##### 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, 2007
 or
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
 For the transition period from  to
 Commission file number
    
    001-9106 (Brandywine Realty Trust)000-24407 (Brandywine Operating Partnership, L.P.)
 Brandywine Realty Trust
Brandywine Operating Partnership, L.P.
  MARYLAND(Brandywine Realty Trust)
    
    23-2413352DELAWARE(Brandywine Operating Partnership L.P.)
    
    23-2862640(State or other jurisdiction ofIncorporation or organization)
    
    (I.R.S. Employer Identification No.)555 East Lancaster AvenueRadnor, Pennsylvania
    
    19087(Address of principal executive offices)
    
    (Zip Code)
 (610) 325-5600
  Brandywine Realty Trust
    
    Yes þ No oBrandywine Operating Partnership, L.P.
    
    Yes þ No o
  Brandywine Realty Trust
    
    Large accelerated filer þ Accelerated filer o Non-accelerated filer oBrandywine Operating Partnership, L.P.
    
    Large accelerated filer o Accelerated filer þ Non-accelerated filer o
  Brandywine Realty Trust
    
    Yes o No þBrandywine Operating Partnership, L.P.
    
    Yes o No þ




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##### 



TABLE OF CONTENTS
 PagePART I  FINANCIAL INFORMATIONBrandywine Realty TrustItem 1.
    
    Financial Statements (unaudited)Consolidated Balance Sheets as of June 30, 2007 and December 31, 2006
    
    
    3Consolidated Statements of Operations for the three- and six-month periods ended
June 30, 2007 and 2006
    
    
    4Consolidated Statements of Other Comprehensive Income for the three- and six-month
periods ended June 30, 2007 and 2006
    
    
    5Consolidated Statements of Cash Flows for the six-month periods ended June 30, 2007
and June 30, 2006
    
    
    6Notes to Unaudited Consolidated Financial Statements
    
    
    7Brandywine Operating Partnership, L.P.Item 1.
    
    Financial Statements (unaudited)Consolidated Balance Sheets as of June 30, 2007 and December 31, 2006
    
    
    34Consolidated Statements of Operations for the three- and six-month periods ended
June 30, 2007 and 2006
    
    
    35Consolidated Statements of Other Comprehensive Income for the three- and six-month
periods ended June 30, 2007 and 2006
    
    
    36Consolidated Statements of Cash Flows for the six-month periods ended June 30, 2007
and June 30, 2006
    
    
    37Notes to Unaudited Consolidated Financial Statements
    
    
    38Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    64Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    83Item 4.
    
    Controls and Procedures
    
    
    83PART II  OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    84Item 1A.
    
    Risk Factors
    
    
    84Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    84Item 3.
    
    Defaults Upon Senior Securities
    
    
    84Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    84Item 5.
    
    Other Information
    
    
    84Item 6.
    
    Exhibits
    
    
    85Signatures
    
    
    86COMPUTATION OF EARNINGS BRANDYWINE REALTY TRUSTCOMPUTATION OF EARNINGS  BRANDYWINE OPERATING PARTNERSHIPCERTIFICATION OF PRESIDENT AND CHIEF EXECUTIVE OFFICERCERTIFICATION OF VICE PRESIDENT AND CHIEF FINANCIAL OFFICERCERTIFICATION OF PRESIDENT AND CHIEF EXECUTIVE OFFICEERCERTIFICATION OF VICE PRESIDENT AND CHIEF FINANCIAL OFFICERCERTIFICATION OF PRESIDENT AND CHIEF EXECUTIVE OFFICER  -- SECTION 906CERTIFICATION OF VICE PRESIDENT AND CHIEF FINANCIAL OFFICER -- SECTION 906CERTIFICATION OF PRESIDENT AND CHIEF EXECUTIVE OFFICER -- SECTION 906CERTIFICATION OF VICE PRESIDENT AND CHIEF FINANCIAL OFFICER -- SECTION 906
  Filing Format
  2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1.  Financial Statements
 
 BRANDYWINE REALTY TRUST
 
 CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands, except share and per share information)
 June 30,
    
    
    December 31,2007
    
    
    2006ASSETSReal estate investments:Operating properties
    
    $
    4,862,726
    
    
    $
    4,927,305Accumulated depreciation
    
    
    (554,417
    )
    
    
    (515,698
    )Operating real estate investments, net
    
    
    4,308,309
    
    
    
    4,411,607Development land and construction-in-progress
    
    
    373,497
    
    
    
    328,119Total real estate invesmtents, net
    
    
    4,681,806
    
    
    
    4,739,726Cash and cash equivalents
    
    
    28,522
    
    
    
    25,379Cash escrowed with qualified intermediary (Note 3)
    
    
    36,590
    
    
    
    Accounts receivable, net (Note 2)
    
    
    16,972
    
    
    
    19,957Accrued rent receivable, net
    
    
    77,922
    
    
    
    71,589Asset held for sale, net
    
    
    
    
    
    
    126,016Investment in real estate ventures, at equity (Note 4)
    
    
    72,748
    
    
    
    74,574Deferred costs, net (Note 5)
    
    
    81,823
    
    
    
    73,708Intangible assets, net (Note 6)
    
    
    239,469
    
    
    
    281,251Other assets
    
    
    92,221
    
    
    
    96,818Total assets
    
    $
    5,328,073
    
    
    $
    5,509,018LIABILITIES AND BENEFICIARIES EQUITYMortgage notes payable (Note 7)
    
    $
    757,145
    
    
    $
    883,920Unsecured notes, net of discounts (Note 7)
    
    
    2,208,070
    
    
    
    2,208,310Unsecured credit facility (Note 7)
    
    
    210,000
    
    
    
    60,000Accounts payable and accrued expenses
    
    
    79,473
    
    
    
    108,400Distributions payable
    
    
    42,131
    
    
    
    42,760Tenant security deposits and deferred rents
    
    
    59,429
    
    
    
    55,697Acquired below market leases, net (Note 6)
    
    
    72,259
    
    
    
    92,527Other liabilities
    
    
    12,682
    
    
    
    14,661Mortgage notes payable and other liabilities held for sale
    
    
    
    
    
    
    20,826Total liabilities
    
    
    3,441,189
    
    
    
    3,487,101Minority interest  partners share of consolidated real estate ventures (Note 10)
    
    
    
    
    
    
    34,428Minority interest  LP units (Note 10)
    
    
    85,829
    
    
    
    89,563Commitments and contingencies (Note 14 )Beneficiaries equity (Note 11):Preferred Shares (shares authorized-20,000,000):7.50% Series C Preferred Shares, $0.01 par value; issued and outstanding-
2,000,000 in 2007 and 2006
    
    
    20
    
    
    
    207.375% Series D Preferred Shares, $0.01 par value; issued and outstanding-
2,300,000 in 2007 and 2006
    
    
    23
    
    
    
    23Common Shares of beneficial interest, $0.01 par value; shares authorized
200,000,000; issued and outstanding- 87,049,237 in 2007 and 88,327,041 in 2006
    
    
    872
    
    
    
    883Additional paid-in capital
    
    
    2,275,319
    
    
    
    2,311,541Cumulative earnings
    
    
    444,340
    
    
    
    423,764Accumulated other comprehensive income
    
    
    1,322
    
    
    
    1,576Cumulative distributions
    
    
    (920,841
    )
    
    
    (839,881
    )Total beneficiaries equity
    
    
    1,801,055
    
    
    
    1,897,926Total liabilities, minority interest and beneficiaries equity
    
    $
    5,328,073
    
    
    $
    5,509,018
  3




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BRANDYWINE REALTY TRUST
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except share and per share information)
 For the three-month periods
    
    
    For the six-month periodsended June 30,
    
    
    ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenue:Rents
    
    $
    138,597
    
    
    $
    130,467
    
    
    $
    276,537
    
    
    $
    253,536Tenant reimbursements
    
    
    21,016
    
    
    
    15,496
    
    
    
    41,839
    
    
    
    32,130Other
    
    
    4,691
    
    
    
    4,466
    
    
    
    9,029
    
    
    
    8,681Total revenue
    
    
    164,304
    
    
    
    150,429
    
    
    
    327,405
    
    
    
    294,347Operating Expenses:Property operating expenses
    
    
    45,965
    
    
    
    41,504
    
    
    
    91,170
    
    
    
    82,478Real estate taxes
    
    
    16,435
    
    
    
    14,388
    
    
    
    32,462
    
    
    
    28,595Depreciation and amortization
    
    
    58,227
    
    
    
    64,145
    
    
    
    120,274
    
    
    
    115,357Administrative expenses
    
    
    6,993
    
    
    
    7,724
    
    
    
    14,262
    
    
    
    16,214Total operating expenses
    
    
    127,620
    
    
    
    127,761
    
    
    
    258,168
    
    
    
    242,644Operating income
    
    
    36,684
    
    
    
    22,668
    
    
    
    69,237
    
    
    
    51,703Other Income (Expense):Interest income
    
    
    1,603
    
    
    
    2,573
    
    
    
    2,390
    
    
    
    5,223Interest expense
    
    
    (40,803
    )
    
    
    (41,596
    )
    
    
    (81,161
    )
    
    
    (81,974
    )Interest expense  Deferred financing costs
    
    
    (1,065
    )
    
    
    (794
    )
    
    
    (2,323
    )
    
    
    (1,273
    )Equity in income of real estate ventures
    
    
    4,504
    
    
    
    463
    
    
    
    5,258
    
    
    
    1,428Net gain on sale of interests in real estate
    
    
    
    
    
    
    2,608
    
    
    
    
    
    
    
    2,608Income (loss) before minority interest
    
    
    923
    
    
    
    (14,078
    )
    
    
    (6,599
    )
    
    
    (22,285
    )Minority interest  partners share of consolidated real estate ventures
    
    
    8
    
    
    
    (17
    )
    
    
    (108
    )
    
    
    281Minority interest attributable to continuing operations  LP units
    
    
    46
    
    
    
    707
    
    
    
    457
    
    
    
    1,142Income (loss) from continuing operations
    
    
    977
    
    
    
    (13,388
    )
    
    
    (6,250
    )
    
    
    (20,862
    )Discontinued operations:Income from discontinued operations
    
    
    1,093
    
    
    
    2,119
    
    
    
    2,869
    
    
    
    7,365Net (loss) gain on disposition of discontinued operations
    
    
    (856
    )
    
    
    
    
    
    
    25,153
    
    
    
    Minority interest  partners share of consolidated real estate ventures
    
    
    
    
    
    
    (195
    )
    
    
    
    
    
    
    (382
    )Minority interest attributable to discontinued operations  LP units
    
    
    (10
    )
    
    
    (92
    )
    
    
    (1,196
    )
    
    
    (319
    )Income from discontinued operations
    
    
    227
    
    
    
    1,832
    
    
    
    26,826
    
    
    
    6,664Net income (loss)
    
    
    1,204
    
    
    
    (11,556
    )
    
    
    20,576
    
    
    
    (14,198
    )Income allocated to Preferred Shares
    
    
    (1,998
    )
    
    
    (1,998
    )
    
    
    (3,996
    )
    
    
    (3,996
    )Income (loss) allocated to Common Shares
    
    $
    (794
    )
    
    $
    (13,554
    )
    
    $
    16,580
    
    
    $
    (18,194
    )Basic earnings (loss) per Common Share:Continuing operations
    
    $
    (0.01
    )
    
    $
    (0.17
    )
    
    $
    (0.12
    )
    
    $
    (0.28
    )Discontinued operations
    
    
    0.00
    
    
    
    0.02
    
    
    
    0.31
    
    
    
    0.07$
    (0.01
    )
    
    $
    (0.15
    )
    
    $
    0.19
    
    
    $
    (0.20
    )Diluted earnings (loss) per Common Share:Continuing operations
    
    $
    (0.01
    )
    
    $
    (0.17
    )
    
    $
    (0.12
    )
    
    $
    (0.28
    )Discontinued operations
    
    
    0.00
    
    
    
    0.02
    
    
    
    0.30
    
    
    
    0.07$
    (0.01
    )
    
    $
    (0.15
    )
    
    $
    0.19
    
    
    $
    (0.20
    )Dividends declared per Common Share
    
    $
    0.44
    
    
    $
    0.44
    
    
    $
    0.88
    
    
    $
    0.88Basic weighted average shares outstanding
    
    
    87,080,785
    
    
    
    90,540,237
    
    
    
    87,680,773
    
    
    
    89,923,528Diluted weighted average shares outstanding
    
    
    87,080,785
    
    
    
    90,540,237
    
    
    
    88,298,521
    
    
    
    89,923,528
  4




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BRANDYWINE REALTY TRUST
 
 CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME
(unaudited, in thousands)
 For the three-month periods
    
    
    For the six-month periodsended June 30,
    
    
    ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net income (loss)
    
    $
    1,204
    
    
    $
    (11,556
    )
    
    $
    20,576
    
    
    $
    (14,198
    )Other comprehensive income:Unrealized gain (loss) on derivative financial instruments
    
    
    (1,872
    )
    
    
    605
    
    
    
    (422
    )
    
    
    2,363Less: minority interest  consolidated real estate venture partners share of
unrealized gain (loss) on derivative financial instruments
    
    
    
    
    
    
    (296
    )
    
    
    
    
    
    
    (809
    )Settlement of forward starting swaps
    
    
    1,148
    
    
    
    
    
    
    
    1,148
    
    
    
    3,266Reclassification of realized (gains)/losses on derivative financial
instruments to operations, net
    
    
    (394
    )
    
    
    9
    
    
    
    (385
    )
    
    
    105Unrealized gain (loss) on available-for-sale securities
    
    
    13
    
    
    
    (184
    )
    
    
    (595
    )
    
    
    (776
    )Total other comprehensive income (loss)
    
    
    (1,105
    )
    
    
    134
    
    
    
    (254
    )
    
    
    4,149Comprehensive income (loss)
    
    $
    99
    
    
    $
    (11,422
    )
    
    $
    20,322
    
    
    $
    (10,049
    )
  5




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##### Table of Contents



BRANDYWINE REALTY TRUST
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
 Six-month periodsended June 30,2007
    
    
    2006Cash flows from operating activities:Net income (loss)
    
    $
    20,576
    
    
    $
    (14,198
    )Adjustments to reconcile net income (loss) to net cash from
operating activities:Depreciation
    
    
    90,405
    
    
    
    95,051Amortization:Deferred financing costs
    
    
    2,323
    
    
    
    1,274Deferred leasing costs
    
    
    7,731
    
    
    
    5,184Acquired above (below) market leases, net
    
    
    (6,304
    )
    
    
    (3,907
    )Acquired lease intangibles
    
    
    26,700
    
    
    
    33,700Deferred compensation costs
    
    
    2,559
    
    
    
    1,445Straight-line rent
    
    
    (14,775
    )
    
    
    (15,916
    )Provision for doubtful accounts
    
    
    500
    
    
    
