<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) June 16, 1997
BRANDYWINE REALTY TRUST
(Exact name of registrant as specified in its charter)
MARYLAND 1-9106 23-2413352
(State or other (Commission file number) (I.R.S. Employer
jurisdiction of Identification
incorporation) 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
On June 16, 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 an office property located
in Broomall, Pennsylvania ("1974 Sproul Road") containing approximately 62,934
net rentable square feet. As of June 16, 1997, the property was approximately
89.3% leased to 10 tenants. Franklin Mint Credit Union, Main Line Book Company,
Allan Collautt Associates and TMR, Inc. each individually occupy more than 10%
of the total net rentable area of the property.
The net purchase price for 1974 Spoul Road totaled $4,125,000. The
Operating Partnership paid the purchase price and closing expenses using
existing cash reserves.
The seller of 1974 Sproul Road, Metropolitan Life Insurance Company, a
New York corporation (the "Seller"), is a party unaffiliated with the Company
and the Operating Partnership. The purchase price for 1974 Sproul Road was
determined by arm's-length negotiation between the Company and the Seller.
2
<PAGE>
The table set forth below shows certain information regarding rental
rates and lease expirations for 1974 Sproul Road.
Scheduled Lease Expirations
(1974 Sproul Road)
<TABLE>
<CAPTION>
Number of Leases Rentable Square Final Annualized Percentage of Total
Year of Expiring Within Footage Subject Base Rent from Final Annualized Base Rent
Lease the Year at to Expiring Leases 1974 Sproul Road under from 1974 Sproul Road
Expiration 1974 Sproul Road (1) at 1974 Sproul Road Expiring Leases (2) Under Expiring Leases
- -------------- -------------------- ------------------- ---------------------- --------------------------
<S> <C> <C> <C> <C>
1997 1 6,725 $ 97,513 12.3%
1998 3 14,602 227,684 28.7%
1999 3 9,492 137,054 17.3%
2000 1 6,376 102,016 12.8%
2001 - - - -
2002 2 18,993 229,670 28.9%
2003 - - - -
2004 - - - -
2005 - - - -
2006 and
Thereafter - - - -
------- -------- ---------- --------
Total 10 56,188 $ 793,937 100.0%
------- -------- ---------- --------
------- -------- ---------- --------
</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 acquisitions of 1974 Sproul
Road, the Company's portfolio consists of 66 office properties and 9
industrial properties that contain an aggregate of approximately 4.3 million
net rentable square feet.
3
<PAGE>
During the period January 1, 1997 through June 16, 1997, the
Company has acquired 10 individually insignificant properties from parties
unaffiliated with the Company and the Operating Partnership. The aggregate
purchase price for these properties was approximately $31 million. The
Company is filing this Current Report on Form 8-K in order to provide audited
financial statements for five of the individually insignificant property
acquisitions in accordance with Regulation S-X, Rule 3-14.
On April 18, 1997, the Operating Partnership acquired the
Greentree Executive Campus Acquisition Properties, aggregating approximately
156,000 net rentable square feet, located in Evesham, New Jersey, for
approximately $11.2 million. Reference is made to the Current Report on Form
8-K dated May 1, 1997 for additional information regarding the Greentree
Executive Campus Acquisition Properties and to Item 7 herein for certain
financial statements related to these properties.
On June 5, 1997, the Operating Partnership acquired two office
buildings, 748 Springdale Road and 855 Springdale Drive, located in West
Whiteland Township, Chester County, Pennsylvania (collectively, the "748 & 855
Springdale Drive"), for a net purchase price of approximately $5.3 million.
Reference is made to Item 7 herein for certain financial statements related to
these properties.
4
<PAGE>
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired.
The audited statement of revenue and certain operating expenses of the
Greentree Executive Campus Acquistion Properties for the year ended December
31, 1996 and the unaudited statement of revenue and certain operating
expenses for the three months ended March 31, 1997 are included on pages F-2
to F-6.
The audited statement of revenue and certain operating expenses of 748 &
855 Springdale Drive for the year ended December 31, 1996 and the unaudited
statement of revenue and certain operating expenses for the three months
ended March 31, 1997 and 1996 are included on pages F-7 to F-10.
(b) Pro Forma Financial Information.
Pro forma financial information which reflects the Company's acquisition of
748 & 855 Springdale Drive and 1974 Sproul Road as of and for the three
months ended March 31, 1997 and for the year ended December 31, 1996 are
included on pages F-1 to F-12.
(c) Exhibits.
10.1 Agreement of Purchase and Sale - by and between Metropolitan Life
Insurance Company and the Company regarding 1974 Sproul Road, Broomall, PA.
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Zelenkofske, Axelrod & Co., Ltd.
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: June 26, 1997 By: /s/ Gerard H. Sweeney
---------------------------------
Title: President and Chief Executive
Officer
<PAGE>
BRANDYWINE REALTY TRUST
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
I. UNAUDITED PRO FORMA CONDENSED CONSOLIDATING FINANCIAL INFORMATION
- Pro Forma Condensed Consolidating Balance Sheet as of March 31, 1997............. F-4
- Pro Forma Condensed Consolidating Statement of Operations for the Year Ended
December 31, 1996................................................................ F-5
- Pro Forma Condensed Consolidating Statement of Operations for the Three Months
Ended March 31, 1997............................................................. F-6
- Notes and Management's Assumptions to Unaudited Pro Forma Condensed Consolidating
Financial Information............................................................ F-7
II. GREENTREE EXECUTIVE CAMPUS ACQUISITION PROPERTIES
- Report of Independent Public Accountants......................................... F-16
- Combined Statements of Revenue and Certain Expenses for the Year Ended December
31, 1996 (audited) and for the Three Month Period Ended March 31, 1997
(unaudited)...................................................................... F-17
- Notes to Combined Statements of Revenue and Certain Expenses..................... F-18
III. 748 & 855 SPRINGDALE DRIVE
- Report of Independent Public Accountants......................................... F-20
- Combined Statements of Revenue and Certain Expenses for the Year Ended December
31, 1996 (audited) and for the Three Month Periods Ended March 31, 1997 and 1996
(unaudited)...................................................................... F-21
- Notes to Combined Statements of Revenue and Certain Expenses..................... F-22
</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 March 31, 1997 and the pro
forma condensed consolidating statements of operations for the three months
ended March 31, 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 (i) the Company; (ii)
the 19 "SSI/TNC" Properties acquired in August 1996; (iii) the LibertyView
Building acquired in July 1996; (iv) the 1996 Additional Acquisition Properties,
consisting of (a) the nine properties (the "SERS Properties") acquired in
November 1996 from the Pennsylvania State Employees Retirement System ("SERS")
and its subsidiaries, (b) Delaware Corporate Center I, (c) 700/800 Business
Center Drive and (d) 8000 Lincoln Drive; (v) the Columbia Acquisition Properties
acquired in January 1997; (vi) the Main Street Acquisition Properties acquired
in March 1997; (vii) the TA Properties acquired in May 1997; (viii) the Emmes
Properties acquired in May 1997; (ix) the Greentree Executive Campus Acquisition
Properties acquired in April 1997; and (x) 748 & 855 Springdale Drive acquired
in June 1997.
The unaudited pro forma condensed consolidating financial information is
presented as if the following events occurred no later than March 31, 1997, for
balance sheet purposes, and at the beginning of the period presented, for
purposes of the statements of operations:
- The Company acquired the LibertyView Building.
- The Company acquired its partnership interests in Brandywine Operating
Partnership, L.P. (the "Operating Partnership").
- The Operating Partnership acquired the 19 SSI/TNC Properties.
- The $774,000 loan from Turkey Vulture Fund XIII, Ltd. (the "RMO Fund")
was satisfied by the issuance of 46,321 Paired Units to the RMO Fund.
Each Paired Unit consists of one Common Share and a warrant exercisable
for one Common Share at a price of $19.50.
- 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 Operating Partnership acquired the 1996 Additional Acquisition
Properties for: (i) 481,818 Series A Convertible Preferred Shares
convertible into 1,606,060 Common Shares valued at $26,444,000; (ii)
discounted deferred payments of $3,225,000; (iii) warrants to purchase
133,333 Common Shares at an exercise price of $25.50 valued at $56,000
and (iv) $23,658,000 of cash.
- The Company issued 636,363 Common Shares at $16.50 per share to a voting
trust established for the benefit of 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.
F-2
<PAGE>
- 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 Operating Partnership acquired the Columbia Acquisition Properties
for $31,481,000, including closing costs of $181,000, paid as follows:
(i) $7,000,000 of borrowings under the Company's revolving credit
facility, (ii) $12,157,000 through an assumption by the Operating
Partnership of mortgage indebtedness encumbering two of the office
buildings and (iii) the $12,324,000 balance from cash reserves.
- 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 "1997 Offering").
- The Operating Partnership acquired the Main Street Acquisition
Properties for $21,583,000, including $83,000 of closing costs, paid as
follows: (i) cash of $19,683,000 and (ii) assumed debt of $1,900,000.
- The Operating Partnership acquired 1336 Enterprise Drive, Greentree
Executive Campus, Five Eves Drive and Kings Manor (the "Other 1997
Acquisitions") for approximately $21,785,000, including closing costs of
approximately $168,000, paid using existing cash reserves and borrowings
under the Company's revolving credit facility.
- The Operating Partnership acquired the TA Properties for $42,245,000,
including $620,000 of closing costs, paid through a borrowing under the
Company's revolving credit facility.
- The Operating Partnership acquired the Emmes Properties for $66,494,000,
including $294,000 of closing costs, paid as follows: (i) $14,275,000 of
borrowings under the Company's revolving credit facility and (ii) the
balance through a borrowing under the Bridge Loan.
- The Operating Partnership acquired 748 & 855 Springdale Drive for
$5,336,000, including $86,000 of closing costs, paid through a borrowing
under the Bridge Loan.
- The Operating Partnership acquired 1974 Sproul Road for $4,181,000,
including $56,000 of closing costs, paid using existing cash reserves.
The pro forma condensed consolidating financial information is unaudited and
is not necessarily indicative of what the actual financial position would have
been at March 31, 1997, nor does it purport to represent the future financial
position and the results of operations of the Company.
F-3
<PAGE>
BRANDYWINE REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATING BALANCE SHEET
AS OF MARCH 31, 1997 (NOTES 1 AND 2)
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
BRANDYWINE OTHER EVENTS
REALTY TRUST SUBSEQUENT TA
HISTORICAL TO MARCH 31, PROPERTIES
CONSOLIDATED 1997 (A) (B)
------------------- ------------------- -----------------
<S> <C> <C> <C>
ASSETS:
Real estate investments, net...................................... $ 208,825 $ 18,147 $ 42,245
Cash and cash equivalents......................................... 18,398 (3,550) --
Escrowed cash..................................................... 1,612 -- --
Accounts receivable............................................... 2,074 -- --
Due from affiliates............................................... 479 -- --
Investment in management company.................................. 116 -- --
Deferred costs and other assets................................... 4,850 -- --
-------- ------- -------
Total assets.................................................... 236,354 14,597 42,245
-------- ------- -------
-------- ------- -------
LIABILITIES:
Mortgages and notes payable....................................... 46,848 14,597 42,245
Accrued interest.................................................. 257 -- --
Accounts payable and accrued expenses............................. 3,223 -- --
Distributions payable............................................. 4,064 -- --
Tenant security deposits and deferred rents....................... 2,157 -- --
-------- ------- -------
Total liabilities............................................... 56,549 14,597 42,245
-------- ------- -------
MINORITY INTEREST................................................... 6,356 -- --
-------- ------- -------
CONVERTIBLE PREFERRED SHARES........................................ 23,458 -- --
-------- ------- -------
BENEFICIARIES' EQUITY:
Common shares of beneficial interest.............................. 96 -- --
Additional paid-in capital........................................ 162,885 -- --
Share warrants.................................................... 962 -- --
Cumulative deficit................................................ (1,198) -- --
Cumulative distributions.......................................... (12,754) -- --
-------- ------- -------
Total beneficiaries' equity..................................... 149,991 -- --
-------- ------- -------
Total liabilities and beneficiaries equity...................... $ 236,354 $ 14,597 $ 42,245
-------- ------- -------
-------- ------- -------
<CAPTION>
EMMES 748 & 855 SPROUL
PROPERTIES SPRINGDALE 1974
(C) DRIVE (D) ROAD (E)
----------------- ----------------- -------------
<S> <C>
ASSETS:
Real estate investments, net...................................... $ 66,494 $ 5,336 $ 4,181
Cash and cash equivalents......................................... -- -- (4,181)
Escrowed cash..................................................... -- -- --
Accounts receivable............................................... -- -- --
Due from affiliates............................................... -- -- --
Investment in management company.................................. -- -- --
Deferred costs and other assets................................... -- -- --
------- ------ ------
Total assets.................................................... 66,494 5,336 --
------- ------ ------
------- ------ ------
LIABILITIES:
Mortgages and notes payable....................................... 66,494 5,336 --
Accrued interest.................................................. -- -- --
Accounts payable and accrued expenses............................. -- -- --
Distributions payable............................................. -- -- --
Tenant security deposits and deferred rents....................... -- -- --
------- ------ ------
Total liabilities............................................... 66,494 5,336 --
------- ------ ------
MINORITY INTEREST................................................... -- -- --
------- ------ ------
CONVERTIBLE PREFERRED SHARES........................................ -- -- --
------- ------ ------
BENEFICIARIES' EQUITY:
Common shares of beneficial interest.............................. -- -- --
Additional paid-in capital........................................ -- -- --
Share warrants.................................................... -- -- --
Cumulative deficit................................................ -- -- --
Cumulative distributions.......................................... -- -- --
------- ------ ------
Total beneficiaries' equity..................................... -- -- --
------- ------ ------
Total liabilities and beneficiaries equity...................... $ 66,494 $ 5,336 $ --
------- ------ ------
------- ------ ------
<CAPTION>
PRO FORMA
CONSOLIDATED
-------------------
ASSETS:
Real estate investments, net...................................... $ 345,228
Cash and cash equivalents......................................... 10,667
Escrowed cash..................................................... 1,612
Accounts receivable............................................... 2,074
Due from affiliates............................................... 479
Investment in management company.................................. 116
Deferred costs and other assets................................... 4,850
--------
Total assets.................................................... 365,026
--------
--------
LIABILITIES:
Mortgages and notes payable....................................... 175,520
Accrued interest.................................................. 257
Accounts payable and accrued expenses............................. 3,223
Distributions payable............................................. 4,064
Tenant security deposits and deferred rents....................... 2,157
--------
Total liabilities............................................... 185,221
--------
MINORITY INTEREST................................................... 6,356
--------
CONVERTIBLE PREFERRED SHARES........................................ 23,458
--------
BENEFICIARIES' EQUITY:
Common shares of beneficial interest.............................. 96
Additional paid-in capital........................................ 162,885
Share warrants.................................................... 962
Cumulative deficit................................................ (1,198)
Cumulative distributions.......................................... (12,754)
--------
Total beneficiaries' equity..................................... 149,991
--------
Total liabilities and beneficiaries equity...................... $ 365,026
--------
--------
</TABLE>
F-4
<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>
BRANDYWINE
REALTY
TRUST
HISTORICAL 1996
CONSOLIDATED (A) EVENTS (B) SUBTOTAL
-------------------- ------------- -------------
<S> <C> <C> <C>
REVENUE:
Base rents.............................. $ 8,462 $ 12,646 $ 21,108
Tenant reimbursements................... 1,372 2,838 4,210
Other................................... 196 100 296
---------- ------------- -------------
Total Revenue......................... 10,030 15,584 25,614
---------- ------------- -------------
OPERATING EXPENSES:
Interest................................ 2,751 513 3,264
Depreciation and amortization........... 2,836 4,687 7,523
Property expenses....................... 3,709 6,830 10,539
General and administrative.............. 825 148 973
---------- ------------- -------------
Total operating expenses.............. 10,121 12,178 22,299
---------- ------------- -------------
Income (loss) before minority
interest............................ (91) 3,406 3,315
Minority interest in (income) loss........ (45) (429) (474)
---------- ------------- -------------
Income (loss) before uncombined entity.... (136) 2,977 2,841
Equity in income of management company.... (26) 66 40
---------- ------------- -------------
Net income (loss)......................... (162) 3,043 2,881
(Income) loss allocated to Preferred
Shares.................................. (401) (1,847) (2,248)
---------- ------------- -------------
Income (loss) allocated to Common
Shares.................................. $ (563) $ 1,196 $ 633
---------- ------------- -------------
---------- ------------- -------------
Earnings (loss) per Common Share.......... $ (0.43)
----------
----------
Weighted average number of shares
outstanding including share
equivalents............................. 1,302,648
----------
----------
<CAPTION>
1997 EVENTS
----------------------------------------------------------------------------------------
TA EMMES 748 & 855 1974 TOTAL
OTHER PROPERTIES PROPERTIES SPRINGDALE SPROUL PRO FORMA
EVENTS (D) (E) (F) DRIVE (G) ROAD (H) CONSOLIDATED
------------ ----------- --------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
REVENUE:
Base rents............................ $ 11,345 $ 5,102 $ 6,214 $ 940 $ 774 $ 45,483
Tenant reimbursements................. 1,102 735 2,681 -- 118 8,846
Other................................. 377 9 10 -- -- 692
------------ ------ ------- ------------- ----- -------
Total Revenue....................... 12,824 5,846 8,905 940 892 55,021
------------ ------ ------- ------------- ----- -------
OPERATING EXPENSES:
Interest.............................. 2,250 3,168 4,987 400 -- 14,069
Depreciation and amortization......... 2,334 1,352 2,128 171 134 13,642
Property expenses..................... 5,619 1,962 3,482 250 492 22,344
General and administrative............ -- -- -- -- -- 973
------------ ------ ------- ------------- ----- -------
Total operating expenses............ 10,203 6,482 10,597 821 626 51,028
------------ ------ ------- ------------- ----- -------
Income (loss) before minority
interest.......................... 2,621 (636) (1,692) 119 266 3,993
Minority interest in (income) loss...... 246 29 76 (5) (12) (140)
------------ ------ ------- ------------- ----- -------
Income (loss) before uncombined entity.. 2,867 (607) (1,616) 114 254 3,853
Equity in income of management company.. -- 105 65 23 22 255
------------ ------ ------- ------------- ----- -------
Net income (loss)....................... 2,867 (502) (1,551) 137 276 4,108
(Income) loss allocated to Preferred
Shares................................ -- -- -- -- -- (2,248)
------------ ------ ------- ------------- ----- -------
Income (loss) allocated to Common
Shares................................ $ 2,867 $ (502) $ (1,551) $ 137 $ 276 $ 1,860
------------ ------ ------- ------------- ----- -------
------------ ------ ------- ------------- ----- -------
Earnings (loss) per Common Share........ $ 0.20
-------
-------
Weighted average number of shares
outstanding including share
equivalents........................... 9,291,406
-------
-------
</TABLE>
F-5
<PAGE>
BRANDYWINE REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 (NOTES 1 AND 3)
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
BRANDYWINE 1997 EVENTS
REALTY -------------------------------------------------------------
TRUST TA EMMES 748 & 855 1974 TOTAL
HISTORICAL OTHER PROPERTIES PROPERTIES SPRINGDALE SPROUL PRO FORMA
CONSOLIDATED (A) EVENTS (C) (E) (F) ROAD (G) ROAD (H) CONSOLIDATED
------------------ ----------- ----------- ----------- ----------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUE:
Base rents............... $ 6,999 $ 1,647 $ 1,292 $ 1,542 $ 239 $ 191 $ 11,910
Tenant reimbursements.... 1,327 147 188 678 -- 29 2,369
Other.................... 272 25 4 1 -- -- 302
---------- ------ ------ ------ ----- ----- --------------
Total Revenue.......... 8,598 1,819 1,484 2,221 239 220 14,581
---------- ------ ------ ------ ----- ----- --------------
OPERATING EXPENSES:
Interest................. 975 341 781 1,230 99 -- 3,426
Depreciation and
amortization........... 2,310 340 333 525 42 33 3,583
Property operating
expenses............... 2,810 834 439 799 57 121 5,060
Other expenses........... 484 -- -- -- -- -- 484
---------- ------ ------ ------ ----- ----- --------------
Total operating
expenses............. 6,579 1,515 1,553 2,554 198 154 12,553
---------- ------ ------ ------ ----- ----- --------------
Income (loss) before
minority interest.... 2,019 304 (69) (333) 41 66 2,028
Minority interest in
(income) loss............ (94) (11) 2 12 (1) (2) (94)
---------- ------ ------ ------ ----- ----- --------------
Income (loss) before
uncombined entity........ 1,925 293 (67) (321) 40 64 1,934
Equity in income of
management company....... 125 -- 26 16 6 5 178
---------- ------ ------ ------ ----- ----- --------------
Net income (loss).......... 2,050 293 (41) (305) 46 69 2,112
(Income) loss allocated to
Preferred Shares......... (499) -- -- -- -- -- (499)
---------- ------ ------ ------ ----- ----- --------------
Income (loss) allocated to
Common Shares............ $ 1,551 $ 293 $ (41) $ (305) $ 46 $ 69 $ 1,613
---------- ------ ------ ------ ----- ----- --------------
---------- ------ ------ ------ ----- ----- --------------
Earnings (loss) per Common
Share.................... $ 0.20 $ 0.17
---------- --------------
---------- --------------
Weighted average number of
shares outstanding
including share
equivalents.............. 7,776,607 9,464,807
---------- --------------
---------- --------------
</TABLE>
F-6
<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 March 31, 1997, the Company owned 50 properties. The Company's
interest in 49 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 March 31, 1997, the Company held
a 96.5% 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 1996 Additional Acquisition
Properties, the Columbia Acquisition Properties, the Main Street Acquisition
Properties, the TA Properties, the Emmes Properties, the Greentree Executive
Campus Aquisition Properties and 748 & 855 Springdale Drive. In management's
opinion, all adjustments necessary to reflect the effects of the 1996 Offering,
the SERS Offering, the Morgan Stanley Offering, the 1997 Offering, the
acquisitions of the SSI/TNC Properties, the LibertyView Building, the 1996
Additional Acquisition Properties, the Columbia Acquisition Properties, the Main
Street Acquisition Properties, the Other 1997 Acquisitions, the TA Properties,
the Emmes Properties, 748 & 855 Springdale Drive and 1974 Sproul Road by the
Company have been made.
