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|--|
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|                                   |
|----------------------------------------|
|                                   |
| **UNITED STATES**                      |
| **SECURITIES AND EXCHANGE COMMISSION** |
| **WASHINGTON, D.C. 20549**             |
|                                   |
|                                        |
|                                   |
| **FORM 10-Q**                          |
| **(Mark One)**                         |   | ** ** |
|                                   | ** ** |   | ** ** |
|                                   | **** |   | **Quarterly       Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act       of 1934** |
|                                   | ** ** |   | ** ** |
|                                   | ** ** |   | **For the quarterly period ended September 30, 2004** |
|                                   |   |   |   |
|                                   | ** ** |   | **or** |
|                                   |   |   |   |
|                                   | **** |   | **Transition       Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act       of 1934** |
|                                   | ** ** |   |   |
|                                   | ** ** |   | ** ** |
|                                   | ** ** |   | **For the transition period from ____________ to  ____________** |
|                                   |   |   |   |
|                                        |
|                                   |   |   |   |
|  Commission file number 000-24407 |
|                                   |

| **BRANDYWINE OPERATING PARTNERSHIP, L.P.**                                                                                                       |
|--------------------------------------------------------------------------------------------------------------------------------------------------|
|                (Exact name of registrant as specified in its charter) |
|                                                                                                                                             |   |
| **Delaware**                                                                                                                                     | **23-2862640** |
| State or other jurisdiction of                                                                                                                   | (I.R.S. Employer Identification No.) |
|    incorporation or organization                                                                                                  |   |
|                                                                                                                                             |   |
| **401 Plymouth Road, Plymouth Meeting, Pennsylvania**                                                                                            | **19462** |
| (Address of principal executive offices)                                                                                                         | (Zip Code) |
|                                                                                                                                             |   |
| **(610) 325-5600**                                                                                                                               |
| Registrant’s telephone number                                                                                                               |

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (orfor such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] 

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes [ ] No [X] 

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|  |
|  |

 

|    | **BRANDYWINE OPERATING PARTNERSHIP, L.P.**                                                                                                             |   |   |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|
|    | **TABLE OF CONTENTS**                                                                                                                                  |   |   |
|    |                                                                                                                                                   |   |   |
|         | PART I - FINANCIAL INFORMATION                                                                                                                         |        |        |
|    |                                                                                                                                                   |   |   |
|    |                                                                                                                                                   | Page   |   |
| Item 1. | Financial Statements (unaudited)                                                                                                                       |        |        |
|    |                                                                                                                                                   |   |   |
|    | Condensed    Consolidated Balance Sheets as of September 30, 2004 and December 31, 2003                                                                | 3      |   |
|    |                                                                                                                                                   |   |   |
|    | Condensed       Consolidated Statements of Operations for the three- and nine-month periods       ended September 30, 2004      and September 30, 2003 | 4      |   |
|    |                                                                                                                                                   |   |   |
|    | Condensed       Consolidated Statements of Cash Flows for the nine-month periods ended       September 30, 2004       and September 30, 2003           | 5      |   |
|    |                                                                                                                                                   |   |   |
|    | Notes to Condensed Consolidated Financial Statements                                                                                                   | 6      |   |
|    |                                                                                                                                                   |   |   |
| Item 2. | Management’s    Discussion and Analysis of Financial Condition and Results of Operations                                                          | 29     |   |
|    |                                                                                                                                                   |   |   |
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk                                                                                             | 38     |   |
|    |                                                                                                                                                   |   |   |
| Item 4. | Controls and Procedures                                                                                                                                | 39     |   |
|    |                                                                                                                                                   |   |   |
|    |                                                                                                                                                   |   |   |
|         | PART II - OTHER INFORMATION                                                                                                                            |        |        |
|    |                                                                                                                                                   |   |   |
| Item 1. | Legal Proceedings                                                                                                                                      | 39     |   |
|    |                                                                                                                                                   |   |   |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                            | 39     |   |
|    |                                                                                                                                                   |   |   |
| Item 3. | Defaults Upon Senior Securities                                                                                                                        | 40     |   |
|    |                                                                                                                                                   |   |   |
| Item 4. | Submission of Matters to a Vote of Security Holders                                                                                                    | 40     |   |
|    |                                                                                                                                                   |   |   |
| Item 5. | Other Information                                                                                                                                      | 40     |   |
|    |                                                                                                                                                   |   |   |
| Item 6. | Exhibits                                                                                                                                               | 40     |   |
|    |                                                                                                                                                   |   |   |
|    | Signatures                                                                                                                                             | 41     |   |

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**PART I - FINANCIAL INFORMATION Item 1. - Financial Statements**

**BRANDYWINE OPERATING PARTNERSHIP, L.P. CONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited and in thousands, except Unit information)**

|                                                                              | **September 30,** |      | **December 31,** |   |
|-----------------------------------------------------------------------------------|-------------------|-----------|------------------|--------|
|                                                                              | **2004**          |      | **2003**         |   |
|                                                                              |                   |      |                  |   |
| **ASSETS**                                                                        |              |      |             |   |
| Real estate investments:                                                          |              |      |             |   |   |   |
|    Operating properties                                            | $                 | 2,503,890 |             | $      | 1,869,744 |   |
|    Accumulated depreciation                                        |              | (311,109  | )                |   | (268,091 | ) |
|                                                                              |                   |           |             |        |  |   |
|                                                                              |              | 2,192,781 |             |   | 1,601,653 |   |
|    Construction-in-progress                                        |              | 89,092    |             |   | 29,787 |   |
|    Land held for development                                       |              | 59,413    |             |   | 63,915 |   |
|                                                                              |                   |           |             |        |  |   |
|                                                                              |              | 2,341,286 |             |   | 1,695,355 |   |
| Cash and cash equivalents                                                         |              | 9,863     |             |   | 8,552 |   |
| Escrowed cash                                                                     |              | 17,301    |             |   | 14,388 |   |
| Accounts receivable, net                                                          |              | 13,138    |             |   | 5,206 |   |
| Accrued rent receivable, net                                                      |              | 30,511    |             |   | 26,652 |   |
| Marketable securities                                                             |              | 462       |             |   | 12,052 |   |
| Assets held for sale                                                              |              | 3,565     |             |   | 5,317 |   |
| Investment in unconsolidated Real Estate Ventures                                 |              | 13,459    |             |   | 15,853 |   |
| Deferred costs, net                                                               |              | 32,259    |             |   | 26,071 |   |
| Other assets                                                                      |              | 126,043   |             |   | 46,330 |   |
|                                                                              |                   |           |             |        |  |   |
|    Total assets                                                    | $                 | 2,587,887 |             | $      | 1,855,776 |   |
|                                                                              |                   |           |             |        |  |   |
| **LIABILITIES AND PARTNERS’ EQUITY**                                         |              |      |             |   |   |   |
| Mortgage notes payable                                                            | $                 | 522,717   |             | $      | 462,659 |   |
| Borrowings under Credit Facility                                                  |              | 322,000   |             |   | 305,000 |   |
| Unsecured term loan                                                               |              | 433,000   |             |   | 100,000 |   |
| Accounts payable and accrued expenses                                             |              | 28,421    |             |   | 30,290 |   |
| Distributions payable                                                             |              | 27,179    |             |   | 20,947 |   |
| Tenant security deposits and deferred rents                                       |              | 17,628    |             |   | 16,123 |   |
| Other liabilities                                                                 |              | 34,483    |             |   | 16,413 |   |
| Liabilities related to assets held for sale                                       |              | —    |             |   | 52 |   |
|                                                                              |                   |           |             |        |  |   |
|    Total liabilities                                               |              | 1,385,428 |             |   | 951,484 |   |
| Commitments and contingencies                                                     |              |      |             |   |   |   |
| 7.25% Series B Preferred Units, 1,950,000 issued and                              |              | —    |             |   | 97,500 |   |
|    outstanding in 2003                                             |              |      |             |   |   |   |
| Redeemable limited partnership units at redemption value;                         |              |      |             |   |   |   |
|    2,061,459 issued and outstanding                                |              | 58,710    |             |   | 46,505 |   |
| Partners’ Equity                                                             |              |      |             |   |   |   |
|    7.25% Series A Preferred Mirror Units; 750,000 issued           |              |      |             |   |   |   |
|       and outstanding                               |              | 37,500    |             |   | 37,500 |   |
|    7.50% Series D Preferred Mirror Units; 2,000,000                |              |      |             |   |   |   |
|       issued    and outstanding                     |              | 47,912    |             |   | 47,912 |   |
|    7.375% Series E Preferred Mirror Units; 2,300,000               |              |      |             |   |   |   |
|       issued    and outstanding in 2004             |              | 55,538    |             |   | — |   |
|    General Partnership Capital, 53,559,258 and                     |              |      |             |   |   |   |
|       41,040,710 units issued and outstanding       |              | 1,002,741 |             |   | 677,033 |   |
|    Accumulated other comprehensive income (loss)                   |              | 58        |             |   | (2,158 | ) |
|                                                                              |                   |           |             |        |  |   |
|          Total partners’ equity |              | 1,143,749 |             |   | 760,287 |   |
|                                                                              |                   |           |             |        |  |   |
|    Total liabilities and partners’ equity                     | $                 | 2,587,887 |             | $      | 1,855,776 |   |
|                                                                              |                   |           |             |        |  |   |

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

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     **BRANDYWINE OPERATING PARTNERSHIP, L.P.   CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(unaudited and in thousands, except per share information)**

|                                                                        | **Three-Month Periods** |   | **Nine-Month Periods**  |   |
|-----------------------------------------------------------------------------|-------------------------|--------|-------------------------|--------|
|                                                                        | **Ended September 30,** |   | **Ended September 30,** |   |
|                                                                        |                         |   |                         |   |
|                                                                        | **2004**                |   | **2003**                |   | **2004** |   | **2003** |   |
|                                                                        |                         |   |                         |   |  |   |  |   |
| **Revenue:**                                                                |                    |   |                    |   |   |   |   |   |
|    Rents                                                     | $                       | 66,637 |                    | $      | 64,354 |   | $ | 194,703 |   | $ | 192,570 |   |
|    Tenant reimbursements                                     |                    | 9,689  |                    |   | 9,045 |   |   | 25,838 |   |   | 26,101 |   |
|    Other                                                     |                    | 3,318  |                    |   | 3,604 |   |   | 9,736 |   |   | 7,678 |   |
|                                                                        |                         |        |                    |        |  |   |  |  |   |  |  |   |
|       Total revenue                           |                    | 79,644 |                    |   | 77,003 |   |   | 230,277 |   |   | 226,349 |   |
| **Expenses:**                                                               |                    |   |                    |   |   |   |   |   |   |   |   |   |
|    Property operating expenses                               |                    | 21,972 |                    |   | 19,183 |   |   | 64,338 |   |   | 59,559 |   |
|    Real estate taxes                                         |                    | 7,686  |                    |   | 7,301 |   |   | 21,471 |   |   | 20,593 |   |
|    Interest                                                  |                    | 11,474 |                    |   | 13,746 |   |   | 35,526 |   |   | 44,293 |   |
|    Depreciation and amortization                             |                    | 18,293 |                    |   | 15,196 |   |   | 50,936 |   |   | 44,798 |   |
|    Administrative expenses                                   |                    | 3,534  |                    |   | 3,630 |   |   | 10,977 |   |   | 10,953 |   |
|                                                                        |                         |        |                    |        |  |   |  |  |   |  |  |   |
|       Total operating expenses                |                    | 62,959 |                    |   | 59,056 |   |   | 183,248 |   |   | 180,196 |   |
| Income from continuing operations before equity in income of                |                    |   |                    |   |   |   |   |   |   |   |   |   |
|    unconsolidated Real Estate Ventures, net gain on sales of |                    |   |                    |   |   |   |   |   |   |   |   |   |
|    interests in real estate and minority interest            |                    | 16,685 |                    |   | 17,947 |   |   | 47,029 |   |   | 46,153 |   |
| Equity in income of unconsolidated Real Estate Ventures                     |                    | 665    |                    |   | (531 | ) |   | 1,573 |   |   | 38 |   |
|                                                                        |                         |        |                    |        |  |   |  |  |   |  |  |   |
| Income from continuing operations before gain on sale of interests          |                    |   |                    |   |   |   |   |   |   |   |   |   |
|    in real estate and minority interest                      |                    | 17,350 |                    |   | 17,416 |   |   | 48,602 |   |   | 46,191 |   |
| Gain on sale of interests in real estate                                    |                    | 1,753  |                    |   | — |   |   | 2,901 |   |   | 1,152 |   |
| Minority interest                                                           |                    | 338    |                    |   | — |   |   | 308 |   |   | — |   |
|                                                                        |                         |        |                    |        |  |   |  |  |   |  |  |   |
| Income from continuing operations                                           |                    | 19,441 |                    |   | 17,416 |   |   | 51,811 |   |   | 47,343 |   |
| Discontinued operations:                                                    |                    |   |                    |   |   |   |   |   |   |   |   |   |
|    Income from discontinued operations                       |                    | (80    | )                       |   | 719 |   |   | (232 | ) |   | 1,988 |   |
|    Gains on disposition of discontinued operations           |                    | 2,486  |                    |   | 1,741 |   |   | 2,735 |   |   | 2,692 |   |
|                                                                        |                         |        |                    |        |  |   |  |  |   |  |  |   |
| Income from discontinued operations                                         |                    | 2,406  |                    |   | 2,460 |   |   | 2,503 |   |   | 4,680 |   |
|                                                                        |                         |        |                    |        |  |   |  |  |   |  |  |   |
| Net income                                                                  |                    | 21,847 |                    |   | 19,876 |   |   | 54,314 |   |   | 52,023 |   |
| Income allocated to Preferred Mirror Units                                  |                    | (2,677 | )                       |   | (2,976 | ) |   | (7,372 | ) |   | (8,928 | ) |
| Income allocated to Preferred Units                                         |                    | — |                    |   | (1,767 | ) |   | (832 | ) |   | (5,301 | ) |
| Preferred Unit redemption gain                                              |                    | — |                    |   | — |   |   | 4,500 |   |   | — |   |
|                                                                        |                         |        |                    |        |  |   |  |  |   |  |  |   |
| Income allocated to Common Partnership Unitholders                          | $                       | 19,170 |                    | $      | 15,133 |   | $ | 50,610 |   | $ | 37,794 |   |
|                                                                        |                         |        |                    |        |  |   |  |  |   |  |  |   |
| Basic earnings per Common Partnership Unit                                  |                    |   |                    |   |   |   |   |   |   |   |   |   |
|       Continuing operations                   | $                       | 0.34   |                    | $      | 0.32 |   | $ | 1.02 |   | $ | 0.85 |   |
|       Discontinued operations                 |                    | 0.05   |                    |   | 0.06 |   |   | 0.05 |   |   | 0.12 |   |
|                                                                        |                         |        |                    |        |  |   |  |  |   |  |  |   |
|    Total basic earnings per Common Partnership Unit          | $                       | 0.39   |                    | $      | 0.38 |   | $ | 1.07 |   | $ | 0.97 |   |
|                                                                        |                         |        |                    |        |  |   |  |  |   |  |  |   |
| Diluted earnings per Common Partnership Unit                                |                    |   |                    |   |   |   |   |   |   |   |   |   |
|       Continuing operations                   | $                       | 0.34   |                    | $      | 0.32 |   | $ | 1.01 |   | $ | 0.85 |   |
|       Discontinued operations                 |                    | 0.05   |                    |   | 0.06 |   |   | 0.05 |   |   | 0.12 |   |
|                                                                        |                         |        |                    |        |  |   |  |  |   |  |  |   |
|    Total diluted earnings per Common Partnership Unit        | $                       | 0.39   |                    | $      | 0.38 |   | $ | 1.06 |   | $ | 0.97 |   |
|                                                                        |                         |        |                    |        |  |   |  |  |   |  |  |   |

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

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**BRANDYWINE OPERATING PARTNERSHIPCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(unaudited and in thousands)**

|                                                                                                                                 | **Nine-Month Period Ended** |     |
|--------------------------------------------------------------------------------------------------------------------------------------|-----------------------------|----------|
|                                                                                                                                 | **September 30,**           |     |
|                                                                                                                                 |                             |     |
|                                                                                                                                 | **2004**                    |     | **2003** |   |
|                                                                                                                                 |                             |     |  |   |
| **Cash         flows from operating activities:**                                                                                    |                        |     |   |   |
|    Net         income                                                                                                 | $                           | 54,314   |   | $ | 52,023 |   |
|       Adjustments         to reconcile net income to net cash from                                     |                        |     |   |   |   |   |
|       operating activities:                                                                            |                        |     |   |   |   |   |
|          Depreciation                                                                   |                        | 43,504   |   |   | 40,489 |   |
|          Amortization:                                                                  |                        |     |   |   |   |   |
|             Deferred financing costs                                     |                        | 1,559    |   |   | 1,533 |   |
|             Deferred leasing costs                                       |                        | 7,614    |   |   | 5,224 |   |
|             Deferred         compensation costs                          |                        | 1,647    |   |   | 2,191 |   |
|          Straight-line rent                                                             |                        | (3,880   | ) |   | (4,429 | ) |
|          Provision for doubtful accounts                                                |                        | 467      |   |   | 300 |   |
|          Net         gain on sale of interests in real estate                           |                        | (5,636   | ) |   | (3,844 | ) |
|          Impairment         loss on real estate venture                                 |                        | —   |   |   | 861 |   |
|          Minority         interest                                                      |                        | (308     | ) |   | — |   |
|          Changes in assets and liabilities:                                             |                        |     |   |   |   |   |
|             Accounts receivable                                          |                        | (2,417   | ) |   | 1,156 |   |
|             Other assets                                                 |                        | 6,608    |   |   | (3,674 | ) |
|             Accounts payable and accrued expenses                        |                        | (4,383   | ) |   | (3,189 | ) |
|             Tenant         security deposits and deferred rents          |                        | 713      |   |   | (2,021 | ) |
|             Other liabilities                                            |                        | 908      |   |   | (1,276 | ) |
|                                                                                                                                 |                             |          |   |  |  |   |
|                Net         cash from operating activities |                        | 100,710  |   |   | 85,344 |   |
| **Cash         flows from investing activities:**                                                                                    |                        |     |   |   |   |   |
|                                                                                                                                 |                        |     |   |   |   |   |
|    Acquisition of properties                                                                                          |                        | (569,454 | ) |   | — |   |
|    Proceeds from sales of properties                                                                                  |                        | 20,710   |   |   | 6,819 |   |
|    Capital expenditures                                                                                               |                        | (79,191  | ) |   | (33,500 | ) |
|    Investment         in unconsolidated Real Estate Ventures                                                          |                        | (241     | ) |   | (511 | ) |
|    Escrowed cash                                                                                                      |                        | (641     | ) |   | 2,969 |   |
|    Cash         distributions from unconsolidated Real Estate Ventures                                                |                        |     |   |   |   |   |
|       in excess of equity in income                                                                    |                        | 255      |   |   | 1,338 |   |
|    Increase in cash due to consolidation of variable interest entities                                                |                        | 426      |   |   | — |   |
|    Leasing costs                                                                                                      |                        | (6,580   | ) |   | (5,858 | ) |
|                                                                                                                                 |                             |          |   |  |  |   |
|                Net         cash from investing activities |                        | (634,716 | ) |   | (28,743 | ) |
| **Cash         flows from financing activities:**                                                                                    |                        |     |   |   |   |   |
|    Proceeds from (repayments of) Credit Facility borrowings                                                           |                        | 17,000   |   |   | 20,000 |   |
|    Proceeds from term loan borrowings                                                                                 |                        | 433,000  |   |   | — |   |
|    Repayments of term loan borrowings                                                                                 |                        | (100,000 | ) |   | — |   |
|    Repayments         of mortgage notes payable                                                                       |                        | (45,824  | ) |   | (80,174 | ) |
|    Debt         financing costs                                                                                       |                        | (3,788   | ) |   | (112 | ) |
|    Repayments         on employee share loans                                                                         |                        | 1,012    |   |   | 1,857 |   |
|    Exercise of share options                                                                                          |                        | 4,868    |   |   | — |   |
|    Proceeds         from common partnership unit issuance, net                                                        |                        | 392,337  |   |   | 47,042 |   |
|    Minority         partner contributions                                                                             |                        | 19       |   |   | — |   |
|    Repurchases         of preferred and common partnership units                                                      |                        | (95,436  | ) |   | — |   |
|    Distributions         paid to preferred and common partnership unitholders                                         |                        | (67,753  | ) |   | (64,522 | ) |
|    Distributions         to outside joint venture partners of consolidated                                            |                        |     |   |   |   |   |
|       variable interest entities                                                                       |                        | (118     | ) |   | — |   |
|                                                                                                                                 |                             |          |   |  |  |   |
|                Net         cash from financing activities |                        | 535,317  |   |   | (75,909 | ) |
|                                                                                                                                 |                        |          |   |   |  |   |
| Increase (decrease) in cash and cash equivalents                                                                                     |                        | 1,311    |   |   | (19,308 | ) |
| Cash and cash equivalents at beginning of period                                                                                     |                        | 8,552    |   |   | 26,801 |   |
|                                                                                                                                 |                             |          |   |  |  |   |
| Cash and cash equivalents at end of period                                                                                           | $                           | 9,863    |   | $ | 7,493 |   |
|                                                                                                                                 |                             |          |   |  |  |   |
| Supplemental       Cash Flow Information:                                                                                            |                        |     |   |   |   |   |
|    Cash paid for interest, net of interest capitalized                                                                | $                           | 27,911   |   | $ | 40,341 |   |
|    Debt         assumed in asset acquisitions                                                                         |                        | 79,330   |   |   | — |   |
|    Class A Units issued in asset acquisitions                                                                         |                        | 10,000   |   |   | — |   |

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

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**BRANDYWINE OPERATING PARTNERSHIP, L.P.******

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**SEPTEMBER 30, 2004**

1. THE PARTNERSHIP

Brandywine Operating Partnership, L.P. (the “Partnership”) is the entity through which Brandywine Realty Trust, a Maryland real estate investment trust (the“Company”), a self-administered and self-managed real estate investment trust, conducts its business and owns its assets. The Partnership’s activities include acquiring, developing, redeveloping, leasing and managing office andindustrial properties. The Company’s common shares of beneficial interest are publicly traded on the New York Stock Exchange under the ticker symbol “BDN”. 

