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BDN 8-K - 06282013


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K
CURRENT REPORT

Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 16, 2013

Brandywine Realty Trust
Brandywine Operating Partnership, L.P.
(Exact name of registrant as specified in charter)
 
 
 
 
 
Maryland
(Brandywine Realty Trust) 
 
001-9106
 
23-2413352
 
 
 
 
 
Delaware
(Brandywine Operating Partnership, L.P.) 
 
000-24407 
(Commission file number)
 
23-2862640
(I.R.S. Employer
Identification Number)
(State or Other Jurisdiction of
Incorporation or Organization)
 
 
 
 
555 East Lancaster Avenue, Suite 100
Radnor, PA 19087
(Address of principal executive offices)

(610) 325-5600
(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[ ]
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ]
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ]
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ]
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))





Item 2.01 Completion of Acquisition or Disposition of Assets.
On October 16, 2013, Brandywine Operating Partnership, L.P. (the "Operating Partnership") the limited partnership through which Brandywine Realty Trust, as sole general partner (the "Parent Company") and, together with the Operating Partnership and subsidiaries of the Operating Partnership, "the Company" or "we"), owns its assets and conducts its operations, contributed a portfolio of seven office properties containing an aggregate of 1,398,826 square feet located in Austin, Texas (the "Properties") to a joint venture (the "Venture") with G&I VII Austin Office LLC (“DRA”), an investment vehicle advised by DRA Advisors LLC. The Properties and related assets represent the Company's entire remaining property portfolio within the Austin, Texas region. DRA and we, based on arm's-length negotiation, agreed to an aggregate gross sales price of $330.0 million subject to an obligation on our part to fund the first $5.2 million of post-closing capital expenditures. The table below lists the location and square footage of each of the Properties:
 
Property
 
City
 
State
 
No. of Buildings
 
Square Feet
1)
1250 South Capital of Texas Highway
 
Austin
 
TX
 
3
 
270,711

2)
1301 South MoPac Expressway
 
Austin
 
TX
 
1
 
222,580

3)
3711 South MoPac Expressway
 
Austin
 
TX
 
2
 
205,195

4)
1601 South MoPac Expressway
 
Austin
 
TX
 
1
 
195,639

5)
1501 South MoPac Expressway
 
Austin
 
TX
 
1
 
195,324

6)
1221 South MoPac Expressway
 
Austin
 
TX
 
1
 
173,302

7)
7000 West William Cannon Drive
 
Austin
 
TX
 
2
 
136,075

 
Total
 
 
 
 
 
11
 
1,398,826

DRA owns a 50% interest in the Venture and we own a 50% interest in the Venture, subject to our right to receive up to an additional 10% of distributions. We and DRA, utilizing additional equity funding of up to $100.0 million per partner and to-be-determined third-party debt financing, intend to jointly pursue additional office opportunities in targeted Austin sub-markets and plan to co-invest in acquisitions that meet certain investment criteria.
At the closing the Venture obtained third party non-recourse debt financing of approximately $230.6 million secured by mortgages on the Properties and used proceeds of this financing together with $49.7 million of cash contributions by DRA (less $1.9 million of closing costs and $6.9 million of closing prorations and lender holdbacks) to fund a $271.5 million distribution to us. We have agreed to fund the first $5.2 million of post-closing capital expenditures on behalf of the Venture, resulting in net proceeds of $266.3 million after funding of our capital expenditure obligation. As part of the transaction, our subsidiary management company executed an agreement with the Venture to provide property management and leasing services to the Venture in exchange for a market-based fee.
Item 9.01 Financial Statements and Exhibits.
(b) Pro Forma Financial Information
The unaudited pro forma consolidated balance sheets of each of Brandywine Realty Trust and Brandywine Operating Partnership, L.P. as of June 30, 2013 and unaudited pro forma consolidated statements of operations of each of Brandywine Realty Trust and Brandywine Operating Partnership, L.P. for the six months ended June 30, 2013 and for the year ended December 31, 2012, including notes thereto, are filed as Exhibit 99.1 hereto and incorporated herein by reference.
(d) Exhibits 99.1 Description
Exhibit 99.1 Unaudited pro forma consolidated balance sheets of each of Brandywine Realty Trust and Brandywine Operating Partnership, L.P. as of June 30, 2013 and the unaudited pro forma consolidated statements of operations of each of Brandywine Realty Trust and Brandywine Operating Partnership L.P., for the six months ended June 30, 2013 and for the year ended December 31, 2012, including notes thereto.

