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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 March 31, 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
incorporation or organization	 	(I.R.S. Employer Identification No.)	
 	 	 	
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 Act).    Yes      No  
 
A total of 55,953,597 Common Shares of Beneficial Interest, par value $0.01 per share, were outstanding as of May 3, 2005.

	

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BRANDYWINE REALTY TRUST
TABLE OF CONTENTS
 
PART I - FINANCIAL INFORMATION
 
 	 	Page	
 	 		
Item 1.	Financial Statements (unaudited)	 	
 	 	 	
 	Consolidated Balance Sheets as of March 31, 2005 and December 31, 2004	3 	
 	 	 	
 	Consolidated Statements of Operations for the three-month periods ended March 31, 2005 and 2004	4 	
 	 	 	
 	Consolidated Statements of Other Comprehensive Income for the three-month periods ended March 31, 2005 and 2004	5 	
 	 	 	
 	Consolidated Statements of Cash Flows for the three-month periods ended March 31, 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	20	
 	 	 	
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	29	
 	 	 	
Item 4.	Controls and Procedures	29	
 
PART II - OTHER INFORMATION
 
Item 1.	Legal Proceedings	29	
 	 	 	
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29	
 	 	 	
Item 3.	Defaults Upon Senior Securities	30	
 	 	 	
Item 4.	Submission of Matters to a Vote of Security Holders	30	
 	 	 	
Item 5.	Other Information	30	
 	 	 	
Item 6.	Exhibits	31	
 	 	 	
 	Signatures	32	
 
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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)
 
 	 	March 31,
2005	 	December 31,
2004	 	
 	 		 		 	
ASSETS	 	 	 	 	 	 	 	
Real estate investments:	 	 	 	 	 	 	 	
Operating properties	 	$	2,484,932	 	$	2,483,134	 	
Accumulated depreciation	 	 	(339,709	)	 	(325,802	)	
 	 			 			 	
Operating real estate investments, net	 	 	2,145,223	 	 	2,157,332	 	
Construction-in-progress	 	 	172,585	 	 	145,016	 	
Land held for development	 	 	74,051	 	 	61,517	 	
 	 			 			 	
Total real estate investments, net	 	 	2,391,859	 	 	2,363,865	 	
Cash and cash equivalents	 	 	15,473	 	 	15,346	 	
Escrowed cash	 	 	18,791	 	 	17,980	 	
Accounts receivable, net	 	 	12,575	 	 	11,999	 	
Accrued rent receivable, net	 	 	35,668	 	 	32,641	 	
Marketable securities	 	 	615	 	 	423	 	
Investment in real estate ventures, at equity	 	 	12,741	 	 	12,754	 	
Deferred costs, net	 	 	34,696	 	 	34,449	 	
Intangible assets, net	 	 	91,004	 	 	101,056	 	
Other assets	 	 	47,661	 	 	43,471	 	
 	 			 			 	
Total assets	 	$	2,661,083	 	$	2,633,984	 	
 	 			 			 	
LIABILITIES AND BENEFICIARIES’ EQUITY	 	 	 	 	 	 	 	
Mortgage notes payable	 	$	513,329	 	$	518,234	 	
Unsecured notes	 	 	636,485	 	 	636,435	 	
Unsecured credit facility	 	 	200,000	 	 	152,000	 	
Accounts payable and accrued expenses	 	 	44,011	 	 	49,242	 	
Distributions payable	 	 	27,517	 	 	27,363	 	
Tenant security deposits and deferred rents	 	 	19,630	 	 	20,046	 	
Acquired below market leases, net of accumulated amortization of $3,382 and $2,341	 	 	37,806	 	 	39,271	 	
Other liabilities	 	 	1,525	 	 	1,525	 	
 	 			 			 	
Total liabilities	 	 	1,480,303	 	 	1,444,116	 	
Minority interest	 	 	42,022	 	 	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-55,625,848 in 2005 and 55,292,752 in 2004	 	 	557	 	 	553	 	
Additional paid-in capital	 	 	1,355,297	 	 	1,346,651	 	
Cumulative earnings	 	 	379,930	 	 	370,515	 	
Accumulated other comprehensive loss	 	 	(2,825	)	 	(3,130	)	
Cumulative distributions	 	 	(594,244	)	 	(567,630	)	
 	 			 			 	
Total beneficiaries’ equity	 	 	1,138,758	 	 	1,147,002	 	
 	 			 			 	
Total liabilities and beneficiaries’ equity	 	$	2,661,083	 	$	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 ended March 31,	 	
 	 		 	
 	 	2005	 	2004	 	
 	 		 		 	
Revenue:	 	 	 	 	 	 	 	
Rents	 	$	81,228	 	$	63,680	 	
Tenant reimbursements	 	 	12,082	 	 	7,993	 	
Other	 	 	5,614	 	 	1,526	 	
 	 			 			 	
Total revenue	 	 	98,924	 	 	73,199	 	
Operating Expenses:	 	 	 	 	 	 	 	
Property operating expenses	 	 	29,879	 	 	22,150	 	
Real estate taxes	 	 	9,657	 	 	6,881	 	
Depreciation and amortization	 	 	28,435	 	 	15,804	 	
Administrative expenses	 	 	4,752	 	 	3,489	 	
 	 			 			 	
Total operating expenses	 	 	72,723	 	 	48,324	 	
 	 			 			 	
Operating income	 	 	26,201	 	 	24,875	 	
Other Income (Expense):	 	 	 	 	 	 	 	
Interest income	 	 	780	 	 	511	 	
Interest expense	 	 	(17,797	)	 	(12,104	)	
Equity in income of real estate ventures	 	 	558	 	 	234	 	
 	 			 			 	
Income before minority interest	 	 	9,742	 	 	13,516	 	
Minority interest attributable to continuing operations	 	 	(327	)	 	(1,261	)	
 	 			 			 	
Income from continuing operations	 	 	9,415	 	 	12,255	 	
Discontinued operations:	 	 	 	 	 	 	 	
Income from discontinued operations	 	 	—	 	 	(1	)	
Net gain on disposition of discontinued operations	 	 	—	 	 	204	 	
Minority interest	 	 	—	 	 	(8	)	
 	 			 			 	
Income from discontinued operations	 	 	—	 	 	195	 	
 	 			 			 	
Net income	 	 	9,415	 	 	12,450	 	
Income allocated to Preferred Shares	 	 	(1,998	)	 	(2,018	)	
Preferred Share redemption/conversion benefit	 	 	—	 	 	4,500	 	
 	 			 			 	
Income allocated to Common Shares	 	$	7,417	 	$	14,932	 	
 	 			 			 	
Basic earnings per Common Share:	 	 	 	 	 	 	 	
Continuing operations	 	$	0.13	 	$	0.34	 	
Discontinued operations	 	 	—	 	 	—	 	
 	 			 			 	
 	 	$	0.13	 	$	0.34	 	
 	 			 			 	
Diluted earnings per Common Share:	 	 	 	 	 	 	 	
Continuing operations	 	$	0.13	 	$	0.34	 	
Discontinued operations	 	 	—	 	 	—	 	
 	 			 			 	
 	 	$	0.13	 	$	0.34	 	

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 ended March 31,	 	
 	 		 	
 	 	2005	 	2004	 	
 	 		 		 	
Net Income	 	$	9,415	 	$	12,450	 	
Other comprehensive income:	 	 	 	 	 	 	 	
Unrealized gain (loss) on derivative financial instruments	 	 	—	 	 	(76	)	
Reclassification of realized losses on derivative financial  instruments to operations	 	 	113	 	 	1,378	 	
Unrealized gain (loss) on available-for-sale securities	 	 	192	 	 	(792	)	
Reclassification of realized (gains) losses on available for sale securities to operations	 	 	—	 	 	(233	)	
 	 			 			 	
Total other comprehensive income	 	 	305	 	 	277	 	
 	 			 			 	
Comprehensive Income	 	$	9,720	 	$	12,727	 	

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)
 
 	 	Three-Month Periods
Ended March 31,	 	
 	 		 	
 	 	2005	 	2004	 	
 	 		 		 	
Cash flows from operating activities:	 	 	 	 	 	 	 	
Net income	 	$	9,415	 	$	12,450	 	
Adjustments to reconcile net income to net cash from operating activities:	 	 	 	 	 	 	 	
Depreciation	 	 	21,203	 	 	13,606	 	
Amortization:	 	 	 	 	 	 	 	
Deferred financing costs	 	 	644	 	 	483	 	
Deferred leasing costs	 	 	1,950	 	 	1,811	 	
Acquired above (below) market leases	 	 	(505	)	 	24	 	
Assumed lease intangibles	 	 	5,282	 	 	490	 	
Deferred compensation costs	 	 	691	 	 	553	 	
Straight-line rent	 	 	(3,275	)	 	(1,925	)	
Provision for doubtful accounts	 	 	400	 	 	430	 	
Net gain on sale of interests in real estate	 	 	—	 	 	(204	)	
Minority interest	 	 	327	 	 	1,269	 	
Changes in assets and liabilities:	 	 	 	 	 	 	 	
Accounts receivable	 	 	(213	)	 	(959	)	
Other assets	 	 	(4,437	)	 	6,831	 	
Accounts payable and accrued expenses	 	 	(4,356	)	 	(5,302	)	
Tenant security deposits and deferred rents	 	 	(416	)	 	1,808	 	
Other liabilities	 	 	(89	)	 	1,703	 	
 	 			 			 	
Net cash from operating activites	 	 	26,621	 	 	33,068	 	
Cash flows from investing activities:	 	 	 	 	 	 	 	
Acquisition of properties	 	 	(11,629	)	 	—	 	
Sales of properties, net	 	 	—	 	 	2,012	 	
Capital expenditures	 	 	(33,247	)	 	(18,379	)	
Investment in unconsolidated Real Estate Ventures	 	 	(48	)	 	(77	)	
Escrowed cash	 	 	(811	)	 	(859	)	
Cash distributions from unconsolidated Real Estate Ventures in excess of equity in income	 	 	44	 	 	261	 	
Increase in cash due to consolidation of variable interest entities	 	 	—	 	 	426	 	
Leasing costs	 	 	(3,182	)	 	(2,026	)	
 	 			 			 	
Net cash from investing activities	 	 	(48,873	)	 	(18,642	)	
Cash flows from financing activites:	 	 	 	 	 	 	 	
Proceeds from (repayments of) Credit Facility borrowings	 	 	48,000	 	 	(40,000	)	
Repayments of mortgage notes payable	 	 	(4,905	)	 	(37,204	)	
Payments of deferred financing costs	 	 	(59	)	 	—	 	
Repayments on employee stock loans	 	 	50	 	 	1	 	
Exercise of stock options	 	 	7,120	 	 	1,200	 	
Proceeds from issuance of shares, net	 	 	—	 	 	175,377	 	
Repurchases of Common Shares and minority interest units	 	 	(239	)	 	(93,835	)	
Distributions paid to shareholders	 	 	(26,456	)	 	(18,513	)	
Distributions to minority interest holders	 	 	(1,132	)	 	(2,447	)	
 	 			 			 	
Net cash from financing activities	 	 	22,379	 	 	(15,421	)	
 	 			 			 	
Decrease in cash and cash equivalents	 	 	127	 	 	(995	)	
Cash and cash equivalents at beginning of period	 	 	15,346	 	 	8,552	 	
 	 			 			 	
Cash and cash equivalents at end of period	 	$	15,473	 	$	7,557	 	
 	 			 			 	
Supplemental disclosure:	 	 	 	 	 	 	 	
Cash paid for interest, net of capitalized interest	 	$	8,828	 	$	10,861	 	
 
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
 
MARCH 31, 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 March 31, 2005, the Company’s portfolio included 223 office properties, 23 industrial facilities and one mixed-use property (collectively, the “Properties”) that contained an aggregate of approximately 19.2 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 March 31, 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 March 31, 2005, owned a 96.4% 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 March 31, 2005, was performing management and leasing services for 39 properties containing an aggregate of approximately 3.5 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 March 31, 2005 and the results of its operations and its cash flows for the three-month periods ended March 31, 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
 
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BRANDYWINE REALTY TRUST
 
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 
MARCH 31, 2005
 
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.
 
