2929 Arch Street
Suite 1800
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	~~Yes~~ ☒ No ☐
Brandywine Operating Partnership, L.P.	Yes	~~Yes~~ ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ such files).


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

A total of ~~175,477,498~~172,270,907 Common Shares of Beneficial Interest, par value $0.01 per share of Brandywine Realty Trust, were outstanding as of ~~October 20, 2017.~~

April 18, 2024.

This report combines the quarterly reports on Form 10-Q for the period ended ~~September 30, 2017~~March 31, 2024 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, 2017,~~March 31, 2024, owned a ~~99.2%~~99.7% interest in the Operating Partnership. The remaining ~~0.8%~~0.3% 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~~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 (the “Exchange Act”), 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.

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

PART I - ~~FINANCIA~~LFINANCIAL INFORMATION

Item 1. — Financial Statements

BRANDYWINE REALTY TRUST

CONSOLIDATED BALANCE SHEETS

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

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-month periods ended

Nine-month periods ended

September 30,

September 30,

2017

2016

2017

2016

Revenue

Rents
$
102,557

$
104,537

$
307,446

$
318,324

Tenant reimbursements

17,239

17,324

53,812

53,315

Termination fees

200

611

2,013

1,459

Third party management fees, labor reimbursement and leasing

6,918

6,248

20,483

17,691

Other

1,524

974

3,395

2,588

Total revenue

128,438

129,694

387,149

393,377

Operating expenses

Property operating expenses

36,847

37,250

110,947

114,208

Real estate taxes

11,235

11,566

34,062

34,933

Third party management expenses

2,619

2,501

7,391

7,172

Depreciation and amortization

42,429

46,956

132,584

142,736

General and administrative expenses

5,813

5,515

21,797

20,711

Provision for impairment

-

-

3,057

13,069

Total operating expenses

98,943

103,788

309,838

332,829

Operating income

29,495

25,906

77,311

60,548

Other income (expense)

Interest income

79

291

635

970

Interest expense

(19,732
)

(20,814
)

(61,473
)

(64,334
)
Interest expense - amortization of deferred financing costs

(577
)

(645
)

(1,807
)

(2,063
)
Interest expense - financing obligation

-

(156
)

-

(679
)
Equity in loss of Real Estate Ventures

(5,723
)

(7,254
)

(5,387
)

(9,323
)
Net gain (loss) on disposition of real estate

-

(104
)

8,411

114,625

Net gain on sale of undepreciated real estate

953

188

953

188

Net gain on Real Estate Venture transactions

13,758

10,472

28,340

19,529

Loss on early extinguishment of debt

-

-

-

(66,590
)
Net income before income taxes

18,253

7,884

46,983

52,871

Income tax benefit

793

-

1,032

-

Net income

19,046

7,884

48,015

52,871

Net income attributable to non-controlling interests

(170
)

(58
)

(384
)

(425
)
Net income attributable to Brandywine Realty Trust

18,876

7,826

47,631

52,446

Distribution to preferred shareholders

-

(1,725
)

(2,032
)

(5,175
)
Preferred share redemption charge

-

-

(3,181
)

-

Nonforfeitable dividends allocated to unvested restricted shareholders

(73
)

(79
)

(245
)

(263
)
Net income attributable to Common Shareholders of Brandywine Realty Trust
$
18,803

$
6,022

$
42,173

$
47,008

Basic income per Common Share
$
0.11

$
0.03

$
0.24

$
0.27

Diluted income per Common Share
$
0.11

$
0.03

$
0.24

$
0.27

Basic weighted average shares outstanding

175,433,657

175,127,110

175,315,581

174,976,998

Diluted weighted average shares outstanding

176,835,022

176,364,615

176,599,332

176,009,822

Distributions declared per Common Share
$
0.16

$
0.16

$
0.48

$
0.47


	Three Months Ended March 31,
	2024		2023
Revenue
Rents	$	119,008	$	120,848
Third party management fees, labor reimbursement and leasing	5,894		6,002
Other	1,582		2,377
Total revenue	126,484		129,227
Operating expenses
Property operating expenses	32,279		33,594
Real estate taxes	12,592		14,602
Third party management expenses	2,543		2,639
Depreciation and amortization	45,042		45,600
General and administrative expenses	11,104		9,482

Total operating expenses	103,560		105,917
Gain on sale of real estate

Net gain on sale of undepreciated real estate	—		781
Total gain on sale of real estate	—		781
Operating income	22,924		24,091
Other income (expense):
Interest and investment income	421		505
Interest expense	(25,049)		(22,653)
Interest expense - amortization of deferred financing costs	(1,091)		(1,027)

Equity in loss of unconsolidated real estate ventures	(13,588)		(6,167)

Net loss on real estate venture transactions	(29)		—



Net loss before income taxes	(16,412)		(5,251)
Income tax provision	(2)		(25)
Net loss	(16,414)		(5,276)
Net loss attributable to noncontrolling interests	46		17
Net loss attributable to Brandywine Realty Trust	(16,368)		(5,259)


Nonforfeitable dividends allocated to unvested restricted shareholders	(336)		(70)
Net loss attributable to Common Shareholders of Brandywine Realty Trust	$	(16,704)	$	(5,329)

Basic loss per Common Share	$	(0.10)	$	(0.03)

Diluted loss per Common Share	$	(0.10)	$	(0.03)

Basic weighted average shares outstanding	172,207,037		171,673,167
Diluted weighted average shares outstanding	172,207,037		171,673,167

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

BRANDYWINE REALTY TRUST

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited, in thousands)

Three-month periods ended

Nine-month periods ended

September 30,

September 30,

2017

2016

2017

2016

Net income
$
19,046

$
7,884

$
48,015

$
52,871

Comprehensive income:

Unrealized gain (loss) on derivative financial instruments

312

2,454

(59
)

(10,764
)
Reclassification of realized losses on derivative financial instruments to operations, net (1)

314

286

905

818

Total comprehensive income (loss)

626

2,740

846

(9,946
)
Comprehensive income

19,672

10,624

48,861

42,925

Comprehensive income attributable to non-controlling interest

(174
)

(81
)

(391
)

(339
)
Comprehensive income attributable to Brandywine Realty Trust
$
19,498

$
10,543

$
48,470

$
42,586


	Three Months Ended March 31,
	2024		2023
Net loss	$	(16,414)	$	(5,276)
Comprehensive income (loss):
Unrealized gain (loss) on derivative financial instruments	6,026		(5,291)





Total comprehensive income (loss)	6,026		(5,291)
Comprehensive loss	(10,388)		(10,567)
Comprehensive loss attributable to noncontrolling interest	27		17
Comprehensive loss attributable to Brandywine Realty Trust	$	(10,361)	$	(10,550)

~~(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

~~For the nine-month period ended September 30, 2017~~

(unaudited, in thousands, except number of shares)

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

BRANDYWINE REALTY TRUST

CONSOLIDATED STATEMENT OF BENEFICIARIES’ EQUITY

~~For the nine-month period ended September 30, 2016~~

(unaudited, in thousands, except number of shares)

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

BRANDYWINE REALTY TRUST

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

Nine-month periods ended September 30,

2017

2016

Cash flows from operating activities:

Net income

$
48,015

$
52,871

Adjustments to reconcile net income to net cash from operating activities:

Depreciation and amortization

132,584

142,736

Amortization of deferred financing costs

1,807

2,063

Amortization of debt discount/(premium), net

1,069

1,108

Amortization of stock compensation costs

4,321

3,612

Straight-line rent income

(21,002
)

(22,049
)
Amortization of acquired above (below) market leases, net

(2,280
)

(5,090
)
Straight-line ground rent expense

66

66

Provision for doubtful accounts

1,622

573

Net gain on real estate venture transactions

(28,340
)

(19,529
)
Net gain on sale of interests in real estate

(9,364
)

(114,813
)
Loss on early extinguishment of debt

-

66,590

Provision for impairment

3,057

13,069

Other than temporary impairment

4,844

-

Real Estate Venture loss in excess of distributions

199

9,945

Deferred financing obligation

-

(681
)
Income tax benefit

(1,133
)

-

Changes in assets and liabilities:

Accounts receivable

(4,445
)

4,041

Other assets

(8,927
)

(10,332
)
Accounts payable and accrued expenses

6,743

7,163

Deferred income, gains and rent

(3,160
)

(2,000
)
Other liabilities

2,107

318

Net cash provided by operating activities

127,783

129,661

Cash flows from investing activities:

Acquisition of properties

(34,748
)

(20,406
)
Proceeds from the sale of properties

114,821

758,931

Proceeds from real estate venture sales

59,022

20,551

Issuance of mortgage note receivable

-

(3,365
)
Capital expenditures for tenant improvements

(44,902
)

(37,991
)
Capital expenditures for redevelopments

(21,951
)

(10,852
)
Capital expenditures for developments

(53,560
)

(147,831
)
Advances for the purchase of tenant assets, net of repayments

1,148

275

Investment in unconsolidated Real Estate Ventures

(5,243
)

(27,174
)
Deposits for real estate

605

(746
)
Escrowed cash

-

6,993

Cash distribution from unconsolidated Real Estate Ventures in excess of cumulative equity income

14,906

12,565

Leasing costs paid

(12,553
)

(12,884
)
Net cash provided by investing activities

17,545

538,066

Cash flows from financing activities:

Proceeds from mortgage notes payable

-

86,900

Repayments of mortgage notes payable

(3,681
)

(355,947
)
Proceeds from credit facility borrowings

264,000

195,000

Repayments of credit facility borrowings

(86,000
)

(195,000
)
Repayments of unsecured notes

(300,000
)

(149,919
)
Debt financing costs paid

-

(477
)
Redemption of preferred shares

(100,000
)

-

Proceeds from the exercise of stock options

1,229

1,286

Shares used for employee taxes upon vesting of share awards

(674
)

(879
)
Partner contributions to consolidated real estate venture

85

73

Partner distributions from consolidated real estate venture

(46
)

-

Distributions paid to shareholders

(88,162
)

(85,702
)
Distributions to non-controlling interest

(711
)

(697
)
Net cash used in financing activities

(313,960
)

(505,362
)
Increase (decrease) in cash and cash equivalents

(168,632
)

162,365

Cash and cash equivalents at beginning of year

193,919

56,694

Cash and cash equivalents at end of period

$
25,287

$
219,059

Supplemental disclosure:

Cash paid for interest, net of capitalized interest during the nine months ended September 30, 2017 and 2016 of $2,975 and $10,023, respectively

$
58,252

$
64,046

Cash paid for income taxes

225

-

Supplemental disclosure of non-cash activity:

Dividends and distributions declared but not paid

28,391

30,036

Change in investment in real estate ventures as a result of dispositions

(30,584
)

(2,023
)
Change in investment in real estate ventures related to non-cash disposition of property

-

25,165

Change in real estate ventures as a result of other than temporary impairment

(4,844
)

-


	Three Months Ended March 31,
	2024		2023
Cash flows from operating activities:
Net loss	$	(16,414)	$	(5,276)
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization	45,042		45,600
Amortization of deferred financing costs	1,091		1,027
Amortization of debt discount/(premium), net	(250)		(258)
Amortization of stock compensation costs	4,378		3,398
Straight-line rent income	(3,199)		(2,835)
Amortization of acquired above (below) market leases, net	(246)		(376)
Ground rent expense	197		201

Net loss on real estate venture transactions	29		—

Total gain on sale of real estate	—		(781)


Loss from unconsolidated real estate ventures, including income distributions	13,588		6,167
Income tax provision	2		25
Changes in assets and liabilities:
Accounts receivable	1,452		(2,416)
Other assets	(16,948)		(16,040)
Accounts payable and accrued expenses	(10,208)		(19,911)
Deferred income, gains and rent	1,199		(960)
Other liabilities	4,098		(2,190)
Net cash provided by operating activities	23,811		5,375
Cash flows from investing activities:







Capital expenditures for tenant improvements	(15,904)		(13,637)
Capital expenditures for redevelopments	(4,013)		(14,114)
Capital expenditures for developments	(7,404)		(4,588)
Advances for the purchase of tenant assets, net of repayments	(998)		(26)
Investment in unconsolidated real estate ventures	(26,975)		(10,627)


Capital distributions from unconsolidated real estate ventures	3,931		300
Leasing costs paid	(3,942)		(2,331)
Net cash used in investing activities	(55,305)		(45,023)
Cash flows from financing activities:

Proceeds from credit facility borrowings	37,000		115,000
Repayments of credit facility borrowings	—		(203,500)
Repayments of unsecured notes	—		(54,301)
Proceeds from unsecured term loan	—		70,000
Proceeds from secured term loan	—		245,000
Proceeds from construction loan	5,076		—
Debt financing costs paid	(200)		(4,414)


Shares used for employee taxes upon vesting of share awards	(594)		(652)




Distributions paid to shareholders	(25,946)		(32,703)
Distributions to noncontrolling interest	(77)		(98)
Net cash provided by financing activities	15,259		134,332
Increase/(Decrease) in cash and cash equivalents and restricted cash	(16,235)		94,684
Cash and cash equivalents and restricted cash at beginning of period	67,534		18,387
Cash and cash equivalents and restricted cash at end of period	$	51,299	$	113,071


Reconciliation of cash and cash equivalents and restricted cash:
Cash and cash equivalents, beginning of period	$	58,319	$	17,551
Restricted cash, beginning of period	9,215		836
Cash and cash equivalents and restricted cash, beginning of period	$	67,534	$	18,387
Cash and cash equivalents, end of period	$	43,210	$	96,945
Restricted cash, end of period	8,089		16,126
Cash and cash equivalents and restricted cash, end of period	$	51,299	$	113,071
Supplemental disclosure:
Cash paid for interest, net of capitalized interest during the three months ended March 31, 2024 and 2023 of $3,918 and $4,072, respectively	$	23,368	$	17,007
Cash paid for income taxes	—		1
Supplemental disclosure of non-cash activity:
Dividends and distributions declared but not paid	26,248		32,823










Change in investment in real estate ventures as a result of deconsolidation	—		8,595
Change in operating real estate from deconsolidation of operating properties	—		(7,814)




Change in capital expenditures financed through accounts payable at period end	(1,179)		451
Change in capital expenditures financed through retention payable at period end	648		255

Change in operating real estate from deconsolidation of 3141 Fairview Park Drive

-

44,313

Change in investment in real estate ventures from deconsolidation of 3141 Fairview Park Drive

-

(12,642
)
Change in mortgage notes payable from deconsolidation of 3141 Fairview Park Drive

-

(20,582
)
Change in other liabilities from deconsolidation of 3141 Fairview Park Drive

-

(12,384
)
Change in capital expenditures financed through accounts payable at period end

(1,455
)

(5,012
)
Change in capital expenditures financed through retention payable at period end

83

2,487

BRANDYWINE ~~OPERATIN~~GOPERATING PARTNERSHIP, L.P.

CONSOLIDATED BALANCE SHEETS

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

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-month periods ended

Nine-month periods ended

September 30,

September 30,

2017

2016

2017

2016

Revenue

Rents
$
102,557

$
104,537

$
307,446

$
318,324

Tenant reimbursements

17,239

17,324

53,812

53,315

Termination fees

200

611

2,013

1,459

Third party management fees, labor reimbursement and leasing

6,918

6,248

20,483

17,691

Other

1,524

974

3,395

2,588

Total revenue

128,438

129,694

387,149

393,377

Operating expenses

Property operating expenses

36,847

37,250

110,947

114,208

Real estate taxes

11,235

11,566

34,062

34,933

Third party management expenses

2,619

2,501

7,391

7,172

Depreciation and amortization

42,429

46,956

132,584

142,736

General and administrative expenses

5,813

5,515

21,797

20,711

Provision for impairment

-

-

3,057

13,069

Total operating expenses

98,943

103,788

309,838

332,829

Operating income

29,495

25,906

77,311

60,548

Other income (expense)

Interest income

79

291

635

970

Interest expense

(19,732
)

(20,814
)

(61,473
)

(64,334
)
Interest expense - amortization of deferred financing costs

(577
)

(645
)

(1,807
)

(2,063
)
Interest expense - financing obligation

-

(156
)

-

(679
)
Equity in loss of Real Estate Ventures

(5,723
)

(7,254
)

(5,387
)

(9,323
)
Net gain (loss) on disposition of real estate

-

(104
)

8,411

114,625

Net gain on sale of undepreciated real estate

953

188

953

188

Net gain on Real Estate Venture transactions

13,758

10,472

28,340

19,529

Loss on early extinguishment of debt

-

-

-

(66,590
)
Net income before income taxes

18,253

7,884

46,983

52,871

Income tax benefit

793

-

1,032

-

Net income

19,046

7,884

48,015

52,871

Net income from continuing operations attributable to non-controlling interests - consolidated real estate ventures

(12
)

(6
)

(25
)

(12
)
Net income attributable to Brandywine Operating Partnership

19,034

7,878

47,990

52,859

Distribution to preferred unitholders

-

(1,725
)

(2,032
)

(5,175
)
Preferred unit redemption charge

-

-

(3,181
)

-

Amounts allocated to unvested restricted unitholders

(73
)

(79
)

(245
)

(263
)
Net income attributable to Common Partnership Unitholders of Brandywine Operating Partnership, L.P.
$
18,961

$
6,074

$
42,532

$
47,421

Basic income per Common Partnership Unit
$
0.11

$
0.03

$
0.24

$
0.27

Diluted income per Common Partnership Unit
$
0.11

$
0.03

$
0.24

$
0.27

Basic weighted average common partnership units outstanding

176,913,456

176,606,909

176,795,380

176,491,311

Diluted weighted average common partnership units outstanding

178,314,821

177,844,414

178,079,131

177,524,135

Distributions declared per Common Partnership Unit
$
0.16

$
0.16

$
0.48

$
0.47


	Three Months Ended March 31,
	2024		2023
Revenue
Rents	$	119,008	$	120,848
Third party management fees, labor reimbursement and leasing	5,894		6,002
Other	1,582		2,377
Total revenue	126,484		129,227
Operating expenses
Property operating expenses	32,279		33,594
Real estate taxes	12,592		14,602
Third party management expenses	2,543		2,639
Depreciation and amortization	45,042		45,600
General and administrative expenses	11,104		9,482

Total operating expenses	103,560		105,917
Gain on sale of real estate

Net gain on sale of undepreciated real estate	—		781
Total gain on sale of real estate	—		781
Operating income	22,924		24,091
Other income (expense):
Interest and investment income	421		505
Interest expense	(25,049)		(22,653)
Interest expense - amortization of deferred financing costs	(1,091)		(1,027)

Equity in loss of unconsolidated real estate ventures	(13,588)		(6,167)

Net loss on real estate venture transactions	(29)		—


Net loss before income taxes	(16,412)		(5,251)
Income tax provision	(2)		(25)
Net loss	(16,414)		(5,276)
Net (income) loss attributable to noncontrolling interests - consolidated real estate ventures	(3)		1
Net loss attributable to Brandywine Operating Partnership	(16,417)		(5,275)


Nonforfeitable dividends allocated to unvested restricted unitholders	(336)		(70)
Net loss attributable to Common Partnership Unitholders of Brandywine Operating Partnership, L.P.	$	(16,753)	$	(5,345)

Basic loss per Common Partnership Unit	$	(0.10)	$	(0.03)

Diluted loss per Common Partnership Unit	$	(0.10)	$	(0.03)

Basic weighted average common partnership units outstanding	172,722,632		172,189,634
Diluted weighted average common partnership units outstanding	172,722,632		172,189,634

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-month periods ended

Nine-month periods ended

September 30,

September 30,

2017

2016

2017

2016

Net income
$
19,046

$
7,884

$
48,015

$
52,871

Comprehensive income:

Unrealized gain (loss) on derivative financial instruments

312

2,454

(59
)

(10,764
)
Reclassification of realized losses on derivative financial instruments to operations, net (1)

314

286

905

818

Total comprehensive income (loss)

626

2,740

846

(9,946
)
Comprehensive income

19,672

10,624

48,861

42,925

Comprehensive income attributable to non-controlling interest - consolidated real estate ventures

(12
)

(6
)

(25
)

(12
)
Comprehensive income attributable to Brandywine Operating Partnership, L.P.
$
19,660

$
10,618

$
48,836

$
42,913


	Three Months Ended March 31,
	2024		2023
Net loss	$	(16,414)	$	(5,276)
Comprehensive income (loss):
Unrealized gain (loss) on derivative financial instruments	6,026		(5,291)




Total comprehensive income (loss)	6,026		(5,291)
Comprehensive loss	(10,388)		(10,567)
Comprehensive (income) loss attributable to noncontrolling interest - consolidated real estate ventures	(3)		1
Comprehensive loss attributable to Brandywine Operating Partnership	$	(10,391)	$	(10,566)

~~(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

~~For the nine-month period ended September 30, 2017~~

(unaudited, in thousands, except number of units)

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

BRANDYWINE OPERATING PARTNERSHIP, L.P.

CONSOLIDATED STATEMENT OF PARTNERS’ EQUITY

~~For the nine-month period ended September 30, 2016~~

(unaudited, in thousands, except number of units)

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-month periods ended September 30,

2017

2016

Cash flows from operating activities:

Net income

$
48,015

$
52,871

Adjustments to reconcile net income to net cash from operating activities:

Depreciation and amortization

132,584

142,736

Amortization of deferred financing costs

1,807

2,063

Amortization of debt discount/(premium), net

1,069

1,108

Amortization of stock compensation costs

4,321

3,612

Straight-line rent income

(21,002
)

(22,049
)
Amortization of acquired above (below) market leases, net

(2,280
)

(5,090
)
Straight-line ground rent expense

66

66

Provision for doubtful accounts

1,622

573

Net gain on real estate venture transactions

(28,340
)

(19,529
)
Net gain on sale of interests in real estate

(9,364
)

(114,813
)
Loss on early extinguishment of debt

-

66,590

Provision for impairment

3,057

13,069

Other than temporary impairment

4,844

-

Real Estate Venture loss in excess of distributions

199

9,945

Deferred financing obligation

-

(681
)
Income tax benefit

(1,133
)

-

Changes in assets and liabilities:

Accounts receivable

(4,445
)

4,041

Other assets

(8,927
)

(10,332
)
Accounts payable and accrued expenses

6,743

7,163

Deferred income, gains and rent

(3,160
)

(2,000
)
Other liabilities

2,107

318

Net cash provided by operating activities

127,783

129,661

Cash flows from investing activities:

Acquisition of properties

(34,748
)

(20,406
)
Proceeds from the sale of properties

114,821

758,931

Proceeds from real estate venture sales

59,022

20,551

Issuance of mortgage note receivable

-

(3,365
)
Capital expenditures for tenant improvements

(44,902
)

(37,991
)
Capital expenditures for redevelopments

(21,951
)

(10,852
)
Capital expenditures for developments

(53,560
)

(147,831
)
Advances for the purchase of tenant assets, net of repayments

1,148

275

Investment in unconsolidated Real Estate Ventures

(5,243
)

(27,174
)
Deposits for real estate

605

(746
)
Escrowed cash

-

6,993

Cash distribution from unconsolidated Real Estate Ventures in excess of cumulative equity income

14,906

12,565

Leasing costs paid

(12,553
)

(12,884
)
Net cash provided by investing activities

17,545

538,066

Cash flows from financing activities:

Proceeds from mortgage notes payable

-

86,900

Repayments of mortgage notes payable

(3,681
)

(355,947
)
Proceeds from credit facility borrowings

264,000

195,000

Repayments of credit facility borrowings

(86,000
)

(195,000
)
Repayments of unsecured notes

(300,000
)

(149,919
)
Redemption of preferred units

(100,000
)

-

Debt financing costs paid

-

(477
)
Proceeds from the exercise of stock options

1,229

1,286

Shares used for employee taxes upon vesting of share awards

(674
)

(879
)
Partner contributions to consolidated real estate venture

85

73

Partner distributions from consolidated real estate venture

(46
)

-

Distributions paid to preferred and common partnership units

(88,873
)

(86,399
)
Net cash used in financing activities

(313,960
)

(505,362
)
Increase (decrease) in cash and cash equivalents

(168,632
)

162,365

Cash and cash equivalents at beginning of year

193,919

56,694

Cash and cash equivalents at end of period

$
25,287

$
219,059

Supplemental disclosure:

Cash paid for interest, net of capitalized interest during the nine months ended September 30, 2017 and 2016 of $2,975 and $10,023, respectively

$
58,252

$
64,046

Cash paid for income taxes

225

-

Supplemental disclosure of non-cash activity:

Dividends and distributions declared but not paid

28,391

30,036

Change in investment in real estate ventures as a result of dispositions

(30,584
)

(2,023
)
Change in investment in real estate ventures related to non-cash disposition of property

-

25,165

Change in real estate ventures as a result of other than temporary impairment

(4,844
)

-

Change in operating real estate from deconsolidation of 3141 Fairview Park Drive

-

44,313


	Three Months Ended March 31,
	2024		2023
Cash flows from operating activities:
Net loss	$	(16,414)	$	(5,276)
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization	45,042		45,600
Amortization of deferred financing costs	1,091		1,027
Amortization of debt discount/(premium), net	(250)		(258)
Amortization of stock compensation costs	4,378		3,398
Straight-line rent income	(3,199)		(2,835)
Amortization of acquired above (below) market leases, net	(246)		(376)
Ground rent expense	197		201

Net loss on real estate venture transactions	29		—

Total gain on sale of real estate	—		(781)


Loss from unconsolidated real estate ventures, including income distributions	13,588		6,167
Income tax provision	2		25
Changes in assets and liabilities:
Accounts receivable	1,452		(2,416)
Other assets	(16,948)		(16,040)
Accounts payable and accrued expenses	(10,208)		(19,911)
Deferred income, gains and rent	1,199		(960)
Other liabilities	4,098		(2,190)
Net cash provided by operating activities	23,811		5,375
Cash flows from investing activities:







Capital expenditures for tenant improvements	(15,904)		(13,637)
Capital expenditures for redevelopments	(4,013)		(14,114)
Capital expenditures for developments	(7,404)		(4,588)
Advances for the purchase of tenant assets, net of repayments	(998)		(26)
Investment in unconsolidated real estate ventures	(26,975)		(10,627)


Capital distributions from unconsolidated real estate ventures	3,931		300
Leasing costs paid	(3,942)		(2,331)
Net cash used in investing activities	(55,305)		(45,023)
Cash flows from financing activities:

Proceeds from credit facility borrowings	37,000		115,000
Repayments of credit facility borrowings	—		(203,500)
Repayments of unsecured notes	—		(54,301)
Proceeds from unsecured term loan	—		70,000
Proceeds from secured term loan	—		245,000
Proceeds from construction loan	5,076		—
Debt financing costs paid	(200)		(4,414)


Shares used for employee taxes upon vesting of share awards	(594)		(652)




Distributions paid to preferred and common partnership units	(26,023)		(32,801)
Net cash provided by financing activities	15,259		134,332
Increase/(Decrease) in cash and cash equivalents and restricted cash	(16,235)		94,684
Cash and cash equivalents and restricted cash at beginning of period	67,534		18,387
Cash and cash equivalents and restricted cash at end of period	$	51,299	$	113,071


Reconciliation of cash and cash equivalents and restricted cash:
Cash and cash equivalents, beginning of period	$	58,319	$	17,551
Restricted cash, beginning of period	9,215		836
Cash and cash equivalents and restricted cash, beginning of period	$	67,534	$	18,387

Cash and cash equivalents, end of period	$	43,210	$	96,945
Restricted cash, end of period	8,089		16,126
Cash and cash equivalents and restricted cash, end of period	$	51,299	$	113,071
Supplemental disclosure:
Cash paid for interest, net of capitalized interest during the three months ended March 31, 2024 and 2023 of $3,918 and $4,072, respectively	$	23,368	$	17,007
Cash paid for income taxes	—		1
Supplemental disclosure of non-cash activity:
Dividends and distributions declared but not paid	26,248		32,823










Change in investment in real estate ventures as a result of deconsolidation	—		8,595
Change in operating real estate from deconsolidation of operating properties	—		(7,814)




Change in capital expenditures financed through accounts payable at period end	(1,179)		451
Change in capital expenditures financed through retention payable at period end	648		255

Change in investment in real estate ventures from deconsolidation of 3141 Fairview Park Drive

-

(12,642
)
Change in mortgage notes payable from deconsolidation of 3141 Fairview Park Drive

-

(20,582
)
Change in other liabilities from deconsolidation of 3141 Fairview Park Drive

-

(12,384
)
Change in capital expenditures financed through accounts payable at period end

(1,455
)

(5,012
)
Change in capital expenditures financed through retention payable at period end

83

2,487

Table of Contents~~BRANDYWINE REALTY TRUST AND BRANDYWINE OPERATING PARTNERSHIP, L.P.~~

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

~~September 30, 2017~~

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 ~~residential, flexible stay, 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, 2017,~~March 31, 2024, owned a ~~99.2%~~99.7% interest in the Operating Partnership. The Parent Company’s common shares of beneficial interest (“common shares”) are publicly traded on the New York Stock Exchange under the ticker symbol ~~“BDN”.~~

“BDN.” The Parent Company, the Operating Partnership, and their consolidated subsidiaries are collectively referred to as the “Company.”

