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