SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 16, 1997
BRANDYWINE REALTY TRUST
(Exact name of registrant as specified in its charter)
MARYLAND 1-9106 23-2413352
(State or other (Commission file number) (I.R.S. Employer
jurisdiction of Identification
incorporation) Number)
16 CAMPUS BOULEVARD, NEWTOWN SQUARE, PENNSYLVANIA 19073
(Address of principal executive offices)
(610) 325-5600
(Registrant's telephone number, including area code)
Page 1 of 6 pages
Item 5. Other Events
On June 16, 1997, Brandywine Operating Partnership, L.P. (the
"Operating Partnership"), a limited partnership of which Brandywine Realty Trust
(the "Company") is the sole general partner, acquired an office property located
in Broomall, Pennsylvania ("1974 Sproul Road") containing approximately 62,934
net rentable square feet. As of June 16, 1997, the property was approximately
89.3% leased to 10 tenants. Franklin Mint Credit Union, Main Line Book Company,
Allan Collautt Associates and TMR, Inc. each individually occupy more than 10%
of the total net rentable area of the property.
The net purchase price for 1974 Spoul Road totaled $4,125,000. The
Operating Partnership paid the purchase price and closing expenses using
existing cash reserves.
The seller of 1974 Sproul Road, Metropolitan Life Insurance Company, a
New York corporation (the "Seller"), is a party unaffiliated with the Company
and the Operating Partnership. The purchase price for 1974 Sproul Road was
determined by arm's-length negotiation between the Company and the Seller.
2
The table set forth below shows certain information regarding rental
rates and lease expirations for 1974 Sproul Road.
Scheduled Lease Expirations
(1974 Sproul Road)
Number of Leases Rentable Square Final Annualized Percentage of Total
Year of Expiring Within Footage Subject Base Rent from Final Annualized Base Rent
Lease the Year at to Expiring Leases 1974 Sproul Road under from 1974 Sproul Road
Expiration 1974 Sproul Road (1) at 1974 Sproul Road Expiring Leases (2) Under Expiring Leases
- -------------- -------------------- ------------------- ---------------------- --------------------------
1997 1 6,725 $ 97,513 12.3%
1998 3 14,602 227,684 28.7%
1999 3 9,492 137,054 17.3%
2000 1 6,376 102,016 12.8%
2001 - - - -
2002 2 18,993 229,670 28.9%
2003 - - - -
2004 - - - -
2005 - - - -
2006 and
Thereafter - - - -
------- -------- ---------- --------
Total 10 56,188 $ 793,937 100.0%
------- -------- ---------- --------
------- -------- ---------- --------
- ---------------------
(1) A lease is considered to expire if, and at any time, it is terminable by
the tenant without payment of penalty or premium.
(2) "Final Annualized Base Rent" for each lease scheduled to expire represents
the cash rental rate in the final month prior to expiration multiplied by
twelve.
After giving effect to the acquisitions of 1974 Sproul
Road, the Company's portfolio consists of 66 office properties and 9
industrial properties that contain an aggregate of approximately 4.3 million
net rentable square feet.
3
During the period January 1, 1997 through June 16, 1997, the
Company has acquired 10 individually insignificant properties from parties
unaffiliated with the Company and the Operating Partnership. The aggregate
purchase price for these properties was approximately $31 million. The
Company is filing this Current Report on Form 8-K in order to provide audited
financial statements for five of the individually insignificant property
acquisitions in accordance with Regulation S-X, Rule 3-14.
On April 18, 1997, the Operating Partnership acquired the
Greentree Executive Campus Acquisition Properties, aggregating approximately
156,000 net rentable square feet, located in Evesham, New Jersey, for
approximately $11.2 million. Reference is made to the Current Report on Form
8-K dated May 1, 1997 for additional information regarding the Greentree
Executive Campus Acquisition Properties and to Item 7 herein for certain
financial statements related to these properties.
On June 5, 1997, the Operating Partnership acquired two office
buildings, 748 Springdale Road and 855 Springdale Drive, located in West
Whiteland Township, Chester County, Pennsylvania (collectively, the "748 & 855
Springdale Drive"), for a net purchase price of approximately $5.3 million.
Reference is made to Item 7 herein for certain financial statements related to
these properties.
4
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired.
The audited statement of revenue and certain operating expenses of the
Greentree Executive Campus Acquistion Properties for the year ended December
31, 1996 and the unaudited statement of revenue and certain operating
expenses for the three months ended March 31, 1997 are included on pages F-2
to F-6.
The audited statement of revenue and certain operating expenses of 748 &
855 Springdale Drive for the year ended December 31, 1996 and the unaudited
statement of revenue and certain operating expenses for the three months
ended March 31, 1997 and 1996 are included on pages F-7 to F-10.
(b) Pro Forma Financial Information.
Pro forma financial information which reflects the Company's acquisition of
748 & 855 Springdale Drive and 1974 Sproul Road as of and for the three
months ended March 31, 1997 and for the year ended December 31, 1996 are
included on pages F-1 to F-12.
(c) Exhibits.
10.1 Agreement of Purchase and Sale - by and between Metropolitan Life
Insurance Company and the Company regarding 1974 Sproul Road, Broomall, PA.
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Zelenkofske, Axelrod & Co., Ltd.
5
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 thereunto duly authorized.
BRANDYWINE REALTY TRUST
Date: June 26, 1997 By: /s/ Gerard H. Sweeney
---------------------------------
Title: President and Chief Executive
Officer
BRANDYWINE REALTY TRUST
INDEX TO FINANCIAL STATEMENTS
I. UNAUDITED PRO FORMA CONDENSED CONSOLIDATING FINANCIAL INFORMATION
- Pro Forma Condensed Consolidating Balance Sheet as of March 31, 1997............. F-4
- Pro Forma Condensed Consolidating Statement of Operations for the Year Ended
December 31, 1996................................................................ F-5
- Pro Forma Condensed Consolidating Statement of Operations for the Three Months
Ended March 31, 1997............................................................. F-6
- Notes and Management's Assumptions to Unaudited Pro Forma Condensed Consolidating
Financial Information............................................................ F-7
II. GREENTREE EXECUTIVE CAMPUS ACQUISITION PROPERTIES
- Report of Independent Public Accountants......................................... F-16
- Combined Statements of Revenue and Certain Expenses for the Year Ended December
31, 1996 (audited) and for the Three Month Period Ended March 31, 1997
(unaudited)...................................................................... F-17
- Notes to Combined Statements of Revenue and Certain Expenses..................... F-18
III. 748 & 855 SPRINGDALE DRIVE
- Report of Independent Public Accountants......................................... F-20
- Combined Statements of Revenue and Certain Expenses for the Year Ended December
31, 1996 (audited) and for the Three Month Periods Ended March 31, 1997 and 1996
(unaudited)...................................................................... F-21
- Notes to Combined Statements of Revenue and Certain Expenses..................... F-22
F-1
BRANDYWINE REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATING FINANCIAL INFORMATION
The following sets forth the pro forma condensed consolidating balance sheet
of Brandywine Realty Trust ("the Company") as of March 31, 1997 and the pro
forma condensed consolidating statements of operations for the three months
ended March 31, 1997 and for the year ended December 31, 1996.