2. ADJUSTMENTS TO PRO FORMA CONDENSED CONSOLIDATING BALANCE SHEET:
(A) Reflects the Company's acquisition of the Other 1997 Acquisitions (only
those acquisitions which occurred after March 31, 1997 are included as 1336
Enterprise Drive is included in the Company's historical March 31, 1997 balance
sheet) based upon the respective purchase prices and closing costs as follows:
<TABLE>
<CAPTION>
TOTAL OTHER
GREENTREE EVENTS
EXECUTIVE FIVE EVES SUBSEQUENT TO
KINGS MANOR CAMPUS DRIVE MARCH 31, 1997
--------------- ------------- ----------- ----------------
<S> <C> <C> <C> <C>
Purchase Price.................................... $ 3,500 $ 11,150 $ 3,375 $ 18,025
Closing Costs..................................... 50 59 13 122
------ ------------- ----------- -------
$ 3,550 $ 11,209 $ 3,388 $ 18,147
</TABLE>
(B) Reflects the Company's acquisition of the TA Properties based upon the
purchase price plus closing costs as follows:
<TABLE>
<CAPTION>
TA PROPERTIES
-------------
<S> <C>
Purchase Price................................................................. $ 41,625
Closing Costs.................................................................. 620
-------------
$ 42,245
</TABLE>
F-7
<PAGE>
(C) Reflects the Company's acquisition of the Emmes Properties based upon
the purchase price plus closing costs as follows:
<TABLE>
<CAPTION>
EMMES PROPERTIES
-----------------
<S> <C>
Purchase Price............................................................. $ 66,200
Closing Costs.............................................................. 294
-------
$ 66,494
</TABLE>
(D) Reflects the Company's acquisition of 748 & 855 Springdale Drive based
upon the purchase price plus closing costs as follows:
<TABLE>
<CAPTION>
748 & 855
SPRINGDALE
DRIVE
---------------
<S> <C>
Purchase Price............................................................... $ 5,250
Closing Costs................................................................ 86
------
$ 5,336
</TABLE>
(E) Reflects the Company's acquisition of 1974 Sproul Road based upon the
purchase price plus closing costs as follows:
<TABLE>
<CAPTION>
1974 SPROUL ROAD
-----------------
<S> <C>
Purchase Price.............................................................. $ 4,125
Closing Costs............................................................... 56
------
$ 4,181
</TABLE>
F-8
<PAGE>
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 DELAWARE 700/800
LIBERTYVIEW CORPORATE BUSINESS CENTER 8000 LINCOLN
BUILDING SERS PROPERTIES CENTER DRIVE DRIVE
--------------- ----------------- ----------- ------------------- ---------------
<S> <C> <C> <C> <C> <C>
Revenue:
Base rents.............................. $ 5,714 $ 4,008 $ 2,036 $ 651 $ 237
Tenant reimbursements................... 2,511 249 -- 76 2
Other................................... 100 -- -- -- --
------- ------ ----------- ----- -----
Total revenue......................... 8,325 4,257 2,036 727 239
Operating Expenses:
Interest................................ 3,783 194 -- -- --
Depreciation and amortization........... 2,819 818 374 212 89
Property expenses....................... 2,831 2,217 552 270 231
General and administrative.............. 715 -- -- -- --
------- ------ ----------- ----- -----
Total operating expenses.............. 10,148 3,229 926 482 320
Income (loss) before minority interest.... (1,823) 1,028 1,110 245 (81)
Minority interest in (income) loss........ 513 -- -- -- --
Income (loss) before uncombined entity.... (1,310) 1,028 1,110 245 (81)
Equity in income of management company.... 75 -- -- -- --
------- ------ ----------- ----- -----
Net income (loss)......................... (1,235) 1,028 1,110 245 (81)
Income allocated to Preferred Shares...... -- -- -- -- --
------- ------ ----------- ----- -----
Income (loss) allocated to Common Shares.. $ (1,235) $ 1,028 $ 1,110 $ 245 $ (81)
------- ------ ----------- ----- -----
------- ------ ----------- ----- -----
<CAPTION>
1996 PRO FORMA
& OTHER
OFFERING TOTAL PRO FORMA
ADJUSTMENTS 1996 EVENTS
----------------- -----------------
Revenue:
Base rents.............................. $ -- $ 12,646
Tenant reimbursements................... -- 2,838
Other................................... -- 100
------ -------
Total revenue......................... -- 15,584
Operating Expenses:
Interest................................ (3,464) 513
Depreciation and amortization........... 375 4,687
Property expenses....................... 729 6,830
General and administrative.............. (567) 148
------ -------
Total operating expenses.............. (2,927) 12,178
Income (loss) before minority interest.... 2,927 3,406
Minority interest in (income) loss........ (942) (429)
Income (loss) before uncombined entity.... 1,985 2,977
Equity in income of management company.... (9) 66
------ -------
Net income (loss)......................... 1,976 3,043
Income allocated to Preferred Shares...... 1,847 1,847
------ -------
Income (loss) allocated to Common Shares.. $ 129 $ 1,196
------ -------
------ -------
</TABLE>
F-9
<PAGE>
(C) Reflects the pro forma adjustments relating to the Columbia Acquisition
Properties, the Main Street Acquisition Properties and the 1997 Other
Acquisitions for the three months ended March 31, 1997 and other pro forma
adjustments to reflect the 1997 Offering for the three months ended March 31,
1997. The operating results reflected below include the historical results and
related pro forma adjustments to reflect the period January 1, 1997 through the
respective acquisition dates. Operating results from those dates forward are
included in the historical results of the Company.
<TABLE>
<CAPTION>
OTHER 1997 ACQUISITIONS
------------------------------------------------------------------
COLUMBIA MAIN STREET GREENTREE
ACQUISITION ACQUISITION 1336 ENTERPRISE EXECUTIVE
PROPERTIES PROPERTIES DRIVE KINGS MANOR CAMPUS FIVE EVES DRIVE
------------- ------------- ----------------- --------------- ------------- -----------------
<S> <C> <C> <C> <C> <C>
Revenue: <C>
Base rents.................. $ 338 $ 542 $ 78 $ 101 $ 502 $ 86
Tenant reimbursements....... 24 60 13 26 14 10
Other....................... 25 -- -- -- -- --
----- ----- --- ----- ----- ---
Total revenue............. 387 602 91 127 516 96
Operating Expenses:
Interest (i)................ 110 -- -- -- 207 63
Depreciation and
amortization (ii)......... 66 109 21 28 89 27
Property expenses........... 130 379 19 42 227 37
General and
administrative............ -- -- -- -- -- --
----- ----- --- ----- ----- ---
Total operating
expenses................ 306 488 40 70 523 127
Income (loss) before minority
interest.................... 81 114 51 57 (7) (31)
Minority interest in (income)
loss........................ (3) (4) (2) (2) -- 1
Income (loss) before
uncombined entity........... 78 110 49 55 (7) (30)
Equity in income of management
company..................... -- -- -- -- -- --
----- ----- --- ----- ----- ---
Net income (loss)............. 78 110 49 55 (7) (30)
Income allocated to Preferred
Shares...................... -- -- -- -- -- --
----- ----- --- ----- ----- ---
Income (loss) allocated to
Common Shares............... $ 78 $ 110 $ 49 $ 55 $ (7) $ (30)
----- ----- --- ----- ----- ---
----- ----- --- ----- ----- ---
<CAPTION>
TOTAL OTHER
1997 OFFERING 1997 EVENTS
----------------- -------------
<S> <C> <C>
Revenue:
Base rents.................. $ -- $ 1,647
Tenant reimbursements....... -- 147
Other....................... -- 25
--------- ------
Total revenue............. -- 1,819
Operating Expenses:
Interest (i)................ (39) 341
Depreciation and
amortization (ii)......... -- 340
Property expenses........... -- 834
General and
administrative............ -- --
--------- ------
Total operating
expenses................ (39) 1,515
Income (loss) before minority
interest.................... 39 304
Minority interest in (income)
loss........................ (1) (11)
Income (loss) before
uncombined entity........... 38 293
Equity in income of management
company..................... -- --
--------- ------
Net income (loss)............. 38 293
Income allocated to Preferred
Shares...................... -- --
--------- ------
Income (loss) allocated to
Common Shares............... $ 38 $ 293
--------- ------
--------- ------
</TABLE>
(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 adjustment for the 1997 Offering represents
interest savings related to the payoff of $7 million 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.
F-10
<PAGE>
(D) Reflects the pro forma statements of operations of the Columbia
Acquisition Properties, the Main Street Acquisition Properties and the 1997
Other Acquisitions for the year ended December 31, 1996 and other pro forma
adjustments to reflect the 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.
<TABLE>
<CAPTION>
1997 OTHER ACQUISITIONS
-----------------------------------------------------------
COLUMBIA MAIN STREET GREENTREE
ACQUISITION ACQUISITION 1336 ENTERPRISE EXECUTIVE
PROPERTIES PROPERTIES DRIVE KINGS MANOR CAMPUS FIVE EVES DRIVE
----------- ----------- ---------------- ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Base rents............................... $ 5,146 $ 3,141 $ 437 $ 411 $ 1,862 $ 348
Tenant reimbursements.................... 359 347 75 107 175 39
Other.................................... 376 -- -- -- -- 1
------ ------ ----- ----- ----------- -----
Total revenue.......................... 5,881 3,488 512 518 2,037 388
Operating Expenses:
Interest (i)............................. 1,680 -- -- -- 841 254
Depreciation and amortization (ii)....... 1,007 629 117 114 359 108
Property expenses........................ 1,979 2,194 107 170 1,018 151
General and administrative............... -- -- -- -- -- --
------ ------ ----- ----- ----------- -----
Total operating expenses............... 4,666 2,823 224 284 2,218 513
Income (loss) before minority interest..... 1,215 665 288 234 (181) (125)
Minority interest in (income) loss......... (55) (30) (13) (11) 8 6
Income (loss) before uncombined entity..... 1,160 635 275 223 (173) (119)
Equity in income of management company..... -- -- -- -- -- --
------ ------ ----- ----- ----------- -----
Net income (loss).......................... 1,160 635 275 223 (173) (119)
Income allocated to Preferred Shares....... -- -- -- -- -- --
------ ------ ----- ----- ----------- -----
Income (loss) allocated to Common Shares... $ 1,160 $ 635 $ 275 $ 223 $ (173) $ (119)
------ ------ ----- ----- ----------- -----
------ ------ ----- ----- ----------- -----
<CAPTION>
TOTAL OTHER
1997 OFFERING 1997 EVENTS
----------------- -----------
<S> <C> <C>
Revenue:
Base rents............................... $ -- $ 11,345
Tenant reimbursements.................... -- 1,102
Other.................................... -- 377
------- -----------
Total revenue.......................... -- 12,824
Operating Expenses:
Interest (i)............................. (525) 2,250
Depreciation and amortization (ii)....... -- 2,334
Property expenses........................ -- 5,619
General and administrative............... -- --
------ -----------
Total operating expenses............... (525) 10,203
Income (loss) before minority interest..... 525 2,621
Minority interest in (income) loss......... 341 246
Income (loss) before uncombined entity..... 866 2,867
Equity in income of management company..... -- --
------- -----------
Net income (loss).......................... 866 2,867
Income allocated to Preferred Shares....... -- --
------- -----------
Income (loss) allocated to Common Shares... $ 866 $ 2,867
------- -----------
------- -----------
</TABLE>
(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 adjustment for the 1997 Offering represents
interest savings related to the payoff of $7 million 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.
F-11
<PAGE>
(E) Reflects the pro forma statements of operations of the TA Properties for
the three months ended March 31, 1997 and for the year ended December 31, 1996.
All amounts represent historical operations of the TA Properties except for the
pro forma adjustments noted:
<TABLE>
<CAPTION>
TA PROPERTIES
----------------------------
<S> <C> <C>
YEAR ENDED THREE MONTHS
DECEMBER 31, ENDED MARCH
1996 31, 1997
------------- -------------
Revenue:
Base rents......................................................................... $ 5,102 $ 1,292
Tenant reimbursements.............................................................. 735 188
Other.............................................................................. 9 4
------ ------
Total revenue..................................................................... 5,846 1,484
Operating Expenses:
Interest (i)....................................................................... 3,168 781
Depreciation and amortization (ii)................................................. 1,352 333
Property expenses.................................................................. 1,962 439
General and administrative......................................................... -- --
------ ------
Total operating expenses.......................................................... 6,482 1,553
Income (loss) before minority interest.............................................. (636) (69)
Minority interest in (income) loss.................................................. 29 2
Income (loss) before uncombined entity.............................................. (607) (67)
Equity in income of management company.............................................. 105 26
------ ------
Net income (loss)................................................................... (502) (41)
Income allocated to Preferred Shares................................................ -- --
------ ------
Income (loss) allocated to Common Shares............................................ $ (502) $ (41)
------ ------
------ ------
</TABLE>
- ------------------------
(i) Pro forma interest expense is presented assuming an effective rate of 7.5%
on 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.
F-12
<PAGE>
(F) Reflects the pro forma statements of operations of the Emmes Properties
for the three months ended March 31, 1997 and for the year ended December 31,
1996. All amounts represent historical operations of the Emmes Properties except
for the pro forma adjustments noted:
<TABLE>
<CAPTION>
EMMES PROPERTIES
---------------------------
<S> <C> <C>
YEAR ENDED THREE MONTHS
DECEMBER 31, ENDED MARCH
1996 31, 1997
------------ -------------
Revenue:
Base rents..................................................................... $ 6,214 $ 1,542
Tenant reimbursements.......................................................... 2,681 678
Other.......................................................................... 10 1
------------ ------
Total revenue................................................................. 8,905 2,221
Operating Expenses:
Interest (i)................................................................... 4,987 1,230
Depreciation and amortization (ii)............................................. 2,128 525
Property expenses.............................................................. 3,482 799
General and administrative..................................................... -- --
------------ ------
Total operating expenses...................................................... 10,597 2,554
Income (loss) before minority interest.......................................... (1,692) (333)
Minority interest in (income) loss.............................................. 76 12
Income (loss) before uncombined entity.......................................... (1,616) (321)
Equity in income of management company.......................................... 65 16
------------ ------
Net income (loss)............................................................... (1,551) (305)
Income allocated to Preferred Shares............................................ -- --
------------ ------
Income (loss) allocated to Common Shares........................................ $ (1,551) $ (305)
------------ ------
------------ ------
</TABLE>
- ------------------------
(i) Pro forma interest expense is presented assuming an effective rate of 7.5%
on 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.
