##### 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, 2008
 or
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
 For the transition period from  to
 Commission file number
    
    001-9106 (Brandywine Realty Trust)000-24407 (Brandywine Operating Partnership, L.P.)
 
 Brandywine Realty Trust
Brandywine Operating Partnership, L.P.
  MARYLAND(Brandywine Realty Trust)DELAWARE(Brandywine Operating Partnership L.P.)
    
    23-2413352
23-2862640(State or other jurisdiction of 
Incorporation 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 o Smaller reporting company oBrandywine Operating Partnership, L.P.:
    
    Large accelerated filer þ Accelerated filer o Non-accelerated filer o Smaller reporting company o
  Brandywine Realty Trust
    
    Yes o No þBrandywine Operating Partnership, L.P.
    
    Yes o No þ




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##### 



TABLE OF CONTENTS
 PageBrandywine Realty TrustPART I  FINANCIAL INFORMATIONItem 1.
    
    Financial Statements (unaudited)Consolidated Balance Sheets as of June 30, 2008 and December 31, 2007
    
    
    3Consolidated Statements of Operations for the three- and six-month periods ended June 30, 2008 and 2007
    
    
    4Consolidated Statements of Other Comprehensive Income for the three- and six-month periods ended June 30, 2008 and 2007
    
    
    5Consolidated Statements of Cash Flows for the six-month periods ended June 30, 2008 and 2007
    
    
    6Notes to Unaudited Consolidated Financial Statements
    
    
    7Brandywine Operating Partnership, L.P.Item 1.
    
    Financial Statements (unaudited)Consolidated Balance Sheets as of June 30, 2008 and December 31, 2007
    
    
    33Consolidated Statements of Operations for the three- and six-month periods ended June 30, 2008 and 2007
    
    
    34Consolidated Statements of Other Comprehensive Income for the three- and six-month periods ended June 30, 2008 and 2007
    
    
    35Consolidated Statements of Cash Flows for the six-month periods ended June 30, 2008 and 2007
    
    
    36Notes to Unaudited Consolidated Financial Statements
    
    
    37Item 2.
    
    Management's Discussion and Analysis of Financial Condition and Results of Operations
    
    
    63Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    80Item 4.
    
    Controls and Procedures
    
    
    80PART II  OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    81Item 1A.
    
    Risk Factors
    
    
    81Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    81Item 3.
    
    Defaults Upon Senior Securities
    
    
    81Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    81Item 5.
    
    Other Information
    
    
    82Item 6.
    
    Exhibits
    
    
    82Signatures
    
    
    84Statement re Computation of Ratios of Brandywine Realty TrustStatement re Computation of Ratios of Brandywine Operating Partnership, L.P.Certification of the Chief Executive Officer of Brandywine Realty Trust pursuant to 13a 14 under the Securities Exchange Act of 1934Certification of the Chief Financial Officer of Brandywine Realty Trust pursuant to 13a-14 under the Securities Exchange Act of 1934Certification of the Chief Executive Officer of Brandywine Realty Trust, in its capacity as the general partner of Brandywine Operating Partnership, L.P.Certification of the Chief Financial Officer of Brandywine Realty Trust, in its capacity as the general partner of Brandywine Operating Partnership, L.P.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 2002Certification 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 2002Certification of the Chief Executive Officer of Brandywine Realty Trust, in its capacity as the general partner of Brandywine Operating Partnership, L.P.Certification of the Chief Financial Officer of Brandywine Realty Trust, in its capacity as the general partner of Brandywine Operating Partnership, L.P.
  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 31,2008
    
    
    2007ASSETSReal estate investments:Rental properties
    
    $
    4,478,032
    
    
    $
    4,813,563Accumulated depreciation
    
    
    (595,209
    )
    
    
    (558,908
    )Operating real estate investments, net
    
    
    3,882,823
    
    
    
    4,254,655Development land and construction-in-progress
    
    
    363,936
    
    
    
    402,270Total real estate invesmtents, net
    
    
    4,246,759
    
    
    
    4,656,925Cash and cash equivalents
    
    
    4,791
    
    
    
    5,600Accounts receivable, net
    
    
    11,888
    
    
    
    17,057Accrued rent receivable, net
    
    
    86,783
    
    
    
    83,098Asset held for sale, net
    
    
    417,127
    
    
    
    Investment in real estate ventures, at equity
    
    
    71,078
    
    
    
    71,598Deferred costs, net
    
    
    85,665
    
    
    
    87,123Intangible assets, net
    
    
    167,115
    
    
    
    218,149Other assets
    
    
    59,712
    
    
    
    74,549Total assets
    
    $
    5,150,918
    
    
    $
    5,214,099LIABILITIES AND BENEFICIARIES EQUITYMortgage notes payable
    
    $
    493,505
    
    
    $
    611,898Unsecured term loan
    
    
    183,000
    
    
    
    150,000Borrowing under credit facilities
    
    
    163,000
    
    
    
    130,727Unsecured senior notes, net of discounts
    
    
    2,177,118
    
    
    
    2,208,344Accounts payable and accrued expenses
    
    
    67,946
    
    
    
    80,164Distributions payable
    
    
    42,419
    
    
    
    42,368Tenant security deposits and deferred rents
    
    
    58,469
    
    
    
    65,241Acquired below market leases, net
    
    
    53,662
    
    
    
    67,281Other liabilities
    
    
    27,040
    
    
    
    30,154Mortgage notes payable and other liabilities held for sale
    
    
    113,897
    
    
    
    Total liabilities
    
    
    3,380,056
    
    
    
    3,386,177Minority interest
    
    
    66,940
    
    
    
    83,990Commitments and contingencies (Note 14)Beneficiaries equity:Preferred Shares (shares authorized-20,000,000):7.50% Series C Preferred Shares, $0.01 par value; issued and outstanding-
2,000,000 in 2008 and 2007
    
    
    20
    
    
    
    207.375% Series D Preferred Shares, $0.01 par value; issued and outstanding-
2,300,000 in 2008 and 2007
    
    
    23
    
    
    
    23Common Shares of beneficial interest, $0.01 par value; shares authorized
200,000,000; 88,612,439 and 88,623,635 issued in 2008 and 2007, respectively
and 87,697,983 and 87,015,600 outstanding in 2008 and 2007, respectively
    
    
    877
    
    
    
    870Additional paid-in capital
    
    
    2,320,305
    
    
    
    2,320,857Common shares in treasury, at cost, 914,456 and 1,599,637 in 2008 and 2007,
respectively
    
    
    (29,970
    )
    
    
    (53,449
    )Cumulative earnings
    
    
    494,704
    
    
    
    477,150Accumulated other comprehensive loss
    
    
    (1,151
    )
    
    
    (1,885
    )Cumulative distributions
    
    
    (1,080,886
    )
    
    
    (999,654
    )Total beneficiaries equity
    
    
    1,703,922
    
    
    
    1,743,932Total liabilities, minority interest and beneficiaries equity
    
    $
    5,150,918
    
    
    $
    5,214,099
  3




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BRANDYWINE REALTY TRUST
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (unaudited, in thousands, except share and per share information)
 For the three-month periods ended
    
    
    For the six-month periods endedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenue:Rents
    
    $
    126,051
    
    
    $
    125,660
    
    
    $
    251,656
    
    
    $
    251,315Tenant reimbursements
    
    
    20,859
    
    
    
    19,419
    
    
    
    39,966
    
    
    
    38,744Termination fees
    
    
    892
    
    
    
    498
    
    
    
    4,124
    
    
    
    1,764Third Party management fees, labor reimbursement and leasing
    
    
    5,170
    
    
    
    5,369
    
    
    
    10,849
    
    
    
    9,704Other
    
    
    815
    
    
    
    1,274
    
    
    
    1,599
    
    
    
    2,439Total revenue
    
    
    153,787
    
    
    
    152,220
    
    
    
    308,194
    
    
    
    303,966Operating Expenses:Property operating expenses
    
    
    41,282
    
    
    
    41,280
    
    
    
    82,904
    
    
    
    82,299Real estate taxes
    
    
    15,581
    
    
    
    15,214
    
    
    
    31,328
    
    
    
    29,956Third party management expenses
    
    
    2,381
    
    
    
    2,496
    
    
    
    4,627
    
    
    
    4,991Depreciation and amortization
    
    
    52,472
    
    
    
    53,542
    
    
    
    104,324
    
    
    
    111,340General & administrative expenses
    
    
    6,127
    
    
    
    7,007
    
    
    
    11,039
    
    
    
    14,417Total operating expenses
    
    
    117,843
    
    
    
    119,539
    
    
    
    234,222
    
    
    
    243,003Operating income
    
    
    35,944
    
    
    
    32,681
    
    
    
    73,972
    
    
    
    60,963Other Income (Expense):Interest income
    
    
    179
    
    
    
    1,597
    
    
    
    382
    
    
    
    2,378Interest expense
    
    
    (35,709
    )
    
    
    (39,423
    )
    
    
    (71,807
    )
    
    
    (78,396
    )Deferred financing costs
    
    
    (1,198
    )
    
    
    (1,065
    )
    
    
    (2,706
    )
    
    
    (2,323
    )Equity in income of real estate ventures
    
    
    1,664
    
    
    
    4,504
    
    
    
    2,779
    
    
    
    5,258Net gain (loss) on dispostion of undepreciated real estate
    
    
    
    
    
    
    
    
    
    
    (24
    )
    
    
    Gain on early extinguishment of debt
    
    
    986
    
    
    
    
    
    
    
    4,342
    
    
    
    Income (loss) before minority interest
    
    
    1,866
    
    
    
    (1,706
    )
    
    
    6,938
    
    
    
    (12,120
    )Minority interest  partners share of consolidated real estate ventures
    
    
    (38
    )
    
    
    8
    
    
    
    (78
    )
    
    
    (108
    )Minority interest attributable to continuing operations  LP units
    
    
    16
    
    
    
    158
    
    
    
    (103
    )
    
    
    681Income (loss) from continuing operations
    
    
    1,844
    
    
    
    (1,540
    )
    
    
    6,757
    
    
    
    (11,547
    )Discontinued operations:Income from discontinued operations
    
    
    1,253
    
    
    
    3,708
    
    
    
    3,535
    
    
    
    8,235Net gain (loss) on disposition of discontinued operations
    
    
    13,420
    
    
    
    (856
    )
    
    
    21,401
    
    
    
    25,153Provision for impairment
    
    
    (6,850
    )
    
    
    
    
    
    
    (6,850
    )
    
    
    Minority interest attributable to discontinued operations  LP
units
    
    
    (299
    )
    
    
    (123
    )
    
    
    (731
    )
    
    
    (1,427
    )Total discontinued operations
    
    
    7,524
    
    
    
    2,729
    
    
    
    17,355
    
    
    
    31,961Net income
    
    
    9,368
    
    
    
    1,189
    
    
    
    24,112
    
    
    
    20,414Income allocated to Preferred Shares
    
    
    (1,998
    )
    
    
    (1,998
    )
    
    
    (3,996
    )
    
    
    (3,996
    )Income (loss) allocated to Common Shares
    
    $
    7,370
    
    
    $
    (809
    )
    
    $
    20,116
    
    
    $
    16,418Basic earnings (loss) per Common Share:Continuing operations
    
    $
    (0.00
    )
    
    $
    (0.04
    )
    
    $
    0.03
    
    
    $
    (0.18
    )Discontinued operations
    
    
    0.09
    
    
    
    0.03
    
    
    
    0.20
    
    
    
    0.36$
    0.08
    
    
    $
    (0.01
    )
    
    $
    0.23
    
    
    $
    0.19Diluted earnings (loss) per Common Share:Continuing operations
    
    $
    (0.00
    )
    
    $
    (0.04
    )
    
    $
    0.03
    
    
    $
    (0.18
    )Discontinued operations
    
    
    0.09
    
    
    
    0.03
    
    
    
    0.20
    
    
    
    0.36$
    0.08
    
    
    $
    (0.01
    )
    
    $
    0.23
    
    
    $
    0.19Dividends declared per Common Share
    
    $
    0.44
    
    
    $
    0.44
    
    
    $
    0.88
    
    
    $
    0.88Basic weighted average shares outstanding
    
    
    87,280,576
    
    
    
    87,080,785
    
    
    
    87,092,271
    
    
    
    87,680,773Diluted weighted average shares outstanding
    
    
    87,512,345
    
    
    
    87,080,785
    
    
    
    87,300,005
    
    
    
    88,298,521
  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 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net income
    
    $
    9,368
    
    
    $
    1,189
    
    
    $
    24,112
    
    
    $
    20,414Other comprehensive income:Unrealized gain (loss) on derivative financial instruments
    
    
    5,358
    
    
    
    (1,872
    )
    
    
    526
    
    
    
    (422
    )Settlement of forward starting swaps
    
    
    
    
    
    
    1,148
    
    
    
    
    
    
    
    1,148Reclassification of realized (gains)/losses on derivative
financial
instruments to operations, net
    
    
    (20
    )
    
    
    (394
    )
    
    
    (40
    )
    
    
    (385
    )Unrealized gain (loss) on available-for-sale securities
    
    
    
    
    
    
    13
    
    
    
    248
    
    
    
    (595
    )Total other comprehensive income (loss)
    
    
    5,338
    
    
    
    (1,105
    )
    
    
    734
    
    
    
    (254
    )Comprehensive income
    
    $
    14,706
    
    
    $
    84
    
    
    $
    24,846
    
    
    $
    20,160
  5




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##### Table of Contents



BRANDYWINE REALTY TRUST
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (unaudited, in thousands)
 Six-month periodsended June 30,2008
    
    
    2007Cash flows from operating activities:Net income (loss)
    
    $
    24,112
    
    
    $
    20,414Adjustments to reconcile net income (loss) to net cash from
operating activities:Depreciation
    
    
    81,948
    
    
    
    90,405Amortization:Deferred financing costs
    
    
    2,706
    
    
    
    2,323Deferred leasing costs
    
    
    8,152
    
    
    
    7,731Acquired above (below) market leases, net
    
    
    (4,673
    )
    
    
    (6,304
    )Acquired lease intangibles
    
    
    22,333
    
    
    
    26,700Deferred compensation costs
    
    
    2,574
    
    
    
    2,552Straight-line rent
    
    
    (11,233
    )
    
    
    (14,775
    )Provision for doubtful accounts
    
    
    2,650
    
    
    
    500Provision for impairment
    
    
    6,850
    
    
    
    Real estate venture income in excess of distributions
    
    
    (569
    )
    
    
    (104
    )Net gain on sale of interests in real estate
    
    
    (21,377
    )
    
    
    (25,153
    )Gain on early extinguishment of debt
    
    
    (4,342
    )
    
    
    Minority interest (expense)/income
    
    
    912
    
    
    
    854Changes in assets and liabilities:Accounts receivable
    
    
    3,324
    
    
    
    3,916Other assets
    
    
    7,168
    
    
    
    1,366Accounts payable and accrued expenses
    
    
    (7,430
    )
    
    
    (6,151
    )Tenant security deposits and deferred rents
    
    
    (2,883
    )
    