As of ~~September 30, 2017,~~March 31, 2024, the Company owned 9772 properties that ~~contain~~contained an aggregate of approximately ~~16.4~~13.0 million net rentable square feet and consist of 82 office properties, four mixed-use properties, one retail property (87 properties, collectively the “Core Properties”), one development property, three redevelopment properties and six properties classified as held for sale (collectively, the “Properties”). The Company’s core portfolio of operating properties (the “Core Properties”) excludes development properties, redevelopment properties, recently completed properties, and properties held for sale. The Properties were comprised of the following as of March 31, 2024:


	Number of Properties	Rentable Square Feet
Office properties	65	11,773,665
Mixed-use properties	4	924,450

Core Properties	69	12,698,115
Development property	2	144,685

Recently completed - not stabilized property	1	168,294

The Properties	72	13,011,094

In addition to the Properties, as of ~~September 30, 2017,~~March 31, 2024, the Company owned economic interests in 13 unconsolidated real estate ventures (collectively, the “Real Estate Ventures”), seven of which own properties that contain an aggregate of approximately 7.8 million net rentable square feet of office space; four of which own, in aggregate, 5.7141.6 acres of land held for ~~development and two of which own residential towers that contain 345 and 321 apartment units, respectively. As of September 30, 2017, the~~development. The Company also ~~owned 214~~held a leasehold interest in one land parcel totaling 0.8 acres, ~~of undeveloped land~~acquired through a prepaid 99-year ground lease, and held options to purchase approximately 605.1 additional acres of undeveloped land. As of ~~September 30, 2017,~~March 31, 2024, the total potential development that ~~these~~this inventory of land ~~parcels~~ could support under current zoning and entitlements, including the parcels under option, amounted to an estimated ~~15.7~~12.1 million net rentable square feet.

As of March 31, 2024, the Company also owned economic interests in twelve unconsolidated real estate ventures (see Note 4, “Investment in Unconsolidated Real Estate Ventures,” for further information). The Properties and the properties owned by the ~~Real Estate Ventures~~unconsolidated real estate ventures are primarily located in or near Philadelphia, Pennsylvania; Austin, Texas; Metropolitan Washington, D.C.; Southern New Jersey; and Wilmington, Delaware and Austin, Texas. In addition to managing properties owned by the Company, as of September 30, 2017, the Company was managing approximately 10.0 million net rentable square feet of office and industrial properties for third parties and Real Estate Ventures.

Delaware.

The Company conducts its third-party real estate management services business primarily through wholly-owned management company subsidiaries. As of ~~September 30, 2017,~~March 31, 2024, the management company subsidiaries were managing properties containing an aggregate of approximately ~~26.4~~22.3 million net rentable square feet, of which approximately ~~16.4~~13.0 million net rentable square feet related to Properties owned by the Company and approximately ~~10.0~~9.3 million net rentable square feet related to properties owned by third parties and ~~Real Estate Ventures.~~

unconsolidated 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"~~(“GAAP”) have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments ~~(consisting~~consist solely of normal recurring ~~matters) for~~matters, and result in a fair statement of the financial position of the Company as of ~~September 30, 2017,~~March 31, 2024, the results of its operations for the ~~three-~~three months ended March 31, 2024 and ~~nine-month periods ended September 30, 2017 and 2016~~2023 and its cash flows for the ~~nine-month periods~~three months ended ~~September 30, 2017~~March 31, 2024 and ~~2016 have been included.~~2023. 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 ~~2016 Annual Report on Form 10-K filed with the SEC on March 1, 2017.~~

~~The Company's~~ Annual Report on Form 10-K for the year ended December 31, ~~2016~~2023 filed with the SEC on February 22, 2024.

The consolidated balance sheet at December 31, 2023 has been derived from the audited financial statements as of that date but does not include all the information and footnotes required by GAAP for complete financial statements. The Company’s

Annual Report on Form 10-K for the year ended December 31, 2023 contains a discussion of ~~our~~the Company’s significant accounting policies under Note 2, ~~"Summary~~“Summary of Significant Accounting ~~Policies"~~Policies”. There have been no ~~significant~~material changes in ~~our~~the Company’s significant accounting policies since December 31, ~~2016, except~~2023.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The estimates and assumptions include, but are not limited to, common development cost estimates for the ~~addition~~Company’s contributions to development joint ventures. The common development cost estimates for development joint venture contributions are highly judgmental, covering significant future time horizons and are sensitive to cost escalation, sales price escalation and absorption, which are affected by expectations about future market or economic conditions. Actual results could differ from these and other estimates.

Recent Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280). The new standard requires enhanced disclosures about significant segment expenses and other segment items and requires companies to disclose all annual disclosures about segments in interim periods. The new standard also permits companies to disclose more than one measure of ~~revenue recognition related to the flexible stay component~~segment profit or loss, requires disclosure of the ~~FMC Tower. Management discusses our significant accounting policies~~title and ~~management’s judgments and estimates with the Company's Audit Committee.~~

~~Significant Accounting Policies – Revenue Recognition~~

The Company’s flexible stay revenue consists of room revenue, food and beverage revenue, and revenue from other hotel operating departments (such as parking fees and other guest service fees). These revenues are recorded net of any sales and occupancy taxes collected from the hotel guests. All rebates or discounts are recorded as a reduction to revenue, and there are no material contingent

obligations with respect to rebates and discounts offered by the hotel. All revenues are recorded on an accrual basis as they are earned. Any cash received prior to a guest’s arrival is recorded as an advance deposit from the guest and recognized as revenue at the timeposition of the ~~guest's occupancy at the hotel property.~~

~~Out of Period Adjustment~~

The Company recorded $1.2 million of impairment charges during quarter ended December 31, 2016, which should have been recorded in the consolidated financial statements for the three-month period ended March 31, 2017Chief Operating Decision Maker, and the nine-month period ended September 30, 2017. Management concluded that these misstatements were not material to any prior period, nor were they material to the consolidated financial statements as of and for the three- and nine-month periods ended September 30, 2017.

~~Reclassifications~~

~~During the first quarter of 2017, the Company adopted ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”), which~~ requires the Company to reclassify employer tax payments on account of employee tax withholdings on share-based awards from operating activities to financing activities in the consolidated statement of cash flows. Prior to the issuance of ASU 2016-09, there was no guidance on the classification of cash paid by an employer to the taxing authorities when directly withholding shares for tax withholding purposes. As a result of the adoption, a $0.9 million cash outflow has been reclassified in the September 30, 2016 consolidated statements of cash flows from operating activities to financing activities. There was no other impact from the adoption of this guidance.

During the quarter ended December 31, 2016, the Company early adopted ASU 2016-15, “Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”), which clarifies that debt prepayment costs should be presented as financing activities in the statement of cash flows. As a result of the adoption, $53.4 million was reclassified in the consolidated statements of cash flows from the operating activities section to the financing activities section of the consolidated statements of cash flows, within the “Repayment of mortgage notes payable” caption, for the nine-months period ended September 30, 2016. There was no other impact from the adoption of this guidance.

~~Recent Accounting Pronouncements~~

In August 2017, the Financial Accounting Standards Board (the “FASB”) issued ASU No. 2017-12 (“ASU 2017-12”) to simplify the application of hedge accounting guidance and improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. In addition, ASU 2017-12 requires an entity to present the earnings effect of the hedging instrument in the same income statement line item in which the earnings effect of the hedged item is reported. The transition guidance provides companies with ~~the option of early adopting the~~a single reportable segment to provide all disclosures required by Topic 280. The new standard ~~using a modified retrospective transition method in any interim period after issuance of the update, or alternatively requires adoption~~is effective for fiscal years beginning after December 15, 2018. This adoption method requires companies to recognize the cumulative effect of initially applying the guidance as an adjustment to accumulated other comprehensive income with a corresponding adjustment to the opening balance of retained earnings as of the beginning of the fiscal year that an entity adopts the update. The Company is in the process of evaluating the impact of this new guidance on its consolidated financial statements.

In May 2017, the FASB issued ASU No. 2017-09 (“ASU 2017-09”) to provide guidance to clarify when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the changes in terms or conditions. ASU 2017-09 is effective for all entities for annual periods,2023, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted and application is prospective. The Company is in the process of evaluating the impact of this new guidance on its consolidated financial statements.

In February 2017, the FASB issued ASU No. 2017-05 (“ASU 2017-05”) to provide guidance for recognizing gains and losses from the transfer of nonfinancial assets and in-substance nonfinancial assets in contracts with non-customers, unless other specific guidance applies. The standard requires a company to derecognize nonfinancial assets once it transfers control of a distinct nonfinancial asset or distinct in substance nonfinancial asset. Additionally, when a company transfers its controlling interest in a nonfinancial asset, but retains a noncontrolling ownership interest, the company is required to measure any noncontrolling interest it receives or retains at fair value. The guidance requires companies to recognize a full gain or loss on the transaction. As a result of the new guidance, the guidance specific to real estate sales in ASC 360-20 will be eliminated. ASU 2017-05 is effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period. The effective date of this guidance coincides with revenue recognition guidance. The Company expects to utilize the modified retrospective approach.

Under the modified retrospective approach, the Company is required to evaluate incomplete contracts as of December 31, 2017 to determine if the sale recognition of nonfinancial assets under ASU 2017-05 differs from ASC 360-20. The Company has identified three potential sale contracts that may not be considered completed contracts, as defined under ASU 2017-05 by December 31, 2017. Based on our final assessment of these sale contracts, the revenue and remaining gain on sale for each of these property sales will be recognized when the Company fulfills its performance obligations under each contract. Accordingly, the derecognition of nonfinancial assets and revenue recognition patterns are not expected to change under ASU 2017-05 when compared to ASC 360-20.

In May 2016, the FASB issued guidance amending the revenue from contracts with customers standard issued in May 2014, which is not yet effective. The amendments are intended to address implementation issues that were raised by stakeholders and discussed by the Joint Transition Resource Group, and provide additional practical expedients on collectability, noncash consideration, presentation of sales tax and contract modifications and completed contracts at transition. In accordance with the FASB election to defer the effective date of the revenue recognition standard by one year, reporting entities may choose to adopt the standard as of its original effective date or for fiscal years, and interim periods within those fiscal years beginning after December 15, ~~2017. Calendar year-end reporting entities~~2024. Early adoption is permitted and companies are ~~therefore~~ required to apply the ~~new revenue guidance beginning in their 2018 interim and annual financial statements.~~ASU retrospectively to all periods presented. The Company ~~has evaluated~~is currently evaluating the impact ~~of this new guidance and has determined~~ that ~~the impact of~~ the adoption of this ~~guidance is not material to~~standard will have on its financial results. In order to evaluate this standard the Company analyzed all of its revenue streams except for rental revenue because rental revenue recognition is not covered by revenue from contracts with customers. The results of the initial assessment are as follows:

statements and related disclosures.

•~~The Company analyzed its tenant reimbursement revenue and determined that the performance obligations set forth in the Company’s lease agreements will not change the revenue recognition pattern.~~

•The Company identified similar performance obligations under this standard as compared with deliverables and separate units of account previously identified for leasing commissions, management fees, parking revenue, hotel and restaurant revenues and other sundry revenues. As a result, the Company determined that the timing of its leasing commissions, management fees, parking revenue, hotel and restaurant revenues and other sundry revenues will remain the same.

•The Company determined that its revenue recognition pattern for development fee revenues will change under the revenue from contracts with customers standard. For all contracts that are not complete as of December 31, 2017, the Company will adopt the input method under the accounting standard. This methodology replaces the percentage of completion method under the current revenue recognition accounting guidance. Although the accounting under the input method is similar to the percentage of completion method, variable income components are evaluated differently under revenue with contracts from customers when compared to the current revenue recognition standard. Additionally, the Company currently recognizes development fee revenue related to its development services provided for certain third party customers under the completed contract method of accounting. This concept is no longer relevant under the new standard because the Company can measure the inputs that are included in the construction services provided to third party customers and will recognize development fee revenue over time rather than at a point in time. The Company analyzed all of the contracts that will not be complete as of December 31, 2017 and expects that the restatement of development fee revenues will be immaterial to its consolidated financial statements.

•~~Currently, the Company is evaluating the disclosure requirements in the guidance and has not determined the impact on the footnote disclosures to its consolidated financial statements.~~

As of ~~September 30, 2017~~March 31, 2024 and December 31, ~~2016,~~2023, the gross carrying value of the operating properties was as follows (in thousands):

September 30,

December 31,

2017

2016

Land
$
470,391

$
469,522

Building and improvements

2,846,869

2,683,087

Tenant improvements

451,807

433,686

Operating properties

3,769,067

3,586,295

Assets held for sale - real estate investments (a)

47,291

73,591

Total
$
3,816,358

$
3,659,886

~~(a)~~

Real estate investments related to assets held for sale above represents gross real estate assets and does not include accumulated depreciation, land held for development or other assets on the balance sheet of the property held for sale. See “~~Held for Sale” below in this Note 3.~~

~~Acquisition~~

On July 28, 2017, the Company acquired an office building containing 58,587 rentable square feet located at 3000 Market Street, in Philadelphia, Pennsylvania, for $32.7 million. The acquisition was the Section 1031 exchange receiver for the sale of Concord Airport Plaza. See property disposition table below.

The purchase of 3000 Market Street is an asset acquisition under ASU 2017-01, which the Company early adopted as of January 1, 2017. As such, the Company capitalized $0.7 million of acquisition-related costs and allocated the purchase price, consisting of the contractual

sales price of $32.0 million and the acquisition related costs, to the tangible and intangible assets. The Company utilized a number of sources in making estimates of fair value for purposes of allocating the purchase price to tangible and intangibles assets acquired. The purchase price has been allocated as follows (in thousands):

July 18, 2017

Building, land and improvements

$
31,728

Intangible assets acquired (a)

2,838

Below market lease liabilities assumed (b)

(1,818
)

$
32,748


	March 31, 2024		December 31, 2023
Land	$	394,628	$	394,669
Building and improvements	2,677,619		2,671,024
Tenant improvements	477,427		476,539


Total	$	3,549,674	$	3,542,232

~~(a)~~

~~Weighted average amortization period of 5.9 years.~~

~~(b)~~

~~Weighted average amortization period of 6.0 years.~~

3000 Market Street contributed approximately $0.3 million of revenue and a nominal amount of net income, included in the Company’s consolidated income statements, for the period from July 28, 2017 through September 30, 2017.

~~Dispositions~~

~~The Company sold the following twelve office properties, one retail property and one mixed-use property during the nine-month period ended September 30, 2017 (dollars in thousands):~~

Disposition Date

Property/Portfolio Name

Location

Type

Number of Properties

Rentable Square Feet

Sales Price

Net Proceeds on Sale

Gain/(Loss) on Sale (a)

June 27, 2017

Two, Four A, Four B and Five Eves Drive (Evesham Corporate Center)

Marlton, NJ

Office

4

134,794

$
9,700

$
8,650

$
(325
)
(b)
June 12, 2017

7000 Midlantic Drive

Mount Laurel, NJ

Retail

1

10,784

8,200

7,714

1,413

March 30, 2017

200, 210 & 220 Lake Drive East (Woodland Falls)

Cherry Hill, NJ

Office

3

215,465

19,000

17,771

(249
)
(c)
March 15, 2017

Philadelphia Marine Center (Marine Piers)

Philadelphia, PA

Mixed-use

1

181,900

21,400

11,182

6,498

(d)
March 13, 2017

11700, 11710, 11720 & 11740 Beltsville Drive (Calverton)

Beltsville, MD

Office

3

313,810

9,000

8,354

-

(e)
February 2, 2017

1200 & 1220 Concord Avenue (Concord Airport Plaza)

Concord, CA

Office

2

350,256

33,100

32,010

551

(f)
Total Dispositions

14

1,207,009

$
100,400

$
85,681

$
7,888

~~(a)~~

~~Gain/(Loss) on Sale is net of closing and other transaction related costs.~~

~~(b)~~

~~During the first quarter of 2017, the Company recognized a $1.0 million impairment related to these properties. The loss on sale represents closing costs.~~

~~(c)~~

~~During the fourth quarter of 2016, the Company recognized a $7.3 million impairment related to these properties. The loss on sale represents closing costs.~~

~~(d)~~

On March 15, 2017, the Company sold its sublease interest in the Piers at Penn’s Landing (the “Marine Piers”), which includes 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, which will be paid in two installments. On the closing date, the buyer paid $12.0 million in cash. On the second purchase price installment date, the buyer will pay $9.4 million. The second purchase price installment is due on (a) January 31, 2020, in the event that the tenant at the Marine Piers does not exercise its existing option to extend the term of the sublease or (b) January 15, 2024, in the event that the tenant does exercise its current extension option to extend the term of the sublease. In accordance with ASC 360-20, ~~Real Estate Sales~~, the Company determined that it is appropriate to account for the sales transaction under the cost recovery method. The Company received cash proceeds of $11.2 million, after closing costs and prorations, and the net book value of the Marine Piers was $4.7 million, resulting in a gain on sale of $6.5 million. The remaining gain on sale of $9.4 million will be recognized on the second purchase price installment date. The Marine Piers was classified as mixed-use within the Company’s property count.

~~(e)~~

During the fourth quarter of 2016, the Company recognized a $3.0 million impairment related to these properties. During the first quarter of 2017, there was a price reduction of $1.7 million under the agreement of sale and an additional impairment of $1.7 million was recognized.

~~(f)~~

During the fourth quarter of 2016, the Company recognized an $11.5 million impairment related to these properties. This sale is designated as a like-kind exchange under Section 1031 of the Internal Revenue Code (“IRC”) and, as such, the proceeds, totaling $32.0 million after closing costs and prorations, were deposited with a Qualified Intermediary, as defined under the IRC. The proceeds received at closing were recorded as “Other assets” in the Company’s consolidated balance sheet. During the third quarter of 2017, the Company acquired 3000 Market Street in Philadelphia, Pennsylvania using the full balance of the Section 1031 proceeds. See ~~“Acquisition”~~ ~~section above.~~

In addition to the amounts in the table above, the Company recorded $0.5 million gain during the first quarter of 2017 from the receipt of additional cash from the disposition of Cira Square during 2016. For further information relating to this sale, see Note 3, “~~Real Estate Investments,” in the notes to the audited financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2016.~~

~~The Company sold the following land parcels during the nine-month period ended September 30, 2017 (dollars in thousands):~~

Disposition Date

Property/Portfolio Name

Location

Number of Parcels

Acres

Sales Price
��

Net Proceeds on Sale

Gain on Sale

September 13, 2017

50 E. Swedesford Square

Malvern, PA

1

12.0

$
7,200

$
7,098

$
882

July 18, 2017

Bishop's Gate

Mount Laurel, NJ

1

49.5

6,000

5,640

71

(a)
April 28, 2017

Garza Ranch - Multi-family

Austin, TX

1

8.4

11,800

11,560

-

(b)
February 15, 2017

Gateway Land - Site C

Richmond, VA

1

4.8

1,100

1,043

-

(c)
January 30, 2017

Garza Ranch - Hotel

Austin, TX

1

1.7

3,500

3,277

-

(b)
Total Dispositions

5

76.4

$
29,600

$
28,618

$
953

~~(a)~~

During the fourth quarter of 2016, the Company recognized an impairment of $3.0 million. During the second quarter of 2017, the Company recognized an additional impairment of $0.3 million, representing closing costs. See ~~“Land Impairment”~~ ~~section below.~~

~~(b)~~

The Company has a continuing involvement through a completion guaranty, which requires the Company as developer to complete certain infrastructure improvements on behalf of the buyers of the land parcels. The cash received at settlement was recorded as “Deferred income, gains and rent” on the Company’s consolidated balance sheet and the Company will recognize the sale once the infrastructure improvements are complete. See Note 13, “~~Commitments and Contingencies” for further discussion of the infrastructure improvements.~~

~~(c)~~

~~During the fourth quarter of 2016, the Company recognized a nominal impairment related to this land parcel.~~

~~Held for Sale~~

~~The following is a summary of properties classified as held for sale but which did not meet the criteria to be classified within discontinued operations at September 30, 2017 (in thousands):~~

Held for Sale Properties Included in Continuing Operations

September 30, 2017

630 Allendale Road - Office (a)

Newtown Square - Office (b)

Total

ASSETS HELD FOR SALE

Real estate investments:

Operating properties
$
19,482

$
27,809

$
47,291

Accumulated depreciation

(6,985
)

(9,206
)

(16,191
)
Operating real estate investments, net

12,497

18,603

31,100

Construction-in-progress

-

25

25

Total assets held for sale, net
$
12,497

$
18,628

$
31,125

LIABILITIES HELD FOR SALE

Other liabilities
$
35

$
234

$
269

Total liabilities held for sale
$
35

$
234

$
269

~~(a)~~

~~Office property containing 150,000 rentable square feet located in the Pennsylvania Suburbs segment.~~

~~(b)~~

~~Five office properties containing 252,802 rentable square feet located in the Pennsylvania Suburbs segment.~~

As the fair value less anticipated costs to sell exceeded the carrying value for each of the properties included in the above table no impairment loss was recorded. The fair value measurements are based on pricing in the purchase and sale agreements for each of the transactions. As the pricing in the purchase and sales agreements are unobservable, the Company determined that the input utilized to determine fair value for these properties falls within Level 3 in accordance with the fair value hierarchy established by Accounting Standards Codification (ASC) Topic 820, ~~“Fair Value Measurements and Disclosures”~~.

As of December 31, 2016, the Company classified three office properties in its Metropolitan Washington, D.C. segment, two office properties in its Other segment and a five-acre parcel of land in its Other segment as held for sale. As of December 31, 2016, $40.7 million and $1.0 million was reclassified from ‘Operating real estate investments, net’ and ‘Land held for development’, respectively, to ‘Assets held for sale, net’ on the consolidated balance sheets; an immaterial amount was reclassified from ‘Other liabilities’ to ‘Liabilities related to assets held for sale’.

~~Land Impairment~~

As of September 30, 2017, the Company evaluated the recoverability of the carrying value of its land parcels that triggered assessment. Based on the analysis, no impairment charges were identified during the three-month period ended September 30, 2017.

As of June 30, 2017, the Company determined that it would not recover the carrying value, less cost of sale, of one land parcel, consisting of 50 acres known as Bishop’s Gate that was classified as held for sale as of June 30, 2017. Accordingly, the Company recorded an

impairment charge of $0.3 million at June 30, 2017, reducing the aggregate carrying value of the land parcel from $5.9 million to its estimated fair value of $5.6 million. The fair value measurement is based on pricing in the purchase and sale agreement for the property. As the pricing in the purchase and sale agreement is unobservable, the Company determined that the input utilized to determine fair value for the property falls within Level 3 in accordance with the fair value hierarchy established by Accounting Standards Codification (ASC) Topic 820, “~~Fair Value Measurements and Disclosures”. The land parcel was sold on July 18, 2017.~~

~~Held for Use Impairment~~

As of September 30, 2017, the Company evaluated the recoverability of the carrying value of its properties that triggered assessment. Based on the analysis, no impairment charges were identified during the three-month period ended September 30, 2017.

As of March 31, 2017, the Company evaluated the recoverability of the carrying value of its properties that triggered assessment under the undiscounted cash flow model. Based on the Company’s evaluation, it was determined that due to the reduction in the Company’s intended hold period of four properties located in the Other segment, the Company would not recover the carrying values of these properties. Accordingly, the Company recorded impairment charges on these properties of $1.0 million at March 31, 2017, reflected in the results for the nine-month period ended September 30, 2017, reducing the aggregate carrying values of the properties from $10.2 million to their estimated fair value of $9.2 million. The Company measured these impairments based on a discounted cash flow analysis, using a hold period of 10 years and residual capitalization rates and discount rates of 9.00% and 9.25%, respectively. The results were comparable to indicative pricing in the market. The assumptions used to determine fair value under the income approach are Level 3 inputs in accordance with the fair value hierarchy established by Accounting Standards Codification (ASC) Topic 820, “~~Fair Value Measurements and Disclosures~~.”