The pro forma condensed consolidating financial information should be read
in conjunction with the historical financial statements of (i) the Company; (ii)
the 19 "SSI/TNC" Properties acquired in August 1996; (iii) the LibertyView
Building acquired in July 1996; (iv) the 1996 Additional Acquisition Properties,
consisting of (a) the nine properties (the "SERS Properties") acquired in
November 1996 from the Pennsylvania State Employees Retirement System ("SERS")
and its subsidiaries, (b) Delaware Corporate Center I, (c) 700/800 Business
Center Drive and (d) 8000 Lincoln Drive; (v) the Columbia Acquisition Properties
acquired in January 1997; (vi) the Main Street Acquisition Properties acquired
in March 1997; (vii) the TA Properties acquired in May 1997; (viii) the Emmes
Properties acquired in May 1997; (ix) the Greentree Executive Campus Acquisition
Properties acquired in April 1997; and (x) 748 & 855 Springdale Drive acquired
in June 1997.
The unaudited pro forma condensed consolidating financial information is
presented as if the following events occurred no later than March 31, 1997, for
balance sheet purposes, and at the beginning of the period presented, for
purposes of the statements of operations:
- The Company acquired the LibertyView Building.
- The Company acquired its partnership interests in Brandywine Operating
Partnership, L.P. (the "Operating Partnership").
- The Operating Partnership acquired the 19 SSI/TNC Properties.
- The $774,000 loan from Turkey Vulture Fund XIII, Ltd. (the "RMO Fund")
was satisfied by the issuance of 46,321 Paired Units to the RMO Fund.
Each Paired Unit consists of one Common Share and a warrant exercisable
for one Common Share at a price of $19.50.
- The Company issued 4,600,000 Common Shares at $16.50 per share, of which
600,000 shares related to the underwriter's exercise of the
over-allotment option (the "1996 Offering").
- The Operating Partnership acquired the 1996 Additional Acquisition
Properties for: (i) 481,818 Series A Convertible Preferred Shares
convertible into 1,606,060 Common Shares valued at $26,444,000; (ii)
discounted deferred payments of $3,225,000; (iii) warrants to purchase
133,333 Common Shares at an exercise price of $25.50 valued at $56,000
and (iv) $23,658,000 of cash.
- The Company issued 636,363 Common Shares at $16.50 per share to a voting
trust established for the benefit of SERS, in exchange for $10.5 million
(the "SERS Offering") and contributed such proceeds to the Operating
Partnership in exchange for 636,363 units of general partnership interest
("GP Units") in the Operating Partnership.
F-2
- The Company issued 709,090 Common Shares at $16.50 per share to two
investment funds managed by Morgan Stanley Asset Management Inc. (the
"Morgan Stanley Offering") and contributed the proceeds to the Operating
Partnership in exchange for 709,090 GP Units.
- The Operating Partnership repaid $49,805,000 of mortgage indebtedness
and $764,000 of loans made by Safeguard Scientifics, Inc. and paid a
$500,000 prepayment penalty with a portion of the proceeds of the 1996
Offering, the SERS Offering and the Morgan Stanley Offering.
- The Operating Partnership acquired the Columbia Acquisition Properties
for $31,481,000, including closing costs of $181,000, paid as follows:
(i) $7,000,000 of borrowings under the Company's revolving credit
facility, (ii) $12,157,000 through an assumption by the Operating
Partnership of mortgage indebtedness encumbering two of the office
buildings and (iii) the $12,324,000 balance from cash reserves.
- The Company issued 2,375,500 Common Shares at $20.625 per share, of
which 175,500 shares related to the underwriter's exercise of the
over-allotment option (the "1997 Offering").
- The Operating Partnership acquired the Main Street Acquisition
Properties for $21,583,000, including $83,000 of closing costs, paid as
follows: (i) cash of $19,683,000 and (ii) assumed debt of $1,900,000.
- The Operating Partnership acquired 1336 Enterprise Drive, Greentree
Executive Campus, Five Eves Drive and Kings Manor (the "Other 1997
Acquisitions") for approximately $21,785,000, including closing costs of
approximately $168,000, paid using existing cash reserves and borrowings
under the Company's revolving credit facility.
- The Operating Partnership acquired the TA Properties for $42,245,000,
including $620,000 of closing costs, paid through a borrowing under the
Company's revolving credit facility.
- The Operating Partnership acquired the Emmes Properties for $66,494,000,
including $294,000 of closing costs, paid as follows: (i) $14,275,000 of
borrowings under the Company's revolving credit facility and (ii) the
balance through a borrowing under the Bridge Loan.
- The Operating Partnership acquired 748 & 855 Springdale Drive for
$5,336,000, including $86,000 of closing costs, paid through a borrowing
under the Bridge Loan.
- The Operating Partnership acquired 1974 Sproul Road for $4,181,000,
including $56,000 of closing costs, paid using existing cash reserves.
The pro forma condensed consolidating financial information is unaudited and
is not necessarily indicative of what the actual financial position would have
been at March 31, 1997, nor does it purport to represent the future financial
position and the results of operations of the Company.
