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) March 31, 1998
BRANDYWINE REALTY TRUST
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(Exact name of registrant as specified in its charter)
MARYLAND 1-9106 23-2413352
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(State or other jurisdiction of (Commission file number) (I.R.S. Employer 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 5 pages
Item 2. Acquisition or Disposition of Assets.
On March 31, 1998, Brandywine Operating Partnership, L.P. (the
"Operating Partnership"), a limited partnership of which Brandywine Realty Trust
(the "Company") is the sole general partner and in which the Company owns, on
the date of this Current Report on Form 8-K an approximately 98.4% interest,
acquired six office properties located in East Windsor, Trenton and
Lawrenceville, N.J. (the "DKM Portfolio") containing an aggregate of
approximately 928,427 net rentable square feet. As of March 31, 1998, the DKM
Portfolio was approximately 96.3% leased to 54 tenants. Agencies of the State of
New Jersey collectively occupy more than 10% of the total net rentable area of
the DKM Portfolio.
The purchase price for the DKM Portfolio totaled $137.8 million. The
Operating Partnership paid $118.8 million of the purchase price and closing
expenses in cash using borrowings under its existing revolving credit facility,
assumed mortgage indebtedness of $15.4 million and paid $3.6 million of the
acquisition price in the form of 153,036 units of limited partnership interest
("Units") in the Operating Partnership.
The Units are redeemable, in whole or in part, at the option of the
holder at any time after 185 days following their date of issuance for cash
based on the market value of the Company's common shares of beneficial interest
("Common Shares") at the time of redemption or, at the Company's option, in
exchange for a number of Common Shares equal to the number of Units tendered for
redemption. The Units and the Common Shares issuable upon redemption of the
Units have not been registered under the Securities Act of 1933 or any state
securities laws and may not be offered and sold in the United States absent
registration or an applicable exemption from registration. The Company has
agreed to file a registration statement registering the resale of Common Shares
issuable upon redemption of Units. See Exhibit 10.2 under Item 7.
In connection with its acquisition of the DKM Portfolio, the Company
agreed to pay certain tax liabilities that might be incurred by certain persons
who held ownership interests in four properties included in the DKM Portfolio in
the event the Company were to take certain actions, such as a sale of the
applicable properties during a four or five year period following the closing.
See Exhibits 10.4, 10.5, 10.6 and 10.7 under Item 7.
The sellers of the DKM Portfolio are parties unaffiliated with the
Company and the Operating Partnership. The identity of each of the sellers is
set forth on Exhibit A of Exhibit 10.1. The Company based its determination of
the purchase price of the properties on the expected cash flow, physical
condition, location, competitive advantages, existing tenancies and
opportunities to retain and attract additional tenants. The purchase price was
determined by arm's-length negotiation between the Company and the sellers.
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The table set forth below shows certain information regarding rental
rates and lease expirations for the DKM Portfolio.
Scheduled Lease Expirations
(DKM Portfolio)
Year of Number of Leases Rentable Square Final Annulaized Percentage of Total
Lease Expiring Within Footage Subject Base Rent Under Final Annualized Base Rent
Expiration the Year at (1) to Expiring Leases Expiring Leases (2) Under Expiring Leases
---------- --------------- ------------------ ------------------- ---------------------
1998 13 106,136 $ 1,664,750 9.5%
1999 7 25,250 429,207 2.5%
2000 13 118,825 2,342,404 13.4%
2001 10 100,858 2,034,203 11.6%
2002 7 49,896 972,703 5.6%
2003 5 47,816 733,438 4.2%
2004 3 86,158 1,771,938 10.1%
2005 3 22,492 462,462 2.6%
2006 - - - -
2007 and
Thereafter 2 340,415 7,088,076 40.5%
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Total 63 897,846 $ 17,499,181 100.0%
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(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 acquisition of the DKM Portfolio, the
Company's portfolio consists of 139 office properties and 28 industrial
properties (including an office property that is currently under construction
and that the Company has agreed to acquire upon its completion during the second
quarter of 1998) that contain an aggregate of approximately 11.5 million net
rentable square feet.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements.
The financial statements of the DKM Portfolio will be included
in an amendment to this Form 8-K by no later than May 30,
1998.
(b) Pro Forma Financial Information.
Pro Forma financial information will be included in an
amendment to this Form 8-K by no later than May 30, 1998.
(c) Exhibits.
10.1 Amended and Restated Transfer Agreement, dated March
31, 1998, by and between the entities listed on
Exhibit A thereto and Brandywine Operating
Partnership, L.P.
10.2 Registration Rights Agreement, dated March 31, 1998,
by and among Brandywine Realty Trust, Brandywine
Operating Partnership, L.P., Brookstone Investors,
L.L.C., Brookstone Holdings of Del. - 4, L.L.C.,
Brookstone Holdings of Del. - 5, L.L.C. and
Brookstone Holdings of Del. - 6, L.L.C., Ronald
Berman and Marie Berman.
10.3 Second Amendment, dated March 31, 1998, to the
Amended and Restated Agreement of Limited
Partnership Agreement of Brandywine Operating
Partnership, L.P.
10.4 Tax Indemnification Agreement, dated March 31, 1998,
by and between Brandywine Operating Partnership,
L.P. and Brookstone Investors, L.L.C.
10.5 Tax Indemnification Agreement, dated March 31, 1998,
by and between Brandywine Operating Partnership,
L.P. and Brookstone Holdings of Del. - 4, L.L.C.
10.6 Tax Indemnification Agreement, dated March 31, 1998,
by and between Brandywine Operating Partnership,
L.P. and Brookstone Holdings of Del. - 5, L.L.C.
10.7 Tax Indemnification Agreement, dated March 31, 1998,
by and between Brandywine Operating Partnership,
L.P. and Brookstone Holdings of Del. - 6, L.L.C.
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SIGNATURE
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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: April 13, 1998 By: /s/ Gerard H. Sweeney
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Gerard H. Sweeney, President and Chief
Executive Officer
(Principal Executive Officer)
Date: April 13, 1998 By: /s/ Mark S. Kripke
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Mark S. Kripke, Chief Financial Officer
(Principal Financial and Accounting
Officer)
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