The Company’s ownership interests in the Partnership consist of both general partner and limited partner units (“Units” or “Common Partnership Units”). ThePartnership issued these Units to the Company in exchange for contributions to the Partnership of the net proceeds from Brandywine Realty Trust’s issuance of its shares of beneficial interest or in connection with awards of shares of beneficialinterest by Brandywine Realty Trust to employees and trustees. The number of Units owned by Brandywine Realty Trust, and the entitlements of these Units to receive distributions and payments in liquidation, mirror the outstanding shares ofbeneficial interest of Brandywine Realty Trust. As of September 30, 2004, Brandywine Realty Trust owned 96.3% of the Partnership’s outstanding Units, excluding any preferred mirror Units. The remaining 3.7% of these Units is owned by limitedpartners. The Partnership issued these Units to persons that contributed assets to the Partnership. The Partnership is obligated to redeem each of these units, at the request of the holder, for cash or one common share of the Company, at the optionof the Company. Pursuant to its Partnership Agreement, the Partnership reimburses Brandywine Realty Trust for all expenses incurred in its operations. The Partnership owns a 95% interest in Brandywine Realty Services Corporation (the“Management Partnership”), a taxable REIT subsidiary, which performs management and leasing services for 35 properties owned by third-parties. As of September 30, 2004, the Partnership also held ownership interests in nine unconsolidatedreal estate ventures with third parties to develop commercial properties. 

As of September 30, 2004, the Partnership owned 222 office properties (excluding two office properties that are held by two consolidated real estate ventures), 24 industrialfacilities and one mixed-use property (collectively, the “Properties”) that contained an aggregate of approximately 19.3 million net rentable square feet. The Properties are located in the office and industrial markets in and surroundingPhiladelphia, Pennsylvania, New Jersey and Richmond, Virginia.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of PresentationThe condensedconsolidated financial statements have been prepared by the Partnership withoutaudit except as to the balance sheet as of December 31, 2003, which has beenprepared from audited data, pursuant to the rules and regulations of the Securitiesand Exchange Commission. Certain information and footnote disclosures normallyincluded in the financial statements prepared in accordance with accounting principlesgenerally accepted in the United States of America have been condensed or omittedpursuant to such rules and regulations, although the Partnership believes thatthe included disclosures are adequate to make the information presented not misleading.In the opinion of management, all adjustments (consisting solely of normal recurringmatters) necessary to fairly present the financial position of the Partnershipas of September 30, 2004, the results of its operations for the three-and nine-monthperiods ended September 30, 2004 and 2003, and its cash flows for the nine-monthperiods ended September 30, 2004 and 2003 have been included. The results ofoperations for such interim periods are not necessarily indicative of the resultsfor afull year. For further information, refer to the Partnership’s consolidated financial statements and footnotes in the Partnership’sregistration statement on Form 10/A-1. Certain prior period amounts have beenreclassified to conform withthe current period presentation. 

Principles of ConsolidationThe accompanying consolidated financial statements include all accounts of the Partnership and its majority-owned and/or controlled subsidiaries. All significant intercompany accountsand transactions have been eliminated*.*

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**BRANDYWINE OPERATING PARTNERSHIP, L.P.******

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS******

**SEPTEMBER 30, 2004**

Use of EstimatesThe preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates andassumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actualresults could differ from those estimates. Management makes significant estimates regarding revenue, impairment of long-lived assets, allowance for doubtful accounts and deferred costs. 

Operating PropertiesOperating propertiesare carried at historical cost less accumulated depreciation and impairment losses.The cost of operating properties reflects their purchase price or developmentcost. Costs incurred for the acquisition and renovation of an operating property,including tenant improvements and major replacements, are capitalized to thePartnership’s investment in that property. Ordinary repairs and maintenanceareexpensed as incurred. Fully-depreciated assets are removed from the accounts.

Depreciation and AmortizationThe costs of buildings and improvements are depreciated using the straight-line method based on the following useful lives: buildings and improvements (five to 40 years) and tenantimprovements (the shorter of the lease term or the life of the asset).

Construction in ProgressProject costsdirectly associated with the development and construction of a real estate projectare capitalized as construction in progress. In addition, interest, real estatetaxes and general and administrative expenses that are directly associated withthe Partnership’s development activities are capitalized until completionof the building shell. Once the building shell of a real estate project is completed,the costs capitalized to construction in progress are transferred to land andbuildings. The Partnership capitalized direct internal construction costs totaling$0.8 million and $2.3 million for the three- and nine-month periods ended September30, 2004, and$0.5 million and $1.4 million for the three-and nine-month periods ended September30, 2003. The Partnership capitalized interest totaling $0.8 million and $1.8million for the three-and nine-month periods ended September 30, 2004 and $0.6million and $1.2 million for the three-and nine-month periods ended September30, 2003 related to development of certain Properties and land holdings. 

Assets Held for Sale and Impairment of Long-Lived AssetsIn accordancewith Statement of Financial Accounting Standards No. 144 (“SFAS 144”), *Accounting for the Impairment or Disposal of Long-Lived Assets*, long-lived assets, such as real estate investments and purchased intangibles subject toamortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carryingamount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carryingamount of the asset exceeds the fair value of the asset. Assets to be disposed of are separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. Theother assets and liabilities related to assets classified as held-for-sale are presented separately in the consolidated balance sheet. 

No significant impairment losses were recorded for the three-and nine-month periods ended September 30, 2004 and 2003. 

Cash and Cash EquivalentsCash and cash equivalents are highly-liquid investments with original maturities of three months or less. The Partnership maintains cash equivalents in financial institutions in excess of insured limits, but believes that maintaining accounts in or through major financial institutionsmitigates this risk. 

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**BRANDYWINE OPERATING PARTNERSHIP, L.P.******

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS******

**SEPTEMBER 30, 2004**

Investmentin Unconsolidated Real Estate VenturesThePartnership currently accounts for its investment in unconsolidated Real EstateVentures (the “Real Estate Ventures”) under the equity method of accountingas certain Real Estate Ventures are either not variable interest entities orthe Partnership is not considered the primary beneficiary of a variable interestentity. These investments are recorded initially at cost, as Investment in RealEstate Ventures, and  subsequently adjusted for equity in earnings and cash contributions and distributions. 

On a periodic basis, management assesses whether there are any indicators that the value of the Partnership’s investments in Real Estate Ventures may be impaired. An investmentis impaired only if the value of the investment, as estimated by management, is less than the carrying value of the investment. To the extent impairment has occurred, the loss is measured as the excess of the carrying amount of the investment overits fair value. 

Deferred CostsCosts incurred in connection with property leasing are capitalized as deferred leasing costs. Deferred leasing costs consist primarily of leasing commissions that are amortized on thestraight-line method over the term of the respective lease. Lease terms generally range from one to 15 years. Management evaluates the deferred leasing costs for potential impairment as economic and market conditions change. In the event a tenantterminates its lease, the unamortized leasing cost is charged to expense. Internal direct leasing costs deferred totaled $0.8 million and $3.0 million for the three-and nine-month periods ended September 30, 2004, and $1.0 million and $2.9 millionfor the three-and nine-month periods ended September 30, 2003. 

Costs incurred in obtaining long-term debt financing are amortized and charged to interest expense over the terms of the related debt agreements. This approach approximates theeffective interest rate method. 

Purchase Price AllocationThe Partnershipallocates the purchase price of properties to net tangible and identified intangibleassets acquired based on fair values. Above-market and below-market in-placelease values for acquired properties are recorded based on the present value(using an interest rate which reflects the risks associated with the leases acquired)of the difference between (i) the contractual amounts to be paid pursuant tothe in-placeleases and (ii) the Partnership’s estimate of the fair market lease ratesfor the corresponding in-place leases, measured over a period equal to the remainingnon-cancelable term of the lease. Capitalized above-market lease values are amortizedas a reduction of rental income over the remaining non-cancelable terms of therespective leases. Capitalized below-market lease values are amortized as anincrease of rental income over the remaining non-cancelable terms of the respectiveleases,including any fixed-rate renewal periods. 

The aggregate value of other intangibles acquired is measured based on the difference between (i) the property valued with in-place leases adjusted to market rental rates and (ii) theproperty valued as if it was vacant. The Partnership estimates the cost to execute leases (including leasing commissions, legal and other related expenses) with terms similar to the remaining lease terms of the in-place leases. This intangible assetis amortized to expense over the remaining term of the respective leases. Partnership estimates of value are made using methods similar to those used by independent appraisers. Factors considered by the Partnership in their analysis include anestimate of the carrying costs during the expected lease-up periods considering current market conditions and costs to execute similar leases. The Partnership also considers information obtained about each property as a result of its pre-acquisitiondue diligence, marketing and leasing activities in estimating the fair value of the tangible and intangible assets acquired. In estimating carrying costs, the Partnership includes real estate taxes, insurance and other operating expenses andestimates of lost rentals at market rates during the expected lease-up periods, which primarily range from three to 36 months. 

The total amount of these other intangible assets is further allocated to tenant relationships and in-place leases based on the Partnership’s evaluation of the specificcharacteristics of each tenant’s lease and the Partnership’s overall relationship with the respective tenant. Characteristics considered by the Partnership in allocating value to its tenant relationships include the nature and extent ofthe Partnership’s business relationship with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit quality and expectations of lease renewals, among other factors. The value of tenant relationshipintangibles is amortized over the remaining initial lease term and renewals, but in no event longer than the remaining depreciable life of the building. The value of in-place leases is amortized over the remaining non-cancelable term of the respective leases andany fixed-rate renewal periods.

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**BRANDYWINE OPERATING PARTNERSHIP, L.P.******

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS******

**SEPTEMBER 30, 2004**

In the event that a tenant terminates its lease, the unamortized portion of each intangible associated with the lease, including market rate adjustments, in-place lease values andtenant relationship values, would be charged to expense.

Revenue RecognitionRentalrevenue is recognized on the straight-line basis regardless of when paymentsare due. The cumulative difference between lease revenue recognized under thestraight-line methodand contractual lease payment terms is recorded as “accrued rent receivable” on the accompanying balance sheets. The straight-line rent adjustment increased revenue by approximately $1.0 million and $3.9 million for the three-andnine-month periods ended September 30, 2004 and by approximately $1.5 million and $4.4 million for the three-and nine-month periods ended September 30, 2003. Tenant receivables and accrued rent receivables are carried net of the allowances fordoubtful accounts of $4.1 million as of September 30, 2004 and $4.0 million as of December 31, 2003. The allowance is based on management’sevaluation of the collectability of receivables, taking into account tenant specificconsiderations as well as the overall credit of the tenant portfolio. The leasesalso typically provide for tenant reimbursement of common area maintenance andother operating expenses. Tenant reimbursement revenue is recorded when earned,as the underlying expenseof the Properties is incurred. Deferred rental revenue represents rental revenuereceived from tenants prior to their due dates. 

Stock-Based Compensation PlansThe Partnership Agreement provides for the issuance by the Partnership to its general partner, the Company, of a number of Common Partnership Units equal to the number of CommonShares issued by the Company, the net proceeds of which are contributed to the Partnership. When the Company issues Common Shares under its equity-based compensation plan, the Partnership issues to the Company an equal number of Common PartnershipUnits.

In December 2002, the Financial Accounting Standards Board issued SFAS 148 (“SFAS 148”), *Accounting for Stock-Based Compensation - Transition and Disclosure*. SFAS 148 amends SFAS 123 (“SFAS 123”), *Accounting for Stock-Based Compensation*, to provide alternative methods of transition for an entity thatvoluntarily adopts the fair value recognition method of recording stock option expense. SFAS 148 also amends the disclosure provisions of SFAS 123 and APB Opinion No. 28, *Interim Financial Reporting*, to require disclosure in the summary of significant accounting policies of the effects of an entity’s accounting policywith respect to stock options on reported net income and earnings per common partnership unit in annual and interim financial statements. The Partnership adopted SFAS 148 on a prospective basis for all equity-based compensation grants issued by theCompany subsequent to January 1, 2002. 

Prior to 2002, the Partnership accounted for equity based awards issued by the Company under the recognition and measurement provisions of APB Opinion No. 25, *Accounting for Stock Issued to Employees and Related Interpretations*. The following table illustrates the effecton net income and earnings per Common Partnership Unit if the fair value based method had been applied to all outstanding and unvested awards in each period (in thousands, except per unit amounts): 

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**BRANDYWINE OPERATING PARTNERSHIP, L.P.******

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**SEPTEMBER 30, 2004**

|                                                                  |   | **Three-month periods** |   |   | **Nine-month periods**  |   |
|-----------------------------------------------------------------------|--------|-------------------------|--------|--------|-------------------------|--------|
|                                                                  |   | **ended September 30,** |   |   | **ended September 30,** |   |
|                                                                  |        |                         |   |        |                         |   |
|                                                                  |   | **2004**                |   |   | **2003**                |   |   | **2004** |   |   | **2003** |   |
|                                                                  |        |                         |   |        |                         |   |  |  |   |  |  |   |
| Net income available to Common Partnership Unitholders, as reported   | $      | 19,170                  |   | $      | 15,133                  |   | $ | 50,610 |   | $ | 37,794 |   |
| Add: Stock based compensation expense included in reported net income |   | 520                     |   |   | 692                     |   |   | 1,647 |   |   | 2,064 |   |
| Deduct: Total stock based compensation expense determined under       |   |                    |   |   |                    |   |   |   |   |   |   |   |
|    fair value recognition method for all awards        |   | (659                    | )      |   | (805                    | )      |   | (2,064 | ) |   | (2,401 | ) |
|                                                                  |        |                         |   |        |                         |   |  |  |   |  |  |   |
| Pro forma net income available to Common Partnership Unitholders      | $      | 19,031                  |   | $      | 15,020                  |   | $ | 50,193 |   | $ | 37,457 |   |
|                                                                  |        |                         |   |        |                         |   |  |  |   |  |  |   |
| Earnings per Common Partnership Unit                                  |   |                    |   |   |                    |   |   |   |   |   |   |   |
|    Basic - as reported                                 | $      | 0.39                    |   | $      | 0.38                    |   | $ | 1.07 |   | $ | 0.97 |   |
|                                                                  |        |                         |   |        |                         |   |  |  |   |  |  |   |
|    Basic - pro forma                                   | $      | 0.39                    |   | $      | 0.37                    |   | $ | 1.06 |   | $ | 0.96 |   |
|                                                                  |        |                         |   |        |                         |   |  |  |   |  |  |   |
|    Diluted - as reported                               | $      | 0.39                    |   | $      | 0.38                    |   | $ | 1.06 |   | $ | 0.97 |   |
|                                                                  |        |                         |   |        |                         |   |  |  |   |  |  |   |
|    Diluted - pro forma                                 | $      | 0.39                    |   | $      | 0.37                    |   | $ | 1.06 |   | $ | 0.96 |   |
|                                                                  |        |                         |   |        |                         |   |  |  |   |  |  |   |

Accounting for Derivative Instruments and Hedging ActivitiesThePartnership accounts for its derivative instruments and hedging activities underSFAS No. 133 (“SFAS 133”), *Accountingfor Derivative Instruments and Hedging Activities*,and its corresponding amendmentsunder SFAS No. 138, *Accountingfor Certain Derivative Instruments and Hedging Activities – An Amendmentof SFAS 133*. SFAS 133 requires thePartnership to measure every derivative instrument (including certain derivativeinstruments embedded in other contracts) at fair value and record them in thebalance sheet  as either an asset or liability. For derivatives designated asfair value hedges, the changes in fair value of both the derivative instrumentand the hedged item are recorded in earnings. For derivatives designated as cashflow hedges, the effectiveportions of changes in the fair value of the derivative are reported in othercomprehensive income. Changes in the ineffective portions of hedges are recognizedin earnings in the current period. For the nine-month period ended September30, 2004,  the Partnership was not party to any derivative contract designatedas a fair value hedge. 

The Partnership actively manages its ratio of fixed-to-floating rate debt. To manage its fixed and floating rate debt in a cost-effective manner, the Partnership, from time to time,enters into interest rate swap agreements as cash flow hedges, under which it agrees to exchange various combinations of fixed and/or variable interest rates based on agreed upon notional amounts.

Income TaxesNofederal or state income taxes are payable by the Partnership, and accordingly,no provision for taxes has been made in the accompanying condensed consolidatedfinancial statements. The partners are to include their respective share of thePartnership’s profits or losses in their individual tax returns. The Partnership’stax returns and the amount of allocable Partnership profits and losses are subjectto examination by federal and state taxing authorities. If such examination resultsin changes to Partnership profits or losses, then the tax liability of the partnerswould be changed accordingly. 

The Partnership owns a subsidiary REIT that has elected to be taxed as a real estate investment trust under Sections 856-860 of the Internal Revenue Code. In management’sopinion, the requirements to maintain this election are being met. The Partnership’s REIT subsidiary is subject to a 4% Federal excise tax if sufficient taxable income is not distributed within prescribed time limits. The excise tax equals 4%of the annual amount, if any, by which the sum of (a) 85% of the subsidiary’s ordinary income and (b) 95% of the subsidiary’s net capital gain exceeds cash distributions and certain taxes paid by the subsidiary. 

Recently Issued Accounting StandardsIn January 2003, FASB issued FASB Interpretation No. 46, *Consolidation of Variable InterestEntities* (“FIN 46”), an interpretation of Accounting Research Bulletin (ARB) 51. FIN 46 provides guidance on identifying entities for which control is achievedthrough means other than through voting rights, variable interest entities (“VIE’s”),and how to 

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**BRANDYWINE OPERATING PARTNERSHIP, L.P.**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**SEPTEMBER 30, 2004**

determine when and which business enterprises should consolidate the VIE. The consolidation provisions of FIN 46 were effective immediately for variable interests in VIE’screated after January 31, 2003. In December 2003, FASB revised Interpretation FIN No. 46, which adopted several Financial Statement Positions and provided transitional guidance for relationships with VIE’s that are special purpose entities(“SPEs”) versus non-SPE’s. The Partnership has no SPE’s. The Partnership implemented the revised guidance to previously existing non-SPE relationships as of March 31, 2004. In connection with the full adoption, the Partnershipconcluded that two previously unconsolidated real estate ventures (Four Tower Bridge Associates and Six Tower Bridge Associates) are VIE’s and that the Partnership is the primary beneficiary. As a consequence, effective March 31, 2004, theseinvestments have been consolidated in the Partnership’s balance sheet, with the interests of the outside joint venture partners reflected as a minority interest. The results of operations for these investments subsequent to March 31, 2004 havebeen included in the Partnership’s condensed consolidated statement of operations with the portion of net income for the investments attributable to outside venture partners is reflected as minority interest attributable to continuingoperations. There was no cumulative effect gain or loss upon adoption on March 31, 2004.

With respect to the Partnership’s remaining investments in unconsolidated Real Estate Ventures, the Partnership has concluded that these investments are not VIE’s or thatthe Partnership is not the primary beneficiary based on the terms of the arrangements. Accordingly, the Partnership will continue to reflect these arrangements using the equity method.

In March 2004, the Emerging Issues Task Force reached a final consensus regarding Issue 03-6, Participating Securities and the Two-Class Method under SFAS 128, (“EITF03-6”). The issue addresses a number of questions regarding the computation of earnings per share by companies that have issued securities other than common stock that participate in dividends and earnings of the issuing entity. Such securitiesare contractually entitled to receive dividends when and if the entity declares dividends on common stock. The issue also provides further guidance on applying the two-class method of calculating earnings per share once it is determined that asecurity is participating. The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rightsin undistributed earnings. This consensus is effective for periods ending after March 31, 2004 and should be applied by restating previously reported earnings per share. Upon adoption of EITF 03-6, the Partnership determined that its Series APreferred Mirror Units and Series C Preferred Mirror Units are participating securities; however, their classification as participating securities had no impact on the Partnership’s computation or presentation of basic or diluted earnings perCommon Partnership Unit. See note 11 for the Partnership’s computation and presentation of earnings per Common Partnership Unit. 

3. ACQUISITIONS AND DISPOSITIONS OF REAL ESTATE INVESTMENTSThe Partnership’s acquisitions were accounted for by the purchase method. The results of each acquired property are included in the results of operations from its respectivepurchase date. 

*2004***On September 21, 2004, the Partnership completed the acquisition of 100% of the partnership interests in The Rubenstein Company, L.P. (“TRC”). In the acquisition, thePartnership acquired 14 office properties (the “TRC Properties”) located in Pennsylvania and Delaware that contain approximately 3.5 million net rentable square feet. The results of TRC’s operations have been included in the condensedconsolidated financial statements since that date. 

The aggregatepurchase price was $624.8 million including $22.8 million of closing costs anddebt prepayment penalties that are included in the basis of the assets acquired.The purchase price was paid with $541.0 million of cash, $73.8 million of debtassumedandvaluedat$79.6millionand 343,006 Class A Units valued at $10.0 million. The value of the debt assumedwas based on prevailing market rates at the time of acquisition. The value ofthe Class A Units was based on theaverage trading price of the Company’s common shares. 

The following table summarizes the fair value of the assets acquired and liabilities assumed at the date of acquisition. The Partnership is in the process of obtaining third-partyvaluations of certain tangible and intangible assets; thus, the allocation of the purchase price is subject to refinement. 

