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 June 30, 2005	 	 	
 	 	or	 	 	
	 	Transition Report Pursuant to Section 13 or 15(d) of the Securities	 	 	
 	 	Exchange Act of 1934	 	 	
 	 	 	 	 	
 	 	For the transition period from ____________ to ___________ 	 	 	
 	 	 	 	 	
 	 	Commission file number     001-9106 	 	 	
Brandywine Realty Trust
(Exact name of registrant as specified in its charter) 
Maryland	23-2413352	
State or other jurisdiction of	(I.R.S. Employer Identification No.)	
incorporation or organization	 	
 	 	
401 Plymouth Road, Plymouth Meeting, Pennsylvania	19462	
(Address of principal executive offices)	(Zip Code)	
 	 	
(610) 325-5600 	
 Registrant's telephone number	
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. Yes  No  
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes  No  
A total of 56,183,343 Common Shares of Beneficial Interest, par value $0.01 per share, were outstanding as of August 8, 2005. 

	
 
BRANDYWINE REALTY TRUST
TABLE OF CONTENTS 
PART I – FINANCIAL INFORMATION 
		Page	 	
Item 1.	Financial Statements (unaudited)	 	 	
		 	 	
 	Consolidated Balance Sheets as of June 30, 2005 and December 31, 2004	3	 	
		 	 	
 	Consolidated Statements of Operations for the three- and six-month periods ended June 30, 2005 and 2004	4	 	
 	 	 	 	
 	Consolidated Statements of Other Comprehensive Income for the three- and six-month periods ended June 30, 2005 and 2004	5	 	
 	 	 	 	
 	Consolidated Statements of Cash Flows for the six-month periods ended June 30, 2005 and 2004	6	 	
		 	 	
 	Notes to Unaudited Consolidated Financial Statements	7	 	
		 	 	
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22	 	
 	 	 	 	
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	34	 	
		 	 	
Item 4.	Controls and Procedures	34	 	

 	PART II – OTHER INFORMATION	 	 	
		 	 	
Item 1.	Legal Proceedings	34	 	
		 	 	
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34	 	
		 	 	
Item 3.	Defaults Upon Senior Securities	35	 	
		 	 	
Item 4.	Submission of Matters to a Vote of Security Holders	35	 	
		 	 	
Item 5.	Other Information	35	 	
		 	 	
Item 6.	Exhibits	35	 	
		 	 	
 	Signatures	36	 	
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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) 
 	 June 30,	 	 December 31,	 	
 	 2005	 	 2004	 	
 			 			 	
ASSETS	 	 	 	 	 	 	
Real estate investments:	 	 	 	 	 	 	
     Operating properties	$	2,515,399	 	$	2,483,134	 	
     Accumulated depreciation	 	(356,416	)	 	(325,802	)	
 			 			 	
          Operating real estate investments, net	 	2,158,983	 	 	2,157,332	 	
     Construction-in-progress	 	213,246	 	 	145,016	 	
     Land held for development	 	85,708	 	 	61,517	 	
 			 			 	
          Total real estate investments, net	 	2,457,937	 	 	2,363,865	 	
Cash and cash equivalents	 	9,321	 	 	15,346	 	
Escrowed cash	 	18,090	 	 	17,980	 	
Accounts receivable, net	 	8,736	 	 	11,999	 	
Accrued rent receivable, net	 	38,687	 	 	32,641	 	
Marketable securities	 	661	 	 	423	 	
Investment in real estate ventures, at equity	 	13,308	 	 	12,754	 	
Deferred costs, net	 	34,447	 	 	34,449	 	
Intangible assets, net	 	85,634	 	 	101,056	 	
Other assets	 	39,088	 	 	43,471	 	
 			 			 	
     Total assets	$	2,705,909	 	$	2,633,984	 	
 			 			 	
LIABILITIES AND BENEFICIARIES' EQUITY	 	 	 	 	 	 	
Mortgage notes payable	$	508,189	 	$	518,234	 	
Unsecured notes	 	636,534	 	 	636,435	 	
Unsecured credit facility	 	265,000	 	 	152,000	 	
Accounts payable and accrued expenses	 	43,877	 	 	49,242	 	
Distributions payable	 	27,583	 	 	27,363	 	
Tenant security deposits and deferred rents	 	18,417	 	 	20,046	 	
Acquired below market leases, net of accumulated amortization of $4,527 and $ 2,341	 	36,520	 	 	39,271	 	
Other liabilities	 	3,825	 	 	1,525	 	
 			 			 	
     Total liabilities	 	1,539,945	 	 	1,444,116	 	
Minority interest	 	41,366	 	 	42,866	 	
Commitments and contingencies (Note 15)	 	 	 	 	 	 	
Beneficiaries' equity:	 	 	 	 	 	 	
     Preferred Shares (shares authorized-10,000,000):	 	 	 	 	 	 	
          7.50% Series C Preferred Shares, $0.01 par value; issued and outstanding- 2,000,000 in 2005 and 2004	 	20	 	 	20	 	
          7.375% Series D Preferred Shares, $0.01 par value; issued and outstanding- 2,300,000 in 2005 and 2004	 	23	 	 	23	 	
     Common Shares of beneficial interest, $0.01 par value; shares authorized	 	 	 	 	 	 	
          100,000,000; issued and outstanding-55,777,093 in 2005 and 55,292,752 in 2004	 	558	 	 	553	 	
     Additional paid-in capital	 	1,358,758	 	 	1,346,651	 	
     Cumulative earnings	 	388,859	 	 	370,515	 	
     Accumulated other comprehensive loss	 	(2,666	)	 	(3,130	)	
     Cumulative distributions	 	(620,924	)	 	(567,630	)	
 			 			 	
          Total beneficiaries' equity	 	1,124,628	 	 	1,147,002	 	
 			 			 	
     Total liabilities and beneficiaries' equity	$	2,705,939	 	$	2,633,984	 	
 			 			 	
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 per share information) 
 	For the three-month periods	 	For the six-month periods	 	
	ended June 30,		ended June 30,		
					
	 	2005		 	2004		 	2005	 	 	2004		
 						 			 			 	
Revenue:												 	
   Rents	$	81,788		$	64,316		$	163,016		$	127,996	 	
   Tenant reimbursements		11,078			8,058			23,160			16,051	 	
   Other		2,377			3,840			7,991			5,366	 	
 						 			 			 	
      Total revenue		95,243			76,214			194,167			149,413	 	
Operating Expenses:												 	
   Property operating expenses		27,801			20,054			57,680			42,204	 	
   Real estate taxes		9,683			6,846			19,340			13,727	 	
   Depreciation and amortization		27,948			16,829			56,383			32,633	 	
   Administrative expenses		4,378			3,954			9,130			7,443	 	
 						 			 			 	
      Total operating expenses		69,810			47,683			142,533			96,007	 	
 						 			 			 	
Operating income		25,433			28,531			51,634			53,406	 	
Other Income (Expense):												 	
   Interest income		687			541			1,467			1,052	 	
   Interest expense		(17,807	)		(11,948	)		(35,604	)		(24,052	)	
   Equity in income of real estate ventures		993			674			1,551			908	 	
   Net gain on sales of real estate		—			1,148			—			1,148	 	
 						 			 			 	
Income before minority interest		9,306			18,946			19,048			32,462	 	
Minority interest attributable to continuing operations		(376	)		(624	)		(703	)		(1,885	)	
 						 			 			 	
Income from continuing operations		8,930			18,322			18,345			30,577	 	
Discontinued operations:												 	
   Loss from discontinued operations		—			(213	)		—			(214	)	
   Net gain on disposition of discontinued operations		—			45			—			249	 	
   Minority interest		—			6			—			(2	)	
 						 			 			 	
Income (loss) from discontinued operations		—			(162	)		—			33	 	
 												 	
Net income		8,930			18,160			18,345			30,610	 	
Income allocated to Preferred Shares		(1,998	)		(2,677	)		(3,996	)		(4,695	)	
Preferred Share redemption/conversion benefit		—			—			—			4,500	 	
 						 			 			 	
Income allocated to Common Shares	$	6,932		$	15,483		$	14,349		$	30,415	 	
 												 	
Basic earnings per Common Share:												 	
      Continuing operations	$	0.12		$	0.34		$	0.26		$	0.68	 	
      Discontinued operations		—			—			—			—	 	
 						 			 			 	
 	$	0.12		$	0.34		$	0.26		$	0.68	 	
 												 	
Diluted earnings per Common Share:												 	
      Continuing operations	$	0.12		$	0.34		$	0.26		$	0.67	 	
      Discontinued operations		—			—			—			—	 	
 						 			 			 	
 	$	0.12		$	0.34		$	0.26		$	0.67	 	
 												 	
The accompanying notes are an integral part of these consolidated financial statements. 
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BRANDYWINE REALTY TRUST 
CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME 
(unaudited, in thousands) 
 	For the three-month periods	    	For the six-month periods	 	
	   ended June 30,		   ended June 30,		
	 			 			
		2005	 	 	2004			2005	 	 	2004		
 			 			 			 			 	
Net Income	$	8,930	 	$	18,160	 	$	18,345	 	$	30,610	 	
   Other comprehensive income:			 			 			 			 	
      Unrealized gain on derivative financial instruments		—	 		379	 		—	 		304	 	
      Reclassification of realized losses on derivative financial			 			 			 			 	
         instruments to operations		113	 		1,346	 		226	 		2,723	 	
      Unrealized gain (loss) on available-for-sale securities		45	 		(92	)		237	 		(884	)	
      Reclassification of realized losses (gains) on available for sale			 			 			 			 	
         securities to operations		—	 		79	 		—	 		(154	)	
 			 			 			 			 	
   Total other comprehensive income		158	 		1,712	 		463	 		1,989	 	
 			 			 			 			 	
Comprehensive Income	$	9,088	 	$	19,872	 	$	18,808	 	$	32,599	 	
 			 			 			 			 	
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) 
 	  	Six-month periods	 	
		ended June 30,		
			
	 	2005	 	 	2004		
							
Cash flows from operating activities:			 			 	
   Net income	$	18,345	 	$	30,610	 	
      Adjustments to reconcile net income to net cash from operating activities:			 			 	
         Depreciation		41,657	 		28,134	 	
         Amortization:			 			 	
            Deferred financing costs		1,293	 		1,032	 	
            Deferred leasing costs		4,057	 		3,942	 	
            Acquired above (below) market leases		(787	)		117	 	
            Assumed lease intangibles		10,584	 		737	 	
            Deferred compensation costs		1,387	 		1,127	 	
         Straight-line rent		(6,500	)		(2,838	)	
         Provision for doubtful accounts		600	 		430	 	
         Real estate venture income in excess of distributions		(647	)		(542	)	
         Net gain on sale of interests in real estate		—	 		(1,397	)	
         Minority interest		703	 		1,887	 	
         Changes in assets and liabilities:			 			 	
            Accounts receivable		3,631	 		408	 	
            Other assets		299	 		11,837	 	
            Accounts payable and accrued expenses		(10,399	)		(3,487	)	
            Tenant security deposits and deferred rents		(1,629	)		267	 	
            Other liabilities		(89	)		1,078	 	
 			 			 	
               Net cash from operating activities		62,505	 		73,342	 	
Cash flows from investing activities:			 			 	
   Acquisition of properties		(38,854	)		—	 	
   Sales of properties, net		—	 		19,949	 	
   Capital expenditures		(82,033	)		(46,286	)	
   Investment in unconsolidated Real Estate Ventures		(119	)		(81	)	
   Escrowed cash		(109	)		(1,183	)	
   Cash distributions from unconsolidated Real Estate Ventures			 			 	
      in excess of equity in income		226	 		416	 	
     Increase in cash due to consolidation of variable interest entities		—	 		426	 	
   Leasing costs		(5,448	)		(4,344	)	
 			 			 	
               Net cash from investing activities		(126,337	)		(31,103	)	
Cash flows from financing activities:			 			 	
   Proceeds from (repayments of) Credit Facility borrowings		113,000	 		(35,000	)	
   Repayments of mortgage notes payable		(10,045	)		(39,100	)	
   Payments of deferred financing costs		(146	)		(3,165	)	
   Repayments on employee stock loans		50	 		16	 	
   Exercise of stock options		10,432	 		1,200	 	
   Proceeds from issuance of shares, net		—	 		175,259	 	
   Minority partner contributions		—	 		19	 	
   Repurchases of Common Shares and minority interest units		(239	)		(95,436	)	
   Distributions paid to shareholders		(53,070	)		(40,763	)	
   Distributions to minority interest holders		(2,175	)		(3,211	)	
   Distributions to outside joint venture partners of consolidated variable interest entities		—	 		(65	)	
 			 			 	
               Net cash from financing activities		57,807	 		(40,246	)	
 			 			 	
Decrease/increase in cash and cash equivalents		(6,025	)		1,993	 	
Cash and cash equivalents at beginning of period		15,346	 		8,552	 	
 			 			 	
