<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) September 30, 1997
BRANDYWINE REALTY TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MARYLAND 1-9106 23-2413352
(State or other jurisdiction (Commission file number) (I.R.S. Employer
of incorporation) Identification Number)
16 CAMPUS BOULEVARD, NEWTOWN SQUARE, PENNSYLVANIA 19073
(Address of principal executive offices)
(610) 325-5600
(Registrant's telephone number, including area code)
Page 1 of 6 pages
<PAGE>
ITEM 5. OTHER EVENTS
(a) On October 9, 1997, Brandywine Operating Partnership, L.P. (the
"Operating Partnership"), a limited partnership in which Brandywine Realty
Trust ("the Company") is the sole general partner and in which, as of the
date of this Report, the Company owns an approximately 98.7% partnership
interest, acquired a five-story office building known as Atrium 1. This
building contains approximately 96,660 net rentable square feet and is
located in Mt. Laurel, New Jersey for a cash purchase price of approximately
$10.3 million. The Operating Partnership paid the purchase price and closing
expenses using borrowings under its existing revolving credit facility. As of
October 9, 1997, Atrium 1 was approximately 83.9% leased to 10 tenants. IBM;
Corporate Dynamics; and Janney, Montgomery, Scott are major tenants,
occupying approximately 17.7%, 14.3% and 11.9%, respectively, of the total
net rentable square feet of Atrium 1. Reference is made to Item 7 herein for
certain financial statements related to Atrium 1.
The seller of Atrium 1, Commercial Development Fund 85, a Connecticut real
estate limited partnership (the "Seller") is a party unaffiliated with the
Company and the Operating Partnership. The Company based its determination of
the purchase price on the expected cash flow, physical condition, location,
competitive advantages, existing tenancies and opportunities to retain and
attract additional tenants. The purchase price was determined by arm's-length
negotiation between the Company and the Seller.
-2-
<PAGE>
The table below sets forth certain information regarding the rental rates
and lease expirations at Atrium 1 as of October 9, 1997.
<TABLE>
<CAPTION>
RENTABLE SQUARE FINAL ANNUALIZED PERCENTAGE OF TOTAL
YEAR OF NUMBER OF LEASES FOOTAGE SUBJECT BASE RENT UNDER FINAL ANNUALIZED BASE RENT
LEASE EXPIRING WITHIN TO EXPIRING EXPIRING LEASES (2) UNDER EXPIRING LEASES
EXPIRATION THE YEAR AT (1) LEASES
------------------ ----------------- ----------------- ---------------- ---------------------------
<S> <C> <C> <C> <C>
1997 1 97 $ 1,940 0.1%
1998 1 4,537 86,203 5.7%
1999 4 19,851 384,683 25.4%
2000 1 4,770 82,044 5.4%
2001 2 26,617 489,751 32.4%
2002 1 11,460 212,010 14.0%
2003 -- -- -- --
2004 1 13,833 255,911 16.9%
2005 -- -- -- --
2006 and
Thereafter ---- -- -- -- --
---------- ---------- ----------- ----------
Total 11 81,165 $ 1,512,542 100.0%
---------- ---------- ----------- ----------
---------- ---------- ----------- ----------
</TABLE>
- ------------------------
(1) A lease is considered to expire if, and at any time, it is terminable by the
tenant without payment of penalty or premium.
(2) "Final Annualized Base Rent" for each lease scheduled to expire represents
the cash rental rate in the final month prior to expiration multiplied by
twelve.
After giving effect to the acquisition of Atrium 1, the Company's portfolio
consists of 78 office properties and 16 industrial properties that contain an
aggregate of approximately 5.9 million net rentable square feet.
-3-
<PAGE>
(b) As previously reported by the Company in a Current Report on Form 8-K
dated October 3, 1997 (the "Prior 8-K"), the Company, through a subsidiary,
entered into a joint venture, Christiana Center Operating Company I LLC
("Joint Venture I"). On October 20, 1997, and as contemplated by the Prior
8-K, Joint Venture I acquired approximately 13.3 acres of land in New Castle
County, Delaware for a cash purchase price of approximately $900,000. In
connection with the planned development of a three-story office building, on
October 20, 1997, Joint Venture I closed an approximately $14.5 million
construction loan (the "Construction Loan") provided by PNC Bank, Delaware
(the "Construction Lender"). In connection with the Construction Loan, the
Company delivered a $1.5 million letter of credit for the benefit of the
Construction Lender and a forward commitment (the "Loan Commitment Letter")
for up to $14.5 million of permanent financing for the Project as well as a
guaranty of payment (the "Guaranty") for the benefit of the Construction
Lender. The Construction Loan is also secured by a first mortgage on the
property being developed by Joint Venture I. Reference is made to the Loan
Commitment Letter and the Guaranty attached hereto as exhibits.
(c) On October 21, 1997, the Company's Common Shares commenced trading on
the New York Stock Exchange. The Company has applied to withdraw the listing
of the Common Shares from the American Stock Exchange.
(d) During the period January 1, 1997 through October 9, 1997, the Company
has acquired 21 individually insignificant properties from parties
unaffiliated with the Company and the Operating Partnership. The aggregate
purchase price for these properties was approximately $79.6 million. The
Company previously provided audited financial statements for five of the
individually insignificant property acquisitions in the Current Report on
Form 8-K dated June 26, 1997 and two of the individually insignificant
property acquisitions in the Current Report on Form 8-K dated September 10,
1997 in accordance with Regulation S-X, Rule 3-14. This Current Report on
Form 8-K provides audited financial statements for an additional eight of the
individually insignificant property acquisitions. After reasonable inquiry,
the Company is not aware of any material factors relating to the above
mentioned properties that would cause the reported financial information
relating to such properties not to be necessarily indicative of future
operating results.
-4-
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
The audited statement of revenue and certain operating expenses of
the Metropolitan Industrial Center for the year ended December 31,
1996 and the unaudited statement of revenue and certain operating
expenses for the six months ended June 30, 1997 are included on pages
F-14 to F-17.
The audited statement of revenue and certain operating expenses of
Atrium 1 for the year ended December 31, 1996 and the unaudited
statement of revenue and certain operating expenses for the six
months ended June 30, 1997 are included on pages F-18 to F-21.
(b) Pro Forma Financial Information.
Pro forma financial information which reflects the Company's
acquisition of the Metropolitan Industrial Center and Atrium 1 as of
and for the six months ended June 30, 1997 and for the year ended
December 31, 1996 are included on pages F-3 to F-13.
(c) Exhibits.
10.1 Guaranty dated October 16, 1997 from Brock J. Vinton and
Brandywine Realty Trust in favor of PNC Bank, Delaware.
10.2 Loan Commitment Letter dated October 16, 1997 from Brandywine
Realty Trust to Christiana Operating Company I, LLC.
23.1 Consent of Arthur Andersen LLP
-5-
<PAGE>
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 thereunto duly authorized.
BRANDYWINE REALTY TRUST
Date: October 30, 1997 By: /s/ Gerard H. Sweeney
-----------------------------------------
Gerard H. Sweeney, President and
Chief Executive Officer
(Principal Executive Officer)
Date: October 30, 1997 By: /s/ Mark S. Kripke
-----------------------------------------
Mark S. Kripke, Chief Financial Officer
and Secretary (Principal Financial and
Accounting Officer)
<PAGE>
BRANDYWINE REALTY TRUST
INDEX TO FINANCIAL STATEMENTS
I. UNAUDITED PRO FORMA CONDENSED CONSOLIDATING FINANCIAL INFORMATION
<TABLE>
<S> <C>
- - Pro Forma Condensed Consolidating Balance Sheet as of June 30, 1997 F--3
- - Pro Forma Condensed Consolidating Statement of Operations for the Year Ended
December 31, 1996................................................................ F--4
- - Pro Forma Condensed Consolidating Statement of Operations for the Six Months
Ended June 30, 1997.............................................................. F--5
- - Notes and Management's Assumptions to Unaudited Pro Forma Condensed Consolidating
Financial Information............................................................ F--6
II. METROPOLITAN INDUSTRIAL CENTER
- - Report of Independent Public Accountants......................................... F--14
- - Statements of Revenue and Certain Expenses for the Year Ended December 31, 1996
(audited) and for the Six Month Period Ended June 30, 1997 (unaudited)........... F--15
- - Notes to Statements of Revenue and Certain Expenses.............................. F--16
III. ATRIUM 1
- - Report of Independent Public Accountants......................................... F--18
- - Statements of Revenue and Certain Expenses for the Year Ended December 31, 1996
(audited) and for the Six Month Period Ended June 30, 1997 (unaudited)........... F--19
- - Notes to Statements of Revenue and Certain Expenses.............................. F--20
</TABLE>
F-1
<PAGE>
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 June 30, 1997 and the pro forma
condensed consolidating statements of operations for the six months ended June
30, 1997 and for the year ended December 31, 1996.
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 no later than June 30, 1997 for
balance sheet purposes, and at the beginning of the period presented for
purposes of the statements of operations:
- The Company acquired the properties described in Note 1 to these pro forma
financial statements.
- The Company acquired its partnership interests in Brandywine Operating
Partnership, L.P. (the "Operating Partnership").
- The Company issued 4,600,000 Common Shares at $16.50 per share, of which
600,000 shares related to the underwriter's exercise of the over-allotment
option (the "1996 Offering").
- The Company issued 636,363 Common Shares at $16.50 per share to a voting
trust established for the benefit of the Pennsylvania State Employees
Retirement System ("SERS"), in exchange for $10.5 million (the "SERS
Offering") and contributed such proceeds to the Operating Partnership in
exchange for 636,363 units of general partnership interest ("GP Units") in
the Operating Partnership.
- The Company issued 709,090 Common Shares at $16.50 per share to two
investment funds managed by Morgan Stanley Asset Management Inc. (the
"Morgan Stanley Offering") and contributed the proceeds to the Operating
Partnership in exchange for 709,090 GP Units.
- The Operating Partnership repaid $49,805,000 of mortgage indebtedness and
$764,000 of loans made by Safeguard Scientifics, Inc. and paid a $500,000
prepayment penalty with a portion of the proceeds of the 1996 Offering,
the SERS Offering and the Morgan Stanley Offering.
- 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 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 Operating Partnership repaid $160,775,000 of indebtedness under the
Company's revolving credit facility using proceeds from the July 1997
Offering.
- 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 Operating Partnership in exchange for
786,840 GP Units.
The pro forma condensed consolidating financial information is unaudited and
is not necessarily indicative of what the actual financial position would have
been at June 30, 1997, nor does it purport to represent the future financial
position and the results of operations of the Company.
F-2
<PAGE>
BRANDYWINE REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATING BALANCE SHEET
AS OF JUNE 30, 1997 (Notes 1 and 2)
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
METRO-
BRANDYWINE 500 AND POLITAN
REALTY TRUST JULY 1997 GREEN 501 OFFICE SEPT. 1997 INDUST.
