|
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
|
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
|
||||||||
(Brandywine Realty Trust)
|
|
|
||||||
|
||||||||
(Brandywine Operating Partnership, L.P.)
|
|
|
||||||
(State or Other Jurisdiction of Incorporation
or Organization) |
(Commission file number)
|
(I.R.S. Employer Identification Number)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
||
|
|
|
Brandywine Realty Trust
|
|
☒
No
☐
|
|
Brandywine Operating Partnership, L.P.
|
|
☒
No
☐
|
Brandywine Realty Trust
|
|
☒
No
☐
|
|
Brandywine Operating Partnership, L.P.
|
|
☒
No
☐
|
|
☒
|
Accelerated filer
☐
|
Non-accelerated filer
☐
|
Smaller reporting company
|
|
Emerging growth company
|
|
Large accelerated filer
☐
|
Accelerated filer
☐
|
|
☒
|
Smaller reporting company
☐
|
Emerging growth company
|
|
Brandywine Realty Trust
|
Yes
|
|
No
☒
|
Brandywine Operating Partnership, L.P.
|
Yes
|
|
No
☒
|
•
|
facilitate a better understanding by the investors of the Parent Company and the Operating Partnership by enabling them to view the business as a whole in the same manner as management views and operates the business;
|
•
|
remove duplicative disclosures and provide a more straightforward presentation in light of the fact that a substantial portion of the disclosure applies to both the Parent Company and the Operating Partnership; and
|
•
|
create time and cost efficiencies through the preparation of one combined report instead of two separate reports.
|
•
|
Consolidated Financial Statements; and
|
•
|
Notes to the Parent Company’s and Operating Partnership’s Equity.
|
Page
|
|
March 31,
2020 |
December 31,
2019 |
||||||
ASSETS
|
|||||||
Real estate investments:
|
|||||||
Operating properties
|
$
|
|
|
$
|
|
|
|
Accumulated depreciation
|
(
|
)
|
(
|
)
|
|||
Right of use asset - operating leases, net
|
|
|
|
|
|||
Operating real estate investments, net
|
|
|
|
|
|||
Construction-in-progress
|
|
|
|
|
|||
Land held for development
|
|
|
|
|
|||
Prepaid leasehold interests in land held for development, net
|
|
|
|
|
|||
Total real estate investments, net
|
|
|
|
|
|||
Assets held for sale, net
|
|
|
|
|
|||
Cash and cash equivalents
|
|
|
|
|
|||
Accounts receivable, net of allowance of $284 as of both March 31, 2020 and December 31, 2019
|
|
|
|
|
|||
Accrued rent receivable, net of allowance of $7,484 and $7,691 as of March 31, 2020 and December 31, 2019, respectively
|
|
|
|
|
|||
Investment in Real Estate Ventures
|
|
|
|
|
|||
Deferred costs, net
|
|
|
|
|
|||
Intangible assets, net
|
|
|
|
|
|||
Other assets
|
|
|
|
|
|||
Total assets
|
$
|
|
|
$
|
|
|
|
LIABILITIES AND BENEFICIARIES' EQUITY
|
|||||||
Mortgage notes payable, net
|
$
|
|
|
$
|
|
|
|
Unsecured credit facility
|
|
|
|
|
|||
Unsecured term loan, net
|
|
|
|
|
|||
Unsecured senior notes, net
|
|
|
|
|
|||
Accounts payable and accrued expenses
|
|
|
|
|
|||
Distributions payable
|
|
|
|
|
|||
Deferred income, gains and rent
|
|
|
|
|
|||
Intangible liabilities, net
|
|
|
|
|
|||
Lease liability - operating leases
|
|
|
|
|
|||
Other liabilities
|
|
|
|
|
|||
Total liabilities
|
$
|
|
|
$
|
|
|
|
Commitments and contingencies (See Note 15)
|
|
|
|||||
Brandywine Realty Trust's Equity:
|
|||||||
Common Shares of Brandywine Realty Trust's beneficial interest, $0.01 par value; shares authorized 400,000,000; 170,965,987 and 176,480,095 issued and outstanding as of March 31, 2020 and December 31, 2019, respectively
|
|
|
|
|
|||
Additional paid-in-capital
|
|
|
|
|
|||
Deferred compensation payable in common shares
|
|
|
|
|
|||
Common shares in grantor trust, 1,117,783 and 1,105,542 issued and outstanding as of March 31, 2020 and December 31, 2019, respectively
|
(
|
)
|
(
|
)
|
|||
Cumulative earnings
|
|
|
|
|
|||
Accumulated other comprehensive loss
|
(
|
)
|
(
|
)
|
|||
Cumulative distributions
|
(
|
)
|
(
|
)
|
|||
Total Brandywine Realty Trust's equity
|
|
|
|
|
|||
Noncontrolling interests
|
|
|
|
|
|||
Total beneficiaries' equity
|
$
|
|
|
$
|
|
|
|
Total liabilities and beneficiaries' equity
|
$
|
|
|
$
|
|
|
Three Months Ended March 31,
|
|||||||
2020
|
2019
|
||||||
Revenue
|
|||||||
Rents
|
$
|
|
|
$
|
|
|
|
Third party management fees, labor reimbursement and leasing
|
|
|
|
|
|||
Other
|
|
|
|
|
|||
Total revenue
|
|
|
|
|
|||
Operating expenses
|
|||||||
Property operating expenses
|
|
|
|
|
|||
Real estate taxes
|
|
|
|
|
|||
Third party management expenses
|
|
|
|
|
|||
Depreciation and amortization
|
|
|
|
|
|||
General and administrative expenses
|
|
|
|
|
|||
Total operating expenses
|
|
|
|
|
|||
Gain on sale of real estate
|
|||||||
Net gain on disposition of real estate
|
|
|
|
|
|||
Net gain on sale of undepreciated real estate
|
|
|
|
|
|||
Total gain on sale of real estate
|
|
|
|
|
|||
Operating income
|
|
|
|
|
|||
Other income (expense):
|
|||||||
Interest income
|
|
|
|
|
|||
Interest expense
|
(
|
)
|
(
|
)
|
|||
Interest expense - amortization of deferred financing costs
|
(
|
)
|
(
|
)
|
|||
Equity in loss of Real Estate Ventures
|
(
|
)
|
(
|
)
|
|||
Net gain on real estate venture transactions
|
|
|
|
|
|||
Net income before income taxes
|
|
|
|
|
|||
Income tax provision
|
(
|
)
|
(
|
)
|
|||
Net income
|
|
|
|
|
|||
Net income attributable to noncontrolling interests
|
(
|
)
|
(
|
)
|
|||
Net income attributable to Brandywine Realty Trust
|
|
|
|
|
|||
Nonforfeitable dividends allocated to unvested restricted shareholders
|
(
|
)
|
(
|
)
|
|||
Net income attributable to Common Shareholders of Brandywine Realty Trust
|
$
|
|
|
$
|
|
|
|
Basic income per Common Share
|
$
|
|
|
$
|
|
|
|
Diluted income per Common Share
|
$
|
|
|
$
|
|
|
|
Basic weighted average shares outstanding
|
|
|
|
|
|||
Diluted weighted average shares outstanding
|
|
|
|
|
Three Months Ended March 31,
|
|||||||
2020
|
2019
|
||||||
Net income
|
$
|
|
|
$
|
|
|
|
Comprehensive loss:
|
|||||||
Unrealized loss on derivative financial instruments
|
(
|
)
|
(
|
)
|
|||
Amortization of interest rate contracts (1)
|
|
|
|
|
|||
Total comprehensive loss
|
(
|
)
|
(
|
)
|
|||
Comprehensive income
|
|
|
|
|
|||
Comprehensive income attributable to noncontrolling interest
|
(
|
)
|
(
|
)
|
|||
Comprehensive income attributable to Brandywine Realty Trust
|
$
|
|
|
$
|
|
|
(1)
|
Amounts reclassified from comprehensive income to interest expense within the Consolidated Statements of Operations.