Cash and cash equivalents at end of period	$	9,321	 	$	10,545	 	
 			 			 	
Supplemental disclosure:			 			 	
      Cash paid for interest, net of capitalized interest	$	25,923	 	$	20,869	 	
The accompanying notes are an integral part of these consolidated financial statements. 
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BRANDYWINE REALTY TRUST 
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 
JUNE 30, 2005 
1. 	THE COMPANY  	
Brandywine Realty Trust, a Maryland real estate investment trust (collectively with its subsidiaries, the “Company”), is a self-administered and self-managed real estate investment trust (a “REIT”) active in acquiring, developing, redeveloping, leasing and managing office and industrial properties. As of June 30, 2005, the Company’s portfolio included 223 office properties, 24 industrial facilities and one mixed-use property (collectively, the “Properties”) that contained an aggregate of approximately 19.6 million net rentable square feet. The Properties are located in the office and industrial markets in and surrounding Philadelphia, Pennsylvania, New Jersey and Richmond, Virginia. As of June 30, 2005, the Company held economic interests in nine unconsolidated real estate ventures that contained approximately 1.6 million net rentable square feet (the “Real Estate Ventures”) formed with third parties to develop or own commercial properties. In addition, the Company owns interests in two consolidated real estate ventures that own two office properties containing approximately 0.2 million net rentable square feet. 
The Company owns its assets through Brandywine Operating Partnership, L.P., a Delaware limited partnership (the “Operating Partnership”). The Company is the sole general partner of the Operating Partnership and, as of June 30, 2005, owned a 96.5% interest in the Operating Partnership. The Operating Partnership owns a 95% interest in a taxable REIT subsidiary, Brandywine Realty Services Corporation, a Pennsylvania corporation (the “Management Company”), that, as of June 30, 2005, was performing management and leasing services for 41 properties containing an aggregate of approximately 3.6 million net rentable square feet (including four of the Company’s Real Estate Ventures). The remaining 5% of the Management Company is owned by a partnership comprised of a current executive and former executive of the Company, each of whom is a member of the Company’s Board of Trustees. 
2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 	
Basis of Presentation
The consolidated financial statements have been prepared by the Company without audit except as to the balance sheet as of December 31, 2004, which has been derived from audited data, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the included disclosures are adequate to make the information presented not misleading. In the opinion of management, all adjustments (consisting solely of normal recurring matters) for a fair statement of the financial position of the Company as of June 30, 2005, the results of its operations for the three- and six-month periods ended June 30, 2005 and 2004 and its cash flows for the six-month periods ended June 30, 2005 and 2004 have been included. The results of operations for such interim periods are not necessarily indicative of the results for a full year. These consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and footnotes included in the Company’s Annual Report on Form 10-K. Certain prior period amounts have been reclassified to conform to the current period presentation. 
Principles of Consolidation
The accompanying consolidated financial statements include all accounts of the Company, its majority-owned and/or controlled subsidiaries, which consist principally of the Operating Partnership as well as the Management Company. The portions of these entities not owned by the Company are presented as minority interest as of and during the periods consolidated. All intercompany accounts and transactions have been eliminated in consolidation. 
When the Company obtains an economic interest in an entity, the Company evaluates the entity to determine if the entity is deemed a variable interest entity (“VIE”), and if the Company is deemed to be the primary beneficiary, in accordance with FASB Interpretation No. 46R, “Consolidation of Variable Interest Entities” (“FIN 46R”). The Company consolidates the entities that are VIEs and of which the Company is deemed to be the primary beneficiary or non-VIEs which the Company controls. For VIE’s where the Company is not deemed to be the primary beneficiary or the entity is not deemed a VIE and the Company’s does not control the entity but has the ability to exercise significant influence are accounted for under the equity method, i.e. at cost, increased or decreased by the Company’s share of earnings or losses, less distributions. The Company will reconsider its determination of whether an entity is a VIE and who the primary beneficiary is if certain events occur that are likely to cause a change in the original determinations. 
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BRANDYWINE REALTY TRUST 
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 
JUNE 30, 2005 
Use of Estimates 
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Management makes significant estimates regarding revenue, impairment of long-lived assets and the allowance for doubtful accounts. 
Operating Properties 
Operating properties are carried at historical cost less accumulated depreciation and impairment losses. The cost of operating properties reflects their purchase price or development cost. Costs incurred for the acquisition and renovation of an operating property are capitalized to the Company’s investment in that property. Ordinary repairs and maintenance are expensed as incurred; major replacements and betterments, which improve or extend the life of the asset, are capitalized and depreciated over their estimated useful lives. Fully-depreciated assets are removed from the accounts.
Purchase Price Allocation 
The Company allocates the purchase price of properties to net tangible and identified intangible assets acquired based on fair values. Above-market and below-market in-place lease values for acquired properties are recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) the Company’s estimate of the fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancellable term of the lease. Capitalized above-market lease values are amortized as a reduction of rental income over the remaining non-cancellable terms of the respective leases. Capitalized below-market lease values are amortized as an increase to rental income over the remaining non-cancellable terms of the respective leases, including any fixed-rate renewal periods. 
Other intangible assets also include amounts representing the value of tenant relationships and in-place leases based on the Company’s evaluation of the specific characteristics of each tenant’s lease and the Company’s overall relationship with the respective tenant. The Company estimates the cost to execute leases with terms similar to the remaining lease terms of the in-place leases, include leasing commissions, legal and other related expenses. This intangible asset is amortized to expense over the remaining term of the respective leases. Company estimates of value are made using methods similar to those used by independent appraisers or by using independent appraisals. Factors considered by the Company in their analysis include an estimate of the carrying costs during the expected lease-up periods considering current market conditions and costs to execute similar leases. The Company also considers information obtained about each property as a result of its pre-acquisition due diligence, marketing and leasing activities in estimating the fair value of the tangible and intangible assets acquired. In estimating carrying costs, the Company includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods, which primarily range from three to twelve months. 
Characteristics considered by the Company in allocating value to its tenant relationships include the nature and extent of the Company’s business relationship with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit quality and expectations of lease renewals, among other factors. The value of tenant relationship intangibles is amortized over the remaining initial lease term and expected renewals, but in no event longer than the remaining depreciable life of the building. The value of in-place leases is amortized over the remaining non-cancellable term of the respective leases and any fixed-rate renewal periods. 
In the event that a tenant terminates its lease, the unamortized portion of each intangible, including market rate adjustments, in-place lease values and tenant relationship values, would be charged to expense. 
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BRANDYWINE REALTY TRUST 
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 
JUNE 30, 2005 
Revenue Recognition and Accounts Receivable 
Rental revenue is recognized on the straight-line basis regardless of when payments are due. The cumulative difference between lease revenue recognized under the straight-line method and contractual lease payment terms is recorded as “accrued rent receivable” on the accompanying balance sheets. The straight-line rent adjustment increased revenue by approximately $3.2 million and $6.5 million for the three- and six-month periods ended June 30, 2005 and approximately $0.9 million and $2.8 million for the three- and six-month periods ended June 30, 2004. Tenant receivables and accrued rent receivables are carried net of the allowances for doubtful accounts of $4.7 million as of June 30, 2005 and $4.2 million as of December 31, 2004. The allowance is based on management’s evaluation of the collectability of receivables, taking into account tenant specific considerations as well as the overall credit of the tenant portfolio. The leases also typically provide for tenant reimbursement of common area maintenance and other operating expenses. Tenant reimbursement revenue is recorded when earned, as the underlying expense of the Properties is incurred. Other income is recorded when earned and is primarily comprised of termination fees received from tenants, bankruptcy settlement fees, third party leasing commissions, and third party management fees. Other income includes net termination fees of $0.9 million and $4.9 million for the three- and six-month periods ended June 30, 2005, and $1.0 million and $1.1 million during for the three- and six-month periods ended June 30, 2004. Deferred rental revenue represents rental revenue received from tenants prior to their due dates. 
Stock-Based Compensation Plans 
In December 2002, the Financial Accounting Standards Board issued SFAS 148 (“SFAS 148”), Accounting for Stock-Based Compensation – Transition and Disclosure. SFAS 148 amends SFAS 123 (“SFAS 123”), Accounting for Stock-Based Compensation, to provide alternative methods of transition for an entity that voluntarily adopts the fair value recognition method of recording stock option expense. SFAS 148 also amends the disclosure provisions of SFAS 123 and APB Opinion No. 28, Interim Financial Reporting, to require disclosure in the summary of significant accounting policies of the effects of an entity’s accounting policy with respect to stock options on reported net income and earnings per share in annual and interim financial statements. The Company adopted SFAS 148 on a prospective basis for all grants subsequent to January 1, 2002. 
Prior to 2002, the Company accounted for stock options issued under the recognition and measurement provisions of APB Opinion No. 25, Accounting for Stock Issued to Employees and Related Interpretations. The following table illustrates the effect on net income available to common shares and earnings per share if the fair value based method had been applied to all outstanding and unvested awards in each period (in thousands, except per share amounts): 
     	     	Three-month periods	     	     	Six-month periods	     	
		ended June 30,			ended June 30,		
							
		2005	  	  	2004			2005	  	  	2004		
													
Net income available to Common Shares, as reported	$	6,932	 	$	15,483	 	$	14,349	 	$	30,415	 	
Add: Stock based compensation expense included in reported net income	 	696	 	 	574	 	 	1,387	 	 	1,127	 	
Deduct: Total stock based compensation expense determined under  fair value recognition method for all awards	 	(813	)	 	(713	)	 	(1,643	)	 	(1,404	)	
 			 	 		 	 		 	 		 	
Pro forma net income available to Common Shares	$	6,815	 	$	15,344	 	$	14,093	 	$	30,138	 	
 			 			 			 			 	
Earnings per Common Share	 	 	 	 	 	 	 	 	 	 	 	 	
   Basic – as reported	$	0.12	 	$	0.34	 	$	0.26	 	$	0.68	 	
 			 			 			 			 	
   Basic – pro forma	$	0.12	 	$	0.34	 	$	0.25	 	$	0.67	 	
 			 			 			 			 	
   Diluted – as reported	$	0.12	 	$	0.34	 	$	0.26	 	$	0.67	 	
 			 			 			 			 	
   Diluted – pro forma	$	0.12	 	$	0.33	 	$	0.25	 	$	0.67	 	
 			 			 			 			 	
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BRANDYWINE REALTY TRUST 
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 
JUNE 30, 2005 
Accounting for Derivative Instruments and Hedging Activities
The Company accounts for its derivative instruments and hedging activities under SFAS No. 133 (“SFAS 133”), Accounting for Derivative Instruments and Hedging Activities, and its corresponding amendments under SFAS No. 138, Accounting for Certain Derivative Instruments and Hedging Activities – An Amendment of SFAS 133. SFAS 133 requires the Company to measure every derivative instrument (including certain derivative instruments embedded in other contracts) at fair value and record them in the balance sheet as either an asset or liability. For derivatives designated as fair value hedges, the changes in fair value of both the derivative instrument and the hedged item are recorded in earnings. For derivatives designated as cash flow hedges, the effective portions of changes in the fair value of the derivative are reported in other comprehensive income. Changes in the ineffective portions of hedges are recognized in earnings in the current period. For the six-month periods ended June 30, 2005 and 2004, the Company was not party to any derivative contract designated as a fair value hedge. 
The Company actively manages its ratio of fixed-to-floating rate debt. To manage its fixed and floating rate debt in a cost-effective manner, the Company, from time to time, enters into interest rate swap agreements as cash flow hedges, under which it agrees to exchange various combinations of fixed and/or variable interest rates based on agreed upon notional amounts. 
As of June 30, 2004, the Company had in place an interest rate cap agreement designated as a cash flow hedge that was designed to reduce the impact of interest rate changes on its variable rate debt. The interest rate cap agreement effectively limited the interest rate on a mortgage with a notional value of $28 million at 8.7% per annum until July 2004. The notional amount at June 30, 2004 provided an indication of the extent of the Company’s involvement in these instruments at that time, but did not represent exposure to credit, interest rate or market risks. Prior to June 30, 2004, the Company had entered into interest rate swap agreements to effectively fix the LIBOR rate on $175 million of its credit facility borrowings at approximately 4.2%. On June 29, 2004, these hedges expired and all amounts held in accumulated other comprehensive income relating to these hedges have been reclassified to operations. 
Income Taxes 
The Company has elected to be treated as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”). In order to maintain its qualification as a REIT, among other things, the Company is required to distribute at least 90% of its REIT taxable income to its shareholders and meet certain tests regarding the nature of its income and assets. As a REIT, the Company is not subject to federal income tax with respect to that portion of its income which meets certain criteria and is distributed annually to the shareholders. Accordingly, no provision for federal income taxes is included in the accompanying consolidated financial statements. The Company plans to continue to operate so that it meets the requirements for taxation as a REIT. Many of these requirements, however, are highly technical and complex. If the Company were to fail to meet these requirements, the Company would be subject to federal income tax. The Company is subject to certain state and local taxes. Provision for such taxes has been included in general and administrative expenses in the Company’s consolidated statements of operations. 
New Pronouncements 
In October 2004, the Financial Accounting Standards Board issued SFAS No. 123R (revised 2004), “Share-Based Payment” (“SFAS 123R”). SFAS 123R requires companies to categorize share-based payments as either liability or equity awards. For liability awards, companies will remeasure the award at fair value at each balance sheet date until the award is settled. Equity classified awards are measured at the fair value and are not remeasured. SFAS 123R will be effective for annual periods beginning January 1, 2006. Awards issued, modified, or settled after the effective date will be measured and recorded in accordance with SFAS 123R. The Company believes that the implementation of this standard will not have a material effect on the Company’s consolidated financial position or results of operations. 
In December 2004, the Financial Accounting Standards Board issued SFAS No. 153, “Accounting for Non-monetary Transactions” (“SFAS 153”). SFAS 153 requires non-monetary exchanges to be accounted for at fair value, recognizing any gain or loss, if the transactions meet a commercial-substance criterion and fair value is determinable. SFAS No. 153 is effective for non-monetary transactions occurring in fiscal years beginning after June 15, 2005. The Company believes that the implementation of this standard will not have a material effect on the Company’s consolidated financial position or results of operations. 
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BRANDYWINE REALTY TRUST 
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 
JUNE 30, 2005 
3.  REAL ESTATE INVESTMENTS 
As of June 30, 2005 and December 31, 2004, the carrying value of the Company’s operating properties was as follows: 
 	 	June 30,	 	 	December 31,	 	
		2005			2004		
			 				