HISTORICAL OFFERING HILLS BERWYN CENTER OFFERING CENTER ATRIUM 1
CONSOLIDATED (A) (B) PARK (C) DRIVE (D) (E) (F) (G)
------------- --------- -------- --------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Real estate
investments,
net......... $ 344,209 $ -- $ 40,444 $ 37,664 $ 17,091 $ -- $ 16,503 $ 10,295
Cash and cash
equivalents.. 10,777 64,965 (23,944) (37,664) (2,091) 16,606 -- --
Escrowed
cash........ 1,213 -- -- -- -- -- -- --
Accounts
receivable... 2,755 -- -- -- -- -- -- --
Due from
affiliates... 293 -- -- -- -- -- -- --
Investment in
management
company..... 202 -- -- -- -- -- -- --
Deferred costs
and other
assets...... 4,980 -- -- -- -- -- -- --
-------- ----------- ----------- ----------- ------------- ----------- ----------- -----------
Total
assets...... 364,429 64,965 16,500 -- 15,000 16,606 16,503 10,295
-------- ----------- ----------- ----------- ------------- ----------- ----------- -----------
-------- ----------- ----------- ----------- ------------- ----------- ----------- -----------
LIABILITIES:
Mortgage notes
payable..... 46,960 -- 1,500 -- -- -- --
Notes payable,
Credit
Facility.... 130,775 (160,775) 15,000 -- 15,000 -- 16,503 10,295
Accrued
interest.... 395 -- -- -- -- -- -- --
Accounts
payable and
accrued
expenses.... 2,650 -- -- -- -- -- -- --
Distributions
payable..... 4,192 -- -- -- -- -- -- --
Tenant
security
deposits and
deferred
rents....... 2,721 -- -- -- -- -- -- --
-------- ----------- ----------- ----------- ------------- ----------- ----------- -----------
Total
liabilities.. 187,693 (160,775) 16,500 -- 15,000 -- 16,503 10,295
-------- ----------- ----------- ----------- ------------- ----------- ----------- -----------
-------- ----------- ----------- ----------- ------------- ----------- ----------- -----------
MINORITY
INTEREST.... 5,508 -- -- -- -- -- -- --
-------- ----------- ----------- ----------- ------------- ----------- ----------- -----------
BENEFICIARIES'
EQUITY:
Common shares
of
beneficial
interest.... 111 115 -- -- -- 8 -- --
Additional
paid-in
capital..... 186,426 225,625 -- -- -- 16,598 -- --
Share
warrants.... 962 -- -- -- -- -- -- --
Cumulative
earnings.... 460 -- -- -- -- -- -- --
Cumulative
distributions.. (16,731) -- -- -- -- -- -- --
-------- ----------- ----------- ----------- ------------- ----------- ----------- -----------
Total
beneficiaries'
equity...... 171,228 225,740 -- -- -- 16,606 -- --
-------- ----------- ----------- ----------- ------------- ----------- ----------- -----------
Total
liabilities
and
beneficiaries'
equity...... $ 364,429 $ 64,965 $ 16,500 $ -- $ 15,000 $ 16,606 $ 16,503 $ 10,295
-------- ----------- ----------- ----------- ------------- ----------- ----------- -----------
-------- ----------- ----------- ----------- ------------- ----------- ----------- -----------
<CAPTION>
PRO FORMA
CONSOLIDATED
------------
<S> <C>
ASSETS:
Real estate
investments,
net......... $ 466,206
Cash and cash
equivalents.. 28,649
Escrowed
cash........ 1,213
Accounts
receivable... 2,755
Due from
affiliates... 293
Investment in
management
company..... 202
Deferred costs
and other
assets...... 4,980
--------
Total
assets...... 504,298
--------
--------
LIABILITIES:
Mortgage notes
payable..... 48,460
Notes payable,
Credit
Facility.... 26,798
Accrued
interest.... 395
Accounts
payable and
accrued
expenses.... 2,650
Distributions
payable..... 4,192
Tenant
security
deposits and
deferred
rents....... 2,721
--------
Total
liabilities.. 85,216
--------
--------
MINORITY
INTEREST.... 5,508
--------
BENEFICIARIES'
EQUITY:
Common shares
of
beneficial
interest.... 234
Additional
paid-in
capital..... 428,649
Share
warrants.... 962
Cumulative
earnings.... 460
Cumulative
distribution (16,731)
--------
Total
beneficiaries'
equity...... 413,574
--------
Total
liabilities
and
beneficiaries'
equity...... $ 504,298
--------
--------
</TABLE>
F-3
<PAGE>
BRANDYWINE REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996 (Notes 1 and 3)
(Unaudited)
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
1997 EVENTS
----------------------------------------
BRANDYWINE
REALTY METRO-
TRUST 1997 POLITAN TOTAL
HISTORICAL 1996 OTHER INDUSTRIAL ATRIUM 1 PRO FORMA
CONSOLIDATED (A) EVENTS (B) SUBTOTAL EVENTS (C) CENTER (E) (F) CONSOLIDATED
-------------------- ------------ ----------- ------------ ------------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUE:
Base rents... $ 8,462 $ 12,646 $ 21,108 $ 37,644 $ 1,811 $ 1,226 $ 61,789
Tenant
reimbursements.. 1,372 2,838 4,210 6,714 406 33 11,363
Other........ 196 100 296 547 9 26 878
---------- ------------ ----------- ------------ ------ ----------- ----------------
Total
Revenue.... 10,030 15,584 25,614 44,905 2,226 1,285 74,030
---------- ------------ ----------- ------------ ------ ----------- ----------------
OPERATING
EXPENSES:
Interest..... 2,751 513 3,264 1,072 1,238 772 6,346
Depreciation
and
amortization.. 2,836 4,687 7,523 9,165 528 329 17,545
Property
expenses... 3,709 6,830 10,539 18,776 678 755 30,748
General and
administrative.. 825 148 973 -- -- -- 973
---------- ------------ ----------- ------------ ------ ----------- ----------------
Total
operating
expenses... 10,121 12,178 22,299 29,013 2,444 1,856 55,612
---------- ------------ ----------- ------------ ------ ----------- ----------------
---------- ------------ ----------- ------------ ------ ----------- ----------------
Income (loss)
before
minority
interest... (91) 3,406 3,315 15,892 (218) (571) 18,418
Minority
interest in
(income)
loss....... (45) (429) (474) 150 3 9 (312)
---------- ------------ ----------- ------------ ------ ----------- ----------------
---------- ------------ ----------- ------------ ------ ----------- ----------------
Income (loss)
before
uncombined
entity..... (136) 2,977 2,841 16,042 (215) (562) 18,106
Equity in
income of
management
company.... (26) 66 40 342 53 31 466
---------- ------------ ----------- ------------ ------ ----------- ----------------
Net income
(loss)..... (162) 3,043 2,881 16,384 (162) (531) 18,572
(Income) loss
allocated
to
Preferred
Shares..... (401) (1,847) (2,248) -- -- -- (2,248)
---------- ------------ ----------- ------------ ------ ----------- ----------------
---------- ------------ ----------- ------------ ------ ----------- ----------------
Income (loss)
allocated
to Common
Shares..... $ (563) $ 1,196 $ 633 $ 16,384 $(1,077) $ (531) $ 16,324
---------- ------------ ----------- ------------ ------ ----------- ----------------
---------- ------------ ----------- ------------ ------ ----------- ----------------
Earnings
(loss) per
Common
Share...... $(0.43) $ 0.76
---------- ----------------
---------- ----------------
Weighted
average
number of
shares..... 1,302,648 21,578,246
---------- ----------------
---------- ----------------
</TABLE>
F-4
<PAGE>
BRANDYWINE REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 (Notes 1 and 3)
(Unaudited)
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
1997 EVENTS
------------------------------------------
BRANDYWINE METRO-
REALTY POLITAN
TRUST 1997 INDUSTRIAL TOTAL
HISTORICAL OTHER CENTER ATRIUM 1 PRO FORMA
CONSOLIDATED (A) EVENTS (D) (E) (F) CONSOLIDATED
-------------------- ------------ ------------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
REVENUE:
Base rents................... $ 16,889 $ 14,105 $ 925 $ 638 $ 32,557
Tenant reimbursements........ 3,285 2,690 220 22 6,217
Other........................ 544 102 5 17 668
---------- ------------ ------------- ----- ----------------
Total Revenue............. 20,718 16,897 1,150 677 39,442
---------- ------------ ------------- ----- ----------------
---------- ------------ ------------- ----- ----------------
OPERATING EXPENSES:
Interest..................... 3,059 (1,022) 614 383 3,034
Depreciation and
amortization................ 5,775 3,413 262 163 9,613
Property operating expenses.. 7,032 6,707 313 368 14,420
Other expenses............... 1,187 -- -- -- 1,187
---------- ------------ ------------- ----- ----------------
Total operating expenses.. 17,053 9,098 1,189 914 28,254
---------- ------------ ------------- ----- ----------------
---------- ------------ ------------- ----- ----------------
Income (loss) before
minority interest........ 3,665 7,799 (39) (237) 11,188
Minority interest in (income)
loss........................ (174) (20) -- 4 (190)
---------- ------------ ------------- ----- ----------------
Income (loss) before
uncombined entity........... 3,491 7,779 (39) (233) 10,998
Equity in income of management
company..................... 217 151 26 15 409
---------- ------------ ------------- ----- ----------------
Net income (loss)............. 3,708 7,930 (13) (218) 11,407
(Income) loss allocated to
Preferred Shares............ (499) -- -- -- (499)
---------- ------------ ------------- ----- ----------------
Income (loss) allocated to
Common Shares............... $ 3,209 $ 7,930 $ (13) $(218) $ 10,908
---------- ------------ ------------- ----- ----------------
---------- ------------ ------------- ----- ----------------
Earnings (loss) per Common
Share....................... $ 0.36 $ 0.50
---------- ----------------
---------- ----------------
Weighted average number of
shares outstanding including
share equivalents........... 8,809,379 21,942,726
---------- ----------------
---------- ----------------
</TABLE>
F-5
<PAGE>
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 October 9, 1997, the Company owned 94 properties. The Company's
interest in 93 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 October 9, 1997, the Company held
a 98.6% 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 SSI/TNC
Properties, the LibertyView Building, the nine properties (the "SERS
Properties") acquired in November 1996 from SERS and its subsidiaries, Delaware
Corporate Center I, 700/800 Business Center Drive, 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 and Atrium 1. In
management's opinion, all adjustments necessary to reflect the effects of the
1996 Offering, the SERS Offering, the Morgan Stanley Offering, the March 1997
Offering, the July 1997 Offering, the September 1997 Offering, the acquisitions
of the SSI/TNC Properties, the LibertyView Building, the 1996 Additional
Acquisition Properties (consisting of the SERS Properties, Delaware Corporate
Center I, 700/800 Business Center Drive and 8000 Lincoln Drive), the Columbia
Acquisition Properties, the Main Street Acquisition Properties, 1336 Enterprise
Drive, the Greentree Executive Campus, 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, Metropolitan Industrial Center and Atrium 1 by the Company have been
made.
2. ADJUSTMENTS TO PRO FORMA CONDENSED CONSOLIDATING BALANCE SHEET:
(A) Reflects the July 1997 Offering and the use of a portion of the net
proceeds to repay $160.8 million of indebtedness under the Credit Facility.
