-----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, SKHSx6WTK2D/Vf465Z/cUokczQS1rBb+WZpO3y84+adHTrVoEZvXqI/tjJm0g4yQ kNzjMD/EbqG1GB0Qx1/Yqw== 0000950116-95-000485.txt : 19951119 0000950116-95-000485.hdr.sgml : 19951119 ACCESSION NUMBER: 0000950116-95-000485 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 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: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09106 FILM NUMBER: 95590907 BUSINESS ADDRESS: STREET 1: 300 BERWYN PARK STREET 2: STE 115 CITY: BERWYN STATE: PA ZIP: 19312 BUSINESS PHONE: 2152519111 MAIL ADDRESS: STREET 1: 200 BERWYN PARK STREET 2: SUITE 100 CITY: BERWYN STATE: PA ZIP: 19312 FORMER COMPANY: FORMER CONFORMED NAME: LINPRO SPECIFIED PROPERTIES DATE OF NAME CHANGE: 19920703 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) x Quarterly Report Pursuant to Section 13 or 15(d) of --------- the Securities Exchange Act of 1934 For the quarterly period ended September 30, 1995 or Transition Report Pursuant to Section 13 or 15(d) of --------- the Securities Exchange Act of 1934 (No Fee Required) For the transition period from to ------------------------- ------------------------- Commission file number 1-9106 ---------------------- Brandywine Realty Trust - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Maryland 23-2413352 - ----------------------- --------------------------------------- (State of Organization) (I.R.S. Employer Identification Number) 200 Berwyn Park, Suite 100, Berwyn, Pennsylvania 19312 - ------------------------------------------------------------------------------ (Address of principal executive offices) (Zip Code) (610) 251-9111 - ------------------------------------------------ (Registrant's telephone number) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ] A total of 1,856,200 Shares of Beneficial Interest were outstanding as of November 2, 1995. BRANDYWINE REALTY TRUST TABLE OF CONTENTS PART I - FINANCIAL INFORMATION Item I. Financial Statements Consolidated Balance Sheets as of September 30, 1995 (unaudited) and December 31, 1994 Consolidated Statements of Operations for the three months ended September 30, 1995 and 1994 (unaudited) Consolidated Statements of Operations for the nine months ended September 30, 1995 and 1994 (unaudited) Consolidated Statements of Cash Flow for the nine months ended September 30, 1995 and 1994 (unaudited) Notes to Financial Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PART II - OTHER INFORMATION Item 1. Legal Proceedings Item 2. Changes in Securities -- Not applicable Item 3. Defaults Upon Senior Securities - Not applicable Item 4. Submission of Matters to a Vote of Security Holders - Not applicable Item 5. Other Information - Not applicable Item 6. Exhibits and Reports on Form 8-K Signatures 2 PART 1 - FINANCIAL INFORMATION Item 1: Financial Statements BRANDYWINE REALTY TRUST CONSOLIDATED BALANCE SHEETS (in thousands)
September 30, 1995 December 31, 1994 ------------------ ----------------- (Unaudited) ASSETS REAL ESTATE INVESTMENTS Operating properties, at adjusted cost $ 21,509 $ 21,335 Accumulated depreciation (7,939) (7,387) -------- -------- 13,570 13,948 CASH AND CASH EQUIVALENTS 860 1,766 ESCROWED CASH 1,686 1,114 DEFERRED COSTS net of accumulated amortiza- tion of $463 in 1995 and $519 in 1994 723 813 ACCOUNTS RECEIVABLE AND OTHER ASSETS 386 232 -------- -------- Total assets $ 17,225 $ 17,873 ======== ======== LIABILITIES AND BENEFICIARIES' EQUITY MORTGAGE NOTES PAYABLE $ 8,957 $ 6,899 TENANT SECURITY DEPOSITS AND DEFERRED RENTS 183 207 ACCOUNTS PAYABLE 167 170 ACCRUED EXPENSES AND OTHER LIABILITIES 156 109 DISTRIBUTIONS PAYABLE -- 1,299 -------- -------- Total liabilities 9,463 8,684 -------- -------- MINORITY INTEREST -- -- COMMITMENTS AND CONTINGENCIES BENEFICIARIES' EQUITY Shares of beneficial interest, $0.01 par value, 5,000,000 preferred shares authorized, none outstanding; 15,000,000 common shares authorized, 1,856,200 shares issued and outstanding 19 19 Additional paid-in capital 16,772 16,772 Cumulative deficit (2,854) (2,262) Cumulative distributions (6,175) (5,340) -------- -------- Total beneficiaries' equity 7,762 9,189 -------- -------- Total liabilities and beneficiaries' equity $ 17,225 $ 17,873 ======== ========
