|
8,702 |
|
|
|
15,547 |
|
|
|
(6,845 |
) |
Above/below market rent amortization |
|
|
6,514 |
|
|
|
5,914 |
|
|
$ |
600 |
|
|
|
|
|
|
|
|
|
|
|
129 |
|
|
|
1,342 |
|
|
|
|
|
|
|
|
|
|
|
6,643 |
|
|
|
7,256 |
|
|
|
(613 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total rents |
|
|
457,355 |
|
|
|
470,307 |
|
|
|
(12,952 |
) |
|
|
9,306 |
|
|
|
1,224 |
|
|
|
13,980 |
|
|
|
14,621 |
|
|
|
(2,413 |
) |
|
|
(2,940 |
) |
|
|
478,228 |
|
|
|
483,212 |
|
|
|
(4,984 |
) |
Tenant reimbursements |
|
|
75,390 |
|
|
|
73,831 |
|
|
|
1,559 |
|
|
|
1,351 |
|
|
|
376 |
|
|
|
2,754 |
|
|
|
3,198 |
|
|
|
301 |
|
|
|
685 |
|
|
|
79,796 |
|
|
|
78,090 |
|
|
|
1,706 |
|
Termination fees |
|
|
2,385 |
|
|
|
4,800 |
|
|
|
(2,415 |
) |
|
|
|
|
|
|
|
|
|
|
1,216 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,601 |
|
|
|
4,800 |
|
|
|
(1,199 |
) |
Third party management fees, labor reimbursement and
leasing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,151 |
|
|
|
20,401 |
|
|
|
17,151 |
|
|
|
20,401 |
|
|
|
(3,250 |
) |
Other |
|
|
2,019 |
|
|
|
1,831 |
|
|
|
188 |
|
|
|
1 |
|
|
|
|
|
|
|
314 |
|
|
|
(6 |
) |
|
|
1,109 |
|
|
|
1,093 |
|
|
|
3,443 |
|
|
|
2,918 |
|
|
|
525 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
|
537,149 |
|
|
|
550,769 |
|
|
|
(13,620 |
) |
|
|
10,658 |
|
|
|
1,600 |
|
|
|
18,264 |
|
|
|
17,813 |
|
|
|
16,148 |
|
|
|
19,239 |
|
|
|
582,219 |
|
|
|
589,421 |
|
|
|
(7,202 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property operating expenses |
|
|
163,138 |
|
|
|
159,236 |
|
|
|
3,902 |
|
|
|
3,626 |
|
|
|
(737 |
) |
|
|
7,740 |
|
|
|
8,100 |
|
|
|
(6,345 |
) |
|
|
(5,829 |
) |
|
|
168,159 |
|
|
|
160,770 |
|
|
|
7,389 |
|
Real estate taxes |
|
|
53,621 |
|
|
|
54,601 |
|
|
|
(980 |
) |
|
|
2,056 |
|
|
|
1,712 |
|
|
|
1,761 |
|
|
|
1,753 |
|
|
|
792 |
|
|
|
583 |
|
|
|
58,230 |
|
|
|
58,649 |
|
|
|
(419 |
) |
Third party management expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,996 |
|
|
|
8,965 |
|
|
|
7,996 |
|
|
|
8,965 |
|
|
|
(969 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal |
|
|
320,390 |
|
|
|
336,932 |
|
|
|
(16,542 |
) |
|
|
4,976 |
|
|
|
625 |
|
|
|
8,763 |
|
|
|
7,960 |
|
|
|
13,705 |
|
|
|
15,520 |
|
|
|
347,834 |
|
|
|
361,037 |
|
|
|
(13,203 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General & administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,821 |
|
|
|
23,002 |
|
|
|
20,821 |
|
|
|
23,002 |
|
|
|
(2,181 |
) |
Depreciation and amortization |
|
|
189,020 |
|
|
|
190,584 |
|
|
|
(1,564 |
) |
|
|
5,145 |
|
|
|
872 |
|
|
|
11,198 |
|
|
|
6,680 |
|
|
|
3,227 |
|
|
|
3,853 |
|
|
|
208,590 |
|
|
|
202,043 |
|
|
|
6,547 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income (loss) |
|
$ |
131,370 |
|
|
$ |
146,348 |
|
|
$ |
(14,978 |
) |
|
$ |
(169 |
) |
|
$ |
(247 |
) |
|
$ |
(2,435 |
) |
|
$ |
1,280 |
|
|
$ |
(10,343 |
) |
|
$ |
(11,335 |
) |
|
$ |
118,423 |
|
|
$ |
135,992 |
|
|
$ |
(17,569 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of properties |
|
|
232 |
|
|
|
232 |
|
|
|
|
|
|
|
4 |
|
|
|
4 |
|
|
|
9 |
|
|
|
9 |
|
|
|
|
|
|
|
|
|
|
|
245 |
|
|
|
245 |
|
|
|
|
|
Square feet |
|
|
22,583 |
|
|
|
22,583 |
|
|
|
|
|
|
|
669 |
|
|
|
669 |
|
|
|
2,311 |
|
|
|
2,311 |
|
|
|
|
|
|
|
|
|
|
|
25,563 |
|
|
|
25,563 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,500 |
|
|
|
1,839 |
|
|
|
661 |
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(135,740 |
) |
|
|
(146,646 |
) |
|
|
10,906 |
|
Interest expense Deferred financing costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,864 |
) |
|
|
(5,450 |
) |
|
|
(414 |
) |
Recognized hedge activity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(916 |
) |
|
|
|
|
|
|
(916 |
) |
Equity in income of real estate ventures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,069 |
|
|
|
8,447 |
|
|
|
(4,378 |
) |
Net (loss) gain on disposition of undepreciated assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(24 |
) |
|
|
24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for impairment on land inventory |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10,841 |
) |
|
|
10,841 |
|
Gain on early extinguishment of debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,176 |
|
|
|
18,105 |
|
|
|
5,071 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,648 |
|
|
|
1,422 |
|
|
|
4,226 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,441 |
|
|
|
37,103 |
|
|
|
(34,662 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
8,089 |
|
|
$ |
38,525 |
|
|
$ |
(30,436 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
0.33 |
|
|
$ |
(0.33 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPLANATORY NOTES |
|
(a) - |
|
Results include: two developments and three 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. |
-47-
Total Revenue
Cash
rents from the Total Portfolio increased by $2.5 million from 2008 to 2009, primarily
reflecting:
|
1) |
|
An additional $5.8 million from four development/redevelopment properties
that we completed and placed in service subsequent to 2008. |
|
2) |
|
An additional $1.0 million of rental income due to increased occupancy at
nine development/redevelopment properties in 2009 in comparison to 2008. |
|
3) |
|
The increase was offset by the decrease of $4.9 million of rental income at
our Same Store properties from 2008 to 2009 due to a decrease in occupancy of 380
basis points. |
Straight-line rents at the Total Portfolio decreased by $6.8 million primarily due to free rent
converting to cash rent during 2009.
