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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Filed pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 14, 1996
BRANDYWINE REALTY TRUST
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(Exact name of registrant as specified in its charter)
MARYLAND 1-9106 23-2413352
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) file number) Identification Number)
16 CAMPUS BOULEVARD, NEWTOWN SQUARE, PENNSYLVANIA 19073
(Address of principal executive offices)
(610) 325-5600
(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On November 14, 1996, the Company consummated a previously
disclosed transaction (the "SERS Transaction") with a voting trust (the "SERS
Voting Trust") established for the benefit of the Commonwealth of Pennsylvania
State Employes' Retirement System ("SERS") pursuant to which it acquired nine
commercial properties (the "SERS Properties") in suburban Philadelphia
aggregating approximately 418,000 net rentable square feet and that have an
average age of approximately 12 years.
As of September 30, 1996, the SERS Properties were
approximately 92.4% leased to 62 tenants. The SERS Properties were acquired by
the Company for an aggregate purchase price of $30.3 million, payable as
follows: (i) by issuing 481,818 preferred shares of beneficial interest, par
value $.01 per share ("Preferred Shares") that, subject to certain conditions,
are convertible into 4,818,180 common shares of beneficial interest, par value
at $.01 per share ("Common Shares") (1,606,060 Common Shares after giving effect
to the Company's previously disclosed reverse one for three share split
effective November 25, 1996 ("Reverse Share Split")); (ii) by agreeing to make
deferred payments aggregating $3.8 million (as described below); and (iii) by
issuing two-year warrants to purchase 400,000 Common Shares at an exercise
price of $8.50 per share (133,333 Common Shares at an exercise price of
$25.50 per share after giving effect to the Company's Reverse Share Split). The
purchase price was determined through negotiation in an arm's-length
transaction.
Each Preferred Share will entitle the holder to: (i) receive
distributions equal to the distributions payable in respect of a number of
Common Shares equal to the Conversion Number (defined below); (ii) vote,
together with holders of Common Shares, as a class, and to cast the number of
votes equal to the Conversion Number; and (iii) a liquidation preference equal
to the greater of (a) the amount that would have been payable with respect to
the Common Shares into which such Preferred Shares would have been convertible
immediately prior to the liquidation had the condition to convertibility been
satisfied and (b) the product of $5.50 ($16.50 after giving effect to the
Company's Reverse Share Split) multiplied by the Conversion Number plus all
declared but unpaid dividends. The Company will be required to pay $2.5
million of the deferred purchase price on June 30, 1998 and $1.3 million on
December 31, 1999 in cash or, at the Company's option, through the issuance of
additional Preferred Shares that will be convertible, subject to certain
conditions, into a number of Common Shares equal to the applicable amount of
the deferred purchase price divided by the greater of the Market Value Per
Share or the Book Value Per Share (as such terms are defined below).
The term "Conversion number" means, initially, ten and such
number is subject to adjustment for share splits, reverse share splits, share
dividends and the like.
The term "Book Value Per Share" means, as of any date: (i)
the total beneficiaries' equity as shown on the Company's consolidated balance
sheet as of the fiscal quarter end immediately prior to the applicable date
(with appropriate adjustments for any material events subsequent thereto)
prepared in accordance with rules and regulations of the Securities and
Exchange Commission and generally accepted accounting principles applied on a
consistent basis (as adjusted to reflect the consideration received by the
Company upon the Exercise (defined below) of any Convertible Securities
(defined below) which are included in
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the computation in (ii) below), divided by (ii) the sum of the number of Common
Shares outstanding on such date plus the number of Common Shares issuable upon
the exercise, conversion or exchange (collectively, "Exercise") of outstanding
options, warrants, Preferred Shares and other convertible securities or similar
rights (collectively, "Convertible Securities") to the extent that the
consideration payable upon the exercise of such Convertible Securities is less
than the Market Value Per Share of the Common Shares issuable upon such
Exercise.