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
 
MARCH 31, 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 $3.3 million and $1.9 million for the three-month periods ended March 31, 2005 and 2004.  Tenant receivables and accrued rent receivables are carried net of the allowances for doubtful accounts of $4.5 million as of March 31, 2005 and $4.1 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.  During the three-months ended March 31, 2005 and 2004, other income includes net termination fees of $4.0 million and $0.2 million, respectively.  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
ended March 31,	 	
 	 		 	
 	 	2005	 	2004	 	
 	 		 		 	
Net income available to Common Shares, as reported	 	$	7,417	 	$	14,932	 	
Add:  Stock based compensation expense included in reported net income	 	 	691	 	 	553	 	
Deduct:  Total stock based compensation expense determined under fair value recognition method for all awards	 	 	(830	)	 	(665	)	
 	 			 			 	
Pro forma net income available to Common Shares	 	$	7,278	 	$	14,820	 	
 	 			 			 	
Earnings per Common Share	 	 	 	 	 	 	 	
Basic - as reported	 	$	0.13	 	$	0.34	 	
 	 			 			 	
Basic - pro forma	 	$	0.13	 	$	0.34	 	
 	 			 			 	
Diluted - as reported	 	$	0.13	 	$	0.34	 	
 	 			 			 	
Diluted - pro forma	 	$	0.13	 	$	0.33	 	

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
 
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BRANDYWINE REALTY TRUST
 
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 
MARCH 31, 2005
 
recognized in earnings in the current period.  For the three-month period ended March 31, 2005, 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.
 
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 after June 15, 2005.  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.
 
3.      REAL ESTATE INVESTMENTS
 
As of March 31, 2005 and December 31, 2004, the carrying value of the Company’s Operating Properties was as follows:
 
 	 	March 31, 2005	 	December 31, 2004	 	
 	 		 		 	
 	 	(amounts in thousands)	 	
Land	 	$	452,906	 	$	452,602	 	
Building and improvements	 	 	1,897,071	 	 	1,892,153	 	
Tenant improvements	 	 	134,955	 	 	138,379	 	
 	 			 			 	
 	 	$	2,484,932	 	$	2,483,134	 	

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BRANDYWINE REALTY TRUST
 
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 
MARCH 31, 2005
 
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 three-month period ended March 31, 2005, the Company acquired 6.9 acres of developable land for an aggregate purchase price of $11.6 million.
 
2004
 
During the three-month period ended March 31, 2004, the Company sold one office property containing 37,000 net rentable square feet and one industrial property containing 45,000 net rentable square feet for an aggregate of $6.1 million, realizing a net gain of $.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.
 
The following table summarizes the fair value of the assets acquired and liabilities assumed at the date of acquisition.
 
 	 	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 payable	 	 	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	 	

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BRANDYWINE REALTY TRUST
 
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 
MARCH 31, 2005
 
The Operating Partnership has 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.  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.
 
Pro forma information relating to the acquisition of TRC is presented below as if TRC was acquired and the related financing transactions occurred as 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:
 
 	 	Three-month period
ended March 31, 2004	 	
 	 		 	
 	 	(unaudited)	 	
Pro forma revenue	 	$	92,967	 	
Pro forma income from continuing operations	 	 	8,236	 	
Earnings per share from continuing operations	 	 	 	 	
Basic – as reported	 	$	0.34	 	
 	 			 	
Basic – as pro forma	 	$	0.21	 	
 	 			 	
Diluted – as reported	 	$	0.34	 	
 	 			 	
Diluted – as pro forma	 	$	0.21	 	

4.     INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTURES, AT EQUITY
 
As of March 31, 2005, the Company had an aggregate investment of approximately $12.7 million in nine 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 that are considered to be variable interest entities under FIN No. 46 and of which the Company is the primary beneficiary.  The financial information for these two real estate ventures (Four and Six Tower Bridge Associates) 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.
 
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BRANDYWINE REALTY TRUST
 
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 
MARCH 31, 2005
 
The following is a summary of the financial position of the Real Estate Ventures as of March 31, 2005 and December 31, 2004 (in thousands):
 
 	 	March 31,
2005	 	December 31,
2004	 	
 	 		 		 	
Operating property, net of accumulated depreciation	 	$	294,368	 	$	294,378	 	
Other assets	 	 	28,287	 	 	29,944	 	
Liabilities	 	 	26,076	 	 	26,989	 	
Debt	 	 	211,206	 	 	209,624	 	
Equity	 	 	85,373	 	 	87,709	 	
Company’s share of equity (Company basis)	 	 	12,741	 	 	12,754	 	
 
The following is a summary of results of operations of the Real Estate Ventures for the three-month periods ended March 31, 2005 and 2004 (in thousands):
 
 	 	Three-month periods ended
March 31,	 	
 	 		 	
 	 	2005	 	2004	 	
 	 		 		 	
Revenue	 	$	11,120	 	$	10,281	 	
Operating expenses	 	 	4,930	 	 	4,515	 	
Interest expense, net	 	 	2,785	 	 	2,898	 	
Depreciation and amortization	 	 	2,218	 	 	2,190	 	
Net income	 	 	1,187	 	 	678	 	
Company’s share of income (Company basis)	 	 	558	 	 	234	 	
 
As of March 31, 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 March 31, 2005 and December 31, 2004, the Company’s intangible assets were comprised of the following (in thousands):
 
 	 	March 31, 2005	 	
 	 		 	
 	 	Total Cost	 	Accumulated
Amortization	 	Deferred Costs,
net	 	
 	 		 		 		 	
In-place lease value	 	$	53,295	 	$	(10,146	)	$	43,149	 	
Tenant relationship value	 	 	37,794	 	 	(2,469	)	 	35,325	 	
Above market leases acquired	 	 	15,127	 	 	(2,597	)	 	12,530	 	
 	 			 			 			 	
Total	 	$	106,216	 	$	(15,212	)	$	91,004	 	

 	 	December 31, 2004	 	
 	 		 	
 	 	Total Cost	 	Accumulated
Amortization	 	Deferred Costs,
net	 	
 	 		 		 		 	
In-place lease value	 	$	55,165	 	$	(6,117	)	$	49,048	 	
Tenant relationship value	 	 	40,570	 	 	(2,377	)	 	38,193	 	
Above market leases acquired	 	 	15,685	 	 	(1,870	)	 	13,815	 	
 	 			 			 			 	
Total	 	$	111,420	 	$	(10,364	)	$	101,056	 	

The reduction in the historical cost values during the three-month period ended March 31, 2005 were due to re-allocations of the Company’s purchase price for the TRC Properties to 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
 
MARCH 31, 2005
 
6.     MORTGAGE NOTES PAYABLE
 
The following table sets forth information regarding our mortgage indebtedness outstanding at March 31, 2005 and December 31, 2004 (in thousands):
 
Property / Location	 	March 31,
2005	 	December 31,
2004	 	Effective
Interest
Rate (a)	 	Maturity
Date	 	
	 		 		 		 		 	
Grande B	 	$	80,070	 	$	80,429	 	 	7.48	%	 	Jul-27	 	
Two Logan Square	 	 	73,258	 	 	73,511	(a)	 	5.78	%	 	Jul-09	 	
Newtown Square/Berwyn Park/Libertyview	 	 	65,195	 	 	65,442	 	 	7.25	%	 	May-13	 	
Midlantic Drive/Lenox Drive/DCC I	 	 	64,666	 	 	64,942	 	 	8.05	%	 	Oct-11	 	
Grande A	 	 	61,898	 	 	62,177	 	 	7.48	%	 	Jul-27	 	
Plymouth Meeting Exec.	 	 	45,095	 	 	45,226	(a)	 	7.00	%	 	Dec-10	 	
Arboretum I, II, III & V	 	 	23,580	 	 	23,690	 	 	7.59	%	 	Jul-11	 	
Grande A	 	 	15,126	 	 	17,157	(b)	 	5.61	%	 	Jul-27	 	
Six Tower Bridge	 	 	15,318	 	 	15,394	 	 	7.79	%	 	Aug-12	 	
400 Commerce Drive	 	 	12,127	 	 	12,175	 	 	7.12	%	 	Jun-08	 	
Four Tower Bridge	 	 	10,859	 	 	10,890	 	 	6.62	%	 	Feb-11	 	
Croton Road	 	 	6,071	 	 	6,100	 	 	7.81	%	 	Jan-06	 	
200 Commerce Drive	 	 	5,959	 	 	5,976	(a)	 	7.12	%	 	Jan-10	 	
Southpoint III	 	 	5,769	 	 	5,877	 	 	7.75	%	 	Apr-14	 	
440 & 442 Creamery Way	 	 	5,692	 	 	5,728	 	 	8.55	%	 	Jul-07	 	
Norriton Office Center	 	 	5,251	 	 	5,270	 	 	8.50	%	 	Oct-07	 	
429 Creamery Way	 	 	3,048	 	 	3,087	 	 	8.30	%	 	Sep-06	 	
Grande A	 	 	2,680	 	 	3,040	(b)	 	5.78	%	 	Jul-27	 	
481 John Young Way	 	 	2,405	 	 	2,420	 	 	8.40	%	 	Nov-07	 	
111 Arrandale Blvd	 	 	1,086	 	 	1,100	 	 	8.65	%	 	Aug-06	 	
Interstate Center	 	 	913	 	 	959	(b)	 	4.31	%	 	Mar-07	 	
 	 			 			 	 	 	 	 	 	 	
Principal balance outstanding	 	 	506,066	 	 	510,590	 	 	 	 	 	 	 	
Plus: unamortized fixed-rate debt premiums	 	 	7,263	 	 	7,644	 	 	 	 	 	 	 	
 	 			 			 	 	 	 	 	 	 	
Total mortgage indebtedness	 	$	513,329	 	$	518,234	 	 	 	 	 	 	 	

 		
 	(a)	Loans were assumed upon acquisition of the related property.  Interest rates presented above reflect the current market rate at the time of acquisition.	
 	 	 	
 	(b)	For loans that bear interest at a variable rate, the rates in effect at March 31, 2005 have been presented.	
 
 	During the three-month periods ended March 31, 2005 and 2004, the Company’s weighted-average interest rate on its mortgage notes payable was 7.1% and 7.3%, respectively.	

7.     UNSECURED NOTES
 
The following table sets forth information regarding our unsecured notes outstanding:

Year	 	March 31,
2005	 	December 31,
2004	 	Maturity	 	Stated
Interest Rate	 	Effective
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: unamoritzed discounts	 	 	(1,515	)	 	(1,565	)	 	 	 	 	 	 	 	 	 	
 	 			 			 	 	 	 	 	 	 	 	 	 	
Total unsecured notes	 	$	636,485	 	$	636,435	 	 	 	 	 	 	 	 	 	 	

 		
 	(1)	Rates include the effect of amortization related to discounts and costs related to settlement of treasury lock agreements.	
 
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BRANDYWINE REALTY TRUST
 
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 
MARCH 31, 2005
 
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.
 
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 March 31, 2005, the Company had $200.0 million of borrowings and $10.7 million of letters of credit outstanding under the Credit Facility, leaving $239.3 million of unused availability.  The weighted-average interest rate on the Company’s unsecured credit facilities, including the effect of interest rate hedges during 2004, was 3.4% during 2005 and 4.6% 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 March 31, 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
 
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BRANDYWINE REALTY TRUST
 
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 
MARCH 31, 2005
 
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.
 
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-month periods ended March 31, 2005.
 
10.     DISCONTINUED OPERATIONS
 
For the three-month period ended March 31, 2005 the Company had no discontinued operations.  For the three-month period ended March 31, 2004, income from discontinued operations relates to 4 properties that the Company sold from January 1, 2004.    The following table summarizes the revenue and expense information for the three-month period ended March 31, 2004 (in thousands):
 
 	 	Three-month period
ended March 31, 2004	 	
 	 		 	
Revenue:	 	 	 	 	
Rents	 	$	193	 	
Tenant reimbursements	 	 	233	 	
Other	 	 	17	 	
 	 			 	
Total revenue	 	 	443	 	
Expenses:	 	 	 	 	
Property operating expenses	 	 	249	 	
Real estate taxes	 	 	92	 	
Depreciation and amortization	 	 	103	 	
 	 			 	
Total operating expenses	 	 	444	 	
Income (loss) from discontinued operations before net gain on sale of interests in real estate and minority interest	 	 	(1	)	
Net gain on sales of interest in real estate	 	 	204	 	
Minority interest	 	 	(8	)	
 	 			 	
Income from discontinued operations	 	$	195	 	

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 March 16, 2005, the Operating Partnership declared a $0.44 per unit cash distribution to holders of Class A Units totaling $0.9 million.
 
