-----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, DhtLa8bq6HR5TQUqCrlfbvgUCqgXehWJ+WokpKukLj8wf3UFKidj8Qn4JhFtD6ae 0iO/MmmppJzpJF+358c0DA== 0000950116-98-001591.txt : 19980803 0000950116-98-001591.hdr.sgml : 19980803 ACCESSION NUMBER: 0000950116-98-001591 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980407 ITEM INFORMATION: FILED AS OF DATE: 19980730 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BRANDYWINE REALTY TRUST CENTRAL INDEX KEY: 0000790816 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 232413352 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 001-09106 FILM NUMBER: 98674348 BUSINESS ADDRESS: STREET 1: 16 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 8-K/A 1 FORM 8-K/A SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------- FORM 8-K/A No. 1 CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): May 7, 1998 BRANDYWINE REALTY TRUST ------------------------------------------------------ (Exact name of registrant as specified in its charter) Maryland 1-9106 23-2413352 (State or Other Jurisdiction (Commission (I.R.S. Employer of Incorporation) File Number) Identification No.) 16 Campus Boulevard, Newtown Square, Pennsylvania 19073 (Address of principal executive offices) (610) 325-5600 (Registrant's telephone number, including area code) Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (a) Financial Statement of Business Acquired. The combined statement of revenue and certain expenses of the First Commercial Properties for the year ended December 31, 1997 together with the report of Independent Public Accountants thereon are included on pages F-11 to F-14. The statement of revenue and certain expenses of One Christina Centre for the year ended December 31, 1997 together with the report of Independent Public Accountants thereon are included on pages F-15 to F-18. (b) Pro Forma Financial Information. Pro forma financial information which reflects the Company's acquisition of the First Commercial Properties and One Christina Centre as of and for the year ended December 31, 1997 are included on pages F-1 to F-10. (c) Exhibits. 23.1 Consent of Arthur Andersen LLP -2- Signature Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. BRANDYWINE REALTY TRUST Date: July 28, 1998 By: /s/ GERARD H. SWEENEY ------------------------ Gerard H. Sweeney President and Chief Executive Officer (Principal Executive Officer) Date: July 28, 1998 By: /s/ MARK S. KRIPKE --------------------- Mark S. Kripke Chief Financial Officer (Principal Financial and Accounting Officer) -3- BRANDYWINE REALTY TRUST INDEX TO FINANCIAL STATEMENTS
I. UNAUDITED PRO FORMA CONDENSED CONSOLIDATING FINANCIAL INFORMATION o Pro Forma Condensed Consolidating Balance Sheet as of December 31, 1997.............................F - 4 o Pro Forma Condensed Consolidating Statement of Operations for the Year Ended December 31, 1997.............................................................................F - 5 o Notes and Management's Assumptions to Unaudited Pro Forma Condensed Consolidating Financial Information......................................................................F - 6 II. FIRST COMMERCIAL PROPERTIES o Report of Independent Public Accountants............................................................F - 11 o Combined Statement of Revenue and Certain Expenses for the Year Ended December 31, 1997 (audited)........................................................................F - 12 o Notes to Statement of Revenue and Certain Expenses..................................................F - 13 III. ONE CHRISTINA CENTRE o Report of Independent Public Accountants............................................................F - 15 o Combined Statement of Revenue and Certain Expenses for the Year Ended December 31, 1997 (audited)........................................................................F - 16 o Notes to Statement of Revenue and Certain Expenses..................................................F - 17