The term "Market Value Per Share" means, as of any date (the
"Valuation Date"), the average of the closing per share sale price(s) of the
Common Shares for the period of 20 consecutive trading days ending on the
trading date immediately preceding the Valuation Date as such prices are
reported by the principal United States securities exchange on which the Common
Shares are then traded or, if the Common Share are not then traded on any such
exchange, the closing per share sale price (or the average of the quoted per
share closing bid and asked prices if no sale is reported) as reported by the
National Association of Securities Dealers, Inc. ("NASD"), Automated Quotation
System ("NASDAQ") or any comparable system or, if the Common Shares are not
then quoted on NASDAQ or any comparable system, the average of the closing per
share bid and asked prices as furnished by any member of the NASD selected by
the Board of Trustees.
Prior to approval (a "Conversion Approval") of the unlimited
conversion of Preferred Shares into Common Shares by a majority of the votes
cast by holders of Common Shares at a meeting of shareholders in which holders
of Preferred Shares have no right to vote such Preferred Shares, Preferred
Shares will be convertible into up to 543,975 Common Shares (181,325 Common
Shares after giving effect to the Company's Reverse Share Split). In the event
that a Conversion Approval has not occurred by July 1, 1997, holders of
Preferred Shares will become entitled to receive distributions equal to 120% of
the distributions payable in respect of a number of Common Shares equal to the
Conversion Number. In the event that a Conversion Approval has not occurred by
July 1, 1998, holders of Preferred Shares will have the right to require the
Company to redeem their Preferred Shares at the Redemption Price (defined
below). Safeguard Scientifics, Inc., The Nichols Company and Richard M.
Osborne have agreed to vote Common Shares beneficially owned by them in favor
of the unlimited conversion. The term "Redemption Price" means, in respect of
a Preferred Share, the greater of: (i) the product of (a) $5.50 ($16.50 after
giving effect to the Company's Reverse Share Split) plus an amount (the "Return
Amount") equal to 8.0% of $5.50 ($16.50 after giving effect to the Company's
Reverse Share Split) per annum from the date of issuance of such Preferred
Share to the redemption date thereof less an amount (not to exceed the Return
Amount) equal to distributions actually received by the holder of account of
such Share and (b) the Conversion Number and (ii) the product of the market
price of a Common Share and the Conversion Number.
For information concerning the SERS Properties, reference is
made to the information under the heading "Business and Properties" in the
Registration Statement on Form S-11 (Registration No. 333-13969), as amended,
filed by the Company with the Securities and Exchange Commission and such
information is hereby incorporated herein by reference.
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ITEM 7. FINANCIAL STATEMENT, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Businesses Acquired. [to come]
The audited statement of revenues and certain operating
expenses of the SERS Properties for the year ended December 31,
1995 is incorporated by reference from pages F-51 and
F-52 of the Company's Registration Statement in Form S-11,
File No. 333-13969, as amended, declared effective November
25, 1996.
The unaudited interim statements of revenues and certain
expenses of the SERS Properties included therein include all
adjustments consisting only of normal recurring accruals,
which the Company considers necessary for a fair presentation
of the SERS Properties revenues and certain expenses for the
nine months ended September 30, 1995 and 1996, as presented in
the unaudited interim financial statements.
(b) Pro Forma Financial Information.
Pro forma financial information which reflects the Company's
acquisitions of the SERS Properties as of September 30,
1996 and for the year ended December 31, 1995 and the 9 months
ended September 30, 1996 is incorporated by reference from
pages F-3 to F-13 of the Company's Registration Statement on
Form S-11, File No. 333-13969, as amended, declared effective
November 25, 1996.
(c) Exhibits.
10.1 Contribution Agreement among the Company, Greenwood
Square Corporation, BCBC Holding Company, 500 North
Gulph Road and RAI Real Estate Advisers, Inc.
("RAI"), as voting trustee.
10.2 Securities Purchase Agreement between the Company
and RAI, as voting trustee.
10.3 Warrant to purchase Common Shares in favor of RAI,
as voting trustee.
10.4 Standstill Agreement between the Company and RAI, as
voting trustee.
10.5 Registration Rights Agreement between the Company
and RAI, as voting trustee.
10.6 Pledge Agreement between the Company and RAI, as
voting trustee.
10.7 Voting Agreement between the Company, RAI as voting
trustee, and certain other parties.
10.8 Excerpt from Registration Statement on Form S-11
(No. 333-13969), as amended, consisting of the
discussion under the heading "Business and
Properties."
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
BRANDYWINE REALTY TRUST
Date: November 27, 1996 By: /s/ Gerard H. Sweeney
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Title: President and Chief
Executive Officer
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