	 	(amounts in thousands )		
Land	$	457,024	 	$	452,602	 	
Building and improvements	 	1,919,277	 	 	1,892,153	 	
Tenant improvements	 	139,098	 	 	138,379	 	
 			 			 	
 	$	2,515,399	 	$	2,483,134	 	
 			 			 	
Acquisitions and Dispositions 
The Company’s acquisitions are accounted for by the purchase method. The results of each acquired property are included in the Company’s results of operations from their respective purchase dates. 
2005 
During the six-month period ended June 30, 2005, the Company acquired one industrial property containing 385,884 net rentable square feet and 28.4 acres of developable land for an aggregate purchase price of $41.8 million. 
2004 
During the six-month period ended June 30, 2004, the Company sold three office properties containing 141,000 net rentable square feet, one industrial property containing 45,000 net rentable square feet and one parcel of land containing 5.3 acres for an aggregate of $24.3 million, realizing a net gain of $1.4 million. During the three-month period ended June 30, 2004, the Company sold one office property containing 103,000 net rentable square feet and one parcel of land containing 5.3 acres for an aggregate $18.2 million, realizing a net gain of $1.2 million. 
On September 21, 2004, the Operating Partnership completed the acquisition of 100% of the partnership interests in The Rubenstein Company, L.P. (“TRC”). Through the acquisition, the Operating Partnership acquired 14 office properties (the “TRC Properties”) located in Pennsylvania and Delaware that contain approximately 3.5 million net rentable square feet. The results of TRC’s operations have been included in the consolidated financial statements since that date. 
The aggregate consideration for the TRC Properties was $631.3 million, including $29.3 million of closing costs, debt prepayment penalties and debt premiums that are included in the basis of the assets acquired. The consideration was paid with $540.4 million of cash, $79.3 million of debt assumed, $1.6 million of other liabilities assumed, and 343,006 Class A Units valued at $10.0 million. The value of the debt assumed was based on prevailing market rates at the time of acquisition. The value of the Class A Units was based on the average trading price of the Company’s common shares. 
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BRANDYWINE REALTY TRUST 
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 
JUNE 30, 2005 
The following table summarizes the fair value of the assets acquired and liabilities assumed at the date of acquisition (in thousands): 
 		At September 21,	 	
	 	2004		
				
Real estate investments	 	 	 	
   Land	$	105,302	 	
   Building and improvements	 	434,795	 	
   Tenant improvements	 	20,322	 	
 			 	
   Total real estate investments acquired	 	560,419	 	
 	 	 	 	
Rent receivables	 	5,537	 	
Other assets acquired:	 	 	 	
   Intangible assets:	 	 	 	
      In-Place leases	 	49,455	 	
      Relationship values	 	35,548	 	
      Above-market leases	 	13,240	 	
 			 	
      Total intangible assets acquired	 	98,243	 	
   Other assets	 	6,292	 	
 			 	
   Total Other assets	 	104,535	 	
 			 	
Total assets acquired	 	670,491	 	
Liabilities assumed:	 	 	 	
   Mortgage notes pay able	 	79,330	 	
   Security deposits and deferred rent	 	618	 	
   Other liabilities:	 	 	 	
      Below-market leases	 	39,204	 	
      Other liabilities	 	943	 	
 			 	
      Total other liabilities assumed	 	40,147	 	
 			 	
   Total liabilities assumed	 	120,095	 	
 			 	
Net assets acquired	$	550,396	 	
 			 	
The Operating Partnership agreed to issue the sellers up to a maximum of $9.7 million of additional Class A Units if certain of the TRC Properties achieve at least 95% occupancy prior to September 21, 2007. At June 30, 2005, the maximum amount payable under this arrangement was $6.7 million. Any contingent amounts ultimately payable would represent additional purchase price and would be reflected within the basis of the assets acquired and liabilities assumed. 
At the closing of this transaction, the Operating Partnership agreed not to sell the TRC Properties in a transaction that would trigger taxable income to the contributors (i.e., sellers) for periods ranging from three to 15 years. In the event that the Operating Partnership sells any of the properties in such a transaction within the applicable restricted period, the Operating Partnership will be required to pay significant tax liabilities that would be incurred by the contributors. 
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BRANDYWINE REALTY TRUST
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2005
Pro forma information relating to the acquisition of TRC is presented below as if TRC was acquired and the related financing transactions occurred on January 1, 2004. These pro forma results are not necessarily indicative of the results which actually would have occurred if the acquisition had occurred on the first day of the periods presented, nor does the pro forma financial information purport to represent the results of operations for future periods (in thousands, except per share amounts): 
 	 Three-month period	 	 Six-month period	 	
 	 ended June 30, 2004	 	 ended June 30, 2004	 	
 			 			 	
 	 (unaudited)	 	 (unaudited)	 	
 	 	 	 	 	 	 	
Pro forma revenue	$	96,012	 	$	188,979	 	
Pro forma income from continuing operations	 	14,303	 	 	22,540	 	
 	 	 	 	 	 	 	
Earnings per share from continuing operations	 	 	 	 	 	 	
   Basic – as reported	$	0.34	 	$	0.68	 	
 			 			 	
   Basic – as pro forma	$	0.22	 	$	0.42	 	
 			 			 	
   Diluted – as reported	$	0.34	 	$	0.67	 	
 			 			 	
   Diluted – as pro forma	$	0.22	 	$	0.42	 	

4.	INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTURES, AT EQUITY	
As of June 30, 2005, the Company had an aggregate investment of approximately $13.3 million in nine unconsolidated Real Estate Ventures (net of returns of investment). The Company formed these ventures with unaffiliated third parties to develop office properties or to acquire land in anticipation of possible development of office properties. Seven of the Real Estate Ventures own eight office buildings that contain an aggregate of approximately 1.6 million net rentable square feet, one Real Estate Venture developed a hotel property that contains 137 rooms and one Real Estate Venture is developing an office property located in Charlottesville, Virginia.
The Company also has investments in two real estate ventures (Four Tower Bridge Associates and Six Tower Bridge Associates) that are considered to be variable interest entities under FIN 46R and of which the Company is the primary beneficiary. The financial information for these two real estate ventures were consolidated into the Company’s consolidated financial statements effective March 31, 2004. Prior to March 31, 2004, the Company accounted for its investment in these two ventures under the equity method.
The Company accounts for its non-controlling interests in its Real Estate Ventures using the equity method. Non-controlling ownership interests range from 6% to 50%, subject to specified priority allocations in certain of the Real Estate Ventures. The Company’s investments, initially recorded at cost, are subsequently adjusted for the Company’s share of the Real Estate Ventures’ income or loss and cash contributions and distributions.
The following is a summary of the financial position of the Real Estate Ventures as of June 30, 2005 and December 31, 2004 (in thousands): 
 	June 30,	 	December 31,	 	
 	2005	 	2004	 	
 			 			 	
Operating property, net of accumulated depreciation	$	289,063	 	$	294,378	 	
Other assets	 	26,995	 	 	29,944	 	
Liabilities	 	23,988	 	 	26,989	 	
Debt	 	206,195	 	 	209,624	 	
Equity	 	85,875	 	 	87,709	 	
Company's share of equity (Company basis)	 	13,308	 	 	12,754	 	
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BRANDYWINE REALTY TRUST
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2005
The following is a summary of results of operations of the Real Estate Ventures for the three- and six-month periods ended June 30, 2005 and 2004 (in thousands):
 	 Three-month periods	 	 Six-month periods	 	
 	 ended June 30,	 	 ended June 30,	 	
 			 			 	
 	 2005	 	 2004	 	 2005	 	 2004	 	
 			 			 			 			 	
Revenue	$	21,018	 	$	11,349	 	$	32,138	 	$	21,630	 	
Operating expenses	 	12,520	 	 	4,534	 	 	17,450	 	 	9,049	 	
Interest expense, net	 	2,821	 	 	2,946	 	 	5,606	 	 	5,844	 	
Depreciation and amortization	 	2,224	 	 	2,022	 	 	4,442	 	 	4,212	 	
Net income	 	3,453	 	 	1,847	 	 	4,640	 	 	2,525	 	
Company's share of income (Company basis)	 	993	 	 	674	 	 	1,551	 	 	908	 	
As of June 30, 2005, the Company had guaranteed repayment of approximately $0.6 million of loans for the Real Estate Ventures. The Company also provides customary environmental indemnities in connection with construction and permanent financing both for its own account and on behalf of the Real Estate Ventures.
5.	INTANGIBLE ASSETS	
As of June 30, 2005 and December 31, 2004, the Company’s intangible assets were comprised of the following (in thousands):
 	June 30, 2005	 	
 								 	
 	 	 	 	Accumulated	 	Deferred Costs,	 	
 	Total Cost	 	Amortization	 	net	 	
 			 			 			 	
In-place lease value	$	51,712	 	$	(11,959	)	$	39,753	 	
Tenant relationship value	 	37,832	 	 	(3,554	)	 	34,278	 	
Above market leases acquired	 	15,149	 	 	(3,546	)	 	11,603	 	
 			 			 			 	
   Total	$	104,693	 	$	(19,059	)	$	85,634	 	

 	December 31, 2004	 	
 								 	
 	 	 	 	Accumulated	 	Deferred Costs,	 	
 	Total Cost	 	Amortization	 	net	 	
 			 			 			 	
In-place lease value	$	55,165	 	$	(6,117	)	$	49,048	 	
Tenant relationship value	 	40,570	 	 	(2,377	)	 	38,193	 	
A bove market leases acquired	 	15,685	 	 	(1,870	)	 	13,815	 	
 			 			 			 	
   Total	$	111,420	 	$	(10,364	)	$	101,056	 	
 			 			 			 	
The reductions in the historical cost values during the six-month period ended June 30, 2005 were due to reallocations of the Company’s purchase price for the TRC Properties among the assets acquired and liabilities assumed based on final appraisals and the retirement of assets that became fully amortized during the aforementioned period. 
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BRANDYWINE REALTY TRUST
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2005
6.	MORTGAGE NOTES PAYABLE	
The following table sets forth information regarding our mortgage indebtedness outstanding at June 30, 2005 and December 31, 2004 (in thousands):
 	 	 	 	 	 	 	 	Effective	 	 	 	
 	 	June 30,	 	December 31,	 	Interest	 	Maturity	 	
Property / Location	 	2005	 	2004	 	Rate (a)	 	Date	 	
	 			 			 		 		 	
Grande B	 	$	79,738	 	$	80,429	 	7.48	%	Jul-27	 	
Two Logan Square	 	 	72,999	 	 	73,511	(a)	5.78	%	Jul-09	 	
Newtown Square/Berwyn Park/Libertyview	 	 	64,944	 	 	65,442	 	7.25	%	May-13	 	
Midlantic Drive/Lenox Drive/DCC I	 	 	64,384	 	 	64,942	 	8.05	%	Oct-11	 	
Grande A	 	 	61,639	 	 	62,177	 	7.48	%	Jul-27	 	
Plymouth Meeting Exec.	 	 	44,962	 	 	45,226	(a)	7.00	%	Dec-10	 	
Arboretum I, II, III & V	 	 	23,468	 	 	23,690	 	7.59	%	Jul-11	 	
Six Tower Bridge	 	 	15,241	 	 	15,394	 	7.79	%	Aug-12	 	
Grande A	 	 	12,977	 	 	17,157	(b)	6.10	%	Jul-27	 	
400 Commerce Drive	 	 	12,083	 	 	12,175	 	7.12	%	Jun-08	 	
Four Tower Bridge	 	 	10,827	 	 	10,890	 	6.62	%	Feb-11	 	
Croton Road	 	 	6,042	 	 	6,100	 	7.81	%	Jan-06	 	
200 Commerce Drive	 	 	5,944	 	 	5,976	(a)	7.12	%	Jan-10	 	
Southpoint III	 	 	5,658	 	 	5,877	 	7.75	%	Apr-14	 	
440 & 442 Creamery Way	 	 	5,656	 	 	5,728	 	8.55	%	Jul-07	 	
Norriton Office Center	 	 	5,231	 	 	5,270	 	8.50	%	Oct-07	 	
429 Creamery Way	 	 	3,009	 	 	3,087	 	8.30	%	Sep-06	 	
481 John Young Way	 	 	2,390	 	 	2,420	 	8.40	%	Nov-07	 	
Grande A	 	 	2,300	 	 	3,040	(b)	6.27	%	Jul-27	 	
111 Arrandale Blvd	 	 	1,072	 	 	1,100	 	8.65	%	Aug-06	 	
Interstate Center	 	 	865	 	 	959	(b)	4.69	%	Mar-07	 	
 	 			 			 	 	 	 	 	
Principal balance outstanding	 	 	501,429	 	 	510,590	 	 	 	 	 	
Plus: unamortized fixed-rate debt premiums	 	 	6,760	 	 	7,644	 	 	 	 	 	
 	 			 			 	 	 	 	 	
Total mortgage indebtedness	 	$	508,189	 	$	518,234	 	 	 	 	 	

(a)	Loans were assumed upon acquisition of the related property. Interest rates presented above reflect the market rate at the time of acquisition.	
(b)	For loans that bear interest at a variable rate, the rates in effect at June 30, 2005 have been presented.	
During the six-month periods ended June 30, 2005 and 2004, the Company’s weighted-average interest rate on its mortgage notes payable was 7.1% and 7.5%, respectively.
7.	UNSECURED NOTES	
The following table sets forth information regarding our unsecured notes outstanding (in thousands):
 	 	June 30,	 	December 31,	 	 	 	Stated	 	Effective	 	
Year	 	2005	 	2004	 	Maturity	 	Interest Rate	 	Interest Rate (1)	 	
	 			 			 		 		 		 	