F-13
<PAGE>
(G) Reflects the pro forma statements of operations of 748 & 855 Springdale
Drive for the three months ended March 31, 1997 and for the year ended December
31, 1996. All amounts represent historical operations of 748 & 855 Springdale
Drive except for the pro forma adjustments noted:
<TABLE>
<CAPTION>
748 & 855 SPRINGDALE DRIVE
--------------------------------
<S> <C> <C>
YEAR ENDED THREE MONTHS
DECEMBER 31, ENDED MARCH
1996 31, 1997
--------------- ---------------
Revenue:
Base rents.................................................... $ 940 $ 239
Tenant reimbursements......................................... -- --
Other......................................................... -- --
Total revenue............................................... 940 239
----- -----
Operating Expenses:
Interest (i).................................................. 400 99
Depreciation and amortization (ii)............................ 171 42
Property expenses............................................. 250 57
General and administrative.................................... -- --
----- -----
Total operating expenses.................................... 821 198
Income (loss) before minority interest.......................... 119 41
Minority interest in (income) loss.............................. (5) (1)
Income (loss) before uncombined entity.......................... 114 40
Equity in income of management company.......................... 23 6
----- -----
Net income (loss)............................................... 137 46
Income allocated to Preferred Shares............................ -- --
Income (loss) allocated to Common Shares........................ $ 137 $ 46
----- -----
----- -----
</TABLE>
- ------------------------
(i) Pro forma interest expense is presented assuming an effective rate of 7.5%
on 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.
F-14
<PAGE>
(H) Reflects the pro forma statements of operations of 1974 Sproul Road for
the three months ended March 31, 1997 and for the year ended December 31, 1996.
All amounts represent historical operations of 1974 Sproul Road except for the
pro forma adjustments noted:
<TABLE>
<CAPTION>
1974 SPROUL ROAD
--------------------------------
<S> <C> <C>
YEAR ENDED THREE MONTHS
DECEMBER 31, ENDED MARCH
1996 31, 1997
--------------- ---------------
Revenue:
Base rents.................................................... $ 774 $ 191
Tenant reimbursements......................................... 118 29
Other......................................................... -- --
----- -----
Total revenue............................................... 892 220
Operating Expenses:
Interest (i).................................................. -- --
Depreciation and amortization (ii)............................ 134 33
Property expenses............................................. 492 121
General and administrative.................................... -- --
----- -----
Total operating expenses.................................... 626 154
Income (loss) before minority interest.......................... 266 66
Minority interest in (income) loss.............................. (12) (2)
Income (loss) before uncombined entity.......................... 254 64
Equity in income of management company.......................... 22 5
----- -----
Net income (loss)............................................... 276 69
----- -----
Income allocated to Preferred Shares............................ -- --
----- -----
Income (loss) allocated to Common Shares........................ $ 276 $ 69
----- -----
----- -----
</TABLE>
- ------------------------
(i) Pro forma interest expense is presented assuming an effective rate of 7.5%
on 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.
F-15
<PAGE>
To Brandywine Realty Trust
We have audited the accompanying combined statement of revenue and certain
expenses of 3001-2-3 GREENTREE ASSOCIATES, L.P., 4000 AND 5000 GREENTREE
EXECUTIVE CAMPUS AND G.E.C. I & II MANAGEMENT CO., L.L.C. (the "GREENTREE
EXECUTIVE CAMPUS ACQUISITION PROPERTIES") described in Note 1 for the year ended
December 31, 1996. This combined financial statement is the responsibility of
management. Our responsibility is to express an opinion on this combined
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 combined statement of revenue and certain
expenses is free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the combined
statement of revenue and certain expenses. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the combined statement of revenue and
certain expenses. 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 a Current Report on Form 8K of Brandywine
Realty Trust as described in Note 1 and is not intended to be a complete
presentation of the GREENTREE EXECUTIVE CAMPUS ACQUISITION PROPERTIES' revenue
and expenses.
In our opinion, the combined statement of revenue and certain expenses
referred to above presents fairly, in all material respects, the revenue and
certain expenses of the GREENTREE EXECUTIVE CAMPUS ACQUISITION PROPERTIES for
the year ended December 31, 1996, in conformity with generally accepted
accounting principles.
ZELENKOFSKE, AXELROD & CO., LTD.
Jenkintown, Pennsylvania June 19, 1997
F-16
<PAGE>
GREENTREE EXECUTIVE CAMPUS ACQUISITION PROPERTIES
COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, MARCH 31, 1997
1996 (UNAUDITED)
------------ --------------
<S> <C> <C>
Revenue
Base Rents (Note 2).......................................... $1,861,942 $ 501,554
Tenant Reimbursements (Note 2)............................... 175,078 13,794
------------ --------------
Total Revenue.............................................. 2,037,020 515,348
------------ --------------
Certain Expenses
Real Estate Taxes............................................ 191,337 47,834
Utilities.................................................... 235,301 64,185
Cleaning and Janitorial...................................... 106,946 24,543
Snow Removal................................................. 50,445 8,419
Lawn Care.................................................... 53,309 8,000
General Maintenance.......................................... 100,473 16,273
Maintenance--Labor........................................... 66,155 13,058
Management Fees (Note 3)..................................... 106,513 25,279
Leasing Fees................................................. 67,714 9,538
Other Operating Expenses..................................... 39,636 9,504
------------ --------------
Total Certain Expenses..................................... 1,017,829 226,633
------------ --------------
Revenue in Excess of Certain Expenses.......................... $1,019,191 $ 288,715
------------ --------------
------------ --------------
</TABLE>
The accompanying notes are an integral part of the combined statement of revenue
and certain expenses.
F-17
<PAGE>
GREENTREE EXECUTIVE CAMPUS ACQUISITION PROPERTIES
NOTES TO COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES
DECEMBER 31, 1996
NOTE 1: BASIS OF PRESENTATION
The combined statement of revenue and certain expenses reflects the
operations of 3001-2-3 Greentree Associates, L.P., 4000 and 5000 Greentree
Executive Campus and G.E.C. I and II Management Co., L.L.C., (the Greentree
Executive Campus Acquisition Properties) located in Marlton, New Jersey. These
properties were acquired by Brandywine Realty Trust (the "Company") in April,
1997. The Greentree Executive Campus Acquisition Properties have an aggregate
net rentable area of approximately 156,000 square feet (95% leased as of
December 31, 1996). This combined statement of revenue and certain expenses is
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 Greentree Executive Campus Acquisition Properties
are maintained on a modified cash basis. Adjusting entries have been made to
present the accompanying financial statement in accordance with generally
accepted accounting principles. The accompanying financial statement excludes
certain expenses such as interest, depreciation and amortization, and other
costs not directly related to future operations of the Greentree Executive
Campus Acquisition Properties.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts of assets and liabilities which affect the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
NOTE 2: OPERATING LEASE
Base rents presented for the year ended December 31, 1996, do not include
straight-line adjustments for scheduled rent increases occurring over the lives
of the leases in accordance with generally accepted accounting principles
because the adjustment is considered immaterial.
F-18
<PAGE>
NOTE 2: OPERATING LEASE (CONTINUED)
There were no tenants whose minimum rental payments were equal to or
exceeding 10% or more of total base rents in 1996.
The Greentree Executive Campus Acquisition Properties are leased to tenants
under operating leases with expiration dates extending, to the year 2006. 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 $1,784,309
1998 1,216,284
1999 705,729
2000 423,357
2001 291,265
Thereafter 561,046
---------
$4,981,990
---------
---------
</TABLE>
Certain leases also include provisions requiring tenants to reimburse the
Company for management costs and other operating expenses up to stipulated
amounts and are included in tenant reimbursements revenue.
NOTE 3: MANAGEMENT FEES
Management fees are based on five percent (5%) of rents collected and are
payable to a related party.
F-19
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Brandywine Realty Trust:
We have audited the combined statement of revenue and certain expenses of
748 & 855 Springdale Drive ("748 & 855 Springdale Drive") 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 748 & 855 Springdale Drive'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 748 & 855
Springdale Drive for the year ended December 31, 1996, in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Philadelphia, Pa.,
June 23, 1997
F-20
<PAGE>
748 & 855 SPRINGDALE DRIVE
COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
<TABLE>
<CAPTION>
FOR THE
FOR THE THREE MONTH PERIOD
YEAR ENDED ENDED MARCH 31,
DECEMBER 31, ----------------------
1996 1997 1996
------------ ---------- ----------
<S> <C> <C> <C>
(UNAUDITED)
REVENUE:
Base rents (Note 2)................................................ $ 940,000 $ 239,000 $ 241,000
------------ ---------- ----------
Total revenue.................................................... 940,000 239,000 241,000
------------ ---------- ----------
CERTAIN EXPENSES:
Maintenance and other operating expenses........................... 156,000 35,000 39,000
Utilities.......................................................... 23,000 4,000 6,000
Real estate taxes.................................................. 71,000 18,000 18,000
------------ ---------- ----------
Total expenses................................................... 250,000 57,000 63,000
------------ ---------- ----------
REVENUE IN EXCESS OF CERTAIN EXPENSES................................ $ 690,000 $ 182,000 $ 178,000
------------ ---------- ----------
------------ ---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-21
<PAGE>
748 & 855 SPRINGDALE DRIVE
NOTES TO COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
DECEMBER 31, 1996
1. BASIS OF PRESENTATION:
On June 5, 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 748 & 855 Springdale Drive, a
portfolio of two office buildings located in West Whiteland Township,
Pennsylvania. 748 & 855 Springdale Drive contain an aggregate net rentable area
of approximately 64,594 square feet, which was 100% leased as of December 31,
1996. The net purchase price for 748 & 855 Springdale Drive was $5.3 million.
The combined statements of revenue and certain expenses reflect the
operations of 748 & 855 Springdale Drive. These combined statements of revenue
and certain expenses are to be included in the Company's Current Report on Form
8-K as the acquisition has been deemed significant pursuant to the rules and
regulations of the Securities and Exchange Commission.
The accounting records of 748 & 855 Springdale Drive are maintained on a
cash basis. Adjusting entries have been made to present the accompanying
financial statement 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 748 & 855 Springdale Drive.
The combined statements of revenue and certain expenses for the three months
ended March 31, 1997 and 1996, are unaudited. In the opinion of management, all
adjustments necessary to present fairly the revenue and certain expenses of 748
& 855 Springdale Drive for the three months ended March 31,1997 and 1996 have
been included. The combined revenue and certain expenses for such interim
periods are 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 amounts of assets and liabilities which affect the
reported amounts of revenues and expenses during the reporting period. The
ultimate results could differ from those estimates.
F-22
<PAGE>
2. OPERATING LEASES:
Base rents presented for the year ended December 31, 1996, and the three
months ended March 31, 1997 and 1996, include straight-line adjustments for
rental revenue increases in accordance with generally accepted accounting
principles. The aggregate rental revenue increase (decrease) resulting from the
straight-line adjustments for the year ended December 31, 1996, and the three
months ended March 31, 1997 and 1996, was ($1,000), ($3,000) (unaudited) and
($1,000,)
($3,000)(unaudited) and $1,000 (unaudited), respectively.
During 1996, rental revenues earned under leases with Environmental
Resources Management, Inc. and Automated Financial Systems, Inc. were $735,000
and $129,000, respectively. Each of these leases individually represented
greater than 10 % of 748 & 855 Springdale Drive's total rental revenue in 1996.
748 & 855 Springdale Drive are 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:
<TABLE>
<S> <C>
1997.............................................................. $ 949,000
1998.............................................................. 945,000
1999.............................................................. 779,000
2000.............................................................. 786,000
2001.............................................................. 465,000
</TABLE>
Certain leases also include provisions requiring tenants to reimburse 748 &
855 Springdale Drive for management costs and other operating expenses up to
stipulated amounts.
F-23
<PAGE>
1974 SPROUL ROAD, BROOMALL, PENNSYLVANIA
SALE AGREEMENT
BETWEEN
METROPOLITAN LIFE INSURANCE COMPANY
AS SELLER
AND
BRANDYWINE REALTY TRUST
AS PURCHASER
Dated as of , 1997
-------------------------------
<PAGE>
SALE AGREEMENT
THIS SALE AGREEMENT (the "Agreement") is made as of this __________ day of
_________________________, 1997 (the "Effective Date", being the date of
Seller's execution hereof), by and between METROPOLITAN LIFE INSURANCE COMPANY,
a New York corporation, ("Seller" ) and BRANDYWINE REALTY TRUST, a Maryland real
estate investment trust ("Purchaser").
W I T N E S S E T H:
ARTICLE I
PURCHASE AND SALE
Section 1.1 Agreement of Purchase and Sale. Subject to the terms and
conditions hereinafter set forth, Seller agrees to sell and convey to
Purchaser, and Purchaser agrees to purchase from Seller, the following:
(a) that certain tract or parcel of land located at and known as
1974 Sproul Road, Broomall, Marple Township, Delaware County, Pennsylvania,
more particularly described in Exhibit A attached hereto and made a part
hereof, together with all rights and appurtenances pertaining to such
property, including any right, title and interest of Seller in and to
adjacent streets, alleys or rights-of-way (the property described in this
clause (a) being herein referred to collectively as the "Land");
(b) the buildings, structures, fixtures and other improvements
affixed to or located on the Land, excluding fixtures owned by tenants (the
property described in this clause (b) being herein referred to collectively
as the "Improvements");
(c) any and all of Seller's right, title and interest in and to all
tangible personal property located upon the Land or within the Improvements,
including, without limitation, any and all appliances, furniture, carpeting,
draperies and curtains, tools and supplies, and other items of personal
property owned by Seller (excluding cash and any software), located on and
used exclusively in connection with the operation of the Land and the
Improvements, which personal property includes without limitation the
personal property listed on Exhibit B attached hereto (the property described
in this clause (c) being herein referred to collectively as the "Personal
Property");
(d) any and all of Seller's right, title and interest in and to the
leases, licenses and occupancy agreements covering all or any portion of the
Real Property, to the extent they are in effect on the date of the Closing
(as such term is defined in Section 4.1 hereof) (the property described in
this clause (d) being herein referred to collectively as the "Leases", as
listed on Exhibit C attached hereto), together with all rents and other
2
<PAGE>
sums due thereunder (the "Rents") and any and all security deposits in
Seller's possession in connection therewith (the "Security Deposits"); and
(e) any and all of Seller's right, title and interest in and to:
(i) the contracts and agreements (collectively, the "Operating Agreements")
listed and described on Exhibit D attached hereto and made a part hereof,
relating to the upkeep, repair, maintenance or operation of the Land,
Improvements or Personal Property, to the extent assignable, specifically
including the Operating Agreement with Grinnell Fire Protection Systems
Company but excepting any other Operating Agreements which Purchaser notifies
Seller to terminate by notice given to Seller by not later than the
expiration of the Inspection Period, which shall be terminated by Seller as
of the date of the Closing or as soon thereafter as is permitted by the
Operating Agreement in question; (ii) all assignable existing warranties and
guaranties (express or implied) issued to Seller in connection with the
Improvements or the Personal Property; (iii) all assignable existing permits,
licenses, approvals and authorizations issued by any governmental authority
in connection with the Property; and (iv) the right to the name "1974 Sproul
Road" (the property described in this clause (e) being sometimes herein
referred to collectively as the "Intangibles").
Section 1.2 Property Defined. The Land and the Improvements are
hereinafter sometimes referred to collectively as the "Real Property". The
Land, the Improvements, the Personal Property, the Leases and the Intangibles
are hereinafter sometimes referred to collectively as the "Property".
Section 1.3 Purchase Price. Seller is to sell and Purchaser is to
purchase the Property for the amount of FOUR MILLION ONE HUNDRED TWENTY-FIVE
THOUSAND DOLLARS ($4,125,000.00) (the "Purchase Price").
Section 1.4 Payment of Purchase Price. The Purchase Price, as increased
or decreased by prorations and adjustments as herein provided, shall be
payable in full at the Closing in cash by wire transfer of immediately
available funds to a bank account designated by Seller in writing to
Purchaser prior to the Closing.
Section 1.5 Deposit.
(a) Simultaneously with the execution and delivery of this
Agreement, Purchaser is depositing with COMMONWEALTH LAND TITLE INSURANCE
COMPANY of 1700 Market Street, Philadelphia, Pennsylvania 19103 ("Escrow
Agent"), the sum of TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000.00) (the
"Initial Deposit") in good funds, either by certified bank or cashier's check
or by federal wire transfer.
(b) On or before the expiration of the Inspection Period, as defined
in Section 3.1 hereof, Purchaser shall deliver to Escrow Agent the sum of FIFTY
3
<PAGE>
THOUSAND DOLLARS ($50,000.00) (the "Second Deposit") in good funds, either by
certified check or cashier's check or by federal wire transfer. The Initial
Deposit and the Second Deposit, together with any interest thereon, are
collectively referred to hereinafter as the "Deposit". Upon the delivery of
the Second Deposit to Escrow Agent, the Inspection Period and the Title
Inspection Period, as defined in Section 2.1 hereof, shall be deemed to have
expired.
(c) Escrow Agent shall hold the Deposit in an interest-bearing
account reasonably acceptable to Seller and Purchaser, in accordance with the
terms and conditions of this Agreement. All interest on such sum shall be
deemed income of Purchaser, and Purchaser shall be responsible for the
payment of all costs and fees imposed on the Deposit account. The Deposit
and all accrued interest shall be distributed in accordance with the terms of
this Agreement. The failure of Purchaser to timely deliver any Deposit
hereunder shall be a material default, and shall entitle Seller, at Seller's
sole option, to terminate this Agreement immediately.
Section 1.6 Escrow Agent. Escrow Agent shall hold and dispose of the
Deposit and any accrued interest thereon in accordance with the terms of this
Agreement. Seller and Purchaser agree that the duties of Escrow Agent
hereunder are purely ministerial in nature and shall be expressly limited to
the safekeeping and disposition of the Deposit and any accrued interest
thereon in accordance with this Agreement. Escrow Agent shall incur no
liability in connection with the safekeeping or disposition of the Deposit
and any accrued interest thereon for any reason other than Escrow Agent's
willful misconduct or gross negligence. In the event that Escrow Agent shall
be in doubt as to its duties or obligations with regard to the Deposit and
any accrued interest thereon, or in the event that Escrow Agent receives
conflicting instructions from Purchaser and Seller with respect to the
Deposit and any accrued interest thereon, Escrow Agent shall not be required
to disburse the Deposit or any accrued interest thereon and may, at its
option, continue to hold the Deposit and any accrued interest thereon until
both Purchaser and Seller agree as to its disposition, or until a final
judgment is entered by a court of competent jurisdiction directing its
disposition, or Escrow Agent may interplead the Deposit and any accrued
interest thereon in accordance with the laws of the state in which the
Property is located.
