UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)



☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended ~~September 30, 2019~~March 31, 2020



☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Brandywine Realty Trust

Brandywine Operating Partnership, L.P.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code (610) 325-5600



Maryland
(Brandywine Realty Trust)	001-9106	23-2413352
Delaware
(Brandywine Operating Partnership, L.P.)	000-24407	23-2862640
(State or Other Jurisdiction of Incorporation or Organization)	(Commission file number)	(I.R.S. Employer Identification Number)

2929 Walnut Street
Suite 1700
Philadelphia, PA 19104
(Address of principal executive offices) (Zip Code)

(610) 325-5600
(Registrant’s telephone number, including area code)

Securities registered pursuant to section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares of Beneficial Interest	BDN	NYSE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.



Brandywine Realty Trust	Yes	☒ No ☐
Brandywine Operating Partnership, L.P.	Yes	☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).



Brandywine Realty Trust	Yes	☒ No ☐
Brandywine Operating Partnership, L.P.	Yes	☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Brandywine Realty Trust:



Large accelerated filer	☒	Accelerated filer ☐	Non-accelerated filer ☐
Smaller reporting company	☐	Emerging growth company	☐

Brandywine Operating Partnership, L.P.:



Large accelerated filer ☐	Accelerated filer ☐	Non-accelerated filer	☒
Smaller reporting company ☐	Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).



Brandywine Realty Trust	Yes	☐	No ☒
Brandywine Operating Partnership, L.P.	Yes	☐	No ☒

A total of ~~176,194,918~~170,495,608 Common Shares of Beneficial Interest, par value $0.01 per share of Brandywine Realty Trust, were outstanding as of ~~October 18, 2019.~~April 23, 2020.

EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the period ended ~~September 30, 2019~~March 31, 2020 of Brandywine Realty Trust (the “Parent Company”) and Brandywine Operating Partnership L.P. (the “Operating Partnership”). The Parent Company is a Maryland real estate investment trust, or REIT, that owns its assets and conducts its operations through the Operating Partnership, a Delaware limited partnership, and subsidiaries of the Operating Partnership. The Parent Company, the Operating Partnership and their consolidated subsidiaries are collectively referred to in this report as the “Company”. In addition, as used in this report, terms such as “we”, “us”, and “our” may refer to the Company, the Parent Company, or the Operating Partnership.

The Parent Company is the sole general partner of the Operating Partnership and, as of ~~September 30, 2019,~~March 31, 2020, owned a 99.4% interest in the Operating Partnership. The remaining 0.6% interest consists of common units of limited partnership interest issued by the Operating Partnership to third parties in exchange for contributions of properties to the Operating Partnership. As the sole general partner of the Operating Partnership, the Parent Company has full and complete authority over the Operating Partnership’s day-to-day operations and management.

Management operates the Parent Company and the Operating Partnership as one enterprise. The management of the Parent Company consists of the same members as the management of the Operating Partnership.

As general partner with control of the Operating Partnership, the Parent Company consolidates the Operating Partnership for financial reporting purposes, and the Parent Company does not have significant assets other than its investment in the Operating Partnership. Therefore, the assets and liabilities of the Parent Company and the Operating Partnership are the same on their respective financial statements. The separate discussions of the Parent Company and the Operating Partnership in this report should be read in conjunction with each other to understand the results of the Company's operations on a consolidated basis and how management operates the Company.

The Company believes that combining the quarterly reports on Form 10-Q of the Parent Company and the Operating Partnership into a single report ~~will result in the following benefits:~~will:

facilitate a better understanding by the investors of the Parent Company and the Operating Partnership by enabling them to view the business as a whole in the same manner as management views and operates the business;

remove duplicative disclosures and provide a more straightforward presentation in light of the fact that a substantial portion of the disclosure applies to both the Parent Company and the Operating Partnership; and

create time and cost efficiencies through the preparation of one combined report instead of two separate reports.

There are few differences between the Parent Company and the Operating Partnership, which are reflected in the footnote disclosures in this report. The Company believes it is important to understand the differences between the Parent Company and the Operating Partnership in the context of how these entities operate as an interrelated consolidated company. The Parent Company is a REIT, whose only material asset is its ownership of partnership interests of the Operating Partnership. As a result, the Parent Company does not conduct business itself, other than acting as the sole general partner of the Operating Partnership, issuing equity from time to time (and contributing the net proceeds of such issuances to the Operating Partnership) and guaranteeing the debt obligations of the Operating Partnership. The Operating Partnership holds substantially all the assets of the Company, ~~and directly or indirectly holds~~including the Company's ownership interests in the ~~Company’s Real Estate Ventures.~~real estate ventures described below. The Operating Partnership conducts the operations of the Company’s business and is structured as a partnership with no publicly traded equity. Except for net proceeds from equity issuances by the Parent Company, which are contributed to the Operating Partnership in exchange for partnership units, the Operating Partnership generates the capital required by the Company’s business through the Operating Partnership’s operations, by the Operating Partnership’s incurrence of indebtedness (directly and through subsidiaries) and through the issuance of partnership units of the Operating Partnership or equity interests in subsidiaries of the Operating Partnership.

The equity and non-controlling interests in the Parent Company and the Operating Partnership’s equity are the main areas of difference between the consolidated financial statements of the Parent Company and the Operating Partnership. The common units of limited partnership interest in the Operating Partnership are accounted for as partners’ equity in the Operating Partnership’s financial statements while the common units of limited partnership interests held by parties other than the Parent Company are presented as non-controlling interests in the Parent Company’s financial statements. The differences between the Parent Company and the Operating Partnership’s equity relate to the differences in the equity issued at the Parent Company and Operating Partnership levels.

To help investors understand the significant differences between the Parent Company and the Operating Partnership, this report presents the following as separate notes or sections for each of the Parent Company and the Operating Partnership:

Consolidated Financial Statements; and

Notes to the Parent Company’s and Operating Partnership’s Equity.

This report also includes separate Item 4. (Controls and Procedures) disclosures and separate Exhibit 31 and 32 certifications for each of the Parent Company and the Operating Partnership in order to establish that the Chief Executive Officer and the Chief Financial Officer of each entity have made the requisite certifications and that the Parent Company and Operating Partnership are compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. § 1350.

In order to highlight the differences between the Parent Company and the Operating Partnership, the separate sections in this report for the Parent Company and the Operating Partnership specifically refer to the Parent Company and the Operating Partnership. In the sections that combine disclosures of the Parent Company and the Operating Partnership, this report refers to such disclosures as those of the Company. Although the Operating Partnership is generally the entity that directly or indirectly enters into contracts and real estate ventures and holds assets and incurs debt, reference to the Company is appropriate because the business is one enterprise and the Parent Company operates the business through the Operating Partnership.

TABLE OF CONTENTS



	Page

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Brandywine Realty Trust

Financial Statements of Brandywine Realty Trust	65

Consolidated Balance Sheets as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019	65

Consolidated Statements of Operations for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~	76

Consolidated Statements of Comprehensive Income for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~	87

Consolidated Statements of Beneficiaries’ Equity for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~	98

Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~	1110

Brandywine Operating Partnership, L.P.

Financial Statements of Brandywine Operating Partnership, L.P.	1211

Consolidated Balance Sheets as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019	1211

Consolidated Statements of Operations for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~	1312

Consolidated Statements of Comprehensive Income for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~	1413

Consolidated Statements of Partners’ Equity for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~	1514

Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~	1716

Notes to Unaudited Consolidated Financial Statements	1817

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	3931

Item 3. Quantitative and Qualitative Disclosures about Market Risk	5742

Item 4. Controls and Procedures	5743

PART II — OTHER INFORMATION	5944

Item 1. Legal Proceedings	5944

Item 1A. Risk Factors	5944

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	5944

Item 3. Defaults Upon Senior Securities	5945

Item 4. Mine Safety Disclosures	5945

Item 5. Other Information	5945

Item 6. Exhibits	6046

Signatures	6147

Filing Format

This combined Form 10-Q is being filed separately by Brandywine Realty Trust and Brandywine Operating Partnership, L.P.

PART I - FINANCIAL INFORMATION

Item 1. — Financial Statements

BRANDYWINE REALTY TRUST

CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands, except share and per share information)


	September 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
ASSETS
Real estate investments:
Operating properties	$	3,995,228		$	3,951,719		$	4,004,118		$	4,006,459
Accumulated depreciation	(944,994		)	(885,407		)	(992,997		)	(973,318		)
Right of use asset - operating leases, net	21,828			—			21,485			21,656
Operating real estate investments, net	3,072,062			3,066,312			3,032,606			3,054,797
Construction-in-progress	151,232			150,263			193,160			180,718
Land held for development	92,189			86,401			108,213			96,124
Prepaid leasehold interests in land held for development, net	39,694			39,999			39,490			39,592
Total real estate investments, net	3,355,177			3,342,975			3,373,469			3,371,231
Assets held for sale, net	7,349			11,599			10,698			7,349
Cash and cash equivalents	29,925			22,842			52,702			90,499
Accounts receivable, net of allowance of $284 and $1,653 as of September 30, 2019 and December 31, 2018, respectively	13,872			16,394
Accrued rent receivable, net of allowance of $11,009 and $11,266 as of September 30, 2019 and December 31, 2018, respectively	168,960			165,243
Accounts receivable, net of allowance of $284 as of both March 31, 2020 and December 31, 2019							16,928			16,363
Accrued rent receivable, net of allowance of $7,484 and $7,691 as of March 31, 2020 and December 31, 2019, respectively							175,277			174,144
Investment in Real Estate Ventures	127,759			169,100			119,998			120,294
Deferred costs, net	96,202			91,075			94,336			95,560
Intangible assets, net	95,798			131,348			75,670			84,851
Other assets	125,390			126,400			126,264			115,678
Total assets	$	4,020,432		$	4,076,976		$	4,045,342		$	4,075,969
LIABILITIES AND BENEFICIARIES' EQUITY
Mortgage notes payable, net	$	315,603		$	320,869		$	312,001		$	313,812
Unsecured credit facility	146,500			92,500			50,000			—
Unsecured term loan, net	248,430			248,042			248,692			248,561
Unsecured senior notes, net	1,367,722			1,366,635			1,581,907			1,582,045
Accounts payable and accrued expenses	119,790			125,696			109,755			113,347
Distributions payable	33,759			33,632			32,692			33,815
Deferred income, gains and rent	22,707			28,293			34,673			35,284
Acquired lease intangibles, net	24,050			31,783
Intangible liabilities, net							20,605			22,263
Lease liability - operating leases	22,503			—			22,606			22,554
Other liabilities	16,931			18,498			28,597			15,985
Total liabilities	$	2,317,995		$	2,265,948		$	2,441,528		$	2,387,666
Commitments and contingencies (See Note 13)
Commitments and contingencies (See Note 15)
Brandywine Realty Trust's Equity:
Common Shares of Brandywine Realty Trust's beneficial interest, $0.01 par value; shares authorized 400,000,000; 176,194,918 and 176,873,324 issued and outstanding as of September 30, 2019 and December 31, 2018, respectively	1,763			1,770
Common Shares of Brandywine Realty Trust's beneficial interest, $0.01 par value; shares authorized 400,000,000; 170,965,987 and 176,480,095 issued and outstanding as of March 31, 2020 and December 31, 2019, respectively							1,710			1,766
Additional paid-in-capital	3,189,350			3,200,312			3,140,194			3,192,158
Deferred compensation payable in common shares	16,216			14,021			17,012			16,216
Common shares in grantor trust, 1,105,542 and 977,120 issued and outstanding as of September 30, 2019 and December 31, 2018, respectively	(16,216		)	(14,021		)
Common shares in grantor trust, 1,117,783 and 1,105,542 issued and outstanding as of March 31, 2020 and December 31, 2019, respectively							(17,012		)	(16,216		)
Cumulative earnings	787,789			775,625			812,578			804,556
Accumulated other comprehensive income	(3,550		)	5,029
Accumulated other comprehensive loss							(10,195		)	(2,370		)
Cumulative distributions	(2,284,610		)	(2,183,909		)	(2,350,733		)	(2,318,233		)
Total Brandywine Realty Trust's equity	1,690,742			1,798,827			1,593,554			1,677,877
Noncontrolling interests	11,695			12,201			10,260			10,426
Total beneficiaries' equity	$	1,702,437		$	1,811,028		$	1,603,814		$	1,688,303
Total liabilities and beneficiaries' equity	$	4,020,432		$	4,076,976		$	4,045,342		$	4,075,969

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

BRANDYWINE REALTY TRUST

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except share and per share information)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2019			2018			2019			2018			2020			2019
Revenue
Rents	$	139,228		$	128,635		$	415,113		$	382,321		$	139,204		$	138,098
Third party management fees, labor reimbursement and leasing	4,938			4,944			14,041			17,531			4,954			3,955
Other	1,165			1,419			4,224			5,290			930			1,843
Total revenue	145,331			134,998			433,378			405,142			145,088			143,896
Operating expenses
Property operating expenses	38,358			37,852			116,542			115,109			37,461			39,500
Real estate taxes	15,247			12,433			47,119			37,272			16,787			15,783
Third party management expenses	2,469			2,612			7,035			9,605			2,662			2,117
Depreciation and amortization	55,627			44,141			158,738			131,631			52,038			51,444
General and administrative expenses	6,974			5,963			25,217			22,209			8,561			9,844
Provision for impairment	—			56,865			—			56,865
Total operating expenses	118,675			159,866			354,651			372,691			117,509			118,688
Gain on sale of real estate
Net gain (loss) on disposition of real estate	356			—			356			(35		)
Net gain on disposition of real estate													2,586			—
Net gain on sale of undepreciated real estate	250			—			1,501			2,859			—			1,001
Total gain on sale of real estate	606			—			1,857			2,824			2,586			1,001
Operating income (loss)	27,262			(24,868		)	80,584			35,275
Operating income													30,165			26,209
Other income (expense):
Interest income	558			1,220			1,636			2,564			575			525
Interest expense	(20,400		)	(19,257		)	(61,273		)	(58,091		)	(20,009		)	(20,357		)
Interest expense - amortization of deferred financing costs	(694		)	(618		)	(2,026		)	(1,872		)	(749		)	(666		)
Equity in (loss) income of Real Estate Ventures	(1,965		)	1			(4,814		)	(1,182		)
Equity in loss of Real Estate Ventures													(1,891		)	(1,358		)
Net gain on real estate venture transactions	2,059			—			3,594			37,263			—			259
Net income (loss) before income taxes	6,820			(43,522		)	17,701			13,957
Net income before income taxes													8,091			4,612
Income tax provision	—			—			(46		)	(158		)	(4		)	(29		)
Net income (loss)	6,820			(43,522		)	17,655			13,799
Net (income) loss attributable to noncontrolling interests	(48		)	342			(155		)	(162		)
Net income (loss) attributable to Brandywine Realty Trust	6,772			(43,180		)	17,500			13,637
Net income													8,087			4,583
Net income attributable to noncontrolling interests													(65		)	(60		)
Net income attributable to Brandywine Realty Trust													8,022			4,523
Nonforfeitable dividends allocated to unvested restricted shareholders	(93		)	(80		)	(305		)	(280		)	(131		)	(119		)
Net income (loss) attributable to Common Shareholders of Brandywine Realty Trust	$	6,679		$	(43,260	)	$	17,195		$	13,357
Net income attributable to Common Shareholders of Brandywine Realty Trust													$	7,891		$	4,404

Basic income (loss) per Common Share	$	0.04		$	(0.24	)	$	0.10		$	0.07
Basic income per Common Share													$	0.04		$	0.03

Diluted income (loss) per Common Share	$	0.04		$	(0.24	)	$	0.10		$	0.07
Diluted income per Common Share													$	0.04		$	0.02

Basic weighted average shares outstanding	176,195,244			178,602,622			176,066,507			178,515,993			176,069,968			175,857,358
Diluted weighted average shares outstanding	176,750,600			178,602,622			176,617,726			179,752,544			176,653,459			176,464,218

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

BRANDYWINE REALTY TRUST

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited, in thousands)

Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
Net income (loss) $ 6,820
$ (43,522 ) $ 17,655
$ 13,799
Comprehensive (loss) income:
Unrealized (loss) gain on derivative financial instruments (1,586 ) 734
(9,209 ) 7,008
Amortization of interest rate contracts (1) 188
293
582
898
Comprehensive (loss) income: (1,398 ) 1,027
(8,627 ) 7,906
Comprehensive income (loss) 5,422
(42,495 ) 9,028
21,705
Comprehensive (income) loss attributable to noncontrolling interest (40 ) 333
(107 ) (228 )
Comprehensive income (loss) attributable to Brandywine Realty Trust $ 5,382
$ (42,162 ) $ 8,921
$ 21,477



	Three Months Ended March 31,
	2020			2019
Net income	$	8,087		$	4,583
Comprehensive loss:
Unrealized loss on derivative financial instruments	(8,057		)	(2,689		)
Amortization of interest rate contracts (1)	188			206
Total comprehensive loss	(7,869		)	(2,483		)
Comprehensive income	218			2,100
Comprehensive income attributable to noncontrolling interest	(21		)	(44		)
Comprehensive income attributable to Brandywine Realty Trust	$	197		$	2,056


⁽¹⁾	Amounts reclassified from comprehensive income to interest expense within the Consolidated Statements of Operations.

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

BRANDYWINE REALTY TRUST

CONSOLIDATED STATEMENTS OF BENEFICIARIES’ EQUITY

(unaudited, in thousands, except number of shares)


	Number of Common Shares		Number of Rabbi Trust/Deferred Compensation Shares		Common Shares of Brandywine Realty Trust's beneficial interest			Additional Paid-in Capital			Deferred Compensation Payable in Common Shares			Common Shares in Grantor Trust			Cumulative Earnings			Accumulated Other Comprehensive Income (Loss)			Cumulative Distributions			Noncontrolling Interests			Total			Number of Common Shares		Number of Rabbi Trust/Deferred Compensation Shares		Common Shares of Brandywine Realty Trust's beneficial interest			Additional Paid-in Capital			Deferred Compensation Payable in Common Shares		Common Shares in Grantor Trust			Cumulative Earnings		Accumulated Other Comprehensive Income (Loss)			Cumulative Distributions			Noncontrolling Interests			Total
BALANCE, beginning of period	176,873,324		977,120		$	1,770		$	3,200,312		$	14,021		$	(14,021	)	$	775,625		$	5,029		$	(2,183,909	)	$	12,201		$	1,811,028		176,480,095		1,105,542		$	1,766		$	3,192,158		$	16,216	$	(16,216	)	$	804,556	$	(2,370	)	$	(2,318,233	)	$	10,426		$	1,688,303
Cumulative effect of accounting change																	(5,336		)										(5,336		)
Net income																	4,523									60			4,583																		8,022								65			8,087
Other comprehensive loss																				(2,469		)				(14		)	(2,483		)																		(7,825		)				(44		)	(7,869		)
Repurchase and retirement of Common Shares of Beneficial Interest	(1,337,169	)			(13		)	(17,268		)																			(17,281		)	(5,644,200	)			(57		)	(53,801		)																	(53,858		)
Issuance of partnership interest in consolidated real estate ventures																										22			22
Share-based compensation activity	465,883		41,342		4			3,673																					3,677
Share Issuance from/(to) Deferred Compensation Plan	(458	)	(5,920	)							619			(619		)													—
Reallocation of Noncontrolling interest								57																		(57		)	—
Distributions declared ($0.19 per share)																							(33,560		)	(187		)	(33,747		)
BALANCE, March 31, 2019	176,001,580		1,012,542		$	1,761		$	3,186,774		$	14,640		$	(14,640	)	$	774,812		$	2,560		$	(2,217,469	)	$	12,025		$	1,760,463
Net income																	6,205									47			6,252
Other comprehensive loss																				(4,720		)				(26		)	(4,746		)
Issuance of partnership interest in consolidated real estate ventures																										3			3
Redemption of LP Units	1,245							16																		(16		)	—
Share-based compensation activity	94,150				2			1,449																					1,451			142,468		50,967		1			2,030																			2,031
Share Issuance from/(to) Deferred Compensation Plan	100,908		100,908								1,599			(1,599		)													—			(12,376	)	(38,726	)				(193		)	796		(796		)												(193		)
Distributions declared ($0.19 per share)																							(33,571		)	(187		)	(33,758		)																					(32,500		)	(187		)	(32,687		)
BALANCE, June 30, 2019	176,197,883		1,113,450		$	1,763		$	3,188,239		$	16,239		$	(16,239	)	$	781,017		$	(2,160	)	$	(2,251,040	)	$	11,846		$	1,729,665
Net income																	6,772									48			6,820
Other comprehensive loss																				(1,390		)				(8		)	(1,398		)
Issuance of partnership interest in consolidated real estate ventures																										2			2
Share-based compensation activity								1,105																					1,105
Share Issuance from/(to) Deferred Compensation Plan	(2,965	)	(7,908	)							(23		)	23															—
Reallocation of Noncontrolling interest								6																		(6		)	—
Distributions declared ($0.19 per share)																							(33,570		)	(187		)	(33,757		)
BALANCE, September 30, 2019	176,194,918		1,105,542		$	1,763		$	3,189,350		$	16,216		$	(16,216	)	$	787,789		$	(3,550	)	$	(2,284,610	)	$	11,695		$	1,702,437
BALANCE, March 31, 2020																																170,965,987		1,117,783		$	1,710		$	3,140,194		$	17,012	$	(17,012	)	$	812,578	$	(10,195	)	$	(2,350,733	)	$	10,260		$	1,603,814

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

BRANDYWINE REALTY TRUST

CONSOLIDATED STATEMENT OF BENEFICIARIES’ EQUITY

(unaudited, in thousands, except number of shares)


	Number of Common Shares		Number of Rabbi Trust/Deferred Compensation Shares		Common Shares of Brandywine Realty Trust's beneficial interest		Additional Paid-in Capital			Deferred Compensation Payable in Common Shares			Common Shares in Grantor Trust			Cumulative Earnings			Accumulated Other Comprehensive Income (Loss)		Cumulative Distributions			Noncontrolling Interests			Total			Number of Common Shares		Number of Rabbi Trust/Deferred Compensation Shares		Common Shares of Brandywine Realty Trust's beneficial interest			Additional Paid-in Capital			Deferred Compensation Payable in Common Shares		Common Shares in Grantor Trust			Cumulative Earnings			Accumulated Other Comprehensive Income (Loss)			Cumulative Distributions			Noncontrolling Interests			Total
BALANCE, beginning of period	178,285,236		894,736		$	1,784	$	3,218,077		$	12,445		$	(12,445	)	$	641,093		$	2,399	$	(2,053,741	)	$	17,258		$	1,826,870		176,873,324		977,120		$	1,770		$	3,200,312		$	14,021	$	(14,021	)	$	775,625		$	5,029		$	(2,183,909	)	$	12,201		$	1,811,028
Cumulative effect of accounting change																																													(5,336		)										(5,336		)
Net income																44,070								375			44,445																		4,523									60			4,583
Other comprehensive income																			4,966					42			5,008
Issuance of Common Shares of Beneficial Interest	23,311						416																				416
Issuance of partnership interest in consolidated real estate ventures																								15			15
Distributions from consolidated real estate ventures																								(54		)	(54		)
Share-based compensation activity	68,425				1		3,072									3											3,076
Share Issuance from/(to) Deferred Compensation Plan	66,830		53,856							1,061			(1,061		)												—
Share Choice Plan issuance	(1,285	)																									—
Reallocation of Noncontrolling interest							(5		)															5			—
Distributions declared ($0.18 per share)																					(32,259		)	(266		)	(32,525		)
BALANCE, March 31, 2018	178,442,517		948,592		$	1,785	$	3,221,560		$	13,506		$	(13,506	)	$	685,166		$	7,365	$	(2,086,000	)	$	17,375		$	1,847,251
Net income																12,747								129			12,876
Other comprehensive income																			1,856					15			1,871
Other comprehensive loss																																																(2,469		)				(14		)	(2,483		)
Repurchase and retirement of Common Shares of Beneficial Interest																														(1,337,169	)			(13		)	(17,268		)																		(17,281		)
Issuance of partnership interest in consolidated real estate ventures																								(4		)	(4		)																									22			22
Share-based compensation activity	127,726				1		1,135									3											1,139			465,883		41,342		4			3,673																				3,677
Share Issuance from/(to) Deferred Compensation Plan	34,230		33,713		1		(112		)	530			(530		)												(111		)	(458	)	(5,920	)							619		(619		)													—
Reallocation of Noncontrolling interest							2																	(2		)	—										57																	(57		)	—
Distributions declared ($0.18 per share)																					(32,230		)	(267		)	(32,497		)
BALANCE, June 30, 2018	178,604,473		982,305		$	1,787	$	3,222,585		$	14,036		$	(14,036	)	$	697,916		$	9,221	$	(2,118,230	)	$	17,246		$	1,830,525
Net loss																(43,180		)						(342		)	(43,522		)
Other comprehensive income																			1,018					9			1,027
Issuance of partnership interest in consolidated real estate ventures																								5			5
Share-based compensation activity							750									8											758
Share Issuance from/(to) Deferred Compensation Plan	(1,871	)	(5,185	)						(15		)	15														—
Reallocation of Noncontrolling interest							(17		)															17			—
Distributions declared ($0.18 per share)																					(32,233		)	(266		)	(32,499		)
BALANCE, September 30, 2018	178,602,602		977,120		$	1,787	$	3,223,318		$	14,021		$	(14,021	)	$	654,744		$	10,239	$	(2,150,463	)	$	16,669		$	1,756,294
Distributions declared ($0.19 per share)																																																			(33,560		)	(187		)	(33,747		)
BALANCE, March 31, 2019																														176,001,580		1,012,542		$	1,761		$	3,186,774		$	14,640	$	(14,640	)	$	774,812		$	2,560		$	(2,217,469	)	$	12,025		$	1,760,463

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

BRANDYWINE REALTY TRUST

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)


	Nine Months Ended September 30,						Three Months Ended March 31,
	2019			2018			2020			2019
Cash flows from operating activities:
Net income	$	17,655		$	13,799		$	8,087		$	4,583
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization	158,738			131,631			52,038			51,444
Amortization of deferred financing costs	2,026			1,872			749			666
Amortization of debt discount/(premium), net	527			527			(395		)	175
Amortization of stock compensation costs	6,145			5,143			2,349			3,449
Straight-line rent income	(8,287		)	(10,102		)	(2,183		)	(4,165		)
Amortization of acquired above (below) market leases, net	(7,236		)	(2,313		)	(1,495		)	(1,805		)
Ground rent expense	1,103			288			366			370
Provision for doubtful accounts	611			1,238			213			—
Net gain on real estate venture transactions	(3,594		)	(37,263		)
Net gain on sale of interests in real estate	(1,857		)	(2,824		)	(2,586		)	(1,001		)
Provision for impairment	—			56,865
Loss from Real Estate Ventures, net of distributions	5,134			2,811			1,890			1,159
Income tax provision	46			158			4			29
Changes in assets and liabilities:
Accounts receivable	2,086			4,165			(1,348		)	(3,539		)
Other assets	(13,089		)	(9,831		)	(14,548		)	(39,088		)
Accounts payable and accrued expenses	194			1,544			(1,213		)	(10,822		)
Deferred income, gains and rent	(3,640		)	(3,461		)	(230		)	(3,148		)
Other liabilities	(1,312		)	290			3,360			19,459
Net cash provided by operating activities	155,250			154,537			45,058			17,766
Cash flows from investing activities:
Acquisition of properties	—			(40,240		)	(11,432		)	—
Proceeds from the sale of properties	41,546			16,771			17,711			5,273
Proceeds from real estate venture sales	675			42,953			—			259
Issuance of mortgage note receivable	—			(44,430		)
Proceeds from repayment of mortgage notes receivable	3,341			141			—			15
Capital expenditures for tenant improvements	(53,383		)	(43,142		)	(13,707		)	(14,978		)
Capital expenditures for redevelopments	(33,905		)	(31,312		)	(9,973		)	(10,777		)
Capital expenditures for developments	(55,002		)	(70,297		)	(19,426		)	(18,645		)
Advances for the purchase of tenant assets, net of repayments	(178		)	739			585			(1,615		)
Investment in unconsolidated Real Estate Ventures	(253		)	(646		)	—			(182		)
Deposits for real estate	(1,990		)	(5,550		)	(1,011		)	3,152
Capital distributions from Real Estate Ventures	35,206			5,101			—			1,851
Leasing costs paid	(13,184		)	(10,664		)	(5,315		)	(5,696		)
Net cash used in investing activities	(77,127		)	(180,576		)	(42,568		)	(41,343		)
Cash flows from financing activities:
Repayments of mortgage notes payable	(5,669		)	(4,972		)	(1,945		)	(1,871		)
Proceeds from credit facility borrowings	333,000			—			66,000			198,000
Repayments of credit facility borrowings	(279,000		)	—			(16,000		)	(130,000		)
Debt financing costs paid	—			(2,704		)
Proceeds from the exercise of stock options	800			—			47			800
Proceeds from the issuance of common shares	—			416
Shares used for employee taxes upon vesting of share awards	(1,554		)	(1,494		)	(722		)	(1,230		)
Partner contributions to consolidated real estate venture	25			15			—			23
Partner distributions from consolidated real estate venture	—			(54		)
Repurchase and retirement of common shares	(17,282		)	—			(53,857		)	(17,282		)
Distributions paid to shareholders	(100,573		)	(96,626		)	(33,622		)	(33,084		)
Distributions to noncontrolling interest	(560		)	(799		)	(187		)	(187		)
Net cash used in financing activities	(70,813		)	(106,218		)
Increase (decrease) in cash and cash equivalents and restricted cash	7,310			(132,257		)
Net cash provided by (used in) financing activities							(40,286		)	15,169
Decrease in cash and cash equivalents and restricted cash							(37,796		)	(8,408		)
Cash and cash equivalents and restricted cash at beginning of year	23,211			203,442			91,170			23,211
Cash and cash equivalents and restricted cash at end of period	$	30,521		$	71,185		$	53,374		$	14,803

Reconciliation of cash and cash equivalents and restricted cash:
Cash and cash equivalents, beginning of period	$	22,842		$	202,179		$	90,499		$	22,842
Restricted cash, beginning of period	369			1,263			671			369
Cash and cash equivalents and restricted cash, beginning of period	$	23,211		$	203,442		$	91,170		$	23,211
Cash and cash equivalents, end of period	$	29,925		$	70,360		$	52,702		$	14,449
Restricted cash, end of period	596			825			672			354
Cash and cash equivalents and restricted cash, end of period	$	30,521		$	71,185		$	53,374		$	14,803
Supplemental disclosure:
Cash paid for interest, net of capitalized interest during the nine months ended September 30, 2019 and 2018 of $2,246 and $2,578, respectively	$	56,455		$	52,888
Cash paid for interest, net of capitalized interest during the three months ended March 31, 2020 and 2019 of $1,201 and $728, respectively							$	12,961		$	14,251
Cash paid for income taxes	1,169			405			1			—
Supplemental disclosure of non-cash activity:
Dividends and distributions declared but not paid	33,759			32,492			32,692			34,107
Change in construction-in-progress related to non-cash disposition of land	—			22,625
Change in deferred income, gains and rent to the non-cash disposition of land	—			(25,462		)
Change in investment in real estate ventures as a result of dispositions	3,461			(17,313		)
Change in operating real estate related to a non-cash acquisition of an operating property	—			(20,653		)
Change in intangible assets, net related to non-cash acquisition of an operating property	—			(3,144		)
Change in acquired lease intangibles, net related to non-cash acquisition of an operating property	—			182
Change in investments in joint venture related to non-cash acquisition of property	—			(2,042		)
Change in mortgage notes payable related to acquisition of an operating property	—			9,940
Change in capital expenditures financed through accounts payable at period end	(6,011		)	992			2,745			(1,080		)
Change in capital expenditures financed through retention payable at period end	(3,356		)	2,352			23			(4,503		)

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

BRANDYWINE OPERATING PARTNERSHIP, L.P.

CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands, except unit and per unit information)


	September 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
ASSETS
Real estate investments:
Operating properties	$	3,995,228		$	3,951,719		$	4,004,118		$	4,006,459
Accumulated depreciation	(944,994		)	(885,407		)	(992,997		)	(973,318		)
Right of use asset - operating leases, net	21,828			—			21,485			21,656
Operating real estate investments, net	3,072,062			3,066,312			3,032,606			3,054,797
Construction-in-progress	151,232			150,263			193,160			180,718
Land held for development	92,189			86,401			108,213			96,124
Prepaid leasehold interests in land held for development, net	39,694			39,999			39,490			39,592
Total real estate investments, net	3,355,177			3,342,975			3,373,469			3,371,231
Assets held for sale, net	7,349			11,599			10,698			7,349
Cash and cash equivalents	29,925			22,842			52,702			90,499
Accounts receivable, net of allowance of $284 and $1,653 as of September 30, 2019 and December 31, 2018, respectively	13,872			16,394
Accrued rent receivable, net of allowance of $11,009 and $11,266 as of September 30, 2019 and December 31, 2018, respectively	168,960			165,243
Accounts receivable, net of allowance of $284 as of both March 31, 2020 and December 31, 2019							16,928			16,363
Accrued rent receivable, net of allowance of $7,484 and $7,691 as of March 31, 2020 and December 31, 2019, respectively							175,277			174,144
Investment in Real Estate Ventures	127,759			169,100			119,998			120,294
Deferred costs, net	96,202			91,075			94,336			95,560
Intangible assets, net	95,798			131,348			75,670			84,851
Other assets	125,390			126,400			126,264			115,678
Total assets	$	4,020,432		$	4,076,976		$	4,045,342		$	4,075,969
LIABILITIES AND PARTNERS' EQUITY
Mortgage notes payable, net	$	315,603		$	320,869		$	312,001		$	313,812
Unsecured credit facility	146,500			92,500			50,000			—
Unsecured term loan, net	248,430			248,042			248,692			248,561
Unsecured senior notes, net	1,367,722			1,366,635			1,581,907			1,582,045
Accounts payable and accrued expenses	119,790			125,696			109,755			113,347
Distributions payable	33,759			33,632			32,692			33,815
Deferred income, gains and rent	22,707			28,293			34,673			35,284
Acquired lease intangibles, net	24,050			31,783
Intangible liabilities, net							20,605			22,263
Lease liability - operating leases	22,503			—			22,606			22,554
Other liabilities	16,931			$	18,498		28,597			$	15,985
Total liabilities	$	2,317,995		2,265,948			$	2,441,528		2,387,666
Commitments and contingencies (See Note 13)
Redeemable limited partnership units at redemption value; 981,626 and 982,871 issued and outstanding as of September 30, 2019 and December 31, 2018, respectively	14,728			12,520
Commitments and contingencies (See Note 15)
Redeemable limited partnership units at redemption value; 981,634 issued and outstanding as of March 31, 2020 and December 31, 2019, respectively							9,981			15,388
Brandywine Operating Partnership, L.P.'s equity:
General Partnership Capital; 176,194,918 and 176,873,324 units issued and outstanding as of September 30, 2019 and December 31, 2018, respectively	1,689,334			1,791,591
General Partnership Capital; 170,965,987 and 176,480,095 units issued and outstanding as of March 31, 2020 and December 31, 2019, respectively							1,603,314			1,674,539
Accumulated other comprehensive income	(3,902		)	4,725			(10,584		)	(2,715		)
Total Brandywine Operating Partnership, L.P.'s equity	1,685,432			1,796,316			1,592,730			1,671,824
Noncontrolling interest - consolidated real estate ventures	2,277			2,192			1,103			1,091
Total partners' equity	$	1,687,709		$	1,798,508		$	1,593,833		$	1,672,915
Total liabilities and partners' equity	$	4,020,432		$	4,076,976		$	4,045,342		$	4,075,969

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

BRANDYWINE OPERATING PARTNERSHIP, L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except unit and per unit information)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2019			2018			2019			2018			2020			2019
Revenue
Rents	$	139,228		$	128,635		$	415,113		$	382,321		$	139,204		$	138,098
Third party management fees, labor reimbursement and leasing	4,938			4,944			14,041			17,531			4,954			3,955
Other	1,165			1,419			4,224			5,290			930			1,843
Total revenue	145,331			134,998			433,378			405,142			145,088			143,896
Operating expenses
Property operating expenses	38,358			37,852			116,542			115,109			37,461			39,500
Real estate taxes	15,247			12,433			47,119			37,272			16,787			15,783
Third party management expenses	2,469			2,612			7,035			9,605			2,662			2,117
Depreciation and amortization	55,627			44,141			158,738			131,631			52,038			51,444
General and administrative expenses	6,974			5,963			25,217			22,209			8,561			9,844
Provision for impairment	—			56,865			—			56,865
Total operating expenses	118,675			159,866			354,651			372,691			117,509			118,688
Gain on sale of real estate
Net gain (loss) on disposition of real estate	356			—			356			(35		)
Net gain on disposition of real estate													2,586			—
Net gain on sale of undepreciated real estate	250			—			1,501			2,859			—			1,001
Total gain on sale of real estate	606			—			1,857			2,824			2,586			1,001
Operating income (loss)	27,262			(24,868		)	80,584			35,275
Operating income													30,165			26,209
Other income (expense):
Interest income	558			1,220			1,636			2,564			575			525
Interest expense	(20,400		)	(19,257		)	(61,273		)	(58,091		)	(20,009		)	(20,357		)
Interest expense - amortization of deferred financing costs	(694		)	(618		)	(2,026		)	(1,872		)	(749		)	(666		)
Equity in (loss) income of Real Estate Ventures	(1,965		)	1			(4,814		)	(1,182		)
Equity in loss of Real Estate Ventures													(1,891		)	(1,358		)
Net gain on real estate venture transactions	2,059			—			3,594			37,263			—			259
Net income (loss) before income taxes	6,820			(43,522		)	17,701			13,957
Net income before income taxes													8,091			4,612
Income tax provision	—			—			(46		)	(158		)	(4		)	(29		)
Net income (loss)	6,820			(43,522		)	17,655			13,799
Net income													8,087			4,583
Net income attributable to noncontrolling interests - consolidated real estate ventures	(11		)	(20		)	(58		)	(46		)	(12		)	(34		)
Net income attributable to Brandywine Operating Partnership	6,809			(43,542		)	17,597			13,753			8,075			4,549
Nonforfeitable dividends allocated to unvested restricted unitholders	(93		)	(80		)	(305		)	(280		)	(131		)	(119		)
Net income (loss) attributable to Common Partnership Unitholders of Brandywine Operating Partnership, L.P.	$	6,716		$	(43,622	)	$	17,292		$	13,473
Net income attributable to Common Partnership Unitholders of Brandywine Operating Partnership, L.P.													$	7,944		$	4,430


Basic income (loss) per Common Partnership Unit	$	0.04		$	(0.24	)	$	0.10		$	0.07
Basic income per Common Partnership Unit													$	0.04		$	0.03

Diluted income (loss) per Common Partnership Unit	$	0.04		$	(0.24	)	$	0.10		$	0.07
Diluted income per Common Partnership Unit													$	0.04		$	0.02

Basic weighted average common partnership units outstanding	177,176,870			180,082,421			177,048,621			179,995,792			177,051,602			176,840,229
Diluted weighted average common partnership units outstanding	177,732,226			180,082,421			177,599,840			181,232,343			177,635,093			177,447,089

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

BRANDYWINE OPERATING PARTNERSHIP, L.P.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited, in thousands)

Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
Net income (loss) $ 6,820
$ (43,522 ) $ 17,655
$ 13,799
Comprehensive (loss) income:
Unrealized (loss) gain on derivative financial instruments (1,586 ) 734
(9,209 ) 7,008
Amortization of interest rate contracts (1) 188
293
582
898
Comprehensive (loss) income: (1,398 ) 1,027
(8,627 ) 7,906
Comprehensive income (loss) 5,422
(42,495 ) 9,028
21,705
Comprehensive income attributable to noncontrolling interest - consolidated real estate ventures (11 ) (20 ) (58 ) (46 )
Comprehensive income (loss) attributable to Brandywine Realty Trust $ 5,411
$ (42,515 ) $ 8,970
$ 21,659



	Three Months Ended March 31,
	2020			2019
Net income	$	8,087		$	4,583
Comprehensive loss:
Unrealized loss on derivative financial instruments	(8,057		)	(2,689		)
Amortization of interest rate contracts (1)	188			206
Total comprehensive loss	(7,869		)	(2,483		)
Comprehensive income	218			2,100
Comprehensive income attributable to noncontrolling interest - consolidated real estate ventures	(12		)	(34		)
Comprehensive income attributable to Brandywine Operating Partnership	$	206		$	2,066

(1)Amounts reclassified from comprehensive income to interest expense within the Consolidated Statements of Operations.

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

BRANDYWINE OPERATING PARTNERSHIP, L.P.

CONSOLIDATED STATEMENTS OF PARTNERS’ EQUITY

(unaudited, in thousands, except number of units)


	General Partner Capital													General Partner Capital
	Units		Amount			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interest - Consolidated Real Estate Ventures		Total Partners' Equity			Units		Amount			Accumulated Other Comprehensive Income			Noncontrolling Interest - Consolidated Real Estate Ventures		Total Partners' Equity
BALANCE, beginning of period	176,873,324		$	1,791,591		$	4,725		$	2,192	$	1,798,508		176,480,095		$	1,674,539		$	(2,715	)	$	1,091	$	1,672,915
Cumulative effect of accounting change			(5,336		)						(5,336		)
Net income			4,549						34		4,583					8,075						12		8,087
Other comprehensive loss						(2,483		)			(2,483		)						(7,869		)			(7,869		)
Deferred compensation obligation	(458	)									—			(12,376	)	(193		)						(193		)
Repurchase and retirement of LP units	(1,337,169	)	(17,281		)						(17,281		)	(5,644,200	)	(53,858		)						(53,858		)
Issuance of partnership interest in consolidated real estate ventures									22		22
Share-based compensation activity	465,883		3,677								3,677			142,468		2,031								2,031
Adjustment of redeemable partnership units to liquidation value at period end			(3,088		)						(3,088		)			5,220								5,220
Distributions declared to general partnership unitholders ($0.19 per unit)			(33,560		)						(33,560		)			(32,500		)						(32,500		)
BALANCE, March 31, 2019	176,001,580		$	1,740,552		$	2,242		$	2,248	$	1,745,042
Net income			6,239						13		6,252
Other comprehensive loss						(4,746		)			(4,746		)
Deferred compensation obligation	100,908										—
Repurchase and retirement of LP units	1,245										—
Issuance of partnership interest in consolidated real estate ventures									3		3
Share-based compensation activity	94,150		1,451								1,451
Adjustment of redeemable partnership units to liquidation value at period end			1,014								1,014
Distributions declared to general partnership unitholders ($0.19 per unit)			(33,571		)						(33,571		)
BALANCE, June 30, 2019	176,197,883		$	1,715,685		$	(2,504	)	$	2,264	$	1,715,445
Net income			6,809						11		6,820
Other comprehensive loss						(1,398		)			(1,398		)
Deferred compensation obligation	(2,965	)									—
Issuance of partnership interest in consolidated real estate ventures									2		2
Share-based compensation activity			1,105								1,105
Adjustment of redeemable partnership units to liquidation value at period end			(695		)						(695		)
Distributions declared to general partnership unitholders ($0.19 per unit)			(33,570		)						(33,570		)
BALANCE, September 30, 2019	176,194,918		$	1,689,334		$	(3,902	)	$	2,277	$	1,687,709
BALANCE, March 31, 2020														170,965,987		$	1,603,314		$	(10,584	)	$	1,103	$	1,593,833

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

BRANDYWINE OPERATING PARTNERSHIP, L.P.

CONSOLIDATED STATEMENT OF PARTNERS’ EQUITY

(unaudited, in thousands, except number of units)


	General Partner Capital													General Partner Capital
	Units		Amount			Accumulated Other Comprehensive Income		Noncontrolling Interest - Consolidated Real Estate Ventures			Total Partners' Equity			Units		Amount			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interest - Consolidated Real Estate Ventures		Total Partners' Equity
BALANCE, beginning of period	178,285,236		$	1,795,684		$	2,056	$	2,215		$	1,799,955		176,873,324		$	1,791,591		$	4,725		$	2,192	$	1,798,508
Cumulative effect of accounting change																(5,336		)						(5,336		)
Net income			44,440					5			44,445					4,549						34		4,583
Other comprehensive income						5,008					5,008
Other comprehensive loss																			(2,483		)			(2,483		)
Deferred compensation obligation	66,830										—			(458	)									—
Issuance of LP Units	23,311		416								416
Issuance of partnership interest in consolidated real estate ventures								15			15
Distributions from consolidated real estate ventures								(54		)	(54		)
Share Choice Plan issuance	(1,285	)									—
Share-based compensation activity	68,425		3,075								3,075
Adjustment of redeemable partnership units to liquidation value at period end			3,604								3,604
Distributions declared to general partnership unitholders ($0.18 per unit)			(32,259		)						(32,259		)
BALANCE, March 31, 2018	178,442,517		$	1,814,960		$	7,064	$	2,181		$	1,824,205
Net income			12,855					21			12,876
Other comprehensive income						1,871					1,871
Deferred compensation obligation	34,230		(111		)						(111		)
Repurchase and retirement of LP units														(1,337,169	)	(17,281		)						(17,281		)
Issuance of partnership interest in consolidated real estate ventures								(4		)	(4		)									22		22
Share-based compensation activity	127,726		1,140								1,140			465,883		3,677								3,677
Adjustment of redeemable partnership units to liquidation value at period end			(1,991		)						(1,991		)			(3,088		)						(3,088		)
Distributions declared to general partnership unitholders ($0.18 per unit)			(32,230		)						(32,230		)
BALANCE, June 30, 2018	178,604,473		$	1,794,623		$	8,935	$	2,198		$	1,805,756
Net loss			(43,542		)			20			(43,522		)
Other comprehensive income						1,027					1,027
Deferred compensation obligation	(1,871	)									—
Issuance of partnership interest in consolidated real estate ventures								5			5
Share-based compensation activity			758								758
Adjustment of redeemable partnership units to liquidation value at period end			1,264								1,264
Distributions declared to general partnership unitholders ($0.18 per unit)			(32,233		)						(32,233		)
BALANCE, September 30, 2018	178,602,602		$	1,720,870		$	9,962	$	2,223		$	1,733,055
Distributions declared to general partnership unitholders ($0.19 per unit)																(33,560		)						(33,560		)
BALANCE, March 31, 2019														176,001,580		$	1,740,552		$	2,242		$	2,248	$	1,745,042

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

BRANDYWINE OPERATING PARTNERSHIP L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)


	Nine Months Ended September 30,						Three Months Ended March 31,
	2019			2018			2020			2019
Cash flows from operating activities:

Net income	$	17,655		$	13,799		$	8,087		$	4,583
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization	158,738			131,631			52,038			51,444
Amortization of deferred financing costs	2,026			1,872			749			666
Amortization of debt discount/(premium), net	527			527			(395		)	175
Amortization of stock compensation costs	6,145			5,143			2,349			3,449
Straight-line rent income	(8,287		)	(10,102		)	(2,183		)	(4,165		)
Amortization of acquired above (below) market leases, net	(7,236		)	(2,313		)	(1,495		)	(1,805		)
Ground rent expense	1,103			288			366			370
Provision for doubtful accounts	611			1,238			213			—
Net gain on real estate venture transactions	(3,594		)	(37,263		)
Net gain on sale of interests in real estate	(1,857		)	(2,824		)	(2,586		)	(1,001		)
Provision for impairment	—			56,865
Loss from Real Estate Ventures, net of distributions	5,134			2,811			1,890			1,159
Income tax provision	46			158			4			29
Changes in assets and liabilities:
Accounts receivable	2,086			4,165			(1,348		)	(3,539		)
Other assets	(13,089		)	(9,831		)	(14,548		)	(39,088		)
Accounts payable and accrued expenses	194			1,544			(1,213		)	(10,822		)
Deferred income, gains and rent	(3,640		)	(3,461		)	(230		)	(3,148		)
Other liabilities	(1,312		)	290			3,360			19,459
Net cash provided by operating activities	155,250			154,537			45,058			17,766

Cash flows from investing activities:
Acquisition of properties	—			(40,240		)	(11,432		)	—
Proceeds from the sale of properties	41,546			16,771			17,711			5,273
Proceeds from real estate venture sales	675			42,953			—			259
Issuance of mortgage note receivable	—			(44,430		)
Proceeds from repayment of mortgage notes receivable	3,341			141			—			15
Capital expenditures for tenant improvements	(53,383		)	(43,142		)	(13,707		)	(14,978		)
Capital expenditures for redevelopments	(33,905		)	(31,312		)	(9,973		)	(10,777		)
Capital expenditures for developments	(55,002		)	(70,297		)	(19,426		)	(18,645		)
Advances for the purchase of tenant assets, net of repayments	(178		)	739			585			(1,615		)
Investment in unconsolidated Real Estate Ventures	(253		)	(646		)	—			(182		)
Deposits for real estate	(1,990		)	(5,550		)	(1,011		)	3,152
Capital distributions from Real Estate Ventures	35,206			5,101			—			1,851
Leasing costs paid	(13,184		)	(10,664		)	(5,315		)	(5,696		)
Net cash used in investing activities	(77,127		)	(180,576		)	(42,568		)	(41,343		)

Cash flows from financing activities:
Repayments of mortgage notes payable	(5,669		)	(4,972		)	(1,945		)	(1,871		)
Proceeds from credit facility borrowings	333,000			—			66,000			198,000
Repayments of credit facility borrowings	(279,000		)	—			(16,000		)	(130,000		)
Debt financing costs paid	—			(2,704		)
Proceeds from the exercise of stock options	800			—			47			800
Proceeds from the issuance of common shares	—			416
Shares used for employee taxes upon vesting of share awards	(1,554		)	(1,494		)	(722		)	(1,230		)
Partner contributions to consolidated real estate venture	25			15			—			23
Partner distributions from consolidated real estate venture	—			(54		)
Repurchase and retirement of common shares	(17,282		)	—			(53,857		)	(17,282		)
Distributions paid to preferred and common partnership units	(101,133		)	(97,425		)	(33,809		)	(33,271		)
Net cash used in financing activities	(70,813		)	(106,218		)
Increase (decrease) in cash and cash equivalents and restricted cash	7,310			(132,257		)
Net cash provided by (used in) financing activities							(40,286		)	15,169
Decrease in cash and cash equivalents and restricted cash							(37,796		)	(8,408		)
Cash and cash equivalents and restricted cash at beginning of year	23,211			203,442			91,170			23,211
Cash and cash equivalents and restricted cash at end of period	$	30,521		$	71,185		$	53,374		$	14,803

Reconciliation of cash and cash equivalents and restricted cash:
Cash and cash equivalents, beginning of period	$	22,842		$	202,179		$	90,499		$	22,842
Restricted cash, beginning of period	369			1,263			671			369
Cash and cash equivalents and restricted cash, beginning of period	$	23,211		$	203,442		$	91,170		$	23,211

Cash and cash equivalents, end of period	$	29,925		$	70,360		$	52,702		$	14,449
Restricted cash, end of period	596			825			672			354
Cash and cash equivalents and restricted cash, end of period	$	30,521		$	71,185		$	53,374		$	14,803

Supplemental disclosure:
Cash paid for interest, net of capitalized interest during the nine months ended September 30, 2019 and 2018 of $2,246 and $2,578, respectively	$	56,455		$	52,888
Cash paid for interest, net of capitalized interest during the three months ended March 31, 2020 and 2019 of $1,201 and $728, respectively							$	12,961		$	14,251
Cash paid for income taxes	1,169			405			1			—

Supplemental disclosure of non-cash activity:
Dividends and distributions declared but not paid	33,759			32,492			32,692			34,107
Change in construction-in-progress related to non-cash disposition of land	—			22,625
Change in deferred income, gains and rent to the non-cash disposition of land	—			(25,462		)
Change in investment in real estate ventures as a result of dispositions	3,461			(17,313		)
Change in operating real estate related to a non-cash acquisition of an operating property	—			(20,653		)
Change in intangible assets, net related to non-cash acquisition of an operating property	—			(3,144		)
Change in acquired lease intangibles, net related to non-cash acquisition of an operating property	—			182
Change in investments in joint venture related to non-cash acquisition of property	—			(2,042		)
Change in mortgage notes payable related to acquisition of an operating property	—			9,940
Change in capital expenditures financed through accounts payable at period end	(6,011		)	992			2,745			(1,080		)
Change in capital expenditures financed through retention payable at period end	(3,356		)	2,352			23			(4,503		)

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

~~BRANDYWINE REALTY TRUST AND BRANDYWINE OPERATING PARTNERSHIP, L.P.~~

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

~~September 30, 2019~~

1. ORGANIZATION OF THE PARENT COMPANY AND THE OPERATING PARTNERSHIP

~~The Parent Company~~Brandywine Realty Trust (the "Parent Company") is a self-administered and self-managed real estate investment trust (“REIT”) ~~that provides leasing, property management,~~engaged in the acquisition, development, redevelopment, ~~acquisition~~ownership, management, and ~~other tenant-related services for~~operation of a portfolio of office ~~retail,~~ and mixed-use properties. The Parent Company owns its assets and conducts its operations through ~~the~~Brandywine Operating Partnership, L.P. (the "Operating Partnership") and subsidiaries of the Operating Partnership. The Parent Company is the sole general partner of the Operating Partnership and, as of ~~September 30, 2019,~~March 31, 2020, owned a 99.4% interest in the Operating Partnership. The Parent Company’s common shares of beneficial interest are publicly traded on the New York Stock Exchange under the ticker symbol “BDN”. The Parent Company, the Operating Partnership, and their consolidated subsidiaries are collectively referred to as the "Company".

As of ~~September 30, 2019,~~March 31, 2020, the Company owned 9594 properties that contained an aggregate of approximately ~~16.7~~16.6 million net rentable square feet (collectively, the “Properties”). The Company’s core portfolio of operating properties excludes development properties, redevelopment properties, and properties held for sale (the “Core Properties”). The Properties were comprised of the following as of ~~September 30, 2019:~~March 31, 2020:


	Number of Properties	Rentable Square Feet	Number of Properties	Rentable Square Feet
Office properties	87	15,509,004	85	15,319,340
Mixed-use properties	3	641,741	4	659,625
Retail property	1	17,884
Core Properties	91	16,168,629	89	15,978,965
Development property	1	204,108	1	204,108
Redevelopment properties	3	338,650	4	397,237
The Properties	95	16,711,387	94	16,580,310

In addition to the Properties, as of ~~September 30, 2019,~~March 31, 2020, the Company owned ~~234.7~~242.5 acres of land held for development, of which ~~35.2~~49.2 acres were held for sale. The Company also held leasehold interests in 2 land parcels totaling 1.8 acres, each acquired through prepaid ~~99 years~~99-year ground leases, and held options to purchase approximately 55.5 additional acres of undeveloped land. As of ~~September 30, 2019,~~March 31, 2020, the total potential development that this inventory of land could support under current zoning and entitlements, including the parcels under option, amounted to an estimated ~~14.2~~14.4 million square feet, of which ~~0.2~~0.3 million square feet relates to ~~35.2~~49.2 acres held for sale. As of ~~September 30, 2019,~~March 31, 2020, the Company also owned economic interests in 107 unconsolidated real estate ventures (collectively, the “Real Estate Ventures”) (see Note 4, ~~“Investment~~''Investment in Unconsolidated Real Estate ~~Ventures,”~~Ventures”) for further information). The Properties and the properties owned by the Real Estate Ventures are located in or near Philadelphia, Pennsylvania; Austin, Texas; Metropolitan Washington, D.C.; ~~and~~ Southern New ~~Jersey~~Jersey; and Wilmington, Delaware.

The Company conducts its third-party real estate management services business primarily through wholly-owned management company subsidiaries. As of ~~September 30, 2019,~~March 31, 2020, the management company subsidiaries were managing properties containing an aggregate of approximately ~~24.6~~24.1 million net rentable square feet, of which approximately ~~16.7~~16.6 million net rentable square feet related to Properties owned by the Company and approximately ~~7.9~~7.5 million net rentable square feet related to properties owned by third parties and Real Estate Ventures.

Unless otherwise indicated, all references in this Form 10-Q to square feet represent net rentable area.

2. BASIS OF PRESENTATION

Basis of Presentation

The consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim financial statements. Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments consist solely of normal recurring matters, and result in a fair statement of the financial position of the Company as of ~~September 30, 2019,~~March 31, 2020, the results of its operations for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~ and its cash flows for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 and ~~2018.~~2019. The results of operations for such interim periods are not necessarily indicative of the results for a full year. These consolidated financial statements should be read in conjunction with the Parent Company’s and the Operating Partnership’s consolidated financial statements and footnotes included in their combined ~~2018~~2019 Annual Report on Form 10-K filed with the SEC on ~~February 22, 2019.~~

March 2, 2020.

The Company's Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 contains a discussion of our significant accounting policies under Note 2, ~~"Summary~~"Summary of Significant Accounting Policies". ~~Other than the adoption of ASU-2016-02, Leases (Topic 842), there~~There have been no significant changes in our significant accounting policies since December 31, ~~2018.~~2019.

The Company reclassified tenant reimbursements and termination fees from “Tenant reimbursements” and “Termination fees,” respectively, to “Rents” on the consolidated statements of operations as a result of the adoption of Topic 842. Prior periods have been revised to conform to current period presentation.

~~Revision of Previously Issued Financial Statements~~

The Company’s comparative 2018 results have been adjusted to correct for the effects of errors discovered during the second quarter of 2019 relating to the purchase price allocation and depreciable lives for 2 acquisitions made in a prior period. The Company has evaluated the impact of the errors to previously issued financial statements and concluded that the errors were immaterial to the previously issued financial statements; however, to correct the cumulative effect of the errors in 2019 would significantly impact the 2019 financial statements. Accordingly, the previously issued financial statements have been corrected. The corrections to the balance sheets include a reduction in cumulative earnings and operating properties and an increase to accumulated depreciation. The corrections to the prior period income statements result in an increase in depreciation and amortization and property operating expenses. In addition, the impact of an immaterial out of period depreciation adjustment, which was previously disclosed in the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2019, has been reflected in the correct period.