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**BRANDYWINE OPERATING PARTNERSHIP, L.P.**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**SEPTEMBER 30, 2004**

|                                                                 | **At September 21, 2004** |    |
|----------------------------------------------------------------------|---------------------------|---------|
|                                                                 |                           |    |
| **Real    estate investments**                                       |                      |    |
|    Land                                               | $                         | 115,397 |   |
|    Building and improvements                          |                      | 461,589 |   |
|                                                                 |                           |         |   |
|    Total real estate investments acquired             |                      | 576,986 |   |
| **Rent receivables**                                                 |                      | 5,534   |   |
| **Other assets acquired:**                                           |                      |    |   |
|    Intangible assets:                                 |                      |    |   |
|       In-Place leases                  |                      | 35,311  |   |
|       Relationship values              |                      | 25,554  |   |
|       Above-market leases              |                      | 12,235  |   |
|                                                                 |                           |         |   |
|       Total intangible assets acquired |                      | 73,100  |   |
|    Other assets                                       |                      | 6,291   |   |
|                                                                 |                           |         |   |
|    Total Other assets                                 |                      | 79,391  |   |
|                                                                 |                           |         |   |
| **Total assets acquired**                                            |                      | 661,911 |   |
| **Liabilities assumed:**                                             |                      |    |   |
|    Mortgage notes payable                             |                      | 79,330  |   |
|    Security deposits and deferred rent                |                      | 781     |   |
|    Other liabilities:                                 |                      |    |   |
|       Below-market leases              |                      | 31,422  |   |
|       Other liabilities                |                      | 689     |   |
|                                                                 |                           |         |   |
|       Total other liabilities assumed  |                      | 32,111  |   |
|                                                                 |                           |         |   |
|    Total liabilities assumed                          |                      | 112,222 |   |
|                                                                 |                           |         |   |
| **Net assets acquired**                                              | $                         | 549,689 |   |
|                                                                 |                           |         |   |

The net assets acquired above do not include any amounts potentially due to the sellers as contingent consideration as part of the transaction. The Partnership has agreed to issue thesellers up to a maximum of $9.7 million of additional Class A Units if certain TRC Properties achieve at least 95% occupancy prior to September 21, 2007. Any contingent amounts ultimately payable would represent additional purchase price and wouldbe reflected within the basis of the assets acquired and liabilities assumed. 

At the closing of this transaction, the Partnership agreed not to sell the TRC Properties in a transaction that would trigger taxable income to the contributors (i.e., sellers) forperiods ranging from three to 15 years. In the event that the Partnership sells any of the properties in such a transaction within the applicable restricted period, the Partnership will be required to pay significant tax liabilities that would beincurred by the contributors. 

The Partnershipfinanced the TRC acquisition using the net proceeds from the Company’s September17, 2004 Common Share offering which the Company contributed to the Partnershipin exchange for GP Units,afterrepaymentofthePartnership’s$100 million unsecured term loan facility, and the net proceeds received fromtwounsecured term loans. See Notes 5 and 8 for further details. 

Pro forma information relating to the acquisition of TRC is presented below as if TRC was acquired and the related financing transactions occurred as of the first day of the periodspresented. These pro forma results are not necessarily indicative of the results, which actually would have occurred if the acquisitions had occurred on the first day of the periods presented, nor does the pro forma financial information purport torepresent the results of operations for future periods: 

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**BRANDYWINE OPERATING PARTNERSHIP, L.P.**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**SEPTEMBER 30, 2004**

|                                          |   | **Three-month periods** |   |   | **Nine-month periods**  |   |
|-----------------------------------------------|--------|-------------------------|--------|--------|-------------------------|--------|
|                                          |   | **ended September 30,** |   |   | **ended September 30,** |   |
|                                          |   |                         |   |   |                         |   |
|                                          |   | **2004**                |   |   | **2003**                |   |   | **2004** |   |   | **2003** |   |
|                                          |        |                         |   |        |                         |   |  |  |   |  |  |   |
| Pro forma revenue                             | $      | 98,901                  |   | $      | 96,260                  |   | $ | 288,048 |   | $ | 284,120 |   |
| Pro forma income from continuing operations   |   | 21,251                  |   |   | 19,226                  |   |   | 57,241 |   |   | 52,773 |   |
|                                          |   |                    |   |   |                    |   |   |   |   |   |   |   |
| Earnings per Common Partnership Unit          |   |                    |   |   |                    |   |   |   |   |   |   |   |
|    from continuing operations: |   |                    |   |   |                    |   |   |   |   |   |   |   |
|    Basic — as reported    | $      | 0.34                    |   | $      | 0.32                    |   | $ | 1.02 |   | $ | 0.85 |   |
|                                          |        |                         |   |        |                         |   |  |  |   |  |  |   |
|    Basic — as pro forma   | $      | 0.33                    |   | $      | 0.31                    |   | $ | 0.99 |   | $ | 0.84 |   |
|                                          |        |                         |   |        |                         |   |  |  |   |  |  |   |
|    Diluted - as reported       | $      | 0.34                    |   | $      | 0.32                    |   | $ | 1.01 |   | $ | 0.85 |   |
|                                          |        |                         |   |        |                         |   |  |  |   |  |  |   |
|    Diluted - as pro forma      | $      | 0.33                    |   | $      | 0.31                    |   | $ | 0.98 |   | $ | 0.83 |   |
|                                          |        |                         |   |        |                         |   |  |  |   |  |  |   |

In addition to the TRC acquisition discussed above, during the three month period ended September 30, 2004, the Partnership acquired one office property containing approximately170,000 rentable square feet and 59 acres of developable land in separate transactions for an aggregate purchase price of $22.9 million. Additionally, the Partnership purchased and sold a land parcel containing 93 acres in two separate transactionswith unrelated third parties. The purchase and sale resulted in a net gain of approximately $1.5 million***.***

During the three-month period ended September 30, 2004, the Partnership recognized a $2.5 million deferred gain from the sale of a property in 2002 that did not qualify for gainrecognition under the full-accrual method. During the third-quarter 2004, the buyer of the property repaid the seller provided financing and the criteria for full-accrual method were met. The deferred gain recognized was presented withindiscontinued operations consistent with the historical operating results from the property. 

During the nine-month period ended September 30, 2004, the Partnership sold two office properties containing 141,000 net rentable square feet, one industrial property containing45,000 net rentable square feet and three land parcels containing 29.3 acres for an aggregate of $25.9 million, realizing a net gain of $1.7 million. During the three-month period ended September 30, 2004, the Partnership sold two land parcelscontaining 24.0 acres for an aggregate price of $1.6 million, realizing a net gain of $0.2 million. 

*2003*****During the nine-month period ended September 30, 2003, the Partnership sold two office properties and two industrial properties containing 172,000 net rentable square feet and oneparcel of land containing 3.1 acres for an aggregate of $13.0 million, realizing a net gain of $3.8 million. During the three-month period ended September 30, 2003, the Partnership sold one office property and two industrial properties containing anaggregate of 141,000 net rentable square feet for $8.3 million, realizing a net gain of $1.7 million.

4. INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTURES

As of September 30, 2004, the Partnership had an aggregate investment of approximately $13.5 million in nine Real Estate Ventures (net of returns of investment). The Partnershipformed these ventures with unaffiliated third parties to develop office properties or to acquire land in anticipation of possible development of office properties. Seven of the Real Estate Ventures own eight office buildings that contain anaggregate of approximately 1.6 million net rentable square feet, one Real Estate Venture developed a hotel property that contains 137 rooms and one Real Estate Venture is developing an office property located in Charlottesville, Virginia. 

The Partnership also has investments in two real estate ventures that are considered variable interest entities under FIN No. 46 and of which the Partnership is the primarybeneficiary. The financial information for these two real estate ventures (Fourand Six Tower Bridge) were consolidated into the Partnership’s condensedconsolidated financial statements effective March 31, 2004. Prior to March 31,2004, the Partnership accounted for its investment in these two ventures underthe equity method.

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**BRANDYWINE OPERATING PARTNERSHIP, L.P.**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**SEPTEMBER 30, 2004**

The Partnership accounts for its non-controlling interests in its Real Estate Ventures using the equity method. Non-controlling ownership interests range from 6% to 50%, subject tospecified priority allocations in certain of the Real Estate Ventures. The Partnership’s investments, initially recorded at cost, are subsequently adjusted for the Partnership’s share of the Real Estate Ventures’ income or loss andcash contributions and distributions.

The following is a summary of the financial position of the Real Estate Ventures as of September 30, 2004 and December 31, 2003 (in thousands):

|                                                | **September 30,** |    |   | **December 31,** |    |
|-----------------------------------------------------|-------------------|---------|--------|------------------|---------|
|                                                | **2004**          |    |   | **2003**         |    |
|                                                |                   |    |   |                  |    |
| Operating property, net of accumulated depreciation | $                 | 292,848 |   | $                | 322,196 |   |
| Other assets                                        |              | 29,683  |   |             | 29,982  |   |
| Liabilities                                         |              | 29,603  |   |             | 27,900  |   |
| Debt                                                |              | 206,397 |   |             | 231,401 |   |
| Equity                                              |              | 86,531  |   |             | 92,877  |   |
| Partnership's share of equity                       |              | 13,459  |   |             | 15,853  |   |

The following is a summary of results of operations of the Real Estate Ventures for the three- and nine-month periods ended September 30, 2004 and 2003 (in thousands): 

|                          |   | **Three-month periods ended** |   | **Nine-month periods ended** |     |
|-------------------------------|--------|-------------------------------|--------|------------------------------|----------|
|                          |   | **September 30,**             |   | **September 30,**            |     |
|                          |   |                               |   |                         |          |   |
|                          |   | **2004**                      |   |                         | **2003** |   |   | **2004** |   |   | **2003** |   |
|                          |   |                               |   |                         |          |   |   |  |   |   |  |   |
| Revenue                       | $      | 11,740                        |   | $                            | 6,253    |   | $ | 33,370 |   | $ | 20,395 |   |
| Operating expenses            |   | 4,484                         |   |                         | 2,493    |   |   | 13,533 |   |   | 9,636 |   |
| Interest expense, net         |   | 3,003                         |   |                         | 1,949    |   |   | 8,847 |   |   | 6,026 |   |
| Depreciation and amortization |   | 1,690                         |   |                         | 1,395    |   |   | 5,902 |   |   | 4,019 |   |
| Net income                    |   | 2,563                         |   |                         | 416      |   |   | 5,087 |   |   | 714 |   |
| Partnership's share of income |   | 665                           |   |                         | (531     | ) |   | 1,573 |   |   | 38 |   |

During the three-month period ended September 30, 2003, the Partnership recorded an impairment charge of $861,000 associated with a non-operating Real Estate Venture. The amountconsisted primarily of legal and acquisition costs related to a parcel of land that ultimately was not acquired. 

As of September 30, 2004, the Partnership had guaranteed repayment of approximately $1.1 million of loans for the Real Estate Ventures. The Partnership also provides customaryenvironmental indemnities in connection with construction and permanent financing both for its own account and on behalf of the Real Estate Ventures. 

5. INDEBTEDNESS

The Partnership utilizes various forms of indebtedness to finance its operations. Following is a summary and description of the Partnership’s indebtedness as of September 30,2004: 

| (a)                                                                                                                  | Mortgage notes payable |
|--------------------------------------------------------------------------------------------------------------------------------|------------------------|
|                                                                                                                           |                   |
| As of September 30, 2004 and December 31, 2003, the Partnership’s mortgage notes payable were comprised of the following: |

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**BRANDYWINE OPERATING PARTNERSHIP, L.P.**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**SEPTEMBER 30, 2004**

|                                             |       | **Principal    Balance** |    |             |   |                     |
|--------------------------------------------------|------------|--------------------------|---------|------------------|--------|--------------------------|
|                                             |       |                          |    |             |   |                     |
|                                             |       | **September    30,**     |    | **December 31,** |   | **Interest Rates as of** |   |   |
|       **Mortgage** | ** ** | **2004**                 |    | **2003**         |   | **September 30, 2004**   |   | **Maturity Dates** |
|                                                  |       |                          |         |             |        |                          |   |  |   |  |
| Variable rate mortgages                          |       | $                        | 23,248  |             | $      | 60,337                   |   | 3.56% to 4.77% |   | March 2007 to July 2027 |
| Fixed rate mortgages                             |       |                     | 499,469 |             |   | 402,322                  |   | 5.78% to 8.65% |   | January 2006 to July 2027 |
|                                             |       |                          |         |             |        |                          |   |   |   |   |
|    Total mortgage notes payable   |       | $                        | 522,717 |             | $      | 462,659                  |   |   |   |   |
|                                             |       |                          |         |             |        |                          |   |   |   |   |

The weightedaverage interest rate on the Partnership’s mortgages was 7.32% and 7.11%for the nine-month periods ended September 30, 2004 and 2003.

| (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | Borrowings under credit facilities |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                               |
| The Partnership utilizes credit facility borrowings for general business purposes, including the acquisition of properties and the repayment of otherdebt. In May 2004, the Partnership replaced its existing credit facility with a $450 million unsecured credit facility (the “Credit Facility”)that matures in May 2007, subject to a one year extension option upon paymentof a fee andabsence any defaults at the time of the extension. Borrowings under the new Credit Facility bear interest at LIBOR plus a spread over LIBOR ranging from 0.65% to 1.20% based onthe Partnership’s unsecured senior debt rating. The Partnership has an option to increase its maximum borrowings under the Credit Facility to $600 million. The Credit Facility contains various financial and non-financial covenants. As ofSeptember 30, 2004, the Partnership was in compliance with all such covenants. |

As of September 30, 2004, the Partnership had $322.0 million of borrowings and $10.7 million of letters of credit outstanding under the Credit Facility, leaving $117.3 million ofunused availability. As of September 30, 2004, the Partnership’s interest rate was 2.74% (LIBOR was 1.84% at September 30, 2004 plus a spread of 0.90%). For the nine-month periods ended September 30, 2004 and 2003, the Partnership’saverage interest rate, including the effects of interest rate hedges as discussed in Note 6 and including both the new Credit Facility and prior credit facility, was 3.98% and 4.57% per annum. 

| (c)   | Unsecured Term Loan                                                                                                                                                         |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|            |                                                                                                                                                                        |
|            | The       Partnership uses unsecured term loans for general business purposes and       the acquisition of properties. The Partnership’s term loans are as    follows: |
|            |
|            | a.                                                                                                                                                                | **2005 Term Loan**– In connection with the TRC acquisition, thePartnership repaid all amounts due under the 2005 Term Loan. The 2005 Term Loan had a principal amount of $100 million and bore interest at LIBOR plus a spread ranging from 1.05% to 1.09% based on the Company’s unsecured senior debt rating. Theaverage interest rate on the Company’s 2005 Term Loan was 2.5% and 3.0% for the nine-month periods ended September 30, 2004 and 2003. |
|            |                                                                                                                                                                        |   |
|            | b.                                                                                                                                                                | **2007         Term Loan**– The         2007 Term Loan was obtained in September  2004 and had a principal amount         of $320 million, was scheduled to mature on May 24, 2007, and was subject         to certain mandatory prepayment provisions. In October 2004, the 2007         Term Loan was repaid in full with a portion of the proceeds from thePartnership’s issuance of unsecured notes. See Note 14. While outstanding,the 2007 Term Loan bore interest at a per annum floating rate equal to: (i) thehigher of (x) theprime rate announced publicly by JP Morgan Chase Bank or (y) the federal fundsrate plus .50% per annum, plus, in either case, between .05% and .70%, dependingon the Partnership’s debt rating, whether the 2007 Term Loan was outstandingmore than 90 days and the Partnership’s leverage ratio or (ii) a Eurodollarrate that is the rate at which Eurodollar depositsfor similar interest periods             are offered plus between 1.05% and 1.70%, depending on the Partnership’s             debt rating, whether the 2007 Term Loan was outstanding for more             than 90 days and the Partnership’s leverage ratio. As of September             30, 2004, the Partnership’s interest rate was 2.94% (LIBOR    rate of 1.84% plus a spread of 1.10%). |
|            |                                                                                                                                                                        |   |

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**BRANDYWINE OPERATING PARTNERSHIP, L.P.******

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS******

**SEPTEMBER 30, 2004**

|   | c.     | **2008 Term Loan**– The 2008 Term Loan was obtained in September 2004 andhas a principal amount of $113 million, matures on September 20, 2008, and is subject to certain mandatory prepayment provisions. The 2008 Term Loan has no scheduled principal amortization and bears interest at a per annum floating rate equal to:(i) the higher of (x) the prime rate announced publicly by JP Morgan Chase Bank or (y) the federal funds rate plus .50% per annum, plus, in either case, between .30% and .95%, depending on the Partnership’s debt rating, whether the 2008 TermLoan is outstanding for more than 90 days and the Partnership’s leverage ratio or (ii) a Eurodollar rate that is the rate at which Eurodollar deposits for similar interest periods are offered plus between 1.30% and 1.95%, depending on thePartnership’s debt rating, whether the 2008 Term Loan is outstanding for more than 90 days and our leverage ratio. As of September 30, 2004, the Partnership’s interest rate was 3.19% (LIBOR rate of 1.84% plus a spread of1.35%). |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |   | The      2007 Term Loan contained and the 2008 Term Loan contains financial and      operating covenants similar to those in the Credit Facility. As of September      30, 2004, the Partnership was in compliance with all such financial and    operating covenants.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |

6. RISK MANAGEMENT AND USE OF FINANCIAL INSTRUMENTS

Risk ManagementIn the normal course of its on-going business operations, the Partnership encounters economic risk. There are three main components of economic risk: interest rate risk, credit riskand market risk. The Partnership is subject to interest rate risk on its interest-bearing liabilities. Credit risk is the risk of inability or unwillingness of tenants to make contractually required payments. Market risk is the risk of declines inthe value of properties due to changes in rental rates, occupancy levels, interest rates or other market factors affecting the valuation of properties held by the Partnership. 

Use of Derivative Financial InstrumentsThe Partnership’s use of derivative instruments is limited to the utilization of interest rate agreements or other instruments to manage interest rate risk exposures and not forspeculative purposes. The principal objective of such arrangements is to minimize the risks and/or costs associated with the Partnership’soperating and financial structure, as well as to hedge specific transactions.The counterparties to these arrangements are major financial institutions withwhich the Partnership and its affiliates may also have other financial relationships.The Partnership is potentially exposed to credit loss in the event of non-performanceby these counterparties.However, because of the high credit ratings of the counterparties, the Partnershipdoes not anticipate that any of the counterparties will fail to meet these obligationsas they come due. The Partnership does not hedge credit or property value marketrisks. 

The Partnership formally assesses, both at inception of the hedge and on an on-going basis, whether each derivative is highly-effective in offsetting changes in cash flows of thehedged item. If management determines that a derivative is not highly-effective as a hedge or if a derivative ceases to be a highly-effective hedge, the Partnership will discontinue hedge accounting prospectively. 

As of September 30, 2004, the Partnership was not party to any derivative financial instruments.

Prior to September 30, 2004, the Partnership had entered into interest rate swap agreements to effectively fix the LIBOR rate on $175 million of its credit facility borrowings atapproximately 4.2%. On June 29, 2004, these hedges expired and all amounts held in accumulated other comprehensive income relating to these hedges have been reclassified to operations.

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**BRANDYWINE OPERATING PARTNERSHIP, L.P.******

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS******

**SEPTEMBER 30, 2004**

In October 2004 and in anticipation of the issuance of unsecured notes, the Partnership entered into treasury lock agreements. See Note 14. 

Concentration of Credit RiskConcentrationsof credit risk arise when a number of tenants related to the Partnership’s investments or rental operations are engaged in similar business activities, or arelocated in the same geographic region, or have similar economic features that would cause their inability to meet contractual obligations, including those to the Partnership, to be similarly affected. The Partnership regularly monitors its tenantbase to assess potential concentrations of credit risk. Management believes the current credit risk portfolio is reasonably well diversified and does not contain any unusual concentration of credit risk. No tenant accounted for 5% or more of thePartnership’s rents during the nine-month periods ended September 30, 2004or 2003. See Note 10 for geographic segment information.

7. DISCONTINUED OPERATIONS

For the three-and nine-month periods ended September 30, 2004 and 2003, income from discontinued operations relates to 13 properties that the Partnership sold from January 1, 2003 toSeptember 30, 2004. One property was designated as held-for-sale as of September 30, 2004. The following table summarizes the balance sheet information for the one property identified as held for sale at September 30, 2004: 

| Real Estate Investments:                   |   |   |   |
|--------------------------------------------|--------|--------|--------|
|    Operating Properties     | $      | 3,815  |   |
|    Accumulated depreciation |   | (497   | )      |
|                                       |        |        |   |
|                                       |   | 3,318  |   |
| Other assets                               |   | 247    |   |
|                                       |        |        |   |
|                                       | $      | 3,565  |   |
|                                       |        |        |   |

 

The following table summarizes revenue and expense information for the 13 properties sold since January 1, 2003 and the one property held for sale as of September 30, 2004 (inthousands): 

|                                                         | **Three-month periods** |   | **Nine-month periods**  |   |
|--------------------------------------------------------------|-------------------------|--------|-------------------------|--------|
|                                                         | **ended September 30,** |   | **ended September 30,** |   |
|                                                         |                         |        |                         |   |  |  |  |   |
|                                                         | **2004**                |   | **2003**                |   | **2004** |   | **2003** |   |
|                                                         |                         |        |                         |   |  |  |   |  |  |  |   |  |  |   |
| **Revenue:**                                                 |                    |   |                    |   |   |   |   |   |   |   |   |   |   |   |
|    Rents                                      | $                       |   | —                 |   | $ | 1,545 |   | $ |   | 198 |   | $ | 5,088 |   |
|    Tenant reimbursements                      |                    |   | —                 |   |   | 273 |   |   |   | 198 |   |   | 734 |   |
|    Other                                      |                    |   | —                 |   |   | 3 |   |   |   | 17 |   |   | 28 |   |
|                                                         |                         |        |                         |   |  |  |   |  |  |  |   |  |  |   |
|       Total revenue            |                    |   | —                 |   |   | 1,821 |   |   |   | 413 |   |   | 5,850 |   |
| **Expenses:**                                                |                    |   |                    |   |   |   |   |   |   |   |   |   |   |   |
|    Property operating expenses                |                    |   | 44                      |   |   | 576 |   |   |   | 343 |   |   | 2,050 |   |
|    Real estate taxes                          |                    |   | 23                      |   |   | 312 |   |   |   | 119 |   |   | 897 |   |
|    Depreciation and amortization              |                    |   | 13                      |   |   | 214 |   |   |   | 183 |   |   | 918 |   |
|                                                         |                         |        |                         |   |  |  |   |  |  |  |   |  |  |   |
|       Total operating expenses |                    |   | 80                      |   |   | 1,102 |   |   |   | 645 |   |   | 3,865 |   |
| Income from discontinued operations before net gain on sale  |                    |   |                    |   |   |   |   |   |   |   |   |   |   |   |
|    of interests in real estate                |                    |   | (80                     | )      |   | 719 |   |   |   | (232 | ) |   | 1,985 |   |
| Net gain on sales of interest in real estate                 |                    | 2,486  |                    |   | 1,741 |   |   | 2,735 |   |   | 2,692 |   |
|                                                         |                         |        |                    |        |  |   |  |  |   |  |  |   |
| Income from discontinued operations                          | $                       | 2,406  |                    | $      | 2,460 |   | $ | 2,503 |   | $ | 4,677 |   |
|                                                         |                         |        |                    |        |  |   |  |  |   |  |  |   |

During the three-month period ended September 30, 2004, the Partnership recognized a $2.5 million deferred gain from the sale of a property in 2002 that did not qualify for gainrecognition under the full-accrual method. During the third-quarter 2004, the buyer of the property repaid the seller provided financing and the criteria for full-accrual method were met. The deferred gain recognized was presented withindiscontinued operations consistent with the historical operating results from the property. 

