Brandywine Realty Trust (BDN) 10-K 2009 FY Annual report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2009

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

For the transition period from                    to                    

Commission file number 001-9106 (Brandywine Realty Trust)

                                                                         000-24407 (Brandywine Operating Partnership, L.P.)

Brandywine Realty Trust

Brandywine Operating Partnership, L.P.

(Exact name of registrant as specified in its charter)

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

555 East Lancaster Avenue Radnor, Pennsylvania	19087
(Address of principal executive offices)	(Zip Code)

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

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

	Name of each exchange
Title of each class	on which registered
Common Shares of Beneficial Interest, par value $0.01 per share (Brandywine Realty Trust)	New York Stock Exchange
7.50% Series C Cumulative Redeemable Preferred Shares of Beneficial Interest par value $0.01 per share (Brandywine Realty Trust)	New York Stock Exchange
7.375% Series D Cumulative Redeemable Preferred Shares of Beneficial Interest par value $0.01 per share (Brandywine Realty Trust)	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:
Units of General Partnership Interest (Brandywine Operating Partnership, L.P.)

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Brandywine Realty Trust	Yesþ Noo
Brandywine Operating Partnership, L.P.	Yeso Noþ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Brandywine Realty Trust	Yeso Noþ
Brandywine Operating Partnership, L.P.	Yeso Noþ

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	Yesþ Noo
Brandywine Operating Partnership, L.P.	Yesþ Noo

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	Yeso Noo
Brandywine Operating Partnership, L.P.	Yeso Noo

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.þ

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

Brandywine Realty Trust:
Large accelerated filerþ Accelerated filero Non-accelerated filero Smaller reporting companyo

Brandywine Operating Partnership, L.P.:
Large accelerated filero Accelerated filero Non-accelerated filerþ Smaller reporting companyo

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

Brandywine Realty Trust	Yeso Noþ
Brandywine Operating Partnership, L.P.	Yeso Noþ

The aggregate market value of the Common Shares of Beneficial Interest held by non-affiliates of Brandywine Realty Trust as of the last day of the registrant’s most recently completed second fiscal quarter was $924.5 million. The aggregate market value has been computed by reference to the closing price of the Common Shares of Beneficial Interest on the New York Stock Exchange on such date. An aggregate of 128,647,297 Common Shares of Beneficial Interest were outstanding as of February 23, 2010.

As of June 30, 2009, the aggregate market value of the 1,896,552 common units of limited partnership (“Units”) held by non-affiliates of Brandywine Operating Partnership, L.P. was $14.1 million based upon the last reported sale price of $7.45 per share on the New York Stock Exchange on June 30, 2009 of the Common Shares of Beneficial Interest of Brandywine Realty Trust, the sole general partner of Brandywine Operating Partnership, L.P. (For this computation, the Registrant has excluded the market value of all Units beneficially owned by Brandywine Realty Trust.)

Documents Incorporated By Reference

Portions of the proxy statement for the 2010 Annual Meeting of Shareholders of Brandywine Realty Trust are incorporated by reference into Part III of this Form 10-K.

The exhibit index as required by Item 601(a) of Regulation S-K is included in Item 15 of Part IV of this report.

TABLE OF CONTENTS

FORM 10-K

	Page
PART I
Item 1. Business		5
Item 1A. Risk Factors		13
Item 1B. Unresolved Staff Comments		24
Item 2. Properties		24
Item 3. Legal Proceedings		34
Item 4. Submission of Matters to a Vote of Security Holders		34
PART II
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities		35
Item 6. Selected Financial Data		39
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations		41
Item 7A. Quantitative and Qualitative Disclosures About Market Risk		67
Item 8. Financial Statements and Supplementary Data		67
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		67
Item 9A. Controls and Procedures		67
Item 9B. Other Information		68
PART III
Item 10. Directors, Executive Officers and Corporate Governance		68
Item 11. Executive Compensation		68
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters		68
Item 13. Certain Relationships and Related Transactions, and Director Independence		68
Item 14. Principal Accounting Fees and Services		68
PART IV
Item 15. Exhibits and Financial Statement Schedules		68
SIGNATURES		74
Exhibit 3.1.26
Exhibit 10.41
Exhibit 12.1
Exhibit 12.2
Exhibit 21
Exhibit 23.1
Exhibit 23.2
Exhibit 23.3
Exhibit 31.1
Exhibit 31.2
Exhibit 31.3
Exhibit 31.4
Exhibit 32.1
Exhibit 32.2
Exhibit 32.3
Exhibit 32.4
Exhibit 99.1

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Filing Format

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

Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. This Annual Report on Form 10-K and other materials filed by us with the SEC (as well as information included in oral or other written statements made by us) contain statements that are forward-looking, including statements relating to business and real estate development activities, acquisitions, dispositions, future capital expenditures, financing sources, governmental regulation (including environmental regulation) and competition. We intend such forward-looking statements to be covered by the safe-harbor provisions of the 1995 Act. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “will,” “should” and similar expressions, as they relate to us, are intended to identify forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be achieved. As forward-looking statements, these statements involve important risks, uncertainties and other factors that could cause actual results to differ materially from the expected results and, accordingly, such results may differ from those expressed in any forward-looking statements made by us or on our behalf. Factors that could cause actual results to differ materially from our expectations include, but are not limited to:

• the continuing impact of the recent credit crisis and global economic slowdown, which is having and may continue to have negative effect on the following, among other things:

• the fundamentals of our business, including overall market occupancy, demand for office space and rental rates;

• the financial condition of our tenants, many of which are financial, legal and other professional firms, our lenders, counterparties to our derivative financial instruments and institutions that hold our cash balances and short-term investments, which may expose us to increased risks of default by these parties;

• availability of financing on attractive terms or at all, which may adversely impact our future interest expense and our ability to pursue acquisition and development opportunities and refinance existing debt; and

• a decline in real estate asset valuations, which may limit our ability to dispose of assets at attractive prices or obtain or maintain debt financing secured by our properties or on an unsecured basis.

• changes in local real estate conditions (including changes in rental rates and the number of properties that compete with our properties);

• changes in the economic conditions affecting industries in which our principal tenants compete;

• the unavailability of equity and debt financing, particularly in light of the current economic environment;

• our failure to lease unoccupied space in accordance with our projections;

• our failure to re-lease occupied space upon expiration of leases;

• tenant defaults and the bankruptcy of major tenants;

• changes in prevailing interest rates;

• risks associated with interest rate hedging contracts and the effectiveness of such arrangements;

• failure of acquisitions to perform as expected;

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• unanticipated costs associated with the acquisition, integration and operation of, our acquisitions;

• unanticipated costs to complete, lease-up and operate our developments and redevelopments;

• impairment charges;

• increased costs for, or lack of availability of, adequate insurance, including for terrorist acts;

• risks associated with actual or threatened terrorist attacks;

• demand for tenant services beyond those traditionally provided by landlords;

• potential liability under environmental or other laws;

• failure or bankruptcy of real estate venture partners;

• inability of real estate venture partners to fund venture obligations;

• failure of dispositions to close in a timely manner;

• failure of buyers of properties from us to comply with terms of their financing or other agreements with us;

• earthquakes and other natural disasters;

• risks associated with the unforeseen impact of climate change including existing and pending laws and regulations governing climate changes to our business operations and tenants;

• risks associated with federal, state and local tax audits;

• complex regulations relating to our status as a REIT and the adverse consequences of our failure to qualify as a REIT; and

• the impact of newly adopted accounting principles on our accounting policies and on period-to-period comparisons of financial results.

Given these uncertainties, and the other risks identified in the “Risk Factors” section and elsewhere in this Annual Report on Form 10-K, 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.

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PART I

Item 1. Business

Introduction

The terms “we,” “us,” “our” or the “Company” refer to Brandywine Realty Trust, a Maryland real estate investment trust, individually or together with its consolidated subsidiaries, including Brandywine Operating Partnership, L.P. (the “Operating Partnership”), a Delaware limited partnership.

We are a self-administered and self-managed real estate investment trust, or REIT, that provides leasing, property management, development, redevelopment, acquisition and other tenant-related services for a portfolio of office, mixed-use and industrial properties. As of December 31, 2009, we owned 212 office properties, 22 industrial facilities and three mixed-use properties (collectively, the “Properties”) containing an aggregate of approximately 23.3 million net rentable square feet. We also have two properties under development and three properties under redevelopment containing an aggregate of 1.9 million net rentable square feet. As of December 31, 2009, we consolidated three office properties owned by real estate ventures containing 0.4 million net rentable square feet. Therefore, as of December 31, 2009 we own and consolidated 245 properties with an aggregate of 25.6 million net rentable square feet. As of December 31, 2009, we owned economic interests in 11 unconsolidated real estate ventures that contain approximately 4.2 million net rentable square feet (collectively, the “Real Estate Ventures”). In addition, as of December 31, 2009, we owned approximately 479 acres of undeveloped land. The Properties and the properties owned by the Real Estate Ventures are located in or near Philadelphia, Pennsylvania, Metropolitan Washington, D.C., Southern and Central New Jersey, Richmond, Virginia, Wilmington, Delaware, Austin, Texas and Oakland, Carlsbad and Rancho Bernardo, California. In addition to managing properties that we own and consolidated, as of December 31, 2009, we were managing approximately 8.9 million square feet of office and industrial properties for third parties and Real Estate Ventures. Unless otherwise indicated, all references to square feet represent net rentable area.

Organization

Brandywine Realty Trust was organized and commenced its operations in 1986 as a Maryland REIT. Brandywine Realty Trust owns its assets and conducts its operations through the Operating Partnership and subsidiaries of the Operating Partnership. Brandywine Realty Trust controls the Operating Partnership as its sole general partner and as of December 31, 2009 owned a 97.9% interest in the Operating Partnership. The holders of the remaining interests in the Operating Partnership, consisting of Class A units of limited partnership interest, have the right to require redemption of their units at any time. At our option, we may satisfy the redemption either for an amount, per unit, of cash equal to the then market price of one Brandywine common share (based on the prior ten-day trading average) or for one Brandywine common share. Our structure as an “UPREIT” is designed, in part, to permit persons contributing properties to us to defer some or all of the tax liability they might otherwise incur in a sale of properties.

Our executive offices are located at 555 East Lancaster Avenue, Suite 100, Radnor, Pennsylvania 19087 and our telephone number is (610) 325-5600. We have offices in Philadelphia, Pennsylvania; Falls Church, Virginia; Mount Laurel, New Jersey; Richmond, Virginia; Austin, Texas; Oakland, California; and Carlsbad, California. We have an internet website at www.brandywinerealty.com. We are not incorporating by reference into this Annual Report on Form 10-K any material from our website. The reference to our website is an inactive textual reference to the uniform resource locator (URL) and is for your reference only.

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2009 Transactions

Real Estate Acquisitions/Dispositions

– On October 13, 2009, we sold a condominium unit consisting of 40,508 square feet and an undivided interest in an office building in Lawrenceville, New Jersey, for a sales price of $7.9 million.

– On October 1, 2009, we sold two office properties, totaling 473,658 net rentable square feet in Trenton, New Jersey for a stated sales price of $85.0 million. We provided to the buyer a $22.5 million seven-year, approximately 6.00% cash pay/7.64% accrual second mortgage loan.

– On April 29, 2009, we sold 7735 Old Georgetown Road, a 122,543 net rentable square feet office property located in Bethesda, Maryland, for a sales price of $26.5 million.

– On March 16, 2009, we sold 305 Harper Drive, a 14,980 net rentable square feet office property located in Moorestown, New Jersey, for a sales price of $1.1 million.

– On February 4, 2009, we sold two office properties, totaling 66,664 net rentable square feet in Exton, Pennsylvania, for an aggregate sales price of $9.0 million.

Developments and Redevelopments

In 2009, we placed in service four office properties that we developed or redeveloped and that contain an aggregate of 0.4 million net rentable square feet. We place a property in service at the earlier of (i) the date the property reaches 95% occupancy and (ii) one year from the project completion date. At December 31, 2009, we had five properties under development or redevelopment that contain an aggregate of 1.9 million net rentable square feet at an estimated total development and redevelopment cost (including estimated tenant improvements) of $396.0 million. We expect to place these projects in service at dates between the first quarter of 2010 and the second quarter of 2011.

Current Economic Climate

Deteriorating economic conditions have resulted in a reduction of the availability of financing and higher borrowing costs. These factors, coupled with a slowing economy, have reduced the volume of real estate transactions and created credit stresses on most businesses. We believe that vacancy rates may increase through 2010 and possibly beyond as the current economic climate negatively impacts tenants in our Properties.

We expect that the impact of the current state of the economy, including rising unemployment and the unprecedented volatility and illiquidity in the financial and credit markets, will continue to have a dampening effect on the fundamentals of our business, including increases in past due accounts, tenant defaults, lower occupancy and reduced effective rents. These conditions would negatively affect our future net income and cash flows and could have a material adverse effect on our financial condition. We believe that the quality of our assets and our strong balance sheet will enable us to raise secured and unsecured debt capital from banks, pension funds and life insurance companies, although these sources are lending fewer dollars, under stricter terms and at higher interest rates, and there can be no assurance that we will be able to borrow funds on terms that are economically attractive or at all.

Unsecured Debt Activity

During the year ended December 31, 2009, we repurchased $444.7 million of our unsecured Notes in a series of transactions which are summarized in the table below:

	Repurchase						Deferred Financing
Notes	Amount		Principal		Gain		Amortization
2009 4.500% Notes	$	92,736	$	94,130	$	1,377	$	88
2010 5.625% Notes		71,414		76,999		5,565		215
2012 5.750% Notes		109,104		112,175		2,610		361
2014 5.400% Notes		6,329		7,319		961		28
3.875% Notes		136,880		154,070		12,664		1,289
	$	416,463	$	444,693	$	23,177	$	1,981

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We funded these repurchases from a combination of proceeds from asset sales, cash flow from operations and borrowings under our unsecured revolving credit facility.

On September 25, 2009, we consummated a registered public offering of $250.0 million in aggregate principal amount of our 7.50% senior unsecured notes due 2015. The notes were priced at 99.412% of their face amount with a yield to maturity of 7.625%, representing a spread at the time of pricing of 5.162% to the yield on the August 2014 Treasury note. The notes have been reflected net of discount of $1.4 million in the consolidated balance sheet as of December 31, 2009. The net proceeds which amounted to $247.0 million after deducting underwriting discounts and offering expenses were used to repay our indebtedness under our $600.0 million unsecured revolving credit facility (the “Credit Facility”) and for general corporate purposes.

We also continue to utilize our Credit Facility for general corporate purposes, including the acquisitions, developments and redevelopments of properties and repayment of other debt, including the Notes shown in the table above. The Credit Facility matures on June 29, 2011 (subject to a one year extension right, at our option, upon our payment of an extension fee equal to 15 basis points of the committed amount under the Credit Facility). The per annum variable interest rate on outstanding balances is LIBOR plus 0.725% and the quarterly facility fee is set at 17.5 basis points per annum. The interest rate and facility fee are subject to adjustment upon a change in our unsecured debt ratings. In addition, the capitalization rate used in the calculation of several of the financial covenants in the Credit Facility is 7.50% and our swing loan availability under the Credit Facility is at $60 million. We are allowed four competitive bid loan requests in any 30 day period. Borrowings are available to the extent of borrowing capacity at the stated rates; however, the competitive bid feature allows banks that are part of the lender consortium under the Credit Facility to bid to make loans to us at a reduced LIBOR rate. We have the option to increase the Credit Facility to $800.0 million subject to the absence of any defaults and our ability to acquire additional commitments from our existing lenders and new lenders.

The Credit Facility contains financial and non-financial covenants, including covenants that relate to our incurrence of additional debt; the granting of liens; consummation of mergers and consolidations; the disposition of assets and interests in subsidiaries; the making of loans and investments; and the payment of dividends. The restriction on dividends permits us to pay dividends to the greater of (i) an amount required for us to retain our qualification as a REIT and (ii) 95% of our funds from operations. The Credit Facility includes financial covenants that require us to maintain an interest coverage ratio, a fixed charge coverage ratio, an unsecured debt ratio and an unencumbered cash flow ratio above specified levels; to maintain net worth above an amount determined on a specified formula; and to maintain a leverage ratio and a secured debt ratio below certain maximum levels. Another financial covenant limits the ratio of unsecured debt to unencumbered properties. We were in compliance with all financial and non-financial covenants as of December 31, 2009. We continuously monitor our compliance with all covenants. Certain covenants restrict our ability to obtain alternative sources of capital. While we believe that we will remain in compliance with our covenants, a continued slow-down in the economy and continued decrease in availability of debt financing could result in non-compliance with covenants and an event of default under the loan.

On April 18, 2008, we exercised the accordion feature on our $150.0 million unsecured term loan that we entered into on October 15, 2007 and funded an additional $33.0 million, bringing our total outstanding balance to $183.0 million. All outstanding borrowings under the term loan bear interest at a periodic rate of LIBOR plus 80 basis points. We used the net proceeds of the term loan increase to reduce indebtedness under our unsecured revolving Credit Facility.

In April 2007, we entered into a $20.0 million Sweep Agreement (the “Sweep Agreement”) to be used for cash management purposes. Borrowings under the Sweep Agreement bear interest at one-month LIBOR plus 0.75%. The Sweep Agreement terminated in April 2009.

Secured Debt Activity

On April 1, 2009, we closed on an $89.8 million first mortgage financing on our Two Logan Square property located in Philadelphia, PA. This loan bears interest at 7.57% per annum and has a seven-year term with three years of interest only payments with principal payments based on a thirty-year amortization schedule. We used $68.5 million in net proceeds to repay without penalty the balance of the former Two Logan Square first mortgage loan and $21.3 million for general corporate purposes including the repayment of existing indebtedness.

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On June 29, 2009, we entered into a forward financing commitment to borrow up to $256.5 million under two separate loans at a per annum interest rate of 5.93%. The loans, when funded, will be secured by mortgages on the 30th Street Post Office (the “Post Office project”), the Cira South Garage (the “garage project”) projects and by the leases of space at these facilities upon the completion of these projects. Of the total borrowings, $209.7 million and $46.8 million will be allocated to the Post Office project and to the garage project, respectively. In order for funding to occur we need to meet conditions which primarily relate to the completion of the projects and the commencement of the rental payments from the respective leases on these properties.

On July 7, 2009, we closed on a $60.0 million first mortgage financing on our One Logan Square property located in Philadelphia, PA. The new loan bears interest at a floating rate of LIBOR plus 350 basis points (subject to a LIBOR floor) and has a seven-year term with three years of interest only payments with principal payments based on a thirty-year amortization schedule at a 7.5% rate. We used the loan proceeds for general corporate purposes including repayment of existing indebtedness.

Additional Financing Activity

In June 2009, we sold 40,250,000 common shares for net proceeds of approximately $242.3 million. We used the net proceeds to reduce indebtedness under our Credit Facility and for general corporate purposes

In December 2009, we received the second contribution under the historic tax credit transaction that we entered into in 2008 with US Bancorp amounting to $23.8 million.

Business Objective and Strategies for Growth

Our business objective is to deploy capital effectively to maximize our return on investment and thereby maximize our total return to shareholders. To accomplish this objective we seek to:

• maximize cash flow through leasing strategies designed to capture rental growth as rental rates increase and as above and below-market leases are renewed;

• attain a high tenant retention rate by providing a full array of property management and maintenance services and tenant service programs responsive to the varying needs of our diverse tenant base;

• form joint venture opportunities with high-quality partners having attractive real estate holdings or significant financial resources;

• utilize our reputation as a full-service real estate development and management organization to identify opportunities that will expand our business and create long-term value; and

• increase the economic diversification of our tenant base while maximizing economies of scale.

Based on the current economic environment we consider the following to be important objectives, however, such objectives may be considered more long term in nature than they have been previously:

• to acquire and develop high-quality office and industrial properties at attractive yields in markets that we expect will experience economic growth and where we can achieve operating efficiencies;

• to deploy our land inventory for development of high-quality office and industrial properties; and

• to capitalize on our redevelopment expertise to selectively develop, redevelop and reposition properties in desirable locations.

We expect to concentrate our real estate activities in markets where we believe that:

• current and projected market rents and absorption statistics justify construction activity;

• we can maximize market penetration by accumulating a critical mass of properties and thereby enhance operating efficiencies;

• barriers to entry (such as zoning restrictions, utility availability, infrastructure limitations, development moratoriums and limited developable land) will create supply constraints on office and industrial space; and

• there is potential for economic growth, particularly job growth and industry diversification.

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Operating Strategy

In this current economic environment, we expect to continue to operate in markets where we have a concentration advantage due to economies of scale. We believe that where possible, it is best to operate with a strong base of properties in order to benefit from the personnel allocation and the market strength associated with managing several properties in the same market. However, we intend to selectively dispose of properties and redeploy capital if we determine a property cannot meet long term earnings growth expectations. We believe that recycling capital is an important aspect of maintaining the overall quality of our portfolio.

Our broader strategy remains focused on continuing to enhance liquidity and strengthen our balance sheet through capital retention, targeted sales activity and management of our existing and prospective liabilities.

In the long term, we believe that we are well positioned in our current markets and have the expertise to take advantage of both development and acquisition opportunities, as warranted by market and economic conditions, in new markets that have healthy long-term fundamentals and strong growth projections. This capability, combined with what we believe is a conservative financial structure, should allow us to achieve disciplined growth. These abilities are integral to our strategy of having a geographically and physically diverse portfolio of assets, which will meet the needs of our tenants.

We use experienced on site construction superintendents, operating under the supervision of project managers and senior management, to control the construction process and mitigate the various risks associated with real estate development.

In order to fund developments, redevelopments and acquisitions, as well as refurbish and improve existing Properties, we must use excess cash from operations after satisfying our dividend and other requirements. The availability of funds for new investments and maintenance of existing Properties depends in large measure on capital markets and liquidity factors over which we can exert little control. Past events, including failures and near failures of a number of large financial service companies, have made the capital markets increasingly volatile. As a result, many property owners are finding financing to be increasingly expensive and difficult to obtain. In addition, downgrades of our public debt ratings by Standard & Poor’s, Moody’s Investor Service and Fitch could increase our cost of capital.

Policies With Respect To Certain Activities

The following is a discussion of our investment, financing and other policies. These policies have been determined by our Board of Trustees and our Board may revise these policies without a vote of shareholders.

Investments in Real Estate or Interests in Real Estate

We may develop, purchase or lease income-producing properties for long-term investment, expand and improve the properties presently owned or other properties purchased, or sell such properties, in whole or in part, as circumstances warrant. Although there is no limitation on the types of development activities that we may undertake, we expect that our development activities will meet current market demand and will generally be on a build-to-suit basis for particular tenants where a significant portion of the building is pre-leased before construction begins. We continue to participate with other entities in property ownership through existing joint ventures or other types of co-ownership. Our equity investments may be subject to existing or future mortgage financing and other indebtedness that will have priority over our equity investments.

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Securities of or Interests in Entities Primarily Engaged in Real Estate Activities and Other Issuers

Subject to the percentage of ownership limitations and gross income tests necessary for REIT qualification, we may invest in securities of other REITs, other entities engaged in real estate activities or securities of other issuers. We may enter into joint ventures or partnerships for the purpose of obtaining an equity interest in a particular property. We do not currently intend to invest in the securities of other issuers except in connection with joint ventures or acquisitions of indirect interests in properties.

Investments in Real Estate Mortgages

While our current portfolio consists of, and our business objectives emphasize, equity investments in commercial real estate, we may, at the discretion of management or our Board of Trustees, invest in other types of equity real estate investments, mortgages and other real estate interests. We do not presently intend to invest to a significant extent in mortgages or deeds of trust, but may invest in participating mortgages if we conclude that we may benefit from the cash flow or any appreciation in the value of the property securing a mortgage. From time to time, we provide seller financing to buyers of our properties. We do this when the buyer requires additional funds for the purchase and provision of seller financing will be beneficial to us and the buyer compared to a mortgage loan from a third party lender.

Dispositions

Our disposition of Properties is based upon management’s periodic review of our portfolio and the determination by management or our Board of Trustees that a disposition would be in our best interests. We intend to use selective dispositions to fund our capital and refinancing needs.

Financing Policies

A primary objective of our financing policy has been to manage our financial position to allow us to raise capital from a variety of sources at competitive rates. Our mortgages, credit facilities and unsecured debt securities contain restrictions on our ability to incur indebtedness. Our charter documents do not limit the indebtedness that we may incur. Our financing strategy is to maintain a strong and flexible financial position by limiting our debt to a prudent level and minimizing our variable interest rate exposure. We intend to finance future growth and future maturing debt with the most advantageous source of capital then available to us. These sources may include selling common or preferred equity and debt securities sold through public offerings or private placements, utilizing availability under our unsecured revolving credit facility or incurring additional indebtedness through secured or unsecured borrowings. To qualify as a REIT, we must distribute to our shareholders each year at least ninety percent of our net taxable income, excluding any net capital gain. This distribution requirement limits our ability to fund future capital needs, including for acquisitions and developments, from income from operations. Therefore, we expect to continue to rely on third party sources of capital to fund future capital needs.

Working Capital Reserves

We maintain working capital reserves and access to borrowings in amounts that our management determines to be adequate to meet our normal contingencies.

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Policies with Respect to Other Activities

We expect to issue additional common and preferred equity in the future and may authorize our Operating Partnership to issue additional common and preferred units of limited partnership interest, including to persons who contribute their interests in properties to us in exchange for such units. We have not engaged in trading, underwriting or agency distribution or sale of securities of unaffiliated issuers and we do not intend to do so. We intend to make investments consistent with our qualification as a REIT, unless because of circumstances or changes in the Internal Revenue Code of 1986, as amended (or the Treasury Regulations), our Board of Trustees determines that it is no longer in our best interests to qualify as a REIT. We may make loans to third parties, including to joint ventures in which we participate and to buyers of our real estate. We intend to make investments in such a way that we will not be treated as an investment company under the Investment Company Act of 1940.

Management Activities

We provide third-party real estate management services primarily through wholly-owned subsidiaries (collectively, the “Management Companies”). As of December 31, 2009, the Management Companies were managing properties containing an aggregate of approximately 34.0 million net rentable square feet, of which approximately 25.2 million net rentable square feet related to Properties owned by us and approximately 8.9 million net rentable square feet related to properties owned by third parties and unconsolidated Real Estate Ventures.

Geographic Segments

As of December 31, 2009, we were managing our portfolio within six segments: (1) Pennsylvania, (2) Metropolitan Washington D.C, (3) New Jersey/Delaware, (4) Richmond, Virginia, (5) Austin, TX and (6) California. The Pennsylvania segment includes properties in Chester, Delaware, Bucks and Montgomery counties in the Philadelphia suburbs and the City of Philadelphia in Pennsylvania. The Metropolitan Washington, D.C. segment includes properties in Northern Virginia and suburban Maryland. The New Jersey/Delaware segment includes properties in Burlington, Camden and Mercer counties and counties in the southern and central part of New Jersey and in New Castle county in the state of Delaware. The Richmond, Virginia segment includes properties primarily in Albemarle, Chesterfield, Goochland and Henrico counties and Durham, North Carolina. The Austin, Texas segment includes properties in Coppell and Austin. The California segment includes properties in Oakland, Concord, Carlsbad and Rancho Bernardo. Our corporate group is responsible for cash and investment management, development of real estate properties during the construction period and general support functions.

Competition

The real estate business is highly competitive. Our Properties compete for tenants with similar properties primarily on the basis of location, total occupancy costs (including base rent and operating expenses), services provided, and the design and condition of the improvements. We also face competition when attempting to acquire or develop real estate, including competition from domestic and foreign financial institutions, other REITs, life insurance companies, pension funds, partnerships and individual investors. Additionally, our ability to compete depends upon trends in the economies of our markets, investment alternatives, financial condition and operating results of current and prospective tenants, availability and cost of capital, construction and renovation costs, land availability, our ability to obtain necessary construction approvals, taxes, governmental regulations, legislation and population trends.

Insurance

We maintain commercial general liability and “all risk” property insurance on our properties. We intend to obtain similar coverage for properties we acquire in the future. There are types of losses, generally of a catastrophic nature, such as losses from war, terrorism, environmental issues, floods, hurricanes and earthquakes that are subject to limitations in certain areas or which may be uninsurable risks. We exercise our discretion in determining amounts, coverage limits and deductibility provisions of insurance, with a view to maintaining appropriate insurance on our investments at a reasonable cost and on suitable terms. If we suffer a substantial loss, our insurance coverage may not be sufficient to pay the full current market value or current replacement cost of our lost investment. Inflation, changes in building codes and ordinances, environmental considerations and other factors also might make it impractical to use insurance proceeds to fully replace or restore a property after it has been damaged or destroyed.

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Employees

As of December 31, 2009, we had 402 full-time employees, including 25 union employees.

Government Regulations Relating to the Environment

Many laws and governmental regulations relating to the environment apply to us and changes in these laws and regulations, or their interpretation by agencies and the courts, occur frequently and may adversely affect us.

Existing conditions at some of our Properties. Independent environmental consultants have conducted Phase I or similar environmental site assessments on our Properties. We generally obtain these assessments prior to the acquisition of a Property and may later update them as required for subsequent financing of the property or as requested by a tenant. Site assessments are generally performed to ASTM standards then existing for Phase I site assessments, and typically include a historical review, a public records review, a visual inspection of the surveyed site, and the issuance of a written report. These assessments do not generally include any soil samplings or subsurface investigations. Depending on the age of the property, the Phase I may have included an assessment of asbestos-containing materials. For properties where asbestos-containing materials were identified or suspected, an operations and maintenance plan was generally prepared and implemented. See Note 2 to our consolidated financial statements for our evaluation in accordance with the accounting standard governing asset retirement obligations.

Historical operations at or near some of our properties, including the operation of underground storage tanks, may have caused soil or groundwater contamination. We are not aware of any such condition, liability or concern by any other means that would give rise to material, uninsured environmental liability. However, the assessments may have failed to reveal all environmental conditions, liabilities or compliance concerns; there may be material environmental conditions, liabilities or compliance concerns that a review failed to detect or which arose at a property after the review was completed; future laws, ordinances or regulations may impose material additional environmental liability; and current environmental conditions at our Properties may be affected in the future by tenants, third parties or the condition of land or operations near our Properties, such as the presence of underground storage tanks. We cannot be certain that costs of future environmental compliance will not affect our ability to make distributions to our shareholders.

Use of hazardous materials by some of our tenants.Some of our tenants handle hazardous substances and wastes on our properties as part of their routine operations. Environmental laws and regulations may subject these tenants, and potentially us, to liability resulting from such activities. We generally require our tenants, in their leases, to comply with these environmental laws and regulations and to indemnify us for any related liabilities. These tenants are primarily involved in the life sciences and the light industrial and warehouse businesses. We are not aware of any material noncompliance, liability or claim relating to hazardous or toxic substances or petroleum products in connection with any of our Properties, and we do not believe that on-going activities by our tenants will have a material adverse effect on our operations.

Costs related to government regulation and private litigation over environmental matters. Under environmental laws and regulations, we may be liable for the costs of removal, remediation or disposal of hazardous or toxic substances present or released on our Properties. These laws could impose liability without regard to whether we are responsible for, or knew of, the presence or release of the hazardous materials. Government investigations and remediation actions may entail substantial costs and the presence or release of hazardous substances on a property could result in governmental cleanup actions or personal injury or similar claims by private plaintiffs.

Potential environmental liabilities may exceed our environmental insurance coverage limits.We carry what we believe to be sufficient environmental insurance to cover potential liability for soil and groundwater contamination, mold impact, and the presence of asbestos-containing materials at the affected sites identified in our environmental site assessments. Our insurance policies are subject to conditions, qualifications and limitations. Therefore, we cannot provide any assurance that our insurance coverage will be sufficient to cover all liabilities for losses.

Potential environmental liabilities may adversely impact our ability to use or sell assets. The presence of contamination or the failure to remediate contamination may impair our ability to sell or lease real estate or to borrow using the real estate as collateral.

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Other

We do not have any foreign operations and our business is not seasonal. Our operations are not dependent on a single tenant or a few tenants and no single tenant accounted for more than 10% of our total 2009 revenue.

Code of Conduct

We maintain a Code of Business Conduct and Ethics applicable to our Board and all of our officers and employees, including our principal executive officer, principal financial officer, principal accounting officer, controller and persons performing similar functions. A copy of our Code of Business Conduct and Ethics is available on our website, www.brandywinerealty.com. In addition to being accessible through our website, copies of our Code of Business Conduct and Ethics can be obtained, free of charge, upon written request to Investor Relations, 555 East Lancaster Avenue, Suite 100, Radnor, PA 19087. Any amendments to or waivers of our Code of Business Conduct and Ethics that apply to our principal executive officer, principal financial officer, principal accounting officer, controller and persons performing similar functions and that relate to any matter enumerated in Item 406(b) of Regulation S-K promulgated by the SEC will be disclosed on our website.

Corporate Governance Principles and Board Committee Charters

Our Corporate Governance Principles and the charters of the Executive Committee, Audit Committee, Compensation Committee and Corporate Governance Committee of the Board of Trustees of Brandywine Realty Trust and additional information regarding our corporate governance are available on our website, www.brandywinerealty.com. In addition to being accessible through our website, copies of our Corporate Governance Principles and charters of our Board Committees can be obtained, free of charge, upon written request to Investor Relations, 555 Lancaster Avenue, Suite 100, Radnor, PA 19087.

Availability of SEC Reports

We file annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K and other information with the SEC. Members of the public may read and copy materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Members of the public may also obtain information on the Public Reference Room by calling the SEC at 1-800-732-0330. The SEC also maintains an Internet web site that contains reports, proxy and information statements and other information regarding issuers, including us, that file electronically with the SEC. The address of that site is http://www.sec.gov. Our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K and other information filed by us with the SEC are available, without charge, on our Internet web site, http://www.brandywinerealty.com as soon as reasonably practicable after they are filed electronically with the SEC. Copies are also available, free of charge, upon written request to Investor Relations, Brandywine Realty Trust, 555 East Lancaster Avenue, Suite 100, Radnor, PA 19087.

Item 1A. Risk Factors

Our results from operations and ability to make distributions on our equity and to pay debt service on our indebtedness may be affected by the risk factors set forth below. All investors should consider the following risk factors before deciding to purchase our securities.

Adverse economic and geopolitical conditions could have a material adverse effect on our results of operations, financial condition and our ability to pay distributions to you.

Our business is affected by the unprecedented volatility and illiquidity in the financial and credit markets, the general global economic recession, and other market or economic challenges experienced by the U.S. economy or the real estate industry as a whole. Our portfolio consists primarily of office buildings (as compared to a more diversified real estate portfolio). If economic conditions persist or deteriorate, then our results of operations, financial condition, financial results and ability to service current debt and to pay distributions to our shareholders may be adversely affected by the following, among other potential conditions:

• significant job losses in the financial and professional services industries may occur, which may decrease demand for our office space, causing market rental rates and property values to be negatively impacted;

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• our ability to borrow on terms and conditions that we find acceptable, or at all, may be limited, which could reduce our ability to complete development opportunities and refinance existing debt;

• reduce our returns from both our existing operations and our development activities and increase our future interest expense;

• reduced values of our properties may limit our ability to dispose of assets at attractive prices or to obtain debt financing secured by our properties and may reduce the availability of unsecured loans;

• the value and liquidity of our short-term investments and cash deposits could be reduced as a result of a deterioration of the financial condition of the institutions that hold our cash deposits or the institutions or assets in which we have made short-term investments, the dislocation of the markets for our short-term investments, increased volatility in market rates for such investments or other factors;

• reduced liquidity in debt markets and increased credit risk premiums for certain market participants may impair our ability to access capital; and

• one or more lenders under our line of credit could refuse or be unable to fund their financing commitment to us and we may not be able to replace the financing commitment of any such lenders on favorable terms, or at all.

These conditions, which could have a material adverse effect on our results of operations, financial condition and ability to pay distributions, may continue or worsen in the future.

Our performance is subject to risks associated with our properties and with the real estate industry.

Our economic performance and the value of our real estate assets, and consequently the value of our securities, are subject to the risk that if our properties do not generate revenues sufficient to meet our operating expenses, including debt service and capital expenditures, our cash flow and ability to pay distributions to our shareholders will be adversely affected. Events or conditions beyond our control that may adversely affect our operations or the value of our properties include:

• downturns in the national, regional and local economic climate including increases in the unemployment rate and inflation;

• competition from other office, mixed use, industrial and commercial buildings;

• local real estate market conditions, such as oversupply or reduction in demand for office, industrial or commercial space;

• changes in interest rates and availability of financing;

• vacancies, changes in market rental rates and the need to periodically repair, renovate and re-lease space;

• increased operating costs, including insurance expense, utilities, real estate taxes, janitorial costs, state and local taxes, labor shortages and heightened security costs;

• civil disturbances, earthquakes and other natural disasters, or terrorist acts or acts of war which may result in uninsured or underinsured losses;

• significant expenditures associated with each investment, such as debt service payments, real estate taxes, insurance and maintenance costs which are generally not reduced when circumstances cause a reduction in revenues from a property; and

• declines in the financial condition of our tenants and our ability to collect rents from our tenants.

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The disruption in the debt capital markets could adversely affect us.

The capital and credit markets have experienced significant volatility and disruption, particularly in the latter half of 2008 and in the first quarter of 2009. In some cases, the markets have produced downward pressure on stock prices and credit availability for certain issuers without regard to those issuers’ underlying financial strength. This resulted in a deterioration in the credit markets affecting the availability of credit, the terms on which it can be sourced and the overall cost of debt capital. This could negatively affect us by:

• increasing our costs to finance our ongoing operations and fund our development and redevelopment activities;

• reducing the availability of potential bidders for, and the amounts offered for, any properties we may wish to sell; and

• preventing us from accessing necessary debt capital on a timely basis leading us to consider potentially more dilutive capital transactions such as undesirable sales of properties or equity securities.

We may suffer adverse consequences due to the financial difficulties, bankruptcy or insolvency of our tenants.

The current economic conditions have caused some of our tenants to experience financial difficulties. If more of our tenants were to experience financial difficulties, including bankruptcy, insolvency or a general downturn in their business, there could be an adverse effect on our financial performance and distributions to shareholders. We cannot assure you that any tenant that files for bankruptcy protection will continue to pay us rent. A bankruptcy filing by or relating to one of our tenants or a lease guarantor would bar efforts by us to collect pre-bankruptcy debts from that tenant or lease guarantor, or its property, unless we receive an order permitting us to do so from the bankruptcy court. In addition, we cannot evict a tenant solely because of bankruptcy. The bankruptcy of a tenant or lease guarantor could delay our efforts to collect past due balances under the relevant leases, and could ultimately preclude collection of these sums. If a lease is assumed by the tenant in bankruptcy, all pre-bankruptcy balances due under the lease must be paid to us in full. If, however, a lease is rejected by a tenant in bankruptcy, we would have only a general, unsecured claim for damages. Any such unsecured claim would only be paid to the extent that funds are available and only in the same percentage as is paid to all other holders of general, unsecured claims. Restrictions under the bankruptcy laws further limit the amount of any other claims that we can make if a lease is rejected. As a result, it is likely that we would recover substantially less than the full value of the remaining rent during the term.

The terms and covenants relating to our indebtedness could adversely impact our economic performance.

Like other real estate companies which incur debt, we are subject to risks associated with debt financing, such as the insufficiency of cash flow to meet required debt service payment obligations and the inability to refinance existing indebtedness. If our debt cannot be paid, refinanced or extended at maturity, we may not be able to make distributions to shareholders at expected levels or at all. Furthermore, an increase in our interest expense could adversely affect our cash flow and ability to make distributions to shareholders. If we do not meet our debt service obligations, any properties securing such indebtedness could be foreclosed on, which would have a material adverse effect on our cash flow and ability to make distributions and, depending on the number of properties foreclosed on, could threaten our continued viability.

Our credit facilities, term loan and the indenture governing our unsecured public debt securities contain (and any new or amended facility will contain) restrictions, requirements and other limitations on our ability to incur indebtedness, including total debt to asset ratios, secured debt to total asset ratios, debt service coverage ratios and minimum ratios of unencumbered assets to unsecured debt which we must maintain. Our ability to borrow under our credit facilities is subject to compliance with such financial and other covenants. In the event that we fail to satisfy these covenants, we would be in default under the credit facilities, the term loan and the indenture and may be required to repay such debt with capital from other sources. Under such circumstances, other sources of capital may not be available to us, or may be available only on unattractive terms. In addition, the mortgages on our properties contain customary covenants such as those that limit our ability, without the prior consent of the lender, to further mortgage the applicable property or to discontinue insurance coverage. If we breach covenants in our secured debt agreements, the lenders can declare a default and take possession of the property securing the defaulted loan.

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Increases in interest rates on variable rate indebtedness will increase our interest expense, which could adversely affect our cash flow and ability to make distributions to shareholders. Rising interest rates could also restrict our ability to refinance existing debt when it matures. In addition, an increase in interest rates could decrease the amounts that third parties are willing to pay for our assets, thereby limiting our ability to alter our portfolio promptly in relation to economic or other conditions. We entered into and may, from time to time, enter into agreements such as interest rate hedges, swaps, floors, caps and other interest rate hedging contracts with respect to a portion of our variable rate debt. Although these agreements may lessen the impact of rising interest rates on us, they also expose us to the risk that other parties to the agreements will not perform or that we cannot enforce the agreements.

Our degree of leverage could limit our ability to obtain additional financing or affect the market price of our equity shares or debt securities.

Our degree of leverage could affect our ability to obtain additional financing for working capital expenditures, development, acquisitions or other general corporate purposes. Our senior unsecured debt is currently rated BB+ by Fitch Ratings, Baa3 by Moody’s Investor Services and BBB- by Standard & Poor’s. We cannot, however, assure you that we will be able to maintain this rating. In the event that our unsecured debt is downgraded from the current rating, we would likely incur higher borrowing costs and the market prices of our common shares and debt securities might decline. Our degree of leverage could also make us more vulnerable to a downturn in business or the economy generally.

We may experience increased operating costs, which might reduce our profitability.

Our properties are subject to increases in operating expenses such as for cleaning, electricity, heating, ventilation and air conditioning, administrative costs and other costs associated with security, landscaping and repairs and maintenance of our properties. In general, under our leases with tenants, we pass through all or a portion of these costs to them. We cannot assure you, however, that tenants will actually bear the full burden of these higher costs, or that such increased costs will not lead them, or other prospective tenants, to seek office space elsewhere. If operating expenses increase, the availability of other comparable office space in our core geographic markets might limit our ability to increase rents; if operating expenses increase without a corresponding increase in revenues, our profitability could diminish and limit our ability to make distributions to shareholders.

Our investment in property development or redevelopment may be more costly or difficult to complete than we anticipate.

We intend to continue to develop properties where market conditions warrant such investment. Once made, these investments may not produce results in accordance with our expectations. Risks associated with our development and construction activities include:

• the unavailability of favorable financing alternatives in the private and public debt markets;

• having sufficient capital to pay development costs;

• unprecedented market volatility in the share price of REITs;

• dependence on the financial services sector as part of our tenant base;

• construction costs exceeding original estimates due to rising interest rates, diminished availability of materials and labor, and increases in the costs of materials and labor;

• construction and lease-up delays resulting in increased debt service, fixed expenses and construction or renovation costs;

• expenditure of funds and devotion of management’s time to projects that we do not complete;

• the unavailability or scarcity of utilities;

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• occupancy rates and rents at newly completed properties may fluctuate depending on a number of factors, including market and economic conditions, resulting in lower than projected rental rates and a corresponding lower return on our investment;

• complications (including building moratoriums and anti-growth legislation) in obtaining necessary zoning, occupancy and other governmental permits; and

• increased use restrictions by local zoning or planning authorities limiting our ability to develop and impacting the size of developments.

We face risks associated with property acquisitions.

We have in the past acquired, and may in the future acquire, properties and portfolios of properties, including large portfolios that would increase our size and potentially alter our capital structure. Although we believe that the acquisitions that we have completed in the past and that we expect to undertake in the future have, and will, enhance our future financial performance, the success of such transactions is subject to a number of factors, including the risk that:

• we may not be able to obtain financing for acquisitions on favorable terms;

• acquired properties may fail to perform as expected;

• the actual costs of repositioning or redeveloping acquired properties may be higher than our estimates;

• acquired properties may be located in new markets where we may have limited knowledge and understanding of the local economy, an absence of business relationships in the area or unfamiliarity with local governmental and permitting procedures; and

• we may not be able to efficiently integrate acquired properties, particularly portfolios of properties, into our organization and manage new properties in a way that allows us to realize cost savings and synergies.

We acquired in the past and in the future may acquire properties or portfolios of properties through tax deferred contribution transactions in exchange for partnership interests in our Operating Partnership. This acquisition structure has the effect, among other factors, of reducing the amount of tax depreciation we can deduct over the tax life of the acquired properties, and typically requires that we agree to protect the contributors’ ability to defer recognition of taxable gain through restrictions on our ability to dispose of the acquired properties and/or the allocation of partnership debt to the contributors to maintain their tax bases. These restrictions on dispositions could limit our ability to sell an asset during a specified time, or on terms, that would be favorable absent such restrictions.

Acquired properties may subject us to known and unknown liabilities.

Properties that we acquire may be subject to known and unknown liabilities for which we would have no recourse, or only limited recourse, to the former owners of such properties. As a result, if a liability were asserted against us based upon ownership of an acquired property, we might be required to pay significant sums to settle it, which could adversely affect our financial results and cash flow. Unknown liabilities relating to acquired properties could include:

• liabilities for clean-up of pre-existing disclosed or undisclosed environmental contamination;

• claims by tenants, vendors or other persons arising on account of actions or omissions of the former owners of the properties; and

• liabilities incurred in the ordinary course of business.

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We have agreed not to sell certain of our properties and to maintain indebtedness subject to guarantees.

We agreed not to sell some of our properties for varying periods of time, in transactions that would trigger taxable income to the former owners, and we may enter into similar arrangements as a part of future property acquisitions. These agreements generally provide that we may dispose of the subject properties only in transactions that qualify as tax-free exchanges under Section 1031 of the Internal Revenue Code or in other tax deferred transactions. Such transactions can be difficult to complete and can result in the property acquired in exchange for the disposed of property inheriting the tax attributes (including tax protection covenants) of the sold property. Violation of these tax protection agreements would impose significant costs on us. As a result, we are restricted with respect to decisions related to financing, encumbering, expanding or selling these properties.

We have also entered into agreements that provide prior owners of properties with the right to guarantee specific amounts of indebtedness and, in the event that the specific indebtedness that they guarantee is repaid or reduced, we would be required to provide substitute indebtedness for them to guarantee. These agreements may hinder actions that we may otherwise desire to take to repay or refinance guaranteed indebtedness because we would be required to make payments to the beneficiaries of such agreements if we violate these agreements.

We may be unable to renew leases or re-lease space as leases expire; certain leases may expire early.

If tenants do not renew their leases upon expiration, we may be unable to re-lease the space. Even if the tenants do renew their leases or if we can re-lease the space, the terms of renewal or re-leasing (including the cost of required renovations) may be less favorable than current lease terms. Certain leases grant the tenants an early termination right upon payment of a termination penalty or if we fail to comply with certain material lease terms. Our inability to renew or release spaces and the early expiration of certain leases could affect our ability to make distributions to shareholders.

We face significant competition from other real estate developers.

We compete with real estate developers, operators and institutions for tenants and acquisition and development opportunities. Some of these competitors may have significantly greater financial resources than we have. Such competition may reduce the number of suitable investment opportunities available to us, may interfere with our ability to attract and retain tenants and may increase vacancies, which could result in increased supply and lower market rental rates, reducing our bargaining leverage and adversely affect our ability to improve our operating leverage. In addition, some of our competitors may be willing (e.g., because their properties may have vacancy rates higher than those for our properties) to make space available at lower rental rates or with higher tenant concession percentages than available space in our properties. We cannot assure you that this competition will not adversely affect our cash flow and our ability to make distributions to shareholders.

Property ownership through joint ventures may limit our ability to act exclusively in our interest.

We develop and acquire properties in joint ventures with other persons or entities when we believe circumstances warrant the use of such structures. As of December 31, 2009, we had investments in 11 unconsolidated real estate ventures and three additional real estate ventures that are consolidated in our financial statements. Our net investments in the 11 unconsolidated real estate ventures aggregated approximately $75.5 million as of December 31, 2009. We could become engaged in a dispute with one or more of our joint venture partners that might affect our ability to operate a jointly-owned property. Moreover, our joint venture partners may, at any time, have business, economic or other objectives that are inconsistent with our objectives, including objectives that relate to the appropriate timing and terms of any sale or refinancing of a property. In some instances, our joint venture partners may have competing interests in our markets that could create conflicts of interest. If the objectives of our joint venture partners or the lenders to our joint ventures are inconsistent with our own objectives, we may not be able to act exclusively in our interests. Furthermore, if the current constrained credit conditions in the capital markets persist or deteriorate further, the value of our investments could deteriorate and we could be required to reduce the carrying value of our equity method investments if a loss in the carrying value of the investment is other than a temporary decline pursuant to the accounting standard governing the equity method of accounting for investments in common stock.

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Because real estate is illiquid, we may not be able to sell properties when appropriate.

Real estate investments generally, and in particular large office and industrial/flex properties like those that we own, often cannot be sold quickly. The capitalization rates at which properties may be sold are generally higher than historic rates, thereby reducing our potential proceeds from sale. Consequently, we may not be able to alter our portfolio promptly in response to changes in economic or other conditions. In addition, the Internal Revenue Code limits our ability to sell properties that we have held for fewer than four years without potential adverse consequences to our shareholders. Furthermore, properties that we have developed and have owned for a significant period of time or that we acquired in exchange for partnership interests in our operating partnership often have a low tax basis. If we were to dispose of any of these properties in a taxable transaction, we may be required under provisions of the Internal Revenue Code applicable to REITs to distribute a significant amount of the taxable gain to our shareholders and this could, in turn, impact our cash flow. In some cases, tax protection agreements with third parties will prevent us from selling certain properties in a taxable transaction without incurring substantial costs. In addition, purchase options and rights of first refusal held by tenants or partners in joint ventures may also limit our ability to sell certain properties. All of these factors reduce our ability to respond to changes in the performance of our investments and could adversely affect our cash flow and ability to make distributions to shareholders as well as the ability of someone to purchase us, even if a purchase were in our shareholders’ best interests.

Some potential losses are not covered by insurance.

We currently carry comprehensive “all-risk” property, rental loss insurance and commercial general liability coverage on all of our properties. We believe the policy specifications and insured limits of these policies are adequate and appropriate. There are, however, types of losses, such as lease and other contract claims, biological, radiological and nuclear hazards and acts of war that generally are not insured. We cannot assure you that we will be able to renew insurance coverage in an adequate amount or at reasonable prices. In addition, insurance companies may no longer offer coverage against certain types of losses, such as losses due to earthquake, terrorist acts and mold, or, if offered, these types of insurance may be prohibitively expensive. Should an uninsured loss or a loss in excess of insured limits occur, we could lose all or a portion of the capital we have invested in a property, as well as the anticipated future revenue from the property. In such an event, we might nevertheless remain obligated for any mortgage debt or other financial obligations related to the property. We cannot assure you that material losses in excess of insurance proceeds will not occur in the future. If any of our properties were to experience a catastrophic loss, it could seriously disrupt our operations, delay revenue and result in large expenses to repair or rebuild the property. Such events could adversely affect our cash flow and ability to make distributions to shareholders. If one or more of our insurance providers were to fail to pay a claim as a result of insolvency, bankruptcy or otherwise, the nonpayment of such claims could have an adverse effect on our financial condition and results of operations. In addition, if one or more of our insurance providers were to become subject to insolvency, bankruptcy or other proceedings and our insurance policies with the provider were terminated or cancelled as a result of those proceedings, we cannot guarantee that we would be able to find alternative coverage in adequate amounts or at reasonable prices. In such case, we could experience a lapse in any or adequate insurance coverage with respect to one or more properties and be exposed to potential losses relating to any claims that may arise during such period of lapsed or inadequate coverage.

Terrorist attacks and other acts of violence or war may adversely impact our performance and may affect the markets on which our securities are traded.

Terrorist attacks against our properties, or against the United States or our interests, may negatively impact our operations and the value of our securities. Attacks or armed conflicts could result in increased operating costs; for example, it might cost more in the future for building security, property and casualty insurance, and property maintenance. As a result of terrorist activities and other market conditions, the cost of insurance coverage for our properties could also increase. We might not be able to pass through the increased costs associated with such increased security measures and insurance to our tenants, which could reduce our profitability and cash flow. Furthermore, any terrorist attacks or armed conflicts could result in increased volatility in or damage to the United States and worldwide financial markets and economy. Such adverse economic conditions could affect the ability of our tenants to pay rent and our cost of capital, which could have a negative impact on our results.

Our ability to make distributions is subject to various risks.

Historically, we have paid quarterly distributions to our shareholders. Our ability to make distributions in the future will depend upon:

• the operational and financial performance of our properties;

• capital expenditures with respect to existing, developed and newly acquired properties;

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• general and administrative costs associated with our operation as a publicly-held REIT;

• the amount of, and the interest rates on, our debt; and

• the absence of significant expenditures relating to environmental and other regulatory matters.

Certain of these matters are beyond our control and any significant difference between our expectations and actual results could have a material adverse effect on our cash flow and our ability to make distributions to shareholders.

Changes in the law may adversely affect our cash flow.

Because increases in income and service taxes are generally not passed through to tenants under leases, such increases may adversely affect our cash flow and ability to make expected distributions to shareholders. Our properties are also subject to various regulatory requirements, such as those relating to the environment, fire and safety. Our failure to comply with these requirements could result in the imposition of fines and damage awards and could result in a default under some of our tenant leases. Moreover, the costs to comply with any new or different regulations could adversely affect our cash flow and our ability to make distributions. Although we believe that our properties are in material compliance with all such requirements, we cannot assure you that these requirements will not change or that newly imposed requirements will not require significant expenditures in order to be compliant.

Potential liability for environmental contamination could result in substantial costs.

Under various federal, state and local laws, ordinances and regulations, we may be liable for the costs to investigate and remove or remediate hazardous or toxic substances on or in our properties, often regardless of whether we know of or are responsible for the presence of these substances. These costs may be substantial. While we do maintain environmental insurance, we can not be assured that our insurance coverage will be sufficient to protect us from all of the aforesaid remediation costs. Also, if hazardous or toxic substances are present on a property, or if we fail to properly remediate such substances, our ability to sell or rent the property or to borrow using that property as collateral may be adversely affected.

Other laws and regulations govern indoor and outdoor air quality including those that can require the abatement or removal of asbestos-containing materials in the event of damage, demolition, renovation or remodeling and also govern emissions of and exposure to asbestos fibers in the air. The maintenance and removal of lead paint and certain electrical equipment containing polychlorinated biphenyls (PCBs) and underground storage tanks are also regulated by federal and state laws. We are also subject to risks associated with human exposure to chemical or biological contaminants such as molds, pollens, viruses and bacteria which, above certain levels, can be alleged to be connected to allergic or other health effects and symptoms in susceptible individuals. We could incur fines for environmental compliance and be held liable for the costs of remedial action with respect to the foregoing regulated substances or tanks or related claims arising out of environmental contamination or human exposure to contamination at or from our properties.

Additionally, we develop, manage, lease and/or operate various properties for third parties. Consequently, we may be considered to have been or to be an operator of these properties and, therefore, potentially liable for removal or remediation costs or other potential costs that could relate to hazardous or toxic substances.

An earthquake or other natural disasters could adversely affect our business.

Some of our properties are located in California which is a high risk geographical area for earthquakes or other natural disasters. Depending upon its magnitude, an earthquake could severely damage our properties which would adversely affect our business. We maintain earthquake insurance for our California properties and the resulting business interruption. We cannot assure you that our insurance will be sufficient if there is a major earthquake.

Americans with Disabilities Act compliance could be costly.

The Americans with Disabilities Act of 1990, as amended (“ADA”) requires that all public accommodations and commercial facilities, including office buildings, meet certain federal requirements related to access and use by disabled persons. Compliance with ADA requirements could involve the removal of structural barriers from certain disabled persons’ entrances which could adversely affect our financial condition and results of operations. Other federal, state and local laws may require modifications to or restrict further renovations of our properties with respect to such accesses. Although we believe that our properties are in material compliance with present requirements, noncompliance with the ADA or similar or related laws or regulations could result in the United States government imposing fines or private litigants being awarded damages against us. In addition, changes to existing requirements or enactments of new requirements could require significant expenditures. Such costs may adversely affect our cash flow and ability to make distributions to shareholders.

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Our status as a REIT (or any of our REIT subsidiaries) is dependent on compliance with federal income tax requirements.

If we (or any of our REIT subsidiaries) fail to qualify as a REIT, we or the affected REIT subsidiaries would be subject to federal income tax at regular corporate rates. Also, unless the IRS granted us or our affected REIT subsidiaries, as the case may be, relief under certain statutory provisions, we or it would remain disqualified as a REIT for four years following the year it first failed to qualify. If we or any of our REIT subsidiaries fails to qualify as a REIT, we or they would be required to pay significant income taxes and would, therefore, have less money available for investments or for distributions to shareholders. This would likely have a material adverse effect on the value of the combined company’s securities. In addition, we or our affected REIT subsidiaries would no longer be required to make any distributions to shareholders.

Failure of the Operating Partnership (or a subsidiary partnership) to be treated as a partnership would have serious adverse consequences to our shareholders. If the IRS were to successfully challenge the tax status of the Operating Partnership or any of its subsidiary partnerships for federal income tax purposes, the Operating Partnership or the affected subsidiary partnership would be taxable as a corporation. In such event we would cease to qualify as a REIT and the imposition of a corporate tax on the Operating Partnership or a subsidiary partnership would reduce the amount of cash available for distribution from the Operating Partnership to us and ultimately to our shareholders.

Even if we qualify as a REIT, we will be required to pay certain federal, state and local taxes on our income and properties. In addition, our taxable REIT subsidiaries will be subject to federal, state and local income tax at regular corporate rates on their net taxable income derived from management, leasing and related service business. If we have net income from a prohibited transaction, such income will be subject to a 100% tax.

We face possible federal, state and local tax audits.

Because we are organized and qualify as a REIT, we are generally not subject to federal income taxes, but are subject to certain state and local taxes. Certain entities through which we own real estate either have undergone, or are currently undergoing, tax audits. Although we believe that we have substantial arguments in favor of our positions in the ongoing audits, in some instances there is no controlling precedent or interpretive guidance on the specific point at issue. There can be no assurance that these or future audits will not have a material adverse effect on our results of operations. We are currently being audited by the Internal Revenue Service for our 2004 tax year. The audit concerns the tax treatment of a transaction in September 2004 in which we acquired a portfolio of properties through the acquisition of a limited partnership. At this time it does not appear that an adjustment would result in a material tax liability for us. However, an adjustment could raise a question as to whether a contributor of partnership interests in the 2004 transaction could assert a claim against us under the tax protection agreement entered into as part of the transaction.

Competition for skilled personnel could increase labor costs.

We compete with various other companies in attracting and retaining qualified and skilled personnel. We depend on our ability to attract and retain skilled management personnel who are responsible for the day-to-day operations of our company. Competitive pressures may require that we enhance our pay and benefits package to compete effectively for such personnel. We may not be able to offset such added costs by increasing the rates we charge tenants. If there is an increase in these costs or if we fail to attract and retain qualified and skilled personnel, our business and operating results could be harmed.

We are dependent upon our key personnel.

We are dependent upon our key personnel whose continued service is not guaranteed. We are dependent on our executive officers for strategic business direction and real estate experience. Loss of their services could adversely affect our operations.

-21-

Although we have an employment agreement with Gerard H. Sweeney, our President and Chief Executive Officer, for a term extending to February 9, 2011, this agreement does not restrict his ability to become employed by a competitor following the termination of his employment. We do not have key man life insurance coverage on our executive officers.

Certain limitations will exist with respect to a third party’s ability to acquire us or effectuate a change in control.

Limitations imposed to protect our REIT status. In order to protect us against the loss of our REIT status, our Declaration of Trust limits any shareholder from owning more than 9.8% in value of our outstanding shares, subject to certain exceptions. The ownership limit may have the effect of precluding acquisition of control of us. If anyone acquires shares in excess of the ownership limit, we may:

• consider the transfer to be null and void;

• not reflect the transaction on our books;

• institute legal action to stop the transaction;

• not pay dividends or other distributions with respect to those shares;

• not recognize any voting rights for those shares; and

• consider the shares held in trust for the benefit of a person to whom such shares may be transferred.

Limitation due to our ability to issue preferred shares.Our Declaration of Trust authorizes our Board of Trustees to cause us to issue preferred shares, without limitation as to amount and without shareholder consent. Our Board of Trustees is able to establish the preferences and rights of any preferred shares issued and these shares could have the effect of delaying or preventing someone from taking control of us, even if a change in control were in our shareholders’ best interests.

Limitation imposed by the Maryland Business Combination Law. The Maryland General Corporation Law, as applicable to Maryland REITs, establishes special restrictions against “business combinations” between a Maryland REIT and “interested shareholders” or their affiliates unless an exemption is applicable. An interested shareholder includes a person, who beneficially owns, and an affiliate or associate of the trust who, at any time within the two-year period prior to the date in question, was the beneficial owner of, ten percent or more of the voting power of our then-outstanding voting shares. Among other things, Maryland law prohibits (for a period of five years) a merger and certain other transactions between a Maryland REIT and an interested shareholder unless the board of trustees had approved the transaction before the party became an interested shareholder. The five-year period runs from the most recent date on which the interested shareholder became an interested shareholder. Thereafter, any such business combination must be recommended by the board of trustees and approved by two super-majority shareholder votes unless, among other conditions, the common shareholders receive a minimum price for their shares and the consideration is received in cash or in the same form as previously paid by the interested shareholder for our shares or unless the board of trustees approved the transaction before the party in question became an interested shareholder. The business combination statute could have the effect of discouraging offers to acquire us and of increasing the difficulty of consummating any such offers, even if the acquisition would be in our shareholders’ best interests.

Maryland Control Share Acquisition Act. Maryland law provides that “control shares” of a REIT acquired in a “control share acquisition” shall have no voting rights except to the extent approved by a vote of two-thirds of the vote eligible to be cast on the matter under the Maryland Control Share Acquisition Act. “Control Shares” means shares that, if aggregated with all other shares previously acquired by the acquirer or in respect of which the acquirer is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquirer to exercise voting power in electing trustees within one of the following ranges of voting power: one-tenth or more but less than one-third, one-third or more but less than a majority or a majority or more of all voting power. Control shares do not include shares the acquiring person is then entitled to vote as a result of having previously obtained shareholder approval. A “control share acquisition” means the acquisition of control shares, subject to certain exceptions. If voting rights or control shares acquired in a control share acquisition are not approved at a shareholder’s meeting, then subject to certain conditions and limitations the issuer may redeem any or all of the control shares for fair value. If voting rights of such control shares are approved at a shareholder’s meeting and the acquirer becomes entitled to vote a majority of the shares entitled to vote, all other shareholders may exercise appraisal rights. Any control shares acquired in a control share acquisition which are not exempt under our Bylaws are subject to the Maryland Control Share Acquisition Act. Our Bylaws contain a provision exempting from the control share acquisition statute any and all acquisitions by any person of our shares. We cannot assure you that this provision will not be amended or eliminated at any time in the future.

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Advance Notice Provisions for Shareholder Nominations and Proposals.Our bylaws require advance notice for shareholders to nominate persons for election as trustees at, or to bring other business before, any meeting of our shareholders. This bylaw provision limits the ability of shareholders to make nominations of persons for election as trustees or to introduce other proposals unless we are notified in a timely manner prior to the meeting.

Many factors can have an adverse effect on the market value of our securities.

A number of factors might adversely affect the price of our securities, many of which are beyond our control. These factors include:

• increases in market interest rates, relative to the dividend yield on our shares. If market interest rates go up, prospective purchasers of our securities may require a higher yield. Higher market interest rates would not, however, result in more funds for us to distribute and, to the contrary, would likely increase our borrowing costs and potentially decrease funds available for distribution. Thus, higher market interest rates could cause the market price of our common shares to go down;

• anticipated benefit of an investment in our securities as compared to investment in securities of companies in other industries (including benefits associated with tax treatment of dividends and distributions);

• perception by market professionals of REITs generally and REITs comparable to us in particular;

• level of institutional investor interest in our securities;

• relatively low trading volumes in securities of REITs;

• our results of operations and financial condition; and

• investor confidence in the stock market generally.

The market value of our common shares is based primarily upon the market’s perception of our growth potential and our current and potential future earnings and cash distributions. Consequently, our common shares may trade at prices that are higher or lower than our net asset value per common share. If our future earnings or cash distributions are less than expected, it is likely that the market price of our common shares will diminish.

Additional issuances of equity securities may be dilutive to shareholders.

The interests of our shareholders could be diluted if we issue additional equity securities to finance future developments or acquisitions or to repay indebtedness. Our Board of Trustees may authorize the issuance of additional equity securities without shareholder approval. Our ability to execute our business strategy depends upon our access to an appropriate blend of debt financing, including unsecured lines of credit and other forms of secured and unsecured debt, and equity financing, including the issuance of common and preferred equity.

The issuance of preferred securities may adversely affect the rights of holders of our common shares.

Because our Board of Trustees has the power to establish the preferences and rights of each class or series of preferred shares, we may afford the holders in any series or class of preferred shares preferences, distributions, powers and rights, voting or otherwise, senior to the rights of holders of common shares. Our Board of Trustees also has the power to establish the preferences and rights of each class or series of units in Brandywine Operating Partnership, and may afford the holders in any series or class of preferred units preferences, distributions, powers and rights, voting or otherwise, senior to the rights of holders of common units.

-23-

The acquisition of new properties or the development of new properties which lack operating history with us may give rise to difficulties in predicting revenue potential.

We may continue to acquire additional properties and may seek to develop our existing land holdings strategically as warranted by market conditions. These acquisitions and developments could fail to perform in accordance with expectations. If we fail to accurately estimate occupancy levels, operating costs or costs of improvements to bring an acquired property or a development property up to the standards established for our intended market position, the performance of the property may be below expectations. Acquired properties may have characteristics or deficiencies affecting their valuation or revenue potential that we have not yet discovered. We cannot assure you that the performance of properties acquired or developed by us will increase or be maintained under our management.

Our performance is dependent upon the economic conditions of the markets in which our properties are located.

Our properties are located in Pennsylvania, New Jersey, Delaware, Maryland, Virginia, Texas, and California. Like other real estate markets, these commercial real estate markets have been impacted by the recent economic downturns, and future declines in 2010 in any of these economies or real estate markets could adversely affect cash available for distribution. Our financial performance and ability to make distributions to our shareholders will be particularly sensitive to the economic conditions in these markets. The local economic climate, which may be adversely impacted by business layoffs or downsizing, industry slowdowns, changing demographics and other factors, and local real estate conditions, such as oversupply of or reduced demand for office, industrial and other competing commercial properties, may affect revenues and the value of properties, including properties to be acquired or developed. We cannot assure you that these local economies will grow in the future.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

Property Acquisitions

We did not acquire any properties during the year ended December 31, 2009.

Development and Redevelopment Properties Placed in Service

We placed in service the following office properties during the year ended December 31, 2009:

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Month Placed			# of		Rentable
in Service	Property/Portfolio Name	Location	Buildings		Square Feet
Jul-09	One Rockledge Associates	Bethesda, MD		1		160,173
Jul-09	Delaware Corporate Center II	Wilmington, DE		1		95,514
Jul-09	Atrium I	Mount Laurel, NJ		1		99,668
Oct-09	100 Lenox Drive	Lawrenceville, NJ		1		50,942
	Total Properties Placed in Service			4		406,297

We place a property under development in service on the date the property reaches 95% occupancy.

Property Sales

We sold the following office properties during the year ended December 31, 2009:

Month of			# of		Rentable Square		Sales
Sale	Property/Portfolio Name	Location	Bldgs.		Feet/ Acres		Price
							(in 000’s)
Feb-09	748 and 855 Springdale Drive	Exton, PA		2		66,664	$	8,950
Mar-09	305 Harper Drive	Moorestown, NJ		1		14,980		1,100
Apr-09	7735 Georgetown Road	Bethesda, MD		1		122,543		26,500
Oct-09	Trenton Office Properties	Trenton, NJ		2		473,658		85,000	(b)
Oct-09	100 Lenox Drive (a)	Lawrenceville, NJ		1		40,508		7,900
	Total Office Properties Sold			7		718,353	$	129,450

(a)-	Pertains to the sale of a condominium interest in an office building.
(b)-	Recorded in accordance with the installment sales method of accounting.

Properties

As of December 31, 2009, we owned 212 office properties, 22 industrial facilities and three mixed-use properties that contain an aggregate of approximately 23.3 million net rentable square feet. We also have two properties under development and three properties under redevelopment containing an aggregate 1.9 million net rentable square feet. As of December 31, 2009, we consolidated three office properties owned by real estate ventures containing 0.4 million net rentable square feet. The properties are located in and surrounding Philadelphia, PA, Metropolitan Washington, D.C., Southern and Central New Jersey, Richmond, VA, Wilmington, DE, Austin, TX, and Oakland, Concord, Carlsbad and Rancho Bernardo, CA. As of December 31, 2009, the Properties were approximately 88.2% occupied by 1,357 tenants and had an average age of approximately 18.5 years. The office properties are primarily suburban office buildings containing an average of approximately 0.1 million net rentable square feet. The industrial properties accommodate a variety of tenant uses, including light manufacturing, assembly, distribution and warehousing. We carry comprehensive liability, fire, extended coverage and rental loss insurance covering all of the properties, with policy specifications and insured limits which we believe are adequate.

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We had the following projects in development or redevelopment as of December 31, 2009:

				%
				Leased
		Rentable		as of			Stabilization
Project Name	Location	Square Feet		12/31/09			Date (a)
Under Development:
Post Office/IRS	Philadelphia, PA		862,692		100.0	%		Q3’ 10
Cira South Garage	Philadelphia, PA		553,421		92.6	%		Q3’ 10
			1,416,113
Under Redevelopment:
Radnor Corporate Center I	Radnor, PA		190,219		89.7	%		Q1’ 10
300 Delaware Avenue	Wilmington, DE		298,071		71.9	%		Q2’ 10
Juniper Street (b)	Philadelphia, PA		—		N/A			Q2’ 11
			488,290
			1,904,403

(a)	Projected stabilization date represents the date the property reaches 95% occupancy.
(b)	This pertains to the redevelopment of a 220 space parking garage.

As of December 31, 2009, the above five projects accounted for $239.9 million of the $272.0 million of construction in progress shown on our consolidated balance sheet.

As of December 31, 2009, we expect our development and redevelopment costs, including estimated tenant improvements, for these five projects to aggregate $396.0 million.