    
    5,665Other liabilities
    
    
    (6,395
    )
    
    
    (10,148
    )Net cash from operating activities
    
    
    103,827
    
    
    
    99,791Cash flows from investing activities:Acquisition of minority interest  partners share of consolidated real estate venture
    
    
    
    
    
    
    (64,174
    )Sales of properties, net
    
    
    53,601
    
    
    
    222,592Capital expenditures
    
    
    (89,034
    )
    
    
    (133,264
    )Investment in unconsolidated real estate ventures
    
    
    (469
    )
    
    
    (523
    )Cash distributions from unconsolidated real estate ventures
in excess of equity in income
    
    
    1,558
    
    
    
    2,169Leasing costs
    
    
    (5,468
    )
    
    
    (11,499
    )Net cash (used in) from investing activities
    
    
    (39,812
    )
    
    
    15,301Cash flows from financing activities:Proceeds from Credit Facility borrowings
    
    
    258,000
    
    
    
    620,875Repayments of Credit Facility borrowings
    
    
    (192,727
    )
    
    
    (470,875
    )Repayments of mortgage notes payable
    
    
    (18,650
    )
    
    
    (126,780
    )Proceeds from unsecured notes
    
    
    
    
    
    
    299,644Repayments of unsecured notes
    
    
    (26,924
    )
    
    
    (299,866
    )Proceeds from forward starting swap termination
    
    
    
    
    
    
    1,148Debt financing costs
    
    
    (209
    )
    
    
    (3,776
    )Exercise of stock options
    
    
    
    
    
    
    6,221Repurchases of Common Shares
    
    
    
    
    
    
    (53,524
    )Distributions paid to shareholders
    
    
    (80,935
    )
    
    
    (81,554
    )Distributions to minority interest holders
    
    
    (3,379
    )
    
    
    (3,462
    )Net cash used in financing activities
    
    
    (64,824
    )
    
    
    (111,949
    )Increase (decrease) in cash and cash equivalents
    
    
    (809
    )
    
    
    3,143Cash and cash equivalents at beginning of period
    
    
    5,600
    
    
    
    25,379Cash and cash equivalents at end of period
    
    $
    4,791
    
    
    $
    28,522Supplemental disclosure:Cash paid for interest, net of capitalized interest
    
    $
    109,355
    
    
    $
    92,541Supplemental disclosure of non-cash activity:Cash escrowed with qualified intermediary
    
    
    
    
    
    
    109,102Acquisition of property using cash escrowed with qualified intermediary
    
    
    
    
    
    
    (72,511
    )
  6




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##### Table of Contents



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




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BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
 Share-Based
Payment
 As Reported
    
    Adjustment
    
    As RevisedAccounts
payable and accrued expenses
    
    
    80,732
    
    
    
    (568
    )
    
    
    80,164Minority interest
    
    
    84,119
    
    
    
    (129
    )
    
    
    83,990Additional paid-in capital
    
    
    2,319,410
    
    
    
    1,447
    
    
    
    2,320,857Cumulative earnings
    
    
    480,217
    
    
    
    (3,067
    )
    
    
    477,150Cumulative distributions
    
    
    (1,001,971
    )
    
    
    2,317
    
    
    
    (999,654
    )Total beneficiaries equity
    
    
    1,743,235
    
    
    
    697
    
    
    
    1,743,932
      Use of Estimates
  8




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
 Operating Properties
  Purchase Price Allocation
  Accounting for Conditional Asset Retirement Obligations
   Revenue Recognition
  9




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
  Stock-Based Compensation Plans
   Accounting for Derivative Instruments and Hedging Activities
  Accounting for Derivative Instruments and Hedging Activities Accounting for Certain Derivative Instruments and Hedging Activities
- An Amendment of SFAS 133 Fair Value
Measurements
 10




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
 Income Taxes
    Accounting Pronouncements Adopted January 1, 2008
 Fair Value Measurements Application
of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address
Fair Value Measurements for Purposes of Lease Classification or Measurement under Statement 13 Effective Date of FASB Statement No. 157 Accounting
for Leases
  11




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
    Fair Value Measurements at ReportingDate Using:Quoted Prices inActive Markets for
    
    
    Significant Other
    
    
    UnobservableJune 30,
    
    
    Identical Assets
    
    
    Observable Inputs
    
    
    InputsDescription
    
    2008
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Assets:Available-for-Sale Securities
    
    $
    846
    
    
    $
    846
    
    
    $
    
    
    
    
    Liabilities:Interest Rate Swaps
    
    $
    3,548
    
    
    
    
    
    
    $
    3,548
    
    
    
    Forward Starting Interest Rate Swaps
    
    
    (995
    )
    
    
    
    
    
    
    (995
    )
    
    
    $
    2,553
    
    
    $
    
    
    
    $
    2,553
    
    
    $
    
  
    
    Non-financial assets and liabilities initially measured at fair value in an acquisition
or business combination that are not remeasured at least annually at fair value
    
    Long-lived assets measured at fair value due to an impairment under Statement of
Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets
    
    Asset retirement obligations initially measured at fair value under Statement of
Financial Accounting Standards No. 143, Accounting for Asset Retirement Obligations
 The Fair Value Option for Financial Assets and Financial Liabilities
 12




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
  New Pronouncements
 Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating Securities
 Accounting for Convertible Debt
Instruments That May Be Settled Upon Conversion (Including Partial Cash Settlement)
 Determination of the Useful Life of
Intangible Assets
 Disclosures
about Derivative Instruments and Hedging Activities Accounting for Derivative Instruments and Hedging Activities
 Business Combinations
 Noncontrolling Interests in Consolidated
Financial Statements  an Amendment of ARB No. 51
 13




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
  REAL ESTATE INVESTMENTS
  June 30, 2008
    
    
    December 31, 2007Land
    
    $
    682,980
    
    
    $
    727,979Building and improvements
    
    
    3,383,725
    
    
    
    3,672,638Tenant improvements
    
    
    411,327
    
    
    
    412,9464,478,032
    
    
    
    4,813,563
 Acquisitions and Dispositions
  2008
      2007
 DRA Venture
  14




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
  Applying the Conditions in Paragraph 42 of FASB
Statement No. 144 in Determining Whether to Report Discontinued Operations
 Other 2007 Acquisitions and Dispositions
          15




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
     INVESTMENT IN UNCONSOLIDATED VENTURES
     16




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
 June 30,
    
    December 31,2008
    
    2007Operating property, net of accumulated depreciation
    
    $
    599,457
    
    
    $
    587,537Other assets
    
    
    111,847
    
    
    
    113,268Liabilities
    
    
    41,618
    
    
    
    41,459Debt
    
    
    544,376
    
    
    
    538,766Equity
    
    
    125,355
    
    
    
    120,581Companys share of equity (Companys basis)
    
    
    71,078
    
    
    
    71,598
  Three-month periods
    
    Six-month periodsended June 30,
    
    ended June 30,2008
    
    2007
    
    2008
    
    2007Revenue
    
    $
    25,863
    
    
    $
    18,986
    
    
    $
    52,896
    
    
    $
    37,300Operating expenses
    
    
    8,875
    
    
    
    6,643
    
    
    
    17,797
    
    
    
    12,940Interest expense, net
    
    
    7,956
    
    
    
    5,410
    
    
    
    15,753
    
    
    
    10,648Depreciation and amortization
    
    
    9,472
    
    
    
    3,776
    
    
    
    18,624
    
    
    
    8,004Net (loss) income
    
    
    (440
    )
    
    
    3,156
    
    
    
    722
    
    
    
    5,707Companys share of income (Company basis)
    
    
    1,664
    
    
    
    4,504
    
    
    
    2,779
    
    
    
    5,258
  DEFERRED COSTS
  June 30, 2008Accumulated
    
    
    Deferred Costs,Total Cost
    
    
    Amortization
    
    
    netLeasing Costs
    
    $
    103,808
    
    
    $
    (34,950
    )
    
    $
    68,858Financing Costs
    
    
    27,108
    
    
    
    (10,301
    )
    
    
    16,807Total
    
    $
    130,916
    
    
    $
    (45,251
    )
    
    $
    85,665
 December 31, 2007Accumulated
    
    
    Deferred Costs,Total Cost
    
    
    Amortization
    
    
    netLeasing Costs
    
    $
    99,077
    
    
    $
    (31,259
    )
    
    $
    67,818Financing Costs
    
    
    27,597
    
    
    
    (8,292
    )
    
    
    19,305Total
    
    $
    126,674
    
    
    $
    (39,551
    )
    
    $
    87,123
 17




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
 INTANGIBLE ASSETS
  June 30, 2008Accumulated
    
    
    Deferred Costs,Total Cost
    
    
    Amortization
    
    
    netIn-place lease value
    
    $
    150,183
    
    
    $
    (63,624
    )
    
    $
    86,559Tenant relationship value
    
    
    104,025
    
    
    
    (34,813
    )
    
    
    69,212Above market leases acquired
    
    
    25,352
    
    
    
    (14,008
    )
    
    
    11,344Total
    
    $
    279,560
    
    
    $
    (112,445
    )
    
    $
    167,115Below market leases acquired
    
    $
    85,791
    
    
    $
    (32,129
    )
    
    $
    53,662
 December 31, 2007Accumulated
    
    
    Deferred Costs,Total Cost
    
    
    Amortization
    
    
    netIn-place lease value
    
    $
    180,456
    
    
    $
    (65,742
    )
    
    $
    114,714Tenant relationship value
    
    
    121,094
    
    
    
    (32,895
    )
    
    
    88,199Above market leases acquired
    
    
    29,337
    
    
    
    (14,101
    )
    
    
    15,236Total
    
    $
    330,887
    
    
    $
    (112,738
    )
    
    $
    218,149Below market leases acquired
    
    $
    103,825
    
    
    $
    (36,544
    )
    
    $
    67,281
  Assets
    
    
    Liabilities2008
    
    $
    20,687
    
    
    $
    6,0172009
    
    
    37,117
    
    
    
    10,1792010
    
    
    30,494
    
    
    
    8,4202011
    
    
    23,492
    
    
    
    7,0862012
    
    
    17,866
    
    
    
    6,336Thereafter
    
    
    37,459
    
    
    
    15,624Total
    
    $
    167,115
    
    
    $
    53,662
 7.
    
    DEBT OBLIGATIONS
  18




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
 EffectiveJune 30,
    
    
    December 31,
    
    
    Interest
    
    
    MaturityProperty / Location
    
    2008
    
    
    2007
    
    
    Rate
    
    
    DateMORTGAGE DEBT:400 Commerce Drive
    
    $
    
    
    
    $
    11,575
    
    
    
    7.12
    %
    
    Jun-08Two Logan Square
    
    
    69,479
    
    
    
    70,124
    
    
    
    5.78
    %(a)
    
    Jul-09200 Commerce Drive
    
    
    5,725
    
    
    
    5,765
    
    
    
    7.12
    %(a)
    
    Jan-101333 Broadway
    
    
    
    
    
    
    23,997
    
    
    
    5.54
    %(a)
    
    May-101 Kaiser Plaza (The Ordway)
    
    
    
    
    
    
    45,509
    
    
    
    5.29
    %(a)
    
    Aug-101901 Harrison Stree (World Savings Center)
    
    
    
    
    
    
    27,142
    
    
    
    5.29
    %(a)
    
    Nov-10Plymouth Meeting Exec.
    
    
    43,134
    
    
    
    43,470
    
    
    
    7.00
    %(a)
    
    Dec-10Four Tower Bridge
    
    
    10,442
    
    
    
    10,518
    
    
    
    6.62
    %
    
    Feb-11Arboretum I, II, III & V
    
    
    21,946
    
    
    
    22,225
    
    
    
    7.59
    %
    
    Jul-11Midlantic Drive/Lenox Drive/DCC I
    
    
    60,567
    
    
    
    61,276
    
    
    
    8.05
    %
    
    Oct-11Research Office Center
    
    
    41,165
    
    
    
    41,527
    
    
    
    5.30
    %(a)
    
    Oct-11Concord Airport Plaza
    
    
    37,102
    
    
    
    37,570
    
    
    
    5.55
    %(a)
    
    Jan-12Six Tower Bridge
    
    
    14,283
    
    
    
    14,472
    
    
    
    7.79
    %
    
    Aug-12Newtown Square/Berwyn Park/Libertyview
    
    
    61,507
    
    
    
    62,125
    
    
    
    7.25
    %
    
    May-13Coppell Associates
    
    
    3,395
    
    
    
    3,512
    
    
    
    6.89
    %
    
    Dec-13Southpoint III
    
    
    4,150
    
    
    
    4,426
    
    
    
    7.75
    %
    
    Apr-14Tysons Corner
    
    
    100,000
    
    
    
    100,000
    
    
    
    5.36
    %(a)
    
    Aug-15Coppell Associates
    
    
    16,600
    
    
    
    16,600
    
    
    
    5.75
    %
    
    Feb-16Principal balance outstanding
    
    
    489,495
    
    
    
    601,833Plus: unamortized fixed-rate debt premiums, net
    
    
    4,010
    
    
    
    10,065Total mortgage indebtedness
    
    $
    493,505
    
    
    $
    611,898UNSECURED DEBT:Sweep Agreement Line
    
    
    
    
    
    
    10,727
    
    
    Libor +1.600
    %
    
    Apr-09Private Placement Notes due 2008
    
    
    113,000
    
    
    
    113,000
    
    
    
    4.34
    %
    
    Dec-082009 Five Year Notes
    
    
    275,000
    
    
    
    275,000
    
    
    
    4.62
    %
    
    Nov-09Bank Term Loan
    
    
    183,000
    
    
    
    150,000
    
    
    Libor + 0.80
    %
    
    Oct-102010 Five Year Notes
    
    
    300,000
    
    
    
    300,000
    
    
    
    5.61
    %
    
    Dec-10Line-of-Credit
    
    
    163,000
    
    
    
    120,000
    
    
    Libor + 0.725
    %
    
    Jun-113.875% Exchangeable Notes
    
    
    313,500
    
    
    
    345,000
    
    
    
    3.93
    %
    
    Oct-112012 Six Year Notes
    
    
    300,000
    
    
    
    300,000
    
    
    
    5.77
    %
    
    Apr-122014 Ten Year Notes
    
    
    250,000
    
    
    
    250,000
    
    
    
    5.53
    %
    
    Nov-142016 Ten Year Notes
    
    
    250,000
    
    
    
    250,000
    
    
    
    5.95
    %
    
    Apr-162017 Ten Year Notes
    
    
    300,000
    
    
    
    300,000
    
    
    
    5.75
    %
    
    May-17Indenture IA (Preferred Trust I)
    
    
    27,062
    
    
    
    27,062
    
    
    Libor + 1.25
    %
    
    Mar-35Indenture IB (Preferred Trust I)
    
    
    25,774
    
    
    
    25,774
    
    
    Libor + 1.25
    %
    
    Apr-35Indenture II (Preferred Trust II)
    
    
    25,774
    
    
    