F-1 BRANDYWINE REALTY TRUST PRO FORMA CONDENSED CONSOLIDATING FINANCIAL INFORMATION The following sets forth the pro forma condensed consolidating balance sheet of Brandywine Realty Trust ("the Company") as of December 31, 1997 and the pro forma condensed consolidating statement of operations for the year ended December 31, 1997. The pro forma condensed consolidating financial information should be read in conjunction with the historical financial statements of the Company and those acquisitions deemed significant pursuant to the rules and regulations of the Securities and Exchange Commission. The unaudited pro forma condensed consolidating financial information is presented as if the following events occurred on December 31, 1997 for balance sheet purposes, and on January 1, 1997 for purposes of the statement of operations: - - The Company acquired the properties described in Note 1 to these pro forma financial statements. - - The Company issued 2,375,500 Common Shares at $20.625 per share, of which 175,500 shares related to the underwriter's exercise of the over-allotment option (the "March 1997 Offering"). The net proceeds from the March 1997 Offering were contributed to the Operating Partnership in exchange for 2,375,500 GP Units. - - The Company issued 11,500,000 Common Shares at $20.75 per share, of which 1,500,000 shares related to the underwriter's exercise of the over-allotment option (the "July 1997 Offering"). The net proceeds from the July 1997 Offering were contributed to the Operating Partnership in exchange for 11,500,000 GP Units. - - The Company issued 786,840 Common Shares at $22.31 per share (the "September 1997 Offering"). The net proceeds from the September 1997 Offering were contributed to the Brandywine Operating Partnership, L.P. (the "Operating Partnership") in exchange for 786,840 units of general partnership interest ("GP Units") in the Operating Partnership. - - The Company issued 751,269 Common Shares at $24.63 per share (the "December 1997 Offering"). The net proceeds from the December 1997 Offering were contributed to the Operating Partnership in exchange for 751,269 GP Units. - - The Company issued 11,000,000 Common Shares at $24.00 per share, of which 1,000,000 shares related to the underwriter's exercise of the over-allotment option (the "January 1998 Offering"). The net proceeds from the January 1998 Offering were contributed to the Operating Partnership in exchange for 11,000,000 GP Units. - - The Company issued an aggregate of 1,012,820 Common Shares at $24.06 per share (the "February 18, 1998 Offering"). The net proceeds from the February 18, 1998 Offering were contributed to the Operating Partnership in exchange for 1,012,820 GP Units. - - The Company issued an aggregate of 629,921 Common Shares at $23.81 per share (the "February 27, 1998 Offering"). The net proceeds from the February 27, 1998 Offering were contributed to the Operating Partnership in exchange for 629,921 GP Units. - - The Company issued an aggregate of 625,000 Common Shares at $24.00 per share (the "April 1998 Offering"). The net proceeds from the April 1998 Offering were contributed to the Operating Partnership in exchange for 625,000 GP Units. F-2 The pro forma condensed consolidating financial information is unaudited and is not necessarily indicative of what the actual financial position would have been at December 31, 1997, nor does it purport to represent the future financial position and the results of operations of the Company. F-3 BRANDYWINE REALTY TRUST PROFORMA CONDENSED CONSOLIDATING BALANCE SHEET AS OF DECEMBER 31, 1997 (Notes 1 and 2) (Unaudited) (In thousands)
BRANDYWINE SHARE OFFERINGS REALTY TRUST ---------------------------- PROPERTY HISTORICAL USE OF ACQUISITIONS PRO FORMA CONSOLIDATED PROCEEDS (A) PROCEEDS (B) (C) CONSOLIDATED ----------- ------------ ----------- ----------- ----------- ASSETS: Real estate investments, net $ 563,557 $ -- $ -- $ 587,961 $ 1,151,518 Cash and cash equivalents 29,442 301,422 (301,422) -- 29,442 Escrowed cash 212 -- -- -- 212 Accounts receivable 3,689 -- -- -- 3,689 Due from affiliates 214 -- -- -- 214 Investment in management company 74 -- -- -- 74 Investment in unconsolidated real estate ventures 5,480 -- -- -- 5,480 Deposits 12,133 -- -- (12,133) -- Deferred costs and other assets 6,680 -- -- -- 6,680 ----------- ------------ ----------- ----------- ----------- Total assets 621,481 301,422 (301,422) 575,828 1,197,309 =========== ============ =========== =========== =========== LIABILITIES: Mortgages and notes payable 163,964 -- (301,422) 561,658 424,200 Accrued interest 857 -- -- -- 857 Accounts payable and accrued expenses 2,377 -- -- -- 2,377 Distributions payable 8,843 -- -- -- 8,843 Tenant security deposits and deferred rents 5,535 -- -- -- 5,535 ----------- ------------ ----------- ----------- ----------- Total liabilities 181,576 -- (301,422) 561,658 441,812 ----------- ------------ ----------- ----------- ----------- MINORITY INTEREST 14,377 -- -- 14,170 28,547 ----------- ------------ ----------- ----------- ----------- BENEFICIARIES' EQUITY: Common shares of beneficial interest 241 132 -- -- 373 Additional paid-in capital 446,054 301,290 -- -- 747,344 Share warrants 962 -- -- -- 962 Cumulative earnings 11,753 -- -- -- 11,753 Cumulative distributions (33,482) -- -- -- (33,482) ----------- ------------ ----------- ----------- ----------- Total beneficiaries' equity 425,528 301,422 -- -- 726,950 ----------- ------------ ----------- ----------- ----------- Total liabilities and beneficiaries' equity $ 621,481 $ 301,422 $ (301,422) $ 575,828 $ 1,197,309 =========== ============ =========== =========== ===========
F-4 BRANDYWINE REALTY TRUST PRO FORMA CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1997 (Notes 1 and 3) (Unaudited) (In thousands, except share and per share amounts)
BRANDYWINE 1997 EVENTS REALTY ---------------------- 1998 TRUST HISTORICAL PRO FORMA SHARE HISTORICAL OPERATIONS ADJUST- OFFERINGS CONSOLIDATED (A) MENTS (B) SUBTOTAL (E) ---------- -------- --------- -------- -------- REVENUE: Base rents $ 49,928 $ 28,640 $ 918 $ 79,486 $ - Tenant reimbursements 9,396 3,954 - 13,350 - Other 1,736 284 - 2,020 - ---------- -------- --------- -------- -------- Total Revenue 61,060 32,878 918 94,856 - ---------- -------- --------- -------- -------- OPERATING EXPENSES: Interest 7,079 - 4,303 11,382 (22,607) Depreciation and amortization 15,589 - 7,093 22,682 - Property operating expenses 22,445 13,745 - 36,190 - Administrative expenses 659 - - 659 - ---------- -------- --------- -------- -------- Total operating expenses 45,772 13,745 11,396 70,913 (22,607) ---------- -------- --------- -------- -------- Income (loss) before equity in income of management company and minority interest 15,288 19,133 (10,478) 23,943 22,607 Equity in income (loss) of management company 89 - 422 (C) 511 - ---------- -------- --------- -------- -------- Income (loss) before minority interest 15,377 19,133 (10,056) 24,454 22,607 Minority interest in (income) loss (376) - (355) (D) (731) (815) (D) ---------- -------- --------- -------- -------- Net income (loss) 15,001 19,133 (10,411) 23,723 21,792 Income allocated to Preferred Shares (499) - - (499) - ---------- -------- --------- -------- -------- Income (loss) allocated to Common Shares $ 14,502 $ 19,133 $ (10,411) $ 23,224 $ 21,792 ========== ======== ========= ======== ======== Diluted earnings (loss) per Common Share $ 0.95 ========== Diluted weighted average number of shares outstanding 15,793,329 ==========
1998 PROPERTY ACQUISITIONS --------------------- HISTORICAL PRO FORMA TOTAL OPERATIONS ADJUST- PRO FORMA (F) MENTS (G) CONSOLIDATED -------- --------- ---------- REVENUE: Base rents $ 62,869 $ - $ 142,355 Tenant reimbursements 10,505 - 23,855 Other 905 - 2,925 -------- --------- ---------- Total Revenue 74,279 - 169,135 -------- --------- ---------- OPERATING EXPENSES: Interest - 42,104 30,879 Depreciation and amortization - 18,815 41,497 Property operating expenses 27,729 - 63,919 Administrative expenses - - 659 -------- --------- ---------- Total operating expenses 27,729 60,919 136,954 -------- --------- ---------- Income (loss) before equity in income of management company and minority interest 46,550 (60,919) 32,181 Equity in income (loss) of management company - 1,576 (C) 2,087 -------- --------- ---------- Income (loss) before minority interest 46,550 (59,343) 34,268 Minority interest in (income) loss - 414 (D) (1,132) -------- --------- ---------- Net income (loss) 46,550 (58,929) 33,136 Income allocated to Preferred Shares - - (499) -------- --------- ---------- Income (loss) allocated to Common Shares $ 46,550 $ (58,929) $ 32,637 ======== ========= ========== Diluted earnings (loss) per Common Share $ 0.87 ========== Diluted weighted average number of shares outstanding 37,407,699 ==========