F-3
BRANDYWINE REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATING BALANCE SHEET
AS OF MARCH 31, 1997 (NOTES 1 AND 2)
(UNAUDITED)
(IN THOUSANDS)
BRANDYWINE OTHER EVENTS
REALTY TRUST SUBSEQUENT TA
HISTORICAL TO MARCH 31, PROPERTIES
CONSOLIDATED 1997 (A) (B)
------------------- ------------------- -----------------
ASSETS:
Real estate investments, net...................................... $ 208,825 $ 18,147 $ 42,245
Cash and cash equivalents......................................... 18,398 (3,550) --
Escrowed cash..................................................... 1,612 -- --
Accounts receivable............................................... 2,074 -- --
Due from affiliates............................................... 479 -- --
Investment in management company.................................. 116 -- --
Deferred costs and other assets................................... 4,850 -- --
-------- ------- -------
Total assets.................................................... 236,354 14,597 42,245
-------- ------- -------
-------- ------- -------
LIABILITIES:
Mortgages and notes payable....................................... 46,848 14,597 42,245
Accrued interest.................................................. 257 -- --
Accounts payable and accrued expenses............................. 3,223 -- --
Distributions payable............................................. 4,064 -- --
Tenant security deposits and deferred rents....................... 2,157 -- --
-------- ------- -------
Total liabilities............................................... 56,549 14,597 42,245
-------- ------- -------
MINORITY INTEREST................................................... 6,356 -- --
-------- ------- -------
CONVERTIBLE PREFERRED SHARES........................................ 23,458 -- --
-------- ------- -------
BENEFICIARIES' EQUITY:
Common shares of beneficial interest.............................. 96 -- --
Additional paid-in capital........................................ 162,885 -- --
Share warrants.................................................... 962 -- --
Cumulative deficit................................................ (1,198) -- --
Cumulative distributions.......................................... (12,754) -- --
-------- ------- -------
Total beneficiaries' equity..................................... 149,991 -- --
-------- ------- -------
Total liabilities and beneficiaries equity...................... $ 236,354 $ 14,597 $ 42,245
-------- ------- -------
-------- ------- -------
EMMES 748 & 855 SPROUL
PROPERTIES SPRINGDALE 1974
(C) DRIVE (D) ROAD (E)
----------------- ----------------- -------------
ASSETS:
Real estate investments, net...................................... $ 66,494 $ 5,336 $ 4,181
Cash and cash equivalents......................................... -- -- (4,181)
Escrowed cash..................................................... -- -- --
Accounts receivable............................................... -- -- --
Due from affiliates............................................... -- -- --
Investment in management company.................................. -- -- --
Deferred costs and other assets................................... -- -- --
------- ------ ------
Total assets.................................................... 66,494 5,336 --
------- ------ ------
------- ------ ------
LIABILITIES:
Mortgages and notes payable....................................... 66,494 5,336 --
Accrued interest.................................................. -- -- --
Accounts payable and accrued expenses............................. -- -- --
Distributions payable............................................. -- -- --
Tenant security deposits and deferred rents....................... -- -- --
------- ------ ------
Total liabilities............................................... 66,494 5,336 --
------- ------ ------
MINORITY INTEREST................................................... -- -- --
------- ------ ------
CONVERTIBLE PREFERRED SHARES........................................ -- -- --
------- ------ ------
BENEFICIARIES' EQUITY:
Common shares of beneficial interest.............................. -- -- --
Additional paid-in capital........................................ -- -- --
Share warrants.................................................... -- -- --
Cumulative deficit................................................ -- -- --
Cumulative distributions.......................................... -- -- --
------- ------ ------
Total beneficiaries' equity..................................... -- -- --
------- ------ ------
Total liabilities and beneficiaries equity...................... $ 66,494 $ 5,336 $ --
------- ------ ------
------- ------ ------
PRO FORMA
CONSOLIDATED
-------------------
ASSETS:
Real estate investments, net...................................... $ 345,228
Cash and cash equivalents......................................... 10,667
Escrowed cash..................................................... 1,612
Accounts receivable............................................... 2,074
Due from affiliates............................................... 479
Investment in management company.................................. 116
Deferred costs and other assets................................... 4,850
--------
Total assets.................................................... 365,026
--------
--------
LIABILITIES:
Mortgages and notes payable....................................... 175,520
Accrued interest.................................................. 257
Accounts payable and accrued expenses............................. 3,223
Distributions payable............................................. 4,064
Tenant security deposits and deferred rents....................... 2,157
--------
Total liabilities............................................... 185,221
--------
MINORITY INTEREST................................................... 6,356
--------
CONVERTIBLE PREFERRED SHARES........................................ 23,458
--------
BENEFICIARIES' EQUITY:
Common shares of beneficial interest.............................. 96
Additional paid-in capital........................................ 162,885
Share warrants.................................................... 962
Cumulative deficit................................................ (1,198)
Cumulative distributions.......................................... (12,754)
--------
Total beneficiaries' equity..................................... 149,991
--------
Total liabilities and beneficiaries equity...................... $ 365,026
--------
--------
F-4
BRANDYWINE REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996 (NOTES 1 AND 3)
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
BRANDYWINE
REALTY
TRUST
HISTORICAL 1996
CONSOLIDATED (A) EVENTS (B) SUBTOTAL
-------------------- ------------- -------------
REVENUE:
Base rents.............................. $ 8,462 $ 12,646 $ 21,108
Tenant reimbursements................... 1,372 2,838 4,210
Other................................... 196 100 296
---------- ------------- -------------
Total Revenue......................... 10,030 15,584 25,614
---------- ------------- -------------
OPERATING EXPENSES:
Interest................................ 2,751 513 3,264
Depreciation and amortization........... 2,836 4,687 7,523
Property expenses....................... 3,709 6,830 10,539
General and administrative.............. 825 148 973
---------- ------------- -------------
Total operating expenses.............. 10,121 12,178 22,299
---------- ------------- -------------
Income (loss) before minority
interest............................ (91) 3,406 3,315
Minority interest in (income) loss........ (45) (429) (474)
---------- ------------- -------------
Income (loss) before uncombined entity.... (136) 2,977 2,841
Equity in income of management company.... (26) 66 40
---------- ------------- -------------
Net income (loss)......................... (162) 3,043 2,881
(Income) loss allocated to Preferred
Shares.................................. (401) (1,847) (2,248)
---------- ------------- -------------
Income (loss) allocated to Common
Shares.................................. $ (563) $ 1,196 $ 633
---------- ------------- -------------
---------- ------------- -------------
Earnings (loss) per Common Share.......... $ (0.43)
----------
----------
Weighted average number of shares
outstanding including share
equivalents............................. 1,302,648
----------
----------
1997 EVENTS