|
Number of Common Shares
|
Number of Rabbi
Trust/Deferred Compensation Shares |
Common Shares of
Brandywine Realty Trust's beneficial interest |
Additional Paid-in
Capital |
Deferred Compensation
Payable in Common Shares |
Common Shares in
Grantor Trust |
Cumulative Earnings
|
Accumulated Other
Comprehensive Income (Loss) |
Cumulative Distributions
|
Noncontrolling Interests
|
Total
|
|||||||||||||||||||||||||||||||
BALANCE, beginning of period
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
(
|
)
|
$
|
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
|
$
|
|
|
||||||||||
Net income
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||
Other comprehensive loss
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||||||||||||||||||||||||||||||||
Repurchase and retirement of Common Shares of Beneficial Interest
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||||||||||||||||||||||||||||||
Share-based compensation activity
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
Share Issuance from/(to) Deferred Compensation Plan
|
(
|
)
|
(
|
)
|
(
|
)
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||||||||||||||
Distributions declared ($0.19 per share)
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||||||||||||||||||||||||||||||||
BALANCE, March 31, 2020
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
(
|
)
|
$
|
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
|
$
|
|
|
Number of Common Shares
|
Number of Rabbi
Trust/Deferred
Compensation Shares
|
Common Shares of
Brandywine Realty
Trust's beneficial
interest
|
Additional Paid-in
Capital
|
Deferred Compensation
Payable
in Common
Shares
|
Common Shares in
Grantor Trust
|
Cumulative Earnings
|
Accumulated Other
Comprehensive Income (Loss)
|
Cumulative Distributions
|
Noncontrolling Interests
|
Total
|
|||||||||||||||||||||||||||||||
BALANCE, beginning of period
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
(
|
)
|
$
|
|
|
$
|
|
|
$
|
(
|
)
|
$
|
|
|
$
|
|
|
||||||||||
Cumulative effect of accounting change
|
(
|
)
|
(
|
)
|
|||||||||||||||||||||||||||||||||||||
Net income
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||
Other comprehensive loss
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||||||||||||||||||||||||||||||||
Repurchase and retirement of Common Shares of Beneficial Interest
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||||||||||||||||||||||||||||||
Issuance of partnership interest in consolidated real estate ventures
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||
Share-based compensation activity
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
Share Issuance from/(to) Deferred Compensation Plan
|
(
|
)
|
(
|
)
|
|
|
(
|
)
|
|
|
|||||||||||||||||||||||||||||||
Reallocation of Noncontrolling interest
|
|
|
(
|
)
|
|
|
|||||||||||||||||||||||||||||||||||
Distributions declared ($0.19 per share)
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||||||||||||||||||||||||||||||||
BALANCE, March 31, 2019
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
(
|
)
|
$
|
|
|
$
|
|
|
$
|
(
|
)
|
$
|
|
|
$
|
|
|
Three Months Ended March 31,
|
|||||||
2020
|
2019
|
||||||
Cash flows from operating activities:
|
|||||||
Net income
|
$
|
|
|
$
|
|
|
|
Adjustments to reconcile net income to net cash from operating activities:
|
|||||||
Depreciation and amortization
|
|
|
|
|
|||
Amortization of deferred financing costs
|
|
|
|
|
|||
Amortization of debt discount/(premium), net
|
(
|
)
|
|
|
|||
Amortization of stock compensation costs
|
|
|
|
|
|||
Straight-line rent income
|
(
|
)
|
(
|
)
|
|||
Amortization of acquired above (below) market leases, net
|
(
|
)
|
(
|
)
|
|||
Ground rent expense
|
|
|
|
|
|||
Provision for doubtful accounts
|
|
|
|
|
|||
Net gain on sale of interests in real estate
|
(
|
)
|
(
|
)
|
|||
Loss from Real Estate Ventures, net of distributions
|
|
|
|
|
|||
Income tax provision
|
|
|
|
|
|||
Changes in assets and liabilities:
|
|||||||
Accounts receivable
|
(
|
)
|
(
|
)
|
|||
Other assets
|
(
|
)
|
(
|
)
|
|||
Accounts payable and accrued expenses
|
(
|
)
|
(
|
)
|
|||
Deferred income, gains and rent
|
(
|
)
|
(
|
)
|
|||
Other liabilities
|
|
|
|
|
|||
Net cash provided by operating activities
|
|
|
|
|
|||
Cash flows from investing activities:
|
|||||||
Acquisition of properties
|
(
|
)
|
|
|
|||
Proceeds from the sale of properties
|
|
|
|
|
|||
Proceeds from real estate venture sales
|
|
|
|
|
|||
Proceeds from repayment of mortgage notes receivable
|
|
|
|
|
|||
Capital expenditures for tenant improvements
|
(
|
)
|
(
|
)
|
|||
Capital expenditures for redevelopments
|
(
|
)
|
(
|
)
|
|||
Capital expenditures for developments
|
(
|
)
|
(
|
)
|
|||
Advances for the purchase of tenant assets, net of repayments
|
|
|
(
|
)
|
|||
Investment in unconsolidated Real Estate Ventures
|
|
|
(
|
)
|
|||
Deposits for real estate
|
(
|
)
|
|
|
|||
Capital distributions from Real Estate Ventures
|
|
|
|
|
|||
Leasing costs paid
|
(
|
)
|
(
|
)
|
|||
Net cash used in investing activities
|
(
|
)
|
(
|
)
|
|||
Cash flows from financing activities:
|
|||||||
Repayments of mortgage notes payable
|
(
|
)
|
(
|
)
|
|||
Proceeds from credit facility borrowings
|
|
|
|
|
|||
Repayments of credit facility borrowings
|
(
|
)
|
(
|
)
|
|||
Proceeds from the exercise of stock options
|
|
|
|
|
|||
Shares used for employee taxes upon vesting of share awards
|
(
|
)
|
(
|
)
|
|||
Partner contributions to consolidated real estate venture
|
|
|
|
|
|||
Repurchase and retirement of common shares
|
(
|
)
|
(
|
)
|
|||
Distributions paid to shareholders
|
(
|
)
|
(
|
)
|
|||
Distributions to noncontrolling interest
|
(
|
)
|
(
|
)
|
|||
Net cash provided by (used in) financing activities
|
(
|
)
|
|
|
|||
Decrease in cash and cash equivalents and restricted cash
|
(
|
)
|
(
|
)
|
|||
Cash and cash equivalents and restricted cash at beginning of year
|
|
|
|
|
|||
Cash and cash equivalents and restricted cash at end of period
|
$
|
|
|
$
|
|
|
|
Reconciliation of cash and cash equivalents and restricted cash:
|
|||||||
Cash and cash equivalents, beginning of period
|
$
|
|
|
$
|
|
|
|
Restricted cash, beginning of period
|
|
|
|
|
|||
Cash and cash equivalents and restricted cash, beginning of period
|
$
|
|
|
$
|
|
|
|
Cash and cash equivalents, end of period
|
$
|
|
|
$
|
|
|
|
Restricted cash, end of period
|
|
|
|
|
|||
Cash and cash equivalents and restricted cash, end of period
|
$
|
|
|
$
|
|
|
|
Supplemental disclosure:
|
|||||||
Cash paid for interest, net of capitalized interest during the three months ended March 31, 2020 and 2019 of $1,201 and $728, respectively
|
$
|
|
|
$
|
|
|
|
Cash paid for income taxes
|
|
|
|
|
|||
Supplemental disclosure of non-cash activity:
|
|||||||
Dividends and distributions declared but not paid
|
|
|
|
|
|||
Change in capital expenditures financed through accounts payable at period end
|
|
|
(
|
)
|
|||
Change in capital expenditures financed through retention payable at period end
|
|
|
(
|
)
|
March 31,
2020 |
December 31,
2019 |
||||||
ASSETS
|
|||||||
Real estate investments:
|
|||||||
Operating properties
|
$
|
|
|
$
|
|
|
|
Accumulated depreciation
|
(
|
)
|
(
|
)
|
|||
Right of use asset - operating leases, net
|
|
|
|
|
|||
Operating real estate investments, net
|
|
|
|
|
|||
Construction-in-progress
|
|
|
|
|
|||
Land held for development
|
|
|
|
|
|||
Prepaid leasehold interests in land held for development, net
|
|
|
|
|
|||
Total real estate investments, net
|
|
|
|
|
|||
Assets held for sale, net
|
|
|
|
|
|||
Cash and cash equivalents
|
|
|
|
|
|||
Accounts receivable, net of allowance of $284 as of both March 31, 2020 and December 31, 2019
|
|
|
|
|
|||
Accrued rent receivable, net of allowance of $7,484 and $7,691 as of March 31, 2020 and December 31, 2019, respectively
|
|
|
|
|
|||
Investment in Real Estate Ventures
|
|
|
|
|
|||
Deferred costs, net
|
|
|
|
|
|||
Intangible assets, net
|
|
|
|
|
|||
Other assets
|
|
|
|
|
|||
Total assets
|
$
|
|
|
$
|
|
|
|
LIABILITIES AND PARTNERS' EQUITY
|
|||||||
Mortgage notes payable, net
|
$
|
|
|
$
|
|
|
|
Unsecured credit facility
|
|
|
|
|
|||
Unsecured term loan, net
|
|
|
|
|
|||
Unsecured senior notes, net
|
|
|
|
|
|||
Accounts payable and accrued expenses
|
|
|
|
|
|||
Distributions payable
|
|
|
|
|
|||
Deferred income, gains and rent
|
|
|
|
|
|||
Intangible liabilities, net
|
|
|
|
|
|||
Lease liability - operating leases
|
|
|
|
|
|||
Other liabilities
|
|
|
$
|
|
|
||
Total liabilities
|
$
|
|
|
|
|
||
Commitments and contingencies (See Note 15)
|
|
|
|||||
Redeemable limited partnership units at redemption value; 981,634 issued and outstanding as of March 31, 2020 and December 31, 2019, respectively
|
|
|
|
|
|||
Brandywine Operating Partnership, L.P.'s equity:
|
|||||||
General Partnership Capital; 170,965,987 and 176,480,095 units issued and outstanding as of March 31, 2020 and December 31, 2019, respectively
|
|
|
|
|
|||
Accumulated other comprehensive income
|
(
|
)
|
(
|
)
|
|||
Total Brandywine Operating Partnership, L.P.'s equity
|
|
|
|
|
|||
Noncontrolling interest - consolidated real estate ventures
|
|
|
|
|
|||
Total partners' equity
|
$
|
|
|
$
|
|
|
|
Total liabilities and partners' equity
|
$
|
|
|
$
|
|
|
Three Months Ended March 31,
|
|||||||
2020
|
2019
|
||||||
Revenue
|
|||||||
Rents
|
$
|
|
|
$
|
|
|
|
Third party management fees, labor reimbursement and leasing
|
|
|
|
|
|||
Other
|
|
|
|
|
|||
Total revenue
|
|
|
|
|
|||
Operating expenses
|
|||||||
Property operating expenses
|
|
|
|
|
|||
Real estate taxes
|
|
|
|
|
|||
Third party management expenses
|
|
|
|
|
|||
Depreciation and amortization
|
|
|
|
|
|||
General and administrative expenses
|
|
|
|
|
|||
Total operating expenses
|
|
|
|
|
|||
Gain on sale of real estate
|
|||||||
Net gain on disposition of real estate
|
|
|
|
|
|||
Net gain on sale of undepreciated real estate
|
|
|
|
|
|||
Total gain on sale of real estate
|
|
|
|
|
|||
Operating income
|
|
|
|
|
|||
Other income (expense):
|
|||||||
Interest income
|
|
|
|
|
|||
Interest expense
|
(
|
)
|
(
|
)
|
|||
Interest expense - amortization of deferred financing costs
|
(
|
)
|
(
|
)
|
|||
Equity in loss of Real Estate Ventures
|
(
|
)
|
(
|
)
|
|||
Net gain on real estate venture transactions
|
|
|
|
|
|||
Net income before income taxes
|
|
|
|
|
|||
Income tax provision
|
(
|
)
|
(
|
)
|
|||
Net income
|
|
|
|
|
|||
Net income attributable to noncontrolling interests - consolidated real estate ventures
|
(
|
)
|
(
|
)
|
|||
Net income attributable to Brandywine Operating Partnership
|
|
|
|
|
|||
Nonforfeitable dividends allocated to unvested restricted unitholders
|
(
|
)
|
(
|
)
|
|||
Net income attributable to Common Partnership Unitholders of Brandywine Operating Partnership, L.P.
