-----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, OfpvLzQ9zOub7OdIFPpn6Y2Tz6iXyZZgnD8qML4PxPYvwJWZWWKTlM7iTk2j8m44 7bcDUGHW9tK2xZarvPm/yg== 0000950116-97-000894.txt : 19970513 0000950116-97-000894.hdr.sgml : 19970513 ACCESSION NUMBER: 0000950116-97-000894 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970512 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: 97600134 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 10-Q 1 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 March 31, 1997 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 or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 16 Campus Boulevard, Newtown Square, Pennsylvania 19073 - ------------------------------------------------- ----- (Address of principal executive offices) (Zip Code) (610) 325-5600 ----------------------------- (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 9,570,062 Common Shares of Beneficial Interest were outstanding as of May 5, 1997. BRANDYWINE REALTY TRUST TABLE OF CONTENTS PART I - FINANCIAL INFORMATION Item 1 Financial Statements Consolidated Balance Sheet as of March 31, 1997 (unaudited) and December 31, 1996 Consolidated Statements of Operations for the three months ended March 31, 1997 and March 31, 1996 (unaudited) Consolidated Statements of Cash Flow for the three months ended March 31, 1997 and March 31, 1996 (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 Item 6. Exhibits and Reports on Form 8-K Signatures 2 Part I - FINANCIAL INFORMATION Item 1. - Financial Statements BRANDYWINE REALTY TRUST CONSOLIDATED BALANCE SHEETS (in thousands)
March 31, December 31, 1997 1996 ------------- --------------- (unaudited) ASSETS REAL ESTATE INVESTMENTS Operating properties $ 220,090 $ 161,284 Accumulated depreciation (11,265) (9,383) --------- --------- 208,825 151,901 CASH AND CASH EQUIVALENTS 18,398 18,279 ESCROWED CASH 1,612 2,044 ACCOUNTS RECEIVABLE 2,074 1,366 DUE FROM AFFILIATES 479 517 INVESTMENT IN MANAGEMENT COMPANY 116 -- DEFERRED COSTS AND OTHER ASSETS 4,850 4,219 --------- --------- Total assets $ 236,354 $ 178,326 ========= ========= LIABILITIES AND BENEFICIARIES' EQUITY MORTGAGE NOTES PAYABLE $ 46,848 $ 36,644 ACCRUED INTEREST 257 202 ACCOUNTS PAYABLE AND ACCRUED EXPENSES 3,223 3,119 DISTRIBUTIONS PAYABLE 4,064 2,255 EXCESS OF LOSSES OVER INVESTMENT IN MANAGEMENT COMPANY -- 14 TENANT SECURITY DEPOSITS AND DEFERRED RENTS 2,157 1,324 --------- --------- Total liabilities 56,549 43,558 --------- --------- MINORITY INTEREST 6,356 6,398 --------- --------- CONVERTIBLE PREFERRED SHARES $0.01 par value, 5,000,000 preferred shares authorized, 427,421 shares issued and outstanding 23,458 26,444 --------- --------- BENEFICIARIES' EQUITY Shares of beneficial interest, $0.01 par value, 25,000,000 common shares authorized, 9,570,062 shares issued and outstanding 96 70 Additional paid-in capital 162,885 113,047 Share warrants 962 962 Cumulative deficit (1,198) (3,248) Cumulative distributions (12,754) (8,905) --------- --------- Total beneficiaries' equity 149,991 101,926 --------- --------- Total liabilities and beneficiaries' equity $ 236,354 $ 178,326 ========= =========
The accompanying notes are an integral part of these condensed interim statements. 3 BRANDYWINE REALTY TRUST CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996 (in thousands, except share and per share information) (Unaudited)
1997 1996 ------------- --------- Revenue: Rents $ 6,999 $ 977 Tenant reimbursements 1,327 30 Other 272 38 ----------- ----------- Total revenue 8,598 1,045 ----------- ----------- Operating Expenses: Interest 975 207 Depreciation and amortization 2,310 242 Property operating expenses 2,810 450 Management fees 315 12 Administrative expenses 169 122 ----------- ----------- Total operating expenses 6,579 1,033 ----------- ----------- Income before minority interest and equity in income of management company 2,019 12 Minority interest in income (94) (2) Equity in income of management company, net of minority interest 125 -- ----------- ----------- Net income 2,050 10 ----------- ----------- Income allocated to Preferred Shares 499 -- ----------- ----------- Income allocated to Common Shares $ 1,551 $ 10 =========== =========== PER SHARE DATA: Earnings per share of beneficial interest Income allocated to Common Shares $ 0.20 $ 0.02 =========== =========== Weighted average number of shares outstanding including share equivalents 7,776,607 625,648 =========== ===========
The accompanying notes are an integral part of these condensed interim statements 4 BRANDYWINE REALTY TRUST CONSOLIDATED STATEMENTS OF CASH FLOW FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996 (in thousands) (Unaudited)
1997 1996 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: NET INCOME $ 2,050 $ 10 ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Minority interest in income of affiliates 94 2 Depreciation and amortization 2,310 242 Equity in income of affiliate (125) -- Changes in assets and liabilities (Increase) decrease in accounts receivable (709) (20) Decrease in affiliate receivable 38 -- (Increase) decrease in other assets (103) 6 Increase (decrease) in accounts payable and accrued expenses 938 (21) Increase (decrease) in accrued mortgage interest 55 -- Increase (decrease) in other liabilities 545 (23) -------- -------- Net cash provided by operating activities 5,093 196 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of properties (58,143) -- Decrease (increase) in escrowed cash 432 395 Capital expenditures and leasing commissions paid (2,292) (439) -------- -------- Net cash used in investing activities (60,003) (44) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of shares, net 45,534 -- Distributions paid to shareholders (2,127) (93) Distributions paid to minority partners (54) (2) Proceeds from mortgage notes payable 21,682 -- Repayment of mortgage notes payable (9,578) (26) Costs associated with new mortgage loans and Credit Facility (549) (179) Other 121 9 -------- -------- Net cash provided by (used in) financing activities 55,029 (291) -------- -------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 119 (139) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 18,279 840 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 18,398 $ 701 ======== ========