Tenant reimbursements increased by $1.7 million from 2008 to 2009 primarily due to the increase in
property operating expenses at our Same Store Portfolio. Tenant reimbursements increased by $1.6
million at our same store portfolio and the property operating expenses including real estate taxes
at those properties increased by $2.9 million.
The decrease in termination fees of $1.2 million from 2008 to 2009 is mainly due to the recognition
of a $3.1 million termination fee from one tenant during 2008 in comparison to a $1.2 million
termination fee received from one tenant at one of redevelopment properties and a $0.6 million
termination fee received from one tenant at one of our same store properties in 2009.
Third party management fees, labor reimbursement and leasing decreased by $3.3 million from 2008 to
2009 as a result of the termination of the management fee contract on March 31, 2008 that we
entered into when we sold the 10 office properties located in Reading and Harrisburg, PA. As the
contract was terminated early, approximately $0.8 million of unamortized deferred management fees
were taken into income during 2008. The decrease also resulted from the termination of other
third party management contracts totaling 4.3 million square feet subsequent to 2008.
Property Operating Expenses
Property
operating expenses, including real estate taxes, at the Total
Portfolio increased by $7.0
million due to increased repairs and maintenance expenses along with increased snow removal
expenses during 2009 compared to 2008. We also incurred an additional $4.7 million of expenses
from four properties that we completed and placed in service subsequent to 2008. These increases
were offset by a decrease in the bad debt expense of $1.4 million from 2008 to 2009.
General & Administrative Expenses
General
& administrative expenses decreased by $2.2 million from 2008 to 2009 mainly due to the
severance costs of $2.4 million in 2008 that we did not have in 2009.
Depreciation and Amortization Expense
Depreciation
and amortization increased by $6.5 million from 2008 to 2009,
primarily due to $4.3
million of depreciation and amortization expense recorded on the four properties completed and placed
in service subsequent to 2008. An additional $4.3 million of depreciation and amortization expense
was recorded on portions of the nine development properties that were placed in service subsequent
to 2008. The increase was offset by the decrease of $1.6 million at the Same Store Portfolio for
asset write-offs related to early move-outs and fully amortized assets when comparing 2009 to 2008.
-48-
Interest Income/ Expense
Interest income increased by approximately $0.7 million mainly due to the accretion of the $40.0
million interest free note receivable from the sale of the five Northern California properties in
the fourth quarter of 2008. The note receivable was recorded at its present value on the date of
sale of $37.1 million. During 2009, we recognized $1.6 million of interest income related to this
note receivable and $0.2 million of interest income related to the $22.5 million note receivable
from the sale of the two Trenton properties during the fourth quarter of 2009. During 2008, we
recognized $0.4 million of interest income related to the note receivable from the sale of the five
Northern California properties and $0.5 million of interest income received from a certificate of
deposit investment.
The
decrease in interest expense of $10.9 million is mainly due to the following:
|
|
|
decrease of $4.9 million resulting from the payoff at maturity of our $113.0
million private placement notes in December 2008. |
|
|
|
decrease of $3.4 million resulting from a lower average Credit Facility balance
at the end of 2009 and a lower weighted average interest rate on such borrowings in
2009 compared to December 31, 2008. |
|
|
|
decrease of $6.9 million resulting from lower weighted average interest rates
on our $183.0 million Bank Term Loan and our three Preferred Trust borrowings. Such
borrowings have variable interest rates and a portion of such borrowings are swapped to
fixed rate debt through our hedging program. This decrease is offset by an increase of
$5.7 million paid under these hedges since the variable interest rates on such debt is
lower than the swapped fixed rate on the hedges assigned to these borrowings. |
|
|
|
decrease of $17.5 million resulting from our buybacks of unsecured notes in
2009. The details of the repurchases completed during the twelve months ended December
31, 2009 and 2008 are noted in the Gain on early extinguishment of debt section below.