|
$
|
|
|
$
|
|
|
|
Basic income per Common Partnership Unit
|
$
|
|
|
$
|
|
|
|
Diluted income per Common Partnership Unit
|
$
|
|
|
$
|
|
|
|
Basic weighted average common partnership units outstanding
|
|
|
|
|
|||
Diluted weighted average common partnership units outstanding
|
|
|
|
|
Three Months Ended March 31,
|
|||||||
2020
|
2019
|
||||||
Net income
|
$
|
|
|
$
|
|
|
|
Comprehensive loss:
|
|||||||
Unrealized loss on derivative financial instruments
|
(
|
)
|
(
|
)
|
|||
Amortization of interest rate contracts (1)
|
|
|
|
|
|||
Total comprehensive loss
|
(
|
)
|
(
|
)
|
|||
Comprehensive income
|
|
|
|
|
|||
Comprehensive income attributable to noncontrolling interest - consolidated real estate ventures
|
(
|
)
|
(
|
)
|
|||
Comprehensive income attributable to Brandywine Operating Partnership
|
$
|
|
|
$
|
|
|
General Partner Capital
|
||||||||||||||||||
Units
|
Amount
|
Accumulated Other Comprehensive Income
|
Noncontrolling Interest - Consolidated Real Estate Ventures
|
Total Partners' Equity
|
||||||||||||||
BALANCE, beginning of period
|
|
|
$
|
|
|
$
|
(
|
)
|
$
|
|
|
$
|
|
|
||||
Net income
|
|
|
|
|
|
|
||||||||||||
Other comprehensive loss
|
(
|
)
|
(
|
)
|
||||||||||||||
Deferred compensation obligation
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||||||
Repurchase and retirement of LP units
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||||||
Share-based compensation activity
|
|
|
|
|
|
|
||||||||||||
Adjustment of redeemable partnership units to liquidation value at period end
|
|
|
|
|
||||||||||||||
Distributions declared to general partnership unitholders ($0.19 per unit)
|
(
|
)
|
(
|
)
|
||||||||||||||
BALANCE, March 31, 2020
|
|
|
$
|
|
|
$
|
(
|
)
|
$
|
|
|
$
|
|
|
General Partner Capital
|
||||||||||||||||||
Units
|
Amount
|
Accumulated Other Comprehensive Income (Loss)
|
Noncontrolling Interest - Consolidated Real Estate Ventures
|
Total Partners' Equity
|
||||||||||||||
BALANCE, beginning of period
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
||||
Cumulative effect of accounting change
|
(
|
)
|
(
|
)
|
||||||||||||||
Net income
|
|
|
|
|
|
|
||||||||||||
Other comprehensive loss
|
(
|
)
|
(
|
)
|
||||||||||||||
Deferred compensation obligation
|
(
|
)
|
|
|
||||||||||||||
Repurchase and retirement of LP units
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||||||
Issuance of partnership interest in consolidated real estate ventures
|
|
|
|
|
||||||||||||||
Share-based compensation activity
|
|
|
|
|
|
|
||||||||||||
Adjustment of redeemable partnership units to liquidation value at period end
|
(
|
)
|
(
|
)
|
||||||||||||||
Distributions declared to general partnership unitholders ($0.19 per unit)
|
(
|
)
|
(
|
)
|
||||||||||||||
BALANCE, March 31, 2019
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Three Months Ended March 31,
|
|||||||
2020
|
2019
|
||||||
Cash flows from operating activities:
|
|||||||
Net income
|
$
|
|
|
$
|
|
|
|
Adjustments to reconcile net income to net cash from operating activities:
|
|||||||
Depreciation and amortization
|
|
|
|
|
|||
Amortization of deferred financing costs
|
|
|
|
|
|||
Amortization of debt discount/(premium), net
|
(
|
)
|
|
|
|||
Amortization of stock compensation costs
|
|
|
|
|
|||
Straight-line rent income
|
(
|
)
|
(
|
)
|
|||
Amortization of acquired above (below) market leases, net
|
(
|
)
|
(
|
)
|
|||
Ground rent expense
|
|
|
|
|
|||
Provision for doubtful accounts
|
|
|
|
|
|||
Net gain on sale of interests in real estate
|
(
|
)
|
(
|
)
|
|||
Loss from Real Estate Ventures, net of distributions
|
|
|
|
|
|||
Income tax provision
|
|
|
|
|
|||
Changes in assets and liabilities:
|
|||||||
Accounts receivable
|
(
|
)
|
(
|
)
|
|||
Other assets
|
(
|
)
|
(
|
)
|
|||
Accounts payable and accrued expenses
|
(
|
)
|
(
|
)
|
|||
Deferred income, gains and rent
|
(
|
)
|
(
|
)
|
|||
Other liabilities
|
|
|
|
|
|||
Net cash provided by operating activities
|
|
|
|
|
|||
Cash flows from investing activities:
|
|||||||
Acquisition of properties
|
(
|
)
|
|
|
|||
Proceeds from the sale of properties
|
|
|
|
|
|||
Proceeds from real estate venture sales
|
|
|
|
|
|||
Proceeds from repayment of mortgage notes receivable
|
|
|
|
|
|||
Capital expenditures for tenant improvements
|
(
|
)
|
(
|
)
|
|||
Capital expenditures for redevelopments
|
(
|
)
|
(
|
)
|
|||
Capital expenditures for developments
|
(
|
)
|
(
|
)
|
|||
Advances for the purchase of tenant assets, net of repayments
|
|
|
(
|
)
|
|||
Investment in unconsolidated Real Estate Ventures
|
|
|
(
|
)
|
|||
Deposits for real estate
|
(
|
)
|
|
|
|||
Capital distributions from Real Estate Ventures
|
|
|
|
|
|||
Leasing costs paid
|
(
|
)
|
(
|
)
|
|||
Net cash used in investing activities
|
(
|
)
|
(
|
)
|
|||
Cash flows from financing activities:
|
|||||||
Repayments of mortgage notes payable
|
(
|
)
|
(
|
)
|
|||
Proceeds from credit facility borrowings
|
|
|
|
|
|||
Repayments of credit facility borrowings
|
(
|
)
|
(
|
)
|
|||
Proceeds from the exercise of stock options
|
|
|
|
|
|||
Shares used for employee taxes upon vesting of share awards
|
(
|
)
|
(
|
)
|
|||
Partner contributions to consolidated real estate venture
|
|
|
|
|
|||
Repurchase and retirement of common shares
|
(
|
)
|
(
|
)
|
|||
Distributions paid to preferred and common partnership units
|
(
|
)
|
(
|
)
|
|||
Net cash provided by (used in) financing activities
|
(
|
)
|
|
|
|||
Decrease in cash and cash equivalents and restricted cash
|
(
|
)
|
(
|
)
|
|||
Cash and cash equivalents and restricted cash at beginning of year
|
|
|
|
|
|||
Cash and cash equivalents and restricted cash at end of period
|
$
|
|
|
$
|
|
|
|
Reconciliation of cash and cash equivalents and restricted cash:
|
|||||||
Cash and cash equivalents, beginning of period
|
$
|
|
|
$
|
|
|
|
Restricted cash, beginning of period
|
|
|
|
|
|||
Cash and cash equivalents and restricted cash, beginning of period
|
$
|
|
|
$
|
|
|
|
Cash and cash equivalents, end of period
|
$
|
|
|
$
|
|
|
|
Restricted cash, end of period
|
|
|
|
|
|||
Cash and cash equivalents and restricted cash, end of period
|
$
|
|
|
$
|
|
|
|
Supplemental disclosure:
|
|||||||
Cash paid for interest, net of capitalized interest during the three months ended March 31, 2020 and 2019 of $1,201 and $728, respectively
|
$
|
|
|
$
|
|
|
|
Cash paid for income taxes
|
|
|
|
|
|||
Supplemental disclosure of non-cash activity:
|
|||||||
Dividends and distributions declared but not paid
|
|
|
|
|
|||
Change in capital expenditures financed through accounts payable at period end
|
|
|
(
|
)
|
|||
Change in capital expenditures financed through retention payable at period end
|
|
|
(
|
)
|
Number of Properties
|
Rentable Square Feet
|
||||
Office properties
|
|
|
|
|
|
Mixed-use properties
|
|
|
|
|
|
Core Properties
|
|
|
|
|
|
Development property
|
|
|
|
|
|
Redevelopment properties
|
|
|
|
|
|
The Properties
|
|
|
|
|
March 31, 2020
|
December 31, 2019
|
||||||
Land
|
$
|
|
|
$
|
|
|
|
Building and improvements
|
|
|
|
|
|||
Tenant improvements
|
|
|
|
|
|||
Total
|
$
|
|
|
$
|
|
|
Property/Portfolio Name
|
Acquisition Date
|
Location
|
Property Type
|
Rentable Square Feet/Acres
|
Purchase Price
|
|||||||
145 King of Prussia Road
|
February 27, 2020
|
Radnor, PA
|
Land
|
7.75 acres
|
$
|
|
|
Property/Portfolio Name
|
Disposition Date
|
Location
|
Property Type
|
Rentable Square Feet/Acres
|
Sales Price
|
Gain/(Loss) on Sale (a)
|
||||||||||
52 East Swedesford Road
|
March 19, 2020
|
Malvern, PA
|
Office
|
|
$
|
|
|
$
|
|
|
(a)
|
Gain/(Loss) on Sale is net of closing and other transaction related costs.
|
March 31, 2020
|
|||||||||||
MAP Venture
|
Other
|
Total
|
|||||||||
Net property
|
$
|
|
|
$
|
|
|
$
|
|
|
||
Other assets
|
|
|
|
|
|
|
|||||
Other liabilities
|
|
|
|
|
|
|
|||||
Debt, net
|
|
|
|
|
|
|
|||||
Equity (a)
|
(
|
)
|
|
|
|
|
December 31, 2019
|
|||||||||||
MAP Venture
|
Other
|
Total
|
|||||||||
Net property
|
$
|
|
|
$
|
|
|
$
|
|
|
||
Other assets
|
|
|
|
|
|
|
|||||
Other liabilities
|
|
|
|
|
|
|
|||||
Debt, net
|
|
|
|
|
|
|
|||||
Equity (a)
|
|
|
|
|
|
|
(a)
|
This amount does not include the effect of the basis difference between the Company's historical cost basis and the basis recorded at the real estate venture level, which is typically amortized over the life of the related assets and liabilities. Basis differentials occur from the impairment of investments, purchases of third party interests in existing real estate ventures and upon the transfer of assets that were previously owned by the Company into a real estate venture. In addition, certain acquisition, transaction and other costs may not be reflected in the net assets at the real estate venture level.