The accompanying notes and management's discussion and analysis of financial condition and results of operations are an integral part of these statements. 3 BRANDYWINE REALTY TRUST CONSOLIDATED STATEMENTS OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 (in thousands, except per share information) (Unaudited)
1995 1994 ----------- ----------- REVENUE: Rents and tenant reimbursements $ 854 $ 1,020 Other income 31 6 ----------- ----------- Total revenue 885 1,026 EXPENSES: Interest 176 237 Depreciation and amortization 285 320 Utilities 148 169 Real estate taxes 102 193 Maintenance 143 135 Other operating expenses 38 75 Administrative expenses 145 172 ----------- ----------- Total expenses 1,037 1,301 LOSS BEFORE MINORITY INTEREST AND GAIN ON SALE OF REAL ESTATE INVESTMENT (152) (275) GAIN ON SALE OF REAL ESTATE INVESTMENT -- 1,116 MINORITY INTEREST IN LOSS OF BRANDYWINE REALTY PARTNERS -- 2 ----------- ----------- NET INCOME (LOSS) $ (152) $ 839 =========== =========== PER SHARE DATA: Earnings per share of beneficial interest Primary Net income (loss) $ (0.08) $ 0.41 =========== =========== Distributions $ 0.05 $ 0.73 =========== =========== Weighted average number of shares outstanding including share equivalents 1,874,041 2,059,508 =========== ===========
The accompanying notes and management's discussion and analysis of financial condition and results of operations are an integral part of these statements. 4 BRANDYWINE REALTY TRUST CONSOLIDATED STATEMENTS OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 (in thousands, except per share information) (Unaudited)
1995 1994 ----------- ----------- REVENUE: Rents and tenant reimbursements $ 2,637 $ 3,366 Other income 54 30 ----------- ----------- Total revenue 2,691 3,396 EXPENSES: Interest 572 825 Depreciation and amortization 1,084 1,047 Utilities 397 482 Real estate taxes 297 388 Maintenance 407 534 Other operating expenses 87 274 Administrative expenses 439 545 Provision for loss on real estate investments -- 5,400 ----------- ----------- Total expenses 3,283 9,495 LOSS BEFORE MINORITY INTEREST, GAIN ON SALE OF REAL ESTATE INVESTMENT AND EXTRAORDINARY ITEM (592) (6,099) GAIN ON SALE OF REAL ESTATE INVESTMENT -- 1,116 MINORITY INTEREST IN LOSS OF BRANDYWINE REALTY PARTNERS -- (5,634) ----------- ----------- INCOME (LOSS) BEFORE EXTRAORDINARY ITEM (592) 651 EXTRAORDINARY ITEM: GAIN ON EXTINGUISHMENT OF DEBT (NET OF $20,109 ALLOCATED TO MINORITY INTEREST) -- 7,998 ----------- ----------- NET INCOME (LOSS) $ (592) $ 8,649 =========== =========== PER SHARE DATA: Earnings per share of beneficial interest Primary Income (loss) before extraordinary item $ (0.32) $ 0.33 Extraordinary item -- 4.00 ----------- ----------- Net income (loss) $ (0.32) $ 4.33 =========== =========== Distributions $ 0.45 $ 0.82 =========== =========== Weighted average number of shares outstanding including share equivalents 1,874,860 1,998,456 =========== ===========
The accompanying notes and management's discussion and analysis of financial condition and results of operations are an integral part of these statements. 5 BRANDYWINE REALTY TRUST STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 (in thousands) (Unaudited)
1995 1994 ---------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES : NET INCOME (LOSS) $ (592) $ 8,649 ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Extraordinary gain on extinguishment of debt (net of $20,109 allocated to minority interest) -- (7,998) Minority interest in loss of Brandywine Realty Partners -- (5,634) Gain on sale of real estate investment -- (1,116) Depreciation and amortization 1,084 1,047 Provision for loss on real estate investments -- 5,400 Changes in assets and liabilities Decrease (increase) in other assets (149) 168 (Decrease) increase in other liabilities 20 (181) ---------- ---------- Net cash provided by operating activities 363 335 ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Cash from Brandywine Realty Partners -- 2,110 Capital expenditures and leasing commissions paid (371) (398) Increase in escrowed cash (572) (2,085) Net proceeds from real estate and other assets sold -- 6,414 ---------- ---------- Net cash (used in) provided by investing activities (943) 6,041 ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Distributions