##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
  þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended June 30, 2009
 or
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from  to
 Commission file number
    
    001-9106 (Brandywine Realty Trust)000-24407 (Brandywine Operating Partnership, L.P.)
 Brandywine Realty Trust
Brandywine Operating Partnership, L.P.
  MARYLAND(Brandywine Realty Trust)
    
    23-2413352DELAWARE(Brandywine Operating Partnership L.P.)
    
    23-2862640(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)Incorporation or organization)
 555 East Lancaster AvenueRadnor, Pennsylvania
    
    19087(Address of principal executive offices)
    
    (Zip Code)
 (610) 325-5600
  Brandywine Realty Trust
    
    Yes þ No oBrandywine Operating Partnership, L.P.
    
    Yes þ No o
  Brandywine Realty Trust
    
    Yes o No oBrandywine Operating Partnership, L.P.
    
    Yes o No o
   Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o
  Brandywine Realty Trust
    
    Yes o No þBrandywine Operating Partnership, L.P.
    
    Yes o No þ




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##### 



TABLE OF CONTENTS
  
 PagePART I  FINANCIAL INFORMATIONBrandywine Realty TrustItem 1.
    
    Financial Statements (unaudited)Consolidated Balance Sheets as of June 30, 2009 and December 31, 2008
    
    
    3Consolidated Statements of Operations for the three- and six-month periods ended
June 30, 2009 and 2008
    
    
    4Consolidated Statements of Other Comprehensive Income for the three- and six-month
periods ended June 30, 2009 and 2008
    
    
    5Consolidated Statements of Equity for the six month periods ended June 30, 2009 and 2008
    
    
    6Consolidated Statements of Cash Flows for the six-month periods ended June 30, 2009
and 2008
    
    
    7Notes to Unaudited Consolidated Financial Statements
    
    
    8Brandywine Operating Partnership, L.P.Item 1.
    
    Financial Statements (unaudited)Consolidated Balance Sheets as of June 30, 2009 and December 31, 2008
    
    
    39Consolidated Statements of Operations for the three-and six- month periods ended
June 30, 2009 and 2008
    
    
    40Consolidated Statements of Other Comprehensive Income for the three- and six month
periods ended June 30, 2009 and 2008
    
    
    41Consolidated Statements of Cash Flows for the six month periods ended June 30, 2009
and 2008
    
    
    42Notes to Unaudited Consolidated Financial Statements
    
    
    43Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    73Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    93Item 4.
    
    Controls and Procedures
    
    
    93PART II  OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    93Item 1A.
    
    Risk Factors
    
    
    93Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    93Item 3.
    
    Defaults Upon Senior Securities
    
    
    94Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    94Item 5.
    
    Other Information
    
    
    94Item 6.
    
    Exhibits
    
    
    95Signatures
    
    
    96EX-31.1EX-31.2EX-31.3EX-31.4EX-32.1EX-32.2EX-32.3EX-32.4
  Filing Format
  2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1.
    
     Financial Statements
 BRANDYWINE REALTY TRUST

CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands, except share and per share information)
 June 30,
    
    
    December 31,2009
    
    
    2008 (as adjusted)ASSETSReal estate investments:Rental properties
    
    $
    4,586,580
    
    
    $
    4,608,320Accumulated depreciation
    
    
    (690,490
    )
    
    
    (639,688
    )Operating real estate investments, net
    
    
    3,896,090
    
    
    
    3,968,632Construction-in-progress
    
    
    197,404
    
    
    
    122,219Land inventory
    
    
    97,430
    
    
    
    100,516Total real estate investments, net
    
    
    4,190,924
    
    
    
    4,191,367Cash and cash equivalents
    
    
    3,936
    
    
    
    3,924Cash in escrow
    
    
    
    
    
    
    31,385Accounts receivable, net
    
    
    8,950
    
    
    
    11,762Accrued rent receivable, net
    
    
    85,669
    
    
    
    86,362Investment in real estate ventures, at equity
    
    
    75,688
    
    
    
    71,028Deferred costs, net
    
    
    100,852
    
    
    
    89,327Intangible assets, net
    
    
    124,106
    
    
    
    145,757Notes receivable
    
    
    49,676
    
    
    
    48,048Other assets
    
    
    47,831
    
    
    
    59,008Total assets
    
    $
    4,687,632
    
    
    $
    4,737,968LIABILITIES AND BENEFICIARIES EQUITYMortgage notes payable
    
    $
    502,961
    
    
    $
    487,525Borrowing under credit facilities
    
    
    74,000
    
    
    
    153,000Unsecured term loan
    
    
    183,000
    
    
    
    183,000Unsecured senior notes, net of discounts
    
    
    1,724,582
    
    
    
    1,917,970Accounts payable and accrued expenses
    
    
    85,474
    
    
    
    74,824Distributions payable
    
    
    15,177
    
    
    
    29,288Tenant security deposits and deferred rents
    
    
    54,595
    
    
    
    58,692Acquired below market leases, net
    
    
    42,036
    
    
    
    47,626Other liabilities
    
    
    53,696
    
    
    
    63,545Total liabilities
    
    
    2,735,521
    
    
    
    3,015,470Commitments and contingencies (Note 15)Brandywine Realty Trusts equity:Preferred Shares (shares authorized-20,000,000):7.50% Series C Preferred Shares, $0.01 par value; issued and outstanding-
2,000,000 in 2009 and 2008
    
    
    20
    
    
    
    207.375% Series D Preferred Shares, $0.01 par value; issued and outstanding-
2,300,000 in 2008 and 2008
    
    
    23
    
    
    
    23Common Shares of Brandywine Realty Trusts beneficial interest, $0.01 par value; shares
authorized 200,000,000; 128,850,253 and 88,610,053 issued in 2009 and 2008, respectively
and 128,583,411 and 88,158,937 outstanding in 2009 and 2008, respectively
    
    
    1,286
    
    
    
    882Additional paid-in capital
    
    
    2,607,919
    
    
    
    2,351,428Deferred compensation payable in common stock
    
    
    5,858
    
    
    
    6,274Common shares in treasury, at cost, 266,842 and 451,116 in 2009 and 2008,
respectively
    
    
    (7,893
    )
    
    
    (14,121
    )Common shares in grantor trust, 264,794 in 2009 and 215,742 in 2008
    
    
    (5,858
    )
    
    
    (6,274
    )Cumulative earnings
    
    
    498,268
    
    
    
    498,716Accumulated other comprehensive loss
    
    
    (10,652
    )
    
    
    (17,005
    )Cumulative distributions
    
    
    (1,176,422
    )
    
    
    (1,150,406
    )Total Brandywine Realty Trusts equity
    
    
    1,912,549
    
    
    
    1,669,537Non-controlling interests
    
    
    39,562
    
    
    
    52,961Total equity
    
    
    1,952,111
    
    
    
    1,722,498Total liabilities and equity
    
    $
    4,687,632
    
    
    $
    4,737,968
  3




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##### Table of Contents



BRANDYWINE REALTY TRUST  
 CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except share and per share information)
 For the three-month periods ended
    
    
    For the six-month periods endedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenue:Rents
    
    $
    121,598
    
    
    $
    123,111
    
    
    $
    244,208
    
    
    $
    245,879Tenant reimbursements
    
    
    18,636
    
    
    
    20,786
    
    
    
    41,069
    
    
    
    39,807Termination fees
    
    
    963
    
    
    
    892
    
    
    
    1,076
    
    
    
    4,124Third Party management fees, labor reimbursement and leasing
    
    
    4,097
    
    
    
    5,170
    
    
    
    8,861
    
    
    
    10,849Other
    
    
    583
    
    
    
    807
    
    
    
    1,501
    
    
    
    1,589Total revenue
    
    
    145,877
    
    
    
    150,766
    
    
    
    296,715
    
    
    
    302,248Operating Expenses:Property operating expenses
    
    
    40,595
    
    
    
    40,171
    
    
    
    85,460
    
    
    
    80,881Real estate taxes
    
    
    14,517
    
    
    
    15,320
    
    
    
    29,887
    
    
    
    30,801Third party management expenses
    
    
    1,968
    
    
    
    2,381
    
    
    
    4,083
    
    
    
    4,627Depreciation and amortization
    
    
    53,308
    
    
    
    51,492
    
    
    
    105,461
    
    
    
    102,430General & administrative expenses
    
    
    5,514
    
    
    
    6,127
    
    
    
    10,472
    
    
    
    11,039Total operating expenses
    
    
    115,902
    
    
    
    115,491
    
    
    
    235,363
    
    
    
    229,778Operating income
    
    
    29,975
    
    
    
    35,275
    
    
    
    61,352
    
    
    
    72,470Other Income (Expense):Interest income
    
    
    642
    
    
    
    179
    
    
    
    1,222
    
    
    
    382Interest expense
    
    
    (34,944
    )
    
    
    (36,742
    )
    
    
    (70,590
    )
    
    
    (73,785
    )Amortization of deferred financing costs
    
    
    (1,894
    )
    
    
    (1,198
    )
    
    
    (3,146
    )
    
    
    (2,706
    )Recognized hedge activity
    
    
    (305
    )
    
    
    
    
    
    
    (305
    )
    
    
    Equity in income of real estate ventures
    
    
    1,533
    
    
    
    1,664
    
    
    
    2,119
    
    
    
    2,779Net gain (loss) on dispostion of undepreciated real estate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24
    )Gain on early extinguishment of debt
    
    
    12,013
    
    
    
    543
    
    
    
    18,651
    
    
    
    3,106Income (loss) from continuing operations
    
    
    7,020
    
    
    
    (279
    )
    
    
    9,303
    
    
    
    2,222Discontinued operations:Income from discontinued operations
    
    
    (14
    )
    
    
    1,922
    
    
    
    336
    
    
    
    5,037Net gain (loss) on disposition of discontinued operations
    
    
    (1,225
    )
    
    
    13,420
    
    
    
    (1,031
    )
    
    
    21,401Provision for impairment
    
    
    
    
    
    
    (6,850
    )
    
    
    (3,700
    )
    
    
    (6,850
    )Total discontinued operations
    
    
    (1,239
    )
    
    
    8,492
    
    
    
    (4,395
    )
    
    
    19,588Net income
    
    
    5,781
    
    
    
    8,213
    
    
    
    4,908
    
    
    
    21,810Net (income) loss from discontinued operations attributable to non-controlling interests
    
    
    35
    
    
    
    (324
    )
    
    
    132
    
    
    
    (791
    )Net (income) loss from continuing operations attributable to non-controlling interests
    
    
    (202
    )
    
    
    23
    
    
    
    (205
    )
    
    
    (37
    )Net (income) attributable to non-controlling interests
    
    
    (167
    )
    
    
    (301
    )
    
    
    (73
    )
    
    
    (828
    )Net income attributable to Brandywine Realty Trust
    
    
    5,614
    
    
    
    7,912
    
    
    
    4,835
    
    
    
    20,982Distribution to Preferred Shares
    
    
    (1,998
    )
    
    
    (1,998
    )
    
    
    (3,996
    )
    
    
    (3,996
    )Amount allocated to unvested restricted shareholders
    
    
    (73
    )
    
    
    (227
    )
    
    
    (110
    )
    
    
    (394
    )Income (loss) allocated to Common Shares
    
    $
    3,543
    
    
    $
    5,687
    
    
    $
    729
    
    
    $
    16,592Basic earnings (loss) per Common Share:Continuing operations
    
    $
    0.04
    
    
    $
    (0.03
    )
    
    $
    0.05
    
    
    $
    (0.03
    )Discontinued operations
    
    
    (0.01
    )
    
    
    0.09
    
    
    
    (0.04
    )
    
    
    0.22$
    0.03
    
    
    $
    0.06
    
    
    $
    0.01
    
    
    $
    0.19Diluted earnings (loss) per Common Share:Continuing operations
    
    $
    0.04
    
    
    $
    (0.03
    )
    
    $
    0.05
    
    
    $
    (0.03
    )Discontinued operations
    
    
    (0.01
    )
    
    
    0.09
    
    
    
    (0.04
    )
    
    
    0.22$
    0.03
    
    
    $
    0.06
    
    
    $
    0.01
    
    
    $
    0.19Dividends declared per Common Share
    
    $
    0.10
    
    
    $
    0.44
    
    
    $
    0.40
    
    
    $
    0.88Basic weighted average shares outstanding
    
    
    101,583,997
    
    
    
    87,280,576
    
    
    
    94,934,134
    
    
    
    87,092,271Diluted weighted average shares outstanding
    
    
    102,742,343
    
    
    
    87,512,345
    
    
    
    95,495,392
    
    
    
    87,300,005Net (loss) income attributable to Brandywine Realty TrustIncome (loss) from continuing operations
    
    $
    6,818
    
    
    $
    (256
    )
    
    $
    9,098
    
    
    $
    2,185Income (loss) from discontinued operations
    
    
    (1,204
    )
    
    
    8,168
    
    
    
    (4,263
    )
    
    
    18,797Net income
    
    $
    5,614
    
    
    $
    7,912
    
    
    $
    4,835
    
    
    $
    20,982
  4




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##### Table of Contents



BRANDYWINE REALTY TRUST  
 CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME
(unaudited, in thousands)
 For the three-month periods ended
    
    
    For the six-month periods endedJune 30,
    
    
    June 30,2009
    
    
    2008 (as adjusted)
    
    
    2009
    
    
    2008 (as adjusted)Net income
    
    $
    5,781
    
    
    $
    8,213
    
    
    $
    4,908
    
    
    $
    21,810Other comprehensive income (loss):Unrealized gain (loss) on derivative financial instruments
    
    
    (4,217
    )
    
    
    5,358
    
    
    
    6,069
    
    
    
    526Reclassification of realized (gains) losses on derivative financial
instruments to operations, net
    
    
    (20
    )
    
    
    (20
    )
    
    
    (40
    )
    
    
    (40
    )Unrealized gain on available-for-sale securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    248Total other comprehensive income (loss)
    
    
    (4,237
    )
    
    
    5,338
    
    
    
    6,029
    
    
    
    734Comprehensive income
    
    $
    1,544
    
    
    $
    13,551
    
    
    $
    10,937
    
    
    $
    22,544Comprehensive (income) loss attributable to non-controlling interest
    
    
    (47
    )
    
    
    (301
    )
    
    
    251
    
    
    
    (828
    )Comprehensive income attributable to Brandywine Realty Trust
    
    $
    1,497
    
    
    $
    13,250
    
    
    $
    11,188
    
    
    $
    21,716
  5




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##### Table of Contents



BRANDYWINE REALTY TRUST

CONSOLIDATED STATEMENTS OF EQUITY
For the Six-Month Periods Ended June 30, 2009 and 2008
(unaudited, in thousands, except number of shares)
 June 30, 2009
 Common Shares ofNumber of Rabbi
    
    
    Brandywine Realty
    
    
    
    
    
    
    
    
    
    
    DeferredNumber of Preferred
    
    
    Par Value of
    
    
    Number of Preferred
    
    
    Par Value of
    
    
    Number of Common
    
    
    Number of Treasury
    
    
    Trust/Deferred
    
    
    Trusts beneficial
    
    
    
    
    
    
    Common Shares in
    
    
    Compensation Payable
    
    
    Common Shares in Grantor
    
    
    
    
    
    
    Accumulated Other
    
    
    Cumulative
    
    
    Non-ControllingC Shares
    
    
    Preferred C Shares
    
    
    D Shares
    
    
    Preferred D Shares
    
    
    Shares
    
    
    Shares
    
    
    Compensation Shares
    
    
    interest
    
    
    Additional Paid-in Capital
    
    
    Treasury
    
    
    in Common Stock
    
    
    Trust
    
    
    Cumulative Earnings
    
    
    Comprehensive Loss
    
    
    Distributions
    
    
    Interests
    
    
    TotalBALANCE, December 31, 2008
    
    
    2,000,000
    
    
    $
    20
    
    
    
    2,300,000
    
    
    $
    23
    
    
    
    88,610,053
    
    
    
    451,116
    
    
    
    215,742
    
    
    $
    882
    
    
    $
    2,351,428
    
    
    $
    (14,121
    )
    
    $
    6,274
    
    
    $
    (6,274
    )
    
    $
    498,716
    
    
    $
    (17,005
    )
    
    $
    (1,150,406
    )
    
    $
    52,961
    
    
    $
    1,722,498Net Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,835
    
    
    
    
    
    
    
    
    
    
    
    73
    
    
    
    4,908Other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,353
    
    
    
    
    
    
    
    (324
    )
    
    
    6,029Issuance of Common Shares of Beneficial Interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,250,000
    
    
    
    
    
    
    
    
    
    
    
    402
    
    
    
    242,043
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    242,445Bonus Share Issuance
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (36,826
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,228
    
    
    
    
    
    
    
    
    
    
    
    (1,105
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    123Vesting of Restricted Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (78,607
    )
    
    
    8,971
    
    
    
    2
    
    
    
    (778
    )
    
    
    2,704
    
    
    
    56
    
    
    
    (56
    )
    
    
    (2,142
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (214
    )Restricted Stock Amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,643
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,643Restricted Performance Units Amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    99
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    99Share Issuance from Deferred Compensation Plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,719
    )
    
    
    (54,854
    )
    
    
    35,186
    
    
    
    
    
    
    
    (21
    )
    
    
    1,830
    
    
    
    (507
    )
    
    
    507
    
    
    