2


Signatures
Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrants have duly caused this report to be signed on their behalf by the undersigned, hereunto duly authorized.
 
 
 
 
 
 
Brandywine Realty Trust
 
 
By:  
/s/ Howard Sipzner
 
 
Howard Sipzner
 
 
Executive Vice President and Chief Financial Officer 
 

 
 
 
 
 
 
Brandywine Operating Partnership L.P.,
 
 
By:
Brandywine Realty Trust, its sole General Partner
 
 
 
 
 
 
 
By:  
/s/ Howard Sipzner
 
 
Howard Sipzner
 
 
Executive Vice President and Chief Financial Officer 

Date: October 22, 2013


3
Exhibit 99.1 - 06282013
Exhibit 99.1



Exhibit Index

Exhibit
No.

99.1
Unaudited pro forma consolidated balance sheets of Brandywine Realty Trust and Brandywine Operating Partnership, L.P. as of June 30, 2013 and unaudited pro forma consolidated statements of operations of Brandywine Realty Trust and Brandywine Operating Partnership, L.P. for the six months ended June 30, 2013 and for the year ended December 31, 2012, including the notes thereto.


Exhibit 99.1


BRANDYWINE REALTY TRUST AND BRANDYWINE OPERATING PARTNERSHIP, L.P.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
On October 16, 2013, Brandywine Operating Partnership, L.P. (the "Operating Partnership") the limited partnership through which Brandywine Realty Trust, as sole general partner (the "Parent Company") and, together with the Operating Partnership and subsidiaries of the Operating Partnership, the "Company" or "we"), owns its assets and conducts its operations, contributed a portfolio of seven office properties containing an aggregate of 1,398,826 square feet located in Austin, Texas (the "Properties") to a joint venture (the "Venture") with G&I VII Austin Office LLC (“DRA”), an investment vehicle advised by DRA Advisors LLC. The Properties and related assets represent the Company's entire remaining property portfolio within the Austin, Texas region. DRA and we, based on an arm's length negotiation, agreed to an aggregate sales price of $330.0 million subject to an obligation on our part to fund the first $5.2 million of post-closing capital expenditures. The table below lists the location and square footage of each of the Properties:
 
Property
 
City
 
State
 
No. of Buildings
 
Square Feet
1)
1250 South Capital of Texas Highway
 
Austin
 
TX
 
3
 
270,711

2)
1301 South MoPac Expressway
 
Austin
 
TX
 
1
 
222,580

3)
3711 South MoPac Expressway
 
Austin
 
TX
 
2
 
205,195

4)
1601 South MoPac Expressway
 
Austin
 
TX
 
1
 
195,639

5)
1501 South MoPac Expressway
 
Austin
 
TX
 
1
 
195,324

6)
1221 South MoPac Expressway
 
Austin
 
TX
 
1
 
173,302

7)
7000 West William Cannon Drive
 
Austin
 
TX
 
2
 
136,075

 
Total
 
 
 
 
 
11
 
1,398,826

DRA owns a 50% interest in the Venture and we own a 50% interest in the Venture, subject to our right to receive up to an additional 10% of distributions. We and DRA, utilizing additional equity funding of up to $100.0 million per partner and to-be-determined third-party debt financing, intend to jointly pursue additional office opportunities in targeted Austin sub-markets and plan to co-invest in acquisitions that meet certain investment criteria.
At the closing the Venture obtained third party non-recourse debt financing of approximately $230.6 million secured by mortgages on the Properties and used proceeds of this financing together with $49.7 million of cash contributions by DRA (less $1.9 million of closing costs and $6.9 million of closing prorations and lender holdbacks) to fund a $271.5 million distribution to us. We have agreed to fund the first $5.2 million of post-closing capital expenditures on behalf of the Venture, resulting in net proceeds of $266.3 million after funding of our capital expenditure obligation. As part of the transaction, our subsidiary management company executed an agreement with the Venture to provide property management and leasing services to the Venture in exchange for a market-based fee.
The following unaudited pro forma consolidated financial statements of each of the Parent Company and the Operating Partnership have been prepared to reflect the effect of the contribution of assets as described in Item 2.01 of the Current Report on Form 8-K with which this Exhibit 99.1 is filed. The following unaudited pro forma consolidated financial statements of the Company are presented to comply with Article 11 of Regulation S-X and follow guidelines of the Securities and Exchange Commission (“SEC”). The unaudited pro forma consolidated statements of operations for the six months ended June 30, 2013 and the for the year ended December 31, 2012 are based on the historical consolidated statements of operations of each of the Parent Company and the Operating Partnership, and give effect to the contribution of assets as if it had occurred on January 1, 2012. The unaudited pro forma consolidated balance sheet as of June 30, 2013 is based on the balance sheet on that date of each of the Parent Company and Operating Partnership, and gives effect to the contribution of assets as if it occurred on June 30, 2013.