12.     BENEFICIARIES’ EQUITY
 
On March 16, 2005, the Company declared a distribution of $0.44 per Common Share, totaling $24.6 million, which was paid on April 15, 2005 to shareholders of record as of April 6, 2005.  On the same date, the Company declared distributions on its Series C Preferred Shares and Series D Preferred Shares to holders of record on March 30, 2005.  These shares are currently entitled to a preferential return of 7.50% and 7.375%, respectively.  Distributions paid on
 
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BRANDYWINE REALTY TRUST
 
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 
MARCH 31, 2005
 
April 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 March 31,	 	
 	 		 	
 	 	2005	 	2004	 	
 	 		 		 	
 	 	Basic	 	Diluted	 	Basic	 	Diluted	 	
 	 		 		 		 		 	
Income from continuing operations	 	$	9,415	 	$	9,415	 	$	12,255	 	$	12,255	 	
Income from discontinued operations	 	 	—	 	 	—	 	 	195	 	 	195	 	
Income allocated to Preferred Shares	 	 	(1,998	)	 	(1,998	)	 	(2,018	)	 	(2,018	)	
Preferred share redemption gain	 	 	—	 	 	—	 	 	4,500	 	 	4,500	 	
 	 			 			 			 			 	
Net income available to common shareholders	 	$	7,417	 	$	7,417	 	$	14,932	 	$	14,932	 	
 	 			 			 			 			 	
Weighted-average shares outstanding	 	 	55,441,773	 	 	55,441,773	 	 	44,036,842	 	 	44,036,842	 	
Options and warrants	 	 	—	 	 	241,019	 	 	—	 	 	287,208	 	
 	 			 			 			 			 	
Total weighted-average shares outstanding	 	 	55,441,773	 	 	55,682,792	 	 	44,036,842	 	 	44,324,050	 	
 	 			 			 			 			 	
Earnings per Common Share:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Continuing operations	 	$	0.13	 	$	0.13	 	$	0.34	 	$	0.34	 	
Discontinued operations	 	 	—	 	 	—	 	 	—	 	 	—	 	
 	 			 			 			 			 	
 	 	$	0.13	 	$	0.13	 	$	0.34	 	$	0.34	 	

Securities (including Series A Preferred Shares of the Company and Class A Units of the Operating Partnership) totaling 2,052,959 and 3,076,489 as of March 31, 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 Bucks County, Pennsylvania and counties in the southern part of New Jersey including Burlington, Camden and Mercer counties.  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, development of certain real estate properties during the construction period, and certain other general support functions.
 
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BRANDYWINE REALTY TRUST
 
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 
MARCH 31, 2005
 
Segment information for the three-month periods ended March 31, 2005 and 2004 is as follows (in thousands):
 
 	 	Pennsylvania - 
West	 	Pennsylvania - 
North	 	New Jersey	 	Urban	 	Virginia	 	Corporate	 	Total	 	
 	 			 			 			 			 			 			 			 	
As of March 31, 2005:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Real estate investments, at cost:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating properties	 	$	832,952	 	$	531,903	 	$	552,816	 	$	349,747	 	$	217,514	 	$	—	 	$	2,484,932	 	
Construction-in-progress	 	 	13,847	 	 	31,101	 	 	11,967	 	 	5,862	 	 	1,883	 	 	107,925	 	 	172,585	 	
Land held for development	 	 	16,304	 	 	28,127	 	 	14,965	 	 	5,647	 	 	7,960	 	 	1,048	 	 	74,051	 	
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 March 31, 2005:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total revenue	 	$	29,708	 	$	19,470	 	$	25,265	 	$	15,956	 	$	7,203	 	$	1,322	 	$	98,924	 	
Property operating expenses and real estate taxes	 	 	10,282	 	 	9,187	 	 	10,673	 	 	6,530	 	 	2,864	 	 	—	 	 	39,536	 	
 	 			 			 			 			 			 			 			 	
Net operating income	 	$	19,426	 	$	10,283	 	$	14,592	 	$	9,426	 	$	4,339	 	$	1,322	 	$	59,388	 	
 	 			 			 			 			 			 			 			 	
For the three-months ended March 31, 2004:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total revenue	 	$	19,927	 	$	18,135	 	$	24,468	 	$	2,827	 	$	6,632	 	$	1,210	 	$	73,199	 	
Property operating expenses and real estate taxes	 	 	6,178	 	 	8,569	 	 	9,381	 	 	1,912	 	 	2,991	 	 	—	 	 	29,031	 	
 	 			 			 			 			 			 			 			 	
Net operating income	 	$	13,749	 	$	9,566	 	$	15,087	 	$	915	 	$	3,641	 	$	1,210	 	$	44,168	 	

 	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
ended March 31,	 	
 	 		 	
 	 	2005	 	2004	 	
 	 		 		 	
Consolidated net operating income	 	$	59,388	 	$	44,168	 	
Less:	 	 	 	 	 	 	 	
Interest income	 	 	780	 	 	511	 	
Interest expense	 	 	(17,797	)	 	(12,104	)	
Depreciation and amortization	 	 	(28,435	)	 	(15,804	)	
Administrative expenses	 	 	(4,752	)	 	(3,489	)	
Minority interest attributable to continuing operations	 	 	(327	)	 	(1,261	)	
Plus:	 	 	 	 	 	 	 	
Equity in income of real estate ventures	 	 	558	 	 	234	 	
 	 			 			 	
Income from continuing operations	 	 	9,415	 	 	12,255	 	
Income from discontinued operations	 	 	—	 	 	195	 	
 	 			 			 	
Net income	 	$	9,415	 	$	12,450	 	

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.
 
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BRANDYWINE REALTY TRUST
 
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 
MARCH 31, 2005
 
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.
 
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 March 31, 2005, the maximum amount payable under this arrangement was $8.4 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.
 
In 1998, we acquired a portfolio of properties from Donald E. Axinn and affiliates.  Upon completion of our acquisition, Mr. Axinn joined our Board.  The 1998 agreement provides for our acquisition in September 2005 of an approximately 141,724 square foot office building located at 101 Paragon Drive, Montvale, New Jersey for $11.0 million from an entity primarily owned and controlled by Mr. Axinn.  The Company and Mr. Axinn are currently negotiating a modification of the 1998 agreement that would provide for the following: (i) Mr. Axinn would pay us $500,000; (ii) our obligation to fund $11.0 million to acquire 101 Paragon would be deferred for approximately five years and the amount of our obligation would be reduced to $5.5 million, with Mr. Axinn assuming responsibility to fund the remaining $5.5 million; and (iii) we and Mr. Axinn would share equally in any net cash flow and in any proceeds of a sale of 101 Paragon, and we would each be required to fund any operating expenses associated with ownership of 101 Paragon.  Consummation of the modification is subject to several conditions, including preparation of customary documentation.
 
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 other 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 March 31, 2005, the Company’s portfolio consisted of 223 office properties, 23 industrial facilities and one mixed-use property that contained an aggregate of approximately 19.2 million net rentable square feet.  As of March 31, 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 (91.3% at March 31, 2005, 87.6% 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 11.2% of the net rentable square feet of the Properties as of March 31, 2005 expire without penalty through the end of 2005.  In addition, leases totaling approximately 11.4% of the net rentable square feet of the Properties as of March 31, 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 three-month period ended March 31, 2005 was 69.3%.  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 Company’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 $4.5 million or 8.6% of total receivables (including accrued rent receivable) as of March 31, 2005 compared to $4.1 million or 8.4% of total receivables (including accrued rent receivable) as of December 31, 2004.
 
Development Risk:
As of March 31, 2005, the Company had in development three office properties and had in redevelopment two office properties aggregating 1.0 million square feet.  The total net investment in these projects is estimated to be $217.9 million of which $125.5 million had been paid as of March 31, 2005.  As of the date of this Form 10-Q, these projects were approximately 79% leased.  One of these development properties is Cira Centre, a 28-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 the date of this Form 10-Q, the office portion of this project was approximately 87% 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 three-month period ended March 31, 2005, the Company acquired 6.9 acres of developable land for an aggregate purchase price of $11.6 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 three-month period ended March 31, 2005 as set forth herein.  Management discusses the Company’s critical accounting policies and estimates with the Company’s Audit Committee.
 
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RESULTS OF OPERATIONS
 
Comparison of the Three Month Periods Ended March 31, 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 227 Properties containing an aggregate of approximately 15.1 million net rentable square feet that were owned for the entire three-month periods ended March 31, 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 of March 31, 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 March 31 2005 and 2004.
 
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 	 	Same Store Property Portfolio	 	Properties
Acquired (a)	 	
 	 		 		 	
(dollars in thousands)	 	2005	 	2004	 	Increase/
(Decrease)	 	%
Change	 	2005	 	2004	 	
	 			 			 			 			 			 			 	
Revenue:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Rents	 	$	62,208	 	$	62,930	 	$	(722	)	 	-1	%	$	18,177	 	 	—	 	
Tenant reimbursements	 	 	9,316	 	 	7,971	 	 	1,345	 	 	17	%	 	2,673	 	 	—	 	
Other	 	 	3,913	 	 	278	 	 	3,635	 	 	100	%	 	301	 	 	—	 	
 	 			 			 			 			 			 			 	
Total revenue	 	 	75,437	 	 	71,179	 	 	4,258	 	 	6	%	 	21,151	 	 	—	 	
Operating Expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Property operating expenses	 	 	24,275	 	 	23,800	 	 	475	 	 	2	%	 	7,683	 	 	—	 	
Real estate taxes	 	 	7,099	 	 	6,663	 	 	436	 	 	7	%	 	2,338	 	 	—	 	
Depreciation and amortization	 	 	17,979	 	 	15,185	 	 	2,794	 	 	18	%	 	9,810	 	 	—	 	
Administrative expenses	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 			 			 			 			 			 			 	
Total property operating expenses	 	 	49,353	 	 	45,648	 	 	3,705	 	 	8	%	 	19,831	 	 	—	 	
 	 			 			 			 			 			 			 	
Operating Income	 	 	26,084	 	 	25,531	 	 	553	 	 	2	%	 	1,320	 	 	—	 	
Other Income (Expense):	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest income	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest expense	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Equity in income of real estate ventures	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income before minority interest	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Minority interest attributable to continuing operations	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income from continuing operations	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income from discontinued operations (c)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Income	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 
 	 	Development
Properties	 	Administrative/
Eliminations (b)	 	
 	 		 		 	
(dollars in thousands)	 	2005	 	2004	 	2005	 	2004	 	
	 			 			 			 			 	
Revenue:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Rents	 	$	843	 	$	750	 	 	—	 	 	—	 	
Tenant reimbursements	 	 	93	 	 	22	 	 	—	 	 	—	 	
Other	 	 	74	 	 	37	 	 	1,326	 	 	1,211 	 	
 	 			 			 			 			 	
Total revenue	 	 	1,010	 	 	809	 	 	1,326	 	 	1,211 	 	
Operating Expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Property operating expenses	 	 	515	 	 	501	 	 	(2,594	)	 	(2,151	)	
Real estate taxes	 	 	220	 	 	218	 	 	—	 	 	—	 	
Depreciation and amortization	 	 	336	 	 	278	 	 	310	 	 	341 	 	
Administrative expenses	 	 	 	 	 	 	 	 	4,752	 	 	3,489	 	
 	 			 			 			 			 	
Total property operating expenses	 	 	1,071	 	 	997	 	 	2,468	 	 	1,679 	 	
 	 			 			 			 			 	
Operating Income	 	 	(61	)	 	(188	)	 	(1,142	)	 	(468	)	
Other Income (Expense):	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest income	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest expense	 	 	 	 	 	 	 	 	 	 	 	 	 	
Equity in income of real estate ventures	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income before minority interest	 	 	 	 	 	 	 	 	 	 	 	 	 	
Minority interest attributable to continuing operations	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income from continuing operations	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income from discontinued operations (c)	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Income	 	 	 	 	 	 	 	 	 	 	 	 	 	
 
 	 	Total Portfolio	 	
 	 		 	
(dollars in thousands)	 	2005	 	2004	 	Increase/
(Decrease)	 	%
Change	 	
	 			 			 			 			 	
Revenue:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Rents	 	$	81,228	 	$	63,680	 	$	17,548	 	 	28	%	
Tenant reimbursements	 	 	12,082	 	 	7,993	 	 	4,089	 	 	51	%	
Other	 	 	5,614	 	 	1,526	 	 	4,088	 	 	100	%	
 	 			 			 			 			 	
Total revenue	 	 	98,924	 	 	73,199	 	 	25,725	 	 	35	%	
Operating Expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Property operating expenses	 	 	29,879	 	 	22,150	 	 	7,729	 	 	35	%	
Real estate taxes	 	 	9,657	 	 	6,881	 	 	2,776	 	 	40	%	
Depreciation and amortization	 	 	28,435	 	 	15,804	 	 	12,631	 	 	80	%	
Administrative expenses	 	 	4,752	 	 	3,489	 	 	1,263	 	 	36	%	
 	 			 			 			 			 	
