SEC Filing | Brandywine Realty Trust

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bdn-20230930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_____________________________________________________________________________________________

FORM 10-Q

_____________________________________________________________________________________________

(Mark One)


☒			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2023


☐			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

_____________________________________________________________________________________________

Brandywine Realty Trust

Brandywine Operating Partnership, L.P.

(Exact name of registrant as specified in its charter)

_____________________________________________________________________________________________

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

_____________________________________________________________________________________________

Maryland

(Brandywine Realty Trust)

001-9106

23-2413352

Delaware

(Brandywine Operating Partnership, L.P.)

000-24407

23-2862640

(State or Other Jurisdiction of Incorporation
or Organization)

(Commission file number)

(I.R.S. Employer Identification Number)

2929 Arch Street
Suite 1800
Philadelphia, PA 19104
(Address of principal executive offices) (Zip Code)

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

Securities registered pursuant to section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Shares of Beneficial Interest

BDN

NYSE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.


Brandywine Realty Trust	Yes	☒ No ☐
Brandywine Operating Partnership, L.P.	Yes	☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).


Brandywine Realty Trust	Yes	☒ No ☐
Brandywine Operating Partnership, L.P.	Yes	☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Brandywine Realty Trust:


Large accelerated filer	☒	Accelerated filer ☐	Non-accelerated filer ☐
Smaller reporting company	☐	Emerging growth company	☐

Brandywine Operating Partnership, L.P.:


Large accelerated filer ☐	Accelerated filer ☐	Non-accelerated filer	☒
Smaller reporting company ☐	Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).


Brandywine Realty Trust	Yes	☐	No ☒
Brandywine Operating Partnership, L.P.	Yes	☐	No ☒

A total of 172,097,661 Common Shares of Beneficial Interest, par value $0.01 per share of Brandywine Realty Trust, were outstanding as of October 22, 2023.

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EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the period ended September 30, 2023 of Brandywine Realty Trust (the “Parent Company”) and Brandywine Operating Partnership L.P. (the “Operating Partnership”). The Parent Company is a Maryland real estate investment trust, or REIT, that owns its assets and conducts its operations through the Operating Partnership, a Delaware limited partnership, and subsidiaries of the Operating Partnership. The Parent Company, the Operating Partnership and their consolidated subsidiaries are collectively referred to in this report as the “Company”. In addition, as used in this report, terms such as “we”, “us”, and “our” may refer to the Company, the Parent Company, or the Operating Partnership.

The Parent Company is the sole general partner of the Operating Partnership and, as of September 30, 2023, owned a 99.7% interest in the Operating Partnership. The remaining 0.3% interest consists of common units of limited partnership interest issued by the Operating Partnership to third parties in exchange for contributions of properties to the Operating Partnership. As the sole general partner of the Operating Partnership, the Parent Company has full and complete authority over the Operating Partnership’s day-to-day operations and management.

Management operates the Parent Company and the Operating Partnership as one enterprise. The management of the Parent Company consists of the same members as the management of the Operating Partnership.

As general partner with control of the Operating Partnership, the Parent Company consolidates the Operating Partnership for financial reporting purposes, and the Parent Company does not have significant assets other than its investment in the Operating Partnership. Therefore, the assets and liabilities of the Parent Company and the Operating Partnership are the same on their respective financial statements. The separate discussions of the Parent Company and the Operating Partnership in this report should be read in conjunction with each other to understand the results of the Company’s operations on a consolidated basis and how management operates the Company.

The Company believes that combining the quarterly reports on Form 10-Q of the Parent Company and the Operating Partnership into a single report will:

•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.

There are few differences between the Parent Company and the Operating Partnership, which are reflected in the footnote disclosures in this report. The Company believes it is important to understand the differences between the Parent Company and the Operating Partnership in the context of how these entities operate as an interrelated consolidated company. The Parent Company is a REIT, whose only material asset is its ownership of partnership interests of the Operating Partnership. As a result, the Parent Company does not conduct business itself, other than acting as the sole general partner of the Operating Partnership, issuing equity from time to time (and contributing the net proceeds of such issuances to the Operating Partnership) and guaranteeing the debt obligations of the Operating Partnership. The Operating Partnership holds substantially all the assets of the Company, including the Company’s ownership interests in the real estate ventures described below. The Operating Partnership conducts the operations of the Company’s business and is structured as a partnership with no publicly traded equity. Except for net proceeds from equity issuances by the Parent Company, which are contributed to the Operating Partnership in exchange for partnership units, the Operating Partnership generates the capital required by the Company’s business through the Operating Partnership’s operations, by the Operating Partnership’s incurrence of indebtedness (directly and through subsidiaries) and through the issuance of partnership units of the Operating Partnership or equity interests in subsidiaries of the Operating Partnership.

