##### Table of Contents



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, 2007
 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
    
    (I.R.S. Employer Identification No.)Incorporation or organization)555 East Lancaster AvenueRadnor, 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 oBrandywine Operating Partnership, L.P.
    
    Large accelerated filer o Accelerated filer þ Non-accelerated filer 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, 2007 and December 31, 2006
    
    
    3Consolidated Statements of Operations for the three- and nine-month periods ended
September 30, 2007 and 2006
    
    
    4Consolidated Statements of Other Comprehensive Income for the three- and nine-month
periods ended September 30, 2007 and 2006
    
    
    5Consolidated Statements of Cash Flows for the nine-month periods ended September 30,
2007 and September 30, 2006
    
    
    6Notes to Unaudited Consolidated Financial Statements
    
    
    7Brandywine Operating Partnership, L.P.Item 1.
    
    Financial Statements (unaudited)Consolidated Balance Sheets as of September 30, 2007 and December 31, 2006
    
    
    35Consolidated Statements of Operations for the three- and nine-month periods ended
September 30, 2007 and 2006
    
    
    36Consolidated Statements of Other Comprehensive Income for the three- and nine-month
periods ended September 30, 2007 and 2006
    
    
    37Consolidated Statements of Cash Flows for the nine-month periods ended September 30,
2007 and September 30, 2006
    
    
    38Notes to Unaudited Consolidated Financial Statements
    
    
    39Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    67Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    86Item 4.
    
    Controls and Procedures
    
    
    86PART II  OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    87Item 1A.
    
    Risk Factors
    
    
    87Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    87Item 3.
    
    Defaults Upon Senior Securities
    
    
    87Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    87Item 5.
    
    Other Information
    
    
    87Item 6.
    
    Exhibits
    
    
    88Signatures
    
    
    89Statement re Computation of Ratios of Brandywine Realty TrustStatement re Computation of Ratios of Brandywine Operating Partnership, L.P.Certification of Chief Executive OfficerCertification of Chief Financial OfficerCertification of Chief Executive Officer, in its capacity as the general partnerCertification of Chief Financial Officer, in its capacity as the general partnerCertification of Chief Executive Officer, Pursuant to Section 906Certification of Chief Financial OfficerCertification of Chief Executive Officer, in its capacity as the general partner, Pursuant to Section 906Certification of Chief Financial Officer, in its capacity as the general partner, Pursuant to Section 906
  Filing Format
  2




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##### Table of Contents



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 31,2007
    
    
    2006ASSETSReal estate investments:Operating properties
    
    $
    4,997,025
    
    
    $
    4,927,305Accumulated depreciation
    
    
    (583,843
    )
    
    
    (515,698
    )Operating real estate investments, net
    
    
    4,413,182
    
    
    
    4,411,607Development land and construction-in-progress
    
    
    406,732
    
    
    
    328,119Total real estate invesmtents, net
    
    
    4,819,914
    
    
    
    4,739,726Cash and cash equivalents
    
    
    17,661
    
    
    
    25,379Accounts receivable, net (Note 2)
    
    
    17,644
    
    
    
    19,957Accrued rent receivable, net
    
    
    81,529
    
    
    
    71,589Asset held for sale, net
    
    
    
    
    
    
    126,016Investment in real estate ventures, at equity (Note 4)
    
    
    72,237
    
    
    
    74,574Deferred costs, net (Note 5)
    
    
    84,309
    
    
    
    73,708Intangible assets, net (Note 6)
    
    
    233,405
    
    
    
    281,251Other assets
    
    
    79,358
    
    
    
    96,818Total assets
    
    $
    5,406,057
    
    
    $
    5,509,018LIABILITIES AND BENEFICIARIES EQUITYMortgage notes payable (Note 7)
    
    $
    617,645
    
    
    $
    883,920Unsecured notes, net of discounts (Note 7)
    
    
    2,208,207
    
    
    
    2,208,310Unsecured credit facility (Note 7)
    
    
    442,664
    
    
    
    60,000Accounts payable and accrued expenses
    
    
    111,480
    
    
    
    108,400Distributions payable
    
    
    42,253
    
    
    
    42,760Tenant security deposits and deferred rents
    
    
    59,107
    
    
    
    55,697Acquired below market leases, net (Note 6)
    
    
    72,731
    
    
    
    92,527Other liabilities
    
    
    17,899
    
    
    
    14,661Mortgage notes payable and other liabilities held for sale
    
    
    
    
    
    
    20,826Total liabilities
    
    
    3,571,986
    
    
    
    3,487,101Minority interest  partners share of consolidated real estate ventures (Note 10)
    
    
    
    
    
    
    34,428Minority interest  LP units (Note 10)
    
    
    81,583
    
    
    
    89,563Commitments and contingencies (Note 14 )Beneficiaries equity (Note 11):Preferred Shares (shares authorized-20,000,000):7.50% Series C Preferred Shares, $0.01 par value; issued and outstanding-
2,000,000 in 2007 and 2006
    
    
    20
    
    
    
    207.375% Series D Preferred Shares, $0.01 par value; issued and outstanding-
2,300,000 in 2007 and 2006
    
    
    23
    
    
    
    23Common Shares of beneficial interest, $0.01 par value; shares authorized
200,000,000; issued and outstanding- 86,843,035 in 2007 and 88,327,041 in 2006
    
    
    868
    
    
    
    883Additional paid-in capital
    
    
    2,269,250
    
    
    
    2,311,541Cumulative earnings
    
    
    446,706
    
    
    
    423,764Accumulated other comprehensive (loss) income
    
    
    (2,865
    )
    
    
    1,576Cumulative distributions
    
    
    (961,514
    )
    
    
    (839,881
    )Total beneficiaries equity
    
    
    1,752,488
    
    
    
    1,897,926Total liabilities, minority interest and beneficiaries equity
    
    $
    5,406,057
    
    
    $
    5,509,018
  3




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##### Table of Contents



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 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenue:Rents
    
    $
    142,089
    
    
    $
    131,649
    
    
    $
    418,626
    
    
    $
    385,185Tenant reimbursements
    
    
    21,415
    
    
    
    22,648
    
    
    
    63,254
    
    
    
    54,778Other
    
    
    11,900
    
    
    
    8,145
    
    
    
    20,929
    
    
    
    16,826Total revenue
    
    
    175,404
    
    
    
    162,442
    
    
    
    502,809
    
    
    
    456,789Operating Expenses:Property operating expenses
    
    
    48,866
    
    
    
    46,396
    
    
    
    140,036
    
    
    
    128,874Real estate taxes
    
    
    15,848
    
    
    
    15,724
    
    
    
    48,310
    
    
    
    44,319Depreciation and amortization
    
    
    61,516
    
    
    
    60,292
    
    
    
    181,790
    
    
    
    175,649General & administrative expenses
    
    
    7,452
    
    
    
    6,490
    
    
    
    21,714
    
    
    
    22,704Total operating expenses
    
    
    133,682
    
    
    
    128,902
    
    
    
    391,850
    
    
    
    371,546Operating income
    
    
    41,722
    
    
    
    33,540
    
    
    
    110,959
    
    
    
    85,243Other Income (Expense):Interest income
    
    
    1,060
    
    
    
    2,479
    
    
    
    3,450
    
    
    
    7,702Interest expense
    
    
    (40,868
    )
    
    
    (44,504
    )
    
    
    (122,029
    )
    
    
    (126,478
    )Interest expense  Deferred financing costs
    
    
    (1,058
    )
    
    
    (789
    )
    
    
    (3,381
    )
    
    
    (2,062
    )Equity in income of real estate ventures
    
    
    763
    
    
    
    370
    
    
    
    6,021
    
    
    
    1,798Net gain on disposition of undepreciated real estate
    
    
    421
    
    
    
    
    
    
    
    421
    
    
    
    2,608Gain on termination of purchase contract
    
    
    
    
    
    
    3,147
    
    
    
    
    
    
    
    3,147Income (loss) before minority interest and discontinuted operations
    
    
    2,040
    
    
    
    (5,757
    )
    
    
    (4,559
    )
    
    
    (28,042
    )Minority interest  partners share of consolidated real estate ventures
    
    
    5
    
    
    
    279
    
    
    
    (103
    )
    
    
    560Minority interest attributable to continuing operations  LP units
    
    
    (2
    )
    
    
    344
    
    
    
    456
    
    
    
    1,486Income (loss) from continuing operations
    
    
    2,043
    
    
    
    (5,134
    )
    
    
    (4,206
    )
    
    
    (25,996
    )Discontinued operations:Income from discontinued operations
    
    
    
    
    
    
    2,643
    
    
    
    2,869
    
    
    
    10,008Net gain on disposition of discontinued operations
    
    
    338
    
    
    
    5,188
    
    
    
    25,491
    
    
    
    5,188Minority interest  partners share of consolidated real estate ventures
    
    
    
    
    
    
    (1,857
    )
    
    
    
    
    
    
    (2,239
    )Minority interest attributable to discontinued operations  LP units
    
    
    (14
    )
    
    
    (276
    )
    
    
    (1,211
    )
    
    
    (595
    )Income from discontinued operations
    
    
    324
    
    
    
    5,698
    
    
    
    27,149
    
    
    
    12,362Net income (loss)
    
    
    2,367
    
    
    
    564
    
    
    
    22,943
    
    
    
    (13,634
    )Income allocated to Preferred Shares
    
    
    (1,998
    )
    
    
    (1,998
    )
    
    
    (5,994
    )
    
    
    (5,994
    )Income (loss) allocated to Common Shares
    
    $
    369
    
    
    $
    (1,434
    )
    
    $
    16,949
    
    
    $
    (19,628
    )Basic earnings (loss) per Common Share:Continuing operations
    
    $
    0.00
    
    
    $
    (0.08
    )
    
    $
    (0.12
    )
    
    $
    (0.36
    )Discontinued operations
    
    
    0.00
    
    
    
    0.06
    
    
    
    0.31
    
    
    
    0.14$
    0.00
    
    
    $
    (0.02
    )
    
    $
    0.19
    
    
    $
    (0.22
    )Diluted earnings (loss) per Common Share:Continuing operations
    
    $
    0.00
    
    
    $
    (0.08
    )
    
    $
    (0.12
    )
    
    $
    (0.36
    )Discontinued operations
    
    
    0.00
    
    
    
    0.06
    
    
    
    0.31
    
    
    
    0.14$
    0.00
    
    
    $
    (0.02
    )
    
    $
    0.19
    
    
    $
    (0.22
    )Dividends declared per Common Share
    
    $
    0.44
    
    
    $
    0.44
    
    
    $
    1.32
    
    
    $
    1.32Basic weighted average shares outstanding
    
    
    86,897,335
    
    
    
    90,042,270
    
    
    
    87,416,757
    
    
    
    89,963,541Diluted weighted average shares outstanding
    
    
    87,114,598
    
    
    
    90,042,270
    
    
    
    87,416,757
    
    
    
    89,963,541
  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 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net income (loss)
    
    $
    2,367
    
    
    $
    564
    
    
    $
    22,943
    
    
    $
    (13,634
    )Other
comprehensive income:Unrealized
gain (loss) on derivative financial instruments
    
    
    (461
    )
    
    
    (1,070
    )
    
    
    (883
    )
    
    
    1,293Less: minority interest  consolidated real estate venture partners share of
unrealized gain (loss) on derivative financial instruments
    
    
    
    
    
    
    525
    
    
    
    
    
    
    
    (284
    )Settlement of treasury locks
    
    
    (3,860
    )
    
    
    
    
    
    
    (3,860
    )
    
    
    Settlement of forward starting swaps
    
    
    
    
    
    
    
    
    
    
    1,148
    
    
    
    3,266Reclassification of realized (gains)/losses on derivative financial
instruments to operations, net
    
    
    171
    
    
    
    9
    
    
    
    (214
    )
    
    
    113Unrealized gain (loss) on available  for  sale securities
    
    
    (37
    )
    
    
    595
    
    
    
    (632
    )
    
    
    (181
    )Total other comprehensive income (loss)
    
    
    (4,187
    )
    
    
    59
    
    
    
    (4,441
    )
    
    
    4,207Comprehensive income (loss)
    
    $
    (1,820
    )
    
    $
    623
    
    
    $
    18,502
    
    
    $
    (9,427
    )
  5




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##### Table of Contents



BRANDYWINE REALTY TRUST
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (unaudited, in thousands)
 Nine-month periodsended September 30,2007
    
    
    2006Cash flows from (used in) operating activities:Net income (loss)
    
    $
    22,943
    
    
    $
    (13,634
    )Adjustments to reconcile net income (loss) to net cash from
operating activities:Depreciation
    
    
    135,354
    
    
    
    143,893Amortization:Deferred financing costs
    
    
    3,381
    
    
    
    2,063Deferred leasing costs
    
    
    11,570
    
    
    
    8,394Acquired above (below) market leases, net
    
    
    (9,311
    )
    
    
    (6,067
    )Acquired lease intangibles
    
    
    39,463
    
    
    
    50,471Deferred compensation costs
    
    
    3,486
    
    
    
    2,332Straight-line rent
    
    
    (20,260
    )
    
    
    (23,486
    )Provision for doubtful accounts
    
    
    1,000
    
    
    
    2,970Real estate venture income in excess of distributions
    
    
    (20
    )
    
    
    (162
    )Net gain on sale of interests in real estate
    
    
    (25,912
    )
    
    
    (7,797
    )Gain on termination of purchase contract
    
    
    
    
    
    
    (3,147
    )Minority interest (expense)/income
    
    
    858
    
    
    
    788Changes in assets and liabilities:Accounts receivable
    
    
    4,607
    
    
    
    2,515Other assets
    
    
    (5,812
    )
    
    
    (13,494
    )Accounts payable and accrued expenses
    
    
    27,449
    
    
    
    36,192Tenant security deposits and deferred rents
    
    
    5,989
    
    
    
    30,635Other liabilities
    
    
    (5,346
    )
    
    
    904Net cash from operating activities
    
    
    189,439
    
    
    
    213,370Cash flows from (used in) investing activities:Acquisition of Prentiss
    
    
    