    25,774
    
    
    Libor + 1.25
    %
    
    Jul-35Principal balance outstanding
    
    
    2,526,110
    
    
    
    2,492,337Plus: unamortized fixed-rate debt discounts, net
    
    
    (2,992
    )
    
    
    (3,266
    )Total unsecured indebtedness
    
    $
    2,523,118
    
    
    $
    2,489,071Total Debt Obligations
    
    $
    3,016,623
    
    
    $
    3,100,969
 
 (a)
    
    Loans were assumed upon acquisition of the related property. Interest rates presented above
reflect the market rate at the time of acquisition.    19




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BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
       20




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
   2008
    
    $
    117,9902009
    
    
    353,2322010
    
    
    539,8582011
    
    
    608,7612012
    
    
    351,053Thereafter
    
    
    1,044,711Total principal payments
    
    
    3,015,605Net unamortized premiums/discounts
    
    
    1,018Outstanding indebtedness
    
    $
    3,016,623
 RISK MANAGEMENT AND USE OF FINANCIAL INSTRUMENTS
 Risk Management
  Use of Derivative Financial Instruments
    21




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
     Hedge
    
    Hedge
    
    
    
    
    
    
    Notional
    
    
    
    
    
    
    Trade
    
    
    MaturityProduct
    
    Type
    
    
    Designation
    
    
    Amount
    
    
    Strike
    
    
    Date
    
    
    Date
    
    
    Fair ValueSwap
    
    Interest Rate
    
    Cash Flow        (b)
    
    $
    71,400
    (a)
    
    
    4.709
    %
    
    
    9/20/07
    
    
    
    10/18/10
    
    
    $
    (2,745
    )Swap
    
    Interest Rate
    
    Cash Flow        (b)
    
    
    25,000
    
    
    
    4.415
    %
    
    
    10/19/07
    
    
    
    10/18/10
    
    
    
    (543
    )Swap
    
    Interest Rate
    
    Cash Flow        (b)
    
    
    25,000
    
    
    
    3.747
    %
    
    
    11/26/07
    
    
    
    10/18/10
    
    
    
    (171
    )Swap
    
    Interest Rate
    
    Cash Flow        (b)
    
    
    25,000
    
    
    
    3.338
    %
    
    
    1/4/08
    
    
    
    12/18/09
    
    
    
    (89
    )Forward Starting Swap
    
    Interest Rate
    
    Cash Flow        (c)
    
    
    25,000
    
    
    
    4.770
    %
    
    
    1/4/08
    
    
    
    12/18/19
    
    
    
    131Forward Starting Swap
    
    Interest Rate
    
    Cash Flow        (c)
    
    
    25,000
    
    
    
    4.423
    %
    
    
    3/19/08
    
    
    
    12/18/19
    
    
    
    864$
    196,400
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (2,553
    )
 
 (a)
    
    - Notional amount accreting up to $155,000 through October 8, 2010.(b)
    
    - Hedging unsecured variable rate debt.(c)
    
    - Future issuance of long-term debt with an expected forward starting date in December 2009. Concentration of Credit Risk
  DISCONTINUED OPERATIONS
  22




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
   Three-month period
    
    
    Six-month periodended June 30, 2008
    
    
    ended June 30, 2008Revenue:Rents
    
    $
    11,235
    
    
    $
    23,496Tenant reimbursements
    
    
    425
    
    
    
    934Termination fees
    
    
    
    
    
    
    25Other
    
    
    50
    
    
    
    148Total revenue
    
    
    11,710
    
    
    
    24,603Expenses:Property operating expenses
    
    
    4,190
    
    
    
    8,149Real estate taxes
    
    
    911
    
    
    
    2,129Depreciation and amortization
    
    
    4,019
    
    
    
    8,107Total operating expenses
    
    
    9,120
    
    
    
    18,385Operating income
    
    
    2,590
    
    
    
    6,218Interest income
    
    
    5
    
    
    
    11Interest expense
    
    
    (1,342
    )
    
    
    (2,694
    )Income from discontinued operations before gain
on sale of interests in real estate and minority interest
    
    
    1,253
    
    
    
    3,535Net gain on sale of interests in real estate
    
    
    13,420
    
    
    
    21,401Provision for impairment
    
    
    (6,850
    )
    
    
    (6,850
    )Minority interest attributable to discontinued
operations  LP units
    
    
    (299
    )
    
    
    (731
    )Income from discontinued operations
    
    $
    7,524
    
    
    $
    17,355
  23




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
 Three-month period
    
    
    Six-month periodended June 30, 2007
    
    
    ended June 30, 2007Revenue:Rents
    
    $
    14,397
    
    
    $
    37,619Tenant reimbursements
    
    
    2,159
    
    
    
    4,341Termination fees
    
    
    
    
    
    
    63Other
    
    
    190
    
    
    
    262Total revenue
    
    
    16,746
    
    
    
    42,285Expenses:Property operating expenses
    
    
    5,517
    
    
    
    13,714Real estate taxes
    
    
    1,462
    
    
    
    4,055Depreciation and amortization
    
    
    4,685
    
    
    
    13,528Total operating expenses
    
    
    11,664
    
    
    
    31,297Operating income
    
    
    5,082
    
    
    
    10,988Interest income
    
    
    6
    
    
    
    12Interest expense
    
    
    (1,380
    )
    
    
    (2,765
    )Income from discontinued operations before gain
on sale of interests in real estate and minority interest
    
    
    3,708
    
    
    
    8,235Net (loss) gain on sale of interests in real estate
    
    
    (856
    )
    
    
    25,153Minority interest attributable to discontinued
operations  LP units
    
    
    (123
    )
    
    
    (1,427
    )Income from discontinued operations
    
    $
    2,729
    
    
    $
    31,961
  Real Estate Investments:Operating property, development land and construction-in-progress
    
    $
    412,044Accumulated depreciation
    
    
    (23,169
    )388,875Other assets
    
    
    35,102Provision for impairment
    
    
    (6,850
    )Total Assets Held for Sale
    
    $
    417,127Mortgage notes payable and other liabilities held for sale
    
    $
    113,897
  MINORITY INTEREST IN OPERATING PARTNERSHIP AND CONSOLIDATED REAL ESTATE VENTURES
 Operating Partnership
  Minority Interest  Partners Share of Consolidated Real Estate Ventures
  24




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
     BENEFICIARIES EQUITY
 Earnings per Share (EPS)
  Three-month periods ended June 30,2008
    
    
    2007Basic
    
    
    Diluted
    
    
    Basic
    
    
    DilutedIncome (loss) from continuing operations
    
    $
    1,844
    
    
    $
    1,844
    
    
    $
    (1,540
    )
    
    $
    (1,540
    )Income allocated to Preferred Shares
    
    
    (1,998
    )
    
    
    (1,998
    )
    
    
    (1,998
    )
    
    
    (1,998
    )Income from continuing operations available to common shareholders
    
    
    (154
    )
    
    
    (154
    )
    
    
    (3,538
    )
    
    
    (3,538
    )Income from discontinued operations
    
    
    7,524
    
    
    
    7,524
    
    
    
    2,729
    
    
    
    2,729Income alloctaed to common shareholders
    
    $
    7,370
    
    
    $
    7,370
    
    
    $
    (809
    )
    
    $
    (809
    )Weighted-average shares outstanding
    
    
    87,280,576
    
    
    
    87,280,576
    
    
    
    87,080,785
    
    
    
    87,080,785Contingent securities/Stock based compensation
    
    
    
    
    
    
    231,769
    
    
    
    
    
    
    
    Total weighted-average shares outstanding
    
    
    87,280,576
    
    
    
    87,512,345
    
    
    
    87,080,785
    
    
    
    87,080,785Earnings per Common Share:Continuing operations
    
    $
    
    
    
    $
    
    
    
    $
    (0.04
    )
    
    $
    (0.04
    )Discontinued operations
    
    
    0.09
    
    
    
    0.09
    
    
    
    0.03
    
    
    
    0.03Total
    
    $
    0.08
    
    
    $
    0.08
    
    
    $
    (0.01
    )
    
    $
    (0.01
    )
 25




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
 Six-month periods ended June 30,2008
    
    
    2007Basic
    
    
    Diluted
    
    
    Basic
    
    
    DilutedIncome (loss) from continuing operations
    
    $
    6,757
    
    
    $
    6,757
    
    
    $
    (11,547
    )
    
    $
    (11,547
    )Income allocated to Preferred Shares
    
    
    (3,996
    )
    
    
    (3,996
    )
    
    
    (3,996
    )
    
    
    (3,996
    )Income from continuing operations available
to common shareholders
    
    
    2,761
    
    
    
    2,761
    
    
    
    (15,543
    )
    
    
    (15,543
    )Income from discontinued operations
    
    
    17,355
    
    
    
    17,355
    
    
    
    31,961
    
    
    
    31,961Income alloctaed to common shareholders
    
    $
    20,116
    
    
    $
    20,116
    
    
    $
    16,418
    
    
    $
    16,418Weighted-average shares outstanding
    
    
    87,092,271
    
    
    
    87,092,271
    
    
    
    87,680,773
    
    
    
    87,680,773Contingent securities/Stock based compensation
    
    
    
    
    
    
    207,734
    
    
    
    
    
    
    
    617,748Total weighted-average shares outstanding
    
    
    87,092,271
    
    
    
    87,300,005
    
    
    
    87,680,773
    
    
    
    88,298,521Earnings per Common Share:Continuing operations
    
    $
    0.03
    
    
    $
    0.03
    
    
    $
    (0.18
    )
    
    $
    (0.18
    )Discontinued operations
    
    
    0.20
    
    
    
    0.20
    
    
    
    0.36
    
    
    
    0.36Total
    
    $
    0.23
    
    
    $
    0.23
    
    
    $
    0.19
    
    
    $
    0.19
   Common and Preferred Shares
    Common Share Repurchases
  26




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
  SHARE BASED COMPENSATION
 Stock Options
  Weighted
    
    
    Weighted AverageAverage
    
    
    Remaining Contractual
    
    
    Aggregate IntrinsicShares
    
    
    Exercise Price
    
    
    Term (in years)
    
    
    Value (in 000s)Outstanding at January 1, 2008
    
    
    1,070,099
    
    
    $
    26.13
    
    
    
    0.54
    
    
    
    (8,775
    )Granted
    
    
    1,824,594
    
    
    
    20.61
    
    
    
    9.77
    
    
    
    (8,849
    )Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited or expired
    
    
    (856,796
    )
    
    
    
    
    
    
    
    
    
    
    Outstanding at June 30, 2008
    
    
    2,037,897
    
    
    $
    20.75
    
    
    
    8.97
    
    
    
    (10,165
    )Vested at June 30, 2008
    
    
    213,303
    
    
    $
    21.93
    
    
    
    2.15
    
    
    
    (1,316
    )Exercisable at June 30, 2008
    
    
    213,303
    
    
    $
    21.93
    
    
    
    2.15
    
    
    
    (1,316
    )
  Restricted Share Awards
  WeightedAverage GrantShares
    
    
    Date Fair valueNon-vested at January 1, 2008
    
    
    409,282
    
    
    $
    31.91Granted
    
    
    224,691
    
    
    
    17.47Vested
    
    
    (109,701
    )
    
    
    29.63Forfeited
    
    
    (7,442
    )
    
    
    23.05Non-vested at June 30, 2008
    
    
    516,830
    
    
    $
    25.87
 27




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
 Outperformance Program
  
 Employee Share Purchase Plan
  SEGMENT INFORMATION
  28




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
  New Jersey
    
    
    Richmond,
    
    
    California -
    
    
    California -
    
    
    MetropolitanPennsylvania
    
    
    /Delaware
    
    
    Virginia
    
    
    North
    
    
    South
    
    
    D.C.
    
    
    Southwest
    
    
    Corporate
    
    
    TotalAs of June 30, 2008:Real estate investments, at cost:Operating properties
    
    $
    1,699,105
    
    
    $
    639,451
    
    
    $
    350,451
    
    
    $
    131,084
    
    
    $
    106,391
    
    
    $
    1,314,760
    
    
    $
    236,790
    
    
    $
    
    
    
    $
    4,478,032Development land and
construction-in-progress
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    363,936
    
    
    
    363,936As of December 31, 2007:Real estate investments, at cost:Operating properties
    
    $
    1,682,839
    
    
    $
    663,503
    
    
    $
    348,310
    
    
    $
    472,818
    
    
    $
    106,303
    
    
    $
    1,302,833
    
    
    $
    236,957
    
    
    $
    
    
    
    $
    4,813,563Developed land and
construction-in-progress
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    
    402,270
    
    
    
    402,270For the three-months ended June 30, 2008:Total revenue
    
    $
    61,459
    
    
    $
    28,971
    
    
    $
    11,407
    
    
    $
    4,352
    
    
    $
    2,957
    
    
    $
    35,145
    
    
    $
    9,913
    
    
    $
    (417
    )
    
    $
    153,787Property operating expenses and real estate taxes
    
    
    21,550
    
    
    
    12,387
    
    
    
    4,008
    
    
    
    1,811
    
    
    
    1,146
    
    
    
    12,155
    
    
    
    4,336
    
    
    
    1,851
    
    
    
    59,244Net operating income
    
    $
    39,909
    
    
    $
    16,584
    
    
    $
    7,399
    
    
    $
    2,541
    
    
    $
    1,811
    
    
    $
    22,990
    
    
    $
    5,577
    
    
    $
    (2,268
    )
    
    $
    94,543For the three-months ended June 30, 2007:Total revenue
    
    $
    65,865
    
    
    $
    28,657
    
    
    $
    8,216
    
    
    $
    3,972
    
    
    $
    3,450
    
    
    $
    33,795
    
    
    $
    10,183
    
    
    $
    (1,918
    )
    
    $
    152,220Property operating expenses and real estate taxes
    
    
    26,291
    
    
    
    12,707
    
    
    
    3,130
    
    
    
    1,254
    
    
    
    1,233
    
    
    
    11,201
    
    
    
    4,050
    
    
    
    (876
    )
    
    
    58,990Net operating income
    
    $
    39,574
    
    
    $
    15,950
    
    
    $
    5,086
    
    
    $
    2,718
    
    
    $
    2,217
    
    
    $
    22,594
    
    
    $
    6,133
    
    
    $
    (1,042
    )
    
    $
    93,230
 29




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
 New Jersey
    
    
    Richmond,
    
    
    California -
    
    
    California -
    
    
    MetropolitanPennsylvania
    
    
    /Delaware
    
    
    Virginia
    
    
    North
    
    
    South
    
    
    D.C.
    