Escrow Agent shall not be responsible for any interest on the Deposit
except as is actually earned, or for the loss of any interest resulting from
the withdrawal of the Deposit or any accrued interest thereon prior to the
date interest is posted thereon.
Escrow Agent shall execute this Agreement solely for the purpose of being
bound by the provisions of Sections 1.5 and 1.6 hereof.
4
<PAGE>
ARTICLE II
TITLE AND SURVEY
Section 2.1 Title Inspection Period. During the period beginning upon
the Effective Date and ending at 5:00 p.m. (local time at the Property) on
the fifteenth (15th) day thereafter (hereinafter referred to as the "Title
Inspection Period"), Purchaser shall have the right to review (a) a current
preliminary title report on the Real Property, accompanied by copies of all
documents referred to in the report, which shall be obtained by Purchaser
promptly after the Effective Date; (b) copies of the most recent property tax
bills for the Property, which Purchaser acknowledges have previously been
provided by Seller; (c) a survey of the Real Property prepared by a licensed
surveyor or engineer hired by Purchaser (the "Survey"); and (d) copies of
Seller's existing title insurance policy and survey for the Real Property,
which Purchaser acknowledges have previously been provided by Seller.
Purchaser shall provide Seller with copies of the items described in clauses
(a) and (c) above promptly upon Purchaser's receipt thereof.
Section 2.2 Title Examination. Purchaser shall notify Seller in writing
(the "Title Notice") prior to the expiration of the Title Inspection Period
which exceptions to title (including survey matters), if any, will not be
accepted by Purchaser. If Purchaser fails to notify Seller in writing of its
disapproval of any exceptions to title by the expiration of the Title
Inspection Period, Purchaser shall be deemed to have approved the condition
of title to the Real Property. If Purchaser notifies Seller in writing that
Purchaser objects to any exceptions to title, Seller shall notify Purchaser
prior to the Closing either (a) that Seller will remove such objectionable
exceptions from title on or before the Closing; provided that Seller may
extend the Closing for such period as shall be required to effect such cure,
but not beyond thirty (30) days; or (b) that Seller elects not to cause such
exceptions to be removed. The procurement by Seller of a commitment for the
issuance of the Title Policy (as defined in Section 2.5 hereof) or an
endorsement thereto insuring Purchaser against any title exception which was
disapproved pursuant to this Section 2.2 shall be deemed a cure by Seller of
such disapproval. If Seller gives Purchaser notice under clause (b) above,
Purchaser shall notify Seller prior to the Closing either that Purchaser will
nevertheless proceed with the purchase and take title to the Property subject
to such exceptions, or that Purchaser will terminate this Agreement. If this
Agreement is terminated pursuant to the foregoing provisions of this
paragraph, then neither party shall have any further rights or obligations
hereunder (except for any indemnity obligations of either party pursuant to
the other provisions of this Agreement), the Deposit and any accrued interest
thereon shall be returned to Purchaser and each party shall bear its own
costs incurred hereunder. If Purchaser shall fail to notify Seller of its
election prior to the Closing, Purchaser shall be deemed to have elected to
proceed with the purchase and take title to the Property subject to such
exceptions.
5
<PAGE>
Section 2.3 Pre-Closing "Gap" Title Defects. Purchaser may, at or prior
to the Closing, notify Seller in writing (the "Gap Notice") of any objections
to title (a) raised by the Title Company between the expiration of the Title
Inspection Period and the Closing and (b) not disclosed by the Title Company
or otherwise known to Purchaser prior to the expiration of the Title
Inspection Period; provided that Purchaser must notify Seller of such
objection to title within two (2) business days of being made aware of the
existence of such exception. If Purchaser sends a Gap Notice to Seller,
Purchaser and Seller shall have the same rights and obligations with respect
to such notice as apply to a Title Notice under Section 2.2 hereof.
Section 2.4 Permitted Exceptions. The Property shall be conveyed
subject to the following matters, which are hereinafter referred to as the
"Permitted Exceptions":
(a) those matters which are not objected to in writing within the
time periods provided in Sections 2.2 or 2.3 hereof or which, if objected to
in writing by Purchaser, are those which Seller has elected not to remove or
cure or has been unable to remove or cure, and subject to which Purchaser has
elected or is deemed to have elected to accept the conveyance of the Property;
(b) the rights of tenants under the Leases;
(c) the lien of all ad valorem real estate taxes and assessments
not yet due and payable as of the date of the Closing, subject to adjustment
as herein provided;
(d) local, state and federal laws, ordinances or governmental
regulations, including but not limited to building and zoning laws,
ordinances and regulations, now or hereafter in effect relating to the
Property; and
(e) items shown on the Survey and not objected to by Purchaser or
waived or deemed waived by Purchaser in accordance with Section 2.2 hereof.
Section 2.5 Conveyance of Title. At the Closing, Seller shall convey
and transfer to Purchaser fee simple title to the Land and Improvements, by
execution and delivery of the Deed (as defined in Section 4.2(a) hereof).
Evidence of delivery of such title shall be the issuance by Commonwealth Land
Title Insurance Company (the "Title Company"), or another national title
company, of an owner's policy of title insurance (the "Title Policy")
covering the Real Property, in the full amount of the Purchase Price, subject
only to the Permitted Exceptions.
ARTICLE III
REVIEW OF PROPERTY
6
<PAGE>
Section 3.1 Right of Inspection. Promptly after the Effective Date,
Seller shall provide Purchaser with copies of the Leases as listed on Exhibit
C attached hereto and copies of the Operating Agreements as listed on Exhibit
D attached hereto. During the period beginning upon the Effective Date and
ending at 5:00 p.m. (local time at the Property) on the fifteen (15th) day
thereafter (hereinafter referred to as the "Inspection Period"), Purchaser
shall have the right to examine the Leases and Operating Agreements and to
make a physical inspection of the Real Property, including an inspection of
the environmental condition thereof pursuant to the terms and conditions of
this Agreement, and to examine at the Property (or the property manager's
office, as the case may be) documents and files located at the Property or
the property manager's office concerning the leasing, maintenance and
operation of the Property, but excluding Seller's partnership or corporate
records, internal memoranda, financial projections, budgets, appraisals,
accounting and tax records and similar proprietary, confidential or
privileged information (collectively, the "Confidential Documents").
Purchaser understands and agrees that any on-site inspections of the
Property shall occur at reasonable times agreed upon by Seller and Purchaser
after reasonable prior written notice to Seller and shall be conducted so as
not to interfere unreasonably with the use of the Property by Seller or its
tenants. Seller reserves the right to have a representative present during
any such inspections. If Purchaser desires to do any invasive testing at the
Property, Purchaser shall do so only after notifying Seller and obtaining
Seller's prior written consent thereto, which consent may be subject to any
terms and conditions imposed by Seller in its sole discretion, including
without limitation the prompt restoration of the Property to its condition
prior to any such inspections or tests, at Purchaser's sole cost and expense.
Purchaser will furnish to Seller copies of any reports received by Purchaser
relating to any inspections of the Property promptly after Purchaser's
receipt thereof. Purchaser agrees to protect, indemnify, defend and hold
Seller harmless from and against any claim for liabilities, losses, costs,
expenses (including reasonable attorneys' fees), damages or injuries arising
out of or resulting from the inspection of the Property by Purchaser or its
agents or consultants, and notwithstanding anything to the contrary in this
Agreement, such obligation to indemnify and hold harmless Seller shall
survive the Closing or any termination of this Agreement.
Section 3.2 Environmental Reports. SELLER SHALL PROVIDE PURCHASER WITH
COPIES OF THE ENVIRONMENTAL REPORTS LISTED ON EXHIBIT E ATTACHED HERETO
PROMPTLY AFTER THE EFFECTIVE DATE. IF SELLER ELECTS TO SECURE ANY UPDATED OR
ADDITIONAL ENVIRONMENTAL REPORTS PRIOR TO THE CLOSING, SELLER SHALL PROVIDE
PURCHASER WITH COPIES OF ALL SUCH REPORTS PROMPTLY UPON SELLER'S RECEIPT
THEREOF. PURCHASER ACKNOWLEDGES THAT ANY ENVIRONMENTAL REPORTS DELIVERED OR
TO BE DELIVERED BY SELLER OR ITS AGENTS OR CONSULTANTS TO PURCHASER ARE MADE
AVAILABLE SOLELY AS AN
7
<PAGE>
ACCOMMODATION TO PURCHASER AND MAY NOT BE RELIED UPON BY PURCHASER IN
CONNECTION WITH THE PURCHASE OF THE PROPERTY. PURCHASER AGREES THAT SELLER
SHALL HAVE NO LIABILITY OR OBLIGATION WHATSOEVER FOR ANY INACCURACY IN OR
OMISSION FROM ANY ENVIRONMENTAL REPORT. PURCHASER HAS CONDUCTED, OR WILL
CONDUCT PRIOR TO THE EXPIRATION OF THE INSPECTION PERIOD, ITS OWN
INVESTIGATION OF THE ENVIRONMENTAL CONDITION OF THE PROPERTY TO THE EXTENT
PURCHASER DEEMS SUCH AN INVESTIGATION TO BE NECESSARY OR APPROPRIATE.
Section 3.3 Right of Termination. If for any reason whatsoever
Purchaser determines that the Property or any aspect thereof is unsuitable
for Purchaser's acquisition, Purchaser shall have the right to terminate this
Agreement by giving written notice thereof to Seller prior to the expiration
of the Inspection Period, and if Purchaser gives such notice of termination
within the Inspection Period, this Agreement shall terminate. If this
Agreement is terminated pursuant to the foregoing provisions of this
paragraph, then neither party shall have any further rights or obligations
hereunder (except for any indemnity obligations of either party pursuant to
the other provisions of this Agreement), the Deposit and any accrued interest
thereon shall be returned to Purchaser and each party shall bear its own
costs incurred hereunder. If Purchaser fails to give Seller a notice of
termination prior to the expiration of the Inspection Period, Purchaser shall
be deemed to have approved all aspects of the Property (except title and
survey, which shall be governed by Article II hereof) and to have elected to
proceed with the purchase of the Property pursuant to the terms hereof.
Section 3.4 Review of Tenant Estoppels. Seller shall deliver to each
tenant of the Property an estoppel certificate in substantially the form of
Exhibit F attached hereto (the "Tenant Estoppels"), and shall request that
the tenants complete and sign the Tenant Estoppels and return them to Seller.
Seller shall deliver copies of the completed Tenant Estoppels to Purchaser as
Seller receives them. If Purchaser determines that an executed Tenant
Estoppel is unacceptable, Purchaser shall notify Seller of such determination
within three (3) business days of Purchaser's receipt of such executed Tenant
Estoppel from Seller, and shall include in such notice a statement of
Purchaser's reasons for such determination, provided that Purchaser may not
object to any executed Tenant Estoppel which is in conformity with Exhibit F
and the terms of the Lease in question. Any executed Tenant Estoppel as to
which Purchaser fails to give such notice of objection within such three (3)
business day period shall be deemed acceptable to Purchaser. In the event
Seller fails to obtain Tenant Estoppels (or, in lieu thereof, at Seller's
option, Seller estoppels) that are acceptable to Purchaser with respect to
tenants of the Property that meet the tenant estoppel standards described on
Exhibit G attached hereto at or prior to the Closing, Purchaser shall have
the right to terminate this Agreement by written notice to Seller. If this
Agreement is terminated pursuant to the
8
<PAGE>
foregoing provisions of this paragraph, then neither party shall have any
further rights or obligations hereunder (except for any indemnity obligations
of either party pursuant to the other provisions of this Agreement), the
Deposit and any accrued interest thereon shall be returned to Purchaser and
each party shall bear its own costs incurred hereunder. If Purchaser fails
to give Seller a notice of termination as set forth above, Purchaser shall be
deemed to have approved the Tenant Estoppels (or Seller estoppels in lieu
thereof, if applicable) and to have elected to proceed with the purchase of
the Property pursuant to the terms hereof. Any Tenant Estoppel which is
received from a tenant after Seller provides its own estoppel in lieu thereof
may be substituted for Seller's estoppel, after which Seller shall have no
further liability thereunder, provided that such Tenant Estoppel contains no
changes or, if changed, is otherwise reasonably acceptable to Purchaser. The
provisions of this Section 3.4 shall survive the Closing.
ARTICLE IV
CLOSING
Section 4.1 Time and Place. The consummation of the transaction
contemplated by this Agreement (the "Closing") shall be held at the offices
of Purchaser's attorney, Brad A. Molotsky, Esq. of the law firm of Pepper
Hamilton & Scheetz LLP, 3000 Two Logan Square, Philadelphia, Pennsylvania on
the tenth (10th) day after expiration of the Inspection Period, or, if that
date is a Saturday, Sunday or holiday, the next business day thereafter. At
the Closing, Seller and Purchaser shall perform the obligations set forth in,
respectively, Section 4.2 and Section 4.3 hereof, the performance of which
obligations shall be concurrent conditions; provided that the Deed shall not
be recorded until Seller receives confirmation that Seller has received the
full amount of the Purchase Price, adjusted by prorations as set forth
herein. The Closing shall be consummated through an escrow administered by
Purchaser's said attorney and the Purchase Price and all documents shall be
deposited with Purchaser's said attorney as escrowee.
Section 4.2 Seller's Obligations at the Closing. At the Closing, Seller
shall:
(a) deliver to Purchaser a duly executed Special Warranty Deed (the
"Deed") in the form attached hereto as Exhibit H, conveying the Land and
Improvements, subject only to the Permitted Exceptions; the warranty of title
in the Deed will be only as to claims made by, through or under Seller and
not otherwise;
(b) deliver to Purchaser a duly executed bill of sale (the "Bill of
Sale") conveying the Personal Property without warranty of title or use and
without warranty, express or implied, as to merchantability and fitness for
any purpose and in the form attached hereto as Exhibit I;
9
<PAGE>
(c) assign to Purchaser, and Purchaser shall assume, the
landlord/lessor interest in and to the Leases, Rents and Security Deposits,
and any and all obligations to pay leasing commissions and finder's fees with
respect to the Leases and amendments, renewals, extensions and expansions
thereof, to the extent provided in Section 4.4(b)(v) hereof, by duly executed
assignment and assumption agreement (the "Assignment and Assumption of
Leases") in the form attached hereto as Exhibit J pursuant to which (i)
Seller shall indemnify Purchaser and hold Purchaser harmless from and against
any and all claims pertaining thereto arising prior to the Closing and (ii)
Purchaser shall indemnify Seller and hold Seller harmless from and against
any and all claims pertaining thereto arising from and after the Closing,
including without limitation, claims made by tenants with respect to tenants'
Security Deposits to the extent paid, credited or assigned to Purchaser;
(d) to the extent assignable, assign to Purchaser, and Purchaser
shall assume, Seller's interest in the Operating Agreements, other than those
to be terminated pursuant to Section 1.1(e), and the other Intangibles by
duly executed assignment and assumption agreement (the "Assignment and
Assumption of Intangibles") in the form attached hereto as Exhibit K pursuant
to which (i) Seller shall indemnify Purchaser and hold Purchaser harmless
from and against any and all claims pertaining thereto arising prior to the
Closing and (ii) Purchaser shall indemnify Seller and hold Seller harmless
from and against any and all claims pertaining thereto arising from and after
the Closing;
(e) join with Purchaser to execute a notice (the "Tenant Notice")
in the form attached hereto as Exhibit L, which Purchaser shall send to each
tenant under each of the Leases promptly after the Closing, informing such
tenant of the sale of the Property and of the assignment to Purchaser of
Seller's interest in, and obligations under, the Leases (including, if
applicable, any Security Deposits), and directing that all Rents and other
sums payable after the Closing under each such Lease be paid as set forth in
the notice;
(f) in the event that any representation or warranty of Seller set
forth herein needs to be modified due to changes since the Effective Date,
deliver to Purchaser a certificate, dated as of the date of the Closing and
executed on behalf of Seller by a duly authorized officer thereof,
identifying any representation or warranty which is not, or no longer is,
true and correct and explaining the state of facts giving rise to the change.
In no event shall Seller be liable to Purchaser for, or be deemed to be in
default hereunder by reason of, any breach of representation or warranty
which results from any change that (i) occurs between the Effective Date and
the date of the Closing and (ii) is expressly permitted under the terms of
this Agreement or is beyond the reasonable control of Seller to prevent;
provided, however, that the occurrence of a change which is not permitted
hereunder or is beyond the reasonable control of Seller to prevent shall, if
materially adverse to Purchaser, constitute the non-fulfillment of the
condition set forth in
10
<PAGE>
Section 4.6(b) hereof, which shall entitle Purchaser, at Purchaser's sole
option, to terminate this Agreement. If this Agreement is terminated
pursuant to the foregoing provisions of this paragraph, then neither party
shall have any further rights or obligations hereunder (except for any
indemnity obligations of either party pursuant to the other provisions of
this Agreement), the Deposit and any accrued interest thereon shall be
returned to Purchaser and each party shall bear its own costs incurred
hereunder. If, despite changes or other matters described in such
certificate, the Closing occurs, Seller's representations and warranties set
forth in this Agreement shall be deemed to have been modified by all
statements made in such certificate;
(g) deliver to Purchaser such evidence as the Title Company may
reasonably require as to the authority of the person or persons executing
documents on behalf of Seller;
(h) deliver to Purchaser a certificate in the form attached hereto
as Exhibit M duly executed by Seller stating that Seller is not a "foreign
person" as defined in the Federal Foreign Investment in Real Property Tax Act
of 1980;
(i) deliver to Purchaser the Leases and Operating Agreements
assigned to Purchaser, together with such leasing and property files and
records located at the Property or the property manager's office as are
material in connection with the continued operation, leasing and maintenance
of the Property, but excluding any Confidential Documents. For a period of
three (3) years after the Closing, Purchaser shall allow Seller and its
agents and representatives access without charge to all files, records and
documents delivered to Purchaser at the Closing, upon reasonable advance
notice and at all reasonable times, to examine and make copies of any and all
such files, records and documents, which right shall survive the Closing;
(j) deliver such affidavits as may be customarily and reasonably
required by the Title Company, in a form reasonably acceptable to Seller, to
the effect that there are no parties in possession other than tenants under
the Leases and that no work has been performed or materials or services
provided that have not been fully paid for and that could give rise to the
filing of a mechanics' lien;
(k) deliver to Purchaser possession and occupancy of the Property,
subject to the Permitted Exceptions;
(l) execute a closing statement acceptable to Seller; and
(m) deliver such additional documents as shall be reasonably
required to consummate the transaction contemplated by this Agreement.