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The following table sets forth information with respect to our core properties at December 31, 2009:

														Average
												Total Base Rent		Annualized
							Net		Percentage			for the Twelve		Rental Rate
					Year		Rentable		Leased as of			Months Ended		as of
					Built/		Square		December 31,			December 31,		December 31,
Property Name			Location	State	Renovated		Feet		2009 (a)			2009 (b) (000’s)		2009 (c)
PENNSYLVANIA SEGMENT
2929 Arch Street	(d	)	Philadelphia	PA		2005		729,897		100.0	%	$	24,315	$	35.11
100 North 18th Street	(e	)	Philadelphia	PA		1988		703,386		96.3	%		20,546		31.40
130 North 18th Street			Philadelphia	PA		1983		594,755		100.0	%		12,492		28.50
150 Radnor Chester Road			Radnor	PA		2004		340,262		100.0	%		9,572		29.41
201 King of Prussia Road			Radnor	PA		2001		251,372		86.5	%		6,119		28.68
555 Lancaster Avenue			Radnor	PA		1973		242,099		99.9	%		6,381		28.41
401 Plymouth Road			Plymouth Meeting	PA		2001		201,883		100.0	%		6,122		32.83
Philadelphia Marine Center	(d	)	Philadelphia	PA	Various			181,900		100.0	%		1,243		5.51
101 West Elm Street			W. Conshohocken	PA		1999		175,009		85.4	%		4,026		26.53
Four Radnor Corporate Center			Radnor	PA		1995		165,138		89.3	%		3,058		25.30
Five Radnor Corporate Center			Radnor	PA		1998		164,577		90.5	%		4,372		32.37
751-761 Fifth Avenue			King Of Prussia	PA		1967		158,000		100.0	%		574		3.64
630 Allendale Road			King of Prussia	PA		2000		150,000		100.0	%		3,722		27.03
640 Freedom Business Center	(d	)	King Of Prussia	PA		1991		132,000		86.7	%		2,187		24.31
52 Swedesford Square			East Whiteland Twp.	PA		1988		131,017		100.0	%		2,972		24.01
400 Berwyn Park			Berwyn	PA		1999		124,182		100.0	%		3,276		28.98
4000 Chemical Road			Plymouth Meeting	PA		2007		120,877		74.8	%		1,345		18.48
Three Radnor Corporate Center			Radnor	PA		1998		119,463		89.3	%		2,715		25.07
101 Lindenwood Drive			Malvern	PA		1988		118,121		44.6	%		1,609		21.24
181 Washington Street	(h	)	Conshohocken	PA		1999		115,122		68.5	%		2,904		28.23
300 Berwyn Park			Berwyn	PA		1989		108,619		44.3	%		1,204		21.23
442 Creamery Way	(f	)	Exton	PA		1991		104,500		100.0	%		598		6.79
Two Radnor Corporate Center			Radnor	PA		1998		100,973		56.4	%		1,572		21.85
301 Lindenwood Drive			Malvern	PA		1984		97,813		93.7	%		1,856		17.40
1 West Elm Street			W. Conshohocken	PA		1999		97,737		79.7	%		2,080		27.06
555 Croton Road			King of Prussia	PA		1999		96,909		90.3	%		2,264		29.40
500 North Gulph Road			King Of Prussia	PA		1979		93,082		90.3	%		1,402		18.99
620 West Germantown Pike			Plymouth Meeting	PA		1990		90,183		74.2	%		1,399		24.44
610 West Germantown Pike			Plymouth Meeting	PA		1987		90,152		76.2	%		1,610		27.47
630 West Germantown Pike			Plymouth Meeting	PA		1988		89,925		97.2	%		1,969		27.51
600 West Germantown Pike			Plymouth Meeting	PA		1986		89,681		83.4	%		1,482		25.18
630 Freedom Business Center	(d	)	King Of Prussia	PA		1989		86,683		92.1	%		1,660		24.25
1200 Swedesford Road			Berwyn	PA		1994		86,622		76.5	%		1,366		29.20
620 Freedom Business Center	(d	)	King Of Prussia	PA		1986		86,570		100.0	%		1,748		24.02
200 Barr Harbour Drive	(h	)	Conshohocken	PA		1998		86,021		100.0	%		2,484		30.35
595 East Swedesford Road			Wayne	PA		1998		81,890		100.0	%		1,750		23.01
1050 Westlakes Drive			Berwyn	PA		1984		80,000		100.0	%		1,984		25.00
One Progress Drive			Horsham	PA		1986		79,204		100.0	%		845		13.45
1060 First Avenue	(e	)	King Of Prussia	PA		1987		77,718		100.0	%		1,061		21.47
741 First Avenue			King Of Prussia	PA		1966		77,184		100.0	%		580		9.10
1040 First Avenue	(e	)	King Of Prussia	PA		1985		75,488		84.8	%		1,287		23.18
200 Berwyn Park			Berwyn	PA		1987		75,025		100.0	%		1,296		19.20
1020 First Avenue	(e	)	King Of Prussia	PA		1984		74,556		100.0	%		1,608		20.25
1000 First Avenue	(e	)	King Of Prussia	PA		1980		74,139		86.7	%		1,367		22.93
436 Creamery Way			Exton	PA		1991		72,300		96.2	%		726		14.53

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														Average
												Total Base Rent		Annualized
							Net		Percentage			for the Twelve		Rental Rate
					Year		Rentable		Leased as of			Months Ended		as of
					Built/		Square		December 31,			December 31,		December 31,
Property Name			Location	State	Renovated		Feet		2009 (a)			2009 (b) (000’s)		2009 (c)
130 Radnor Chester Road			Radnor	PA		2004		71,349		100.0	%		2,150		31.35
170 Radnor Chester Road			Radnor	PA		2004		69,787		92.6	%		1,597		25.21
14 Campus Boulevard			Newtown Square	PA		1998		69,542		100.0	%		1,815		25.00
500 Enterprise Road			Horsham	PA		1990		66,751		0.0	%		—		—
575 East Swedesford Road			Wayne	PA		1985		66,265		100.0	%		1,235		28.53
429 Creamery Way			Exton	PA		1996		63,420		100.0	%		790		16.72
610 Freedom Business Center	(d	)	King Of Prussia	PA		1985		62,991		88.9	%		720		23.43
925 Harvest Drive			Blue Bell	PA		1990		62,957		96.7	%		1,032		21.23
980 Harvest Drive			Blue Bell	PA		1988		62,379		100.0	%		1,383		24.16
426 Lancaster Avenue			Devon	PA		1990		61,102		100.0	%		1,213		19.90
1180 Swedesford Road			Berwyn	PA		1987		60,371		100.0	%		1,880		33.08
1160 Swedesford Road			Berwyn	PA		1986		60,099		100.0	%		1,493		26.04
100 Berwyn Park			Berwyn	PA		1986		57,731		42.7	%		735		21.99
440 Creamery Way			Exton	PA		1991		57,218		88.8	%		790		16.85
640 Allendale Road	(f	)	King of Prussia	PA		2000		56,034		100.0	%		350		8.60
565 East Swedesford Road			Wayne	PA		1984		55,979		83.4	%		818		22.64
650 Park Avenue			King Of Prussia	PA		1968		54,338		100.0	%		822		17.10
910 Harvest Drive			Blue Bell	PA		1990		52,611		100.0	%		1,040		20.23
680 Allendale Road			King Of Prussia	PA		1962		52,528		0.0	%		—		—
2240/50 Butler Pike			Plymouth Meeting	PA		1984		52,229		100.0	%		1,102		22.59
920 Harvest Drive			Blue Bell	PA		1990		51,875		100.0	%		1,009		21.19
486 Thomas Jones Way			Exton	PA		1990		51,372		69.1	%		619		21.09
660 Allendale Road	(f	)	King of Prussia	PA		1962		50,635		0.0	%		93		—
875 First Avenue			King Of Prussia	PA		1966		50,000		100.0	%		1,037		22.00
630 Clark Avenue			King Of Prussia	PA		1960		50,000		100.0	%		301		8.19
620 Allendale Road			King Of Prussia	PA		1961		50,000		67.0	%		536		16.06
15 Campus Boulevard			Newtown Square	PA		2002		49,621		100.0	%		1,018		25.62
479 Thomas Jones Way			Exton	PA		1988		49,264		63.0	%		556		18.04
17 Campus Boulevard			Newtown Square	PA		2001		48,565		100.0	%		1,202		30.39
11 Campus Boulevard			Newtown Square	PA		1998		47,699		100.0	%		1,111		25.75
456 Creamery Way			Exton	PA		1987		47,604		100.0	%		372		6.68
585 East Swedesford Road			Wayne	PA		1998		43,683		100.0	%		771		27.01
1100 Cassett Road			Berwyn	PA		1997		43,480		100.0	%		1,106		32.09
467 Creamery Way			Exton	PA		1988		42,000		100.0	%		568		19.31
1336 Enterprise Drive			West Goshen	PA		1989		39,330		100.0	%		796		24.10
600 Park Avenue			King Of Prussia	PA		1964		39,000		100.0	%		545		16.17
412 Creamery Way			Exton	PA		1999		38,098		86.0	%		591		17.71
18 Campus Boulevard			Newtown Square	PA		1990		37,374		85.3	%		702		20.62
457 Creamery Way			Exton	PA		1990		36,019		100.0	%		285		—
100 Arrandale Boulevard			Exton	PA		1997		34,931		100.0	%		456		17.43
300 Lindenwood Drive			Malvern	PA		1991		33,000		100.0	%		794		23.41
2260 Butler Pike			Plymouth Meeting	PA		1984		31,892		100.0	%		658		22.02
120 West Germantown Pike			Plymouth Meeting	PA		1984		30,574		100.0	%		528		19.75
468 Thomas Jones Way			Exton	PA		1990		28,934		100.0	%		550		19.50
1700 Paoli Pike			Malvern	PA		2000		28,000		0.0	%		378		—
140 West Germantown Pike			Plymouth Meeting	PA		1984		25,357		76.0	%		383		25.12

-28-

														Average
												Total Base Rent		Annualized
							Net		Percentage			for the Twelve		Rental Rate
					Year		Rentable		Leased as of			Months Ended		as of
					Built/		Square		December 31,			December 31,		December 31,
Property Name			Location	State	Renovated		Feet		2009 (a)			2009 (b) (000’s)		2009 (c)
481 John Young Way			Exton	PA		1997		19,275		100.0	%		510		26.07
100 Lindenwood Drive			Malvern	PA		1985		18,400		100.0	%		357		20.03
200 Lindenwood Drive			Malvern	PA		1984		12,600		0.0	%		99		—
111 Arrandale Road			Exton	PA		1996		10,479		100.0	%		198		18.74
SUBTOTAL/WEIGHTED AVG — PENNSYLVANIA SEGMENT		��						9,446,776		90.6	%		195,842		21.06
METROPOLITAN WASHINGTON D.C. SEGMENT
1676 International Drive			McLean	VA		1999		299,387		93.8	%		8,877		30.87
13820 Sunrise Valley Drive			Herndon	VA		2007		268,240		100.0	%		4,676		27.76
2340 Dulles Corner Boulevard			Herndon	VA		1987		264,405		100.0	%		8,077		31.18
2291 Wood Oak Drive			Herndon	VA		1999		227,574		100.0	%		5,332		30.16
7101 Wisconsin Avenue			Bethesda	MD		1975		223,054		98.0	%		6,848		33.33
1900 Gallows Road			Vienna	VA		1989		210,632		64.8	%		3,957		26.04
3130 Fairview Park Drive			Falls Church	VA		1999		180,645		78.6	%		5,055		32.81
3141 Fairview Park Drive			Falls Church	VA		1988		180,611		90.4	%		4,209		28.33
2355 Dulles Corner Boulevard			Herndon	VA		1988		179,176		84.0	%		4,918		32.48
2411 Dulles Corner Park			Herndon	VA		1990		176,618		100.0	%		5,697		32.24
1880 Campus Commons Drive			Reston	VA		1985		172,448		100.0	%		3,112		22.18
2121 Cooperative Way			Herndon	VA		2000		161,275		83.5	%		4,024		31.86
6600 Rockledge Drive	(d	)	Bethesda	MD		1981		160,173		57.7	%		2,960		30.55
8260 Greensboro Drive			McLean	VA		1980		158,961		76.7	%		3,230		26.27
2251 Corporate Park Drive			Herndon	VA		2000		158,016		100.0	%		5,190		34.40
12015 Lee Jackson Memorial Highway			Fairfax	VA		1985		153,255		100.0	%		3,756		27.50
13880 Dulles Corner Lane			Herndon	VA		1997		151,747		100.0	%		4,686		36.65
8521 Leesburg Pike			Vienna	VA		1984		150,897		71.0	%		3,548		28.68
2273 Research Boulevard			Rockville	MD		1999		147,689		98.4	%		4,348		33.88
2275 Research Boulevard			Rockville	MD		1990		147,650		100.0	%		3,716		30.56
2201 Cooperative Way			Herndon	VA		1990		138,806		85.7	%		3,896		34.95
2277 Research Boulevard			Rockville	MD		1986		137,045		100.0	%		3,360		29.78
11781 Lee Jackson Memorial Highway			Fairfax	VA		1982		130,935		97.8	%		3,193		26.29
11720 Beltsville Drive			Beltsville	MD		1987		128,903		71.6	%		2,320		24.54
13825 Sunrise Valley Drive			Herndon	VA		1989		104,150		12.4	%		651		25.61
198 Van Buren Street			Herndon	VA		1996		98,934		93.5	%		2,957		33.80
196 Van Buren Street			Herndon	VA		1991		97,781		57.9	%		2,019		32.27
11700 Beltsville Drive			Beltsville	MD		1981		96,843		98.2	%		2,104		22.81
11710 Beltsville Drive			Beltsville	MD		1987		81,281		100.0	%		1,864		26.01
4401 Fair Lakes Court			Fairfax	VA		1988		55,972		100.0	%		1,377		27.97
11740 Beltsville Drive			Beltsville	MD		1987		6,783		100.0	%		140		25.81
SUBTOTAL/WEIGHTED AVG — METROPOLITAN WASHINGTON D.C. SEGMENT								4,849,886		88.5	%		120,097		29.60
NEW JERSEY/DELAWARE SEGMENT
920 North King Street			Wilmington	DE		1989		203,328		96.7	%		4,583		27.32
10000 Midlantic Drive			Mt. Laurel	NJ		1990		183,147		97.5	%		2,577		26.42
1009 Lenox Drive			Lawrenceville	NJ		1989		180,734		92.4	%		4,273		28.37
525 Lincoln Drive West			Marlton	NJ		1986		165,956		90.2	%		2,866		24.72
Main Street — Plaza 1000			Voorhees	NJ		1988		162,364		71.2	%		2,733		27.28

-29-

															Average
												Total Base Rent			Annualized
							Net		Percentage			for the Twelve			Rental Rate
					Year		Rentable		Leased as of			Months Ended			as of
					Built/		Square		December 31,			December 31,			December 31,
Property Name			Location	State	Renovated		Feet		2009 (a)			2009 (b) (000’s)			2009 (c)
400 Commerce Drive			Newark	DE		1997		154,086		100.0	%		2,321			16.10
457 Haddonfield Road			Cherry Hill	NJ		1990		121,737		89.7	%		2,536			22.82
2000 Midlantic Drive			Mt. Laurel	NJ		1989		121,658		61.3	%		1,036			25.32
700 East Gate Drive			Mt. Laurel	NJ		1984		119,272		84.8	%		1,805			22.24
2000 Lenox Drive			Lawrenceville	NJ		2000		119,114		100.0	%		3,230			30.73
989 Lenox Drive			Lawrenceville	NJ		1984		112,055		52.2	%		2,155			29.93
993 Lenox Drive			Lawrenceville	NJ		1985		111,124		100.0	%		2,889			28.83
1000 Howard Boulevard			Mt. Laurel	NJ		1988		105,312		95.7	%		1,845			23.90
One Righter Parkway	(d	)	Wilmington	DE		1989		104,761		97.0	%		2,359			24.74
1000 Atrium Way			Mt. Laurel	NJ		1989		99,668		96.2	%		1,412			23.63
997 Lenox Drive			Lawrenceville	NJ		1987		97,277		79.7	%		2,226			27.25
Two Righter Parkway	(d	)	Wilmington	DE		1987		95,514		80.9	%		1,780			25.10
1120 Executive Boulevard			Mt. Laurel	NJ		1987		95,278		100.0	%		1,592			27.94
15000 Midlantic Drive			Mt. Laurel	NJ		1991		84,056		77.8	%		879			22.43
220 Lake Drive East			Cherry Hill	NJ		1988		78,509		69.8	%		1,200			22.37
10 Lake Center Drive			Marlton	NJ		1989		76,359		90.6	%		1,186			21.19
200 Lake Drive East			Cherry Hill	NJ		1989		76,352		83.2	%		1,506			25.47
1200 Lenox Drive			Lawrenceville	NJ		2007		75,000		61.0	%		1,055			24.59
Three Greentree Centre			Marlton	NJ		1984		69,300		98.6	%		1,331			24.86
200 Commerce Drive			Newark	DE		1998		68,034		100.0	%		1,327			20.07
9000 Midlantic Drive			Mt. Laurel	NJ		1989		67,299		100.0	%		836			26.85
6 East Clementon Road			Gibbsboro	NJ		1980		66,236		96.5	%		979			29.92
100 Commerce Drive			Newark	DE		1989		62,787		92.6	%		1,094			21.04
701 East Gate Drive			Mt. Laurel	NJ		1986		61,794		75.8	%		708			22.95
210 Lake Drive East			Cherry Hill	NJ		1986		60,604		89.2	%		924			23.41
308 Harper Drive			Moorestown	NJ		1976		59,500		56.8	%		508			22.96
305 Fellowship Drive			Mt. Laurel	NJ		1980		56,824		100.0	%		1,101	��		24.08
Two Greentree Centre			Marlton	NJ		1983		56,075		76.1	%		448			22.01
309 Fellowship Drive			Mt. Laurel	NJ		1982		55,911		82.1	%		846			25.79
One Greentree Centre			Marlton	NJ		1982		55,838		65.8	%		684			22.08
8000 Lincoln Drive			Marlton	NJ		1997		54,923		100.0	%		1,040			13.63
307 Fellowship Drive			Mt. Laurel	NJ		1981		54,485		60.3	%		704			26.61
303 Fellowship Drive			Mt. Laurel	NJ		1979		53,768		70.7	%		637			22.72
1000 Bishops Gate			Mt. Laurel	NJ		2005		53,281		100.0	%		1,208			25.02
1000 Lenox Drive			Lawrenceville	NJ		1982		52,264		100.0	%		1,329			29.52
100 Lenox Drive			Lawrenceville	NJ		1991		50,942		100.0	%		681			16.51
2 Foster Avenue	(f	)	Gibbsboro	NJ		1974		50,761		94.6	%		195			4.58
4000 Midlantic Drive			Mt. Laurel	NJ		1998		46,945		100.0	%		657			24.48
Five Eves Drive			Marlton	NJ		1986		45,564		100.0	%		730			22.35
161 Gaither Drive			Mount Laurel	NJ		1987		44,739		96.4	%		603			21.82
Main Street — Piazza			Voorhees	NJ		1990		44,708		89.6	%		663			19.27
30 Lake Center Drive			Marlton	NJ		1986		40,287		91.3	%		652			19.46
20 East Clementon Road			Gibbsboro	NJ		1986		38,260		74.7	%		359			19.86
Two Eves Drive			Marlton	NJ		1987		37,532		62.0	%		416			18.94
304 Harper Drive			Moorestown	NJ		1975		32,978		83.6	%		512			24.30
Main Street — Promenade			Voorhees	NJ		1988		31,445		80.0	%		355			14.94
Four B Eves Drive			Marlton	NJ		1987		27,011		100.0	%		408			17.40
815 East Gate Drive			Mt. Laurel	NJ		1986		25,500		65.1	%		296			17.94
817 East Gate Drive			Mt. Laurel	NJ		1986		25,351		100.0	%		268			13.88

-30-

														Average
												Total Base Rent		Annualized
							Net		Percentage			for the Twelve		Rental Rate
					Year		Rentable		Leased as of			Months Ended		as of
					Built/		Square		December 31,			December 31,		December 31,
Property Name			Location	State	Renovated		Feet		2009 (a)			2009 (b) (000’s)		2009 (c)
Four A Eves Drive			Marlton	NJ		1987		24,687		100.0	%		311		16.81
1 Foster Avenue	(f	)	Gibbsboro	NJ		1972		24,255		100.0	%		95		4.58
4 Foster Avenue	(f	)	Gibbsboro	NJ		1974		23,372		100.0	%		159		7.78
7 Foster Avenue			Gibbsboro	NJ		1983		22,158		61.8	%		300		21.37
10 Foster Avenue			Gibbsboro	NJ		1983		18,651		90.4	%		194		18.47
5 U.S. Avenue	(f	)	Gibbsboro	NJ		1987		5,000		100.0	%		24		5.00
50 East Clementon Road			Gibbsboro	NJ		1986		3,080		100.0	%		174		56.41
5 Foster Avenue			Gibbsboro	NJ		1968		2,000		100.0	%		—		—
SUBTOTAL/WEIGHTED AVG — NEW JERSEY/DELAWARE SEGMENT								4,416,810		87.3	%		73,800		22.07
RICHMOND, VA SEGMENT
300 Arboretum Place			Richmond	VA		1988		212,698		94.5	%		3,378		18.05
6800 Paragon Place			Richmond	VA		1986		144,722		85.5	%		2,571		20.64
6802 Paragon Place			Richmond	VA		1989		143,567		89.4	%		2,262		18.23
7501 Boulders View Drive			Richmond	VA		1990		137,283		62.7	%		1,980		17.65
2511 Brittons Hill Road	(f	)	Richmond	VA		1987		132,548		100.0	%		678		6.65
2100-2116 West Laburnam Avenue			Richmond	VA		1976		127,929		89.3	%		1,568		14.51
1957 Westmoreland Street	(g	)	Richmond	VA		1975		121,815		0.0	%		184		—
7300 Beaufont Springs Drive			Richmond	VA		2000		120,665		100.0	%		2,573		22.03
1025 Boulders Parkway			Richmond	VA		1994		93,143		98.8	%		1,826		20.43
2201-2245 Tomlynn Street	(f	)	Richmond	VA		1989		85,860		91.9	%		473		8.33
7401 Beaufont Springs Drive			Richmond	VA		1998		82,639		73.4	%		1,311		20.62
7325 Beaufont Springs Drive			Richmond	VA		1999		75,218		100.0	%		1,554		22.29
100 Gateway Centre Parkway			Richmond	VA		2001		74,991		67.2	%		520		16.81
6806 Paragon Place			Richmond	VA		2007		74,480		100.0	%		1,754		24.61
9011 Arboretum Parkway			Richmond	VA		1991		73,183		93.0	%		1,292		18.72
4805 Lake Brooke Drive			Glen Allen	VA		1996		60,867		100.0	%		1,057		19.02
9100 Arboretum Parkway			Richmond	VA		1988		57,974		93.7	%		864		16.24
2812 Emerywood Parkway			Henrico	VA		1980		56,984		87.4	%		857		15.46
4364 South Alston Avenue			Durham	NC		1985		56,601		100.0	%		1,132		21.37
2277 Dabney Road	(f	)	Richmond	VA		1986		50,400		100.0	%		267		7.40
9200 Arboretum Parkway			Richmond	VA		1988		49,542		100.0	%		467		17.04
9210 Arboretum Parkway			Richmond	VA		1988		48,012		89.5	%		563		14.85
2212-2224 Tomlynn Street	(f	)	Richmond	VA		1985		45,353		100.0	%		230		7.55
2221-2245 Dabney Road	(f	)	Richmond	VA		1994		45,250		86.2	%		234		7.80
2251 Dabney Road	(f	)	Richmond	VA		1983		42,000		100.0	%		209		6.77
2161-2179 Tomlynn Street	(f	)	Richmond	VA		1985		41,550		100.0	%		273		8.45
2256 Dabney Road	(f	)	Richmond	VA		1982		33,413		100.0	%		232		8.84
2246 Dabney Road	(f	)	Richmond	VA		1987		33,271		100.0	%		287		11.11
2244 Dabney Road	(f	)	Richmond	VA		1993		33,050		100.0	%		297		11.52
9211 Arboretum Parkway			Richmond	VA		1991		30,791		63.1	%		330		13.87
2248 Dabney Road	(f	)	Richmond	VA		1989		30,184		100.0	%		194		9.03
2130-2146 Tomlynn Street	(f	)	Richmond	VA		1988		29,700		57.6	%		179		11.75
2120 Tomlyn Street	(f	)	Richmond	VA		1986		23,850		100.0	%		133		7.67
2240 Dabney Road	(f	)	Richmond	VA		1984		15,389		100.0	%		138		11.85
SUBTOTAL/WEIGHTED AVG — RICHMOND, VA SEGMENT								2,484,922		86.3	%		31,867		14.03

-31-

															Average
												Total Base Rent			Annualized
							Net		Percentage			for the Twelve			Rental Rate
					Year		Rentable		Leased as of			Months Ended			as of
					Built/		Square		December 31,			December 31,			December 31,
Property Name			Location	State	Renovated		Feet		2009 (a)			2009 (b) (000’s)			2009 (c)
CALIFORNIA
155 Grand Avenue			Oakland	CA		1990		200,996		71.7	%		4,128			36.10
1220 Concord Avenue			Concord	CA		1984		175,153		100.0	%		2,944			22.46
1200 Concord Avenue			Concord	CA		1984		175,103		100.0	%		4,161			26.44
5780 & 5790 Fleet Street			Carlsbad	CA		1999		121,381		68.3	%		2,834			33.25
5900 & 5950 La Place Court			Carlsbad	CA		1988		80,506		80.5	%		1,727			25.38
16870 West Bernardo Drive			Rancho Bernardo	CA		2002		68,708		69.6	%		1,331			31.25
5963 La Place Court			Carlsbad	CA		1987		61,587		54.0	%		804			24.19
2035 Corte Del Nogal			Carlsbad	CA		1991		53,982		53.7	%		698			14.25
5973 Avendia Encinas			Carlsbad	CA		1986		51,695		79.6	%		1,132			28.59
SUBTOTAL/WEIGHTED AVG — CALIFORNIA								989,111		80.2	%		19,759			26.88
AUSTIN, TX
1250 Capital of Texas Highway South			Austin	TX		1984		270,711		82.3	%		3,360			24.13
1301 Mopac Expressway			Austin	TX		2001		222,580		99.8	%		4,320			31.54
3711 South Mopac Expressway			Austin	TX		2007		205,195		93.5	%		2,230			17.03
1601 Mopac Expressway			Austin	TX		2000		195,639		100.0	%		2,966			27.23
1501 South Mopac Expressway			Austin	TX		1999		195,324		94.5	%		2,609			26.89
1221 Mopac Expressway			Austin	TX		2001		173,302		93.0	%		3,127			32.64
1177 East Belt Line Road	(h	)	Coppell	TX		1998		150,000		100.0	%		1,833			14.87
1801 Mopac Expressway			Austin	TX		1999		58,576		100.0	%		975			28.23
SUBTOTAL/WEIGHTED AVG — AUSTIN, TX								1,471,327		94.3	%		21,420			25.32
SUBTOTAL FULLY OWNED PROPERTIES / WEIGHTED AVG.								23,658,832		88.9	%		462,785			21.79
2970 Market Street			Philadelphia	PA		N/A		862,692		100.0	%		—			—
2930 Chestnut Street			Philadelphia	PA		N/A		553,421		92.6	%		—			—
300 Delaware Avenue			Wilmington	DE		1989		298,071		71.9	%		2,967			17.94
One Radnor Corporate Center			Radnor	PA		1998		190,219		89.7	%		3,839			21.98
Juniper Street			Philadelphia	PA		N/A		—		—			—			—
SUBTOTAL DEVELOPMENT/REDEVELOPMENT PROPERTIES / WEIGHTED AVG.								1,904,403		92.4	%		6,806			7.98
TOTAL CORE PORTFOLIO								25,563,235		89.2	%		469,591
														��

(a)	Calculated by dividing net rentable square feet included in leases signed on or before December 31, 2009 at the property by the aggregate net rentable square feet of the property.
(b)	“Total Base Rent” for the twelve months ended December 31, 2009 represents base rents earned during such period, excluding tenant reimbursements, calculated in accordance with generally accepted accounting principles (GAAP) determined on a straight-line basis.
(c)	“Average Annualized Rental Rate” is calculated as follows: (i) for office leases written on a triple net basis, the sum of the annualized contracted base rental rates payable for all space leased as of December 31, 2009 plus the prorata 2009 budgeted operating expense recoveries excluding tenant electricity; and (ii) for office leases written on a full service basis, the annualized contracted base rent payable for all space leased as of December 31, 2009. In both cases, the annualized rental rate is divided by the total square footage leased as of December 31, 2009 without giving effect to free rent or scheduled rent increases that would be taken into account under GAAP.
(d)	These properties are subject to a ground lease with a third party.
(e)	We hold our interest in Two Logan Square (100 North 18th Street) primarily through our ownership of second and third mortgages that are secured by this property and that are junior to a first mortgage with a third party. Our ownership of these two mortgages currently provides us with all of the cash flows from Two Logan Square after the payment of operating expenses and debt service on the first mortgage.
(f)	These properties are industrial facilities.
(g)	Property sold on January 14, 2010.
(h)	Property owned by consolidated real estate venture.

-32-

The following table shows information regarding rental rates and lease expirations for the Properties at December 31, 2009 and assumes that none of the tenants exercises renewal options or termination rights, if any, at or prior to scheduled expirations:

							Final		Percentage
			Rentable		Final		Annualized		of Total Final
	Number of		Square		Annualized		Base Rent		Annualized
Year of	Leases		Footage		Base Rent		Per Square		Base Rent
Lease	Expiring		Subject to		Under		Foot Under		Under
Expiration	Within the		Expiring		Expiring		Expiring		Expiring			Cumulative
December 31,	Year		Leases		Leases (a)		Leases		Leases			Total
2010		390		2,978,553		61,524,591		20.66		12.1	%		12.1	%
2011		299		3,201,307		70,464,819		22.01		13.8	%		25.9	%
2012		230		2,479,141		60,450,938		24.38		11.9	%		37.7	%
2013		172		2,261,892		46,619,815		20.61		9.1	%		46.9	%
2014		175		2,409,842		54,612,455		22.66		10.7	%		57.6	%
2015		108		1,950,515		49,022,957		25.13		9.6	%		67.2	%
2016		73		1,129,774		28,292,757		25.04		5.5	%		72.8	%
2017		57		1,394,958		38,941,266		27.92		7.6	%		80.4	%
2018		36		1,014,518		29,958,725		29.53		5.9	%		86.3	%
2019		34		927,351		32,733,953		35.30		6.4	%		92.7	%
2020 and thereafter		32		1,413,069		37,181,075		26.31		7.4	%		100.0	%
		1,606		21,160,920	$	509,803,351	$	24.09		100.0	%

(a) “Final Annualized Base Rent” for each lease scheduled to expire represents the cash rental rate of base rents, excluding tenant reimbursements, in the final month prior to expiration multiplied by 12. Tenant reimbursements generally include payment of a portion of real estate taxes, operating expenses and common area maintenance and utility charges.

At December 31, 2009, our Properties were leased to 1,357 tenants that are engaged in a variety of businesses. The following table sets forth information regarding leases at the Properties with the 20 tenants with the largest amounts leased based upon Annualized Base Rent as of December 31, 2009:

			Weighted									Percentage of
			Average		Aggregate		Percentage			Annualized		Aggregate
	Number		Remaining		Leased		of Aggregate			Base		Annualized
	of		Lease Term		Square		Leased			Rent (in		Base
Tenant Name (a)	Leases		in Months		Feet		Square Feet			000) (b)		Rent
Northrop Grumman Corporation		6		73		469,116		2.2	%	$	13,787		3.0	%
Pepper Hamilton LLP		2		59		309,042		1.5	%		10,604		2.3	%
Wells Fargo Bank, N.A.		15		20		475,326		2.2	%		10,336		2.2	%
Lockheed Martin		9		32		577,251		2.7	%		9,594		2.1	%
Time Warner Cable, Inc.		1		115		266,899		1.3	%		8,307		1.8	%
Dechert LLP		1		118		218,565		1.0	%		7,213		1.6	%
KPMG, LLP		2		55		245,828		1.2	%		7,047		1.5	%
Verizon		4		15		302,087		1.4	%		5,995		1.3	%
Lincoln National Management Co.		1		127		193,626		0.9	%		5,952		1.3	%
Computer Associates International		1		112		227,574		1.1	%		5,604		1.2	%
Blank Rome LLP		1		145		239,236		1.1	%		5,529		1.2	%
Computer Sciences		6		44		276,410		1.3	%		4,811		1.0	%
AT&T		5		87		144,451		0.7	%		4,067		0.9	%
General Services Administration — U.S. Govt.		12		58		169,128		0.8	%		3,925		0.8	%
Omnicare Clinical Research		1		7		150,000		0.7	%		3,899		0.8	%
Marsh USA, Inc.		2		43		128,589		0.6	%		3,839		0.8	%
Hewlett Packard		2		78		141,339		0.7	%		3,803		0.8	%
Deltek Systems, Inc.		3		27		116,172		0.5	%		3,696		0.8	%
Woodcock Washburn, LLC		1		144		109,323		0.5	%		3,608		0.8	%
National Rural Utilities Cooperative		1		22		107,228		0.6	%		3,438		0.8	%
Consolidated Total/Weighted Average		76		60		4,867,190		23.0	%	$	125,054		27.0	%

(a)	The identified tenant includes affiliates in certain circumstances.
(b)	Annualized Base Rent represents the monthly Base Rent, excluding tenant reimbursements, for each lease in effect at December 31, 2009 multiplied by 12. Tenant reimbursements generally include payment of a portion of real estate taxes, operating expenses and common area maintenance and utility charges.

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Real Estate Ventures

As of December 31, 2009, we had investments in three real estate ventures that are considered to be variable interest entities under the accounting standard for consolidation and of which we are the primary beneficiary. We consolidate these three real estate ventures into our financial statements.

As of December 31, 2009, we also had an aggregate investment of approximately $75.5 million in our 11 actively operating unconsolidated Real Estate Ventures (net of returns of investment). We entered into these ventures with unaffiliated third parties to develop office properties or to acquire land in anticipation of possible development of office properties. Ten of the Real Estate Ventures own 45 office buildings that contain an aggregate of approximately 4.2 million net rentable square feet and one Real Estate Venture developed a hotel property that contains 137 rooms in Conshohocken, PA.

We account for our investments in these Real Estate Ventures using the equity method. Our ownership interests range from 3% to 50%, subject to specified priority allocations in certain of the Real Estate Ventures. Our investments, initially recorded at cost, are subsequently adjusted for our share of the Real Estate Ventures’ income or loss and contributions to capital and distributions, unless we have no intent or obligation to fund losses in which case our investment would not go below zero.

As of December 31, 2009, we had guaranteed repayment of approximately $2.1 million of loans for the Real Estate Ventures. We also provide customary environmental indemnities and completion guarantees in connection with construction and permanent financing both for our own account and on behalf of the Real Estate Ventures.

Item 3. Legal Proceedings

We are involved from time to time in legal proceedings, including tenant disputes, employee disputes, disputes arising out of agreements to purchase or sell properties and disputes relating to state and local taxes. We generally consider these disputes to be routine to the conduct of our business and management believes that the final outcome of such proceedings will not have a material adverse effect on our financial position, results of operations or liquidity.

Item 4. Submission of Matters to a Vote of Security Holders

We did not submit any matters to a vote of our shareholders during the fourth quarter of the year ended December 31, 2009.

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PART II

Item 5. Market for Registrant’s Common Equity and Related Shareholder Matters and Issuer Purchases of Equity Securities

Our common shares are traded on the New York Stock Exchange (“NYSE”) under the symbol “BDN.” There is no established trading market for the Class A units of the Operating Partnership. On February 23, 2010, there were 713 holders of record of our common shares and 43 holders of record of the Class A units (in addition to Brandywine Realty Trust). On February 23, 2010, the last reported sales price of the common shares on the NYSE was $11.09. The following table sets forth the quarterly high and low sales price per common share reported on the NYSE for the indicated periods and the distributions paid by us with respect to each such period.

	Share Price		Share Price		Distributions
	High		Low		Paid During Quarter
First Quarter 2008	$	19.39	$	15.70	$	0.44
Second Quarter 2008	$	19.86	$	15.76	$	0.44
Third Quarter 2008	$	18.30	$	13.48	$	0.44
Fourth Quarter 2008	$	15.22	$	3.73	$	0.44
First Quarter 2009	$	7.36	$	2.52	$	0.30
Second Quarter 2009	$	7.45	$	2.91	$	0.10
Third Quarter 2009	$	11.46	$	6.61	$	0.10
Fourth Quarter 2009	$	11.85	$	9.48	$	0.10

For each quarter in 2009 and 2008, the Operating Partnership paid a cash distribution per Class A unit in an amount equal to the dividend paid on a common share for each such quarter.

In order to maintain the status of Brandywine Realty Trust as a REIT, we must make annual distributions to shareholders of at least 90% of our taxable income (not including net capital gains). Future distributions will be declared at the discretion of our Board of Trustees and will depend on our actual cash flow, financial condition and capital requirements, the annual distribution requirements under the REIT provisions of the Internal Revenue Code of 1986 and such other factors as our Board deems relevant.

On December 8, 2009, our Board of Trustees declared a quarterly dividend distribution of $0.15 per common share that was paid on January 20, 2010. Our Board of Trustees has adopted a dividend policy designed to match our distributions to our projected, normalized taxable income for 2010.

We will continue to evaluate the potential of paying such dividends in stock versus cash. Our Board of Trustees has made no determination on our future dividend composition.

On June 24, 2009, we filed with the NYSE our annual CEO Certification and Annual Written Affirmation pursuant to Section 303A.12 of the NYSE Listed Company Manual, each certifying that we were in compliance with all of the listing standards of the NYSE.

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The following table provides information as of December 31, 2009 with respect to compensation plans under which our equity securities are authorized for issuance:

	(a)		(b)		(c)
					Number of securities
					remaining available for
	Number of securities to be		Weighted-average		future issuance under
	issued upon exercise of		exercise price of		equity compensation plans
	outstanding options,		outstanding options,		(excluding securities
Plan category	warrants and rights		warrants and rights		reflected in column (a))
Equity compensation plans approved by security holders (1)		2,404,566	$	15.48		1,828,124
Equity compensation plans not approved by security holders		—		—		—
Total		2,404,566	$	15.48		1,828,124

(1) Relates to our Amended and Restated 1997 Long-Term Incentive Plan. In May 2007, our shareholders approved an amendment to our Amended and Restated 1997 Long-Term Incentive Plan (the “1997 Plan”). The amendment provided for the merger of the Prentiss Properties Trust 2005 Share Incentive Plan (the “Prentiss 2005 Plan”) with and into the 1997 Plan, thereby transferring into the 1997 Plan all of the shares that remained available for award under the Prentiss 2005 Plan. We had previously assumed the Prentiss 2005 Plan, together with other Prentiss incentive plans, as part of our January 2006 acquisition of Prentiss Properties Trust (“Prentiss”). The 1997 Plan reserves 500,000 common shares solely for awards under options and share appreciation rights that have an exercise or strike price at least equal to the market price of the common shares on the date of award and the remaining shares under the 1997 Plan are available for any type of award, including restricted share and performance share awards and options. Incentive stock options may not be granted with an exercise price below the market price of the common shares on the grant date. To date we have awarded incentive stock options and non-qualified stock options that generally have a ten year term and vest over a one to three year period.

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The following table presents information related to our share repurchases during the year ended December. 31, 2009:

						Purchased as Part of		Shares that May Yet Be
	Total Number of			Average Price Paid		Publicly Announced		Purchased Under the
Period	Shares Purchased			per Share		Plans or Programs		Plans or Programs (a)
								(in thousands)
January 2009		25,755	(b)	$	6.96		—		539,200
February 2009		—					—		539,200
March 2009		5,008	(b)		2.52		—		539,200
April 2009		—					—		539,200
May 2009		—					—		539,200
June 2009		—					—		539,200
July 2009		—					—		539,200
August 2009		—					—		539,200
September 2009		—					—		539,200
October 2009		—					—		539,200
November 2009		—					—		539,200
December 2009		��					—		539,200
Total		30,763					—

(a)

On May 2, 2006, our Board of Trustees authorized an increase in the number of common shares that we may repurchase, whether in open-market or privately negotiated transactions. The Board authorized us to purchase up to an aggregate of 3,500,000 common shares (inclusive of remaining share repurchase availability under the Board’s prior authorization from September 2001). There is no expiration date on the share repurchase program and the Board can cancel this program at any time.

(b)

Represents Common Shares cancelled by the Company upon vesting of restricted Common Shares previously awarded to Company employees in satisfaction of tax withholding obligations. Such shares do not impact the total number of shares that may yet be purchased under the share repurchase program.

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SHARE PERFORMANCE GRAPH

The Securities and Exchange Commission requires us to present a chart comparing the cumulative total shareholder return on the common shares with the cumulative total shareholder return of (i) a broad equity index and (ii) a published industry or peer group index. The following chart compares the cumulative total shareholder return for the common shares with the cumulative shareholder return of companies on (i) the S&P 500 Index (ii) the Russell 2000 and (iii) the NAREIT ALL-REIT Total Return Index as provided by NAREIT for the period beginning December 31, 2004 and ending December 31, 2009.

	Period Ending
Index	12/31/04		12/31/05		12/31/06		12/31/07		12/31/08		12/31/09
Brandywine Realty Trust		100.00		101.06		125.40		71.76		34.33		55.96
S&P 500		100.00		104.91		121.48		128.16		80.74		102.11
Russell 2000		100.00		104.55		123.76		121.82		80.66		102.58
NAREIT All Equity REIT Index		100.00		112.16		151.49		127.72		79.53		101.79

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Item 6. Selected Financial Data

The following table sets forth selected financial and operating data and should be read in conjunction with the financial statements and related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in this Annual Report on Form 10-K. The selected data have been revised to reflect disposition of all properties since January 1, 2005, which have been reclassified as discontinued operations for all periods presented in accordance with the accounting standard governing discontinued operations. The selected financial data have also been revised to reflect the impact of the retrospective adoption of the accounting standard for convertible debt, non-controlling interest and the accounting standard for earnings per share disclosures related to non-forfeitable dividend rights for unvested shares. Please refer to Note 2 of the Consolidated Financial Statements of each registrant for additional information.

Brandywine Realty Trust
(in thousands, except per common share data and number of properties)

Year Ended December 31,	2009			2008 (a)			2007 (a)			2006 (a)			2005 (a)
Operating Results
Total revenue	$	582,219		$	589,421		$	604,811		$	551,367		$	340,190
Income (loss) from continuing operations		5,648			1,422			9,333			(37,420	)		23,849
Net income		8,089			38,525			55,335			10,949			43,550
Income allocated to Common Shares		(245	)		28,462			44,124			332			33,626
Income (loss) from continuing operations per Common Share
Basic	$	(0.02	)	$	(0.08	)	$	—		$	(0.51	)	$	0.26
Diluted	$	(0.02	)	$	(0.08	)	$	—		$	(0.51	)	$	0.26
Earnings per Common Share
Basic	$	—		$	0.33		$	0.50		$	—		$	0.60
Diluted	$	—		$	0.33		$	0.50		$	—		$	0.60
Cash distributions paid per Common Share	$	0.60		$	1.76		$	1.76		$	1.76		$	1.78	(b)
Balance Sheet Data
Real estate investments, net of accumulated depreciation	$	4,164,992		$	4,191,367		$	4,657,333		$	4,739,726		$	2,541,486
Total assets		4,663,750			4,742,619			5,213,968			5,508,479			2,805,745
Total indebtedness		2,454,577			2,741,495			3,081,949			3,133,934			1,521,384
Total liabilities		2,742,010			3,020,121			3,363,759			3,462,272			1,662,844
Noncontrolling interest		38,308			52,961			84,076			123,630			37,749
Brandywine Realty Trust’s equity		1,883,432			1,669,537			1,766,133			1,922,577			1,105,152
Other Data
Cash flows from:
Operating activities	$	220,405		$	233,867		$	224,805		$	238,299		$	125,147
Investing activities		(102,549	)		164,046			39,162			(912,813	)		(252,417	)
Financing activities		(120,213	)		(399,589	)		(283,746	)		692,719			119,098
Property Data
Number of properties owned at year end		245			248			257			313			251
Net rentable square feet owned at year end		25,563			26,257			28,888			31,764			19,600

(a)

Net income has been increased/(reduced) by $(5.0) million, $(1.4) million, $1.1 million and $1.2 million for the years ended December 31, 2008, 2007, 2006 and 2005, respectively, related to the retrospective adoption of the standards for convertibe debt and non-controlling interest discussed in Note 2 of the Consolidated Financial Statements. Total assets as of December 31, 2008, 2007, 2006 have also been increased/(reduced) by $0.3 million, $(0.1) million, and $(0.5) million, respectively. as a result of the retrospective adoption of the accounting standard for convertible debt. Total liabilities as of December 31, 2008, 2007 and 2006 have also been increased/(reduced) by $(12.2) million, $(19.0) million and $(23.4) million, respectively as a result of the retrospective adoption of the accounting standard for convertible debt. Accordingly, total equity as of December 31, 2008, 2007, 2006 and 2005 have been increased/(reduced) by $65.7 million, $102.9 million, $146.9 million and $37.7 million, respectively as result of these retrospective adjustments for convertible debt and noncontrolling interests. The debt impacted by the adoption of the accounting standard for convertible debt was issued in October 2006. We reclassified tenant reimbursements that are payable to tenants of $4.7 million to accounts payable and accrued expenses from accounts receivable, net at December 31, 2008.

(b)

Includes $0.02 special distribution declared in December 2006 for shareholders of record for the period January 1, 2006 through January 4, 2006 (pre-Prentiss merger period).

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Brandywine Operating Partnership, L.P.
(in thousands, except per unit data and number of properties)

Year Ended December 31,	2009			2008 (a)			2007 (a)			2006 (a)			2005 (a)
Operating Results
Total revenue	$	582,219		$	589,421		$	604,811		$	551,367		$	340,190
Income (loss) from continuing operations		5,648			1,422			9,333			(37,420	)		23,849
Net income		8,089			38,525			55,335			10,949			43,550
Income from continuing operations per
Common Partnership Unit
Basic	$	(0.02	)	$	(0.08	)	$	0.01		$	(0.49	)	$	0.26
Diluted	$	(0.02	)	$	(0.08	)	$	0.01		$	(0.49	)	$	0.26
Earnings per Common Partnership Units
Basic	$	—		$	0.33		$	0.49		$	0.03		$	0.60
Diluted	$	—		$	0.33		$	0.49		$	0.03		$	0.60
Cash distributions paid per Common	$	0.60		$	1.76		$	1.76		$	1.76		$	1.78	(b)
Partnership Unit
Balance Sheet Data
Real estate investments, net of accumulated depreciation	$	4,164,992		$	4,191,367		$	4,657,333		$	4,739,726		$	2,541,486
Total assets		4,663,750			4,742,619			5,213,968			5,508,479			2,805,745
Total indebtedness		2,454,577			2,741,495			3,081,949			3,133,935			1,521,384
Total liabilities		2,742,010			3,020,121			3,363,759			3,462,272			1,662,844
Redeemable limited partnership units		44,620			54,166			90,151			96,544			85,694
Non-controlling interest		65			—			28			34,414			—
Brandywine Operating Partnership’s equity		1,877,055			1,668,332			1,760,030			1,915,249			1,057,207
Other Data
Cash flows from:
Operating activities	$	220,405		$	233,867		$	224,805		$	238,299		$	125,147
Investing activities		(102,549	)		164,046			39,162			(912,813	)		(252,417	)
Financing activities		(120,213	)		(399,589	)		(283,746	)		692,719			119,098
Property Data
Number of properties owned at year end		245			248			257			313			251
Net rentable square feet owned at year end		25,563			26,257			28,888			31,764			19,600

(a)

Net income has been increased/(reduced) by $(6.3) million, $(3.5) million, and $1.0 million for the years ended December 31, 2008, 2007, and 2006 respectively, related to the retrospective adoption of the accounting standards for convertibe debt and non-controlling interest discussed in Note 2 of the Consolidated Financial Statements. Total assets as of December 31, 2008, 2007, 2006 have also been increased/(reduced) by $0.3 million, $(0.1) million, and $(0.5) million, respectively. as a result of the retrospective adoption of the accounting standard for convertible debt. Total liabilities as of December 31, 2008, 2007 and 2006 have also been increased/(reduced) by $(12.2) million, $(19.0) million and $(23.4) million, respectively as a result of the retrospective adoption of the accounting standard for convertible debt. Redeemable limited partnership units as of December 31, 2008, 2007, 2006 and 2005 have also been increased/(reduced) by $32.5 million, $21.3 million, $(35.2) million and $31.4 million, respectively, as a result of the restrospective adoption of the accounting standard for the classification and measurement of redeemable securities which also became effective upon the adoption of the accounting standard for noncontrolling interest. Accordingly, total equity as of December 31, 2008, 2007, 2006 and 2005 have been increased/(reduced) by $(20.0) million, $(2.3) million, $92.1 million and $(31.4) million, respectively as a result of these retrospective adjustments. The debt impacted by the adoption of the accounting standard for convertible debt was obtained in October 2006. We reclassified tenant reimbursements that are payable to tenants of $4.7 million to accounts payable and accrued expenses from accounts receivable, net at December 31, 2008.

(b)

Includes $0.02 special distribution declared in December 2006 for shareholders of record for the period January 1, 2006 through January 4, 2006 (pre-Prentiss merger period).

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the consolidated financial statements appearing elsewhere herein and is based primarily on our consolidated financial statements for the years ended December 31, 2009, 2008 and 2007.

OVERVIEW

As of December 31, 2009, we managed our portfolio within six geographic segments: (1) Pennsylvania, (2) Metropolitan Washington D.C, (3) New Jersey/Delaware, (4) Richmond, Virginia, (5) Austin, Texas and (6) California. The Pennsylvania segment includes properties in Chester, Delaware, Bucks, and Montgomery counties in the Philadelphia suburbs and the City of Philadelphia in Pennsylvania. The Metropolitan Washington, D.C. segment includes properties in Northern Virginia and suburban Maryland. The New Jersey/Delaware segment includes properties in Burlington, Camden and Mercer counties and counties in the southern and central part of New Jersey and in New Castle county in the state of Delaware. The Richmond, Virginia segment includes properties primarily in Albemarle, Chesterfield, Goochland and Henrico counties and Durham, North Carolina. The California segment includes properties in Oakland, Concord, Carlsbad and Rancho Bernardo. The Austin, Texas segment includes properties in Austin and Coppell.

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

Factors that May Influence Future Results of Operations

Global Market and Economic Conditions

In the U.S., recent market and economic conditions have been unprecedented and challenging with tighter credit conditions and slower growth. As a result of these market conditions, the cost and availability of credit has been and may continue to be adversely affected by illiquid credit markets and wider credit spreads. Concern about the stability of the markets generally and the strength of counterparties specifically has led many lenders and institutional investors to reduce, and in some cases, cease to provide funding to borrowers. Continued turbulence in the U.S. and international markets and economies may adversely affect our liquidity and financial condition, and the liquidity and financial condition of our tenants. If these market conditions continue, they may limit our ability and the ability of our tenants, to timely refinance maturing liabilities and access the capital markets to meet liquidity needs.

Real Estate Asset Valuation

General economic conditions and the resulting impact on market conditions or a downturn in tenants’ businesses may adversely affect the value of our assets. Periods of economic slowdown or recession in the U.S., declining demand for leased office, mixed use, or industrial properties and/or a decrease in market rental rates and/or market values of real estate assets in our submarkets could have a negative impact on the value of our assets, including the value of our properties and related tenant improvements. If we were required under GAAP to write down the carrying value of any of our properties to the lower of cost or fair value due to impairment, or if as a result of an early lease termination we were required to remove or dispose of material amounts of tenant improvements that are not reusable to another tenant, our financial condition and results of operations would be negatively affected.

Leasing Activity and Rental Rates

The amount of net rental income generated by our properties depends principally on our ability to maintain the occupancy rates of currently leased space and to lease currently available space, newly developed or redeveloped properties and space available from unscheduled lease terminations. The amount of rental income we generate also depends on our ability to maintain or increase rental rates in our submarkets. Negative trends in one or more of these factors could adversely affect our rental income in future periods.

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Development and Redevelopment Programs

Historically, a significant portion of our growth has come from our development and redevelopment efforts. We have a proactive planning process by which we continually evaluate the size, timing, costs and scope of our development and redevelopment programs and, as necessary, scale activity to reflect the economic conditions and the real estate fundamentals that exist in our strategic submarkets. Given the economic conditions, we do not intend to commence new development or redevelopment projects in the near future. We believe that our current capital plan allows for us to continue the development and redevelopment projects that are currently underway.

We believe that a portion of our future potential growth will continue to come from our newly developed or redeveloped properties once current economic conditions normalize. However, we anticipate that the general economic conditions and the resulting impact on conditions in our core markets will delay timing and reduce the scope of our development program in the near future, which will further impact the average development and redevelopment asset balances qualifying for interest and other carry cost capitalization. We cease capitalizing such costs once a project does not qualify for interest and other carry cost capitalization under GAAP.

In addition, we may be unable to lease committed development or redevelopment properties at expected rental rates or within projected timeframes or complete development or redevelopment properties on schedule or within budgeted amounts, which could adversely affect our financial condition, results of operations and cash flow.

Financial and Operating Performance

Our financial and operating performance is dependent upon the demand for office, industrial and other commercial 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.

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, are not 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 accounting for approximately 12.1% of our aggregate final annualized base rents as of December 31, 2009 (representing approximately 11.7% of the net rentable square feet of the Properties) expire without penalty in 2010. We maintain an active dialogue with our tenants in an effort to maximize lease renewals. Our retention rate for leases that were scheduled to expire in 2009 was 66.9%. If we are unable to renew leases or relet space under expiring leases, at anticipated rental rates, or if tenants terminate their leases early, our cash flow would be adversely impacted.

Tenant Credit Risk:

In the event of a tenant default, we may experience delays in enforcing our rights as a landlord and may incur substantial costs in protecting our investment. Our management regularly evaluates our accounts receivable reserve policy in light of our tenant base and general and local economic conditions. Our accounts receivable allowance was $16.4 million or 14.29% of total receivables (including accrued rent receivable) as of December 31, 2009 compared to $15.5 million or 13.09% of total receivables (including accrued rent receivable) as of December 31, 2008.

If economic conditions persist or deteriorate further, we may experience increases in past due accounts, defaults, lower occupancy and reduced effective rents. This condition would negatively affect our future net income and cash flows and could have a material adverse effect on our financial condition.

Development Risk:

At December 31, 2009, we were proceeding on two developments and three redevelopments sites aggregating 1.9 million square feet with total projected costs of $396.0 million of which $142.6 million remained to be funded. These amounts include $355.5 million of total project costs for the combined 30^th Street Post Office (100% pre-leased to the Internal Revenue Service) and Cira South Garage (92.6% pre-leased to the Internal Revenue Service) in Philadelphia, Pennsylvania of which $128.5 million remained to be funded at December 31, 2009. We are also finishing the lease-up of eight recently completed developments for which we expect to spend an additional $8.8 million in 2010. We are actively marketing space at these projects to prospective tenants but can provide no assurance as to the timing or terms of any leases of space at these projects.

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As of December 31, 2009, we owned approximately 479 acres of undeveloped land. When the market recovers, we will look to opportunistically dispose of those parcels that we do not anticipate developing. For the parcels of land that we ultimately develop, we would be subject to risks associated with development of this land including construction cost increases or overruns and construction delays, insufficient occupancy rates, building moratoriums and inability to obtain necessary zoning, land-use, building, occupancy and other required governmental approvals.

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. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the reporting periods. 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 the accounting estimate are reasonably likely to occur from period to period. Management believes the following critical accounting policies reflect our more significant judgments and estimates used in the preparation of our consolidated financial statements. For a summary of all of our significant accounting policies, see Note 2 to our consolidated financial statements included elsewhere in this report.

Revenue Recognition

We recognize rental revenue on the straight-line basis from the later of the date of the commencement of the lease or the date of acquisition of the property subject to existing leases, which averages minimum rents over the terms of the leases. Lease incentives, which are included as reductions of rental revenue are recognized on a straight-line basis over the term of the lease. Certain lease agreements contain provisions that require tenants to reimburse a pro rata share of real estate taxes and common area maintenance costs. For certain leases in the portfolio, there are significant assumptions and judgments made by management in determining the lease term such as when termination options are provided to the tenant. The lease term impacts the period over which minimum rents are determined and recorded and also considers the period over which lease related costs are amortized. In addition, our rental revenue is impacted by our determination of whether the improvements made by us or the tenant are landlord assets. The determination of whether an asset is a landlord asset requires judgment and principally considers whether improvements would be utilizable by another tenant upon move out by the existing tenant. To the extent they are determined not to be landlord assets, and we fund them, they are considered as lease incentives. To the extent the tenant funds the improvements that we consider to be landlord assets, we treat them as deferred revenue which is amortized to revenue over the lease term.

Real Estate Investments

Real estate investments are carried at cost. We record acquisition of real estate investments under the purchase method of accounting and allocate the purchase price to land, buildings and intangible assets on a relative fair value basis. Depreciation is computed using the straight-line method over the useful lives of buildings and capital improvements (5 to 55 years) and over the shorter of the lease term or the life of the asset for tenant improvements. Direct construction costs related to the development of Properties and land holdings are capitalized as incurred. Capitalized costs include pre-construction costs essential to the development of the property, development and constructions costs, interest, property taxes, insurance, salaries and other project costs during the period of development. Estimates and judgments are required in determining when capitalization of certain costs such as interest should commence and cease. We expense routine repair and maintenance expenditures and capitalize those items that extend the useful lives of the underlying assets.

Real Estate Ventures

When we obtain an economic interest in an entity, we evaluate the entity to determine if the entity is deemed a variable interest entity (“VIE”), and if we are deemed to be the primary beneficiary, in accordance with the accounting standard for the consolidation of variable interest entities. This accounting standard requires significant use of judgments and estimates in determining its application. If the entity is not deemed to be a VIE, and we serve as the general partner within the entity, we evaluate to determine if our presumed control as the general partner is overcome by the “kick out” rights and other substantive participating rights of the limited partners in accordance with same accounting standard.

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We consolidate (i) entities that are VIEs and of which we are deemed to be the primary beneficiary and (ii) entities that are non-VIEs which we control. Entities that we account for under the equity method (i.e., at cost, increased or decreased by our share of earnings or losses, less distributions) include (i) entities that are VIEs and of which we are not deemed the primary beneficiary and (ii) entities that are non-VIEs which we do not control, but over which we have the ability to exercise significant influence. We will reconsider our determination of whether an entity is a VIE and who the primary beneficiary is if events occur that are likely to cause a change in the original determinations.

On a periodic basis, management assesses whether there are any indicators that the value of our investments in unconsolidated joint ventures may be impaired. An investment is impaired only if management’s estimate of the value of the investment is less than the carrying value of the investment, and such decline in value is deemed to be 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. 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. As 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 its impairment analyses may not be realized.

Impairment of Long-Lived Assets

We review long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The review of recoverability is based on an estimate of the future undiscounted cash flows (excluding interest charges) expected to result from the long-lived asset’s use and eventual disposition. These cash flows consider factors such as expected future operating income, trends and prospects, as well as the effects of leasing demand, competition and other factors. If impairment exists due to the inability to recover the carrying value of a long-lived asset, an impairment loss is recorded to the extent that the carrying value exceeds the estimated fair-value of the property. We are required to make subjective assessments as to whether there are impairments in the values of the investments in long-lived assets. These assessments have a direct impact on our net income because recording an impairment loss results in an immediate negative adjustment to net income. The evaluation of anticipated cash flows is highly subjective and is based in part on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results in future periods. There were also operating properties evaluated as they have been identified for potential sale. No impairment was determined; however, if actual cashflows or the estimated holding periods change, an impairment could be recorded in the future and it could be material. Although our strategy is generally to hold our properties over the long-term, we will dispose of properties to meet our liquidity needs or for other strategic needs. If our strategy changes or market conditions otherwise dictate an earlier sale date, an impairment loss may be recognized to reduce the property to the lower of the carrying amount or fair value less costs to sell, and such loss could be material. If we determine that impairment has occurred, the affected assets must be reduced to their fair-value.

Where properties have been identified as having a potential for sale, additional judgments are required related to the determination as to the appropriate period over which the undiscounted cash flows should include the operating cash flows and the amount included as the estimated residual value. Management determines the amounts to be included based on a probability weighted cash flow. This requires significant judgment. In some cases, the results of whether an impairment is indicated are sensitive to changes in assumptions input into the estimates, including the hold period until expected sale. At December 31, 2009, we performed an impairment assessment of our land holdings as management determined that a sale scenario was the most likely source of future cash flows for certain of the land parcels aggregating to total cost of $15.7 million which is included in land inventory. This impairment assessment required management to estimate the expected proceeds from sale at some point in the future, to determine whether an impairment was indicated. This estimate requires significant judgment. If our expectations as to the expected sales proceeds, or timing of the anticipated sale change based on market conditions or otherwise, our evaluation of impairment could be different and such differences could be material.

During the first quarter of 2009, we determined that one of our properties, during our testing for impairment under the held and used model, had a historical cost greater than the probability weighted undiscounted cash flows. Accordingly, an impairment on the property of $3.7 million was recorded to reduce its carrying value to an amount based on management’s estimate of the current fair value. This property was sold in the second quarter. We also recorded an impairment on properties designated as held for sale at June 30, 2008 of $6.85 million; these properties were sold during the last quarter of 2008. During our impairment review for the remaining part of 2009, it was determined that no additional impairment charges were necessary.

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Income Taxes

We have elected to be treated as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”). In addition, we have several subsidiary REITs. In order to maintain our qualification as a REIT, we and each of our REIT subsidiaries are required to, among other things, distribute at least 90% of our REIT taxable income to our stockholders and meet certain tests regarding the nature of its income and assets. As REITs, we and our REIT subsidiaries are not subject to federal income tax with respect to the portion of our income that meets certain criteria and is distributed annually to the stockholders. Accordingly, no provision for federal income taxes is included in the accompanying consolidated financial statements with respect to the operations of these REITs. We and our REIT subsidiaries intend to continue to operate in a manner that allows us to continue to meet the requirements for taxation as REITs. Many of these requirements, however, are highly technical and complex. If we or one of our REIT subsidiaries were to fail to meet these requirements, we would be subject to federal income tax.

We may elect to treat one or more of our subsidiaries as a taxable REIT subsidiary (“TRS”). In general, a TRS may perform additional services for our tenants and generally may engage in any real estate or non-real estate related business (except for the operation or management of health care facilities or lodging facilities or the provision to any person, under a franchise, license or otherwise, of rights to any brand name under which any lodging facility or health care facility is operated). A TRS is subject to corporate federal income tax. We have elected to treat certain of our corporate subsidiaries as TRSs; these entities provide third party property management services and certain services to tenants that could not otherwise be provided.

Allowance for Doubtful Accounts

We maintain an allowance for doubtful accounts that represents an estimate of losses that may be incurred from the inability of tenants to make required payments. The allowance is an estimate based on two calculations that are combined to determine the total amount reserved. First, we evaluate specific accounts where we have determined that a tenant may have an inability to meet its financial obligations. In these situations, we use our judgment, based on the facts and circumstances, and record a specific reserve for that tenant against amounts due to reduce the receivable to the amount that we expect to collect. These reserves are re-evaluated and adjusted as additional information becomes available. Second, a reserve is established for all tenants based on a range of percentages applied to receivable aging categories. If the financial condition of our tenants were to deteriorate, additional allowances may be required.

Deferred Costs

We incur direct costs related to the financing, development and leasing of our properties. Management exercises judgment in determining whether such costs, particularly internal costs, meet the criteria for capitalization or must be expensed. Capitalized financing fees are amortized over the related loan term and capitalized leasing costs are amortized over the related lease term. Management re-evaluates the remaining useful lives of leasing costs as the creditworthiness of our tenants and economic and market conditions change.

Purchase Price Allocation

We allocate the purchase price of properties to net tangible and identified intangible assets acquired based on fair values. Above-market and below-market in-place lease values for acquired properties are recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) our estimate of the fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancellable term of the lease. Capitalized above-market lease values are amortized as a reduction of rental income over the remaining non-cancellable terms of the respective leases. Capitalized below-market lease values are amortized as an increase of rental income over the remaining non-cancellable terms of the respective leases, including any fixed-rate renewal periods.

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Other intangible assets also include amounts representing the value of tenant relationships and in-place leases based on our evaluation of the specific characteristics of each tenant’s lease and our overall relationship with the respective tenant. We estimate the cost to execute leases with terms similar to the remaining lease terms of the in-place leases, include leasing commissions, legal and other related expenses. This intangible asset is amortized to expense over the remaining term of the respective leases. We estimate fair value through methods similar to those used by independent appraisers or by using independent appraisals. Factors that we consider in our analysis include an estimate of the carrying costs during the expected lease-up periods considering current market conditions and costs to execute similar leases. We also consider information obtained about each property as a result of our pre-acquisition due diligence, marketing and leasing activities in estimating the fair value of the tangible and intangible assets acquired. In estimating carrying costs, we include real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods, which primarily range from three to twelve months.

Characteristics that we consider in allocating value to our tenant relationships include the nature and extent of our business relationship with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit quality and expectations of lease renewals. The value of tenant relationship intangibles is amortized over the remaining initial lease term and expected renewals, but in no event longer than the remaining depreciable life of the building. The value of in-place leases is amortized over the remaining non-cancellable term of the respective leases and any fixed-rate renewal periods.

In the event that a tenant terminates its lease, the unamortized portion of each intangible, including market rate adjustments, in-place lease values and tenant relationship values, would be charged to expense.

RESULTS OF OPERATIONS

Comparison of the Year Ended December 31, 2009 to the Year Ended December 31, 2008

The table below shows selected operating information for the “Same Store Property Portfolio” and the “Total Portfolio.” The Same Store Property Portfolio consists of 232 properties containing an aggregate of approximately 22.6 million net rentable square feet that we owned for the entire twelve-month periods ended December 31, 2009 and 2008. 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 twelve-month periods ended December 31, 2009 and 2008) by providing information for the properties which were acquired, under development (including lease-up assets) or placed into service and administrative/elimination information for the twelve-month periods ended December 31, 2009 and 2008 (in thousands).

The Total Portfolio net income presented in the table is equal to the net income of Brandywine Realty Trust. The only difference between the reported net income of Brandywine Realty Trust and Brandywine Operating Partnership is the allocation of the non-controlling interest attributable to continuing and discontinued operations for limited partnership units that is on the statement of operations for Brandywine Realty Trust.

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Comparison of twelve-months ended December 31, 2009 to the twelve-months ended December 31, 2008

								Acquired/Completed						Development/Redevelopment						Other/
	Same Store Property Portfolio							Properties						Properties (a)						(Eliminations) (b)						Total Portfolio
					Increase/																											Increase/
(dollars in thousands)	2009		2008		(Decrease)			2009			2008			2009			2008			2009			2008			2009			2008			(Decrease)
Revenue:
Cash rents	$	445,370	$	450,291	$	(4,921	)	$	6,739		$	902		$	13,187		$	12,156		$	(2,413	)	$	(2,940	)	$	462,883		$	460,409		$	2,474
Straight-line rents		5,471		14,102	$	(8,631	)		2,567			322			664			1,123			—			—			8,702			15,547			(6,845	)
Above/below market rent amortization		6,514		5,914	$	600			—			—			129			1,342			—			—			6,643			7,256			(613	)
Total rents		457,355		470,307		(12,952	)		9,306			1,224			13,980			14,621			(2,413	)		(2,940	)		478,228			483,212			(4,984	)
Tenant reimbursements		75,390		73,831		1,559			1,351			376			2,754			3,198			301			685			79,796			78,090			1,706
Termination fees		2,385		4,800		(2,415	)		—			—			1,216			—			—			—			3,601			4,800			(1,199	)
Third party management fees, labor reimbursement and leasing		—		—		—			—			—			—			—			17,151			20,401			17,151			20,401			(3,250	)
Other		2,019		1,831		188			1			—			314			(6	)		1,109			1,093			3,443			2,918			525
																	��
Total revenue		537,149		550,769		(13,620	)		10,658			1,600			18,264			17,813			16,148			19,239			582,219			589,421			(7,202	)
Property operating expenses		163,138		159,236		3,902			3,626			(737	)		7,740			8,100			(6,345	)		(5,829	)		168,159			160,770			7,389
Real estate taxes		53,621		54,601		(980	)		2,056			1,712			1,761			1,753			792			583			58,230			58,649			(419	)
Third party management expenses		—		—		—			—			—			—			—			7,996			8,965			7,996			8,965			(969	)
Subtotal		320,390		336,932		(16,542	)		4,976			625			8,763			7,960			13,705			15,520			347,834			361,037			(13,203	)
General & administrative expenses		—		—		—			—			—			—			—			20,821			23,002			20,821			23,002			(2,181	)
Depreciation and amortization		189,020		190,584		(1,564	)		5,145			872			11,198			6,680			3,227			3,853			208,590			202,043			6,547
Operating Income (loss)	$	131,370	$	146,348	$	(14,978	)	$	(169	)	$	(247	)	$	(2,435	)	$	1,280		$	(10,343	)	$	(11,335	)	$	118,423		$	135,992		$	(17,569	)
Number of properties		232		232					4			4			9			9									245			245
Square feet		22,583		22,583					669			669			2,311			2,311									25,563			25,563
Other Income (Expense):
Interest income																											2,500			1,839			661
Interest expense																											(135,740	)		(146,646	)		10,906
Interest expense — Deferred financing costs																											(5,864	)		(5,450	)		(414	)
Recognized hedge activity																											(916	)		—			(916	)
Equity in income of real estate ventures																	��										4,069			8,447			(4,378	)
Net (loss) gain on disposition of undepreciated assets																											—			(24	)		24
Provision for impairment on land inventory																											—			(10,841	)		10,841
Gain on early extinguishment of debt																											23,176			18,105			5,071
Income (loss) from continuing operations																											5,648			1,422			4,226
Income from discontinued operations																											2,441			37,103			(34,662	)
Net Income																										$	8,089		$	38,525		$	(30,436	)
Earnings per common share																										$	—		$	0.33		$	(0.33	)

EXPLANATORY NOTES
(a) -	Results include: two developments and three redevelopment properties.
(b) -	Represents certain revenues and expenses at the corporate level as well as various intercompany costs that are eliminated in consolidation and third-party management fees.

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Total Revenue

Cash rents from the Total Portfolio increased by $2.5 million from 2008 to 2009, primarily reflecting:

1) An additional $5.8 million from four development/redevelopment properties that we completed and placed in service subsequent to 2008.

2) An additional $1.0 million of rental income due to increased occupancy at nine development/redevelopment properties in 2009 in comparison to 2008.

3) The increase was offset by the decrease of $4.9 million of rental income at our Same Store properties from 2008 to 2009 due to a decrease in occupancy of 380 basis points.

Straight-line rents at the Total Portfolio decreased by $6.8 million primarily due to free rent converting to cash rent during 2009.

Tenant reimbursements increased by $1.7 million from 2008 to 2009 primarily due to the increase in property operating expenses at our Same Store Portfolio. Tenant reimbursements increased by $1.6 million at our same store portfolio and the property operating expenses including real estate taxes at those properties increased by $2.9 million.

The decrease in termination fees of $1.2 million from 2008 to 2009 is mainly due to the recognition of a $3.1 million termination fee from one tenant during 2008 in comparison to a $1.2 million termination fee received from one tenant at one of redevelopment properties and a $0.6 million termination fee received from one tenant at one of our same store properties in 2009.

Third party management fees, labor reimbursement and leasing decreased by $3.3 million from 2008 to 2009 as a result of the termination of the management fee contract on March 31, 2008 that we entered into when we sold the 10 office properties located in Reading and Harrisburg, PA. As the contract was terminated early, approximately $0.8 million of unamortized deferred management fees were taken into income during 2008. The decrease also resulted from the termination of other third party management contracts totaling 4.3 million square feet subsequent to 2008.

