SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A No. 1
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) March 4, 1997
BRANDYWINE REALTY TRUST
(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)
Page 1 of 2 pages
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Businesses Acquired. The Financial
Statements of the Main Street Properties are included on
pages F-11 to F-14.
(b) Pro Forma Financial Information. Pro Forma financial
information is included on pages F-2 to F-10.
(c) Exhibits.
1.1 Agreement of Sale for 1336 Enterprise Drive, Goshen
Corporate Park, E. Goshen Township, Chester County,
Pennsylvania, dated February 14, 1997, by and
between Brandywine Realty Trust and Hough/Loew
Construction, Inc.
1.2 Agreement of Sale, dated as of February 21, 1997,
between Radnor-Camco Partnership and Brandywine
Realty Trust.
23.1 Consent of Arthur Andersen LLP.
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: April 29, 1997 By: /s/ Gerard H. Sweeney
---------------------
Title: President and Chief Executive
Officer
-2-
BRANDYWINE REALTY TRUST
INDEX TO FINANCIAL STATEMENTS
I. UNAUDITED PRO FORMA CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
* Pro Forma Condensed Consolidating Balance Sheet as of
December 31, 1996 ......................................F -4
* Pro Forma Condensed Consolidating Statement of Operations
for the Year Ended December 31, 1996..................F - 5
* Notes and Management's Assumptions to Unaudited Pro Forma
Condensed Consolidating Financial Information..........F - 6
II. MAIN STREET ACQUISITION PROPERTIES
* Report of Independent Public Accountants..............F - 11
* Statement of Revenue and Certain Expenses for the Year Ended
December 31, 1996.....................................F - 12
* Notes to Statement of Revenue and Certain Expenses....F - 13
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 December 31, 1996 and the
pro forma condensed consolidating statement of operations for the year ended
December 31, 1996.
The unaudited pro forma condensed consolidating financial information
is presented as if the following transactions had been consummated on December
31, 1996, for balance sheet purposes, and at the beginning of the period
presented, for purposes of the statement of operations:
- This 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 by the Company in
August 1996; (iii) the LibertyView Building acquired by the Company 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 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 by the Company in January 1997 and (vi) the Main
Street Properties Acquisition Properties acquired by the Company in March
1997.
- In December 1996, 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 $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 acquired its partnership interests in the Brandywine
Operating Partnership.
- The Company acquired the LibertyView Building.
- In conjunction with the 1996 Offering, the Company acquired the SERS
Properties, Delaware Corporate Center I, 700/800 Business Center Drive
and 8000 Lincoln Drive (the "1996 Additional Acquisition Properties") for
$26,444,000 of Preferred Shares, $3,225,000 of deferred payments, $56,000
of warrants and $23,658,000 of cash.
- The Company issued 636,363 Common Shares at $16.50 per share to SERS
Voting Trust, in exchange for $10.5 million and contributed such proceeds
to the Operating Partnership in exchange for 636,363 units of general
partnership interest ("GP Units") in the Operating Partnership.
- Following the 1996 Offering and the application of the net proceeds
therefrom, the Operating Partnership repaid $49,805,000 of indebtedness
secured by the Properties, $764,000 of loans made by SSI to the Operating
Partnership and a $500,000 prepayment penalty.
- The company issued 709,090 Common Shares at $16.50 per share to two
investment funds managed by Morgan Stanley Asset Management Inc. and
contributed the proceeds to the Operating Partnership in exchange for
709,090 GP Units.
F-2
- 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 in cash.
- 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 $19,183,000, (ii) cash deposits of $500,000 and (ii)
assumed debt of $1,900,000.
The pro forma condensed consolidating financial information is unaudited
and is not necessarily indicative of what the actual financial position
would have been at December 31, 1996, 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 DECEMBER 31, 1996 (NOTES 1 AND 2)
(UNAUDITED)
(IN THOUSANDS)
BRANDYWINE MAIN STREET
REALTY TRUST 1997 ACQUISITION
HISTORICAL OTHER PROPERTIES PRO FORMA
CONSOLIDATED EVENTS (A) (B) CONSOLIDATED
------------- ---------- ----------- -------------
ASSETS:
Real estate investments, net $ 151,901 $ 31,481 $ 21,583 $ 204,965
Cash and cash equivalents 18,279 26,755 (19,183) 25,851
Escrowed cash 2,044 -- -- 2,044
Deferred costs, net 3,549 -- -- 3,549
Other assets 2,553 -- (500) 2,053
-------- -------- -------- ---------
Total assets 178,326 58,236 1,900 238,462
======== ======== ======== =========
LIABILITIES:
Mortgage and notes payable 36,644 12,157 1,900 50,701
Other liabilities 6,914 -- -- 6,914
-------- -------- -------- ---------
Total liabilities 43,558 12,157 1,900 57,615
-------- -------- -------- ---------
MINORITY INTEREST 6,398 -- -- 6,398
-------- -------- -------- ---------
CONVERTIBLE PREFERRED SHARES 26,444 -- -- 26,444
-------- -------- -------- ---------
BENEFICIARIES' EQUITY
Common shares of beneficial interest 70 24 -- 94
Additional paid-in capital 113,047 46,055 -- 159,102
Share Warrants 962 -- -- 962
Accumulated equity (deficit) (12,153) -- -- (12,153)
-------- -------- -------- ---------
Total beneficiaries' equity 101,926 46,079 -- 148,005
-------- -------- -------- ---------
Total liabilities and beneficiaries' equity $ 178,326 $ 58,236 $ 1,900 $ 238,462
======== ======== ======== =========
The accompanying notes and management's assumptions are an
integral part of this statement.