    (1,670
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    139Share Choice Plan Issuance
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,081
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (46
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (46
    )Stock Option Amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    227
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    227Outperformance Plan Amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    615
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    615Trustee Fees Paid in Shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,987
    )
    
    
    4,895
    
    
    
    
    
    
    
    
    
    
    
    466
    
    
    
    35
    
    
    
    (35
    )
    
    
    (366
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100Other  consolidated real estate ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    124
    
    
    
    124Preferred Share distributions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,996
    )
    
    
    
    
    
    
    (3,996
    )Adjustment for Non-Controlling Interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,709
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,709
    )
    
    
    Distributions declared ($0.10 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (22,020
    )
    
    
    (563
    )
    
    
    (22,583
    )BALANCE, June 30, 2009
    
    
    2,000,000
    
    
    $
    20
    
    
    
    2,300,000
    
    
    $
    23
    
    
    
    128,850,253
    
    
    
    266,842
    
    
    
    264,794
    
    
    $
    1,286
    
    
    $
    2,607,919
    
    
    $
    (7,893
    )
    
    $
    5,858
    
    
    $
    (5,858
    )
    
    $
    498,268
    
    
    $
    (10,652
    )
    
    $
    (1,176,422
    )
    
    $
    39,562
    
    
    $
    1,952,111
 June 30, 2008
 Common Shares ofNumber of Rabbi
    
    
    Brandywine Realty
    
    
    
    
    
    
    
    
    
    
    DeferredNumber of Preferred
    
    
    Par Value of
    
    
    Number of Preferred
    
    
    Par Value of
    
    
    Number of Common
    
    
    Number of Treasury
    
    
    Trust/Deferred
    
    
    Trusts beneficial
    
    
    
    
    
    
    Common Shares in
    
    
    Compensation Payable
    
    
    Common Shares in Grantor
    
    
    
    
    
    
    Accumulated Other
    
    
    Cumulative
    
    
    Non-ControllingC Shares
    
    
    Preferred C Shares
    
    
    D Shares
    
    
    Preferred D Shares
    
    
    Shares
    
    
    Shares
    
    
    Compensation Shares
    
    
    interest
    
    
    Additional Paid-in Capital
    
    
    Treasury
    
    
    in Common Stock
    
    
    Trust
    
    
    Cumulative Earnings
    
    
    Comprehensive Loss
    
    
    Distributions
    
    
    Interests
    
    
    TotalBALANCE, December 31, 2007
    
    
    2,000,000
    
    
    $
    20
    
    
    
    2,300,000
    
    
    $
    23
    
    
    
    88,614,322
    
    
    
    1,599,637
    
    
    
    171,650
    
    
    $
    870
    
    
    $
    2,348,153
    
    
    $
    (53,449
    )
    
    $
    5,651
    
    
    $
    (5,651
    )
    
    $
    471,902
    
    
    $
    (1,885
    )
    
    $
    (999,654
    )
    
    $
    84,076
    
    
    $
    1,850,056Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,982
    
    
    
    
    
    
    
    
    
    
    
    828
    
    
    
    21,810Other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    734
    
    
    
    
    
    
    
    
    
    
    
    734Vesting of Restricted Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (73,741
    )
    
    
    9,895
    
    
    
    3
    
    
    
    (1,012
    )
    
    
    2,370
    
    
    
    167
    
    
    
    (167
    )
    
    
    (1,068
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    293Restricted Stock Amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,273
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,273Conversion of LP units to Common Shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (561,568
    )
    
    
    
    
    
    
    6
    
    
    
    
    
    
    
    21,348
    
    
    
    
    
    
    
    
    
    
    
    (6,533
    )
    
    
    
    
    
    
    
    
    
    
    (14,821
    )
    
    
    (0
    )Share Cancellation/Forfeiture
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (308
    )
    
    
    
    
    
    
    (308
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10
    )
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Share Issuance from Deferred Compensation Plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (39,691
    )
    
    
    33,413
    
    
    
    
    
    
    
    
    
    
    
    767
    
    
    
    491
    
    
    
    (491
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    767Share Choice Plan Issuance
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,575
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (27
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (27
    )Stock Option Amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    78
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    78Deferred Compensation Obligation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,445
    )
    
    
    4,445
    
    
    
    
    
    
    
    
    
    
    
    228
    
    
    
    77
    
    
    
    (77
    )
    
    
    (151
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    77Outperformance Plan Amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    741
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    741Trustee Fees Paid in Shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,586
    )
    
    
    2,058
    
    
    
    
    
    
    
    60
    
    
    
    35
    
    
    
    35
    
    
    
    (35
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    95Preferred Share distributions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,996
    )
    
    
    
    
    
    
    (3,996
    )Distributions declared ($0.44 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (77,231
    )
    
    
    (3,210
    )
    
    
    (80,441
    )BALANCE, June 30, 2008
    
    
    2,000,000
    
    
    $
    20
    
    
    
    2,300,000
    
    
    $
    23
    
    
    
    88,612,439
    
    
    
    914,606
    
    
    
    221,153
    
    
    $
    879
    
    
    $
    2,349,266
    
    
    $
    (28,701
    )
    
    $
    6,411
    
    
    $
    (6,411
    )
    
    $
    485,132
    
    
    $
    (1,151
    )
    
    $
    (1,080,881
    )
    
    $
    66,873
    
    
    $
    1,791,460
 6




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##### Table of Contents



BRANDYWINE REALTY TRUST

CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
 Six-month periodsended June 30,2009
    
    
    2008Cash flows from operating activities:Net income (loss)
    
    $
    4,908
    
    
    $
    21,810Adjustments to reconcile net income (loss) to net cash from
operating activities:Depreciation
    
    
    80,109
    
    
    
    81,948Amortization:Deferred financing costs
    
    
    3,146
    
    
    
    2,706Amortization of debt discount
    
    
    1,215
    
    
    
    3,418Deferred leasing costs
    
    
    8,928
    
    
    
    8,152Acquired above (below) market leases, net
    
    
    (3,487
    )
    
    
    (4,673
    )Acquired lease intangibles
    
    
    17,051
    
    
    
    22,333Deferred compensation costs
    
    
    2,288
    
    
    
    2,574Recognized hedge activity
    
    
    305
    
    
    
    Straight-line rent
    
    
    (4,094
    )
    
    
    (11,233
    )Provision for doubtful accounts
    
    
    3,907
    
    
    
    2,650Provision for impairment
    
    
    3,700
    
    
    
    6,850Real estate venture income in excess of distributions
    
    
    (1,026
    )
    
    
    (569
    )Net loss (gain) on sale of interests in real estate
    
    
    1,031
    
    
    
    (21,377
    )Gain on early extinguishment of debt
    
    
    (18,651
    )
    
    
    (3,106
    )Cumulative interest accretion on repayment of unsecured notes
    
    
    (1,955
    )
    
    
    (435
    )Changes in assets and liabilities:Accounts receivable
    
    
    2,671
    
    
    
    3,324Other assets
    
    
    9,412
    
    
    
    7,168Accounts payable and accrued expenses
    
    
    2,611
    
    
    
    (7,430
    )Tenant security deposits and deferred rents
    
    
    (2,707
    )
    
    
    (2,883
    )Other liabilities
    
    
    (4,264
    )
    
    
    (6,395
    )Net cash from operating activities
    
    
    105,098
    
    
    
    104,832Cash flows from investing activities:Sales of properties, net
    
    
    33,354
    
    
    
    53,601Capital expenditures
    
    
    (94,810
    )
    
    
    (89,239
    )Investment in unconsolidated real estate ventures
    
    
    (14,980
    )
    
    
    (469
    )Escrowed cash
    
    
    31,385
    
    
    
    Cash distributions from unconsolidated real estate ventures
in excess of cumulative equity in income
    
    
    11,346
    
    
    
    1,558Leasing costs
    
    
    (14,286
    )
    
    
    (5,468
    )Net cash (used in) from investing activities
    
    
    (47,991
    )
    
    
    (40,017
    )Cash flows from financing activities:Proceeds from Credit Facility borrowings
    
    
    347,000
    
    
    
    258,000Repayments of Credit Facility borrowings
    
    
    (426,000
    )
    
    
    (192,727
    )Proceeds from mortgage notes payable
    
    
    89,800
    
    
    
    Repayments of mortgage notes payable
    
    
    (73,576
    )
    
    
    (18,650
    )Repayments of unsecured notes
    
    
    (174,823
    )
    
    
    (27,725
    )Debt financing costs
    
    
    (21,525
    )
    
    
    (209
    )Net proceeds from issuance of common shares
    
    
    242,455
    
    
    
    Distributions paid to shareholders
    
    
    (39,299
    )
    
    
    (80,935
    )Distributions to noncontrolling interest
    
    
    (1,127
    )
    
    
    (3,379
    )Net cash used in financing activities
    
    
    (57,095
    )
    
    
    (65,625
    )Increase (decrease) in cash and cash equivalents
    
    
    12
    
    
    
    (810
    )Cash and cash equivalents at beginning of period
    
    
    3,924
    
    
    
    5,600Cash and cash equivalents at end of period
    
    $
    3,936
    
    
    $
    4,790Supplemental disclosure:Cash paid for interest, net of capitalized interest
    
    $
    74,584
    
    
    $
    109,355Supplemental disclosure of non-cash activity:Note receivable issued in a property sale transaction
    
    
    950
    
    
    
    Change in capital expenditures financed through accounts payable
    
    
    8,300
    
    
    
    (2,920
    )
  7




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##### Table of Contents



BRANDYWINE REALTY TRUST
 
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
 THE COMPANY
     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Basis of Presentation
  Reclassifications and Revisions
 Share-Based Payment
 8




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
  Accounting for Deferred Compensation
Arrangements Where Amounts Earned Are Held in a Rabbi Trust and Invested.
     Use of Estimates
  Operating Properties
  9




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
 Purchase Price Allocation
  Accounting for Conditional Asset Retirement Obligations
   Impairment or Disposal of Long-Lived Assets
 Accounting for the Impairment or
Disposal of Long-Lived Assets
  10




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
    Revenue Recognition
   Stock-Based Compensation Plans
  11




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
   Accounting for Derivative Instruments and Hedging Activities
 Accounting for Derivative Instruments and Hedging Activities Accounting for Certain Derivative Instruments and Hedging Activities
 An Amendment of SFAS 133 Fair Value
Measurements
  Fair Value Measurements
 Fair Value Measurements Application of FASB Statement No. 157
to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements
for Purposes of Lease Classification or Measurement under Statement 13 Effective Date of FASB Statement No. 157 Accounting for Leases
  12




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
   Fair Value Measurements at ReportingDate Using:Quoted Prices inActive Markets for
    
    
    Significant Other
    
    
    UnobservableJune 30,
    
    
    Identical Assets
    
    
    Observable Inputs
    
    
    InputsDescription
    
    2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)RecurringAssets:Available-for-Sale Securities
    
    $
    348
    
    
    $
    348
    
    
    $
    
    
    
    $
    Liabilities:Interest Rate Swaps
    
    $
    9,514
    
    
    $
    
    
    
    $
    9,514
    
    
    
    Forward Starting Interest Rate Swaps
    
    
    3,186
    
    
    
    
    
    
    
    3,186
    
    
    
    $
    12,700
    
    
    $
    
    
    
    $
    12,700
    
    
    $
    
  Fair Value Measurements at ReportingDate Using:Quoted Prices inActive Markets for
    
    
    Significant Other
    
    
    UnobservableDecember 31,
    
    
    Identical Assets
    
    
    Observable Inputs
    
    
    InputsDescription
    
    2008
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Assets:Available-for-Sale Securities
    
    $
    423
    
    
    $
    423
    
    
    $
    
    
    
    $
    Liabilities:Interest Rate Swaps
    
    $
    10,985
    
    
    $
    
    
    
    $
    10,985
    
    
    $
    Forward Starting Interest Rate Swaps
    
    
    7,481
    
    
    
    
    
    
    
    7,481
    
    
    
    $
    18,466
    
    
    $
    
    
    
    $
    18,466
    
    
    $
    
  
    
    Non-financial assets and liabilities initially measured at fair value in an acquisition
or business combination that are not remeasured at least annually at fair value,
 13




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
 
    
    Long-lived assets measured at fair value due to an impairment under Statement of Financial
Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets
and
 
    
    Asset retirement obligations initially measured at fair value under Statement of
Financial Accounting Standards No. 143, Accounting for Asset Retirement Obligations.
  Income Taxes
    Accounting Pronouncements Adopted January 1, 2009 on a Retrospective Basis
 Accounting for
Convertible Debt Instruments That May Be Settled Upon Conversion (Including Partial Cash
Settlement)
  14




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
   APB 14-1As Reported
    
    Adjustment
    
    As RevisedConstruction-in-progress
    
    $
    121,402
    
    
    $
    817
    
    
    $
    122,219Deferred costs, net
    
    
    89,866
    
    
    
    (539
    )
    
    
    89,327Unsecured bonds, net of discount
    
    
    1,930,147
    
    
    
    (12,177
    )
    
    
    1,917,970Additional paid-in capital
    
    
    2,327,617
    
    
    
    23,811
    
    
    
    2,351,428Cumulative earnings
    
    
    509,834
    
    
    
    (11,118
    )
    
    
    498,716Non-controlling interests
    
    
    53,199
    
    
    
    (238
    )
    
    
    52,961Total equity
    
    $
    1,710,043
    
    
    $
    12,455
    
    
    $
    1,722,498
 Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating
Securities
 Accounting for
Non-controlling Interests
 15




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
 Classification and Measurement of Redeemable
Securities
 Accounting Pronouncements Adopted During 2009 on a Prospective Basis
 Subsequent Events
 Interim Disclosures about Fair Value of
Financial Instruments
 Determining Fair Value When the Volume and Level of
Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That
are Not Orderly
 Recognition
and Presentation of Other-Than-Temporary Impairments
 Disclosures about Derivative Instruments and Hedging Activities Accounting for Derivative Instruments and Hedging
Activities
 16




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
 Determination of the Useful Life of Intangible
Assets
 Business Combinations
 New Pronouncements
 Accounting for Transfers of Financials Assets, an amendment
to FAS 140 (FAS 166), Amendment to FASB Interpretation No. 46R (FAS 167) Consolidation of Variable Interest
Entities
 REAL ESTATE INVESTMENTS
  June 30, 2009
    
    
    December 31, 2008Land
    
    $
    701,856
    
    
    $
    707,591Building and improvements
    
    
    3,455,973
    
    
    
    3,481,289Tenant improvements
    
    
    428,751
    
    
    
    419,440$
    4,586,580
    
    
    $
    4,608,320
 Acquisitions and Dispositions
     17




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BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
  INVESTMENT IN UNCONSOLIDATED VENTURES
     2009
    
    2008Net property
    
    $
    548,785
    
    
    $
    554,424Other assets
    
    
    91,002
    
    
    
    96,278Other Liabilities
    
    
    54,115
    
    
    
    39,388Debt
    
    
    475,809
    
    
    
    514,308Equity
    
    
    109,863
    
    
    
    97,006Companys share of equity (Companys basis)
    
    
    75,688
    
    
    
    71,028
  Three-month periods
    
    Six-month periodsended June 30,
    
    ended June 30,2009
    
    2008
    
    2009
    
    2008Revenue
    
    $
    27,125
    
    
    $
    25,863
    
    
    $
    53,689
    
    
    $
    52,896Operating expenses
    
    
    9,109
    
    
    
    8,875
    
    
    
    18,675
    
    
    
    17,797Interest expense, net
    
    
    6,845
    
    
    
    7,956
    
    
    
    13,997
    
    
    
    15,753Depreciation and amortization
    
    
    8,859
    
    
    
    9,472
    
    
    
    17,681
    
    
    
    18,624Net income (loss)
    
    
    2,312
    
    
    
    (440
    )
    
    
    3,336
    
    
    
    722Companys share of income (Company basis)
    
    
    1,533
    
    
    
    1,664
    
    
    
    2,119
    
    
    
    2,779
 18




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
  DEFERRED COSTS
  June 30, 2009Accumulated
    
    
    Deferred Costs,Total Cost
    
    
    Amortization
    
    
    netLeasing Costs
    
    $
    114,689
    
    
    $
    (45,467
    )
    
    $
    69,222Financing Costs
    
    
    43,651
    
    
    
    (12,021
    )
    
    
    31,630Total
    
    $
    158,340
    
    
    $
    (57,488
    )
    
    $
    100,852
 December 31, 2008Accumulated
    
    
    Deferred Costs,Total Cost
    
    
    Amortization
    
    
    netLeasing Costs
    
    $
    115,262
    
    
    $
    (39,528
    )
    
    $
    75,734Financing Costs
    
    
    25,170
    
    
    
    (11,577
    )
    
    
    13,593Total
    
    $
    140,432
    
    
    $
    (51,105
    )
    
    $
    89,327
 INTANGIBLE ASSETS
  June 30, 2009Accumulated
    
    
    Intangible Assets,Total Cost
    
    
    Amortization
    
    
    netIn-place lease value
    
    $
    134,881
    
    
    $
    (72,730
    )
    
    $
    62,151Tenant relationship value
    
    
    101,087
    
    
    
    (45,824
    )
    
    
    55,263Above market leases acquired
    
    
    20,058
    
    
    
    (13,366
    )
    
    
    6,692Total
    
    $
    256,026
    
    
    $
    (131,920
    )
    
    $
    124,106Below market leases acquired
    
    $
    77,945
    
    
    $
    (35,909
    )
    
    $
    42,036
 December 31, 2008Accumulated
    
    
    Intangible Assets,Total Cost
    
    
    Amortization
    
    
    netIn-place lease value
    
    $
    145,518
    
    
    $
    (71,138
    )
    
    $
    74,380Tenant relationship value
    
    
    103,485
    
    
    
    (40,835
    )
    
    
    62,650Above market leases acquired
    
    
    23,351
    
    
    
    (14,624
    )
    
    
    8,727Total
    
    $
    272,354
    
    
    $
    (126,597
    )
    
    $
    145,757Below market leases acquired
    
    $
    82,950
    
    
    $
    (35,324
    )
    
    $
    47,626
 19




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BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
  Assets
    
    
    Liabilities2009
    
    $
    15,729
    
    
    $
    4,7762010
    
    
    29,499
    
    
    
    8,3452011
    
    
    22,772
    
    
    
    7,0512012
    
    
    17,430
    
    
    
    6,3142013
    
    
    12,636
    
    
    
    5,874Thereafter
    
    
    26,040
    
    
    
    9,676Total
    
    $
    124,106
    
    
    $
    42,036
 DEBT OBLIGATIONS
  MORTGAGE DEBT:
 EffectiveJune 30,
    
    
    December 31,
    
    
    Interest
    
    
    MaturityProperty / Location
    
    2009
    
    
    2008
    
    
    Rate
    
    
    Date200 Commerce Drive
    
    $
    5,639
    
    
    $
    5,684
    
    
    
    7.12%
    (a)
    
    Jan-10Plymouth Meeting Exec.
    