(B) Reflects the Company's acquisition of the Green Hills Properties as
follows:
GREEN HILLS PROPERTIES
----------------------
Purchase Price........ $40,000
Closing Costs......... 444
-------
$40,444
F-6
<PAGE>
(C) Reflects the Company's acquisition of Berwyn Park as follows:
Purchase Price........ $37,150
Closing Costs......... 514
-------
$37,664
(D) Reflects the Company's acquisition of 500 and 501 Office Center Drive as
follows:
Purchase Price........ $16,900
Closing Costs......... 191
-------
$17,091
(E) Reflects the September 1997 Offering.
(F) Reflects the Company's acquisition of the Metropolitan Industrial Center
as follows:
Purchase Price........ $16,300
Closing Costs......... 203
-------
$16,503
(G) Reflects the Company's acquisition of Atrium 1 as follows:
Purchase Price........ $10,250
Closing Costs......... 45
-------
$10,295
3. ADJUSTMENTS TO PRO FORMA CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS:
(A) Reflects the historical consolidated operations of the Company.
(B) Reflects the historical operations of the SSI/TNC Properties,
LibertyView Building and the 1996 Additional Acquisition Properties from January
1, 1996 through the respective dates of acquisition, plus the pro forma 1996
Offering adjustments. The table below reflects the adjustments:
<TABLE>
<CAPTION>
SSI/TNC
PROPERTIES AND 700/800 1996 PRO FORMA TOTAL
LIBERTY VIEW DELAWARE BUSINESS CENTER 8000 LINCOLN & OTHER OFFERING PRO FORMA
BUILDING SERS PROPERTIES CORPORATE CENTER DRIVE DRIVE ADJUSTMENTS 1996 EVENTS
-------------- --------------- ---------------- --------------- ------------ ---------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Base rents........ $ 5,714 $4,008 $2,036 $651 $ 237 $ -- $12,646
Tenant
reimbursements... 2,511 249 -- 76 2 -- 2,838
Other............. 100 -- -- -- -- -- 100
------- ------ ------ ----- ----- ------ -------
Total revenue.... 8,325 4,257 2,036 727 239 -- 15,584
Operating Expenses:
Interest.......... 3,783 194 -- -- -- (3,464) 513
Depreciation and
amortization..... 2,819 818 374 212 89 375 4,687
Property
expenses......... 2,831 2,217 552 270 231 729 6,830
General and
administrative... 715 -- -- -- -- (567) 148
------- ------ ------ ----- ----- ------ -------
Total operating
expenses........ 10,148 3,229 926 482 320 (2,927) 12,178
Income (loss) before
minority interest. (1,823) 1,028 1,110 245 (81) 2,927 3,406
Minority interest in
(income)loss...... 513 -- -- -- -- (942) (429)
Income (loss)
before uncombined
entity............ (1,310) 1,028 1,110 245 (81) 1,985 2,977
Equity in income
of management
company........... 75 -- -- -- -- (9) 66
------- ------ ------ ----- ----- ------ -------
Net income (loss).. (1,235) 1,028 1,110 245 (81) 1,976 3,043
Income allocated
to Preferred
Shares............ -- -- -- -- -- 1,847 1,847
------- ------ ------ ----- ----- ------ -------
Income (loss)
allocated to
Common Shares..... $(1,235) $1,028 $1,110 $245 $ (81) $ 129 $ 1,196
------- ------ ------ ----- ----- ------ -------
</TABLE>
F-7
<PAGE>
(C) Reflects the pro forma 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 and 500/501 Office Center
Drive for the year ended December 31, 1996 and other pro forma adjustments to
reflect the March 1997 Offering and the July 1997 Offering for the year ended
December 31, 1996. The operating results reflected below include the historical
results and related pro forma adjustments to reflect the period January 1, 1996
through the earlier of the respective acquisition dates or December 31, 1996.
Operating results from those dates forward are included in the historical
results of the Company.
F-8
<PAGE>
<TABLE>
<CAPTION>
COLUMBIA MAIN STREET GREENTREE
ACQUISITION ACQUISITION 1336 ENTERPRISE EXECUTIVE
PROPERTIES PROPERTIES DRIVE KINGS MANOR CAMPUS
----------- ----------- --------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Revenue:
Base rents.................. $5,146 $3,141 $437 $411 $1,862
Tenant reimbursements....... 359 347 75 107 175
Other....................... 376 -- -- -- --
----------- ----------- ----- ----- ---------
Total revenue........... 5,881 3,488 512 518 2,037
----------- ----------- ----- ----- ---------
Operating Expenses:
Interest (i)................ 1,680 -- -- -- 841
Depreciation and
amortization (ii)......... 1,007 629 117 114 359
Property expenses........... 1,979 2,194 107 170 1,018
General and
administrative............ -- -- -- -- --
----------- ----------- ----- ----- ---------
Total operating
expenses.............. 4,666 2,823 224 284 2,218
----------- ----------- ----- ----- ---------
Income (loss) before minority
interest.................... 1,215 665 288 234 (181)
Minority interest in (income)
loss........................ (20) (11) (5) (4) 3
----------- ----------- ----- ----- ---------
Income (loss) before
uncombined entity........... 1,195 654 283 230 (178)
Equity in income of management
company (iii)............... -- -- -- -- --
----------- ----------- ----- ----- ---------
Net income (loss)............. 1,195 654 283 230 (178)
Income allocated to Preferred
Shares...................... -- -- -- -- --
----------- ----------- ----- ----- ---------
Income (loss) allocated to
Common Shares............... $1,195 $ 654 $283 $230 $ (178)
----------- ----------- ----- ----- ---------
----------- ----------- ----- ----- ---------
</TABLE>
<TABLE>
<CAPTION>
748 & 855
SPRINGDALE
FIVE EVES DRIVE TA PROPERTIES EMMES PROPERTIES DRIVE 1974 SPROUL ROAD
--------------- ------------- ---------------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Revenue:
Base rents.................. $ 348 $5,102 $ 6,214 $940 $774
Tenant reimbursements....... 39 735 2,681 -- 118
Other....................... 1 9 10 -- --
----- ------ ------- ----- -----
Total revenue........... 388 5,846 8,905 940 892
----- ------ ------- ----- -----
Operating Expenses:
Interest (i)................ 254 3,168 4,987 400 --
Depreciation and
amortization (ii)......... 108 1,352 2,128 171 134
Property expenses........... 151 1,962 3,482 250 492
General and
administrative............ -- -- -- -- --
----- ------ ------- ----- -----
Total operating
expenses.............. 513 6,482 10,597 821 626
----- ------ ------- ----- -----
Income (loss) before minority
interest.................... (125) (636) (1,692) 119 266
Minority interest in (income)
loss........................ 2 9 27 (2) (5)
----- ------ ------- ----- -----
Income (loss) before
uncombined entity........... (123) (627) (1,665) 117 261
Equity in income of management
company (iii)............... -- 105 65 23 22
----- ------ ------- ----- -----
Net income (loss)............. (123) (522) (1,600) 140 283
Income allocated to Preferred
Shares...................... -- -- -- -- --
Income (loss) allocated to
Common Shares............... $(123) $ (522) $(1,600) $140 $283
</TABLE>
<TABLE>
<CAPTION>
MARCH 1997 JULY 1997 BERWYN PARK GREEN HILLS 500/501 OFFICE TOTAL OTHER 1997
OFFERING OFFERING PROPERTIES PROPERTIES (IV) CENTER DRIVE EVENTS
---------- --------- ----------- --------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Base rents............. $-- $ -- $3,815 $7,700 $1,754 $37,644
Tenant
reimbursements....... -- -- 720 -- 1,358 6,714
Other.................. -- -- 108 -- 43 547
----- --------- ----------- ------ ------ -------
Total revenue...... -- -- 4,643 7,700 3,155 44,905
----- --------- ----------- ------ ------ -------
Operating Expenses:
Interest (i)........... (525) (12,058) -- 1,200 1,125 1,072
Depreciation and
amortization (ii).... -- -- 1,205 1,294 547 9,165
Property expenses...... -- -- 1,991 3,419 1,561 18,776
General and
administrative........ -- -- -- -- -- --
----- --------- ----------- ------ ------ -------
Total operating
expenses......... (525) (12,058) 3,196 5,913 3,233 29,013
----- --------- ----------- ------ ------ -------
Income (loss) before
minority interest...... 525 12,058 1,447 1,787 (78) 15,892
Minority interest in
(income) loss.......... 348 (137) (27) (28) -- 150
----- --------- ----------- ------ ------ -------
Income (loss) before
uncombined entity...... 873 11,921 1,420 1,759 (78) 16,042
Equity in income of
management company
(iii).................. -- -- 166 (115) 76 342
----- --------- ----------- ------ ------ -------
Net income (loss)........ 873 11,921 1,586 1,644 (2) 16,384
Income allocated to
Preferred Shares....... -- -- -- -- -- --
----- --------- ----------- ------ ------ -------
Income (loss) allocated
to Common Shares....... $ 873 $ 11,921 $1,586 $1,644 $ (2) $16,384
----- --------- ----------- ------ ------ -------
----- --------- ----------- ------ ------ -------
</TABLE>
F-9
<PAGE>
(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. The adjustments for
the March 1997 Offering and the July 1997 Offering represent interest
savings related to the payoff of $7 million and $160.8 million,
respectively, of credit facility borrowings at an effective rate of
7.5%.
(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 equity in income of management company is presented based on
management fees less incremental costs estimated to be incurred.
(iv) Pro forma property expenses exclude $666,000 from historical amounts.
Such amount represents expected salary savings.
(D) Reflects the pro forma adjustments relating to 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 and 500/501 Office Center Drive for the
six months ended June 30, 1997 and other pro forma adjustments to reflect the
March 1997 Offering and the July 1997 Offering for the six months ended June 30,
1997. The operating results reflected below include the historical results and
related pro forma adjustments to reflect the period January 1, 1997 through the
earlier of the respective acquisition date or June 30, 1997.
