UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
  þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
 For the quarterly period ended September 30, 2008
 or
 o
    
    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)
000-24407 (Brandywine Operating Partnership, L.P.)
 
 Brandywine Realty Trust
Brandywine Operating Partnership, L.P.
  MARYLAND(Brandywine Realty Trust)
    
    23-2413352DELAWARE(Brandywine Operating Partnership L.P.)
    
    23-2862640(State or other jurisdiction of 
Incorporation or organization)
    
    (I.R.S. Employer Identification No.)555 East Lancaster Avenue 
Radnor, Pennsylvania
    
    19087(Address of principal executive offices)
    
    (Zip Code)
 (610) 325-5600
  Brandywine Realty Trust
    
    Yes þ No oBrandywine Operating Partnership, L.P.
    
    Yes þ No o
  Brandywine Realty Trust:
    
    Large accelerated filer þ Accelerated filer o Non-accelerated filer o Smaller reporting company oBrandywine Operating Partnership, L.P.:
    
    Large accelerated filer þ Accelerated filer o Non-accelerated filer o Smaller reporting company o
  Brandywine Realty Trust
    
    Yes o No þBrandywine Operating Partnership, L.P.
    
    Yes o No þ




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##### 



TABLE OF CONTENTS
 PageBrandywine Realty TrustPART I  FINANCIAL INFORMATIONItem 1.
    
    Financial Statements (unaudited)Consolidated Balance Sheets as of September 30, 2008 and December 31, 2007
    
    
    3Consolidated Statements of Operations for the three- and nine-month periods ended
September 30, 2008 and 2007
    
    
    4Consolidated Statements of Other Comprehensive Income for the three- and nine-month
periods ended September 30, 2008 and 2007
    
    
    5Consolidated Statements of Cash Flows for the nine-month periods ended September 30,
2008 and 2007
    
    
    6Notes to Unaudited Consolidated Financial Statements
    
    
    7Brandywine Operating Partnership, L.P.Item 1.
    
    Financial Statements (unaudited)Consolidated Balance Sheets as of September 30, 2008 and December 31, 2007
    
    
    34Consolidated Statements of Operations for the three- and nine-month periods ended
September 30, 2008 and 2007
    
    
    35Consolidated Statements of Other Comprehensive Income for the three- and nine-month
periods ended September 30, 2008 and 2007
    
    
    36Consolidated Statements of Cash Flows for the nine-month periods ended September 30,
2008 and 2007
    
    
    37Notes to Unaudited Consolidated Financial Statements
    
    
    38Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    64Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    81Item 4.
    
    Controls and Procedures
    
    
    82PART II  OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    82Item 1A.
    
    Risk Factors
    
    
    82Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    82Item 3.
    
    Defaults Upon Senior Securities
    
    
    83Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    83Item 5.
    
    Other Information
    
    
    83Item 6.
    
    Exhibits
    
    
    83Signatures
    
    
    84
  Filing Format
  2




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##### 



PART I  FINANCIAL INFORMATION
 
 Item 1.  Financial Statements
 BRANDYWINE REALTY TRUST
 
 CONSOLIDATED BALANCE SHEETS
 (unaudited, in thousands, except share and per share information)
 September 30,
    
    
    December 31,2008
    
    
    2007ASSETSReal estate investments:Rental properties
    
    $
    4,467,405
    
    
    $
    4,813,563Accumulated depreciation
    
    
    (609,566
    )
    
    
    (558,908
    )Operating real estate investments, net
    
    
    3,857,839
    
    
    
    4,254,655Development land and construction-in-progress
    
    
    353,904
    
    
    
    402,270Total real estate invesmtents, net
    
    
    4,211,743
    
    
    
    4,656,925Cash and cash equivalents
    
    
    2,674
    
    
    
    5,600Accounts receivable, net
    
    
    8,018
    
    
    
    17,057Accrued rent receivable, net
    
    
    87,783
    
    
    
    83,098Asset held for sale, net
    
    
    459,197
    
    
    
    Investment in real estate ventures, at equity
    
    
    71,036
    
    
    
    71,598Deferred costs, net
    
    
    83,133
    
    
    
    87,123Intangible assets, net
    
    
    156,109
    
    
    
    218,149Other assets
    
    
    73,584
    
    
    
    74,549Total assets
    
    $
    5,153,277
    
    
    $
    5,214,099LIABILITIES AND BENEFICIARIES EQUITYMortgage notes payable
    
    $
    490,593
    
    
    $
    611,898Unsecured term loan
    
    
    183,000
    
    
    
    150,000Borrowing under credit facilities
    
    
    175,000
    
    
    
    130,727Unsecured senior notes, net of discounts
    
    
    2,177,255
    
    
    
    2,208,344Accounts payable and accrued expenses
    
    
    99,368
    
    
    
    76,919Distributions payable
    
    
    42,124
    
    
    
    42,368Tenant security deposits and deferred rents
    
    
    57,194
    
    
    
    65,241Acquired below market leases, net
    
    
    50,446
    
    
    
    67,281Other liabilities
    
    
    31,075
    
    
    
    30,154Mortgage notes payable and other liabilities held for sale
    
    
    111,230
    
    
    
    Total liabilities
    
    
    3,417,285
    
    
    
    3,382,932Minority interest
    
    
    65,521
    
    
    
    83,990Commitments and contingencies (Note 14)Beneficiaries equity:Preferred Shares (shares authorized-20,000,000):7.50% Series C Preferred Shares, $0.01 par value; issued and outstanding-
2,000,000 in 2008 and 2007
    
    
    20
    
    
    
    207.375% Series D Preferred Shares, $0.01 par value; issued and outstanding-
2,300,000 in 2008 and 2007
    
    
    23
    
    
    
    23Common Shares of beneficial interest, $0.01 par value; shares authorized
200,000,000; 88,610,053 and 88,623,635 issued in 2008 and 2007, respectively
and 87,479,705 and 87,015,600 outstanding in 2008 and 2007, respectively
    
    
    877
    
    
    
    870Additional paid-in capital
    
    
    2,326,988
    
    
    
    2,324,342Deferred compensation payable in common stock
    
    
    6,272
    
    
    
    5,651Common shares in treasury, at cost, 914,606 and 1,599,637 in 2008 and 2007,
respectively
    
    
    (29,949
    )
    
    
    (53,449
    )Common shares in grantor trust, 215,742 in 2008 and 171,650 in 2007
    
    
    (6,272
    )
    
    
    (5,651
    )Cumulative earnings
    
    
    497,038
    
    
    
    476,910Accumulated other comprehensive loss
    
    
    (2,836
    )
    
    
    (1,885
    )Cumulative distributions
    
    
    (1,121,690
    )
    
    
    (999,654
    )Total beneficiaries equity
    
    
    1,670,471
    
    
    
    1,747,177Total liabilities, minority interest and beneficiaries equity
    
    $
    5,153,277
    
    
    $
    5,214,099
  3




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##### 



BRANDYWINE REALTY TRUST
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (unaudited, in thousands, except share and per share information)
 For the three-month periods ended
    
    
    For the nine-month periods endedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenue:Rents
    
    $
    123,571
    
    
    $
    128,277
    
    
    $
    371,605
    
    
    $
    375,933Tenant reimbursements
    
    
    19,732
    
    
    
    20,525
    
    
    
    59,676
    
    
    
    59,255Termination fees
    
    
    338
    
    
    
    7,649
    
    
    
    4,462
    
    
    
    9,418Third Party management fees, labor reimbursement and leasing
    
    
    4,390
    
    
    
    4,415
    
    
    
    15,239
    
    
    
    14,119Other
    
    
    784
    
    
    
    2,274
    
    
    
    2,378
    
    
    
    4,711Total revenue
    
    
    148,815
    
    
    
    163,140
    
    
    
    453,360
    
    
    
    463,436Operating Expenses:Property operating expenses
    
    
    40,978
    
    
    
    43,410
    
    
    
    122,531
    
    
    
    124,316Real estate taxes
    
    
    15,148
    
    
    
    15,232
    
    
    
    46,179
    
    
    
    44,886Third party management expenses
    
    
    1,790
    
    
    
    2,508
    
    
    
    6,417
    
    
    
    7,499Depreciation and amortization
    
    
    51,060
    
    
    
    56,876
    
    
    
    154,527
    
    
    
    167,315General & administrative expenses
    
    
    6,863
    
    
    
    7,402
    
    
    
    17,902
    
    
    
    21,819Total operating expenses
    
    
    115,839
    
    
    
    125,428
    
    
    
    347,556
    
    
    
    365,835Operating income
    
    
    32,976
    
    
    
    37,712
    
    
    
    105,804
    
    
    
    97,601Other Income (Expense):Interest income
    
    
    221
    
    
    
    1,054
    
    
    
    603
    
    
    
    3,432Interest expense
    
    
    (35,039
    )
    
    
    (39,496
    )
    
    
    (106,846
    )
    
    
    (117,892
    )Deferred financing costs
    
    
    (1,092
    )
    
    
    (1,058
    )
    
    
    (3,798
    )
    
    
    (3,381
    )Equity in income of real estate ventures
    
    
    1,059
    
    
    
    763
    
    
    
    3,838
    
    
    
    6,021Net gain (loss) on dispostion of undepreciated real estate
    
    
    
    
    
    
    421
    
    
    
    (24
    )
    
    
    421Gain on early extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    4,342
    
    
    
    Income (loss) before minority interest
    
    
    (1,875
    )
    
    
    (604
    )
    
    
    3,919
    
    
    
    (13,798
    )Minority interest  partners share of consolidated real estate ventures
    
    
    (39
    )
    
    
    5
    
    
    
    (117
    )
    
    
    (103
    )Minority interest attributable to continuing operations  LP units
    
    
    141
    
    
    
    116
    
    
    
    84
    
    
    
    843Income (loss) from continuing operations
    
    
    (1,773
    )
    
    
    (483
    )
    
    
    3,886
    
    
    
    (13,058
    )Discontinued operations:Income from discontinued operations
    
    
    4,619
    
    
    
    2,694
    
    
    
    9,298
    
    
    
    12,003Net gain (loss) on disposition of discontinued operations
    
    
    
    
    
    
    338
    
    
    
    21,401
    
    
    
    25,491Provision for impairment
    
    
    
    
    
    
    
    
    
    
    (6,850
    )
    
    
    Minority interest attributable to discontinued operations  LP units
    
    
    (167
    )
    
    
    (130
    )
    
    
    (944
    )
    
    
    (1,603
    )Total discontinued operations
    
    
    4,452
    
    
    
    2,902
    
    
    
    22,905
    
    
    
    35,891Net income
    
    
    2,679
    
    
    
    2,419
    
    
    
    26,791
    
    
    
    22,833Income allocated to Preferred Shares
    
    
    (1,998
    )
    
    
    (1,998
    )
    
    
    (5,994
    )
    
    
    (5,994
    )Income (loss) allocated to Common Shares
    
    $
    681
    
    
    $
    421
    
    
    $
    20,797
    
    
    $
    16,839Basic earnings (loss) per Common Share:Continuing operations
    
    $
    (0.04
    )
    
    $
    (0.03
    )
    
    $
    (0.02
    )
    
    $
    (0.22
    )Discontinued operations
    
    
    0.05
    
    
    
    0.03
    
    
    
    0.26
    
    
    
    0.41$
    0.01
    
    
    $
    0.00
    
    
    $
    0.24
    
    
    $
    0.19Diluted earnings (loss) per Common Share:Continuing operations
    
    $
    (0.04
    )
    
    $
    (0.03
    )
    
    $
    (0.02
    )
    
    $
    (0.22
    )Discontinued operations
    
    
    0.05
    
    
    
    0.03
    
    
    
    0.26
    
    
    
    0.41$
    0.01
    
    
    $
    0.00
    
    
    $
    0.24
    
    
    $
    0.19Dividends declared per Common Share
    
    $
    0.44
    
    
    $
    0.44
    
    
    $
    1.32
    
    
    $
    1.32Basic weighted average shares outstanding
    
    
    87,695,892
    
    
    
    86,897,335
    
    
    
    87,423,108
    
    
    
    87,416,757Diluted weighted average shares outstanding
    
    
    87,695,892
    
    
    
    87,114,598
    
    
    
    87,437,133
    
    
    
    87,882,401
  4




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##### 



BRANDYWINE REALTY TRUST
 
 CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME
 (unaudited, in thousands)
 For the three-month periods
    
    
    For the nine-month periodsended September 30,
    
    
    ended September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net income
    
    $
    2,679
    
    
    $
    2,419
    
    
    $
    26,792
    
    
    $
    22,833Other comprehensive income:Unrealized gain (loss) on derivative financial instruments
    
    
    (1,664
    )
    
    
    (461
    )
    
    
    (1,138
    )
    
    
    (883
    )Settlement of treasury locks
    
    
    
    
    
    
    (3,860
    )
    
    
    
    
    
    
    (3,860
    )Settlement of forward starting swaps
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,148Reclassification of realized (gains)/losses on derivative
financial
instruments to operations, net
    
    
    (20
    )
    
    
    171
    
    
    
    (60
    )
    
    
    (214
    )Unrealized gain (loss) on available-for-sale securities
    
    
    
    
    
    
    (37
    )
    
    
    248
    
    
    
    (632
    )Total other comprehensive income (loss)
    
    
    (1,684
    )
    
    
    (4,187
    )
    
    
    (950
    )
    
    
    (4,441
    )Comprehensive income
    
    $
    995
    
    
    $
    (1,768
    )
    
    $
    25,842
    
    
    $
    18,392
  5




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##### 



BRANDYWINE REALTY TRUST
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (unaudited, in thousands)
 Nine-month periodsended September 30,2008
    
    
    2007Cash flows from operating activities:Net income (loss)
    
    $
    26,791
    
    
    $
    22,833Adjustments to reconcile net income (loss) to net cash from
operating activities:Depreciation
    
    
    120,185
    
    
    
    135,354Amortization:Deferred financing costs
    
    
    3,799
    
    
    
    3,381Deferred leasing costs
    
    
    12,306
    
    
    
    11,570Acquired above (below) market leases, net
    
    
    (6,493
    )
    
    
    (9,311
    )Acquired lease intangibles
    
    
    31,589
    
    
    
    39,463Deferred compensation costs
    
    
    3,952
    
    
    
    3,590Straight-line rent
    
    
    (13,730
    )
    
    
    (20,260
    )Provision for doubtful accounts
    
    
    3,150
    
    
    
    1,000Provision for impairment
    
    
    6,850
    
    
    
    Real estate venture income in excess of distributions
    
    
    (569
    )
    
    
    (20
    )Net gain on sale of interests in real estate
    
    
    (21,377
    )
    
    
    (25,912
    )Gain on early extinguishment of debt
    
    
    (4,342
    )
    
    
    Minority interest income
    
    
    977
    
    
    
    863Changes in assets and liabilities:Accounts receivable
    
    
    7,046
    
    
    
    4,607Other assets
    
    
    (7,145
    )
    
    
    (5,812
    )Accounts payable and accrued expenses
    
    
    24,497
    
    
    
    27,449Tenant security deposits and deferred rents
    
    
    (4,851
    )
    