    1,956Real estate venture income in excess of distributions
    
    
    (104
    )
    
    
    (267
    )Net gain on sale of interests in real estate
    
    
    (25,153
    )
    
    
    (2,608
    )Minority interest (expense)/income
    
    
    847
    
    
    
    (722
    )Changes in assets and liabilities:Accounts receivable
    
    
    3,916
    
    
    
    5,937Other assets
    
    
    1,366
    
    
    
    6,471Accounts payable and accrued expenses
    
    
    (6,151
    )
    
    
    7,451Tenant security deposits and deferred rents
    
    
    5,665
    
    
    
    9,976Other liabilities
    
    
    (10,148
    )
    
    
    (6,053
    )Net cash from operating activities
    
    
    99,953
    
    
    
    124,774Cash flows from investing activities:Acquisition of Prentiss
    
    
    
    
    
    
    (935,856
    )Acquisition of properties
    
    
    
    
    
    
    (50,114
    )Acquisition of minority interest  partners share of consolidated real estate venture
    
    
    (64,174
    )
    
    
    Sales of properties, net
    
    
    222,592
    
    
    
    144,006Capital expenditures
    
    
    (133,264
    )
    
    
    (102,851
    )Investment in unconsolidated real estate ventures
    
    
    (523
    )
    
    
    (502
    )Cash distributions from unconsolidated real estate ventures
in excess of equity in income
    
    
    2,169
    
    
    
    2,215Leasing costs
    
    
    (11,499
    )
    
    
    (12,114
    )Net cash from investing activities
    
    
    15,301
    
    
    
    (955,216
    )Cash flows from financing activities:Proceeds from Credit Facility borrowings
    
    
    620,875
    
    
    
    310,000Repayments of Credit Facility borrowings
    
    
    (470,875
    )
    
    
    (205,000
    )Proceeds from mortgage notes payable
    
    
    
    
    
    
    20,520Repayments of mortgage notes payable
    
    
    (126,780
    )
    
    
    (21,198
    )Proceeds from term loan
    
    
    
    
    
    
    750,000Repayments of term loan
    
    
    
    
    
    
    (750,000
    )Proceeds from unsecured notes
    
    
    299,644
    
    
    
    847,818Repayments of unsecured notes
    
    
    (299,866
    )
    
    
    Proceeds from forward starting swap termination
    
    
    1,148
    
    
    
    3,266Repayments on employee stock loans
    
    
    
    
    
    
    35Debt financing costs
    
    
    (3,776
    )
    
    
    (6,987
    )Exercise of stock options
    
    
    6,221
    
    
    
    8,011Repurchases of Common Shares
    
    
    (53,524
    )
    
    
    (34,481
    )Distributions paid to shareholders
    
    
    (81,716
    )
    
    
    (68,306
    )Distributions to minority interest holders
    
    
    (3,462
    )
    
    
    (4,033
    )Net cash from financing activities
    
    
    (112,111
    )
    
    
    849,645Increase (decrease) in cash and cash equivalents
    
    
    3,143
    
    
    
    19,203Cash and cash equivalents at beginning of period
    
    
    25,379
    
    
    
    7,174Cash and cash equivalents at end of period
    
    $
    28,522
    
    
    $
    26,377Supplemental disclosure:Cash paid for interest, net of capitalized interest of $8,217 in 2007 and $4,916 in 2006
    
    $
    92,541
    
    
    $
    73,933Supplemental disclosure of non-cash activity:Common shares issued in the Prentiss acquisition
    
    
    
    
    
    
    1,022,173Operating Partnership units issued in Prentiss acquisitions
    
    
    
    
    
    
    64,103Operating Partnership units issued in property acquistions
    
    
    
    
    
    
    13,819Cash escrowed with qualified intermediary (Note 3)
    
    
    109,102
    
    
    
    Acquisition of property using cash escrowed with qualified intermediary
    
    
    (72,511
    )
    
    
    Debt, minority interest and other liabilities, net, assumed in the Prentiss acquisition
    
    
    
    
    
    
    679,520
  6




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




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##### Table of Contents



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




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##### Table of Contents



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




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
 Stock-Based Compensation Plans
   Accounting for Derivative Instruments and Hedging Activities
 Accounting for Derivative Instruments and Hedging Activities Accounting for Certain Derivative Instruments and Hedging Activities
 An Amendment of SFAS 133
  Income Taxes
  10




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##### Table of Contents



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




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BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
 Accounting for Uncertainty in Income Taxes, an
Interpretation of FASB Statement No. 109
 REAL ESTATE INVESTMENTS
  June 30, 2007
    
    
    December 31, 2006Land
    
    $
    738,193
    
    
    $
    756,400Building and improvements
    
    
    3,725,268
    
    
    
    3,807,040Tenant improvements
    
    
    399,265
    
    
    
    363,865$
    4,862,726
    
    
    $
    4,927,305
 Acquisitions and Dispositions
  2007
       12




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##### Table of Contents



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




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##### Table of Contents



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




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
    Six-month periodended June 30, 2006Pro forma revenue
    
    $
    296,765Pro forma loss from continuing operations
    
    
    (21,119
    )Pro forma loss allocated to common shares
    
    
    (17,901
    )Earnings per common share from continuing operationsBasic  as reported
    
    $
    (0.28
    )Basic  as pro forma
    
    $
    (0.28
    )Diluted  as reported
    
    $
    (0.28
    )Diluted  as pro forma
    
    $
    (0.28
    )Earnings per common shareBasic  as reported
    
    $
    (0.20
    )Basic  as pro forma
    
    $
    (0.20
    )Diluted  as reported
    
    $
    (0.20
    )Diluted  as pro forma
    
    $
    (0.20
    )
    Other 2006 Acquisitions and Dispositions
  15




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
        INVESTMENT IN UNCONSOLIDATED VENTURES
     16




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
 June 30,
    
    December 31,2007
    
    2006Operating property, net of accumulated depreciation
    
    $
    394,539
    
    
    $
    365,168Other assets
    
    
    45,039
    
    
    
    52,935Liabilities
    
    
    32,111
    
    
    
    28,764Debt
    
    
    357,661
    
    
    
    332,589Equity
    
    
    49,805
    
    
    
    56,888Companys share of equity (Companys basis)
    
    
    72,748
    
    
    
    74,574
  Three-month periods
    
    Six-month periodsended June 30,
    
    ended June 30,2007
    
    2006
    
    2007
    
    2006Revenue
    
    $
    18,986
    
    
    $
    18,710
    
    
    $
    37,300
    
    
    $
    38,434Operating expenses
    
    
    6,643
    
    
    
    6,743
    
    
    
    12,940
    
    
    
    14,737Interest expense, net
    
    
    5,410
    
    
    
    5,080
    
    
    
    10,648
    
    
    
    10,074Depreciation and amortization
    
    
    3,776
    
    
    
    5,299
    
    
    
    8,004
    
    
    
    10,172Net income
    
    
    3,156
    
    
    
    1,589
    
    
    
    5,707
    
    
    
    3,451Companys share of income
(Company basis)
    
    
    896
    
    
    
    463
    
    
    
    1,658
    
    
    
    1,428
   DEFERRED COSTS
  June 30, 2007Accumulated
    
    
    Deferred Costs,Total Cost
    
    
    Amortization
    
    
    netLeasing Costs
    
    $
    91,984
    
    
    $
    (30,941
    )
    
    $
    61,043Financing Costs
    
    
    26,898
    
    
    
    (6,118
    )
    
    
    20,780Total
    
    $
    118,882
    
    
    $
    (37,059
    )
    
    $
    81,823
 December 31, 2006Accumulated
    
    
    Deferred Costs,Total Cost
    
    
    Amortization
    
    
    netLeasing Costs
    
    $
    83,629
    
    
    $
    (28,278
    )
    
    $
    55,351Financing Costs
    
    
    24,648
    
    
    
    (6,291
    )
    
    
    18,357Total
    
    $
    108,277
    
    
    $
    (34,569
    )
    
    $
    73,708
 17




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
 INTANGIBLE ASSETS AND LIABILITIES
  June 30, 2007Accumulated
    
    
    Deferred Costs,Total Cost
    
    
    Amortization
    
    
    netIntangible Assets:In-place lease value
    
    $
    182,148
    
    
    $
    (55,584
    )
    
    $
    126,564Tenant relationship value
    
    
    120,532
    
    
    
    (26,309
    )
    
    
    94,223Above market leases acquired
    
    
    31,950
    
    
    
    (13,268
    )
    
    
    18,682Total intangible assets
    
    $
    334,630
    
    
    $
    (95,161
    )
    
    $
    239,469Intangible Liability:Below market leases acquired
    
    $
    102,754
    
    
    $
    (30,495
    )
    
    $
    72,259
 December 31, 2006Accumulated
    
    
    Deferred Costs,Total Cost
    
    
    Amortization
    
    
    netIntangible Assets:In-place lease value
    
    $
    207,513
    
    
    $
    (52,293
    )
    
    $
    155,220Tenant relationship value
    
    
    124,605
    
    
    
    (19,572
    )
    
    
    105,033Above market leases acquired
    
    
    32,667
    
    
    
    (11,669
    )
    
    
    20,998Total intangible assets
    
    $
    364,785
    
    
    $
    (83,534
    )
    
    $
    281,251Intangible Liability:Below market leases acquired
    
    $
    118,536
    
    
    $
    (26,009
    )
    
    $
    92,527
  Assets
    
    
    Liabilities2007 (remainder)
    
    $
    28,702
    
    
    $
    8,8132008
    
    
    46,841
    
    
    
    13,4692009
    
    
    40,923
    
    
    
    11,4442010
    
    
    34,221
    
    
    
    8,8992011
    
    
    26,808
    
    
    
    7,435Thereafter
    
    
    61,974
    
    
    
    22,199Total
    
    $
    239,469
    
    
    $
    72,259
 DEBT OBLIGATIONS
  18




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BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
 MORTGAGE DEBT:
 EffectiveJune 30,
    
    
    December 31,
    
    
    Interest
    
    
    
    MaturityProperty / Location
    
    2007
    
    
    2006
    
    
    Rate
    
    
    
    DateInterstate Center
    
    $
    
    
    
    $
    552
    
    
    6.19%
    
    
    
    Mar-07The Bluffs
    
    
    
    
    
    
    10,700
    
    
    6.00%
    
    (a)
    
    Apr-07Pacific Ridge
    
    
    
    
    
    
    14,500
    
    
    6.00%
    
    (a)
    
    Apr-07Pacific View/Camino
    
    
    
    
    
    
    26,000
    
    
    6.00%
    
    (a)
    
    Apr-07Computer Associates Building
    
    
    
    
    
    
    31,000
    
    
    6.00%
    
    (a)
    
    Apr-07Presidents Plaza
    
    
    
    
    
    
    30,900
    
    
    6.00%
    
    (a)
    
    Apr-07440 & 442 Creamery Way
    
    
    
    
    
    
    5,421
    
    
    8.55%
    
    
    
    May-07Grande A
    
    
    59,297
    
    
    
    59,513
    
    
    7.48%
    
    (b)
    
    Jul-07Grande B
    
    
    76,731
    
    
    
    77,535
    
    
    7.48%
    
    (b)
    
    Jul-07481 John Young Way
    
    
    2,259
    
    
    
    2,294
    
    
    8.40%
    
    
    
    Nov-07400 Commerce Drive
    
    
    11,681
    
    
    
    11,797
    
    
    7.12%
    
    
    
    Jun-08Two Logan Square
    
    
    70,745
    
    
    
    71,348
    
    
    5.78%
    
    (a)
    
    Jul-09200 Commerce Drive
    
    
    5,802
    
    
    
    5,841
    
    
    7.12%
    
    (a)
    
    Jan-101333 Broadway
    
    
    24,209
    
    
    
    24,418
    
    
    5.18%
    
    (a)
    
    May-10The Ordway
    
    
    45,861
    
    
    
    46,199
    
    
    7.95%
    
    (a)
    
    Aug-10World Savings Center
    
    
    27,334
    
    
    
    27,524
    
    
    7.91%
    
    (a)
    
    Nov-10Plymouth Meeting Exec.
    
    
    43,793
    
    
    
    44,103
    
    
    7.00%
    
    (a)
    
    Dec-10Four Tower Bridge
    
    
    10,591
    
    
    
    10,626
    
    
    6.62%
    
    
    
    Feb-11Arboretum I, II, III & V
    
    
    22,492
    
    
    
    22,750
    
    
    7.59%
    
    
    
    Jul-11Midlantic Drive/Lenox Drive/DCC I
    
    
    61,958
    
    
    
    62,678
    
    
    8.05%
    
    
    
    Oct-11Research Office Center
    
    
    41,872
    
    
    
    42,205
    
    
    7.64%
    
    (a)
    
    Oct-11Concord Airport Plaza
    
    
    38,021
    
    
    
    38,461
    
    
    7.20%
    
    (a)
    
    Jan-12Six Tower Bridge
    
    
    14,655
    
    
    
    14,744
    
    
    7.79%
    
    
    
    Aug-12Newtown Square/Berwyn Park/Libertyview
    
    
    62,721
    
    
    
    63,231
    
    
    7.25%
    
    
    
    May-13Coppell Associates
    
    
    3,626
    
    
    
    3,737
    
    
    6.89%
    
    
    
    Dec-13Southpoint III
    
    
    4,692
    
    
    
    4,949
    
    
    7.75%
    
    
    
    Apr-14Tysons Corner
    
    
    100,000
    
    
    
    100,000
    
    
    4.84%
    
    (a)
    
    Aug-15Coppell Associates
    
    
    16,600
    
    
    
    16,600
    
    
    5.75%
    
    
    
    Mar-16Principal balance outstanding
    
    
    744,940
    
    
    
    869,626Plus: unamortized fixed-rate debt premiums, net
    
    
    12,205
    
    
    
    14,294Total mortgage indebtedness
    
    $
    757,145
    
    
    $
    883,920UNSECURED DEBT:Private Placement Notes due 2008
    
    
    113,000
    
    
    
    113,000
    
    
    4.34%
    
    
    
    Dec-082009 Three Year Notes
    
    
    
    
    
    
    300,000
    
    
    Libor + 0.45%
    
    
    
    Apr-092009 Five Year Notes
    
    
    275,000
    
    
    
    275,000
    
    
    4.62%
    
    
    
    Nov-092010 Five Year Notes
    
    
    300,000
    
    
    
    300,000
    
    
    5.61%
    
    
    
    Dec-10Line-of-Credit
    
    
    210,000
    
    
    
    60,000
    
    
    Libor + 0.725%
    
    
    
    Jun-113.875% Exchangeable Notes
    
    
    345,000
    
    
    
    345,000
    
    
    3.87%
    
    
    
    Oct-112012 Six Year Notes
    
    
    300,000
    
    
    
    300,000
    
    
    5.77%
    
    
    
    Apr-122014 Ten Year Notes
    
    
    250,000
    
    
    