This decrease is offset by an increase of $5.1 million of interest on issuance of new
notes. |
The above explained net decrease of $21.9 million is offset by a decrease in capitalized interest
of $7.9 million as a result of the decrease in the average balance, on open development and
redevelopment projects, $0.3 million of interest expense related
to our tax credit transactions, and an increase of $2.6 million from a higher outstanding mortgage notes
payable balance as of December 31, 2009 compared to December 31, 2008.
Amortization of deferred financing costs increased by $0.4 million due to the acceleration of such
expenses incurred in the debt repurchase activities of 2009.
Provision for impairment on land inventory
As part of our review of long-lived assets in accordance with the accounting standard for
long-lived assets, during the quarter ending December 31, 2008, management determined that certain
of the parcels in our land inventory considered at that time more likely to be sold had historical
carrying values in excess of the current estimate of their fair value. Our impairment was recorded based on
managements estimate of the current fair value of the land inventory at that time.
Provision for Impairment on Real Estate
During the quarter ended March 31, 2009 impairment review, we determined that one of the properties
tested for impairment under the held and used model had a historical cost greater than the
probability weighted undiscounted cash flows. Accordingly, the recorded amount was reduced to an
amount based on managements estimate of the current fair value. During the nine months period
ended September 30, 2008,
we recorded a provision of $6.85 million for impairment relating to the sale of the five Northern
California properties classifies as held for sale.
-49-
Where properties have been identified as having a potential for sale, additional judgments are
required related to the determination as to the appropriate period over which the undiscounted cash
flows should include the operating cash flows and the amount included as the estimated residual
value. Management determines the amounts to be included based on a probability weighted cash flow.
This requires significant judgment. In some cases, the results of whether an impairment is
indicated are sensitive to changes in assumptions input into the estimates, including the hold
period until expected sale.
Recognized hedge activity
During 2009, we recorded a $1.1 million mark to market adjustment relating to two of our swaps that
were applied to our offering of $250.0 million 7.50% senior unsecured notes due 2015 completed in
September 2009. The swaps no longer qualified for hedge accounting upon completion of this
offering as the hedging relationship was terminated. Accordingly, the changes in the fair value of
the swaps were reflected in our statement of operations until they were cash settled in December
2009. We paid $5.1 million to terminate these swaps. During the
year, we also recorded a net $0.1
million of income related to the write-off of AOCI and the ineffective portion of certain of our hedges.
Equity in income of real estate ventures
The decrease in equity in income of real estate venture from 2008 to 2009 was mainly due to a
payout of $3.2 million that we received for our interest in a real estate venture that was sold
during the fourth quarter of 2008. The remainder of the decrease is primarily attributable to
lower net income at the real estate venture properties.
Gain on early extinguishment of debt
During 2009, we repurchased $154.1 million of our $345.0 million 3.875% Exchangeable Notes, $94.1
million of our $275.0 million 4.500% Guaranteed Notes due 2009, $77.0 million of our $300.0 million
5.625% Guaranteed Notes due 2010, $112.2 million of our $300.0 million 5.750% Guaranteed Notes due
2012 and $7.3 million of our $250.0 million 5.400% Guaranteed Notes due 2014 which resulted in a
net gain on early extinguishment of debt of $23.2 million. The gain on early extinguishment of
debt is inclusive of adjustments made to reflect our adoption of the new accounting standard for
convertible debt instruments.
During 2008, we repurchased $63.0 million of our $345.0 million 3.875% Guaranteed Exchangeable
Notes, $78.3 million of our $275.0 million 4.500% Guaranteed Notes due 2009 and $24.5 million of
our $300.0 million 5.625% Guaranteed Notes due 2010 which resulted in an $18.1 million gain that we
reported for the early extinguishment of debt. The gain on extinguishment of debt has been
retrospectively adjusted to reflect our adoption of the new accounting standard for convertible
debt instruments.
Discontinued Operations
During the twelve month period ended December 31, 2009, we sold two properties in Exton, PA, one
property in Moorestown, NJ, one property in Bethesda, MD, two properties in Trenton, NJ and a
condominium unit and an undivided interest in an office building in Lawrenceville, NJ. These
properties had total revenue of $13.5 million, operating expenses of $6.4 million, depreciation and
amortization expenses of $2.2 million and gain on sale of $1.2 million. We determined that the sale
of the two properties in Trenton, NJ should be accounted for using the Installment Sale Method. As
a result, we deferred the portion of the gain which exceeded the calculated gain following the
installment sale method. These amounts will decrease in proportion with the paydown of the
principal balance on our note receivable from the buyer of the properties. The buyer is not
obligated to make any principal payments over the next seven
years. If they do make principal payments in advance, a portion of these amounts that are deferred
will be recognized as a gain on sale in the period that we receive the cash for the principal
payments. We also recorded a $3.7 million loss provision during the first quarter of 2009 in
connection with the property in Bethesda, MD sold during the second quarter of 2009 which reduced
our income from discontinued operations.
-50-
The December 31, 2008 amounts are reclassified to include the operations of the properties sold
during the twelve months period ended December 31, 2009, as well as all properties that were sold
through the year ended December 31, 2008. Therefore, the discontinued operations amount for the
twelve months period ended December 31, 2008 includes total revenue of $60.8 million, operating
expenses of $27.3 million, depreciation and amortization expense of $13.4 million, interest expense
of $4.6 million and gains on sale of $28.5 million. We also recorded a $6.85 million loss provision
in connection with the five Northern California properties classified as held for sale during the
second quarter of 2008 which reduced our income from discontinued operations.
