<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 March 31, 1995
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 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 May
5, 1995.
<PAGE>
BRANDYWINE REALTY TRUST
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item I. Financial Statements
Consolidated Balance Sheets as of March 31, 1995 (unaudited)
and December 31, 1994
Consolidated Statements of Operations for the three months ended March
31, 1995 and March 31, 1994 (unaudited)
Consolidated Statements of Cash Flow for the three months ended March
31, 1995 and March 31, 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
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1: Financial Statements
BRANDYWINE REALTY TRUST
CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
March 31, 1995 December 31, 1994
-------------- -----------------
(Unaudited)
ASSETS
<S> <C> <C>
REAL ESTATE INVESTMENTS
Operating properties, at adjusted cost $21,360 $21,335
Accumulated depreciation (7,478) (7,387)
------- -------
13,882 13,948
CASH AND CASH EQUIVALENTS 365 1,766
ESCROWED CASH 922 1,114
DEFERRED COSTS net of accumulated amortization
of $454 in 1995 and $519 in 1994 788 813
ACCOUNTS RECEIVABLE AND OTHER ASSETS 506 232
------- -------
Total assets $16,463 $17,873
======= =======
LIABILITIES AND BENEFICIARIES' EQUITY
MORTGAGE NOTE PAYABLE $ 6,899 $ 6,899
TENANT SECURITY DEPOSITS AND DEFERRED
RENTS 185 207
ACCOUNTS PAYABLE 152 170
ACCRUED EXPENSES AND OTHER LIABILITIES 108 109
DISTRIBUTIONS PAYABLE -- 1,299
------- -------
Total liabilities 7,344 8,684
------- -------
MINORITY INTEREST -- --
COMMITMENTS AND CONTINGENCIES
BENEFICIARIES' EQUITY
Shares of beneficial interest, $0.01 par value,
5,000,000 preferred shares, authorized,
0 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 (2,332) (2,262)
Cumulative distributions (5,340) (5,340)
------- -------
Total beneficiaries' equity 9,119 9,189
------- -------
Total liabilities and beneficiaries equity $16,463 $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.
<PAGE>
BRANDYWINE REALTY TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(in thousands, except per share information)
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
REVENUE:
Rents and tenant reimbursements $ 907 $ 1,256
Other income 20 23
--------- ---------
Total revenue 927 1,279
EXPENSES:
Interest 176 322
Depreciation and amortization 282 361
Utilities 130 177
Real estate taxes 97 71
Maintenance 137 231
Management fee 16 62
Other operating expenses 12 73
Administrative expenses 147 224
Provision for loss on real estate investments -- 5,400
--------- ---------
Total expenses 997 6,921
LOSS BEFORE MINORITY INTEREST AND
EXTRAORDINARY ITEM (70) (5,642)
MINORITY INTEREST IN LOSS OF BRANDYWINE REALTY PARTNERS -- (5,642)
--------- ---------
(LOSS) INCOME BEFORE EXTRAORDINARY ITEM (70) --
EXTRAORDINARY ITEM: GAIN ON EXTINGUISHMENT OF DEBT
(NET OF $20,109 ALLOCATED TO MINORITY INTEREST) -- 7,998
--------- ---------
NET INCOME (LOSS) (70) 7,998
========= =========
PER SHARE DATA:
Earnings per share of beneficial interest
Primary
(Loss) income before extraordinary item $(0.04) $ 0.00
Extraordinary item 0.00 4.07
--------- ---------
Net income (loss) $(0.04) $ 4.07
========= =========
Distributions $ 0.00 $ 0.04
========= =========
Weighted average number of shares outstanding
including share equivalents 1,872,724 1,967,517
========= =========
</TABLE>
The accompanying notes and management's discussion and analysis of financial
condition and results of operations are an integral part of these statements.