Total property operating expenses	 	 	72,723	 	 	48,324	 	 	24,399	 	 	50	%	
 	 			 			 			 			 	
Operating Income	 	 	26,201	 	 	24,875	 	 	1,326	 	 	5	%	
Other Income (Expense):	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest income	 	 	780	 	 	511	 	 	269	 	 	53	%	
Interest expense	 	 	(17,797	)	 	(12,104	)	 	(5,693	)	 	-47	%	
Equity in income of real estate ventures	 	 	558	 	 	234	 	 	324	 	 	100	%	
 	 			 			 			 			 	
Income before minority interest	 	 	9,742	 	 	13,516	 	 	(3,774	)	 	-28	%	
Minority interest attributable to continuing operations	 	 	(327	)	 	(1,261	)	 	934	 	 	74	%	
 	 			 			 			 			 	
Income from continuing operations	 	 	9,415	 	 	12,255	 	 	(2,840	)	 	-23	%	
Income from discontinued operations (c)	 	 	—	 	 	195	 	 	(195	)	 	-100	%	
 	 			 			 			 			 	
Net Income	 	$	9,415	 	$	12,450	 	$	(3,035	)	 	-24	%	

	
(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 $25.7 million primarily due to properties that were acquired in 2004 and an increase in other income in 2005 as compared to 2004.  Revenue for Same Store Properties increased by $4.3 million due to increased tenant reimbursement revenue resulting from increased property operating expenses in 2005 as compared to 2004 and a $3.7 million net termination fee in other income associated with a single tenant termination in 2005 as compared to 2004.  Average occupancy for the Same Store Properties increased to 92.0% in 2005 from 91.3% in 2004.  Other revenue represents lease termination fees, bankruptcy settlement proceeds, leasing commissions and third-party management fees.  Total Portfolio other revenue increased by $4.1 million in 2005 primarily due a $3.7 million net termination fee associated with a single tenant termination in 2005.  
 
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 slightly increased snow removal costs. Property operating expenses for the Same Store Properties increased by $0.5 million in 2005 due to slightly increased snow removal costs 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 and increased tax rates and property assessments.  Real estate taxes for the Same Store Properties increased by $0.4 million in 2005 as a result of higher tax rates and property assessments.
 
Depreciation and Amortization Expense
 
Depreciation and amortization expense increased by $12.6 million in 2005 primarily due to the properties acquired in the latter half of 2004 and amortization from tenant improvements and leasing commissions paid during 2004.
 
Administrative Expenses 
 
Administrative expenses increased by $1.3 million in 2005 primarily due to increased spending during the three-month period ended March 31, 2005 due to 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 Income
 
Interest income increased by $0.3 million in 2005 primarily due to interest associated with a receivable the Company acquired as part of the TRC Acquisition in September 2004.
 
Interest Expense
 
Interest expense increased by $5.7 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 decreased interest expense on the Company’s unsecured line of credit resulting from a decrease in the average LIBOR rate during the periods as well as the Company’s spread over LIBOR.  
 
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.
 
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 $0.9 million in 2005 primarily due to decreased net income (as a result of increased depreciation and interest expense) and the redemption of the Series B Preferred Units in February 2004.
 
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Discontinued Operations
 
Discontinued operations decreased by $0.2 million in 2005 primarily due to the timing of property sales for assets included in discontinued operations.    
 
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 $74 million expected to fund 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, material 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 March 31, 2005 and December 31, 2004, we maintained cash and cash equivalents of $15.5 million and $15.4 million, an increase of $0.1 million.  This increase was the result of the following changes in cash flow from our various activities for the three-month periods ended March 31:
 
Activity	 	2005	 	2004	 	
	 			 			 	
Operating	 	$	26,621	 	$	33,068 	 	
Investing	 	 	(48,873	)	 	(18,642	)	
Financing	 	 	22,379	 	 	(15,421	)	
 	 			 			 	
Net cash flows	 	$	127	 	$	(995	)	

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Our principal source of cash flows is from the operation of our Properties.  Our decreased cash flow from operating activities is primarily attributable to the timing of real estate tax payments and deposits on future property acquisitions.  
 
Increased investing activity was comprised of our acquisition of properties/developable land parcels ($11.6 million), construction costs related to our Cira Centre development project and various other capital and tenant improvement projects (totaling $33.2 million in 2005). 
 
Increased financing activity was comprised of additional borrowings on our Credit Facility in 2005 ($48 million).  These proceeds were used to fund the investment activity discussed above.
 
Capitalization
 
          Indebtedness
 
As of March 31 2005, we had approximately $1.3 billion of outstanding indebtedness.  The table below summarizes our mortgage notes payable, our unsecured notes and our revolving credit facility at March 31, 2005 and December 31, 2004:
 
 	 	 	March 31,
2005	 	 	December 31,
2004	 	
 	 			 			 	
 	 	(dollars in thousands)	 	
Balance:	 	 	 	 	 	 	 	
Fixed rate	 	$	1,131,095	 	$	1,133,513	 	
Variable rate	 	 	218,719	 	 	173,156	 	
 	 			 			 	
Total	 	$	1,349,814	 	$	1,306,669	 	
 	 			 			 	
Percent of Total Debt:	 	 	 	 	 	 	 	
Fixed rate	 	 	84	%	 	87	%	
Variable rate	 	 	16	%	 	13	%	
 	 			 			 	
Total	 	 	100	%	 	100	%	
 	 			 			 	
Weighted-average interest rate at period end:	 	 	 	 	 	 	 	
Fixed rate	 	 	5.9	%	 	5.9	%	
Variable rate	 	 	3.7	%	 	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).
 
          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 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 new 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 March 31, 2005, the Company was in compliance 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 March 31, 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 they become due primarily through the use of unsecured debt or equity.  
 
As of March 31, 2005, the Company’s debt plus preferred shares-to-market capitalization ratio was 46.6%.  As a general policy, the Company intends, but is not obligated, to adhere to a policy of maintaining a debt plus preferred shares-to-market capitalization ratio of no more than 50%.
 
          Equity
 
On March 16, 2005, the Company declared a distribution of $0.44 per Common Share, totaling $24.6 million, which was paid on April 15, 2005 to shareholders of record as of April 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 March 16, 2005, the Company declared distributions on its Series C Preferred Shares and Series D Preferred Shares to holders of record on March 30, 2005.  These shares are currently entitled to a preferential return of 7.50% and 7.375%, respectively.  Distributions paid on April 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 4,000,000 of its outstanding Common Shares.  Through March 31, 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 three-month period ended March 31, 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 also have an effective shelf registration statement on Form S-3 filed with the Securities and Exchange Commission that registered $750.0 million in common shares, preferred shares, depositary shares and warrants and $750.0 million in debt securities.  As of March 31, 2005, the registration statement had $533 million of capacity for future issuances of common shares, preferred shares, depositary shares and warrants and had $225 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
 
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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.
 
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 March 31, 2005:
 
 	 	Payments by Period (in thousands)	 	
 	 		 	
 	 	Total	 	Less than
1 Year	 	1-3 Years	 	3-5 Years	 	More than
5 Years	 	
 	 			 			 			 			 			 	
Mortgage notes payable (a)	 	$	506,066	 	$	6,482	 	$	62,665	 	$	133,906	 	$	303,013	 	
Revolving credit facility	 	 	200,000	 	 	—	 	 	200,000	 	 	—	 	 	—	 	
Unsecured debt  (a)	 	 	638,000	 	 	—	 	 	113,000	 	 	275,000	 	 	250,000	 	
Purchase commitments	 	 	11,000	 	 	11,000	 	 	—	 	 	—	 	 	—	 	
Ground leases	 	 	107,146	 	 	1,435	 	 	2,870	 	 	2,870	 	 	99,971	 	
Other liabilities	 	 	1,525	 	 	837	 	 	—	 	 	—	 	 	688	 	
 	 			 			 			 			 			 	
 	 	$	1,463,737	 	$	19,754	 	$	378,535	 	$	411,776	 	$	653,672 	 	

	
(a)	Amounts do not include unamortized discounts and/or premiums.	
 
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.
 
In 1998, we acquired a portfolio of properties from Donald E. Axinn and affiliates.  Upon completion of our acquisition, Mr. Axinn joined our Board.  The 1998 agreement provides for our acquisition in September 2005 of an approximately 141,724 square foot office building located at 101 Paragon Drive, Montvale, New Jersey for $11.0 million from an entity primarily owned and controlled by Mr. Axinn.  The Company and Mr. Axinn are currently negotiating a modification of the 1998 agreement that would provide for the following: (i) Mr. Axinn would pay us $500,000; (ii) our obligation to fund $11.0 million to acquire 101 Paragon would be deferred for approximately five years and the amount of our obligation would be reduced to $5.5 million, with Mr. Axinn assuming responsibility to fund the remaining $5.5 million; and (iii) we and Mr. Axinn would share equally in any net cash flow and in any proceeds of a sale of 101 Paragon, and we would each be required to fund any operating expenses associated with ownership of 101 Paragon.  Consummation of the modification is subject to several conditions, including preparation of customary documentation.  
 
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 March 31, 2005, the maximum amount payable under this arrangement was $8.4 million.  
 
As part of the TRC Properties, 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.
 
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As part 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 restricted 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.
 
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 2004 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 March 31, 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:	 	 	 	 	 	 	 	 	 	 	 	 	 	
January	 	 	20,137	 	$	29.39	 	 	—	 	 	762,000 	 	
February	 	 	—	 	$	—	 	 	—	 	 	762,000 	 	
March	 	 	—	 	$	—	 	 	—	 	 	762,000 	 	
 	 			 			 			 			 	
Total	 	 	20,137	 	$	29.39	 	 	—	 	 	762,000 	 	

	
(A)   Represent Common Shares cancelled by the Company upon vesting of restricted Common Shares previously awarded to Company 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
 
Not applicable.
 
Item 5.   Other Information
 
 	•	The Company held its annual meeting of shareholders on May 2, 2005. At the meeting, each of the eight individuals nominated for election to the Company’s Board of Trustees was elected to the Board. These individuals will serve on the Board until the next annual meeting of shareholders and until their successors are elected and qualified or until their earlier resignation. The number of shares cast for or withheld for each nominee is set forth below:	
 
Trustee	 	 	For	 	 	Withheld	 	
	 			 			 	
Walter D’Alessio	 	 	51,167,302	 	 	1,800,620	 	
D. Pike Aloian	 	 	51,289,117	 	 	1,678,805	 	
Donald E. Axinn	 	 	50,104,539	 	 	2,863,383	 	
Wyche Fowler	 	 	52,182,925	 	 	784,997	 	
Michael J. Joyce	 	 	50,898,665	 	 	2,069,257	 	
Anthony A. Nichols Sr.	 	 	51,301,759	 	 	1,666,163	 	
Charles P. Pizzi	 	 	51,189,843	 	 	1,778,079	 	
Gerard H. Sweeney	 	 	51,181,922	 	 	1,786,000	 	
 
 	•	At its annual meeting of shareholders, the shareholders voted as follows to ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the calendar year 2005 as follows:	
 
–     Votes For	 	 	52,925,451	 	
–     Votes Against	 	 	25,105	 	
–     Abstentions	 	 	17,366	 	
–     Broker Non-Votes	 	 	zero	 	
 
 	•	At its annual meeting of shareholders, the shareholders voted as follows to amend and restate the Company’s 1997 Long-Term Incentive Plan as follows:	
 
–     Votes For	 	 	44,461,578	 	
–     Votes Against	 	 	2,446,871	 	
–     Abstentions	 	 	63,209	 	
–     Broker Non-Votes	 	 	5,996,264	 	
 
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Item 6.   Exhibits 
 
(a)  Exhibits
 
10.1	2005 Restricted Share Award to Gerard H. Sweeney (previously filed as Exhibit 10.1 to the Company’s Form 8-K dated February 11, 2005 and incorporated herein by reference)*	
10.2	Form of 2005 Restricted Share Award to executive officers (other than the President and Chief Executive Officer) (previously filed as Exhibit 10.2 to the Company’s Form 8-K dated February 11, 2005 and incorporated herein by reference)*	
10.3	Amended and Restated Employment Agreement of President and Chief Executive Officer (previously filed as Exhibit 10.3 to the Company’s Form 8-K dated February 11, 2005 and incorporated herein by reference)*	
10.4	Form of Severance Agreement for executive officers (previously filed as Exhibit 10.4 to the Company’s Form 8-K dated February 11, 2005 and incorporated herein by reference)*	
10.5	Amended and Restated 1997 Long-term Incentive Plan*	
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	

 	* Management contract or compensatory plan or arrangement.	
 