F-5 BRANDYWINE REALTY TRUST NOTES AND MANAGEMENT'S ASSUMPTIONS TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATING FINANCIAL INFORMATION (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS) 1. BASIS OF PRESENTATION: Brandywine Realty Trust (the "Company") is a Maryland real estate investment trust. As of May 13, 1998, the Company owned 179 properties. The Company's interest in all of the Properties is held through Brandywine Operating Partnership, L.P. (the "Operating Partnership"). The Company is the sole general partner of the Operating Partnership and as of May 13, 1998, the Company held a 97.4% interest in the Operating Partnership. These pro forma financial statements should be read in conjunction with the historical financial statements and notes thereto of the Company, the Columbia Acquisition Properties, the Main Street Acquisition Properties, the TA Properties, the Emmes Properties, the Greentree Executive Campus Acquisition Properties, 748 & 855 Springdale Drive, the Green Hills Properties, the Berwyn Park Properties, 500 & 501 Office Center Drive, Metropolitan Industrial Center, Atrium 1, Bala Pointe Office Centre, the Scarborough Properties, the GMH Properties, the RREEF Properties, Three Christina Centre, the DKM Properties, the First Commercial Properties and One Christina Centre. In management's opinion, all adjustments necessary to reflect the effects of the March 1997 Offering, the July 1997 Offering, the September 1997 Offering, the December 1997 Offering, the January 1998 Offering, the February 18, 1998 Offering, the February 27, 1998 Offering, the April 1998 Offering, the acquisitions of the Columbia Acquisition Properties, the Main Street Acquisition Properties, 1336 Enterprise Drive, the Greentree Executive Campus Acquisition Properties, Five Eves Drive, Kings Manor, the TA Properties, the Emmes Properties, 748 & 855 Springdale Drive, 1974 Sproul Road, the Green Hills Properties, the Berwyn Park Properties, 500 & 501 Office Center Drive, Christiana Corporate Center, Metropolitan Industrial Center, Atrium 1, 5 & 6 Cherry Hill Executive Campus, 220 Commerce Drive, Provident Place, the PECO Building, Bala Pointe Office Centre, the Scarborough Properties, the GMH Properties, the RREEF Properties, Three Christina Centre, 920 Harvest Drive, Norriton Business Center, the DKM Properties, the First Commercial Properties and One Christina Centre by the Company have been made. 2. ADJUSTMENTS TO PRO FORMA CONDENSED CONSOLIDATING BALANCE SHEET: (A) Reflects the proceeds received from the Company's recent public share offerings, as summarized below: Net Common Additional Proceeds Shares Paid In to Company At Par Capital --------------- ------------- ------------ January 1998 Offering $ 249,970 $ 110 $ 249,860 February 18, 1998 Offering 23,052 10 23,042 February 27, 1998 Offering 14,225 6 14,219 April 1998 Offering 14,175 6 14,169 --------------- ------------- ------------ Total $ 301,422 $ 132 $ 301,290 =============== ============= ============ F-6 (B) Reflects the use of the proceeds received from the Company's recent public share offerings, as detailed in footnote (A) above, to repay indebtedness, as summarized below: Use of Debt Cash Repayments ----------- ------------- January 1998 Offering $ (249,970) $ (249,970) February 18, 1998 Offering (23,052) (23,052) February 27, 1998 Offering (14,225) (14,225) April 1998 Offering (14,175) (14,175) ----------- ------------- Total $ (301,422) $ (301,422) =========== ============= (C) Reflects the Company's recent property acquisitions as follows:
Cost Consideration -------------------------------------- -------------------------------------------------- Credit Mortgage Operating Closing Facility Debt Partnership Acquisition Purchase Price Costs Total Borrowings Assumption Units Deposits ----------- -------------- ----- ----- ---------- ---------- ----- -------- GMH Portfolio $ 229,015 $ 1,665 $ 230,680 $ 218,547 $ - $ - $ 12,133 RREEF Portfolio 55,500 657 56,157 56,157 - - - Three Christina Centre 50,600 1,062 51,662 51,662 - - - 920 Harvest Drive 12,000 164 12,164 12,164 - - - Norriton Business Center 7,742 283 8,025 2,367 5,658 - - DKM Portfolio 137,800 381 138,181 119,195 15,374 3,612 - First Commercial Properties 48,500 227 48,727 38,169 - 10,558 - One Christina Centre 41,625 740 42,365 42,365 - - - ------------------------------------- -------------------------------------------------- Total $ 582,782 $ 5,179 $ 587,961 $ 540,626 $ 21,032 $ 14,170 $ 12,133 ===================================== ==================================================