    
    
    
    (935,856
    )Acquisition of properties
    
    
    (88,890
    )
    
    
    (169,462
    )Acquisition of minority interest  partners share of consolidated real estate venture
    
    
    (63,732
    )
    
    
    Sales of properties, net
    
    
    234,428
    
    
    
    258,931Proceeds from termination of purchase contract
    
    
    
    
    
    
    3,147Capital expenditures
    
    
    (194,009
    )
    
    
    (180,771
    )Investment in unconsolidated real estate ventures
    
    
    (809
    )
    
    
    (643
    )Cash distributions from unconsolidated real estate ventures
in excess of equity in income
    
    
    2,917
    
    
    
    2,444Leasing costs
    
    
    (13,854
    )
    
    
    (30,524
    )Net cash used in investing activities
    
    
    (123,949
    )
    
    
    (1,052,734
    )Cash flows from (used in) financing activities:Proceeds from Credit Facility borrowings
    
    
    886,539
    
    
    
    462,000Repayments of Credit Facility borrowings
    
    
    (503,875
    )
    
    
    (302,002
    )Proceeds from mortgage notes payable
    
    
    
    
    
    
    20,520Repayments of mortgage notes payable
    
    
    (266,280
    )
    
    
    (29,327
    )Proceeds from term loan
    
    
    
    
    
    
    750,000Repayments of term loan
    
    
    
    
    
    
    (750,000
    )Proceeds from unsecured notes
    
    
    299,784
    
    
    
    847,818Repayments of unsecured notes
    
    
    (299,866
    )
    
    
    Net settlement of hedge transactions
    
    
    (2,712
    )
    
    
    3,266Repayments on employee stock loans
    
    
    
    
    
    
    60Debt financing costs
    
    
    (3,822
    )
    
    
    (6,991
    )Exercise of stock options
    
    
    6,278
    
    
    
    9,120Repurchases of Common Shares
    
    
    (59,426
    )
    
    
    (34,481
    )Distributions paid to shareholders
    
    
    (122,075
    )
    
    
    (110,094
    )Distributions to minority interest holders
    
    
    (7,753
    )
    
    
    (11,161
    )Net cash (used in) from financing activities
    
    
    (73,208
    )
    
    
    848,728Increase (decrease) in cash and cash equivalents
    
    
    (7,718
    )
    
    
    9,364Cash and cash equivalents at beginning of period
    
    
    25,379
    
    
    
    7,174Cash and cash equivalents at end of period
    
    $
    17,661
    
    
    $
    16,538Supplemental disclosure:Cash paid
for interest, net of capitalized interest of $12,757 in 2007 and
$7,209 in 2006
    
    $
    118,766
    
    
    $
    108,426Supplemental disclosure of non-cash activity:Common shares issued in the Prentiss acquisition
    
    
    
    
    
    
    1,022,173Operating Partnership units issued in Prentiss acquisitions
    
    
    
    
    
    
    64,103Operating Partnership units issued in property acquistions
    
    
    
    
    
    
    13,819Debt, minority interest and other liabilities, net, assumed in the Prentiss acquisition
    
    
    
    
    
    
    679,520
  6




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##### Table of Contents



BRANDYWINE REALTY TRUST
 
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
 THE COMPANY
     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Basis of Presentation
  7




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
  Principles of Consolidation
  Use of Estimates
  Operating Properties
  Purchase Price Allocation
  8




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
     Revenue Recognition
    9




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
  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
 Income Taxes
  10




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
   New Pronouncements
  The Fair Value Option for Financial Assets
and Financial Liabilities
 Fair Value Measurements
 11




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
  Accounting for Uncertainty in Income Taxes, an
Interpretation of FASB Statement No. 109
 REAL ESTATE INVESTMENTS
  September 30, 2007
    
    
    December 31, 2006Land
    
    $
    759,231
    
    
    $
    756,400Building and improvements
    
    
    3,813,882
    
    
    
    3,807,040Tenant improvements
    
    
    423,912
    
    
    
    363,865$
    4,997,025
    
    
    $
    4,927,305
 Acquisitions and Dispositions
  2007
    12




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
         2006
 Prentiss Acquisition
    13




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
 At January 5, 2006Real estate investmentsLand  operating
    
    $
    282,584Building and improvements
    
    
    1,942,728Tenant improvements
    
    
    120,610Construction in progress and land inventory
    
    
    57,329Total real estate investments acquired
    
    
    2,403,251Rent receivables
    
    
    6,031Other assets acquired:Intangible assets:In-place leases
    
    
    187,907Relationship values
    
    
    98,382Above-market leases
    
    
    26,352Total intangible assets acquired
    
    
    312,641Investment in real estate ventures
    
    
    66,921Investment in marketable securities
    
    
    193,089Other assets
    
    
    8,868Total other assets
    
    
    581,519Total assets acquired
    
    
    2,990,801Liabilities assumed:Mortgage notes payable
    
    
    532,607Unsecured notes
    
    
    78,610Secured note payable
    
    
    186,116Security deposits and deferred rent
    
    
    6,475Other liabilities:Below-market leases
    
    
    78,911Other liabilities
    
    
    43,995Total other liabilities assumed
    
    
    122,906Total liabilities assumed
    
    
    926,714Minority interest
    
    
    104,658Net assets acquired
    
    $
    1,959,429
   14




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
    Nine-month periodended September 30, 2006Pro forma revenue
    
    $
    460,193Pro forma loss from continuing operations
    
    
    (25,646
    )Pro forma loss allocated to common shares
    
    
    (19,278
    )Earnings per common share from continuing
operationsBasic  as reported
    
    $
    (0.36
    )Basic  as pro forma
    
    $
    (0.35
    )Diluted  as reported
    
    $
    (0.36
    )Diluted  as pro forma
    
    $
    (0.35
    )Earnings per common shareBasic  as reported
    
    $
    (0.22
    )Basic  as pro forma
    
    $
    (0.21
    )Diluted  as reported
    
    $
    (0.22
    )Diluted  as pro forma
    
    $
    (0.21
    )
    15




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
 Other 2006 Acquisitions and Dispositions
            INVESTMENT IN UNCONSOLIDATED VENTURES
    16




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
   September 30,
    
    December 31,2007
    
    2006Operating property, net of accumulated
depreciation
    
    $
    393,262
    
    
    $
    365,168Other assets
    
    
    44,788
    
    
    
    52,935Liabilities
    
    
    33,033
    
    
    
    28,764Debt
    
    
    355,501
    
    
    
    332,589Equity
    
    
    49,540
    
    
    
    56,888Companys share of equity (Companys basis)
    
    
    72,237
    
    
    
    74,574
  Three-month periods
    
    Nine-month periodsended September 30,
    
    ended September 30,2007
    
    2006
    
    2007
    
    2006Revenue
    
    $
    19,374
    
    
    $
    19,189
    
    
    $
    56,674
    
    
    $
    57,623Operating expenses
    
    
    6,793
    
    
    
    7,696
    
    
    
    19,733
    
    
    
    22,433Interest expense, net
    
    
    5,421
    
    
    
    5,282
    
    
    
    16,069
    
    
    
    15,356Depreciation and amortization
    
    
    3,970
    
    
    
    4,826
    
    
    
    11,974
    
    
    
    14,998Net income
    
    
    3,191
    
    
    
    1,385
    
    
    
    8,898
    
    
    
    4,836Companys share of income
(Companys basis)
    
    
    763
    
    
    
    370
    
    
    
    2,149
    
    
    
    1,798
   DEFERRED COSTS
  17




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
 September 30, 2007Accumulated
    
    
    Deferred Costs,Total Cost
    
    
    Amortization
    
    
    netLeasing Costs
    
    $
    97,066
    
    
    $
    (32,525
    )
    
    $
    64,541Financing Costs
    
    
    26,944
    
    
    
    (7,176
    )
    
    
    19,768Total
    
    $
    124,010
    
    
    $
    (39,701
    )
    
    $
    84,309
 December 31, 2006Accumulated
    
    
    Deferred Costs,Total Cost
    
    
    Amortization
    
    
    netLeasing Costs
    
    $
    83,629
    
    
    $
    (28,278
    )
    
    $
    55,351Financing Costs
    
    
    24,648
    
    
    
    (6,291
    )
    
    
    18,357Total
    
    $
    108,277
    
    
    $
    (34,569
    )
    
    $
    73,708
 6.
    
    INTANGIBLE ASSETS AND LIABILITIES
  September 30, 2007Accumulated
    
    
    Deferred Costs,Total Cost
    
    
    Amortization
    
    
    netIntangible Assets:In-place lease value
    
    $
    184,537
    
    
    $
    (61,072
    )
    
    $
    123,465Tenant relationship value
    
    
    122,236
    
    
    
    (29,777
    )
    
    
    92,459Above market leases acquired
    
    
    30,968
    
    
    
    (13,487
    )
    
    
    17,481Total intangible assets
    
    $
    337,741
    
    
    $
    (104,336
    )
    
    $
    233,405Intangible Liability:Below market leases acquired
    
    $
    105,437
    
    
    $
    (32,706
    )
    
    $
    72,731
 December 31, 2006Accumulated
    
    
    Deferred Costs,Total Cost
    
    
    Amortization
    
    
    netIntangible Assets:In-place lease value
    
    $
    207,513
    
    
    $
    (52,293
    )
    
    $
    155,220Tenant relationship value
    
    
    124,605
    
    
    
    (19,572
    )
    
    
    105,033Above market leases acquired
    
    
    32,667
    
    
    
    (11,669
    )
    
    
    20,998Total intangible assets
    
    $
    364,785
    
    
    $
    (83,534
    )
    
    $
    281,251Intangible Liability:Below market leases acquired
    
    $
    118,536
    
    
    $
    (26,009
    )
    
    $
    92,527
  18




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
 Assets
    
    
    Liabilities2007 (remainder)
    
    $
    13,931
    
    
    $
    4,2252008
    
    
    49,233
    
    
    
    14,4322009
    
    
    42,729
    
    
    
    12,2692010
    
    
    35,458
    
    
    
    9,5862011
    
    
    27,445
    
    
    
    7,860Thereafter
    
    
    64,609
    
    
    
    24,359Total
    
    $
    233,405
    
    
    $
    72,731
 DEBT OBLIGATIONS
  19




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
 EffectiveSeptember 30,
    
    
    December 31,
    
    
    Interest
    
    
    MaturityProperty / Location
    
    2007
    
    
    2006
    
    
    Rate
    
    
    DateMORTGAGE DEBT:Interstate Center
    
    $
    
    
    
    $
    552
    
    
    
    6.19
    %
    
    Mar-07The Bluffs
    
    
    
    
    
    
    10,700
    
    
    
    6.00
    %(a)
    
    Apr-07Pacific Ridge
    
    
    
    
    
    
    14,500
    
    
    
    6.00
    %(a)
    
    Apr-07Pacific View/Camino
    
    
    
    
    
    
    26,000
    
    
    
    6.00
    %(a)
    
    Apr-07Computer Associates Building
    
    
    
    
    
    
    31,000
    
    
    
    6.00
    %(a)
    
    Apr-07Presidents Plaza
    
    
    
    
    
    
    30,900
    
    
    
    6.00
    %(a)
    
    Apr-07440 & 442 Creamery Way
    
    
    
    
    
    
    5,421
    
    
    
    8.55
    %
    
    May-07Grande A
    
    
    
    
    
    
    59,513
    
    
    
    7.48
    %
    
    Jul-07Grande B
    
    
    
    
    
    
    77,535
    
    
    
    7.48
    %
    
    Jul-07481 John Young Way
    
    
    2,241
    
    
    
    2,294
    
    
    
    8.40
    %
    
    Dec-07400 Commerce Drive
    
    
    11,631
    
    
    
    11,797
    
    
    
    7.12
    %
    
    Jun-08Two Logan Square
    
    
    70,437
    
    
    
    71,348
    
    
    
    5.78
    %(a)
    
    Jul-09200 Commerce Drive
    
    
    5,785
    
    
    
    5,841
    
    
    
    7.12
    %(a)
    
    Jan-101333 Broadway
    
    
    24,105
    
    
    
    24,418
    
    
    
    5.18
    %(a)
    
    May-10The Ordway
    
    
    45,687
    
    
    
    46,199
    
    
    
    7.95
    %(a)
    
    Aug-10World Savings Center
    
    
    27,242
    
    
    
    27,524
    
    
    
    7.91
    %(a)
    
    Nov-10Plymouth Meeting Exec.
    
