-----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, CLITs9hW8Vqu521dVwnDeBGJNrMnnOiOP7vTiSLoEuzCpNNYjlAw2a+ez2Hec/HP wWoCDbwntUQUGXlA15ReIA== 0000950116-00-000727.txt : 20000503 0000950116-00-000727.hdr.sgml : 20000503 ACCESSION NUMBER: 0000950116-00-000727 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000330 DATE AS OF CHANGE: 20000502 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BRANDYWINE REALTY TRUST CENTRAL INDEX KEY: 0000790816 STANDARD INDUSTRIAL CLASSIFICATION: 6798 IRS NUMBER: 232413352 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 001-09106 FILM NUMBER: 589386 BUSINESS ADDRESS: STREET 1: 14 CAMPUS BLVD STREET 2: STE 100 CITY: NEWTOWN SQUARE STATE: PA ZIP: 19073 BUSINESS PHONE: 6103255600 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-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES AND EXCHANGE ACT OF 1934 (FEE REQUIRED) For the fiscal year ended December 31, 1999 ------------------------------------------------- OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES AND 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 14 Campus Boulevard, Newtown Square, Pennsylvania 19073 ------------------------------------------------- ----- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (610) 325-5600 -------------- Securities registered pursuant to Section 12(b) of the Act: Name of each exchange Title of each class on which registered Common Shares of Beneficial Interest, (par value $0.01 per share) New York Stock Exchange - - -------------------------------------------------------------------------------- Securities registered pursuant to Section 12(g) of the Act: - - -------------------------------------------------------------------------------- (Title of class) - - -------------------------------------------------------------------------------- (Title of class) 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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] The aggregate market value of the voting shares held by non-affiliates of the registrant was approximately $561.0 million as of March 15, 2000. The aggregate market value has been computed by reference to the closing price of the Common Shares of Beneficial Interest on the New York Stock Exchange on such date. An aggregate of 36,155,011 Common Shares of Beneficial Interest were outstanding as of March 15, 2000. DOCUMENTS INCORPORATED BY REFERENCE None TABLE OF CONTENTS FORM 10-K
PAGE ---- PART I.......................................................................................................4 Item 1. Business.....................................................................................4 Item 2. Properties..................................................................................14 Item 3. Legal Proceedings...........................................................................25 Item 4. Submission of Matters to a Vote of Security Holders.........................................26 PART II.....................................................................................................26 Item 5. Market for Registrant's Common Equity and Related Shareholder Matters.......................26 Item 6. Selected Financial Data.....................................................................27 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.......28 Item 7A. Quantitative and Qualitative Disclosure About Market Risk...................................32 Item 8. Financial Statements and Supplementary Data.................................................32 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure........32 PART III....................................................................................................32 Item 10. Trustees and Executive Officers of the Registrant...........................................32 Item 11. Executive Compensation......................................................................36 Item 12. Security Ownership of Certain Beneficial Owners and Management..............................42 Item 13. Certain Relationships and Related Transactions..............................................45 PART IV.....................................................................................................47 Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.............................47
-3- PART I ITEM 1. BUSINESS GENERAL Brandywine Realty Trust (collectively with its subsidiaries, the "Company") is a self-administered and self-managed real estate investment trust ("REIT") active in acquiring, developing, redeveloping, leasing and managing office and industrial properties. As of December 31, 1999, the Company owned 199 office properties, 51 industrial facilities and one mixed-use property (the "Properties") that contained an aggregate of approximately 16.6 million net rentable square feet and managed an additional 47 properties containing 4.0 million net rentable square feet. As of December 31, 1999, 191 of the 251 Properties (approximately 74.0% of the Company's portfolio based on net rentable square feet) were located in the office and industrial markets surrounding Philadelphia, Pennsylvania (Northern and Western Suburbs and Wilmington, Delaware) and Southern and Central New Jersey. The balance of the Properties were primarily located in Northern New Jersey and Long Island, New York; and Northern and Richmond, Virginia. As of December 31, 1999, the Company owned approximately 412.6 acres of undeveloped land and held options to purchase approximately 42.9 additional acres. As of December 31, 1999, the Company owned economic interests in eleven development joint ventures (the "Real Estate Ventures"). As of December 31, 1999, the Company had invested $35.7 million in the Real Estate Ventures and had committed to make future equity contributions totaling approximately $6.4 million. Seven of the Real Estate Ventures own eight suburban office buildings that contain an aggregate of approximately 1,035,000 net rentable square feet. Four other Real Estate Ventures are currently redeveloping or developing four suburban office buildings that are expected to contain an aggregate of approximately 646,000 net rentable square feet upon completion. As of December 31, 1999, the Real Estate Ventures also owned or held options to purchase approximately 25.1 acres of undeveloped land. The Company's business objectives are to: * maximize cash flow through leasing strategies designed to capture potential rental growth as rental rates increase and as below-market leases are renewed; * ensure a high tenant retention rate through aggressive tenant service programs responsive to the varying needs of the Company's diverse tenant base; * increase economic diversification while maximizing economies of scale; * acquire high-quality office and industrial properties and portfolios of such properties at attractive yields in selected submarkets within the Mid-Atlantic region (including Delaware, New Jersey, New York, Pennsylvania, and Virginia), which management expects will experience economic growth and which provide barriers to entry; * capitalize on management's redevelopment expertise to selectively acquire, redevelop and reposition underperforming properties in desirable locations; * acquire land in anticipation of developing office or industrial properties on a build-to-suit basis, under circumstances where significant pre-leasing can be arranged or as otherwise warranted by market conditions; * enhance the Company's investment strategy through the pursuit of joint venture opportunities with high-quality partners having attractive real estate holdings or significant financial resources; and -4- * execute an investment strategy that effectively balances creating long-term growth opportunities with the Company's public market valuation. The Company expects to continue to concentrate its real estate activities in submarkets within the Mid-Atlantic region where it believes that: (i) barriers to entry (such as zoning restrictions, utility availability, infrastructure limitations, development moratoriums and limited developable land) will create supply constraints on office and industrial space; (ii) current market rents and absorption statistics justify limited new construction activity; (iii) it can maximize market penetration by accumulating a critical mass of properties and thereby enhance operating efficiencies; and (iv) there is potential for economic growth. The Company's executive offices are located at 14 Campus Boulevard, Suite 100, Newtown Square, Pennsylvania 19073 and its telephone number is (610) 325-5600. ORGANIZATION The Company was organized and commenced its operations in 1986 as a Maryland real estate investment trust. The Company owns its assets and conducts its operations through Brandywine Operating Partnership, L.P. (the "Operating Partnership") and subsidiaries of the Operating Partnership. As of December 31, 1999, the Company's ownership interest in the Operating Partnership was approximately 87.8% and the Company was entitled to approximately 94.4% of the Operating Partnership's income after distributions by the Operating Partnership to holders of its preferred units. The structure of the Company as an "UPREIT" is designed, in part, to permit persons contributing properties (or interests in properties) to the Company to defer some or all of the tax liability they might otherwise incur. The Company conducts its real estate management services through a management company (the "Management Company"). The Company, through its indirect ownership of preferred and common stock of the Management Company, is entitled to receive 95% of amounts paid as dividends by the Management Company. See "Management Company." EQUITY OFFERINGS During 1999, the Company issued an aggregate of 4,375,000 Series B Preferred Shares (the "Series B Preferred Shares") to an institutional investor, raising net proceeds of approximately $95.4 million. The Series B Preferred Shares are convertible into an aggregate of 4,375,000 Common Shares, subject to anti-dilution adjustment. Each Series B Preferred Share accrues dividends equal to the greater of $.525 per quarter or the quarterly dividend on the number of Common Shares into which a Series B Preferred Share is convertible. The Company used the net proceeds to repay indebtedness and for working capital. CREDIT FACILITY The Company maintains an unsecured credit facility (the "Credit Facility") that bears interest at LIBOR plus 1.5%, with the spread over LIBOR subject to reductions from .125% to .35%, and a possible increase of .25% based on the Company's leverage. The maximum amount available to be outstanding under the Credit Facility is $450 million. As of December 31, 1999, the Company had unused availability under the Credit Facility of $73.2 million. The Credit Facility matures in September 2001, subject to the Company's right upon payment of a fee to extend the maturity to September 2002. ADDITIONAL DEBT Mortgage Indebtedness. The following table sets forth information regarding the Company's mortgage indebtedness outstanding at December 31, 1999: -5-
Annual Debt Principal Interest Service Balance Rate (in 000's) Maturity Property / Location (in 000's) (a) (a) (b) Date - - ------------------------------------------- --------------- ------------ ------------- ------------ One & Three Christina, Park 80 I & II, and 10000 & 15000 Midlantic Drive $117,769 7.18% $1,617 2/04 Grande B (26 properties) 85,982 7.48% 7,440 7/27 100, 200 and 300 Berwyn Park, 50 East State Street, and 33 West State Street 74,200 8.97% 5,892 4/02 Grande A (27 properties) 70,740 7.48% 7,440 7/27 Arboretum I, II, III & V 25,800 8.00% 2,064 1/01 Grande A (27 properties) 20,000 7.23% 1,236 7/27 1009 Lenox Drive 14,962 8.25% 1,627 7/03 457 Haddonfield Road 8,819 8.72% 792 1/01 Grande A (27 properties) 7,497 7.40% 1,896 7/27 2000 Lenox Drive 7,042 7.50% 38 8/02 One - Three Greentree Centre 6,777 7.56% 884 1/02 Norriton Office Center 5,577 8.50% 523 10/07 1120 Executive Plaza 5,379 9.88% 832 3/02 1000 Howard Boulevard 5,199 9.25% 803 11/04 7310 Tilghman Street 2,449 9.25% 257 3/00 Interstate Center 1,649 7.75% 128 3/07 Greenwood Square I 1,300 8.00% 1,300 1/00 Corporate Center Drive 1,168 8.00% 48 6/01 Green Hills (undeveloped land) 500 5.00% 22 8/00 -------- -------- Total mortgage indebtedness $462,809 $34,839 ======== ========
(a) For loans that bear interest at a variable rate, the rates in effect at December 31, 1999 have been assumed to remain constant. (b) "Annual Debt Service" is calculated by annualizing the regularly scheduled principal and interest amortization. Guaranties. As of December 31, 1999, the Company had guaranteed repayment of approximately $16.2 million of loans to the Real Estate Joint Ventures. In addition, as of December 31, 1999, the Company had guaranteed completion of one office property under development by a Real Estate Venture that is being financed with a mortgage loan in the amount of $44 million. MANAGEMENT COMPANY The Company conducts its real estate management services business through the Management Company. As of December 31, 1999, the Management Company was managing properties containing an aggregate of approximately 20.5 million net rentable square feet, of which approximately 16.5 million net rentable square feet related to Properties owned by the Company or subject to purchase options held by the Company, and approximately 4.0 million net rentable square feet related to properties owned by unaffiliated third parties. Through its indirect ownership of 100% of the preferred stock and 5% of the common stock of the Management Company, the Company is entitled to receive 95% of amounts paid as dividends by the Management Company. Because certain executive officers of the Company indirectly own 95% of the voting common stock of the Management Company, the Company does not control the timing or amount of distributions by, or the management and operations of, the Management Company. The Management Company has made no distributions to any executive officers of the Company since its inception. GEOGRAPHIC SEGMENTS The Company operates in four geographic segments: (1) Pennsylvania Suburbs (includes Berks, Bucks, Chester, Cumberland, Dauphin, Delaware, Lehigh, Montgomery, Northampton and Philadelphia counties and Wilmington, Delaware), (2) Southern and Central New Jersey (includes Atlantic, Burlington, Camden and Mercer counties), (3) New York (includes Northern New Jersey and Long Island, New York), and (4) Virginia (includes Northern Virginia and Richmond, Virginia). (See Note 10 to the Financial Statements.) The Company does not have any foreign operations and its business is not seasonal. -6- COMPETITION The leasing of real estate is highly competitive. The Properties compete for tenants with similar properties located in its markets primarily on the basis of location, rent charged, services provided, and the design and condition of the improvements. The Company also faces competition when attempting to acquire real estate, including competition from domestic and foreign financial institutions, other REIT's, life insurance companies, pension trusts, trust funds, partnerships and individual investors. EMPLOYEES As of December 31, 1999, the Company employed 248 persons. RISK FACTORS An investment in the Company involves various risks. Actual results may differ significantly from those expressed or implied by forward-looking statements made by us or on our behalf. These statements are identified by words such as "expect," "anticipate," "should," "pro forma" and words of similar import. Factors that might cause such a difference include the various risks stated below that we believe are material to investors who purchase or own our securities. Prospective investors should carefully consider the following risk factors together with the other reports and documents we file with the Securities and Exchange Commission, which may include additional or more current relevant information. * THERE CAN BE NO ASSURANCE THAT WE WILL EFFECTIVELY MANAGE OUR RAPID GROWTH. We have been growing rapidly. Since August 1, 1996, we have acquired or developed 247 of the 251 Properties owned by us as of December 31, 1999. We have managed this growth by applying our experience to newly acquired properties and we expect continued success in that effort. No assurances can be given, however, that we will succeed in our integration efforts or that newly acquired properties will perform as we expect. * WE DEPEND ON THE PERFORMANCE OF OUR PRIMARY MARKETS, AND CHANGES IN SUCH MARKETS MAY ADVERSELY AFFECT OUR FINANCIAL CONDITION. Most of our Properties are located in suburban markets in Pennsylvania, New Jersey, New York, Virginia and Delaware. Like other real estate markets, these commercial real estate markets have experienced economic downturns in the past, and future declines in any of these real estate markets could adversely affect our operations or cash flow and ability to make distributions to shareholders. Our financial performance will be particularly sensitive to the economic conditions in these markets. Our revenues and the value of our Properties may be adversely affected by a number of factors, including the economic climate in these markets (which may be adversely impacted by business layoffs, industry slowdowns, changing demographics and other factors) and real estate conditions in these markets (such as oversupply of or reduced demand for office and industrial properties). These factors, when and if they occur in the area in which our Properties are located, would adversely affect our cash flow and ability to make distributions to shareholders. OUR ABILITY TO MAKE DISTRIBUTIONS IS SUBJECT TO VARIOUS RISKS. We pay quarterly distributions to our shareholders. Our ability to make distributions in the future will depend upon: * the performance of our Properties; -7- * expenditures with respect to existing and newly acquired properties; * the amount of, and the interest rates on, our debt; * the absence of significant expenditures relating to environmental and other regulatory matters; and * future sales of securities. Certain of these matters are beyond our control and any significant difference between our expectations and actual results could have a material adverse effect on our cash flow and our ability to make distributions to shareholders. * WE MAY BE UNABLE TO RENEW LEASES OR RELET SPACE AS LEASES EXPIRE. If tenants fail to renew their leases upon expiration, we may be unable to relet the subject space. Even if the tenants do renew their leases or we can relet the space, the terms of renewal or reletting (including the cost of required renovations) may be less favorable than current lease terms. Certain leases grant the tenants an early termination right upon payment of a termination penalty. While we have estimated the necessary expenditures for new and renewal leases for 2000 and 2001, no assurances can be given as to the accuracy of such estimates. * FINANCIALLY DISTRESSED TENANTS MAY LIMIT OUR ABILITY TO REALIZE THE VALUE OF OUR INVESTMENTS. Following a tenant's lease default, we may experience delays in enforcing our rights as a landlord and may incur substantial costs in protecting our investment. In addition, a tenant may seek bankruptcy law protection which could relieve the tenant from its obligation to make lease payments. * WE FACE SIGNIFICANT COMPETITION FROM OTHER REAL ESTATE DEVELOPERS. We compete with real estate developers, operators and institutions for tenants and acquisition opportunities. Some of these competitors have significantly greater resources than we do. No assurances can be given that this competition will not adversely affect our cash flow and ability to make distributions to shareholders. * BECAUSE REAL ESTATE IS ILLIQUID, WE MAY NOT BE ABLE TO SELL PROPERTIES WHEN APPROPRIATE. Real estate investments generally cannot be sold quickly. We may not be able to vary our portfolio promptly in response to economic or other conditions. In addition, the Internal Revenue Code of 1986 (the "Code") limits our ability to sell properties held for fewer than four years. Purchase options and rights of first refusal held by certain tenants may also limit our ability to sell certain properties. Any of these factors could adversely affect our cash flow and ability to make distributions to shareholders as well as the ability of someone to purchase us, even if a purchase were in our shareholders' best interests. -8- * WE HAVE AGREED NOT TO SELL CERTAIN OF OUR PROPERTIES. We have agreed with the former owners of certain of our properties not to sell properties aggregating approximately 4.8 million net rentable square feet for varying periods of time in transactions that would trigger taxable income to the former owners, subject to certain exceptions. Some of these agreements are with affiliates of current trustees of our company. In addition, we may enter into similar agreements with future sellers of properties. These agreements generally provide that we may dispose of the applicable properties in transactions that qualify as tax-free exchanges under Section 1031 of the Code or in other tax deferred transactions. Therefore, without suffering adverse financial consequences, we may be precluded from selling certain properties other than in transactions that would qualify as tax-free exchanges for federal income tax purposes. * CHANGES IN THE LAW MAY ADVERSELY AFFECT OUR CASH FLOW. Because increases in income and service taxes are generally not passed through to tenants under leases, such increases may adversely affect our cash flow and ability to make expected distributions to shareholders. The Properties are also subject to various regulatory requirements, such as those relating to fire and safety. Our failure to comply with these requirements could result in the imposition of fines and damage awards. While we believe that the Properties are currently in material compliance with all such requirements, there can be no assurance that these requirements will not change or that newly imposed requirements will not require significant unanticipated expenditures. * BY HOLDING PROPERTIES THROUGH THE OPERATING PARTNERSHIP AND VARIOUS JOINT VENTURES, WE ARE EXPOSED TO ADDITIONAL RISKS. We own the Properties and interests in Real Estate Ventures through the Operating Partnership. In the future, we expect to continue to participate with other entities in property ownership through joint ventures or partnerships. Partnership or joint venture investments may involve risks not otherwise present in direct investments. Such risks include: o the potential bankruptcy of our partners or co-venturers; o a conflict between our business goals and those of our partners or co-venturers; and o actions taken by our partners or co-venturers contrary to our instructions or objectives, including our policy of maintaining our REIT qualification. We will, however, seek to maintain sufficient control of such partnerships and joint ventures to enable us to achieve our business objectives. There is no limitation under our organizational documents as to the amount of funds which we may invest in partnerships or joint ventures. * FUTURE ACQUISITIONS MAY FAIL TO PERFORM IN ACCORDANCE WITH OUR EXPECTATIONS AND MAY REQUIRE DEVELOPMENT AND RENOVATION COSTS EXCEEDING OUR ESTIMATES. Changing market conditions, including competition from others, may diminish our opportunities for making attractive acquisitions. Once made, our investments may fail to perform in accordance with our expectations. Our actual renovation and improvement costs in bringing an acquired property up to market standards may exceed our estimates. In addition, we periodically develop, redevelop and construct office buildings and other commercial properties. Risks associated with these activities include: o the unavailability of favorable financing, including permanent financing to repay construction financing; -9- o the abandonment of such activities prior to completion; o construction costs exceeding original estimates; o construction and lease-up delays resulting in increased debt service and construction costs; and o insufficient occupancy rates and rents at a newly completed property causing a property to be unprofitable. * OUR INDEBTEDNESS SUBJECTS US TO ADDITIONAL RISKS. Debt Financing and Existing Debt Maturities. We are subject to risks normally associated with debt financing, such as the insufficiency of cash flow to meet required payment obligations and the inability to refinance existing indebtedness. If our debt cannot be paid, refinanced or extended at maturity, in addition to our failure to repay our debt, we may not be able to make distributions to shareholders at expected levels or at all. Furthermore, an increase in our interest expense could adversely affect our cash flow and ability to make distributions to shareholders. If we do not meet our mortgage financing obligations, any properties securing such indebtedness could be foreclosed on, which would have a material adverse effect on our cash flow and ability to make distributions and, depending on the number of properties foreclosed on, could threaten our continued viability. Risk of Rising Interest Rates and Variable Rate Debt. Increases in interest rates on variable rate indebtedness would increase our interest expense, which could adversely affect our cash flow and ability to make distributions to shareholders. No Limitation on Debt. Our organizational documents do not contain any limitation on our ability to incur additional debt. Accordingly, we could increase our outstanding debt without restriction. The increased debt service could adversely affect our cash flow and ability to make distributions and could increase the risk of default on our indebtedness. * OUR STATUS AS A REIT IS DEPENDENT ON COMPLIANCE WITH FEDERAL INCOME TAX REQUIREMENTS. Our failure to qualify as a REIT would have serious adverse consequences to our shareholders. We believe that since 1986, we have qualified for taxation as a REIT for federal income tax purposes. We plan to continue to meet the requirements for taxation as a REIT. Many of these requirements are highly technical and complex. The determination that we are a REIT requires an analysis of various factual matters and circumstances that may not be totally within our control. For example, to qualify as a REIT, at least 95% of our gross income must come from certain sources that are itemized in the REIT tax laws. We are also required to distribute to shareholders at least 95% of our REIT taxable income (excluding capital gains). The fact that we hold our assets through the Operating Partnership and its subsidiaries further complicates the application of the REIT requirements. Even a technical or inadvertent mistake could jeopardize our REIT status. Furthermore, Congress and the IRS might change the tax laws and regulations, and the courts might issue new rulings that make it more difficult, or impossible, for us to remain qualified as a REIT. We do not believe, however, that any pending or proposed tax law changes would jeopardize our REIT status. To maintain REIT status, a REIT may not own more than 10% of the voting stock of any corporation, except for a qualified REIT subsidiary (which must be wholly-owned by the REIT) or another REIT. In order to comply with this rule, the Operating Partnership owns 5% of the voting common stock and all of the non-voting preferred stock of the Management Company. The Internal Revenue Service ("IRS"), however, could contend that the Operating Partnership's ownership of all of the non-voting preferred stock of the Management Company should be viewed as voting stock because of the Operating Partnership's substantial economic position in the Management Company. If successful in -10- such a contention, the Company's status as a REIT would be lost and the Company would be subject to the consequences summarized below. Arthur Andersen LLP, our tax advisor, has given us an opinion to the effect that, beginning with our taxable year ended December 31, 1986, we have been organized and have operated in conformity with the requirements for qualification and taxation as a REIT under the Internal Revenue Code (the "Code") and that our current organization and method of operation will enable us to continue to so qualify. The opinion of Arthur Andersen LLP is based on assumptions and factual representations made by us regarding our ability to meet the requirements for qualification as a REIT. Such opinion is not binding on the IRS or any court. Moreover, Arthur Andersen LLP does not review or monitor our compliance with the requirements for REIT qualification on an ongoing basis. We cannot guarantee that we will be qualified and taxed as a REIT, because our qualification and taxation as a REIT will depend upon our ability to meet, on an ongoing basis, the requirements imposed under the Code. If we fail to qualify as a REIT, we would be subject to federal income tax at regular corporate rates. Also, unless the IRS granted us relief under certain statutory provisions, we would remain disqualified as a REIT for four years following the year we first failed to qualify. If we failed to qualify as a REIT, we would be required to pay significant income taxes and would, therefore, have less money available for investments or for distributions to shareholders. This would likely have a significant adverse affect of the value of our securities. In addition, we would no longer be required to make any distributions to shareholders. In order to make the distributions required to maintain our REIT status, we may need to borrow funds. To obtain the favorable tax treatment associated with REIT qualification, we generally will be required to distribute to shareholders at least 95% of our annual REIT taxable income (excluding net capital gains). In addition, we will be subject to tax on our undistributed net taxable income and net capital gain and a 4% nondeductible excise tax on the amount, if any, by which certain distributions paid by us with respect to any calendar year are less than the sum of 85% of ordinary income plus 95% of capital gain net income for the calendar year, plus certain undistributed amounts from prior years. We intend to make distributions to shareholders to comply with the distribution provisions of the Code and to avoid income and other taxes. Our income will consist primarily of our share of the income of the Operating Partnership and our cash flow will consist primarily of our share of distributions from the Operating Partnership. Differences in timing between the receipt of income and the payment of expenses in arriving at taxable income (of the Company or the Operating Partnership) and the effect of required debt amortization payments could require us to borrow funds on a short-term basis or to liquidate funds on adverse terms to meet the REIT qualification distribution requirements. Failure of the Operating Partnership (or a subsidiary partnership) to be treated as a partnership would have serious adverse consequences to our shareholders. If the IRS were to successfully challenge the tax status of the Operating Partnership or any of its subsidiary partnerships for federal income tax purposes, the Operating Partnership or the affected subsidiary partnership would be taxable as a corporation. In such event, we would cease to qualify as a REIT and the imposition of a corporate tax on the Operating Partnership or a subsidiary partnership would reduce the amount of cash available for distribution from such partnership to us and our shareholders. We do pay some taxes. Even if we qualify as a REIT, we are required to pay certain federal, state and local taxes on our income and property. In addition, the Management Company is subject to federal, state and local income tax at regular corporate rates on its net taxable income derived from its management, leasing and related service business. If we have net income from a prohibited transaction, such income will be subject to a 100% tax. We own a subsidiary REIT. One of our subsidiaries, Atlantic American Properties Trust ("AAPT"), that indirectly holds approximately 26 of the Properties, elected to be taxed as a REIT for the year ended December 31, 1997. So long as we seek to maintain AAPT's REIT status, AAPT will be -11- subject to all the requirements and risks associated with maintaining REIT status summarized above, including the limitation on the ownership of more than 10% of the voting securities of any corporation (other than a qualified REIT subsidiary or another REIT). AAPT indirectly owns non-voting common stock issued by a corporation which is neither a qualified REIT subsidiary nor a REIT. * ENVIRONMENTAL PROBLEMS ARE POSSIBLE AND MAY BE COSTLY. Federal, state and local laws, ordinances and regulations may require a current or previous owner or operator of real estate to investigate and clean up hazardous or toxic substances or releases at such property. The owner or operator may be forced to pay for property damage and for investigation and clean-up costs incurred by others in connection with environmental contamination. Such laws typically impose clean-up responsibility and liability without regard to whether the owner or operator knew of or caused the presence of the contaminants. Even if more than one person may have been responsible for the contamination, each person covered by the environmental laws may be held responsible for all of the clean-up costs incurred. In addition, third parties may sue the owner or operator of a site for damages and costs resulting from environmental contamination emanating from that site. These costs may be substantial and the presence of such substances may adversely affect the owner's ability to sell or rent such property or to borrow using such property as collateral. Independent environmental consultants have conducted a standard Phase I or similar general environmental site assessment ("ESA") of each of our Properties to identify potential sources of environmental contamination and assess environmental regulatory compliance. For a number of the Properties, the Phase I ESA either referenced a prior Phase II ESA obtained on such Property or prompted us to have a Phase II ESA of such Property conducted. A Phase II ESA generally involves invasive procedures, such as soil sampling and testing or the installation and monitoring of groundwater wells. While the ESAs conducted have identified environmental contamination on a few of the Properties, they have not revealed any environmental contamination, liability or compliance concern that we believe would have a material adverse effect on our cash flow or ability to make distributions to shareholders. It is possible that the existing ESAs relating to the Properties do not reveal all environmental contaminations, liabilities or compliance concerns which currently exist, and it is also possible that the cost of remediating identified contamination may exceed current estimates. In addition, future properties which we acquire may be subject to environmental conditions. * SOME POTENTIAL LOSSES ARE NOT COVERED BY INSURANCE. We carry comprehensive liability, fire, extended coverage and rental loss insurance on all of our Properties. We believe the policy specifications and insured limits of these policies are adequate and appropriate. There are, however, types of losses, such as lease and other contract claims that generally are not insured. Should an uninsured loss or a loss in excess of insured limits occur, we could lose all or a portion of the capital we have invested in a property, as well as the anticipated future revenue from the property. In such an event, we might nevertheless remain obligated for any mortgage debt or other financial obligations related to the property. * WE DO NOT CONTROL THE MANAGEMENT COMPANY. While we own substantially all (95%) of the economic interest in the Management Company, to maintain our REIT qualification, certain of our executive officers indirectly hold 95% of the voting common stock of the Management Company. Therefore, we do not control the timing or amount of distributions by, or the management and operation of, the Management Company. As a result, decisions relating to the payment of distributions by, and the business policies and operations of, the Management Company could be adverse to our interests. -12- * WE ARE DEPENDENT UPON OUR KEY PERSONNEL. We are dependent upon the efforts of our executive officers, particularly Anthony A. Nichols, Sr. and Gerard H. Sweeney. The loss of their services could have an adverse affect on our operations. Although we have employment agreements with Messrs. Nichols and Sweeney, such agreements do not restrict their ability to become employed by a competitor following the termination of their employment with us. * CERTAIN LIMITATIONS EXIST WITH RESPECT TO A THIRD PARTY'S ABILITY TO ACQUIRE US OR EFFECTUATE A CHANGE IN CONTROL. Limitations imposed to protect our REIT status. In order to protect us against loss of our REIT status, our Declaration of Trust limits any shareholder from owning more than 9.8% in value of our outstanding shares, subject to certain exceptions. The ownership limit may have the effect of precluding acquisition of control of the Company. If anyone acquires shares in excess of the ownership limit, we may: o consider the transfer to be null and void; o not reflect the transaction on our books; o institute legal action to stop the transaction; o not pay dividends or other distributions with respect to those shares; o not recognize any voting rights for those shares; and o consider the shares held in trust for the benefit of a person to whom such shares may be transferred. Limitation due to our ability to issue preferred shares. Our Declaration of Trust authorizes the Board of Trustees to issue preferred shares. The Board of Trustees may establish the preferences and rights of any preferred shares issued which could have the effect of delaying or preventing someone from taking control of us, even if a change in control were in our shareholders' best interests. Limitations imposed by the Business Combination Law. The Maryland General Corporation Law, as applicable to Maryland real estate investment trusts, establishes special restrictions against "business combinations" between a Maryland real estate investment trust and "interested shareholders" or their affiliates unless an exemption is applicable. An interested shareholder includes a person who beneficially owns, and an affiliate or associate of the trust who, at any time within the two-year period prior to the date in question, was the beneficial owner of, ten percent or more of the voting power of our then-outstanding voting shares. Among other things, the law prohibits (for a period of five years) a merger and certain other transactions between the trust and an interested shareholder unless the Board of Trustees approved the transaction before the party became an interested shareholder. The five-year period runs from the most recent date on which the interested shareholder became an interested shareholder. Thereafter, any such business combination must be recommended by the Board of Trustees and approved by two super-majority shareholder votes unless, among other conditions, the trust's common shareholders receive a minimum price for their shares and the consideration is received in cash or in the same form as previously paid by the interested shareholder for its shares or unless the Board of Trustees approved the transaction before the party in question became an interested shareholder. The business combination statute could have the effect of discouraging offers to acquire us and of increasing the difficulty of consummating any such offers, even if our acquisition would be in our shareholders' best interests. -13- We have exempted any business combination involving Safeguard Scientifics, Inc., the Commonwealth of Pennsylvania State Employees' Retirement System and a voting trust established for its benefit, Morgan Stanley Asset Management Inc. and two funds managed by it, Lazard Freres Real Estate Investors, L.L.C., Five Arrows Realty Securities III L.L.C., Gerard H. Sweeney (the Company's President and Chief Executive Officer) and any of their respective affiliates or associates. * THE ISSUANCE OF PREFERRED SHARES MAY ADVERSELY AFFECT THE RIGHTS OF HOLDERS OF COMMON SHARES. Because the Board of Trustees has the power to establish the preferences and rights of each class or series of Preferred Shares, it may afford the holders in any series or class of preferred shares preferences, distributions, powers and rights, voting or otherwise, senior to the rights of holders of Common Shares. ITEM 2. PROPERTIES PROPERTIES As of December 31, 1999, the Company owned 199 office properties, 51 industrial facilities and one mixed-use property that contained an aggregate of approximately 16.6 million net rentable square feet. As of December 31, 1999, 191 of the 251 Properties (approximately 74.0% of the Company's portfolio based on net rentable square feet) were located in the office and industrial markets in and surrounding Philadelphia, Pennsylvania (includes Berks, Bucks, Chester, Cumberland, Dauphin, Delaware, Lehigh, Montgomery, Northampton and Philadelphia counties and Wilmington, Delaware) and Southern and Central New Jersey (includes Atlantic, Burlington, Camden and Mercer counties). The balance of the Properties were located in Northern New Jersey and Long Island, New York; and Northern and Richmond, Virginia (approximately 9.9% and 16.1%, respectively, of the Company's portfolio based on net rentable square feet). As of December 31, 1999, the Properties (excluding two Properties under development or redevelopment) were approximately 94.1% leased to 1,318 tenants and had an average age of approximately 16.0 years. The office Properties are primarily one to three story suburban office buildings containing an average of approximately 66,000 net rentable square feet. The industrial Properties accommodate a variety of tenant uses including light manufacturing, assembly, distribution, and warehousing. The Company carries comprehensive liability, fire, extended coverage and rental loss insurance covering all of the Properties, with policy specifications and insured limits which the Company believes are adequate. The following table sets forth certain information with respect to the Properties at December 31, 1999: -14-