3. ADJUSTMENTS TO PRO FORMA CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS: (A) Reflects the historical statements of operations of the Columbia Acquisition Properties, the Main Street Acquisition Properties, 1336 Enterprise Drive, Kings Manor, Greentree Executive Campus, Five Eves Drive, the TA Properties, the Emmes Properties, 748 & 855 Springdale Drive, 1974 Sproul Road, the Berwyn Park Properties, the Green Hills Properties, 500/501 Office Center Drive, Christiana Corporate Center, Metropolitan Industrial Center, Atrium 1, 5 & 6 Cherry Hill Executive Campus, 220 Commerce Drive, Provident Place, Bala Pointe Office Centre and the Scarborough Properties for the year ended December 31, 1997. The operating results reflected below include the historical results for the period January 1, 1997 through the earlier of the respective acquisition dates or December 31, 1997. Operating results from those dates forward are included in the historical results of the Company. F-7
Tenant Property reimburse- operating Acquisition / Offering Rents ments Other expenses - ---------------------------------------- ----------------------------------------------- Columbia Acquisition Properties $ 338 $ 24 $ 25 $ 130 Main Street Acquisition Properties 542 60 - 379 1336 Enterprise Drive 78 13 - 19 Kings Manor 105 27 - 43 Greentree Executive Campus 602 17 - 272 Five Eves Drive 103 12 - 45 TA Properties 2,053 299 6 698 Emmes Properties 2,570 1,130 2 1,332 748 & 755 Springdale Drive 414 - - 99 1974 Sproul Road 354 54 - 225 Berwyn Park Properties 2,492 376 36 1,073 Green Hills Properties 4,567 - - 2,725 500/501 Office Center Drive 1,106 919 48 971 Christiana Corporate Center 615 22 45 218 Metropolitan Industrial Center 1,395 306 33 472 Atrium 1 994 34 26 573 5 & 6 Cherry Hill Executive Campus 127 - - 140 220 Commerce Drive 594 - - 186 Provident Place 644 90 7 283 Bala Pointe Office Centre 3,523 34 35 1,544 Scarborough Properties 5,424 537 21 2,318 ----------------------------------------------- Total $ 28,640 $ 3,954 $ 284 $ 13,745 ===============================================
(B) Reflects the Company's pro forma adjustments relative to the acquisitions of the Columbia Acquisition Properties, the Main Street Acquisition Properties, 1336 Enterprise Drive, Kings Manor, Greentree Executive Campus, Five Eves Drive, the TA Properties, the Emmes Properties, 748 & 855 Springdale Drive, 1974 Sproul Road, the Berwyn Park Properties, the Green Hills Properties, 500/501 Office Center Drive, Christiana Corporate Center, Metropolitan Industrial Center, Atrium 1, 5 & 6 Cherry Hill Executive Campus, 220 Commerce Drive, Provident Place, the PECO Building, Bala Pointe Office Centre and the Scarborough Properties for the year ended December 31, 1997 and pro forma adjustments to reflect the March 1997 Offering, the July 1997 Offering, the September 1997 Offering and the December 1997 Offering for the year ended December 31, 1997. The pro forma adjustments below reflect the period January 1, 1997 through the earlier of the respective acquisition dates or December 31, 1997. Operating results from those dates forward are included in the historical results of the Company. F-8
Depreciation and amortization Acquisition / Offering Rents Interest (i) (ii) - ---------------------------------------- ------------------------------------------- Columbia Acquisition Properties $ - $ 110 $ 66 Main Street Acquisition Properties - - 109 1336 Enterprise Drive - - 21 Kings Manor - - 29 Greentree Executive Campus - 249 106 Five Eves Drive - 75 32 TA Properties - 1,241 530 Emmes Properties - 2,049 874 748 & 755 Springdale Drive - 171 73 1974 Sproul Road - - 61 Berwyn Park Properties - - 700 Green Hills Properties - 690 745 500/501 Office Center Drive - 700 340 Christiana Corporate Center - 308 132 Metropolitan Industrial Center - 926 395 Atrium 1 - 597 255 5 & 6 Cherry Hill Executive Campus - 218 93 220 Commerce Drive - 345 147 Provident Place - 411 175 PECO Building (iii) 918 652 278 Bala Pointe Office Centre - 1,891 807 Scarborough Properties - 1,957 1,125 March 1997 Offering - (91) - July 1997 Offering - (6,905) - September 1997 Offering - - - December 1997 Offering - (1,291) - ---------------------------------------- Total $ 918 $ 4,303 $ 7,093 ========================================