    250,000
    
    
    5.53%
    
    
    
    Nov-142016 Ten Year Notes
    
    
    250,000
    
    
    
    250,000
    
    
    5.95%
    
    
    
    Apr-162017 Ten Year Notes
    
    
    300,000
    
    
    
    
    
    
    5.72%
    
    
    
    May-17Indenture IA (Preferred Trust I)
    
    
    27,062
    
    
    
    27,062
    
    
    Libor + 1.25%
    
    
    
    Mar-35Indenture IB (Preferred Trust I)
    
    
    25,774
    
    
    
    25,774
    
    
    Libor + 1.25%
    
    
    
    Apr-35Indenture II (Preferred Trust II)
    
    
    25,774
    
    
    
    25,774
    
    
    Libor + 1.25%
    
    
    
    Jul-35Principal balance outstanding
    
    
    2,421,610
    
    
    
    2,271,610Plus: unamortized fixed-rate debt discounts, net
    
    
    (3,540
    )
    
    
    (3,300
    )Total mortgage indebtedness
    
    $
    2,418,070
    
    
    $
    2,268,310Total Debt Obligations
    
    $
    3,175,215
    
    
    $
    3,152,230
 
 (a)
    
    Loans were assumed upon acquisition of the related property. Interest rates presented
above reflect the market rate at the time of acquisition.(b)
    
    In May 2007, the Company elected to prepay the loan on the date indicated in the Maturity date
column (See Note 15) 19




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BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
         20




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BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
     2007
    
    $
    143,2362008
    
    
    135,1482009
    
    
    354,9552010
    
    
    450,1892011
    
    
    687,262Thereafter
    
    
    1,395,760Total indebtedness
    
    $
    3,166,550
 RISK MANAGEMENT AND USE OF FINANCIAL INSTRUMENTS
 Risk Management
  Use of Derivative Financial Instruments
  21




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BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
     Concentration of Credit Risk
  DISCONTINUED OPERATIONS
  22




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BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
 Three-month period
    
    
    Six-month periodended June 30, 2007
    
    
    ended June 30, 2007Revenue:Rents
    
    $
    1,460
    
    
    $
    12,397Tenant reimbursements
    
    
    562
    
    
    
    1,246Other
    
    
    145
    
    
    
    214Total revenue
    
    
    2,167
    
    
    
    13,857Expenses:Property operating expenses
    
    
    833
    
    
    
    4,845Real estate taxes
    
    
    241
    
    
    
    1,549Depreciation and amortization
    
    
    
    
    
    
    4,594Total operating expenses
    
    
    1,074
    
    
    
    10,988Operating income
    
    
    1,093
    
    
    
    2,869Income from discontinued operations before (loss) gain
on sale of interests in real estate and minority interest
    
    
    1,093
    
    
    
    2,869Net (loss) gain on sale of interests in real estate
    
    
    (856
    )
    
    
    25,153Minority interest attributable to discontinued
operations  LP units
    
    
    (10
    )
    
    
    (1,196
    )Income from discontinued operations
    
    $
    227
    
    
    $
    26,826
  Three-month period
    
    
    Six-month periodended June 30, 2006
    
    
    ended June 30, 2006Revenue:Rents
    
    $
    21,505
    
    
    $
    46,218Tenant reimbursements
    
    
    1,740
    
    
    
    4,209Other
    
    
    217
    
    
    
    587Total revenue
    
    
    23,462
    
    
    
    51,014Expenses:Property operating expenses
    
    
    8,609
    
    
    
    18,020Real estate taxes
    
    
    2,700
    
    
    
    6,187Depreciation and amortization
    
    
    9,746
    
    
    
    18,869Total operating expenses
    
    
    21,055
    
    
    
    43,076Operating income
    
    
    2,407
    
    
    
    7,938Interest income
    
    
    13
    
    
    
    13Interest expense (a)
    
    
    (301
    )
    
    
    (586
    )Income from discontinued operations before gain on
sale of interests in real estate and minority interest
    
    
    2,119
    
    
    
    7,365Minority interest  partners share of consolidated
real estate venture
    
    
    (195
    )
    
    
    (382
    )Minority interest attributable to discontinued
operations  LP units
    
    
    (92
    )
    
    
    (319
    )Income from discontinued operations
    
    $
    1,832
    
    
    $
    6,664
 
 (a)
    
    Interest expense relate to a mortgage that was secured by one of the sold properties and
paid off at the time of sale.  23




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BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
 MINORITY INTEREST IN OPERATING PARTNERSHIP AND REAL ESTATE VENTURES
    BENEFICIARIES EQUITY
 Earnings per Share (EPS)
  Three-month periods ended June 30,2007
    
    
    2006Basic
    
    
    Diluted
    
    
    Basic
    
    
    DilutedIncome (loss) from continuing operations
    
    $
    977
    
    
    $
    977
    
    
    $
    (13,388
    )
    
    $
    (13,388
    )Income (loss) from discontinued operations
    
    
    227
    
    
    
    227
    
    
    
    1,832
    
    
    
    1,832Income allocated to Preferred Shares
    
    
    (1,998
    )
    
    
    (1,998
    )
    
    
    (1,998
    )
    
    
    (1,998
    )Net income available to common shareholders
    
    $
    (794
    )
    
    $
    (794
    )
    
    $
    (13,554
    )
    
    $
    (13,554
    )Weighted-average shares outstanding
    
    
    87,080,785
    
    
    
    87,080,785
    
    
    
    90,540,237
    
    
    
    90,540,237Contingent securities/Stock based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total weighted-average shares outstanding
    
    
    87,080,785
    
    
    
    87,080,785
    
    
    
    90,540,237
    
    
    
    90,540,237Earnings per Common Share:Continuing operations
    
    $
    (0.01
    )
    
    $
    (0.01
    )
    
    $
    (0.17
    )
    
    $
    (0.17
    )Discontinued operations
    
    
    
    
    
    
    
    
    
    
    0.02
    
    
    
    0.02$
    (0.01
    )
    
    $
    (0.01
    )
    
    $
    (0.15
    )
    
    $
    (0.15
    )
 24




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BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
 Six-month periods ended June 30,2007
    
    
    2006Basic
    
    
    Diluted
    
    
    Basic
    
    
    DilutedIncome (loss) from continuing operations
    
    $
    (6,250
    )
    
    $
    (6,250
    )
    
    $
    (20,862
    )
    
    $
    (20,862
    )Income (loss) from discontinued operations
    
    
    26,826
    
    
    
    26,826
    
    
    
    6,664
    
    
    
    6,664Income allocated to Preferred Shares
    
    
    (3,996
    )
    
    
    (3,996
    )
    
    
    (3,996
    )
    
    
    (3,996
    )Net income available to common shareholders
    
    $
    16,580
    
    
    $
    16,580
    
    
    $
    (18,194
    )
    
    $
    (18,194
    )Weighted-average shares outstanding
    
    
    87,680,773
    
    
    
    87,680,773
    
    
    
    89,923,528
    
    
    
    89,923,528Contingent securities/Stock based compensation
    
    
    
    
    
    
    617,748
    
    
    
    
    
    
    
    Total weighted-average shares outstanding
    
    
    87,680,773
    
    
    
    88,298,521
    
    
    
    89,923,528
    
    
    
    89,923,528Earnings per Common Share:Continuing operations
    
    $
    (0.12
    )
    
    $
    (0.12
    )
    
    $
    (0.28
    )
    
    $
    (0.28
    )Discontinued operations
    
    
    0.31
    
    
    
    0.30
    
    
    
    0.07
    
    
    
    0.07$
    0.19
    
    
    $
    0.19
    
    
    $
    (0.20
    )
    
    $
    (0.20
    )
  Common and Preferred Shares
    Common Share Repurchases
  25




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BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
 SHARE BASED COMPENSATION
  Stock Options
  Weighted
    
    
    Weighted AverageAverage
    
    
    Remaining Contractual
    
    
    Aggregate IntrinsicShares
    
    
    Exercise Price
    
    
    Term (in years)
    
    
    Value (in 000s)Outstanding at January 1, 2007
    
    
    1,286,070
    
    
    $
    26.45
    
    
    
    1.50
    
    
    $
    8,739Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    (198,495
    )
    
    
    28.80
    
    
    
    0.87
    
    
    
    1,171Forfeited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at June 30, 2007
    
    
    1,087,575
    
    
    $
    26.03
    
    
    
    1.07
    
    
    $
    8,029Vested at June 30, 2007
    
    
    1,087,575
    
    
    $
    26.03
    
    
    
    1.07
    
    
    $
    8,029Exercisable at June 30, 2007
    
    
    1,087,575
    
    
    $
    26.03
    
    
    
    1.07
    
    
    $
    8,029
   Restricted Stock Awards
   26




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
 WeightedAverage GrantShares
    
    
    Date Fair valueNon-vested at January 1, 2007
    
    
    338,860
    
    
    $
    28.23Granted
    
    
    227,709
    
    
    
    35.09Vested
    
    
    (107,143
    )
    
    
    26.45Forfeited
    
    
    (10,626
    )
    
    
    31.47Non-vested at June 30, 2007
    
    
    448,800
    
    
    $
    32.05
 Outperformance Program
   Employee Share Purchase Plan
  SEGMENT INFORMATION
  27




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BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
  28




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BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
   Pennsylvania 
    
    
    Pennsylvania 
    
    
    
    
    
    
    
    
    
    
    Richmond,
    
    
    Northern
    
    
    Southern
    
    
    MetropolitanWest
    
    
    North
    
    
    New Jersey
    
    
    Urban
    
    
    Virginia
    
    
    California
    
    
    California
    
    
    Washington, D.C.
    
    
    Southwest
    
    
    Corporate
    
    
    TotalAs of June 30, 2007:Real estate investments, at cost:Operating properties
    
    $
    934,320
    
    
    $
    443,874
    
    
    $
    556,496
    
    
    $
    573,062
    
    
    $
    252,982
    
    
    $
    471,291
    
    
    $
    105,982
    
    
    $
    1,290,464
    
    
    $
    234,255
    
    
    $
    
    
    
    $
    4,862,726Development and
construction-in-progress
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    373,497
    
    
    
    373,497As of December 31, 2006:Real estate investments, at cost:Operating properties
    
    $
    922,347
    
    
    $
    530,436
    
    
    $
    570,009
    
    
    $
    568,008
    
    
    $
    244,519
    
    
    $
    396,927
    
    
    $
    95,942
    
    
    $
    1,255,940
    
    
    $
    343,177
    
    
    $
    
    
    
    $
    4,927,305Development and
construction-in-progress
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    328,119
    
    
    
    328,119For the three-months ended June 30, 2007:Total revenue
    
    $
    31,604
    
    
    $
    15,355
    
    
    $
    24,792
    
    
    $
    24,024
    
    
    $
    8,168
    
    
    $
    16,817
    
    
    $
    3,012
    
    
    $
    32,919
    
    
    $
    9,714
    
    
    $
    (2,101
    )
    
    $
    164,304Property operating expenses and
real estate taxes
    
    
    13,036
    
    
    
    5,547
    
    
    
    10,643
    
    
    
    8,835
    
    
    
    3,037
    
    
    
    6,345
    
    
    
    803
    
    
    
    10,301
    
    
    
    3,593
    
    
    
    260
    
    
    
    62,400Net operating income
    
    $
    18,568
    
    
    $
    9,808
    
    
    $
    14,149
    
    
    $
    15,189
    
    
    $
    5,131
    
    
    $
    10,472
    
    
    $
    2,209
    
    
    $
    22,618
    
    
    $
    6,121
    
    
    $
    (2,361
    )
    
    $
    101,904For the three-months ended June 30, 2006:Total revenue
    
    $
    26,006
    
    
    $
    17,792
    
    
    $
    22,921
    
    
    $
    21,367
    
    
    $
    8,109
    
    
    $
    14,735
    
    
    $
    2,911
    
    
    $
    26,525
    
    
    $
    6,680
    
    
    $
    3,383
    
    
    $
    150,429Property operating expenses and
real estate taxes
    
    
    7,566
    
    
    
    9,650
    
    
    
    9,650
    
    
    
    8,153
    
    
    
    3,125
    
    
    
    5,573
    
    
    
    889
    
    
    
    8,268
    
    
    
    3,049
    
    
    
    (31
    )
    
    
    55,892Net operating income
    
    $
    18,440
    
    
    $
    8,142
    
    
    $
    13,271
    
    
    $
    13,214
    
    
    $
    4,984
    
    
    $
    9,162
    
    
    $
    2,022
    
    
    $
    18,257
    
    
    $
    3,631
    
    
    $
    3,414
    
    
    $
    94,537
 29




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BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
   Pennsylvania 
    
    
    Pennsylvania 
    
    
    
    
    
    
    
    
    
    
    Richmond,
    
    
    Northern
    
    
    Southern
    
    
    MetropolitanWest
    
    
    North
    
    
    New Jersey
    
    
    Urban
    
    
    Virginia
    
    
    California
    
    
    California
    
    
    Washington, D.C.
    