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<PAGE>
Section 4.3 Purchaser's Obligations at the Closing. At the Closing,
Purchaser shall:
(a) pay to Seller the full amount of the Purchase Price (which
amount shall include the Deposit and any accrued interest thereon), as
increased or decreased by prorations and adjustments as herein provided, in
immediately available wire transferred funds pursuant to Section 1.4 hereof;
(b) join Seller in execution of the Assignment and Assumption of
Leases, the Assignment and Assumption of Intangibles, and the Tenant Notices;
(c) in the event that any representation or warranty of Purchaser
set forth herein needs to be modified due to changes since the Effective
Date, deliver to Seller a certificate, dated as of the date of the Closing
and executed on behalf of Purchaser by a duly authorized representative
thereof, identifying any such representation or warranty which is not, or no
longer is, true and correct and explaining the state of facts giving rise to
the change. In no event shall Purchaser be liable to Seller for, or be deemed
to be in default hereunder by reason of, any breach of representation or
warranty which results from any change that (i) occurs between the Effective
Date and the date of the Closing and (ii) is expressly permitted under the
terms of this Agreement or is beyond the reasonable control of Purchaser to
prevent; provided, however, that the occurrence of a change which is not
permitted hereunder or is beyond the reasonable control of Purchaser to
prevent shall, if materially adverse to Seller, constitute the
non-fulfillment of the condition set forth in Section 4.7(c) hereof; if,
despite changes or other matters described in such certificate, the Closing
occurs, Purchaser's representations and warranties set forth in this
Agreement shall be deemed to have been modified by all statements made in
such certificate;
(d) deliver to Seller such evidence as the Title Company may
reasonably require as to the authority of the person or persons executing
documents on behalf of Purchaser;
(e) deliver such affidavits as may be customarily and reasonably
required by the Title Company, in a form reasonably acceptable to Purchaser;
(f) execute a closing statement acceptable to Purchaser; and
(g) deliver such additional documents as shall be reasonably
required to consummate the transaction contemplated by this Agreement.
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<PAGE>
Section 4.4 Credits and Prorations.
(a) All income and expenses of the Property shall be apportioned as
of 12:01 a.m. on the day of the Closing as if Purchaser were vested with
title to the Property during the entire day upon which the Closing occurs.
Such prorated items shall include without limitation the following:
(i) all Rents, if any;
(ii) taxes and assessments (including personal property taxes on the
Personal Property) levied against the Property;
(iii) utility charges for which Seller is liable, if any, such
charges to be apportioned at the Closing on the basis of the most recent
meter reading occurring prior to the Closing (dated not more than fifteen
(15) days prior to the Closing) or, if unmetered, on the basis of a current
bill for each such utility;
(iv) all amounts payable under brokerage agreements and Operating
Agreements, pursuant to the terms of this Agreement; and
(v) any other operating expenses or other items pertaining to the
Property which are customarily prorated between a purchaser and a seller in
the county in which the Property is located.
(b) Notwithstanding anything contained in Section 4.4(a) hereof:
(i) At the Closing, (A) Seller shall, at Seller's option, either
deliver to Purchaser any Security Deposits actually held by Seller pursuant
to the Leases or credit to the account of Purchaser the amount of such
Security Deposits (to the extent such Security Deposits have not been applied
against delinquent Rents or otherwise as provided in the Leases), and (B)
Seller shall be entitled to receive and retain all refundable cash or other
deposits posted with utility companies serving the Property;
(ii) Any taxes paid at or prior to the Closing shall be prorated
based upon the amounts actually paid. If taxes and assessments due and
payable during the year of the Closing have not been paid before the Closing,
Seller shall be charged at the Closing an amount equal to that portion of
such taxes and assessments which relates to the period before the Closing and
Purchaser shall pay the taxes and assessments prior to their becoming
delinquent. Any such apportionment made with respect to a tax year for which
the tax rate or assessed valuation, or both, have not yet been fixed shall be
based upon the tax rate and/or assessed valuation last fixed. To the extent
that the actual taxes and assessments for the current year differ from the
amount apportioned at the Closing, the parties shall make all necessary
adjustments by appropriate payments between
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themselves within thirty (30) days after such amounts are determined
following the Closing, subject to the provisions of Section 4.4(d) hereof;
(iii) Charges referred to in Section 4.4(a) hereof which are
payable by any tenant to a third party shall not be apportioned hereunder,
and Purchaser shall accept title subject to any of such charges unpaid and
Purchaser shall look solely to the tenant responsible therefor for the
payment of the same. If Seller shall have paid any of such charges on behalf
of any tenant, and shall not have been reimbursed therefor by the time of the
Closing, Purchaser shall credit to Seller an amount equal to all such charges
so paid by Seller;
(iv) As to utility charges referred to in Section 4.4(a)(iii)
hereof, Seller may on notice to Purchaser elect to pay one or more of all of
said items accrued to the date hereinabove fixed for apportionment directly
to the person or entity entitled thereto, and to the extent Seller so elects,
such item shall not be apportioned hereunder, and Seller's obligation to pay
such item directly in such case shall survive the Closing or any termination
of this Agreement;
(v) Purchaser shall be responsible for the payment of (A) all
Tenant Inducement Costs (as hereinafter defined) and leasing commissions
which become due and payable (whether before or after the Closing) as a
result of any new Leases, or any renewals, extensions, amendments or
expansions of existing Leases, which are signed during the Lease Approval
Period (as hereinafter defined) and which are approved or deemed approved in
accordance with Section 5.4 hereof or do not require Purchaser's approval
under Section 5.4 hereof; (B) all Tenant Inducement Costs and leasing
commissions with respect to new Leases, or renewals, extensions, amendments
or expansions of existing Leases, signed or entered into from and after the
date of the Closing; and (C) all Tenant Inducement Costs and leasing
commissions listed on Exhibit N attached hereto. If, as of the date of the
Closing, Seller shall have paid any Tenant Inducement Costs or leasing
commissions for which Purchaser is responsible pursuant to the foregoing
provisions, Purchaser shall reimburse Seller therefor at the Closing. For
purposes hereof, the term "Tenant Inducement Costs" shall mean any
out-of-pocket payments required under a Lease to be paid by the landlord
thereunder to or for the benefit of the tenant thereunder which is in the
nature of a tenant inducement, including specifically, without limitation,
tenant improvement costs, lease buyout costs, and moving, design,
refurbishment and club membership allowances. The term "Tenant Inducement
Costs" shall not include loss of income resulting from any free rental
period, it being agreed that Seller shall bear the loss resulting from any
free rental period until the date of the Closing and that Purchaser shall
bear such loss from and after the date of the Closing. For purposes hereof,
the term "Lease Approval Period" shall mean the period from the Effective
Date until the date of the Closing;
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(vi) Unpaid and delinquent Rents collected by Seller and Purchaser
after the date of the Closing shall be delivered as follows: (a) if Seller
collects any unpaid or delinquent Rents for the Property, Seller shall,
within fifteen (15) days after the receipt thereof, deliver to Purchaser any
such Rents to which Purchaser is entitled hereunder relating to the date of
the Closing and any period thereafter, and (b) if Purchaser collects any
unpaid or delinquent Rents for the Property, Purchaser shall, within fifteen
(15) days after the receipt thereof, deliver to Seller any such Rents which
Seller is entitled to hereunder relating to the period prior to the date of
the Closing. Seller and Purchaser agree that (i) all Rents which are
received by Seller or Purchaser within the first thirty (30) day period after
the date of the Closing shall be applied first to unpaid Rents for the month
in which the Closing occurred, then to current Rents, and then to delinquent
Rents, if any, in the order of their maturity, and (ii) all Rents received by
Seller or Purchaser after the first thirty (30) day period after the date of
the Closing shall be applied first to current Rents and then to delinquent
Rents, if any, in the inverse order of maturity. Purchaser will make a good
faith effort after the Closing to collect all Rents in the usual course of
Purchaser's operation of the Property, but Purchaser will not be obligated to
institute any lawsuit or other collection procedures to collect delinquent
Rents. Seller may attempt to collect any delinquent Rents owed Seller and
may institute any lawsuit or collection procedures, but may not evict any
tenant. In the event that there shall be any Rents or other charges under
any Leases which, although relating to a period prior to the Closing, do not
become due and payable until after the Closing or are paid prior to the
Closing but are subject to adjustment after the Closing (such as year end
common area expense reimbursements and the like), then any Rents or charges
of such type received by Purchaser or its agents or Seller or its agents
subsequent to the Closing shall, to the extent applicable to a period
extending through the Closing, be prorated between Seller and Purchaser as of
the Closing and Seller's portion thereof shall be remitted promptly to Seller
by Purchaser.
(c) Seller may continue to prosecute any appeal of the real
property tax assessment for prior tax periods, and may take related action
which Seller deems appropriate in connection therewith. Purchaser shall
cooperate with Seller in connection with such appeal and collection of a
refund of real property taxes paid. Seller owns and holds all right, title
and interest in and to such appeal and refund, and all amounts payable in
connection therewith shall be paid directly to Seller by the applicable
authorities. If such refund or any part thereof is received by Purchaser,
Purchaser shall promptly pay such amount to Seller. Any refund received by
Seller shall be distributed as follows: first, to reimburse Seller for all
costs incurred in connection with the appeal; second, with respect to refunds
payable to tenants of the Real Property pursuant to the Leases, to such
tenants in accordance with the terms of such Leases; and third, to Seller to
the extent such appeal covers the period prior to the Closing, and to
Purchaser to the extent such appeal covers the period as of the Closing and
thereafter. If and to the extent
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any such appeal covers the period after the Closing, Purchaser shall have the
right to participate in such appeal.
(d) Except as otherwise provided herein, any revenue or expense
amount which cannot be ascertained with certainty as of the Closing shall be
prorated on the basis of the parties' reasonable estimates of such amount,
and shall be the subject of a final proration as soon after the Closing as
the precise amounts can be ascertained. Purchaser shall promptly notify
Seller when it becomes aware that any such estimated amount has been
ascertained. Once all revenue and expense amounts have been ascertained,
Purchaser shall prepare, and certify as correct, a final proration statement
which shall be subject to Seller's approval. Upon Seller's acceptance and
approval of any final proration statement submitted by Purchaser, such
statement shall be conclusively deemed to be accurate and final.
(e) Subject to the final sentence of Section 4.4(d) hereof, the
provisions of this Section 4.4 shall survive the Closing.
Section 4.5 Transaction Taxes and Closing Costs.
(a) Seller and Purchaser shall execute such returns, questionnaires
and other documents as shall be required with regard to all applicable real
property transaction taxes imposed by applicable federal, state or local law
or ordinance.
(b) Seller shall pay the fees of any counsel representing Seller in
connection with this transaction. Seller shall also pay the following costs
and expenses:
* one-half of the escrow fee, if any, which may be charged by Escrow
Agent.
* one-half of any transfer tax, sales tax, documentary stamp tax or
similar tax which becomes payable by reason of the transfer of the Property.
* the fees for Broker.
(c) Purchaser shall pay the fees of any counsel representing
Purchaser in connection with this transaction. Purchaser shall also pay the
following costs and expenses:
* one-half of the escrow fee, if any, which may be charged by Escrow
Agent or Title Company.
* the fee for the title examination and the title report or commitment
and the premium for the Title Policy, and all endorsements thereto.
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* the cost of the Survey.
* the fees for recording the Deed.
* one-half of any transfer tax, sales tax, documentary stamp tax or
similar tax which becomes payable by reason of the transfer of the Property.
(d) The Personal Property is included in this sale without charge,
except that Purchaser shall pay to Seller the amount of any and all sales or
similar taxes payable in connection with the transfer of the Personal
Property and Purchaser shall execute and deliver any tax returns required of
it in connection therewith.
(e) All costs and expenses incident to this transaction and the
closing thereof, and not specifically described above, shall be paid by the
party incurring same.
(f) The provisions of this Section 4.5 shall survive the Closing.
Section 4.6 Conditions Precedent to Obligation of Purchaser. The
obligation of Purchaser to consummate the transaction hereunder shall be
subject to the fulfillment on or before the date of the Closing of all of the
following conditions, any or all of which may be waived by Purchaser in its
sole discretion:
(a) Seller shall have delivered to Purchaser all of the items
required to be delivered to Purchaser pursuant to the terms of this
Agreement, including but not limited to, those provided for in Section 4.2
hereof.
(b) All of the representations and warranties of Seller contained
in this Agreement shall be true and correct in all material respects as of
the date of the Closing (with appropriate modifications permitted under this
Agreement).
(c) Seller shall have performed and observed, in all material
respects, all covenants and agreements of this Agreement to be performed and
observed by Seller as of the date of the Closing.
Section 4.7 Conditions Precedent to Obligation of Seller. The
obligation of Seller to consummate the transaction hereunder shall be subject
to the fulfillment on or before the date of the Closing of all of the
following conditions, any or all of which may be waived by Seller in its sole
discretion:
(a) Seller shall have received the Purchase Price as adjusted as
provided herein, pursuant to and payable in the manner provided for in this
Agreement.
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(b) Purchaser shall have delivered to Seller all of the items
required to be delivered to Seller pursuant to the terms of this Agreement,
including but not limited to, those provided for in Section 4.3 hereof.
(c) All of the representations and warranties of Purchaser
contained in this Agreement shall be true and correct in all material
respects as of the date of the Closing (with appropriate modifications
permitted under this Agreement).
(d) Purchaser shall have performed and observed, in all material
respects, all covenants and agreements of this Agreement to be performed and
observed by Purchaser as of the date of the Closing.
ARTICLE V
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 5.1 Representations and Warranties of Seller. Seller hereby
makes the following representations and warranties to Purchaser as of the
Effective Date, which representations and warranties shall be deemed to have
been made again as of the Closing, subject to Section 4.2(f) hereof:
(a) Organization and Authority. Seller has been duly organized and
is validly existing under the laws of the State of New York. Seller has the
full right and authority to enter into this Agreement and to transfer all of
the Property and to consummate or cause to be consummated the transaction
contemplated by this Agreement. The person signing this Agreement on behalf
of Seller is authorized to do so.
(b) Pending Actions. To Seller's knowledge, Seller has not
received written notice of any action, suit, arbitration, unsatisfied order
or judgment, government investigation or proceeding pending against Seller
which, if adversely determined, could individually or in the aggregate
materially interfere with the consummation of the transaction contemplated by
this Agreement.
(c) Operating Agreements. To Seller's knowledge, the Operating
Agreements listed on Exhibit D are all of the agreements concerning the
operation and maintenance of the Property entered into by Seller and
affecting the Property, except any agreement with Seller's property manager,
which shall be terminated by Seller.
(d) Lease Brokerage. To Seller's knowledge, there are no
agreements with brokers providing for the payment from and after the Closing
by Seller or Seller's successor-in-interest of leasing commissions or fees
for procuring tenants with respect to the Property, except as disclosed in
Exhibit O hereto.
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(e) Condemnation. To Seller's knowledge, Seller has received no
written notice of any condemnation proceedings relating to the Property.
(f) Litigation. To Seller's knowledge, except as set forth on
Exhibit P attached hereto, and except tenant eviction proceedings, tenant
bankruptcies, proceedings for the collection of delinquent rentals from
tenants and proceedings related to claims for personal injury or damage to
property due to events occurring at the Property, Seller has not received
written notice of any litigation which has been filed against Seller that
arises out of the ownership of the Property and would materially affect the
Property or use thereof, or Seller's ability to perform hereunder.
(g) Violations. To Seller's knowledge, except as set forth on
Exhibit Q attached hereto, Seller has not received written notice of any
uncured violation of any federal, state or local law relating to the use or
operation of the Property which would materially adversely affect the
Property or use thereof.
(h) Leases. To Seller's knowledge, the list of Leases attached
hereto as Exhibit C is accurate in all material respects and lists all of the
leases currently affecting the Property.
(i) Purchase Rights. To Seller's knowledge, Seller has not granted
any rights or options to purchase the Property to, or accepted any offers to
purchase the Property from, any party other than Purchaser.
(j) Employees of Seller. To Seller's knowledge, Seller has no
employees at the Property. Purchaser shall not be responsible for or
required to assume any employee benefit plans or severance obligations of
Seller.
(k) Statement of Tenant Delinquencies. To Seller's knowledge, the
Statement of Tenant Delinquencies attached hereto as Exhibit R is accurate in
all material respects and lists all overdue obligations of tenants at the
Property.
Section 5.2 Knowledge Defined. References to the "knowledge" of Seller
shall refer only to the current actual knowledge of the Designated Employee
(as hereinafter defined) of AEW Real Estate Advisors, Limited Partnership,
and shall not be construed, by imputation or otherwise, to refer to the
knowledge of Seller or any affiliate of Seller, to any property manager, or
to any other officer, agent, manager, representative or employee of Seller or
any affiliate thereof or to impose upon such Designated Employee any duty to
investigate the matter to which such actual knowledge, or the absence
thereof, pertains, other than to make due inquiry of Seller's property
manager for the
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Property. As used herein, the term "Designated Employee" shall refer to the
following person: Tammy Nicora.
Section 5.3 Survival of Seller's Representations and Warranties. The
representations and warranties of Seller set forth in Section 5.1 hereof as
updated as of the Closing in accordance with the terms of this Agreement,
shall survive the Closing for a period of one hundred eighty (180) days. No
claim for a breach of any representation or warranty of Seller shall be
actionable or payable if the breach in question results from or is based on a
condition, state of facts or other matter which was known to Purchaser prior
to the Closing. Seller shall have no liability to Purchaser for a breach of
any representation or warranty (a) unless the valid claims for all such
breaches collectively aggregate more than Twenty Thousand Dollars
($20,000.00), in which event the full amount, from the first dollar, of such
valid claims shall be actionable, up to the Cap (as defined in this Section),
and (b) unless written notice containing a description of the specific nature
of such breach shall have been given by Purchaser to Seller prior to the
expiration of said one hundred eighty (180) day period and an action shall
have been commenced by Purchaser against Seller within two hundred forty
(240) days of the Closing. Purchaser agrees to first seek recovery under any
insurance policies, service contracts and Leases prior to seeking recovery
from Seller, and Seller shall not be liable to Purchaser if Purchaser's claim
is satisfied from such insurance policies, service contracts or Leases. As
used herein, the term "Cap" shall mean the total aggregate amount of Three
Hundred Fifty Thousand Dollars ($350,000.00).
Section 5.4 Covenants of Seller. Seller hereby covenants with Purchaser
as follows:
(a) From the Effective Date until the Closing or earlier
termination of this Agreement, Seller shall use reasonable efforts to operate
and maintain the Property in a manner generally consistent with the manner in
which Seller has operated and maintained the Property prior to the Effective
Date.