(i) Pro forma interest expense is presented assuming an effective rate of 7.5% on borrowings under the Company's revolving credit facility. The adjustment for the Columbia Acquisition Properties also reflects an effective interest rate of 9.5% on assumed debt. (ii) Pro forma depreciation expense is presented assuming an 80% building and 20% land allocation of the purchase price and capitalized closing costs and assumes a useful life of 25 years. (iii)Pro forma base rents for the Peco Building are based on the lease in place as of November 25, 1997 as historically the property was owner occupied and was not an operating property. All property expenses are paid directly by the tenant. (C) Pro forma equity in income of management company is based on management fees less incremental costs estimated to be incurred. (D) Pro forma minority interest in income represents the incremental pro forma earnings allocable to minority partners. (E) Represents interest expense savings from debt repayments upon the application of the net proceeds from the January 1998 Offering, the February 18, 1998 Offering, the February 27, 1998 Offering and the April 1998 Offering. Interest savings Offering (i) - ------------------------------------------------------------ January 1998 Offering $ (18,748) February 18, 1998 Offering (1,729) February 28, 1998 Offering (1,067) April 1998 Offering (1,063) ------------------- Total $ (22,607) =================== (i) Pro forma interest expense is presented assuming an effective rate of 7.5% on borrowings under the Company's revolving credit facility. F-9 (F) Reflects the historical operations of the GMH Portfolio, the RREEF Portfolio, Three Christina Centre, 920 Harvest Drive, Norriton Business Center, the DKM Portfolio, the First Commercial Properties and One Christina Centre for the year ended December 31, 1997.
Tenant Property reimburse- operating Acquisition Rents ments Other expenses - ------------------------------ -------------------------------------------------------- GMH Portfolio $ 25,049 $ 1,937 $ 174 $ 10,935 RREEF Portfolio 4,160 705 - 1,252 Three Christina Centre 4,635 2,427 22 2,830 920 Harvest Drive 1,658 63 - 724 Norriton Business Center 1,161 - - 276 DKM Portfolio 15,182 4,135 24 7,164 First Commercial Properties 6,235 719 116 2,307 One Christina Centre 4,789 519 569 2,241 -------------------------------------------------------- Total $ 62,869 $ 10,505 $ 905 $ 27,729 ========================================================
(G) Reflects the Company's pro forma adjustments relative to the acquisitions of the GMH Portfolio, the RREEF Portfolio, Three Christina Centre, 920 Harvest Drive, Norriton Business Center, the DKM Portfolio, the First Commercial Properties and One Christina Centre for the year ended December 31, 1997. Depreciation and Acquisition Interest (i) amortization (ii) - ------------------------------ -------------------------------- GMH Portfolio $ 16,391 $ 7,382 RREEF Portfolio 4,212 1,797 Three Christina Centre 3,875 1,653 920 Harvest Drive 912 389 Norriton Business Center 658 257 DKM Portfolio 10,016 4,422 First Commercial Properties 2,863 1,559 One Christina Centre 3,177 1,356 -------------------------------- Total $ 42,104 $ 18,815 ================================ (i) Pro forma interest expense is presented assuming an effective rate of 7.5% on borrowings under the Company's revolving credit facility, and an effective rate of 7% to 8.5% on assumed mortgage indebtedness. (ii) Pro forma depreciation expense is presented assuming an 80% building and 20% land allocation of the purchase price and capitalized closing costs and assumes a useful life of 25 years. F-10 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Brandywine Realty Trust: We have audited the combined statement of revenue and certain expenses of First Commercial Properties, described in Note 1, for the year ended December 31, 1997. This financial statement is the responsibility of the Property's management. Our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement. 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 audit provides a reasonable basis for our opinion. The statement of revenue and certain expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission for inclusion in a current report on Form 8-K of Brandywine Realty Trust as described in Note 1, and is not intended to be a complete presentation of First Commercial Properties' revenue and expenses. In our opinion, the financial statement referred to above presents fairly, in all material respects, the revenue and certain expenses of First Commercial Properties for the year ended December 31, 1997, in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Philadelphia, Pa., April 27, 1998 F-11 FIRST COMMERCIAL PROPERTIES COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES FOR THE