The equity and non-controlling interests in the Parent Company and the Operating Partnership’s equity are the main areas of difference between the consolidated financial statements of the Parent Company and the Operating Partnership. The common units of limited partnership interest in the Operating Partnership are accounted for as partners’ equity in the Operating Partnership’s financial statements while the common units of limited partnership interests held by parties other than the Parent Company are presented as non-controlling interests in the Parent Company’s financial statements. The differences between the Parent Company and the Operating Partnership’s equity relate to the differences in the equity issued at the Parent Company and Operating Partnership levels.

To help investors understand the significant differences between the Parent Company and the Operating Partnership, this report presents the following as separate notes or sections for each of the Parent Company and the Operating Partnership:

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•Consolidated Financial Statements; and

•Notes to the Parent Company’s and Operating Partnership’s Equity.

This report also includes separate Item 4. (Controls and Procedures) disclosures and separate Exhibit 31 and 32 certifications for each of the Parent Company and the Operating Partnership in order to establish that the Chief Executive Officer and the Chief Financial Officer of each entity have made the requisite certifications and that the Parent Company and Operating Partnership are compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and 18 U.S.C. § 1350.

In order to highlight the differences between the Parent Company and the Operating Partnership, the separate sections in this report for the Parent Company and the Operating Partnership specifically refer to the Parent Company and the Operating Partnership. In the sections that combine disclosures of the Parent Company and the Operating Partnership, this report refers to such disclosures as those of the Company. Although the Operating Partnership is generally the entity that directly or indirectly enters into contracts and real estate ventures and holds assets and incurs debt, reference to the Company is appropriate because the business is one enterprise and the Parent Company operates the business through the Operating Partnership.

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TABLE OF CONTENTS


			Page

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Brandywine Realty Trust

Financial Statements of Brandywine Realty Trust			5

Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022			5

Consolidated Statements of Operations for the nine months ended September 30, 2023 and 2022			6

Consolidated Statements of Comprehensive Income for the nine months ended September 30, 2023 and 2022			7

Consolidated Statements of Beneficiaries’ Equity for the nine months ended September 30, 2023 and 2022			8

Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022			10

Brandywine Operating Partnership, L.P.

Financial Statements of Brandywine Operating Partnership, L.P.			11

Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022			11

Consolidated Statements of Operations for the nine months ended September 30, 2023 and 2022			12

Consolidated Statements of Comprehensive Income for the nine months ended September 30, 2023 and 2022			13

Consolidated Statements of Partners’ Equity for the nine months ended September 30, 2023 and 2022			14

Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022			16

Notes to Unaudited Consolidated Financial Statements			17

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			31

Item 3. Quantitative and Qualitative Disclosures about Market Risk			47

Item 4. Controls and Procedures			48

PART II — OTHER INFORMATION			49

Item 1. Legal Proceedings			49

Item 1A. Risk Factors			49

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			49

Item 3. Defaults Upon Senior Securities			49

Item 4. Mine Safety Disclosures			49

Item 5. Other Information			49

Item 6. Exhibits			50

Signatures			51

Filing Format

This combined Form 10-Q is being filed separately by Brandywine Realty Trust and Brandywine Operating Partnership, L.P.

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PART I - FINANCIAL INFORMATION

Item 1. — Financial Statements

BRANDYWINE REALTY TRUST

CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands, except share and per share information)


	September 30, 2023		December 31, 2022
ASSETS
Real estate investments:
Operating properties	$	3,694,633	$	3,617,240
Accumulated depreciation	(1,153,030)		(1,063,060)
Right of use asset - operating leases, net	19,188		19,664
Operating real estate investments, net	2,560,791		2,573,844
Construction-in-progress	143,929		218,869
Land held for development	76,058		76,499
Prepaid leasehold interests in land held for development, net	27,762		35,576
Total real estate investments, net	2,808,540		2,904,788