F-10
<PAGE>
<TABLE>
<CAPTION>
COLUMBIA MAIN STREET GREENTREE
ACQUISITION ACQUISITION 1336 ENTERPRISE EXECUTIVE
PROPERTIES PROPERTIES DRIVE KINGS MANOR CAMPUS
------------- ------------- ------------------- --------------- -----------
<S> <C> <C> <C> <C> <C>
Revenue:
Base rents................................. $ 338 $ 542 $ 78 $ 105 $ 602
Tenant reimbursements...................... 24 60 13 27 17
Other...................................... 25 -- -- -- --
----- ----- --- ----- -----
Total revenue........................... 387 602 91 132 619
----- ----- --- ----- -----
Operating Expenses:
Interest (i)............................... 110 -- -- -- 249
Depreciation and amortization (ii)......... 66 109 21 29 106
Property expenses.......................... 130 379 19 43 272
General and administrative................. -- -- -- -- --
----- ----- --- ----- -----
Total operating expenses................ 306 488 40 72 627
----- ----- --- ----- -----
Income (loss) before minority interest....... 81 114 51 60 (8)
Minority interest in (income) loss........... (1) (2) (1) (1) --
----- ----- --- ----- -----
Income (loss) before uncombined entity....... 80 112 50 59 (8)
Equity in income of management company
(iii)...................................... -- -- -- -- --
----- ----- --- ----- -----
Net income (loss)............................ 80 112 50 59 (8)
Income allocated to Preferred Shares......... -- -- -- -- --
----- ----- --- ----- -----
Income (loss) allocated to Common Shares..... $ 80 $ 112 $ 50 $ 59 $(8)
----- ----- --- ----- -----
----- ----- --- ----- -----
</TABLE>
<TABLE>
<CAPTION>
748 & 855
SPRINGDALE
FIVE EVES DRIVE TA PROPERTIES EMMES PROPERTIES DRIVE 1974 SPROUL ROAD
----------------- ------------- ----------------- ------------- -------------------
<S> <C> <C> <C> <C> <C>
Revenue:
Base rents.................... $ 103 $ 2,053 $ 2,570 $ 414 $ 354
Tenant reimbursements......... 12 299 1,130 -- 54
Other......................... -- 6 2 -- --
----- ------ ------ ----- -----
Total revenue.............. 115 2,358 3,702 414 408
----- ------ ------ ----- -----
Operating Expenses:
Interest (i).................. 75 1,241 2,049 171 --
Depreciation and amortization
(ii)......................... 32 530 875 73 61
Property expenses............. 45 698 1,332 99 225
General and administrative.... -- -- -- -- --
----- ------ ------ ----- -----
Total operating expenses... 152 2,469 4,256 343 286
----- ------ ------ ----- -----
Income (loss) before minority
interest...................... (37) (111) (554) 71 122
Minority interest in (income)
loss.......................... 1 1 9 (1) (2)
----- ------ ------ ----- -----
Income (loss) before uncombined
entity........................ (36) (110) (545) 70 120
Equity in income of management
company (iii)................. -- 41 27 10 10
----- ------ ------ ----- -----
Net income (loss)............... (36) (69) (518) 80 130
Income allocated to Preferred
Shares........................ -- -- -- -- --
----- ------ ------ ----- -----
Income (loss) allocated to
Common Shares................. $ (36) $ (69) $ (518) $ 80 $ 130
----- ------ ------ ----- -----
----- ------ ------ ----- -----
</TABLE>
<TABLE>
<CAPTION>
GREEN HILLS TOTAL OTHER
MARCH 1997 JULY 1997 BERWYN PARK PROPERTIES 500/501 OFFICE 1997
OFFERING OFFERING PROPERTIES (IV) CENTER DRIVE EVENTS
------------- ----------- ------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Base rents......................... $ -- $ -- $ 2,128 $ 3,936 $ 882 $ 14,105
Tenant reimbursements.............. -- -- 321 -- 733 2,690
Other.............................. -- -- 31 -- 38 102
----- ----------- ------ ------ ----- -------
Total revenue...................... -- -- 2,480 3,936 1,653 16,897
----- ----------- ------ ------ ----- -------
Operating Expenses:
Interest (i)....................... (91) (5,979) -- 595 558 (1,022)
Depreciation and amortization
(ii)............................. -- -- 598 642 271 3,413
Property expenses.................. -- -- 916 1,775 774 6,707
General and administrative......... -- -- -- -- -- --
----- ----------- ------ ------ ----- -------
Total operating expenses........... (91) (5,979) 1,514 3,012 1,603 9,098
----- ----------- ------ ------ ----- -------
Income (loss) before minority
interest......................... 91 5,979 966 924 50 7,799
Minority interest in (income)
loss............................. 36 (27) (17) (14) (1) (20)
----- ----------- ------ ------ ----- -------
Income (loss) before uncombined
entity........................... 127 5,952 949 910 49 7,779
Equity in income of management
company (iii).................... -- -- 82 (57) 38 151
----- ----------- ------ ------ ----- -------
Net income (loss).................. 127 5,952 1,031 853 87 7,930
Income allocated to Preferred
Shares........................... -- -- -- -- -- --
----- ----------- ------ ------ ----- -------
Income (loss) allocated to Common
Shares........................... $ 127 $ 5,952 $ 1,031 $ 853 $ 87 $ 7,930
----- ----------- ------ ------ ----- -------
----- ----------- ------ ------ ----- -------
</TABLE>
F-11
<PAGE>
(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. The adjustments for
the March 1997 Offering and the July 1997 Offering represent interest
savings related to the payoff of $7 million and $160.8 million,
respectively, of credit facility borrowings at an effective rate of
7.5%.
(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 equity in income of management company is presented based on
management fees less incremental costs estimated to be incurred.
(iv) Pro forma property expenses exclude $333,000 from historical amounts. Such
amount represents expected salary savings.
(E) Reflects the pro forma statements of operations of the Metropolitan
Industrial Center for the six months ended June 30, 1997 and for the year ended
December 31, 1996. All amounts represent historical operations except for the
pro forma adjustments noted:
<TABLE>
<CAPTION>
METROPOLITAN INDUSTRIAL CENTER
---------------------------------
YEAR ENDED
DECEMBER 31, SIX MONTHS ENDED
1996 JUNE 30, 1997
------------ -------------------
<S> <C> <C>
Revenue:Base rents.................................................. $ 1,811 $ 925
Tenant reimbursements............................................. 406 220
Other............................................................. 9 5
------------ -----
Total revenue.................................................. 2,226 1,150
Operating Expenses:
Interest (i)...................................................... 1,238 614
Depreciation and amortization (ii)................................ 528 262
Property expenses................................................. 678 313
General and administrative........................................ -- --
------------ -----
Total operating expenses....................................... 2,444 1,189
Income (loss) before minority interest.............................. (218) (39)
Minority interest in (income) loss.................................. 3 --
Income (loss) before uncombined entity.............................. (215) (39)
Equity in income of management company (iii)........................ 53 26
------------ -----
Net income (loss)................................................... (162) (13)
Income allocated to Preferred Shares................................ -- --
------------ -----
Income (loss) allocated to Common Shares............................ $ (162) $ (13)
------------ -----
------------ -----
</TABLE>
(i) Pro forma interest expense is presented assuming an effective rate of 7.5%
on $16.5 million of borrowings under the Company's revolving credit
facility.
(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 equity in income of management company is presented based on
management fees less incremental costs estimated to be incurred.
(F) Reflects the pro forma statements of operations of Atrium 1 for the six
months ended June 30, 1997 and for the year ended December 31, 1996. All amounts
represent historical operations except for the pro forma adjustments noted:
F-12
<PAGE>
<TABLE>
<CAPTION>
ATRIUM 1
----------------------------------
<S> <C> <C>
YEAR ENDED
DECEMBER 31, SIX MONTHS ENDED
1996 JUNE 30, 1997
------------- -------------------
Revenue:
Base rents................................................ $ 1,226 $ 638
Tenant reimbursements..................................... 33 22
Other..................................................... 26 17
------ -----
Total revenue.......................................... 1,285 677
Operating Expenses:
Interest (i).............................................. 772 383
Depreciation and amortization (ii)........................ 329 163
Property expenses......................................... 755 368
General and administrative................................ -- --
------ -----
Total operating expenses............................... 1,856 914
Income (loss) before minority interest...................... (571) (237)
Minority interest in (income) loss.......................... 9 4
Income (loss) before uncombined entity...................... (562) (233)
Equity in income of management company (iii)................ 31 15
------ -----
Net income (loss)........................................... (531) (218)
Income allocated to Preferred Shares........................ -- --
------ -----
Income (loss) allocated to Common Shares.................... $ (531) $ (218)
------ -----
------ -----
</TABLE>
(i) Pro forma interest expense is presented assuming an effective rate of 7.5%
on $10.3 million of borrowings under the Company's revolving credit
facility.
(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 equity in income of management company is presented based on
management fees less incremental costs estimated to be incurred.
F-13
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Brandywine Realty Trust:
We have audited the combined statement of revenue and certain expenses of
Metropolitan Industrial Center, described in Note 1, for the year ended
December 31, 1996. This financial statement is the responsibility of
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 statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
The combined 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 the 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 Metropolitan Industrial Center'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 the Metropolitan
Industrial Center for the year ended December 31, 1996, in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Philadelphia, Pa.,
October 15, 1997
F-14
<PAGE>
METROPOLITAN INDUSTRIAL CENTER
COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
<TABLE>
<CAPTION>
FOR THE FOR THE SIX
YEAR ENDED MONTHS ENDED
DECEMBER 31, JUNE 30,
1996 1997
------------ -------------
(UNAUDITED)
<S> <C> <C>
REVENUE:
Base rents (Note 2)............................................................... $1,811,000 $ 925,000
Tenant reimbursements............................................................. 406,000 220,000
Other............................................................................. 9,000 5,000
------------ -------------
Total revenue.................................................................. 2,226,000 1,150,000
------------ -------------
CERTAIN EXPENSES:
Maintenance and other operating expenses.......................................... 247,000 107,000
Utilities......................................................................... 43,000 25,000
Real estate taxes................................................................. 388,000 181,000
------------ -------------
------------ -------------
Total certain expenses......................................................... 678,000 313,000
------------ -------------
REVENUE IN EXCESS OF CERTAIN EXPENSES............................................... $1,548,000 $ 837,000
------------ -------------
------------ -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-15
<PAGE>
METROPOLITAN INDUSTRIAL CENTER
NOTES TO COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
DECEMBER 31, 1996
1. BASIS OF PRESENTATION:
On September 30, 1997, Brandywine Operating Partnership, L.P. (the "Operating
Partnership"), a limited partnership of which Brandywine Realty Trust (the
"Company") is the sole general partner, acquired Metropolitan Industrial
Center, a portfolio of seven office buildings located in Bensalem,
Pennsylvania. Metropolitan Industrial Center has an aggregate net rentable
area of approximately 447,000 square feet which was 85% leased as of December
31, 1996. The net purchase price for Metropolitan Industrial Center was $16.3
million.
The combined statements of revenue and certain expenses reflect the
operations of Metropolitan Industrial Center. These combined statements of
revenue and certain expenses are to be included in the Company's Current
Report on Form 8-K, pursuant to the rules and regulations of the Securities
and Exchange Commission.
The accounting records of Metropolitan Industrial Center are maintained on a
cash basis. 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 Metropolitan
Industrial Center.
The combined statement of revenue and certain expenses for the six months
ended June 30, 1997 is unaudited. In the opinion of management, all
adjustments (consisting solely of normal recurring adjustments) necessary to
present fairly the revenue and certain expenses of Metropolitan Industrial
Center for the six months ended June 30, 1997 have been included. The
combined revenue and certain expenses for such interim period is not
necessarily indicative of the results for the full year.
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 which affect the
reported amounts of revenue and expenses during the reporting period. The
ultimate results could differ from those estimates.
2. OPERATING LEASES:
Base rents for the year ended December 31, 1996 and for the six months ended
June 30, 1997 include straight-line adjustments for rental revenue increases
in accordance with generally accepted accounting principles. The aggregate
rental revenue decreases resulting from the straight-line adjustments for the
year ended December 31, 1996 and the six months ended June 30, 1997 were
$61,000 and $24,000 (unaudited), respectively.