    
    43,633
    
    
    
    44,103
    
    
    
    7.00
    %(a)
    
    Dec-10Four Tower Bridge
    
    
    10,554
    
    
    
    10,626
    
    
    
    6.62
    %
    
    Feb-11Arboretum I, II, III & V
    
    
    22,360
    
    
    
    22,750
    
    
    
    7.59
    %
    
    Jul-11Midlantic Drive/Lenox Drive/DCC I
    
    
    61,621
    
    
    
    62,678
    
    
    
    8.05
    %
    
    Oct-11Research Office Center
    
    
    41,700
    
    
    
    42,205
    
    
    
    7.64
    %(a)
    
    Oct-11Concord Airport Plaza
    
    
    37,798
    
    
    
    38,461
    
    
    
    7.20
    %(a)
    
    Jan-12Six Tower Bridge
    
    
    14,565
    
    
    
    14,744
    
    
    
    7.79
    %
    
    Aug-12Newtown Square/Berwyn Park/Libertyview
    
    
    62,425
    
    
    
    63,231
    
    
    
    7.25
    %
    
    May-13Coppell Associates
    
    
    3,571
    
    
    
    3,737
    
    
    
    6.89
    %
    
    Dec-13Southpoint III
    
    
    4,561
    
    
    
    4,949
    
    
    
    7.75
    %
    
    Apr-14Tysons Corner
    
    
    100,000
    
    
    
    100,000
    
    
    
    4.84
    %(a)
    
    Aug-15Coppell Associates
    
    
    16,600
    
    
    
    16,600
    
    
    
    5.75
    %
    
    Mar-16Principal balance outstanding
    
    
    606,516
    
    
    
    869,626Plus: unamortized fixed-rate debt
premiums, net
    
    
    11,129
    
    
    
    14,294Total mortgage indebtedness
    
    $
    617,645
    
    
    $
    883,920UNSECURED DEBT:Sweep Agreement Line
    
    
    13,664
    
    
    
    
    
    
    Libor + 0.75
    %    
    Mar-08Private Placement Notes due 2008
    
    
    113,000
    
    
    
    113,000
    
    
    
    4.34
    %
    
    Dec-082009 Three Year Notes
    
    
    
    
    
    
    300,000
    
    
    Libor + 0.45
    %    
    Apr-092009 Five Year Notes
    
    
    275,000
    
    
    
    275,000
    
    
    
    4.62
    %
    
    Nov-092010 Five Year Notes
    
    
    300,000
    
    
    
    300,000
    
    
    
    5.61
    %
    
    Dec-10Line-of-Credit
    
    
    429,000
    
    
    
    60,000
    
    
    Libor + 0.725
    %    
    Jun-113.875% Exchangeable Notes
    
    
    345,000
    
    
    
    345,000
    
    
    
    3.87
    %
    
    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
    
    
    
    
    
    
    
    5.72
    %
    
    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
    
    
    2,654,274
    
    
    
    2,271,610Plus: unamortized fixed-rate debt
discounts, net
    
    
    (3,403
    )
    
    
    (3,300
    )Total unsecured indebtedness
    
    $
    2,650,871
    
    
    $
    2,268,310Total Debt Obligations
    
    $
    3,268,516
    
    
    $
    3,152,230
 
 (a)
    
    Loans were assumed upon acquisition of the related property. Interest rates presented above
reflect the market rate at the time of acquisition.  20




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BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
         21




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
     2007
    
    $
    4,8132008
    
    
    148,8122009
    
    
    354,9552010
    
    
    450,1892011
    
    
    906,261Thereafter
    
    
    1,395,760Total indebtedness
    
    $
    3,260,790
 RISK MANAGEMENT AND USE OF FINANCIAL INSTRUMENTS
 Risk Management
  Use of Derivative Financial Instruments
  22




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
    Trade Date
    
    Notional Amount
    
    All-in RateJuly 10, 2007
    
    $50.0 million
    
    4.984%July 18, 2007
    
    $50.0 million
    
    4.915%July 20, 2007
    
    $25.0 million
    
    4.848%July 25, 2007
    
    $25.0 million
    
    4.780%
     23




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
   Concentration of Credit Risk
  DISCONTINUED OPERATIONS
  Three-month period
    
    
    Nine-month periodended September 30, 2007
    
    
    ended September 30, 2007Revenue:Rents
    
    $
    
    
    
    $
    12,397Tenant reimbursements
    
    
    
    
    
    
    1,246Other
    
    
    
    
    
    
    214Total revenue
    
    
    
    
    
    
    13,857Expenses:Property operating expenses
    
    
    
    
    
    
    4,845Real estate taxes
    
    
    
    
    
    
    1,549Depreciation and amortization
    
    
    
    
    
    
    4,594Total operating expenses
    
    
    
    
    
    
    10,988Operating income
    
    
    
    
    
    
    2,869Income from discontinued operations before (loss) gain
on sale of interests in real estate and minority interest
    
    
    
    
    
    
    2,869Net (loss) gain on sale of interests in real estate
    
    
    338
    
    
    
    25,491Minority interest attributable to discontinued
operations  LP units
    
    
    (14
    )
    
    
    (1,211
    )Income from discontinued operations
    
    $
    324
    
    
    $
    27,149
  24




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
 Three-month period
    
    
    Nine-month periodended September 30, 2006
    
    
    ended September 30, 2006Revenue:Rents
    
    $
    20,170
    
    
    $
    66,388Tenant reimbursements
    
    
    1,442
    
    
    
    5,651Other
    
    
    273
    
    
    
    860Total revenue
    
    
    21,885
    
    
    
    72,899Expenses:Property operating expenses
    
    
    7,982
    
    
    
    26,002Real estate taxes
    
    
    2,849
    
    
    
    9,036Depreciation and amortization
    
    
    8,304
    
    
    
    27,173Total operating expenses
    
    
    19,135
    
    
    
    62,211Operating income
    
    
    2,750
    
    
    
    10,688Interest income
    
    
    2
    
    
    
    15Interest expense (a)
    
    
    (109
    )
    
    
    (695
    )Income from discontinued operations before gain on
sale of interests in real estate and minority interest
    
    
    2,643
    
    
    
    10,008Net gain (loss) on sale of interests in real estate
    
    
    5,188
    
    
    
    5,188Minority interest  partners share of net gain on sale
    
    
    (1,757
    )
    
    
    (1,757
    )Minority interest  partners share of consolidated
real estate venture
    
    
    (100
    )
    
    
    (482
    )Minority interest attributable to discontinued
operations  LP units
    
    
    (276
    )
    
    
    (595
    )Income from discontinued operations
    
    $
    5,698
    
    
    $
    12,362
 
 (a)
    
    Interest expense relates to a mortgage that was collateralized by one of the sold properties
and paid off at the time of sale.  MINORITY INTEREST IN OPERATING PARTNERSHIP AND REAL ESTATE VENTURES
    11.
    
    BENEFICIARIES EQUITY
 Earnings per Share (EPS)
  25




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
 Three-month periods ended September 30,2007
    
    
    2006Basic
    
    
    Diluted
    
    
    Basic
    
    
    DilutedIncome (loss) from continuing operations
    
    $
    2,043
    
    
    $
    2,043
    
    
    $
    (5,134
    )
    
    $
    (5,134
    )Income from discontinued operations
    
    
    324
    
    
    
    324
    
    
    
    5,698
    
    
    
    5,698Income allocated to Preferred Shares
    
    
    (1,998
    )
    
    
    (1,998
    )
    
    
    (1,998
    )
    
    
    (1,998
    )Net income available to common shareholders
    
    $
    369
    
    
    $
    369
    
    
    $
    (1,434
    )
    
    $
    (1,434
    )Weighted-average shares outstanding
    
    
    86,897,335
    
    
    
    86,897,335
    
    
    
    90,042,270
    
    
    
    90,042,270Contingent securities/Stock based compensation
    
    
    
    
    
    
    217,263
    
    
    
    
    
    
    
    Total weighted-average shares outstanding
    
    
    86,897,335
    
    
    
    87,114,598
    
    
    
    90,042,270
    
    
    
    90,042,270Earnings (loss) per Common Share:Continuing operations
    
    $
    0.00
    
    
    $
    0.00
    
    
    $
    (0.08
    )
    
    $
    (0.08
    )Discontinued operations
    
    
    0.00
    
    
    
    0.00
    
    
    
    0.06
    
    
    
    0.06$
    0.00
    
    
    $
    0.00
    
    
    $
    (0.02
    )
    
    $
    (0.02
    )
 Nine-month periods ended September 30,2007
    
    
    2006Basic
    
    
    Diluted
    
    
    Basic
    
    
    DilutedIncome (loss) from continuing operations
    
    $
    (4,206
    )
    
    $
    (4,206
    )
    
    $
    (25,996
    )
    
    $
    (25,996
    )Income from discontinued operations
    
    
    27,149
    
    
    
    27,149
    
    
    
    12,362
    
    
    
    12,362Income allocated to Preferred Shares
    
    
    (5,994
    )
    
    
    (5,994
    )
    
    
    (5,994
    )
    
    
    (5,994
    )Net income available to common shareholders
    
    $
    16,949
    
    
    $
    16,949
    
    
    $
    (19,628
    )
    
    $
    (19,628
    )Weighted-average shares outstanding
    
    
    87,416,757
    
    
    
    87,416,757
    
    
    
    89,963,541
    
    
    
    89,963,541Contingent securities/Stock based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total weighted-average shares outstanding
    
    
    87,416,757
    
    
    
    87,416,757
    
    
    
    89,963,541
    
    
    
    89,963,541Earnings (loss) per Common Share:Continuing operations
    
    $
    (0.12
    )
    
    $
    (0.12
    )
    
    $
    (0.36
    )
    
    $
    (0.36
    )Discontinued operations
    
    
    0.31
    
    
    
    0.31
    
    
    
    0.14
    
    
    
    0.14$
    0.19
    
    
    $
    0.19
    
    
    $
    (0.22
    )
    
    $
    (0.22
    )
  Common and Preferred Shares
   26




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
   Common Share Repurchases
  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, 2007
    
    
    1,286,070
    
    
    
    
    
    
    $
    26.45
    
    
    
    1.50
    
    
    
    $
    8,739Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    (198,495
    )
    
    
    
    
    
    
    28.80
    
    
    
    0.87
    
    
    
    
    1,171Forfeited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at September 30, 2007
    
    
    1,087,575
    
    
    
    
    
    
    $
    26.03
    
    
    
    0.82
    
    
    
    $
    (780
    )Vested at September 30, 2007
    
    
    1,087,575
    
    
    
    
    
    
    $
    26.03
    
    
    
    0.82
    
    
    
    $
    (780
    )Exercisable at September 30, 2007
    
    
    1,087,575
    
    
    
    
    
    
    $
    26.03
    
    
    
    0.82
    
    
    
    $
    (780
    )
  27




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
  Restricted Share Awards
   WeightedAverage GrantShares
    
    
    Date Fair valueNon-vested at January 1, 2007
    
    
    338,860
    
    
    $
    28.23Granted
    
    
    227,709
    
    
    
    35.09Vested
    
    
    (107,143
    )
    
    
    26.45Forfeited
    
    
    (35,721
    )
    
    
    31.81Non-vested at September 30, 2007
    
    
    423,705
    
    
    $
    32.03
 Outperformance Program
   28




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
 Employee Share Purchase Plan
  SEGMENT INFORMATION
   29




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
  Pennsylvania
    
    
    Pennsylvania
    
    
    
    
    
    
    
    
    
    
    Richmond,
    
    
    Northern
    
    
    Southern
    
    
    MetropolitanWest
    
    
    North
    
    
    New Jersey
    
    
    Urban
    
    
    Virginia
    
    
    California
    
    
    California
    
    
    Washington, D.C.
    
    
    Southwest
    
    
    Corporate
    
    
    TotalAs of September 30, 2007:Real estate investments, at cost:Operating properties
    
    $
    958,089
    
    
    $
    449,900
    
    
    $
    557,749
    
    
    $
    576,477
    
    
    $
    346,848
    
    
    $
    472,254
    
    
    $
    105,652
    
    
    $
    1,293,478
    
    
    $
    236,578
    
    
    $
    
    
    
    $
    4,997,025Development and
construction-in-progress
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    406,732
    
    
    
    406,732As of December 31, 2006:Real estate investments, at cost:Operating properties
    
    $
    922,347
    
    
    $
    530,436
    
    
    $
    570,009
    
    
    $
    568,008
    
    
    $
    244,519
    
    
    $
    396,927
    
    
    $
    95,942
    
    
    $
    1,255,940
    
    
    $
    343,177
    
    
    $
    
    
    
    $
    4,927,305Development and
construction-in-progress
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    328,119
    
    
    
    328,119For the three-months ended September 30, 2007:Total revenue
    
    $
    39,968
    
    
    $
    15,388
    
    
    $
    25,030
    
    
    $
    24,440
    
    
    $
    10,604
    
    
    $
    16,047
    
    
    $
    3,126
    
    
    $
    32,483
    
    
    $
    8,587
    
    
    $
    (269
    )
    
    $
    175,404Property operating expenses and
real estate taxes
    
    
    12,319
    
    
    
    5,681
    
    
    
    12,467
    
    
    
    9,320
    
    
    
    3,645
    
    
    
    6,075
    
    
    
    1,286
    
    
    
    10,321
    
    
    
    3,031
    
    
    
    569
    
    
    
    64,714Net operating income
    
    $
    27,649
    
    
    $
    9,707
    
    
    $
    12,563
    
    
    $
    15,120
    
    
    $
    6,959
    
    
    $
    9,972
    
    
    $
    1,840
    
    
    $
    22,162
    
    
    $
    5,556
    
    
    $
    (838
    )
    
    $
    110,690For the three-months ended September 30, 2006:Total revenue
    
    $
    31,371
    
    
    $
    18,485
    
    
    $
    24,467
    
    
    $
    22,185
    
    
    $
    8,509
    
    
    $
    14,655
    
    
    $
    3,035
    
    
    $
    28,774
    
    
    $
    7,831
    
    
    $
    3,130
    
    
    $
    162,442Property operating expenses and
real estate taxes
    
    
    8,818
    
    
    
    9,658
    
    
    
    12,394
    
    
    
    9,243
    
    
    
    3,027
    
    
    
    5,726
    
    
    
    898
    
    
    
    9,347
    
    
    
    2,619
    
    
    
    390
    
    
    
    62,120Net operating income
    
    $
    22,553
    
    
    $
    8,827
    
    
    $
    12,073
    
    
    $
    12,942
    
    
    $
    5,482
    
    
    $
    8,929
    
    
    $
    2,137
    
    
    $
    19,427
    
    
    $
    5,212
    
    
    $
    2,740
    
    
    $
    100,322
 30




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
  Pennsylvania 
    
    
    Pennsylvania 
    
    
    
    
    
    
    
    
    
    
    Richmond,
    
    
    Northern
    
    
    Southern
    
    
    Metropolitan- West
    
    
    - North
    
    
    New Jersey
    
    
    Urban
    
    
    Virginia
    
    
    California
    
    
    California
    
    
    Washington, D.C.
    