    
    Southwest
    
    
    Corporate
    
    
    TotalFor the six-months ended June 30, 2008:Total revenue
    
    $
    126,025
    
    
    $
    56,967
    
    
    $
    22,469
    
    
    $
    8,708
    
    
    $
    5,924
    
    
    $
    70,108
    
    
    $
    18,981
    
    
    $
    (988
    )
    
    $
    308,194Property operating expenses and real estate taxes
    
    
    43,792
    
    
    
    24,519
    
    
    
    7,721
    
    
    
    3,426
    
    
    
    2,337
    
    
    
    24,573
    
    
    
    8,411
    
    
    
    4,080
    
    
    
    118,859Net operating income
    
    $
    82,233
    
    
    $
    32,448
    
    
    $
    14,748
    
    
    $
    5,282
    
    
    $
    3,587
    
    
    $
    45,535
    
    
    $
    10,570
    
    
    $
    (5,068
    )
    
    $
    189,335For the six-months ended June 30, 2007:Total revenue
    
    $
    131,466
    
    
    $
    56,969
    
    
    $
    17,196
    
    
    $
    7,060
    
    
    $
    6,664
    
    
    $
    67,340
    
    
    $
    19,109
    
    
    $
    (1,838
    )
    
    $
    303,966Property operating expenses and real estate taxes
    
    
    51,452
    
    
    
    25,024
    
    
    
    6,144
    
    
    
    2,127
    
    
    
    2,565
    
    
    
    22,710
    
    
    
    7,562
    
    
    
    (338
    )
    
    
    117,246Net operating income
    
    $
    80,014
    
    
    $
    31,945
    
    
    $
    11,052
    
    
    $
    4,933
    
    
    $
    4,099
    
    
    $
    44,630
    
    
    $
    11,547
    
    
    $
    (1,500
    )
    
    $
    186,720
 30




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
  Three-month periods
    
    
    Six-month periodsended June 30,
    
    
    ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Consolidated net operating income
    
    $
    94,543
    
    
    $
    93,230
    
    
    $
    189,335
    
    
    $
    186,720Interest income
    
    
    179
    
    
    
    1,597
    
    
    
    382
    
    
    
    2,378Interest expense
    
    
    (35,709
    )
    
    
    (39,423
    )
    
    
    (71,807
    )
    
    
    (78,396
    )Deferred financing costs
    
    
    (1,198
    )
    
    
    (1,065
    )
    
    
    (2,706
    )
    
    
    (2,323
    )Depreciation and amortization
    
    
    (52,472
    )
    
    
    (53,542
    )
    
    
    (104,324
    )
    
    
    (111,340
    )General & administrative expenses
    
    
    (6,127
    )
    
    
    (7,007
    )
    
    
    (11,039
    )
    
    
    (14,417
    )Minority interest  partners share of consolidated
real estate ventures
    
    
    (38
    )
    
    
    8
    
    
    
    (78
    )
    
    
    (108
    )Minority interest attributable to continuing
operations  LP units
    
    
    16
    
    
    
    158
    
    
    
    (103
    )
    
    
    681Equity in income of real estate ventures
    
    
    1,664
    
    
    
    4,504
    
    
    
    2,779
    
    
    
    5,258Net (loss) gain on disposition of undepreciated real estate
    
    
    
    
    
    
    
    
    
    
    (24
    )
    
    
    Gain on early extinguishment of debt
    
    
    986
    
    
    
    
    
    
    
    4,342
    
    
    
    Income (loss) from continuing operations
    
    
    1,844
    
    
    
    (1,540
    )
    
    
    6,757
    
    
    
    (11,547
    )Income from discontinued operations
    
    
    7,524
    
    
    
    2,729
    
    
    
    17,355
    
    
    
    31,961Net income
    
    $
    9,368
    
    
    $
    1,189
    
    
    $
    24,112
    
    
    $
    20,414
 COMMITMENTS AND CONTINGENCIES
 Legal Proceedings
   Environmental
  31




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##### Table of Contents



BRANDYWINE REALTY TRUST
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
 Ground Rent
  2008
    
    $
    8682009
    
    
    1,9862010
    
    
    2,3182011
    
    
    2,3182012
    
    
    2,318Thereafter
    
    
    291,831
  Other Commitments or Contingencies
    32




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1.  Financial Statements
 BRANDYWINE OPERATING PARTNERSHIP, L.P.
 
 CONSOLIDATED BALANCE SHEETS
 (unaudited, in
thousands, except unit and per unit information)
 June 30,
    
    
    December 31,2008
    
    
    2007ASSETSReal estate investments:Rental properties
    
    $
    4,478,032
    
    
    $
    4,813,563Accumulated depreciation
    
    
    (595,209
    )
    
    
    (558,908
    )Operating real estate investments, net
    
    
    3,882,823
    
    
    
    4,254,655Development land and construction-in-progress
    
    
    363,936
    
    
    
    402,270Total real estate investments, net
    
    
    4,246,759
    
    
    
    4,656,925Cash and cash equivalents
    
    
    4,791
    
    
    
    5,600Accounts receivable, net
    
    
    11,888
    
    
    
    17,057Accrued rent receivable, net
    
    
    86,783
    
    
    
    83,098Asset held for sale, net
    
    
    417,127
    
    
    
    Investment in real estate ventures, at equity
    
    
    71,078
    
    
    
    71,598Deferred costs, net
    
    
    85,665
    
    
    
    87,123Intangible assets, net
    
    
    167,115
    
    
    
    218,149Other assets
    
    
    59,712
    
    
    
    74,549Total assets
    
    $
    5,150,918
    
    
    $
    5,214,099LIABILITIES AND BENEFICIARIES EQUITYMortgage notes payable
    
    $
    493,505
    
    
    $
    611,898Unsecured term loan
    
    
    183,000
    
    
    
    150,000Borrowing under credit facilities
    
    
    163,000
    
    
    
    130,727Unsecured senior notes, net of discounts
    
    
    2,177,118
    
    
    
    2,208,344Accounts payable and accrued expenses
    
    
    67,946
    
    
    
    80,164Distributions payable
    
    
    42,419
    
    
    
    42,368Tenant security deposits and deferred rents
    
    
    58,469
    
    
    
    65,241Acquired below market leases, net
    
    
    53,662
    
    
    
    67,281Other liabilities
    
    
    27,040
    
    
    
    30,154Mortgage notes payable and other liabilities held for sale
    
    
    113,897
    
    
    
    Total liabilities
    
    
    3,380,056
    
    
    
    3,386,177Commitments and contingencies (Note 14)Redeemable limited partnership units at redemption value;
3,276,662 and 3,838,229 issued and outstanding in 2008 and 2007, respectively
    
    
    51,640
    
    
    
    68,819Partners equity:7.50% Series D Preferred Mirror Units; 2,000,000 issued and outstanding in 2008
and 2007
    
    
    47,912
    
    
    
    47,9127.375% Series E Preferred Mirror Units; 2,300,000 issued and outstanding in 2008
and 2007
    
    
    55,538
    
    
    
    55,538General Partnership Capital, 88,612,439 and 88,623,635 units issued in 2008 and
2007, respectively and 87,697,983 and 87,015,600 units outstanding in
2008 and 2007, respectively
    
    
    1,616,923
    
    
    
    1,657,538Accumulated other comprehensive loss
    
    
    (1,151
    )
    
    
    (1,885
    )Total partners equity
    
    
    1,719,222
    
    
    
    1,759,103Total liabilities, minority interest, and partners equity
    
    $
    5,150,918
    
    
    $
    5,214,099
  33




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##### Table of Contents



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (unaudited, in thousands, except unit and per unit information)
 For the three-month periods
    
    
    For the six-month periodsended June 30,
    
    
    ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenue:Rents
    
    $
    126,051
    
    
    $
    125,660
    
    
    $
    251,656
    
    
    $
    251,315Tenant reimbursements
    
    
    20,859
    
    
    
    19,419
    
    
    
    39,966
    
    
    
    38,744Termination fees
    
    
    892
    
    
    
    498
    
    
    
    4,124
    
    
    
    1,764Third Party management fees, labor reimbursement and leasing
    
    
    5,170
    
    
    
    5,369
    
    
    
    10,849
    
    
    
    9,704Other
    
    
    815
    
    
    
    1,274
    
    
    
    1,599
    
    
    
    2,439Total revenue
    
    
    153,787
    
    
    
    152,220
    
    
    
    308,194
    
    
    
    303,966Operating Expenses:Property operating expenses
    
    
    41,282
    
    
    
    41,280
    
    
    
    82,904
    
    
    
    82,299Real estate taxes
    
    
    15,581
    
    
    
    15,214
    
    
    
    31,328
    
    
    
    29,956Third party management expenses
    
    
    2,381
    
    
    
    2,496
    
    
    
    4,627
    
    
    
    4,991Depreciation and amortization
    
    
    52,472
    
    
    
    53,542
    
    
    
    104,324
    
    
    
    111,340General & administrative expenses
    
    
    6,127
    
    
    
    7,007
    
    
    
    11,039
    
    
    
    14,417Total operating expenses
    
    
    117,843
    
    
    
    119,539
    
    
    
    234,222
    
    
    
    243,003Operating income
    
    
    35,944
    
    
    
    32,681
    
    
    
    73,972
    
    
    
    60,963Other Income (Expense):Interest income
    
    
    179
    
    
    
    1,597
    
    
    
    382
    
    
    
    2,378Interest expense
    
    
    (35,709
    )
    
    
    (39,423
    )
    
    
    (71,807
    )
    
    
    (78,396
    )Deferred financing costs
    
    
    (1,198
    )
    
    
    (1,065
    )
    
    
    (2,706
    )
    
    
    (2,323
    )Equity in income of real estate ventures
    
    
    1,664
    
    
    
    4,504
    
    
    
    2,779
    
    
    
    5,258Net gain (loss) on dispostion of undepreciated real estate
    
    
    
    
    
    
    
    
    
    
    (24
    )
    
    
    Gain on early extinguishment of debt
    
    
    986
    
    
    
    
    
    
    
    4,342
    
    
    
    Income (loss) before minority interest
    
    
    1,866
    
    
    
    (1,706
    )
    
    
    6,938
    
    
    
    (12,120
    )Minority interest  partners share of consolidated real estate ventures
    
    
    (38
    )
    
    
    8
    
    
    
    (78
    )
    
    
    (108
    )Income (loss) from continuing operations
    
    
    1,828
    
    
    
    (1,698
    )
    
    
    6,860
    
    
    
    (12,228
    )Discontinued operations:Income from discontinued operations
    
    
    1,253
    
    
    
    3,708
    
    
    
    3,535
    
    
    
    8,235Net gain (loss) on disposition of discontinued operations
    
    
    13,420
    
    
    
    (856
    )
    
    
    21,401
    
    
    
    25,153Provision for impairment
    
    
    (6,850
    )
    
    
    
    
    
    
    (6,850
    )
    
    
    Total discontinued operations
    
    
    7,823
    
    
    
    2,852
    
    
    
    18,086
    
    
    
    33,388Net income (loss)
    
    
    9,651
    
    
    
    1,154
    
    
    
    24,946
    
    
    
    21,160Income allocated to Preferred Units
    
    
    (1,998
    )
    
    
    (1,998
    )
    
    
    (3,996
    )
    
    
    (3,996
    )Income (loss) allocated to Common Partnership Units
    
    $
    7,653
    
    
    $
    (844
    )
    
    $
    20,950
    
    
    $
    17,164Basic earnings (loss) per Common Partnership Unit:Continuing operations
    
    $
    (0.00
    )
    
    $
    (0.04
    )
    
    $
    0.03
    
    
    $
    (0.18
    )Discontinued operations
    
    
    0.09
    
    
    
    0.03
    
    
    
    0.20
    
    
    
    0.36$
    0.08
    
    
    $
    (0.01
    )
    
    $
    0.23
    
    
    $
    0.19Diluted earnings (loss) per Common Partnership Unit:Continuing operations
    
    $
    (0.00
    )
    
    $
    (0.04
    )
    
    $
    0.03
    
    
    $
    (0.18
    )Discontinued operations
    
    
    0.09
    
    
    
    0.03
    
    
    
    0.20
    
    
    
    0.36$
    0.08
    
    
    $
    (0.01
    )
    
    $
    0.23
    
    
    $
    0.19Basic weighted average Common Partnership Unit
    
    
    90,747,434
    
    
    
    91,020,069
    
    
    
    90,736,342
    
    
    
    91,620,218Diluted weighted average Common Partnership Unit
    
    
    90,979,203
    
    
    
    91,020,069
    
    
    
    90,944,076
    
    
    
    92,237,966
  34




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##### Table of Contents



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 
 CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME
 (unaudited, in thousands)
 For the three-month periods
    
    
    For the six-month periodsended June 30,
    
    
    ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net income
    
    $
    9,651
    
    
    $
    1,154
    
    
    $
    24,946
    
    
    $
    21,160Other comprehensive income:Unrealized gain (loss) on derivative financial instruments
    
    
    5,358
    
    
    
    (1,872
    )
    
    
    526
    
    
    
    (422
    )Settlement of forward starting swaps
    
    
    
    
    
    
    1,148
    
    
    
    
    
    
    
    1,148Reclassification of realized (gains)/losses on derivative
financial
instruments to operations, net
    
    
    (20
    )
    
    
    (394
    )
    
    
    (40
    )
    
    
    (385
    )Unrealized gain (loss) on available-for-sale securities
    
    
    
    
    
    
    13
    
    
    
    248
    
    
    
    (595
    )Total other comprehensive income (loss)
    
    
    5,338
    
    
    
    (1,105
    )
    
    
    734
    
    
    
    (254
    )Comprehensive income
    
    $
    14,989
    
    
    $
    49
    
    
    $
    25,680
    
    
    $
    20,906
  35




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##### Table of Contents



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (unaudited, in thousands)
 Six-month periodsended June 30,2008
    
    
    2007Cash flows from operating activities:Net income (loss)
    
    $
    24,946
    
    
    $
    21,160Adjustments to reconcile net income (loss) to net cash from
operating activities:Depreciation
    
    
    81,948
    
    
    
    90,405Amortization:Deferred financing costs
    
    
    2,706
    
    
    
    2,323Deferred leasing costs
    
    
    8,152
    
    
    
    7,731Acquired above (below) market leases, net
    
    
    (4,673
    )
    
    
    (6,304
    )Acquired lease intangibles
    
    
    22,333
    
    
    
    26,700Deferred compensation costs
    
    
    2,574
    
    
    
    2,552Straight-line rent
    
    
    (11,233
    )
    
    
    (14,775
    )Provision for doubtful accounts
    
    
    2,650
    
    
    
    500Provision for impairment
    
    
    6,850
    
    
    
    Real estate venture income in excess of distributions
    
    
    (569
    )
    
    
    (104
    )Net gain on sale of interests in real estate
    
    
    (21,377
    )
    
    
    (25,153
    )Gain on early extinguishment of debt
    
    
    (4,342
    )
    
    
    Minority interest (expense)/income
    
    
    78
    
    
    
    108Changes in assets and liabilities:Accounts receivable
    
    
    3,324
    
    
    
    3,916Other assets
    
    
    7,168
    
    
    
    1,366Accounts payable and accrued expenses
    
    
    (7,430
    )
    
    
    (6,151
    )Tenant security deposits and deferred rents
    
    
    (2,883
    )
    
    
    5,665Other liabilities
    
    
    (6,395
    )
    
    
    (10,148
    )Net cash from operating activities
    
    
    103,827
    
    
    