~~The following tables and paragraphs present line items of the previously issued financial statements that have been corrected as a result of the revision:~~

~~Balance sheet impacts~~ ~~(in thousands)~~:

December 31, 2018
Balance Sheet: As previously reported Adjustments As adjusted
Assets (Parent Company and Operating Partnership)

Operating properties 3,953,319
(1,600 ) 3,951,719
Accumulated depreciation (865,462 ) (19,945 ) (885,407 )
Operating real estate investments, net 3,087,857
(21,545 ) 3,066,312
Total assets 4,098,521
(21,545 ) 4,076,976

Equity (Parent Company)

Additional Paid-in Capital 3,200,850
(538 ) 3,200,312
Cumulative Earnings 796,513
(20,888 ) 775,625
Total Brandywine Realty Trust's equity 1,820,253
(21,426 ) 1,798,827
Noncontrolling interests 12,320
(119 ) 12,201
Total beneficiaries' equity 1,832,573
(21,545 ) 1,811,028
Total liabilities and beneficiaries' equity 4,098,521
(21,545 ) 4,076,976

Equity (Operating Partnership)

General Partnership Capital 1,813,136
(21,545 ) 1,791,591
Total Brandywine Operating Partnership, L.P.'s equity 1,817,861
(21,545 ) 1,796,316
Total partners' equity 1,820,053
(21,545 ) 1,798,508
Total liabilities and partners' equity 4,098,521
(21,545 ) 4,076,976

~~Statement of Beneficiaries’ / Partners’ Equity impacts~~ ~~(in thousands):~~

Three and Nine Months Ended September 30, 2018
Brandywine Realty Trust As previously reported Adjustments As adjusted
Statement of Beneficiaries' Equity:
Additional paid-in capital, beginning of period 3,218,564
(487 ) 3,218,077
Cumulative earnings, beginning of period 660,174
(19,081 ) 641,093
Noncontrolling interest, beginning of period 17,420
(162 ) 17,258
Additional paid-in capital, March 31, 2018 3,222,047
(487 ) 3,221,560
Cumulative earnings, March 31, 2018 704,506
(19,340 ) 685,166
Noncontrolling interests, March 31, 2018 17,538
(163 ) 17,375
Additional paid-in capital, June 30, 2018 3,223,072
(487 ) 3,222,585
Cumulative earnings, June 30, 2018 717,515
(19,599 ) 697,916
Noncontrolling interests, June 30, 2018 17,410
(164 ) 17,246
Additional paid-in capital, September 30, 2018 3,223,817
(499 ) 3,223,318
Cumulative earnings, September 30, 2018 674,599
(19,855 ) 654,744
Noncontrolling interests, September 30, 2018 16,824
(155 ) 16,669

Brandywine Operating Partnership
Statement of Partners' Equity:
Partner Capital, beginning of period 1,815,411
(19,727 ) 1,795,684
Partner Capital, March 31, 2018 1,834,947
(19,987 ) 1,814,960
Partner Capital, June 30, 2018 1,814,870
(20,247 ) 1,794,623
Partner Capital, September 30, 2018 1,741,379
(20,509 ) 1,720,870

~~Statement of Operations impacts:~~

Net income for the three and nine months ended September 30, 2018 has been reduced by $0.3 million and $0.8 million respectively, with a $0.01 decrease to basic and diluted income per common share and per common partnership unit for the nine months ended September 30, 2019. There was 0 change to any previously reported net income per share amount for the three months ended September 30, 2018.

~~There were no impacts to cash flows from operating activities in any period.~~

Adoption of New Accounting Guidance

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), modifying the principles for the recognition, measurement, presentation, and disclosure of leases for both parties to a contract (i.e., lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification determines whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and lease liability for all leases with a term of greater than twelve months regardless of their classification. Leases with a term of twelve months or less will be accounted for in the same manner as operating leases under ASC 840, Leases. The new standard requires lessors to account for leases using an approach that is substantially equivalent to previous guidance for sales-type leases, direct financing leases, and operating leases. The guidance supersedes previously issued guidance under ASC 840.

The Company adopted Topic 842 effective January 1, 2019. In applying the modified retrospective transition method, the Company elected the package of practical expedients available for implementation, which allows for the following:

~~An entity need not reassess whether any expired or existing contracts are or contain leases;~~

~~An entity need not reassess the lease classification for any expired or existing leases; and~~

~~An entity need not reassess initial indirect costs for any existing leases.~~

Furthermore, the Company elected the optional transition method to make January 1, 2019 the initial application date of the standard. This package of practical expedients allows entities to account for their existing leases for the remainder of their respective lease terms following the previous accounting guidance.

The Company also elected to adopt the optional transition practical expedient provided in ASU 2018-01 to not evaluate under Topic 842 for existing or expired land easements prior to the application date to determine if they meet the definition of a lease.

The Company also elected to adopt the practical expedient offered in ASU 2018-11 that allows lessors to not allocate the total consideration to lease and nonlease components, such as tenant reimbursements, based on their relative standalone selling prices as the timing and pattern of revenue recognition of the combined single lease component is the same and the leases are classified as operating leases.

The Company elected to adopt ASU 2018-20, which allows lessors to not evaluate whether certain sales taxes and other similar taxes are lessor costs or lessee costs. Instead, lessors will account for those costs as if they are lessee costs. All collections from lessees of taxes within the scope of the election are excluded from the consideration of the contract and from variable payments not included in the consideration of the contract.

~~Lessor accounting~~

The Company generates revenue under leases with tenants occupying the Properties. Generally, leases with tenants are accounted for as operating leases. As of September 30, 2019, the Company does not have any leases classified as direct-financing or sales-type leases. The operating leases have various expiration dates.

~~Lease payments on non-cancellable leases at September 30, 2019 are as follows (in thousands):~~

Year Minimum Rent
2019 (three months remaining) $ 97,250
2020 386,991
2021 364,435
2022 324,296
2023 296,890
Thereafter 1,413,756
Total $ 2,883,618

~~Lease payments on non-cancellable leases at December 31, 2018 are as follows (in thousands):~~

Year Minimum Rent
2019 $ 392,058
2020 372,619
2021 349,160
2022 304,445
2023 277,388
Thereafter 1,265,810
Total $ 2,961,480

Fixed lease payments under tenant leases are recognized on a straight-line basis over the term of the related lease. The cumulative difference between lease revenue recognized under the straight-line method and contractual lease payments are recorded as “Accrued rent receivable” on the consolidated balance sheets. Variable lease payments are recognized as lease revenue in the period in which changes occur in facts and circumstances on which the variable lease payments are based.

In November 2018, the FASB issued ASU No. 2018-19, which clarifies that operating lease receivables are not within the scope of ASC 326-20 and should instead be accounted for under the new leasing standard, ASC 842. Topic 842 requires a binary approach to evaluating leases for collectability. Lessors are required to determine if it is probable that substantially all of the lease payments will be collected from the tenant over the lease term. Should the lessor determine that it is not probable that substantially all of the lease payments will be collected, the standard requires that the lessor write off any accrued rent receivable and begin recognizing lease payments on a cash basis. The Company has evaluated all leases for collectability and is recognizing lease payments for certain leases on a cash basis because collectability of substantially all of the lease payments is not probable. As a result, the write off of the accrued rent receivable of $0.7 million was recorded by the Company upon adoption of Topic 842 as a cumulative effect of accounting change adjustment to equity through “Cumulative earnings” on the consolidated balance sheets.

The Company’s lease revenue is impacted by the Company’s determination of whether improvements to the property, whether made by the Company or by the tenant, are landlord assets. The determination of whether an improvement is a landlord asset

requires judgment. In making this judgment, the Company’s primary consideration is whether an improvement would be utilizable by another tenant upon the then-existing tenant vacating the improved space. If the Company has funded an improvement that it determines not to be landlord assets, then it treats the cost of the improvement as a lease incentive. If the tenant has funded the improvement that the Company determines to be landlord assets, then the Company treats the costs of the improvement as deferred revenue and amortizes these costs into revenue over the lease term.

For certain leases, the Company also makes significant assumptions and judgments in determining the lease term, including assumptions when the lease provides the tenant with an early termination option or purchase option. The lease term impacts the period over which the Company determines and records lease payments and also impacts the period over which it amortizes lease-related costs. The Company considers all relevant factors that create an economic incentive for the lessee and uses judgment to determine if those factors, considered together, signify that the lessee is reasonably certain to exercise the option. For leases where a tenant executes a lease termination, termination fees are recognized over the modified term of the lease as rental income. Additionally, any deferred rents receivable are accelerated over the modified lease term.

The Company’s leases also typically provide for tenant reimbursement of a portion of common area maintenance expenses and other operating expenses to the extent that a tenant’s pro rata share of expenses exceeds a base year level set in the lease or to the extent that the tenant has a lease on a triple net basis. The Company also contracts with third-party vendors and suppliers for goods and services to fulfill certain of the Company’s obligations to tenants. Tenant reimbursement~~s are billed in the period in which the related expenses are incurred.~~

~~The table below sets forth the allocation of lease revenue recognized between fixed contractual payments and variable lease payments (in thousands):~~

Three Months Ended September 30, Nine Months Ended September 30,
Lease Revenue 2019 2019
Fixed contractual payments $ 110,535
$ 327,252
Variable lease payments 28,693
87,861
Total $ 139,228
$ 415,113

Fixed lease payments include contractual rents under lease agreements with tenants recognized on a straight-line basis over the lease term, including amortization of lease incentives and above or below market rent intangibles, and parking income that is fixed under a long-term contract. Variable lease payments include reimbursements billed to tenants, termination fees, bad debt expense, and parking income that is not fixed under a long-term contract.

~~Lessee Accounting~~

The Company is the lessee under 6 long-term ground leases classified as operating leases. While adoption of the practical expedient allows the Company to not revisit the classification of existing leases, the Company measured the present value of the future lease payments for each ground lease agreement and recognized a right of use asset and lease liability in the aggregate amount of $22.4 million, each as of January 1, 2019 in accordance with Topic 842. The right of use assets and lease liabilities are presented as “Right of use asset – operating leases” and “Lease liability – operating leases”, respectively, on the consolidated balance sheet as of September 30, 2019.

The Company makes significant assumptions and judgments when determining the discount rate for the lease to calculate the present value of the lease payments. As the rate implicit in the lease is not readily determinable, the Company estimates the incremental borrowing rate (“IBR”) that it would need to pay to borrow, on a collateralized basis, an amount equal to the lease payments in a similar economic environment, over a similar lease term. The Company utilized a market-based approach to estimate the IBR for each individual lease. The base IBR was estimated utilizing observable mortgage and corporate bond rates, which were then adjusted to account for considerations related to the Company’s credit rating and the lease term to select an incremental borrowing rate for each lease.

The lease liabilities and right of use assets are amortized on a straight-line basis over the lease term with the corresponding expense classified in “Property operating expenses” on the consolidated statements of operations. Certain of the Company’s ground leases contain extension options and the Company considered all relevant factors in determining if it was reasonably certain that it would exercise such extension options. The Company concluded that it was not reasonably certain that it would exercise the extension options and, therefore, has not included the extension period in the remaining lease terms. With the exception of certain ground leases that are subject to rent increases periodically based on the CPI index, all lease payments under the ground lease are fixed. Topic 842 requires use of the most recent CPI adjustment when determining the present value of the lease payments for an indexed lease. As such, the 2018 CPI index was used to determine the right of use asset and corresponding lease liability as of January 1,

~~2019. Additional rent payments for amounts in excess of this estimated growth rate will be expensed on a cash basis as incurred and are considered variable lease costs.~~

~~The table below summarizes the Company’s operating lease cost (in thousands) recognized through “Property operating expenses” on the consolidated statements of operations:~~

Three Months Ended September 30, Nine Months Ended September 30,
Lease Cost 2019 2019
Fixed lease cost $ 525
$ 1,575
Variable lease cost 13
41
Total $ 538
$ 1,616

Weighted-average remaining lease term (years) 52.9

Weighted-average discount rate 6.3 %

~~Marine Piers Sublease Interest Sale~~

On March 15, 2017, the Company sold its sublease interest in the Piers at Penn’s Landing (the “Marine Piers”), which included leasehold improvements containing 181,900 net rentable square feet, and a marina, located in Philadelphia, Pennsylvania, for an aggregate sales price of $21.4 million. On the closing date, the buyer paid $12.0 million in cash and the Company received cash proceeds of $11.2 million, after closing costs and prorations. The $9.4 million balance of the purchase price was due on (a) January 31, 2020, in the event that the tenant at the Marine Piers did not exercise an option it held to extend the term of the sublease or (b) January 15, 2024, in the event that the tenant did exercise the option to extend the term of the sublease. In accordance with ASU 2017-05, the Company determined that it was appropriate to recognize the sale of the sublease interest in the Marine Piers and to defer the amount of the remaining $9.4 million balance due under the purchase and sale agreement until collectability can be determined.

During the first quarter of 2019, the tenant at the Marine Piers exercised its option to extend the term of its sublease. As a result, the $9.4 million balance of the purchase price is due on January 15, 2024, and the Company will recognize the additional gain on sale when the gain is realizable or realized.

~~Recent Accounting Pronouncements~~

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments Credit Losses (Topic 326), which changes how entities measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The guidance replaces the current incurred loss model with an expected loss approach, resulting in more timely recognition of such losses. In November 2018, the FASB released ASU 2018-19, Codification Improvements to Topic 326, Financial Instrument - Credit Losses, which clarifies that receivables arising from operating leases are not within the scope of Subtopic 326-20. The guidance iswas effective for the Company onas of January 1, 2020. The Company ~~is in the process of evaluating the impact of this new guidance on reserves for notes receivable, but does~~adopted ASU 2016-13 effective January 1, 2020 and it did not ~~anticipate that the guidance will~~ have a material impact on ~~its~~the consolidated financial statements.

3. REAL ESTATE INVESTMENTS

As of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, the gross carrying value of the operating properties was as follows (in thousands):


	September 30, 2019		December 31, 2018		March 31, 2020		December 31, 2019
Land	$	489,744	$	487,301	$	485,420	$	489,702
Building and improvements	3,049,606		3,048,889		3,044,461		3,049,395
Tenant improvements	455,878		415,529		474,237		467,362
Total	$	3,995,228	$	3,951,719	$	4,004,118	$	4,006,459

Acquisitions

The following table summarizes the property acquisitions during the three months ended March 31, 2020 (dollars in thousands):

Property/Portfolio Name

Acquisition Date

Location

Property Type

Rentable Square Feet/Acres

Purchase Price

145 King of Prussia Road

February 27, 2020

Radnor, PA

Land

7.75 acres

11,250

Dispositions

~~On September 11, 2019,~~The following table summarizes the ~~Company sold an office~~ property in Vienna, Virginia known as 1900 Gallows Rd., which included 210,632 square feet of rentable space, for a total sales price of $36.4 million resulting in a loss on sale of $0.4 million after closing and other transaction related costs. Duringdispositions during the three months ended ~~September 30, 2019, the Company also received additional proceeds from a sale that closed in a prior year resulting in $0.7 million of additional gain on sale.~~

~~The Company sold the following land parcel and recognized a gain on a property sold in a prior year during the nine months ended September 30, 2019~~March 31, 2020 (dollars in thousands):

Disposition Date Property/Portfolio Name Location Number of Parcels Acres Sales Price Net Proceeds on Sale Gain on Sale
March 15, 2019 9 Presidential Boulevard Bala Cynwyd, PA 1
2.7
$ 5,325
$ 5,023
$ 751

January 8, 2015 Libertyview Cherry Hill, NJ —
—
—
—
750
(a)
Total Dispositions 1
2.7
$ 5,325
$ 5,023
$ 1,501

Property/Portfolio Name

Disposition Date

Location

Property Type

Rentable Square Feet/Acres

Sales Price

Gain/(Loss) on Sale (a)

52 East Swedesford Road

March 19, 2020

Malvern, PA

Office

131,077

18,000

2,336

(a)

AsGain/(Loss) on Sale is net of January 2019, the Company expects to receive an additional $1.0 million of contingent consideration. The Company will recognize this consideration on a cash basis due to uncertainty of collectability. The $1.0 million consideration is payable to the Company in 12 equal installments, of which $0.8 million has been received during the nine months ended September 30, 2019.closing and other transaction related costs.

Held for Sale

As of ~~September 30, 2019,~~March 31, 2020, the Company determined that the sale of one parcel of land within the Pennsylvania Suburbs segment and 2 parcels of land ~~totaling 35.2 acres in~~within the Other segment totaling 49.2 acres was probable and classified these properties as held for ~~sale in accordance with applicable accounting standards for long-lived assets.~~sale. As ~~of September 30, 2019, $7.3~~such, $10.7 million was ~~reclassified from “Land held for development” to “Assets~~classified as "Assets held for sale, ~~net”~~net" on the consolidated balance sheets. As of ~~September 30, 2019,~~March 31, 2020, the fair value less the anticipated costs of sale of the properties exceeded the carrying values. ~~As a result, the Company expects to record gains on sale.~~ The fair value of the properties is based on the pricing in the purchase and sale agreement.

As of December 31, 2019, the Company determined that the sale of two parcels of land within the Other segment totaling 35.2 acres was probable and classified these properties as held for sale. As such, $7.3 million was classified as “Assets held for sale, net” on the consolidated balance sheets.

4. INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTURES

As of ~~September 30, 2019,~~March 31, 2020, the ~~Company's~~Company held ownership interests in 7 unconsolidated real estate ventures for an aggregate investment balance of $118.4 million, which includes a negative investment balance in one unconsolidated real estate venture, reflected within 'Other liabilities' in the Real Estate Ventures was $127.8 million. The Company formed or acquired interests in the Real Estate Ventures with unaffiliated third parties to develop or manage office, residential and/or mixed-use properties or to acquire land in anticipation of possible development of office, residential and/or mixed-use properties.consolidated balance sheets. As of ~~September 30, 2019, 6~~March 31, 2020, 3 of the real estate ventures owned properties that contained an aggregate of approximately ~~5.6~~5.4 million net rentable square feet of office space; 2 real estate ventures

owned 1.4 acres of land held for development; 1 real estate venture owned 1.3 acres of land in active development; and 1 real estate venture owned a residential tower that contained 321 apartment units.

The Company accounts for its ~~unconsolidated~~ interests in the Real Estate Ventures, ~~using the equity method. The Company’s unconsolidated interests~~which range from 15% to 70% ~~and, in certain~~, using the equity method. Certain of the ~~real estate ventures,~~Real Estate Ventures are subject to specified priority allocations of distributable cash.

The Company earned management fees from its Real Estate Ventures of ~~$1.0 million and $3.2~~$1.1 million for each of the three ~~and nine~~ months ended ~~September 30, 2019, respectively,~~March 31, 2020 and ~~$1.4 million and $4.0 million for the three and nine months ended September 30, 2018, respectively.~~2019.

The Company earned leasing commission income from its Real Estate Ventures of ~~$0.3~~$0.4 million and ~~$0.8~~$0.2 million for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019, ~~respectively, and $1.5 million and $4.4 million for the three and nine months ended September 30, 2018,~~ respectively.

The Company had outstanding accounts receivable balances from its Real Estate Ventures of $0.9 million and $0.8 million as of ~~both September 30, 2019~~March 31, 2020 and December 31, ~~2018.~~2019, respectively.

The amounts reflected in the following tables (except for the Company’s share of equity ~~and~~in income) are based on the financial information of the individual Real Estate Ventures. The Company does not record operating losses of a real estate venture in excess of its investment balance unless the Company is liable for the obligations of the real estate venture or is otherwise obligated to provide financial support to the real estate venture.

The following is a summary of the financial position of the Real Estate Ventures in which the Company held interests as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 (in thousands):



	March 31, 2020
	MAP Venture			Other		Total
Net property	$	189,953		$	650,323	$	840,276
Other assets	256,904			87,201		344,105
Other liabilities	266,798			21,188		287,986
Debt, net	181,768			419,352		601,120
Equity (a)	(1,709		)	296,984		295,275

September 30, 2019 December 31, 2018
Net property $ 841,743
$ 835,983
Other assets (a) 351,364
159,499
Other liabilities (a) 289,952
85,681
Debt, net (b) 581,024
365,707
Equity (c) 322,131
544,094



	December 31, 2019
	MAP Venture		Other		Total
Net property	$	192,582	$	641,785	$	834,367
Other assets	256,453		85,549		342,002
Other liabilities	266,200		23,871		290,071
Debt, net	181,525		403,543		585,068
Equity (a)	1,310		299,920		301,230


(a)	~~The increase is due to the recording of lease related assets and liabilities of $197.1 million and $206.4 million, respectively, for MAP Venture in connection with the adoption of Topic 842.~~


~~(b)~~	The increase is due to third-party debt financing received by Herndon Innovation Center Venture during the three months ended March 31, 2019. See “Herndon Innovation Center Metro Portfolio Venture” section below for further information.

~~(c)~~

This amount ~~includes~~does not include the effect of the basis difference between the Company's historical cost basis and the basis recorded at the real estate venture level, which is typically amortized over the life of the related assets and liabilities. Basis differentials occur from the impairment of investments, purchases of third party interests in existing real estate ventures and upon the transfer of assets that were previously owned by the Company into a real estate venture. In addition, certain acquisition, transaction and other costs may not be reflected in the net assets at the real estate venture level.

The following is a summary of results of operations of the Real Estate Ventures in which the Company held interests during the ~~three and nine-month~~three-month periods ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~ (in thousands):


	Three Months Ended September 30, 2019															Three Months Ended March 31, 2020
	DRA (G&I) Austin (a)			Brandywine-AI Venture LLC			MAP Venture			Other			Total			MAP Venture			Other			Total
Revenue	$	—		$	1,360		$	17,476		$	13,890		$	32,726		$	17,313		$	13,838		$	31,151
Operating expenses	—			(871		)	(11,981		)	(5,017		)	(17,869		)	(12,228		)	(5,733		)	(17,961		)
Interest expense, net	—			(222		)	(2,436		)	(3,522		)	(6,180		)	(2,047		)	(2,942		)	(4,989		)
Depreciation and amortization	—			(540		)	(6,247		)	(6,307		)	(13,094		)	(6,058		)	(6,465		)	(12,523		)
Gain on early extinguishment of debt	$	—		$	4,371		$	—		$	—		$	4,371
Net income (loss)	$	—		$	4,098		$	(3,188	)	$	(956	)	$	(46	)
Net loss																$	(3,020	)	$	(1,302	)	$	(4,322	)
Ownership interest %	—		%	50		%	50		%	(b)			(b)			50		%	Various			Various
Company's share of net income (loss)	$	—		$	2,049		$	(1,594	)	$	(2,400	)	$	(1,945	)
Company's share of net loss																$	(1,510	)	$	(352	)	$	(1,862	)
Basis adjustments and other	—			31			(28		)	(23		)	(20		)	(10		)	(19		)	(29		)
Equity in income (loss) of Real Estate Ventures	$	—		$	2,080		$	(1,622	)	$	(2,423	)	$	(1,965	)
Equity in loss of Real Estate Ventures																$	(1,520	)	$	(371	)	$	(1,891	)



	Three Months Ended March 31, 2019
	MAP Venture			Other			Total
Revenue	$	18,288		$	16,771		$	35,059
Operating expenses	(12,155		)	(6,563		)	(18,718		)
Interest expense, net	(2,536		)	(1,384		)	(3,920		)
Depreciation and amortization	(6,349		)	(7,363		)	(13,712		)
Net income (loss)	$	(2,752	)	$	1,461		$	(1,291	)
Ownership interest %	50		%	Various			Various
Company's share of net income (loss)	$	(1,376	)	$	64		$	(1,312	)
Basis adjustments and other	(56		)	10			(46		)
Equity in income (loss) of Real Estate Ventures	$	(1,432	)	$	74		$	(1,358	)

Three Months Ended September 30, 2018
DRA (G&I) Austin (a) Brandywine-AI Venture LLC MAP Venture Other Total
Revenue $ 14,232
$ 5,962
$ 17,243
$ 4,580
$ 42,017
Operating expenses (6,428 ) (2,589 ) (10,219 ) (1,904 ) (21,140 )
Interest expense, net (2,549 ) (873 ) (2,894 ) (1,228 ) (7,544 )
Depreciation and amortization (4,896 ) (2,232 ) (4,654 ) (1,481 ) (13,263 )
Loss on early extinguishment of debt —
—
(334 ) —
(334 )
Net income (loss) $ 359
$ 268
$ (858 ) $ (33 ) $ (264 )
Ownership interest % 50 % 50 % 50 % (b)
(b)
Company's share of net income (loss) $ 180
$ 134
$ (429 ) $ (121 ) $ (236 )
Basis adjustments and other 243
31
(15 ) (22 ) 237
Equity in income (loss) of Real Estate Ventures $ 423
$ 165
$ (444 ) $ 144
$ 1

5. LEASES

Lessor Accounting

Nine months ended September 30, 2019
DRA (G&I) Austin (a) Brandywine-AI Venture LLC evo at Cira Centre South (c) MAP Venture Other Total
Revenue $ —
$ 5,050
$ —
$ 53,560
$ 42,538
$ 101,148
Operating expenses —
(2,473 ) —
(35,747 ) (15,736 ) (53,956 )
Interest expense, net —
(698 ) —
(7,504 ) (8,219 ) (16,421 )
Depreciation and amortization —
(2,055 ) —
(19,146 ) (19,078 ) (40,279 )
Loss on early extinguishment of debt $ —
$ 4,371
$ —
$ —
$ —
$ 4,371
Net income (loss) $ —
$ 4,195
$ —
$ (8,837 ) $ (495 ) $ (5,137 )
Ownership interest % — % 50 % — % 50 % (b)
(b)
Company's share of net income (loss) $ —
$ 2,098
$ —
$ (4,419 ) $ (2,444 ) $ (4,765 )
Basis adjustments and other —
101
—
(69 ) (81 ) (49 )
Equity in income (loss) of Real Estate Ventures $ —
$ 2,199
$ —
$ (4,488 ) $ (2,525 ) $ (4,814 )

Nine Months Ended September 30, 2018
DRA (G&I) Austin (a) Brandywine-AI Venture LLC evo at Cira Centre South (c) MAP Venture Other Total
Revenue $ 42,492
$ 17,768
$ 995
$ 50,976
$ 13,708
$ 125,939
Operating expenses (18,245 ) (8,010 ) (250 ) (30,347 ) (5,145 ) (61,997 )
Interest expense, net (7,070 ) (2,606 ) (388 ) (10,426 ) (3,132 ) (23,622 )
Depreciation and amortization (15,622 ) (6,915 ) (376 ) (14,096 ) (4,430 ) (41,439 )
Loss on early extinguishment of debt —
—
(718 ) (334 ) —
(1,052 )
Net income (loss) $ 1,555
$ 237
$ (737 ) $ (4,227 ) $ 1,001
$ (2,171 )
Ownership interest % 50 % 50 % 50 % 50 % (b)
(b)
Company's share of net income (loss) $ 778
$ 119
$ (369 ) $ (2,114 ) $ 168
$ (1,418 )
Basis adjustments and other 378
33
11
(39 ) (147 ) 236
Equity in income (loss) of Real Estate Ventures $ 1,156
$ 152
$ (358 ) $ (2,153 ) $ 21
$ (1,182 )


~~(a)~~	On December 11, 2018, the Company acquired from DRA Advisors, an unaffiliated third party, DRA’s 50% ownership interest in the G&I Austin Office LLC real estate venture. The DRA Austin Venture owned 12 office properties containing an aggregate 1,570,123 square feet, located in Austin, Texas. As a result of the acquisition, the Company acquired complete ownership of the Austin properties.


~~(b)~~	The Company’s unconsolidated ownership interests ranged from 15% to 70% during the three and nine months ended September 30, 2019 and 25% to 70% during the three and nine months ended September 30, 2018, subject to specified priority allocations of distributable cash in certain of the Real Estate Ventures.


~~(c)~~	~~The Company sold its 50% ownership interest in evo at Cira Centre South Venture during the first quarter of 2018.~~

~~Brandywine - AI Venture: 3130 Fairview Park Drive~~

~~On August 29, 2019, BDN – AI Venture transferred an office building located in Falls Church, Virginia~~The table below sets forth the allocation of lease revenue between fixed contractual payments and containing 180,659 rentable square feet to the mortgage lender in full satisfaction of the lender’s outstanding $26.0 million mortgage loan. The mortgage loan was nonrecourse to the Company. The Company recorded its $2.2 million share of the gain on debt forgiveness as "Net gain on real estate venture transactions" in its consolidated statements of operationsvariable lease payments for the three months ended ~~September 30, 2019.~~March 31, 2020 and 2019 (in thousands):

~~MAP Venture~~



	Three Months Ended March 31,		Three Months Ended March 31,
Lease Revenue	2020		2019
Fixed contractual payments	$	104,401	$	104,649
Variable lease payments	30,639		28,731
Total	$	135,040	$	133,380

The Company holds a 50% ownership interest in the MAP Ground Lease Venture LLC (the “MAP Venture”) which is the lessee under a 99 years ground lease of land parcels underlying 58 office properties owned by the MAP Venture. Upon adoption of Topic 842, Leases, on January 1, 2019, the MAP Venture determined that the carrying amount of the right of use asset was greater than the fair value of the underlying right of use asset. The fair value of the underlying right of use asset was determined using the purchase price paid by a third-party to acquire the ground lease. As a result, MAP Venture recorded a $9.2 million cumulative

effect of accounting change adjustment simultaneously with the recording of the right of use asset to reduce the value of the right of use asset to its estimated fair value. The Company recorded its $4.6 million proportionate share of the cumulative effect of accounting change adjustment through "Cumulative earnings” on its consolidated balance sheets.

~~Herndon Innovation Center Metro Portfolio Venture, LLC~~

On March 29, 2019, Herndon Innovation Center Metro Portfolio Venture, LLC (“Herndon Innovation Center Venture”), in which the Company holds a 15% ownership interest, obtained $134.1 million of third-party debt financing, secured by 4 properties within the venture, with an initial advance of $113.1 million. The remaining funds available under the loan have not yet been drawn. On April 1, 2019, the venture received $111.0 million in net cash proceeds from the financing. The Company received $16.7 million for its share of the cash proceeds on April 12, 2019. The loan bears interest at LIBOR + 1.95% capped at a total maximum interest rate of 5.45% - 6.45% over the term of the loan and matures on March 29, 2024. On April 11, 2019, the venture obtained an additional $115.3 million of third-party debt financing secured by the remaining four properties within the venture. The loan bears interest at LIBOR + 1.80% capped at a total maximum interest rate of 6.3% and matures on April 11, 2024. On April 12, 2019, the Company received $13.8 million for its share of the cash proceeds from the financing.

