-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SOYcflVVo4o32tzEPdZEnU4gfJ3O3jUERrijej0ssLknd5OP/SrEbH9LF/zc4qNK ztvBdR2pGClLQ5jYsU+anQ== 0000893220-97-000414.txt : 19970225 0000893220-97-000414.hdr.sgml : 19970225 ACCESSION NUMBER: 0000893220-97-000414 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970124 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970224 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BRANDYWINE REALTY TRUST CENTRAL INDEX KEY: 0000790816 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 232413352 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-09106 FILM NUMBER: 97541965 BUSINESS ADDRESS: STREET 1: TWO GREENTREE CENTRE STREET 2: STE 100 CITY: MARLTON STATE: NJ ZIP: 08053 BUSINESS PHONE: 2152519111 MAIL ADDRESS: STREET 1: TWO GREENTREE CENTRE STREET 2: SUITE 100 CITY: MARLTON STATE: NJ ZIP: 08053 FORMER COMPANY: FORMER CONFORMED NAME: LINPRO SPECIFIED PROPERTIES DATE OF NAME CHANGE: 19920703 8-K/A 1 FORM 8-K/A NO.2, BRANDYWINE REALTY TRUST 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A No. 2 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) January 24, 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) -1- 2 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On January 24, 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 a portfolio of five office buildings (collectively, the "Acquired Properties") containing an aggregate of approximately 290,000 net rentable square feet, as more fully described below: 1. 1120 Executive Plaza, Mt. Laurel, New Jersey, containing approximately 95,124 net rentable square feet. As of January 24, 1997, this property was 95.44% leased to seven (7) tenants. 2. 1000 Howard Boulevard, Mt. Laurel Corporate Park, Mt. Laurel, New Jersey, containing approximately 105,312 net rentable square feet. As of January 24, 1997, this property was 99.56% leased to four (4) tenants. 3. Building 2, Executive Court Business Park, Evesham Township, New Jersey, containing approximately 37,517 net rentable square feet. As of January 24, 1997, this property was 95.07% leased to twelve (12) tenants. 4. Building 4A, Executive Court Business Campus, Evesham Township, New Jersey, containing approximately 24,687 net rentable square feet. As of January 24, 1997, this property was 90.61% leased to six (6) tenants. 5. Building 4(B), Executive Court Business Campus, Evesham, New Jersey, containing approximately 26,982 net rentable square feet. As of January 24, 1997, this property was 82.84% leased to two (2). The net purchase price for the Acquired Properties totaled $31,299,721. The Operating Partnership paid the purchase price as follows: (i) $7,000,000 was paid through a borrowing under the revolving credit facility previously established with Smith Barney Mortgage Capital Group, Inc., and NationsBank, N.A., (ii) $12,156,557.72 was paid through an assumption by the Operating Partnership of mortgage indebtedness encumbering 1120 Executive Plaza and 1000 Howard Boulevard, Mt. Laurel Corporate Park, held by Sun Life Assurance Company of Canada (U.S.) ("Sun Life"), and (iii) the balance, including closing expenses, was paid with existing cash reserves. The debt held by Sun Life encumbering 1120 Executive Plaza carried an outstanding principal balance of $6,137,968 as of January 24, 1997, with principal and accrued interest paid through December 31, 1996; the next installment of principal and interest being due -2- 3 February 1, 1997. Interest is payable at the contract rate of 9.875% per annum, with monthly installments of principal and interest payable in the amount of $69,353 each. The loan matures on March 1, 2002, and requires the payment of a specified premium for prepayment. The debt held by Sun Life encumbering 1000 Howard Boulevard, Mt. Laurel Corporate Park carried an outstanding principal balance of $6,018,589 as of January 24, 1997, with principal and accrued interest paid through December 31, 1996, the next installment of principal and interest being due February 1, 1997. Interest is payable at the contract rate of 9.25% per annum, with monthly installments of principal and interest payable in the amount of $66,897 each. The loan matures on November 1, 2004 and requires the payment of a specified premium for prepayment. The Operating Partnership's assumption of the aforesaid debt was specifically approved by Sun Life. In consideration for purchasing the Acquired Properties, the Company also acquired from MLCP Associates Limited Partnership an option to acquire a parcel of land containing approximately 8 acres, located in the Mt. Laurel Corporate Park, Mt. Laurel, New Jersey, immediately adjacent to the 1000 Howard Boulevard property described above. The purchase price for the option property is $1,000,000, and the option may be exercised at any time during the Initial Option Period which expires July 23, 1999. The Operating Partnership has the right to extend the Option Period until June 30, 2000, by paying an extension fee of $100,000, and upon such other terms and conditions as are set forth in the Option Agreement dated as of January 24, 1997. The Option Property is currently unimproved. The sellers of the Acquired Properties, 1120 Associates Limited Partnership, a Delaware limited partnership, by Palomino Corporation, its general partner, MLCP Associates Limited Partnership, a Delaware limited partnership, by MLCP General Corporation, its general partner, and Executive Court Associates Limited Partnership, a Delaware limited partnership, by Palomino Corporation, its general partner, are parties unaffiliated with the Company and the Operating Partnership. The purchase price for the Acquired Properties was determined by arm's-length negotiation between the Company and the sellers. -3- 4 The table set forth below shows certain information regarding rental rates and lease expirations for the Acquired Properties. Scheduled Lease Expirations (The Acquired Properties)