1
Exhibit 99.1




The unaudited pro forma consolidated financial statements presented below are based on assumptions and adjustments set forth in the notes thereto. The unaudited pro forma adjustments made in the compilation of the unaudited pro forma consolidated financial statements were directly attributable to the contribution of assets, are factually supportable, are based upon available information and assumptions that the Company considers reasonable, and have been made solely for purposes of developing such unaudited pro forma financial information for illustrative purposes in compliance with the disclosure requirements of the SEC. The unaudited pro forma consolidated financial information is presented for informational purposes only and should not be considered indicative of actual results that would have been achieved had the contribution of assets actually been consummated on the dates indicated and does not purport to be indicative of the financial condition as of any future date or results of operation for any future period.
The unaudited pro forma consolidated financial information, and the accompanying notes, should be read in conjunction with the Company's audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2012 filed with the SEC on February 26, 2013 and the Quarterly Report on Form 10-Q for the period ended June 30, 2013 filed on August 6, 2013.


2
Exhibit 99.1



Brandywine Realty Trust
Unaudited Pro Forma Consolidated Balance Sheet
As of June 30, 2013
(in thousands, except per share data)
 
 
 
 
 
 
As Reported
Venture Transaction
 
Reported as
 
 (A)
(B)
 
Pro Forma
ASSETS
 
 
 
 
Real estate investments:
 
 
 
 
Rental properties
$
4,620,460

$
(286,799
)
 (B1)
$
4,333,661

Accumulated depreciation
(967,726
)
41,136

 (B1)
(926,590
)
Operating real estate investments, net
3,652,734

(245,663
)
 
3,407,071

Construction-in-progress
51,260

(2,665
)
 (B1)
48,595

Land inventory
94,444

—

 
94,444

Total real estate investments, net
3,798,438

(248,328
)
 
3,550,110

Cash and cash equivalents
215,948

271,540

 (B2)
487,488

Accounts receivable, net
11,834

(233
)
 (B1)
11,601

Accrued rent receivable, net
124,341

(4,550
)
 (B1)
119,791

Investment in real estate ventures, at equity
176,875

18,272

 (B3)
195,147

Deferred costs, net
119,917

(4,623
)
 (B1)
115,294

Intangible assets, net
59,919

(11,176
)
 (B1)
48,743

Notes receivable
7,026

—

 
7,026

Other assets
52,091

(220
)
 (B1)
51,871

Total assets
$
4,566,389

$
20,682

 
$
4,587,071

 
 
 
 
 
LIABILITIES AND BENEFICIARIES’ EQUITY
  
 
 
 
Mortgage notes payable
$
437,618

$
—

 
$
437,618

Unsecured credit facility
—

—

 
—

Unsecured term loans
450,000

—

 
450,000

Unsecured senior notes, net of discounts
1,492,127

—

 
1,492,127

Accounts payable and accrued expenses
70,434

(3,518
)
 (B1)
66,916

Distributions payable
25,587

—

 
25,587

Deferred income, gains and rent
81,903

(1,317
)
 (B1)
80,586

Acquired lease intangibles, net
30,455

(1,986
)
 (B1)
28,469

Other liabilities
44,196

4,821

 (B4)
49,017

 
 
 
 
 
Total liabilities
2,632,320

(2,000
)
 
2,630,320

Commitments and contingencies
 
 
 
 
 
 
 
 
 
Brandywine Realty Trust’s equity:
  
 
 
 
Preferred Shares (shares authorized-20,000,000):
  
 
 