<PAGE>
BRANDYWINE REALTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(in thousands)
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME (LOSS) $ (70) $ 7,998
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 -- (5,642)
Depreciation and amortization 282 361
Provision for loss on real estate investments -- 5,400
Changes in assets and liabilities
Decrease (increase) in other assets 45 68
(Decrease) increase in other liabilities (31) 121
------- -------
Net cash provided by operating activities 226 308
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash from Brandywine Realty Partners -- 2,110
Capital expenditures and leasing commissions paid (192) (5)
Decrease (Increase) in escrowed cash 192 (2,268)
Net proceeds from real estate and other assets sold -- 2,278
------- -------
Net cash provided by investing activities -- 2,115
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions paid to shareholders (1,299) --
Minority Partner contributions -- 49
Proceeds from new mortgage loan -- 10,000
Repayment of original mortgage notes payable -- (13,200)
Costs associated with refinancing transaction -- (625)
Costs associated with financing commitment -- (100)
Deposit associated with refinancing commitment (318) --
Tenant security deposits and other financing activities (10) 78
------- -------
Net cash used in financing activities (1,627) (3,798)
------- -------
DECREASE IN CASH AND CASH EQUIVALENTS (1,401) (1,375)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,766 2,470
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 365 $ 1,095
======= =======
</TABLE>
The accompanying notes and management's discussion and analysis of financial
condition and results of operations are an integral part of these statements.
<PAGE>
BRANDYWINE REALTY TRUST
-----------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
MARCH 31, 1995
--------------
1. ORGANIZATION:
------------
Brandywine Realty Trust (the "Trust"), was formed on February 26, 1986 as a real
estate investment trust. On July 31, 1986, the Trust sold through an initial
public offering 1,856,200 shares of beneficial interest, the net proceeds of
which were $17,168,000. On July 31, 1986, the Trust acquired a 68% general
partner interest in Brandywine Realty Partners ("Brandywine"), at a total cost
of $16,787,000. On July 31, 1986, Brandywine used the capital contributions of
its three general partners, aggregating $17,058,000, along with certain debt
financing, to acquire commercial and industrial real estate projects (the
"Specified Projects") at a total cost of $63,845,000. In January 1994,
Brandywine refinanced the original mortgage loans on the Specified Projects and
Brandywine National Corporation ("Brandywine National"), the original
administrative partner of Brandywine, transferred its 2% general partner
interest in Brandywine to the Trust and the Trust was designated as the new
administrative partner of Brandywine. As of March 31, 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,
consisting only of normal recurring adjustments, except for the provision for
loss on real estate investments as described in Note 3 and the sale of certain
real estate investments described in Note 4, necessary to present fairly the
financial position of the Trust as of March 31, 1995, and the results of its
operations and its cash flows for the three months ended March 31, 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.
<PAGE>
Net Income (Loss) Per Share
- ---------------------------
Net income (loss) per share is calculated based upon the weighted average shares
outstanding which were 1,872,724 in 1995 and 1,967,517 in 1994. Earnings per
share for 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 March 31 for the fully diluted earnings
per share calculation. No such options have been exercised as of March 31, 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
March 31, 1995 and December 31, 1994, cash and cash equivalents totaling
$365,000 and $1,766,000, respectively included tenant escrow deposits of
$145,000 and $155,000, respectively. Mortgage interest paid for the three months
ended March 31, 1995 and March 31, 1994 totaled $171,000 and $388,000
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 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 new 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.
5. MORTGAGE NOTE PAYABLE:
---------------------
At March 31, 1995 and 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 March 31, 1995 and December 31, 1994, the rate of minimum
interest was set at 10.46% and 9.59%, respectively.
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. On January 31, 1994, an initial deposit of $540,000 was made
into this account and an additional $1.5 million deposit was made upon the sale
of the Lincoln Centre property.
<PAGE>
Ongoing monthly deposits of $40,000 were required. At March 31, 1995 and
December 31, 1994, total escrow cash reserves held by the lender amounted to
$922,000 and $1,114,000 respectively.
On April 21, 1995, the Trust refinanced the existing mortgage note borrowing
$9,000,000 under nonrecourse mortgage loans which provide for a fixed rate of
interest, initially set at 8.75%, and are cross-collateralized by the Specified
Projects. See Note 8.