paid to shareholders (2,134) (1,522) Minority Partner contributions -- 49 Minority Partner distributions -- (8) Proceeds from new mortgage notes payable 9,000 10,000 Repayment of mortgage notes payable (6,942) (15,697) Costs associated with refinancing transaction (250) (729) Costs associated with financing commitment -- (100) Tenant security deposits and other financing activities -- (147) ---------- ---------- Net cash used in financing activities (326) (8,154) ---------- ---------- DECREASE IN CASH AND CASH EQUIVALENTS (906) (1,778) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,766 2,470 ---------- ---------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 860 $ 692 ========== ==========
The accompanying notes and management's discussion and analysis of financial condition and results of operations are an integral part of these statements. 6 BRANDYWINE REALTY TRUST NOTES TO FINANCIAL STATEMENTS September 30, 1995 1. ORGANIZATION: Brandywine Realty Trust (the "Trust"), was formed in 1986 as a real estate investment trust to own a 68% general partner interest in Brandywine Realty Partners ("Brandywine"), which owns a commercial real estate portfolio located in the greater Philadelphia, Pennsylvania and Raleigh, North Carolina markets (the "Specified Projects"). In January 1994, Brandywine refinanced the original mortgage loans on the Specified Projects and the Trust obtained control of the Specified Projects which are now consolidated for financial reporting purposes. As of September 30, 1995, the partners of Brandywine and their percentage ownership were as follows: % Ownership ----------- Brandywine Realty Trust (the "Trust"), a Maryland real estate investment trust 70% Brandywine Specified Property Investors Limited Partnership ("BSPI"), a Pennsylvania limited partnership 30% ---- 100% ==== 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: The financial statements have been prepared by the Trust without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Trust believes that the disclosures are adequate to make the information presented not misleading. In the opinion of the Trust, all adjustments necessary to present fairly the financial position of the Trust as of September 30, 1995, the results of its operations for the three and nine months ended September 30, 1995 and 1994, and its cash flows for the nine months ended September 30, 1995 and 1994 have been included. The results of operations for such interim periods are not necessarily indicative of the results for the full year. Principles of Consolidation The Trust consolidates the accounts of Brandywine with the Trust and reflects the BSPI investment as Minority Interest. All significant intercompany accounts and transactions have been eliminated in consolidation. 7 Net Income (Loss) Per Share Net income (loss) per share is calculated based upon the weighted average shares outstanding which were 1,874,860 for the nine months ended September 30, 1995 and 1,998,456 for the nine months ended September 30, 1994. Earnings per share for 1995 and 1994 has been computed by considering any share equivalents applying the "treasury stock" method and assuming that all options were exercised on date of issue. The proceeds obtained from the exercise of any options would be utilized to purchase outstanding shares at the average market price for the primary earnings per share calculation and at the maximum of the average market price or the closing market price as of September 30 for the fully diluted earnings per share calculation. No such options have been exercised as of September 30, 1995. If these options had been exercised, the per share results would not be materially different from the primary earnings per share presented. Statements of Cash Flows For purposes of reporting cash flows, cash and cash equivalents include cash on hand and short-term investments with original maturities of 90 days or less. At September 30, 1995 and December 31, 1994, cash and cash equivalents totaling $860,000 and $1,766,000, respectively, included tenant escrow deposits of $157,000 and $155,000, respectively. Total mortgage interest paid for the nine months ended September 30, 1995 and September 30, 1994 amounted to $588,000 and $1,282,000, respectively. 