 
6.90% Series E Preferred Shares
40

—

 
40

Common Shares of Brandywine Realty Trust’s beneficial interest
1,565

—

 
1,565

Additional paid-in capital
2,967,790

—

 
2,967,790

Deferred compensation payable in common shares
5,516

—

 
5,516

Common shares in grantor trust,
(5,516
)
—

 
(5,516
)
Cumulative earnings
490,754

22,427

(B5)
513,181

Accumulated other comprehensive loss
(4,601
)
—

 
(4,601
)
Cumulative distributions
(1,541,896
)
—

 
(1,541,896
)
Total Brandywine Realty Trust’s equity
1,913,652

22,427

 
1,936,079

Non-controlling interests
20,417

255

(B5)
20,672

Total beneficiaries' equity
1,934,069

22,682

 
1,956,751

Total liabilities and equity
$
4,566,389

$
20,682

 
$
4,587,071


The accompanying notes are an integral part of the unaudited pro forma consolidated financial statements.

3
Exhibit 99.1


Brandywine Realty Trust
Unaudited Pro Forma Consolidated Income Statement
For the six months ended June 30, 2013
(in thousands, except per share data)
 
 
 
 
 
 
 
 
Venture Transaction
 
 
 
As Reported (C)
Properties Contributed (D)
Other (E)
 
Pro Forma
Revenue:
 
 
 
 
 
Rents
$
231,201

$
(11,138
)
$
—

 
$
220,063

Tenant reimbursements
39,916

(7,958
)
—

 
31,958

Termination fees
906

—

—

 
906

Third party management fees, labor reimbursement and leasing
6,389

—

312

(E1)
6,701

Other
2,330

(30
)
—

 
2,300

Total revenue
280,742

(19,126
)
312

 
261,928

Operating Expenses:
  
 
 
 
 
Property operating expenses
78,908

(5,086
)
—

 
73,822

Real estate taxes
28,552

(3,550
)
—

 
25,002

Third party management expenses
2,788

—

—

 
2,788

Depreciation and amortization
98,846

(6,230
)
—

 
92,616

General and administrative expenses
13,886

1

—

 
13,887

Total operating expenses
222,980

(14,865
)
—

 
208,115

Operating income
57,762

(4,261
)
312

 
53,813

Other Income (Expense):
  
 
 
 
 
Interest income
180

(14
)
—

 
166

Interest expense
(61,351
)
—

194

(E2)
(61,157
)
Interest expense — amortization of deferred financing costs
(2,344
)
—

—

 
(2,344
)
Interest expense - financing obligation
(429
)
—

—

 
(429
)
Equity in income of real estate ventures
3,043

—

684

(E3)
3,727

Gain from remeasurement of investment in real estate venture
7,847

—

—

 
7,847

Net gain (loss) on real estate venture transactions
3,683

—

—

 
3,683

Loss on early extinguishment of debt
(1,116
)
—

—

 
(1,116
)
Income from continuing operations before non-controlling interests
7,275

(4,275
)
1,190

 
4,190

Net income attributable to non-controlling interests — partners’ share of consolidated real estate ventures
(51
)
—

—

 
(51
)
Net (income) loss from continuing operations attributable to non-controlling interests — LP units
(39
)
51

(14
)
 
(2
)
Net income attributable to continuing operations
7,185

(4,224
)
1,176

 
4,137

 
 
 
 
 
 
Income allocated to Preferred Shares
(3,450
)
—

—

 
(3,450
)
Preferred share redemption charge
—

—

—

 
—

Amount allocated to unvested restricted shareholders
(193
)
—

—

 
(193
)
Net income from continuing operations allocated to Common Shareholders of Brandywine Realty Trust
$
3,542

$
(4,224
)
$
1,176

 
$
494

 
 
 
 
 
 
Per share data:
 
 
 
 
 
Basic earnings per Common Share:
  
 
 
 
 
Continuing operations
$
0.02

 
 
 
$
—

Diluted earnings per Common Share:
  
 
 
 
  
Continuing operations
$
0.02

 
 
 
$
—

 
 
 
 
 
 
Basic weighted average shares outstanding
149,509

 
 
 
149,509

 
 
 
 
 
 
Diluted weighted average shares outstanding
150,666

 
 
 
150,666


The accompanying notes are an integral part of the unaudited pro forma consolidated financial statements.