During the three-month period ended September 30, 2016, there was no provision for impairment recognized. During the nine-month period ended September 30, 2016, the Company recognized a provision for impairment of $13.1 million. For further information relating to these impairments, see Note 3, “~~Real Estate Investments~~,” in the notes to the audited financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2016. There were no impairment charges identified for the three-month period ended September 30, 2016.

The sales of properties, land and the land parcel held for sale do not represent a strategic shift that has a major effect on the Company's operations and financial results. Accordingly, the operating results of these properties remain classified within continuing operations for all periods presented.

4. INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTURES

As of ~~September 30, 2017,~~March 31, 2024, the Company held ownership interests in 13twelve unconsolidated ~~Real Estate Ventures for an~~real estate ventures, with a net aggregate investment balance of ~~$236.3 million. The Company formed or acquired interests~~$565.8 million, which includes a negative investment balance in ~~these Real Estate Ventures with unaffiliated third parties to develop or manage office, residential and/or mixed-use properties or to acquire land in anticipation~~one unconsolidated real estate venture of ~~possible development of office, residential and/or mixed-use properties.~~$52.2 million, reflected within “Other liabilities” on the consolidated balance sheets. As of ~~September 30, 2017, seven~~March 31, 2024, five of the real estate ventures owned properties that ~~contain~~contained an aggregate of approximately ~~7.8~~9.1 million net rentable square feet of office space; ~~four~~two real estate ventures owned ~~5.7~~1.4 acres of land held for development; ~~and two~~four real estate ventures owned ~~residential towers that contain 345 and 321~~7.5 acres of land in active development; one real estate venture owned a mixed used tower comprised of 250 apartment units ~~respectively.~~

and 0.2 million net rentable square feet of office/retail space.

The Company accounts for its ~~unconsolidated~~ interests in the ~~Real Estate Ventures~~unconsolidated real estate ventures, which range from 15% to 78%, using the equity method. ~~The Company’s~~Certain of the unconsolidated ~~interests range from 20% to 70%,~~real estate ventures are subject to specified priority allocations of distributable ~~cash in certain of the Real Estate Ventures.~~

cash.

The Company earned management fees from ~~its Real Estate Ventures~~the unconsolidated real estate ventures of ~~$1.7~~$1.9 million and ~~$4.9~~$2.1 million for the ~~three-~~three months ended March 31, 2024 and ~~nine-month periods ended September 30, 2017, respectively, and $1.7 million and $4.8 million for the three- and nine-month periods ended September 30, 2016,~~2023, respectively.

The Company earned leasing ~~commission income~~commissions from ~~its Real Estate Ventures~~the unconsolidated real estate ventures of ~~$0.4~~$0.6 million and ~~$3.3~~$0.7 million for the ~~three-~~three months ended March 31, 2024 and ~~nine-month periods ended September 30, 2017, respectively, and $0.8 million and $1.9 million for the three- and nine-month periods ended September 30, 2016,~~2023, respectively.

The Company ~~has~~had outstanding accounts receivable balances from ~~its Real Estate Ventures~~the unconsolidated real estate ventures of ~~$1.1~~$2.7 million and ~~$1.4~~$3.5 million as of ~~September 30, 2017~~March 31, 2024 and December 31, ~~2016,~~2023, 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 committed to provide financial support to the Real Estate Venture.

unconsolidated real estate ventures.

The following is a summary of the financial position of the ~~Real Estate Ventures~~unconsolidated real estate ventures in which the Company held interests as of ~~September 30, 2017~~March 31, 2024 and December 31, ~~2016~~2023 (in thousands):

~~(a)~~

This amount includes 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.

(a)This amount 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.

(b)Excludes amounts related to the Mid-Atlantic Office JV and Herndon Innovation Center Metro Portfolio Venture, LLC, as the Company discontinued applying the equity method of accounting after December 31, 2023.

The following is a summary of results of operations of the ~~Real Estate Ventures~~unconsolidated real estate ventures in which the Company held interests during the ~~three- and nine-month~~three-month periods ended ~~September 30, 2017~~March 31, 2024 and ~~2016~~2023 (in thousands):

Three-month periods ended September 30,

Nine-month periods ended September 30,

2017

2016

2017

2016

Revenue
$
56,511

$
57,710

$
169,609

$
157,641

Operating expenses

(27,419
)

(27,592
)

(77,757
)

(81,347
)
Provision for impairment

-

(10,476
)

-

(10,476
)
Interest expense, net

(11,670
)

(12,102
)

(33,771
)

(32,019
)
Depreciation and amortization

(20,684
)

(22,722
)

(61,816
)

(63,125
)
Net loss (a)
$
(3,262
)

$
(15,182
)

$
(3,735
)

$
(29,326
)

Equity in loss of Real Estate Ventures (b)
$
(5,723
)

$
(7,254
)

$
(5,387
)

$
(9,323
)

~~(a)~~

~~The nine-month period ended~~ ~~September~~ ~~30, 2016 amount includes $7.1 million of acquisition deal costs related to the formation of the MAP Venture.~~

~~(b)~~

The three- and nine-month periods ended September 30, 2017 include a $4.8 million other than temporary impairment charge related to the BDN-AI Venture that was recorded during the three months ended September 30, 2017.


	Three Months Ended March 31,
	2024		2023
Revenue	$	45,949	$	57,886
Operating expenses	(24,881)		(28,851)
Interest expense, net	(17,363)		(15,891)
Depreciation and amortization	(20,889)		(24,174)
Loss on property disposition	(490)


Net loss	$	(17,674)	$	(11,030)
Ownership interest %	Various		Various
Company's share of net loss	$	(13,814)	$	(6,124)

Basis adjustments and other	226		(43)
Equity in loss of unconsolidated real estate ventures	$	(13,588)	$	(6,167)

~~Brandywine AI~~

MAP Venture

The MAP Venture ~~– 7101 Wisconsin Property Sale~~

On December 20, 2011, the Company formed a real estate venture, Brandywine - AI Venture LLC, (the "BDN-AI Venture"), with Current Creek Investments, LLC ("Current Creek"), a wholly-owned subsidiary of Allstate Insurance Company. The Company and Current Creek each own a 50% interest in the BDN-AI Venture. The BDN-AI Venture owned sixowns 57 office properties ~~which the Company contributed three properties to the BDN-AI Venture upon its formation and three properties~~ that ~~were acquired by the BDN-AI Venture subsequent to its formation. The contributed office properties~~ contain an aggregate of ~~587,317~~3,868,811 net rentable square feet and consist of 3130 and 3141 Fairview Park Drive, both located in Falls Church, Virginia, and 7101 Wisconsin Avenue located in Bethesda, Maryland. On July 10, 2012, the BDN-AI Venture acquired three office properties containing an aggregate 510,202 net rentable square feet and consist of 1010 Wayne Avenue, 1100 Wayne Avenue and 8484 Georgia Avenue located in Silver Spring, Maryland.

~~On September 14, 2017, the BDN-AI Venture completed the sale of 7101 Wisconsin Avenue containing 230,904~~ rentable square feet located in ~~Bethesda, Maryland,~~the Pennsylvania Suburbs, New Jersey/Delaware, Metropolitan Washington, D.C. and Richmond, Virginia (the “MAP Venture”). The MAP Venture leases the land parcels under the 57 office properties through a ground lease that extends through February 2115. The properties held by the MAP Venture are encumbered by a mortgage on the MAP Venture's leasehold interest in the buildings that is nonrecourse to the Company and the assignment of the related rents and leases. The mortgage loan had an original maturity date of August 1, 2023. The lender provided the MAP Venture with three successive two-month extensions that matured on February 27, 2024. At March 31, 2024, the mortgage balance was $179.1 million. The Company and its partners are in active discussions, including with the mortgage lender, as to a potential extension of the loan or other restructuring of the venture. At present, there can be no assurance as to the outcome of these discussions. At March 31, 2024, the Company's negative investment balance was $52.2 million. The Company has no obligation to fund additional equity to the MAP Venture.

Mid-Atlantic Office JV

On December 21, 2020, the Company contributed a portfolio of 12 properties containing an aggregate of 1,128,645 net rentable square feet, nine of which are located in the Pennsylvania Suburbs segment and three located in the Company's former Metropolitan Washington, D.C. segment, to the Mid-Atlantic Office JV, for a gross sales price of ~~$105.7~~$192.9 million. Upon consummation of the transaction, the Company owned approximately 40% of the equity interest in the venture. On the closing date, Mid-Atlantic Office JV obtained $147.4 million of third-party debt financing secured by the 12 properties within the venture, with an initial advance of $120.8 million. The loan bears interest at SOFR + 3.25% per annum and matured on January 9, 2024. The Company and its partners are in active discussions, including with the mortgage lender, as to a potential extension of the loan or other restructuring of the venture. At present, there can be no assurance as to the ~~time~~outcome of ~~sale,~~these discussions.

Table of Contents

As of March 31, 2024, the ~~property~~Company's investment in the Mid-Atlantic Office JV was zero, and the Company has discontinued applying the equity method of accounting on these assets as the Company has not guaranteed the venture's obligations or otherwise committed to providing financial support.

Herndon Innovation Center Metro Portfolio Venture, LLC

The Herndon Innovation Center Metro Portfolio Venture, LLC (“Herndon Innovation Center”) consists of eight properties containing an aggregate of 1,293,197 net rentable square feet, located in the Company's former Metropolitan Washington, D.C. segment. The Company and its partner own 15% and 85% equity interests in the Herndon Innovation Center, respectively. The properties held by Herndon Innovation Center are encumbered by a ~~$37.4~~$233.4 million ~~of first~~secured mortgage ~~financing, which was repaid in full resulting in a debt prepayment penalty of $0.8 million. Subsequent~~loan that matured on March 29, 2024 and is nonrecourse to the ~~sales transaction, first~~Company. The Company and its partners are in active discussions, including with the mortgage ~~payoff~~lender, as to a potential extension of the loan or other restructuring of the venture. At present, there can be no assurance as to the outcome of these discussions. As of March 31, 2024, the Company's investment in the Herndon Innovation Center was zero, and ~~closing costs, BDN-AI Venture received cash proceeds~~the Company has discontinued applying the equity method of ~~$63.6~~accounting on these assets as the Company has not guaranteed the venture's obligations or otherwise committed to providing financial support.

Cira Square

On March 17, 2022, the Company formed a joint venture, Cira Square REIT, LLC (“Cira Square Venture”), for the purpose of acquiring Cira Square, an office property located at 2970 Market Street in Philadelphia, Pennsylvania containing 862,692 net rentable square feet for a gross purchase price of $383.0 million. The Company ~~was allocated 50% for its~~owns a 20% equity interest in Cira Square Venture and ~~received net cash proceeds~~provided an initial capital contribution of ~~$31.8~~$28.6 million ~~and recognized a $13.8 million gain~~ on the ~~real estate venture’s transaction. Subsequent to~~closing date.

On the ~~sale transaction, the BDN-AI~~closing date, Cira Square Venture ~~owned 5 properties consisting~~obtained $257.7 million of ~~874,479 rentable square feet and the Company’s equity method investment balance in the BDN-AI Venture was $49.1 million.~~

~~Brandywine AI Venture – Other Than Temporary Impairment~~

~~Each quarter, management estimates the fair value of its ownership interest in the Real Estate Ventures, considering the estimated fair value of the real estate assets owned~~third-party debt financing secured by the ~~Real Estate Ventures and the related indebtedness, as well as the working capital assets and~~

liabilities of the Real Estate Ventures and the terms of the related Real Estate Venture agreements. The Company’s estimates of fair value of the real estate assets incorporate a number of assumptions that are subject to economic and market uncertainties including demand for space, competition for tenants, current market rental rates, changes in market rental rates, operating costs, capitalization rates, holding periods and discount rates. For these assumptions, the Company considered its experience and historical performance in the various markets and data provided by market research organizations. In assessing whether the impairmentproperty which is ~~other than temporary, the Company considers several factors. The longevity and severity of the impairment are considered as well as the expected time for recovery of value to occur, if ever.~~

As of September 30, 2017, the Company evaluated the recoverability of its investment basis in BDN-AI Venture utilizing a discounted cash flow model. Based on the Company’s evaluation of the fair value of the Company’s investment in the five remaining properties within BDN-AI Venture subsequent to the disposition of 7101 Wisconsin Avenue, it was determined that a continuing situation of weak demand for space and intense competition for tenants was leading to the Company’s share of fair value of the remaining properties to be less than its investment basis in the unconsolidated real estate venture. This continuing and sustained impairment in value, as suggested by the discounted cash flows and the other assessment considerations described above, caused the Company to conclude that the decline in value was other than temporary for its investment in the BDN-AI Venture. During the nine-month period ended September 30, 2017, the Company’s investment basis was $49.1 million, before a $4.8 million impairment charge. Subsequent to the impairment charge, the Company had a net basis of $44.3 million.

Determining the current fair value of the Company’s investment is based on a number of factors that are difficult to predict. The market may decline further and future impairment charges may be needed. The Company measured this impairment based on a discounted cash flow analysis, using a hold period of 10 years, a residual capitalization rate of 7.5% and discount rates ranging from 7.8% to 8.5%. The assumptions to determine fair value under the income approach are Level 3 inputs in accordance with the fair value hierarchy established by Accounting Standards Codification (ASC) Topic 820, “~~Fair Value Measurements and Disclosures~~.”

~~The Parc at Plymouth Meeting Venture~~

On January 31, 2017, the Company sold its 50% interest in TB-BDN Plymouth Apartments, L.P., a 50/50 real estate venture with Toll Brothers, at a gross sales value of $100.5 million, of which the Company was allocated 50% for its interest. The venture developed and operated a 398-unit multi-family complex in Plymouth Meeting, Pennsylvania encumbered by a $54.0 million construction loan. The construction loan was repaid commensurate with the sale of the Company’s 50% interest. As a result, the Company is no longer subject to a $3.2 million payment guarantee on the construction loan. The cash proceeds, after the payment of the Company’s share of the debt and closing costs, were $27.2 million. The carrying amount of the Company’s investment at the time of sale was $12.6 million, resulting in a $14.6 million gain on sale of interest in the real estate venture.

~~Guarantees~~

As of September 30, 2017, the Company’s unconsolidated real estate ventures had aggregate indebtedness to third parties of $915.0 million. These loans are generally mortgage or construction loans, most of which are non-recoursenonrecourse to the Company. AsThe loan bears interest at 3.50% over one-month term SOFR per annum, and matured on April 1, 2024. On April 1, 2024, the venture's loan received an extension to July 1, 2024. The Company and its partners are in active discussions, including with the mortgage lender, as to a potential extension of ~~September 30, 2017,~~ the ~~loans for which~~loan or other restructuring of the venture. At present, there ~~is recourse~~can be no assurance as to the ~~Company consist~~outcome of these discussions. At March 31, 2024, the ~~following:~~ (~~i) a $55.4 million payment guaranty on~~Company's investment balance was $25.1 million.

5. LEASES

Lessor Accounting

The table below sets forth the ~~term loan for evo at Cira Centre South; (ii) a joint~~allocation of lease revenue between fixed contractual payments and ~~several cost overrun guaranty on the $88.9 million construction loan~~variable lease payments for the ~~development project undertaken by 1919 Market Street LP;~~three months ended March 31, 2024 and (iii) a $0.4 million payment guarantee on a loan provided to PJP VII. In addition, during construction undertaken by real estate ventures, the Company has provided and expects to continue to provide cost overrun and completion guarantees, with rights2023 (in thousands):


	Three Months Ended March 31,
Lease Revenue	2024		2023
Fixed contractual payments	$	92,213	$	91,682
Variable lease payments	24,198		26,515
Total	$	116,411	$	118,197

Table 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. For additional information regarding these real estate ventures, including their indebtedness, see Note 4, "~~Investment in Unconsolidated Real Estate Ventures," in the notes to the audited financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2016.~~

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5.6. INTANGIBLE ASSETS AND LIABILITIES

As of ~~September 30, 2017~~March 31, 2024 and December 31, ~~2016,~~2023, the Company’s intangible assets/liabilities were comprised of the following (in thousands):

As of ~~September 30, 2017,~~March 31, 2024, the Company’s annual amortization for its intangible assets/liabilities, assuming no prospective early lease terminations, ~~are~~was as follows (dollars in thousands):

Assets

Liabilities

2017 (three months remaining)
$
3,443

$
677

2018

12,257

2,512

2019

10,984

2,198

2020

8,904

1,650

2021

6,366

1,062

Thereafter

16,863

9,057

Total
$
58,817

$
17,156


	Assets		Liabilities
2024 (nine months remaining)	$	1,236	$	681
2025	1,485		869
2026	1,093		739
2027	808		623
2028	313		534
Thereafter	2,177		4,576


Total	$	7,112	$	8,022

The following table sets forth information regarding the Company’s consolidated debt obligations outstanding ~~at September 30, 2017~~as of March 31, 2024 and December 31, ~~2016~~2023 (in thousands):

September 30, 2017

December 31, 2016

Effective Interest Rate

Maturity Date

MORTGAGE DEBT:

Two Logan Square
$
84,839

$
86,012

3.98%

May 2020

One Commerce Square

124,518

127,026

3.64%

(a)
Apr 2023

Two Commerce Square

112,000

112,000

4.51%

(b)
Apr 2023

Principal balance outstanding

321,357

325,038

Plus: fair market value premium (discount), net

(2,434
)

(2,761
)

Less: deferred financing costs

(606
)

(728
)

Mortgage indebtedness
$
318,317

$
321,549

UNSECURED DEBT

$600.0M Revolving Credit Facility
$
178,000

$
-

LIBOR + 1.20%

May 2019

Seven-Year Term Loan - Swapped to fixed

250,000

250,000

3.72%

Oct 2022

$300.0M 5.70% Guaranteed Notes due 2017 (c)

-

300,000

5.68%

May 2017

$325.0M 4.95% Guaranteed Notes due 2018

325,000

325,000

5.13%

Apr 2018

$250.0M 3.95% Guaranteed Notes due 2023

250,000

250,000

4.02%

Feb 2023

$250.0M 4.10% Guaranteed Notes due 2024

250,000

250,000

4.33%

Oct 2024

$250.0M 4.55% Guaranteed Notes due 2029

250,000

250,000

4.60%

Oct 2029

Indenture IA (Preferred Trust I) - Swapped to fixed

27,062

27,062

2.75%

Mar 2035

Indenture IB (Preferred Trust I) - Swapped to fixed

25,774

25,774

3.30%

Apr 2035

Indenture II (Preferred Trust II) - Swapped to fixed

25,774

25,774

3.09%

Jul 2035

Principal balance outstanding

1,581,610

1,703,610

Plus: original issue premium (discount), net

(3,937
)

(4,678
)

Less: deferred financing costs

(6,350
)

(7,369
)

Total unsecured indebtedness
$
1,571,323

$
1,691,563

Total Debt Obligations
$
1,889,640

$
2,013,112

~~(a)~~

This loan was assumed upon acquisition of the related properties on December 19, 2013. On December 29, 2015, the Company refinanced the debt increasing the principal balance to $130.0 million and extended the scheduled maturity date from January 6, 2016 to April 5, 2023. The effective interest rate as of December 31, 2015 was 3.64%. A default under this loan will also constitute a default under the loan secured by Two Commerce Square. This loan is also secured by a lien on Two Commerce Square.


	March 31, 2024		December 31, 2023		Effective Interest Rate		Maturity Date
SECURED DEBT:



$245.0M 5.88% Secured Term Loan due 2028	$	245,000	$	245,000	5.88%		February 2028
$50.0M Construction Loan due 2026	18,899		13,824		SOFR + 2.50%		August 2026
Principal balance outstanding	263,899		258,824

Less: deferred financing costs	(2,963)		(3,153)
Total Secured indebtedness	$	260,936	$	255,671

UNSECURED DEBT
$600 million Unsecured Credit Facility	$	37,000	—		SOFR + 1.50%		June 2027	(a)
Term Loan - Swapped to fixed	250,000		250,000		SOFR + 1.70%	(b)	June 2027	(a)
$70.0 million Term Loan	70,000		70,000		SOFR + 2.00%		February 2025	(a)
$350.0M 4.10% Guaranteed Notes due 2024	340,000		340,000		3.78%		October 2024
$450.0M 3.95% Guaranteed Notes due 2027	450,000		450,000		4.03%		November 2027
$350.0M 7.55% Guaranteed Notes due 2028	350,000		350,000		7.98%	(c)	March 2028
$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		SOFR + 1.51	(d)	March 2035
Indenture IB (Preferred Trust I)	25,774		25,774		SOFR + 1.51	(d)	April 2035
Indenture II (Preferred Trust II)	25,774		25,774		SOFR + 1.51	(d)	July 2035
Principal balance outstanding	1,925,610		1,888,610
Plus: original issue premium (discount), net	1,628		1,878
Less: deferred financing costs	(6,919)		(7,327)
Total unsecured indebtedness	$	1,920,319	$	1,883,161
Total Debt Obligations	$	2,181,255	$	2,138,832

~~(b)~~

This loan was assumed upon acquisition of the related property on December 19, 2013. The interest rate reflects the market rate at the time of acquisition. A default under this loan will also constitute a default under the loan secured by One Commerce Square. This loan is also secured by a lien on One Commerce Square.

(a)Spread includes a 10 basis point daily SOFR adjustment.

~~(c)~~

On May 1, 2017, the entire principal balance of the unsecured 5.70% Guaranteed Notes was repaid upon maturity. Available cash balances and the Credit Facility (as defined below) were used to fund the repayment of the unsecured notes.

(b)On November 23, 2022, the $250.0 million unsecured term loan was swapped to a fixed rate. At March 31, 2024, the fixed rate for this instrument is 5.41% and matures on June 30, 2027. The effective date of the swap was January 31, 2023.

(c)During the third quarter of 2023, Moody’s downgraded our senior unsecured credit rating from Baa3 to Ba1. As a result of the downgrade, the interest rate on our 7.55% Guaranteed Notes due 2028 (the "2028 Notes") increased 25 basis points in September 2023 due to the coupon adjustment provisions within the 2028 Notes. During the first quarter of 2024, S&P downgraded our senior unsecured credit rating from BBB- to BB+. As a result of the downgrade, the interest rate on the 2028 Notes increased 25 basis points to 8.05% in March 2024 due to the coupon adjustment provisions within the 2028 Notes.

(d)On January 16, 2024, the Trust Preferred I Indenture IA was swapped to a fixed rate at 5.14% for the period from March 30, ~~2017~~2024 to December 30, 2026 and ~~December 31, 2016,~~Trust Preferred I Indenture IB and Trust Preferred II Indenture II were swapped to a fixed rate at 5.24% for the ~~Company’s weighted-average effective interest rates on its mortgage notes payable were both 4.03%.~~

period from January 30, 2024 to January 30, 2027.

The Company utilizes borrowings under its ~~four-year~~ unsecured ~~revolving~~ credit facility (the ~~“Credit~~“Unsecured Credit Facility”) ~~borrowings~~ for general business purposes, including ~~acquisition, development~~to fund costs of acquisitions, developments and ~~redevelopment~~redevelopments of properties, fund share repurchases and ~~the repayment of~~repay other debt. The Unsecured Credit Facility provides for borrowings of up to $600.0 million and the per annum variable interest rate on ~~the outstanding balances~~borrowings is ~~LIBOR~~SOFR plus ~~1.20%~~1.40% plus a spread adjustment of 0.10%. The interest rate and facility fee are subject to adjustment upon a change in the Company’s unsecured debt ratings. ~~As of September 30, 2017, the Company had~~ ~~$178.0~~ ~~million of borrowings and $13.5 million in letters of credit outstanding, leaving $408.5 million of unused availability under the Credit Facility.~~ During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2024, the weighted-average interest rate on Unsecured Credit Facility borrowings was ~~2.34%~~6.77%, resulting in $0.2 million of interest expense for such period.

Guaranteed Notes due 2029

On April 12, 2024, the Company completed an underwritten offering of $400.0 million aggregate principal amount of its 8.875% Guaranteed Notes due 2029 (the “2029 Notes”). AsThe 2029 Notes were priced at approximately 99.51% of their face amount. The Company received approximately $391.8 million of net proceeds after the deduction for underwriting discounts and offering expenses.

On April 15, 2024, the Company commenced a tender offer (the “Tender Offer”) for any and all of the outstanding $335.1 million principal amount of its 4.10% Guaranteed Notes due 2024 (the “2024 Notes”). The purchase price offered per $1,000 principal amount of 2024 Notes pursuant to the Tender Offer was determined by reference to the fixed spread for the 2024 Notes of 0 basis points plus the yield based on the bid-side price of the 4.250% U.S. Treasury due September 30, ~~2017,~~2024. The Tender Offer expired on April 19, 2024. Upon completion of the ~~effective interest rate~~Tender Offer, on ~~Credit Facility borrowings was 2.43%. As of and during the nine-month period ended September 30, 2016,~~April 23, 2024, the Company ~~had no borrowings under~~issued a

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redemption notice to redeem any 2024 Notes that remained outstanding after the ~~Credit Facility.~~

Tender Offer. The expected redemption date is June 7, 2024.

Additional Information on Unsecured and Secured Consolidated Debt

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, 2017. Management continuously monitors the Company’s compliance with and anticipated compliance with the covenants.~~March 31, 2024. Certain of the covenants restrict the Company’s ability to obtain alternative sources of capital. While the Company currently believes it will remain in compliance with its covenants, in the event that the economy deteriorates in the future, the Company may not be able to remain in compliance with such covenants, in which case a default would result absent a lender waiver.

As of ~~September 30, 2017,~~March 31, 2024, the ~~Company’s~~ aggregate scheduled principal payments ofon the Company’s consolidated debt obligations ~~excluding amortization of discounts~~(secured and ~~premiums, are~~unsecured) were as follows (in thousands):

2017 (three months remaining)	$	1,250
2018		331,601
2019		185,360
2020		86,978
2021		6,099

2024 (nine months remaining)
2025
2026
2027
2028
Thereafter		1,291,679
Total principal payments		1,902,967
Net unamortized premiums/(discounts)		(6,371	)
Net deferred financing costs		(6,956	)
Outstanding indebtedness	$	1,889,640

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.~~

•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, 2017~~March 31, 2024 and December 31, ~~2016,~~2023, 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, 2017~~March 31, 2024 and December 31, ~~2016~~2023 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, 2017

December 31, 2016

Carrying Amount (a)

Fair Value

Carrying Amount (a)

Fair Value

Unsecured notes payable
$
1,066,366

$
1,087,263

$
1,364,854

$
1,372,758

Variable rate debt
$
504,957

$
486,653

$
326,709

$
307,510

Mortgage notes payable
$
318,317

$
305,657

$
321,549

$
328,853

Note receivable (b)
$
3,384

$
3,655

$
3,380

$
3,717

~~(a)~~

In April 2015, the FASB issued guidance requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct reduction from the carrying amount of the corresponding debt liability, consistent with debt discounts. As a result, the carrying amounts presented in the table above are net of deferred financing costs of $4.7 million and $5.5 million for unsecured notes payable, $1.7 million and $1.9 million for variable rate debt and $0.6 million and $0.7 million for mortgage notes payable as of September 30, 2017 and December 31, 2016, respectively.