    99,791Cash flows from investing activities:Acquisition of minority interest  partners share of consolidated real estate venture
    
    
    
    
    
    
    (64,174
    )Sales of properties, net
    
    
    53,601
    
    
    
    222,592Capital expenditures
    
    
    (89,034
    )
    
    
    (133,264
    )Investment in unconsolidated real estate ventures
    
    
    (469
    )
    
    
    (523
    )Cash distributions from unconsolidated real estate ventures
in excess of equity in income
    
    
    1,558
    
    
    
    2,169Leasing costs
    
    
    (5,468
    )
    
    
    (11,499
    )Net cash (used in) from investing activities
    
    
    (39,812
    )
    
    
    15,301Cash flows from financing activities:Proceeds from Credit Facility borrowings
    
    
    258,000
    
    
    
    620,875Repayments of Credit Facility borrowings
    
    
    (192,727
    )
    
    
    (470,875
    )Repayments of mortgage notes payable
    
    
    (18,650
    )
    
    
    (126,780
    )Proceeds from unsecured notes
    
    
    
    
    
    
    299,644Repayments of unsecured notes
    
    
    (26,924
    )
    
    
    (299,866
    )Proceeds from forward starting swap termination
    
    
    
    
    
    
    1,148Debt financing costs
    
    
    (209
    )
    
    
    (3,776
    )Exercise of stock options
    
    
    
    
    
    
    6,221Repurchases
of Common Partnership Units
    
    
    
    
    
    
    (53,524
    )Distributions paid to preferred and common partnership unitholders
    
    
    (84,314
    )
    
    
    (85,016
    )Net cash used in financing activities
    
    
    (64,824
    )
    
    
    (111,949
    )Increase (decrease) in cash and cash equivalents
    
    
    (809
    )
    
    
    3,143Cash and cash equivalents at beginning of period
    
    
    5,600
    
    
    
    25,379Cash and cash equivalents at end of period
    
    $
    4,791
    
    
    $
    28,522Supplemental disclosure:Cash paid for interest, net of capitalized interest
    
    $
    109,355
    
    
    $
    92,541Supplemental disclosure of non-cash activity:Cash escrowed with qualified intermediary
    
    
    
    
    
    
    109,102Acquisition of property using cash escrowed with qualified intermediary
    
    
    
    
    
    
    (72,511
    )
  36




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##### Table of Contents



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
 ORGANIZATION AND NATURE OF OPERATIONS
     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Basis of Presentation
  Shared-Based Payment
 37




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
  As Reported
    
    Adjustment
    
    As RevisedAccounts
payable and accrued expenses
    
    
    80,732
    
    
    
    (568
    )
    
    
    80,164General Partnership Capital
    
    
    1,656,970
    
    
    
    568
    
    
    
    1,657,538
      Principles of Consolidation
  38




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##### Table of Contents



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
  Use of Estimates
  Operating Properties
  Purchase Price Allocation
  Accounting for
Conditional Asset Retirement Obligations
  39




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##### Table of Contents



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
   Revenue Recognition
  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
 40




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##### Table of Contents



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
 Fair
Value Measurements
 Income Taxes
    Accounting Pronouncements Adopted January 1, 2008
 Fair Value Measurements Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements
That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under
Statement 13 Effective Date of FASB
Statement No. 157
 41




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##### Table of Contents



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
 Accounting for Leases
    Fair Value Measurements at ReportingDate Using:Quoted Prices inActive Markets for
    
    
    Significant Other
    
    
    UnobservableJune 30,
    
    
    Identical Assets
    
    
    Observable Inputs
    
    
    InputsDescription
    
    2008
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Assets:Available-for-Sale Securities
    
    $
    846
    
    
    $
    846
    
    
    $
    
    
    
    
    Liabilities:Interest Rate Swaps
    
    $
    3,548
    
    
    
    
    
    
    $
    3,548
    
    
    
    Forward Starting Interest Rate Swaps
    
    
    (995
    )
    
    
    
    
    
    
    (995
    )
    
    
    $
    2,553
    
    
    $
    
    
    
    $
    2,553
    
    
    $
    
  
    
    Non-financial assets and liabilities initially measured at fair value in an acquisition
or business combination that are not remeasured at least annually at fair value
 42




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
 
    
    Long-lived assets measured at fair value due to an impairment under Statement of
Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets
    
    Asset retirement obligations initially measured at fair value under Statement of
Financial Accounting Standards No. 143, Accounting for Asset Retirement Obligations
 The Fair Value Option for Financial Assets and Financial Liabilities
 New Pronouncements
 Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating Securities
 Accounting for Convertible Debt
Instruments That May Be Settled Upon Conversion (Including Partial Cash Settlement)
 Determination of the Useful Life of
Intangible Assets
 Disclosures
about Derivative Instruments and Hedging Activities Accounting for Derivative Instruments and Hedging
Activities
 43




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##### Table of Contents



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
  Business Combinations
 Noncontrolling Interests in Consolidated
Financial Statements  an Amendment of ARB No. 51
 REAL ESTATE INVESTMENTS
  June 30, 2008
    
    
    December 31, 2007Land
    
    $
    682,980
    
    
    $
    727,979Building and improvements
    
    
    3,383,725
    
    
    
    3,672,638Tenant improvements
    
    
    411,327
    
    
    
    412,9464,478,032
    
    
    
    4,813,563
 Acquisitions and Dispositions
  2008
      44




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##### Table of Contents



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
 2007
 DRA Venture
   Applying the Conditions in Paragraph 42 of FASB
Statement No. 144 in Determining Whether to Report Discontinued Operations
 Other 2007 Acquisitions and Dispositions
  
    45




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##### Table of Contents



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
         INVESTMENT IN UNCONSOLIDATED VENTURES
    46




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##### Table of Contents



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
   June 30,
    
    December 31,2008
    
    2007Operating property, net of accumulated depreciation
    
    $
    599,457
    
    
    $
    587,537Other assets
    
    
    111,847
    
    
    
    113,268Liabilities
    
    
    41,618
    
    
    
    41,459Debt
    
    
    544,376
    
    
    
    538,766Equity
    
    
    125,355
    
    
    
    120,581Partnerships share of equity (Partnerships basis)
    
    
    71,078
    
    
    
    71,598
  Three-month periods
    
    Six-month periodsended June 30,
    
    ended June 30,2008
    
    2007
    
    2008
    
    2007Revenue
    
    $
    25,863
    
    
    $
    18,986
    
    
    $
    52,896
    
    
    $
    37,300Operating expenses
    
    
    8,875
    
    
    
    6,643
    
    
    
    17,797
    
    
    
    12,940Interest expense, net
    
    
    7,956
    
    
    
    5,410
    
    
    
    15,753
    
    
    
    10,648Depreciation and amortization
    
    
    9,472
    
    
    
    3,776
    
    
    
    18,624
    
    
    
    8,004Net (loss) income
    
    
    (440
    )
    
    
    3,156
    
    
    
    722
    
    
    
    5,707Partnerships share of income (Partnerships basis)
    
    
    1,664
    
    
    
    4,504
    
    
    
    2,779
    
    
    
    5,258
  DEFERRED COSTS
  47




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##### Table of Contents



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
 June 30, 2008Accumulated
    
    
    Deferred Costs,Total Cost
    
    
    Amortization
    
    
    netLeasing Costs
    
    $
    103,808
    
    
    $
    (34,950
    )
    
    $
    68,858Financing Costs
    
    
    27,108
    
    
    
    (10,301
    )
    
    
    16,807Total
    
    $
    130,916
    
    
    $
    (45,251
    )
    
    $
    85,665
 December 31, 2007Accumulated
    
    
    Deferred Costs,Total Cost
    
    
    Amortization
    
    
    netLeasing Costs
    
    $
    99,077
    
    
    $
    (31,259
    )
    
    $
    67,818Financing Costs
    
    
    27,597
    
    
    
    (8,292
    )
    
    
    19,305Total
    
    $
    126,674
    
    
    $
    (39,551
    )
    
    $
    87,123
 INTANGIBLE ASSETS
  June 30, 2008AccumulatedTotal Cost
    
    
    Amortization
    
    
    Deferred Costs, netIn-place lease value
    
    $
    150,183
    
    
    $
    (63,624
    )
    
    $
    86,559Tenant relationship value
    
    
    104,025
    
    
    
    (34,813
    )
    
    
    69,212Above market leases acquired
    
    
    25,352
    
    
    
    (14,008
    )
    
    
    11,344Total
    
    $
    279,560
    
    
    $
    (112,445
    )
    
    $
    167,115Below market leases acquired
    
    $
    85,791
    
    
    $
    (32,129
    )
    
    $
    53,662
 December 31, 2007AccumulatedTotal Cost
    
    
    Amortization
    
    
    Deferred Costs, netIn-place lease value
    
    $
    180,456
    
    
    $
    (65,742
    )
    
    $
    114,714Tenant relationship value
    
    
    121,094
    
    
    
    (32,895
    )
    
    
    88,199Above market leases acquired
    
    
    29,337
    
    
    
    (14,101
    )
    
    
    15,236Total
    
    $
    330,887
    
    
    $
    (112,738
    )
    
    $
    218,149Below market leases acquired
    
    $
    103,825
    
    
    $
    (36,544
    )
    
    $
    67,281
  Assets
    
    
    Liabilities2008
    
    $
    20,687
    
    
    $
    6,0172009
    
    
    37,117
    
    
    
    10,1792010
    
    
    30,494
    
    
    
    8,4202011
    
    
    23,492
    
    
    
    7,0862012
    
    
    17,866
    
    
    
    6,336Thereafter
    
    
    37,459
    
    
    
    15,624Total
    
    $
    167,115
    
    
    $
    53,662
 48




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
 DEBT OBLIGATIONS
  EffectiveJune 30,
    
    
    December 31,
    
    
    Interest
    
    
    MaturityProperty / Location
    
    2008
    
    
    2007
    
    
    Rate
    
    
    DateMORTGAGE DEBT:400 Commerce Drive
    
    $
    
    
    
    $
    11,575
    
    
    
    7.12%
    
    
    Jun-08Two Logan Square
    
    
    69,479
    
    
    
    70,124
    
    
    
    5.78%
    (a)
    
    Jul-09200 Commerce Drive
    
    
    5,725
    
    
    
    5,765
    
    
    
    7.12%
    (a)
    
    Jan-101333 Broadway
    
    
    
    
    
    
    23,997
    
    
    
    5.54%
    (a)
    
    May-101 Kaiser Plaza (The Ordway)
    
    
    
    
    
    
    45,509
    
    
    
    5.29%
    (a)
    
    Aug-101901 Harrison Stree (World Savings Center)
    
    
    
    
    
    
    27,142
    
    
    
    5.29%
    (a)
    
    Nov-10Plymouth Meeting Exec.
    
    
    43,134
    
    
    
    43,470
    
    
    
    7.00%
    (a)
    
    Dec-10Four Tower Bridge
    
    
    10,442
    
    
    
    10,518
    
    
    
    6.62%
    
    
    Feb-11Arboretum I, II, III & V
    
    
    21,946
    
    
    
    22,225
    
    
    
    7.59%
    
    
    Jul-11Midlantic Drive/Lenox Drive/DCC I
    
    
    60,567
    
    
    
    61,276
    
    
    
    8.05%
    
    
    Oct-11Research Office Center
    
    
    41,165
    
    
    
    41,527
    
    
    
    5.30%
    (a)
    
    Oct-11Concord Airport Plaza
    
    
    37,102
    
    
    
    37,570
    
    
    
    5.55%
    (a)
    
    Jan-12Six Tower Bridge
    
    
    14,283
    
    
    
    14,472
    
    
    
    7.79%
    
    
    Aug-12Newtown Square/Berwyn Park/Libertyview
    
    
    61,507
    
    
    
    62,125
    
    
    
    7.25%
    
    
    May-13Coppell Associates
    
    
    3,395
    
    
    
    3,512
    
    
    
    6.89%
    
    
    Dec-13Southpoint III
    
    
    4,150
    
    
    
    4,426
    
    
    
    7.75%
    
    
    Apr-14Tysons Corner
    
    
    100,000
    
    
    
    100,000
    
    
    
    5.36%
    (a)
    
    Aug-15Coppell Associates
    
    
    16,600
    
    
    
    16,600
    
    
    
    5.75%
    
    
    Feb-16Principal balance outstanding
    
    
    489,495
    
    
    
    601,833Plus: unamortized fixed-rate debt premiums, net
    
    
    4,010
    
    
    
    10,065Total mortgage indebtedness
    
    $
    493,505
    
    
    $
    611,898UNSECURED DEBT:Sweep Agreement Line
    
    
    
    
    
    
    10,727
    
    
    Libor + 1.600%
    
    
    Apr-09Private Placement Notes due 2008
    
    
    113,000
    
    
    
    113,000
    
    
    
    4.34%
    
    
    Dec-082009 Five Year Notes
    
    
    275,000
    
    
    
    275,000
    
    
    
    4.62%
    
    
    Nov-09Bank Term Loan
    
    
    183,000
    
    
    
    150,000
    
    
    Libor + 0.80%
    
    
    Oct-102010 Five Year Notes
    
    
    300,000
    
    
    
    300,000
    
    
    
    5.61%
    
    
    Dec-10Line-of-Credit
    
    
    163,000
    
    
    
    120,000
    
    
    Libor + 0.725%
    
    
    Jun-113.875% Exchangeable Notes
    
    
    313,500
    
    
    
    345,000
    
    
    
    3.93%
    
    
    Oct-112012 Six Year Notes
    
    
    300,000
    
    
    
    300,000
    
    
    
    5.77%
    
    
    Apr-122014 Ten Year Notes
    
    
    250,000
    
    
    
    250,000
    
    
    
    5.53%
    
    
    Nov-142016 Ten Year Notes
    
    
    250,000
    
    
    
    250,000
    
    
    
    5.95%
    
    
    Apr-162017 Ten Year Notes
    
    
    300,000
    
    
    
    300,000
    
    
    
    5.75%
    
    
    May-17Indenture IA (Preferred Trust I)
    
    
    27,062
    
    
    
    27,062
    
    
    Libor + 1.25%
    
    
    Mar-35Indenture IB (Preferred Trust I)
    
    
    25,774
    
    
    
    25,774
    
    
    Libor + 1.25%
    
    
    Apr-35Indenture II (Preferred Trust II)
    
    
    25,774
    
    
    
    25,774
    
    
    Libor + 1.25%
    
    
    Jul-35Principal balance outstanding
    
    
    2,526,110
    
    
    
    2,492,337Plus: unamortized fixed-rate debt discounts, net
    
    
    (2,992
    )
    
    
    (3,266
    )Total unsecured indebtedness
    
    $
    2,523,118
    
    
    $
    2,489,071Total Debt Obligations
    
    $
    3,016,623
    
    
    $
    3,100,969
 
 (a)
    
    Loans were assumed upon acquisition of the related property. Interest rates presented above
reflect the market rate at the time of acquisition.  49