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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: May 6, 2005	By:	/s/ GERARD H. SWEENEY	
 	 		
 	 	Gerard H. Sweeney, President and Chief Executive Officer	
 	 	(Principal Executive Officer)	
 	 	 	
Date: May 6, 2005	By:	/s/ CHRISTOPHER P. MARR	
 	 		
 	 	Christopher P. Marr, Senior Vice President and Chief Financial Officer	
 	 	(Principal Financial Officer)	
 	 	 	
Date: May 6, 2005	By:	/s/ TIMOTHY M. MARTIN	
 	 		
 	 	Timothy M. Martin, Vice President-Finance and Chief Accounting Officer	
 	 	(Principal Accounting Officer)	
 
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Exhibit 10.5
 
BRANDYWINE REALTY TRUST
AMENDED AND RESTATED 1997 LONG-TERM INCENTIVE PLAN
(As amended effective May 2, 2005)
 
          SECTION 1.  Purpose; Definitions.  The purpose of the Brandywine Realty Trust 1997 Long-Term Incentive Plan (the “Plan”) is to offer to certain employees and trustees of Brandywine Realty Trust (the “Company”), organized as a Maryland real estate investment trust, and its subsidiaries, equity interests in the Company, options to acquire equity interests in the Company, and other performance-based incentive awards, thereby attracting, retaining and motivating such persons, and strengthening the mutuality of interests between such persons and the Company’s shareholders.  The Plan was originally adopted effective May 12, 1997 and has been amended with shareholder approval effective May 15, 1998 and May 2, 2005.
 
          For purposes of the Plan, the following initially capitalized words and phrases shall be defined as set forth below, unless the context clearly requires a different meaning:
 
                    a.          “Affiliate” means, with respect to a person or entity, a person that directly or indirectly controls, or is controlled by, or is under common control with such person or entity.
 
                    b.          “Board” means the Board of Trustees of the Company, as constituted from time to time.
 
                    c.          “Cause” occurs when the Participant, as determined by the Board: 
 
                                  (i)          has engaged in any type of disloyalty to the Company, including without limitation, fraud, embezzlement, theft, or dishonesty in the course of his employment or engagement, or has otherwise breached any fiduciary duty owed to the Company;
 
                                  (ii)         has been convicted of a felony;
 
                                  (iii)       has disclosed trade secrets or confidential information of the Company; or
 
                                  (iv)       has breached any agreement with or duty to the Company in respect of confidentiality, non-disclosure, non-competition or otherwise.
 
                    d.          “Change of Control” means:
 
                                  (i)          the acquisition in one or more transactions by any “Person” (as the term person is used for purposes of Sections 13(d) or 14(d) of the Exchange Act) of “Beneficial ownership” (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty-five percent (25%) or more of the combined voting power of the Company’s then outstanding voting securities (the “Voting Securities”), provided that for purposes of this clause (i) Voting Securities acquired directly from the Company by any Person shall be excluded from the determination of such Person’s Beneficial ownership of Voting Securities (but such Voting Securities shall be included in the calculation of the total number of Voting Securities then outstanding); or 
 
                                  (ii)         approval by shareholders of the Company of:
 
                                                (A)          a merger, reorganization or consolidation involving the Company if the shareholders of the Company immediately before such merger, reorganization or consolidation do not or will not own directly or indirectly immediately following such merger, reorganization or consolidation, more than fifty percent (50%) of the combined voting power of the outstanding voting securities of the company resulting from or surviving such merger, reorganization or consolidation in substantially the same proportion as their ownership of the Voting Securities outstanding immediately before such merger, reorganization or consolidation; or 
 
                                                (B)          a complete liquidation or dissolution of the Company; or
 
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                                                (C)          an agreement for the sale or other disposition of all or substantially all of the assets of the Company; or
 
                                  (iii)       acceptance by shareholders of the Company of shares in a share exchange if the shareholders of the Company immediately before such share exchange do not or will not own directly or indirectly immediately following such share exchange more than fifty percent (50%) of the combined voting power of the outstanding voting securities of the entity resulting from or surviving such share exchange in substantially the same proportion as their ownership of the Voting Securities outstanding immediately before such share exchange; or
 
                                  (iv)       a change in the composition of the Board over a period of twenty four (24) months or less such that a majority of the Board members ceases to be comprised of individuals who either: (i) have been board members continuously since the beginning of such period; or (ii) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described in clause (i) who were still in office at the time such election or nomination was approved by the Board.
 
                    e.          “Code” means the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto.
 
                    f.          “Committee” shall mean the Committee appointed by the Board in accordance with Section 2 of the Plan, if one is appointed, in which event in connection with this Plan, the Committee shall possess all of the power and authority of, and shall be authorized to take any and all actions required to be taken hereunder by, and make any and all determinations required to be taken hereunder by, the Board.
 
                    g.          “Disability” shall mean a disability of an employee or a trustee which renders such employee or trustee unable to perform the full extent of his duties and responsibilities by reason of his illness or incapacity which would entitle that employee or trustee to receive Social Security Disability Income under the Social Security Act, as amended, and the regulations promulgated thereunder.  “Disabled” shall mean having a Disability.  The determination of whether a Participant is Disabled shall be made by the Board, whose determination shall be conclusive; provided that,
 
                                  (i)          if a Participant is bound by the terms of an employment agreement between the Participant and the Company, whether the Participant is “Disabled” for purposes of the Plan shall be determined in accordance with the procedures set forth in said employment agreement, if such procedures are therein provided; and
 
                                  (ii)         a Participant bound by such an employment agreement shall not be determined to be Disabled under the Plan any earlier than he would be determined to be disabled under his employment agreement.
 
                    h.          “Exchange Act” means the Securities Exchange Act of 1934, as amended.
 
                    i.          “Fair Market Value” means, as of any date: (i) the closing price of the Shares as reported on the principal nationally recognized stock exchange on which the Shares are traded on such date, or if no Share prices are reported on such date, the closing price of the Shares on the next preceding date on which there were reported Share prices; or (ii) if the Shares are not listed or admitted to unlisted trading privileges on a nationally recognized stock exchange, the closing price of the Shares as reported by The NASDAQ Market on such date, or if no Share prices are reported on such date, the closing price of the Shares on the next preceding date on which there were reported Share prices; or (3) if the Shares are not listed or admitted to unlisted trading privileges on a nationally recognized stock exchange or traded on The NASDAQ Market, then the Fair Market Value shall be determined by the Board acting in its discretion, which determination shall be conclusive.
 
                    j.          “Incentive Stock Option” means any Option intended to be and designated as an “Incentive Stock Option” within the meaning of Section 422 of the Code.
 
                    k.          “Long-Term Performance Award” or “Long-Term Award” means an award made pursuant to Section 8 hereof that is payable in cash and/or Shares (including Restricted Shares, Performance Shares and Performance Units) in accordance with the terms of the grant, based on Company, business unit and/or individual performance, in each case as determined by the Committee and as set forth in the grant letter.
 
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                    l.          “Non-Employee Trustee” shall have the meaning set forth in Rule 16b-3(b)(3) promulgated by the Securities and Exchange Commission under the Exchange Act, or any successor definition adopted by the Securities and Exchange Commission (substituting the word “trustee” for “director”); provided, however, that the Board or the Committee may, in its sole discretion, substitute the definition of “outside director” provided in the regulations under Section 162(m) of the Code in place of the definition of Non-Employee Director contained in the Exchange Act.
 
                    m.          “Non-Qualified Stock Option” means any Option that is not an Incentive Stock Option.
 
                    n.          “Participant” means an employee or trustee of the Company or a Subsidiary to whom an award is granted pursuant to the Plan.
 
                    o.          “Performance Share” means an award made pursuant to Section 9 hereof of the right to receive Shares at the end of a specified performance period.
 
                    p.          “Performance Unit” means an award made pursuant to Section 10 hereof of the right to receive cash at the end of a specified performance period.
 
                    q.          “Restricted Shares” means an award of Shares that is subject to restrictions pursuant to Section 7 hereof.
 
                    r.          “Retirement” means termination of the employment of a Participant with the Company, an Affiliate (including parent) or a Subsidiary other than (i) a termination effected at the direction of the Company or parent (whether or not the Company effects such termination for Cause), (ii) termination on account of Disability, or (iii) termination on account of death.  With respect to a trustee who is not also an employee of the Company, Retirement shall occur at such time as the individual ceases to be a trustee.
 
                    s.          “Rules” means Section 16 of the Exchange Act and the regulations promulgated thereunder.
 
                    t.          “SAR” means a share appreciation right granted under the Plan and described in Section 6 hereof. 
 
                    u.          “Securities Broker” means a registered securities broker acceptable to the Company who agrees to effect the cashless exercise of an Option pursuant to Section 5(k) hereof.
 
                    v.          “Share” means a common share of beneficial interest, $.01 par value per share, of the Company, subject to substitution or adjustment as provided in Section 3(c) hereof.
 
                    w.          “Stock Option” or “Option” means any option to purchase Shares (including Restricted Shares, if the Committee so determines) granted pursuant to Section 5 hereof.
 
                    x.          “Subsidiary” means, in respect of the Company or parent, a subsidiary company, whether now or hereafter existing, as defined in Sections 424(f) and (g) of the Code, and any other entity 50% or more of the economic interests in which are owned, directly or indirectly, by the Company.
 
                    y.          “Trustee” means a member of the Board.
 
          SECTION 2.  Administration.  The Plan shall be administered by the Board.  The Board may at any time by a unanimous vote, with each member voting, appoint a Committee consisting of not less than two Trustees to administer the Plan on behalf of the Board, subject to such terms and conditions as the Board may prescribe, provided that each Committee member shall be a Non-Employee Trustee.  Members of the Committee shall serve for such period of time as the Board may determine.  Members of the Board or the Committee who are eligible for awards or have been granted awards may vote on any matters affecting the administration of the Plan or any awards pursuant to the Plan.
 
          If a Committee is appointed, all references to actions to be taken by the Board in the administration of the Plan shall be construed as references to the Committee.
 
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          From time to time the Board may increase the size of the Committee and appoint additional members thereto (provided such new members are Non-Employee Trustees), remove members (with or without Cause) and appoint new members in substitution therefor, fill vacancies however caused, or remove all members of the Committee and thereafter directly administer the Plan.
 
          The Board shall have full authority to grant to eligible persons under Section 4: (i) Options, (ii) SARs, (iii) Restricted Shares, (iv) Long-Term Performance Awards, (v) Performance Shares and/or (vi) Performance Units.  In particular, the Board shall have the authority:
 
                    a.          to select the persons to whom Options, SARs, Restricted Shares, Long-Term Performance Awards, Performance Shares and Performance Units may from time to time be granted hereunder;
 
                    b.          to determine whether and to what extent Incentive Stock Options, Non-Qualified Stock Options, SARs, Restricted Shares, Long-Term Performance Awards, Performance Shares and Performance Units, or any combination thereof, are to be granted hereunder;
 
                    c.          to determine the number of Shares, if any, to be covered by each such award granted hereunder;
 
                    d.          to determine the terms and conditions, not inconsistent with the terms of the Plan, of any award granted hereunder, including, but not limited to, the Share price and any restriction or limitation, any vesting provisions, or any vesting acceleration or forfeiture waiver regarding any Option or other award and/or the Shares relating thereto, or the length of the period following termination of employment of any Participant during which any Option or SAR may be exercised (which, in the case of an Incentive Stock Option, shall be no longer than one year in the case of the termination of employment of a Participant by reason of death or Disability, or three months in the case of the termination of employment of a Participant for any reason other than death or Disability), based on such factors as the Board shall determine, in its sole discretion;
 
                    e.          to determine whether and under what circumstances an Option may be exercised without a payment of cash under Section 5(k); and
 
                    f.          to determine whether, to what extent and under what circumstances Shares and other amounts payable with respect to an award under the Plan may be deferred either automatically or at the election of the Participant; and
 
                    g.          to make such arrangements with a Subsidiary for awards to be made to a Participant by such Subsidiary and for the transfer of Shares to such Subsidiary for the purpose of delivery to such Participant, as the Board may deem necessary or appropriate to further the purposes of the Plan.
 
          The Board shall have the authority to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan as it shall, from time to time, deem advisable; to interpret the terms and provisions of the Plan and any award issued under the Plan (and any agreements relating thereto); to amend the terms of any agreement relating to any award issued under the Plan, provided that the Participant consents to such amendment; and to otherwise supervise the administration of the Plan.  The Board may correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any award granted in the manner and to the extent it shall deem necessary to carry out the intent of the Plan.
 