Individual tenant minimum rental payments greater than 10% of the total base
rents in 1996 were as follows:
<TABLE>
<S> <C>
Northtec, Inc.............................................. $ 594,000
General Service Administration............................. 209,000
Picker International, Inc.................................. 208,000
</TABLE>
F-16
<PAGE>
The Metropolitan Industrial Center is leased to tenants under operating
leases with expiration dates extending to the year 2001. Future minimum
rentals under noncancelable operating leases, excluding tenant reimbursements
of operating expenses as of December 31, 1996, are as follows:
1997 $1,831,000
1998 1,487,000
1999 1,015,000
2000 418,000
2001 67,000
Certain leases also include provisions requiring tenants to reimburse
Metropolitan Industrial Center for management costs and other operating
expenses up to stipulated amounts.
F-17
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Brandywine Realty Trust:
We have audited the statement of revenue and certain expenses of Atrium I,
described in Note 1, for the year ended December 31, 1996. This financial
statement is the responsibility of 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 statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
The combined 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 the 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 Atrium I'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 the Atrium I for
the year ended December 31, 1996, in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Philadelphia, Pa.,
October 27, 1997
F-18
<PAGE>
ATRIUM I
STATEMENTS OF REVENUE AND CERTAIN EXPENSES
<TABLE>
<CAPTION>
FOR THE FOR THE SIX
YEAR ENDED MONTHS ENDED
DECEMBER 31, JUNE 30,
1996 1997
------------ -------------
(UNAUDITED)
<S> <C> <C>
REVENUE:
Base rents (Note 2).................................................... $1,225,519 $ 638,254
Tenant reimbursements.................................................. 32,877 22,470
Other.................................................................. 26,845 16,662
------------ -------------
Total revenue....................................................... 1,285,241 677,386
------------ -------------
CERTAIN EXPENSES:
Maintenance and other operating expenses............................... 362,900 189,269
Utilities.............................................................. 255,163 109,887
Real estate taxes...................................................... 136,996 68,498
------------ -------------
Total certain expenses.............................................. 755,059 367,654
------------ -------------
REVENUE IN EXCESS OF CERTAIN EXPENSES.................................... $ 530,182 $ 309,732
------------ -------------
------------ -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-19
<PAGE>
ATRIUM I
NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES
DECEMBER 31, 1996
BASIS OF PRESENTATION:
On October 9, 1997, Brandywine Operating Partnership, L.P. (the "Operating
Partnership"), a limited partnership of which Brandywine Realty Trust (the
"Company") is the sole general partner, acquired Atrium I, a five story
office complex located in Mt. Laurel, New Jersey. Atrium I has an aggregate
net rentable area of approximately 98,000 square feet which was 84% leased as
of December 31, 1996. The net purchase price for Atrium I was $10,250,000.
The statements of revenue and certain expenses reflect the operations of
Atrium I. These statements of revenue and certain expenses are to be included
in the Company's Current Report on Form 8-K, pursuant to the rules and
regulations of the Securities and Exchange Commission.
The accounting records of Atrium I are maintained on a cash basis. 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 Atrium I.
The statement of revenue and certain expenses for the six months ended June
30, 1997 is unaudited. In the opinion of management, all adjustments
(consisting solely of normal recurring adjustments) necessary to present
fairly the revenue and certain expenses of Atrium I for the six months ended
June 30, 1997 have been included. The revenue and certain expenses for such
interim period is not necessarily indicative of the results for the full year.
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 which affect the
reported amounts of revenue and expenses during the reporting period. The
ultimate results could differ from those estimates.
2. OPERATING LEASES:
Base rents for the year ended December 31, 1996 and for the six months ended
June 30, 1997, include straight-line adjustments for rental revenue increases
in accordance with generally accepted accounting principles. The aggregate
rental revenue increases/(decreases) resulting from the straight-line
adjustments for the year ended December 31, 1996 and the six months ended
June 30, 1997 were ($39,000) and $85,000 (unaudited), respectively.
Individual tenant minimum rental payments greater than 10% of the total base
rents in 1996 were as follows:
<TABLE>
<S> <C>
Navistar Credit.................................. $ 134,887
Navistar International........................... $ 134,299
Janney Montgomery Scott.......................... $ 170,721
IBM Corporation.................................. $ 326,768
</TABLE>
F-20
<PAGE>
Atrium I is leased to tenants under operating leases with expiration dates
extending to the year 2002. Future minimum rentals under noncancelable
operating leases, excluding tenant reimbursements of operating expenses as of
December 31, 1996, are as follows:
<TABLE>
<S> <C>
1997 $1,153,150
1998 $1,355,355
1999 $1,367,939
2000 $ 952,519
2001 $ 681,420
Thereafter $ 467,920
</TABLE>
Certain leases also include provisions requiring tenants to reimburse Atrium
I for management costs and other operating expenses up to stipulated amounts.
F-21
<PAGE>
Exhibit 10.1
GUARANTY
This GUARANTY dated as of October 16, 1997, made by Brock J. Vinton and
Brandywine Realty Trust (hereinafter referred to as "Guarantor" or
"Guarantors"), in favor of PNC Bank, Delaware ("Lender") to secure the
obligations of Christiana Center Operating Company I LLC (the "Borrower").
BACKGROUND
A. Lender has loaned Borrower $14,500,000 (the "Loan") as evidenced by that
certain note (the "Note"), in the amount of $14,500,000, of even date herewith
between Borrower and Lender.
B. The Note is secured by a mortgage (the "Mortgage"), security agreement
("Security Agreement"), assignment of leases ("Lease Assignment"), and
collateral assignment of agreements ("Collateral Assignment"), all of even date
herewith between Lender and Borrower (the Note, Mortgage, Security Agreement,
Lease Assignment, Collateral Assignment, and all other documents securing the
Loan as the "Loan Documents").
C. Guarantors are principals of Borrower.
D. Lender is willing to make the Loan only on the condition that Guarantors
execute this Guaranty.
E. Guarantors have determined that the extension of credit to the Borrower
in accordance with the Loan Documents directly benefits, and that their
execution, delivery and performance of this Guaranty are in the best interests
of, the Guarantors.
COVENANTS
NOW, THEREFORE, in consideration of the undertakings of Lender pursuant to
the Loan Documents and intending to be legally bound, the Guarantors hereby
agree as follows:
1. Guaranty. The Guarantors hereby jointly and severally, irrevocably,
absolutely and unconditionally guarantee and become surety for the following
payment obligations and liabilities (hereinafter collectively referred to as
the "Obligations"):
(a) the prompt payment by the Borrower, as and when due and payable,
whether by acceleration or otherwise of all amounts now or hereafter owing by
the Borrower in respect of the Loan Documents, whether for principal, interest,
fees, expenses or otherwise, and the due performance and observance by the
Borrower of its other obligations now or hereafter existing in respect of the
Loan Documents and any renewals, extensions and modifications thereof; and
(b) any and all expenses, including reasonable attorneys fees, incurred by
Lender in enforcing its rights under this Guaranty.
<PAGE>
The Obligations hereunder do not include the full completion of the
Improvements in strict accordance with the Plans and all requirements of the
Construction Loan Agreement not later than the Completion Date, which
completion is the subject of a separate Completion Guaranty of even date
herewith.
2. Obligations Unconditional.
(a) The Guarantors hereby guarantee that the Obligations will be paid
strictly in accordance with the terms of the Loan Documents. The liability of
the Guarantors hereunder shall be absolute and unconditional, irrespective of:
(i) any lack of validity or enforceability of the Loan Documents or any
agreement or instrument relating thereto, including, without limitation, the
lack of validity or enforceability of all or any portion of the liens or
security interests granted thereby; (ii) any change in the time, manner or
place of payment of, or in any other term in respect of, all or any of the
Obligations, or any other amendment or waiver of or consent to any departure
from the terms of the Loan Documents; (iii) any exchange or release
of, or non-perfection of any lien on or security interest in, any collateral,
or any release or amendment or waiver of or consent to any departure from the
terms of any other guaranty for all or any of the Obligations; (iv) any other
circumstance which might otherwise constitute a defense available to, or a
discharge of, the Borrower or any other guarantor or obligor in respect of the
Obligations or the Guarantors in respect hereof; or (v) the absence of any
action on the part of Lender to obtain payment of the Obligations from the
Borrower or from the Guarantors or from any other guarantor or obligor.
(b) This Guaranty (i) is a continuing guarantee and shall remain in full
force and effect until all of the Obligations and other expenses guaranteed
pursuant to Section 1 hereof have been paid in full; and (ii) shall continue to
be effective or shall be reinstated, as the case may be, if at any time any
payment of any of the Obligations is rescinded, avoided or rendered void as a
preferential transfer, impermissible set-off, fraudulent conveyance or must
otherwise be returned or disgorged by Lender upon the insolvency, bankruptcy or
reorganization of either the Borrower or the Guarantors or otherwise, all as
though such rescinded, avoided or voided payment had not been made, and
notwithstanding any action or failure to act on the part of Lender in reliance
on such payment.
3. Waivers. The Guarantors hereby waive (i) promptness and diligence; (ii)
notice of the incurrence of any Obligation by the Borrower; (iii) notice of any
actions taken by Lender or the Borrower under the Loan Documents or any other
agreement or instrument relating thereto; (iv) acceptance of this Guaranty and
reliance thereon by Lender; (v) presentment, demand of payment, notice of
dishonor or nonpayment, protest and notice of protest with respect to the
Obligations, and all other formalities of every kind in connection with the
enforcement of the Obligations or of the obligations of the Guarantors
hereunder or of any other guarantor, the omission of or delay in which, but
for the provisions of this Section 3, might constitute grounds for relieving
the Guarantors of their obligations hereunder; (vi) any requirement that Lender
protect, secure, perfect or insure any security interest or lien or any
property subject thereto or exhaust any right or take any action against the
Borrower, the Guarantors, any other person or any collateral; and (vii) notice
of any election by Lender to sell any of the property mortgaged, assigned or
pledged as security for any of the Obligations at a public or private sale.
-2-
<PAGE>
4. Subrogation and Similar Rights. The Guarantors will not exercise any
rights which they may acquire by way of subrogation, indemnification or
contribution, by reason of any payment made by any of them hereunder or
otherwise, until after the date on which all of the Obligations shall have been
satisfied in full and until such time, any such rights against the Borrower
shall be fully subordinate in lien and payment to any claim which Lender now or
hereafter has against the Borrower. If any amount shall be paid to the
Guarantors on account of such subrogation, indemnification or contribution at
any time when all of the Obligations and all other expenses guaranteed pursuant
hereto shall not have been paid in full, such amount shall be held in trust for
the benefit of Lender, shall be segregated from the other funds of the
Guarantors and shall forthwith be paid over to Lender to be applied in whole or
in part by Lender against the Obligations, whether matured or unmatured, in
accordance with the terms of the Loan Documents. If the Guarantors shall make
payment to Lender of all or any portion of the Obligations and all of the
Obligations shall be paid in full, Lender will, at the written request of the
Guarantors, execute and deliver to the Guarantors (without recourse,
representation or warranty) appropriate documents necessary to evidence the
transfer by subrogation to the Guarantors of an interest in the Obligations
resulting from such payment by the Guarantors, such subrogation to be fully
subject and subordinate, however, to Lender's right to collect any other
amounts which may be due to Lender by the Borrower.