    
    Southwest
    
    
    Corporate
    
    
    TotalFor the nine-months
ended September 30,
2007:Total revenue
    
    $
    98,983
    
    
    $
    50,144
    
    
    $
    74,344
    
    
    $
    71,806
    
    
    $
    27,675
    
    
    $
    47,899
    
    
    $
    9,266
    
    
    $
    97,660
    
    
    $
    26,968
    
    
    $
    (1,936
    )
    
    $
    502,809Property operating
expenses and real
estate taxes
    
    
    36,577
    
    
    
    18,295
    
    
    
    34,087
    
    
    
    27,328
    
    
    
    9,661
    
    
    
    18,205
    
    
    
    3,357
    
    
    
    31,125
    
    
    
    10,251
    
    
    
    (540
    )
    
    
    188,346Net operating income
    
    $
    62,406
    
    
    $
    31,849
    
    
    $
    40,257
    
    
    $
    44,478
    
    
    $
    18,014
    
    
    $
    29,694
    
    
    $
    5,909
    
    
    $
    66,535
    
    
    $
    16,717
    
    
    $
    (1,396
    )
    
    $
    314,463For the nine-months
ended September 30,
2006:Total revenue
    
    $
    82,199
    
    
    $
    54,307
    
    
    $
    70,623
    
    
    $
    62,826
    
    
    $
    24,009
    
    
    $
    42,914
    
    
    $
    8,591
    
    
    $
    81,157
    
    
    $
    23,590
    
    
    $
    6,573
    
    
    $
    456,789Property operating
expenses and real
estate taxes
    
    
    24,605
    
    
    
    29,174
    
    
    
    32,064
    
    
    
    26,060
    
    
    
    9,045
    
    
    
    16,175
    
    
    
    2,425
    
    
    
    25,179
    
    
    
    9,302
    
    
    
    (836
    )
    
    
    173,193Net operating income
    
    $
    57,594
    
    
    $
    25,133
    
    
    $
    38,559
    
    
    $
    36,766
    
    
    $
    14,964
    
    
    $
    26,739
    
    
    $
    6,166
    
    
    $
    55,978
    
    
    $
    14,288
    
    
    $
    7,409
    
    
    $
    283,596
 31




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
  Three-month periods
    
    
    Nine-month periodsended September 30,
    
    
    ended September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Consolidated net operating income
    
    $
    110,690
    
    
    $
    100,322
    
    
    $
    314,463
    
    
    $
    283,596Plus/(Minus):Interest income
    
    
    1,060
    
    
    
    2,479
    
    
    
    3,450
    
    
    
    7,702Interest expense
    
    
    (40,868
    )
    
    
    (44,504
    )
    
    
    (122,029
    )
    
    
    (126,478
    )Interest expense  deferred financing costs
    
    
    (1,058
    )
    
    
    (789
    )
    
    
    (3,381
    )
    
    
    (2,062
    )Depreciation and amortization
    
    
    (61,516
    )
    
    
    (60,292
    )
    
    
    (181,790
    )
    
    
    (175,649
    )General & administrative expenses
    
    
    (7,452
    )
    
    
    (6,490
    )
    
    
    (21,714
    )
    
    
    (22,704
    )Minority interest  partners share of
consolidated
real estate ventures
    
    
    5
    
    
    
    279
    
    
    
    (103
    )
    
    
    560Minority interest attributable to continuing
operations  LP units
    
    
    (2
    )
    
    
    344
    
    
    
    456
    
    
    
    1,486Equity in income of real estate ventures
    
    
    763
    
    
    
    370
    
    
    
    6,021
    
    
    
    1,798Net gain on disposition of undepreciated
real estate
    
    
    421
    
    
    
    
    
    
    
    421
    
    
    
    2,608Gain on termination of purchase contract
    
    
    
    
    
    
    3,147
    
    
    
    
    
    
    
    3,147Income (loss) from continuing operations
    
    
    2,043
    
    
    
    (5,134
    )
    
    
    (4,206
    )
    
    
    (25,996
    )Income from discontinued operations
    
    
    324
    
    
    
    5,698
    
    
    
    27,149
    
    
    
    12,362Net income (loss)
    
    $
    2,367
    
    
    $
    564
    
    
    $
    22,943
    
    
    $
    (13,634
    )
 COMMITMENTS AND CONTINGENCIES
 Legal Proceedings
   Environmental
  32




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
 Ground Rent
  2007
    
    $
    4342008
    
    
    1,7362009
    
    
    2,0682010
    
    
    2,3182011
    
    
    2,318Thereafter
    
    
    293,451
 Other Commitments or Contingencies
     SUBSEQUENT EVENTS
  33




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
      34




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##### Table of Contents



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 31,2007
    
    
    2006ASSETSReal estate investments:Operating properties
    
    $
    4,997,025
    
    
    $
    4,927,305Accumulated depreciation
    
    
    (583,843
    )
    
    
    (515,698
    )Operating real estate investments, net
    
    
    4,413,182
    
    
    
    4,411,607Development land and construction-in-progress
    
    
    406,732
    
    
    
    328,119Total real estate invesmtents, net
    
    
    4,819,914
    
    
    
    4,739,726Cash and cash equivalents
    
    
    17,661
    
    
    
    25,379Accounts receivable, net (Note 2)
    
    
    17,644
    
    
    
    19,957Accrued rent receivable, net (Note 2)
    
    
    81,529
    
    
    
    71,589Asset held for sale, net
    
    
    
    
    
    
    126,016Investment in real estate ventures, at equity (Note 4)
    
    
    72,237
    
    
    
    74,574Deferred costs, net (Note 5)
    
    
    84,309
    
    
    
    73,708Intangible assets, net (Note 6)
    
    
    233,405
    
    
    
    281,251Other assets
    
    
    79,358
    
    
    
    96,818Total assets
    
    $
    5,406,057
    
    
    $
    5,509,018LIABILITIES AND PARTNERS EQUITYMortgage notes payable (Note 7)
    
    $
    617,645
    
    
    $
    883,920Unsecured notes, net of discounts (Note 7)
    
    
    2,208,207
    
    
    
    2,208,310Unsecured credit facility (Note 7)
    
    
    442,664
    
    
    
    60,000Accounts payable and accrued expenses
    
    
    111,480
    
    
    
    108,400Distributions payable
    
    
    42,253
    
    
    
    42,760Tenant security deposits and deferred rents
    
    
    59,107
    
    
    
    55,697Acquired below market leases, net (Note 6)
    
    
    72,731
    
    
    
    92,527Other liabilities
    
    
    17,899
    
    
    
    14,661Mortgage notes payable and other liabilities held for sale
    
    
    
    
    
    
    20,826Total liabilities
    
    
    3,571,986
    
    
    
    3,487,101Minority interest  partners share of consolidated real estate ventures (Note 10)
    
    
    
    
    
    
    34,436Commitments and contingencies (Note 14)Redeemable limited partnership units at redemption value;
3,849,483 and 3,961,235 issued and outstanding in 2007 and 2006, respectively
    
    
    97,430
    
    
    
    131,711Partners equity (Note 11):7.50% Series D Preferred Mirror Units; 2,000,000 issued and outstanding in 2007
and 2006
    
    
    47,912
    
    
    
    47,9127.375% Series E Preferred Mirror Units; 2,300,000 issued and outstanding in 2007
and 2006
    
    
    55,538
    
    
    
    55,538General Partnership Capital, 87,049,237 and 88,327,041 units issued and outstanding
in 2007 and 2006, respectively
    
    
    1,636,056
    
    
    
    1,750,745Accumulated other comprehensive (loss) income
    
    
    (2,865
    )
    
    
    1,575Total partners equity
    
    
    1,736,641
    
    
    
    1,855,770Total liabilities, minority interest, and partners equity
    
    $
    5,406,057
    
    
    $
    5,509,018
  35




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##### Table of Contents



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 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenue:Rents
    
    $
    142,089
    
    
    $
    131,649
    
    
    $
    418,626
    
    
    $
    385,185Tenant reimbursements
    
    
    21,415
    
    
    
    22,648
    
    
    
    63,254
    
    
    
    54,778Other
    
    
    11,900
    
    
    
    8,145
    
    
    
    20,929
    
    
    
    16,826Total revenue
    
    
    175,404
    
    
    
    162,442
    
    
    
    502,809
    
    
    
    456,789Operating Expenses:Property operating expenses
    
    
    48,866
    
    
    
    46,396
    
    
    
    140,036
    
    
    
    128,874Real estate taxes
    
    
    15,848
    
    
    
    15,724
    
    
    
    48,310
    
    
    
    44,319Depreciation and amortization
    
    
    61,516
    
    
    
    60,292
    
    
    
    181,790
    
    
    
    175,649General & administrative expenses
    
    
    7,452
    
    
    
    6,490
    
    
    
    21,714
    
    
    
    22,704Total
operating expenses
    
    
    133,682
    
    
    
    128,902
    
    
    
    391,850
    
    
    
    371,546Operating income
    
    
    41,722
    
    
    
    33,540
    
    
    
    110,959
    
    
    
    85,243Other Income (Expense):Interest income
    
    
    1,060
    
    
    
    2,479
    
    
    
    3,450
    
    
    
    7,702Interest expense
    
    
    (40,868
    )
    
    
    (44,504
    )
    
    
    (122,029
    )
    
    
    (126,478
    )Interest
expense  deferred financing costs
    
    
    (1,058
    )
    
    
    (789
    )
    
    
    (3,381
    )
    
    
    (2,062
    )Equity in
income of real estate ventures
    
    
    763
    
    
    
    370
    
    
    
    6,021
    
    
    
    1,798Net gain on
disposition of undepreciated real estate
    
    
    421
    
    
    
    
    
    
    
    421
    
    
    
    2,608Gain on
termination of purchase contract
    
    
    
    
    
    
    3,147
    
    
    
    
    
    
    
    3,147Income
(loss) before minority interest and discontinued operations
    
    
    2,040
    
    
    
    (5,757
    )
    
    
    (4,559
    )
    
    
    (28,042
    )Minority
interest  partners share of consolidated real estate ventures
    
    
    5
    
    
    
    279
    
    
    
    (103
    )
    
    
    560Income (loss) from continuing operations
    
    
    2,045
    
    
    
    (5,478
    )
    
    
    (4,662
    )
    
    
    (27,482
    )Discontinued operations:Income from discontinued operations
    
    
    
    
    
    
    2,643
    
    
    
    2,869
    
    
    
    10,008Net gain on
disposition of discontinued operations
    
    
    338
    
    
    
    5,188
    
    
    
    25,491
    
    
    
    5,188Minority
interest  partners share of consolidated real estate ventures
    
    
    
    
    
    
    (1,857
    )
    
    
    
    
    
    
    (2,239
    )Income from discontinued operations
    
    
    338
    
    
    
    5,974
    
    
    
    28,360
    
    
    
    12,957Net income (loss)
    
    
    2,383
    
    
    
    496
    
    
    
    23,698
    
    
    
    (14,525
    )Income allocated to Preferred Units
    
    
    (1,998
    )
    
    
    (1,998
    )
    
    
    (5,994
    )
    
    
    (5,994
    )Income (loss) allocated to Common Partnership Units
    
    $
    385
    
    
    $
    (1,502
    )
    
    $
    17,704
    
    
    $
    (20,519
    )Basic earnings (loss) per Common Partnership Unit:Continuing
operations
    
    $
    0.00
    
    
    $
    (0.08
    )
    
    $
    (0.12
    )
    
    $
    (0.36
    )Discontinued
operations
    
    
    0.00
    
    
    
    0.06
    
    
    
    0.31
    
    
    
    0.14$
    0.00
    
    
    $
    (0.02
    )
    
    $
    0.19
    
    
    $
    (0.22
    )Diluted earnings (loss) per Common Partnership Unit:Continuing
operations
    
    $
    0.00
    
    
    $
    (0.08
    )
    
    $
    (0.12
    )
    
    $
    (0.36
    )Discontinued
operations
    
    
    0.00
    
    
    
    0.06
    
    
    
    0.31
    
    
    
    0.14$
    0.00
    
    
    $
    (0.02
    )
    
    $
    0.19
    
    
    $
    (0.22
    )Basic weighted average Common Partnership Unit
    
    
    90,772,197
    
    
    
    94,147,584
    
    
    
    91,334,438
    
    
    
    94,043,030Diluted weighted average Common Partnership Unit
    
    
    90,989,460
    
    
    
    94,147,584
    
    
    
    91,334,438
    
    
    
    94,043,030
  36




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##### Table of Contents



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 
 CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME
 (unaudited, in thousands)
 For the three-month
    
    
    For the nine-monthperiods ended September 30,
    
    
    periods ended September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net income (loss)
    
    $
    2,383
    
    
    $
    496
    
    
    $
    23,698
    
    
    $
    (14,525
    )Other comprehensive income:Unrealized gain (loss) on derivative financial instruments
    
    
    (461
    )
    
    
    (1,070
    )
    
    
    (883
    )
    
    
    1,293Less: minority interest  consolidated real estate venture partners share of
unrealized gain (loss) on derivative financial instruments
    
    
    
    
    
    
    525
    
    
    
    
    
    
    
    (284
    )Settlement of treasury locks
    
    
    (3,860
    )
    
    
    
    
    
    
    (3,860
    )
    
    
    Settlement of forward starting swaps
    
    
    
    
    
    
    
    
    
    
    1,148
    
    
    
    3,266Reclassification of realized (gains)/losses on derivative financial
instruments to operations, net
    
    
    171
    
    
    
    9
    
    
    
    (214
    )
    
    
    113Unrealized gain (loss) on available-for-sale securities
    
    
    (37
    )
    
    
    595
    
    
    
    (632
    )
    
    
    (181
    )Total other comprehensive income (loss)
    
    
    (4,187
    )
    
    
    59
    
    
    
    (4,441
    )
    
    
    4,207Comprehensive income (loss)
    
    $
    (1,804
    )
    
    $
    555
    
    
    $
    19,257
    
    
    $
    (10,318
    )
  37




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##### Table of Contents



BRANDYWINE OPERATING PARTNERSHIP L.P.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (unaudited, in thousands)
 Nine-month periodsended September 30,2007
    
    
    2006Cash flows from (used in) operating activities:Net income (loss)
    
    $
    23,698
    
    
    $
    (14,525
    )Adjustments to reconcile net income (loss) to net cash from
operating activities:Depreciation
    
    
    135,354
    
    
    
    143,893Amortization:Deferred financing costs
    
    
    3,381
    
    
    