Cash and cash equivalents	47,872		17,551
Restricted cash and escrows	10,745		—

Accounts receivable	23,130		11,003
Accrued rent receivable, net of allowance of $3,158 and $3,947 as of September 30, 2023 and December 31, 2022, respectively	185,135		179,771
Investment in unconsolidated real estate ventures	638,096		567,635
Deferred costs, net	98,049		96,639
Intangible assets, net	8,539		18,451
Other assets	102,557		78,667
Total assets	$	3,922,663	$	3,874,505
LIABILITIES AND BENEFICIARIES' EQUITY
Secured term loan, net	$	241,654	$	—
Unsecured credit facility	—		88,500
Unsecured term loan, net	318,282		248,168
Unsecured senior notes, net	1,574,524		1,628,370
Accounts payable and accrued expenses	132,731		132,440
Distributions payable	26,018		32,792
Deferred income, gains and rent	23,222		25,082
Intangible liabilities, net	8,536		10,322

Lease liability - operating leases	23,318		23,166
Other liabilities	60,010		52,331
Total liabilities	$	2,408,295	$	2,241,171
Commitments and contingencies (See Note 14)
Brandywine Realty Trust's Equity:
Common Shares of Brandywine Realty Trust's beneficial interest, $0.01 par value; shares authorized 400,000,000; 172,097,661 and 171,569,807 issued and outstanding as of September 30, 2023 and December 31, 2022, respectively	1,719		1,716
Additional paid-in-capital	3,161,568		3,153,229
Deferred compensation payable in common shares	19,965		19,601
Common shares in grantor trust, 1,194,127 and 1,179,643 issued and outstanding as of September 30, 2023 and December 31, 2022, respectively	(19,965)		(19,601)
Cumulative earnings	1,136,686		1,176,195
Accumulated other comprehensive income	8,125		3,897
Cumulative distributions	(2,801,074)		(2,709,405)
Total Brandywine Realty Trust's equity	1,507,024		1,625,632
Noncontrolling interests	7,344		7,702
Total beneficiaries' equity	$	1,514,368	$	1,633,334
Total liabilities and beneficiaries' equity	$	3,922,663	$	3,874,505

The accompanying notes are an integral part of these consolidated financial statements.

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BRANDYWINE REALTY TRUST

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except share and per share information)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Revenue
Rents	$	121,661	$	117,481	$	360,642	$	350,279
Third party management fees, labor reimbursement and leasing	6,553		6,872		18,782		17,904
Other	1,158		1,216		5,057		8,933
Total revenue	129,372		125,569		384,481		377,116
Operating expenses
Property operating expenses	31,123		32,624		96,608		97,283
Real estate taxes	12,808		12,313		38,981		39,872
Third party management expenses	2,468		2,549		7,664		7,898
Depreciation and amortization	48,966		45,134		141,645		132,875
General and administrative expenses	8,069		7,564		26,911		25,892
Provision for impairment	11,666		—		16,134		—
Total operating expenses	115,100		100,184		327,943		303,820
Gain on sale of real estate
Net gain on disposition of real estate	—		8,669		—		8,813
Net gain on sale of undepreciated real estate	—		2,983		781		8,007
Total gain on sale of real estate	—		11,652		781		16,820
Operating income	14,272		37,037		57,319		90,116
Other income (expense):
Interest income	293		498		1,318		1,387
Interest expense	(24,355)		(17,061)		(70,677)		(49,144)
Interest expense - amortization of deferred financing costs	(1,110)		(745)		(3,251)		(2,259)

Equity in loss of unconsolidated real estate ventures	(10,739)		(6,260)		(24,504)		(15,804)

Net gain on real estate venture transactions	—		—		181		—



Net income (loss) before income taxes	(21,639)		13,469		(39,614)		24,296
Income tax benefit (provision)	3		9		(35)		(66)
Net income (loss)	(21,636)		13,478		(39,649)		24,230
Net (income) loss attributable to noncontrolling interests	82		(37)		140		(59)
Net income (loss) attributable to Brandywine Realty Trust	(21,554)		13,441		(39,509)		24,171


Nonforfeitable dividends allocated to unvested restricted shareholders	(159)		(105)		(433)		(351)
Net income (loss) attributable to Common Shareholders of Brandywine Realty Trust	$	(21,713)	$	13,336	$	(39,942)	$	23,820

Basic income (loss) per Common Share	$	(0.13)	$	0.08	$	(0.23)	$	0.14

Diluted income (loss) per Common Share	$	(0.13)	$	0.08	$	(0.23)	$	0.14

Basic weighted average shares outstanding	172,097,661		171,569,807		171,912,552		171,464,936
Diluted weighted average shares outstanding	172,097,661		172,152,256		171,912,552		172,435,153

The accompanying notes are an integral part of these consolidated financial statements.