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)
1997 EVENTS
BRANDYWINE --------------------------
REALTY
TRUST MAIN STREET TOTAL PRO
HISTORICAL 1996 OTHER ACQUISITION FORMA
CONSOLIDATED (A) EVENTS (B) EVENTS (C) PROPERTIES (D) CONSOLIDATED
----------------- ------------ ------------ ------------- -------------
Revenue:
Base rents $ 8,462 $ 12,646 $ 5,146 $ 3,141 $ 29,395
Tenant reimbursements 1,372 2,838 359 347 4,916
Other 196 100 376 -- 672
----------- ----------- ---------- ----------- -----------
Total revenue 10,030 15,584 5,881 3,488 34,983
----------- ----------- ---------- ----------- -----------
Operating Expenses
Interest 2,751 513 1,155 -- 4,419
Depreciation and amortization 2,836 4,687 1,007 629 9,159
Property expenses 3,709 6,830 1,979 2,194 14,712
General and administrative 825 148 -- -- 973
----------- ----------- ---------- ----------- -----------
Total operating expenses 10,121 12,178 4,141 2,823 29,263
----------- ----------- ---------- ----------- -----------
Income (loss) before minority interest (91) 3,406 1,740 665 5,720
Minority interest in (income) loss (45) (429) -- -- (474)
----------- ----------- ---------- ----------- -----------
Income (loss) before uncombined entity
and extraordinary items (136) 2,977 1,740 665 5,246
Equity income of management company (26) 66 -- -- 40
(Income) loss allocated to Preferred Shares (401) (1,847) -- -- (2,248)
----------- ----------- ---------- ----------- -----------
Income (loss) allocated to Common Shares $ (563) $ 1,196 $ 1,740 $ 665 $ 3,038
=========== =========== ========== =========== ===========
Earnings (loss) allocated to Common Shares $ (0.43) $ 0.33
=========== ==========
Weighted average number of shares
outstanding including share
equivalents 1,302,648 9,255,012
=========== ==========
The accompanying notes and management's assumptions
are an integral part of this statement.
F-5
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 December 31, 1996, the Company owned interests in 37
properties, consisting of 34 suburban office buildings in three states and three
industrial properties. The Company is sole general partner and had an
approximately 95.5% interest in Brandywine Operating Partnership, L.P. (the
"Operating Partnership") as of December 31, 1996.
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 and Main Street Acquisition
Properties. In management's opinion, all adjustments necessary to reflect the
effects of the 1996 Offering, the Concurrent Financings, the 1997 Offering, the
acquisitions of the SSI/TNC Properties, the LibertyView Building, the
Acquisition Properties, the Columbia Acquisition Properties and the Main Street
Acquisition Properties by the Company have been made.