3. REAL ESTATE INVESTMENTS: Real estate investments are carried at the lower of adjusted cost or estimated net realizable value. On January 31, 1994, the outstanding mortgage indebtedness totaling approximately $43 million was extinguished in exchange for the payment of $14 million resulting, after costs, in an extraordinary gain of approximately $28 million in the first quarter of 1994. Of the total extraordinary gain, $20,109,000 was allocable to the Minority Interest partner. The consummation of this transaction resulted in management's determination that the aggregate carrying value of the then owned seven Specified Projects exceeded the estimated net realizable value of approximately $22 million. Management based its estimate primarily upon third-party appraisals (reviewing each appraisal in relation to the current real estate market) and the then new $10 million nonrecourse mortgage. In the first quarter of 1994, a writedown of $5.4 million was recorded to adjust the carrying value of the seven Specified Projects to the estimated net realizable value. 4. SALES OF REAL ESTATE INVESTMENTS: On February 28, 1994, the Lincoln Centre project was sold for a net sales price equal to its adjusted carrying value of approximately $2,300,000. Of the total net proceeds, $1,500,000 was deposited with the then mortgage lender as escrowed cash reserves available for capital improvements, tenant improvements and leasing commissions associated with the remaining Specified Projects and the balance of net proceeds was reserved for general liquidity needs. On August 8, 1994, the Academy Downs project was sold for a net sales price of approximately $4,500,000. As a result, a net gain on the sale of $1,116,000 was recorded during the third quarter of 1994. Of the total net proceeds, Brandywine paid the then mortgage lender $2,497,000 as principal and $366,000 as Additional Interest, as defined in the applicable loan documents. After the required payments to the lender, eighty-five percent of the balance of net proceeds or $1,355,000 was distributed to the Trust's shareholders as distributions totaling $0.73 per share. Subsequent to September 30, 1994, the Iron Run project was sold for a net sales price of approximately $2,400,000. As a result, a net gain on the sale of $294,000 was recorded during the fourth quarter of 1994. Of the total net proceeds, Brandywine paid the then mortgage lender $604,000 as principal and $436,000 as Additional Interest, as defined in the applicable loan documents. After the required payments to the lender, eighty-five percent of the balance of net proceeds or $1,207,000 was distributed to the Trust's shareholders as distributions totaling $0.65 per share. 8 5. MORTGAGE NOTES PAYABLE: At December 31, 1994, the mortgage note payable totaled $6,899,000, was non-recourse and was secured by first mortgages on the Specified Projects. The mortgage loan was scheduled to mature on January 31, 1999 upon which date the full outstanding principal balance would have been due. Minimum interest was payable monthly at a floating rate equal to 4.25% per annum in excess of the composite rate on the lender's United States commercial paper, adjusted monthly. At December 31, 1994, the rate of minimum interest was set at 9.59%. The Trust was also required to escrow cash reserves as additional security for the repayment of the mortgage loan in non-interest bearing accounts held by the lender. The lender held $125,000 as a deposit and escrowed real estate tax payments with respect to the Specified Projects into which escrow payments were made on a monthly basis pro rata based upon annual real estate tax bills. In addition, the lender held escrowed cash reserves to pay for capital improvements, tenant improvements and leasing commissions associated with the Specified Projects. At December 31, 1994, total escrow cash reserves held by the lender amounted to $1,114,000. In conjunction with the refinancing, discussed below, these cash reserves were released to the Trust. On April 21, 1995, the Trust refinanced its then existing mortgage loan with proceeds of mortgage loans totaling $9 million and providing for a fixed rate of interest. The mortgage loans are cross-collateralized by the Projects. The mortgage loans have a six year