Total Base Rent Average for the Annualized Percentage Twelve Rental Tenants Leasing 10% Leased Months Rate or More of Rentable Net as of Ended as of Square Footage per Rentable December December December Property as of Year Square 31, 31, 31, December 31, 1999 and Property Name Location State Built Feet 1999 (a) 1999 (b) 1999 (c) Lease Expiration Date (000's) - - ------------------------------------------------------------------------------------------------------------------------------------ 600 East Main Street Richmond VA 1986 424,369 84.7% 7,032 24.43 Bell Atlantic VA (19%) - 11/03 GSA Department of Taxation (22%) - 11/01 Bank of America (19%) - 6/00 100-300 Gundy Drive Reading PA 1970 417,301 100.0% 6,978 15.15 Parsons Corporation (42%) - 3/05 Penske Truck Leasing (35%) - 12/05 301 North Walnut Street Wilmington DE 1989 321,511 100.0% 5,522 17.36 First USA Bank (93%) - 12/15 201 North Walnut Street Wilmington DE 1988 311,286 100.0% 4,975 19.60 First USA Bank (91%) - 1/17 50 East State Street Trenton NJ 1989 305,884 92.8% 5,095 18.05 State of N.J. Dept. of Human Services (73%) - 9/09 Park 80 West Plaza II Saddlebrook NJ 1988 264,265 95.5% 5,576 24.47 Vornado Realty Trust (12%) - 4/02 Lexington Management Corp. (10%) - 8/03 Park 80 West Plaza I Saddlebrook NJ 1970 222,800 96.5% 4,501 23.29 New York Life Insurance Co. (12%) - 10/04 300 Arboretum Place Richmond VA 1988 209,444 93.6% 3,319 15.54 The Travelers (37%) - 1/04 United Health Care (14%) - 12/04 1900 Gallows Road Vienna VA 1982 203,084 100.0% 4,268 20.73 GRC International (82%) - 5/09 National Captioning (18%) - 9/04 1009 Lenox Drive Lawrenceville NJ 1989 179,585 95.9% 3,834 23.17 N.J. State Medical Underwriters (16%) - 5/01 Uniform Code Council, Inc. (11%) - 11/08 10000 Midlantic Drive Mt. Laurel NJ 1990 177,148 96.3% 2,738 21.83 QAD, Inc. (37%) - 8/01 Deutsche Financial Services (13%) - 1/00 300 Corporate Center Drive Camp Hill PA 1989 175,280 100.0% 3,396 18.31 Keystone Health Plan Center (70%) - 8/04 Highmark Incorporated (30%) - 8/04 111 Presidential Boulevard Bala Cynwyd PA 1997 172,798 100.0% 4,683 25.38 American Business Financial (52%) - 1/03 & 7/03 1880 Campus Commons Drive Reston VA 1985 172,448 100.0% 2,285 15.63 Bell Atlantic Video Systems (100%) - 4/01 Philadelphia Marine Center (f) Philadelphia PA Various 168,650 100.0% 1,175 3.48 Dave & Busters of Pennsylvania, Inc. (88%) - 2/14 Meiji-En Restaurant (11%) - 6/03 33 West State Street Trenton NJ 1988 167,774 100.0% 2,983 23.99 The State of New Jersey (96%) - 7/00 & 8/08 Main Street - Plaza 1000 Voorhees NJ 1988 162,395 84.1% 2,821 20.19 Credit Lenders (13%) - 12/01 Morgan Stanley Dean Witter (11%) - 9/04 751-761 Fifth Avenue King Of Prussia PA 1967 158,000 100.0% 490 3.10 Lockheed Martin Corp. (100%) - 9/02 12015 Lee Jackson Memorial Highway Fairfax VA 1985 150,046 100.0% 3,714 21.69 Mantech (35%) - 5/07 Logicon Geodynamic (13%) - 8/07 Aerotek (13%) - 7/03 Walcoff & Associates (13%) - 5/00 55 U.S. Avenue Gibbsboro NJ 1982 138,982 100.0% 1,070 6.63 Micro Warehouse, Inc. (100%) - 8/02 100 Katchel Blvd Reading PA 1970 133,424 100.0% 2,622 20.00 Penske Truck Leasing (58%) - 12/05 2511 Brittons Hill Road Richmond VA 1987 132,103 100.0% 593 4.24 Colortree, Inc. (56%) - 7/07 Circuit City Stores, Inc. (44%) - 6/00 640 Freedom Business Center(f) King Of Prussia PA 1991 132,000 100.0% 2,145 18.74 General Electric Company (100%) - 9/01 52 Swedesford Square East Whiteland Twp. PA 1988 131,017 100.0% 2,787 20.20 Bell Atlantic (65%) - 8/04 The Vanguard Group (35%) - 7/06 105 / 140 Terry Drive Newtown PA 1982 128,666 87.6% 1,266 13.53 Parmaceutical Marketing Services,Inc. (13%) - 10/00 Media Management Services, Inc. (10%) - 8/04 Magellan Behavioral Health (10%) - 12/04 11781 Lee Jackson Memorial Highway Fairfax VA 1985 128,353 100.0% 2,229 16.56 Versatility (31%) - 12/04 Logicon Geodynamic (27%) - 9/00 & 6/07 7535 Windsor Drive Allentown PA 1988 128,114 100.0% 1,954 15.17 Air Products (47%) - 11/01 Cadence Design Systems, Inc. (16%) - 11/01 & 12/03 Rosenbluth International (14%) - 4/04 2100-2116 West Laburnam Avenue Richmond VA 1976 127,092 84.1% 1,642 15.30 Chesapeake Packaging Corp. (15%) -12/00 1760 Market Street Philadelphia PA 1981 123,689 95.8% 2,314 20.24 1957 Westmoreland Street Richmond VA 1975 121,815 100.0% 531 4.00 Capital One Bank (100%) - 2/06 457 Haddonfield Road Cherry Hill NJ 1990 121,785 63.4% 1,387 21.72 Montgomery McCracken (12%) - 2/05 Dilworth, Paxson (10%) - 5/04 2000 Midlantic Drive Mt. Laurel NJ 1989 121,658 100.0% 1,664 19.01 Lockheed Martin Corporation (47%) - 5/02, 6/02,10/04 Computer Associates International (26%) - 12/02 Telesciences, Inc. (13%) - 4/08 Moore Business Forms (12%) - 4/00 700 East Gate Drive Mt. Laurel NJ 1984 118,899 88.9% 2,149 17.43 Copelco (50%) - 3/05 LMC Properties (14%) - 6/00 HBO & Company (13%) - 8/04 4667 Somerton Road(d) Trevose PA 1974 118,000 100.0% 2,195 5.27 BVI Industries, Inc. (34%) - 12/00 & 12/03 American Home Patient, Inc. (17%) - 10/02 Brownell Electro, Inc. (14%) - 5/00 Town & Country Van Lines, Inc. (14%) - 1/03 A.P. Green Refractories Co. (13%) - 12/01
Total Base Rent Average for the Annualized Percentage Twelve Rental Tenants Leasing 10% Leased Months Rate or More of Rentable Net as of Ended as of Square Footage per Rentable December December December Property as of Year Square 31, 31, 31, December 31, 1999 and Property Name Location State Built Feet 1999 (a) 1999 (b) 1999 (c) Lease Expiration Date (000's) - - ------------------------------------------------------------------------------------------------------------------------------------ 7130 Ambassador Drive Allentown PA 1991 114,049 100.0% 249 5.20 Dispensing Containers Corporation (100%) - 9/04 501 Office Fort Center Drive Washington PA 1974 112,729 85.7% 1,341 18.65 7350 Tilghman Street Allentown PA 1987 111,500 100.0% 1,857 16.58 The Hartford Group (100%) - 12/04 & 12/07 993 Lenox Drive Lawrenceville NJ 1985 111,137 97.8% 2,164 21.80 Stark & Stark, Inc. (57%) - 8/04 Office Concierge, Inc. (18%) - 4/04 Navigant Consulting (12%) - 6/00 50 Swedesford Square East Whiteland Twp. PA 1986 109,800 100.0% 1,925 15.81 Decision One Corporation (100%) - 12/05 300 Berwyn Park Berwyn PA 1989 107,919 96.9% 2,006 21.86 Delaware Valley Financial (68%) - 3/04 1111 Old Eagle School Road Valley Forge PA 1962 107,000 100.0% 1,017 9.50 PECO (100%) - 6/00 640-660 Allendale King Of Road Prussia PA 1962 107,000 100.0% 552 6.53 Kendall Company (100%) - 3/00 1000 Howard Boulevard Mt. Laurel NJ 1988 105,312 95.5% 2,165 21.12 Conrail (66%) - 6/05 Lincoln Technical Institute (25%) - 11/09 4550 New Linden Hill Road Wilmington DE 1974 104,985 48.0% 979 15.96 The Whitaker Corporation (23%) - 8/02 One Righter Parkway(f) Talleyville DE 1989 104,828 100.0% 2,278 20.26 Kimberly Clark (89%) - 12/05 Zeneca, Inc. (11%) -12/05 920 Harvest Drive Blue Bell PA 1990 104,505 100.0% 1,704 16.61 Aetna Life Insurance (100%) - 6/02 500 Office Center Fort Drive Washington PA 1974 101,139 92.0% 1,507 20.25 Information Resources, Inc. (32%) - 1/06 Gateway Funding, Inc. (13%) - 12/03 Access Services, Inc. (10%) - 8/03 7450 Tilghman Street Allentown PA 1986 100,000 78.8% 1,327 16.56 The Hartford Group (67%) - 12/07 Paychex, Inc. (10%) - 9/06 One South Union Place Cherry Hill NJ 1982 99,573 100.0% 1,383 13.56 Vlasic Foods International, Inc. (100%) - 7/08 3 Paragon Drive Montvale NJ 1988 98,124 100.0% 1,793 22.90 Mercedes Benz USA, Inc. (68%) - 8/04 International Paper Company (32%) - 4/09 997 Lenox Drive Lawrenceville NJ 1987 97,277 92.5% 1,895 21.13 Fox,Rothschild,O'Brien & Frankel (34%) - 6/03 Dechert Price & Rhoads (25%) - 11/03 Smith Barney, Inc. (10%) - 9/05 1000 Atrium Way Mt. Laurel NJ 1989 97,158 89.1% 1,721 18.63 Navistar Financial (18%) - 12/04 IBM (18%) - 3/01 Corporate Dynamics (14%) - 2/04 Janney, Montgomery, Scott (14%) - 6/05 1120 Executive Boulevard Marlton NJ 1987 95,122 99.4% 1,567 21.52 Computer Sciences Corporation (63%) - 5/02 Fleercorp (19%) - 4/03 500 North Gulph Road King Of Prussia PA 1979 93,082 93.3% 1,634 19.20 Transition Software (16%) - 9/00 Nason Cullen Group (14%) - 8/01 & 8/06 Strohl Systems (12%) - 03/00 Ford Motor Credit Corp. (10%) - 10/04 55 Ames Court Plainview NY 1961 90,000 100.0% 1,112 12.69 Berman Blake Associates (100%) - 2/03 630 Freedom King Of Business Center(f) Prussia PA 1989 86,598 77.8% 1,538 22.13 HQ King of Prussia, Inc. (17%) - 7/04 620 Freedom King Of Business Center(f) Prussia PA 1986 86,559 100.0% 1,885 25.60 Reliance Insurance Company (80%) - 10/02 Sun Microsystems, Inc. (18%) - 2/01 2201-2245 Tomlynn Street Richmond VA 1989 85,860 96.9% 524 7.54 CMS Automation (24%) - 1/04 Information Integration (27%) - 11/06 Micro View (13%) -3/01 Leonard Fishman & Son, Inc. (13%) - 4/04 15000 Midlantic Drive Mt. Laurel NJ 1991 84,056 100.0% 847 18.22 New Jersey Bell Telephone (89%) - 7/06 Gallagher Bassett Services, Inc. (11%) - 11/02 3331 Street Road - Greenwood Square Bensalem PA 1986 82,641 89.7% 1,429 18.53 Stelex, Inc. (14%) - 5/04 U.S. Wats, Inc. (13%) - 8/01 245 Old Country Road Melville NY 1978 82,308 100.0% 631 6.95 Citicorp Custom Credit, Inc. (100%) - 1/06 2595 Metropolitan Drive(d) Trevose PA 1981 80,000 100.0% -- 7.44 Northtec LLC (100 %) - 6/06 One Progress Avenue Horsham PA 1986 79,204 100.0% 978 9.80 Reed Technology (100%) - 6/11 323 Norristown Road Lower Gwyned PA 1988 79,083 100.0% 1,186 17.34 Bisys Plan Services (62%) - 7/02 Siemans Energy (20%) - 1/01 180 Wheeler Court Langhorne PA 1975 78,213 100.0% 276 4.60 Lainiere De Picardie, Inc. (59%) - 12/01 West Coast Entertainment Corp. (41%) - 8/00 1007 Laurel Oak Road Voorhees NJ 1996 78,205 100.0% 621 7.94 R.F. Power Products, Inc. (100%) - 10/06 1060 First Avenue(f) King Of Prussia PA 1987 77,718 100.0% 1,538 19.87 Finova Capital (30%) - 1/04 Centeon Management (27%) - 10/02 Apogee, Inc. (24%) - 8/00 Artemis Management (11%) - 5/01 741 First Avenue King Of Prussia PA 1966 77,184 100.0% 540 9.00 Tozour - Trane, Incorporated (100%) - 4/05
Total Base Rent Average for the Annualized Percentage Twelve Rental Tenants Leasing 10% Leased Months Rate or More of Rentable Net as of Ended as of Square Footage per Rentable December December December Property as of Year Square 31, 31, 31, December 31, 1999 and Property Name Location State Built Feet 1999 (a) 1999 (b) 1999 (c) Lease Expiration Date (000's) - - ------------------------------------------------------------------------------------------------------------------------------------ 1040 First Avenue(f) King Of Prussia PA 1985 75,488 100.0% 1,576 22.96 Cortech Consulting (47%) - 9/01 and 6/04 First USA, Inc. (26%) - 6/05 Centeon Management (15%) - 1/03 125 Jericho Turnpike Jericho NY 1969 75,308 89.0% 849 19.65 Getty Petroleum Corporation (42%) - 1/02 200 Berwyn Park Berwyn PA 1987 75,015 93.9% 1,522 24.07 Devon Direct Marketing & Advertising (52%) - 12/01 and 4/02 VHA East Corporation (12%) - 11/04 Bucks Consultants (12%) - 8/01 1020 First Avenue(f) King Of Prussia PA 1984 74,556 100.0% 1,399 17.87 Centeon Management (100%) - 10/02 1000 First Avenue(f) King Of Prussia PA 1980 74,139 100.0% 1,658 23.29 First USA, Inc. (27%) - 4/05 Elf Atochem (22%) - 3/06 Centeon Mangement (21%) - 1/03 Finova Capital (16%) - 1/04 160 - 180 West Germantown Pike East Norriton PA 1982 73,750 94.0% 1,150 16.48 Icon Clinical Research (33%) - 8/02 9011 Arboretum Parkway Richmond VA 1991 73,195 98.2% 1,247 16.70 Elliptus Software (30%) - 3/00 & 8/03 Primeco Personal Communications (24%) - 7/05 91 North Industry Court Deer Park NY 1965 71,000 100.0% 304 5.36 Windowrama Warehousing, Inc. (100%) - 1/03 2560 Metropolitan Drive Trevose PA 1983 70,000 99.9% -- 7.41 Picker International (48%) - 9/02 Delta Lighting Products, Inc. (19%) - 5/01 Nextel Communications (18%) - 5/03 Rentacom, Inc (15%) - 10/04 14 Campus Boulevard Newtown Square PA 1998 69,400 100.0% 1,244 21.26 Catholic Health East (37%) - 9/08 Brandywine Realty Trust (29%) - 12/03 Naviant Technology Solutions, Inc. (28%) - 9/08 Three Greentree Centre Marlton NJ 1984 69,101 93.8% 1,002 18.16 Parker McCay (43%) - 5/01 Surety Title Company (19%) - 12/03 National City Mortgage Company (12%) - 7/00 Olde Discount (12%) - 3/00 1105 Berkshire Boulevard Reading PA 1987 68,985 93.8% 914 14.01 The Travelers Indemnity Company (68%) - 2/02 Spicer Systems (14%) - 11/01 King & Harvard Cherry Hill NJ 1974 67,397 63.3% 264 18.38 U.S. Government - Social Security (33%) - 2/10 UFCW Local 56, AFL-CIO (25%) - 11/09 N.J. Department of Law and Public Safety (23%) - 10/09 U.S. Government - Navy Audit (11%) - 7/01 9000 Midlantic Drive Mt. Laurel NJ 1989 67,299 100.0% 765 19.49 Automotive Rentals (100%) - 8/00 500 Enterprise Road Horsham PA 1990 66,751 100.0% 718 14.91 Conti Mortgage (81%) - 4/01 Pioneer Technologies (19%) - 10/00 6 East Clementon Road Gibbsboro NJ 1980 66,236 93.9% 1,057 16.51 West Jersey Healtrh Systems (30%) - 3/01 Insurance Marketing Services (18%) - 12/04 Equifax Credit Information Services (15%) - 12/02 Premium Bank (12%) - 9/00 104 Windsor Center Drive East Windsor NJ 1987 65,980 100.0% 1,139 18.58 I-STAT Corporation (57%) - 9/03 Green Tree Learning Centers, Inc. (21%) - 9/02 Evans East (22%) - 12/05 16 Campus Boulevard Newtown Square PA 1990 65,463 100.0% 700 15.56 Creative Financial (61%) - 5/06 Atlantic Credit Union (35%) - 1/06 925 Harvest Drive Blue Bell PA 1990 63,663 100.0% 1,164 17.98 Elliott, Reihner, Siedzikowski & Egan (35%) - 6/08 Flamm, Boroff & Bacine, P.C. (21%) - 7/05 100 Commerce Drive Newark DE 1989 63,378 100.0% 924 14.53 The Travelers Bank (76%) - 12/01 Blaze Systems Corporations (13%) - 9/00 610 Freedom Business King Of Center(f) Prussia PA 1985 62,734 100.0% 1,375 24.79 The Hartford Steam Boiler Co. (55%) - 8/00 UNUM Life Insurance Company (20%) - 7/02 Newbridge Networks, Incorporated (11%) - 12/01 1974 Sproul Road Broomall PA 1995 62,669 90.9% 950 16.10 Franklin Mint Credit Union (30%) - 5/02 Main Line Book Company (22%) - 3/03 Allan Coullautt Associates (20 %) - 2/03 TMR, Incorporated (11%) - 10/02 263 Old Country Road Mellevile NY 1999 62,500 100.0% 517 11.57 Ademco Distributing, Inc. (100%) - 2/09 4805 Lake Brooke Drive Glen Allen VA 1996 61,632 100.0% 1,041 16.70 Kemper Insurance (51%) - 10/10 Target (34%) - 2/03 J. Sargeant Reynolds (11%) - 9/01 2200 Cabot Boulevard Langhorne PA 1979 61,543 100.0% 301 7.38 Nobel Printing Ink (44%) - 8/05 Hussman Corporation (34%) - 3/00 McCaffrey Management (22%) - 8/00 426 Lancaster Avenue Devon PA 1990 61,102 100.0% 1,089 18.38 GE Transport International Pool (100%) - 9/03 701 East Gate Drive Mt. Laurel NJ 1986 60,711 99.2% 1,085 19.35 Lockheed Martin Corporation (57%) - 4/02 Digital Equipment (16%) - 6/00 American International (11%) - 1/00 3329 Street Road - Greenwood Square Bensalem PA 1985 60,642 100.0% 1,067 17.74 FPA Corporation (27%) - 12/01 Orbital Engineering (12%) - 2/01 Model Consulting, Inc. (11%) - 7/03 Prudential Insurance Company (11%) - 6/02 321 Norristown Road Lower Gwyned PA 1988 60,011 98.0% 1,186 17.96 Navisys (29%) - 12/02 Bisys Plan Services (28%) - 7/02 Bradford White Corporation (19%) - 12/01
Total Base Rent Average for the Annualized Percentage Twelve Rental Tenants Leasing 10% Leased Months Rate or More of Rentable Net as of Ended as of Square Footage per Rentable December December December Property as of Year Square 31, 31, 31, December 31, 1999 and Property Name Location State Built Feet 1999 (a) 1999 (b) 1999 (c) Lease Expiration Date (000's) - - ------------------------------------------------------------------------------------------------------------------------------------ 200 Corporate Center Drive Camp Hill PA 1989 60,000 100.0% 1,110 18.54 Highmark, Incorporated (100%) - 5/01 2575 Metropolitan Drive Trevose PA 1981 60,000 100.0% -- 5.27 Northtec LLC (100%) - 6/06 4000/5000 West Lincoln Drive Marlton NJ 1982 59,891 89.4% 768 14.57 Marconi Systems (18%) - 5/01 1000/2000 West Lincoln Drive Marlton NJ 1982 59,751 90.5% 757 14.28 Kaytes - Cooperman (10%) - 3/00 & 6/01 Occupational Training Center (10%) - 7/02 308 Harper Drive Mt. Laurel NJ 1976 59,500 100.0% 1,204 19.42 Harleysville Insurance Company (70%) - 4/03 Cisco Systems (25%) - 7/03 1000 Axinn Avenue Garden City NY 1965 59,000 100.0% 287 4.86 Fortunoff Fine Jewelry & Silverware, Inc. (100%) - 1/02 309 Fellowship Drive Mt. Laurel NJ 1982 58,408 94.4% 909 18.75 Morgan Stanley Dean Witter (20%) - 12/09 HQ Mount Laurel, Inc. (19%) - 4/08 OSI Collection (17%) - 7/01 PSE & G (13%) - 7/00 Merchants Mutual Insurance (12%) - 6/01 9100 Arboretum Parkway Richmond VA 1988 58,167 96.6% 969 16.54 New York Life Insurance Co. (15%) - 3/04 Columbia HCA (13%) - 6/01 Reliance Insurance Company (11%) - 2/00 835 New Durham Road Edison NJ 1974 58,095 100.0% 324 5.33 Western Union International, Inc. (100%) - 2/05 300 Welsh Road Horsham PA 1980 57,792 100.0% 998 18.38 Digital Cable Radio (31%) - 9/03 American Meter Company - (30%) - 7/04 A.G. Edwards & Sons, Inc. (14%) - 12/03 Abington OB/GYN (11%) - 10/01 100 Berwyn Park Berwyn PA 1986 57,730 100.0% 1,166 27.09 Shared Medical Systems (49%) - 3/02 & 3/04 Funds Associates, Ltd. (29%) - 10/02 LCOR, Inc. (13%) - 3/04 305 Fellowship Drive Mt. Laurel NJ 1980 56,824 28.6% 815 17.58 Paychex (24%) - 4/00 4364 South Alston Avenue Durham NC 1985 56,601 100.0% 1,056 18.54 Cato Research (69%) - 7/01 Sandler & Recht (25%) - 4/01 2812 Emerywood Parkway Henrico VA 1980 56,076 100.0% 552 10.43 Charter One (100%) - 1/03 Two Greentree Centre Marlton NJ 1983 56,075 100.0% 1,174 19.42 Merrill, Lynch, Pierce, Fenner (28%) - 11/08 IBS Interactive (16%) - 12/03 Chubb Institute (10%) - 12/00 One Greentree Centre Marlton NJ 1982 55,838 80.4% 952 18.89 American Executive Services (30%) - 1/06 Temple University (18%) - 12/02 8000 Lincoln Drive Marlton NJ 1997 54,923 100.0% 920 18.89 Computer Sciences Corporation (67%) - 11/01 Blue Cross (33%) - 5/07 307 Fellowship Drive Mt. Laurel NJ 1981 54,485 99.7% 858 18.94 PRC, Incorporated (10%) - 12/00 303 Fellowship Drive Mt. Laurel NJ 1979 53,848 86.6% 665 15.59 Equiva Services (17%) - 12/01 The Prudential Insurance Company (28%) - 2/00 & 5/04 Larami / Hasbro (22%) - 12/99 Metro Commercial (15%) - 2/05 2010 Cabot Boulevard Langhorne PA 1985 52,831 100.0% 393 9.64 Computer Hardware Maintenance (56%) - 1/03 DiMark, Inc. (33%) - 9/02 Digital Descriptor Systems (11%) - 6/00 680 Allendale Road King Of Prussia PA 1962 52,528 100.0% 375 11.09 Immunization Products, Ltd. (100%) - 10/11 2240/50 Butler Pike Plymouth Meeting PA 1984 52,229 67.3% 672 19.02 First Union Bank (58%) - 4/06 650 Park Avenue(e) King Of Prussia PA 1968 51,711 66.9% 169 16.10 IBAH, Inc. (65%) - 7/00 1155 Business Center Drive Horsham PA 1990 51,388 100.0% 717 19.09 IMS (84%) - 3/06 Motorola Products (14%) - 2/00 25 Phillips Parkway Montvale NJ 1988 51,155 100.0% 1,190 25.85 Volvo North America Corporation (100%) - 3/01 486 Thomas Jones Way Exton PA 1990 51,072 100.0% 703 18.39 First American Real Estate Tax Service (24%) - 1/04 Toshiba American Medical Systems (13%) - 6/02 Cape Environmental (12%) - 7/02 ICI America's, Inc. (12%) - 11/00 J. Reckner Associates, Inc. (11%) - 9/03 2 Foster Avenue Gibbsboro NJ 1974 50,761 94.6% 198 3.99 Harbor Laundry, Inc. (95%) - 8/00 855 Springdale Drive Exton PA 1986 50,750 100.0% 761 15.25 Environmental Resources (100%) - 7/01 800 Business Center Drive Horsham PA 1986 50,609 100.0% 605 15.30 Metpath (73%) - 1/12 KWS & P (18%) - 4/02 2277 Dabney Road Richmond VA 1986 50,400 100.0% 267 5.30 KPA, Inc. (33%) - 2/01 Cort Furniture Rental (25%) - 3/00 West Home Health (25%) - 7/01 Goodall Rubber Company (17%) - 5/01 875 First Avenue(e) King Of Prussia PA 1966 50,000 0.0% 102 0.00 630 Clark Avenue King Of Prussia PA 1960 50,000 100.0% 301 5.78 Metro Fiber Systems of Philadelphia (100%) - 9/12
Total Base Rent Average for the Annualized Percentage Twelve Rental Tenants Leasing 10% Leased Months Rate or More of Rentable Net as of Ended as of Square Footage per Rentable December December December Property as of Year Square 31, 31, 31, December 31, 1999 and Property Name Location State Built Feet 1999 (a) 1999 (b) 1999 (c) Lease Expiration Date (000's) - - ------------------------------------------------------------------------------------------------------------------------------------ 620 Allendale Road King Of Prussia PA 1961 50,000 100.0% 430 11.97 Executone Information Systems, Inc. (50 %) - 9/01 Proconex, Inc. (50%) - 6/00 44 National Road Edison NJ 1967 50,000 100.0% 180 3.62 Sawdust Pencil Company (100%) - 5/00 102 Chestnut Ridge Road Montvale NJ 1979 49,671 12.1% 883 23.56 Geotek Communications, Inc. (12%) - 2/07 9200 Arboretum Parkway Richmond VA 1988 49,542 100.0% 596 12.86 Commonwealth Propane (29%) - 6/05 Chippenham / Johnston Willis (23%) - 7/00 Lanier Worldwide, Inc. (11%) - 1/00 Columbia Propane (10%) - 11/10 West End Orthopadic (10%) - 3/03 7150 Windsor Drive Allentown PA 1988 49,420 92.3% 393 12.29 Bell Atlantic PA (35%) - 10/04 ICT Group (20%) - 2/01 Interior Workplace Solutions (15%) - 10/99 Choice One Commumications (12%) - 11/04 Linden Optical (11%) - 3/01 837 New Durham Road Edison NJ 1977 48,200 100.0% 168 4.22 TLC Warehouse Corporation (50%) -11/01 Lex Associates, Inc. (50%) - 12/02 520 Virginia Drive Fort Washington PA 1987 48,122 100.0% 647 14.37 The Vandeveer Group (100%) - 8/00 9210 Arboretum Parkway Richmond VA 1988 47,943 100.0% 673 13.82 Alan Bradley Corporation (25%) - 3/00 U.S. Marine Corps (17%) - 6/01 Land America Financial Group (17%) - 1/00 Virginia Multispecialty Services (15%) - 3/03 Whiting Turner Contracting Co. (11%) - 12/00 11 Campus Boulevard Newtown Square PA 1998 47,700 100.0% 189 23.65 Department of Forestry (70%) - 10/09 Jobson Publishing (18%) - 10/06 456 Creamery Way Exton PA 1987 47,604 100.0% 355 7.70 Neutronics (100%) - 1/03 4000 Midlantic Drive Mt. Laurel NJ 1998 46,945 100.0% 909 18.44 Axiom (100%) - 4/08 6575 Snowdrift Road Allentown PA 1988 46,250 25.3% 250 7.48 Covance Pharmaceutical (25%) - 11/04 220 Commerce Drive Fort Washington PA 1985 46,094 92.4% 786 19.13 Temple University (25%) - 4/01 Ram Technologies (13%) - 3/04 Brandywine Realty Services (11%) - 6/02 Five Eves Drive Marlton NJ 1986 45,564 90.8% 434 16.03 Virtua Health (36%) - 11/06 Samaritan Hospice (25%) - 2/04 McCay Corporation (18%) - 10/00 2212-2224 Tomlynn Street Richmond VA 1985 45,353 100.0% 258 6.06 Carriage House (40%) - 5/03 Office Masters (12%) - 4/02 Alkat Electrical (11%) - 7/01 2221-2245 Dabney Road Richmond VA 1994 45,250 84.1% 312 6.72 Ademco Distribution (31%) - 7/04 Thulman Eastern (24%) - 6/02 Dal - Tile Corporation (16%) - 9/04 DHL Airways (14%) - 8/00 2201 Dabney Street Richmond VA 1962 45,000 0.0% (7) 0.00 500 Scarborough Drive Egg Harbor Twp.NJ 1987 44,750 87.0% 784 20.76 The Mitre Corporation (19%) - 12/04 Raytheon Services (16%) - 9/02 NYMA, Inc. (13%) - 7/00 501 Scarborough Drive Egg Harbor Twp.NJ 1987 44,750 100.0% 832 18.70 TMA (34%) - 3/02 Computer Sciences Corporation (34%) - 10/00 Lockheed Martin Corporation (33%) - 1/01 7248 Tilghman Street Allentown PA 1987 43,782 96.0% 440 16.23 Ohio Casualty (45%) - 7/01 IDS Financial Services (28%) - 7/01 9000 West Lincoln Drive Marlton NJ 1983 43,719 94.2% 582 15.28 Counseling Program (18%) - 1/00 110 Summit Drive Exton PA 1985 43,660 100.0% 264 12.52 Pall Trincor (30%) - 3/02 DGH Technology (12%) - 9/04 336 South Service Road Melville NY 1965 43,600 100.0% 381 8.32 Nikon, Inc. (100%) - 4/01 2535 Metropolitan Drive(d) Trevose PA 1974 42,000 100.0% -- 6.27 Larson - Juhl (100%) - 10/03 2251 Dabney Road Richmond VA 1983 42,000 76.0% 193 4.78 Wynne Guild (30%) - 1/01 Cavalier Flooring Systems, Inc. (20%) - 4/03 Dominion Restoration (10%) - 7/00 Unit Instruments (10%) - 7/02 2169-2279 Tomlynn Street Richmond VA 1985 41,550 100.0% 229 5.95 United Power Corporation (30%) - 4/02 Kathleen's Bake Shop (29%) - 4/04 Dillard Paper Company (20%) - 11/01 KCI Therapeutics (10%) - 6/00 Scherr's Refrigeration (10%) - 5/03 Main Street - Piazza Voorhees NJ 1990 41,408 100.0% 567 13.92 Cooper Hospital (41%) - 2/01 & 7/01 Lincoln Investments (20%) - 8/03 Chamber of Commerce (10%) - 8/01 Southern N.J. Medical (10%) - 3/00 20 East Clementon Road Gibbsboro NJ 1986 40,755 100.0% 715 16.56 R.Randle Scarborough, Inc. (21%) - 12/99 Serco, Inc. (15%) - 12/05 Feinberg and Associates (15%) - 1/05 Medaquist Receivables Mgmt Co. (14%) - 4/03 The State of New Jersey (13%) - 9/07 258 Chapman Road Newark DE 1983 40,667 86.0% 531 14.49 Conectiv Solutions (49%) - 4/00 Mia Shoes, Inc. (23%) - 6/04
Total Base Rent Average for the Annualized Percentage Twelve Rental Tenants Leasing 10% Leased Months Rate or More of Rentable Net as of Ended as of Square Footage per Rentable December December December Property as of Year Square 31, 31, 31, December 31, 1999 and Property Name Location State Built Feet 1999 (a) 1999 (b) 1999 (c) Lease Expiration Date (000's) - - ------------------------------------------------------------------------------------------------------------------------------------ 1000 East Lincoln Drive Marlton NJ 1981 40,600 75.0% 144 5.49 Packquisition Corporation (75%) - 2/01 7310 Tilghman Street Allentown PA 1985 40,000 76.6% 303 14.21 H. Wilden & Associates (21%) - 5/09 Lucent Technologies (15%) - 7/03 PECO Hyperion Telecommunications (14%) - 12/03 The Donnelley Directory (10%) - 6/02 2510 Metropolitan Drive(d) Trevose PA 1981 40,000 100.0% -- 5.61 Philadelphia Choice Television (100%) - 6/01 2000 Cabot Boulevard Langhorne PA 1985 39,969 100.0% 298 9.37 Ecogen, Inc. (37%) - 3/00 Rom - Tec, Inc. (28%) - 9/02 CSX Transportation (23%) - 5/04 AGIE, Ltd. (13%) - 1/01 150 Corporate Center Drive Camp Hill PA 1987 39,401 73.6% 607 15.74 Highmark, Incorporated (37%) - 12/00 The Prudential Insurance Company (15%) - 7/00 600 Park Avenue King Of Prussia PA 1964 39,000 100.0% 470 13.73 Smithkline Beecham Corporation (100%) - 5/02 1336 Enterprise Drive West Goshen PA 1989 38,470 100.0% 463 14.16 CFM Technologies, Inc. (100%) - 11/00 755 Business Center Drive Horsham PA 1998 38,050 100.0% 578 19.62 Scirex Corporation (100%) - 12/08 Two Eves Drive Marlton NJ 1987 37,532 100.0% 448 17.87 Basco Associates (24%) - 2/01 Acceptance Risk Management (18%) - 4/00 1255 Broad Street Bloomfield NJ 1981 37,478 100.0% 572 19.97 Charles M. Cummins & Elliot Shack (75%) - 2/06 Menno Travel Services (14%) - 10/03 18 Campus Boulevard Newtown Square PA 1990 37,374 100.0% 525 19.73 Emax Solution Partners (59%) - 6/03 Marshall Dennehey (21%) - 9/06 Rosenbluth Travel (20%) - 8/03 2512 Metropolitan Drive(d) Trevose PA 1981 37,000 100.0% -- 6.39 Bucks County Midweek, Inc. (40%) - 6/03 American Bank Note Company (30%) - 12/04 Philadelphia Newspapers, Inc. (17%) - 10/00 Stolarik Donohue Associates, Inc. (14%) - 3/00 3000 West Lincoln Drive Marlton NJ 1982 36,070 88.4% 415 14.33 Abo, Uris & Allenburger (20%) - 1/02 645 Stewart Avenue Garden City NY 1962 35,552 100.0% 226 9.85 Hearst Business Communications (100%) - 11/03 3000 Cabot Boulevard Langhorne PA 1986 34,693 100.0% 645 20.54 Geraghty & Miller (27%) - 4/03 Integrated Data Solutions (15%) - 9/04 Luigi Bormioli Company (15%) - 7/04 2256 Dabney Road Richmond VA 1982 33,560 87.5% 160 5.32 Daycon Products (25%) - 5/04 Visual Aids (25%) - 5/01 Ellis Flooring (23%) - 2/07 Durfee Thurber (15%) - 5/00 2246 Dabney Road Richmond VA 1987 33,271 100.0% 275 7.46 McKinney & Company (20%) - 12/99 Suitable for Framing (15%) - 8/01 Xerox Corporation (15%) - 6/02 Canning Corporation (14%) - 3/02 2244 Dabney Road Richmond VA 1993 33,050 100.0% 302 8.74 Pharmaco LSR International, Inc. (100%) - 8/04 7010 Snowdrift Way Allentown PA 1991 33,029 100.0% 401 15.12 Neighbor Care (61%) - 11/02 Anderson BDG Corporation (39%) - 6/03 304 Harper Drive Mt. Laurel NJ 1975 32,978 100.0% 489 16.96 Semcor (20%) - 12/99 Legg Mason Wood Walker (18%) - 6/02 Panzano & Partners (14%) - 12/04 Tab Products (10%) - 6/02 256 Chapman Road Newark DE 1983 32,746 86.1% 383 14.56 Delaware Department of Admin. Services (21%) - 10/04 Key Enterprises (17%) - 3/05 On-Board Chemical (11%) - 5/00 2260 Butler Pike Plymouth Meeting PA 1984 31,892 62.4% 374 18.11 Ostroff, Fair & Company P.C. (34%) - 7/04 Thoroughbred Direct International (28%) - 5/01 Main Street - Promenade Voorhees NJ 1988 31,445 94.4% 372 14.76 Southern N.J. Medical (28%) - 3/00 Morgenstern (14%) - 5/04 168 Franklin Corner Drive Lawrenceville NJ 1976 30,998 47.9% 296 17.39 Metropolitan Life Insurance (18%) - 10/04 9211 Arboretum Parkway Richmond VA 1991 30,791 100.0% 407 13.15 Bell Industries (50 %) - 12/02 Triton Property Management (30%) 2/01 Jess Duboy Advertising (10%) - 2/02 B.F. Saul Mortgage Company (10%) - 3/01 700 Business Center Drive Horsham PA 1986 30,773 100.0% 472 17.59 Macro (50%) - 4/01 Arrow Electronics (34%) - 8/01 KWS & P (16%) - 4/02 262 Chapman Road Newark DE 1983 30,615 95.3% 482 12.91 On-Board Chemical (52%) - 5/00 120 West Germantown Pike Plymouth Meeting PA 1984 30,546 100.0% 442 18.48 Clair Odell Insurance Agency (82%) - 7/01 Kleinert's, Inc. (13%) - 10/01 2248 Dabney Road Richmond VA 1989 30,184 72.0% 218 8.22 A&J Telephone Systems (21%) - 1/03 Pharmaco, Inc. (14%) - 8/04 650 Dresher Road Horsham PA 1984 30,138 100.0% 369 11.75 GMAC (100%) - 5/03
Total Base Rent Average for the Annualized Percentage Twelve Rental Tenants Leasing 10% Leased Months Rate or More of Rentable Net as of Ended as of Square Footage per Rentable December December December Property as of Year Square 31, 31, 31, December 31, 1999 and Property Name Location State Built Feet 1999 (a) 1999 (b) 1999 (c) Lease Expiration Date (000's) - - ------------------------------------------------------------------------------------------------------------------------------------ 655 Business Center Drive Horsham PA 1997 29,849 100.0% 431 19.49 Letven, Diccicco & Battista, Inc. (54%) - 9/07 Paccar Financial Corporation (22%) - 9/02 Legg Mason Wood Walker (14%) - 5/04 2130-2146 Tomlynn Street Richmond VA 1988 29,700 100.0% 197 6.51 United Power Corporation (100%) - 4/02 630 Dresher Road Horsham PA 1987 29,680 100.0% 33 13.50 PNC Bank (100%) - 3/00 2260/70 Cabot Boulevard Langhorne PA 1984 29,638 100.0% 291 13.87 Sager Electrical (14%) - 10/02 Manufacturers Survey (13%) - 12/01 Terminix International (13%) - 11/02 Pronet Incorporated (10%) - 3/02 260 Chapman Road Newark DE 1983 29,018 84.3% 286 14.16 468 Thomas Jones Way Exton PA 1990 28,934 100.0% 405 17.96 Franciscan Health Systems (82%) - 6/00 American Day Treatment (18%) - 6/00 80 Skyline Drive Plainview NY 1961 28,822 45.7% 204 10.42 Kimberly Home Health Care (28%) - 2/03 Marketing Congress, Inc. (10%) - 6/02 2407 Park Drive Harrisburg PA 1985 28,285 100.0% 417 14.85 Barakos-Landino, Inc. (53%) - 10/00 AEGIS Security Insurance Company (47%) - 10/00 131 Jericho Turnpike Jericho NY 1967 27,783 100.0% 361 21.69 Katzman Weinstein Company (23%) - 11/04 120 Express Street Plainview NY 1962 27,729 100.0% 245 10.63 Tyz - All Plastics, Inc. (55%) - 11/08 Henderson & Bodwell (45%) - 9/02 Four B Eves Drive Marlton NJ 1987 27,011 83.8% 268 15.86 ISO Commercial Risk (67%) - 6/00 Global Industries, Inc. (17%) - 10/00 1150 Berkshire Boulevard Reading PA 1979 26,781 89.9% 378 15.69 Ervin Levin, D.D.S. (12%) - 4/07 Jessee L. Pleet, Esq. (10%) - 6/00 110 Voice Road Carle Place NY 1963 25,920 100.0% 145 8.10 Scales Air Compressor Corp. (100%) - 12/01 2405 Park Drive Harrisburg PA 1985 25,495 51.6% 306 16.33 Consolidated Rail Corporation (34%) - 2/05 R.H. Holsberg & Company (11%) - 8/02 United of Omaha Life Insurance Co. (10%) - 10/02 815 East Gate Drive Mt. Laurel NJ 1986 25,393 87.4% 279 14.38 Semcor (54%) - 3/04 Wyle Laboratories (33%) - 11/01 140 West Germantown Pike Plymouth Meeting PA 1984 25,357 100.0% 398 15.36 Healthcare, Inc. (46%) - 9/04 Career Concepts (29%) - 2/04 PA Liquor Control Board (18%) - 6/09 817 East Gate Drive Mt. Laurel NJ 1986 25,351 100.0% 351 12.86 Landress Co. - Emtec (62%) - 3/01 Concentra (38%) - 9/04 100 Voice Road Carle Place NY 1963 25,000 100.0% 214 10.73 Nuclear Associates (100%) - 12/00 3333 Street Road - Greenwood Square Bensalem PA 1988 25,000 100.0% 387 16.76 Nextell Communications (100%) - 7/02 800 Corporate Circle Drive Harrisburg PA 1979 24,779 92.5% 319 13.45 Clear Channel Incorporated (28%) - 8/02 Andrews, Sacunas & Saline Office (22%) - 7/02 Leukemia Society of America (13%) - 9/01 The Harrisburg Symphony (11%) - 6/03 263 Chapman Road Newark DE 1983 24,773 83.9% 284 14.08 Delaware Department of Admin. Services (84%) - 7/01 & 9/02 Four A Eves Drive Marlton NJ 1987 24,687 100.0% 262 15.57 Advanced Systems (33%) - 4/04 Groundwater Technology (39%) - 5/04 Columbia Investment Builders (10%) - 1/00 1 Foster Avenue Gibbsboro NJ 1972 24,255 0.0% 44 0.00 2120 Tomlyn Street Richmond VA 1986 23,850 100.0% 150 6.12 United Power Corporation (42%) - 8/01 Unijax (30%) - 11/00 Swinging Door (15%) - 10/03 West End Signs (14%) - 11/01 261 Chapman Road Newark DE 1983 23,700 100.0% 316 13.50 Delaware Department of Admin. Services (100%) - 10/01 & 5/02 4 Foster Avenue Gibbsboro NJ 1974 23,372 89.4% 172 7.77 Harbor Laundry, Inc. (62%) - 8/00 Medical Data Exchange, Inc. (27%) - 10/02 155 Rittenhouse Circle Bristol PA 1985 22,500 100.0% 225 11.00 Osiris Investment, LP (100%) - 2/02 10 Skyline Drive Plainview NY 1960 22,200 100.0% 159 8.51 Shore Pharmaceutical (40%) 6/05 Cold Spring Harbor Laboratories (28%) - 5/00 2005 Cabot Boulevard Langhorne PA 1985 22,000 100.0% 197 10.84 Ecogen (100%) - 3/00 7 Foster Avenue Gibbsboro NJ 1983 21,843 90.9% 319 16.06 Choice Point Services (35%) - 4/01 180 Central Ave. / 2 Engineers Ln. Farmingdale NY 1960 21,700 100.0% 133 5.76 Yaleet, Inc. (100%) - 5/05 2490 Boulevard of King Of the Generals Prussia PA 1975 20,600 100.0% 299 14.50 Commonwealth of Pennsylvania (100%) - 6/01 10 Foster Avenue Gibbsboro NJ 1983 18,651 100.0% 261 14.87 Dolphin, Inc. (35%) - 5/00 Rottland Homes of New Jersey (29%) - 5/04 111 Ames Court Plainview NY 1959 18,000 88.9% 126 8.43 Centroid, Inc. (45%) - 4/05 Alarmguard, Inc. (41%) - 12/00 600 Corporate Circle Drive Harrisburg PA 1978 17,858 100.0% 267 14.94 Clear Channel, Incorporated (100%) - 7/02
Total Base Rent Average for the Annualized Percentage Twelve Rental Tenants Leasing 10% Leased Months Rate or More of Rentable Net as of Ended as of Square Footage per Rentable December December December Property as of Year Square 31, 31, 31, December 31, 1999 and Property Name Location State Built Feet 1999 (a) 1999 (b) 1999 (c) Lease Expiration Date (000's) - - ------------------------------------------------------------------------------------------------------------------------------------ 11 Commercial Street Plainview NY 1961 17,548 100.0% 137 9.91 Shore Pharmeceutical Providers, Inc. (100%) - 6/05 500 Nationwide Drive Harrisburg PA 1977 16,015 21.3% 197 13.07 Conrad M. Siegel, Incorporated (79%) - 12/99 David M. Griffith & Associates (21%) - 1/00 2110 Tomlynn Street Richmond VA 1965 15,910 100.0% 74 4.68 Reynolds Metals (100%) - 2/00 2240 Dabney Road Richmond VA 1984 15,389 100.0% 252 11.19 PDD Development, Inc. (55%) - 8/04 8 Engineers Lane Farmingdale NY 1963 15,000 100.0% 13 6.17 The Furniture Outlet (100%) - 9/04 305 Harper Drive Mt. Laurel NJ 1979 14,980 100.0% 112 8.04 The Jerome Group (100%) - 9/02 748 Springdale Drive Exton PA 1986 13,844 32.0% 91 19.88 Chester County District Court - (32%) - 1/04 2404 Park Drive Harrisburg PA 1983 11,000 100.0% 127 12.42 Tracking Systems Corporation (65%) - 3/04 Rogers - American Co., Inc. (35%) - 8/00 2401 Park Drive Harrisburg PA 1984 10,074 100.0% 147 14.79 Moore Business Forms, Inc. (44%) - 6/99 Judy Carhart, MD (10%) - 10/01 19 Engineers Lane Farmingdale NY 1962 10,000 100.0% 69 6.70 First Commercial Asset Management (100%) - 1/03 5 U.S. Avenue Gibbsboro NJ 1987 5,000 100.0% 18 3.60 Mcfadden Catering, Inc. (100%) - 12/03 50 East Clementon Road Gibbsboro NJ 1986 3,080 100.0% 121 39.17 Corestates Financial Corporation (100%) - 10/02 200 Nationwide Drive Harrisburg PA 1978 2,500 100.0% 60 24.00 Fulton Bank (100 %) - 8/03 5 Foster Avenue Gibbsboro NJ 1968 2,000 50.0% 1 0.00 Borough of Gibbsboro - Police Station (50%) - 11/02 TOTAL ALL PROPERTIES / WEIGHTED AVG. 16,603,977 94.1% $230,904 $15.90 ========== ==== ======== ======
(a) Calculated by dividing net rentable square feet included in leases signed on or before December 31, 1999 at the property by the aggregate net rentable square feet of the Property. (b) "Total Base Rent" for the twelve months ended December 31, 1999 represents base rents received during such period, excluding tenant reimbursements, calculated in accordance with generally accepted accounting principles (GAAP) determined on a straight-line basis. Tenant reimbursements generally include payment of real estate taxes, operating expenses and common area maintenance and utility charges. (c) "Average Annualized Rental Rate" is calculated as follows: (i) for office leases written on a triple net basis, the sum of the annualized contracted base rental rates payable for all space leased as of December 31, 1999 (without giving effect to free rent or scheduled rent increases that would be taken into account under GAAP) plus the 1999 budgeted operating expenses excluding tenant electricity; and (ii) for office leases written on a full service basis, the annualized contracted base rent payable for all space leased as of December 31, 1999. In both cases the annualized rental rate is divided by the total square footage leased as of December 31, 1999 without giving effect to free rent or scheduled rent increases that would be taken into account under GAAP. (d) The Total Base Rent reflected for these properties is presented on a consolidated basis. (e) These properties are under redevelopment and are excluded from the percentages for Weighted Average Percentage Leased and Average Annualized Rental Rate information. (f) This property is subject to a ground lease. The following table shows certain information regarding rental rates and lease expirations for the Properties at December 31, 1999, assuming none of the tenants exercises renewal options or termination rights, if any, at or prior to scheduled expirations:
Final Percentage Rentable Final Annualized of Total Final Number of Square Annualized Base Rent Annualized Year of Leases Footage Base Rent Per Square Base Rent Lease Expiring Subject to Under Foot Under Under Expiration Within the Expiring Expiring Expiring Expiring Cumulative December 31, Year Leases Leases (a) Leases Leases Total ------------ ---- ------ ---------- ------ ------ ----- 2000 420 2,363,804 $ 32,788,701 $13.87 13.1% 13.1% 2001 324 2,635,940 39,349,760 14.93 15.8% 28.9% 2002 272 2,286,578 33,208,116 14.52 13.3% 42.2% 2003 224 1,705,418 29,096,697 17.06 11.7% 53.9% 2004 217 1,836,887 33,396,891 18.18 13.4% 67.3% 2005 86 1,239,497 22,673,985 18.29 9.1% 76.4% 2006 36 832,539 10,355,190 12.44 4.1% 80.5% 2007 23 410,218 8,438,307 20.57 3.4% 83.9% 2008 15 450,423 9,478,451 21.04 3.8% 87.7% 2009 48 697,348 15,430,452 22.13 6.2% 93.9% 2010 and thereafter 73 1,109,989 15,358,700 13.84 6.1% 100.0% ----- ---------- ------------ ----- ------ 1,738 15,568,641 $249,575,250 $16.03 100.0% ===== ========== ============ ====== =====
(a) "Final Annualized Base Rent" for each lease scheduled to expire represents the cash rental rate of base rents, excluding tenant reimbursements, in the final month prior to expiration multiplied by 12. Tenant reimbursements generally include payment of real estate taxes, operating expenses and common area maintenance and utility charges. At December 31, 1999, the Properties were leased to 1,318 tenants that are engaged in a variety of businesses. The following table sets forth information regarding leases at the Properties with the 20 largest tenants based upon Annualized Escalated Rent from the Properties as of December 31, 1999:
Percentage of Remaining Aggregate Percentage Annualized Aggregate Number Lease Square of Aggregate Escalated Annualized of Term in Feet Leased Rent (in Escalated Tenant Name (a) Leases Months Leased Square Feet 000) (b) Rent - - --------------- ------ ------ ------ ----------- -------- ---- First USA Bank 9 (c) 619,370 4.0% $ 12,499 4.4% State of New Jersey 3 (d) 383,616 2.5% 10,613 3.8% Bell Atlantic 7 (e) 430,372 2.8% 8,730 3.1% Penske Truck Leasing 1 72 225,194 1.4% 4,142 1.5% GRC International 1 112 166,597 1.1% 3,897 1.4% General Electric 2 (f) 193,102 1.2% 3,654 1.3% Lockheed Martin 7 (g) 281,016 1.8% 3,372 1.2% The Hartford 3 (h) 178,981 1.1% 3,326 1.2% Parsons Corporation 2 (i) 173,487 1.1% 3,275 1.2% Travelers 3 (j) 173,165 1.1% 2,942 1.0% Aventis Behring 4 (k) 122,013 0.8% 2,630 0.9% Bank of America 1 5 82,394 0.5% 2,628 0.9% Highmark Corporation 3 (l) 127,679 0.8% 2,612 0.9% American Business Financial Services 1 43 89,799 0.6% 2,494 0.9% Computer Sciences, Corporation 4 (m) 111,733 0.7% 2,483 0.9% Keystone Health Plan Central 1 56 122,101 0.8% 2,454 0.9% Reliance Insurance Company 5 (n) 83,979 0.5% 2,216 0.8% Kimberly Clark Corporation (Scott Paper) 1 72 93,014 0.6% 2,136 0.8% Decision One 1 71 109,800 0.7% 2,018 0.7% Mercedes Benz/Daimler Chrysler 2 (o) 66,783 0.4% 1,993 0.7% -- -- --------- ---- ------- ---- Consolidated Total/Weighted Average 61 78 3,834,195 24.6% $80,114 28.5% == == ========= ==== ======= ====
(a) The identified tenant includes affiliates in certain circumstances. (b) Annualized Escalated Rent represents the monthly Escalated Rent for each lease in effect at December 31, 1999 multiplied by 12. Escalated Rent represents fixed base rental amounts plus pass-throughs of operating expenses, including electricity costs. The Company estimates operating expense pass-throughs based on historical amounts and comparable market data. (c) Consists of nine leases: a lease representing 274,531 net rentable square feet that expires in January 2017, a lease representing 238,028 net rentable square feet that expires in December 2015, a lease representing 7,088 net rentable square feet that expires in December 2010, two leases representing 53,894 net rentable square feet that expire in June 2010, two leases representing 39,374 net rentable square feet that expire in June 2005, a lease representing 403 net rentable square feet that expires in March 2000 and a lease representing 6,052 net rentable square feet which the tenant occupies on a month-to-month basis. (d) Consists of three leases: a lease representing 222,987 net rentable square feet that expires in September 2009, a lease representing 117,428 net rentable square feet that expires in August 2008 and a lease representing 43,201 net rentable square feet that expires in July 2000. (e) Consists of seven leases: a lease representing 74,728 net rentable square feet that expires in July 2006, a lease representing 17,179 net rentable square feet that expires in October 2004, a lease representing 29,477 net rentable square feet that expires in August 2004, a lease representing 56,084 net rentable square feet that expires in March 2004, a lease representing 80,456 net rentable square feet that expires in November 2003, a lease representing 172,448 net rentable square feet that expires in April 2001 and a rooftop lease that expires in February 2001. (f) Consists of two leases: a lease representing 132,000 net rentable square feet that expires in September 2001 and a lease representing 61,102 net rentable square feet that expires in September 2003. (g) Consists of seven leases: a lease representing 158,000 net rentable square feet that expires in September 2002, a lease representing 30,280 net rentable square feet that expires in May 2002, a lease representing 14,750 net rentable square feet that expires in January 2001, a lease representing 13,956 net rentable square feet that expires in October 2004, a lease representing 12,498 net rentable square feet that expires in June 2002, a lease representing 16,726 net rentable square feet that expires in May 2000 and a lease representing 34,806 net rentable square feet that expires in April 2002. (h) Consists of three leases: two leases representing 143,961 net rentable square feet that expire in December 2007 and a lease representing 35,020 net rentable square feet that expires in December 2004. (i) Consists of two leases: a lease representing 72,694 net rentable square feet that expires in March 2003 and a lease representing 100,793 net rentable square feet that expires in March 2010. -24- (j) Consists of three leases: a lease representing 78,110 net rentable square feet that expires in January 2004, a lease representing 47,067 net rentable square feet that expires in February 2002 and a lease representing 47,988 net rentable square feet that expires in December 2001. (k) Consists of four leases: two leases that represent 26,652 net rentable square feet that expire in January 2003, and two leases that represent 95,361 net rentable square feet that expire in October 2002. (l) Consists of three leases: a lease representing 53,179 net rentable square feet that expires in August 2004, a lease representing 60,000 net rentable square feet that expires in May 2001 and a lease representing 14,500 net rentable square feet that expires in December 2000. (m) Consists of four leases: a lease representing 47,176 net rentable square feet that expires in May 2002, a lease representing 36,830 net rentable square feet that expires in November 2001, a lease representing 15,000 net rentable square feet that expires in October 2000 and a lease representing 12,727 net rentable square feet that expires in August 2003. (n) Consists of five leases: two leases representing 4,097 net rentable square feet that expire in January 2003, a lease representing 68,841 net rentable square feet that expires in October 2002, a lease representing 3,848 net rentable square feet that expires in June 2002 and a lease representing 6,383 net rentable square feet that the tenant currently occupies on a month-to-month basis. (o) Consists of two leases: a lease representing 47,630 net rentable square feet that expires in August 2004 and a lease representing 19,153 net rentable square feet that the tenant currently occupies on a month-to-month basis. REAL ESTATE VENTURES Through December 31, 1999, the Company had invested approximately $35.7 million in eleven Real Estate Ventures (net of returns of investment received by the Company) and had committed to make future equity contributions totaling approximately $6.4 million. The Company, through subsidiaries, formed these ventures with unaffiliated third parties to develop office properties or to acquire land in anticipation of possible development of office properties. At December 31, 1999, seven of the Real Estate Ventures owned eight office properties containing an aggregate of 1,035,000 net rentable square feet. At December 31, 1999, these properties were approximately 96% leased to 49 tenants. In addition, at December 31, 1999, four of the Real Estate Ventures were in the process of developing four office properties that are expected to contain an aggregate of approximately 646,000 net rentable square feet upon completion. At December 31, 1999, the Real Estate Ventures also owned or held options to purchase approximately 25.1 acres of undeveloped land. ITEM 3. LEGAL PROCEEDINGS The Company is involved from time to time in litigation on various matters, which include disputes with tenants and disputes arising out of agreements to purchase or sell properties. Given the nature of the Company's business activities, these lawsuits are considered routine to the conduct of its business. The result of any particular lawsuit cannot be predicted, because of the very nature of litigation, the litigation process and its adversarial nature, and the jury system. Reference is made to the litigation disclosed in Part II, Item 1 of the Company's Form 10-Q for the quarter ended September 30, 1999. On July 9, 1999, the Superior Court of New Jersey, Camden County, dismissed the complaint against the Company with prejudice. The plaintiffs subsequently filed a motion for reconsideration, which motion the Superior Court denied. The plaintiffs then appealed the dismissal and the motion for reconsideration. The case is currently on appeal before the Appellate Division of the Superior Court of New Jersey. Briefing on the appeal has been completed and the parties are awaiting a decision. In November 1999, a third-party complaint was filed in the Superior Court of New Jersey, Burlington County, by BRI OP Limited Partnership ("BRI OP") against the Company, as well as several persons and entities, including against several former affiliates of the Company, relative to Greentree Shopping Center located in Marlton, New Jersey ("Subject Property"). The Subject Property was owned and managed by a subsidiary of the Company between 1986 and 1988. BRI OP, also a former owner of the Subject Property, has been sued by the present owner and manager of the Subject Property, seeking indemnification and contribution for costs related to the remediation of environmental contamination allegedly caused by a dry cleaning business, which was a tenant of the Subject Property. BRI OP, in turn, brought a third-party action against the Company and others seeking indemnification for -25- environmental remediation and clean up costs for which it may be held liable. The litigation is presently in the early stages of discovery, and the Company is, as of the date of this Annual Report, unable to estimate either the potential remediation and/or clean-up costs, or the Company's ultimate responsibility for such costs. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Company did not submit any matters to a vote of security holders in the fourth quarter of the fiscal year ended December 31, 1999. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS The Common Shares are traded on the NYSE under the symbol "BDN." On March 24, 2000, there were approximately 348 holders of record of the Common Shares. On March 24, 2000, the last reported sales price of the Common Shares on the NYSE was $16.50. The following table sets forth the quarterly high and low closing sales price per share reported on the NYSE for the indicated periods and the distributions paid by the Company with respect to each such period. SHARE PRICE SHARE PRICE DISTRIBUTIONS HIGH LOW DECLARED FOR QUARTER ---- --- -------------------- First Quarter 1998 $26 3/8 $23 1/16 $0.37 Second Quarter 1998 $24 5/16 $21 1/16 $0.38 Third Quarter 1998 $23 1/8 $16 1/4 $0.38 Fourth Quarter 1998 $19 $16 1/4 $0.39 First Quarter 1999 $18 2/16 $16 3/16 $0.39 Second Quarter 1999 $20 7/16 $16 $0.39 Third Quarter 1999 $20 1/8 $16 1/4 $0.39 Fourth Quarter 1999 $17 1/2 $15 1/8 $0.40 Future distributions by the Company will be at the discretion of the Board of Trustees and will depend on the actual cash flow of the Company, its financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Internal Revenue Code of 1986 and such other factors as the Board of Trustees deems relevant. Summarized below is information regarding the sale by the Company of securities during 1999 and through the date of this Annual Report on Form 10-K that were not registered under the Securities Act of 1933. During 1999, the Company issued an aggregate of 85,552 Common Shares upon the redemption of 85,552 Class A Units: July 8, 1999 (41,734 Common Shares); and December 24, 1999 (43,818 Common Shares). The redemptions were effected by the Company in accordance with the agreement of limited partnership of the Operating Partnership and no cash proceeds were received by the Company in connection with such redemptions. In April 1999, the Company issued 1,041,667 Series B Preferred Shares, which are convertible into 1,041,667 Common Shares, subject to anti-dilution adjustment. In addition, in June 1999, the Company issued 416,666 Series B Preferred Shares, which are convertible into 416,666 Common Shares, subject to anti-dilution adjustment. In December 1999, the Company issued 2,916,667 Series B Preferred Shares, which are convertible into 2,916,667 Common Shares, subject to anti-dilution adjustment. Proceeds to the Company were used to repay indebtedness and for working capital. -26- In May 1999, the Operating Partnership issued 83,333 Class A Units to acquire a portfolio of 3 office properties. In August 1999, the Operating Partnership issued 400,000 Series B Preferred Units to acquire an office property. The Series B Units may be converted by the holder into 754,717 Class A Units, assuming a $26.50 conversion price. No underwriter was involved in connection with the foregoing securities issuances, which were exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, as transactions not involving public offerings. ITEM 6. SELECTED FINANCIAL DATA (in thousands, except per Common Share data and number of properties)
YEAR ENDED DECEMBER 31, 1999 1998 1997 1996 1995 - - ----------------------- ---- ---- ---- ---- ---- OPERATING RESULTS Total revenue $283,220 $192,861 $61,060 $10,030 $3,666 Net income (loss) 34,606 33,025 15,001 (162) (824) Earnings per Common Share Basic $0.80 $0.90 $0.96 $(0.44) $(1.33) Diluted $0.80 $0.89 $0.95 $(0.44) $(1.33) Cash distributions declared per Common Share $1.57 $1.52 $1.44 $0.82 $1.65 BALANCE SHEET DATA Real estate investments, net of accumulated depreciation $1,702,353 $1,840,618 $563,557 $151,901 $13,709 Total assets 1,829,916 1,911,680 621,481 178,326 17,105 Total indebtedness 839,634 1,000,560 163,964 36,644 8,931 Total liabilities 894,558 1,040,828 181,576 43,558 9,761 Minority interest 145,941 127,198 14,377 6,398 -- Convertible preferred shares 95,366 -- -- 26,444 -- Beneficiaries' equity 694,051 743,654 425,528 101,926 7,344 OTHER DATA Funds from operations $110,042 $84,569 $30,035 $2,589 $537 Cash flows from: Operating activities 88,512 73,953 33,572 2,568 497 Investing activities 70,174 (903,049) (418,256) (35,401) (701) Financing activities (166,069) 812,729 395,847 50,272 (722) PROPERTY DATA Number of properties owned at year end 251 272 117 37 4 Net rentable square feet owned at year end 16,607 18,834 7,131 1,994 255
-27- ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the financial statements appearing elsewhere herein. The results of operations, liquidity and capital resources and cash flows of the Company include the historical results of operations of the Properties held by the Company during the years ended December 31, 1999, 1998 and 1997. This Annual Report on Form 10-K contains forward-looking statements for purposes of the Securities Act of 1933 and the Securities Exchange Act of 1934 and as such may involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, there can be no assurance that these expectations will be realized. OVERVIEW The Company operates in four geographic segments: (1) Pennsylvania Suburbs (includes Berks, Bucks, Chester, Cumberland, Dauphin, Delaware, Lehigh, Montgomery, Northampton and Philadelphia counties and Wilmington, Delaware), (2) Southern and Central New Jersey (includes Atlantic, Burlington, Camden and Mercer counties), (3) New York (includes Northern New Jersey and Long Island, New York), and (4) Virginia (includes Northern Virginia and Richmond, Virginia). The Company believes it has established an effective platform in these office and industrial markets that provides a foundation for achieving its goals of maximizing market penetration and operating economies of scale. During 1999, the Company sold 27 properties (seven office properties and 20 industrial facilities), containing approximately 2.6 million net rentable square feet, for $147.7 million and acquired six properties (five office properties and one industrial facility), containing approximately 463,000 net rentable square feet, for $42.0 million. The Company receives income primarily from rental revenue (including tenant reimbursements) from the Properties and, to a lesser extent, from the management of certain properties owned by third parties. The Company expects that revenue growth in the next two years will result primarily from rent increases in its current portfolio. RESULTS OF OPERATIONS COMPARISON OF THE YEAR ENDED DECEMBER 31, 1999 TO THE YEAR ENDED DECEMBER 31, 1998 Revenue (which includes rental income, recoveries from tenants, and other income) increased to $283.2 million for 1999 as compared to $192.9 million for 1998 primarily due to property acquisitions made during the latter part of 1998 and, to a lesser extent, increased rental rates. The straight-line rent adjustment increased revenues by $8.1 million in 1999 and $6.3 million in 1998. Property operating expenses and real estate taxes increased to $90.1 million in 1999 as compared to $60.8 million in 1998 primarily due to the result of property acquisitions during the latter part of 1998. Property level operating income for the 245 properties owned by the Company for a corresponding period increased to $112.1 million in 1999 from $105.4 million in 1998, an increase of 6.4%. Rental income for these properties increased to $125.3 million in 1999 from $118.2 million in 1998 primarily due to increased rental rates. Property operating expenses and real estate taxes for these properties increased to $65.4 million in 1999 from $61.4 million in 1998 due to increases in real estate taxes, management fees, and maintenance and repair work offset by expense savings from a Company initiative designed to take advantage of economies of scale. Interest expense increased to $66.7 million in 1999 as compared to $36.9 million in 1998 primarily due to increased borrowings incurred in connection with property acquisitions made during the latter part of 1998. Average outstanding debt balances for 1999 were $927.3 million as compared to $575.6 million for 1998. Such increases were partially offset by reduced interest rates. The Company's weighted-average interest rate on unsecured credit facilities decreased to 6.95% in 1999 from 7.05% in 1998 and on mortgage notes payable to 7.1% in 1999 from 7.6% in 1998. -28- Depreciation and amortization expense increased to $72.4 million in 1999 as compared to $48.0 million in 1998 primarily due to property acquisitions made during the latter part of 1998. Amortization of deferred compensation costs increased to $1.8 million in 1999 as compared to $1.5 million in 1998 due to the issuance of 57,872 additional restricted Common Shares in 1999 to Company executives. Management fees increased to $12.0 million in 1999 as compared to $6.9 million in 1998 primarily due to property acquisitions made during the latter part of 1998. Gains on sale of interests in real estate was $3.1 million in 1999 and $0.2 million in 1998. The Company sold 27 properties in 1999. Minority interest represents the equity in income attributable to the portion of the Operating Partnership not owned by the Company. The increase in minority interest income to $8.0 million in 1999 from $2.4 million in 1998 was primarily due to the property acquisitions made during the latter part of 1998. COMPARISON OF THE YEAR ENDED DECEMBER 31, 1998 TO THE YEAR ENDED DECEMBER 31, 1997 Revenues increased to $192.9 million in 1998 from $61.1 million in 1997 primarily a result of the 235 properties acquired by the Company in 1997 and 1998 and, to a lesser extent, increased occupancy. The straight-line rent adjustment increased revenues by $6.3 million in 1998 as compared to $1.7 million in 1997. In 1998, 91 leases representing 516,652 square feet of office and industrial space commenced at an average rate per square foot of $15.47, which was 13.8% higher than the average rate per square foot on leases that expired. Property operating expenses and real estate taxes increased to $60.8 million in 1998 as compared to $20.1 million in 1997 primarily due to property acquisitions. Property level operating income for the 117 properties owned by the Company as of December 31, 1997 increased to $40.6 million in 1998 from $38.6 million in 1997, an increase of 5.2%. Occupancy for these 117 properties increased from 91% to 95% driving revenue growth of 5.0% and causing expenses to increase by 4.7%. Interest expense increased to $36.9 million in 1998 from $7.1 million in 1997 primarily due to additional indebtedness incurred to finance certain of the Company's acquisitions. Depreciation and amortization expense increased to $48.0 million in 1999 as compared to $15.6 million in 1998 primarily due to property acquisitions. Amortization of deferred compensation costs totaling $1.5 million related to 443,557 restricted Common Shares issued in 1998 to Company executives. Management fees increased to $6.9 million in 1999 as compared to $2.3 million in 1998 primarily due to property acquisitions. Administrative expenses increased to $1.7 million in 1998 from $0.7 million in 1997 primarily due to management and staffing additions to support the Company's growth. The extraordinary item in 1998 relates to the write-off of $2.0 million of unamortized deferred financing costs. LIQUIDITY AND CAPITAL RESOURCES CASH FLOWS During 1999, the Company generated $88.5 million in cash flow from operating activities. Other sources of cash in-flows consisted of: (i) $203.4 million of additional mortgage notes payable, (ii) $147.7 million of net proceeds -29- from property sales, (iii) $95.4 million of net proceeds from equity issuances and (iv) $67.0 million of proceeds from draws on the Credit Facility. During 1999, cash out-flows consisted of: (i) $371.5 million to repay borrowings under the Credit Facility, (ii) $72.3 million of distributions to shareholders and minority partners in the Operating Partnership, (iii) $60.0 million of mortgage note repayments, (iv) $30.8 million to fund capital expenditures, (v) $22.2 million to repurchase Common Shares, (vi) $20.0 million for property acquisitions, (vii) $19.4 million of investment in unconsolidated real estate ventures, (viii) $7.3 million of escrowed cash and (ix) $5.9 million of debt costs. CAPITALIZATION At December 31, 1999, the Company maintained a $450.0 million Credit Facility. (See Item 1. Business-Credit Facility) As of December 31, 1999, the Company had approximately $839.6 million of debt outstanding, consisting of $376.8 million of borrowings under the Credit Facility and $462.8 million of mortgage notes payable. The mortgage notes payable consists of $343.6 million of fixed rate loans and $119.2 million of variable rate loans. The mortgage loans mature or matured between January 2000 and July 2027. As of December 31, 1999, the Company had $73.2 million of availability remaining under the Credit Facility. For the year ended December 31, 1999, the weighted-average interest rate under the Company's Credit Facility was 6.95%, and the weighted-average interest rate for borrowings under mortgage notes payable was 7.1%. As of December 31, 1999, the Company's debt-to-market capitalization ratio was 49%. As a general policy, the Company intends, but is not obligated, to adhere to a policy of maintaining a long-term average debt-to-market capitalization ratio of no more than 50%. In 1998, the Company's Board of Trustees approved a share repurchase program authorizing the Company to repurchase up to 2,000,000 of its outstanding Common Shares. In 1999, the Board increased the authorization to 3,000,000 Common Shares. No time limit has been placed on the duration of the share repurchase program. During 1999, the Company repurchased 1,344,295 Common Shares for an aggregate of $22.2 million (an average price of $16.69 per share). PREFERRED SHARE ISSUANCE In 1999, the Company sold to Five Arrows Realty Securities III L.L.C., an investment fund managed by Rothschild Realty Inc., $105.0 million of Series B Preferred Shares. Each Series B Preferred Share is convertible into one Common Share, subject to anti-dilution adjustment, and is entitled to quarterly dividends equal to the greater of $0.525 per share or the quarterly dividend on the number of Common Shares into which a Series B Preferred Share is convertible. The Series B Preferred Shares are perpetual and may be redeemed, at the Company's option, at par beginning in April 2007. In addition, the Company may require the conversion of the Series B Preferred Shares into Common Shares starting April 2004, if certain conditions are met, including that the Common Shares are then trading in excess of 130% of the conversion price. Upon certain changes in control of the Company, the holder may require the Company to redeem its Series B Preferred Shares. In addition, as part of the transaction, the Company issued to the holder seven-year warrants exercisable for 500,000 Common Shares at an exercise price of $24.00 per share. At the initial funding in April 1999, the Company issued 1,041,667 Series B Preferred Shares for gross proceeds of $25 million. In June 1999, the Company issued an additional 416,666 Series B Preferred Shares for -30- gross proceeds of $10 million. In December 1999, the Company issued 2,916,667 Series B Preferred Shares for the remaining $70 million. SHORT- AND LONG-TERM LIQUIDITY The Company believes that cash flow from operations and current financing alternatives are adequate to fund short-term liquidity requirements for 2000. Cash flow from operations is generated primarily from rental revenues, operating expense reimbursements from tenants, and provision of management services to third parties. The Company intends to use these funds to meet its principal short-term liquidity needs, which are to fund operating expenses, debt service requirements, recurring capital expenditures, tenant allowances, leasing commissions and the minimum distributions required to maintain the Company's REIT qualifications under the Internal Revenue Code. On December 17, 1999, the Board of Trustees declared a quarterly dividend distribution of $0.40 per share, paid on January 14, 2000 to shareholders of record as of December 30, 1999. The increase from $0.39 to $0.40 in the fourth quarter was the eighth increase during the past ten quarters. Distributions were $1.57 per share in 1999 as compared to $1.52 in 1998, representing an increase of approximately 3.3%. The Company expects to meet its long-term liquidity requirements, such as for property acquisitions, development, investments in real estate ventures, scheduled debt maturities, renovations, expansions and other non-recurring capital improvements, through borrowings under its Credit Facility, long-term secured and unsecured indebtedness, and the issuance of equity securities. FUNDS FROM OPERATIONS Management considers Funds from Operations ("FFO") as one measure of REIT performance. FFO is calculated as net income (loss) adjusted for depreciation expense attributable to real property, amortization expense attributable to capitalized leasing costs, gains on sales of real estate investments, and extraordinary items and comparable adjustments for real estate ventures accounted for using the equity method. Management believes that FFO is a useful disclosure in the real estate industry; however, the Company's disclosure may not be comparable to other REIT's. FFO should not be considered an alternative to net income as an indication of the Company's operating performance or to operating cash flows as a measure of liquidity. The following table summarizes FFO for the years ended December 31, 1999 and 1998 (in thousands, except share data):
1999 1998 ---- ---- Income before gains on sale, minority interest and extraordinary item $ 39,487 $37,246 Add (deduct): Depreciation: Attributable to real property 66,493 45,032 Attributable to real estate ventures 1,242 255 Amortization attributable to leasing costs 2,820 2,036 ----------- ----------- Funds from operations before minority interest $110,042 $84,569 =========== =========== Weighted-average Common Shares (including Common Share equivalents) and Operating Partnership units 45,190,881 38,340,594 =========== ===========
YEAR 2000 COMPLIANCE The Company has not experienced any problems relating to the Year 2000 issue on or after January 1, 2000. The Company implemented its Year 2000 compliance program and intends to maintain its contingency plans until it is satisfied that Company operations will not be adversely impacted by the possibility of a Year 2000 issue. -31- INFLATION A majority of the Company's leases provide for escalations of real estate taxes and operating expenses either on a triple net basis or over a base amount. In addition, many of the office leases provide for fixed base rent increases or indexed escalations (based on the CPI or other measure). The Company believes that inflationary increases in expenses will be significantly offset by expense reimbursement and contractual rent increases. INTEREST RATE RISK AND SENSITIVITY ANALYSIS The analysis below presents the sensitivity of the market value of the Company's financial instruments to selected changes in market rates. The range of changes chosen reflects the Company's view of changes which are reasonably possible over a one-year period. Market values are the present value of projected future cash flows based on the market rates chosen. The Company's financial instruments consist of both fixed and variable rate debt. As of December 31, 1999, the Company's consolidated debt consisted of $343.6 million in fixed rate mortgages and $119.2 million in floating rate mortgage notes, and $376.8 million borrowed under its Credit Facility. All financial instruments were entered into for other than trading purposes and the net market value of these financial instruments is referred to as the net financial position. Changes in interest rates have different impacts on the fixed and variable rate portions of the Company's debt portfolio. A change in interest rates on the fixed portion of the debt portfolio impacts the net financial instrument position, but has no impact on interest incurred or cash flows. A change in interest rates on the variable portion of the debt portfolio impacts the interest incurred and cash flows, but does not impact the net financial instrument position. The Company has entered into interest rate swap and rate cap agreements designed to reduce the impact of interest rates changes on its variable rate debt. At December 31, 1999, the Company had two interest rate swap agreements for notional principal amounts aggregating $150 million. The swap agreements effectively fix the interest rate on $50 million of Credit Facility borrowings at 5.844% until November 2000 and on $100 million at 5.805% until November 2001. The interest rate caps effectively fix the interest rate on two variable rate mortgages. One rate cap fixes the interest rate on a mortgage with a notional value of $75 million at 6.25% until April 2001 and then at 7% until maturity in April 2002. The second interest rate cap fixes the interest rate on a mortgage with a notional value of $28 million at 8.7% until July 2004. The sensitivity analysis related to the fixed portion of the Company's debt portfolio assumes an instantaneous 1% move in interest rates from their actual levels at December 31, 1999 with all other variables held constant. As of December 31, 1999, a 1% increase in actual interest rates would result in a decrease in beneficiaries' equity of $18.8 million and a 1% decrease in actual interest rates would result in an increase in beneficiaries' equity of $21.2 million. Based on the Company's variable rate debt as of December 31, 1999, a 1% increase in interest rates would result in an additional $5.0 million in interest expense per year and a 1% decrease would reduce interest expense by $5.0 million per year. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK See discussion in Management's Discussion and Analysis included in Item 7 herein. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The financial statements and supplementary financial data are listed under Item 14(a) and filed as part of this Annual Report on Form 10-K. See Item 14. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III ITEM 10. TRUSTEES AND EXECUTIVE OFFICERS OF THE COMPANY The following table sets forth certain information with respect to the executive officers and Trustees of the Company: -32-
NAME AGE POSITION ---- --- -------- Anthony A. Nichols, Sr................... 60 Chairman of the Board and Trustee Gerard H. Sweeney........................ 43 President, Chief Executive Officer and Trustee Jeffrey F. Rogatz........................ 38 Senior Vice President and Chief Financial Officer Anthony S. Rimikis....................... 51 Senior Vice President - Development and Construction John M. Adderly, Jr...................... 39 Senior Vice President - Operations Bradley W. Harris........................ 40 Vice President and Chief Accounting Officer D. Pike Aloian........................... 45 Trustee Donald E. Axinn.......................... 70 Trustee Walter D'Alessio......................... 66 Trustee Robert C. Larson......................... 65 Trustee Warren V. Musser......................... 73 Trustee Charles P. Pizzi......................... 49 Trustee