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**BRANDYWINE OPERATING PARTNERSHIP, L.P.******

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS******

**SEPTEMBER 30, 2004**

Discontinued operations have not been segregated in the condensed consolidated statements of cash flows. Therefore, amounts for certain captions will not agree with respective data inthe condensed consolidated statements of operations.

8. PARTNERS’ EQUITY

On September 17, 2004, the Company sold 7,750,000 Common Shares in an underwritten public offering for net proceeds of approximately $217.1 million and contributed those proceeds tothe Partnership in exchange for 7,750,000 GP Units. 

On September 20, 2004, the Partnership declared a distribution of $0.44 per Common Partnership Unit, totaling $24.6 million, which was paid on October 15, 2004 to unit holders ofrecord as of October 5, 2004.

On September 20, 2004, the Partnership declared distributions to holders of its Series A Preferred Mirror Units, Series D Preferred Mirror Units and Series E Preferred Mirror Units toholders of record on September 30, 2004. These units are currently entitled to a cumulative preferential return of 7.25%, 7.50% and 7.375%, respectively. Distributions paid on October 15, 2004 to holders of Series A Preferred Mirror Units, Series DPreferred Mirror Units and Series E Preferred Mirror Units totaled $.7 million, $.9 million and $1.1 million, respectively. 

9. COMPREHENSIVE INCOME

Comprehensive income represents net income, plus the results of certain partners’ equity changes not reflected in the condensed consolidated statements of operations. Thecomponents of comprehensive income are as follows (in thousands): 

|                                                                      |   | **Three-month periods** |   |   | **Nine-month periods**  |   |
|---------------------------------------------------------------------------|--------|-------------------------|--------|--------|-------------------------|--------|
|                                                                      |   | **Ended September 30,** |   |   | **Ended September 30,** |   |
|                                                                      |        |                         |   |        |                         |   |
|                                                                      |   | **2004**                |   |   | **2003**                |   |   | **2004** |   |   | **2003** |   |
|                                                                      |        |                         |   |        |                         |   |  |  |   |  |  |   |
| Net income                                                                | $      | 21,847                  |   | $      | 19,876                  |   | $ | 54,314 |   | $ | 52,023 |   |
| Other comprehensive income (loss):                                        |   |                    |   |   |                    |   |   |   |   |   |   |   |
|    Reclassification adjustment for gains reclassified      |   |                    |   |   |                    |   |   |   |   |   |   |   |
|       into operations                       |   | —                 |   |   | —                 |   |   | (233 | ) |   | — |   |
|    Reclassification adjustments for losses reclassified    |   |                    |   |   |                    |   |   |   |   |   |   |   |
|       into operations                       |   | —                 |   |   | 1,366                   |   |   | 2,802 |   |   | 3,928 |   |
|    Unrealized derivative loss on cash flow hedges          |   | —                 |   |   | (17                     | )      |   | 305 |   |   | (1,146 | ) |
|    Unrealized gain (loss) on available-for-sale securities |   | 227                     |   |   | 27                      |   |   | (658 | ) |   | 73 |   |
|                                                                      |        |                         |   |        |                         |   |  |  |   |  |  |   |
| Other Comprehensive income                                                | $      | 22,074                  |   | $      | 21,252                  |   | $ | 56,530 |   | $ | 54,878 |   |
|                                                                      |        |                         |   |        |                         |   |  |  |   |  |  |   |

10. SEGMENT INFORMATION

In connection with the TRC acquisition, the Partnership restructured its operating regions into five segments: (1) Pennsylvania--North, (2) Pennsylvania--West, (3) New Jersey(including New York in 2003 periods), (4) Virginia and (5) Urban. Prior to the TRC acquisition, the Partnership operated in four segments: (1) Pennsylvania--North, (2) Pennsylvania—West, (3) New Jersey, and (4) Virginia. The correspondingsegment disclosures below for the three- and nine-month periods ended September 30, 2004 and 2003 have been restated to reflect the change in the Partnership’s operating segments. Corporate is responsible for cash and investment management,certain construction projects, and certain other general support functions. 

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**BRANDYWINE OPERATING PARTNERSHIP, L.P.******

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**SEPTEMBER 30, 2004**

Segment    information for the three-month periods ended September 30, 2004 and 2003    is as follows (in thousands):

|                                        | **Pennsylvania** |    | **Pennsylvania** |    |           |   |         |    |      |   |    |          |    |      |   |    |    |   |
|---------------------------------------------|------------------|---------|------------------|---------|----------------|--------|--------------|---------|-----------|--------|---------|---------------|---------|-----------|--------|---------|---------|--------|
|                                        | **North**        |    | **West**         |    | **New Jersey** |   | **Virginia** |    | **Urban** |   |    | **Corporate** |    | **Total** |   |
|                                        |                  |    |                  |         |           |        |         |         |           |   |         |               |    |           |        |    |         |        |   |
| As of September 30, 2004:                   |             |    |             |    |           |   |         |    |      |   |    |          |    |      |   |    |    |   |   |   |   |
| Real estate investments, at cost            |             |    |             |    |           |   |         |    |      |   |    |          |    |      |   |    |    |   |   |   |   |
|    Operating properties      | $                | 526,600 |             | $       | 843,381        |   | $            | 558,839 |      | $      | 215,696 |          | $       | 359,374   |   | $       | — |   | $ | 2,503,890 |   |
|    Construction-in-progress  |             | 20,118  |             |    | 6,471          |   |         | 10,740  |      |   | 1,470   |          |    | 1,397     |   |    | 48,896  |   |   | 89,092 |   |
|    Land held for development |             | 22,016  |             |    | 9,817          |   |         | 18,592  |      |   | 7,960   |          |    | 515       |   |    | 513     |   |   | 59,413 |   |
| Assets held for sale, at cost               |             | 3,565   |             |    | —        |   |         | — |      |   | — |          |    | —   |   |    | — |   |   | 3,565 |   |
|                                        |             |    |             |    |           |   |         |    |      |   |    |          |    |      |   |    |    |   |   |   |   |
| As of December 31, 2003:                    |             |    |             |    |           |   |         |    |      |   |    |          |    |      |   |    |    |   |   |   |   |
| Real estate investments, at cost:           |             |    |             |    |           |   |         |    |      |   |    |          |    |      |   |    |    |   |   |   |   |
|    Operating properties      | $                | 480,469 |             | $       | 573,300        |   | $            | 536,264 |      | $      | 214,488 |          | $       | 65,223    |   | $       | — |   | $ | 1,869,744 |   |
|    Construction-in-progress  | 20,115           |    |             | 4,546   |           |   | 4,081        |    |      | 582    |    |          | 446     |      |   | 17      |    |   | 29,787 |   |
|    Land held for development | 21,764           |    |             | 11,469  |           |   | 13,378       |    |      | 8,576  |    |          | 515     |      |   | 8,213   |    |   | 63,915 |   |
| Assets held for sale, at cost               | —          |    |             | — |           |   | 3,649        |    |      | 1,668  |    |          | — |      |   | — |    |   | 5,317 |   |
|                                        |             |    |             |    |           |   |         |    |      |   |    |          |    |      |   |    |    |   |   |   |
| For three months ended September 30, 2004:  |             |    |             |    |           |   |         |    |      |   |    |          |    |      |   |    |    |   |   |   |
| Total revenue                               | $                | 19,390  |             | $       | 20,969         |   | $            | 25,492  |      | $      | 6,640   |          | $       | 4,550     |   | $       | 2,603   |   | $ | 79,644 |   |
| Property operating expenses                 |             |    |             |    |           |   |         |    |      |   |    |          |    |      |   |    |    |   |   |   |   |
|    and real estate taxes     |             | 8,211   |             |    | 6,999          |   |         | 10,035  |      |   | 2,851   |          |    | 1,520     |   |    | 42      |   |   | 29,658 |   |
|                                        |                  |         |             |         |                |   |              |         |      |        |         |          |         |           |   |         |         |   |  |  |   |
| Net operating income                        | $                | 11,179  |             | $       | 13,970         |   | $            | 15,457  |      | $      | 3,789   |          | $       | 3,030     |   | $       | 2,561   |   | $ | 49,986 |   |
|                                        |                  |         |             |         |                |   |              |         |      |        |         |          |         |           |   |         |         |   |  |  |   |
| For three months ended September 30, 2003:  |             |    |             |    |           |   |         |    |      |   |    |          |    |      |   |    |    |   |   |   |
| Total revenue                               | $                | 17,687  |             | $       | 23,658         |   | $            | 22,956  |      | $      | 7,071   |          | $       | 3,033     |   | $       | 2,598   |   | $ | 77,003 |   |
| Property operating expenses                 |             |    |             |    |           |   |         |    |      |   |    |          |    |      |   |    |    |   |   |   |   |
|    and real estate taxes     |             | 6,924   |             |    | 7,139          |   |         | 8,367   |      |   | 2,739   |          |    | 1,315     |   |    | — |   |   | 26,484 |   |
|                                        |                  |         |             |         |                |   |              |         |      |        |         |          |         |           |   |         |         |   |  |  |   |
| Net operating income                        | $                | 10,763  |             | $       | 16,519         |   | $            | 14,589  |      | $      | 4,332   |          | $       | 1,718     |   | $       | 2,598   |   | $ | 50,519 |   |
|                                        |                  |         |             |         |                |   |              |         |      |        |         |          |         |           |   |         |         |   |  |  |   |

Segment information for the nine-month periods ended September 30, 2004 and 2003 is as follows (in thousands):

|                                                | **Pennsylvania** |   | **Pennsylvania** |   |           |   |         |   |      |   |          |   |      |   |   |   |    |   |   |
|-----------------------------------------------------|------------------|--------|------------------|--------|----------------|--------|--------------|--------|-----------|--------|---------------|--------|-----------|--------|--------|--------|---------|--------|--------|
|                                                | **North**        |   | **West**         |   | **New Jersey** |   | **Virginia** |   | **Urban** |   | **Corporate** |   | **Total** |   |
|                                                |                  |   |                  |        |           |        |         |        |           |   |               |        |      |        |        |   |         |        |   |
| For    nine month periods ended September 30, 2004: |             |   |             |   |           |   |         |   |      |   |          |   |      |   |   |   |    |   |   |   |
| Total revenue                                       | $                | 56,764 |             | $      | 61,656         |   | $            | 74,319 |      | $      | 20,018        |   | $         | 10,895 |   | $      | 6,625   |   | $      | 230,277 |   |
| Property operating expenses                         |             |   |             |   |           |   |         |   |      |   |          |   |      |   |   |   |    |   |   |   |   |
|    and real estate taxes             |             | 24,691 |             |   | 19,576         |   |         | 28,562 |      |   | 8,418         |   |      | 4,265  |   |   | 297     |   |   | 85,809 |   |
|                                                |                  |        |             |        |                |   |              |        |      |        |               |   |           |        |   |        |         |   |        |  |   |
| Net operating income                                | $                | 32,073 |             | $      | 42,080         |   | $            | 45,757 |      | $      | 11,600        |   | $         | 6,630  |   | $      | 6,328   |   | $      | 144,468 |   |
|                                                |                  |        |             |        |                |   |              |        |      |        |               |   |           |        |   |        |         |   |        |  |   |
| For    nine month periods ended September 30, 2003: |             |   |             |   |           |   |         |   |      |   |          |   |      |   |   |   |    |   |   |   |
| Total revenue                                       | $                | 54,118 |             | $      | 70,281         |   | $            | 68,191 |      | $      | 20,780        |   | $         | 8,581  |   | $      | 4,398   |   | $      | 226,349 |   |
| Property operating expenses                         |             |   |             |   |           |   |         |   |      |   |          |   |      |   |   |   |    |   |   |   |   |
|    and real estate taxes             |             | 22,203 |             |   | 20,804         |   |         | 25,280 |      |   | 8,159         |   |      | 3,706  |   |   | — |   |   | 80,152 |   |
|                                                |                  |        |             |        |                |   |              |        |      |        |               |   |           |        |   |        |         |   |        |  |   |
| Net operating income                                | $                | 31,915 |             | $      | 49,477         |   | $            | 42,911 |      | $      | 12,621        |   | $         | 4,875  |   | $      | 4,398   |   | $      | 146,197 |   |
|                                                |                  |        |             |        |                |   |              |        |      |        |               |   |           |        |   |        |         |   |        |  |   |

Net operating income is defined as total revenue less property operating expenses and real estate taxes. Below is a reconciliation of consolidated net operating income to net income(in thousands): 

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**BRANDYWINE OPERATING PARTNERSHIP, L.P.******

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**SEPTEMBER 30, 2004**

|                                                             |   | **Three-month period**  |   |   | **Nine-month period**   |   |
|------------------------------------------------------------------|--------|-------------------------|--------|--------|-------------------------|--------|
|                                                             |   | **ended September 30,** |   |   | **ended September 30,** |   |
|                                                             |   |                         |   |   |                         |   |
|                                                             |   | **2004**                |   |   | **2003**                |   |   | **2004** |   |   | **2003** |   |
|                                                             |        |                         |   |        |                         |   |  |  |   |  |  |   |
| Consolidated net operating income                                | $      | 49,986                  |   | $      | 50,519                  |   | $ | 144,468 |   | $ | 146,197 |   |
| Less:                                                            |   |                    |   |   |                    |   |   |   |   |   |   |   |
|    Interest expense                               |   | (11,474                 | )      |   | (13,746                 | )      |   | (35,526 | ) |   | (44,293 | ) |
|    Depreciation and amortization                  |   | (18,293                 | )      |   | (15,196                 | )      |   | (50,936 | ) |   | (44,798 | ) |
|    Administrative expenses                        |   | (3,534                  | )      |   | (3,630                  | )      |   | (10,977 | ) |   | (10,953 | ) |
|    Minority interest attributable to continuing   |   |                    |   |   |                    |   |   |   |   |   |   |   |
|       operations                   |   | 338                     |   |   | —                 |   |   | 308 |   |   | — |   |
| Plus:                                                            |   |                    |   |   |                    |   |   |   |   |   |   |   |
|    Equity in income of real estate ventures       |   | 665                     |   |   | (531                    | )      |   | 1,573 |   |   | 38 |   |
|    Net gains on sales of interests in real estate |   | 1,753                   |   |   | —                 |   |   | 2,901 |   |   | 1,152 |   |
|                                                             |        |                         |   |        |                         |   |  |  |   |  |  |   |
| Income from continuing operations                                |   | 19,441                  |   |   | 17,416                  |   |   | 51,811 |   |   | 47,343 |   |
| Income from discontinued operations                              |   | 2,406                   |   |   | 2,460                   |   |   | 2,503 |   |   | 4,680 |   |
|                                                             |        |                         |   |        |                         |   |  |  |   |  |  |   |
| Net income                                                       | $      | 21,847                  |   | $      | 19,876                  |   | $ | 54,314 |   | $ | 52,023 |   |
|                                                             |        |                         |   |        |                         |   |  |  |   |  |  |   |

11. EARNINGS PER COMMON PARNTERSHIP UNIT

The following table details the number of units and net income used to calculate basic and diluted earnings per common partnership unit (in thousands, except unit and per unitamounts): 

|                                                           | **Three-month    periods ended September 30,** |       |
|----------------------------------------------------------------|------------------------------------------------|------------|
|                                                           |                                                |            |  |  |  |  |  |   |
|                                                           | **2004**                                       |       | **2003** |   |
|                                                           |                                                |            |  |   |  |  |  |   |
|                                                           |                                           | **Basic**  |   |   | **Diluted** |   |   | **Basic** |   |   | **Diluted** |   |
|                                                           |                                                |            |   |  |  |   |  |  |   |  |  |   |
| Income from continuing operations                              | $                                              | 19,441     |   | $ | 19,441 |   | $ | 17,416 |   | $ | 17,416 |   |
| Income from discontinued operations                            |                                           | 2,406      |   |   | 2,406 |   |   | 2,460 |   |   | 2,460 |   |
| Income allocated to Preferred Units                            |                                           | (2,677     | ) |   | (2,677 | ) |   | (4,743 | ) |   | (4,743 | ) |
|                                                           |                                                |            |   |  |  |   |  |  |   |  |  |   |
|                                                           |                                           | 19,170     |   |   | 19,170 |   |   | 15,133 |   |   | 15,133 |   |
| Preferred Unit discount amortization                           |                                           | —    |   |   | — |   |   | (369 | ) |   | (369 | ) |
|                                                           |                                                |            |   |  |  |   |  |  |   |  |  |   |
| Net income available to common partnership unitholders         | $                                              | 19,170     |   | $ | 19,170 |   | $ | 14,764 |   | $ | 14,764 |   |
|                                                           |                                                |            |   |  |  |   |  |  |   |  |  |   |
| Weighted-average    common partnership units outstanding       |                                           | 48,681,057 |   |   | 48,681,057 |   |   | 39,096,588 |   |   | 39,096,588 |   |
| Options and warrants                                           |                                           | —    |   |   | 240,844 |   |   | — |   |   | 161,423 |   |
|                                                           |                                                |            |   |  |  |   |  |  |   |  |  |   |
| Total    weighted-average common partnership units outstanding |                                           | 48,681,057 |   |   | 48,921,901 |   |   | 39,096,588 |   |   | 39,258,011 |   |
|                                                           |                                                |            |   |  |  |   |  |  |   |  |  |   |
| Earnings per Common Partnership Unit:                          |                                           |       |   |   |   |   |   |   |   |   |   |   |
|    Continuing operations                        | $                                              | 0.34       |   | $ | 0.34 |   | $ | 0.32 |   | $ | 0.32 |   |
|    Discontinued operations                      |                                           | 0.05       |   |   | 0.05 |   |   | 0.06 |   |   | 0.06 |   |
|                                                           |                                                |            |   |  |  |   |  |  |   |  |  |   |
|    Total                                        | $                                              | 0.39       |   | $ | 0.39 |   | $ | 0.38 |   | $ | 0.38 |   |
|                                                           |                                                |            |   |  |  |   |  |  |   |  |  |   |

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**BRANDYWINE OPERATING PARTNERSHIP, L.P.**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**SEPTEMBER 30, 2004**

|                                                        | **Nine-month periods ended September 30,** |       |
|-------------------------------------------------------------|--------------------------------------------|------------|
|                                                        |                                            |       |
|                                                        | **2004**                                   |       | **2003** |   |
|                                                        |                                            |            |  |   |  |  |  |   |
|                                                        |                                       | **Basic**  |   |   | **Diluted** |   |   | **Basic** |   |   | **Diluted** |   |
|                                                        |                                            |            |   |  |  |   |  |  |   |  |  |   |
| Income from continuing operations                           | $                                          | 51,811     |   | $ | 51,811 |   | $ | 47,343 |   | $ | 47,343 |   |
| Income from discontinued operations                         |                                       | 2,503      |   |   | 2,503 |   |   | 4,680 |   |   | 4,680 |   |
| Preferred unit redemption gain                              |                                       | 4,500      |   |   | 4,500 |   |   | — |   |   | — |   |
| Income allocated to Preferred Units                         |                                       | (8,204     | ) |   | (8,204 | ) |   | (14,229 | ) |   | (14,229 | ) |
|                                                        |                                            |            |   |  |  |   |  |  |   |  |  |   |
|                                                        |                                       | 50,610     |   |   | 50,610 |   |   | 37,794 |   |   | 37,794 |   |
| Preferred Unit discount amortization                        |                                       | —     |   |   | — |   |   | (1,107 | ) |   | (1,107 | ) |
|                                                        |                                            |            |   |  |  |   |  |  |   |  |  |   |
| Net income available to common partnership unitholders      | $                                          | 50,610     |   | $ | 50,610 |   | $ | 36,687 |   | $ | 36,687 |   |
|                                                        |                                            |            |   |  |  |   |  |  |   |  |  |   |
| Weighted-average common partnership units outstanding       |                                       | 47,303,034 |   |   | 47,303,034 |   |   | 37,861,809 |   |   | 37,861,809 |   |
| Options and warrants                                        |                                       | —     |   |   | 238,346 |   |   | — |   |   | 137,251 |   |
|                                                        |                                            |            |   |  |  |   |  |  |   |  |  |   |
| Total weighted-average common partnership units outstanding |                                       | 47,303,034 |   |   | 47,541,380 |   |   | 37,861,809 |   |   | 37,999,060 |   |
|                                                        |                                            |            |   |  |  |   |  |  |   |  |  |   |
|                                                        |                                       |       |   |   |   |   |   |   |   |   |   |   |
| Earnings per Common Partnership Unit:                       |                                       |       |   |   |   |   |   |   |   |   |   |   |
|    Continuing operations                     | $                                          | 1.02       |   | $ | 1.01 |   | $ | 0.85 |   | $ | 0.85 |   |
|    Discontinued operations                   |                                       | 0.05       |   |   | 0.05 |   |   | 0.12 |   |   | 0.12 |   |
|                                                        |                                            |            |   |  |  |   |  |  |   |  |  |   |
|    Total                                     | $                                          | 1.07       |   | $ | 1.06 |   | $ | 0.97 |   | $ | 0.97 |   |
|                                                        |                                            |            |   |  |  |   |  |  |   |  |  |   |

Securities (including Series A Preferred Mirror Units, Series C Preferred Mirror Units and Series B Preferred Units) totaling 1,339,286 and 9,196,429 as of September 30, 2004 and 2003were excluded from the earnings per common partnership unit computations for the three- and nine-month periods ended September 30, 2004 and 2003 because their effect would have been antidilutive. All of the Series C Preferred Mirror Units wereredeemed, or were converted into Common Partnership Units, in December 2003 and are no longer outstanding. All of the Series B Preferred Units were redeemed by the Partnership in February 2004 and are no longer outstanding. 