term, and the lender has the right to call the loans at par at the end of year three. Monthly payments of interest and principal are due based on a 25 year amortization schedule. The interest rate is set at 8.75% for the first twelve months, 9.0% for the succeeding six months and 9.31% for the remainder of the term. The loan is generally nonrecourse to the Trust as to interest and principal, except in the event of a sale or encumbrance of the mortgaged premises, or in the event of fraud or willful misrepresentation in connection with the loan. In addition, the Trust has agreed to be personally responsible to the lender for certain other liabilities, including (i) environmental liabilities, (ii) waste relating to the mortgaged premises, (iii) misapplication or misappropriate of certain reserves and other amounts held in connection with the operation of the mortgage premises, (iv) failure to pay certain expenses relating to the mortgage premises, including utilities, operating and maintenance, taxes, assessments, and insurance, but only to the extent that the Trust received rents or other proceeds from the mortgaged premises during the eighteen month period prior to an event of default under the loan documents, or after the occurrence thereof, and (v) certain other enumerated liabilities. The lender is entitled to hold escrow cash reserves for real estate taxes and capital requirements in two interest-bearing accounts. Deposits to the real estate tax escrow account are required to be made on a monthly basis. Ongoing deposits to the capital escrow account are required of $10,000 per month during the first year of the loans and $25,000 per month over the remainder of the term of the loans. Amounts held in the capital escrow account may be advanced, from time to time and subject to certain conditions, to pay for capital improvements, tenant improvements and leasing commissions associated with the Projects and distributions to Shareholders of the Trust. The capital escrow account held by the lender does not constitute additional collateral for the mortgage loans. At September 30, 1995, the principal balance of the loans totaled $8,957,000 and the capital and real estate tax escrow accounts totaled $1,686,000. 9 6. MINORITY INTEREST AND BENEFICIARIES' EQUITY: Under the terms of the Brandywine Partnership Agreement, the methods followed for 1995 and 1994 regarding contributions and distributions and allocations of income (loss) were as follows: Cash Contributions During the first quarter of 1994, in order to provide the cash necessary to complete the January 1994 refinancing of the Specified Projects, the Trust contributed cash of $2,466,000 to Brandywine. This contribution increased the Trust's Unrecovered Capital, originally defined in accordance with the Brandywine Partnership Agreement as an amount equal to $18,562,000, to $21,028,000. Such Unrecovered Capital represents the amount due to the Trust as a first preference upon capital events related to the Specified Projects. At September 30, 1995 and December 31, 1994, the Trust's Unrecovered Capital totaled $17,817,000 and $18,467,000, respectively, in accordance with the Brandywine Partnership Agreement. Cash Distributions Distributions of cash flow from operations are due first to the Trust and BSPI, for reimbursement of administrative expenses; and second to the Trust, 98% of remaining cash flow; and to BSPI, 2% of remaining cash flow. Distributions from capital events are due first to the Trust, up to its Unrecovered Capital, as defined in the Brandywine Partnership Agreement. Allocation of Net Income (Losses) from Operations For financial reporting purposes, income is first allocated to the Trust and BSPI in an amount equal to cash distributions made to each partner. Thereafter, net losses are allocated to BSPI to the extent of its positive capital account balance and its share of Brandywine's "minimum gain" (as defined in the applicable United States Treasury Department regulations). Remaining net income and net losses are allocated to the Trust. 