2008	 	$	113,000	 	$	113,000	 	Dec-08	 	4.34	%	4.34	%	
2009	 	 	275,000	 	 	275,000	 	Nov-09	 	4.50	%	4.62	%	
2014	 	 	250,000	 	 	250,000	 	Nov-14	 	5.40	%	5.53	%	
 	 			 			 	 	 	 	 	 	 	
Total face amount	 	$	638,000	 	$	638,000	 	 	 	 	 	 	 	
Less: unamortized discounts	 	 	(1,466	)	 	(1,565	)	 	 	 	 	 	 	
 	 			 			 	 	 	 	 	 	 	
Total unsecured notes	 	$	636,534	 	$	636,435	 	 	 	 	 	 	 	

(1)	Rates include the effect of amortization related to discounts and costs related to settlement of treasury lock agreements.	
The indenture relating to the 2009 and 2014 unsecured notes contains various financial restrictions and requirements, including (1) a leverage ratio not to exceed 60%, (2) a secured debt leverage ratio not to exceed 40%, (3) a debt service coverage ratio of greater than 1.5 to 1.0, and (4) an unencumbered asset value of not less than 150% of unsecured debt. In addition, the note purchase agreement relating to the 2008 unsecured notes contains covenants that are similar to the above covenants.
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BRANDYWINE REALTY TRUST
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2005
8.	UNSECURED CREDIT FACILITY	
The Company utilizes credit facility borrowings for general business purposes, including the acquisition, development and redevelopment of properties and the repayment of other debt. The Company maintains a $450.0 million unsecured credit facility (the “Credit Facility”) that matures in May 2007. Borrowings under the Credit Facility generally bear interest at LIBOR plus a spread over LIBOR ranging from 0.65% to 1.2% based on the Company’s unsecured senior debt rating. The Company has the option to increase the Credit Facility to $600.0 million subject to the absence of any defaults and the Company’s ability to acquire additional commitments from our existing lenders or new lenders. As of June 30, 2005, the Company had $265.0 million of borrowings and $10.7 million of letters of credit outstanding under the Credit Facility, leaving $174.3 million of unused availability. For the six-month periods ended June 30, 2005 and 2004, the weighted-average interest rate on the Company’s unsecured credit facilities, including the effect of interest rate hedges during 2004, was 4.06% during 2005 and 4.55% during 2004. 
The Credit Facility requires the maintenance of certain ratios related to minimum net worth, debt-to-total capitalization and fixed charge coverage and various non-financial covenants.
9.	RISK MANAGEMENT AND USE OF FINANCIAL INSTRUMENTS	
Risk Management 
In the normal course of its on-going business operations, the Company encounters economic risk. There are three main components of economic risk: interest rate risk, credit risk and market risk. The Company is subject to interest rate risk on its interest-bearing liabilities. Credit risk is the risk of inability or unwillingness of tenants to make contractually required payments. Market risk is the risk of declines in the value of properties due to changes in rental rates, occupancy levels, interest rates or other market factors affecting the valuation of properties held by the Company. 
Use of Derivative Financial Instruments 
The Company’s use of derivative instruments is limited to the utilization of interest rate agreements or other instruments to manage interest rate risk exposures and not for speculative purposes. The principal objective of such arrangements is to minimize the risks and/or costs associated with the Company’s operating and financial structure, as well as to hedge specific transactions. The counterparties to these arrangements are major financial institutions with which the Company and its affiliates may also have other financial relationships. The Company is potentially exposed to credit loss in the event of non-performance by these counterparties. However, because of the high credit ratings of the counterparties, the Company does not anticipate that any of the counterparties will fail to meet these obligations as they come due. The Company does not hedge credit or property value market risks. 
The Company formally assesses, both at inception of the hedge and on an on-going basis, whether each derivative is highly-effective in offsetting changes in cash flows of the hedged item. If management determines that a derivative is not highly-effective as a hedge or if a derivative ceases to be a highly-effective hedge, the Company will discontinue hedge accounting prospectively. 
As of June 30, 2005 and December 31, 2004, the Company was not party to any derivative financial instruments. 
In October 2004, in anticipation of the offering of the 2009 and 2014 unsecured notes, the Company entered into treasury lock agreements. The treasury lock agreements were designated as cash flow hedges of interest rate risk and qualified for hedge accounting. The treasury lock agreements were for notional amounts totaling $194.8 million for an expiration of five years at an all-in-rate of 4.8% and for notional amounts totaling $188.0 million for an expiration of 10 years at an all-in-rate of 5.6%. The treasury lock agreements were settled in October 2004 upon the completion of the offering of the 2009 and 2014 unsecured notes at a total cost of approximately $3.2 million. The cost was recorded as a component of accumulated other comprehensive loss and is being amortized to interest expense over the terms of the respective unsecured notes.
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BRANDYWINE REALTY TRUST 
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 
JUNE 30, 2005
As of June 30, 2004, the Company had in place an interest rate cap agreement designated as a cash flow hedge that was designed to reduce the impact of interest rate changes on its variable rate debt. The interest rate cap agreement effectively limited the interest rate on a mortgage with a notional value of $28 million at 8.7% per annum until July 2004. The notional amount at June 30, 2004 provided an indication of the extent of the Company’s involvement in these instruments at that time, but did not represent exposure to credit, interest rate or market risks. Prior to June 30, 2004, the Company had entered into interest rate swap agreements to effectively fix the LIBOR rate on $175 million of its credit facility borrowings at approximately 4.2%. On June 29, 2004, these hedges expired and all amounts held in accumulated other comprehensive income relating to these hedges have been reclassified to operations. 
Concentration of Credit Risk 
Concentrations of credit risk arise when a number of tenants related to the Company’s investments or rental operations are engaged in similar business activities, or are located in the same geographic region, or have similar economic features that would cause their inability to meet contractual obligations, including those to the Company, to be similarly affected. The Company regularly monitors its tenant base to assess potential concentrations of credit risk. Management believes the current credit risk portfolio is reasonably well diversified and does not contain any unusual concentration of credit risk. No tenant accounted for 5% or more of the Company’s rents during the three- and six-month periods ended June 30, 2005 or 2004.
10.	DISCONTINUED OPERATIONS	
For the three- and six-month periods ended June 30, 2005, the Company had no income from discontinued operations. For the three- and six-month periods ended June 30, 2004, income from discontinued operations relates to 4 properties that the Company sold during 2004. The following table summarizes the revenue and expense information for the three- and six-month periods ended June 30, 2004 (in thousands): 
 	Three-month period	 	Six-month period	 	
 	ended June 30, 2004	 	ended June 30, 2004	 	
 		 		 	
Revenue:	 	 	 	 	 	 	
   Rents	$	75	 	$	268	 	
   Tenant reimbursements	 	63	 	 	296	 	
   Other	 	—	 	 	17	 	
 			 			 	
      Total revenue	 	138	 	 	581	 	
Expenses:	 	 	 	 	 	 	
   Property operating expenses	 	212	 	 	461	 	
   Real estate taxes	 	62	 	 	154	 	
   Depreciation and amortization	 	77	 	 	180	 	
 			 			 	
      Total operating expenses	 	351	 	 	795	 	
Loss from discontinued operations before net gain on sale of interests in real estate and minority interest	 	(213	)	 	(214	)	
Net gain on sales of interest in real estate	 	45	 	 	249	 	
Minority interest	 	6	 	 	(2	)	
 			 			 	
Income (loss) from discontinued operations	$	(162	)	$	33	 	
 			 			 	
Discontinued operations have not been segregated in the consolidated statements of cash flows. Therefore, amounts for certain captions will not agree with respective data in the consolidated statements of operations.
11.	MINORITY INTEREST	
On June 15, 2005, the Operating Partnership declared a $0.44 per unit cash distribution to holders of Class A Units totaling $0.9 million. 
In February 2004, the Operating Partnership redeemed all of its outstanding Series B Preferred Units for an aggregate price of $93.0 million, together with accrued but unpaid distributions from January 1, 2004. The Series B Preferred Units had an aggregate stated value of $97.5 million and accrued distributions at 7.25% per annum. We recorded a gain of $4.5 million related to the redemption.
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BRANDYWINE REALTY TRUST
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2005
12. 	BENEFICIARIES’ EQUITY	
On June 15, 2005, the Company declared a distribution of $0.44 per Common Share, totaling $24.7 million, which was paid on July 15, 2005 to shareholders of record as of July 6, 2005. On June 15, 2005, the Company declared distributions on its Series C Preferred Shares and Series D Preferred Shares to holders of record as of June 30, 2005. These shares are entitled to a preferential return of 7.50% and 7.375%, respectively. Distributions paid on July 15, 2005 to holders of Series C Preferred Shares and Series D Preferred Shares totaled $0.9 million and $1.1 million, respectively.
13. 	EARNINGS PER COMMON SHARE	
The following table details the number of shares and net income used to calculate basic and diluted earnings per share (in thousands, except share and per share amounts): 
 	Three-month periods ended June 30,	 	
 		 	
 	2005	 	2004	 	
 		 		 	
 	Basic	 	Diluted	 	 	Basic	 	 	Diluted	 	
 			 			 			 			 	
Income from continuing operations	$	8,930	 	$	8,930	 	$	18,322	 	$	18,322	 	
Income from discontinued operations	 	—	 	 	—	 	 	(162	)	 	(162	)	
Income allocated to Preferred Shares	 	(1,998	)	 	(1,998	)	 	(2,677	)	 	(2,677	)	
 			 			 			 			 	
Net income available to common shareholders	$	6,932	 	$	6,932	 	$	15,483	 	$	15,483	 	
 			 			 			 			 	
Weighted-average shares outstanding	 	55,681,668	 	 	55,681,668	 	 	45,665,274	 	 	45,665,274	 	
Options and warrants	 	—	 	 	162,571	 	 	—	 	 	146,672	 	
 			 			 			 			 	
Total weighted-average shares outstanding	 	55,681,668	 	 	55,844,239	 	 	45,665,274	 	 	45,811,946	 	
 			 			 			 			 	
Earnings per Common Share:	 	 	 	 	 	 	 	 	 	 	 	 	
   Continuing operations	$	0.12	 	$	0.12	 	$	0.34	 	$	0.34	 	
   Discontinued operations	 	—	 	 	—	 	 	—	 	 	—	 	
 			 			 			 			 	
 	$	0.12	 	$	0.12	 	$	0.34	 	$	0.34	 	

 	Six-month periods ended June 30,	 	
 		 	
 	2005	 	2004	 	
 		 		 	
 	 	Basic	 	 	Diluted	 	 	Basic	 	 	Diluted	 	
 			 			 			 			 	
Income from continuing operations	$	18,345	 	$	18,345	 	$	30,577	 	$	30,577	 	
Income from discontinued operations	 	—	 	 	—	 	 	33	 	 	33	 	
Income allocated to Preferred Shares	 	(3,996	)	 	(3,996	)	 	(4,695	)	 	(4,695	)	
Preferred share redemption gain	 	—	 	 	—	 	 	4,500	 	 	4,500	 	
 			 			 			 			 	
Net income available to common shareholders	$	14,349	 	$	14,349	 	$	30,415	 	$	30,415	 	

Weighted-average shares outstanding	 	55,562,384	 	 	55,562,384	 	 	44,876,459	 	 	44,876,459	 	
Options and warrants	 	—	 	 	223,686	 	 	—	 	 	220,276	 	
 			 			 			 			 	
Total weighted-average shares outstanding	 	55,562,384	 	 	55,786,070	 	 	44,876,459	 	 	45,096,735	 	

Earnings per Common Share:	 	 	 	 	 	 	 	 	 	 	 	 	
   Continuing operations	$	0.26	 	$	0.26	 	$	0.68	 	$	0.67	 	
   Discontinued operations	 	—	 	 	—	 	 	—	 	 	—	 	
 			 			 			 			 	
 	$	0.26	 	$	0.26	 	$	0.68	 	$	0.67	 	
 			 			 			 			 	
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BRANDYWINE REALTY TRUST 
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 
JUNE 30, 2005 
Securities (including Series A Preferred Shares of the Company and Class A Units of the Operating Partnership) totaling 2,052,959 and 3,057,739 as of June 30, 2005 and 2004, respectively, were excluded from the earnings per share computations because their effect would have been antidilutive. The Series A Preferred Shares were converted to Common Shares in November 2004. 
14. 	SEGMENT INFORMATION 	
The Company currently manages its portfolio within five segments: (1) Pennsylvania–West, (2) Pennsylvania–North, (3) New Jersey, (4) Urban and (5) Virginia. The Pennsylvania–West segment includes properties in Chester, Delaware and Montgomery counties in the Philadelphia suburbs of Pennsylvania. The Pennsylvania–North segment includes properties north of Philadelphia in Berks, Bucks, Cumberland, Dauphin, Lehigh and Montgomery counties. The New Jersey segment includes properties in counties in the southern part of New Jersey including Burlington, Camden and Mercer counties and in Bucks County, Pennsylvania. The Urban segment includes properties in the City of Philadelphia, Pennsylvania and the state of Delaware. The Virginia segment includes properties primarily in Albemarle, Chesterfield and Henrico counties, the City of Richmond and Durham, North Carolina. Corporate is responsible for cash and investment management, develo pment of certain real estate properties during the construction period, and certain other general support functions. 
Segment information as of and for the three-month periods ended June 30, 2005 and 2004 is as follows (in thousands): 
 	Pennsylvania –	 	Pennsylvania –	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	West	 	North	 	New Jersey	 	Urban	 	Virginia	 	Corporate	 	Total	 	
 		 		 		 			 			 			 			 	