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BRANDYWINE REALTY TRUST

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited, in thousands)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net income (loss)	$	(21,636)	$	13,478	$	(39,649)	$	24,230
Comprehensive income:
Unrealized gain on derivative financial instruments	2,885		490		4,240		6,001



Amortization of interest rate contracts (1)	—		188		—		564

Total comprehensive income	2,885		678		4,240		6,565
Comprehensive income (loss)	(18,751)		14,156		(35,409)		30,795
Comprehensive (income) loss attributable to noncontrolling interest	106		(39)		128		(79)
Comprehensive income (loss) attributable to Brandywine Realty Trust	$	(18,645)	$	14,117	$	(35,281)	$	30,716

(1)Amounts reclassified from comprehensive income to interest expense within the Consolidated Statements of Operations.

The accompanying notes are an integral part of these consolidated financial statements.

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BRANDYWINE REALTY TRUST

CONSOLIDATED STATEMENTS OF BENEFICIARIES’ EQUITY

(unaudited, in thousands, except number of shares)


	Number of Common Shares	Number of Rabbi Trust/Deferred Compensation Shares	Common Shares of Brandywine Realty Trust's beneficial interest		Additional Paid-in Capital		Deferred Compensation Payable in Common Shares		Common Shares in Grantor Trust		Cumulative Earnings		Accumulated Other Comprehensive Income (Loss)		Cumulative Distributions		Noncontrolling Interests		Total
BALANCE, December 31, 2022	171,569,807	1,179,643	$	1,716	$	3,153,229	$	19,601	$	(19,601)	$	1,176,195	$	3,897	$	(2,709,405)	$	7,702	$	1,633,334
Net loss											(5,259)						(17)		(5,276)
Other comprehensive income (loss)													(5,307)				16		(5,291)


Share-based compensation activity	171,318	22,449	1		3,370														3,371
Share Issuance from/(to) Deferred Compensation Plan	(13,422)	(48,733)			(88)		145		(145)										(88)
Reallocation of Noncontrolling interest					(4)												4		—
Distributions declared $0.19 per share)															(32,734)		(98)		(32,832)
BALANCE, March 31, 2023	171,727,703	1,153,359	$	1,717	$	3,156,507	$	19,746	$	(19,746)	$	1,170,936	$	(1,410)	$	(2,742,139)	$	7,607	$	1,593,218
Net loss											(12,696)						(41)		(12,737)
Other comprehensive income													6,626				20		6,646

Share-based compensation activity	374,226	54,056	2		2,614														2,616
Share Issuance from/(to) Deferred Compensation Plan							219		(219)										—
Reallocation of Noncontrolling interest					155												(155)		—
Distributions declared $0.19 per share)															(32,985)		(98)		(33,083)
BALANCE, June 30, 2023	172,101,929	1,207,415	$	1,719	$	3,159,276	$	19,965	$	(19,965)	$	1,158,240	$	5,216	$	(2,775,124)	$	7,333	$	1,556,660
Net loss											(21,554)						(82)		(21,636)
Other comprehensive income													2,909				(24)		2,885
Share-based compensation activity					2,506														2,506
Share Issuance from/(to) Deferred Compensation Plan	(4,268)	(13,288)			(20)														(20)
Reallocation of Noncontrolling interest					(194)												194		—
Distributions declared $0.15 per share)															(25,950)		(77)		(26,027)

BALANCE, September 30, 2023	172,097,661	1,194,127	1,719		3,161,568		19,965		(19,965)		1,136,686		8,125		(2,801,074)		7,344		1,514,368

The accompanying notes are an integral part of these consolidated financial statements.