    
    5,989Other liabilities
    
    
    (3,592
    )
    
    
    (5,346
    )Net cash from operating activities
    
    
    179,043
    
    
    
    189,438Cash flows from investing activities:Acquisition of properties
    
    
    
    
    
    
    (88,890
    )Acquisition of minority interest  partners share of consolidated real estate venture
    
    
    
    
    
    
    (63,732
    )Sales of properties, net
    
    
    53,601
    
    
    
    234,428Capital expenditures
    
    
    (130,410
    )
    
    
    (194,009
    )Investment in unconsolidated real estate ventures
    
    
    (853
    )
    
    
    (809
    )Cash distributions from unconsolidated real estate ventures
in excess of equity in income
    
    
    1,984
    
    
    
    2,917Leasing costs
    
    
    (7,302
    )
    
    
    (13,854
    )Net cash used in investing activities
    
    
    (82,980
    )
    
    
    (123,949
    )Cash flows from financing activities:Proceeds from Credit Facility borrowings
    
    
    302,000
    
    
    
    886,539Repayments of Credit Facility borrowings
    
    
    (257,727
    )
    
    
    (503,875
    )Repayments of mortgage notes payable
    
    
    (21,946
    )
    
    
    (266,280
    )Proceeds from term loan
    
    
    33,000
    
    
    
    Proceeds from unsecured notes
    
    
    
    
    
    
    299,784Repayments and repurchases of unsecured notes
    
    
    (27,158
    )
    
    
    (299,866
    )Settlement of forward starting swaps
    
    
    
    
    
    
    (2,712
    )Debt financing costs
    
    
    (273
    )
    
    
    (3,822
    )Exercise of stock options
    
    
    
    
    
    
    6,278Repurchases of Common Shares
    
    
    
    
    
    
    (59,426
    )Distributions paid to shareholders
    
    
    (121,936
    )
    
    
    (122,074
    )Distributions to minority interest holders
    
    
    (4,949
    )
    
    
    (7,753
    )Net cash used in financing activities
    
    
    (98,989
    )
    
    
    (73,207
    )Increase (decrease) in cash and cash equivalents
    
    
    (2,926
    )
    
    
    (7,718
    )Cash and cash equivalents at beginning of period
    
    
    5,600
    
    
    
    25,379Cash and cash equivalents at end of period
    
    $
    2,674
    
    
    $
    17,661Supplemental disclosure:Cash paid for interest, net of capitalized interest
    
    $
    110,121
    
    
    $
    118,766Supplemental disclosure of non-cash activity:Cash escrowed with qualified intermediary
    
    
    
    
    
    
    109,102Acquisition of property using cash escrowed with qualified intermediary
    
    
    
    
    
    
    (72,511
    )
  6




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BRANDYWINE REALTY TRUST
 
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
 THE COMPANY
     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Basis of Presentation
   7




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##### 



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
 Share-Based Payment
  Accounting for Deferred Compensation
Arrangements Where Amounts Earned Are Held in a Rabbi Trust and Invested.
   Tax Withholding
    
    Reclassification
    
    Rabbi TrustAs Reported
    
    Adjustment
    
    Adjustment
    
    Adjustment
    
    As RevisedAccounts payable and accrued expenses
    
    $
    80,732
    
    
    $
    (568
    )
    
    $
    (3,245
    )
    
    $
    
    
    
    $
    76,919Minority interest
    
    
    84,119
    
    
    
    (129
    )
    
    
    
    
    
    
    
    
    
    
    83,990Additional paid-in capital
    
    
    2,319,410
    
    
    
    1,447
    
    
    
    3,485
    
    
    
    
    
    
    
    2,324,342Cumulative earnings
    
    
    480,217
    
    
    
    (3,067
    )
    
    
    (240
    )(a)
    
    
    
    
    
    
    476,910Cumulative distributions
    
    
    (1,001,971
    )
    
    
    2,317
    
    
    
    
    
    
    
    
    
    
    
    (999,654
    )Deferred compensation payable in common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,651
    
    
    
    5,651Common shares in grantor trust
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,651
    )
    
    
    (5,651
    )Total beneficiaries equity
    
    $
    1,743,235
    
    
    $
    697
    
    
    $
    3,245
    
    
    $
    
    
    
    $
    1,747,177
 
 (a)
    
    Represents the correction to cumulative earnings in respect of issuance of treasury shares in
settlement of restricted share awards for an amount less than their cost. 8




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##### 



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
       Use of Estimates
  Operating Properties
  Purchase Price Allocation
  9




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##### 



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
  Accounting for Conditional Asset Retirement Obligations
   Revenue Recognition
  Stock-Based Compensation Plans
  10




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##### 



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
   Accounting for Derivative Instruments and Hedging Activities
  Accounting for Derivative Instruments and Hedging Activities Accounting for Certain Derivative Instruments and Hedging Activities
 An Amendment of SFAS 133 Fair Value
Measurements
 Income Taxes
   11




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##### 



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
   Accounting Pronouncements Adopted January 1, 2008
 Fair Value Measurements Application
of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address
Fair Value Measurements for Purposes of Lease Classification or Measurement under Statement 13 Effective Date of FASB Statement No. 157 Accounting
for Leases
    12




---



##### 



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
 Fair Value Measurements at ReportingDate Using:Quoted Prices inActive Markets for
    
    
    Significant Other
    
    
    UnobservableSeptember 30,
    
    
    Identical Assets
    
    
    Observable Inputs
    
    
    InputsDescription
    
    2008
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Assets:Available-for-Sale Securities
    
    $
    774
    
    
    $
    774
    
    
    $
    
    
    
    
    Liabilities:Interest Rate Swaps
    
    $
    4,066
    
    
    
    
    
    
    $
    4,066
    
    
    
    Forward Starting Interest Rate Swaps
    
    
    71
    
    
    
    
    
    
    
    71
    
    
    
    $
    4,137
    
    
    $
    
    
    
    $
    4,137
    
    
    $
    
  
    
    Non-financial assets and liabilities initially measured at fair value in an acquisition
or business combination that are not remeasured at least annually at fair value
    
    Long-lived assets measured at fair value due to an impairment under Statement of
Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets
    
    Asset retirement obligations initially measured at fair value under Statement of
Financial Accounting Standards No. 143, Accounting for Asset Retirement Obligations
 The Fair Value Option for Financial Assets and Financial Liabilities
 New Pronouncements
 Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating Securities
 Accounting for Convertible Debt
Instruments That May Be Settled Upon Conversion (Including Partial Cash Settlement)
 13




---



##### 



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
  Determination of the Useful Life of
Intangible Assets
 Disclosures
about Derivative Instruments and Hedging Activities Accounting for Derivative Instruments and Hedging Activities
 Business Combinations
 Noncontrolling Interests in Consolidated
Financial Statements  an Amendment of ARB No. 51
 14




---



##### 



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
 REAL ESTATE INVESTMENTS
  September 30, 2008
    
    
    December 31, 2007Land
    
    $
    677,175
    
    
    $
    727,979Building and improvements
    
    
    3,385,932
    
    
    
    3,672,638Tenant improvements
    
    
    404,298
    
    
    
    412,946$
    4,467,405
    
    
    $
    4,813,563
 2008 Dispositions
      INVESTMENT IN UNCONSOLIDATED VENTURES
     15




---



##### 



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
 September 30,
    
    December 31,2008
    
    2007Operating property, net of accumulated depreciation
    
    $
    598,726
    
    
    $
    587,537Other assets
    
    
    102,372
    
    
    
    113,268Liabilities
    
    
    38,259
    
    
    
    41,459Debt
    
    
    545,236
    
    
    
    538,766Equity
    
    
    117,603
    
    
    
    120,581Companys share of equity (Companys basis)
    
    
    71,036
    
    
    
    71,598
  Three-month periods
    
    Nine-month periodsended September 30,
    
    ended September 30,2008
    
    2007
    
    2008
    
    2007Revenue
    
    $
    27,358
    
    
    $
    19,374
    
    
    $
    80,254
    
    
    $
    56,674Operating expenses
    
    
    10,931
    
    
    
    6,793
    
    
    
    28,727
    
    
    
    19,733Interest expense, net
    
    
    8,042
    
    
    
    5,421
    
    
    
    23,795
    
    
    
    16,069Depreciation and amortization
    
    
    9,794
    
    
    
    3,970
    
    
    
    28,418
    
    
    
    11,974Net (loss) income
    
    
    (1,409
    )
    
    
    3,191
    
    
    
    (687
    )
    
    
    8,898Companys share of income (Company basis)
    
    
    1,059
    
    
    
    763
    
    
    
    3,838
    
    
    
    2,149
   DEFERRED COSTS
  September 30, 2008Accumulated
    
    
    Deferred Costs,Total Cost
    
    
    Amortization
    
    
    netLeasing Costs
    
    $
    104,296
    
    
    $
    (36,941
    )
    
    $
    67,355Financing Costs
    
    
    27,170
    
    
    
    (11,392
    )
    
    
    15,778Total
    
    $
    131,466
    
    
    $
    (48,333
    )
    
    $
    83,133
 December 31, 2007Accumulated
    
    
    Deferred Costs,Total Cost
    
    
    Amortization
    
    
    netLeasing Costs
    
    $
    99,077
    
    
    $
    (31,259
    )
    
    $
    67,818Financing Costs
    
    
    27,597
    
    
    
    (8,292
    )
    
    
    19,305Total
    
    $
    126,674
    
    
    $
    (39,551
    )
    
    $
    87,123
 16




---



##### 



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
 INTANGIBLE ASSETS
  September 30, 2008Accumulated
    
    
    Deferred Costs,Total Cost
    
    
    Amortization
    
    
    netIn-place lease value
    
    $
    146,943
    
    
    $
    (66,714
    )
    
    $
    80,229Tenant relationship value
    
    
    103,709
    
    
    
    (37,765
    )
    
    
    65,944Above market leases acquired
    
    
    23,489
    
    
    
    (13,553
    )
    
    
    9,936Total
    
    $
    274,141
    
    
    $
    (118,032
    )
    
    $
    156,109Below market leases acquired
    
    $
    83,566
    
    
    $
    (33,120
    )
    
    $
    50,446
 December 31, 2007Accumulated
    
    
    Deferred Costs,Total Cost
    
    
    Amortization
    
    
    netIn-place lease value
    
    $
    180,456
    
    
    $
    (65,742
    )
    
    $
    114,714Tenant relationship value
    
    
    121,094
    
    
    
    (32,895
    )
    
    
    88,199Above market leases acquired
    
    
    29,337
    
    
    
    (14,101
    )
    
    
    15,236Total
    
    $
    330,887
    
    
    $
    (112,738
    )
    
    $
    218,149Below market leases acquired
    
    $
    103,825
    
    
    $
    (36,544
    )
    
    $
    67,281
  Assets
    
    
    Liabilities2008
    
    $
    10,082
    
    
    $
    2,8092009
    
    
    36,882
    
    
    
    10,1752010
    
    
    30,260
    
    
    
    8,4162011
    
    
    23,277
    
    
    
    7,0862012
    
    
    17,798
    
    
    
    6,336Thereafter
    
    
    37,810
    
    
    
    15,624Total
    
    $
    156,109
    
    
    $
    50,446
 DEBT OBLIGATIONS
  17




---



##### 



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
 EffectiveSeptember 30,
    
    
    December 31,
    
    
    Interest
    
    
    MaturityProperty / Location
    
    2008
    
    
    2007
    
    
    Rate
    
    
    DateMORTGAGE DEBT:400 Commerce Drive
    
    $
    
    
    
    $
    11,575
    
    
    
    7.12
    %
    
    Jun-08Two Logan Square
    
    
    69,148
    
    
    
    70,124
    
    
    
    5.78
    %(a)
    
    Jul-09200 Commerce Drive
    
    
    5,706
    
    
    
    5,765
    
    
    
    7.12
    %(a)
    
    Jan-101333 Broadway
    
    
    
    
    
    
    23,997
    
    
    
    5.54
    %(a)
    
    May-101 Kaiser Plaza (The Ordway)
    
    
    
    
    
    
    45,509
    
    
    
    5.29
    %(a)
    
    Aug-101901 Harrison Stree (World Savings Center)
    
    
    
    
    
    
    27,142
    
    
    
    5.29
    %(a)
    
    Nov-10Plymouth Meeting Exec.
    
    
    42,962
    
    
    
    43,470
    
    
    
    7.00
    %(a)
    
    Dec-10Four Tower Bridge
    
    
    10,403
    
    
    
    10,518
    
    
    
    6.62
    %
    
    Feb-11Arboretum I, II, III & V
    
    
    21,803
    
    
    
    22,225
    
    
    
    7.59
    %
    
    Jul-11Midlantic Drive/Lenox Drive/DCC I
    
    
    60,157
    
    
    
    61,276
    
    
    
    8.05
    %
    
    Oct-11Research Office Center
    
    
    40,980
    
    
    
    41,527
    
    
    
    5.30
    %(a)
    
    Oct-11Concord Airport Plaza
    
    
    36,862
    
    
    
    37,570
    
    
    
    5.55
    %(a)
    
    Jan-12Six Tower Bridge
    
    
    14,185
    
    
    
    14,472
    
    
    
    7.79
    %
    
    Aug-12Newtown Square/Berwyn Park/Libertyview
    
    
    61,233
    
    
    
    62,125
    
    
    
    7.25
    %
    
    May-13Coppell Associates
    
    
    3,336
    
    
    
    3,512
    
    
    
    6.89
    %
    
    Dec-13Southpoint III
    
    
    4,008
    
    
    
    4,426
    
    
    
    7.75
    %
    
    Apr-14Tysons Corner
    
    
    99,890
    
    
    
    100,000
    
    
    
    5.36
    %(a)
    
    Aug-15Coppell Associates
    
    
    16,600
    
    
    
    16,600
    
    
    
    5.75
    %
    
    Feb-16Principal balance outstanding
    
    
    487,273
    
    
    
    601,833Plus: unamortized fixed-rate debt premiums, net
    
    
    3,320
    
    
    
    10,065Total mortgage indebtedness
    
    $
    490,593
    
    
    $
    611,898UNSECURED DEBT:Sweep Agreement Line
    
    
    
    
    
    
    10,727
    
    
    Libor +1.60
    %
    

    Apr-09Private Placement Notes due 2008
    
    
    113,000
    
    
    
    113,000
    
    
    
    4.34
    %
    
    Dec-082009 Five Year Notes
    
    
    275,000
    
    
    
    275,000
    
    
    
    4.62
    %
    
    Nov-09Bank Term Loan
    
    
    183,000
    
    
    
    150,000
    
    
    Libor + 0.80
    %
    
    Oct-102010 Five Year Notes
    
    
    300,000
    
    
    
    300,000
    
    
    
    5.61
    %
    
    Dec-10Line-of-Credit
    
    
    175,000
    
    
    
    120,000
    
    
    Libor + 0.725
    5
    
    Jun-113.875% Exchangeable Notes
    
    
    313,500
    
    
    
    345,000
    
    
    
    3.93
    %
    
    Oct-112012 Six Year Notes
    
    
    300,000
    
    
    
    300,000
    
    
    