(b) Except as provided hereinbelow, a copy of any amendment,
renewal, extension or expansion of an existing Lease or of any new Lease
which Seller wishes to execute between the Effective Date and the date of the
Closing will be submitted to Purchaser prior to execution by Seller.
Purchaser agrees to notify Seller in writing within five (5) business days
after its receipt thereof of either its approval or disapproval thereof,
including all Tenant Inducement Costs and leasing commissions to be incurred
in connection therewith. In the event Purchaser informs Seller within such
five (5) business day period that Purchaser does not approve the amendment,
renewal, extension or expansion of the existing Lease or the new Lease, which
approval shall not be unreasonably withheld, Seller shall have the right to
terminate this Agreement by written notice thereof to Purchaser within five
(5) business days after Seller's receipt of
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written notice of Purchaser's disapproval thereof. If this Agreement is
terminated pursuant to the foregoing provisions of this paragraph, then
neither party shall have any further rights or obligations hereunder (except
for any indemnity obligations of either party pursuant to the other
provisions of this Agreement), the Deposit and any accrued interest thereon
shall be returned to Purchaser and each party shall bear its own costs
incurred hereunder. In the event Purchaser fails to notify Seller in writing
of its approval or disapproval within the five (5) business day period set
forth above, Purchaser shall be deemed to have approved such new Lease,
amendment, renewal, extension or expansion. Notwithstanding the foregoing,
no amendment, renewal, extension, expansion or other modification of an
existing Lease shall require Purchaser's prior approval if it does not, under
the terms of the Lease in question, require the prior consent or approval of
the landlord thereunder. At the Closing, Purchaser shall reimburse Seller
for any Tenant Inducement Costs, leasing commissions incurred by Seller
pursuant to any amendment, renewal, extension, expansion or new Lease (i)
that is approved or deemed approved by Purchaser or (ii) that does not
require Purchaser's approval.
Section 5.5 Representations and Warranties of Purchaser. Purchaser
hereby makes the following representations and warranties to Seller as of the
Effective Date, which representations and warranties shall be deemed to have
been made again as of the Closing, subject to Section 4.3(c) hereof:
(a) Organization and Authority. Purchaser has been duly organized
and is validly existing under the laws of the State of Maryland. Purchaser
has the full right and authority to enter into this Agreement and to
consummate or cause to be consummated the transaction contemplated by this
Agreement. The person signing this Agreement on behalf of Purchaser is
authorized to do so.
(b) Pending Actions. To Purchaser's knowledge, there is no action,
suit, arbitration, unsatisfied order or judgment, government investigation or
proceeding pending against Purchaser which, if adversely determined, could
individually or in the aggregate materially interfere with the consummation
of the transaction contemplated by this Agreement.
(c) ERISA. As of the Closing, (1) Purchaser will not be an
employee benefit plan as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), which is subject to Title
I of ERISA, nor a plan as defined in Section 4975(e)(1) of the Internal
Revenue Code of 1986, as amended (each of the foregoing hereinafter referred
to collectively as "Plan"), and (2) the assets of Purchaser will not
constitute "plan assets" of one or more such Plans within the meaning of
Department of Labor ("DOL") Regulation Section 2510.3-101.
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As of the Closing, if Purchaser is a "governmental plan" as
defined in Section 3(32) of ERISA, the closing of the sale of the Property
will not constitute or result in a violation of state or local statutes
regulating investments of and fiduciary obligations with respect to
governmental plans.
As of the Closing, Purchaser will be acting on its own behalf
and not on account of or for the benefit of any Plan.
Purchaser has no present intent to transfer the Property to any
entity, person or Plan which will cause a violation of ERISA.
Purchaser shall not assign its interest under this contract of
sale to any entity, person, or Plan which will cause a violation of ERISA.
Section 5.6 Survival of Purchaser's Representations and Warranties. The
representations and warranties of Purchaser set forth in Section 5.5 hereof
as updated as of the Closing in accordance with the terms of this Agreement,
shall survive the Closing for a period of one hundred eighty (180) days.
Purchaser shall have no liability to Seller for a breach of any
representation or warranty unless written notice containing a description of
the specific nature of such breach shall have been given by Seller to
Purchaser prior to the expiration of said one hundred eighty (180) day period
and an action shall have been commenced by Seller against Purchaser within
two hundred forty (240) days of the Closing.
ARTICLE VI
DEFAULT
Section 6.1 Default by Purchaser. In the event the sale of the Property
as contemplated by this Agreement is not consummated due to Purchaser's
default hereunder, Seller shall be entitled, as its sole remedy, to terminate
this Agreement and receive the Deposit and any accrued interest thereon as
liquidated damages for the breach of this Agreement, it being agreed between
the parties hereto that the actual damages to Seller in the event of such
breach are impractical to ascertain and the amount of the Deposit and any
accrued interest thereon is a reasonable estimate thereof.
Section 6.2 Default by Seller. In the event the sale of the Property as
contemplated by this Agreement is not consummated due to Seller's default
hereunder, Purchaser shall be entitled, as its sole remedy, either (a) to
receive the return of the Deposit and any accrued interest thereon, which
return shall operate to terminate this Agreement and release Seller from any
and all liability hereunder, except that in such event Seller shall reimburse
Purchaser for up to Twenty-five Thousand Dollars ($25,000.00) for reasonably
documented expenses incurred by Purchaser in connection
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with Purchaser's investigation of the Property, or (b) to enforce specific
performance of Seller's obligation to convey the Property to Purchaser in
accordance with the terms of this Agreement, it being understood and agreed
that the remedy of specific performance shall not be available to enforce any
other obligation of Seller hereunder. Except as otherwise set forth in this
paragraph, Purchaser expressly waives its rights to seek damages in the event
of Seller's default hereunder. Purchaser shall be deemed to have elected to
terminate this Agreement and receive back the Deposit and any accrued
interest thereon if Purchaser fails to file suit for specific performance
against Seller in a court having jurisdiction in the county and state in
which the Property is located, on or before thirty (30) days following the
date upon which the Closing was to have occurred.
Section 6.3 Recoverable Damages. Notwithstanding Sections 6.1 and 6.2
hereof, in no event shall the provisions of Sections 6.1 and 6.2 limit the
damages recoverable by either party against the other party due to the other
party's obligation to indemnify such party in accordance with this Agreement.
ARTICLE VII
RISK OF LOSS
Section 7.1 Minor Damage. In the event of loss or damage to the
Property or any portion thereof which is not "Major" (as hereinafter
defined), this Agreement shall remain in full force and effect provided that
Seller shall, at Seller's option, either (a) perform any necessary repairs,
or (b) assign to Purchaser all of Seller's right, title and interest in and
to any claims and proceeds Seller may have with respect to any casualty
insurance policies or condemnation awards relating to the premises in
question. In the event that Seller elects to perform repairs upon the
Property, Seller shall use reasonable efforts to complete such repairs
promptly and the date of the Closing shall be extended a reasonable time, not
to exceed thirty (30) days, in order to allow for the completion of such
repairs. If Seller elects to assign a casualty claim to Purchaser, the
Purchase Price shall be reduced by an amount equal to the lesser of the
deductible amount under Seller's insurance policy or the cost of such repairs
as determined in accordance with Section 7.3 hereof. Upon the Closing, full
risk of loss with respect to the Property shall pass to Purchaser.
Section 7.2 Major Damage. In the event of a "Major" loss or damage,
Purchaser may terminate this Agreement by written notice to Seller, in which
event the Deposit and any accrued interest thereon shall be returned to
Purchaser. If Purchaser fails to terminate this Agreement within ten (10)
days after Seller sends Purchaser written notice of the occurrence of such
Major loss or damage (which notice shall state the cost of repair or
restoration thereof as opined by an architect in accordance with Section 7.3
hereof), then Purchaser shall be deemed to have elected to proceed with the
Closing, in which event Seller shall, at Seller's option, either (a) perform
any necessary repairs, or (b)
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assign to Purchaser all of Seller's right, title and interest in and to any
claims and proceeds Seller may have with respect to any casualty insurance
policies or condemnation awards relating to the premises in question. In the
event that Seller elects to perform repairs upon the Property, Seller shall
use reasonable efforts to complete such repairs promptly and the date of the
Closing shall be extended a reasonable time in order to allow for the
completion of such repairs. If Seller elects to assign a casualty claim to
Purchaser, the Purchase Price shall be reduced by an amount equal to the
lesser of the deductible amount under Seller's insurance policy or the cost
of such repairs as determined in accordance with Section 7.3 hereof. Upon
the Closing, full risk of loss with respect to the Property shall pass to
Purchaser.
Section 7.3 Definition of "Major" Loss or Damage. For purposes of
Sections 7.1 and 7.2, "Major" loss or damage refers to the following: (a)
loss or damage to the Property such that the cost of repairing or restoring
the premises in question to substantially the same condition which existed
prior to the event of damage would be, in the opinion of an architect
selected by Seller and reasonably approved by Purchaser, equal to or greater
than Three Hundred Fifty Thousand Dollars ($350,000.00), and (b) any loss due
to a condemnation which permanently and materially impairs the current use of
the Property as an office building. If Purchaser does not give written
notice to Seller of Purchaser's reasons for disapproving an architect within
five (5) business days after receipt of notice of the proposed architect,
Purchaser shall be deemed to have approved the architect selected by Seller.
ARTICLE VIII
COMMISSIONS
Section 8.1 Brokerage Commissions. With respect to the transaction
contemplated by this Agreement, Seller represents that its sole broker is
Cushman & Wakefield of Pennsylvania, Inc. ("Broker"), and Purchaser
represents that it has not dealt with any broker. Each party hereto agrees
that if any person or entity other than Broker makes a claim for brokerage
commissions or finder's fees related to the sale of the Property by Seller to
Purchaser, and such claim is made by, through or on account of any acts or
alleged acts of said party or its representatives, said party will protect,
indemnify, defend and hold the other party free and harmless from and against
any and all loss, liability, cost, damage and expense (including reasonable
attorneys' fees) in connection therewith. The provisions of this paragraph
shall survive the Closing or any termination of this Agreement.
ARTICLE IX
DISCLAIMERS AND WAIVERS
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Section 9.1 No Reliance on Documents. Except as expressly stated
herein, Seller makes no representation or warranty as to the truth, accuracy
or completeness of any materials, data or information delivered by Seller or
its brokers or agents to Purchaser in connection with the transaction
contemplated by this Agreement. Purchaser acknowledges and agrees that all
materials, data and information delivered by Seller to Purchaser in
connection with the transaction contemplated by this Agreement are provided
to Purchaser as a convenience only and that any reliance on or use of such
materials, data or information by Purchaser shall be at the sole risk of
Purchaser, except as otherwise expressly stated herein. Neither Seller, nor
any affiliate of Seller, nor the person or entity which prepared any report
or reports delivered by Seller to Purchaser shall have any liability to
Purchaser for any inaccuracy in or omission from any such reports.
Section 9.2 AS-IS SALE; DISCLAIMERS. EXCEPT AS EXPRESSLY SET FORTH IN
THIS AGREEMENT, IT IS UNDERSTOOD AND AGREED THAT SELLER IS NOT MAKING AND HAS
NOT AT ANY TIME MADE ANY WARRANTIES OR REPRESENTATIONS OF ANY KIND OR
CHARACTER, EXPRESS OR IMPLIED, WITH RESPECT TO THE PROPERTY, INCLUDING, BUT
NOT LIMITED TO, ANY WARRANTIES OR REPRESENTATIONS AS TO HABITABILITY,
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
PURCHASER ACKNOWLEDGES AND AGREES THAT UPON THE CLOSING SELLER SHALL SELL
AND CONVEY TO PURCHASER AND PURCHASER SHALL ACCEPT THE PROPERTY "AS IS, WHERE
IS, WITH ALL FAULTS", EXCEPT TO THE EXTENT EXPRESSLY PROVIDED OTHERWISE IN
THIS AGREEMENT. PURCHASER HAS NOT RELIED AND WILL NOT RELY ON, AND SELLER IS
NOT LIABLE FOR OR BOUND BY, ANY EXPRESS OR IMPLIED WARRANTIES, GUARANTIES,
STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO THE PROPERTY OR
RELATING THERETO (INCLUDING SPECIFICALLY, WITHOUT LIMITATION, OFFERING
PACKAGES DISTRIBUTED WITH RESPECT TO THE PROPERTY) MADE OR FURNISHED BY
SELLER, THE MANAGERS OF THE PROPERTY, OR ANY REAL ESTATE BROKER OR AGENT
REPRESENTING OR PURPORTING TO REPRESENT SELLER, TO WHOMEVER MADE OR GIVEN,
DIRECTLY OR INDIRECTLY, ORALLY OR IN WRITING, UNLESS SPECIFICALLY SET FORTH
IN THIS AGREEMENT. PURCHASER ALSO ACKNOWLEDGES THAT THE PURCHASE PRICE
REFLECTS AND TAKES INTO ACCOUNT THAT THE PROPERTY IS BEING SOLD "AS-IS".
PURCHASER REPRESENTS TO SELLER THAT PURCHASER HAS CONDUCTED, OR WILL
CONDUCT PRIOR TO THE CLOSING, SUCH INVESTIGATIONS OF THE PROPERTY, INCLUDING
BUT NOT LIMITED TO, THE PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF, AS
PURCHASER
25
<PAGE>
DEEMS NECESSARY OR DESIRABLE TO SATISFY ITSELF AS TO THE CONDITION OF THE
PROPERTY AND THE EXISTENCE OR NONEXISTENCE OR CURATIVE ACTION TO BE TAKEN
WITH RESPECT TO ANY HAZARDOUS OR TOXIC SUBSTANCES ON OR DISCHARGED FROM THE
PROPERTY, AND WILL RELY SOLELY UPON SAME AND NOT UPON ANY INFORMATION
PROVIDED BY OR ON BEHALF OF SELLER OR ITS AGENTS OR EMPLOYEES WITH RESPECT
THERETO, OTHER THAN SUCH REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER
AS ARE EXPRESSLY SET FORTH IN THIS AGREEMENT. UPON THE CLOSING, PURCHASER
SHALL ASSUME THE RISK THAT ADVERSE MATTERS, INCLUDING BUT NOT LIMITED TO,
CONSTRUCTION DEFECTS AND ADVERSE PHYSICAL AND ENVIRONMENTAL CONDITIONS, MAY
NOT HAVE BEEN REVEALED BY PURCHASER'S INVESTIGATIONS, AND PURCHASER, UPON THE
CLOSING, SHALL BE DEEMED TO HAVE WAIVED, RELINQUISHED AND RELEASED SELLER
(AND SELLER'S OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES AND AGENTS) FROM
AND AGAINST ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION (INCLUDING CAUSES
OF ACTION IN TORT), LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES
(INCLUDING REASONABLE ATTORNEYS' FEES) OF ANY AND EVERY KIND OR CHARACTER,
KNOWN OR UNKNOWN (OTHER THAN WITH RESPECT TO SUCH REPRESENTATIONS, WARRANTIES
AND COVENANTS OF SELLER AS ARE EXPRESSLY SET FORTH IN THIS AGREEMENT), WHICH
PURCHASER MIGHT HAVE ASSERTED OR ALLEGED AGAINST SELLER (AND SELLER'S
OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES AND AGENTS) AT ANY TIME BY
REASON OF OR ARISING OUT OF ANY LATENT OR PATENT CONSTRUCTION DEFECTS OR
PHYSICAL CONDITIONS, VIOLATIONS OF ANY APPLICABLE LAWS AND ANY AND ALL OTHER
ACTS, OMISSIONS, EVENTS, CIRCUMSTANCES OR MATTERS REGARDING THE PROPERTY.
Section 9.3 Survival of Disclaimers. The provisions of this Article IX
shall survive the Closing or any termination of this Agreement.
ARTICLE X
MISCELLANEOUS
Section 10.1 Confidentiality. Purchaser and its representatives shall
hold in strictest confidence all data and information obtained with respect
to Seller or its business, whether obtained before or after the execution and
delivery of this Agreement, and shall not disclose the same to others;
provided, however, that it is understood and agreed that Purchaser may
disclose such data and information if required to do so by law and in any
case to the employees, lenders, consultants, accountants and attorneys of
Purchaser provided that such persons agree to treat such data and information
confidentially. In the event this Agreement is terminated or Purchaser fails
to perform hereunder, Purchaser shall promptly return to Seller any
statements, documents,
26
<PAGE>
schedules, exhibits or other written information obtained from Seller in
connection with this Agreement or the transaction contemplated by this
Agreement. It is understood and agreed that, with respect to any provision
of this Agreement which refers to the termination of this Agreement and the
return of the Deposit and any accrued interest thereon to Purchaser, such
Deposit and accrued interest shall not be returned to Purchaser unless and
until Purchaser has fulfilled its obligation to return to Seller the
materials described in the preceding sentence. In the event of a breach or
threatened breach by Purchaser or its agents or representatives of this
Section 10.1, Seller shall be entitled to an injunction restraining Purchaser
or its agents or representatives from disclosing, in whole or in part, such
confidential information. Nothing herein shall be construed as prohibiting
Seller from pursuing any other available remedy at law or in equity for such
breach or threatened breach. The provisions of this Section 10.1 shall
survive the Closing or any termination of this Agreement.
Section 10.2 Public Disclosure. Prior to and after the Closing, except
as otherwise required by Federal or State securities laws, any release to the
public of information with respect to the sale contemplated by this Agreement
or any matters set forth in this Agreement will be made only in the form
approved by Purchaser and Seller. The provisions of this Section 10.2 shall
survive the Closing or any termination of this Agreement.
Section 10.3 Assignment. Subject to the provisions of this Section
10.3, the terms and provisions of this Agreement are to apply to and bind the
permitted successors and assigns of the parties hereto. Purchaser may not
assign its rights under this Agreement without first obtaining Seller's
written approval, which approval may be given or withheld in Seller's sole
discretion. In the event Purchaser intends to assign its rights hereunder,
(a) Purchaser shall send Seller written notice of its request at least ten
(10) business days prior to the Closing, which request shall include the
legal name and structure of the proposed assignee, as well as any other
information that Seller may reasonably request, and (b) Purchaser and the
proposed assignee shall execute an assignment and assumption of this
Agreement in form and substance satisfactory to Seller, and (c) in no event
shall any assignment of this Agreement release or discharge Purchaser from
any liability or obligation hereunder. Notwithstanding the foregoing,
Seller's prior written approval shall not be required in connection with any
assignment by Purchaser of its rights under this Agreement to a wholly-owned
subsidiary or an affiliate controlled by or under common control with
Purchaser, provided that Purchaser shall give Seller written notice of any
such assignment at least five (5) business days prior to the Closing and
provided further that the provisions of clauses (b) and (c) above shall apply
to any such assignment. Notwithstanding the foregoing, under no
circumstances shall Purchaser have the right to assign this Agreement to any
person or entity owned or controlled by an employee benefit plan if Seller's
sale of the Property to such person or entity would, in the reasonable
opinion of Seller's ERISA advisor, create or otherwise
27
<PAGE>
cause a "prohibited transaction" under ERISA. Any transfer, directly or
indirectly, of any stock, partnership interest or other ownership interest in
Purchaser shall constitute an assignment of this Agreement. The provisions
of this Section 10.3 shall survive the Closing or any termination of this
Agreement.