The following are biographical summaries of the executive officers and Trustees: ANTHONY A. NICHOLS, SR., Chairman of the Board and Trustee. Mr. Nichols was first elected Chairman of the Board on August 22, 1996. Mr. Nichols founded The Nichols Company, a private real estate development company, through a corporate joint venture with Safeguard Scientifics, Inc. and was President and Chief Executive Officer from 1982 through August 1996. From 1968 to 1982, Mr. Nichols was Senior Vice President of Colonial Mortgage Service Company. Mr. Nichols serves on the Board of Directors of CenterCore Inc. GERARD H. SWEENEY, President, Chief Executive Officer and Trustee. Mr. Sweeney was first elected a Trustee in February 1996. Mr. Sweeney has served as President and Chief Executive Officer of the Company since August 1994 and as President since November 1989. Prior to August 1994, Mr. Sweeney served as Vice President of LCOR, Incorporated ("LCOR"), a real estate development firm. Mr. Sweeney was employed by The Linpro Company (a predecessor of LCOR) from 1983 to 1994 and served in several capacities, including Financial Vice President and General Partner. Mr. Sweeney serves on the Board of U.S. Realtel, Inc., the Foundation for Architecture, and the Pennsylvania Academy of Fine Arts. JEFFREY F. ROGATZ, Senior Vice President and Chief Financial Officer. Mr. Rogatz became Senior Vice President and Chief Financial Officer of the Company in January 1999. Mr. Rogatz was employed for over 11 years as an investment banker with Legg Mason Wood Walker, Inc. ("Legg Mason") and most recently served as a managing director in Legg Mason's corporate finance group. Mr. Rogatz served as the lead investment banker from Legg Mason in advising the Company on capital markets transactions, including seven public offerings which raised in excess of $650 million. ANTHONY S. RIMIKIS, Senior Vice President-Development & Construction. Mr. Rimikis became Senior Vice President-Development & Construction in October 1997. From January 1994 until October 1997, Mr. Rimikis served as Vice President of Emmes Realty Services, Inc., a New York based real estate services company where he managed the company's construction and development activities in New Jersey and Maryland. Prior to joining Emmes, he served as Vice President of Development for DKM Properties Corp. from 1988 to 1994. JOHN M. ADDERLY, JR., Senior Vice President--Operations. Mr. Adderly has served as an officer of the Company since January 1995. Mr. Adderly was employed by the Rodin Group, a Philadelphia-based real estate development, -33- management and brokerage firm from 1982 until 1995, where he served as Vice President and Chief Financial Officer from 1986 until 1995 and as Corporate Controller from 1982 until 1986. BRADLEY W. HARRIS, Vice President and Chief Accounting Officer. Mr. Harris became Vice President and Chief Accounting Officer of the Company in September 1999. Mr. Harris was employed by Envirosource, Inc. from September 1996 to May 1999 as Controller. Prior to joining Envirosource, he was employed by Ernst & Young, LLP for over 15 years, most recently as a Senior Manager. D. PIKE ALOIAN, Trustee. Mr. Aloian was first elected a Trustee in April 1999. Mr. Aloian joined Rothchild, Inc. in 1988 and is responsible for the origination, economic analysis, closing and on-going review of Rothschild's real estate investments. Between 1980 and 1988, Mr. Aloian was a vice president of The Harlan Company, where he was responsible for property acquisition, development and financing. Mr. Aloian is a director of EastGroup Properties, Koger Equity, Inc., Merritt Properties, Morningstar Storage Centers and Angeles Corporation. He currently is an adjunct professor of the Columbia University Graduate School of Business. Mr. Aloian graduated from Harvard College in 1976 and received an M.B.A. from Columbia University in 1980. DONALD E. AXINN, Trustee. Mr. Axinn was first elected a Trustee in October 1998. Mr. Axinn is the founder and chairman of the Donald E. Axinn Companies, an investment firm and developer of office and industrial parks throughout the New York metropolitan area. He has published two novels and six books of poetry, serves on the board of The American Academy of Poets, the advisory board for the Poet Laureate, and was recently Chairman of The Nature Conservancy, L.I. Chapter. A graduate of Middlebury College and holder of a master's degree in Humanities, he has also been awarded four honorary doctorates. Mr. Axinn has also served as an Associate Dean of Arts and Sciences at Hofstra University. In 1983, he founded with others the Interfaith Nutrition Network, shelters and kitchens for the homeless and hungry on Long Island. WALTER D'ALESSIO, Trustee. Mr. D'Alessio was first elected a Trustee in August 1996. He has served as Chairman, President and Chief Executive Officer of Legg Mason Real Estate Services, Inc., a mortgage banking firm headquartered in Philadelphia, Pennsylvania since 1982. Previously, Mr. D'Alessio served as Executive Vice President of the Philadelphia Industrial Development Corporation and Executive Director of the Philadelphia Redevelopment Authority. He also serves on the Board of Directors of PECO Energy Company, Pennsylvania Blue Shield, Independence Blue Cross, Philadelphia Beltline Railroad and the Greater Philadelphia Chamber of Commerce. ROBERT C. LARSON, Trustee. Mr. Larson was first elected a Trustee in December 1999. Mr. Larson is a Managing Director of Lazard Freres & Co. LLC and Chairman of Lazard Freres Real Estate Investors L.L.C., the group responsible for Lazard's principal investing activities in real estate. He also is vice chairman and a director of Taubman Centers, Inc., a publicly traded real estate investment trust specializing in the development, management and ownership of regional retail centers. Mr. Larson joined The Taubman Company as senior vice president in 1974, was elected president and chief operating officer in 1978, chief executive officer in 1988 and chairman of the Taubman Realty Group in 1990. He retired from active management responsibilities at Taubman in December 1998 and intends to retire from its board at its 2000 annual meeting of shareholders. Mr. Larson serves as a director of Bass PLC, the London-based international group operating in hotel, leisure retailing and branded drinks, and has been nominated to serve on the board of directors of United Dominion Realty Trust Inc., a real estate investment trust, at its 2000 annual meeting of shareholders. Mr. Larson also serves as the chairman of the board of directors of Commonwealth Atlantic Properties, Inc. and as a director of American Apartment Communities III, Inc. and Destination Europe Limited, all of which are real estate companies. WARREN V. MUSSER, Trustee. Mr. Musser was first elected a Trustee in August 1996. He has served as Chairman and Chief Executive Officer of Safeguard Scientifics, Inc. since 1953. Mr. Musser also serves as the Chairman of the Board of Directors of Cambridge Technology Partners (Massachusetts), Inc. and CompuCom Systems, Inc. He is also a Director of DocuCorp International, Inc. and Sanchez Computer Associates, Inc. Mr. Musser also serves on a variety of civic, educational, and charitable Boards of Directors and serves as Vice President/Development, Cradle of Liberty Council, Boy Scouts of America, vice chairman of the Eastern Technology Council, and Chairman of the Pennsylvania Partnership on Economic Education. -34- CHARLES P. PIZZI, Trustee. Mr. Pizzi was first elected a Trustee in August 1996. Mr. Pizzi has served as President of the Greater Philadelphia Chamber of Commerce since 1989. Mr. Pizzi is a director of Vestaur Securities, Inc. and serves on a variety of civic, educational and charitable Boards of Directors, including Drexel University, Private Industry Council, Highmark, Inc., Independence Blue Cross, Opera Company of Philadelphia, Pennsylvania Academy of the Fine Arts, Philadelphia Convention & Visitors Bureau, Philadelphia Industrial Development Corporation, and United Way of Southeastern Pennsylvania. Mr. Pizzi also serves on the Board of Advisors at Day & Zimmerman. Mr. Larson was initially elected to the Board of Trustees in December 1999 by the Board to replace the position held by Matthew J. Lustig. Like Mr. Lustig, Mr. Larson was designated for election to the Board by LF Strategic Realty Investors L.P. ("LFSRI"), a firm from whose affiliates the Company acquired a portfolio of properties in September 1998. LFSRI has a contractual right to designate a nominee to serve on the Board, and the Company has agreed to use reasonable efforts to cause the nominee to be elected to the Board. Mr. Aloian was initially elected to the Board of Trustees in April 1999 in connection with the Company's issuance of its Series B Preferred Shares to Five Arrows Realty Securities III L.L.C. ("Five Arrows"). Holders of Series B Preferred Shares have the right to elect a Trustee to the Board for so long as Five Arrows or its affiliates own at least fifty percent of the outstanding Series B Preferred Shares. COMMITTEES OF THE BOARD OF TRUSTEES Audit Committee. The Audit Committee of the Board of Trustees (the "Audit Committee") currently consists of Messrs. D'Alessio, Pizzi and Axinn, none of whom is an employee of the Company. In the opinion of the Board, these Trustees are independent of management and free of any relationship that would interfere with their exercise of independent judgment as members of the Audit Committee. The Audit Committee's responsibilities are included in its Charter, which was adopted by the full Board in December 1999. Compensation Committee. The Compensation Committee of the Board of Trustees (the "Compensation Committee") currently consists of Messrs. D'Alessio and Pizzi, neither of whom is an employee of the Company. Murry N. Gunty, the predecessor to Matthew J. Lustig as a designee of LFSRI to the Board, served as a member of the Compensation Committee from March 1999 to April 1999. The Compensation Committee is authorized to determine compensation for the Company's executive officers, although during 1999 formal action on compensation matters was taken by the full Board (with interested members of the Board abstaining). Executive Committee. The executive committee of the Board of Trustees (the "Executive Committee") currently consists of Messrs. Nichols, Musser, Sweeney and D'Alessio. The Executive Committee has been delegated all powers of the Board of Trustees, except the power to: (i) declare dividends on shares of beneficial interest; (ii) issue shares of beneficial interest (other than as permitted by the By-Laws); (iii) recommend to shareholders any action that requires shareholder approval; (iv) amend the Bylaws of the Company; and (v) approve any merger or share exchange which does not require shareholder approval. The Executive Committee did not meet in 1999. SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934 requires the Company's officers, Trustees, and persons who own more than 10% of the Common Shares to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, Trustees, and greater than 10% shareholders are required by regulation to furnish the Company with copies of all Section 16(a) forms they file. Based solely on review of the copies of such forms furnished to the Company or written representations that no Annual Statements of Beneficial Ownership of Securities on Form 5 were required to be filed, the Company believes that during the year ended December 31, 1999, all Section 16(a) filing requirements applicable to its officers, Trustees, and greater than 10% shareholders were complied with, except that Mr. Harris filed his initial Form 3 approximately two months late. -35- ITEM 11. EXECUTIVE COMPENSATION CASH AND NON-CASH COMPENSATION PAID TO EXECUTIVE OFFICERS The following table sets forth certain information concerning compensation paid for the years ended December 31, 1999, 1998 and 1997: (i) to the Company's President and Chief Executive Officer and (ii) to each of the four other most highly compensated executive officers (the "Named Executive Officers") of the Company during the year ended December 31, 1999. -36- SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION -------------------------------------- ------------------------------- NAME AND PRINCIPAL POSITION YEAR(1) SALARY BONUS(4) OTHER RESTRICTED SECURITIES ALL OTHER ANNUAL SHARE UNDERLYING COMPENSATION COMPENSATION AWARDS(10) OPTIONS (#) ($)(14) - - ------------------------------------------------------------------------------------------------------------------------------------ Anthony A. Nichols, Sr. 1999 $250,000 $244,063 $ 85,298 (5) --- --- $5,620 Chairman of the Board 1998 $250,000 $228,313 --- $4,000,000(11) 678,958 $ 785 1997 $200,000 $250,000 --- --- --- --- Gerard H. Sweeney 1999 $300,000 $310,875 $113,596 (6) --- --- $5,965 President and Chief 1998 $300,000 $273,976 --- $6,000,000(11) 1,018,489 $1,038 Executive Officer 1997 $200,000 $250,000 --- --- --- --- Jeffrey F. Rogatz 1999 $188,500 $150,000 $ 9,264 (7) $ 381,838(12) 56,582 $5,662 Senior Vice President and 1998(2) --- --- --- --- --- --- Chief Financial Officer 1997 --- --- --- --- --- --- John M. Adderly, Jr. 1999 $147,800 $ 65,000 $ 41,782 (8) --- --- $5,704 Senior Vice President - 1998 $125,000 $ 65,000 --- $ 533,000 90,644 $ 625 Operations 1997 $102,885 $ 35,000 --- --- --- --- Anthony S. Rimikis 1999 $127,400 $100,000 $ 16,602 (9) $204,942(13) 22,631 $5,255 Senior Vice President - 1998 $100,000 $ 50,000 --- --- 25,000 $ 622 Development & 1997(3) $ 21,154 $ 10,000 --- --- --- --- Construction
(1) Compensation is reportable in the year in which the compensable service was performed, even if the compensation was paid in a subsequent year. (2) Mr. Rogatz became an employee of the Company in January 1999. (3) Mr. Rimikis became an employee of the Company in October 1997. (4) 1999 bonus amounts, which were approved by the Board of Trustees in accordance with the Company's executive compensation guidelines, were paid as follows: (i) 25% in Common Shares valued at $16.375 per share (the closing price of a Common Share on December 31, 1999) and (ii) 75%, at the election of the applicable executive officer, in any combination of cash and Common Shares valued at $13.918 per share (85% of the closing price of a Common Share on December 31, 1999). Of the Common Shares elected to be received in satisfaction of the 75% portion of the bonus ("Bonus Shares"), the portion of such Common Shares received as a result of the discounted purchase price is subject to certain transfer restrictions until December 31, 2001. All Common Shares issued to the recipients were acquired by the Company through open market purchases. (5) Includes the difference between the price paid for Common Shares and the market price of such shares on the date of acquisition ($57,191) and loan forgiveness ($28,107). (6) Includes the difference between the price paid for Common Shares and the market price of such shares on the date of acquisition ($79,868) and loan forgiveness ($33,728). (7) Consists of the difference between the price paid for Common Shares and the market price of such shares on the date of acquisition. (8) Includes the difference between the price paid for Common Shares and the market price of such shares on the date of acquisition ($29,743) and loan forgiveness ($12,039). -37- (9) Includes the difference between the price paid for Common Shares and the market price of such shares on the date of acquisition ($5,720) and loan forgiveness ($10,882). (10) The holder of restricted shares is entitled to vote the shares and to receive dividends on the shares. (11) In January 2000, 25% of the 1998 restricted share awards to Messrs. Nichols, Sr. and Sweeney vested and the remaining 75% vest in three equal annual installments commencing in January 2001. (12) Consists of 13,201 shares, which vest in four equal annual installments commencing in January 2000, and 9,160 shares, which vest in four equal annual installments commencing in January 2001. (13) Consists of 5,280 shares, which vest in four equal annual installments commencing in July 2000, and 6,107 shares, which vest in four equal annual installments commencing in January 2001. (14) Includes employer matching and profit sharing contributions to the Company's 401(k) retirement and profit sharing plan. STOCK OPTIONS GRANTED TO EXECUTIVE OFFICERS DURING LAST FISCAL YEAR Summarized in the following table is information concerning options awarded to the President and Chief Executive Officer and each of the other Named Executive Officers of the Company for the year ended December 31, 1999: -38- OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
NAME NUMBER OF % OF TOTAL EXERCISE EXPIRATION GRANT COMMON OPTIONS/SARS PRICE DATE DATE SHARES GRANTED TO ($/SH) PRESENT UNDERLYING EMPLOYEES VALUE ($) OPTIONS IN FISCAL GRANTED (#) (1) YEAR - - ----------------------------------------------------------------------------------------------------------- Anthony A. Nichols, Sr. --- --- --- --- --- Chairman of the Board Gerard H. Sweeney --- --- --- --- --- President and Chief Executive Officer Jeffrey F. Rogatz 16,485 $25.25 1/19/08 $13,683 (2) Senior Vice President and 19,290 $27.78 1/19/08 $13,503 (2) Chief Financial Officer 20,807 22.6% $29.04 1/19/08 $13,525(2) John M. Adderly, Jr. --- --- --- --- --- Senior Vice President - Operations Anthony S. Rimikis 6,594 $25.25 7/01/08 $10,287 (3) Senior Vice President - 7,715 $27.78 7/01/08 $10,570 (3) Development & Construction 8,322 9.0% $29.04 7/01/08 $10,562 (3)
(1) Options vest ratably over four years, subject to acceleration of vesting under certain circumstances, such as upon a change in control of the Company. Upon a change of control, unexercised options convert to 6,601 and 2,640 Common Shares for Messrs. Rogatz and Rimikis, respectively. The number of Common Shares issuable upon a change of control is subject to a proportional reduction in the event of any prior option exercise. (2) The grant date present values for the options are determined using the Black-Scholes option pricing model. The assumptions used in calculating the Black-Scholes present values for the option grants were as follows: (a) a risk-free interest rate of 4.70% (based on the yield on a U.S. Treasury security with a maturity of 10 years (the life of the option)); (b) a dividend yield of 8.91%; (c) volatility of the Common Shares of 27.0% (based on the daily Common Share price for one year prior to the option grant); and (d) an option term of ten years. The Black-Scholes option pricing model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. The amount realized from an employee stock option ultimately depends on the market value of the Common Shares on the date of exercise. (3) The grant date present values for the options are determined using the Black-Scholes option pricing model. The assumptions used in calculating the Black-Scholes present values for the option grants were as follows: (a) a risk-free interest rate of 5.83% (based on the yield on a U.S. Treasury security with a maturity of 10 years (the life of the option)); (b) a dividend yield of 8.91%; (c) volatility of the Common Shares of 28.4% (based on the daily Common Share price for one year prior to the option grant); and (d) an option term of ten years. The Black-Scholes option pricing model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. The amount realized from an employee stock option ultimately depends on the market value of the Common Shares on the date of exercise. -39- STOCK OPTIONS HELD BY EXECUTIVE OFFICERS AT DECEMBER 31, 1999 The following table sets forth certain information regarding options for the purchase of Common Shares that were held by: (a) the Company's President and Chief Executive Officer and (b) each of the other Named Executive Officers of the Company at December 31, 1999. No options for the purchase of Common Shares were exercised by such persons during the fiscal year ended December 31, 1999. -40- AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION/SAR VALUES
NAME SHARES VALUE NUMBER OF VALUE OF ACQUIRED ON REALIZED SECURITIES UNEXERCISED EXERCISE (#) ($) UNDERLYING IN-THE-MONEY UNEXERCISED OPTIONS AT FY OPTIONS/SAR AT END ($) FY-END (#) EXERCISABLE/ EXERCISABLE/ UNEXERCISABLE UNEXERCISABLE - - -------------------------------- -------------- ------------ ------------------ -------------------- Anthony A. Nichols, Sr. N/A N/A 328,356 / 407,375 $0 / $0 Chairman of the Board Gerard H. Sweeney N/A N/A 554,062 / 611,094 $204,364 / $0 President and Chief Executive Officer Jeffrey F. Rogatz N/A N/A 14,146 / 42,436 $0 / $0 Senior Vice President and Chief Financial Officer John M. Adderly, Jr. N/A N/A 46,258 / 54,386 $0 / $0 Senior Vice President - Operations Anthony S. Rimikis N/A N/A 10,000 / 37,631 $0 / $0 Senior Vice President - Development & Construction
EMPLOYMENT AGREEMENTS Each of Messrs. Nichols, Sr. and Sweeney has entered into an employment agreement with the Company. The term of each agreement extends to December 31, 2003. The employment agreements establish annual base salaries for each of Messrs. Nichols, Sr. and Sweeney of $250,000 and $300,000, respectively, which compensation may be increased by the Board of Trustees in its discretion. The employment agreements include a provision entitling the applicable executive to a payment equal to three times the sum of his annual salary and bonus: (i) upon termination of the executive's employment without cause, (ii) upon resignation by the executive "for good reason" or (iii) upon his death. Resignation by the executive within six months following a reduction in the executive's salary, an adverse change in his status or responsibilities, certain changes in the location of the Company's headquarters or a change in control of the Company would each constitute a resignation "for good reason." EXECUTIVE LOANS In February 2000, the Company loaned Messrs. Sweeney and Nichols, Sr. $1.5 million and $1.0 million, respectively, solely to enable them to purchase Common Shares (96,000 shares in the case of Mr. Sweeney and 64,000 shares in the case of Mr. Nichols). The loans have a four-year term and bear interest at the lower of the Company's cost of funds and a rate based on the dividend payable on the Common Shares, but -41- not to exceed 10% per annum. The loans are subject to forgiveness over a three-year period, with the amount of forgiveness tied to the Company's total shareholder return compared to the total shareholder return of peer group companies. The loans are also subject to forgiveness in the event of a change of control of the Company. Each executive may repay the loans at maturity by surrendering Common Shares valued at the executive's initial per share purchase price ($15.625). SEVERANCE AGREEMENTS The Company has entered into severance agreements with Messrs. Rogatz, Adderly and Rimikis. These agreements provide that, if such executive's employment is terminated (or constructively terminated) within one year following the effective date of a change of control of the Company, such executive will be entitled to salary continuation for a period of one and a half years, with respect to Messrs. Rogatz and Adderly, and one year, with respect to Mr. Rimikis, from the effective date of such executive's termination. The Company has entered into a similar agreement with eight other officers of the Company. 401(K) PLAN The Company maintains a Section 401(k) and Profit Sharing Plan (the "401(k) Plan") covering its eligible employees and other designated affiliates. The 401(k) Plan permits eligible employees to defer up to a designated percentage of their annual compensation, subject to certain limitations imposed by the Internal Revenue Code. The employees' elective deferrals are immediately vested and non-forfeitable upon contribution to the 401(k) Plan. The Company reserves the right to make matching contributions or discretionary profit sharing contributions. The 401(k) Plan is designed to qualify under Section 401 of the Code so that contributions by employees or the Company to the 401(k) Plan and income earned on plan contributions, are not taxable to employees until withdrawn from the 401(k) Plan, and so that contributions by the Company, if any, will be deductible by them when made. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The Compensation Committee of the Board of Trustees is currently comprised of Charles P. Pizzi and Walter D'Alessio. Murry N. Gunty served as a member of the Compensation Committee while a member of the Board, commencing in March 1999. No executive officer of the Company serves on the Compensation Committee. In September 1998, the Company acquired a portfolio of office, industrial and mixed-use properties from affiliates of LFSRI. As part of this transaction, the Company acquired two additional properties from LFSRI affiliates during 1999. LFSRI obtained a contractual right to designate a nominee to serve on the Board, and the Company has agreed to use reasonable efforts to cause the nominee (currently Mr. Larson) to be elected to the Board. COMPENSATION OF TRUSTEES During 1999, the Company paid its Trustees, who are not officers of the Company, fees for their services as Trustees. These non-employee Trustees received annual compensation of $20,000 (of which one-half was paid in Common Shares and one-half was paid in cash) and a fee of $1,000 for attendance at each meeting of the Board of Trustees and $500 for participation in each meeting of a committee of the Board of Trustees. Commencing in 2000, non-employee Trustees may elect to receive up to all, but not less than half, of their annual fee in Common Shares. Trustees who are employees of the Company receive no separate compensation for services as a Trustee or committee member. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information as of March 15, 2000 (except as indicated in Note 3) regarding the beneficial ownership of Common Shares (and Common Shares for which Class A Units of -42- the Operating Partnership may be exchanged) by each Trustee, by each executive officer, by all Trustees and executive officers as a group, and by each person known to the Company to be the beneficial owner of 5% or more of the outstanding Common Shares. Except as indicted below, to the Company's knowledge, all of such Common Shares are owned directly, and the indicated person has sole voting and investment power.
NUMBER OF COMMON PERCENTAGE OF NAME AND BUSINESS ADDRESS OF BENEFICIAL OWNER (1) SHARES COMMON SHARES (2) - - ------------------------------------------------- ------ ----------------- Five Arrows Realty Securities III, L.L.C. (3) 4,875,000 11.9% LF Strategic Realty Investors L.P. (4) 4,107,143 10.2% Morgan Stanley Dean Witter & Co. (5) 2,452,603 6.8% Robert C. Larson (6) 4,107,143 10.2% D. Pike Aloian (7) 4,875,560 11.9% Donald E. Axinn (8) 1,112,544 3.0% Gerard H. Sweeney (9) 969,636 2.6% Anthony A. Nichols, Sr. (10) 718,580 2.0% John M. Adderly, Jr. (11) 98,052 * Jeffrey F. Rogatz (12) 73,706 * Anthony S. Rimikis (13) 38,247 * Warren V. Musser (14) 6,105 * Walter D'Alessio (15) 1,532 * Charles P. Pizzi (16) 976 * All Trustees and Executive Officers as a Group (12 persons) (17) 12,004,961 30.3%
* Less than one percent. (1) Unless indicated otherwise, the business address of each person listed is 14 Campus Boulevard, Suite 100, Newtown Square, Pennsylvania 19073. (2) Assumes that all Class A Units eligible for redemption held by each named person or entity are redeemed for Common Shares. The total number of Common Shares outstanding used in calculating the percentage of Common Shares assumes that none of the Class A Units eligible for redemption held by other named persons or entities are redeemed for Common Shares. (3) Includes (a) 4,375,000 Common Shares issuable upon conversion of 4,375,000 Series B Preferred Shares and (b) 500,000 Common Shares issuable upon the exercise of warrants that are currently exercisable. The business address of Five Arrows Realty Securities III, L.L.C. is 1251 Avenue of the Americas, 44th Floor, New York, New York 10020. (4) Based on an amended Schedule 13D filed with the Securities and Exchange Commission on December 9, 1999. Represents (a) 1,339,286 Common Shares issuable upon conversion, at $28.00 per Common Share, of 750,000 issued and outstanding Series A Preferred Shares having an aggregate stated value of $37.5 million which are directly owned by Prometheus AAPT Holdings, LLC ("Holdings") and (b) 2,767,857 Common Shares issuable upon redemption of Class A Units that are issuable upon redemption or conversion of Series B Preferred Units held by subsidiaries of Commonwealth Atlantic Properties, Inc. ("CAPI"). Excludes 714,285 Common Shares issuable upon redemption or conversion of Series B Preferred Units held by subsidiaries of CAPI which are generally not subject to redemption until August 31, 2000. LF Strategic Realty Investors L.P. ("LFSRI") is the sole member of Holdings and owns 84% of the common stock of CAPI and 100% of the common stock of Commonwealth Atlantic Properties Investors Trust, which in turn owns 16% of the common stock of CAPI. Lazard Freres Real Estate Investors L.L.C. ("LFREI") is the general -43- partner of LFSRI, and Lazard Freres & Co. LLC ("LF&Co.") is the managing member of LFREI. As a result of such relationships LFSRI, LFREI and LF&Co. may be deemed to indirectly beneficially own such Common Shares. LFSRI, LFREI and LF&Co. disclaim beneficial ownership of the Common Shares. Each of Holdings, LFSRI, LFREI and LF&Co. has a business address at 30 Rockefeller Plaza, New York, New York 10020. CAPI and its subsidiaries have a business address at 66 Canal Center Plaza, 7th Floor, Alexandria, Virginia 22314. (5) Based on an amended Schedule 13G filed with the Securities and Exchange Commission on February 7, 2000 for the year ended December 31, 1999. Morgan Stanley Dean Witter & Co. has a business address at 1585 Broadway, New York, New York 10036. Accounts managed by Morgan Stanley Dean Witter & Co. have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, certain of such Common Shares. (6) Mr. Larson is a Managing Director of LF&Co. and Chairman of LFREI and may be deemed to indirectly beneficially own all of the Common Shares which LF&Co. and LFREI indirectly beneficially own. See footnote 4. Mr. Larson disclaims beneficial ownership of all such Common Shares except to the extent of any pecuniary interest he may possess by virtue of his positions with LF&Co. and LFREI. Mr. Larson has a business address at 30 Rockefeller Plaza, New York, New York 10020. (7) Mr. Aloian, among others, is a Manager of Five Arrows Realty Securities III, L.L.C., which owns all 4,375,000 outstanding Series B Preferred Shares and warrants. Mr. Aloian disclaims beneficial ownership of the Series B Preferred Shares and Common Shares issuable upon exercise of warrants. Mr. Aloian has a business address at 1251 Avenue of the Americas, 44th Floor, New York, New York 10020. (8) Includes (a) 560 Common Shares, (b) 100,000 Common Shares issuable upon the exercise of options that are currently exercisable, and (c) 1,011,984 Common Shares issuable upon redemption of Class A Units. Mr. Axinn has a business address at 131 Jericho Turnpike, Jericho, NY 11743. (9) Includes (a) 415,574 Common Shares and (b) 554,062 Common Shares issuable upon the exercise of options and warrants that are currently exercisable or that become exercisable within 60 days of March 15, 2000. (10) Includes (a) 390,224 Common Shares and (b) 328,356 Common Shares issuable upon exercise of options and warrants that are currently exercisable or that become exercisable within 60 days of March 15, 2000. (11) Includes (a) 51,794 Common Shares and (b) 46,258 Common Shares issuable upon the exercise of options and warrants that are currently exercisable or that become exercisable within 60 days of March 15, 2000. (12) Includes (a) 59,560 Common Shares and (b) 14,146 Common Shares issuable upon the exercise of options that are currently exercisable or that become exercisable within 60 days of March 15, 2000. (13) Includes (a) 28,247 Common Shares and (b) 10,000 Common Shares issuable upon the exercise of options that become exercisable within 60 days of March 15, 2000. (14) Mr. Musser has a business address at 800 The Safeguard Building, 435 Devon Park Drive, Wayne, Pennsylvania 19087. (15) Mr. D'Alessio has a business address at 1735 Market Street, Philadelphia, Pennsylvania 19103. (16) Mr. Pizzi has a business address at 200 South Broad, Philadelphia, Pennsylvania 19103. -44- (17) Includes 4,107,143 Common Shares beneficially owned by LF&Co. and LFREI and 4,375,000 Common Shares beneficially owned by Five Arrows. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS LAZARD TRANSACTION In September 1998, the Company acquired a portfolio of office, industrial and mixed-use properties from LFSRI and its affiliates. As part of this transaction, the Company acquired two additional properties from LFSRI affiliates during 1999. LFSRI obtained a contractual right to designate a nominee to serve on the Board, and the Company has agreed to use reasonable efforts to cause the nominee (currently Mr. Larson) to be elected to the Board. AXINN TRANSACTION In October 1998, the Company consummated a transaction in which it acquired a portfolio of 22 office and industrial properties from the Donald E. Axinn Companies and affiliates. Mr. Axinn became a member of the Board of Trustees in October 1998. As part of this transaction, the Company agreed to acquire an additional six office properties containing an aggregate of approximately 983,053 net rentable square feet for an aggregate purchase price of $63.1 million, upon satisfaction of certain conditions. In December 1998, the Company acquired one of these properties, known as 3 Paragon Drive, Montvale, New Jersey, for $11.0 million in cash. OPTION PROPERTIES In 1996, Brandywine Operating Partnership, L.P., the entity through which the Company conducts its business, acquired an option from an affiliate of TNC entitling it to acquire, in the Operating Partnership's discretion, four properties containing an aggregate of approximately 159,000 net rentable square feet (collectively, the "Option Properties"). The option term ends in August 2000. The purchase price payable by the Operating Partnership upon exercise of the option is $10.00 in excess of the mortgage debt encumbering the Option Properties at the time of exercise (which as of December 31, 1999 aggregated $22.2 million). Exercise of the option is subject to a right of first refusal in favor of, and the consent of, the holder of the mortgage encumbering the Option Properties. There can be no assurance that the Company will exercise its option or that the holder of such mortgage will consent to the exercise of the option. ENVIRONMENTAL INDEMNITY Safeguard Scientifics, Inc., of which Mr. Musser is Chairman, has indemnified the Operating Partnership against the cost of remediation that may be required to be undertaken on account of certain environmental conditions at one of the properties acquired by the Company in 1996, subject to an aggregate maximum liability of approximately $2.0 million. The term of Safeguard's indemnity agreement expires in August 2001. EMPLOYEE SHARE PURCHASE LOANS In 1998, the Board authorized the Company to make loans totaling $5.0 million to enable employees of the Company to purchase Common Shares. Thirty-six employees of the Company participated in the loan program, including the following executive officers: Mr. Nichols, Sr. ($665,458), Mr. Sweeney ($993,006), Mr. Rogatz ($438,833), Mr. Adderly ($495,761), and Mr. Rimikis ($197,471). Proceeds of these loans were used to enable these executive officers to purchase Common Shares. The loans have five-year terms, are full recourse and are secured by the Common Shares purchased. Interest accrues on the loans at the lower of the interest rate borne on borrowings under the Company's revolving credit facility or a rate based on the dividend payments on the Common Shares and is payable quarterly. For the quarter ended December 31, 1999, this rate was 7.97% per annum. The principal of the loans is payable at the earlier of the stated maturity date or 90 days following termination of the applicable executive's employment with the Company. In addition, in January 1999, the Operating Partnership loaned executive officers of the Company an aggregate of $81,107, as follows: Mr. Nichols, Sr. ($26,897), Mr. Sweeney -45- ($32,276), Mr. Adderly ($11,521) and Mr. Rimikis ($10,413). Proceeds of these January 1999 loans funded tax withholding payments due in connection with certain year-end bonuses. These loans accrued interest at the short-term applicable federal rate and were forgiven at maturity on December 31, 1999. -46- PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K (a) 1. and 2. Financial Statements and Schedules The financial statements and schedules listed below are filed as part of this annual report on the pages indicated. INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
PAGE ---- Report of Independent Public Accountants.................................................F-1 Consolidated Balance Sheets as of December 31, 1999 and December 31, 1998................F-2 Consolidated Statements of Operations for the Years Ended December 31, 1999, 1998 and 1997..........................................................................F-3 Consolidated Statements of Beneficiaries' Equity for the Years Ended December 31, 1999, 1998 and 1997..........................................................................F-4 Consolidated Statements of Cash Flows for the Years Ended December 31, 1999, 1998 and 1997..........................................................................F-5 Notes to Consolidated Financial Statements...............................................F-6 Schedule II - Valuation and Qualifying Accounts..........................................F-19 Schedule III - Real Estate and Accumulated Depreciation..................................F-20
3. Exhibits
EXHIBITS NO. DESCRIPTION - - -------- --- ----------- (1) 3.1.1 Amended and Restated Declaration of Trust of the Company (amended and restated as of May 12, 1997). (2) 3.1.2 Articles of Amendment to Declaration of Trust of the Company (September 4, 1997). (3) 3.1.3 Articles of Amendment to Declaration of Trust of the Company (May 15, 1998). (4) 3.1.4 Articles Supplementary to Declaration of Trust of the Company (September 28, 1998). (5) 3.1.5 Articles of Amendment to Declaration of Trust of the Company (March 19, 1999). (6) 3.1.6. Articles Supplementary to Declaration of Trust of the Company (April 19, 1999). (7) 3.2 Amended and Restated Bylaws of the Company. (8) 10.01 Brandywine Realty Partners General Partnership Agreement. (8) 10.02 Second Amended and Restated Partnership Agreement of Brandywine Realty Services Partnership. (9) 10.03 Amendment to Brandywine Realty Partners General Partnership Agreement. (10) 10.04 Third Amendment to Brandywine Realty Partners General Partnership Agreement. (10) 10.05 Form of Warrant issued to Executive Officers. ** (10) 10.06 Environmental Indemnity Agreement between the Company and Safeguard Scientifics, Inc. (10) 10.07 Articles of Incorporation of Brandywine Realty Services Corporation, as amended. (11) 10.08 Amended and Restated Agreement of Limited Partnership of Brandywine Operating Partnership, L.P. (the "Operating Partnership"). (11) 10.09 Amendment No. 1 to Amended and Restated Agreement of Limited Partnership of the Operating Partnership. (11) 10.10 First Amendment to Amended and Restated Agreement of Limited Partnership of the Operating Partnership. (11) 10.11 Tax Indemnification Agreement - PWCC. (11) 10.12 Tax Indemnification Agreement - Laurel Oak. (11) 10.13 Tax Indemnification Agreement - English Creek. (12) 10.14 Second Amendment, dated March 31, 1998, to the Amended and Restated Agreement of Limited Partnership Agreement of Brandywine Operating Partnership, L.P. (12) 10.15 Tax Indemnification Agreement, dated March 31, 1998, by and between Brandywine Operating Partnership, L.P. and Brookstone Investors, L.L.C. (12) 10.16 Tax Indemnification Agreement, dated March 31, 1998, by and between Brandywine Operating Partnership, L.P. and Brookstone Holdings of Del.-4, L.L.C. EXHIBITS NO. DESCRIPTION - - -------- --- ----------- (12) 10.17 Tax Indemnification Agreement, dated March 31, 1998, by and between Brandywine Operating Partnership, L.P. and Brookstone Holdings of Del.-5, L.L.C. (12) 10.18 Tax Indemnification Agreement, dated March 31, 1998, by and between Brandywine Operating Partnership, L.P. and Brookstone Holdings of Del.-6, L.L.C. (13) 10.19 Contribution Agreement, dated April 7, 1998, by and between the entities listed on Schedule thereto and Brandywine Operating Partnership, L.P. (13) 10.20 First Amendment to Contribution Agreement dated May 8, 1998. (13) 10.21 Third Amendment, dated May 8, 1998, to the Amended and Restated Agreement of Limited Partnership of Brandywine Operating Partnership, L.P. (13) 10.22 Tax Indemnification Agreement dated May 8, 1998, by and between Brandywine Operating Partnership, L.P. and the parties identified on the signature page. (14) 10.23 Contribution Agreement (Axinn). (14) 10.24 Form of Axinn Options. ** (14) 10.25 Form of Hamer Options. ** (4) 10.26 Second Amended and Restated Credit Agreement. (4) 10.27 Pledge Agreement. (4) 10.28 Credit Agreement. (4) 10.29 Fourth Amendment to the Amended and Restated Agreement of Limited Partnership of the Operating Partnership creating the Series A Preferred Mirror Units. (4) 10.30 Fifth Amendment to the Amended and Restated Agreement of Limited Partnership of the Operating Partnership creating the Series B Preferred Units. (4) 10.31 Sixth Amendment to the Amended and Restated Agreement of Limited Partnership of the Operating Partnership. (4) 10.32 First Amendment to Contribution Agreement (Axinn). (15) 10.33 Contribution and Purchase Agreement (Lazard). (15) 10.34 Form of Board of Trustees Designation Letter. (5) 10.35 Amended and Restated Employment Agreement of Anthony A. Nichols, Sr.** (5) 10.36 Amended and Restated Employment Agreement of Gerard H. Sweeney. ** (5) 10.37 Amended and Restated Non-Qualified Stock Option Award to Anthony A. Nichols, Sr. ** (5) 10.38 Amended and Restated Non-Qualified Stock Option Award to Gerard H. Sweeney. ** (5) 10.39 Amended and Restated Non-Qualified Stock Option Award to John M. Adderly, Jr.** (5) 10.40 Non-Qualified Stock Option Award to Jeffrey F. Rogatz. ** (16) 10.41 Restricted Share Award to Anthony A. Nichols, Sr. ** (16) 10.42 Restricted Share Award to Gerard H. Sweeney. ** (16) 10.43 Restricted Share Award to John M. Adderly, Jr. ** (5) 10.44 Long-Term Performance Award for Anthony A. Nichols, Sr. ** (5) 10.45 Long-Term Performance Award for Gerard H. Sweeney. ** (5) 10.46 Long-Term Performance Award for John M. Adderly, Jr. ** (5) 10.47 Long-Term Performance Award for Anthony S. Rimikis. ** (5) 10.48 Severance Agreement (Jeffrey F. Rogatz). ** (5) 10.49 Severance Agreement (John M. Adderly, Jr.). ** (5) 10.50 Severance Agreement (Anthony S. Rimikis). ** 10.51 Third Amendment to Restricted Share Award to Anthony A. Nichols, Sr. ** 10.52 Third Amendment to Restricted Share Award to Gerard H. Sweeney. ** 10.53 Restricted Share Award to Jeffrey F. Rogatz (May 1999). ** 10.54 Restricted Share Award to Anthony S. Rimikis. ** 10.55 Restricted Share Award to Jeffrey F. Rogatz (January 2000). ** 10.56 Loan Agreement with Gerard H. Sweeney. ** 10.57 Loan Agreement with Anthony A. Nichols, Sr. ** 21.1 List of Subsidiaries of the Company. 23.1 Consent of Arthur Andersen LLP. 27.1 Financial Data Schedule.