----------------------------------------------------------------------------------------
TA EMMES 748 & 855 1974 TOTAL
OTHER PROPERTIES PROPERTIES SPRINGDALE SPROUL PRO FORMA
EVENTS (D) (E) (F) DRIVE (G) ROAD (H) CONSOLIDATED
------------ ----------- --------------- ------------- ------------- ---------------
REVENUE:
Base rents............................ $ 11,345 $ 5,102 $ 6,214 $ 940 $ 774 $ 45,483
Tenant reimbursements................. 1,102 735 2,681 -- 118 8,846
Other................................. 377 9 10 -- -- 692
------------ ------ ------- ------------- ----- -------
Total Revenue....................... 12,824 5,846 8,905 940 892 55,021
------------ ------ ------- ------------- ----- -------
OPERATING EXPENSES:
Interest.............................. 2,250 3,168 4,987 400 -- 14,069
Depreciation and amortization......... 2,334 1,352 2,128 171 134 13,642
Property expenses..................... 5,619 1,962 3,482 250 492 22,344
General and administrative............ -- -- -- -- -- 973
------------ ------ ------- ------------- ----- -------
Total operating expenses............ 10,203 6,482 10,597 821 626 51,028
------------ ------ ------- ------------- ----- -------
Income (loss) before minority
interest.......................... 2,621 (636) (1,692) 119 266 3,993
Minority interest in (income) loss...... 246 29 76 (5) (12) (140)
------------ ------ ------- ------------- ----- -------
Income (loss) before uncombined entity.. 2,867 (607) (1,616) 114 254 3,853
Equity in income of management company.. -- 105 65 23 22 255
------------ ------ ------- ------------- ----- -------
Net income (loss)....................... 2,867 (502) (1,551) 137 276 4,108
(Income) loss allocated to Preferred
Shares................................ -- -- -- -- -- (2,248)
------------ ------ ------- ------------- ----- -------
Income (loss) allocated to Common
Shares................................ $ 2,867 $ (502) $ (1,551) $ 137 $ 276 $ 1,860
------------ ------ ------- ------------- ----- -------
------------ ------ ------- ------------- ----- -------
Earnings (loss) per Common Share........ $ 0.20
-------
-------
Weighted average number of shares
outstanding including share
equivalents........................... 9,291,406
-------
-------
F-5
BRANDYWINE REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 (NOTES 1 AND 3)
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
BRANDYWINE 1997 EVENTS
REALTY -------------------------------------------------------------
TRUST TA EMMES 748 & 855 1974 TOTAL
HISTORICAL OTHER PROPERTIES PROPERTIES SPRINGDALE SPROUL PRO FORMA
CONSOLIDATED (A) EVENTS (C) (E) (F) ROAD (G) ROAD (H) CONSOLIDATED
------------------ ----------- ----------- ----------- ----------- ---------- --------------
REVENUE:
Base rents............... $ 6,999 $ 1,647 $ 1,292 $ 1,542 $ 239 $ 191 $ 11,910
Tenant reimbursements.... 1,327 147 188 678 -- 29 2,369
Other.................... 272 25 4 1 -- -- 302
---------- ------ ------ ------ ----- ----- --------------
Total Revenue.......... 8,598 1,819 1,484 2,221 239 220 14,581
---------- ------ ------ ------ ----- ----- --------------
OPERATING EXPENSES:
Interest................. 975 341 781 1,230 99 -- 3,426
Depreciation and
amortization........... 2,310 340 333 525 42 33 3,583
Property operating
expenses............... 2,810 834 439 799 57 121 5,060
Other expenses........... 484 -- -- -- -- -- 484
---------- ------ ------ ------ ----- ----- --------------
Total operating
expenses............. 6,579 1,515 1,553 2,554 198 154 12,553
---------- ------ ------ ------ ----- ----- --------------
Income (loss) before
minority interest.... 2,019 304 (69) (333) 41 66 2,028
Minority interest in
(income) loss............ (94) (11) 2 12 (1) (2) (94)
---------- ------ ------ ------ ----- ----- --------------
Income (loss) before
uncombined entity........ 1,925 293 (67) (321) 40 64 1,934
Equity in income of
management company....... 125 -- 26 16 6 5 178
---------- ------ ------ ------ ----- ----- --------------
Net income (loss).......... 2,050 293 (41) (305) 46 69 2,112
(Income) loss allocated to
Preferred Shares......... (499) -- -- -- -- -- (499)
---------- ------ ------ ------ ----- ----- --------------
Income (loss) allocated to
Common Shares............ $ 1,551 $ 293 $ (41) $ (305) $ 46 $ 69 $ 1,613
---------- ------ ------ ------ ----- ----- --------------
---------- ------ ------ ------ ----- ----- --------------
Earnings (loss) per Common
Share.................... $ 0.20 $ 0.17
---------- --------------
---------- --------------
Weighted average number of
shares outstanding
including share
equivalents.............. 7,776,607 9,464,807
---------- --------------
---------- --------------
F-6
BRANDYWINE REALTY TRUST
NOTES AND MANAGEMENT'S ASSUMPTIONS TO
UNAUDITED PRO FORMA CONDENSED CONSOLIDATING
FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
1. BASIS OF PRESENTATION:
Brandywine Realty Trust (the "Company") is a Maryland real estate investment
trust. As of March 31, 1997, the Company owned 50 properties. The Company's
interest in 49 of the Properties is held through Brandywine Operating
Partnership, L.P. (the "Operating Partnership"). The Company is the sole general
partner of the Operating Partnership and as of March 31, 1997, the Company held
a 96.5% interest in the Operating Partnership.
These pro forma financial statements should be read in conjunction with the
historical financial statements and notes thereto of the Company, the SSI/TNC
Properties, the LibertyView Building, the 1996 Additional Acquisition
Properties, the Columbia Acquisition Properties, the Main Street Acquisition
Properties, the TA Properties, the Emmes Properties, the Greentree Executive
Campus Aquisition Properties and 748 & 855 Springdale Drive. In management's
opinion, all adjustments necessary to reflect the effects of the 1996 Offering,
the SERS Offering, the Morgan Stanley Offering, the 1997 Offering, the
acquisitions of the SSI/TNC Properties, the LibertyView Building, the 1996
Additional Acquisition Properties, the Columbia Acquisition Properties, the Main
Street Acquisition Properties, the Other 1997 Acquisitions, the TA Properties,
the Emmes Properties, 748 & 855 Springdale Drive and 1974 Sproul Road by the
Company have been made.
2. ADJUSTMENTS TO PRO FORMA CONDENSED CONSOLIDATING BALANCE SHEET:
(A) Reflects the Company's acquisition of the Other 1997 Acquisitions (only
those acquisitions which occurred after March 31, 1997 are included as 1336
Enterprise Drive is included in the Company's historical March 31, 1997 balance
sheet) based upon the respective purchase prices and closing costs as follows:
TOTAL OTHER
GREENTREE EVENTS
EXECUTIVE FIVE EVES SUBSEQUENT TO
KINGS MANOR CAMPUS DRIVE MARCH 31, 1997
--------------- ------------- ----------- ----------------
Purchase Price.................................... $ 3,500 $ 11,150 $ 3,375 $ 18,025
Closing Costs..................................... 50 59 13 122
------ ------------- ----------- -------
$ 3,550 $ 11,209 $ 3,388 $ 18,147
(B) Reflects the Company's acquisition of the TA Properties based upon the
purchase price plus closing costs as follows:
TA PROPERTIES
-------------
Purchase Price................................................................. $ 41,625
Closing Costs.................................................................. 620
-------------
$ 42,245
F-7
(C) Reflects the Company's acquisition of the Emmes Properties based upon
the purchase price plus closing costs as follows:
EMMES PROPERTIES
-----------------
Purchase Price............................................................. $ 66,200
Closing Costs.............................................................. 294
-------
$ 66,494
(D) Reflects the Company's acquisition of 748 & 855 Springdale Drive based
upon the purchase price plus closing costs as follows:
748 & 855
SPRINGDALE
DRIVE
---------------
Purchase Price............................................................... $ 5,250
Closing Costs................................................................ 86
------
$ 5,336
(E) Reflects the Company's acquisition of 1974 Sproul Road based upon the
purchase price plus closing costs as follows:
1974 SPROUL ROAD
-----------------
Purchase Price.............................................................. $ 4,125
Closing Costs............................................................... 56
------
$ 4,181
F-8
3. ADJUSTMENTS TO PRO FORMA CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS:
(A) Reflects the historical consolidated operations of the Company.