F-6
2. ADJUSTMENTS TO PRO FORMA CONDENSED
CONSOLIDATING BALANCE SHEET:
(A) Reflects the Company's acquisition of the Columbia Acquisition Properties
based upon the purchase price plus closing costs, and the 1997 Offering as
follows:
Columbia 1997 Total 1997
Acquisition Offering Other
Properties Adjustments Events
--------------- ---------------- ---------------
Assets:
Real Estate Investments, net $ 31,481 $ - $ 31,481
Cash and cash equivalents (12,324) 39,079 (i) 26,755
Escrowed cash - - -
Deferred costs, net - - -
Other Assets - - -
--------------- ---------------- ---------------
Total Assets 19,157 39,079 58,236
Liabilities:
Mortgage and notes payable 19,157 (7,000)(ii) 12,157
Other liabilities - - -
--------------- ---------------- ---------------
Total liabilities 19,157 (7,000) 12,157
Minority Interest - - -
Convertible Preferred Shares - - -
Beneficiaries' Equity:
Common shares of beneficial interest - 24(iii) 24
Additional paid-in capital - 46,055(iv) 46,055
Stock warrants - - -
Accumulated equity (deficit) - - -
--------------- ---------------- ---------------
Total beneficiaries' equity - 46,079 46,079
--------------- ---------------- ---------------
Total liabilities and
beneficiaries' equity $ 19,157 $ 39,079 $ 58,236
=============== ================ ===============
(i) Pro forma cash and cash equivalents were determined as follows:
Net proceeds from this Offering and from the exercise of the
over-allotment option after underwriting discounts,
commissions and expenses of $2,916 $ 46,079
Repayment of mortgage and notes payable (7,000)
----------------
Net increase in cash and cash equivalents $ 39,079
================
(ii) Reflects the net decrease in mortgages and notes payable $ (7,000)
================
(iii) Par value of the Common Shares to be issued $ 24
================
F-7
(iv) Reflects the issuance of 2,375,500 Common Shares, par value of $.01 per
share, at the offering price of $20.63 per share. The following table sets
forth the adjustments to additional paid-in capital:
Net proceeds from the Offering of Common Shares after
Underwriting discounts and Commissions and Offering
expenses $46,079
Less: Adjusted par value of Common Shares at $.01 par (24)
----------
Net increase in additional paid in capital $46,055
=========
(B) Reflects the Company's acquisition of Main Street Properties based upon the
purchase price plus closing costs as follows:
Purchase Price $21,500
Closing Costs 83
--------
$21,583
=======
3. ADJUSTMENTS TO PRO FORMA CONDENSED
CONSOLIDATING STATEMENT 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 following table below reflects the adjustments:
SSI/TNC
Properties 700/800 1996
and Delaware Business 8000 Pro Forma Total
LibertyView SERS Corporate Center Lincoln & Other Offering Pro Forma
Building Properties Center Drive Drive Adjustments 1996 Events
------------ ---------- ---------- --------- --------- ------------------ ------------
Revenue:
Base rents $ 5,714 $ 4,008 $ 2,036 $ 651 $ 237 $ -- $ 12,646
Tenant reimbursements 2,511 249 -- 76 2 -- 2,838
Other 100 -- -- -- -- -- 100
-------- -------- -------- -------- -------- -------- --------
8,325 4,257 2,036 727 239 -- 15,584
perating expenses:
Interest 3,783 194 -- -- -- (3,464) 513
Depreciation and amortization 2,819 818 374 212 89 375 4,687
Property expenses 2,831 2,217 552 270 231 729 6,830
General and administrative 715 -- -- -- -- (567) 148
-------- -------- -------- -------- -------- -------- --------
Total operating expenses 10,148 3,229 926 482 320 (2,927) 12,178
Income (loss) before minority interest (1,823) 1,028 1,110 245 (81) 2,927 3,406
Minority interest in income (loss) (513) -- -- -- -- 942 429
Income (loss) before uncombined entity
and extraordinary items (1,310) 1,028 1,110 245 (81) 1,985 2,977
Equity income of management company 75 -- -- -- -- (9) 66
Income (loss) before extraordinary items (1,235) 1,028 1,110 245 (81) 1,976 3,043
Income allocated to Preferred Shares -- -- -- -- -- 1,847 1,847
-------- -------- -------- -------- -------- -------- --------
Income (loss) allocated to Common Shares $ (1,235) $ 1,028 $ 1,110 $ 245 $ (81) $ 129 $ 1,196
======== ======== ======== ======== ======== ======== ========
F-8
(C) Reflects the pro forma statement of operations of the Columbia Acquisition
Properties 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 following
table reflects the pro forma adjustments:
1997 Other Acquisitions
----------------------------------
Columbia
Acquisition
Properties Pro Forma 1997 Total Other
Historical Adjustments Offering 1997 Events
-------------- --------------- ------------ ------------
Revenue:
Base rents $ 5,146 $ -- $ -- $ 5,146
Tenant reimbursements 359 -- -- 359
Other 376 -- -- 376
------- ----- ----- -------
5,881 -- -- 5,881
Operating Expenses:
Interest -- 1,680(i) (525)(ii) 1,155
Depreciation and amortization -- 1,007(iii) -- --
Property expenses 1,979 -- -- 1,979
General and administrative -- -- -- --
------- ----- ----- -------
Total operating expenses 1,979 2,687 (525) 4,141
Income (loss) before minority interest 3,902 (2,687) 525 1,740
Minority Interest in Income (loss) -- -- -- --
Income (loss) before uncombined entity and
extraordinary items 3,902 (2,687) 525 1,740
Equity Income of management company -- -- -- --
Income (loss) before extraordinary items 3,902 (2,687) 525 1,740
Income allocated to Preferred Shares -- -- -- --
Income (loss) allocated to Common Shares $ 3,902 $(2,687) $ 525 $ 1,740
======= ======= ======= =======
(i) Interest expense reflects pro forma interest on debt using an effective rate
of 7.5% on borrowings under the revolving credit facility and an effective rate
of 9.5% on assumed debt.