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BRANDYWINE REALTY TRUST

CONSOLIDATED STATEMENT OF BENEFICIARIES’ EQUITY

(unaudited, in thousands, except number of shares)



	Number of Common Shares	Number of Rabbi Trust/Deferred Compensation Shares	Common Shares of Brandywine Realty Trust's beneficial interest		Additional Paid-in Capital		Deferred Compensation Payable in Common Shares		Common Shares in Grantor Trust		Cumulative Earnings		Accumulated Other Comprehensive Income (Loss)		Cumulative Distributions		Noncontrolling Interests		Total
BALANCE, December 31, 2021	171,126,257	1,169,703	$	1,712	$	3,146,786	$	18,491	$	(18,491)	$	1,122,372	$	(2,020)	$	(2,578,583)	$	10,952	$	1,701,219
Net income											6,093						8		6,101
Other comprehensive income													3,940				12		3,952
Redemption of LP Units																	(4,006)		(4,006)

Share-based compensation activity	277,061	68,540	2		1,653														1,655
Share Issuance from/(to) Deferred Compensation Plan	(19,406)	(52,702)			(249)		895		(895)										(249)
Reallocation of Noncontrolling interest					(959)												959		—
Distributions declared ($0.19 per share)															(32,711)		(98)		(32,809)
BALANCE, March 31, 2022	171,383,912	1,185,541	$	1,714	$	3,147,231	$	19,386	$	(19,386)	$	1,128,465	$	1,920	$	(2,611,294)	$	7,827	$	1,675,863
Net loss											4,637						14		4,651
Other comprehensive income													1,929				6		1,935


Share-based compensation activity	191,368	16,844	2		1,915														1,917
Share Issuance from/(to) Deferred Compensation Plan							215		(215)										—
Distributions declared ($0.19 per share)															(32,705)		(98)		(32,803)
BALANCE, June 30, 2022	171,575,280	1,202,385	$	1,716	$	3,149,146	$	19,601	$	(19,601)	$	1,133,102	$	3,849	$	(2,643,999)	$	7,749	$	1,651,563
Net income											13,441						37		13,478
Other comprehensive income													676				2		678


Share-based compensation activity	1,100				2,094														2,094
Share Issuance from/(to) Deferred Compensation Plan	(6,573)	(22,742)			(63)														(63)
Distributions declared ($0.19 per share)															(32,703)		(98)		(32,801)

BALANCE, September 30, 2022	171,569,807	1,179,643	1,716		3,151,177		19,601		(19,601)		1,146,543		4,525		(2,676,702)		7,690		1,634,949

The accompanying notes are an integral part of these consolidated financial statements.

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BRANDYWINE REALTY TRUST

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)


	Nine Months Ended September 30,
	2023		2022
Cash flows from operating activities:
Net income (loss)	$	(39,649)	$	24,230
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization	141,645		132,875
Amortization of deferred financing costs	3,251		2,259
Amortization of debt discount/(premium), net	(774)		(1,463)
Amortization of stock compensation costs	8,305		7,232
Straight-line rent income	(6,612)		(8,958)
Amortization of acquired above (below) market leases, net	(993)		(2,189)
Ground rent expense	601		611

Net gain on real estate venture transactions	(181)		—

Total gain on sale of real estate	(781)		(16,820)

Provision for impairment	16,134		—
Loss from unconsolidated real estate ventures, including income distributions	24,504		15,049
Income tax provision	35		66
Changes in assets and liabilities:
Accounts receivable	(2,362)		933
Other assets	(24,619)		(9,949)
Accounts payable and accrued expenses	(8,992)		3,240
Deferred income, gains and rent	(1,196)		(666)
Other liabilities	3,089		1,712
Net cash provided by operating activities	111,405		148,162
Cash flows from investing activities:
Acquisition of properties	—		(3,446)
Proceeds from the sale of properties	51,285		35,462





Capital expenditures for tenant improvements	(34,219)		(67,782)
Capital expenditures for redevelopments	(42,592)		(74,383)
Capital expenditures for developments	(30,149)		(82,507)
Advances for the purchase of tenant assets, net of repayments	(9,292)		(447)
Investment in unconsolidated real estate ventures	(72,715)		(43,681)
Deposits for real estate	3,500		(7,450)

Capital distributions from unconsolidated real estate ventures	2,700		8,930
Leasing costs paid	(7,969)		(20,096)
Net cash used in investing activities	(139,451)		(255,400)
Cash flows from financing activities:

Proceeds from credit facility borrowings	172,000		260,000
Repayments of credit facility borrowings	(260,500)		(37,000)
Repayments of unsecured notes	(54,301)		—
Proceeds from unsecured term loan	70,000		—
Proceeds from secured term loan	245,000		—
Debt financing costs paid	(4,371)		(6,641)


Shares used for employee taxes upon vesting of share awards	(952)		(2,941)