As of June 30, 2005:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Real estate investments, at cost:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
   Operating properties	$	835,305	 	$	542,970	 	$	568,219	 	$	350,504	 	$	218,401	 	$	—	 	$	2,515,399	 	
   Construction-in-progress	 	14,828	 	 	33,487	 	 	13,615	 	 	5,961	 	 	1,627	 	 	143,728	 	 	213,246	 	
   Land held for development	 	16,595	 	 	31,216	 	 	23,219	 	 	5,925	 	 	7,960	 	 	793	 	 	85,708	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
As of December 31, 2004:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Real estate investments, at cost:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
   Operating properties	$	830,622	 	$	533,142	 	$	553,969	 	$	349,911	 	$	215,490	 	$	—	 	$	2,483,134	 	
   Construction-in-progress	 	13,140	 	 	24,591	 	 	10,994	 	 	3,581	 	 	3,789	 	 	88,921	 	 	145,016	 	
   Land held for development	 	9,820	 	 	27,964	 	 	14,585	 	 	516	 	 	7,959	 	 	673	 	 	61,517	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
For the three-months ended June 30, 2005	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total revenue	$	26,656	 	$	19,013	 	$	24,802	 	$	16,467	 	$	7,111	 	$	1,194	 	$	95,243	 	
Property operating expenses and real estate taxes	 	9,922	 	 	8,444	 	 	9,730	 	 	6,527	 	 	2,861	 	 	—	 	 	37,484	 	
 			 			 			 			 			 			 			 	
Net operating income	$	16,734	 	$	10,569	 	$	15,072	 	$	9,940	 	$	4,250	 	$	1,194	 	$	57,759	 	

For the three-months ended June 30, 2004	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total revenue	$	19,693	 	$	19,368	 	$	24,063	 	$	3,793	 	$	6,746	 	$	2,551	 	$	76,214	 	
Property operating expenses and real estate taxes	 	5,452	 	 	8,101	 	 	8,822	 	 	1,842	 	 	2,683	 	 	—	 	 	26,900	 	
 			 			 			 			 			 			 			 	
Net operating income	$	14,241	 	$	11,267	 	$	15,241	 	$	1,951	 	$	4,063	 	$	2,551	 	$	49,314	 	
 			 			 			 			 			 			 			 	
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BRANDYWINE REALTY TRUST 
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 
JUNE 30, 2005 
Segment information for the six-month periods ended June 30, 2005 and 2004 is as follows (in thousands): 
 	Pennsylvania –	 	Pennsylvania –	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
	West		North		New Jersey			Urban			Virginia	 	Corporate	 	Total	 	
 		 			 		 			 			 			 			 	
For the six-months ended June 30, 2005	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total revenue	$	56,370	 	$	38,475	 	$	50,061	 	$	32,427	 	$	14,317	 	$	2,517	 	$	194,167	 	
Property operating expenses and real estate taxes	 	20,204	 	 	17,622	 	 	20,403	 	 	13,065	 	 	5,726	 	 	—	 	 	77,020	 	
 			 			 			 			 			 			 			 	
Net operating income	$	36,166	 	$	20,853	 	$	29,658	 	$	19,362	 	$	8,591	 	$	2,517	 	$	117,147	 	
 			 			 			 			 			 			 			 	
For the six-months ended June 30, 2004	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total revenue	$	39,622	 	$	37,503	 	$	48,529	 	$	6,619	 	$	13,378	 	$	3,762	 	$	149,413	 	
Property operating expenses and real estate taxes	 	11,429	 	 	16,724	 	 	18,234	 	 	3,869	 	 	5,675	 	 	—	 	 	55,931	 	
 			 			 			 			 			 			 			 	
Net operating income	$	28,193	 	$	20,779	 	$	30,295	 	$	2,750	 	$	7,703	 	$	3,762	 	$	93,482	 	
 			 			 			 			 			 			 			 	
Net operating income is defined as total revenue less property operating expenses and real estate taxes. Below is a reconciliation of consolidated net operating income to net income (in thousands): 
 	 	Three-month periods	 	 	Six-month period	 	
 	 	ended June 30,	 	 	ended June 30,	 	
 			 			 	
 	 	2005	 	 	2004	 	 	2005	 	 	2004	 	
 			 			 			 			 	
Consolidated net operating income	$	57,759	 	$	49,314	 	$	117,147	 	$	93,482	 	
Less:	 	 	 	 	 	 	 	 	 	 	 	 	
   Interest income	 	687	 	 	541	 	 	1,467	 	 	1,052	 	
   Interest expense	 	(17,807	)	 	(11,948	)	 	(35,604	)	 	(24,052	)	
   Depreciation and amortization	 	(27,948	)	 	(16,829	)	 	(56,383	)	 	(32,633	)	
   Administrative expenses	 	(4,378	)	 	(3,954	)	 	(9,130	)	 	(7,443	)	
   Minority interest attributable to continuing operations	 	(376	)	 	(624	)	 	(703	)	 	(1,885	)	
Plus:	 	 	 	 	 	 	 	 	 	 	 	 	
   Equity in income of real estate ventures	 	993	 	 	674	 	 	1,551	 	 	908	 	
   Net gain on sales of interests in real estate	 	—	 	 	1,148	 	 	—	 	 	1,148	 	
 			 			 			 			 	
Income from continuing operations	 	8,930	 	 	18,322	 	 	18,345	 	 	30,577	 	
Income (loss) from discontinued operations	 	—	 	 	(162	)	 	—	 	 	33	 	
 			 			 			 			 	
Net income	$	8,930	 	$	18,160	 	$	18,345	 	$	30,610	 	

15.	COMMITMENTS AND CONTINGENCIES 	
Legal Proceedings 
The Company is involved from time to time in litigation on various matters, including disputes with tenants and disputes arising out of agreements to purchase or sell properties. Given the nature of the Company’s business activities, these lawsuits are considered routine to the conduct of its business. The result of any particular lawsuit cannot be predicted, because of the very nature of litigation, the litigation process and its adversarial nature, and the jury system. 
Environmental 
As an owner of real estate, the Company is subject to various environmental laws of federal, state, and local governments. The Company’s compliance with existing laws has not had a material adverse effect on its financial condition and results of operations, and the Company does not believe it will have a material adverse effect in the future. However, the Company cannot predict the impact of unforeseen environmental contingencies or new or changed laws or regulations on its current Properties or on properties that the Company may acquire. 
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BRANDYWINE REALTY TRUST 
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 
JUNE 30, 2005 
Related Party Transaction 
We are a party to an agreement with one of our Trustees (Donald E. Axinn) in which we agreed to fund $5.5 million in September 2010 to acquire a fifty percent interest in an approximately 141,725 square foot office building located at 101 Paragon Drive, Montvale, New Jersey. Our agreement provides for proceeds of our $5.5 million payment to be used (together with funds provided by Mr. Axinn) to repay in full the third party loan that encumbers this property. 
Ground Rent 
Future minimum rental payments under the terms of all non-cancelable ground leases under which the Company is the lessee are expensed on a straight-line basis regardless of when payments are due. 
Other Commitments or Contingencies 
As part of our TRC acquisition, the Operating Partnership agreed to issue to the sellers up to a maximum of $9.7 million of Class A Units of the Operating Partnership if certain of the acquired properties achieve at least 95% occupancy prior to September 21, 2007. At June 30, 2005, the maximum amount payable under this arrangement was $6.7 million. 
As part of the TRC acquisition, the Company acquired an interest in Two Logan Square, a 696,477 square foot office building in Philadelphia, Pennsylvania, primarily through a second and third mortgage secured by this property pursuant to which the Company receives substantially all cash flows from the property. The Company currently does not expect to take title to Two Logan Square until, at the earliest, September 2019. In the event that the Company takes title to Two Logan Square upon a foreclosure of its mortgages, the Company has agreed to make a payment to an unaffiliated third party with a residual interest as a fee owner of this property. The amount of the payment would be $0.6 million if we must pay a state and local transfer upon taking title, or $2.9 million if no transfer tax is payable upon the transfer. 
As part of the TRC acquisition and several of our other acquisitions, the Company has agreed not to sell the acquired properties. In the case of TRC, the Company agreed not to sell the acquired properties for periods ranging from three to 15 years from the acquisition date as follows: 201 Radnor Financial Center, 555 Radnor Financial Center and 300 Delaware Avenue (three years); One Rodney Square and 130/150/170 Radnor Financial Center (10 years); and One Logan Square, Two Logan Square and Radnor Corporate Center (15 years). The Company also owns 14 other properties that aggregate 1.0 million square feet and have agreed not to sell these properties for periods that expire through 2008. These agreements generally provide that we may dispose of the subject Properties only in transactions that qualify as tax-free exchanges under Section 1031 of the Code or in other tax deferred transactions. In the event that the Company sells any of the properties within the applicable restricted period in non-exempt transactions, the Company has agreed to pay significant tax liabilities that would be incurred by the parties who sold the applicable property 
The Company invests in its Properties and regularly incurs capital expenditures in the ordinary course of business to maintain the Properties. The Company believes that such expenditures enhance the competitiveness of the Properties. The Company also enters into construction, utility and service contracts in the ordinary course of business which may extend beyond one year. These contracts include terms that provide for cancellation with insignificant or no cancellation penalties. 
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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with the financial statements and notes thereto appearing elsewhere herein. This Form 10-Q contains forward-looking statements for purposes of the Securities Act of 1933 and the Securities Exchange Act of 1934 and as such may involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from results, performance or achievements expressed or implied by such forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, there can be no assurance that these expectations will be realized. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events. Factors that could cause actual results to differ materially from management’s current expectations include, but are not limited to, changes in general economic conditions, changes in local real estate conditions (including changes in rental rates and the number of competing properties), changes in the economic conditions affecting industries in which the Company's principal tenants compete, the Company’s failure to lease unoccupied space in accordance with the Company’s projections, the failure of the Company to re-lease occupied space upon expiration of leases, the bankruptcy of major tenants, changes in prevailing interest rates, the unavailability of equity and debt financing, unanticipated costs associated with the acquisition and integration of the Company’s acquisitions, costs to complete and lease-up pending developments, increased costs for, or lack of availability of, adequate insurance, including for terrorist acts, demand for tenant services beyond those traditionally provided by landlords, potential liability under environmental or ot her laws, the existence of complex regulations relating to the Company’s status as a REIT and to the Company’s acquisition, disposition and development activities, the adverse consequences of the Company’s failure to qualify as a REIT and the other risks identified in the Company’s Annual Report on Form 10-K for the year ended December 31, 2004. 
OVERVIEW 
The Company currently manages its portfolio within five geographic segments: (1) Pennsylvania—West, (2) Pennsylvania—North, (3) New Jersey, (4) Urban and (5) Virginia. The Company believes it has established an effective platform in these office and industrial markets that provides a foundation for achieving its goals of maximizing market penetration, optimizing operating economies of scale and creating long-term investment value. 
As of June 30, 2005, the Company’s portfolio consisted of 223 office properties, 24 industrial facilities and one mixed-use property that contained an aggregate of approximately 19.6 million net rentable square feet. As of June 30, 2005, we held economic interests in nine unconsolidated real estate ventures that contained approximately 1.6 million net rentable square feet (the “Real Estate Ventures”) formed with third parties to develop or own commercial properties. In addition, we own interests in two consolidated real estate ventures that own two office properties containing approximately 0.2 million net rentable square feet. 
The Company receives income primarily from rental revenue (including tenant reimbursements) from the Properties and, to a lesser extent, from the management of properties owned by third parties and from investments in the Real Estate Ventures. 
The Company’s financial performance is dependent upon the demand for office and other commercial space in its markets. Current economic conditions, including recessionary pressures and capital market volatility, have enhanced the challenges facing the Company. 
The Company seeks revenue growth through an increase in occupancy of its portfolio (91.4% at June 30, 2005, 87.8% including the five lease-up assets acquired as part of the TRC acquisition in September 2004) and through acquisitions. However, with a downturn in general leasing activity, owners of commercial real estate, including the Company, are experiencing longer periods of rental downtime and are incurring higher capital costs and leasing commissions to achieve targeted tenancies. 
As the Company seeks to increase revenue, management also focuses on strategies to minimize operating risks, including (i) tenant rollover risk, (ii) tenant credit risk and (iii) development risk. 
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Tenant Rollover Risk: 
The Company is subject to the risk that, upon expiration, leases may not be renewed, the space may not be re-leased, or the terms of renewal or re-leasing (including the cost of renovations) may be less favorable than the current lease terms. Leases totaling approximately 7.4% of the net rentable square feet of the Properties as of June 30, 2005 expire without penalty through the end of 2005. In addition, leases totaling approximately 11.7% of the net rentable square feet of the Properties as of June 30, 2005 are scheduled to expire without penalty in 2006. The Company maintains an active dialogue with its tenants in an effort to achieve lease renewals. The Company’s retention rate for leases that were scheduled to expire in the six-month period ended June 30, 2005 was 74.7%. If the Company is unable to renew leases for a substantial portion of the space under expiring leases, or promptly re-lease this space at anticipated rental rates, the C ompany’s cash flow could be adversely impacted. 
Tenant Credit Risk: 
In the event of a tenant default, the Company may experience delays in enforcing its rights as a landlord and may incur substantial costs in protecting its investment. Management regularly evaluates its accounts receivable reserve policy in light of its tenant base and general and local economic conditions. The accounts receivable allowances were $4.7 million or 9.1% of total receivables (including accrued rent receivable) as of June 30, 2005 compared to $4.2 million or 8.4% of total receivables (including accrued rent receivable) as of December 31, 2004. 
Development Risk: 
As of June 30, 2005, the Company had in development three office properties and had in redevelopment three office properties aggregating 1.1 million square feet. The total net investment in these projects is estimated to be $230.3 million of which $167.0 million had been incurred as of June 30, 2005. As of June 30, 2005, these projects were approximately 80% leased. One of these development properties is Cira Centre, a 29-story office tower located adjacent to Amtrak’s 30th Street Station in the University City District of Philadelphia. The total net investment in this project is estimated to be $177.6 million and the Company expects to complete the project in the fourth quarter of 2005. As of June 30, 2005, the office portion of this project was approximately 93% leased. While the Company is actively marketing space at these projects to prospective tenants, management cannot provide assurance as to the timing or terms of any leases for such space. If one or more of the Company’s assumptions regarding the successful efforts of development and leasing are incorrect, the resulting adjustments could impact earnings. 
ACQUISITIONS AND DISPOSITIONS OF REAL ESTATE INVESTMENTS 
During the six-month period ended June 30, 2005, the Company acquired one office property containing 385,884 net rentable square feet and 28.4 acres of developable land for an aggregate purchase price of $41.8 million. 
CRITICAL ACCOUNTING POLICIES AND ESTIMATES 
Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Management bases its estimates and assumptions on historical experience and current economic conditions. On an on-going basis, management evaluates its estimates and assumptions including those related to revenue, impairment of long-lived assets and the allowance for doubtful accounts. Actual results may differ from those estimates and assumptions. 
The Company’s Annual Report on Form 10-K for the year ended December 31, 2004, contains a discussion of the Company’s critical accounting policies. See also Note 2 in the Company’s unaudited consolidated financial statements for the six-month period ended June 30, 2005 as set forth herein. Management discusses the Company’s critical accounting policies and management’s judgments and estimates with the Company’s Audit Committee. 
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RESULTS OF OPERATIONS 
Comparison of the Three-Month Periods Ended June 30, 2005 and 2004 
The table below shows selected operating information for the Same Store Property Portfolio and the Total Portfolio. The Same Store Property Portfolio consists of 226 Properties containing an aggregate of approximately 15.0 million net rentable square feet that were owned for the entire three-month periods ended June 30, 2005 and 2004. This table also includes a reconciliation from the Same Store Property Portfolio to the Total Portfolio (i.e. all properties owned by us as during the three-month periods ended June 30, 2005 and 2004) by providing information for the properties which were acquired, sold, or placed into service and administrative/elimination information for the three-month periods ended June 30, 2005 and 2004. 
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 	Same Store Property Portfolio	 	Properties
Acquired (a)	 	Development
Properties 	 	Administrative/
Eliminations (b) 	 	Total Portfolio	 	
 		 		 		 		 		 	