    5.77
    %
    
    Apr-122014 Ten Year Notes
    
    
    250,000
    
    
    
    250,000
    
    
    
    5.53
    %
    
    Nov-142016 Ten Year Notes
    
    
    250,000
    
    
    
    250,000
    
    
    
    5.95
    %
    
    Apr-162017 Ten Year Notes
    
    
    300,000
    
    
    
    300,000
    
    
    
    5.75
    %
    
    May-17Indenture IA (Preferred Trust I)
    
    
    27,062
    
    
    
    27,062
    
    
    Libor + 1.25
    %
    
    Mar-35Indenture IB (Preferred Trust I)
    
    
    25,774
    
    
    
    25,774
    
    
    Libor + 1.25
    %
    
    Apr-35Indenture II (Preferred Trust II)
    
    
    25,774
    
    
    
    25,774
    
    
    Libor + 1.25
    %
    
    Jul-35Principal balance outstanding
    
    
    2,538,110
    
    
    
    2,492,337Plus: unamortized fixed-rate debt discounts, net
    
    
    (2,855
    )
    
    
    (3,266
    )Total unsecured indebtedness
    
    $
    2,535,255
    
    
    $
    2,489,071Total Debt Obligations
    
    $
    3,025,848
    
    
    $
    3,100,969
 
 (a)
    
    Loans were assumed upon acquisition of the related property. Interest rates presented above
reflect the market rate at the time of acquisition.    18




---



##### 



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
       19




---



##### 



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
     2008
    
    $
    115,6602009
    
    
    353,2262010
    
    
    539,8522011
    
    
    620,7552012
    
    
    351,046Thereafter
    
    
    1,044,844Total principal payments
    
    
    3,025,383Net unamortized premiums/discounts
    
    
    465Outstanding indebtedness
    
    $
    3,025,848
 RISK MANAGEMENT AND USE OF FINANCIAL INSTRUMENTS
 Risk Management
  Use of Derivative Financial Instruments
   20




---



##### 



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
 
    Hedge
    
    Hedge

    
    
    
    
    
    Notional
    
    
    
    
    
    
    Trade
    
    
    MaturityProduct
    
    Type

    
    Designation
    
    
    Amount
    
    
    Strike
    
    
    Date
    
    
    Date
    
    
    Fair ValueSwap
    
    Interest Rate
    
    Cash Flow (b)
    
    $
    75,000
    (a)
    
    
    4.709
    %
    
    
    9/20/07
    
    
    
    10/18/10
    
    
    $
    (3,302
    )Swap
    
    Interest Rate
    
    Cash Flow (b)
    
    
    25,000
    
    
    
    4.415
    %
    
    
    10/19/07
    
    
    
    10/18/10
    
    
    
    (621
    )Swap
    
    Interest Rate
    
    Cash Flow (b)
    
    
    25,000
    
    
    
    3.747
    %
    
    
    11/26/07
    
    
    
    10/18/10
    
    
    
    (244
    )Swap
    
    Interest Rate
    
    Cash Flow (b)
    
    
    25,000
    
    
    
    3.338
    %
    
    
    1/4/08
    
    
    
    12/18/09
    
    
    
    (78
    )Forward Starting Swap
    
    Interest Rate
    
    Cash Flow (c)
    
    
    25,000
    
    
    
    4.770
    %
    
    
    1/4/08
    
    
    
    12/18/19
    
    
    
    (359
    )Forward Starting Swap
    
    Interest Rate
    
    Cash Flow (c)
    
    
    25,000
    
    
    
    4.423
    %
    
    
    3/19/08
    
    
    
    12/18/19
    
    
    
    287$
    200,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (4,317
    )
 
 (a)
    
    - Notional amount accreting up to $155,000 through October 8, 2010.(b)
    
    - Hedging unsecured variable rate debt.(c)
    
    - Future issuance of long-term debt with an expected forward starting date in December 2009. Concentration of Credit Risk
  DISCONTINUED OPERATIONS
  21




---



##### 



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
   Three-month period
    
    
    Nine-month periodended September 30, 2008
    
    
    ended September 30, 2008Revenue:Rents
    
    $
    12,373
    
    
    $
    39,491Tenant reimbursements
    
    
    685
    
    
    
    1,641Termination fees
    
    
    
    
    
    
    25Other
    
    
    42
    
    
    
    195Total revenue
    
    
    13,100
    
    
    
    41,352Expenses:Property operating expenses
    
    
    4,898
    
    
    
    14,398Real estate taxes
    
    
    1,234
    
    
    
    3,660Depreciation and amortization
    
    
    586
    
    
    
    9,550Total operating expenses
    
    
    6,718
    
    
    
    27,608Operating income
    
    
    6,382
    
    
    
    13,744Interest income
    
    
    4
    
    
    
    15Interest expense
    
    
    (1,767
    )
    
    
    (4,461
    )Income from discontinued operations before gain
on sale of interests in real estate and minority interest
    
    
    4,619
    
    
    
    9,298Net gain on sale of interests in real estate
    
    
    
    
    
    
    21,401Provision for impairment
    
    
    
    
    
    
    (6,850
    )Minority interest attributable to discontinued
operations  LP units
    
    
    (167
    )
    
    
    (944
    )Income from discontinued operations
    
    $
    4,452
    
    
    $
    22,905
  22




---



##### 



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
 Three-month period
    
    
    Nine-month periodended September 30, 2007
    
    
    ended September 30, 2007Revenue:Rents
    
    $
    13,812
    
    
    $
    55,090Tenant reimbursements
    
    
    890
    
    
    
    5,245Termination fees
    
    
    
    
    
    
    58Other
    
    
    70
    
    
    
    334Total revenue
    
    
    14,772
    
    
    
    60,727Expenses:Property operating expenses
    
    
    5,456
    
    
    
    20,563Real estate taxes
    
    
    616
    
    
    
    4,973Depreciation and amortization
    
    
    4,640
    
    
    
    19,069Total operating expenses
    
    
    10,712
    
    
    
    44,605Operating income
    
    
    4,060
    
    
    
    16,122Interest income
    
    
    6
    
    
    
    18Interest expense
    
    
    (1,372
    )
    
    
    (4,137
    )Income from discontinued operations before gain
on sale of interests in real estate and minority interest
    
    
    2,694
    
    
    
    12,003Net (loss) gain on sale of interests in real estate
    
    
    338
    
    
    
    25,491Minority interest  partners share of consolidated
real estate venture
    
    
    
    
    
    
    Minority interest attributable to discontinued
operations  LP units
    
    
    (130
    )
    
    
    (1,603
    )Income from discontinued operations
    
    $
    2,902
    
    
    $
    35,891
  Real Estate Investments:Operating property, development land and construction-in-progress
    
    $
    466,924Accumulated depreciation
    
    
    (37,004
    )429,920Other assets
    
    
    36,127Provision for impairment
    
    
    (6,850
    )Total Assets Held for Sale, net
    
    $
    459,197Mortgage notes payable and other liabilities held for sale
    
    $
    111,230
  MINORITY INTEREST IN OPERATING PARTNERSHIP AND CONSOLIDATED REAL ESTATE VENTURES
 Operating Partnership
  Minority Interest  Partners Share of Consolidated Real Estate Ventures
  23




---



##### 



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
     BENEFICIARIES EQUITY
 Earnings per Share (EPS)
  Three-month periods ended September 30,2008
    
    
    2007Basic
    
    
    Diluted
    
    
    Basic
    
    
    DilutedIncome (loss) from continuing operations
    
    $
    (1,773
    )
    
    $
    (1,773
    )
    
    $
    (483
    )
    
    $
    (483
    )Income allocated to Preferred Shares
    
    
    (1,998
    )
    
    
    (1,998
    )
    
    
    (1,998
    )
    
    
    (1,998
    )Income from continuing operations available to common shareholders
    
    
    (3,771
    )
    
    
    (3,771
    )
    
    
    (2,481
    )
    
    
    (2,481
    )Income from discontinued operations
    
    
    4,452
    
    
    
    4,452
    
    
    
    2,902
    
    
    
    2,902Income allocated to common shareholders
    
    $
    681
    
    
    $
    681
    
    
    $
    421
    
    
    $
    421Weighted-average shares outstanding
    
    
    87,695,862
    
    
    
    87,695,862
    
    
    
    86,897,335
    
    
    
    86,897,335Contingent securities/Stock based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    217,263Total weighted-average shares outstanding
    
    
    87,695,862
    
    
    
    87,695,862
    
    
    
    86,897,335
    
    
    
    87,114,598Earnings per Common Share:Continuing operations
    
    $
    (0.04
    )
    
    $
    (0.04
    )
    
    $
    (0.03
    )
    
    $
    (0.03
    )Discontinued operations
    
    
    0.05
    
    
    
    0.05
    
    
    
    0.03
    
    
    
    0.03Total
    
    $
    0.01
    
    
    $
    0.01
    
    
    $
    
    
    
    $
    
 24




---



##### 



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
 Nine-month periods ended September 30,2008
    
    
    2007Basic
    
    
    Diluted
    
    
    Basic
    
    
    DilutedIncome (loss) from continuing operations
    
    $
    3,886
    
    
    $
    3,886
    
    
    $
    (13,058
    )
    
    $
    (13,058
    )Income allocated to Preferred Shares
    
    
    (5,994
    )
    
    
    (5,994
    )
    
    
    (5,994
    )
    
    
    (5,994
    )Income from continuing operations available to common shareholders
    
    
    (2,108
    )
    
    
    (2,108
    )
    
    
    (19,052
    )
    
    
    (19,052
    )Income from discontinued operations
    
    
    22,905
    
    
    
    22,905
    
    
    
    35,891
    
    
    
    35,891Income allocated to common shareholders
    
    $
    20,797
    
    
    $
    20,797
    
    
    $
    16,839
    
    
    $
    16,839Weighted-average shares outstanding
    
    
    87,423,108
    
    
    
    87,423,108
    
    
    
    87,416,757
    
    
    
    87,416,757Contingent securities/Stock based compensation
    
    
    
    
    
    
    14,025
    
    
    
    
    
    
    
    456,644Total weighted-average shares outstanding
    
    
    87,423,108
    
    
    
    87,437,133
    
    
    
    87,416,757
    
    
    
    87,873,401Earnings per Common Share:Continuing operations
    
    $
    (0.02
    )
    
    $
    (0.02
    )
    
    $
    (0.22
    )
    
    $
    (0.22
    )Discontinued operations
    
    
    0.26
    
    
    
    0.26
    
    
    
    0.41
    
    
    
    0.41Total
    
    $
    0.24
    
    
    $
    0.24
    
    
    $
    0.19
    
    
    $
    0.19
   Common and Preferred Shares
    Common Share Repurchases
  25




---



##### 



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
  Rabbi Trust
 Accounting for Deferred Compensation Arrangements
Where the Amounts Are Held in a Rabbi Trust and Invested
 SHARE BASED COMPENSATION
 Stock Options
  Weighted
    
    
    Weighted AverageAverage
    
    
    Remaining Contractual
    
    
    Aggregate IntrinsicShares
    
    
    Exercise Price
    
    
    Term (in years)
    
    
    Value (in 000s)Outstanding at January 1, 2008
    
    
    1,070,099
    
    
    $
    26.13
    
    
    
    0.54
    
    
    $
    (8,775
    )Granted
    
    
    1,824,594
    
    
    
    20.61
    
    
    
    9.28
    
    
    
    (8,356
    )Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited or expired
    
    
    (903,309
    )
    
    
    
    
    
    
    
    
    
    
    Outstanding at September 30, 2008
    
    
    1,991,384
    
    
    $
    20.75
    
    
    
    8.70
    
    
    $
    (9,613
    )Vested at September 30, 2008
    
    
    213,303
    
    
    $
    21.93
    
    
    
    1.90
    
    
    $
    (1,258
    )Exercisable at September 30, 2008
    
    
    213,303
    
    
    $
    21.93
    
    
    
    1.90
    
    
    $
    (1,258
    )
 Restricted Share Awards
  26




---



##### 



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
  WeightedAverage GrantShares
    
    
    Date Fair valueNon-vested at January 1, 2008
    
    
    409,282
    
    
    $
    31.91Granted
    
    
    224,691
    
    
    
    17.47Vested
    
    
    (109,701
    )
    
    
    29.63Forfeited
    
    
    (9,870
    )
    
    
    26.77Non-vested at September 30, 2008
    
    
    514,402
    
    
    $
    25.89
 Outperformance Program
    Employee Share Purchase Plan
  27




---



##### 



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
 SEGMENT INFORMATION
  28




---



##### 



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
  New Jersey
    
    
    Richmond,
    
    
    California
    
    
    California
    
    
    MetropolitanPennsylvania
    
    
    /Delaware
    
    
    Virginia
    
    
    North
    
    
    South
    
    
    D.C.
    
    
    Southwest
    
    
    Corporate
    
    
    TotalAs of September 30, 2008:Real estate investments, at cost:Operating properties
    
    $
    1,721,116
    
    
    $
    651,601
    
    
    $
    296,978
    
    
    $
    131,085
    
    
    $
    105,992
    
    
    $
    1,311,989
    
    
    $
    248,644
    
    
    $
    
    
    
    $
    4,467,405Development land and
construction-in-progress
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    353,904
    
    
    
    353,904As of December 31, 2007:Real estate investments, at cost:Operating properties
    
    $
    1,682,839
    
    
    $
    663,503
    
    
    $
    348,310
    
    
    $
    472,818
    
    
    $
    106,303
    
    
    $
    1,302,833
    
    
    $
    236,957
    
    
    $
    
    
    
    $
    4,813,563Developed land and
construction-in-progress
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    
    402,270
    
    
    
    402,270For the three-months ended September 30, 2008:Total revenue
    
    $
    59,646
    
    
    $
    28,586
    
    
    $
    9,400
    
    
    $
    4,565
    
    
    $
    2,735
    
    
    $
    35,019
    
    
    $
    9,339
    
    
    $
    (475
    )
    
    $
    148,815Property operating expenses, real estate
taxes and third party management expenses
    
    
    21,124
    
    
    
    15,010
    
    
    
    3,177
    
    
    
    1,247
    
    
    
    1,119
    
    
    
    12,704
    
    
    
    3,983
    
    
    
    (448
    )
    
    
    57,916Net operating income
    
    $
    38,522
    
    
    $
    13,576
    
    
    $
    6,223
    
    
    $
    3,318
    
    
    $
    1,616
    
    
    $
    22,315
    
    
    $
    5,356
    
    
    $
    (27
    )
    
    $
    90,899For the three-months ended September 30, 2007:Total revenue
    
    $
    74,992
    
    
    $
    28,496
    
    
    $
    8,815
    
    
    $
    4,775
    
    
    $
    3,266
    
    
    $
    33,657
    
    
    $
    9,184
    
    
    $
    (45
    )
    
    $
    163,140Property operating expenses, real estate
taxes and third party management expenses
    
    
    26,917
    
    
    
    14,763
    
    
    
    2,973
    
    
    
    1,796
    
    
    
    1,503
    
    
    
    12,118
    
    
    
    3,600
    
    
    
    (2,520
    )
    
    
    61,150Net operating income
    
    $
    48,075
    
    
    $
    13,733
    
    
    $
    5,842
    
    
    $
    2,979
    
    
    $
    1,763
    
    
    $
    21,539
    
    
    $
    5,584
    
    
    $
    2,475
    
    
    $
    101,990
 29




---



##### 



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
 New Jersey
    
    
    Richmond,
    
    
    California -
    
    
    California -
    
    
    MetropolitanPennsylvania
    
    
    /Delaware
    
    
    Virginia
    
    
    North
    
    
    South
    
    
    D.C.
    