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~~(b)~~

~~The inputs to originate the note receivable are unobservable and, as a result, are categorized as Level 3. The Company determined fair value by calculating the present value of the cash payments to be received through the maturity date of the loan. See Note 2,~~ ~~“Summary of Significant Accounting Policies,”~~ ~~to the Company’s 2016 Annual Report on Form 10-K for the year ended December 31, 2016 for further information regarding the note origination.~~


	March 31, 2024				December 31, 2023
	Carrying Amount (a)		Fair Value		Carrying Amount (a)		Fair Value
Unsecured notes payable	$	1,486,215	$	1,396,547	$	1,486,052	$	1,386,621
Variable rate debt	453,003		412,377		410,932		370,665
Secured fixed rate debt	242,036		232,653		241,847		233,088

(a)Net of deferred financing costs of $5.4 million and $5.8 million for unsecured notes payable, $1.5 million and $1.5 million for variable rate debt and $3.0 million and $3.2 million for secured fixed rate debt as of March 31, 2024 and December 31, 2023.

The Company used quoted market prices as of March 31, 2024 and December 31, 2023 to value the unsecured notes payable and, as such, categorized them as Level 2.

The inputs utilized to determine the fair value of the Company’s unsecured notes payable are categorized as Level 2. This is because the Company valued these instruments using quoted market prices as of September 30, 2017 and December 31, 2016. 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 ~~estimated~~determined using a discounted cash flow ~~analysis valuation on the~~model that considered borrowing rates ~~currently~~ available to the Company for loans with similar terms and ~~maturities, as applicable.~~ characteristics.

The inputs utilized to determine fair value of the ~~mortgage debt~~Company’s notes receivable are unobservable and, as such, were categorized as Level 3. Fair value was determined ~~by discounting~~using a discounted cash flow model that considered the ~~future~~ contractual interest and principal payments bydiscounted at a blended ~~market~~interest rate ~~for loans with similar terms, maturities and loan-to-value. These inputs have been categorized as Level 3 because~~of the ~~Company considers the rates used in the valuation techniques to be unobservable inputs.~~

notes receivable.

For the Company’s ~~mortgage loans, the Company uses an estimate based discounted cash flow analyses and its knowledge of the mortgage market. The weighted average discount rate~~Level 3 financial instruments for ~~the combined variable rate debt and mortgage loans used to calculate~~which fair value ~~as of September 30, 2017 and December 31, 2016 was 4.143% and 4.353%, respectively. An~~is disclosed, an increase in the discount rate used ~~in the discounted cash flow model~~to determine fair value would result in a decrease to the fair ~~value of the Company’s long-term debt.~~value. Conversely, a decrease in the discount rate ~~used in the discounted cash flow model~~ would result in an increase to the fair ~~value of the Company’s long-term debt.~~

value.

Disclosure about the fair value of financial instruments is based upon pertinent information available to management as of ~~September 30, 2017~~March 31, 2024 and December 31, ~~2016.~~2023. 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, 2017, and current~~March 31, 2024. 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.

~~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 $14.6 million and $14.9 million as of September 30, 2017 and December 31, 2016, 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, 2017 and December 31, 2016 was approximately $25.9 million and $24.4 million, respectively.

9. ~~FAIR VALUE OF~~ DERIVATIVE FINANCIAL INSTRUMENTS

The following table summarizes the terms and fair values of the Company’s derivative financial instruments as of ~~September 30, 2017~~March 31, 2024 and December 31, ~~2016.~~2023. 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

9/30/2017

12/31/2016

9/30/2017

12/31/2016

(Liabilities)/Assets

Swap

Interest Rate

Cash Flow
(a)
$
250,000

$
250,000

3.718
%

October 8, 2015

October 8, 2022

$
(3,185
)

$
3,733

Swap

Interest Rate

Cash Flow
(a)

25,774

25,774

3.300
%

December 22, 2011

January 30, 2021

(209
)

(300
)
Swap

Interest Rate

Cash Flow
(a)

25,774

25,774

3.090
%

January 6, 2012

October 30, 2019

(88
)

(214
)
Swap

Interest Rate

Cash Flow
(a)

27,062

27,062

2.750
%

December 21, 2011

September 30, 2017

-

(83
)

$
328,610

$
328,610

~~(a)~~

~~Hedging unsecured variable rate debt.~~


Hedge Product	Hedge Type	Designation		Notional Amount				Strike		Trade Date	Maturity Date	Fair value
				3/31/2024		12/31/2023						3/31/2024		12/31/2023



Assets/(Liabilities)
Swap	Interest Rate	Cash Flow	(a)	$	250,000	$	250,000	3.729	%	November 23, 2022	June 30, 2027	$	3,226	$	(757)
Swap	Interest Rate	Cash Flow	(a)	27,062		—		3.629	%	January 12, 2024	December 30, 2026	438		—
Swap	Interest Rate	Cash Flow	(a)	51,548		—		3.725	%	January 12, 2024	January 30, 2027	698		—
				$	328,610	$	250,000

(a)Hedging unsecured variable rate debt.

The Company measures its derivative instruments at fair value and records them ~~gross~~ in “Other assets” and (“Other liabilities”) on the Company’s consolidated balance sheet in other assets or other liabilities. Additionally, the Company recorded its share of the fair value of derivative financial instruments held by its unconsolidated real estate ventures, as of September 30, 2017.

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 ~~its~~the inputs utilized to determine the fair value of derivative ~~valuations in their entirety~~instruments are classified in Level 2 of the fair value hierarchy.

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10. LIMITED PARTNERS’ NONCONTROLLING INTERESTS IN THE PARENT COMPANY

Noncontrolling 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 noncontrolling interests associated with the redeemable common limited partnership units in the accompanying consolidated balance sheet of the Parent Company was $3.9 million and $4.1 million as of March 31, 2024 and December 31, 2023, respectively. Under the applicable accounting guidance, the redemption value of the redeemable common limited partnership units is carried at fair value. The aggregate settlement value of these units (based on the number of units outstanding and the average closing price of the common shares during the last five business days of the quarter ended March 31, 2024) was approximately $2.4 million and $2.8 million as of March 31, 2024 and December 31, 2023, 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-month periods ended September 30,

2017

2016

Basic

Diluted

Basic

Diluted

Numerator

Income from continuing operations
$
19,046

$
19,046

$
7,884

$
7,884

Net income from continuing operations attributable to non-controlling interests

(170
)

(170
)

(58
)

(58
)
Nonforfeitable dividends allocated to unvested restricted shareholders

(73
)

(73
)

(79
)

(79
)
Preferred share dividends

-

-

(1,725
)

(1,725
)
Net income attributable to common shareholders
$
18,803

$
18,803

$
6,022

$
6,022

Denominator

Weighted-average shares outstanding

175,433,657

175,433,657

175,127,110

175,127,110

Contingent securities/Share based compensation

-

1,401,365

-

1,237,505

Weighted-average shares outstanding

175,433,657

176,835,022

175,127,110

176,364,615

Earnings per Common Share:

Net income attributable to common shareholders
$
0.11

$
0.11

$
0.03

$
0.03


	Three Months Ended March 31,
	2024				2023
	Basic		Diluted		Basic		Diluted
Numerator
Net loss	$	(16,414)	$	(16,414)	$	(5,276)	$	(5,276)
Net loss attributable to noncontrolling interests	46		46		17		17
Nonforfeitable dividends allocated to unvested restricted shareholders	(336)		(336)		(70)		(70)


Net loss attributable to common shareholders	$	(16,704)	$	(16,704)	$	(5,329)	$	(5,329)
Denominator


Weighted-average shares outstanding	172,207,037		172,207,037		171,673,167		171,673,167
Loss per Common Share:
Net loss attributable to common shareholders	$	(0.10)	$	(0.10)	$	(0.03)	$	(0.03)

Nine-month periods ended September 30,

2017

2016

Basic

Diluted

Basic

Diluted

Numerator

Income from continuing operations
$
48,015

$
48,015

$
52,871

$
52,871

Net income from continuing operations attributable to non-controlling interests

(384
)

(384
)

(425
)

(425
)
Nonforfeitable dividends allocated to unvested restricted shareholders

(245
)

(245
)

(263
)

(263
)
Preferred share dividends

(2,032
)

(2,032
)

(5,175
)

(5,175
)
Preferred share redemption charge

(3,181
)

(3,181
)

-

-

Net income attributable to common shareholders
$
42,173

$
42,173

$
47,008

$
47,008

Denominator

Weighted-average shares outstanding

175,315,581

175,315,581

174,976,998

174,976,998

Contingent securities/Share based compensation

-

1,283,751

-

1,032,824

Weighted-average shares outstanding

175,315,581

176,599,332

174,976,998

176,009,822

Earnings per Common Share:

Net income attributable to common shareholders
$
0.24

$
0.24

$
0.27

$
0.27

Redeemable common limited partnership units totaling ~~1,479,799~~515,595 and 516,467 at ~~both September 30, 2017~~March 31, 2024 and ~~September 30, 2016,~~March 31, 2023, respectively, 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-~~three months ended March 31, 2024 and ~~nine-month periods ended September 30, 2017 and 2016,~~2023, 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~~Company’s shareholder-approved long-term equity incentive plan.

Common ~~and Preferred~~ Shares

On ~~September 12, 2017,~~February 14, 2024, the Parent Company declared a distribution of ~~$0.16~~$0.15 per common share, totaling ~~$28.4~~$26.3 million, which was paid on ~~October~~April 18, ~~2017~~2024 to shareholders of record as of ~~October~~April 4, ~~2017.~~

~~On April 11, 2017,~~2024.

The Parent Company maintains a common share repurchase program under which the Board of Trustees has authorized the Parent Company ~~redeemed all~~to repurchase its common shares. On January 3, 2019, the Board of ~~its outstanding 4,000,000 Series E Preferred Shares at an aggregate redemption price~~Trustees authorized the repurchase of ~~$25.51 per share, which includes $2.0~~up to $150.0 million of ~~dividends accrued through~~ the ~~redemption date. The redemption was funded with existing cash balances on hand.~~

~~Also on April 11, 2017,~~Company's common shares from and after January 3, 2019. During the ~~Parent~~three months ended March 31, 2024 and March 31, 2023, the Company ~~recognized a $3.2 million charge related to the underwriting discount and related expenses incurred at issuance~~did not repurchase any common shares.

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-month periods ended September 30,

2017

2016

Basic

Diluted

Basic

Diluted

Numerator

Income from continuing operations
$
19,046

$
19,046

$
7,884

$
7,884

Nonforfeitable dividends allocated to unvested restricted unitholders

(73
)

(73
)

(79
)

(79
)
Preferred unit dividends

-

-

(1,725
)

(1,725
)
Net income attributable to non-controlling interests

(12
)

(12
)

(6
)

(6
)
Net income attributable to common unitholders
$
18,961

$
18,961

$
6,074

$
6,074

Denominator

Weighted-average units outstanding

176,913,456

176,913,456

176,606,909

176,606,909

Contingent securities/Share based compensation

-

1,401,365

-

1,237,505

Total weighted-average units outstanding

176,913,456

178,314,821

176,606,909

177,844,414

Earnings per Common Partnership Unit:

Net income attributable to common unitholders
$
0.11

$
0.11

$
0.03

$
0.03


	Three Months Ended March 31,
	2024				2023
	Basic		Diluted		Basic		Diluted
Numerator
Net loss	$	(16,414)	$	(16,414)	$	(5,276)	$	(5,276)
Net (income) loss attributable to noncontrolling interests	(3)		(3)		1		1
Nonforfeitable dividends allocated to unvested restricted unitholders	(336)		(336)		(70)		(70)


Net loss attributable to common unitholders	$	(16,753)	$	(16,753)	$	(5,345)	$	(5,345)
Denominator


Total weighted-average units outstanding	172,722,632		172,722,632		172,189,634		172,189,634
Loss per Common Partnership Unit:
Net loss attributable to common unitholders	$	(0.10)	$	(0.10)	$	(0.03)	$	(0.03)

Nine-month periods ended September 30,

2017

2016

Basic

Diluted

Basic

Diluted

Numerator

Income from continuing operations
$
48,015

$
48,015

$
52,871

$
52,871

Nonforfeitable dividends allocated to unvested restricted unitholders

(245
)

(245
)

(263
)

(263
)
Preferred unit dividends

(2,032
)

(2,032
)

(5,175
)

(5,175
)
Preferred unit redemption charge

(3,181
)

(3,181
)

-

-

Net income attributable to non-controlling interests

(26
)

(26
)

(12
)

(12
)
Net income attributable to common unitholders
$
42,531

$
42,531

$
47,421

$
47,421

Denominator

Weighted-average units outstanding

176,795,380

176,795,380

176,491,311

176,491,311

Contingent securities/Share based compensation

-

1,283,751

-

1,032,824

Total weighted-average units outstanding

176,795,380

178,079,131

176,491,311

177,524,135

Earnings per Common Partnership Unit:

Net income attributable to common unitholders
$
0.24

$
0.24

$
0.27

$
0.27

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.~~unit. For the ~~three-~~three months ended March 31, 2024 and ~~nine-month periods ended September 30, 2017 and 2016,~~2023, 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 executives and other employees under the Parent ~~Company's~~Company’s shareholder-approved long-term incentive plan.

Common Partnership Units ~~and Preferred Mirror Units~~

On ~~September 12, 2017,~~February 14, 2024, the Operating Partnership declared a distribution of ~~$0.16~~$0.15 per common partnership unit, totaling ~~$28.4~~$0.1 million ~~which~~, which was paid on ~~October~~April 18, ~~2017~~2024 to unitholders of record as of ~~October~~April 4, ~~2017.~~

~~On April 11, 2017,~~2024.

In connection with the Parent Company’s common share repurchase program, one common unit of the Operating Partnership ~~redeemed all~~is retired for each common share repurchased. During the three months ended March 31, 2024 and March 31, 2023, the Company did not repurchase any units.

As of ~~its~~March 31, 2024, 2,242,275 restricted share rights and units (“Restricted Share Units”) were outstanding ~~4,000,000 Series E-Linked Preferred Mirror~~under the Company’s long term equity incentive plan. These Restricted Share Units 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, 2024 was $3.6 million and is expected to be recognized over a weighted average remaining vesting period of 1.19 years. During the three months ended March 31, 2024 and 2023, the amortization related to outstanding Restricted Share Units was $3.9 million (of which $0.7 million was capitalized) and $2.8 million (of which $0.4 million was capitalized), respectively. Compensation expense related to outstanding Restricted Share Units is included in general and administrative expense.

On February 26, 2024, the Compensation Committee of the Parent Company’s Board of Trustees awarded to officers of the Company an aggregate ~~redemption price~~ of ~~$25.51 per unit,~~1,251,803 Restricted Share Units, which ~~includes $2.0 million~~vest over three years from the grant date. Each Restricted Share Unit entitles the holder to one common share upon settlement. The Parent Company pays dividend equivalents on the

Restricted Share Units prior to the ~~redemption~~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 Units, 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 ~~redemption~~Restricted Share Units granted in 2024, 2023, and 2022 to certain senior executives include an “outperformance feature” whereby additional shares may be earned, up to 275% of ~~preferred units was funded~~the shares subject to the basic award, based on the Company’s achievement of earnings-based targets and capital markets based targets during a three-year performance period with ~~existing cash balances on hand.~~

~~Also on April 11, 2017,~~an additional 366 days of service generally required to fully vest. In addition to the ~~Operating Partnership~~basic award, up to an aggregate of 2,669,293, 925,642, and 406,179 shares may be awarded under the outperformance feature for the 2024, 2023, and 2022 awards, respectively, to those senior officers whose Restricted Share Units awards include the “outperformance feature.” As of March 31, 2024, the Company has not recognized ~~a $3.2 million charge~~any compensation expense related to the ~~underwriting discount~~outperformance feature for the 2022 awards and has recognized $0.3 million and $0.5 million related ~~expenses incurred at issuance~~to the outperformance feature for the 2024 and 2023 awards respectively. The Company will continue to evaluate progression towards achievement of the ~~Series E-Linked Preferred Mirror~~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 February 16, 2024, the Compensation Committee awarded non-officer employees an aggregate of 142,320 Restricted Share Units that generally vest in three equal annual installments. 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 or qualifying retirement eligibility.

Restricted Performance Share Unit Awards

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 varying between zero and 200% of the target amount based on ~~April 11, 2012. This charge~~the achievement of certain performance or market conditions. For 2022 and 2023 awards, the number of shares issuable is ~~included~~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 (“Relative TSR”). For 2024 awards, the number of common shares issuable is determined based on the Company’s achievement of certain operating metrics during three one-year performance periods, subject to further adjustment based on Relative TSR for the three-year term of the award. The table below presents certain information as to unvested RPSU awards.

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. If an award's service inception date precedes the grant date, we initially measure compensation expense for awards with performance conditions at fair value at the service inception date based on probability of payout, and we remeasure compensation expense at subsequent reporting dates until all of the award’s key terms and conditions are known and the grant date is established. We amortize awards with performance conditions using the graded expense method.

For 2022 and 2023 awards, the performance period will be abbreviated and the determination and delivery of earned shares will be accelerated in the ~~earnings~~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, the number of shares deliverable will be pro-rated based on the portion of the performance period actually worked before retirement.

For 2024 awards, the Company awarded 1,251,803 shares of which 417,268 are granted in 2024. The determination and delivery of earned shares will be accelerated in the event of a change in control or the award recipient’s death or disability before the end of the full three-year term of the award.If the award recipient’s service ceases due to his or her qualifying retirement or disability during the term of the award, the award will remain outstanding and be earned based on actual performance for the full term of the award, subject to pro-ration based on the portion of the term actually worked.Dividend equivalents will be credited as additional RPSUs during the term of the awards, subject to the same terms and conditions as the original RPSUs.

For the three months ended March 31, 2024, the Company recognized amortization of the 2024, 2023 and 2022 RPSU awards of $1.4 million, of which $0.2 million was capitalized consistent with the Company’s policies for capitalizing eligible portions of employee compensation. For the three months ended March 31, 2023, amortization for the 2023, 2022 and 2021 RPSU awards was $1.4 million, of which $0.2 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 RPSUs at March 31, 2024 was approximately $10.9 million and is expected to be recognized over a weighted average remaining vesting period of 2.1 years.

The Company issued 164,461 common shares on February 1, 2023 in settlement of RPSUs that had been awarded on March 5, 2021 (with a three-year measurement period ended December 31, 2023). Holders of these RPSUs also received a cash dividend of $0.15 per share ~~calculations above, as well as within the Operating Partnership’s consolidated income statements as a reduction in net income to arrive at net income attributable to~~for these common ~~partnership unitholders under the caption “Preferred unit redemption charge.” There were no comparable charges for the prior year.~~

~~12.~~shares on January 18, 2024.

14. SEGMENT INFORMATION

Real estate investments, at cost:

September 30, 2017

December 31, 2016

Philadelphia CBD

$
1,591,828

$
1,320,974

Pennsylvania Suburbs (a)

966,128

1,005,446

Metropolitan Washington, D.C.

976,286

975,987

Austin, Texas

146,859

146,794

Other

87,966

137,094

$
3,769,067

$
3,586,295

Assets held for sale (b)

47,291

73,591

Operating properties

$
3,816,358

$
3,659,886

Corporate

Construction-in-progress

$
127,141

$
297,462

Land held for development

$
120,696

$
150,970

~~(a)~~

As of September 30, 2017, the Company categorized six office properties in its Pennsylvania Suburbs segment as held for sale in accordance with applicable accounting standards for long lived assets. See Note 3, “Real Estate Investments,” for further information.

~~(b)~~


Real estate investments, at cost:
	March 31, 2024		December 31, 2023
Philadelphia CBD	$	1,535,852	$	1,534,893
Pennsylvania Suburbs	901,577		900,230
Austin, Texas	803,756		801,973
Total Core Segments	3,241,185		3,237,096
Other	308,489		305,136


Operating properties	$	3,549,674	$	3,542,232

Corporate
Right of use asset - operating leases, net	$	18,875	$	19,031
Construction-in-progress	$	146,194	$	135,529
Land held for development	$	81,616	$	82,510
Prepaid leasehold interests in land held for development, net	$	27,762	$	27,762

Nine-month periods ended

September 30,

2017

2016

Total revenue

Operating expenses (a)

Net operating income

Total revenue

Operating expenses (a)

Net operating income

Philadelphia CBD
$
165,352

$
(64,311
)

$
101,041

$
148,496

$
(58,102
)

$
90,394

Pennsylvania Suburbs

105,673

(35,670
)

70,003

107,971

(36,982
)

70,989

Metropolitan Washington, D.C.

69,190

(26,347
)

42,843

76,881

(29,567
)

47,314

Austin, Texas

25,772

(11,634
)

14,138

25,123

(9,689
)

15,434

Other

14,274

(9,083
)

5,191

30,328

(17,513
)

12,815

Corporate

6,888

(5,355
)

1,533

4,578

(4,460
)

118

Operating properties
$
387,149

$
(152,400
)

$
234,749

$
393,377

$
(156,313
)

$
237,064

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

Unconsolidated real estate ventures (in thousands):

Investment in real estate ventures, at equity

Equity in income (loss) of real estate ventures

As of

Three-month periods ended September 30,

Nine-month periods ended September 30,

September 30, 2017

December 31, 2016

2017

2016

2017

2016

Philadelphia CBD
$
42,298

$
48,691

$
134

$
(453
)

$
113

$
(473
)
Pennsylvania Suburbs

3,320

15,421

24

(170
)

448

410

Metropolitan Washington, D.C. (a)

119,550

141,786

(5,264
)

(5,287
)

(4,872
)

(6,068
)
Austin, Texas

52,940

52,886

(15
)

(561
)

1,266

(1,299
)
MAP Venture (b)

16,283

20,893

(706
)

(1,010
)

(2,610
)

(2,608
)
Other

1,922

1,654

104

227

268

715

Total
$
236,313

$
281,331

$
(5,723
)

$
(7,254
)

$
(5,387
)

$
(9,323
)

~~(a)~~

The three- and nine-month periods ended September 30, 2017 include a $4.8 million other than temporary impairment charge related to the BDN - AI Venture that was recorded during the three months ended September 30, 2017.

~~(b)~~

The MAP Venture represents a joint venture formed between the Company and MAP Ground Lease Holdings LLC, an affiliate of Och-Ziff Capital Management Group, LLC, on February 4, 2016. The MAP Venture’s 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 investment in the MAP Venture is separately presented. All other unconsolidated real estate ventures are managed consistently with the Company’s regional segments.


Unconsolidated real estate ventures:
	Investment in real estate ventures				Equity in income (loss) of real estate ventures
	As of				Three Months Ended March 31,
	March 31, 2024		December 31, 2023		2024		2023
Philadelphia CBD	$	468,642	$	450,136	$	(9,613)	$	(3,259)
Metropolitan Washington, D.C.	69,288		71,931		(752)		(1,176)
Mid-Atlantic Office JV	—		—		—		190
MAP Venture	(52,200)		(48,733)		(3,223)		(1,922)

Austin, Texas	80,112		79,160		—		—
Total	$	565,842	$	552,494	$	(13,588)	$	(6,167)

Net operating income (“NOI”) is a non-GAAP financial measure, ~~defined~~which we define as total property revenue less property operating expenses, real estate taxes and ~~third party~~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 and bad debt expense.~~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 primary measure that is used by the ~~Company~~Company’s management to evaluate the operating performance of ~~its~~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 (loss), as defined by GAAP, to consolidated NOI, (in thousands):

Three-month periods ended September 30,

Nine-month periods ended September 30,

2017

2016

2017

2016

Net income
$
19,046

$
7,884

$
48,015

$
52,871

Plus:

Interest expense

19,732

20,814

61,473

64,334

Interest expense - amortization of deferred financing costs

577

645

1,807

2,063

Interest expense - financing obligation

-

156

-

679

Depreciation and amortization

42,429

46,956

132,584

142,736

General and administrative expenses

5,813

5,515

21,797

20,711

Equity in loss of Real Estate Ventures

5,723

7,254

5,387

9,323

Provision for impairment

-

-

3,057

13,069

Loss on early extinguishment of debt

-

-

-

66,590

Less:

Interest income

79

291

635

970

Income tax benefit

793

-

1,032

-

Net gain (loss) on disposition of real estate

-

(104
)

8,411

114,625

Net gain on sale of undepreciated real estate

953

188

953

188

Net gain on Real Estate Venture transactions

13,758

10,472

28,340

19,529

Consolidated net operating income
$
77,737

$
78,377

$
234,749

$
237,064

~~13.~~

Table of Contents


	Three Months Ended March 31,
	2024		2023
Net loss	$	(16,414)	$	(5,276)
Plus:
Interest expense	25,049		22,653
Interest expense - amortization of deferred financing costs	1,091		1,027

Depreciation and amortization	45,042		45,600
General and administrative expenses	11,104		9,482
Equity in loss of unconsolidated real estate ventures	13,588		6,167


Less:
Interest and investment income	421		505
Income tax provision	(2)		(25)


Net gain on sale of undepreciated real estate	—		781
Net loss on real estate venture transactions	(29)		—

Consolidated net operating income	$	79,070	$	78,392

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 required leasing and capital reserve accounts for the benefit of the mortgage lenders with a letter-of-credit. As of September 30, 2017, there is an associated $10.0 million letter of credit for a mortgage lender. 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~~

Future minimum rental 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 have remaining lease terms ranging from 12 to 72 years. Minimum future rental payments on non-cancelable leases at September 30, 2017 are as follows (in thousands):

Year

Minimum Rent

2017 (three months remaining)

$
303

2018

1,211

2019

1,211

2020

1,211

2021

1,211

Thereafter

57,527

Total

$
62,674

~~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~~Debt Guarantees 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 future minimum rental payments does not include any contingent rent amounts or any reimbursed expenses. Reference is made in our Annual Report on Form 10-K for the year ended December 31, 2016 for further detail regarding commitments and contingencies.