(dollars in thousands)	 	2005	 	 	2004	 	 	Increase/
(Decrease)	 	%
Change	 	 	2005	 	2004	 	 	2005	 	 	2004	 	2005	 	2004	 	 	2005	 	 	2004	 	 	Increase/
(Decrease)	 	%
Change	 	
			 			 			 		 			 		 			 			 		 		 			 			 			 		 	
Revenue:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
   Rents	$	62,091	 	$	61,946	 	$	145	 	0	%	$	18,452	 	1,301	 	$	1,245	 	$	1,069	 	—	 	—	 	$	81,788	 	$	64,316	 	$	17,472	 	27	%	
   Tenant reimbursements	 	7,596	 	 	7,816	 	 	(220	)	-3	%	 	3,333	 	192	 	 	149	 	 	50	 	—	 	—	 	 	11,078	 	 	8,058	 	 	3,020	 	37	%	
   Other	 	916	 	 	1,260	 	 	(344	)	-27	%	 	264	 	—	 	 	3	 	 	13	 	1,194	 	2,567	 	 	2,377	 	 	3,840	 	 	(1,463	)	-38	%	
 		 		 		 		 		 		 		 		 		 		 		 		 		 		 	
Total revenue	 	70,603	 	 	71,022	 	 	(419	)	-1	%	 	22,049	 	1,493	 	 	1,397	 	 	1,132	 	1,194	 	2,567	 	 	95,243	 	 	76,214	 	 	19,029	 	25	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating Expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
   Property operating expenses	 	22,360	 	 	21,321	 	 	1,039	 	5	%	 	7,093	 	542	 	 	579	 	 	440	 	(2,231	)	(2,249	)	 	27,801	 	 	20,054	 	 	7,747	 	39	%	
   Real estate taxes	 	6,969	 	 	6,629	 	 	340	 	5	%	 	2,446	 	5	 	 	268	 	 	212	 	—	 	—	 	 	9,683	 	 	6,846	 	 	2,837	 	41	%	
   Depreciation and amortization	 	16,277	 	 	15,763	 	 	514	 	3	%	 	10,599	 	370	 	 	809	 	 	445	 	263	 	251	 	 	27,948	 	 	16,829	 	 	11,119	 	66	%	
   Administrative expenses	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	4,378	 	3,954	 	 	4,378	 	 	3,954	 	 	424	 	11	%	
 			 			 			 		 			 		 			 			 		 		 			 			 			 		 	
Total property operating expenses	 	45,606	 	 	43,713	 	 	1,893	 	4	%	 	20,138	 	917	 	 	1,656	 	 	1,097	 	2,410	 	1,956	 	 	69,810	 	 	47,683	 	 	22,127	 	46	%	
 			 			 			 		 			 		 			 			 		 		 			 			 			 		 	
Operating Income	 	24,997	 	 	27,309	 	 	(2,312	)	-8	%	 	1,911	 	576	 	 	(259	)	 	35	 	(1,216	)	611	 	 	25,433	 	 	28,531	 	 	(3,098	)	-11	%	
Other Income (Expense):	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
   Interest income	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	687	 	 	541	 	 	146	 	27	%	
   Interest expense	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(17,807	)	 	(11,948	)	 	(5,859	)	49	%	
Equity in income of real estate ventures	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	993	 	 	674	 	 	319	 	47	%	
Net gain on sales of interest in real estate	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 	 	1,148	 	 	(1,148	)	-100	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 			 			 			 		 	
Income before minority interest	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	9,306	 	 	18,946	 	 	(9,640	)	-51	%	
Minority interest attributable to	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
   continuing operations	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(376	)	 	(624	)	 	248	 	40	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 			 			 			 		 	
Income from continuing operations	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	8,930	 	 	18,322	 	 	(9,392	)	-51	%	
Income from discontinued operations (c)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 	 	(162	)	 	162	 	-100	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 			 			 			 		 	
Net Income	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	8,930	 	 	18,160	 	 	(9,230	)	-51	%	

(a)	– Represents the operations of properties acquired that are not included in the definition of the Same Store Property Portfolio. 	
(b) 	– Represents certain revenue and expenses at the corporate level as well as various intercompany costs that are eliminated in consolidation.	
(c)	– All properties sold during the respective periods meet the criteria for treatment as a discontinued operation and have been presented as such under SFAS No. 144 (“SFAS 144”), 
Accounting for the Impairment or Disposal of Long-Lived Assets . 	
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Revenue 
Revenue increased by $19.0 million primarily due to properties that were acquired in 2004, offset by a decrease in other income in 2005 as compared to 2004. Average occupancy for the Same Store Properties increased to 92.3% in 2005 from 90.9% in 2004. Other revenue represents lease termination fees, bankruptcy settlement proceeds, leasing commissions and third-party management fees. Total portfolio other revenue decreased to $2.4 million for the three-month period ended June 30, 2005 as compared to $3.8 million for the comparable period in 2004 primarily due to the settlement of a previously disclosed litigation totaling $1.0 million plus accrued interest on the Company’s security deposit in 2004. 
Operating Expenses and Real Estate Taxes 
Property operating expenses increased by $7.7 million in 2005 primarily due to the properties acquired in the latter half of 2004 and higher expense levels in 2005 on the Same Store Properties. Property operating expenses for the Same Store Properties increased by $1.0 million in 2005 over 2004 due to increases in utility expenses and repairs and maintenance expenses at various Same Store Properties. 
Real estate taxes increased by $2.8 million primarily due to the properties acquired in the latter half of 2004. Real estate taxes for the Same Store Properties increased by $0.3 million in 2005 as a result of higher tax rates and property assessments. 
Depreciation and Amortization Expense 
Depreciation and amortization expense increased by $11.1 million in 2005 primarily due to the properties acquired in the second half of 2004 and amortization from additional tenant improvements and leasing commissions incurred over the year. 
Administrative Expenses 
Administrative expenses increased by $0.4 million in 2005 primarily due to the cost of additional personnel hired as part of the TRC acquisition in September 2004 and higher compensation and benefits costs for employees. 
Interest Expense 
Interest expense increased by $5.9 million in 2005 primarily due to increased debt from the Company’s fixed rate unsecured notes issued in the fourth quarter of 2004 offset by a decrease in the effective borrowing cost under the Company’s unsecured credit facilities, including the effect of interest rate hedges during 2004. 
Equity in Income of Real Estate Ventures 
Equity in income of Real Estate Ventures increased by $0.3 million in 2005 as a result of increased net income from the Real Estate Ventures. 
Net Gain on Sales of Interests in Real Estate 
During the three-month period ended June 30, 2004, the Company sold one office property containing 103,000 net rentable square feet and one parcel of land containing 5.3 acres for an aggregate $18.2 million, realizing a net gain of $1.2 million (approximately $45,000 of which is included in income from discontinued operations). There were no property sales during the three-month period ended June 30, 2005. 
Minority Interest 
Minority interest from continuing operations represents the equity in income attributable to the portion of the Operating Partnership not owned by the Company. Minority interest from continuing operations decreased by $0.2 million in 2005 primarily due to decreased net income (as a result of a decrease in net gain on sales of interest in real estate and increased depreciation and interest expense). 
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Discontinued Operations 
Discontinued operations increased by $0.2 million in 2005 primarily due to the timing of sales for assets included in discontinued operations. 
Comparison of the Six-Month Periods Ended June 30, 2005 and 2004 
The table below shows selected operating information for the Same Store Property Portfolio and the Total Portfolio. The Same Store Property Portfolio consists of 226 Properties containing an aggregate of approximately 15.0 million net rentable square feet that were owned for the entire six-month periods ended June 30, 2005 and 2004. This table also includes a reconciliation from the Same Store Property Portfolio to the Total Portfolio (i.e. all properties owned by us during the six-month periods ended June 30, 2005 and 2004) by providing information for the properties which were acquired, sold, or placed into service and administrative/elimination information for the six-month periods ended June 30, 2005 and 2004. 
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 	 	 	 	Properties	 	Properties	 	 	Development	 	Administrative/	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Same Store Property Portfolio	 	 	Acquired (a)	 	Sold (a)	 	 	Properties	 	Eliminations (b)	 	 	Total Portfolio	 	
 	 		 			 		 			 		 			 	
 	 	 	 	 	 	 	Increase/	 	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Increase/	 	%	 	
(dollars in thousands)	 	2005	 	 	2004	 	(Decrease)	 	Change	 	 	2005	 	2004	 	2005	 	2004	 	 	2005	 	 	2004	 	2005	 	2004	 	 	2005	 	 	2004	 	 	(Decrease)	 	Change	 	
 		 				 		 			 		 		 		 			 			 		 		 			 			 			 		 	
Revenue:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
   Rents	$	124,009	 	$	124,406	 	($397	)	0	%	$	36,629	 	1,331	 	— 	 	137	 	$	2,378	 	$	2,122	 	— 	 	— 	 	$	163,016	 	$	127,996	 	$	35,020	 	27	%	
   Tenant reimbursements	 	16,867	 	 	15,715	 	1,152	 	7	%	 	6,006	 	192	 	— 	 	— 	 	 	287	 	 	144	 	— 	 	— 	 	 	23,160	 	 	16,051	 	 	7,109	 	44	%	
   Other	 	4,828	 	 	1,537	 	3,291	 	100	%	 	562	 	8	 	— 	 	— 	 	 	79	 	 	42	 	2,522	 	3,779	 	 	7,991	 	 	5,366	 	 	2,625	 	49	%	
 	 		 	 		 		 		 	 		 		  		 		 			 	 		 		 		 	 		 	 		 	 		 		 	
    Total revenue	 	145,704	 	 	141,658	 	4,046	 	3	%	 	43,197	 	1,531	 	— 	 	137	 	 	2,744	 	 	2,308	 	2,522	 	3,779	 	 	194,167	 	 	149,413	 	 	44,754	 	30	%	
Operating Expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
   Property operating expenses	 	46,458	 	 	44,908	 	1,550	 	3	%	 	14,790	 	542	 	— 	 	30	 	 	1,272	 	 	1,131	 	(4,840	)	(4,407	)	 	57,680	 	 	42,204	 	 	15,476	 	37	%	
   Real estate taxes	 	14,023	 	 	13,247	 	776	 	6	%	 	4,780	 	11	 	— 	 	— 	 	 	537	 	 	469	 	— 	 	— 	 	 	19,340	 	 	13,727	 	 	5,613	 	41	%	
   Depreciation and amortization	 	34,206	 	 	30,939	 	3,267	 	11	%	 	20,410	 	370	 	— 	 	— 	 	 	1,225	 	 	804	 	542	 	520	 	 	56,383	 	 	32,633	 	 	23,750	 	73	%	
   Administrative expenses	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	9,130	 	7,443	 	 	9,130	 	 	7,443	 	 	1,687	 	23	%	
 			 		 		 		 		 		 		 		 		 		 		 		 		 		 		 		 	