    
    Southwest
    
    
    Corporate
    
    
    TotalFor the six-months
ended June 30, 2007:Total revenue
    
    $
    59,162
    
    
    $
    34,836
    
    
    $
    49,449
    
    
    $
    47,478
    
    
    $
    17,108
    
    
    $
    31,927
    
    
    $
    6,153
    
    
    $
    65,305
    
    
    $
    18,451
    
    
    $
    (2,464
    )
    
    $
    327,405Property operating
expenses and real
estate taxes
    
    
    24,143
    
    
    
    12,573
    
    
    
    21,337
    
    
    
    17,877
    
    
    
    5,986
    
    
    
    11,984
    
    
    
    2,074
    
    
    
    20,642
    
    
    
    7,156
    
    
    
    (140
    )
    
    
    123,632Net operating income
    
    $
    35,019
    
    
    $
    22,263
    
    
    $
    28,112
    
    
    $
    29,601
    
    
    $
    11,122
    
    
    $
    19,943
    
    
    $
    4,079
    
    
    $
    44,663
    
    
    $
    11,295
    
    
    $
    (2,324
    )
    
    $
    203,773For the six-months
ended June 30, 2006:Total revenue
    
    $
    50,827
    
    
    $
    35,785
    
    
    $
    46,237
    
    
    $
    40,640
    
    
    $
    15,501
    
    
    $
    28,244
    
    
    $
    5,558
    
    
    $
    52,391
    
    
    $
    15,720
    
    
    $
    3,444
    
    
    $
    294,347Property operating
expenses and real
estate taxes
    
    
    15,793
    
    
    
    19,627
    
    
    
    19,683
    
    
    
    16,819
    
    
    
    6,023
    
    
    
    10,448
    
    
    
    1,529
    
    
    
    15,837
    
    
    
    6,568
    
    
    
    (1,254
    )
    
    
    111,073Net operating income
    
    $
    35,034
    
    
    $
    16,158
    
    
    $
    26,554
    
    
    $
    23,821
    
    
    $
    9,478
    
    
    $
    17,796
    
    
    $
    4,029
    
    
    $
    36,554
    
    
    $
    9,152
    
    
    $
    4,698
    
    
    $
    183,274
 30




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BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
  Three-month periods
    
    
    Six-month periodsended June 30,
    
    
    ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Consolidated net operating income (loss)
    
    $
    101,904
    
    
    $
    94,537
    
    
    $
    203,773
    
    
    $
    183,274Less:Interest income
    
    
    1,603
    
    
    
    2,573
    
    
    
    2,390
    
    
    
    5,223Interest expense
    
    
    (40,803
    )
    
    
    (41,596
    )
    
    
    (81,161
    )
    
    
    (81,974
    )Deferred financing costs
    
    
    (1,065
    )
    
    
    (794
    )
    
    
    (2,323
    )
    
    
    (1,273
    )Depreciation and amortization
    
    
    (58,227
    )
    
    
    (64,145
    )
    
    
    (120,274
    )
    
    
    (115,357
    )Administrative expenses
    
    
    (6,993
    )
    
    
    (7,724
    )
    
    
    (14,262
    )
    
    
    (16,214
    )Minority interest  partners share of consolidated
real estate ventures
    
    
    8
    
    
    
    (17
    )
    
    
    (108
    )
    
    
    281Minority interest attributable to continuing
operations  LP units
    
    
    46
    
    
    
    707
    
    
    
    457
    
    
    
    1,142Plus:Equity in income of real estate ventures
    
    
    4,504
    
    
    
    463
    
    
    
    5,258
    
    
    
    1,428Net gain on disposition of undepreciated real estate
    
    
    
    
    
    
    2,608
    
    
    
    
    
    
    
    2,608Income (loss) from continuing operations
    
    
    977
    
    
    
    (13,388
    )
    
    
    (6,250
    )
    
    
    (20,862
    )Income (loss) from discontinued operations
    
    
    227
    
    
    
    1,832
    
    
    
    26,826
    
    
    
    6,664Net income (loss)
    
    $
    1,204
    
    
    $
    (11,556
    )
    
    $
    20,576
    
    
    $
    (14,198
    )
 COMMITMENTS AND CONTINGENCIES
 Legal Proceedings
   Environmental
  Ground Rent
 31




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BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
  2007
    
    $
    8682008
    
    
    1,7362009
    
    
    1,8182010
    
    
    1,8182011
    
    
    1,818Thereafter
    
    
    269,979
      SUBSEQUENT EVENTS
   32




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BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
    33




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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 share and per share information)
 June 30,
    
    
    December 31,2007
    
    
    2006ASSETSReal estate investments:Operating properties
    
    $
    4,862,726
    
    
    $
    4,927,305Accumulated depreciation
    
    
    (554,417
    )
    
    
    (515,698
    )Operating real estate investments, net
    
    
    4,308,309
    
    
    
    4,411,607Development land and construction-in-progress
    
    
    373,497
    
    
    
    328,119Total real estate invesmtents, net
    
    
    4,681,806
    
    
    
    4,739,726Cash and cash equivalents
    
    
    28,522
    
    
    
    25,379Cash escrowed with qualified intermediary (Note 3)
    
    
    36,590
    
    
    
    Accounts receivable, net (Note 2)
    
    
    16,972
    
    
    
    19,957Accrued rent receivable, net (Note 2)
    
    
    77,922
    
    
    
    71,589Asset held for sale, net
    
    
    
    
    
    
    126,016Investment in real estate ventures, at equity (Note 4)
    
    
    72,748
    
    
    
    74,574Deferred costs, net (Note 5)
    
    
    81,823
    
    
    
    73,708Intangible assets, net (Note 6)
    
    
    239,469
    
    
    
    281,251Other assets
    
    
    92,221
    
    
    
    96,818Total assets
    
    $
    5,328,073
    
    
    $
    5,509,018LIABILITIES AND PARTNERS EQUITYMortgage notes payable (Note 7)
    
    $
    757,145
    
    
    $
    883,920Unsecured notes, net of discounts (Note 7)
    
    
    2,208,070
    
    
    
    2,208,310Unsecured credit facility (Note 7)
    
    
    210,000
    
    
    
    60,000Accounts payable and accrued expenses
    
    
    79,473
    
    
    
    108,400Distributions payable
    
    
    42,131
    
    
    
    42,760Tenant security deposits and deferred rents
    
    
    59,429
    
    
    
    55,697Acquired below market leases, net (Note 6)
    
    
    72,259
    
    
    
    92,527Other liabilities
    
    
    12,682
    
    
    
    14,661Mortgage notes payable and other liabilities held for sale
    
    
    
    
    
    
    20,826Total liabilities
    
    
    3,441,189
    
    
    
    3,487,101Minority interest  partners share of consolidated real estate ventures (Note 10)
    
    
    
    
    
    
    34,436Commitments and contingencies (Note 14)
Redeemable limited partnership units at redemption value;
3,939,284 and 3,961,235 issued and outstanding in 2007 and 2006, respectively
    
    
    112,585
    
    
    
    131,711Partners equity (Note 11):7.50% Series D Preferred Mirror Units; 2,000,000 issued and
outstanding in 2007
and 2006
    
    
    47,912
    
    
    
    47,9127.375% Series E Preferred Mirror Units; 2,300,000 issued and
outstanding in 2007
and 2006
    
    
    55,538
    
    
    
    55,538General Partnership Capital, 87,049,237 and 88,327,041 units
issued and outstanding
in 2007 and 2006, respectively
    
    
    1,669,527
    
    
    
    1,750,745Accumulated other comprehensive income
    
    
    1,322
    
    
    
    1,575Total partners equity
    
    
    1,774,299
    
    
    
    1,855,770Total liabilities, minority interest, and partners equity
    
    $
    5,328,073
    
    
    $
    5,509,018
  34




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (unaudited, in thousands, except share and per share information)
 For the three-month periods
    
    
    For the six-month periodsended June 30,
    
    
    ended June,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenue:Rents
    
    $
    138,597
    
    
    $
    130,467
    
    
    $
    276,537
    
    
    $
    253,536Tenant reimbursements
    
    
    21,016
    
    
    
    15,496
    
    
    
    41,839
    
    
    
    32,130Other
    
    
    4,691
    
    
    
    4,466
    
    
    
    9,029
    
    
    
    8,681Total revenue
    
    
    164,304
    
    
    
    150,429
    
    
    
    327,405
    
    
    
    294,347Operating Expenses:Property operating expenses
    
    
    45,965
    
    
    
    41,504
    
    
    
    91,170
    
    
    
    82,478Real estate taxes
    
    
    16,435
    
    
    
    14,388
    
    
    
    32,462
    
    
    
    28,595Depreciation and amortization
    
    
    58,227
    
    
    
    64,145
    
    
    
    120,274
    
    
    
    115,357Administrative expenses
    
    
    6,993
    
    
    
    7,724
    
    
    
    14,262
    
    
    
    16,214Total operating expenses
    
    
    127,620
    
    
    
    127,761
    
    
    
    258,168
    
    
    
    242,644Operating income
    
    
    36,684
    
    
    
    22,668
    
    
    
    69,237
    
    
    
    51,703Other Income (Expense):Interest income
    
    
    1,603
    
    
    
    2,573
    
    
    
    2,390
    
    
    
    5,223Interest expense
    
    
    (40,803
    )
    
    
    (41,596
    )
    
    
    (81,161
    )
    
    
    (81,974
    )Interest expense  Deferred financing costs
    
    
    (1,065
    )
    
    
    (794
    )
    
    
    (2,323
    )
    
    
    (1,273
    )Equity in income of real estate ventures
    
    
    4,504
    
    
    
    463
    
    
    
    5,258
    
    
    
    1,428Net gain on disposition of undepreciated real estate
    
    
    
    
    
    
    2,608
    
    
    
    
    
    
    
    2,608Income (loss) before minority interest
    
    
    923
    
    
    
    (14,078
    )
    
    
    (6,599
    )
    
    
    (22,285
    )Minority interest  partners share of consolidated real estate ventures
    
    
    8
    
    
    
    84
    
    
    
    (108
    )
    
    
    370Income (loss) from continuing operations
    
    
    931
    
    
    
    (13,994
    )
    
    
    (6,707
    )
    
    
    (21,915
    )Discontinued operations:Income from discontinued operations
    
    
    1,093
    
    
    
    2,119
    
    
    
    2,869
    
    
    
    7,365Net (loss) gain on disposition of discontinued operations
    
    
    (856
    )
    
    
    
    
    
    
    25,153
    
    
    
    Minority interest  partners share of consolidated real estate ventures
    
    
    
    
    
    
    (195
    )
    
    
    
    
    
    
    (382
    )Income from discontinued operations
    
    
    237
    
    
    
    1,924
    
    
    
    28,022
    
    
    
    6,983Net income (loss)
    
    
    1,168
    
    
    
    (12,070
    )
    
    
    21,315
    
    
    
    (14,932
    )Income allocated to Preferred Units
    
    
    (1,998
    )
    
    
    (1,998
    )
    
    
    (3,996
    )
    
    
    (3,996
    )Income (loss) allocated to Common Partnership Units
    
    $
    (830
    )
    
    $
    (14,068
    )
    
    $
    17,319
    
    
    $
    (18,928
    )Basic earnings (loss) per Common Partnership Unit:Continuing operations
    
    $
    (0.01
    )
    
    $
    (0.17
    )
    
    $
    (0.12
    )
    
    $
    (0.28
    )Discontinued operations
    
    
    0.00
    
    
    
    0.02
    
    
    
    0.31
    
    
    
    0.07$
    (0.01
    )
    
    $
    (0.15
    )
    
    $
    0.19
    
    
    $
    (0.20
    )Diluted earnings (loss) per Common Partnership Unit:Continuing operations
    
    $
    (0.01
    )
    
    $
    (0.17
    )
    
    $
    (0.12
    )
    
    $
    (0.28
    )Discontinued operations
    
    
    0.00
    
    
    
    0.02
    
    
    
    0.30
    
    
    
    0.07$
    (0.01
    )
    
    $
    (0.15
    )
    
    $
    0.19
    
    
    $
    (0.20
    )Basic weighted average Common Partnership Unit
    
    
    91,020,069
    
    
    
    94,653,573
    
    
    
    91,620,218
    
    
    
    93,989,891Diluted weighted average Common Partnership Unit
    
    
    91,020,069
    
    
    
    94,653,573
    
    
    
    92,237,966
    
    
    
    93,989,891
  35




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 
 CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME
 (unaudited, in thousands)
 For the three-month
    
    
    For the six-monthperiods ended June 30,
    
    
    periods ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net income (loss)
    
    $
    1,168
    
    
    $
    (12,070
    )
    
    $
    21,315
    
    
    $
    (14,932
    )Other comprehensive income:Unrealized gain (loss) on derivative financial instruments
    
    
    (1,872
    )
    
    
    605
    
    
    
    (422
    )
    
    
    2,363Less: minority interest  consolidated real estate venture partners share of
unrealized gain (loss) on derivative financial instruments
    
    
    
    
    
    
    (296
    )
    
    
    
    
    
    
    (809
    )Settlement of forward starting swaps
    
    
    1,148
    
    
    
    
    
    
    
    1,148
    
    
    
    3,266Reclassification of realized (gains)/losses on derivative financial
instruments to operations, net
    
    
    (394
    )
    
    
    9
    
    
    
    (385
    )
    
    
    105Unrealized gain (loss) on available-for-sale securities
    
    
    13
    
    
    
    (184
    )
    
    
    (595
    )
    
    
    (776
    )Total other comprehensive income (loss)
    
    
    (1,105
    )
    
    
    134
    
    
    
    (254
    )
    
    
    4,149Comprehensive income (loss)
    
    $
    63
    
    
    $
    (11,936
    )
    
    $
    21,061
    
    
    $
    (10,783
    )
  36




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BRANDYWINE OPERATING PARTNERSHIP L.P.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (unaudited, in thousands)
 Six-month periodsended June 30,2007
    
    
    2006Cash flows from operating activities:Net income (loss)
    
    $
    21,315
    
    
    $
    (14,932
    )Adjustments to reconcile net income (loss) to net cash from
operating activities:Depreciation
    
    
    90,405
    
    
    
    95,051Amortization:Deferred financing costs
    
    
    2,323
    
    
    
    1,274Deferred leasing costs
    
    
    7,731
    
    
    
    5,184Acquired above (below) market leases, net
    
    
    (6,304
    )
    
    
    (3,907
    )Acquired lease intangibles
    
    
    26,700
    
    
    
    33,700Deferred compensation costs
    
    
    2,559
    
    
    
    1,445Straight-line rent
    
    
    (14,775
    )
    
    
    (15,916
    )Provision for doubtful accounts
    
    
    500
    
    
    
    1,956Real estate venture income in excess of distributions
    
    
    (104
    )
    
    
    (267
    )Net gain on sale of interests in real estate
    
    
    (25,153
    )
    
    
    (2,608
    )Minority interest (expense)/income
    
    
    108
    
    
    
    12Changes in assets and liabilities:Accounts receivable
    
    
    3,916
    
    
    
    5,937Other assets
    
    
    1,366
    
    
    
    6,471Accounts payable and accrued expenses
    
    
    (6,151
    )
    
    
    7,451Tenant security deposits and deferred rents
    
    
    5,665
    
    
    
    9,976Other liabilities
    
    
    (10,148
    )
    
    
    (6,053
    )Net cash from operating activities
    
    
    99,953
    
    
    
    124,774Cash flows from investing activities:Acquisition of Prentiss
    
    
    
    
    
    
    (935,856
    )Acquisition of properties
    
    
    
    
    
    
    (50,114
    )Acquisition of minority interest  partners share of consolidated real estate venture
    
    
    (64,174
    )
    
    
    Sales of properties, net
    
    
    222,592
    
    
    
    144,006Capital expenditures
    
    
    (133,264
    )
    
    
    (102,851
    )Investment in unconsolidated real estate ventures
    
    
    (523
    )
    
    
    (502
    )Cash distributions from unconsolidated real estate ventures
in excess of equity in income
    
    
    2,169
    
    
    
    2,215Leasing costs
    
    
    (11,499
    )
    
    
    (12,114
    )Net cash from investing activities
    
    
    15,301
    
    
    
    (955,216
    )Cash flows from financing activities:Proceeds from Credit Facility borrowings
    
    
    620,875
    
    
    
    310,000Repayments of Credit Facility borrowings
    
    
    (470,875
    )
    
    
    (205,000
    )Proceeds from mortgage notes payable
    
    
    
    
    
    
    20,520Repayments of mortgage notes payable
    
    
    (126,780
    )
    
    
    (21,198
    )Proceeds from term loan
    
    
    
    
    
    
    750,000Repayments of term loan
    
    
    
    
    
    
    (750,000
    )Proceeds from unsecured notes
    
    
    299,644
    
    
    
    847,818Repayments of unsecured notes
    
    
    (299,866
    )
    
    
    Proceeds from forward starting swap termination
    
    
    1,148
    
    
    
    3,266Repayments on employee stock loans
    
    
    
    
    
    
    35Debt financing costs
    
    
    (3,776
    )
    
    
    (6,987
    )Exercise of stock options
    
    
    6,221
    
    
    
    8,011Repurchases of Common Partnership Units
    
    
    (53,524
    )
    
    
    (34,481
    )Distributions paid to preferred and common partnership unitholders
    
    
    (85,178
    )
    
    
    (72,339
    )Net cash from financing activities
    
    
    (112,111
    )
    
    
    849,645Increase (decrease) in cash and cash equivalents
    
    
    3,143
    
    
    
    19,203Cash and cash equivalents at beginning of period
    
    
    25,379
    
    
    
    7,174Cash and cash equivalents at end of period
    
    $
    28,522
    
    
    $
    26,377Supplemental disclosure:Cash paid for interest, net of capitalized interest of $8,217 in 2007 and $4,916 in 2006
    
    $
    92,541
    
    
    $
    73,933Supplemental disclosure of non-cash activity:Common shares issued in the Prentiss acquisition
    
    
    
    
    
    
    1,022,173Operating Partnership units issued in Prentiss acquisitions
    
    
    
    
    
    
    64,103Operating Partnership units issued in property acquistions
    
    
    
    
    
    
    13,819Cash escrowed with qualified intermediary (Note 3)
    
    
    109,102
    
    
    
    Acquisition of property using cash escrowed with qualified intermediary
    
    
    (72,511
    )
    
    
    Debt, minority interest and other liabilities, net, assumed in the Prentiss acquisition
    
    
    
    
    
    
    679,520
  37




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##### Table of Contents



BRANDYWINE OPERATING PARTNERHIP, L.P.
 