|
Three Months Ended March 31, 2020
|
|||||||||||
MAP Venture
|
Other
|
Total
|
|||||||||
Revenue
|
$
|
|
|
$
|
|
|
$
|
|
|
||
Operating expenses
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||
Interest expense, net
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||
Depreciation and amortization
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||
Net loss
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
||
Ownership interest %
|
|
%
|
Various
|
|
Various
|
|
|||||
Company's share of net loss
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
||
Basis adjustments and other
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||
Equity in loss of Real Estate Ventures
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
Three Months Ended March 31, 2019
|
|||||||||||
MAP Venture
|
Other
|
Total
|
|||||||||
Revenue
|
$
|
|
|
$
|
|
|
$
|
|
|
||
Operating expenses
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||
Interest expense, net
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||
Depreciation and amortization
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||
Net income (loss)
|
$
|
(
|
)
|
$
|
|
|
$
|
(
|
)
|
||
Ownership interest %
|
|
%
|
Various
|
|
Various
|
|
|||||
Company's share of net income (loss)
|
$
|
(
|
)
|
$
|
|
|
$
|
(
|
)
|
||
Basis adjustments and other
|
(
|
)
|
|
|
(
|
)
|
|||||
Equity in income (loss) of Real Estate Ventures
|
$
|
(
|
)
|
$
|
|
|
$
|
(
|
)
|
Three Months Ended March 31,
|
Three Months Ended March 31,
|
|||||||
Lease Revenue
|
2020
|
2019
|
||||||
Fixed contractual payments
|
$
|
|
|
$
|
|
|
||
Variable lease payments
|
|
|
|
|
||||
Total
|
$
|
|
|
$
|
|
|
March 31, 2020
|
|||||||||||
Total Cost
|
Accumulated Amortization
|
Intangible Assets, net
|
|||||||||
Intangible assets, net:
|
|||||||||||
In-place lease value
|
$
|
|
|
$
|
(
|
)
|
$
|
|
|
||
Tenant relationship value
|
|
|
(
|
)
|
|
|
|||||
Above market leases acquired
|
|
|
(
|
)
|
|
|
|||||
Total intangible assets, net
|
$
|
|
|
$
|
(
|
)
|
$
|
|
|
||
Total Cost
|
Accumulated Amortization
|
Intangible Liabilities, net
|
|||||||||
Intangible liabilities, net:
|
|||||||||||
Below market leases acquired
|
$
|
|
|
$
|
(
|
)
|
$
|
|
|
December 31, 2019
|
|||||||||||
Total Cost
|
Accumulated Amortization
|
Intangible Assets, net
|
|||||||||
Intangible assets, net:
|
|||||||||||
In-place lease value
|
$
|
|
|
$
|
(
|
)
|
$
|
|
|
||
Tenant relationship value
|
|
|
(
|
)
|
|
|
|||||
Above market leases acquired
|
|
|
(
|
)
|
|
|
|||||
Total intangible assets, net
|
$
|
|
|
$
|
(
|
)
|
$
|
|
|
||
Total Cost
|
Accumulated Amortization
|
Intangible Liabilities, net
|
|||||||||
Intangible liabilities, net:
|
|||||||||||
Below market leases acquired
|
$
|
|
|
$
|
(
|
)
|
$
|
|
|
Assets
|
Liabilities
|
||||||
2020 (nine months remaining)
|
$
|
|
|
$
|
|
|
|
2021
|
|
|
|
|
|||
2022
|
|
|
|
|
|||
2023
|
|
|
|
|
|||
2024
|
|
|
|
|
|||
Thereafter
|
|
|
|
|
|||
Total
|
$
|
|
|
$
|
|
|
March 31, 2020
|
December 31, 2019
|
Effective
Interest Rate
|
Maturity
Date
|
||||||||
MORTGAGE DEBT:
|
|||||||||||
Two Logan Square
|
$
|
|
|
$
|
|
|
|
August 2020
|
|||
Four Tower Bridge
|
|
|
|
|
|
February 2021
|
|||||
One Commerce Square
|
|
|
|
|
|
April 2023
|
|||||
Two Commerce Square
|
|
|
|
|
|
April 2023
|
|||||
Principal balance outstanding
|
|
|
|
|
|||||||
Plus: fair market value premium (discount), net
|
(
|
)
|
(
|
)
|
|||||||
Less: deferred financing costs
|
(
|
)
|
(
|
)
|
|||||||
Mortgage indebtedness
|
$
|
|
|
$
|
|
|
|||||
UNSECURED DEBT
|
|||||||||||
$600 million Unsecured Credit Facility
|
$
|
|
|
$
|
|
|
LIBOR + 1.10%
|
July 2022
|
|||
Seven-Year Term Loan - Swapped to fixed
|
|
|
|
|
|
October 2022
|
|||||
$350.0M 3.95% Guaranteed Notes due 2023
|
|
|
|
|
|
February 2023
|
|||||
$350.0M 4.10% Guaranteed Notes due 2024
|
|
|
|
|
|
October 2024
|
|||||
$450.0M 3.95% Guaranteed Notes due 2027
|
|
|
|
|
|
November 2027
|
|||||
$350.0M 4.55% Guaranteed Notes due 2029
|
|
|
|
|
|
October 2029
|
|||||
Indenture IA (Preferred Trust I)
|
|
|
|
|
LIBOR + 1.25%
|
March 2035
|
|||||
Indenture IB (Preferred Trust I) - Swapped to fixed
|
|
|
|
|
|
April 2035
|
|||||
Indenture II (Preferred Trust II)
|
|
|
|
|
LIBOR + 1.25%
|
July 2035
|
|||||
Principal balance outstanding
|
|
|
|
|
|||||||
Plus: original issue premium (discount), net
|
|
|
|
|
|||||||
Less: deferred financing costs
|
(
|
)
|
(
|
)
|
|||||||
Total unsecured indebtedness
|
$
|
|
|
$
|
|
|
|||||
Total Debt Obligations
|
$
|
|
|
$
|
|
|
2020 (nine months remaining)
|
$
|
|
|
2021
|
|
|
|
2022
|
|
|
|
2023
|
|
|
|
2024
|
|
|
|
Thereafter
|
|
|
|
Total principal payments
|
|
|
|
Net unamortized premiums/(discounts)
|
|
|
|
Net deferred financing costs
|
(
|
)
|
|
Outstanding indebtedness
|
$
|
|
|
•
|
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access;
|
•
|
Level 2 inputs are inputs, other than quoted prices included in Level 1, which are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals; and
|
•
|
Level 3 inputs are unobservable inputs for the asset or liability, which is typically based on an entity’s own assumptions, as there is little, if any, related market activity or information.
|
March 31, 2020
|
December 31, 2019
|
||||||||||||||
Carrying Amount (a)
|
Fair Value
|
Carrying Amount (a)
|
Fair Value
|
||||||||||||
Unsecured notes payable
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|||
Variable rate debt
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|||
Mortgage notes payable
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|||
Notes receivable
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
(a)
|
Net of deferred financing costs of
$
|
Hedge Product
|
Hedge Type
|
Designation
|
Notional Amount
|
Strike
|
Trade Date
|
Maturity Date
|
Fair value
|
||||||||||||||||||||
3/31/2020
|
12/31/2019
|
3/31/2020
|
12/31/2019
|
||||||||||||||||||||||||
Liabilities
|
|||||||||||||||||||||||||||
Swap
|
Interest Rate
|
Cash Flow
|
(a)
|
$
|
|
|
$
|
|
|
|
%
|
October 8, 2015
|
October 8, 2022
|
$
|
(
|
)
|
$
|
(
|
)
|
||||||||
Swap
|
Interest Rate
|
Cash Flow
|
(a)
|
$
|
|
|
$
|
|
|
|
%
|
December 22, 2011
|
January 30, 2021
|
(
|
)
|
(
|
)
|
||||||||||
$
|
|
|
$
|
|
|
(a)
|
Hedging unsecured variable rate debt.
|
Three Months Ended March 31,
|
|||||||||||||||
2020
|
2019
|
||||||||||||||
Basic
|
Diluted
|
Basic
|
Diluted
|
||||||||||||
Numerator
|
|||||||||||||||
Net income
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|||
Net income attributable to noncontrolling interests
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||||
Nonforfeitable dividends allocated to unvested restricted shareholders
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||||
Net income attributable to common shareholders
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|||
Denominator
|
|||||||||||||||
Weighted-average shares outstanding
|
|
|
|
|
|
|
|
|
|||||||
Contingent securities/Share based compensation
|
—
|
|
|
|
—
|
|
|
|
|||||||
Weighted-average shares outstanding
|
|
|
|
|
|
|
|
|
|||||||
Earnings per Common Share:
|
|||||||||||||||
Net income attributable to common shareholders
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Three Months Ended March 31,
|
|||||||||||||||
2020
|
2019
|
||||||||||||||
Basic
|
Diluted
|
Basic
|
Diluted
|
||||||||||||
Numerator
|
|||||||||||||||
Net income
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|||
Net income attributable to noncontrolling interests
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||||
Nonforfeitable dividends allocated to unvested restricted unitholders
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||||
Net income attributable to common unitholders
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|||
Denominator
|
|||||||||||||||
Weighted-average units outstanding
|
|
|
|
|
|
|
|
|
|||||||
Contingent securities/Share based compensation
|
—
|
|
|
|
—
|
|
|
|
|||||||
Total weighted-average units outstanding
|
|
|
|
|
|
|
|
|
|||||||
Earnings per Common Partnership Unit:
|
|||||||||||||||
Net income attributable to common unitholders
|
|
|
|
|
|
|
|
|
Shares
|
Weighted Average Grant Date Fair Value
|
Aggregate Intrinsic Value (in thousands)
|
|||||||||
Non-vested at January 1, 2020
|
|
|
$
|
|
|
$
|
|
|
|||
Granted
|
|
|
$
|
|
|
$
|
|
|
|||
Vested
|
(
|
)
|
$
|
|
|
$
|
|
|
|||
Forfeited
|
(
|
)
|
$
|
|
|
$
|
|
|
|||
Non-vested at March 31, 2020
|
|
|
$
|
|
|
$
|
|
|
RPSU Grant
|
|||||||||||||||
2/28/2018
|
2/21/2019
|
3/5/2020
|
Total
|
||||||||||||
(Amounts below in shares, unless otherwise noted)
|
|||||||||||||||
Non-vested at January 1, 2020
|
|
|
|
|
|
|
|
|
|||||||
Units Granted
|
|
|
|
|
|
|
|
|
|||||||
Non-vested at March 31, 2020
|
|
|
|
|
|
|
|
|
|||||||
Measurement Period Commencement Date
|
1/1/2018
|
|
1/1/2019
|
|
1/1/2020
|
|
|
||||||||
Measurement Period End Date
|
12/31/2020
|
|
12/31/2021
|
|
12/31/2022
|
|
|
||||||||
Units Granted
|
|
|
|
|
|
|
|
||||||||
Fair Value of Units on Grant Date (in thousands)
|
$
|
|
|
$
|
|
|
$
|
|
|
|
|
Real estate investments, at cost:
|
|||||||
March 31, 2020
|
December 31, 2019
|
||||||
Philadelphia CBD
|
$
|
|
|
$
|
|
|
|
Pennsylvania Suburbs
|
|
|
|
|
|||
Austin, Texas
|
|
|
|
|
|||
Metropolitan Washington, D.C.