Total property operating expenses	 	94,687	 	 	89,094	 	5,593	 	6	%	 	39,980	 	923	 	— 	 	30	 	 	3,034	 	 	2,404	 	4,832	 	3,556	 	 	142,533	 	 	96,007	 	 	46,526	 	48	%	
 			 		 		 		 		 		 		 		 		 		 		 		 		 		 		 		 	
Operating Income	 	51,017	 	 	52,564	 	(1,547	)	-3	%	 	3,217	 	608	 	— 	 	107	 	 	(290	)	 	(96	)	(2,310	)	223	 	 	51,634	 	 	53,406	 	 	(1,772	)	-3	%	
Other Income (Expense):	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
   Interest income	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	1,467	 	 	1,052	 	 	415	 	39	%	
   Interest expense	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(35,604	)	 	(24,052	)	 	(11,552	)	48	%	
Equity in income of real estate ventures	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	1,551	 	 	908	 	 	643	 	71	%	
Net gain on sales of interest in real estate	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 	 	1,148	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 		 		 	 		 		 	
Income before minority interest	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	19,048	 	 	32,462	 	 	(12,266	)	-38	%	
Minority interest attributable to continuing operations	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(703	)	 	(1,885	)	 	1,182	 	63	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 		 		 		 		 	
Income from continuing operations	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	18,345	 	 	30,577	 	 	(11,084	)	-36	%	
Income from discontinued operations (c)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 	 	33	 	 	(33	)	-100	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 		 		 		 		 	
Net Income	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	18,345	 	 	30,610	 	 	(11,117	)	-36	%	

(a)	– Represents the operations of properties acquired that are not included in the definition of the Same Store Property Portfolio. 	
(b)	– Represents certain revenue and expenses at the corporate level as well as various intercompany costs that are eliminated in consolidation. 	
(c)	– All properties sold during the respective periods meet the criteria for treatment as a discontinued operation and have been presented as such under SFAS No. 144 (“SFAS 144”), Accounting for the Impairment or Disposal of Long-Lived Assets . 	
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Revenue 
Revenue increased by $44.8 million primarily due to properties that were acquired in 2004 and an increase in other income in 2005 as compared to 2004. Other revenue represents lease termination fees, bankruptcy settlement proceeds, leasing commissions and third-party management fees. Total portfolio other revenue increased by $2.6 million when comparing the six-month period ended June 30, 2005 to the comparable period in 2004 primarily due to a $3.7 million net termination fee associated with a single tenant termination in 2005 offset by the settlement of litigation totaling $1.0 million plus accrued interest on the Company’s security deposit in 2004. 
Operating Expenses and Real Estate Taxes 
Property operating expenses increased by $15.5 million in 2005 primarily due to the properties acquired in the latter half of 2004 and higher expense levels in 2005 on the Same Store Properties. Property operating expenses for the Same Store Properties increased by $1.6 million in 2005 over 2004 due to increases in snow removal costs, utility expenses and repairs and maintenance expenses at various Same Store Properties. 
Real estate taxes increased by $5.6 million primarily due to the properties acquired in the latter half of 2004. Real estate taxes for the Same Store Properties increased by $0.8 million in 2005 as a result of higher tax rates and property assessments. 
Depreciation and Amortization Expense 
Depreciation and amortization expense increased by $23.8 million in 2005 primarily due to the properties acquired in the second half of 2004 and amortization from additional tenant improvements and leasing commissions incurred over the year. 
Administrative Expenses 
Administrative expenses increased by $1.7 million in 2005 primarily due to the cost of additional personnel hired as part of the TRC acquisition in September 2004, higher compensation and benefits costs for employees and increased spending on process and technology improvements. 
Interest Expense 
Interest expense increased by $11.6 million in 2005 primarily due to increased debt from the Company’s fixed rate unsecured notes issued in the fourth quarter of 2004 offset by a decrease in the effective borrowing cost under the Company’s unsecured credit facilities, including the effect of interest rate hedges during 2004. 
Equity in Income of Real Estate Ventures 
Equity in income of Real Estate Ventures increased by $0.6 million in 2005 as a result of increased net income from the Real Estate Ventures. 
Net Gain on Sales of Interests in Real Estate 
During the six-month period ended June 30, 2004, the Company sold three office properties containing 141,000 net rentable square feet, one industrial property containing 45,000 net rentable square feet and one parcel of land containing 5.3 acres for an aggregate of $24.3 million, realizing a net gain of $1.4 million ($0.2 million of the net gain is presented in income from discontinued operations). There were no property sales during the six-month period ended June 30, 2005. 
Minority Interest 
Minority interest from continuing operations represents the equity in income attributable to the portion of the Operating Partnership not owned by the Company. Minority interest from continuing operations decreased by $1.2 million in 2005 primarily due to decreased net income (as a result of a decrease in net gain on sales of interest in real estate and increased depreciation and interest expense). 
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LIQUIDITY AND CAPITAL RESOURCES 
General 
Our principal liquidity needs for the next twelve months are as follows: 
 	•	fund normal recurring expenses,	
 	 	 	
 	•	meet debt service requirements,	
 	 	 	
 	•	fund capital expenditures, including capital and tenant improvements and leasing costs,	
 	 	 	
 	•	fund current development costs, including continued development of Cira Centre in University City, Philadelphia, and	
 	 	 	
 	•	fund distributions declared by our Board of Trustees.	
We believe that these needs will be satisfied using cash flows generated by operations and provided by financing activities. Rental revenue, recovery income from tenants, and other income from operations are our principal sources of cash used to pay operating expenses, debt service, recurring capital expenditures and the minimum distribution required to maintain our REIT qualification. We seek to increase cash flows from our existing properties by maintaining quality standards for our properties that promote high occupancy rates and permit increases in rental rates while reducing tenant turnover and controlling operating expenses. Our sources of revenue also include third-party fees generated by our property management, leasing, development and construction businesses. Consequently, we believe our revenue, together with proceeds from financing activities, will continue to provide the necessary funds for our short-term liquidity needs. However, mat erial changes in these factors may adversely affect our net cash flows. Such changes, in turn, would adversely affect our ability to fund distributions, debt service payments and tenant improvements. In addition, a material adverse change in our cash provided by operations may affect the financial performance covenants under our unsecured Credit Facility and unsecured notes. 
Our principal liquidity needs for periods beyond twelve months are for the costs of developments, redevelopments, property acquisitions, scheduled debt maturities, major renovations, expansions and other non-recurring capital improvements. We draw on multiple financing sources to fund our long-term capital needs. Our Credit Facility is utilized for general business purposes, including the acquisition, development and redevelopment of properties and the repayment of other debt. In the fourth quarter of 2004 we completed two offerings of unsecured notes and expect to utilize the debt market and common equity as capital sources for other long-term capital needs. 
Cash Flows 
The following summary discussion of our cash flows is based on the consolidated statement of cash flows and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented. 
As of June 30, 2005 and December 31, 2004, we maintained cash and cash equivalents of $9.3 million and $15.3 million, respectively, a decrease of $6.0 million. This decrease was the result of the following changes in cash flow from our activities for the six-month period ended June 30: 
   Activity	 	 	2005	 	 	2004	 	
	 			 			 	
Operating	 	$	62,505	 	$	73,342	 	
Investing	 	 	(126,337	)	 	(31,103	)	
Financing	 	 	57,807	 	 	(40,246	)	
	 			 			 	
Net cash flows	 	$	(6,025	)	$	1,993	 	
 	 			 			 	
Our principle source of cash flows is from the operations of our Properties. Our decreased cash flow from operating activities in the six-months ended June 30, 2005 compared to the same period in 2004 is primarily attributable to reductions in other assets which generated positive cash flow of $11.8 million in the 2004 period, the timing of real estate tax and other payments which generated higher cash outflows in the 2005 period, and greater net cash inflows from a larger asset base in 2005 as compared to 2004. 
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Decreased cash flows from investing activities (comparing the first half of 2005 to the first half of 2004) were attributable to our acquisition of properties and developable land parcels in 2005 ($38.9 million), the absence of dispositions during 2005 ($20.0 million in 2004) and construction costs related to our Cira Centre development project and various other capital and tenant improvement projects (contributing to a $35.7 million increase in 2005). 
Increased cash flows from financing activities was comprised of additional borrowings on our Credit Facility in 2005 ($113 million) to fund acquisitions and development activities compared to the 2004 period in which equity issuances and the related proceeds were used to reduce outstanding indebtedness and to fund the repurchase of preferred units in our operating partnership. 
Capitalization 
Indebtedness 
As of June 30 2005, we had approximately $1.4 billion of outstanding indebtedness. The table below summarizes our mortgage notes payable, our unsecured notes and our revolving credit facility at June 30, 2005 and December 31, 2004: 
 	 	June 30,	 	 	December 31,	 	
		2005			2004		
			 				
	 	(dollars in thousands)		
Balance:	 	 	 	 	 	 	
   Fixed rate	$	1,128,581	 	$	1,133,513	 	
   Variable rate	 	281,142	 	 	173,156	 	
 			 			 	
      Total	$	1,409,723	 	$	1,306,669	 	

Percent of Total Debt:	 	 	 	 	 	 	
   Fixed rate	 	80	%	 	87	%	
   Variable rate	 	20	%	 	13	%	
 			 			 	
      Total	 	100	%	 	100	%	

Weighted-average interest rate at period end:	 	 	 	 	 	 	
   Fixed rate	 	5.9	%	 	5.9	%	
   Variable rate	 	4.0	%	 	3.5	%	
 			 			 	
      Total	 	5.6	%	 	5.6	%	
 			 			 	
The variable rate debt shown above generally bears interest based on various spreads over LIBOR (the term of which is selected by the Company). 
The Company utilizes credit facility borrowings for general business purposes, including the acquisition, development and redevelopment of properties and the repayment of other debt. The Company maintains a $450 million unsecured credit facility (the “Credit Facility”) that matures in May 2007, subject to a one year extension option upon payment of a fee and absence any defaults at the time of the extension. Borrowings under the Credit Facility generally bear interest at LIBOR plus a spread over LIBOR ranging from 0.65% to 1.20% based on the Company’s unsecured senior debt rating. The Company has an option to increase its maximum borrowings under the Credit Facility to $600 million subject to the absence of any defaults and our ability to acquire additional commitments from our existing lenders or new lenders. The Credit Facility contains various financial and non-financial covenants. As of June 30, 2005, the Company was in compl iance with all such covenants. 
The Company expects to renegotiate its Credit Facility prior to maturity or extend its term. 
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The Company utilizes unsecured notes as a long-term financing alternative. The indentures and note purchase agreements contain various financial restrictions and requirements, including (1) a leverage ratio not to exceed 60%, (2) a secured debt leverage ratio not to exceed 40%, (3) an debt service coverage ratio of greater than 1.5 to 1.0, and (4) an unencumbered asset value of not less than 150% of unsecured debt. In addition, the note purchase agreement relating to the 2008 Notes contains covenants that are similar to the above covenants. At June 30, 2005, the Company was in compliance with each of these financial restrictions and requirements.
The Company has mortgages, loans payable and other obligations which consist of various loans collateralized by certain of the Company’s Properties. Payments on mortgages, loans payable and other obligations are generally due in monthly installments of principal and interest, or interest only. 
The Company intends to refinance its mortgage indebtedness as it matures primarily through the use of unsecured debt or equity.
As of June 30, 2005, the Company’s debt-to-market capitalization ratio was 42.9%. As a general policy, the Company intends, but is not obligated, to adhere to a policy of maintaining a debt-to-market capitalization ratio of no more than 50%.
Equity
On June 15, 2005, the Company declared a distribution of $0.44 per Common Share, totaling $24.7 million, which was paid on July 15, 2005 to shareholders of record as of July 6, 2005. The Operating Partnership simultaneously declared a $0.44 per unit cash distribution to holders of Class A Units totaling $0.9 million.
On June 15, 2005, the Company declared distributions on its Series C Preferred Shares and Series D Preferred Shares to holders of record on June 30, 2005. These shares are entitled to a preferential return of 7.50% and 7.375%, respectively. Distributions paid on July 15, 2005 to holders of Series C Preferred Shares and Series D Preferred Shares totaled $0.9 million and $1.1 million, respectively.
The Company’s Board of Trustees approved a share repurchase program authorizing the Company to repurchase up to 4.0 million of its outstanding Common Shares. Through June 30, 2005, the Company had repurchased 3.2 million of its Common Shares at an average price of $17.75 per share. Under the share repurchase program, the Company has the authority to repurchase an additional 762,000 shares. No Common Shares were repurchased during the six-month period ended June 30, 2005 under the share repurchase program. No time limit has been placed on the duration of the share repurchase program.
Shelf Registration Statement
The Company and the Operating Partnership have an effective shelf registration statement on Form S-3 filed with the Securities and Exchange Commission that registered $750 million in common shares, preferred shares, depositary shares and warrants and $750 million in debt securities. As of June 30, 2005, the registration statement had the entire $750 million of capacity for future issuances of common shares, preferred shares, depositary shares and warrants and had the entire $750 million of capacity for future issuances of debt securities.
Short- and Long-Term Liquidity
The Company believes that its cash flow from operations is adequate to fund its short-term liquidity requirements. Cash flow from operations is generated primarily from rental revenues and operating expense reimbursements from tenants and management services income from providing services to third parties. The Company intends to use these funds to meet short-term liquidity needs, which are to fund operating expenses, debt service requirements, recurring capital expenditures, tenant allowances, leasing commissions and the minimum distributions required to maintain the Company’s REIT qualification under the Internal Revenue Code.
The Company expects to meet its long-term liquidity requirements, such as for property acquisitions, development, investments in real estate ventures, scheduled debt maturities, major renovations, expansions and other significant capital improvements, through cash from operations, borrowings under its Credit Facility, other long-term secured and unsecured indebtedness, the issuance of equity securities and the proceeds from the disposition of selected assets.
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Inflation 
A majority of the Company’s leases provide for separate escalations of real estate taxes and operating expenses either on a triple net basis or over a base amount. In addition, many of the office leases provide for fixed base rent increases. The Company believes that inflationary increases in expenses will be significantly offset by expense reimbursement and contractual rent increases. 
Commitments and Contingencies 
The following table outlines the timing of payment requirements related to the Company’s contractual commitments as of June 30, 2005: 
 	 	 	 	 	Payments by Period (in thousands)	 	 	 	 	
										