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
 ORGANIZATION AND NATURE OF OPERATIONS
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Basis of Presentation
  38




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##### Table of Contents



BRANDYWINE OPERATING PARTNERHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
 Principles of Consolidation
  Use of Estimates
  Operating Properties
  Purchase Price Allocation
  39




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##### Table of Contents



BRANDYWINE OPERATING PARTNERHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
    Revenue Recognition
   40




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##### Table of Contents



BRANDYWINE OPERATING PARTNERHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
 Stock-Based Compensation Plans
   Accounting for Derivative Instruments and Hedging Activities
 Accounting for Derivative Instruments and Hedging Activities Accounting for Certain Derivative Instruments and Hedging Activities
 An Amendment of SFAS 133
  Income Taxes
   41




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##### Table of Contents



BRANDYWINE OPERATING PARTNERHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
   New Pronouncements
  The Fair Value Option for Financial Assets
and Financial Liabilities
 Fair Value Measurements
 42




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##### Table of Contents



BRANDYWINE OPERATING PARTNERHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
  Accounting for Uncertainty in Income Taxes, an
Interpretation of FASB Statement No. 109
 REAL ESTATE INVESTMENTS
  June 30, 2007
    
    
    December 31, 2006Land
    
    $
    738,193
    
    
    $
    756,400Building and improvements
    
    
    3,725,268
    
    
    
    3,807,040Tenant improvements
    
    
    399,265
    
    
    
    363,865$
    4,862,726
    
    
    $
    4,927,305
 Acquisitions and Dispositions
  2007
       43




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##### Table of Contents



BRANDYWINE OPERATING PARTNERHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
    2006
 Prentiss Acquisition
    44




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##### Table of Contents



BRANDYWINE OPERATING PARTNERHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
 At January 5, 2006Real estate investmentsLand  operating
    
    $
    282,584Building and improvements
    
    
    1,942,728Tenant improvements
    
    
    120,610Construction in progress and land inventory
    
    
    57,329Total real estate investments acquired
    
    
    2,403,251Rent receivables
    
    
    6,031Other assets acquired:Intangible assets:In-place leases
    
    
    187,907Relationship values
    
    
    98,382Above-market leases
    
    
    26,352Total intangible assets acquired
    
    
    312,641Investment in real estate ventures
    
    
    66,921Investment in marketable securities
    
    
    193,089Other assets
    
    
    8,868Total other assets
    
    
    581,519Total assets acquired
    
    
    2,990,801Liabilities assumed:Mortgage notes payable
    
    
    532,607Unsecured notes
    
    
    78,610Secured note payable
    
    
    186,116Security deposits and deferred rent
    
    
    6,475Other liabilities:Below-market leases
    
    
    78,911Other liabilities
    
    
    43,995Total other liabilities assumed
    
    
    122,906Total liabilities assumed
    
    
    926,714Minority interest
    
    
    104,658Net assets acquired
    
    $
    1,959,429
   45




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##### Table of Contents



BRANDYWINE OPERATING PARTNERHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
    Six-month periodended June 30, 2006(unaudited)Pro forma revenue
    
    $
    296,765Pro forma loss from continuing operations
    
    
    (22,157
    )Pro forma loss allocated to common partnership units
    
    
    (18,594
    )Earnings per common partnership unit from continuing operationsBasic  as reported
    
    $
    (0.28
    )Basic  as pro forma
    
    $
    (0.28
    )Diluted  as reported
    
    $
    (0.28
    )Diluted  as pro forma
    
    $
    (0.28
    )Earnings per common partnership unitBasic  as reported
    
    $
    (0.20
    )Basic  as pro forma
    
    $
    (0.20
    )Diluted  as reported
    
    $
    (0.20
    )Diluted  as pro forma
    
    $
    (0.20
    )
    46




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##### Table of Contents



BRANDYWINE OPERATING PARTNERHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
 Other Acquisitions and Dispositions
        INVESTMENT IN UNCONSOLIDATED VENTURES
     47




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##### Table of Contents



BRANDYWINE OPERATING PARTNERHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
 2007
    
    2006Operating property, net of accumulated depreciation
    
    $
    394,539
    
    
    $
    365,168Other assets
    
    
    45,039
    
    
    
    52,935Liabilities
    
    
    32,111
    
    
    
    28,764Debt
    
    
    357,661
    
    
    
    332,589Equity
    
    
    49,805
    
    
    
    56,888Partnerships share of equity (Partnerships basis)
    
    
    72,748
    
    
    
    74,574
  Three-month periods
    
    Six-month periodsended June 30,
    
    ended June 30,2007
    
    2006
    
    2007
    
    2006Revenue
    
    $
    18,986
    
    
    $
    18,710
    
    
    $
    37,300
    
    
    $
    38,434Operating expenses
    
    
    6,643
    
    
    
    6,743
    
    
    
    12,940
    
    
    
    14,737Interest expense, net
    
    
    5,410
    
    
    
    5,080
    
    
    
    10,648
    
    
    
    10,074Depreciation and amortization
    
    
    3,776
    
    
    
    5,299
    
    
    
    8,004
    
    
    
    10,172Net income
    
    
    3,156
    
    
    
    1,589
    
    
    
    5,707
    
    
    
    3,451Partnerships share of income (Partnership basis)
    
    
    896
    
    
    
    463
    
    
    
    1,658
    
    
    
    1,428
   DEFERRED COSTS
  June 30, 2007Accumulated
    
    
    Deferred Costs,Total Cost
    
    
    Amortization
    
    
    netLeasing Costs
    
    $
    91,984
    
    
    $
    (30,941
    )
    
    $
    61,043Financing Costs
    
    
    26,898
    
    
    
    (6,118
    )
    
    
    20,780Total
    
    $
    118,882
    
    
    $
    (37,059
    )
    
    $
    81,823
 December 31, 2006Accumulated
    
    
    Deferred Costs,Total Cost
    
    
    Amortization
    
    
    netLeasing Costs
    
    $
    83,629
    
    
    $
    (28,278
    )
    
    $
    55,351Financing Costs
    
    
    24,648
    
    
    
    (6,291
    )
    
    
    18,357Total
    
    $
    108,277
    
    
    $
    (34,569
    )
    
    $
    73,708
 48




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##### Table of Contents



BRANDYWINE OPERATING PARTNERHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
 INTANGIBLE ASSETS AND LIABILITIES
  June 30, 2007Accumulated
    
    
    Deferred Costs,Total Cost
    
    
    Amortization
    
    
    netIntangible
Assets:In-place lease value
    
    $
    182,148
    
    
    $
    (55,584
    )
    
    $
    126,564Tenant relationship value
    
    
    120,532
    
    
    
    (26,309
    )
    
    
    94,223Above market leases acquired
    
    
    31,950
    
    
    
    (13,268
    )
    
    
    18,682Total intangible assets
    
    $
    334,630
    
    
    $
    (95,161
    )
    
    $
    239,469Intangible Liability:Below market leases acquired
    
    $
    102,754
    
    
    $
    (30,495
    )
    
    $
    72,259
 December 31, 2006AccumulatedTotal Cost
    
    
    Amortization
    
    
    Deferred Costs, netIntangible Assets:In-place lease value
    
    $
    207,513
    
    
    $
    (52,293
    )
    
    $
    155,220Tenant relationship value
    
    
    124,605
    
    
    
    (19,572
    )
    
    
    105,033Above market leases acquired
    
    
    32,667
    
    
    
    (11,669
    )
    
    
    20,998Total intangible assets
    
    $
    364,785
    
    
    $
    (83,534
    )
    
    $
    281,251Intangible Liability:Below market leases acquired
    
    $
    118,536
    
    
    $
    (26,009
    )
    
    $
    92,527
  Assets
    
    
    Liabilities2007 (remainder)
    
    $
    28,702
    
    
    $
    8,8132008
    
    
    46,841
    
    
    
    13,4692009
    
    
    40,923
    
    
    
    11,4442010
    
    
    34,221
    
    
    
    8,8992011
    
    
    26,808
    
    
    
    7,435Thereafter
    
    
    61,974
    
    
    
    22,199Total
    
    $
    239,469
    
    
    $
    72,259
 DEBT OBLIGATIONS
  49




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BRANDYWINE OPERATING PARTNERHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
 EffectiveJune 30,
    
    
    December 31,
    
    
    Interest
    
    
    MaturityProperty / Location
    
    2007
    
    
    2006
    
    
    Rate
    
    
    DateMORTGAGE DEBT:Interstate Center
    
    $
    
    
    
    $
    552
    
    

    6.19%
    
    
    Mar-07The Bluffs
    
    
    
    
    
    
    10,700
    
    

        6.00%
    (a)
    
    Apr-07Pacific Ridge
    
    
    
    
    
    
    14,500
    
    

    6.00%
    (a)
    
    Apr-07Pacific View/Camino
    
    
    
    
    
    
    26,000
    
    

    6.00        %
    (a)
    
    Apr-07Computer Associates Building
    
    
    
    
    
    
    31,000
    
    

    6.00        %
    (a)
    
    Apr-07Presidents Plaza
    
    
    
    
    
    
    30,900
    
    

    6.00        %
    (a)
    
    Apr-07440 & 442 Creamery Way
    
    
    
    
    
    
    5,421
    
    

    8.55%
    
    
    May-07Grande A
    
    
    59,297
    
    
    
    59,513
    
    

    7.48        %
    (b)
    
    Jul-07Grande B
    
    
    76,731
    
    
    
    77,535
    
    

    7.48        %
    (b)
    
    Jul-07481 John Young Way
    
    
    2,259
    
    
    
    2,294
    
    

    8.40%
    
    
    Nov-07400 Commerce Drive
    
    
    11,681
    
    
    
    11,797
    
    

    7.12%
    
    
    Jun-08Two Logan Square
    
    
    70,745
    
    
    
    71,348
    
    

    5.78        %
    (a)
    
    Jul-09200 Commerce Drive
    
    
    5,802
    
    
    
    5,841
    
    

    7.12        %
    (a)
    
    Jan-101333 Broadway
    
    
    24,209
    
    
    
    24,418
    
    

    5.18        %
    (a)
    
    May-10The Ordway
    
    
    45,861
    
    
    
    46,199
    
    

    7.95        %
    (a)
    
    Aug-10World Savings Center
    
    
    27,334
    
    
    
    27,524
    
    
    7.91        %
    (a)
    
    Nov-10Plymouth Meeting Exec.
    
    
    43,793
    
    
    
    44,103
    
    
    7.00        %
    (a)
    
    Dec-10Four Tower Bridge
    
    
    10,591
    
    
    
    10,626
    
    
    6.62%
    
    
    Feb-11Arboretum I, II, III & V
    
    
    22,492
    
    
    
    22,750
    
    
    7.59%
    
    
    Jul-11Midlantic Drive/Lenox Drive/DCC I
    
    
    61,958
    
    
    
    62,678
    
    
    8.05%
    
    
    Oct-11Research Office Center
    
    
    41,872
    
    
    
    42,205
    
    
    7.64        %
    (a)
    
    Oct-11Concord Airport Plaza
    
    
    38,021
    
    
    
    38,461
    
    
    7.20        %
    (a)
    
    Jan-12Six Tower Bridge
    
    
    14,655
    
    
    
    14,744
    
    
    7.79%
    
    
    Aug-12Newtown Square/Berwyn Park/Libertyview
    
    
    62,721
    
    
    
    63,231
    
    
    7.25%
    
    
    May-13Coppell Associates
    
    
    3,626
    
    
    
    3,737
    
    
    6.89%
    
    
    Dec-13Southpoint III
    
    
    4,692
    
    
    
    4,949
    
    
    7.75%
    
    
    Apr-14Tysons Corner
    
    
    100,000
    
    
    
    100,000
    
    
    4.84        %
    (a)
    
    Aug-15Coppell Associates
    
    
    16,600
    
    
    
    16,600
    
    
    5.75%
    
    
    Mar-16Principal balance outstanding
    
    
    744,940
    
    
    
    869,626Plus: unamortized fixed-rate debt premiums, net
    
    
    12,205
    
    
    
    14,294Total mortgage indebtedness
    
    $
    757,145
    
    
    $
    883,920UNSECURED DEBT:Private Placement Notes due 2008
    
    
    113,000
    
    
    
    113,000
    
    
    4.34%
    
    
    Dec-082009 Three Year Notes
    
    
    
    
    
    
    300,000
    
    
    Libor + 0.45%
    
    
    Apr-092009 Five Year Notes
    
    
    275,000
    
    
    
    275,000
    
    
    4.62%
    
    
    Nov-092010 Five Year Notes
    
    
    300,000
    
    
    
    300,000
    
    
    5.61%
    
    
    Dec-10Line-of-Credit
    
    
    210,000
    
    
    
    60,000
    
    
    Libor + 0.725%
    
    
    Jun-113.875% Exchangeable Notes
    
    
    345,000
    
    
    
    345,000
    
    
    3.87%
    
    
    Oct-112012 Six Year Notes
    
    
    300,000
    
    
    