    
    42,421
    
    
    
    42,785
    
    
    
    7.00%
    (a)
    
    Dec-10Four Tower Bridge
    
    
    10,284
    
    
    
    10,404
    
    
    
    6.62%
    
    
    Feb-11Arboretum I, II, III & V
    
    
    21,357
    
    
    
    21,657
    
    
    
    7.59%
    
    
    Jul-11Midlantic Drive/Lenox Drive/DCC I
    
    
    59,016
    
    
    
    59,784
    
    
    
    8.05%
    
    
    Oct-11Research Office Center
    
    
    40,403
    
    
    
    40,791
    
    
    
    5.30%
    (a)
    
    Oct-11Concord Airport Plaza
    
    
    36,115
    
    
    
    36,617
    
    
    
    5.55%
    (a)
    
    Jan-12Six Tower Bridge
    
    
    13,880
    
    
    
    14,185
    
    
    
    7.79%
    
    
    Aug-12Newtown Square/Berwyn Park/Libertyview
    
    
    60,245
    
    
    
    60,910
    
    
    
    7.25%
    
    
    May-13Coppell Associates
    
    
    2,995
    
    
    
    3,273
    
    
    
    6.89%
    
    
    Dec-13Southpoint III
    
    
    3,565
    
    
    
    3,863
    
    
    
    7.75%
    
    
    Apr-14Tysons Corner
    
    
    98,795
    
    
    
    99,529
    
    
    
    5.36%
    (a)
    
    Aug-15Coppell Associates
    
    
    16,600
    
    
    
    16,600
    
    
    
    5.75%
    
    
    Feb-16Two Logan Square
    
    
    89,800
    
    
    
    68,808
    
    
    
    7.57%
    (b)
    
    Apr-16Principal balance outstanding
    
    
    501,115
    
    
    
    484,890Plus: unamortized fixed-rate debt premiums, net
    
    
    1,846
    
    
    
    2,635Total mortgage indebtedness
    
    $
    502,961
    
    
    $
    487,525UNSECURED DEBT:$275.0M 4.500% Guaranteed Notes due 2009
    
    
    150,151
    
    
    
    196,680
    
    
    
    4.62%
    
    
    Nov-09Bank Term Loan
    
    
    183,000
    
    
    
    183,000
    
    
    
    LIBOR + 0.80%
    
    
    Oct-10        (c)$300.0M 5.625% Guaranteed Notes due 2010
    
    
    210,546
    
    
    
    275,545
    
    
    
    5.61%
    
    
    Dec-10Credit Facility
    
    
    74,000
    
    
    
    153,000
    
    
    
    LIBOR + 0.725%
    
    
    Jun-11(c)$320.7M 3.875% Guaranteed Exchangeable Notes due 2026
    
    
    205,740
    
    
    
    282,030
    
    
    
    5.50%
    
    
    Oct-11$300.0M 5.750% Guaranteed Notes due 2012
    
    
    290,035
    
    
    
    300,000
    
    
    
    5.77%
    
    
    Apr-12$250.0M 5.400% Guaranteed Notes due 2014
    
    
    250,000
    
    
    
    250,000
    
    
    
    5.53%
    
    
    Nov-14$250.0M 6.000% Guaranteed Notes due 2016
    
    
    250,000
    
    
    
    250,000
    
    
    
    5.95%
    
    
    Apr-16$300.0M 5.700% Guaranteed Notes due 2017
    
    
    300,000
    
    
    
    300,000
    
    
    
    5.75%
    
    
    May-17Indenture IA (Preferred Trust I)
    
    
    27,062
    
    
    
    27,062
    
    
    
    LIBOR + 1.25%
    
    
    Mar-35Indenture IB (Preferred Trust I)
    
    
    25,774
    
    
    
    25,774
    
    
    
    LIBOR + 1.25%
    
    
    Apr-35Indenture II (Preferred Trust II)
    
    
    25,774
    
    
    
    25,774
    
    
    
    LIBOR + 1.25%
    
    
    Jul-35Principal balance outstanding
    
    
    1,992,082
    
    
    
    2,268,865less: unamortized exchangeable debt discount
    
    
    (8,063
    )
    
    
    (12,177
    )Plus: unamortized fixed-rate debt discounts, net
    
    
    (2,437
    )
    
    
    (2,718
    )Total unsecured indebtedness
    
    $
    1,981,582
    
    
    $
    2,253,970Total Debt Obligations
    
    $
    2,484,543
    
    
    $
    2,741,495
 20




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BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
 
 (a)
    
    Loans were assumed upon acquisition of the related property. Interest rates presented
above reflect the market rate at the time of acquisition.(b)
    
    The Two Logan Square mortgage loan was re-financed in the amount of $89.8 million on April 1,
2009. The new loan features a 7.57% rate and a seven year term with three years interest only
payments followed by a thirty year amortization schedule.(c)
    
    These loans may be extended to June 29, 2012 at the Companys discretion. th
   Repurchase
    
    
    
    
    
    
    
    
    
    
    Deferred FinancingNotes
    
    Amount
    
    
    Principal
    
    
    Gain
    
    
    Amortization2009 Notes
    
    $
    44,945
    
    
    $
    46,529
    
    
    $
    1,584
    
    
    $
    622010 Notes
    
    
    59,257
    
    
    
    64,999
    
    
    
    5,735
    
    
    
    1902012 Notes
    
    
    9,061
    
    
    
    9,965
    
    
    
    904
    
    
    
    353.875% Notes
    
    
    63,514
    
    
    
    76,290
    
    
    
    10,428
    
    
    
    796$
    176,777
    
    
    $
    197,783
    
    
    $
    18,651
    
    
    $
    1,083
  21




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BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
     2009
    
    $
    154,9282010
    
    
    450,4052011
    
    
    412,0352012
    
    
    341,4742013
    
    
    59,184Thereafter
    
    
    1,075,171Total principal payments
    
    
    2,493,197Net unamortized premiums/discounts
    
    
    (8,654
    )Outstanding indebtedness
    
    $
    2,484,543
 FAIR VALUE OF FINANCIAL INSTRUMENTS
   June 30, 2009
    
    December 31, 2008Carrying
    
    Fair
    
    Carrying
    
    FairAmount
    
    Value
    
    Amount
    
    ValueMortgage payable, net of premiums
    
    $
    502,961
    
    
    $
    485,472
    
    
    $
    484,890
    
    
    $
    487,525Unsecured notes payable, net of
discounts
    
    $
    1,645,972
    
    
    $
    1,379,098
    
    
    $
    1,854,186
    
    
    $
    1,152,056Variable Rate Debt Instruments
    
    $
    335,610
    
    
    $
    331,421
    
    
    $
    414,610
    
    
    $
    398,748Notes Receivable
    
    $
    49,676
    
    
    $
    48,488
    
    
    $
    48,048
    
    
    $
    46,227
 RISK MANAGEMENT AND USE OF FINANCIAL INSTRUMENTS
 22




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BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
 Risk Management
  Risks and Uncertainties
     23




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BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
  Use of Derivative Financial Instruments
        24




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
 Hedge
    
    Hedge
    
    
    
    Notional Amount
    
    
    
    
    
    
    Trade
    
    
    Maturity
    
    
    Fair ValueProduct
    
    Type
    
    Designation
    
    6/30/2009
    
    
    12/31/2008
    
    
    Strike
    
    Date
    
    
    Date
    
    
    6/30/2009
    
    
    12/31/2008Swap
    
    Interest Rate
    
    Cash Flow        (b)
    
    $
    91,700
    
    
    $
    78,000
    (a)
    
    
    4.709
    %
    
    
    9/20/07
    
    
    
    10/18/10
    
    
    $
    6,452
    
    
    $
    7,204Swap
    
    Interest Rate
    
    Cash Flow        (b)
    
    
    25,000
    
    
    
    25,000
    
    
    
    4.415
    %
    
    
    10/19/07
    
    
    
    10/18/10
    
    
    
    1,173
    
    
    
    1,439Swap
    
    Interest Rate
    
    Cash Flow        (b)
    
    
    25,000
    
    
    
    25,000
    
    
    
    3.747
    %
    
    
    11/26/07
    
    
    
    10/18/10
    
    
    
    915
    
    
    
    1,111Swap
    
    Interest Rate
    
    Cash Flow        (b)
    
    
    25,000
    
    
    
    25,000
    
    
    
    3.338
    %
    
    
    9/23/07
    
    
    
    12/18/09
    
    
    
    354
    
    
    
    603Swap
    
    Interest Rate
    
    Cash Flow        (b)
    
    
    25,774
    
    
    
    25,774
    
    
    
    2.975
    %
    
    
    10/16/08
    
    
    
    10/30/10
    
    
    
    620
    
    
    
    628Forward Starting
Swap
    
    Interest Rate
    
    Cash Flow        (c)
    
    
    25,000
    
    
    
    25,000
    
    
    
    4.770
    %
    
    
    1/4/08
    
    
    
    12/18/19
    
    
    
    1,949
    
    
    
    4,079Forward Starting
Swap
    
    Interest Rate
    
    Cash Flow        (c)
    
    
    25,000
    
    
    
    25,000
    
    
    
    4.423
    %
    
    
    3/19/08
    
    
    
    12/18/19
    
    
    
    1,237
    
    
    
    3,402$
    242,474
    
    
    $
    228,774
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    12,700
    
    
    $
    18,466
 
 (a)
    
     Notional amount accreting up to $155,000 through October 8, 2010.(b)
    
     Hedging unsecured variable rate debt.(c)
    
     Future issuance of long-term debt with an expected forward starting date in March 2010. Concentration of Credit Risk
  DISCONTINUED OPERATIONS
  25




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BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
 Three-month period
    
    
    Six-month periodended June 30, 2009
    
    
    ended June 30, 2009Revenue:Rents
    
    $
    311
    
    
    $
    1,511Tenant reimbursements
    
    
    (4
    )
    
    
    43Other
    
    
    3
    
    
    
    71Total revenue
    
    
    310
    
    
    
    1,625Expenses:Property operating expenses
    
    
    165
    
    
    
    546Real estate taxes
    
    
    17
    
    
    
    127Depreciation and amortization
    
    
    142
    
    
    
    615Provision for impairment of discontinued
operations
    
    
    
    
    
    
    3,700Total operating expenses
    
    
    324
    
    
    
    4,988Interest income
    
    
    
    
    
    
    (1
    )Loss from discontinued operations before gain
on sale of interests in real estate
    
    
    (14
    )
    
    
    (3,364
    )Net loss on sale of interests in real estate
    
    
    (1,225
    )
    
    
    (1,031
    )Loss from discontinued operations
    
    
    (1,239
    )
    
    
    (4,395
    )Loss from discontinued operations
attributable to non-controlling interest
    
    
    35
    
    
    
    132Loss from discontinued operations
attributable to Brandywine Realty Trust
    
    $
    (1,204
    )
    
    $
    (4,263
    )
  Three-month period
    
    
    Six-month periodended June 30, 2008
    
    
    ended June 30, 2008Revenue:Rents
    
    $
    14,175
    
    
    $
    29,273Tenant reimbursements
    
    
    498
    
    
    
    1,093Other
    
    
    58
    
    
    
    183Total revenue
    
    
    14,731
    
    
    
    30,549Expenses:Property operating expenses
    
    
    5,301
    
    
    
    10,172Real estate taxes
    
    
    1,172
    
    
    
    2,656Depreciation and amortization
    
    
    4,999
    
    
    
    10,001Provision for impairment of discontinued
operations
    
    
    6,850
    
    
    
    6,850Total operating expenses
    
    
    18,322
    
    
    
    29,679Interest income
    
    
    5
    
    
    
    11Interest expense
    
    
    (1,342
    )
    
    
    (2,694
    )Loss from discontinued operations before gain
on sale of interests in real estate
    
    
    (4,928
    )
    
    
    (1,813
    )Net gain on sale of interests in real estate
    
    
    13,420
    
    
    
    21,401Income from discontinued operations
    
    
    8,492
    
    
    
    19,588Income from discontinued operations
attributable to non-controlling interest
    
    
    (324
    )
    
    
    (791
    )Income from discontinued operations
attributable to Brandywine Realty Trust
    
    $
    8,168
    
    
    $
    18,797
  11.
    
    NON-CONTROLLING INTERESTS IN OPERATING PARTNERSHIP AND CONSOLIDATED REAL ESTATE
VENTURES
 26




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BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
 Operating Partnership
  Non-Controlling Interest  Partners Share of Consolidated Real Estate Ventures
   BENEFICIARIES EQUITY
 Earnings per Share (EPS)
  27




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
 Three-month periods ended June 30,2009
    
    
    2008Basic
    
    
    Diluted
    
    
    Basic
    
    
    DilutedNumeratorIncome (loss) from continuing operations
    
    $
    7,020
    
    
    $
    7,020
    
    
    $
    (279
    )
    
    $
    (279
    )Net (loss) income attributable to non-controlling interests
    
    
    (202
    )
    
    
    (202
    )
    
    
    23
    
    
    
    23Amount allocable to unvested restricted shareholders
    
    
    (73
    )
    
    
    (73
    )
    
    
    (227
    )
    
    
    (227
    )Preferred share dividends
    
    
    (1,998
    )
    
    
    (1,998
    )
    
    
    (1,998
    )
    
    
    (1,998
    )Income (loss) from continuing operations available to common shareholders
    
    
    4,747
    
    
    
    4,747
    
    
    
    (2,481
    )
    
    
    (2,481
    )Income from discontinued operations
    
    
    (1,239
    )
    
    
    (1,239
    )
    
    
    8,492
    
    
    
    8,492Net income (loss) from discontinued operations attributable to
non-controlling interests
    
    
    35
    
    
    
    35
    
    
    
    (324
    )
    
    
    (324
    )Discontinued operations attributable to common shareholders
    
    
    (1,204
    )
    
    
    (1,204
    )
    
    
    8,168
    
    
    
    8,168Net income available to common shareholders
    
    $
    3,543
    
    
    $
    3,543
    
    
    $
    5,687
    
    
    $
    5,687DenominatorWeighted-average shares outstanding
    
    
    101,583,997
    
    
    
    101,583,997
    
    
    
    87,280,576
    
    
    
    87,280,576Contingent securities/Stock based compensation
    
    
    
    
    
    
    1,158,346
    
    
    
    
    
    
    
    231,769Total weighted-average shares outstanding
    
    
    101,583,997
    
    
    
    102,742,343
    
    
    
    87,280,576
    
    
    
    87,512,345Earnings per Common Share:Income from continuing operations attributable to common shareholders
    
    $
    0.04
    
    
    $
    0.04
    
    
    $
    (0.03
    )
    
    $
    (0.03
    )Discontinued operations attributable to common shareholders
    
    
    (0.01
    )
    
    
    (0.01
    )
    
    
    0.09
    
    
    
    0.09Net income attributable to common shareholders
    
    $
    0.03
    
    
    $
    0.03
    
    
    $
    0.06
    
    
    $
    0.06
 Six-month periods ended June 30,2009
    
    
    2008Basic
    
    
    Diluted
    
    
    Basic
    
    
    DilutedNumeratorIncome (loss) from continuing operations
    
    $
    9,303
    
    
    $
    9,303
    
    
    $
    2,222
    
    
    $
    2,222Net (loss) income attributable to non-controlling interests
    
    
    (205
    )
    
    
    (205
    )
    
    
    (37
    )
    
    
    (37
    )Amount allocable to unvested restricted shareholders
    
    
    (110
    )
    
    
    (110
    )
    
    
    (394
    )
    
    
    (394
    )Preferred share dividends
    
    
    (3,996
    )
    
    
    (3,996
    )
    
    
    (3,996
    )
    
    
    (3,996
    )Income (loss) from continuing operations available to common shareholders
    
    
    4,992
    
    
    
    4,992
    
    
    
    (2,205
    )
    