	 	 	 	 	Less than	 	 	 	 	 	 	 		More than		
	 	Total			1 Year			1-3 Years			3-5 Years			5 Years		
 			 			 			 			 			 	
Mortgage notes payable (a)	$	501,429	 	$	14,888	 	$	35,768	 	$	104,207	 	$	346,566	 	
Revolving credit facility	 	265,000	 	 	—	 	 	265,000	 	 	—	 	 	—	 	
Unsecured debt (a)	 	638,000	 	 	—	 	 	—	 	 	388,000	 	 	250,000	 	
Ground leases (b)	 	259,990	 	 	1,435	 	 	2,869	 	 	2,993	 	 	252,693	 	
Other liabilities	 	1,525	 	 	837	 	 	—	 	 	—	 	 	688	 	
 			 			 			 			 			 	
 	$	1,665,944	 	$	17,160	 	$	303,637	 	$	495,200	 	$	849,947	 	

(a)	Amounts do not include unamortized discounts and/or premiums.	
(b)	Future minimum rental payments under the terms of all non-cancelable ground leases under which the Company is the lessee are expensed on a straight-line basis regardless of when payments are due.	
The Company intends to refinance its mortgage notes payable as they become due or repay those that are secured by properties being sold. The Company expects to renegotiate its Credit Facility prior to maturity or extend its term. 
We are a party to an agreement with one of our Trustees (Donald E. Axinn) in which we agreed to fund $5.5 million in September 2010 to acquire a fifty percent interest in an approximately 141,725 square foot office building located at 101 Paragon Drive, Montvale, New Jersey. Our agreement provides for proceeds of our $5.5 million payment to be used (together with funds provided by Mr. Axinn) to repay in full the third party loan that encumbers this property. 
As part of our purchase of the TRC Properties in September 2004, the Operating Partnership agreed to issue to the sellers up to a maximum of $9.7 million of Class A Units of the Operating Partnership if certain of the acquired properties achieve at least 95% occupancy prior to September 21, 2007. At June 30, 2005, the maximum amount payable under this arrangement was $6.7 million. 
As part of the TRC acquisition, we acquired our interest in Two Logan Square, a 696,477 square foot office building in Philadelphia, primarily through a second and third mortgage secured by this property. We currently do not expect to take title to Two Logan Square until, at the earliest, September 2019. In the event that we take title to Two Logan Square upon a foreclosure of our mortgage, we have agreed to make a payment to an unaffiliated third party with a residual interest in the fee owner of this property. The amount of the payment would be $0.6 million if we must pay a state and local transfer upon taking title, and $2.9 million if no transfer tax is payable upon the transfer. 
In our acquisition of the TRC Properties and several of our other acquisitions, we agreed not to sell the acquired properties. In the case of the TRC Properties, we agreed not to sell the acquired properties for periods ranging from three to 15 years from the acquisition date as follows: 201 Radnor Financial Center, 555 Radnor Financial Center and 300 Delaware Avenue (three years); One Rodney Square and 130/150/170 Radnor Financial Center (10 years); and One Logan Square, Two Logan Square and Radnor Corporate Center (15 years). We also own 14 properties that aggregate 1.0 million square feet and have agreed not to sell these properties for periods that expire through 2008. These agreements generally provide that we may dispose of the subject Properties only in transactions that qualify as tax-free exchanges under Section 1031 of the Code or in other tax deferred transactions. In the event that we sell any of the properties within the applicable re stricted period in non-exempt transactions, we have agreed to pay significant tax liabilities that would be incurred by the parties who sold us the applicable property. 
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We invest in our Properties and regularly incur capital expenditures in the ordinary course to maintain the Properties. We believe that such expenditures enhance the competitiveness of the Properties. We also enter into construction, utility and service contracts in the ordinary course of business which may extend beyond one year. These contracts include terms that provide for cancellation with insignificant or no cancellation penalties. 
Item 3.  Quantitative and Qualitative Disclosures about Market Risk 
Market risk is the exposure to loss resulting from changes in interest rates, commodity prices and equity prices. In pursuing its business plan, the primary market risk to which the Company is exposed is interest rate risk. Changes in the general level of interest rates prevailing in the financial markets may affect the spread between the Company’s yield on invested assets and cost of funds and, in turn, the Company’s ability to make distributions or payments to its shareholders. While the Company has not experienced any significant credit losses, in the event of a significant rising interest rate environment and/or economic downturn, defaults could increase and result in losses to the Company which adversely affect its operating results and liquidity. 
There have been no material changes in Quantitative and Qualitative disclosures in 2005 from the disclosures included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2004. Reference is made to Item 7 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2004 and the caption “Liquidity and Capital Resources” under Item 2 of this Quarterly Report on Form 10-Q. 
Item 4.  Controls and Procedures 
 	(a)
  	Evaluation of disclosure controls and procedures. The Company’s Chief Executive Officer and its Chief Financial Officer, after evaluating the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this quarterly report, have concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that it files under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.	
 	 	 	
 	(b)
  	Changes in internal controls over financial reporting. There was no change in the 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 Company’s internal control over financial reporting.	
Part II.  OTHER INFORMATION 
Item 1.  Legal Proceedings 
Not applicable. 
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds 
The following table summarizes the share repurchases during the three-month period ended June 30, 2005: 
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 	Total 
Number of 
Shares 
Purchased (A)	 	 	Average
Price Paid Per
Share	 	Total
Number of
Shares
Purchased as
Part of Publicly
Announced Plans
or Programs	 	Maximum
Number of
Shares that May
Yet Be Purchased
Under the Plans
or Programs	 	
 		 			 		 		 	
2005		 	 		 		 		 	
April 	—	 	$	—	 	—	 	762,000	 	
May	—	 	$	—	 	—	 	762,000	 	
June	—	 	$	—	 	—	 	762,000	 	
 		 			 		 		 	
    Total	—	 	$	—	 	—	 	762,000	 	
 		 			 		 		 	
(A)	Rep resent Common Shares cancelled by the Comp any upon vesting of restricted Common Shares previously awarded to Comp any employees, in satisfaction of tax withholding obligations.	
 	 	
Item 3. Defaults Upon Senior Securities 
Not applicable. 
Item 4. Submission of Matters to a Vote of Security Holders 
We incorporate by reference the disclosure contained in Part II, Item 5 of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2005 filed with the Securities and Exchange Commission on May 6, 2005. This disclosure summarizes the voting results at our annual meeting of shareholders held on May 2, 2005. 
Item 5. Other Information
Not applicable.
Item 6. Exhibits
(a)	Exhibits	
 	 	
12.1	Statement re Computation of Ratios	
31.1	Certification Pursuant to 13a-14 under the Securities Exchange Act of 1934	
31.2	Certification Pursuant to 13a-14 under the Securities Exchange Act of 1934	
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	
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SIGNATURES OF REGISTRANT 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. 
BRANDYWINE REALTY TRUST 
(Registrant) 
Date: August 8, 2005	By:	/s/ Gerard H. Sweeney	
 	  		
 	Gerard H. Sweeney, President and Chief Executive Officer	
 	(Principal Executive Officer)	

Date: August 8, 2005	By:	/s/ Christopher P. Marr	
 	  		
 	Christopher P. Marr, Senior Vice President and Chief Financial Officer	
 	(Principal Financial Officer)	

Date: August 8, 2005	By:	/s/ Timothy M. Martin	
 	  		
 	Timothy M. Martin, Vice President-Finance and Chief Accounting Officer	
 	(Principal Accounting Officer)	

Brandywine Realty Trust 
Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Share Distributions
(in thousands) 
 	 	For the six months ended June 30,	 	 	For the years ended December 31,	 	
 		 		 	
 	 2005	 	 2004	 	 2004	 	 2003	 	 2002	 	 2001	 	 2000	 	
 		 		 		 		 		 		 		 	
Earnings before fixed charges:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Add:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
     Income from continuing operations (a)	$	18,345	 	$	30,577	 	$	57,604	 	$	75,832	 	$	47,643	 	$	19,462	 	$	38,953	 	
     Minority interest attributable to continuing operations	 	703	 	 	1,885	 	 	2,472	 	 	9,294	 	 	9,375	 	 	7,760	 	 	8,800	 	
     Fixed charges - per below	 	40,782	 	 	27,534	 	 	61,894	 	 	69,476	 	 	76,950	 	 	83,627	 	 	84,604	 	
Less:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
     Income from equity method investments not distributed	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	(518	)	
     Capitalized interest	 	(3,870	)	 	(991	)	 	(3,030	)	 	(1,503	)	 	(2,949	)	 	(5,178	)	 	(8,182	)	
     Preferred Distributions of consolidated subsidiaries	 	—	 	 	(832	)	 	(832	)	 	(7,069	)	 	(7,069	)	 	(7,069	)	 	(7,069	)	
 			 			 			 			 			 			 			 	
Earnings before fixed charges	$	55,960	 	$	58,173	 	$	118,108	 	$	146,030	 	$	123,950	 	$	98,602	 	$	116,588	 	

Fixed charges and Preferred Distributions:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest expense (including amortization)	$	35,604	 	$	24,052	 	$	55,061	 	$	57,835	 	$	63,522	 	$	67,496	 	$	64,746	 	
Capitalized interest	 	3,870	 	 	991	 	 	3,030	 	 	1,503	 	 	2,949	 	 	5,178	 	 	8,182	 	
Proportionate share of interest for unconsolidated real estate ventures	 	1,308	 	 	1,659	 	 	2,971	 	 	3,069	 	 	3,410	 	 	3,884	 	 	4,607	 	
Distributions to preferred unitholders in Operating Partnership	 	—	 	 	832	 	 	832	 	 	7,069	 	 	7,069	 	 	7,069	 	 	7,069	 	
 			 			 			 			 			 			 			 	
     Total Fixed Charges	 	40,782	 	 	27,534	 	 	61,894	 	 	69,476	 	 	76,950	 	 	83,627	 	 	84,604	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income allocated to preferred shareholders	 	3,996	 	 	4,695	 	 	9,720	 	 	11,906	 	 	11,906	 	 	11,906	 	 	11,906	 	
 			 			 			 			 			 			 			 	
     Total Preferred Distributions	 	3,996	 	 	4,695	 	 	9,720	 	 	11,906	 	 	11,906	 	 	11,906	 	 	11,906	 	
 			 			 			 			 			 			 			 	
     Total combined fixed charges and preferred distributions	$	44,778	 	$	32,229	 	$	71,614	 	$	81,382	 	$	88,856	 	$	95,533	 	$	96,510	 	
 			 			 			 			 			 			 			 	
Ratio of earnings to combined fixed charges and preferred distributions	 	1.25	 	 	1.80	 	 	1.65	 	 	1.79	 	 	1.39	 	 	1.03	 	 	1.21	 	

(a)	Amounts for the six months ended June 30, 2005 and 2004 and for the years ended December 31, 2004, 2003, 2002, 2001 and 2000 have been reclassified to present properties identified as held for sale consistent with the presentation for the period ended June 30, 2004. As a result, operations have been reclassified to discontinued operations from continuing operations for all periods presented. 	

CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED
I, Gerard H. Sweeney, certify that:
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 in 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 other 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: August 8, 2005 	 	 	 	
 	 	 	 	
  	 	 /s/ Gerard H. Sweeney  	 	
  	 		 	
  	 	Gerard H. Sweeney  	 	
  	 	President and Chief Executive Officer  	 	

CERTIFICATION PURSUANT TO 
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED 
I, Christopher P. Marr, certify that:
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 in 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 other 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: August 8, 2005 	 	 	
 	 	  	  	 /s/ Christopher P. Marr  	
 	 	  			
 	 	  	  	Christopher P. Marr  	
 	 	  	  	Senior Vice President and Chief Financial Officer  	

RULE 13(a)-14(b) CERTIFICATION 
PURSUANT TO 
18 U.S.C. SECTION 1350, 
AS ADOPTED PURSUANT TO 
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002*
In connection with the Quarterly Report of Brandywine Realty Trust (the “Company”) on Form 10-Q for the quarter ended June 30, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Gerard H. Sweeney, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
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 result of operations of the Company. 	
 	
Date: August 8, 2005	
 	/s/ Gerard H. Sweeney	
 		
 	Gerard H. Sweeney 
President and Chief Executive Officer	
* A signed original of this written statement required by Section 906 has been provided to Brandywine Realty Trust and will be retained by Brandywine Realty Trust and furnished to the Securities and Exchange Commission or its staff upon request.

RULE 13(a)-14(b) CERTIFICATION
PURSUANT TO 
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO 
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002*
In connection with the Quarterly Report of Brandywine Realty Trust (the “Company”) on Form 10-Q for the quarter ended June 30, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Christopher P. Marr, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 
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 result of operations of the Company.	
 	 	
Date: August 8, 2005 	 	
 	/s/ Christopher P. Marr  	
 		
 	Christopher P. Marr 	
 	Senior Vice President and Chief Financial Officer 	
* A signed original of this written statement required by Section 906 has been provided to Brandywine Realty Trust and will be retained by Brandywine Realty Trust and furnished to the Securities and Exchange Commission or its staff upon request.