7. STOCK OPTIONS: On August 8, 1994, subject to shareholder approval which was received at the Annual Meeting of Shareholders on October 11, 1994, the Board of Trustees adopted a stock option compensatory plan benefiting an executive officer of the Trust covering 140,000 common shares of beneficial interest. The plan includes options exercisable for 100,000 shares at an exercise price of $6.50. Of the remaining 40,000 shares subject to options, options covering 20,000 shares vested on August 8, 1995 and options covering 20,000 shares vest on August 8, 1996. The exercise price of the 40,000 options was set at $3.80. The per share exercise price of these options is subject to reduction as proceeds from the sale of, or refinancing of debt secured by, any Specified Projects are distributed by the Trust to shareholders by an amount equal to the amount so distributed, from time to time, on account of each share. Accordingly, the per share exercise prices of the options have been reduced to $4.77 and $2.07, respectively, as a result of distributions to shareholders from proceeds of the Academy Downs and Iron Run sales and the April 21, 1995 mortgage refinancing. During 1995 and 1994 there were no options exercised or canceled or that expired relative to officers of the Trust. 10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS The Trust's consolidated net loss for the period from July 1, 1995 to September 30, 1995 was ($152,000) or ($0.08) per share as compared to consolidated net income of $839,000 or $0.41 per share for the period from July 1, 1994 to September 30, 1994. The 1994 net income is primarily attributable to the gain resulting from the sale of Academy Downs. The Trust's consolidated net loss for the period from January 1, 1995 to September 30, 1995 was ($592,000) or ($0.32) per share as compared to consolidated net income of $8,649,000 or $4.33 per share for the period from January 1, 1994 to September 30, 1994. The Trust's 1995 loss includes the write-off of deferred loan fees totaling $254,000 or $0.14 per share. The Trust's net income for the period January 1, 1994 to September 30, 1994 is primarily attributable to the extraordinary gain upon extinguishment of debt resulting from the January 31, 1994 refinancing of the Specified Projects and the gain resulting from the sale of Academy Downs. The Trust's funds from operations increased by 41% to $492,000 for the nine months ended September 30, 1995 from $348,000 for the nine months ended September 30, 1994. Funds from operations conforms to the definition adopted by the National Association of Real Estate Investment Trusts, Inc. defined as net income excluding extraordinary items, gains and losses from sales of property, plus depreciation and amortization and other non-cash charges and similar adjustments for unconsolidated subsidiaries. Funds from operations does not represent cash generated from operations as defined by Generally Accepted Accounting Principals (GAAP) and is not necessarily indicative of cash available to fund cash needs. For the nine months ended September 30, 1995 funds from operations was computed by adjusting the Trust's net loss for the period by adding back depreciation and amortization expense which expense includes the write off of deferred loan fees totaling $254,000 resulting from the April 21, 1995 refinancing. For the nine months ended September 30, 1994, funds from operations was computed by adjusting the Trust's net income for the period by the extraordinary gain upon extinguishment of debt, gain on sale of real estate investment, minority interest, provision for loss on real estate investments and depreciation and amortization expense. Primarily as a result of the sales of three of the Specified Projects during 1994, rental revenues decreased by $729,000 or 22% and operating expenses decreased by $490,000 or 29% for the nine months ended September 30, 1995 compared to the nine months ended September 30, 1994. For this same period, depreciation and amortization expense increased by $37,000 or 4% due to the write off of deferred loan fees totaling $254,000 resulting from the April 21, 1995 refinancing of the Specified Projects' mortgage loans, offset by the reduction in depreciation and amortization expense due to the sales of three of the Specified Projects during 1994. Interest expense decreased by $253,000 or 31% due to the January 31, 1994 and April 21, 1995 refinancings of the mortgage loans. Administrative expenses decreased by $106,000 or 19% primarily due to nonrecurring costs related to legal costs and mortgage restructuring efforts. As of September 30, 1995, the Specified Projects are 97% leased as compared to 86%, as of January 31, 1995. For the first nine months of 1995, the Trust obtained new leases covering approximately 39,000 square feet and obtained renewals of approximately 2,000 square feet while approximately 11,000 square feet were vacated. Approximately 6% of the total space or 15,000 square feet in the Specified Projects is either available for lease or represents leases expiring on or before December 31, 1995. 