~~Guarantees~~

As of September 30, 2019, the Real Estate Ventures had aggregate indebtedness of $592.4 million. These loans are generally mortgage or construction loans, most of which are nonrecourse to the Company, except for customary carve-outs. As of September 30, 2019, the loans to Real Estate Ventures for which there is recourse to the Company consisted of the following: (i) a $0.3 million payment guarantee on a loan with a $3.7 million outstanding principal balance, provided to PJP VII; and (ii) up to a $41.3 million payment guarantee on a $150.0 million construction loan provided to 4040 Wilson. In addition, during construction undertaken by any of the Real Estate Ventures, including 4040 Wilson, the Company has provided and expects to continue to provide cost overrun and completion guarantees, with rights of contribution among partners or members in the Real Estate Ventures, as well as customary environmental indemnities and guarantees of customary exceptions to nonrecourse provisions in loan agreements.

5.6. INTANGIBLE ASSETS AND LIABILITIES

As of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, the Company’s intangible assets/liabilities were comprised of the following (in thousands):


	September 30, 2019							March 31, 2020
	Total Cost		Accumulated Amortization			Intangible Assets, net		Total Cost		Accumulated Amortization			Intangible Assets, net
Intangible assets, net:
In-place lease value	$	168,881	$	(74,951	)	$	93,930	$	153,328	$	(79,024	)	$	74,304
Tenant relationship value	5,268		(4,728		)	540		5,142		(4,775		)	367
Above market leases acquired	4,955		(3,627		)	1,328		4,866		(3,867		)	999
Total intangible assets, net	$	179,104	$	(83,306	)	$	95,798	$	163,336	$	(87,666	)	$	75,670

	Total Cost		Accumulated Amortization			Intangible Liabilities, net		Total Cost		Accumulated Amortization			Intangible Liabilities, net
Acquired lease intangibles, net:
Intangible liabilities, net:
Below market leases acquired	$	44,876	$	(20,826	)	$	24,050	$	43,302	$	(22,697	)	$	20,605


	December 31, 2018							December 31, 2019
	Total Cost		Accumulated Amortization			Intangible Assets, net		Total Cost		Accumulated Amortization			Intangible Assets, net
Intangible assets, net:
In-place lease value	$	181,887	$	(53,376	)	$	128,511	$	167,357	$	(84,123	)	$	83,234
Tenant relationship value	9,564		(8,551		)	1,013		5,268		(4,815		)	453
Above market leases acquired	4,966		(3,142		)	1,824		4,956		(3,792		)	1,164
Total intangible assets, net	$	196,417	$	(65,069	)	$	131,348	$	177,581	$	(92,730	)	$	84,851

	Total Cost		Accumulated Amortization			Intangible Liabilities, net		Total Cost		Accumulated Amortization			Intangible Liabilities, net
Acquired lease intangibles, net:
Intangible liabilities, net:
Below market leases acquired	$	49,655	$	(17,872	)	$	31,783	$	44,757	$	(22,494	)	$	22,263

As of ~~September 30, 2019,~~March 31, 2020, the Company’s annual amortization for its intangible assets/liabilities, assuming no prospective early lease terminations, was as follows (dollars in thousands):


	Assets		Liabilities		Assets		Liabilities
2019 (three months remaining)	$	10,057	$	1,696
2020	28,185		5,299
2020 (nine months remaining)					$	18,801	$	3,665
2021	18,289		3,890		17,854		3,838
2022	12,153		2,270		12,043		2,257
2023	9,236		1,722		9,213		1,716
2024					6,294		1,428
Thereafter	17,878		9,173		11,465		7,701
Total	$	95,798	$	24,050	$	75,670	$	20,605

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6.7. DEBT OBLIGATIONS

The following table sets forth information regarding the Company’s consolidated debt obligations outstanding at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 (in thousands):


	September 30, 2019			December 31, 2018			Effective Interest Rate	Maturity Date	March 31, 2020			December 31, 2019			Effective Interest Rate	Maturity Date
MORTGAGE DEBT:
Two Logan Square	$	81,535		$	82,805		3.98%	May 2020	$	80,667		$	81,103		3.98%	August 2020
Four Tower Bridge	9,351			9,526			4.50%	February 2021	9,230			9,291			4.50%	February 2021
One Commerce Square	117,486			120,183			3.64%	April 2023	115,647			116,571			3.64%	April 2023
Two Commerce Square	108,991			110,518			4.51%	April 2023	107,948			108,472			4.51%	April 2023
Principal balance outstanding	317,363			323,032					313,492			315,437
Plus: fair market value premium (discount), net	(1,477		)	(1,759		)			(1,289		)	(1,383		)
Less: deferred financing costs	(283		)	(404		)			(202		)	(242		)
Mortgage indebtedness	$	315,603		$	320,869				$	312,001		$	313,812

UNSECURED DEBT
$600 million Unsecured Credit Facility	$	146,500		$	92,500		LIBOR + 1.10%	July 2022	$	50,000		$	—		LIBOR + 1.10%	July 2022
Seven-Year Term Loan - Swapped to fixed	250,000			250,000			2.87%	October 2022	250,000			250,000			2.87%	October 2022
$350.0M 3.95% Guaranteed Notes due 2023	350,000			350,000			3.87%	February 2023	350,000			350,000			3.87%	February 2023
$250.0M 4.10% Guaranteed Notes due 2024	250,000			250,000			4.33%	October 2024
$350.0M 4.10% Guaranteed Notes due 2024									350,000			350,000			3.78%	October 2024
$450.0M 3.95% Guaranteed Notes due 2027	450,000			450,000			4.03%	November 2027	450,000			450,000			4.03%	November 2027
$250.0M 4.55% Guaranteed Notes due 2029	250,000			250,000			4.60%	October 2029
$350.0M 4.55% Guaranteed Notes due 2029									350,000			350,000			4.30%	October 2029
Indenture IA (Preferred Trust I)	27,062			27,062			LIBOR + 1.25%	March 2035	27,062			27,062			LIBOR + 1.25%	March 2035
Indenture IB (Preferred Trust I) - Swapped to fixed	25,774			25,774			3.30%	April 2035	25,774			25,774			3.30%	April 2035
Indenture II (Preferred Trust II) - Swapped to fixed	25,774			25,774			3.09%	July 2035
Indenture II (Preferred Trust II)									25,774			25,774			LIBOR + 1.25%	July 2035
Principal balance outstanding	1,775,110			1,721,110					1,878,610			1,828,610
Plus: original issue premium (discount), net	(3,852		)	(4,096		)			11,601			12,090
Less: deferred financing costs	(8,606		)	(9,837		)			(9,612		)	(10,094		)
Total unsecured indebtedness	$	1,762,652		$	1,707,177				$	1,880,599		$	1,830,606
Total Debt Obligations	$	2,078,255		$	2,028,046				$	2,192,600		$	2,144,418

~~As of both September 30, 2019 and December 31, 2018, the Company’s weighted-average effective interest rates on its mortgage notes payable was 4.05%.~~

In addition to the debt described above, the Company utilizes borrowings under its unsecured revolving credit facility (the ~~“Credit~~“Unsecured Credit Facility”) for general business purposes, including to fund costs of acquisitions, developments and redevelopments of properties, fund share repurchases and to repay other debt. The Unsecured Credit Facility provides for borrowings of up to $600.0 million and the per annum variable interest rate on borrowings is LIBOR plus 1.10%. The interest rate and facility fee are subject to adjustment upon a change in the Company’s unsecured debt ratings. During the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, the weighted-average interest rate on Unsecured Credit Facility borrowings was ~~3.5%~~2.1% resulting in ~~$4.2 million~~a nominal amount of interest expense. As of ~~September 30, 2019,~~March 31, 2020, the effective interest rate on Credit Facility borrowings was ~~3.2%~~2.1%. ~~The Company had no borrowings under the Credit Facility as of and during the nine-months ended September 30, 2018.~~

The Parent Company unconditionally guarantees the unsecured debt obligations of the Operating Partnership (or is a co-borrower with the Operating Partnership) but does not by itself incur unsecured indebtedness. The Parent Company has no material assets other than its investment in the Operating Partnership.

The Company was in compliance with all financial covenants as of ~~September 30, 2019.~~March 31, 2020. Certain of the covenants restrict the Company’s ability to obtain alternative sources of capital.

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As of ~~September 30, 2019,~~March 31, 2020, the Company’s aggregate scheduled principal payments of debt obligations are as follows (in thousands):


2019 (three months remaining)	$	1,926
2020	87,225
2020 (nine months remaining)				$	85,281
2021	15,143			15,143
2022	402,832			306,332
2023	556,737			556,736
2024				350,000
Thereafter	1,028,610			878,610
Total principal payments	2,092,473			2,192,102
Net unamortized premiums/(discounts)	(5,329		)	10,312
Net deferred financing costs	(8,889		)	(9,814		)
Outstanding indebtedness	$	2,078,255		$	2,192,600

7.8. FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial assets and liabilities recorded on the consolidated balance sheets are categorized based on the inputs to the valuation techniques as follows:

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access;

Level 2 inputs are inputs, other than quoted prices included in Level 1, which are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals; and

Level 3 inputs are unobservable inputs for the asset or liability, which is typically based on an entity’s own assumptions, as there is little, if any, related market activity or information.

The Company determined the fair values disclosed below using available market information and discounted cash flow analyses as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively. The discount rate used in calculating fair value is the sum of the current risk free rate and the risk premium on the date of measurement of the instruments or obligations. Considerable judgment is necessary to interpret market data and to develop the related estimates of fair value. Accordingly, the estimates presented are not necessarily indicative of the amounts that the Company could realize upon disposition. The use of different estimates and valuation methodologies may have a material effect on the fair value amounts shown. The Company believes that the carrying amounts reflected in the consolidated balance sheets at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 approximate the fair values for cash and cash equivalents, accounts receivable, other assets ~~(except for the note receivable disclosed below),~~ and liabilities, accounts payable and accrued ~~expenses.~~expenses because they are short-term in duration. The following are financial instruments for which the Company’s estimates of fair value differ from the carrying amounts (in thousands):


	September 30, 2019				December 31, 2018				March 31, 2020				December 31, 2019
	Carrying Amount (a)		Fair Value		Carrying Amount (a)		Fair Value		Carrying Amount (a)		Fair Value		Carrying Amount (a)		Fair Value
Unsecured notes payable	$	1,289,112	$	1,366,900	$	1,288,024	$	1,262,570	$	1,503,297	$	1,511,215	$	1,503,435	$	1,591,830
Variable rate debt	$	473,540	$	456,478	$	419,153	$	402,924	$	377,302	$	359,532	$	327,171	$	309,947
Mortgage notes payable	$	315,603	$	320,761	$	320,869	$	318,515	$	312,001	$	331,341	$	313,812	$	317,031
Notes receivable	$	44,430	$	40,844	$	47,771	$	47,747	$	44,430	$	46,640	$	44,430	$	43,322


(a)	~~Amounts presented are net~~Net of deferred financing costs of ~~$7.0~~$8.3 million and ~~$7.9~~$8.7 million for unsecured notes payable, ~~$1.6~~$1.3 million and ~~$5.1~~$1.4 million for variable rate debt and ~~$0.3 million and $0.4~~$0.2 million for mortgage notes payable as of ~~September 30, 2019~~both March 31, 2020 and December 31, ~~2018, respectively.~~2019.

On June 26, 2018, the Company provided a $44.4 million mortgage loan to Brandywine 1919 Ventures, an unconsolidated real estate venture in which the Company holds a 50% ownership interest, and recorded a related party note receivable of $44.4 ~~million.~~million within 'Other assets' on the consolidated balance sheets. Refer to Note 24, ''Investment in Unconsolidated Real Estate Ventures" to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 for further detail regarding this financing.

The Company used quoted market prices as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 to value the unsecured notes payable and, as such, categorized them as Level 2. ~~For the fair value of the Company’s unsecured notes, the Company uses a discount rate based on the indicative new issue pricing provided by lenders.~~

The inputs utilized to determine the fair value of the Company’s mortgage notes payable and variable rate debt are categorized as Level 3. The fair value of the variable rate debt was determined using a discounted cash flow model that considered borrowing

rates available to the Company for loans with similar terms and characteristics. The fair value of the mortgage notes payable was determined using a discounted cash flow model that considered the contractual interest and principal payments discounted at a blended market rate for loans with similar terms, maturities and loan-to-value. These inputs have been categorized as Level 3 because the Company considers the rates used in the valuation techniques to be unobservable.

The inputs utilized to determine fair value of the Company's notes receivable are unobservable and, as such, were categorized as Level 3. Fair value was determined using a discounted cash flow model that considered the contractual interest and principal payments discounted at a blended interest rate of the notes receivable.

For the Company’s level 3 financial instruments for which fair value is disclosed, an increase in the discount rate used to determine fair value would result in a decrease to the fair value. Conversely, a decrease in the discount rate would result in an increase to the fair value.

Disclosure about the fair value of financial instruments is based upon pertinent information available to management as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018.~~2019. Although management is not aware of any factors that would significantly affect the fair value amounts, such amounts ~~have~~were not ~~been~~ comprehensively revalued for purposes of these financial statements since ~~September 30, 2019, and current~~March 31, 2020. Current estimates of fair value may differ from the amounts presented herein.

~~8. LIMITED PARTNERS' NON-CONTROLLING INTERESTS IN THE PARENT COMPANY~~

Non-controlling interests in the Parent Company’s financial statements relate to redeemable common limited partnership interests in the Operating Partnership held by parties other than the Parent Company and properties which are consolidated but not wholly owned by the Operating Partnership.

~~Operating Partnership~~

The aggregate book value of the non-controlling interests associated with the redeemable common limited partnership interests in the accompanying consolidated balance sheet of the Parent Company was $9.4 million and $10.1 million as of September 30, 2019 and December 31, 2018, respectively. Under the applicable accounting guidance, the redemption value of limited partnership units are carried at, on a limited partner basis, the greater of historical cost adjusted for the allocation of income and distributions or fair value. The Parent Company believes that the aggregate settlement value of these interests, based on the number of units outstanding and the closing price of the common shares on the balance sheet dates as of September 30, 2019 and December 31, 2018, was approximately $14.9 million and $12.6 million, respectively.

9. DERIVATIVE FINANCIAL INSTRUMENTS

The following table summarizes the terms and fair values of the Company’s derivative financial instruments as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018.~~2019. The notional amounts provide an indication of the extent of the Company’s involvement in these instruments at that time, but do not represent exposure to credit, interest rate or market risks (amounts presented in ~~thousands and included in other assets and other liabilities on the Company’s consolidated balance sheets)~~thousands).


Hedge Product	Hedge Type	Designation		Notional Amount				Strike		Trade Date	Maturity Date	Fair value					Hedge Type	Designation		Notional Amount				Strike		Trade Date	Maturity Date	Fair value
				9/30/2019		12/31/2018						9/30/2019			12/31/2018
Assets
Swap	Interest Rate	Cash Flow	(a)	$	25,774	$	25,774	3.090	%	January 6, 2012	October 30, 2019	$	28		$	183
																				3/31/2020		12/31/2019						3/31/2020			12/31/2019
Liabilities
Swap	Interest Rate	Cash Flow	(a)	$	250,000	$	250,000	2.868	%	October 8, 2015	October 8, 2022	$	(1,586	)	$	7,008	Interest Rate	Cash Flow	(a)	$	250,000	$	250,000	2.868	%	October 8, 2015	October 8, 2022	$	(8,423	)	$	(562	)
Swap	Interest Rate	Cash Flow	(a)	$	25,774	$	25,774	3.300	%	December 22, 2011	January 30, 2021	(99		)	292		Interest Rate	Cash Flow	(a)	$	25,774	$	25,774	3.300	%	December 22, 2011	January 30, 2021	(293		)	(94		)
				$	301,548	$	301,548													$	275,774	$	275,774


(a)	Hedging unsecured variable rate debt.

The Company measures its derivative instruments at fair value and records them in “Other assets” and (“Other liabilities”) on the Company’s consolidated balance sheets.

Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current

credit spreads to evaluate the likelihood of default by itself and its counterparties. The Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company has determined that the inputs utilized to determine the fair value of derivative instruments are classified in Level 2 of the fair value hierarchy.

Disclosure about the fair value of derivative instruments is based upon pertinent information available to management as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018.~~2019. Although management is not aware of any factors that would significantly affect the fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since ~~September 30, 2019.~~March 31, 2020. Current estimates of fair value may differ from the amounts presented herein.

10. ~~BENEFICIARIES’~~LIMITED PARTNERS' NONCONTROLLING INTERESTS IN THE PARENT COMPANY

Operating Partnership

The aggregate book value of the non-controlling interests associated with the redeemable common limited partnership interests in the accompanying consolidated balance sheet of the Parent Company was $9.2 million and $9.3 million as of March 31, 2020 and December 31, 2019, respectively. Under the applicable accounting guidance, the redemption value of limited partnership units are carried at, on a limited partner basis, the greater of historical cost adjusted for the allocation of income and distributions or fair value. The Parent Company believes that the aggregate settlement value of these interests (based on the number of units

outstanding and the closing price of the common shares on the balance sheet date) was approximately $10.3 million and $15.5 million as of March 31, 2020 and December 31, 2019, respectively.

11. BENEFICIARIES' EQUITY OF THE PARENT COMPANY

Earnings per Share (EPS)

The following ~~tables detail~~table details the number of shares and net income used to calculate basic and diluted earnings per share (in thousands, except share and per share amounts; results may not add due to rounding):

Three Months Ended September 30,
2019 2018
Basic Diluted Basic Diluted
Numerator
Net income (loss) $ 6,820
$ 6,820
$ (43,522 ) $ (43,522 )
Net (income) loss attributable to noncontrolling interests (48 ) (48 ) 342
342
Nonforfeitable dividends allocated to unvested restricted shareholders (93 ) (93 ) (80 ) (80 )
Net income (loss) attributable to common shareholders $ 6,679
$ 6,679
$ (43,260 ) $ (43,260 )
Denominator
Weighted-average shares outstanding 176,195,244
176,195,244
178,602,622
178,602,622
Contingent securities/Share based compensation —
555,356
—
—
Weighted-average shares outstanding 176,195,244
176,750,600
178,602,622
178,602,622
Earnings (loss) per Common Share:
Net income (loss) attributable to common shareholders $ 0.04
$ 0.04
$ (0.24 ) $ (0.24 )

Nine Months Ended September 30,
2019 2018
Basic Diluted Basic Diluted
Numerator
Net income $ 17,655
$ 17,655
$ 13,799
$ 13,799
Net income attributable to noncontrolling interests (155 ) (155 ) (162 ) (162 )
Nonforfeitable dividends allocated to unvested restricted shareholders (305 ) (305 ) (280 ) (280 )
Net income attributable to common shareholders $ 17,195
$ 17,195
$ 13,357
$ 13,357
Denominator
Weighted-average shares outstanding 176,066,507
176,066,507
178,515,993
178,515,993
Contingent securities/Share based compensation —
551,219
—
1,236,551
Weighted-average shares outstanding 176,066,507
176,617,726
178,515,993
179,752,544
Earnings per Common Share:
Net income attributable to common shareholders $ 0.10
$ 0.10
$ 0.07
$ 0.07



	Three Months Ended March 31,
	2020						2019
	Basic			Diluted			Basic			Diluted
Numerator
Net income	$	8,087		$	8,087		$	4,583		$	4,583
Net income attributable to noncontrolling interests	(65		)	(65		)	(60		)	(60		)
Nonforfeitable dividends allocated to unvested restricted shareholders	(131		)	(131		)	(119		)	(119		)
Net income attributable to common shareholders	$	7,891		$	7,891		$	4,404		$	4,404
Denominator
Weighted-average shares outstanding	176,069,968			176,069,968			175,857,358			175,857,358
Contingent securities/Share based compensation	—			583,491			—			606,860
Weighted-average shares outstanding	176,069,968			176,653,459			175,857,358			176,464,218
Earnings per Common Share:
Net income attributable to common shareholders	$	0.04		$	0.04		$	0.03		$	0.02

Redeemable common limited partnership units totaling ~~981,626~~981,634 at ~~September 30,~~March 31, 2020 and 982,871 at March 31, 2019, ~~and 1,479,799 at September 30, 2018,~~ were excluded from the diluted earnings per share computations because they are not dilutive.

Unvested restricted shares are considered participating securities which require the use of the two-class method for the computation of basic and diluted earnings per share. For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ earnings representing nonforfeitable dividends as noted in the table above were allocated to the unvested restricted shares issued to the Company’s executives and other employees under the Company's shareholder-approved long-term incentive plan.

Common Shares

On ~~September 10, 2019,~~February 27, 2020 the Parent Company declared a distribution of $0.19 per common share, totaling ~~$33.8~~$32.7 million, which was paid on ~~October 17, 2019~~April 21, 2020 to shareholders of record as of ~~October 3, 2019.~~April 7, 2020.

The Parent Company maintains a common share repurchase program under which the Board of Trustees has authorized the Parent Company to repurchase common shares. On January 3, 2019, the Board of Trustees authorized the repurchase of up to $150.0 million common shares from and after January 3, 2019. During the ~~nine~~three months ended ~~September 30,~~March 31, 2020, the Company repurchased and retired 5,644,200 common shares at an average price of $9.54 per share, totaling $53.9 million. During the three months ended March 31, 2019, the Company repurchased and retired 1,337,169 common shares at an average price of $12.92 per share, totaling $17.3 million. ~~There were 0 share repurchases during the three months ended September 30, 2019.~~

~~11. PARTNERS’~~12. PARTNERS' EQUITY OF THE ~~OPERATING PARTNERSHIP~~PARENT COMPANY

Earnings per Common Partnership Unit

The following ~~tables detail~~table details the number of units and net income used to calculate basic and diluted earnings per common partnership unit (in thousands, except unit and per unit amounts; results may not add due to rounding):

Three Months Ended September 30,
2019 2018
Basic Diluted Basic Diluted
Numerator
Net income (loss) $ 6,820
$ 6,820
$ (43,522 ) $ (43,522 )
Net income attributable to noncontrolling interests (11 ) (11 ) (20 ) (20 )
Nonforfeitable dividends allocated to unvested restricted unitholders (93 ) (93 ) (80 ) (80 )
Net income (loss) attributable to common unitholders $ 6,716
$ 6,716
$ (43,622 ) $ (43,622 )
Denominator
Weighted-average units outstanding 177,176,870
177,176,870
180,082,421
180,082,421
Contingent securities/Share based compensation —
555,356
—
—
Total weighted-average units outstanding 177,176,870
177,732,226
180,082,421
180,082,421
Earnings (loss) per Common Partnership Unit:
Net income (loss) attributable to common unitholders 0.04
0.04
(0.24 ) (0.24 )


	Nine Months Ended September 30,												Three Months Ended March 31,
	2019						2018						2020						2019
	Basic			Diluted			Basic			Diluted			Basic			Diluted			Basic			Diluted
Numerator
Net income	$	17,655		$	17,655		$	13,799		$	13,799		$	8,087		$	8,087		$	4,583		$	4,583
Net income attributable to noncontrolling interests	(58		)	(58		)	(46		)	(46		)	(12		)	(12		)	(34		)	(34		)
Nonforfeitable dividends allocated to unvested restricted unitholders	(305		)	(305		)	(280		)	(280		)	(131		)	(131		)	(119		)	(119		)
Net income attributable to common unitholders	$	17,292		$	17,292		$	13,473		$	13,473		$	7,944		$	7,944		$	4,430		$	4,430
Denominator
Weighted-average units outstanding	177,048,621			177,048,621			179,995,792			179,995,792			177,051,602			177,051,602			176,840,229			176,840,229
Contingent securities/Share based compensation	—			551,219			—			1,236,551			—			583,491			—			606,860
Total weighted-average units outstanding	177,048,621			177,599,840			179,995,792			181,232,343			177,051,602			177,635,093			176,840,229			177,447,089
Earnings per Common Partnership Unit
Earnings per Common Partnership Unit:
Net income attributable to common unitholders	$	0.10		$	0.10		$	0.07		$	0.07		0.04			0.04			0.03			0.02

Unvested restricted units are considered participating securities which require the use of the two-class method for the computation of basic and diluted earnings per share. For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ earnings representing nonforfeitable dividends ~~as noted in the table above~~ were allocated to the unvested restricted units issued to the Parent ~~Company in connection with awards to the Parent Company’s~~Company's executives and other employees under the Parent Company's shareholder-approved long-term incentive plan.

Common Partnership Units

On ~~September 10, 2019,~~February 27, 2020 the Operating Partnership declared a distribution of $0.19 per common partnership unit, totaling ~~$33.8~~$32.7 million, which was paid on ~~October 17, 2019~~April 21, 2020 to unitholders of record as of ~~October 3, 2019.~~

April 7, 2020.

In connection with the Parent Company’s common share repurchase program, 1 common unit of the Operating Partnership is retired for each common share repurchased. During the ~~nine~~three months ended ~~September 30,~~March 31, 2020, the Company retired 5,644,200 common partnership units at an average price of $9.54 per unit, totaling $53.9 million, in connection with an equal number of common share repurchases. During the three months ended March 31, 2019, the Company retired 1,337,169 common partnership units at an average price of $12.92 per unit, totaling $17.3 million, in connection with an equal number of share repurchases. ~~There~~

13. SHARE BASED COMPENSATION

Restricted Share Rights Awards

As of March 31, 2020, 689,184 restricted share rights ("Restricted Share Rights") were ~~0 share repurchases~~outstanding under the Company's long term equity incentive plan. These Restricted Share Rights vest over one to three years from the initial grant dates. The remaining compensation expense to be recognized with respect to these awards at March 31, 2020 was $3.5 million and is expected to be recognized over a weighted average remaining vesting period of 1.40 years. During the three months ended March 31, 2020 and 2019, the amortization related to outstanding Restricted Share Rights was $1.9 million (of which $0.3 million was capitalized) and $1.6 million (of which $0.2 million was capitalized), respectively. Compensation expense related to outstanding Restricted Share Rights is included in general and administrative expense.

The following table summarizes the Company’s Restricted Share Rights activity during the three months ended ~~September 30, 2019.~~March 31, 2020:



	Shares		Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value (in thousands)
Non-vested at January 1, 2020	479,144		$	15.90	$	44.7
Granted	224,678		$	14.66	$	—
Vested	(12,718	)	$	15.60	$	—
Forfeited	(1,920	)	$	15.63	$	—
Non-vested at March 31, 2020	689,184		$	15.50	$	—

On March 5, 2020, the Compensation Committee of the Parent Company’s Board of Trustees awarded to officers of the Company an aggregate of 183,758 Restricted Share Rights, which vest over three years from the grant date. Each Restricted Share Right

entitles the holder to 1 common share upon settlement. The Parent Company pays dividend equivalents on the Restricted Share Rights prior to the settlement date. Vesting and/or settlement would accelerate if the recipient of the award were to die, become disabled or, in the case of certain of such Restricted Share Rights, retire in a qualifying retirement prior to the vesting or settlement date. Qualifying retirement generally means the recipient’s voluntary termination of employment after reaching at least age 57 and accumulating at least 15 years of service with the Company. In addition, vesting would also accelerate if the Parent Company were to undergo a change of control and, on or before the first anniversary of the change of control, the recipient’s employment were to cease due to a termination without cause or resignation with good reason.

The Restricted Share Rights granted in 2020 to certain senior executives include an “outperformance feature” whereby additional shares may be earned, up to 200% of the shares subject to the basic award, based on the Company’s achievement of targets for same-store net operating cash income growth and investment activity provided certain operating and balance sheet metrics are also achieved during the three-year period ending December 31, 2022. Half of any additional shares earned will vest based on continued service through each of January 1, 2023 and January 1, 2024, respectively, provided that this additional service requirement will be waived in the event of a death, disability or qualifying retirement. In addition to the basic award, up to 316,306 shares may be awarded under the outperformance feature. As of March 31, 2020, the Company has not recognized any compensation expense for the outperformance feature of these awards as it has been determined that it is not probable that the performance metrics will be achieved. The Company will evaluate progression towards achievement of the performance metrics on a quarterly basis and recognize compensation expense for the outperformance feature of these awards should it be determined that achievement of these metrics is probable.

In addition, on March 5, 2020, the Compensation Committee awarded non-officer employees an aggregate of 40,920 Restricted Share Rights that generally vest in 3 equal installments on April 15, 2021, 2022, and 2023. Vesting of these awards is subject to acceleration upon death, disability or termination without cause within one year following a change of control.

In accordance with the accounting standard for share-based compensation, the Company amortizes share-based compensation costs through the qualifying retirement dates for those executives who meet the conditions for qualifying retirement during the scheduled vesting period and whose award agreements provide for vesting upon a qualifying retirement.

Restricted Performance Share Units Plan

The Compensation Committee of the Parent Company’s Board of Trustees has granted performance share-based awards (referred to as Restricted Performance Share Units, or RPSUs) to officers of the Parent Company. The RPSUs are settled in common shares, with the number of common shares issuable in settlement determined based on the Company’s total shareholder return over specified measurement periods compared to total shareholder returns of comparative groups over the measurement periods. The table below presents certain information as to unvested RPSU awards.