    300,000
    
    
    5.77%
    
    
    Apr-122014 Ten Year Notes
    
    
    250,000
    
    
    
    250,000
    
    
    5.53%
    
    
    Nov-142016 Ten Year Notes
    
    
    250,000
    
    
    
    250,000
    
    
    5.95%
    
    
    Apr-162017 Ten Year Notes
    
    
    300,000
    
    
    
    
    
    
    5.72%
    
    
    May-17Indenture IA (Preferred Trust I)
    
    
    27,062
    
    
    
    27,062
    
    
    Libor + 1.25%
    
    
    Mar-35Indenture IB (Preferred Trust I)
    
    
    25,774
    
    
    
    25,774
    
    
    Libor + 1.25%
    
    
    Apr-35Indenture II (Preferred Trust II)
    
    
    25,774
    
    
    
    25,774
    
    
    Libor + 1.25%
    
    
    Jul-35Principal balance outstanding
    
    
    2,421,610
    
    
    
    2,271,610Plus: unamortized fixed-rate debt discounts, net
    
    
    (3,540
    )
    
    
    (3,300
    )Total mortgage indebtedness
    
    $
    2,418,070
    
    
    $
    2,268,310Total Debt Obligations
    
    $
    3,175,215
    
    
    $
    3,152,230
 
 (a)
    
    Loans were assumed upon acquisition of the related property. Interest rates presented
above reflect the market rate at the time of acquisition.(b)
    
    In May 2007, the Company elected to prepay the loan on the date indicated in the Maturity date
column. (See Note 15) 50




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BRANDYWINE OPERATING PARTNERHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
         51




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##### Table of Contents



BRANDYWINE OPERATING PARTNERHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
     2007
    
    $
    143,2362008
    
    
    135,1482009
    
    
    354,9552010
    
    
    450,1892011
    
    
    687,262Thereafter
    
    
    1,395,760Total indebtedness
    
    $
    3,166,550
 RISK MANAGEMENT AND USE OF FINANCIAL INSTRUMENTS
 Risk Management
  Use of Derivative Financial Instruments
  52




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BRANDYWINE OPERATING PARTNERHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
     Concentration of Credit Risk
  DISCONTINUED OPERATIONS
  53




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##### Table of Contents



BRANDYWINE OPERATING PARTNERHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
 Three-month periods
    
    
    Six-month periodended June 30, 2007
    
    
    ended June 30, 2007Revenue:Rents
    
    $
    1,460
    
    
    $
    12,397Tenant reimbursements
    
    
    562
    
    
    
    1,246Other
    
    
    145
    
    
    
    214Total revenue
    
    
    2,167
    
    
    
    13,857Expenses:Property operating expenses
    
    
    833
    
    
    
    4,845Real estate taxes
    
    
    241
    
    
    
    1,549Depreciation and amortization
    
    
    
    
    
    
    4,594Total operating expenses
    
    
    1,074
    
    
    
    10,988Income from discontinued operations before (loss) gain
on sale of interests in real estate and minority interest
    
    
    1,093
    
    
    
    2,869Net (loss) gain on sale of interests in real estate
    
    
    (856
    )
    
    
    25,153Income from discontinued operations
    
    $
    237
    
    
    $
    28,022
  Three-month periods
    
    
    Six-month periodended June 30, 2006
    
    
    ended June 30, 2006Revenue:Rents
    
    $
    21,505
    
    
    $
    46,218Tenant reimbursements
    
    
    1,740
    
    
    
    4,209Other
    
    
    217
    
    
    
    587Total revenue
    
    
    23,462
    
    
    
    51,014Expenses:Property operating expenses
    
    
    8,609
    
    
    
    18,020Real estate taxes
    
    
    2,700
    
    
    
    6,187Depreciation and amortization
    
    
    9,746
    
    
    
    18,869Total operating expenses
    
    
    21,055
    
    
    
    43,076Operating income
    
    
    2,407
    
    
    
    7,938Interest income
    
    
    13
    
    
    
    13Interest expense (a)
    
    
    (301
    )
    
    
    (586
    )Income from discontinued operations before gain on
sale of interests in real estate and minority interest
    
    
    2,119
    
    
    
    7,365Minority interest  partners share of consolidated
real estate venture
    
    
    (195
    )
    
    
    (382
    )Income from discontinued operations
    
    $
    1,924
    
    
    $
    6,983
 
 (a)
    
    Interest expense relate to a mortgage that was secured by one of the sold properties and
paid off at the time of sale.  MINORITY INTEREST IN REAL ESTATE VENTURES
  54




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##### Table of Contents



BRANDYWINE OPERATING PARTNERHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
  PARTNERS EQUITY
 Earnings per Common Partnership Unit
  Three-month periods ended June 30,2007
    
    
    2006Basic
    
    
    Diluted
    
    
    Basic
    
    
    DilutedIncome (loss) from continuing operations
    
    $
    931
    
    
    $
    931
    
    
    $
    (13,994
    )
    
    $
    (13,994
    )Income (loss) from discontinued operations
    
    
    237
    
    
    
    237
    
    
    
    1,924
    
    
    
    1,924Income allocated to Preferred Units
    
    
    (1,998
    )
    
    
    (1,998
    )
    
    
    (1,998
    )
    
    
    (1,998
    )Net income available to common partnership unitholders
    
    $
    (830
    )
    
    $
    (830
    )
    
    $
    (14,068
    )
    
    $
    (14,068
    )Weighted-average common partnership units outstanding
    
    
    91,020,069
    
    
    
    91,020,069
    
    
    
    94,653,573
    
    
    
    94,653,573Contingent securities/Stock based compensation
    
    
    
    
    
    
    398,864
    
    
    
    
    
    
    
    Total weighted-average partnership units outstanding
    
    
    91,020,069
    
    
    
    91,418,933
    
    
    
    94,653,573
    
    
    
    94,653,573Earnings per Common Partnership Unit:Continuing operations
    
    $
    (0.01
    )
    
    $
    (0.01
    )
    
    $
    (0.17
    )
    
    $
    (0.17
    )Discontinued operations
    
    
    
    
    
    
    
    
    
    
    0.02
    
    
    
    0.02$
    (0.01
    )
    
    $
    (0.01
    )
    
    $
    (0.15
    )
    
    $
    (0.15
    )
 Six-month periods ended June 30,2007
    
    
    2006Basic
    
    
    Diluted
    
    
    Basic
    
    
    DilutedIncome (loss) from continuing operations
    
    $
    (6,707
    )
    
    $
    (6,707
    )
    
    $
    (21,915
    )
    
    $
    (21,915
    )Income (loss) from discontinued operations
    
    
    28,022
    
    
    
    28,022
    
    
    
    6,983
    
    
    
    6,983Income allocated to Preferred Units
    
    
    (3,996
    )
    
    
    (3,996
    )
    
    
    (3,996
    )
    
    
    (3,996
    )Net income available to common partnership unitholders
    
    $
    17,319
    
    
    $
    17,319
    
    
    $
    (18,928
    )
    
    $
    (18,928
    )Weighted-average common partnership units outstanding
    
    
    91,620,218
    
    
    
    91,620,218
    
    
    
    93,989,891
    
    
    
    93,989,891Contingent securities/Stock based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total weighted-average partnership units outstanding
    
    
    91,620,218
    
    
    
    91,620,218
    
    
    
    93,989,891
    
    
    
    93,989,891Earnings per Common Partnership Unit:Continuing operations
    
    $
    (0.12
    )
    
    $
    (0.12
    )
    
    $
    (0.28
    )
    
    $
    (0.28
    )Discontinued operations
    
    
    0.31
    
    
    
    0.31
    
    
    
    0.07
    
    
    
    0.07$
    0.19
    
    
    $
    0.19
    
    
    $
    (0.20
    )
    
    $
    (0.20
    )
 Common Partnership Unit and Preferred Mirror Units
  55




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BRANDYWINE OPERATING PARTNERHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
  Common Share Repurchases
  SHARE BASED COMPENSATION
  Stock Options
  Weighted
    
    
    Weighted AverageAverage
    
    
    Remaining Contractual
    
    
    Aggregate IntrinsicShares
    
    
    Exercise Price
    
    
    Term (in years)
    
    
    Value (in 000s)Outstanding at January 1, 2007
    
    
    1,286,070
    
    
    $
    26.45
    
    
    
    1.50
    
    
    $
    8,739Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    (198,495
    )
    
    
    28.80
    
    
    
    0.87
    
    
    
    1,171Forfeited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at June 30, 2007
    
    
    1,087,575
    
    
    $
    26.03
    
    
    
    1.07
    
    
    $
    8,029Vested at June 30, 2007
    
    
    1,087,575
    
    
    $
    26.03
    
    
    
    1.07
    
    
    $
    8,029Exercisable at June 30, 2007
    
    
    1,087,575
    
    
    $
    26.03
    
    
    
    1.07
    
    
    $
    8,029
   56




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BRANDYWINE OPERATING PARTNERHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
 Restricted Stock Awards
  WeightedAverage GrantShares
    
    
    Date Fair valueNon-vested at January 1, 2007
    
    
    338,860
    
    
    $
    28.23Granted
    
    
    227,709
    
    
    
    35.09Vested
    
    
    (107,143
    )
    
    
    26.45Forfeited
    
    
    (10,626
    )
    
    
    31.47Non-vested at June 30, 2007
    
    
    448,800
    
    
    $
    32.05
 Outperformance Program
   Employee Share Purchase Plan
  57




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BRANDYWINE OPERATING PARTNERHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
 SEGMENT INFORMATION
  58




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BRANDYWINE OPERATING PARTNERHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
   Pennsylvania
    
    
    Pennsylvania
    
    
    
    
    
    
    
    
    
    
    Richmond,
    
    
    Northern
    
    
    Southern
    
    
    MetropolitanWest
    
    
    North
    
    
    New Jersey
    
    
    Urban
    
    
    Virginia
    
    
    California
    
    
    California
    
    
    Washington, D.C.
    
    
    Southwest
    
    
    Corporate
    
    
    TotalAs of June 30, 2007:Real estate investments, at cost:Operating properties
    
    $
    934,320
    
    
    $
    443,874
    
    
    $
    556,496
    
    
    $
    573,062
    
    
    $
    252,982
    
    
    $
    471,291
    
    
    $
    105,982
    
    
    $
    1,290,464
    
    
    $
    234,255
    
    
    $
    
    
    
    $
    4,862,726Development and
construction-in-progress
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    373,497
    
    
    
    373,497As of December 31, 2006:Real estate investments, at cost:Operating properties
    
    $
    922,347
    
    
    $
    530,436
    
    
    $
    570,009
    
    
    $
    568,008
    
    
    $
    244,519
    
    
    $
    396,927
    
    
    $
    95,942
    
    
    $
    1,255,940
    
    
    $
    343,177
    
    
    $
    
    
    
    $
    4,927,305Development and
construction-in-progress
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    328,119
    
    
    
    328,119For the three-months ended June 30, 2007:Total revenue
    
    $
    31,604
    
    
    $
    15,355
    
    
    $
    24,792
    
    
    $
    24,024
    
    
    $
    8,168
    
    
    $
    16,817
    
    
    $
    3,012
    
    
    $
    32,919
    
    
    $
    9,714
    
    
    $
    (2,101
    )
    
    $
    164,304Property operating expenses and real estate taxes
    
    
    13,036
    
    
    
    5,547
    
    
    
    10,643
    
    
    
    8,835
    
    
    
    3,037
    
    
    
    6,345
    
    
    
    803
    
    
    
    10,301
    
    
    
    3,593
    
    
    
    260
    
    
    
    62,400Net operating income
    
    $
    18,568
    
    
    $
    9,808
    
    
    $
    14,149
    
    
    $
    15,189
    
    
    $
    5,131
    
    
    $
    10,472
    
    
    $
    2,209
    
    
    $
    22,618
    
    
    $
    6,121
    
    
    $
    (2,361
    )
    
    $
    101,904For the three-months ended June 30, 2006:Total revenue
    
    $
    26,006
    
    
    $
    17,792
    
    
    $
    22,921
    
    
    $
    21,367
    
    
    $
    8,109
    
    
    $
    14,735
    
    
    $
    2,911
    
    
    $
    26,525
    
    
    $
    6,680
    
    
    $
    3,383
    
    
    $
    150,429Property operating expenses and real estate taxes
    
    
    7,566
    
    
    
    9,650
    
    
    
    9,650
    
    
    
    8,153
    
    
    
    3,125
    
    
    
    5,573
    
    
    
    889
    
    
    
    8,268
    
    
    
    3,049
    
    
    
    (31
    )
    
    
    55,892Net operating income
    
    $
    18,440
    
    
    $
    8,142
    
    
    $
    13,271
    
    
    $
    13,214
    
    
    $
    4,984
    
    
    $
    9,162
    
    
    $
    2,022
    
    
    $
    18,257
    
    
    $
    3,631
    
    
    $
    3,414
    
    
    $
    94,537
 59




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BRANDYWINE OPERATING PARTNERHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
   Pennsylvania
    
    
    Pennsylvania
    
    
    
    
    
    
    
    
    
    
    Richmond,
    
    
    Northern
    
    
    Southern
    
    
    MetropolitanWest
    
    
    North
    
    
    New Jersey
    
    
    Urban
    
    
    Virginia
    
    
    California
    
    
    California
    
    
    Washington, D.C.
    