5. Representations and Warranties. Each Guarantor represents and warrants
to Lender that:
(a) All the Guarantors are sui juris and of full capacity to make and
perform this Guaranty, or are validly existing, in good standing with full
legal authority to make and perform this Guaranty, as the case may be;
(b) This Guaranty has been duly executed and delivered by the Guarantors
and such execution and delivery and the performance by the Guarantors of the
Guarantors' obligations hereunder will not violate any applicable provision of
law or judgment, order or regulation of any court or of any public or
governmental agency or authority nor conflict with or constitute a breach of or
a default under any instrument to which the Guarantors are a party or by which
the Guarantors or any of the Guarantors' property is bound, and this Guaranty
is a legal, valid and binding obligation of the Guarantors enforceable in
accordance with its terms;
(c) There is no litigation, proceeding or investigation pending or, to the
knowledge of the Guarantors, threatened against any of the Guarantors, the
adverse result of which might in any material respect affect the business,
property or financial condition of the Guarantors or the performance by the
Guarantors of the Guarantors' obligations hereunder, and no Guarantor is in
violation in any material respect of any applicable statute, rule, order or
regulation of any governmental body;
(d) The Guarantors have filed all federal, state and local tax returns
required to be filed (or have obtained valid extensions of the dates on which
such returns are required to be filed) and have paid all taxes as shown on the
said returns to be due;
-3-
<PAGE>
6. Notices. Every notice and communication under this Agreement shall be in
writing and shall be given by either (i) hand-delivery, (ii) first class mail
(postage prepaid), (iii) reliable overnight commercial courier (charges
prepaid), or (iv) telecopy or other means of electronic transmission, if
confirmed promptly by any of the methods specified in clauses (i), (ii) and
(iii) of this sentence, to the following addresses:
To the Guarantors as follows:
Brock J. Vinton
c/o The Commonwealth Group
62 Read's Way
New Castle, DE 19720
Brandywine Realty Trust
Newtown Corporate Campus
16 Campus Boulevard
Newtown Square, PA 19073
Attn: Gerard H. Sweeney, President and CEO
With a copy to:
William S. Gee, Esquire
Saul, Ewing, Remick & Saul LLP
222 Delaware Avenue, Suite 1200
P.O. Box 1266
Wilmington, Delaware 19899
Eric L. Stern, Esquire
Pepper, Hamilton & Scheetz LLP
3000 Two Logan Square
Eighteen And Arch Streets
Philadelphia, PA 19103
To Lender as follows:
PNC Bank, Delaware
222 Delaware Avenue
17th Floor
Wilmington, Delaware 19801
Attn: Jeremy J. Abelson
-4-
<PAGE>
Eugenia L. Barnett
Real Estate Loan Administration
PNC Bank
1600 Market Street, 30th Floor
Mailstop #F2-F070-30-7
Philadelphia, PA 19103
With a copy to:
Duane, Morris & Heckscher LLP
P.O. Box 195
Wilmington, DE 19899
Attention: Daniel F. Lindley, Esquire
Notice given by telecopy or other means of electronic transmission shall be
deemed to have been given and received when sent. Notice by overnight courier
shall be deemed to have been given and received on the date scheduled for
delivery. Notice by mail shall be deemed to have been given and received two (2)
calendar days after the date first deposited in the United States Mail. Notice
by hand delivery shall be deemed to have been given and received upon delivery.
A party may change its address by giving written notice to the other party.
7. Miscellaneous.
(a) The Guarantors shall make each payment hereunder in lawful money of the
United States of America and in same day funds to Lender at its address as set
forth above in the paragraph entitled "Notices."
(b) This Guaranty contains the entire agreement of the parties hereto with
respect to the subject matter hereof. No amendment of any provision of this
Guaranty shall be effective unless it is in writing and signed by the Guarantors
and Lender, and no waiver of any provision of this Guaranty, and no waiver or
consent to any departure by the Guarantors therefrom, shall be effective unless
it is in writing and signed by Lender, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
(c) No failure on the part of Lender to exercise, and no delay in
exercising, any right hereunder or under the Loan Documents or any right against
any other guarantor of the Obligations shall operate as a waiver hereof or
thereof; nor shall any single or partial exercise of any right preclude any
other or further exercise thereof or the exercise of any other right. The rights
and remedies of Lender provided herein and in the Loan Documents, and in any
instrument signed by any other guarantor of the Obligations are cumulative and
are in addition to, and not exclusive of, any rights or remedies provided by
law. The rights of Lender under the Loan Documents, under this Guaranty and
under any other guaranty of the Obligations against any party thereto are not
conditional or contingent upon any attempt by Lender to exercise any of its
rights under the Loan Documents, under this Guaranty or under any other guaranty
of the Obligations against any such party or against any other person.
-5-
<PAGE>
(d) Any provision of this Guaranty which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability, and such prohibition or unenforceability
shall not invalidate such provision to the extent it is not prohibited or
unenforceable in any other jurisdiction, nor invalidate the remaining provisions
hereof or thereof, all of which shall be liberally construed in favor of Lender
in order to effect the provisions hereof.
(e) The obligations of the Guarantors hereunder shall not be subject to any
counterclaim, setoff, deduction or defense based upon any related or unrelated
claim which the Guarantors may now or hereafter have against the Borrower or
Lender (none of which are waived by Guarantors hereunder), except payment of the
Obligations.
(f) This Guaranty shall (i) be binding on the Guarantors and their heirs,
executors, administrators, successors, transferees and assigns, and (ii) inure,
together with all rights and remedies of Lender hereunder, to the benefit of
Lender and its successors, transferees and assigns. Without limiting the
generality of the foregoing clause (ii), pursuant to the Loan Documents Lender
may assign or otherwise transfer its rights under the Loan Documents or under
any other guaranty of the Obligations to any other person, and such other person
shall thereupon become vested with all of the benefits in respect thereof
granted to Lender, herein or otherwise. Notwithstanding the foregoing clause
(f)(i), none of the rights or obligations of the Guarantors hereunder may be
assigned or otherwise transferred without the prior written consent of Lender.
(g) This Guaranty shall be governed by and construed in accordance with the
internal laws, and not the law of conflicts, of the State of Delaware.
(h) Each Guarantor agrees that any action or proceeding against him or her
to enforce, or arising out of, this Guaranty may be commenced in state or
federal court in any county in the State of Delaware or in any other location
where the Guarantor or any of the Guarantor's property is located, and each
Guarantor waives personal service of process and agrees that a summons and
complaint commencing an action or proceeding in any such court shall be properly
served and shall confer personal jurisdiction if served by registered or
certified mail in accordance with Section 6 hereof.
(i) All liabilities and obligations of the Guarantors hereunder shall be
joint and several.
(j) The paragraph headings used herein are for convenience only and do not
affect or modify the terms and conditions hereof.
8. CONFESSION OF JUDGMENT. BROCK J. VINTON (but not Brandywine Realty Trust)
HEREBY IRREVOCABLY AUTHORIZES AND EMPOWERS LENDER, BY ITS ATTORNEY, OR THE
PROTHONOTARY OR THE CLERK OF ANY COURT OF RECORD IN THE STATE OF DELAWARE OR IN
ANY JURISDICTION WHERE PERMITTED BY LAW, UPON THE OCCURRENCE OF AN EVENT OF
DEFAULT AS DEFINED IN THE LOAN DOCUMENTS OR AT ANY TIME THEREAFTER, TO APPEAR
-6-
<PAGE>
FOR BROCK J. VINTON AND CONFESS AND ENTER JUDGMENT AGAINST HIM IN FAVOR OF
LENDER IN ANY JURISDICTION IN WHICH HE OR ANY OF HIS PROPERTY IS LOCATED FOR THE
AMOUNT OF ALL OBLIGATIONS, TOGETHER WITH COSTS OF SUIT AND WITH ACTUAL
COLLECTION COSTS (INCLUDING REASONABLE ATTORNEYS' FEES), WITH OR WITHOUT
DECLARATION, AND WITHOUT STAY OF EXECUTION, AND WITH RELEASE OF ERRORS AND THE
RIGHT TO ISSUE EXECUTION FORTHWITH, AND FOR DOING SO THIS AGREEMENT OR A COPY
VERIFIED BY AFFIDAVIT SHALL BE A SUFFICIENT WARRANT. BROCK J. VINTON HEREBY
WAIVES AND RELEASES ALL RELIEF FROM ANY AND ALL APPRAISEMENT, STAY OR EXEMPTION
LAW OF ANY STATE NOW IN FORCE OR HEREAFTER ENACTED. THIS AUTHORITY AND POWER
SHALL NOT BE EXHAUSTED BY THE EXERCISE THEREOF AND SHALL CONTINUE UNTIL THE
OBLIGATIONS ARE FULLY PAID, PERFORMED, DISCHARGED AND SATISFIED.
BEING FULLY AWARE OF HIS RIGHTS TO PRIOR NOTICE AND HEARING ON THE VALIDITY
OF ANY CLAIMS THAT MAY BE ASSERTED AGAINST HIM BY LENDER UNDER THIS AGREEMENT
BEFORE JUDGMENT CAN BE ENTERED AND BEFORE ASSETS OF HIS CAN BE GARNISHED AND
ATTACHED, BROCK J. VINTON HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES
THESE RIGHTS AND EXPRESSLY AGREES AND CONSENTS TO LENDER, UPON THE OCCURRENCE OF
AN EVENT OF DEFAULT, OR AT ANY TIME THEREAFTER, ENTERING JUDGMENT AGAINST HIM BY
CONFESSION AND ATTACHING AND GARNISHING LENDER ACCOUNTS AND OTHER ASSETS OF HIS
WITHOUT PRIOR NOTICE OR OPPORTUNITY FOR A HEARING. BROCK J. VINTON ACKNOWLEDGES
THAT HE HAS HAD THE ASSISTANCE OF COUNSEL IN THE REVIEW AND EXECUTION OF THIS
AGREEMENT AND FURTHER ACKNOWLEDGES THAT THE MEANING AND EFFECT OF THE FOREGOING
PROVISIONS CONCERNING CONFESSION OF JUDGMENT HAVE BEEN FULLY EXPLAINED TO HIM BY
SUCH COUNSEL.
9. Special Exculpation Clause.
No recourse shall be had for any obligation of Brandywine Realty Trust under
this Guaranty or under any of the other Loan Documents, or for any claim based
thereon or otherwise in respect thereof, against any past, present or future
trustee, shareholder, officer or employee of Brandywine Realty Trust, whether by
virtue of any statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise, all such liability being expressly waived and released by
each party to this Guaranty and the other Loan Documents.
-7-
<PAGE>
IN WITNESS WHEREOF, the Guarantors have caused this Guaranty to be duly
executed and sealed as of the date first above written.
Witness:
/S/ /S/ (SEAL)
------------------------------ -------------------------------
Brock J. Vinton
Witness: Brandywine Realty Trust
/S/ By: /S/ (SEAL)
------------------------------ -------------------------------
Gerard H. Sweeney
Title: President and CEO
-8-
<PAGE>
STATE OF DELAWARE :
: SS.