(B) Reflects the historical operations of the SSI/TNC Properties,
LibertyView Building and the 1996 Additional Acquisition Properties from January
1, 1996 through the respective dates of acquisition, plus the pro forma 1996
Offering adjustments. The table below reflects the adjustments:
SSI/TNC
PROPERTIES AND DELAWARE 700/800
LIBERTYVIEW CORPORATE BUSINESS CENTER 8000 LINCOLN
BUILDING SERS PROPERTIES CENTER DRIVE DRIVE
--------------- ----------------- ----------- ------------------- ---------------
Revenue:
Base rents.............................. $ 5,714 $ 4,008 $ 2,036 $ 651 $ 237
Tenant reimbursements................... 2,511 249 -- 76 2
Other................................... 100 -- -- -- --
------- ------ ----------- ----- -----
Total revenue......................... 8,325 4,257 2,036 727 239
Operating Expenses:
Interest................................ 3,783 194 -- -- --
Depreciation and amortization........... 2,819 818 374 212 89
Property expenses....................... 2,831 2,217 552 270 231
General and administrative.............. 715 -- -- -- --
------- ------ ----------- ----- -----
Total operating expenses.............. 10,148 3,229 926 482 320
Income (loss) before minority interest.... (1,823) 1,028 1,110 245 (81)
Minority interest in (income) loss........ 513 -- -- -- --
Income (loss) before uncombined entity.... (1,310) 1,028 1,110 245 (81)
Equity in income of management company.... 75 -- -- -- --
------- ------ ----------- ----- -----
Net income (loss)......................... (1,235) 1,028 1,110 245 (81)
Income allocated to Preferred Shares...... -- -- -- -- --
------- ------ ----------- ----- -----
Income (loss) allocated to Common Shares.. $ (1,235) $ 1,028 $ 1,110 $ 245 $ (81)
------- ------ ----------- ----- -----
------- ------ ----------- ----- -----
1996 PRO FORMA
& OTHER
OFFERING TOTAL PRO FORMA
ADJUSTMENTS 1996 EVENTS
----------------- -----------------
Revenue:
Base rents.............................. $ -- $ 12,646
Tenant reimbursements................... -- 2,838
Other................................... -- 100
------ -------
Total revenue......................... -- 15,584
Operating Expenses:
Interest................................ (3,464) 513
Depreciation and amortization........... 375 4,687
Property expenses....................... 729 6,830
General and administrative.............. (567) 148
------ -------
Total operating expenses.............. (2,927) 12,178
Income (loss) before minority interest.... 2,927 3,406
Minority interest in (income) loss........ (942) (429)
Income (loss) before uncombined entity.... 1,985 2,977
Equity in income of management company.... (9) 66
------ -------
Net income (loss)......................... 1,976 3,043
Income allocated to Preferred Shares...... 1,847 1,847
------ -------
Income (loss) allocated to Common Shares.. $ 129 $ 1,196
------ -------
------ -------
F-9
(C) Reflects the pro forma adjustments relating to the Columbia Acquisition
Properties, the Main Street Acquisition Properties and the 1997 Other
Acquisitions for the three months ended March 31, 1997 and other pro forma
adjustments to reflect the 1997 Offering for the three months ended March 31,
1997. The operating results reflected below include the historical results and
related pro forma adjustments to reflect the period January 1, 1997 through the
respective acquisition dates. Operating results from those dates forward are
included in the historical results of the Company.
OTHER 1997 ACQUISITIONS
------------------------------------------------------------------
COLUMBIA MAIN STREET GREENTREE
ACQUISITION ACQUISITION 1336 ENTERPRISE EXECUTIVE
PROPERTIES PROPERTIES DRIVE KINGS MANOR CAMPUS FIVE EVES DRIVE
------------- ------------- ----------------- --------------- ------------- -----------------
Revenue:
Base rents.................. $ 338 $ 542 $ 78 $ 101 $ 502 $ 86
Tenant reimbursements....... 24 60 13 26 14 10
Other....................... 25 -- -- -- -- --
----- ----- --- ----- ----- ---
Total revenue............. 387 602 91 127 516 96
Operating Expenses:
Interest (i)................ 110 -- -- -- 207 63
Depreciation and
amortization (ii)......... 66 109 21 28 89 27
Property expenses........... 130 379 19 42 227 37
General and
administrative............ -- -- -- -- -- --
----- ----- --- ----- ----- ---
Total operating
expenses................ 306 488 40 70 523 127
Income (loss) before minority
interest.................... 81 114 51 57 (7) (31)
Minority interest in (income)
loss........................ (3) (4) (2) (2) -- 1
Income (loss) before
uncombined entity........... 78 110 49 55 (7) (30)
Equity in income of management
company..................... -- -- -- -- -- --
----- ----- --- ----- ----- ---
Net income (loss)............. 78 110 49 55 (7) (30)
Income allocated to Preferred
Shares...................... -- -- -- -- -- --
----- ----- --- ----- ----- ---
Income (loss) allocated to
Common Shares............... $ 78 $ 110 $ 49 $ 55 $ (7) $ (30)
----- ----- --- ----- ----- ---
----- ----- --- ----- ----- ---
TOTAL OTHER
1997 OFFERING 1997 EVENTS
----------------- -------------
Revenue:
Base rents.................. $ -- $ 1,647
Tenant reimbursements....... -- 147
Other....................... -- 25
--------- ------
Total revenue............. -- 1,819
Operating Expenses:
Interest (i)................ (39) 341
Depreciation and
amortization (ii)......... -- 340
Property expenses........... -- 834
General and
administrative............ -- --
--------- ------
Total operating
expenses................ (39) 1,515
Income (loss) before minority
interest.................... 39 304
Minority interest in (income)
loss........................ (1) (11)
Income (loss) before
uncombined entity........... 38 293
Equity in income of management
company..................... -- --
--------- ------
Net income (loss)............. 38 293
Income allocated to Preferred
Shares...................... -- --
--------- ------
Income (loss) allocated to
Common Shares............... $ 38 $ 293
--------- ------
--------- ------
(i) Pro forma interest expense is presented assuming an effective rate of
7.5% on borrowings under the Company's revolving credit facility. The adjustment
for the Columbia Acquisition Properties also reflects an effective interest rate
of 9.5% on assumed debt. The adjustment for the 1997 Offering represents
interest savings related to the payoff of $7 million of credit facility
borrowings at an effective rate of 7.5%.