Net Income
Net
income decreased by $30.4 million from the twelve-month period ended December 31, 2008 as a
result of the factors described above. Net income is significantly impacted by depreciation of
operating properties and amortization of acquired intangibles. These non-cash charges do not
directly affect our ability to pay dividends. Such charges can be expected to continue until 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
Loss per share (basic and diluted) were $0.00 for the twelve-month period ended December 31, 2009
as compared to earnings per share of $0.33 for the twelve-month period ended December 31, 2008 as a
result of the factors described above and an increase in the average number of common shares
outstanding. The increase in the average number of common shares outstanding is primarily the
result of a $242.3 million public equity offering of 40,250,000 shares during the second quarter of
2009.
-51-
RESULTS OF OPERATIONS
Comparison of the Year Ended December 31, 2008 to the Year Ended December 31, 2007
The table below shows selected operating information for the Same Store Property Portfolio and
the Total Portfolio. The Same Store Property Portfolio consists of 224 properties containing an
aggregate of approximately 21.5 million net rentable square feet that we owned for the entire
twelve-month periods ended December 31, 2008 and 2007. This table also includes a reconciliation
from the Same Store Property Portfolio to the Total Portfolio net income (i.e., all properties
owned by us during the twelve-month periods ended December 31, 2008 and 2007) by providing
information for the properties which were acquired, under development (including lease-up assets)
or placed into service and administrative/elimination information for the twelve-month periods
ended December 31, 2008 and 2007 (in thousands).
We have a significant, continuing involvement in the G&I Interchange Office LLC joint venture
through our 20% ownership interest and the management and leasing services we provide for the
venture. Accordingly, under the accounting standard for reporting discontinued operations, we
have determined that the operations of the properties owned by the joint venture (the G&I
properties) should not be included in discontinued operations. This determination is reflected in
the income statement comparisons below as we recognized revenue and expenses during the
twelve-months ended December 31, 2007 for our 100% ownership interest through the date of sale on
December 21, 2007 and such information related to the G&I properties is included in the Other
(Eliminations) column.
The Total Portfolio net income presented in the table is equal 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 that is on the statement of
operations for Brandywine Realty Trust.
-52-
Comparison of twelve-months ended December 31, 2008 to the twelve-months ended December 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired/Completed |
|
|
Development/Redevelopment |
|
|
Other/ |
|
|
|
|
|
|
Same Store Properties |
|
|
Properties |
|
|
Properties (a) |
|
|
(Eliminations) (b) |
|
|
Total Portfolio |
|
|
|
|
|
|
|
|
|
|
|
Increase/ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase/ |
|
(dollars in thousands) |
|
2008 |
|
|
2007 |
|
|
(Decrease) |
|
|
2008 |
|
|
2007 |
|
|
2008 |
|
|
2007 |
|
|
2008 |
|
|
2007 |
|
|
2008 |
|
|
2007 |
|
|
(Decrease) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash rents |
|
$ |
423,112 |
|
|
$ |
414,696 |
|
|
$ |
8,416 |
|
|
$ |
39,280 |
|
|
$ |
25,416 |
|
|
$ |
12,387 |
|
|
$ |
8,738 |
|
|
$ |
(2,224 |
) |
|
$ |
20,992 |
|
|
$ |
472,555 |
|
|
$ |
469,842 |
|
|
$ |
2,713 |
|
Straight-line rents |
|
|
10,432 |
|
|
|
17,855 |
|
|
|
(7,423 |
) |
|
|
4,375 |
|
|
|
7,286 |
|
|
|
1,169 |
|
|
|
966 |
|
|
|
|
|
|
|
627 |
|
|
$ |
15,976 |
|
|
$ |
26,734 |
|
|
|
(10,758 |
) |
Above/below market rent amortization |
|
|
6,065 |
|
|
|
8,761 |
|
|
|
(2,696 |
) |
|
|
(89 |
) |
|
|
(289 |
) |
|
|
1,342 |
|
|
|
978 |
|
|
|
|
|
|
|
|
|
|
$ |
7,318 |
|
|
$ |
9,450 |
|
|
|
(2,132 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total rents |
|
|
439,609 |
|
|
|
441,312 |
|
|
|
(1,703 |
) |
|
|
43,566 |
|
|
|
32,413 |
|
|
|
14,898 |
|
|
|
10,682 |
|
|
|
(2,224 |
) |
|
|
21,619 |
|
|
|
495,849 |
|
|
|
506,026 |
|
|
|
(10,177 |
) |
Tenant reimbursements |
|
|
75,828 |
|
|
|
71,156 |
|
|
|
4,672 |
|
|
|
4,332 |
|
|
|
3,187 |
|
|
|
3,283 |
|
|
|
2,907 |
|
|
|
686 |
|
|
|
3,916 |
|
|
|
84,129 |
|
|
|
81,166 |
|
|
|
2,963 |
|
Termination fees |
|
|
4,700 |
|
|
|
9,950 |
|
|
|
(5,250 |
) |
|
|
100 |
|
|
|
|
|
|
|
|
|
|
|
50 |
|
|
|
|
|
|
|
53 |
|
|
|
4,800 |
|
|
|
10,053 |
|
|
|
(5,253 |
) |
Third party management fees, labor
reimbursement and leasing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,401 |
|
|
|
19,691 |
|
|
|
20,401 |
|
|
|
19,691 |
|
|
|
710 |
|
Other |
|
|
1,746 |
|
|
|
2,610 |
|
|
|
(864 |
) |
|
|
99 |
|
|
|
39 |
|
|
|
(6 |
) |
|
|
2 |
|
|
|
1,093 |
|
|
|
3,310 |
|
|
|
2,932 |
|
|
|
5,961 |
|
|
|
(3,029 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
|
521,883 |
|
|
|