    
    Southwest
    
    
    Corporate
    
    
    TotalFor the six-months ended June 30, 2007:Total revenue
    
    $
    59,162
    
    
    $
    34,836
    
    
    $
    49,449
    
    
    $
    47,478
    
    
    $
    17,108
    
    
    $
    31,927
    
    
    $
    6,153
    
    
    $
    65,305
    
    
    $
    18,451
    
    
    $
    (2,464
    )
    
    $
    327,405Property operating expenses and real estate taxes
    
    
    24,143
    
    
    
    12,573
    
    
    
    21,337
    
    
    
    17,877
    
    
    
    5,986
    
    
    
    11,984
    
    
    
    2,074
    
    
    
    20,642
    
    
    
    7,156
    
    
    
    (140
    )
    
    
    123,632Net operating income
    
    $
    35,019
    
    
    $
    22,263
    
    
    $
    28,112
    
    
    $
    29,601
    
    
    $
    11,122
    
    
    $
    19,943
    
    
    $
    4,079
    
    
    $
    44,663
    
    
    $
    11,295
    
    
    $
    (2,324
    )
    
    $
    203,773For the six-months ended June 30, 2006:Total revenue
    
    $
    50,827
    
    
    $
    35,785
    
    
    $
    46,237
    
    
    $
    40,640
    
    
    $
    15,501
    
    
    $
    28,244
    
    
    $
    5,558
    
    
    $
    52,391
    
    
    $
    15,720
    
    
    $
    3,444
    
    
    $
    294,347Property operating expenses and real estate taxes
    
    
    15,793
    
    
    
    19,627
    
    
    
    19,683
    
    
    
    16,819
    
    
    
    6,023
    
    
    
    10,448
    
    
    
    1,529
    
    
    
    15,837
    
    
    
    6,568
    
    
    
    (1,254
    )
    
    
    111,073Net operating income
    
    $
    35,034
    
    
    $
    16,158
    
    
    $
    26,554
    
    
    $
    23,821
    
    
    $
    9,478
    
    
    $
    17,796
    
    
    $
    4,029
    
    
    $
    36,554
    
    
    $
    9,152
    
    
    $
    4,698
    
    
    $
    183,274
 60




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BRANDYWINE OPERATING PARTNERHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
  Three-month periods
    
    
    Six-month periodsended June 30,
    
    
    ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Consolidated net operating income (loss)
    
    $
    101,904
    
    
    $
    94,537
    
    
    $
    203,773
    
    
    $
    183,274Less:Interest income
    
    
    1,603
    
    
    
    2,573
    
    
    
    2,390
    
    
    
    5,223Interest expense
    
    
    (40,803
    )
    
    
    (41,596
    )
    
    
    (81,161
    )
    
    
    (81,974
    )Deferred financing costs
    
    
    (1,065
    )
    
    
    (794
    )
    
    
    (2,323
    )
    
    
    (1,273
    )Depreciation and amortization
    
    
    (58,227
    )
    
    
    (64,145
    )
    
    
    (120,274
    )
    
    
    (115,357
    )Administrative expenses
    
    
    (6,993
    )
    
    
    (7,724
    )
    
    
    (14,262
    )
    
    
    (16,214
    )Minority interest  partners share of consolidated
real estate ventures
    
    
    8
    
    
    
    84
    
    
    
    (108
    )
    
    
    370Plus:Equity in income of real estate ventures
    
    
    4,504
    
    
    
    463
    
    
    
    5,258
    
    
    
    1,428Net gain on disposition of undepreciated real estate
    
    
    
    
    
    
    2,608
    
    
    
    
    
    
    
    2,608Income (loss) from continuing operations
    
    
    931
    
    
    
    (13,994
    )
    
    
    (6,707
    )
    
    
    (21,915
    )Income (loss) from discontinued operations
    
    
    237
    
    
    
    1,924
    
    
    
    28,022
    
    
    
    6,983Net income (loss)
    
    $
    1,168
    
    
    $
    (12,070
    )
    
    $
    21,315
    
    
    $
    (14,932
    )
 COMMITMENTS AND CONTINGENCIES
 Legal Proceedings
   Environmental
  61




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BRANDYWINE OPERATING PARTNERHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
 Ground Rent
  2007
    
    $
    8682008
    
    
    1,7362009
    
    
    1,8182010
    
    
    1,8182011
    
    
    1,818Thereafter
    
    
    269,979
 Other Commitments or Contingencies
     SUBSEQUENT EVENTS
  62




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BRANDYWINE OPERATING PARTNERHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
    63




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  
    
    our failure to lease unoccupied space in accordance with our projections;
    
    our failure to re-lease occupied space upon expiration of leases;
    
    the bankruptcy of major tenants;
    
    changes in prevailing interest rates;
    
    the unavailability of equity and debt financing;
    
    unanticipated costs associated with the acquisition and integration of our acquisitions;
    
    unanticipated costs to complete and lease-up pending developments;
    
    impairment charges;
    
    increased costs for, or lack of availability of, adequate insurance, including for terrorist acts;
    
    risks associated with actual or threatened terrorist attacks;
    
    demand for tenant services beyond those traditionally provided by landlords;
    
    potential liability under environmental or other laws;
    
    earthquakes and other natural disasters;
    
    risks associated with state and local tax audits;
    
    complex regulations relating to our status as a REIT and the adverse consequences of our
failure to qualify as a REIT;
    
    changes in local real estate conditions (including changes in rental rates and the
number of competing properties);
    
    changes in the economic conditions affecting industries in which our principal tenants compete;
    
    changes in general economic conditions;
    
    the impact of newly adopted accounting principles on our accounting policies and on
period-to-period comparisons of financial results and the other risks identified in the
Risk Factors section and elsewhere in our Annual Report on Form 10-K for the year ended
December 31, 2006.
     64




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Tenant Rollover Risk
  Tenant Credit Risk
  Development Risk
  65




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66




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67




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Comparison of the Three-Month Periods Ended June 30, 2007 and 2006
   68




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Acquired/Completed
    
    
    Development/Redevelopment
    
    
    Administrative/Same Store Property Portfolio
    
    
    Properties
    
    
    Properties
    
    
    Eliminations (a)
    
    
    Total PortfolioIncrease/
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Increase/(dollars in thousands)
    
    2007
    
    
    2006
    
    
    (Decrease)
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    (Decrease)Revenue:Cash rents
    
    $
    114,320
    
    
    $
    113,337
    
    
    $
    983
    
    
    $
    12,474
    
    
    $
    3,046
    
    
    $
    4,141
    
    
    $
    5,546
    
    
    $
    (1,152
    )
    
    $
    266
    
    
    $
    129,783
    
    
    $
    122,195
    
    
    $
    7,588Straight-line rents
    
    
    3,342
    
    
    
    4,416
    
    
    
    (1,074
    )
    
    
    2,038
    
    
    
    2,307
    
    
    
    742
    
    
    
    368
    
    
    
    
    
    
    
    
    
    
    
    6,122
    
    
    
    7,091
    
    
    
    (969
    )Rents  FAS 141
    
    
    2,414
    
    
    
    1,612
    
    
    
    802
    
    
    
    402
    
    
    
    
    
    
    
    (124
    )
    
    
    (431
    )
    
    
    
    
    
    
    
    
    
    
    2,692
    
    
    
    1,181
    
    
    
    1,511Total rents
    
    
    120,076
    
    
    
    119,365
    
    
    
    711
    
    
    
    14,914
    
    
    
    5,353
    
    
    
    4,759
    
    
    
    5,483
    
    
    
    (1,152
    )
    
    
    266
    
    
    
    138,597
    
    
    
    130,467
    
    
    
    8,130Tenant reimbursements
    
    
    19,482
    
    
    
    14,337
    
    
    
    5,145
    
    
    
    762
    
    
    
    220
    
    
    
    637
    
    
    
    704
    
    
    
    135
    
    
    
    235
    
    
    
    21,016
    
    
    
    15,496
    
    
    
    5,520Termination fess
    
    
    464
    
    
    
    1,276
    
    
    
    (812
    )
    
    
    35
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    499
    
    
    
    1,276
    
    
    
    (777
    )Other, excluding termination fees
    
    
    661
    
    
    
    681
    
    
    
    (20
    )
    
    
    44
    
    
    
    1
    
    
    
    4
    
    
    
    17
    
    
    
    3,483
    
    
    
    2,491
    
    
    
    4,192
    
    
    
    3,190
    
    
    
    1,002Total revenue
    
    
    140,683
    
    
    
    135,659
    
    
    
    5,024
    
    
    
    15,755
    
    
    
    5,574
    
    
    
    5,400
    
    
    
    6,204
    
    
    
    2,466
    
    
    
    2,992
    
    
    
    164,304
    
    
    
    150,429
    
    
    
    13,875Property operating expenses
    
    
    41,934
    
    
    
    39,875
    
    
    
    2,059
    
    
    
    4,422
    
    
    
    1,984
    
    
    
    2,210
    
    
    
    2,369
    
    
    
    (2,601
    )
    
    
    (2,724
    )
    
    
    45,965
    
    
    
    41,504
    
    
    
    4,461Real estate taxes
    
    
    14,393
    
    
    
    13,099
    
    
    
    1,294
    
    
    
    914
    
    
    
    253
    
    
    
    1,067
    
    
    
    994
    
    
    
    61
    
    
    
    42
    
    
    
    16,435
    
    
    
    14,388
    
    
    
    2,047Subtotal
    
    
    84,356
    
    
    
    82,685
    
    
    
    1,671
    
    
    
    10,419
    
    
    
    3,337
    
    
    
    2,123
    
    
    
    2,841
    
    
    
    5,006
    
    
    
    5,674
    
    
    
    101,904
    
    
    
    94,537
    
    
    
    7,367Administrative expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,993
    
    
    
    7,724
    
    
    
    6,993
    
    
    
    7,724
    
    
    
    (731
    )Depreciation and amortization
    
    
    48,298
    
    
    
    48,060
    
    
    
    238
    
    
    
    6,752
    
    
    
    45
    
    
    
    2,422
    
    
    
    15,379
    
    
    
    755
    
    
    
    661
    
    
    
    58,227
    
    
    
    64,145
    
    
    
    (5,918
    )Operating Income (loss)
    
    $
    36,058
    
    
    $
    34,625
    
    
    $
    1,433
    
    
    $
    3,667
    
    
    $
    3,292
    
    
    $
    (299
    )
    
    $
    (12,538
    )
    
    $
    (2,742
    )
    
    $
    (2,711
    )
    
    $
    36,684
    
    
    $
    22,668
    
    
    $
    14,016Number of properties
    
    
    256
    
    
    
    256
    
    
    
    
    
    
    
    9
    
    
    
    
    
    
    
    16
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    281Square feet
    
    
    24,001
    
    
    
    24,001
    
    
    
    
    
    
    
    2,033
    
    
    
    
    
    
    
    2,433
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,467Occupancy %
    
    
    93.6
    %
    
    
    93.0
    %
    
    
    
    
    
    
    96.4
    %
    
    
    
    
    
    
    29.7
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    88.4
    %Other Income (Expense):Interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,603
    
    
    
    2,573
    
    
    
    (970
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (40,803
    )
    
    
    (41,596
    )
    
    
    793Interest expense  Deferred financing costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,065
    )
    
    
    (794
    )
    
    
    (271
    )Equity in income of real estate ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,504
    
    
    
    463
    
    
    
    4,041Net gain on sales of interests in real estate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,608
    
    
    
    (2,608
    )Income (loss) before minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    923
    
    
    
    (14,078
    )
    
    
    15,001Minority interest  partners share of consolidated real estate ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    (17
    )
    
    
    25Minority interest attributable to continuing operations  LP units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46
    
    
    
    707
    
    
    
    (661
    )Income (loss) from continuing operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    977
    
    
    
    (13,388
    )
    
    
    14,365Income (loss) from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    227
    
    
    
    1,832
    
    
    
    (1,605
    )Net Income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    1,204
    
    
    $
    (11,556
    )
    
    $
    12,760Earnings (loss) per common share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (0.01
    )
    
    $
    (0.15
    )
    
    $
    0.14
 
  
 69




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##### Table of Contents



Revenue
  1)
    
    An additional $1.0 million at the Same Store Portfolio from increased occupancy
and a decrease in free rent periods as noted by the corresponding decrease of $1.1
million in straight-line rents for the Same Store Portfolio.2)
    
    An additional $9.4 million from four properties that we acquired after June 30,
2006 and four development properties (including additional occupancy at Cira Centre)
that we completed and placed in service subsequent to June 30, 2006.3)
    
    These increases were offset by the decrease in cash rents at our
development/redevelopment properties primarily as a result of one building, which is
now included in redevelopment, that was occupied during the three-months ended June 30,
2006 and had no occupancy during the three-months ended June 30, 2007. We acquired
this building in New Jersey with the intent to begin redevelopment after the single
tenant vacated in the third quarter of 2006.
   Property Operating Expenses
  1)
    
    An increase of $3.4 million at the Same Store Portfolio, primarily due to increased
occupancy and real estate tax reassessments. Increased occupancy at our properties causes
an increase in the amount of expense incurred for utilities, security, and janitorial
services.2)
    
    The incurrence of $3.1 million of property operating expenses for the four properties
that we acquired and the four properties that we placed in service after the second quarter
of 2006.
 Depreciation and Amortization Expense
  1)
    
    The incurrence of $2.9 million of depreciation and amortization expense on account of
the four properties acquired after the second quarter of 2006.2)
    
    The incurrence of $2.7 million of depreciation and amortization expense during the
three-months ended June 30, 2007 on account of Cira Centre, which we placed in service in
the fourth quarter of 2006.3)
    
    The increases were offset by $11.9 million of accelerated depreciation expense for one
of our properties (50 E. Swedesford Road) which was demolished as part of an office park
development in suburban Philadelphia during the three-months ended June 30, 2006.
 Administrative Expenses
  70




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##### Table of Contents



Interest Income/ Expense
  Equity in income of Real Estate Ventures
  Minority Interest-partners share of consolidated Real Estate Ventures
   Minority Interest attributable to continuing operations  LP units
  Discontinued Operations
   Net Income
  Earnings (Loss) Per Share
  71




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##### Table of Contents



72




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##### Table of Contents



Comparison of the Six-Month Periods Ended June 30, 2007 and 2006
   73




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##### Table of Contents



Acquired/Completed
    
    
    Development/Redevelopment
    
    
    Administrative/Same Store Property Portfolio
    
    
    Properties
    
    
    Properties
    
    
    Eliminations (a)
    
    
    Total PortfolioIncrease/
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Increase/(dollars in thousands)
    
    2007
    
    
    2006
    
    
    (Decrease)
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    (Decrease)Revenue:Cash rents
    
    $
    227,672
    
    
    $
    221,267
    
    
    $
    6,405
    
    
    $
    22,446
    
    
    $
    4,976
    
    
    $
    8,553
    
    
    $
    10,652
    
    
    $
    (2,032
    )
    
    $
    369
    
    
    $
    256,639
    
    
    $
    237,264
    
    
    $
    19,375Straight-line rents
    
    
    6,713
    
    
    
    9,267
    
    
    
    (2,554
    )
    
    
    4,976
    
    
    
    3,185
    
    
    
    2,675
    
    
    
    699
    
    
    
    
    
    
    
    
    
    
    
    14,364
    
    
    
    13,151
    
    
    
    1,213Rents  FAS 141
    
    
    4,671
    
    
    
    3,677
    
    
    
    994
    
    
    
    1,114
    
    
    
    
    
    
    
    (251
    )
    
    
    (556
    )
    
    
    
    
    
    
    
    
    
    
    5,534
    
    
    
    3,121
    
    
    
    2,413Total rents
    
    
    239,056
    
    
    
    234,211
    
    
    
    4,845
    
    
    
    28,536
    
    
    
    8,161
    
    
    
    10,977
    
    
    
    10,795
    
    
    
    (2,032
    )
    
    
    369
    
    
    
    276,537
    
    
    
    253,536
    
    
    
    23,001Tenant reimbursements
    
    
    38,828
    
    
    
    30,076
    
    
    
    8,752
    
    
    
    1,553
    
    
    
    296
    
    
    
    1,214
    
    
    
    1,401
    
    
    
    244
    
    
    
    357
    
    
    
    41,839
    
    
    
    32,130
    
    
    
    9,709Termination fess
    
    
    1,021
    
    
    
    1,866
    
    
    
    (845
    )
    
    
    659
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    148
    
    
    