|
|
|
|
|
|||
Other
|
|
|
|
|
|||
Operating Properties
|
$
|
|
|
$
|
|
|
|
Right of use asset - operating leases, net
|
$
|
|
|
$
|
|
|
|
Corporate
|
|||||||
Construction-in-progress
|
$
|
|
|
$
|
|
|
|
Land held for development (a)
|
$
|
|
|
$
|
|
|
|
Prepaid leasehold interests in land held for development, net (b)
|
$
|
|
|
$
|
|
|
(a)
|
Does not include
|
(b)
|
Includes leasehold interests in prepaid
|
Three Months Ended March 31,
|
|||||||||||||||||||||||
2020
|
2019
|
||||||||||||||||||||||
Total revenue
|
Operating expenses (a)
|
Net operating income (loss)
|
Total revenue
|
Operating expenses (a)
|
Net operating income (loss)
|
||||||||||||||||||
Philadelphia CBD
|
$
|
|
|
$
|
(
|
)
|
$
|
|
|
$
|
|
|
$
|
(
|
)
|
$
|
|
|
|||||
Pennsylvania Suburbs
|
|
|
(
|
)
|
|
|
|
|
(
|
)
|
|
|
|||||||||||
Austin, Texas
|
|
|
(
|
)
|
|
|
|
|
(
|
)
|
|
|
|||||||||||
Metropolitan Washington, D.C.
|
|
|
(
|
)
|
|
|
|
|
(
|
)
|
|
|
|||||||||||
Other
|
|
|
(
|
)
|
|
|
|
|
(
|
)
|
|
|
|||||||||||
Corporate
|
|
|
(
|
)
|
(
|
)
|
|
|
(
|
)
|
(
|
)
|
|||||||||||
Operating properties
|
$
|
|
|
$
|
(
|
)
|
$
|
|
|
$
|
|
|
$
|
(
|
)
|
$
|
|
|
(a)
|
Includes property operating expenses, real estate taxes and third party management expense.
|
Unconsolidated real estate ventures:
|
|||||||||||||||
Investment in real estate ventures
|
Equity in income (loss) of real estate venture
|
||||||||||||||
As of
|
Three Months Ended March 31,
|
||||||||||||||
March 31, 2020
|
December 31, 2019
|
2020
|
2019
|
||||||||||||
Philadelphia CBD
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|||
Metropolitan Washington, D.C.
|
|
|
|
|
(
|
)
|
(
|
)
|
|||||||
MAP Venture (a)
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||||
Other
|
|
|
|
|
|
|
|
|
|||||||
Total
|
$
|
|
|
$
|
|
|
$
|
(
|
)
|
$
|
(
|
)
|
(a)
|
Included in Other liabilities on the consolidated balance sheets.
|
Three Months Ended March 31,
|
|||||||
2020
|
2019
|
||||||
Net income
|
$
|
|
|
$
|
|
|
|
Plus:
|
|||||||
Interest expense
|
|
|
|
|
|||
Interest expense - amortization of deferred financing costs
|
|
|
|
|
|||
Depreciation and amortization
|
|
|
|
|
|||
General and administrative expenses
|
|
|
|
|
|||
Equity in loss of Real Estate Ventures
|
|
|
|
|
|||
Less:
|
|||||||
Interest income
|
|
|
|
|
|||
Income tax provision
|
(
|
)
|
(
|
)
|
|||
Net gain on disposition of real estate
|
|
|
|
|
|||
Net gain on sale of undepreciated real estate
|
|
|
|
|
|||
Net gain on real estate venture transactions
|
|
|
|
|
|||
Consolidated net operating income
|
$
|
|
|
$
|
|
|
Three Months Ended March 31,
|
|||||||
2020
|
2019
|
||||||
Leasing Activity
|
|||||||
Core Properties (1):
|
|||||||
Total net rentable square feet owned
|
15,978,965
|
|
16,379,261
|
|
|||
Occupancy percentage (end of period)
|
93.3
|
%
|
92.1
|
%
|
|||
Average occupancy percentage
|
93.0
|
%
|
91.8
|
%
|
|||
Total Portfolio, less properties in development (2):
|
|||||||
Tenant retention rate (3)
|
75.6
|
%
|
66.2
|
%
|
|||
New leases and expansions commenced (square feet)
|
224,417
|
|
404,925
|
|
|||
Leases renewed (square feet)
|
87,449
|
|
412,123
|
|
|||
Net absorption (square feet)
|
62,507
|
|
(65,796
|
)
|
|||
Percentage change in rental rates per square feet (4):
|
|||||||
New and expansion rental rates
|
21.1
|
%
|
13.6
|
%
|
|||
Renewal rental rates
|
8.6
|
%
|
14.9
|
%
|
|||
Combined rental rates
|
15.7
|
%
|
14.6
|
%
|
|||
Capital Costs Committed (5):
|
|||||||
Leasing commissions (per square feet)
|
$
|
6.28
|
|
$
|
7.87
|
|
|
Tenant Improvements (per square feet)
|
$
|
18.02
|
|
$
|
22.33
|
|
|
Weighted average lease term (years)
|
6.7
|
|
7.7
|
|
|||
Total capital per square foot per lease year
|
$
|
3.96
|
|
$
|
4.81
|
|
(1)
|
Does not include properties under development, redevelopment, held for sale, or sold.
|
(2)
|
Includes leasing related to completed developments and redevelopments, as well as sold properties.
|
(3)
|
Calculated as percentage of total square feet.
|
(4)
|
Includes base rent plus reimbursement for operating expenses and real estate taxes.
|
(5)
|
Calculated on a weighted average basis.
|
Property/Portfolio Name
|
Location
|
Expected Completion
|
Activity Type
|
Approximate Square Footage
|
Estimated Costs
|
Amount Funded
|
|||||||||||
The Bulletin Building (a)
|
Philadelphia, PA
|
Q3 2020
|
Redevelopment
|
283,000
|
|
$
|
84,800
|
|
$
|
67,300
|
|
||||||
405 Colorado Street (b)
|
Austin, TX
|
Q1 2021
|
Development
|
204,000
|
|
116,000
|
|
38,800
|
|
||||||||
426 W. Lancaster Avenue (c)
|
Devon, PA
|
Q1 2019
|
Redevelopment
|
56,000
|
|
14,900
|
|
13,100
|
|
||||||||
3000 Market Street (d)
|
Philadelphia, PA
|
Q1 2021
|
Redevelopment
|
64,000
|
|
38,000
|
|
13,000
|
|
(a)
|
Estimated costs include $37.8 million of building basis, representing the acquisition cost.
|
(b)
|
Estimated costs include $2.1 million of existing property basis through a ground lease. Project includes 520 parking spaces.
|
(c)
|
The property was vacated during the third quarter of 2017. Total project costs include $4.9 million of existing property basis. The renovation of the base building was substantially completed during the first quarter of 2019 and remaining costs as of
March 31, 2020
primarily represent tenant improvements.
|
(d)
|
Estimated costs include $12.8 million of existing property basis.
|
(a)
|
“Same Store Property Portfolio,” which represents
88
properties containing an aggregate of approximately
15.8
million net rentable square feet, and represents properties that we owned for the three-month periods ended
March 31, 2020
and
2019
. The Same Store Property Portfolio includes properties acquired or placed in service on or prior to
January 1,
2019
and owned through
March 31,
2020
,
|
(b)
|
“Total Portfolio,” which represents all properties owned by us during the
three months ended March 31, 2020
and
2019
,
|
(c)
|
"Recently Completed/Acquired Properties," which represents
1
property placed into service or acquired on or subsequent to
January 1,
2019
,
|
(d)
|
"Development/Redevelopment Properties," which represents
5
properties currently in development/redevelopment. A property is excluded from our Same Store Property Portfolio and moved into Development/Redevelopment in the period that we determine to proceed with development/redevelopment for a future development strategy, and
|
(e)
|
"
Q1
2019
through
Q1
2020
Dispositions," which represents 2 properties disposed of from the
three months ended March 31, 2019
through the
three months ended March 31, 2020
.