    2,063Deferred leasing costs
    
    
    11,570
    
    
    
    8,394Acquired above (below) market leases, net
    
    
    (9,311
    )
    
    
    (6,067
    )Acquired lease intangibles
    
    
    39,463
    
    
    
    50,471Deferred compensation costs
    
    
    3,486
    
    
    
    2,332Straight-line rent
    
    
    (20,260
    )
    
    
    (23,486
    )Provision for doubtful accounts
    
    
    1,000
    
    
    
    2,970Real estate venture income in excess of distributions
    
    
    (20
    )
    
    
    (162
    )Net gain on sale of interests in real estate
    
    
    (25,912
    )
    
    
    (7,797
    )Gain on termination of purchase contract
    
    
    
    
    
    
    (3,147
    )Minority interest (expense)/income
    
    
    103
    
    
    
    1,679Changes in assets and liabilities:Accounts receivable
    
    
    4,607
    
    
    
    2,515Other assets
    
    
    (5,812
    )
    
    
    (13,494
    )Accounts payable and accrued expenses
    
    
    27,449
    
    
    
    36,192Tenant security deposits and deferred rents
    
    
    5,989
    
    
    
    30,635Other liabilities
    
    
    (5,346
    )
    
    
    904Net cash from operating activities
    
    
    189,439
    
    
    
    213,370Cash flows from (used in) investing activities:Acquisition of Prentiss
    
    
    
    
    
    
    (935,856
    )Acquisition of properties
    
    
    (88,890
    )
    
    
    (169,462
    )Acquisition of minority interest  partners share of consolidated real estate venture
    
    
    (63,732
    )
    
    
    Sales of properties, net
    
    
    234,428
    
    
    
    258,931Proceeds from termination of purchase contract
    
    
    
    
    
    
    3,147Capital expenditures
    
    
    (194,009
    )
    
    
    (180,771
    )Investment in unconsolidated real estate ventures
    
    
    (809
    )
    
    
    (643
    )Cash distributions from unconsolidated real estate ventures
in excess of equity in income
    
    
    2,917
    
    
    
    2,444Leasing costs
    
    
    (13,854
    )
    
    
    (30,524
    )Net cash used in investing activities
    
    
    (123,949
    )
    
    
    (1,052,734
    )Cash flows from (used in) financing activities:Proceeds from Credit Facility borrowings
    
    
    886,539
    
    
    
    462,000Repayments of Credit Facility borrowings
    
    
    (503,875
    )
    
    
    (302,002
    )Proceeds from mortgage notes payable
    
    
    
    
    
    
    20,520Repayments of mortgage notes payable
    
    
    (266,280
    )
    
    
    (29,327
    )Proceeds from term loan
    
    
    
    
    
    
    750,000Repayments of term loan
    
    
    
    
    
    
    (750,000
    )Proceeds from unsecured notes
    
    
    299,784
    
    
    
    847,818Repayments of unsecured notes
    
    
    (299,866
    )
    
    
    Net settlement of hedge transactions
    
    
    (2,712
    )
    
    
    3,266Repayments on employee stock loans
    
    
    
    
    
    
    60Debt financing costs
    
    
    (3,822
    )
    
    
    (6,991
    )Exercise of stock options
    
    
    6,278
    
    
    
    9,120Repurchases of Common Partnership Units
    
    
    (59,426
    )
    
    
    (34,481
    )Distributions paid to preferred and common partnership unitholders
    
    
    (129,828
    )
    
    
    (121,255
    )Net cash (used in) from financing activities
    
    
    (73,208
    )
    
    
    848,728Increase (decrease) in cash and cash equivalents
    
    
    (7,718
    )
    
    
    9,364Cash and cash equivalents at beginning of period
    
    
    25,379
    
    
    
    7,174Cash and cash equivalents at end of period
    
    $
    17,661
    
    
    $
    16,538Supplemental disclosure:Cash paid for interest, net of capitalized interest of $12,757 in 2007 and $7,209 in 2006
    
    $
    118,766
    
    
    $
    108,426Supplemental disclosure of non-cash activity:Common shares issued in the Prentiss acquisition
    
    
    
    
    
    
    1,022,173Operating Partnership units issued in Prentiss acquisitions
    
    
    
    
    
    
    64,103Operating Partnership units issued in property acquistions
    
    
    
    
    
    
    13,819Debt, minority interest and other liabilities, net, assumed in the Prentiss acquisition
    
    
    
    
    
    
    679,520
  38




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##### Table of Contents



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
 ORGANIZATION AND NATURE OF OPERATIONS
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Basis of Presentation
  39




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##### Table of Contents



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
 Principles of Consolidation
  Use of Estimates
  Operating Properties
  Purchase Price Allocation
  40




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##### Table of Contents



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
    Revenue Recognition
    41




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##### Table of Contents



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
 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
 Income Taxes
  42




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##### Table of Contents



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
    New Pronouncements
  The Fair Value Option for Financial Assets
and Financial Liabilities
 Fair Value Measurements
 43




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##### Table of Contents



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
  Accounting for Uncertainty in Income Taxes, an
Interpretation of FASB Statement No. 109
 REAL ESTATE INVESTMENTS
  September 30, 2007
    
    
    December 31, 2006Land
    
    $
    759,231
    
    
    $
    756,400Building and improvements
    
    
    3,813,882
    
    
    
    3,807,040Tenant improvements
    
    
    423,912
    
    
    
    363,865$
    4,997,025
    
    
    $
    4,927,305
 Acquisitions and Dispositions
  2007
   44




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##### Table of Contents



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
  
       2006
 Prentiss Acquisition
   45




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##### Table of Contents



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
  At January 5, 2006Real estate investmentsLand  operating
    
    $
    282,584Building and improvements
    
    
    1,942,728Tenant improvements
    
    
    120,610Construction in progress and land inventory
    
    
    57,329Total real estate investments acquired
    
    
    2,403,251Rent receivables
    
    
    6,031Other assets acquired:Intangible assets:In-place leases
    
    
    187,907Relationship values
    
    
    98,382Above-market leases
    
    
    26,352Total intangible assets acquired
    
    
    312,641Investment in real estate ventures
    
    
    66,921Investment in marketable securities
    
    
    193,089Other assets
    
    
    8,868Total other assets
    
    
    581,519Total assets acquired
    
    
    2,990,801Liabilities assumed:Mortgage notes payable
    
    
    532,607Unsecured notes
    
    
    78,610Secured note payable
    
    
    186,116Security deposits and deferred rent
    
    
    6,475Other liabilities:Below-market leases
    
    
    78,911Other liabilities
    
    
    43,995Total other liabilities assumed
    
    
    122,906Total liabilities assumed
    
    
    926,714Minority interest
    
    
    104,658Net assets acquired
    
    $
    1,959,429
  46




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##### Table of Contents



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
     Nine-month periodended September 30, 2006Pro forma revenue
    
    $
    460,193Pro forma loss from continuing operations
    
    
    (27,117
    )Pro forma loss allocated to common partnership
units
    
    
    (20,154
    )Earnings per common partnership
unit from continuing operationsBasic  as reported
    
    $
    (0.36
    )Basic  as pro forma
    
    $
    (0.35
    )Diluted  as reported
    
    $
    (0.36
    )Diluted  as pro forma
    
    $
    (0.35
    )Earnings per common partnership unitBasic  as reported
    
    $
    (0.22
    )Basic  as pro forma
    
    $
    (0.21
    )Diluted  as reported
    
    $
    (0.22
    )Diluted  as pro forma
    
    $
    (0.21
    )
   47




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##### Table of Contents



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
  Other 2006 Acquisitions and Dispositions
            INVESTMENT IN UNCONSOLIDATED VENTURES
  48




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##### Table of Contents



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
    2007
    
    2006Operating property, net of accumulated depreciation
    
    $
    393,262
    
    
    $
    365,168Other assets
    
    
    44,788
    
    
    
    52,935Liabilities
    
    
    33,033
    
    
    
    28,764Debt
    
    
    355,501
    
    
    
    332,589Equity
    
    
    49,540
    
    
    
    56,888Partnerships share of equity (Partnerships basis)
    
    
    72,237
    
    
    
    74,574
  Three-month periods
    
    Nine-month periodsended September 30,
    
    ended September 30,2007
    
    2006
    
    2007
    
    2006Revenue
    
    $
    19,374
    
    
    $
    19,189
    
    
    $
    56,674
    
    
    $
    57,623Operating expenses
    
    
    6,793
    
    
    
    7,696
    
    
    
    19,733
    
    
    
    22,433Interest expense, net
    
    
    5,421
    
    
    
    5,282
    
    
    
    160,909
    
    
    
    15,356Depreciation and amortization
    
    
    3,970
    
    
    
    4,826
    
    
    
    11,974
    
    
    
    14,998Net income
    
    
    3,191
    
    
    
    1,385
    
    
    
    8,898
    
    
    
    4,836Partnerships share of
income (Partnerships basis)
    
    
    763
    
    
    
    370
    
    
    
    2,149
    
    
    
    1,798
   DEFERRED COSTS
  49




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##### Table of Contents



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
 September 30, 2007Accumulated
    
    
    Deferred Costs,Total Cost
    
    
    Amortization
    
    
    netLeasing Costs
    
    $
    97,066
    
    
    $
    (32,525
    )
    
    
    64,541Financing Costs
    
    
    26,944
    
    
    
    (7,176
    )
    
    
    19,768Total
    
    $
    124,010
    
    
    $
    (39,701
    )
    
    $
    84,309
 December 31, 2006Accumulated
    
    
    Deferred Costs,Total Cost
    
    
    Amortization
    
    
    netLeasing Costs
    
    $
    83,629
    
    
    $
    (28,278
    )
    
    $
    55,351Financing Costs
    
    
    24,648
    
    
    
    (6,291
    )
    
    
    18,357Total
    
    $
    108,277
    
    
    $
    (34,569
    )
    
    $
    73,708
 INTANGIBLE ASSETS AND LIABILITIES
  September 30, 2007Accumulated
    
    
    Deferred Costs,Total Cost
    
    
    Amortization
    
    
    netIntangible Assets:In-place lease value
    
    $
    184,537
    
    
    $
    (61,072
    )
    
    $
    123,465Tenant relationship value
    
    
    122,236
    
    
    
    (29,777
    )
    
    
    92,459Above market leases acquired
    
    
    30,968
    
    
    
    (13,487
    )
    
    
    17,481Total intangible assets
    
    $
    337,741
    
    
    $
    (104,336
    )
    
    $
    233,405Intangible Liability:Below market leases acquired
    
    $
    105,437
    
    
    $
    (32,706
    )
    
    $
    72,731
 December 31, 2006Accumulated
    
    
    Deferred Costs,Total Cost
    
    
    Amortization
    
    
    netIntangible Assets:In-place lease value
    
    $
    207,513
    
    
    $
    (52,293
    )
    
    $
    155,220Tenant relationship value
    
    
    124,605
    
    
    
    (19,572
    )
    
    
    105,033Above market leases acquired
    
    
    32,667
    
    
    
    (11,669
    )
    
    
    20,998Total intangible assets
    
    $
    364,785
    
    
    $
    (83,534
    )
    
    $
    281,251Intangible Liability:Below market leases acquired
    
    $
    118,536
    
    
    $
    (26,009
    )
    
    $
    92,527
  50




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##### Table of Contents



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
 Assets
    
    
    Liabilities2007 (remainder)
    
    $
    13,931
    
    
    $
    4,2252008
    
    
    49,233
    
    
    
    14,4322009
    
    
    42,729
    
    
    
    12,2692010
    
    
    35,458
    
    
    
    9,5862011
    
    
    27,445
    
    
    
    7,860Thereafter
    
    
    64,609
    
    
    
    24,359Total
    
    $
    233,405
    
    
    $
    72,731
 DEBT OBLIGATIONS
  51




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##### Table of Contents



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
 EffectiveSeptember 30
    
    
    December 31,
    
    
    Interest
    
    
    
    MaturityProperty / Location
    
    2007
    
    
    2006
    
    
    Rate
    
    
    
    DateMORTGAGE DEBT:Interstate Center
    
    $
    
    
    
    $
    552
    
    
    6.19%
    
    
    
    Mar-07The Bluffs
    
    
    
    
    
    
    10,700
    
    
    6.00%
    
    (a)
    
    Apr-07Pacific Ridge
    
    
    
    
    
    
    14,500
    
    
    6.00%
    
    (a)
    
    Apr-07Pacific View/Camino
    
    
    
    
    
    
    26,000
    
    
    6.00%
    
    (a)
    
    Apr-07Computer Associates Building
    
    
    
    
    
    
    31,000
    
    
    6.00%
    
    (a)
    
    Apr-07Presidents Plaza
    
    
    
    
    
    
    30,900
    
    
    6.00%
    
    (a)
    
    Apr-07440 & 442 Creamery Way
    
    
    
    
    
    
    5,421
    
    
    8.55%
    
    
    
    May-07Grande A
    
    
    
    
    
    
    59,513
    
    
    7.48%
    
    
    
    Jul-07Grande B
    
    
    
    
    
    
    77,535
    
    
    7.48%
    
    
    
    Jul-07481 John Young Way
    
    
    2,241
    
    
    
    2,294
    
    
    8.40%
    
    
    
    Dec-07400 Commerce Drive
    
    
    11,631
    
    
    
    11,797
    
    
    7.12%
    
    
    
    Jun-08Two Logan Square
    
    
    70,437
    
    
    
    71,348
    
    
    5.78%
    
    (a)
    
    Jul-09200 Commerce Drive
    
    
    5,785
    
    
    
    5,841
    
    
    7.12%
    
    (a)
    
    Jan-101333 Broadway
    
    
    24,105
    
    
    
    24,418
    
    
    5.18%
    
    (a)
    
    May-10The Ordway
    
    
    45,687
    
    
    
    46,199
    
    
    7.95%
    
    (a)
    
    Aug-10World Savings Center
    
    
    27,242
    
    
    
    27,524
    
    
    7.91%
    
    (a)
    
    Nov-10Plymouth Meeting Exec.
    