    
    
    
    
    1,828
    
    
    
    1,866
    
    
    
    (38
    )Other, excluding termination fees
    
    
    1,324
    
    
    
    1,465
    
    
    
    (141
    )
    
    
    93
    
    
    
    11
    
    
    
    10
    
    
    
    34
    
    
    
    5,774
    
    
    
    5,305
    
    
    
    7,201
    
    
    
    6,815
    
    
    
    386Total revenue
    
    
    280,229
    
    
    
    267,618
    
    
    
    12,611
    
    
    
    30,841
    
    
    
    8,468
    
    
    
    12,201
    
    
    
    12,230
    
    
    
    4,134
    
    
    
    6,031
    
    
    
    327,405
    
    
    
    294,347
    
    
    
    33,058Property operating expenses
    
    
    84,366
    
    
    
    79,700
    
    
    
    4,666
    
    
    
    8,594
    
    
    
    3,415
    
    
    
    4,581
    
    
    
    4,866
    
    
    
    (6,371
    )
    
    
    (5,503
    )
    
    
    91,170
    
    
    
    82,478
    
    
    
    8,692Real estate taxes
    
    
    28,400
    
    
    
    26,031
    
    
    
    2,369
    
    
    
    1,534
    
    
    
    464
    
    
    
    2,213
    
    
    
    1,990
    
    
    
    315
    
    
    
    110
    
    
    
    32,462
    
    
    
    28,595
    
    
    
    3,867Subtotal
    
    
    167,463
    
    
    
    161,887
    
    
    
    5,576
    
    
    
    20,713
    
    
    
    4,589
    
    
    
    5,407
    
    
    
    5,374
    
    
    
    10,190
    
    
    
    11,424
    
    
    
    203,773
    
    
    
    183,274
    
    
    
    20,499Administrative expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,262
    
    
    
    16,214
    
    
    
    14,262
    
    
    
    16,214
    
    
    
    (1,952
    )Depreciation and amortization
    
    
    96,336
    
    
    
    96,623
    
    
    
    (287
    )
    
    
    12,752
    
    
    
    88
    
    
    
    9,649
    
    
    
    17,534
    
    
    
    1,537
    
    
    
    1,112
    
    
    
    120,274
    
    
    
    115,357
    
    
    
    4,917Operating Income (loss)
    
    $
    71,127
    
    
    $
    65,264
    
    
    $
    5,863
    
    
    $
    7,961
    
    
    $
    4,501
    
    
    $
    (4,242
    )
    
    $
    (12,160
    )
    
    $
    (5,609
    )
    
    $
    (5,902
    )
    
    $
    69,237
    
    
    $
    51,703
    
    
    $
    17,534Number of properties
    
    
    256
    
    
    
    256
    
    
    
    
    
    
    
    9
    
    
    
    
    
    
    
    16
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    281Square feet
    
    
    24,001
    
    
    
    24,001
    
    
    
    
    
    
    
    2,033
    
    
    
    
    
    
    
    2,433
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,467Occupancy %
    
    
    93.6
    %
    
    
    93.0
    %
    
    
    
    
    
    
    96.4
    %
    
    
    
    
    
    
    29.7
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    88.4
    %Other Income (Expense):Interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,390
    
    
    
    5,223
    
    
    
    (2,833
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (81,161
    )
    
    
    (81,974
    )
    
    
    813Interest expense  Deferred financing costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,323
    )
    
    
    (1,273
    )
    
    
    (1,050
    )Equity in income of real estate ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,258
    
    
    
    1,428
    
    
    
    3,830Net gain on sales of interests in real estate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,608
    
    
    
    (2,608
    )Loss before minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,599
    )
    
    
    (22,285
    )
    
    
    15,686Minority interest  partners share of consolidated real estate ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (108
    )
    
    
    281
    
    
    
    (389
    )Minority interest attributable to continuing operations  LP units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    457
    
    
    
    1,142
    
    
    
    (685
    )Loss from continuing operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,250
    )
    
    
    (20,862
    )
    
    
    14,612Loss from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,826
    
    
    
    6,664
    
    
    
    20,162Net Income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    20,576
    
    
    $
    (14,198
    )
    
    $
    34,774Earnings per common share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    0.19
    
    
    $
    (0.20
    )
    
    $
    0.39
 
   74




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##### Table of Contents



Revenue
  1)
    
    An additional $6.4 million at the Same Store Portfolio from increased occupancy
and increased rents received on lease renewals.2)
    
    An additional $17.5 million from four properties that we acquired after June
30, 2006 and four development properties (including additional occupancy at Cira
Centre) that we completed and placed in service after June 30, 2006.3)
    
    These increases were offset by the decrease in cash rents at our
development/redevelopment properties primarily as a result of one building, which is
now included in redevelopment, that was occupied during the six-months ended June 30,
2006 and had no occupancy during the six-months ended June 30, 2007. We acquired this
building in New Jersey with the intent to begin redevelopment after the single tenant
vacated in the third quarter of 2006.
    Property Operating Expenses
  1)
    
    An increase of $7.0 million at the Same Store Portfolio, primarily due to increased
occupancy and real estate tax reassessments. Increased occupancy at our properties causes
an increase in the amount of expense incurred for utilities, security, and janitorial
services.2)
    
    The incurrence of $6.2 million of property operating expenses for the four properties
that we acquired after June 30, 2006.
 Depreciation and Amortization Expense
  1)
    
    The incurrence of $12.2 million of depreciation and amortization expense on account of
the four properties that we acquired after the second quarter of 2006 and four development
properties (including Cira Centre) that we completed and placed in service subsequent to
June 30, 2006.2)
    
    The incurrence of $2.8 million of accelerated amortization related to customer
relationship and in-place lease intangible assets for one of our properties that is
currently included in Development Properties. The value ascribed to these intangibles
considered renewal periods and when the renewals did not occur, we expensed the unamortized
value of the intangibles and the property was placed into development for future tenants.3)
    
    The incurrence of $2.0 million of accelerated depreciation associated with tenant
move-outs, primarily one tenant that was in a Development Property. There was no
termination fee received in connection with this move-out as a result of the tenants
bankruptcy.
 75




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4)
    
    The increases were offset by $11.9 million of accelerated depreciation expense for one
of our properties (50 E. Swedesford Road) which was demolished as part of an office park
development in suburban Philadelphia during the six-months ended June 30, 2006.
 Administrative Expenses
  Interest Income/ Expense
   Equity in income of Real Estate Ventures
  Minority Interest-partners share of consolidated Real Estate Ventures
   Minority Interest attributable to continuing operations  LP units
  Discontinued Operations
   76




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Net Income
  Earnings Per Share
  77




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General
  
    
    fund normal recurring expenses,
    
    fund capital expenditures, including capital and tenant improvements and leasing costs,
    
    fund development and redevelopment costs,
    
    fund new property acquisitions, and
    
    fund distributions declared by our Board of Trustees, including the minimum distribution
required to maintain our REIT qualification under the Internal Revenue Code.
      Cash Flows
  78




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Activity
    
    2007
    
    
    2006Operating
    
    $
    99,953
    
    
    $
    124,774Investing
    
    
    15,301
    
    
    
    (955,216
    )Financing
    
    
    (112,111
    )
    
    
    849,645Net cash flows
    
    $
    3,143
    
    
    $
    19,203
    Capitalization
 Indebtedness
    79




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##### Table of Contents



June 30,
    
    
    December 31,2007
    
    
    2006(dollars in thousands)Balance:Fixed rate
    
    $
    2,877,939
    
    
    $
    2,707,176Variable rate
    
    
    288,611
    
    
    
    439,162Total
    
    $
    3,166,550
    
    
    $
    3,146,338Percent of Total Debt:Fixed rate
    
    
    91
    %
    
    
    86
    %Variable rate
    
    
    9
    %
    
    
    14
    %Total
    
    
    100
    %
    
    
    100
    %Weighted-average interest rate at period end:Fixed rate
    
    
    5.63
    %
    
    
    5.58
    %Variable rate
    
    
    5.98
    %
    
    
    5.97
    %Total
    
    
    5.66
    %
    
    
    5.63
    %
    80




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Equity
    Shelf Registration Statement
  Short- and Long-Term Liquidity
   81




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##### Table of Contents



Inflation
   Commitments and Contingencies
  Payments by Period (in thousands)Less than
    
    
    
    
    
    
    
    
    
    
    More thanTotal
    
    
    1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    5 YearsMortgage notes payable (a)
    
    $
    744,940
    
    
    $
    143,237
    
    
    $
    102,103
    
    
    $
    282,450
    
    
    $
    217,150Revolving credit facility
    
    
    210,000
    
    
    
    
    
    
    
    
    
    
    
    210,000
    
    
    
    Unsecured debt (a)
    
    
    2,211,610
    
    
    
    
    
    
    
    388,000
    
    
    
    645,000
    
    
    
    1,178,610Ground leases (b)
    
    
    278,038
    
    
    
    868
    
    
    
    3,554
    
    
    
    3,637
    
    
    
    269,979Other liabilities
    
    
    1,957
    
    
    
    
    
    
    
    1,269
    
    
    
    
    
    
    
    688$
    3,446,545
    
    
    $
    144,105
    
    
    $
    494,926
    
    
    $
    1,141,087
    
    
    $
    1,666,427
 
 (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.     82




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##### Table of Contents



Interest Rate Risk and Sensitivity Analysis
     
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
   
 Item 4. Controls and Procedures
 (a)
    
    Evaluation of disclosure controls and procedures.Under the supervision and with the
participation of our management, including our principal executive officer and principal
financial officer, we conducted an evaluation of our disclosure controls and procedures, as
such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of
1934, as amended (the Exchange Act) as of the end of the period covered by this quarterly
report, have concluded that the Companys disclosure controls and procedures are effective
to ensure that information required to be disclosed by the Company in the reports that it
files under the Securities Exchange Act of 1934 is recorded, processed, summarized and
reported within the time periods specified in the rules and forms of the Securities and
Exchange Commission and accumulated and communicated to management, including the principal
executive, principal financial officers, as appropriate, to allow timely decisions
regarding disclosure.
 83




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##### Table of Contents



(b)
    
    Changes in internal controls over financial reporting.There was no change in the
Companys internal control over financial reporting that occurred during the period covered
by this quarterly report that has materially affected, or is reasonably likely to
materially affect, the Companys internal control over financial reporting.
 
 Part II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  Total
    
    
    
    
    
    Purchased as
    
    Shares that MayNumber of
    
    Average
    
    Part of Publicly
    
    Yet Be PurchasedShares
    
    Price Paid Per
    
    Announced Plans
    
    Under the PlansPurchased
    
    Share
    
    or Programs
    
    or Programs (a)2007:April
    
    
    265,000
    
    
    $
    33.38
    
    
    
    265,000
    
    
    
    753,800May
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    753,800June
    
    
    1,128
    (b)
    
    
    29.47
    
    
    
    1,128
    
    
    
    753,800Total
    
    
    266,128
    
    
    
    
    
    
    
    266,128
 
 (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.(b)
    
    Represents Common Shares cancelled by the Company upon vesting of restricted Common Shares
previously awarded to Company
employees in satisfaction of tax witholding obligations. 
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  84




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##### Table of Contents



Item 6. Exhibits
 (a) Exhibits
 10.1
    
    Second Amended and Restated Revolving Credit Agreement (incorporated by reference
to Brandywines Current Report on Form 8-K filed on June 29, 2007)10.2
    
    Amended and Restated 1997 Long-Term Incentive Plan (incorporated by reference to
Brandywines Quarterly Report on Form 10-Q for the quarter ended March 31, 2007)**10.3
    
    2007 Non-Qualified Employee Share Purchase Plan (incorporated by reference to
Brandywines Quarterly Report on Form 10-Q for the quarter ended March 31, 2007)**10.4
    
    Amended and Restated Employment Agreement for President and Chief Executive
Officer (incorporated by reference to Brandywines Current Report on Form 8-K filed on
February 14, 2007)**10.5
    
    Form of 2007 Restricted Share Award to Non-Employee Trustees (incorporated by
reference to Brandywines Quarterly Report on Form 10-Q for the quarter ended March 31,
2007)**12.1
    
    Statement re Computation of Ratios of Brandywine Realty Trust12.2
    
    Statement re Computation of Ratios of Brandywine Operating Partnership, L.P.31.1
    
    Certification of the Chief Executive Officer of Brandywine Realty Trust pursuant
to 13a-14 under the Securities Exchange Act of 193431.2
    
    Certification of the Chief Financial Officer of Brandywine Realty Trust pursuant
to 13a-14 under the Securities Exchange Act of 193431.3
    
    Certification of the Chief Executive Officer of Brandywine Realty Trust, in its
capacity as the general partner of Brandywine Operating Partnership, L.P., pursuant to
13a-14 under the Securities Exchange Act of 193431.4
    
    Certification of the Chief Financial Officer of Brandywine Realty Trust, in its
capacity as the general partner of Brandywine Operating Partnership, L.P., pursuant to
13a-14 under the Securities Exchange Act of 193432.1
    
    Certification of the Chief Executive Officer of Brandywine Realty Trust pursuant
to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 200232.2
    
    Certification of the Chief Financial Officer of Brandywine Realty Trust pursuant
to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 200232.3
    
    Certification of the Chief Executive Officer of Brandywine Realty Trust, in its
capacity as the general partner of Brandywine Operating Partnership, L.P., pursuant to
18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
200232.4
    
    Certification of the Chief Financial Officer of Brandywine Realty Trust, in its
capacity as the general partner of Brandywine Operating Partnership, L.P., pursuant to
18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
 
 **
    
    Management contract or compensatory plan or arrangement 85




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SIGNATURES OF REGISTRANT
  BRANDYWINE REALTY TRUST(Registrant)Date: August 8, 2007
    
    By:
    
    /s/ Gerard H. SweeneyGerard H. Sweeney, President and Chief Executive Officer(Principal Executive Officer)Date: August 8, 2007
    
    By:
    
    /s/ Howard M. SipznerHoward M. Sipzner, Executive Vice President and Chief Financial Officer(Principal Financial Officer)Date: August 8, 2007
    
    By:
    
    /s/ Darryl M. DunnDarryl M. Dunn, Vice President, Chief Accounting Officer & Treasurer(Principal Accounting Officer)
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##### Table of Contents



SIGNATURES OF REGISTRANT
    Date: August 8, 2007
    
    By:
    
    /s/ Gerard H. SweeneyGerard H. Sweeney, President and Chief Executive Officer(Principal Executive Officer)Date: August 8, 2007
    
    By:
    
    /s/ Howard M. SipznerHoward M. Sipzner, Executive Vice President and Chief Financial Officer(Principal Financial Officer)Date: August 8, 2007
    
    By:
    
    /s/ Darryl M. DunnDarryl M. Dunn, Vice President, Chief Accounting Officer & Treasurer(Principal Accounting Officer)
 87