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




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
     2008
    
    $
    117,9902009
    
    
    353,2322010
    
    
    539,8582011
    
    
    608,7612012
    
    
    351,053Thereafter
    
    
    1,044,711Total principal payments
    
    
    3,015,605Net unamortized premiums/discounts
    
    
    1,018Outstanding indebtedness
    
    $
    3,016,623
 RISK MANAGEMENT AND USE OF FINANCIAL INSTRUMENTS
 Risk Management
  Use of Derivative Financial Instruments
   51




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
      Hedge
    
    Hedge
    
    
    
    
    
    
    Notional
    
    
    
    
    
    
    Trade
    
    
    MaturityProduct
    
    Type
    
    
    Designation
    
    
    Amount
    
    
    Strike
    
    
    Date
    
    
    Date
    
    
    Fair ValueSwap
    
    Interest Rate
    
    Cash Flow
    (b)
    
    $
    71,400
    (a)
    
    
    4.709
    %
    
    
    9/20/07
    
    
    
    10/18/10
    
    
    $
    (2,745
    )Swap
    
    Interest Rate
    
    Cash Flow
    (b)
    
    
    25,000
    
    
    
    4.415
    %
    
    
    10/19/07
    
    
    
    10/18/10
    
    
    
    (543
    )Swap
    
    Interest Rate
    
    Cash Flow
    (b)
    
    
    25,000
    
    
    
    3.747
    %
    
    
    11/26/07
    
    
    
    10/18/10
    
    
    
    (171
    )Swap
    
    Interest Rate
    
    Cash Flow
    (b)
    
    
    25,000
    
    
    
    3.338
    %
    
    
    1/4/08
    
    
    
    12/18/09
    
    
    
    (89
    )Forward Starting Swap
    
    Interest Rate
    
    Cash Flow
    (c)
    
    
    25,000
    
    
    
    4.770
    %
    
    
    1/4/08
    
    
    
    12/18/19
    
    
    
    131Forward Starting Swap
    
    Interest Rate
    
    Cash Flow
    (c)
    
    
    25,000
    
    
    
    4.423
    %
    
    
    3/19/08
    
    
    
    12/18/19
    
    
    
    864$
    196,400
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (2,553
    )
 
 (a)
    
    - Notional amount accreting up to $155,000 through October 8, 2010.(b)
    
    - Hedging unsecured variable rate debt.(c)
    
    - Future issuance of long-term debt with an expected forward starting date in December 2009. Concentration of Credit Risk
  52




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
 DISCONTINUED OPERATIONS
   Three-month period
    
    
    Six-month periodended June 30, 2008
    
    
    ended June 30, 2008Revenue:Rents
    
    $
    11,235
    
    
    $
    23,496Tenant reimbursements
    
    
    425
    
    
    
    934Termination fees
    
    
    
    
    
    
    25Other
    
    
    50
    
    
    
    148Total revenue
    
    
    11,710
    
    
    
    24,603Expenses:Property operating expenses
    
    
    4,190
    
    
    
    8,149Real estate taxes
    
    
    911
    
    
    
    2,129Depreciation and amortization
    
    
    4,019
    
    
    
    8,107Total operating expenses
    
    
    9,120
    
    
    
    18,385Operating income
    
    
    2,590
    
    
    
    6,218Interest income
    
    
    5
    
    
    
    11Interest expense
    
    
    (1,342
    )
    
    
    (2,694
    )Income from discontinued operations before gain on
sale of interests in real estate and minority interest
    
    
    1,253
    
    
    
    3,535Net gain on sale of interests in real estate
    
    
    13,420
    
    
    
    21,401Provision for impairment
    
    
    (6,850
    )
    
    
    (6,850
    )Income from discontinued operations
    
    $
    7,823
    
    
    $
    18,086
  53




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##### Table of Contents



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
 Three-month period
    
    
    Six-month periodended June 30, 2007
    
    
    ended June 30, 2007Revenue:Rents
    
    $
    14,397
    
    
    $
    37,619Tenant reimbursements
    
    
    2,159
    
    
    
    4,341Termination fees
    
    
    
    
    
    
    63Other
    
    
    190
    
    
    
    262Total revenue
    
    
    16,746
    
    
    
    42,285Expenses:Property operating expenses
    
    
    5,517
    
    
    
    13,714Real estate taxes
    
    
    1,462
    
    
    
    4,055Depreciation and amortization
    
    
    4,685
    
    
    
    13,528Total operating expenses
    
    
    11,664
    
    
    
    31,297Operating income
    
    
    5,082
    
    
    
    10,988Interest income
    
    
    6
    
    
    
    12Interest expense
    
    
    (1,380
    )
    
    
    (2,765
    )Income from discontinued operations before gain on
sale of interests in real estate and minority interest
    
    
    3,708
    
    
    
    8,235Net (loss) gain on sale of interests in real estate
    
    
    (856
    )
    
    
    25,153Income from discontinued operations
    
    $
    2,852
    
    
    $
    33,388
  Real Estate Investments:Operating property, development land and construction-in-progress
    
    $
    412,044Accumulated depreciation
    
    
    (23,169
    )388,875Other assets
    
    
    35,102Provision for impairment
    
    
    (6,850
    )Total Assets Held for Sale
    
    $
    417,127Mortgage notes payable and other liabilities held for sale
    
    $
    113,897
  MINORITY INTEREST  PARTNERS SHARE OF CONSOLIDATED REAL
ESTATE VENTURES
  54




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##### Table of Contents



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
    PARTNERS EQUITY
 Earnings per Common Partnership Unit
  Three-month periods ended June 30,2008
    
    
    2007Basic
    
    
    Diluted
    
    
    Basic
    
    
    DilutedIncome (loss) from continuing operations
    
    $
    1,828
    
    
    $
    1,828
    
    
    $
    (1,698
    )
    
    $
    (1,698
    )Income allocated to Preferred Units
    
    
    (1,998
    )
    
    
    (1,998
    )
    
    
    (1,998
    )
    
    
    (1,998
    )Net income afrom continuing operations available to common unitholders
    
    
    (170
    )
    
    
    (170
    )
    
    
    (3,696
    )
    
    
    (3,696
    )Income from discontinued operations
    
    
    7,823
    
    
    
    7,823
    
    
    
    2,852
    
    
    
    2,852Net income available to common unitholders
    
    $
    7,653
    
    
    $
    7,653
    
    
    $
    (844
    )
    
    $
    (844
    )Weighted-average common partnership units outstanding
    
    
    90,747,434
    
    
    
    90,747,434
    
    
    
    91,020,069
    
    
    
    91,020,069Contingent securities/Stock based compensation
    
    
    
    
    
    
    231,769
    
    
    
    
    
    
    
    Total weighted-average partnership units outstanding
    
    
    90,747,434
    
    
    
    90,979,203
    
    
    
    91,020,069
    
    
    
    91,020,069Earnings per Common Partnership Unit:Continuing operations
    
    $
    
    
    
    $
    
    
    
    $
    (0.04
    )
    
    $
    (0.04
    )Discontinued operations
    
    
    0.09
    
    
    
    0.09
    
    
    
    0.03
    
    
    
    0.03Total
    
    $
    0.08
    
    
    $
    0.08
    
    
    $
    (0.01
    )
    
    $
    (0.01
    )
 55




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
 Six-month periods ended June 30,2008
    
    
    2007Basic
    
    
    Diluted
    
    
    Basic
    
    
    DilutedIncome (loss) from continuing operations
    
    $
    6,860
    
    
    $
    6,860
    
    
    $
    (12,228
    )
    
    $
    (12,228
    )Income allocated to Preferred Units
    
    
    (3,996
    )
    
    
    (3,996
    )
    
    
    (3,996
    )
    
    
    (3,996
    )Income from continuing operations available to
common unitholders
    
    
    2,864
    
    
    
    2,864
    
    
    
    (16,224
    )
    
    
    (16,224
    )Income from discontinued operations
    
    
    18,086
    
    
    
    18,086
    
    
    
    33,388
    
    
    
    33,388Net income available to common unitholders
    
    $
    20,950
    
    
    $
    20,950
    
    
    $
    17,164
    
    
    $
    17,164Weighted-average common partnership units outstanding
    
    
    90,736,342
    
    
    
    90,736,342
    
    
    
    91,620,218
    
    
    
    91,620,218Contingent securities/Stock based compensation
    
    
    
    
    
    
    207,734
    
    
    
    
    
    
    
    617,748Total weighted-average partnership units outstanding
    
    
    90,736,342
    
    
    
    90,944,076
    
    
    
    91,620,218
    
    
    
    92,237,966Earnings per Common Partnership Unit:Continuing operations
    
    $
    0.03
    
    
    $
    0.03
    
    
    $
    (0.18
    )
    
    $
    (0.18
    )Discontinued operations
    
    
    0.20
    
    
    
    0.20
    
    
    
    0.36
    
    
    
    0.36Total
    
    $
    0.23
    
    
    $
    0.23
    
    
    $
    0.19
    
    
    $
    0.19
 Common Partnership Unit and Preferred Mirror Units
   Common Share Repurchases
  SHARE BASED COMPENSATION
 Stock Options
  56




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
 Weighted
    
    
    Weighted AverageAverage
    
    
    Remaining Contractual
    
    
    Aggregate IntrinsicShares
    
    
    Exercise Price
    
    
    Term (in years)
    
    
    Value (in 000s)Outstanding at January 1, 2008
    
    
    1,070,099
    
    
    $
    26.13
    
    
    
    0.54
    
    
    
    (8,775
    )Granted
    
    
    1,824,594
    
    
    
    20.61
    
    
    
    9.77
    
    
    
    (8,849
    )Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited or expired
    
    
    (856,796
    )
    
    
    
    
    
    
    
    
    
    
    Outstanding at June 30, 2008
    
    
    2,037,897
    
    
    $
    20.75
    
    
    
    8.97
    
    
    
    (10,165
    )Vested at June 30, 2008
    
    
    213,303
    
    
    $
    21.93
    
    
    
    2.15
    
    
    
    (1,316
    )Exercisable at June 30, 2008
    
    
    213,303
    
    
    $
    21.93
    
    
    
    2.15
    
    
    
    (1,316
    )
  Restricted Share Awards
  WeightedAverage GrantShares
    
    
    Date Fair valueNon-vested at January 1, 2008
    
    
    409,282
    
    
    $
    31.91Granted
    
    
    224,691
    
    
    
    17.47Vested
    
    
    (109,701
    )
    
    
    29.63Forfeited
    
    
    (7,442
    )
    
    
    23.05Non-vested at June 30, 2008
    
    
    516,830
    
    
    $
    25.87
 Outperformance Program
   57




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##### Table of Contents



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




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
  New Jersey
    
    
    Richmond,
    
    
    California -
    
    
    California -
    
    
    MetropolitanPennsylvania
    
    
    /Delaware
    
    
    Virginia
    
    
    North
    
    
    South
    
    
    D.C.
    
    
    Southwest
    
    
    Corporate
    
    
    TotalAs of June 30, 2008:Real estate investments, at
cost:Operating properties
    
    $
    1,699,105
    
    
    $
    639,451
    
    
    $
    350,451
    
    
    $
    131,084
    
    
    $
    106,391
    
    
    $
    1,314,760
    
    
    $
    236,790
    
    
    $
    
    
    
    $
    4,478,032Development land and
construction-in-progress
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    363,936
    
    
    
    363,936As of December 31, 2007:Real estate investments, at
cost:Operating properties
    
    $
    1,682,839
    
    
    $
    663,503
    
    
    $
    348,310
    
    
    $
    472,818
    
    
    $
    106,303
    
    
    $
    1,302,833
    
    
    $
    236,957
    
    
    $
    
    
    
    $
    4,813,563Developed land and
construction-in-progress
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    
    402,270
    
    
    
    402,270For the three-months ended June
30, 2008:Total revenue
    
    $
    61,459
    
    
    $
    28,971
    
    
    $
    11,407
    
    
    $
    4,352
    
    
    $
    2,957
    
    
    $
    35,145
    
    
    $
    9,913
    
    
    $
    (417
    )
    
    $
    153,787Property operating expenses
and real estate taxes
    
    
    21,550
    
    
    
    12,387
    
    
    
    4,008
    
    
    
    1,811
    
    
    
    1,146
    
    
    
    12,155
    
    
    
    4,336
    
    
    
    1,851
    
    
    
    59,244Net operating income
    
    $
    39,909
    
    
    $
    16,584
    
    
    $
    7,399
    
    
    $
    2,541
    
    
    $
    1,811
    
    
    $
    22,990
    
    
    $
    5,577
    
    
    $
    (2,268
    )
    
    $
    94,543For the three-months ended
June 30, 2007:Total revenue
    
    $
    65,865
    
    
    $
    28,657
    
    
    $
    8,216
    
    
    $
    3,972
    
    
    $
    3,450
    
    
    $
    33,795
    
    
    $
    10,183
    
    
    $
    (1,918
    )
    
    $
    152,220Property operating expenses
and real estate taxes
    
    
    26,291
    
    
    
    12,707
    
    
    
    3,130
    
    
    
    1,254
    
    
    
    1,233
    
    
    
    11,201
    
    
    
    4,050
    
    
    
    (876
    )
    
    
    58,990Net operating income
    
    $
    39,574
    
    
    $
    15,950
    
    
    $
    5,086
    
    
    $
    2,718
    
    
    $
    2,217
    
    
    $
    22,594
    
    
    $
    6,133
    
    
    $
    (1,042
    )
    
    $
    93,230
 59




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##### Table of Contents



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
 New Jersey
    
    
    Richmond,
    
    
    California -
    
    
    California -
    
    
    MetropolitanPennsylvania
    
    
    /Delaware
    
    
    Virginia
    
    
    North
    
    
    South
    
    
    D.C.
    