12. 	CONDENSED CONSOLIDATING INFORMATION:

On July 1, 2004, the Company and the Partnership filed a Registration Statement on Form S-3 (the “Registration Statement”)with the Securities and Exchange Commission to register: (i) common shares ofbeneficial interest, preferred shares of beneficial interest, depository sharesand warrants of the Company; (ii) debt securities of the Partnership (“Debt Securities”); and (iii) full and unconditionalguaranties of the Debt Securities by the Company and certain wholly-owned subsidiaries of the Partnership (the “Subsidiary Guarantors”). The Partnership has other subsidiaries (“Non-Guarantor Subsidiaries”) that are notSubsidiary Guarantors.

The following summaries the condensed consolidating financial information for the Partnership as of September 30, 2004 and December 31, 2003 and for each of the three- and nine-monthperiods ended September 30, 2004 and 2003: 

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**BRANDYWINE OPERATING PARTNERSHIP, L.P.**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**SEPTEMBER 30, 2004**

**CONSOLIDATING BALANCE SHEETSeptember 30, 2004 (in 000’s)**

|                                                          | **The**         |      | **Guarantor**    |   | **Non-Guarantor** |   | **Consolidation** |      |             |   |
|---------------------------------------------------------------|-----------------|-----------|------------------|--------|-------------------|--------|-------------------|-----------|------------------|--------|
|                                                          | **Partnership** |      | **Subsidiaries** |   | **Subsidiaries**  |   | **Eliminations**  |      | **Consolidated** |   |
|                                                          |                 |      |                  |   |                   |   |                   |      |                  |   |
| **ASSETS**                                                    |            |      |             |   |              |   |              |      |             |   |   |   |   |   |   |
| Total Real estate investments, net                            | $               | 912,020   |             | $      | 410,848           |   | $                 | 1,018,418 |             | $      | — |   | $ | 2,341,286 |   |
| Cash and cash equivalents                                     |            | 9,863     |             |   | —            |   |              | —    |             |   | — |   |   | 9,863 |   |
| Escrowed cash                                                 |            | 8,061     |             |   | 932               |   |              | 8,308     |             |   | — |   |   | 17,301 |   |
| Accounts receivable, net                                      |            | 19,558    |             |   | 8,998             |   |              | 15,093    |             |   | — |   |   | 43,649 |   |
| Marketable securities                                         |            | 462       |             |   | —            |   |              | —    |             |   | — |   |   | 462 |   |
| Assets held for sale                                          |            | —    |             |   | 3,565             |   |              | —    |             |   | — |   |   | 3,565 |   |
| Investment in real estate ventures, at equity                 |            | 13,459    |             |   | —            |   |              | —    |             |   | — |   |   | 13,459 |   |
| Investments in Subsidiaries, at equity                        |            | 1,238,331 |             |   | —            |   |              | —    |             |   | (1,238,331 | ) |   | — |   |
| Deferred costs, net                                           |            | 26,211    |             |   | 2,411             |   |              | 3,637     |             |   | — |   |   | 32,259 |   |
| Other assets                                                  |            | 25,709    |             |   | 20,191            |   |              | 80,143    |             |   | — |   |   | 126,043 |   |
|                                                          |                 |           |             |        |                   |   |                   |           |             |        |  |   |  |  |   |
|    Total assets                                | $               | 2,253,674 |             | $      | 446,945           |   | $                 | 1,125,599 |             | $      | (1,238,331 | ) | $ | 2,587,887 |   |
|                                                          |                 |           |             |        |                   |   |                   |           |             |        |  |   |  |  |   |
| **LIABILITIES AND PARTNERS’ EQUITY**                     |            |      |             |   |              |   |              |      |             |   |   |   |   |   |   |
| Mortgage notes payable                                        | $               | 234,561   |             | $      | 13,660            |   | $                 | 274,496   |             | $      | — |   | $ | 522,717 |   |
| Borrowings under Credit Facility                              |            | 322,000   |             |   | —            |   |              | —    |             |   | — |   |   | 322,000 |   |
| Unsecured term loan                                           |            | 433,000   |             |   | —            |   |              | —    |             |   | — |   |   | 433,000 |   |
| Accounts payable and accrued expenses                         |            | 21,281    |             |   | 1,559             |   |              | 5,581     |             |   | — |   |   | 28,421 |   |
| Distributions payable                                         |            | 27,179    |             |   | —            |   |              | —    |             |   | — |   |   | 27,179 |   |
| Tenant security deposits and deferred rents                   |            | 11,669    |             |   | 2,088             |   |              | 3,871     |             |   | — |   |   | 17,628 |   |
| Other liabilities                                             |            | 1,523     |             |   | 780               |   |              | 32,180    |             |   | — |   |   | 34,483 |   |
|                                                          |                 |           |             |        |                   |   |                   |           |             |        |  |   |  |  |   |
|    Total liabilities                           |            | 1,051,213 |             |   | 18,087            |   |              | 316,128   |             |   | — |   |   | 1,385,428 |   |
| Redeemable limited partnership units                          |            | 58,710    |             |   | —            |   |              | —    |             |   | — |   |   | 58,710 |   |
| Total partners’ equity                                   |            | 1,143,749 |             |   | 428,859           |   |              | 809,472   |             |   | (1,238,331 | ) |   | 1,143,749 |   |
|                                                          |                 |           |             |        |                   |   |                   |           |             |        |  |   |  |  |   |
|    Total liabilities and partners’ equity | $               | 2,253,672 |             | $      | 446,946           |   | $                 | 1,125,600 |             | $      | (1,238,331 | ) | $ | 2,587,887 |   |
|                                                          |                 |           |             |        |                   |   |                   |           |             |        |  |   |  |  |   |

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**BRANDYWINE OPERATING PARTNERSHIP, L.P.**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**SEPTEMBER 30, 2004****CONSOLIDATINGBALANCE SHEETDECEMBER 31, 2003(in000’s)**

|                                                          |   |            |   |             |    |              |
|---------------------------------------------------------------|--------|-----------------|--------|------------------|---------|-------------------|
|                                                          |   |            |   |             |    |              |   |   |
|                                                          |   |            |   |             |    |              |   |   |   |   |
|                                                          |   | **The**         |   | **Guarantor**    |    | **Non-Guarantor** |   | **Consolidation** |   |   |   |   |
|                                                          |   | **Partnership** |   | **Subsidiaries** |    | **Subsidiaries**  |   | **Eliminations** |   | **Consolidated** |   |
|                                                          |        |                 |   |                  |    |                   |   |  |   |  |   |
| **ASSETS**                                                    |   |            |   |             |    |              |   |   |   |   |   |   |   |   |   |
| Total Real estate investments, net                            | $      | 899,695         |   | $                | 348,578 |              | $ | 447,082 |   | $ | — |   | $ | 1,695,355 |   |
| Cash and cash equivalents                                     |   | 8,552           |   |             | —  |              |   | — |   |   | — |   |   | 8,552 |   |
| Escrowed cash                                                 |   | 5,906           |   |             | 806     |              |   | 7,676 |   |   | — |   |   | 14,388 |   |
| Accounts receivable, net                                      |   | 16,166          |   |             | 8,467   |              |   | 7,225 |   |   | — |   |   | 31,858 |   |
| Marketable securities                                         |   | 12,052          |   |             | —  |              |   | — |   |   | — |   |   | 12,052 |   |
| Assets held for sale                                          |   | —          |   |             | 1,668   |              |   | 3,649 |   |   | — |   |   | 5,317 |   |
| Investment in real estate ventures, at equity                 |   | 15,853          |   |             | —  |              |   | — |   |   | — |   |   | 15,853 |   |
| Investments in Subsidiaries, at equity                        |   | 627,896         |   |             | —  |              |   | — |   |   | (627,896 | ) |   | — |   |
| Deferred costs, net                                           |   | 19,970          |   |             | 2,185   |              |   | 3,916 |   |   | — |   |   | 26,071 |   |
| Other assets                                                  |   | 26,447          |   |             | 18,350  |              |   | 1,533 |   |   | — |   |   | 46,330 |   |
|                                                          |        |                 |   |                  |         |              |  |  |   |  |  |   |  |  |   |
|    Total assets                                | $      | 1,632,537       |   | $                | 380,054 |              | $ | 471,081 |   | $ | (627,896 | ) | $ | 1,855,776 |   |
|                                                          |        |                 |   |                  |         |              |  |  |   |  |  |   |  |  |   |
| **LIABILITIES AND PARTNERS’ EQUITY**                     |   |            |   |             |    |              |   |   |   |   |   |   |   |   |   |
| Mortgage notes payable                                        | $      | 249,433         |   | $                | 14,251  |              | $ | 198,975 |   | $ | — |   | $ | 462,659 |   |
| Borrowings under Credit Facility                              |   | 305,000         |   |             | —  |              |   | — |   |   | — |   |   | 305,000 |   |
| Unsecured term loan                                           |   | 100,000         |   |             | —  |              |   | — |   |   | — |   |   | 100,000 |   |
| Accounts payable and accrued expenses                         |   | 25,579          |   |             | 1,763   |              |   | 2,948 |   |   | — |   |   | 30,290 |   |
| Distributions payable                                         |   | 20,947          |   |             | —  |              |   | — |   |   | — |   |   | 20,947 |   |
| Tenant security deposits and deferred rents                   |   | 10,954          |   |             | 1,584   |              |   | 3,585 |   |   | — |   |   | 16,123 |   |
| Other liabilities                                             |   | 16,332          |   |             | —  |              |   | 81 |   |   | — |   |   | 16,413 |   |
| Liabilities related to assets held for sale                   |   | —          |   |             | 32      |              |   | 20 |   |   | — |   |   | 52 |   |
|                                                          |        |                 |   |                  |         |              |  |  |   |  |  |   |  |  |   |
|    Total liabilities                           |   | 728,245         |   |             | 17,630  |              |   | 205,609 |   |   | — |   |   | 951,484 |   |
| 7.25% Series B Preferred Units                                |   | 97,500          |   |             | —  |              |   | — |   |   | — |   |   | 97,500 |   |
| Redeemable limited partnership units                          |   | 46,505          |   |             | —  |              |   | — |   |   | — |   |   | 46,505 |   |
| Total partners’ equity                                   |   | 760,287         |   |             | 362,424 |              |   | 265,472 |   |   | (627,896 | ) |   | 760,287 |   |
|                                                          |        |                 |   |                  |         |              |  |  |   |  |  |   |  |  |   |
|    Total liabilities and partners’ equity | $      | 1,632,537       |   | $                | 380,054 |              | $ | 471,081 |   | $ | (627,896 | ) | $ | 1,855,776 |   |
|                                                          |        |                 |   |                  |         |              |  |  |   |  |  |   |  |  |   |

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**BRANDYWINE OPERATING PARTNERSHIP, L.P.**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**SEPTEMBER 30, 2004**

**CONSOLIDATING      STATEMENT OF OPERATIONS THREE MONTH PERIOD ENDED SEPTEMBER 30, 2004(in 000’s)**

|                                                         |            |   |             |   |              |   |              |   |             |   |
|--------------------------------------------------------------|-----------------|--------|------------------|--------|-------------------|--------|-------------------|--------|------------------|--------|
|                                                         |            |   |             |   |              |   |              |   |             |   |
|                                                         | **The**         |   | **Guarantor**    |   | **Non-Guarantor** |   | **Consolidation** |   |             |   |
|                                                         | **Partnership** |   | **Subsidiaries** |   | **Subsidiaries**  |   | **Eliminations**  |   | **Consolidated** |   |
|                                                         |                 |   |                  |   |                   |   |                   |   |                  |   |
| **Revenue:**                                                 |            |   |             |   |              |   |              |   |             |   |
|    Rents                                      | $               | 37,330 |             | $      | 12,993            |   | $                 | 16,314 |             | $      | — |   | $ | 66,637 |   |
|    Tenant reimbursements                      |            | 4,806  |             |   | 2,780             |   |              | 2,103  |             |   | — |   |   | 9,689 |   |
|    Other                                      |            | 5,395  |             |   | 532               |   |              | 895    |             |   | (3,504 | ) |   | 3,318 |   |
|                                                         |                 |        |             |        |                   |   |                   |        |             |        |  |   |  |  |   |
|       Total revenue            |            | 47,531 |             |   | 16,305            |   |              | 19,312 |             |   | (3,504 | ) |   | 79,644 |   |
|                                                         |            |   |             |   |              |   |              |   |             |   |   |   |   |   |   |
| **Operating Expenses:**                                      |            |   |             |   |              |   |              |   |             |   |   |   |   |   |   |
|    Property operating expenses                |            | 14,026 |             |   | 5,031             |   |              | 6,419  |             |   | (3,504 | ) |   | 21,972 |   |
|    Real estate taxes                          |            | 4,170  |             |   | 1,732             |   |              | 1,784  |             |   | — |   |   | 7,686 |   |
|    Interest                                   |            | 7,609  |             |   | 274               |   |              | 3,591  |             |   | — |   |   | 11,474 |   |
|    Depreciation and amortization              |            | 10,287 |             |   | 3,563             |   |              | 4,443  |             |   | — |   |   | 18,293 |   |
|    Administrative expenses                    |            | 2,894  |             |   | —            |   |              | 640    |             |   | — |   |   | 3,534 |   |
|                                                         |                 |        |             |        |                   |   |                   |        |             |        |  |   |  |  |   |
|       Total operating expenses |            | 38,986 |             |   | 10,600            |   |              | 16,877 |             |   | (3,504 | ) |   | 62,959 |   |
|                                                         |                 |        |             |        |                   |   |                   |        |             |        |  |   |  |  |   |
| Income from continuing operations before                     |            |   |             |   |              |   |              |   |             |   |   |   |   |   |   |
|    equity in income of real estate ventures   |            |   |             |   |              |   |              |   |             |   |   |   |   |   |   |
|    and net gains on sales of real estate      |            | 8,545  |             |   | 5,705             |   |              | 2,435  |             |   | — |   |   | 16,685 |   |
|                                                         |            |   |             |   |              |   |              |   |             |   |   |   |   |   |   |
| Equity in income of real estate ventures                     |            | 665    |             |   | —            |   |              | — |             |   | — |   |   | 665 |   |
| Equity in income of subsidiaries                             |            | 8,264  |             |   | —            |   |              | — |             |   | (8,264 | ) |   | — |   |
| Net gains on sales of real estate                            |            | 1,574  |             |   | —            |   |              | 179    |             |   | — |   |   | 1,753 |   |
| Minority interest in consolidated                            |            |   |             |   |              |   |              |   |             |   |   |   |   |   |   |
|    variable interest entities                 |            | 338    |             |   | —            |   |              | — |             |   | — |   |   | 338 |   |
|                                                         |                 |        |             |        |                   |   |                   |        |             |        |  |   |  |  |   |
| Income from continuing operations                            |            | 19,386 |             |   | 5,705             |   |              | 2,614  |             |   | (8,264 | ) |   | 19,441 |   |
|                                                         |            |   |             |   |              |   |              |   |             |   |   |   |   |   |   |
| Discontinued operations:                                     |            |   |             |   |              |   |              |   |             |   |   |   |   |   |   |
|    Income from discontinued operations        |            | (25    | )                |   | (55               | )      |              | — |             |   | — |   |   | (80 | ) |
|    Net Gain on Disposition                    |            | 2,486  |             |   | —            |   |              | — |             |   | — |   |   | 2,486 |   |
|                                                         |                 |        |             |        |                   |   |                   |        |             |        |  |   |  |  |   |
| Income from discontinued operations                          |            | 2,461  |             |   | (55               | )      |              | — |             |   | — |   |   | 2,406 |   |
|                                                         |                 |        |             |        |                   |   |                   |        |             |        |  |   |  |  |   |
| Net income                                                   | $               | 21,847 |             | $      | 5,650             |   | $                 | 2,614  |             | $      | (8,264 | ) | $ | 21,847 |   |
|                                                         |                 |        |             |        |                   |   |                   |        |             |        |  |   |  |  |   |

24

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**BRANDYWINE OPERATING PARTNERSHIP, L.P.**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**SEPTEMBER 30, 2004**

**CONSOLIDATINGSTATEMENT OF OPERATIONS NINE MONTH PERIOD ENDED SEPTEMBER 30, 2004(in000’s)**

|                                                         |            |    |             |   |              |   |              |   |             |   |
|--------------------------------------------------------------|-----------------|---------|------------------|--------|-------------------|--------|-------------------|--------|------------------|--------|
|                                                         |            |    |             |   |              |   |              |   |             |   |
|                                                         | **The**         |    | **Guarantor**    |   | **Non-Guarantor** |   | **Consolidation** |   |             |   |
|                                                         | **Partnership** |    | **Subsidiaries** |   | **Subsidiaries**  |   | **Eliminations**  |   | **Consolidated** |   |
|                                                         |                 |    |                  |   |                   |   |                   |   |                  |   |
| **Revenue:**                                                 |            |    |             |   |              |   |              |   |             |   |
|    Rents                                      | $               | 110,788 |             | $      | 38,219            |   | $                 | 45,696 |             | $      | — |   | $ | 194,703 |   |
|    Tenant reimbursements                      |            | 12,370  |             |   | 7,963             |   |              | 5,505  |             |   | — |   |   | 25,838 |   |
|    Other                                      |            | 23,940  |             |   | 1,489             |   |              | 3,424  |             |   | (19,117 | ) |   | 9,736 |   |
|                                                         |                 |         |             |        |                   |   |                   |        |             |        |  |   |  |  |   |
|       Total revenue            |            | 147,098 |             |   | 47,671            |   |              | 54,625 |             |   | (19,117 | ) |   | 230,277 |   |
|                                                         |            |    |             |   |              |   |              |   |             |   |   |   |   |   |   |
| **Operating Expenses:**                                      |            |    |             |   |              |   |              |   |             |   |   |   |   |   |   |
|    Property operating expenses                |            | 51,381  |             |   | 15,201            |   |              | 16,873 |             |   | (19,117 | ) |   | 64,338 |   |
|    Real estate taxes                          |            | 11,819  |             |   | 4,826             |   |              | 4,826  |             |   | — |   |   | 21,471 |   |
|    Interest                                   |            | 24,277  |             |   | 791               |   |              | 10,458 |             |   | — |   |   | 35,526 |   |
|    Depreciation and amortization              |            | 28,905  |             |   | 9,272             |   |              | 12,759 |             |   | — |   |   | 50,936 |   |
|    Administrative expenses                    |            | 8,922   |             |   | —            |   |              | 2,055  |             |   | — |   |   | 10,977 |   |
|                                                         |                 |         |             |        |                   |   |                   |        |             |        |  |   |  |  |   |
|       Total operating expenses |            | 125,304 |             |   | 30,090            |   |              | 46,971 |             |   | (19,117 | ) |   | 183,248 |   |
|                                                         |                 |         |             |        |                   |   |                   |        |             |        |  |   |  |  |   |
| Income from continuing operations before                     |            |    |             |   |              |   |              |   |             |   |   |   |   |   |   |
|    equity in income of real estate ventures   |            |    |             |   |              |   |              |   |             |   |   |   |   |   |   |
|    and net gains on sales of real estate      |            | 21,794  |             |   | 17,581            |   |              | 7,654  |             |   | — |   |   | 47,029 |   |
|                                                         |            |    |             |   |              |   |              |   |             |   |   |   |   |   |   |
| Equity in income of real estate ventures                     |            | 1,573   |             |   | —            |   |              | — |             |   | — |   |   | 1,573 |   |
| Equity in income of subsidiaries                             |            | 25,534  |             |   | —            |   |              | — |             |   | (25,534 | ) |   | — |   |
| Net gains on sales of real estate                            |            | 2,901   |             |   | —            |   |              | — |             |   | — |   |   | 2,901 |   |
| Minority interest in consolidated                            |            |    |             |   |              |   |              |   |             |   |   |   |   |   |   |
|    variable interest entities                 |            | 308     |             |   | —            |   |              | — |             |   | — |   |   | 308 |   |
|                                                         |                 |         |             |        |                   |   |                   |        |             |        |  |   |  |  |   |
| Income from continuing operations                            |            | 52,110  |             |   | 17,581            |   |              | 7,654  |             |   | (25,534 | ) |   | 51,811 |   |
|                                                         |            |    |             |   |              |   |              |   |             |   |   |   |   |   |   |
| Discontinued operations:                                     |            |    |             |   |              |   |              |   |             |   |   |   |   |   |   |
|    Income from discontinued operations        |            | (327    | )                |   | (68               | )      |              | 163    |             |   | — |   |   | (232 | ) |
|    Net Gain on Disposition                    |            | 2,531   |             |   | 382               |   |              | (178   | )                |   | — |   |   | 2,735 |   |
|                                                         |                 |         |             |        |                   |   |                   |        |             |        |  |   |  |  |   |
| Income from discontinued operations                          |            | 2,204   |             |   | 314               |   |              | (15    | )                |   | — |   |   | 2,503 |   |
|                                                         |                 |         |             |        |                   |   |                   |        |             |        |  |   |  |  |   |
| Net income                                                   | $               | 54,314  |             | $      | 17,895            |   | $                 | 7,639  |             | $      | (25,534 | ) | $ | 54,314 |   |
|                                                         |                 |         |             |        |                   |   |                   |        |             |        |  |   |  |  |   |
|                                                         |            |    |             |   |              |   |              |   |             |   |   |   |   |   |   |