During the first quarter of 1994, the Trust obtained a $26 million commitment
from its then mortgage lender to provide nonrecourse financing for the
acquisition of additional real estate properties. At March 31, 1995 and December
31, 1994, no amounts were borrowed against the commitment.
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
March 31, 1995 and December 31, 1994, the Trust's Unrecovered Capital totaled
$18,467,000 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
100,000 shares at an exercise price of $6.50. Of the remaining 40,000 shares,
20,000 shares are vested on August 8, 1995 and 20,000 shares are vested 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, the or 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 $5.12 and
$2.42 respectively, as a result of distributions to shareholders from proceeds
of the Academy Downs and Iron Run sales. During 1994 there were no options
exercised, canceled or expired relative to officers of the Trust.
<PAGE>
8. SUBSEQUENT EVENT:
----------------
On April 21, 1995, the Trust refinanced the existing mortgage note of $6,899,000
borrowing $9 million under nonrecourse mortgage loans which provide for a fixed
rate of interest and are cross-collateralized by the Specified Projects. The $9
million mortgage loans provide for a term of six years with the lender having
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 of the loans. In
addition, the lender is entitled to hold escrow cash reserves for both real
estate taxes and capital needs in two interest-bearing accounts. Deposits to the
real estate tax escrow account are required monthly pro rata based upon annual
tax bills. Amounts held in the capital escrow account may be advanced, from time
to time, subject to the new lender's verification of the Trust's compliance with
certain stated conditions to pay for capital improvements, tenant improvements
and leasing commissions associated with the Specified Projects and distributions
to shareholders of the Trust. This capital escrow account held by the lender is
not additional collateral for the mortgage loan. An initial deposit of
$1,559,000 was made to this account on April 21, 1995. Ongoing monthly deposits
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.
Unaudited Pro forma Financial Information
- -----------------------------------------
The following unaudited pro forma condensed consolidated balance sheet as of
March 31, 1995, unaudited pro forma condensed consolidated statement of
operations for the three months ended March 31, 1995 and unaudited pro forma
condensed consolidated statement of operations for the year ended December 31,
1994 of Brandywine Realty Trust give effect to the above refinancing of the
Specified Projects as if the event had occurred on March 31, 1995, for balance
sheet purposes and on January 1, of the period for purposes of the statements of
operations. The pro forma financial information is unaudited and is not
necessarily indicative of the results which actually would have occurred if the
transactions had been consummated at the beginning of the period presented, nor
does it purport to represent the financial position and results of operations
for future periods.
<PAGE>
BRANDYWINE REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1995
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Historical Adjustments Pro Forma
---------- ----------- ---------
(Unaudited)
<S> <C> <C> <C>
ASSETS
REAL ESTATE INVESTMENTS
Operating properties, at adjusted cost $21,360 $ -- 21,360
Accumulated depreciation (7,478) -- (7,478)
------- ------- -------
13,882 -- 13,882
CASH AND CASH EQUIVALENTS 365 1,460 (a) 1,825
ESCROWED CASH 922 637 (a) 1,559
OTHER ASSETS 1,294 (416)(b) 878
------- ------- -------
Total assets $16,463 $ 1,681 $18,144
======= ======= =======
LIABILITIES AND BENEFICIARIES' EQUITY
MORTGAGE NOTES PAYABLE $ 6,899 $ 2,101 (c) $ 9,000
DISTRIBUTIONS PAYABLE -- 650 (d) 650
OTHER LIABILITIES 445 (62)(e) 383
------- ------- -------
Total liabilities 7,344 2,689 10,033
MINORITY INTEREST -- -- --
BENEFICIARIES' EQUITY: 9,119 (1,008)(f) 8,111
------- ------- -------
Total liabilities and beneficiaries' equity $16,463 $ 1,681 $18,144
======= ======= =======
</TABLE>
(a) Record cash received as a result of refinancing of $2,101,000, plus release
of deposits of $318,000 less of cash placed in reserves ($637,000), costs of
refinancing ($260,000) and payment of accrued mortgage interest ($62,000).