(ii) Represents interest savings related to the Company using a portion of the
proceeds from the 2/26/97 offering to repay the $7.0 million of borrowings under
the credit facility at an effective rate of 7.5%.
(iii) Reflects the depreciation of the buildings using a 25-year useful life.
F-9
(D) Main Street Acquisition Properties
Main Street
Acquisition Pro Forma
Properties Main Street
Historical Pro Forma Acquisition
12/31/96 Adjustments Properties
----------------- ---------------- ---------------
Revenue:
Base rents $ 3,141 $ - $ 3,141
Tenant Reimbursements 347 - 347
----------------- ---------------- ---------------
3,488 - 3,488
Operating expenses:
Interest - - -
Depreciation and amortization - 629 (i) 629
Property expenses 2,194 - 2,194
General and administrative - - -
----------------- ---------------- ---------------
2,194 629 2,823
Income (loss) before minority interest 1,294 (629) 665
----------------- ---------------- ---------------
Equity income of management company - - -
----------------- ---------------- ---------------
Income allocated to Common Shares $ 1,294 $ (629) $ 665
================= ================ ===============
(i) Reflects the depreciation of the buildings using a 25-year useful life.
F-10
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Brandywine Realty Trust:
We have audited the combined statement of revenue and certain expenses of Main
Street Properties (the "Properties") 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 a 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 the Properties' revenue and expenses.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the revenue and certain expenses of the Properties for
the year ended December 31, 1996, in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Philadelphia, Pa.,
January 29, 1997
F-11
MAIN STREET PROPERTIES
COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1996
REVENUE:
Base rents (Note 2) $ 3,141,000
Tenant reimbursements 347,000
----------------
Total revenue 3,488,000
----------------
CERTAIN EXPENSES:
Maintenance and other operating expenses 1,305,000
Utilities 439,000
Real estate taxes 450,000
----------------
Total certain expenses 2,194,000
----------------
REVENUE IN EXCESS OF CERTAIN EXPENSES $ 1,294,000
================
The accompanying notes are an integral part of this financial statement.
F-12
MAIN STREET PROPERTIES
NOTES TO COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES
DECEMBER 31, 1996
1. BASIS OF PRESENTATION:
The combined statement of revenue and certain expenses reflects the operations
of the Main Street Properties (the "Properties"), located in Voorhees, New
Jersey. These properties are expected to be acquired by Brandywine Realty Trust
(the "Company") from Radnor Canuso Partnership ("RCP") in February 1997. The
Properties have an aggregate net rentable area of approximately 235,000 square
feet (96% leased as of December 31, 1996) and four undeveloped land sites. This
combined statement of revenue and certain expenses is 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 the 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, professional fees, and other costs not directly
related to the future operations of the Properties.
The preparation of financial statements in conformity with generally accepted
accounting principles 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 revenues and expenses during the reporting period.
Actual results could differ from those estimates.
2. OPERATING LEASES:
Base rents presented for the year ended December 31, 1996, include straight-line
adjustments for rental revenue increases in accordance with generally accepted
accounting principles. The aggregate rental revenue increase resulting from the
straight-line adjustment for the year ended December 31, 1996, was $62,000
(unaudited).
F-13
Tenants whose minimum rental payments were equal to 10% or more of total base
rents in 1996 are as follows:
Dean Witter $ 343,000
Credit Lenders 340,000
The Properties are leased to tenants under operating leases with expiration
dates extending to the year 2004. Future minimum rentals under noncancelable
operating leases, excluding tenant reimbursements of operating expenses as of
December 31, 1996, are as follows:
1997 $3,009,000
1998 3,130,000
1999 2,514,000
2000 1,788,000
2001 1,282,000
Thereafter 1,723,000
Certain leases also include provisions requiring tenants to reimburse the
Company for management costs and other operating expenses up to stipulated
amounts.
3. COMMITMENTS:
The Properties include four undeveloped land sites as part of a condominium
association at December 31, 1996. The owner of the Properties is responsible for
payment of unallocated expenses as a result of this undeveloped land. The
unallocated expenses recorded during the year totaled approximately $286,000 and
are included in maintenance and other operating expenses in the accompanying
combined statement of revenue and certain expenses.
F-14