|
Same Store Property Portfolio
|
Recently Completed/Acquired Properties
|
Development/Redevelopment Properties
|
Other (Eliminations) (a)
|
Total Portfolio
|
||||||||||||||||||||||||||||||||||||||||||||||||||
(dollars and square feet in millions except per share amounts)
|
2020
|
2019
|
$ Change
|
% Change
|
2020
|
2019
|
2020
|
2019
|
2020
|
2019
|
2020
|
2019
|
$ Change
|
% Change
|
||||||||||||||||||||||||||||||||||||||||
Revenue:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Rents
|
$
|
132.8
|
|
$
|
129.6
|
|
$
|
3.2
|
|
2.5
|
%
|
$
|
1.8
|
|
$
|
1.0
|
|
$
|
1.5
|
|
$
|
2.7
|
|
$
|
3.1
|
|
$
|
4.8
|
|
$
|
139.2
|
|
$
|
138.1
|
|
$
|
1.1
|
|
0.8
|
%
|
||||||||||||||
Third party management fees, labor reimbursement and leasing
|
—
|
|
—
|
|
—
|
|
—
|
%
|
—
|
|
—
|
|
—
|
|
—
|
|
5.0
|
|
4.0
|
|
5.0
|
|
4.0
|
|
1.0
|
|
25.0
|
%
|
||||||||||||||||||||||||||
Other
|
0.3
|
|
0.4
|
|
(0.1
|
)
|
(25.0
|
)%
|
—
|
|
—
|
|
—
|
|
—
|
|
0.6
|
|
1.4
|
|
0.9
|
|
1.8
|
|
(0.9
|
)
|
(50.0
|
)%
|
||||||||||||||||||||||||||
Total revenue
|
133.1
|
|
130.0
|
|
3.1
|
|
2.4
|
%
|
1.8
|
|
1.0
|
|
1.5
|
|
2.7
|
|
8.7
|
|
10.2
|
|
145.1
|
|
143.9
|
|
1.2
|
|
0.8
|
%
|
||||||||||||||||||||||||||
Property operating expenses
|
35.4
|
|
36.2
|
|
(0.8
|
)
|
(2.1
|
)%
|
0.3
|
|
—
|
|
0.6
|
|
1.1
|
|
1.1
|
|
2.2
|
|
37.4
|
|
39.5
|
|
(2.1
|
)
|
(5.2
|
)%
|
||||||||||||||||||||||||||
Real estate taxes
|
15.5
|
|
14.8
|
|
0.7
|
|
4.7
|
%
|
0.4
|
|
0.2
|
|
0.4
|
|
0.3
|
|
0.5
|
|
0.4
|
|
16.8
|
|
15.7
|
|
1.1
|
|
7.0
|
%
|
||||||||||||||||||||||||||
Third party management expenses
|
—
|
|
—
|
|
—
|
|
—
|
%
|
—
|
|
—
|
|
—
|
|
—
|
|
2.7
|
|
2.1
|
|
2.7
|
|
2.1
|
|
0.6
|
|
28.6
|
%
|
||||||||||||||||||||||||||
Net operating income
|
82.2
|
|
79.0
|
|
3.2
|
|
4.0
|
%
|
1.1
|
|
0.8
|
|
0.5
|
|
1.3
|
|
4.4
|
|
5.5
|
|
88.2
|
|
86.6
|
|
1.6
|
|
1.8
|
%
|
||||||||||||||||||||||||||
Depreciation and amortization
|
48.2
|
|
46.3
|
|
1.9
|
|
4.1
|
%
|
0.5
|
|
0.2
|
|
1.0
|
|
1.4
|
|
2.3
|
|
3.6
|
|
52.0
|
|
51.5
|
|
0.5
|
|
1.0
|
%
|
||||||||||||||||||||||||||
General & administrative expenses
|
—
|
|
—
|
|
—
|
|
—
|
%
|
—
|
|
—
|
|
—
|
|
—
|
|
8.6
|
|
9.8
|
|
8.6
|
|
9.8
|
|
(1.2
|
)
|
(12.2
|
)%
|
||||||||||||||||||||||||||
Net gain on disposition of real estate
|
(2.6
|
)
|
—
|
|
(2.6
|
)
|
—
|
%
|
||||||||||||||||||||||||||||||||||||||||||||||
Net gain on sale of undepreciated real estate
|
—
|
|
(1.0
|
)
|
1.0
|
|
(100.0
|
)%
|
||||||||||||||||||||||||||||||||||||||||||||||
Operating income (loss)
|
$
|
34.0
|
|
$
|
32.7
|
|
$
|
1.3
|
|
3.9
|
%
|
$
|
0.6
|
|
$
|
0.6
|
|
$
|
(0.5
|
)
|
$
|
(0.1
|
)
|
$
|
(6.5
|
)
|
$
|
(7.9
|
)
|
$
|
30.2
|
|
$
|
26.3
|
|
$
|
3.9
|
|
14.6
|
%
|
||||||||||||||
Number of properties
|
88
|
|
88
|
|
1
|
|
5
|
|
94
|
|
||||||||||||||||||||||||||||||||||||||||||||
Square feet
|
15.8
|
|
15.8
|
|
0.2
|
|
0.6
|
|
16.6
|
|
||||||||||||||||||||||||||||||||||||||||||||
Core Occupancy % (b)
|
93.3
|
%
|
92.2
|
%
|
100.0
|
%
|
||||||||||||||||||||||||||||||||||||||||||||||||
Other Income (Expense):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest income
|
0.6
|
|
0.5
|
|
0.1
|
|
20.0
|
%
|
||||||||||||||||||||||||||||||||||||||||||||||
Interest expense
|
(20.0
|
)
|
(20.4
|
)
|
0.4
|
|
(2.0
|
)%
|
||||||||||||||||||||||||||||||||||||||||||||||
Interest expense — Deferred financing costs
|
(0.7
|
)
|
(0.7
|
)
|
—
|
|
—
|
%
|
||||||||||||||||||||||||||||||||||||||||||||||
Equity in loss of Real Estate Ventures
|
(1.9
|
)
|
(1.4
|
)
|
(0.5
|
)
|
35.7
|
%
|
||||||||||||||||||||||||||||||||||||||||||||||
Net gain on real estate venture transactions
|
—
|
|
0.3
|
|
(0.3
|
)
|
(100.0
|
)%
|
||||||||||||||||||||||||||||||||||||||||||||||
Net income
|
$
|
8.2
|
|
$
|
4.6
|
|
$
|
3.6
|
|
77.2
|
%
|
|||||||||||||||||||||||||||||||||||||||||||
Net income attributable to Common Shareholders of Brandywine Realty Trust
|
$
|
0.04
|
|
$
|
0.02
|
|
$
|
0.02
|
|
100.0
|
%
|
(a)
|
Represents certain revenues and expenses at the corporate level as well as various intercompany costs that are eliminated in consolidation, third-party management fees, provisions for impairment, and changes in the accrued rent receivable allowance. Other/(Eliminations) also includes properties sold and properties classified as held for sale.
|
(b)
|
Pertains to Core Properties.
|
•
|
normal recurring expenses;
|
•
|
capital expenditures, including capital and tenant improvements and leasing costs;
|
•
|
debt service and principal repayment obligations;
|
•
|
current development and redevelopment costs;
|
•
|
commitments to unconsolidated real estate ventures;
|
•
|
distributions to shareholders to maintain our Parent Company’s REIT status;
|
•
|
possible acquisitions of properties, either directly or indirectly through the acquisition of equity interest therein; and
|
•
|
possible common share repurchases.
|
•
|
cash flows from operations;
|
•
|
distributions of cash from our unconsolidated real estate ventures;
|
•
|
cash and cash equivalent balances;
|
•
|
availability under our unsecured Credit Facility;
|
•
|
secured construction loans and long-term unsecured indebtedness;
|
•
|
issuances of Parent Company equity securities and/or units of the Operating Partnership; and
|
•
|
sales of real estate.
|
Three Months Ended March 31,
|
||||||||||||
Activity
|
2020
|
2019
|
(Decrease) Increase
|
|||||||||
Operating
|
$
|
45,058
|
|
$
|
17,766
|
|
$
|
27,292
|
|
|||
Investing
|
(42,568
|
)
|
(41,343
|
)
|
(1,225
|
)
|
||||||
Financing
|
(40,286
|
)
|
15,169
|
|
(55,455
|
)
|
||||||
Net cash flows
|
$
|
(37,796
|
)
|
$
|
(8,408
|
)
|
$
|
(29,388
|
)
|
Acquisitions of real estate
|
$
|
(11,432
|
)
|
|
Capital expenditures and capitalized interest
|
1,294
|
|
||
Capital improvements/acquisition deposits/leasing costs
|
(1,582
|
)
|
||
Joint venture investments
|
(77
|
)
|
||
Distributions from joint ventures
|
(1,851
|
)
|
||
Proceeds from the sale of properties
|
12,438
|
|
||
Proceeds from notes receivable
|
(15
|
)
|
||
Increase in net cash used in investing activities
|
$
|
(1,225
|
)
|
Proceeds from debt obligations
|
$
|
(132,000
|
)
|
|
Repayments of debt obligations
|
113,926
|
|
||
Proceeds from the exercise of stock options
|
(753
|
)
|
||
Repurchase and retirement of common shares
|
(36,575
|
)
|
||
Other financing activities
|
485
|
|
||
Dividends and distributions paid
|
(538
|
)
|
||
Increase in net cash used in financing activities
|
$
|
(55,455
|
)
|
March 31, 2020
|
December 31, 2019
|
||||||
(dollars in thousands)
|
|||||||
Balance:
(a)
|
|||||||
Fixed rate
|
$
|
2,089,266
|
|
$
|
2,091,211
|
|
|
Variable rate - unhedged
|
102,836
|
|
52,836
|
|
|||
Total
|
$
|
2,192,102
|
|
$
|
2,144,047
|
|
|
Percent of Total Debt:
|
|||||||
Fixed rate
|
95.3
|
%
|
97.5
|
%
|
|||
Variable rate - unhedged
|
4.7
|
%
|
2.5
|
%
|
|||
Total
|
100.0
|
%
|
100.0
|
%
|
|||
Weighted-average interest rate at period end:
|
|||||||
Fixed rate
|
3.9
|
%
|
3.9
|
%
|
|||
Variable rate - unhedged
|
2.6
|
%
|
3.2
|
%
|
|||
Total
|
3.8
|
%
|
3.8
|
%
|
|||
Weighted-average maturity in years:
|
|||||||
Fixed rate
|
5.3
|
|
5.6
|
|
|||
Variable rate - unhedged
|
9.0
|
|
15.6
|
|
|||
Total
|
5.5
|
|
5.9
|
|
(a)
|
Consists of unpaid principal and does not reflect premium/discount or deferred financing costs.