    
    (2,205
    )Income from discontinued operations
    
    
    (4,395
    )
    
    
    (4,395
    )
    
    
    19,588
    
    
    
    19,588Net income (loss) from discontinued operations attributable to
non-controlling interests
    
    
    132
    
    
    
    132
    
    
    
    (791
    )
    
    
    (791
    )Discontinued operations attributable to common shareholders
    
    
    (4,263
    )
    
    
    (4,263
    )
    
    
    18,797
    
    
    
    18,797Net income available to common shareholders
    
    $
    729
    
    
    $
    729
    
    
    $
    16,592
    
    
    $
    16,592DenominatorWeighted-average shares outstanding
    
    
    94,934,134
    
    
    
    94,934,134
    
    
    
    87,092,271
    
    
    
    87,092,271Contingent securities/Stock based compensation
    
    
    
    
    
    
    561,258
    
    
    
    
    
    
    
    207,734Total weighted-average shares outstanding
    
    
    94,934,134
    
    
    
    95,495,392
    
    
    
    87,092,271
    
    
    
    87,300,005Earnings per Common Share:Income from continuing operations attributable to common shareholders
    
    $
    0.05
    
    
    $
    0.05
    
    
    $
    (0.03
    )
    
    $
    (0.03
    )Discontinued operations attributable to common shareholders
    
    
    (0.04
    )
    
    
    (0.04
    )
    
    
    0.22
    
    
    
    0.22Net income attributable to common shareholders
    
    $
    0.01
    
    
    $
    0.01
    
    
    $
    0.19
    
    
    $
    0.19
  28




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BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
   Common and Preferred Shares
     Common Share Repurchases
    SHARE BASED AND DEFERRED COMPENSATION
 29




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BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
 Stock Options
   Average
    
    
    Remaining Contractual
    
    
    Aggregate  IntrinsicShares
    
    
    Exercise Price
    
    
    Term (in years)
    
    
    Value (in 000s)Outstanding at January 1, 2009
    
    
    1,754,648
    
    
    $
    20.41
    
    
    
    8.77
    
    
    $
    (30,093
    )Granted
    
    
    676,491
    
    
    
    2.91
    
    
    
    9.76
    
    
    
    3,071,267Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited or expired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at June 30, 2009
    
    
    2,431,139
    
    
    $
    15.54
    
    
    
    8.90
    
    
    $
    (19,664,394
    )Vested/Exercisable at June 30, 2009
    
    
    624,976
    
    
    $
    20.04
    
    
    
    8.05
    
    
    $
    (7,795,586
    )
 Restricted Share Awards
   WeightedAverage GrantShares
    
    
    Date Fair valueNon-vested at January 1, 2009
    
    
    475,496
    
    
    $
    26.21Granted
    
    
    372,586
    
    
    
    3.36Vested
    
    
    (111,703
    )
    
    
    22.85Forfeited
    
    
    (2,322
    )
    
    
    22.19Non-vested at June 30, 2009
    
    
    734,057
    
    
    $
    9.78
 Restricted Performance Share Units Plan
  30




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BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
   Outperformance Program
    Employee Share Purchase Plan
  31




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
 Deferred Compensation
   Accounting for
Deferred Compensation Arrangements Where Amounts Earned Are Held in A Rabbi Trust and Invested,
 TAX CREDIT TRANSACTIONS
 Historic Tax Credit Transaction
    32




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BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
   New Markets Tax Credit Transaction
      SEGMENT INFORMATION
  33




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BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
  34




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
  New Jersey
    
    
    Richmond,Pennsylvania
    
    
    Metropolitan, D.C.
    
    
    /Delaware
    
    
    Virginia
    
    
    California
    
    
    Austin, Texas
    
    
    Corporate
    
    
    TotalAs of June 30, 2009:Real estate investments, at cost:Operating properties
    
    $
    1,729,472
    
    
    $
    1,356,842
    
    
    $
    677,252
    
    
    $
    297,678
    
    
    $
    248,570
    
    
    $
    276,766
    
    
    $
    
    
    
    $
    4,586,580Construction-in-progress
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    197,404
    
    
    $
    197,404Land inventory
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    97,430
    
    
    $
    97,430As of December 31, 2008:Real estate investments, at cost:Operating properties
    
    $
    1,734,948
    
    
    $
    1,371,997
    
    
    $
    674,503
    
    
    $
    297,171
    
    
    $
    248,876
    
    
    $
    280,825
    
    
    $
    
    
    
    $
    4,608,320Construction-in-progress
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    122,219
    
    
    $
    122,219Land inventory
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    100,516
    
    
    $
    100,516For the three-months ended June 30, 2009:Total revenue
    
    $
    58,606
    
    
    $
    34,637
    
    
    $
    29,190
    
    
    $
    8,948
    
    
    $
    6,158
    
    
    $
    8,825
    
    
    $
    (487
    )
    
    $
    145,877Property operating expenses, real estate
taxes and
third party management expenses
    
    
    21,038
    
    
    
    12,762
    
    
    
    12,792
    
    
    
    3,374
    
    
    
    3,392
    
    
    
    3,997
    
    
    
    (275
    )
    
    
    57,080Net operating income
    
    $
    37,568
    
    
    $
    21,875
    
    
    $
    16,398
    
    
    $
    5,574
    
    
    $
    2,766
    
    
    $
    4,828
    
    
    $
    (212
    )
    
    $
    88,797For the three-months ended June 30, 2008:Total revenue
    
    $
    60,704
    
    
    $
    34,288
    
    
    $
    29,377
    
    
    $
    9,593
    
    
    $
    7,310
    
    
    $
    9,914
    
    
    $
    (420
    )
    
    $
    150,766Property operating expenses, real estate
taxes and
third party management expenses
    
    
    21,282
    
    
    
    11,929
    
    
    
    12,837
    
    
    
    3,161
    
    
    
    3,102
    
    
    
    4,375
    
    
    
    1,186
    
    
    
    57,872Net operating income
    
    $
    39,422
    
    
    $
    22,359
    
    
    $
    16,540
    
    
    $
    6,432
    
    
    $
    4,208
    
    
    $
    5,539
    
    
    $
    (1,606
    )
    
    $
    92,894For the six-months ended June 30, 2009:Total revenue
    
    $
    119,059
    
    
    $
    69,811
    
    
    $
    58,639
    
    
    $
    18,450
    
    
    $
    13,532
    
    
    $
    17,918
    
    
    $
    (694
    )
    
    $
    296,715Property operating expenses, real estate
taxes and
third party management expenses
    
    
    46,278
    
    
    
    26,640
    
    
    
    26,911
    
    
    
    7,257
    
    
    
    6,737
    
    
    
    7,978
    
    
    
    (2,371
    )
    
    
    119,430Net operating income
    
    $
    72,781
    
    
    $
    43,171
    
    
    $
    31,728
    
    
    $
    11,193
    
    
    $
    6,795
    
    
    $
    9,940
    
    
    $
    1,677
    
    
    $
    177,285For the six-months ended June 30, 2008:Total revenue
    
    $
    124,346
    
    
    $
    68,489
    
    
    $
    57,968
    
    
    $
    18,820
    
    
    $
    14,639
    
    
    $
    18,981
    
    
    $
    (995
    )
    
    $
    302,248Property operating expenses, real estate
taxes and
third party management expenses
    
    
    43,131
    
    
    
    24,061
    
    
    
    25,235
    
    
    
    6,138
    
    
    
    6,011
    
    
    
    8,449
    
    
    
    3,284
    
    
    
    116,309Net operating income
    
    $
    81,215
    
    
    $
    44,428
    
    
    $
    32,733
    
    
    $
    12,682
    
    
    $
    8,628
    
    
    $
    10,532
    
    
    $
    (4,279
    )
    
    $
    185,939
 35




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
  Three-month periods
    
    
    Six-month periodsended June 30,
    
    
    ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Consolidated net operating income
    
    $
    88,797
    
    
    $
    92,894
    
    
    $
    177,285
    
    
    $
    185,939Less:Interest expense
    
    
    (34,944
    )
    
    
    (36,742
    )
    
    
    (70,590
    )
    
    
    (73,785
    )Deferred financing costs
    
    
    (1,894
    )
    
    
    (1,198
    )
    
    
    (3,146
    )
    
    
    (2,706
    )Recognized hedge activity
    
    
    (305
    )
    
    
    
    
    
    
    (305
    )
    
    
    Depreciation and amortization
    
    
    (53,308
    )
    
    
    (51,492
    )
    
    
    (105,461
    )
    
    
    (102,430
    )General & administrative expenses
    
    
    (5,514
    )
    
    
    (6,127
    )
    
    
    (10,472
    )
    
    
    (11,039
    )Plus:Interest income
    
    
    642
    
    
    
    179
    
    
    
    1,222
    
    
    
    382Equity in income of real estate ventures
    
    
    1,533
    
    
    
    1,664
    
    
    
    2,119
    
    
    
    2,779Net loss on sales of interests in
undepreciated real estate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24
    )Gain on early extinguishment of debt
    
    
    12,013
    
    
    
    543
    
    
    
    18,651
    
    
    
    3,106Income (loss) from continuing operations
    
    
    7,020
    
    
    
    (279
    )
    
    
    9,303
    
    
    
    2,222Income (loss) from discontinued operations
    
    
    (1,239
    )
    
    
    8,492
    
    
    
    (4,395
    )
    
    
    19,588Net income
    
    $
    5,781
    
    
    $
    8,213
    
    
    $
    4,908
    
    
    $
    21,810
 16. COMMITMENTS AND CONTINGENCIES
 Legal Proceedings
  Environmental
  Ground Rent
  36




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BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
 2009
    
    $
    9932010
    
    
    2,2362011
    
    
    2,3182012
    
    
    2,3182013
    
    
    2,318Thereafter
    
    
    290,541
  Other Commitments or Contingencies
      37




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
  th
 SUBSEQUENT EVENTS
   38




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 BRANDYWINE OPERATING PARTNERSHIP, L.P.

CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands, except unit and per unit information)
 June 30,
    
    
    December 31,2009
    
    
    2008 (as adjusted)ASSETSReal estate investments:Operating properties
    
    $
    4,586,580
    
    
    $
    4,608,320Accumulated depreciation
    
    
    (690,490
    )
    
    
    (639,688
    )Operating real estate investments, net
    
    
    3,896,090
    
    
    
    3,968,632Construction-in-progress
    
    
    197,404
    
    
    
    122,219Land inventory
    
    
    97,430
    
    
    
    100,516Total real estate investments, net
    
    
    4,190,924
    
    
    
    4,191,367Cash and cash equivalents
    
    
    3,936
    
    
    
    3,924Cash in escrow
    
    
    
    
    
    
    31,385Accounts receivable, net
    
    
    8,950
    
    
    
    11,762Accrued rent receivable, net
    
    
    85,669
    
    
    
    86,362Investment in real estate ventures, at equity
    
    
    75,688
    
    
    
    71,028Deferred costs, net
    
    
    100,852
    
    
    
    89,327Intangible assets, net
    
    
    124,106
    
    
    
    145,757Notes receivable
    
    
    49,676
    
    
    
    48,048Other assets
    
    
    47,831
    
    
    
    59,008Total assets
    
    $
    4,687,632
    
    
    $
    4,737,968LIABILITIES AND EQUITYMortgage notes payable
    
    $
    502,961
    
    
    $
    487,525Borrowing under credit facilities
    
    
    74,000
    
    
    
    153,000Unsecured term loan
    
    
    183,000
    
    
    
    183,000Unsecured senior notes, net of discounts
    
    
    1,724,582
    
    
    
    1,917,970Accounts payable and accrued expenses
    
    
    85,474
    
    
    
    74,824Distributions payable
    
    
    15,177
    
    
    
    29,288Tenant security deposits and deferred rents
    
    
    54,595
    
    
    
    58,692Acquired below market leases, net
    
    
    42,036
    
    
    
    47,626Other liabilities
    
    
    53,696
    
    
    
    63,545Total liabilities
    
    
    2,735,521
    
    
    
    3,015,470Commitments and contingencies (Note 15)Redeemable limited partnership units
2,816,621 and 2,816,621 issued and outstanding in 2009 and 2008, respectively
    
    
    53,308
    
    
    
    54,166Brandywine Operating Partnerships equity:7.50% Series D Preferred Mirror Units; 2,000,000 issued and outstanding in 2009
and 2008
    
    
    47,912
    
    
    
    47,9127.375% Series E Preferred Mirror Units; 2,300,000 issued and outstanding in
2009
and 2008
    
    
    55,538
    
    
    
    55,538General Partnership Capital, 128,850,253 and 88,610,053 units issued in 2009
and
2008, respectively and 128,583,411 and
88,158,937 units outstanding in
2009 and 2008, respectively
    
    
    1,806,196
    
    
    
    1,581,887Accumulated other comprehensive loss
    
    
    (10,976
    )
    
    
    (17,005
    )Total Brandywine Operating Partnerships equity
    
    
    1,898,670
    
    
    
    1,668,332Non-controlling interest  consolidated real estate ventures
    
    
    133
    
    
    
    Total equity
    
    
    1,898,803
    
    
    
    1,668,332Total liabilities and equity
    
    $
    4,687,632
    
    
    $
    4,737,968
  39




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##### Table of Contents



BRANDYWINE OPERATING PARTNERSHIP, L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except unit and per unit information)
 For the three-month periods ended
    
    
    For the six-month periods endedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenue:Rents
    
    $
    121,598
    
    
    $
    123,111
    
    
    $
    244,208
    
    
    $
    245,879Tenant reimbursements
    
    
    18,636
    
    
    
    20,786
    
    
    
    41,069
    
    
    
    39,807Termination fees
    
    
    963
    
    
    
    892
    
    
    
    1,076
    
    
    
    4,124Third party management fees, labor reimbursement and leasing
    
    
    4,097
    
    
    
    5,170
    
    
    
    8,861
    
    
    
    10,849Other
    
    
    583
    
    
    
    807
    
    
    
    1,501
    
    
    
    1,589Total revenue
    
    
    145,877
    
    
    
    150,766
    
    
    
    296,715
    
    
    
    302,248Operating Expenses:Property operating expenses
    
    
    40,595
    
    
    
    40,171
    
    
    
    85,460
    
    
    
    80,881Real estate taxes
    
    
    14,517
    
    
    
    15,320
    
    
    
    29,887
    
    
    
    30,801Third party management expenses
    
    
    1,968
    
    
    
    2,381
    
    
    
    4,083
    
    
    
    4,627Depreciation and amortization
    
    
    53,308
    
    
    
    51,492
    
    
    
    105,461
    
    
    
    102,430General & administrative expenses
    
    
    5,514
    
    
    
    6,127
    
    
    
    10,472
    
    
    
    11,039Total operating expenses
    
    
    115,902
    
    
    
    115,491
    
    
    
    235,363
    
    
    
    229,778Operating income
    
    
    29,975
    
    
    
    35,275
    
    
    
    61,352
    
    
    
    72,470Other Income (Expense):Interest income
    
    
    642
    
    
    
    179
    
    
    
    1,222
    
    
    
    382Interest expense
    
    
    (34,944
    )
    
    
    (36,742
    )
    
    
    (70,590
    )
    
    
    (73,785
    )Interest expense  Deferred financing costs
    
    
    (1,894
    )
    
    
    (1,198
    )
    
    
    (3,146
    )
    
    
    (2,706
    )Recognized hedge activity
    
    
    (305
    )
    
    
    
    
    
    
    (305
    )
    
    
    Equity in income of real estate ventures
    
    
    1,533
    
    
    
    1,664
    
    
    
    2,119
    
    
    
    2,779Net loss on disposition of undepreciated real estate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24
    )Gain on early extinguishment of debt
    
    
    12,013
    
    
    
    543
    
    
    
    18,651
    
    
    
    3,106Income (loss) from continuing operations
    
    
    7,020
    
    
    
    (279
    )
    
    
    9,303
    
    
    
    2,222Discontinued operations:Income from discontinued operations
    
    
    (14
    )
    
    
    1,922
    
    
    
    336
    
    
    
    5,037Net gain on disposition of discontinued operations
    
    
    (1,225
    )
    
    
    13,420
    
    
    
    (1,031
    )
    
    
    21,401Provision for impairment
    
    
    
    
    
    
    (6,850
    )
    
    
    (3,700
    )
    
    
    (6,850
    )(1,239
    )
    
    
    8,492
    
    
    
    (4,395
    )
    
    
    19,588Net income
    
    
    5,781
    
    
    
    8,213
    
    
    
    4,908
    
    
    
    21,810Net income allocated to non-controlling interests
    
    
    (28
    )
    
    
    (38
    )
    
    
    (22
    )
    
    
    (78
    )Net income attributable to
Brandywine Operating Partnership
    
    
    5,753
    
    
    
    8,175
    
    
    
    4,886
    
    
    
    21,732Preferred share dividends
    
    
    (1,998
    )
    
    
    (1,998
    )
    
    
    (3,996
    )
    
    
    (3,996
    )Amount allocated to unvested restricted shareholders
    
    
    (73
    )
    
    
    (227
    )
    
    
    (110
    )
    
    
    (394
    )Income allocated to Common Partnership Units
    
    $
    3,682
    
    
    $
    5,950
    
    
    $
    780
    
    
    $
    17,342Basic earnings (loss) per Common Partnership Unit:Continuing operations
    
    $
    0.05
    
    
    $
    (0.03
    )
    
    $
    0.05
    
    
    $
    (0.02
    )Discontinued operations
    
    
    (0.01
    )
    
    
    0.10
    
    
    
    (0.04
    )
    
    
    0.21$
    0.04
    
    
    $
    0.07
    
    
    $
    0.01
    
    
    $
    0.19Diluted earnings (loss) per Common Partnership Unit:Continuing operations
    
    $
    0.05
    
    
    $
    (0.03
    )
    
    $
    0.05
    
    
    $
    (0.02
    )Discontinued operations
    
    
    (0.01
    )
    
    
    0.10
    
    
    
    (0.04
    )
    
    
    0.21$
    0.04
    
    
    $
    0.07
    
    
    $
    0.01
    
    
    $
    0.19Basic weighted average common partnership units outstanding
    
    
    104,400,618
    
    
    
    90,747,434
    
    
    
    97,750,755
    
    
    
    90,736,342Diluted weighted average common partnership units outstanding
    
    
    105,558,964
    
    
    
    90,979,203
    
    
    
    98,312,013
    
    
    
    90,944,076Net (loss) income attributable to
Brandywine Operating PartnershipIncome (loss) from continuing operations
    
    $
    6,992
    
    
    $
    (317
    )
    
    $
    9,281
    
    
    $
    2,144Income (loss) from discontinued operations
    
    
    (1,239
    )
    
    
    8,492
    
    
    
    (4,395
    )
    
    
    19,588Net income
    
    $
    5,753
    
    
    $
    8,175
    
    
    $
    4,886
    
    
    $
    21,732
  40




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BRANDYWINE OPERATING PARTNERSHIP, L.P.

CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME
(unaudited, in thousands)
 For the three-month periods
    
    
    For the six-month periods endedended June 30,
    
    
    June 30,2009
    
    
    2008 (as adjusted)
    
    
    2009
    
    
    2008 (as adjusted)Net income
    
    $
    5,781
    
    
    $
    8,213
    
    
    $
    4,908
    
    
    $
    21,810Other comprehensive income (loss):Unrealized gain (loss) on derivative financial instruments
    
    
    (4,217
    )
    
    
    5,358
    
    
    
    6,069
    
    
    
    526Reclassification of realized (gains) on derivative financial
instruments to operations, net
    
    
    (20
    )
    
    
    (20
    )
    
    
    (40
    )
    
    
    (40
    )Unrealized gain on available-for-sale securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    248Total other comprehensive income (loss)
    
    
    (4,237
    )
    
    
    5,338
    
    
    
    6,029
    
    
    
    734Comprehensive income
    
    $
    1,544
    
    
    $
    13,551
    
    
    $
    10,937
    
    
    $
    22,544Comprehensive income attributable to non-controlling interests
    
    
    (28
    )
    
    
    (38
    )
    
    
    (22
    )
    
    
    (78
    )Comprehensive income attributable to Brandywine Operating Partnership
    
    $
    1,516
    
    
    $
    13,513
    
    
    $
    10,915
    
    
    $
    22,466
  41




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##### Table of Contents



BRANDYWINE OPERATING PARTNERSHIP L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
 Six-month periodsended June 30,2009
    
    
    2008 (as adjusted)Cash flows from operating activities:Net income
    
    $
    4,908
    
    
    $
    21,810Adjustments to reconcile net income to net cash from operating activities:Depreciation
    
    
    80,109
    
    
    
    81,948Amortization:Deferred financing costs
    
    
    3,146
    
    
    
    2,706Amortization of debt discount
    
    
    1,215
    
    
    
    3,418Deferred leasing costs
    
    
    8,928
    
    
    
    8,152Acquired above (below) market leases, net
    
    
    (3,487
    )
    
    
    (4,673
    )Acquired lease intangibles
    
    
    17,051
    
    
    
    22,333Deferred compensation costs
    
    
    2,288
    
    
    
    2,574Recognized hedge activity
    
    
    305
    
    
    
    Straight-line rent
    
    
    (4,094
    )
    
    
    (11,233
    )Provision for doubtful accounts
    
    
    3,907
    
    
    
    2,650Provision for impairment in real estate
    
    
    3,700
    
    
    
    6,850Real estate venture income in excess of distributions
    
    
    (1,026
    )
    
    
    (569
    )Net gain on sale of interests in real estate
    
    
    1,031
    
    
    
    (21,377
    )Gain on early extinguishment of debt
    
    
    (18,651
    )
    
    
    (3,106
    )Cummulative interest accretion on repayments of unsecured notes
    
    
    (1,955
    )
    
    
    (435
    )Changes in assets and liabilities:Accounts receivable
    
    
    2,671
    
    
    
    3,324Other assets
    
    
    9,412
    
    
    
    7,168Accounts payable and accrued expenses
    
    
    2,611
    
    
    
    (7,430
    )Tenant security deposits and deferred rents
    
    
    (2,707
    )
    
    
    (2,883
    )Other liabilities
    
    
    (4,264
    )
    
    
    (6,395
    )Net cash from operating activities
    
    
    105,098
    
    
    
    104,832Cash flows from investing activities:Sales of properties, net
    
    
    33,354
    
    
    
    53,601Capital expenditures
    
    
    (94,810
    )
    
    
    (89,239
    )Investment in unconsolidated real estate ventures
    
    
    (14,980
    )
    
    
    (469
    )Escrowed cash
    
    
    31,385
    
    
    
    Cash distributions from unconsolidated real estate ventures in excess of equity in income
    
    
    11,346
    
    
    
    1,558Leasing costs
    
    
    (14,286
    )
    
    
    (5,468
    )Net cash used in investing activities
    
    
    (47,991
    )
    
    
    (40,017
    )Cash flows from financing activities:Proceeds from Credit Facility borrowings
    
    
    347,000
    
    
    
    258,000Repayments of Credit Facility borrowings
    
    
    (426,000
    )
    
    
    (192,727
    )Proceeds from mortgage notes payable
    
    
    89,800
    
    
    
    Repayments of mortgage notes payable
    
    
    (73,576
    )
    
    
    (18,650
    )Repayments of unsecured notes
    
    
    (174,823
    )
    
    
    (27,725
    )Debt financing costs
    
    
    (21,525
    )
    
    
    (209
    )Net proceeds from Issuance of Common Partnership Units
    
    
    242,455
    
    
    
    Distributions paid to preferred and common partnership unitholders
    
    
    (40,426
    )
    
    
    (84,314
    )Net cash used in financing activities
    
    
    (57,095
    )
    
    
    (65,625
    )Increase (decrease) in cash and cash equivalents
    
    
    12
    
    
    
    (810
    )Cash and cash equivalents at beginning of period
    
    
    3,924
    
    
    
    5,600Cash and cash equivalents at end of period
    
    $
    3,936
    
    
    $
    4,790Supplemental disclosure:Cash paid for interest, net of capitalized interest
    
    $
    74,584
    
    
    $
    109,355Supplemental disclosure of non-cash activity:Note receivable issued in a property sale transaction
    
    
    950
    
    
    
    Change in capital expenditures financed through accounts payable
    
    
    8,300
    
    
    
    (2,920
    )
  42




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
 ORGANIZATION AND NATURE OF OPERATIONS
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Basis of Presentation
  Reclassifications and Revisions
 Share-Based Payment
  43




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
  Accounting for Deferred Compensation
Arrangements Where Amounts Earned Are Held in a Rabbi Trust and Invested.
     Principles of Consolidation
  44




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
 Use of Estimates
  Operating Properties
  Purchase Price Allocation
  Accounting for Conditional Asset Retirement Obligations
  45




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
  Impairment or Disposal of Long-Lived Assets
 Accounting for the Impairment or
Disposal of Long-Lived Assets
    Revenue Recognition
  46




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
   Stock-Based Compensation Plans
   Accounting for Derivative Instruments and Hedging Activities
 Accounting for Derivative Instruments and Hedging Activities Accounting for Certain Derivative Instruments and Hedging Activities
- An Amendment of SFAS 133 Fair Value
Measurements
  Fair Value Measurements
 Fair Value
Measurements Application of FASB
Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair
Value Measurements for Purposes of Lease
 47




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
 Classification or Measurement under Statement 13 Effective Date of FASB Statement No. 157 Accounting
for Leases
    Fair Value Measurements at ReportingDate Using:Quoted Prices inActive Markets for
    
    
    Significant Other
    
    
    UnobservableJune 30,
    
    
    Identical Assets
    
    
    Observable Inputs
    
    
    InputsDescription
    
    2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)RecurringAssets:Available-for-Sale
Securities
    
    $
    348
    
    
    $
    348
    
    
    $
    
    
    
    $
    Liabilities:Interest Rate Swaps
    
    $
    9,514
    
    
    $
    
    
    
    $
    9,514
    
    
    $
    Forward Starting Interest
Rate Swaps
    
    
    3,186
    
    
    
    
    
    
    
    3,186
    
    
    
    $
    12,700
    
    
    $
    
    
    
    $
    12,700
    
    
    $
    
  48




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
 Fair Value Measurements at ReportingDate Using:Quoted Prices inActive Markets for
    
    
    Significant Other
    
    
    UnobservableDecember 31,
    
    
    Identical Assets
    
    
    Observable Inputs
    
    
    InputsDescription
    
    2008
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Assets:Available-for-Sale
Securities
    
    $
    423
    
    
    $
    423
    
    
    $
    
    
    
    $
    Liabilities:Interest Rate Swaps
    
    $
    10,985
    
    
    $
    
    
    
    $
    10,985
    
    
    $
    Forward Starting
Interest Rate
Swaps
    
    
    7,481
    
    
    
    
    
    
    
    7,481
    
    
    
    $
    18,466
    
    
    $
    
    
    
    $
    18,466
    
    
    $
    
  
    
    Non-financial assets and liabilities initially measured at fair value in an acquisition
or business combination that are not re-measured at least annually at fair value,
    
    Long-lived assets measured at fair value due to an impairment under Statement of
Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assetsand
    
    Asset retirement obligations initially measured at fair value under Statement of
Financial Accounting Standards No. 143, Accounting for Asset Retirement Obligations.
  Income Taxes
    Accounting Pronouncements Adopted January 1, 2009 on a Retrospective Basis
 Accounting for
Convertible Debt Instruments That May Be Settled Upon Conversion (Including Partial Cash
Settlement)
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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
   Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating
Securities
 Accounting for
Non-controlling Interests Classification and Measurement
of Redeemable Securities
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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
   APB 14-1
    
    D-98As Reported
    
    Adjustment
    
    Adjustment
    
    As RevisedConstruction-in-progress
    
    $
    121,402
    
    
    $
    817
    
    
    $
    
    
    
    $
    122,219Deferred costs, net
    
    
    89,866
    
    
    
    (539
    )
    
    
    
    
    
    
    89,327Unsecured bonds, net of discount
    
    
    1,930,147
    
    
    
    (12,177
    )
    
    
    
    
    
    
    1,917,970Redeemable limited partnership
    
    
    21,716
    
    
    
    
    
    
    
    32,450
    
    
    
    54,166unitsGeneral partnership capital
    
    
    1,601,882
    
    
    
    12,455
    
    
    
    (32,450
    )
    
    
    1,581,887Total equity
    
    $
    1,688,327
    
    
    $
    12,455
    
    
    $
    (32,450
    )
    
    $
    1,668,332
 Accounting Pronouncements Adopted During 2009 on a Prospective Basis
 Subsequent Events
 Interim Disclosures about Fair Value of
Financial Instruments
 Determining Fair Value When the Volume and Level of
Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That
are Not Orderly
 Recognition
and Presentation of Other-Than-Temporary Impairments
 51




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
  Disclosures about Derivative Instruments and Hedging Activities Accounting for Derivative Instruments
and Hedging Activities
 Determination of the Useful Life of Intangible
Assets
 Business Combinations
 New Pronouncements
 Accounting for Transfers of Financials Assets, an amendment
to FAS 140 (FAS 166), Amendment to FASB Interpretation No. 46R (FAS 167) Consolidation of Variable Interest
Entities
 REAL ESTATE INVESTMENTS
  52




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
 June 30, 2009
    
    
    December 31, 2008Land
    
    $
    701,856
    
    
    $
    707,591Building and improvements
    
    
    3,455,973
    
    
    
    3,481,289Tenant improvements
    
    
    428,751
    
    
    
    419,440$
    4,586,580
    
    
    $
    4,608,320
 Acquisitions and Dispositions
      INVESTMENT IN UNCONSOLIDATED VENTURES
     53




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
 June 30,
    
    December 31,2009
    
    2008Net property
    
    $
    548,785
    
    
    $
    554,424Other assets
    
    
    91,002
    
    
    
    96,278Other Liabilities
    
    
    54,115
    
    
    
    39,388Debt
    
    
    475,809
    
    
    
    514,308Equity
    
    
    109,863
    
    
    
    97,006Partnerships share of equity (Partnerships basis)
    
    
    75,688
    
    
    
    71,028
  Three-month periods
    
    Six-month periodsended June 30,
    
    ended March 31,2009
    
    2008
    
    2009
    
    2008Revenue
    
    $
    27,125
    
    
    $
    25,863
    
    
    $
    53,689
    
    
    $
    52,896Operating expenses
    
    
    9,109
    
    
    
    8,875
    
    
    
    18,675
    
    
    
    17,797Interest expense, net
    
    
    6,845
    
    
    
    7,956
    
    
    
    13,997
    
    
    
    15,753Depreciation and amortization
    
    
    8,859
    
    
    
    9,472
    
    
    
    17,681
    
    
    
    18,624Net income
    
    
    2,312
    
    
    
    (440
    )
    
    
    3,336
    
    
    
    722Partnerships share of income (Partnerships basis)
    
    
    1,533
    
    
    
    1,664
    
    
    
    2,119
    
    
    
    2,779
  DEFERRED COSTS
  June 30, 2009Accumulated
    
    
    Deferred Costs,Total Cost
    
    
    Amortization
    
    
    netLeasing Costs
    
    $
    114,689
    
    
    $
    (45,467
    )
    
    $
    69,222Financing Costs
    
    
    43,651
    
    
    
    (12,021
    )
    
    
    31,630Total
    
    $
    158,340
    
    
    $
    (57,488
    )
    
    $
    100,852
 December 31, 2008Accumulated
    
    
    Deferred Costs,Total Cost
    
    
    Amortization
    
    
    netLeasing Costs
    
    $
    115,262
    
    
    $
    (39,528
    )
    
    $
    75,734Financing Costs
    
    
    25,170
    
    
    
    (11,577
    )
    
    
    13,593Total
    
    $
    140,432
    
    
    $
    (51,105
    )
    
    $
    89,327
 54




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
 INTANGIBLE ASSETS
  June 30, 2009Accumulated
    
    
    Intangible Assets,Total Cost
    
    
    Amortization
    
    
    netIn-place lease value
    
    $
    134,881
    
    
    $
    (72,730
    )
    
    $
    62,151Tenant relationship value
    
    
    101,087
    
    
    
    (45,824
    )
    
    
    55,263Above market leases acquired
    
    
    20,058
    
    
    
    (13,366
    )
    
    
    6,692Total
    
    $
    256,026
    
    
    $
    (131,920
    )
    
    $
    124,106Below market leases acquired
    
    $
    77,945
    
    
    $
    (35,909
    )
    
    $
    42,036
 December 31, 2008Accumulated
    
    
    Intangible Assets,Total Cost
    
    
    Amortization
    
    
    netIn-place lease value
    
    $
    145,518
    
    
    $
    (71,138
    )
    
    $
    74,380Tenant relationship value
    
    
    103,485
    
    
    
    (40,835
    )
    
    
    62,650Above market leases acquired
    
    
    23,351
    
    
    
    (14,624
    )
    
    
    8,727Total
    
    $
    272,354
    
    
    $
    (126,597
    )
    
    $
    145,757Below market leases acquired
    
    $
    82,950
    
    
    $
    (35,324
    )
    
    $
    47,626
  Assets
    
    
    Liabilities2009
    
    $
    15,729
    
    
    $
    4,7762010
    
    
    29,499
    
    
    
    8,3452011
    
    
    22,772
    
    
    
    7,0512012
    
    
    17,430
    
    
    
    6,3142013
    
    
    12,636
    
    
    
    5,874Thereafter
    
    
    26,040
    
    
    
    9,676Total
    
    $
    124,106
    
    
    $
    42,036
 DEBT OBLIGATIONS
  55




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
 MORTGAGE DEBT:
 EffectiveJune 30
    
    
    December 31,
    
    
    Interest
    
    MaturityProperty / Location
    
    2009
    
    
    2008
    
    
    Rate
    
    Date200 Commerce Drive
    
    $
    5,639
    
    
    $
    5,684
    
    
    7.12%
    (a)
    Jan-10Plymouth Meeting Exec.
    