Section 10.4 Notices. Any notice pursuant to this Agreement shall be
given in writing by (a) personal delivery, (b) reputable overnight delivery
service with proof of delivery, (c) United States Mail, postage prepaid,
registered or certified mail, return receipt requested, or (d) legible
facsimile transmission, sent to the intended addressee at the address set
forth below, or to such other address or to the attention of such other
person as the addressee shall have designated by written notice sent in
accordance herewith, and shall be deemed to have been given upon receipt or
refusal to accept delivery, or, in the case of facsimile transmission, as of
the date of the facsimile transmission provided that an original of such
facsimile is also sent to the intended addressee by means described in
clauses (a), (b) or (c) above. Unless changed in accordance with the
preceding sentence, the addresses for notices given pursuant to this
Agreement shall be as follows:
If to Seller:
Metropolitan Life Insurance Company
c/o AEW Capital Management, L.P.
225 Franklin Street
Boston, MA 02110-2803
Attn: Tammy Nicora
Telephone: (617) 578-9576
Telecopier: (617) 578-9555
With a copy to:
Robert C. Santomenna, Esq.
Drummond & Drummond
One Monument Way
Portland, ME 04101
Telephone: (207) 774-0317
Telecopier: (207) 761-4690
If to Purchaser:
Brandywine Realty Trust
16 Campus Boulevard, Suite 150
Newton Square, PA 19073
28
<PAGE>
Attn: Gerard H. Sweeney
Telephone: (610) 325-5600
Telecopier: (610) 325-5622
With a copy to:
Brad A. Molotsky, Esq.
Pepper Hamilton & Scheetz
3000 Two Logan Square
Philadelphia, PA 19103-2799
Telephone: (215) 981-4262
Telecopier: (215) 981-4930
Section 10.5 Modifications. This Agreement cannot be changed orally, and
no executory agreement shall be effective to waive, change, modify or discharge
it in whole or in part unless such executory agreement is in writing and is
signed by the parties against whom enforcement of any waiver, change,
modification or discharge is sought.
Section 10.6 Entire Agreement. This Agreement, including the exhibits and
schedules hereto, contains the entire agreement between the parties hereto
pertaining to the subject matter hereof and fully supersedes all prior written
or oral agreements and understandings between the parties pertaining to such
subject matter, other than any confidentiality agreement executed by Purchaser
in connection with the Property.
Section 10.7 Further Assurances. Each party agrees that it will execute
and deliver such other documents and take such other action, whether prior or
subsequent to the Closing, as may be reasonably requested by the other party to
consummate the transaction contemplated by this Agreement. The provisions of
this Section 10.7 shall survive the Closing.
Section 10.8 Counterparts. This Agreement may be executed in
counterparts, all such executed counterparts shall constitute the same
agreement, and the signature of any party to any counterpart shall be deemed a
signature to, and may be appended to, any other counterpart.
Section 10.9 Facsimile Signatures. In order to expedite the transaction
contemplated by this Agreement, telecopied signatures may be used in place of
original signatures on this Agreement. Seller and Purchaser intend to be bound
by the signatures on the telecopied document, are aware that the other party
will rely on the telecopied signatures, and hereby waive any defenses to the
enforcement of the terms of this Agreement based on the form of signature.
29
<PAGE>
Section 10.10 Severability. If any provision of this Agreement is
determined by a court of competent jurisdiction to be invalid or unenforceable,
the remainder of this Agreement shall nonetheless remain in full force and
effect; provided that the invalidity or unenforceability of such provision does
not materially adversely affect the benefits accruing to any party hereunder.
Section 10.11 Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania.
Purchaser and Seller agree that the provisions of this Section 10.11 shall
survive the Closing or any termination of this Agreement.
Section 10.12 No Third-Party Beneficiary. The provisions of this
Agreement and of the documents to be executed and delivered at the Closing are
and will be for the benefit of Seller and Purchaser only and are not for the
benefit of any third party, and accordingly, no third party shall have the right
to enforce the provisions of this Agreement or of the documents to be executed
and delivered at the Closing.
Section 10.13 Captions. The section headings appearing in this Agreement
are for convenience of reference only and are not intended, to any extent and
for any purpose, to limit or define the text of any section or any subsection
hereof.
Section 10.14 Construction. The parties acknowledge that the parties and
their counsel have reviewed and revised this Agreement and that the normal rule
of construction to the effect that any ambiguities are to be resolved against
the drafting party shall not be employed in the interpretation of this Agreement
or any exhibits or amendments hereto.
Section 10.15 Recordation. This Agreement may not be recorded by any
party hereto without the prior written consent of the other party hereto. The
provisions of this Section 10.15 shall survive the Closing or any termination of
this Agreement.
Section 10.16 Seller Approval. INTENTIONALLY OMITTED.
Section 10.17 Time of the Essence. Time is of the essence of this
Agreement, and of each covenant, agreement and condition hereof which provides
for notice to be given or action taken on a specific date or within a specified
period of time.
Section 10.18 SEC Disclosure. During the period beginning on the
Effective Date and ending on the first anniversary of the date of the Closing,
and in addition to any other document production required of Seller hereunder,
Seller shall, from time to time, upon reasonable advance written notice from
Purchaser, provide Purchaser and its representatives with: (i) access to all
financial and other information pertaining to the
30
<PAGE>
period of Seller's ownership and operation of the Property which is relevant
and reasonably necessary in the opinion of Purchaser's outside third party
accountants (the "Accountants"), but excluding any Confidential Documents (as
defined in Section 3.1 of this Agreement), to enable Purchaser and the
Accountants to prepare financial statements in compliance with any or all of
(a) Rule 3-05 or 3-14 of Regulation S-X of the Securities and Exchange
Commission (the "Commission"), as applicable, (b) any other rule issued by
the Commission and applicable to Purchaser, and (c) any registration
statement, report or disclosure statement filed with the Commission by or on
behalf of Purchaser; and (ii) if required by the Accountants in order to
render an opinion concerning the operating statements for the Property, a
representation letter substantially in the form attached hereto as Exhibit S.
Section 10.19 Exculpation. No recourse shall be had for any obligation of
Purchaser under this Agreement or under any document executed in connection with
or pursuant to this Agreement, 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 Seller and all parties
claiming by, through or under Seller, it being agreed by Purchaser and Seller
that recourse against Purchaser under this Agreement shall be limited to the
assets of Brandywine Realty Trust.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the Effective Date.
PURCHASER:
BRANDYWINE REALTY TRUST
By:
-------------------------------------------
Name:
--------------------------------------------
Title:
-----------------------
Date:
-----------------------
SELLER:
31
<PAGE>
METROPOLITAN LIFE INSURANCE COMPANY, by AEW Real Estate Advisors, Limited
Partnership, its duly authorized asset manager and advisor
By:
------------------------------------------
Name:
------------------------------------------
Title:
--------------------------
Date:
--------------------------
32
<PAGE>
Escrow Agent executes this Agreement below solely for the purpose of
acknowledging that it agrees to be bound by the provisions of Sections 1.5 and
1.6 hereof.
ESCROW AGENT:
COMMONWEALTH LAND TITLE INSURANCE COMPANY
By:
-----------------------------------------
Name:
-----------------------------------------
Title:
------------------------------
Date:
------------------------------
33
<PAGE>
TABLE OF CONTENTS
Page No.
ARTICLE I PURCHASE AND SALE
Section 1.1 Agreement of Purchase and Sale........................... 2
Section 1.2 Property Defined......................................... 3
Section 1.3. Purchase Price........................................... 3
Section 1.4 Payment of Purchase Price................................ 3
Section 1.5 Deposit.................................................. 3
Section 1.6 Escrow Agent............................................. 4
ARTICLE II TITLE AND SURVEY
Section 2.1 Title Inspection Period.................................. 5
Section 2.2 Title Examination........................................ 5
Section 2.3 Pre-Closing "Gap" Title Defects.......................... 5
Section 2.4 Permitted Exceptions..................................... 6
Section 2.5 Conveyance of Title...................................... 6
ARTICLE III REVIEW OF PROPERTY
Section 3.1 Right of Inspection...................................... 6
Section 3.2 Environmental Reports.................................... 7
Section 3.3 Right of Termination..................................... 8
Section 3.4 Review of Tenant Estoppels............................... 8
ARTICLE IV CLOSING
Section 4.1 Time and Place........................................... 9
Section 4.2 Seller's Obligations at the Closing...................... 9
Section 4.3 Purchaser's Obligations at the Closing................... 11
Section 4.4 Credits and Prorations....................................12
Section 4.5 Transaction Taxes and Closing Costs...................... 16
Section 4.6 Conditions Precedent to Obligation of Purchaser.......... 17
Section 4.7 Conditions Precedent to Obligation of Seller............. 17
ARTICLE V REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 5.1 Representations and Warranties of Seller..................18
Section 5.2 Knowledge Defined........................................ 19
<PAGE>
Section 5.3 Survival of Seller's Representations and Warranties...... 20
Section 5.4 Covenants of Seller...................................... 20
Section 5.5 Representations and Warranties of Purchaser.............. 21
Section 5.6 Survival of Purchaser's Representations and Warranties... 22
ARTICLE VI DEFAULT
Section 6.1 Default by Purchaser..................................... 22
Section 6.2 Default by Seller........................................ 22
Section 6.3 Recoverable Damages...................................... 23
ARTICLE VII RISK OF LOSS
Section 7.1 Minor Damage............................................. 23
Section 7.2 Major Damage............................................. 23
Section 7.3 Definition of "Major" Loss or Damage..................... 24
ARTICLE VIII COMMISSIONS
Section 8.1 Brokerage Commissions.................................... 24
ARTICLE IX DISCLAIMERS AND WAIVERS
Section 9.1 No Reliance on Documents................................. 24
Section 9.2 AS-IS SALE; DISCLAIMERS.................................. 25
Section 9.3 Survival of Disclaimers.................................. 26
ARTICLE X MISCELLANEOUS
Section 10.1 Confidentiality.......................................... 26
Section 10.2 Public Disclosure........................................ 27
Section 10.3 Assignment............................................... 27
Section 10.4 Notices.................................................. 27
Section 10.5 Modifications............................................ 28
Section 10.6 Entire Agreement......................................... 29
Section 10.7 Further Assurances....................................... 29
Section 10.8 Counterparts............................................. 29
Section 10.9 Facsimile Signatures..................................... 29
Section 10.10 Severability............................................. 29
Section 10.11 Applicable Law........................................... 29
Section 10.12 No Third-Party Beneficiary............................... 29
<PAGE>
Section 10.13 Captions................................................. 29
Section 10.14 Construction............................................. 30
Section 10.15 Recordation.............................................. 30
Section 10.16 Seller Approval.......................................... 30
Section 10.17 Time of the Essence.......................................30
Section 10.18 SEC Disclosure............................................30
Section 10.19 Exculpation...............................................30
<PAGE>
EXHIBITS:
A DESCRIPTION OF LAND
B LIST OF PERSONAL PROPERTY
C LIST OF LEASES
D LIST OF OPERATING AGREEMENTS
E LIST OF ENVIRONMENTAL REPORTS
F FORM OF TENANT ESTOPPEL CERTIFICATE
G TENANT ESTOPPEL STANDARDS
H FORM OF DEED
I FORM OF BILL OF SALE
J FORM OF ASSIGNMENT AND ASSUMPTION OF LEASES
K FORM OF ASSIGNMENT AND ASSUMPTION OF INTANGIBLES
L FORM OF TENANT NOTICE
M FORM OF FIRPTA CERTIFICATE
N LIST OF CERTAIN TENANT COSTS AND COMMISSIONS
O LIST OF BROKERAGE AGREEMENTS
P LIST OF SPECIFIED LITIGATION
Q LIST OF VIOLATION NOTICES
R STATEMENT OF TENANT DELINQUENCIES
S FORM OF SEC REPRESENTATION LETTER
<PAGE>
EXHIBIT A
DESCRIPTION OF LAND
ALL THAT CERTAIN lot or piece of ground with the buildings and improvements
thereon erected, Situate in the Township of Marple, County of Delaware and
Commonwealth of Pennsylvania, bounded and described as follows, to wit:
BEGINNING at a point in the middle line of the Springfield Road, now known as
Sproul Road, at the distance of 625.96 feet measured North 16 degrees 27 minutes
West from the intersection of the middle line of Springfield Road, now known as
Sproul Road, with the middle line of Leedom Mills Road; thence extending along
the middle line of the said Springfield Road, now known as Sproul Road, North 16
degrees 27 minutes West, 283.42 feet to a point; thence continuing along the
middle line of the said Springfield Road, now known as Sproul Road, North 17
degrees West, 147.85 feet to a point (this point is South 17 degrees East 833.23
feet from corner of Lawrence Road); thence extending South 72 degrees 19 minutes
West, 519 feet to a point; thence extending South 17 degrees East, 147.85 feet
to a point; thence extending South 16 degrees 27 minutes East, 283.42 feet to a
point; thence extending North 72 degrees 19 minutes East 519 feet to the first
mentioned point and place of beginning.
CONTAINING 5 acres more or less.
Folio #25-00-4495-00.
<PAGE>
EXHIBIT B
LIST OF PERSONAL PROPERTY
One 6' fiberglass ladder
One 6' wooden ladder
One 10' fiberglass ladder
Two 10' wooden ladders
One high lift
One 24' extension ladder
Four screw drivers
One pliers
One adjustable pliers
One set vise grips
One adjustable wrench
Two pipe wrenches
One hammer
One hacksaw
One pair side cutters
One PVC cutter
One caulk gun
One wire brush
One manual injector pump
One submersible pump
One brute/can with wheels
One desk
One 4-drawer file cabinet
Five chairs
One hand truck
One paint pole
<PAGE>
EXHIBIT C
LIST OF LEASES
Lease between New England Mutual Life Insurance Company as Landlord and ALLAN
COLLAUT ASSOCIATES, INC. as Tenant, dated January 9, 1995.
Lease between New England Mutual Life Insurance Company as Landlord and FRANKLIN
MINT FEDERAL CREDIT UNION as Tenant, dated March 15, 1994; First Amendment to
Lease dated April 8, 1997, with Metropolitan Life Insurance Company as Landlord.
Lease between New England Mutual Life Insurance Company as Landlord and
INTERNATIONAL BUSINESS MACHINES CORPORATION as Tenant, dated July 20, 1994;
First Amendment to Lease dated March 21, 1995.
Lease between New England Mutual Life Insurance Company as Landlord and MAIN
LINE BOOK COMPANY as Tenant, dated April 13, 1993; First Amendment to Lease
dated October 24, 1995.
Lease between New England Mutual Life Insurance Company as Landlord and Penn
Therapy Associates, Inc. as Tenant, dated April 21, 1993; Landlord's Consent [to
assignment and sublease] dated June 27, 1996; Assignment and Assumption
Agreement dated July 1, 1996 between Penn Therapy Associates, Inc. as Assignor
and MIDATLANTIC HEALTH GROUP, INC. as Assignee; Sublease dated July 1, 1996
between Midatlantic Health Group, Inc. as Sublessor and Mary Ellen DiMatteo as
Sublessee; Sublease dated July 1, 1996 between Midatlantic Health Group, Inc. as
Sublessee and Penn Therapy, P.C. as Sublessee.
Lease between Broomall '81 Associates as Lessor and TMR, Inc. as Lessee, dated
July 1990; First Amendment to Lease dated July 19, 1990; Second Amendment to
Lease dated February 17, 1994, with New England Mutual Life Insurance Company as
Landlord; letter exercising extension option dated December 21, 1994.
Lease between Metropolitan Life Insurance Company as Landlord and JOHN P.
WILLIAMSON, KEVIN M. MCVEIGH AND MICHAEL D. ALFANO as Tenant, dated December 17,
1996.
<PAGE>
EXHIBIT D
LIST OF OPERATING AGREEMENTS
1. Agreement with Grinnell Fire Protection Systems Company (automatic
sprinkler equipment inspection).
2. Agreement with The Penn City Elevator Company (elevator maintenance).
3. Agreement with Jimmy Boot Inc. d/b/a Budget Maintenance (janitorial
services).
4. Agreement with Detailed Environments (landscape maintenance).
5. Agreement with Exton Landscape Service (snow and ice removal).
6. Agreement with M & M Equipment (generator maintenance).
7. Agreement with Innerscapes (interior landscaping).
8. Agreement with Harvey & Harvey (waste disposal).
9. Agreement with Honeywell (fire alarm panel monitoring).
10. Agreement with Comfort Zone, Inc. (HVAC maintenance).
11. Agreement with Delaware Valley Water Treatment Corp. (water treatment).
<PAGE>
EXHIBIT E
LIST OF ENVIRONMENTAL REPORTS
1. Phase I Site Assessment dated August 30, 1989, prepared by Vectre
Corporation.
2. Preliminary Environmental Site Evaluation dated February 25, 1992, prepared
by GZA GeoEnvironmental, Inc., with follow-up letter dated July 10, 1992.
3. Phase I Environmental Site Assessment dated January 22, 1997, prepared by
Langan Engineering and Environmental Services.
<PAGE>
EXHIBIT F
TENANT ESTOPPEL FORM
Brandywine Realty Trust
16 Campus Boulevard, Suite 150
Newton Square, PA 19073
Attention: Gerard H. Sweeney
NationsBank, N.A.
Real Estate Banking
6300 Greensboro Drive, Suite 300
McLean, VA 22102
Attention: Gary P.F. Carr
Re: Lease dated ________________________, 199__ (the "Lease") between
____________________ as landlord and _______________________ as tenant, for
certain premises located at 1974 Sproul Road, Broomall, Pennsylvania (the
"Property").
Gentlemen:
The undersigned _____________________________ ("Tenant"), being the
holder of the tenant's interest under the Lease as described on Schedule 1
attached hereto, demising a portion of the Property (the "Leased Premises"),
understands that Brandywine Realty Trust ("Brandywine") or its assignee or
nominee intends to acquire the Property from the owner thereof, Metropolitan
Life Insurance Company ("Landlord") and that NationsBank, N.A., as Agent for
the parties listed on Schedule 2 attached hereto (collective, "Lender"), may
be the holder of a first mortgage on the Property, and that Brandywine and
Lender require this certification from the undersigned.