(1) Previously filed as an exhibit to the Company's Form 8-K dated June 9, 1997 and incorporated herein by reference. (2) Previously filed as an exhibit to the Company's Form 8-K dated September 10, 1997 and incorporated herein by reference. (3) Previously filed as an exhibit to the Company's Form 8-K dated June 3, 1998 and incorporated herein by reference. (4) Previously filed as an exhibit to the Company's Form 8-K dated October 13, 1998 and incorporated herein by reference. (5) Previously filed as an exhibit to the Company's Form 10-K for the fiscal year ended December 31, 1999 and incorporated herein by reference. (6) Previously filed as an exhibit to the Company's Form 8-K dated April 26, 1999 and incorporated herein by reference. (7) Previously filed as an exhibit to the Company's Form 8-K dated December 31, 1996 and incorporated herein by reference. (8) Previously filed as an exhibit to the Company's Registration statement of Form S-11 (File No. 33-4175) and incorporated herein by reference. (9) Previously filed as an exhibit to the Company's Form 10-K for the fiscal year ended December 31, 1993 and incorporated herein by reference. (10) Previously filed as an exhibit to the Company's Form 8-K dated August 22, 1996 and incorporated herein by reference. (11) Previously filed as an exhibit to the Company's Form 8-K dated December 17, 1997 and incorporated herein by reference. (12) Previously filed as an exhibit to the Company's Form 8-K dated April 13, 1998 and incorporated herein by reference. (13) Previously filed as an exhibit to the Company's Form 8-K dated May 14, 1998 and incorporated herein by reference. (14) Previously filed as an exhibit to the Company's Form 8-K dated July 30, 1998 and incorporated herein by reference. (15) Previously filed as an exhibit to the Company's Form 8-K dated August 13, 1998 and incorporated herein by reference. (16) Previously filed as an exhibit to the Company's Form 10-K for the fiscal year ended December 31, 1997 and incorporated herein by reference. ** Management contract or compensatory plan or arrangement. (b) Reports on Form 8-K. During the fourth quarter of the year ended December 31, 1999, the Company did not file any reports on Form 8-K. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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 By: /s/ GERARD H. SWEENEY ----------------------------------- Gerard H. Sweeney President and Chief Executive Officer Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ ANTHONY A. NICHOLS, SR. Chairman of the Board and Trustee March 29, 2000 - - ------------------------------------ Anthony A. Nichols, Sr. /s/ GERARD H. SWEENEY President, Chief Executive Officer and March 29, 2000 - - ------------------------------------ Trustee (Principal Executive Officer) Gerard H. Sweeney /s/ JEFFREY F. ROGATZ Senior Vice President and Chief Financial March 29, 2000 - - ------------------------------------ Officer (Principal Financial Officer) Jeffrey F. Rogatz /s/ BRADLEY W. HARRIS Vice President and Chief Accounting March 29, 2000 - - ------------------------------------ Officer (Principal Accounting Officer) Bradley W. Harris /s/ WARREN V. MUSSER Trustee March 29, 2000 - - ------------------------------------ Warren V. Musser /s/ WALTER D'ALESSIO Trustee March 29, 2000 - - ------------------------------------ Walter D'Alessio /s/ CHARLES P. PIZZI Trustee March 29, 2000 - - ------------------------------------ Charles P. Pizzi /s/ DONALD E. AXINN Trustee March 29, 2000 - - ------------------------------------ Donald E. Axinn /s/ ROBERT C. LARSON Trustee March 29, 2000 - - ------------------------------------ Robert Larson /s/ D. PIKE ALOIAN Trustee March 29, 2000 - - ------------------------------------ D. Pike Aloian
-50- REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Beneficiaries of Brandywine Realty Trust: We have audited the consolidated balance sheets of Brandywine Realty Trust (a Maryland real estate investment trust) and subsidiaries as of December 31, 1999 and 1998, and the related consolidated statements of operations, beneficiaries' equity and cash flows for each of the three years in the period ended December 31, 1999. These consolidated financial statements and the schedules referred to below are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and schedules based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Brandywine Realty Trust and subsidiaries as of December 31, 1999 and 1998, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1999, in conformity with accounting principles generally accepted in the United States. Our audit was made for the purpose of forming an opinion on the basic consolidated financial statements taken as a whole. The schedules listed in the index to financial statements and schedules in Item 14 are presented for purposes of complying with the Securities and Exchange Commission's rules and are not a required part of the basic consolidated financial statements. These schedules have been subjected to the auditing procedures applied in the audit of the basic consolidated financial statements and in our opinion, fairly state in all material respects the financial data required to be set forth therein to in relation to the basic consolidated financial statements taken as a whole. ARTHUR ANDERSEN LLP Philadelphia, Pennsylvania March 3, 2000 F-1 BRANDYWINE REALTY TRUST CONSOLIDATED BALANCE SHEETS (IN THOUSANDS)
DECEMBER 31, DECEMBER 31, 1999 1998 ---- ---- ASSETS Real estate investments: Operating properties $ 1,828,097 $ 1,908,095 Accumulated depreciation (125,744) (67,477) ----------- ----------- 1,702,353 1,840,618 Cash and cash equivalents 5,692 13,075 Escrowed cash 10,814 3,489 Accounts receivable, net 25,893 10,769 Due from affiliates 7,361 5,474 Investment in management company 228 148 Investment in real estate ventures, at equity 35,682 15,315 Deferred costs, net 17,960 10,787 Other assets 23,933 12,005 ----------- ----------- Total assets $ 1,829,916 $ 1,911,680 =========== =========== LIABILITIES AND BENEFICIARIES' EQUITY Mortgage notes payable $ 462,809 $ 319,235 Borrowings under Credit Facility 376,825 681,325 Accounts payable and accrued expenses 17,071 10,295 Distributions payable 18,982 17,850 Tenant security deposits and deferred rents 18,871 12,123 ----------- ----------- Total liabilities 894,558 1,040,828 Minority interest 145,941 127,198 Preferred Shares, $0.01 par value; shares authorized-10,000,000; 8.75% Series B Preferred Shares, 4,375,000 issued and outstanding in 1999 95,366 -- Commitments and Contingencies Beneficiaries' equity: Preferred Shares, $0.01 par value; shares authorized-10,000,000; 7.25% Series A Preferred Shares, 750,000 issued and outstanding in 1999 and 1998 8 8 Common Shares of beneficial interest, $0.01 par value; shares authorized-100,000,000; shares issued and outstanding-36,372,590 in 1999 and 37,573,381 in 1998 364 376 Additional paid-in capital 769,165 789,381 Share warrants 908 962 Cumulative earnings 73,892 44,076 Cumulative distributions (150,286) (91,149) ----------- ----------- Total beneficiaries' equity 694,051 743,654 ----------- ----------- Total liabilities and beneficiaries' equity $ 1,829,916 $ 1,911,680 =========== ===========
The accompanying notes are an integral part of these financial statements. F-2 BRANDYWINE REALTY TRUST CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE INFORMATION)
YEAR ENDED DECEMBER 31, -------------------------------------------- 1999 1998 1997 ---- ---- ---- REVENUE: Rents $ 240,979 $ 163,865 $ 49,928 Tenant reimbursements 35,270 24,140 9,396 Other 6,971 4,856 1,736 --------- --------- --------- 283,220 192,861 61,060 OPERATING EXPENSES: Property operating expenses 64,586 44,459 14,866 Real estate taxes 25,497 16,365 5,278 Interest 66,659 36,886 7,079 Depreciation and amortization 72,454 48,002 15,589 Amortization of deferred compensation costs 1,758 1,488 -- Management fees 11,998 6,922 2,301 Administrative expenses 1,840 1,711 659 --------- --------- --------- Total operating expenses 244,792 155,833 45,772 --------- --------- --------- Income before equity in income of management company, equity in income of real estate ventures, gains on sales, minority interest and extraordinary items 38,428 37,028 15,288 Equity in income of management company 80 74 89 Equity in income of real estate ventures 979 144 -- --------- --------- --------- Income before gains on sales, minority interest and extraordinary items 39,487 37,246 15,377 Gains on sale of interests in real estate 3,115 209 -- --------- --------- --------- Income before minority interest and extraordinary items 42,602 37,455 15,377 Minority interest (7,996) (2,427) (376) --------- --------- --------- Income before extraordinary items 34,606 35,028 15,001 Extraordinary items -- (2,003) -- --------- --------- --------- Net Income 34,606 33,025 15,001 Income allocated to Preferred Shares (4,790) (702) (499) --------- --------- --------- Income allocated to Common Shares $ 29,816 $ 32,323 $ 14,502 ========= ========= ========= Earnings per Common Share before extraordinary item: Basic $ 0.80 $ 0.95 $ 0.96 ========= ========= ========= Diluted $ 0.80 $ 0.95 $ 0.95 ========= ========= ========= Earnings per Common Share after extraordinary item: Basic $ 0.80 $ 0.90 $ 0.96 ========= ========= ========= Diluted $ 0.80 $ 0.89 $ 0.95 ========= ========= =========
The accompanying notes are an integral part of these financial statements. F-3 BRANDYWINE REALTY TRUST CONSOLIDATED STATEMENTS OF BENEFICIARIES' EQUITY FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 (IN THOUSANDS, EXCEPT NUMBER OF SHARES)
Number of Par Value of Number of Par Value of Additional Preferred Preferred Common Shares Common Paid-in Shares Shares Shares Shares Capital ------ ------ ------ ------ ------- BALANCE, January 1, 1997 -- $ -- 7,013,240 $70 $113,047 Issuance of Common Shares -- -- 17,074,075 171 333,007 Net income -- -- -- -- -- Preferred Share distributions -- -- -- -- -- Distributions ($1.44 per share) -- -- -- -- -- ------- ---- ---------- ---- -------- BALANCE, December 31, 1997 -- -- 24,087,315 241 446,054 Issuance of Preferred Shares 750,000 8 -- -- 37,492 Issuance of Common Shares -- -- 13,572,810 136 307,491 Repurchase of Common Shares -- -- (86,744) (1) (1,656) Net income -- -- -- -- -- Preferred Share distributions -- -- -- -- -- Distributions ($1.52 per share) -- -- -- -- -- ------- ---- ---------- ---- -------- BALANCE, December 31, 1998 750,000 8 37,573,381 376 789,381 Issuance of Common Shares -- -- 143,504 1 1,894 Repurchase of Common Shares -- -- (1,344,295) (13) (22,164) Expiration of Common Share warrants -- -- -- -- 54 Net income -- -- -- -- -- Preferred Share distributions -- -- -- -- -- Distributions ($1.57 per share) -- -- -- -- -- ------- ---- ---------- ---- -------- BALANCE, December 31, 1999 750,000 $ 8 36,372,590 $364 $769,165 ======= ==== ========== ==== ========
Cumulative Share Earnings Cumulative Warrants (Deficit) Distributions Total -------- --------- ------------- ----- BALANCE, January 1, 1997 $962 $(3,248) $(8,905) $101,926 Issuance of Common Shares -- -- -- 333,178 Net income -- 15,001 -- 15,001 Preferred Share distributions -- -- (499) (499) Distributions ($1.44 per share) -- -- (24,078) (24,078) ---- ------- --------- -------- BALANCE, December 31, 1997 962 11,753 (33,482) 425,528 Issuance of Preferred Shares -- -- -- 37,500 Issuance of Common Shares -- -- -- 307,627 Repurchase of Common Shares -- -- -- (1,657) Net income -- 33,025 -- 33,025 Preferred Share distributions -- (702) -- (702) Distributions ($1.52 per share) -- -- (57,667) (57,667) ---- ------- --------- -------- BALANCE, December 31, 1998 962 44,076 (91,149) 743,654 Issuance of Common Shares -- -- -- 1,895 Repurchase of Common Shares -- -- -- (22,177) Expiration of Common Share warrants (54) -- -- -- Net income -- 34,606 -- 34,606 Preferred Share distributions -- (4,790) -- (4,790) Distributions ($1.57 per share) -- -- (59,137) (59,137) ---- ------- --------- -------- BALANCE, December 31, 1999 $908 $73,892 $(150,286) $694,051 ==== ======= ========= ========
The accompanying notes are an integral part of these financial statements. F-4
BRANDYWINE REALTY TRUST CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) YEAR ENDED DECEMBER 31, ----------------------------------------------- 1999 1998 1997 ---- ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 34,606 $ 33,025 $ 15,001 Adjustments to reconcile net income to net cash from operating activities: Minority interest 7,996 2,427 376 Depreciation and amortization 72,454 48,002 15,589 Equity in income of management company (80) (74) (89) Equity in income of real estate ventures (979) (144) -- Amortization of deferred compensation costs 1,758 1,488 -- Issuance of shares to trustees -- 29 -- Amortization of discounted notes payable 162 229 334 Gain on sale of interests in real estate (3,115) (209) -- Extraordinary items -- 2,003 -- Changes in assets and liabilities: Accounts receivable (15,124) (7,080) (2,323) Due from affiliates (1,887) (5,260) 303 Prepaid assets and deferred costs (19,194) (14,775) (1,303) Accounts payable and accrued expenses 5,167 7,704 1,473 Other liabilities 6,748 6,588 4,211 ----------- ----------- ----------- Net cash from operating activites 88,512 73,953 33,572 CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of properties (20,000) (878,484) (406,871) Sales of properties 147,700 14,704 -- Investment in real estate ventures (19,388) (9,691) (5,480) Decrease (increase) in escrowed cash (7,325) (3,277) 1,832 Capital expenditures (30,813) (26,301) (7,737) ----------- ----------- ----------- Net cash from investing activities 70,174 (903,049) (418,256) CASH FLOWS FROM FINANCING ACTIVITES: Proceeds from notes payable, Credit Facility 67,000 1,374,467 293,208 Repayment of notes payable, Credit Facility (371,500) (808,375) (177,975) Proceeds from mortgage notes payable 203,415 19,277 388 Repayment of mortgage notes payable (60,003) (14,669) (4,485) Debt financing costs (5,868) (4,916) (1,296) Proceeds from issuance of shares, net 95,366 301,023 305,055 Repurchases of Common Shares (22,177) (1,657) -- Distributions paid to shareholders (63,144) (51,440) (18,069) Distributions paid to minority partners (9,158) (981) (448) Purchase of minority interests -- -- (531) ----------- ----------- ----------- Net cash from financing activities (166,069) 812,729 395,847 ----------- ----------- ----------- (Decrease) increase in cash and cash equivalents (7,383) (16,367) 11,163 Cash and cash equivalents at beginning of year 13,075 29,442 18,279 ----------- ----------- ----------- Cash and cash equivalents at end of year $ 5,692 $ 13,075 $ 29,442 =========== =========== ===========
The accompanying notes are an integral part of these financial statements. F-5 BRANDYWINE REALTY TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1999 1. ORGANIZATION AND NATURE OF OPERATIONS Brandywine Realty Trust (collectively with its subsidiaries, the "Company") is a self-administered and self-managed real estate investment trust (a "REIT") active in acquiring, developing, redeveloping, leasing and managing office and industrial properties. As of December 31, 1999, the Company's portfolio included 199 office properties, 51 industrial facilities and one mixed use property (collectively, the "Properties") that contained an aggregate of approximately 16.6 million net rentable square fee. A majority of the Properties were located in the office and industrial markets surrounding Philadelphia (Northern and Western Suburbs and Wilmington, Delaware) and Southern and Central New Jersey. The balance of the Properties were primarily located in Northern New Jersey and Long Island, New York; and Northern and Richmond, Virginia. As of December 31, 1999, the Company also held economic interests in eleven office real estate ventures (the "Real Estate Ventures"). The Company's interest in its assets 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 December 31, 1999, held an approximate 87.8% interest in the Operating Partnership and was entitled to approximately 94.4% of the Operating Partnership's income after distributions to holders of Series B Preferred Units. The Operating Partnership holds a 95% economic interest in Brandywine Realty Services Corporation (the "Management Company") through its ownership of 100% of the Management Company's non-voting preferred stock and 5% of its voting common stock. As of December 31, 1999, the Management Company was managing and leasing properties containing an aggregate of approximately 20.5 million net rentable square feet, of which 16.5 million net rentable square feet related to properties owned by the Company or subject to purchase options held by the Company, and approximately 4.0 million net rentable square feet related to properties owned by unaffiliated third parties. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the Company and the Operating Partnership. The portion of the Operating Partnership not owned by the Company is presented as minority interest. Intercompany accounts and transactions have been eliminated. Certain amounts reported in prior years have been reclassified for comparative purposes. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. REAL ESTATE INVESTMENTS Real estate investments are carried at cost. Depreciation is computed using the straight-line method based on the following useful lives: buildings and improvements (25 to 35 years) and tenant improvements over the shorter of the lease term or the life of the asset. Direct construction costs related to development projects totaling $882,000 and $598,000 were capitalized during 1999 and 1998, respectively. Interest totaling $2.1 million in 1999, $1.2 million in 1998 and $62,000 in 1997 was capitalized related to the development of certain Properties and land holdings. Real estate investments will be reviewed for impairment if facts and circumstances indicate that the carrying value of such assets may not be recoverable. Measurement of any impairment loss will be based on the fair value of the asset; generally, determined using valuation techniques, such as the present value of expected future cash flows. No impairment adjustments have been made as a result of this review process during 1999, 1998 and 1997. F-6 CASH EQUIVALENTS Cash equivalents are highly-liquid investments with original maturities of three months or less. ACCOUNTS RECEIVABLE Accounts receivable, presented net of an allowance for doubtful accounts of $3.4 million in 1999 and $3.2 million in 1998, includes straight-line rent receivables of $16.6 million in 1999 and $8.5 million in 1998. OTHER ASSETS As of December 31, 1999, Other Assets included a $13.0 million loan (secured by real estate, bearing interest at 8%), prepaid real estate taxes of $4.5 million, an investment in US Realtel, Inc. of $2.5 million (see Note 13), and other assets. MANAGEMENT COMPANY Investment in the Management Company is accounted for using the equity method. The Management Company provides management, leasing, construction, development, redevelopment and other real estate related services for the Company's Properties and for third parties. DEFERRED COSTS Certain expenditures related to the financing and leasing of the Properties are capitalized. Capitalized financing fees are amortized over the related loan term and capitalized leasing costs are amortized over the related lease term. Accumulated amortization related to these costs was $6.5 million in 1999 and $3.7 million in 1998. FAIR VALUE OF FINANCIAL INSTRUMENTS Carrying amounts reported in the balance sheet for cash, accounts receivable, other assets, accounts payable and accrued expenses, and borrowings under credit facility approximate fair value due to the nature of these instruments. Accordingly, these items have been excluded from the fair value disclosures. REVENUE RECOGNITION Rental revenue is recognized on a straight-line basis over the lease term regardless of when payments are due. The straight-line rent adjustment increased revenue by approximately $8.1 million in 1999, $6.3 million in 1998, and $1.7 million in 1997. Certain lease agreements contain provisions that require tenants to reimburse a pro rata share of real estate taxes and certain common area maintenance costs. No tenant represented 10% or more of the Company's rental revenue in 1999, 1998 or 1997. INCOME TAXES The Company elects to be taxed as a real estate investment trust under Sections 856-860 of the Internal Revenue Code. In management's opinion, the requirements to maintain this election are being met. Accordingly, no provision for Federal income taxes has been reflected in the financial statements. Earnings and profits, which determine the taxability of distributions to shareholders, differ from net income reported for financial reporting purposes due to differences in cost basis, the estimated useful lives used to compute depreciation, and the allocation of net income and loss for financial versus tax reporting purposes. The Company is subject to a 4% Federal excise tax, if sufficient taxable income is not distributed within prescribed time limits. The excise tax equals 4% of the annual amount, if any, by which the sum of (a) 85% of the Company's ordinary income and (b) 95% of the Company's net capital gain exceeds cash distributions and certain taxes paid by the Company. No excise tax was incurred in 1999, 1998, or 1997. The Management Company is subject to Federal and state income taxes. The operating results of the Management Company include a provision for income taxes of $57,000 in 1999, $83,000 in 1998, and $21,000 in 1997. F-7 EARNINGS PER SHARE Basic earnings per share is calculated by dividing income applicable to Common Shares by the weighted-average number of shares outstanding during the period. Diluted earnings per share includes the effect of common share equivalents outstanding during the period. STOCK-BASED COMPENSATION PLANS The Company follows Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, in accounting for stock-based compensation plans and discloses the fair value of options granted and pro forma earnings as permitted by Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation. COMPREHENSIVE INCOME Net income as reported by the Company reflects total comprehensive income for the years ended December 31, 1999, 1998 and 1997. NEW PRONOUNCEMENTS In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. The FASB also issued SFAS No. 137 that delays the effective date for SFAS 133 until fiscal years beginning after June 15, 2000. SFAS 133 establishes accounting and reporting standards for the recognition and measurement of derivative instruments and hedging activities. The Company has not quantified the impact of SFAS 133 on the Company's future financial position or results of operations. 3. MINORITY INTEREST Income allocated to the Minority Interest is based on the percentage ownership of the Operating Partnership held by third parties throughout the year. Minority interest is comprised of Class A Units of limited partnership interest ("Class A Units") and Series B Preferred Units of limited partnership interest ("Series B Preferred Units"). The Operating Partnership issued these interests to persons that contributed assets to the Operating Partnership. The Operating Partnership is obligated to redeem, at the request of a holder, each Class A Unit for cash or one Common Share, at the option of the Company. Each Series B Preferred Unit has a stated value of $50.00 and is convertible, at the option of the holder, into Class A Units at a conversion price of $28.00. The conversion price declines to $26.50, if the average trading price of the Common Shares during the 60-day period ending December 31, 2003 is $23.00 or less. The Series B Preferred Units bear a preferred distribution of 7.25% per annum, subject to an increase in the event quarterly distributions paid to holders of Common Shares exceed $0.51 per share. The Company distributed $1.8 million to the holders of Series B Preferred Units during 1999. As of December 31, 1999, there were 2,156,150 Class A Units and 1,950,000 Series B Preferred Units held by third party investors. 4. ACQUISITIONS AND DISPOSITIONS OF REAL ESTATE INVESTMENTS The Company's acquisitions were accounted for by the purchase method. The results of each acquired property is included in the Company's results of operations from their respective purchase dates. 1999 - - ---- During 1999, the Company sold 27 properties (seven office properties and 20 industrial facilities), containing 2.6 million net rentable square feet, for $147.7 million, realizing a net gain of $3.1 million, and acquired six properties (five office properties and one industrial facility), containing 463,000 net rentable square feet, for $42.0 million. The purchase price of these properties was satisfied with cash of $20.0 million, the issuance of 83,333 Class A Units valued at $2.0 million ($24 per unit), and the issuance of 400,000 Series B Preferred Units valued at $20.0 million ($50 per unit). The results of operations on a pro forma basis on the above acquisitions and dispositions are not material. F-8 1998 - - ---- During 1998, the Company purchased 153 office, industrial and mixed-use properties, containing 11.6 million net rentable square feet, for $1.3 billion. The purchase price was satisfied with cash of $848.8 million, debt assumption of $265.5 million, the issuance of 1,754,763 Class A Units valued at $41.0 million, the issuance of 1,550,000 Series B Preferred Units with a stated value of $77.5 million; and the issuance of 750,000 Series A Preferred Shares (the "Series A Preferred Shares") with a stated value of $37.5 million. The Company also sold one office property, containing 156,000 net rentable square feet, for $14.7 million, resulting in a gain of $209,000. All pro forma financial information presented herein is unaudited and not necessarily indicative of the results that would have occurred if the acquisitions had been consummated on the respective dates indicated, nor does the pro forma information purport to represent the results of operations for future periods. The following unaudited pro forma financial information of the Company for the years ended December 31, 1998 and 1997 gives effect to the properties acquired and the Common Share, Class A Unit, Series B Preferred Unit and Series A Preferred Share issuances during 1998 as if the purchases and issuances had occurred on January 1, 1997.