(ii) Pro forma depreciation expense is presented assuming an 80% building
and 20% land allocation of the purchase price and capitalized closing costs and
assumes a useful life of 25 years.
F-10
(D) Reflects the pro forma statements of operations of the Columbia
Acquisition Properties, the Main Street Acquisition Properties and the 1997
Other Acquisitions for the year ended December 31, 1996 and other pro forma
adjustments to reflect the 1997 Offering for the year ended December 31, 1996.
The operating results reflected below include the historical results and related
pro forma adjustments to reflect the period January 1, 1996 through the earlier
of the respective acquisition dates or December 31, 1996. Operating results from
those dates forward are included in the historical results of the Company.
1997 OTHER ACQUISITIONS
-----------------------------------------------------------
COLUMBIA MAIN STREET GREENTREE
ACQUISITION ACQUISITION 1336 ENTERPRISE EXECUTIVE
PROPERTIES PROPERTIES DRIVE KINGS MANOR CAMPUS FIVE EVES DRIVE
----------- ----------- ---------------- ----------- ----------- ----------------
Revenue:
Base rents............................... $ 5,146 $ 3,141 $ 437 $ 411 $ 1,862 $ 348
Tenant reimbursements.................... 359 347 75 107 175 39
Other.................................... 376 -- -- -- -- 1
------ ------ ----- ----- ----------- -----
Total revenue.......................... 5,881 3,488 512 518 2,037 388
Operating Expenses:
Interest (i)............................. 1,680 -- -- -- 841 254
Depreciation and amortization (ii)....... 1,007 629 117 114 359 108
Property expenses........................ 1,979 2,194 107 170 1,018 151
General and administrative............... -- -- -- -- -- --
------ ------ ----- ----- ----------- -----
Total operating expenses............... 4,666 2,823 224 284 2,218 513
Income (loss) before minority interest..... 1,215 665 288 234 (181) (125)
Minority interest in (income) loss......... (55) (30) (13) (11) 8 6
Income (loss) before uncombined entity..... 1,160 635 275 223 (173) (119)
Equity in income of management company..... -- -- -- -- -- --
------ ------ ----- ----- ----------- -----
Net income (loss).......................... 1,160 635 275 223 (173) (119)
Income allocated to Preferred Shares....... -- -- -- -- -- --
------ ------ ----- ----- ----------- -----
Income (loss) allocated to Common Shares... $ 1,160 $ 635 $ 275 $ 223 $ (173) $ (119)
------ ------ ----- ----- ----------- -----
------ ------ ----- ----- ----------- -----
TOTAL OTHER
1997 OFFERING 1997 EVENTS
----------------- -----------
Revenue:
Base rents............................... $ -- $ 11,345
Tenant reimbursements.................... -- 1,102
Other.................................... -- 377
------- -----------
Total revenue.......................... -- 12,824
Operating Expenses:
Interest (i)............................. (525) 2,250
Depreciation and amortization (ii)....... -- 2,334
Property expenses........................ -- 5,619
General and administrative............... -- --
------ -----------
Total operating expenses............... (525) 10,203
Income (loss) before minority interest..... 525 2,621
Minority interest in (income) loss......... 341 246
Income (loss) before uncombined entity..... 866 2,867
Equity in income of management company..... -- --
------- -----------
Net income (loss).......................... 866 2,867
Income allocated to Preferred Shares....... -- --
------- -----------
Income (loss) allocated to Common Shares... $ 866 $ 2,867
------- -----------
------- -----------
(i) Pro forma interest expense is presented assuming an effective rate of
7.5% on borrowings under the Company's revolving credit facility. The adjustment
for the Columbia Acquisition Properties also reflects an effective interest rate
of 9.5% on assumed debt. The adjustment for the 1997 Offering represents
interest savings related to the payoff of $7 million of credit facility
borrowings at an effective rate of 7.5%.
(ii) Pro forma depreciation expense is presented assuming an 80% building
and 20% land allocation of the purchase price and capitalized closing costs and
assumes a useful life of 25 years.
F-11
(E) Reflects the pro forma statements of operations of the TA Properties for
the three months ended March 31, 1997 and for the year ended December 31, 1996.
All amounts represent historical operations of the TA Properties except for the
pro forma adjustments noted:
TA PROPERTIES
----------------------------
YEAR ENDED THREE MONTHS
DECEMBER 31, ENDED MARCH
1996 31, 1997
------------- -------------
Revenue:
Base rents......................................................................... $ 5,102 $ 1,292
Tenant reimbursements.............................................................. 735 188
Other.............................................................................. 9 4
------ ------
Total revenue..................................................................... 5,846 1,484
Operating Expenses:
Interest (i)....................................................................... 3,168 781
Depreciation and amortization (ii)................................................. 1,352 333
Property expenses.................................................................. 1,962 439
General and administrative......................................................... -- --
------ ------
Total operating expenses.......................................................... 6,482 1,553
Income (loss) before minority interest.............................................. (636) (69)
Minority interest in (income) loss.................................................. 29 2
Income (loss) before uncombined entity.............................................. (607) (67)
Equity in income of management company.............................................. 105 26
------ ------
Net income (loss)................................................................... (502) (41)
Income allocated to Preferred Shares................................................ -- --
------ ------
Income (loss) allocated to Common Shares............................................ $ (502) $ (41)
------ ------
------ ------
- ------------------------
(i) Pro forma interest expense is presented assuming an effective rate of 7.5%
on borrowings under the Company's revolving credit facility.
(ii) Pro forma depreciation expense is presented assuming an 80% building and
20% land allocation of the purchase price and capitalized closing costs and
assumes a useful life of 25 years.
F-12
(F) Reflects the pro forma statements of operations of the Emmes Properties
for the three months ended March 31, 1997 and for the year ended December 31,
1996. All amounts represent historical operations of the Emmes Properties except
for the pro forma adjustments noted:
EMMES PROPERTIES
---------------------------
YEAR ENDED THREE MONTHS
DECEMBER 31, ENDED MARCH
1996 31, 1997
------------ -------------
Revenue:
Base rents..................................................................... $ 6,214 $ 1,542
Tenant reimbursements.......................................................... 2,681 678
Other.......................................................................... 10 1
------------ ------
Total revenue................................................................. 8,905 2,221
Operating Expenses:
Interest (i)................................................................... 4,987 1,230
Depreciation and amortization (ii)............................................. 2,128 525
Property expenses.............................................................. 3,482 799
General and administrative..................................................... -- --
------------ ------
Total operating expenses...................................................... 10,597 2,554
Income (loss) before minority interest.......................................... (1,692) (333)
Minority interest in (income) loss.............................................. 76 12
Income (loss) before uncombined entity.......................................... (1,616) (321)
Equity in income of management company.......................................... 65 16
------------ ------
Net income (loss)............................................................... (1,551) (305)
Income allocated to Preferred Shares............................................ -- --
------------ ------
Income (loss) allocated to Common Shares........................................ $ (1,551) $ (305)
------------ ------
------------ ------
- ------------------------
(i) Pro forma interest expense is presented assuming an effective rate of 7.5%
on borrowings under the Company's revolving credit facility.