    
    43,633
    
    
    
    44,103
    
    
    7.00%
    
    (a)
    
    Dec-10Four Tower Bridge
    
    
    10,554
    
    
    
    10,626
    
    
    6.62%
    
    
    
    Feb-11Arboretum I, II, III & V
    
    
    22,360
    
    
    
    22,750
    
    
    7.59%
    
    
    
    Jul-11Midlantic Drive/Lenox Drive/DCC I
    
    
    61,621
    
    
    
    62,678
    
    
    8.05%
    
    
    
    Oct-11Research Office Center
    
    
    41,700
    
    
    
    42,205
    
    
    7.64%
    
    (a)
    
    Oct-11Concord Airport Plaza
    
    
    37,798
    
    
    
    38,461
    
    
    7.20%
    
    (a)
    
    Jan-12Six Tower Bridge
    
    
    14,565
    
    
    
    14,744
    
    
    7.79%
    
    
    
    Aug-12Newtown Square/Berwyn Park/Libertyview
    
    
    62,425
    
    
    
    63,231
    
    
    7.25%
    
    
    
    May-13Coppell Associates
    
    
    3,571
    
    
    
    3,737
    
    
    6.89%
    
    
    
    Dec-13Southpoint III
    
    
    4,561
    
    
    
    4,949
    
    
    7.75%
    
    
    
    Apr-14Tysons Corner
    
    
    100,000
    
    
    
    100,000
    
    
    4.84%
    
    (a)
    
    Aug-15Coppell Associates
    
    
    16,600
    
    
    
    16,600
    
    
    5.75%
    
    
    
    Mar-16Principal balance outstanding
    
    
    606,516
    
    
    
    869,626Plus: unamortized fixed-rate debt premiums, net
    
    
    11,129
    
    
    
    14,294Total mortgage indebtedness
    
    $
    617,645
    
    
    $
    883,920UNSECURED DEBT:Sweep Agreement Line
    
    
    13,664
    
    
    
    
    
    
    Libor + 0.75%
    
    
    
    Mar-08Private Placement Notes due 2008
    
    
    113,000
    
    
    
    113,000
    
    
    4.34%
    
    
    
    Dec-082009 Three Year Notes
    
    
    
    
    
    
    300,000
    
    
    Libor + 0.45%
    
    
    
    Apr-092009 Five Year Notes
    
    
    275,000
    
    
    
    275,000
    
    
    4.62%
    
    
    
    Nov-092010 Five Year Notes
    
    
    300,000
    
    
    
    300,000
    
    
    5.61%
    
    
    
    Dec-10Line-of-Credit
    
    
    429,000
    
    
    
    60,000
    
    
    Libor + 0.725%
    
    
    
    Jun-113.875% Exchangeable Notes
    
    
    345,000
    
    
    
    345,000
    
    
    3.87%
    
    
    
    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
    
    
    
    
    
    
    5.72%
    
    
    
    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
    
    
    2,654,274
    
    
    
    2,271,610Plus: unamortized fixed-rate debt discounts, net
    
    
    (3,403
    )
    
    
    (3,300
    )Total unsecured indebtedness
    
    $
    2,650,871
    
    
    $
    2,268,310Total Debt Obligations
    
    $
    3,268,516
    
    
    $
    3,152,230
 
 (a)
    
    Loans were assumed upon acquisition of the related property. Interest rates presented above
reflect the market rate at the time of acquisition.  52




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
         53




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
     2007
    
    $
    4,8132008
    
    
    148,8122009
    
    
    354,9552010
    
    
    450,1892011
    
    
    906,261Thereafter
    
    
    1,395,760Total indebtedness
    
    $
    3,260,790
 RISK MANAGEMENT AND USE OF FINANCIAL INSTRUMENTS
 Risk Management
  Use of Derivative Financial Instruments
  54




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##### Table of Contents



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
    Trade Date
    
    Notional Amount
    
    All-in RateJuly 10, 2007
    
    $50.0 million
    
    4.984%July 18, 2007
    
    $50.0 million
    
    4.915%July 20, 2007
    
    $25.0 million
    
    4.848%July 25, 2007
    
    $25.0 million
    
    4.780%
     55




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
   Concentration of Credit Risk
  DISCONTINUED OPERATIONS
  Three-month period
    
    
    Nine-month periodended September 30, 2007
    
    
    ended September 30, 2007Revenue:Rents
    
    $
    
    
    
    $
    12,397Tenant reimbursements
    
    
    
    
    
    
    1,246Other
    
    
    
    
    
    
    214Total revenue
    
    
    
    
    
    
    13,857Expenses:Property operating expenses
    
    
    
    
    
    
    4,845Real estate taxes
    
    
    
    
    
    
    1,549Depreciation and amortization
    
    
    
    
    
    
    4,594Total operating expenses
    
    
    
    
    
    
    10,988Income from discontinued operations before (loss) gain
on sale of interests in real estate and minority interest
    
    
    
    
    
    
    2,869Net (loss) gain on sale of interests in real estate
    
    
    338
    
    
    
    25,491Income from discontinued operations
    
    $
    338
    
    
    $
    28,360
  56




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
 Three-month period
    
    
    Nine-month periodended September 30, 2006
    
    
    ended September 30, 2006Revenue:Rents
    
    $
    20,170
    
    
    $
    66,388Tenant reimbursements
    
    
    1,442
    
    
    
    5,651Other
    
    
    273
    
    
    
    860Total revenue
    
    
    21,885
    
    
    
    72,899Expenses:Property operating expenses
    
    
    7,982
    
    
    
    26,002Real estate taxes
    
    
    2,849
    
    
    
    9,036Depreciation and amortization
    
    
    8,304
    
    
    
    27,173Total operating expenses
    
    
    19,135
    
    
    
    62,211Operating income
    
    
    2,750
    
    
    
    10,688Interest income
    
    
    2
    
    
    
    15Interest expense (a)
    
    
    (109
    )
    
    
    (695
    )Income from discontinued operations before gain on
sale of interests in real estate and minority interest
    
    
    2,643
    
    
    
    10,008Net gain on sale of interests in real estate
    
    
    5,188
    
    
    
    5,188Minority interest  partners share of gain on sale
    
    
    (1,757
    )
    
    
    (1,757
    )Minority interest  partners share of consolidated
real estate venture
    
    
    (100
    )
    
    
    (482
    )Income from discontinued operations
    
    $
    5,974
    
    
    $
    12,957
 
 (a)
    
    Interest expense relates to a mortgage that was collateralized by one of the sold properties
and paid off at the time of sale.  MINORITY INTEREST IN REAL ESTATE VENTURES
   PARTNERS EQUITY
 Earnings per Common Partnership Unit
  57




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
 Three-month periods ended September 30,2007
    
    
    2006Basic
    
    
    Diluted
    
    
    Basic
    
    
    DilutedIncome (loss) from continuing operations
    
    $
    2,045
    
    
    $
    2,045
    
    
    $
    (5,478
    )
    
    $
    (5,478
    )Income from discontinued operations
    
    
    338
    
    
    
    338
    
    
    
    5,974
    
    
    
    5,974Income allocated to Preferred Units
    
    
    (1,998
    )
    
    
    (1,998
    )
    
    
    (1,998
    )
    
    
    (1,998
    )Net income available to common partnership
unitholders
    
    $
    385
    
    
    $
    385
    
    
    $
    (1,502
    )
    
    $
    (1,502
    )Weighted-average common partnership units
outstanding
    
    
    90,772,197
    
    
    
    90,772,197
    
    
    
    94,147,584
    
    
    
    94,147,584Contingent securities/Stock based compensation
    
    
    
    
    
    
    217,263
    
    
    
    
    
    
    
    Total weighted-average partnership units outstanding
    
    
    90,772,197
    
    
    
    90,989,460
    
    
    
    94,147,584
    
    
    
    94,147,584Earnings (loss) per Common Partnership Unit:Continuing operations
    
    $
    0.00
    
    
    $
    0.00
    
    
    $
    (0.08
    )
    
    $
    (0.08
    )Discontinued operations
    
    
    0.00
    
    
    
    0.00
    
    
    
    0.06
    
    
    
    0.06$
    0.00
    
    
    $
    0.00
    
    
    $
    (0.02
    )
    
    $
    (0.02
    )
 Nine-month periods ended September 30,2007
    
    
    2006Basic
    
    
    Diluted
    
    
    Basic
    
    
    DilutedIncome (loss) from continuing operations
    
    $
    (4,662
    )
    
    $
    (4,662
    )
    
    $
    (27,482
    )
    
    $
    (27,482
    )Income from discontinued operations
    
    
    28,360
    
    
    
    28,360
    
    
    
    12,957
    
    
    
    12,957Income allocated to Preferred Units
    
    
    (5,994
    )
    
    
    (5,994
    )
    
    
    (5,994
    )
    
    
    (5,994
    )Net income available to common partnership
unitholders
    
    $
    17,704
    
    
    $
    17,704
    
    
    $
    (20,519
    )
    
    $
    (20,519
    )Weighted-average common partnership units
outstanding
    
    
    91,334,438
    
    
    
    91,334,438
    
    
    
    94,043,030
    
    
    
    94,043,030Contingent securities/Stock based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total weighted-average partnership units outstanding
    
    
    91,334,438
    
    
    
    91,334,438
    
    
    
    94,043,030
    
    
    
    94,043,030Earnings (loss) per Common Partnership Unit:Continuing operations
    
    $
    (0.12
    )
    
    $
    (0.12
    )
    
    $
    (0.36
    )
    
    $
    (0.36
    )Discontinued operations
    
    
    0.31
    
    
    
    0.31
    
    
    
    0.14
    
    
    
    0.14$
    0.19
    
    
    $
    0.19
    
    
    $
    (0.22
    )
    
    $
    (0.22
    )
 Common Partnership Unit and Preferred Mirror Units
   Common Share Repurchases
  58




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
  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, 2007
    
    
    1,286,070
    
    
    $
    26.45
    
    
    
    1.50
    
    
    $
    8,739Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    (198,495
    )
    
    
    28.80
    
    
    
    0.87
    
    
    
    1,171Forfeited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at September 30, 2007
    
    
    1,087,575
    
    
    $
    26.03
    
    
    
    0.82
    
    
    $
    (780
    )Vested at September 30, 2007
    
    
    1,087,575
    
    
    $
    26.03
    
    
    
    0.82
    
    
    $
    (780
    )Exercisable at September 30, 2007
    
    
    1,087,575
    
    
    $
    26.03
    
    
    
    0.82
    
    
    $
    (780
    )
   Restricted Share Awards
  59




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
 WeightedAverage GrantShares
    
    
    Date Fair valueNon-vested at January 1, 2007
    
    
    338,860
    
    
    $
    28.23Granted
    
    
    227,709
    
    
    
    35.09Vested
    
    
    (107,143
    )
    
    
    26.45Forfeited
    
    
    (35,721
    )
    
    
    31.81Non-vested at September 30, 2007
    
    
    423,705
    
    
    $
    32.03
 Outperformance Program
   Employee Share Purchase Plan
  SEGMENT INFORMATION
  60




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
   61




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
  Pennsylvania 
    
    
    Pennsylvania 
    
    
    
    
    
    
    
    
    
    
    Richmond,
    
    
    Northern
    
    
    Southern
    
    
    MetropolitanWest
    
    
    North
    
    
    New Jersey
    
    
    Urban
    
    
    Virginia
    
    
    California
    
    
    California
    
    
    Washington, D.C.
    
    
    Southwest
    
    
    Corporate
    
    
    TotalAs of September 30, 2007:Real estate investments, at cost:Operating properties
    
    $
    958,089
    
    
    $
    449,900
    
    
    $
    557,749
    
    
    $
    576,477
    
    
    $
    346,848
    
    
    $
    472,254
    
    
    $
    105,652
    
    
    $
    1,293,478
    
    
    $
    236,578
    
    
    $
    
    
    
    $
    4,997,025Development and
construction-in-progress
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    406,732
    
    
    
    406,732As of December 31, 2006:Real estate investments, at cost:Operating properties
    
    $
    922,347
    
    
    $
    530,436
    
    
    $
    570,009
    
    
    $
    568,008
    
    
    $
    244,519
    
    
    $
    396,927
    
    
    $
    95,942
    
    
    $
    1,255,940
    
    
    $
    343,177
    
    
    $
    
    
    
    $
    4,927,305Development and
construction-in-progress
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    328,119
    
    
    
    328,119For the three-months ended September 30, 2007:Total revenue
    
    $
    39,968
    
    
    $
    15,388
    
    
    $
    25,030
    
    
    $
    24,440
    
    
    $
    10,604
    
    
    $
    16,047
    
    
    $
    3,126
    
    
    $
    32,483
    
    
    $
    8,587
    
    
    $
    (269
    )
    
    $
    175,404Property operating expenses and
real estate taxes
    
    
    12,319
    
    
    
    5,681
    
    
    
    12,467
    
    
    
    9,320
    
    
    
    3,645
    
    
    
    6,075
    
    
    
    1,286
    
    
    
    10,321
    
    
    
    3,031
    
    
    
    569
    
    
    
    64,714Net operating income
    
    $
    27,649
    
    
    $
    9,707
    
    
    $
    12,563
    
    
    $
    15,120
    
    
    $
    6,959
    
    
    $
    9,972
    
    
    $
    1,840
    
    
    $
    22,162
    
    
    $
    5,556
    
    
    $
    (838
    )
    
    $
    110,690For the three-months ended September 30, 2006:Total revenue
    
    $
    31,371
    
    
    $
    18,485
    
    
    $
    24,467
    
    
    $
    22,185
    
    
    $
    8,509
    
    
    $
    14,655
    
    
    $
    3,035
    
    
    $
    28,774
    
    
    $
    7,831
    
    
    $
    3,130
    
    
    $
    162,442Property operating expenses and
real estate taxes
    
    
    8,818
    
    
    
    9,658
    
    
    
    12,394
    
    
    
    9,243
    
    
    
    3,027
    
    
    
    5,726
    
    
    
    898
    
    
    
    9,347
    
    
    
    2,619
    
    
    
    390
    
    
    
    62,120Net operating income
    
    $
    22,553
    
    
    $
    8,827
    
    
    $
    12,073
    
    
    $
    12,942
    
    
    $
    5,482
    
    
    $
    8,929
    
    
    $
    2,137
    
    
    $
    19,427
    
    
    $
    5,212
    
    
    $
    2,740
    
    
    $
    100,322
 62




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
  Pennsylvania 
    
    
    Pennsylvania 
    
    
    
    
    
    
    
    
    
    
    Richmond,
    
    
    Northern
    
    
    Southern
    
    
    MetropolitanWest
    
    
    North
    
    
    New Jersey
    
    
    Urban
    
    
    Virginia
    
    
    California
    
    
    California
    
    
    Washington, D.C.
    