    
    42,421
    
    
    
    42,785
    
    
    7.00%
    (a)
    Dec-10Four Tower Bridge
    
    
    10,284
    
    
    
    10,404
    
    
    6.62%
    
    Feb-11Arboretum I, II, III & V
    
    
    21,357
    
    
    
    21,657
    
    
    7.59%
    
    Jul-11Midlantic Drive/Lenox Drive/DCC I
    
    
    59,016
    
    
    
    59,784
    
    
    8.05%
    
    Oct-11Research Office Center
    
    
    40,403
    
    
    
    40,791
    
    
    5.30%
    (a)
    Oct-11Concord Airport Plaza
    
    
    36,115
    
    
    
    36,617
    
    
    5.55%
    (a)
    Jan-12Six Tower Bridge
    
    
    13,880
    
    
    
    14,185
    
    
    7.79%
    
    Aug-12Newtown Square/Berwyn Park/Libertyview
    
    
    60,245
    
    
    
    60,910
    
    
    7.25%
    
    May-13Coppell Associates
    
    
    2,995
    
    
    
    3,273
    
    
    6.89%
    
    Dec-13Southpoint III
    
    
    3,565
    
    
    
    3,863
    
    
    7.75%
    
    Apr-14Tysons Corner
    
    
    98,795
    
    
    
    99,529
    
    
    5.36%
    (a)
    Aug-15Coppell Associates
    
    
    16,600
    
    
    
    16,600
    
    
    5.75%
    
    Feb-16Two Logan Square
    
    
    89,800
    
    
    
    68,808
    
    
    7.57%
    (b)
    Apr-16Principal balance outstanding
    
    
    501,115
    
    
    
    484,890Plus: unamortized fixed-rate debt premiums, net
    
    
    1,846
    
    
    
    2,635Total mortgage indebtedness
    
    $
    502,961
    
    
    $
    487,525UNSECURED DEBT:$275.0M 4.500% Guaranteed Notes due 2009
    
    
    150,151
    
    
    
    196,680
    
    
    4.62%
    
    Nov-09Bank Term Loan
    
    
    183,000
    
    
    
    183,000
    
    
    LIBOR + 0.80%
    
    Oct-10      (c)$300.0M 5.625% Guaranteed Notes due 2010
    
    
    210,546
    
    
    
    275,545
    
    
    5.61%
    
    Dec-10Credit Facility
    
    
    74,000
    
    
    
    153,000
    
    
    LIBOR + 0.725%
    
    Jun-11      (c)$320.7M 3.875% Guaranteed Exchangeable Notes
due 2026
    
    
    205,740
    
    
    
    282,030
    
    
    5.50%
    
    Oct-11$300.0M 5.750% Guaranteed Notes due 2012
    
    
    290,035
    
    
    
    300,000
    
    
    5.77%
    
    Apr-12$250.0M 5.400% Guaranteed Notes due 2014
    
    
    250,000
    
    
    
    250,000
    
    
    5.53%
    
    Nov-14$250.0M 6.000% Guaranteed Notes due 2016
    
    
    250,000
    
    
    
    250,000
    
    
    5.95%
    
    Apr-16$300.0M 5.700% Guaranteed Notes due 2017
    
    
    300,000
    
    
    
    300,000
    
    
    5.75%
    
    May-17Indenture IA (Preferred Trust I)
    
    
    27,062
    
    
    
    27,062
    
    
    LIBOR + 1.25%
    
    Mar-35Indenture IB (Preferred Trust I)
    
    
    25,774
    
    
    
    25,774
    
    
    LIBOR + 1.25%
    
    Apr-35Indenture II (Preferred Trust II)
    
    
    25,774
    
    
    
    25,774
    
    
    LIBOR + 1.25%
    
    Jul-35Principal balance outstanding
    
    
    1,992,082
    
    
    
    2,268,865less: unamortized exchangeable debt discount
    
    
    (8,063
    )
    
    
    (12,177
    )Plus: unamortized fixed-rate debt discounts, net
    
    
    (2,437
    )
    
    
    (2,718
    )Total unsecured indebtedness
    
    $
    1,981,582
    
    
    $
    2,253,970Total Debt Obligations
    
    $
    2,484,543
    
    
    $
    2,741,495
 
 (a)
    
    Loans were assumed upon acquisition of the related property. Interest rates presented
above reflect the market rate at the time of acquisition.(b)
    
    The Two Logan Square mortgage was refinanced in the amount of 89.8 million on April 1, 2009.
The new loan features a 7.57% rate and a seven-year term with three years of interest only
payments followed by a thirty-year amortization schedule.(c)
    
    These loans may be extended to June 29, 2012 at the Partnerships discretion. th
 56




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
    Repurchase
    
    
    
    
    
    
    
    
    
    
    Deferred FinancingNotes
    
    Amount
    
    
    Principal
    
    
    Gain
    
    
    Amortization2009 Notes
    
    $
    44,945
    
    
    $
    46,529
    
    
    $
    1,584
    
    
    $
    622010 Notes
    
    
    59,257
    
    
    
    64,999
    
    
    
    5,735
    
    
    
    1902012 Notes
    
    
    9,061
    
    
    
    9,965
    
    
    
    904
    
    
    
    353.875% Notes
    
    
    63,514
    
    
    
    76,290
    
    
    
    10,428
    
    
    
    796$
    176,777
    
    
    $
    197,783
    
    
    $
    18,651
    
    
    $
    1,083
     57




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
 2009
    
    $
    154,9282010
    
    
    450,4052011
    
    
    412,0352012
    
    
    341,4742013
    
    
    59,184Thereafter
    
    
    1,075,171Total principal payments
    
    
    2,493,197Net unamortized premiums/discounts
    
    
    (8,654
    )Outstanding indebtedness
    
    $
    2,484,543
 FAIR VALUE OF FINANCIAL STATEMENTS
   June 30, 2009
    
    December 31, 2008Carrying
    
    Fair
    
    Carrying
    
    FairAmount
    
    Value
    
    Amount
    
    ValueMortgage payable, net of premiums
    
    $
    502,961
    
    
    $
    485,472
    
    
    $
    484,890
    
    
    $
    487,525Unsecured notes payable, net of discounts
    
    $
    1,645,972
    
    
    $
    1,379,098
    
    
    $
    1,854,186
    
    
    $
    1,152,056Variable Rate Debt Instruments
    
    $
    335,610
    
    
    $
    331,421
    
    
    $
    414,610
    
    
    $
    398,748Notes Receivable
    
    $
    49,676
    
    
    $
    48,488
    
    
    $
    48,048
    
    
    $
    46,227
 RISK MANAGEMENT AND USE OF FINANCIAL INSTRUMENTS
 Risk Management
   58




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 200
     Use of Derivative Financial Instruments
   59




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
      Hedge
    
    Hedge
    
    
    
    Notional Amount
    
    
    
    
    
    
    Trade
    
    
    Maturity
    
    
    Fair ValueProduct
    
    Type
    
    Designation
    
    6/30/2009
    
    
    12/31/2008
    
    
    Strike
    
    Date
    
    
    Date
    
    
    6/30/2009
    
    
    12/31/2008Swap
    
    Interest Rate
    
    Cash Flow             (b)
    
    $
    91,700
    
    
    $
    78,000
    (a)
    
    
    4.709
    %
    
    
    9/20/07
    
    
    
    10/18/10
    
    
    $
    6,452
    
    
    $
    7,204Swap
    
    Interest Rate
    
    Cash Flow             (b)
    
    
    25,000
    
    
    
    25,000
    
    
    
    4.415
    %
    
    
    10/19/07
    
    
    
    10/18/10
    
    
    
    1,173
    
    
    
    1,439Swap
    
    Interest Rate
    
    Cash Flow             (b)
    
    
    25,000
    
    
    
    25,000
    
    
    
    3.747
    %
    
    
    11/26/07
    
    
    
    10/18/10
    
    
    
    915
    
    
    
    1,111Swap
    
    Interest Rate
    
    Cash Flow             (b)
    
    
    25,000
    
    
    
    25,000
    
    
    
    3.338
    %
    
    
    9/23/07
    
    
    
    12/18/09
    
    
    
    354
    
    
    
    603Swap
    
    Interest Rate
    
    Cash Flow             (b)
    
    
    25,774
    
    
    
    25,774
    
    
    
    2.975
    %
    
    
    10/16/08
    
    
    
    10/30/10
    
    
    
    620
    
    
    
    628Forward Starting Swap
    
    Interest Rate
    
    Cash Flow             (c)
    
    
    25,000
    
    
    
    25,000
    
    
    
    4.770
    %
    
    
    1/4/08
    
    
    
    12/18/19
    
    
    
    1,949
    
    
    
    4,079Forward Starting Swap
    
    Interest Rate
    
    Cash Flow             (c)
    
    
    25,000
    
    
    
    25,000
    
    
    
    4.423
    %
    
    
    3/19/08
    
    
    
    12/18/19
    
    
    
    1,237
    
    
    
    3,402$
    242,474
    
    
    $
    228,774
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    12,700
    
    
    $
    18,466
 
 (a)
    
     Notional amount accreting up to $155,000 through October 8, 2010.(b)
    
     Hedging unsecured variable rate debt.(c)
    
     Future issuance of long-term debt with an expected forward starting date in March 2010. Concentration of Credit Risk
  60




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
  DISCONTINUED OPERATIONS
  Three-month period
    
    
    Six-month periodended June 30, 2009
    
    
    ended June 30, 2009Revenue:Rents
    
    $
    311
    
    
    $
    1,511Tenant reimbursements
    
    
    (4
    )
    
    
    43Other
    
    
    3
    
    
    
    71Total revenue
    
    
    310
    
    
    
    1,625Expenses:Property operating expenses
    
    
    165
    
    
    
    546Real estate taxes
    
    
    17
    
    
    
    127Depreciation and amortization
    
    
    142
    
    
    
    615Provision for impairment of discontinued operations
    
    
    
    
    
    
    3,700Total operating expenses
    
    
    324
    
    
    
    4,988Interest income
    
    
    
    
    
    
    (1
    )Loss from discontinued operations before gain on
sale of interests in real estate
    
    
    (14
    )
    
    
    (3,364
    )Net loss on sale of interests in real estate
    
    
    (1,225
    )
    
    
    (1,031
    )Loss from discontinued operations attributable to Brandywine Operating Partnership
    
    $
    (1,239
    )
    
    $
    (4,395
    )
  Three-month period
    
    
    Six-month periodended June 30, 2008
    
    
    ended June 30, 2008Revenue:Rents
    
    $
    14,175
    
    
    $
    29,273Tenant reimbursements
    
    
    498
    
    
    
    1,093Other
    
    
    58
    
    
    
    183Total revenue
    
    
    14,731
    
    
    
    30,549Expenses:Property operating expenses
    
    
    5,301
    
    
    
    10,172Real estate taxes
    
    
    1,172
    
    
    
    2,656Depreciation and amortization
    
    
    4,999
    
    
    
    10,001Provision for impairment of discontinued operations
    
    
    6,850
    
    
    
    6,850Total operating expenses
    
    
    18,322
    
    
    
    29,679Interest income
    
    
    5
    
    
    
    11Interest expense
    
    
    (1,342
    )
    
    
    (2,694
    )Loss from discontinued operations before gain on
sale of interests in real estate
    
    
    (4,928
    )
    
    
    (1,813
    )Net gain on sale of interests in real estate
    
    
    13,420
    
    
    
    21,401Income from discontinued operations attributable to Brandywine Operating Partnership
    
    $
    8,492
    
    
    $
    19,588
  61




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
 NON-CONTROLLING INTEREST  PARTNERS SHARE OF CONSOLIDATED REAL ESTATE VENTURES
   PARTNERS EQUITY
 Earnings per Common Partnership Unit
  Three-month periods ended June 30,2009
    
    
    2008Basic
    
    
    Diluted
    
    
    Basic
    
    
    DilutedNumeratorIncome (loss) from continuing operations
    
    $
    7,020
    
    
    $
    7,020
    
    
    $
    (279
    )
    
    $
    (279
    )Net income attributable to non-controlling interests
    
    
    (28
    )
    
    
    (28
    )
    
    
    (38
    )
    
    
    (38
    )Amount allocable to unvested restricted shareholders
    
    
    (73
    )
    
    
    (73
    )
    
    
    (227
    )
    
    
    (227
    )Preferred share dividends
    
    
    (1,998
    )
    
    
    (1,998
    )
    
    
    (1,998
    )
    
    
    (1,998
    )Income (loss) from continuing operations available to common unitholders
    
    
    4,921
    
    
    
    4,921
    
    
    
    (2,542
    )
    
    
    (2,542
    )Discontinued operations attributable to common unitholders
    
    
    (1,239
    )
    
    
    (1,239
    )
    
    
    8,492
    
    
    
    8,4923Net income available to common unitholders
    
    $
    3,682
    
    
    $
    3,682
    
    
    $
    5,950
    
    
    $
    5,950DenominatorWeighted-average units outstanding
    
    
    104,400,618
    
    
    
    104,400,618
    
    
    
    90,747,434
    
    
    
    90,747,434Contingent securities/Stock based compensation
    
    
    
    
    
    
    1,158,346
    
    
    
    
    
    
    
    231,769Total weighted-average common partnership units outstanding
    
    
    104,400,618
    
    
    
    105,558,964
    
    
    
    90,747,434
    
    
    
    90,979,203Earnings per Common Partnership Unit:Income from continuing operations attributable to common unitholders
    
    $
    0.05
    
    
    $
    0.05
    
    
    $
    (0.03
    )
    
    $
    (0.03
    )Discontinued operations attributable to common unitholders
    
    
    (0.01
    )
    
    
    (0.01
    )
    
    
    0.10
    
    
    
    0.10Net (loss) income attributable to common unitholders
    
    $
    0.04
    
    
    $
    0.04
    
    
    $
    0.07
    
    
    $
    0.07
 62




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
 Six-month periods ended June 30,2009
    
    
    2008Basic
    
    
    Diluted
    
    
    Basic
    
    
    DilutedNumeratorIncome (loss) from continuing operations
    
    $
    9,303
    
    
    $
    9,303
    
    
    $
    2,222
    
    
    $
    2,222Net income attributable to non-controlling interests
    
    
    (22
    )
    
    
    (22
    )
    
    
    (78
    )
    
    
    (78
    )Amount allocable to unvested restricted shareholders
    
    
    (110
    )
    
    
    (110
    )
    
    
    (394
    )
    
    
    (394
    )Preferred share dividends
    
    
    (3,996
    )
    
    
    (3,996
    )
    
    
    (3,996
    )
    
    
    (3,996
    )Income (loss) from continuing operations available to common unitholders
    
    
    5,175
    
    
    
    5,175
    
    
    
    (2,246
    )
    
    
    (2,246
    )Discontinued operations attributable to common unitholders
    
    
    (4,395
    )
    
    
    (4,395
    )
    
    
    19,588
    
    
    
    19,588Net income available to common unitholders
    
    $
    780
    
    
    $
    780
    
    
    $
    17,342
    
    
    $
    17,342DenominatorWeighted-average units outstanding
    
    
    97,750,755
    
    
    
    97,750,755
    
    
    
    90,736,342
    
    
    
    90,736,342Contingent securities/Stock based compensation
    
    
    
    
    
    
    561,258
    
    
    
    
    
    
    
    207,734Total weighted-average common partnership units outstanding
    
    
    97,750,755
    
    
    
    98,312,013
    
    
    
    90,736,342
    
    
    
    90,944,076Earnings per Common Partnership Unit:Income from continuing operations attributable to common unitholders
    
    $
    0.05
    
    
    $
    0.05
    
    
    $
    (0.02
    )
    
    $
    (0.02
    )Discontinued operations attributable to common unitholders
    
    
    (0.04
    )
    
    
    (0.04
    )
    
    
    0.21
    
    
    
    0.21Net (loss) income attributable to common unitholders
    
    $
    0.01
    
    
    $
    0.01
    
    
    $
    0.19
    
    
    $
    0.19
  Common Partnership Unit and Preferred Mirror Units
    Common Share Repurchases
 63




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
    SHARE BASED AND DEFERRED COMPENSATION
 Stock Options
   Average
    
    
    Remaining Contractual
    
    
    Aggregate IntrinsicShares
    
    
    Exercise Price
    
    
    Term (in years)
    
    
    Value (in 000s)Outstanding at January 1, 2009
    
    
    1,754,648
    
    
    $
    20.41
    
    
    
    8.77
    
    
    $
    (30,093
    )Granted
    
    
    676,491
    
    
    
    2.91
    
    
    
    9.76
    
    
    
    3,071,267Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited or expired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at June 30, 2009
    
    
    2,431,139
    
    
    $
    15.54
    
    
    
    8.90
    
    
    $
    (19,664,394
    )Vested/Exercisable at June 30, 2009
    
    
    624,976
    
    
    $
    20.04
    
    
    
    8.05
    
    
    $
    (7,795,586
    )
 Restricted Share Awards
   64




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
 WeightedAverage GrantShares
    
    
    Date Fair valueNon-vested at January 1, 2009
    
    
    475,496
    
    
    $
    26.21Granted
    
    
    372,586
    
    
    
    3.36Vested
    
    
    (111,703
    )
    
    
    22.85Forfeited
    
    
    (2,322
    )
    
    
    22.19Non-vested at June 30, 2009
    
    
    734,057
    
    
    $
    9.78
 Restricted Performance Share Units Plan
    Outperformance Program
   65




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
  Employee Share Purchase Plan
  Deferred Compensation
   Accounting for Deferred Compensation Arrangements Where Amounts Earned Are Held in A Rabbi
Trust and Invested,
 66




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
 TAX CREDIT TRANSACTIONS
 Historic Tax Credit Transaction
     New Markets Tax Credit Transaction
    67




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
    SEGMENT INFORMATION
   68




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
  New Jersey
    
    
    Richmond,Pennsylvania
    
    
    Metropolitan, D.C.
    