YEAR ENDED DECEMBER 31, -------------------------------- 1998 1997 -------------- --------------- (unaudited and in thousands, except per share data) Pro forma total revenues $266,462 $246,792 Pro forma net income before extraordinary items allocated to Common Shares 25,272 18,338 Pro forma net income after extraordinary items allocated to Common Shares 23,269 18,338 Pro forma net income per Common Share before extraordinary items (diluted) $ 0.67 $ 0.50 Pro forma net income per Common Share after extraordinary items (diluted) $ 0.62 $ 0.50
1997 - - ---- During 1997, the Company acquired 80 properties (61 office properties and 19 industrial facilities) containing 5.1 million net rentable square feet for $403.7 million. The purchase price was satisfied with cash of $378.3 million, debt assumption of $15.9 million, and $9.5 million in Class A Units. The following unaudited pro forma financial information of the Company for the years ended December 31, 1997 and 1996 gives effect to the properties acquired during 1997 and 1996 as if the purchases and Common Share issuances had occurred on January 1, 1996. YEAR ENDED DECEMBER 31, ----------------------------- 1997 1996 ---- ---- (unaudited and in thousands, except per share data) Pro forma total revenues $94,856 $86,309 Pro forma net income allocated to Common Shares 23,890 15,450 Pro forma net income per Common Share $ 1.02 $ 0.69 5. MANAGEMENT COMPANY Management fees paid by the Properties to the Management Company amounted to $11.3 million in 1999, $6.9 million in 1998, and $2.3 million in 1997. The Management Company also receives reimbursement of certain costs attributable to the operations of the Properties. These costs, included in property operating expenses, amounted to $7.3 million in 1999, $5.3 million in 1998, and $1.9 million in 1997. Summarized unaudited financial information for the Management Company as of and for the years ended December 31, 1999, 1998 and 1997 is as follows: F-9 1999 1998 1997 ---- ---- ---- (unaudited and in thousands) Total assets $ 3,659 $ 1,763 $ 924 Total revenue 22,103 13,011 5,077 Net income 85 77 93 Company's share of net income 80 74 89 6. INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTURES The Company accounts for its non-controlling interests in Real Estate Ventures using the equity method. Non-controlling ownership interests generally range from 15% to 65%, subject to specified priority allocations in certain real estate ventures. These investments, initially recorded at cost, are subsequently adjusted for the Company's net equity in ventures' income or loss and cash contributions and distributions. The Company's investment in Real Estate Ventures is as follows (in thousands):
Real Estate Company's Share Ownership Carrying Venture of Real Estate Percentage (1) Amount Debt at 100% Venture Income -------------- ------ ------------ -------------- Two Tower Bridge Associates 35% $ 2,806 $ 7,737 $ 275 Four Tower Bridge Associates 65% 6,221 11,000 480 Five Tower Bridge Associates 15%(2) -- 44,305 -- Six Tower Bridge Associates 65% 5 18,700 -- Christiana Center Operating Company I, LLC 50% 2,171 12,914 126 Christiana Center Operating Company II, LLC 50% 1,087 6,225 21 Christiana Center Operating Company III, LLC 50% -- -- -- Interstate 202, G.P 50% 762 5,901 72 Plymouth Meeting General Partnership (3) 60% 5,067 4,938 -- Brandywine Tysons International Partners (4) 25% 11,647 61,500 5 1000 Chesterbrook Boulevard Partnership 50% 5,916 27,000 -- -------- -------- -------- $ 35,682 $200,220 $ 979 ======== ======== ========
(1) Ownership percentage represents the Company's entitlement to residual distributions after payment by the applicable venture of priority returns. (2) This percentage gives effect to the dilution that will occur upon funding by a third party of an equity commitment that will be used to repay a construction loan upon maturity of the loan in 2001. (3) The Company has loaned this entity $4.3 million that bears interest at 10%. This loan (plus accrued interest) will convert into equity after certain conditions have been met. (4) The Company has guaranteed $16.2 million of this entity's debt. The Company also has a $3.5 million receivable from this entity that the Company has included in its investment in the entity. The Company also holds an interest in an entity that acquired 20 industrial properties from the Company in 1999. The Company has no control rights over this entity and is entitled to share in distributions, only after the other partners have received agreed upon priority returns on their investments. As of December 31, 1999, the Company had committed to make future equity contributions to Real Estate Ventures totaling approximately $6.4 million. F-10 7. INDEBTEDNESS The Company utilizes credit facility borrowings for general business purposes, including the acquisition of properties and the repayment of debt. At December 31, 1999, the Company had a $450.0 million unsecured credit facility (the "Credit Facility") that matures in September 2001, which can be extended through September 2002 upon payment of a fee. The Credit Facility bears interest at LIBOR (LIBOR was 6.47% at December 31, 1999) plus 1.5%, with the spread over LIBOR subject to reductions from .125% to .35% and a possible increase of .25% based on the Company's leverage. As of December 31, 1999, the Company had $376.8 million outstanding under the Credit Facility. The weighted-average interest rate on the Company's unsecured credit facilities was 6.95% in 1999, 7.05% in 1998, and 7.4% in 1997. As of December 31, 1999, the Company had $462.8 million of mortgage notes payable secured by 101 of the Properties and certain land holdings. Fixed rate mortgages, totaling $343.6 million, require payments of principal and/or interest (or imputed interest) at rates ranging from 5.0% to 9.88% and mature or matured at various dates from January 2000 through July 2027. Non-interest bearing mortgage loans (included with the fixed rate mortgages), totaling $2.5 million in 1999 and $2.3 million in 1998 with interest imputed at 8.0%, have unamortized discounts of $118,000 in 1999 and $280,000 in 1998. Discount amortization aggregated $162,000 in 1999, $234,000 in 1998, and $333,000 in 1997. Variable rate mortgages, totaling $119.2 million, require payments of principal and/or interest at rates ranging from LIBOR plus .76% to 2.5% or the prime rate (the prime rate was 8.5% at December 31, 1999) minus .75% to 1.0% and mature at various dates from January 2001 through July 2027. To minimize the risks of fluctuating interest rates, the Company purchased a two-year interest rate cap agreement, related to $75 million of its variable rate mortgages, that limits the Company's exposure in the event that the LIBOR exceeds 6.25%. The Company also obtained an interest rate cap agreement that runs consecutively and limits the Company's exposure until the loan matures in the event that the LIBOR exceeds 7%. The weighted-average interest rate on the Company's mortgages was 7.1% in 1999, 7.6% in 1998, and 8.3% in 1997. The Company has entered into interest rate swap and rate cap agreements designed to reduce the impact of interest rate changes on its variable rate debt. At December 31, 1999, the Company had two interest rate swap agreements for notional principal amounts aggregating $150 million. The swap agreements effectively fix the interest rate on $50 million of Credit Facility borrowings at 5.844% until November 2000 and on $100 million at 5.805% until November 2001. The interest rate caps effectively fix the interest rate on two variable rate mortgages. One rate cap fixes the interest rate on a mortgage with a notional value of $75 million at 6.25% until April 2001 and then at 7% until maturity in April 2002. The second interest rate cap fixes the interest rate on a mortgage with a notional value of $28 million at 8.7% until July 2004. As of December 31, 1999, the fair value of the interest rate swap agreements, based on quotes from an independent third party, was $1.73 million and represents the estimated amount that the Company would receive if the contracts were terminated. Aggregate principal payments on mortgage notes payable and the Credit Facility at December 31, 1999 are due as follows (in thousands): Mortgage Notes Credit Payable Facility Total ------- -------- ----- 2000 $ 11,538 $ -- $ 11,538 2001 43,429 376,825 420,254 2002 95,170 -- 95,170 2003 18,898 -- 18,898 2004 118,177 -- 118,177 2005 and thereafter 175,597 -- 175,597 -------- -------- -------- $462,809 $376,825 $839,634 ======== ======== ======== As of December 31, 1999, the Company was in compliance with all debt covenants. The Company paid interest (including capitalized interest ) totaling $67.3 million in 1999, $35.0 million in 1998, and $6.1 million in 1997. As of December 31, 1999, the carrying value of the Company's debt exceeded fair market value by approximately $19.0 million, as determined by using year-end interest rates and market conditions. During 1998, the Company wrote-off $2.0 million of unamortized deferred financing costs accounted for as an extraordinary item. 8. PREFERRED SHARES AND BENEFICIARIES' EQUITY In April 1999, the Company entered into an agreement with an investment fund to sell up to $105.0 million of convertible preferred securities with an 8.75% coupon rate. The Series B Preferred Shares, convertible into Common Shares at a conversion price of $24.00 per share, are entitled to quarterly dividends equal to the greater of $0.525 per share or the quarterly dividend on the number of Common Shares into which a Series B Preferred Share is convertible. The Series B Preferred Shares are perpetual and may be redeemed, at the Company's option, at par, beginning in April 2007. In addition, the Company may require the conversion of the Series B Preferred Shares into Common Shares starting in April 2004, if certain conditions are met, including that the Common Shares are then trading in excess of 130% of the conversion price. Upon certain changes in control of the Company, the holder may require the Company to redeem its F-11 Series B Preferred Shares. In addition, as part of the transaction, the Company issued the holder seven-year warrants exercisable for 500,000 Common Shares at an exercise price of $24.00 per share. At the initial funding, the Company issued 1,041,667 Series B Preferred Shares for gross proceeds of $25 million. In June 1999, the Company issued an additional 416,666 Series B Preferred Shares for gross proceeds of $10 million. In December 1999, the Company issued 2,916,667 Series B Preferred Shares for the remaining $70 million. In 1998, the Company issued 750,000 Series A Preferred Shares. The Series A Preferred Shares, with a stated value of $50.00, are convertible into Common Shares, at the option of the holder, at a conversion price of $28.00. The conversion price declines to $26.50, if the trading price of the Common Shares during the 60-day period ending December 31, 2003 is $23.00 or less. The Series A Preferred Shares bear a preferred distribution of 7.25% per annum, subject to an increase if quarterly distributions paid to Common Share holders exceeds $0.51 per share. In 1998, the Company's Board of Trustees approved a share repurchase program authorizing the Company to repurchase up to 2,000,000 of its outstanding Common Shares. In 1999, the Board increased the authorization to 3,000,000 Common Shares. No time limit has been placed on the duration of the share repurchase program. During 1999, the Company repurchased 1,344,295 Common Shares for $22.2 million (average price of $16.69 per share). At December 31, 1999, 438,194 "restricted" Common Shares were held by certain executives of the Company. The restricted shares, valued at $10.7 million at issuance, are amortized over their respective vesting periods of four to five years. 9. STOCK OPTIONS AND WARRANTS The Company maintains a plan that authorizes the issuance of incentive stock options and non-qualified stock options to key employees to purchase Common Shares of the Company. The terms and conditions of option awards are determined by the Board of Trustees. Incentive stock options may not be granted at exercise prices less than fair value of the stock at the time of grant. Options granted by the Company generally vest over two to five years. All options awarded by the Company to date are non-qualified stock options. Stock options were granted at exercise prices ranging from 125% to 165% of fair market value on the grant date in 1999 and at exercise prices ranging from fair market value to 115% of fair market value in 1998. The following table summarizes stock option activity for the three years ended December 31, 1999: Number Weighted- of Shares Average Grant Price Range Under Exercise -------------------- Option Price From To ------------- ------------ -------------------- Balance at January 1, 1997 and December 31, 1997 290,000 $ 20.09 $ 6.21 $ 19.50 Granted 2,243,704 27.35 24.00 29.04 ---------- Balance at December 31, 1998 2,533,704 25.51 6.21 29.04 Granted 250,763 27.51 25.25 29.04 Canceled (62,609) 27.93 25.25 29.04 ---------- Balance at December 31, 1999 2,721,858 26.38 6.21 29.04 ========== Using the Black-Scholes option pricing model, the estimated weighted-average fair value of stock options granted was $1.21 in 1999 and $2.12 in 1998. No stock options were granted in 1997. Assumptions made in determining estimates of fair value include: risk-free interest rates of 5.6% in 1999 and 5.8% in 1998, a volatility factor of .280 in 1999 and .187 in 1998, a dividend yield of 8.9% in 1999 and 6.8% in 1998, and a weighted-average life expectancy of 10 years in 1999 and 1998. F-12 The following table summarizes stock options outstanding as of December 31, 1999:
Weighted- Average Weighted- Weighted- Range of Number of Remaining Average Number of Average Exercise Options Contractual Exercise Options Exercise Prices Outstanding Life Price Exercisable Price - - --------------------- ------------ ----------- --------- ----------- ---------- $6.21 to $15.00 46,667 5.4 years $ 12.00 46,667 $ 12.00 $15.01 to $23.00 243,333 3.4 19.50 243,333 19.50 $23.01 to $29.04 2,431,858 9.9 27.35 477,161 26.58 ------------- ---------- $6.21 to $29.04 2,721,858 9.2 26.38 767,161 23.44 ============= ===========
The following table summarizes the pro forma effects assuming compensation cost for such awards had been recorded based upon estimated fair values (in thousands, except per share amounts): Year ended December 31, ----------------------------------------------- 1999 1998 1997 -------------- -------------- ----------- Net income: As reported $ 29,816 $ 32,323 $ 14,502 Pro forma 28,852 31,440 14,502 Earnings per common share: As reported Basic $ 0.80 $ 0.90 $ 0.96 Diluted $ 0.80 $ 0.89 $ 0.95 Pro forma Basic $ 0.77 $ 0.87 $ 0.96 Diluted $ 0.77 $ 0.87 $ 0.95 Only options granted after December 31, 1994 are reflected in the calculations. Therefore, the pro forma disclosures are not likely to be representative of future pro forma amounts. As of December 31, 1999, there are 838,772 warrants outstanding to purchase Common Shares of the Company at exercise prices ranging from $19.50 to $25.50. 10. SEGMENT INFORMATION The Company has adopted Statement of Financial Accounting Standards No. 131, Disclosures about Segments of an Enterprise and Related Information. This Statement established standards for reporting financial information about operating segments in interim and annual financial reports and provides for a "management approach" in identifying the reportable segments. The Company has four reportable segments: (1) Pennsylvania Suburbs (includes Berks, Bucks, Chester, Cumberland, Dauphin, Delaware, Lehigh, Montgomery, Northampton and Philadelphia counties), (2) Southern and Central New Jersey (includes Atlantic, Burlington, Camden and Mercer counties), (3) New York (includes Northern New Jersey and Long Island, New York) and (4) Virginia (includes Northern Virginia and Richmond, Virginia. Corporate is responsible for cash and investment management and certain other general support functions. Segment information for the two years ended December 31, 1999 and 1998 is as follows (in thousands): F-14
Southern Pennsylvania and Central Suburbs New Jersey New York Virginia Corporate Total ------- ---------- -------- -------- --------- ----- 1999: - - ----- Real estate investments, at cost $895,697 $457,604 $169,837 $304,959 $ -- $1,828,097 Total revenue 142,427 73,426 25,081 39,562 2,724 283,220 Property operating expenses and real estate taxes 44,347 26,230 7,835 11,671 -- 90,083 Interest 6,861 8,406 2,912 2,495 45,985 66,659 Depreciation & amortization 35,433 18,751 6,577 9,375 2,318 72,454 1998: - - ----- Real estate investments, at cost $987,268 $463,784 $143,650 $313,393 $ -- $1,908,095 Total revenue 110,368 57,360 11,911 10,607 2,615 192,861 Property operating expenses and real estate taxes 33,359 20,938 4,142 2,385 -- 60,824 Interest 1,335 3,258 -- 833 31,460 36,886 Depreciation & amortization 26,894 14,260 3,338 2,726 784 48,002
11. NET INCOME PER COMMON SHARE The following table details the number of shares and net income used to calculated basic and diluted earnings per share for the three years ended December 31, 1999 (in thousands, except per share amounts).
For the year ended December 31, ---------------------------------------------------------------------------------- 1999 1998 1997 -------------------------- ---------------------- ---------------------- Basic Diluted Basic Diluted Basic Diluted ----- ------- ----- ------- ----- ------- Net income $34,606 $34,606 $33,025 $33,025 $15,001 $15,001 Income allocated to Preferred Shares (4,790) (4,790) (702) (702) (499) -- ---------- ---------- ---------- ---------- ---------- ---------- Income available to common shareholders $29,816 $29,816 $32,323 $32,323 $14,502 $15,001 ========== ========== ========== ========== ========== ========== Weighted-average shares outstanding 37,348,022 37,348,022 36,073,773 36,073,773 15,030,002 15,030,002 Preferred Shares -- -- -- -- -- 686,214 Options and warrants -- 14,932 -- 63,580 -- 77,113 ---------- ---------- ---------- ---------- ---------- ---------- Total weighted-average shares outstanding 37,348,022 37,362,954 36,073,773 36,137,353 15,030,002 15,793,329 ========== ========== ========== ========== ========== ========== Earnings per share $0.80 $0.80 $0.90 $0.89 $0.96 $0.95 ========== ========== ========== ========== ========== ==========
12. DISTRIBUTIONS
1999 1998 1997 ---- ---- ---- COMMON SHARE DISTRIBUTIONS: Ordinary income $1.44 $1.52 $1.18 Return of capital 0.13 0.00 0.26 ------ ----- ----- Total distributions per share $1.57 $1.52 $1.44 ===== ===== ===== Percentage classified as ordinary income 91.8% 100.0% 82.0% Percentage classified as return of capital 8.2% 0.0% 18.0% PREFERRED SHARE DISTRIBUTIONS: Total distributions declared $4,790,000 $702,000 $499,000
F-15 13. RELATED-PARTY TRANSACTIONS In 1996, Brandywine Operating Partnership, L.P., the entity through which the Company conducts its business, acquired an option from an affiliate of TNC entitling it to acquire, in the Operating Partnership's discretion, four properties containing an aggregate of approximately 159,000 net rentable square feet (collectively, the "Option Properties"). The option term ends in August 2000. The purchase price payable by the Operating Partnership upon exercise of the option is $10.00 in excess of the mortgage debt encumbering the Option Properties at the time of exercise (which as of December 31, 1999 aggregated $22.2 million). Exercise of the option is subject to a right of first refusal in favor of, and the consent of, the holder of the mortgage encumbering the Option Properties. There can be no assurance that the Company will exercise its option or that the holder of such mortgage will consent to the exercise of the option. In September 1998, the Company acquired a portfolio of office, industrial and mixed use properties from LFSRI and its affiliates. As part of this transaction, the Company acquired two additional properties from LFSRI affiliates during 1999. LFSRI obtained a contractual right to designate a nominee to serve on the Board, and the Company has agreed to use reasonable efforts to cause the nominee (currently Mr. Larson) to be elected to the Board. In October 1998, the Company consummated a transaction in which it acquired a portfolio of 22 office and industrial properties from the Donald E. Axinn Companies and affiliates. Mr. Axinn became a member of the Board of Trustees in October 1998. As part of this transaction, the Company agreed to acquire an additional six office properties containing an aggregate of approximately 983,000 net rentable square feet for an aggregate purchase price of $63.1 million, upon satisfaction of certain conditions. In December 1998, the Company acquired one of these properties for $11.0 million in cash. In 1998, the Board authorized the Company to issue loans totaling $5.0 million to enable employees of the Company to purchase Common Shares. The loans have five-year terms, are full recourse, and are secured by the Common Shares purchased. Interest, payable quarterly, accrues on the loans at the lower of the interest rate borne on borrowings under the Company's Credit Facility or a rate based on the dividend payments on the Common Shares. As of December 31, 1999, the interest rate was 7.97% per annum. The loans are payable at the earlier of the stated maturity date or 90 days following the employee's termination. As of December 31, 1999, the Company loaned $4.6 million to employees to purchase 266,443 Common Shares of the Company. In December 1999, the Company purchased 384,615 shares of US Realtel, Inc. ("USR") Common Stock for $2.5 million and received warrants exercisable for 600,000 shares of USR Common Stock. The warrants have an exercise price of $8.00 per share and expire on December 31, 2004. The Company loaned USR $1.5 million, and agreed to loan USR an additional $1.5 million in 2000. The loan matures at the earlier of either July 2001 or the completion of a qualified public offering. The loan bears interest, payable quarterly, at 12%. In addition, as part of the transaction, an officer of the Company was designated a position on USR's Board of Directors. Due from affiliates includes $1.1 million in 1999 and $0.4 million in 1998 advanced to the Management Company for working capital. 14. OPERATING LEASES The Company leases properties to tenants under operating leases with various expiration dates extending to 2019. As of December 31, 1999, leases covering approximately 2.4 million square feet or 13.1% of the net rentable square footage were scheduled to expire during 2000. Minimum future rentals and straight-line rental income on noncancelable leases at December 31, 1999 are as follows (in thousands): F-16 Minimum Straight-line Year Rent Rental Income Total ---- ---- ------------- ----- 2000 $ 217,017 $ 5,392 $ 222,409 2001 188,680 2,311 190,991 2002 154,992 (496) 154,496 2003 124,205 (1,510) 122,695 2004 98,265 (4,534) 93,731 2005 and thereafter 268,487 (17,807) 250,680 ----------- - -------- ----------- $ 1,051,646 $ (16,644) $ 1,035,002 =========== =========== =========== Total minimum future rentals presented above do not include amounts to be received as tenant reimbursements for increases in certain operating costs. 15. SUMMARY OF INTERIM RESULTS (UNAUDITED) The following is a summary interim financial information as of and for the years ended December 31, 1999 and 1998 (in thousands, except per share data):
1st 2nd 3rd 4th Quarter Quarter Quarter Quarter ------- ------- ---------- ------- 1999: - - ----- Total revenue $70,783 $71,672 $70,194 $70,571 Earnings before interest, depreciation and amortization (a) 45,780 46,316 45,457 45,729 Net income 7,198 7,833 11,064(b) 8,511 Income allocated to Common Shares 6,518 6,763 9,619 6,916 Net income per Common Share: Basic $ 0.17 $ 0.18 $ 0.26 $ 0.19 Diluted $ 0.17 $ 0.18 $ 0.26 $ 0.19 1998: - - ----- Total revenue $33,102 $43,130 $47,256 $69,373 Earnings before interest, depreciation and amortization (a) 21,405 27,943 30,199 44,075 Net income before extraordinary item 8,803 10,422 9,559 6,244 Net income after extraordinary item 7,945 10,422 8,414 6,244 Income allocated to Common Shares 7,945 10,422 8,392 5,564 Net income per Common Share before extraordinary item: Basic $ 0.28 $ 0.28 $ 0.25 $ 0.15 Diluted $ 0.28 $ 0.28 $ 0.25 $ 0.15 Net income per Common Share after extraordinary item: Basic $ 0.25 $ 0.28 $ 0.22 $ 0.15 Diluted $ 0.25 $ 0.28 $ 0.22 $ 0.15
(a) Earnings before interest, depreciation and amortization, excludes gains or losses on sale of real estate investments, minority interest, and extraordinary items. (b) The Company recorded a $3.5 million gain on sale of properties during the 3rd quarter of 1999. The summation of quarterly earnings per share amounts do not necessarily equal year to date amounts. F-17 16. COMMITMENTS AND CONTINGENCIES: Legal Proceedings The Company is involved from time to time in litigation on various matters, including disputes with tenants and disputes arising out of agreements to purchase or sell properties. Given the nature of the Company's business activities, these lawsuits are considered routine to the conduct of its business. The result of any particular lawsuit cannot be predicted, because of the very nature of litigation, the litigation process and its adversarial nature, and the jury system. The Company is a defendant in a case in which the plaintiffs allege that the Company breached its obligation to purchase a portfolio of properties for approximately $83.0 million. In July 1999, the complaint against the Company was dismissed with prejudice. The plaintiffs then appealed the dismissal and the motion for reconsideration. The case is currently on appeal before the Appellate Division of the Superior Court of New Jersey. Briefing on the appeal has been completed and the parties are awaiting a decision. In November 1999, a third-party complaint was filed in the Superior Court of New Jersey, Burlington County by BRI OP Limited Partnership ("BRI OP") against the Company as well as several other persons and entities, including against several former affiliates of the Company, relative to Greentree Shopping Center located in Marlton, NJ ("Subject Property"). The Subject Property was owned and managed by a subsidiary of the Company between 1986 and 1988. BRI OP, also a former owner of the Subject Property, has been sued by the present owner and manager of the Subject Property, seeking indemnification and contribution for costs related to the remediation of environmental contamination allegedly caused by a dry cleaning business which was a tenant of the Subject Property. BRI OP, in turn, brought a third-party action against the Company and others seeking indemnification for environmental remediation and clean up costs for which it may be held liable. The litigation is presently in the early states of discovery, and the Company is, as of the date of these financial statements, unable to estimate either the potential remediation and/or clean-up costs, or the Company's ultimate responsibility for such costs. Letters-of-Credit and Other Commitments In connection with certain mortgages, the Company is required to maintain leasing and capital reserve accounts with the mortgage lender through letters-of-credit which totaled $12.3 million at December 31, 1999. The Company is also required to maintain escrow accounts for taxes, insurance and tenant security deposits that amounted to $10.8 million at December 31, 1999. The related tenant rents are deposited into the loan servicer's depository accounts, which are used to fund debt service, operating expenses, capital expenditures and the escrow and reserve accounts, as necessary. Any excess cash is included in cash and cash equivalents. As of December 31, 1999, the Company owned 412.6 acres of land for future development and held options to purchase 42.9 additional acres. F-18 Brandywine Realty Trust Schedule II Valuation and Qualifying Accounts (in thousands)
Additions Balance at ------------ Balance Beginning Charged to at End Description of Period expense Deductions of Period ----------- --------- ------- ---------- --------- Allowance for doubtful accounts: Year ended December 31, 1999 $3,172 $1,034 $ 848 $3,358 ====== ====== ===== ====== Year ended December 31, 1998 $ 582 $2,710 $ 120 $3,172 ====== ====== ===== ====== Year ended December 31, 1997 $ 40 $ 542 $ -- $ 582 ====== ====== ===== ======
(a) Reconciliation of Real Estate: The following table reconciles the real estate investments from January 1, 1999 to December 31, 1999 (in thousands): Balance at beginning of year $ 1,908,095 Additions: Acquisitions 42,000(1) Capital expenditures 30,813 Dispositions (152,811) ------------- Balance at end of year $ 1,828,097 ============= --------- (1) Comprised of $20 million in cash and $22 million in units. (b) Reconciliation of Accumulated Depreciation: The following table reconciles the accumulated depreciation on real estate investments from January 1, 1999 to December 31, 1999 (in thousands): Balance at beginning of year $ 67,477 Depreciation expense 66,493 Dispositions (8,226) ------------ Balance at end of year $ 125,744 ============ (c) The loans are cross-collateralized and secured by first mortgages on 3 properties. (d) Unsecured debt in connection with the Company's acquisition of a property portfolio containing 8 properties. (e) The loan is cross-collateralized and secured by mortgages on 27 properties. (f) The loan is cross-collateralized and secured by mortgages on 4 properties. (g) The loan is cross-collateralized and secured by mortgages on 26 properties. (h) The loan is cross-collateralized and secured by mortgages on 6 properties. (i) The loan is cross-collateralized and secured by mortgages on 3 properties.