          All decisions made by the Board pursuant to the provisions of the Plan shall be final and binding on all persons, including the Company and Participants.  No member of the Board shall be liable for any good faith determination, act or failure to act in connection with the Plan or any award made under the Plan.
 
          SECTION 3.  Shares Subject to the Plan.
 
                    a.          Shares Subject to the Plan.  The Shares to be subject or related to awards under the Plan shall be authorized and unissued Shares of the Company or Shares previously issued and subsequently acquired by or on behalf of the Company.  The maximum number of Shares available for awards under the Plan is 6,600,000.  Of such Shares, (1) 6,100,000 shall be available for Non-Qualified Stock Options, Incentive Stock Options, Restricted Shares, SARS, Long-Term Performance Awards and/or Performance Shares; and (2) 500,000 shall be available
 
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solely for Non-Qualified Stock Options, Incentive Stock Options and SARS that meet the Specified Limitation described below in this Section 3(a) (such 500,000 Shares referred to in this clause (2) being hereinafter referred to as the “Restricted Pool”).  The Company may reserve for the purposes of the Plan 6,600,000 Shares.  If and to the extent that an SAR, Long-Term Performance Award or Performance Unit is settled in cash or payable solely in cash, such award shall not reduce the number of Shares subject to the Plan.  No individual shall be granted, over the term of the Plan, Options or SARs exercisable for more than an aggregate of 4,500,000 Shares.  In order for a Non-Qualified Stock Option or Incentive Stock Option to meet the Specified Limitation, it must have an exercise price per Share purchasable under the Option of not less than 100% of the Fair Market Value of the Share on the date of the grant, and in order for an SAR to meet the Specified Limitation, it must entitle the recipient to receive, upon exercise thereof, the excess of the Fair Market Value of the Share covered by the SAR on the date of exercise over the Fair Market Value of a Share on the date of the grant.
 
                    b.          Effect of the Expiration or Termination of Awards.  If and to the extent that an award made under the Plan expires, terminates or is canceled or forfeited for any reason, the number of Shares associated with the expired, terminated, canceled or forfeited portion of the award shall again become available for award under the Plan.
 
                    c.          Other Adjustment.  In the event of any merger, reorganization, consolidation, recapitalization, Share distribution or dividend, Share split or combination, or other change in entity structure affecting the Shares, such substitution or adjustment shall be made in the aggregate number, type and issuer of the securities reserved for issuance under the Plan, in the number and Option price of securities subject to outstanding Options granted under the Plan and in the number and price of securities subject to other awards made under the Plan, as may be determined to be appropriate by the Board in its sole discretion, provided that the number of securities subject to any award shall always be a whole number. The Board, in its sole discretion, shall make appropriate equitable anti-dilution adjustments to the number of then-outstanding SARs, and to the Fair Market Value upon which the value of such SARs is based.
 
          SECTION 4.  Eligibility.  Trustees and other employees of the Company or its Subsidiaries are eligible to be granted awards under the Plan.  Trustees and other employees who are not employees of the Company or of a Subsidiary that is a subsidiary as defined in Section 424(f) and (g) of the Code, are eligible to be granted awards under the Plan, but are not eligible to be granted Incentive Stock Options.
 
          SECTION 5.  Options.  Options granted under the Plan may be of two types: (i) Incentive Stock Options or (ii) Non-Qualified Stock Options.  Options may be granted alone, in addition to or in tandem with other awards granted under the Plan.  Any Option granted under the Plan shall be in such form as the Board may from time to time approve.
 
          The Board shall have the authority to grant any Participant eligible under Section 4 Incentive Stock Options, Non-Qualified Stock Options, or both types of Options (in each case with or without SARs).  To the extent that any Option does not qualify as an Incentive Stock Option, it shall constitute a Non-Qualified Stock Option.
 
          Options granted under the Plan shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Board shall deem appropriate; provided, however, that the provisions of Option awards need not be the same with respect to each Participant:
 
                    a.          Option Price.  The exercise price per Share purchasable under a Non-Qualified Stock Option shall be determined by the Board; provided that the exercise price per Share of an Option awarded under the Restricted Pool shall meet the Specified Limitation; and the exercise price per Share purchasable under an Incentive Stock Option shall be 100% of the Fair Market Value of the Share on the date of the grant.  However, any Incentive Stock Option granted to any Participant who, at the time the Option is granted, owns more than 10% of the voting power of all classes of shares of the Company or of a Subsidiary that is a subsidiary company as defined in Section 424(f) and (g) of the Code, shall have an exercise price per Share of not less than 110% of Fair Market Value per Share on the date of the grant.
 
                    b.          Option Term.  The term of each Option shall be fixed by the Board, but no Option shall be exercisable more than ten years after the date the Option is granted.  However, any Incentive Stock Option granted to any Participant who, at the time such Option is granted, owns more than 10% of the voting power of all classes of shares of the Company or of a Subsidiary that is a subsidiary company as defined in Section 424(f) and (g)
 
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of the Code, may not have a term of more than five years.  No Option may be exercised by any person after expiration of the term of the Option.
 
                    c.          Exercisability.  Options shall vest and be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Board at the time of grant.  If the Board provides, in its discretion, that any Option is exercisable only in installments, the Board may waive such installment exercise provisions at any time at or after grant, in whole or in part, based on such factors as the Board shall determine, in its sole discretion.
 
                    d.          Method of Exercise.  Subject to the exercise provisions under Section 5(c) and the termination provisions set forth in Sections 5(f) through (i), Options may be exercised in whole or in part at any time and from time to time during the term of the Option, by giving written notice of exercise to the Company specifying the number of Shares to be purchased.  Such notice shall be accompanied by payment in full of the purchase price, either by certified or bank check, or such other instrument as the Board may accept.  As determined by the Board, in its sole discretion, at or after grant, payment in full or in part of the exercise price of an Option may be made in the form of Shares that are not unvested Restricted Shares based on the Fair Market Value of the Shares on the date the Option is exercised; provided, however, that, in the case of an Incentive Stock Option, the right to make a payment in the form of already owned Shares may be authorized only at the time the Option is granted.
 
          No Shares shall be issued upon exercise of an Option until full payment therefor has been made.  A Participant shall not have the right to distributions or dividends or any other rights of a shareholder with respect to Shares subject to the Option until the Participant has given written notice of exercise, has paid in full for such Shares, and, if requested, has given the representation described in Section 13(a) hereof.
 
                    e.          Non-transferability of Options.  Unless otherwise determined by the Board, no Option shall be transferable by the Participant otherwise than by will or by the laws of descent and distribution and all Options shall be exercisable, during the Participant’s lifetime, only by the Participant or, in the event of his Disability, by his personal representative.
 
                    f.          Termination by Reason of Death.  Subject to Section 5(i), if a Participant’s service with the Company or any Subsidiary terminates by reason of death, any Option held by such Participant may thereafter be exercised, to the extent then exercisable or on such accelerated basis as the Board may determine at or after grant, by the legal representative of the estate or by the legatee of the Participant under the will of the Participant, for a period expiring (i) at such time as may be specified by the Board at or after the time of grant, or (ii) if not specified by the Board, then one year from the date of death, or (iii) if sooner than the applicable period specified under (i) or (ii) above, then upon the expiration of the stated term of such Option.
 
                    g.          Termination by Reason of Disability.  Subject to Section 5(i), if a Participant’s service with the Company or any Subsidiary terminates by reason of Disability, any Option held by such Participant may thereafter be exercised by the Participant or his personal representative, to the extent it was exercisable at the time of termination, or on such accelerated basis as the Board may determine at or after grant, for a period expiring (i) at such time as may be specified by the Board at or after the time of grant, or (ii) if not specified by the Board, then six months from the date of termination of service, or (iii) if sooner than the applicable period specified under (i) or (ii) above, then upon the expiration of the stated term of such Option; provided, however, that if the Participant dies within such period, any unexercised Option held by such Participant shall, at the sole discretion of the Board, thereafter be exercisable to the extent to which it was exercisable at the time of death for a period of one (1) year from the date of such death (or such other period as may be specified by the Board) or until the expiration of the stated term of such Option, whichever period is shorter.
 
                    h.          Other Termination.  Subject to Section 5(i), if a Participant’s service with the Company or any Subsidiary terminates for any reason other than death or Disability, any Option held by such Participant may thereafter be exercised by the Participant, to the extent it was exercisable at the time of such termination or on such accelerated basis as the Board may determine at or after the time of grant, for a period expiring (i) at such time as may be specified by the Board at or after the time of grant, or (ii) if not specified by the Board, then thirty (30) days from the date of termination of service, or (iii) if sooner than the applicable period specified under (i) or (ii) above, then upon the expiration of the stated term of such Option.
 
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                    i.          Change of Control.  In the event of a Change of Control, the Board may, in its sole discretion, cause all outstanding Options to immediately become fully exercisable.
 
                    j.          Incentive Stock Option Limitations.  To the extent required for “incentive stock option” status under Section 422 of the Code, the aggregate Fair Market Value (determined as of the time of grant) of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Participant during any calendar year under the Plan and/or any other plan of the Company or any Subsidiary shall not exceed $100,000.  For purposes of applying the foregoing limitation, Incentive Stock Options shall be taken into account in the order granted.
 
                    k.          Cashless Exercise.  The Company may, in the sole discretion of the Board, cooperate in a “cashless exercise” of an Option.  The cashless exercise shall be effected by the Participant delivering to the Securities Broker instructions to sell a sufficient number of Shares to cover the costs and expenses associated therewith.
 
          SECTION 6.  Share Appreciation Rights.
 
                    a.          Grant.  SARs may be granted alone (“Stand-Alone SARs”) or in conjunction with all or part of any Option granted under the Plan (“Tandem SARs”). In the case of a Non-Qualified Stock Option, a Tandem SAR may be granted either at or after the time of the grant of such Option.  In the case of an Incentive Stock Option, a Tandem SAR may be granted only at the time of the grant of such Option.
 
                    b.          Exercise.
 
                                 (i)          Tandem SARs.  A Tandem SAR or applicable portion thereof shall terminate and no longer be exercisable upon the termination or exercise of the related Option or portion thereof, except that, unless otherwise determined by the Board, in its sole discretion at the time of grant, a Tandem SAR granted with respect to less than the full number of Shares covered by a related Option shall be reduced only after such related Option is exercised or otherwise terminated with respect to the number of Shares not covered by the Tandem SAR.
 
          A Tandem SAR may be exercised by a Participant by surrendering the applicable portion of the related Option, only at such time or times and to the extent that the Option to which such Tandem SAR relates shall be exercisable in accordance with the provisions of Section 5 and this Section 6.  Options which have been so surrendered, in whole or in part, shall no longer be exercisable to the extent the related Tandem SARs have been exercised.
 
          Upon the exercise of a Tandem SAR, a Participant shall be entitled to receive, upon surrender to the Company of all (or a portion) of an Option in exchange for cash and/or Shares, an amount equal to the excess of (A) the Fair Market Value, as of the date such Option (or such portion thereof) is surrendered, of the Shares covered by such Option (or such portion thereof) over (B) the aggregate exercise price of such Option (or such portion thereof).
 
          Upon the exercise of a Tandem SAR, the Option or part thereof to which such Tandem SAR is related shall be deemed to have been exercised and (for the purpose of the limitation set forth in Section 3(a) of the Plan on the number of Shares available for awards under the Plan) the number of Shares available for awards under the Plan shall be reduced by the number of Shares, if any, issued upon such exercise; provided however, that if the Tandem SAR is from the Restricted Pool (as defined in Section 3(a) of the Plan), then the number of Shares available for awards under the Plan shall instead be reduced by the total number of Tandem SARs that are exercised and settled for Shares and not the number of Shares, if any, issued upon such exercise.
 
          A Tandem SAR may be exercised only if and when the Fair Market Value of the Shares subject to the Option exceeds the exercise price of such Option.
 
                                  (ii)       Stand-Alone SARs.  A Stand-Alone SAR may be exercised by a Participant giving notice of intent to exercise to the Company, provided that all or a portion of such Stand-Alone SAR shall have become vested and exercisable as of the date of exercise.
 
          Upon the exercise of a Stand-Alone SAR, a Participant shall be entitled to receive, in either cash and/or Shares, as determined by the Board, an amount equal to the excess, if any, of (A) the Fair Market Value, as of the
 
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date such SAR (or portion of such SAR) is exercised, of the Shares covered by such SAR (or portion of such SAR) over (B) the Fair Market Value of the Shares covered by such SAR (or a portion of such SAR) as of the date such SAR  (or a portion of such SAR) was granted.
 