The accompanying notes are an integral part of these condensed interim statements. 5 BRANDYWINE REALTY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1997 1. ORGANIZATION AND NATURE OF OPERATIONS: Brandywine Realty Trust (the "Company"), is a Maryland real estate investment trust. As of March 31, 1997, the Company owns 50 properties (collectively, the "Properties"). The Company's interest in 49 of the Properties is held through Brandywine Operating Partnership, L.P. (the "Operating Partnership"). The Company is the sole general partner of the Operating Partnership and as of March 31, 1997, the Company held a 96.5% interest in the Operating Partnership. At March 31, 1997, the Company's portfolio aggregated approximately 2.6 million square feet available for lease for office and industrial purposes. As of March 31, 1997, the overall occupancy rate of the Properties was approximately 94.7%. The Company's Properties are primarily located within the suburban Philadelphia office and industrial market area. A downturn in business activity in the greater Philadelphia market could negatively impact the Company. The Company has fewer resources than many of the owners and developers it competes against. The principal methods of competition include primarily the basis of price, property quality and location. 2. GENERAL: The financial statements have been prepared by the Company 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 Company believes that the disclosures are adequate to make the information presented not misleading. In the opinion of the Company, all adjustments (consisting of normal recurring adjustments, except for the adjustments to record the effects of the Company's acquisitions of 13 Properties during the three months ended March 31, 1997 (See Note 3)) necessary to present fairly the financial position of the Company as of March 31, 1997, and the results of its operations and its cash flows for the three months ended March 31, 1997 and 1996 have been included. The results of operations for such interim periods are not necessarily indicative of the results for the full year. For further information, refer to the Company's consolidated financial statements and footnotes thereto included in the Annual Report on Form 10-K for the year ended December 31, 1996. Reclassifications Certain 1996 amounts have been reclassified to conform to the current year presentation. Net Income (Loss) Per Share Net income (loss) per share is based on the weighted average number of common shares of beneficial interest ("Common Shares") outstanding adjusted to give effect to common share equivalents. The Financial Accounting Standards Board has recently issued Statements of Financial Accounting Standards 6 No. 128, "Earnings per Share", which is effective for financial statements for periods ending after December 15, 1997. This standard establishes new accounting and disclosure for earnings per share ("EPS"). The EPS, as currently reported for the three month period ended March 31, 1997 and 1996, are the same as the basic EPS and diluted EPS required by the standard. 3. ACQUISITIONS OF REAL ESTATE INVESTMENTS: On January 24, 1997, the Company acquired a portfolio of five office buildings containing an aggregate of approximately 290,000 net rentable square feet located in southern New Jersey (the "January Acquisition Properties"). The net aggregate purchase price totaled approximately $31.3 million and was paid as follows: (i) $7.0 million was paid through a borrowing under the revolving credit facility previously established with Smith Barney Mortgage Capital Group, Inc. and NationsBank, N.A. (the "Credit Facility"); (ii) approximately $12.1 million was paid through an assumption of mortgage indebtedness encumbering two of the five acquired buildings; and (iii) the balance was paid with existing cash reserves. Further, in connection with this transaction, the Company obtained an option to acquire an unimproved parcel of land containing approximately eight acres, located immediately adjacent to one of the acquired buildings for a purchase price of $1.0 million. The Company may exercise the option at any time through June 30, 1998 and may extend the option period until June 30, 1999 by paying an extension fee of $100,000, subject to certain terms and conditions. In two separate transactions during March 1997, the Company acquired eight office buildings (collectively the "March Acquisition Properties") for an aggregate cash purchase price of $25.1 million. The eight office buildings contain an aggregate of approximately 274,000 net rentable square feet. Seven of the properties are located in Burlington County, New Jersey and one of the properties is located in Chester County, Pennsylvania. On March 7, 1997 the Company acquired a 6.8 acre parcel of undeveloped land located in Montgomery County, Pennsylvania for a purchase price of $1.0 million paid through a