4
Exhibit 99.1


Brandywine Realty Trust
Unaudited Pro Forma Consolidated Income Statement
For the year ended December 31, 2012
(in thousands, except per share data)
 
 
 
 
 
 
 
 
 
Venture Transaction
 
 
 
 
As Reported (C)
Properties Contributed (D)
Other (E)
 
Other Dispositions (F)
Pro Forma
Revenue:
 
 
 
 
 
 
Rents
$
459,855

$
(19,763
)
$
—

 
$
(21,256
)
$
418,836

Tenant reimbursements
78,613

(12,520
)
—

 
(1,490
)
64,603

Termination fees
3,233

(51
)
—

 
—

3,182

Third party management fees, labor reimbursement and leasing
12,116

—

612

(E1)
—

12,728

Other
6,016

(41
)
—

 
(306
)
5,669

Total revenue
559,833

(32,375
)
612

 
(23,052
)
505,018

Operating Expenses:
  
 
 
 
 
 
Property operating expenses
159,296

(9,274
)
—

 
(6,560
)
143,462

Real estate taxes
55,969

(5,199
)
—

 
(2,561
)
48,209

Third party management expenses
5,127

—

—

 
—

5,127

Depreciation and amortization
195,841

(10,835
)
—

 
(7,126
)
177,880

General and administrative expenses
25,413

(135
)
—

 
—

25,278

Total operating expenses
441,646

(25,443
)
—

 
(16,247
)
399,956

Operating income
118,187

(6,932
)
612

 
(6,805
)
105,062

Other Income (Expense):
  
 
 
 
 
 
Interest income
3,012

(40
)
—

 
(4
)
2,968

Historic tax credit transaction income
11,840

—

—

 
—

11,840

Interest expense
(132,939
)
—

496

(E2)
—

(132,443
)
Interest expense — amortization of deferred financing costs
(6,208
)
—

—

 
—

(6,208
)
Interest expense - financing obligation
(850
)
—

—

 
—

(850
)
Recognized hedge activity
(2,985
)
—

—

 
—

(2,985
)
Loss on real estate formation
(950
)
—

—

 
—

(950
)
Equity in income of real estate ventures
2,741

—

(520
)
(E3)
—

2,221

Loss on early extinguishment of debt
(22,002
)
—

—

 
—

(22,002
)
Loss from continuing operations before non-controlling interests
(30,154
)
(6,972
)
588

 
(6,809
)
(43,347
)
Net income attributable to non-controlling interests — partners’ share of consolidated real estate ventures
(670
)
—

—

 
—

(670
)
Net (income) loss from continuing operations attributable to non-controlling interests — LP units
736

126

(11
)
 
123

974

Net loss attributable to continuing operations
(30,088
)
(6,846
)
577

 
(6,686
)
(43,043
)
 
 
 
 
 
 
 
Income allocated to Preferred Shares
(10,405
)
—

—

 
—

(10,405
)
Preferred share redemption charge
(4,052
)
—

—

 
—

(4,052
)
Amount allocated to unvested restricted shareholders
(376
)
—

—

 
—

(376
)
Net loss from continuing operations allocated to Common Shareholders of Brandywine Realty Trust
$
(44,921
)
$
(6,846
)
$
577

 
$
(6,686
)
$
(57,876
)
 
 
 
 
 
 
 
Per share data:
 
 
 
 
 
 
Basic loss per Common Share:
  
 
 
 
 
 
Continuing operations
$
(0.31
)
 
 
 
 
$
(0.40
)
Diluted loss per Common Share:
  
 
 
 
 
  
Continuing operations
$
(0.31
)
 
 
 
 
$
(0.40
)
 
 
 
 
 
 
 
Basic weighted average shares outstanding
143,257

 
 
 
 
143,257

 
 
 
 
 
 
 
Diluted weighted average shares outstanding
143,257

 
 
 
 
143,257

The accompanying notes are an integral part of the unaudited pro forma consolidated financial statements.