Redemption of limited partnership units	—		(4,006)
Distributions paid to shareholders	(98,306)		(98,020)
Distributions to noncontrolling interest	(294)		(353)
Net cash provided by financing activities	68,276		111,039
Increase in cash and cash equivalents and restricted cash	40,230		3,801
Cash and cash equivalents and restricted cash at beginning of period	18,387		28,300
Cash and cash equivalents and restricted cash at end of period	$	58,617	$	32,101


Reconciliation of cash and cash equivalents and restricted cash:
Cash and cash equivalents, beginning of period	$	17,551	$	27,463
Restricted cash, beginning of period	836		837
Cash and cash equivalents and restricted cash, beginning of period	$	18,387	$	28,300
Cash and cash equivalents, end of period	$	47,872	$	31,198
Restricted cash, end of period	10,745		903
Cash and cash equivalents and restricted cash, end of period	$	58,617	$	32,101
Supplemental disclosure:
Cash paid for interest, net of capitalized interest during the nine months ended September 30, 2023 and 2022 of $12,602 and $7,274, respectively	$	73,217	$	47,711
Cash paid for income taxes	550		902
Supplemental disclosure of non-cash activity:
Dividends and distributions declared but not paid	26,027		32,805










Change in investment in real estate ventures as a result of deconsolidation	8,595		107,057
Change in operating real estate from deconsolidation of operating properties	(7,814)		(105,405)


Change in other assets as a result of deconsolidation of operating properties	—		(1,652)
Change in other assets as a result of investing activities	—		13,396
Change in capital expenditures financed through accounts payable at period end	4,276		(11,020)
Change in capital expenditures financed through retention payable at period end	2,587		(4,609)

The accompanying notes are an integral part of these consolidated financial statements.

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BRANDYWINE OPERATING PARTNERSHIP, L.P.

CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands, except unit and per unit information)


	September 30, 2023		December 31, 2022
ASSETS
Real estate investments:
Operating properties	$	3,694,633	$	3,617,240
Accumulated depreciation	(1,153,030)		(1,063,060)
Right of use asset - operating leases, net	19,188		19,664
Operating real estate investments, net	2,560,791		2,573,844
Construction-in-progress	143,929		218,869
Land held for development	76,058		76,499
Prepaid leasehold interests in land held for development, net	27,762		35,576
Total real estate investments, net	2,808,540		2,904,788

Cash and cash equivalents	47,872		17,551
Restricted cash and escrows	10,745		—

Accounts receivable	23,130		11,003
Accrued rent receivable, net of allowance of $3,158 and $3,947 as of September 30, 2023 and December 31, 2022, respectively	185,135		179,771
Investment in unconsolidated real estate ventures	638,096		567,635
Deferred costs, net	98,049		96,639
Intangible assets, net	8,539		18,451
Other assets	102,557		78,667
Total assets	$	3,922,663	$	3,874,505
LIABILITIES AND PARTNERS' EQUITY
Mortgage notes payable, net	$	241,654	$	—
Unsecured credit facility	—		88,500
Unsecured term loan, net	318,282		248,168
Unsecured senior notes, net	1,574,524		1,628,370
Accounts payable and accrued expenses	132,731		132,440
Distributions payable	26,018		32,792
Deferred income, gains and rent	23,222		25,082
Intangible liabilities, net	8,536		10,322

Lease liability - operating leases	23,318		23,166
Other liabilities	60,010		52,331
Total liabilities	$	2,408,295	$	2,241,171
Commitments and contingencies (See Note 14)
Redeemable limited partnership units at redemption value; 516,467 and 516,467 issued and outstanding as of September 30, 2023 and December 31, 2022, respectively	2,282		3,195
Brandywine Operating Partnership, L.P.'s equity:
General Partnership Capital; $172,097,661 and 171,569,807 units issued and outstanding as of September 30, 2023 and December 31, 2022, respectively	1,501,466		1,623,738
Accumulated other comprehensive income	7,809		3,569
Total Brandywine Operating Partnership, L.P.'s equity	1,509,275		1,627,307
Noncontrolling interest - consolidated real estate ventures	2,811		2,832
Total partners' equity	$	1,512,086	$	1,630,139
Total liabilities and partners' equity	$	3,922,663	$	3,874,505

The accompanying notes are an integral part of these consolidated financial statements.