Number of Leases Rentable Square Expiring Within Footage Subject to Final Annualized Base Percentage of Total Final Year of the Year at Expiring Rent From Acquired Annualized Base Rent From Lease Acquired Leases at Acquired Properties Acquired Properties Expiration Properties(1) Properties Under Expiring Leases(2) Under Expiring Leases - ---------- ------------- ---------- ------------------------ --------------------- 1997 6 54,007 998,887 21.06% 1998 5 7,919 90,949 1.92% 1999 5 14,493 160,401 3.38% 2000 6 137,021 2,432,347 51.27% 2001 7 23,209 288,133 6.07% 2002 2 13,306 268,110 5.65% 2003 2004 2005 2006 and 1 26,070 504,976 10.65% thereafter Total 32 276,025 4,743,803 100.00% =========== ============== ============ =================
- --------------------- (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. -4- 5 ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (a) Financial Statements of Businesses Acquired. The Financial Statements of the Columbia Acquisition Properties are included on pages F-13 to F-16. (b) Pro Forma Financial Information. Pro Forma financial information is included on pages F-2 to F-12. (c) Exhibits. 10.1* Agreement of Sale - 1120 Executive Plaza, Mount Laurel Corporate Park, Executive Court and Option Parcel. 10.2* Assumption, Modification and Release Agreement - 1120 Executive Plaza. 10.3* Assumption, Modification and Release Agreement - 1000 Howard Boulevard, Mt. Laurel, New Jersey. 10.4* Option Agreement - Lot 8, Block 1104, Mount Laurel, New Jersey. 10.5* Sun Life Mortgage Note - 1120 Associates Limited Partnership. 10.6* Sun Life Mortgage and Security Agreement - 1120 Associates Limited Partnership. 10.7* Sun Life Letter - 1120 Associates Limited Partnership. 10.8* Sun Life Mortgage Note - MLCP Associates Limited Partnership. 10.9* Sun Life Mortgage and Security Agreement - MLCP Associates Limited Partnership. 10.10* Sun Life Letter - MLCP Associates Limited Partnership. 23.1 Consent of Arthur Andersen LLP - ------------- * Previously filed as an exhibit to the Form 8-K dated January 24, 1997.
-5- 6 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: February 24, 1997 By: /s/ Gerard H. Sweeney ---------------------------------- Title: President and Chief Executive Officer -6- 7 BRANDYWINE REALTY TRUST INDEX TO FINANCIAL STATEMENTS I. UNAUDITED PRO FORMA CONDENSED CONSOLIDATING FINANCIAL STATEMENTS * Pro Forma Condensed Consolidating Balance Sheet as of September 30, 1996. . . . . . . . . . . . . . . . . . . . . . . F-3 * Pro Forma Condensed Consolidating Statements of Operations for the Year Ended December 31, 1995, and the Nine-Months Ended September 30, 1996. . . . . . . . . . . . . . . . . . . . . . . F-4 * Notes and Management's Assumptions to Unaudited Pro Forma Condensed Consolidating Financial Information . . . . . . . . . F-6 II. COLUMBIA ACQUISITION PROPERTIES * Report of Independent Public Accountants. . . . . . . . . . . . F-13 * Statements of Revenue and Certain Expenses for the Year Ended December 31, 1996, the Year Ended December 31, 1995 (Unaudited), and the Nine-Months Ended September 30, 1996 (Unaudited). . . . F-14 * Notes to Statements of Revenue and Certain Expenses . . . . . . F-15 F-1 8 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 September 30, 1996, and the pro forma condensed consolidating statements of operations for the year ended December 31, 1995 and the nine-month period ended September 30, 1996. The unaudited pro forma condensed consolidating financial information is presented as if the following transactions had been consummated on September 30, 1996, for balance sheet purposes, and at the beginning of the period presented, for purposes of the statements of operations: - This pro forma condensed consolidating financial information should be read in conjunction with the historical financial statements of the Company, the SSI/TNC Properties, the LibertyView Building, the Acquisition Properties and the Columbia Acquisition Properties (defined below) and the related notes thereto. In management's opinion, all adjustments necessary to reflect the effects of the transactions consummated have been made. - 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 "Offering"). - The $774,000 loan from the RMO Fund was satisfied by the Company by the issuance of 46,321 Paired Units to the RMO Fund. - The Company acquired its partnership interests in the Operating Partnership. - The Operating