Property Operating Expenses

Property operating expenses, including real estate taxes, at the Total Portfolio increased by $7.0 million due to increased repairs and maintenance expenses along with increased snow removal expenses during 2009 compared to 2008. We also incurred an additional $4.7 million of expenses from four properties that we completed and placed in service subsequent to 2008. These increases were offset by a decrease in the bad debt expense of $1.4 million from 2008 to 2009.

General & Administrative Expenses

General & administrative expenses decreased by $2.2 million from 2008 to 2009 mainly due to the severance costs of $2.4 million in 2008 that we did not have in 2009.

Depreciation and Amortization Expense

Depreciation and amortization increased by $6.5 million from 2008 to 2009, primarily due to $4.3 million of depreciation and amortization expense recorded on the four properties completed and placed in service subsequent to 2008. An additional $4.3 million of depreciation and amortization expense was recorded on portions of the nine development properties that were placed in service subsequent to 2008. The increase was offset by the decrease of $1.6 million at the Same Store Portfolio for asset write-offs related to early move-outs and fully amortized assets when comparing 2009 to 2008.

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Interest Income/ Expense

Interest income increased by approximately $0.7 million mainly due to the accretion of the $40.0 million interest free note receivable from the sale of the five Northern California properties in the fourth quarter of 2008. The note receivable was recorded at its present value on the date of sale of $37.1 million. During 2009, we recognized $1.6 million of interest income related to this note receivable and $0.2 million of interest income related to the $22.5 million note receivable from the sale of the two Trenton properties during the fourth quarter of 2009. During 2008, we recognized $0.4 million of interest income related to the note receivable from the sale of the five Northern California properties and $0.5 million of interest income received from a certificate of deposit investment.

The decrease in interest expense of $10.9 million is mainly due to the following:

• decrease of $4.9 million resulting from the payoff at maturity of our $113.0 million private placement notes in December 2008.

• decrease of $3.4 million resulting from a lower average Credit Facility balance at the end of 2009 and a lower weighted average interest rate on such borrowings in 2009 compared to December 31, 2008.

• decrease of $6.9 million resulting from lower weighted average interest rates on our $183.0 million Bank Term Loan and our three Preferred Trust borrowings. Such borrowings have variable interest rates and a portion of such borrowings are swapped to fixed rate debt through our hedging program. This decrease is offset by an increase of $5.7 million paid under these hedges since the variable interest rates on such debt is lower than the swapped fixed rate on the hedges assigned to these borrowings.

• decrease of $17.5 million resulting from our buybacks of unsecured notes in 2009. The details of the repurchases completed during the twelve months ended December 31, 2009 and 2008 are noted in theGain on early extinguishment of debtsection below. This decrease is offset by an increase of $5.1 million of interest on issuance of new notes.

The above explained net decrease of $21.9 million is offset by a decrease in capitalized interest of $7.9 million as a result of the decrease in the average balance, on open development and redevelopment projects, $0.3 million of interest expense related to our tax credit transactions, and an increase of $2.6 million from a higher outstanding mortgage notes payable balance as of December 31, 2009 compared to December 31, 2008.

Amortization of deferred financing costs increased by $0.4 million due to the acceleration of such expenses incurred in the debt repurchase activities of 2009.

Provision for impairment on land inventory

As part of our review of long-lived assets in accordance with the accounting standard for long-lived assets, during the quarter ending December 31, 2008, management determined that certain of the parcels in our land inventory considered at that time more likely to be sold had historical carrying values in excess of the current estimate of their fair value. Our impairment was recorded based on management’s estimate of the current fair value of the land inventory at that time.

Provision for Impairment on Real Estate

During the quarter ended March 31, 2009 impairment review, we determined that one of the properties tested for impairment under the held and used model had a historical cost greater than the probability weighted undiscounted cash flows. Accordingly, the recorded amount was reduced to an amount based on management’s estimate of the current fair value. During the nine months period ended September 30, 2008, we recorded a provision of $6.85 million for impairment relating to the sale of the five Northern California properties classifies as held for sale.

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Where properties have been identified as having a potential for sale, additional judgments are required related to the determination as to the appropriate period over which the undiscounted cash flows should include the operating cash flows and the amount included as the estimated residual value. Management determines the amounts to be included based on a probability weighted cash flow. This requires significant judgment. In some cases, the results of whether an impairment is indicated are sensitive to changes in assumptions input into the estimates, including the hold period until expected sale.

Recognized hedge activity

During 2009, we recorded a $1.1 million mark to market adjustment relating to two of our swaps that were applied to our offering of $250.0 million 7.50% senior unsecured notes due 2015 completed in September 2009. The swaps no longer qualified for hedge accounting upon completion of this offering as the hedging relationship was terminated. Accordingly, the changes in the fair value of the swaps were reflected in our statement of operations until they were cash settled in December 2009. We paid $5.1 million to terminate these swaps. During the year, we also recorded a net $0.1 million of income related to the write-off of AOCI and the ineffective portion of certain of our hedges.

Equity in income of real estate ventures

The decrease in equity in income of real estate venture from 2008 to 2009 was mainly due to a payout of $3.2 million that we received for our interest in a real estate venture that was sold during the fourth quarter of 2008. The remainder of the decrease is primarily attributable to lower net income at the real estate venture properties.

Gain on early extinguishment of debt

During 2009, we repurchased $154.1 million of our $345.0 million 3.875% Exchangeable Notes, $94.1 million of our $275.0 million 4.500% Guaranteed Notes due 2009, $77.0 million of our $300.0 million 5.625% Guaranteed Notes due 2010, $112.2 million of our $300.0 million 5.750% Guaranteed Notes due 2012 and $7.3 million of our $250.0 million 5.400% Guaranteed Notes due 2014 which resulted in a net gain on early extinguishment of debt of $23.2 million. The gain on early extinguishment of debt is inclusive of adjustments made to reflect our adoption of the new accounting standard for convertible debt instruments.

During 2008, we repurchased $63.0 million of our $345.0 million 3.875% Guaranteed Exchangeable Notes, $78.3 million of our $275.0 million 4.500% Guaranteed Notes due 2009 and $24.5 million of our $300.0 million 5.625% Guaranteed Notes due 2010 which resulted in an $18.1 million gain that we reported for the early extinguishment of debt. The gain on extinguishment of debt has been retrospectively adjusted to reflect our adoption of the new accounting standard for convertible debt instruments.

Discontinued Operations

During the twelve month period ended December 31, 2009, we sold two properties in Exton, PA, one property in Moorestown, NJ, one property in Bethesda, MD, two properties in Trenton, NJ and a condominium unit and an undivided interest in an office building in Lawrenceville, NJ. These properties had total revenue of $13.5 million, operating expenses of $6.4 million, depreciation and amortization expenses of $2.2 million and gain on sale of $1.2 million. We determined that the sale of the two properties in Trenton, NJ should be accounted for using the Installment Sale Method. As a result, we deferred the portion of the gain which exceeded the calculated gain following the installment sale method. These amounts will decrease in proportion with the paydown of the principal balance on our note receivable from the buyer of the properties. The buyer is not obligated to make any principal payments over the next seven years. If they do make principal payments in advance, a portion of these amounts that are deferred will be recognized as a gain on sale in the period that we receive the cash for the principal payments. We also recorded a $3.7 million loss provision during the first quarter of 2009 in connection with the property in Bethesda, MD sold during the second quarter of 2009 which reduced our income from discontinued operations.

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The December 31, 2008 amounts are reclassified to include the operations of the properties sold during the twelve months period ended December 31, 2009, as well as all properties that were sold through the year ended December 31, 2008. Therefore, the discontinued operations amount for the twelve months period ended December 31, 2008 includes total revenue of $60.8 million, operating expenses of $27.3 million, depreciation and amortization expense of $13.4 million, interest expense of $4.6 million and gains on sale of $28.5 million. We also recorded a $6.85 million loss provision in connection with the five Northern California properties classified as held for sale during the second quarter of 2008 which reduced our income from discontinued operations.

Net Income

Net income decreased by $30.4 million from the twelve-month period ended December 31, 2008 as a result of the factors described above. Net income is significantly impacted by depreciation of operating properties and amortization of acquired intangibles. These non-cash charges do not directly affect our ability to pay dividends. Such charges can be expected to continue until lease intangibles are fully amortized. These intangibles are amortizing over the related lease terms or estimated duration of the tenant relationship.

Earnings per Common Share

Loss per share (basic and diluted) were $0.00 for the twelve-month period ended December 31, 2009 as compared to earnings per share of $0.33 for the twelve-month period ended December 31, 2008 as a result of the factors described above and an increase in the average number of common shares outstanding. The increase in the average number of common shares outstanding is primarily the result of a $242.3 million public equity offering of 40,250,000 shares during the second quarter of 2009.

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RESULTS OF OPERATIONS

Comparison of the Year Ended December 31, 2008 to the Year Ended December 31, 2007

The table below shows selected operating information for the “Same Store Property Portfolio” and the “Total Portfolio.” The Same Store Property Portfolio consists of 224 properties containing an aggregate of approximately 21.5 million net rentable square feet that we owned for the entire twelve-month periods ended December 31, 2008 and 2007. 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 twelve-month periods ended December 31, 2008 and 2007) by providing information for the properties which were acquired, under development (including lease-up assets) or placed into service and administrative/elimination information for the twelve-month periods ended December 31, 2008 and 2007 (in thousands).

We have a significant, continuing involvement in the G&I Interchange Office LLC joint venture through our 20% ownership interest and the management and leasing services we provide for the venture. Accordingly, under the accounting standard for reporting discontinued operations, we have determined that the operations of the properties owned by the joint venture (the “G&I properties”) should not be included in discontinued operations. This determination is reflected in the income statement comparisons below as we recognized revenue and expenses during the twelve-months ended December 31, 2007 for our 100% ownership interest through the date of sale on December 21, 2007 and such information related to the G&I properties is included in the Other (Eliminations) column.

The Total Portfolio net income presented in the table is equal to the net income of Brandywine Realty Trust. The only difference between the reported net income of Brandywine Realty Trust and Brandywine Operating Partnership is the allocation of the minority interest attributable to continuing and discontinued operations for limited partnership units that is on the statement of operations for Brandywine Realty Trust.

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Comparison of twelve-months ended December 31, 2008 to the twelve-months ended December 31, 2007

								Acquired/Completed						Development/Redevelopment						Other/
	Same Store Properties							Properties						Properties (a)						(Eliminations) (b)							Total Portfolio
					Increase/																												Increase/
(dollars in thousands)	2008		2007		(Decrease)			2008			2007			2008			2007			2008				2007			2008			2007			(Decrease)
Revenue:																							��
Cash rents	$	423,112	$	414,696	$	8,416		$	39,280		$	25,416		$	12,387		$	8,738		$	(2,224	)		$	20,992		$	472,555		$	469,842		$	2,713
Straight-line rents		10,432		17,855		(7,423	)		4,375			7,286			1,169			966			—				627		$	15,976		$	26,734			(10,758	)
Above/below market rent amortization		6,065		8,761		(2,696	)		(89	)		(289	)		1,342			978			—				—		$	7,318		$	9,450			(2,132	)
Total rents		439,609		441,312		(1,703	)		43,566			32,413			14,898			10,682			(2,224	)			21,619			495,849			506,026			(10,177	)
Tenant reimbursements		75,828		71,156		4,672			4,332			3,187			3,283			2,907			686				3,916			84,129			81,166			2,963
Termination fees		4,700		9,950		(5,250	)		100			—			—			50			—				53			4,800			10,053			(5,253	)
Third party management fees, labor reimbursement and leasing		—		—		—			—			—			—			—			20,401				19,691			20,401			19,691			710
Other		1,746		2,610		(864	)		99			39			(6	)		2			1,093				3,310			2,932			5,961			(3,029	)
Total revenue		521,883		525,028		(3,145	)		48,097			35,639			18,175			13,641			19,956				48,589			608,111			622,897			(14,786	)
Operating Expenses:
Property operating expenses		152,177		149,484		2,693			12,229			10,653			8,228			6,337			(5,601	)			2,070			167,033			168,544			(1,511	)
Real estate taxes		52,167		50,149		2,018			6,389			4,190			1,773			1,702			768				3,822			61,097			59,863			1,234
Third party management expenses		—		—		—			—			—			—			—			8,965				10,361			8,965			10,361			(1,396	)
Subtotal		317,539		325,395		(7,856	)		29,479			20,796			8,174			5,602			15,824				32,336			371,016			384,129			(13,113	)
General and administrative expenses		—		—		—			—			—			—			—			23,002				27,938			23,002			27,938			(4,936	)
Depreciation and amortization		176,056		181,232		(5,176	)		19,286			16,813			6,708			8,689			3,855				16,493			205,905			223,227			(17,322	)
Operating Income (loss)	$	141,483	$	144,163	$	(2,680	)	$	10,193		$	3,983		$	1,466		$	(3,087	)	$	(11,033	)		$	(12,095	)	$	142,109		$	132,964		$	9,145
Number of properties		224							16						8						—							248			—
Square feet (in thousands)		21,490							2,440						2,337						—							26,267			—
Other Income (Expense):
Interest income																												1,839			4,014			(2,175	)
Interest expense																												(146,646	)		(161,150	)		14,504
Interest expense — Deferred financing costs																												(5,450	)		(4,496	)		(954	)
Recognized hedge activity																												—			(3,698	)		3,698
Equity in income of real estate ventures																												8,447			6,955			1,492
Net gain on disposition of depreciated real estate																												(24	)		40,919			(40,943	)
Provision for impairment on land inventory																												(10,841	)		—			(10,841	)
Gain on early extinguishment of debt																												18,105			—			18,105
Income (loss) from continuing operations																												7,539			15,508			(7,969	)
Income (loss) from discontinued operations																												30,986			39,827			(8,841	)
Net Income (loss)																											$	38,525		$	55,335		$	(16,810	)
Earnings per common share																											$	0.33		$	0.50		$	(0.17	)
EXPLANATORY NOTES

(a)-	Results include: two developments and six redevelopment properties.
(b)-	Represents certain revenues and expenses at the corporate level as well as various intercompany costs that are eliminated in consolidation and third-party management fees. Also included are revenues and expenses from the 29 G&I properties.

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Total Revenue

Cash rents from the Total Portfolio increased by $2.7 million from 2007 to 2008, primarily reflecting:

1) An additional $8.4 million at the Same Store Portfolio from increased rents received on lease renewals and free rent periods converting to cash rent. This free rent conversion is the primary reason for the decrease in Total Portfolio straight-line rental income.

2) An additional $13.9 million from six properties that we acquired and ten development/redevelopment properties that we completed and placed in service subsequent to 2007.

3) An additional $3.6 million of rental income due to increased occupancy at eight development/redevelopment properties in 2008 in comparison to 2007.

4) The increase was offset by the decrease of $25.1 million of rental income earned from our G&I properties during 2007.

Tenant reimbursements increased by $3.0 million from 2007 to 2008 primarily due to the increase in property operating expenses at our Same Store Portfolio. Tenant reimbursements increased by $4.7 million at our same store portfolio and the property operating expenses at those properties increased by $4.7 million. These increases are offset by the activity of the G&I properties during 2007.

Third party management fees, labor reimbursement and leasing increased by $0.7 million from 2007 to 2008 as a result of a greater number of properties that we are managing for third parties. The 29 G&I properties make up a significant portion of the increase in the number of properties that we manage for third parties.

Property Operating Expenses

Property operating expenses, including real estate taxes and third party management expenses, at the Total Portfolio decreased by $1.7 million from 2007 to 2008, primarily due to $11.9 million of such expenses for the G&I properties in 2007. The decrease was offset by $3.8 million of property operating expenses and real estate taxes from six properties that we acquired and ten development/redevelopment properties that we completed and placed in service subsequent to 2007. Property operating expenses and real estate taxes at our Same Store Portfolio and our eight development/redevelopment properties also increased by $4.7 million and $2.0 million, respectively, from 2007 to 2008.

Depreciation and Amortization Expense

Depreciation and amortization decreased by $17.3 million from 2007 to 2008, primarily due to $11.3 million of depreciation and amortization expense recorded on the G&I properties during 2007. In addition, depreciation and amortization decreased by $5.2 million at our Same Store Portfolio due to assets within the Same Store Portfolio being fully amortized subsequent to 2007.

General & Administrative Expenses

General & administrative expenses decreased by $4.9 million from 2007 to 2008 of which approximately $2.3 million was a result of the final determination of 2007 bonus awards to our executive management, thereby resulting in a reduction to the estimated payout that was accrued during 2007. We incurred $2.4 million of severance costs in 2008 and $1.9 million of severance costs in 2007. These measures and other corporate level cost saving strategies resulted in the remainder of the decrease from the prior year.

Interest Income/ Expense

The decrease in interest income by approximately $2.2 million is due to lower cash balances during the period ended December 31, 2008.

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Interest expense decreased by $14.5 million primarily due to lower mortgage notes payable outstanding during the year ending December 31, 2008 in comparison to December 31, 2007 as a result of certain mortgage notes payable being paid off subsequent to 2007. The decrease is also the result of a lower outstanding balance and lower weighted average interest rate on Credit Facility borrowings during 2008 in comparison to 2007.

Loss on Settlement of Treasury Lock Agreements

In July 2007, in anticipation of an expected debt offering, we entered into four treasury lock agreements. The treasury lock agreements were designated as cash flow hedges on interest rate risk and qualified for hedge accounting. The agreements were settled on September 21, 2007, the original termination date of each agreement, at a total cost of $3.7 million. During the fourth quarter of 2007, we determined that the planned debt issuance was remote and recorded $3.7 million as an expense for the residual balance of $3.7 million. No such settlement occurred during the year ending December 31, 2008.

Provision for impairment on land inventory

As part of our review of long-lived assets in accordance with the related requirements provided under the accounting standard for long lived assets, during the quarter ending December 31, 2008, management determined that certain of the parcels in our land inventory had historical carrying values in excess of the current estimate of their fair value. Our impairment was recorded based on management’s estimate of the current fair value of the land inventory.

Gain on early extinguishment of debt

During the year-ended December 31, 2008, we repurchased $63.0 million of our $345.0 million 3.875% Guaranteed Exchangeable Notes, $78.3 million of our $275.0 million 4.500% Guaranteed Notes due 2009 and $24.5 million of our $300.0 million 5.625% Guaranteed Notes due 2010 which resulted in a $18.1 million gain that we reported for the early extinguishment of debt on our consolidated statement of operations. In addition, we accelerated amortization of the related deferred financing costs of $1.1 million. We also reduced gain on early extinguishment of debt by $2.6 million resulting from the retrospective adoption of the accounting standard for convertible debt.

Discontinued Operations

During the twelve-month period ended December 31, 2008, we sold one property in Allentown, PA, one property in Mount Laurel, NJ, one property in Newtown, PA, five properties in Oakland, CA and one property in Richmond, VA. These properties had total revenue of $42.1 million, operating expenses of $18.6 million, depreciation and amortization expenses of $9.6 million and minority interest attributable to discontinued operations of $1.2 million. We also recorded a $6.85 million provision for impairment in connection with the five properties in Oakland, CA which reduced our income from discontinued operations.

The December 31, 2007 amount is reclassified to include the operations of the properties sold during the twelve-month period ended December 31, 2008, as well as the 20 properties that were sold during the year ended December 31, 2007. Therefore, the discontinued operations amount for the twelve-month period ended December 31, 2007 includes 29 sold properties with total revenue of $75.7 million, operating expenses of $32.3 million, depreciation and amortization expense of $23.8 million and minority interest attributable to discontinued operations of $1.7 million.

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Net Income

Net income decreased by $16.8 million from the twelve-month period ended December 31, 2007 as a result of the factors described above. Net income is significantly impacted by depreciation of operating properties and amortization of acquired intangibles. These non-cash charges do not directly affect our ability to pay dividends. Such charges can be expected to continue until the lease intangibles are fully amortized. These intangibles are amortizing over the related lease terms or estimated duration of the tenant relationship.

Earnings per Common Share

Earnings per share (basic and diluted) were $0.33 for the twelve-month period ended December 31, 2008 as compared to $0.50 for the twelve-month period ended December 31, 2007 as a result of the factors described above and an increase in the average number of common shares outstanding. The increase in the average number of common shares outstanding is the result of a partnership unit conversion to common shares during 2008 and the issuance of common shares upon the vesting of restricted common shares.

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LIQUIDITY AND CAPITAL RESOURCES

General

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

• fund normal recurring expenses,

• fund capital expenditures, including capital and tenant improvements and leasing costs,

• fund repayment of certain debt instruments when they mature,

• fund current development and redevelopment costs, and

• fund distributions declared by our Board of Trustees.

We believe that with the general downturn in the economy, it is reasonably likely that vacancy rates may continue to increase, effective rental rates on new and renewed leases may continue to decrease and tenant installation costs, including concessions, may continue to increase in most or all of our markets in 2010 and possibly beyond. As a result of the potential negative effects on our revenue from the overall reduced demand for office space, our cash flow could be insufficient to cover increased tenant installation costs over the short-term. If this situation were to occur, we expect that we would finance any shortfalls through borrowings under our Credit Facility and other debt and equity financings.

We believe that our liquidity needs will be satisfied through cash flows generated by operations, financing activities and selective Property sales. Rental revenue, expense recoveries from tenants, and other income from operations are our principal sources of cash that we use 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, developments and construction businesses. We believe our revenue, together with proceeds from property sales and secured 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. Such changes, in turn, would adversely affect our ability to fund distributions, debt service payments and tenant improvements. In addition, a material adverse change in our cash provided by operations would affect the financial performance covenants under our unsecured credit facility and unsecured notes.

Financial markets have experienced unusual volatility and uncertainty. Liquidity has generally tightened in all financial markets, including the debt and equity markets. Our liquidity management remains a top priority. Our ability to fund development projects, as well as our ability to repay or refinance debt maturities could be adversely affected by an inability to secure financing at reasonable terms beyond those already completed in 2009. It is possible, in these unusual and uncertain times that one or more lenders in our revolving credit facility could fail to fund a borrowing request. Such an event could adversely affect our ability to access funds from its revolving credit facility when needed.

We pursued new financing opportunities to ensure an appropriate balance sheet position through 2010. As a result of these efforts, we are comfortable with our ability to meet future debt maturities and development funding needs. We believe that our current balance sheet and outlook for 2010 are in an adequate position at the date of this filing, despite the ongoing disruption in the credit markets. The following are our significant activities during 2009 affecting our liquidity management:

• On April 1, 2009, we closed on an $89.8 million first mortgage financing on our Two Logan Square property. The new loan bears interest at 7.57% per annum and has a seven-year term with three years of interest only payments with principal payments based on a thirty-year amortization schedule. We used $68.5 million in net proceeds to repay without penalty the balance of the former Two Logan Square first mortgage loan and $21.3 million for general corporate purposes including the repayment of existing indebtedness.

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• On June 2, 2009, we completed the public offering of 40,250,000 of our common shares, par value $0.01 per share. The common shares were issued and sold to the underwriters at a public offering price of $6.30 per common share in accordance with an underwriting agreement. The common shares sold include 5,250,000 shares issued and sold pursuant to the underwriters’ exercise in full of their over-allotment option under the underwriting agreement. We received net proceeds of approximately $242.3 million from the offering net of underwriting discounts, commissions and expenses. We used the net proceeds from the offering to repay our $600 million unsecured revolving credit facility and for general corporate purposes.

• On June 29, 2009, we entered into a forward financing commitment to borrow up to $256.5 million under two separate loans at a per annum interest rate of 5.93%. The loans, when funded, will be secured by mortgages on the 30^th Street Post Office (the “Post Office project”), the Cira South Garage (the “garage project”) projects and by the leases of space at these facilities upon the completion of these projects. Of the total borrowings, $209.7 million and $46.8 million will be allocated to the Post Office project and to the garage project, respectively. In order for funding to occur we need to meet certain conditions which primarily relate to the completion of the projects and the commencement of the rental payments from the respective leases on these properties.

• On July 7, 2009, we closed on a $60.0 million first mortgage financing on our One Logan Square property. The new loan bears interest at a floating rate of LIBOR plus 350 basis points (subject to a LIBOR floor) and has a seven-year term with three years of interest only payments with principal payments based on a thirty-year amortization schedule at a 7.5% rate. We used the loan proceeds for general corporate purposes including repayment of existing indebtedness.

• On September 25, 2009, we consummated a registered public offering of $250.0 million in aggregate principal amount of our 7.50% senior unsecured notes due 2015. The notes were priced at 99.412% of their face amount with a yield to maturity of 7.625%, representing a spread at the time of pricing of 5.162% to the yield on the August 2014 Treasury note. The notes have been reflected net of discount of $1.4 million in the consolidated balance sheet as of December 31, 2009. The net proceeds which amounted to $247.0 million after deducting underwriting discounts and offering expenses will be used to repay our indebtedness under our existing unsecured revolving credit facility and for general corporate purposes.

• In December 2009, we received the second contribution under the historic tax credit transaction that we entered into in 2008 with US Bancorp amounting to $23.8 million.

• During 2009, we sold seven properties containing 0.7 million in net rentable square feet for net cash proceeds of $101.3 million.

We will also consider other properties within our portfolio where it may be in our best interest to obtain a secured mortgage.

We draw on multiple financing sources to fund our long-term capital needs. We use our credit facility for general business purposes, including the acquisition, development and redevelopment of properties and the repayment of other debt.

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

Our ability to sell common and preferred shares is dependent on, among other things, general market conditions for REITs, market perceptions about our company and the current trading price of our shares. We regularly analyze which source of capital is most advantageous to us at any particular point in time.

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We will also consider sales of selected Properties as another source of managing our liquidity. Asset sales during 2009 and 2008 have been a source of cash. Since mid-2007, we have used proceeds from asset sales to repay existing indebtedness, provide capital for our development activities and strengthen our financial condition. There is no guarantee that we will be able to raise similar or even lesser amounts of capital from future asset sales.

Cash Flows

The following summary discussion of our cash flows is based on the consolidated statement of cash flows included in our consolidated financial statements and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented.

As of December 31, 2009 and 2008, we maintained cash and cash equivalents of $1.6 million and $3.9 million, respectively. This $2.3 million decrease was the result of the following changes in cash flow from our various activities:

Activity	2009			2008			2007
Operating	$	220,405		$	233,867		$	224,805
Investing		(102,549	)		164,046			39,162
Financing		(120,213	)		(399,589	)		(283,746	)
Net cash flows	$	(2,357	)	$	(1,676	)	$	(19,779	)

Our principal source of cash flows is from the operation of our properties. We do not restate our cash flow for discontinued operations.

The net decrease in cash flows from operating activities is primarily the result of the following:

• Decrease in average occupancy from 92.1% during the year ended December 31, 2008 to 88.7% during the year ended December 31, 2009;

• Decrease in the number of operating properties due to dispositions. We sold a total of seven properties during the year ended December 31, 2009;

• These decreases are offset by the receipt of the second contribution under the historic tax credit transaction that we entered into in 2008 with US Bancorp amounting to $23.8 million; and

• Timing of cash receipts from our tenants and cash expenditures in the normal course of operations.

The cash flows used in investing activities is primarily attributable to the following:

• Our capital expenditures for tenant and building improvements and leasing commissions increased by $57.3 million during the year ended December 31, 2009 when compared to the year ended December 31, 2008;

• Net proceeds from sales of properties during the year ended December 31,2009 decreased by $268.8 million when compared to the year ended December 31, 2008; and

• Receipt of funds placed in escrow during the last quarter of 2008 related to the Cira garage project amounting to $31.4 million which was also used to finance the project this year.

The net decrease in cash used in financing activities is mainly due to the following:

• Net proceeds received from the public offering of common shares amounting to $242.3 million.

• Decrease in our distributions paid to shareholders and non-controlling interests from $169.3 million during the year ended December 31, 2008 to $70.6 million during the year ended December 31, 2009.

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• During the year ended December 31, 2009, we also obtained a total of $149.8 million first mortgage financings on our One Logan and Two Logan Square office properties located in Philadelphia, Pennsylvania.

• Completion of a registered public offering of $250.0 million in aggregate principal amount of our 7.50% senior unsecured notes due 2015. We received $247.0 million in net proceeds from this offering after deducting underwriting discounts and offering expenses.

• Increase in the net activity of our credit facility and unsecured notes of $370.2 million during the year ended December 31, 2009 when compared to the year ended December 31, 2008.

• Repayments of mortgage notes payable also increased from $25.1 million during year ended December 31, 2008 to $84.1 million during the year ended December 31, 2009.

• In addition, deferred financing costs paid also increased during the year ended December 31, 2009 by $24.4 million when compared to the year ended December 31, 2008 and primarily relate to the payment of a $17.7 million forward financing commitment fee, the remainder relates to costs incurred for other borrowings closed during the year.

Capitalization

Indebtedness

During the year ended December 31, 2009, we repurchased $444.7 million of our unsecured Notes in a series of transactions which are summarized in the table below:

	Repurchase						Deferred Financing
Notes	Amount		Principal		Gain		Amortization
2009 4.500% Notes	$	92,736	$	94,130	$	1,377	$	88
2010 5.625% Notes		71,414		76,999		5,565		215
2012 5.750% Notes		109,104		112,175		2,610		361
2014 5.400% Notes		6,329		7,319		961		28
3.875% Notes		136,880		154,070		12,664		1,289
	$	416,463	$	444,693	$	23,177	$	1,981

The Operating Partnership is the issuer of our unsecured notes and Brandywine Realty Trust has fully and unconditionally guaranteed the payment of principal and interest on the notes.

On September 25, 2009, we consummated a registered public offering of $250.0 million in aggregate principal amount of our 7.50% senior unsecured notes due 2015. The notes were priced at 99.412% of their face amount with a yield to maturity of 7.625%, representing a spread at the time of pricing of 5.162% to the yield on the August 2014 Treasury note. The notes have been reflected net of discount of $1.4 million in the consolidated balance sheet as of December 31, 2009. The net proceeds which amounted to $247.0 million after deducting underwriting discounts and offering expenses will be used to repay our indebtedness under our existing unsecured revolving credit facility and for general corporate purposes.

On July 7, 2009, we closed on a $60.0 million first mortgage financing on our One Logan Square property. The new loan bears interest at a floating rate of LIBOR plus 350 basis points (subject to a LIBOR floor) and has a seven-year term with three years of interest only payments with principal payments based on a thirty-year amortization schedule at a 7.5% rate. We used the loan proceeds for general corporate purposes including repayment of existing indebtedness.

On April 1, 2009, we closed on an $89.8 million first mortgage financing on our Two Logan Square property. The new loan bears interest at 7.57% per annum and has a seven-year term with three years of interest only payments with principal payments based on a thirty-year amortization schedule. We used $68.5 million in net proceeds to repay without penalty the balance of the former Two Logan Square first mortgage loan and $21.3 million for general corporate purposes including the repayment of existing indebtedness.

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On April 18, 2008, we exercised the accordion feature on our $150.0 million unsecured term loan which we entered into in October 2007 and borrowed an additional $33.0 million, bringing our total outstanding balance to $183.0 million. All outstanding borrowings under the term loan bear interest at a periodic rate of LIBOR plus 80 basis points. The net proceeds of the term loan increase were used to reduce indebtedness under our unsecured revolving credit facility. The term loan matures on October 18, 2010 and may be extended at our option for two one-year periods but not beyond the maturity date of our revolving credit facility.

On June 29, 2007, we amended our $600.0 million unsecured revolving credit facility (the “Credit Facility”). The amendment extended the maturity date of the Credit Facility from December 22, 2009 to June 29, 2011 (subject to an extension of one year, at our option, upon our payment of an extension fee equal to 15 basis points of the committed amount under the Credit Facility). The amendment also reduced the per annum variable interest rate on outstanding balances from LIBOR plus 0.80% to LIBOR plus 0.725% per annum. In addition, the amendment reduced the quarterly facility fee from 20 basis points to 17.5 basis points per annum. The interest rate and facility fee are subject to adjustment upon a change in our unsecured debt ratings. The amendment also lowered to 7.50% from 8.50% the capitalization rate used in the calculation of several of the financial covenants; increased our swing loan availability from $50.0 million to $60.0 million; and increased the number of competitive bid loan requests available to us from two to four in any 30 day period. Borrowings are always available to the extent of borrowing capacity at the stated rates; however, the competitive bid feature allows banks that are part of the lender consortium under the Credit Facility to bid to make loans to us at a reduced Eurodollar rate. We have the option to increase the Credit Facility to $800.0 million subject to the absence of any defaults and our ability to acquire additional commitments from our existing lenders or new lenders.

On April 30, 2007, we consummated the public offering of $300.0 million aggregate principal amount of unsecured 5.70% Guaranteed Notes due 2017 and used the net proceeds from this offering to reduce borrowings under the Credit Facility.

In April 2007, the entered into a $20.0 million Sweep Agreement (the “Sweep Agreement”) to be used for cash management purposes. Borrowings under the Sweep Agreement bear interest at one-month LIBOR plus 0.75%. The Sweep Agreement ended in April 2009 at which point the agreement was not renewed.

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As of December 31, 2009, we had approximately $2.5 billion of outstanding indebtedness. The table below summarizes our mortgage notes payable, our unsecured notes and our revolving Credit Facility (net of discounts) at December 31, 2009 and 2008:

	December 31,			December 31,
	2009			2008
	(dollars in thousands)
Balance:
Fixed rate (includes variable swapped to fixed)	$	2,299,741		$	2,505,659
Variable rate — unhedged		154,836			235,836
Total	$	2,454,577		$	2,741,495
Percent of Total Debt:
Fixed rate (includes variable swapped to fixed)		93.7	%		91.4	%
Variable rate — unhedged		6.3	%		8.6	%
Total		100	%		100	%
Weighted-average interest rate at period end:
Fixed rate (includes variable swapped to fixed)		5.9	%		5.6	%
Variable rate — unhedged		1.8	%		2.1	%
Total		5.6	%		5.1	%

The variable rate debt shown above generally bears interest based on various spreads ranging from 0.73% to 1.6% over a LIBOR term periodically selected by us.

We use Credit Facility borrowings for general business purposes, including the acquisition, development and redevelopment of properties and the repayment of other debt. We have an option to increase the maximum borrowings under the Credit Facility to $800.0 million subject to the absence of any defaults and our ability to obtain additional commitments from our existing or new lenders.

Our interest rate incurred under our revolving Credit Facility and term loan is subject to modification depending on our rating status with qualified agencies.

As of December 31, 2009, we had $92.0 million of borrowings, $13.9 million of letters of credit outstanding under the Credit Facility, and a $51.0 million holdback in connection with our historic tax credit transaction leaving $443.1 million of unused availability. For the years ended December 31, 2009 and 2008, our weighted average interest rates, including the effects of interest rate hedges discussed in Note 7 to the consolidated financial statements included herein, and including both the new Credit Facility and prior credit facility, were 2.08% and 4.35% per annum, respectively.

The Credit Facility contains financial and non-financial covenants, including covenants that relate to our incurrence of additional debt; the granting of liens; consummation of mergers and consolidations; the disposition of assets and interests in subsidiaries; the making of loans and investments; and the payment of dividends. The restriction on dividends permits us to pay dividends to the greater of (i) an amount required for us to retain our qualification as a REIT and (ii) 95% of our funds from operations. The Credit Facility also contains financial covenants that require us to maintain an interest coverage ratio, a fixed charge coverage ratio, an unsecured debt ratio and an unencumbered cash flow ratio above certain specified minimum levels; to maintain net worth above an amount determined on a specified formula; and to maintain a leverage ratio and a secured debt ratio below certain maximum levels. Another financial covenant limits the ratio of unsecured debt to unencumbered properties. We continuously monitor the Company’s compliance with and anticipated compliance with the covenants. Certain of the covenants restrict management’s ability to obtain alternative sources of capital. We were in compliance with all covenants as of December 31, 2009.

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The indenture under which we issued our unsecured Notes including those issued in September 2009 contain (or contained) financial covenants, including (1) a leverage ratio not to exceed 60%, (2) a secured debt leverage ratio not to exceed 40%, (3) a debt service coverage ratio of greater than 1.5 to 1.0 and (4) an unencumbered asset value of not less than 150% of unsecured debt. We were in compliance with all covenants as of December 31, 2009.

We have mortgage loans that are collateralized by certain of our Properties. Payments on mortgage loans are generally due in monthly installments of principal and interest, or interest only. We intend to refinance or repay our mortgage loans as they mature through the use of proceeds from selective Property sales and secured or unsecured borrowings. However, in the current and future economic environment one or more of these sources may not be available on attractive terms or at all.

Our charter documents do not limit the amount or form of indebtedness that we may incur, and our policies on debt incurrence are solely within the discretion of our Board, subject to financial covenants in the Credit Facility, indenture and other credit agreements.

As of December 31, 2009, we had guaranteed repayment of approximately $2.1 million of loans on behalf of certain Real Estate Ventures. See Item 2. Properties — Real Estate Ventures. We also provide customary environmental indemnities and completion guarantees in connection with construction and permanent financing both for our own account and on behalf of certain of the Real Estate Ventures.

Share Repurchases

We maintain a share repurchase program under which our Board has authorized us to repurchase our common shares from time to time. Our Board initially authorized this program in 1998 and has periodically replenished capacity under the program, including, most recently, on May 2, 2006 when our Board restored capacity to 3.5 million common shares. We did not repurchase any shares during 2009 under this plan. As of December 31, 2009, we may repurchase an additional 0.5 million shares under the plan. Our Board has not limited the duration of the program; however, it may be terminated at any time.

Off-Balance Sheet Arrangements

We are not dependent on any off-balance sheet financing arrangements for liquidity. Our off-balance sheet arrangements are discussed in Note 4 to the financial statements, “Investment in Unconsolidated Real Estate Ventures”. Additional information about the debt of our unconsolidated Real Estate Ventures is included in “Item 2 — Properties”.

Short- and Long-Term Liquidity

We believe that our cash flow from operations is adequate to fund our short-term liquidity requirements, excluding principal payments under our debt obligations. Cash flow from operations is generated primarily from rental revenues and operating expense reimbursements from tenants and management services income from providing services to third parties. We intend to use these funds to meet short-term liquidity needs, which are to fund operating expenses, recurring capital expenditures, tenant allowances, leasing commissions, interest expense and the minimum distributions required to maintain our REIT qualification under the Internal Revenue Code. We expect to meet short-term scheduled debt maturities through borrowings under the Credit Facility and proceeds from selective asset dispositions. As of December 31, 2009, we had $1,902.9 million of unsecured debt and $551.7 million of mortgage debt of which $198.5 million and $51.3 million, respectively, are scheduled to mature through December 2010. We expect to extend our term loan of $183.0 million, we expect to have sufficient capacity under our Credit Facility and for the remaining debt maturities, and we will also continue to look to the other listed sources to fund these maturities.

We expect to meet our long-term liquidity requirements, such as for property acquisitions, development, investments in real estate ventures, scheduled debt maturities, major renovations, expansions and other significant capital improvements, through cash from operations, borrowings under the Credit Facility, additional secured and unsecured indebtedness, the issuance of equity securities, contributions from joint venture investors and proceeds from asset dispositions.

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Many commercial real estate lenders have substantially tightened underwriting standards or have withdrawn from the lending marketplace. Also, spreads in the investment grade bond market have substantially widened. These circumstances have materially impacted liquidity in the debt markets, making financing terms less attractive, and in certain cases have resulted in the unavailability of certain types of debt financing. As a result, we expect debt financings will be more difficult to obtain and that borrowing costs on new and refinanced debt will be more expensive. Moreover, the recent volatility in the financial markets, in general, will make it more difficult or costly, or even impossible, for us to raise capital through the issuance of common stock, preferred stock or other equity instruments or through public issuances of debt securities from our shelf registration statements as we have been able to do in the past. Such conditions would also limit our ability to raise capital through asset dispositions at attractive prices or at all.

Inflation

A majority of our leases provide for reimbursement of real estate taxes and operating expenses either on a triple net basis or over a base amount. In addition, many of our office leases provide for fixed base rent increases. We believe that inflationary increases in expenses will be partially offset by expense reimbursement and contractual rent increases. There were also reductions in our rental rates on some of our new leases and renewals due to the current operating environment.

Commitments and Contingencies

The following table outlines the timing of payment requirements related to our contractual commitments as of December 31, 2009.

	Payments by Period (in thousands)
			Less than						More than
	Total		1 Year		1-3 Years		3-5 Years		5 Years
Mortgage notes payable (a)	$	550,590	$	51,258	$	243,666	$	94,884	$	160,782
Revolving credit facility		92,000		—		92,000		—		—
Unsecured term loan		183,000		183,000		—		—		—
Unsecured debt (a)		1,635,621		198,545		187,825		492,681		756,570
Ground leases (b)		297,594		2,318		6,955		7,226		281,095
Interest expense		687,806		134,019		206,322		233,911		113,554
Development contracts (c)		77,418		77,418		—		—		—
Other liabilities		7,162		—		—		—		7,162
	$	3,531,191	$	646,558	$	736,768	$	828,702	$	1,319,163

(a)	Amounts do not include unamortized discounts and/or premiums.
(b)	Future minimum rental payments under the terms of all non-cancelable ground leases under which we are the lessee are expensed on a straight-line basis regardless of when payments are due.
(c)	Represents contractual obligations for certain development projects and does not contemplate all costs expected to be incurred.

As part of the TRC acquisition, we acquired our interest in Two Logan Square, a 703,386 square foot office building in Philadelphia, primarily through our ownership of a second and third mortgage secured by this property. This property is consolidated as the borrower is a variable interest entity and we, through our ownership of the second and third mortgages are the primary beneficiary. We currently do not expect to take title to Two Logan Square until, at the earliest, September 2019. If we take fee title to Two Logan Square upon a foreclosure of our mortgage, we have agreed to pay an unaffiliated third party that holds a residual interest in the fee owner of this property an amount equal to $0.6 million (if we must pay a state and local transfer upon taking title) and $2.9 million (if no transfer tax is payable upon the transfer).

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We are currently being audited by the Internal Revenue Service for our 2004 tax year. The audit concerns the tax treatment of the transaction in September 2004 in which we acquired a portfolio of properties through the acquisition of a limited partnership. At this time it does not appear that an adjustment would result in a material tax liability for us. However, an adjustment could raise a question as to whether a contributor of partnership interests in the 2004 transaction could assert a claim against us under the tax protection agreement entered into as part of the transaction.

As part of our 2006 acquisition of Prentiss Properties Trust, the TRC acquisition in 2004 and several of our other transactions, we agreed not to sell certain of the properties we acquired in transactions that would trigger taxable income to the former owners. In the case of the TRC acquisition, we agreed not to sell acquired properties for periods up to 15 years from the date of the TRC acquisition date as follows at December 31, 2009: One Rodney Square and 130/150/170 Radnor Financial Center (January 2015); and One Logan Square, Two Logan Square and Radnor Corporate Center (January 2020). In the Prentiss acquisition, we assumed the obligation of Prentiss not to sell Concord Airport Plaza before March 2018. Our agreements generally provide that we may dispose of the subject properties only in transactions that qualify as tax-free exchanges under Section 1031 of the Internal Revenue Code or in other tax deferred transactions. If we were to sell a restricted property before expiration of the restricted period in a non-exempt transaction, we would be required to make significant payments to the parties who sold us the applicable property on account of tax liabilities triggered to them.

In connection with our development of the PO Box/IRS and Cira Garage projects, during 2008, we entered into a historic tax credit and new markets tax credit arrangement, respectively. We are required to be in compliance with various laws, regulations and contractual provisions that apply to our historic and new market tax credit arrangements. Non-compliance with applicable requirements could result in projected tax benefits not being realized and therefore, require a refund to USB or reduction of investor capital contributions, which are reported as deferred income in our consolidated balance sheet, until such time as our obligation to deliver tax benefits is relieved. The remaining compliance periods for our tax credit arrangements run through 2015. We do not anticipate that any material refunds or reductions of investor capital contributions will be required in connection with these arrangements.

On June 29, 2009, we entered into a forward financing commitment to borrow up to $256.5 million under two separate loans which are secured by mortgages on the 30th Street Post Office (the “Post Office project”), the Cira South Garage (the “garage project”) projects and by the leases of space at these facilities upon the completion of these projects (See Note 7). In order for funding to occur we need to meet certain conditions which primarily relate to the completion of the projects and the commencement of the rental payments from the respective leases on these properties. The expected funding date is scheduled on August 26, 2010 which is also the anticipated completion date of the projects. In the event the said conditions were not met, we have the right to extend the funding date by paying an extension fee amounting to $1.8 million for each 30 day extension within the allowed two year extension period. In addition, we can also voluntarily elect to terminate the loans during the forward period including the extension period by paying a termination fee. We are also subject to the termination fee if the conditions were not met on the final advance date. The termination fee is calculated as the greater of the 0.5% of the total available principal to be funded or the present value of the scheduled interest and principal payments (based on the principal amount to be funded and the then 20 —year treasury rate plus 50 basis points) from the funding date through the loans’ maturity date and the amount to be funded. In addition, deferred financing costs related to these loans will be accelerated if we chose to terminate the forward financing commitment.

We invest in our properties and regularly incur capital expenditures in the ordinary course to maintain the properties. We believe that such expenditures enhance our competitiveness. We also enter 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.

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Interest Rate Risk and Sensitivity Analysis

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

Our financial instruments consist of both fixed and variable rate debt. As of December 31, 2009, our consolidated debt consisted of $551.7 million in fixed rate mortgages, $92.0 million borrowings under our Credit Facility, $183.0 million borrowings in an unsecured, term loan and $1.6 billion in unsecured notes (net of discounts) of which $1,575.0 million are fixed rate borrowings and $52.8 million are variable rate borrowings. All financial instruments were entered into for other than trading purposes and the net market value of these financial instruments is referred to as the net financial position. Changes in interest rates have different impacts on the fixed and variable rate portions of our debt portfolio. A change in interest rates on the fixed portion of the debt portfolio impacts the net financial instrument position, but has no impact on interest incurred or cash flows. A change in interest rates on the variable portion of the debt portfolio impacts the interest incurred and cash flows, but does not impact the net financial instrument position.

As of December 31, 2009, based on prevailing interest rates and credit spreads, the fair value of our unsecured notes was $1.5 billion. For sensitivity purposes, a 100 basis point change in the discount rate equates to a change in the total fair value of our debt, including the Notes, of approximately $15.5 million at December 31, 2009.

We use derivative instruments to manage interest rate risk exposures and not for speculative purposes. As of December 31, 2009 we effectively hedged debt with a notional amount of $198.8 million through four interest rate swap agreements. These instruments have an aggregate fair value of $7.3 million at December 31, 2009.

In December 2009, we settled in cash two of our interest swaps with a notional amount of $50.0 million, which we have applied in the registered offering of our unsecured notes on September 21, 2009. The related interest swaps no longer qualify for hedge accounting upon the completion of the offering as the hedging relationship was terminated. Accordingly, changes in the fair value of these interest rate swaps were charged to our consolidated statements of operations until their cash settlement date. We also recognized $0.1 million gain from the ineffectiveness of the hedges during the twelve months ended December 31, 2009.

The total carrying value of our variable rate debt was approximately $353.6 million and $414.6 million at December 31, 2009 and December 31, 2008, respectively. The total fair value of our debt, excluding the Notes, was approximately $341.2 million and $398.7 million at December 31, 2009 and December 31, 2008, respectively. For sensitivity purposes, a 100 basis point change in the discount rate equates to a change in the total fair value of our debt, excluding the Notes, of approximately $1.5 million at December 31, 2009, and a 100 basis point change in the discount rate equates to a change in the total fair value of our debt of approximately $2.4 million at December 31, 2008.

If market rates of interest increase by 1%, the fair value of our outstanding fixed-rate mortgage debt would decrease by approximately $16.1 million. If market rates of interest decrease by 1%, the fair value of our outstanding fixed-rate mortgage debt would increase by approximately $16.9 million.

At December 31, 2009, our outstanding variable rate debt based on LIBOR totaled approximately $353.6 million. At December 31, 2009, the interest rate on our variable rate debt was approximately 1.17%. If market interest rates on our variable rate debt change by 100 basis points, total interest expense would change by approximately $0.4 million for the quarter ended December 31, 2009.

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

Item 7A. Quantitative and Qualitative Disclosure About Market Risk

See discussion in Management’s Discussion and Analysis included in Item 7 herein.

Item 8. Financial Statements and Supplementary Data

The financial statements and supplementary financial data of Brandywine Realty Trust and Brandywine Operating Partnership, L.P. and the reports thereon of PricewaterhouseCoopers LLP, an independent registered public accounting firm, with respect thereto are listed under Item 15(a) and filed as part of this Annual Report on Form 10-K. See Item 15.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None

Item 9A. Controls and Procedures

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

Under the supervision and with the participation of each registrant’s management, including its principal executive officer and principal financial officer, each registrant’s management conducted an evaluation of the registrant’s disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act). Based on this evaluation, the principal executive officer and the principal financial officer of each registrant concluded that each registrant’s disclosure controls and procedures were effective as of the end of the period covered by this annual report.

Management’s Report on Internal Control Over Financial Reporting

The management of each registrant is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f).

Under the supervision and with the participation of each registrant’s management, including its principal executive officer and principal financial officer, each registrant’s management conducted an evaluation of the effectiveness of the registrant’s internal control over financial reporting based on the framework inInternal Control — Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation under the framework inInternal Control — Integrated Framework, each registrant’s management concluded that the registrant’s internal control over financial reporting was effective as of December 31, 2009.

Management of each registrant has excluded our investments in Four and Six Tower Bridge Associates from its evaluation of the effectiveness of internal control over financial reporting as of December 31, 2009 because we do not have the right or authority to assess the internal controls of the individual entities and we also lack the ability, in practice, to make the assessment. Four and Six Tower Bridge Associates are two real estate partnerships, created prior to December 15, 2003, which we consolidate under the accounting standard for the consolidation of variable interest entities. The total assets and total revenue of Four and Six Tower Bridge Associates represent, in the aggregate, less than 1% of our consolidated total assets and consolidated total revenue as of and for the year ended December 31, 2009.

The effectiveness of each registrant’s internal control over financial reporting as of December 31, 2009 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their reports which are included herein.

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Changes in Internal Control over Financial Reporting.

There have not been any changes in either registrant’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, either registrant’s internal control over financial reporting.

Item 9B. Other Information

On February 23, 2010 our Board provided RREEF America LLC, a registered investment advisor, a waiver from the 9.8% share ownership limit in our Declaration of Trust. The waiver permits RREEF to hold, on behalf of its advisory clients, up to 14,750,000 common shares. The waiver does not permit any of RREEF’s advisory clients to own (directly or through RREEF) shares above the 9.8% ownership limit, nor does the waiver permit RREEF to own shares for its own account above the 9.8% ownership limit. We have attached as an exhibit to this Form 10-K a copy of the waiver and RREEF’s certificate of representations, warranties and agreements .

PART III

Item 10. Directors, Executive Officers and Corporate Governance

Incorporated herein by reference to the Company’s definitive proxy statement to be filed with respect to its 2010 Annual Meeting of Shareholders.

Item 11. Executive Compensation

Incorporated herein by reference to the Company’s definitive proxy statement to be filed with respect to its 2010 Annual Meeting of Shareholders.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters

Incorporated herein by reference to the Company’s definitive proxy statement to be filed with respect to its 2010 Annual Meeting of Shareholders.

Item 13. Certain Relationships and Related Transactions, and Director Independence

Incorporated herein by reference to the Company’s definitive proxy statement to be filed with respect to its 2010 Annual Meeting of Shareholders.

Item 14. Principal Accounting Fees and Services

Incorporated herein by reference to the Company’s definitive proxy statement to be filed with respect to its 2010 Annual Meeting of Shareholders.

PART IV

Item 15. Exhibits and Financial Statement Schedules.

(a) 1. and 2. Financial Statements and Schedules

The financial statements and schedules of Brandywine Realty Trust and Brandywine Operating Partnership listed below are filed as part of this annual report on the pages indicated.

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Index to Financial Statements and Schedules

BRANDYWINE REALTY TRUST

	Page
Report of Independent Registered Public Accounting Firm		F-1
Consolidated Balance Sheets as of December 31, 2009 and 2008		F-2
Consolidated Statements of Operations for the Years Ended December 31, 2009, 2008 and 2007		F-3
Consolidated Statements of Other Comprehensive (Loss) Income for the Years Ended December 31, 2009, 2008 and 2007		F-4
Consolidated Statements of Beneficiaries’ Equity for the Years Ended December 31, 2009 2008 and 2007		F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2009, 2008 and 2007		F-6
Notes to Consolidated Financial Statements		F-7
Schedule II — Valuation and Qualifying Accounts		F-42
Schedule III — Real Estate and Accumulated Depreciation		F-43

BRANDYWINE OPERATING PARTNERSHIP, L.P.

	Page
Report of Independent Registered Public Accounting Firm		F-48
Consolidated Balance Sheets as of December 31, 2009 and 2008		F-49
Consolidated Statements of Operations for the Years Ended December 31, 2009, 2008 and 2007		F-50
Consolidated Statements of Other Comprehensive (Loss) Income for the Years Ended December 31, 2009, 2008 and 2007		F-51
Consolidated Statements of Partner’s Equity for the Years Ended December 31, 2009 2008 and 2007		F-52
Consolidated Statements of Cash Flows for the Years Ended December 31, 2009, 2008 and 2007		F-53
Notes to Consolidated Financial Statements		F-54
Schedule II — Valuation and Qualifying Accounts		F-89
Schedule III — Real Estate and Accumulated Depreciation		F-90
(c)(1) Financial Statements of G&I Interchange Office, LLC		F-95

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3.Exhibits

Exhibits No.		Description
	3.1.1	Amended and Restated Declaration of Trust of Brandywine Realty Trust (amended and restated as of May 12, 1997) (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated June 9, 1997 and incorporated herein by reference)
	3.1.2	Articles of Amendment to Declaration of Trust of Brandywine Realty Trust (September 4, 1997) (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated September 10, 1997 and incorporated herein by reference)
	3.1.3	Articles of Amendment to Declaration of Trust of Brandywine Realty Trust (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated June 3, 1998 and incorporated herein by reference)
	3.1.4	Articles Supplementary to Declaration of Trust of Brandywine Realty Trust (September 28, 1998) (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated October 13, 1998 and incorporated herein by reference)
	3.1.5	Articles of Amendment to Declaration of Trust of Brandywine Realty Trust (March 19, 1999) (previously filed as an exhibit to Brandywine Realty Trust’s Form 10-K for the fiscal year ended December 31, 1998 and incorporated herein by reference)
	3.1.6	Articles Supplementary to Declaration of Trust of Brandywine Realty Trust (April 19, 1999) (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated April 26, 1999 and incorporated herein by reference)
	3.1.7	Articles Supplementary to Declaration of Trust of Brandywine Realty Trust (December 30, 2003) (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-A dated December 29, 2003 and incorporated herein by reference)
	3.1.8	Articles Supplementary to Declaration of Trust of Brandywine Realty Trust (February 5, 2004) (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-A dated February 5, 2004 and incorporated herein by reference)
	3.1.9	Articles of Amendment to Declaration of Trust of Brandywine Realty Trust (October 3, 2005) (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated October 4, 2005 and incorporated herein by reference)
	3.1.10	Amended and Restated Agreement of Limited Partnership of Brandywine Operating Partnership, L.P. (the “Operating Partnership”) (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated December 17, 1997 and incorporated herein by reference)
	3.1.11	First Amendment to Amended and Restated Agreement of Limited Partnership of Brandywine Operating Partnership, L.P. (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated December 17, 1997 and incorporated herein by reference)
	3.1.12	Second Amendment to the Amended and Restated Agreement of Limited Partnership Agreement of Brandywine Operating Partnership, L.P.** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated April 13, 1998 and incorporated herein by reference)
	3.1.13	Third Amendment to the Amended and Restated Agreement of Limited Partnership of Brandywine Operating Partnership, L.P. (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated May 14, 1998 and incorporated herein by reference)
	3.1.14	Fourth Amendment to the Amended and Restated Agreement of Limited Partnership of Brandywine Operating Partnership, L.P. (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated October 13, 1998 and incorporated herein by reference)
	3.1.15	Fifth Amendment to the Amended and Restated Agreement of Limited Partnership of Brandywine Operating Partnership, L.P. (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated October 13, 1998 and incorporated herein by reference)
	3.1.16	Sixth Amendment to the Amended and Restated Agreement of Limited Partnership of Brandywine Operating Partnership, L.P. (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated October 13, 1998 and incorporated herein by reference)
	3.1.17	Seventh Amendment to the Amended and Restated Agreement of Limited Partnership of Brandywine Operating Partnership, L.P. (previously filed as an exhibit to Brandywine Realty Trust’s Form 10-K for the fiscal year ended December 31, 2003 and incorporated herein by reference)
	3.1.18	Eighth Amendment to the Amended and Restated Agreement of Limited Partnership of Brandywine Operating Partnership, L.P. (previously filed as an exhibit to Brandywine Realty Trust’s Form 10-K for the fiscal year ended December 31, 2003 and incorporated herein by reference)
	3.1.19	Ninth Amendment to the Amended and Restated Agreement of Limited Partnership of Brandywine Operating Partnership, L.P. (previously filed as an exhibit to Brandywine Realty Trust’s Form 10-K for the fiscal year ended December 31, 2003 and incorporated herein by reference)
	3.1.20	Tenth Amendment to the Amended and Restated Agreement of Limited Partnership of Brandywine Operating Partnership, L.P. (previously filed as an exhibit to Brandywine Realty Trust’s Form 10-K for the fiscal year ended December 31, 2003 and incorporated herein by reference)
	3.1.21	Eleventh Amendment to the Amended and Restated Agreement of Limited Partnership of Brandywine Operating Partnership, L.P. (previously filed as an exhibit to Brandywine Realty Trust’s Form 10-K for the fiscal year ended December 31, 2003 and incorporated herein by reference)
	3.1.22	Twelfth Amendment to the Amended and Restated Agreement of Limited Partnership of Brandywine Operating Partnership, L.P. (previously filed as an exhibit to Brandywine Realty Trust’s Form 10-K for the fiscal year ended December 31, 2003 and incorporated herein by reference)

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Exhibits No.		Description
	3.1.23	Thirteenth Amendment to the Amended and Restated Agreement of Limited Partnership of Brandywine Operating Partnership, L.P. (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated September 21, 2004 and incorporated herein by reference)
	3.1.24	Fourteenth Amendment to the Amended and Restated Agreement of Limited Partnership of Brandywine Operating Partnership, L.P. (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated January 10, 2006 and incorporated herein by reference)
	3.1.25	Fifteenth Amendment to the Amended and Restated Agreement of Limited Partnership of Brandywine Operating Partnership, L.P. (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated August 18, 2006 and incorporated herein by reference)
	3.1.26	List of partners of Brandywine Operating Partnership, L.P.
	3.2	Amended and Restated Bylaws of Brandywine Realty Trust (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated October 14, 2003 and incorporated herein by reference)
	4.1	Form of 7.50% Series C Cumulative Redeemable Preferred Share Certificate (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-A dated December 29, 2003 and incorporated herein by reference)
	4.2	Form of 7.375% Series D Cumulative Redeemable Preferred Share Certificate (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-A dated February 5, 2004 and incorporated herein by reference)
	4.3.1	Indenture dated October 22, 2004 by and among Brandywine Operating Partnership, L.P., Brandywine Realty Trust, certain subsidiaries of Brandywine Operating Partnership, L.P. named therein and The Bank of New York, as Trustee (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated October 22, 2004 and incorporated herein by reference)
	4.3.2	First Supplemental Indenture dated as of May 25, 2005 by and among Brandywine Operating Partnership, L.P., Brandywine Realty Trust, certain subsidiaries of Brandywine Operating Partnership, L.P. named therein and The Bank of New York, as Trustee (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated May 26, 2005 and incorporated herein by reference)
	4.3.3	Second Supplemental Indenture dated as of October 4, 2006 by and among Brandywine Operating Partnership, L.P., Brandywine Realty Trust and the Bank of New York, as Trustee (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated October 4, 2006 and incorporated herein by reference)
	4.4	Form of $250,000,000 5.40% Guaranteed Note due 2014 (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated October 22, 2004 and incorporated herein by reference)
	4.5	Form of $300,000,000 5.625% Guaranteed Note due 2010 (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated December 20, 2005 and incorporated herein by reference)
	4.6	Form of $300,000,000 aggregate principal amount of 5.75% Guaranteed Note due 2012 (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated March 28, 2006 and incorporated herein by reference).
	4.7	Form of $250,000,000 aggregate principal amount of 6.00% Guaranteed Note due 2016 (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated March 28, 2006 and incorporated herein by reference).
	4.8	Form of 3.875% Exchangeable Guaranteed Notes due 2026 (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated October 4, 2006 and incorporated herein by reference)
	4.9	Form of $300,000,000 aggregate principal amount of 5.70% Guaranteed Notes due 2017 (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated April 30, 2007 and incorporated herein by reference)
	4.10	Form of $250,000,000 aggregate principal amount of 7.50% Guaranteed Notes due 2015 (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated September 25, 2009 and incorporated herein by reference)
	10.1	Second Amended and Restated Revolving Credit Agreement dated as of June 29, 2007 (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated June 29, 2007 and incorporated herein by reference)
	10.2	Term Loan Agreement dated as of October 15, 2007 (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated October 16, 2007 and incorporated herein by reference)
	10.3	Contribution Agreement dated as of July 10, 1998 (with Donald E. Axinn) (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated July 30, 1998 and incorporated herein by reference)
	10.4	First Amendment to Contribution Agreement (with Donald E. Axinn) (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated October 13, 1998 and incorporated herein by reference)
	10.5	Modification Agreement dated as of June 20, 2005 between Brandywine Operating Partnership, L.P. and Donald E. Axinn (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated June 21, 2005 and incorporated herein by reference)
	10.6	Contribution Agreement dated August 18, 2004 with TRC Realty, Inc.-GP, TRC-LB LLC and TRC Associates Limited Partnership (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated August 19, 2004 and incorporated herein by reference)
	10.7	Registration Rights Agreement (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated September 21, 2004 and incorporated herein by reference)
	10.8	Tax Protection Agreement (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated September 21, 2004 and incorporated herein by reference)
	10.9	Registration Rights Agreement dated as of October 3, 2005 (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated October 4, 2005 and incorporated herein by reference)
	10.10	Letter to Cohen & Steers Capital Management, Inc. relating to waiver of share ownership limit (previously filed as an exhibit to Brandywine Realty Trust’s Form 10-Q for the quarter ended June 30, 2003 and incorporated herein by reference)
	10.11	Registration Rights Agreement dated as of October 4, 2006 relating to 3.875% Exchangeable Guaranteed Notes due 2026 (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated October 4, 2006 and incorporated herein by reference)

-71-

Exhibits No.		Description
	10.12	Common Share Delivery Agreement (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated October 4, 2006 and incorporated herein by reference)
	10.13	2006 Amended and Restated Agreement dated as of January 5, 2006 with Anthony A. Nichols, Sr.** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated January 10, 2006 and incorporated herein by reference)
	10.14	Consulting Letter Agreement with Anthony A. Nichols, Sr.** (previously filed as an exhibit to Brandywine Realty Trust’s Form 10-K for the fiscal year ended December 31, 2008 and incorporated herein by reference)
	10.15	Amended and Restated Employment Agreement dated as of February 9, 2007 of Gerard H. Sweeney** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated February 14, 2007 and incorporated herein by reference)
	10.16	Amended and Restated 1997 Long-Term Incentive Plan** (previously filed as an exhibit to Brandywine Realty Trust’s Form 10-Q for the quarter ended March 31, 2007 and incorporated herein by reference)
	10.17	Amended and Restated Executive Deferred Compensation Plan effective March 25, 2004** (previously filed as an exhibit to Brandywine Realty Trust’s Form 10-Q for the quarter ended March 31, 2004 and incorporated herein by reference)
	10.18	Amended and Restated Executive Deferred Compensation Plan effective January 1, 2009** (previously filed as an exhibit to Brandywine Realty Trust’s Form 10-K for the fiscal year ended December 31, 2008 and incorporated herein by reference)
	10.19	2007 Non-Qualified Employee Share Purchase Plan** (previously filed as an exhibit to Brandywine Realty Trust’s Form 10-Q for the quarter ended March 31, 2007 and incorporated herein by reference)
	10.20	2006 Restricted Share Award to Gerard H. Sweeney** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated February 15, 2006 and incorporated herein by reference)
	10.21	Form of 2006 Restricted Share Award to executive officers (other than the President and Chief Executive Officer)** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated February 15, 2006 and incorporated herein by reference)
	10.22	Form of 2007 Restricted Share Award to non-executive trustees** (previously filed as an exhibit to Brandywine Realty Trust’s Form 10-Q for the quarter ended March 31, 2007 and incorporated herein by reference)
	10.23	Performance Share Award to Howard M. Sipzner** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated December 12, 2006 and incorporated herein by reference)
	10.24	2007 Performance Share Award to Gerard H. Sweeney** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated February 14, 2007 and incorporated herein by reference)
	10.25	Form of 2007 Performance Share Award to executive officers (other than the President and Chief Executive Officer)** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated February 14, 2007 and incorporated herein by reference)
	10.26	Summary of Trustee Compensation** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated March 17, 2006 and incorporated herein by reference)
	10.27	Form of Restricted Share Award** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated January 10, 2006 and incorporated herein by reference)
	10.28	Form of Performance Share Award to the President and CEO and Executive Vice President and CFO** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated April 11, 2008 and incorporated herein by reference)
	10.29	Form of Performance Share Award to the executive officers (other than the President and CEO and Executive Vice President and CFO)** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated April 11, 2008 and incorporated herein by reference)
	10.30	Form of Non-Qualified Share Option Agreement to the President and CEO and Executive Vice President and CFO** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated April 11, 2008 and incorporated herein by reference)
	10.31	Form of Non-Qualified Share Option Agreement to the executive officers (other than the President and CEO and Executive Vice President and CFO)** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated April 11, 2008 and incorporated herein by reference)
	10.32	Form of Incentive Stock Option Agreement to the President and CEO and Executive Vice President and CFO ** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated April 11, 2008 and incorporated herein by reference)
	10.33	Form of Incentive Stock Option Agreement to the executive officers (other than the President and CEO and Executive Vice President and CFO)** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated April 11, 2008 and incorporated herein by reference)
	10.34	Form of Restricted Share Award for Executive Officers** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated April 1, 2009 and incorporated herein by reference)
	10.35	Form of Restricted Performance Share Unit and Dividend Equivalent Rights Award Agreement for Executive Officers** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated April 1, 2009 and incorporated herein by reference)
	10.36	2009-2011 Restricted Performance Share Unit Program** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated April 1, 2009 and incorporated herein by reference)
	10.37	Forms of Non-Qualified Share Option Agreement for Executive Officers** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated April 1, 2009 and incorporated herein by reference)
	10.38	Forms of Incentive Stock Option Agreement for Executive Officers ** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated April 1, 2009 and incorporated herein by reference)

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Exhibits No.		Description
	10.39	Form of Amended and Restated Change of Control Agreement with Executive Officers** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K filed on February 4, 2010 and incorporated herein by reference)
	10.40	Employment Agreement dated February 3, 2010 with Howard M. Sipzner ** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K filed on February 4, 2010 and incorporated herein by reference)
	10.41	Letter to RREEF America LLC relating to waiver of share ownership limit
	12.1	Statement re Computation of Ratios of Brandywine Realty Trust
	12.2	Statement re Computation of Ratios of Brandywine Operating Partnership, L.P.
	14.1	Code of Business Conduct and Ethics** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated December 22, 2004 and incorporated herein by reference)
	21	List of subsidiaries
	23.1	Consent of PricewaterhouseCoopers LLP relating to financial statements of Brandywine Realty Trust
	23.2	Consent of PricewaterhouseCoopers LLP relating to financial statements of Brandywine Operating Partnership, L.P.
	23.3	Consent of PricewaterhouseCoopers LLP relating to financial statements of G&I Interchange Office L.L.C.
	31.1	Certification of the Chief Executive Officer of Brandywine Realty Trust pursuant to 13a-14 under the Securities Exchange Act of 1934
	31.2	Certification of the Chief Financial Officer of Brandywine Realty Trust pursuant to 13a-14 under the Securities Exchange Act of 1934
	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 under the Securities Exchange Act of 1934
	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 under the Securities Exchange Act of 1934
	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
	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
	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
	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
	99.1	Material Tax Consequences

**	Management contract or compensatory plan or arrangement
(b)	Financial Statement Schedule: See Item 15 (a) (1) and (2) above
(c)(1)	The Financial Statements of G&I Interchange Office, LLC on page F-99

-73-

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

BRANDYWINE REALTY TRUST
By:	/s/ Gerard H. Sweeney
	Gerard H. Sweeney
	President and Chief Executive Officer

Date: March 1, 2010

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Walter D’AlessioWalter D’Alessio	Chairman of the Board and Trustee	March 1, 2010
/s/ Gerard H. SweeneyGerard H. Sweeney	President, Chief Executive Officer and Trustee (Principal Executive Officer)	March 1, 2010
/s/ Howard M. SipznerHoward M. Sipzner	Executive Vice President and Chief Financial Officer (Principal Financial Officer)	March 1, 2010
/s/ Gabriel J. MainardiGabriel J. Mainardi	Vice President and Chief Accounting Officer (Principal Accounting Officer)	March 1, 2010
/s/ D. Pike AloianD. Pike Aloian	Trustee	March 1, 2010
/s/ Wyche FowlerWyche Fowler	Trustee	March 1, 2010
/s/ Michael J. JoyceMichael J. Joyce	Trustee	March 1, 2010
/s/ Anthony A. Nichols, Sr.Anthony A. Nichols, Sr.	Trustee	March 1, 2010
/s/ Charles P. PizziCharles P. Pizzi	Trustee	March 1, 2010

-74-

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

BRANDYWINE OPERATING PARTNERSHIP, L.P.
By:	Brandywine Realty Trust, its General Partner
By:	/s/ Gerard H. Sweeney
	Gerard H. Sweeney
	President and Chief Executive Officer

Date: March 1, 2010

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Walter D’AlessioWalter D’Alessio	Chairman of the Board and Trustee	March 1, 2010
/s/ Gerard H. SweeneyGerard H. Sweeney	President, Chief Executive Officer and Trustee (Principal Executive Officer)	March 1, 2010
/s/ Howard M. SipznerHoward M. Sipzner	Executive Vice President and Chief Financial Officer (Principal Financial Officer)	March 1, 2010
/s/ Gabriel J. MainardiGabriel J. Mainardi	Vice President and Chief Accounting Officer (Principal Accounting Officer)	March 1, 2010
/s/ D. Pike AloianD. Pike Aloian	Trustee	March 1, 2010
/s/ Wyche FowlerWyche Fowler	Trustee	March 1, 2010
/s/ Michael J. JoyceMichael J. Joyce	Trustee	March 1, 2010
/s/ Anthony A. Nichols, Sr.Anthony A. Nichols, Sr.	Trustee	March 1, 2010
/s/ Charles P. PizziCharles P. Pizzi	Trustee	March 1, 2010

-75-

Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders of Brandywine Realty Trust:

In our opinion, the consolidated financial statements listed in the index appearing under Item 15(a)(1) present fairly, in all material respects, the financial position of Brandywine Realty Trust and its subsidiaries (the “Company”) at December 31, 2009 and 2008, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2009 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedules listed in the index appearing under Item 15(a)(2) present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009, based on criteria established inInternal Control - Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements and financial statement schedules, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on these financial statements, on the financial statement schedules and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

As discussed in Note 2 to the consolidated financial statements, as of January 1, 2009, the Company changed the way it accounts for convertible debt investments that may be settled in cash upon conversion and the way it accounts for non-controlling interests.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As described in Management’s Report on Internal Control Over Financial Reporting, management has excluded the Company’s investments in Four and Six Tower Bridge Associates from its assessment of internal control over financial reporting as of December 31, 2009 because the Company does not have the right and authority to assess the internal control over financial reporting of the individual entities and it lacks the ability to influence or modify the internal control over financial reporting of the individual entities. Four and Six Tower Bridge Associates are two real estate partnerships, created prior to December 13, 2003, which the Company started consolidating in accordance with the accounting standard for the consolidation of variable interest entities on March 31, 2004. We have also excluded Four and Six Tower Bridge Associates from our audit of internal control over financial reporting. The total assets and total revenue of Four and Six Tower Bridge Associates represent, in the aggregate less than 1% and 1%, respectively, of the Company’s consolidated financial statement amounts as of and for the year ended December 31, 2009.