|
Period
|
Scheduled amortization
|
Principal maturities
|
Total
|
Weighted Average Interest Rate of Maturing Debt
|
|||||||||||
2020 (nine months remaining)
|
$
|
4,760
|
|
$
|
80,521
|
|
$
|
85,281
|
|
3.98
|
%
|
||||
2021
|
6,142
|
|
9,001
|
|
15,143
|
|
4.28
|
%
|
|||||||
2022
|
6,332
|
|
300,000
|
|
306,332
|
|
2.76
|
%
|
|||||||
2023
|
1,620
|
|
555,116
|
|
556,736
|
|
3.94
|
%
|
|||||||
2024
|
—
|
|
350,000
|
|
350,000
|
|
3.78
|
%
|
|||||||
2025
|
—
|
|
—
|
|
—
|
|
—
|
%
|
|||||||
2026
|
—
|
|
—
|
|
—
|
|
—
|
%
|
|||||||
2027
|
—
|
|
450,000
|
|
450,000
|
|
4.03
|
%
|
|||||||
2028
|
—
|
|
—
|
|
—
|
|
—
|
%
|
|||||||
2029
|
—
|
|
350,000
|
|
350,000
|
|
4.30
|
%
|
|||||||
Thereafter
|
—
|
|
78,610
|
|
78,610
|
|
3.18
|
%
|
|||||||
Totals
|
$
|
18,854
|
|
$
|
2,173,248
|
|
$
|
2,192,102
|
|
3.80
|
%
|
Three Months Ended March 31,
|
|||||||
2020
|
2019
|
||||||
(amounts in thousands, except share information)
|
|||||||
Net income attributable to common unitholders
|
$
|
7,944
|
|
$
|
4,430
|
|
|
Add (deduct):
|
|||||||
Amount allocated to unvested restricted unitholders
|
131
|
|
119
|
|
|||
Net gain on real estate venture transactions
|
—
|
|
(259
|
)
|
|||
Net gain on disposition of real estate
|
(2,586
|
)
|
—
|
|
|||
Depreciation and amortization:
|
|||||||
Real property
|
38,353
|
|
35,606
|
|
|||
Leasing costs including acquired intangibles
|
13,199
|
|
15,406
|
|
|||
Company’s share of unconsolidated real estate ventures
|
4,599
|
|
5,041
|
|
|||
Partners’ share of consolidated real estate ventures
|
(60
|
)
|
(53
|
)
|
|||
Funds from operations
|
$
|
61,580
|
|
$
|
60,290
|
|
|
Funds from operations allocable to unvested restricted shareholders
|
(190
|
)
|
(214
|
)
|
|||
Funds from operations available to common share and unit holders (FFO)
|
$
|
61,390
|
|
$
|
60,076
|
|
|
Weighted-average shares/units outstanding — basic (a)
|
177,051,602
|
|
176,840,229
|
|
|||
Weighted-average shares/units outstanding — fully diluted (a)
|
177,635,093
|
|
177,447,089
|
|
(a)
|
Includes common share and partnership units outstanding through the
three
months ended
March 31, 2020
and
2019
, respectively.
|
(a)
|
Evaluation of disclosure controls and procedures.
Under the supervision and with the participation of its management, including its principal executive officer and principal financial officer, the Parent Company conducted an evaluation of its disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act), as of the end of the period covered by this quarterly report. Based on this evaluation, the Parent Company’s principal executive officer and principal financial officer have concluded that the Parent Company’s disclosure controls and procedures are effective as of the end of the period covered by this quarterly report.
|
(b)
|
Changes in internal control over financial reporting.
There was no change in the Parent Company’s internal control over financial reporting that occurred during the period covered by this quarterly report that has materially affected, or is reasonably likely to materially affect, the Parent Company’s internal control over financial reporting.
|
(a)
|
Evaluation of disclosure controls and procedures.
Under the supervision and with the participation of its management, including its principal executive officer and principal financial officer, the Operating Partnership conducted an evaluation of its disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Exchange Act as of the end of the period covered by this quarterly report. Based on this evaluation, the Operating Partnership’s principal executive officer and principal financial officer have concluded that the Operating Partnership’s disclosure controls and procedures are effective as of the end of the period covered by this quarterly report.
|
(b)
|
Changes in internal control over financial reporting.
There was no change in the Operating Partnership’s internal control over financial reporting that occurred during the period covered by this quarterly report that has materially affected, or is reasonably likely to materially affect, the Operating Partnership’s internal control over financial reporting.
|
(a)
|
None.
|
(b)
|
Not applicable.
|
(c)
|
Our Board of Trustees has authorized a share repurchase program under which we may repurchase up to $150.0 million of our outstanding common shares. We may repurchase shares from time to time on the open market or in privately negotiated transactions or otherwise, depending on market prices and other conditions. During the fiscal quarter ended
March 31, 2020
, we repurchased 5,644,200 common shares at an average price of $9.54 per share for a total of approximately $53.9 million. As of
March 31, 2020
, $89.0 million remained available for repurchases under our share repurchase program. For each common share repurchased, one of our units in the Operating Partnership was redeemed. Repurchases of common shares were financed with general corporate funds, including borrowings under our unsecured Credit Facility. On April 2, 2020, we settled the purchase of an additional 604,283 shares at an average price of $10.17 per share, which had a trade date of March 31, 2020, for an aggregate of $6.1 million.
|
Period
|
Total number of shares (or units) purchased
|
Average price paid per share (or unit)
|
Total number of shares (or units) purchased as part of publicly announced plans or programs
|
Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs
|
||||||||
January 1, 2020 - January 31, 2020
|
||||||||||||
Open Market Purchases
|
—
|
|
$
|
—
|
|
—
|
|
|||||
February 1, 2020 - February 29, 2020
|
||||||||||||
Open Market Purchases
|
—
|
|
—
|
|
—
|
|
||||||
March 1, 2020 - March 31, 2020
|
||||||||||||
Open Market Purchases
|
5,644,200
|
|
9.54
|
|
5,644,200
|
|
||||||
Totals
|
5,644,200
|
|
$
|
9.54
|
|
5,644,200
|
|
$89.0 million
|
(a)
|
Exhibits
|
|||
Exhibits No.
|
Description
|
|||
10.1
|
|
|||
10.2
|
|
|||
10.3
|
|
|||
31.1
|
|
|||
31.2
|
|
|||
31.3
|
|
|||
31.4
|
|
|||
32.1
|
|
|||
32.2
|
|
|||
32.3
|
|
|||
32.4
|
|
|||
99.1
|
|
|||
101.1
|
|
The following materials from the Quarterly Reports on Form 10-Q of Brandywine Realty Trust and Brandywine Operating Partnership, L.P. for the quarter ended March 31, 2020 formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statement of Equity, (iv) the Consolidated Statements of Cash Flows, and (v) Notes to Consolidated Financial Statements, detailed tagged and filed herewith.
|
||
104
|
|
Cover Page Interactive Data File – the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
BRANDYWINE REALTY TRUST
(Registrant)
|
||||
Date:
|
April 28, 2020
|
By:
|
/s/ Gerard H. Sweeney
|
|
Gerard H. Sweeney, President and
Chief Executive Officer
|
||||
(Principal Executive Officer)
|
||||
Date:
|
April 28, 2020
|
By:
|
/s/ Thomas E. Wirth
|
|
Thomas E. Wirth, Executive Vice President
and Chief Financial Officer
|
||||
(Principal Financial Officer)
|
||||
Date:
|
April 28, 2020
|
By:
|
/s/ Daniel Palazzo
|
|
Daniel Palazzo, Vice President and
Chief Accounting Officer
|
||||
(Principal Accounting Officer)
|
BRANDYWINE OPERATING PARTNERSHIP, L.P.
(Registrant)
BRANDYWINE REALTY TRUST,
as general partner
|
||||
Date:
|
April 28, 2020
|
By:
|
/s/ Gerard H. Sweeney
|
|
Gerard H. Sweeney, President and
Chief Executive Officer
|
||||
(Principal Executive Officer)
|
||||
Date:
|
April 28, 2020
|
By:
|
/s/ Thomas E. Wirth
|
|
Thomas E. Wirth, Executive Vice President
and Chief Financial Officer
|
||||
(Principal Financial Officer)
|
||||
Date:
|
April 28, 2020
|
By:
|
/s/ Daniel Palazzo
|
|
Daniel Palazzo, Vice President and
Chief Accounting Officer
|
||||
(Principal Accounting Officer)
|
1.
|
I have reviewed this
quarterly
report on Form
10-Q
of Brandywine Realty Trust;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15(d)-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: April 28, 2020
|
/s/ Gerard H. Sweeney
|
|
Gerard H. Sweeney
President and Chief Executive Officer
|
1.
|
I have reviewed this
quarterly
report on Form
10-Q
of Brandywine Realty Trust;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15(d)-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: April 28, 2020
|
/s/ Thomas E. Wirth
|
|
Thomas E. Wirth
Executive Vice President and Chief Financial Officer
|
1.
|
I have reviewed this
quarterly
report on Form
10-Q
of Brandywine Operating Partnership, L.P.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15(d)-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: April 28, 2020
|
/s/ Gerard H. Sweeney
|
|
Gerard H. Sweeney
|
||
President and Chief Executive Officer
|
1.
|
I have reviewed this
quarterly
report on Form
10-Q
of Brandywine Operating Partnership, L.P.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15(d)-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: April 28, 2020
|
/s/ Thomas E. Wirth
|
|
Thomas E. Wirth
|
||
Executive Vice President and Chief Financial Officer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Gerard H. Sweeney
|
|
Gerard H. Sweeney
President and Chief Executive Officer
|
|
Date: April 28, 2020
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Thomas E. Wirth
|
|
Thomas E. Wirth
Executive Vice President and Chief Financial Officer
|
|
Date: April 28, 2020
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Gerard H. Sweeney
|
|
Gerard H. Sweeney
|
|
President and Chief Executive Officer
|
|
Date: April 28, 2020
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Thomas E. Wirth
|
|
Thomas E. Wirth
|
|
Executive Vice President and Chief Financial Officer
|
|
Date: April 28, 2020
|
•
|
the tax consequences to you may vary depending on your particular tax situation;
|
||||||||
•
|
special rules that are not discussed below may apply to you if, for example, you are a tax-exempt organization, a broker-dealer, a non-U.S. person, a trust, an estate, a regulated investment company, a REIT, a financial institution, an insurance company, a holder of debt securities or shares through a partnership or other pass-through entity,
a person that holds debt securities or shares as part of a straddle, conversion or other integrated transaction, a person liable for the alternative minimum tax, a U.S. Shareholder or U.S. Holder (each as defined below) whose “functional currency” is not the U.S. dollar, an entity treated as a U.S. corporation by virtue of the inversion rules, or otherwise subject to special tax treatment under the Code;
|
||||||||
•
|
this summary does not address state, local or non-U.S. tax considerations;
|
||||||||
•
|
this summary deals only with our shareholders and debt holders that hold common shares, preferred shares or debt securities as “capital assets” within the meaning of Section 1221 of the Code;
|
||||||||
•
|
tax rules are subject to change, potentially with retroactive effect; and
|
||||||||
•
|
this discussion is not intended to be, and should not be construed as, tax advice.