Partnership acquired the 19 SSI/TNC Properties in connection with the SSI/TNC transaction. - The Company acquired the LibertyView Building. - In conjunction with the Offering the Company acquired the SERS Properties, Delaware Corporate Center I, 700/800 Business Center Drive, and 8000 Lincoln Drive (hereinafter referred to as the "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 contributed the net proceeds from the Offering and related transactions to the Operating Partnership in exchange for 6,206,060 GP Units. - The Company issued 636,363 Common Shares at $16.50 per share to SERS Voting Trust, in exchange for $10.5 million and contribute such proceeds to the Operating Partnership in exchange for 636,363 GP Units. - Following the 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 in the Morgan Stanley Private Placement and contributed the proceeds to the Operating Partnership in exchange for 709,090 GP Units. - The Operating Partnership acquired the Columbia Acquisition Properties for $31,300,000 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, including closing costs of $181,000 in cash. The pro forma condensed consolidating financial information is unaudited and is not necessarily indicative of what the actual financial position would have been at September 30, 1996, nor does it purport to represent the future financial position and the results of operations of the Company. F-2 9 \ BRANDYWINE REALTY TRUST PRO FORMA CONDENSED CONSOLIDATING BALANCE SHEET AS OF SEPTEMBER 30, 1996 (NOTES 1 AND 2) (UNAUDITED) (IN THOUSANDS)
BRANDYWINE REALTY TRUST COLUMBIA PRO FORMA HISTORICAL ACQUISITION ACQUISITION OFFERING PRO FORMA CONSOLIDATED(A) PROPERTIES(B) PROPERTIES(K) ADJUSTMENTS CONSOLIDATED --------------- ------------- ------------- ------------ ------------ Assets: Real estate investments, net........... $ 98,818 $ 52,218 $ 31,481 $ -- $182,517 Cash and cash equivalents.............. 1,859 (23,658) (12,324) 39,952 (C) 5,829 Escrowed cash.......................... 966 1,355 -- (145)(D) 2,176 Deferred costs, net.................... 2,290 -- -- 355 (E) 2,645 Other assets........................... 2,250 (190) -- -- 2,060 -------- ------- ------- -------- -------- Total assets................... $ 106,183 $ 29,725 $ 19,157 40,162 $195,227 ======== ======= ======= ======== ======== LIABILITIES: Mortgages and notes payable............ $ 83,020 $ 3,225 $ 19,157 (51,343)(F) $ 54,059 Other liabilities...................... 3,096 -- -- (745)(G) 2,351 -------- ------- ------- -------- -------- Total liabilities.............. 86,116 3,225 19,157 (52,088) 56,410 -------- ------- ------- -------- -------- MINORITY INTEREST........................ 8,758 -- -- -- 8,758 -------- ------- ------- -------- -------- Convertible Preferred Shares............. -- 26,444 -- -- 26,444 -------- ------- ------- -------- -------- BENEFICIARIES' EQUITY: Common shares of beneficial interest... 9 -- -- 60(H) 69 Additional paid-in capital............. 20,443 -- -- 91,942(I) 112,385 Stock warrants......................... 658 56 -- 248(J) 962 Accumulated equity (deficit)........... (9,801) -- -- -- (9,801) -------- ------- ------- ------- -------- Total beneficiaries' equity.... 11,309 56 -- 92,250 103,615 -------- ------- ------- ------- -------- Total liabilities and beneficiaries' equity........ $ 106,183 $ 29,725 $ 19,157 $40,162 $195,227 ======== ======= ======= ======= ========
The accompanying notes and management assumptions are an integral part of these statements. F-3 10 BRANDYWINE REALTY TRUST PRO FORMA CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1995 (NOTES 1 AND 3) (UNAUDITED) (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
TOTAL ADJUSTED SSI/TNC PROPERTIES BRANDYWINE AND REALTY LIBERTYVIEW TOTAL TRUST BUILDING ADJUSTED COLUMBIA HISTORICAL COMBINED ACQUISITION ACQUISITION PRO FORMA TOTAL PRO CONSOLIDATED HISTORICAL PROPERTIES PROPERTIES OFFERING FORMA (A) (B) (C) (L) ADJUSTMENT CONSOLIDATED ------------ ------------- ----------- ----------- ---------- ------------ Revenue: Base rents........................... $ 3,517 $ 8,948 $ 6,348 $ 5,032 $ -- $ 23,845 Tenant reimbursements................ 66 3,430 450 393 -- 4,339 Other................................ 83 3 -- 31 -- 117 ------ ------- ------ ------- ------- ------- Total revenue................ 3,666 12,381 6,798 5,456 -- 28,301 ------ ------- ------ ------- ------- ------- Operating expenses: Interest............................. 793 6,700 258 1,680 (4,529)(D) 4,902 Depreciation and amortization........ 1,402 4,090 1,671 1,007 415(E) 8,585 Property expenses.................... 1,608 4,222 3,408 2,004 891(G) 12,133 General and administrative........... 682 670 -- -- (562)(H) 790 ------ ------- ------ ------- ------- ------- Total operating expenses..... 4,485 15,682 5,337 4,691 (3,785) 26,410 ------ ------- ------ ------- ------- ------- Income (loss) before minority interest................... (819) (3,301) 1,461 765 3,785 1,891 Minority interest in income (loss)..... 