    
    Southwest
    
    
    Corporate
    
    
    TotalFor the nine-months ended September 30, 2007:Total revenue
    
    $
    98,983
    
    
    $
    50,144
    
    
    $
    74,344
    
    
    $
    71,806
    
    
    $
    27,675
    
    
    $
    47,899
    
    
    $
    9,266
    
    
    $
    97,660
    
    
    $
    26,968
    
    
    $
    (1,936
    )
    
    $
    502,809Property operating
expenses and real
estate taxes
    
    
    36,577
    
    
    
    18,295
    
    
    
    34,087
    
    
    
    27,328
    
    
    
    9,661
    
    
    
    18,205
    
    
    
    3,357
    
    
    
    31,125
    
    
    
    10,251
    
    
    
    (540
    )
    
    
    188,346Net operating income
    
    $
    62,406
    
    
    $
    31,849
    
    
    $
    40,257
    
    
    $
    44,478
    
    
    $
    18,014
    
    
    $
    29,694
    
    
    $
    5,909
    
    
    $
    66,535
    
    
    $
    16,717
    
    
    $
    (1,396
    )
    
    $
    314,463For the nine-months ended September 30, 2006:Total revenue
    
    $
    82,199
    
    
    $
    54,307
    
    
    $
    70,623
    
    
    $
    62,826
    
    
    $
    24,009
    
    
    $
    42,914
    
    
    $
    8,591
    
    
    $
    81,157
    
    
    $
    23,590
    
    
    $
    6,573
    
    
    $
    456,789Property operating
expenses and real
estate taxes
    
    
    24,605
    
    
    
    29,174
    
    
    
    32,064
    
    
    
    26,060
    
    
    
    9,045
    
    
    
    16,175
    
    
    
    2,425
    
    
    
    25,179
    
    
    
    9,302
    
    
    
    (836
    )
    
    
    173,193Net operating income
    
    $
    57,594
    
    
    $
    25,133
    
    
    $
    38,559
    
    
    $
    36,766
    
    
    $
    14,964
    
    
    $
    26,739
    
    
    $
    6,166
    
    
    $
    55,978
    
    
    $
    14,288
    
    
    $
    7,409
    
    
    $
    283,596
 63




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BRANDYWINE
OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
  Three-month periods
    
    
    Nine-month periodsended September 30,
    
    
    ended September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Consolidated net operating income (loss)
    
    $
    110,690
    
    
    $
    100,322
    
    
    $
    314,463
    
    
    $
    283,596Plus/(Minus)Interest income
    
    
    1,060
    
    
    
    2,479
    
    
    
    3,450
    
    
    
    7,702Interest expense
    
    
    (40,868
    )
    
    
    (44,504
    )
    
    
    (122,029
    )
    
    
    (126,478
    )Interest expense  deferred financing costs
    
    
    (1,058
    )
    
    
    (789
    )
    
    
    (3,381
    )
    
    
    (2,062
    )Depreciation and amortization
    
    
    (61,516
    )
    
    
    (60,292
    )
    
    
    (181,790
    )
    
    
    (175,649
    )General & administrative expenses
    
    
    (7,452
    )
    
    
    (6,490
    )
    
    
    (21,714
    )
    
    
    (22,704
    )Minority interest  partners share of consolidated
real estate ventures
    
    
    5
    
    
    
    279
    
    
    
    (103
    )
    
    
    560Equity in income of real estate ventures
    
    
    763
    
    
    
    370
    
    
    
    6,021
    
    
    
    1,798Net gain on disposition of undepreciated real
estate
    
    
    421
    
    
    
    
    
    
    
    421
    
    
    
    2,608Gian on termination of purchase contract
    
    
    
    
    
    
    3,147
    
    
    
    
    
    
    
    3,147Income (loss) from continuing operations
    
    
    2,045
    
    
    
    (5,478
    )
    
    
    (4,662
    )
    
    
    (27,482
    )Income from discontinued operations
    
    
    338
    
    
    
    5,974
    
    
    
    28,360
    
    
    
    12,957Net income (loss)
    
    $
    2,383
    
    
    $
    496
    
    
    $
    23,698
    
    
    $
    (14,525
    )
 COMMITMENTS AND CONTINGENCIES
 Legal Proceedings
   Environmental
  64




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BRANDYWINE
OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
 Ground Rent
  2007
    
    $
    4342008
    
    
    1,7362009
    
    
    2,0682010
    
    
    2,3182011
    
    
    2,318Thereafter
    
    
    293,451
 Other Commitments or Contingencies
     SUBSEQUENT EVENTS
  65




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BRANDYWINE
OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 September 30, 2007
      66




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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;
    
    the bankruptcy of major tenants;
    
    changes in prevailing interest rates;
    
    the unavailability of equity and debt financing;
    
    unanticipated costs associated with the acquisition and integration of our acquisitions;
    
    unanticipated costs to complete and lease-up pending developments;
    
    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, 2006.
     67




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Tenant Rollover Risk
  Tenant Credit Risk
  Development Risk
  68




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69




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##### Table of Contents



70




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Comparison of the Three-Month Periods Ended September 30, 2007 and 2006
   71




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##### Table of Contents



Acquired/Completed
    
    
    Development/Redevelopment
    
    
    Administrative/Same Store Property Portfolio
    
    
    Properties
    
    
    Properties
    
    
    Eliminations (a)
    
    
    Total PortfolioIncrease/
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Increase/(dollars in thousands)
    
    2007
    
    
    2006
    
    
    (Decrease)
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    (Decrease)Revenue:Cash rents
    
    $
    113,376
    
    
    $
    111,467
    
    
    $
    1,909
    
    
    $
    17,180
    
    
    $
    5,530
    
    
    $
    4,307
    
    
    $
    6,337
    
    
    $
    (1,267
    )
    
    $
    148
    
    
    $
    133,596
    
    
    $
    123,482
    
    
    $
    10,114Straight-line rents
    
    
    2,398
    
    
    
    2,989
    
    
    
    (591
    )
    
    
    2,896
    
    
    
    3,258
    
    
    
    192
    
    
    
    178
    
    
    
    
    
    
    
    
    
    
    
    5,486
    
    
    
    6,425
    
    
    
    (939
    )Rents  FAS 141
    
    
    2,145
    
    
    
    1,762
    
    
    
    383
    
    
    
    354
    
    
    
    189
    
    
    
    508
    
    
    
    (209
    )
    
    
    
    
    
    
    
    
    
    
    3,007
    
    
    
    1,742
    
    
    
    1,265Total rents
    
    
    117,919
    
    
    
    116,218
    
    
    
    1,701
    
    
    
    20,430
    
    
    
    8,977
    
    
    
    5,007
    
    
    
    6,306
    
    
    
    (1,267
    )
    
    
    148
    
    
    
    142,089
    
    
    
    131,649
    
    
    
    10,440Tenant reimbursements
    
    
    18,999
    
    
    
    21,109
    
    
    
    (2,110
    )
    
    
    1,330
    
    
    
    556
    
    
    
    1,015
    
    
    
    916
    
    
    
    71
    
    
    
    67
    
    
    
    21,415
    
    
    
    22,648
    
    
    
    (1,233
    )Termination fess
    
    
    7,598
    
    
    
    4,629
    
    
    
    2,969
    
    
    
    
    
    
    
    26
    
    
    
    52
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,650
    
    
    
    4,655
    
    
    
    2,995Other, excluding termination fees
    
    
    875
    
    
    
    838
    
    
    
    37
    
    
    
    194
    
    
    
    18
    
    
    
    5
    
    
    
    5
    
    
    
    3,176
    
    
    
    2,629
    
    
    
    4,250
    
    
    
    3,490
    
    
    
    760Total revenue
    
    
    145,391
    
    
    
    142,794
    
    
    
    2,597
    
    
    
    21,954
    
    
    
    9,577
    
    
    
    6,079
    
    
    
    7,227
    
    
    
    1,980
    
    
    
    2,844
    
    
    
    175,404
    
    
    
    162,442
    
    
    
    12,962Property operating expenses
    
    
    44,022
    
    
    
    42,970
    
    
    
    1,052
    
    
    
    5,350
    
    
    
    2,886
    
    
    
    2,473
    
    
    
    3,029
    
    
    
    (2,979
    )
    
    
    (2,489
    )
    
    
    48,866
    
    
    
    46,396
    
    
    
    2,470Real estate taxes
    
    
    13,333
    
    
    
    13,758
    
    
    
    (425
    )
    
    
    1,489
    
    
    
    669
    
    
    
    965
    
    
    
    665
    
    
    
    61
    
    
    
    632
    
    
    
    15,848
    
    
    
    15,724
    
    
    
    124Subtotal
    
    
    88,036
    
    
    
    86,066
    
    
    
    1,970
    
    
    
    15,115
    
    
    
    6,022
    
    
    
    2,641
    
    
    
    3,533
    
    
    
    4,898
    
    
    
    4,701
    
    
    
    110,690
    
    
    
    100,322
    
    
    
    10,368Administrative expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,452
    
    
    
    6,490
    
    
    
    7,452
    
    
    
    6,490
    
    
    
    962Depreciation and amortization
    
    
    48,002
    
    
    
    50,569
    
    
    
    (2,567
    )
    
    
    9,492
    
    
    
    4,400
    
    
    
    3,089
    
    
    
    4,728
    
    
    
    933
    
    
    
    595
    
    
    
    61,516
    
    
    
    60,292
    
    
    
    1,224Operating Income
    
    $
    40,034
    
    
    $
    35,497
    
    
    $
    4,537
    
    
    $
    5,623
    
    
    $
    1,622
    
    
    $
    (448
    )
    
    $
    (1,195
    )
    
    $
    (3,487
    )
    
    $
    (2,384
    )
    
    $
    41,722
    
    
    $
    33,540
    
    
    $
    8,182Number of properties
    
    
    255
    
    
    
    255
    
    
    
    
    
    
    
    16
    
    
    
    
    
    
    
    17
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    288Square feet
    
    
    23,616
    
    
    
    23,616
    
    
    
    
    
    
    
    2,880
    
    
    
    
    
    
    
    4,081
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,577Occupancy % at September 30, 2007
    
    
    94.0
    %
    
    
    92.9
    %
    
    
    
    
    
    
    96.7
    %
    
    
    
    
    
    
    27.5
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    85.3
    %Other Income (Expense):Interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,060
    
    
    
    2,479
    
    
    
    (1,419
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (40,868
    )
    
    
    (44,504
    )
    
    
    3,636Interest expense  deferred financing
costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,058
    )
    
    
    (789
    )
    
    
    (269
    )Equity in income of real estate ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    763
    
    
    
    370
    
    
    
    393Net gain on sales of interests in real
estate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    421
    
    
    
    
    
    
    
    421Gain on termination of purchase contract
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,147
    
    
    
    (3,147
    )Income (loss) before minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,040
    
    
    
    (5,757
    )
    
    
    7,797Minority interest  partners share of
consolidated real estate ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    279
    
    
    
    (274
    )Minority interest attributable to
continuing operations  LP units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    344
    
    
    
    (346
    )Income
(loss) from continuing operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,043
    
    
    
    (5,134
    )
    
    
    7,177Income from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    324
    
    
    
    5,698
    
    
    
    (5,374
    )Net Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    2,367
    
    
    $
    564
    
    
    $
    1,803Earnings (loss) per common share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    0.00
    
    
    
    ($0.02
    )
    
    $
    0.02
 
  
 (a)  Represents certain revenues and expenses at the corporate level as well as various
intercompany costs that are eliminated in consolidation 72




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Revenue
  1)
    
    An additional $1.9 million at the Same Store Portfolio from increased occupancy
and a decrease in free rent periods as noted by the corresponding decrease of $0.6
million in straight-line rents for the Same Store Portfolio.2)
    
    An additional $11.7 million from seven properties that we acquired after
September 30, 2006 and seven development properties (including additional occupancy at
Cira Centre) that we completed and placed in service subsequent to September 30, 2006.3)
    
    These increases were offset by the decrease of $2.0 million in cash rents at
our development/redevelopment properties primarily as a result of five buildings that
were occupied during the three-months ended September 30, 2006 but are not in service
during the three-months ended September 30, 2007.
   Property Operating Expenses
  1)
    
    An increase of $0.6 million at the Same Store Portfolio, primarily due to increased
occupancy and real estate tax reassessments. Increased occupancy at our properties causes
an increase in the amount of expense incurred for utilities, security, and janitorial
services.2)
    
    The incurrence of $3.3 million of property operating expenses for seven of the
properties that we acquired and the seven properties that we placed in service after the
third quarter of 2006.3)
    
    These increases were offset by a decrease of $0.5 million in bad debt expense and a
decrease in expenses incurred for our development/redevelopment properties due to five
properties being taken out of service subsequent to September 30, 2006.
 Depreciation and Amortization Expense
  1)
    
    The incurrence of $5.1 million of depreciation and amortization expense on account of
seven of the properties that we acquired and seven development properties (including
additional occupancy at Cira Centre) that we completed and placed in service after the
third quarter of 2006.2)
    
    The increases were offset by the decrease of $2.6 million of depreciation and
amortization expense in our same store portfolio and a decrease of $1.6 million of
depreciation and amortization expense as result of five buildings that were occupied during
the three-months ended September 30, 2006 are not in service during the three-months ended
September 30, 2007.
 73