**CONSOLIDATING STATEMENT OF CASH FLOWSNINE MONTH PERIOD ENDED SEPTEMBER 30, 2004 (in 000’s)**

|                                 | **The**         |     | **Guarantor**    |   | **Non-Guarantor** |   | **Consolidation** |     |             |   |
|--------------------------------------|-----------------|----------|------------------|--------|-------------------|--------|-------------------|----------|------------------|--------|
|                                 | **Partnership** |     | **Subsidiaries** |   | **Subsidiaries**  |   | **Eliminations**  |     | **Consolidated** |   |
|                                 |                 |     |                  |   |                   |   |                   |     |                  |   |
| Cash flows from operating activities | $               | (534,627 | )                | $      | 25,917            |   | $                 | 16,252   |             | $      | 593,168 |   | $ | 100,710 |   |
| Cash flows from investing activities |            | (11,990  | )                |   | (73,866           | )      |              | (548,860 | )                |   | — |   |   | (634,716 | ) |
| Cash flows from financing activities |            | 547,928  |             |   | 47,949            |   |              | 532,608  |             |   | (593,168 | ) |   | 535,317 |   |
|                                 |                 |          |             |        |                   |   |                   |          |             |        |  |   |  |  |   |
| Increase (decrease) in cash and      |            |     |             |   |              |   |              |     |             |   |   |   |   |   |   |
|    cash equivalents   |            | 1,311    |             |   | —            |   |              | —   |             |   | — |   |   | 1,311 |   |
| Cash and cash equivalents at         |            |     |             |   |              |   |              |     |             |   |   |   |   |   |   |
|    beginning of year  |            | 8,552    |             |   | —            |   |              | —   |             |   | — |   |   | 8,552 |   |
|                                 |                 |          |             |        |                   |   |                   |          |             |        |  |   |  |  |   |
| Cash and cash equivalents at         |            |     |             |   |              |   |              |     |             |   |   |   |   |   |   |
|    end of year        | $               | 9,863    |             | $      | —            |   | $                 | —   |             | $      | — |   | $ | 9,863 |   |
|                                 |                 |          |             |        |                   |   |                   |          |             |        |  |   |  |  |   |

25

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**BRANDYWINE OPERATING PARTNERSHIP, L.P.**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**SEPTEMBER 30, 2004**

      **CONSOLIDATING STATEMENT OF OPERATIONS   THREE MONTH PERIOD ENDED SEPTEMBER 30, 2003****(in000’s)**

|                                                         |            |   |             |   |              |   |              |   |             |   |
|--------------------------------------------------------------|-----------------|--------|------------------|--------|-------------------|--------|-------------------|--------|------------------|--------|
|                                                         |            |   |             |   |              |   |              |   |             |   |
|                                                         | **The**         |   | **Guarantor**    |   | **Non-Guarantor** |   | **Consolidation** |   |             |   |
|                                                         | **Partnership** |   | **Subsidiaries** |   | **Subsidiaries**  |   | **Eliminations**  |   | **Consolidated** |   |
|                                                         |                 |   |                  |   |                   |   |                   |   |                  |   |
| **Revenue:**                                                 |            |   |             |   |              |   |              |   |             |   |
|    Rents                                      | $               | 37,045 |             | $      | 12,507            |   | $                 | 14,802 |             | $      | — |   | $ | 64,354 |   |
|    Tenant reimbursements                      |            | 4,848  |             |   | 2,342             |   |              | 1,855  |             |   | — |   |   | 9,045 |   |
|    Other                                      |            | 5,926  |             |   | 573               |   |              | 697    |             |   | (3,592 | ) |   | 3,604 |   |
|                                                         |                 |        |             |        |                   |   |                   |        |             |        |  |   |  |  |   |
|       Total revenue            |            | 47,819 |             |   | 15,422            |   |              | 17,354 |             |   | (3,592 | ) |   | 77,003 |   |
|                                                         |            |   |             |   |              |   |              |   |             |   |   |   |   |   |   |
| **Operating Expenses:**                                      |            |   |             |   |              |   |              |   |             |   |   |   |   |   |   |
|    Property operating expenses                |            | 13,207 |             |   | 4,686             |   |              | 4,882  |             |   | (3,592 | ) |   | 19,183 |   |
|    Real estate taxes                          |            | 4,284  |             |   | 1,476             |   |              | 1,541  |             |   | — |   |   | 7,301 |   |
|    Interest                                   |            | 9,965  |             |   | 286               |   |              | 3,495  |             |   | — |   |   | 13,746 |   |
|    Depreciation and amortization              |            | 8,607  |             |   | 2,668             |   |              | 3,921  |             |   | — |   |   | 15,196 |   |
|    Administrative expenses                    |            | 3,131  |             |   | —            |   |              | 499    |             |   | — |   |   | 3,630 |   |
|                                                         |                 |        |             |        |                   |   |                   |        |             |        |  |   |  |  |   |
|       Total operating expenses |            | 39,194 |             |   | 9,116             |   |              | 14,338 |             |   | (3,592 | ) |   | 59,056 |   |
|                                                         |                 |        |             |        |                   |   |                   |        |             |        |  |   |  |  |   |
| Income from continuing operations before                     |            |   |             |   |              |   |              |   |             |   |   |   |   |   |   |
|    equity in income of real estate ventures   |            |   |             |   |              |   |              |   |             |   |   |   |   |   |   |
|    and net gains on sales of real estate      |            | 8,625  |             |   | 6,306             |   |              | 3,016  |             |   | — |   |   | 17,947 |   |
|                                                         |            |   |             |   |              |   |              |   |             |   |   |   |   |   |   |
| Equity in income of real estate ventures                     |            | (531   | )                |   | —            |   |              | — |             |   | — |   |   | (531 | ) |
| Equity in income of subsidiaries                             |            | 10,387 |             |   | —            |   |              | — |             |   | (10,387 | ) |   | — |   |
| Net gains on sales of real estate                            |            | — |             |   | —            |   |              | — |             |   | — |   |   | — |   |
| Minority interest in consolidated                            |            |   |             |   |              |   |              |   |             |   |   |   |   |   |   |
|    variable interest entities                 |            | — |             |   | —            |   |              | — |             |   | — |   |   | — |   |
|                                                         |                 |        |             |        |                   |   |                   |        |             |        |  |   |  |  |   |
| Income from continuing operations                            |            | 18,481 |             |   | 6,306             |   |              | 3,016  |             |   | (10,387 | ) |   | 17,416 |   |
|                                                         |            |   |             |   |              |   |              |   |             |   |   |   |   |   |   |
| Discontinued operations:                                     |            |   |             |   |              |   |              |   |             |   |   |   |   |   |   |
|    Income from discontinued operations        |            | 465    |             |   | 117               |   |              | 137    |             |   | — |   |   | 719 |   |
|    Net Gain on Disposition                    |            | 930    |             |   | —            |   |              | 811    |             |   | — |   |   | 1,741 |   |
|                                                         |                 |        |             |        |                   |   |                   |        |             |        |  |   |  |  |   |
| Income from discontinued operations                          |            | 1,395  |             |   | 117               |   |              | 948    |             |   | — |   |   | 2,460 |   |
|                                                         |                 |        |             |        |                   |   |                   |        |             |        |  |   |  |  |   |
| Net income                                                   | $               | 19,876 |             | $      | 6,423             |   | $                 | 3,964  |             | $      | (10,387 | ) | $ | 19,876 |   |
|                                                         |                 |        |             |        |                   |   |                   |        |             |        |  |   |  |  |   |

26

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**BRANDYWINE OPERATING PARTNERSHIP, L.P.**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**SEPTEMBER 30, 2004**

**CONSOLIDATING STATEMENT OF OPERATIONS NINE MONTH PERIOD ENDED SEPTEMBER 30, 2003****(in000’s)**

|                                                         |            |    |             |   |              |   |              |   |             |   |
|--------------------------------------------------------------|-----------------|---------|------------------|--------|-------------------|--------|-------------------|--------|------------------|--------|
|                                                         |            |    |             |   |              |   |              |   |             |   |
|                                                         | **The**         |    | **Guarantor**    |   | **Non-Guarantor** |   | **Consolidation** |   |             |   |
|                                                         | **Partnership** |    | **Subsidiaries** |   | **Subsidiaries**  |   | **Eliminations**  |   | **Consolidated** |   |
|                                                         |                 |    |                  |   |                   |   |                   |   |                  |   |
| **Revenue:**                                                 |            |    |             |   |              |   |              |   |             |   |
|    Rents                                      | $               | 111,294 |             | $      | 36,935            |   | $                 | 44,341 |             | $      | — |   | $ | 192,570 |   |
|    Tenant reimbursements                      |            | 13,931  |             |   | 7,178             |   |              | 4,992  |             |   | — |   |   | 26,101 |   |
|    Other                                      |            | 15,145  |             |   | 1,488             |   |              | 1,762  |             |   | (10,717 | ) |   | 7,678 |   |
|                                                         |                 |         |             |        |                   |   |                   |        |             |        |  |   |  |  |   |
|       Total revenue            |            | 140,370 |             |   | 45,601            |   |              | 51,095 |             |   | (10,717 | ) |   | 226,349 |   |
|                                                         |            |    |             |   |              |   |              |   |             |   |   |   |   |   |   |
| **Operating Expenses:**                                      |            |    |             |   |              |   |              |   |             |   |   |   |   |   |   |
|    Property operating expenses                |            | 40,385  |             |   | 14,291            |   |              | 15,600 |             |   | (10,717 | ) |   | 59,559 |   |
|    Real estate taxes                          |            | 11,906  |             |   | 4,267             |   |              | 4,420  |             |   | — |   |   | 20,593 |   |
|    Interest                                   |            | 32,945  |             |   | 868               |   |              | 10,480 |             |   | — |   |   | 44,293 |   |
|    Depreciation and amortization              |            | 25,371  |             |   | 7,915             |   |              | 11,512 |             |   | — |   |   | 44,798 |   |
|    Administrative expenses                    |            | 9,453   |             |   | —            |   |              | 1,500  |             |   | — |   |   | 10,953 |   |
|                                                         |                 |         |             |        |                   |   |                   |        |             |        |  |   |  |  |   |
|       Total operating expenses |            | 120,060 |             |   | 27,341            |   |              | 43,512 |             |   | (10,717 | ) |   | 180,196 |   |
|                                                         |                 |         |             |        |                   |   |                   |        |             |        |  |   |  |  |   |
| Income from continuing operations before                     |            |    |             |   |              |   |              |   |             |   |   |   |   |   |   |
|    equity in income of real estate ventures   |            |    |             |   |              |   |              |   |             |   |   |   |   |   |   |
|    and net gains on sales of real estate      |            | 20,310  |             |   | 18,260            |   |              | 7,583  |             |   | — |   |   | 46,153 |   |
|                                                         |            |    |             |   |              |   |              |   |             |   |   |   |   |   |   |
| Equity in income of real estate ventures                     |            | 38      |             |   | —            |   |              | — |             |   | — |   |   | 38 |   |
| Equity in income of subsidiaries                             |            | 27,905  |             |   | —            |   |              | — |             |   | (27,905 | ) |   | — |   |
| Net gains on sales of real estate                            |            | 1,152   |             |   | —            |   |              | — |             |   | — |   |   | 1,152 |   |
| Minority interest in consolidated                            |            |    |             |   |              |   |              |   |             |   |   |   |   |   |   |
|    variable interest entities                 |            | —  |             |   | —            |   |              | — |             |   | — |   |   | — |   |
|                                                         |                 |         |             |        |                   |   |                   |        |             |        |  |   |  |  |   |
| Income from continuing operations                            |            | 49,405  |             |   | 18,260            |   |              | 7,583  |             |   | (27,905 | ) |   | 47,343 |   |
|                                                         |            |    |             |   |              |   |              |   |             |   |   |   |   |   |   |
| Discontinued operations:                                     |            |    |             |   |              |   |              |   |             |   |   |   |   |   |   |
|    Income from discontinued operations        |            | 1,127   |             |   | 356               |   |              | 505    |             |   | — |   |   | 1,988 |   |
|    Net Gain on Disposition                    |            | 1,491   |             |   | 390               |   |              | 811    |             |   | — |   |   | 2,692 |   |
|                                                         |                 |         |             |        |                   |   |                   |        |             |        |  |   |  |  |   |
| Income from discontinued operations                          |            | 2,618   |             |   | 746               |   |              | 1,316  |             |   | — |   |   | 4,680 |   |
|                                                         |                 |         |             |        |                   |   |                   |        |             |        |  |   |  |  |   |
| Net income                                                   | $               | 52,023  |             | $      | 19,006            |   | $                 | 8,899  |             | $      | (27,905 | ) | $ | 52,023 |   |
|                                                         |                 |         |             |        |                   |   |                   |        |             |        |  |   |  |  |   |
|                                                         |            |    |             |   |              |   |              |   |             |   |   |   |   |   |   |
|                                                         |            |    |             |   |              |   |              |   |             |   |   |   |   |   |   |

**CONSOLIDATING STATEMENT OF CASH FLOWS NINE MONTH PERIOD ENDED SEPTEMBER 30, 2003 (in 000’s)**

|                                 | **The**         |    | **Guarantor**    |   | **Non-Guarantor** |   | **Consolidation** |   |             |   |
|--------------------------------------|-----------------|---------|------------------|--------|-------------------|--------|-------------------|--------|------------------|--------|
|                                 | **Partnership** |    | **Subsidiaries** |   | **Subsidiaries**  |   | **Eliminations**  |   | **Consolidated** |   |
|                                 |                 |    |                  |   |                   |   |                   |   |                  |   |
| Cash flows from operating activities | $               | 71,639  |             | $      | 22,954            |   | $                 | 10,500 |             | $      | (19,749 | ) | $ | 85,344 |   |
| Cash flows from investing activities |            | (22,597 | )                |   | (3,849            | )      |              | (2,297 | )                |   | — |   |   | (28,743 | ) |
| Cash flows from financing activities |            | (68,350 | )                |   | (19,105           | )      |              | (8,203 | )                |   | 19,749 |   |   | (75,909 | ) |
|                                 |                 |         |             |        |                   |   |                   |        |             |        |  |   |  |  |   |
| Increase (decrease) in cash and      |            |    |             |   |              |   |              |   |             |   |   |   |   |   |   |
|    cash equivalents   |            | (19,308 | )                |   | —            |   |              | — |             |   | — |   |   | (19,308 | ) |
| Cash and cash equivalents at         |            |    |             |   |              |   |              |   |             |   |   |   |   |   |   |
|    beginning of year  |            | 26,801  |             |   | —            |   |              | — |             |   | — |   |   | 26,801 |   |
|                                 |                 |         |             |        |                   |   |                   |        |             |        |  |   |  |  |   |
| Cash and cash equivalents at         |            |    |             |   |              |   |              |   |             |   |   |   |   |   |   |
|    end of year        | $               | 7,493   |             | $      | —            |   | $                 | — |             | $      | — |   | $ | 7,493 |   |
|                                 |                 |         |             |        |                   |   |                   |        |             |        |  |   |  |  |   |

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**BRANDYWINE OPERATING PARTNERSHIP, L.P.**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**SEPTEMBER 30, 2004**

13. COMMITMENTS AND CONTINGENCIES 

*Legal Proceedings*

Reference ismade to Note 17 of the Partnership’sregistration statement on Form 10/A-1 for the year ended December 31, 2003 involvingpending litigation in the State of New Jersey. As reported in the Form 10/A-1onApril 26, 2004, the Appellate Division affirmed the Chancery Division’ssummary judgment ruling in the Partnership’s favor on all counts. In lieuof an appeal to the New Jersey Supreme Court, the parties agreed to  a finalsettlement and consented to the release of a security deposit and interest thereonto the Partnership. In exchange, the Partnership agreed to waive its claim forcounsel fees. As a result of the foregoing, the Partnership recorded $1.0million plus accrued interest on the Partnership’s security deposit thatwas released in other revenue for the nine-month period ended September 30, 2004.

*Environmental*

As an owner of real estate, the Partnership is subject to various environmental laws of federal, state, and local governments. The Partnership’s compliance with existing laws hasnot had a material adverse effect on its financial condition and results of operations, and the Partnership does not believe it will have a material adverse effect in the future. However, the Partnership cannot predict the impact of unforeseenenvironmental contingencies or new or changed laws or regulations on its current Properties or on properties that the Partnership may acquire. 

14.  SUBSEQUENT EVENT 

On October 22, 2004, the Partnership issued $275.0 million of 2009 4.5% unsecured notes (the “2009 Notes”) and $250.0 million of 2014 5.4% unsecured notes (the “2014Notes”). The Partnership received net proceeds after discounts and underwriting discounts of approximately $520.1 million. The Partnership and certain of the wholly-owned subsidiaries of the Partnership fully and unconditionally guaranteed thepayment of principal and interest on the Notes. In anticipation of the issuance of the Notes, the Partnership entered into treasury lock agreements with notional amounts totaling $194.8 million with an expiration of 5 years at an all-in rate of 4.7%and with notional amounts totaling $188.0 million with an expiration of 10 years at an all-in rate of 5.6%. Upon issuance of the Notes, the Partnership terminated the treasury lock agreements at a total cost of $3.2 million that will be amortized tointerest expense over the life of the respective notes. The net proceeds of the Notes were used to repay the $320 million 2007 Term Loan, to settle the treasury lock agreements discussed above and to reduce borrowings outstanding under thePartnership’s revolving credit facility.

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**Item 2.****Management’s Discussion and Analysis of Financial Condition and Results ofOperations**

The following discussion and analysis should be read in conjunction with the financial statements and notes thereto appearing elsewhere herein. This Form 10-Q contains forward-lookingstatements for purposes of the Securities Act of 1933 and the Securities Exchange Act of 1934 and as such may involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of thePartnership to be materially different from results, performance or achievements expressed or implied by such forward-looking statements. Although the Partnership believes that the expectations reflected in such forward-looking statements are basedupon reasonable assumptions, there can be no assurance that these expectations will be realized. The Partnership assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events. Factors thatcould cause actual results to differ materially from management’s current expectations include, but are not limited to, changes in general economic conditions, changes in local real estate conditions (including changes in rental rates and thenumber of competing properties), changes in the economic conditions affecting industries in which the Partnership's principal tenants compete, the Partnership’s failure to lease unoccupied space in accordance with the Partnership’sprojections, the failure of the Partnership 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 associatedwith the acquisition and integration of the Partnership’s acquisitions, costs to complete and lease-up pending developments, increased costs for, or lack of availability of, adequate insurance, including for terrorist acts, demand for tenantservices beyond those traditionally provided by landlords, potential liability under environmental or other laws, the existence of complex regulations relating to the Partnership’s status as a REIT and to the Partnership’s acquisition,disposition and development activities, the adverse consequences of the Company’s failure to qualify as a REIT and the other risks identified in the Partnership’s registration statement on Form 10/A-1 for the year ended December 31, 2003.

OVERVIEW

The Partnership currently manages its portfolio within five segments: (1) Pennsylvania--West, (2) Pennsylvania--North, (3) New Jersey (including New York in 2003), (4) Virginia and(5) Urban areas. As of September 30, 2004, the Partnership’s portfolio consisted of 222 office properties (excluding two office properties held by two consolidated real estate ventures), 24 industrial facilities and one mixed-use property thatcontain an aggregate of approximately 19.3 million net rentable square feet. As of September 30, 2004, the Partnership held ownership interests in nine unconsolidated Real Estate Ventures. 

The Partnership receives income primarily from rental revenue (including tenant reimbursements) from the Properties and, to a lesser extent, from the management of properties owned bythird parties and from investments in the Real Estate Ventures.

The Partnership’s financial performance is dependent upon the demand for office and other commercial space in its markets. Current economic conditions, including recessionarypressures and capital market volatility, have enhanced the challenges facing the Partnership. 

In the current economic climate, the Partnership continues to seek revenue growth through an increase in occupancy of its portfolio (90.5% at September 30, 2004, 85.6% including thefive lease-up assets acquired as part of the TRC Properties) and through acquisitions. However, with a downturn in general leasing activity, owners of commercial real estate, including the Partnership, are experiencing longer periods of rentaldowntime and are incurring higher capital costs and leasing commissions to achieve targeted tenancies.

As the Partnership seeks to increase revenue, management also focuses on strategies to minimize operating risks, including (i) tenant rollover risk, (ii) tenant credit risk and (iii)development risk. 

Tenant Rollover Risk: The Partnership is subject to the risk that, upon expiration, leases may not be renewed, the space may not be re-leased, or the terms of renewal or re-leasing (including the cost ofrenovations) may be less favorable than the current lease terms. Leases totaling 4.3% of the net rentable square feet of the Properties as of September 30, 2004 expire without penalty through the end of 2004. In addition, leases totalingapproximately 16.4% of the net rentable square feet of the Properties as of September 30, 2004 are scheduled to expire without penalty in 2005. The Partnership maintains an 

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active dialogue with its tenants in an effort to achieve a high level of lease renewals. The Partnership’s retention rate for leases that were scheduled to expire in thenine-month period ended September 30, 2004 was 77.3%. If the Partnership is unable to renew leases for a substantial portion of the space under expiring leases, or promptly re-lease this space at anticipated rental rates, the Partnership’s cashflow could be adversely impacted.

Tenant Credit Risk: In the event of a tenant default, the Partnership may experience delays in enforcing its rights as a landlord and may incur substantial costs in protecting its investment. Managementregularly evaluates its accounts receivable reserve policy in light of its tenant base and general and local economic conditions. The accounts receivable allowances were $4.1 million or 8.6% of total receivables (including accrued rent receivable)as of September 30, 2004 compared to $4.0 million or 11.2% of total receivables (including accrued rent receivable) as of December 31, 2003.

Development Risk: Asof September 30, 2004, the Partnership had in development four office propertiesand had in redevelopment three office properties aggregating 1.2 million squarefeet. The total cost of these projects is estimated to be $222.5 million of which$70.2 million had been incurred as of September 30, 2004. As of September 30,2004, these projects were approximately 57% leased. One of these developmentproperties is Cira Centre, aplanned 28-story office tower to be located adjacent to Amtrak’s 30th Street Station inthe University City District of Philadelphia. The total cost of this project is estimated to be $177.6 million and the Partnership expects to complete the project in the fourth quarter of 2005. As of September 30, 2004, this project wasapproximately 65% leased. While the Partnership is actively marketing space at these projects to prospective tenants, management cannot provide assurance as to the timing or terms of any leases for such space. As of September 30, 2004, thePartnership owned approximately 469 acres of undeveloped land. Risks associated with development include construction cost overruns, construction delays, insufficient occupancy rates and inability to obtain necessary zoning, land-use, building,occupancy and other required governmental approvals. If one or more of the Partnership’sassumptions regarding the successful efforts of development and leasing are incorrect,the resulting adjustments could impact earnings. 