          For the purpose of the limitation set forth in Section 3(a) of the Plan on the number of Shares available for awards under the Plan, upon the exercise of a Stand-Alone SAR, the number of Shares available for awards under the Plan shall be reduced by the number of Shares, if any, issued under, and upon the exercise of, the Stand-Alone SAR; provided however, that if the Stand-Alone SAR is from the Restricted Pool (as defined in Section 3(a) of the Plan), then the number of Shares available for awards under the Plan shall instead be reduced by the total  number of Stand-Alone SARs that are exercised and settled for Shares and not the number of Shares, if any, issued upon such exercise.
 
                    c.          Terms and Conditions.  SARs shall be subject to such terms and conditions, not inconsistent with the provisions of the Plan, as shall be determined from time to time by the Board, in its sole discretion; provided, however, that the provisions of SAR awards need not be the same with respect to each Participant. Such terms and conditions include the following:
 
                                 (i)          Non-Transferability.  Unless otherwise determined by the Board, no SAR shall be transferable by the Participant otherwise than by will or by the laws of descent and distribution and all SARs shall be exercisable, during the Participant’s lifetime, only by the Participant or, in the event of his Disability, by his personal representative.
 
                                 (ii)          Term of SAR.  The term of each SAR shall be fixed by the Board, provided that the term of a Tandem SAR shall be determined by the terms of the applicable Option, and provided further that the term of a Stand-Alone SAR shall be ten (10) years, unless another term is specified by the Board.
 
                                 (iii)          Exercisability.  SARs shall vest and be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Board at the time of grant, provided that the term of a Tandem SAR shall be determined by the terms of the applicable Option.  A Participant shall not have any rights as a shareholder with respect to any SAR.
 
                                 (iv)          Termination of Employment.  Unless otherwise specified in the terms of an award, SARs shall be subject to the terms of Sections 5(f)-(h) with respect to exercise upon termination of employment.
 
                                 (v)          Change of Control.  In the event of a Change of Control, the Board may, in its sole discretion, cause all outstanding SARs to immediately become fully exercisable.
 
          SECTION 7.   Restricted Shares.
 
                    a.          Administration.  Restricted Shares may be issued either alone or in addition to other awards granted under the Plan.  The Board shall determine the persons to whom, and the time or times at which, grants of Restricted Shares will be made, the number of Shares to be awarded, the price (if any) to be paid by the recipient of Restricted Shares, the time or times within which such awards may be subject to forfeiture, and all other conditions of the awards.
 
          The Board may condition the vesting of Restricted Shares upon the attainment of specified performance goals or such other factors as the Board may determine, in its sole discretion, at the time of the award.  The Board may award Restricted Shares that vest without regard to the attainment of specified performance goals.
 
          The provisions of Restricted Share awards need not be the same with respect to each Participant.
 
                    b.          Awards and Certificates.  The prospective recipient of a Restricted Share award shall not have any rights with respect to such award, unless and until such recipient has executed an agreement evidencing the award and has delivered a fully executed copy thereof to the Company, and has otherwise complied with the applicable terms and conditions of such award.  The purchase price for Restricted Shares may be zero.
 
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          Each Participant receiving a Restricted Share award shall be issued a share certificate in respect of such Restricted Shares.  Such certificate shall be registered in the name of such Participant, and shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such award, substantially in the following form:
 
          “The transferability of this certificate and the shares represented hereby are subject to the terms and conditions (including forfeiture) of the Brandywine Realty Trust Amended and Restated 1997 Long-Term Incentive Plan, as amended, and an Agreement entered into between the registered owner and Brandywine Realty Trust.  Copies of such Plan and Agreement are on file in the principal offices of Brandywine Realty Trust and will be made available to any Shareholder without charge upon request to the Secretary of the Company.”
 
          The Board may require that the share certificates evidencing Restricted Shares be held in custody by the Company until the restrictions thereon shall have lapsed, and that, as a condition of any Restricted Share award, the Participant shall have delivered to the Company a share power, endorsed in blank, relating to the Shares covered by such award.
 
                    c.          Restrictions and Conditions.  The Restricted Shares awarded pursuant to this Section 7 shall be subject to the following restrictions and conditions:
 
                                 (i)          During a period set by the Board commencing with the date of such award (the “Restriction Period”), the Participant shall not be permitted to sell, transfer, pledge, assign or otherwise encumber Restricted Shares awarded under the Plan.  The Board, in its sole discretion, may provide for the lapse of such restrictions in installments and may accelerate or waive such restrictions in whole or in part, based on service, performance and/or such other factors or criteria as the Board may determine, in its sole discretion.  The Board may, in its sole discretion, issue Restricted Shares under the Plan for which all restrictions are waived, including, but not limited to, Restricted Shares issued to Trustees as part or all of their Trustees’ fees for any period.
 
                                 (ii)         Except as provided in this paragraph (ii) and Section 7(c)(i), once the Participant has been issued a certificate or certificates for Restricted Shares, the Participant shall have, with respect to the Restricted Shares, all of the rights of a shareholder of the Company, including the right to vote the Shares, and the right to receive any cash distributions or dividends.  The Board, in its sole discretion, as determined at the time of award, may permit or require the payment of cash distributions or dividends to be deferred and, if the Board so determines, reinvested in additional Restricted Shares to the extent Shares are available under Section 3 of the Plan.
 
                                 (iii)       Subject to the applicable provisions of the award agreement and this Section 7, upon termination of a Participant’s service with the Company for reasons other than death or Disability during the Restriction Period, all Restricted Shares still subject to restriction shall be forfeited by the Participant.  Subject to the provisions of the Plan, the Board, in its sole discretion, may provide for the lapse of such restrictions in installments and may waive such restrictions, in whole or in part, at any time, based on such factors as the Board shall deem appropriate in its sole discretion.  Unless otherwise provided in an award agreement, upon the death or Disability of a Participant during the Restriction Period, restrictions will lapse with respect to a percentage of the Restricted Shares award granted to the Participant that is equal to the percentage of the Restriction Period that has elapsed as of the date of death or the date on which such Disability commenced (as determined by the Board in its sole discretion), and a share certificate or share certificates representing such Shares, without bearing the restrictive legend described in Section 7(b), shall be delivered by the Company to the Participant or the Participant’s estate, as the case may be, in exchange for the share certificate or share certificates that contain such restrictive legend.
 
                                 (iv)       In the event of hardship or other special circumstances of a Participant whose service with the Company is involuntarily terminated (other than for Cause), the Board may, in its sole discretion, waive in whole or in part any or all remaining restrictions with respect to such Participant’s Restricted Shares, based on such factors as the Board may deem appropriate.
 
                                 (v)        If and when the Restriction Period expires without a prior forfeiture of the Restricted Shares subject to such Restriction Period, the certificates for such Shares, without bearing the restrictive legend described in Section 7(b), shall be promptly delivered by the Company to the Participant, in exchange for the share certificate or share certificates that contain such restrictive legend.
 
9

                                 (vi)       In the event of a Change of Control, the Board, in its sole discretion, may cause all Restricted Shares remaining subject to forfeiture to immediately cease to be subject to forfeiture and a share certificate or shares certificates representing such Shares, without bearing the restrictive legend described in Section 7(b), shall be issued by the Company and delivered to the Participant, in exchange for the share certificate or share certificates that contain such restrictive legend.
 
          SECTION 8.  Long-Term Performance Awards.
 
                    a.          Awards and Administration.  Long-Term Performance Awards may be awarded either alone or in addition to other awards granted under the Plan.  Prior to award of a Long-Term Performance Award, the Board shall determine the nature, length and starting date of the performance period (the “performance period”) for each Long-Term Performance Award.  Performance periods may overlap and Participants may participate simultaneously with respect to Long-Term Performance Awards that are subject to different performance periods and/or different performance factors and criteria.  Prior to award of a Long-Term Performance Award, the Board shall determine the performance objectives to be used in awarding Long-Term Performance Awards and determine the extent to which such Long-Term Performance Awards have been earned.  Performance objectives may vary from Participant to Participant and between groups of Participants and shall be based upon such Company, business unit and/or individual performance factors and criteria as the Board may deem appropriate, including, but not limited to, earnings per Share or return on equity. 
 
          At the beginning of each performance period, the Board shall determine for each Long-Term Performance Award subject to such performance period the range of dollar values and/or number of Shares to be awarded to the Participant at the end of the performance period if and to the extent that the relevant measure(s) of performance for such Long-Term Performance Award is (are) met.  Such dollar values or number of Shares may be fixed or may vary in accordance with such performance and/or other criteria as may be specified by the Board, in its sole discretion.
 
                    b.          Adjustment of Awards.  In the event of special or unusual events or circumstances affecting the application of one or more performance objectives to a Long-Term Performance Award, the Board may revise the performance objectives and/or underlying factors and criteria applicable to the Long-Term Performance Awards affected, to the extent deemed appropriate by the Board, in its sole discretion, to avoid unintended windfalls or hardship.
 
                    c.          Termination of Service.  Unless otherwise provided in the applicable award agreements, if a Participant terminates service with the Company during a performance period because of death, Disability or Retirement, such Participant (or his estate) shall be entitled to a payment with respect to each outstanding Long-Term Performance Award at the end of the applicable performance period:
 
                                 (i)          based, to the extent relevant under the terms of the award, upon the Participant’s performance for the portion of such performance period ending on the date of termination and the performance of the applicable business unit(s) for the entire performance period, and
 
                                 (ii)         pro-rated, where deemed appropriate by the Board, for the portion of the performance period during which the Participant was employed by or served on the Board of the Company, all as determined by the Board, in its sole discretion.
 
          However, the Board may provide for an earlier payment in settlement of such award in such amount and under such terms and conditions as the Board deems appropriate, in its sole discretion.
 
          Except as otherwise determined by the Board, if a Participant terminates service with the Company during a performance period for any other reason, then such Participant shall not be entitled to any payment with respect to the Long-Term Performance Awards subject to such performance period, unless the Board shall otherwise determine, in its sole discretion.
 
          In the event of a Change of Control, the Board may, in its sole discretion, cause all conditions applicable to a Long-Term Performance Award to immediately terminate and a share certificate or share certificates representing Shares subject to such award, or cash, as the case may be, to be issued and/or delivered to the Participant.
 
10

                    d.          Form of Payment.  The earned portion of a Long-Term Performance Award may be paid currently or on a deferred basis, together with such interest or earnings equivalent as may be determined by the Board, in its sole discretion.  Payment shall be made in the form of cash or whole Shares, including Restricted Shares, either in a lump sum payment or in annual installments commencing as soon as practicable after the end of the relevant performance period, all as the Board shall determine at or after grant.  A Participant whose Long-Term Performance Award is payable in Shares or Restricted Shares shall not have any rights as a shareholder until such share certificate or share certificates have been issued to such Participant, and, if requested, the Participant has given the representation described in Section 13(a) hereof.
 
          SECTION 9.  Performance Shares.
 
                    a.          Awards and Administration.  The Board shall determine the persons to whom and the time or times at which Performance Shares shall be awarded, the number of Performance Shares to be awarded to any such person, the duration of the period (the “performance period”) during which, and the conditions under which, receipt of the Shares will be deferred, and the other terms and conditions of the award in addition to those set forth below.
 
          The Board may condition the receipt of Shares pursuant to a Performance Share award upon the attainment of specified performance goals or such other factors or criteria as the Board shall determine, in its sole discretion.
 
          The provisions of Performance Share awards need not be the same with respect to each Participant, and such awards to individual Participants need not be the same in subsequent years.
 
                    b.          Terms and Conditions.  Performance Shares awarded pursuant to this Section 9 shall be subject to the following terms and conditions and such other terms and conditions, not inconsistent with the terms of this Plan, as the Board shall deem desirable:
 
                                 (i)          Conditions.  The Board, in its sole discretion, shall specify the performance period during which, and the conditions under which, the receipt of Shares covered by the Performance Share award will be deferred.
 
                                 (ii)         Share Certificate.  At the expiration of the performance period, if the Board, in its sole discretion, determines that the conditions specified in the Performance Share agreement have been satisfied, a share certificate or share certificates evidencing the number of Shares covered by the Performance Share award shall be issued and delivered to the Participant.  A Participant shall not be deemed to be the holder of Shares, or to have the rights of a holder of Shares, with respect to the Performance Shares unless and until a share certificate or share certificates evidencing such Shares are issued to such Participant.  If, with respect to an award of Performance Shares, the Board determines after the expiration of the performance period that a Participant is not entitled to the entire number of Performance Shares represented by the award, then the Shares representing the portion of the award that is not paid to the Participant shall again become available for award under the Plan, subject to Section 3(b).
 