Initial Cost ----------------------------------------- Net Improvements (Retirements) Encumberances at Building and Since City State December 31, 1999 Land Improvements Acquisitions - - ---------------------------------------------------------------------------------------------------------------------------------- One Greentree Centre Marlton NJ 6,777 (c) 345 4,440 210 Two Greentree Centre Marlton NJ -- (c) 264 4,693 214 Three Greentree Centre Marlton NJ -- (c) 323 6,024 394 One Righter Parkway Talleyville DE -- 2,545 10,195 164 457 Haddonfield Road Cherry Hill NJ 8,819 2,142 9,120 1,014 168 Franklin Corner Drive Lawrenceville NJ -- 398 1,597 152 8000 Lincoln Drive Marlton NJ -- 606 2,887 804 7248 Tilghman Street Allentown PA -- 731 2,969 27 6575 Snowdrift Road Allentown PA -- 601 2,411 18 7310 Tilghman Street Allentown PA 2,449 553 2,246 480 33 Street Road - Greenwood Square I Bensalem PA 1,300 (d) 851 3,407 382 33 Street Road - Greenwood Square II Bensalem PA -- (d) 1,126 4,511 1,025 33 Street Road - Greenwood Square III Bensalem PA -- (d) 350 1,401 285 456 Creamery Way Exton PA -- 635 2,548 4 110 Summit Drive Exton PA -- 403 1,647 224 468 Creamery Way Exton PA -- 527 2,112 29 486 Thomas Jones Way Exton PA -- 806 3,256 535 650 Dresher Road Horsham PA -- 636 2,501 74 700 Business Center Drive Horsham PA -- 550 2,201 232 800 Business Center Drive Horsham PA -- 896 3,585 64 1155 Business Center Drive Horsham PA -- 1,029 4,124 (16) One Progress Avenue Horsham PA -- 1,425 5,629 126 500 Enterprise Road Horsham PA -- 1,303 5,188 8 500 North Gulph Road King of Prussia PA -- 1,303 5,201 531 2200 Cabot Boulevard Langhorne PA -- 770 3,117 444 2260/70 Cabot Boulevard Langhorne PA -- (d) 415 1,661 3000 Cabot Boulevard Langhorne PA -- (d) 485 1,940 18 Campus Boulevard Newtown Square PA -- 786 3,312 83 16 Campus Boulevard Newtown Square PA -- 1,153 4,627 86 2240/50 Butler Pike Plymouth Meeting PA -- 1,104 4,627 103 120 West Germantown Pike Plymouth Meeting PA -- 685 2,773 84 140 West Germantown Pike Plymouth Meeting PA -- 481 1,976 302 2260 Butler Pike Plymouth Meeting PA -- 661 2,727 241 100 Commerce Drive Newark DE -- 1,160 4,633 63 King & Harvard Cherry Hill NJ -- 1,698 1,069 1,884 One South Union Place Cherry Hill NJ -- 771 8,047 739 500 Scarborough Drive Egg Harbor NJ -- 746 2,977 283 501 Scarborough Drive Egg Harbor NJ -- 746 2,977 39 1 Foster Avenue Gibbsboro NJ -- 92 364 10 2 Foster Avenue Gibbsboro NJ -- 185 730 20 4 Foster Avenue Gibbsboro NJ -- 183 726 26 5 Foster Avenue Gibbsboro NJ -- 8 32 3 7 Foster Avenue Gibbsboro NJ -- 231 921 20 10 Foster Avenue Gibbsboro NJ -- 244 971 79 55 U.S. Avenue Gibbsboro NJ -- 1,116 4,435 42 6 East Clementon Road Gibbsboro NJ -- 1,345 5,366 241 20 East Clementon Road Gibbsboro NJ -- 769 3,055 146 50 East Clementon Road Gibbsboro NJ -- 243 964 5 5 U.S. Avenue Gibbsboro NJ -- 21 81 3 1000 East Lincoln Drive Marlton NJ -- 264 1,059 15 Two Eves Drive Marlton NJ -- 818 3,461 131 Four A Eves Drive Marlton NJ -- 539 2,168 173 Four B Eves Drive Marlton NJ -- 588 2,369 45 Five Eves Drive Marlton NJ -- 703 2,819 391 1000/2000 West Lincoln Drive Marlton NJ -- 888 3,568 150 3000 West Lincoln Drive Marlton NJ -- 569 2,293 105 Initial Cost ----------------------------------------- Net Improvements (Retirements) Encumberances at Building and Since City State December 31, 1999 Land Improvements Acquisitions - - ---------------------------------------------------------------------------------------------------------------------------------- 4000/5000 West Lincoln Drive Marlton NJ -- 877 3,526 206 9000 West Lincoln Drive Marlton NJ -- 610 2,422 140 10000 Midlantic Drive Mt. Laurel NJ 117,769(h) 3,206 12,857 673 4000 Midlantic Drive Mt. Laurel NJ -- 714 5,085 89 2000 Midlantic Drive Mt. Laurel NJ -- 2,202 8,823 193 15000 Midlantic Drive Mt. Laurel NJ -- (h) 3,061 12,254 106 9000 Midlantic Drive Mt. Laurel NJ -- 1,472 5,895 14 1000 Howard Boulevard Mt. Laurel NJ 5,199 2,298 9,288 434 1120 Executive Boulevard Mt. Laurel NJ 5,379 2,074 8,415 671 1000 Atrium Way Mt. Laurel NJ -- 2,061 8,180 313 Main Street - Promenade Voorhees NJ -- 531 2,052 11 Main Street - Plaza 1000 Voorhees NJ -- 2,729 10,931 522 Main Street - Piazza Voorhees NJ -- 696 2,802 42 Main Street- CAM Voorhees NJ -- 3 11 13 1007 Laurel Oak Road Voorhees NJ -- 1,563 6,241 16 111 Presidential Boulevard Bala Cynwyd PA -- 5,419 21,612 925 100 Berwyn Park Berwyn PA 74,200 (i) 1,823 7,290 366 200 Berwyn Park Berwyn PA -- (i) 2,364 9,460 253 300 Berwyn Park Berwyn PA -- (i) 3,527 13,422 152 1974 Sproul Road Broomall PA -- 841 3,368 292 855 Springdale Drive Exton PA -- 838 3,370 58 748 Springdale Drive Exton PA -- 236 931 14 500 Office Center Drive Ft. Washington PA -- 1,617 6,480 1,181 501 Office Center Drive Ft. Washington PA -- 1,796 7,192 873 220 Commerce Drive Ft. Washington PA -- 1,086 4,338 273 300 Welsh Road Horsham PA -- 1,290 5,157 402 655 Business Center Drive Horsham PA -- 544 2,529 652 2000 Cabot Boulevard Langhorne PA -- (d) 569 2,281 202 2005 Cabot Boulevard Langhorne PA -- (d) 313 1,257 4 2010 Cabot Boulevard Langhorne PA -- (d) 760 3,091 6 321 Norristown Road Lower Gwyned PA -- 1,289 5,176 241 323 Norristown Road Lower Gwyned PA -- 1,685 6,751 130 Campus Boulevard - Lot 7, 8 & 9 Newtown Square PA -- 2,363 -- -- 100-300 Gundy Drive Reading PA 500 6,468 25,180 1,738 100 Katchel Blvd Reading PA -- 1,881 7,423 83 2510 Metropolitan Drive Trevose PA -- 3,311 13,218 1,624 1111 Old Eagle School Road Valley Forge PA -- 1,967 7,721 2,614 1336 Enterprise Drive West Goshen PA -- 731 2,946 27 256-263 Chapman Road / Cambridge Newark DE -- 292 1,185 1 256-263 Chapman Road / Bellevue Newark DE -- 374 1,547 25 256-263 Chapman Road / Commonwealth Newark DE -- 351 1,421 61 256-263 Chapman Road / Oxford Newark DE -- 410 1,663 243 256-263 Chapman Road / Chopin Newark DE -- 484 1,958 142 256-263 Chapman Road / Stockton Newark DE -- 291 1,176 -- 256-263 Chapman Road / CAM Newark DE -- -- -- -- 4550 New Linden Hill Road Wilmington DE -- 1,998 7,995 258 301 North Walnut Street Wilmington DE -- (h) 8,495 34,016 1,250 201 North Walnut Street Wilmington DE -- (h) 10,359 41,509 177 4364 South Alston Avenue Durham NC 98,237 (e) 1,622 6,419 128 Westpark Land Durham NC 2,184 -- -- 2,184 1255 Broad Street Bloomfield NJ -- 992 3,947 40 104 Windsor Center Drive East Windsor NJ -- 977 3,918 1,236 44 National Road Edison NJ -- 324 1,288 81 835 New Durham Road Edison NJ -- 705 2,553 29 837 New Durham Road Edison NJ -- 298 1,184 28 993 Lenox Drive Lawrenceville NJ -- 9,627 17,996 (6,806) 997 Lenox Drive Lawrenceville NJ 2,410 9,700 151 25 1009 Lenox Drive Lawrenceville NJ 7,042 4,912 19,284 1,379 102 Chestnut Ridge Road Montvale NJ -- 1,618 6,437 93 25 Phillips Parkway Montvale NJ -- 1,960 7,799 99 Initial Cost ----------------------------------------- Net Improvements (Retirements) Encumberances at Building and Since City State December 31, 1999 Land Improvements Acquisitions - - ---------------------------------------------------------------------------------------------------------------------------------- 3 Paragon Drive Montvale NJ -- 2,006 8,757 1,437 700 East Gate Drive Mt. Laurel NJ -- (e) 3,569 14,436 71 701 East Gate Drive Mt. Laurel NJ -- (e) 1,736 6,877 158 815 East Gate Drive Mt. Laurel NJ -- (e) 637 2,584 11 817 East Gate Drive Mt. Laurel NJ -- (e) 611 2,426 49 303 Fellowship Drive Mt. Laurel NJ -- (e) 1,493 6,055 223 305 Fellowship Drive Mt. Laurel NJ -- (e) 1,422 5,768 451 307 Fellowship Drive Mt. Laurel NJ -- (e) 1,564 6,342 241 309 Fellowship Drive Mt. Laurel NJ -- (e) 1,518 6,154 410 304 Harper Drive Mt. Laurel NJ -- (e) 657 2,674 204 305 Harper Drive Mt. Laurel NJ -- (e) 222 913 8 308 Harper Drive Mt. Laurel NJ -- (e) 1,643 6,663 88 East Gate Land Mt. Laurel NJ (e) 930 1 -- Park 80 West Plaza I Saddlebrook NJ -- (h) 6,242 26,938 3,144 Park 80 West Plaza II Saddlebrook NJ -- (h) 7,668 30,533 2,292 33 West State Street Trenton NJ -- 6,016 24,091 (21) 50 East State Street Trenton NJ -- 8,926 35,735 247 100 Voice Road Carle Place NY -- 400 1,594 8 110 Voice Road Carle Place NY -- 256 1,018 5 91 North Industry Court Deer Park NY -- 550 2,191 47 180 Central Ave / 2 Engineers Lane Farmingdale NY -- 221 882 5 8 Engineers Lane Farmingdale NY -- 194 774 62 19 Engineers Lane Farmingdale NY -- 114 452 5 1000 Axinn Avenue Garden City NY -- 546 2,507 (292) 645 Stewart Avenue Garden City NY -- 414 1,648 9 245 Old Country Road Mellville NY -- 1,232 4,903 26 336 South Service Road Melville NY -- 707 2,812 29 111 Ames Court Plainview NY -- 177 671 35 55 Ames Court Plainview NY -- 818 3,259 492 10 Skyline Drive Plainview NY -- 239 951 42 11 Commercial Street Plainview NY -- 237 942 23 80 Skyline Drive Plainview NY -- 484 1,937 3 120 Express Street Plainview NY -- 404 1,591 82 7010 Snowdrift Way Allentown PA -- (e) 817 3,324 (9) 7350 Tilghman Street Allentown PA -- 3,414 13,716 926 7450 Tilghman Street Allentown PA -- (e) 2,867 11,631 886 7150 Windsor Drive Allentown PA -- (e) 1,034 4,219 (1) 7535 Windsor Drive Allentown PA -- (e) 3,376 13,400 387 Iron Run Land Allentown PA (e) 7,534 108 -- 920 Harvest Drive Blue Bell PA -- 2,433 9,738 (186) 925 Harvest Drive Blue Bell PA -- 1,671 6,606 69 155 Rittenhouse Circle Bristol PA -- (e) 370 1,437 53 150 Corporate Center Drive Camp Hill PA -- 964 3,871 50 200 Corporate Center Drive Camp Hill PA -- 1,647 6,606 281 300 Corporate Center Drive Camp Hill PA 1,168 4,823 19,301 219 426 Lancaster Avenue Devon PA -- 1,689 6,756 3 160-180 West Germantown Pike East Norriton PA 5,577 1,603 6,418 37 50 Swedesford Square Frazer PA -- (e) 3,902 15,254 354 52 Swedesford Square Frazer PA -- (e) 4,242 16,579 379 922 Swedesford Road Frazer PA -- 215 1 10 520 Virginia Drive Ft. Washington PA -- 845 3,455 29 2401 Park Drive Harrisburg PA -- 182 728 32 2404 Park Drive Harrisburg PA -- 167 668 93 2405 Park Drive Harrisburg PA -- 424 1,697 30 2407 Park Drive Harrisburg PA -- 464 1,864 19 600 Corporate Circle Drive Harrisburg PA -- 363 1,452 59 800 Corporate Circle Drive Harrisburg PA -- 414 1,653 22 200 Nationwide Drive Harrisburg PA -- 100 403 -- 500 Nationwide Drive Harrisburg PA -- 208 850 2 755 Business Center Drive Horsham PA -- 1,363 2,334 564 Initial Cost ----------------------------------------- Net Improvements (Retirements) Encumberances at Building and Since City State December 31, 1999 Land Improvements Acquisitions - - ---------------------------------------------------------------------------------------------------------------------------------- Keith Valley Lots 2, 4, 5 Horsham PA 3,853 65 -- 1000 First Avenue King of Prussia PA -- (e) 2,772 10,936 282 1020 First Avenue King of Prussia PA -- (e) 2,168 8,576 170 1040 First Avenue King of Prussia PA -- (e) 2,861 11,282 652 1060 First Avenue King of Prussia PA -- (e) 2,712 10,953 160 2490 Boulevard of the Generals King of Prussia PA -- 348 1,394 13 610 Freedom Business Center King of Prussia PA -- 2,017 8,070 62 620 Freedom Business Center King of Prussia PA -- 2,770 11,014 63 630 Freedom Business Center King of Prussia PA -- 2,773 11,144 122 640 Freedom Business Center King of Prussia PA -- 4,222 16,891 49 600 Park Avenue King of Prussia PA -- 1,012 4,048 -- 650 Park Avenue King of Prussia PA -- 1,917 4,378 1,255 630 Clark Avenue King of Prussia PA -- 547 2,190 -- 620 Allendale Road King of Prussia PA -- 1,478 3,839 -- 640-660 Allendale Road King of Prussia PA -- 3,671 3,343 65 680 Allendale Road King of Prussia PA -- 689 2,756 543 751-761 Fifth Avenue King of Prussia PA -- 1,097 4,391 -- 741 First Avenue King of Prussia PA -- 1,287 5,151 10 875 First Avenue King of Prussia PA -- 618 2,473 108 180 Wheeler Court Langhorne PA -- 608 2,436 -- 105 / 140 Terry Drive Newtown PA -- 2,299 8,238 1,275 14 Campus Boulevard Newtown Square PA -- 2,243 4,217 966 1760 Market Street Philadelphia PA -- 3,020 (e) 12,210 Philadelphia Marine Center Philadelphia PA -- 533 (e) 2,196 1105 Berkshire Boulevard Reading PA -- 1,115 4,510 99 1150 Berkshire Boulevard Reading PA -- 435 1,748 220 11781 Lee Jackson Memorial Highway Fairfax VA 85,982 (g) 3,616 14,468 1 12015 Lee Jackson Memorial Highway Fairfax VA -- (g) 5,398 21,563 113 4805 Lake Brooke Drive Glen Allen VA -- (g) 1,640 6,567 (13) 2812 Emerywood Parkway Henrico VA -- (g) 1,069 4,281 (13) 1880 Campus Commons Drive Reston VA -- (g) 5,707 22,768 23 9100 Arboretum Parkway Richmond VA 25,800 (f) 1,363 5,489 123 9200 Arboretum Parkway Richmond VA -- (f) 984 3,973 (9) 300 Arboretum Place Richmond VA -- (f) 5,450 21,892 321 9210 Arboretum Parkway Richmond VA -- (f) 1,110 4,474 56 9011 Arboretum Parkway Richmond VA -- (g) 1,856 7,702 168 9211 Arboretum Parkway Richmond VA -- (g) 581 2,433 (8) 600 East Main Street Richmond VA -- (e) 9,809 38,255 1,509 2100-2108 West Laburnum Richmond VA 1,649 2,482 8,846 (245) 2244 Dabney Road Richmond VA -- (g) 551 2,203 (7) 2110 Tomlynn Street Richmond VA -- (g) 159 637 (3) 2201 Dabney Street Richmond VA -- (g) 367 1,470 (5) 1957 Westmoreland Street Richmond VA -- (g) 1,062 4,241 219 2511 Brittons Hill Road Richmond VA -- (g) 1,201 4,820 7 2240 Dabney Road Richmond VA -- (g) 264 1,059 (4) Greater Dabney Richmond VA (g) 3,740 -- -- 2256 Dabney Road Richmond VA -- (g) 356 1,427 9 2251 Dabney Road Richmond VA -- (g) 387 1,552 (4) 2120 Tomlynn Street Richmond VA -- (g) 280 1,125 22 2169-79 Tomlynn Street Richmond VA -- (g) 422 1,695 54 2212-2224 Tomlynn Street Richmond VA -- (g) 502 2,014 1 2277 Dabney Road Richmond VA -- (g) 507 2,034 (6) 2246 Dabney Road Richmond VA -- (g) 455 1,822 (6) 2130-2146 Tomlynn Street Richmond VA -- (g) 353 1,416 (4) 2248 Dabney Road Richmond VA -- (g) 511 2,049 (1) 2201-2245 Tomlynn Street Richmond VA -- (g) 1,020 4,067 293 2221-2245 Dabney Road Richmond VA -- (g) 530 2,123 (5) 1900 Gallows Road Vienna VA -- (g) 7,344 29,308 -- 2000 Lenox Drive Lawrenceville NJ -- 14,962 9,668 810 125 Jericho Turnpike Jericho NY -- 963 4,026 242 131 Jericho Turnpike Jericho NY -- 340 1,295 121 263 Old Country Road Mellville NY -- 1,567 6,266 1 7130 Ambassador Drive Allentown PA 761 3,046 68 761 630 Dresher Road Horsham PA -- 771 3,083 -- Allendale King of Prussia PA -- -- 3,772 1,008 11 Campus Boulevard Newtown Square PA -- 1,112 4,067 -- Concourse Land Richmond VA -- 1,074 -- -- Gateway Parkway Land Chesterfield VA -- 1,278 -- -- $ 462,809 $ 377,304 $1,398,301 $52,492 ========= ========= ========== =======
Gross Amount at Which Carried December 31, 1999 ------------------------------------------------------------- Accumulated Depreciation at Building and December 31, Date of Date Depreciable Land Improvements Total (a) 1999 (b) Construction Acquired Life - - ------------------------------------------------------------------------------------------------------------------------------------ One Greentree Centre 345 4,650 4,995 2,509 1982 1986 25 Two Greentree Centre 264 4,907 5,171 2,760 1983 1986 25 Three Greentree Centre 323 6,418 6,741 3,511 1984 1986 25 One Righter Parkway 2,545 10,359 12,904 1,283 1989 1996 25 457 Haddonfield Road 2,142 10,134 12,276 1,492 1990 1996 31.5 168 Franklin Corner Drive 398 1,749 2,147 238 1976 1996 25 8000 Lincoln Drive 606 3,691 4,297 1,130 1983 1996 25 7248 Tilghman Street 731 2,996 3,727 537 1987 1996 25 6575 Snowdrift Road 601 2,429 3,030 504 1988 1996 25 7310 Tilghman Street 553 2,726 3,279 467 1985 1996 25 33 Street Road - Greenwood Square I 851 3,789 4,640 610 1985 1996 25 33 Street Road - Greenwood Square II 1,126 5,536 6,662 911 1985 1996 25 33 Street Road - Greenwood Square III 350 1,686 2,036 298 1985 1996 25 456 Creamery Way 635 2,552 3,187 407 1987 1996 25 110 Summit Drive 403 1,871 2,274 346 1985 1996 25 468 Creamery Way 527 2,141 2,668 411 1990 1996 25 486 Thomas Jones Way 806 3,791 4,597 888 1990 1996 25 650 Dresher Road 636 2,575 3,211 475 1984 1996 25 700 Business Center Drive 550 2,433 2,983 344 1986 1996 25 800 Business Center Drive 896 3,649 4,545 488 1986 1996 25 1155 Business Center Drive 1,029 4,108 5,137 1,026 1990 1996 25 One Progress Avenue 1,425 5,755 7,180 786 1986 1996 25 500 Enterprise Road 1,303 5,196 6,499 1,265 1990 1996 25 500 North Gulph Road 1,303 5,732 7,035 945 1979 1996 25 2200 Cabot Boulevard 770 3,561 4,331 563 1985 1996 25 2260/70 Cabot Boulevard 415 1,783 2,198 259 1984 1996 25 3000 Cabot Boulevard 485 2,235 2,720 362 1986 1996 25 18 Campus Boulevard 786 3,395 4,181 891 1990 1996 25 16 Campus Boulevard 1,153 4,713 5,866 907 1990 1996 25 2240/50 Butler Pike 1,104 4,730 5,834 973 1984 1996 25 120 West Germantown Pike 685 2,857 3,542 463 1984 1996 25 140 West Germantown Pike 481 2,278 2,759 426 1984 1996 25 2260 Butler Pike 661 2,968 3,629 568 1984 1996 25 100 Commerce Drive 1,160 4,696 5,856 432 1989 1997 25 King & Harvard 1,698 2,953 4,651 124 1997 25 One South Union Place 771 8,786 9,557 1,450 1997 25 500 Scarborough Drive 746 3,260 4,006 336 1987 1997 25 501 Scarborough Drive 746 3,016 3,762 251 1987 1997 25 1 Foster Avenue 92 374 466 32 1972 1997 25 2 Foster Avenue 185 750 935 70 1974 1997 25 4 Foster Avenue 183 752 935 61 1974 1997 25 5 Foster Avenue 8 35 43 3 1968 1997 25 7 Foster Avenue 231 941 1,172 76 1983 1997 25 10 Foster Avenue 244 1,050 1,294 89 1983 1997 25 55 U.S. Avenue 1,116 4,477 5,593 364 1982 1997 25 6 East Clementon Road 1,345 5,607 6,952 511 1980 1997 25 20 East Clementon Road 769 3,201 3,970 356 1986 1997 25 50 East Clementon Road 243 969 1,212 83 1986 1997 25 5 U.S. Avenue 21 84 105 7 1987 1997 25 1000 East Lincoln Drive 264 1,074 1,338 89 1981 1997 25 Two Eves Drive 818 3,592 4,410 584 1987 1997 25 Four A Eves Drive 539 2,341 2,880 283 1987 1997 25 Four B Eves Drive 588 2,414 3,002 315 1987 1997 25 Five Eves Drive 703 3,210 3,913 393 1986 1997 25 1000/2000 West Lincoln Drive 888 3,718 4,606 484 1982 1997 25 3000 West Lincoln Drive 569 2,398 2,967 291 1982 1997 25 Gross Amount at Which Carried December 31, 1999 ------------------------------------------------------------- Accumulated Depreciation at Building and December 31, Date of Date Depreciable Land Improvements Total (a) 1999 (b) Construction Acquired Life - - ------------------------------------------------------------------------------------------------------------------------------------ 4000/5000 West Lincoln Drive 877 3,732 4,609 480 1982 1997 25 9000 West Lincoln Drive 610 2,562 3,172 349 1983 1997 25 10000 Midlantic Drive 3,206 13,530 16,736 1,594 1990 1997 25 4000 Midlantic Drive 714 5,174 5,888 1,010 1981 1997 25 2000 Midlantic Drive 2,202 9,016 11,218 944 1989 1997 25 15000 Midlantic Drive 3,061 12,360 15,421 1,315 1991 1997 25 9000 Midlantic Drive 1,472 5,909 7,381 613 1989 1997 25 1000 Howard Boulevard 2,298 9,722 12,020 1,462 1988 1997 25 1120 Executive Boulevard 2,074 9,086 11,160 1,301 1987 1997 25 1000 Atrium Way 2,061 8,493 10,554 834 1989 1997 25 Main Street - Promenade 531 2,063 2,594 235 1988 1997 25 Main Street - Plaza 1000 2,729 11,453 14,182 1,312 1988 1997 25 Main Street - Piazza 696 2,844 3,540 339 1990 1997 25 Main Street- CAM 3 24 27 9 1997 25 1007 Laurel Oak Road 1,563 6,257 7,820 511 1996 1997 25 111 Presidential Boulevard 5,419 22,537 27,956 2,006 1974 1997 25 100 Berwyn Park 1,823 7,656 9,479 817 1986 1997 25 200 Berwyn Park 2,364 9,713 12,077 932 1987 1997 25 300 Berwyn Park 3,527 13,574 17,101 1,322 1989 1997 25 1974 Sproul Road 841 3,660 4,501 425 1972 1997 25 855 Springdale Drive 838 3,428 4,266 354 1986 1997 25 748 Springdale Drive 236 945 1,181 104 1986 1997 25 500 Office Center Drive 1,617 7,661 9,278 822 1974 1997 25 501 Office Center Drive 1,796 8,065 9,861 972 1974 1997 25 220 Commerce Drive 1,086 4,611 5,697 426 1985 1997 25 300 Welsh Road 1,290 5,559 6,849 511 1985 1997 25 655 Business Center Drive 544 3,181 3,725 552 1997 1997 31.5 2000 Cabot Boulevard 569 2,483 3,052 286 1985 1997 25 2005 Cabot Boulevard 313 1,261 1,574 132 1985 1997 25 2010 Cabot Boulevard 760 3,097 3,857 340 1985 1997 25 321 Norristown Road 1,289 5,417 6,706 611 1972 1997 25 323 Norristown Road 1,685 6,881 8,566 740 1988 1997 25 Campus Boulevard - Lot 7, 8 & 9 2,363 -- 2,363 1997 100-300 Gundy Drive 6,468 26,918 33,386 2,748 1970 1997 25 100 Katchel Blvd 1,881 7,506 9,387 762 1970 1997 25 2510 Metropolitan Drive 3,311 14,842 18,153 1,526 1981 1997 25 1111 Old Eagle School Road 1,967 10,335 12,302 667 1962 1997 25 1336 Enterprise Drive 731 2,973 3,704 336 1989 1997 25 256-263 Chapman Road / Cambridge 292 1,186 1,478 94 1983 1998 25 256-263 Chapman Road / Bellevue 374 1,572 1,946 140 1983 1998 25 256-263 Chapman Road / Commonwealth 351 1,482 1,833 129 1983 1998 25 256-263 Chapman Road / Oxford 410 1,906 2,316 159 1983 1998 25 256-263 Chapman Road / Chopin 484 2,100 2,584 174 1983 1998 25 256-263 Chapman Road / Stockton 291 1,176 1,467 94 1983 1998 25 256-263 Chapman Road / CAM -- -- -- 1983 1998 25 4550 New Linden Hill Road 1,998 8,253 10,251 673 1974 1998 25 301 North Walnut Street 8,495 35,266 43,761 2,324 1989 1998 25 201 North Walnut Street 10,359 41,686 52,045 3,105 1988 1998 25 4364 South Alston Avenue 1,622 6,547 8,169 331 985 1998 25 Westpark Land 2,184 -- 2,184 1998 1255 Broad Street 992 3,987 4,979 206 1981 1998 25 104 Windsor Center Drive 977 5,154 6,131 518 1987 1998 25 44 National Road 324 1,369 1,693 69 1967 1998 25 835 New Durham Road 705 2,582 3,287 134 1974 1998 25 837 New Durham Road 298 1,212 1,510 61 1977 1998 25 993 Lenox Drive 9,627 11,190 20,817 778 1985 1998 25 997 Lenox Drive 2,410 9,851 12,261 721 1987 1998 25 1009 Lenox Drive 4,912 20,663 25,575 1,555 1989 1998 25 102 Chestnut Ridge Road 1,618 6,530 8,148 331 1979 1998 25 25 Phillips Parkway 1,960 7,898 9,858 403 1988 1998 25 Gross Amount at Which Carried December 31, 1999 ------------------------------------------------------------- Accumulated Depreciation at Building and December 31, Date of Date Depreciable Land Improvements Total (a) 1999 (b) Construction Acquired Life - - ------------------------------------------------------------------------------------------------------------------------------------ 3 Paragon Drive 2,006 10,194 12,200 502 1988 1998 25 700 East Gate Drive 3,569 14,507 18,076 731 1984 1998 25 701 East Gate Drive 1,736 7,035 8,771 349 1986 1998 25 815 East Gate Drive 637 2,595 3,232 139 1986 1998 25 817 East Gate Drive 611 2,475 3,086 124 1986 1998 25 303 Fellowship Drive 1,493 6,278 7,771 324 1979 1998 25 305 Fellowship Drive 1,422 6,219 7,641 290 1980 1998 25 307 Fellowship Drive 1,564 6,583 8,147 347 1981 1998 25 309 Fellowship Drive 1,518 6,564 8,082 308 1982 1998 25 304 Harper Drive 657 2,878 3,535 140 1975 1998 25 305 Harper Drive 222 921 1,143 48 1979 1998 25 308 Harper Drive 1,643 6,751 8,394 339 1976 1998 25 East Gate Land 930 1 931 1998 Park 80 West Plaza I 6,242 30,082 36,324 2,903 1988 1998 25 Park 80 West Plaza II 7,668 32,825 40,493 2,767 1970 1998 25 33 West State Street 6,016 24,070 30,086 1,686 1988 1998 25 50 East State Street 8,926 35,982 44,908 2,512 1989 1998 25 100 Voice Road 400 1,602 2,002 81 1963 1998 25 110 Voice Road 256 1,023 1,279 52 1963 1998 25 91 North Industry Court 550 2,238 2,788 13 1965 1998 25 180 Central Ave / 2 Engineers Lane 221 887 1,108 45 1960 1998 25 8 Engineers Lane 194 836 1,030 50 1963 1998 25 19 Engineers Lane 114 457 571 23 1962 1998 25 1000 Axinn Avenue 546 2,215 2,761 126 1965 1998 25 645 Stewart Avenue 414 1,657 2,071 84 1962 1998 25 245 Old Country Road 1,232 4,929 6,161 251 1978 1998 25 336 South Service Road 707 2,841 3,548 144 1965 1998 25 111 Ames Court 177 706 883 38 1959 1998 25 55 Ames Court 818 3,751 4,569 287 1961 1998 25 10 Skyline Drive 239 993 1,232 62 1960 1998 25 11 Commercial Street 237 965 1,202 32 1961 1998 25 80 Skyline Drive 484 1,940 2,424 114 1961 1998 25 120 Express Street 404 1,673 2,077 73 1962 1998 25 7010 Snowdrift Way 817 3,315 4,132 167 1991 1998 25 7350 Tilghman Street 3,414 14,642 18,056 823 1987 1998 25 7450 Tilghman Street 2,867 12,517 15,384 689 1986 1998 25 7150 Windsor Drive 1,034 4,218 5,252 212 1988 1998 25 7535 Windsor Drive 3,376 13,787 17,163 710 1988 1998 25 Iron Run Land 7,534 108 7,642 -- 1998 920 Harvest Drive 2,433 9,552 11,985 643 1990 1998 25 925 Harvest Drive 1,671 6,675 8,346 417 1990 1998 25 155 Rittenhouse Circle 370 1,490 1,860 79 1985 1998 25 150 Corporate Center Drive 964 3,921 4,885 265 1987 1998 25 200 Corporate Center Drive 1,647 6,887 8,534 581 1989 1998 25 300 Corporate Center Drive 4,823 19,520 24,343 1,329 1989 1998 25 426 Lancaster Avenue 1,689 6,759 8,448 537 1990 1998 25 160-180 West Germantown Pike 1,603 6,455 8,058 467 1982 1998 25 50 Swedesford Square 3,902 15,608 19,510 787 1988 1998 25 52 Swedesford Square 4,242 16,958 21,200 856 1986 1998 25 922 Swedesford Road 215 11 226 1986 1998 25 520 Virginia Drive 845 3,484 4,329 285 1987 1998 25 2401 Park Drive 182 760 942 53 1984 1998 25 2404 Park Drive 167 761 928 70 1983 1998 25 2405 Park Drive 424 1,727 2,151 132 1985 1998 25 2407 Park Drive 464 1,883 2,347 130 1985 1998 25 600 Corporate Circle Drive 363 1,511 1,874 102 1978 1998 25 800 Corporate Circle Drive 414 1,675 2,089 108 1979 1998 25 200 Nationwide Drive 100 403 503 27 1978 1998 25 500 Nationwide Drive 208 852 1,060 58 1977 1998 25 755 Business Center Drive 1,363 2,898 4,261 235 1998 1998 31.5 Gross Amount at Which Carried December 31, 1999 ------------------------------------------------------------- Accumulated Depreciation at Building and December 31, Date of Date Depreciable Land Improvements Total (a) 1999 (b) Construction Acquired Life - - ------------------------------------------------------------------------------------------------------------------------------------ Keith Valley Lots 2, 4, 5 3,853 65 3,918 1998 1000 First Avenue 2,772 11,218 13,990 567 1980 1998 25 1020 First Avenue 2,168 8,746 10,914 442 1984 1998 25 1040 First Avenue 2,861 11,934 14,795 624 1985 1998 25 1060 First Avenue 2,712 11,113 13,825 593 1987 1998 25 2490 Boulevard of the Generals 348 1,407 1,755 112 1975 1998 25 610 Freedom Business Center 2,017 8,132 10,149 655 1985 1998 25 620 Freedom Business Center 2,770 11,077 13,847 889 1986 1998 25 630 Freedom Business Center 2,773 11,266 14,039 924 1989 1998 25 640 Freedom Business Center 4,222 16,940 21,162 1,349 1991 1998 25 600 Park Avenue 1,012 4,048 5,060 302 1964 1998 25 650 Park Avenue 1,917 5,633 7,550 733 1968 1998 25 630 Clark Avenue 547 2,190 2,737 163 1960 1998 25 620 Allendale Road 1,478 3,839 5,317 286 1961 1998 25 640-660 Allendale Road 3,671 3,408 7,079 261 1962 1998 25 680 Allendale Road 689 3,299 3,988 205 1962 1998 25 751-761 Fifth Avenue 1,097 4,391 5,488 243 1967 1998 25 741 First Avenue 1,287 5,161 6,448 385 1966 1998 25 875 First Avenue 618 2,581 3,199 184 1966 1998 25 180 Wheeler Court 608 2,436 3,044 182 1975 1998 25 105 / 140 Terry Drive 2,299 9,513 11,812 809 1982 1998 25 14 Campus Boulevard 2,243 5,183 7,426 698 1998 1998 25 1760 Market Street 3,020 12,320 15,340 637 1981 1998 25 Philadelphia Marine Center 533 2,205 2,738 112 1998 25 1105 Berkshire Boulevard 1,115 4,609 5,724 371 1987 1998 25 1150 Berkshire Boulevard 435 1,968 2,403 197 1979 1998 25 11781 Lee Jackson Memorial Highway 3,616 14,469 18,085 732 1985 1998 25 12015 Lee Jackson Memorial Highway 5,398 21,676 27,074 1,092 1985 1998 25 4805 Lake Brooke Drive 1,640 6,554 8,194 331 1996 1998 25 2812 Emerywood Parkway 1,069 4,268 5,337 214 1980 1998 25 1880 Campus Commons Drive 5,707 22,791 28,498 1,152 1985 1998 25 9100 Arboretum Parkway 1,363 5,612 6,975 334 1988 1998 25 9200 Arboretum Parkway 984 3,964 4,948 200 1988 1998 25 300 Arboretum Place 5,450 22,213 27,663 1,172 1988 1998 25 9210 Arboretum Parkway 1,110 4,530 5,640 264 1988 1998 25 9011 Arboretum Parkway 1,856 7,870 9,726 463 1991 1998 25 9211 Arboretum Parkway 581 2,425 3,006 122 1991 1998 25 600 East Main Street 9,809 39,764 49,573 2,066 1986 1998 25 2100-2108 West Laburnum 2,482 8,601 11,083 (710) 1976 1998 25 2244 Dabney Road 551 2,196 2,747 111 1993 1998 25 2110 Tomlynn Street 159 634 793 32 1965 1998 25 2201 Dabney Street 367 1,465 1,832 74 1962 1998 25 1957 Westmoreland Street 1,062 4,460 5,522 299 1975 1998 25 2511 Brittons Hill Road 1,201 4,827 6,028 243 1987 1998 25 2240 Dabney Road 264 1,055 1,319 53 1984 1998 25 Greater Dabney 3,740 -- 3,740 1998 25 2256 Dabney Road 356 1,436 1,792 85 1982 1998 25 2251 Dabney Road 387 1,548 1,935 78 1983 1998 25 2120 Tomlynn Street 280 1,147 1,427 57 1986 1998 25 2169-79 Tomlynn Street 422 1,749 2,171 116 1985 1998 25 2212-2224 Tomlynn Street 502 2,015 2,517 102 1985 1998 25 2277 Dabney Road 507 2,028 2,535 103 1986 1998 25 2246 Dabney Road 455 1,816 2,271 92 1987 1998 25 2130-2146 Tomlynn Street 353 1,412 1,765 71 1988 1998 25 2248 Dabney Road 511 2,048 2,559 104 1989 1998 25 2201-2245 Tomlynn Street 1,020 4,360 5,380 316 1989 1998 25 2221-2245 Dabney Road 530 2,118 2,648 109 1994 1998 25 1900 Gallows Road 7,344 29,308 36,652 1,482 1982 1998 25 2000 Lenox Drive -- 10,478 10,478 1999 1999 125 Jericho Turnpike 963 4,268 5,231 126 1969 1999 25 Gross Amount at Which Carried December 31, 1999 ------------------------------------------------------------- Accumulated Depreciation at Building and December 31, Date of Date Depreciable Land Improvements Total (a) 1999 (b) Construction Acquired Life - - ------------------------------------------------------------------------------------------------------------------------------------ 131 Jericho Turnpike 340 1,416 1,756 82 1967 1999 25 263 Old Country Road 1,567 6,267 7,834 251 1999 1999 25 7130 Ambassador Drive 3,114 3,875 75 1991 1999 25 630 Dresher Road 771 3,083 3,854 10 1987 1999 25 Allendale -- 4,780 4,780 1999 11 Campus Boulevard 1,112 4,067 5,179 47 1999 1999 25 Concourse Land 1,074 -- 1,074 1999 Gateway Parkway Land 1,278 -- 1,278 1999 $377,304 $1,450,793 $1,828,097 $125,744 ======== ========== ========== ========
- - -------------------------------------------------------------------------------- EXHIBIT INDEX - - -------------------------------------------------------------------------------- Exhibit - - -------
10.51 Third Amendment to Restricted Share Award to Anthony A. Nichols, Sr.** 10.52 Third Amendment to Restricted Share Award to Gerard H. Sweeney.** 10.53 Restricted Share Award to Jeffrey F. Rogatz (May 1999).** 10.54 Restricted Share Award to Anthony S. Rimikis.** 10.55 Restricted Share Award to Jeffrey F. Rogatz (January 2000).** 10.56 Loan Agreement with Gerard H. Sweeney.** 10.57 Loan Agreement with Anthony A. Nichols, Sr.** 21.1 List of Subsidiaries of the Company. 23.1 Consent of Arthur Andersen LLP. 27.1 Financial Data Schedule.