RECENT ACTIVITY 

On September 21, 2004, the Partnership completed the acquisition of 100% of the partnership interests in The Rubenstein Company, L.P. (“TRC”) for a total purchase price of$600 million, excluding transaction costs and debt prepayment penalties. In the acquisition, the Partnership acquired 14 office properties (the “TRC Properties”) located in Pennsylvania and Delaware that contain approximately 3.5 millionnet rentable square feet. The results of TRC’s operations have been included in the condensed consolidated financial statements since that date. 

The Partnership has agreed to issue the sellers up to a maximum of $9.7 million of additional Class A Units if certain TRC Properties achieve at least 95% occupancy prior to September21, 2007. Any contingent amounts ultimately payable would represent additional purchase price and would be reflected within the basis of the assets acquired and liabilities assumed. 

At the closing of this transaction, the Partnership agreed not to sell the TRC Properties in a transaction that would trigger taxable income to the contributors (i.e., sellers) forperiods ranging from three to 15 years. In the event that the Partnership sells any of the properties in such a transaction within the applicable restricted period, the Partnership will be required to pay significant tax liabilities that would beincurred by the contributors. 

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In addition to the TRC acquisition, the Partnership acquired the following properties during the nine-month period ended September 30, 2004: 

|    **Acquisition**            |   |                                        |   |             |   | **# of**   |   | **Rentable**          |   | **Purchase**   |   |
|----------------------------------------------|--------|---------------------------------------------|--------|------------------|--------|------------|--------|-----------------------|--------|----------------|--------|
|       **Date** |   | **Property/Portfolio Name**                 |   | **Location**     |   | **Bldgs.** |   | **Square Feet/Acres** |   | **Price**      |   |
|                                              |   |                                             |   |                  |   |            |   |                       |   |                |   |
|                                         |   |                                        |   |             |   |       |   |                  |   | **(in 000's)** |   |
| **Office/Industrial Properties:**            |   |                                        |   |             |   |       |   |                  |   |           |
|    Jul-04                     |   | Five Greentree                              |   | Mount Laurel, NJ |   | 1          |   | 169,534               |   |           | 18,353 |   |
|                                         |   |                                        |   |             |   |            |   |                       |   |           |        |   |
|                                         |   | Total Office/Industrial Properties Acquired |   |             |   | 1          |   | 169,534               |   | $              | 18,353 |   |
|                                         |   |                                        |   |             |   |            |   |                       |   |                |        |   |
| **Land Parcels:**                            |   |                                        |   |             |   |       |   |                  |   |           |   |   |
|    Sep-04                     |   | Newtown Land                                |   | Newtown, Pa      |   | —     |   | 58.4                  |   | $              | 4,500  |   |
|                                         |   |                                        |   |             |   |            |   |                       |   |                |        |   |
|                                         |   | Total Land Acquired                         |   |             |   | —     |   | 58.4                  |   | $              | 4,500  |   |
|                                         |   |                                        |   |             |   |            |   |                       |   |                |        |   |

During the nine-month period ended September 30, 2004, the Partnership disposed of the following properties: 

| **Sale**                          |   |                                    |   |             |   | **# of**   |   | **Rentable**          |   | **Disposition** |   |
|-----------------------------------|--------|-----------------------------------------|--------|------------------|--------|------------|--------|-----------------------|--------|-----------------|--------|
| **Date**                          |   | **Property/Portfolio Name**             |   | **Location**     |   | **Bldgs.** |   | **Square Feet/Acres** |   | **Price**       |   |
|                                   |   |                                         |   |                  |   |            |   |                       |   |                 |   |
|                              |   |                                    |   |             |   |       |   |                  |   | **(in 000's)**  |   |
| **Office/Industrial Properties:** |   |                                    |   |             |   |       |   |                  |   |            |
|    Mar-04          |   | 2201 Dabney Road                        |   | Richmond, VA     |   | 1          |   | 45,000                |   | $               | 2,100  |   |
|    Mar-04          |   | 1255 Broad Street                       |   | Bloomfield, NJ   |   | 1          |   | 37,478                |   |            | 3,960  |   |
|    Jun-04          |   | 935 First Avenue                        |   | Montgomery, PA   |   | 1          |   | 103,090               |   |            | 17,000 |   |
|                              |   |                                    |   |             |   |            |   |                       |   |            |        |   |
|                              |   | Total Office/Industrial Properties Sold |   |             |   | 3          |   | 185,568               |   | $               | 23,060 |   |
|                              |   |                                    |   |             |   |            |   |                       |   |                 |        |   |
| **Land Parcels:**                 |   |                                    |   |             |   |       |   |                  |   |            |   |   |
|    May-04          |   | Twin Hickory Land                       |   | Richmond, VA     |   | —     |   | 5.3                   |   | $               | 1,242  |   |
|    Aug-04          |   | East Gate Land                          |   | Mount Laurel, NJ |   | —     |   | 19.4                  |   | $               | 1,300  |   |
|    Sep-04          |   | Dabney Plot B Land                      |   | Richmond, VA     |   | —     |   | 4.6                   |   | $               | 341    |   |
|                              |   |                                    |   |             |   |            |   |                       |   |                 |        |   |
|                              |   | Total Land Sold                         |   |             |   | —     |   | 29.3                  |   | $               | 2,883  |   |
|                              |   |                                    |   |             |   |            |   |                       |   |                 |        |   |

The above table excludes a purchase and sale of a land parcel totaling 95 acres in two separate transactions with unrelated third parties. The purchase and sale resulted in a net gainof approximately $1.5 million. 

**CRITICAL ACCOUNTING POLICIES AND ESTIMATES**

Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses the Partnership’s condensed consolidated financial statements, which havebeen prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assetsand liabilities and the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Management bases its estimates and assumptions on historicalexperience and current economic conditions. On an on-going basis, management evaluates its estimates and assumptions including those related to revenue, impairment of long-lived assets, allowance for doubtful accounts, deferred costs, contingenciesand litigation. Actual results may differ from those estimates and assumptions.

The Partnership’s significant accounting policies are described in Note 2 to the consolidated financial statements included in the Partnership’s registration statement onForm 10/A-1. See also Note 2 in the Partnership’s unaudited condensed consolidated financial statements for the nine-month period ended September 30, 2004 as set forth herein. Management of the Company discusses the Partnership’s criticalaccounting policies and estimates with the Company’s Audit Committee. 

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RESULTS OF OPERATIONS 

*Comparison of the Three Month Periods Ended September 30, 2004 and September 30, 2003*

|                                                             | **Three-month periods ended**                  |   |       |   |        |   |
|------------------------------------------------------------------|------------------------------------------------|--------|------------|--------|-------------|--------|
|                                                             | **September 30,**                              |   | ** ** |   |        |   |
|                                                             |                                                |   | **Dollar** |   | **Percent** |   |
|                                                             | **2004**                                       |   | **2003**   |   | **Change**  |   | **Change** |   |
|                                                             |                                                |   |            |   |             |   |  |   |
|                                                             |  (amounts in thousands)    |   |
| **Revenue:**                                                     |                                           |   |       |   |        |   |   |   |   |   |   |
|    Rents                                          | $                                              | 66,637 |       | $      | 64,354      |   | $ | 2,283 |   | 3.5 | % |
|    Tenant reimbursements                          |                                           | 9,689  |       |   | 9,045       |   |   | 644 |   | 7.1 | % |
|    Other                                          |                                           | 3,318  |       |   | 3,604       |   |   | (286 | ) | -7.9 | % |
|                                                             |                                                |        |       |        |             |   |  |  |   |   |   |
|       Total revenue                |                                           | 79,644 |       |   | 77,003      |   |   | 2,641 |   | 3.4 | % |
|                                                             |                                           |   |       |   |        |   |   |   |   |   |   |
| **Operating Expenses:**                                          |                                           |   |       |   |        |   |   |   |   |   |   |
|    Property operating expenses                    |                                           | 21,972 |       |   | 19,183      |   |   | 2,789 |   | 14.5 | % |
|    Real estate taxes                              |                                           | 7,686  |       |   | 7,301       |   |   | 385 |   | 5.3 | % |
|    Interest                                       |                                           | 11,474 |       |   | 13,746      |   |   | (2,272 | ) | -16.5 | % |
|    Depreciation and amortization                  |                                           | 18,293 |       |   | 15,196      |   |   | 3,097 |   | 20.4 | % |
|    Administrative expenses                        |                                           | 3,534  |       |   | 3,630       |   |   | (96 | ) | -2.6 | % |
|                                                             |                                                |        |       |        |             |   |  |  |   |   |   |
|       Total operating expenses     |                                           | 62,959 |       |   | 59,056      |   |   | 3,903 |   | 6.6 | % |
|                                                             |                                                |        |       |        |             |   |  |  |   |   |   |
| Income from continuing operations before equity in               |                                           |   |       |   |        |   |   |   |   |   |   |
|    income of unconsolidated Real Estate Ventures, |                                           |   |       |   |        |   |   |   |   |   |   |
|    net gain on sales and minority interest        |                                           | 16,685 |       |   | 17,947      |   |   | (1,262 | ) | -7.0 | % |
| Equity in income of unconsolidated Real Estate Ventures          |                                           | 665    |       |   | (531        | )      |   | 1,196 |   | -225.2 | % |
|                                                             |                                                |        |       |        |             |   |  |  |   |   |   |
| Income from continuing operations before net gain                |                                           |   |       |   |        |   |   |   |   |   |   |
|    on sales and minority interest                 |                                           | 17,350 |       |   | 17,416      |   |   | (66 | ) | -0.4 | % |
| Gain on sale of interests in real estate                         |                                           | 1,753  |       |   | —      |   |   | 1,753 |   | 100.0 | % |
| Minority interest                                                |                                           | 338    |       |   | —      |   |   | 338 |   | 100.0 | % |
|                                                             |                                                |        |       |        |             |   |  |  |   |   |   |
| Income from continuing operations                                |                                           | 19,441 |       |   | 17,416      |   |   | 2,025 |   | 11.6 | % |
| Income from discontinued operations (including gains on          |                                           |   |       |   |        |   |   |   |   |   |   |
|    dispositions)                                  |                                           | 2,406  |       |   | 2,460       |   |   | (54 | ) | -2.2 | % |
|                                                             |                                                |        |       |        |             |   |  |  |   |   |   |
|    Net income                                     | $                                              | 21,847 |       | $      | 19,876      |   | $ | 1,971 |   | 9.9 | % |
|                                                             |                                                |        |       |        |             |   |  |  |   |   |   |

Of the 247 Properties owned by the Partnership as of September 30, 2004, a total of 221 Properties containing an aggregate of 14.7 million net rentable square feet (“Same StoreProperties”) were owned for the entire three-month periods ended September 30, 2004 and 2003.

Revenue increased to $79.6 million for the three-month period ended September 30, 2004 as compared to $77.0 million for the comparable period in 2003, primarily due to revenue fromtwo consolidated real estate ventures (Four and Six Tower Bridge Associates) that were consolidated for the three months ended September 30, 2004 and approximately $1.8 million of revenue earned from the 14 TRC Properties. The revenue and expensesrelating to TRC are included in the income statement from the date of acquisition. The straight-line rent adjustment, which reflects the difference between rents accrued in accordance with generally accepted accounting principles and rents billed,increased revenues over contract rents by $1.0 million for the three-month period ended September 30, 2004 and $1.5 million for the comparable period in 2003. Other revenue includes lease termination fees, leasing commissions, third-party managementfees and interest income. Revenue for the Same Store Properties increased to $69.1 million for the three months ended September 30, 2004 as compared to $68.5 million for the comparable period in 2003. This increase was the result of increased tenantreimbursement revenue resulting from increased property operating expenses at the Same Store Properties in 2004. Occupancy for the Same Store Properties as of September 30, 2004 decreased to 90.6% from 91.6% as of September 30, 2003.

Property operating expenses increased to $22.0 million for the three-month period ended September 30, 2004 as compared to $19.2 million for the comparable period in 2003, primarilydue to the additional property operating expenses associated with the consolidation of two real estate ventures (Four and Six Tower Bridge Associates) effective March 31, 2004 and operating expenses associated with the 14 TRC Properties.Additionally, the increase in property operating expenses is attributable to increased repairs and maintenance and utilities expenses in 2004 as compared to 2003. Property operating expenses for the Same Store Properties increased to $21.2 millionfor the three months ended September 30, 2004 as compared to $19.7 million for the comparable period in 2003 as a result of increased repairs and maintenance expenditures and utilities expenses in 2004 as compared to 2003. 

Real estate taxes increased to $7.7 million for the three-month period ended September 30, 2004 as compared to $7.3 million for the comparable period in 2003, primarily due additionalreal estate taxes relating to the 14 TRC properties and to highertax rates and property assessments. Real estate taxes for the Same Store Propertiesincreased to $6.8 million for the three months ended September 30, 2004 as comparedto $6.4 million for the comparable period in 2003 as a result of higher tax ratesand property assessments in 2004. 

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Interest expense decreased to $11.5 million for the three-month period ended September 30, 2004 as compared to $13.7 million for the comparable period in 2003, primarily due todecreased average borrowings and decreased interest rates. Average outstanding debt balances for the three months ended September 30, 2004 were $821.1 million as compared to approximately $942.2 million for the comparable period in 2003. ThePartnership’s weighted-average interest rate on its outstanding indebtedness (after giving effect to hedging activities) decreased to 4.62% as of September 30, 2004 from 5.56% as of September 30, 2003. The decrease in interest expense wasoffset by additional interest expense associated with two consolidated real estate ventures that were consolidated effective March 31, 2004 and additional borrowings under the revolving Credit Facility and the unsecured term loans used to fund theacquisition of TRC.

Depreciation and amortization expense increased to $18.3 million for the three-month period ended September 30, 2004 as compared to $15.2 million for the comparable period in 2003primarily due to additional depreciation recorded from the acquisition of TRC, other property acquisitions from October 2003 through September 2004, increased tenant improvements in the second half of 2003 and 2004 and depreciation and amortizationexpense associated with two real estate ventures that were consolidated effective March 31, 2004. 

Administrative expenses decreased to $3.5 million for the three-month period ended September 30, 2004 as compared to $3.6 million for the comparable period in 2003. 

Equity in income of Real Estate Ventures increased to $0.7 million for the three-month period ended September 30, 2004 as compared to a loss of $0.5 million for the comparable periodin 2003, primarily due to increased income from the One and Three Christina Center joint venture formed in December 2003, in which the Partnership retains a 20% interest and an impairment charge recorded during the third quarter 2003 associated witha non-operating joint venture. This increase was offset by the reclassification of income from the Four and Six Tower Bridge joint ventures that were consolidated into the Partnership’s statement of operations for the three-month period endedSeptember 30, 2004.

Gain on sale of real estate interests increased to $1.8 million in 2004 from zero in 2003 primarily due to the purchase and sale of a land parcel to two separate third parties duringthe third quarter 2004 in which the Partnership recorded a net gain of approximately $1.5 million.

Minority interest from continuing operations primarily represents the income attributable to the interest of the outside joint venture partners in the net income of thePartnership’s two consolidated real estate ventures. These two real estate ventures were consolidated effective March 31, 2004.

Discontinued operations was $2.4 million for the three-month periods ended September 30, 2004 and 2003. The Partnership recognition of a $2.5 million deferred gain from the sale of aproperty in 2002 that did not qualify for gain recognition under the full-accrual method. During the third-quarter 2004, the buyer of the property repaid the seller provided financing and the criteria for full-accrual method were met.

 

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|                                                             |                         |    |       |   |        |   |
|------------------------------------------------------------------|------------------------------|---------|------------|--------|-------------|--------|
|                                                             | **Nine-month periods ended** |    |       |   |        |   |
|                                                             | **September 30,**            |    |       |   |        |   |
|                                                             |                              |    | **Dollar** |   | **Percent** |   |
|                                                             | **2004**                     |    | **2003**   |   | **Change**  |   | **Change** |   |
|                                                             |                              |    |            |   |             |   |  |   |
|                                                             | (amounts in thousands)       |    |
| **Revenue:**                                                     |                         |    |       |   |        |   |   |   |   |   |   |
|    Rents                                          | $                            | 194,703 |       | $      | 192,570     |   | $ | 2,133 |   | 1.1 | % |
|    Tenant reimbursements                          |                         | 25,838  |       |   | 26,101      |   |   | (263 | ) | -1.0 | % |
|    Other                                          |                         | 9,736   |       |   | 7,678       |   |   | 2,058 |   | 26.8 | % |
|                                                             |                              |         |       |        |             |   |  |  |   |   |   |
|       Total revenue                |                         | 230,277 |       |   | 226,349     |   |   | 3,928 |   | 1.7 | % |
|                                                             |                         |    |       |   |        |   |   |   |   |   |   |
| **Operating Expenses:**                                          |                         |    |       |   |        |   |   |   |   |   |   |
|    Property operating expenses                    |                         | 64,338  |       |   | 59,559      |   |   | 4,779 |   | 8.0 | % |
|    Real estate taxes                              |                         | 21,471  |       |   | 20,593      |   |   | 878 |   | 4.3 | % |
|    Interest                                       |                         | 35,526  |       |   | 44,293      |   |   | (8,767 | ) | -19.8 | % |
|    Depreciation and amortization                  |                         | 50,936  |       |   | 44,798      |   |   | 6,138 |   | 13.7 | % |
|    Administrative expenses                        |                         | 10,977  |       |   | 10,953      |   |   | 24 |   | 0.2 | % |
|                                                             |                              |         |       |        |             |   |  |  |   |   |   |
|       Total operating expenses     |                         | 183,248 |       |   | 180,196     |   |   | 3,052 |   | 1.7 | % |
|                                                             |                              |         |       |        |             |   |  |  |   |   |   |
| Income from continuing operations before equity in               |                         |    |       |   |        |   |   |   |   |   |   |
|    income of unconsolidated Real Estate Ventures, |                         |    |       |   |        |   |   |   |   |   |   |
|    net gain on sales and minority interest        |                         | 47,029  |       |   | 46,153      |   |   | 876 |   | 1.9 | % |
| Equity in income of unconsolidated Real Estate Ventures          |                         | 1,573   |       |   | 38          |   |   | 1,535 |   | 4039.5 | % |
|                                                             |                              |         |       |        |             |   |  |  |   |   |   |
| Income from continuing operations before net gain                |                         |    |       |   |        |   |   |   |   |   |   |
|    on sales and minority interest                 |                         | 48,602  |       |   | 46,191      |   |   | 2,411 |   | 5.2 | % |
| Gain on sale of interests in real estate                         |                         | 2,901   |       |   | 1,152       |   |   | 1,749 |   | 151.8 | % |
| Minority interest                                                |                         | 308     |       |   | —      |   |   | 308 |   | 100.0 | % |
|                                                             |                              |         |       |        |             |   |  |  |   |   |   |
| Income from continuing operations                                |                         | 51,811  |       |   | 47,343      |   |   | 4,468 |   | 9.4 | % |
| Income from discontinued operations (including gains on          |                         |    |       |   |        |   |   |   |   |   |   |
|    dispositions)                                  |                         | 2,503   |       |   | 4,680       |   |   | (2,177 | ) | -46.5 | % |
|                                                             |                              |         |       |        |             |   |  |  |   |   |   |
|    Net income                                     | $                            | 54,314  |       | $      | 52,023      |   | $ | 2,291 |   | 4.4 | % |
|                                                             |                              |         |       |        |             |   |  |  |   |   |   |

Of the 247 Properties owned by the Partnership as of September 30, 2004, a total of 221 Properties containing an aggregate of 14.7 million net rentable square feet (“Same StoreProperties”) were owned for the entire nine-month periods ended September 30, 2004 and 2003.

Revenue increasedto $230.3 million for the nine-month period ended September 30, 2004 as comparedto $226.4 million for the comparable period in 2003, primarily due approximately $1.8 million of additional revenue earned from the 14 TRC Properties acquiredas part of the acquisition of TRC and revenue from two consolidated real estateventures (Four and Six Tower Bridge Associates) that were consolidated effectiveMarch 31,2004. These two real estate ventures were not consolidated in 2003. Additionally,this increase is also due to increased other revenue in 2004 as compared to 2003.The straight-line rent adjustment, which reflects the difference between rents accrued in accordance with generally accepted accounting principles and rentsbilled, increased revenues over contract rents by $3.3 million for the nine-monthperiod ended September 30, 2004 and $4.4 million for the comparable period in2003. Otherrevenue includes income from the settlement of a previously disclosed litigation,lease termination fees, leasing commissions, third-party management fees andinterest income. Other revenue increased to $9.7 million for the nine-month periodended  September 30, 2004 as compared to $7.7 million for the comparable periodin 2003 primarily due to the settlement of a previously disclosed litigationtotaling $1.0 million plus accrued interest on the Partnership’s securitydeposit that was  released in 2004. Revenue for the Same Store Properties increasedto $206.3 million for the nine-months ended September 30, 2004 as compared to$203.9 million for the comparable period in 2003. This increase was the resultof increased terminationfees received in 2004 as compared to 2003 and increased tenant reimbursementrevenue resulting from increased property operating expenses at the Same StoreProperties in 2004. Occupancy for the Same Store Properties as of September 30,2004decreased to 90.6% from 91.6% as of September 30, 2003.

Property operatingexpenses increased to $64.4 million for the nine-month period ended September30, 2004 as compared to $59.6 million for the comparable period in 2003, primarilydue to property operating expenses associated with the 14 TRC Properties acquiredas part of the acquisition of TRC, and additional property operating expensesassociated with two consolidated real estate ventures that were consolidatedeffective March31, 2004. Additionally, the increase in property operating expenses is attributableto increased snow removal costs, repairs and maintenance expenditures and utilitiesexpenses in 2004 as compared to 2003. Property operating expenses for the SameStore Properties increased to $21.2 million for the three-months ended September30, 2004 as compared to $19.7 million for the comparableperiod in 2003 as a result of increased snow removal costs, repairs and maintenanceexpenditures and utility expenses in 2004 as compared to 2003. 