5
Exhibit 99.1


Brandywine Operating Partnership, L.P.
Unaudited Pro Forma Consolidated Balance Sheet
As of June 30, 2013
(in thousands, except per share data)
 
 
 
 
 
 
As Reported
Venture Transaction
 
Reported as
 
 (A)
(B)
 
Pro Forma
ASSETS
 
 
 
 
Real estate investments:
 
 
 
 
Rental properties
$
4,620,460

$
(286,799
)
 (B1)
$
4,333,661

Accumulated depreciation
(967,726
)
41,136

 (B1)
(926,590
)
Operating real estate investments, net
3,652,734

(245,663
)
 
3,407,071

Construction-in-progress
51,260

(2,665
)
 (B1)
48,595

Land inventory
94,444

—

 
94,444

Total real estate investments, net
3,798,438

(248,328
)
 
3,550,110

Cash and cash equivalents
215,948

271,540

 (B2)
487,488

Accounts receivable, net
11,834

(233
)
 (B1)
11,601

Accrued rent receivable, net
124,341

(4,550
)
 (B1)
119,791

Investment in real estate ventures, at equity
176,875

18,272

 (B3)
195,147

Deferred costs, net
119,917

(4,623
)
 (B1)
115,294

Intangible assets, net
59,919

(11,176
)
 (B1)
48,743

Notes receivable
7,026

—

 
7,026

Other assets
52,091

(220
)
 (B1)
51,871

Total assets
$
4,566,389

$
20,682

 
$
4,587,071

 
 
 
 
 
LIABILITIES AND EQUITY
  
 
 
 
Mortgage notes payable
$
437,618

$
—

 
$
437,618

Unsecured credit facility
—

—

 
—

Unsecured term loans
450,000

—

 
450,000

Unsecured senior notes, net of discounts
1,492,127

—

 
1,492,127

Accounts payable and accrued expenses
70,434

(3,518
)
 (B1)
66,916

Distributions payable
25,587

—

 
25,587

Deferred income, gains and rent
81,903

(1,317
)
 (B1)
80,586

Acquired lease intangibles, net
30,455

(1,986
)
 (B1)
28,469

Other liabilities
44,196

4,821

 (B4)
49,017

 
 
 
 
 
Total liabilities
2,632,320

(2,000
)
 
2,630,320

 
 
 
 
 
Commitments and contingencies
 
 
 
 
Redeemable limited partnership units at redemption value
26,241

—

 
26,241

 
 
 
 
 
Brandywine Operating Partnership, L.P.’s equity:
  
 
 
 
6.90% Series E-Linked Preferred Mirror Units
96,850

—

 
96,850

General Partnership Capital
1,815,979

22,682

(B5)
1,838,661

Accumulated other comprehensive loss
(5,001
)
—

 
(5,001
)
Total Brandywine Operating Partnership's Equity
1,934,069

22,682

 
1,956,751

Total liabilities and partners' equity
$
4,566,389

$
20,682

 
$
4,587,071


The accompanying notes are an integral part of the unaudited pro forma consolidated financial statements.


6
Exhibit 99.1


Brandywine Operating Partnership, L.P.
Unaudited Pro Forma Consolidated Income Statement
For the six months ended June 30, 2013
(in thousands, except per share data)
 
 
 
 
 
 
 
 
Venture Transaction
 
 
 
As Reported (C)
Properties Contributed (D)
Other (E)
 
Pro Forma
Revenue:
 
 
 
 
 
Rents
$
231,201

$
(11,138
)
$
—

 
$
220,063

Tenant reimbursements
39,916

(7,958
)
—

 
31,958

Termination fees
906

—

—

 
906

Third party management fees, labor reimbursement and leasing
6,389

—

312

(E1)
6,701

Other
2,330

(30
)
—

 
2,300

Total revenue
280,742

(19,126
)
312

 
261,928

Operating Expenses:
  
 
 
 
 
Property operating expenses
78,908

(5,086
)
—

 
73,822

Real estate taxes
28,552

(3,550
)
—

 
25,002

Third party management expenses
2,788

—

—

 
2,788

Depreciation and amortization
98,846

(6,230
)
—

 
92,616

General and administrative expenses
13,886

1

—

 
13,887

Total operating expenses
222,980

(14,865
)
—

 
208,115

Operating income
57,762

(4,261
)
312

 
53,813

Other Income (Expense):
  
 
 
 
 
Interest income
180

(14
)
—

 
166

Interest expense
(61,351
)
—

194

(E2)
(61,157
)
Interest expense — amortization of deferred financing costs
(2,344
)
—

—

 
(2,344
)
Interest expense - financing obligation
(429
)
—

—

 
(429
)
Equity in income of real estate ventures
3,043

—

684

(E3)
3,727

Gain from remeasurement of investment in real estate venture
7,847

—

—

 
7,847

Net gain (loss) on real estate venture transactions
3,683

—

—

 
3,683

Loss on early extinguishment of debt
(1,116
)
—

—

 
(1,116
)
Income from continuing operations
7,275

(4,275
)
1,190

 
4,190

 
 