COUNTY OF NEW CASTLE :
On the 16th day of October, 1997, before me, a Notary Public in and for the
State and County aforesaid, the undersigned, personally appeared Brock J.
Vinton, and that he executed the foregoing instrument for the purposes therein
contained by signing his name.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
/S/
--------------------------------
NOTARY PUBLIC
Typed name:
---------------------
My commission expires:
----------
STATE OF PENNSYLVANIA :
: SS.
COUNTY OF DELAWARE :
On the 16th day of October, 1997, before me, a Notary Public in and for the
State and County aforesaid, the undersigned, personally appeared Gerard H.
Sweeney, trustee of Brandywine Realty Trust and authorized to sign on behalf of
said trust, and that he executed the foregoing instrument for the purposes
therein contained by signing the name of said trust.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
/S/
--------------------------------
NOTARY PUBLIC
Typed name:
---------------------
My commission expires:
----------
-9-
<PAGE>
Exhibit 10.20
October 16, 1997
Christiana Operating Company I LLC
c/o Gender Road Joint Venture
62 Read's Way
New Castle, DE 19720
Attention: Brock J. Vinton
DEAR MR. Vinton:
Brandywine Realty Trust, a Maryland real estate investment trust, or its
affiliate ("Lender"), hereby offers to make a loan ("Loan") to Christiana
Operating Company I LLC, a Delaware limited liability company ("Borrower"), for
term financing for 400 Commerce Drive, New Castle County, Delaware (the "Real
Property"), inclusive of the 150,000 TRIANGLE square foot mid-rise office
building to be constructed thereon (the building, parking and related
improvements being collectively referred to as "Improvements"), all on the terms
and conditions set forth herein:
1. Amount; Purpose.
(a) The Loan shall be in the principal amount of up to $14,500,000, or
such lesser amount as shall actually be advanced by PNC Bank, Delaware, for
construction, and shall be evidenced by a promissory note in such aggregate
principal amount executed by Borrower and made payable to the order of Lender
("Note").
(b) The Loan shall be used by Borrower solely to refinance the cost of
acquisition of the Real Property and construction of the Improvements.
2. Interest Rate. The Loan shall provide for interest to be paid on the
unpaid principal balance outstanding from time to time, at a per annum rate
equal to a 30, 60 or 90 day (as determined by Lender) LIBOR + 250 basis points.
Interest only shall be paid in advance for the month in which the loan closing
("Closing") shall occur, followed by 119 payments of principal and interest,
payable in arrears, commencing on the first day of the second month following
the date of the Closing and each succeeding month thereafter, with all unpaid
principal and interest due on the 120th installment date. Amortization of the
Loan is based upon a twenty-five (25) year schedule.
<PAGE>
Christiana Operating Company I LLC
c/o Gender Road Joint Venture
Attn: Brock J. Vinton
October 16, 1997
Page 2
3. Payment Terms.
(a) Borrower shall have the right, prior to the Maturity Date, to
prepay the unpaid principal balance of the Note, subject to and upon the terms
and conditions governing the prepayment of indebtedness to be set forth in
definitive loan documents, including, without limitation, the payment of
breakage fees and yield maintenance costs.
(b) Any prepayment, whether voluntary or involuntary, shall be applied
first to any accrued and unpaid interest under the Note up to the date of such
prepayment, and then to any other sums which may be payable to Lender under the
Loan Documents up to the date of such prepayment, and then to the outstanding
principal balance of the Note, any such prepayment applied to principal shall be
applied to the principal portions of installments due under the Note in the
inverse order of their maturity, and the acceptance of any such prepayment when
there is an event of default in existence under any of the Loan Documents shall
not constitute a waiver, release or accord and satisfaction thereof or of any
rights with respect thereto by Lender.
(c) The Note shall provide for a late payment charge of four (4%)
percent of any principal, interest or other amount not paid when due, and a
rate of interest after the occurrence of an event of default under the Loan
Documents ("Default Rate") of five (5%) percent in excess of the interest rate
then payable under the Note pursuant to paragraph 2 above.
(d) Borrower shall reimburse Lender for any and all fees, costs and
expenses Lender may incur in connection with making, disbursing, administering
and enforcing the Loan contemplated hereby. Without limitation of any
provisions set forth herein or in the Loan Documents, Borrower shall indemnify,
defend and save and hold harmless Lender of, from and against any and all loss,
cost, expense, damage and liability which Lender or Lender's affiliates may
suffer, sustain or incur by reason of, or arising out of Borrower's breach,
violation or default under, or other failure to timely and fully pay and
perform its obligations under the Loan.
4. Loan Documents; Security. The Loan evidenced by the Note shall be
governed and secured, inter alia, as follows:
(a) a first, insured Open-End Mortgage and Security Agreement covering
the Real Property and Improvements from Borrower to Lender ("Mortgage");
<PAGE>
Christiana Operating Company I LLC
c/o Gender Road Joint Venture
Attn: Brock J. Vinton
October 16, 1997
Page 3
(b) a first Assignment of Leases and Rents from Borrower to Lender
relating to all leases affecting all or any portion of the Real Property
("Assignment of Leases and Rents");
(c) a first Assignment of Borrower's interests under contracts,
licenses and permits, documents and rights relating to the property as specified
by Lender ("Assignments of Contracts");
(d) Uniform Commercial Code financing statements executed by Borrower in
favor of Lender, perfecting Lender's first security interests granted by
Borrower pursuant to the Mortgage in all tangible and intangible personal
property which at the time of the Loan Closing or thereafter is located on or
used in connection with the Real Property ("UCC's");
(e) an Environmental Indemnification Agreement furnished by Borrower
with which Borrower shall indemnify and hold Lender harmless of and from any
and all loss, cost, expense, damage or liability relating to the environmental
condition of the Real Property or the presence of hazardous wastes thereon.
5. Loan Closing Date. Lender's obligation to fund under this Commitment
shall terminate on September 30, 1998. The foregoing notwithstanding, Borrower
shall have one (1) option to extend the expiration date of this Commitment for
one additional period of six (6) months upon written request of Borrower
accompanied by an extension fee equal to one half of one percent (.5%) percent
of the Loan ($72,500), such extension notice and commitment fee to be due and
payable on or before September 30, 1998, time being of the essence.
6. Composition of Borrower. During the term of the Loan, Borrower shall be
and remain a Delaware limited liability company, validly existing and in good
standing under the laws of the State of Delaware, in which Gender Road Joint
Venture and Brandywine Operating Partnership, or its affiliate, shall be and
remain its sole members.
7. General and Special Conditions. The General Conditions attached hereto
are an integral part of this Commitment and are incorporated herein by this
reference. The General Conditions shall not in any way diminish any of the
terms, conditions or requirements set forth herein, and such General Conditions
shall be interpreted to augment, supplement and complement such terms,
conditions and requirements. In addition to the General Conditions and any other
conditions that may be set forth in the Loan Documents, Lender's obligation to
make the Loan shall be specifically subject to the following conditions:
(a) Intentionally Omitted.
<PAGE>
Christiana Operating Company I LLC
c/o Gender Road Joint Venture
Attn: Brock J. Vinton
October 16, 1997
Page 4
(b) Intentionally Omitted.
(c) Intentionally Omitted.
(d) Certificate of Occupancy: Borrower shall deliver to Lender a
current, final certificate of occupancy for the building and for the CSC
premises, issued by the Delaware Department of Labor and Industry and by New
Castle County (or other appropriate governmental authorities) and evidence
satisfactory to Lender demonstrating compliance with all zoning, building,
health, fire, traffic, safety, environmental, wetlands and such other rules,
regulations, ordinances, statutes and requirements applicable to the property
and the improvements relating thereto.
8. Fees and Costs. Acceptance of this Commitment shall constitute Borrower's
unconditional agreement, irrespective of whether or not the Loan Closing occurs
and the reasons therefor, to pay all fees, including a closing fee equal to one
(1%) percent of the Loan ($145,000), expenses, taxes, costs and charges in
respect to the Loan, or in any way connected therewith, including but not
limited to Lender's counsel fees and costs, title insurance premiums and search
fees, survey costs, environmental audit costs, appraisal costs, recording and
filing fees and site inspection fees of Lender.
9. Tax and Insurance Escrows. Real estate taxes and insurance premiums shall
be paid or caused to be paid by Borrower timely, and Borrower shall be required
to furnish Lender with paid receipts therefor. The Mortgage shall reserve to
Lender the option to collect monthly from Borrower and hold in escrow amounts
sufficient to pay real estate taxes, water and sewer charges and assessments,
other lienable assessments and insurance premiums, irrespective of whether such
items are paid by the tenants under any executed leases relating to space on the
Real Property. Lender shall release such amounts to Borrower from time to time
upon proof of the payment of such items by Borrower.
10. Accuracy of Information. Borrower represents and warrants to Lender that
all documents and/or information provided to Lender by Borrower in connection
with the issuance of this Commitment are true and correct in all material
respects and Borrower further acknowledges that the issuance of this Commitment
by Lender is in reliance upon the accuracy and truth of such documents and/or
information.
11. Waiver of Trial by Jury. Borrower hereby knowingly, voluntarily and
intentionally waives the right it may have to a trial by jury in respect of any
litigation based hereon, arising out of, under or in connection with this
Commitment or the Loan and any document contemplated to be executed in
conjunction herewith or therewith, or any course
<PAGE>
Christiana Operating Company I LLC
c/o Gender Road Joint Venture
Attn: Brock J. Vinton
October 16, 1997
Page 5
of conduct, course of dealing, statements (whether verbal or written) or
actions of Borrower or Lender. This provision is a material inducement for
Lender entering into this Commitment.
12. Brokerage and Other Fees. Borrower agrees to indemnify and hold Lender
harmless against the claims of any and all brokers or agents and from claims for
any commissions, fees or other amounts owned or claimed to be owed regarding the
Loan and/or the Real Property and Improvements.
13. Intentionally Omitted.
14. Lender's Review. Lender and its agents may inspect the plans and
specifications, the Project Budget, the course of construction and other matters
pertaining to construction of the Building and Improvements. Borrower
acknowledges and agrees that such inspections are made solely for the protection
of the Lender in its capacity as Lender, and Borrower confirms that the Lender
is not making and will not be deemed to be making any representations or
warranties as to any matters pertaining to the Building or Improvements by
reason of such inspections or by reason of advances made by the Lender under the
Loan Documents. Without limitation of any of the foregoing, Borrower has
selected the general contractor, all major subcontractors, the project architect
and engineer, and all other consultants providing professional services with
respect to the Project, and Lender, in its capacity as such, has not and shall
not have any responsibility for their selection nor for the quality of their
materials, their services, or workmanship. Neither the Borrower nor any other
person shall have any right to rely on any procedures required by the Lender
herein, such procedures being solely for the protection of the Lender, in its
capacity as lender.
Following acceptance of this Commitment and prior to the Closing, Borrower
shall provide to Lender a copy of all periodic architect's reports by the
architect of record and by the construction lender's architect/engineer within
ten (10) days of submission during the entire period of construction. In
addition to the foregoing, Borrower shall provide to Lender a lease schedule
provided during each calendar quarter of the initial lease-up period of the
property containing not less than the following information: tenant name, lease
term, lease commencement, date of occupancy, monthly rent, concessions, unit
size and unit leased.