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Real estate taxes increased to $21.5 million for the nine-month period ended September 30, 2004 as compared to $20.6 million for the comparable period in 2003, primarily due to highertax rates and property assessments Real estate taxes for the Same Store Properties increased to $19.6 million for the nine-months ended September 30, 2004 as compared to $18.4 million for the comparable period in 2003 as a result of higher tax ratesand property assessments in 2004. 

Interest expense decreased to $35.5 million for the nine-month period ended September 30, 2004 as compared to $44.3 million for the comparable period in 2003, primarily due todecreased average borrowings and decreased interest rates. Average outstanding debt balances for the nine-months ended September 30, 2004 were $775.5 million as compared to approximately $968.9 million for the comparable period in 2003. ThePartnership’s weighted-average interest rate on its outstanding indebtedness (after giving effect to hedging activities) decreased to 4.62% as of September 30, 2004 from 5.56% as of September 30, 2003. The decrease in interest expense wasoffset by additional interest expense associated with two consolidated real estate ventures that were consolidated effective March 31, 2004 and additional borrowings under the revolving Credit Facility and the unsecured term loans used to fund theacquisition of TRC.

Depreciationand amortization expense increased to $50.9 million for the nine-month periodended September 30, 2004 as compared to $44.8 million for the comparable periodin 2003  primarily due to additional depreciation recorded from the TRC Properties,other property acquisitions from October 2003 to September 2004, increased tenantimprovements in the second half of 2003 and 2004 and depreciation and amortizationexpenseassociated with two consolidated real estate ventures that were consolidatedeffective March 31, 2004. 

Administrative expenses were $11.0 million for the nine-month periods ended September 30, 2004 and 2003.

Equity in income of Real Estate Ventures increased to $1.6 million for the nine-month period ended September 30, 2004 as compared to $0.1 million for the comparable period in 2003,primarily due to increased income from the One and Three Christina Center real estate venture formed in December 2003, in which the Partnership retains a 20% interest and an impairment charge recorded during the third quarter 2003 associated with anon-operating joint venture. This increase was offset by the reclassification of income from our Four and Six Tower Bridge joint ventures that were consolidated into the Partnership’s statement of operations effective March 31, 2004.

Gain on saleof real estate interests increased to $2.9 million in 2004 from $1.2 millionin 2003 primarily due to the purchase and sale of a land parcel to two separatethird parties during the third quarter 2004 in which the Partnership recordeda net gain of approximately $1.5 million. 

Minority interest from continuing operations represents the income attributable to the interest of the outside joint venture partners in the net income of the Partnership’s twoconsolidated real estate ventures. These two real estate ventures were consolidated effective March 31, 2004. 

Discontinued operations decreased to $2.5 million for the nine-month period ended September 30, 2004 as compared to $4.7 million for the comparable period in 2003 primarily due to theoperations of the properties included in discontinued operations in 2004 as compared to 2003. During the third-quarter 2004, the buyer of the property repaid the seller provided financing and the criteria for full-accrual method were met. 

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LIQUIDITY AND CAPITAL RESOURCES 

*Cash Flows*

During the nine-month period ended September 30, 2004, the Partnership generated $101.0 million in cash flow from operating activities. Other sources of cash flow for the nine-month  period consisted of: (i) $392.3 million in net proceeds from Unit issuances, (ii) $17.0 million of proceeds from draws on the Credit Facility, net of Credit Facility payments, (iii)$433.0 million from term loan borrowings, (iv) $20.7 million of  proceeds from sales of properties, (v) $4.9 million of proceeds from exercise of stock options, (vi) $0.3 million of cash distributions from Real Estate Ventures in excess of equity in income (vii) $0.4 million from the consolidation of variable  interest entities and (viii) $1.0 million from repayments on employee loans. During the nine-month period ended September 30, 2004, cash outflows consisted of: (i)$100 million of term loan repayments, (ii)$93.8 million of repurchases of Series B  Preferred Units and Class A Units, (iii) $79.2 million to fund development and capital expenditures, (iv) $45.8 million of mortgage note repayments, (v) $67.9 million of distributions to common partnership unitholders, (vi) $6.6 million of leasing  costs, (vii) $3.8 million in debt financing costs, (viii) $1.6 million for redemption of Class A Units, (ix) $0.6 million of escrowed cash and (x) $0.2 million of additional investments in Real Estate Ventures. 

During thenine-month period ended September 30, 2003, the Partnership generated $85.3 millionin cash flow from operating activities. Other sources of cash flow for the nine-monthperiod consisted of: (i) $20.0 million of proceeds from draws on the Credit Facilitynet of Credit Facility repayments, (ii) $47.0 million in net proceeds from shareissuances,(iii)$6.8millionofproceeds from sales of properties, (iv) $3.0 million of escrowed cash, (v) $1.9million from payments on employee loans and (vi) $1.3 million of cash distributionsfrom Real Estate Ventures. During the nine-month period ended September 30, 2003,cash out-flows consisted of: (i) $80.2 million of mortgage note repayments, (ii)$64.5 million of distributions to common partnership unitholders, (iii) $33.5million to fund development andcapital expenditures, (iv) $5.9 million of leasing costs, (v) $0.5 million ofadditionalinvestment in Real Estate Ventures and (vi) $0.1 million of debt financing costs. 

*Capitalization*******

During the nine-month period ended September 30, 2004, the Partnership replaced its existing credit facility with a $450 million unsecured Credit Facility that matures in May 2007,subject to a one-year extension option. The Partnership may elect to increase the Credit Facility to $600 million subject to the absence of any defaults and the Partnership’s ability to acquire additional commitments from its existing lendersor new lenders. The Credit Facility bears interest at LIBOR plus a spread over LIBOR ranging from 0.65% to 1.20% based on the Partnership’s unsecured senior debt rating. As of September 30, 2004, the Partnership’s interest rate was 2.74%(LIBOR rate of 1.84% plus a spread of 0.90%).

During the nine-month period ended September 30, 2004, the Partnership repaid all amounts due under its existing $100.0 million unsecured term loan and obtained two additionalunsecured term loans in the principal amounts of $320.0 million (the 2007 Term Loan) and $113.0 million (the 2008 Term Loan). The 2007 Term Loan was scheduled to mature in September 2007 and the 2008 Term Loan matures in September 2008. As ofSeptember 30, 2004, the Partnership’s interest rate under the 2007 and 2008 Term Loans were 2.94% and 3.19% (LIBOR rate of 1.84% plus a spread of 1.10% and 1.35%).

On October 22, 2004, the Partnership issued $275.0 million of its 2009 4.5% unsecured notes (the “2009 Notes”) and $250.0 million of its 2014 5.4% unsecured notes (the“2014 Notes”). The Partnership received net proceeds after discounts and underwriting discounts of approximately $520.1 million. The Partnership and certain of the wholly-owned subsidiaries of the Partnership fully and unconditionallyguaranteed the payment of principal of and interest on the Notes. In anticipation of the issuance of the Notes, the Partnership entered into treasury lock agreements with notional amounts totaling $194.8 million with an expiration of 5 years at anall-in rate of 4.7% and with notional amounts totaling $188.0 million with an expiration of 10 years at an all-in rate of 5.6%. Upon issuance of the Notes, the Partnership terminated the treasury lock agreements at a total cost of $3.2 million thatwill be amortized to interest expense over the life of the respective notes. The net proceeds of the Notes were used to repay the $320 million 2007 Term Loan, to settle the treasury lock agreements discussed above and to reduce borrowingsoutstanding under the Partnership’s revolving credit facility.

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As of September 30, 2004, the Partnership had approximately $1,277.7 million of debt outstanding, consisting of $322.0 million of borrowings under the Credit Facility, $433.0 millionunder two unsecured term loans and $522.7 million of mortgage notes payable. The mortgage loans mature between January 2006 and July 2027. As of September 30, 2004, the Partnership also had $10.7 million of letters of credit outstanding under theCredit Facility and $117.3 million of unused availability under the Credit Facility.

Previously, the Partnership had entered into interest rate swap agreements to fix the LIBOR component of the Partnership’s interest rate on $175 million of the Credit Facility atapproximately 4.2%. These interest rate swaps expired on June 29, 2004.******

The Partnership intends to refinance its mortgage notes payable as they become due primarily through the use of unsecured debt or equity. The Partnership expects to renegotiate itsCredit Facility prior to maturity or extend its term. 

On January 12, 2004, the Company issued 2,645,000 Common Shares for net proceeds of approximately $69.3 million, in an underwritten public offering, and contributed those proceeds tothe Partnership in exchange for 2,645,000 GP Units. The Partnership used the proceeds to reduce the outstanding balance under our revolving credit facility. 

In February 2004, the Partnership redeemed all of its outstanding Series B Preferred Units for an aggregate price of $93.0 million, together with accrued but unpaid distributions fromJanuary 1, 2004. The Series B Preferred Units had an aggregate stated value of $97.5 million and accrued distributions at 7.25% per annum. The Partnership recorded a gain of $4.5 million related to the redemption. 

On February 27, 2004, the Company issued 2,300,000 Series D Preferred Shares for net proceeds of approximately $55.5 million, in an underwritten public offering, and contributed thoseproceeds to the Partnership in exchange for 2,300,000 Series E Preferred Mirror Units. The Partnership used the proceeds to reduce the outstanding balance under our revolving credit facility. 

On March 3, 2004, the Company issued 1,840,000 Common Shares for net proceeds of approximately $50.7 million, in an underwritten public offering, and contributed those proceeds to thePartnership in exchange for 1,840,000 GP Units. The Partnership used the proceeds to reduce the outstanding balance under our revolving credit facility. 

On September 17, 2004, the Company issued 7,750,000 Common Shares for net proceeds of approximately $217.1 million, in an underwritten public offering, and contributed those proceedsto the Partnership in exchange for 7,750,000 general partnership units.

As of September 30, 2004, the Partnership’s debt-to-market capitalization ratio was 44.1%. As a general policy, the Partnership intends, but is not obligated, to adhere to apolicy of maintaining a debt-to-market capitalization ratio of no more than 50%. 

The Board of Trustees of Brandywine Realty Trust approved a share repurchase program authorizing it to repurchase up to 4,000,000 of its outstanding Common Shares. Through September30, 2004, Brandywine Realty Trust had repurchased 3.2 million of its Common Shares at an average price of $17.75 per share. Concurrent with share repurchases by Brandywine Realty Trust, we have repurchased 3.2 million of its GP Units from BrandywineRealty Trust at an average price of $17.75 per GP Unit. Under the share repurchase program, Brandywine Realty Trust has the authority to repurchase an additional 762,000 shares. No time limit has been placed on the duration of the share repurchaseprogram.******

*Short- and Long-Term Liquidity*

The Partnership believes that its cash flow from operations is adequate to fund its short-term liquidity requirements. Cash flow from operations is generated primarily from rentalrevenues and operating expense reimbursements from tenants and management services income from providing services to third parties. The Partnership intends to use these funds to meet short-term liquidity needs, which are to fund operating expenses,debt service requirements, recurring capital expenditures, tenant allowances, leasing commissions and the minimum distributions required to maintain the Company’s REIT qualification under the Internal Revenue Code. 

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On September 20, 2004, the Partnership declared a distribution of $0.44 per Common Partnership Unit, totaling $24.6 million, which was paid on October 15, 2004 to unit holders ofrecord as of October 5, 2004.

On September 20, 2004, the Partnership declared distributions to holders of its Series A Preferred Units, Series D Preferred Units and Series E Preferred Units to holders of record onSeptember 30, 2004. These units are currently entitled to a cumulative preferential return of 7.25%, 7.50% and 7.375%, respectively. Distributions paid on October 15, 2004 to holders of Series A Preferred Units, Series D Preferred Units and Series EPreferred Units totaled $.7 million, $.9 million and $1.1 million, respectively. 

The Partnership expects to meet its long-term liquidity requirements, such as for property acquisitions, development, investments in real estate ventures, scheduled debt maturities,major renovations, expansions and other significant capital improvements, through cash from operations, borrowings under its Credit Facility, other long-term secured and unsecured indebtedness, the issuance of equity securities and the proceeds fromthe disposition of selected assets. 

*Inflation*

A majority of the Partnership’s leases provide for separate escalations of real estate taxes and operating expenses either on a triple net basis or over a base amount. Inaddition, many of the office leases provide for fixed base rent increases. The Partnership believes that inflationary increases in expenses will be significantly offset by expense reimbursement and contractual rent increases. 

**Item 3.****Quantitative and Qualitative Disclosures about MarketRisk******

Market risk is the exposure to loss resulting from changes in interest rates, commodity prices and equity prices. In pursuing its business plan, the primary market risk to which thePartnership is exposed is interest rate risk. Changes in the general level of interest rates prevailing in the financial markets may affect the spread between the Partnership’s yield on invested assets and cost of funds and, in turn, thePartnership’s ability to make distributions or payments to its shareholders. While the Partnership has not experienced any significant credit losses, in the event of a significant rising interest rate environment and/or economic downturn,defaults could increase and result in losses to the Partnership which adversely affect its operating results and liquidity.

The analysis below presents the sensitivity of the market value of our financial instruments to selected changes in market rates. The range of changes chosen reflects our view ofchanges which are reasonably possible over a one-year period. Market values are the present value of projected future cash flows based on prevailing market conditions at September 30, 2004. 

Our financial instruments consist of both fixed and variable rate debt. As of September 30, 2004, our consolidated debt consisted of $499.5 million in fixed rate mortgages and $23.2million in variable rate mortgage notes, $322.0 million borrowings under our credit facility and $433.0 million under our term loans. All financial instruments were entered into for other than trading purposes and the net market value of thesefinancial instruments is referred to as the net financial position. Changes in interest rates have different impacts on the fixed and variable rate portions of our debt portfolio. A change in interest rates on the fixed portion of the debt portfolioimpacts the net financial position, but has no impact on interest incurred or cash flows. A change in interest rates on the variable portion of the debt portfolio impacts the interest incurred and cash flows, but does not impact the net financialposition. 

As of September 30, 2004, the carrying value of our fixed rate debt was $499.5 million and had a fair value of $553.7 million. Changes in market interest rates on our fixed-rate debtimpacts the fair value of the debt, but it has no impact on interest incurred or cash flow. The sensitivity analysis related to our fixed debt assumes an immediate 100 basis point move in interest rates from their actual September 30, 2004 levels,with all other variables held constant. A 100 basis point increase in market interest rates would result in a decrease in the fair market value of our fixed-rate debt by $32.3million at September 30, 2004. A 100 basis point decrease in marketinterest rates would result in an increase in the fair market value of our fixed-rate debt by $35.6 million at September 30, 2004.

Based on our variable rate debt as of September 30, 2004, a 1% increase in interest rates would result in an additional $7.8 million in interest expense per year and a 1% decreasewould reduce interest expense by $7.8 million per year. 

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On October22, 2004, the Partnership issued $275.0 million of its 2009 4.5% unsecured notes(the “2009 Notes”) and $250.0 million of its 2014 5.4% unsecured notes(the“2014 Notes”). In anticipation of the issuance of the Notes, the Partnershipentered into treasury lock agreements with notional amounts totaling $194.8 millionwith an expiration of 5 years at an all-in rate of 4.7% and with notional  amountstotaling $188.0 million with an expiration of 10 years at an all-in rate of 5.6%.Upon issuance of the Notes, the Partnership terminated the treasury lock agreementsat a total cost of $3.2 million that will be amortized to interest expenseover the life of the respective notes. On a pro forma basis after these financingtransactions, the Partnership’svariable rate debt has decreased by $525.0 million to $253.2 million. Based onthe pro forma variable rate debt, a 1% increase would result in an additional$2.5 million of interest expense per year and a 1% decrease would reduce interestexpense by $2.5 million per year. 

**Item 4.****Controls and Procedures******

| (a)    | *Evaluation of disclosure controls and procedures.*The Chief ExecutiveOfficer and its Chief Financial Officer of the Company, after evaluating the effectiveness of the Partnership’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of theend of the period covered by this quarterly report, have concluded that the Partnership’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Partnership in the reports that it files underthe Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| (b)    | *Changes in internal controls over financial reporting.*There was no changein the Partnership’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 Partnership’s internal controlover financial reporting.                                                                                                                                                                                                                                                                                                                                                                                                                    |

**Part II. OTHER INFORMATION**

**Item 1.****Legal Proceedings******

Not applicable.****

**Item 2.****Unregistered Sales of Equity Securities and Use ofProceeds******

The following table summarizes the unit repurchases during the three-month periods ended September 30, 2004:

|                    |    **Total****Number    of****Unit****Purchased** |   |   | **Average****Price    Paid     Per Unit** |   | **Total        Number    of Unit Purchased    as Part    of Publicly Announced    Plans or    Programs (1)** |   |  **Maximum  Number    of Units that    May Yet    Be Purchased Under    the Plans or    Programs (1)** |   |
|-------------------------|------------------------------------------------------------------|--------|--------|-------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------|--------|
|                    |                                                             |   |   |                                      |   |
|                    |                                                             |   |   |                                      |   |
|                    |                                                             |   |   |                                      |   |
|                    |                                                             |   |   |                                      |   |
|                    |                                                             |   |   |                                      |   |
|                    |                                                             |   |   |                                      |   |
| **2004:**               |                                                                  |   |        |                                           |   |                                                                                                              |   |                                                                                                             |   |
| April                   | —                                                          |   | $      | —                                   |   | —                                                                                                      |   | 762,000                                                                                                     |   |
| May                     | —                                                          |   | $      | —                                   |   | —                                                                                                      |   | 762,000                                                                                                     |   |
| June                    | —                                                          |   | $      | —                                   |   | —                                                                                                      |   | 762,000                                                                                                     |   |
|                    |                                                                  |   |        |                                           |   |                                                                                                              |   |                                                                                                             |   |
|    Total | —                                                          |   | $      | —                                   |   | —                                                                                                      |   | 762,000                                                                                                     |   |
|                    |                                                                  |   |        |                                           |   |                                                                                                              |   |                                                                                                             |   |

(1) In 1998, the Company's Board of Trustees approved an open market share repurchase program and in 2001 authorized an increase in the total number of Common Shares that may berepurchased under the program to 4,000,000 Common Shares. The share repurchase program does not have an expiration date.

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| **Item         3. Defaults         Upon Senior Securities**                     |
|---------------------------------------------------------------------------------|
|                                                                            |   |
| Not applicable.                                                                 |
|                                                                            |   |
| **Item         4. Submission         of Matters to a Vote of Security Holders** |
|                                                                            |
| Not applicable.                                                                 |
|                                                                            |   |
| **Item         5. Other         Information**                                   |
|                                                                            |   |
| Not applicable.                                                                 |
|                                                                            |   |
| **Item         6. Exhibits         and Reports on Form 8-K**                    |
|                                                                            |   |
| **(a) Exhibits**                                                                |
| 10.1                                                                            | Contribution       Agreement (Incorporated by reference to Exhibit 10.1 to Brandywine’s       Current Report on Form 8-K filed August 19, 2004) |
| 10.2                                                                            | Amendment       No. 1 to Credit Agreement (Incorporated by reference to Exhibit 10.1 to       Brandywine’s Current Report on Form 8-K filed September 13, 2004) |
| 10.3                                                                            | Term       Loan Credit Agreement (2007) (Incorporated by reference to Exhibit 10.1       to Brandywine’s Current Report on Form 8-K filed September 21, 2004) |
| 10.4                                                                            | Term       Loan Credit Agreement (2008) (Incorporated by reference to Exhibit 10.2       to Brandywine’s Current Report on Form 8-K filed September 21, 2004) |
| 10.5                                                                            | Registration       Rights Agreement (Incorporated by reference to Exhibit 10.3 to Brandywine’s       Current Report on Form 8-K filed September 21, 2004) |
| 10.6                                                                            | Tax       Protection Agreement (Incorporated by reference to Exhibit 10.4 to Brandywine’s       Current Report on Form 8-K filed September 21, 2004) |
| 10.7                                                                            | Indenture       (Incorporated by reference to Exhibit 4.1 to Brandywine’s Current       Report on Form 8-K filed October 22, 2004) |
| 10.8                                                                            | Form       of $275,000,000 4.50% Guaranteed Note due 2009 (Incorporated by reference       to Exhibit 4.2 to Brandywine’s       Current Report on Form 8-K filed October 22, 2004) |
| 10.9                                                                            | Form       of $250,000,000 5.40% Guaranteed Note due 2014 (Incorporated by reference       to Exhibit 4.3 to Brandywine’s Current Report on Form 8-K filed October 22, 2004) |
| 31.1                                                                            | Certification Pursuant to 13a-14 of the Securities Exchange Act of 1934 |
| 31.2                                                                            | Certification Pursuant to 13a-14 of the Securities Exchange Act of 1934 |
| 32.1                                                                            | Certification       Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906       of the Sarbanes-Oxley Act of 2002 |
| 32.2                                                                            | Certification       Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906       of the Sarbanes-Oxley Act       of 2002 |

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SIGNATURES OF REGISTRANT

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto dulyauthorized. 

|                   | BRANDYWINE OPERATING PARTNERSHIP, L.P. |
|------------------------|----------------------------------------|
|                   | (Registrant)                           |   |
|                   |                                   |   |
|                   | By:                                    | Brandywine Realty Trust, its General Partner |
|                   |                                   |   |
|                   |                                   |   |
|                   |                                   |   |
| Date: November 9, 2004 | By:                                    | /s/ Gerard H. Sweeney |
|                   |                                   |  |
|                   |                                   | Gerard H. Sweeney, President and Chief Executive Officer |
|                   |                                   | (Principal Executive Officer) |
|                   |                                   |   |
|                   |                                   |   |
| Date: November 9, 2004 | By:                                    | /s/ Christopher P. Marr |
|                   |                                   |  |
|                   |                                   | Christopher P. Marr, Senior Vice President and Chief Financial Officer |
|                   |                                   | (Principal Financial Officer) |
|                   |                                   |   |
|                   |                                   |   |
| Date: November 9, 2004 | By:                                    | /s/ Timothy M. Martin |
|                   |                                   |  |
|                   |                                   | Timothy       M. Martin, Vice President-Finance and Chief Accounting Officer |
|                   |                                   | (Principal Accounting Officer) |

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