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BRANDYWINE OPERATING PARTNERSHIP, L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except unit and per unit information)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Revenue
Rents	$	121,661	$	117,481	$	360,642	$	350,279
Third party management fees, labor reimbursement and leasing	6,553		6,872		18,782		17,904
Other	1,158		1,216		5,057		8,933
Total revenue	129,372		125,569		384,481		377,116
Operating expenses
Property operating expenses	31,123		32,624		96,608		97,283
Real estate taxes	12,808		12,313		38,981		39,872
Third party management expenses	2,468		2,549		7,664		7,898
Depreciation and amortization	48,966		45,134		141,645		132,875
General and administrative expenses	8,069		7,564		26,911		25,892
Provision for impairment	11,666		—		16,134		—
Total operating expenses	115,100		100,184		327,943		303,820
Gain on sale of real estate
Net gain on disposition of real estate	—		8,669		—		8,813
Net gain on sale of undepreciated real estate	—		2,983		781		8,007
Total gain on sale of real estate	—		11,652		781		16,820
Operating income	14,272		37,037		57,319		90,116
Other income (expense):
Interest income	293		498		1,318		1,387
Interest expense	(24,355)		(17,061)		(70,677)		(49,144)
Interest expense - amortization of deferred financing costs	(1,110)		(745)		(3,251)		(2,259)

Equity in loss of unconsolidated real estate ventures	(10,739)		(6,260)		(24,504)		(15,804)

Net gain on real estate venture transactions	—		—		181		—


Net income (loss) before income taxes	(21,639)		13,469		(39,614)		24,296
Income tax benefit (provision)	3		9		(35)		(66)
Net income (loss)	(21,636)		13,478		(39,649)		24,230
Net loss attributable to noncontrolling interests - consolidated real estate ventures	20		1		21		5
Net income (loss) attributable to Brandywine Operating Partnership	(21,616)		13,479		(39,628)		24,235


Nonforfeitable dividends allocated to unvested restricted unitholders	(159)		(105)		(433)		(351)
Net income (loss) attributable to Common Partnership Unitholders of Brandywine Operating Partnership, L.P.	$	(21,775)	$	13,374	$	(40,061)	$	23,884

Basic income (loss) per Common Partnership Unit	$	(0.13)	$	0.08	$	(0.23)	$	0.14

Diluted income (loss) per Common Partnership Unit	$	(0.13)	$	0.08	$	(0.23)	$	0.14

Basic weighted average common partnership units outstanding	172,614,128		172,086,274		172,429,019		172,019,701
Diluted weighted average common partnership units outstanding	172,614,128		172,668,723		172,429,019		172,989,918

The accompanying notes are an integral part of these consolidated financial statements.

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BRANDYWINE OPERATING PARTNERSHIP, L.P.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited, in thousands)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net income (loss)	$	(21,636)	$	13,478	$	(39,649)	$	24,230
Comprehensive income:
Unrealized gain on derivative financial instruments	2,885		490		4,240		6,001



Amortization of interest rate contracts (1)	—		188		—		564
Total comprehensive income	2,885		678		4,240		6,565
Comprehensive income (loss)	(18,751)		14,156		(35,409)		30,795
Comprehensive loss attributable to noncontrolling interest - consolidated real estate ventures	20		1		21		5
Comprehensive income (loss) attributable to Brandywine Operating Partnership	$	(18,731)	$	14,157	$	(35,388)	$	30,800

(1)Amounts reclassified from comprehensive income to interest expense within the Consolidated Statements of Operations.

The accompanying notes are an integral part of these consolidated financial statements.

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BRANDYWINE OPERATING PARTNERSHIP, L.P.

CONSOLIDATED STATEMENTS OF PARTNERS’ EQUITY

(unaudited, in thousands, except number of units)


	General Partner Capital
	Units	Amount		Accumulated Other Comprehensive Income		Noncontrolling Interest - Consolidated Real Estate Ventures		Total Partners' Equity
BALANCE, December 31, 2022	171,569,807	$	1,623,738	$	3,569	$	2,832	$	1,630,139
Net loss		(5,275)				(1)		(5,276)
Other comprehensive loss				(5,291)				(5,291)
Deferred compensation obligation	(13,422)	(88)						(88)

Share-based compensation activity	171,318	3,371						3,371
Adjustment of redeemable partnership units to liquidation value at period end		779						779
Distributions declared to general partnership unitholders ($0.19 per unit)		(32,734)						(32,734)
BALANCE, March 31, 2023	171,727,703