/s/ PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
March 1, 2010

F-1

BRANDYWINE REALTY TRUST

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share information)

	December 31,			December 31,
	2009			2008 (as adjusted)
ASSETS
Real estate investments:
Rental properties	$	4,512,618		$	4,608,320
Accumulated depreciation		(716,956	)		(639,688	)
Operating real estate investments, net		3,795,662			3,968,632
Construction-in-progress		271,962			122,219
Land inventory		97,368			100,516
Total real estate investments, net		4,164,992			4,191,367
Cash and cash equivalents		1,567			3,924
Cash in escrow		—			31,385
Accounts receivable, net		10,934			16,413
Accrued rent receivable, net		87,173			86,362
Investment in real estate ventures, at equity		75,458			71,028
Deferred costs, net		106,097			89,327
Intangible assets, net		105,163			145,757
Notes receivable		59,008			48,048
Other assets		53,358			59,008
Total assets	$	4,663,750		$	4,742,619
LIABILITIES AND BENEFICIARIES’ EQUITY
Mortgage notes payable	$	551,720		$	487,525
Borrowing under credit facilities		92,000			153,000
Unsecured term loan		183,000			183,000
Unsecured senior notes, net of discounts		1,627,857			1,917,970
Accounts payable and accrued expenses		88,599			79,475
Distributions payable		21,799			29,288
Tenant security deposits and deferred rents		58,572			58,692
Acquired below market leases, net		37,087			47,626
Deferred income		47,379			24,271
Other liabilities		33,997			39,274
Total liabilities		2,742,010			3,020,121
Commitments and contingencies (Note 20)
Brandywine Realty Trust’s equity:
Preferred Shares (shares authorized-20,000,000):
7.50% Series C Preferred Shares, $0.01 par value; issued and outstanding- 2,000,000 in 2009 and 2008		20			20
7.375% Series D Preferred Shares, $0.01 par value; issued and outstanding- 2,300,000 in 2009 and 2008		23			23
Common Shares of Brandywine Realty Trust’s beneficial interest, $0.01 par value; shares authorized 200,000,000; 128,849,176 and 88,610,053 issued in 2009 and 2008, respectively and 128,582,334 and 88,158,937 outstanding in 2009 and 2008, respectively		1,286			882
Additional paid-in capital		2,610,421			2,351,428
Deferred compensation payable in common stock		5,549			6,274
Common shares in treasury, at cost, 251,764 and 451,116 in 2009 and 2008, respectively		(7,205	)		(14,121	)
Common shares in grantor trust, 255,700 in 2009 and 215,742 in 2008		(5,549	)		(6,274	)
Cumulative earnings		501,384			498,716
Accumulated other comprehensive loss		(9,138	)		(17,005	)
Cumulative distributions		(1,213,359	)		(1,150,406	)
Total Brandywine Realty Trust’s equity		1,883,432			1,669,537
Non-controlling interests		38,308			52,961
Total equity		1,921,740			1,722,498
Total liabilities and equity	$	4,663,750		$	4,742,619

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

F-2

BRANDYWINE REALTY TRUST

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share information)

	Years ended December 31,
	2009			2008 (as adjusted)			2007 (as adjusted)
Revenue:
Rents	$	478,228		$	483,212		$	493,309
Tenant reimbursements		79,796			78,090			75,821
Termination fees		3,601			4,800			10,053
Third party management fees, labor reimbursement and leasing		17,151			20,401			19,691
Other		3,443			2,918			5,937
Total revenue		582,219			589,421			604,811
Operating Expenses:
Property operating expenses		168,159			160,770			162,590
Real estate taxes		58,230			58,649			57,586
Third party management expenses		7,996			8,965			10,361
Depreciation and amortization		208,590			202,043			219,553
General and administrative expenses		20,821			23,002			27,932
Provision for impairment on land inventory		—			10,841			—
Total operating expenses		463,796			464,270			478,022
Operating income		118,423			125,151			126,789
Other Income (Expense):
Interest income		2,500			1,839			4,014
Interest expense		(135,740	)		(146,646	)		(161,150	)
Interest expense — amortization of deferred financing costs		(5,864	)		(5,450	)		(4,496	)
Loss on settlement of treasury lock agreements		—			—			(3,698	)
Recognized hedge activity		(916	)		—			—
Equity in income of real estate ventures		4,069			8,447			6,955
Net gain on sale of interests in depreciated real estate		—			—			40,919
Net (loss) gain on sale of interests in undepreciated real estate		—			(24	)
Gain on early extinguishment of debt		23,176			18,105			—
Income from continuing operations		5,648			1,422			9,333
Discontinued operations:
Income from discontinued operations		4,903			15,456			20,259
Net gain on disposition of discontinued operations		1,238			28,497			25,743
Provision for impairment		(3,700	)		(6,850	)		—
Total discontinued operations		2,441			37,103			46,002
Net income		8,089			38,525			55,335
Net income (loss) from discontinued operations attributable to non- controlling interests		(38	)		(1,399	)		(1,964	)
Net income (loss) from continuing operations attributable to non- controlling interests		(25	)		91			(490	)
Net (income) attributable to non-controlling interests		(63	)		(1,308	)		(2,454	)
Net income attributable to Brandywine Realty Trust		8,026			37,217			52,881
Distribution to Preferred Shares		(7,992	)		(7,992	)		(7,992	)
Amount allocated to unvested restricted shareholders		(279	)		(763	)		(765	)
Income (loss) allocated to Common Shares	$	(245	)	$	28,462		$	44,124
Basic earnings per Common Share:
Continuing operations	$	(0.02	)	$	(0.08	)	$	0.00
Discontinued operations		0.02			0.41			0.50
	$	—		$	0.33		$	0.50
Diluted earnings per Common Share:
Continuing operations	$	(0.02	)	$	(0.08	)	$	0.00
Discontinued operations		0.02			0.41			0.50
	$	—		$	0.33		$	0.50
Basic weighted average shares outstanding		111,898,045			87,574,423			87,272,148
Diluted weighted average shares outstanding		113,251,291			87,583,163			87,321,276
Net (loss) income attributable to Brandywine Realty Trust
Income (loss) from continuing operations	$	5,623		$	1,513		$	8,843
Income (loss) from discontinued operations		2,403			35,704			44,038
Net income	$	8,026		$	37,217		$	52,881

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

F-3

BRANDYWINE REALTY TRUST

CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE (LOSS) INCOME

(in thousands)

	Years ended December 31,
	2009			2008 (as adjusted)			2007 (as adjusted)
Net income	$	8,089		$	38,525		$	55,335
Other comprehensive income:
Unrealized gain (loss) on derivative financial instruments		7,395			(15,288	)		(3,600	)
Settlement of treasury locks		—			—			(3,860	)
Settlement of forward starting swaps		—			—			1,148
Ineffectiveness of the hedges		(125	)		—			—
Reclassification of realized (gains)/losses on derivative financial instruments to operations, net		(184	)		(80	)		3,436
Unrealized gain (loss) on available-for-sale securities		—			248			(585	)
Total other comprehensive income (loss)		7,086			(15,120	)		(3,461	)
Comprehensive income		15,175			23,405			51,874
Comprehensive (income) loss attributable to non-controlling interest		227			(1,309	)		(2,454	)
Comprehensive income attributable to Brandywine Realty Trust	$	15,402		$	22,096		$	49,420

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

F-4

BRANDYWINE REALTY TRUST

CONSOLIDATED STATEMENTS OF BENEFICIARIES’ EQUITY

For the years ended December 31, 2009, 2008 and 2007

(in thousands, except number of shares)

															Number of			Common Shares
															Rabbi			of Brandywine									Deferred									Accumulated
	Number of		Par Value		Number of		Par Value of		Number of			Number of			Trust/Deferred			Realty Trust’s									Compensation									Other
	Preferred C		of Preferred		Preferred		Preferred D		Common			Treasury			Compensation			beneficial			Additional Paid-in			Common Shares			Payable in			Common Shares in			Cumulative			Comprehensive			Cumulative			Non-Controlling
	Shares		C Shares		D Shares		Shares		Shares			Shares			Shares			interest			Capital			in Treasury			Common Stock			Grantor Trust			Earnings			Income (Loss)			Distributions			Interests			Total
BALANCE, December 31, 2006 (as adjusted)		2,000,000	$	20		2,300,000	$	23		88,327,041			—			—		$	883		$	2,338,487		$	—		$	—		$	—		$	419,470		$	1,576		$	(837,882	)	$	123,630		$	2,046,207
Net income																																		52,881									2,454			55,335
Other comprehensive income																																					(3,461	)								(3,461	)
Vesting of Restricted Stock										66,086									1			402																								403
Restricted Stock Amortization																						1,974																								1,974
Conversion of LP units to Common Shares										21,951												716																					(716	)		—
LP units Cash Redemption																																											(2,846	)		(2,846	)
Non-controlling interest reclassification																						(2,828	)																				2,828			—
Repurchase of Common Shares into Treasury													1,780,600						(16	)					(59,408	)																				(59,424	)
Deferred Compensation Obligation													(180,963	)		180,963			2						6,130			5,959			(5,959	)		(296	)											5,836
Share Issuance from Deferred Compensation Plan																(8,398	)											(277	)		277															—
Share Cancellation										(915	)					(915	)											(31	)		31															—
Trustee Fees Paid in Shares										1,664												55																								55
Exercise of Options										198,495												8,008			(171	)																				7,837
Outperformance Plan Amortization																						1,339																								1,339
Acquisition of noncontrolling interest in consolidated joint venture																																											(34,385	)		(34,385	)
Preferred Share distributions																																								(7,992	)					(7,992	)
Distributions declared ($1.76 per share)																																								(153,780	)		(6,889	)		(160,669	)
BALANCE, December 31, 2007 (as adjusted)		2,000,000	$	20		2,300,000	$	23		88,614,322			1,599,637			171,650		$	870		$	2,348,153		$	(53,449	)	$	5,651		$	(5,651	)	$	472,055		$	(1,885	)	$	(999,654	)	$	84,076		$	1,850,209
Net income																																		37,216									1,309			38,525
Other comprehensive income																																					(15,120	)								(15,120	)
Vesting of Restricted Stock													(77,191	)		9,895						(912	)		2,582			167			(167	)		(1,344	)											326
Restricted Stock Amortization																						2,884																								2,884
Conversion of LP units to Common Shares													(1,021,608	)					10						35,052									(8,323	)								(27,058	)		(319	)
Share Cancellation/Forfeiture										(4,269	)		150			(1,524	)		2			(33	)					(47	)		47															(31	)
Share Issuance from/to Deferred Compensation Plan													(44,286	)		33,663									1,502			468			(468	)		(792	)											710
Share Choice Plan Issuance																						(49	)																							(49	)
Stock Option Amortization																						336																								336
Outperformance Plan Amortization																						989																								989
Trustee Fees Paid in Shares													(5,586	)		2,058						60			192			35			(35	)		(97	)											155
Preferred Share distributions																																								(7,992	)					(7,992	)
Distributions declared ($1.76 per share)																																								(142,760	)		(5,365	)		(148,125	)
BALANCE, December 31, 2008 (as adjusted)		2,000,000	$	20		2,300,000	$	23		88,610,053			451,116			215,742		$	882		$	2,351,428		$	(14,121	)	$	6,274		$	(6,274	)	$	498,716		$	(17,005	)	$	(1,150,406	)	$	52,961		$	1,722,498
Net income																																		8,026									63			8,089
Other comprehensive income																																					7,376						(290	)		7,086
Issuance of Common Shares of Beneficial Interest										40,250,000									403			241,920																								242,323
Bonus Share Issuance													(36,826	)											1,228									(1,105	)											123
Vesting of Restricted Stock													(86,172	)		8,971			2			(852	)		2,960			56			(56	)		(2,322	)											(212	)
Restricted Stock Amortization																						3,286																								3,286
Restricted Performance Units Amortization																						288																								288
Conversion of LP units to Common Shares													(7,513	)											432									(178	)								(254	)		(0	)
Share Issuance from/to Deferred Compensation Plan										(3,796	)		(54,854	)		26,092						(29	)		1,830			(816	)		816			(1,670	)											131
Share Choice Plan Issuance										(7,081	)								(1	)		(45	)																							(46	)
Stock Option Amortization																						602																								602
Outperformance Plan Amortization																						927																								927
Trustee Fees Paid in Shares													(13,987	)		4,895									466			35			(35	)		(314	)											152
Other — consolidated real estate ventures																																											34			34
Other activity																						187															491									678
Adjustment for Non-Controlling Interests																						12,709												231									(12,940	)		—
Preferred Share distributions																																								(7,992	)					(7,992	)
Distributions declared ($0.45 per share)																																								(54,961	)		(1,266	)		(56,227	)
BALANCE, December 31, 2009		2,000,000	$	20		2,300,000	$	23		128,849,176			251,764			255,700		$	1,286		$	2,610,421		$	(7,205	)	$	5,549		$	(5,549	)	$	501,384		$	(9,138	)	$	(1,213,359	)	$	38,308		$	1,921,740

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

F-5

BRANDYWINE REALTY TRUST

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Years ended December 31,
	2009			2008 (as adjusted)			2007 (as adjusted)
Cash flows from operating activities:
Net income	$	8,089		$	38,525		$	55,335
Adjustments to reconcile net income to net cash from operating activities:
Depreciation		160,039			158,234			179,724
Amortization:
Deferred financing costs		5,864			5,450			4,497
Amortization of debt discount		3,495			6,843			4,381
Deferred leasing costs		18,037			16,561			15,672
Acquired above (below) market leases, net		(6,661	)		(8,104	)		(12,225	)
Acquired lease intangibles		32,387			40,663			51,669
Deferred compensation costs		5,200			4,522			4,672
Recognized hedge activity		916			—			—
Straight-line rent		(9,116	)		(16,543	)		(28,304	)
Provision for doubtful accounts		5,371			6,769			3,147
Provision for impairment in real estate		3,700			6,850			—
Provision for impairment on land inventory		—			10,841			—
Real estate venture income in excess of distributions		(2,512	)		(808	)		(55	)
Net gain on sale of interests in real estate		(1,237	)		(28,473	)		(66,662	)
Gain on early extinguishment of debt		(23,176	)		(18,105	)		—
Cumulative interest accretion of repayments of unsecured notes		(5,009	)		(435	)
Contributions from historic tax credit transaction, net of deferred costs		23,763			7,952			—
Contributions from new market tax credit transaction, net of deferred costs		—			8,965			—
Changes in assets and liabilities:
Accounts receivable		3,746			(1,631	)		6,449
Other assets		2,373			3,683			(1,366	)
Accounts payable and accrued expenses		(10,067	)		2,491			(11,091	)
Tenant security deposits and deferred rents		2,397			(827	)		12,634
Other liabilities		2,806			(9,556	)		6,328
Net cash from operating activities		220,405			233,867			224,805
Cash flows from investing activities:
Acquisition of properties		—			—			(88,890	)
Acquisition of non-controlling interest in consolidated real estate venture		—			—			(63,732	)
Sales of properties, net		101,305			370,087			472,590
Capital expenditures		(206,311	)		(146,583	)		(267,516	)
Investment in unconsolidated Real Estate Ventures		(14,980	)		(934	)		(897	)
Escrowed cash		31,385			(31,385	)		—
Cash distributions from unconsolidated Real Estate Ventures in excess of cumulative equity in income		13,062			2,311			3,711
Leasing costs		(27,010	)		(29,450	)		(16,104	)
Net cash from (used in) investing activities		(102,549	)		164,046			39,162
Cash flows from financing activities:
Proceeds from Credit Facility borrowings		983,000			514,000			959,602
Repayments of Credit Facility borrowings		(1,044,000	)		(491,727	)		(888,875	)
Proceeds from mortgage notes payable		149,800			—			—
Repayments of mortgage notes payable		(84,102	)		(25,155	)		(272,028	)
Proceeds from unsecured term loan		—			33,000			150,000
Proceeds from unsecured notes		247,030			—			300,000
Repayments of unsecured notes		(514,004	)		(260,088	)		(299,926	)
Net settlement of hedge transactions		(5,044	)		—			(2,712	)
Debt financing costs		(24,620	)		(278	)		(4,474	)
Net proceeds from issuance of shares		242,332			—			—
Exercise of stock options		—			—			6,011
Repurchases of common shares		—			—			(59,426	)
Distributions paid to shareholders		(68,914	)		(162,882	)		(162,043	)
Distributions to noncontrolling interest		(1,691	)		(6,459	)		(9,875	)
Net cash (used in) from financing activities		(120,213	)		(399,589	)		(283,746	)
Increase (decrease) in cash and cash equivalents		(2,357	)		(1,676	)		(19,779	)
Cash and cash equivalents at beginning of year		3,924			5,600			25,379
Cash and cash equivalents at end of year	$	1,567		$	3,924		$	5,600
Supplemental disclosure:
Cash paid for interest, net of capitalized interest	$	139,636		$	178,725		$	182,790
Supplemental disclosure of non-cash activity:
Note receivable issued in the Northern California transaction at its present value		—			37,100			—
Note receivable issued related to the sale of the two Trenton properties, net of the $12.9 million deferred gain		9,600			—			—
Debt assumed by the purchaser in the Northern California transaction		—			95,300			—
Capital expenditures financed through accounts payable as of year end		7,086			9,029			7,744
Capital expenditures financed through retention payable		5,862			(928	)		1,117
Unfunded tenant allowance		5,986			—			—

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

F-6

BRANDYWINE REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009, 2008 AND 2007

1.ORGANIZATION AND NATURE OF OPERATIONS

Brandywine Realty Trust, a Maryland real estate investment trust, or REIT, is a self-administered and self-managed real estate investment trust, or REIT, that provides leasing, property management, development, redevelopment, acquisition and other tenant-related services for a portfolio of office and industrial properties. Brandywine Realty Trust owns its assets and conducts its operations through Brandywine Operating Partnership, L.P. a Delaware limited partnership (the “Operating Partnership”) and subsidiaries of the Operating Partnership. Brandywine Realty Trust, the Operating Partnership and their consolidated subsidiaries are collectively referred to below as the “Company.”

As of December 31, 2009, the Company owned 212 office properties, 22 industrial facilities and three mixed-use properties (collectively, the “Properties”) containing an aggregate of approximately 23.3 million net rentable square feet. The Company also has two properties under development and three properties under redevelopment containing an aggregate 1.9 million net rentable square feet. As of December 31, 2009, the Company consolidates three office properties owned by real estate ventures containing 0.4 million net rentable square feet. Therefore, the Company owns and consolidates 245 properties with an aggregate of 25.6 million net rentable square feet. As of December 31, 2009, the Company owned economic interests in 11 unconsolidated real estate ventures that contain approximately 4.2 million net rentable square feet (collectively, the “Real Estate Ventures”). In addition, as of December 31, 2009, the Company owned approximately 479 acres of undeveloped land. The Properties and the properties owned by the Real Estate Ventures are located in or near Philadelphia, Pennsylvania, Metropolitan Washington, D.C., Southern and Central New Jersey, Richmond, Virginia, Wilmington, Delaware, Austin, Texas and Oakland, Carlsbad and Rancho Bernardo, California. In addition to managing properties that the Company owns, as of December 31, 2009, the Company was managing approximately 8.9 million net rentable square feet of office and industrial properties for third parties and Real Estate Ventures.

All references to building square footage, acres, occupancy percentage and the number of buildings are unaudited.

Brandywine Realty Trust is the sole general partner of the Operating Partnership and, as of December 31, 2009, owned a 97.9% interest in the Operating Partnership. The Company conducts its third-party real estate management services business primarily through five management companies (collectively, the “Management Companies”): Brandywine Realty Services Corporation (“BRSCO”), BTRS, Inc. (“BTRS”), Brandywine Properties I Limited, Inc. (“BPI”), BDN Brokerage, LLC (“BBL”) and Brandywine Properties Management, L.P. (“BPM”). Each of BRSCO, BTRS and BPI is a taxable REIT subsidiary. The Operating Partnership owns, directly and indirectly, currently 100% of each of BRSCO, BTRS, BPI, BBL and BPM.

As of December 31, 2009, the Management Companies were managing properties containing an aggregate of approximately 34.0 million net rentable square feet, of which approximately 25.2 million net rentable square feet related to Properties owned by the Company and approximately 8.9 million net rentable square feet related to properties owned by third parties and Real Estate Ventures.

F-7

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Reclassifications and Revisions

Certain amounts have been reclassified in prior years to conform to the current year presentation. The reclassifications are primarily due to the treatment of sold properties as discontinued operations on the statement of operations for all periods presented and the adoption of new accounting pronouncements that required retrospective application. The Company is also now reflecting tenant reimbursements that are payable to tenants of $4.7 million in accounts payable and accrued expenses rather than in accounts receivable, net at December 31, 2008 to conform to the current year presentation. For the year ended December 31, 2009, the Company has $5.4 million of tenant reimbursement owed to tenants in accounts payable and accrued expenses. See “Accounting Pronouncements Adopted in 2009” for details pertaining to the changes to prior periods resulting from the adoption of certain new accounting pronouncements.

Principles of Consolidation

When the Company obtains an economic interest in an entity, the Company evaluates the entity to determine if the entity is deemed a variable interest entity (“VIE”), and if the Company is deemed to be the primary beneficiary, in accordance with the accounting standard for the consolidation of variable interest entities. When an entity is not deemed to be a VIE, the Company considers the provisions of the same accounting standard to determine whether a general partner, or the general partners as a group, controls a limited partnership or similar entity when the limited partner have certain rights. The Company consolidates (i) entities that are VIEs and of which the Company is deemed to be the primary beneficiary and (ii) entities that are non-VIEs which the Company controls and the limited partners neither have the ability to dissolve the entity or remove the Company without cause nor any substantive participating rights. Entities that the Company accounts for under the equity method (i.e., at cost, increased or decreased by the Company’s share of earnings or losses, plus contributions, less distributions) include (i) entities that are VIEs and of which the Company is not deemed to be the primary beneficiary (ii) entities that are non-VIEs which the Company does not control, but over which the Company has the ability to exercise significant influence and (iii) entities that are non-VIE’s that the Company controls through its general partner status, but the limited partners in the entity have the substantive ability to dissolve the entity or remove the Company without cause or have substantive participating rights. The Company will reconsider its determination of whether an entity is a VIE and who the primary beneficiary is, and whether or not the limited partners in an entity have substantive rights, if certain events occur that are likely to cause a change in the original determinations. The portion of these entities not owned by the Company is presented as non-controlling interest as of and during the periods consolidated. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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. Management makes significant estimates regarding revenue, valuation of real estate and related intangible assets and liabilities, useful lives of fixed assets, impairment of long-lived assets, equity method investments and securities, allowance for doubtful accounts and deferred costs.

Operating Properties

Operating properties are carried at historical cost less accumulated depreciation and impairment losses. The cost of operating properties reflects their purchase price or development cost. Pursuant to the Company’s adoption of the accounting standard for business combinations as of January 1, 2009, acquisition related costs are expensed as incurred. Prior to the adoption of the accounting standard, acquisition costs are capitalized when incurred. Costs incurred for the renovation and betterment of an operating property are capitalized to the Company’s investment in that property. Ordinary repairs and maintenance are expensed as incurred; major replacements and betterments, which improve or extend the life of the asset, are capitalized and depreciated over their estimated useful lives. Fully-depreciated assets are removed from the accounts.

Purchase Price Allocation

The Company allocates the purchase price of properties to net tangible and identified intangible assets acquired based on fair values. Above-market and below-market in-place lease values for acquired properties are recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) the Company’s estimate of the fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of the lease (includes the below market fixed renewal period). Capitalized above-market lease values are amortized as a reduction of rental income over the remaining non-cancelable terms of the respective leases. Capitalized below-market lease values are amortized as an increase to rental income over the remaining non-cancelable terms of the respective leases, including any below market fixed-rate renewal periods.

F-8

Other intangible assets also include amounts representing the value of tenant relationships and in-place leases based on the Company’s evaluation of the specific characteristics of each tenant’s lease and the Company’s overall relationship with the respective tenant. The Company estimates the cost to execute leases with terms similar to the remaining lease terms of the in-place leases, including leasing commissions, legal and other related expenses. This intangible asset is amortized to expense over the remaining term of the respective leases. Company estimates of value are made using methods similar to those used by independent appraisers or by using independent appraisals. Factors considered by the Company in this analysis include an estimate of the carrying costs during the expected lease-up periods considering current market conditions and costs to execute similar leases. In estimating carrying costs, the Company includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods, which primarily range from three to twelve months. The Company also considers information obtained about each property as a result of its pre-acquisition due diligence, marketing and leasing activities in estimating the fair value of the tangible and intangible assets acquired. The Company also uses the information obtained as a result of its pre-acquisition due diligence as part of its consideration of the accounting standard governing asset retirement obligations and when necessary, will record a conditional asset retirement obligation as part of its purchase price.

Characteristics considered by the Company in allocating value to its tenant relationships include the nature and extent of the Company’s business relationship with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit quality and expectations of lease renewals, among other factors. The value of tenant relationship intangibles is amortized over the remaining initial lease term and expected renewals, but in no event longer than the remaining depreciable life of the building. The value of in-place leases is amortized over the remaining non-cancelable term of the respective leases and any fixed-rate renewal periods.

In the event that a tenant terminates its lease, the unamortized portion of each intangible, including in-place lease values and tenant relationship values, is charged to expense and market rate adjustments (above or below) are recorded to revenue.

Depreciation and Amortization

The costs of buildings and improvements are depreciated using the straight-line method based on the following useful lives: buildings and improvements (five to 55 years) and tenant improvements (the shorter of the lease term or the life of the asset).

Construction in Progress

Project costs directly associated with the development and construction of a real estate project are capitalized as construction in progress. In addition, interest, real estate taxes and other expenses that are directly associated with the Company’s development activities are capitalized until the property is placed in service. Internal direct construction costs totaling $3.9 million in 2009, $5.2 million in 2008, $4.8 and million in 2007 and interest totaling $8.9 million in 2009, $16.7 million in 2008, and $17.9 million in 2007 were capitalized related to development of certain Properties and land holdings.

Impairment or Disposal of Long-Lived Assets

The accounting standard for property, plant and equipment provides a single accounting model for long-lived assets as held-for-sale, broadens the scope of businesses to be disposed of that qualify for reporting as discontinued operations and changes the timing of recognizing losses on such operations.

The Company reviews long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The review of recoverability is based on an estimate of the future undiscounted cash flows (excluding interest charges) expected to result from the long-lived asset’s use and eventual disposition. These cash flows consider factors such as expected future operating income, trends and prospects, as well as the effects of leasing demand, competition and other factors. If impairment exists due to the inability to recover the carrying value of a long-lived asset, an impairment loss is recorded to the extent that the carrying value exceeds the estimated fair-value of the property. The Company is required to make subjective assessments as to whether there are impairments in the values of the investments in long-lived assets. These assessments have a direct impact on its net income because recording an impairment loss results in an immediate negative adjustment to net income. The evaluation of anticipated cash flows is highly subjective and is based in part on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results in future periods. Although the Company’s strategy is generally to hold its properties over the long-term, the Company will dispose of properties to meet its liquidity needs or for other strategic needs. If the Company’s strategy changes or market conditions otherwise dictate an earlier sale date, an impairment loss may be recognized to reduce the property to the lower of the carrying amount or fair value less costs to sell, and such loss could be material. If the Company determines that impairment has occurred and the assets are classified as held and used, the affected assets must be reduced to their fair value.

F-9

Where properties have been identified as having a potential for sale, additional judgments are required related to the determination as to the appropriate period over which the undiscounted cash flows should include the operating cash flows and the amount included as the estimated residual value. Management determines the amounts to be included based on a probability weighted cash flow. This requires significant judgment. In some cases, the results of whether an impairment is indicated are sensitive to changes in assumptions input into the estimates, including the hold period until expected sale.

During the first quarter of 2009, the Company determined that one of its properties, during testing for impairment under the held and used model, had a historical cost greater than the probability weighted undiscounted cash flows. Accordingly, the recorded amount was reduced to an amount based on management’s estimate of the current fair value. This property was sold in the second quarter. The Company also recorded an impairment on properties designated as held for sale at June 30, 2008 of $6.85 million; these properties were sold during the last quarter of 2008. During the Company’s impairment review for the remaining part of 2009, it was determined that no additional impairment charges were necessary.

Cash and Cash Equivalents

Cash and cash equivalents are highly-liquid investments with original maturities of three months or less. The Company maintains cash equivalents in financial institutions in excess of insured limits, but believes this risk is mitigated by only investing in or through major financial institutions.

Cash in Escrow

Cash in escrow of $31.4 million at December 31, 2008 represents cash that was used during 2009 for the financing of the Cira South Garage. This cash was held in escrow pursuant to the new markets tax credit transaction entered into by the Company on December 30, 2008.

Restricted Cash

Restricted cash consists of cash held as collateral to provide credit enhancement for the Company’s mortgage debt, cash for property taxes, capital expenditures and tenant improvements. Restricted cash is included in other assets as discussed below.

Accounts Receivable and Accrued Rent Receivable

Leases with tenants are accounted for as operating leases. Minimum annual rentals under tenant leases are recognized on a straight-line basis over the term of the related lease. The cumulative difference between lease revenue recognized under the straight-line method and contractual lease payment terms is recorded as “accrued rent receivable, net” on the accompanying balance sheets. Included in current tenant receivables are tenant reimbursements which are comprised of amounts recoverable from tenants for common area maintenance expenses and certain other recoverable expenses that are recognized as revenue in the period in which the related expenses are incurred. As of December 31, 2009 and 2008, no tenant represented more than 10% of accounts receivable and accrued rent receivable.

Tenant receivables and accrued rent receivables are carried net of the allowances for doubtful accounts of $4.2 million and $12.2 million in 2009, respectively and $4.9 million and $10.6 million in 2008, respectively. The allowance is an estimate based on two calculations that are combined to determine the total amount reserved. First, the Company evaluates specific accounts where it has determined that a tenant may have an inability to meet its financial obligations. In these situations, the Company uses its judgment, based on the facts and circumstances, and records a specific reserve for that tenant against amounts due to reduce the receivable to the amount that the Company expects to collect. These reserves are reevaluated and adjusted as additional information becomes available. Second, a reserve is established for all tenants based on a range of percentages applied to receivable aging categories for tenant receivables. For accrued rent receivables, the Company considers the results of the evaluation of specific accounts and also considers other factors including assigning risk factors to different industries based on its tenants SIC classification. Considering various factors including assigning a risk factor to different industries, these percentages are based on historical collection and write-off experience adjusted for current market conditions.

F-10

Investments in Unconsolidated Real Estate Ventures

The Company accounts for its investments in unconsolidated Real Estate Ventures under the equity method of accounting as it is not the primary beneficiary (for VIE’s) and the Company exercises significant influence, but does not control these entities under the provisions of the entities’ governing agreements pursuant to the accounting standard for the consolidation of variable interest entities. These investments are recorded initially at cost, as Investments in Real Estate Ventures, and subsequently adjusted for equity in earnings and cash contributions and distributions.

On a periodic basis, management assesses whether there are any indicators that the value of the Company’s 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. To the extent impairment has occurred, the loss shall be measured as the excess of the carrying amount of the investment over the value of the investment, as estimated by management. The determination as to whether an impairment exists requires significant management judgment about the fair value of its ownership interest.

To the extent that the Company acquires an interest in or contributes assets to a Real Estate Venture project, the difference between the Company’s cost basis in the investment and the value of the Real Estate Venture or asset contributed is amortized over the life of the related assets, intangibles and liabilities and such adjustment is included in the Company’s share of equity in income of unconsolidated Real Estate Ventures. For purposes of cash flow presentation, distributions from unconsolidated Real Estate Ventures are presented as part of operating activities when they are considered as return on investments. Distributions in excess of the Company’s share in the cumulative unconsolidated Real Estate Ventures’ earnings are considered as return of investments and are presented as part of investing activities in accordance with the accounting standard for cash flow presentation.

Deferred Costs

Costs incurred in connection with property leasing are capitalized as deferred leasing costs. Deferred leasing costs consist primarily of leasing commissions and internal leasing costs that are amortized on the straight-line method over the life of the respective lease which generally ranges from one to 15 years. Management re-evaluates the remaining useful lives of leasing costs as economic and market conditions change.

Costs incurred in connection with debt financing are capitalized as deferred financing costs and charged to interest expense over the terms of the related debt agreements. Deferred financing costs consist primarily of loan fees which are amortized over the related loan term.

Other Assets

Other assets is comprised of the following as of December 31, 2009:

	December 31,
	2009		2008
	(amounts in thousands)
Prepaid ground rent	$	7,733	$	—
Prepaid real estate taxes		7,492		7,720
Rent inducements, net		6,680		8,432
Cash surrender value of life insurance		6,498		5,262
Restricted cash		5,632		13,292
Marketable securities		2,798		2,789
Prepaid insurance		2,747		4,058
Furnitures, fixtures and equipment		2,664		4,641
Deposits on future settlements		1,108		2,966
Others		10,006		9,848
Total	$	53,358	$	59,008

F-11

Notes Receivable

As of December 31, 2009, notes receivable included a $2.8 million purchase money mortgage with a 20 year amortization period that bears interest at 8.5%, a $7.5 million purchase money mortgage with a 20 year amortization period that bears interest at 8.5%, a $39.1 million purchase money mortgage with an imputed interest rate of 4.0% accreting up to $40.0 million due in 2010 and a $22.5 million seven year purchase money mortgage (due 2016) that bears interest at approximately 6% cash pay/7.64% accrual. The $22.5 million notes receivable is related to the sale of the two Trenton properties during the year and is presented net of the $12.9 deferred gain in accordance with the accounting standard for installment sales (the “Trenton Note”). The Company expects to receive $27.8 million at maturity of the Trenton Note including the difference between the cash payments and the stated accrual rate. See Note 3 for additional information regarding the sale and the Trenton Note.

As of December 31, 2008, notes receivable included a $2.8 million purchase money mortgage with a 20 year amortization period that bears interest at 8.5%, a $7.7 million purchase money mortgage with a 20 year amortization period that bears interest at 8.5% and a $37.5 million purchase money mortgage with an imputed interest rate of 4.0% accreting up to $40.0 million due in 2010.

The Company periodically assesses the collectibility of the notes receivable in accordance with the accounting standard for loan receivables. No collectibility issues were noted as of December 31, 2009 and 2008.

Revenue Recognition

Rental revenue is recognized on the straight-line basis from the later of the date of the commencement of the lease or the date of acquisition of the property subject to existing leases, which averages minimum rents over the terms of the leases. The straight-line rent adjustment increased revenue by approximately $6.4 million in 2009, $14.0 million in 2008, and $25.0 million in 2007. Deferred rents on the balance sheet represent rental revenue received prior to their due dates and amounts paid by the tenant for certain improvements considered to be landlord assets that will remain as the Company’s property at the end of the tenant’s lease term. The amortization of the amounts paid by the tenant for such improvements is calculated on a straight-line basis over the term of the tenant’s lease and is a component of straight-line rental income and increased revenue by $2.7 million in 2009, $2.5 million in 2008, and $3.3 million in 2007. Lease incentives, which are included as reductions of rental revenue in the accompanying consolidated statements of operations, are recognized on a straight-line basis over the term of the lease. Lease incentives decreased revenue by $1.8 million in 2009, $0.8 million in 2008, and $0.1 million in 2007.

Leases also typically provide for tenant reimbursement of a portion of common area maintenance and other operating expenses to the extent that a tenant’s pro rata share of expenses exceeds a base year level set in the lease or to the extent that the tenant has a lease on a triple net basis. For certain leases, significant assumptions and judgments are made by the Company in determining the lease term such as when termination options are provided to the tenant. The lease term impacts the period over which minimum rents are determined and recorded and also considers the period over which lease related costs are amortized. Termination fees received from tenants, bankruptcy settlement fees, third party management fees, labor reimbursement and leasing income are recorded when earned.

No tenant represented greater than 10% of the Company’s rental revenue in 2009, 2008 or 2007.

Income Taxes

The Company has elected to be treated as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”). In addition, the Company has several subsidiary REITs. In order to maintain their qualification as a REIT, the Company and its REIT subsidiaries are required to, among other things, distribute at least 90% of its REIT taxable income to its stockholders and meet certain tests regarding the nature of its income and assets. As REITs, the Company and its REIT subsidiaries are not subject to federal income tax with respect to the portion of its income that meets certain criteria and is distributed annually to the stockholders. Accordingly, no provision for federal income taxes is included in the accompanying consolidated financial statements with respect to the operations of these entities. The Company and its REIT subsidiaries intend to continue to operate in a manner that allows them to continue to meet the requirements for taxation as REITs. Many of these requirements, however, are highly technical and complex. If the Company or one of its REIT subsidiaries were to fail to meet these requirements, the Company would be subject to federal income tax. The Company is subject to certain state and local taxes. Provision for such taxes has been included in general and administrative expenses in the Company’s Consolidated Statements of Operations and Comprehensive Income.

The tax basis in the Company’s assets was $4.6 billion as of December 31, 2009 and $4.4 billion as of December 31, 2008.

The Company is subject to a 4% federal excise tax if sufficient taxable income is not distributed within prescribed time limits. The excise tax equals 4% of the annual amount, if any, by which the sum of (a) 85% of the Company’s ordinary income and (b) 95% of the Company’s net capital gain exceeds cash distributions and certain taxes paid by the Company. No excise tax was incurred in 2009, 2008, or 2007.

F-12

The Company may elect to treat one or more of its subsidiaries as a taxable REIT subsidiary (“TRS”). In general, a TRS of the Company may perform additional services for tenants of the Company and generally may engage in any real estate or non-real estate related business (except for the operation or management of health care facilities or lodging facilities or the provision to any person, under a franchise, license or otherwise, of rights to any brand name under which any lodging facility or health care facility is operated). A TRS is subject to corporate federal income tax. The Company has elected to treat certain of its corporate subsidiaries as TRSs, these entities provide third party property management services and certain services to tenants that could not otherwise be provided.

In 2007, the Company adopted the provisions of accounting standards for income taxes which changed the framework for accounting for uncertainty in income taxes. As a result of the adoption, the Company recognized no material adjustments regarding its current tax accounting treatment. The Company would recognize interest and penalties, to the extent incurred related to uncertain tax positions, as income tax expense, which would be included in general and administrative expense.

Earnings Per Share

Basic earnings per share is calculated by dividing income allocated to Common Shares by the weighted-average number of shares outstanding during the period. Diluted earnings per share includes the effect of common share equivalents outstanding during the period.

Treasury Shares

The Company accounts for its treasury share purchases using the cost method. Since repurchase, shares have been reissued at an amount less than their cost basis. The losses on reissuances are charged to the cumulative earnings of the Company using the FIFO basis.

Stock-Based Compensation Plans

The Company maintains a shareholder-approved equity-incentive plan known as the Amended and Restated 1997 Long-Term Incentive Plan (the “1997 Plan”). The 1997 Plan is administered by the Compensation Committee of the Company’s Board of Trustees. Under the 1997 Plan, the Compensation Committee is authorized to award equity and equity-based awards, including incentive stock options, non-qualified stock options, restricted shares and performance-based shares. As of December 31, 2009, 1.8 million common shares remained available for future awards under the 1997 Plan. Through December 31, 2009, all options awarded under the 1997 Plan had a one to ten-year term.

The Company incurred stock-based compensation expense of $4.5 million during 2009, of which $0.8 million was capitalized as part of the Company’s review of employee salaries eligible for capitalization. The Company recognized stock-based compensation expense of $4.6 million and $4.7 million in 2008 and 2007, respectively. The expensed amounts are included in general and administrative expense on the Company’s consolidated income statement in the respective periods.

Comprehensive Income

Comprehensive income or loss is recorded in accordance with the provisions of the accounting standard for comprehensive income. The accounting standard establishes standards for reporting comprehensive income and its components in the financial statements. Comprehensive income includes unrealized gains and losses on available-for-sale securities and the effective portions of changes in the fair value of derivatives.

Accounting for Derivative Instruments and Hedging Activities

The Company accounts for its derivative instruments and hedging activities in accordance with the accounting standard for derivative and hedging activities. The accounting standard requires the Company to measure every derivative instrument (including certain derivative instruments embedded in other contracts) at fair value and record them in the balance sheet as either an asset or liability. See disclosures below related to the Company’s adoption of the accounting standard for fair value measurements and disclosures.

F-13

For derivatives designated as fair value hedges, the changes in fair value of both the derivative instrument and the hedged item are recorded in earnings. For derivatives designated as cash flow hedges, the effective portions of changes in the fair value of the derivative are reported in other comprehensive income. During the year ended December 31, 2009, the Company recorded a $(1.1) million fair value adjustment in its consolidated statements of operations related to two of its interest swaps in which the hedging relationship ceased due to the issuance of its unsecured notes on September 25, 2009. The ineffective portions of the hedges are recognized in earnings in the current year and during the year ended December 31, 2009, the Company recognized a gain of $0.1 million for the ineffective portion of its forward starting swaps prior to the termination of the hedging relationship (See Note 9).

The Company actively manages its ratio of fixed-to-floating rate debt. To manage its fixed and floating rate debt in a cost-effective manner, the Company, from time to time, enters into interest rate swap agreements as cash flow hedges, under which it agrees to exchange various combinations of fixed and/or variable interest rates based on agreed upon notional amounts.

Fair Value Measurements

The Company adopted a newly issued accounting standard for fair value measurements and disclosures. The new accounting standard defines fair value, establishes a framework for measuring fair value in GAAP and provides for expanded disclosure about fair value measurements. The accounting standard is applied prospectively and is applied to all other accounting pronouncements that require or permit fair value measurements. The accounting standard was applied to the Company’s financial instruments effective January 1, 2008 and to all non-financial assets and non-financial liabilities effective January 1, 2009.

The accounting standard for fair value measurements and disclosures defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. It also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value. 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 that 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. 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.

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

The following table sets forth the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of December 31, 2009:

	Fair Value Measurements at Reporting
	Date Using:
			Quoted Prices in
			Active Markets for		Significant Other		Unobservable
	December 31,		Identical Assets		Observable Inputs		Inputs
Description	2009		(Level 1)		(Level 2)		(Level 3)
Recurring
Assets:
Available-for-Sale Securities	$	431	$	431	$	—	$	—
Liabilities:
Interest Rate Swaps	$	7,320	$	—	$	7,320	$	—

F-14

The following table sets forth the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of December 31, 2008:

	Fair Value Measurements at Reporting
	Date Using:
			Quoted Prices in
			Active Markets for		Significant Other		Unobservable
	December 31,		Identical Assets		Observable Inputs		Inputs
Description	2008		(Level 1)		(Level 2)		(Level 3)
Recurring
Assets:
Available-for-Sale Securities	$	423	$	423	$	—	$	—
Liabilities:
Interest Rate Swaps	$	10,985	$	—	$	10,985	$	—
Forward Starting Interest Rate Swaps		7,481		—		7,481		—
	$	18,466	$	—	$	18,466	$	—

The adoption of the accounting standard for fair value measurements and disclosures did not have a material impact on the Company’s non-financial assets and liabilities. Non-financial assets and liabilities recorded at fair value on a non-recurring basis to which the Company would apply the accounting standard where a measurement was required under fair value would include:

• Non-financial assets and liabilities initially measured at fair value in an acquisition or business combination that are not remeasured at least annually at fair value,

• Long-lived assets measured at fair value due to an impairment in accordance with the accounting standard for the impairment or disposal of long-lived assets,

• Equity and cost method investments measured at fair value due to an impairment in accordance with the accounting standard for investments,

• Notes receivable adjusted for any impairment in its value in accordance with the accounting standard for loan receivables and

• Asset retirement obligations initially measured at fair value under the accounting standard for asset retirement obligations.

There were no items that were accounted for at fair value on a non-recurring basis as of December 31, 2009.

Accounting Pronouncements Adopted in 2009

In June 2009, the Financial Accounting Standards Board (FASB) issued the FASB Accounting Standards Codification (Codification). The Codification became the single source for all authoritative GAAP recognized by the FASB to be applied for financial statements issued for periods ending after September 15, 2009. The Codification is not expected to change GAAP and it did not have an effect on the Company’s consolidated financial position or results of operations.

In May 2009, the FASB issued a new accounting standard for subsequent events reporting. The new accounting standard established principles and requirements for evaluating and reporting subsequent events and distinguishes which subsequent events should be recognized in the financial statements versus which subsequent events should be disclosed in the financial statements. The accounting standard also requires disclosure of the date through which subsequent events are evaluated by management (see Note 21). The Company’s adoption of the new standard did not have a material impact on its consolidated financial position or results of operations.

F-15

In April 2009, the FASB issued an amendment to the disclosure requirements about fair value instruments. The amendment require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies in addition to the annual financial statements. It also requires those disclosures in summarized financial information at interim reporting periods. The amendment is effective for interim periods ending after June 15, 2009. Prior period presentation is not required for comparative purposes at initial adoption.

In April 2009, the FASB issued a new accounting standard for determining fair value when the volume and level of activity for financial and non-financial assets or liabilities have significantly decreased and for identifying transactions that are not orderly. The new accounting standard is effective for fiscal years and interim periods ending after June 15, 2009 and shall be applied prospectively. The Company’s adoption of the new standard did not have a material impact on its consolidated financial position or results of operations.

In April 2009, the FASB issued amendments to the recognition and presentation requirements of other-than-temporary impairments to make the guidance in U.S. GAAP for debt securities more operational and to improve the presentation and disclosure of other-than temporary impairments on debt and equity securities in the financial statements. The amendments are effective for fiscal years and interim periods ending after June 15, 2009. The Company’s adoption of these amendments did not have a material impact on its consolidated financial position or results of operations.

In January 2009, the Company adopted the FASB issued accounting standard for disclosures about derivative instruments and hedging activities. This new standard enhances disclosure requirements for derivative instruments in order to provide users of financial statements with an enhanced understanding of (i) how and why an entity uses derivative instruments, (ii) how derivative instruments and related hedged items are accounted for under the accounting standard for derivative instruments and hedging activities and (iii) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. The new accounting standard is to be applied prospectively for the first annual reporting period beginning on or after November 15, 2008. See Note 9 for further discussion.

In January 2009, the Company adopted a newly issued accounting standard for convertible debt instruments. The new accounting standard requires the initial proceeds from convertible debt that may be settled in cash to be bifurcated between a liability component and an equity component. The objective of the guidance is to require the liability and equity components of convertible debt to be separately accounted for in a manner such that the interest expense recorded on the convertible debt would not equal the contractual rate of interest on the convertible debt, but instead would be recorded at a rate that would reflect the issuer’s conventional debt borrowing rate. This is accomplished through the creation of a discount on the debt that would be accreted using the effective interest method as additional non-cash interest expense over the period the debt is expected to remain outstanding (i.e. through the first optional redemption date). The provisions of the new accounting standard were adopted on January 1, 2009 and applied retrospectively.

The new accounting standard for convertible debt instruments impacted the Company’s accounting for its 3.875% Exchangeable Notes and has a material impact on the Company’s consolidated financial statements and results of operations. The principal amount outstanding is $128.0 million at December 31, 2009 and $282.3 million at December 31, 2008 (see Note 7). At certain times and upon certain events, the notes are exchangeable for cash up to their principal amount and, with respect to the remainder, if any, of the exchange value in excess of such principal amount, cash or common shares. The initial exchange rate is 25.4065 shares per $1,000 principal amount of notes (which is equivalent to an initial exchange price of $39.36 per share). The carrying amount of the equity component is $24.4 million. The unamortized debt discount is $4.3 million at December 31, 2009 and $12.2 million at December 31, 2008 and will be amortized through October 15, 2011. The effective interest rate at December 31, 2009 and 2008 was 5.5%. The Company recognized contractual coupon interest of $8.3 million in 2009, $12.1 million in 2008 and $13.3 million in 2007. In addition, the Company recognized interest on amortization of debt discount of $4.0 million in 2009, $4.3 million in 2008 and $4.4 million in 2007. The application of the accounting standard for convertible debt resulted in an aggregate of approximately $3.9 million and $4.0 million (net of incremental capitalized interest) of additional non-cash interest expense retrospectively applied for the years ended December 31, 2008 and 2007, respectively. Debt discount write-offs resulting from debt repurchases amounted to $3.8 million in 2009 and $2.6 million in 2008. There were no repurchases made in 2007. The application of the new accounting standard required the Company to reduce the amount of gain recognized on early extinguishment of debt for the year ended December 31, 2008 by approximately $2.6 million.

F-16

Effective January 1, 2009, the Company adopted a newly issued accounting standard related to whether instruments granted in share-based payment transactions are participating securities. This new standard requires that non-vested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents be treated as participating securities in the computation of earnings per share pursuant to the two-class method. The accounting standard was applied retrospectively to all periods presented. The accounting standard required the Company to include the impact of its unvested restricted shares in earnings per share using this methodology. For dilutive earnings per share, this methodology or the treasury stock method would be used depending on which method is more dilutive. The face of the Company’s consolidated statement of operations and earnings per share disclosure (See Note 12) has been updated to reflect the adoption of this accounting standard and are presented as amounts allocated to unvested restricted shareholders. The adoption of the new accounting standard did not have a material impact on the Company’s consolidated financial position or results of operations.

Effective January 1, 2009, the Company adopted a newly issued accounting standard for non-controlling interests. In accordance with this accounting standard, non-controlling interests are presented as a component of consolidated shareholders’ equity unless these interests are considered redeemable. Also, under this standard, net income will encompass the total income of all consolidated subsidiaries and there is separate disclosure on the face of the income statement of the attribution of that income between controlling and non-controlling interests. Lastly, increases and decreases in non-controlling interests are treated as equity transactions. The face of the Company’s consolidated balance sheet, statement of operations and statements of other comprehensive income has been updated to reflect the adoption of this accounting standard. The adoption of this accounting standard did not have material impact on the Company’s financial position or results of operations. As a result of the Company’s adoption of this standard, amounts reported prior to adoption as minority interests on its balance sheets are now presented as non-controlling interests within equity. There has been no change in the measurement of this line item from amounts previously reported other than those discussed above relating to the adoption of the new accounting standard on convertible debt instruments. During the year-ended December 31, 2009, the Company allocated $0.5 million to non-controlling interests, which relates to the accumulated other comprehensive income balance as of December 31, 2008 attributable to the non-controlling interests. The Company determined the out of period adjustment was not material to prior periods or to the current period.

In accordance with the Company’s retrospective adoption of the accounting standards for convertible and non-controlling interest, the Company’s consolidated balance sheets and selected line items from the statements of operations for all periods presented have been revised as follows:

	As of December 31, 2008
			Convertible Debt			Non-Controlling
Balance Sheet:	As Reported		Adjustment			Interest Adjustment			As Revised
Assets:
Construction-in-progress	$	121,402	$	817		$	—		$	122,219
Deferred costs, net		89,866		(539	)		—			89,327
Total assets		4,737,690		278			—			4,737,968
Liabilities:
Unsecured bonds, net of discount		1,930,147		(12,177	)					1,917,970
Total liabilities		3,027,647		(12,177	)					3,015,470
Non-controlling interest		53,199		—			(53,199	)		—
Equity:
Additional paid-in capital		2,327,617		23,811						2,351,428
Cumulative earnings		509,834		(11,118	)					498,716
Non-controlling interests		—		(238	)		53,199			52,961
Total equity	$	1,710,043	$	12,455		$	—		$	1,722,498

The adoption of the accounting standards described above increased total equity as of December 31, 2007 and 2006 by $102.9 million and $146.9 million, respectively.

	For the Year Ended December 31, 2008
				Convertible Debt			Non-Controlling
Income Statement:	As Reported			Adjustment			Interest Adjustment		As Revised
Interest expense	$	(142,770	)	$	(3,876	)	$	—	$	(146,646	)
Gain on extinguishment of debt		20,664			(2,559	)		—		18,105
Net income	$	43,480		$	(6,435	)	$	1,480	$	38,525

	For the Year Ended December 31, 2007
				Convertible Debt			Non-Controlling
Income Statement:	As Reported			Adjustment			Interest Adjustment		As Revised
Interest expense	$	(157,178	)	$	(3,972	)	$	—	$	(161,150	)
Net income	$	56,706		$	(3,972	)	$	2,601	$	55,335

The impact of the retrospective adoption of the accounting standards discussed above to the subtotals in the statements of cash flow was not material.

New Pronouncements

In June 2009, the FASB issued an amendment to the accounting and disclosure requirements for transfers of financial assets. This amendment requires greater transparency and additional disclosures for transfers of financial assets and the entity’s continuing involvement with them and changes the requirements for derecognizing financial assets. In addition, this amendment eliminates the concept of a qualifying special-purpose entity (QSPE). This amendment is effective for fiscal years beginning after November 15, 2009. The Company is currently evaluating the impact of adopting this amendment on its consolidated financial position or results of operations.

F-17

In June 2009, the FASB also issued an amendment to the accounting and disclosure requirements for the consolidation of variable interest entities (VIEs). The elimination of the concept of a QSPE, as discussed above, removes the exception from applying the consolidation guidance within this amendment. This amendment requires an enterprise to perform a qualitative analysis when determining whether or not it must consolidate a VIE. The amendment also requires an enterprise to continuously reassess whether it must consolidate a VIE. Additionally, the amendment requires enhanced disclosures about an enterprise’s involvement with VIEs and any significant change in risk exposure due to that involvement, as well as how its involvement with VIEs impacts the enterprise’s financial statements. Finally, an enterprise will be required to disclose significant judgments and assumptions used to determine whether or not to consolidate a VIE. This amendment is effective for fiscal years beginning after November 15, 2009. The Company is currently evaluating the impact of adopting this amendment on its consolidated financial position or results of operations.

3.REAL ESTATE INVESTMENTS

As of December 31, 2009 and 2008, the gross carrying value of the Company’s Properties was as follows:

	December 31,
	2009		2008
	(amounts in thousands)
Land	$	690,441	$	707,591
Building and improvements		3,393,498		3,481,289
Tenant improvements		428,679		419,440
	$	4,512,618	$	4,608,320

Acquisitions and Dispositions

The Company did not complete any acquisitions during the years ended December 31, 2009 and 2008.

2009

On October 13, 2009, the Company sold a condominium unit consisting of 40,508 square feet and an undivided interest in an office building in Lawrenceville, New Jersey, for a sales price of $7.9 million.

On October 1, 2009, the Company sold two office properties, totaling 473,658 net rentable square feet in Trenton, New Jersey for a stated sales price of $85.0 million. We provided to the buyer a $22.5 million seven-year, approximately 6.00% cash pay/7.64% accrual second mortgage loan. This sale was recorded using the installment sales method of accounting for real estate sales which requires for each cash payment received (including the buyer’s payments under its first mortgage) profit to be apportioned in the same ratio as total cost and total profit bear to sales value. Accordingly, the Company recognized a gain on sale of $2.7 million upon receipt of cash from the buyer in 2009 and expects to recognize the remaining gain of $12.9 million substantially upon the repayment of the second mortgage in 2016. The buyer has the option to extend the maturity date of the second mortgage for an additional three years subject to certain conditions under the loan agreement. Interest income on the second mortgage is recognized as it is received. In addition, the Company was engaged to manage the properties sold during the term of the second mortgage and is entitled for a management fee equal to 2.5% of all gross receipts from the operation of the properties and will be reimbursed for all management related expenses.

On April 29, 2009, the Company sold 7735 Old Georgetown Road, a 122,543 net rentable square feet office property located in Bethesda, Maryland, for a sales price of $26.5 million.

On March 16, 2009, the Company sold 305 Harper Drive, a 14,980 net rentable square feet office property located in Moorestown, New Jersey, for a sales price of $1.1 million.

On February 4, 2009, the Company sold two office properties, totaling 66,664 net rentable square feet in Exton, Pennsylvania, for an aggregate sales price of $9.0 million.

2008

On October 8, 2008, the Company sold five properties, totaling approximately 1.7 million net rentable square feet in Oakland, California for an aggregate sales price of $412.5 million. The buyer assumed three mortgage loans totaling $95.3 million and was granted by the Company a $40.0 million interest free note receivable secured by a first mortgage on two of the properties. The present value of the note receivable on the sale date was $37.1 million and the balance will accrete to $40.0 million as interest income is earned through the maturity date in August 2010 at an imputed 4.0% interest rate. The Company incurred an impairment charge of $6.85 million upon the classification of these properties as held for sale at June 30, 2008.

F-18

On October 1, 2008, the Company sold Main Street Centre, a 0.4 million net rentable square feet office property located in Richmond, Virginia, for a sales price of $48.8 million.

On April 25, 2008, the Company sold 100 Brandywine Boulevard, an office property located in Newtown, Pennsylvania containing 102,000 net rentable square feet, for a sales price of $28.0 million.

On February 29, 2008, the Company sold 1400 Howard Boulevard, an office property located in Mount Laurel, New Jersey containing 75,590 net rentable square feet, for a sales price of $22.0 million.

On February 14, 2008, the Company sold a parcel of land located in Henrico, Virginia containing 3.24 acres, for a sales price of $0.4 million.

On January 14, 2008, the Company sold 7130 Ambassador Drive, an office property located in Allentown, Pennsylvania containing 114,049 net rentable square feet, for a sales price of $5.8 million.

All sales presented above are included within discontinued operations. The sales prices above also do not include transaction costs for each of the respective sales.

4.INVESTMENT IN UNCONSOLIDATED VENTURES

As of December 31, 2009, the Company had an aggregate investment of approximately $75.5 million in its 11 actively operating unconsolidated Real Estate Ventures. The Company formed these ventures with unaffiliated third parties, or acquired them, to develop office properties or to acquire land in anticipation of possible development of office properties. Ten of the Real Estate Ventures own 45 office buildings that contain an aggregate of approximately 4.2 million net rentable square feet, and one Real Estate Venture developed a hotel property that contains 137 rooms in Conshohocken, PA.

The Company accounts for its unconsolidated interests in its Real Estate Ventures using the equity method. The Company’s unconsolidated interests range from 3% to 50%, subject to specified priority allocations in certain of the Real Estate Ventures.

The amounts reflected in the following tables (except for the Company’s share of equity and income) are based on the historical financial information of the individual Real Estate Ventures. One of the Real Estate Ventures, acquired in connection with the Prentiss Properties Trust merger in 2006, had a negative equity balance on a historical cost basis as a result of historical depreciation and distribution of excess financing proceeds. The Company reflected its acquisition of this Real Estate Venture interest at its relative fair value as of the date of the purchase of Prentiss. The difference between allocated cost and the underlying equity in the net assets of the investee is accounted for as if the entity were consolidated (i.e., allocated to the Company’s relative share of assets and liabilities with an adjustment to recognize equity in earnings for the appropriate depreciation/amortization). The Company does not record operating losses of the Real Estate Ventures 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.

F-19

The Company’s investment in Real Estate Ventures as of December 31, 2009 and the Company’s share of the Real Estate Ventures’ income (loss) for the year ended December 31, 2009 was as follows (in thousands):

						Company’s Share
						of 2009 Real			Real Estate		Current
	Ownership			Carrying		Estate Venture			Venture		Interest			Debt
	Percentage (1)			Amount		Income (Loss)			Debt at 100%		Rate			Maturity
Two Tower Bridge Associates		35	%	$	1,468	$	(114	)	$	15,560		5.90	%	May-13
Seven Tower Bridge Associates (2)		10	%		—		(551	)		—		N/A			N/A
Eight Tower Bridge Associates (5)		3.4	%		—		339			52,500		L+5.00	%	Jun-12
1000 Chesterbrook Boulevard		50	%		1,770		204			25,446		6.88	%	Nov-11
PJP Building Two, LC		30	%		263		120			4,703		6.12	%	Nov-23
PJP Building Three, LC		25	%		—		32			—		N/A			N/A
PJP Building Five, LC		25	%		156		96			6,099		6.47	%	Aug-19
PJP Building Six, LC		25	%		115		55			9,215		6.08	%	Apr-23
PJP Building Seven, LC		25	%		177		177			8,508		L+1.55	%	Nov-13
Macquarie BDN Christina LLC		20	%		6,859		797			59,000		8.00	%	Jun-11
Broadmoor Austin Associates		50	%		64,086		1,327			90,721		5.79	%	Apr-11
Residence Inn Tower Bridge		50	%		564		162			14,480		5.63	%	Feb-16
G&I Interchange Office LLC (DRA) (3)		20	%		—		1,180			184,000		5.78	%	Jan-15
Invesco, L.P. (4)					—		244			—		N/A			N/A
				$	75,458	$	4,068		$	470,232

(1)	Ownership percentage represents the Company’s entitlement to residual distributions after payments of priority returns, where applicable.
(2)	The loss related to Seven Tower Bridge above represents a write-off of our investment balance due to the Venture terminating development on a parcel of land owned by the partnership.
(3)	The Company retained a 20% interest and received distributions from financing in excess of its basis. The Company has no commitment to fund and no expectation of operating losses, accordingly, the Company’s carrying value has not been reduced below zero. The income recognized for the year ended December 31, 2009 relates to the distributions in excess of the Company’s investment in the Venture. The amount is shown gross of the elimination of 20% portion of revenues we received for management fees of $0.4 million as of December 31, 2009.
(4)	The Company’s interest consists solely of a residual profits interest. The Company no longer has an investment in this real estate venture.
(5)	The Company has no commitment to fund and no expectations of operating losses, accordingly, the Company’s carrying value has not been reduced below zero.

The following is a summary of the financial position of the unconsolidated Real Estate Ventures in which the Company had investment interests as of December 31, 2009 and 2008 (in thousands):

	December 31,
	2009		2008 (adjusted)
Net property	$	503,932	$	553,833
Other assets		96,643		94,165
Other Liabilities		37,774		37,863
Debt		470,232		515,832
Equity		92,569		94,164
Company’s share of equity (Company’s basis)		75,458		71,028

The following is a summary of results of operations of the unconsolidated Real Estate Ventures in which the Company had interests as of December 31, 2009, 2008 and 2007 (in thousands):

	Year ended December 31,
	2009			2008			2007
Revenue	$	105,236		$	105,844		$	75,541
Operating expenses		38,691			38,036			25,724
Interest expense, net		30,858			30,585			21,442
Depreciation and amortization		36,700			32,057	(a)		15,526
Net income		(1,012	)		(416	)(a)		12,849
Company’s share of income (Company’s basis)		4,069			8,447			2,926

(a)- Pertains to the correction of an error in DRA’s unaudited financial statements. The adjustments relate to the understatement of depreciation expense amounting to $2.1 million. The adjustments have no impact on the Company’s consolidated financial statements.

F-20

Equity in income of real estate ventures in the Company’s consolidated statement of operations for the twelve-months ended December 31, 2007 includes a $3.9 million distribution on account of a residual profits interest that is not included in the table above.

As of December 31, 2009, the aggregate principal payments of recourse and non-recourse debt payable to third-parties are as follows (in thousands):

2010	$	21,410
2011		165,303
2012		56,072
2013		22,220
2014		3,162
Thereafter		202,065
	$	470,232

As of December 31, 2009, the Company had guaranteed repayment of approximately $2.1 million of loans on behalf of certain Real Estate Ventures. The Company also provides customary environmental indemnities in connection with construction and permanent financing both for its own account and on behalf of its Real Estate Ventures.

5.DEFERRED COSTS

As of December 31, 2009 and 2008, the Company’s deferred costs were comprised of the following (in thousands):

	December 31, 2009
			Accumulated			Deferred Costs,
	Total Cost		Amortization			net
Leasing Costs	$	124,391	$	(50,643	)	$	73,748
Financing Costs		42,965		(10,616	)		32,349
Total	$	167,356	$	(61,259	)	$	106,097

	December 31, 2008
			Accumulated			Deferred Costs,
	Total Cost		Amortization			net
Leasing Costs	$	115,263	$	(39,528	)	$	75,735
Financing Costs		25,169		(11,577	)		13,592
Total	$	140,432	$	(51,105	)	$	89,327

During 2009, 2008 and 2007, the Company capitalized internal direct leasing costs of $5.3 million, $7.9 million and $8.2 million, respectively, in accordance with the accounting standard for the capitalization of leasing costs.

F-21

6.INTANGIBLE ASSETS AND LIABILITIES

As of December 31, 2009 and 2008, the Company’s intangible assets/liabilities were comprised of the following (in thousands):

	December 31, 2009
			Accumulated			Deferred Costs,
	Total Cost		Amortization			net
In-place lease value	$	123,456	$	(71,402	)	$	52,054
Tenant relationship value		97,566		(49,374	)		48,192
Above market leases acquired		15,674		(10,757	)		4,917
Total	$	236,696	$	(131,533	)	$	105,163
Below market leases acquired	$	75,325	$	(38,238	)	$	37,087

	December 31, 2008
			Accumulated			Deferred Costs,
	Total Cost		Amortization			net
In-place lease value	$	145,518	$	(71,138	)	$	74,380
Tenant relationship value		103,485		(40,835	)		62,650
Above market leases acquired		23,351		(14,624	)		8,727
Total	$	272,354	$	(126,597	)	$	145,757
Below market leases acquired	$	82,950	$	(35,324	)	$	47,626

For the years ended December 31, 2009, 2008, and 2007, the Company wrote off through the acceleration of amortization of approximately $2.4 million, $1.7 million and $4.1 million, respectively, of intangible assets as a result of tenant move-outs prior to the end of the associated lease terms. For the years ended December 31, 2009, 2008, and 2007, the Company accelerated amortization of approximately $0.4 million, $0.1 million and $0.4 million, respectively, of intangible liabilities as a result of tenant move-outs.

As of December 31, 2009, the Company’s annual amortization for its intangible assets/liabilities is as follows (in thousands, assumes no early terminations):

	Assets		Liabilities
2010	$	28,842	$	8,307
2011		22,452		7,013
2012		17,217		6,275
2013		12,438		5,836
2014		9,130		4,348
Thereafter		15,084		5,308
Total	$	105,163	$	37,087

F-22

7.DEBT OBLIGATIONS

The following table sets forth information regarding the Company’s mortgage indebtedness outstanding at December 31, 2009 and 2008 (in thousands):

							Effective
	December 31,			December 31,			Interest			Maturity
Property / Location	2009			2008			Rate			Date
MORTGAGE DEBT:
200 Commerce Drive	$	—		$	5,684			7.12	%(a)	Sep-09
Plymouth Meeting Exec.		42,042			42,785			7.00	%(b)	Dec-10
Four Tower Bridge		10,158			10,404			6.62	%	Feb-11
Arboretum I, II, III & V		21,046			21,657			7.59	%	Jul-11
Midlantic Drive/Lenox Drive/DCC I		58,215			59,784			8.05	%	Oct-11
Research Office Center		39,999			40,791			5.30	%(b)	Oct-11
Concord Airport Plaza		35,594			36,617			5.55	%(b)	Jan-12
Six Tower Bridge		13,557			14,185			7.79	%	Aug-12
Newtown Square/Berwyn Park/Libertyview		59,557			60,910			7.25	%	May-13
Coppell Associates		2,711			3,273			6.89	%	Dec-13
Southpoint III		3,255			3,863			7.75	%	Apr-14
Tysons Corner		98,056			99,529			5.36	%(b)	Aug-15
Coppell Associates		16,600			16,600			5.75	%	Feb-16
Two Logan Square		89,800			68,808			7.57	%(c)	Apr-16
One Logan Square		60,000			—			4.50	%(d)	Jul-16
Principal balance outstanding		550,590			484,890
Plus: unamortized fixed-rate debt premiums, net		1,130			2,635
Total mortgage indebtedness	$	551,720		$	487,525
UNSECURED DEBT:
$275.0M 4.500% Guaranteed Notes due 2009		—			196,680			4.62	%	Nov-09
Bank Term Loan		183,000			183,000		LIBOR + 0.80		%	Oct-10	(e)
$300.0M 5.625% Guaranteed Notes due 2010		198,545			275,545			5.61	%	Dec-10
Credit Facility		92,000			153,000		LIBOR + 0.725		%	Jun-11	(e)
$345.0M 3.875% Guaranteed Exchangeable Notes due 2026		127,960			282,030			5.50	%	Oct-11	(f)
$300.0M 5.750% Guaranteed Notes due 2012		187,825			300,000			5.77	%	Apr-12
$250.0M 5.400% Guaranteed Notes due 2014		242,681			250,000			5.53	%	Nov-14
$250.0M 7.500% Guaranteed Notes due 2015		250,000			—			7.75	%	May-15
$250.0M 6.000% Guaranteed Notes due 2016		250,000			250,000			5.95	%	Apr-16
$300.0M 5.700% Guaranteed Notes due 2017		300,000			300,000			5.75	%	May-17
Indenture IA (Preferred Trust I)		27,062			27,062		LIBOR + 1.25		%	Mar-35
Indenture IB (Preferred Trust I)		25,774			25,774		LIBOR + 1.25		%	Apr-35
Indenture II (Preferred Trust II)		25,774			25,774		LIBOR + 1.25		%	Jul-35
Principal balance outstanding		1,910,621			2,268,865
Less: unamortized exchangeable debt discount		(4,327	)		(12,177	)
unamortized fixed-rate debt discounts, net		(3,437	)		(2,718	)
Total unsecured indebtedness	$	1,902,857		$	2,253,970
Total Debt Obligations	$	2,454,577		$	2,741,495

(a)	On September 30, 2009, the Company pre-paid the remaining balance of the mortgage debt with no penalty.
(b)	Loans were assumed upon acquisition of the related property. Interest rates presented above reflect the market rate at the time of acquisition.
(c)	The Two Logan Square mortgage loan was re-financed in the amount of $89.8 million on April 1, 2009. The new loan bears interest at 7.57% per annum and has a seven year term with three years of interest only payments followed by a thirty year amortization schedule.
(d)	The Company obtained a mortgage on a previously unencumbered property during the third quarter 2009. The loan features a floating rate of LIBOR plus 350 basis points (subject to a LIBOR floor) and a seven-year term with three years interest only followed by a thirty-year amortization schedule at a 7.5% constant.
(e)	These loans may be extended to June 29, 2012 at the Company’s discretion.
(f)	On October 20, 2011, the holders of the Exchangeable Notes have the right to request the redemption of all or a portion of the Exchangeable Notes they hold at a price equal to 100% of the principal amount plus accrued and unpaid interest. Accordingly, the Exchangeable Notes have been presented with an October 20, 2011 maturity date.