(b) Record release of deposit on refinancing ($318,000), write off of
unamortized loan fees of $358,000 relative to mortgage loan existing at
March 31, 1995 and record estimated costs of $260,000 incurred to effect
refinancing as deferred costs to be amortized over term of new mortgage
loans.
(c) Record extinguishment of $6,899,000 mortgage loan existing at March 31, 1995
and new mortgage loans of $9,000,000.
(d) Record distribution payable to shareholders as a result of the refinancing,
in an amount equal to 85% of net proceeds from refinancing as required
pursuant to the Trust's documents.
(e) Record payment of accrued mortgage interest of $62,000 related to mortgage
interest loan existing at March 31, 1995.
(f) Record write off of $358,000 unamortized loan fees relative to mortgage loan
existing at March 31, 1995 plus distribution payable to shareholders as a
result of refinancing of $650,000.
<PAGE>
BRANDYWINE REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1995
(in thousands, except per share information)
(unaudited)
<TABLE>
<CAPTION>
Historical Adjustments Pro Forma
---------- ----------- ---------
<S> <C> <C> <C>
REVENUE:
Rents and tenant reimbursements $ 907 $ -- $ 907
Other income 20 -- 20
----------- ----------- -----------
Total revenue 927 -- 927
EXPENSES:
Interest 176 21 (a) 197
Depreciation and amortization 282 369 (b) 651
Operating expenses 392 -- 392
Administrative expenses 147 -- 147
----------- ----------- -----------
Total expenses 997 390 1,387
----------- ----------- -----------
NET LOSS $ (70) $ (390) $ (460)
=========== =========== ===========
PER SHARE $ (0.04) $ (0.25)
=========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING INCLUDING SHARE EQUIVALENTS 1,872,724 1,872,724
=========== ===========
</TABLE>
(a) Record the increase in interest expense of $21,000 pursuant to new
mortgage loans at an interest rate of 8.75%.
(b) Record the write-off of unamortized loan fee of $358,000 relative to
mortgage loans existing at January 1, 1995 plus amortization of $11,000
resulting from estimated costs of $260,000 incurred to effect refinancing
and recorded as deferred costs to be amortized over the six year term of the
new mortgage loans.
<PAGE>
BRANDYWINE REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1994
(in thousands, except per share information)
<TABLE>
<CAPTION>
Historical Adjustments Pro Forma
---------- ----------- ---------
<S> <C> <C> <C>
REVENUE:
Rents and tenant reimbursements $ 4,159 $ -- $ 4,159
Other income 33 -- 33
---------- ---------- ----------
Total revenue 4,192 -- 4,192
EXPENSES:
Interest 1,962 (1,174)(a) 788
Depreciation and amortization 1,370 (18)(b) 1,352
Operating expenses 2,102 -- 2,102
Administrative expenses 834 -- 834
Provision for loss on real estate investments 5,400 -- 5,400
---------- ---------- ----------
Total expenses 11,668 (1,192) 10,476
---------- ---------- ----------
LOSS BEFORE MINORITY INTEREST, GAIN ON SALES OF
REAL ESTATE INVESTMENTS AND EXTRAORDINARY ITEM (7,476) 1,192 (6,284)
GAIN ON SALES OF REAL ESTATE INVESTMENTS 1,410 -- 1,410
MINORITY INTEREST IN LOSS OF BRANDYWINE
REALTY PARTNERS (5,635) -- (5,635)
---------- ---------- ----------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM $ (431) $ 1,192 $ 761
========== ========== ==========
PER SHARE $ (0.21) $ 0.38
========== ==========
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING INCLUDING SHARE EQUIVALENTS 2,022,981 2,022,981
========== ==========
</TABLE>
(a) Record the reduction in interest expense of $1,174,000 pursuant to new
mortgage loans at an interest rate of 8.75%.