YEAR ENDED DECEMBER 31, 1997 REVENUE: Base rents (Note 2) $ 6,235,000 Tenant reimbursements 719,000 Other 116,000 ----------- Total revenues 7,070,000 ----------- CERTAIN EXPENSES: Maintenance and other operating expenses 912,000 Utilities 894,000 Real estate taxes 501,000 ----------- Total certain expenses 2,307,000 REVENUE IN EXCESS OF CERTAIN EXPENSES $ 4,763,000 =========== The accompanying notes are an integral part of this financial statement. F - 12 FIRST COMMERCIAL PROPERTIES NOTES TO COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES DECEMBER 31, 1997 1. BASIS OF PRESENTATION: --------------------- The statement of revenue and certain expenses reflect the operations of First Commercial Properties (the "Properties") located in Harrisburg, Pennsylvania. The Properties are expected to be acquired from Brandywine Operating Partnership, L.P. (the "Operating Partnership"), a limited partnership of which Brandywine Realty Trust (the "Company") is the sole general partner. The Properties consist of a portfolio of eleven office buildings with approximately 38 tenants in May 1998. The Properties have an aggregate net rentable area of approximately 410,000 square feet which was 96% leased as of December 31, 1997. The net purchase price for Property is expected to be $48.5 million. The statement of revenue and certain expenses is to be included in the Company's current report on Form 8-K, as the above-described transaction has been deemed significant pursuant to the rules and regulations of the Securities and Exchange Commission. Adjusting entries have been made to present the accompanying financial statements in accordance with generally accepted accounting principles. The accompanying financial statements exclude certain expenses such as interest, depreciation and amortization, professional fees, and other costs not directly related to the future operations of Property. 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 revenue and expenses during the reporting period. The ultimate results could differ from those estimates. 2. OPERATING LEASES: ---------------- Base rents presented for the year ended December 31, 1997, include straight-line adjustments for rental revenue increases in accordance with generally accepted accounting principles. The aggregate rental revenue decrease resulting from the straight-line adjustment for the year ended December 31, 1997, was $59,000. The following tenants account for greater than 10% of minimum rent: Property Tenant Minimum Rent -------- ------ ------------ 300 Corporate Center Dr. IBM $2,6678,000 200 Corporate Center Dr. PA Blue Shield 975,000 F-13 The Property is leased to tenants under operating leases with expiration dates extending to the year 2003. Future minimum rentals under noncancelable operating leases, excluding tenant reimbursements of operating expenses as of December 31, 1997, are as follows: 1998 $ 5,465,000 1999 3,450,000 2000 976,000 2001 777,000 2002 412,000 Thereafter 537,000 ------------- Total $ 11,618,000 Certain leases also include provisions requiring tenants to reimburse First Commercial Properties for management costs and other operating expenses up to stipulated amounts. 3. RELATED PARTY TRANSACATION: First Commercial Development Company, a related party, leases 3,166 square feet of the Properties. The lease is on a month-to month basis at approximately $4,617 per month. Rents totaling $55,405 have been included in the statement of revenues and certain expenses. F-14 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Brandywine Realty Trust: We have audited the statement of revenue and certain expenses of One Christina Centre, described in Note 1, for the year ended December 31, 1997. This financial statement is the responsibility of the Property's management. Our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement. 