On September 25, 2009, the Company closed a registered offering of $250.0 million in aggregate principal amount of its 7.50% senior unsecured notes due 2015. The notes were priced at 99.412% of their face amount with a yield to maturity of 7.625%, representing a spread at the time of pricing of 5.162% to the yield on the August 2014 Treasury note. The notes have been reflected net of discount of $1.4 million in the consolidated balance sheet as of December 31, 2009. The net proceeds which amounted to $247.0 million after deducting underwriting discounts and offering expenses were used to repay the Company’s indebtedness under its unsecured revolving credit facility and for general corporate purposes.

On July 7, 2009, the Company closed a $60.0 million first mortgage on One Logan Square, a 594,361 square foot office property located in Philadelphia, Pennsylvania. This loan accrues interest at a rate of LIBOR plus 3.5% with a minimum LIBOR rate of 1% over a seven-year term with three years of interest only payments and interest and principal payments based on a thirty-year amortization schedule for the remaining four years. The loan proceeds were used for general corporate purposes including repayment of existing indebtedness.

F-23

On June 29, 2009, the Company entered into a forward financing commitment to borrow up to $256.5 million under two separate loans which are secured by mortgages on the 30^th Street Post Office (the “Post Office project’), the Cira South Garage (the “garage project”) and by the leases of space at these facilities upon the completion of these projects. Of the total borrowings, $209.7 million and $46.8 million will be allocated to the Post Office project and to the garage project, respectively. The Company paid a $17.7 million commitment fee, which includes a $1.5 million arrangement fee, in connection with this commitment. The total loan amount together with the net commitment fee was deposited in an escrow account to be administered by The Bank of New York Mellon (the “trustee”). In accordance with the trust agreement between the lender and the trustee, the lender assigned its rights under the loans to the Trust. The Trust issued certificates to third parties in an amount equal to the funding commitment. Upon investment of the escrow account in a portfolio of U.S. Government treasuries, the net commitment fee of $16.1 million will be used together with the interest earned on the escrow account to pay interest costs of the loans through August 26, 2010 which is also the anticipated completion date of the projects and the expected funding date. In order for funding to occur, certain conditions must be met by the Company which primarily relate to the completion of the projects and the commencement of the rental payments from the respective leases with the IRS on these properties. The loans will bear interest at 5.93% and require principal and interest payments based on a twenty year amortization schedule. The Company intends to use the loan proceeds to reduce borrowings under its credit facility and for general corporate purposes. As of December 31, 2009, the commitment fee is included as part of the deferred costs in the Company’s consolidated balance sheet as it believes the funding is probable of occurring. The Company will amortize this cost over the term of the loan starting on the date the funding of the loans has occurred. In the event that the Company believes the funding will not occur, this cost will be written off in the period that such determination was made. In addition, should the funding not occur either because the Company does not meet the conditions or the Company decides not to proceed with the funding, a termination fee is payable (see Note 20).

During 2009, 2008 and 2007, the Company’s weighted-average interest rate on its mortgage notes payable was 6.45%, 6.40% and 6.74%, respectively. As of December 31, 2009 and 2008, the net carrying value of the Company’s Properties that are encumbered by mortgage indebtedness was $784.2 million and $691.6 million, respectively.

During the year ended December 31, 2009, the Company repurchased $444.7 million of its existing Notes in a series of transactions which are summarized in the table below:

	Repurchase						Deferred Financing
Notes	Amount		Principal		Gain		Amortization
2009 Notes	$	92,736	$	94,130	$	1,377	$	88
2010 Notes		71,414		76,999		5,565		215
2012 Notes		109,104		112,175		2,610		361
2014 Notes		6,329		7,319		961		28
3.875% Notes		136,880		154,070		12,664		1,289
	$	416,463	$	444,693	$	23,177	$	1,981

During the year ended December 31, 2008, the Company exercised the accordion feature on its $150.0 million unsecured term loan which it had entered into in October 2007 and borrowed an additional $33.0 million, bringing its total outstanding balance to $183.0 million. All outstanding borrowings under the term loan bear interest at a periodic rate of LIBOR plus 80 basis points. The net proceeds of the term loan were used to reduce indebtedness under the Company’s unsecured revolving credit facility. The Term Loan matures on October 18, 2010 and may be extended at the Company’s option for two, one-year periods but not beyond the final maturity date of its revolving credit facility. There is no scheduled principal amortization of the Term Loan and the Company may prepay borrowings in whole or in part without premium or penalty. Portions of the Term Loan bear interest at a per annum floating rate equal to: (i) the higher of (x) the prime rate or (y) the federal funds rate plus 0.50% per annum or (ii) a London interbank offered rate that is the rate at which Eurodollar deposits for one, two, three or six months are offered plus between 0.475% and 1.10% per annum (the “Libor Margin”), depending on the Company’s debt rating. The Term Loan Agreement contains financial and operating covenants. Financial covenants include minimum net worth, fixed charge coverage ratio, maximum leverage ratio, restrictions on unsecured and secured debt as a percentage of unencumbered assets and other financial tests. Operating covenants include limitations on the Company’s ability to incur additional indebtedness, grant liens on assets, enter into affiliate transactions, and pay dividends. The Company was in compliance with all covenants as of December 31, 2009.

F-24

On April 30, 2007, the Operating Partnership completed an underwritten public offering of $300.0 million aggregate principal amount of 5.70% unsecured notes due 2017 (the “2017 Notes”). Brandywine Realty Trust guaranteed the payment of principal and interest on the 2017 Notes. The Company used proceeds from these notes to reduce borrowings under the Company’s revolving credit facility. The Operating Partnership’s indenture relating to this unsecured note contains financial restrictions and requirements, including (1) a leverage ratio not to exceed 60%, (2) a secured debt leverage ratio not to exceed 40%, (3) a debt service coverage ratio of greater than 1.5 to 1.0, and (4) an unencumbered asset value of not less than 150% of unsecured debt. The Company was in compliance with all financial covenants as of December 31, 2009.

In April 2007, the Company entered into a $20.0 million Sweep Agreement (the “Sweep Agreement”) to be used for cash management purposes. Borrowings under the Sweep Agreement bear interest at one-month LIBOR plus 0.75%. The Sweep Agreement ended in April 2009 at which point the agreement was not renewed.

The Company utilizes credit facility borrowings for general business purposes, including the acquisition, development and redevelopment of properties and the repayment of other debt. The maturity date of the $600.0 million Credit Facility (“the Credit Facility”) is June 29, 2011 (subject to an extension of one year, at the Company’s option, upon its payment of an extension fee equal to 15 basis points of the committed amount under the Credit Facility). The per annum variable interest rate on outstanding balances is LIBOR plus 0.725%. The interest rate and facility fee are subject to adjustment upon a change in the Company’s unsecured debt ratings. The Company has the option to increase the Credit Facility to $800.0 million subject to the absence of any defaults and the Company’s ability to acquire additional commitments from its existing or new lenders. As of December 31, 2009, the Company had $92.0 million of borrowings, $13.9 million of letters of credit outstanding, and a $51.0 million holdback in connection with its historic tax credit transaction, leaving $471.1 million of unused availability. During the years ended December 31, 2009 and 2008, the weighted-average interest rate on Credit Facility borrowings was 2.08% and 4.35% respectively. As of December 31, 2009 and 2008, the weighted average interest rate on Credit Facility borrowings was 0.96% and 1.85%, respectively.

The Credit Facility requires the maintenance of ratios related to minimum net worth, debt-to-total capitalization and fixed charge coverage and includes non-financial covenants. The Company was in compliance with all financial covenants as of December 31, 2009.

As of December 31, 2009, the Company’s aggregate scheduled principal payments of debt obligations, excluding amortization of discounts and premiums, are as follows (in thousands):

2010	$	432,804
2011		352,214
2012		239,483
2013		59,753
2014		246,394
Thereafter		1,130,563
Total principal payments		2,461,211
Net unamortized premiums/discounts		(6,634	)
Outstanding indebtedness	$	2,454,577

8.FAIR VALUE OF FINANCIAL INSTRUMENTS

The following fair value disclosure was determined by the Company using available market information and discounted cash flow analyses as of December 31, 2009 and 2008, 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 acquiring or assuming 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 estimation methodologies may have a material effect on the estimated fair value amounts. The Company believes that the carrying amounts reflected in the Consolidated Balance Sheets at December 31, 2009 and 2008 approximate the fair values for cash and cash equivalents, accounts receivable, other assets, accounts payable and accrued expenses.

F-25

The following are financial instruments for which the Company estimates of fair value differ from the carrying amounts (in thousands):

	December 31, 2009					December 31, 2008
	Carrying			Fair		Carrying		Fair
	Amount			Value		Amount		Value
Mortgage payable, net of premiums	$	551,873		$	523,745	$	484,890	$	459,519
Unsecured notes payable, net of discounts	$	1,557,011		$	1,497,356	$	1,854,186	$	1,152,056
Variable Rate Debt Instruments	$	353,610		$	341,210	$	414,610	$	398,748
Notes Receivable	$	71,989	(a)	$	62,776	$	48,048	$	46,227

(a) For purposes of this disclosure, the Trenton Note is presented gross of the recognized deferred gain of $12.9 million.

9.RISK MANAGEMENT AND USE OF FINANCIAL INSTRUMENTS

Risk Management

In the course of its on-going business operations, the Company encounters economic risk. There are three main components of economic risk: interest rate risk, credit risk and market risk. The Company is subject to interest rate risk on its interest-bearing liabilities. Credit risk is primarily the risk of inability or unwillingness of tenants to make contractually required payments and counterparties on derivatives not fulfilling their obligations. Market risk is the risk of declines in the value of properties due to changes in rental rates, interest rates or other market factors affecting the valuation of properties held by the Company.

Risks and Uncertainties

Deteriorating economic conditions have generally resulted in a reduction of the availability of financing and higher borrowing costs. These factors, coupled with a slowing economy, have reduced the volume of real estate transactions and created credit stresses on most businesses. The Company believes that vacancy rates may increase through 2010 and possibly beyond as the current economic climate negatively impacts tenants in the Properties. The current financial markets also have an adverse effect on the Company’s other counter parties such as the counter parties in its derivative contracts.

The Company expects that the impact of the current state of the economy, including high unemployment and the unprecedented volatility and illiquidity in the financial and credit markets, will continue to have a dampening effect on the fundamentals of its business, including increases in past due accounts, tenant defaults, lower occupancy and reduced effective rents. These conditions would negatively affect the Company’s future net income and cash flows and could have a material adverse effect on its financial condition.

The Company’s Credit Facility, Bank Term Loan and the indenture governing the unsecured public debt securities (Note 7) contain restrictions, requirements and other limitations on the ability to incur indebtedness, including total debt to asset ratios, secured debt to total asset ratios, debt service coverage ratios and minimum ratios of unencumbered assets to unsecured debt which it must maintain. The ability to borrow under the Credit Facility is subject to compliance with such financial and other covenants. In the event that the Company fails to satisfy these covenants, it would be in default under the Credit Facility, the Bank Term Loan and the indenture and may be required to repay such debt with capital from other sources. Under such circumstances, other sources of capital may not be available, or may be available only on unattractive terms.

Availability of borrowings under the Credit Facility is subject to a traditional material adverse effect clause. Each time the Company borrows it must represent to the lenders that there have been no events of a nature which would have a material adverse effect on the business, assets, operations, condition (financial or otherwise) or prospects of the Company taken as a whole or which could negatively effect the ability of the Company to perform its obligations under the Credit Facility. While the Company believes that there are currently no material adverse effect events, the Company is operating in unprecedented economic times and it is possible that such event could arise which would limit the Company’s borrowings under the Credit Facility. If an event occurs which is considered to have a material adverse effect, the lenders could consider the Company in default under the terms of the Credit Facility and the borrowings under the Credit Facility would become due and payable. If the Company is unable to obtain a waiver, this would have a material adverse effect on the Company’s financial position and results of operations.

F-26

The Company was in compliance with all financial covenants as of December 31, 2009. Management continuously monitors the Company’s compliance with and anticipated compliance with the covenants. Certain of the covenants restrict management’s ability to obtain alternative sources of capital. While the Company currently believes it will remain in compliance with its covenants, in the event of a continued slow-down and continued crisis in the credit markets, the Company may not be able to remain in compliance with such covenants and if the lender would not provide a waiver, it could result in an event of default.

Use of Derivative Financial Instruments

The Company’s use of derivative instruments is limited to the utilization of interest rate agreements or other instruments to manage interest rate risk exposures and not for speculative purposes. The principal objective of such arrangements is to minimize the risks and/or costs associated with the Company’s operating and financial structure, as well as to hedge specific transactions. The counterparties to these arrangements are major financial institutions with which the Company and its affiliates may also have other financial relationships. The Company is potentially exposed to credit loss in the event of non-performance by these counterparties. However, because of the high credit ratings of the counterparties, the Company does not anticipate that any of the counterparties will fail to meet these obligations as they come due. The Company does not hedge credit or property value market risks through derivative financial instruments.

The Company formally assesses, both at inception of the hedge and on an on-going basis, whether each derivative is highly-effective in offsetting changes in cash flows of the hedged item. If management determines that a derivative is not highly-effective as a hedge or if a derivative ceases to be a highly-effective hedge, the Company will discontinue hedge accounting prospectively. The related ineffectiveness would be charged to the Statement of Operations.

The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves.

To comply with the provisions of the accounting standard for fair value measurements and disclosures, the Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.

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. However, as of December 31, 2009 and 2008, 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 derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

The fair values of the hedges at December 31, 2009 and 2008 are included in other liabilities and accumulated other comprehensive income in the accompanying balance sheet, except for the $1.1 million fair value adjustment of the hedges charged as an expense to the consolidated statements of operations during the year ended December 31, 2009, relating to two of the Company’s interest rate swaps which were both cash settled in December 2009. The hedging relationship with these swaps ceased upon the Company’s planned issuance of its unsecured notes effective September 21, 2009, and as such the interest rate swaps no longer qualified for hedge accounting. Accordingly, changes in the fair value of these interest rate swaps were charged to our consolidated statements of operations until they were cash settled. The Company also recognized a gain of $0.1 million from the ineffectiveness of the hedges during the year ended December 31, 2009 prior to the termination of the hedging relationship.

F-27

The following table summarizes the terms and fair values of the Company’s derivative financial instruments at December 31, 2009 and 2008. 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.

Hedge	Hedge			Notional Amount								Trade		Maturity		Fair Value
Product	Type	Designation		12/31/2009		12/31/2008			Strike			Date		Date		12/31/2009		12/31/2008
Swap	Interest Rate	Cash Flow	(b)	$	123,000	$	78,000	(a)		4.709	%		9/20/07		10/18/10	$	5,162	$	7,204
Swap	Interest Rate	Cash Flow	(b)		25,000		25,000			4.415	%		10/19/07		10/18/10		827		1,439
Swap	Interest Rate	Cash Flow	(b)		25,000		25,000			3.747	%		11/26/07		10/18/10		688		1,111
Swap	Interest Rate	Cash Flow	(b)		—		25,000			3.338	%		1/4/08		12/18/09		—		603
Swap	Interest Rate	Cash Flow	(b)		25,774		25,774			2.975	%		10/16/08		10/30/10		643		628
Swap	Interest Rate	Cash Flow	(b),(c)		—		25,000			4.770	%		1/4/08		12/18/19		—		4,079
Swap	Interest Rate	Cash Flow	(b),(c)		—		25,000			4.423	%		3/19/08		12/18/19		—		3,402
				$	198,774	$	228,774									$	7,320	$	18,466

(a)-	Notional amount accreting up to $155,000 through October 8, 2010.
(b)-	Hedging unsecured variable rate debt.
(c)-	Cash settled at their maturity dates.

Concentration of Credit Risk

Concentrations of credit risk arise when a number of tenants related to the Company’s investments or rental operations are engaged in similar business activities, or are located in the same geographic region, or have similar economic features that would cause their inability to meet contractual obligations, including those to the Company, to be similarly affected. The Company regularly monitors its tenant base to assess potential concentrations of credit risk. Management believes the current credit risk portfolio is reasonably well diversified and does not contain any unusual concentration of credit risk. No tenant accounted for 5% or more of the Company’s rents during 2009, 2008 and 2007. Recent developments in the general economy and the global credit markets have had a significant adverse effect on companies in numerous industries. The Company has tenants concentrated in various industries that may be experiencing adverse effects from the current economic conditions and the Company could be adversely affected if such tenants go into default on their leases.

10.DISCONTINUED OPERATIONS

For the years ended December 31, 2009, 2008 and 2007, income from discontinued operations relates to an aggregate of 36 properties containing approximately 6.7 million net rentable square feet that the Company has sold since January 1, 2007.

The following table summarizes revenue and expense information for the properties sold which qualify for discontinued operations reporting since January 1, 2007 (in thousands):

F-28

	Years Ended December 31,
	2009			2008			2007
Revenue:
Rents	$	8,055		$	52,712		$	82,049
Tenant reimbursements		5,309			7,829			11,114
Termination fees		—			25			183
Other		123			227			404
Total revenue		13,487			60,793			93,750
Expenses:
Property operating expenses		4,665			21,077			31,560
Real estate taxes		1,763			6,270			8,953
Depreciation & amortization		2,155			13,412			27,507
Provision for impairment		3,700			6,850			—
Total operating expenses		12,283			47,609			68,020
Operating income		1,204			13,184			25,730
Interest income		(1	)		17			26
Interest expense		—			(4,595	)		(5,497	)
Income from discontinued operations before gain on sale of interests in real estate		1,203			8,606			20,259
Net gain on sale of interests in real estate		1,238			28,497			25,743
Income from discontinued operations		2,441			37,103			46,002
Income from discontinued operations attributable to non-controlling interest		(38	)		(1,399	)		(1,964	)
Income from discontinued operations attributable to Brandywine Realty Trust	$	2,403		$	35,704		$	44,038

Discontinued operations have not been segregated in the consolidated statements of cash flows. Therefore, amounts for certain captions will not agree with respective data in the consolidated statements of operations.

11. NON-CONTROLLING INTEREST IN OPERATING PARTNERSHIP AND CONSOLIDATED REAL ESTATE VENTURES

Operating Partnership

As of December 31, 2009 and 2008, the aggregate book value of the non-controlling interest associated with these units in the accompanying consolidated balance sheet was $38.3 million and $53.0 million, respectively and the Company believes that the aggregate settlement value of these interests was approximately $32.0 million and $21.7 million, respectively. This amount is based on the number of units outstanding and the closing share price on the balance sheet date.

Non-controlling Interest — Partners’ Share of Consolidated Real Estate Ventures

As of December 31, 2009 and 2008, the Company owned interests in three consolidated real estate ventures that own three office properties containing approximately 0.4 million net rentable square feet. The Company is the primary beneficiary and these consolidated real estate ventures are variable interest entities under the accounting standard for consolidation.

The non-controlling interests associated with certain of the Real Estate Ventures that have finite lives under the terms of the partnership agreements represent mandatorily redeemable interests as defined under the accounting standard for certain financial instruments with characteristics of both liabilities and equity. The aggregate amount related to these non-controlling interests classified within equity is $0.1 million at December 31, 2009 and a nominal amount as of December 31, 2008. The Company believes that the aggregate settlement value of these interests was approximately $7.9 million and $9.1 million as of December 31, 2009 and 2008, respectively. This amount is based on the estimated liquidation values of the assets and liabilities and the resulting proceeds that the Company would distribute to its Real Estate Venture partners upon dissolution, as required under the terms of the respective partnership agreements. Subsequent changes to the estimated fair values of the assets and liabilities of the consolidated Real Estate Ventures will affect the Company’s estimate of the aggregate settlement value. The partnership agreements do not limit the amount that the non-controlling interest partners would be entitled to in the event of liquidation of the assets and liabilities and dissolution of the respective partnerships.

F-29

12.BENEFICIARIES’ EQUITY

Earnings per Share (EPS)

The following 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):

	Years ended December 31,
	2009						2008						2007
	Basic			Diluted			Basic			Diluted			Basic			Diluted
Numerator
Income from continuing operations	$	5,648		$	5,648		$	1,422		$	1,422		$	9,333		$	9,333
Net income (loss) from continuing operations attributable to non-controlling interests		(25	)		(25	)		91			91			(490	)		(490	)
Amount allocable to unvested restricted shareholders		(279	)		(279	)		(763	)		(763	)		(765	)		(765	)
Preferred share dividends		(7,992	)		(7,992	)		(7,992	)		(7,992	)		(7,992	)		(7,992	)
Income (loss) from continuing operations available to common shareholders		(2,648	)		(2,648	)		(7,242	)		(7,242	)		86			86
Income from discontinued operations		2,441			2,441			37,103			37,103			46,002			46,002
Net income from discontinued operations attributable to non-controlling interests		(38	)		(38	)		(1,399	)		(1,399	)		(1,964	)		(1,964	)
Discontinued operations attributable to common shareholders		2,403			2,403			35,704			35,704			44,038			44,038
Net income (loss) available to common shareholders	$	(245	)	$	(245	)	$	28,462		$	28,462		$	44,124		$	44,124
Denominator
Weighted-average shares outstanding		111,898,045			111,898,045			87,574,423			87,574,423			87,272,148			87,272,148
Contingent securities/Stock based compensation		—			1,353,246			—			8,740						49,128
Total weighted-average shares outstanding		111,898,045			113,251,291			87,574,423			87,583,163			87,272,148			87,321,276
Earnings per Common Share:
Income from continuing operations attributable to common shareholders	$	(0.02	)	$	(0.02	)	$	(0.08	)	$	(0.08	)	$	—		$	—
Discontinued operations attributable to common shareholders		0.02			0.02			0.41			0.41			0.50			0.50
Net income attributable to common shareholders	$	—		$	—		$	0.33		$	0.33		$	0.50		$	0.50

Securities totaling 2,809,108 in 2009, 2,816,621 in 2008, and 3,838,229 in 2007 were excluded from the earnings per share computations because their effect would have been antidilutive.

The contingent securities/stock based compensation impact is calculated using the treasury stock method and relates to employee awards settled in shares of the Company. The effect of these securities is anti-dilutive for periods that the Company incurs a net loss available to common shareholders and therefore is excluded from the dilutive earnings per share calculation in such periods.

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 twelve months ended December 31, 2009, 2008 and 2007, earnings representing nonforfeitable dividends as noted in the table above were allocated to the unvested restricted shares.

Common and Preferred Shares

On December 8, 2009, the Company declared a distribution of $0.15 per Common Share, totaling $19.3 million, which was paid on January 20, 2010 to shareholders of record as of January 6, 2010. On December 8, 2009, the Company declared distributions on its Series C Preferred Shares and Series D Preferred Shares to holders of record as of December 30, 2009. These shares are entitled to a preferential return of 7.50% and 7.375%, respectively. Distributions paid on January 15, 2010 to holders of Series C Preferred Shares and Series D Preferred Shares totaled $0.9 million and $1.1 million, respectively.

On June 2, 2009, the Company completed its public offering (the “offering”) of 40,250,000 of its common shares, par value $0.01 per share. The common shares were issued and sold by the Company to the underwriters at a public offering price of $6.30 per common share in accordance with an underwriting agreement. The common shares sold include 5,250,000 shares issued and sold pursuant to the underwriters’ exercise in full of their over-allotment option under the underwriting agreement. The Company received net proceeds of approximately $242.3 million from the offering net of underwriting discounts, commissions and expenses. The Company used the net proceeds from the offering to repay outstanding borrowings under its $600.0 million unsecured revolving credit facility amounting to $242.0 million and for general corporate purposes.

F-30

Common Share Repurchases

The Company maintains a share repurchase program under which the Board has authorized the Company to repurchase our common shares from time to time. The Board initially authorized this program in 1998 and has periodically replenished capacity under the program. On May 2, 2006 the Company’s Board restored capacity to 3.5 million common shares.

The Company did not repurchase any shares during the year-ended December 31, 2009. As of December 31, 2009, the Company may purchase an additional 0.5 million shares under the plan.

Repurchases may be made from time to time in the open market or in privately negotiated transactions, subject to market conditions and compliance with legal requirements. The share repurchase program does not contain any time limitation and does not obligate the Company to repurchase any shares. The Company may discontinue the program at any time.

13.SHARE BASED COMPENSATION

Stock Options

At December 31, 2009, the Company had 2,404,567 options outstanding under its shareholder approved equity incentive plan. There were 1,788,448 options unvested as of December 31, 2009 and $0.6 million of unrecognized compensation expense associated with these options will be recognized over a weighted average period of 1.63 years. During the years ended December 31, 2009 and 2008, the Company recognized $0.6 million and $0.3 million, respectively, of compensation expense included in general and administrative expense related to unvested options. No options were unvested during the year ended December 31, 2007.

Option activity as of December 31, 2009 and changes during the year ended December 31, 2009 were as follows:

				Weighted		Weighted Average
				Average		Remaining Contractual		Aggregate Intrinsic
	Shares			Exercise Price		Term (in years)		Value
Outstanding at January 1, 2009		1,754,648		$	20.41		8.77	$	(30,093	)
Granted		676,491			2.91		9.25		5,743,405
Exercised		—
Forfeited or expired		(26,572	)		20.61
Outstanding at December 31, 2009		2,404,567		$	15.48		8.38	$	(9,816,670	)
Vested/Exercisable at December 31, 2009		616,119		$	20.03		7.54	$	(5,268,260	)

The fair value of share option awards is estimated on the date of the grant using the Black-Scholes option valuation model. The following weighted-average assumptions were utilized in calculating the fair value of options granted during the years ended December 31, 2009 and 2008:

Grant Date	April 1, 2009			March 20, 2008			April 8, 2008
Risk-free interest rate		2.20	%		2.74	%		3.03	%
Dividend yield		23.64	%		8.81	%		8.52	%
Volatility factor		40.99	%		23.15	%		23.22	%
Weighted-average expected life	7 yrs			7 yrs			7 yrs

There were no options granted during the year-ended December 31, 2007.

F-31

	Years ended December 31,
	2008							2007
						Weighted							Weighted
						Average							Average
				Weighted		Remaining					Weighted		Remaining
				Average		Contractual					Average		Contractual
				Exercise		Term					Exercise		Term
	Shares			Price		(in Years)		Shares			Price		(in Years)
Outstanding at beginning of year		1,070,099		$	26.13		0.54		1,286,075		$	26.45		1.5
Granted		1,824,594			20.61		8.61		—
Prentiss options converted to Company options as part of the Prentiss acquisition (See Note 3)		—			0.00		—		—		$	28.80		0.87
Exercised		—			0.00		—		(198,495	)	$	0.00		—
Forfeited/Expired		(1,140,045	)		26.10		—		(17,481	)		—
Outstanding at end of year		1,754,648		$	20.41		9.01		1,070,099		$	26.13		0.54
Vested/Exercisable at end of year		60,224		$	14.71		1.83		1,070,099		$	26.13

401(k) Plan

The Company sponsors a 401(k) defined contribution plan for its employees. Each employee may contribute up to 100% of annual compensation, subject to specific limitations under the Internal Revenue Code. At its discretion, the Company can make matching contributions equal to a percentage of the employee’s elective contribution and profit sharing contributions. Employees vest in employer contributions over a three-year service period. The Company contributions were $0.2 million in 2009, $0.6 million in 2008 and $0.6 million in 2007.

Restricted Share Awards

As of December 31, 2009, 708,580 restricted shares were outstanding and vest over three to seven years from the initial grant date. The remaining compensation expense to be recognized at December 31, 2009 was approximately $5.2 million. That expense is expected to be recognized over a weighted average remaining vesting period of 2.1 years. The Company recognized stock compensation related to outstanding restricted shares of $3.2 million during the year ended December 31, 2009, of which $0.8 million was capitalized as part of the Company’s review of employee salaries eligible for capitalization. For the years ended December 31, 2008 and 2007, the Company recognized $3.0 million of compensation expense included in general and administrative expense in the respective period related to outstanding restricted shares.

The following table summarizes the Company’s restricted share activity for the twelve months-ended December 31, 2009:

				Weighted
				Average Grant
	Shares			Date Fair value
Non-vested at January 1, 2009		475,496		$	26.21
Granted		372,586			3.36
Vested		(119,268	)		21.84
Forfeited		(20,234	)		14.65
Non-vested at December 31, 2009		708,580		$	9.69

Restricted Performance Share Units Plan

On April 1, 2009 the Compensation Committee of the Company’s Board of Trustees awarded 488,292 share-based units, referred to as Restricted Performance Share Units (“RPSU”), to executive participants. The awards are contingent upon the Company’s total shareholder return as compared to its industry peers and the employment status of the participants through the performance period. The performance period commenced on January 1, 2009 and will end on the earlier of December 31, 2011 or the date of a change in control.

F-32

If the total shareholder return during the measurement period places the Company at or above a certain percentile as compared to its peers based on an industry-based index at the end of the measurement period then the number of shares that will be delivered shall equal a certain percentage of the participant’s base units.

The participants will also receive dividend equivalent rights (“DER”) based on the initial number of the units awarded. The DER will be calculated throughout the vesting period and the dollar value of the DER will be used to purchase additional RPSU. All shares due to the participants will be delivered on March 1, 2012. On April 1, 2009, the Company awarded 488,292 RPSU to its officers. The shares awarded have a three year cliff vesting period which is the period the $1.1 million fair value of the awards will be amortized. As of December 31, 2009, 470,861 of the RPSU awarded remained outstanding and 20,525 DERs have been determined. On the date of the grant, the awards were valued using a Monte Carlo simulation. For the year-ended December 31, 2009, the Company recognized compensation expense of $0.3 million related to this plan.

Outperformance Program

On August 28, 2006, the Compensation Committee of the Company’s Board of Trustees adopted a long-term incentive compensation program (the “outperformance program”) under the 1997 Plan. The outperformance program provided for share-based awards, with share issuances (if any), to take the form of both vested and restricted common shares and with any share issuances contingent upon the Company’s total shareholder return during a three year measurement period exceeding specified performance hurdles. These hurdles were not met and, accordingly, no shares were delivered under the outperformance program and the outperformance program, has terminated in accordance with its terms. The awards under the outperformance program were accounted for in accordance with the accounting standard for stock-based compensation. The aggregate grant date fair values of the awards under the outperformance program, as adjusted for estimated forfeitures, were approximately $5.9 million (with the values determined through a Monte Carlo simulation) and are being amortized into expense over the five-year vesting period beginning on the grant dates using a graded vesting attribution model. For the years ended December 31, 2009, 2008 and 2007, the Company recognized $0.9 million, $1.0 million and $1.4 million, respectively, of compensation expense related to the outperformance program; $0.5 million remains to be recognized as compensation expense as of December 31, 2009.

Employee Share Purchase Plan

On May 9, 2007, the Company’s shareholders approved the 2007 Non-Qualified Employee Share Purchase Plan (the “ESPP”). The ESPP is intended to provide eligible employees with a convenient means to purchase common shares of the Company through payroll deductions and voluntary cash purchases at an amount equal to 85% of the average closing price per share for a specified period. Under the plan document, the maximum participant contribution for the 2009 plan year is limited to the lesser of 20% of compensation or $25,000. The number of shares reserved for issuance under the ESPP is 1.25 million. During the year ended December 31, 2009, employees made purchases of $0.4 million under the ESPP and the Company recognized $0.3 million of compensation expense related to the ESPP. During the year ended December 31, 2008, employees made purchases of $0.6 million under the ESPP and the Company recognized $0.1 million of compensation expense related to the ESPP. The Board of Directors of the Company may terminate the ESPP at its sole discretion at anytime.

Deferred Compensation

In January 2005, the Company adopted a Deferred Compensation Plan (the “Plan”) that allows trustees and certain key employees to voluntarily defer compensation. Compensation expense is recorded for the deferred compensation and a related liability is recognized. Participants may elect designated benchmark investment options for the notational investment of their deferred compensation. The deferred compensation obligation is adjusted for deemed income or loss related to the investments selected. At the time the participants defer compensation, the Company records a liability, which is included in the Company’s consolidated balance sheet. The liability is adjusted for changes in the market value of the participants selected investments at the end of each accounting period, and the impact of adjusting the liability is recorded as an increase or decrease to compensation cost. For the years ended December 31, 2009, 2008 and 2007, the Company recorded a net increase in compensation cost of $1.5 million, a net reduction in compensation cost of $2.8 million and a net increase in compensation cost of $0.9 million, respectively, in connection with the Plan due to the change in market value of the participant investments in the Plan.

The deferred compensation obligations are unfunded, but the Company has purchased assets, company-owned life insurance policies and mutual funds, which can be utilized as a future funding source for the obligations related to the Plan. Participants in the Plan have no interest in any assets set aside by the Company to meet its obligations under the deferral plan. For the years ended December 31, 2009, 2008 and 2007, the Company recorded a net reduction in compensation cost of $1.8 million, a net increase in compensation cost of $2.7 million and a net decrease in compensation cost of $0.8 million, respectively, in connection with the investments in the Company-owned policies and mutual funds.

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Participants in the Plan may elect to have all or a portion of their deferred compensation invested in the Company’s common shares. The Company holds these shares in a rabbi trust, which is subject to the claims of the Company’s creditors in the event of the Company’s bankruptcy or insolvency. The Plan does not provide for diversification of a participant’s deferral allocated to the Company common share and deferrals allocated to Company common share can only be settled with a fixed number of shares. In accordance with the accounting standard for deferred compensation arrangements where amounts earned are held in a rabbi trust and invested, the deferred compensation obligation associated with Company’s common shares is classified as a component of shareholder’s equity and the related shares are treated as shares to be issued and are included in total shares outstanding. At December 31, 2009 and 2008, there were 0.3 million and 0.2 million shares, respectively, to be issued included in total shares outstanding. Subsequent changes in the fair value of the common shares are not reflected in operations or shareholders’ equity of the Company.

14.PREFERRED SHARES

In 2003, the Company issued 2,000,000 7.50% Series C Cumulative Redeemable Preferred Shares (the “Series C Preferred Shares”) for net proceeds of $48.1 million. The Series C Preferred Shares are perpetual. On or after December 30, 2008, the Company, at its option, may redeem the Series C Preferred Shares, in whole or in part, by paying $25.00 per share, which is equivalent to its liquidation preference, plus accrued but unpaid dividends.

In 2004, the Company issued 2,300,000 7.375% Series D Cumulative Redeemable Preferred Shares (the “Series D Preferred Shares”) for net proceeds of $55.5 million. The Series D Preferred Shares are perpetual. On or after February 27, 2009, the Company, at its option, may redeem the Series D Preferred Shares, in whole or in part, by paying $25.00 per share, which is equivalent to its liquidation preference, plus accrued but unpaid dividends. The Company could not redeem Series D Preferred Shares before February 27, 2009 except to preserve its REIT status.

15.DISTRIBUTIONS

	Years ended December 31,
	2009			2008			2007
Common Share Distributions:
Ordinary income	$	0.60		$	1.53		$	1.16
Capital gain		—			0.11			0.46
Non-taxable distributions		—			0.12			0.14
Distributions per share	$	0.60		$	1.76		$	1.76
Percentage classified as ordinary income		100.0	%		86.9	%		65.9	%
Percentage classified as capital gain		0.0	%		6.3	%		26.1	%
Percentage classified as non-taxable distribution		0.0	%		6.8	%		8.0	%
Preferred Share Distributions:
Total distributions declared	$	7,992,000		$	7,992,000		$	7,992,000

16.TAX CREDIT TRANSACTIONS

Historic Tax Credit Transaction

On November 17, 2008, the Company closed a transaction with US Bancorp (“USB”) related to the historic rehabilitation of the 30th Street Post Office in Philadelphia, Pennsylvania (“Project”), an 862,692 square foot office building which is 100% pre-leased to the Internal Revenue Service (expected commencement of the IRS lease is August 2010). USB has agreed to contribute approximately $67.9 million of Project costs and advanced $10.2 million of that contemporaneously with the closing of the transaction. USB advanced another $23.8 million of the said funds in December 2009. The remaining funds will be advanced in 2010 subject to the Company’s achievement of certain construction milestones and its compliance with the federal rehabilitation regulations. In return for the investment, USB will, upon completion of the Project in 2010, receive substantially all of the rehabilitation credits available under section 47 of the Internal Revenue Code.

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In exchange for its contributions into the Project, USB is entitled to substantially all of the benefits derived from the tax credit, but does not have a material interest in the underlying economics of the property. This transaction also includes a put/call provision whereby the Company may be obligated or entitled to repurchase USB’s interest in the Project. The Company believes the put will be exercised and an amount attributed to that puttable non-controlling interest obligation is included in other liabilities and is being accreted to the expected fixed put price.

Based on the contractual arrangements that obligate the Company to deliver tax benefits and provide other guarantees to USB and that entitle the Company through fee arrangements to receive substantially all available cash flow from the Project, the Company concluded that the Project should be consolidated in accordance with the accounting standard for consolidation. The Company also concluded that capital contributions received from USB, in substance, are consideration that the Company receives in exchange for its obligation to deliver tax credits and other tax benefits to USB. These receipts other than the amounts allocated to the put obligation will be recognized as revenue in the consolidated financial statements only after the put/call provision is exercised and when USB no longer has any ongoing interest in the Project. The tax credit is subject to 20% recapture per year beginning one year after the completion of the Project in 2010. The Company expects that USB will exercise the put/call provision in December 2015 when the recapture period ends. The Company will recognize the cash received as income once either the put or the call is exercised.

The USB contributions made during 2009 and 2008 of $23.8 million and $10.2 million, respectively are presented within deferred income on the Company’s consolidated balance sheet at December 31, 2009 and 2008. The said contributions recorded as deferred income are net of the amounts allocated to non-controlling interest as described above of $0.7 million in 2009 and $0.3 million in 2008.

Direct and incremental costs incurred in structuring the arrangement are deferred and will be recognized as expense in the consolidated financial statements upon the recognition of the related revenue as discussed above. The deferred cost at December 31, 2009 is $2.4 million and is included in other assets on the Company’s consolidated balance sheet. Amounts included in interest expense related to the accretion of the non-controlling interest liability and the 2% return expected to be paid to USB on its non-controlling interest aggregate to $0.2 million for the year-ended December 31, 2009.

New Markets Tax Credit Transaction

On December 30, 2008, the Company entered into a transaction with USB related to the Cira Garage Project (“garage project”) in Philadelphia, Pennsylvania and expects to receive a net benefit of $7.8 million under a qualified New Markets Tax Credit Program (“NMTC”). The NMTC was provided for in the Community Renewal Tax Relief Act of 2000 (the “Act”) and is intended to induce investment capital in underserved and impoverished areas of the United States. The Act permits taxpayers (whether companies or individuals) to claim credits against their Federal income taxes for up to 39% of qualified investments in qualified, active low-income businesses or ventures.

USB contributed $13.3 million into the garage project and as such they are entitled to substantially all of the benefits derived from the tax credit, but they do not have a material interest in the underlying economics of the garage project. This transaction also includes a put/call provision whereby the Company may be obligated or entitled to repurchase USB’s interest. The Company believes the put will be exercised and an amount attributed to that obligation is included in other liabilities. The said put price is insignificant.

Based on the contractual arrangements that obligate the Company to deliver tax benefits and provide various other guarantees to USB, the Company concluded that the project should be consolidated in accordance with the accounting standard for consolidation. The USB contribution of $13.3 million is included in deferred income on the Company’s consolidated balance sheet at December 31, 2009 and 2008. The USB contribution other than the amount allocated to the put obligation will be recognized as income in the consolidated financial statements only after the put/call provision is exercised and when USB no longer has any ongoing interest in the Project. The NMTC is subject to 100% recapture for a period of seven years as provided in the Internal Revenue Code. The Company expects that USB will exercise the put/call provision in December 2015 at the end of the recapture period.

Direct and incremental costs incurred in structuring the arrangement are deferred and will be recognized as expense in the consolidated financial statements upon the recognition of the related revenue as discussed above. The deferred costs at December 31, 2009 is $5.3 million and is included in other assets on the Company’s consolidated balance sheet.

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17.ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table details the components of accumulated other comprehensive income (loss) as of and for the three years ended December 31, 2009 (in thousands):

	Unrealized Gains			Cash Flow			Accumulated Other
	(Losses) on Securities			Hedges			Comprehensive Loss
Balance at January 1, 2007		328			1,248			1,576
Change during year		—			(3,600	)		(3,600	)
Settlement of treasury locks		—			(3,860	)		(3,860	)
Settlement of forward starting swaps		—			1,148			1,148
Reclassification adjustments for (gains) losses reclassified into operations		(585	)		3,436			2,851
Balance at December 31, 2007		(257	)		(1,628	)		(1,885	)
Change during year		—			(15,288	)		(15,288	)
Reclassification adjustments for (gains) losses reclassified into operations		248			(80	)		168
Balance at December 31, 2008	$	(9	)	$	(16,996	)	$	(17,005	)
Change during year		—			7,395			7,395
Non-controlling interest — consolidated real estate venture partner’s share of unrealized (gains)/losses on derivative financial instruments		—			290			290
Ineffectiveness of forward starting swaps		—			(125	)		(125	)
Other					491			491
Reclassification adjustments for (gains) losses reclassified into operations		—			(184	)		(184	)
Balance at December 31, 2009	$	(9	)	$	(9,129	)	$	(9,138	)

Over time, the unrealized gains and losses held in Accumulated Other Comprehensive Income (“AOCI”) will be reclassified to earnings when hedged items are recognized in earnings. The current balance held in AOCI is expected to be reclassified to earnings over the lives of the current hedging instruments, or for realized losses on forecasted debt transactions over the related term of the debt obligation (including the planned issuance related to previously forecasted transactions that are considered to be reasonably possible of occurring), as applicable. During the year ended December 31, 2008, the Company reclassified approximately $(0.5) million to interest expense associated with treasury lock agreements and forward starting swaps previously settled.

18.SEGMENT INFORMATION

As of December 31, 2009, the Company manages its portfolio within six segments: (1) Pennsylvania, (2) Metropolitan Washington D.C, (3) New Jersey/Delaware, (4) Richmond, Virginia, (5) Austin, Texas and (6) California. The Pennsylvania segment includes properties in Chester, Delaware, Bucks, and Montgomery counties in the Philadelphia suburbs and the City of Philadelphia in Pennsylvania. The Metropolitan Washington, D.C. segment includes properties in Northern Virginia and suburban Maryland. The New Jersey/Delaware segment includes properties in Burlington, Camden and Mercer counties and counties in the southern and central part of New Jersey and in New Castle county in the state of Delaware. The Richmond, Virginia segment includes properties primarily in Albemarle, Chesterfield, Goochland and Henrico counties and Durham, North Carolina. The California segment includes properties in Oakland, Concord, Carlsbad and Rancho Bernardo. The Austin, Texas segment includes properties in Coppell and Austin. The corporate group is responsible for cash and investment management, development of certain real estate properties during the construction period, and certain other general support functions. Land held for development and construction in progress are transferred to operating properties by region upon completion of the associated construction or project.

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Segment information for the three years ended December 31, 2009, 2008 and 2007 are as follows (in thousands):

			Metropolitan,		New Jersey		Richmond,
	Pennsylvania		D.C.		/Delaware		Virginia		Austin, Texas		California		Corporate			Total
2009:
Real estate investments, at cost:
Operating properties	$	1,726,267	$	1,356,206	$	598,122	$	297,958	$	282,093	$	251,972	$	—		$	4,512,618
Construction-in-progress		—		—		—		—		—		—		271,962			271,962
Land inventory		—		—		—		—		—		—		97,368			97,368
Total revenue		239,038		140,438		103,277		36,387		35,143		29,282		(1,346	)		582,219
Property operating expenses, real estate taxes and third party management expenses		90,455		52,712		48,254		14,337		15,404		14,683		(1,460	)		234,385
Net operating income	$	148,583	$	87,726	$	55,023	$	22,050	$	19,739	$	14,599	$	114		$	347,834
2008:
Real estate investments, at cost:
Operating properties	$	1,734,946	$	1,371,997	$	674,503	$	297,171	$	280,826	$	248,877	$	—		$	4,608,320
Construction-in-progress		—		—		—		—		—		—		122,219			122,219
Land inventory		—		—		—		—		—		—		100,516			100,516
Total revenue		243,216		138,339		104,711		38,047		37,388		29,590		(1,870	)		589,421
Property operating expenses, real estate taxes and third party management expenses		86,071		49,672		46,895		13,136		16,385		12,855		3,370			228,384
Net operating income	$	157,145	$	88,667	$	57,816	$	24,911	$	21,003	$	16,735	$	(5,240	)	$	361,037
2007:
Real estate investments, at cost:
Operating properties	$	1,682,840	$	1,302,833	$	663,503	$	348,310	$	236,959	$	579,120	$	—		$	4,813,565
Construction-in-progress		—		—		—		—		—		—		332,380			332,380
Land inventory		—		—		—		—		—		—		70,297			70,297
Total revenue		274,246		130,731		101,927		31,693		37,874		30,141		(1,801	)		604,811
Property operating expenses, real estate taxes and third party management expenses		96,366		44,963		46,911		10,655		16,407		10,942		4,293			230,537
Net operating income	$	177,880	$	85,768	$	55,016	$	21,038	$	21,467	$	19,199	$	(6,094	)	$	374,274

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Net operating income is defined as total revenue less property operating expenses, real estate taxes and third party management expenses. Segment net operating income includes revenue, real estate taxes and property operating expenses directly related to operation of the properties within the respective geographical region. Segment net operating income excludes property level depreciation and amortization, revenue and expenses directly associated with third party real estate management services, expenses associated with corporate administrative support services, and inter-company eliminations. Below is a reconciliation of consolidated net operating income to consolidated income (loss) from continuing operations:

	Year Ended December 31,
	2009			2008			2007
	(amounts in thousands)
Consolidated net operating income	$	347,834		$	361,037		$	374,274
Less:
Interest expense		(135,740	)		(146,646	)		(161,150	)
Deferred financing costs		(5,864	)		(5,450	)		(4,496	)
Loss on settlement of treasury lock agreements		—			—			(3,698	)
Depreciation and amortization		(208,590	)		(202,043	)		(219,553	)
Administrative expenses		(20,821	)		(23,002	)		(27,932	)
Provision for impairment on land inventory		—			(10,841	)		—
Recognized Hedge Activity		(916	)		—			—
Plus:
Interest income		2,500			1,839			4,014
Equity in income of real estate ventures		4,069			8,447			6,955
Net gain on sales of interests in depreciated real estate		—			—			40,919
Net (loss) gain on sales of interests in undepreciated real estate		—			(24	)		—
Gain on early extinguishment of debt		23,176			18,105			—
Income (loss) from continuing operations		5,648			1,422			9,333
Income from discontinued operations		2,441			37,103			46,002
Net income	$	8,089		$	38,525		$	55,335

19.OPERATING LEASES

The Company leases properties to tenants under operating leases with various expiration dates extending to 2025. Minimum future rentals on non-cancelable leases at December 31, 2009 are as follows (in thousands):

Year	Minimum Rent
2010	$	473,953
2011		421,120
2012		358,097
2013		309,052
2014		260,157
Thereafter		1,010,618

Total minimum future rentals presented above do not include amounts to be received as tenant reimbursements for operating costs.

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20.COMMITMENTS AND CONTINGENCIES

Legal Proceedings

The Company is involved from time to time in litigation on various matters, including disputes with tenants 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 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, the Company has funded required leasing and capital reserve accounts for the benefit of the mortgage lenders with letters-of-credit which totaled $13.9 million at December 31, 2009. 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. At December 31, 2009, the Company guaranteed a $51.0 million holdback from the Credit Facility in connection with its historic tax credit transaction. Any excess cash is included in cash and cash equivalents.

Ground Rent

Future minimum rental payments under the terms of all non-cancelable ground leases under which the Company is the lessee are expensed on a straight-line basis regardless of when payments are due. Minimum future rental payments on non-cancelable leases at December 31, 2009 are as follows (in thousands):

2010	$	2,318
2011		2,318
2012		2,318
2013		2,318
2014		2,409
Thereafter		285,913

One of the land leases for a property (currently under development) provides for contingent rent participation by the lessor in certain capital transactions and net operating cash flows of the property after certain returns are achieved by 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 nor any reimbursed expenses.

Other Commitments or Contingencies

As part of the Company’s September 2004 acquisition of a portfolio of properties from The Rubenstein Company (which the Company refers to as the TRC acquisition), the Company acquired its interest in Two Logan Square, a 702,006 square foot office building in Philadelphia, primarily through its ownership of a second and third mortgage secured by this property. This property is consolidated as the borrower is a variable interest entity and the Company, through its ownership of the second and third mortgages, is the primary beneficiary. The Company currently does not expect to take title to Two Logan Square until, at the earliest, September 2019. If the Company takes fee title to Two Logan Square upon a foreclosure of its mortgage, the Company has agreed to pay an unaffiliated third party that holds a residual interest in the fee owner of this property an amount equal to $0.6 million (if the Company must pay a state and local transfer upon taking title) and $2.9 million (if no transfer tax is payable upon the transfer).

The Company is currently being audited by the Internal Revenue Service for its 2004 tax year. The audit concerns the tax treatment of the transaction in September 2004 in which the Company acquired a portfolio of properties through the acquisition of a limited partnership. At this time it does not appear that an adjustment if any, would result in a material tax liability for the Company. However, an adjustment could raise a question as to whether a contributor of partnership interests in the 2004 transaction could assert a claim against the Company under the tax protection agreement entered into as part of the transaction.

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As part of the Company’s 2006 acquisition of Prentiss Properties Trust, the TRC acquisition in 2004 and several of our other transactions, the Company agreed not to sell certain of the properties it acquired in transactions that would trigger taxable income to the former owners. In the case of the TRC acquisition, the Company agreed not to sell acquired properties for periods up to 15 years from the date of the TRC acquisition as follows at December 31, 2009: One Rodney Square and 130/150/170 Radnor Financial Center (January 2015); and One Logan Square, Two Logan Square and Radnor Corporate Center (January 2020). In the Prentiss acquisition, the Company assumed the obligation of Prentiss not to sell Concord Airport Plaza before March 2018. The Company’s agreements generally provide that it may dispose of the subject properties only in transactions that qualify as tax-free exchanges under Section 1031 of the Internal Revenue Code or in other tax deferred transactions. If the Company were to sell a restricted property before expiration of the restricted period in a non-exempt transaction, the Company may be required to make significant payments to the parties who sold it the applicable property on account of tax liabilities attributed to them.

The Company invests in its properties and regularly incurs capital expenditures in the ordinary course 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.

During 2008, in connection with the development of the PO Box/IRS and Cira Garage projects, the Company entered into a historic tax credit and new market tax credit arrangement, respectively. The Company is required to be in compliance with various laws, regulations and contractual provisions that apply to its historic and new market tax credit arrangements. Non-compliance with applicable requirements could result in projected tax benefits not being realized and require a refund or reduction of investor capital contributions, which are reported as deferred income in the Company’s consolidated balance sheet, until such time as its obligation to deliver tax benefits is relieved. The remaining compliance periods for its tax credit arrangements runs through 2015. The Company does not anticipate that any material refunds or reductions of investor capital contributions will be required in connection with these arrangements. Refer to Note 16 for further discussion on the tax credit transactions.

On June 29, 2009, the Company entered into a forward financing commitment to borrow up to $256.5 million under two separate loans which are secured by mortgages on the Post Office project, the garage project and by the leases of space at these facilities upon the completion of these projects (See Note 7). In order for funding to occur, certain conditions must be met by the Company and primarily relate to the completion of the projects and the commencement of the rental payments from the respective leases on these properties. The expected funding date is scheduled on August 26, 2010 which is also the anticipated completion date of the projects. In the event the conditions were not met, the Company has the right to extend the funding date by paying an extension fee amounting to $1.8 million for each 30 day extension within the allowed two year extension period. In addition, the Company can also voluntarily elect to terminate the loans during the forward period including the extension period by paying a termination fee. The Company is also subject to the termination fee if the conditions were not met on the final advance date. The termination fee is calculated as the greater of the 0.5% of the total available principal to be funded or the difference between the present value of the scheduled interest and principal payments (based on the principal amount to be funded and the then 20-year treasury rate plus 50 basis points) from the funding date through the loans’ maturity date and the amount to be funded. In addition, deferred financing costs related to these loans will be accelerated if the Company chose to terminate the forward financing commitment.

21.SUBSEQUENT EVENT

On January 14, 2010, the Company sold an office property containing 121,815 net rentable square feet located in Richmond, Virginia, for a sales price of $10.9 million.

The Company has evaluated subsequent events.

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22. SUMMARY OF QUARTERLY RESULTS (UNAUDITED)

The following is a summary of quarterly financial information as of and for the years ended December 31, 2009 and 2008 (in thousands, except per share data):

	1st			2nd		3rd			4th
	Quarter			Quarter		Quarter (a)			Quarter (a)
2009:
Total revenue	$	146,917		$	142,074	$	146,593		$	146,635
Net income		(873	)		5,780		7,309			(4,127	)
Income allocated to Common Shares		(778	)		5,612		7,148			(3,956	)
Basic earnings per Common Share	$	(0.03	)	$	0.03	$	0.04		$	(0.04	)
Diluted earnings per Common Share	$	(0.03	)	$	0.03	$	0.04		$	(0.04	)
2008:
Total revenue	$	148,457		$	147,516	$	144,338		$	149,110
Net income		13,597			8,213		1,746			14,969
Income allocated to Common Shares		13,070			7,912		1,697			14,538
Basic earnings per Common Share	$	0.13		$	0.07	$	(0.01	)	$	0.14
Diluted earnings per Common Share	$	0.13		$	0.06	$	(0.01	)	$	0.14

(a) The fourth quarter net income includes a $0.9 million out of period adjustment pertaining to the Company’s incorrect recording during the quarter ended September 30, 2009 of an amount released from Accumulated Other Comprehensive Income as a charge rather than a credit to recognized hedge activity. The amount released of $0.4 million relates to a forecasted transaction which was no longer expected to occur. The reversal of the entry resulted in the $0.9 million of income in the quarter ended December 31, 2009. In addition, the fourth quarter of 2009 contains an out of period depreciation adjustment of $1.3 million relating to tenant assets that should have been written off over the second and third quarters of 2009 amounting to $0.6 million and $0.7 million, respectively.

The summation of quarterly earnings per share amounts do not necessarily equal the full year amounts. The above information was updated to reclassify amounts previously reported to reflect discontinued operations and the retrospective adoption of the new accounting standards. See Note 2 and Note 10.

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Brandywine Realty Trust
Schedule II

Valuation and Qualifying Accounts
(in thousands)

	Balance at						Balance
	Beginning						at End
Description	of Period		Additions		Deductions (1)		of Period
Allowance for doubtful accounts:
Year ended December 31, 2009	$	15,474	$	2,596	$	1,707	$	16,363
Year ended December 31, 2008	$	10,162	$	6,900	$	1,588	$	15,474
Year ended December 31, 2007	$	9,311	$	2,147	$	1,296	$	10,162

(1) Deductions represent amounts that the Company had fully reserved for in prior periods and pursuit of collection of such amounts was ceased during the period.

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BRANDYWINE REALTY TRUST
SCHEDULE III
Real Estate and Accumulated Depreciation — December 31, 2009
(in thousands)

												Gross Amount at Which Carried
					Initial Cost							December 31, 2009
									Net
									Improvements									Accumulated
									(Retirements)									Depreciation at
			Encumberances at				Building and		Since					Building and				December 31,		Year of		Year		Depreciable
	City	State	December 31, 2009		Land		Improvements		Acquisition			Land		Improvements		Total (a)		2009 (b)		Construction		Acquired		Life
PENNSYLVANIA
2929 Arch Street	Philadelphia	PA		—		—		208,570		17,954			—		226,524		226,524		36,427		2005		N/A		40
130 North 18th Street	Philadelphia	PA		89,800		14,496		107,736		9,874			14,473		117,633		132,106		20,451		1983		2004		23
100 North 18th Street	Philadelphia	PA		60,000		16,066		100,255		3,940			16,066		104,195		120,261		17,168		1988		2004		33
150 Radnor Chester Road	Radnor	PA		—		11,925		36,986		13,064			11,897		50,078		61,975		10,691		1983		2004		29
555 Lancaster Avenue	Radnor	PA		—		8,014		16,508		25,497			8,609		41,410		50,019		10,236		1973		2004		24
One Radnor Corporate Center	Radnor	PA		—		7,323		28,613		11,526			7,323		40,139		47,462		6,107		1998		2004		29
201 King of Prussia Road	Radnor	PA		—		8,956		29,811		5,101			8,949		34,918		43,868		8,466		2001		2004		25
401 Plymouth Road	Plymouth Meeting	PA		—		6,198		16,131		15,222			6,199		31,353		37,551		7,442		2001		2000		40
Four Radnor Corporate Center	Radnor	PA		—		5,406		21,390		8,976			5,705		30,067		35,772		6,300		1995		2004		30
Five Radnor Corporate Center	Radnor	PA		—		6,506		25,525		1,892			6,578		27,345		33,923		4,678		1998		2004		38
101 West Elm Street	W. Conshohocken	PA		—		6,251		25,209		1,031			6,251		26,239		32,491		3,261		1999		2005		40
4000 Chemical Road	Plymouth Meeting	PA		—		4,373		24,546		1,295			4,373		25,841		30,214		1,157		2007		N/A		40
Three Radnor Corporate Center	Radnor	PA		—		4,773		17,961		1,250			4,791		19,192		23,984		3,766		1998		2004		29
640 Freedom Business Center	King Of Prussia	PA		—		4,222		16,891		2,689			4,222		19,580		23,802		6,628		1991		1998		40
555 Croton Road	King of Prussia	PA		—		4,486		17,943		1,026			4,486		18,969		23,455		4,261		1999		2001		40
400 Berwyn Park	Berwyn	PA		—		2,657		4,462		15,790			2,657		20,252		22,909		6,473		1999		1999		40
630 Allendale Road	King of Prussia	PA		—		2,836		4,028		15,499			2,636		19,727		22,363		7,289		2000		2000		40
101 Lindenwood Drive	Malvern	PA		—		4,152		16,606		1,324			4,152		17,931		22,082		4,334		1988		2001		40
52 Swedesford Square	East Whiteland Twp.	PA		—		4,241		16,579		1,002			4,241		17,581		21,822		5,771		1988		1998		40
600 West Germantown Pike	Plymouth Meeting	PA		10,626		3,652		15,288		1,456			3,652		16,744		20,396		3,685		1986		2002		40
630 West Germantown Pike	Plymouth Meeting	PA		10,652		3,558		14,743		2,094			3,558		16,836		20,395		3,376		1988		2002		40
980 Harvest Drive	Blue Bell	PA		—		3,304		16,960		0			3,304		16,961		20,264		5,098		1988		2002		40
Two Radnor Corporate Center	Radnor	PA		—		3,937		15,484		810			3,942		16,289		20,231		3,144		1998		2004		29
610 West Germantown Pike	Plymouth Meeting	PA		10,682		3,651		14,514		1,921			3,651		16,434		20,086		3,588		1987		2002		40
620 West Germantown Pike	Plymouth Meeting	PA		10,682		3,572		14,435		1,417			3,572		15,851		19,424		3,843		1990		2002		40
200 Barr Harbour Drive	Conshohocken	PA		13,557		2,827		15,525		163			2,827		15,688		18,515		6,116		1999		2004		40
1050 Westlakes Drive	Berwyn	PA		—		2,611		10,445		5,046			2,611		15,491		18,102		4,376		1984		1999		40
1 West Elm Street	W. Conshohocken	PA		—		3,557		14,249		—			3,557		14,347		17,904		1,526		1999		2005		40
1200 Swedesford Road	Berwyn	PA		3,255		2,595		11,809		3,370			2,595		15,178		17,774		2,189		1994		2001		40
181 Washington Street	Conshohocken	PA		10,158		2,672		14,221		812			2,673		15,032		17,705		6,688		1998		2004		40
300 Berwyn Park	Berwyn	PA		10,506		2,206		13,422		1,983			2,206		15,405		17,611		5,478		1989		1997		40
620 Freedom Business Center	King Of Prussia	PA		—		2,770		11,014		3,295			2,770		14,309		17,079		5,242		1986		1998		40
1000 First Avenue	King Of Prussia	PA		—		2,772		10,936		3,177			2,772		14,113		16,885		4,494		1980		1998		40
1060 First Avenue	King Of Prussia	PA		—		2,712		10,953		2,609			2,712		13,562		16,274		4,279		1987		1998		40
301 Lindenwood Drive	Malvern	PA		—		2,729		10,915		1,955			2,729		12,870		15,599		3,419		1984		2001		40
1040 First Avenue	King Of Prussia	PA		—		2,860		11,282		1,047			2,860		12,329		15,189		4,192		1985		1998		40
595 East Swedesford Road	Wayne	PA		—		2,729		10,917		1,491			2,729		12,408		15,137		2,063		1998		2003		40
630 Freedom Business Center	King Of Prussia	PA		—		2,773		11,144		978			2,773		12,122		14,895		4,203		1989		1998		40
1020 First Avenue	King Of Prussia	PA		—		2,168		8,576		4,118			2,168		12,693		14,862		3,895		1984		1998		40
130 Radnor Chester Road	Radnor	PA		—		2,573		8,338		3,692			2,567		12,035		14,603		1,830		1983		2004		25
170 Radnor Chester Road	Radnor	PA		—		2,514		8,147		3,340			2,509		11,493		14,001		2,246		1983		2004		25
200 Berwyn Park	Berwyn	PA		7,254		1,533		9,460		2,351			1,533		11,811		13,344		4,564		1987		1997		40
575 East Swedesford Road	Wayne	PA		—		2,178		8,712		1,856			2,178		10,568		12,746		1,842		1985		2003		40
1180 Swedesford Road	Berwyn	PA		—		2,086		8,342		1,237			2,086		9,580		11,665		2,471		1987		2001		40
610 Freedom Business Center	King Of Prussia	PA		—		2,017		8,070		722			2,017		8,792		10,809		3,086		1985		1998		40
565 East Swedesford Road	Wayne	PA		—		1,872		7,489		1,201			1,872		8,690		10,562		1,688		1984		2003		40
1160 Swedesford Road	Berwyn	PA		—		1,781		7,124		1,245			1,781		8,369		10,150		2,248		1986		2001		40
100 Berwyn Park	Berwyn	PA		5,580		1,180		7,290		963			1,180		8,253		9,433		3,135		1986		1997		40
925 Harvest Drive	Blue Bell	PA		—		1,671		6,606		1,128			1,671		7,734		9,405		2,775		1990		1998		40
650 Park Avenue	King Of Prussia	PA		—		1,916		4,378		2,530			1,916		6,908		8,824		2,950		1968		1998		40
426 Lancaster Avenue	Devon	PA		—		1,689		6,756		369			1,689		7,126		8,814		2,489		1990		1998		40
1100 Cassett Road	Berwyn	PA		—		1,695		6,779		(0	)		1,695		6,779		8,474		1,483		1997		2001		40
14 Campus Boulevard	Newtown Square	PA		6,725		2,244		4,217		1,734			2,244		5,951		8,195		1,648		1998		1998		40
500 North Gulph Road	King Of Prussia	PA		—		1,303		5,201		1,564			1,303		6,765		8,068		2,661		1979		1996		40
920 Harvest Drive	Blue Bell	PA		—		1,209		6,595		(245	)		1,208		6,351		7,559		2,398		1990		1998		40
2240/2250 Butler Pike	Plymouth Meeting	PA		—		1,104		4,627		1,666			1,104		6,293		7,397		2,811		1984		1996		40
One Progress Drive	Horsham	PA		—		1,399		5,629		230			1,399		5,859		7,258		2,360		1986		1996		40
585 East Swedesford Road	Wayne	PA		—		1,350		5,401		358			1,350		5,758		7,109		902		1998		2003		40
429 Creamery Way	Exton	PA		—		1,368		5,471		19			1,368		5,490		6,858		1,244		1996		2001		40
741 First Avenue	King Of Prussia	PA		—		1,287		5,151		219			1,287		5,369		6,657		1,956		1966		1998		40
440 Creamery Way	Exton	PA		—		982		3,927		1,717			982		5,644		6,626		1,508		1991		2001		40
412 Creamery Way	Exton	PA		—		1,195		4,779		503			1,195		5,282		6,477		1,296		1999		2001		40
875 First Avenue	King Of Prussia	PA		—		618		2,473		3,302			618		5,775		6,393		2,086		1966		1998		40
17 Campus Boulevard	Newtown Square	PA		4,699		1,108		5,155		46			1,108		5,201		6,309		2,083		2001		1997		40
479 Thomas Jones Way	Exton	PA		—		1,075		4,299		808			1,075		5,107		6,182		1,231		1988		2001		40
500 Enterprise Drive	Horsham	PA		—		1,303		5,188		(446	)		1,303		4,741		6,045		1,804		1990		1996		40
11 Campus Boulevard	Newtown Square	PA		4,610		1,112		4,067		802			1,112		4,869		5,981		1,429		1998		1999		40
Philadelphia Marine Center	Philadelphia	PA		—		532		2,196		3,249			628		5,349		5,977		1,241	Various			1998		40
467 Creamery Way	Exton	PA		—		906		3,623		1,365			906		4,988		5,894		1,171		1988		2001		40

F-43

BRANDYWINE REALTY TRUST
SCHEDULE III
Real Estate and Accumulated Depreciation — December 31, 2009
(in thousands)

												Gross Amount at Which Carried
					Initial Cost							December 31, 2009
									Net
									Improvements									Accumulated
									(Retirements)									Depreciation at
			Encumberances at				Building and		Since					Building and				December 31,		Year of		Year		Depreciable
	City	State	December 31, 2009		Land		Improvements		Acquisition			Land		Improvements		Total (a)		2009 (b)		Construction		Acquired		Life
300 Lindenwood Drive	Malvern	PA		—		848		3,394		1,362			849		4,756		5,604		1,110		1991		2001		40
436 Creamery Way	Exton	PA		—		994		3,978		555			994		4,532		5,527		1,112		1991		2001		40
751-761 Fifth Avenue	King Of Prussia	PA		—		1,097		4,391		31			1,097		4,422		5,519		1,505		1967		1998		40
15 Campus Boulevard	Newtown Square	PA		4,800		1,164		3,896		408			1,164		4,304		5,468		1,012		2002		2000		40
600 Park Avenue	King Of Prussia	PA		—		1,012		4,048		385			1,012		4,433		5,445		1,443		1964		1998		40
620 Allendale Road	King Of Prussia	PA		—		1,020		3,839		514			1,020		4,353		5,373		1,387		1961		1998		40
442 Creamery Way	Exton	PA		—		894		3,576		684			894		4,260		5,154		1,100		1991		2001		40
100 Arrandale Boulevard	Exton	PA		—		970		3,878		274			970		4,152		5,122		983		1997		2001		40
18 Campus Boulevard	Newtown Square	PA		3,615		787		3,312		461			787		3,773		4,560		1,676		1990		1996		40
2260 Butler Pike	Plymouth Meeting	PA		—		661		2,727		1,103			662		3,829		4,491		1,665		1984		1996		40
486 Thomas Jones Way	Exton	PA		—		806		3,256		339			806		3,595		4,401		1,360		1990		1996		40
1700 Paoli Pike	Malvern	PA		—		458		559		3,281			488		3,810		4,298		1,017		2000		2000		40
120 West Germantown Pike	Plymouth Meeting	PA		—		685		2,773		652			685		3,425		4,110		1,518		1984		1996		40
457 Creamery Way	Exton	PA		—		777		3,107		25			777		3,132		3,909		699		1990		2001		40
1336 Enterprise Drive	West Goshen	PA		—		731		2,946		47			731		2,993		3,724		1,133		1989		1997		40
680 Allendale Road	King Of Prussia	PA		—		689		2,756		9			689		2,765		3,454		946		1962		1998		40
456 Creamery Way	Exton	PA		—		635		2,548		(48	)		635		2,500		3,135		1,010		1987		1996		40
630 Clark Avenue	King Of Prussia	PA		—		547		2,190		0			547		2,190		2,737		746		1960		1998		40
140 West Germantown Pike	Plymouth Meeting	PA		—		481		1,976		264			482		2,239		2,721		934		1984		1996		40
468 Thomas Jones Way	Exton	PA		—		526		2,112		74			527		2,185		2,712		926		1990		1996		40
481 John Young Way	Exton	PA		—		496		1,983		14			496		1,997		2,493		435		1997		2001		40
100 Lindenwood Drive	Malvern	PA		—		473		1,892		78			473		1,970		2,443		452		1985		2001		40
640 Allendale Road	King of Prussia	PA		—		439		432		1,480			439		1,912		2,351		445		2000		2000		40
660 Allendale Road	King of Prussia	PA		—		396		3,343		(1,637	)		396		1,706		2,102		821		1962		1998		40
200 Lindenwood Drive	Malvern	PA		—		324		1,295		1			324		1,296		1,620		284		1984		2001		40
351 Plymouth Road	Plymouth Meeting	PA		—		1,043		555		—			1,043		555		1,598		66		N/A		2000		40
111 Arrandale Road	Exton	PA		—		262		1,048		125			262		1,173		1,435		287		1996		2001		40
922 Swedesford Road	Berwyn	PA		—		218		—		(218	)		—		—		—		—		N/A		N/A		40
METROPOLITAN WASHINGTON, D.C.
1676 International Drive	Mclean	VA		62,713		18,437		97,538		1,031			18,785		98,221		117,006		8,591		1999		2006		55
2340 Dulles Corner Boulevard	Herndon	VA		—		16,345		65,379		18,370			16,129		83,965		100,094		10,569		1987		2006		40
13820 Sunrise Valley Drive	Herndon	VA		—		11,082		47,290		19,687			11,082		66,977		78,059		1,931		2007		N/A		40
7101 Wisconsin Avenue	Bethesda	MD		—		9,634		48,402		4,825			9,816		53,045		62,860		6,396		1975		2006		45
3130 Fairview Park Drive	Falls Church	VA		—		6,576		51,605		2,262			6,700		53,743		60,443		4,739		1999		2006		53
2291 Wood Oak Drive	Herndon	VA		—		8,243		52,413		(741	)		8,782		51,133		59,915		4,610		1999		2006		55
2355 Dulles Corner Boulevard	Herndon	VA		—		10,365		43,876		5,245			10,365		49,121		59,486		5,514		1988		2006		40
196/198 Van Buren Street	Herndon	VA		—		7,931		43,812		7,171			8,348		50,565		58,914		6,513		1991		2006		53
2251 Corporate Park Drive	Herndon	VA		—		11,472		45,893		42			11,472		45,936		57,407		3,636		2000		2006		40
2411 Dulles Corner Park	Herndon	VA		—		7,279		46,340		3,654			7,417		49,856		57,273		4,630		1990		2006		50
1900 Gallows Road	Vienna	VA		—		7,797		47,817		(897	)		7,944		46,773		54,717		3,680		1989		2006		52
3141 Fairview Park Drive	Falls Church	VA		—		5,918		40,981		841			6,050		41,691		47,741		4,573		1988		2006		51
13880 Dulles Corner Lane	Herndon	VA		—		7,236		39,213		640			7,373		39,716		47,089		4,728		1997		2006		55
6600 Rockledge Drive	Bethesda	MD		—		—		37,421		8,329			—		45,750		45,750		4,819		1981		2006		50
2121 Cooperative Way	Herndon	VA		—		5,598		38,639		219			5,795		38,661		44,456		3,536		2000		2006		54
8260 Greensboro Drive	Mclean	VA		33,296		7,952		33,964		407			8,102		34,221		42,323		3,794		1980		2006		52
2273 Research Boulevard	Rockville	MD		14,180		5,167		31,110		3,128			5,237		34,168		39,405		4,552		1999		2006		45
2201 Cooperative Way	Herndon	VA		—		4,809		34,093		(1,785	)		4,809		32,309		37,118		2,772		1990		2006		54
2275 Research Boulevard	Rockville	MD		14,180		5,059		29,668		1,389			5,154		30,962		36,116		3,158		1990		2006		45
8521 Leesburg Pike	Vienna	VA		—		4,316		30,885		(57	)		4,397		30,746		35,143		3,276		1984		2006		51
1880 Campus Commons Drive	Reston	VA		—		6,164		28,114		86			6,281		28,083		34,364		2,466		1985		2006		52
2277 Research Boulevard	Rockville	MD		13,163		4,649		26,952		(238	)		4,733		26,629		31,362		2,451		1986		2006		45
12015 Lee Jackson Memorial Highway	Fairfax	VA		—		3,770		22,895		2,188			3,842		25,012		28,853		3,605		1985		2006		42
11720 Beltsville Drive	Beltsville	MD		—		3,831		16,661		4,660			3,904		21,248		25,151		2,913		1987		2006		46
11781 Lee Jackson Memorial Highway	Fairfax	VA		—		3,246		19,836		(229	)		3,307		19,546		22,853		2,611		1982		2006		40
13825 Sunrise Valley Drive	Herndon	VA		—		3,794		19,365		(1,376	)		3,866		17,917		21,783		1,590		1989		2006		46
11700 Beltsville Drive	Beltsville	MD		—		2,808		12,081		743			2,863		12,769		15,632		1,707		1981		2006		46
4401 Fair Lakes Court	Fairfax	VA		—		1,569		11,982		(142	)		1,599		11,810		13,409		1,171		1988		2006		52
11710 Beltsville Drive	Beltsville	MD		—		2,278		11,100		(709	)		2,321		10,348		12,669		1,359		1987		2006		46
3141 Fairview Park Drive — I	Falls Church	VA		—		733		4,939		(100	)		733		4,838		5,572		386		1988		2006		51
3141 Fairview Park Drive — II	Falls Church	VA		—		297		1,964		0			297		1,964		2,261		157		1988		2006		51
11740 Beltsville Drive	Bethesda	MD		—		198		870		18			202		884		1,086		75		1987		2006		46
NEW JERSEY/DELAWARE
920 North King Street	Wilmington	DE		—		6,141		21,140		1,081			6,141		22,221		28,362		4,529		1989		2004		30
1009 Lenox Drive	Lawrenceville	NJ		—		4,876		19,284		4,020			5,118		23,063		28,180		7,914		1989		1998		40
300 Delaware Avenue	Wilmington	DE		—		6,368		13,739		2,614			6,369		16,353		22,721		4,168		1989		2004		23
525 Lincoln Drive West	Marlton	NJ		—		3,727		17,620		1,009			3,727		18,630		22,356		4,090		1986		2004		40
700 East Gate Drive	Mt. Laurel	NJ		—		3,569		14,436		2,153			3,569		16,590		20,158		5,362		1984		1998		40
989 Lenox Drive	Lawrenceville	NJ		—		3,701		14,802		1,481			3,850		16,134		19,984		2,839		1984		2003		40
10000 Midlantic Drive	Mt. Laurel	NJ		—		3,206		12,857		2,613			3,206		15,470		18,676		6,307		1990		1997		40
One Righter Parkway	Wilmington	DE		9,227		2,545		10,195		5,456			2,545		15,651		18,196		5,871		1989		1996		40
Main Street — Plaza 1000	Voorhees	NJ		—		2,732		10,942		4,127			2,732		15,069		17,801		6,463		1988		1997		40
2000 Lenox Drive	Lawrenceville	NJ		10,496		2,291		12,221		3,210			2,684		15,038		17,722		6,400		2000		2000		40