~~Put Agreement~~

On May 4, 2015, the Company entered into a put agreement in the ordinary course of business that grants an unaffiliated third party the unilateral option to require the Company to purchase a property, at a predetermined price, until May 4, 2018. In addition to the $35.0 million purchase price, the Company would be responsible for transaction and closing costs. There can be no assurance that the counterparty will exercise the option.

~~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. Equity Funding Commitments

As of ~~September 30, 2017, the liability had accreted to $1.8 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, 2017,~~March 31, 2024, the Company’s unconsolidated real estate ventures had aggregate indebtedness ~~to third parties~~ of ~~$915.0~~$1,438.0 million. These loans are generally mortgage loans or secured construction loans, most of which are non-recourse to the Company. In addition, in certain instances, the Company provides non-recourse carve-out guarantees on these non-recourse loans. As of September 30, 2017, the loans for which there is recoursenonrecourse to the Company, ~~consists~~except for customary recourse carve-outs. In addition, during construction undertaken by the unconsolidated real estate ventures, including the 3025 JFK Venture, the 3151 Market Street Venture, and the One Uptown Ventures, the Company has provided, and expects to continue to provide, cost overrun and completion guarantees, as well as customary environmental indemnities and guarantees of customary exceptions to nonrecourse provisions in loan agreements.

In the agreement with its partner in the 3151 Market Street Venture, the Company agreed to provide cost overrun ~~guaranty on~~and completion guaranties for the ~~$88.9~~project under development. As of March 31, 2024, total estimated costs to develop 3151 Market Street are approximately $316.9 million and as of such date, the Company has fully funded its share of equity. The partner is responsible for up to $22.9 million of additional construction costs. Thereafter, if a construction loan has not been obtained, the Company would be responsible to fund the balance of the development costs and would fund such costs through the use of its credit facilities and cash on hand.

Impact of Natural Disasters and Casualty

The Company carries liability insurance to mitigate its exposure to certain losses, including those relating to property damage. The Company records the estimated amount of expected insurance proceeds for property damage and other losses incurred as an asset (typically a ~~$0.4 million payment guarantee on a loan provided to PJP VII. See Note 4, "Investment in Unconsolidated Real Estate Ventures,"~~ inreceivable from the ~~notes~~insurer) and income up to the ~~consolidated financial statements above for more information.~~

amount of the losses incurred when receipt of insurance proceeds is deemed probable. Any amount of insurance recovery in excess of the amount of the losses is considered a gain contingency and is not recorded until the proceeds are received.

In connection with the ~~agreements of sale,~~Schuylkill Yards Project, the Company entered into a ~~development agreement~~neighborhood engagement program and, ~~related completion guarantee~~as of March 31, 2024, had $5.6 million of future fixed contractual obligations. The Company also committed to ~~construct certain infrastructure improvements to~~fund additional contributions under the land on behalf of each buyer, estimated to cost $13.2 million. Total estimated costs related to the improvements are included in the sale price of each land parcel. Recognition of the sale of the land parcels is deferred until the improvements are completed.program. As of ~~September 30, 2017,~~March 31, 2024, the ~~costs incurred to complete the infrastructure improvements~~Company estimates that these additional contributions, which are not ~~in excess~~fixed under the terms of ~~the fixed sale price included in each sale contract. Accordingly, there are no indicators of impairment.~~

~~On December 3, 2015, the Company entered into an~~ agreement, as development manager to construct Subaru of America’s (“Subaru”) corporate headquarters (the “Subaru Headquarters Development”), an office property containing five floors and approximately 250,000 square feet, on land owned by Subaru and located in Camden, New Jersey. In addition to development fees, the agreement provides the Company with the ability to earn additional profit if total project costs are less than the not-to-exceed (“NTE”) amount. As of September 30, 2017, thewill be $2.1 million.

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. INCOME TAXES~~

The Company operates its business to be qualified to be taxed as a REIT for federal income tax purposes. As a REIT, the Company generally will not be subject to federal income tax on the income that the Company distributes currently to our shareholders. The determination that the Company is a REIT requires analysis

Table of various factual matters and circumstances that may not be totally within its control. To qualify as a REIT, at least 95% of the Company’s gross income must come from specific passive sources, such as rent, that are itemized in REIT tax laws. In addition, to qualify as a REIT, the Company cannot own specified amounts of debt and equity securities of some issuers. The Company is also required to distribute to its shareholders with respect to each year at least 90% of its REIT taxable income (excluding net capital gains). The Company’s intention is to adhere to the REIT qualification requirements and to maintain its qualification for taxation as a REIT. If the Company fails to qualify for taxation as a REIT in any taxable year, the Company will be subject to federal income taxes at regular corporate rates (including any applicable alternative minimum tax) and it may not be able to qualify as a REIT for four subsequent taxable years. As a REIT, the Company may be subject to certain state and local taxes on its income and property, and to federal income and excise taxes on undistributed taxable income. The Company’s taxable REIT subsidiaries ("TRS") will generally be subject to federal, state, and local income taxes at the applicable rates.

The Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases, and for net operating loss, capital loss and tax credit carryforwards. The deferred tax assets and liabilities are measured using the enacted income tax rates in effect for the year in which those temporary differences are expected to be realized or settled. The effect on the deferred tax assets and liabilities from a change in tax rates is recognized in earnings in the period when the new rate is enacted. However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of all available evidence, including the future reversals of existing taxable temporary differences, future projected taxable income and tax planning strategies. Valuation allowances are provided if, based upon the weight of the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

ContentsIn projecting future taxable income, the analysis begins with historical results and incorporates assumptions about the amount of future state and federal pretax operating income adjusted for items that do not have tax consequences. The assumptions about future taxable income require significant judgment and are consistent with the plans and estimates the Company is using to manage the underlying businesses. The Company considered all available evidence, both positive and negative, including cumulative loss in recent years and its current forecast of future income in its analysis. While the Company believes its forecast of future taxable income is reasonable, it is inherently uncertain. If the Company’s projections of future income are lower than expected, the Company may need to establish a valuation allowance. Based on the analysis prepared, the Company recorded a deferred tax asset of $1.0 million as of September 30, 2017. There were no deferred tax balances as of September 30, 2016.

~~The Company had no accruals for tax uncertainties as of September 30, 2017 and December 31, 2016.~~

~~15. SUBSEQUENT EVENTS~~

On October 2, 2017, the Company entered into a lease and will commence construction on a 165,000 square foot building at Four Points in Austin, Texas. The project is 100% preleased to a single tenant under a 10-year lease. Estimated costs, including $2.1 million of existing land basis, total $48.2 million, with delivery anticipated in Q1 2019. The Company expects to fund the project with available cash balances and/or funds from its Credit Facility.

On October 16, 2017, the Company acquired through ground leases 3025 and 3001 Market Street, known as One Drexel Plaza and Drexel Square, respectively, located in Philadelphia, Pennsylvania, containing 282,709 rentable square feet, for a gross sales price of $35.0 million. The acquisition is an asset acquisition under ASU 2017-01. As such, we capitalized $2.7 million of transaction costs. Under the purchase agreement, the Company is obligated to incur a minimum of $8.0 million to improve One Drexel Plaza and Drexel Square over the next 24 months.

On October 18, 2017, DRA (G&I) Austin (the “DRA Austin Venture”), a real estate venture in which the Company holds a 50% interest, sold five office portfolios in Austin, Texas containing 1,164,496 square feet for a gross sales price of $333.3 million. Prior to the sale, the properties were encumbered by $151.0 million of mortgage debt. The Company’s share of cash proceeds, after payment of the DRA Austin Venture’s share of debt, closing costs and prorations was $86.4 million. The Company currently estimates its total gain on the transaction is approximately $52 million.

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~~might cause actual results to differ materially from our expectations are set forth in ~~our Annual Report under the heading “Forward-Looking Statements” in our Annual Report on Form 10-K for the year ended December 31, 2016.~~

~~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, ~~2016,~~2023. Accordingly, 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, 2017~~March 31, 2024 and December 31, ~~2016~~2023 and for the ~~three-~~three months ended March 31, 2024 and ~~nine-month periods ended September 30, 2017 and 2016~~2023 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.

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2024, we owned and managed properties within ~~five markets;~~four segments: (1) Philadelphia ~~Central Business District (“CBD”),~~CBD, (2) Pennsylvania Suburbs, (3) ~~Metropolitan Washington, D.C. (4)~~ Austin, Texas, and ~~(5)~~(4) 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 ~~Metropolitan Washington, D.C. segment includes properties in Northern Virginia, Washington, D.C. and southern Maryland. The~~ Austin, Texas segment includes properties in the City of Austin, Texas. The Other segment includes properties located in the District of Columbia, Northern Virginia, Southern Maryland, Camden County, in New Jersey and ~~properties in~~ New Castle County, in Delaware. ~~On February 2, 2017, we sold our last two remaining properties located in California, which was previously included in our Other segment. See Note 3,~~ ~~“Real Estate Investments,”~~ ~~to our Consolidated Financial Statements for further information.~~ In addition to the ~~five markets,~~four segments, 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.

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.~~unconsolidated 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 ~~part of~~core to our ~~Core Properties,~~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, parking, and ~~other commercial~~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 reduce the availability of financing and potentially increase borrowing costs; lead to declines in demands for office and other commercial space and result in rental rate declines; and adversely impact tenant credit quality.

Overall economic conditions, including but not limited to labor shortages, supply chain constraints, inflation, rising interest rates and deteriorating financial and credit markets, ~~could~~ have had 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~~could impact 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 ~~traditional term,~~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, 2017~~March 31, 2024 was ~~92.0%~~87.7% compared to ~~92.7%~~89.0% at ~~September 30, 2016.~~

March 31, 2023.


	Three Months Ended March 31,
	2024			2023
Leasing Activity
Core Properties (1):
Total net rentable square feet owned	12,698,115			12,791,041
Occupancy percentage (end of period)	87.7		%	89.0		%
Average occupancy percentage	87.7		%	88.9		%
Total Portfolio, less properties in development/redevelopment (2):
Tenant retention rate (3)	67.3		%	45.2		%
New leases and expansions commenced (square feet)	129,325			66,251
Leases renewed (square feet)	163,595			108,793
Net (negative) absorption (square feet)	(48,938)			(109,287)
Percentage change in rental rates per square foot (4):
New and expansion rental rates	16.8		%	13.8		%
Renewal rental rates	16.9		%	15.2		%
Combined rental rates	16.9		%	14.9		%
Weighted average lease term for leases commenced (years)	7.4			7.4
Capital Costs Committed (5):
Leasing commissions (per square foot)	$	11.55		$	11.36
Tenant Improvements (per square foot)	$	36.19		$	12.12
Total capital per square foot per lease year	$	4.67		$	2.92

(2)Includes leasing related to completed developments and ~~2016:~~

Three Months Ended September 30,

Nine Months ended September 30,

2017

2016

2017

2016

Leasing Activity

   Core Properties (1):

     Total net rentable square feet owned

15,582,963

16,187,682

15,582,963

16,187,682

     Occupancy percentage (end of period)

92.0
%

92.7
%

92.0
%

92.7
%
     Average occupancy percentage

91.6
%

92.4
%

91.8
%

92.6
%
   Total Portfolio, less properties in development (2):

     Retention rate

81.4
%

79.6
%

72.8
%

67.1
%
     New leases and expansions commenced (square feet)

274,647

240,582

610,520

734,075

     Leases renewed (square feet)

250,306

182,146

1,114,591

733,902

     Net absorption (square feet)

69,092

24,785

(97,021
)

(190,585
)
     Percentage change in rental rates per square feet (3)

       New and expansion rental rates

5.7
%

9.1
%

6.8
%

14.9
%
       Renewal rental rates

12.4
%

6.7
%

3.7
%

9.4
%
       Combined rental rates

10.7
%

7.9
%

4.1
%

11.4
%
     Capital Costs Committed (4):

       Leasing commissions (per square feet)
$
6.33

$
5.65

$
3.79

$
3.91

       Tenant Improvements (per square feet)
$
13.21

$
19.99

$
9.24

$
10.44

       Weighted average lease term (years)

10.0

6.9

7.3

5.8

       Total capital per square foot per lease year
$
2.43

$
3.88

$
1.54

$
2.39

~~(1)~~

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

redevelopments, recently completed not yet stabilized, and sold properties.

~~(2)~~

~~Includes leasing related to completed developments and redevelopments, as well as sold properties.~~

(3)Calculated as percentage of total square feet.

~~(3)~~

~~Rental rates include base rent plus reimbursement for operating expenses and real estate taxes.~~

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

~~(4)~~

~~Calculated on a weighted average basis.~~

(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 ~~0.4%~~3.3% of our aggregate final annualized base rents ~~which assumes the base rent at the end~~as of March 31, 2024 (representing approximately 4.4% of the ~~lease term, as of September 30, 2017 (representing approximately 0.5% of the net~~occupied rentable square feet of the properties) are scheduled to expire without penalty ~~in 2017.~~during the remainder of 2024. We maintain an active dialogue with our tenants in an effort to maximize lease renewals. For our Core Properties, the retention rate for the three- and nine-month periods ended September 30, 2017 was 81.4% and 72.8% compared to a retention rate of 79.6% and 67.1% for the three- and nine-months period ended September 30, 2016. If we are unable to renew leases or relet space under expiring leases, at anticipated rental rates, or if our tenants terminate their leases early, our ~~financial position, net income and~~ 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. ~~We regularly evaluate~~Our management evaluates our ~~accounts~~accrued rent receivable reserve policy in light of our tenant base and general and local economic conditions. Our ~~accounts~~accrued rent receivable allowance was ~~$17.0~~$2.4 million or ~~8.6%~~1.3% of ~~total receivables (including~~our accrued rent ~~receivables)~~receivable balance as of ~~September 30, 2017~~March 31, 2024, compared to ~~$16.1~~$2.7 million or ~~9.0%~~1.4% of ~~total receivables (including~~our accrued rent ~~receivables)~~receivable balance as of December 31, ~~2016.~~

2023.

If economic conditions deteriorate, including as a result of inflation and rising interest rates, we may experience increases in past due accounts, defaults, lower occupancy and reduced effective rents. ~~This condition~~These conditions would negatively affect our future net income and cash flows and could have a material adverse effect on our financial condition.

Table of Contents

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, 2017,~~March 31, 2024, the following active development project, within our consolidated portfolio, remains under construction in progress (dollars, in thousands):

Property/Portfolio Name

Location

Expected Completion Date

Activity Type

Approximate Square Footage

Estimated Costs

Construction Loan Financing

Amount Funded

155 King of Prussia Road

Radnor, PA

Q4 2024

Development

144,685

80,000

50,000

49,809

As of March 31, 2024, the following recently completed development project was not yet stabilized (dollars, in thousands):

Property/Portfolio Name

Location

Completion Date

Activity Type

Approximate Square Footage

Estimated Costs

Amount Funded

250 King of Prussia Road (a)

Radnor, PA

Q3 2022 (b)

Redevelopment

205,803

103,680

88,354

(a)Estimated project costs include $20.6 million of existing property basis. The base building was completed in the third quarter of 2022. The remaining amounts unfunded relate to tenant fit-out work to be completed.

(b)The occupied portions of the office building were placed into service throughout 2022 and 2023.

In addition to the properties listed above, we have classified one parking facility in Philadelphia, Pennsylvania as redevelopment.

As of March 31, 2024, the following unconsolidated real estate venture development projects remain under construction ~~(in thousands, except square footage/acreage and number of buildings)~~in progress (dollars, in thousands):

~~Wholly Owned Developments/Redevelopments:~~

Construction Commencement Date

Expected Completion

Activity Type

Property/Portfolio Name

Location

Number of Buildings

Square Footage/ Units

Estimated Costs

Amount Funded

Q2 2014

(a)

Development

30th & Walnut Streets (FMC Tower at Cira Centre South)

Philadelphia, PA

1

625,000 / 268 units

$
400,000

$
394,700

Q3 2017

Q3 2018

Development

Subaru National Training Center

Camden, NJ

1

83,000

44,300

12,400

Q4 2016

Q4 2017

Redevelopment

Broadmoor - Building 6

Austin, Texas

1

144,000

34,500

(b)

24,600

TBD

Q3 2018

Redevelopment

500 North Gulph Road

King Of Prussia, PA

1

100,000

21,200

(c)

4,500

Q4 2017

Q1 2019

Development

Four Points Building 3

Austin, TX

1

165,000

48,200

(d)

2,100

TBD

Q1 2019

Redevelopment

426 Lancaster Avenue

Devon, PA

1

56,000

12,000

(e)

4,900

Total

6

1,173,000

$
560,200

$
443,200

~~(a)~~

The office component was substantially completed as of the third quarter of 2016 and is included in Recently Completed/Acquired Properties at September 30, 2017. The residential and restaurant components remain in Development/Redevelopment Properties at September 30, 2017. See “~~Results of Operations” section below.~~


Property/Portfolio Name	Location	Expected Completion Date	Approximate Square Footage	Estimated Costs		Amount Funded		Construction Loan Financing		Our Share Remaining to be Funded		Partner's Share Remaining to be Funded
3025 JFK Boulevard (60%)	Philadelphia, PA	Q4 2023	(a)	$	300,000	$	268,135	$	186,727	$	5,664	$	—
3151 Market Street (65%)	Philadelphia, PA	Q3 2024	441,000	$	316,909	$	163,208	(b)		(b)		$	—
One Uptown - Office (56%)	Austin, TX	Q1 2024	362,679	$	201,616	$	138,177	$	121,650	$	—	$	—
One Uptown - Multifamily (50%)	Austin, TX	Q3 2024	341 Units	$	144,029	$	107,956	$	85,000	$	—	$	—

~~(b)~~

Building vacated by anchor tenant in the office complex as part of an overall lease restructuring. We are renovating the property as the first step in the repositioning of the Broadmoor Campus. Total project costs include $18.5 million of existing property basis.

~~(c)~~

~~Building was vacated during the fourth quarter of 2016. Current plans are to renovate and amenitize the property. Total project costs include $4.5 million of existing property basis.~~

~~(d)~~

~~Project is pre-leased to a single tenant. Total project costs include $2.1 million of land basis existing at project inception.~~

~~(e)~~

~~Property was vacated during the third quarter of 2017. Current plans are to renovate this building. Total project costs include $4.9 million of existing property basis.~~

~~In addition, the above table does not include amounts related to the Schuylkill Yards Project. See below under “Other Development Activities” for further details.~~

~~Other Development Activities:~~

On December 3, 2015, we entered into an agreement as development manager to construct Subaru of America’s (“Subaru”) corporate headquarters (the “Subaru Headquarters Development”), an office property containing five floors and approximately 250,000(a)Mixed used building with 428,000 rentable square feet ~~on land owned by Subaru~~consisting of 200,000 square feet of life science/innovation office, 219,000 square feet of residential (326 units), and ~~located in Camden, New Jersey.~~9,000 square feet of retail.

(b)The development budget contemplated receipt of a construction loan of approximately $174.3 million, reflecting a 55% loan to value ratio and, as of the date of this Form 10-Q, no construction loan has been obtained and there can be no assurance that a loan will be obtained. In ~~addition to development fees,~~ the ~~agreement provides us the ability to earn additional profit if total project~~event that costs are ~~less than~~incurred before a construction loan has been obtained, the ~~not-to-exceed (“NTE”) amount.~~ Company expects to fund such costs through its credit facilities and cash on hand.

As of ~~September 30, 2017, we estimate that we will earn $2.6 million~~the date of residual profit upon completion of the Subaru Headquarters Development, of which $2.1 million was recognized as of September 30, 2017. For the three- and nine-month periods ended September 30, 2017, we earned $0.8 million and $1.6 million, respectively. The NTE amount, currently at $79.4 million, may be adjusted by change orders agreed upon by both Subaru and us. If construction costs exceed the NTE amount, we are obligated to pay the excess and the residual profit recognized will be reversed. As of September 30, 2017, $57.2 million of the project costs had been funded, and we do not expect to incur costs in excess of the NTE amount. We currently expect the development to be substantially complete during the fourth quarter of 2017 with the remaining $0.5 million recognized over the remaining development period.

Also on December 3, 2015, we entered into an agreement to construct an 83,000 square foot build-to-suit service center (the “Subaru NSTC Development”) on land parcels owned by us for Subaru as the single tenant. We currently expect to deliver the building during the third quarter of 2018. At September 30, 2017, $12.4 million of the project costs, totaling $44.3 million, had been funded. This project is currently consolidated in our financial statements, whereas the Subaru Headquarters Development is a third party development and is not consolidated in our financial statements. See Item 1., “~~Business – Other Development Activities,” included in our Annual~~this Quarterly Report on Form ~~10-K for~~10-Q, the ~~fiscal year ended December 31, 2016 for further information on this development.~~

~~As of September 30, 2017, we remain in~~3151 Market Street Venture has not secured a construction loan. Under the ~~planning phase of our master developer~~partnership agreement with ~~Drexel University for the Schuylkill Yards Project. For further information relating to this development see Item 1.,~~ ~~"Business - Developments"~~ ~~included in~~ our ~~Annual Report on Form 10-K for the fiscal year ended December 31, 2016.~~

~~Reference is made to our Annual Report on Form 10-K for the year ended December 31, 2016 for project overviews, as well as risks associated with these development projects. See Item 2.,~~ ~~"Liquidity and Capital Resources – Contractual Obligations"~~ ~~below~~partner in this ~~Item 2 for contractual commitments relating to our ongoing development projects.~~

~~Land Holdings~~

As of September 30, 2017, we owned approximately 214 acres of undeveloped land and held options to purchase approximately 60 additional acres of undeveloped land. As market conditions warrant, we will seek to opportunistically dispose of those parcels that we do not anticipate developing. For parcels of land that we ultimately develop, we will be subject to risks and costs associated with land development, including building moratoriums and the inability to obtain necessary zoning, land-use, building, occupancy and other required governmental approvals, construction cost increases or overruns and construction delays, and insufficient occupancy rates and rental rates. As of September 30, 2017, the total potential development that these land parcels could support amounted to 15.7 million square feet of development, inclusive of the options to purchase approximately 60 additional acres of undeveloped land.

~~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 where 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~~venture, after our ~~direct experience with~~partner has funded the ~~properties and their markets.~~

~~We generally consider assets to be “held for sale” when the transaction has been approved by our Board~~remaining balance 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 designatedits capital commitment, 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 sale 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 nine-month periods ended September 30, 2017 and 2016, we capitalized $0.4 million and $1.5 million, respectively.

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. Our estimates of value for each investment (particularly in commercial real estate joint ventures) 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~~

~~Acquisition~~

On July 28, 2017, we acquired an office building containing 58,587 rentable square feet located at 3000 Market Street, in Philadelphia, Pennsylvania, for $32.7 million. The acquisition was the Section 1031 exchange receiver for the sale of Concord Airport Plaza. See property disposition table below.

The purchase of 3000 Market Street is an asset acquisition under ASU 2017-01, which we early adopted as of January 1, 2017. As such, we capitalized $0.7 million of acquisition-related costs and allocated the purchase price, consisting of the contractual sales price of $32.0 million and the acquisition related costs, to the tangible and intangible assets. We utilized a number of sources in making estimates of fair value for purposes of allocating the purchase price to tangible and intangibles assets acquired. The purchase price has been allocated as follows (in thousands):

July 18, 2017

Building, land and improvements

$
31,728

Intangible assets acquired (a)

2,838

Below market lease liabilities assumed (b)

(1,818
)

$
32,748

~~(a)~~

~~Weighted average amortization period of 5.9 years.~~

~~(b)~~

~~Weighted average amortization period of 6.0 years.~~

3000 Market Street contributed approximately $0.3 million of revenue and a nominal amount of net income, included in our consolidated income statements, for the period from July 28, 2017 through September 30, 2017.

~~Dispositions~~

~~We sold the following twelve office properties, one retail property and one mixed-use property during the nine-month period ended September 30, 2017 (dollars in thousands).~~

Disposition Date

Property/Portfolio Name

Location

Type

Number of Properties

Rentable Square Feet

Sales Price

Net Proceeds on Sale

Gain (Loss) on Sale (a)

Occupancy % at Date of Sale

June 27, 2017

Two, Four A, Four B and Five Eves Drive (Evesham Corporate Center)

Marlton, NJ

Office

4

134,794

$
9,700

$
8,650

$
(325
)
(b)

91.6%

June 12, 2017

7000 Midlantic Drive

Mount Laurel, NJ

Retail

1

10,784

8,200

7,714

1,413

100.0%

March 30, 2017

200, 210 & 220 Lake Drive East (Woodland Falls)

Cherry Hill, NJ

Office

3

215,465

19,000

17,771

(249
)
(c)

93.3%

March 15, 2017

Philadelphia Marine Center (Marine Piers)

Philadelphia, PA

Mixed-use

1

181,900

21,400

11,182

6,498

(d)

100.0%

March 13, 2017

11700, 11710, 11720 & 11740 Beltsville Drive (Calverton)

Beltsville, MD

Office

3

313,810

9,000

8,354

-

(e)

49.7%

February 2, 2017

1200 & 1220 Concord Avenue (Concord Airport Plaza)

Concord, CA

Office

2

350,256

33,100

32,010

551

(f)

100.0%

Total Dispositions

14

1,207,009

$
100,400

$
85,681

$
7,888

~~(a)~~

~~Gain/(Loss) on Sale is net of closing and other transaction related costs.~~

~~(b)~~

~~During the first quarter of 2017, we recognized a $1.0 million impairment related to these properties. The loss on sale represents closing costs.~~

~~(c)~~

~~During the fourth quarter of 2016, we recognized a $7.3 million impairment related to these properties. The loss on sale represents closing costs.~~

~~(d)~~

On March 15, 2017, we sold our sublease interest in the Piers at Penn’s Landing (the “Marine Piers”), which includes 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, which will be paid in two installments. On the closing date, the buyer paid $12.0 million in cash. On the second purchase price installment date, the buyer will pay $9.4 million. The second purchase price installment is due on (a) January 31, 2020, in the event that the tenant at the Marine Piers does not exercise its existing option to extend the term of the sublease or (b) January 15, 2024, in the event that the tenant does exercise its current extension option to extend the term of the sublease. In accordance with ASC 360-20, ~~Real Estate Sales~~, we determined that it is appropriate to account for the sales transaction under the cost recovery method. We received cash proceeds of $11.2 million, after closing costs and prorations, and the net book value of the Marine Piers was $4.7 million, resulting in a gain on sale of $6.5 million. The remaining gain on sale of $9.4 million will be recognized on the second purchase price installment date. The Marine Piers was classified as mixed-use within our property count.

~~(e)~~

During the fourth quarter of 2016, we recognized a $3.0 million impairment related to these properties. During the first quarter of 2017, there was a price reduction of $1.7 million under the agreement of sale. As such, an additional impairment of $1.7 million was recognized during the first quarter of 2017.