(ii) Pro forma depreciation expense is presented assuming an 80% building and
20% land allocation of the purchase price and capitalized closing costs and
assumes a useful life of 25 years.
F-13
(G) Reflects the pro forma statements of operations of 748 & 855 Springdale
Drive for the three months ended March 31, 1997 and for the year ended December
31, 1996. All amounts represent historical operations of 748 & 855 Springdale
Drive except for the pro forma adjustments noted:
748 & 855 SPRINGDALE DRIVE
--------------------------------
YEAR ENDED THREE MONTHS
DECEMBER 31, ENDED MARCH
1996 31, 1997
--------------- ---------------
Revenue:
Base rents.................................................... $ 940 $ 239
Tenant reimbursements......................................... -- --
Other......................................................... -- --
Total revenue............................................... 940 239
----- -----
Operating Expenses:
Interest (i).................................................. 400 99
Depreciation and amortization (ii)............................ 171 42
Property expenses............................................. 250 57
General and administrative.................................... -- --
----- -----
Total operating expenses.................................... 821 198
Income (loss) before minority interest.......................... 119 41
Minority interest in (income) loss.............................. (5) (1)
Income (loss) before uncombined entity.......................... 114 40
Equity in income of management company.......................... 23 6
----- -----
Net income (loss)............................................... 137 46
Income allocated to Preferred Shares............................ -- --
Income (loss) allocated to Common Shares........................ $ 137 $ 46
----- -----
----- -----
- ------------------------
(i) Pro forma interest expense is presented assuming an effective rate of 7.5%
on borrowings under the Company's revolving credit facility.
(ii) Pro forma depreciation expense is presented assuming an 80% building and
20% land allocation of the purchase price and capitalized closing costs and
assumes a useful life of 25 years.
F-14
(H) Reflects the pro forma statements of operations of 1974 Sproul Road for
the three months ended March 31, 1997 and for the year ended December 31, 1996.
All amounts represent historical operations of 1974 Sproul Road except for the
pro forma adjustments noted:
1974 SPROUL ROAD
--------------------------------
YEAR ENDED THREE MONTHS
DECEMBER 31, ENDED MARCH
1996 31, 1997
--------------- ---------------
Revenue:
Base rents.................................................... $ 774 $ 191
Tenant reimbursements......................................... 118 29
Other......................................................... -- --
----- -----
Total revenue............................................... 892 220
Operating Expenses:
Interest (i).................................................. -- --
Depreciation and amortization (ii)............................ 134 33
Property expenses............................................. 492 121
General and administrative.................................... -- --
----- -----
Total operating expenses.................................... 626 154
Income (loss) before minority interest.......................... 266 66
Minority interest in (income) loss.............................. (12) (2)
Income (loss) before uncombined entity.......................... 254 64
Equity in income of management company.......................... 22 5
----- -----
Net income (loss)............................................... 276 69
----- -----
Income allocated to Preferred Shares............................ -- --
----- -----
Income (loss) allocated to Common Shares........................ $ 276 $ 69
----- -----
----- -----
- ------------------------
(i) Pro forma interest expense is presented assuming an effective rate of 7.5%
on borrowings under the Company's revolving credit facility.
(ii) Pro forma depreciation expense is presented assuming an 80% building and
20% land allocation of the purchase price and capitalized closing costs and
assumes a useful life of 25 years.
F-15
To Brandywine Realty Trust
We have audited the accompanying combined statement of revenue and certain
expenses of 3001-2-3 GREENTREE ASSOCIATES, L.P., 4000 AND 5000 GREENTREE
EXECUTIVE CAMPUS AND G.E.C. I & II MANAGEMENT CO., L.L.C. (the "GREENTREE
EXECUTIVE CAMPUS ACQUISITION PROPERTIES") described in Note 1 for the year ended
December 31, 1996. This combined financial statement is the responsibility of
management. Our responsibility is to express an opinion on this combined
financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the combined statement of revenue and certain
expenses is free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the combined
statement of revenue and certain expenses. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the combined statement of revenue and
certain expenses. We believe that our audit provides a reasonable basis for our
opinion.
The combined statement of revenue and certain expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in a Current Report on Form 8K of Brandywine
Realty Trust as described in Note 1 and is not intended to be a complete
presentation of the GREENTREE EXECUTIVE CAMPUS ACQUISITION PROPERTIES' revenue
and expenses.
In our opinion, the combined statement of revenue and certain expenses
referred to above presents fairly, in all material respects, the revenue and
certain expenses of the GREENTREE EXECUTIVE CAMPUS ACQUISITION PROPERTIES for
the year ended December 31, 1996, in conformity with generally accepted
accounting principles.
ZELENKOFSKE, AXELROD & CO., LTD.
Jenkintown, Pennsylvania June 19, 1997
F-16
GREENTREE EXECUTIVE CAMPUS ACQUISITION PROPERTIES
COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, MARCH 31, 1997
1996 (UNAUDITED)
------------ --------------
Revenue
Base Rents (Note 2).......................................... $1,861,942 $ 501,554
Tenant Reimbursements (Note 2)............................... 175,078 13,794
------------ --------------
Total Revenue.............................................. 2,037,020 515,348
------------ --------------
Certain Expenses
Real Estate Taxes............................................ 191,337 47,834
Utilities.................................................... 235,301 64,185
Cleaning and Janitorial...................................... 106,946 24,543
Snow Removal................................................. 50,445 8,419
Lawn Care.................................................... 53,309 8,000
General Maintenance.......................................... 100,473 16,273
Maintenance--Labor........................................... 66,155 13,058
Management Fees (Note 3)..................................... 106,513 25,279
Leasing Fees................................................. 67,714 9,538
Other Operating Expenses..................................... 39,636 9,504
------------ --------------
Total Certain Expenses..................................... 1,017,829 226,633
------------ --------------
Revenue in Excess of Certain Expenses.......................... $1,019,191 $ 288,715
------------ --------------
------------ --------------
The accompanying notes are an integral part of the combined statement of revenue
and certain expenses.
F-17
GREENTREE EXECUTIVE CAMPUS ACQUISITION PROPERTIES
NOTES TO COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES
DECEMBER 31, 1996
NOTE 1: BASIS OF PRESENTATION
The combined statement of revenue and certain expenses reflects the
operations of 3001-2-3 Greentree Associates, L.P., 4000 and 5000 Greentree
Executive Campus and G.E.C. I and II Management Co., L.L.C., (the Greentree
Executive Campus Acquisition Properties) located in Marlton, New Jersey. These
properties were acquired by Brandywine Realty Trust (the "Company") in April,
1997. The Greentree Executive Campus Acquisition Properties have an aggregate
net rentable area of approximately 156,000 square feet (95% leased as of
December 31, 1996). This combined statement of revenue and certain expenses is
to be included in the Company's Current Report on Form 8-K pursuant to the rules
and regulations of the Securities and Exchange Commission.