    
    Southwest
    
    
    Corporate
    
    
    TotalFor the nine-months
ended September 30,
2008:Total revenue
    
    $
    185,671
    
    
    $
    85,553
    
    
    $
    28,221
    
    
    $
    13,275
    
    
    $
    8,659
    
    
    $
    105,128
    
    
    $
    28,320
    
    
    $
    (1,467
    )
    
    $
    453,360Property operating
expenses, real
estate taxes and
thrid party
management expenses
    
    
    66,664
    
    
    
    40,581
    
    
    
    9,510
    
    
    
    5,234
    
    
    
    3,531
    
    
    
    38,318
    
    
    
    12,693
    
    
    
    (1,404
    )
    
    
    175,127Net operating income
    
    $
    119,007
    
    
    $
    44,972
    
    
    $
    18,711
    
    
    $
    8,041
    
    
    $
    5,128
    
    
    $
    66,810
    
    
    $
    15,627
    
    
    $
    (63
    )
    
    $
    278,233For the nine-months
ended September 30,
2007:Total revenue
    
    $
    206,148
    
    
    $
    85,305
    
    
    $
    22,303
    
    
    $
    11,753
    
    
    $
    9,913
    
    
    $
    100,851
    
    
    $
    28,245
    
    
    $
    (1,082
    )
    
    $
    463,436Property operating
expenses, real
estate taxes and
third party
management expenses
    
    
    79,949
    
    
    
    40,670
    
    
    
    7,613
    
    
    
    4,433
    
    
    
    4,172
    
    
    
    35,744
    
    
    
    11,460
    
    
    
    (7,340
    )
    
    
    176,701Net operating income
    
    $
    126,199
    
    
    $
    44,635
    
    
    $
    14,690
    
    
    $
    7,320
    
    
    $
    5,741
    
    
    $
    65,107
    
    
    $
    16,785
    
    
    $
    6,258
    
    
    $
    286,735
 30




---



##### 



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
  Three-month periods
    
    
    Nine-month periodsended September 30,
    
    
    ended September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Consolidated net operating income
    
    $
    90,899
    
    
    $
    101,990
    
    
    $
    278,233
    
    
    $
    286,735Interest income
    
    
    221
    
    
    
    1,054
    
    
    
    603
    
    
    
    3,432Interest expense
    
    
    (35,039
    )
    
    
    (39,496
    )
    
    
    (106,846
    )
    
    
    (117,892
    )Deferred financing costs
    
    
    (1,092
    )
    
    
    (1,058
    )
    
    
    (3,798
    )
    
    
    (3,381
    )Depreciation and amortization
    
    
    (51,060
    )
    
    
    (56,876
    )
    
    
    (154,527
    )
    
    
    (167,315
    )General & administrative expenses
    
    
    (6,863
    )
    
    
    (7,402
    )
    
    
    (17,902
    )
    
    
    (21,819
    )Minority interest  partners share of consolidated
real estate ventures
    
    
    (39
    )
    
    
    5
    
    
    
    (117
    )
    
    
    (103
    )Minority interest attributable to continuing
operations  LP units
    
    
    141
    
    
    
    116
    
    
    
    84
    
    
    
    843Equity in income of real estate ventures
    
    
    1,059
    
    
    
    763
    
    
    
    3,838
    
    
    
    6,021Net (loss) gain on disposition of undepreciated real estate
    
    
    
    
    
    
    421
    
    
    
    (24
    )
    
    
    421Gain on early extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    4,342
    
    
    
    Income (loss) from continuing operations
    
    
    (1,773
    )
    
    
    (483
    )
    
    
    3,886
    
    
    
    (13,058
    )Income from discontinued operations
    
    
    4,452
    
    
    
    2,902
    
    
    
    22,905
    
    
    
    35,891Net income
    
    $
    2,679
    
    
    $
    2,419
    
    
    $
    26,791
    
    
    $
    22,833
 COMMITMENTS AND CONTINGENCIES
 Legal Proceedings
   Environmental
  31




---



##### 



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
 Ground Rent
  2008
    
    $
    4342009
    
    
    1,9862010
    
    
    2,3182011
    
    
    2,3182012
    
    
    2,318Thereafter
    
    
    292,037
  Other Commitments or Contingencies
    32




---



##### 



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
  SUBSEQUENT EVENTS
   33




---



##### 



PART I  FINANCIAL INFORMATION
 
 Item 1.  Financial Statements
 BRANDYWINE OPERATING PARTNERSHIP, L.P.
 
 CONSOLIDATED BALANCE SHEETS
 (unaudited, in thousands, except unit and per unit information)
 September 30,
    
    
    December 31,2008
    
    
    2007ASSETSReal estate investments:Rental properties
    
    $
    4,467,405
    
    
    $
    4,813,563Accumulated depreciation
    
    
    (609,566
    )
    
    
    (558,908
    )Operating real estate investments, net
    
    
    3,857,839
    
    
    
    4,254,655Development land and construction-in-progress
    
    
    353,904
    
    
    
    402,270Total real estate invesmtents, net
    
    
    4,211,743
    
    
    
    4,656,925Cash and cash equivalents
    
    
    2,674
    
    
    
    5,600Accounts receivable, net
    
    
    8,018
    
    
    
    17,057Accrued rent receivable, net
    
    
    87,783
    
    
    
    83,098Asset held for sale, net
    
    
    459,197
    
    
    
    Investment in real estate ventures, at equity
    
    
    71,036
    
    
    
    71,598Deferred costs, net
    
    
    83,133
    
    
    
    87,123Intangible assets, net
    
    
    156,109
    
    
    
    218,149Other assets
    
    
    73,584
    
    
    
    74,549Total assets
    
    $
    5,153,277
    
    
    $
    5,214,099LIABILITIES AND BENEFICIARIES EQUITYMortgage notes payable
    
    $
    490,593
    
    
    $
    611,898Unsecured term loan
    
    
    183,000
    
    
    
    150,000Borrowing under credit facilities
    
    
    175,000
    
    
    
    130,727Unsecured senior notes, net of discounts
    
    
    2,177,255
    
    
    
    2,208,344Accounts payable and accrued expenses
    
    
    99,368
    
    
    
    76,919Distributions payable
    
    
    42,124
    
    
    
    42,368Tenant security deposits and deferred rents
    
    
    57,194
    
    
    
    65,241Acquired below market leases, net
    
    
    50,446
    
    
    
    67,281Other liabilities
    
    
    31,075
    
    
    
    30,154Mortgage notes payable and other liabilities held for sale
    
    
    111,230
    
    
    
    Total liabilities
    
    
    3,417,285
    
    
    
    3,382,932Commitments and contingencies (Note 14)Redeemable limited partnership units at redemption value;
3,276,662 and 3,838,229 issued and outstanding in 2008 and 2007, respectively
    
    
    51,640
    
    
    
    68,819Partners equity:7.50% Series D Preferred Mirror Units; 2,000,000 issued and outstanding in 2008
and 2007
    
    
    47,912
    
    
    
    47,9127.375% Series E Preferred Mirror Units; 2,300,000 issued and outstanding in 2008
and 2007
    
    
    55,538
    
    
    
    55,538General Partnership Capital, 87,695,447 and 87,015,600 units issued and
outstanding in 2008 and 2007, respectively
    
    
    1,583,738
    
    
    
    1,660,783Accumulated other comprehensive loss
    
    
    (2,836
    )
    
    
    (1,885
    )Total partners equity
    
    
    1,684,352
    
    
    
    1,762,348Total liabilities, minority interest, and partners equity
    
    $
    5,153,277
    
    
    $
    5,214,099
  34




---



##### 



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (unaudited, in thousands, except unit and per unit information)
 For the three-month periods
    
    
    For the nine-month periodsended September 30,
    
    
    ended September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenue:Rents
    
    $
    123,571
    
    
    $
    128,277
    
    
    $
    371,605
    
    
    $
    375,933Tenant reimbursements
    
    
    19,732
    
    
    
    20,525
    
    
    
    59,676
    
    
    
    59,255Termination fees
    
    
    338
    
    
    
    7,649
    
    
    
    4,462
    
    
    
    9,418Third Party management fees, labor reimbursement and leasing
    
    
    4,390
    
    
    
    4,415
    
    
    
    15,239
    
    
    
    14,119Other
    
    
    784
    
    
    
    2,274
    
    
    
    2,378
    
    
    
    4,711Total revenue
    
    
    148,815
    
    
    
    163,140
    
    
    
    453,360
    
    
    
    463,436Operating Expenses:Property operating expenses
    
    
    40,978
    
    
    
    43,410
    
    
    
    122,531
    
    
    
    124,316Real estate taxes
    
    
    15,148
    
    
    
    15,232
    
    
    
    46,179
    
    
    
    44,886Third party management expenses
    
    
    1,790
    
    
    
    2,508
    
    
    
    6,417
    
    
    
    7,499Depreciation and amortization
    
    
    51,060
    
    
    
    56,876
    
    
    
    154,527
    
    
    
    167,315General & administrative expenses
    
    
    6,863
    
    
    
    7,402
    
    
    
    17,902
    
    
    
    21,819Total operating expenses
    
    
    115,839
    
    
    
    125,428
    
    
    
    347,556
    
    
    
    365,835Operating income
    
    
    32,976
    
    
    
    37,712
    
    
    
    105,804
    
    
    
    97,601Other Income (Expense):Interest income
    
    
    221
    
    
    
    1,054
    
    
    
    603
    
    
    
    3,432Interest expense
    
    
    (35,039
    )
    
    
    (39,496
    )
    
    
    (106,846
    )
    
    
    (117,892
    )Deferred financing costs
    
    
    (1,092
    )
    
    
    (1,058
    )
    
    
    (3,798
    )
    
    
    (3,381
    )Equity in income of real estate ventures
    
    
    1,059
    
    
    
    763
    
    
    
    3,838
    
    
    
    6,021Net gain (loss) on dispostion of undepreciated real estate
    
    
    
    
    
    
    421
    
    
    
    (24
    )
    
    
    421Gain on early extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    4,342
    
    
    
    Income (loss) before minority interest
    
    
    (1,875
    )
    
    
    (604
    )
    
    
    3,919
    
    
    
    (13,798
    )Minority interest  partners share of consolidated real estate ventures
    
    
    (39
    )
    
    
    5
    
    
    
    (117
    )
    
    
    (103
    )Income (loss) from continuing operations
    
    
    (1,914
    )
    
    
    (599
    )
    
    
    3,802
    
    
    
    (13,901
    )Discontinued operations:Income from discontinued operations
    
    
    4,619
    
    
    
    2,694
    
    
    
    9,298
    
    
    
    12,003Net gain (loss) on disposition of discontinued operations
    
    
    
    
    
    
    338
    
    
    
    21,401
    
    
    
    25,491Provision for impairment
    
    
    
    
    
    
    
    
    
    
    (6,850
    )
    
    
    Total discontinued operations
    
    
    4,619
    
    
    
    3,032
    
    
    
    23,849
    
    
    
    37,494Net income (loss)
    
    
    2,705
    
    
    
    2,433
    
    
    
    27,651
    
    
    
    23,593Income allocated to Preferred Units
    
    
    (1,998
    )
    
    
    (1,998
    )
    
    
    (5,994
    )
    
    
    (5,994
    )Income (loss) allocated to Common Partnership Units
    
    $
    707
    
    
    $
    435
    
    
    $
    21,657
    
    
    $
    17,599Basic earnings (loss) per Common Partnership Unit:Continuing operations
    
    $
    (0.04
    )
    
    $
    (0.03
    )
    
    $
    (0.02
    )
    
    $
    (0.22
    )Discontinued operations
    
    
    0.05
    
    
    
    0.03
    
    
    
    0.26
    
    
    
    0.41$
    0.01
    
    
    $
    0.00
    
    
    $
    0.24
    
    
    $
    0.19Diluted earnings (loss) per Common Partnership Unit:Continuing operations
    
    $
    (0.04
    )
    
    $
    (0.03
    )
    
    $
    (0.02
    )
    
    $
    (0.22
    )Discontinued operations
    
    
    0.05
    
    
    
    0.03
    
    
    
    0.26
    
    
    
    0.41$
    0.01
    
    
    $
    0.00
    
    
    $
    0.24
    
    
    $
    0.19Basic weighted average Common Partnership Unit
    
    
    90,972,553
    
    
    
    90,772,197
    
    
    
    90,943,815
    
    
    
    91,334,438Diluted weighted average Common Partnership Unit
    
    
    90,972,553
    
    
    
    90,989,460
    
    
    
    90,957,841
    
    
    
    91,800,082
  35




---



##### 



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 
 CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME
 (unaudited, in thousands)
 For the three-month periods
    
    
    For the nine-month periodsended September 30,
    
    
    ended September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net income
    
    $
    2,705
    
    
    $
    2,433
    
    
    $
    27,651
    
    
    $
    23,593Other comprehensive income:Unrealized gain (loss) on derivative financial instruments
    
    
    (1,664
    )
    
    
    (461
    )
    
    
    (1,138
    )
    
    
    (883
    )Settlement of forward starting swaps
    
    
    
    
    
    
    (3,860
    )
    
    
    
    
    
    
    (3,860
    )Settlement of forward starting swaps
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,148Reclassification of realized (gains)/losses on derivative financial
instruments to operations, net
    
    
    (20
    )
    
    
    171
    
    
    
    (60
    )
    
    
    (214
    )Unrealized gain (loss) on available-for-sale securities
    
    
    
    
    
    
    (37
    )
    
    
    248
    
    
    
    (632
    )Total other comprehensive income (loss)
    
    
    (1,684
    )
    
    
    (4,187
    )
    
    
    (950
    )
    
    
    (4,441
    )Comprehensive income
    
    $
    1,021
    
    
    $
    (1,754
    )
    
    $
    26,701
    
    
    $
    19,152
  36




---



##### 



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (unaudited, in thousands)
 Nine-month periodsended September 30,2008
    
    
    2007Cash flows from operating activities:Net income (loss)
    
    $
    27,651
    
    
    $
    23,593Adjustments to reconcile net income (loss) to net cash from
operating activities:Depreciation
    
    
    120,185
    
    
    
    135,354Amortization:Deferred financing costs
    
    
    3,799
    
    
    
    3,381Deferred leasing costs
    
    
    12,306
    
    
    
    11,570Acquired above (below) market leases, net
    
    
    (6,493
    )
    
    
    (9,311
    )Acquired lease intangibles
    
    
    31,589
    
    
    
    39,463Deferred compensation costs
    
    
    3,952
    
    
    
    3,590Straight-line rent
    
    
    (13,730
    )
    
    
    (20,260
    )Provision for doubtful accounts
    
    
    3,150
    
    
    