- - ----------------- *Indicates management contract or compensatory plan or arrangement. EX-10.51 2 EXHIBIT 10.51 Exhibit 10.51 THIRD AMENDMENT TO RESTRICTED SHARE AWARD This Third Amendment to Restricted Share Award is dated December 17, 1999 by and between Brandywine Realty Trust, a Maryland real estate investment trust (the "Company") and Anthony A. Nichols, Sr. ("Grantee"). WHEREAS, the Company and Grantee desire to amend the Restricted Share Award dated January 2, 1998, as previously amended pursuant to a First Amendment dated October 31, 1998 and a Second Amendment dated March 19, 1999 (the "Award") between the Company and the Grantee as provided herein. NOW, THEREFORE, the parties hereto, intending to be legally bound hereby, agree as follows: 1. Paragraph 4(b) of the Award is amended and restated in its entirety to read as follows: Subject to Paragraph 4(a), a Vesting Date for Restricted Shares subject to the Award shall occur in accordance with the following schedule: (i) As to twelve and one-half percent (12.5%) of the Restricted Shares, December 31, 1999; (ii) As to an additional twelve and one-half percent (12.5%) of the Restricted Shares, January 2, 2000; (iii) As to an additional twenty five percent (25%) of the Restricted Shares, January 2, 2001; (iv) As to an additional twenty five percent (25%) of the Restricted Shares, January 2, 2002; (v) As to an additional twenty five percent (25%) of the Restricted Shares, January 2, 2003. 2. This Third Amendment does not amend the Award in any respect except as set forth above, and the Award, as amended hereby, shall continue in full force and effect after the date hereof in accordance with its terms. IN WITNESS WHEREOF, the parties have executed this Third Amendment the day and year first above written. BRANDYWINE REALTY TRUST By: ----------------------------------------- Title: President and Chief Executive Officer ----------------------------------------- Anthony A. Nichols, Sr. -2- EX-10.52 3 EXHIBIT 10.52 Exhibit 10.52 THIRD AMENDMENT TO RESTRICTED SHARE AWARD This Third Amendment to Restricted Share Award is dated December 17, 1999 by and between Brandywine Realty Trust, a Maryland real estate investment trust (the "Company") and Gerard H. Sweeney ("Grantee"). WHEREAS, the Company and Grantee desire to amend the Restricted Share Award dated January 2, 1998, as previously amended pursuant to a First Amendment dated October 31, 1998 and a Second Amendment dated March 19, 1999(the "Award"), between the Company and the Grantee as provided herein. NOW, THEREFORE, the parties hereto, intending to be legally bound hereby, agree as follows: 1. Paragraph 4(b) of the Award is amended and restated in its entirety to read as follows: Subject to Paragraph 4(a), a Vesting Date for Restricted Shares subject to the Award shall occur in accordance with the following schedule: (i) As to twelve and one-half percent (12.5%) of the Restricted Shares, December 31, 1999; (ii) As to an additional twelve and one-half percent (12.5%) of the Restricted Shares, January 2, 2000; (iii) As to an additional twenty five percent (25%) of the Restricted Shares, January 2, 2001; (iv) As to an additional twenty five percent (25%) of the Restricted Shares, January 2, 2002; (v) As to an additional twenty five percent (25%) of the Restricted Shares, January 2, 2003. 2. This Third Amendment does not amend the Award in any respect except as set forth above, and the Award, as amended hereby, shall continue in full force and effect after the date hereof in accordance with its terms. IN WITNESS WHEREOF, the parties have executed this Third Amendment the day and year first above written. BRANDYWINE REALTY TRUST By: ----------------------------------------- Title: President and Chief Executive Officer ----------------------------------------- Gerard H. Sweeney EX-10.53 4 EXHIBIT 10.53 Exhibit 10.53 BRANDYWINE REALTY TRUST RESTRICTED SHARE AWARD This is a Restricted Share Award dated May 18, 1999 from Brandywine Realty Trust, a Maryland real estate investment trust (the "Company") to Jeffrey F. Rogatz ("Grantee"). Terms used herein as defined terms and not defined herein have the meanings assigned to them in the Brandywine Realty Trust 1997 Long-Term Incentive Plan, as amended from time to time (the "Plan"). 1. DEFINITIONS. As used herein: (a) "AWARD" means the award of Restricted Shares hereby granted. (b) "BOARD" means the Board of Trustees of the Company, as constituted from time to time. (c) "CAUSE" means "Cause" as defined in the Plan. (d) "CHANGE OF CONTROL" means "Change of Control" as defined in the Plan. (e) "CODE" means the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto. (f) "COMMITTEE" means the Committee appointed by the Board in accordance with Section 2 of the Plan, if one is appointed and in existence at the time of reference. If no committee has been appointed pursuant to Section 2, or if such a committee is not in existence at the time of reference, "Committee" means the Board. (g) "DATE OF GRANT" means May 18, 1999, the date on which the Company awarded the Restricted Shares. (h) "EMPLOYER" means the Company or the Subsidiary for which Grantee is performing services on the applicable Vesting Date. (i) "RESTRICTED PERIOD" means, with respect to each Restricted Share, the period beginning on the Date of Grant and ending on the Vesting Date. (j) "RESTRICTED SHARES" means the 13,201 Shares which are the subject of the Award hereby granted. (k) "RULE 16B-3" means Rule 16b-3 promulgated under the 1934 Act, as in effect from time to time. (l) "SHARE" means a common share of beneficial interest, $.01 par value per share, of the Company, subject to substitution or adjustment as provided in Section 3(c) of the Plan. (m) "SUBSIDIARY" means, with respect to the Company or parent, a subsidiary company, whether now or hereafter existing, as defined in section 424(f) of the Code, and any other entity 50% or more of the economic interests in which are owned, directly or indirectly, by the Company. (n) "VESTING DATE" means the date on which the restrictions imposed under Paragraph 3 on a Restricted Share lapse, as provided in Paragraph 4. 2. GRANT OF RESTRICTED SHARES. Subject to the terms and conditions set forth herein and in the Plan, the Company hereby grants to Grantee the Restricted Shares. Grantee shall pay to the Company $.01 per Restricted Share granted to him. 3. RESTRICTIONS ON RESTRICTED SHARE. Subject to the terms and conditions set forth herein and in the Plan, prior to the Vesting Date in respect of Restricted Shares, Grantee shall not be permitted to sell, transfer, pledge or assign such Restricted Shares. Share certificates evidencing Restricted Shares shall be held in custody by the Company until the restrictions thereon have lapsed. Concurrently herewith, Participant shall deliver to the Company a share power, endorsed in blank, relating to the Restricted Shares covered by the Award. During the Restricted Period, share certificates evidencing Restricted Shares shall bear a legend in substantially the following form: THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS (INCLUDING FORFEITURE) OF THE BRANDYWINE REALTY TRUST 1997 LONG-TERM INCENTIVE PLAN AND AN AGREEMENT ENTERED INTO BETWEEN THE REGISTERED OWNER AND BRANDYWINE REALTY TRUST. COPIES OF SUCH PLAN AND AGREEMENT ARE ON FILE IN THE PRINCIPAL OFFICES OF BRANDYWINE REALTY TRUST AND WILL BE MADE AVAILABLE TO ANY SHAREHOLDER WITHOUT CHARGE UPON REQUEST TO THE SECRETARY OF THE COMPANY. 4. LAPSE OF RESTRICTIONS. (a) Subject to the terms and conditions set forth herein and in the Plan, the restrictions set forth in Paragraph 3 on each Restricted Share that has not been forfeited shall -2- lapse on the applicable Vesting Date in respect of such Restricted Share, provided that either (i) on the Vesting Date, Grantee is, and has from the Date of Grant continuously been, an employee of the Company or a Subsidiary during the Restricted Period, or (ii) Grantee's termination of employment before the Vesting Date is due to death or disability. (b) Subject to Paragraph 4(a), a Vesting Date for Restricted Shares subject to the Award shall occur in accordance with the following schedule: (i) As to twenty five percent (25%) of the Restricted Shares, January 2, 2000; (ii) As to an additional twenty five percent (25%) of the Restricted Shares, January 2, 2001; (iii) As to an additional twenty five percent (25%) of the Restricted Shares, January 2, 2002; (iv) As to an additional twenty five percent (25%) of the Restricted Shares, January 2, 2003; (c) Notwithstanding Paragraph 4(b), a Vesting Date for all Restricted Shares subject to the Award shall occur upon the occurrence of a Change of Control, and the Restricted Shares, to the extent not previously vested, shall thereupon vest in full, provided that (i) as of the date of the Change of Control, Grantee is, and has from the Date of Grant continuously been, an employee of the Company or a Subsidiary or (ii) Grantee's termination of employment before the date of the Change of Control is because of death or disability. 5. FORFEITURE OF RESTRICTED SHARES. (a) Subject to the terms and conditions set forth herein, if Grantee terminates employment with the Company and all Subsidiaries during the Restricted Period for reasons other than as described in Paragraph 4(c), Grantee shall forfeit the Restricted Shares which have not vested as of such termination of employment, provided that Grantee shall not, on account of such termination, forfeit Restricted Shares which have not vested as of Grantee's termination of employment with the Employer because of death or disability. Upon a forfeiture of the Restricted Shares as provided in this Paragraph 5, the Restricted Shares shall be deemed canceled. (b) The provisions of this Paragraph 5 shall not apply to Restricted Shares as to which the restrictions of Paragraph 3 have lapsed. 6. RIGHTS OF GRANTEE. During the Restricted Period, with respect to the Restricted Shares, Grantee shall have all of the rights of a shareholder of the Company, including the right -3- to vote the Restricted Shares and the right to receive any distributions or dividends payable on Shares. 7. NOTICES. Any notice to the Company under this Award shall be made to: Brandywine Realty Trust 14 Campus Boulevard Newtown Square, PA 19073 Attention: Chief Financial Officer or such other address as may be provided to Grantee by written notice. Any notice to Grantee under this award shall be made to Grantee at the address listed in the Company's personnel files. All notices under this Award shall be deemed to have been given when hand-delivered, telecopied or mailed, first class postage prepaid, and shall be irrevocable once given. 8. SECURITIES LAWS. The Committee may from time to time impose any conditions on the Restricted Shares as it deems necessary or advisable to ensure that the Plan satisfies the conditions of Rule 16b-3, and that Shares are issued and resold in compliance with the Securities Act of 1933, as amended. 9. DELIVERY OF SHARES. Upon a Vesting Date, the Company shall notify Grantee (or Grantee's legal representatives, estate or heirs, in the event of Grantee's death before a Vesting Date) that the restrictions on the Restricted Shares have lapsed. Within ten (10) business days of a Vesting Date, the Company shall, without payment from Grantee for the Restricted Shares, deliver to Grantee a certificate for the Restricted Shares without any legend or restrictions, except for such restrictions as may be imposed by the Committee, in its sole judgment, under Paragraph 8, provided that no certificates for Shares will be delivered to Grantee until appropriate arrangements have been made with Employer for the withholding of any taxes which may be due with respect to such Shares. The Company may condition delivery of certificates for Shares upon the prior receipt from Grantee of any undertakings which it may determine are required to assure that the certificates are being issued in compliance with federal and state securities laws. The right to payment of any fractional Shares shall be satisfied in cash, measured by the product of the fractional amount times the fair market value of a Share on the Vesting Date, as determined by the Committee. 10. AWARD NOT TO AFFECT EMPLOYMENT. The Award granted hereunder shall not confer upon Grantee any right to continue in the employment of the Company or any Subsidiary. 11. MISCELLANEOUS. (a) The address for Grantee to which notice, demands and other communications are to be given or delivered under or by reason of the provisions hereof shall be the Grantee's address as reflected in the Company's personnel records. -4- (b) This Award and all questions relating to its validity, interpretation, performance and enforcement shall be governed by and construed in accordance with the laws of Pennsylvania. BRANDYWINE REALTY TRUST By: ----------------------------------------- Title: President and Chief Executive Officer Accepted: - - ---------------------------------------- Jeffrey F. Rogatz -5- EX-10.54 5 EXHIBIT 10.54 Exhibit 10.54 BRANDYWINE REALTY TRUST RESTRICTED SHARE AWARD This is a Restricted Share Award dated January 2, 2000 from Brandywine Realty Trust, a Maryland real estate investment trust (the "Company") to Anthony Rimikis ("Grantee"). Terms used herein as defined terms and not defined herein have the meanings assigned to them in the Brandywine Realty Trust 1997 Long-Term Incentive Plan, as amended from time to time (the "Plan"). 1. DEFINITIONS. As used herein: (a) "AWARD" means the award of Restricted Shares hereby granted. (b) "BOARD" means the Board of Trustees of the Company, as constituted from time to time. (c) "CAUSE" means "Cause" as defined in the Plan. (d) "CHANGE OF CONTROL" means "Change of Control" as defined in the Plan. (e) "CODE" means the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto. (f) "COMMITTEE" means the Committee appointed by the Board in accordance with Section 2 of the Plan, if one is appointed and in existence at the time of reference. If no committee has been appointed pursuant to Section 2, or if such a committee is not in existence at the time of reference, "Committee" means the Board. (g) "DATE OF GRANT" means January 2, 2000, the date on which the Company awarded the Restricted Shares. (h) "EMPLOYER" means the Company or the Subsidiary for which Grantee is performing services on the applicable Vesting Date. (i) "RESTRICTED PERIOD" means, with respect to each Restricted Share, the period beginning on the Date of Grant and ending on the Vesting Date. (j) "RESTRICTED SHARES" means the 6,107 Shares which are the subject of the Award hereby granted. (k) "RULE 16B-3" means Rule 16b-3 promulgated under the 1934 Act, as in effect from time to time. (l) "SHARE" means a common share of beneficial interest, $.01 par value per share, of the Company, subject to substitution or adjustment as provided in Section 3(c) of the Plan. (m) "SUBSIDIARY" means, with respect to the Company or parent, a subsidiary company, whether now or hereafter existing, as defined in section 424(f) of the Code, and any other entity 50% or more of the economic interests in which are owned, directly or indirectly, by the Company. (n) "VESTING DATE" means the date on which the restrictions imposed under Paragraph 3 on a Restricted Share lapse, as provided in Paragraph 4. 2. GRANT OF RESTRICTED SHAREs. Subject to the terms and conditions set forth herein and in the Plan, the Company hereby grants to Grantee the Restricted Shares. Grantee shall pay to the Company $.01 per Restricted Share granted to him. 3. RESTRICTIONS ON RESTRICTED SHARE. Subject to the terms and conditions set forth herein and in the Plan, prior to the Vesting Date in respect of Restricted Shares, Grantee shall not be permitted to sell, transfer, pledge or assign such Restricted Shares. Share certificates evidencing Restricted Shares shall be held in custody by the Company until the restrictions thereon have lapsed. Concurrently herewith, Participant shall deliver to the Company a share power, endorsed in blank, relating to the Restricted Shares covered by the Award. During the Restricted Period, share certificates evidencing Restricted Shares shall bear a legend in substantially the following form: THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS (INCLUDING FORFEITURE) OF THE BRANDYWINE REALTY TRUST 1997 LONG-TERM INCENTIVE PLAN AND AN AGREEMENT ENTERED INTO BETWEEN THE REGISTERED OWNER AND BRANDYWINE REALTY TRUST. COPIES OF SUCH PLAN AND AGREEMENT ARE ON FILE IN THE PRINCIPAL OFFICES OF BRANDYWINE REALTY TRUST AND WILL BE MADE AVAILABLE TO ANY SHAREHOLDER WITHOUT CHARGE UPON REQUEST TO THE SECRETARY OF THE COMPANY. 4. LAPSE OF RESTRICTIONS. (a) Subject to the terms and conditions set forth herein and in the Plan, the restrictions set forth in Paragraph 3 on each Restricted Share that has not been forfeited shall lapse on the applicable Vesting Date in respect of such Restricted Share, provided that either (i) on the Vesting Date, Grantee is, and has from the Date of Grant continuously been, an employee of the Company or a Subsidiary during the Restricted Period, or (ii) Grantee's termination of employment before the Vesting Date is due to death or disability. (b) Subject to Paragraph 4(a), a Vesting Date for Restricted Shares subject to the Award shall occur in accordance with the following schedule: (i) As to twenty five percent (25%) of the Restricted Shares, January 2, 2001; (ii) As to an additional twenty five percent (25%) of the Restricted Shares, January 2, 2002; (iii) As to an additional twenty five percent (25%) of the Restricted Shares, January 2, 2003; (iv) As to an additional twenty five percent (25%) of the Restricted Shares, January 2, 2004; (c) Notwithstanding Paragraph 4(b), a Vesting Date for all Restricted Shares subject to the Award shall occur upon the occurrence of a Change of Control, and the Restricted Shares, to the extent not previously vested, shall thereupon vest in full, provided that (i) as of the date of the Change of Control, Grantee is, and has from the Date of Grant continuously been, an employee of the Company or a Subsidiary or (ii) Grantee's termination of employment before the date of the Change of Control is because of death or disability. 5. FORFEITURE OF RESTRICTED SHARES. (a) Subject to the terms and conditions set forth herein, if Grantee terminates employment with the Company and all Subsidiaries during the Restricted Period for reasons other than as described in Paragraph 4(c), Grantee shall forfeit the Restricted Shares which have not vested as of such termination of employment, provided that Grantee shall not, on account of such termination, forfeit Restricted Shares which have not vested as of Grantee's termination of employment with the Employer because of death or disability. Upon a forfeiture of the Restricted Shares as provided in this Paragraph 5, the Restricted Shares shall be deemed canceled. (b) The provisions of this Paragraph 5 shall not apply to Restricted Shares as to which the restrictions of Paragraph 3 have lapsed. 6. RIGHTS OF GRANTEE. During the Restricted Period, with respect to the Restricted Shares, Grantee shall have all of the rights of a shareholder of the Company, including the right to vote the Restricted Shares and the right to receive any distributions or dividends payable on Shares. 7. NOTICES. Any notice to the Company under this Award shall be made to: Brandywine Realty Trust 14 Campus Boulevard Newtown Square, PA 19073 Attention: Chief Financial Officer or such other address as may be provided to Grantee by written notice. Any notice to Grantee under this award shall be made to Grantee at the address listed in the Company's personnel files. All notices under this Award shall be deemed to have been given when hand-delivered, telecopied or mailed, first class postage prepaid, and shall be irrevocable once given. 8. SECURITIES LAWS. The Committee may from time to time impose any conditions on the Restricted Shares as it deems necessary or advisable to ensure that the Plan satisfies the conditions of Rule 16b-3, and that Shares are issued and resold in compliance with the Securities Act of 1933, as amended. 9. DELIVERY OF SHARES. Upon a Vesting Date, the Company shall notify Grantee (or Grantee's legal representatives, estate or heirs, in the event of Grantee's death before a Vesting Date) that the restrictions on the Restricted Shares have lapsed. Within ten (10) business days of a Vesting Date, the Company shall, without payment from Grantee for the Restricted Shares, deliver to Grantee a certificate for the Restricted Shares without any legend or restrictions, except for such restrictions as may be imposed by the Committee, in its sole judgment, under Paragraph 8, provided that no certificates for Shares will be delivered to Grantee until appropriate arrangements have been made with Employer for the withholding of any taxes which may be due with respect to such Shares. The Company may condition delivery of certificates for Shares upon the prior receipt from Grantee of any undertakings which it may determine are required to assure that the certificates are being issued in compliance with federal and state securities laws. The right to payment of any fractional Shares shall be satisfied in cash, measured by the product of the fractional amount times the fair market value of a Share on the Vesting Date, as determined by the Committee. 10. AWARD NOT TO AFFECT EMPLOYMENT. The Award granted hereunder shall not confer upon Grantee any right to continue in the employment of the Company or any Subsidiary. 11. MISCELLANEOUS. (a) The address for Grantee to which notice, demands and other communications are to be given or delivered under or by reason of the provisions hereof shall be the Grantee's address as reflected in the Company's personnel records. (b) This Award and all questions relating to its validity, interpretation, performance and enforcement shall be governed by and construed in accordance with the laws of Pennsylvania. BRANDYWINE REALTY TRUST By: ----------------------------------------- Title: President and Chief Executive Officer Accepted: - - ----------------------------------------- Anthony Rimikis EX-10.55 6 EXHIBIT 10.55 Exhibit 10.55 BRANDYWINE REALTY TRUST RESTRICTED SHARE AWARD This is a Restricted Share Award dated January 2, 2000 from Brandywine Realty Trust, a Maryland real estate investment trust (the "Company") to Jeffrey F. Rogatz ("Grantee"). Terms used herein as defined terms and not defined herein have the meanings assigned to them in the Brandywine Realty Trust 1997 Long-Term Incentive Plan, as amended from time to time (the "Plan"). 1. DEFINITIONS. As used herein: (a) "AWARD" means the award of Restricted Shares hereby granted. (b) "BOARD" means the Board of Trustees of the Company, as constituted from time to time. (c) "CAUSE" means "Cause" as defined in the Plan. (d) "CHANGE OF CONTROL" means "Change of Control" as defined in the Plan. (e) "CODE" means the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto. (f) "COMMITTEE" means the Committee appointed by the Board in accordance with Section 2 of the Plan, if one is appointed and in existence at the time of reference. If no committee has been appointed pursuant to Section 2, or if such a committee is not in existence at the time of reference, "Committee" means the Board. (g) "DATE OF GRANT" means January 2, 2000, the date on which the Company awarded the Restricted Shares. (h) "EMPLOYER" means the Company or the Subsidiary for which Grantee is performing services on the applicable Vesting Date. (i) "RESTRICTED PERIOD" means, with respect to each Restricted Share, the period beginning on the Date of Grant and ending on the Vesting Date. (j) "RESTRICTED SHARES" means the 9,160 Shares which are the subject of the Award hereby granted. (k) "RULE 16B-3" means Rule 16b-3 promulgated under the 1934 Act, as in effect from time to time. (l) "SHARE" means a common share of beneficial interest, $.01 par value per share, of the Company, subject to substitution or adjustment as provided in Section 3(c) of the Plan. (m) "SUBSIDIARY" means, with respect to the Company or parent, a subsidiary company, whether now or hereafter existing, as defined in section 424(f) of the Code, and any other entity 50% or more of the economic interests in which are owned, directly or indirectly, by the Company. (n) "VESTING DATE" means the date on which the restrictions imposed under Paragraph 3 on a Restricted Share lapse, as provided in Paragraph 4. 2. GRANT OF RESTRICTED SHARES. Subject to the terms and conditions set forth herein and in the Plan, the Company hereby grants to Grantee the Restricted Shares. Grantee shall pay to the Company $.01 per Restricted Share granted to him. 3. RESTRICTIONS ON RESTRICTED SHARE. Subject to the terms and conditions set forth herein and in the Plan, prior to the Vesting Date in respect of Restricted Shares, Grantee shall not be permitted to sell, transfer, pledge or assign such Restricted Shares. Share certificates evidencing Restricted Shares shall be held in custody by the Company until the restrictions thereon have lapsed. Concurrently herewith, Participant shall deliver to the Company a share power, endorsed in blank, relating to the Restricted Shares covered by the Award. During the Restricted Period, share certificates evidencing Restricted Shares shall bear a legend in substantially the following form: THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS (INCLUDING FORFEITURE) OF THE BRANDYWINE REALTY TRUST 1997 LONG-TERM INCENTIVE PLAN AND AN AGREEMENT ENTERED INTO BETWEEN THE REGISTERED OWNER AND BRANDYWINE REALTY TRUST. COPIES OF SUCH PLAN AND AGREEMENT ARE ON FILE IN THE PRINCIPAL OFFICES OF BRANDYWINE REALTY TRUST AND WILL BE MADE AVAILABLE TO ANY SHAREHOLDER WITHOUT CHARGE UPON REQUEST TO THE SECRETARY OF THE COMPANY. 4. LAPSE OF RESTRICTIONS. (a) Subject to the terms and conditions set forth herein and in the Plan, the restrictions set forth in Paragraph 3 on each Restricted Share that has not been forfeited shall lapse on the applicable Vesting Date in respect of such Restricted Share, provided that either (i) on the Vesting Date, Grantee is, and has from the Date of Grant continuously been, an employee of the Company or a Subsidiary during the Restricted Period, or (ii) Grantee's termination of employment before the Vesting Date is due to death or disability. (b) Subject to Paragraph 4(a), a Vesting Date for Restricted Shares subject to the Award shall occur in accordance with the following schedule: (i) As to twenty five percent (25%) of the Restricted Shares, January 2, 2001; (ii) As to an additional twenty five percent (25%) of the Restricted Shares, January 2, 2002; (iii) As to an additional twenty five percent (25%) of the Restricted Shares, January 2, 2003; (iv) As to an additional twenty five percent (25%) of the Restricted Shares, January 2, 2004; (c) Notwithstanding Paragraph 4(b), a Vesting Date for all Restricted Shares subject to the Award shall occur upon the occurrence of a Change of Control, and the Restricted Shares, to the extent not previously vested, shall thereupon vest in full, provided that (i) as of the date of the Change of Control, Grantee is, and has from the Date of Grant continuously been, an employee of the Company or a Subsidiary or (ii) Grantee's termination of employment before the date of the Change of Control is because of death or disability. 5. FORFEITURE OF RESTRICTED SHARES. (a) Subject to the terms and conditions set forth herein, if Grantee terminates employment with the Company and all Subsidiaries during the Restricted Period for reasons other than as described in Paragraph 4(c), Grantee shall forfeit the Restricted Shares which have not vested as of such termination of employment, provided that Grantee shall not, on account of such termination, forfeit Restricted Shares which have not vested as of Grantee's termination of employment with the Employer because of death or disability. Upon a forfeiture of the Restricted Shares as provided in this Paragraph 5, the Restricted Shares shall be deemed canceled. (b) The provisions of this Paragraph 5 shall not apply to Restricted Shares as to which the restrictions of Paragraph 3 have lapsed. 6. RIGHTS OF GRANTEE. During the Restricted Period, with respect to the Restricted Shares, Grantee shall have all of the rights of a shareholder of the Company, including the right to vote the Restricted Shares and the right to receive any distributions or dividends payable on Shares. 7. NOTICES. Any notice to the Company under this Award shall be made to: Brandywine Realty Trust 14 Campus Boulevard Newtown Square, PA 19073 Attention: Chief Financial Officer or such other address as may be provided to Grantee by written notice. Any notice to Grantee under this award shall be made to Grantee at the address listed in the Company's personnel files. All notices under this Award shall be deemed to have been given when hand-delivered, telecopied or mailed, first class postage prepaid, and shall be irrevocable once given. 8. SECURITIES LAWS. The Committee may from time to time impose any conditions on the Restricted Shares as it deems necessary or advisable to ensure that the Plan satisfies the conditions of Rule 16b-3, and that Shares are issued and resold in compliance with the Securities Act of 1933, as amended. 9. DELIVERY OF SHARES. Upon a Vesting Date, the Company shall notify Grantee (or Grantee's legal representatives, estate or heirs, in the event of Grantee's death before a Vesting Date) that the restrictions on the Restricted Shares have lapsed. Within ten (10) business days of a Vesting Date, the Company shall, without payment from Grantee for the Restricted Shares, deliver to Grantee a certificate for the Restricted Shares without any legend or restrictions, except for such restrictions as may be imposed by the Committee, in its sole judgment, under Paragraph 8, provided that no certificates for Shares will be delivered to Grantee until appropriate arrangements have been made with Employer for the withholding of any taxes which may be due with respect to such Shares. The Company may condition delivery of certificates for Shares upon the prior receipt from Grantee of any undertakings which it may determine are required to assure that the certificates are being issued in compliance with federal and state securities laws. The right to payment of any fractional Shares shall be satisfied in cash, measured by the product of the fractional amount times the fair market value of a Share on the Vesting Date, as determined by the Committee. 10. AWARD NOT TO AFFECT EMPLOYMENT. The Award granted hereunder shall not confer upon Grantee any right to continue in the employment of the Company or any Subsidiary. 11. MISCELLANEOUS. (a) The address for Grantee to which notice, demands and other communications are to be given or delivered under or by reason of the provisions hereof shall be the Grantee's address as reflected in the Company's personnel records. (b) This Award and all questions relating to its validity, interpretation, performance and enforcement shall be governed by and construed in accordance with the laws of Pennsylvania. BRANDYWINE REALTY TRUST By: ----------------------------------------- Title: President and Chief Executive Officer Accepted: - - ----------------------------------------- Jeffrey F. Rogatz EX-10.56 7 EXHIBIT 10.56 Exhibit 10.56 LOAN AGREEMENT This Loan Agreement is entered into as of February 18, 2000 by and between Gerard H. Sweeney ("Executive") and Brandywine Operating Partnership, L.P. ("Company"). Intending to be legally bound, Executive and Company agree as follows: 1. LOAN. On the date hereof, Company shall loan to Executive $1.5 million (the "Loan"). 2. USE OF PROCEEDS; NO SECURITY. Executive agrees to use the proceeds of the Loan solely to purchase common shares of beneficial interest ("Common Shares") of Brandywine Realty Trust ("BRT") from Company. The obligations of Executive under this Agreement are unsecured, and, without limiting the generality of the foregoing, Executive and Company agree that Executive's obligations under this Agreement are not secured by a pledge of the Common Shares. 3. INTEREST. Interest shall accrue on the outstanding principal balance of the Loan from the date hereof at a variable rate equal to the lower of: (i) the interest rate borne by Company's then outstanding revolving credit facility (as refinanced from time to time), (ii) the Dividend-Computed Rate (as defined below) and (iii) 10%. If borrowings under the revolving credit facility bear interest at different rates (e.g., prime rate versus LIBOR), the applicable rate will be the highest of the rates in effect from time to time. The "Dividend Computed Rate" shall mean the rate, expressed as a percentage, computed as follows: FIRST, multiply by four the most recent regular quarterly dividend paid on a Common Share; SECOND, multiply the result from the first step by the number of Common Shares purchased with the Loan proceeds; THIRD, divide the result from the second step by the original principal amount of the Loan. For purposes of the foregoing, if the amount of the quarterly dividend changes, the Dividend Computed Rate will change, effective as of the payment date for such new dividend level. Accrued interest on the principal balance of the Loan shall be payable annually on the first business day of each April, commencing April 2001. 4. MATURITY DATE. Subject to Section 6, the outstanding principal balance of the Loan, plus accrued but unpaid interest thereon, shall be due and payable on the first business day of April 2004. 5. MANNER OF PAYMENT. The principal of, and interest on, the Loan shall be payable at Company's office at 14 Campus Boulevard, Suite 100, Newtown Square, Pennsylvania 19073 (or such other address as Company shall, from time to time, notify Executive). All such principal and interest shall be payable in lawful money of the United States of America in immediately available funds; provided, however, that Executive may, in his sole discretion, tender Common Shares to Company in repayment of all or any portion of the Loan and accrued interest thereon, with each share tendered valued at $15.625 (subject to equitable and proportionate adjustment in the event of a split or reverse split of, or share dividend on, the Common Shares). 6. LOAN FORGIVENESS. a. Upon a Change of Control of BRT, the outstanding principal balance of the Loan, plus accrued but unpaid interest thereon, shall automatically be forgiven. As used herein, the term "Change of Control" shall have the meaning assigned to it in the Amended and Restated Employment Agreement (the "Employment Agreement") between BRT and Executive. b. Within thirty (30) days following the first business day of each April 2001, 2002 and 2003, Company shall compute the total shareholder return on the Common Shares from February 18, 2000 through such first business day of April, and shall compare such total shareholder return to the total shareholder return over the same time period on the common shares of the other companies in the Peer Group (as defined below). If BRT's total shareholder return for each applicable period falls in the bottom quadrant of the Peer Group, then 25% of one-third of the original principal amount of the Loan shall be automatically forgiven as of such computation date. If BRT's total shareholder return falls in the third, second or first quadrant of the Peer Group, then 50%, 75% or 100%, respectively, of one third of the original principal amount of the Loan shall be automatically forgiven as of the computation date. c. In addition to the forgiveness provided in the preceding paragraph, if BRT's total shareholder return for any of the three measurement periods specified in the preceding paragraph exceeds the average total shareholder return of the companies in the first quadrant of the Peer Group for any such measurement period, then any portion of the principal of the Loan that was previously eligible for forgiveness, but which was not forgiven, shall be automatically forgiven. d. Whenever a portion of the principal of the Loan is forgiven, accrued interest on such portion of the principal shall also be forgiven. e. The Peer Group shall initially consist of the following companies, in addition to BRT: Koger Equity Inc., SL Green Realty Corp., Kilroy Realty Corp., Prentiss Properties Trust, Reckson Associates Realty Corp., First Industry Realty Trust Inc., Arden Realty Inc., CarrAmerica Realty Corp., Highwoods Properties Inc., Mack-Cali Realty Corp., Bedford Properties, Liberty Property Trust and Great Lakes. In the event that any of such companies is involved in a business combination or similar extraordinary transaction, it shall be removed from the Peer Group. 7. TREATMENT OF LOAN. For purposes of the "three times multiplier" referenced in Sections 18(b) and (d) of the Employment Agreement, the amount of the Loan and any portion of the Loan that is forgiven shall not be treated as an amount paid to Executive -2- pursuant to Section 5 of the Employment Agreement and shall not be treated as the short-term portion of any bonus amounts paid or payable to Executive pursuant to Section 6 of the Employment Agreement. 8. MISCELLANEOUS. This Agreement may be amended only by a written instrument executed by Company and Executive. This Agreement shall be governed by the laws of the State of Delaware. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. Brandywine Realty Trust By:_____________________________ Title:__________________________ _______________________________ Gerard H. Sweeney -3- EX-10.57 8 EXHIBIT 10.57 Exhibit 10.57 LOAN AGREEMENT This Loan Agreement is entered into as of February 18, 2000 by and between Anthony A. Nichols, Sr. ("Executive") and Brandywine Operating Partnership, L.P. ("Company"). Intending to be legally bound, Executive and Company agree as follows: 1. LOAN. On the date hereof, Company shall loan to Executive $1.0 million (the "Loan"). 2. USE OF PROCEEDS; NO SECURITY. Executive agrees to use the proceeds of the Loan solely to purchase common shares of beneficial interest ("Common Shares") of Brandywine Realty Trust ("BRT") from Company. The obligations of Executive under this Agreement are unsecured, and, without limiting the generality of the foregoing, Executive and Company agree that Executive's obligations under this Agreement are not secured by a pledge of the Common Shares. 3. INTEREST. Interest shall accrue on the outstanding principal balance of the Loan from the date hereof at a variable rate equal to the lower of: (i) the interest rate borne by Company's then outstanding revolving credit facility (as refinanced from time to time), (ii) the Dividend-Computed Rate (as defined below) and (iii) 10%. If borrowings under the revolving credit facility bear interest at different rates (e.g., prime rate versus LIBOR), the applicable rate will be the highest of the rates in effect from time to time. The "Dividend Computed Rate" shall mean the rate, expressed as a percentage, computed as follows: FIRST, multiply by four the most recent regular quarterly dividend paid on a Common Share; SECOND, multiply the result from the first step by the number of Common Shares purchased with the Loan proceeds; THIRD, divide the result from the second step by the original principal amount of the Loan. For purposes of the foregoing, if the amount of the quarterly dividend changes, the Dividend Computed Rate will change, effective as of the payment date for such new dividend level. Accrued interest on the principal balance of the Loan shall be payable annually on the first business day of each April, commencing April 2001. 4. MATURITY DATE. Subject to Section 6, the outstanding principal balance of the Loan, plus accrued but unpaid interest thereon, shall be due and payable on the first business day of April 2004. 5. MANNER OF PAYMENT. The principal of, and interest on, the Loan shall be payable at Company's office at 14 Campus Boulevard, Suite 100, Newtown Square, Pennsylvania 19073 (or such other address as Company shall, from time to time, notify Executive). All such principal and interest shall be payable in lawful money of the United States of America in immediately available funds; provided, however, that Executive may, in his sole discretion, tender Common Shares to Company in repayment of all or any portion of the Loan and accrued interest thereon, with each share tendered valued at $15.625 (subject to equitable and proportionate adjustment in the event of a split or reverse split of, or share dividend on, the Common Shares). 6. LOAN FORGIVENESS. a. Upon a Change of Control of BRT, the outstanding principal balance of the Loan, plus accrued but unpaid interest thereon, shall automatically be forgiven. As used herein, the term "Change of Control" shall have the meaning assigned to it in the Amended and Restated Employment Agreement (the "Employment Agreement") between BRT and Executive. b. Within thirty (30) days following the first business day of each April 2001, 2002 and 2003, Company shall compute the total shareholder return on the Common Shares from February 18, 2000 through such first business day of April, and shall compare such total shareholder return to the total shareholder return over the same time period on the common shares of the other companies in the Peer Group (as defined below). If BRT's total shareholder return for each applicable period falls in the bottom quadrant of the Peer Group, then 25% of one-third of the original principal amount of the Loan shall be automatically forgiven as of such computation date. If BRT's total shareholder return falls in the third, second or first quadrant of the Peer Group, then 50%, 75% or 100%, respectively, of one third of the original principal amount of the Loan shall be automatically forgiven as of the computation date. c. In addition to the forgiveness provided in the preceding paragraph, if BRT's total shareholder return for any of the three measurement periods specified in the preceding paragraph exceeds the average total shareholder return of the companies in the first quadrant of the Peer Group for any such measurement period, then any portion of the principal of the Loan that was previously eligible for forgiveness, but which was not forgiven, shall be automatically forgiven. d. Whenever a portion of the principal of the Loan is forgiven, accrued interest on such portion of the principal shall also be forgiven. e. The Peer Group shall initially consist of the following companies, in addition to BRT: Koger Equity Inc., SL Green Realty Corp., Kilroy Realty Corp., Prentiss Properties Trust, Reckson Associates Realty Corp., First Industry Realty Trust Inc., Arden Realty Inc., CarrAmerica Realty Corp., Highwoods Properties Inc., Mack-Cali Realty Corp., Bedford Properties, Liberty Property Trust and Great Lakes. In the event that any of such companies is involved in a business combination or similar extraordinary transaction, it shall be removed from the Peer Group. 7. TREATMENT OF LOAN. For purposes of the "three times multiplier" referenced in Sections 18(b) and (d) of the Employment Agreement, the amount of the Loan and any portion of the Loan that is forgiven shall not be treated as an amount paid to Executive pursuant to Section 5 of the Employment Agreement and shall not be treated as the short-term portion of any bonus amounts paid or payable to Executive pursuant to Section 6 of the Employment Agreement. -2- 8. MISCELLANEOUS. This Agreement may be amended only by a written instrument executed by Company and Executive. This Agreement shall be governed by the laws of the State of Delaware. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. Brandywine Realty Trust By: ______________________________ Title:____________________________ _________________________________ Anthony A. Nichols, Sr. -3- EX-21.1 9 EXHIBIT 21.1 Exhibit 21.1 BRANDYWINE REALTY TRUST SUBSIDIARIES AAPOP 1, L.P., a Delaware limited partnership AAPOP 2, L.P., a Delaware limited partnership AAPOP 3, L.P., a Delaware limited partnership AAPOP Umbrella, L.P., a Delaware limited partnership Brandywine 1676, L.P., a Delaware limited partnership Brandywine Ambassador, L.P., a Pennsylvania limited partnership Brandywine Berwyn SPE, L.P., a Pennsylvania limited partnership Brandywine Dominion, L.P., a Pennsylvania limited partnership Brandywine F.C., L.P., a Pennsylvania limited partnership Brandywine Grande B, L.P., a Delaware limited partnership Brandywine I.S., L.P., a Pennsylvania limited partnership Brandywine Norriton, L.P., a Pennsylvania limited partnership Brandywine Operating Partnership, L.P., a Delaware limited partnership Brandywine P.M., L.P., a Pennsylvania limited partnership Brandywine TB Inn, L.P., a Pennsylvania limited partnership Brandywine Realty Partners, a Pennsylvania general partnership Brandywine TB I, L.P., a Pennsylvania limited partnership Brandywine TB II, L.P., a Pennsylvania limited partnership Brandywine TB V, L.P., a Pennsylvania limited partnership Brandywine TB VI, L.P., a Pennsylvania limited partnership Brandywine Tysons, L.P., a Delaware limited partnership C/N Iron Run Limited Partnership III, a Pennsylvania limited partnership C/N Leedom Limited Partnership II, a Pennsylvania limited partnership C/N Oaklands Limited Partnership I, a Pennsylvania limited partnership C/N Oaklands Limited Partnership III, a Pennsylvania limited partnership Fifteen Horsham, L.P., a Pennsylvania limited partnership Five/Oliver Brandywine Partner, L.P., a Pennsylvania limited partnership Iron Run Limited Partnership V, a Pennsylvania limited partnership LC/N Horsham Limited Partnership, a Pennsylvania limited partnership LC/N Keith Valley Limited Partnership I, a Pennsylvania limited partnership Newtech III Limited Partnership, a Pennsylvania limited partnership Newtech IV Limited Partnership, a Pennsylvania limited partnership Nichols Lansdale Limited Partnership III, a Pennsylvania limited partnership Witmer Operating Partnership I, L.P., a Delaware limited partnership Brandywine Central, L.P., a Pennsylvania limited partnership Brandywine 3 Paragon Drive Partnership, a New York general partnership Brandywine 55 Ames Court Partnership, a New York general partnership Brandywine Engineers Lane Partnership, a New York general partnership Brandywine National Road Partnership, a New York general partnership Brandywine Phillips Parkway Partnership, a New Jersey general partnership Brandywine Broad Street Partnership, a New York general partnership Brandywine Axinn Avenue Partnership, a New York general partnership Brandywine Durham Partnership, a New Jersey general partnership Interstate Center Associates, a Virginia general partnership Iron Run Venture I, a Pennsylvania general partnership IR Northlight II Associates, a Pennsylvania general partnership Iron Run Venture II, a Pennsylvania general partnership AAP Sub One, Inc., a Delaware corporation AAP Sub Two, Inc., a Delaware corporation AAP Sub Three, Inc., a Delaware corporation AAP Sub Four, Inc., a Delaware corporation Atlantic American Land Development, Inc., a Delaware corporation AAP 1-49, Inc., 49 separate Delaware corporations Brandywine Grande B Corp., a Delaware corporation Brandywine Holdings, I, Inc., a Pennsylvania corporation Brandywine Holdings II, Inc., a Pennsylvania corporation Brandywine Holdings III, Inc., a Pennsylvania corporation Brandywine Realty Services Corporation, a Pennsylvania corporation Brandywine SPE Corp., a Pennsylvania corporation 1100 Brandywine, LLC, a Delaware limited liability company Brandywine 263 Old Country Road, L.L.C., a New York limited liability company Brandywine Acquisitions, LLC, a Delaware limited liability company Brandywine Ambassador, LLC, a Pennsylvania limited liability company Brandywine Axinn I, LLC, a Delaware limited liability company Brandywine Axinn II, LLC, a Delaware limited liability company Brandywine Berwyn SPE, L.L.C., a Pennsylvania limited liability company Brandywine Brokerage Services, LLC, A New Jersey limited liability company Brandywine Chestnut Ridge, L.L.C., a New Jersey limited liability company Brandywine Dabney, L.L.C., a Delaware limited liability company Brandywine Dominion, L.L.C., a Pennsylvania limited liability company Brandywine F.C., L.L.C., a Pennsylvania limited liability company Brandywine I.S., L.L.C., a Pennsylvania limited liability company Brandywine Interstate 50, L.L.C., a Delaware limited liability company Brandywine Leasing, LLC, a Delaware limited liability company Brandywine - Main Street, LLC, a Delaware limited liability company Brandywine Norriton, L.L.C., a Pennsylvania limited liability company Brandywine P.M., L.L.C., a Pennsylvania limited liability company Brandywine Piazza, L.L.C., a New Jersey limited liability company Brandywine Plaza 1000, L.L.C., a New Jersey limited liability company Brandywine Promenade, L.L.C., a New Jersey limited liability company Brandywine TB Inn, L.L.C., a Pennsylvania limited liability company Brandywine TB I, L.L.C., a Pennsylvania limited liability company Brandywine TB II, L.L.C., a Pennsylvania limited liability company Brandywine TB III, L.L.C., a Pennsylvania limited liability company Brandywine TB V, L.L.C., a Pennsylvania limited liability company Brandywine TB VI, L.L.C., a Pennsylvania limited liability company Brandywine Trenton Urban Renewal, L.L.C., a Delaware limited liability company Brandywine Tysons, L.L.C., a Delaware limited liability company Brandywine Witmer, L.L.C., a Pennsylvania limited liability company Brandywine Industrial Partnership, L.P., a Delaware limited partnership Brandywine Tysons International Partners, a Delaware general partnership 1000 Chesterbrook Boulevard Partnership, a Pennsylvania general partnership Christiana Center Operating Company I LLC, a Delaware limited liability company Christiana Center Operating Company II LLC, a Delaware limited liability company Christiana Center Operating Company III LLC, a Delaware limited liability company Two Tower Bridge Associates, a Pennsylvania limited partnership Four Tower Bridge Associates, a Pennsylvania limited partnership Five Tower Bridge Associates, a Pennsylvania limited partnership Six Tower Bridge Associates, a Pennsylvania limited partnership Interstate 202 General Partnership, a Pennsylvania general partnership Plymouth Meeting General Partnership, a Pennsylvania general partnership Atlantic American Properties Trust, a Maryland real estate investment trust EX-23.1 10 EXHIBIT 23.1 Exhibit 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our report dated March 3, 2000 included in this Form 10-K, into the Company's previously filed Registration Statements on Forms S-3 (File No. 333-20999, File No. 333-46647, File No. 333-56237 and File No. 333-69653) and Forms S-8 (File No. 333-14243 and File No. 333-28427). ARTHUR ANDERSEN LLP Philadelphia, Pennsylvania March 30, 2000 EX-27 11 FINANCIAL DATA SCHEDULE
5 0000790816 BRANDYWINE REALTY TRUST 1000 12-MOS DEC-31-1999 DEC-31-1998 DEC-31-1999 5,692 0 25,893 0 0 42,399 1,828,097 125,744 1,829,916 54,924 839,634 0 0 364 656,187 1,829,916 0 283,220 0 244,792 0 0 66,659 34,606 0 0 0 0 0 34,606 .80 .80
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