    
    Southwest
    
    
    Corporate
    
    
    TotalFor the six-months
ended June 30, 2008:Total revenue
    
    $
    126,025
    
    
    $
    56,967
    
    
    $
    22,469
    
    
    $
    8,708
    
    
    $
    5,924
    
    
    $
    70,108
    
    
    $
    18,981
    
    
    $
    (988
    )
    
    $
    308,194Property operating
expenses and real
estate taxes
    
    
    43,792
    
    
    
    24,519
    
    
    
    7,721
    
    
    
    3,426
    
    
    
    2,337
    
    
    
    24,573
    
    
    
    8,411
    
    
    
    4,080
    
    
    
    118,859Net operating income
    
    $
    82,233
    
    
    $
    32,448
    
    
    $
    14,748
    
    
    $
    5,282
    
    
    $
    3,587
    
    
    $
    45,535
    
    
    $
    10,570
    
    
    $
    (5,068
    )
    
    $
    189,335For the six-months ended
June 30, 2007:Total revenue
    
    $
    131,466
    
    
    $
    56,969
    
    
    $
    17,196
    
    
    $
    7,060
    
    
    $
    6,664
    
    
    $
    67,340
    
    
    $
    19,109
    
    
    $
    (1,838
    )
    
    $
    303,966Property operating
expenses and real
estate taxes
    
    
    51,452
    
    
    
    25,024
    
    
    
    6,144
    
    
    
    2,127
    
    
    
    2,565
    
    
    
    22,710
    
    
    
    7,562
    
    
    
    (338
    )
    
    
    117,246Net operating income
    
    $
    80,014
    
    
    $
    31,945
    
    
    $
    11,052
    
    
    $
    4,933
    
    
    $
    4,099
    
    
    $
    44,630
    
    
    $
    11,547
    
    
    $
    (1,500
    )
    
    $
    186,720
 60




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BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
  Three-month periods
    
    
    Six-month periodsended June 30,
    
    
    ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Consolidated net operating income
    
    $
    94,543
    
    
    $
    93,230
    
    
    $
    189,335
    
    
    $
    186,720Less:Interest income
    
    
    179
    
    
    
    1,597
    
    
    
    382
    
    
    
    2,378Interest expense
    
    
    (35,709
    )
    
    
    (39,423
    )
    
    
    (71,807
    )
    
    
    (78,396
    )Deferred financing costs
    
    
    (1,198
    )
    
    
    (1,065
    )
    
    
    (2,706
    )
    
    
    (2,323
    )Depreciation and amortization
    
    
    (52,472
    )
    
    
    (53,542
    )
    
    
    (104,324
    )
    
    
    (111,340
    )General & administrative expenses
    
    
    (6,127
    )
    
    
    (7,007
    )
    
    
    (11,039
    )
    
    
    (14,417
    )Minority interest  partners share of consolidated
real estate ventures
    
    
    (38
    )
    
    
    8
    
    
    
    (78
    )
    
    
    (108
    )Plus:Equity in income of real estate ventures
    
    
    1,664
    
    
    
    4,504
    
    
    
    2,779
    
    
    
    5,258Net (loss) gain on disposition of undepreciated real estate
    
    
    
    
    
    
    
    
    
    
    (24
    )
    
    
    Gain on early extinguishment of debt
    
    
    986
    
    
    
    
    
    
    
    4,342
    
    
    
    Income (loss) from continuing operations
    
    
    1,828
    
    
    
    (1,698
    )
    
    
    6,860
    
    
    
    (12,228
    )Income from discontinued operations
    
    
    7,823
    
    
    
    2,852
    
    
    
    18,086
    
    
    
    33,388Net income
    
    $
    9,651
    
    
    $
    1,154
    
    
    $
    24,946
    
    
    $
    21,160
 COMMITMENTS AND CONTINGENCIES
 Legal Proceedings
   Environmental
  61




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##### Table of Contents



BRANDYWINE OPERATING PARTNERSHIP, L.P.
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2008
 Ground Rent
  2008
    
    $
    8682009
    
    
    1,9862010
    
    
    2,3182011
    
    
    2,3182012
    
    
    2,318Thereafter
    
    
    291,831
  Other Commitments or Contingencies
    62




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##### Table of Contents



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 impact of unrealized hedging transactions;
    
    the unavailability of equity and debt financing;
    
    unanticipated costs associated with the acquisition, integration and operation of our
acquisitions;
    
    unanticipated costs to complete, lease-up and operate our developments and
redevelopments;
    
    impairment charges;
    
    increased costs for, or lack of availability of, adequate insurance, including for
terrorist acts;
    
    risks associated with actual or threatened terrorist attacks;
    
    demand for tenant services beyond those traditionally provided by landlords;
    
    potential liability under environmental or other laws;
    
    earthquakes and other natural disasters;
    
    risks associated with state and local tax audits;
    
    complex regulations relating to our status as a REIT and the adverse consequences of our
failure to qualify as a REIT;
    
    changes in local real estate conditions (including changes in rental rates and the
number of competing properties);
    
    changes in the economic conditions affecting industries in which our principal tenants
compete;
    
    changes in general economic conditions;
    
    the impact of newly adopted accounting principles on our accounting policies and on
period-to-period comparisons of financial results and the other risks identified in the
Risk Factors section and elsewhere in our Annual Report on Form 10-K for the year ended
December 31, 2007.
     63




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##### Table of Contents



Tenant Rollover Risk
  Tenant Credit Risk
  64




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##### Table of Contents



Development Risk
             65




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##### Table of Contents



Comparison of the Three-Month Periods Ended , 2008 and 2007
  Applying the Conditions in Paragraph 42 of FASB Statement
No. 144 in Determining Whether to Report Discontinued Operations
  66




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##### Table of Contents



Acquired/Completed
    
    
    Development/Redevelopment
    
    
    OtherSame Store Property Portfolio

    
    
    Properties
    
    
    Properties (a)
    
    
    (Eliminations) (b)
    
    
    Total PortfolioIncrease/
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Increase/(dollars in thousands)
    
    2008
    
    
    2007
    
    
    (Decrease)
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    (Decrease)Revenue:Cash rents
    
    $
    107,304
    
    
    $
    105,767
    
    
    $
    1,537
    
    
    $
    9,612
    
    
    $
    4,911
    
    
    $
    3,273
    
    
    $
    1,990
    
    
    $
    (550
    )
    
    $
    5,207
    
    
    $
    119,639
    
    
    $
    117,875
    
    
    $
    1,764Straight-line rents
    
    
    3,264
    
    
    
    4,242
    
    
    
    (978
    )
    
    
    1,034
    
    
    
    1,087
    
    
    
    82
    
    
    
    45
    
    
    
    
    
    
    
    348
    
    
    
    4,380
    
    
    
    5,722
    
    
    
    (1,342
    )Rents  FAS 141
    
    
    1,637
    
    
    
    2,109
    
    
    
    (472
    )
    
    
    (31
    )
    
    
    (113
    )
    
    
    426
    
    
    
    67
    
    
    
    
    
    
    
    
    
    
    
    2,032
    
    
    
    2,063
    
    
    
    (31
    )Total rents
    
    
    112,205
    
    
    
    112,118
    
    
    
    87
    
    
    
    10,615
    
    
    
    5,885
    
    
    
    3,781
    
    
    
    2,102
    
    
    
    (550
    )
    
    
    5,555
    
    
    
    126,051
    
    
    
    125,660
    
    
    
    391Tenant reimbursements
    
    
    18,919
    
    
    
    17,454
    
    
    
    1,465
    
    
    
    927
    
    
    
    645
    
    
    
    939
    
    
    
    440
    
    
    
    74
    
    
    
    880
    
    
    
    20,859
    
    
    
    19,419
    
    
    
    1,440Termination fees
    
    
    792
    
    
    
    1,123
    
    
    
    (331
    )
    
    
    100
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (625
    )
    
    
    892
    
    
    
    498
    
    
    
    394Third party management fees, laborreimbursement and leasing
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,170
    
    
    
    5,369
    
    
    
    5,170
    
    
    
    5,369
    
    
    
    (199
    )Other
    
    
    347
    
    
    
    652
    
    
    
    (305
    )
    
    
    43
    
    
    
    9
    
    
    
    12
    
    
    
    (6
    )
    
    
    413
    
    
    
    619
    
    
    
    815
    
    
    
    1,274
    
    
    
    (459
    )Total revenue
    
    
    132,263
    
    
    
    131,347
    
    
    
    916
    
    
    
    11,685
    
    
    
    6,539
    
    
    
    4,732
    
    
    
    2,536
    
    
    
    5,107
    
    
    
    11,798
    
    
    
    153,787
    
    
    
    152,220
    
    
    
    1,567Property operating expenses
    
    
    38,135
    
    
    
    36,745
    
    
    
    1,390
    
    
    
    3,188
    
    
    
    2,181
    
    
    
    1,607
    
    
    
    1,331
    
    
    
    (1,648
    )
    
    
    1,023
    
    
    
    41,282
    
    
    
    41,280
    
    
    
    2Real estate taxes
    
    
    13,382
    
    
    
    13,089
    
    
    
    293
    
    
    
    1,295
    
    
    
    800
    
    
    
    761
    
    
    
    390
    
    
    
    143
    
    
    
    935
    
    
    
    15,581
    
    
    
    15,214
    
    
    
    367Management expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,381
    
    
    
    2,496
    
    
    
    2,381
    
    
    
    2,496
    
    
    
    (115
    )Subtotal
    
    
    80,746
    
    
    
    81,513
    
    
    
    (767
    )
    
    
    7,202
    
    
    
    3,558
    
    
    
    2,364
    
    
    
    815
    
    
    
    4,231
    
    
    
    7,344
    
    
    
    94,543
    
    
    
    93,230
    
    
    
    1,313General & administrative expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,127
    
    
    
    7,007
    
    
    
    6,127
    
    
    
    7,007
    
    
    
    (880
    )Depreciation and amortization
    
    
    44,766
    
    
    
    45,885
    
    
    
    (1,119
    )
    
    
    5,104
    
    
    
    2,907
    
    
    
    1,661
    
    
    
    1,237
    
    
    
    941
    
    
    
    3,513
    
    
    
    52,472
    
    
    
    53,542
    
    
    
    (1,070
    )Operating Income (loss)
    
    $
    35,980
    
    
    $
    35,628
    
    
    $
    352
    
    
    $
    2,098
    
    
    $
    651
    
    
    $
    703
    
    
    $
    (422
    )
    
    $
    (2,837
    )
    
    $
    (3,176
    )
    
    $
    35,944
    
    
    $
    32,681
    
    
    $
    3,263Number of properties
    
    
    225
    
    
    
    
    
    
    
    
    
    
    
    12
    
    
    
    
    
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    249Square feet
    
    
    21,917
    
    
    
    
    
    
    
    
    
    
    
    1,762
    
    
    
    
    
    
    
    3,207
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,886Other Income (Expense):Interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    179
    
    
    
    1,597
    
    
    
    (1,418
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (35,709
    )
    
    
    (39,423
    )
    
    
    3,714Interest expense  Deferred financing costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,198
    )
    
    
    (1,065
    )
    
    
    (133
    )Equity in income of real estate ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,664
    
    
    
    4,504
    
    
    
    (2,840
    )Gain on early extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    986
    
    
    
    
    
    
    
    986Income (loss) before minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,866
    
    
    
    (1,706
    )
    
    
    3,572Minority interest  partners share of consolidated realestate
ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (38
    )
    
    
    8
    
    
    
    (46
    )Minority interest attributable to continuing operations LP units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16
    
    
    
    158
    
    
    
    (142
    )Income (loss) from continuing operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,844
    
    
    
    (1,540
    )
    
    
    3,384Income from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,524
    
    
    
    2,729
    
    
    
    4,795Net Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    9,368
    
    
    $
    1,189
    
    
    $
    8,179Earnings per common share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    0.08
    
    
    $
    (0.01
    )
    
    $
    0.09
 
 EXPLANATORY NOTES(a)
    
    - Results include: six developments and six redevelopment properties.(b)
    
    - Represents certain revenues and expenses at the corporate level as well as various intercompany costs that are eliminated in consolidation and third-party management fees. Also
included are revenues and expenses from the29 DRA properties. 67




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##### Table of Contents



Total Revenue
  1)
    
    An additional $1.5 million at the Same Store Portfolio from increased
occupancy, increased rents received on lease renewals and free rent periods converting
to cash rent subsequent to the second quarter of 2007. This free rent conversion is
the primary reason for the decrease in Total Portfolio straight-line rental income.2)
    
    An additional $4.7 million from six properties that we acquired and six
development/redevelopment properties that we completed and placed in service subsequent
to the second quarter of 2007.3)
    
    An additional $1.3 million of rental income due to increased occupancy at 12
development/redevelopment properties in the second quarter of 2008 in comparison to
2007.4)
    
    The increase was offset by the decrease of $5.7 million of rental income earned
from our G&I properties in the second quarter of 2007.
  Property Operating Expenses
  Depreciation and Amortization Expense
  General & Administrative Expenses
  Interest Income/ Expense
   Gain on early extinguishment of debt
  68




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##### Table of Contents



Minority Interest attributable to continuing operations  LP units
  Discontinued Operations
   Net Income
  Earnings per Common Share
  69




---



##### Table of Contents



Comparison of the Six-Month Periods Ended , 2008 and 2007
  Applying the Conditions in Paragraph 42 of FASB
Statement No. 144 in Determining Whether to Report Discontinued Operations
  70




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##### Table of Contents



Acquired/Completed
    
    
    Development/Redevelopment
    
    
    OtherSame Store Property Portfolio

    
    
    Properties
    
    
    Properties (a)
    
    
    (Eliminations) (b)
    
    
    Total PortfolioIncrease/
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Increase/(dollars in thousands)
    
    2008
    
    
    2007
    
    
    (Decrease)
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    (Decrease)Revenue:Cash rents
    
    $
    213,659
    
    
    $
    209,693
    
    
    $
    3,966
    
    
    $
    18,410
    
    
    $
    8,335
    
    
    $
    6,174
    
    
    $
    4,418
    
    
    $
    (1,252
    )
    
    $
    10,618
    
    
    $
    236,991
    
    
    $
    233,064
    
    
    $
    3,927Straight-line rents
    
    
    7,292
    
    
    
    9,615
    
    
    
    (2,323
    )
    
    
    2,979
    
    
    
    3,507
    
    
    
    495
    
    
    
    132
    
    
    
    
    
    
    
    474
    
    
    
    10,766
    
    
    
    13,728
    
    
    
    (2,962
    )Rents  FAS 141
    
    
    3,107
    
    
    
    4,581
    
    
    
    (1,474
    )
    
    
    (64
    )
    
    
    (175
    )
    
    
    856
    
    
    
    117
    
    
    
    
    
    
    
    
    
    
    
    3,899
    
    
    
    4,523
    
    
    
    (624
    )Total rents
    
    
    224,058
    
    
    
    223,889
    
    
    
    169
    
    
    
    21,325
    
    
    
    11,667
    
    
    
    7,525
    
    
    
    4,667
    
    
    
    (1,252
    )
    
    
    11,092
    
    
    
    251,656
    
    
    
    251,315
    
    
    
    341Tenant reimbursements
    
    
    35,753
    
    
    
    34,859
    
    
    
    894
    
    
    
    2,045
    
    
    
    1,239
    
    
    
    2,003
    
    
    
    800
    
    
    
    165
    
    
    
    1,846
    
    
    
    39,966
    
    
    
    38,744
    
    
    
    1,222Termination fees
    
    
    4,024
    
    
    
    1,617
    
    
    
    2,407
    
    
    
    100
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    147
    
    
    
    4,124
    
    
    
    1,764
    
    
    
    2,360Third party management fees, laborreimbursement and leasing
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,849
    
    
    
    9,704
    
    
    
    10,849
    
    
    
    9,704
    
    
    
    1,145Other
    
    
    858
    
    
    
    1,347
    
    
    
    (489
    )
    
    
    63
    
    
    
    14
    
    
    
    15
    
    
    
    (2
    )
    
    
    663
    
    
    
    1,080
    
    
    
    1,599
    
    
    
    2,439
    
    
    
    (840
    )Total revenue
    
    
    264,693
    
    
    
    261,712
    
    
    
    2,981
    
    
    
    23,533
    
    
    