    1,000Provision for impairment
    
    
    6,850
    
    
    
    Real estate venture income in excess of distributions
    
    
    (569
    )
    
    
    (20
    )Net gain on sale of interests in real estate
    
    
    (21,377
    )
    
    
    (25,912
    )Gain on early extinguishment of debt
    
    
    (4,342
    )
    
    
    Minority interest income
    
    
    117
    
    
    
    103Changes in assets and liabilities:Accounts receivable
    
    
    7,046
    
    
    
    4,607Other assets
    
    
    (7,145
    )
    
    
    (5,812
    )Accounts payable and accrued expenses
    
    
    24,497
    
    
    
    27,449Tenant security deposits and deferred rents
    
    
    (4,851
    )
    
    
    5,989Other liabilities
    
    
    (3,592
    )
    
    
    (5,346
    )Net cash from operating activities
    
    
    179,043
    
    
    
    189,438Cash flows from investing activities:Acquisition of properties
    
    
    
    
    
    
    (88,890
    )Acquisition of minority interest  partners share of consolidated real estate venture
    
    
    
    
    
    
    (63,732
    )Sales of properties, net
    
    
    53,601
    
    
    
    234,428Capital expenditures
    
    
    (130,410
    )
    
    
    (194,009
    )Investment in unconsolidated real estate ventures
    
    
    (853
    )
    
    
    (809
    )Cash distributions from unconsolidated real estate ventures
in excess of equity in income
    
    
    1,984
    
    
    
    2,917Leasing costs
    
    
    (7,302
    )
    
    
    (13,854
    )Net cash used in investing activities
    
    
    (82,980
    )
    
    
    (123,949
    )Cash flows from financing activities:Proceeds from Credit Facility borrowings
    
    
    302,000
    
    
    
    886,539Repayments of Credit Facility borrowings
    
    
    (257,727
    )
    
    
    (503,875
    )Repayments of mortgage notes payable
    
    
    (21,946
    )
    
    
    (266,280
    )Proceeds
from term loan
    
    
    33,000
    
    
    
    Proceeds from unsecured notes
    
    
    
    
    
    
    299,784Repayments and repurchase of unsecured notes
    
    
    (27,158
    )
    
    
    (299,866
    )Settlement of forward starting swaps
    
    
    
    
    
    
    (2,712
    )Debt financing costs
    
    
    (273
    )
    
    
    (3,822
    )Exercise of stock options
    
    
    
    
    
    
    6,278Repurchases of Common Partnership Units
    
    
    
    
    
    
    (59,426
    )Distributions paid to preferred and common partnership unitholders
    
    
    (126,885
    )
    
    
    (129,827
    )Net cash used in financing activities
    
    
    (98,989
    )
    
    
    (73,207
    )Increase (decrease) in cash and cash equivalents
    
    
    (2,926
    )
    
    
    (7,718
    )Cash and cash equivalents at beginning of period
    
    
    5,600
    
    
    
    25,379Cash and cash equivalents at end of period
    
    $
    2,674
    
    
    $
    17,661Supplemental disclosure:Cash paid for interest, net of capitalized interest
    
    $
    110,121
    
    
    $
    118,766Supplemental disclosure of non-cash activity:Cash escrowed with qualified intermediary
    
    
    
    
    
    
    109,102Acquisition of property using cash escrowed with qualified intermediary
    
    
    
    
    
    
    (72,511
    )
  37




---



##### 



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
 ORGANIZATION AND NATURE OF OPERATIONS
     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Basis of Presentation
  Share-Based Payment
 38




---



##### 



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
    Tax Withholding
    
    ReclassificationAs Reported
    
    Adjustment
    
    Adjustment
    
    As RevisedAccounts payable and accrued expenses
    
    $
    80,732
    
    
    $
    (568
    )
    
    $
    (3,245
    )
    
    $
    76,919Deferred compensation payable in common
partnership units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Common partnership units in grantor trust
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    General Partnership Capital
    
    $
    1,656,970
    
    
    $
    568
    
    
    $
    3,245
    
    
    $
    1,660,783
     39




---



##### 



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
   Principles of Consolidation
  Use of Estimates
  Operating Properties
  Purchase Price Allocation
  40




---



##### 



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
  Accounting for Conditional Asset Retirement Obligations
   Revenue Recognition
  41




---



##### 



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
 Stock-Based Compensation Plans
   Accounting for Derivative Instruments and Hedging Activities
  Accounting for Derivative Instruments and Hedging Activities Accounting for Certain Derivative Instruments and Hedging Activities
 An Amendment of SFAS 133 Fair Value
Measurements
 Income Taxes
   42




---



##### 



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
  Accounting Pronouncements Adopted January 1, 2008
 Fair Value Measurements Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements
That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under
Statement 13 Effective Date of FASB
Statement No. 157 Accounting for Leases
   43




---



##### 



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
  Fair Value Measurements at ReportingDate Using:Quoted Prices inActive Markets for
    
    
    Significant Other
    
    
    UnobservableSeptember 30,
    
    
    Identical Assets
    
    
    Observable Inputs
    
    
    InputsDescription
    
    2008
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Assets:Available-for-Sale Securities
    
    $
    774
    
    
    $
    774
    
    
    $
    
    
    
    $
    Liabilities:Interest Rate Swaps
    
    $
    4,066
    
    
    $
    
    
    
    $
    4,066
    
    
    $
    Forward Starting Interest Rate Swaps
    
    
    71
    
    
    
    
    
    
    
    71
    
    
    
    $
    4,137
    
    
    $
    
    
    
    $
    4,137
    
    
    $
    
  
    
    Non-financial assets and liabilities initially measured at fair value in an acquisition
or business combination that are not remeasured at least annually at fair value
    
    Long-lived assets measured at fair value due to an impairment under Statement of
Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets
    
    Asset retirement obligations initially measured at fair value under Statement of
Financial Accounting Standards No. 143, Accounting for Asset Retirement Obligations
 The Fair Value Option for Financial Assets and Financial Liabilities
 New Pronouncements
 Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating Securities
 Accounting for Convertible Debt
Instruments That May Be Settled Upon Conversion (Including Partial Cash Settlement)
 44




---



##### 



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
  Determination of the Useful Life of
Intangible Assets
 Disclosures
about Derivative Instruments and Hedging Activities Accounting for Derivative Instruments and Hedging Activities
 Business Combinations
 Noncontrolling Interests in Consolidated
Financial Statements  an Amendment of ARB No. 51
 45




---



##### 



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
 REAL ESTATE INVESTMENTS
  September 30, 2008
    
    
    December 31, 2007Land
    
    $
    677,175
    
    
    $
    727,979Building and improvements
    
    
    3,385,932
    
    
    
    3,672,638Tenant improvements
    
    
    404,298
    
    
    
    412,946$
    4,467,405
    
    
    $
    4,813,563
 2008 Dispositions
      INVESTMENT IN UNCONSOLIDATED VENTURES
 
   46




---



##### 



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
  September 30,
    
    December 31,2008
    
    2007Operating property, net of accumulated depreciation
    
    $
    598,726
    
    
    $
    587,537Other assets
    
    
    102,372
    
    
    
    113,268Liabilities
    
    
    38,259
    
    
    
    41,459Debt
    
    
    545,236
    
    
    
    538,766Equity
    
    
    117,603
    
    
    
    120,581Partnerships share of equity (Partnerships basis)
    
    
    71,036
    
    
    
    71,598
  Three-month periods
    
    Nine-month periodsended September 30,
    
    ended September 30,2008
    
    2007
    
    2008
    
    2007Revenue
    
    $
    27,358
    
    
    $
    19,374
    
    
    $
    80,254
    
    
    $
    56,674Operating expenses
    
    
    10,931
    
    
    
    6,793
    
    
    
    28,727
    
    
    
    19,733Interest expense, net
    
    
    8,042
    
    
    
    5,421
    
    
    
    23,795
    
    
    
    16,069Depreciation and amortization
    
    
    9,794
    
    
    
    3,970
    
    
    
    28,418
    
    
    
    11,974Net (loss) income
    
    
    (1,409
    )
    
    
    3,191
    
    
    
    (687
    )
    
    
    8,898Partnerships share of income (Partnership basis)
    
    
    1,059
    
    
    
    763
    
    
    
    3,838
    
    
    
    2,149
   DEFERRED COSTS
  September 30, 2008Accumulated
    
    
    Deferred Costs,Total Cost
    
    
    Amortization
    
    
    netLeasing Costs
    
    $
    104,296
    
    
    $
    (36,941
    )
    
    $
    67,355Financing Costs
    
    
    27,170
    
    
    
    (11,392
    )
    
    
    15,778Total
    
    $
    131,466
    
    
    $
    (48,333
    )
    
    $
    83,133
 December 31, 2007Accumulated
    
    
    Deferred Costs,Total Cost
    
    
    Amortization
    
    
    netLeasing Costs
    
    $
    99,077
    
    
    $
    (31,259
    )
    
    $
    67,818Financing Costs
    
    
    27,597
    
    
    
    (8,292
    )
    
    
    19,305Total
    
    $
    126,674
    
    
    $
    (39,551
    )
    
    $
    87,123
 47




---



##### 



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
 INTANGIBLE ASSETS
  September 30, 2008AccumulatedTotal Cost
    
    
    Amortization
    
    
    Deferred Costs, netIn-place lease value
    
    $
    146,943
    
    
    $
    (66,714
    )
    
    $
    80,229Tenant relationship value
    
    
    103,709
    
    
    
    (37,765
    )
    
    
    65,944Above market leases acquired
    
    
    23,489
    
    
    
    (13,553
    )
    
    
    9,936Total
    
    $
    274,141
    
    
    $
    (118,032
    )
    
    $
    156,109Below market leases acquired
    
    $
    83,566
    
    
    $
    (33,120
    )
    
    $
    50,446
 December 31, 2007AccumulatedTotal Cost
    
    
    Amortization
    
    
    Deferred Costs, netIn-place lease value
    
    $
    180,456
    
    
    $
    (65,742
    )
    
    $
    114,714Tenant relationship value
    
    
    121,094
    
    
    
    (32,895
    )
    
    
    88,199Above market leases acquired
    
    
    29,337
    
    
    
    (14,101
    )
    
    
    15,236Total
    
    $
    330,887
    
    
    $
    (112,738
    )
    
    $
    218,149Below market leases acquired
    
    $
    103,825
    
    
    $
    (36,544
    )
    
    $
    67,281
  Assets
    
    
    Liabilities2008
    
    $
    10,082
    
    
    $
    2,8092009
    
    
    36,882
    
    
    
    10,1752010
    
    
    30,260
    
    
    
    8,4162011
    
    
    23,277
    
    
    
    7,0862012
    
    
    17,798
    
    
    
    6,336Thereafter
    
    
    37,810
    
    
    
    15,624Total
    
    $
    156,109
    
    
    $
    50,446
 48




---



##### 



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
 DEBT OBLIGATIONS
  EffectiveSeptember 30,
    
    
    December 31,
    
    
    Interest
    
    
    MaturityProperty / Location
    
    2008
    
    
    2007
    
    
    Rate
    
    
    DateMORTGAGE DEBT:400 Commerce Drive
    
    $
    
    
    
    $
    11,575
    
    
    
    7.12%
    
    
    Jun-08Two Logan Square
    
    
    69,148
    
    
    
    70,124
    
    
    
    5.78%
    (a)
    
    Jul-09200 Commerce Drive
    
    
    5,706
    
    
    
    5,765
    
    
    
    7.12%
    (a)
    
    Jan-101333 Broadway
    
    
    
    
    
    
    23,997
    
    
    
    5.54%
    (a)
    
    May-101 Kaiser Plaza (The Ordway)
    
    
    
    
    
    
    45,509
    
    
    
    5.29%
    (a)
    
    Aug-101901 Harrison Stree (World Savings Center)
    
    
    
    
    
    
    27,142
    
    
    
    5.29%
    (a)
    
    Nov-10Plymouth Meeting Exec.
    
    
    42,962
    
    
    
    43,470
    
    
    
    7.00%
    (a)
    
    Dec-10Four Tower Bridge
    
    
    10,403
    
    
    
    10,518
    
    
    
    6.62%
    
    
    Feb-11Arboretum I, II, III & V
    
    
    21,803
    
    
    
    22,225
    
    
    
    7.59%
    
    
    Jul-11Midlantic Drive/Lenox Drive/DCC I
    
    
    60,157
    
    
    
    61,276
    
    
    
    8.05%
    
    
    Oct-11Research Office Center
    
    
    40,980
    
    
    
    41,527
    
    
    
    5.30%
    (a)
    
    Oct-11Concord Airport Plaza
    
    
    36,862
    
    
    
    37,570
    
    
    
    5.55%
    (a)
    
    Jan-12Six Tower Bridge
    
    
    14,185
    
    
    
    14,472
    
    
    
    7.79%
    
    
    Aug-12Newtown Square/Berwyn Park/Libertyview
    
    
    61,233
    
    
    
    62,125
    
    
    
    7.25%
    
    
    May-13Coppell Associates
    
    
    3,336
    
    
    
    3,512
    
    
    
    6.89%
    
    
    Dec-13Southpoint III
    
    
    4,008
    
    
    
    4,426
    
    
    
    7.75%
    
    
    Apr-14Tysons Corner
    
    
    99,890
    
    
    
    100,000
    
    
    
    5.36%
    (a)
    
    Aug-15Coppell Associates
    
    
    16,600
    
    
    
    16,600
    
    
    
    5.75%
    
    
    Feb-16Principal balance outstanding
    
    
    487,273
    
    
    
    601,833Plus: unamortized fixed-rate debt premiums, net
    
    
    3,320
    
    
    
    10,065Total mortgage indebtedness
    
    $
    490,593
    
    
    $
    611,898UNSECURED DEBT:Sweep Agreement Line
    
    
    
    
    
    
    10,727
    
    
    Libor + 1.600%
    
    Apr-09Private Placement Notes due 2008
    
    
    113,000
    
    
    
    113,000
    
    
    
    4.34%
    
    
    Dec-082009 Five Year Notes
    
    
    275,000
    
    
    
    275,000
    
    
    
    4.62%
    
    
    Nov-09Bank Term Loan
    
    
    183,000
    
    
    
    150,000
    
    
    Libor + 0.80%
    
    Oct-102010 Five Year Notes
    
    
    300,000
    
    
    
    300,000
    
    
    
    5.61%
    
    
    Dec-10Line-of-Credit
    
    
    175,000
    
    
    
    120,000
    
    
    Libor + 0.725%
    
    Jun-113.875% Exchangeable Notes
    
    
    313,500
    
    
    
    345,000
    
    
    
    3.93%
    
    
    Oct-112012 Six Year Notes
    
    
    300,000
    
    
    
    300,000
    
    
    
    5.77%
    
    
    Apr-122014 Ten Year Notes
    
    
    250,000
    
    
    
    250,000
    
    
    
    5.53%
    
    
    Nov-142016 Ten Year Notes
    
    
    250,000
    
    
    
    250,000
    
    
    
    5.95%
    
    
    Apr-162017 Ten Year Notes
    
    
    300,000
    
    
    
    300,000
    
    
    