    
    /Delaware
    
    
    Virginia
    
    
    California
    
    
    Austin, Texas
    
    
    Corporate
    
    
    TotalAs of June 30, 2009:Real estate investments, at cost:Operating properties
    
    $
    1,729,472
    
    
    $
    1,356,842
    
    
    $
    677,252
    
    
    $
    297,678
    
    
    $
    248,570
    
    
    $
    276,766
    
    
    $
    
    
    
    $
    4,586,580Construction-in-progress
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    197,404
    
    
    $
    197,404Land inventory
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    97,430
    
    
    $
    97,430As of December 31, 2008:Real estate investments, at cost:Operating properties
    
    $
    1,734,948
    
    
    $
    1,371,997
    
    
    $
    674,503
    
    
    $
    297,171
    
    
    $
    248,876
    
    
    $
    280,825
    
    
    $
    
    
    
    $
    4,608,320Construction-in-progress
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    122,219
    
    
    $
    122,219Land inventory
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    100,516
    
    
    $
    100,516For the three-months ended June 30, 2009:Total revenue
    
    $
    58,606
    
    
    $
    34,637
    
    
    $
    29,190
    
    
    $
    8,948
    
    
    $
    6,158
    
    
    $
    8,825
    
    
    $
    (487
    )
    
    $
    145,877Property operating expenses, real estate
taxes and third party management expenses
    
    
    21,038
    
    
    
    12,762
    
    
    
    12,792
    
    
    
    3,374
    
    
    
    3,392
    
    
    
    3,997
    
    
    
    (275
    )
    
    
    57,080Net operating income
    
    $
    37,568
    
    
    $
    21,875
    
    
    $
    16,398
    
    
    $
    5,574
    
    
    $
    2,766
    
    
    $
    4,828
    
    
    $
    (212
    )
    
    $
    88,797For the three-months ended June 30, 2008:Total revenue
    
    $
    60,704
    
    
    $
    34,288
    
    
    $
    29,377
    
    
    $
    9,593
    
    
    $
    7,310
    
    
    $
    9,914
    
    
    $
    (420
    )
    
    $
    150,766Property operating expenses, real estate
taxes and third party management expenses
    
    
    21,282
    
    
    
    11,929
    
    
    
    12,837
    
    
    
    3,161
    
    
    
    3,102
    
    
    
    4,375
    
    
    
    1,186
    
    
    
    57,872Net operating income
    
    $
    39,422
    
    
    $
    22,359
    
    
    $
    16,540
    
    
    $
    6,432
    
    
    $
    4,208
    
    
    $
    5,539
    
    
    $
    (1,606
    )
    
    $
    92,894For the six-months ended June 30, 2009:Total revenue
    
    $
    119,059
    
    
    $
    69,811
    
    
    $
    58,639
    
    
    $
    18,450
    
    
    $
    13,532
    
    
    $
    17,918
    
    
    $
    (694
    )
    
    $
    296,715Property operating expenses, real estate
taxes and third party management expenses
    
    
    46,278
    
    
    
    26,640
    
    
    
    26,911
    
    
    
    7,257
    
    
    
    6,737
    
    
    
    7,978
    
    
    
    (2,371
    )
    
    
    119,430Net operating income
    
    $
    72,781
    
    
    $
    43,171
    
    
    $
    31,728
    
    
    $
    11,193
    
    
    $
    6,795
    
    
    $
    9,940
    
    
    $
    1,677
    
    
    $
    177,285For the six-months ended June 30, 2008:Total revenue
    
    $
    124,346
    
    
    $
    68,489
    
    
    $
    57,968
    
    
    $
    18,820
    
    
    $
    14,639
    
    
    $
    18,981
    
    
    $
    (995
    )
    
    $
    302,248Property operating expenses, real estate
taxes and third party management expenses
    
    
    43,131
    
    
    
    24,061
    
    
    
    25,235
    
    
    
    6,138
    
    
    
    6,011
    
    
    
    8,449
    
    
    
    3,284
    
    
    
    116,309Net operating income
    
    $
    81,215
    
    
    $
    44,428
    
    
    $
    32,733
    
    
    $
    12,682
    
    
    $
    8,628
    
    
    $
    10,532
    
    
    $
    (4,279
    )
    
    $
    185,939
 69




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##### Table of Contents



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
  Three-month periods
    
    
    Six-month periodsended June 30,
    
    
    ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Consolidated net operating income
    
    $
    88,797
    
    
    $
    92,894
    
    
    $
    177,285
    
    
    $
    185,939Less:Interest expense
    
    
    (34,944
    )
    
    
    (36,742
    )
    
    
    (70,590
    )
    
    
    (73,785
    )Deferred financing costs
    
    
    (1,894
    )
    
    
    (1,198
    )
    
    
    (3,146
    )
    
    
    (2,706
    )Recognized hedge activity
    
    
    (305
    )
    
    
    
    
    
    
    (305
    )
    
    
    Depreciation and amortization
    
    
    (53,308
    )
    
    
    (51,492
    )
    
    
    (105,461
    )
    
    
    (102,430
    )General & administrative expenses
    
    
    (5,514
    )
    
    
    (6,127
    )
    
    
    (10,472
    )
    
    
    (11,039
    )Provision for impairment of real estate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Plus:Interest income
    
    
    642
    
    
    
    179
    
    
    
    1,222
    
    
    
    382Equity in income of real estate ventures
    
    
    1,533
    
    
    
    1,664
    
    
    
    2,119
    
    
    
    2,779Net loss on sales of interests in
undepreciated real estate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24
    )Gain on early extinguishment of debt
    
    
    12,013
    
    
    
    543
    
    
    
    18,651
    
    
    
    3,106Income (loss) from continuing operations
    
    
    7,020
    
    
    
    (279
    )
    
    
    9,303
    
    
    
    2,222Income (loss) from discontinued operations
    
    
    (1,239
    )
    
    
    8,492
    
    
    
    (4,395
    )
    
    
    19,588Net income
    
    $
    5,781
    
    
    $
    8,213
    
    
    $
    4,908
    
    
    $
    21,810
 COMMITMENTS AND CONTINGENCIES
 Legal Proceedings
  Environmental
  Ground Rent
  70




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
 2009
    $
    9932010
    
    2,2362011
    
    2,3182012
    
    2,3182013
    
    2,318Thereafter
    
    290,541
  Other Commitments or Contingencies
      71




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##### Table of Contents



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2009
  th
 SUBSEQUENT EVENTS
   72




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
  
    
    changes in general economic conditions;
    
    changes in local real estate conditions (including changes in rental rates and the
number of properties that compete with our properties);
    
    changes in the economic conditions affecting industries in which our principal
tenants compete;
    
    the unavailability of equity and debt financing, particularly in light of the
current economic environment;
    
    our failure to lease unoccupied space in accordance with our projections;
    
    our failure to re-lease occupied space upon expiration of leases;
    
    tenant defaults and the bankruptcy of major tenants;
    
    changes in prevailing interest rates;
    
    the impact of unrealized hedging transactions;
    
    failure of acquisitions to perform as expected;
    
    unanticipated costs associated with the acquisition, integration and operation of,
our acquisitions;
    
    unanticipated costs to complete, lease-up and operate our developments and
redevelopments;
    
    impairment charges;
    
    increased costs for, or lack of availability of, adequate insurance, including for
terrorist acts;
    
    risks associated with actual or threatened terrorist attacks;
    
    demand for tenant services beyond those traditionally provided by landlords;
    
    potential liability under environmental or other laws;
    
    failure or bankruptcy of real estate venture partners;
    
    inability of real estate venture partners to fund venture obligations;
    
    failure of dispositions to close in a timely manner;
    
    failure of buyers to comport with terms of their financing agreements to us;
    
    earthquakes and other natural disasters;
    
    risks associated with federal, state and local tax audits;
    
    complex regulations relating to our status as a REIT and the adverse consequences of
our failure to qualify as a REIT; and
    
    the impact of newly adopted accounting principles on our accounting policies and on
period-to-period comparisons of financial results.
   73




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74




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##### Table of Contents



Tenant Rollover Risk
  Tenant Credit Risk
   Development Risk
 th
        75




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##### Table of Contents



76




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##### Table of Contents



Comparison of the Three-Month Periods Ended June 30, 2009 and 2008
   77




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##### Table of Contents



Recently Completed
    
    
    Development/Redevelopment
    
    
    OtherSame Store Property Portfolio
    
    
    Properties
    
    
    Properties (a)
    
    
    (Eliminations)
    
    
    Total PortfolioIncrease/
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Increase/(dollars in thousands)
    
    2009
    
    
    2008
    
    
    (Decrease)
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    (Decrease)Revenue:Cash rents
    
    $
    114,092
    
    
    $
    114,309
    
    
    $
    (217
    )
    
    $
    791
    
    
    $
    60
    
    
    $
    3,439
    
    
    $
    3,212
    
    
    $
    (636
    )
    
    $
    (757
    )
    
    $
    117,686
    
    
    $
    116,824
    
    
    $
    862Straight-line rents
    
    
    1,454
    
    
    
    4,190
    
    
    
    (2,736
    )
    
    
    550
    
    
    
    
    
    
    
    167
    
    
    
    82
    
    
    
    
    
    
    
    
    
    
    
    2,171
    
    
    
    4,272
    
    
    
    (2,101
    )Rents  FAS 141R
    
    
    1,679
    
    
    
    1,589
    
    
    
    90
    
    
    
    
    
    
    
    
    
    
    
    62
    
    
    
    426
    
    
    
    
    
    
    
    
    
    
    
    1,741
    
    
    
    2,015
    
    
    
    (274
    )Total rents
    
    
    117,225
    
    
    
    120,088
    
    
    
    (2,863
    )
    
    
    1,341
    
    
    
    60
    
    
    
    3,668
    
    
    
    3,720
    
    
    
    (636
    )
    
    
    (757
    )
    
    
    121,598
    
    
    
    123,111
    
    
    
    (1,513
    )Tenant reimbursements
    
    
    17,552
    
    
    
    19,771
    
    
    
    (2,219
    )
    
    
    289
    
    
    
    22
    
    
    
    680
    
    
    
    916
    
    
    
    115
    
    
    
    77
    
    
    
    18,636
    
    
    
    20,786
    
    
    
    (2,150
    )Termination fees
    
    
    963
    
    
    
    892
    
    
    
    71
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    963
    
    
    
    892
    
    
    
    71Third party management fees, labor reimbursement and leasing
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,097
    
    
    
    5,170
    
    
    
    4,097
    
    
    
    5,170
    
    
    
    (1,073
    )Other, excluding termination fees
    
    
    419
    
    
    
    383
    
    
    
    36
    
    
    
    
    
    
    
    
    
    
    
    24
    
    
    
    12
    
    
    
    140
    
    
    
    412
    
    
    
    583
    
    
    
    807
    
    
    
    (224
    )Total revenue
    
    
    136,159
    
    
    
    141,134
    
    
    
    (4,975
    )
    
    
    1,630
    
    
    
    82
    
    
    
    4,372
    
    
    
    4,648
    
    
    
    3,716
    
    
    
    4,902
    
    
    
    145,877
    
    
    
    150,766
    
    
    
    (4,889
    )Property operating expenses
    
    
    39,730
    
    
    
    40,298
    
    
    
    568
    
    
    
    763
    
    
    
    (347
    )
    
    
    1,910
    
    
    
    1,931
    
    
    
    (1,808
    )
    
    
    (1,711
    )
    
    
    40,595
    
    
    
    40,171
    
    
    
    (424
    )Real estate taxes
    
    
    13,362
    
    
    
    14,449
    
    
    
    1,087
    
    
    
    554
    
    
    
    352
    
    
    
    454
    
    
    
    432
    
    
    
    147
    
    
    
    87
    
    
    
    14,517
    
    
    
    15,320
    
    
    
    803Third party management expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,968
    
    
    
    2,381
    
    
    
    1,968
    
    
    
    2,381
    
    
    
    413Subtotal
    
    
    83,067
    
    
    
    86,387
    
    
    
    (3,320
    )
    
    
    313
    
    
    
    77
    
    
    
    2,008
    
    
    
    2,285
    
    
    
    3,409
    
    
    
    4,145
    
    
    
    88,797
    
    
    
    92,894
    
    
    
    (4,097
    )General & administrative expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,514
    
    
    
    6,127
    
    
    
    5,514
    
    
    
    6,127
    
    
    
    613Depreciation and amortization
    
    
    49,289
    
    
    
    48,892
    
    
    
    (397
    )
    
    
    1,094
    
    
    
    44
    
    
    
    2,124
    
    
    
    1,616
    
    
    
    801
    
    
    
    940
    
    
    
    53,308
    
    
    
    51,492
    
    
    
    (1,816
    )Operating Income (loss)
    
    $
    33,778
    
    
    $
    37,495
    
    
    $
    (3,717
    )
    
    $
    (781
    )
    
    $
    33
    
    
    $
    (116
    )
    
    $
    669
    
    
    $
    (2,906
    )
    
    $
    (2,922
    )
    
    $
    29,975
    
    
    $
    35,275
    
    
    $
    (5,300
    )Number of properties
    
    
    234
    
    
    
    234
    
    
    
    
    
    
    
    4
    
    
    
    4
    
    
    
    9
    
    
    
    9
    
    
    
    
    
    
    
    
    
    
    
    247
    
    
    
    247Square feet
    
    
    23,051
    
    
    
    23,051
    
    
    
    
    
    
    
    669
    
    
    
    669
    
    
    
    2,340
    
    
    
    2,340
    
    
    
    
    
    
    
    
    
    
    
    26,060
    
    
    
    26,060Other Income (Expense):Interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    642
    
    
    
    179
    
    
    
    463Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (34,944
    )
    
    
    (36,742
    )
    
    
    1,798Interest expense  Deferred financing costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,894
    )
    
    
    (1,198
    )
    
    
    (696
    )Recognized hedge activity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (305
    )
    
    
    
    
    
    
    (305
    )Equity in income of real estate ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,533
    
    
    
    1,664
    
    
    
    (131
    )Gain on early extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,013
    
    
    
    543
    
    
    
    11,470Income (loss) from continuing operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,020
    
    
    
    (279
    )
    
    
    7,299Income from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,239
    )
    
    
    8,492
    
    
    
    (9,731
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    5,781
    
    
    $
    8,213
    
    
    $
    (2,432
    )Earnings per common share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    0.03
    
    
    $
    0.06
    
    
    $
    (0.03
    )
   78




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##### Table of Contents



Total Revenue
     Real Estate Taxes
  Depreciation and Amortization Expense
  General and Administrative Expense
  Interest Income/ Expense
   
    
    decrease of $1.2 million resulting from the payoff at maturity of our $113.0 million
private placement notes in December 2008.
    
    decrease of $0.8 million resulting from a lower Credit Facility balance and a lower
weighted average interest rate on such borrowings at June 30, 2009 compared to June 30,
2008.
    
    decrease of $1.5 million resulting from lower weighted average interest rates on our
$183.0 million Bank Term Loan and our three Preferred Trust borrowings. Such borrowings
have variable interest rates and a portion of such borrowings are swapped to fixed rate
debt through our hedging program. This decrease is offset by an increase of $1.4 million
paid under these hedges since the variable interest rates on such debt is lower than the
swapped fixed rate on the hedges assigned to these borrowings.
    
    decrease of $2.6 million resulting from our buybacks of various unsecured notes
subsequent to the second quarter of 2008. The details of the various purchases completed
during the three months ended June 30, 2009 are noted in the Gain on early extinguishment
of debtsection below and details for all purchases during and subsequent to the second
quarter of 2008 are included in our Annual Report on Form 10-K for 2008.
 79




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Gain on early extinguishment of debt
   Discontinued Operations
   Net (Loss) Income
  Earnings (loss) per Common Share
  80




---



##### Table of Contents



Comparison of the Six-Month Periods Ended June 30, 2009 and 2008
   81




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##### Table of Contents



Recently Completed
    
    
    Development/Redevelopment
    
    
    OtherSame Store Property Portfolio
    
    
    Properties
    
    
    Properties (a)
    
    
    (Eliminations)
    
    
    Total PortfolioIncrease/
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Increase/(dollars in thousands)
    
    2009
    
    
    2008
    
    
    (Decrease)
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    (Decrease)Revenue:Cash rents
    
    $
    229,622
    
    
    $
    226,824
    
    
    $
    2,798
    
    
    $
    1,440
    
    
    $
    118
    
    
    $
    6,809
    
    
    $
    6,057
    
    
    $
    (1,183
    )
    
    $
    (1,623
    )
    
    $
    236,688
    
    
    $
    231,376
    
    
    $
    5,312Straight-line rents
    
    
    3,067
    
    
    
    10,142
    
    
    
    (7,075
    )
    
    
    644
    
    
    
    
    
    
    
    342
    
    
    
    495
    
    
    
    
    
    
    
    
    
    
    
    4,053
    
    
    
    10,637
    
    
    
    (6,584
    )Rents  FAS 141R
    
    
    3,346
    
    
    
    3,010
    
    
    
    336
    
    
    
    
    
    
    
    
    
    
    
    121
    
    
    
    856
    
    
    
    
    
    
    
    
    
    
    
    3,467
    
    
    
    3,866
    
    
    
    (399
    )Total rents
    
    
    236,035
    
    
    
    239,976
    
    
    
    (3,941
    )
    
    
    2,084
    
    
    
    118
    
    
    
    7,272
    
    
    
    7,408
    
    
    
    (1,183
    )
    
    
    (1,623
    )
    