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 audit provides a reasonable basis for our opinion. The statement of revenue and certain expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission for inclusion in a current report on Form 8-K of Brandywine Realty Trust, as described in Note 1, and is not intended to be a complete presentation of the Property's revenue and expenses. In our opinion, the financial statement referred to above presents fairly, in all material respects, the revenue and certain expenses of One Christina Centre for the year ended December 31, 1997, in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Philadelphia, Pa., May 1, 1998 F-15 ONE CHRISTINA CENTRE STATEMENT OF REVENUE AND CERTAIN EXPENSES (NOTE 1) FOR THE YEAR ENDED DECEMBER 31, 1997 REVENUE: Minimum rent (Note 2) $ 4,789,000 Tenant reimbursements 519,000 Other Income (Note 4) 569,000 ------------ Total revenue 5,877,000 ------------ CERTAIN EXPENSES: Maintenance and other operating expenses 1,114,000 Utilities 738,000 Real estate taxes 389,000 ------------ Total certain expenses 2,241,000 ------------ REVENUE IN EXCESS OF CERTAIN EXPENSES $ 3,636,000 ============ The accompanying notes are an integral part of this financial statement. F-16 ONE CHRISTINA CENTRE NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES DECEMBER 31, 1997 2. BASIS OF PRESENTATION: --------------------- The statement of revenue and certain expenses reflect the operations of One Christina Centre (the "Property"), located in Wilmington, Delaware. The Property is expected to be acquired by Brandywine Realty Trust (the "Company") from Christina Pagemill, LLC in May 1998 for a net purchase price of approximately $41.6 million. The Property has an aggregate net rentable area of approximately 333,000 square feet which is 95% leased as of December 31, 1997. This statement of revenue and certain expenses is to be included in the Company's current report on Form 8-K, as the above described transaction has been deemed significant pursuant to the rules and regulations of the Securities and Exchange Commission. The accounting records of the Property are maintained on an accrual basis. The accompanying financial statements exclude certain expenses such as interest, depreciation and amortization, professional fees, and other costs not directly related to the future operations of the Property. 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 revenue and expenses during the reporting period. The ultimate results could differ from those estimates. 2. OPERATING LEASES: ---------------- Base rents presented for the year ended December 31, 1997, include straight-line adjustments for rental revenue increases in accordance with generally accepted accounting principles. The aggregate rental revenue increase resulting from the straight-line adjustment for the year ended December 31, 1997 was $535,000. The following tenants account for greater than 10% of minimum rent: Beneficial Corporation $2,424,000 First USA Bank $1,070,000 The Property is leased to tenants under operating leases with expiration dates extending to the year 2010. Future minimum rentals under noncancelable operating leases, excluding tenant reimbursements of operating expenses as of December 31, 1997, are as follows: 1998 $ 4,285,000 1999 3,959,000 2000 3,976,000 2001 3,953,000 2002 4,061,000 Thereafter 33,010,000 ------------- $ 53,244,000 ============= F-17 Certain leases also include provisions requiring tenants to reimburse the Property for management costs and other operating expenses up to stipulated amounts. 3. RELATED PARTY TRANSACTIONS: -------------------------- The Property paid management fees of $172,000 to LaSalle Partners, an unrelated third party, based on percentages as defined in the management agreement. These management fees are included within maintenance and other operating expenses in the statement of revenue and certain expenses. 4. OTHER INCOME: ------------ The Property receives revenue from the operation of a parking facility that is managed by an unrelated third party. Revenue received from the operation of this facility totaled approximately $494,000 for the year ended December 31, 1997, and is included in other income on the statement of revenues and certain expenses. F-18 EX-23.1 2 EXHIBIT 23.1 Exhibit 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our report dated April 27, 1998 in this Form 8-K/A No. 1 on the combined statement of revenue and certain expenses of the First Commercial Properties and our report dated May 1, 1998 in this Form 8-K/A No. 1 on the combined statement of revenue and certain expenses of One Christina Centre into the Company's previously filed Registration Statements on Forms S-3 (File No. 333-20991, File No. 333-20999, File No. 333-56237, File No. 46647 and File No. 53359) and Forms S-8 (File No. 333-14243, File No. 333-28427, and File No. 52957). ARTHUR ANDERSEN LLP Philadelphia, Pa., July 21, 1998 -----END PRIVACY-ENHANCED MESSAGE-----