F-44

BRANDYWINE REALTY TRUST
SCHEDULE III
Real Estate and Accumulated Depreciation — December 31, 2009
(in thousands)

												Gross Amount at Which Carried
					Initial Cost							December 31, 2009
									Net
									Improvements									Accumulated
									(Retirements)									Depreciation at
			Encumberances at				Building and		Since					Building and				December 31,		Year of		Year		Depreciable
	City	State	December 31, 2009		Land		Improvements		Acquisition			Land		Improvements		Total (a)		2009 (b)		Construction		Acquired		Life
Two Righter Parkway	Wilmington	DE		—		2,802		11,217		3,460			2,802		14,677		17,479		955		1987		2001		40
15000 Midlantic Drive	Mt. Laurel	NJ		—		3,061		12,254		1,106			3,061		13,360		16,421		4,889		1991		1997		40
997 Lenox Drive	Lawrenceville	NJ		7,917		2,410		9,700		4,140			2,540		13,710		16,250		4,021		1987		1998		40
993 Lenox Drive	Lawrenceville	NJ		9,792		2,811		17,996		(5,484	)		2,960		12,363		15,323		4,372		1985		1998		40
1200 Lenox Drive	Lawrenceville	NJ		—		1,071		12,967		851			1,071		13,817		14,889		549		2007		N/A		40
1000 Atrium Way	Mt. Laurel	NJ		—		2,061		8,180		3,962			2,061		12,142		14,203		3,848		1989		1997		40
1120 Executive Boulevard	Marlton	NJ		—		2,074		8,415		2,239			2,074		10,654		12,728		4,465		1987		1997		40
1000 Howard Boulevard	Mt. Laurel	NJ		—		2,297		9,288		965			2,297		10,253		12,550		4,151		1988		1997		40
400 Commerce Drive	Newark	DE		—		2,528		9,220		733			2,528		9,953		12,481		2,262		1997		2002		40
220 Lake Drive East	Cherry Hill	NJ		—		2,144		8,798		878			2,144		9,676		11,820		2,417		1988		2001		40
200 Lake Drive East	Cherry Hill	NJ		—		2,069		8,275		1,474			2,069		9,749		11,818		2,752		1989		2001		40
457 Haddonfield Road	Cherry Hill	NJ		11,774		2,142		9,120		329			2,142		9,449		11,591		4,092		1990		1996		40
2000 Midlantic Drive	Mt. Laurel	NJ		10,717		2,202		8,823		60			2,203		8,882		11,085		3,270	��	1989		1997		40
10 Lake Center Drive	Marlton	NJ		—		1,880		7,521		1,619			1,880		9,140		11,020		2,534		1989		2001		40
100 Lenox Drive	Lawrenceville	NJ		—		—		—		10,771			1,134		9,637		10,771		539		1977		1999		N/A
701 East Gate Drive	Mt. Laurel	NJ		—		1,736		6,877		1,005			1,736		7,882		9,618		2,785		1986		1998		40
210 Lake Drive East	Cherry Hill	NJ		—		1,645		6,579		759			1,645		7,338		8,983		1,906		1986		2001		40
308 Harper Drive	Moorestown	NJ		—		1,643		6,663		219			1,644		6,881		8,525		2,209		1976		1998		40
305 Fellowship Drive	Mt. Laurel	NJ		—		1,421		5,768		1,265			1,421		7,033		8,454		2,466		1980		1998		40
307 Fellowship Drive	Mt. Laurel	NJ		—		1,565		6,342		449			1,565		6,792		8,356		2,259		1981		1998		40
303 Fellowship Drive	Mt. Laurel	NJ		—		1,493		6,055		652			1,494		6,707		8,200		2,194		1979		1998		40
309 Fellowship Drive	Mt. Laurel	NJ		—		1,518		6,154		397			1,518		6,551		8,069		2,087		1982		1998		40
1000 Lenox Drive	Lawrenceville	NJ		—		1,174		4,696		2,180			1,244		6,806		8,050		2,033		1982		2002		40
1000 Bishops Gate	Mt. Laurel	NJ		—		934		6,287		—			934		6,883		7,817		1,612		2005		2000		40
9000 Midlantic Drive	Mt. Laurel	NJ		5,926		1,472		5,895		95			1,472		5,990		7,462		2,230		1989		1997		40
6 East Clementon Road	Gibbsboro	NJ		—		1,345		5,366		350			1,345		5,716		7,061		2,015		1980		1997		40
Three Greentree Centre	Marlton	NJ		—		323		6,024		607			324		6,631		6,954		4,930		1984		1986		40
100 Commerce Drive	Newark	DE		—		1,160		4,633		849			1,160		5,482		6,642		2,139		1989		1997		40
200 Commerce Drive	Newark	DE		—		911		4,414		1,018			911		5,432		6,343		1,340		1998		2002		40
30 Lake Center Drive	Marlton	NJ		—		1,043		4,171		912			1,043		5,084		6,126		1,310		1986		2001		40
161 Gaither Drive	Mount Laurel	NJ		—		1,016		4,064		714			1,016		4,778		5,794		1,183		1987		2001		40
Two Greentree Centre	Marlton	NJ		—		264		4,693		694			264		5,387		5,651		3,616		1983		1986		40
One Greentree Centre	Marlton	NJ		—		345		4,440		590			345		5,030		5,375		3,365		1982		1986		40
Two Eves Drive	Marlton	NJ		—		818		3,461		43			818		3,503		4,322		1,326		1987		1997		40
4000 Midlantic Drive	Mt. Laurel	NJ		4,133		714		5,085		(1,524	)		714		3,561		4,275		1,412		1998		1997		40
20 East Clementon Road	Gibbsboro	NJ		—		769		3,055		281			769		3,336		4,105		1,201		1986		1997		40
Five Eves Drive	Marlton	NJ		—		703		2,819		491			703		3,310		4,013		1,303		1986		1997		40
8000 Lincoln Drive	Marlton	NJ		—		606		2,887		303			606		3,189		3,796		1,442		1997		1996		40
304 Harper Drive	Moorestown	NJ		—		657		2,674		418			657		3,092		3,749		1,076		1975		1998		40
Main Street — Piazza	Voorhees	NJ		—		696		2,802		151			696		2,953		3,649		1,158		1990		1997		40
815 East Gate Drive	Mt. Laurel	NJ		—		636		2,584		307			636		2,891		3,527		995		1986		1998		40
817 East Gate Drive	Mt. Laurel	NJ		—		611		2,426		360			611		2,785		3,397		886		1986		1998		40
Four B Eves Drive	Marlton	NJ		—		588		2,369		381			588		2,749		3,338		1,148		1987		1997		40
Four A Eves Drive	Marlton	NJ		—		539		2,168		142			539		2,310		2,849		876		1987		1997		40
Main Street — Promenade	Voorhees	NJ		—		531		2,052		55			532		2,107		2,638		805		1988		1997		40
10 Foster Avenue	Gibbsboro	NJ		—		244		971		265			244		1,236		1,480		492		1983		1997		40
7 Foster Avenue	Gibbsboro	NJ		—		231		921		94			231		1,014		1,246		391		1983		1997		40
50 East Clementon Road	Gibbsboro	NJ		—		114		964		3			114		967		1,081		338		1986		1997		40
4 Foster Avenue	Gibbsboro	NJ		—		183		726		37			183		763		946		280		1974		1997		40
2 Foster Avenue	Gibbsboro	NJ		—		185		730		24			185		754		939		269		1974		1997		40
1 Foster Avenue	Gibbsboro	NJ		—		93		364		63			93		428		520		157		1972		1997		40
5 U.S. Avenue	Gibbsboro	NJ		—		21		81		3			21		84		105		29		1987		1997		40
5 Foster Avenue	Gibbsboro	NJ		—		9		32		26			9		58		67		19		1968		1997		40
RICHMOND
300 Arboretum Place	Richmond	VA		12,156		5,450		21,892		3,089			5,450		24,982		30,431		7,830		1988		1998		40
7501 Boulders View Drive	Richmond	VA		—		4,669		19,699		474			4,925		19,917		24,842		1,234		1990		2007		40
7300 Beaufont Springs Drive	Richmond	VA		—		4,672		19,689		306			4,922		19,745		24,667		1,196		2000		2007		40
6800 Paragon Place	Richmond	VA		—		4,552		18,414		975			4,552		19,389		23,941		1,790		1986		2006		40
6802 Paragon Place	Richmond	VA		—		2,917		11,454		1,890			2,917		13,344		16,261		3,080		1989		2002		40
1025 Boulders Parkway	Richmond	VA		—		2,574		11,297		738			2,824		11,785		14,609		836		1994		2007		40

F-45

BRANDYWINE REALTY TRUST
SCHEDULE III
Real Estate and Accumulated Depreciation — December 31, 2009
(in thousands)

												Gross Amount at Which Carried
					Initial Cost							December 31, 2009
									Net
									Improvements									Accumulated
									(Retirements)									Depreciation at
			Encumberances at				Building and		Since					Building and				December 31,		Year of		Year		Depreciable
	City	State	December 31, 2009		Land		Improvements		Acquisition			Land		Improvements		Total (a)		2009 (b)		Construction		Acquired		Life
2100-2116 West Laburnam Avenue	Richmond	VA		—		2,482		8,846		2,533			2,482		11,378		13,861		3,618		1976		1998		40
7325 Beaufont Springs Drive	Richmond	VA		—		2,344		10,377		502			2,594		10,629		13,223		672		1999		2007		40
7401 Beaufont Springs Drive	Richmond	VA		—		2,349		10,396		276			2,599		10,422		13,021		632		1998		2007		40
6806 Paragon Place	Richmond	VA		—		—		10,288		809			403		10,695		11,097		1,473		2007		2005		40
9011 Arboretum Parkway	Richmond	VA		—		1,857		7,702		877			1,857		8,579		10,436		2,799		1991		1998		40
4805 Lake Brooke Drive	Glen Allen	VA		—		1,640		6,567		1,373			1,640		7,939		9,580		2,534		1996		1998		40
4364 South Alston Avenue	Durham	NC		—		1,622		6,419		910			1,581		7,370		8,951		2,694		1985		1998		40
2511 Brittons Hill Road	Richmond	VA		—		1,202		4,820		1,863			1,202		6,683		7,885		2,329		1987		1998		40
9100 Arboretum Parkway	Richmond	VA		3,313		1,362		5,489		590			1,362		6,079		7,441		1,948		1988		1998		40
100 Gateway Centre Parkway	Richmond	VA		—		391		5,410		760			391		6,170		6,561		1,231		2001		1998		40
2812 Emerywood Parkway	Henrico	VA		—		1,069		4,281		984			1,069		5,265		6,334		1,845		1980		1998		40
9210 Arboretum Parkway	Richmond	VA		2,747		1,110		4,474		457			1,110		4,931		6,041		1,611		1988		1998		40
9200 Arboretum Parkway	Richmond	VA		2,831		985		3,973		993			985		4,966		5,951		1,389		1988		1998		40
1957 Westmoreland Street	Richmond	VA		—		1,061		4,241		224			1,061		4,465		5,526		1,389		1975		1998		40
2201-2245 Tomlynn Street	Richmond	VA		—		1,020		4,067		370			1,020		4,437		5,457		1,430		1989		1998		40
9211 Arboretum Parkway	Richmond	VA		—		582		2,433		224			582		2,658		3,239		884		1991		1998		40
2248 Dabney Road	Richmond	VA		—		512		2,049		234			512		2,283		2,795		793		1989		1998		40
2221-2245 Dabney Road	Richmond	VA		—		530		2,123		140			530		2,263		2,793		794		1994		1998		40
2244 Dabney Road	Richmond	VA		—		550		2,203		37			550		2,240		2,790		727		1993		1998		40
2212-2224 Tomlynn Street	Richmond	VA		—		502		2,014		157			502		2,170		2,673		714		1985		1998		40
2277 Dabney Road	Richmond	VA		—		507		2,034		15			507		2,049		2,556		662		1986		1998		40
2161-2179 Tomlynn Street	Richmond	VA		—		423		1,695		269			423		1,964		2,387		701		1985		1998		40
2246 Dabney Road	Richmond	VA		—		455		1,822		18			455		1,840		2,295		593		1987		1998		40
2256 Dabney Road	Richmond	VA		—		356		1,427		379			356		1,806		2,162		653		1982		1998		40
2251 Dabney Road	Richmond	VA		—		387		1,552		111			387		1,663		2,050		535		1983		1998		40
2130-2146 Tomlynn Street	Richmond	VA		—		353		1,416		194			353		1,609		1,963		578		1988		1998		40
2120 Tomlynn Street	Richmond	VA		—		281		1,125		106			281		1,231		1,512		384		1986		1998		40
2240 Dabney Road	Richmond	VA		—		264		1,059		11			265		1,068		1,334		344		1984		1998		40
Boulders Land	Richmond	VA		—		1,256		—		0			1,256		—		1,256		—	NA			2007		N/A
CALIFORNIA
155 Grand Avenue	Oakland	CA		—		13,556		54,266		3,148			13,557		57,413		70,970		3,650		1990		2007		40
5780 & 5790 Fleet Street	Carlsbad	CA		—		7,073		22,907		2,854			7,517		25,317		32,834		2,485		1999		2006		55
1200 Concord Avenue	Concord	CA		18,320		6,395		24,664		640			6,515		25,183		31,698		6,635		1984		2006		34
1220 Concord Avenue	Concord	CA		18,327		6,476		24,966		215			6,476		25,180		31,656		6,777		1984		2006		34
16870 W Bernardo Drive	San Diego	CA		—		2,979		15,896		1,407			3,155		17,127		20,282		1,745		2002		2006		56
5900 & 5950 La Place Court	Carlsbad	CA		—		3,706		11,185		1,537			3,956		12,472		16,428		1,397		1988		2006		48
5963 La Place Court	Carlsbad	CA		—		2,824		9,413		1,619			3,000		10,856		13,856		1,121		1987		2006		55
5973 Avenida Encinas	Carlsbad	CA		—		2,121		8,361		1,216			2,257		9,441		11,698		1,220		1986		2006		45
2035 Corte Del Nogal	Carlsbad	CA		—		3,261		6,077		1,026			3,500		6,865		10,364		1,034		1991		2006		39
Two Kaiser Plaza	Oakland	CA		—		7,841		—		—			7,841		—		7,841		—		N/A		2006		N/A
Oakland Lot B	Oakland	CA		—		4,342		—		(0	)		4,342		—		4,342		—		N/A		2006		N/A
AUSTIN
1250 Capital of Texas Hwy South	Austin	TX		—		5,152		37,928		3,798			5,251		41,628		46,878		5,107		1984		2006		52
1301 Mopac Expressway	Austin	TX		—		4,188		41,229		266			4,251		41,432		45,683		4,354		2001		2006		55
1601 Mopac Expressway	Austin	TX		—		3,538		34,346		2,241			3,606		36,520		40,126		5,324		2000		2006		54
1501 South Mopac Expressway	Austin	TX		—		3,698		34,912		(2,352	)		3,769		32,489		36,257		2,535		1999		2006		53
1221 Mopac Expressway	Austin	TX		—		3,290		31,548		89			3,370		31,556		34,926		3,000		2001		2006		55
3711 South Mopac Expressway — I	Austin	TX		—		1,688		21,011		2,884			1,689		23,894		25,583		103		2007		2006		40
3711 South Mopac Expressway — II	Austin	TX		—		1,688		19,229		2,640			1,689		21,868		23,557		1,524		2007		2006		40
1177 East Beltline Road	Coppell	TX		19,311		1,516		14,895		8			1,517		14,903		16,420		2,547		1998		2006		42
1801 Mopac Expressway	Austin	TX		—		1,227		10,959		469			1,250		11,405		12,655		1,114		1999		2006		53
Total:			$	551,720	$	680,832	$	3,396,822	$	434,271		$	690,441	$	3,822,177	$	4,512,618	$	716,956

F-46

(a) Reconciliation of Real Estate:

The following table reconciles the real estate investments from January 1, 2007 to December 31, 2009 (in thousands):

	2009			2008			2007
Balance at beginning of year	$	4,608,320		$	4,825,747		$	4,939,489
Additions:
Acquisitions		—			122			158,399
Capital expenditures		80,506			247,345			179,691
Less:
Dispositions		(176,208	)		(464,894	)		(451,832	)
Balance at end of year	$	4,512,618		$	4,608,320		$	4,825,747

The aggregate cost for federal income tax purposes is $4.6 billion as of December 31, 2009

(b) Reconciliation of Accumulated Depreciation:

The following table reconciles the accumulated depreciation on real estate investments from January 1, 2007 to December 31, 2009 (in thousands):

	2009			2008			2007
Balance at beginning of year	$	639,688		$	558,908		$	515,698
Additions:
Depreciation expense — continued operations		141,309			144,631			167,160
Depreciation expense — discontinued operations		6,494			6,494			4,748
Less:
Dispositions		(70,535	)		(70,345	)		(128,698	)
Balance at end of year	$	716,956		$	639,688		$	558,908

F-47

Report of Independent Registered Public Accounting Firm

To the Partners of Brandywine Operating Partnership:

In our opinion, the consolidated financial statements listed in the index appearing under Item 15(a)(1) present fairly, in all material respects, the financial position of Brandywine Operating Partnership and its subsidiaries (the “Partnership”) at December 31, 2009 and 2008, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2009 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedules listed in the index appearing under Item 15(a)(2) present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Partnership maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009, based on criteria established inInternal Control — Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Partnership’s management is responsible for these financial statements and financial statement schedules, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on these financial statements, on the financial statement schedules and on the Partnership’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

As discussed in Note 2 to the consolidated financial statements, as of January 1, 2009, the Partnership changed the way it accounts for convertible debt instruments that may be settled in cash upon conversion and the way it accounts for non-controlling interests.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As described in Management’s Report on Internal Control Over Financial Reporting, management has excluded the Partnership’s investments in Four and Six Tower Bridge Associates from its assessment of internal control over financial reporting as of December 31, 2009 because the Partnership does not have the right and authority to assess the internal control over financial reporting of the individual entities and it lacks the ability to influence or modify the internal control over financial reporting of the individual entities. Four and Six Tower Bridge Associates are two real estate partnerships, created prior to December 13, 2003, which the Partnership started consolidating in accordance with the accounting standard for the consolidation of variable interest entities on March 31, 2004. We have also excluded Four and Six Tower Bridge Associates from our audit of internal control over financial reporting. The total assets and total revenue of Four and Six Tower Bridge Associates represent, in the aggregate less than 1% and 1%, respectively, of the Partnership’s consolidated financial statement amounts as of and for the year ended December 31, 2009.

/s/ PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
March 1, 2010

F-48

BRANDYWINE OPERATING PARTNERSHIP, L.P.

CONSOLIDATED BALANCE SHEETS

(in thousands, except unit and per unit information)

	December 31,
	2009			2008 (as adjusted)
Real estate investments:
Operating properties	$	4,512,618		$	4,608,320
Accumulated depreciation		(716,956	)		(639,688	)
Operating real estate investments, net		3,795,662			3,968,632
Construction-in-progress		271,962			122,219
Land inventory		97,368			100,516
Total real estate invesmtents, net		4,164,992			4,191,367
Cash and cash equivalents		1,567			3,924
Cash in escrow		—			31,385
Accounts receivable, net		10,934			16,413
Accrued rent receivable, net		87,173			86,362
Investment in real estate ventures, at equity		75,458			71,028
Deferred costs, net		106,097			89,327
Intangible assets, net		105,163			145,757
Notes receivable		59,008			48,048
Other assets		53,358			59,008
Total assets	$	4,663,750		$	4,742,619
LIABILITIES AND BENEFICIARIES’ EQUITY
Mortgage notes payable	$	551,720		$	487,525
Borrowing under credit facilities		92,000			153,000
Unsecured term loan		183,000			183,000
Unsecured senior notes, net of discounts		1,627,857			1,917,970
Accounts payable and accrued expenses		88,599			79,475
Distributions payable		21,799			29,288
Tenant security deposits and deferred rents		58,572			58,692
Acquired below market leases, net		37,087			47,626
Deferred income		47,379			24,271
Other liabilities		33,997			39,274
Total liabilities		2,742,010			3,020,121
Commitments and contingencies (Note 20)
Redeemable limited partnership units at redemption value; 2,809,108 and 2,816,621 issued and outstanding in 2009 and 2008, respectively		44,620			54,166
Brandywine Operating Partnership’s equity:
7.50% Series D Preferred Mirror Units; issued and outstanding — 2,000,000 in 2009 and 2008		47,912			47,912
7.375% Series E Preferred Mirror Units; issued and outstanding — 2,300,000 in 2009 and 2008		55,538			55,538
General Partnership Capital, 128,849,176 and 88,610,053 units issued in 2009 and 2008, respectively and 128,582,334 and 88,158,937 units outstanding in 2009 and 2008, respectively		1,783,033			1,581,887
Accumulated other comprehensive loss		(9,428	)		(17,005	)
Total Brandywine Operating Partnership’s equity		1,877,055			1,668,332
Non-controlling interest — consolidated real estate ventures		65			—
Total Equity		1,877,120			1,668,332
Total liabilities and partners’ equity	$	4,663,750		$	4,742,619

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

F-49

BRANDYWINE OPERATING PARTNERSHIP, L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except unit and per unit information)

	Years ended December 31,
	2009			2008 (as adjusted)			2007 (as adjusted)
Revenue:
Rents	$	478,228		$	483,212		$	493,309
Tenant reimbursements		79,796			78,090			75,821
Termination fees		3,601			4,800			10,053
Third party management fees, labor reimbursement and leasing		17,151			20,401			19,691
Other		3,443			2,918			5,937
Total revenue		582,219			589,421			604,811
Operating Expenses:
Property operating expenses		168,159			160,770			162,590
Real estate taxes		58,230			58,649			57,586
Third party management expenses		7,996			8,965			10,361
Depreciation and amortization		208,590			202,043			219,553
General & administrative expenses		20,821			23,002			27,932
Provision for impairment on land inventory		—			10,841			—
Total operating expenses		463,796			464,270			478,022
Operating income		118,423			125,151			126,789
Other Income (Expense):
Interest income		2,500			1,839			4,014
Interest expense		(135,740	)		(146,646	)		(161,150	)
Interest expense — amortization of deferred financing costs		(5,864	)		(5,450	)		(4,496	)
Loss on settlement of treasury lock agreements		—			—			(3,698	)
Recognized hedge activity		(916	)		—			—
Equity in income of real estate ventures		4,069			8,447			6,955
Net gain on sale of interests in depreciated real estate		—			—			40,919
Net (loss) gain on sale of interests in undepreciated real estate		—			(24	)		—
Gain on early extinguishment of debt		23,176			18,105			—
Income from continuing operations		5,648			1,422			9,333
Discontinued operations:
Income from discontinued operations		4,903			15,456			20,259
Net gain on disposition of discontinued operations		1,238			28,497			25,743
Provision for impairment		(3,700	)		(6,850	)		—
Total discontinued operations		2,441			37,103			46,002
Net income		8,089			38,525			55,335
Net (income) attributable to non-controlling interests		(30	)		(127	)		(465	)
Net income attributable to Brandywine Operating Partnership		8,059			38,398			54,870
Distribution to Preferred Shares		(7,992	)		(7,992	)		(7,992	)
Amount allocated to unvested restricted shareholders		(279	)		(763	)		(765	)
Income allocated to Common Partnership Units	$	(212	)	$	29,643		$	46,113
Basic earnings per Common Partnership Units:
Continuing operations	$	(0.02	)	$	(0.08	)	$	0.01
Discontinued operations		0.02			0.41			0.48
	$	—		$	0.33		$	0.49
Diluted earnings per Common Partnership Units:
Continuing operations	$	(0.02	)	$	(0.08	)	$	0.01
Discontinued operations		0.02			0.41			0.48
	$	—		$	0.33		$	0.49
Basic weighted average common partnership units outstanding		114,712,869			90,391,044			91,170,209
Diluted weighted average common partnership units outstanding		116,066,115			90,399,784			91,219,337
Net (loss) income attributable to Brandywine Operating Partnership
Income (loss) from continuing operations	$	5,618		$	1,295		$	8,868
Income (loss) from discontinued operations		2,441			37,103			46,002
Net income	$	8,059		$	38,398		$	54,870

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

F-50

BRANDYWINE OPERATING PARTNERSHIP, L.P.

CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE (LOSS) INCOME

(in thousands)

	Years ended December 31,
	2009			2008			2007
Net income	$	8,089		$	38,525		$	55,335
Other comprehensive income (loss):
Unrealized gain (loss) on derivative financial instruments		7,395			(15,288	)		(3,600	)
Settlement of treasury locks		—			—			(3,860	)
Settlement of forward starting swaps		—			—			1,148
Ineffectiveness of the hedges		(125	)		—			—
Reclassification of realized (gains)/losses on derivative financial instruments to operations, net		(184	)		(80	)		3,436
Unrealized gain (loss) on available-for-sale securities		—			248			(585	)
Total other comprehensive income (loss)		7,086			(15,120	)		(3,461	)
Comprehensive income		15,175			23,405			51,874
Comprehensive (income) loss attributable to non-controlling interest		(30	)		(127	)		(465	)
Comprehensive income attributable to Brandywine Operating Partnership	$	15,145		$	23,278		$	51,409

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

F-51

BRANDYWINE OPERATING PARTNERSHIP, L.P.

CONSOLIDATED STATEMENT OF PARTNERS’ EQUITY

For the years ended December 31, 2009, 2008 and 2007

(in thousands, except Units)

																		Non-controlling Interest -
	Series D Preferred Mirror Units				Series E Preferred Mirror Units				General Partner Capital						Accumulated Other			Consolidated Real			Total Partner’s
	Units		Amount		Units		Amount		Units			Amount			Comprehensive Income			Estate Ventures			Equity
Balance, December 31, 2006 (as adjusted)		2,000,000		47,912		2,300,000		55,538		88,327,041			1,810,223			1,576			34,414			1,949,663
Net income		—		—		—		—		—			54,870			—			465			55,335
Other comprehensive income:		—		—		—		—		—			—			(3,461	)					(3,461	)
Repurchase of common partnership units in treasury and for deferred comp plan		—		—		—		—		(1,780,600	)		(59,408	)		—						(59,408	)
Common partnership units used for deferred compensation plan		—		—		—		—		172,565			5,890			—						5,890
Conversion of LP units to common shares		—		—		—		—		21,951			716			—						716
Vesting of restricted units		—		—		—		—		66,086			402			—						402
Restricted stock amortization		—		—		—		—		—			1,974			—						1,974
Common partnership units cancellation		—		—		—		—		(915	)		—			—						—
Outperformance plan amortization		—		—		—		—		—			1,339			—						1,339
Trustee fees paid in shares		—		—		—		—		1,664			55			—						55
Exercise of options		—		—		—		—		206,893			7,837			—						7,837
Non-controlling interest reclassification		—		—		—		—		—			(2,828	)		—						(2,828	)
Adjustment of redeemable partnership units to liquidation value at period end		—		—		—		—		—			(833	)		—						(833	)
Acquisition of non-controlling interest in consolidated JV		—		—		—		—		—			—			—			(34,527	)		(34,527	)
Distributions to Preferred Mirror Units		—		—		—		—		—			(7,992	)		—			—			(7,992	)
Distributions to general partnership unit holder		—		—		—		—		—			(153,780	)		—			(324	)		(154,104	)
Balance, December 31, 2007 (as adjusted)		2,000,000		47,912		2,300,000		55,538		87,014,685			1,658,465			(1,885	)		28			1,760,058
Net income		—		—		—		—		—			38,398			—			127			38,525
Other comprehensive income:		—		—		—		—		—			—			(15,120	)		—			(15,120	)
Deferred compensation obligation		—		—		—		—		44,286			710			—			—			710
Conversion of LP units to common shares		—		—		—		—		1,021,608			26,729			—			—			26,729
Share choice plan		—		—		—		—		—			(49	)		—			—			(49	)
Common partnership units cancellation		—		—		—		—		(4,419	)		(33	)		—			—			(33	)
Vesting of restricted units		—		—		—		—		77,191			326			—			—			326
Restricted stock amortization		—		—		—		—		—			2,887			—			—			2,887
Outperformance plan amortization		—		—		—		—		—			989			—			—			989
Option amortization		—		—		—		—		—			336						—			336
Trustee fees paid in shares		—		—		—		—		5,586			155			—			—			155
Adjustment of redeemable partnership units to liquidation value at period end		—		—		—		—		—			3,726			—			—			3,726
Distributions to Preferred Mirror Units		—		—		—		—		—			(7,992	)		—			—			(7,992	)
Distributions to general partnership unit holder		—		—		—		—		—			(142,760	)		—			(155	)		(142,915	)
Balance, December 31, 2008 (as adjusted)		2,000,000	$	47,912		2,300,000	$	55,538		88,158,937		$	1,581,887		$	(17,005	)	$	—		$	1,668,332
Net income		—		—		—		—		—			8,059			—			30			8,089
Other comprehensive income:		—		—		—		—		—			—			7,086			—			7,086
Deferred compensation obligation		—		—		—		—		51,058			131			—			—			131
Issuance of LP Units		—		—		—		—		40,250,000			242,323			—			—			242,323
Bonus Share Issuance		—		—		—		—		36,826			123			—			—			123
Conversion of LP units to common shares		—		—		—		—		7,513			254			—			—			254
Share choice plan		—		—		—		—		(7,081	)		(46	)		—			—			(46	)
Common partnership units cancellation		—		—		—		—		—			—			—			—			—
Vesting of restricted units		—		—		—		—		86,172			(213	)		—			—			(213	)
Restricted stock amortization										—			3,286			—			—			3,286
Restricted performance units amortization		—		—		—		—		—			288			—			—			288
Outperformance plan amortization		—		—		—		—		—			927			—			—			927
Option amortization		—		—		—		—		—			602			—			—			602
Trustee fees paid in shares		—		—		—		—		13,987			4,895			—			—			4,895
Adjustment of redeemable partnership units to liquidation value at period end		—		—		—		—		—			3,470			—			—			3,470
Adjustment to non-controlling interest		—		—		—		—		—			—			—			35			35
Other		—		—		—		—		—			—			491			—			491
Distributions to Preferred Mirror Units		—		—		—		—		—			(7,992	)		—			—			(7,992	)
Distributions to general partnership unit holder		—		—		—		—		—			(54,961	)		—			—			(54,961	)
Balance, December 31, 2009		2,000,000	$	47,912		2,300,000	$	55,538		128,597,412		$	1,783,033		$	(9,428	)	$	65		$	1,877,120

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

F-52

BRANDYWINE OPERATING PARTNERSHIP, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Years ended December 31,
	2009			2008 (as adjusted)			2007 (as adjusted)
Cash flows from operating activities:
Net income	$	8,089		$	38,525		$	55,335
Adjustments to reconcile net income to net cash from operating activities:
Depreciation		160,039			158,234			179,724
Amortization:
Deferred financing costs		5,864			5,450			4,497
Amortization of debt discount		3,495			6,843			4,381
Deferred leasing costs		18,037			16,561			15,672
Acquired above (below) market leases, net		(6,661	)		(8,104	)		(12,225	)
Acquired lease intangibles		32,387			40,663			51,669
Deferred compensation costs		5,200			4,522			4,672
Recognized hedge activity		916			—			—
Straight-line rent		(9,116	)		(16,543	)		(28,304	)
Provision for doubtful accounts		5,371			6,769			3,147
Provision for impairment in real estate		3,700			6,850			—
Provision for impairment on land inventory		—			10,841			—
Real estate venture income in excess of distributions		(2,512	)		(808	)		(55	)
Net gain on sale of interests in real estate		(1,237	)		(28,473	)		(66,662	)
Gain on early extinguishment of debt		(23,176	)		(18,105	)		—
Cumulative interest accretion of repayments of unsecured notes		(5,009	)		(435	)		—
Contributions from historic tax credit transaction, net of deferred costs		23,763			7,952			—
Contributions from new market tax credit transaction, net of deferred costs		—			8,965			—
Changes in assets and liabilities:
Accounts receivable		3,746			(1,631	)		6,449
Other assets		2,373			3,683			(1,366	)
Accounts payable and accrued expenses		(10,067	)		2,491			(11,091	)
Tenant security deposits and deferred rents		2,397			(827	)		12,634
Other liabilities		2,806			(9,556	)		6,328
Net cash from operating activities		220,405			233,867			224,805
Cash flows from investing activities:
Acquisition of properties		—			—			(88,890	)
Acquisition of non-controlling interest in consolidated real estate venture		—			—			(63,732	)
Sales of properties, net		101,305			370,087			472,590
Capital expenditures		(206,311	)		(146,583	)		(267,516	)
Investment in marketable securities		—			—			—
Investment in unconsolidated Real Estate Ventures		(14,980	)		(934	)		(897	)
Escrowed cash		31,385			(31,385	)		—
Cash distributions from unconsolidated Real Estate Ventures in excess of equity in income		13,062			2,311			3,711
Leasing costs		(27,010	)		(29,450	)		(16,104	)
Net cash from (used in) investing activities		(102,549	)		164,046			39,162
Cash flows from financing activities:
Proceeds from Credit Facility borrowings		983,000			514,000			959,602
Repayments of Credit Facility borrowings		(1,044,000	)		(491,727	)		(888,875	)
Proceeds from mortgage notes payable		149,800			—			—
Repayments of mortgage notes payable		(84,102	)		(25,155	)		(272,028	)
Proceeds from unsecured term loan		—			33,000			150,000
Proceeds from unsecured notes		247,030			—			300,000
Repayments of unsecured notes		(514,004	)		(260,088	)		(299,926	)
Net settlement of of hedge transactions		(5,044	)		—			(2,712	)
Debt financing costs		(24,620	)		(278	)		(4,474	)
Net proceeds from issuance of shares		242,332			—			—
Exercise of stock options		—			—			6,011
Repurchases of Common Shares		—			—			(59,426	)
Distributions paid to preferred and common partnership unitholders		(70,605	)		(169,341	)		(171,918	)
Net cash used in (from) financing activities		(120,213	)		(399,589	)		(283,746	)
Increase (decrease) in cash and cash equivalents		(2,357	)		(1,676	)		(19,779	)
Cash and cash equivalents at beginning of period		3,924			5,600			25,379
Cash and cash equivalents at end of period	$	1,567		$	3,924		$	5,600
Supplemental disclosure:
Cash paid for interest, net of capitalized interest	$	139,636		$	178,725		$	182,790
Supplemental disclosure of non-cash activity:
Note receivable issued in the Northern California transaction at its present value		—			37,100			—
Note receivable issued on the two Trenton properties sale transaction at its present value		9,600			—			—
Debt assumed by the purchaser in the Northern California transaction		—			95,300			—
Capital expenditures financed through accounts payable as of year end		7,086			9,029			7,744
Capital expenditures financed through retention payable		5,862			(928	)		1,117
Unfunded tenant allowance		5,986			—			—

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

F-53

BRANDYWINE OPERATING PARTNERSHIP, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009, 2008 AND 2007

1.ORGANIZATION AND NATURE OF OPERATIONS

Brandywine Operating Partnership, L.P. (referred to herein as “we”, “us” or the “Partnership’) is the entity through which Brandywine Realty Trust, a Maryland real estate investment trust (the “Company”), a self-administered and self-managed real estate investment trust, conducts its business and own its assets. The Partnership’s activities include leasing, property management, development, redevelopment, acquisition and other tenant-related services for a portfolio of office and industrial properties. The Company’s common shares of beneficial interest are publicly traded on the New York Stock Exchange under the ticker symbol “BDN”.

As of December 31, 2009, the Partnership owned 212 office properties, 22 industrial facilities and one mixed-use property (collectively, the “Properties”) containing an aggregate of approximately 23.3 million net rentable square feet. The Partnership also has two properties under development and three properties under redevelopment containing an aggregate 1.9 million net rentable square feet. As of December 31, 2009, the Partnership consolidates three office properties owned by real estate ventures containing 0.4 million net rentable square feet. Therefore, the Partnership owns and consolidates 245 properties with an aggregate of 25.6 million net rentable square feet. As of December 31, 2009, the Partnership owned economic interests in 11 unconsolidated real estate ventures that contain approximately 4.2 million net rentable square feet (collectively, the “Real Estate Ventures”). In addition, as of December 31, 2009, the Partnership owned approximately 492 acres of undeveloped land. The Properties and the properties owned by the Real Estate Ventures are located in or near Philadelphia, Pennsylvania, Metropolitan Washington, D.C., Southern and Central New Jersey, Richmond, Virginia, Wilmington, Delaware, Austin, Texas and Oakland, Carlsbad and Rancho Bernardo, California. In addition to managing properties that the Partnership owns, as of December 31, 2009, the Partnership was managing approximately 8.9 million net rentable square feet of office and industrial properties for third parties and Real Estate Ventures.

All references to building square footage, acres, occupancy percentage and the number of buildings are unaudited.

Brandywine Realty Trust is the sole general partner of the Operating Partnership and, as of December 31, 2009, owned a 97.9% interest in the Operating Partnership. The Partnership conducts its third-party real estate management services business primarily through five management companies (collectively, the “Management Companies”): Brandywine Realty Services Corporation (“BRSCO”), BTRS, Inc. (“BTRS”), Brandywine Properties I Limited, Inc. (“BPI”), BDN Brokerage, LLC (“BBL”) and Brandywine Properties Management, L.P. (“BPM”). Each of BRSCO, BTRS and BPI is a taxable REIT subsidiary. The Operating Partnership owns, directly and indirectly, currently 100% of each of BRSCO, BTRS, BPI, BBL and BPM.

As of December 31, 2009, the Management Companies were managing properties containing an aggregate of approximately 34.0 million net rentable square feet, of which approximately 25.2 million net rentable square feet related to Properties owned by the Partnership and approximately 8.9 million net rentable square feet related to properties owned by third parties and Real Estate Ventures.

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Reclassification and Revisions

Certain amounts have been reclassified in prior years to conform to the current year presentation. The reclassifications are primarily due to the treatment of sold or held for sale properties as discontinued operations on the statement of operations for all periods presented and the adoption of new accounting pronouncements that required retrospective application. The Partnership is also now reflecting tenant reimbursements that are payable to tenants of $4.7 million in accounts payable and accrued expenses rather than in accounts receivable, net at December 31, 2008 to conform to the current year presentation. For the year ended December 31, 2009, the Partnership has $5.4 million of tenant reimbursement owed to tenants in accounts payable and accrued expenses. See “Recent Accounting Pronouncements Adopted in 2009” for details pertaining to the changes to prior periods resulting from the adoption of new accounting pronouncements.

F-54

Principles of Consolidation

When the Partnership obtains an economic interest in an entity, the Partnership evaluates the entity to determine if the entity is deemed a variable interest entity (“VIE”), and if the Partnership is deemed to be the primary beneficiary, in accordance with the accounting standard for the consolidation of variable interest entities. When an entity is not deemed to be a VIE, the Partnership considers the provisions of the same accounting standard to determine whether a general partner, or the general partners as a group, controls a limited partnership or similar entity when the limited partner have certain rights. The Partnership consolidates (i) entities that are VIEs and of which the Partnership is deemed to be the primary beneficiary and (ii) entities that are non-VIEs which the Partnership controls and the limited partners neither have the ability to dissolve the entity or remove the Partnership without cause nor any substantive participating rights. Entities that the Partnership accounts for under the equity method (i.e., at cost, increased or decreased by the Partnership’s share of earnings or losses, plus contributions, less distributions) include (i) entities that are VIEs and of which the Partnership is not deemed to be the primary beneficiary (ii) entities that are non-VIEs which the Partnership does not control, but over which the Partnership has the ability to exercise significant influence and (iii) entities that are non-VIE’s that the Partnership controls through its general partner status, but the limited partners in the entity have the substantive ability to dissolve the entity or remove the Partnership without cause or have substantive participating rights. The Partnership will reconsider its determination of whether an entity is a VIE and who the primary beneficiary is, and whether or not the limited partners in an entity have substantive rights, if certain events occur that are likely to cause a change in the original determinations. The portion of these entities not owned by the Partnership is presented as non-controlling interest as of and during the periods consolidated. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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. Management makes significant estimates regarding revenue, valuation of real estate and related intangible assets and liabilities, useful lives of fixed assets, impairment of long-lived assets, equity method investments and securities, allowance for doubtful accounts and deferred costs.

Operating Properties

Operating properties are carried at historical cost less accumulated depreciation and impairment losses. The cost of operating properties reflects their purchase price or development cost. Pursuant to the Partnership’s adoption of the accounting standard for business combination as of January 1, 2009, acquisition related costs are expensed as incurred. Prior of the adoption of the accounting standard, acquisition costs are capitalized when incurred. Costs incurred for the renovation and betterment of an operating property are capitalized to the Partnership’s investment in that property. Ordinary repairs and maintenance are expensed as incurred; major replacements and betterments, which improve or extend the life of the asset, are capitalized and depreciated over their estimated useful lives. Fully-depreciated assets are removed from the accounts.

Purchase Price Allocation

The Partnership allocates the purchase price of properties to net tangible and identified intangible assets acquired based on fair values. Above-market and below-market in-place lease values for acquired properties are recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) the Partnership’s estimate of the fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of the lease. Capitalized above-market lease values are amortized as a reduction of rental income over the remaining non-cancelable terms of the respective leases. Capitalized below-market lease values are amortized as an increase to rental income over the remaining non-cancelable terms of the respective leases, including any below market fixed-rate renewal periods.

Other intangible assets also include amounts representing the value of tenant relationships and in-place leases based on the Partnership’s evaluation of the specific characteristics of each tenant’s lease and the Partnership’s overall relationship with the respective tenant. The Partnership estimates the cost to execute leases with terms similar to the remaining lease terms of the in-place leases, including leasing commissions, legal and other related expenses. This intangible asset is amortized to expense over the remaining term of the respective leases. Partnership estimates of value are made using methods similar to those used by independent appraisers or by using independent appraisals. Factors considered by the Partnership in this analysis include an estimate of the carrying costs during the expected lease-up periods considering current market conditions and costs to execute similar leases. In estimating carrying costs, the Partnership includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods, which primarily range from three to twelve months. The Partnership also considers information obtained about each property as a result of its pre-acquisition due diligence, marketing and leasing activities in estimating the fair value of the tangible and intangible assets acquired. The Partnership also uses the information obtained as a result of its pre-acquisition due diligence as part of its consideration of the accounting standard governing asset retirement obligations and when necessary, will record a conditional asset retirement obligation as part of its purchase price.

F-55

Characteristics considered by the Partnership in allocating value to its tenant relationships include the nature and extent of the Partnership’s business relationship with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit quality and expectations of lease renewals, among other factors. The value of tenant relationship intangibles is amortized over the remaining initial lease term and expected renewals, but in no event longer than the remaining depreciable life of the building. The value of in-place leases is amortized over the remaining non-cancelable term of the respective leases and any below market fixed-rate renewal periods.

In the event that a tenant terminates its lease, the unamortized portion of each intangible, including market rate adjustments (above or below), in-place lease values and tenant relationship values, is charged to expense and market rate adjustments are recorded to revenue.

Depreciation and Amortization

The costs of buildings and improvements are depreciated using the straight-line method based on the following useful lives: buildings and improvements (five to 55 years) and tenant improvements (the shorter of the lease term or the life of the asset).

Construction in Progress

Project costs directly associated with the development and construction of a real estate project are capitalized as construction in progress. In addition, interest, real estate taxes and other expenses that are directly associated with the Partnership’s development activities are capitalized until the property is placed in service. Internal direct construction costs totaling $3.9 million in 2009, $5.2 million in 2008 and $4.8 million in 2007 and interest totaling $8.8 million in 2009, $16.7 million in 2008 and $17.9 million in 2007 were capitalized related to development of certain Properties and land holdings.

Impairment or Disposal of Long-Lived Assets

The accounting standard for property, plant and equipment provides a single accounting model for long-lived assets as held-for-sale, broadens the scope of businesses to be disposed of that qualify for reporting as discontinued operations and changes the timing of recognizing losses on such operations.

The Partnership reviews long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The review of recoverability is based on an estimate of the future undiscounted cash flows (excluding interest charges) expected to result from the long-lived asset’s use and eventual disposition. These cash flows consider factors such as expected future operating income, trends and prospects, as well as the effects of leasing demand, competition and other factors. If impairment exists due to the inability to recover the carrying value of a long-lived asset, an impairment loss is recorded to the extent that the carrying value exceeds the estimated fair-value of the property. The Partnership is required to make subjective assessments as to whether there are impairments in the values of the investments in long-lived assets. These assessments have a direct impact on its net income because recording an impairment loss results in an immediate negative adjustment to net income. The evaluation of anticipated cash flows is highly subjective and is based in part on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results in future periods. Although the Partnership’s strategy is generally to hold its properties over the long-term, the Partnership will dispose of properties to meet its liquidity needs or for other strategic needs. If the Company’s strategy changes or market conditions otherwise dictate an earlier sale date, an impairment loss may be recognized to reduce the property to the lower of the carrying amount or fair value less costs to sell, and such loss could be material. If the Partnership determines that impairment has occurred and the assets are classified as held and used, the affected assets must be reduced to their fair value.

Where properties have been identified as having a potential for sale, additional judgments are required related to the determination as to the appropriate period over which the undiscounted cash flows should include the operating cash flows and the amount included as the estimated residual value. Management determines the amounts to be included based on a probability weighted cash flow. This requires significant judgment. In some cases, the results of whether an impairment is indicated are sensitive to changes in assumptions input into the estimates, including the hold period until expected sale.

F-56

During the first quarter of 2009, the Partnership determined that one of its properties, during testing for impairment under the held and used model, had a historical cost greater than the probability weighted undiscounted cash flows. Accordingly, the recorded amount was reduced to an amount based on management’s estimate of the current fair value. This property was sold in the second quarter. The Partnership also recorded an impairment on properties designated as held for sale at June 30, 2008 of $6.85 million; these properties were sold during the last quarter of 2008. During the Partnership’s impairment review for the remaining part of 2009, it was determined that no additional impairment charges were necessary.

Cash and Cash Equivalents

Cash and cash equivalents are highly-liquid investments with original maturities of three months or less. The Partnership maintains cash equivalents in financial institutions in excess of insured limits, but believes this risk is mitigated by only investing in or through major financial institutions.

Cash in Escrow

Cash in escrow of $31.4 million at December 31, 2009 represents cash that was used during 2009 for the financing of the Cira South Garage. This cash was held in escrow pursuant to the new markets tax credit transaction entered into by the Partnership on December 30, 2008.

Restricted Cash

Restricted cash consists of cash held as collateral to provide credit enhancement for the Partnership’s mortgage debt, cash for property taxes, capital expenditures and tenant improvements. Restricted cash is included in other assets as discussed below.

Accounts Receivable and Accrued Rent Receivable

Leases with tenants are accounted for as operating leases. Minimum annual rentals under tenant leases are recognized on a straight-line basis over the term of the related lease. The cumulative difference between lease revenue recognized under the straight-line method and contractual lease payment terms is recorded as “accrued rent receivable, net” on the accompanying balance sheets. Included in current tenant receivables are tenant reimbursements which are comprised of amounts recoverable from tenants for common area maintenance expenses and certain other recoverable expenses that are recognized as revenue in the period in which the related expenses are incurred. As of December 31, 2009 and 2008, no tenant represented more than 10% of accounts receivable and accrued rent receivables.

Tenant receivables and accrued rent receivables are carried net of the allowances for doubtful accounts of $4.2 million and $12.2 million in 2009, respectively and $4.9 million and $10.6 million in 2008, respectively. The allowance is an estimate based on two calculations that are combined to determine the total amount reserved. First, the Partnership evaluates specific accounts where it has determined that a tenant may have an inability to meet its financial obligations. In these situations, the Partnership uses its judgment, based on the facts and circumstances, and records a specific reserve for that tenant against amounts due to reduce the receivable to the amount that the Partnership expects to collect. These reserves are reevaluated and adjusted as additional information becomes available. Second, a reserve is established for all tenants based on a range of percentages applied to receivable aging categories for tenant receivables. For accrued rent receivables, the Partnership considers the results of the evaluation of specific accounts and also considers other factors including assigning risk factors to different industries based on its tenants SIC classification. Considering various factors including assigning a risk factor to different industries, these percentages are based on historical collection and write-off experience adjusted for current market conditions.

Investments in Unconsolidated Real Estate Ventures

The Partnership accounts for its investments in unconsolidated Real Estate Ventures under the equity method of accounting as it is not the primary beneficiary (for VIE’s) and the Partnership exercises significant influence, but does not control these entities under the provisions of the entities’ governing agreements pursuant to the accounting standard for the consolidation of variable interest entities. These investments are recorded initially at cost, as Investments in Real Estate Ventures, and subsequently adjusted for equity in earnings and cash contributions and distributions.

F-57

On a periodic basis, management assesses whether there are any indicators that the value of the Partnership’s 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. To the extent impairment has occurred, the loss shall be measured as the excess of the carrying amount of the investment over the value of the investment, as estimated by management. The determination as to whether an impairment exists requires significant management judgment about the fair value of its ownership interest.

To the extent that the Partnership acquires an interest in or contributes assets to a Real Estate Venture project, the difference between the Partnership’s cost basis in the investment and the value of the Real Estate Venture or asset contributed is amortized over the life of the related assets, intangibles and liabilities and such adjustment is included in the Partnership’s share of equity in income of unconsolidated Real Estate Ventures. For purposes of cash flow presentation, distributions from unconsolidated Real Estate Ventures are presented as part of operating activities when they are considered as return on investments. Distributions in excess of the Partnership’s share in the cumulative unconsolidated Real Estate Ventures’ earnings are considered as return of investments and are presented as part of investing activities in accordance with the accounting standard for cash flow presentation.

Deferred Costs

Costs incurred in connection with property leasing are capitalized as deferred leasing costs. Deferred leasing costs consist primarily of leasing commissions and internal leasing costs that are amortized on the straight-line method over the life of the respective lease which generally ranges from one to 15 years. Management re-evaluates the remaining useful lives of leasing costs as economic and market conditions change.

Costs incurred in connection with debt financing are capitalized as deferred financing costs and charged to interest expense over the terms of the related debt agreements. Deferred financing costs consist primarily of loan fees which are amortized over the related loan term. Management re-evaluates the remaining useful lives of financing costs as economic and market conditions change.

Other Assets

Other assets is comprised of the following as of December 31, 2009:

	December 31,
	2009		2008
	(amounts in thousands)
Prepaid ground rent	$	7,733	$	—
Prepaid real estate taxes		7,492		7,720
Rent inducements, net		6,680		8,432
Cash surrender value of life insurance		6,498		5,262
Restricted cash		5,632		13,292
Marketable securities		2,798		2,789
Prepaid insurance		2,747		4,058
Furnitures, fixtures and equipment		2,664		4,641
Deposits on future settlements		1,108		2,966
Others		10,006		9,848
Total	$	53,358	$	59,008

Notes Receivable

As of December 31, 2009, notes receivable included a $2.8 million purchase money mortgage with a 20 year amortization period that bears interest at 8.5%, a $7.5 million purchase money mortgage with a 20 year amortization period that bears interest at 8.5%, a $39.1 million purchase money mortgage with an imputed interest rate of 4.0% accreting up to $40.0 million due in 2010 and a $22.5 million seven year purchase money mortgage (due 2016) that bears interest at approximately 6% cash pay/7.64% accrual. The $22.5 million notes receivable is related to the sale of the two Trenton properties during the year and is presented net of $12.9 deferred gain in accordance with the accounting standard for installment sales (the “Trenton Note”). The Partnership expects to receive $27.8 million at maturity of the Trenton Note including the difference between the cash payments and the stated accrual rate. See Note 3 for additional information regarding the sale and the Trenton Note.

F-58

As of December 31, 2008, notes receivable included a $2.8 million purchase money mortgage with a 20 year amortization period that bears interest at 8.5%, a $7.7 million purchase money mortgage with a 20 year amortization period that bears interest at 8.5% and a $37.5 million purchase money mortgage with an imputed interest rate of 4.0% accreting up to $40.0 million due in 2010.

The Partnership periodically assesses the collectibility of the notes receivable in accordance with the accounting standard for receivables. No collectibility issues were noted as of December 31, 2009 and 2008.

Revenue Recognition

Rental revenue is recognized on the straight-line basis from the later of the date of the commencement of the lease or the date of acquisition of the property subject to existing leases, which averages minimum rents over the terms of the leases. The straight-line rent adjustment increased revenue by approximately $6.4 million in 2009, $14.0 million in 2008, and $25.0 million in 2007. Deferred rents on the balance sheet represent rental revenue received prior to their due dates and amounts paid by the tenant for certain improvements considered to be landlord assets that will remain as the Partnership’s property at the end of the tenant’s lease term. The amortization of the amounts paid by the tenant for such improvements is calculated on a straight-line basis over the term of the tenant’s lease and is a component of straight-line rental income and increased revenue by $2.7 million in 2009, $2.5 million in 2008, and $3.3 million in 2007. Lease incentives, which are included as reductions of rental revenue in the accompanying consolidated statements of operations, are recognized on a straight-line basis over the term of the lease. Lease incentives decreased revenue by $1.8 million in 2009, $0.8 million in 2008, and $0.1 million in 2007.

Leases also typically provide for tenant reimbursement of a portion of common area maintenance and other operating expenses to the extent that a tenant’s pro rata share of expenses exceeds a base year level set in the lease or to the extent that the tenant has a lease on a triple net basis. For certain leases, significant assumptions and judgments are made by the Partnership in determining the lease term such as when termination options are provided to the tenant. The lease term impacts the period over which minimum rents are determined and recorded and also considers the period over which lease related costs are amortized. Termination fees received from tenants, bankruptcy settlement fees, third party management fees, labor reimbursement and leasing income are recorded when earned.

No tenant represented greater than 10% of the Partnership’s rental revenue in 2009, 2008 or 2007.

Income Taxes

No federal or state income taxes are payable by the Partnership, and accordingly, no provision for taxes has been made in the accompanying consolidated financial statements. The partners are to include their respective share of the Partnership’s profits or losses in their individual tax returns. The Partnership’s tax returns and the amount of allocable Partnership profits and losses are subject to examination by federal and state taxing authorities. If such examination results in changes to Partnership profits or losses, then the tax liability of the partners would be changed accordingly.

The Partnership has several subsidiary real estate investment trusts (“REITs”) that have elected to be treated as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”). In addition, the Partnership has several subsidiary REITs. In order to maintain their qualification as a REIT, the Partnership and its REIT subsidiaries are required to, among other things, distribute at least 90% of its REIT taxable income to its stockholders and meet certain tests regarding the nature of its income and assets. The REIT subsidiaries are not subject to federal income tax with respect to the portion of its income that meets certain criteria and is distributed annually to the stockholders. Accordingly, no provision for federal income taxes is included in the accompanying consolidated financial statements with respect to the operations of these entities. The Partnership and its REIT subsidiaries intend to continue to operate in a manner that allows them to continue to meet the requirements for taxation as REITs. Many of these requirements, however, are highly technical and complex. If the Partnership or one of its REIT subsidiaries were to fail to meet these requirements, the Partnership would be subject to federal income tax. The Partnership is subject to certain state and local taxes. Provision for such taxes has been included in general and administrative expenses in the Partnership’s Consolidated Statements of Operations and Comprehensive Income.

The tax basis in the Partnership’s assets was $4.6 billion as of December 31, 2009 and $4.4 billion as of December 31, 2008.

F-59

The Partnership is subject to a 4% federal excise tax if sufficient taxable income is not distributed within prescribed time limits. The excise tax equals 4% of the annual amount, if any, by which the sum of (a) 85% of the Partnership’s ordinary income and (b) 95% of the Partnership’s net capital gain exceeds cash distributions and certain taxes paid by the Partnership. No excise tax was incurred in 2008, 2007, or 2006.

The Partnership may elect to treat one or more of its subsidiaries as a taxable REIT subsidiary (“TRS”). In general, a TRS of the Partnership may perform additional services for tenants of the Partnership and generally may engage in any real estate or non-real estate related business (except for the operation or management of health care facilities or lodging facilities or the provision to any person, under a franchise, license or otherwise, of rights to any brand name under which any lodging facility or health care facility is operated). A TRS is subject to corporate federal income tax. The Partnership has elected to treat certain of its corporate subsidiaries as TRSs, these entities provide third party property management services and certain services to tenants that could not otherwise be provided.

In 2007, the Partnership adopted the provisions of accounting standards for income taxes which changed the framework for accounting for uncertainty in income taxes. As a result of the adoption, the Partnership recognized no material adjustments regarding its current tax accounting treatment. The Partnership would recognize interest and penalties, to the extent incurred related to uncertain tax positions, as income tax expense, which would be included in general and administrative expense.

Earnings Per Share

Basic earnings per share is calculated by dividing income allocated to Common Shares by the weighted-average number of shares outstanding during the period. Diluted earnings per share includes the effect of common share equivalents outstanding during the period.

Treasury Shares

The Partnership accounts for its treasury share purchases using the cost method. Since repurchase, shares have been reissued at an amount less than their cost basis. The losses on reissuances are charged to the cumulative earnings of the Partnership using the FIFO basis.

Stock-Based Compensation Plans

The Partnership Agreement provides for the issuance by the Partnership to its general partner, the Company, of a number of Common Partnership Units equal to the number of common shares issued by the Company, the net proceeds of which are contributed to the Partnership. When the Company issues common shares under its equity-based compensation plan, the Partnership issues to the Company an equal number of Common Partnership Units. The Company maintains a shareholder-approved equity-incentive plan known as the Amended and Restated 1997 Long-Term Incentive Plan (the “1997 Plan”). The 1997 Plan is administered by the Compensation Committee of the Company’s Board of Trustees. Under the 1997 Plan, the Compensation Committee is authorized to award equity and equity-based awards, including incentive stock options, non-qualified stock options, restricted shares and performance-based shares. As of December 31, 2008, 3.3 million common shares remained available for future awards under the 1997 Plan. Through December 31, 2008, all options awarded under the 1997 Plan had a one to ten year term.

The Partnership incurred stock-based compensation expense of $4.5 million in 2009, of which $0.8 million was capitalized as part of the Partnership’s review of employee salaries eligible for capitalization. The Partnership recognized stock-based compensation expense of $4.6 million and $4.7 million in 2008 and 2007, respectively. The expensed amounts are included in general and administrative expense on the Partnership’s consolidated income statement in the respective periods.

Comprehensive Income

Comprehensive income or loss is recorded in accordance with the the accounting standard for comprehensive income. This accounting standard establishes standards for reporting comprehensive income and its components in financial statements. Comprehensive income includes unrealized gains and losses on available-for-sale securities and the effective portions of changes in the fair value of derivatives.

F-60

Accounting for Derivative Instruments and Hedging Activities

The Partnership accounts for its derivative instruments and hedging activities in accordance with the accounting standard for derivative and hedging activities. The accounting standard requires the Partnership to measure every derivative instrument (including certain derivative instruments embedded in other contracts) at fair value and record them in the balance sheet as either an asset or liability. See disclosures below related to the Partnership’s adoption of the accounting standard for fair value measurements and disclosures.

For derivatives designated as fair value hedges, the changes in fair value of both the derivative instrument and the hedged item are recorded in earnings. For derivatives designated as cash flow hedges, the effective portions of changes in the fair value of the derivative are reported in other comprehensive income. During the year ended December 31, 2009, the Partnership recorded a $(1.1) million fair value adjustment in its consolidated statements of operations related to two of its interest swaps in which the hedging relationship ceased due to the issuance of the unsecured notes on September 25, 2009. The ineffective portions of hedges are recognized in earnings in the current period and during the year ended December 31, 2009, the Partnership recognized $0.1 million for the ineffective portion of its forward starting swaps prior to the termination of the hedging relationship (See Note 9).

The Partnership actively manages its ratio of fixed-to-floating rate debt. To manage its fixed and floating rate debt in a cost-effective manner, the Partnership, from time to time, enters into interest rate swap agreements as cash flow hedges, under which it agrees to exchange various combinations of fixed and/or variable interest rates based on agreed upon notional amounts.

Fair Value Measurements

The Partnership adopted a newly issued accounting standard for fair value measurements and disclosures. The new accounting standard defines fair value, establishes a framework for measuring fair value in GAAP and provides for expanded disclosure about fair value measurements. The accounting standard is applied prospectively and is applied to all other accounting pronouncements that require or permit fair value measurements. The accounting standard was applied to the Partnership’s financial instruments effective January 1, 2008 and to all non-financial assets and non-financial liabilities effective January 1, 2009.

The accounting standard for fair value measurements and disclosures defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. It also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value. 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 Partnership has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that 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. 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. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Partnership’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

The following table sets forth the Partnership’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of December 31, 2009:

	Fair Value Measurements at Reporting
	Date Using:
			Quoted Prices in
			Active Markets for		Significant Other		Unobservable
	December 31,		Identical Assets		Observable Inputs		Inputs
Description	2009		(Level 1)		(Level 2)		(Level 3)
Recurring
Assets:
Available-for-Sale Securities	$	431	$	431	$	—	$	—
Liabilities:
Interest Rate Swaps	$	7,320	$	—	$	7,320	$	—

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The following table sets forth the Partnership’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of December 31, 2008:

	Fair Value Measurements at Reporting
	Date Using:
			Quoted Prices in
			Active Markets for		Significant Other		Unobservable
	December 31,		Identical Assets		Observable Inputs		Inputs
Description	2008		(Level 1)		(Level 2)		(Level 3)
Recurring
Assets:
Available-for-Sale Securities	$	423	$	423	$	—	$	—
Liabilities:
Interest Rate Swaps	$	10,985	$	—	$	10,985	$	—
Forward Starting Interest Rate Swaps		7,481		—		7,481		—
	$	18,466	$	—	$	18,466	$	—

The adoption of the accounting standard for fair value measurements and disclosures did not have a material impact on the Partnership’s non-financial assets and liabilities. Non-financial assets and liabilities recorded at fair value on a non-recurring basis to which the Partnership would apply the accounting standard where a measurement was required under fair value would include:

• Non-financial assets and liabilities initially measured at fair value in an acquisition or business combination that are not remeasured at least annually at fair value,

• Long-lived assets measured at fair value due to an impairment in accordance with the accounting standard for the impairment or disposal of long-lived assets,

• Equity and cost method investments measured at fair value due to an impairment in accordance with the accounting standard for investments,

• Notes receivable adjusted for any impairment in its value in accordance with the accounting standard for loan receivables and

• Asset retirement obligations initially measured at fair value under the accounting standard for asset retirement obligations.

There were no items that were accounted for at fair value on a non-recurring basis as of December 31, 2009.

Accounting Pronouncements Adopted in 2009

In June 2009, the Financial Accounting Standards Board (FASB) issued the FASB Accounting Standards Codification (Codification). The Codification became the single source for all authoritative GAAP recognized by the FASB to be applied for financial statements issued for periods ending after September 15, 2009. The Codification is not expected to change GAAP and it did not have an effect on the Partnership’s consolidated financial position or results of operations.

In May 2009, the FASB issued a new accounting standard for subsequent events reporting. The new accounting standard established principles and requirements for evaluating and reporting subsequent events and distinguishes which subsequent events should be recognized in the financial statements versus which subsequent events should be disclosed in the financial statements. The accounting standard also requires disclosure of the date through which subsequent events are evaluated by management (see Note 17). The Partnership’s adoption of the new standard did not have a material impact on its consolidated financial position or results of operations.

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In April 2009, the FASB issued an amendment to the disclosure requirements about fair value instruments. The amendment require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies in addition to the annual financial statements. It also requires those disclosures in summarized financial information at interim reporting periods. The amendment is effective for interim periods ending after June 15, 2009. Prior period presentation is not required for comparative purposes at initial adoption.

In April 2009, the FASB issued a new accounting standard for determining fair value when the volume and level of activity for financial and non-financial assets or liabilities have significantly decreased and for identifying transactions that are not orderly. The new accounting standard is effective for fiscal years and interim periods ending after June 15, 2009 and shall be applied prospectively. The Partnership’s adoption of the new standard did not have a material impact on its consolidated financial position or results of operations.

In April 2009, the FASB issued amendments to the recognition and presentation requirements of other-than-temporary impairments to make the guidance in U.S. GAAP for debt securities more operational and to improve the presentation and disclosure of other-than temporary impairments on debt and equity securities in the financial statements. The amendments are effective for fiscal years and interim periods ending after June 15, 2009. The Partnership’s adoption of these amendments did not have a material impact on its consolidated financial position or results of operations.

In January 2009, the Partnership adopted the FASB issued accounting standard for disclosures about derivative instruments and hedging activities. This new standard enhances disclosure requirements for derivative instruments in order to provide users of financial statements with an enhanced understanding of (i) how and why an entity uses derivative instruments, (ii) how derivative instruments and related hedged items are accounted for under the accounting standard for derivative instruments and hedging activities and (iii) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. The new accounting standard is to be applied prospectively for the first annual reporting period beginning on or after November 15, 2008. See Note 9 for further discussion.

In January 2009, the Partnership adopted a newly issued accounting standard for convertible debt instruments. The new accounting standard requires the initial proceeds from convertible debt that may be settled in cash to be bifurcated between a liability component and an equity component. The objective of the guidance is to require the liability and equity components of convertible debt to be separately accounted for in a manner such that the interest expense recorded on the convertible debt would not equal the contractual rate of interest on the convertible debt, but instead would be recorded at a rate that would reflect the issuer’s conventional debt borrowing rate. This is accomplished through the creation of a discount on the debt that would be accreted using the effective interest method as additional non-cash interest expense over the period the debt is expected to remain outstanding (i.e. through the first optional redemption date). The provisions of the new accounting standard were adopted on January 1, 2009 and applied retrospectively.

The new accounting standard for convertible debt instruments impacted the Partnership’s accounting for its 3.875% Exchangeable Notes and has a material impact on the Company’s consolidated financial statements and results of operations. The principal amount outstanding is $128.0 million at December 31, 2009 and $282.3 million at December 31, 2008 (see Note 7). At certain times and upon certain events, the notes are exchangeable for cash up to their principal amount and, with respect to the remainder, if any, of the exchange value in excess of such principal amount, cash or common shares. The initial exchange rate is 25.4065 shares per $1,000 principal amount of notes (which is equivalent to an initial exchange price of $39.36 per share). The carrying amount of the equity component is $24.4 million. The unamortized debt discount is $4.3 million at December 31, 2009 and $12.2 million at December 31, 2008 and will be amortized through October 15, 2011. The effective interest rate at December 31, 2009 and 2008 was 5.5%. The Partnership recognized contractual coupon interest of $8.3 million in 2009, $12.1 million in 2008 and $13.3 million in 2007. In addition, the Partnership recognized interest on amortization of debt discount of $4.0 million in 2009, $4.3 million in 2008 and $4.4 million in 2007. The application of the accounting standard for convertible debt resulted in an aggregate of approximately $3.9 million and $4.0 million (net of incremental capitalized interest) of additional non-cash interest expense retrospectively applied for the years ended December 31, 2008 and 2007, respectively. Debt discount write-offs resulting from debt repurchases amounted to $3.8 million in 2009 and $2.6 million in 2008. There were no repurchases made in 2007. The application of the new accounting standard required the Partnership to reduce the amount of gain recognized on early extinguishment of debt for the year ended December 31, 2008 by approximately $2.6 million.

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Effective January 1, 2009, the Partnership adopted a newly issued accounting standard related to whether instruments granted in share-based payment transactions are participating securities. This new standard requires that non-vested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents be treated as participating securities in the computation of earnings per share pursuant to the two-class method. The accounting standard was applied retrospectively to all periods presented. The accounting standard required the Partnership to include the impact of its unvested restricted shares in earnings per share using this more dilutive methodology. For dilutive earnings per share this methodology or the treasury stock method would be used depending on which method is more dilutive. The face of the Partnership’s consolidated statement of operations and earnings per share disclosure (See Note 11) has been updated to reflect the adoption of this accounting standard and are presented as amounts allocated to unvested restricted shareholders. The adoption of the new accounting standard did not have a material impact on the Partnership’s consolidated financial position or results of operations.