combination of $645,000 in cash and a promissory note to the seller for $369,000. The promissory note is due without interest on the earlier of the issuance of a building certificate in connection with the construction of a second building on the land or March 1, 1998. All acquisitions which occurred during the three months ended March 31, 1997 and the year ended December 31, 1996 were accounted for by the purchase method. The results of operations for each of the acquisition properties have been included from the respective purchase dates. The following unaudited pro forma financial information of the Company for the three months ended March 31, 1997 and March 31, 1996 gives effect to the acquisition of 46 of the Company's total Properties owned on March 31, 1997 as if the purchases had occurred on January 1, 1997 and January 1, 1996, respectively. The pro forma financial information is unaudited and is not necessarily indicative of the results which actually would have occurred if the acquisitions had occurred on January 1, 1997 and January 1, 1996, respectively, nor does it purport to represent the results of operations for future periods. 7
Three Months Ended March 31, (Unaudited in thousands, except per ----------------------------------- share amounts) -------------- 1997 1996 ---- ---- Pro forma total revenues $9,693 $8,746 Pro forma net income (loss) allocated to Common Shares $1,916 $ 760 Pro forma net income (loss) per Common Share $ 0.25 $ 0.08
4. MORTGAGE NOTES PAYABLE: In connection with the Company's acquisition of the January Acquisition Properties, the Company borrowed $7.0 million under the Credit Facility and assumed two mortgage notes encumbering two of the January Acquisition Properties. The two mortgage loans totaled $6.1 million and $6.0 million, respectively, as of March 31, 1997. These two loans are due March 1, 2002 and November 1, 2004, respectively, and bear interest at an annual rate of 9.875% and 9.25%, respectively, with principal and interest payments due monthly. On March 4, 1997, in connection with the 1997 Offering, discussed in Note 5 below, the Company repaid the Credit Facility in full. 5. ISSUANCE OF SHARES AND WARRANTS On March 4, 1997, the Company consummated an underwritten public offering (the "1997 Offering") of 2,200,000 Common Shares at a price to the public of $20-5/8 per share. Pursuant to exercise by the underwriters of their over-allotment option, on March 17, 1997, the Company issued an additional 175,500 Common Shares at a price to the public of $20-5/8 per share. The Company used the proceeds from this public offering to fund the purchase of additional office properties and land parcels, to repay certain indebtedness and for working capital purposes. On March 19, 1997, 54,397 of the then issued and outstanding total of 481,818 preferred shares of beneficial interest, designated Series A Convertible Preferred Shares ("Preferred Shares") were converted by the holder into 181,323 Common Shares. 6. DISTRIBUTIONS: On March 31, 1997, the Company declared a distribution of $0.35 per share payable on April 30, 1997 to shareholders of record as of April 15, 1997. For the three months ended March 31, 1997, the Company declared distributions allocable to preferred shareholders totaling $499,000. 8 7. SUBSEQUENT EVENTS On April 18, 1997, the Company acquired Greentree Executive Campus, a multi-building garden office complex, and Five Eves Drive, a three story midrise office building, for an aggregate cash purchase price of approximately $14.5 million. The properties are located in Burlington County, New Jersey and consist of an aggregate of approximately 202,000 net rentable square feet. On April 3, 1997, the Company purchased 201 and 221 King Manor Drive, two industrial facilities, for a cash purchase price of approximately $3.5 million. The properties are located in Montgomery County, Pennsylvania and consist of an aggregate of approximately 125,000 net rentable square feet. 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS Comparison of the Three Months Ended March 31, 1997 to the Three Months Ended March 31, 1996. Primarily as a result of the Company's acquisition program during 1996 and 1997, total revenue increased by approximately $7.6 million or 723% and property operating and management fee expenses increased by approximately $2.7 million or 576% for the three months ended March 31, 1997 as compared to the three months ended March 31, 1996. Depreciation and amortization expense increased by approximately $2.1 million or 855% for the three months ended March 31, 1997 as compared to the three months ended March 31, 1996 primarily as a result of the Company's acquisition of real estate during 1996 and 1997. Interest expense increased by approximately $768 million or 371% primarily as a result of additional indebtedness associated with certain of the Company's acquisitions. Administrative expenses increased by $47,000 or 38.5% primarily as a result of the increase in management personnel associated with the Company's growth. As a result of the foregoing, the Company's consolidated net income was approximately $2.1 million, and, after income allocated to Preferred Shares of approximately $499,000, the Company's income allocated to Common Shares was approximately $1.6 million or $0.20 per share for the three months ended March 31, 1997 compared to consolidated net income of $10,000 or $0.02 per share for the three months ended March 31, 1996. LIQUIDITY AND CAPITAL RESOURCES As of March 31, 1997 and December 31, 1996, cash and cash equivalents totaled $18.4 million and $18.3 