    12,920
    
    
    
    9,543
    
    
    
    5,465
    
    
    
    10,425
    
    
    
    23,869
    
    
    
    308,194
    
    
    
    303,966
    
    
    
    4,228Property operating expenses
    
    
    74,778
    
    
    
    74,421
    
    
    
    357
    
    
    
    6,468
    
    
    
    4,106
    
    
    
    3,391
    
    
    
    2,730
    
    
    
    (1,733
    )
    
    
    1,042
    
    
    
    82,904
    
    
    
    82,299
    
    
    
    605Real estate taxes
    
    
    26,949
    
    
    
    25,478
    
    
    
    1,471
    
    
    
    2,503
    
    
    
    1,596
    
    
    
    1,624
    
    
    
    840
    
    
    
    252
    
    
    
    2,042
    
    
    
    31,328
    
    
    
    29,956
    
    
    
    1,372Management expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,627
    
    
    
    4,991
    
    
    
    4,627
    
    
    
    4,991
    
    
    
    (364
    )Subtotal
    
    
    162,966
    
    
    
    161,813
    
    
    
    1,153
    
    
    
    14,562
    
    
    
    7,218
    
    
    
    4,528
    
    
    
    1,895
    
    
    
    7,279
    
    
    
    15,794
    
    
    
    189,335
    
    
    
    186,720
    
    
    
    2,615General & administrative expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,039
    
    
    
    14,417
    
    
    
    11,039
    
    
    
    14,417
    
    
    
    (3,378
    )Depreciation and amortization
    
    
    89,741
    
    
    
    91,204
    
    
    
    (1,463
    )
    
    
    9,483
    
    
    
    6,919
    
    
    
    3,271
    
    
    
    5,374
    
    
    
    1,829
    
    
    
    7,843
    
    
    
    104,324
    
    
    
    111,340
    
    
    
    (7,016
    )Operating Income (loss)
    
    $
    73,225
    
    
    $
    70,609
    
    
    $
    2,616
    
    
    $
    5,079
    
    
    $
    299
    
    
    $
    1,257
    
    
    $
    (3,479
    )
    
    $
    (5,589
    )
    
    $
    (6,466
    )
    
    $
    73,972
    
    
    $
    60,963
    
    
    $
    13,009Number of properties
    
    
    225
    
    
    
    
    
    
    
    
    
    
    
    12
    
    
    
    
    
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    249Square feet
    
    
    21,917
    
    
    
    
    
    
    
    
    
    
    
    1,762
    
    
    
    
    
    
    
    3,207
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,886Other Income (Expense):Interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    382
    
    
    
    2,378
    
    
    
    (1,996
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (71,807
    )
    
    
    (78,396
    )
    
    
    6,589Interest expense  Deferred financing costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,706
    )
    
    
    (2,323
    )
    
    
    (383
    )Equity in income of real estate ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,779
    
    
    
    5,258
    
    
    
    (2,479
    )Net loss on disposition of undepreciated assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24
    )
    
    
    
    
    
    
    (24
    )Gain on early extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,342
    
    
    
    
    
    
    
    4,342Income (loss) before minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,938
    
    
    
    (12,120
    )
    
    
    19,058Minority interest  partners share of consolidated realestate
ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (78
    )
    
    
    (108
    )
    
    
    30Minority interest attributable to continuing operations LP units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (103
    )
    
    
    681
    
    
    
    (784
    )Income (loss) from continuing operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,757
    
    
    
    (11,547
    )
    
    
    18,304Income from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,355
    
    
    
    31,961
    
    
    
    (14,606
    )Net Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    24,112
    
    
    $
    20,414
    
    
    $
    3,698Earnings per common share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    0.23
    
    
    $
    0.19
    
    
    $
    0.04
 
 EXPLANATORY NOTES(a)
    
    - Results include: six developments and six redevelopment properties.(b)
    
    - Represents certain revenues and expenses at the corporate level as well as various intercompany costs that are eliminated in consolidation and third-party management fees. Also
included are revenues and expenses from the 29 DRA properties. 71




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##### Table of Contents



Total Revenue
  1)
    
    An additional $4.0 million at the Same Store Portfolio from increased
occupancy, increased rents received on lease renewals and free rent periods converting
to cash rent. This free rent conversion is the primary reason for the decrease in
Total Portfolio straight-line rental income.2)
    
    An additional $10.1 million from six properties that we acquired and six
development/redevelopment properties that we completed and placed in service subsequent
to the second quarter of 2007.3)
    
    An additional $1.7 million of rental income due to increased occupancy at 12
development/redevelopment properties in the six-month period ended June 30, 2008 in
comparison to the six-month period ended June 30, 2007.4)
    
    The increase was offset by the decrease of $11.9 million of rental income
earned from our G&I properties during the six-month period ended June 30, 2007.
   Property Operating Expenses
  Depreciation and Amortization Expense
   General & Administrative Expenses
  72




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##### Table of Contents



Interest Income/ Expense
   Gain on early extinguishment of debt
  Minority Interest attributable to continuing operations  LP units
  Discontinued Operations
   Net Income
  Earnings per Common Share
  73




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##### Table of Contents



General
  
    
    fund normal recurring expenses,
    
    fund capital expenditures, including capital and tenant improvements and leasing costs,
    
    fund current development and redevelopment costs, and
    
    fund distributions declared by our Board of Trustees.
        74




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##### Table of Contents



Cash Flows
   Activity
    
    2008
    
    
    2007Operating
    
    $
    103,827
    
    
    $
    99,791Investing
    
    
    (39,812
    )
    
    
    15,301Financing
    
    
    (64,824
    )
    
    
    (111,949
    )Net cash flows
    
    $
    (809
    )
    
    $
    3,143
    Capitalization
 Indebtedness
     75




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##### Table of Contents



June 30,
    
    
    December 31,2008
    
    
    2007(dollars in thousands)Balance:Fixed rate (includes
variable swapped to
fixed)
    
    $
    2,738,413
    
    
    $
    2,855,332Variable rate  unhedged
    
    
    278,210
    
    
    
    245,637Total
    
    $
    3,016,623
    
    
    $
    3,100,969Percent of Total Debt:Fixed rate (includes
variable swapped to
fixed)
    
    
    90.8
    %
    
    
    92.1
    %Variable rate  unhedged
    
    
    9.2
    %
    
    
    7.9
    %Total
    
    
    100
    %
    
    
    100
    %Weighted-average interest rate at period end:Fixed rate (includes
variable swapped to
fixed)
    
    
    5.4
    %
    
    
    5.5
    %Variable rate  unhedged
    
    
    3.4
    %
    
    
    5.8
    %Total
    
    
    5.2
    %
    
    
    5.6
    %
       Equity
   76




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##### Table of Contents



Shelf Registration Statement
  Short- and Long-Term Liquidity
   Inflation
  Commitments and Contingencies
  77




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##### Table of Contents



Payments by Period (in thousands)Less than
    
    
    
    
    
    
    
    
    
    
    More thanTotal
    
    
    1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    5 YearsMortgage notes payable (a)
    
    $
    585,358
    
    
    $
    11,741
    
    
    $
    238,707
    
    
    $
    228,434
    
    
    $
    106,476Revolving credit facility
    
    
    163,000
    
    
    
    
    
    
    
    163,000
    
    
    
    
    
    
    
    Unsecured term loan
    
    
    183,000
    
    
    
    
    
    
    
    183,000
    
    
    
    
    
    
    
    Unsecured debt (a)
    
    
    2,180,110
    
    
    
    113,000
    
    
    
    575,000
    
    
    
    613,500
    
    
    
    878,610Ground leases (b)
    
    
    301,639
    
    
    
    1,736
    
    
    
    4,304
    
    
    
    4,636
    
    
    
    290,963Interest expense
    
    
    832,595
    
    
    
    156,985
    
    
    
    258,781
    
    
    
    212,030
    
    
    
    204,799Development contracts (c)
    
    
    12,371
    
    
    
    8,583
    
    
    
    3,788
    
    
    
    
    
    
    
    Other liabilities
    
    
    1,249
    
    
    
    
    
    
    
    561
    
    
    
    
    
    
    
    688$
    4,259,322
    
    
    $
    292,045
    
    
    $
    1,427,141
    
    
    $
    1,058,600
    
    
    $
    1,481,536
 
 (a)
    
    Amounts do not include unamortized discounts and/or premiums.(b)
    
    Future minimum rental payments under the terms of all non-cancelable ground leases under which
we are
the lessee are expensed on a straight-line basis regardless of when payments are due. Certain
of the land leases
provide for prepayment of rent on a present value basis using a fixed discount rate.
Further, certain of the land
leases for properties (currently under development) provide for contingent rent participation
by the lessor in
certain capital transactions and net operating cash flows of the property after certain
returns are achieved by us.
Such amounts, if any will be reflected as contingent rent when incurred. The leases also
provide for payment
by us of certain operating costs relating to the land, primarily real estate taxes. The above
schedule of future
minimum rental payments does not include any contingent rent amounts nor any reimbursed
expenses.(c)
    
    Represents contractual obligations for certain development projects and does not contemplate
all costs expected
to be incurred for such developments.    78




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##### Table of Contents



Interest Rate Risk and Sensitivity Analysis
       
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
   
 Item 4. Controls and Procedures
 (a)
    
    Evaluation of disclosure controls and procedures.Under the supervision and with the
participation of our management, including our principal executive officer and principal
financial officer, we conducted an evaluation of our disclosure controls and procedures, as
such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of
1934, as amended (the Exchange Act) as of the end of the period covered by this quarterly
report and have concluded that the Companys disclosure controls and procedures are
effective.
 79




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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
  TotalNumber of
    
    
    MaximumShares
    
    
    Number ofTotal
    
    
    
    
    
    
    Purchased as
    
    
    Shares that MayNumber of
    
    
    Average
    
    
    Part of Publicly
    
    
    Yet Be PurchasedShares
    
    
    Price Paid Per
    
    
    Announced Plans
    
    
    Under the PlansPurchased
    
    
    Share
    
    
    or Programs
    
    
    or Programs (a)2008:April
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    539,200May
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    539,200June
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    539,200Total
    
    
    
    
    
    
    
    
    
    
    
 
 (a)
    
    On May 2, 2006, our Board of Trustees authorized an increase in the number of common shares
that we may repurchase,
whether in open-market or privately negotiated transactions. The Board authorized us to
purchase up to an aggregate of 3,500,000 common shares (inclusive of the remaining share
repurchase availability under the Boards prior authorization from September 2001). There is no
expiration date on the share repurchase program. 
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
    
    We held our annual meeting of shareholders on June 18, 2008. At the meeting, each of
the eight individuals nominated for election to our Board of Trustees was elected to the
Board. These individuals will serve on the Board until the next annual meeting of
shareholders and until their successors are elected and qualified or until their earlier
resignation. The number of shares cast for or withheld for each nominee is set forth
below:
 Trustee
    
    
    For
    
    
    WithheldWalter DAlessio
    
    
    78,673,232
    
    
    
    2,524,472D. Pike Aloian
    
    
    78,784,877
    
    
    
    2,412,827Donald E. Axinn
    
    
    72,515,564
    
    
    
    8,682,140Wyche Fowler
    
    
    78,772,040
    
    
    
    2,425,664
 80




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##### Table of Contents



Trustee
    
    For
    
    
    WithheldMichael J. Joyce
    
    
    78,776,474
    
    
    
    2,421,230Anthony A. Nichols Sr.
    
    
    78,331,096
    
    
    
    2,866,608Charles P. Pizzi
    
    
    78,680,676
    
    
    
    2,517,028Gerard H. Sweeney
    
    
    78,674,094
    
    
    
    2,523,610
 
    
    At our annual meeting of shareholders, our shareholders voted as follows to ratify the
appointment of PricewaterhouseCoopers LLP as our independent registered public accounting
firm for the calendar year 2008 as follows:
 
    
    Votes for
    
    
    81,096,208
    
    Votes Against
    
    
    80,256
    
    Abstentions
    
    
    21,240
 
 Item 5. Other Information
  
 Item 6. Exhibits
 (a) Exhibits
 10.1
    
    Employment letter agreement with Robert Wiberg (incorporated by reference to
Brandywines Current Report on Form 8-K filed on January 22, 2008)**10.2
    
    Form of Performance Share Award to President and Chief Executive Officer and
Executive Vice President and Chief Financial Officer (incorporated by reference to
Brandywines Current Report on Form 8-K filed on April 11, 2008)**10.3
    
    Form of Performance Award to Executives other than President and Chief Executive
Officer and Executive Vice President and Chief Financial Officer (incorporated by
reference to Brandywines Current Report on Form 8-K filed on April 11, 2008)**10.4
    
    Form of Incentive Share Option Agreement for President and Chief Executive
Officer and Executive Vice President and Chief Financial Officer (incorporated by
reference to Brandywines Current Report on Form 8-K filed on April 11, 2008)**10.5
    
    Form of Incentive Share Option Agreement to Executives other than President and
Chief Executive Officer and Executive Vice President and Chief Financial Officer
(incorporated by reference to Brandywines Current Report on Form 8-K filed on April 11,
2008)**10.6
    
    Form of Non-Qualified Share Option Agreement for President and Chief Executive
Officer and Executive Vice President and Chief Financial Officer (incorporated by
reference to Brandywines Current Report on Form 8-K filed on April 11, 2008)**10.7
    
    Form of Non-Qualified Share Option Agreement to Executives other than President
and Chief Executive Officer and Executive Vice President and Chief Financial Officer
(incorporated by reference to Brandywines Current Report on Form 8-K filed on April 11,
2008)**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 1934
 81




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##### Table of Contents



32.1
    
    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 82




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##### Table of Contents



SIGNATURES OF REGISTRANT
  BRANDYWINE REALTY TRUST(Registrant)Date: August 8, 2008
    
    By:
    
    /s/ Gerard H. SweeneyGerard H. Sweeney, President and Chief Executive Officer(Principal Executive Officer)Date: August 8, 2008
    
    By:
    
    /s/ Howard M. SipznerHoward M. Sipzner, Executive Vice President and Chief Financial Officer(Principal Financial Officer)Date: August 8, 2008
    
    By:
    
    /s/ Gabriel J. MainardiGabriel J. Mainardi, Vice President  Corporate Accounting(Principal Accounting Officer)
 83




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##### Table of Contents



SIGNATURES OF REGISTRANT
  BRANDYWINE OPERATING PARTNERSHIP, L.P. (Registrant)BRANDYWINE REALTY TRUST, as general partnerDate: August 8, 2008
    
    By:
    
    /s/ Gerard H. SweeneyGerard H. Sweeney, President and Chief Executive Officer(Principal Executive Officer)Date: August 8, 2008
    
    By:
    
    /s/ Howard M. SipznerHoward M. Sipzner, Executive Vice President and Chief Financial Officer(Principal Financial Officer)Date: August 8, 2008
    
    By:
    
    /s/ Gabriel J. MainardiGabriel J. Mainardi, Vice President  Corporate Accounting(Principal Accounting Officer)
 84