    
    244,208
    
    
    
    245,879
    
    
    
    (1,671
    )Tenant reimbursements
    
    
    38,814
    
    
    
    37,635
    
    
    
    1,179
    
    
    
    482
    
    
    
    15
    
    
    
    1,589
    
    
    
    1,988
    
    
    
    184
    
    
    
    169
    
    
    
    41,069
    
    
    
    39,807
    
    
    
    1,262Termination fees
    
    
    1,076
    
    
    
    4,124
    
    
    
    (3,048
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,076
    
    
    
    4,124
    
    
    
    (3,048
    )Third party management fees, labor
reimbursement and leasing
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,861
    
    
    
    10,849
    
    
    
    8,861
    
    
    
    10,849
    
    
    
    (1,988
    )Other, excluding termination fees
    
    
    765
    
    
    
    908
    
    
    
    (143
    )
    
    
    1
    
    
    
    
    
    
    
    127
    
    
    
    15
    
    
    
    608
    
    
    
    666
    
    
    
    1,501
    
    
    
    1,589
    
    
    
    (88
    )Total revenue
    
    
    276,690
    
    
    
    282,643
    
    
    
    (5,953
    )
    
    
    2,567
    
    
    
    133
    
    
    
    8,988
    
    
    
    9,411
    
    
    
    8,470
    
    
    
    10,061
    
    
    
    296,715
    
    
    
    302,248
    
    
    
    (5,533
    )Property operating expenses
    
    
    81,343
    
    
    
    79,368
    
    
    
    (1,975
    )
    
    
    1,496
    
    
    
    (755
    )
    
    
    4,011
    
    
    
    4,122
    
    
    
    (1,389
    )
    
    
    (1,854
    )
    
    
    85,461
    
    
    
    80,881
    
    
    
    (4,580
    )Real estate taxes
    
    
    27,598
    
    
    
    28,991
    
    
    
    1,393
    
    
    
    1,080
    
    
    
    766
    
    
    
    925
    
    
    
    881
    
    
    
    284
    
    
    
    163
    
    
    
    29,887
    
    
    
    30,801
    
    
    
    914Third party management expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,083
    
    
    
    4,627
    
    
    
    4,083
    
    
    
    4,627
    
    
    
    544Subtotal
    
    
    167,749
    
    
    
    174,284
    
    
    
    (6,535
    )
    
    
    (9
    )
    
    
    122
    
    
    
    4,052
    
    
    
    4,408
    
    
    
    5,492
    
    
    
    7,125
    
    
    
    177,284
    
    
    
    185,939
    
    
    
    (8,655
    )General & administrative expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,471
    
    
    
    11,039
    
    
    
    10,471
    
    
    
    11,039
    
    
    
    568Depreciation and amortization
    
    
    97,207
    
    
    
    97,329
    
    
    
    122
    
    
    
    2,139
    
    
    
    63
    
    
    
    4,233
    
    
    
    3,209
    
    
    
    1,882
    
    
    
    1,829
    
    
    
    105,461
    
    
    
    102,430
    
    
    
    (3,031
    )Operating Income (loss)
    
    $
    70,542
    
    
    $
    76,955
    
    
    $
    (6,413
    )
    
    $
    (2,148
    )
    
    $
    59
    
    
    $
    (181
    )
    
    $
    1,199
    
    
    $
    (6,861
    )
    
    $
    (5,743
    )
    
    $
    61,352
    
    
    $
    72,470
    
    
    $
    (11,118
    )Number of properties
    
    
    234
    
    
    
    234
    
    
    
    
    
    
    
    4
    
    
    
    4
    
    
    
    9
    
    
    
    9
    
    
    
    
    
    
    
    
    
    
    
    247
    
    
    
    247Square feet
    
    
    23,051
    
    
    
    23,051
    
    
    
    
    
    
    
    669
    
    
    
    669
    
    
    
    2,340
    
    
    
    2,340
    
    
    
    
    
    
    
    
    
    
    
    26,060
    
    
    
    26,060Other Income (Expense):Interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,222
    
    
    
    382
    
    
    
    840Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (70,590
    )
    
    
    (73,785
    )
    
    
    3,195Interest expense  Deferred financing costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,146
    )
    
    
    (2,706
    )
    
    
    (440
    )Recognized hedge activity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (305
    )
    
    
    
    
    
    
    (305
    )Equity in income of real estate ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,119
    
    
    
    2,779
    
    
    
    (660
    )Net loss on disposition of undepreciated assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24
    )
    
    
    24Gain on early extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,651
    
    
    
    3,106
    
    
    
    15,545Income (loss) from continuing operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,303
    
    
    
    2,222
    
    
    
    7,081Income from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,395
    )
    
    
    19,588
    
    
    
    (23,983
    )Net (loss) income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    4,908
    
    
    $
    21,810
    
    
    $
    (16,902
    )Earnings per common share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    0.01
    
    
    $
    0.19
    
    
    $
    (0.18
    )
 EXPLANATORY NOTES(a)  Results include: two developments and seven redevelopment properties. 82




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Total Revenue
  1)
    
    An additional $2.8 million at the Same Store Portfolio from free rent periods
converting to cash rent.
 2)
    
    An additional $1.3 million from four properties that we completed and placed in
service subsequent to the second quarter of 2008.
 3)
    
    An additional $0.8 million of rental income due to increased occupancy at 9
development/redevelopment properties in the six months period ended June 30, 2009 in
comparison to the six month periods ended June 30, 2008.
     Property Operating Expenses
  Real Estate Taxes
  Depreciation and Amortization Expense
  Provision for Impairment on Real Estate
   83




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Interest Income/ Expense
   
    
    decrease of $2.5 million resulting from the payoff at maturity of our $113.0 million
private placement notes in December 2008.
 
    
    decrease of $1.8 million resulting from a lower Credit Facility balance and a lower
weighted average interest rate on such borrowings at June 30, 2009 compared to June 30,
2008.
 
    
    decrease of $2.9 million resulting from lower weighted average interest rates on our
$183.0 million Bank Term Loan and our three Preferred Trust borrowings. Such borrowings
have variable interest rates and a portion of such borrowings are swapped to fixed rate
debt through our hedging program. This decrease is offset by an increase of $2.9 million
paid under these hedges since the variable interest rates on such debt is lower than the
swapped fixed rate on the hedges assigned to these borrowings.
 
    
    decrease of $4.9 million resulting from our buybacks of various unsecured notes
subsequent to the second quarter of 2008. The details of the various purchases completed
during the six months ended June 30, 2009 are noted in the Gain on early extinguishment of
debtsection below and details for all purchases during and subsequent to the six months
ended June 30, 2008 are included in our Annual Report on Form 10-K for 2008.
  Gain on early extinguishment of debt
   Discontinued Operations
   84




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Net (Loss) Income
  Earnings (loss) per Common Share
  85




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##### Table of Contents



General
  
    
    fund normal recurring expenses,
 
    
    fund capital expenditures, including capital and tenant improvements and leasing costs,
 
    
    fund repayment of certain debt instruments when they mature,
 
    
    fund current development and redevelopment costs, and
 
    
    fund distributions declared by our Board of Trustees.
    th
 86




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##### Table of Contents



Cash Flows
   Activity
    
    2009
    
    
    2008Operating
    
    $
    105,098
    
    
    $
    104,832Investing
    
    
    (47,991
    )
    
    
    (40,017
    )Financing
    
    
    (57,095
    )
    
    
    (65,625
    )Net cash flows
    
    $
    12
    
    
    $
    (810
    )
   87




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##### Table of Contents



Capitalization
 Indebtedness
  Repurchase
    
    
    
    
    
    
    
    
    
    
    Deferred FinancingNotes
    
    Amount
    
    
    Principal
    
    
    Gain
    
    
    Amortization2009 Notes
    
    $
    44,945
    
    
    $
    46,529
    
    
    $
    1,584
    
    
    $
    622010 Notes
    
    
    59,257
    
    
    
    64,999
    
    
    
    5,735
    
    
    
    1902012 Notes
    
    
    9,061
    
    
    
    9,965
    
    
    
    904
    
    
    
    353.875% Notes
    
    
    63,514
    
    
    
    76,290
    
    
    
    10,428
    
    
    
    796$
    176,777
    
    
    $
    197,783
    
    
    $
    18,651
    
    
    $
    1,083
  June 30,
    
    
    December 31,2009
    
    
    2008(dollars in thousands)Balance:Fixed rate (includes variable swapped to fixed)
    
    $
    2,341,407
    
    
    $
    2,505,659Variable rate  unhedged
    
    
    143,136
    
    
    
    235,836Total
    
    $
    2,484,543
    
    
    $
    2,741,495Percent of Total Debt:Fixed rate (includes variable swapped to fixed)
    
    
    94.2
    %
    
    
    91.4
    %Variable rate  unhedged
    
    
    5.8
    %
    
    
    8.6
    %Total
    
    
    100
    %
    
    
    100
    %Weighted-average interest rate at period end:Fixed rate (includes variable swapped to fixed)
    
    
    5.5
    %
    
    
    5.6
    %Variable rate  unhedged
    
    
    2.2
    %
    
    
    2.1
    %Total
    
    
    5.3
    %
    
    
    5.1
    %
   88




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Equity
     Shelf Registration Statement
  89




---



##### Table of Contents



Short- and Long-Term Liquidity
    Inflation
  Commitments and Contingencies
  90




---



##### Table of Contents



Payments by Period (in thousands)Less than
    
    
    
    
    
    
    
    
    
    
    More thanTotal
    
    
    1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    5 YearsMortgage notes payable (a)
    
    $
    501,115
    
    
    $
    15,307
    
    
    $
    214,782
    
    
    $
    78,998
    
    
    $
    192,028Revolving credit facility
    
    
    74,000
    
    
    
    
    
    
    
    74,000
    
    
    
    
    
    
    
    Unsecured term loan
    
    
    183,000
    
    
    
    
    
    
    
    183,000
    
    
    
    
    
    
    
    Unsecured debt (a)
    
    
    1,735,089
    
    
    
    150,151
    
    
    
    706,328
    
    
    
    250,000
    
    
    
    628,610Ground leases (b)
    
    
    300,725
    
    
    
    1,986
    
    
    
    4,554
    
    
    
    4,637
    
    
    
    289,548Interest expense
    
    
    788,491
    
    
    
    198,739
    
    
    
    218,085
    
    
    
    198,995
    
    
    
    172,672Development contracts (c)
    
    
    108,822
    
    
    
    88,976
    
    
    
    19,846
    
    
    
    
    
    
    
    Other liabilities
    
    
    6,326
    
    
    
    251
    
    
    
    
    
    
    
    
    
    
    
    6,075$
    3,697,568
    
    
    $
    455,410
    
    
    $
    1,420,595
    
    
    $
    532,630
    
    
    $
    1,288,933
 
 (a)
    
    Amounts do not include unamortized discounts and/or premiums.(b)
    
    Future minimum rental payments under the terms of all non-cancelable ground leases under which
we are
the lessee are expensed on a straight-line basis regardless of when payments are due.(c)
    
    Represents contractual obligations for certain development projects and does not contemplate
all costs expected to be incurred for such developments.     91




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th
  Interest Rate Risk and Sensitivity Analysis
       92




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Item 3. Quantitative and Qualitative Disclosures about Market Risk
   
 Item 4. Controls and Procedures
 (a)
    
    Evaluation of disclosure controls and procedures.Under the supervision and with the
participation of our management, including our principal executive officer and principal
financial officer, we conducted an evaluation of our disclosure controls and procedures, as
such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of
1934, as amended (the Exchange Act) as of the end of the period covered by this quarterly
report and have concluded that the Companys disclosure controls and procedures are
effective.(b)
    
    Changes in internal controls over financial reporting.There was no change in the
Companys internal control over financial reporting that occurred during the period covered
by this quarterly report that has materially affected, or is reasonably likely to
materially affect, the Companys internal control over financial reporting.
 
 Part II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  93




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##### Table of Contents



Shares
    
    
    Number ofTotal
    
    
    
    
    
    
    Purchased as
    
    
    Shares that MayNumber of
    
    
    Average
    
    
    Part of Publicly
    
    
    Yet Be PurchasedShares
    
    
    Price Paid Per
    
    
    Announced Plans
    
    
    Under the PlansPurchased
    
    
    Share
    
    
    or Programs
    
    
    or Programs (a)2009:April
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    539,200May
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    539,200June
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    539,200Total
    
    
    
    
    
    
    
    
    
    
    
 
 (a)
    
    On May 2, 2006, our Board of Trustees authorized an increase in the number of common shares
that we may repurchase,
whether in open-market or privately negotiated transactions. The Board authorized us to purchase
up to an aggregate of 3,500,000
common shares (inclusive of the remaining share repurchase availability under the Boards prior
authorization from September 2001). There is no expiration date on the share repurchase program. 
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
 
    
    We held our annual meeting of shareholders on June 2, 2009. At the meeting, each of the
eight individuals nominated for election to our Board of Trustees was elected to the Board.
These individuals will serve on the Board until the next annual meeting of shareholders and
until successors are elected and qualified or until their earlier resignation. The numbers of
            shares cast for or withheld for each nominee is set forth below:
 Trustee
    
    For
    
    WithheldWalter DAlessio
    
    73,835,240
    
    7,002,663D. Pike Aloian
    
    78,180,396
    
    2,657,506Anthony A. Nichols, Sr.
    
    76,671,883
    
    4,166,019Donald E. Axinn
    
    68,478,451
    
    12,354,452Wyche Fowler
    
    78,152,993
    
    2,684,910Michael J. Joyce
    
    74,013,079
    
    6,824,824Charles P. Pizzi
    
    73,897,681
    
    6,940,222Gerard H. Sweeney
    
    76,760,838
    
    4,077,065
 
    
    At our annual meeting of shareholders, our shareholders voted as follow to ratify the
appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm
for the calendar year 2009 as follows:
 Votes for
    
    81,096,208Votes Against
    
    80,256Abstentions
    
    21,240
 
 Item 5. Other Information
  94




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##### Table of Contents



Item 6. Exhibits
 (a) Exhibits
 10.1
    
    Form of Restricted Share Award (incorporated by reference to Brandywines Current
Report on Form 8-K filed on April 7, 2009)**
 10.2
    
    Form of Performance Unit Award Agreement (incorporated by reference to
Brandywines Current Report on Form 8-K filed on April 7, 2009)**10.3
    
    Form of Incentive Share Option Agreement (incorporated by reference to
Brandywines Current Report on Form 8-K filed on April 7, 2009)**10.4
    
    Form of Non-Qualified Share Option Agreement (incorporated by reference to
Brandywines Current Report on Form 8-K filed on April 7, 2009)**10.5
    
    2009  2011 Performance Unit Award Program (incorporated by reference to
Brandywines Current Report on Form 8-K filed on April 7, 2009)**31.1
    
    Certification of the Chief Executive Officer of Brandywine Realty Trust pursuant
to 13a-14 under the Securities Exchange Act of 193431.2
    
    Certification of the Chief Financial Officer of Brandywine Realty Trust pursuant
to 13a-14 under the Securities Exchange Act of 193431.3
    
    Certification of the Chief Executive Officer of Brandywine Realty Trust, in its
capacity as the general partner of Brandywine Operating Partnership, L.P., pursuant to
13a-14 under the Securities Exchange Act of 193431.4
    
    Certification of the Chief Financial Officer of Brandywine Realty Trust, in its
capacity as the general partner of Brandywine Operating Partnership, L.P., pursuant to
13a-14 under the Securities Exchange Act of 193432.1
    
    Certification of the Chief Executive Officer of Brandywine Realty Trust pursuant
to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 200232.2
    
    Certification of the Chief Financial Officer of Brandywine Realty Trust pursuant
to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 200232.3
    
    Certification of the Chief Executive Officer of Brandywine Realty Trust, in its
capacity as the general partner of Brandywine Operating Partnership, L.P., pursuant to
18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
200232.4
    
    Certification of the Chief Financial Officer of Brandywine Realty Trust, in its
capacity as the general partner of Brandywine Operating Partnership, L.P., pursuant to
18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
 
 **
    
    Management contract or compensatory plan or arrangement 95




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##### Table of Contents



SIGNATURES OF REGISTRANT
  BRANDYWINE REALTY TRUST
                    (Registrant)Date: August 7, 2009
    
    By:
    /s/ Gerard H. SweeneyGerard H. Sweeney,  President and Chief Executive Officer
(Principal Executive Officer)Date: August 7, 2009
    
    By:
    /s/ Howard M. SipznerHoward M. Sipzner, Executive Vice President and Chief Financial Officer
(Principal Financial Officer)Date: August 7, 2009
    
    By:
    /s/ Gabriel J. MainardiGabriel J. Mainardi,  Vice President, Accounting & Treasurer
(Principal Accounting Officer) 96




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##### Table of Contents



SIGNATURES OF REGISTRANT
    Date: August 7, 2009
    By:
    /s/ Gerard H. SweeneyGerard H. Sweeney,  President and Chief Executive Officer
(Principal Executive Officer)Date: August 7, 2009
    By:
    /s/ Howard M. SipznerHoward M. Sipzner,  Executive Vice President and Chief Financial Officer
(Principal Financial Officer)Date: August 7, 2009
    By:
    /s/ Gabriel J. MainardiGabriel J. Mainardi,  Vice President, Accounting & Treasurer
(Principal Accounting Officer) 97