11 LIQUIDITY AND CAPITAL RESOURCES The Trust's primary asset is its 70% general partner interest in Brandywine which owns and operates the Specified Projects. The Trust's principal source of liquidity consists of the distributions it receives from the operation of the Specified Projects. As of September 30, 1995, the Trust's consolidated cash balances were $860,000 as compared to $1,766,000 as of December 31, 1994. In addition, escrowed cash balances with the Trust's mortgage lender totaled $1,686,000 and $1,114,000 as of September 30, 1995 and December 31, 1994, respectively. During the first nine months of 1995, the Trust paid $2,134,000 in distributions to shareholders. Net cash provided by operating activities for this same period totaled $363,000. On April 21, 1995, the Trust refinanced the existing $6,899,000 mortgage note borrowing $9,000,000 under mortgage loans which provide for a fixed rate of interest, initially set at 8.75%, and are cross-collateralized by the Specified Projects. In connection with the refinancing, the Trust paid $250,000 in associated transaction costs and increased escrowed cash balances by approximately $572,000. Tenant improvements and leasing commissions covered by lender escrow funds totaled $371,000 for the first nine months of 1995. As a result of the refinancing and positive operating activities for the first nine months of 1995, the Trust declared distributions in 1995 as follows:
Declaration Date Record Date Payment Date Amount per Share ---------------- ----------- ------------ ---------------- April 19,1995 May 11, 1995 May 17, 1995 $ 0.05 April 21,1995 May 11, 1995 May 17, 1995 $ 0.35 July 11, 1995 July 26, 1995 July 31, 1995 $ 0.05 October 11, 1995 October 26, 1995 October 31, 1995 $ 0.05
At September 30, 1995 the Trust has capitalized as other assets $100,000 related to professional fees incurred in connection with the exploration of several potential investment transactions. The Trust is continuing its discussions relative to these transactions. No assurance can be given that the Trust can or will consummate such transactions. The Trust believes that current cash reserves are sufficient, and that operation of the Specified Projects will provide sufficient cash flow, to continue operations throughout 1995 and, to the extent foreseeable, in the years to follow. The Trust believes that it qualifies for federal income tax purposes as a real estate investment trust and intends to remain so qualified. 12 Part II. Other Information Item 1. Legal Proceedings Neither the Trust nor Brandywine is a party to any material pending legal proceedings as of September 30, 1995 nor as of the date of this Form 10-Q. Item 6. Exhibits and Reports on Form 8-K Exhibits: None Reports on Form 8-K: None 13 BRANDYWINE REALTY TRUST SIGNATURES OF REGISTRANT Pursuant to the requirements of the Securities and 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 (Registrant) Date: November 10, 1995 By: /s/ Gerard H. Sweeney ---------------------------- -------------------------------------- Gerard H. Sweeney, President and Chief Executive Officer (Principal Executive Officer) Date: November 10, 1995 By: /s/ Francine M. Haulenbeek ---------------------------- -------------------------------------- Francine M. Haulenbeek, Vice President - Finance and Secretary (Principal Financial and Accounting Officer) 14 EX-27 2
5 9-MOS DEC-31-1995 SEP-30-1995 2,546,000 0 386,000 0 0 1,146,000 21,509,000 (7,939,000) 17,225,000 323,000 8,957,000 16,791,000 0 0 (9,029,000) 17,225,000 0 2,691,000 0 0 2,711,000 0 572,000 0 0 (592,000) 0 0 0 (592,000) (0.32) (0.32)
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