million, respectively. During the first quarter of 1997, net cash provided by operating activities totaled approximately $5.1 million. On March 4, 1997, the Company consummated the 1997 Offering generating net proceeds of approximately $45.5 million. During the first quarter of 1997, the Company used its cash sources primarily: (i) to acquire additional Properties totaling approximately $58.1 million using cash of approximately $36.5 million and approximately $21.6 million in additional indebtedness; (ii) to repay approximately $9.6 million in debt; (iii) to fund approximately $2.1 million in distributions paid to shareholders; and (iv) to fund approximately $2.3 million in capital expenditures and leasing commissions, using cash of approximately $1.7 million and additional borrowings and escrowed cash reserves totaling $607,000 available for such expenditures. As of March 31, 1997, the Company had approximately $46.8 million of debt outstanding consisting of mortgage loans totaling $43.5 million and deferred payments totaling $3.8 million (which amount has been discounted, as of March 31, 1997 to $3.3 million based on its terms). The mortgages mature between December 1997 and November 2004. For the three months ended March 31, 1997, the weighted average interest on the Company's debt was 8.0%. The Company's Properties require periodic investments of capital for tenant related capital expenditures and for general capital improvements. For the three months ended March 31, 1997, such expenditures totaled $2.3 million. Sources covering these expenditures included approximately $115,000 in financing pursuant to an existing commitment from the lender on one of the Properties and approximately $492,000 in escrowed cash reserves in connection with eleven of the Company's Properties. The Company's primary sources of cash available for distribution will be from rental revenues and operating expense reimbursements from tenants and the management services income from providing services to third parties. The Company intends to use these funds to pay operating expenses, pay debt 10 service, fund recurring capital expenditures, fund tenant allowances and pay regular quarterly distributions to shareholders. For the quarter ended March 31, 1997, the Company's distributions totaled $0.35 per Common Share amounting to approximately $1.6 million. In addition, during this period, the Company's distributions to Preferred Shares totaled approximately $499,000. The Company expects to meet its short-term liquidity requirements generally through its working capital and net cash provided by operations. The Company believes that its net cash provided by operations will be sufficient to allow the Company to make distributions necessary to enable the Company to continue to remain qualified as a REIT. The Company also believes that the foregoing sources of liquidity will be sufficient to fund its short-term liquidity needs for the foreseeable future. The Company expects to meet its long-term liquidity requirements, such as for property acquisitions, scheduled debt maturities, renovations, expansions and other non-recurring capital improvements, through long-term secured and unsecured indebtedness and the issuance of additional equity securities. The Company also expects to use funds available under the Credit Facility to finance acquisitions and capital improvements on an interim basis. CASH FLOWS Comparison of the Three Months Ended March 31, 1997 to the Three Months Ended March 31, 1996. Net cash provided by operating activities increased in the three months ended March 31, 1997 by $4.9 million in comparison to the three months ended March 31, 1996. The increase was primarily attributable to operating activities of the 46 Properties acquired by the Company during 1996 and through March 31, 1997. Net cash used in investing activities increased in the three months ended March 31, 1997 by $60.0 million in comparison to the three months ended March 31, 1996. The increased cash use was primarily attributable to the Company's acquisition of 13 Properties during the first three months of 1997 and capital expenditures and leasing costs associated with the Company's Properties. Net cash provided by financing activities increased by $54.7 million in the three months ended March 31, 1997 in comparison to the three months ended March 31, 1996. The increase was primarily attributable to net proceeds received in connection with the 1997 Offering and proceeds from mortgage notes in connection with certain of the Properties acquired by the Company during 1997, offset, in part, by the repayment of certain mortgage loans and distributions to shareholders. FUNDS FROM OPERATIONS Management generally considers Funds from Operations as one measure of REIT performance. The Company adopted the NAREIT definition of Funds from Operations in 1996 and has used this definition for all periods presented in the financial statements included herein. Funds from Operations is calculated as net income (loss) adjusted for depreciation expense attributable to real property, amortization expense attributable to capitalized leasing costs, tenant allowances and improvements, gains on sales of real estate investments and extraordinary and nonrecurring items. Funds from Operations should not be considered as an alternative to net income as an indication of the Company's performance or to cash flows as a measure of liquidity. 11 Funds from Operations for the three months ended March 31, 1997 and March 31, 1996 is summarized in the following table (in thousands, except share and per share data).