|
•
|
We will be taxed at regular corporate rates on any undistributed REIT taxable income, including undistributed net capital gains;
|
|||||||||
•
|
Under certain circumstances, for tax years beginning before January 1, 2018, we may be subject to the “alternative minimum tax” on our items of tax preference, if any;
|
|||||||||
•
|
If we have net income from prohibited transactions (which are, in general, certain sales or other dispositions of property, other than foreclosure property, held primarily for sale to customers in the ordinary course of business) such income will be subject to a 100% tax (See “-Sale of Partnership Property)”;
|
|||||||||
•
|
If we elect to treat property that we acquire in connection with a foreclosure of a mortgage loan or leasehold as “foreclosure property,” we may thereby avoid the 100% tax on gain from a resale of that property (if the sale would otherwise constitute a prohibited transaction), but the income from the sale or operation of the property (and any other non-qualifying income from foreclosure property) may be subject to corporate income tax at the highest applicable rate (35% for tax years beginning on or before December 31, 2017 and 21% for tax years beginning after that date);
|
|||||||||
•
|
If we should fail to satisfy the 75% gross income test or the 95% gross income test (each as discussed below), and nonetheless have maintained our qualification as a REIT because certain other requirements have been met, we will be subject to a 100% tax on the net income attributable to the greater of the amount by which we fail the 75% or 95% test, multiplied by a fraction intended to reflect our profitability;
|
|||||||||
•
|
If we fail to satisfy any of the REIT asset tests, as discussed below, by more than a
de minimis
amount, but our failure is due to reasonable cause and not due to willful negligence and we nonetheless maintain our REIT qualification because of specified cure provisions, we will be required to pay a tax equal to the greater of $50,000 or the highest applicable rate for corporate taxpayers (35% for tax years beginning on or before December 31, 2017 and 21% for tax years beginning after that date) of the net income generated by the non-qualifying assets during the period in which we failed to satisfy the asset tests;
|
|||||||||
•
|
If we fail to satisfy any provision of the Code that would result in our failure to qualify as a REIT (other than a gross income or asset test requirement) and that violation is due to reasonable cause and not due to willful negligence, we may retain our REIT qualification, but we will be required to pay a penalty of $50,000 for each such failure;
|
|||||||||
•
|
We may be required to pay monetary penalties to the IRS in certain circumstances, including if we fail to meet record-keeping requirements intended to monitor our compliance with rules relating to the composition of our shareholders, as described below in “-Requirements for Qualification as a REIT”;
|
|||||||||
•
|
If we should fail to distribute during each calendar year at least the sum of (a) 85% of our REIT ordinary income for such year, (b) 95% of our REIT capital gain net income for such year and (c) any undistributed taxable income from prior years, we would be subject to a 4% excise tax on the excess of such required distribution over the sum of (i) the amounts actually distributed plus (ii) retained amounts on which corporate level tax is paid by us;
|
|||||||||
•
|
We may elect to retain and pay income tax on our net long-term capital gain, and in that case, a shareholder would include its proportionate share of our undistributed long-term capital gain in its income and would be allowed a credit for its proportionate share of the tax we paid;
|
|||||||||
•
|
A 100% excise tax may be imposed on some items of income and expense that are directly or constructively paid between us, our tenants and/or our taxable REIT subsidiaries if and to the extent that the Internal Revenue Service successfully adjusts the reported amounts of these items;
|
|||||||||
•
|
If we acquire appreciated assets from a C corporation (a corporation generally subject to corporate level tax) in a transaction in which the adjusted tax basis of the assets in our hands is determined by reference to the adjusted tax basis of the assets in the hands of the C corporation, we may be subject to tax on such appreciation at the highest corporate income tax rate then applicable if we subsequently recognize gain on a disposition of such assets during the five-year period following their acquisition from the C corporation, unless the C corporation elects to treat the assets as if they were sold for their fair market value at the time of our acquisition; and
|
|||||||||
•
|
Income earned by any of our taxable REIT subsidiaries will be subject to tax at regular corporate rates.
|
•
|
The amount of rent must not be based in whole or in part on the income or profits of any person. However, an
amount received or accrued generally will not be excluded from the term “rents from real property” solely by reason of being based on a fixed percentage or percentages of gross receipts or sales.
|
|||||||
•
|
Rents received from a tenant will not qualify as “rents from real property” in satisfying the gross income tests if the REIT, or a direct or indirect owner of 10% or more of the REIT, directly or constructively, owns 10% or more of such tenant (a “Related Party Tenant”). However, rental payments from a taxable REIT subsidiary will qualify as rents from real property even if we own more than 10% of the total value or combined voting power of the taxable REIT subsidiary if at least 90% of the property is leased to unrelated tenants and the rent paid by the taxable REIT subsidiary is substantially comparable to the rent paid by the unrelated tenants for comparable space.
|
|||||||
•
|
Rent attributable to personal property leased in connection with a lease of real property will not qualify as “rents from real property” if such rent exceeds 15% of the total rent received under the lease.
|
|||||||
•
|
For rents received to qualify as “rents from real property,” we generally must not operate or manage the property or furnish or render services to tenants, except through an “independent contractor” who is adequately compensated and from whom the REIT derives no income, or through a taxable REIT subsidiary. The “independent contractor” requirement, however, does not apply to the extent the services provided by the REIT are “usually or customarily rendered” in connection with the rental of space for occupancy only, and are not otherwise considered “rendered to the occupant.” In addition, a
de minimis
rule applies with respect to non-customary services. Specifically, if the value of the non-customary service income with respect to a property (valued at no less than 150% of the direct costs of performing such services) is 1% or less of the total income derived from the property, then all rental income except the non-customary service income will qualify as “rents from real property.” A taxable REIT subsidiary may provide services (including non-customary services) to a REIT’s tenants without “tainting” any of the rental income received by the REIT, and it will be able to manage or operate properties for third parties and generally engage in other activities unrelated to real estate.
|
•
|
a citizen or individual resident of the United States;
|
|||
•
|
a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States or any state thereof or the District of Columbia;
|
|||
•
|
an estate the income of which is subject to U.S. federal income taxation regardless of its source; or
|
|||
•
|
a trust if it (a) is subject to the primary supervision of a court within the U.S. and one or more U.S. persons have the authority to control all substantial decisions of the trust or (b) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.
|
•
|
your long-term capital gains, if any, recognized on the disposition of our shares;
|
|||
•
|
our distributions designated as long-term capital gain dividends (except to the extent attributable to real estate depreciation, in which case such distributions are subject to a 25% tax rate to such extent);
|
|||
•
|
our dividends attributable to dividends received by us from non-REIT corporations, such as taxable REIT subsidiaries; and
|
|||
•
|
our dividends to the extent attributable to income upon which we have paid corporate income tax (e.g., to the extent that we distribute less than 100% of our taxable income).
|
•
|
a citizen or individual resident of the United States;
|
|||
•
|
a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States or any state thereof or the District of Columbia;
|
|||
•
|
an estate the income of which is subject to U.S. federal income taxation regardless of its source; or
|
|||
•
|
a trust if it (a) is subject to the primary supervision of a court within the United States and one or more U.S. persons have the authority to control all substantial decisions of the trust or (b) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.
|
•
|
it is payable at least once per year;
|
|||||||
•
|
it is payable over the entire term of the debt security; and
|
|||||||
•
|
it is payable at a single fixed rate or, subject to certain conditions, based on one or more interest indices.
|
•
|
the debt security’s “adjusted issue price” at the beginning of the accrual period multiplied by its yield to maturity, determined on the basis of compounding at the close of each accrual period and properly adjusted for the length of the accrual period, over
|
|||
•
|
the aggregate of all qualified stated interest allocable to the accrual period.
|
•
|
the interest on a floating rate debt security is based on more than one interest index; or
|
|||
•
|
the principal amount of the debt security is indexed in any manner.
|
•
|
the amount of cash and the fair market value of other property received in exchange for such debt securities, other than amounts attributable to accrued but unpaid qualified stated interest, which will be subject to tax as ordinary income to the extent not previously included in income; and
|
|||
•
|
the U.S. Holder’s adjusted tax basis in such debt securities.
|
•
|
interest paid on debt securities is not effectively connected with a non-U.S. Holder’s conduct of a trade or business in the United States;
|
|||||||||||||||||
•
|
the non-U.S. Holder does not actually or constructively own 10% or more of the capital or profits interest in the Operating Partnership (in the case of debt issued by the Operating Partnership), or 10% or more of the total combined voting power of all classes of stock of Brandywine entitled to vote (in the case of debt issued by Brandywine);
|
|||||||||||||||||
•
|
the non-U.S. Holder is not
|
|||||||||||||||||
o
|
a controlled foreign corporation that is related to the Operating Partnership or Brandywine, as applicable, or
|
|||||||||||||||||
o
|
a bank that receives such interest on an extension of credit made pursuant to a loan agreement entered into in the ordinary course of its trade or business; and
|
|||||||||||||||||
•
|
the beneficial owner of debt securities provides a certification, which is generally made on an IRS Form W-8BEN or W-8BEN-E, as applicable, or a suitable substitute form and signed under penalties of perjury, that it is not a United States person.
|
•
|
the non-U.S. Holder is an individual who is present in the United States for 183 days or more in the taxable year of the disposition and certain other conditions are met; or
|
|||||
•
|
the gain is effectively connected with the conduct of a trade or business of the non-U.S. Holder in the United States and, if an applicable tax treaty requires, such gain is attributable to a United States permanent establishment maintained by such non-U.S. Holder.
|
•
|
fails to furnish an accurate taxpayer identification number, or TIN, to the payor in the manner required;
|
|||||||
•
|
is notified by the IRS that it has failed to properly report payments of interest or dividends; or
|
|||||||
•
|
under certain circumstances, fails to certify, under penalties of perjury, that it has furnished a correct TIN and that it has not been notified by the IRS that it is subject to backup withholding.
|
•
|
a controlled foreign corporation for U.S. federal income tax purposes;
|
|||||||
•
|
a foreign person 50% or more of whose gross income from all sources for the three-year period ending with the close of its taxable year preceding the payment, or for such part of the period that the broker has been in existence, is derived from activities that are effectively connected with the conduct of a United States trade or business; or
|
|||||||
•
|
a foreign partnership that at any time during the partnership’s taxable year is either engaged in the conduct of a trade or business in the United States or of which 50% or more of its income or capital interests are held by United States persons.
|