5 (1,182) -- -- 1,370(F) 193 ------ ------- ------ ------- ------- ------- Income (loss) before uncombined entity and extraordinary items.............. (824) (2,119) 1,461 765 2,415 1,698 Equity income of management company.... -- 179 -- -- (107)(I) 72 ------ ------- ------ ------- ------- ------- Income (loss) before extraordinary items................................ (824) (1,940) 1,461 765 2,308 1,770 Income allocated to Preferred Shares... -- -- -- -- 2,248(J) 2,248 ------ ------- ------ ------- ------- ------- Income (loss) allocated to Common Shares........................ $ (824) $(1,940) $ 1,461 $ 765 $ 60 $ (478) ====== ======= ====== ======= ======= ======= Earnings (loss) per share before extraordinary items:................. Income (loss) allocated to Common Shares............................ $ (1.32) $ (0.07) ====== ======= Weighted average number of shares outstanding including share equivalents.......................... 624,791 6,909,016 ====== =========
The accompanying notes and management assumptions are an integral part of these statements. F-4 11 BRANDYWINE REALTY TRUST PRO FORMA CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 1996 (NOTES 1 AND 3) (UNAUDITED) (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
TOTAL ADJUSTED SSI/TNC PROPERTIES BRANDYWINE AND REALTY LIBERTYVIEW TOTAL TRUST BUILDING ADJUSTED COLUMBIA HISTORICAL COMBINED ACQUISITION ACQUISITION PRO FORMA TOTAL PRO CONSOLIDATED HISTORICAL PROPERTIES PROPERTIES OFFERING FORMA (A) (B) (C) (L) ADJUSTMENT CONSOLIDATED ------------ ------------- ----------- ---------- ---------- ------------ Revenue: Base rents........................... $ 4,063 $ 5,714 $ 5,828 $ 3,882 $ -- $ 19,487 Tenant reimbursements................ 467 2,511 277 178 -- 3,433 Other................................ 69 100 -- 90 -- 259 ------- ------- ------ ------- -------- --------- 4,599 8,325 6,105 4,150 -- 23,179 ------- ------- ------ ------- -------- --------- Operating expenses: Interest............................. 1,342 3,783 194 1,260 (2,874)(D) 3,705 Depreciation and amortization........ 1,173 2,819 1,253 755 311(E) 6,311 Property expenses.................... 1,867 2,831 2,724 1,395 605(G) 9,422 General and administrative........... 439 715 -- -- (567)(H) 587 ------- ------- ------ ------- -------- --------- Total operating expenses..... 4,821 10,148 4,171 3,410 (2,525) 20,025 ------- ------- ------ ------- -------- --------- Income (loss) before minority interest................... (222) (1,823) 1,934 740 2,525 3,154 Minority interest in income (loss)..... (40) (513) -- 796(F) 243 ------- ------- ------ ------- -------- --------- Income (loss) before uncombined entity and extraordinary items.............. (182) (1,310) 1,934 740 1,729 2,911 Equity income of management company.... 54 75 -- 115(I) 244 ------- ------- ------ ------- -------- --------- Income (loss) before extraordinary items................................ $ (128) $(1,235) $ 1,934 $ 740 1,844 $ 3,155 Income (loss) allocated to Preferred Shares............................... -- -- -- -- 1,686(J) 1,686(I) ------- ------- ------ ------- -------- --------- Income (loss) allocated to Common Shares............................... $ (128) $(1,235) $ 1,934 $ 740 $ 158 $ 1,469 ======= ======= ====== ======= ======== ========= Earnings per common share before extraordinary items.................. Income (loss) allocated to Common Shares............................ $ (0.19) $ 0.21 ======= ========= Weighted average number of shares outstanding.......................... 676,801 6,908,053(K) ======= =========
The accompanying notes and management assumptions are an integral part of these statements. F-5 12 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 September 30, 1996, the Company owned interests in 24 properties, consisting of 23 suburban office buildings in three states and one industrial property. The Company is the sole general partner and had an approximately 59% interest in Brandywine Operating Partnership, L.P. (the "Operating Partnership"). The minority interests in the Operating Partnership included TNC and other owners, and SSI, which had ownership interests of 31% and 10%, respectively. 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 Acquisition Properties and the Columbia Acquisition Properties. In management's opinion, all adjustments necessary to reflect the effects of the Offering and the Concurrent Investments, the acquisitions of the SSI/TNC Properties, the LibertyView Building, the Acquisition Properties and the Columbia Acquisition Properties by the Company have been made. 2. ADJUSTMENTS TO PRO FORMA CONDENSED CONSOLIDATING BALANCE SHEET: (A) Reflects the historical consolidated balance sheet of the Company as of September 30, 1996. Acquisition Properties (B) Reflects the combined balance sheets of the acquisitions of the Acquisition Properties as follows:
DELAWARE 700/800 CORPORATE BUSINESS 8000 SERS CENTER CENTER LINCOLN PROPERTIES(I) I(II) DRIVE(II) DRIVE(II) COMBINED ------------- ---------- --------- --------- -------- Real estate investments, net........ $29,232 $ 12,733 $ 7,225 $ 3,028 $ 52,218 Cash and cash equivalents........... (862) (12,618) (7,175) (3,003) (23,658) Other assets........................ -- (115) (50) (25) (190) Escrowed cash....................... 1,355 -- -- -- 1,355 ------- -------- ------- ------- -------- Total assets.............. $29,725 $ -- $ -- $ -- $ 29,725 ======= ======== ======= ======= ======== Liabilities: Mortgages and notes payable....... $ 3,225 $ -- $ -- $ -- $ 3,225 ------- -------- ------- ------- -------- Total liabilities......... 3,225 -- -- -- 3,225 ------- -------- ------- ------- -------- Convertible Preferred Shares........ 26,444 -- -- -- 26,444 ------- -------- ------- ------- -------- Total beneficiaries' equity.................. 56 -- -- -- 56 ------- -------- ------- ------- -------- Total liabilities and beneficiaries' equity... $29,725 $ -- $ -- $ -- $ 29,725 ======= ======== ======= ======= ========
- --------------- (i) The purchase price for the SERS Properties consists of: (i) 481,818 Series A Preferred Shares, convertible, under certain circumstances, into 1,606,060 Common Shares; (ii) two year warrants to purchase 133,333 Common Shares at an exercise price of $25.50 per share and based on a $.42 per warrant value (based on a modified Black Scholes calculation); and (iii) deferred payments aggregating $3.8 million, of which $2.5 million is payable in June 1998 and $1.3 million is due in December 1999. The Company recorded a $575 adjustment to the purchase price to reflect the fair value of the deferred payments. In addition, closing costs of $862 have been capitalized to real estate investments, net. F-6 13 (ii) Reflects the Company's acquisition of these properties based upon the purchase price plus closing costs as follows:
PURCHASE CLOSING PRICE COSTS TOTAL -------- ------- ------- Delaware Corporate Center I............................. $ 12,700 $ 33 $12,733 700/800 Business Center Drive........................... 7,100 125 7,225 8000 Lincoln Drive...................................... 3,000 28 3,028 ------- ---- ------- $ 22,800 $ 186 $22,986 ======= ==== =======
Offering (C) 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 $6,028............................................ $ 69,872 - Net proceeds from the Morgan Stanley Private Placement............ 11,700 - Net proceeds from the SERS Private Placement...................... 10,500 - Repayment of mortgages and notes payable including related costs............................................................. (51,069) - Payment of commitment fee on the Credit Facility.................. (875) Other cash activities -- - Release of escrowed cash resulting from the repayment of mortgage notes payable..................................................... 145 - Payment of accrued interest....................................... (321) -------- - Net increase in cash and cash equivalents......................... $ 39,952 ======== (D) Release of escrowed cash resulting from the repayment of mortgage notes payable....................................................... $ (145) ======== (E) Reflects the net increase in deferred financing costs as follows: - Credit Facility................................................... $ 875 - Elimination of previously deferred costs.......................... (424) - Repayment of mortgage notes....................................... (96) -------- $ 355 ======== (F) Reflects the net decrease in mortgages and notes payable: - Repayment of mortgages and notes payable from net proceeds of this Offering.......................................................... $(50,569) - Payment of the note payable to the RMO Fund through the issuance of Paired Units................................................... (774) -------- $(51,343) ======== (G) Reflects the payment of accrued interest in connection with the repayment of mortgages and notes payable and payment of previously deferred costs...................................................... $ (745) ======== (H) Par value of the Common Shares to be issued......................... $ 60 ========
F-7 14
(I) Reflects (i) the issuance of 4,600,000 Common Shares, par value of $.01 per share, at the offering price of $16.50 per share; (ii) the issuance of 709,090 Common Shares, at $16.50 per share in the Morgan Stanley private placement; (iii) the issuance of 636,363 Common Shares at the offering price of $16.50 per share to SERS Voting Trust in connection with the SERS Private Placement; and (iv) the issuance of 46,321 Paired Units to the RMO Fund. 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................................................. $69,872 Less: Adjusted par value of Common Shares at $.01 par...... (46) $ 69,826 ------- - Net proceeds from the Concurrent Investments net of par value of $13............................................. 22,187 - Write-off of deferred financing costs.................... (96) - Prepayment of note payable to the RMO Fund, net of par value of $1.............................................. 525 - Prepayment penalty....................................... (500) ------- Net increase in additional paid-in capital................. $ 91,942 ======= (J) Reflects the issuance of 46,321 warrants to the RMO Fund, based on a $5.40 per warrant value (based on a modified Black Scholes calculation)................................. $ 248 ======= (K) Reflects the combined balance sheets of the Columbia Acquisition Properties.