~~(f)~~

During the fourth quarter of 2016, we recognized an $11.5 million impairment related to these properties. This sale is designated as a like-kind exchange under Section 1031 of the IRC and, as such, the proceeds, totaling $32.0 million after closing costs and prorations, were deposited with a Qualified Intermediary, as defined under the IRC. The proceeds received at closing were recorded as “Other assets” in our consolidated balance sheet. During the third quarter of 2017, we acquired 3000 Market Street in Philadelphia, Pennsylvania using the full balance of the Section 1031 proceeds. See ~~“Acquisition”~~ ~~section above.~~

~~In addition to the amounts~~shown in the table above, then, until a construction loan has been obtained, we ~~recorded $0.5 million gain during~~will be obligated to fund the ~~first quarter~~balance of ~~2017 from the receipt of additional cash from the disposition of Cira Square during 2016. For further information relating to this sale, see Note 3, “Real Estate Investments~~,”construction costs incurred in the ~~notes to the audited financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2016.~~

~~We sold the following land parcels during the nine-month period ended September 30, 2017 (dollars in thousands):~~

Disposition Date

Property/Portfolio Name

Location

Number of Parcels

Acres

Sales Price

Net Proceeds on Sale

Gain on Sale

September 13, 2017

50 E. Swedesford Square

Malvern, PA

1

12.0

$
7,200

$
7,098

$
882

July 18, 2017

Bishop's Gate

Mount Laurel, NJ

1

49.5

6,000

5,640

71

(a)
April 28, 2017

Garza Ranch - Multi-family

Austin, TX

1

8.4

11,800

11,560

-

(b)
February 15, 2017

Gateway Land - Site C

Richmond, VA

1

4.8

1,100

1,043

-

(c)
January 30, 2017

Garza Ranch - Hotel

Austin, TX

1

1.7

3,500

3,277

-

(b)
Total Dispositions

5

76.4

$
29,600

$
28,618

$
953

project development.

~~(a)~~

During the fourth quarter of 2016, we recognized an impairment of $3.0 million. During the second quarter of 2017, we recognized an additional impairment of $0.3 million, representing closing costs. See ~~“Land Impairment”~~ ~~section below.~~

~~(b)~~

We have a continuing involvement through a completion guaranty, which requires us as developer to complete certain infrastructure improvements on behalf of the buyers of the land parcels. The cash received at settlement was recorded as “Deferred income, gains and rent” on our consolidated balance sheet and we will recognize the sale once the infrastructure improvements are complete. See Item 2., “~~Management’s Discussion and Analysis of Financial Condition and Results of Operations – Contractual Obligations” for further discussion of the infrastructure improvements.~~

~~(c)~~

~~During the fourth quarter of 2016, we recognized a nominal impairment related to this land parcel.~~

~~Held for Sale~~

~~The following is a summary of properties classified as held for sale but which did not meet the criteria to be classified within discontinued operations at September 30, 2017 (in thousands):~~

~~(a)~~

~~Office property containing 150,000 rentable square feet located in the Pennsylvania Suburbs segment.~~

~~(b)~~

~~Five office properties containing 252,802 rentable square feet located in the Pennsylvania Suburbs segment.~~

~~Land Impairment~~

As of September 30, 2017, we evaluated the recoverability of the carrying value of our land parcels that triggered assessment. Based on the analysis, no impairment charges were identified during the three-month period ended September 30, 2017.

As of June 30, 2017, we determined that we would not recover the carrying value, less cost of sale, of one land parcel, consisting of 50 acres that was classified as held for sale as of June 30, 2017. Accordingly, we recorded an impairment charge of $0.3 million at June 30, 2017, reducing the aggregate carrying value of the land parcel from $5.9 million to its estimated fair value of $5.6 million. The fair value measurement is based on pricing in the purchase and sale agreement for the property.

~~Held for Use Impairment~~

As of September 30, 2017, we evaluated the recoverability of the carrying value of our properties that triggered assessment. Based on the analysis, no impairment charges were identified during the three-month period ended September 30, 2017.

As of March 31, 2017, we evaluated the recoverability of the carrying value of our properties that triggered assessment under the undiscounted cash flow model. Based on our evaluation, it was determined that due to the reduction in our intended hold period of four properties located in the Other segment, we would not recover the carrying values of these properties. Accordingly, we recorded impairment charges on these properties of $1.0 million at March 31, 2017, reflected in the results for the nine-month period ended

September 30, 2017, reducing the aggregate carrying values of the properties from $10.2 million to their estimated fair value of $9.2 million. We measured these impairments based on a discounted cash flow analysis, using a hold period of 10 years and residual capitalization rates and discount rates of 9.00% and 9.25%, respectively. The results were comparable to indicative pricing in the market.

During the three-month period ended September 30, 2016, there was no provision for impairment recognized. During the nine-month period ended September 30, 2016, we recognized a provision for impairment of $13.1 million. For further information relating to these impairments, see Note 3, “~~Real Estate Investments,” in the notes to the audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016.~~

The sales of properties, land and the land parcel held for sale do not represent a strategic shift that has a major effect on our operations and financial results. Accordingly, the operating results of these properties remain classified within continuing operations for all periods presented.

~~Brandywine AI Venture – 7101 Wisconsin Property Sale~~

On December 20, 2011, we formed a real estate venture, Brandywine - AI Venture LLC, (the "BDN-AI Venture"), with Current Creek Investments, LLC ("Current Creek"), a wholly-owned subsidiary of Allstate Insurance Company. We and Current Creek each own a 50% interest in the BDN-AI Venture. The BDN-AI Venture owned six office properties, which we contributed three properties to the BDN-AI Venture upon its formation and three properties that were acquired by the BDN-AI Venture subsequent to its formation. The contributed office properties contain an aggregate of 587,317 net rentable square feet and consist of 3130 and 3141 Fairview Park Drive, both located in Falls Church, Virginia, and 7101 Wisconsin Avenue located in Bethesda, Maryland. On July 10, 2012, the BDN-AI Venture acquired three office properties containing an aggregate 510,202 net rentable square feet and consist of 1010 Wayne Avenue, 1100 Wayne Avenue and 8484 Georgia Avenue located in Silver Spring, Maryland.

On September 14, 2017, the BDN-AI Venture sold 7101 Wisconsin Avenue containing 230,904 rentable square feet located in Bethesda, Maryland, for a gross sales price of $105.7 million. At the time of sale, the property was encumbered by a $37.4 million of first mortgage financing, which was repaid in full resulting in a debt prepayment penalty of $0.8 million. Subsequent to the sales transaction, first mortgage payoff and closing costs, BDN-AI Venture received cash proceeds of $63.6 million. We were allocated 50% for our interest and received net cash proceeds of $31.8 million and recognized a $13.8 million gain on the real estate venture’s transaction. Subsequent to the sale transaction, the BDN-AI Venture owned 5 properties consisting of 874,479 rentable square feet and our equity method investment balance in the BDN-AI Venture was $49.1 million.

~~Brandywine AI Venture – Other Than Temporary Impairment~~

Each quarter, we estimate the fair value of our ownership interest in the Real Estate Ventures, considering the estimated fair value of the real estate assets owned by the Real Estate Ventures and the related indebtedness, as well as the working capital assets and liabilities of the Real Estate Ventures and the terms of the related Real Estate Venture agreements. Our estimates of fair value of the real estate assets incorporate a number of assumptions that are subject to economic and market uncertainties including demand for space, competition for tenants, current market rental rates, changes in market rental rates, operating costs, capitalization rates, holding periods and discount rates. For these assumptions, we considered our experience and historical performance in the various markets and data provided by market research organizations. In assessing whether the impairment is other than temporary, we consider several factors. The longevity and severity of the impairment are considered as well as the expected time for recovery of value to occur, if ever.

As of September 30, 2017, we evaluated the recoverability of our investment basis in BDN-AI Venture utilizing a discounted cash flow model. Based on our evaluation of the fair value of the five remaining properties within BDN-AI Venture subsequent to the disposition of 7101 Wisconsin Avenue, it was determined that a continuing situation of weak demand for space and intense competition for tenants was leading to our share of fair value of the remaining properties to be less than our investment basis in the unconsolidated real estate venture. This continuing and sustained impairment in value, as suggested by the discounted cash flows and the other assessment considerations described above, caused us to conclude that the decline in value was other than temporary for our investment in the BDN-AI Venture. During the nine-month period ended September 30, 2017, our investment basis was $49.1 million, before a $4.8 million impairment charge. Subsequent to the impairment charge, our net basis was $44.3 million.

Determining the current fair value of our investment is based on a number of factors that are difficult to predict. The market may decline further and future impairment charges may be needed. We measured this impairment based on a discounted cash flow analysis, using a hold period of 10 years, a residual capitalization rate of 7.5% and discount rates ranging from 7.8% to 8.5%.

~~Parc at Plymouth Meeting Venture~~

On January 31, 2017, we sold our 50% interest in TB-BDN Plymouth Apartments, L.P., a 50/50 real estate venture with Toll Brothers, at a gross sales value of $100.5 million. The venture developed and operated a 398-unit multi-family complex in Plymouth Meeting, Pennsylvania encumbered by a $54.0 million construction loan. The construction loan was repaid commensurate with the sale of our 50% interest. As a result, we are no longer subject to a $3.2 million payment guarantee on the construction loan. The cash proceeds, after the payment of our share of the debt and closing costs, were $27.2 million. The carrying amount of our investment at the time of sale was $12.6 million, resulting in a $14.6 million gain on sale of interest in the real estate venture.

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).~~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, ~~2016~~2023 contains a discussion of our critical accounting policies. There have been no significant changes in our critical accounting policies since December 31, ~~2016. See also Note 2, "Basis~~2023.

Table of ~~Presentation," in our unaudited consolidated financial statements for the nine-month period ended September 30, 2017, set forth herein.~~

Contents

RESULTS OF OPERATIONS

The following discussion is based on our consolidated financial statements for the ~~three-~~three months ended March 31, 2024 and ~~nine-month periods ended September 30, 2017 and 2016.~~2023. 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 and bad debt expense.~~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~~13, “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~~13, “Segment Information,,"” to our ~~consolidated financial statements~~Consolidated Financial Statements for a reconciliation of NOI to our consolidated net income as defined by GAAP.

Comparison of the ~~Three-Month Periods~~Three Months Ended ~~September 30, 2017~~March 31, 2024 and ~~September 30, 2016~~

March 31, 2023

The ~~table below shows selected operating information~~following comparison for the ~~“Same Store Property Portfolio” and~~three months ended March 31, 2024 to the ~~“Total Portfolio.” The~~ three months ended March 31, 2023, makes reference to the effect of the following:

(a)“Same Store Property Portfolio, ~~consists of 83~~” which represents 68 properties containing an aggregate of approximately ~~14.3~~12.4 million net rentable square feet, and represents properties that we owned and consolidated for the ~~entire~~ three-month periods ended ~~September 30, 2017~~March 31, 2024 and ~~2016.~~2023. The ~~Total~~Same Store Property Portfolio includes ~~the effects of other~~ properties ~~that were either placed into service,~~ acquired or ~~redeveloped after~~placed in service on or prior to January 1, ~~2016~~2023 and ~~disposed of prior to September 30, 2017 or~~owned and consolidated through March 31, 2024, excluding properties classified as held for sale, ~~as of September 30, 2017.~~

(b)“Total Portfolio,” which represents all properties owned and consolidated by us during the three months ended March 31, 2024 and 2023,

(c)“Recently Completed/Acquired Properties,” which represents two properties placed into service or acquired on or subsequent to January 1, 2023,

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

(e)“Q1 2023 through Q1 2024 Dispositions,” which represents five properties disposed of from the Same Store Property Portfolio to the Total Portfolio net income (i.e., all properties owned by us during the three-month periods ended September 30, 2017 and 2016) by providing information for the properties which were acquired, placed into service, under development or redevelopment and administrative/elimination information for the three-month periods ended September 30, 2017 and 2016.

~~The Total Portfolio net income presented in the table is equal to the net income~~January 1, 2023 through March 31, 2024.

Table of ~~the Parent Company and the Operating Partnership.~~

Contents

Comparison of the three months ended ~~September 30, 2017~~March 31, 2024 to the three months ended ~~September 30, 2016~~

Same Store Property Portfolio

Recently Completed/Acquired Properties (a)

Development/Redevelopment Properties (b)

Other/(Eliminations) (c)

Total Portfolio

(dollars and square feet in thousands)

2017

2016

Increase/ (Decrease)

2017

2016

2017

2016

2017

2016

2017

2016

Increase/ (Decrease)

Revenue:

Cash rents

$
88,334

$
84,636

$
3,698

$
2,732

$
1,734

$
1,919

$
458

$
1,103

$
7,747

$
94,088

$
94,575

$
(487
)
Straight-line rents

1,900

5,427

(3,527
)

6,066

3,173

-

(11
)

(9
)

(133
)

7,957

8,456

(499
)
Above/below market rent amortization

451

1,518

(1,067
)

60

(13
)

-

-

1

1

512

1,506

(994
)
Total rents

90,685

91,581

(896
)

8,858

4,894

1,919

447

1,095

7,615

102,557

104,537

(1,980
)
Tenant reimbursements

16,031

15,517

514

1,106

332

5

48

97

1,427

17,239

17,324

(85
)
Termination fees

200

133

67

-

466

-

-

-

12

200

611

(411
)
Third party management fees, labor reimbursement and leasing

-

-

-

-

-

-

-

6,918

6,248

6,918

6,248

670

Other

633

376

257

7

6

602

-

282

592

1,524

974

550

Total revenue

107,549

107,607

(58
)

9,971

5,698

2,526

495

8,392

15,894

128,438

129,694

(1,256
)
Property operating expenses

31,351

30,968

(383
)

2,321

1,882

2,681

799

494

3,601

36,847

37,250

403

Real estate taxes

10,025

9,920

(105
)

266

177

193

86

751

1,383

11,235

11,566

331

Third party management expenses

-

-

-

-

-

-

-

2,619

2,501

2,619

2,501

(118
)
Net operating income

66,173

66,719

(546
)

7,384

3,639

(348
)

(390
)

4,528

8,409

77,737

78,377

(640
)
Depreciation and amortization

35,669

41,261

5,592

3,735

2,624

1,446

215

1,579

2,856

42,429

46,956

4,527

General & administrative expenses

-

-

-

-

-

-

-

5,813

5,515

5,813

5,515

(298
)
Operating income (loss)

$
30,504

$
25,458

$
5,046

$
3,649

$
1,015

$
(1,794
)

$
(605
)

$
(2,864
)

$
38

$
29,495

$
25,906

$
3,589

Number of properties

83

83

4

4

91

Square feet

14,331

14,331

1,252

391

15,974

Core Occupancy % (d)

92.7
%

94.5
%

83.7
%

Other Income (Expense):

Interest income

79

291

(212
)
Interest expense

(19,732
)

(20,814
)

1,082

Interest expense — Deferred financing costs

(577
)

(645
)

68

Interest expense —Financing obligation

-

(156
)

156

Equity in loss of real estate ventures

(5,723
)

(7,254
)

1,531

Net loss on disposition of real estate

-

(104
)

104

Net gain on sale of undepreciated real estate

953

188

765

Net gain on real estate venture transactions

13,758

10,472

3,286

Income tax benefit

793

-

793

Net income

$
19,046

$
7,884

$
11,162

Net income attributable to Common Shareholders of Brandywine Realty Trust

$
0.11

$
0.03

$
0.08

~~EXPLANATORY NOTES~~

~~(a)~~

~~Results include: three properties recently completed and one acquisition.~~

March 31, 2023


	Same Store Property Portfolio										Recently Completed/Acquired Properties				Development/Redevelopment Properties				Other (Eliminations) (a) (c)				Total Portfolio
(dollars and square feet in millions except per share amounts)	2024			2023			$ Change		% Change		2024		2023		2024		2023		2024		2023		2024		2023		$ Change		% Change
Revenue:
Rents	$	111.4		$	112.6		$	(1.2)	(1.1)	%	$3.9		$	0.9	$	—	$	—	$	3.7	$	7.3	$	119.0	$	120.8	$	(1.8)	(1.5)	%
Third party management fees, labor reimbursement and leasing	—			—			—		—	%	—		—		—		—		5.9		6.0		5.9		6.0		(0.1)		(1.7)	%
Other	0.3			0.3			—		—	%	—		—		—		—		1.3		2.1		1.6		2.4		(0.8)		(33.3)	%
Total revenue	111.7			112.9			(1.2)		(1.1)	%	3.9		0.9		—		—		10.9		15.4		126.5		129.2		(2.7)		(2.1)	%
Property operating expenses	29.3			30.5			(1.2)		(3.9)	%	0.8		0.1		—		—		2.1		3.0		32.2		33.6		(1.4)		(4.2)	%
Real estate taxes	12.0			13.4			(1.4)		(10.4)	%	0.3		0.1		—		—		0.3		1.1		12.6		14.6		(2.0)		(13.7)	%
Third party management expenses	—			—			—		—	%	—		—		—		—		2.5		2.6		2.5		2.6		(0.1)		(3.8)	%
Net operating income	70.4			69.0			1.4		2.0	%	2.8		0.7		—		—		6.0		8.7		79.2		78.4		0.8		1.0	%
Depreciation and amortization	38.7			39.4			(0.7)		(1.8)	%	2.3		—		—		—		4.0		5.7		45.0		45.1		(0.1)		(0.2)	%
General & administrative expenses	—			—			—		—	%	—		—		—		—		11.1		9.5		11.1		9.5		1.6		16.8	%


Net gain on sale of undepreciated real estate																							—		(0.8)		0.8		(100.0)	%
Operating income (loss)	$	31.7		$	29.6		$	2.1	7.1	%	$0.5		$	0.7	$	—	$	—	$	(9.1)	$	(6.5)	$	23.1	$	24.6	$	(1.5)	(6.1)	%
Number of properties	68			68							2				2								72
Square feet	12.4			12.4							0.4				0.1								13.2
Core Occupancy % (b)	88.2		%	88.0		%					76.9	%
Other Income (Expense):
Interest and investment income																							0.4		0.5		(0.1)		(20.0)	%
Interest expense																							(25.0)		(22.7)		(2.3)		10.1	%
Interest expense — Deferred financing costs																							(1.1)		(1.0)		(0.1)		10.0	%

Equity in loss of unconsolidated real estate ventures																							(13.6)		(6.2)		(7.4)		119.4	%





Net loss																							$	(16.2)	$	(4.8)	$	(11.4)	237.5	%
Net loss attributable to Common Shareholders of Brandywine Realty Trust																							$	(0.10)	$	(0.03)	$	(0.07)	233.3	%

~~(b)~~

~~Results include: one development, three redevelopment properties and the residential and restaurant components of the FMC Tower (not included in the property count).~~

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

~~(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.

(b)Pertains to Core Properties.

~~(d)~~

~~Pertains to Core Properties (i.e. not under development, redevelopment, or re-entitlement).~~

(c)Held for use impairment charges are excluded from Same Store Property Portfolio operating income and presented in Other (Eliminations).

Total Revenue

~~Cash rents~~

Rents from the Total Portfolio decreased ~~by $0.5 million during~~primarily as a result of the ~~third quarter of 2017 compared to the third quarter of 2016, primarily attributable to:~~

following:

•$~~5.8~~2.4 million decrease due to the ~~disposition~~sales of ~~21 properties from~~8521 Leesburg Pike, Vienna, VA in the fourth quarter of 2023, 200 North Radnor Chester Road, Radnor, PA and Three Barton Skyway, Austin, TX in the third quarter of ~~2016 through the third quarter of 2017 (the “Q3 2016 and 2017 Dispositions”);~~

2023;

•$~~0.8~~1.1 million decrease ~~from Other/(Eliminations), primarily from the six office properties held for sale; offset by,~~

~~$3.7 million increase in the Same Store Property Portfolio~~ due to ~~positive cash rent growth and free rent converting to cash rent across our portfolio in 2017 compared to 2016;~~

~~$1.5 million increase from Development/Redevelopment Properties for~~ the ~~third quarter~~early termination of ~~2017 compared to the third quarter of 2016 primarily related to the residential component of the FMC Tower being placed into service; and~~

$1.0 million increase from Recently Completed/Acquired Properties, primarily attributable to the expiration of free rent periods for the office component of the FMC Tower, which was placed into service during the second quarter of 2016.

~~Straight-line rents from the Total Portfolio decreased by $0.5 million primarily due to~~ a ~~decrease of $3.5 million from the Same Store Property Portfolio due to free rent converting to cash rent in the Philadelphia CBD segment, offset by~~single tenant occupant at a ~~$2.9 million increase from Recently Completed/Acquired Properties, primarily related to the office component of the FMC Tower being placed into service during the second half of 2016.~~

Above/below market rent amortization decreased by $1.0 million from the third quarter of 2017 to the third quarter of 2016, primarily attributable to a decrease in the Same Store Property Portfolio from the Austin, Texas segment.

Third party management fees, labor reimbursement and leasing increased by $0.7 million for the third quarter of 2017 compared to the third quarter of 2016, primarily due to construction management fees earned on the Subaru Headquarters Development in Camden, New Jersey.

~~Other income increased $0.6 million, which was primarily related to restaurant income from Walnut Street Café at the FMC Tower, which was placed into service at the end of the second quarter of 2017.~~

~~Depreciation and Amortization~~

Depreciation and amortization expense decreased by $4.5 million for the third quarter of 2017 compared to the third quarter of 2016, of which $5.6 million of the decrease relates to the Same Store Property Portfolio from the timing of intangible asset amortization, primarilyproperty in our Austin, Texas segment ~~and a $2.3 million decrease relating to~~in the ~~Q3 2016 and 2017 Dispositions. These decreases were offset by a $1.1~~third quarter of 2023;

•$3.0 million increase ~~in depreciation expense from~~related to our Recently Completed/Acquired Properties ~~primarily relating to the office component~~which comprise 250 King of ~~FMC Tower being placed into service during the second half of 2016~~Prussia Road, Radnor, PA and ~~a $1.2 million increase from Development/Redevelopment Properties, primarily relating to the residential component of the FMC Tower being placed into service and a $1.1~~2340 Dulles Corner Boulevard, Herndon VA;

•$2.0 million increase related to ~~fixed asset additions across~~405 Colorado, Austin TX stabilized in second quarter of 2023; and

•$0.3 million decrease due to net changes in leasing activity within the remainder of the portfolio.

~~Interest Expense~~

~~Interest expense~~

Property Operating Expenses

Property operating expenses decreased ~~$1.1 million from~~primarily as a result of the sale of 8521 Leesburg Pike, Vienna, VA in the fourth quarter of 2023 and the sales of 200 North Radnor Chester Road, Radnor, PA and Three Barton Skyway, Austin, TX in the third quarter of ~~2017 to the third quarter of 2016 primarily~~2023 and due to the ~~following:~~

~~$4.2 million decrease related to the repayment of the 2017 Unsecured Notes on May 1, 2017; and~~

~~$0.3 million decrease related to the refinance of Two Logan Square mortgage debt in 2016.~~

~~The decrease of $4.5 million in interest expense described above was offset by the following:~~

~~$2.2 million decrease in capitalized interest as we began to place portions of FMC Tower into service during the second quarter of 2016; and~~

~~$1.2 million increase related to interest expense incurred on our Credit Facility, as we did not have an outstanding balance during the period ended September 30, 2016.~~

~~Equity in Loss of Real Estate Ventures~~

~~The decrease in the loss from Real Estate Ventures of $1.5 million for the third quarter of 2017 compared to the third quarter of 2016 is primarily due to the following:~~

$0.7 million increase in operating income from the 1919 Market Street Venture related to an increase in average occupancy from 44.3% during the third quarter of 2016 to 96.8% during the third quarter of 2017;

$0.5 million increase in operating income recognized from the DRA (G&I) Austin venture (the “DRA Austin Venture”) related to an increase in market rental rates and average occupancy from 90.2% during the third quarter of 2016 to 91.6% during the third quarter of 2017; and

~~$0.3 million increase in operating income from the remaining Real Estate Ventures during the third quarter of 2017 compared to the third quarter of 2016.~~

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

The gain of $1.0 million recognized during the third quarter of 2017 resulted from the dispositions of Bishop’s Gate land and 50 E. Swedesford Square, which generated gains of $0.1 million and $0.9 million, respectively.

~~During the third quarter of 2016, we recognized a gain of $0.2 million from the sale of two acres of undeveloped land in Mt. Laurel, New Jersey.~~

~~Net Gain from Real Estate Venture Transactions~~

~~The gain of $13.8 million recognized during the third quarter of 2017 resulted from the disposition of an office property at 7101 Wisconsin Avenue, located in Bethesda, Maryland, held by the~~ ~~BDN – AI Venture~~.

During the third quarter of 2016, the $10.5 million gain primarily consists of $7.0 million in proceeds related to the sale of our residual profits interest in the Invesco Venture and $3.2 million from the sale of our 25% interest in the PJP V real estate venture.

~~Income Tax Benefit~~

The income tax benefit of $0.8 million recognized during the third quarter of 2017 was generated from operating losses incurred by the retail and flexible stay components at FMC Tower, located in Philadelphia, Pennsylvania. There was no income tax benefit recorded during the third quarter of 2016.

~~Comparison of the Nine-Month Periods Ended September 30, 2017 and September 30, 2016~~

The table below shows selected operating information for the “Same Store Property Portfolio” and the “Total Portfolio.” The Same Store Property Portfolio consists of 83 properties containing an aggregate of approximately 14.3 million net rentable square feet, and represents properties that we owned for the entire nine-month periods ended September 30, 2017 and 2016. The Total Portfolio includes the effects of other properties that were either placed into service, acquired or redeveloped after January 1, 2016 and disposed of prior to September 30, 2017 or classified as held for sale as of September 30, 2017. 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-month periods ended September 30, 2017 and 2016) by providing information for the properties which were acquired, placed into service, under development or redevelopment and administrative/elimination information for the nine-month periods ended September 30, 2017 and 2016.