Effective January 1, 2009, the Partnership adopted a newly issued accounting standard for non-controlling interests. In accordance with this accounting standard, non-controlling interests are presented as a component of consolidated shareholders’ equity unless these interests are considered redeemable. Also, under this standard, net income will encompass the total income of all consolidated subsidiaries and there will be separate disclosure on the face of the income statement of the attribution of that income between controlling and non-controlling interests. Lastly, increases and decreases in non-controlling interests will be treated as equity transactions. The face of the Partnership’s consolidated balance sheet, statement of operations and statements of other comprehensive income has been updated to reflect the adoption of this accounting standard. The adoption of this accounting standard did not have material impact on the Partnership’s financial position or results of operations. As a result of the Partnership’s adoption of this standard, amounts are now presented as non-controlling interests within equity (amounts were nominal as of December 31, 2008).

Limited partnership units of the Partnership have been included in the mezzanine section (between liability and equity) on the accompanying consolidated balance sheets. These units are redeemable by the holders for the cash equivalent thereof, or at the Company’s option, a like number of unregistered common shares of the Company. Historically we have recorded the redeemable partnership units at their redemption amount (fair value) as of the balance sheet date. In accordance with the new accounting standard the redeemable partnership units should be adjusted to the maximum redemption amount at each balance sheet date, however it is not appropriate to reduce the amounts below a certain floor. The units should not be recorded at less than the original issue value of the units adjusted for income allocation and distributions. The revised presentation and floor measurement required by this accounting standard have been adopted retrospectively.

In accordance with the Partnership’s retrospective adoption of the accounting standards for convertible and non-controlling interest, the Partnership’s consolidated balance sheets and selected line items from the statements of operations for all periods presented have been revised as follows:

	As of December 31, 2008
			Convertible Debt			Redeemable Limited Partnership Units
Balance Sheet:	As Reported		Adjustment			Interest Adjustment			As Revised
Assets:
Construction-in-progress	$	121,402	$	817		$	—		$	122,219
Deferred costs, net		89,866		(539	)		—			89,327
Total assets		4,737,690		278			—			4,737,968
Liabilities:
Unsecured bonds, net of discount		1,930,147		(12,177	)					1,917,970
Total liabilities		3,027,647		(12,177	)					3,015,470
Redeemable limited partnership units		21,716		—			32,450			54,166
Brandywine Operating Partnership’s equity	$	1,688,327	$	12,455		$	(32,450	)	$	1,668,332

The adoption of the accounting standards as described above increased/(reduced) total equity as of December 31, 2007 and 2006 by $(2.3) million and $92.1 million, respectively.

	For the Year Ended December 31, 2008
				Convertible Debt			Non-controlling
Income Statement:	As Reported			Adjustment			Interest Adjustment		As Revised
Interest expense	$	(142,770	)	$	(3,876	)	$	—	$	(146,646	)
Gain on extinguishment of debt		20,664			(2,559	)		—		18,105
Net income	$	44,833		$	(6,435	)	$	127	$	38,525

	For the Year Ended December 31, 2007
				Convertible Debt			Non-controlling
Income Statement:	As Reported			Adjustment			Interest Adjustment		As Revised
Interest expense	$	(157,178	)	$	(3,972	)	$	—	$	(161,150	)
Net income	$	58,843		$	(3,972	)	$	464	$	55,335

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The impact of the retrospective adoption of the accounting standards discussed above to the subtotals in the statements of cash flow was not material.

New Pronouncements

In June 2009, the FASB issued an amendment to the accounting and disclosure requirements for transfers of financial assets. This amendment requires greater transparency and additional disclosures for transfers of financial assets and the entity’s continuing involvement with them and changes the requirements for derecognizing financial assets. In addition, this amendment eliminates the concept of a qualifying special-purpose entity (QSPE). This amendment is effective for fiscal years beginning after November 15, 2009. The Partnership is currently evaluating the impact of adopting this amendment on its consolidated financial position or results of operations.

In June 2009, the FASB also issued an amendment to the accounting and disclosure requirements for the consolidation of variable interest entities (VIEs). The elimination of the concept of a QSPE, as discussed above, removes the exception from applying the consolidation guidance within this amendment. This amendment requires an enterprise to perform a qualitative analysis when determining whether or not it must consolidate a VIE. The amendment also requires an enterprise to continuously reassess whether it must consolidate a VIE. Additionally, the amendment requires enhanced disclosures about an enterprise’s involvement with VIEs and any significant change in risk exposure due to that involvement, as well as how its involvement with VIEs impacts the enterprise’s financial statements. Finally, an enterprise will be required to disclose significant judgments and assumptions used to determine whether or not to consolidate a VIE. This amendment is effective for fiscal years beginning after November 15, 2009. The Partnership is currently evaluating the impact of adopting this amendment on its consolidated financial position or results of operations.

3.REAL ESTATE INVESTMENTS

As of December 31, 2009 and 2008, the gross carrying value of the Partnership’s Properties was as follows:

	December 31,
	2009		2008
	(amounts in thousands)
Land	$	690,441	$	707,591
Building and improvements		3,393,498		3,481,289
Tenant improvements		428,679		419,440
	$	4,512,618	$	4,608,320

Acquisitions and Dispositions

The Partnership did not complete any acquisitions during the years ended December 31, 2009 and 2008.

2009

On October 13, 2009, the Partnership sold a condominium interest in an office building consisting of 40,508 square feet in Lawrenceville, New Jersey, for a sales price of $7.9 million.

On October 1, 2009, the Partnership sold two office properties, totaling 473,658 net rentable square feet in Trenton, New Jersey for an aggregate sales price of $85.0 million. We provided to the buyer a $22.5 million seven-year, approximately 6.00% cash pay/7.64% accrual second mortgage loan. This sale was recorded using the installment sales method of accounting for real estate sales which requires for each cash payment received (including the buyer’s payments under its first mortgage) profit to be apportioned in the same ratio as total cost and total profit bear to sales value. Accordingly, the Partnership recognized a gain on sale of $2.7 million upon receipt of cash from the buyer in 2009 and expects to recognize the remaining gain of $12.9 million substantially upon the repayment of the second mortgage in 2016. The buyer has the option to extend the maturity date of the second mortgage for an additional three years subject to certain conditions under the loan agreement. Interest income on the second mortgage is recognized as it is received. In addition, the Partnership was engaged to manage the properties sold during the term of the second mortgage and is entitled for a management fee equal to 2.5% of all gross receipts from the operation of the properties and will be reimbursed for all management related expenses.

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On April 29, 2009, the Partnership sold 7735 Old Georgetown Road, a 122,543 net rentable square feet office property located in Bethesda, Maryland, for a sales price of $26.5 million.

On March 16, 2009, the Partnership sold 305 Harper Drive, a 14,980 net rentable square feet office property located in Moorestown, New Jersey, for a sales price of $1.1 million.

On February 4, 2009, the Partnership sold two office properties, totaling 66,664 net rentable square feet in Exton, Pennsylvania, for an aggregate sales price of $9.0 million.

2008

On October 8, 2008, the Partnership sold five properties, totaling approximately 1.7 million net rentable square feet in Oakland, California for an aggregate sales price of $412.5 million. The buyer assumed three mortgage loans totaling 95.3 million and was granted by the Partnership a $40.0 million interest free note receivable secured by a first mortgage on two of the properties. The present value of the note receivable on the sale date was $37.1 million and the balance will accrete to $40.0 million as interest income is earned through the maturity date in August 2010 at an imputed 4.0% interest rate. The Partnership incurred an impairment charge of $6.85 million upon the classification of these properties as held for sale at June 30, 2008.

On October 1, 2008, the Partnership sold Main Street Centre, a 0.4 million net rentable square feet office property located in Richmond, Virginia, for a sales price of $48.8 million.

On April 25, 2008, the Partnership sold 100 Brandywine Boulevard, an office property located in Newtown, Pennsylvania containing 102,000 net rentable square feet, for a sales price of $28.0 million.

On February 29, 2008, the Partnership sold 1400 Howard Boulevard, an office property located in Mount Laurel, New Jersey containing 75,590 net rentable square feet, for a sales price of $22.0 million.

On February 14, 2008, the Partnership sold a parcel of land located in Henrico, Virginia containing 3.24 acres, for a sales price of $0.4 million.

On January 14, 2008, the Partnership sold 7130 Ambassador Drive, an office property located in Allentown, Pennsylvania containing 114,049 net rentable square feet, for a sales price of $5.8 million.

All sales presented above are included within discontinued operations. The sales prices above also do not include transaction costs for each of the respective sales.

4.INVESTMENT IN UNCONSOLIDATED VENTURES

As of December 31, 2009, the Partnership had an aggregate investment of approximately $75.5 million in its 11 actively operating unconsolidated Real Estate Ventures. The Partnership formed these ventures with unaffiliated third parties, or acquired them, to develop office properties or to acquire land in anticipation of possible development of office properties. Ten of the Real Estate Ventures own 45 office buildings that contain an aggregate of approximately 4.2 million net rentable square feet, one Real Estate Venture developed a hotel property that contains 137 rooms in Conshohocken, PA.

The Partnership accounts for its unconsolidated interests in its Real Estate Ventures using the equity method. Unconsolidated interests range from 3% to 50%, subject to specified priority allocations in certain of the Real Estate Ventures.

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The amounts reflected in the following tables (except for the Partnership’s share of equity and income) are based on the historical financial information of the individual Real Estate Ventures. One of the Real Estate Ventures, acquired in connection with the Prentiss Properties Trust merger in 2006, had a negative equity balance on a historical cost basis as a result of historical depreciation and distribution of excess financing proceeds. The Partnership reflected its acquisition of this Real Estate Venture interest at its relative fair value as of the date of the purchase of Prentiss. The difference between allocated cost and the underlying equity in the net assets of the investee is accounted for as if the entity were consolidated (i.e., allocated to the Partnership’s relative share of assets and liabilities with an adjustment to recognize equity in earnings for the appropriate depreciation/amortization). The Partnership does not allocate operating losses of the Real Estate Ventures in excess of its investment balance unless the Partnership is liable for the obligations of the Real Estate Venture or is otherwise committed to provide financial support to the Real Estate Venture.

The Partnership’s investment in Real Estate Ventures as of December 31, 2009 and the Partnership’s share of the Real Estate Ventures’ income (loss) for the year ended December 31, 2009 was as follows (in thousands):

						Company’s Share
						of 2009 Real			Real Estate		Current
	Ownership			Carrying		Estate Venture			Venture		Interest			Debt
	Percentage (1)			Amount		Income (Loss)			Debt at 100%		Rate			Maturity
Two Tower Bridge Associates		35	%	$	1,468	$	(114	)	$	15,560		5.90	%	May-13
Seven Tower Bridge Associates (2)		10	%		—		(551	)		—		N/A			N/A
Eight Tower Bridge Associates (5)		3.4	%		—		339			52,500		L+5.00	%	Jun-12
1000 Chesterbrook Boulevard		50	%		1,770		204			25,446		6.88	%	Nov-11
PJP Building Two, LC		30	%		263		120			4,703		6.12	%	Nov-23
PJP Building Three, LC		25	%		—		32			—		N/A			N/A
PJP Building Five, LC		25	%		156		96			6,099		6.47	%	Aug-19
PJP Building Six, LC		25	%		115		55			9,215		6.08	%	Apr-23
PJP Building Seven, LC		25	%		177		177			8,508		L+1.55	%	Nov-13
Macquarie BDN Christina LLC		20	%		6,859		797			59,000		8.00	%	Jun-11
Broadmoor Austin Associates		50	%		64,086		1,327			90,721		5.79	%	Apr-11
Residence Inn Tower Bridge		50	%		564		162			14,480		5.63	%	Feb-16
G&I Interchange Office LLC (DRA) (3)		20	%		—		1,180			184,000		5.78	%	Jan-15
Invesco, L.P. (4)					—		244			—		N/A			N/A
				$	75,458	$	4,068		$	470,232

(1)	Ownership percentage represents the Partnership’s entitlement to residual distributions after payments of priority returns, where applicable.
(2)	The loss related to Seven Tower Bridge above represents a writeoff of our investment balance due to the Venture terminating development on a parcel of land owned by the partnership.
(3)	The Partnership retained a 20% interest and received distributions from financing in excess of its basis. The Partnership has no commitment to fund and no expectation of operating losses, accordingly, the Partnership’s carrying value has not been reduced below zero. The income recognized for the year ended December 31, 2009 relates to the distributions in excess of the Partnership’s investment in the Venture. The amount is shown gross of the elimination of 20% portion of revenues we received for management fees of $0.4 million as of December 31, 2009.
(4)	The Partnership’s interest consists solely of a residual profits interest. The Partnership no longer has an investment in this real estate venture.
(5)	The Partnership has no commitment to fund and no expectations of operating losses, accordingly, the Partnership’s carrying value has not been reduced below zero.

The following is a summary of the financial position of the unconsolidated Real Estate Ventures in which the Partnership had investment interests as of December 31, 2009 and 2008 (in thousands):

	December 31,
	2009		2008
Net property	$	503,932	$	553,833
Other assets		96,643		94,165
Other Liabilities		37,774		37,863
Debt		470,232		515,832
Equity		92,569		94,164
Partnership’s share of equity (Partnership’s basis)		75,458		71,028

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The following is a summary of results of operations of the unconsolidated Real Estate Ventures in which the Partnership had interests as of December 31, 2009, 2008 and 2007 (in thousands):

	Year ended December 31,
	2009			2008 (a)			2007
Revenue	$	105,236		$	105,844		$	75,541
Operating expenses		38,691			38,036			25,724
Interest expense, net		30,858			30,585			21,442
Depreciation and amortization		36,700			32,057	(a)		15,526
Net income		(1,012	)		416	(a)		12,849
Partnership’s share of income (Partnership’s basis)		4,069			8,447			6,955

(a) - Pertains to the correction of an error in DRA’s unaudited financial statements. The adjustments relate to the understatement of depreciation expense amounting to $2.1 million. The adjustments have no impact on the Company’s consolidated financial statements.

Equity in income of real estate ventures in the Partnership’s consolidated statement of operations for the twelve-months ended December 31, 2007 includes a $3.9 million distribution on account of a residual profits interest that is not included in the table above.

As of December 31, 2009, the aggregate principal payments of recourse and non-recourse debt payable to third-parties are as follows (in thousands):

2010	$	21,410
2011		165,303
2012		56,072
2013		22,220
2014		3,162
Thereafter		202,065
	$	470,232

As of December 31, 2009, the Partnership had guaranteed repayment of approximately $2.1 million of loans on behalf of certain Real Estate Ventures. The Partnership also provides customary environmental indemnities in connection with construction and permanent financing both for its own account and on behalf of its Real Estate Ventures.

5.DEFERRED COSTS

As of December 31, 2009 and 2008, the Partnership’s deferred costs were comprised of the following (in thousands):

	December 31, 2009
			Accumulated			Deferred Costs,
	Total Cost		Amortization			net
Leasing Costs	$	124,391	$	(50,643	)	$	73,748
Financing Costs		42,965		(10,616	)		32,349
Total	$	167,356	$	(61,259	)	$	106,097

	December 31, 2008
			Accumulated			Deferred Costs,
	Total Cost		Amortization			net
Leasing Costs	$	115,263	$	(39,528	)	$	75,735
Financing Costs		25,169		(11,577	)	$	13,592
Total	$	140,432	$	(51,105	)	$	89,327

During 2009, 2008 and 2007, the Partnership capitalized internal direct leasing costs of $5.3 million, $7.9 million and $8.2 million, respectively, in accordance with the accounting standard for the capitalization of leasing costs.

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6.INTANGIBLE ASSETS AND LIABILITIES

As of December 31, 2009 and 2008, the Partnership’s intangible assets/liabilities were comprised of the following (in thousands):

	December 31, 2009
			Accumulated			Deferred Costs,
	Total Cost		Amortization			net
In-place lease value	$	123,456	$	(71,402	)	$	52,054
Tenant relationship value		97,566		(49,374	)		48,192
Above market leases acquired		15,674		(10,757	)		4,917
Total	$	236,696	$	(131,533	)	$	105,163
Below market leases acquired	$	75,325	$	(38,238	)	$	37,087

	December 31, 2008
			Accumulated			Deferred Costs,
	Total Cost		Amortization			net
In-place lease value	$	145,518	$	(71,138	)	$	74,380
Tenant relationship value		103,485		(40,835	)		62,650
Above market leases acquired		23,351		(14,624	)		8,727
Total	$	272,354	$	(126,597	)	$	145,757
Below market leases acquired	$	82,950	$	(35,324	)	$	47,626

For the years ended December 31, 2009, 2008, and 2007, the Partnership wrote off through the acceleration of amortization of approximately $2.4 million, $1.7 million and $4.1 million, respectively, of intangible assets as a result of tenant move-outs prior to the end of the associated lease terms. For the years ended December 31, 2009, 2008, and 2007, the Partnership accelerated amortization of approximately $0.4 million, $0.1 million and $0.4 million, respectively, of intangible liabilities as a result of tenant move-outs.

As of December 31, 2009, the Partnership’s annual amortization for its intangible assets/liabilities is as follows (in thousands, assumes no early terminations):

	Assets		Liabilities
2010	$	28,842	$	8,307
2011		22,452		7,013
2012		17,217		6,275
2013		12,438		5,836
2014		9,130		4,348
Thereafter		15,084		5,308
Total	$	105,163	$	37,087

7.DEBT OBLIGATIONS

The following table sets forth information regarding the Partnership’s mortgage indebtedness outstanding at December 31, 2009 and 2008 (in thousands):

	December 31,		December 31,					Maturity
	2009		2008		Interest Rate			Date
MORTGAGE DEBT:
200 Commerce Drive	$	—	$	5,684		7.12	%(a)	Sep-09
Plymouth Meeting Exec		42,042		42,785		7.00	%(b)	Dec-10
Four Tower Bridge		10,158		10,404		6.62	%	Feb-11
Arboretum I, II, III & V		21,046		21,657		7.59	%	Jul-11
Midlantic Drive/Lenox Drive/DCC I		58,215		59,784		8.05	%	Oct-11
Research Office Center		39,999		40,791		5.30	%(b)	Oct-11
Concord Airport Plaza		35,594		36,617		5.55	%(b)	Jan-12
Six Tower Bridge		13,557		14,185		7.79	%	Aug-12
Newtown Square/Berwyn Park/Libertyview		59,557		60,910		7.25	%	May-13
Coppell Associates		2,711		3,273		6.89	%	Dec-13
Southpoint III		3,255		3,863		7.75	%	Apr-14

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	December 31,			December 31,						Maturity
	2009			2008			Interest Rate			Date
Tysons Corner		98,056			99,529			5.36	%(b)	Aug-15
Coppell Associates		16,600			16,600			5.75	%	Feb-16
Two Logan Square		89,800			68,808			7.57	%(c)	Apr-16
One Logan Square		60,000			—			4.50	%(d)	Jul-16
Principal balance outstanding		550,590			484,890
Plus: unamortized fixed-rate debt premiums, net		1,130			2,635
Total mortgage indebtedness	$	551,720		$	487,525
UNSECURED DEBT:
$275.0M 4.500% Guaranteed Notes due 2009		—			196,680			4.62	%	Nov-09
Bank Term Loan		183,000			183,000		LIBOR + 0.80		%	Oct-10	(e)
$300.0M 5.625% Guaranteed Notes due 2010		198,545			275,545			5.61	%	Dec-10
Credit Facility		92,000			153,000		LIBOR + 0.725		%	Jun-11	(e)
$320.7M 3.875% Guaranteed Exchangeable Notes due 2026		127,960			282,030			5.50	%	Oct-11	(f)
$300.0M 5.750% Guaranteed Notes due 2012		187,825			300,000			5.77	%	Apr-12
$250.0M 5.400% Guaranteed Notes due 2014		242,681			250,000			5.53	%	Nov-14
$250.0M 7.500% Guaranteed Notes due 2015		250,000			—			7.75	%	May-15
$250.0M 6.000% Guaranteed Notes due 2016		250,000			250,000			5.95	%	Apr-16
$300.0M 5.700% Guaranteed Notes due 2017		300,000			300,000			5.75	%	May-17
Indenture IA (Preferred Trust I)		27,062			27,062		LIBOR + 1.25		%	Mar-35
Indenture IB (Preferred Trust I)		25,774			25,774		LIBOR + 1.25		%	Apr-35
Indenture II (Preferred Trust II)		25,774			25,774		LIBOR + 1.25		%	Jul-35
Principal balance outstanding		1,910,621			2,268,865
Less: unamortized exchangeable debt discount		(4,327	)		(12,177	)
unamortized fixed-rate debt discounts, net		(3,437	)		(2,718	)
Total unsecured indebtedness	$	1,902,857		$	2,253,970
Total Debt Obligations	$	2,454,577		$	2,741,495

(a)	On September 30, 2009, the Partnership pre-paid the remaining balance of the mortgage debt with no penalty.
(b)	Loans were assumed upon acquisition of the related property. Interest rates presented above reflect the market rate at the time of acquisition.
(c)	The Two Logan Square mortgage loan was re-financed in the amount of $89.8 million on April 1, 2009. The new loan bears interest at 7.57% per annum and has a seven year term with three years of interest only payments followed by a thirty year amortization schedule.
(d)	The Partnership obtained a mortgage on a previously unencumbered property during the third quarter 2009. The loan features a floating rate of LIBOR plus 350 basis points (subject to a LIBOR floor) and a seven-year term with three years interest only followed by a thirty-year amortization schedule at a 7.5% constant.
(e)	These loans may be extended to June 29, 2012 at the Partnership’s discretion.
(f)	On October 20, 2011, the holders of the Exchangeable Notes have the right to request the redemption of all or a portion of the Exchangeable Notes they hold at a price equal to 100% of the principal amount plus accrued and unpaid interest. Accordingly, the Exchangeable Notes have been presented with an October 20, 2011 maturity date.

On September 25, 2009, the Partnership closed a registered offering of $250.0 million in aggregate principal amount of its 7.50% senior unsecured notes due 2015. The notes were priced at 99.412% of their face amount with a yield to maturity of 7.625%, representing a spread at the time of pricing of 5.162% to the yield on the August 2014 Treasury note. The notes have been reflected net of discount of $1.4 million in the consolidated balance sheet as of December 31, 2009. The net proceeds which amounted to $247.0 million after deducting underwriting discounts and offering expenses were used to repay the Partnership’s indebtedness under its unsecured revolving credit facility and for general corporate purposes.

On July 7, 2009, the Partnership closed a $60.0 million first mortgage on One Logan Square, a 594,361 square foot office property located in Philadelphia, Pennsylvania. This loan accrues interest at a rate of LIBOR plus 3.5% with a minimum LIBOR rate of 1% over a seven-year term with three years of interest only payments and interest and principal payments based on a thirty-year amortization schedule for the remaining four years. The loan proceeds were used for general corporate purposes including repayment of existing indebtedness.

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On June 29, 2009, the Partnership entered into a forward financing commitment to borrow up to $256.5 million under two separate loans which are secured by mortgages on the 30^th Street Post Office (the “Post Office project’), the Cira South Garage (the “garage project”) and by the leases of space at these facilities upon the completion of these projects. Of the total borrowings, $209.7 million and $46.8 million will be allocated to the Post Office project and to the garage project, respectively. The Partnership paid a $17.7 million commitment fee, which includes a $1.5 million arrangement fee, in connection with this commitment. The total loan amount together with the net commitment fee was deposited in an escrow account to be administered by The Bank of New York Mellon (the “trustee”). In accordance with the trust agreement between the lender and the trustee, the lender assigned its rights under the loans to the Trust. The Trust issued certificates to third parties in an amount equal to the funding commitment. Upon investment of the escrow account in a portfolio of U.S. Government treasuries, the net commitment fee of $16.2 million will be used together with the interest earned on the escrow account to pay interest costs of the loans through August 26, 2010 which is also the anticipated completion date of the projects and the expected funding date. In order for funding to occur, certain conditions must be met by the Partnership which primarily relate to the completion of the projects and the commencement of the rental payments from the respective leases with the IRS on these properties. The loans will bear interest at 5.93% and require principal and interest payments based on a twenty year amortization schedule. The Partnership intends to use the loan proceeds to reduce borrowings under its credit facility and for general corporate purposes. As of December 31, 2009, the commitment fee is included as part of the deferred costs in the Partnership’s consolidated balance sheet as it believes the funding is probable of occurring. The Partnership will amortize this cost over the term of the loan starting on the date the funding of the loans has occurred. In the event that the Partnership believes the funding will not occur, this cost will be written off in the period that such determination was made. In addition, should the funding not occur either because the Partnership does not meet the conditions or the Partnership decides not to proceed with the funding, a termination fee is payable (see Note 16).

During 2009, 2008 and 2007, the Partnership’s weighted-average interest rate on its mortgage notes payable was 6.45%, 6.40% and 6.74%, respectively. As of December 31, 2009 and 2008, the net carrying value of the Partnership’s Properties that are encumbered by mortgage indebtedness was $784.2 million and $691.6 million, respectively.

During the year ended December 31, 2009, the Partnership repurchased $444.7 million of its existing Notes in a series of transactions which are summarized in the table below:

	Repurchase						Deferred Financing
Notes	Amount		Principal		Gain		Amortization
2009 Notes	$	92,736	$	94,130	$	1,377	$	88
2010 Notes		71,414		76,999		5,565		215
2012 Notes		109,104		112,175		2,610		361
2014 Notes		6,329		7,319		961		28
3.875% Notes		136,880		154,070		12,664		1,289
	$	416,463	$	444,693	$	23,177	$	1,981

During the year ended December 31, 2008, the Partnership exercised the accordion feature on its $150.0 million unsecured term loan which it had entered into in October 2007 and borrowed an additional $33.0 million, bringing its total outstanding balance to $183.0 million. All outstanding borrowings under the term loan bear interest at a periodic rate of LIBOR plus 80 basis points. The net proceeds of the term loan were used to reduce indebtedness under the Partnership’s unsecured revolving credit facility. The Term Loan matures on October 18, 2010 and may be extended at the Partnership’s option for two, one-year periods but not beyond the final maturity date of its revolving credit facility. There is no scheduled principal amortization of the Term Loan and the Partnership may prepay borrowings in whole or in part without premium or penalty. Portions of the Term Loan bear interest at a per annum floating rate equal to: (i) the higher of (x) the prime rate or (y) the federal funds rate plus 0.50% per annum or (ii) a London interbank offered rate that is the rate at which Eurodollar deposits for one, two, three or six months are offered plus between 0.475% and 1.10% per annum (the “Libor Margin”), depending on the Company’s debt rating. The Term Loan Agreement contains financial and operating covenants. Financial covenants include minimum net worth, fixed charge coverage ratio, maximum leverage ratio, restrictions on unsecured and secured debt as a percentage of unencumbered assets and other financial tests. Operating covenants include limitations on the Partnership’s ability to incur additional indebtedness, grant liens on assets, enter into affiliate transactions, and pay dividends. The Partnership was in compliance with all covenants as of December 31, 2009.

On April 30, 2007, the Operating Partnership completed an underwritten public offering of $300.0 million aggregate principal amount of 5.70% unsecured notes due 2017 (the “2017 Notes”). Brandywine Realty Trust guaranteed the payment of principal and interest on the 2017 Notes. The Company used proceeds from these notes to reduce borrowings under the Company’s revolving credit facility. The Operating Partnership’s indenture relating to unsecured notes contains financial restrictions and requirements, including (1) a leverage ratio not to exceed 60%, (2) a secured debt leverage ratio not to exceed 40%, (3) a debt service coverage ratio of greater than 1.5 to 1.0, and (4) an unencumbered asset value of not less than 150% of unsecured debt. The Partnership was in compliance with all financial covenants as of December 31, 2009.

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In April 2007, the Partnership entered into a $20.0 million Sweep Agreement (the “Sweep Agreement”) to be used for cash management purposes. Borrowings under the Sweep Agreement bear interest at one-month LIBOR plus 0.75%. The Sweep Agreement ended in April 2009 at which point the agreement was not renewed.

The Partnership utilizes credit facility borrowings for general business purposes, including the acquisition, development and redevelopment of properties and the repayment of other debt. The maturity date of the $600.0 million Credit Facility (“the Credit Facility”) is June 29, 2011 (subject to an extension of one year, at the Partnership’s option, upon its payment of an extension fee equal to 15 basis points of the committed amount under the Credit Facility). The per annum variable interest rate on outstanding balances is LIBOR plus 0.725%. The interest rate and facility fee are subject to adjustment upon a change in the Partnership’s unsecured debt ratings. The Partnership has the option to increase the Credit Facility to $800.0 million subject to the absence of any defaults and the Partnership’s ability to acquire additional commitments from its existing or new lenders. As of December 31, 2009, the Partnership had $92.0 million of borrowings, $13.9 million of letters of credit outstanding, and a $51.0 million holdback in connection with its historic tax credit transaction, leaving $471.1 million of unused availability. During the years ended December 31, 2009 and 2008, the weighted-average interest rate on Credit Facility borrowings was 2.08% and 4.35% respectively. As of December 31, 2009 and 2008, the weighted average interest rate on Credit Facility borrowings was 0.96% and 1.85%, respectively.

The Credit Facility requires the maintenance of ratios related to minimum net worth, debt-to-total capitalization and fixed charge coverage and includes non-financial covenants. The Partnership was in compliance with all financial covenants as of December 31, 2009.

As of December 31, 2009, the Partnership’s aggregate principal payments are as follows (in thousands):

2010	$	432,804
2011		352,214
2012		239,483
2013		59,753
2014		246,394
Thereafter		1,130,563
Total principal payments		2,461,211
Net unamortized premiums/discounts		(6,634	)
Outstanding indebtedness	$	2,454,577

8.  FAIR VALUE OF FINANCIAL INSTRUMENTS

The following fair value disclosure was determined by the Partnership using available market information and discounted cash flow analyses as of December 31, 2009 and 2008, 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 acquiring or assuming 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 Partnership could realize upon disposition. The use of different estimation methodologies may have a material effect on the estimated fair value amounts. The Partnership believes that the carrying amounts reflected in the Consolidated Balance Sheets at December 31, 2009 and 2008 approximate the fair values for cash and cash equivalents, accounts receivable, other assets, accounts payable and accrued expenses.

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The following are financial instruments for which the Partnership estimates of fair value differ from the carrying amounts (in thousands):

	December 31, 2009					December 31, 2008
	Carrying			Fair		Carrying		Fair
	Amount			Value		Amount		Value
Mortgage payable, net of premiums	$	551,720		$	523,745	$	484,890	$	459,519
Unsecured notes payable, net of discounts	$	1,557,011		$	1,497,356	$	1,854,186	$	1,152,056
Variable Rate Debt Instruments	$	353,610		$	341,210	$	414,610	$	398,748
Notes Receivable	$	71,989	(a)	$	62,776	$	48,048	$	46,227

(a) For purposes of this disclosure, the Trenton Note is presented gross of the recognized deferred gain of $12.9 million.

9.  RISK MANAGEMENT AND USE OF FINANCIAL INSTRUMENTS

Risk Management

In the course of its on-going business operations, the Partnership encounters economic risk. There are three main components of economic risk: interest rate risk, credit risk and market risk. The Partnership is subject to interest rate risk on its interest-bearing liabilities. Credit risk is primarily the risk of inability or unwillingness of tenants to make contractually required payments and counterparties on derivatives not fulfilling their obligations. Market risk is the risk of declines in the value of properties due to changes in rental rates, interest rates or other market factors affecting the valuation of properties held by the Partnership.

Risks and Uncertainties

In the course of its on-going business operations, the Partnership encounters economic risk. There are three main components of economic risk: interest rate risk, credit risk and market risk. The Partnership is subject to interest rate risk on its interest-bearing liabilities. Credit risk is primarily the risk of inability or unwillingness of tenants to make contractually required payments. Market risk is the risk of declines in the value of properties due to changes in rental rates, interest rates or other market factors affecting the valuation of properties held by the Partnership.

The Partnership expects that the impact of the current state of the economy, including high unemployment and the unprecedented volatility and illiquidity in the financial and credit markets, will continue to have a dampening effect on the fundamentals of its business, including increases in past due accounts, tenant defaults, lower occupancy and reduced effective rents. These conditions would negatively affect the Partnership’s future net income and cash flows and could have a material adverse effect on its financial condition.

The Partnership’s Credit Facility, Bank Term Loan and the indenture governing the unsecured public debt securities (Note 7) contain restrictions, requirements and other limitations on the ability to incur indebtedness, including total debt to asset ratios, secured debt to total asset ratios, debt service coverage ratios and minimum ratios of unencumbered assets to unsecured debt which it must maintain. The ability to borrow under the Credit Facility is subject to compliance with such financial and other covenants. In the event that the Partnership fails to satisfy these covenants, it would be in default under the Credit Facility, the Bank Term Loan and the indenture and may be required to repay such debt with capital from other sources. Under such circumstances, other sources of capital may not be available, or may be available only on unattractive terms.

Availability of borrowings under the Credit Facility is subject to a traditional material adverse effect clause. Each time the Partnership borrows it must represent to the lenders that there have been no events of a nature which would have a material adverse effect on the business, assets, operations, condition (financial or otherwise) or prospects of the Partnership taken as a whole or which could negatively effect the ability of the Partnership to perform its obligations under the Credit Facility. While the Partnership believes that there are currently no material adverse effect events, the Partnership is operating in unprecedented economic times and it is possible that such event could arise which would limit the Partnership’s borrowings under the Credit Facility. If an event occurs which is considered to have a material adverse effect, the lenders could consider the Partnership in default under the terms of the Credit Facility and the borrowings under the Credit Facility would become due and payable. If the Partnership is unable to obtain a waiver, this would have a material adverse effect on the Partnership’s financial position and results of operations.

The Partnership was in compliance with all financial covenants as of December 31, 2009. Management continuously monitors the Partnership’s compliance with and anticipated compliance with the covenants. Certain of the covenants restrict management’s ability to obtain alternative sources of capital. While the Partnership currently believes it will remain in compliance with its covenants, in the event of a continued slow-down and continued crisis in the credit markets, the Partnership may not be able to remain in compliance with such covenants and if the lender would not provide a waiver, it could result in an event of default.

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Use of Derivative Financial Instruments

The Partnership’s use of derivative instruments is limited to the utilization of interest rate agreements or other instruments to manage interest rate risk exposures and not for speculative purposes. The principal objective of such arrangements is to minimize the risks and/or costs associated with the Partnership’s operating and financial structure, as well as to hedge specific transactions. The counterparties to these arrangements are major financial institutions with which the Partnership and its affiliates may also have other financial relationships. The Partnership is potentially exposed to credit loss in the event of non-performance by these counterparties. However, because of the high credit ratings of the counterparties, the Partnership does not anticipate that any of the counterparties will fail to meet these obligations as they come due. The Partnership does not hedge credit or property value market risks through derivative financial instruments.

The Partnership formally assesses, both at inception of the hedge and on an on-going basis, whether each derivative is highly-effective in offsetting changes in cash flows of the hedged item. If management determines that a derivative is not highly-effective as a hedge or if a derivative ceases to be a highly-effective hedge, the Partnership will discontinue hedge accounting prospectively. The related ineffectiveness would be charged to the Statement of Operations.

The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves.

To comply with the provisions of the accounting standard for fair value measurements and disclosures, the Partnership incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Partnership has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.

Although the Partnership 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. However, as of December 31, 2009 and 2008, the Partnership 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 Partnership has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

The fair values of the hedges at December 31, 2009 and 2008 are included in other liabilities and accumulated other comprehensive income in the accompanying balance sheet, except for the $1.1 million fair value adjustment of the hedges charged as an expense to the consolidated statements of operations during the year ended December 31, 2009, relating to two of the Partnership’s interest rate swaps which were both cash settled in December 2009. The hedging relationship with these swaps ceased upon the Partnership’s planned issuance of its unsecured notes effective September 21, 2009, and as such the interest rate swaps no longer qualify for hedge accounting. Accordingly, changes in the fair value of these interest rate swaps were charged to our consolidated statements of operations until they were cash settled. The Partnership also recognized $0.1 million of ineffectiveness of the hedges during the year ended December 31, 2009 prior to the termination of the hedging relationship.

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The following table summarizes the terms and fair values of the Partnership’s derivative financial instruments at December 31, 2009 and 2008. The notional amounts provide an indication of the extent of the Partnership’s involvement in these instruments at that time, but do not represent exposure to credit, interest rate or market risks.

Hedge	Hedge				Notional Amount								Trade		Maturity		Fair Value
Product	Type	Designation			12/31/2009		12/31/2008			Strike			Date		Date		12/31/2009		12/31/2008
Swap	Interest Rate	Cash Flow	(b	)	$	123,000	$	78,000	(a)		4.709	%		9/20/07		10/18/10	$	5,162	$	7,204
Swap	Interest Rate	Cash Flow	(b	)		25,000		25,000			4.415	%		10/19/07		10/18/10		827		1,439
Swap	Interest Rate	Cash Flow	(b	)		25,000		25,000			3.747	%		11/26/07		10/18/10		688		1,111
Swap	Interest Rate	Cash Flow	(b	)		—		25,000			3.338	%		1/4/08		12/18/10		—		603
Swap	Interest Rate	Cash Flow	(b	)		25,774		25,774			2.975	%		10/16/08		10/30/10		643		628
Swap	Interest Rate	Cash Flow	(c	)		—		25,000			4.770	%		1/4/08		12/18/19		—		4,079
Swap	Interest Rate	Cash Flow	(c	)		—		25,000			4.423	%		3/19/08		12/18/19		—		3,402
					$	198,774	$	228,774									$	7,320	$	18,466

(a)	- National amount accreting up to $155,000 through October 8, 2010.
(b)	- Hedging unsecured variable rate debt.
(c)	- Cash settled at their maturity dates.

Concentration of Credit Risk

Concentrations of credit risk arise when a number of tenants related to the Partnership’s investments or rental operations are engaged in similar business activities, or are located in the same geographic region, or have similar economic features that would cause their inability to meet contractual obligations, including those to the Partnership, to be similarly affected. The Partnership regularly monitors its tenant base to assess potential concentrations of credit risk. Management believes the current credit risk portfolio is reasonably well diversified and does not contain any unusual concentration of credit risk. No tenant accounted for 5% or more of the Partnership’s rents during 2009, 2008 and 2007. Recent developments in the general economy and the global credit markets have had a significant adverse effect on companies in numerous industries. The Partnership has tenants concentrated in various industries that may be experiencing adverse effects from the current economic conditions and the Partnership could be adversely affected if such tenants go into default on their leases.

10.DISCONTINUED OPERATIONS

For the years ended December 31, 2009, 2008 and 2007, income from discontinued operations relates to an aggregate of 36 properties containing approximately 6.7 million net rentable square feet that the Partnership has sold since January 1, 2007.

The following table summarizes revenue and expense information for the properties sold which qualify for discontinued operations reporting since January 1, 2007 (in thousands):

	Years Ended December 31,
	2009			2008			2007
Revenue:
Rents	$	8,055		$	52,712		$	82,049
Tenant reimbursements		5,309			7,829			11,114
Termination fees		—			25			183
Other		123			227			404
Total revenue		13,487			60,793			93,750
Expenses:
Property operating expenses		4,665			21,077			31,560
Real estate taxes		1,763			6,270			8,953
Depreciation & amortization		2,155			13,412			27,507
Provision for impairment		3,700			6,850			—
Total operating expenses		12,283			47,609			68,020
Operating income		1,204			13,184			25,730
Interest income		(1	)		17			26
Interest expense		—			(4,595	)		(5,497	)
Income from discontinued operations before gain on sale of interests in real estate and minority interest		1,203			8,606			20,259
Net gain on sale of interests in real estate		1,238			28,497			25,743
Income from discontinued operations		2,441			37,103			46,002
Income from discontinued operations attributable to non-controlling interest		(30	)		(127	)		(465	)
Income from discontinued operations attributable to Brandywine Operating Partnership	$	2,411		$	36,976		$	45,537

Discontinued operations have not been segregated in the consolidated statements of cash flows. Therefore, amounts for certain captions will not agree with respective data in the consolidated statements of operations.

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11.NON-CONTROLLING INTEREST IN CONSOLIDATED REAL ESTATE VENTURES

As of December 31, 2009 and 2008, the Partnership owned interests in three consolidated real estate ventures that own three office properties containing approximately 0.4 million net rentable square feet. The Partnership is the primary beneficiary and these consolidated real estate ventures are variable interest entities under the accounting standard for consolidation.

The non-controlling interests associated with certain of the Real Estate Ventures that have finite lives under the terms of the partnership agreements represent mandatorily redeemable interests as defined under the accounting standard for certain financial instruments with characteristics of both liabilities and equity. The aggregate amount related to these non-controlling interests classified within equity is $0.1 million at December 31, 2009 and a nominal amount as of December 31, 2008. The Partnership believes that the aggregate settlement value of these interests was approximately $7.9 million and $9.1 million as of December 31, 2009 and 2008, respectively. This amount is based on the estimated liquidation values of the assets and liabilities and the resulting proceeds that the Partnership would distribute to its Real Estate Venture partners upon dissolution, as required under the terms of the respective partnership agreements. Subsequent changes to the estimated fair values of the assets and liabilities of the consolidated Real Estate Ventures will affect the Partnership’s estimate of the aggregate settlement value. The partnership agreements do not limit the amount that the minority partners would be entitled to in the event of liquidation of the assets and liabilities and dissolution of the respective partnerships.

12.PARTNERS’ EQUITY

Earnings per Common Partnership Unit

The following 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):

	Years ended December 31,
	2009						2008						2007
	Basic			Diluted			Basic			Diluted			Basic			Diluted
Numerator
Income from continuing operations	$	5,648		$	5,648		$	1,422		$	1,422		$	9,333		$	9,333
Net income (loss) from continuing operations attributable to non-controlling interests		(30	)		(30	)		(127	)		(127	)		(465	)		(465	)
Amount allocable to unvested restricted unitholders		(279	)		(279	)		(763	)		(763	)		(765	)		(765	)
Preferred units dividends		(7,992	)		(7,992	)		(7,992	)		(7,992	)		(7,992	)		(7,992	)
Income (loss) from continuing operations available to common unitholders		(2,653	)		(2,653	)		(7,460	)		(7,460	)		111			111
Discontinued operations attributable to common unitholders		2,441			2,441			37,103			37,103			46,002			46,002
Net income (loss) available to common unitholders	$	(212	)	$	(212	)	$	29,643		$	29,643		$	46,113		$	46,113
Denominator
Weighted-average units outstanding		114,712,869			114,712,869			90,391,044			90,391,044			91,170,209			91,170,209
Contingent securities/Stock based compensation		—			1,353,246			—			8,740						49,128
Total weighted-average units outstanding		114,712,869			116,066,115			90,391,044			90,399,784			91,170,209			91,219,337
Earnings per Common Partnership Units:
Income from continuing operations attributable to common unitholders	$	(0.02	)	$	(0.02	)	$	(0.08	)	$	(0.08	)	$	0.01		$	0.01
Discontinued operations attributable to common unitholders		0.02			0.02			0.41			0.41			0.48			0.48
Net income attributable to common unitholders	$	—		$	—		$	0.33		$	0.33		$	0.49		$	0.49

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 unit. For the twelve months ended December 31, 2009, 2008 and 2007, earnings representing nonforfeitable dividends as noted in the table above were allocated to the unvested restricted units.

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Common Partnership Unit and Preferred Mirror Units

The Company is the sole general partner of the Partnership and conducts substantially all its business and owns its assets through the Partnership and as a result does not have any significant assets, liabilities or operations, other than its investment in the Partnership’s Units, nor does it have any employees of its own. Pursuant to the Partnership Agreement, the Partnership reimburses the Company for all expenses incurred on behalf of its operations.

The Partnership issues partnership units to the Company in exchange for the contribution of the net proceeds of any equity security issuance by the Company. The number and terms of such partnership units correspond in number and terms of the related equity securities issued by the Company. In addition, the Partnership may also issue separate classes of partnership units. Historically, the Partnership has had the following types of partnership units outstanding (i) Preferred Partnership Units which have been issued to parties other than the Company (ii) Preferred Mirror Partnership Units which have been issued to the Company and (iii) Common Partnership Units which include both interests held by the Company and those held by other limited partners. Each of these interests is described in more detail below.

Preferred Mirror Partnership Units

In exchange for the proceeds received in corresponding offerings by the Company of preferred shares of beneficial interest, the Partnership has issued to the Company a corresponding amount of Preferred Mirror Partnership Units with terms consistent with that of the preferred securities issued by the Company.

On December 30, 2003, the Partnership issued 2,000,000 Series D Preferred Mirror Units to Brandywine Realty Trust in exchange for its contribution of the proceeds of its Series C Preferred Shares. The 2,000,000 Series D Preferred Mirror Units outstanding have an aggregate liquidation preference of $50.0 million, or $25.00 per unit. Cumulative distributions on the Series D Preferred Mirror Units are payable quarterly at an annualized rate of 7.50% of the liquidation preference. In the event that any of the Series C Preferred Shares of Brandywine Realty Trust are redeemed, which may occur at the option of Brandywine Realty Trust at any time on or after December 30, 2009, then an equivalent number of Series D Preferred Mirror Units will be redeemed.

On February 27, 2004, the Partnership issued 2,300,000 Series E Preferred Mirror Units to Brandywine Realty Trust in exchange for its contribution of the net proceeds of its Series D Preferred Shares. The 2,300,000 Series E Preferred Mirror Units outstanding have an aggregate liquidation preference of $57.5 million, or $25.00 per unit. Cumulative distributions on the Series E Preferred Mirror Units are payable quarterly at an annualized rate of 7.375% of the liquidation preference. In the event that any of the Series D Preferred Shares of Brandywine Realty Trust are redeemed, which may occur at the option of Brandywine Realty Trust at any time on or after February 27, 2009, then an equivalent number of Series E Preferred Mirror Units will be redeemed.

Common Partnership Units (Redeemable and General)

The Partnership has two classes of Common Partnership Units: (i) Class A Limited Partnership Interest which are held by both the Company and outside third parties and (ii) General Partnership Interests which are held by the Company. (Collectively, the Class A Limited Partnership Interest and General Partnership Interests are referred to as “Common Partnership Units”). The holders of the Common Partnership Units are entitled to share in cash distributions from, and in profits and losses of, the Partnership, in proportion to their respective percentage interests, subject to preferential distributions on the preferred mirror units and the preferred units.

The Common Partnership Units held by the Company (comprised of both General Partnership Units and Class A Limited Partnership Units) are presented as partner’s equity in the consolidated financial statements. Class A Limited Partnership Interest held by parties other than the Company are redeemable at the option of the holder for a like number of common shares of the Company, or cash, or a combination thereof, at the election of the Company. Because the form of settlement of these redemption rights are not within the control of the Partnership, these Common Partnership Units have been excluded from partner’s equity and are presented as redeemable limited partnership units measured at the potential cash redemption value as of the end of the periods presented based on the closing market price of the Company’s common shares at December 31, 2009, 2008 and 2007, which was $11.40, $7.71, $17.93 respectively. As of December 31, 2009, 2008 and 2007, 2,809,108 and 2,816,229 Class A Units were outstanding and owned by outside limited partners of the Partnership.

On December 8, 2009, the Partnership declared a distribution of $0.15 per Common Share, totaling $19.3 million, which was paid on January 20, 2010 to shareholders of record as of January 6, 2010. On December 8, 2009, the Partnership declared distributions on its Series C Preferred Shares and Series D Preferred Shares to holders of record as of December 30, 2009. These shares are entitled to a preferential return of 7.50% and 7.375%, respectively. Distributions paid on January 15, 2010 to holders of Series C Preferred Shares and Series D Preferred Shares totaled $0.9 million and $1.1 million, respectively.

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On June 2, 2009, the Partnership completed its public offering (the “offering”) of 40,250,000 of its common shares, par value $0.01 per share. The common shares were issued and sold by the Partnership to the underwriters at a public offering price of $6.30 per common share in accordance with an underwriting agreement. The common shares sold include 5,250,000 shares issued and sold pursuant to the underwriters’ exercise in full of their over-allotment option under the underwriting agreement. The Partnership received net proceeds of approximately $242.3 million from the offering net of underwriting discounts, commissions and expenses. The Partnership used the net proceeds from the offering to repay outstanding borrowings under its $600.0 million unsecured revolving credit facility amounting to $242.0 million and for general corporate purposes.

Common Share Repurchases

The Partnership maintains a share repurchase program under which the Board has authorized us to repurchase our common shares from time to time. The Board initially authorized this program in 1998 and has periodically replenished capacity under the program. On May 2, 2006 the Partnership’s Board restored capacity to 3.5 million common shares.

The Partnership did not repurchase any shares during the year-ended December 31, 2009. As of December 31, 2009, the Partnership may purchase an additional 0.5 million shares under the plan.

Repurchases may be made from time to time in the open market or in privately negotiated transactions, subject to market conditions and compliance with legal requirements. The share repurchase program does not contain any time limitation and does not obligate the Partnership to repurchase any shares. The Partnership may discontinue the program at any time.

13.SHARE BASED COMPENSATION

Stock Options

At December 31, 2009, the Partnership had 2,404,567 options outstanding under its shareholder approved equity incentive plan. There were 1,788,448 options unvested as of December 31, 2009 and $0.6 million of unrecognized compensation expense associated with these options will be recognized over a weighted average period of 1.63 years. During the year ended December 31, 2009 and 2008, the Partnership recognized $0.6 million and $0.3 million, respectively, of compensation expense included in general and administrative expense related to unvested options. No options were unvested during the year ended December 31, 2007.

Option activity as of December 31, 2009 and changes during the year ended December 31, 2009 were as follows:

				Weighted		Weighted Average
				Average		Remaining Contractual		Aggregate Intrinsic
	Shares			Exercise Price		Term (in years)		Value (in 000’s)
Outstanding at January 1, 2009		1,754,648		$	20.41		8.77	$	(30,093	)
Granted		676,491			2.91		9.25		5,743,405
Exercised		—
Forfeited or expired		(26,572	)		20.61
Outstanding at December 31, 2009		2,404,567		$	15.48		8.38	$	(9,816,670	)
Vested/Exercisable at December 31, 2009		616,119		$	20.03		7.54	$	(5,268,260	)

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The fair value of share option awards is estimated on the date of the grant using the Black-Scholes option valuation model. The following weighted-average assumptions were utilized in calculating the fair value of options granted during the year ended December 31, 2009 and 2008:

Grant Date	April 1, 2009			March 20, 2008			April 8, 2008
Risk-free interest rate		2.20	%		2.74	%		3.03	%
Dividend yield		23.64	%		8.81	%		8.52	%
Volatility factor		40.99	%		23.15	%		23.22	%
Weighted-average expected life	7 yrs			7 yrs			7 yrs

There were no options granted during the year-ended December 31, 2007.

						Weighted							Weighted
						Average							Average
				Weighted		Remaining					Weighted		Remaining
				Average		Contractual					Average		Contractual
				Exercise		Term					Exercise		Term
	Shares			Price		(in Years)		Shares			Price		(in Years)
Outstanding at beginning of year		1,070,099		$	26.13		0.54		1,286,075		$	26.45		1.5
Granted		1,824,594			20.61		8.61		—
Prentiss options converted to Company options as part of the Prentiss acquisition (See Note 3)		—			—		—		—		$	28.80		0.87
Exercised		—			—		—		(198,495	)	$	0.00		—
Forfeited/Expired		(1,140,045	)		26.10		—		(17,481	)		—
Outstanding at end of year		1,754,648		$	20.41		9.01		1,070,099		$	26.13		0.54
Vested/Exercisable at end of year		60,224		$	14.71		1.83		1,070,099		$	26.13

401(k) Plan

The Company sponsors a 401(k) defined contribution plan for its employees. Each employee may contribute up to 100% of annual compensation, subject to specific limitations under the Internal Revenue Code. At its discretion, the Company can make matching contributions equal to a percentage of the employee’s elective contribution and profit sharing contributions. Employees vest in employer contributions over a three-year service period. The Company contributions were $0.2 million in 2009, $0.6 million in 2008 and $0.6 million in 2007.

Restricted Share Awards

As of December 31, 2009, 708,580 restricted shares were outstanding and vest over three to seven years from the initial grant date. The remaining compensation expense to be recognized at December 31, 2009 was approximately $5.2 million. That expense is expected to be recognized over a weighted average remaining vesting period of 2.1 years. The Partnership recognized stock compensation related to outstanding restricted shares of $3.2 million during the year ended December 31, 2009, of which $0.8 million was capitalized as part of the Partnership’s review of employee salaries eligible for capitalization. For the years ended December 31, 2008 and 2007, the Partnership recognized $3.0 million of compensation expense included in general and administrative expense in the respective period related to outstanding restricted shares.

The following table summarizes the Partnership’s restricted share activity for the twelve months-ended December 31, 2009:

				Weighted
				Average Grant
	Shares			Date Fair value
Non-vested at January 1, 2009		475,496		$	26.21
Granted		372,586			3.36
Vested		(119,268	)		21.84
Forfeited		(20,234	)		14.65
Non-vested at December 31, 2009		708,580		$	9.69

F-79

Restricted Performance Share Units Plan

On April 1, 2009 the Compensation Committee of the Partnership’s Board of Trustees awarded 488,292 share-based units, referred to as Restricted Performance Share Units (“RPSU”), to executive participants. The awards are contingent upon the Partnership’s total shareholder return as compared to its industry peers and the employment status of the participants through the performance period. The performance period commenced on January 1, 2009 and will end on the earlier of December 31, 2011 or the date of a change in control.

If the total shareholder return during the measurement period places the Partnership at or above a certain percentile as compared to its peers based on an industry-based index at the end of the measurement period then the number of shares that will be delivered shall equal a certain percentage of the participant’s base units.

The participants will also receive dividend equivalent rights (“DER”) based on the initial number of the units awarded. The DER will be calculated throughout the vesting period and the dollar value of the DER will be used to purchase additional RPSU. All shares due to the participants will be delivered on March 1, 2012. On April 1, 2009, the Partnership awarded 488,292 RPSU to its officers. As of December 31, 2009, 470,861 of the RPSU awarded remained outstanding and 20,525 DERs have been determined. The shares awarded have a three year cliff vesting period which is the period the $1.1 million fair value of the awards will be amortized. On the date of the grant, the awards were valued using a Monte Carlo simulation. For the year-ended December 31, 2009, the Partnership recognized compensation expense of $0.3 million related to this plan.

Outperformance Program

On August 28, 2006, the Compensation Committee of the Company’s Board of Trustees adopted a long-term incentive compensation program (the “outperformance program”) under the 1997 Plan. The outperformance program provided for share-based awards, with share issuances (if any), to take the form of both vested and restricted common shares and with any share issuances contingent upon the Partnership’s total shareholder return during a three year measurement period exceeding specified performance hurdles. These hurdles were not met and, accordingly, no shares were delivered under the outperformance program and the outperformance program, has terminated in accordance with its terms. The awards under the outperformance program were accounted for in accordance with the accounting standard for stock-based compensation. The aggregate grant date fair values of the awards under the outperformance program, as adjusted for estimated forfeitures, were approximately $5.9 million (with the values determined through a Monte Carlo simulation) and are being amortized into expense over the five-year vesting period beginning on the grant dates using a graded vesting attribution model. For the years ended December 31, 2009, 2008 and 2007, the Partnership recognized $0.9 million, $1.0 million and $1.4 million, respectively, of compensation expense related to the outperformance program, $0.5 million remains to be recognized as compensation expense as of December 31, 2009.

Employee Share Purchase Plan

On May 9, 2007, the Company’s shareholders approved the 2007 Non-Qualified Employee Share Purchase Plan (the “ESPP”). The ESPP is intended to provide eligible employees with a convenient means to purchase common shares of the Partnership through payroll deductions and voluntary cash purchases at an amount equal to 85% of the average closing price per share for a specified period. Under the plan document, the maximum participant contribution for the 2009 plan year is limited to the lesser of 20% of compensation or $25,000. The number of shares reserved for issuance under the ESPP is 1.25 million. During the year ended December 31, 2009, employees made purchases of $0.4 million under the ESPP and the Partnership recognized $0.3 million of compensation expense related to the ESPP. During the year ended December 31, 2008, employees made purchases of $0.6 million under the ESPP and the Partnership recognized $0.1 million of compensation expense related to the ESPP. The Board of Directors of the Partnership may terminate the ESPP at its sole discretion at anytime.

Deferred Compensation

In January 2005, the Company adopted a Deferred Compensation Plan (the “Plan”) that allows trustees and certain key employees to voluntarily defer compensation. Compensation expense is recorded for the deferred compensation and a related liability is recognized. Participants may elect designated benchmark investment options for the notational investment of their deferred compensation. The deferred compensation obligation is adjusted for deemed income or loss related to the investments selected. At the time the participants defer compensation, the Partnership records a liability, which is included in the Partnership’s consolidated balance sheet. The liability is adjusted for changes in the market value of the participants selected investments at the end of each accounting period, and the impact of adjusting the liability is recorded as an increase or decrease to compensation cost. For the years ended December 31, 2009, 2008 and 2007, the Partnership recorded a net increase in compensation cost of $1.5 million, a net reduction in compensation cost of $2.8 million and a net increase in compensation cost of $0.9 million, respectively, in connection with the Plan due to the change in market value of the participant investments in the Plan.

F-80

The deferred compensation obligations are unfunded, but the Company has purchased assets, company-owned life insurance policies and mutual funds, which can be utilized as a future funding source for the obligations related to the Plan. Participants in the Plan have no interest in any assets set aside by the Company to meet its obligations under the deferral plan. For the years ended December 31, 2009, 2008 and 2007, the Company recorded a net reduction in compensation cost of $1.8 million, a net increase in compensation cost of $2.7 million and a net decrease in compensation cost of $0.8 million, respectively, in connection with the investments in the Company-owned policies and mutual funds.

Participants in the Plan may elect to have all or a portion of their deferred compensation invested in the Partnership’s common shares. The Partnership holds these shares in a rabbi trust, which is subject to the claims of the Partnership’s creditors in the event of the Partnership’s bankruptcy or insolvency. The Plan does not provide for diversification of a participant’s deferral allocated to the Company common share and deferrals allocated to Partnership common share can only be settled with a fixed number of shares. In accordance with the accounting standard for deferred compensation arrangements where amounts earned are held in a rabbi trust and invested, the deferred compensation obligation associated with Partnership’s common share is classified as a component of shareholder’s equity and the related shares are treated as shares to be issued and are included in total shares outstanding. At December 31, 2009 and 2008, there were 0.3 million and 0.2 million shares, respectively, to be issued included in total shares outstanding. Subsequent changes in the fair value of the common shares are not reflected in operations or shareholders’ equity of the Partnership.

14.DISTRIBUTIONS

	Years ended December 31,
	2009		2008		2007
Common Partnership Unit Distributions:
Total distributions per unit	$	0.60	$	1.76	$	1.76
Preferred Unit Distributions:
Total distributions declared	$	7,992,000	$	7,992,000	$	7,992,000

15.TAX CREDIT TRANSACTIONS

Historic Tax Credit Transaction

On November 17, 2008, the Partnership closed a transaction with US Bancorp (“USB”) related to the historic rehabilitation of the 30th Street Post Office in Philadelphia, Pennsylvania (“Project”), an 862,692 square foot office building which is 100% pre-leased to the Internal Revenue Service (expected commencement of the IRS lease is August 2010). USB has agreed to contribute approximately $67.9 million of Project costs and advanced $10.2 million of that contemporaneously with the closing of the transaction. USB advanced another $23.8 million of the said funds in December 2009. The remaining funds will be advanced in 2009 and 2010 subject to the Partnership’s achievement of certain construction milestones and its compliance with the federal rehabilitation regulations. In return for the investment, USB will, upon completion of the Project in 2010, receive substantially all of the rehabilitation credits available under section 47 of the Internal Revenue Code.

In exchange for its contributions into the Project, USB is entitled to substantially all of the benefits derived from the tax credit, but does not have a material interest in the underlying economics of the property. This transaction also includes a put/call provision whereby the Partnership may be obligated or entitled to repurchase USB’s interest in the Project. The Partnership believes the put will be exercised and an amount attributed to that puttable non-controlling interest obligation is included in other liabilities and is being accreted to the expected fixed put price.

Based on the contractual arrangements that obligate the Partnership to deliver tax benefits and provide other guarantees to USB and that entitle the Partnership through fee arrangements to receive substantially all available cash flow from the Project, the Partnership concluded that the Project should be consolidated in accordance with the accounting standard for consolidation. The Partnership also concluded that capital contributions received from USB, in substance, are consideration that the Partnership receives in exchange for its obligation to deliver tax credits and other tax benefits to USB. These receipts other than the amounts allocated to the put obligation will be recognized as revenue in the consolidated financial statements only after the put/call provision is exercised and when USB no longer has any ongoing interest in the Project. The tax credit is subject to 20% recapture per year beginning one year after the completion of the Project in 2010. The Partnership expects that USB will exercise the put/call provision in December 2015 when the recapture period ends. The Partnership will recognize the cash received as income once either the put or the call is exercised.

F-81

The USB contributions made during 2009 and 2008 of $23.8 million and $10.2 million, respectively, is presented within deferred income on the Partnership’s consolidated balance sheet at December 31, 2009 and 2008. The said USB contributions recorded as deferred income are net of the amounts allocated to non-controlling interest as described above of $0.7 million in 2009 and $0.2 million in 2008.

Direct and incremental costs incurred in structuring the arrangement are deferred and will be recognized as expense in the consolidated financial statements upon the recognition of the related revenue as discussed above. The deferred cost at December 31, 2009 is $2.4 million and is included in other assets on the Partnership’s consolidated balance sheet. Amounts included in interest expense related to the accretion of the non-controlling interest liability and the 2% return expected to be paid to USB on its non-controlling interest aggregate to $0.2 million for the year-ended December 31, 2009.

New Markets Tax Credit Transaction

On December 30, 2008, the Partnership entered into a transaction with USB related to the Cira Garage Project (“garage project”) in Philadelphia, Pennsylvania and expects to receive a net benefit of $7.8 million under a qualified New Markets Tax Credit Program (“NMTC”). The NMTC was provided for in the Community Renewal Tax Relief Act of 2000 (the “Act”) and is intended to induce investment capital in underserved and impoverished areas of the United States. The Act permits taxpayers (whether companies or individuals) to claim credits against their Federal income taxes for up to 39% of qualified investments in qualified, active low-income businesses or ventures.

USB contributed $13.3 million into the garage project and as such they are entitled to substantially all of the benefits derived from the tax credit, but they do not have a material interest in the underlying economics of the garage project. This transaction also includes a put/call provision whereby the Partnership may be obligated or entitled to repurchase USB’s interest. The Partnership believes the put will be exercised and an amount attributed to that obligation is included in other liabilities. The said put price is insignificant.

Based on the contractual arrangements that obligate the Partnership to deliver tax benefits and provide various other guarantees to USB, the Partnership concluded that the project should be consolidated in accordance with the accounting standard for consolidation. The USB contribution of $13.3 million is included in deferred income on the Partnership’s consolidated balance sheet at December 31, 2009 and 2008. The USB contribution other than the amount allocated to the put obligation will be recognized as income in the consolidated financial statements only after the put/call provision is exercised and when USB no longer has any ongoing interest in the Project. The NMTC is subject to 100% recapture for a period of seven years as provided in the Internal Revenue Code. The Partnership expects that USB will exercise the put/call provision in December 2015 at the end of the recapture period.

Direct and incremental costs incurred in structuring the arrangement are deferred and amortized over the expected duration of the arrangement in proportion to the recognition of the related revenue. The deferred costs at December 31, 2009 is $5.4 million and is included in other assets on the Partnership’s consolidated balance sheet.

F-82

16.ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table details the components of accumulated other comprehensive income (loss) as of and for the three years ended December 31, 2009 (in thousands):

	Unrealized Gains			Cash Flow			Accumulated Other
	(Losses) on Securities			Hedges			Comprehensive Loss
Balance at January 1, 2007		328			1,248			1,576
Change during year		—			(3,600	)		(3,600	)
Settlement of treasury locks		—			(3,860	)		(3,860	)
Settlement of forward starting swaps		—			1,148			1,148
Reclassification adjustments for (gains) losses reclassified into operations		(585	)		3,436			2,851
Balance at December 31, 2007		(257	)		(1,628	)		(1,885	)
Change during year		—			(15,288	)		(15,288	)
Reclassification adjustments for (gains) losses reclassified into operations		248			(80	)		168
Balance at December 31, 2008	$	(9	)	$	(16,996	)	$	(17,005	)
Change during year		—			7,395			7,395
Ineffectiveness of forward starting swaps		—			(125	)		(125	)
Other		—			491			491
Reclassification adjustments for (gains) losses reclassified into operations		—			(184	)		(184	)
Balance at December 31, 2009	$	(9	)	$	(9,419	)	$	(9,428	)

Over time, the unrealized gains and losses held in Accumulated Other Comprehensive Income (“AOCI”) will be reclassified to earnings when hedged items are recognized in earnings. The current balance held in AOCI is expected to be reclassified to earnings over the lives of the current hedging instruments, or for realized losses on forecasted debt transactions, over the related term of the debt obligation (including the planned issuance related to previously forecasted transactions that are considered to be reasonably possible of occurring), as applicable. During the year ended December 31, 2008, the Partnership reclassified approximately $(0.5) million to interest expense associated with treasury lock agreements and forward starting swaps previously settled.

17.SEGMENT INFORMATION

As of December 31, 2009, the Partnership manages its portfolio within six segments: (1) Pennsylvania, (2) Metropolitan Washington D.C, (3) New Jersey/Delaware, (4) Richmond, Virginia, (5) Austin, Texas, and (6) California. The Pennsylvania segment includes properties in Chester, Delaware, Bucks, and Montgomery counties in the Philadelphia suburbs and the City of Philadelphia in Pennsylvania. The Metropolitan Washington, D.C. segment includes properties in Northern Virginia and suburban Maryland. The New Jersey/Delaware segment includes properties in counties in the southern and central part of New Jersey including Burlington, Camden and Mercer counties and the state of Delaware. The Richmond, Virginia segment includes properties primarily in Albemarle, Chesterfield and Henrico counties, the City of Richmond and Durham, North Carolina. The California segment includes properties in Oakland, Concord, Carlsbad and Rancho Bernardo. The Austin, Texas segment includes properties in Coppell and Austin. The corporate group is responsible for cash and investment management, development of certain real estate properties during the construction period, and certain other general support functions. Land held for development and construction in progress are transferred to operating properties by region upon completion of the associated construction or project.

F-83

Segment information for the three years ended December 31, 2009, 2008 and 2007 are as follows (in thousands):

			Metropolitan,		New Jersey		Richmond,
	Pennsylvania		D.C.		/Delaware		Virginia		Austin, Texas		California		Corporate			Total
2009:
Real estate investments, at cost:
Operating properties	$	1,726,267	$	1,356,206	$	598,122	$	297,958	$	282,093	$	251,972	$	—		$	4,512,618
Construction-in-progress	$	—	$	—	$	—	$	—	$	—	$	—	$	271,962		$	271,962
Land inventory	$	—	$	—	$	—	$	—	$	—	$	—	$	97,368		$	97,368
Total revenue	$	239,038	$	140,438	$	103,277	$	36,387	$	35,143	$	29,282	$	(1,346	)	$	582,219
Property operating expenses, real estate taxes and third party management expenses		90,455		52,712		48,254		14,337		15,404		14,683		(1,460	)		234,385
Net operating income	$	148,583	$	87,726	$	55,023	$	22,050	$	19,739	$	14,599	$	114		$	347,834
2008:
Real estate investments, at cost:
Operating properties	$	1,734,946	$	1,371,997	$	674,503	$	297,171	$	280,826	$	248,877	$	—		$	4,608,320
Construction-in-progress	$	—	$	—	$	—	$	—	$	—	$	—	$	122,219		$	122,219
Land inventory	$	—	$	—	$	—	$	—	$	—	$	—	$	100,516		$	100,516
Total revenue	$	243,216	$	138,339	$	104,711	$	38,047	$	37,388	$	29,590	$	(1,870	)	$	589,421
Property operating expenses, real estate taxes and third party management expenses		86,071		49,672		46,895		13,136		16,385		12,855		3,370			228,384
Net operating income	$	157,145	$	88,667	$	57,816	$	24,911	$	21,003	$	16,735	$	(5,240	)	$	361,037
2007:
Real estate investments, at cost:
Operating properties	$	1,682,840	$	1,302,833	$	663,503	$	348,310	$	236,959	$	579,120	$	—		$	4,813,565
Construction-in-progress	$	—	$	—	$	—	$	—	$	—	$	—	$	332,380		$	332,380
Land inventory	$	—	$	—	$	—	$	—	$	—	$	—	$	70,297		$	70,297
Total revenue	$	274,246	$	130,731	$	101,927	$	31,693	$	37,874	$	30,141	$	(1,801	)	$	604,811
Property operating expenses, real estate taxes and third party management expenses		96,366		44,963		46,911		10,655		16,407		10,942		4,293			230,537
Net operating income	$	177,880	$	85,768	$	55,016	$	21,038	$	21,467	$	19,199	$	(6,094	)	$	374,274

F-84

Net operating income is defined as total revenue less property operating expenses, real estate taxes and third party management expenses. Segment net operating income includes revenue, real estate taxes and property operating expenses directly related to operation of the properties within the respective geographical region. Segment net operating income excludes property level depreciation and amortization, revenue and expenses directly associated with third party real estate management services, expenses associated with corporate administrative support services, and inter-company eliminations. Below is a reconciliation of consolidated net operating income to consolidated income (loss) from continuing operations:

	Year Ended December 31,
	2009			2008			2007
	(amounts in thousands)
Consolidated net operating income	$	347,834		$	361,037		$	374,274
Less:
Interest expense		(135,740	)		(146,646	)		(161,150	)
Deferred financing costs		(5,864	)		(5,450	)		(4,496	)
Loss on settlement of treasury lock agreements		—			—			(3,698	)
Depreciation and amortization		(208,590	)		(202,043	)		(219,553	)
Administrative expenses		(20,821	)		(23,002	)		(27,932	)
Provision for impairment on land inventory		—			(10,841	)		—
Recognized Hedge Activity		(916	)		—			—
Plus:
Interest income		2,500			1,839			4,014
Equity in income of real estate ventures		4,069			8,447			6,955
Net gain on sales of interests in depreciated real estate		—			—			40,919
Net (loss) gain on sales of interests in undepreciated real estate		—			(24	)		—
Gain on early extinguishment of debt		23,176			18,105			—
Income (loss) from continuing operations		5,648			1,422			9,333
Income from discontinued operations		2,441			37,103			46,002
Net income	$	8,089		$	38,525		$	55,335

19.OPERATING LEASES

The Partnership leases properties to tenants under operating leases with various expiration dates extending to 2025. Minimum future rentals on non-cancelable leases at December 31, 2009 are as follows (in thousands):

Year	Minimum Rent
2010	$	473,953
2011		421,120
2012		358,097
2013		309,052
2014		260,157
Thereafter		1,010,618

Total minimum future rentals presented above do not include amounts to be received as tenant reimbursements for operating costs.

20.COMMITMENTS AND CONTINGENCIES

Legal Proceedings

The Partnership is involved from time to time in litigation on various matters, including disputes with tenants and disputes arising out of agreements to purchase or sell properties. Given the nature of the Partnership’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 Partnership 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 Partnership.

F-85

Letters-of-Credit

Under certain mortgages, the Partnership has funded required leasing and capital reserve accounts for the benefit of the mortgage lenders with letters-of-credit which totaled $13.9 million at December 31, 2009. 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. At December 31, 2009, the Partnership guaranteed a $51.0 million holdback from the Credit Facility in connection with its historic tax credit transaction. Any excess cash is included in cash and cash equivalents.