The accounting records of Greentree Executive Campus Acquisition Properties
are maintained on a modified cash basis. Adjusting entries have been made to
present the accompanying financial statement in accordance with generally
accepted accounting principles. The accompanying financial statement excludes
certain expenses such as interest, depreciation and amortization, and other
costs not directly related to future operations of the Greentree Executive
Campus Acquisition Properties.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts of assets and liabilities which affect the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
NOTE 2: OPERATING LEASE
Base rents presented for the year ended December 31, 1996, do not include
straight-line adjustments for scheduled rent increases occurring over the lives
of the leases in accordance with generally accepted accounting principles
because the adjustment is considered immaterial.
F-18
NOTE 2: OPERATING LEASE (CONTINUED)
There were no tenants whose minimum rental payments were equal to or
exceeding 10% or more of total base rents in 1996.
The Greentree Executive Campus Acquisition Properties are leased to tenants
under operating leases with expiration dates extending, to the year 2006. Future
minimum rentals under noncancelable operating leases, excluding tenant
reimbursements of operating expenses as of December 31, 1996, are as follows:
1997 $1,784,309
1998 1,216,284
1999 705,729
2000 423,357
2001 291,265
Thereafter 561,046
---------
$4,981,990
---------
---------
Certain leases also include provisions requiring tenants to reimburse the
Company for management costs and other operating expenses up to stipulated
amounts and are included in tenant reimbursements revenue.
NOTE 3: MANAGEMENT FEES
Management fees are based on five percent (5%) of rents collected and are
payable to a related party.
F-19
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Brandywine Realty Trust:
We have audited the combined statement of revenue and certain expenses of
748 & 855 Springdale Drive ("748 & 855 Springdale Drive") described in Note 1
for the year ended December 31, 1996. This financial statement is the
responsibility of management. Our responsibility is to express an opinion on
this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The combined statement of revenue and certain expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in the Current Report on Form 8-K of
Brandywine Realty Trust as described in Note 1 and is not intended to be a
complete presentation of 748 & 855 Springdale Drive's revenue and expenses.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the revenue and certain expenses of 748 & 855
Springdale Drive for the year ended December 31, 1996, in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Philadelphia, Pa.,
June 23, 1997
F-20
748 & 855 SPRINGDALE DRIVE
COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
FOR THE
FOR THE THREE MONTH PERIOD
YEAR ENDED ENDED MARCH 31,
DECEMBER 31, ----------------------
1996 1997 1996
------------ ---------- ----------
(UNAUDITED)
REVENUE:
Base rents (Note 2)................................................ $ 940,000 $ 239,000 $ 241,000
------------ ---------- ----------
Total revenue.................................................... 940,000 239,000 241,000
------------ ---------- ----------
CERTAIN EXPENSES:
Maintenance and other operating expenses........................... 156,000 35,000 39,000
Utilities.......................................................... 23,000 4,000 6,000
Real estate taxes.................................................. 71,000 18,000 18,000
------------ ---------- ----------
Total expenses................................................... 250,000 57,000 63,000
------------ ---------- ----------
REVENUE IN EXCESS OF CERTAIN EXPENSES................................ $ 690,000 $ 182,000 $ 178,000
------------ ---------- ----------
------------ ---------- ----------
The accompanying notes are an integral part of these financial statements.
F-21
748 & 855 SPRINGDALE DRIVE
NOTES TO COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
DECEMBER 31, 1996
1. BASIS OF PRESENTATION:
On June 5, 1997, Brandywine Operating Partnership, L.P. (the "Operating
Partnership"), a limited partnership of which Brandywine Realty Trust (the
"Company") is the sole general partner, acquired 748 & 855 Springdale Drive, a
portfolio of two office buildings located in West Whiteland Township,
Pennsylvania. 748 & 855 Springdale Drive contain an aggregate net rentable area
of approximately 64,594 square feet, which was 100% leased as of December 31,
1996. The net purchase price for 748 & 855 Springdale Drive was $5.3 million.
The combined statements of revenue and certain expenses reflect the
operations of 748 & 855 Springdale Drive. These combined statements of revenue
and certain expenses are to be included in the Company's Current Report on Form
8-K as the acquisition has been deemed significant pursuant to the rules and
regulations of the Securities and Exchange Commission.
The accounting records of 748 & 855 Springdale Drive are maintained on a
cash basis. Adjusting entries have been made to present the accompanying
financial statement in accordance with generally accepted accounting principles.
The accompanying financial statements exclude certain expenses such as interest,
depreciation and amortization, professional fees, and other costs not directly
related to the future operations of 748 & 855 Springdale Drive.
The combined statements of revenue and certain expenses for the three months
ended March 31, 1997 and 1996, are unaudited. In the opinion of management, all
adjustments necessary to present fairly the revenue and certain expenses of 748
& 855 Springdale Drive for the three months ended March 31,1997 and 1996 have
been included. The combined revenue and certain expenses for such interim
periods are not necessarily indicative of the results for the full year.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts of assets and liabilities which affect the
reported amounts of revenues and expenses during the reporting period. The
ultimate results could differ from those estimates.
F-22
2. OPERATING LEASES:
Base rents presented for the year ended December 31, 1996, and the three
months ended March 31, 1997 and 1996, include straight-line adjustments for
rental revenue increases in accordance with generally accepted accounting
principles. The aggregate rental revenue increase (decrease) resulting from the
straight-line adjustments for the year ended December 31, 1996, and the three
months ended March 31, 1997 and 1996, was ($1,000), ($3,000) (unaudited) and
($1,000,)
($3,000)(unaudited) and $1,000 (unaudited), respectively.
During 1996, rental revenues earned under leases with Environmental
Resources Management, Inc. and Automated Financial Systems, Inc. were $735,000
and $129,000, respectively. Each of these leases individually represented
greater than 10 % of 748 & 855 Springdale Drive's total rental revenue in 1996.
748 & 855 Springdale Drive are leased to tenants under operating leases
with expiration dates extending to the year 2001. Future minimum rentals
under noncancelable operating leases, excluding tenant reimbursements of
operating expenses as of December 31, 1996, are as follows:
1997.............................................................. $ 949,000
1998.............................................................. 945,000
1999.............................................................. 779,000
2000.............................................................. 786,000
2001.............................................................. 465,000
Certain leases also include provisions requiring tenants to reimburse 748 &
855 Springdale Drive for management costs and other operating expenses up to
stipulated amounts.
F-23