	RPSU Grant
	2/28/2018		2/21/2019		3/5/2020		Total
(Amounts below in shares, unless otherwise noted)
Non-vested at January 1, 2020	190,296		206,069		—		396,365
Units Granted	—		—		319,600		319,600
Non-vested at March 31, 2020	190,296		206,069		319,600		715,965
Measurement Period Commencement Date	1/1/2018		1/1/2019		1/1/2020
Measurement Period End Date	12/31/2020		12/31/2021		12/31/2022
Units Granted	209,193		213,728		319,600
Fair Value of Units on Grant Date (in thousands)	$	4,276	$	4,627	$	5,389

The Company values each RPSU on its grant date using a Monte Carlo simulation. The fair values of each award are being amortized over the three year performance period. During the performance period, dividend equivalents are credited as additional RPSU's, subject to the same terms and conditions as the original RPSU's. The performance period will be abbreviated and the determination and delivery of earned shares will be accelerated in the event of a change in control or if the recipient of the award were to die, become disabled or retire in a qualifying retirement prior to the end of the otherwise applicable three year performance period; provided that, in the case of qualifying retirement for the March 5, 2020 grant, the number of shares deliverable will be pro-rated based on the portion of the performance period actually worked before retirement. In accordance with the February 2019 and 2018 grants, the Company amortizes stock-based compensation costs through the qualifying retirement date for those executives who meet the conditions for qualifying retirement during the scheduled vesting period.

For the three months ended March 31, 2020, the Company recognized amortization of the 2020, 2019 and 2018 RPSU awards of $0.6 million, of which $0.1 million was capitalized consistent with the Company’s policies for capitalizing eligible portions of employee compensation. For the three months ended March 31, 2019, amortization for the 2019, 2018 and 2017 RPSU awards was $2.7 million, of which $0.4 million was capitalized consistent with the Company’s policies for capitalizing eligible portions of employee compensation.

The remaining compensation expense to be recognized with respect to the non-vested RPSU's at March 31, 2020 was approximately $6.9 million and is expected to be recognized over a weighted average remaining vesting period of 2.37 years.

The Company issued 121,897 common shares on February 1, 2020 in settlement of RPSUs that had been awarded on March 1, 2017 (with a three-year measurement period ended December 31, 2019). Holders of these RPSUs also received a cash dividend of $0.19 per share for these common shares on January 22, 2020.

~~12.~~14. SEGMENT INFORMATION

As of ~~September 30, 2019,~~March 31, 2020, the Company owns and manages properties within 5 segments: (1) Philadelphia Central Business District ~~(Philadelphia CBD)~~("Philadelphia CBD"), (2) Pennsylvania Suburbs, (3) Austin, Texas (4) Metropolitan Washington, D.C. and (5) Other. The Philadelphia CBD segment includes properties located in the City of Philadelphia, Pennsylvania. The Pennsylvania Suburbs segment includes properties in Chester, Delaware, and Montgomery counties in the Philadelphia suburbs. The Austin, Texas segment includes properties in the City of Austin, Texas. The Metropolitan Washington, D.C. segment includes properties in the District of Columbia, Northern Virginia and ~~southern~~Southern Maryland. The Other segment includes properties located in Camden County, in New Jersey and ~~properties in~~ New Castle County, in Delaware. In addition to the five segments, the corporate group is responsible for cash and investment management, development of certain real estate properties during the construction period, and certain other general support functions. Land held for development and construction in progress is transferred to operating properties by region upon completion of the associated construction or project.

The following tables provide selected asset information and results of operations of the Company's reportable segments (in thousands):



Real estate investments, at cost:
	March 31, 2020		December 31, 2019
Philadelphia CBD	$	1,733,987	$	1,726,299
Pennsylvania Suburbs	991,788		1,003,890
Austin, Texas	722,873		721,255
Metropolitan Washington, D.C.	468,416		468,035
Other	87,054		86,980
Operating Properties	$	4,004,118	$	4,006,459

Right of use asset - operating leases, net	$	21,485	$	21,656

Corporate
Construction-in-progress	$	193,160	$	180,718
Land held for development (a)	$	108,213	$	96,124
Prepaid leasehold interests in land held for development, net (b)	$	39,490	$	39,592

Real estate investments, at cost:
September 30, 2019 December 31, 2018
Philadelphia CBD $ 1,716,466
$ 1,670,388
Pennsylvania Suburbs 1,005,332
1,002,937
Austin, Texas 719,441
667,698
Metropolitan Washington, D.C. 467,117
524,190
Other 86,872
86,506
$ 3,995,228
$ 3,951,719

Right of use asset - operating leases, net (a) $ 21,828
$ —

Corporate
Construction-in-progress $ 151,232
$ 150,263
Land held for development (b) $ 92,189
$ 86,401
Prepaid leasehold interests in land held for development, net (c) $ 39,694
$ 39,999


(a)	~~On January 1,~~Does not include 49.2 acres and 35.2 acres of land classified as held for sale as of March 31, 2020 and December 31, 2019, ~~as a result of the adoption of Topic 842, Leases, the Company recognized operating ground leases for which it is a lessee on its consolidated balance sheets. See Note 2, “Basis of Presentation,” for further information.~~ respectively.

(b)

As of September 30, 2019, the Company categorized 35.2 acres of land held for development, located in the Other segment, as held for sale in accordance with applicable accounting standards for long lived assets. As of December 31, 2018, the Company categorized 37.9 acres of land held for development, comprised of 2.7 acres and 35.2 acres, located in the Pennsylvania Suburbs segment and Other segment, respectively, as held for sale in accordance with applicable accounting standards for long lived assets. See Note 3, ~~“Real Estate Investments,” for further information.~~


~~(c)~~	~~As of September 30, 2019 and December 31, 2018, this caption comprised~~Includes leasehold interests in prepaid 99-year ground leases at 3025 and 3001-3003 JFK Boulevard, in Philadelphia, ~~Pennsylvania.~~Pennsylvania as of March 31, 2020 and December 31, 2019.

Net operating ~~income (in thousands):~~income:

Three Months Ended September 30,
2019 2018
Total revenue Operating expenses (a) Net operating income (loss) Total revenue Operating expenses (a) Net operating income (loss)
Philadelphia CBD $ 66,105
$ (24,773 ) $ 41,332
$ 64,352
$ (24,427 ) $ 39,925
Pennsylvania Suburbs 34,818
(11,667 ) 23,151
34,745
(11,956 ) 22,789
Austin, Texas (b) 26,280
(9,302 ) 16,978
8,641
(3,894 ) 4,747
Metropolitan Washington, D.C. (c) 13,179
(5,999 ) 7,180
22,754
(8,548 ) 14,206
Other 3,706
(2,691 ) 1,015
3,707
(2,436 ) 1,271
Corporate 1,243
(1,642 ) (399 ) 799
(1,636 ) (837 )
Operating properties $ 145,331
$ (56,074 ) $ 89,257
$ 134,998
$ (52,897 ) $ 82,101


	Nine Months Ended September 30,																Three Months Ended March 31,
	2019								2018								2020								2019
	Total revenue		Operating expenses (a)			Net operating income (loss)			Total revenue		Operating expenses (a)			Net operating income (loss)			Total revenue		Operating expenses (a)			Net operating income (loss)			Total revenue		Operating expenses (a)			Net operating income (loss)
Philadelphia CBD	$	196,859	$	(75,311	)	$	121,548		$	190,478	$	(73,559	)	116,919			$	65,915	$	(24,198	)	$	41,717		$	65,798	$	(25,185	)	$	40,613
Pennsylvania Suburbs	104,744		(36,466		)	68,278			103,960		(37,075		)	66,885			37,237		(12,678		)	24,559			35,627		(12,991		)	22,636
Austin, Texas ~~(b)~~	77,234		(28,182		)	49,052			25,474		(10,812		)	14,662			26,581		(10,145		)	16,436			24,766		(9,076		)	15,690
Metropolitan Washington, D.C. ~~(c)~~	40,372		(18,542		)	21,830			69,012		(25,699		)	43,313			10,754		(5,512		)	5,242			13,520		(6,204		)	7,316
Other	10,352		(7,226		)	3,126			13,187		(9,601		)	3,586			3,652		(2,693		)	959			3,182		(2,145		)	1,037
Corporate	3,817		(4,969		)	(1,152		)	3,031		(5,240		)	(2,209		)	949		(1,684		)	(735		)	1,003		(1,799		)	(796		)
Operating properties	$	433,378	$	(170,696	)	$	262,682		$	405,142	$	(161,986	)	$	243,156		$	145,088	$	(56,910	)	$	88,178		$	143,896	$	(57,400	)	$	86,496


(a)	Includes property operating expenses, real estate taxes and third party management expense.


~~(b)~~	On December 11, 2018, the Company acquired from DRA Advisors, an unaffiliated third party, DRA’s 50% ownership interest in the G&I Austin Office LLC real estate venture. The DRA Austin Venture owned 12 office properties containing an aggregate 1,570,123 square feet, located in Austin, Texas. As a result of the acquisition, the Company acquired complete ownership of the Austin properties.


~~(c)~~	On December 20, 2018, the Company contributed a portfolio of 8 properties containing an aggregate of 1,293,197 square feet, located in its Metropolitan Washington, D.C. segment, known as the Rockpoint Portfolio, to the Herndon Innovation Center Venture. The Company and its partner own 15% and 85% interests in the Herndon Innovation Center Venture, respectively.


Unconsolidated real estate ventures (in thousands):
Unconsolidated real estate ventures:																	Unconsolidated real estate ventures:
	Investment in real estate ventures				Equity in income (loss) of real estate venture												Investment in real estate ventures						Equity in income (loss) of real estate venture
	As of				Three Months Ended September 30,						Nine Months Ended September 30,						As of						Three Months Ended March 31,
	September 30, 2019		December 31, 2018		2019			2018			2019			2018			March 31, 2020			December 31, 2019			2020			2019
Philadelphia CBD	$	18,114	$	19,897	$	55		$	(36	)	$	217		$	(183	)	$	17,602		$	17,524		$	78		$	78
Metropolitan Washington, D.C. (a) (b)	106,111		136,142		(528		)	(31		)	(963		)	(431		)
Metropolitan Washington, D.C.																	102,396			102,840			(449		)	(175		)
MAP Venture ~~(c)~~(a)	1,620		11,173		(1,602		)	(444		)	(4,414		)	(2,011		)	(1,590		)	(70		)	(1,520		)	(1,367		)
Other	1,914		1,888		110			89			346			287			—			—			—			106
Austin, Texas (d)	—		—		—			423			—			1,156
Total	$	127,759	$	169,100	$	(1,965	)	$	1		$	(4,814	)	$	(1,182	)	$	118,408		$	120,294		$	(1,891	)	$	(1,358	)


(a)	~~On December 20, 2018,~~Included in Other liabilities on the ~~Company formed the Herndon Innovation Center Venture. See footnote (c) to the “Net operating income” table above for further information regarding this transaction.~~


~~(b)~~	~~On August 29, 2019, BDN – AI Venture transferred an office building to the lender in full satisfaction of the outstanding mortgage loan. Refer to Note 4,~~ ~~“Investment in Unconsolidated Real Estate Ventures”~~ ~~for further information.~~


~~(c)~~	Represents a joint venture formed on February 4, 2016 between the Company and MAP Ground Lease Holdings LLC, an affiliate of Och-Ziff Capital Management Group, LLC. The business operations, including properties in Richmond,

Virginia; Metropolitan Washington, D.C.; New Jersey/Delaware and Pennsylvania Suburbs, are centrally managed with the results reported to management of the Company on a consolidated basis. As a result, the Company’s investment in MAP Venture is separately presented. All other unconsolidated real estate ventures are managed consistently with the Company’s regional segments.

~~(d)~~

On December 11, 2018, the Company acquired from DRA Advisors, an unaffiliated third party, DRA’s 50% ownership interest in the G&I Austin Office LLC real estate venture. The DRA Austin Venture owned 12 office properties containing an aggregate 1,570,123 square feet, located in Austin, Texas. As a result of the acquisition, the Company acquired complete ownership of the Austin properties.consolidated balance sheets.

Net operating income (“NOI”) is a non-GAAP financial measure, ~~defined~~which we define as total revenue less property operating expenses, real estate taxes and third party management expenses. Property operating expenses that are included in determining NOI consist of costs that are necessary and allocable to our operating properties such as utilities, property-level salaries, repairs and maintenance, property insurance and management fees. General and administrative expenses that are not reflected in NOI primarily consist of corporate-level salaries, amortization of share awards and professional fees that are incurred as part of corporate office management. ~~All companies~~NOI presented by the Company may not ~~calculate~~be comparable to NOI ~~in the same manner.~~reported by other companies that define NOI differently. NOI is the measure that is used by the Company’s management to evaluate the operating performance of the Company’s real estate assets by segment. The Company believes NOI provides useful information to investors regarding the financial condition and results of operations because it reflects only those income and expense items that are incurred at the property level. While NOI is a relevant and widely used measure of operating performance of real estate investment trusts, it does not represent cash flow from operations or net income as defined by GAAP and should not be considered as an alternative to those measures in evaluating our liquidity or operating performance. NOI does not reflect interest expenses, real estate impairment losses, depreciation and amortization costs, capital expenditures and leasing costs. The Company believes that net income (loss), as defined by GAAP, is the most appropriate earnings measure. The following is a reconciliation of consolidated net income, as defined by GAAP, to consolidated NOI, (in thousands):


	Three Months Ended September 30,					Nine Months Ended September 30,						Three Months Ended March 31,
	2019		2018			2019			2018			2020			2019
Net income (loss)	$	6,820	$	(43,522	)	$	17,655		$	13,799
Net income												$	8,087		$	4,583
Plus:
Interest expense	20,400		19,257			61,273			58,091			20,009			20,357
Interest expense - amortization of deferred financing costs	694		618			2,026			1,872			749			666
Depreciation and amortization	55,627		44,141			158,738			131,631			52,038			51,444
General and administrative expenses	6,974		5,963			25,217			22,209			8,561			9,844
Equity in loss (income) of Real Estate Ventures	1,965		(1		)	4,814			1,182
Provision for impairment	—		56,865			—			56,865

Equity in loss of Real Estate Ventures												1,891			1,358
Less:
Interest income	558		1,220			1,636			2,564			575			525
Income tax provision	—		—			(46		)	(158		)	(4		)	(29		)
Net gain (loss) on disposition of real estate	356		—			356			(35		)
Net gain on disposition of real estate												2,586			—
Net gain on sale of undepreciated real estate	250		—			1,501			2,859			—			1,001
Net gain on real estate venture transactions	2,059		—			3,594			37,263			—			259
Consolidated net operating income	$	89,257	$	82,101		$	262,682		$	243,156		$	88,178		$	86,496

~~13.~~15. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

The Company is involved from time to time in litigation on various matters, including disputes with tenants, vendors and disputes arising out of agreements to purchase or sell properties. Given the nature of the Company’s business activities, these lawsuits are considered routine to the conduct of its business. The result of any particular lawsuit cannot be predicted, because of the very nature of litigation, the litigation process and its adversarial nature, and the jury system. The Company will establish reserves for specific legal proceedings when it determines that the likelihood of an unfavorable outcome is probable and when the amount of loss is reasonably estimable. The Company does not expect that the liabilities, if any, that may ultimately result from such legal actions will have a material adverse effect on the consolidated financial position, results of operations or cash flows of the Company.

Letters-of-Credit

Under certain mortgages, ~~including mortgages held by real estate ventures,~~ the Company ~~may be required to fund~~has funded required leasing and capital reserve accounts for the benefit of the mortgage lenders with ~~a letter-of-credit.~~letters-of-credit. There were 0 ~~associated~~ letters-of-credit for a mortgage lender ~~on September 30, 2019.~~as of March 31, 2020. Certain of the tenant rents at properties that secure these mortgage loans are deposited into the loan servicer’s depository accounts, which are used to fund debt service, operating expenses, capital expenditures and the escrow and reserve accounts, as necessary. Any excess cash is included in cash and cash equivalents.

Environmental

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

~~Ground Rent~~

Lease payments by the Company under the terms of all non-cancelable ground leases of land on which properties in the Company’s consolidated portfolio are situated are expensed on a straight-line basis regardless of when payments are due. The Company’s ground leases, excluding prepaid ground leases, have remaining lease terms ranging from 9 to 65 years. Lease payments on non-cancelable leases at September 30, 2019, which, where applicable, considered CPI index rates upon adoption of Topic 842, are as follows (in thousands):

Year Minimum Rent
2019 (three months remaining) $ 303
2020 1,217
2021 1,232
2022 1,248
2023 1,263
Thereafter 111,757
Total lease payments $ 117,020
Less: Imputed interest (94,517 )
Present value of operating lease liabilities $ 22,503

~~Lease payments on non-cancelable leases at December 31, 2018, which were determined under ASC 840 and are therefore not adjusted for increases based on CPI, are as follows (in thousands):~~

Year Minimum Rent
2019 $ 1,222
2020 1,222
2021 1,222
2022 1,222
2023 1,222
Thereafter 55,689
Total $ 61,799

The Company obtained ground tenancy rights related to three properties in Philadelphia, Pennsylvania, which provide for contingent rent participation by the lessor in certain capital transactions and net operating cash flows of the properties after certain returns are achieved by the Company. Such amounts, if any, will be reflected as contingent rent when incurred. The leases also provide for payment by the Company of certain operating costs relating to the land, primarily real estate taxes. The above schedule of lease payments does not include any contingent rent amounts or any reimbursed expenses.

~~Fair Value of Contingent Consideration~~

On April 2, 2015, the Company purchased 618 Market Street in Philadelphia, Pennsylvania. The allocated purchase price included contingent consideration of $2.0 million payable to the seller upon commencement of development. The liability was initially recorded at fair value of $1.6 million and will accrete through interest expense to $2.0 million over the expected period until development is commenced. The fair value of this contingent consideration was determined using a probability weighted discounted

cash flow model. The significant inputs to the discounted cash flow model were the discount rate and weighted probability scenarios. As the inputs are unobservable, the Company determined the inputs used to value this liability fall within Level 3 for fair value reporting. As of September 30, 2019, the liability had accreted to $2.0 million. As there were no significant changes to the inputs, the liability remains within Level 3 for fair value reporting.

Debt Guarantees

As of ~~September 30, 2019,~~March 31, 2020, the Company’s ~~unconsolidated real estate ventures~~Real Estate Ventures had aggregate indebtedness of ~~$592.4~~$611.6 million. These loans are generally mortgage or construction loans, most of which are nonrecourse to the Company, except for customary recourse carve-outs. As of ~~September 30, 2019,~~March 31, 2020, the ~~loans~~$150.0 million construction loan obtained by 4040 Wilson, located in Arlington, Virginia, for which the Company has ~~provided recourse guarantees consist of the following: (i)~~ a ~~$0.3 million~~ payment guarantee ~~on a loan with a $3.7 million outstanding principal balance, provided to PJP VII; and (ii)~~ up to a $41.3 million, ~~payment guarantee on a $150.0 million loan provided~~is recourse to ~~4040 Wilson.~~the Company. In addition, during construction undertaken by ~~real estate ventures,~~the Real Estate Ventures, including 4040 Wilson, the Company has provided, and expects to continue to provide, cost overrun and completion guarantees, with rights of contribution among partners or members in the real estate ventures, as well as customary environmental indemnities and guarantees of customary exceptions to nonrecourse provisions in loan agreements.

~~Allowance for Doubtful Accounts~~

~~As discussed in Note 2,~~ ~~“Basis of Presentation,”~~ the Company, as lessor, initially analyzes each of its operating leases at the individual level to determine whether it is probable that the associated lease payments are collectible. If collectability for an individual lease is not considered probable, the Company recognizes lease revenue for that individual lease on a cash basis. For the remaining portfolio of operating leases that are individually considered collectible, the Company estimates that a portion ultimately will be uncollectible and, as such, have established and maintain a general allowance. As of September 30, 2019, the general allowance for the remaining portfolio of operating leases that are individually considered collectible was $11.3 million.

Other Commitments or Contingencies

~~On October 13, 2017, the Company acquired a leasehold interest in the office building known as The Bulletin Building, in Philadelphia, Pennsylvania.~~ In connection with the acquisition, the Company is required to spend no less than $8.0 million in capital improvements to the property. As of September 30, 2019, $5.1 million of the funding related to this requirement had been met. The Company estimates that it will incur $39.0 million in excess of this funding requirement and expects to complete the redevelopment of The Bulletin Building during the second quarter of 2020 at an estimated aggregate cost of $84.8 million, inclusive of the acquisition cost of $37.8 million.

~~During the fourth quarter of 2017, in~~ connection with the Schuylkill Yards Project, ~~with Drexel University,~~ the Company entered into a neighborhood engagement program and, as of ~~September 30, 2019,~~March 31, 2020, had ~~$8.5~~$8.4 million of future fixed contractual obligations. ~~In addition,~~The Company is also committed to make additional

contributions under the program. As of March 31, 2020, the Company estimates ~~$2.9 million of potential~~that these additional contributions, ~~for~~ which are not fixed under the terms of agreement, will be $2.7 million.

As of March 31, 2020, the Company was under contract to acquire an office property containing approximately 170,000 rentable square feet located in Radnor, Pennsylvania for a purchase price of $20.3 million. The Company has paid $1.0 million towards the purchase price in the form of a non-refundable deposit and the transaction is ~~not currently contractually obligated.~~expected to close during 2020.

The Company invests in its properties and regularly incurs capital expenditures in the ordinary course of business to maintain the properties. The Company believes that such expenditures enhance its competitiveness. The Company also enters into construction, utility and service contracts in the ordinary course of business which may extend beyond one year. These contracts typically provide for cancellation with insignificant or no cancellation penalties.

~~14.~~16. SUBSEQUENT EVENTS

On ~~October~~April 2, 2020, we settled the purchase of 604,283 common shares, which had a trade date of March 31, 2020, for an aggregate of $6.1 million.

The recent outbreak of COVID-19 across many countries around the globe, including the U.S., has significantly slowed global

economic activity, caused significant volatility in financial markets, and resulted in unprecedented job losses causing many to fear an imminent global recession. The global impact of the outbreak has been rapidly evolving the responses of many countries, including the U.S., have included quarantines, restrictions on business activities, including construction activities, restrictions on group gatherings, and restrictions on travel. These actions are creating disruption in the global economy and supply chains and adversely impacting many industries, including owners and developers of office and mixed-use buildings. Moreover, there is significant uncertainty around the breadth and duration of business disruptions related to COVID-19, as well as its impact on the U.S. economy and consumer confidence. Demand for space at our properties is dependent on a variety of macroeconomic factors, such as employment levels, interest rates, changes in stock market valuations, rent levels and availability of competing space. These factors can be significantly adversely affected by a variety of factors beyond our control. The extent to which COVID-19 impacts our results will depend on future developments, many of which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions taken to contain it or treat its impact. If the outbreak continues, there will likely be continued negative economic impacts, market volatility, and business disruption which could negatively impact our tenants’ ability to pay rent, our ability to lease vacant space, and our ability to complete development and redevelopment projects, and these consequences, in turn, could materially impact our results of operations.

On April 10, ~~2019,~~2020, the ~~Company~~Financial Accounting Standards Board (the "FASB") issued ~~$100.0 million~~a Staff Q&A to respond to some frequently asked questions about accounting for lease concessions related to the effects of ~~4.100% guaranteed notes due 2024 at~~the COVID-19 pandemic. Consequently, for concessions related to the effects of the COVID-19 pandemic, an entity will not have to analyze each contract to determine whether enforceable rights and obligations for concessions exist in the contract and can elect to apply or not apply the lease modification guidance to those contracts. Entities may make the elections for any lessor-provided concessions related to the effects of the COVID-19 pandemic (e.g., deferrals of lease payments, cash payments made to the lessee, reduced future lease payments) as long as the concession does not result in a ~~price~~substantial increase in the rights of ~~106.315%~~the lessor or the obligations of their principal amount, plus accrued and unpaid interest from and including October 1, 2019, with a re-offer yield of 2.669% and $100.0 million of 4.550% guaranteed notes due 2029 at a price of 110.058% of their principal amount, plus accrued and unpaid interest from and including October 1, 2019, with a re-offer yield of 3.331% for a combined net proceeds of approximately $214.3 million after deducting underwriting discounts and estimated transaction expenses.the lessee. The Company ~~used approximately $145.5 million~~is currently working with tenants impacted by the COVID-19 pandemic to determine appropriate lease concessions. To date, the impact of ~~the net proceeds to repay the full outstanding amount~~lease concessions granted has not had a material effect on the ~~unsecured credit facility.~~

financial statements. The Company will continue to evaluate the impact of lease concessions and the appropriate accounting for those concessions.

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

The Private Securities Litigation Reform Act of 1995 (the “1995 Act”) provides a “safe harbor” for forward-looking statements. This Quarterly Report on Form 10-Q and other materials filed by us with the SEC (as well as information included in oral or other written statements made by us) contain statements that are forward-looking, including statements relating to business and real estate development activities, acquisitions, dispositions, future capital expenditures, financing sources, governmental regulation (including environmental regulation) and competition. We intend such forward-looking statements to be covered by the safe-harbor provisions of the 1995 Act. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “will,” “should” and similar expressions, as they relate to us, are intended to identify forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be achieved. As forward-looking statements, these statements involve important risks, uncertainties and other factors that could cause actual results to differ materially from the expected results and, accordingly, such results may differ from those expressed in any forward-looking statements made by us or on our behalf. Factors that could cause actual results to differ materially from our expectations are set forth under the heading “Forward-Looking Statements” in our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019, many of which may be more likely to impact us as a result of the ongoing coronavirus (COVID-19) outbreak.

Given these uncertainties, and the other risks identified in the “Risk Factors ” section of our Annual Report on Form 10-K for the year ended December 31, ~~2018,~~2019 and in Part II, Item 1A of this Quarterly Report, we caution readers not to place undue reliance on forward-looking statements. We assume no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

The discussion that follows is based primarily on our consolidated financial statements as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 and for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~ and should be read along with the consolidated financial statements and related notes appearing elsewhere in this report. The ability to compare one period to another may be significantly affected by acquisitions completed, development properties placed in service and dispositions made during those periods.

OVERVIEW

During the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, we owned and managed properties within five markets: (1) Philadelphia Central Business District (“Philadelphia CBD”), (2) Pennsylvania Suburbs, (3) Austin, Texas, (4) Metropolitan Washington, D.C., and (5) Other. The Philadelphia CBD segment includes properties located in the City of Philadelphia in Pennsylvania. The Pennsylvania Suburbs segment includes properties in Chester, Delaware and Montgomery counties in the Philadelphia suburbs. The Austin, Texas segment includes properties in the City of Austin, Texas. The Metropolitan Washington, D.C. segment includes properties in Northern Virginia, Washington, D.C. and ~~southern~~Southern Maryland. The Other segment includes properties in Camden County, in New Jersey and ~~properties in~~ New Castle County, in Delaware. In addition to the five markets, our corporate group is responsible for cash and investment management, development of certain real estate properties during the construction period, and certain other general support functions. ~~See Note 1, “Organization of the Parent Company and the Operating Partnership,” for our property portfolio and land holdings.~~

We generate cash and revenue from leases of space at our Properties and, to a lesser extent, from the management and development of properties owned by third parties and from investments in the Real Estate Ventures. Factors that we evaluate when leasing space include rental rates, costs of tenant improvements, tenant creditworthiness, current and expected operating costs, the length of the lease term, vacancy levels and demand for ~~office~~ space. We also generate cash through sales of assets, including assets that we do not view as core to our business plan, either because of location or expected growth potential, and assets that are commanding premium prices from third party investors.

Our financial and operating performance is dependent upon the demand for office, residential and retail space in our markets, our leasing results, our acquisition, disposition and development activity, our financing activity, our cash requirements and economic and market conditions, including prevailing interest rates.

Adverse changes in economic conditions could result in a reduction of the availability of financing and potentially in higher borrowing costs. Vacancy rates may increase, and rental rates and rent collection rates may decline, during the remainder of ~~2019~~2020 and possibly beyond as the current economic climate may negatively impact tenants.

Overall economic conditions, including but not limited to higher unemployment and deteriorating financial and credit markets, could have a dampening effect on the fundamentals of our business, including increases in past due accounts, tenant defaults, lower occupancy and reduced effective rents. These adverse conditions would negatively affect our future net income and cash flows and could have a material adverse effect on our financial condition. We believe that the quality of our assets and the strength of our balance sheet will enable us to raise debt capital, if necessary, in various forms and from different sources, including through secured or unsecured loans from banks, pension funds and life insurance companies. However, there can be no assurance that we will be able to borrow funds on terms that are economically attractive or at all.

We continue to seek revenue growth throughout our portfolio by increasing occupancy and rental rates. Occupancy at our Core Properties at ~~September 30, 2019~~March 31, 2020 was ~~93.2%~~93.3% compared to ~~93.0%~~92.1% at ~~September 30, 2018.~~March 31, 2019.

The table below summarizes selected operating and leasing statistics of our wholly owned properties for the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 and ~~2018:~~2019:


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2019			2018			2019			2018			2020			2019
Leasing Activity
Core Properties (1):
Total net rentable square feet owned	16,168,629			14,338,030			16,168,629			14,338,030			15,978,965			16,379,261
Occupancy percentage (end of period)	93.2		%	93.0		%	93.2		%	93.0		%	93.3		%	92.1		%
Average occupancy percentage	92.9		%	92.8		%	92.2		%	92.6		%	93.0		%	91.8		%
Total Portfolio, less properties in development (2):
Retention rate	71.6		%	75.1		%	72.2		%	66.3		%
Tenant retention rate (3)													75.6		%	66.2		%
New leases and expansions commenced (square feet)	276,907			196,129			902,040			479,814			224,417			404,925
Leases renewed (square feet)	240,904			139,407			748,953			437,160			87,449			412,123
Net absorption (square feet)	33,173			49,578			116,164			(40,884		)	62,507			(65,796		)
Percentage change in rental rates per square feet (3):
Percentage change in rental rates per square feet (4):
New and expansion rental rates	13.3		%	17.1		%	13.9		%	22.6		%	21.1		%	13.6		%
Renewal rental rates	6.5		%	6.3		%	11.8		%	8.6		%	8.6		%	14.9		%
Combined rental rates	9.3		%	11.4		%	12.4		%	14.4		%	15.7		%	14.6		%
Capital Costs Committed (4):
Capital Costs Committed (5):
Leasing commissions (per square feet)	$	9.49		$	2.75		$	8.05		$	5.94		$	6.28		$	7.87
Tenant Improvements (per square feet)	$	29.78		$	8.26		$	23.77		$	18.77		$	18.02		$	22.33
Weighted average lease term (years)	7.9			5.8			7.4			7.1			6.7			7.7
Total capital per square foot per lease year	$	4.82		$	2.57		$	4.76		$	3.21		$	3.96		$	4.81


(1)	~~Includes all Core Properties and does~~Does not include properties under development, redevelopment, or held for sale, or sold.