                                 (iii)       Death, Disability or Retirement.  Subject to the provisions of the Plan, and unless otherwise provided in the Performance Share Agreement, if a Participant terminates service with the Company during a performance period because of death, Disability or Retirement, such Participant (or his estate) shall be entitled to receive, at the expiration of the performance period, a percentage of Performance Shares that is equal to the percentage of the performance period that had elapsed as of the date of termination, provided that the Board, in its sole discretion, determines that the conditions specified in the Performance Share agreement have been satisfied.  In such event, a share certificate or share certificates evidencing such Shares shall be issued and delivered to the Participant or the Participant’s estate, as the case may be.
 
                                 (iv)       Termination of Service.  Unless otherwise determined by the Board at the time of grant, the Performance Shares will be forfeited upon a termination of service during the performance period for any reason other than death, Disability or Retirement.
 
                                 (v)         Change of Control.  In the event of a Change of Control, the Board may, in its sole discretion, cause all conditions applicable to the Performance Shares to immediately terminate and a share
 
11

certificate or share certificates evidencing Shares subject to the Share award to be issued and delivered to the Participant.
 
          SECTION 10.  Performance Units.
 
                    a.          Awards and Administration.  The Board shall determine the persons to whom and the time or times at which Performance Units shall be awarded, the number of Performance Units to be awarded to any such person, the duration of the period (the “performance period”) during which, and the conditions under which, a Participant’s right to Performance Units will be vested, the ability of Participants to defer the receipt of payment of such Performance Units, and the other terms and conditions of the award in addition to those set forth below.
 
          A Performance Unit shall have a fixed dollar value.
 
          The Board may condition the vesting of Performance Units upon the attainment of specified performance goals or such other factors or criteria as the Board shall determine, in its sole discretion.
 
          The provisions of Performance Unit awards need not be the same with respect to each Participant, and such awards to individual Participants need not be the same in subsequent years.
 
                    b.          Terms and Conditions.  Performance Units awarded pursuant to this Section 10 shall be subject to the following terms and conditions and such other terms and conditions, not inconsistent with the terms of this Plan, as the Board shall deem desirable:
 
                                 (i)          Conditions.  The Board, in its sole discretion, shall specify the performance period during which, and the conditions under which, the Participant’s right to Performance Units will be vested.
 
                                 (ii)         Vesting.  At the expiration of the performance period, the Board, in its sole discretion, shall determine the extent to which the performance goals have been achieved, and the percentage of the Performance Units of each Participant that have vested.
 
                                 (iii)        Death, Disability or Retirement.  Subject to the provisions of this Plan, and unless otherwise provided in the award agreement, if a Participant terminates service with the Company during a performance period because of death, Disability or Retirement, such Participant (or the Participant’s estate) shall be entitled to receive, at the expiration of the performance period, a percentage of Performance Units that is equal to the percentage of the performance period that had elapsed as of the date of termination, provided that the Board, in its sole discretion, determines that the conditions specified in the Performance Unit agreement have been satisfied, and payment thereof shall be made to the Participant or the Participant’s estate, as the case may be.
 
                                 (iv)       Termination of Service.  Unless otherwise determined by the Board at the time of grant, the Performance Units will be forfeited upon a termination of service during the performance period for any reason other than death, Disability or Retirement.
 
                                 (v)         Change of Control.  In the event of a Change of Control, the Board may, in its sole discretion, cause all conditions applicable to Performance Units to immediately terminate and cash representing the full amount of such award to be paid to the Participant.
 
          SECTION 11.  Amendments and Termination.  The Board may amend, alter or discontinue the Plan at any time, but no amendment, alteration or discontinuation shall be made which would impair the rights of a Participant with respect to an Option, SAR, Restricted Share, Long-Term Performance Award, Performance Share or Performance Unit which has been granted under the Plan, without the Participant’s consent, or which, without the approval of such amendment within one year (365 days) of its adoption by the Board, by a majority of the votes cast at a duly held shareholder meeting at which a quorum representing a majority of the Company’s outstanding voting shares is present (either in person or by proxy) (“Shareholder Approval”), would:
 
                    a.          except as expressly provided in the Plan, increase the total number of Shares reserved for the purposes of the Plan;
 
                    b.          change the persons or class of persons eligible to participate in the Plan; or
 
12

                    c.          extend the maximum Option term under Section 5(b) of the Plan.
 
          Except as permitted by Section 3(c), the Board shall not, without Shareholder Approval, amend a previously granted Option or grant a new Option in substitution for a previously granted Option, if such amended or substituted Option would have an exercise price that is lower than the original Option.
 
          Subject to the above provisions, the Board shall have broad authority to amend the Plan to take into account changes in applicable tax laws and accounting rules, as well as other developments.
 
          SECTION 12.  Unfunded Status of Plan.  The Plan is intended to constitute an “unfunded” plan for incentive and deferred compensation.  With respect to any payments not yet made to a Participant by the Company, nothing contained herein shall give any such Participant any rights that are greater than those of a general creditor of the Company.  In its sole discretion, the Board may authorize the creation of trusts or other arrangements to meet the obligations created under the Plan to deliver Shares or payments in lieu of Shares or with respect to awards hereunder.
 
          SECTION 13.   General Provisions.
 
                    a.          The Board may require each person acquiring Shares or a Share-based award under the Plan to represent to and agree with the Company in writing that the Participant is acquiring the Shares or Share-based award for investment purposes and without a view to distribution thereof and as to such other matters as the Board believes are appropriate to ensure compliance with applicable Federal and state securities laws.  The certificate evidencing such award and any securities issued pursuant thereto may include any legend which the Board deems appropriate to reflect any restrictions on transfer and compliance with securities laws.
 
          All certificates for Shares or other securities delivered under the Plan shall be subject to such share transfer orders and other restrictions as the Board may deem advisable under the rules, regulations, and other requirements of the Securities Act of 1933, as amended, the Exchange Act, any stock exchange upon which the Shares are then listed, and any other applicable Federal or state securities laws, and the Board may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.
 
                    b.          Nothing contained in the Plan shall prevent the Board from adopting other or additional compensation arrangements, subject to shareholder approval if such approval is required by law or any stock exchange upon which the Shares are then listed; and such arrangements may be either generally applicable or applicable only in specific cases.
 
                    c.          The adoption of the Plan shall not confer upon any employee of the Company or a Subsidiary any right to continued employment with the Company or such Subsidiary, nor shall it interfere in any way with the right of the Company or such Subsidiary to terminate the employment of any of its employees at any time.
 
                    d.          No later than the date as of which an amount first becomes includable in the gross income of the Participant for Federal income tax purposes with respect to any award under the Plan, the Participant shall pay to the Company, or make arrangements satisfactory to the Board regarding the payment, of any Federal, state or local taxes of any kind required by law to be withheld with respect to such amount.  Unless otherwise determined by the Board, the minimum required withholding obligations may be settled with Shares, including Shares that are part of the award that gives rise to the withholding requirement.  The obligations of the Company under the Plan shall be conditional on such payment or arrangements and the Company shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the Participant.
 
                    e.          At the time of grant of an award under the Plan, the Board may provide that the Shares received as a result of such grant shall be subject to a right of first refusal, pursuant to which the Participant shall be required to offer to the Company any Shares that the Participant wishes to sell, with the price being the then Fair Market Value of the Shares, subject to such other terms and conditions as the Board may specify at the time of grant.
 
                    f.          The Board shall establish such procedures as it deems appropriate for a Participant to designate a beneficiary to whom any amounts payable in the event of the Participant’s death are to be paid.
 
13

                    g.          The Plan and all awards made and actions taken thereunder shall be governed by and construed in accordance with the laws of the State of Maryland.
 
          SECTION 14.  Effective Date of Plan.  This Plan shall become effective on the date that it is adopted by the Board; provided, however, that it shall not be an Incentive Stock Option Plan if it is not approved, within one year (365 days) of its adoption by the Board, by a majority of the votes cast at a duly held shareholder meeting at which a quorum representing a majority of Company’s outstanding voting shares is present, either in person or by proxy.  The Board may make awards hereunder prior to approval of the Plan; provided, however, that any and all Incentive Stock Options so awarded automatically shall be converted into Non-Qualified Stock Options if the Plan is not approved by shareholders within 365 days of its adoption.
 
          SECTION 15.  Term of Plan.  No Option, SAR, Restricted Share, Long-Term Performance Award, Performance Share or Performance Unit shall be granted pursuant to the Plan on or after the tenth (10th) anniversary of the latest date of shareholder approval of either the Plan or an amendment to the Plan, but awards granted prior to such tenth (10th) anniversary may extend beyond that date.
 
14

Brandywine Realty Trust
Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Share Distributions
(in thousands)
 
 	 	For the three months ended
March 31,	 	For the years ended December 31,	 	
 	 		 		 	
 	 	2005	 	2004	 	2004	 	2003	 	2002	 	2001	 	2000	 	
 	 			 			 			 			 			 			 			 	
Earnings before fixed charges:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Add:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income from continuing operations (a)	 	$	9,415	 	$	12,255	 	$	57,604	 	$	75,832	 	$	47,643	 	$	19,462	 	$	38,953 	 	
Minority interest attributable to continuing operations	 	 	327	 	 	1,261	 	 	2,472	 	 	9,294	 	 	9,375	 	 	7,760	 	 	8,800 	 	
Fixed charges - per below	 	 	20,221	 	 	14,413	 	 	61,894	 	 	69,476	 	 	76,950	 	 	83,627	 	 	84,604 	 	
Less:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income from equity method investments not distributed	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	(518	)	
Capitalized interest	 	 	(1,772	)	 	(396	)	 	(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	 	$	28,191	 	$	26,701	 	$	118,108	 	$	146,030	 	$	123,950	 	$	98,602	 	$	116,588 	 	
 	 			 			 			 			 			 			 			 	
Fixed charges and Preferred Distributions:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest expense (including amortization)	 	$	17,797	 	$	12,104	 	$	55,061	 	$	57,835	 	$	63,522	 	$	67,496	 	$	64,746 	 	
Capitalized interest	 	 	1,772	 	 	396	 	 	3,030	 	 	1,503	 	 	2,949	 	 	5,178	 	 	8,182 	 	
Proportionate share of interest for unconsolidated real estate ventures	 	 	652	 	 	1,081	 	 	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	 	 	20,221	 	 	14,413	 	 	61,894	 	 	69,476	 	 	76,950	 	 	83,627	 	 	84,604 	 	
Income allocated to preferred shareholders	 	 	1,998	 	 	2,018	 	 	9,720	 	 	11,906	 	 	11,906	 	 	11,906	 	 	11,906 	 	
 	 			 			 			 			 			 			 			 	
Total Preferred Distributions	 	 	1,998	 	 	2,018	 	 	9,720	 	 	11,906	 	 	11,906	 	 	11,906	 	 	11,906 	 	
 	 			 			 			 			 			 			 			 	
Total combined fixed charges and preferred distributions	 	$	22,219	 	$	16,431	 	$	71,614	 	$	81,382	 	$	88,856	 	$	95,533	 	$	96,510 	 	
 	 			 			 			 			 			 			 			 	
Ratio of earnings to combined fixed charges and preferred distributions	 	 	1.27	 	 	1.63	 	 	1.65	 	 	1.79	 	 	1.39	 	 	1.03	 	 	1.21	 	

 
	
(a)	Amounts for the three months ended March 31, 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 December 31, 2004.  As a result, operations have been reclassified to discontinued operations from continuing operations for all periods presented.	
 
Exhibit 31.1
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:            May 6, 2005           	 	/s/  Gerard H. Sweeney	
 	 		
 	 	Gerard H. Sweeney	
 	 	President and Chief Executive Officer	
 
Exhibit 31.2
 
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:            May 6, 2005           	 	/s/  Christopher P. Marr	
 	 		
 	 	Christopher P. Marr	
 	 	Senior Vice President and Chief Financial Officer	
 
Exhibit 32.1 
 
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 three-month period ended March 31, 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.  	
  
/s/  Gerard H. Sweeney	 	
	 	
Gerard H. Sweeney	 	
President and Chief Executive Officer	 	
Date:         May 6, 2005        	 	

*  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.  
Exhibit 32.2 
 
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 three-month period ended March 31, 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.  	
 
/s/  Christopher P. Marr	 	
	 	
Christopher P. Marr	 	
Senior Vice President and Chief Financial Officer	 	
Date:         May 6, 2005        	 	

*  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.