Three Months Three Months Ended Ended March 31, 1997 March 31, 1996 FUNDS FROM OPERATIONS: Income before minority interest and equity in income of management $ 2,019 $ 12 company Add (Deduct): Depreciation attributable to real property 1,969 202 Amortization attributable to leasing costs, tenant allowances and improvements 179 32 Equity in income of management company 125 -- Minority interest not attributable to unit holders (11) (2) ----------- ----------- Funds from Operations before Minority Interest $ 4,281 $ 244 =========== =========== Weighted average Common Shares outstanding, including common share equivalents (1) 9,758,066 625,648 =========== =========== Funds from Operations, per share $ 0.44 $ 0.39 =========== ===========
(1) Includes the weighted average effect of 1,424,737 Common Shares issuable upon the conversion of the Preferred Shares, the weighted average effect of 399,567 Common Shares issuable upon the conversion of 399,567 Operating Partnership units and 762,104 Common Shares reserved for issuance upon the exercise of outstanding warrants and options. 12 Part II. Other Information Item 1. Legal Proceedings The Company is not currently involved (nor was it involved at March 31, 1997) in any material legal proceedings nor, to the Company's knowledge, is any material legal proceeding currently threatened against the company, other than routine litigation arising in the ordinary course of business, substantially all of which is expected to be covered by liability insurance. Item 5. Other Events The statements contained herein which are not historical facts may be forward looking statements based on economic forecasts, budgets and other factors which, by their nature, involve known risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results implied by such statements. In particular, among the factors that could cause actual results to differ materially are the following: business conditions and the general economy; limited geographic concentration of the Company's Properties; competitive factors; and interest rates and other risks inherent in the real estate business. For future information on factors that could impact the Company and the statements contained herein, reference is made to the Company's other filings with the Securities and Exchange Commission. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: 10.25 Separation Agreement between the Company and John P. Gallagher 27 Financial Data Schedule (b) Reports on Form 8-K: During the first quarter ended March 31, 1997, and through May 12, 1997, the Company filed the following: (i) a Current Report on Form 8-K/A No. 1 dated February 5, 1997 (amending Items 2 and 7, as originally filed) regarding the Company's acquisition of nine commercial properties, containing an aggregate of approximately 418,000 square feet and located in suburban Philadelphia. Such Form 8-K/A No. 1 incorporated (x) an audited combined statement of revenue and certain expenses of the acquired properties for the year ended December 31, 1995; (y) unaudited combined statements of revenue and certain expenses of the acquired properties for the nine months ended September 30, 1995 and 1996; and (z) pro forma financial information as of September 30, 1996 and for the year ended December 31, 1995 and the nine months ended September 30, 1996. (ii) a Current Report on Form 8-K dated February 7, 1997 (reporting under Items 2 and 7) regarding the Company's acquisition of a portfolio of five office buildings, containing an aggregate of approximately 290,000 square feet and located in southern New Jersey. (iii) a Current Report on Form 8-K/A No. 1 dated February 13, 1997 (amending Item 7, as originally filed) regarding the Company's acquisition of a portfolio of five office buildings, containing an aggregate of approximately 290,000 square feet and located in southern New Jersey. Such Form 8-K/A No. 1 incorporated (x) an audited combined statement of revenue and certain expenses of the acquired properties for the year ended December 31, 1996; (y) unaudited combined statements of revenue and certain expenses of the acquired properties for the year ended December 31, 1995 and the nine months ended September 30, 1996; and (z) pro forma financial information as of September 30, 1996 and for the year ended December 31, 1995 and the nine months ended September 30, 1996. (iv) a Current Report on Form 8-K/A No. 2 dated February 24, 1997 (amending Items 2 and 7, as originally filed) regarding the Company's acquisition of a portfolio of five office buildings, containing an 13 aggregate of approximately 290,000 square feet and located in southern New Jersey. Such Form 8-K/A No. 2 incorporated (x) an audited combined statement of revenue and certain expenses of the acquired properties for the year ended December 31, 1996; (y) unaudited