15. No Off-set. Anything herein contained to the contrary notwithstanding,
the Borrower specifically acknowledges and agrees that neither the Borrower nor
Gender Road Joint Venture shall have any right to offset against sums due and
owing to Lender, distributions or other sums paid or to be paid to Brandywine
Operating Partnership, in its capacity as a member of Borrower, nor may any
distributions or other sums due Brandywine Operating Partnership as a member of
Borrower be offset against sums paid or payable to Lender under the Loan.
<PAGE>
Christiana Operating Company I LLC
c/o Gender Road Joint Venture
Attn: Brock J. Vinton
October 16, 1997
Page 6
16. Borrower and Lender. Borrower acknowledges and agrees that its
obligations to Lender hereunder and under the Loan Documents are and shall be
independent of any obligations of Borrower to its members, and the obligations
of Borrower's members, each to the other. Borrower, Brock J. Vinton and Gender
Road Joint Venture expressly acknowledge and agree that Lender has no fiduciary
duty or obligation of any kind to them, or any of them, and Lender is and shall
be free to exercise any and all rights and remedies reserved to Lender hereunder
and under the Loan Documents, notwithstanding that Brandywine Operating
Partnership, L.P., or its subsidiary, is a member in Borrower.
17. Exculpation. No recourse shall be had for any obligation of Brandywine
Realty Trust under this Commitment or under any document executed in connection
herewith or pursuant hereto, or for any claim based thereon or otherwise in
respect thereof, against any past, present or future trustee, shareholder,
officer or employee of Brandywine Realty Trust, whether by virtue of any statute
or rule of law, or by the enforcement of any assessment or penalty or otherwise,
all such liability being expressly waived and released by the Borrower and all
parties claiming by, through or under Borrower.
18. Acceptance; Termination. The acceptance of this Commitment shall be
evidenced by the return of the enclosed copy hereof executed by Borrower, within
three (3) days from the date hereof. Unless this Commitment is so accepted, it
shall become null and void.
VERY TRULY YOURS,
BRANDYWINE REALTY TRUST,
a Maryland real estate investment trust
By: /S/ Gerard H. Sweeney
------------------------------------
Name: Gerard H. Sweeney
Title: President and CEO
<PAGE>
ACCEPTANCE
Intending to be legally bound, the undersigned hereby accept the foregoing
Commitment and agree to the terms and conditions thereof.
CHRISTIANA CENTER OPERATING COMPANY I LLC
a Delaware limited liability company
BY: /S/
-----------------------------------------------
Brock J. Vinton
<PAGE>
GENERAL CONDITIONS
The following General Conditions are an integral part of this commitment:
1. Documents and Information to be Furnished to Lender Before Loan Closing.
At least ten (10) business days prior to the scheduled date of the Loan Closing,
Borrower must obtain at its expense and submit to Lender the documents and
information set forth below. Such documentation and information shall be subject
to Lender's review and approval, both as to form and substance, and shall be
updated and effective at the time of Loan Closing. None of the materials
provided by Borrower shall vary in any material respect from the information and
materials previously provided to Lender in order to induce Lender to underwrite
and approve the Loan.
(a) A currently dated title report, in form and substance satisfactory
to Lender, issued by Commonwealth Land Title Insurance Corporation, covering the
Real Property, which contains copies of all identified documents referred to
therein. The title report shall stipulate that title insurance, in a form
approved by Lender, shall be issued to Lender at time of the Loan Closing which
shall insure Lender as the holder of a valid first mortgage lien for the full
amount of the Mortgage, free and clear of all liens (including mechanic's liens
filed or unfiled), encumbrances and exceptions other than those which may be
approved by Lender.
(b) A current ALTA/ASCM as-built survey of the Real Property, certified
to and acceptable to Lender and to Commonwealth Land Title Insurance
Corporation, issuing the title insurance, showing such items as Lender shall
specify, together with a metes and bounds description of the Real Property
corresponding to such survey.
(c) Any and all lease agreements relating to any portion of the Real
Property, and any form of proposed lease agreement to be used by Borrower in
connection with the Real Property during the term of the Loan.
(d) Borrower's Operating Agreement, filed Certificate of Formation,
pertinent incumbency and signature certificates, and resolutions authorizing the
transaction.
(e) A written opinion of Borrower's 's counsel, who shall be acceptable
to Lender, stating that, inter alia: (i) Borrower is duly organized, validly
existing and in good standing in the State of Delaware, authorized to do
business in the State of Delaware, (ii) Borrower has full authority and legal
right to carry out the terms of this Commitment and any other documentation
required hereunder or in connection with the Loan, (iii) Borrower has taken all
necessary and appropriate action to authorize the execution and delivery of this
Commitment and all other documents required to be executed by it in connection
with
<PAGE>
the Loan, (iv) this Commitment and all other documents required to be
executed by Borrower in connection with the Loan have been duly executed and
acknowledged or witnessed, as appropriate, by Borrower, (v) none of the
aforesaid actions, undertakings and agreements contravene or shall contravene
Borrower's Operating Agreement or Certificate of Formation, the provisions of
this Commitment, or the provisions of any contract or agreement to which
Borrower is a party or by which Borrower is bound or any applicable law, (vi)
such counsel is not aware of any matters contrary to the representations or
warranties of Borrower contained in this Commitment or in any documents required
to be executed in connection with the Loan, (vii) the Note, Mortgage and all
other loan documents are valid and binding and enforceable according to their
respective terms in the state where the Real Property is located and (viii) the
Loan is not usurious.
(f) Fully paid fire and casualty insurance policies with extended
coverage, covering risk of loss or damage to the Real Property due to fire and
such other casualties as Lender may require, with limits equal to one hundred
percent of the full replacement cost with such company or companies approved by
Lender (but such company must have an A or better rating by Best's Rating
Service) and containing mortgagee clauses in favor of Lender in form and content
satisfactory to Lender; fully paid flood insurance policy, if determined to be
necessary by Lender; and fully paid liability insurance and workmen's
compensation insurance in such amounts as may be required by Lender or, as to
workmen's compensation, mandated by statute.
(g) The final as-built plans and specifications for the Building and
Improvements, which shall have been approved in writing by all necessary and
appropriate governmental authorities, the general contractor, the primary
subcontractors, and the architect, engineer and bonding company, as appropriate.
(h) Appraisals of the Real Property in accordance with the requirements
of Title 11 of the Financial Institutions Reform, Recovery and Enforcement Act
of 1989 ("FIRREA") based upon its fair market value currently and upon its
projected fair market value following completion of the construction of the
Building as shown in the plans and specifications, which appraisals shall be
paid for by Borrower, performed by an MAI appraiser selected by or acceptable to
Lender and acceptable in form and substance to Lender.
(i) A Phase I Environmental Report (and the report of such further
investigations, if any, as shall be deemed appropriate by Lender), prepared by
an independent environmental engineering firm acceptable to Lender, indicating
that there are no hazardous substances or wastes in, on or around the Real
Property, that the Real Property does not contain any wetlands, that the Real
Property is not located in a flood hazard area or 100-year flood plain, and
otherwise in form and substance satisfactory to Lender.
(j) Intentionally Omitted.
2. Lender's Approval of Documents and Title. The need for and the adequacy
as to form and substance of each and every document relating to the Loan and all
<PAGE>
questions relating to the validity, status and priority of the security for the
Loan shall be determined by and must be satisfactory to Lender.
3. Condemnation. Lender shall have the right to terminate this Commitment in
the event there occurs, between the date of this Commitment and the date of the
Loan Closing, any loss or damage to the Real Property due to any taking of all
or any portion of the Real Property by exercise of the power of condemnation or
eminent domain, which precludes or substantially delays completion of the
Project.
4. Maximum Rate of Interest on Loan. Notwithstanding anything to the
contrary contained herein or in any other document executed in connection with
the Loan, the effective rate of interest on the Loan shall not exceed the
maximum effective rate of interest permitted by applicable law or regulation.
Borrower hereby agrees to give Lender prior written notice in the event any
interest payment made to Lender with respect to this Loan will cause the total
interest payments collected in any one year to be usurious under applicable law,
and Lender hereby agrees not to collect knowingly any interest from Borrower in
the form of fees or otherwise which will render this Loan usurious. In the event
that such interest would be usurious in Lender's opinion, Lender reserves the
right to reduce the interest payable by Borrower or, if the Loan Closing has not
yet occurred and at its option, to terminate this Commitment. This provision
shall survive the Loan Closing and the repayment of the Loan.
5. No Other Liens on Real Property. Borrower hereby agrees that during the
term of the Loan and any extension thereof, there shall be no other financing
secured by the Real Property and no lien or encumbrance other than those
contemplated by this Commitment shall be created or permitted to exist against
the Real Property without the written consent of Lender. In the event such
consent is given, any and all such financing and liens shall be absolutely and
unconditionally subordinated to the lien of the Mortgage contemplated by this
Commitment.
6. No Transfer of Real Property. Borrower hereby agrees that during the term
of the Loan and any extension thereof, there shall be no transfer of legal or
equitable ownership of the Real Property.
7. No Waiver of Rights. Neither the failure of Lender nor the delay of
Lender to exercise any right, power or privilege under this Commitment shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege preclude any other or further exercise of any other
right, power or privilege.
8. Assignment.
(a) Neither this Commitment nor the Loan proceeds shall be assignable by
Borrower without the prior written consent of Lender, and any attempt at such
assignment without such consent shall be void.
<PAGE>
(b) This Commitment, the Loan and any and all documents pertaining
thereto may be placed, assigned, serviced or participated (either in whole or
in part) by Lender, its successors and assigns.
9. Modification; Entire Commitment; No Reliance by Third Parties. No change
or modification of this Commitment shall be valid unless the same is in writing
and signed by the parties hereto. This Commitment contains the entire agreement
between the parties hereto and there are no promises, agreements, conditions,
undertakings, warranties and representations, either written or oral, expressed
or implied between the parties hereto other than as herein set forth. It is
expressly understood and agreed that this Commitment represents an integration
of any and all prior and contemporaneous promises, agreements, conditions,
undertakings, warranties and representation between the parties hereto. This
Commitment is directed solely and exclusively to Borrower and shall not inure to
the benefit of or be relied upon by any third party.
10. Commitment to Survive Closing. This Commitment shall survive the Loan
Closing and each and every one of the obligations and undertakings of Borrower
named herein shall be continuing obligations and undertakings and shall not
cease and determine until the entire Loan, together with all interest and fees
due hereon and any other amounts which may accrue pursuant hereto or to the
Loan, shall have been paid in full, and until all obligations and undertakings
of Borrower shall have been fully completed and discharged.
* * * *
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our report dated October 15, 1997 in this Form 8-K on the combined statement
of revenue and certain expenses of Metropolitan Industrial Center and our
report dated October 27, 1997 in this Form 8-K on the combined statement of
revenue and certain expenses of Atrium 1, into the Company's previously filed
Registration Statements on Forms S-3 (File No. 333-20991 and File No.
333-20999) and Forms S-8 (File No. 333-14243 and File No. 333-28427).
ARTHUR ANDERSEN LLP
Philadelphia, Pa.,
October 30, 1997