    5.75%
    
    
    May-17Indenture IA (Preferred Trust I)
    
    
    27,062
    
    
    
    27,062
    
    
    Libor + 1.25%
    
    Mar-35Indenture IB (Preferred Trust I)
    
    
    25,774
    
    
    
    25,774
    
    
    Libor + 1.25%
    
    Apr-35Indenture II (Preferred Trust II)
    
    
    25,774
    
    
    
    25,774
    
    
    Libor + 1.25%
    
    Jul-35Principal balance outstanding
    
    
    2,538,110
    
    
    
    2,492,337Plus: unamortized fixed-rate debt discounts, net
    
    
    (2,855
    )
    
    
    (3,266
    )Total unsecured indebtedness
    
    $
    2,535,255
    
    
    $
    2,489,071Total Debt Obligations
    
    $
    3,025,848
    
    
    $
    3,100,969
 
 (a)
    
    Loans were assumed upon acquisition of the related property. Interest rates presented above
reflect the market rate at the time of acquisition.   49




---



##### 



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
       50




---



##### 



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
     2008
    
    $
    115,6602009
    
    
    353,2262010
    
    
    539,8522011
    
    
    620,7552012
    
    
    351,046Thereafter
    
    
    1,044,844Total principal payments
    
    
    3,025,383Net unamortized premiums/discounts
    
    
    465Outstanding indebtedness
    
    $
    3,025,848
 RISK MANAGEMENT AND USE OF FINANCIAL INSTRUMENTS
 Risk Management
  Use of Derivative Financial Instruments
   51




---



##### 



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
      Hedge
    
    Hedge
    
    
    
    
    
    
    Notional
    
    
    
    
    
    
    Trade
    
    
    MaturityProduct
    
    Type
    
    
    
    Designation
    
    Amount
    
    
    Strike
    
    
    Date
    
    
    Date
    
    
    Fair ValueSwap
    
    Interest Rate
    
    Cash Flow
    (b)
    $
    75,000
    (a)
    
    
    4.709
    %
    
    
    9/20/07
    
    
    
    10/18/10
    
    
    $
    (3,302
    )Swap
    
    Interest Rate
    
    Cash Flow
    (b)
    
    25,000
    
    
    
    4.415
    %
    
    
    10/19/07
    
    
    
    10/18/10
    
    
    
    (621
    )Swap
    
    Interest Rate
    
    Cash Flow
    (b)
    
    25,000
    
    
    
    3.747
    %
    
    
    11/26/07
    
    
    
    10/18/10
    
    
    
    (244
    )Swap
    
    Interest Rate
    
    Cash Flow
    (b)
    
    25,000
    
    
    
    3.338
    %
    
    
    1/4/08
    
    
    
    12/18/09
    
    
    
    (78
    )Forward Starting Swap
    
    Interest Rate
    
    Cash Flow
    (c)
    
    25,000
    
    
    
    4.770
    %
    
    
    1/4/08
    
    
    
    12/18/19
    
    
    
    (359
    )Forward Starting Swap
    
    Interest Rate
    
    Cash Flow
    (c)
    
    25,000
    
    
    
    4.423
    %
    
    
    3/19/08
    
    
    
    12/18/19
    
    
    
    287$
    200,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (4,317
    )
 
 (a)
    
    - Notional amount accreting up to $155,000 through October 8, 2010.(b)
    
    - Hedging unsecured variable rate debt.(c)
    
    - Future issuance of long-term debt with an expected forward starting date in December 2009. Concentration of Credit Risk
  52




---



##### 



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
 DISCONTINUED OPERATIONS
   Three-month period
    
    
    Nine-month periodended September 30, 2008
    
    
    ended September 30, 2008Revenue:Rents
    
    $
    12,373
    
    
    $
    39,491Tenant reimbursements
    
    
    685
    
    
    
    1,641Termination fees
    
    
    
    
    
    
    25Other
    
    
    42
    
    
    
    195Total revenue
    
    
    13,100
    
    
    
    41,352Expenses:Property operating expenses
    
    
    4,898
    
    
    
    14,398Real estate taxes
    
    
    1,234
    
    
    
    3,660Depreciation and amortization
    
    
    586
    
    
    
    9,550Total operating expenses
    
    
    6,718
    
    
    
    27,608Operating income
    
    
    6,382
    
    
    
    13,744Interest income
    
    
    4
    
    
    
    15Interest expense
    
    
    (1,767
    )
    
    
    (4,461
    )Income from discontinued operations before gain on
sale of interests in real estate and minority interest
    
    
    4,619
    
    
    
    9,298Net gain on sale of interests in real estate
    
    
    
    
    
    
    21,401Provision for impairment
    
    
    
    
    
    
    (6,850
    )Income from discontinued operations
    
    $
    4,619
    
    
    $
    23,849
  53




---



##### 



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
 Three-month period
    
    
    Nine-month periodended September 30, 2007
    
    
    ended September 30, 2007Revenue:Rents
    
    $
    13,812
    
    
    $
    55,090Tenant reimbursements
    
    
    890
    
    
    
    5,245Termination fees
    
    
    
    
    
    
    58Other
    
    
    70
    
    
    
    334Total revenue
    
    
    14,772
    
    
    
    60,727Expenses:Property operating expenses
    
    
    5,456
    
    
    
    20,563Real estate taxes
    
    
    616
    
    
    
    4,973Depreciation and amortization
    
    
    4,640
    
    
    
    19,069Total operating expenses
    
    
    10,712
    
    
    
    44,605Operating income
    
    
    4,060
    
    
    
    16,122Interest income
    
    
    6
    
    
    
    18Interest expense
    
    
    (1,372
    )
    
    
    (4,137
    )Income from discontinued operations before (loss) gain
on sale of interests in real estate and minority interest
    
    
    2,694
    
    
    
    12,003Net (loss) gain on sale of interests in real estate
    
    
    338
    
    
    
    25,491Income from discontinued operations
    
    $
    3,032
    
    
    $
    37,494
  Real Estate Investments:Operating property, development land and construction-in-progress
    
    $
    466,924Accumulated depreciation
    
    
    (37,004
    )429,920Other assets
    
    
    36,127Provision for impairment
    
    
    (6,850
    )Total Assets Held for Sale, net
    
    $
    459,197Mortgage notes payable and other liabilities held for sale
    
    $
    111,230
  MINORITY INTEREST  PARTNERS SHARE OF CONSOLIDATED REAL ESTATE VENTURES
     54




---



##### 



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
  PARTNERS EQUITY
 Earnings per Common Partnership Unit
  Three-month periods ended September 30,2008
    
    
    2007Basic
    
    
    Diluted
    
    
    Basic
    
    
    DilutedIncome (loss) from continuing operations
    
    $
    (1,914
    )
    
    $
    (1,914
    )
    
    $
    (599
    )
    
    $
    (599
    )Income allocated to Preferred Units
    
    
    (1,998
    )
    
    
    (1,998
    )
    
    
    (1,998
    )
    
    
    (1,998
    )Net income afrom continuing operations available to
common unitholders
    
    
    (3,912
    )
    
    
    (3,912
    )
    
    
    (2,597
    )
    
    
    (2,597
    )Income from discontinued operations
    
    
    4,619
    
    
    
    4,619
    
    
    
    3,032
    
    
    
    3,032Net income available to common unitholders
    
    $
    707
    
    
    $
    707
    
    
    $
    435
    
    
    $
    435Weighted-average common partnership units outstanding
    
    
    90,972,553
    
    
    
    90,972,553
    
    
    
    90,772,197
    
    
    
    90,772,197Contingent securities/Stock based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    217,263Total weighted-average partnership units outstanding
    
    
    90,972,553
    
    
    
    90,972,553
    
    
    
    90,772,197
    
    
    
    90,989,460Earnings per Common Partnership Unit:Continuing operations
    
    $
    (0.04
    )
    
    $
    (0.04
    )
    
    $
    (0.03
    )
    
    $
    (0.03
    )Discontinued operations
    
    
    0.05
    
    
    
    0.05
    
    
    
    0.03
    
    
    
    0.03Total
    
    $
    0.01
    
    
    $
    0.01
    
    
    $
    0.00
    
    
    $
    0.00
 55




---



##### 



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
 Nine-month periods ended September 30,2008
    
    
    2007Basic
    
    
    Diluted
    
    
    Basic
    
    
    DilutedIncome (loss) from continuing operations
    
    $
    3,802
    
    
    $
    3,802
    
    
    $
    (13,901
    )
    
    $
    (13,901
    )Income allocated to Preferred Units
    
    
    (5,994
    )
    
    
    (5,994
    )
    
    
    (5,994
    )
    
    
    (5,994
    )Income from continuing operations available to common unitholders
    
    
    (2,192
    )
    
    
    (2,192
    )
    
    
    (19,895
    )
    
    
    (19,895
    )Income from discontinued operations
    
    
    23,849
    
    
    
    23,849
    
    
    
    37,494
    
    
    
    37,494Net income available to common unitholders
    
    $
    21,657
    
    
    $
    21,657
    
    
    $
    17,599
    
    
    $
    17,599Weighted-average common partnership units outstanding
    
    
    90,943,815
    
    
    
    90,943,815
    
    
    
    91,334,438
    
    
    
    91,334,438Contingent securities/Stock based compensation
    
    
    
    
    
    
    14,026
    
    
    
    
    
    
    
    465,644Total weighted-average partnership units outstanding
    
    
    90,943,815
    
    
    
    90,957,841
    
    
    
    91,334,438
    
    
    
    91,800,082Earnings per Common Partnership Unit:Continuing operations
    
    $
    (0.02
    )
    
    $
    (0.02
    )
    
    $
    (0.22
    )
    
    $
    (0.22
    )Discontinued operations
    
    
    0.26
    
    
    
    0.26
    
    
    
    0.41
    
    
    
    0.41Total
    
    $
    0.24
    
    
    $
    0.24
    
    
    $
    0.19
    
    
    $
    0.19
 Common Partnership Unit and Preferred Mirror Units
   Common Share Repurchases
  Rabbi Trust
 Accounting for Deferred Compensation
Arrangements Where the Amounts Are Held in a Rabbi Trust and Invested
 56




---



##### 



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
 SHARE BASED COMPENSATION
 Stock Options
  Weighted
    
    
    Weighted AverageAverage
    
    
    Remaining Contractual
    
    
    Aggregate IntrinsicShares
    
    
    Exercise Price
    
    
    Term (in years)
    
    
    Value (in 000s)Outstanding at January 1, 2008
    
    
    1,070,099
    
    
    $
    26.13
    
    
    
    0.54
    
    
    $
    (8,775
    )Granted
    
    
    1,824,594
    
    
    
    20.61
    
    
    
    9.28
    
    
    
    (8,356
    )Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited or expired
    
    
    (903,309
    )
    
    
    
    
    
    
    
    
    
    
    Outstanding at September 30, 2008
    
    
    1,991,384
    
    
    $
    20.75
    
    
    
    8.70
    
    
    $
    (9,613
    )Vested at September 30, 2008
    
    
    213,303
    
    
    $
    21.93
    
    
    
    1.90
    
    
    $
    (1,258
    )Exercisable at September 30, 2008
    
    
    213,303
    
    
    $
    21.93
    
    
    
    1.90
    
    
    $
    (1,258
    )
 Restricted Share Awards
  WeightedAverage GrantShares
    
    
    Date Fair valueNon-vested at January 1, 2008
    
    
    409,282
    
    
    $
    31.91Granted
    
    
    224,691
    
    
    
    17.47Vested
    
    
    (109,701
    )
    
    
    29.63Forfeited
    
    
    (9,870
    )
    
    
    26.77Non-vested at September 30, 2008
    
    
    514,402
    
    
    $
    25.89
 Outperformance Program
  57




---



##### 



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
    Employee Share Purchase Plan
  SEGMENT INFORMATION
  58




---



##### 



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
  New Jersey
    
    
    Richmond,
    
    
    California -
    
    
    California -
    
    
    MetropolitanPennsylvania
    
    
    /Delaware
    
    
    Virginia
    
    
    North
    
    
    South
    
    
    D.C.
    
    
    Southwest
    
    
    Corporate
    
    
    TotalAs of September 30, 2008:Real estate investments, at cost:Operating properties
    
    $
    1,721,116
    
    
    $
    651,601
    
    
    $
    296,978
    
    
    $
    131,085
    
    
    $
    105,992
    
    
    $
    1,311,989
    
    
    $
    248,644
    
    
    $
    
    
    
    $
    4,467,405Development land and
construction-in-progress
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    353,904
    
    
    
    353,904As of December 31, 2007:Real estate investments, at cost:Operating properties
    
    $
    1,682,839
    
    
    $
    663,503
    
    
    $
    348,310
    
    
    $
    472,818
    
    
    $
    106,303
    
    
    $
    1,302,833
    
    
    $
    236,957
    
    
    $
    
    
    
    $
    4,813,563Developed land and
construction-in-progress
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    
    402,270
    
    
    
    402,270For the three-months ended
September 30, 2008:Total revenue
    
    $
    59,646
    
    
    $
    28,586
    
    
    $
    9,400
    
    
    $
    4,565
    
    
    $
    2,735
    
    
    $
    35,019
    
    
    $
    9,339
    
    
    $
    (475
    )
    
    $
    148,815Property operating expenses,
real estate taxes and third
party management expenses
    
    
    21,124
    
    
    
    15,010
    
    
    
    3,177
    
    
    
    1,247
    
    
    
    1,119
    
    
    
    12,704
    
    
    
    3,983
    
    
    
    (448
    )
    
    
    57,916Net operating income
    
    $
    38,522
    
    
    $
    13,576
    
    
    $
    6,223
    
    
    $
    3,318
    
    
    $
    1,616
    
    
    $
    22,315
    
    
    $
    5,356
    
    
    $
    (27
    )
    
    $
    90,899For the three-months ended
September 30, 2007:Total revenue
    
    $
    74,992
    
    
    $
    28,496
    
    
    $
    8,815
    
    
    $
    4,775
    
    
    $
    3,266
    
    
    $
    33,657
    
    
    $
    9,184
    
    
    $
    (45
    )
    
    $
    163,140Property operating expenses,
real estate taxes and third
party management expenses
    
    
    26,917
    
    
    
    14,763
    
    
    
    2,973
    
    
    
    1,796
    
    
    
    1,503
    
    
    
    12,118
    
    
    
    3,600
    
    
    
    (2,520
    )
    
    
    61,150Net operating income
    
    $
    48,075
    
    
    $
    13,733
    
    
    $
    5,842
    
    
    $
    2,979
    
    
    $
    1,763
    
    
    $
    21,539
    
    
    $
    5,584
    
    
    $
    2,475
    
    
    $
    101,990
 59




---



##### 



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2008
 New Jersey
    
    
    Richmond,
    
    
    California -
    
    
    California -
    
    
    MetropolitanPennsylvania
    
    
    /Delaware
    
    
    Virginia
    
    
    North
    
    
    South
    
    
    D.C.
    