combined statements of revenue and certain expenses of the acquired properties for the year ended December 31, 1995 and the nine months ended September 30, 1996; and (z) pro forma financial information as of September 30, 1996 and for the year ended December 31, 1995 and the nine months ended September 30, 1996. (v) a Current Report on Form 8-K dated February 27, 1997 (reporting under Items 5 and 7) regarding the Company having entered into the underwriting agreement in connection with the 1997 Offering and the Company having entered into several agreements to acquire eight office buildings and two industrial facilities. (vi) a Current Report on Form 8-K dated March 18, 1997 (reporting under Items 2, 5 and 7) regarding (a) the Company's acquisition of seven office properties (the "Main Street Properties"), located in southern New Jersey; (b) the Company's acquisition of a three story office building located in Chester County, Pennsylvania; and (c) the Company's consummation of the 1997 Offering. (vii) a Current Report on Form 8-K/A No. 1 dated April 29, 1997 (amending Item 7, as originally filed) regarding (a) the Company's acquisition of the Main Street Properties, located in southern New Jersey. Such Form 8-K/A No. 1 incorporated (x) an audited combined statement of revenue and certain expenses of the Main Street Properties for the year ended December 31, 1996; and (y) pro forma financial information as of December 31, 1996 and for the year ended December 31, 1996. (viii) a Current Report on Form 8-K dated April 18, 1997 (reporting under Items 5 and 7) regarding the Company's acquisition of 201 and 221 King Manor Drive, two industrial facilities, containing an aggregate of approximately 125,000 square feet and located in Montgomery County, Pennsylvania. (ix) a Current Report on Form 8-K dated May 1, 1997 (reporting under Items 5 and 7) regarding the Company's acquisitions of a 6.8 acre parcel of undeveloped land located in Montgomery County, Pennsylvania, the Greentree Executive Campus, a multi-building garden office complex located in Burlington County, New Jersey and Five Eves Drive, a mid-rise office building, located in Burlington County, New Jersey. (x) a Current Report on Form 8-K dated May 9, 1997 (reporting under Item 5) regarding the Company's earnings for the three months ended March 31, 1997 and certain other financial information. 14 BRANDYWINE REALTY TRUST SIGNATURES OF REGISTRANT 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 (Registrant) Date: May 12, 1997 By: /s/ Gerard H. Sweeney ------------ ---------------------- Gerard H. Sweeney, President and Chief Executive Officer (Principal Executive Officer) Date: May 12, 1997 By: /s/ Mark S. Kripke ------------ ------------------- Mark S. Kripke, Chief Financial Officer and Secretary (Principal Financial and Accounting Officer) 15 EX-10 2 EXHIBIT 10.25 Exhibit 10.25 - ------------------------------------------------------------------------------ SEPARATION AGREEMENT - ------------------------------------------------------------------------------ THIS SEPARATION AGREEMENT is dated as of March 21, 1997 and is made by and between JOHN P. GALLAGHER ("Gallagher"), an individual who resides at 783 Valley Road, Blue Bell, Pennsylvania 19422, as well as each and every dependent, heir, executor, legal representative and assign of Gallagher, and BRANDYWINE REALTY TRUST ("BRT"), a Maryland real estate investment trust, having its headquarters at 16 Campus Boulevard, Newtown Square, Pennsylvania 19073, together with each and every one of its predecessors, successors (by merger or otherwise), parents, subsidiaries (including but not limited to Brandywine Realty Services Corporation ("BRSC")), affiliates, divisions, trustees, directors, officers, employees and agents, whether present or former. WHEREAS, Gallagher entered into an Employment Agreement dated as of July 31, 1996 (the "Employment Agreement") with BRSC; WHEREAS, BRSC assigned its rights and delegated its obligations under the Employment Agreement to BRT; WHEREAS, the parties intend that Gallagher's employment with BRT will terminate on April 1, 1997 and that the Employment Agreement will terminate on that date; WHEREAS, Gallagher and BRT desire to part on an amicable basis. NOW, THEREFORE, in consideration of the mutual promises hereinafter set forth, Gallagher and BRT, acting of their own free will and intending to be legally and irrevocably bound, hereby agree as follows: 1. Employment Termination. Gallagher agrees that his employment with BRT is terminated, effective as of April 1, 1997, and Gallagher resigns from all positions with BRT, effective as of April 1, 1997. Without limiting the generality of the foregoing, all rights and obligations of BRT and Gallagher under the Employment Agreement shall terminate, effective as of April 1, 1997. Gallagher waives any and all rights to reinstatement and/or consideration for future employment with BRT. 2. Salary Continuation. BRT agrees to pay Gallagher salary continuation in the total amount of One Hundred Four Thousand Five Hundred Dollars ($104,500.00) for the period from April 1, 1997 to August 22, 1998. This salary continuation will be paid in the same manner and with the same federal, state and local tax withholdings as Gallagher's current salary. 