 
 
 
 
Income allocated to Preferred Units
(3,450
)
—

—

 
(3,450
)
Preferred unit redemption charge
—

—

—

 
—

Amount allocated to unvested restricted shareholders
(193
)
—

—

 
(193
)
Net income from continuing operations allocated to Common Partnership Units
$
3,632

$
(4,275
)
$
1,190

 
$
547

 
 
 
 
 
 
Per share data:
 
 
 
 
 
Basic earnings per Common Partnership Unit:
  
 
 
 
 
Continuing operations
$
0.02

 
 
 
$
—

Diluted earnings per Common Partnership Unit:
  
 
 
 
  
Continuing operations
$
0.02

 
 
 
$
—

 
 
 
 
 
 
Basic weighted average common partnership units outstanding
151,324

 
 
 
151,324

 
 
 
 
 
 
Diluted weighted average common partnership units outstanding
152,481

 
 
 
152,481


The accompanying notes are an integral part of the unaudited pro forma consolidated financial statements.


7
Exhibit 99.1


Brandywine Operating Partnership, L.P.
Unaudited Pro Forma Consolidated Income Statement
For the year ended December 31, 2012
(in thousands, except per share data)
 
 
 
 
 
 
 
 
 
Venture Transaction
 
 
 
 
As Reported (C)
Properties Contributed (D)
Other (E)
 
Other Dispositions (F)
Pro Forma
Revenue:
 
 
 
 
 
 
Rents
$
459,855

$
(19,763
)
$
—

 
$
(21,256
)
$
418,836

Tenant reimbursements
78,613

(12,520
)
—

 
(1,490
)
64,603

Termination fees
3,233

(51
)
—

 
—

3,182

Third party management fees, labor reimbursement and leasing
12,116

—

612

(E1)
—

12,728

Other
6,016

(41
)
—

 
(306
)
5,669

Total revenue
559,833

(32,375
)
612

 
(23,052
)
505,018

Operating Expenses:
  
 
 
 
 
 
Property operating expenses
159,296

(9,274
)
—

 
(6,560
)
143,462

Real estate taxes
55,969

(5,199
)
—

 
(2,561
)
48,209

Third party management expenses
5,127

—

—

 
—

5,127

Depreciation and amortization
195,841

(10,835
)
—

 
(7,126
)
177,880

General and administrative expenses
25,413

(135
)
—

 
—

25,278

Total operating expenses
441,646

(25,443
)
—

 
(16,247
)
399,956

Operating income
118,187

(6,932
)
612

 
(6,805
)
105,062

Other Income (Expense):
  
 
 
 
 
 
Interest income
3,012

(40
)
—

 
(4
)
2,968

Historic tax credit transaction income
11,840

—

—

 
—

11,840

Interest expense
(132,939
)
—

496

(E2)
—

(132,443
)
Interest expense — amortization of deferred financing costs
(6,208
)
—

—

 
—

(6,208
)
Interest expense - financing obligation
(850
)
—

—

 
—

(850
)
Recognized hedge activity
(2,985
)
—

—

 
—

(2,985
)
Loss on real estate formation
(950
)
—

—

 
—

(950
)
Equity in income of real estate ventures
2,741

—

(520
)
(E3)
—

2,221

Loss on early extinguishment of debt
(22,002
)
—

—

 
—

(22,002
)
Income (loss) from continuing operations
(30,154
)
(6,972
)
588

 
(6,809
)
(43,347
)
 
 
 
 
 
 
 
Income allocated to Preferred Units
(10,405
)
—

—

 
—

(10,405
)
Preferred unit redemption charge
(4,052
)
—

—

 
—

(4,052
)
Amount allocated to unvested restricted shareholders
(376
)
—

—

 
—

(376
)
Net income (loss) from continuing operations allocated to Common Partnership Units
$
(44,987
)
$
(6,972
)
$
588

 
$
(6,809
)
$
(58,180
)
 
 
 
 
 
 
 
Per share data:
 
 
 
 
 
 
Basic loss per Common Partnership Unit:
  
 
 
 
 
 
Continuing operations
$
(0.31
)
 
 
 
 
$
(0.40
)
Diluted loss per Common Partnership Unit:
  
 
 
 
 
  
Continuing operations
$
(0.31
)
 
 
 
 
$
(0.40
)
 
 
 
 
 
 
 
Basic weighted average common partnership units outstanding
145,883

 
 
 
 
145,883

 
 
 
 
 
 
 
Diluted weighted average common partnership units outstanding
145,883

 
 
 
 
145,883


The accompanying notes are an integral part of the unaudited pro forma consolidated financial statements.