Ground Rent

Future minimum rental payments under the terms of all non-cancelable ground leases under which the Partnership is the lessee are expensed on a straight-line basis regardless of when payments are due. Minimum future rental payments on non-cancelable leases at December 31, 2009 are as follows (in thousands):

2010	$	2,318
2011		2,318
2012		2,318
2013		2,318
2014		2,409
Thereafter		285,913

One of the land leases for a property (currently under development) provides for contingent rent participation by the lessor in certain capital transactions and net operating cash flows of the property after certain returns are achieved by the Partnership. Such amounts, if any, will be reflected as contingent rent when incurred. The leases also provide for payment by the Partnership of certain operating costs relating to the land, primarily real estate taxes. The above schedule of future minimum rental payments does not include any contingent rent amounts nor any reimbursed expenses.

Other Commitments or Contingencies

As part of the Partnership’s September 2004 acquisition of a portfolio of properties from The Rubenstein Company (which the Partnership refers to as the TRC acquisition), the Partnership acquired its interest in Two Logan Square, a 696,477 square foot office building in Philadelphia, primarily through its ownership of a second and third mortgage secured by this property. This property is consolidated as the borrower is a variable interest entity and the Partnership, through its ownership of the second and third mortgages, is the primary beneficiary. The Partnership currently does not expect to take title to Two Logan Square until, at the earliest, September 2019. If the Partnership takes fee title to Two Logan Square upon a foreclosure of its mortgage, the Partnership has agreed to pay an unaffiliated third party that holds a residual interest in the fee owner of this property an amount equal to $0.6 million (if we must pay a state and local transfer upon taking title) and $2.9 million (if no transfer tax is payable upon the transfer).

The Partnership is currently being audited by the Internal Revenue Service for its 2004 tax year. The audit concerns the tax treatment of the transaction in September 2004 in which the Partnership acquired a portfolio of properties through the acquisition of a limited partnership. At this time it does not appear that an adjustment would result in a material tax liability for the Partnership. However, an adjustment could raise a question as to whether a contributor of partnership interests in the 2004 transaction could assert a claim against the Partnership under the tax protection agreement entered into as part of the transaction.

As part of the Partnership’s 2006 acquisition of Prentiss Properties Trust, the TRC acquisition in 2004 and several of our other transactions, the Partnership agreed not to sell certain of the properties it acquired in transactions that would trigger taxable income to the former owners. In the case of the TRC acquisition, the Partnership agreed not to sell acquired properties for periods up to 15 years from the date of the TRC acquisition as follows at September 30, 2009: One Rodney Square and 130/150/170 Radnor Financial Center (January 2015); and One Logan Square, Two Logan Square and Radnor Corporate Center (January 2020). In the Prentiss acquisition, the Partnership assumed the obligation of Prentiss not to sell Concord Airport Plaza before March 2018. The Partnership’s agreements generally provide that it may dispose of the subject properties only in transactions that qualify as tax-free exchanges under Section 1031 of the Internal Revenue Code or in other tax deferred transactions. If the Partnership were to sell a restricted property before expiration of the restricted period in a non-exempt transaction, the Partnership may be required to make significant payments to the parties who sold it the applicable property on account of tax liabilities attributed to them.

The Partnership invests in its properties and regularly incurs capital expenditures in the ordinary course to maintain the properties. The Partnership believes that such expenditures enhance our competitiveness. The Partnership 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.

F-86

During 2008, in connection with the development of the PO Box/IRS and Cira Garage projects, the Company entered into a historic tax credit and new market tax credit arrangement, respectively. The Partnership is required to be in compliance with various laws, regulations and contractual provisions that apply to its historic and new market tax credit arrangements. Non-compliance with applicable requirements could result in projected tax benefits not being realized and require a refund or reduction of investor capital contributions, which are reported as deferred income in the Partnership’s consolidated balance sheet, until such time as its obligation to deliver tax benefits is relieved. The remaining compliance periods for its tax credit arrangements runs through 2015. The Partnership does not anticipate that any material refunds or reductions of investor capital contributions will be required in connection with these arrangements. Refer to Note 16 for further discussion on the tax credit transactions.

On June 29, 2009, the Partnership entered into a forward financing commitment to borrow up to $256.5 million under two separate loans which are secured by mortgages on the Post Office project, the garage project and by the leases of space at these facilities upon the completion of these projects (See Note 7). In order for funding to occur, certain conditions must be met by the Partnership and primarily relate to the completion of the projects and the commencement of the rental payments from the respective leases on these properties. The expected funding date is scheduled on August 26, 2010 which is also the anticipated completion date of the projects. In the event the conditions were not met, the Partnership has the right to extend the funding date by paying an extension fee amounting to $1.8 million for each 30 day extension within the allowed two year extension period. In addition, the Partnership can also voluntarily elect to terminate the loans during the forward period including the extension period by paying a termination fee. The Partnership is also subject to the termination fee if the conditions were not met on the final advance date. The termination fee is calculated as the greater of the 0.5% of the total available principal to be funded or the difference between the present value of the scheduled interest and principal payments (based on the principal amount to be funded and the then 20-year treasury rate plus 50 basis points) from the funding date through the loans’ maturity date and the amount to be funded. In addition, deferred financing costs related to these loans will be accelerated if the Partnership chose to terminate the forward financing commitment.

21.SUBSEQUENT EVENT

On January 14, 2010, the Partnership sold an office property containing 121,815 net rentable square feet located in Richmond, Virginia, for a sales price of $10.9 million.

The Partnership has evaluated subsequent events.

F-87

22.SUMMARY OF QUARTERLY RESULTS (UNAUDITED)

The following is a summary of quarterly financial information as of and for the years ended December 31, 2009 and 2008 (in thousands, except per share data):

	1st			2nd		3rd			4th
	Quarter			Quarter		Quarter (a)			Quarter (a)
2009:
Total revenue	$	146,917		$	142,074	$	146,593		$	146,635
Net income		(873	)		5,780		7,309			(4,127	)
Income allocated to Common Partnership Units		(778	)		5,612		7,148			(3,956	)
Basic earnings per Common Partnership Unit	$	(0.03	)	$	0.03	$	0.04		$	(0.04	)
Diluted earnings per Common Partnership Unit	$	(0.03	)	$	0.03	$	0.04		$	(0.04	)
2008:
Total revenue	$	148,457		$	147,516	$	144,338		$	149,110
Net income		13,597			8,213		1,746			14,969
Income allocated to Common Partnership Units		13,070			7,912		1,697			14,538
Basic earnings per Common Partnership Unit	$	0.13		$	0.07	$	(0.01	)	$	0.14
Diluted earnings per Common Partnership Unit	$	0.13		$	0.06	$	(0.01	)	$	0.14

(a) The fourth quarter net income includes a $0.9 million out of period adjustment pertaining to the Company’s incorrect recording during the quarter ended September 30, 2009 of an amount released from Accumulated Other Comprehensive Income as a charge rather than a credit to recognized hedge activity. The amount released of $0.4 million relates to a forecasted transaction which was no longer expected to occur. The reversal of the entry resulted in the $0.9 million of income in the quarter ended December 31, 2009. In addition, the fourth quarter of 2009 contains an out of period depreciation adjustment of $1.3 million relating to tenant assets that should have been written off over the second and third quarters of 2009 amounting to $0.6 million and $0.7 million, respectively.

The summation of quarterly earnings per share amounts do not necessarily equal the full year amounts. The above information was updated to reclassify amounts previously reported to reflect discontinued operations and the retrospective adoption of the new accounting standards. See Note 2 and Note 10.

F-88

Brandywine Operating Partnership

Schedule II

Valuation and Qualifying Accounts
(in thousands)

	Balance at						Balance
	Beginning						at End
Description	of Period		Additions		Deductions (1)		of Period
Allowance for doubtful accounts:
Year ended December 31, 2009	$	15,474	$	2,596	$	1,707	$	16,363
Year ended December 31, 2008	$	10,162	$	6,900	$	1,588	$	15,474
Year ended December 31, 2007	$	9,311	$	2,147	$	1,296	$	10,162

(1) Deductions represent amounts that the Partnership had fully reserved for in prior periods and pursuit of collection of such amounts was ceased during the period.

F-89

BRANDYWINE OPERATING PARTNERSHIP, L.P.

SCHEDULE III

Real Estate and Accumulated Depreciation — December 31, 2009

(in thousands)

												Gross Amount at Which Carried
					Initial Cost							December 31, 2009
									Net
									Improvements										Accumulated
									(Retirements)										Depreciation at
			Encumberances at				Building and		Since					Building and					December 31,		Year of		Year		Depreciable
	City	State	December 31, 2009		Land		Improvements		Acquisition			Land		Improvements			Total (a)		2009 (b)		Construction		Acquired		Life
PENNSYLVANIA
2929 Arch Street	Philadelphia	PA		—		—		208,570		17,954			—		226,524			226,524		36,427		2005		N/A		40
130 North 18th Street	Philadelphia	PA		89,800		14,496		107,736		9,874			14,473		117,633			132,106		20,451		1983		2004		23
100 North 18th Street	Philadelphia	PA		60,000		16,066		100,255		3,940			16,066		104,195			120,261		17,168		1988		2004		33
150 Radnor Chester Road	Radnor	PA		—		11,925		36,986		13,064			11,897		50,078			61,975		10,691		1983		2004		29
555 Lancaster Avenue	Radnor	PA		—		8,014		16,508		25,497			8,609		41,410			50,019		10,236		1973		2004		24
One Radnor Corporate Center	Radnor	PA		—		7,323		28,613		11,526			7,323		40,139			47,462		6,107		1998		2004		29
201 King of Prussia Road	Radnor	PA		—		8,956		29,811		5,101			8,949		34,918			43,868		8,466		2001		2004		25
401 Plymouth Road	Plymouth Meeting	PA		—		6,198		16,131		15,222			6,199		31,353			37,551		7,442		2001		2000		40
Four Radnor Corporate Center	Radnor	PA		—		5,406		21,390		8,976			5,705		30,067			35,772		6,300		1995		2004		30
Five Radnor Corporate Center	Radnor	PA		—		6,506		25,525		1,892			6,578		27,345			33,923		4,678		1998		2004		38
101 West Elm Street	W. Conshohocken	PA		—		6,251		25,209		1,031			6,251		26,239			32,491		3,261		1999		2005		40
4000 Chemical Road	Plymouth Meeting	PA		—		4,373		24,546		1,295			4,373		25,841			30,214		1,157		2007		N/A		40
Three Radnor Corporate Center	Radnor	PA		—		4,773		17,961		1,250			4,791		19,192			23,984		3,766		1998		2004		29
640 Freedom Business Center	King Of Prussia	PA		—		4,222		16,891		2,689			4,222		19,580			23,802		6,628		1991		1998		40
555 Croton Road	King of Prussia	PA		—		4,486		17,943		1,026			4,486		18,969			23,455		4,261		1999		2001		40
400 Berwyn Park	Berwyn	PA		—		2,657		4,462		15,790			2,657		20,252			22,909		6,473		1999		1999		40
630 Allendale Road	King of Prussia	PA		—		2,836		4,028		15,499			2,636		19,727			22,363		7,289		2000		2000		40
101 Lindenwood Drive	Malvern	PA		—		4,152		16,606		1,324			4,152		17,931			22,082		4,334		1988		2001		40
52 Swedesford Square	East Whiteland Twp.	PA		—		4,241		16,579		1,002			4,241		17,581			21,822		5,771		1988		1998		40
600 West Germantown Pike	Plymouth Meeting	PA		10,626		3,652		15,288		1,456			3,652		16,744			20,396		3,685		1986		2002		40
630 West Germantown Pike	Plymouth Meeting	PA		10,652		3,558		14,743		2,094			3,558		16,836			20,395		3,376		1988		2002		40
980 Harvest Drive	Blue Bell	PA		—		3,304		16,960		0			3,304		16,961			20,264		5,098		1988		2002		40
Two Radnor Corporate Center	Radnor	PA		—		3,937		15,484		810			3,942		16,289			20,231		3,144		1998		2004		29
610 West Germantown Pike	Plymouth Meeting	PA		10,682		3,651		14,514		1,921			3,651		16,434			20,086		3,588		1987		2002		40
620 West Germantown Pike	Plymouth Meeting	PA		10,682		3,572		14,435		1,417			3,572		15,851			19,424		3,843		1990		2002		40
200 Barr Harbour Drive	Conshohocken	PA		13,557		2,827		15,525		163			2,827		15,688			18,515		6,116		1999		2004		40
1050 Westlakes Drive	Berwyn	PA		—		2,611		10,445		5,046			2,611		15,491			18,102		4,376		1984		1999		40
1 West Elm Street	W. Conshohocken	PA		—		3,557		14,249		—			3,557		14,347			17,904		1,526		1999		2005		40
1200 Swedesford Road	Berwyn	PA		3,255		2,595		11,809		3,370			2,595		15,178			17,774		2,189		1994		2001		40
181 Washington Street	Conshohocken	PA		10,158		2,672		14,221		812			2,673		15,032			17,705		6,688		1998		2004		40
300 Berwyn Park	Berwyn	PA		10,506		2,206		13,422		1,983			2,206		15,405			17,611		5,478		1989		1997		40
620 Freedom Business Center	King Of Prussia	PA		—		2,770		11,014		3,295			2,770		14,309			17,079		5,242		1986		1998		40
1000 First Avenue	King Of Prussia	PA		—		2,772		10,936		3,177			2,772		14,113			16,885		4,494		1980		1998		40
1060 First Avenue	King Of Prussia	PA		—		2,712		10,953		2,609			2,712		13,562			16,274		4,279		1987		1998		40
301 Lindenwood Drive	Malvern	PA		—		2,729		10,915		1,955			2,729		12,870			15,599		3,419		1984		2001		40
1040 First Avenue	King Of Prussia	PA		—		2,860		11,282		1,047			2,860		12,329			15,189		4,192		1985		1998		40
595 East Swedesford Road	Wayne	PA		—		2,729		10,917		1,491			2,729		12,408			15,137		2,063		1998		2003		40
630 Freedom Business Center	King Of Prussia	PA		—		2,773		11,144		978			2,773		12,122			14,895		4,203		1989		1998		40
1020 First Avenue	King Of Prussia	PA		—		2,168		8,576		4,118			2,168		12,693			14,862		3,895		1984		1998		40
130 Radnor Chester Road	Radnor	PA		—		2,573		8,338		3,692			2,567		12,035			14,603		1,830		1983		2004		25
170 Radnor Chester Road	Radnor	PA		—		2,514		8,147		3,340			2,509		11,493			14,001		2,246		1983		2004		25
200 Berwyn Park	Berwyn	PA		7,254		1,533		9,460		2,351			1,533		11,811			13,344		4,564		1987		1997		40
575 East Swedesford Road	Wayne	PA		—		2,178		8,712		1,856			2,178		10,568	��		12,746		1,842		1985		2003		40
1180 Swedesford Road	Berwyn	PA		—		2,086		8,342		1,237			2,086		9,580			11,665		2,471		1987		2001		40
610 Freedom Business Center	King Of Prussia	PA		—		2,017		8,070		722			2,017		8,792			10,809		3,086		1985		1998		40
565 East Swedesford Road	Wayne	PA		—		1,872		7,489		1,201			1,872		8,690			10,562		1,688		1984		2003		40
1160 Swedesford Road	Berwyn	PA		—		1,781		7,124		1,245			1,781		8,369			10,150		2,248		1986		2001		40
100 Berwyn Park	Berwyn	PA		5,580		1,180		7,290		963			1,180		8,253			9,433		3,135		1986		1997		40
925 Harvest Drive	Blue Bell	PA		—		1,671		6,606		1,128			1,671		7,734			9,405		2,775		1990		1998		40
650 Park Avenue	King Of Prussia	PA		—		1,916		4,378		2,530			1,916		6,908			8,824		2,950		1968		1998		40
426 Lancaster Avenue	Devon	PA		—		1,689		6,756		369			1,689		7,126			8,814		2,489		1990		1998		40
1100 Cassett Road	Berwyn	PA		—		1,695		6,779		(0	)		1,695		6,779			8,474		1,483		1997		2001		40
14 Campus Boulevard	Newtown Square	PA		6,725		2,244		4,217		1,734			2,244		5,951			8,195		1,648		1998		1998		40
500 North Gulph Road	King Of Prussia	PA		—		1,303		5,201		1,564			1,303		6,765			8,068		2,661		1979		1996		40
920 Harvest Drive	Blue Bell	PA		—		1,209		6,595		(245	)		1,208		6,351			7,559		2,398		1990		1998		40
2240/2250 Butler Pike	Plymouth Meeting	PA		—		1,104		4,627		1,666			1,104		6,293			7,397		2,811		1984		1996		40
One Progress Drive	Horsham	PA		—		1,399		5,629		230			1,399		5,859			7,258		2,360		1986		1996		40
585 East Swedesford Road	Wayne	PA		—		1,350		5,401		358			1,350		5,758			7,109		902		1998		2003		40
429 Creamery Way	Exton	PA		—		1,368		5,471		19			1,368		5,490			6,858		1,244		1996		2001		40
741 First Avenue	King Of Prussia	PA		—		1,287		5,151		219			1,287		5,369			6,657		1,956		1966		1998		40
440 Creamery Way	Exton	PA		—		982		3,927		1,717			982		5,644			6,626		1,508		1991		2001		40
412 Creamery Way	Exton	PA		—		1,195		4,779		503			1,195		5,282			6,477		1,296		1999		2001		40
875 First Avenue	King Of Prussia	PA		—		618		2,473		3,302			618		5,775			6,393		2,086		1966		1998		40
17 Campus Boulevard	Newtown Square	PA		4,699		1,108		5,155		46			1,108		5,201			6,309		2,083		2001		1997		40
479 Thomas Jones Way	Exton	PA		—		1,075		4,299		808			1,075		5,107			6,182		1,231		1988		2001		40
500 Enterprise Drive	Horsham	PA		—		1,303		5,188		(446	)		1,303		4,741			6,045		1,804		1990		1996		40
11 Campus Boulevard	Newtown Square	PA		4,610		1,112		4,067		802			1,112		4,869			5,981		1,429		1998		1999		40
Philadelphia Marine Center	Philadelphia	PA		—		532		2,196		3,249			628		5,349			5,977		1,241	Various			1998		40

F-90

BRANDYWINE OPERATING PARTNERSHIP, L.P.

SCHEDULE III

Real Estate and Accumulated Depreciation — December 31, 2009

(in thousands)

												Gross Amount at Which Carried
					Initial Cost							December 31, 2009
									Net
									Improvements									Accumulated
									(Retirements)									Depreciation at
			Encumberances at				Building and		Since					Building and				December 31,		Year of		Year		Depreciable
	City	State	December 31, 2009		Land		Improvements		Acquisition			Land		Improvements		Total (a)		2009 (b)		Construction		Acquired		Life
467 Creamery Way	Exton	PA		—		906		3,623		1,365			906		4,988		5,894		1,171		1988		2001		40
300 Lindenwood Drive	Malvern	PA		—		848		3,394		1,362			849		4,756		5,604		1,110		1991		2001		40
436 Creamery Way	Exton	PA		—		994		3,978		555			994		4,532		5,527		1,112		1991		2001		40
751-761 Fifth Avenue	King Of Prussia	PA		—		1,097		4,391		31			1,097		4,422		5,519		1,505		1967		1998		40
15 Campus Boulevard	Newtown Square	PA		4,800		1,164		3,896		408			1,164		4,304		5,468		1,012		2002		2000		40
600 Park Avenue	King Of Prussia	PA		—		1,012		4,048		385			1,012		4,433		5,445		1,443		1964		1998		40
620 Allendale Road	King Of Prussia	PA		—		1,020		3,839		514			1,020		4,353		5,373		1,387		1961		1998		40
442 Creamery Way	Exton	PA		—		894		3,576		684			894		4,260		5,154		1,100		1991		2001		40
100 Arrandale Boulevard	Exton	PA		—		970		3,878		274			970		4,152		5,122		983		1997		2001		40
18 Campus Boulevard	Newtown Square	PA		3,615		787		3,312		461			787		3,773		4,560		1,676		1990		1996		40
2260 Butler Pike	Plymouth Meeting	PA		—		661		2,727		1,103			662		3,829		4,491		1,665		1984		1996		40
486 Thomas Jones Way	Exton	PA		—		806		3,256		339			806		3,595		4,401		1,360		1990		1996		40
1700 Paoli Pike	Malvern	PA		—		458		559		3,281			488		3,810		4,298		1,017		2000		2000		40
120 West Germantown Pike	Plymouth Meeting	PA		—		685		2,773		652			685		3,425		4,110		1,518		1984		1996		40
457 Creamery Way	Exton	PA		—		777		3,107		25			777		3,132		3,909		699		1990		2001		40
1336 Enterprise Drive	West Goshen	PA		—		731		2,946		47			731		2,993		3,724		1,133		1989		1997		40
680 Allendale Road	King Of Prussia	PA		—		689		2,756		9			689		2,765		3,454		946		1962		1998		40
456 Creamery Way	Exton	PA		—		635		2,548		(48	)		635		2,500		3,135		1,010		1987		1996		40
630 Clark Avenue	King Of Prussia	PA		—		547		2,190		0			547		2,190		2,737		746		1960		1998		40
140 West Germantown Pike	Plymouth Meeting	PA		—		481		1,976		264			482		2,239		2,721		934		1984		1996		40
468 Thomas Jones Way	Exton	PA		—		526		2,112		74			527		2,185		2,712		926		1990		1996		40
481 John Young Way	Exton	PA		—		496		1,983		14			496		1,997		2,493		435		1997		2001		40
100 Lindenwood Drive	Malvern	PA		—		473		1,892		78			473		1,970		2,443		452		1985		2001		40
640 Allendale Road	King of Prussia	PA		—		439		432		1,480			439		1,912		2,351		445		2000		2000		40
660 Allendale Road	King of Prussia	PA		—		396		3,343		(1,637	)		396		1,706		2,102		821		1962		1998		40
200 Lindenwood Drive	Malvern	PA		—		324		1,295		1			324		1,296		1,620		284		1984		2001		40
351 Plymouth Road	Plymouth Meeting	PA		—		1,043		555		—			1,043		555		1,598		66		N/A		2000		40
111 Arrandale Road	Exton	PA		—		262		1,048		125			262		1,173		1,435		287		1996		2001		40
922 Swedesford Road	Berwyn	PA		—		218		—		(218	)		—		—		—		—		N/A		N/A		40
METROPOLITAN WASHINGTON D.C.
1676 International Drive	Mclean	VA		62,713		18,437		97,538		1,031			18,785		98,221		117,006		8,591		1999		2006		55
2340 Dulles Corner Boulevard	Herndon	VA		—		16,345		65,379		18,370			16,129		83,965		100,094		10,569		1987		2006		40
13820 Sunrise Valley Drive	Herndon	VA		—		11,082		47,290		19,687			11,082		66,977		78,059		1,931		2007		N/A		40
7101 Wisconsin Avenue	Bethesda	MD		—		9,634		48,402		4,825			9,816		53,045		62,860		6,396		1975		2006		45
3130 Fairview Park Drive	Falls Church	VA		—		6,576		51,605		2,262			6,700		53,743		60,443		4,739		1999		2006		53
2291 Wood Oak Drive	Herndon	VA		—		8,243		52,413		(741	)		8,782		51,133		59,915		4,610		1999		2006		55
2355 Dulles Corner Boulevard	Herndon	VA		—		10,365		43,876		5,245			10,365		49,121		59,486		5,514		1988		2006		40
196/198 Van Buren Street	Herndon	VA		—		7,931		43,812		7,171			8,348		50,565		58,914		6,513		1991		2006		53
2251 Corporate Park Drive	Herndon	VA		—		11,472		45,893		42			11,472		45,936		57,407		3,636		2000		2006		40
2411 Dulles Corner Park	Herndon	VA		—		7,279		46,340		3,654			7,417		49,856		57,273		4,630		1990		2006		50
1900 Gallows Road	Vienna	VA		—		7,797		47,817		(897	)		7,944		46,773		54,717		3,680		1989		2006		52
3141 Fairview Park Drive	Falls Church	VA		—		5,918		40,981		841			6,050		41,691		47,741		4,573		1988		2006		51
13880 Dulles Corner Lane	Herndon	VA		—		7,236		39,213		640			7,373		39,716		47,089		4,728		1997		2006		55
6600 Rockledge Drive	Bethesda	MD		—		—		37,421		8,329			—		45,750		45,750		4,819		1981		2006		50
2121 Cooperative Way	Herndon	VA		—		5,598		38,639		219			5,795		38,661		44,456		3,536		2000		2006		54
8260 Greensboro Drive	Mclean	VA		33,296		7,952		33,964		407			8,102		34,221		42,323		3,794		1980		2006		52
2273 Research Boulevard	Rockville	MD		14,180		5,167		31,110		3,128			5,237		34,168		39,405		4,552		1999		2006		45
2201 Cooperative Way	Herndon	VA		—		4,809		34,093		(1,785	)		4,809		32,309		37,118		2,772		1990		2006		54
2275 Research Boulevard	Rockville	MD		14,180		5,059		29,668		1,389			5,154		30,962		36,116		3,158		1990		2006		45
8521 Leesburg Pike	Vienna	VA		—		4,316		30,885		(57	)		4,397		30,746		35,143		3,276		1984		2006		51
1880 Campus Commons Drive	Reston	VA		—		6,164		28,114		86			6,281		28,083		34,364		2,466		1985		2006		52
2277 Research Boulevard	Rockville	MD		13,163		4,649		26,952		(238	)		4,733		26,629		31,362		2,451		1986		2006		45
12015 Lee Jackson Memorial Highway	Fairfax	VA		—		3,770		22,895		2,188			3,842		25,012		28,853		3,605		1985		2006		42
11720 Beltsville Drive	Beltsville	MD		—		3,831		16,661		4,660			3,904		21,248		25,151		2,913		1987		2006		46
11781 Lee Jackson Memorial Highway	Fairfax	VA		—		3,246		19,836		(229	)		3,307		19,546		22,853		2,611		1982		2006		40
13825 Sunrise Valley Drive	Herndon	VA		—		3,794		19,365		(1,376	)		3,866		17,917		21,783		1,590		1989		2006		46
11700 Beltsville Drive	Beltsville	MD		—		2,808		12,081		743			2,863		12,769		15,632		1,707		1981		2006		46
4401 Fair Lakes Court	Fairfax	VA		—		1,569		11,982		(142	)		1,599		11,810		13,409		1,171		1988		2006		52
11710 Beltsville Drive	Beltsville	MD		—		2,278		11,100		(709	)		2,321		10,348		12,669		1,359		1987		2006		46
3141 Fairview Park Drive — I	Falls Church	VA		—		733		4,939		(100	)		733		4,838		5,572		386		1988		2006		51
3141 Fairview Park Drive — II	Falls Church	VA		—		297		1,964		0			297		1,964		2,261		157		1988		2006		51
11740 Beltsville Drive	Bethesda	MD		—		198		870		18			202		884		1,086		75		1987		2006		46
NEW JERSEY/DELAWARE
920 North King Street	Wilmington	DE		—		6,141		21,140		1,081			6,141		22,221		28,362		4,529		1989		2004		30
1009 Lenox Drive	Lawrenceville	NJ		—		4,876		19,284		4,020			5,118		23,063		28,180		7,914		1989		1998		40
300 Delaware Avenue	Wilmington	DE		—		6,368		13,739		2,614			6,369		16,353		22,721		4,168		1989		2004		23
525 Lincoln Drive West	Marlton	NJ		—		3,727		17,620		1,009			3,727		18,630		22,356		4,090		1986		2004		40

F-91

BRANDYWINE OPERATING PARTNERSHIP, L.P.

SCHEDULE III

Real Estate and Accumulated Depreciation — December 31, 2009

(in thousands)

												Gross Amount at Which Carried
					Initial Cost							December 31, 2009
									Net
									Improvements									Accumulated
									(Retirements)									Depreciation at
			Encumberances at				Building and		Since					Building and				December 31,		Year of		Year		Depreciable
	City	State	December 31, 2009		Land		Improvements		Acquisition			Land		Improvements		Total (a)		2009 (b)		Construction		Acquired		Life
700 East Gate Drive	Mt. Laurel	NJ		—		3,569		14,436		2,153			3,569		16,590		20,158		5,362		1984		1998		40
989 Lenox Drive	Lawrenceville	NJ		—		3,701		14,802		1,481			3,850		16,134		19,984		2,839		1984		2003		40
10000 Midlantic Drive	Mt. Laurel	NJ		—		3,206		12,857		2,613			3,206		15,470		18,676		6,307		1990		1997		40
One Righter Parkway	Wilmington	DE		9,227		2,545		10,195		5,456			2,545		15,651		18,196		5,871		1989		1996		40
Main Street — Plaza 1000	Voorhees	NJ		—		2,732		10,942		4,127			2,732		15,069		17,801		6,463		1988		1997		40
2000 Lenox Drive	Lawrenceville	NJ		10,496		2,291		12,221		3,210			2,684		15,038		17,722		6,400		2000		2000		40
Two Righter Parkway	Wilmington	DE		—		2,802		11,217		3,460			2,802		14,677		17,479		955		1987		2001		40
15000 Midlantic Drive	Mt. Laurel	NJ		—		3,061		12,254		1,106			3,061		13,360		16,421		4,889		1991		1997		40
997 Lenox Drive	Lawrenceville	NJ		7,917		2,410		9,700		4,140			2,540		13,710		16,250		4,021		1987		1998		40
993 Lenox Drive	Lawrenceville	NJ		9,792		2,811		17,996		(5,484	)		2,960		12,363		15,323		4,372		1985		1998		40
1200 Lenox Drive	Lawrenceville	NJ		—		1,071		12,967		851			1,071		13,817		14,889		549		2007		N/A		40
1000 Atrium Way	Mt. Laurel	NJ		—		2,061		8,180		3,962			2,061		12,142		14,203		3,848		1989		1997		40
1120 Executive Boulevard	Marlton	NJ		—		2,074		8,415		2,239			2,074		10,654		12,728		4,465		1987		1997		40
1000 Howard Boulevard	Mt. Laurel	NJ		—		2,297		9,288		965			2,297		10,253		12,550		4,151		1988		1997		40
400 Commerce Drive	Newark	DE		—		2,528		9,220		733			2,528		9,953		12,481		2,262		1997		2002		40
220 Lake Drive East	Cherry Hill	NJ		—		2,144		8,798		878			2,144		9,676		11,820		2,417		1988		2001		40
200 Lake Drive East	Cherry Hill	NJ		—		2,069		8,275		1,474			2,069		9,749		11,818		2,752		1989		2001		40
457 Haddonfield Road	Cherry Hill	NJ		11,774		2,142		9,120		329			2,142		9,449		11,591		4,092		1990		1996		40
2000 Midlantic Drive	Mt. Laurel	NJ		10,717		2,202		8,823		60			2,203		8,882		11,085		3,270		1989		1997		40
10 Lake Center Drive	Marlton	NJ		—		1,880		7,521		1,619			1,880		9,140		11,020		2,534		1989		2001		40
100 Lenox Drive	Lawrenceville	NJ		—		—		—		10,771			1,134		9,637		10,771		539		1977		1999		N/A
701 East Gate Drive	Mt. Laurel	NJ		—		1,736		6,877		1,005			1,736		7,882		9,618		2,785		1986		1998		40
210 Lake Drive East	Cherry Hill	NJ		—		1,645		6,579		759			1,645		7,338		8,983		1,906		1986		2001		40
308 Harper Drive	Moorestown	NJ		—		1,643		6,663		219			1,644		6,881		8,525		2,209		1976		1998		40
305 Fellowship Drive	Mt. Laurel	NJ		—		1,421		5,768		1,265			1,421		7,033		8,454		2,466		1980		1998		40
307 Fellowship Drive	Mt. Laurel	NJ		—		1,565		6,342		449			1,565		6,792		8,356		2,259		1981		1998		40
303 Fellowship Drive	Mt. Laurel	NJ		—		1,493		6,055		652			1,494		6,707		8,200		2,194		1979		1998		40
309 Fellowship Drive	Mt. Laurel	NJ		—		1,518		6,154		397			1,518		6,551		8,069		2,087		1982		1998		40
1000 Lenox Drive	Lawrenceville	NJ		—		1,174		4,696		2,180			1,244		6,806		8,050		2,033		1982		2002		40
1000 Bishops Gate	Mt. Laurel	NJ		—		934		6,287		—			934		6,883		7,817		1,612		2005		2000		40
9000 Midlantic Drive	Mt. Laurel	NJ		5,926		1,472		5,895		95			1,472		5,990		7,462		2,230		1989		1997		40
6 East Clementon Road	Gibbsboro	NJ		—		1,345		5,366		350			1,345		5,716		7,061		2,015		1980		1997		40
Three Greentree Centre	Marlton	NJ		—		323		6,024		607			324		6,631		6,954		4,930		1984		1986		40
100 Commerce Drive	Newark	DE		—		1,160		4,633		849			1,160		5,482		6,642		2,139		1989		1997		40
200 Commerce Drive	Newark	DE		—		911		4,414		1,018			911		5,432		6,343		1,340		1998		2002		40
30 Lake Center Drive	Marlton	NJ		—		1,043		4,171		912			1,043		5,084		6,126		1,310		1986		2001		40
161 Gaither Drive	Mount Laurel	NJ		—		1,016		4,064		714			1,016		4,778		5,794		1,183		1987		2001		40
Two Greentree Centre	Marlton	NJ		—		264		4,693		694			264		5,387		5,651		3,616		1983		1986		40
One Greentree Centre	Marlton	NJ		—		345		4,440		590			345		5,030		5,375		3,365		1982		1986		40
Two Eves Drive	Marlton	NJ		—		818		3,461		43			818		3,503		4,322		1,326		1987		1997		40
4000 Midlantic Drive	Mt. Laurel	NJ		4,133		714		5,085		(1,524	)		714		3,561		4,275		1,412		1998		1997		40
20 East Clementon Road	Gibbsboro	NJ		—		769		3,055		281			769		3,336		4,105		1,201		1986		1997		40
Five Eves Drive	Marlton	NJ		—		703		2,819		491			703		3,310		4,013		1,303		1986		1997		40
8000 Lincoln Drive	Marlton	NJ		—		606		2,887		303			606		3,189		3,796		1,442		1997		1996		40
304 Harper Drive	Moorestown	NJ		—		657		2,674		418			657		3,092		3,749		1,076		1975		1998		40
Main Street — Piazza	Voorhees	NJ		—		696		2,802		151			696		2,953		3,649		1,158		1990		1997		40
815 East Gate Drive	Mt. Laurel	NJ		—		636		2,584		307			636		2,891		3,527		995		1986		1998		40
817 East Gate Drive	Mt. Laurel	NJ		—		611		2,426		360			611		2,785		3,397		886		1986		1998		40
Four B Eves Drive	Marlton	NJ		—		588		2,369		381			588		2,749		3,338		1,148		1987		1997		40
Four A Eves Drive	Marlton	NJ		—		539		2,168		142			539		2,310		2,849		876		1987		1997		40
Main Street — Promenade	Voorhees	NJ		—		531		2,052		55			532		2,107		2,638		805		1988		1997		40
10 Foster Avenue	Gibbsboro	NJ		—		244		971		265			244		1,236		1,480		492		1983		1997		40
7 Foster Avenue	Gibbsboro	NJ		—		231		921		94			231		1,014		1,246		391		1983		1997		40
50 East Clementon Road	Gibbsboro	NJ		—		114		964		3			114		967		1,081		338		1986		1997		40
4 Foster Avenue	Gibbsboro	NJ		—		183		726		37			183		763		946		280		1974		1997		40
2 Foster Avenue	Gibbsboro	NJ		—		185		730		24			185		754		939		269		1974		1997		40
1 Foster Avenue	Gibbsboro	NJ		—		93		364		63			93		428		520		157		1972		1997		40
5 U.S. Avenue	Gibbsboro	NJ		—		21		81		3			21		84		105		29		1987		1997		40
5 Foster Avenue	Gibbsboro	NJ		—		9		32		26			9		58		67		19		1968		1997		40
RICHMOND
300 Arboretum Place	Richmond	VA		12,156		5,450		21,892		3,089			5,450		24,982		30,431		7,830		1988		1998		40
7501 Boulders View Drive	Richmond	VA		—		4,669		19,699		474			4,925		19,917		24,842		1,234		1990		2007		40
7300 Beaufont Springs Drive	Richmond	VA		—		4,672		19,689		306			4,922		19,745		24,667		1,196		2000		2007		40
6800 Paragon Place	Richmond	VA		—		4,552		18,414		975			4,552		19,389		23,941		1,790		1986		2006		40
6802 Paragon Place	Richmond	VA		—		2,917		11,454		1,890			2,917		13,344		16,261		3,080		1989		2002		40
1025 Boulders Parkway	Richmond	VA		—		2,574		11,297		738			2,824		11,785		14,609		836		1994		2007		40
2100-2116 West Laburnam Avenue	Richmond	VA		—		2,482		8,846		2,533			2,482		11,378		13,861		3,618		1976		1998		40

F-92

BRANDYWINE OPERATING PARTNERSHIP, L.P.

SCHEDULE III

Real Estate and Accumulated Depreciation — December 31, 2009

(in thousands)

												Gross Amount at Which Carried
					Initial Cost							December 31, 2009
									Net
									Improvements									Accumulated
									(Retirements)									Depreciation at
			Encumberances at				Building and		Since					Building and				December 31,		Year of		Year		Depreciable
	City	State	December 31, 2009		Land		Improvements		Acquisition			Land		Improvements		Total (a)		2009 (b)		Construction		Acquired		Life
7325 Beaufont Springs Drive	Richmond	VA		—		2,344		10,377		502			2,594		10,629		13,223		672		1999		2007		40
7401 Beaufont Springs Drive	Richmond	VA		—		2,349		10,396		276			2,599		10,422		13,021		632		1998		2007		40
6806 Paragon Place	Richmond	VA		—		—		10,288		809			403		10,695		11,097		1,473		2007		2005		40
9011 Arboretum Parkway	Richmond	VA		—		1,857		7,702		877			1,857		8,579		10,436		2,799		1991		1998		40
4805 Lake Brooke Drive	Glen Allen	VA		—		1,640		6,567		1,373			1,640		7,939		9,580		2,534		1996		1998		40
4364 South Alston Avenue	Durham	NC		—		1,622		6,419		910			1,581		7,370		8,951		2,694		1985		1998		40
2511 Brittons Hill Road	Richmond	VA		—		1,202		4,820		1,863			1,202		6,683		7,885		2,329		1987		1998		40
9100 Arboretum Parkway	Richmond	VA		3,313		1,362		5,489		590			1,362		6,079		7,441		1,948		1988		1998		40
100 Gateway Centre Parkway	Richmond	VA		—		391		5,410		760			391		6,170		6,561		1,231		2001		1998		40
2812 Emerywood Parkway	Henrico	VA		—		1,069		4,281		984			1,069		5,265		6,334		1,845		1980		1998		40
9210 Arboretum Parkway	Richmond	VA		2,747		1,110		4,474		457			1,110		4,931		6,041		1,611		1988		1998		40
9200 Arboretum Parkway	Richmond	VA		2,831		985		3,973		993			985		4,966		5,951		1,389		1988		1998		40
1957 Westmoreland Street	Richmond	VA		—		1,061		4,241		224			1,061		4,465		5,526		1,389		1975		1998		40
2201-2245 Tomlynn Street	Richmond	VA		—		1,020		4,067		370			1,020		4,437		5,457		1,430		1989		1998		40
9211 Arboretum Parkway	Richmond	VA		—		582		2,433		224			582		2,658		3,239		884		1991		1998		40
2248 Dabney Road	Richmond	VA		—		512		2,049		234			512		2,283		2,795		793		1989		1998		40
2221-2245 Dabney Road	Richmond	VA		—		530		2,123		140			530		2,263		2,793		794		1994		1998		40
2244 Dabney Road	Richmond	VA		—		550		2,203		37			550		2,240		2,790		727		1993		1998		40
2212-2224 Tomlynn Street	Richmond	VA		—		502		2,014		157			502		2,170		2,673		714		1985		1998		40
2277 Dabney Road	Richmond	VA		—		507		2,034		15			507		2,049		2,556		662		1986		1998		40
2161-2179 Tomlynn Street	Richmond	VA		—		423		1,695		269			423		1,964		2,387		701		1985		1998		40
2246 Dabney Road	Richmond	VA		—		455		1,822		18			455		1,840		2,295		593		1987		1998		40
2256 Dabney Road	Richmond	VA		—		356		1,427		379			356		1,806		2,162		653		1982		1998		40
2251 Dabney Road	Richmond	VA		—		387		1,552		111			387		1,663		2,050		535		1983		1998		40
2130-2146 Tomlynn Street	Richmond	VA		—		353		1,416		194			353		1,609		1,963		578		1988		1998		40
2120 Tomlynn Street	Richmond	VA		—		281		1,125		106			281		1,231		1,512		384		1986		1998		40
2240 Dabney Road	Richmond	VA		—		264		1,059		11			265		1,068		1,334		344		1984		1998		40
Boulders Land	Richmond	VA		—		1,256		—		0			1,256		—		1,256		—	NA			2007		N/A
CALIFORNIA
155 Grand Avenue	Oakland	CA		—		13,556		54,266		3,148			13,557		57,413		70,970		3,650		1990		2007		40
5780 & 5790 Fleet Street	Carlsbad	CA		—		7,073		22,907		2,854			7,517		25,317		32,834		2,485		1999		2006		55
1200 Concord Avenue	Concord	CA		18,320		6,395		24,664		640			6,515		25,183		31,698		6,635		1984		2006		34
1220 Concord Avenue	Concord	CA		18,327		6,476		24,966		215			6,476		25,180		31,656		6,777		1984		2006		34
16870 W Bernardo Drive	San Diego	CA		—		2,979		15,896		1,407			3,155		17,127		20,282		1,745		2002		2006		56
5900 & 5950 La Place Court	Carlsbad	CA		—		3,706		11,185		1,537			3,956		12,472		16,428		1,397		1988		2006		48
5963 La Place Court	Carlsbad	CA		—		2,824		9,413		1,619			3,000		10,856		13,856		1,121		1987		2006		55
5973 Avenida Encinas	Carlsbad	CA		—		2,121		8,361		1,216			2,257		9,441		11,698		1,220		1986		2006		45
2035 Corte Del Nogal	Carlsbad	CA		—		3,261		6,077		1,026			3,500		6,865		10,364		1,034		1991		2006		39
Two Kaiser Plaza	Oakland	CA		—		7,841		—		—			7,841		—		7,841		—		N/A		2006		N/A
Oakland Lot B	Oakland	CA		—		4,342		—		(0	)		4,342		—		4,342		—		N/A		2006		N/A
AUSTIN
1250 Capital of Texas Hwy South	Austin	TX		—		5,152		37,928		3,798			5,251		41,628		46,878		5,107		1984		2006		52
1301 Mopac Expressway	Austin	TX		—		4,188		41,229		266			4,251		41,432		45,683		4,354		2001		2006		55
1601 Mopac Expressway	Austin	TX		—		3,538		34,346		2,241			3,606		36,520		40,126		5,324		2000		2006		54
1501 South Mopac Expressway	Austin	TX		—		3,698		34,912		(2,352	)		3,769		32,489		36,257		2,535		1999		2006		53
1221 Mopac Expressway	Austin	TX		—		3,290		31,548		89			3,370		31,556		34,926		3,000		2001		2006		55
3711 South Mopac Expressway — I	Austin	TX		—		1,688		21,011		2,884			1,689		23,894		25,583		103		2007		2006		40
3711 South Mopac Expressway — II	Austin	TX		—		1,688		19,229		2,640			1,689		21,868		23,557		1,524		2007		2006		40
1177 East Beltline Road	Coppell	TX		19,311		1,516		14,895		8			1,517		14,903		16,420		2,547		1998		2006		42
1801 Mopac Expressway	Austin	TX		—		1,227		10,959		469			1,250		11,405		12,655		1,114		1999		2006		53
Total:			$	551,720	$	680,832	$	3,396,822	$	434,271		$	690,441	$	3,822,177	$	4,512,618	$	716,956

F-93

(a) Reconciliation of Real Estate:

The following table reconciles the real estate investments from January 1, 2007 to December 31, 2009 (in thousands):

	2009			2008			2007
Balance at beginning of year	$	4,608,320		$	4,825,747		$	4,939,489
Additions:
Acquisitions		—			122			158,399
Capital expenditures		80,506			247,345			179,691
Less:
Dispositions		(176,208	)		(464,894	)		(451,832	)
Assets transferred to held-for-sale		—			—			—
Balance at end of year	$	4,512,618		$	4,608,320		$	4,825,747

The aggregate cost for federal income tax purposes is $4.6 billion as of December 31, 2009

(b) Reconciliation of Accumulated Depreciation:

The following table reconciles the accumulated depreciation on real estate investments from January 1, 2007 to December 31, 2009 (in thousands):

	2009			2008			2007
Balance at beginning of year	$	639,688		$	558,908		$	515,698
Additions:
Depreciation expense — continued operations		141,309			144,631			167,160
Depreciation expense — discontinued operations		6,494			6,494			4,748
Acquisitions					—			—
Less:
Dispositions		(70,535	)		(70,345	)		(128,698	)
Assets transferred to held-for-sale		—			—			—
Balance at end of year	$	716,956		$	639,688		$	558,908

F-94

G&I VI Interchange Office, LLC
Consolidated Financial Statements for the Years
Ended December 31, 2009, 2008 and 2007

F-95

G&I VI Interchange Office, LLC
Index
December 31, 2009, 2008 and 2007

	Page(s)
Report of Independent Auditors		F-97
Consolidated Financial Statements
Balance Sheets		F-98
Statements of Operations		F-99
Statements of Members’ Equity		F-100
Statements of Cash Flows		F-101
Notes to Consolidated Financial Statements		F-102–110

F-96

Report of Independent Auditors

To the Members of
G&I VI Interchange Office, LLC:

In our opinion, the accompanying consolidated statements of operations, Members’ equity, and cash flows present fairly, in all material respects, the results of operations and cash flows of G&I Interchange Office, LLC (the “Company”) for the period from October 24, 2007 (“Inception”) to December 31, 2007, in conformity with accounting principles generally accepted in the United States of America. These consolidated statements of operations, Members’ equity, and cash flows are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated statements of operations, Members’ equity, and cash flows based on our audit. We conducted our audit of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated statements of operations, Members’ equity, and cash flows are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated statements of operations, Members’ equity, and cash flows, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers

Philadelphia, Pennsylvania
March 27, 2008

F-97

G&I VI Interchange Office, LLC

Consolidated Balance Sheets
December 31, 2009 and 2008 (Not covered by Auditors Report)

(in thousands of dollars)

	2009			2008
Assets
Real estate investments:
Land	$	36,741		$	36,741
Building and improvements		150,466			150,105
Development land and construction in progress		1,594			3,188
Tenant improvements		22,509			19,961
		211,310			209,995
Accumulated depreciation		(20,022	)		(10,690	)
Real estate investments, net		191,288			199,305
Cash and cash equivalents		2,989			2,682
Restricted cash		1,328			1,398
Accounts receivable, net		469			42
Accrued rent receivable, net		2,988			1,782
Deferred costs, net of accumulated amortization of $618 and $187		2,162			1,309
Intangible assets, net of accumulated amortization of $17,135 and $10,754		26,509			35,094
Related party assets (Note 7)		5,124			5,517
Other assets		1,475			1,231
Total assets	$	234,332		$	248,360
Liabilities and Members’ Equity
Mortgage notes payable	$	184,000		$	184,000
Accounts payable and accrued expenses		2,328			2,162
Security deposits and deferred rents		1,941			1,436
Acquired below market leases, net of accumulated amortization of $2,765 and $1,517		3,766			5,075
Total liabilities		192,035			192,673
Non-controlling interest		3,205			3,205
Commitments and contingencies (Note 8)
Members’ equity		39,092			52,482
Total liabilities, non-controlling interest, and members’ equity	$	234,332		$	248,360

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

F-98

G&I VI Interchange Office, LLC

Consolidated Statements of Operations
Years Ended December 31, 2009, 2008 (Not covered by Auditors Report) and for the
Period from October 24, 2007 (“Inception”) to December 31, 2007

(in thousands of dollars)

	For the Years Ended						For the Period From
	December 31,						Inception to December 31,
				2008
	2009			(as adjusted)			2007
Revenue
Rental income	$	28,381		$	28,849		$	991
Tenant reimbursements		4,605			2,815			82
Termination fees		73			1,379			—
Other income		363			302			—
Total revenues		33,422			33,345			1,073
Expenses
Property operating expenses		8,998			8,256			236
Real estate taxes		3,227			3,213			111
Interest		10,937			11,058			385
Depreciation and amortization		17,911			22,084			767
Administrative expenses		802			413			—
Total expenses		41,875			45,024			1,499
Net loss		(8,453	)		(11,679	)		(426	)
Non-controlling interest		(272	)		(214	)		—
Net loss attributable to the Company	$	(8,725	)	$	(11,893	)	$	(426	)

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

F-99

G&I VI Interchange Office, LLC

Consolidated Statements of Members’ Equity
Years Ended December 31, 2009, 2008 (Not covered by Auditors Report) and for
the Period from October 24, 2007 (“Inception”) to December 31, 2007

(in thousands of dollars)

	G&I VI
	Investment			Brandywine
	Interchange			Operating
	Office LLC			Partnership, L.P.			Total
Balance at Inception	$	—		$	—		$	—
Contributions		54,288			13,572			67,860
Net loss		(341	)		(85	)		(426	)
Balance at December 31, 2007		53,947			13,487			67,434
Distributions		(2,447	)		(612	)		(3,059	)
Net loss		(9,514	)		(2,379	)		(11,893	)
Balance at December 31, 2008 (as adjusted)		41,986			10,496			52,482
Distributions		(3,732	)		(933	)		(4,665	)
Net loss		(6,980	)		(1,745	)		(8,725	)
Balance at December 31, 2009	$	31,274		$	7,818		$	39,092

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

F-100

G&I VI Interchange Office, LLC

Consolidated Statements of Cash Flows
Years Ended December 31, 2009, 2008 (Not covered by Auditors Report) and for
the Period from October 24, 2007 (“Inception”) to December 31, 2007

(in thousands of dollars)

				2008
	2009			(as adjusted)			2007
Cash flows from operating activities
Net loss	$	(8,453	)	$	(11,679	)	$	(426	)
Adjustments to reconcile net loss to net cash from operating activities
Depreciation and amortization		17,911			22,084			767
Straight line rents and amortization of above/below market intangibles		(1,859	)		(1,140	)		(51	)
Deferred financing cost amortization		184			184			7
Changes in assets and liabilities related to operations
Accounts receivable		(427	)		(42	)		—
Related party assets (unearned rent receivable)		—			319			—
Other assets		(243	)		6			(1,237	)
Tenant security deposits and deferred rents		505			(170	)		—
Accounts payable and accrued expenses		166			1,855			154
Net cash provided by (used in) operating activities		7,784			11,417			(786	)
Cash flows from investing activities
Cash paid for property acquisitions		—			—			(229,806	)
Property advance		—			—			(3,205	)
Construction receivable from affiliate of member		393			888			(3,200	)
Capital expenditures		(1,966	)		(6,031	)		—
Leasing costs		(1,037	)		(208	)		—
Restricted cash		70			(1,398	)		—
Net cash used in investing activities		(2,540	)		(6,749	)		(236,211	)
Cash flows from financing activities
Mortgage notes payable		—			—			184,000
Payments for deferred financing costs		—			—			(1,291	)
Contributions from members		—			—			54,288
Distributions to non-controlling interests		(272	)		(214	)		—
Distributions to members		(4,665	)		(3,059	)		—
Related party assets (funding of tenant security deposit receivable)		—			1,287			—
Net cash provided by (used in) financing activities		4,937			2,143			236,997
Net change in cash and cash equivalents		307			2,682			—
Cash and cash equivalents — Beginning of period		2,682			—			—
Cash and cash equivalents — End of period	$	2,989		$	2,682		$	—
Supplemental disclosure
Cash paid for interest during the period	$	10,783		$	9,930		$	379
Supplemental disclosure of non-cash financing activity
Contributions from member		—			—			13,572
Tenant security deposits and deferred rents		—			—			1,606
Related party assets		—			—			(1,606	)
Capital expenditures financed through accounts payable as of year-end		133			153			—

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

F-101

G&I VI Interchange Office, LLC
Years Ended December 31, 2009, 2008 (Not covered by Auditors Report) and for
the Period from October 24, 2007 (“Inception”) to December 31, 2007

(in thousands of dollars)

1. Organization and Nature of Operations

	G&I VI Interchange Office LLC (the “Company”) was formed on October 24, 2007 (“Inception”), as a Delaware Limited Liability Company. Two wholly-owned subsidiaries of Brandywine Operating Partnership, L.P. (collectively, “Brandywine”) were admitted as members of the Company on December 19, 2007. The other member of the Company is G&I VI Investment Interchange Office LLC (“G&I VI”), an investment vehicle advised by DRA Advisors LLC. Neither G&I VI nor DRA Advisors LLC is affiliated with Brandywine. The Company was formed for the purpose of acquiring, owning, leasing and managing 29 office buildings, (collectively, the “Properties”) totaling approximately 1,611,000 net rentable square feet. The Properties are located in the Montgomery, Bucks, and Lehigh counties in Pennsylvania. On December 19, 2007, Brandywine transferred to the Company 100% of its ownership interests in 26 of the Properties and transferred to the Company an 89% ownership interest in three of the Properties (“89/11 Properties”) with Brandywine’s remaining 11% ownership interest reflected as non-controlling interest on the consolidated balance sheet of the Company. As of December 31, 2009, G&I VI and Brandywine maintained an 80% and 20% interest in the Company, respectively. The Company engaged Brandywine to perform property management and leasing services for the Properties. (See Note 7).
2.	Summary of Significant Accounting Policies
	Basis of Accounting and Principles of Consolidation
	The consolidated financial statements are prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. The accompanying consolidated financial statements include the financial position, results of operations, and cash flows of the Company and the Properties in which the Company has a controlling interest.
	When the Company obtains an economic interest in an entity, the Company evaluates the entity to determine if the entity is deemed a variable interest entity (“VIE”), and if the Company is deemed to be the primary beneficiary, in accordance with the accounting standard for the consolidation of variable interest entities. When an entity is not deemed to be a VIE, the Company considers the provisions of the same accounting standard in determining whether a general partner, or the general partners as a group, controls a limited partnership or similar entity when the limited partners have certain rights. The Company consolidates (i) entities that are VIEs and of which the Company is deemed to be the primary beneficiary and (ii) entities that are non-VIEs which the Company controls and in which the limited partners do not have the ability to dissolve the entity or remove the Company without cause nor substantive participating rights. The 89/11 Properties are considered VIEs of which the Company is the primary beneficiary and therefore these properties are consolidated. The Company will reconsider its determination of whether an entity is a VIE and who the primary beneficiary is, and whether or not the limited partners in an entity have substantive rights, if certain events occur that are likely to cause a change in the original determinations. The portion of the 89/11 Properties not owned by the Company is presented as non-controlling interest as of December 31, 2009. All intercompany accounts and transactions have been eliminated in consolidation.
	Use of Estimates
	The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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. Management makes significant estimates regarding revenue, impairment of long-lived assets, allowance for doubtful accounts and deferred costs.

F-102

G&I VI Interchange Office, LLC
Years Ended December 31, 2009, 2008 (Not covered by Auditors Report) and for
the Period from October 24, 2007 (“Inception”) to December 31, 2007

(in thousands of dollars)

Real Estate Investments

Real estate investments are carried at historical cost less accumulated depreciation and impairment losses, if any. The cost of real estate investments reflects their purchase price or development cost. Costs incurred for the acquisition and renovation of an operating property are capitalized to the Company’s investment in that property. Ordinary repairs and maintenance are expensed as incurred; major replacements and betterments, which improve or extend the life of the asset, are capitalized and depreciated over their estimated useful lives. Fully-depreciated assets are removed from the accounts.

The cost of buildings and improvements are depreciated using the straight-line method based on the following useful lives: buildings and improvements (five to 51 years) and tenant improvements (the shorter of the lease term or the life of the asset).

In accordance with accounting standard for property, plant and equipment, long-lived assets, such as real estate investments and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of are separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. The other assets and liabilities related to assets classified as held-for-sale are presented separately in the consolidated balance sheet. The Company had no properties classified as held for sale at December 31, 2009.

Purchase Price Allocation

The Company allocates the purchase price of properties to net tangible and identified intangible assets acquired based on fair values. Above-market and below-market lease values for acquired properties are recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) the Company’s estimate of the fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of the lease. Capitalized above-market lease values are amortized as a reduction of rental income over the remaining non-cancelable terms of the respective leases. Capitalized below-market lease values are amortized as an increase to rental income over the remaining non-cancelable terms of the respective leases, including any below market fixed-rate renewal periods.

F-103

G&I VI Interchange Office, LLC
Years Ended December 31, 2009, 2008 (Not covered by Auditors Report) and for
the Period from October 24, 2007 (“Inception”) to December 31, 2007

(in thousands of dollars)

Other intangible assets also include amounts representing the value of tenant relationships and in-place leases based on the Company’s evaluation of the specific characteristics of each tenant’s lease and the Company’s overall relationship with the respective tenant. The Company estimates the cost to execute leases with terms similar to the remaining lease terms of the in-place leases, including leasing commissions, legal and other related expenses. This intangible asset is amortized to expense over the remaining term of the respective leases. The Company estimates of value are made using methods similar to those used by independent appraisers or by using independent appraisals. Factors considered by the Company in this analysis include an estimate of the carrying costs during the expected lease-up periods considering current market conditions and costs to execute similar leases. In estimating carrying costs, the Company includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods, which primarily approximate six months. The Company also considers information obtained about each property as a result of its pre acquisition due diligence, marketing and leasing activities in estimating the fair value of the tangible and intangible assets acquired. The Company also uses the information obtained as a result of its pre-acquisition due diligence as part of its consideration of the accounting standard governing asset retirement obligations, and when necessary, will record a conditional asset retirement obligation as part of its purchase price.

Characteristics considered by the Company in allocating value to its tenant relationships include the nature and extent of the Company’s business relationship with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit quality and expectations of lease renewals, among other factors. The value of tenant relationship intangibles is amortized over the remaining initial lease term and expected renewals, but in no event longer than the remaining depreciable life of the building. The value of in-place leases is amortized over the remaining non-cancelable term of the respective leases and any below market fixed-rate renewal periods.

In the event that a tenant terminates its lease, the unamortized portion of each intangible, including market rate adjustments (above or below), in-place lease values and tenant relationship values, would be charged to expense and market rate adjustments would be recorded to revenue.

Cash and Cash Equivalents

Cash and cash equivalents are highly-liquid investments with original maturities of three months or less. The Company maintains cash equivalents in financial institutions in excess of insured limits, but believes this risk is mitigated by only investing in or through major financial institutions.

Restricted Cash

Restricted cash represents tenant security deposits, which are segregated and restricted under the terms of the underlying leases.

Deferred Costs

The Company has capitalized as deferred costs certain expenditures related to the leasing and financing of the Properties. Deferred leasing commissions are amortized, on a straight-line basis, over the terms of the related leases. Deferred financing costs are charged to interest expense over the terms of the related debt.

Revenue Recognition

Rental income from leases is recognized on a straight-line basis regardless of when payments are due. The cumulative difference between rental income recognized and contractual lease payments is recorded as “accrued rent receivable” on the accompanying balance sheet. The straight-line rent adjustment increased revenue by approximately $1,218 in 2009, $1,700 in 2008 and $41 in 2007.

Certain lease agreements also contain provisions that require tenants to reimburse a pro-rata share of real estate taxes and certain common area maintenance costs subject to their proportionate share of increases over their respective base year amounts. These amounts are included in tenant reimbursements on the accompanying consolidated statement of income and are recorded when earned.

F-104

G&I VI Interchange Office, LLC
Years Ended December 31, 2009, 2008 (Not covered by Auditors Report) and for
the Period from October 24, 2007 (“Inception”) to December 31, 2007

(in thousands of dollars)

Other Assets

As of December 31, 2009 and 2008, respectively, other assets included prepaid real estate taxes of $1,242 and $1,231 and prepaid service contracts of $233 and $0.

Deferred Rent

Deferred rent represents revenue received from tenants prior to their due dates.

Income Taxes

The Company has elected to be treated as a partnership for federal tax purposes and is therefore not taxed directly. The taxable income or loss of the Company is included in the income tax returns of the members; accordingly, no provision for income tax expense or benefit is reflected in the accompanying consolidated financial statements.

The Company’s tax returns and the amount of allocable Company profit and losses are subject to examination by federal and state taxing authorities. If such examination results in changes to Company profits or losses, then the tax liability of the partners would be changed accordingly.

New Accounting Pronouncements

FASB Codification

In June 2009, the Financial Accounting Standards Board (“FASB”) issued the “FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles”, (formerly FAS 168). FASB Accounting Standards Codification 105-10 (or “ASC” 105-10) establishes the FASB Accounting Standards Codification (“Codification”) as the single source for all authoritative GAAP recognized by the FASB to be applied for financial statements issued for periods ending after September 15, 2009. The Codification does not change GAAP and will not have an effect on the Company’s financial position, results of operations, or liquidity.

Accounting for Uncertainty in Income Taxes

On January 1, 2009, the Company adopted the authoritative guidance on accounting for and disclosure of uncertainty in tax positions in accordance with the FASB ASC 740-10 (formerly FIN 48)Accounting for Uncertainty in Income Taxes. This guidance prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The guidance requires that an entity recognize in the financial statements the impact of a tax position if that position is more likely than not to be sustained on audit, based on the technical merits of the position. The guidance also provides clarification on de-recognition, balance sheet classification, interest and penalties, and footnote disclosures. As the Company has elected to be treated as a partnership for federal tax purposes and does not pay federal or state income taxes, the adoption of the guidance as of January 1, 2009 did not have a material effect on its financial statements.

Non-Controlling Interests

Effective January 1, 2009, the Company adopted a newly issued accounting standard for non-controlling interests. In accordance with this accounting standard, non-controlling interests are presented as a component of equity unless these interests are considered redeemable. Also, under this standard, net income will encompass the total income of all consolidated subsidiaries and there is separate disclosure on the face of the income statement of the attribution of that income between controlling and non-controlling interests. Lastly, increases and decreases in non-controlling interests are treated as equity transactions. The face of the Company’s consolidated balance sheet, statement of operations and statements of other comprehensive income has been updated to reflect the adoption of this accounting standard. The adoption of this accounting standard did not have material impact on the Company’s financial position or results of operations. As a result of the Company’s adoption of this standard, amounts reported prior to adoption as minority interests on its balance sheets are now presented as non-controlling interests within equity. There has been no change in the measurement of this line item from amounts previously reported.

F-105

G&I VI Interchange Office, LLC
Years Ended December 31, 2009, 2008 (Not covered by Auditors Report) and for
the Period from October 24, 2007 (“Inception”) to December 31, 2007

(in thousands of dollars)

Subsequent Events

Effective December 31, 2009 the Company adopted ASC 855-10 (formerly SFAS No. 165),Subsequent Events, which establishes principles and requirements for evaluating and reporting subsequent events and distinguishes which subsequent events should be recognized in the financial statements versus which subsequent events should be disclosed in the financial statements. ASC 855-10 also requires disclosure of the date through which subsequent events are evaluated by management. Adoption of SFAS 165 (ASC 855-10) had no impact on the Company’s results of operations at December 31, 2009. See Note 9, Subsequent Events, for further discussion.

Correction of previously filed financial statements for the year ended December 31, 2008

Subsequent to the inclusion of these financial statements for the year ended December 31, 2008 in Brandywine Realty Trust’s Form 10K, adjustments primarily related to depreciation and amortization expenses were recorded. See the tables below for the impact on the December 31, 2008 financial statements.

(in thousands)	As of December 31, 2008
Balance Sheet:	As Reported			Adjustments			As Revised
Assets:
Tenant improvements	$	19,947		$	14		$	19,961
Accumulated depreciation		(10,099	)		(591	)	$	(10,690	)
Intangible assets, net of accumulated amortization		37,207			(2,113	)	$	35,094
Total assets		251,050			(2,690	)	$	248,360
Liabilities and Members’ Equity:
Accounts payable and accrued expenses		2,009			153		$	2,162
Members’ equity		55,325			(2,843	)	$	52,482
Total liabilities and members’ equity	$	251,050		$	(2,690	)	$	248,360

F-106

G&I VI Interchange Office, LLC
Years Ended December 31, 2009, 2008 (Not covered by Auditors Report) and for
the Period from October 24, 2007 (“Inception”) to December 31, 2007

(in thousands of dollars)

(in thousands)	For the Year Ended December 31, 2008
Income Statement:	As Reported			Adjustments			As Revised
Rental income	$	28,901		$	(52	)	$	28,849
Depreciation and amortization		19,293			2,791			22,084
Net loss before non-controlling interest		(8,836	)		(2,843	)		(11,679	)
Net loss attributable to the Company	$	(9,050	)	$	(2,843	)	$	(11,893	)

3.	Intangible Assets and Liabilities
	As of December 31, 2009 and 2008, the Company’s intangible assets and liabilities are comprised of the following:

	2009			2008
Customer relationship value	$	19,418		$	21,213
Value of in-place leases		20,829			21,178
Above-market lease assets		3,397			3,457
Total intangible assets		43,644			45,848
Less: Accumulated amortization		(17,135	)		(10,754	)
Intangible assets, net	$	26,509		$	35,094
Acquired lease liability (below market rent)	$	6,531		$	6,592
Less: Accumulated amortization		(2,765	)		(1,517	)
Acquired lease liability, net	$	3,766		$	5,075

F-107

G&I VI Interchange Office, LLC
Years Ended December 31, 2009, 2008 (Not covered by Auditors Report) and for
the Period from October 24, 2007 (“Inception”) to December 31, 2007

(in thousands of dollars)

As of December 31, 2009, the Company’s annual amortization for its intangible assets/liabilities are as follows (in thousands, assumes no early terminations):

Year	Assets		Liabilities
2010	$	5,735	$	1,002
2011		5,074		885
2012		4,107		585
2013		3,429		355
2014		2,624		299
Thereafter		5,539		640
	$	26,509	$	3,766

4.	Mortgage Notes Payable
	On December 19, 2007, the Company obtained four mortgage notes payable aggregating $184,000 to finance the Properties, each with a maturity date of January 1, 2015. The mortgage notes payable require interest only payments through January 1, 2011 at an interest rate of 5.78% per annum and, after that date, interest and principal payments through December 1, 2014. All unpaid principal is due upon maturity.
	The mortgages are collateralized by a first lien mortgage and an assignment of rents and leases on the Properties owned by the Company.
	The mortgage notes are not prepayable for the first two years. Thereafter, the loans may be prepaid in whole or in part subject to prepayment penalties. A partial prepayment to release one or more of the properties from the lien is based on specifically allocated loan balance by property, subject to certain financial covenants with respect to the remaining properties.
	The following fair value disclosure was determined by the Company using available market information and discounted cash flow analyses as of December 31, 2009. The discount rate used in calculating fair value is the sum of the current risk free rate and the risk premium on the measurement date. 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 estimation methodologies may have a material effect on the estimated fair value amounts. As of December 31, 2009, the fair market value of the mortgage notes payable was approximately $173,656.

F-108

G&I VI Interchange Office, LLC
Years Ended December 31, 2009, 2008 (Not covered by Auditors Report) and for
the Period from October 24, 2007 (“Inception”) to December 31, 2007

(in thousands of dollars)

As of December 31, 2009, the Company’s aggregate principal payments are as follows (in thousands):

2010	$	—
2011		2,153
2012		2,482
2013		2,629
2014		2,785
Thereafter		173,951
Total	$	184,000

5.	Members’ Equity
	Allocation of Net Income (Loss)
	Net income (loss) is allocated to the members in accordance with the provisions of the Operating Agreement. Losses are generally allocated ratably. Certain incentives are provided to Brandywine to maximize the performance of the Company. Accordingly, the relative percentage of the total distributions actually received by Brandywine and G&I VI will vary depending on Company income.
	Distributions of Cash Flows from Operations
	Distributions of cash flows from operations, as defined in the operating agreement of the Company, are to be made quarterly to the members in accordance with their percentage interests.
	Distributions of Net Proceeds from Capital Transactions
	Distributions of net proceeds from a capital transaction are to be made, first, to return capital contributions of the members, pro rata in accordance with the percentage interests of the members, then to each member pro rata in accordance with their percentage until an internal rate of return hurdle has been achieved, and thereafter in accordance with an adjusted percentage that reflects Brandywine’s residual profits interest in the Company.
6.	Leasing Arrangements
	The Company leases the Properties to tenants under operating leases with expiration dates extending to the year 2018. Future minimum rentals under noncancelable operating leases, excluding tenant reimbursements of operating costs, as of December 31, 2009, are as follows:

Year	Minimum Rent
2010	$	25,895
2011		22,238
2012		18,741
2013		14,411
2014		9,820
Thereafter		18,847

The Company may also receive reimbursements from tenants for certain property operating expenses, including but not limited to, common area maintenance costs, insurance and real estate taxes.

F-109

G&I VI Interchange Office, LLC
Years Ended December 31, 2009, 2008 (Not covered by Auditors Report) and for
the Period from October 24, 2007 (“Inception”) to December 31, 2007

(in thousands of dollars)

7.	Related Party Transactions
	An affiliate of Brandywine provides management services to the Properties and in return receives a management fee equal to 3% of the monthly Effective Gross Revenue (as defined in the Operating Agreement). As of December 31, 2009, 2008 and 2007, the Company incurred approximately $974, $854 and $10, respectively.
	In addition, other payroll and administrative costs, based on a per Property square foot amount, are allocated from Brandywine to the Company. As of December 31, 2009, 2008 and 2007, the Company incurred approximately $889, $889 and $37, respectively.
	Upon transfer of certain of the Properties to the Company, Brandywine received $3,200 in exchange for the execution and delivery of an agreement related to future capital expenditures of the Company. This agreement requires Brandywine to fund $3,200 of the first $6,000 of capital expenditures incurred by the Company. The amount paid to Brandywine is included in related party assets on the accompanying consolidated balance sheet.
	Upon transfer of certain of the Properties on December 19, 2007, the Company advanced Brandywine $3,205 which Brandywine expects to repay together with interest at 8.5% per annum in approximately 3 years. The amount paid to Brandywine is included in related party assets on the accompanying consolidated balance sheet.
	A summary of related party receivables as of December 31, 2009 and 2008 is as follows:

	2009		2008
Capital expenditure receivable	$	1,919	$	2,312
Property advance		3,205		3,205
	$	5,124	$	5,517

8.	Commitments and Contingencies
	In the normal course of business, the Company may, from time to time, enter into contracts or agreements with tenants and other vendors that commit the Company to specific or contingent liabilities. As of December 31, 2009, there were no contracts or agreements with tenants or vendors that management considers significant (either individually or in the aggregate) to the financial position or results of operations of the Company. The Company is also subject to legal claims in the ordinary course of business as a property owner.
	As an owner and operator of real estate, the Company is subject to various environmental laws of federal, state, and local governments. Compliance with these laws has not had a material effect on the financial statements and management does not believe it will have such an impact in the future.
9.	Subsequent Events
	The Company has evaluated subsequent events through February 26, 2010 and none were considered significant.

F-110