(2)	Includes leasing related to completed developments and redevelopments, as well as sold properties.


(3)	~~Rental rates include~~Calculated as percentage of total square feet.


(4)	Includes base rent plus reimbursement for operating expenses and real estate taxes.


~~(4)~~(5)	Calculated on a weighted average basis.

In seeking to increase revenue through our operating, financing and investment activities, we also seek to minimize operating risks, including (i) tenant rollover risk, (ii) tenant credit risk and (iii) development risk.

Tenant Rollover Risk

We are subject to the risk that tenant leases, upon expiration, will not be renewed, that space may not be relet, or that the terms of renewal or reletting (including the cost of renovations) may be less favorable to us than the current lease terms. Leases that accounted for approximately ~~2.1%~~5.5% of our aggregate final annualized base rents as of ~~September 30, 2019~~March 31, 2020 (representing approximately ~~1.7%~~5.7% of the net rentable square feet of the properties) are scheduled to expire without penalty in ~~2019.~~2020. We maintain an active dialogue with our tenants in an effort to maximize lease renewals. If we are unable to renew leases or relet space under expiring leases, at anticipated rental rates, or if tenants terminate their leases early, our cash flow would be adversely impacted.

Tenant Credit Risk

In the event of a tenant default, we may experience delays in enforcing our rights as a landlord and may incur substantial costs in protecting our investment. Our management evaluates our accounts receivable reserve policy in light of our tenant base and general and local economic conditions. Our accounts receivable allowance was ~~$11.3~~$7.8 million or ~~5.8%~~3.9% of total receivables (including accrued rent ~~receivables)~~receivable) as of ~~September 30, 2019~~March 31, 2020 compared to ~~$12.9~~$8.0 million or ~~6.6%~~4.0% of total receivables (including accrued rent ~~receivables)~~receivable) as of December 31, ~~2018.~~2019.

If economic conditions deteriorate, including as a result of the recent COVID-19 outbreak, we may experience increases in past due accounts, defaults, lower occupancy and reduced effective rents. This condition would negatively affect our future net income and cash flows and could have a material adverse effect on our financial condition.

Development Risk

Development projects are subject to a variety of risks, including construction delays, construction cost overruns, building moratoriums, inability to obtain financing on favorable terms, inability to lease space at projected rates, inability to enter into construction, development and other agreements on favorable terms, and unexpected environmental and other hazards.

As of ~~September 30, 2019~~March 31, 2020 the following development and redevelopment projects remain under construction in progress and we were proceeding on the following activity (dollars, in thousands):

Construction Commencement Date Expected Completion Activity Type Property/Portfolio Name Location Number of Buildings Square Footage/ Units Estimated Costs Amount Funded
Q2 2019 Q2 2020 Redevelopment The Bulletin Building Philadelphia, PA 1 283,000
$ 84,800
(a) $ 53,600
Q1 2019 Q4 2020 Development 405 Colorado Street Austin, TX 1 204,000
114,000
(b) 19,600
Q2 2018 Q1 2019 (c) Redevelopment 426 W. Lancaster Avenue Devon, PA 1 56,000
14,900
(c) 12,500
Total 3 543,000
$ 213,700
$ 85,700

Property/Portfolio Name

Location

Expected Completion

Activity Type

Approximate Square Footage

Estimated Costs

Amount Funded

The Bulletin Building (a)

Philadelphia, PA

Q3 2020

Redevelopment

283,000

84,800

67,300

405 Colorado Street (b)

Austin, TX

Q1 2021

Development

204,000

116,000

38,800

426 W. Lancaster Avenue (c)

Devon, PA

Q1 2019

Redevelopment

56,000

14,900

13,100

3000 Market Street (d)

Philadelphia, PA

Q1 2021

Redevelopment

64,000

38,000

13,000


(a)	Estimated costs include $37.8 million of building basis, representing the acquisition cost. The amount funded, as of September 30, 2019, includes $5.1 million related to an $8.0 million funding commitment required through the ground lease. See "Liquidity and Capital Resources – Contractual Obligations" for further information regarding this commitment.


(b)	Estimated costs ~~includes~~include $2.1 million of existing property basis through a ground lease. Project includes 520 parking spaces.


(c)	The property was vacated during the third quarter of 2017. Total project costs include $4.9 million of existing property basis. The renovation of the base building was substantially completed during the first quarter of 2019 and remaining costs as of ~~September 30, 2019~~March 31, 2020 primarily represent tenant improvements.


(d)	Estimated costs include $12.8 million of existing property basis.

~~Other Development Activities:~~

~~4040 Wilson Venture~~

~~4040 Wilson, a 50/50 real estate venture between Ashton Park and us, is developing a 427,500 square foot mixed-use building, representing~~In addition to the ~~final phase of the eight building, mixed-use, Liberty Center complex located~~properties listed above, we have classified one parking facility in the Ballston submarket of Arlington, Virginia. The project is being constructed on a 1.3-acre land parcel contributed by Ashton Park to 4040 Wilson. During the fourth quarter of 2017, 4040 Wilson achieved pre-leasing levels that enabled the venture to obtain a secured construction loan with a total borrowing capacity of $150.0 million for the remainder of the project costs. The total estimated project costs are $224.8 million, which we expect will be financed through approximately $74.8 million of partner capital contributions and $150.0 million in proceeds from the secured construction loan.Philadelphia, Pennsylvania as redevelopment. As of September 30, 2019, $98.9 million had been advanced under the construction loan, and the venture had commenced construction of the mixed-use building. We expect completion of the development to occur during the second quarter of 2020.

~~Schuylkill Yards Project~~

As of September 30, 2019, we remain in the planning and development phase of our master developer agreement (the “Development Agreement”) with Drexel University, a Pennsylvania non-profit corporation, and an affiliate of Drexel University, (collectively “Drexel”) for the Schuylkill Yards Project. For further information relating to this development, including an overview of the project, see Item 1., ~~"Business – Other Development Activities"~~ ~~included in our Annual Report on Form 10-K for the fiscal year ended December~~March 31, ~~2018. See the table above for information relating to progress at the Bulletin Building, a redevelopment that is part of the Schuylkill Yards Project, as of September 30, 2019.~~

~~For information regarding the 2018 acquisitions within the scope of the Schuylkill Yards project, see Item 1.,~~ ~~“Business – 2018 Transactions,”~~ ~~in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018. For information regarding the 2017 acquisitions within the scope of the Schuylkill Yards project, see Item 1.,~~ ~~“Business – 2017 Transactions,”~~ ~~in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017.~~

~~Reference is made to our Annual Report on Form 10-K for the year ended December 31, 2018 for project overviews, as well as risks associated with these development projects. See~~ ~~"Liquidity and Capital Resources – Contractual Obligations"~~ ~~below for contractual commitments relating to our ongoing development projects.~~

~~Impairments and Disposal of Long-Lived Assets~~

We review our long-lived assets for impairment following the end of each quarter using cash flow projections and estimated fair values for each of the properties included within our impairment analysis. We update leasing and other assumptions regularly, paying particular attention to properties where2020, there is an event or change in circumstances that indicates an impairment in value. Additionally, we consider strategic decisions regarding the future development plans for property under development and other market factors. For long-lived assets to be held and used, we analyze recoverability based on the estimated undiscounted future cash flows expected to be generated from the operations and eventual disposition of the assets over, in most cases, a 10-year hold period. If there is significant possibility that we will dispose of assets earlier, we analyze the recoverability using a probability weighted analysis of the undiscounted future cash flows expected to be generated from the operations and eventual disposition of each asset using various possible hold periods. If the recovery analysis indicates that the carrying value of the tested property is not recoverable, the property is written down to its fair value and an impairment loss is recognized. In such case, an impairment loss is recognized in the amount of the excess of the carrying amount of the asset over its fair value. If and when our plans change, we revise our recoverability analysis to use cash flows expected from operations and eventual disposition of each asset using hold periods that are consistent with our revised plans.

Estimated cash flows used in such analysis are based on our plans for the property and our views of market economic conditions. The estimates consider factors such as current and future rental rates, occupancies for the tested property and comparable properties, estimated operating and capital expenditures and recent sales data for comparable properties. Most of these factors are influenced by market data obtained from real estate leasing and brokerage firms and our direct experience with the properties and their markets.

~~We generally consider assets to be “held for sale” when the transaction~~ has been ~~approved by our Board of Trustees, or by officers vested with authority to approve the transaction and there are~~ no known significant contingencies relating to the sale of the property within one year of the consideration date and the consummation of the transaction is otherwise considered probable. When a property is designated as held for sale, we stop depreciating the property and estimate the property’s fair value, net of selling costs. If the determination is made that the estimated fair value, net of selling costs, is less than the net book value of the property, an impairment loss is recognized equal to the difference and reduces the net book value of the property. For periods in which a property is classified as held for sale, we classify the assets of the property as held for salematerial construction spend on ~~the consolidated balance sheet for such periods.~~

The relevant accounting guidance for impairments requires that qualifying assets and liabilities and the results of operations that have been sold, or otherwise qualify as “held for sale,” be presented as discontinued operations in all periods presented if the disposal represents a strategic shift that has, or will have, a major effect on our operations and financial results. If deemed a discontinued operation, then the components of the property’s net income that are reflected as discontinued operations include net gain (or loss) on disposition of real estate, operating results, depreciation and interest expense (if the property is subject to a secured loan).

~~Impairments of Land Held for Development~~

When demand for development declines and the ability to sell land held for development deteriorates, or other market factors indicate a possible impairment in the recoverability of land held for development, it is reviewed for impairment by comparing its fair value to its carrying value. If the estimated sales value is less than the carrying value, the carrying value is written down to its estimated fair value.

~~Equity Method Investments in Unconsolidated Real Estate Ventures~~

Under the equity method, investments in unconsolidated Real Estate Ventures are recorded initially at cost, as Investments in unconsolidated Real Estate Ventures, and subsequently adjusted for equity in earnings, cash contributions, distributions and impairments. For Real Estate Ventures that are constructing assets to commence planned principal operations, we capitalize interest expense using our weighted average interest rate of consolidated debt and our investment balance as a basis. Planned principal operations commence when a property is available to lease and at that point in time we cease capitalizing interest to our investment basis. During the three and nine months ended September 30, 2019 and 2018, no interest expense was capitalized.

On a periodic basis, management also assesses whether there are any indicators that the value of our investments in unconsolidated real estate ventures may be other than temporarily impaired. An investment is impaired only if the value of the investment, as estimated by management, is less than the carrying value of the investment and the decline is other than temporary. To the extent impairment has occurred, the loss shall be measured as the excess of the carrying amount of the investment over the fair value of the investment, as estimated by management. Estimates of value for each investment are based on a number of assumptions that

are subject to economic and market uncertainties including, among others, demand for space, competition for tenants, changes in market rental rates, and operating costs. These factors are difficult to predict and are subject to future events that may alter management’s assumptions; accordingly, the values estimated by management in our impairment analyses may not be realized.

~~RECENT PROPERTY TRANSACTIONS~~

~~See Note 3, “Real Estate Investments~~,” for information related to recent property transactions during the three and nine months ended September 30, 2019 as well as information related to properties held for sale as of September 30, 2019. See Note 4, “~~Investment in Unconsolidated Real Estate Ventures,” for information related to recent property transactions at our unconsolidated joint ventures during the three and nine months ended September 30, 2019.~~this project.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Management’s Discussion and Analysis of Financial Condition and Results of Operations discuss our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The preparation of these financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Certain accounting policies are considered to be critical accounting policies, as they require management to make assumptions about matters that are highly uncertain at the time the estimate is made and changes in accounting estimate are reasonably likely to occur from period to period. Management bases its estimates and assumptions on historical experience and current economic conditions.

Our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 contains a discussion of our critical accounting policies. There have been no significant changes in our critical accounting policies since December 31, ~~2018 with the exception of the adoption of ASC 842, Leases. See also Note 2, "Basis of Presentation," in our unaudited consolidated financial statements for the three months ended September 30, 2019, set forth herein.~~2019.

RESULTS OF OPERATIONS

The following discussion is based on our consolidated financial statements for the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 and ~~2018.~~2019. We believe that presentation of our consolidated financial information, without a breakdown by segment, will effectively present important information useful to our investors.

Net operating income (“NOI”) as presented in the comparative analysis below is a non-GAAP financial measure defined as total revenue less property operating expenses, real estate taxes and third party management expenses. Property operating expenses that are included in determining NOI consist of costs that are necessary and allocable to our operating properties such as utilities, property-level salaries, repairs and maintenance, property insurance, and management fees. General and administrative expenses that are not reflected in NOI primarily consist of corporate-level salaries, amortization of share awards and professional fees that are incurred as part of corporate office management. NOI is a non-GAAP financial measure that we use internally to evaluate the operating performance of our real estate assets by segment, as presented in Note ~~12, "Segment~~14, ''Segment Information,," to our consolidated financial statements, and of our business as a whole. We believe NOI provides useful information to investors regarding our financial condition and results of operations because it reflects only those income and expense items that are incurred at the property

level. While NOI is a relevant and widely used measure of operating performance of real estate investment trusts, it does not represent cash flow from operations or net income as defined by GAAP and should not be considered as an alternative to those measures in evaluating our liquidity or operating performance. NOI does not reflect interest expenses, real estate impairment losses, depreciation and amortization costs, capital expenditures and leasing costs. We believe that net income, as defined by GAAP, is the most appropriate earnings measure. See Note ~~12, "Segment~~14, ''Segment Information” to our Consolidated Financial Statements for a reconciliation of NOI to our consolidated net income as defined by GAAP.

Comparison of the Three Months Ended ~~September 30,~~March 31, 2020 and March 31, 2019 ~~and September 30, 2018~~

The table below shows selected operating information for the “Same Store Property Portfolio” and the “Total Portfolio.” The Same Store Property Portfolio consists of 74 properties containing an aggregate of approximately 14.0 million net rentable square feet, and represents properties that we owned for the entire three months ended September 30, 2019 and 2018. The Total Portfolio includes the effects of other properties that were either placed into service, acquired or redeveloped after July 1, 2018 and disposed of prior to September 30, 2019 or classified as held for sale as of September 30, 2019. A property is excluded from our Same Store Property Portfolio and moved into the redevelopment column in the period that we determine to proceed with development/redevelopment for a future development strategy. This table also includes a reconciliation from the Same Store Property Portfolio to the Total Portfolio net income (i.e., all properties owned by us during the three months ended September 30, 2019 and 2018) by providing information for the properties which were acquired, placed into service, under development or redevelopment and administrative/elimination informationfollowing comparison for the three months ended ~~September 30, 2019 and 2018.~~

~~During~~March 31, 2020 to the three months ended ~~September 30,~~March 31, 2019, makes reference to the ~~Same Store Property Portfolio was reduced by the disposition of 1900 Gallows Road, an office property in Vienna, Virginia, containing 210,632 rentable square feet.~~

~~For detail~~effect of the ~~properties comprising the Same Store Property Portfolio, as of December 31, 2018, see the Item 2.~~ ~~“Properties”~~ ~~section of our Annual Report on Form 10-K for the year ended December 31, 2018.~~following:

~~The Total Portfolio net income presented in the table is equal to the net income of the Parent Company and the Operating Partnership.~~


(a)	“Same Store Property Portfolio,” which represents 88 properties containing an aggregate of approximately 15.8 million net rentable square feet, and represents properties that we owned for the three-month periods ended March 31, 2020 and 2019. The Same Store Property Portfolio includes properties acquired or placed in service on or prior to January 1, 2019 and owned through March 31, 2020,


(b)	“Total Portfolio,” which represents all properties owned by us during the three months ended March 31, 2020 and 2019,


(c)	"Recently Completed/Acquired Properties," which represents 1 property placed into service or acquired on or subsequent to January 1, 2019,


(d)	"Development/Redevelopment Properties," which represents 5 properties currently in development/redevelopment. A property is excluded from our Same Store Property Portfolio and moved into Development/Redevelopment in the period that we determine to proceed with development/redevelopment for a future development strategy, and


(e)	"Q1 2019 through Q1 2020 Dispositions," which represents 2 properties disposed of from the three months ended March 31, 2019 through the three months ended March 31, 2020.

Comparison of three months ended ~~September 30, 2019~~March 31, 2020 to the three months ended ~~September 30, 2018~~March 31, 2019


	Same Store Property Portfolio									Recently Completed/Acquired Properties (a)					Development/Redevelopment Properties (b)					Other/(Eliminations) (c)						Total Portfolio									Same Store Property Portfolio											Recently Completed/Acquired Properties					Development/Redevelopment Properties						Other (Eliminations) (a)						Total Portfolio
(dollars and square feet in thousands)	2019			2018			Increase/ (Decrease)			2019			2018		2019			2018		2019			2018			2019			2018			Increase/ (Decrease)
(dollars and square feet in millions except per share amounts)																																			2020			2019			$ Change			% Change		2020			2019		2020			2019			2020			2019			2020			2019			$ Change			% Change
Revenue:
Rents	$	110,921		$	111,858		$	(937	)	$	22,221		$	1,571	$	2,043		$	1,961	$	4,043		$	13,245		$	139,228		$	128,635		$	10,593		$	132.8		$	129.6		$	3.2		2.5	%	$	1.8		$	1.0	$	1.5		$	2.7		$	3.1		$	4.8		$	139.2		$	138.1		$	1.1		0.8	%
Third party management fees, labor reimbursement and leasing	—			—			—			—			—		—			—		4,938			4,944			4,938			4,944			(6		)	—			—			—			—	%	—			—		—			—			5.0			4.0			5.0			4.0			1.0			25.0	%
Other	436			341			95			55			—		2			30		672			1,048			1,165			1,419			(254		)	0.3			0.4			(0.1		)	(25.0	)%	—			—		—			—			0.6			1.4			0.9			1.8			(0.9		)	(50.0	)%
Total revenue	111,357			112,199			(842		)	22,276			1,571		2,045			1,991		9,653			19,237			145,331			134,998			10,333			133.1			130.0			3.1			2.4	%	1.8			1.0		1.5			2.7			8.7			10.2			145.1			143.9			1.2			0.8	%
Property operating expenses	31,098			32,011			913			4,345			365		550			772		2,365			4,704			38,358			37,852			(506		)	35.4			36.2			(0.8		)	(2.1	)%	0.3			—		0.6			1.1			1.1			2.2			37.4			39.5			(2.1		)	(5.2	)%
Real estate taxes	10,983			10,403			(580		)	3,603			230		244			226		417			1,574			15,247			12,433			(2,814		)	15.5			14.8			0.7			4.7	%	0.4			0.2		0.4			0.3			0.5			0.4			16.8			15.7			1.1			7.0	%
Third party management expenses	—			—			—			—			—		—			—		2,469			2,612			2,469			2,612			143			—			—			—			—	%	—			—		—			—			2.7			2.1			2.7			2.1			0.6			28.6	%
Net operating income	69,276			69,785			(509		)	14,328			976		1,251			993		4,402			10,347			89,257			82,101			7,156			82.2			79.0			3.2			4.0	%	1.1			0.8		0.5			1.3			4.4			5.5			88.2			86.6			1.6			1.8	%
Depreciation and amortization	37,666			35,981			(1,685		)	13,902			752		1,578			887		2,481			6,521			55,627			44,141			(11,486		)	48.2			46.3			1.9			4.1	%	0.5			0.2		1.0			1.4			2.3			3.6			52.0			51.5			0.5			1.0	%
Provision for impairment (d)	—			—			—			—			—		—			—		—			56,865			—			56,865			56,865
General & administrative expenses	—			—			—			—			—		—			—		6,974			5,963			6,974			5,963			(1,011		)	—			—			—			—	%	—			—		—			—			8.6			9.8			8.6			9.8			(1.2		)	(12.2	)%
Net gain on disposition of real estate																										(356		)	—			356																															(2.6		)	—			(2.6		)	—	%
Net gain on sale of undepreciated real estate																										(250		)	—			250																															—			(1.0		)	1.0			(100.0	)%
Operating income (loss)	$	31,610		$	33,804		$	(2,194	)	$	426		$	224	$	(327	)	$	106	$	(5,053	)	$	(59,002	)	$	27,262		$	(24,868	)	$	52,130		$	34.0		$	32.7		$	1.3		3.9	%	$	0.6		$	0.6	$	(0.5	)	$	(0.1	)	$	(6.5	)	$	(7.9	)	$	30.2		$	26.3		$	3.9		14.6	%
Number of properties	74			74						17					4											95									88			88								1					5												94
Square feet	14,009			14,009						2,159					543											16,711									15.8			15.8								0.2					0.6												16.6
Core Occupancy % (e)	93.1		%	93.1		%				93.5		%
Core Occupancy % (b)																																			93.3		%	92.2		%						100.0		%
Other Income (Expense):
Interest income																										558			1,220			(662		)																													0.6			0.5			0.1			20.0	%
Interest expense																										(20,400		)	(19,257		)	(1,143		)																													(20.0		)	(20.4		)	0.4			(2.0	)%
Interest expense — Deferred financing costs																										(694		)	(618		)	(76		)																													(0.7		)	(0.7		)	—			—	%
Equity in income (loss) of Real Estate Ventures																										(1,965		)	1			(1,966		)
Equity in loss of Real Estate Ventures																																																															(1.9		)	(1.4		)	(0.5		)	35.7	%
Net gain on real estate venture transactions																										2,059			—			2,059																															—			0.3			(0.3		)	(100.0	)%
Net income (loss)																										$	6,820		$	(43,522	)	$	50,342
Net income (loss) attributable to Common Shareholders of Brandywine Realty Trust																										$	0.04		$	(0.24	)	$	0.28
Net income																																																															$	8.2		$	4.6		$	3.6		77.2	%
Net income attributable to Common Shareholders of Brandywine Realty Trust																																																															$	0.04		$	0.02		$	0.02		100.0	%

~~EXPLANATORY NOTES~~


(a)	~~Includes: three properties recently completed, and 14 acquisitions.~~


~~(b)~~	~~Includes: one development and three redevelopment properties.~~


~~(c)~~	~~Includes~~Represents certain revenues and expenses at the corporate level as well as various intercompany costs that are eliminated in consolidation, third-party management fees, ~~and~~ provisions for ~~impairment.~~impairment, and changes in the accrued rent receivable allowance. Other/(Eliminations) also includes

properties sold ~~that do not qualify as discontinued operations, properties classified as held for sale, and the retail and residential components of FMC Tower.~~


~~(d)~~	~~Impairment charges are excluded from Same Store Property operating~~ and ~~presented in Other~~properties classified as held for sale.


~~(e)~~(b)	Pertains to Core Properties.

Total Revenue

Rents from the Total Portfolio increased by ~~$10.6~~$1.1 million during the ~~third~~first quarter of ~~2019~~2020 compared to the ~~third~~first quarter of ~~2018, of which $20.6~~2019. The increase in Rents is primarily driven by a $3.2 million ~~relates~~increase across the Same Store Portfolio due to increased occupancy at several properties within the Philadelphia CBD Segment and a $1.3 million increase in termination fee income, as well as a $0.8 million increase related to leasing activity at the Recently ~~Completed/~~Completion/Acquired ~~Properties, primarily from the acquisitions of the DRA Austin Portfolio and Quarry Lake II in December 2018. This increase was~~Properties. These increases are partially offset by a ~~$0.9~~decrease of $1.6 million ~~decrease~~ related to the ~~Same Store Portfolio~~Q1 2019 through Q1 2020 Dispositions and a ~~$9.1~~decrease of $1.2 million ~~decrease~~ related to redevelopments included in Development/Redevelopment Properties.

Third party management fees, labor reimbursement, and leasing income increased by $1.0 million during the ~~disposition of 10 properties from the third~~first quarter of ~~2018 through~~2020 compared to the ~~third~~first quarter of 2019 ~~(the “Q3 2018 through Q3 2019 Dispositions”).~~primarily due to an increase general contractor management services provided to MAP Venture.

Property Operating Expenses

Property operating expenses across our Total Portfolio ~~increased $0.5~~decreased $2.1 million for the three months ended ~~September 30, 2019~~March 31, 2020 compared to the three months ended ~~September 30, 2018,~~March 31, 2019, of which ~~$4.0~~$0.8 million relates to Recently Completed/Acquired Properties, primarily the DRA Austin and Quarry Lake II acquisitions. These increases were partially offset by a $2.5 million decrease due to the YTD 2018 and 2019 Dispositions and $1.0 million of miscellaneous decreases across our ~~Total Portfolio.~~Same Store Property Portfolio, $0.5 million relates to decreases due to vacancies at our Development/Redevelopment Properties in advance of beginning redevelopment activities, and $0.4 million relates to the Q1 2019 through Q1 2020 Dispositions.

Real Estate Taxes

Real estate taxes increased ~~$2.8~~$1.1 million for the ~~third~~first quarter of 2020 compared to the first quarter of 2019, ~~compared to the third quarter of 2018,~~ of which ~~$3.4~~$0.7 million related to ~~Recently Completed/Acquired Properties, primarily from the acquisitions of the DRA Austin~~our Same Store Property Portfolio and ~~Quarry Lake II in December 2018, and $0.6~~$0.2 million relates to ~~increased real estate tax assessments related to properties from~~ our ~~Philadelphia CBD segment within the Same Store Property Portfolio. These increases were partially offset by a decrease of $1.2 million from the Q3 2018 through Q3 2019 Dispositions.~~Recently Completed/Acquired Properties.

Depreciation and Amortization

Depreciation and amortization expense increased by ~~$11.5~~$0.5 million for the ~~third~~first quarter of 2020 compared to the first quarter of 2019, ~~compared to the third quarter of 2018,~~ of which ~~$13.1~~$1.9 million relates to the ~~Recently Completed/Acquired Properties~~Same Store Property Portfolio, primarily due to the ~~acquisitions~~write off of the DRA Austin Portfolio and Quarry Lake II in December 2018, 500 North Gulph Road being placed into service in December 2018 and Broadmoor 6 being placed into service in October 2018. There was also an increase of $1.7 million and $0.7assets for a terminated tenant in the ~~Same Store Portfolio~~Philadelphia CBD Segment and ~~Development/Redevelopment Properties, respectively. These increases were~~$0.3 million relates to our Recently Completed/Acquired Properties. This increase was offset by ~~decreases~~a decrease of ~~$4.0~~$0.8 million ~~relating~~related to 650 Park Avenue, which was demolished in July 2019, $0.6 million related to the ~~Q3 2018~~Q1 2019 through ~~Q3 2019 Dispositions.~~

~~Provision for Impairment~~

~~The $56.9~~Q1 2020 Dispositions and $0.4 million ~~provision for impairment recognized during~~related to the three months ended September 30, 2018 reflected our determination that we would not recover the carrying value of eight held for sale properties in our Metropolitan Washington, D.C. segment. There were no impairment charges for the three months ended September 2019.Development/Redevelopment Properties.

General and Administrative

~~General and administrative expenses increased by $1.0~~The $1.2 million decrease for the ~~third~~first quarter of 2020 compared to the first quarter of 2019 is primarily related to a $1.8 million decrease in compensation related expenses, which is driven by changes to the vesting period of retirement eligible officers for the 2020 Restricted Performance Share Unit awards compared to the ~~third quarter of 2018, primarily due to~~2019 Restricted Performance Share Unit awards. This was partially offset by a ~~$0.6 million increase in payroll, bonus, stock compensation expense and related benefits and a $0.4~~$0.3 million increase due to ~~a decrease~~an increase in capitalized general and administrative ~~costs on development projects.~~

~~Interest Expense~~

The $1.1 million increase in interest expense for the third quarter of 2019 compared to the third quarter of 2018 is primarily attributable to a $1.5 million increase in interest expense related to the Credit Facility, due to increased borrowings during the three months ended September 30, 2019 compared to the three months ended September 30, 2018. The $1.5 million increase above was offset by a $0.4 million decrease related to the refinancing of the seven-year term loan on December 13, 2018, which reduced the effective interest rate by 0.55%.

~~Equity in income (loss) of real estate ventures~~

~~Equity in income of unconsolidated real estate ventures decreased $1.9 million compared to the third quarter of 2018 to the third quarter of 2019 is primarily due to the following:~~

$1.2 million decrease primarily due to increased ground rent expense at the MAP Venture during the third quarter of 2019 compared to the third quarter of 2018 as a result of the adoption of Topic 842, Leases;

~~$0.3 million decrease related to the Herndon Innovation Center Venture, which was formed during the fourth quarter of 2018; and~~

$0.4 million decrease related to our acquisition and consolidation of DRA Advisor’s 50% ownership interest in the DRA Austin Venture during the fourth quarter of 2018, which generated income during the three months ended September 30, 2018.costs.

Net Gain ~~from~~on Disposition of Real Estate ~~Venture Transactions~~

The gain of ~~$2.1~~$2.6 million recognized during the three months ended ~~September 30, 2019~~March 31, 2020 is primarily related to the disposition of 52 East Swedesford Road, an office property in our Pennsylvania Suburbs Segment.