3. ADJUSTMENTS TO PRO FORMA CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS: (A) Reflects the historical consolidated operations of the Company. SSI/TNC Transaction and LibertyView Building Acquisition (B) Reflects the adjusted historical operations of the SSI/TNC Properties which were acquired on August 22, 1996 and LibertyView Building which was acquired on July 19, 1996. The historical operations of the SSI/TNC Properties exclude the extraordinary gains on restructuring of debt of $5,559 and $494 for the year ended December 31, 1995 and the nine-month period ended September 30, 1996, respectively. F-8 15 FOR THE YEAR ENDED DECEMBER 31, 1995
TOTAL ADJUSTED SSI/TNC PROPERTIES AND SSI/TNC LIBERTYVIEW PROPERTIES LIBERTYVIEW BUILDING HISTORICAL BUILDING PRO FORMA COMBINED COMBINED HISTORICAL ADJUSTMENTS HISTORICAL ---------- ------------ ----------- -------------- Revenue: Base rents............................... $ 7,829 $1,119 $ -- $ 8,948 Tenant reimbursements.................... 2,895 535 -- 3430 Management fees.......................... 617 -- (617)(iv) -- Other.................................... 3 -- -- 3 --------- ------ -------- -------- Total revenue......................... 11,344 1,654 (617) 12,381 --------- ------ -------- -------- Operating expenses: Interest................................. 5,855 -- 845(i) 6,700 Depreciation and amortization............ 4,336 -- (246)(ii) 4,090 Property expenses........................ 3,424 798 -- 4,222 General and administrative............... 1,108 -- (438)(iv) 670 --------- ------ ------- -------- Total operating expenses.............. 14,723 798 161 15,682 Income (loss) before minority interest............................ (3,379) 856 (778) (3,301) Minority interest in income (loss)......... -- -- (1,182)(iii) (1,182)(iii) --------- ------ ------- -------- Income (loss) before uncombined entity and extraordinary items...................... (3,379) 856 404 (2,119) Equity income of management company........ -- -- 179 179 --------- ------ ------- -------- Income (loss) before extraordinary items... $ (3,379) $ 856 $ 583 $ (1,940) ======== ====== ======= ========
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
TOTAL ADJUSTED SSI/TNC SSI/TNC PROPERTIES AND PROPERTIES LIBERTYVIEW LIBERTYVIEW HISTORICAL PROPERTY BUILDING COMBINED HISTORICAL PRO FORMA COMBINED THRU 8/22/96 THRU 7/19/96 ADJUSTMENTS HISTORICAL ------------ ------------ ----------- -------------- Revenue: Base rents............................. $ 5,059 $ 655 $ -- $ 5,714 Tenant reimbursements.................. 2,250 261 -- 2,511 Management fees........................ 778 -- (778)(iv) -- Other.................................. 100 -- -- 100 -------- ------ ------- -------- Total revenue....................... 8,187 916 (778) 8,325 -------- ------ ------- -------- Operating expenses: Interest............................... 3,322 -- 461(i) 3,783 Depreciation and amortization.......... 2,717 -- 102(ii) 2,819 Property expenses...................... 2,831 -- -- 2,831 General and administrative............. 599 399 (283)(iv) 715 -------- ------ ------- -------- Total operating expenses............ 9,469 399 280 10,148 Income (loss) before minority interest.......................... (1,282) 517 (1,058) (1,823) Minority interest in income (loss)....... -- -- (513)(iii) (513) -------- ------ --------- -------- Income (loss) before uncombined entity and extraordinary items................ (1,282) 517 (545) (1,310) Equity income of management company...... -- -- 75(iv) 75 -------- ------ --------- -------- Income (loss) before extraordinary items.................................. $ (1,282) $ 517 $ (470) $ (1,235) ======== ====== ======= ========
F-9 16
FOR THE PERIOD FROM JANUARY 1, 1996 TO THE FOR THE RESPECTIVE YEAR ENDED ACQUISITION DECEMBER 31, 1995 DATE ----------------- --------------- (i) Reflects the increase in interest expense resulting from: - the Note payable to SSI (which bears interest at prime) assuming a prime rate of 8.25%................. $ 33 $ 21 - the Mortgage and notes payable of the LibertyView Building, with effective rates of 8% per annum........ 750 406 - the Note payable to the RMO fund (which bears interest at prime) assuming a prime rate of 8.25%.............. 62 34 ----- ----- $ 845 $ 461 ===== ===== (ii) Reflects the (decrease) increase in depreciation and amortization as follows: - Depreciation of capitalized costs from the SSI/TNC Transaction included in real estate investments....... $ 33 $ 24 - Depreciation of buildings acquired over a 25-year useful life and tenant improvements and other furniture, fixtures and equipment (FF&E) over five years in general...................................... (563) (76) - Depreciation of the LibertyView Building over a 35-year useful life................................... 244 132 - Amortization of deferred financing costs related to the LibertyView Building.............................. 40 22 ----- ----- $(246) $ 102 ======= =====
(iii) Minority interest in income (loss) has been reflected in accordance with the terms of the Operating Partnership Agreement. As of September 30, 1996, the Company owns 59% of the Operating Partnership. The remaining 41% of the Operating Partnership is owned by TNC, SSI and the other owners whose interests are reflected as minority interest. The adjustments to record the income effect of minority interest share of loss for the periods ended December 31, 1995, and September 30, 1996, in the pro forma statements of operations were computed as follows:
FOR THE FOR THE YEAR ENDED NINE-MONTHS DECEMBER 31, ENDED 1995 SEPTEMBER 30, 1996 ------------ ------------------ SSI/TNC Properties loss before Minority Interest............................... $ (3,379) $ (1,282) Impact of pro forma adjustments.......... 497 31 -------- -------- Total loss..................... $ (2,882) $ (1,251) ======== ======== Pro forma minority interest in loss (41%).................................. $ (1,182) $ (513) ======== ========
(iv) Reflects the results of operations of the Management Company from third party management services as accounted for using the equity method. Acquisition Properties (C) Reflects the combined pro forma statements of operations of the Acquisition Properties for the year ended December 31, 1995 and the nine months ended September 30, 1996, respectively. F-10 17 FOR THE YEAR ENDED DECEMBER 31, 1995
DELAWARE 700/800 SERS CORPORATE BUSINESS 8000 LINCOLN PRO FORMA COMBINED PROPERTIES(I) CENTER I(I) CENTER DRIVE(I) DRIVE(I) ADJUSTMENTS(II) TOTAL ------------- ----------- ---------------- ------------ --------------- -------- Revenue: Base rents................ $ 4,366 $ 410 $567 $1,005 $ -- $6,348 Tenant reimbursements..... 238 -- 188 24 -- 450 ------ ----- ---- ---- -------- ------ 4,604 410 755 1,029 -- 6,798 ------ ----- ---- ---- -------- ------ Operating expenses: Interest.................. -- -- -- -- 258(ii) 258 Depreciation and amortization............ -- -- -- -- 1,671(iii) 1,671 Property expenses......... 2,236 502 305 365 -- 3,408 ------ ----- ---- ---- -------- ------ Total operating expenses.............. 2,236 502 305 365 1,928 5,337 ------ ----- ---- ---- -------- ------ Income (loss) before minority interest..... $ 2,368 $ (92) $450 $ 664 $(1,928) $1,461 ====== ===== ==== ==== ======== ======
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
DELAWARE 700/800 SERS CORPORATE BUSINESS 8000 LINCOLN PRO FORMA COMBINED PROPERTIES(I) CENTER I(I) CENTER DRIVE(I) DRIVE(I) ADJUSTMENTS(II) TOTAL ------------- ----------- ---------------- ------------ --------------- -------- Revenue: Base rents................ $ 3,435 $ 1,666 $533 $194 $ -- $5,828 Tenant reimbursements..... 213 -- 62 2 -- 277 ------ ----- ---- ---- -------- ------ 3,648 1,666 595 196 -- 6,105 ------ ----- ---- ---- -------- ------ Operating expenses: Interest.................. -- -- -- -- 194(ii) 194 Depreciation and amortization............ -- -- -- -- 1,253(iii) 1,253 Property expenses......... 1,862 452 221 189 -- 2,724 ------ ----- ---- ---- -------- ------ Total operating expenses.............. 1,862 452 221 189 1,447 4,171 ------ ----- ---- ---- -------- ------ Income (loss) before minority interest..... $ 1,786 $ 1,214 $374 $ 7 $(1,447) $1,934 ====== ===== ==== ==== ======== ======
- --------------- (i) Reflects the historical operations of the Acquisition Properties, excluding certain expenses such as interest, depreciation and amortization, professional costs, and other costs not directly related to the future operations of the Acquisition Properties. (ii) Reflects the interest on the note payable to the Seller of the SERS Properties using an effective rate of 8%. (iii) Reflects the depreciation of the Acquisition Properties using a 25-year useful life. F-11 18
FOR THE YEAR ENDED FOR THE DECEMBER NINE-MONTHS 31, ENDED 1995 SEPTEMBER 30, 1996 ----------- ------------------ Offering (D) Reflects the net reduction of interest expense associated with the mortgages and notes payable assumed to be repaid using net proceeds from the Offering. ....................................... $(4,529) $ (2,874) ----------- ---------- (E) Reflects the net increase in amortization of deferred financing costs related to the mortgage notes paid off and the new Credit Facility. ..... $ 415 $ 311 ----------- ---------- (F) Reflects adjustment for minority interest in the Operating Partnership of 6%. .................... $ 1,370 $ 796 ----------- ---------- (G) To record management fees charged by the Management Company. ............................. $ 891 $ 605 ----------- ---------- (H) To transfer general and administrative expenses to the Management Company. ...................... $ (562) $ (567) ----------- ---------- (I) To record share of income (loss) from the Management Company............................... $ (107) $ 115 ----------- ---------- (J) To record dividends on 481,818 Preferred Shares at an annual rate of $4.67 per share. ........... $ 2,248 $ 1,686 ----------- ---------- (K) Reflects the weighted average number of Common Shares outstanding including share equivalents. If all Units (509,856) were converted as of January 1, 1995, the weighted average number of shares outstanding would have been 6,818,872 and 6,817,910, respectively. ........................ Columbia Acquisition Properties (L) Reflects the combined pro forma statements of operations of the Columbia Acquisition Properties for the year ended December 31, 1995 and the nine months ended September 30, 1996. Revenues and property expenses reflect historical operations, excluding certain expenses which are not directly related to the future operations of the properties. Interest expense reflects pro forma interest on assumed 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. Depreciation expense is presented using a 25-year useful life.