525,028 |
|
|
|
(3,145 |
) |
|
|
48,097 |
|
|
|
35,639 |
|
|
|
18,175 |
|
|
|
13,641 |
|
|
|
19,956 |
|
|
|
48,589 |
|
|
|
608,111 |
|
|
|
622,897 |
|
|
|
(14,786 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property operating expenses |
|
|
152,177 |
|
|
|
149,484 |
|
|
|
2,693 |
|
|
|
12,229 |
|
|
|
10,653 |
|
|
|
8,228 |
|
|
|
6,337 |
|
|
|
(5,601 |
) |
|
|
2,070 |
|
|
|
167,033 |
|
|
|
168,544 |
|
|
|
(1,511 |
) |
Real estate taxes |
|
|
52,167 |
|
|
|
50,149 |
|
|
|
2,018 |
|
|
|
6,389 |
|
|
|
4,190 |
|
|
|
1,773 |
|
|
|
1,702 |
|
|
|
768 |
|
|
|
3,822 |
|
|
|
61,097 |
|
|
|
59,863 |
|
|
|
1,234 |
|
Third party management expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,965 |
|
|
|
10,361 |
|
|
|
8,965 |
|
|
|
10,361 |
|
|
|
(1,396 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal |
|
|
317,539 |
|
|
|
325,395 |
|
|
|
(7,856 |
) |
|
|
29,479 |
|
|
|
20,796 |
|
|
|
8,174 |
|
|
|
5,602 |
|
|
|
15,824 |
|
|
|
32,336 |
|
|
|
371,016 |
|
|
|
384,129 |
|
|
|
(13,113 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,002 |
|
|
|
27,938 |
|
|
|
23,002 |
|
|
|
27,938 |
|
|
|
(4,936 |
) |
Depreciation and amortization |
|
|
176,056 |
|
|
|
181,232 |
|
|
|
(5,176 |
) |
|
|
19,286 |
|
|
|
16,813 |
|
|
|
6,708 |
|
|
|
8,689 |
|
|
|
3,855 |
|
|
|
16,493 |
|
|
|
205,905 |
|
|
|
223,227 |
|
|
|
(17,322 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income (loss) |
|
$ |
141,483 |
|
|
$ |
144,163 |
|
|
$ |
(2,680 |
) |
|
$ |
10,193 |
|
|
$ |
3,983 |
|
|
$ |
1,466 |
|
|
$ |
(3,087 |
) |
|
$ |
(11,033 |
) |
|
$ |
(12,095 |
) |
|
$ |
142,109 |
|
|
$ |
132,964 |
|
|
$ |
9,145 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of properties |
|
|
224 |
|
|
|
|
|
|
|
|
|
|
|
16 |
|
|
|
|
|
|
|
8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
248 |
|
|
|
|
|
|
|
|
|
Square feet (in thousands) |
|
|
21,490 |
|
|
|
|
|
|
|
|
|
|
|
2,440 |
|
|
|
|
|
|
|
2,337 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,267 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,839 |
|
|
|
4,014 |
|
|
|
(2,175 |
) |
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(146,646 |
) |
|
|
(161,150 |
) |
|
|
14,504 |
|
Interest expense Deferred financing costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,450 |
) |
|
|
(4,496 |
) |
|
|
(954 |
) |
Recognized hedge activity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,698 |
) |
|
|
3,698 |
|
Equity in income of real estate ventures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,447 |
|
|
|
6,955 |
|
|
|
1,492 |
|
Net gain on disposition of depreciated real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(24 |
) |
|
|
40,919 |
|
|
|
(40,943 |
) |
Provision for impairment on land inventory |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10,841 |
) |
|
|
|
|
|
|
(10,841 |
) |
Gain on early extinguishment of debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,105 |
|
|
|
|
|
|
|
18,105 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,539 |
|
|
|
15,508 |
|
|
|
(7,969 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,986 |
|
|
|
39,827 |
|
|
|
(8,841 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
38,525 |
|
|
$ |
55,335 |
|
|
$ |
(16,810 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
0.33 |
|
|
$ |
0.50 |
|
|
$ |
(0.17 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPLANATORY NOTES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)- |
|
Results include: two developments and six 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 G&I properties. |
-53-
Total Revenue
Cash rents from the Total Portfolio increased by $2.7 million from 2007 to 2008, primarily
reflecting:
|
1) |
|
An additional $8.4 million at the Same Store Portfolio from increased rents
received on lease renewals and free rent periods converting to cash rent. This free
rent conversion is the primary reason for the decrease in Total Portfolio
straight-line rental income. |
|
2) |
|
An additional $13.9 million from six properties that we acquired and ten
development/redevelopment properties that we completed and placed in service
subsequent to 2007. |
|
3) |
|
An additional $3.6 million of rental income due to increased occupancy at
eight development/redevelopment properties in 2008 in comparison to 2007. |
|
4) |
|
The increase was offset by the decrease of $25.1 million of rental income
earned from our G&I properties during 2007. |
Tenant reimbursements increased by $3.0 million from 2007 to 2008 primarily due to the increase in
property operating expenses at our Same Store Portfolio. Tenant reimbursements increased by $4.7
million at our same store portfolio and the property operating expenses at those properties
increased by $4.7 million. These increases are offset by the activity of the G&I properties during
2007.
Third party management fees, labor reimbursement and leasing increased by $0.7 million from 2007 to
2008 as a result of a greater number of properties that we are managing for third parties. The 29
G&I properties make up a significant portion of the increase in the number of properties that we
manage for third parties.