~~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 endedSeptember 30, 2017to the nine months endedSeptember 30, 2016~~

Same Store Property Portfolio

Recently Completed/Acquired Properties (a)

Development/Redevelopment Properties (b)

Other (Eliminations) (c)

Total Portfolio

(dollars and square feet in thousands)

2017

2016

Increase/ (Decrease)

2017

2016

2017

2016

2017

2016

2017

2016

Increase/ (Decrease)

Revenue:

Cash rents

$
265,967

$
250,966

$
15,001

$
6,245

$
5,223

$
4,385

$
1,755

$
6,432

$
32,753

$
283,029

$
290,697

$
(7,668
)
Straight-line rents

6,903

17,504

(10,601
)

15,510

4,988

(84
)

23

(192
)

21

22,137

22,536

(399
)
Above/below market rent amortization

2,244

5,197

(2,953
)

35

(338
)

-

232

1

-

2,280

5,091

(2,811
)
Total rents

275,114

273,667

1,447

21,790

9,873

4,301

2,010

6,241

32,774

307,446

318,324

(10,878
)
Tenant reimbursements

49,263

46,105

3,158

2,704

675

72

358

1,773

6,177

53,812

53,315

497

Termination fees

1,536

324

1,212

466

1,087

-

-

11

48

2,013

1,459

554

Third party management fees, labor reimbursement and leasing

-

-

-

-

-

-

-

20,483

17,691

20,483

17,691

2,792

Other

1,641

1,307

334

48

19

609

-

1,097

1,262

3,395

2,588

807

Total revenue

327,554

321,403

6,151

25,008

11,654

4,982

2,368

29,605

57,952

387,149

393,377

(6,228
)
Property operating expenses

93,835

92,828

(1,007
)

7,346

3,882

5,210

1,409

4,556

16,089

110,947

114,208

3,261

Real estate taxes

29,916

29,379

(537
)

621

530

617

235

2,908

4,789

34,062

34,933

871

Third party management expenses

-

-

-

-

-

-

-

7,391

7,172

7,391

7,172

(219
)
Net operating income

203,803

199,196

4,607

17,041

7,242

(845
)

724

14,750

29,902

234,749

237,064

(2,315
)
Depreciation and amortization

112,707

125,462

12,755

12,089

6,103

3,985

1,674

3,803

9,497

132,584

142,736

10,152

General & administrative expenses

-

-

-

-

-

-

-

21,797

20,711

21,797

20,711

(1,086
)
Provision for impairment (d)

-

-

-

-

-

-

-

3,057

13,069

3,057

13,069

10,012

Operating income (loss)

$
91,096

$
73,734

$
17,362

$
4,952

$
1,139

$
(4,830
)

$
(950
)

$
(13,907
)

$
(13,375
)

$
77,311

$
60,548

$
16,763

Number of properties

83

83

4

4

91

Square feet

14,331

14,331

1,252

391

15,974

Core Occupancy % (e)

92.7
%

94.5
%

83.7
%

Other Income (Expense):

Interest income

635

970

(335
)
Interest expense

(61,473
)

(64,334
)

2,861

Interest expense — Deferred financing costs

(1,807
)

(2,063
)

256

Interest expense —Financing obligation

-

(679
)

679

Equity in loss of real estate ventures

(5,387
)

(9,323
)

3,936

Net gain on sale of disposition of real estate

8,411

114,625

(106,214
)
Net gain on sale of undepreciated real estate

953

188

765

Net gain on real estate venture transactions

28,340

19,529

8,811

Loss on early extinguishment of debt

-

(66,590
)

66,590

Income tax benefit

1,032

-

1,032

Net income

$
48,015

$
52,871

$
(4,856
)
Net income attributable to Common Shareholders of Brandywine Realty Trust

$
0.24

$
0.27

$
(0.03
)

~~EXPLANATORY NOTES~~

~~(a)~~

~~Results include: three properties recently completed and one acquisition.~~

~~(b)~~

~~Results include: one development, three redevelopment properties and the residential and restaurant components of the FMC Tower (not included in the property count).~~

~~(c)~~

~~(d)~~

~~Held for use impairment charges are excluded from Same Store Property Portfolio operating income and presented in Other (Eliminations). See Note 3, “Real Estate Investments” to the consolidated financial statements for further information.~~

~~(e)~~

~~Pertains to Core Properties (i.e. not under development, redevelopment, or re-entitlement).~~

~~Total Revenue~~

~~Cash rents from the Total Portfolio decreased by $7.7 million during the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016, primarily attributable to:~~

$23.4 million decrease due to the disposition of 82 properties from the nine months ended September 30, 2016 through the nine months ended September 30, 2017 (the “YTD 2016 and 2017 Dispositions”); and

~~$3.0 million decrease from Other/(Elimination) Properties, primarily due to the six properties held for sale during the nine months ended September 30, 2017; offset by,~~

$15.0 million increase in the Same Store Property Portfolio due to positive cash rent growth and free rent converting to cash rent across the portfolio in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016;

$2.6 million increase from Development/Redevelopment Properties, primarily due to the residential component of the FMC Tower being placed into service during the nine months ended September 30, 2017; and

Above/below market rent amortization decreased by $2.8 million from the nine months ended September 30, 2017 to the nine months ended September 30, 2016, primarily attributable to a decrease in the Same Store Property Portfolio from the Austin, Texas segment.

Tenant reimbursements from the Total Portfolio increased by $0.5 million during the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 primarily attributable to an increase of $3.2 million from the Same Store Portfolio and $2.0 million from Recently Completed/Acquired Properties. These increases were offset by a $4.5 million decrease due to the YTD 2016 and 2017 Dispositions and a $0.3 decrease from Development/Redevelopment Properties. Expense recoveries at the Same Store Portfolio increased modestly with a reimbursement percentage of 39.8% during the nine months ended September 30, 2017 compared to 37.7% during the nine months ended September 30, 2016.

~~Termination fees increased $0.5 million due to the timing of tenant terminations. The termination fees for the nine months ended September 30, 2017 primarily related to the~~early termination of ~~one~~a single tenant ~~in the Same Store Portfolio from our Philadelphia CBD region.~~

Third party management fees, labor reimbursement and leasing increased by $2.8 million for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016, primarily due to an increase of lease commission income earned from the DRA Austin Venture and construction management fees earned from the Subaru Headquarters Development in Camden, New Jersey.

~~Other income increased $0.8 million, which was primarily related to restaurant income generated by Walnut Street Café~~occupant at ~~the FMC Tower, which was placed into service at the end of the second quarter of 2017.~~

~~Property Operating Expenses~~

Property operating expenses across our Total Portfolio decreased $3.3 million for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016, of which $11.7 million relates to the YTD 2016 and 2017 Dispositions. This decrease was partially offset by increases of $3.8 million from Development/Redevelopment Properties, $3.5 million from Recently Completed/Acquired Properties and $1.1 million from Same Store Properties, primarily relating to repairs and maintenance in the Austin, Texas Segment.

~~Real Estate Taxes~~

Real estate taxes decreased $0.9 million for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016, of which $2.3 million relates to the YTD 2016 and 2017 Dispositions. This decrease was partially offset by increases of $0.5 million in the Same Store Property Portfolio due to assessments, $0.4 million from Development/Redevelopment Properties and $0.4 million from a ~~34.6 acre land parcel acquired in Austin, Texas on July 1, 2016.~~

~~Depreciation and Amortization~~

Depreciation and amortization expense decreased by $10.2 million for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016, of which $12.8 million of the decrease relates to the Same Store Property Portfolio from the timing of intangible asset amortization, primarilyproperty in our Austin, Texas segment ~~and~~in the third quarter of 2023.

Real Estate Taxes

Real estate taxes decreased primarily as a $6.6 million decrease relating to the YTD 2016 and 2017 Dispositions. These decreases were offset by a $6.0 million increase from Recently Completed/Acquired Properties, primarily relating to the office component of FMC Tower being placed into service during the second half of 2016, $2.3 million increase in depreciation

~~expense from Development/Redevelopment Properties, primarily relating to the residential component~~result of the ~~FMC Tower being placed into service and a $0.9 million increase related~~reduction in tax assessments in 2024 compared to ~~fixed asset additions across the portfolio.~~

2023 on properties in our Austin Texas segment.

Table of Contents

General and Administrative Expenses

General and administrative expenses increased ~~by $1.1 million for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016, due to~~primarily as a $2.2 million increase in professional fees and a $0.3 million increase in marketing costs primarily related to the new Company logo. These increases were offset by a $1.5 million decrease in payroll and related benefits due to a lower employee headcount.

~~Provision for Impairment~~

Asresult of June 30, 2017, we determined that we would not recover the carrying value of one land parcel, consisting of 50 acres, in the Other segment. Accordingly, we recorded an impairment charge of $0.3 million at June 30, 2017.

As of December 31, 2016, based on our held for sale impairment analysis, we determined that we would not recover the carrying value of three office properties located in the Metropolitan Washington D.C. segment. Because we determined that the carrying value of these properties exceeded their fair value, a $2.6 million impairment charge was recorded. Subsequent to our December 31, 2016 impairment review, there was a purchase price reduction of $1.7 million under the agreement of sale, which resulted in an additional impairment charge of $1.7 million during the quarter ended March 31, 2017.

As of March 31, 2017, based on our held for use impairment analysis, we determined that we would not recover the carrying value of four office properties located in the Other segment. Because we determined that the carrying value of these properties exceeded their fair value, a $1.0 million impairment charge was recorded.

During the nine-month period ended September 30, 2016, we recognized a $13.1 million provision for impairment. During the first quarter of 2016, we recognized a held for use impairment loss totaling $7.4 million. This impairment charge resulted from our held for use impairment analysis, which determined that we would not recover the carrying value of two properties located in our Metropolitan D.C. segment. As of June 30, 2016, a held for use impairment charge of $3.9 million was recorded on a property in our Metropolitan D.C. segment. The impairment calculation was based on our recoverability of the carrying value of the property under a discounted cash flow model. Also during the second quarter of 2016, in connection with the disposition of the office property at 1120 Executive Boulevard located in Mount Laurel, New Jersey, we recognized a held for sale impairment loss totaling approximately $1.8 million, which approximates the estimated loss on sale.

increased deferred compensation expense.

Interest Expense

Interest expense ~~decreased $2.9 million from the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016~~increased primarily due to the ~~following:~~

~~$7.1 million decrease related to the repayment~~effect of the ~~2017 Unsecured Notes on May 1, 2017;~~

~~$2.2~~$245 million ~~decrease related~~secured term loan we closed in March 2023, the proceeds from which were applied to reduce then outstanding balance under our unsecured line of credit and obtained an additional $70 million of unsecured financing in March 2023 resulting in higher leverage at higher interest rates over the ~~repayment~~prior period. Additionally, as a result of the ~~2016 Unsecured Notes on April 1, 2016;~~

~~$1.0 million decrease related to~~Moody's downgrade in the ~~refinance of Two Logan Square mortgage debt in 2016;~~

~~$0.5 million decrease related to the repayment of the IRS Philadelphia Campus and Cira South Garage mortgage debt during 2016; and~~

~~$0.6 million decrease in interest expense incurred for 3141 Fairview Park Drive, as we deconsolidated this property on August 31, 2016.~~

~~The decrease of $11.4 million in interest expense described above was offset by the following:~~

~~$7.0 million decrease in capitalized interest due to placing a portion of the FMC Tower into service during the second~~third quarter of ~~2016;~~2023 and

~~$1.5 million related to interest on our Credit Facility as the average outstanding balance was higher in 2017 as compared to 2016.~~

~~Interest Expense – Financing Obligation~~

Interest expense from financing obligations decreased $0.6 million from the nine months ended September 30, 2017 to the nine months ended September 30, 2016 due to the deconsolidation of 3141 Fairview Park Drive. For further information, see ~~Item 1., “Business – 2016 Transactions” in our annual report on Form 10-K for 2016.~~

~~Equity in Loss of Real Estate Ventures~~

~~The decrease in the loss from Real Estate Ventures of $3.9 million for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 is primarily due to the following:~~

$2.6 million increase in operating income recognized from the DRA Austin Venture because of termination fee income recognized during the nine-month period ended September 30, 2017, with no comparable termination fees in the nine-month period ended September 30, 2016;

$1.1 million increase in operating income recognized from the BDN– AI Venture related to an increase in occupancy at 7101 Wisconsin Avenue from 70.9% during the nine-month period ended September 30, 2016 to 96.7% during the nine-month period ended September 30, 2017; and

$0.7 million increase in operating income from the 1919 Market Street Venture related to an increase in average occupancy from 18.5% to 87.7% for the nine-month period ended September 30, 2017 compared to the nine-month period ended September 30, 2016.

~~The increases of $4.4 million were partially offset by the following:~~

~~$0.3 million decrease in operating income from Invesco, L.P., as we sold our residual profits interest in the real estate venture subsequent to September 30, 2016; and~~

~~$0.2 million decrease in operating income from the 1000 Chesterbrook Venture, which was sold during the nine-month period ended September 30, 2016.~~

~~Net Gain on Disposition of Real Estate~~

The gain on disposition of real estate of $8.4 million recognized in the nine months ended September 30, 2017 resulted from a gain of $0.5 million on the sale of two office properties located in Concord, California, a gain of $6.5 million from the sale of the Marine Piers located in Philadelphia, Pennsylvania, an additional $0.5 million gain recognized on Cira Square, which was disposed of S&P downgrade in the first quarter of ~~2016, a gain~~2024, the interest rate on our 2028 Notes increased in September 2023 and March 2024 to 8.05% due to the coupon adjustment provisions within the 2028 Notes.

Equity in Income of ~~$1.4 million~~Real Estate Ventures

The increased losses from our unconsolidated real estate ventures are primarily due to higher interest rates on the sale of the retail property at 7000 Midlantic in Mount Laurel, New Jersey. These gains were partially offset by a loss of $0.2 million, representing closing costs, on the sale of three office properties located in Cherry Hill, New Jerseyventures’ outstanding indebtedness and ~~a loss of $0.3 million, representing closing costs, on the sale of four office properties located in Marlton, New Jersey known as the Evesham Corporate Center.~~

~~The $115.5 million~~ net ~~gain on disposition of real estate recognized for the nine-month period ended September 30, 2016 resulted~~losses from the ~~sale~~3025 JFK Venture being put into service in February 2016 of an office property known as Cira Square, located in Philadelphia, Pennsylvania, consisting of 862,692 square feet. The sale of the MAP Venture properties in February 2016 did not have a material impact on the gain on sale because of an impairment charge of $45.4 million recorded during the fourth quarter of ~~2015. During the first quarter~~2024.

Table of 2016, we recognized an impairment loss totaling approximately $7.4 million on the properties known as Metro Plaza I & II located in Herndon, Virginia. The loss on disposition of $0.8 million represents additional closing costs that were recognized at settlement during the second quarter of 2016. Additionally, we recorded a loss of $0.1 million resulting from the disposition 50 East Clementon Road, located in Gibbsboro, New Jersey, during the nine months ended September 30, 2016.

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

The gain of $1.0 million recognized during the nine-month period ended September 30, 2017 resulted from the dispositions of Bishop’s Gate land and 50 E. Swedesford Square, which generated gains of $0.1 million and $0.9 million, respectively.

~~During the nine-month period ended September 30, 2016, we recognized a gain of $0.2 million from the sale of two acres of undeveloped land in Mt. Laurel, New Jersey.~~

~~Net Gain from Real Estate Venture Transactions~~

The $28.3 million gain recognized during the nine-month period ended September 30, 2017 resulted from the $13.8 gain on the disposition of an office property at 7101 Wisconsin Avenue, located in Bethesda, Maryland, held by the ~~BDN – AI Venture and a~~ ~~$14.6 million gain on the sale of~~ ~~our entire 50% interest in TB-BDN Plymouth Apartments, L.P.~~

Contents

During the nine-month period ended September 30, 2016, a $5.9 million gain was recognized from the sale of our entire 50% interest in the Coppell Associates real estate venture, a $3.2 million gain was recognized from the disposition of the office property held by the 1000 Chesterbrook real estate venture, a $7.0 million gain was recognized from the sale of our residual profits interest in the Invesco Venture and a $3.2 million gain was recognized from the sale of our 25% interest in the PJP V real estate venture.

~~Loss on Early Extinguishment of Debt~~

On January 14, 2016, we used borrowings from our $600.0 million unsecured revolving credit facility to fund the repayment of our $176.9 million mortgage and our $35.5 million mortgage that encumbered Cira Square and Cira South Garage, respectively. Each mortgage was repaid ahead of its scheduled maturity date of September 10, 2030, which resulted in prepayment penalties and non-cash charges for the write-off of deferred financing costs totaling $66.6 million. We subsequently repaid in full the advances under our unsecured revolving credit facility with the proceeds from the dispositions of real estate that occurred during the first quarter of 2016. There were no comparable extinguishments of debt incurred during nine months ended September 30, 2017.

~~Income Tax Benefit~~

The income tax benefit of $1.0 million recognized during the nine-month period ended September 30, 2017 was generated from operating losses incurred by the retail and flexible stay components at FMC Tower, located in Philadelphia, Pennsylvania. There was no income tax benefit recorded during the nine-month period ended September 30, 2016.

LIQUIDITY AND CAPITAL RESOURCES

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

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

As of ~~September 30, 2017,~~March 31, 2024, the Parent Company owned a ~~99.2%~~99.7% interest in the Operating Partnership. The remaining interest of approximately ~~0.8%~~0.3% 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 ~~our revolving line of credit~~ and cash flows ~~generated by~~from operations, financing activities ~~including access to equity financing, including through “at-the-market” equity program~~ and ~~selective property~~real estate sales. Rental revenue ~~expense recoveries from tenants,~~ 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 ~~throughout~~during the remainder of ~~2017~~2024 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 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 credit facility, including unsecured term loans and unsecured notes. As of ~~September 30, 2017,~~March 31, 2024 we were in compliance with all of our debt covenants and requirement obligations.

On April 12, 2024, we completed an underwritten offering of $400.0 million aggregate principal amount of our 8.875% Guaranteed Notes due 2029 (the “2029 Notes”). The 2029 Notes were priced at approximately 99.51% of their face amount. We ~~use multiple financing sources~~received approximately $391.8 million of net proceeds after the deduction for underwriting discounts and offering expenses.

~~MARYLAND (Brandywine Realty Trust)~~		~~23-2413352~~
~~DELAWARE (Brandywine Operating Partnership L.P.)~~		~~23-2862640~~
~~(State or other jurisdiction of~~		~~(I.R.S. Employer~~
~~incorporation or organization)~~		~~Identification No.)~~

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


		Page

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Brandywine Realty Trust

Financial Statements of Brandywine Realty Trust			6 5

Consolidated Balance Sheets as of ~~September 30, 2017~~March 31, 2024 and December 31, ~~2016~~2023			6 5

Consolidated Statements of Operations for the three months ended March 31, 2024 and ~~nine-month periods ended September 30, 2017 and 2016~~2023			7 6

Consolidated Statements of Comprehensive Income for the three months ended March 31, 2024 and ~~nine-month periods ended September 30, 2017 and 2016~~2023			8 7

Consolidated Statements of Beneficiaries’ Equity for the ~~nine-month periods~~three months ended ~~September 30, 2017~~March 31, 2024 and ~~2016~~2023			9 8

Consolidated Statements of Cash Flows for the ~~nine-month periods~~three months ended ~~September 30, 2017~~March 31, 2024 and ~~2016~~2023			11 10

Brandywine Operating Partnership, L.P.

Financial Statements of Brandywine Operating Partnership, L.P.			13 11

Consolidated Balance Sheets as of ~~September 30, 2017~~March 31, 2024 and December 31, ~~2016~~2023			13 11

Consolidated Statements of Operations for the three months ended March 31, 2024 and ~~nine-month periods ended September 30, 2017 and 2016~~2023			14 12

Consolidated Statements of Comprehensive Income for the three months ended March 31, 2024 and ~~nine-month periods ended September 30, 2017 and 2016~~2023			15 13

Consolidated Statements of Partners’ Equity for the ~~nine-month periods~~three months ended ~~September 30, 2017~~March 31, 2024 and ~~2016~~2023			16 14

Consolidated Statements of Cash Flows for the ~~nine-month periods~~three months ended ~~September 30, 2017~~March 31, 2024 and ~~2016~~2023			18 16

Notes to Unaudited Consolidated Financial Statements			20 17

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			42 32

Item 3. Quantitative and Qualitative Disclosures about Market Risk			66 43

Item 4. Controls and Procedures			67 44

PART II — OTHER INFORMATION			68 45

Item 1. Legal Proceedings			68 45

Item 1A. Risk Factors			68 45

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			68 45

Item 3. Defaults Upon Senior Securities			68 45

Item 4. Mine Safety Disclosures			68 45

Item 5. Other Information			68 45

Item 6. Exhibits			69 46

Signatures			70

	47

		September 30,			December 31,
		2017			2016
	March 31, 2024								March 31, 2024	December 31, 2023
ASSETS		(unaudited)
Real estate investments:
Real estate investments:
Real estate investments:
Operating properties
Operating properties
Operating properties		$	3,769,067		$	3,586,295
Accumulated depreciation			(885,438	)		(852,476	)
Right of use asset - operating leases, net
Operating real estate investments, net			2,883,629			2,733,819
Construction-in-progress			127,141			297,462
Land held for development			120,696			150,970
Prepaid leasehold interests in land held for development, net
Total real estate investments, net			3,131,466			3,182,251
Assets held for sale, net			31,125			41,718

Cash and cash equivalents			25,287			193,919
Accounts receivable, net of allowance of $3,294 and $2,373 as of September 30, 2017 and December 31, 2016, respectively			14,785			12,446
Accrued rent receivable, net of allowance of $13,731 and $13,743 as of September 30, 2017 and December 31, 2016, respectively			166,093			149,624
Investment in Real Estate Ventures, equity method			236,313			281,331
Cash and cash equivalents
Cash and cash equivalents
Restricted cash and escrows

Accounts receivable
Accounts receivable
Accounts receivable
Accrued rent receivable, net of allowance of $2,435 and $2,672 as of March 31, 2024 and December 31, 2023, respectively
Investment in unconsolidated real estate ventures
Deferred costs, net			96,980			91,342
Intangible assets, net			58,817			72,478
Other assets			94,553			74,104
Total assets		$	3,855,419		$	4,099,213
LIABILITIES AND BENEFICIARIES' EQUITY
Mortgage notes payable, net		$	318,317		$	321,549
Secured debt, net
Secured debt, net
Secured debt, net
Unsecured credit facility			178,000			-
Unsecured term loans, net			248,347			248,099
Unsecured term loan, net
Unsecured senior notes, net			1,144,976			1,443,464
Accounts payable and accrued expenses			112,413			103,404
Distributions payable			28,391			30,032
Deferred income, gains and rent			41,468			31,620
Acquired lease intangibles, net			17,156			18,119
Liabilities related to assets held for sale			269			81
Intangible liabilities, net

Lease liability - operating leases
Lease liability - operating leases
Lease liability - operating leases
Other liabilities			15,512			19,408
Total liabilities		$	2,104,849		$	2,215,776
Commitments and contingencies (See Note 13)
Commitments and contingencies (See Note 15)								Commitments and contingencies (See Note 15)
Brandywine Realty Trust's Equity:
Preferred Shares (shares authorized-20,000,000)
6.90% Series E Preferred Shares, $0.01 par value; issued and outstanding- 0 as of September 30, 2017 and 4,000,000 as of December 31, 2016			-			40
Common Shares of Brandywine Realty Trust's beneficial interest, $0.01 par value; shares authorized 400,000,000; 175,477,498 and 175,140,760 issued and outstanding as of September 30, 2017 and December 31, 2016, respectively			1,755			1,752
Common Shares of Brandywine Realty Trust's beneficial interest, $0.01 par value; shares authorized 400,000,000; 172,270,907 and 172,097,661 issued and outstanding as of March 31, 2024 and December 31, 2023, respectively
Common Shares of Brandywine Realty Trust's beneficial interest, $0.01 par value; shares authorized 400,000,000; 172,270,907 and 172,097,661 issued and outstanding as of March 31, 2024 and December 31, 2023, respectively
Common Shares of Brandywine Realty Trust's beneficial interest, $0.01 par value; shares authorized 400,000,000; 172,270,907 and 172,097,661 issued and outstanding as of March 31, 2024 and December 31, 2023, respectively
Additional paid-in-capital			3,167,481			3,258,870
Deferred compensation payable in common shares			14,090			13,684
Common shares in grantor trust, 1,000,966 as of September 30, 2017, 899,457 as of December 31, 2016			(14,090	)		(13,684	)
Common shares in grantor trust, 1,145,121 and 1,194,127 issued and outstanding as of March 31, 2024 and December 31, 2023, respectively
Cumulative earnings			586,954			539,319
Accumulated other comprehensive loss			(906	)		(1,745	)
Accumulated other comprehensive income (loss)
Cumulative distributions			(2,021,568	)		(1,931,892	)
Total Brandywine Realty Trust's equity			1,733,716			1,866,344
Non-controlling interests			16,854			17,093
Noncontrolling interests
Total beneficiaries' equity		$	1,750,570		$	1,883,437
Total liabilities and beneficiaries' equity		$	3,855,419		$	4,099,213



	Number of Preferred Shares			Par Value of Preferred 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			Non-Controlling Interests			Total
BALANCE, December 31, 2016		4,000,000		$	40			175,140,760			899,457	$	1,752	$	3,258,870		$	13,684	$	(13,684	)	$	539,319	$	(1,745	)	$	(1,931,892	)	$	17,093		$	1,883,437
Net income																							47,631								384			48,015
Other comprehensive income																									839						7			846
Redemption of Preferred Shares		(4,000,000	)		(40	)									(96,810	)																		(96,850	)
Issuance of partnership interest in consolidated real estate venture																															85			85
Distributions from consolidated real estate venture																															(46	)		(46	)
Equity issuance costs															(499	)																		(499	)
Bonus share issuance								6,752							110																			110
Share-based compensation activity								333,127			39,870		3		5,900								4											5,907
Share Issuance from/(to) Deferred Compensation Plan								(1,718	)		61,639				(48	)		406		(406	)													(48	)
Share Choice Plan issuance								(1,423	)																									-
Adjustment to Non-controlling Interest															(42	)															42			-
Preferred Share distributions																												(2,032	)					(2,032	)
Preferred Share redemption charges																												(3,181	)					(3,181	)
Distributions declared ($0.48 per share)																												(84,463	)		(711	)		(85,174	)
BALANCE, September 30, 2017		-		$	-			175,477,498			1,000,966	$	1,755	$	3,167,481		$	14,090	$	(14,090	)	$	586,954	$	(906	)	$	(2,021,568	)	$	16,854		$	1,750,570


	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, December 31, 2023	172,097,661	1,194,127	$	1,719	$	3,163,949	$	19,965	$	(19,965)	$	979,406	$	(668)	$	(2,827,022)	$	6,773	$	1,324,157
Net loss											(16,368)						(46)		(16,414)
Other comprehensive income (loss)													6,007				19		6,026