3. COBRA. For the one-year period commencing April 1, 1997, BRT will provide Gallagher with family coverage under the Company's group medical plan subject to the terms of the plan as in effect from time to time. Any required employee contribution to the medical plan premium will be deducted from Gallagher's salary continuation payments. Gallagher's employment, for purposes of continuation of benefits for himself and eligible dependents at his (or their) own cost under COBRA, shall terminate on April 1, 1997. Accordingly, Gallagher's statutory right under COBRA to continue participation in BRT's group medical coverage for a period of up to eighteen (18) months, at his own cost, shall terminate 18 months after April 1, 1997. Gallagher agrees to promptly notify BRT by written notice to the President and Chief Executive Officer of BRT if he becomes eligible to participate in a comparable medical plan with a new employer. 4. Transfer of Partnership Interest. Gallagher agrees to transfer all of his right, title and interest as a partner in Brandywine Realty Services Partnership ("BRSP") to BRSP on April 1, 1997 in exchange for $25.00 and shall, on such date, withdraw as a partner of BRSP. 5. Confidentiality. (a) Gallagher agrees that he will not disclose or use, for his direct or indirect benefit or the direct or indirect benefit of any third party, any Confidential Information (as hereinafter defined) of BRT. "Confidential Information" means any and all proprietary or non-public information of BRT, including without limitation, information as to BRT's business and financial strategy and BRT's relationships with actual and prospective sellers or buyers of real estate or tenants of real estate. Confidential Information does not include information that is generally known in the real estate industry. (b) Gallagher agrees that he will, effective as of April 1, 1997: (i) discontinue all use of Confidential Information; (ii) return to BRT all material furnished by BRT that contains Confidential Information; and (iii) erase any Confidential Information contained in computer memory under his ownership or control. (c) Gallagher agrees to return to BRT on April 1, 1997 any documents and material whatsoever relating to the business of BRT. He also agrees that he will not make or retain copies of the foregoing. 6. Waiver and Release of Claims. Gallagher completely releases, relinquishes, waives and discharges BRT, its officers, trustees, directors, employees, agents, successors and assigns from all claims, liabilities, demands and causes of action, known or unknown, filed or contingent, which he may have or claim to have against BRT as of the date of termination of his employment arising out of or in any way related to his employment with BRT or the termination of that employment. Gallagher agrees that he has executed this Agreement on his own behalf, and also on behalf of his dependents, heirs, agents, representatives and assigns. This release includes, but is not limited to, a release of any rights or claims he may have under: -2- (a) the Age Discrimination in Employment Act, which prohibits age discrimination in employment; (b) Title VII of the Civil Rights Act of 1964, as amended by the Civil Rights Act of 1991, which prohibits discrimination in employment based on race, color, national origin, religion or sex; (c) the Americans with Disabilities Act, which prohibits discrimination on the basis of a covered disability; (d) the Employer Retirement and Income Security Act, which prohibits discrimination on the basis of entitlement to certain benefits; (e) any other federal, state or local laws or regulations prohibiting employment discrimination; (f) breach of any express or implied contract claims; (g) wrongful termination or any other tort claims, including claims for attorney's fees, whether based on common law or otherwise; (h) all claims to acquire or exercise any other rights or entitlements of stock, warrants, options, or other securities of BRT; provided that nothing contained herein shall terminate or restrict Gallagher's rights under the warrants held by him on the date hereof exercisable for an aggregate of 40,000 common shares of beneficial interest of BRT at any time before 5:00 p.m. on August 22, 2002, as more fully provided in said warrants. BRT agrees to release, relinquish, waive and discharge Gallagher of all claims, liabilities, demands and causes of action, known or unknown, which it may have or claim to have against Gallagher as of the date of the signing of this Agreement. This release does not waive BRT's right to enforce claims arising under this Agreement or any claims which by law may not be waived. 