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##### Table of Contents



Administrative Expenses
  Interest Income/ Expense
    Equity in income of Real Estate Ventures
  Minority Interest-partners share of consolidated Real Estate Ventures
   Minority Interest attributable to continuing operations  LP units
  Discontinued Operations
  74




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##### Table of Contents



Net Income
  Earnings (Loss) Per Share
  75




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##### Table of Contents



Comparison of the Nine-Month Periods Ended September 30, 2007 and 2006
   76




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##### Table of Contents



Acquired/Completed
    
    
    Development/Redevelopment
    
    
    Administrative/Same Store Property Portfolio
    
    
    Properties
    
    
    Properties
    
    
    Eliminations (a)
    
    
    Total PortfolioIncrease/
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Increase/(dollars in thousands)
    
    2007
    
    
    2006
    
    
    (Decrease)
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    (Decrease)Revenue:Cash rents
    
    $
    336,272
    
    
    $
    329,576
    
    
    $
    6,696
    
    
    $
    43,764
    
    
    $
    13,305
    
    
    $
    13,497
    
    
    $
    19,501
    
    
    $
    (3,299
    )
    
    $
    (1,638
    )
    
    $
    390,234
    
    
    $
    360,744
    
    
    $
    29,490Straight-line rents
    
    
    8,878
    
    
    
    12,195
    
    
    
    (3,317
    )
    
    
    10,085
    
    
    
    6,883
    
    
    
    887
    
    
    
    653
    
    
    
    
    
    
    
    (153
    )
    
    
    19,850
    
    
    
    19,578
    
    
    
    272Rents  FAS 141
    
    
    6,304
    
    
    
    5,265
    
    
    
    1,039
    
    
    
    1,491
    
    
    
    251
    
    
    
    747
    
    
    
    (653
    )
    
    
    
    
    
    
    
    
    
    
    8,542
    
    
    
    4,863
    
    
    
    3,679Total rents
    
    
    351,454
    
    
    
    347,036
    
    
    
    4,418
    
    
    
    55,340
    
    
    
    20,439
    
    
    
    15,131
    
    
    
    19,501
    
    
    
    (3,299
    )
    
    
    (1,791
    )
    
    
    418,626
    
    
    
    385,185
    
    
    
    33,441Tenant reimbursements
    
    
    56,930
    
    
    
    50,251
    
    
    
    6,679
    
    
    
    3,395
    
    
    
    1,076
    
    
    
    2,615
    
    
    
    3,027
    
    
    
    314
    
    
    
    424
    
    
    
    63,254
    
    
    
    54,778
    
    
    
    8,476Termination fess
    
    
    8,556
    
    
    
    6,256
    
    
    
    2,300
    
    
    
    809
    
    
    
    101
    
    
    
    113
    
    
    
    163
    
    
    
    
    
    
    
    
    
    
    
    9,478
    
    
    
    6,520
    
    
    
    2,958Other, excluding termination fees
    
    
    2,207
    
    
    
    2,270
    
    
    
    (63
    )
    
    
    174
    
    
    
    79
    
    
    
    (28
    )
    
    
    23
    
    
    
    9,098
    
    
    
    7,934
    
    
    
    11,451
    
    
    
    10,306
    
    
    
    1,145Total revenue
    
    
    419,147
    
    
    
    405,813
    
    
    
    13,334
    
    
    
    59,718
    
    
    
    21,695
    
    
    
    17,831
    
    
    
    22,714
    
    
    
    6,113
    
    
    
    6,567
    
    
    
    502,809
    
    
    
    456,789
    
    
    
    46,020Property operating expenses
    
    
    125,790
    
    
    
    120,591
    
    
    
    5,199
    
    
    
    15,818
    
    
    
    7,673
    
    
    
    7,825
    
    
    
    9,206
    
    
    
    (9,397
    )
    
    
    (8,596
    )
    
    
    140,036
    
    
    
    128,874
    
    
    
    11,162Real estate taxes
    
    
    41,150
    
    
    
    39,288
    
    
    
    1,862
    
    
    
    3,775
    
    
    
    1,813
    
    
    
    3,008
    
    
    
    2,476
    
    
    
    377
    
    
    
    742
    
    
    
    48,310
    
    
    
    44,319
    
    
    
    3,991Subtotal
    
    
    252,207
    
    
    
    245,934
    
    
    
    6,273
    
    
    
    40,125
    
    
    
    12,209
    
    
    
    6,998
    
    
    
    11,032
    
    
    
    15,133
    
    
    
    14,421
    
    
    
    314,463
    
    
    
    283,596
    
    
    
    30,867Administrative expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,714
    
    
    
    22,704
    
    
    
    21,714
    
    
    
    22,704
    
    
    
    (990
    )Depreciation and amortization
    
    
    141,608
    
    
    
    143,858
    
    
    
    (2,250
    )
    
    
    26,110
    
    
    
    6,245
    
    
    
    11,602
    
    
    
    23,839
    
    
    
    2,470
    
    
    
    1,707
    
    
    
    181,790
    
    
    
    175,649
    
    
    
    6,141Operating Income
    
    $
    110,599
    
    
    $
    102,076
    
    
    $
    8,523
    
    
    $
    14,015
    
    
    $
    5,964
    
    
    $
    (4,604
    )
    
    $
    (12,807
    )
    
    $
    (9,051
    )
    
    $
    (9,990
    )
    
    $
    110,959
    
    
    $
    85,243
    
    
    $
    25,716Number of properties
    
    
    254
    
    
    
    254
    
    
    
    
    
    
    
    17
    
    
    
    
    
    
    
    17
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    288Square feet
    
    
    23,471
    
    
    
    23,471
    
    
    
    
    
    
    
    3,025
    
    
    
    
    
    
    
    4,081
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,577Occupancy % at September 30, 2007
    
    
    94.0
    %
    
    
    92.9
    %
    
    
    
    
    
    
    96.3
    %
    
    
    
    
    
    
    27.5
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    85.3
    %Other Income (Expense):Interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,450
    
    
    
    7,702
    
    
    
    (4,252
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (122,029
    )
    
    
    (126,478
    )
    
    
    4,449Interest expense  Deferred financing costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,381
    )
    
    
    (2,062
    )
    
    
    (1,319
    )Equity in income of real estate ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,021
    
    
    
    1,798
    
    
    
    4,223Net gain on sales of interests in real estate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    421
    
    
    
    2,608
    
    
    
    (2,187
    )Gain on termination of purchase contract
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,147
    
    
    
    (3,147
    )Loss before minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,559
    )
    
    
    (28,042
    )
    
    
    23,483Minority interest  partners share of consolidated real estate ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (103
    )
    
    
    560
    
    
    
    (663
    )Minority interest attributable to continuing operations  LP units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    456
    
    
    
    1,486
    
    
    
    (1,030
    )Loss from continuing operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,206
    )
    
    
    (25,996
    )
    
    
    21,790Income from
discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,149
    
    
    
    12,362
    
    
    
    14,787Net Income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    22,943
    
    
    $
    (13,634
    )
    
    $
    36,577Earnings per common share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    0.19
    
    
    
    ($0.22
    )
    
    $
    0.41
 
   77




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##### Table of Contents



Revenue
  1)
    
    An additional $6.7 million at the Same Store Portfolio from increased occupancy
and increased rents received on lease renewals.2)
    
    An additional $30.5 million from seven properties that we acquired after
September 30, 2006 and seven development properties (including additional occupancy at
Cira Centre) that we completed and placed in service after September 30, 2006.3)
    
    These increases were offset by the decrease of $6.0 million in cash rents at
our development/redevelopment properties primarily as a result of five buildings, which
are now included in redevelopment, that were occupied during the nine-months ended
September 30, 2006.
   Property Operating Expenses
  1)
    
    An increase of $7.1 million at the Same Store Portfolio, primarily due to increased
occupancy and real estate tax reassessments. Increased occupancy at our properties causes
an increase in the amount of expense incurred for utilities, security, and janitorial
services.2)
    
    The incurrence of $10.1 million of property operating expenses for seven of the
properties that we acquired after September 30, 2006.3)
    
    These increases were offset by decreases due to five buildings that were taken out of
service subsequent to September 30, 2006.
 Depreciation and Amortization Expense
  1)
    
    The incurrence of $20.0 million of depreciation and amortization expense on account of
seven of the properties that we acquired after the third quarter of 2006 and seven
development properties (including Cira Centre) that we completed and placed in service
subsequent to September 30, 2006.2)
    
    This increase was offset by $11.9 million of accelerated depreciation expense for one
of our properties (50 E. Swedesford Road) which was demolished as part of an office park
development in suburban Philadelphia during the nine-months ended September 30, 2006. This
property is included as part of our Development/Redevelopment Properties.3)
    
    The increase is also offset by a decrease of $2.3 million in our Same Store portfolio.
This decrease is the result of assets within our Same Store portfolio being fully amortized
subsequent to September 30, 2006.
 Administrative Expenses
  78




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##### Table of Contents



Interest Income/ Expense
     Equity in income of Real Estate Ventures
  Minority Interest-partners share of consolidated Real Estate Ventures
   Minority Interest attributable to continuing operations  LP units
  Discontinued Operations
   79




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##### Table of Contents



Net Income
  Earnings Per Share
  80




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##### Table of Contents



General
  
    
    fund normal recurring expenses,
    
    fund capital expenditures, including capital and tenant improvements and leasing costs,
    
    fund development and redevelopment costs,
    
    fund new property acquisitions, and
    
    fund distributions declared by our Board of Trustees, including the minimum distribution
required to maintain our REIT qualification under the Internal Revenue Code.
      Cash Flows
  81




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##### Table of Contents



Activity
    
    2007
    
    
    2006Operating
    
    $
    189,439
    
    
    $
    213,370Investing
    
    
    (123,949
    )
    
    
    (1,052,734
    )Financing
    
    
    (73,208
    )
    
    
    848,728Net cash flows
    
    $
    (7,718
    )
    
    $
    9,364
    Capitalization
 Indebtedness
     82




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##### Table of Contents



September 30,
    
    
    December31,2007
    
    
    2006(dollars in thousands)Balance:Fixed rate
    
    $
    2,739,516
    
    
    $
    2,707,176Variable rate
    
    
    521,274
    
    
    
    439,162Total
    
    $
    3,260,790
    
    
    $
    3,146,338Percent of Total Debt:Fixed rate
    
    
    84
    %
    
    
    86
    %Variable rate
    
    
    16
    %
    
    
    14
    %Total
    
    
    100
    %
    
    
    100
    %Weighted-average interest rate at period end:Fixed rate
    
    
    5.51
    %
    
    
    5.58
    %Variable rate
    
    
    5.89
    %
    
    
    5.97
    %Total
    
    
    5.57
    %
    
    
    5.63
    %
   83




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##### Table of Contents



Equity
    Shelf Registration Statement
  Short- and Long-Term Liquidity
  84




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##### Table of Contents



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)
    
    $
    606,516
    
    
    $
    23,896
    
    
    $
    163,337
    
    
    $
    251,734
    
    
    $
    167,549Revolving credit facility
    
    
    442,664
    
    
    
    
    
    
    
    13,664
    
    
    
    429,000
    
    
    
    Unsecured debt (a)
    
    
    2,211,610
    
    
    
    
    
    
    
    388,000
    
    
    
    645,000
    
    
    
    1,178,610Ground leases (b)
    
    
    302,325
    
    
    
    1,736
    
    
    
    4,187
    
    
    
    4,652
    
    
    
    291,750Other liabilities
    
    
    1,796
    
    
    
    
    
    
    
    1,108
    
    
    
    
    
    
    
    688$
    3,564,911
    
    
    $
    25,632
    
    
    $
    570,296
    
    
    $
    1,330,386
    
    
    $
    1,638,597
 
 (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.    85




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##### Table of Contents



Interest Rate Risk and Sensitivity Analysis
     
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
   
 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 to ensure that information required to be disclosed by the Company in the reports
that it files under the Securities Exchange Act of 1934 is recorded, processed, summarized
and reported within the time periods
 86




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##### Table of Contents



specified in the rules and forms of the Securities and Exchange Commission and accumulated
and communicated to management, including the principal executive and principal financial
officers, as appropriate, to allow timely decisions regarding disclosure.
 (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
  Total
    
    
    
    
    
    
    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)2007:July
    
    
    214,600
    
    
    $
    27.50
    
    
    
    
    
    
    
    539,200August
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    539,200September
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    539,200Total
    
    
    214,600
    
    
    
    
    
    
    
    
 
 (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).  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  87




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##### Table of Contents



Item 6. Exhibits
 (a) Exhibits
 10.1
    
    Term Loan Agreement (incorporated by reference to Brandywines Current Report on
Form 8-K filed on October 16, 2007)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
 88




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##### Table of Contents



SIGNATURES OF REGISTRANT
  
 Date: November 9, 2007
    
    By: /s/ Gerard H. Sweeney

Gerard H. Sweeney, President and Chief Executive Officer(Principal Executive Officer)Date: November 9, 2007
    
    By: /s/ Howard M. Sipzner

Howard M. Sipzner, Executive Vice President and Chief Financial Officer(Principal Financial Officer)Date: November 9, 2007
    
    By: /s/ Darryl M. Dunn

Darryl M. Dunn, Vice President, Chief Accounting Officer & Treasurer(Principal Accounting Officer)
 89




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##### Table of Contents



SIGNATURES OF REGISTRANT
    Date: November 9, 2007
    
    By: /s/ Gerard H. Sweeney

Gerard H. Sweeney, President and Chief Executive Officer(Principal Executive Officer)Date: November 9, 2007
    
    By: /s/ Howard M. Sipzner

Howard M. Sipzner, Executive Vice President and Chief Financial Officer(Principal Financial Officer)Date: November 9, 2007
    
    By: /s/ Darryl M. Dunn

Darryl M. Dunn, Vice President, Chief Accounting Officer & Treasurer(Principal Accounting Officer)
 90