Property Operating Expenses
Property operating expenses, including real estate taxes and third party management expenses, at
the Total Portfolio decreased by $1.7 million from 2007 to 2008, primarily due to $11.9 million of
such expenses for the G&I properties in 2007. The decrease was offset by $3.8 million of property
operating expenses and real estate taxes from six properties that we acquired and ten
development/redevelopment properties that we completed and placed in service subsequent to 2007.
Property operating expenses and real estate taxes at our Same Store Portfolio and our eight
development/redevelopment properties also increased by $4.7 million and $2.0 million, respectively,
from 2007 to 2008.
Depreciation and Amortization Expense
Depreciation and amortization decreased by $17.3 million from 2007 to 2008, primarily due to $11.3
million of depreciation and amortization expense recorded on the G&I properties during 2007. In
addition, depreciation and amortization decreased by $5.2 million at our Same Store Portfolio due
to assets within the Same Store Portfolio being fully amortized subsequent to 2007.
General & Administrative Expenses
General & administrative expenses decreased by $4.9 million from 2007 to 2008 of which
approximately $2.3 million was a result of the final determination of 2007 bonus awards to our
executive management, thereby resulting in a reduction to the estimated payout that was accrued
during 2007. We incurred $2.4 million of severance costs in 2008 and $1.9 million of severance
costs in 2007. These measures and other corporate level cost saving strategies resulted in the
remainder of the decrease from the prior year.
Interest Income/ Expense
The decrease in interest income by approximately $2.2 million is due to lower cash balances during
the period ended December 31, 2008.
-54-
Interest expense decreased by $14.5 million primarily due to lower mortgage notes payable
outstanding during the year ending December 31, 2008 in comparison to December 31, 2007 as a result
of certain mortgage notes payable being paid off subsequent to 2007. The decrease is also the
result of a lower outstanding balance and lower weighted average interest rate on Credit Facility
borrowings during 2008 in comparison to 2007.
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 remote and recorded $3.7 million
as an expense for the residual balance of $3.7 million. No such settlement occurred during the
year ending December 31, 2008.
Provision for impairment on land inventory
As part
of our review of long-lived assets in accordance with the related
requirements provided
under the accounting standard for long lived assets, during the quarter ending
December 31, 2008, management determined that certain of the parcels in our land inventory had
historical carrying values in excess of the current estimate of their
fair value. Our impairment was recorded
based on managements estimate of the current fair value of the land inventory.
Gain on early extinguishment of debt
During the year-ended December 31, 2008, we repurchased $63.0 million of our $345.0 million 3.875%
Guaranteed Exchangeable Notes, $78.3 million of our $275.0 million 4.500% Guaranteed Notes due 2009
and $24.5 million of our $300.0 million 5.625% Guaranteed
Notes due 2010 which resulted in a $18.1
million gain that we reported for the early extinguishment of debt on our consolidated statement of
operations. In addition, we accelerated amortization of the related deferred financing costs of
$1.1 million. We also reduced gain on early extinguishment of
debt by $2.6 million resulting from the retrospective adoption of the
accounting standard for convertible debt.
Discontinued Operations
During the twelve-month period ended December 31, 2008, we sold one property in Allentown, PA, one
property in Mount Laurel, NJ, one property in Newtown, PA, five properties in Oakland, CA and one
property in Richmond, VA. These properties had total revenue of $42.1 million, operating expenses
of $18.6 million, depreciation and amortization expenses of $9.6 million and minority interest
attributable to discontinued operations of $1.2 million. We also recorded a $6.85 million
provision for impairment in connection with the five properties in Oakland, CA which reduced our
income from discontinued operations.
The December 31, 2007 amount is reclassified to include the operations of the properties sold
during the twelve-month period ended December 31, 2008, as well as the 20 properties that were sold
during the year ended December 31, 2007. Therefore, the discontinued operations amount for the
twelve-month period ended December 31, 2007 includes 29 sold properties with total revenue of $75.7
million, operating expenses of $32.3 million, depreciation and amortization expense of $23.8
million and minority interest attributable to discontinued operations of $1.7 million.
-55-
Net Income
Net
income decreased by $16.8 million from the twelve-month period ended December 31, 2007 as a
result of the factors described above. Net income is significantly impacted by depreciation of
operating properties and amortization of acquired intangibles. These non-cash charges do not
directly affect our ability to pay dividends. Such charges can be expected to continue until 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 (basic and diluted) were $0.33 for the twelve-month period ended December 31,
2008 as compared to $0.50 for the twelve-month period ended December 31, 2007 as a result of the
factors described above and an increase in the average number of common shares outstanding. The
increase in the average number of common shares outstanding is the result of a partnership unit
conversion to common shares during 2008 and the issuance of common shares upon the vesting of
restricted common shares.
-56-
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 repayment of certain debt instruments when they mature, |
|
|
|
fund current development and redevelopment costs, and |
|
|
|
fund distributions declared by our Board of Trustees. |
We believe that with the general downturn in the economy, it is reasonably likely that vacancy
rates may continue to increase, effective rental rates on new and renewed leases may continue to
decrease and tenant installation costs, including concessions, may continue to increase in most or
all of our markets in 2010 and possibly beyond. As a result of the potential negative effects on
our revenue from the overall reduced demand for office space, our cash flow could be insufficient
to cover increased tenant installation costs over the short-term. If this situation were to occur,
we expect that we would finance any shortfalls through borrowings under our Credit Facility and
other debt and equity financings.