F-12 19 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Brandywine Realty Trust: We have audited the combined statement of revenue and certain expenses of the Columbia Acquisition 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 the 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 the Columbia Acquisition 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 Columbia Acquisition Properties for the year ended December 31, 1996, in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Philadelphia, Pa., February 11, 1997 F-13 20 COLUMBIA ACQUISITION PROPERTIES COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES (Notes 1, 2 and 3) (In Thousands)
FOR THE NINE-MONTH PERIOD ENDED FOR THE YEAR ENDED SEPTEMBER 30, DECEMBER 31 1996 -------------------------- ------------ 1995 1996 (UNAUDITED) ----------- ------- (UNAUDITED) REVENUE: Base rents (Note 2) $ 5,032 $ 5,146 $ 3,882 Tenant reimbursements 393 360 178 Lease termination income (Note 2) 31 376 90 -------- -------- -------- Total revenue 5,456 5,882 4,150 CERTAIN EXPENSES: Maintenance and other operating expenses 932 931 684 Utilities 620 610 379 Real estate taxes 452 438 332 -------- ------- -------- Total certain expenses 2,004 1,979 1,395 REVENUE IN EXCESS OF CERTAIN EXPENSES $ 3,452 $ 3,903 $ 2,755 ======== ======= ========
The accompanying notes are an integral part of these financial statements. F-14 21 COLUMBIA ACQUISITION PROPERTIES NOTES TO COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES DECEMBER 31, 1996 1. BASIS OF PRESENTATION: On January 24, 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 the Columbia Acquisition Properties, a portfolio of five office buildings containing an aggregate of net rentable area of approximately 290,000 square feet, which were 92.6% leased as of December 31, 1996. The net purchase price for the Columbia Acquisition Properties was $31.3 million. The purchase price was paid as follows: (i) $7 million from borrowings under the Company's revolving credit facility, (ii) $12.2 million through an assumption by the Operating Partnership of mortgage indebtedness encumbering two of the office buildings, and (iii) the balance, including closing expenses, from existing cash reserves. The combined statement of revenue and certain expenses reflects the operations of the Columbia Acquisition Properties located in Mt. Laurel and Evesham Township, New Jersey. 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 Columbia Acquisition Properties are maintained on the accounting basis used for federal income tax purposes. Adjusting entries have been made to present the accompanying financial statements in accordance with generally accepted accounting principles. The accompanying financial statements exclude certain expenses such as interest, depreciation and amortization, and other costs not directly related to the future operations of the Columbia Acquisition 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 expense during the reporting period. The ultimate results could differ from those estimates. F-15 22 2. OPERATING LEASES: During 1996, the lease with Consolidated Rail Corporation ("Conrail") was amended twice in order to accommodate Conrail's request to vacate a total of 12,779 square feet of leased space. In consideration for these lease modifications, Conrail paid the landlord $41,000 in 1996 and $335,000 on January 15, 1997. These amounts were recorded as lease termination income in the accompanying combined statement of revenue and certain expenses. Rental revenues earned under leases with Conrail, Computer Sciences Corporation and Fleer Corporation were $1,784,000, $861,000 and $613,000, respectively. All were greater than 10% of the total base rents in 1996. The Columbia Acquisition Properties are leased to tenants under operating leases with expiration dates extending to the year 2007. Future minimum rentals under noncancelable operating leases, excluding tenant reimbursements of operating expenses, as of December 31, 1996, were as follows: 1997 $4,515,000 1998 4,025,000 1999 3,859,000 2000 2,286,000 2001 794,000 Thereafter 2,728,000
Certain leases also include provisions requiring tenants to reimburse the Company for management costs and other operating expenses up to stipulated amounts. 3. RELATED PARTY: The Company has landscaping services performed by Allen Landscaping Co., an entity owned by a partner of the Columbia Acquisition Properties. Total expenses incurred for these services were $131,000 in 1996. F-16 EX-23.1 2 CONSENT OF ARTHUR ANDERSEN LLP 1 CONSENT OF INDEPENDENT ACCOUNTANTS As independent public accountants, we hereby consent to the inclusion of our report dated February 11, 1997 in this Form 8-K/A on the combined statement of revenue and certain expenses of Columbia Acquisition Properties. It should be noted that we have not audited any financial statements of the Columbia Acquisition Properties subsequent to December 31, 1996 or performed any audit procedures subsequent to the date of our report. ARTHUR ANDERSEN LLP Philadelphia, Pa., February 22, 1997 -----END PRIVACY-ENHANCED MESSAGE-----