Net Gain on Sale of Undepreciated Real Estate

The gain ~~on debt forgiveness for 3130 Fairview Drive, located in Falls Church, VA, held by~~of $1.0 million recognized during the ~~BDN - AI Venture. The property~~first quarter of 2019 was ~~transferred~~primarily related to the ~~mortgage lender during~~a $0.8 million gain from the ~~three months ended September 30, 2019 in full satisfaction~~disposition of ~~the $26.0 million mortgage debt then held by the lender.~~9 Presidential Boulevard.

Net Income

Net income increased by ~~$50.3~~$3.6 million for the first quarter of 2020 compared to the ~~third quarter of 2018 to the third~~first quarter of 2019 as a result of the factors described above.

Net Income per Common Share – fully diluted

Net income per share was $0.04 for the ~~third~~first quarter of ~~2019~~2020 as compared to net ~~loss~~income per share of ~~$0.24~~$0.02 for the ~~third~~first quarter of ~~2018~~2019 as a result of the factors described above.

~~Comparison of the Nine Months Ended September 30, 2019 and September 30, 2018~~

The table below shows selected operating information for the “Same Store Property Portfolio” and the “Total Portfolio.” The Same Store Property Portfolio consists of 73 properties containing an aggregate of approximately 13.9 million net rentable square feet, and represents properties that we owned for the entire nine months ended September 30, 2019 and 2018. The Total Portfolio includes the effects of other properties that were either placed into service, acquired or redeveloped after January 1, 2018 and disposed of prior to September 30, 2019 or classified as held for sale as of September 30, 2019. A property is excluded from our Same Store Property Portfolio and moved into the redevelopment column in the period that we determine that a redevelopment would be the best use of the asset, and when said asset is taken out of service or is undergoing re-entitlement for a future development strategy. This table also includes a reconciliation from the Same Store Property Portfolio to the Total Portfolio net income (i.e., all properties owned by us during the nine months ended September 30, 2019 and 2018) by providing information for the properties which were acquired, placed into service, under development or redevelopment and administrative/elimination information for the nine months ended September 30, 2019 and 2018.

During the nine months ended September 30, 2019, a property containing 5,000 rentable square feet, located in our Other segment, was removed from the Same Store Property Portfolio and was reclassified as land. In addition, 650 Park Avenue, located in our Pennsylvania Suburbs segment, was removed from the Same Store Property Portfolio in advance of plans to demolish the building and redevelop the property. The Same Store Property Portfolio was also reduced by the disposition of 1900 Gallows Road, an office property in Vienna, Virginia containing 210,632 rentable square feet.

~~For detail of the properties comprising the Same Store Property Portfolio, as of December 31, 2018, see Item 2.~~ ~~“Properties”~~ ~~section of our Annual Report on Form 10-K for the year ended December 31, 2018.~~

~~The Total Portfolio net income presented in the table is equal to the net income of the Parent Company and the Operating Partnership.~~

~~Comparison of nine months ended September 30, 2019 to the nine months ended September 30, 2018~~

Same Store Property Portfolio Recently Completed/Acquired Properties (a) Development/Redevelopment Properties (b) Other (Eliminations) (c) Total Portfolio
(dollars and square feet in thousands) 2019 2018
Increase/
(Decrease)
2019 2018 2019 2018 2019 2018 2019 2018
Increase/
(Decrease)
Revenue:
Rents $ 330,982
$ 330,779
$ 203
$ 64,928
$ 6,505
$ 6,439
$ 5,069
$ 12,764
$ 39,968
$ 415,113
$ 382,321
$ 32,792
Third party management fees, labor reimbursement and leasing —
—
—
—
—
—
—
14,041
17,531
14,041
17,531
(3,490 )
Other 1,123
1,230
(107 ) 156
(16 ) 8
40
2,937
4,036
4,224
5,290
(1,066 )
Total revenue 332,105
332,009
96
65,084
6,489
6,447
5,109
29,742
61,535
433,378
405,142
28,236
Property operating expenses 94,639
95,130
491
13,133
1,861
2,034
2,687
6,736
15,431
116,542
115,109
(1,433 )
Real estate taxes 33,936
30,682
(3,254 ) 11,133
939
744
699
1,306
4,952
47,119
37,272
(9,847 )
Third party management expenses —
—
—
—
—
—
—
7,035
9,605
7,035
9,605
2,570
Net operating income 203,530
206,197
(2,667 ) 40,818
3,689
3,669
1,723
14,665
31,547
262,682
243,156
19,526
Depreciation and amortization 107,595
105,803
(1,792 ) 38,767
3,270
3,233
2,851
9,143
19,707
158,738
131,631
(27,107 )
General & administrative expenses —
—
—
—
—
—
—
25,217
22,209
25,217
22,209
(3,008 )
Provision for impairment —
56,865
—
56,865
56,865
Net (gain) loss on disposition of real estate (356 ) 35
391
Net gain on sale of undepreciated real estate (1,501 ) (2,859 ) (1,358 )
Operating income (loss) $ 95,935
$ 100,394
$ (4,459 ) $ 2,051
$ 419
$ 436
$ (1,128 ) $ (19,695 ) $ (67,234 ) $ 80,584
$ 35,275
$ 45,309
Number of properties 73
73
18
4
95

Square feet 13,923
13,923
2,245
543
16,711

Core Occupancy % (d) 93.1 % 93.2 % 93.7 %
Other Income (Expense):
Interest income 1,636
2,564
(928 )
Interest expense (61,273 ) (58,091 ) (3,182 )
Interest expense — Deferred financing costs (2,026 ) (1,872 ) (154 )
Equity in loss of Real Estate Ventures (4,814 ) (1,182 ) (3,632 )
Net gain on real estate venture transactions 3,594
37,263
(33,669 )
Income tax provision (46 ) (158 ) 112
Net income $ 17,655
$ 13,799
$ 3,856
Net income attributable to Common Shareholders of Brandywine Realty Trust $ 0.10
$ 0.07
$ 0.03

~~EXPLANATORY NOTES~~


~~(a)~~	~~Results include: three properties recently completed and 15 acquisitions.~~


~~(b)~~	~~Results include: one development and three redevelopment properties.~~


~~(c)~~	Represents certain revenues and expenses at the corporate level as well as various intercompany costs that are eliminated in consolidation, third-party management fees and provisions for impairment. It also includes properties sold that do not qualify as discontinued operations and properties classified as held for sale.


~~(d)~~	~~Pertains to Core Properties.~~

~~Total Revenue~~

Rents from the Total Portfolio increased by $32.8 million during the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018, of which $58.4 million relates to Recently Completed/Acquired Properties, primarily the DRA Austin and Quarry Lake II acquisitions, $0.2 million relates to the Same Store Portfolio and $1.3 million relates to development/redevelopment properties. These increases were partially offset by a $27.1 million decrease due to the disposition of 10 properties from the nine months ended September 30, 2018 through the nine months ended September 30, 2019 (the “YTD 2018 and 2019 Dispositions”).

Third party management fees, labor reimbursement and leasing decreased by $3.5 million for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018, due primarily to decreases in third party management and development fees of $6.9 million. The decrease includes $2.8 million of third party management fees related to the sale of twelve office properties by the Austin Venture in the fourth quarter of 2018, $1.7 million related to the sale of three office properties held by our BDN – AI Venture in the fourth quarter of 2018, and a decrease of $2.4 million related to general contractor management services provided primarily to the MAP Venture. These decreases were offset by a $2.4 million increase in third party management fees from our Herndon Innovation Center Venture, which was formed during the fourth quarter of 2018, and $1.0 million increase in third party developer fees related to the development of a medical facility located in Radnor, Pennsylvania that commenced during the second quarter of 2019.

~~Other income decreased $1.1 million, which was primarily due to insurance refund proceeds received during the nine months ended September 30, 2018.~~

~~Property Operating Expenses~~

Property operating expenses across our Total Portfolio increased $1.4 million for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018, of which $11.2 million relates to Recently Completed/Acquired Properties, primarily the DRA Austin and Quarry Lake II acquisitions. These increases were partially offset by a $7.4 million decrease due to the YTD 2018 and 2019 Dispositions and $2.4 million of miscellaneous decreases across our Total Portfolio.

~~Real Estate Taxes~~

Real estate taxes increased $9.8 million for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018, of which $3.3 million relates to increased real estate tax assessments at the Same Store Property Portfolio, primarily in the Philadelphia CBD segment, and $10.2 million related to Recently Completed/Acquired Properties. These increases were partially offset by decreases of $3.1 million from the YTD 2018 and 2019 Dispositions and $0.6 million related to properties used for parking operations in the Philadelphia CBD segment.

~~Depreciation and Amortization~~

Depreciation and amortization expense increased by $27.1 million for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018, of which $35.5 million relates to the Recently Completed/Acquired Properties due to the acquisitions of the DRA Austin Portfolio and Quarry Lake II in December 2018, 500 North Gulph Road being placed into service in December 2018 and Broadmoor 6 being placed into service in October 2018. There was also a $1.5 million increase related to the acceleration of depreciation at 650 Park Avenue, in King of Prussia, PA, ahead of its demolition as we plan to redevelop this property, and approximately $1.5 million due to early terminations at 1676 International Drive. These increases were offset by decreases of $12.9 million relating to the YTD 2018 and 2019 Dispositions. The remaining increase is due to $1.5 million of miscellaneous changes across the Total Portfolio, including decreases on account of fully depreciated assets in the Same Store Portfolio and increases due to early terminations or capital improvements.

~~General and Administrative~~

General and administrative expenses increased by $3.0 million for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018, due to a $1.5 million increase in payroll, bonus, stock compensation expense, and related

~~benefits, $1.0 million increase due to a decrease in capitalized costs, $0.2 million increase in charitable contributions, and $0.3 million increase in professional fees.~~

~~Provision for Impairment~~

The $56.9 million provision for impairment recognized during the nine months ended September 30, 2018 reflects our determination that we would not recover the carrying value of eight held for sale properties in our Metropolitan Washington, D.C. segment. There were no impairment charges for the nine months ended September 2019.

~~Net Gain on Sale of Undepreciated Real Estate~~

The gain of $1.5 million recognized during the nine months ended September 30, 2019 resulted from the sale of 9 Presidential Boulevard and from consideration received during the nine months ended September 30, 2019 related to the Libertyview disposition, which occurred in 2015.

The gain of $2.9 million recognized during the nine months ended September 30, 2018 resulted from the recognition of a deferred gain from the sale of land parcels located at Garza Ranch in Austin, Texas.

~~Interest Expense~~

Interest expense increased $3.2 million from the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018 primarily due to a $4.2 million increase in interest expense related to the Credit Facility, due to increased borrowings during the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018. The $4.2 million increase above was partially offset by a $1.0 million decrease related to the refinance of the seven-year term loan on December 13, 2018, which reduced the effective interest rate by 0.55%.

~~Equity in Income (Loss) of Real Estate Ventures~~

~~Equity in loss of unconsolidated real estate ventures increased $3.6 million from the nine months ended September 30, 2018 to the nine months ended September 30, 2019 primarily due to the following:~~

$2.4 million increase primarily due to increased ground rent expense at the MAP Venture during the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018 as a result of the adoption of Topic 842, Leases;

$1.2 million increase related to our acquisition and consolidation of DRA Advisor’s 50% ownership interest in the DRA Austin Venture during the fourth quarter of 2018, which generated $1.2 million of income during the nine months ended September 30, 2018; and

~~$0.3 million increase related to the Herndon Innovation Center Venture, which was formed during the fourth quarter of 2018.~~

~~These increases in equity in loss of real estate ventures were offset by $0.3 million related to the disposition of evo at Cira during the first quarter of 2018.~~

~~Net Gain from Real Estate Venture Transactions~~

~~The $37.3 million net gain from Real Estate Venture transactions during the nine months ended September 30, 2018 relates to the following:~~

~~$25.7 million from the sale of the evo at Cira Centre South Venture; and~~

~~$11.6 million gain recognized on the exchange of our 20% interest in the Seven Tower Bridge Venture for the remaining 35% interest in the Four Tower Bridge Venture.~~

~~The $3.6 million net gain from Real Estate Venture transactions during the nine months ended September 30, 2019 relates to the following:~~

~~$1.2 million of gain recognized related to related to proceeds from a connection agreement by the 51 N Street venture with the third-party owner of an adjacent property;~~

~~$0.3 million of additional proceeds during the first quarter of 2019 from the sale of the evo at Cira Centre South Venture, which was sold during the first quarter of 2018; and~~

~~$2.1 million related to the gain on debt forgiveness for 3130 Fairview Drive, located in Falls Church, VA, held by the BDN - AI Venture.~~

~~Net Income~~

~~Net income increased by $3.9 million from the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018 as a result of the factors described above.~~

~~Net Income per Common Share – fully diluted~~

Net income per share was $0.10 for the nine months ended September 30, 2019 as compared to net income per share of $0.07 for the nine months ended September 30, 2018 as a result of the factors described above.

LIQUIDITY AND CAPITAL RESOURCES

General

Our principal liquidity funding needs for the next twelve months are as follows:

~~fund~~ normal recurring expenses;

~~fund~~ capital expenditures, including capital and tenant improvements and leasing costs;

~~fund~~ debt service and principal repayment obligations;

~~fund~~ current development and redevelopment costs;

~~fund~~ commitments to unconsolidated real estate ventures;

~~fund~~ distributions to shareholders to maintain our Parent Company’s REIT status;

~~fund~~ possible acquisitions of properties, either directly or indirectly through the acquisition of equity interest therein; and

~~fund~~ possible common share repurchases.

We expect to satisfy these needs using one or more of the following:

cash flows from operations;

distributions of cash from our unconsolidated real estate ventures;

cash and cash equivalent balances;

availability under our unsecured Credit Facility;

secured construction loans and long-term unsecured indebtedness;

issuances of Parent Company equity securities and/or units of the Operating Partnership; and

sales of real estate.

As of ~~September 30, 2019,~~March 31, 2020, the Parent Company owned a 99.4% interest in the Operating Partnership. The remaining interest of approximately 0.6% pertains to common limited partnership interests owned by non-affiliated investors who contributed property to the Operating Partnership in exchange for their interests. As the sole general partner of the Operating Partnership, the Parent Company has full and complete responsibility for the Operating Partnership’s day-to-day operations and management. The Parent Company’s source of funding for its dividend payments and other obligations is the distributions it receives from the Operating Partnership.

As summarized above, we believe that our liquidity needs will be satisfied through available cash balances and cash flows from operations, financing activities and real estate sales. Rental revenue and other income from operations are our principal sources of cash to pay operating expenses, debt service, recurring capital expenditures and the minimum distributions required to maintain our REIT qualification. We seek to increase cash flows from our properties by maintaining quality standards for our properties that promote high occupancy rates and permit increases in rental rates while reducing tenant turnover and controlling operating expenses. Our revenue also includes third-party fees generated by our property management, leasing, development and construction businesses. We believe that our revenue, together with proceeds from property sales and debt financings, will continue to provide funds for our short-term liquidity needs. However, material changes in our operating or financing activities may adversely affect our net cash flows. With uncertain economic conditions, vacancy rates may increase, effective rental rates on new and renewed

leases may decrease and tenant installation costs, including concessions, may increase in most or all of our markets during ~~2019~~2020 and possibly beyond. As a result, our revenues and cash flows could be insufficient to cover operating expenses, including increased tenant installation costs, pay debt service or make distributions to shareholders over the short-term. If this situation were to occur, we expect that we would finance cash deficits through borrowings under our unsecured revolving credit facility and other sources of debt and equity financings. In addition, a material adverse change in cash provided by operations could adversely affect our compliance with financial performance covenants under our unsecured revolving credit facility, including unsecured term loans and unsecured notes. As of ~~September 30, 2019~~March 31, 2020 we were in compliance with all of our debt covenants and requirement obligations.

In addition, we are continuing to monitor the outbreak of the novel coronavirus (“COVID-19”) and the related economic impacts, market volatility, and business disruption, and its impact on our tenants. The severity and duration of the pandemic and its impact on our operations and liquidity is uncertain as this continues to evolve globally. However, if the outbreak continues, there will likely be continued negative economic impacts, market volatility, and business disruption which could negatively impact our tenants’ ability to pay rent, our ability to lease vacant space, and our ability to complete development and redevelopment projects, and these consequences, in turn, could materially impact our results of operations. Approximately 96% of April total cash-based rent has been received from our tenants which reflects a 97% collection rate from our office tenants. We have received rent relief requests primarily from our co-working and retail tenants, who represent approximately 2.1% and 1.6% of April billings, respectively. The relief requests have substantially all been in the form of rent deferral for varying lengths of time and we are currently assessing the merits of each request. For those tenants we believe require rent relief, we expect to grant deferrals and, in some instances, seek extended lease terms through favorable lease extensions. We can give no assurances on the outcomes of these ongoing negotiations, the amount and nature of the rent relief packages and ultimate recovery of the amounts deferred.

We use multiple financing sources to fund our long-term capital needs. When needed, we use borrowings under our unsecured revolving credit facility for general business purposes, including to meet debt maturities and to fund distributions to shareholders as well as development and acquisition costs and other expenses. In light of the volatility in financial markets and economic uncertainties, it is possible, that one or more lenders under our unsecured revolving credit facility could fail to fund a borrowing request. Such an event could adversely affect our ability to access funds ~~from~~under our unsecured credit facility when needed to fund distributions or pay expenses.

Our ability to incur additional debt is dependent upon a number of factors, including our credit ratings, the value of our unencumbered assets, our degree of leverage and borrowing restrictions imposed by our lenders. If one or more rating agencies were to downgrade our unsecured credit rating, our access to the unsecured debt market would be more limited and the interest rate under our unsecured credit facility and unsecured term ~~loan~~loans would increase.

The Parent Company unconditionally guarantees the Operating Partnership’s secured and unsecured obligations, which, as of ~~September 30, 2019,~~March 31, 2020, amounted to ~~$317.4~~$313.5 million and ~~$1,775.1~~$1,878.6 million, respectively.

Capital Markets

The Parent Company issues equity from time to time, the proceeds of which it contributes to the Operating Partnership in exchange for additional interests in the Operating Partnership, and guarantees debt obligations of the Operating Partnership. The Parent Company’s ability to sell common shares and preferred shares is dependent on, among other things, general market conditions for REITs, market perceptions about the Company as a whole and the current trading price of the Parent Company’s shares. The Parent Company generally maintains a shelf registration statement that ~~has registered~~covers the offering and sale of common shares, preferred shares, depositary shares, warrants and unsecured debt securities. Subject to our ongoing compliance with securities laws, and if warranted by market conditions, we may offer and sell equity and debt securities from time to time under the shelf registration ~~statement. We also maintain a continuous offering program (the “Offering Program”) that permits us to sell up to 16,000,000 common shares~~statement or in ~~“at the market” offerings as defined in Rule 415~~transactions exempt from registration.

See Note 11, ''Beneficiaries' Equity of the Securities Act until January 10, 2020. From initial sales activity under the Offering Program on December 13, 2017 through September 30, 2019, we generated approximately $51.6 million from the issuance of 2,882,302 common shares under the Offering Program at an average price per share of $18.19 after payment of approximately $0.8 million of commissionsParent Company” to the sales agents and before offering expenses. During the nine months ended September 30, 2019, we did not sell any shares under the Offering Program. At September 30, 2019, 13,117,698 common shares remained available for future sale under the Offering Program.

~~See Note 10, “Beneficiaries’ Equity of The Operating Partnership~~”our Consolidated Financial Statements for further information related to our share repurchase program during the three ~~and nine~~ months ended ~~September 30, 2019.~~March 31, 2020. We expect to fund any additional share repurchases with a combination of available cash balances and availability under our unsecured revolving credit facility. The timing and amounts of any repurchases will depend on a variety of factors, including market conditions, regulatory requirements, share prices, capital availability and other factors as determined by our management team. The repurchase program does not require the purchase of any minimum number of shares and may be suspended or discontinued at any time without notice.

Capital Recycling

The Operating Partnership also considers net sales of selected properties and recapitalization of unconsolidated real estate ventures as additional sources of managing its liquidity. During the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, we sold ~~2.7 acres of undeveloped land and~~ one office property for net cash proceeds of ~~$5.0 million and $34.1 million respectively.~~$17.5 million.

We expect that our primary uses of capital during the remainder of ~~2019~~2020 will be to fund our current development and redevelopment ~~projects.~~projects and also to repay $80.5 million in principal due upon maturity of the mortgage note for Two Logan Square, in Philadelphia, Pennsylvania, in August 2020, if not refinanced or extended. As of ~~September 30, 2019,~~March 31, 2020, we had ~~$29.9~~$52.7 million of cash and cash equivalents and ~~$452.0~~$548.3 million of available borrowings under our Credit Facility, net of ~~$1.5~~$1.7 million in letters of credit outstanding. Based on the foregoing, as well as cash flows from operations net of dividend requirements, we believe we have sufficient capital to fund our remaining capital requirements on existing development and redevelopment projects and pursue additional attractive investment opportunities.

Cash Flows

The following discussion of our cash flows is based on the consolidated statement of cash flows and is not meant to be a comprehensive discussion of the changes in our cash flows for the periods presented.

As of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, we maintained cash and cash equivalents and restricted cash of ~~$30.5~~$53.4 million and ~~23.2~~$91.2 million, respectively. We report and analyze our cash flows based on operating activities, investing activities, and financing activities. The following table summarizes changes in our cash flows (in thousands):


	Nine Months Ended September 30,						Three Months Ended March 31,
Activity	2019			2018			2020			2019			(Decrease) Increase
Operating	$	155,250		$	154,537		$	45,058		$	17,766		$	27,292
Investing	(77,127		)	(180,576		)	(42,568		)	(41,343		)	(1,225		)
Financing	(70,813		)	(106,218		)	(40,286		)	15,169			(55,455		)
Net cash flows	$	7,310		$	(132,257	)	$	(37,796	)	$	(8,408	)	$	(29,388	)

Our principal source of cash flows is from the operation of our Properties. Our Properties provide a relatively consistent stream of cash flows that provides us with the resources to fund operating expenses, debt service and quarterly dividends.

~~The net increase~~

Cash is used in investing activities to fund acquisitions, development, or redevelopment projects and recurring and nonrecurring capital expenditures. We selectively invest in new projects that enable us to take advantage of ~~$0.7 million~~our development, leasing, financing, and property management skills and invest in ~~cash from operating activities for~~existing buildings that meet our investment criteria. During the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020, when compared to the ~~nine~~three months ended ~~September 30, 2018 is~~March 31, 2019, the change in investing cash flows was due to the ~~timing~~following activities (in thousands):



Acquisitions of real estate	$	(11,432	)
Capital expenditures and capitalized interest	1,294
Capital improvements/acquisition deposits/leasing costs	(1,582		)
Joint venture investments	(77		)
Distributions from joint ventures	(1,851		)
Proceeds from the sale of properties	12,438
Proceeds from notes receivable	(15		)
Increase in net cash used in investing activities	$	(1,225	)

We generally fund our investment activity through the sale of ~~cash receipts~~real estate, property-level financing, credit facilities, senior unsecured notes, convertible or exchangeable securities, and ~~cash expenditures in~~construction loans. From time to time, we may issue common or preferred shares of beneficial interest, or the ~~normal course~~Operating Partnership may issue common or preferred units of ~~operations.~~

~~The net increase of $103.4 million in cash from investing activities during~~limited partnership interest. During the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020, when compared to the ~~nine~~three months ended ~~September 30, 2018 primarily relates to a decrease~~March 31, 2019, the change in acquisition activity and an increase in distributions from unconsolidated Real Estate Ventures during the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018. Quantitatively, the increase reflects the following:

~~$44.4 million increase from the 2018 issuance of a mortgage loan to 1919 Ventures, with no comparable activity during the nine months ended September 30, 2019;~~

~~$40.3 million increase in~~financing cash from the acquisitions of 3001-3003 JFK Boulevard and 3025 JFK Boulevard in Philadelphia, Pennsylvania during the nine months ended September 30, 2018 with no comparable acquisition during the nine months ended September 30, 2019;

$30.1 million increase in cash distributed from unconsolidated Real Estate Ventures in excess of cumulative equity in income, as Herndon Innovation Center Venture distributed proceeds from mortgage financing which closed during the nine months ended September 30, 2019;

$24.8 million increase in net proceeds from the disposition of an office building, one land parcel and the receipt of proceeds related to contingent consideration received during the nine months ended September 30, 2019 compared to the disposition of two land parcels and an office building during the nine months ended September 30, 2018;

$3.6 million increase from deposits for real estate, resulting from deposits made during the nine months ended September 30, 2018 relating to our ability to increase project density at certain of the development sites with Schuylkill Yards;

~~$3.2 million increase~~flows was due to the ~~repayment~~following activities (in thousands):



Proceeds from debt obligations	$	(132,000	)
Repayments of debt obligations	113,926
Proceeds from the exercise of stock options	(753		)
Repurchase and retirement of common shares	(36,575		)
Other financing activities	485
Dividends and distributions paid	(538		)
Increase in net cash used in financing activities	$	(55,455	)

Off-Balance Sheet Arrangements

As of March 31, 2020, we did not have any off-balance sheet arrangements that have, or are reasonably likely to have, a ~~mortgage note receivable during the nine months ended September 30, 2019;~~

~~$2.5 million increase in cash from decreased~~material current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures ~~for tenant improvements, developments/redevelopments and leasing commissions, which primarily relates to ongoing development and redevelopment projects; and~~

~~$0.5 million increase due to a decrease in contributions to unconsolidated Real Estate Ventures.~~

~~The increase in cash provided by investing activities was primarily offset by the following:~~

$42.2 million decrease in proceeds from real estate venture sales as a result of the proceeds of $43.0 million from the sale of the evo at Cira Centre South Venture during the nine months ended September 30, 2018 compared to $0.3 million in proceeds received during the nine months endedor capital resources.

~~September 30, 2019 related to the evo at Cira Centre South Venture and Austin Venture sales in 2018;~~

~~$2.5 million decrease in cash from increased leasing costs paid during the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018; and~~

~~$0.8 million decrease due to advances made for the purchase of tenant assets, net of repayments.~~

The net increase of $35.4 million in cash provided by financing activities for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018 is attributed to the following:

~~$54.0 million in net borrowings under the unsecured revolving credit facility;~~

~~$2.7 million decrease in cash used for debt financing costs due to the refinance of the unsecured revolving credit facility in 2018 with no comparable activity in 2019;~~

~~$0.8 million in proceeds from the exercise of stock options during the nine months ended September 30, 2019, with no such activity for the nine months ended September 30, 2018; and~~

~~$0.2 million decrease in distributions to noncontrolling interests.~~

~~The increases in cash provided by financing activities was offset by the following;~~

~~$17.3 million increase in cash used to repurchase and retire common shares, with no such activity during the nine months ended September 30, 2018;~~

$3.7 million increase in cash used due to the increase of dividends paid from $0.54 per share during the nine months ended September 30, 2018 to $0.57 per share for the nine months ended September 30, 2019;

~~$0.7 million increase from the repayment of mortgage notes payable;~~

~~$0.5 million decrease in proceeds from the issuance of common shares, as there were no share issuances during the nine months ended September 30, 2019; and~~

~~$0.1 million increase in shares used for employee taxes upon vesting of share awards.~~

Capitalization

Indebtedness

The table below summarizes indebtedness under our mortgage notes payable and our unsecured debt at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018:~~

2019:


	September 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
	(dollars in thousands)						(dollars in thousands)
Balance: (a)
Fixed rate	$	1,918,911		$	1,924,580		$	2,089,266		$	2,091,211
Variable rate - unhedged	173,562			119,562			102,836			52,836
Total	$	2,092,473		$	2,044,142		$	2,192,102		$	2,144,047
Percent of Total Debt:
Fixed rate	91.7		%	94.2		%	95.3		%	97.5		%
Variable rate - unhedged	8.3		%	5.8		%	4.7		%	2.5		%
Total	100.0		%	100.0		%	100.0		%	100.0		%
Weighted-average interest rate at period end:
Fixed rate	3.9		%	3.9		%	3.9		%	3.9		%
Variable rate - unhedged	3.3		%	3.6		%	2.6		%	3.2		%
Total	3.9		%	3.9		%	3.8		%	3.8		%
Weighted-average maturity in years:
Fixed rate	5.8			6.6			5.3			5.6
Variable rate - unhedged	4.8			4.0			9.0			15.6
Total	5.7			6.4			5.5			5.9


(a)	Consists of unpaid principal and does not reflect premium/discount or deferred financing costs.

Scheduled principal payments and related weighted average annual effective interest rates for our debt as of ~~September 30, 2019~~March 31, 2020 were as follows (in thousands):


Period	Scheduled amortization		Principal maturities		Total		Weighted Average Interest Rate of Maturing Debt		Scheduled amortization		Principal maturities		Total		Weighted Average Interest Rate of Maturing Debt
2019	$	1,926	$	—	$	1,926	3.98	%
2020	6,705		80,521		87,226		3.98	%
2020 (nine months remaining)									$	4,760	$	80,521	$	85,281	3.98	%
2021	6,142		9,001		15,143		4.28	%	6,142		9,001		15,143		4.28	%
2022	6,332		396,500		402,832		3.02	%	6,332		300,000		306,332		2.76	%
2023	1,620		555,116		556,736		3.94	%	1,620		555,116		556,736		3.94	%
2024	—		250,000		250,000		4.33	%	—		350,000		350,000		3.78	%
2025	—		—		—		—	%	—		—		—		—	%
2026	—		—		—		—	%	—		—		—		—	%
2027	—		450,000		450,000		4.03	%	—		450,000		450,000		4.03	%
2028	—		—		—		—	%	—		—		—		—	%
2029									—		350,000		350,000		4.30	%
Thereafter	—		328,610		328,610		4.29	%	—		78,610		78,610		3.18	%
Totals	$	22,725	$	2,069,748	$	2,092,473	3.89	%	$	18,854	$	2,173,248	$	2,192,102	3.80	%

The indenture under which the Operating Partnership issued its unsecured notes contains financial covenants, including: (i) a leverage ratio not to exceed 60%; (ii) a secured debt leverage ratio not to exceed 40%; (iii) a debt service coverage ratio of greater than 1.5 to 1.0; and (iv) an unencumbered asset value of not less than 150% of unsecured debt. The Operating Partnership is in compliance with all covenants as of ~~September 30, 2019.~~March 31, 2020.