Share-based compensation activity	194,480	7,148	2		4,829														4,831
Share Issuance from/(to) Deferred Compensation Plan	(21,234)	(56,154)			(100)		31		(31)										(100)
Reallocation of Noncontrolling interest					(17)												17		—
Distributions declared $0.15 per share)															(26,177)		(77)		(26,254)
BALANCE, March 31, 2024	172,270,907	1,145,121	$	1,721	$	3,168,661	$	19,996	$	(19,996)	$	963,038	$	5,339	$	(2,853,199)	$	6,686	$	1,292,246


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


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

	Three-month periods ended						Nine-month periods ended
	September 30,						September 30,
	2017			2016			2017			2016
Revenue
Rents	$	102,557		$	104,537		$	307,446		$	318,324
Tenant reimbursements		17,239			17,324			53,812			53,315
Termination fees		200			611			2,013			1,459
Third party management fees, labor reimbursement and leasing		6,918			6,248			20,483			17,691
Other		1,524			974			3,395			2,588
Total revenue		128,438			129,694			387,149			393,377
Operating expenses
Property operating expenses		36,847			37,250			110,947			114,208
Real estate taxes		11,235			11,566			34,062			34,933
Third party management expenses		2,619			2,501			7,391			7,172
Depreciation and amortization		42,429			46,956			132,584			142,736
General and administrative expenses		5,813			5,515			21,797			20,711
Provision for impairment		-			-			3,057			13,069
Total operating expenses		98,943			103,788			309,838			332,829
Operating income		29,495			25,906			77,311			60,548
Other income (expense)
Interest income		79			291			635			970
Interest expense		(19,732	)		(20,814	)		(61,473	)		(64,334	)
Interest expense - amortization of deferred financing costs		(577	)		(645	)		(1,807	)		(2,063	)
Interest expense - financing obligation		-			(156	)		-			(679	)
Equity in loss of Real Estate Ventures		(5,723	)		(7,254	)		(5,387	)		(9,323	)
Net gain (loss) on disposition of real estate		-			(104	)		8,411			114,625
Net gain on sale of undepreciated real estate		953			188			953			188
Net gain on Real Estate Venture transactions		13,758			10,472			28,340			19,529
Loss on early extinguishment of debt		-			-			-			(66,590	)
Net income before income taxes		18,253			7,884			46,983			52,871
Income tax benefit		793			-			1,032			-
Net income		19,046			7,884			48,015			52,871
Net income attributable to non-controlling interests		(170	)		(58	)		(384	)		(425	)
Net income attributable to Brandywine Realty Trust		18,876			7,826			47,631			52,446
Distribution to preferred shareholders		-			(1,725	)		(2,032	)		(5,175	)
Preferred share redemption charge		-			-			(3,181	)		-
Nonforfeitable dividends allocated to unvested restricted shareholders		(73	)		(79	)		(245	)		(263	)
Net income attributable to Common Shareholders of Brandywine Realty Trust	$	18,803		$	6,022		$	42,173		$	47,008

Basic income per Common Share	$	0.11		$	0.03		$	0.24		$	0.27

Diluted income per Common Share	$	0.11		$	0.03		$	0.24		$	0.27

Basic weighted average shares outstanding		175,433,657			175,127,110			175,315,581			174,976,998
Diluted weighted average shares outstanding		176,835,022			176,364,615			176,599,332			176,009,822

Distributions declared per Common Share	$	0.16		$	0.16		$	0.48		$	0.47

	Nine-month periods ended September 30,
	2017			2016
Cash flows from operating activities:
Net income	$	48,015		$	52,871
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization		132,584			142,736
Amortization of deferred financing costs		1,807			2,063
Amortization of debt discount/(premium), net		1,069			1,108
Amortization of stock compensation costs		4,321			3,612
Straight-line rent income		(21,002	)		(22,049	)
Amortization of acquired above (below) market leases, net		(2,280	)		(5,090	)
Straight-line ground rent expense		66			66
Provision for doubtful accounts		1,622			573
Net gain on real estate venture transactions		(28,340	)		(19,529	)
Net gain on sale of interests in real estate		(9,364	)		(114,813	)
Loss on early extinguishment of debt		-			66,590
Provision for impairment		3,057			13,069
Other than temporary impairment		4,844			-
Real Estate Venture loss in excess of distributions		199			9,945
Deferred financing obligation		-			(681	)
Income tax benefit		(1,133	)		-
Changes in assets and liabilities:
Accounts receivable		(4,445	)		4,041
Other assets		(8,927	)		(10,332	)
Accounts payable and accrued expenses		6,743			7,163
Deferred income, gains and rent		(3,160	)		(2,000	)
Other liabilities		2,107			318
Net cash provided by operating activities		127,783			129,661

Cash flows from investing activities:
Acquisition of properties		(34,748	)		(20,406	)
Proceeds from the sale of properties		114,821			758,931
Proceeds from real estate venture sales		59,022			20,551
Issuance of mortgage note receivable		-			(3,365	)
Capital expenditures for tenant improvements		(44,902	)		(37,991	)
Capital expenditures for redevelopments		(21,951	)		(10,852	)
Capital expenditures for developments		(53,560	)		(147,831	)
Advances for the purchase of tenant assets, net of repayments		1,148			275
Investment in unconsolidated Real Estate Ventures		(5,243	)		(27,174	)
Deposits for real estate		605			(746	)
Escrowed cash		-			6,993
Cash distribution from unconsolidated Real Estate Ventures in excess of cumulative equity income		14,906			12,565
Leasing costs paid		(12,553	)		(12,884	)
Net cash provided by investing activities		17,545			538,066

Cash flows from financing activities:
Proceeds from mortgage notes payable		-			86,900
Repayments of mortgage notes payable		(3,681	)		(355,947	)
Proceeds from credit facility borrowings		264,000			195,000
Repayments of credit facility borrowings		(86,000	)		(195,000	)
Repayments of unsecured notes		(300,000	)		(149,919	)
Debt financing costs paid		-			(477	)
Redemption of preferred shares		(100,000	)		-
Proceeds from the exercise of stock options		1,229			1,286
Shares used for employee taxes upon vesting of share awards		(674	)		(879	)
Partner contributions to consolidated real estate venture		85			73
Partner distributions from consolidated real estate venture		(46	)		-
Distributions paid to shareholders		(88,162	)		(85,702	)
Distributions to non-controlling interest		(711	)		(697	)
Net cash used in financing activities		(313,960	)		(505,362	)
Increase (decrease) in cash and cash equivalents		(168,632	)		162,365
Cash and cash equivalents at beginning of year		193,919			56,694
Cash and cash equivalents at end of period	$	25,287		$	219,059

Supplemental disclosure:
Cash paid for interest, net of capitalized interest during the nine months ended September 30, 2017 and 2016 of $2,975 and $10,023, respectively	$	58,252		$	64,046
Cash paid for income taxes		225			-

Supplemental disclosure of non-cash activity:
Dividends and distributions declared but not paid		28,391			30,036
Change in investment in real estate ventures as a result of dispositions		(30,584	)		(2,023	)
Change in investment in real estate ventures related to non-cash disposition of property		-			25,165
Change in real estate ventures as a result of other than temporary impairment		(4,844	)		-

Change in operating real estate from deconsolidation of 3141 Fairview Park Drive	-		44,313
Change in investment in real estate ventures from deconsolidation of 3141 Fairview Park Drive	-		(12,642	)
Change in mortgage notes payable from deconsolidation of 3141 Fairview Park Drive	-		(20,582	)
Change in other liabilities from deconsolidation of 3141 Fairview Park Drive	-		(12,384	)
Change in capital expenditures financed through accounts payable at period end	(1,455	)	(5,012	)
Change in capital expenditures financed through retention payable at period end	83		2,487


	Series E-Linked Preferred Mirror Units						General Partner Capital
	Units			Amount			Units			Amount			Accumulated Other Comprehensive Gain/(Loss)			Non-controlling Interest - Consolidated Real Estate Ventures				Total Partners' Equity
BALANCE, December 31, 2016		4,000,000		$	96,850			175,140,760		$	1,762,764		$	(2,122	)	$	2,150			$	1,859,642
Net income											47,990						25				48,015
Other comprehensive income														846							846
Redemption of Preferred Mirror Units		(4,000,000	)		(96,850	)															(96,850	)
Deferred compensation obligation								(1,718	)		(48	)									(48	)
Issuance of LP Units											(499	)									(499	)
Issuance of partnership interest in consolidated real estate venture																	86				86
Distributions from consolidated real estate venture																	(46	)			(46	)
Share Choice Plan issuance								(1,423	)												-
Bonus share issuance								6,752			110										110
Share-based compensation activity								333,127			5,907										5,907
Adjustment of redeemable partnership units to liquidation value at period end											(2,781	)									(2,781	)
Distributions to Preferred Mirror Units											(2,032	)									(2,032	)
Preferred Mirror Units redemption charge											(3,181	)							��		(3,181	)
Distributions to general partnership unitholders ($0.48 per unit)											(84,463	)									(84,463	)
BALANCE, September 30, 2017		-		$	-			175,477,498		$	1,723,767		$	(1,276	)	$	2,215			$	1,724,706

	July 18, 2017
Building, land and improvements	$	31,728
Intangible assets acquired (a)		2,838
Below market lease liabilities assumed (b)		(1,818	)
	$	32,748

Disposition Date	Property/Portfolio Name	Location	Type	Number of Properties	Rentable Square Feet		Sales Price		Net Proceeds on Sale		Gain/(Loss) on Sale (a)
June 27, 2017	Two, Four A, Four B and Five Eves Drive (Evesham Corporate Center)	Marlton, NJ	Office	4		134,794	$	9,700	$	8,650	$	(325	)	(b)
June 12, 2017	7000 Midlantic Drive	Mount Laurel, NJ	Retail	1		10,784		8,200		7,714		1,413
March 30, 2017	200, 210 & 220 Lake Drive East (Woodland Falls)	Cherry Hill, NJ	Office	3		215,465		19,000		17,771		(249	)	(c)
March 15, 2017	Philadelphia Marine Center (Marine Piers)	Philadelphia, PA	Mixed-use	1		181,900		21,400		11,182		6,498		(d)
March 13, 2017	11700, 11710, 11720 & 11740 Beltsville Drive (Calverton)	Beltsville, MD	Office	3		313,810		9,000		8,354		-		(e)
February 2, 2017	1200 & 1220 Concord Avenue (Concord Airport Plaza)	Concord, CA	Office	2		350,256		33,100		32,010		551		(f)
Total Dispositions				14		1,207,009	$	100,400	$	85,681	$	7,888

	Held for Sale Properties Included in Continuing Operations
	September 30, 2017
	630 Allendale Road - Office (a)			Newtown Square - Office (b)			Total
ASSETS HELD FOR SALE
Real estate investments:
Operating properties	$	19,482		$	27,809		$	47,291
Accumulated depreciation		(6,985	)		(9,206	)		(16,191	)
Operating real estate investments, net		12,497			18,603			31,100
Construction-in-progress		-			25			25
Total assets held for sale, net	$	12,497		$	18,628		$	31,125

LIABILITIES HELD FOR SALE
Other liabilities	$	35		$	234		$	269
Total liabilities held for sale	$	35		$	234		$	269

	September 30, 2017			December 31, 2016
			March 31, 2024 (b)
			March 31, 2024 (b)
			March 31, 2024 (b)
Net property
Net property
Net property	$	1,329,601		$	1,483,067
Other assets		205,631			231,972
Other assets
Other assets
Other liabilities
Other liabilities
Other liabilities		109,041			129,486
Debt, net		910,842			989,738
Debt, net
Debt, net
Equity(a)		515,349			595,815

Company’s share of equity (Company’s basis) (a)	$	236,313		$	281,331
Equity(a)
Equity(a)

	Three-month periods ended September 30,						Nine-month periods ended September 30,
	2017			2016			2017			2016
Revenue	$	56,511		$	57,710		$	169,609		$	157,641
Operating expenses		(27,419	)		(27,592	)		(77,757	)		(81,347	)
Provision for impairment		-			(10,476	)		-			(10,476	)
Interest expense, net		(11,670	)		(12,102	)		(33,771	)		(32,019	)
Depreciation and amortization		(20,684	)		(22,722	)		(61,816	)		(63,125	)
Net loss (a)	$	(3,262	)	$	(15,182	)	$	(3,735	)	$	(29,326	)

Equity in loss of Real Estate Ventures (b)	$	(5,723	)	$	(7,254	)	$	(5,387	)	$	(9,323	)

	September 30, 2017
	Total Cost			Accumulated Amortization			Intangible Assets, net
	March 31, 2024											March 31, 2024
	Total Cost								Total Cost		Accumulated Amortization			Intangible Assets, net
Intangible assets, net:
In-place lease value
In-place lease value
In-place lease value	$	100,519		$	(45,765	)	$	54,754
Tenant relationship value		12,831			(10,646	)		2,185
Above market leases acquired		4,354			(2,476	)		1,878

Total intangible assets, net	$	117,704		$	(58,887	)	$	58,817

Acquired lease intangibles, net:
Total intangible assets, net

Total intangible assets, net

			Total Cost
			Total Cost
			Total Cost							Accumulated Amortization			Intangible Liabilities, net
Intangible liabilities, net:
Below market leases acquired	$	32,158		$	(15,002	)	$	17,156
Below market leases acquired
Below market leases acquired

	September 30, 2017			December 31, 2016			Effective Interest Rate			Maturity Date
MORTGAGE DEBT:

Two Logan Square	$	84,839		$	86,012			3.98%		May 2020
One Commerce Square		124,518			127,026			3.64%	(a)	Apr 2023
Two Commerce Square		112,000			112,000			4.51%	(b)	Apr 2023
Principal balance outstanding		321,357			325,038
Plus: fair market value premium (discount), net		(2,434	)		(2,761	)
Less: deferred financing costs		(606	)		(728	)
Mortgage indebtedness	$	318,317		$	321,549

UNSECURED DEBT
$600.0M Revolving Credit Facility	$	178,000		$	-		LIBOR + 1.20%			May 2019
Seven-Year Term Loan - Swapped to fixed		250,000			250,000			3.72%		Oct 2022
$300.0M 5.70% Guaranteed Notes due 2017 (c)		-			300,000			5.68%		May 2017
$325.0M 4.95% Guaranteed Notes due 2018		325,000			325,000			5.13%		Apr 2018
$250.0M 3.95% Guaranteed Notes due 2023		250,000			250,000			4.02%		Feb 2023
$250.0M 4.10% Guaranteed Notes due 2024		250,000			250,000			4.33%		Oct 2024
$250.0M 4.55% Guaranteed Notes due 2029		250,000			250,000			4.60%		Oct 2029
Indenture IA (Preferred Trust I) - Swapped to fixed		27,062			27,062			2.75%		Mar 2035
Indenture IB (Preferred Trust I) - Swapped to fixed		25,774			25,774			3.30%		Apr 2035
Indenture II (Preferred Trust II) - Swapped to fixed		25,774			25,774			3.09%		Jul 2035
Principal balance outstanding		1,581,610			1,703,610
Plus: original issue premium (discount), net		(3,937	)		(4,678	)
Less: deferred financing costs		(6,350	)		(7,369	)
Total unsecured indebtedness	$	1,571,323		$	1,691,563
Total Debt Obligations	$	1,889,640		$	2,013,112


	Shares	Weighted Average Grant Date Fair Value
Non-vested at January 1, 2024	889,166	$	8.79
Granted	1,394,123	$	4.11
Vested	(34,365)	$	6.08
Forfeited	(6,649)	$	8.16
Non-vested at March 31, 2024	2,242,275	$	5.92


	RPSU Grant Date
	3/3/2022		2/16/2023		2/26/2024		Total
(Amounts below in shares, unless otherwise noted)
Non-vested at January 1, 2024	513,038		1,057,173		—		1,570,211
Granted	—		—		417,268		417,268
Units Vested	(9,877)		(19,484)		—		(29,361)
Units Cancelled	(1,048)		(4,341)		—		(5,389)
Non-vested at March 31, 2024	502,113		1,033,348		417,268		1,952,729
Measurement Period Commencement Date	1/1/2022		1/1/2023		1/1/2024
Measurement Period End Date	12/31/2024		12/31/2025		12/31/2026
Awarded Units	516,852		1,057,173		1,251,803
Fair Value of Units on Grant Date (in thousands)	$	6,872	$	7,125	$	1,715

Unconsolidated real estate ventures (in thousands):
	Investment in real estate ventures, at equity				Equity in income (loss) of real estate ventures
	As of				Three-month periods ended September 30,						Nine-month periods ended September 30,
	September 30, 2017		December 31, 2016		2017			2016			2017			2016
Philadelphia CBD	$	42,298	$	48,691	$	134		$	(453	)	$	113		$	(473	)
Pennsylvania Suburbs		3,320		15,421		24			(170	)		448			410
Metropolitan Washington, D.C. (a)		119,550		141,786		(5,264	)		(5,287	)		(4,872	)		(6,068	)
Austin, Texas		52,940		52,886		(15	)		(561	)		1,266			(1,299	)
MAP Venture (b)		16,283		20,893		(706	)		(1,010	)		(2,610	)		(2,608	)
Other		1,922		1,654		104			227			268			715
Total	$	236,313	$	281,331	$	(5,723	)	$	(7,254	)	$	(5,387	)	$	(9,323	)

Year	Minimum Rent
2017 (three months remaining)	$	303
2018		1,211
2019		1,211
2020		1,211
2021		1,211
Thereafter		57,527
Total	$	62,674

	Three Months Ended September 30,						Nine Months ended September 30,
	2017			2016			2017			2016
Leasing Activity
Core Properties (1):
Total net rentable square feet owned		15,582,963			16,187,682			15,582,963			16,187,682
Occupancy percentage (end of period)		92.0	%		92.7	%		92.0	%		92.7	%
Average occupancy percentage		91.6	%		92.4	%		91.8	%		92.6	%
Total Portfolio, less properties in development (2):
Retention rate		81.4	%		79.6	%		72.8	%		67.1	%
New leases and expansions commenced (square feet)		274,647			240,582			610,520			734,075
Leases renewed (square feet)		250,306			182,146			1,114,591			733,902
Net absorption (square feet)		69,092			24,785			(97,021	)		(190,585	)
Percentage change in rental rates per square feet (3)
New and expansion rental rates		5.7	%		9.1	%		6.8	%		14.9	%
Renewal rental rates		12.4	%		6.7	%		3.7	%		9.4	%
Combined rental rates		10.7	%		7.9	%		4.1	%		11.4	%
Capital Costs Committed (4):
Leasing commissions (per square feet)	$	6.33		$	5.65		$	3.79		$	3.91
Tenant Improvements (per square feet)	$	13.21		$	19.99		$	9.24		$	10.44
Weighted average lease term (years)		10.0			6.9			7.3			5.8
Total capital per square foot per lease year	$	2.43		$	3.88		$	1.54		$	2.39

Construction Commencement Date	Expected Completion	Activity Type	Property/Portfolio Name	Location	Number of Buildings	Square Footage/ Units		Estimated Costs			Amount Funded
Q2 2014	(a)	Development	30th & Walnut Streets (FMC Tower at Cira Centre South)	Philadelphia, PA	1	625,000 / 268 units		$	400,000		$	394,700
Q3 2017	Q3 2018	Development	Subaru National Training Center	Camden, NJ	1		83,000		44,300			12,400
Q4 2016	Q4 2017	Redevelopment	Broadmoor - Building 6	Austin, Texas	1		144,000		34,500	(b)		24,600
TBD	Q3 2018	Redevelopment	500 North Gulph Road	King Of Prussia, PA	1		100,000		21,200	(c)		4,500
Q4 2017	Q1 2019	Development	Four Points Building 3	Austin, TX	1		165,000		48,200	(d)		2,100
TBD	Q1 2019	Redevelopment	426 Lancaster Avenue	Devon, PA	1		56,000		12,000	(e)		4,900
		Total			6		1,173,000	$	560,200		$	443,200

	Same Store Property Portfolio									Recently Completed/Acquired Properties (a)						Development/Redevelopment Properties (b)						Other/(Eliminations) (c)						Total Portfolio
(dollars and square feet in thousands)	2017			2016			Increase/ (Decrease)			2017			2016			2017			2016			2017			2016			2017			2016			Increase/ (Decrease)
Revenue:
Cash rents	$	88,334		$	84,636		$	3,698		$	2,732		$	1,734		$	1,919		$	458		$	1,103		$	7,747		$	94,088		$	94,575		$	(487	)
Straight-line rents		1,900			5,427			(3,527	)		6,066			3,173			-			(11	)		(9	)		(133	)		7,957			8,456			(499	)
Above/below market rent amortization		451			1,518			(1,067	)		60			(13	)		-			-			1			1			512			1,506			(994	)
Total rents		90,685			91,581			(896	)		8,858			4,894			1,919			447			1,095			7,615			102,557			104,537			(1,980	)
Tenant reimbursements		16,031			15,517			514			1,106			332			5			48			97			1,427			17,239			17,324			(85	)
Termination fees		200			133			67			-			466			-			-			-			12			200			611			(411	)
Third party management fees, labor reimbursement and leasing		-			-			-			-			-			-			-			6,918			6,248			6,918			6,248			670
Other		633			376			257			7			6			602			-			282			592			1,524			974			550
Total revenue		107,549			107,607			(58	)		9,971			5,698			2,526			495			8,392			15,894			128,438			129,694			(1,256	)
Property operating expenses		31,351			30,968			(383	)		2,321			1,882			2,681			799			494			3,601			36,847			37,250			403
Real estate taxes		10,025			9,920			(105	)		266			177			193			86			751			1,383			11,235			11,566			331
Third party management expenses		-			-			-			-			-			-			-			2,619			2,501			2,619			2,501			(118	)
Net operating income		66,173			66,719			(546	)		7,384			3,639			(348	)		(390	)		4,528			8,409			77,737			78,377			(640	)
Depreciation and amortization		35,669			41,261			5,592			3,735			2,624			1,446			215			1,579			2,856			42,429			46,956			4,527
General & administrative expenses		-			-			-			-			-			-			-			5,813			5,515			5,813			5,515			(298	)
Operating income (loss)	$	30,504		$	25,458		$	5,046		$	3,649		$	1,015		$	(1,794	)	$	(605	)	$	(2,864	)	$	38		$	29,495		$	25,906		$	3,589
Number of properties	83			83						4						4												91
Square feet		14,331			14,331						1,252						391												15,974
Core Occupancy % (d)		92.7	%		94.5	%					83.7	%
Other Income (Expense):
Interest income																													79			291			(212	)
Interest expense																													(19,732	)		(20,814	)		1,082
Interest expense — Deferred financing costs																													(577	)		(645	)		68
Interest expense —Financing obligation																													-			(156	)		156
Equity in loss of real estate ventures																													(5,723	)		(7,254	)		1,531
Net loss on disposition of real estate																													-			(104	)		104
Net gain on sale of undepreciated real estate																													953			188			765
Net gain on real estate venture transactions																													13,758			10,472			3,286
Income tax benefit																													793			-			793
Net income																												$	19,046		$	7,884		$	11,162
Net income attributable to Common Shareholders of Brandywine Realty Trust																												$	0.11		$	0.03		$	0.08

	Nine Months Ended September 30,
Activity	2017			2016
Operating	$	127,783		$	129,661
Investing		17,545			538,066
Financing		(313,960	)		(505,362	)
Net cash flows	$	(168,632	)	$	162,365


	(Decrease) Increase

Capital expenditures and capitalized interest	5,018
Capital improvements/acquisition deposits/leasing costs	(2,583)
Joint venture investments	(16,348)


Capital distributions from unconsolidated real estate ventures	3,631

Increase in net cash used in investing activities	$	(10,282)


	(Decrease) Increase
Proceeds from debt obligations	$	(387,924)
Repayments of debt obligations	257,801


Dividends and distributions paid	6,778
Debt financing costs paid	4,214
Other financing activities	58
Decrease in net cash provided by financing activities	$	(119,073)

	September 30, 2017			December 31, 2016
	(dollars in thousands)
Balance: (a)
Fixed rate	$	1,724,967		$	2,028,648
Variable rate - unhedged		178,000			-
Total	$	1,902,967		$	2,028,648
Percent of Total Debt:
Fixed rate		90.6	%		100.0	%
Variable rate - unhedged		9.4	%		-
Total		100.0	%		100.0	%
Weighted-average interest rate at period end:
Fixed rate		4.3	%		4.5	%
Variable rate - unhedged		2.4	%		-
Total		4.1	%		4.5	%
Weighted-average maturity in years:
Fixed rate		6.1			5.9
Variable rate - unhedged		1.6			-
Total		5.7			5.9

Period	Scheduled amortization		Principal maturities		Total		Weighted Average Interest Rate of Maturing Debt
2017 (three months remaining)	$	1,250	$	-	$	1,250		3.90	%
2018		6,601		325,000		331,601		5.11	%
2019		7,360		178,000		185,360		2.49	%
2020		6,457		80,521		86,978		3.98	%
2021		6,099		-		6,099		3.96	%
2022		6,332		250,000		256,332		3.63	%
2023		1,621		455,116		456,737		4.04	%
2024		-		250,000		250,000		4.23	%
Thereafter		-		328,610		328,610		4.38	%
Totals	$	35,720	$	1,867,247	$	1,902,967		4.10	%

	Payments by Period (in thousands)
			Less than						More than
	Total		1 Year		1-3 Years		3-5 Years		5 Years
Mortgage notes payable (a)	$	321,357	$	6,055	$	94,645	$	12,315	$	208,342
Credit Facility		178,000		-		178,000		-		-
Unsecured term loan (a)		250,000		-		-		-		250,000
Unsecured debt (a)		1,153,610		325,000		-		-		828,610
Ground leases (b)		62,674		1,211		2,422		2,422		56,619
Development contracts (c)		79,460		79,460		-		-		-
Interest expense (d)		397,548		63,930		108,637		85,711		139,270
Other liabilities (e)		27,723		349		7,486		8,158		11,730
	$	2,470,372	$	476,005	$	391,190	$	108,606	$	1,494,571


(a)	Exhibits
	Exhibits No.		Description
	10.1		Form of 2024 Performance-Based Restricted Stock Unit Award Agreement (filed herewith).**
	10.2		Form of 2024 Restricted Stock Unit Award Agreement (with outperformance feature) (filed herewith).**
	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
~~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
~~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
~~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
~~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
~~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
~~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
~~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) .
	101.1
~~101.1~~		The following materials from the combined Quarterly Reports on Form 10-Q of Brandywine Realty Trust and Brandywine Operating Partnership, L.P. for the quarter ended ~~September 30, 2017~~March 31, 2024 formatted in ~~XBRL (eXtensible~~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.