    
    Southwest
    
    
    Corporate
    
    
    TotalFor the nine-months ended
September 30, 2008:Total revenue
    
    $
    185,671
    
    
    $
    85,553
    
    
    $
    28,221
    
    
    $
    13,275
    
    
    $
    8,659
    
    
    $
    105,128
    
    
    $
    28,320
    
    
    $
    (1,467
    )
    
    $
    453,360Property operating
expenses, real estate
taxes and thrid party
management expenses
    
    
    66,664
    
    
    
    40,581
    
    
    
    9,510
    
    
    
    5,234
    
    
    
    3,531
    
    
    
    38,318
    
    
    
    12,693
    
    
    
    (1,404
    )
    
    
    175,127Net operating income
    
    $
    119,007
    
    
    $
    44,972
    
    
    $
    18,711
    
    
    $
    8,041
    
    
    $
    5,128
    
    
    $
    66,810
    
    
    $
    15,627
    
    
    $
    (63
    )
    
    $
    278,233For the nine-months ended
September 30, 2007:Total revenue
    
    $
    206,148
    
    
    $
    85,305
    
    
    $
    22,303
    
    
    $
    11,753
    
    
    $
    9,913
    
    
    $
    100,851
    
    
    $
    28,245
    
    
    $
    (1,082
    )
    
    $
    463,436Property operating
expenses, real estate
taxes and third party
management expenses
    
    
    79,949
    
    
    
    40,670
    
    
    
    7,613
    
    
    
    4,433
    
    
    
    4,172
    
    
    
    35,744
    
    
    
    11,460
    
    
    
    (7,340
    )
    
    
    176,701Net operating income
    
    $
    126,199
    
    
    $
    44,635
    
    
    $
    14,690
    
    
    $
    7,320
    
    
    $
    5,741
    
    
    $
    65,107
    
    
    $
    16,785
    
    
    $
    6,258
    
    
    $
    286,735
 60




---



##### 



Three-month periods
    
    
    Nine-month periodsended September 30,
    
    
    ended September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Consolidated net operating income
    
    $
    90,899
    
    
    $
    101,990
    
    
    $
    278,233
    
    
    $
    286,735Less:Interest income
    
    
    221
    
    
    
    1,054
    
    
    
    603
    
    
    
    3,432Interest expense
    
    
    (35,039
    )
    
    
    (39,496
    )
    
    
    (106,846
    )
    
    
    (117,892
    )Deferred financing costs
    
    
    (1,092
    )
    
    
    (1,058
    )
    
    
    (3,798
    )
    
    
    (3,381
    )Depreciation and amortization
    
    
    (51,060
    )
    
    
    (56,876
    )
    
    
    (154,527
    )
    
    
    (167,315
    )General & administrative expenses
    
    
    (6,863
    )
    
    
    (7,402
    )
    
    
    (17,902
    )
    
    
    (21,819
    )Minority interest  partners share of consolidated
real estate ventures
    
    
    (39
    )
    
    
    5
    
    
    
    (117
    )
    
    
    (103
    )Plus:Equity in income of real estate ventures
    
    
    1,059
    
    
    
    763
    
    
    
    3,838
    
    
    
    6,021Net (loss) gain on disposition of undepreciated
real estate
    
    
    
    
    
    
    421
    
    
    
    (24
    )
    
    
    421Gain on early extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    4,342
    
    
    
    Income (loss) from continuing operations
    
    
    (1,914
    )
    
    
    (599
    )
    
    
    3,802
    
    
    
    (13,901
    )Income from discontinued operations
    
    
    4,619
    
    
    
    3,032
    
    
    
    23,849
    
    
    
    37,494Net income
    
    $
    2,705
    
    
    $
    2,433
    
    
    $
    27,651
    
    
    $
    23,593
 COMMITMENTS AND CONTINGENCIES
 Legal Proceedings
   Environmental
  Ground Rent
  61




---



##### 



2008
    
    $
    4342009
    
    
    1,9862010
    
    
    2,3182011
    
    
    2,3182012
    
    
    2,318Thereafter
    
    
    292,037
  Other Commitments or Contingencies
     62




---



##### 



SUBSEQUENT EVENTS
   63




---



##### 



Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
  
    
    our failure to lease unoccupied space in accordance with our projections;
    
    our failure to re-lease occupied space upon expiration of leases;
    
    tenant defaults and the bankruptcy of major tenants;
    
    changes in prevailing interest rates;
    
    the impact of unrealized hedging transactions;
    
    the unavailability of equity and debt financing;
    
    unanticipated costs associated with the acquisition, integration and operation of our
acquisitions;
    
    unanticipated costs to complete, lease-up and operate our developments and
redevelopments;
    
    impairment charges;
    
    increased costs for, or lack of availability of, adequate insurance, including for
terrorist acts;
    
    risks associated with actual or threatened terrorist attacks;
    
    demand for tenant services beyond those traditionally provided by landlords;
    
    potential liability under environmental or other laws;
    
    earthquakes and other natural disasters;
    
    risks associated with state and local tax audits;
    
    complex regulations relating to our status as a REIT and the adverse consequences of our
failure to qualify as a REIT;
    
    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 our principal tenants
compete;
    
    changes in general economic conditions;
    
    the impact of newly adopted accounting principles on our accounting policies and on
period-to-period comparisons of financial results and the other risks identified in the
Risk Factors section and elsewhere in our Annual Report on Form 10-K for the year ended
December 31, 2007.
     64




---



##### 



Tenant Rollover Risk
  65




---



##### 



Tenant Credit Risk
  Development Risk
             66




---



##### 



67




---



##### 



Comparison of the Three-Month Periods Ended , 2008 and 2007
  Applying the Conditions in Paragraph 42 of FASB Statement
No. 144 in Determining Whether to Report Discontinued Operations
  68




---



##### 



Acquired/Completed
    
    
    Development/Redevelopment
    
    
    OtherSame Store Property Portfolio
    
    
    Properties
    
    
    Properties (a)
    
    
    (Eliminations) (b)
    
    
    Total PortfolioIncrease/
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Increase/(dollars in thousands)
    
    2008
    
    
    2007
    
    
    (Decrease)
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    (Decrease)Revenue:Cash rents
    
    $
    109,541
    
    
    $
    107,848
    
    
    $
    1,693
    
    
    $
    6,997
    
    
    $
    5,007
    
    
    $
    3,442
    
    
    $
    2,139
    
    
    $
    (578
    )
    
    $
    5,550
    
    
    $
    119,402
    
    
    $
    120,544
    
    
    $
    (1,142
    )Straight-line rents
    
    
    1,006
    
    
    
    3,785
    
    
    
    (2,779
    )
    
    
    865
    
    
    
    1,570
    
    
    
    491
    
    
    
    (143
    )
    
    
    
    
    
    
    41
    
    
    
    2,362
    
    
    
    5,253
    
    
    
    (2,891
    )Rents  FAS 141
    
    
    1,317
    
    
    
    2,009
    
    
    
    (692
    )
    
    
    64
    
    
    
    41
    
    
    
    426
    
    
    
    430
    
    
    
    
    
    
    
    
    
    
    
    1,807
    
    
    
    2,480
    
    
    
    (673
    )Total rents
    
    
    111,864
    
    
    
    113,642
    
    
    
    (1,778
    )
    
    
    7,926
    
    
    
    6,618
    
    
    
    4,359
    
    
    
    2,426
    
    
    
    (578
    )
    
    
    5,591
    
    
    
    123,571
    
    
    
    128,277
    
    
    
    (4,706
    )Tenant reimbursements
    
    
    17,963
    
    
    
    18,380
    
    
    
    (417
    )
    
    
    372
    
    
    
    416
    
    
    
    997
    
    
    
    711
    
    
    
    400
    
    
    
    1,018
    
    
    
    19,732
    
    
    
    20,525
    
    
    
    (793
    )Termination fees
    
    
    338
    
    
    
    7,699
    
    
    
    (7,361
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50
    
    
    
    
    
    
    
    (100
    )
    
    
    338
    
    
    
    7,649
    
    
    
    (7,311
    )Third party management fees, labor reimbursement and leasing
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,390
    
    
    
    4,415
    
    
    
    4,390
    
    
    
    4,415
    
    
    
    (25
    )Other
    
    
    529
    
    
    
    842
    
    
    
    (313
    )
    
    
    12
    
    
    
    2
    
    
    
    13
    
    
    
    3
    
    
    
    230
    
    
    
    1,427
    
    
    
    784
    
    
    
    2,274
    
    
    
    (1,490
    )Total revenue
    
    
    130,694
    
    
    
    140,563
    
    
    
    (9,869
    )
    
    
    8,310
    
    
    
    7,036
    
    
    
    5,369
    
    
    
    3,190
    
    
    
    4,442
    
    
    
    12,351
    
    
    
    148,815
    
    
    
    163,140
    
    
    
    (14,325
    )Property operating expenses
    
    
    40,485
    
    
    
    39,979
    
    
    
    506
    
    
    
    2,290
    
    
    
    1,344
    
    
    
    1,811
    
    
    
    1,300
    
    
    
    (3,608
    )
    
    
    787
    
    
    
    40,978
    
    
    
    43,410
    
    
    
    (2,432
    )Real estate taxes
    
    
    13,269
    
    
    
    13,095
    
    
    
    174
    
    
    
    781
    
    
    
    775
    
    
    
    907
    
    
    
    473
    
    
    
    191
    
    
    
    889
    
    
    
    15,148
    
    
    
    15,232
    
    
    
    (84
    )Third party management expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,790
    
    
    
    2,508
    
    
    
    1,790
    
    
    
    2,508
    
    
    
    (718
    )Subtotal
    
    
    76,940
    
    
    
    87,489
    
    
    
    (10,549
    )
    
    
    5,239
    
    
    
    4,917
    
    
    
    2,651
    
    
    
    1,417
    
    
    
    6,069
    
    
    
    8,167
    
    
    
    90,899
    
    
    
    101,990
    
    
    
    (11,091
    )General & administrative expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,863
    
    
    
    7,402
    
    
    
    6,863
    
    
    
    7,402
    
    
    
    (539
    )Depreciation and amortization
    
    
    45,205
    
    
    
    48,845
    
    
    
    (3,640
    )
    
    
    2,982
    
    
    
    2,396
    
    
    
    1,785
    
    
    
    1,768
    
    
    
    1,088
    
    
    
    3,867
    
    
    
    51,060
    
    
    
    56,876
    
    
    
    (5,816
    )Operating Income (loss)
    
    $
    31,735
    
    
    $
    38,644
    
    
    $
    (6,909
    )
    
    $
    2,257
    
    
    $
    2,521
    
    
    $
    866
    
    
    $
    (351
    )
    
    $
    (1,882
    )
    
    $
    (3,102
    )
    
    $
    32,976
    
    
    $
    37,712
    
    
    $
    (4,736
    )Number of properties
    
    
    226
    
    
    
    226
    
    
    
    
    
    
    
    11
    
    
    
    11
    
    
    
    11
    
    
    
    11
    
    
    
    
    
    
    
    
    
    
    
    248
    
    
    
    248Square feet
    
    
    21,939
    
    
    
    21,939
    
    
    
    
    
    
    
    1,436
    
    
    
    1,436
    
    
    
    3,085
    
    
    
    3,085
    
    
    
    
    
    
    
    
    
    
    
    26,460
    
    
    
    26,460Other Income (Expense):Interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    221
    
    
    
    1,054
    
    
    
    (833
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (35,039
    )
    
    
    (39,496
    )
    
    
    4,457Interest expense  Deferred financing costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,092
    )
    
    
    (1,058
    )
    
    
    (34
    )Equity in income of real estate ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,059
    
    
    
    763
    
    
    
    296Net gain on disposition of undepreciated assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    421
    
    
    
    (421
    )Income (loss) before minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,875
    )
    
    
    (604
    )
    
    
    (1,271
    )Minority interest  partners share of consolidated real estate ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (39
    )
    
    
    5
    
    
    
    (44
    )Minority interest attributable to continuing operations  LP units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    141
    
    
    
    116
    
    
    
    25Income (loss) from continuing operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,773
    )
    
    
    (483
    )
    
    
    (1,290
    )Income from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,452
    
    
    
    2,902
    
    
    
    1,550Net Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    2,679
    
    
    $
    2,419
    
    
    $
    260Earnings per common share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    0.01
    
    
    $
    0.00
    
    
    $
    0.01
 
 EXPLANATORY NOTES(a)
    -
    Results include: five developments and six redevelopment properties.(b)
    -
    Represents certain revenues and expenses at the corporate level as well as various
intercompany costs that are eliminated in consolidation and third-party management fees. Also
included are revenues and expenses from the 29 DRA properties. 69




---



##### 



Total Revenue
  1)
    
    An additional $1.7 million at the Same Store Portfolio from increased
occupancy, increased rents received on lease renewals and free rent periods converting
to cash rent subsequent to the second quarter of 2007. This free rent conversion is
the primary reason for the decrease in Total Portfolio straight-line rental income.2)
    
    An additional $2.0 million from five properties that we acquired and six
development/redevelopment properties that we completed and placed in service subsequent
to the third quarter of 2007.3)
    
    An additional $1.3 million of rental income due to increased occupancy at 11
development/redevelopment properties in the third quarter of 2008 in comparison to
2007.4)
    
    The increase was offset by the decrease of $6.8 million of rental income earned
from our G&I properties in the third quarter of 2007.
  Property Operating Expenses
  Depreciation and Amortization Expense
  General & Administrative Expenses
  Interest Income/ Expense
   Minority Interest attributable to continuing operations  LP units
  70




---



##### 



Discontinued Operations
   Net Income
  Earnings per Common Share
  71




---



##### 



Comparison of the Nine-Month Periods Ended , 2008 and 2007
  Applying the Conditions in Paragraph 42 of FASB
Statement No. 144 in Determining Whether to Report Discontinued Operations
  72




---



##### 



Acquired/Completed
    
    
    Development/Redevelopment
    
    
    OtherSame Store Property Portfolio
    
    
    Properties
    
    
    Properties (a)
    
    
    (Eliminations) (b)
    
    
    Total PortfolioIncrease/
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Increase/(dollars in thousands)
    
    2008
    
    
    2007
    
    
    (Decrease)
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    (Decrease)Revenue:Cash rents
    
    $
    316,658
    
    
    $
    310,845
    
    
    $
    5,813
    
    
    $
    28,410
    
    
    $
    16,387
    
    
    $
    9,499
    
    
    $
    6,559
    
    
    $
    (1,830
    )
    
    $
    16,159
    
    
    $
    352,737
    
    
    $
    349,950
    
    
    $
    2,787Straight-line rents
    
    
    8,309
    
    
    
    13,131
    
    
    
    (4,822
    )
    
    
    3,867
    
    
    
    5,344
    
    
    
    986
    
    
    
    (11
    )
    
    
    
    
    
    
    516
    
    
    
    13,162
    
    
    
    18,980
    
    
    
    (5,818
    )Rents  FAS 141
    
    
    4,497
    
    
    
    6,667
    
    
    
    (2,170
    )
    
    
    (73
    )
    
    
    (211
    )
    
    
    1,282
    
    
    
    547
    
    
    
    
    
    
    
    
    
    
    
    5,706
    
    
    
    7,003
    
    
    
    (1,297
    )Total rents
    
    
    329,464
    
    
    
    330,643
    
    
    