We believe that our liquidity needs will be satisfied through cash flows generated by operations,
financing activities and selective Property sales. 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, developments and
construction businesses. We believe our revenue, together with proceeds from property sales and
secured 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.
Financial markets have experienced unusual volatility and uncertainty. Liquidity has generally
tightened in all financial markets, including the debt and equity markets. Our liquidity
management remains a top priority. Our ability to fund development projects, as well as our
ability to repay or refinance debt maturities could be adversely affected by an inability to secure
financing at reasonable terms beyond those already completed in 2009. It is possible, in these
unusual and uncertain times that one or more lenders in our revolving credit facility could fail to
fund a borrowing request. Such an event could adversely affect our ability to access funds from
its revolving credit facility when needed.
We pursued new financing opportunities to ensure an appropriate balance sheet position through
2010. As a result of these efforts, we are comfortable with our ability to meet future debt
maturities and development funding needs. We believe that our current balance sheet and outlook
for 2010 are in an adequate position at the date of this filing, despite the ongoing disruption in
the credit markets. The following are our significant activities during 2009 affecting our
liquidity management:
|
|
|
On April 1, 2009, we closed on an $89.8 million first mortgage financing on our
Two Logan Square property. The new loan bears interest at 7.57% per annum and has a
seven-year term with three years of interest only payments with principal payments
based on a thirty-year amortization schedule. We used $68.5 million in net proceeds to
repay without penalty the
balance of the former Two Logan Square first mortgage loan and $21.3 million for general
corporate purposes including the repayment of existing indebtedness. |
-57-
|
|
|
On June 2, 2009, we completed the public offering of 40,250,000 of our common
shares, par value $0.01 per share. The common shares were issued and sold to the
underwriters at a public offering price of $6.30 per common share in accordance with an
underwriting agreement. The common shares sold include 5,250,000 shares issued and sold
pursuant to the underwriters exercise in full of their over-allotment option under the
underwriting agreement. We received net proceeds of approximately $242.3 million from
the offering net of underwriting discounts, commissions and expenses. We used the net
proceeds from the offering to repay our $600 million unsecured revolving credit
facility and for general corporate purposes. |
|
|
|
On June 29, 2009, we entered into a forward financing commitment to borrow up
to $256.5 million under two separate loans at a per annum interest rate of 5.93%. The
loans, when funded, will be secured by mortgages on the 30th Street Post
Office (the Post Office project), the Cira South Garage (the garage project)
projects and by the leases of space at these facilities upon the completion of these
projects. Of the total borrowings, $209.7 million and $46.8 million will be allocated
to the Post Office project and to the garage project, respectively. In order for
funding to occur we need to meet certain conditions which primarily relate to the
completion of the projects and the commencement of the rental payments from the
respective leases on these properties. |
|
|
|
On July 7, 2009, we closed on a $60.0 million first mortgage financing on our One
Logan Square property. The new loan bears interest at a floating rate of LIBOR plus 350
basis points (subject to a LIBOR floor) and has a seven-year term with three years of
interest only payments with principal payments based on a thirty-year amortization
schedule at a 7.5% rate. We used the loan proceeds for general corporate purposes
including repayment of existing indebtedness. |
|
|
|
On September 25, 2009, we consummated a registered public offering of $250.0
million in aggregate principal amount of our 7.50% senior unsecured notes due 2015. The
notes were priced at 99.412% of their face amount with a yield to maturity of 7.625%,
representing a spread at the time of pricing of 5.162% to the yield on the August 2014
Treasury note. The notes have been reflected net of discount of $1.4 million in the
consolidated balance sheet as of December 31, 2009. The net proceeds which amounted to
$247.0 million after deducting underwriting discounts and offering expenses will be
used to repay our indebtedness under our existing unsecured revolving credit facility
and for general corporate purposes. |
|
|
|
In December 2009, we received the second contribution under the historic tax credit
transaction that we entered into in 2008 with US Bancorp amounting to $23.8 million. |
|
|
|
During 2009, we sold seven properties containing 0.7 million in net rentable square
feet for net cash proceeds of $101.3 million. |
We will also consider other properties within our portfolio where it may be in our best interest to
obtain a secured mortgage.
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.
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. If more than one 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.
-58-
We will also consider sales of selected Properties as another source of managing our liquidity.
Asset sales during 2009 and 2008 have been a source of cash. Since mid-2007, we have used proceeds
from asset sales to repay existing indebtedness, provide capital for our development activities and
strengthen our financial condition. There is no guarantee that we will be able to raise similar or
even lesser amounts of capital from future asset sales.
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, 2009 and 2008, we maintained cash and cash equivalents of $1.6 million and $3.9
million, respectively. This $2.3 million decrease was the result of the following changes in cash
flow from our various activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Activity |
|
2009 |
|
|
2008 |
|
|
2007 |
|
Operating |
|
$ |
220,405 |
|
|
$ |
233,867 |
|
|
$ |
224,805 |
|
Investing |
|
|
(102,549 |
) |
|
|
164,046 |
|
|
|
39,162 |
|
Financing |
|
|
(120,213 |
) |
|
|
(399,589 |
) |
|
|
(283,746 |
) |
|
|
|
|
|
|
|
|
|
|
Net cash flows |
|
$ |
(2,357 |
) |
|
$ |
(1,676 |
) |
|
$ |
(19,779 |
) |
|
|
|
|
|
|
|
|
|
|
Our principal source of cash flows is from the operation of our properties. We do not restate our
cash flow for discontinued operations.