The Operating Partnership has mortgage loans that are collateralized by certain of its ~~properties.~~Properties. Payments on mortgage loans are generally due in monthly installments of principal and interest, or interest only. The Operating Partnership intends to refinance or

repay its indebtedness as it matures, subject to tax guarantees, through the use of proceeds from selective property sales and secured or unsecured borrowings. However, in the current and expected future economic environment one or more of these sources may not be available on attractive terms or at all.

On October 10, 2019, the Company issued $100.0 million of 4.100% guaranteed notes due 2024 and $100.0 million of 4.550% guaranteed notes due 2029 for a combined net proceeds of approximately $214.3 million after deducting underwriting discounts and estimated transaction expenses. The 2024 Notes were issued as part of the same series as the Operating Partnership’s outstanding 4.100% guaranteed notes due 2024, $250.0 million of which were originally issued on September 16, 2014, for all purposes. The 2029 Notes were issued as part of the same series as the Operating Partnership’s outstanding 4.550% guaranteed notes due 2029, $250.0 million of which were originally issued on September 16, 2014, for all purposes. The Company used approximately $145.5 million of the net proceeds to repay in the full outstanding amount on the unsecured credit facility. See Note 14, “Subsequent Events” for further information related to the debt issuance.

Equity

In order to maintain its qualification as a REIT, the Parent Company is required to, among other things, pay dividends to its shareholders of at least 90% of its REIT taxable income. See Note ~~10, “Beneficiaries’~~11, ''Beneficiaries' Equity of ~~The Operating Partnership~~the Parent Company,” to our Consolidated Financial Statements for further information related to our dividends declared for the ~~third~~first quarter of ~~2019.~~

~~Inflation~~

A majority of our leases provide for tenant reimbursement of real estate taxes and operating expenses either on a triple net basis or over a base year or stop amount. In addition, many of our office leases provide for fixed base rent increases. We believe that inflationary increases in expenses will be partially offset by expense reimbursement and contractual rent increases.2020.

Contractual Obligations

~~The following table outlines the timing of payment requirements related~~Refer to our ~~contractual obligations as of September 30, 2019:~~

Payments by Period (in thousands)
Total
Less than
1 Year
1-3 Years 3-5 Years
More than
5 Years
Mortgage notes payable (a) $ 317,363
87,599
21,422
208,342
—
Unsecured credit facility 146,500
—
146,500
—
—
Unsecured term loan (a) 250,000
—
—
250,000
—
Unsecured debt (a) 1,378,610
—
—
350,000
1,028,610
Ground leases (b) 62,874
1,254
2,507
2,507
56,606
Development contracts (c) 184,213
134,967
42,316
1,350
5,580
Tenant improvements (d) 47,677
43,165
4,512
—
—
Interest expense (e) 437,057
75,851
129,357
93,140
138,709
Other liabilities (f) 34,129
4,900
9,054
4,430
15,745
$ 2,858,423
$ 347,736
$ 355,668
$ 909,769
$ 1,245,250


~~(a)~~	~~Amounts are gross of deferred financing costs and do not reflect unamortized discounts and/or premiums.~~


~~(b)~~	~~Rental payments under the terms of all non-cancelable ground leases under which we are the lessee are expensed on a straight-line basis regardless of when payments are due.~~


~~(c)~~	Represents contractual obligations for wholly-owned development projects and does not contemplate all costs expected to be incurred for such developments. This table does not include contractual obligations for our real estate venture developments, which are referenced below.


~~(d)~~	~~Represents cash commitments under signed leases and excludes tenant-funded improvements. The timing of these expenditures may fluctuate.~~


~~(e)~~	~~Variable rate debt future interest expense commitments are calculated using September 30,~~ 2019 ~~interest rates.~~


~~(f)~~	Other liabilities consists of: (i) our deferred compensation liability; (ii) the interest accretion on the anticipated transfer tax liability on Two Logan Square in Philadelphia, Pennsylvania; (iii) the contingent consideration associated with the purchase of 618 Market Street in Philadelphia, Pennsylvania; and (iv) a payment to a tenant under a profit sharing arrangement.

~~The above table does not include amounts related to the 4040 Wilson development in Arlington, Virginia. For further discussion of this development, see Item 1. “Business – Developments,” included in our~~ Annual Report on Form 10-K for ~~the fiscal year ended December 31, 2018 and section “Overview – Development Risk,”~~ ~~above, for further details.~~

~~We provide customary guarantees for certain development projects~~a discussion of our ~~unconsolidated real estate ventures. See Note 4, "Investment in Unconsolidated Real Estate Ventures," and Note 13,~~ ~~“Commitments and Contingencies,”~~ ~~for further details on payment guarantees provided on~~contractual obligations. There have been no material changes, outside the ~~behalf~~ordinary course of ~~real estate ventures.~~

~~As of September 30, 2019, we expect~~business, to ~~incur $6.0 million for capital improvements to operating properties, which are not included in~~these contractual obligations during the ~~above table. We expect that most of these improvements will be paid by~~three months ended March 31, 2020.

On October 13, 2017, we acquired a leasehold interest in the office building known as The Bulletin Building, in Philadelphia, Pennsylvania. In connection with the acquisition, we are required to spend no less than $8.0 million in capital improvements to the property. As of September 30, 2019, $5.1 million related to this requirement had been funded. See Note 13, ~~“Commitments and Contingencies,”~~ ~~for further information.~~

During the fourth quarter of 2017, in connection with the Schuylkill Yards Project, we entered into a neighborhood engagement program and, as of September 30, 2019, we had contractual obligations under this program for $8.5 million of future payments, which are included in the table above within “Development contracts.” In addition, we estimate $2.9 million of potential additional contributions under this program for which we are not currently contractually obligated. As such, these costs are not included in the above table. See Note 13, ~~“Commitments and Contingencies,”~~ ~~for further information.~~

Funds from Operations (FFO)

Pursuant to the revised definition of FFO adopted by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”), we calculate FFO by adjusting net income/(loss) attributable to common unit holders (computed in accordance with GAAP) for gains (or losses) from sales of properties, impairment losses on depreciable consolidated real estate, impairment losses on investments in unconsolidated real estate ventures driven by a measurable decrease in the fair value of depreciable real estate held by the unconsolidated Real Estate Ventures, real estate related depreciation and amortization, and after similar adjustments for unconsolidated Real Estate Ventures. FFO is a non-GAAP financial measure. We believe that the use of FFO combined with the required GAAP presentations, has been beneficial in improving the understanding of operating results of REITs among the investing public and making comparisons of REITs’ operating results more meaningful. We consider FFO to be a useful measure for reviewing comparative operating and financial performance because, by excluding gains or losses related to sales of previously depreciated operating real estate assets and real estate depreciation and amortization, FFO can help the investing public compare the operating performance of a company’s real estate between periods or as compared to other companies. Our computation of FFO may not be comparable to FFO reported by other REITs or real estate companies that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently.

We consider net income, as defined by GAAP, to be the most comparable earnings measure to FFO. While FFO and FFO per unit are relevant and widely used measures of operating performance of REITs, FFO does not represent cash flow from operations or net income as defined by GAAP and should not be considered as alternatives to those measures in evaluating our liquidity or operating performance. We believe that to further understand our performance, FFO should be compared with our reported net income/ (loss) attributable to common unit holders and considered in addition to cash flows in accordance with GAAP, as presented in our consolidated financial statements.

The following table presents a reconciliation of net income attributable to common unit holders to FFO for the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 and ~~2018:~~2019:

Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
(amounts in thousands, except share information)
Net income (loss )attributable to common unitholders $ 6,716
$ (43,622 ) $ 17,292
$ 13,473
Add (deduct):
Amount allocated to unvested restricted unitholders 93
80
305
280
Net gain on real estate venture transactions (2,059 ) —
(2,318 ) (37,263 )
Net gain (loss) on disposition of real estate (356 ) —
(356 ) 35
Provision for impairment (a) —
56,865
—
56,865

Depreciation and amortization:
Real property 40,695
35,252
112,833
105,521
Leasing costs including acquired intangibles 14,374
8,482
44,478
24,932
Company’s share of unconsolidated real estate ventures 4,800
6,334
14,815
20,230
Partners’ share of consolidated real estate ventures (61 ) (57 ) (168 ) (166 )
Funds from operations $ 64,202
$ 63,334
$ 186,881
$ 183,907
Funds from operations allocable to unvested restricted shareholders (179 ) (157 ) (567 ) (528 )
Funds from operations available to common share and unit holders (FFO) $ 64,023
$ 63,177
$ 186,314
$ 183,379
Weighted-average shares/units outstanding — basic (b) 177,176,870
180,082,421
177,048,621
179,995,792
Weighted-average shares/units outstanding — fully diluted (b) 177,732,226
181,253,953
177,599,840
181,232,343

~~(a)In accordance with the NAREIT definition of FFO, impairment on land held for development is excluded.~~



	Three Months Ended March 31,
	2020			2019
	(amounts in thousands, except share information)
Net income attributable to common unitholders	$	7,944		$	4,430
Add (deduct):
Amount allocated to unvested restricted unitholders	131			119
Net gain on real estate venture transactions	—			(259		)
Net gain on disposition of real estate	(2,586		)	—
Depreciation and amortization:
Real property	38,353			35,606
Leasing costs including acquired intangibles	13,199			15,406
Company’s share of unconsolidated real estate ventures	4,599			5,041
Partners’ share of consolidated real estate ventures	(60		)	(53		)
Funds from operations	$	61,580		$	60,290
Funds from operations allocable to unvested restricted shareholders	(190		)	(214		)
Funds from operations available to common share and unit holders (FFO)	$	61,390		$	60,076
Weighted-average shares/units outstanding — basic (a)	177,051,602			176,840,229
Weighted-average shares/units outstanding — fully diluted (a)	177,635,093			177,447,089


~~(b)~~(a)	Includes common share and partnership units outstanding through the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Market risk is the exposure to loss resulting from changes in interest rates, commodity prices and equity prices. In pursuing our business plan, the primary market risk to which we are exposed is interest rate risk. Changes in the general level of interest rates prevailing in the financial markets may affect the spread between our yield on invested assets and cost of funds and, in turn, our ability to make distributions or payments to our shareholders. While we have not experienced any significant credit losses, in the

event of a significant rising interest rate environment and/or continued economic slowdown, defaults could increase and result in losses to us which would adversely affect our operating results and liquidity.

Interest Rate Risk and Sensitivity Analysis

The analysis below presents the sensitivity of the market value of the Operating Partnership’s financial instruments to selected changes in market rates. The range of changes chosen reflects its view of changes which are reasonably possible over a one-year period. Market values are the present value of projected future cash flows based on the market rates chosen.

Our financial instruments consist of both fixed and variable rate debt. As of ~~September 30, 2019,~~March 31, 2020, our consolidated debt consisted of mortgage loans with an outstanding principal balance of ~~$317.4~~$313.5 million and unsecured notes with an outstanding principal balance of ~~$1,300.0~~$1,500.0 million, all of which are fixed rate borrowings. We also have variable rate debt consisting of trust preferred securities with an outstanding principal balance of $78.6 million, a $600.0 million Credit Facility with an outstanding balance of ~~$146.5~~$50.0 million and an unsecured term loan with an outstanding principal balance of $250.0 million, all of which have been swapped to fixed rates, except for ~~one~~two trust preferred ~~security~~securities with an outstanding principal balance of ~~$27.1 million.~~$52.8 million and our unsecured credit facility. All financial instruments were entered into for other than trading purposes and the net market value of these financial instruments is referred to as the net financial position. Changes in interest rates have different impacts on the fixed and variable rate portions of our debt portfolio. A change in interest rates on the fixed portion of the debt portfolio impacts the net financial instrument position, but has no impact on interest incurred or cash flows. A change in interest rates on the variable portion of the debt portfolio impacts the interest incurred and cash flows, but does not impact the net financial instrument position.

If market rates of interest increase by 100 basis points, the fair value of our outstanding fixed-rate mortgage debt would decrease by approximately ~~$7.8~~$7.0 million. If market rates of interest decrease by 100 basis points, the fair value of our outstanding fixed-rate mortgage debt would increase by approximately ~~$8.1~~$7.2 million.

As of ~~September 30, 2019,~~March 31, 2020, based on prevailing interest rates and credit spreads, the fair value of our unsecured notes was ~~$1,366.9~~$1,511.2 million. For sensitivity purposes, a 100-basis point change in the discount rate equates to a change in the total fair value of our unsecured notes of approximately ~~$13.6~~$15.1 million at ~~September 30, 2019.~~March 31, 2020.

From time to time or as the need arises, we use derivative instruments to manage interest rate risk exposures and not for speculative or trading purposes. The total outstanding principal balance of our variable rate debt was approximately ~~$475.1~~$378.6 million and ~~$421.1~~$328.6 million at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively. The total fair value of our debt was ~~approximately $456.5~~approximately$359.5 million and ~~$402.9~~$309.9 million at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively. For sensitivity purposes, if market rates of interest increase by 100 basis points the fair value of our variable rate debt would decrease by approximately ~~$17.7~~$14.0 million at ~~September 30, 2019.~~March 31, 2020. If market rates of interest decrease by 100 basis points the fair value of our outstanding variable rate debt would increase by approximately ~~$19.0~~$15.2 million.

These amounts were determined solely by considering the impact of hypothetical interest rates on our financial instruments. Due to the uncertainty of specific actions we may undertake to minimize possible effects of market interest rate increases, this analysis assumes no changes in our financial structure.

Item 4. Controls and Procedures

Controls and Procedures (Parent Company)

(a)

Evaluation of disclosure controls and procedures. Under the supervision and with the participation of its management, including its principal executive officer and principal financial officer, the Parent Company conducted an evaluation of its 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. Based on this evaluation, the Parent Company’s principal executive officer and principal financial officer have concluded that the Parent Company’s disclosure controls and procedures are effective as of the end of the period covered by this quarterly report.


(b)	Changes in internal control over financial reporting. There was no change in the Parent 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 Parent Company’s internal control over financial reporting.

Controls and Procedures (Operating Partnership)

(a)

Evaluation of disclosure controls and procedures. Under the supervision and with the participation of its management, including its principal executive officer and principal financial officer, the Operating Partnership conducted an evaluation of its disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Exchange Act as of the end of the period covered by this quarterly report. Based on this evaluation, the Operating Partnership’s principal executive officer and principal financial officer have concluded that the Operating Partnership’s disclosure controls and procedures are effective as of the end of the period covered by this quarterly report.

~~financial officer have concluded that the Operating Partnership’s disclosure controls and procedures are effective as of the end of the period covered by this quarterly report.~~


(b)	Changes in internal control over financial reporting. There was no change in the Operating Partnership’s internal control over financial reporting that occurred during the period covered by this quarterly report that has materially affected, or is reasonably likely to materially affect, the Operating Partnership’s internal control over financial reporting.

Part II. OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

~~There are no material~~The risks set out below represent changes ~~from~~to risk factors ~~as previously~~ disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019. The information in this Quarterly Report on Form 10-Q should be read in conjunction with the other factors described in "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2019.

The ongoing coronavirus (“COVID-19”) pandemic and measures intended to prevent its spread present material uncertainty and risk and could have a material adverse effect on our business, results of operations, cash flows and financial condition.

The recent outbreak of COVID-19 across many countries around the globe, including the U.S., has significantly slowed global economic activity, caused significant volatility in financial markets, and resulted in unprecedented job losses causing many to fear an imminent global recession. The global impact of the outbreak has been rapidly evolving and the responses of many countries, including the U.S., have included quarantines, restrictions on business activities, including construction activities, restrictions on group gatherings, and restrictions on travel. These actions are creating disruption in the global economy and supply chains and adversely impacting many industries, including owners and developers of office and mixed-use buildings. Moreover, there is significant uncertainty around the breadth and duration of business disruptions related to COVID-19, as well as its impact on the U.S. economy and consumer confidence. Demand for space at our properties is dependent on a variety of macroeconomic factors, such as employment levels, interest rates, changes in stock market valuations, rent levels and availability of competing space. These factors can be significantly adversely affected by a variety of factors beyond our control. The extent to which COVID-19 impacts our results will depend on future developments, many of which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions taken to contain it or treat its impact. The impact of COVID-19 could negatively impact our business in a number of ways, including: (i) deterioration in the financial condition of our tenants and in their ability to pay rents; (ii) reduction in demand for space in our portfolio; (iii) costs associated with construction delays and cost overruns at our development and redevelopment projects; (iv) reduction in availability of, and increased costs of, capital; and (v) failure of our contract counterparties, including partners in Real Estate Ventures, to meet their obligations. The ongoing situation presents material uncertainty and risk and could have a material adverse effect on our business, results of operations, cash flows and financial condition.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds


(a)	None.


(b)	Not applicable.

(c)

~~There were no common share repurchases under the Parent Company’s~~

Our Board of Trustees has authorized a share repurchase program under which we may repurchase up to $150.0 million of our outstanding common shares. We may repurchase shares from time to time on the open market or in privately negotiated transactions or otherwise, depending on market prices and other ~~repurchases of equity securities of the Parent Company or the Operating Partnership, during~~conditions. During the fiscal quarter ended ~~September 30, 2019.~~March 31, 2020, we repurchased 5,644,200 common shares at an average price of $9.54 per share for a total of approximately $53.9 million. As of ~~September 30, 2019, $132.7~~March 31, 2020, $89.0 million remained available for repurchases under our share repurchase ~~program~~program. For each common share repurchased, one of our units in the Operating Partnership was redeemed. Repurchases of common shares were financed with general corporate funds, including borrowings under our unsecured Credit Facility. On April 2, 2020, we settled the purchase of an additional 604,283 shares at an average price of $10.17 per share, which had a trade date of March 31, 2020, for an aggregate of $6.1 million.

A summary of our repurchases of common shares for the three month period ended March 31, 2020 is as follows:



Period	Total number of shares (or units) purchased	Average price paid per share (or unit)		Total number of shares (or units) purchased as part of publicly announced plans or programs	Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs
January 1, 2020 - January 31, 2020
Open Market Purchases	—	$	—	—
February 1, 2020 - February 29, 2020
Open Market Purchases	—	—		—
March 1, 2020 - March 31, 2020
Open Market Purchases	5,644,200	9.54		5,644,200
Totals	5,644,200	$	9.54	5,644,200	$89.0 million

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

~~None.~~Exhibit 99.1 (Material Federal Income Tax Considerations) filed with this Form 10-Q replaces Exhibit 99.1 (Material Federal Income Tax Considerations) to the Annual Report on Form 10-K for the fiscal year ended December 31, 2019 to reflect recent legislative changes under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was signed into law on March 27, 2020.

Item 6. Exhibits



(a)	Exhibits
	Exhibits No.	Description

	~~4.1~~10.1	Form of ~~4.100% Guaranteed Notes due 2024 (previously filed as an exhibit to Brandywine RealtyTrust’s Current Report on Form 8-K dated October 10, 2019 and incorporated herein by reference).~~

	~~4.2~~	~~Form of 4.550% Guaranteed Notes due 2029~~2020-2022 Performance Unit Award Agreement (previously filed as an exhibit to Brandywine Realty Trust’s ~~Current Report on~~ Form 8-K ~~dated October 10, 2019~~filed on March 11, 2020 and incorporated herein by reference).**
	10.2	2020-2022 Performance Share Unit Program (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K filed on March 11, 2020 and incorporated herein by reference)**
	10.3	Form of Restricted Common Share Rights Award (with outperformance feature) (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K filed on March 11, 2020 and incorporated herein by reference)**
	31.1	Certification of the Chief Executive Officer of Brandywine Realty Trust pursuant to 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934 (filed herewith)

	31.2	Certification of the Chief Financial Officer of Brandywine Realty Trust pursuant to 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934 (filed herewith)

	31.3	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(a) and 15d-14(a) under the Securities Exchange Act of 1934 (filed herewith)

	31.4	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(a) and 15d-14(a) under the Securities Exchange Act of 1934 (filed herewith)

	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 2002 (furnished herewith)

	32.2	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 2002 (furnished herewith)

	32.3	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 2002 (furnished herewith)

	32.4	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 (furnished herewith)
	99.1	Material Federal Income Tax Considerations (filed herewith)
	101.1	The following materials from the Quarterly Reports on Form 10-Q of Brandywine Realty Trust and Brandywine Operating Partnership, L.P. for the quarter ended ~~September 30, 2019~~March 31, 2020 formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statement of Equity, (iv) the Consolidated Statements of Cash Flows, and (v) Notes to Consolidated Financial Statements, detailed tagged and filed herewith.

	104	Cover Page Interactive Data File – the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

** Management contract or compensatory plan or arrangement.

Exhibits 32.1, 32.2, 32.3 and 32.4 are being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liability of that section, nor shall any of such exhibits be deemed to be incorporated by reference in any filing of Brandywine Realty Trust or Brandywine Operating Partnership, L.P. under the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise stated in such filing.

SIGNATURES OF REGISTRANT

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



		BRANDYWINE REALTY TRUST (Registrant)

Date:	~~October 24, 2019~~April 28, 2020	By:	/s/ Gerard H. Sweeney
			Gerard H. Sweeney, President and Chief Executive Officer
			(Principal Executive Officer)

Date:	~~October 24, 2019~~April 28, 2020	By:	/s/ Thomas E. Wirth
			Thomas E. Wirth, Executive Vice President and Chief Financial Officer
			(Principal Financial Officer)

Date:	~~October 24, 2019~~April 28, 2020	By:	/s/ Daniel Palazzo
			Daniel Palazzo, Vice President and Chief Accounting Officer
			(Principal Accounting Officer)

SIGNATURES OF REGISTRANT

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



		BRANDYWINE OPERATING PARTNERSHIP, L.P. (Registrant) BRANDYWINE REALTY TRUST, as general partner

Date:	~~October 24, 2019~~April 28, 2020	By:	/s/ Gerard H. Sweeney
			Gerard H. Sweeney, President and Chief Executive Officer
			(Principal Executive Officer)

Date:	~~October 24, 2019~~April 28, 2020	By:	/s/ Thomas E. Wirth
			Thomas E. Wirth, Executive Vice President and Chief Financial Officer
			(Principal Financial Officer)

Date:	~~October 24, 2019~~April 28, 2020	By:	/s/ Daniel Palazzo
			Daniel Palazzo, Vice President and Chief Accounting Officer
			(Principal Accounting Officer)

6248



	December 31, 2018
Balance Sheet:	As previously reported		Adjustments		As adjusted
Assets (Parent Company and Operating Partnership)
Operating properties	3,953,319		(1,600	)	3,951,719
Accumulated depreciation	(865,462	)	(19,945	)	(885,407	)
Operating real estate investments, net	3,087,857		(21,545	)	3,066,312
Total assets	4,098,521		(21,545	)	4,076,976

Equity (Parent Company)
Additional Paid-in Capital	3,200,850		(538	)	3,200,312
Cumulative Earnings	796,513		(20,888	)	775,625
Total Brandywine Realty Trust's equity	1,820,253		(21,426	)	1,798,827
Noncontrolling interests	12,320		(119	)	12,201
Total beneficiaries' equity	1,832,573		(21,545	)	1,811,028
Total liabilities and beneficiaries' equity	4,098,521		(21,545	)	4,076,976

Equity (Operating Partnership)
General Partnership Capital	1,813,136		(21,545	)	1,791,591
Total Brandywine Operating Partnership, L.P.'s equity	1,817,861		(21,545	)	1,796,316
Total partners' equity	1,820,053		(21,545	)	1,798,508
Total liabilities and partners' equity	4,098,521		(21,545	)	4,076,976



Year	Minimum Rent
2019 (three months remaining)	$	97,250
2020	386,991
2021	364,435
2022	324,296
2023	296,890
Thereafter	1,413,756
Total	$	2,883,618



	Three Months Ended September 30,			Nine Months Ended September 30,
Lease Cost	2019			2019
Fixed lease cost	$	525		$	1,575
Variable lease cost	13			41
Total	$	538		$	1,616

Weighted-average remaining lease term (years)	52.9
Weighted-average discount rate	6.3		%



	Three Months Ended September 30, 2018
	DRA (G&I) Austin (a)			Brandywine-AI Venture LLC			MAP Venture			Other			Total
Revenue	$	14,232		$	5,962		$	17,243		$	4,580		$	42,017
Operating expenses	(6,428		)	(2,589		)	(10,219		)	(1,904		)	(21,140		)
Interest expense, net	(2,549		)	(873		)	(2,894		)	(1,228		)	(7,544		)
Depreciation and amortization	(4,896		)	(2,232		)	(4,654		)	(1,481		)	(13,263		)
Loss on early extinguishment of debt	—			—			(334		)	—			(334		)
Net income (loss)	$	359		$	268		$	(858	)	$	(33	)	$	(264	)
Ownership interest %	50		%	50		%	50		%	(b)			(b)
Company's share of net income (loss)	$	180		$	134		$	(429	)	$	(121	)	$	(236	)
Basis adjustments and other	243			31			(15		)	(22		)	237
Equity in income (loss) of Real Estate Ventures	$	423		$	165		$	(444	)	$	144		$	1



	Nine months ended September 30, 2019
	DRA (G&I) Austin (a)			Brandywine-AI Venture LLC			evo at Cira Centre South (c)			MAP Venture			Other			Total
Revenue	$	—		$	5,050		$	—		$	53,560		$	42,538		$	101,148
Operating expenses	—			(2,473		)	—			(35,747		)	(15,736		)	(53,956		)
Interest expense, net	—			(698		)	—			(7,504		)	(8,219		)	(16,421		)
Depreciation and amortization	—			(2,055		)	—			(19,146		)	(19,078		)	(40,279		)
Loss on early extinguishment of debt	$	—		$	4,371		$	—		$	—		$	—		$	4,371
Net income (loss)	$	—		$	4,195		$	—		$	(8,837	)	$	(495	)	$	(5,137	)
Ownership interest %	—		%	50		%	—		%	50		%	(b)			(b)
Company's share of net income (loss)	$	—		$	2,098		$	—		$	(4,419	)	$	(2,444	)	$	(4,765	)
Basis adjustments and other	—			101			—			(69		)	(81		)	(49		)
Equity in income (loss) of Real Estate Ventures	$	—		$	2,199		$	—		$	(4,488	)	$	(2,525	)	$	(4,814	)



	Nine Months Ended September 30, 2018
	DRA (G&I) Austin (a)			Brandywine-AI Venture LLC			evo at Cira Centre South (c)			MAP Venture			Other			Total
Revenue	$	42,492		$	17,768		$	995		$	50,976		$	13,708		$	125,939
Operating expenses	(18,245		)	(8,010		)	(250		)	(30,347		)	(5,145		)	(61,997		)
Interest expense, net	(7,070		)	(2,606		)	(388		)	(10,426		)	(3,132		)	(23,622		)
Depreciation and amortization	(15,622		)	(6,915		)	(376		)	(14,096		)	(4,430		)	(41,439		)
Loss on early extinguishment of debt	—			—			(718		)	(334		)	—			(1,052		)
Net income (loss)	$	1,555		$	237		$	(737	)	$	(4,227	)	$	1,001		$	(2,171	)
Ownership interest %	50		%	50		%	50		%	50		%	(b)			(b)
Company's share of net income (loss)	$	778		$	119		$	(369	)	$	(2,114	)	$	168		$	(1,418	)
Basis adjustments and other	378			33			11			(39		)	(147		)	236
Equity in income (loss) of Real Estate Ventures	$	1,156		$	152		$	(358	)	$	(2,153	)	$	21		$	(1,182	)



Construction Commencement Date	Expected Completion	Activity Type	Property/Portfolio Name	Location	Number of Buildings	Square Footage/ Units	Estimated Costs			Amount Funded
Q2 2019	Q2 2020	Redevelopment	The Bulletin Building	Philadelphia, PA	1	283,000	$	84,800	(a)	$	53,600
Q1 2019	Q4 2020	Development	405 Colorado Street	Austin, TX	1	204,000	114,000		(b)	19,600
Q2 2018	Q1 2019 (c)	Redevelopment	426 W. Lancaster Avenue	Devon, PA	1	56,000	14,900		(c)	12,500
		Total			3	543,000	$	213,700		$	85,700



	Payments by Period (in thousands)
	Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
Mortgage notes payable (a)	$	317,363	87,599		21,422		208,342		—
Unsecured credit facility	146,500		—		146,500		—		—
Unsecured term loan (a)	250,000		—		—		250,000		—
Unsecured debt (a)	1,378,610		—		—		350,000		1,028,610
Ground leases (b)	62,874		1,254		2,507		2,507		56,606
Development contracts (c)	184,213		134,967		42,316		1,350		5,580
Tenant improvements (d)	47,677		43,165		4,512		—		—
Interest expense (e)	437,057		75,851		129,357		93,140		138,709
Other liabilities (f)	34,129		4,900		9,054		4,430		15,745
	$	2,858,423	$	347,736	$	355,668	$	909,769	$	1,245,250