    (1,179
    )
    
    
    32,204
    
    
    
    21,520
    
    
    
    11,767
    
    
    
    7,095
    
    
    
    (1,830
    )
    
    
    16,675
    
    
    
    371,605
    
    
    
    375,933
    
    
    
    (4,328
    )Tenant reimbursements
    
    
    53,386
    
    
    
    53,966
    
    
    
    (580
    )
    
    
    2,750
    
    
    
    2,154
    
    
    
    2,972
    
    
    
    1,511
    
    
    
    568
    
    
    
    1,624
    
    
    
    59,676
    
    
    
    59,255
    
    
    
    421Termination fees
    
    
    4,362
    
    
    
    9,320
    
    
    
    (4,958
    )
    
    
    100
    
    
    
    
    
    
    
    
    
    
    
    50
    
    
    
    
    
    
    
    48
    
    
    
    4,462
    
    
    
    9,418
    
    
    
    (4,956
    )Third party management fees, labor reimbursement and leasing
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,239
    
    
    
    14,119
    
    
    
    15,239
    
    
    
    14,119
    
    
    
    1,120Other
    
    
    1,375
    
    
    
    2,183
    
    
    
    (808
    )
    
    
    82
    
    
    
    23
    
    
    
    28
    
    
    
    1
    
    
    
    893
    
    
    
    2,504
    
    
    
    2,378
    
    
    
    4,711
    
    
    
    (2,333
    )Total revenue
    
    
    388,587
    
    
    
    396,112
    
    
    
    (7,525
    )
    
    
    35,136
    
    
    
    23,697
    
    
    
    14,767
    
    
    
    8,657
    
    
    
    14,870
    
    
    
    34,970
    
    
    
    453,360
    
    
    
    463,436
    
    
    
    (10,076
    )Property operating expenses
    
    
    113,169
    
    
    
    112,103
    
    
    
    1,066
    
    
    
    9,459
    
    
    
    6,426
    
    
    
    5,244
    
    
    
    4,020
    
    
    
    (5,341
    )
    
    
    1,767
    
    
    
    122,531
    
    
    
    124,316
    
    
    
    (1,785
    )Real estate taxes
    
    
    39,651
    
    
    
    37,823
    
    
    
    1,828
    
    
    
    3,617
    
    
    
    2,819
    
    
    
    2,467
    
    
    
    1,315
    
    
    
    444
    
    
    
    2,929
    
    
    
    46,179
    
    
    
    44,886
    
    
    
    1,293Third party management expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,417
    
    
    
    7,499
    
    
    
    6,417
    
    
    
    7,499
    
    
    
    (1,082
    )Subtotal
    
    
    235,767
    
    
    
    246,186
    
    
    
    (10,419
    )
    
    
    22,060
    
    
    
    14,452
    
    
    
    7,056
    
    
    
    3,322
    
    
    
    13,350
    
    
    
    22,775
    
    
    
    278,233
    
    
    
    286,735
    
    
    
    (9,584
    )General & administrative expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,902
    
    
    
    21,819
    
    
    
    17,902
    
    
    
    21,819
    
    
    
    (3,917
    )Depreciation and amortization
    
    
    132,687
    
    
    
    137,524
    
    
    
    (4,837
    )
    
    
    13,904
    
    
    
    11,392
    
    
    
    5,041
    
    
    
    7,143
    
    
    
    2,895
    
    
    
    11,256
    
    
    
    154,527
    
    
    
    167,315
    
    
    
    (12,788
    )Operating Income (loss)
    
    $
    103,080
    
    
    $
    108,662
    
    
    $
    (5,582
    )
    
    $
    8,156
    
    
    $
    3,060
    
    
    $
    2,015
    
    
    $
    (3,821
    )
    
    $
    (7,447
    )
    
    $
    (10,300
    )
    
    $
    105,804
    
    
    $
    97,601
    
    
    $
    8,203Number of properties
    
    
    224
    
    
    
    224
    
    
    
    
    
    
    
    13
    
    
    
    13
    
    
    
    11
    
    
    
    11
    
    
    
    
    
    
    
    
    
    
    
    248
    
    
    
    248Square feet
    
    
    21,493
    
    
    
    21,493
    
    
    
    
    
    
    
    1,882
    
    
    
    1,882
    
    
    
    3,085
    
    
    
    3,085
    
    
    
    
    
    
    
    
    
    
    
    26,460
    
    
    
    26,460Other Income (Expense):Interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    603
    
    
    
    3,432
    
    
    
    (2,829
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (106,846
    )
    
    
    (117,892
    )
    
    
    11,046Interest expense  Deferred financing costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,798
    )
    
    
    (3,381
    )
    
    
    (417
    )Equity in income of real estate ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,838
    
    
    
    6,021
    
    
    
    (2,183
    )Net loss on disposition of undepreciated assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24
    )
    
    
    421
    
    
    
    (445
    )Gain on early extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,342
    
    
    
    
    
    
    
    4,342Income (loss) before minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,919
    
    
    
    (13,798
    )
    
    
    17,717Minority interest  partners share of consolidated
real estate ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (117
    )
    
    
    (103
    )
    
    
    (14
    )Minority interest attributable to continuing
operations  LP units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    84
    
    
    
    843
    
    
    
    (759
    )Income (loss) from continuing operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,886
    
    
    
    (13,058
    )
    
    
    16,944Income from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,905
    
    
    
    35,891
    
    
    
    (12,986
    )Net Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    26,791
    
    
    $
    22,833
    
    
    $
    3,958Earnings per common share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    0.24
    
    
    $
    0.19
    
    
    $
    0.05
 
 EXPLANATORY NOTES(a)
    -
    Results include: five developments and six redevelopment properties.(b)
    -
    Represents certain revenues and expenses at the corporate
level as well as various intercompany costs that are eliminated in consolidation and third-party management fees. Also included are revenues and expenses from the 29 DRA properties. 73




---



##### 



Total Revenue
  1)
    
    An additional $5.8 million at the Same Store Portfolio from increased
occupancy, increased rents received on lease renewals and free rent periods converting
to cash rent. This free rent conversion is the primary reason for the decrease in
Total Portfolio straight-line rental income.2)
    
    An additional $12.0 million from six properties that we acquired and seven
development/redevelopment properties that we completed and placed in service subsequent
to the third quarter of 2007.3)
    
    An additional $2.9 million of rental income due to increased occupancy at 11
development/redevelopment properties in the nine-month period ended September 30, 2008
in comparison to the nine-month period ended September 30, 2007.4)
    
    The increase was offset by the decrease of $19.4 million of rental income
earned from our G&I properties during the nine-month period ended September 30, 2007.
  Property Operating Expenses
  Depreciation and Amortization Expense
  General & Administrative Expenses
  Interest Income/ Expense
  74




---



##### 



Gain on early extinguishment of debt
  Minority
Interest attributable to continuing operations  LP units
  Discontinued Operations
   Net Income
  Earnings per Common Share
  75




---



##### 



General
  
    
    fund normal recurring expenses,
    
    fund capital expenditures, including capital and tenant improvements and leasing costs,
    
    fund current development and redevelopment costs, and
    
    fund distributions declared by our Board of Trustees.
        76




---



##### 



Cash Flows
   Activity
    
    2008
    
    
    2007Operating
    
    $
    179,043
    
    
    $
    189,438Investing
    
    
    (82,980
    )
    
    
    (123,949
    )Financing
    
    
    (98,989
    )
    
    
    (73,207
    )Net cash flows
    
    $
    (2,926
    )
    
    $
    (7,718
    )
    Capitalization
 77




---



##### 



Indebtedness
     September 30,
    
    
    December31,2008
    
    
    2007(dollars in thousands)Balance:Fixed rate (includes
variable swapped to
fixed)
    
    $
    2,738,773
    
    
    $
    2,855,332Variable rate  unhedged
    
    
    286,610
    
    
    
    245,637Total
    
    $
    3,025,383
    
    
    $
    3,100,969Percent of Total Debt:Fixed rate (includes
variable swapped to
fixed)
    
    
    90.5
    %
    
    
    92.1
    %Variable rate  unhedged
    
    
    9.5
    %
    
    
    7.9
    %Total
    
    
    100
    %
    
    
    100
    %Weighted-average interest rate at period end:Fixed rate (includes
variable swapped to
fixed)
    
    
    5.4
    %
    
    
    5.5
    %Variable rate  unhedged
    
    
    3.8
    %
    
    
    5.8
    %Total
    
    
    5.2
    %
    
    
    5.6
    %
    78




---



##### 



Equity
    Shelf Registration Statement
  Short- and Long-Term Liquidity
    79




---



##### 



Inflation
  Commitments and Contingencies
  Payments by Period (in thousands)Less than
    
    
    
    
    
    
    
    
    
    
    More thanTotal
    
    
    1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    5 YearsMortgage notes payable (a)
    
    $
    582,740
    
    
    $
    80,019
    
    
    $
    190,098
    
    
    $
    206,664
    
    
    $
    105,959Revolving credit facility
    
    
    175,000
    
    
    
    
    
    
    
    175,000
    
    
    
    
    
    
    
    Unsecured term loan
    
    
    183,000
    
    
    
    
    
    
    
    183,000
    
    
    
    
    
    
    
    Unsecured debt (a)
    
    
    2,180,110
    
    
    
    113,000
    
    
    
    888,500
    
    
    
    550,000
    
    
    
    628,610Ground leases (b)
    
    
    301,411
    
    
    
    1,736
    
    
    
    4,304
    
    
    
    4,636
    
    
    
    290,735Interest expense
    
    
    791,609
    
    
    
    154,411
    
    
    
    247,050
    
    
    
    200,374
    
    
    
    189,774Development contracts (c)
    
    
    13,955
    
    
    
    8,489
    
    
    
    5,466
    
    
    
    
    
    
    
    Other liabilities
    
    
    1,060
    
    
    
    
    
    
    
    372
    
    
    
    
    
    
    
    688$
    4,228,885
    
    
    $
    357,655
    
    
    $
    1,693,790
    
    
    $
    961,674
    
    
    $
    1,215,766
 
 (a)
    
    Amounts do not include unamortized discounts and/or premiums.(b)
    
    Future minimum rental payments under the terms of all non-cancelable ground leases under which we are
the lessee are expensed on a straight-line basis regardless of when payments are due. Certain of the land leases
provide for prepayment of rent on a present value basis using a fixed discount rate. Further, certain of the land
leases for properties (one under development and one in operations) provide for contingent rent participation by the lessor in
certain capital transactions and net operating cash flows of the property after certain returns are achieved by us.
Such amounts, if any will be reflected as contingent rent when incurred. The leases also provide for payment
by us of certain operating costs relating to the land, primarily real estate taxes. The above schedule of future
minimum rental payments does not include any contingent rent amounts nor any reimbursed expenses.(c)
    
    Represents contractual obligations for certain development projects and does not contemplate all costs expected
to be incurred for such developments.   80




---



##### 



Interest Rate Risk and Sensitivity Analysis
      
 
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
 81




---



##### 



Item 4. Controls and Procedures
 (a)
    
    Evaluation of disclosure controls and procedures.Under the supervision and with the
participation of our management, including our principal executive officer and principal
financial officer, we conducted an evaluation of our disclosure controls and procedures, as
such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of
1934, as amended (the Exchange Act) as of the end of the period covered by this quarterly
report and have concluded that the Companys disclosure controls and procedures are
effective.(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
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  82




---



##### 



TotalNumber of
    
    
    MaximumShares
    
    
    Number ofTotal
    
    
    
    
    
    
    Purchased as
    
    
    Shares that MayNumber of
    
    
    Average
    
    
    Part of Publicly
    
    
    Yet Be PurchasedShares
    
    
    Price Paid Per
    
    
    Announced Plans
    
    
    Under the PlansPurchased
    
    
    Share
    
    
    or Programs
    
    
    or Programs (a)2008:July
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    539,200August
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    539,200September
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    539,200Total
    
    
    
    
    
    
    
    
    
    
    
 
 (a)
    
    On May 2, 2006, our Board of Trustees authorized an increase in the number of common shares that we may repurchase,
whether in open-market or privately negotiated transactions. The Board authorized us to purchase up to an aggregate of 3,500,000
common shares (inclusive of the remaining share repurchase availability under the Boards prior authorization from September
2001).
There is no expiration date on the share repurchase program. 
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  
 Item 6. Exhibits
 (a) Exhibits
 12.1
    
    Statement re Computation of Ratios of Brandywine Realty Trust12.2
    
    Statement re Computation of Ratios of Brandywine Operating Partnership, L.P.31.1
    
    Certification of the Chief Executive Officer of Brandywine Realty Trust pursuant
to 13a-14 under the Securities Exchange Act of 193431.2
    
    Certification of the Chief Financial Officer of Brandywine Realty Trust pursuant
to 13a-14 under the Securities Exchange Act of 193431.3
    
    Certification of the Chief Executive Officer of Brandywine Realty Trust, in its
capacity as the general partner of Brandywine Operating Partnership, L.P., pursuant to
13a-14 under the Securities Exchange Act of 193431.4
    
    Certification of the Chief Financial Officer of Brandywine Realty Trust, in its
capacity as the general partner of Brandywine Operating Partnership, L.P., pursuant to
13a-14 under the Securities Exchange Act of 193432.1
    
    Certification of the Chief Executive Officer of Brandywine Realty Trust pursuant
to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 200232.2
    
    Certification of the Chief Financial Officer of Brandywine Realty Trust pursuant
to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 200232.3
    
    Certification of the Chief Executive Officer of Brandywine Realty Trust, in its
capacity as the general partner of Brandywine Operating Partnership, L.P., pursuant to
18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
200232.4
    
    Certification of the Chief Financial Officer of Brandywine Realty Trust, in its
capacity as the general partner of Brandywine Operating Partnership, L.P., 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 83




---



##### 



SIGNATURES OF REGISTRANT
  BRANDYWINE REALTY TRUST(Registrant)Date: November 7, 2008
    
    By:
    
    /s/ Gerard H. SweeneyGerard H. Sweeney, President and Chief Executive Officer(Principal Executive Officer)Date: November 7, 2008
    
    By:
    
    /s/ Howard M. SipznerHoward M. Sipzner, Executive Vice President and Chief Financial Officer(Principal Financial Officer)Date: November 7, 2008
    
    By:
    
    /s/ Gabriel J. MainardiGabriel J. Mainardi, Vice President  Corporate Accounting(Principal Accounting Officer)
 84




---



##### 



SIGNATURES OF REGISTRANT
  BRANDYWINE OPERATING PARTNERSHIP, L.P. (Registrant)BRANDYWINE REALTY TRUST, as general partnerDate: November 7, 2008
    
    By:
    
    /s/ Gerard H. SweeneyGerard H. Sweeney, President and Chief Executive Officer(Principal Executive Officer)Date: November 7, 2008
    
    By:
    
    /s/ Howard M. SipznerHoward M. Sipzner, Executive Vice President and Chief Financial Officer(Principal Financial Officer)Date: November 7, 2008
    
    By:
    
    /s/ Gabriel J. MainardiGabriel J. Mainardi, Vice President  Corporate Accounting(Principal Accounting Officer)
 85