The net decrease in cash flows from operating activities is primarily the result of the following:
|
|
|
Decrease in average occupancy from 92.1% during the year ended December 31,
2008 to 88.7% during the year ended December 31, 2009; |
|
|
|
Decrease in the number of operating properties due to dispositions. We sold a
total of seven properties during the year ended December 31, 2009; |
|
|
|
These decreases are offset by the receipt of the second contribution under the
historic tax credit transaction that we entered into in 2008 with US Bancorp amounting
to $23.8 million; and |
|
|
|
Timing of cash receipts from our tenants and cash expenditures in the normal
course of operations. |
The cash flows used in investing activities is primarily attributable to the following:
|
|
|
Our capital expenditures for tenant and building improvements and leasing
commissions increased by $57.3 million during the year ended December 31, 2009 when
compared to the year ended December 31, 2008; |
|
|
|
Net proceeds from sales of properties during the year ended December 31,2009
decreased by $268.8 million when compared to the year ended December 31, 2008; and |
|
|
|
Receipt of funds placed in escrow during the last quarter of 2008 related to
the Cira garage project amounting to $31.4 million which was also used to finance the
project this year. |
The net decrease in cash used in financing activities is mainly due to the following:
|
|
|
Net proceeds received from the public offering of common shares amounting to
$242.3 million. |
|
|
|
Decrease in our distributions paid to shareholders and non-controlling
interests from $169.3 million during the year ended December 31, 2008 to $70.6 million
during the year ended December 31, 2009. |
-59-
|
|
|
During the year ended December 31, 2009, we also obtained a total of $149.8
million first mortgage financings on our One Logan and Two Logan Square office
properties located in Philadelphia, Pennsylvania. |
|
|
|
Completion of a registered public offering of $250.0 million in aggregate
principal amount of our 7.50% senior unsecured notes due 2015. We received $247.0
million in net proceeds from this offering after deducting underwriting discounts and
offering expenses. |
|
|
|
Increase in the net activity of our credit facility and unsecured notes of
$370.2 million during the year ended December 31, 2009 when compared to the year ended
December 31, 2008. |
|
|
|
Repayments of mortgage notes payable also increased from $25.1 million during
year ended December 31, 2008 to $84.1 million during the year ended December 31, 2009. |
|
|
|
In addition, deferred financing costs paid also increased during the year ended
December 31, 2009 by $24.4 million when compared to the year ended December 31, 2008
and primarily relate to the payment of a $17.7 million forward financing commitment
fee, the remainder relates to costs incurred for other borrowings closed during the
year. |
Capitalization
Indebtedness
During the year ended December 31, 2009, we repurchased $444.7 million of our unsecured Notes in a
series of transactions which are summarized in the table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repurchase |
|
|
|
|
|
|
|
|
|
|
Deferred Financing |
|
Notes |
|
Amount |
|
|
Principal |
|
|
Gain |
|
|
Amortization |
|
2009 4.500% Notes |
|
$ |
92,736 |
|
|
$ |
94,130 |
|
|
$ |
1,377 |
|
|
$ |
88 |
|
2010 5.625% Notes |
|
|
71,414 |
|
|
|
76,999 |
|
|
|
5,565 |
|
|
|
215 |
|
2012 5.750% Notes |
|
|
109,104 |
|
|
|
112,175 |
|
|
|
2,610 |
|
|
|
361 |
|
2014 5.400% Notes |
|
|
6,329 |
|
|
|
7,319 |
|
|
|
961 |
|
|
|
28 |
|
3.875% Notes |
|
|
136,880 |
|
|
|
154,070 |
|
|
|
12,664 |
|
|
|
1,289 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
416,463 |
|
|
$ |
444,693 |
|
|
$ |
23,177 |
|
|
$ |
1,981 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
On September 25, 2009, we consummated a registered public offering of $250.0 million in aggregate
principal amount of our 7.50% senior unsecured notes due 2015. The notes were priced at 99.412% of
their face amount with a yield to maturity of 7.625%, representing a spread at the time of pricing
of 5.162% to the yield on the August 2014 Treasury note. The notes have been reflected net of
discount of $1.4 million in the consolidated balance sheet as of December 31, 2009. The net
proceeds which amounted to $247.0 million after deducting underwriting discounts and offering
expenses will be used to repay our indebtedness under our existing unsecured revolving credit
facility and for general corporate purposes.
On
July 7, 2009, we closed on a $60.0 million first mortgage financing on our One Logan Square
property. The new loan bears interest at a floating rate of LIBOR plus 350 basis points (subject to
a LIBOR floor) and has a seven-year term with three years of interest only payments with principal
payments based on a thirty-year amortization schedule at a 7.5% rate. We used the loan proceeds for
general corporate purposes including repayment of existing indebtedness.
On April 1, 2009, we closed on an $89.8 million first mortgage financing on our Two Logan Square
property. The new loan bears interest at 7.57% per annum and has a seven-year term with three years
of interest only payments with principal payments based on a thirty-year amortization schedule. We
used $68.5 million in net proceeds to repay without penalty the balance of the former Two Logan
Square first mortgage loan and $21.3 million for general corporate purposes including the repayment
of existing indebtedness.
-60-
On April 18, 2008, we exercised the accordion feature on our $150.0 million unsecured term loan
which we entered into in October 2007 and borrowed an additional
$33.0 million, bringing our total
outstanding
balance to $183.0 million. All outstanding borrowings under the term loan bear interest at a
periodic rate of LIBOR plus 80 basis points. The net proceeds of the term loan increase were used
to reduce indebtedness under our unsecured 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 LIBOR plus
0.80% to LIBOR 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 an