7. Cooperation. Gallagher agrees to cooperate with BRT and its executives in facilitating an orderly transition with respect to matters relating to his responsibilities as a BRT executive, and, in furtherance of such agreement, agrees to provide, at no additional compensation, reasonable consultation to BRT's Chairman of the Board, President and Chief Executive Officer and such other executives, including BRT's Chief Financial Officer, as they may identify from time to time. Gallagher agrees that he will not in the future voluntarily assist any individual or entity in preparing, or prosecuting any action or proceeding against BRT, its trustees, directors, officers, employees, or affiliates, including but not limited to, any administrative agency claims. Gallagher also agrees that he will, at BRT's expense and without -3- unreasonably interfering with his future employment obligations, cooperate with and assist BRT in its defense of any such action or proceeding. 8. Arbitration of Disputes Under this Agreement. The parties agree that any and all disputes arising out of the performance or breach of this Agreement or any promise or covenant herein shall be resolved by submission to arbitration in Philadelphia, Pennsylvania under, and in accordance with, the rules and procedures of the American Arbitration Association. 9. Enforcement. All remedies at law and equity shall be available for the enforcement of this Agreement. This Agreement may be pleaded as a full bar to the enforcement of any claim in any way related to or arising out of Gallagher's employment with BRT and/or the termination of his employment to the extent of the waivers set forth in Paragraph 6 above. All sums due to Gallagher hereunder shall be paid without reduction for compensation earned by Gallagher in any subsequent employment and shall be payable to Gallagher or his estate notwithstanding Gallagher's death, disability or any other factor. 10. Opportunity to Review and Right to Revoke. Gallagher acknowledges that he is acting of his own free will, that he has been afforded twenty-one (21) days to read and review the terms of this Agreement, that he has been advised to, and has had an opportunity to, seek the advice of counsel, and that he is voluntarily entering into this Agreement with full knowledge of its respective provisions and effects. Gallagher also acknowledges that he has seven (7) days following his signing of this Agreement to revoke this Agreement in which case BRT will have no obligation to make any payment to him. 11. Contractual Effect. The parties understand and acknowledge that the terms of this Agreement are contractual and not a mere recital. Consequently, they expressly consent that this Agreement shall be given full force and effect according to each and all of its express terms and provisions, and that it shall be binding upon the respective parties as well as their heirs, executors, successors, administrators and assigns. 12. Governing Law. This Agreement shall be governed by the laws of the Commonwealth of Pennsylvania. IN WITNESS WHEREOF, Gallagher and BRT each acknowledge that they are acting of their own free will, that they have had a sufficient opportunity to read and review the terms of this Agreement, they have each received the advice of their respective counsel with -4- respect hereto, and that they have voluntarily caused the execution of this Agreement and by reference herein as of the day and year set forth below. /s/ John P. Gallagher Witness: /s/ Anthony A. Nichols, Sr. ------------------------------- ------------------------------------ John P. Gallagher On behalf of Brandywine Realty Trust: By: /s/ Gerard H. Sweeney Witness: /s/ Anthony A. Nichols, Sr. ------------------------------- ------------------------------------ Title: President and Chief Executive Officer JOINDER Pursuant to Paragraph 4 of the above agreement, Brandywine Realty Services Partnership ("BRSP") hereby pays to John P. Gallagher the sum of $25.00 in exchange for his entire right, title and interest as a partner in BRSP. BRANDYWINE REALTY SERVICES PARTNERSHIP By: /s/ Gerard H. Sweeney ------------------------------------ Gerard H. Sweeney, a General Partner -5- EX-27 3 FINANCIAL DATA SCHEDULE
5 0000790816 BRANDYWINE REALTY TRUST 1,000 U.S. DOLLARS 3-MOS MAR-31-1997 MAR-31-1997 1 20,010 0 2,553 0 0 22,563 220,090 11,265 236,354 7,544 0 0 23,458 149,991 0 236,354 0 8,598 0 0 5,604 0 975 2,050 2,050 2,050 0 0 0 2,050 0.20 0.20
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