8
Exhibit 99.1



BRANDYWINE REALTY TRUST AND BRANDYWINE OPERATING PARTNERSHIP, L.P.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
Pro Forma Adjustments

(A)
Reflects the Company's consolidated balance sheet as of June 30, 2013, as contained in the historical financial statements and notes thereto presented in the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2013.

(B)
The pro forma adjustments represent the elimination of the assets and liabilities of the Properties contributed. These adjustments also include actual cash received at closing on October 16, 2013 of $271.5 million.

(B1) Represents the sale of the Properties' assets and liabilities.
(B2) Represents net proceeds received by Brandywine upon sale of the Properties.
(B3) Represents the Company's 50% basis in the Venture based on the carrying value of the Properties contributed as of June 30, 2013.
(B4) Represents our obligation to fund the first $5.2 million of post-closing capital expenditures and leasing costs with respect to new tenants, offset by the sale of certain of the Properties' liabilities.
(B5) Represents the estimated gain on sale recognized by the Company upon completion of the sale transaction as if the sale occurred as of June 30, 2013, and was calculated as follows:

Contractual Sales Price of the Properties
$
330,000,000

   Less: Equity in the Venture
(49,700,000
)
Partial sale value of the Properties
$
280,300,000

   Less: Actual closing costs and June 30, 2013 prorations
(3,545,624
)
   Less: Share of mortgage indebtedness
(115,300,000
)
   Less: Our obligation to fund future capital expenditures and leasing costs
(5,200,000
)
   Less: Property basis as of June 30, 2013
(133,572,059
)
Estimated gain
$
22,682,317

   Less: Estimated gain attributable to non-controlling interest
(255,362
)
Estimated gain attributable to shareholders (i)
$
22,426,955


(i)
The Company expects to record an estimated $26.2 million gain on sale from this transaction as of October 16, 2013 as a result of additional depreciation expense and changes in the basis from June 30, 2013.     

(C)
Reflects the consolidated results of operations for the Company for the six months ended June 30, 2013 and the year ended December 31, 2012 as contained in the historical financial statements and notes thereto in the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 and Annual Report on Form 10-K for the year ended December 31, 2012, respectively.

(D)
Represents revenues and expenses of the Properties sold for the six months ended June 30, 2013 and the year ended December 31, 2012. Included in the Properties sold is 7000 West William Cannon Drive, which was purchased December 31, 2012. Each of the other Properties sold were held for the entire periods presented in the pro forma statements.







9
Exhibit 99.1


(E)
Represents additional adjustments made in connection with the Venture transaction as follows:

(E1) Represents management fee income pursuant to the management and leasing agreement.
(E2) Represents an adjustment made to interest expense in connection with the sale of the Properties. Interest expense represents the elimination of interest expense on a portion of the Company's unsecured revolving credit facility that was repaid with proceeds from the sale as if the sale occurred on January 1, 2012 using actual monthly interest rates on the revolving credit facility over the periods. Each 1/8 of 1% decrease in the interest rate of the revolving credit facility will decrease interest expense by a nominal amount for the six months ending June 30, 2013 and the year ended December 31, 2012, respectively.
(E3) Represents the Company's share of net income from the Venture, assuming the Venture commenced January 1, 2012.

(F)
Represents the elimination of the actual historical results of operations of the other dispositions occurring in 2013 as if the dispositions occurred on January 1, 2012. Included within other dispositions is a portfolio of eight properties sold in Lawrenceville, New Jersey on February 25, 2013. On March 1, 2013 the Company filed an 8-K including pro forma financial information in connection with the sale of the eight properties. All other dispositions were not significant individually or in aggregate under Regulation S-X prior to the disposition of the Properties to the Venture. No such adjustment is applicable to the Pro Forma Consolidated Income Statements for the six months ended June 30, 2013, as these properties were classified as discontinued operations during the period and historical reported numbers already reflect the classification of revenues and expenses of discontinued operations.

10