(b) Record the reduction to amortization expense of $18,000 pursuant to
estatimated costs of $260,000 incurred to effect refinancing and recorded
as deferred costs to be amortized over the six year term of the new
mortgage loans.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
-----------------------------------------------------------
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 March 31, 1995, the Trust's consolidated cash balances were $365,000 as
compared to $1,766,000 as of December 31, 1994. In addition, escrowed cash
balances with the Trust's mortgage lender totaled $922,000 and $1,114,000 as of
March 31, 1995 and December 31, 1994, respectively. During the first quarter of
1995, the Trust paid $1,299,000 in distributions to shareholders and paid
$318,000 as a deposit toward the then pending refinancing, which, as discussed
below, occurred on April 21, 1995. Net cash provided by operating activities for
the first quarter of 1995 totaled approximately $226,000.
On April 21, 1995, the Trust refinanced the $6,899,000 existing mortgage note
borrowing $9,000,000 under nonrecourse mortgage loans which provide for a fixed
rate of interest, initially set at 8.75%, and are cross-collateralized by the
Specified Projects.
As a result of this refinancing and the positive operating activities for the
first quarter of 1995, the Trust declared distributions in 1995 as follows:
Declaration Date Record Date Payment Date Amount per Share
- ---------------- ----------- ------------ ----------------
April 19,1995 May 11, 1995 May 17, 1995 $ 0.05
April 21,1995 May 11, 1995 May 17, 1995 $ 0.35
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.
RESULTS OF OPERATIONS
- ---------------------
The Trust's consolidated net loss for the period from January 1, 1995 to March
31, 1995 was ($70,000) or ($0.04) per share as compared to consolidated net
income of $7,998,000 or $4.07 per share for the period from January 1, 1994 to
March 31, 1994. The net income for the three months ended March 31, 1994 is
wholly attributable to the extraordinary gain upon extinguishment of debt
resulting from the refinancing of the Specified Projects in January of 1994.
The Trust's funds from operations for the three months ended March 31,
1995 totaled $212,000 as compared to $119,000 for the three months ended
March 31, 1994.
When comparing activity for the three months ended March 31, 1995 to the three
months ended March 31, 1994, rental revenues decreased by $352,000 or 27%,
depreciation and amortization expense decreased by $79,000 or 22% and project
operating expenses decreased by $222,000 or 36%. Each of these decreases was
primarily due to the sales of three of the Specified Projects during 1994.
Interest expense decreased by $146,000 or 45% primarily as a result of the
January 1994 refinancing. Administrative expenses decreased by $77,000 or 34%
primarily as a result of reduced professional fees relating to the 1994
foreclosure litigation and mortgage restructuring efforts.
<PAGE>
As of April 30, 1995, the Specified Projects are 91% leased as compared to 86%,
as of January 31, 1995. During the first quarter of 1995, no space was vacated
and no renewals occurred. However, the Trust has obtained new leases covering
approximately 18,000 square feet.
Approximately 13% of the total space or 33,000 square feet in the Specified
Projects is either available for lease or represents leases expiring on or
before December 31, 1995.
<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 March 31, 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
<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: May 9, 1995 By: /s/ Gerard H. Sweeney
----------- -------------------------------------------
Gerard H. Sweeney, President and
Chief Executive Officer
(Principal Executive Officer)
Date: May 9, 1995 By: /s/ Francine M. Haulenbeek
----------- --------------------------------------------
Francine M. Haulenbeek, Vice President -
Finance and Secretary
(Principal Financial and Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 1,287,000
<SECURITIES> 0
<RECEIVABLES> 506,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 506,000
<PP&E> 21,360,000
<DEPRECIATION> (7,478,000)
<TOTAL-ASSETS> 16,463,000
<CURRENT-LIABILITIES> 260,000
<BONDS> 6,899,000
<COMMON> 16,791,000
0
0
<OTHER-SE> (7,672,000)
<TOTAL-LIABILITY-AND-EQUITY> 16,463,000
<SALES> 0
<TOTAL-REVENUES> 927,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 821,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 176,000
<INCOME-PRETAX> 0
<INCOME-TAX> 0
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (70,000)
<EPS-PRIMARY> (0.04)
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