Accordingly, Tenant hereby certifies to Brandywine and Lender as follows:
1. The Lease is in full force and effect and has not been modified,
supplemented, or amended except as set forth on Schedule 1 attached hereto.
2. There are no other representations, warranties, agreements,
concessions, commitments or other understandings between Tenant and Landlord
regarding the Property other than as set forth in the Lease.
3. Landlord has completed and delivered, and Tenant has accepted, the
Leased Premises in the condition required by the Lease. The term of the Lease
<PAGE>
commenced on ____________________. The Leased Premises consists of
approximately __________ square feet. Tenant has taken possession of and is
occupying the Leased Premises on a rent-paying basis, and the monthly base
rent payable thereunder is $___________, payable in advance. All
improvements and work required to be done by Landlord under the Lease, and
all facilities required to be furnished to the Leased Premises under the
Lease, have been completed or furnished to the satisfaction of Tenant, except
as follows: _____________________________________________________.
4. The term of the Lease expires on ____________________________,
excluding any renewals or extensions. Tenant has no option to purchase or
right to purchase the Property or any part thereof.
5. All rents and additional rents and other sums due and payable by
Tenant under the Lease have been paid in full and no rents, additional rents or
other sums payable by Tenant under the Lease have been paid more than one (1)
month in advance of the due dates thereof.
6. To Tenant's knowledge, Landlord is not in default under any of the
requirements, provisions, terms, conditions or covenants to be performed or
complied with by Landlord under the Lease and no event has occurred or situation
arisen which would, with the passage of time and/or the giving of notice,
constitute a default or event of default by Landlord under the Lease.
7. Tenant is not in default under any of the requirements, provisions,
terms, conditions or covenants to be performed or complied with by Tenant under
the Lease, and no event has occurred or situation arisen which would, with the
passage of time and/or the giving of notice, constitute a default or event of
default by Tenant under the Lease.
8. Neither Tenant nor, to Tenant's knowledged, Landlord, has commenced
any action or given or received any notice for the purpose or terminating the
Lease.
9. Tenant has no existing defenses, offsets, claims or credits against
the payment of rent, additional rent or any other sums due and payable under the
Lease or the performance of Tenant's obligations under the Lease.
10. Tenant has paid a security deposit under the Lease of $_______________.
TENANT:
<PAGE>
By:
------------------------------------
Name:
------------------------------------
Title:
-------------------------
Date:
-------------------------
<PAGE>
SCHEDULE 1
DESCRIPTION OF THE LEASE
<PAGE>
SCHEDULE 2
NATIONSBANK AGENCY
NationsBank, N.A., Smith Barney Mortgage Capital Ground, Inc. and all other
parties to whom a direct participation interest in a certain Credit Facility are
sold, transferred and assigned pursuant to the provisions of a certain Revolving
Credit Agreement and a certain Co-Lender and Servicing Agreement, each dated as
of November 25, 1996, as amended.
<PAGE>
EXHIBIT G
TENANT ESTOPPEL STANDARDS
Tenants representing 75% of occupied space in the Property.
<PAGE>
EXHIBIT H
FORM OF DEED
SPECIAL WARRANTY DEED
THIS INDENTURE, made this _________ day of ________________________,
1997, between METROPOLITAN LIFE INSURANCE COMPANY, a New York corporation
having a mailing address in care of AEW Capital Management, L.P., 225
Franklin Street, Boston, Massachusetts 02110-2803 (hereinafter called the
Grantor), and BRANDYWINE REALTY TRUST, a Maryland real estate investment
trust having a mailing address of 16 Campus Boulevard, Suite 150, Newton
Square, Pennsylvania 19073 (hereinafter called the Grantee);
WITNESSETH, That the said Grantor, for and in consideration of the sum of
Ten Dollars ($10.00) lawful money of the United States of America, unto it well
and truly paid by the said Grantee at and before the sealing and delivery of
these presents, the receipt whereof is hereby acknowledged, has granted,
bargained, sold, aliened, enfeoffed, released and confirmed, and by these
presents does grant, bargain, sell, alien, enfeoff, release and confirm unto the
said Grantee, its successors and assigns, the following described Premises:
ALL THAT CERTAIN lot or piece of ground with the buildings and improvements
thereon erected, Situate in the Township of Marple, County of Delaware and
Commonwealth of Pennsylvania, bounded and described as follows, to wit:
BEGINNING at a point in the middle line of the Springfield Road, now known
as Sproul Road, at the distance of 625.96 feet measured North 16 degrees 27
minutes West from the intersection of the middle line of Springfield Road, now
known as Sproul Road, with the middle line of Leedom Mills Road; thence
extending along the middle line of the said Springfield Road, now known as
Sproul Road, North 16 degrees 27 minutes West, 283.42 feet to a point; thence
continuing along the middle line of the said Springfield Road, now known as
Sproul Road, North 17 degrees West, 147.85 feet to a point (this point is South
17 degrees East 833.23 feet from corner of Lawrence Road); thence extending
South 72 degrees 19 minutes West, 519 feet to a point; thence extending South 17
degrees East, 147.85 feet to a point; thence extending South 16 degrees 27
minutes East, 283.42 feet to a point; thence extending North 72 degrees 19
minutes East 519 feet to the first mentioned point and place of beginning.
CONTAINING 5 acres more or less.
<PAGE>
Folio #25-00-4495-00.
TOGETHER with all and singular the buildings, improvements, ways, streets,
alleys, passages, waters, water-courses, rights, liberties, privileges,
hereditaments and appurtenances whatsoever thereunto belonging, or in any wise
appertaining, and the reversions and remainders, rents, issues and profits
thereof, and all the estate, right, title, interest, property, claim and demand
whatsoever of the said Grantor, in law, equity, or otherwise howsoever, of, in,
and to the same and every part thereof.
TO HAVE AND TO HOLD the said lot or piece of ground above described and the
hereditaments and premises hereby granted, mentioned and intended so to be, with
the appurtenances, unto the said Grantee, its successors and assigns, to and for
the only proper use and behoof of the said Grantee, its successors and assigns
forever.
AND the said Grantor, for itself, its successors and assigns, does by these
presents covenant, grant and agree to and with the said Grantee, its successors
and assigns, that it shall and will WARRANT and forever DEFEND all and singular
the hereditaments and premises herein described and granted, or mentioned and
intended so to be, with the appurtenances, unto the said Grantee, its successors
and assigns, against the said Grantor, its successors and assigns, and against
all and every other Person and Persons whomsoever lawfully claiming or to claim
the same or any part thereof by, from or under the said Grantor, its successors
and assigns.
IN WITNESS WHEREOF, the Grantor has caused this instrument to be executed
by its duly authorized representatives the day and year first above written.
METROPOLITAN LIFE INSURANCE COMPANY, by AEW Real Estate
Advisors, Limited Partnership, its duly authorized asset manager and advisor
By:
--------------------------------------------
Name:
--------------------------------------------
Title:
------------------------------------------
Signed, sealed and delivered in the presence of:
<PAGE>
Witness
-------------------------------------------
<PAGE>
COMMONWEALTH OF MASSACHUSETTS _________________, 1997
COUNTY OF SUFFOLK, SS.
Then personally appeared before me the above-named ______________________,
the __________________________ of AEW Real Estate Advisors, Limited Partnership,
the duly authorized asset manager and advisor of the Grantor corporation, and
acknowledged the foregoing instrument to be the free act and deed of the said
AEW Real Estate Advisors, Limited Partnership, in its said capacity.
------------------------------------------
Notary Public
------------------------------------------
Type or print name
------------------------------------------
Commission expiration date
<PAGE>
EXHIBIT I
FORM OF BILL OF SALE
KNOW ALL MEN BY THESE PRESENTS, that METROPOLITAN LIFE INSURANCE COMPANY, a
New York corporation having an address in care of AEW Capital Management, L.P.,
225 Franklin Street, Boston, Massachusetts 02110-2803 (the "Seller"), for and in
consideration of the sum of Ten Dollars and other valuable consideration to it
in hand paid by BRANDYWINE REALTY TRUST, a Maryland real estate investment trust
having an address of 16 Campus Boulevard, Suite 150, Newton Square, Pennsylvania
19073 (the "Purchaser"), the receipt and sufficiency of which are hereby
acknowledged, hereby sells, assigns, transfers and conveys unto said Purchaser
any and all of Seller's right, title and interest in and to all tangible
personal property located upon the land described in Schedule 1 attached hereto
and hereby made a part hereof (the "Land"), more commonly known as 1974 Sproul
Road, Broomall, Pennsylvania, or within the improvements located thereon,
including, without limitation, any and all appliances, furniture, carpeting,
draperies and curtains, tools and supplies, and other items of personal property
owned by Seller (excluding cash and any software), used exclusively in the
operation of the Land and improvements, as is, where is, and without warranty of
title or use, and without warranty, express or implied, of merchantability or
fitness for a particular purpose.
TO HAVE AND TO HOLD all of said personal property unto Purchaser, its
successors and assigns, to its own use forever.
IN WITNESS WHEREOF, Seller has executed this Bill of Sale as of the ________
day of _______________, 1997.
SELLER:
METROPOLITAN LIFE INSURANCE COMPANY, by AEW Real
Estate Advisors, Limited Partnership, its duly authorized asset manager and
advisor
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
<PAGE>
SCHEDULE 1
LEGAL DESCRIPTION
ALL THAT CERTAIN lot or piece of ground with the buildings and improvements
thereon erected, Situate in the Township of Marple, County of Delaware and
Commonwealth of Pennsylvania, bounded and described as follows, to wit:
BEGINNING at a point in the middle line of the Springfield Road, now known as
Sproul Road, at the distance of 625.96 feet measured North 16 degrees 27 minutes
West from the intersection of the middle line of Springfield Road, now known as
Sproul Road, with the middle line of Leedom Mills Road; thence extending along
the middle line of the said Springfield Road, now known as Sproul Road, North 16
degrees 27 minutes West, 283.42 feet to a point; thence continuing along the
middle line of the said Springfield Road, now known as Sproul Road, North 17
degrees West, 147.85 feet to a point (this point is South 17 degrees East 833.23
feet from corner of Lawrence Road); thence extending South 72 degrees 19 minutes
West, 519 feet to a point; thence extending South 17 degrees East, 147.85 feet
to a point; thence extending South 16 degrees 27 minutes East, 283.42 feet to a
point; thence extending North 72 degrees 19 minutes East 519 feet to the first
mentioned point and place of beginning.
CONTAINING 5 acres more or less.
Folio #25-00-4495-00.
<PAGE>
EXHIBIT J
FORM OF ASSIGNMENT AND ASSUMPTION OF LEASES
THIS ASSIGNMENT AND ASSUMPTION OF LEASES (the "Assignment") is made as of
this______________ day of_____________________, 1997 between METROPOLITAN LIFE
INSURANCE COMPANY, a New York corporation having an address in care of AEW
Capital Management, L.P., 225 Franklin Street, Boston, Massachusetts 02110-2803
("Assignor") and BRANDYWINE REALTY TRUST, a Maryland real estate investment
trust having an address of 16 Campus Boulevard, Suite 150, Newton Square,
Pennsylvania 19073 ("Assignee").
For and in consideration of the sum of Ten Dollars ($10.00) and other
valuable consideration to it in hand paid by Assignee to Assignor, the
conveyance by Assignor to Assignee of all that certain real property being
particularly described on Schedule 1 attached hereto and incorporated herein by
this reference (the "Property"), more commonly known as 1974 Sproul Road,
Broomall, Pennsylvania, and the mutual covenants herein contained, the receipt
and sufficiency of the foregoing consideration being hereby acknowledged by the
parties hereto, Assignor hereby assigns, transfers, sets over and conveys to
Assignee all of Assignor's right, title and interest in, to and under the
existing and outstanding leases, licenses and occupancy agreements
(collectively, the "Leases"), of the improvements comprising a part of the
Property, being the Leases described on Schedule 2 attached hereto and
incorporated herein by this reference, together with all security deposits
tendered under the Leases remaining in the possession of Assignor.
Assignee does hereby assume and agree to perform all of Assignor's
obligations under or with respect to the Leases accruing from and after the
date hereof, including without limitation, (A) any claims made by tenants
with respect to the tenants' security deposits to the extent paid, credited
or assigned to Assignee by Assignor, (B) any and all obligations to pay
leasing commissions and finder's fees which are due or payable after the date
hereof with respect to the Leases as a result of any new Leases, or any
renewals, extensions, amendments or expansions of existing Leases signed
between _____________________________ and the date hereof which were approved
or deemed approved in accordance with Section 5.4 of the Sale Agreement
between Assignor and Assignee dated __________________ or did not require
Purchaser's approval thereunder, (C) all Tenant Inducement Costs (as defined
in Section 4.4 of said Sale Agreement) and leasing commissions with respect
to new Leases, or renewals, extensions, amendments or expansions of existing
Leases, signed or entered into from and after the date hereof, and (D) all
Tenant Inducement Costs and leasing commissions listed on Schedule 3 attached
hereto, if any. Assignee agrees to indemnify, protect, defend and hold
Assignor
<PAGE>
harmless from and against any and all liabilities, losses, costs, damages and
expenses (including reasonable attorneys' fees) directly or indirectly
arising out of or related to any breach or default in Assignee's obligations
hereunder. Assignor shall remain liable for all of Assignor's obligations
under or with respect to the Leases accruing prior to the date hereof.
Assignor agrees to indemnify, protect, defend and hold Assignee harmless from
and against any and all liabilities, losses, costs, damages and expenses
(including reasonable attorneys' fees) directly or indirectly arising out of
or related to any breach or default in Assignor's obligations hereunder.
This Assignment shall be binding upon and inure to the benefit of Assignor
and Assignee and their respective heirs, executors, administrators, successors
and assigns.
This Assignment may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
IN WITNESS WHEREOF, Assignor and Assignee have each executed this
Assignment as of the date first written above.
ASSIGNOR:
METROPOLITAN LIFE INSURANCE COMPANY, by AEW Real
Estate Advisors, Limited Partnership, its duly authorized asset manager and
advisor
By:_____________________________________________
Name:___________________________________________
Title:__________________________________________
ASSIGNEE:
BRANDYWINE REALTY TRUST
By:_____________________________________________
Name:___________________________________________
<PAGE>
Title:__________________________________________
<PAGE>
SCHEDULE 1
LEGAL DESCRIPTION
ALL THAT CERTAIN lot or piece of ground with the buildings and improvements
thereon erected, Situate in the Township of Marple, County of Delaware and
Commonwealth of Pennsylvania, bounded and described as follows, to wit:
BEGINNING at a point in the middle line of the Springfield Road, now known as
Sproul Road, at the distance of 625.96 feet measured North 16 degrees 27 minutes
West from the intersection of the middle line of Springfield Road, now known as
Sproul Road, with the middle line of Leedom Mills Road; thence extending along
the middle line of the said Springfield Road, now known as Sproul Road, North 16
degrees 27 minutes West, 283.42 feet to a point; thence continuing along the
middle line of the said Springfield Road, now known as Sproul Road, North 17
degrees West, 147.85 feet to a point (this point is South 17 degrees East 833.23
feet from corner of Lawrence Road); thence extending South 72 degrees 19 minutes
West, 519 feet to a point; thence extending South 17 degrees East, 147.85 feet
to a point; thence extending South 16 degrees 27 minutes East, 283.42 feet to a
point; thence extending North 72 degrees 19 minutes East 519 feet to the first
mentioned point and place of beginning.
CONTAINING 5 acres more or less.
Folio #25-00-4495-00.
<PAGE>
SCHEDULE 2
LEASES
Lease between New England Mutual Life Insurance Company as Landlord and ALLAN
COLLAUT ASSOCIATES, INC. as Tenant, dated January 9, 1995.
Lease between New England Mutual Life Insurance Company as Landlord and FRANKLIN
MINT FEDERAL CREDIT UNION as Tenant, dated March 15, 1994; First Amendment to
Lease dated April 8, 1997, with Metropolitan Life Insurance Company as Landlord.
Lease between New England Mutual Life Insurance Company as Landlord and
INTERNATIONAL BUSINESS MACHINES CORPORATION as Tenant, dated July 20, 1994;
First Amendment to Lease dated March 21, 1995.
Lease between New England Mutual Life Insurance Company as Landlord and Main
LINE BOOK COMPANY as Tenant, dated April 13, 1993; First Amendment to Lease
dated October 24, 1995.
Lease between New England Mutual Life Insurance Company as Landlord and Penn
Therapy Associates, Inc. as Tenant, dated April 21, 1993; Landlord's Consent [to
assignment and sublease] dated June 27, 1996; Assignment and Assumption
Agreement dated July 1, 1996 between Penn Therapy Associates, Inc. as Assignor
and MIDATLANTIC HEALTH GROUP, INC. as Assignee; Sublease dated July 1, 1996
between Midatlantic Health Group, Inc. as Sublessor and Mary Ellen DiMatteo as
Sublessee; Sublease dated July 1, 1996 between Midatlantic Health Group, Inc. as
Sublessee and Penn Therapy, P.C. as Sublessee.
Lease between Broomall '81 Associates as Lessor and TMR, INC. as Lessee, dated
July 1990; First Amendment to Lease dated July 19, 1990; Second Amendment to
Lease dated February 17, 1994, with New England Mutual Life Insurance Company as
Landlord; letter exercising extension option dated December 21, 1994.
Lease between Metropolitan Life Insurance Company as Landlord and JOHN P.
WILLIAMSON, KEVIN M. MCVEIGH AND MICHAEL D. ALFANO as Tenant, dated December 17,
1996.
<PAGE>
SCHEDULE 3
OTHER TENANT INDUCEMENT COSTS AND LEASING COMMISSIONS
<PAGE>
EXHIBIT K
FORM OF ASSIGNMENT AND ASSUMPTION OF INTANGIBLES
THIS ASSIGNMENT AND ASSUMPTION OF INTANGIBLES (the "Assignment") is made as
of the____________day of____________________, 1997 between METROPOLITAN LIFE
INSURANCE COMPANY, a New York corporation having an address in care of AEW
Capital Management, L.P., 225 Franklin Street, Boston, Massachusetts 02110-2803,
("Assignor") and BRANDYWINE REALTY TRUST, a Maryland real estate investment
trust having an address of 16 Campus Boulevard, Newton Square, Pennsylvania
("Assignee").
For and in consideration of the sum of Ten Dollars ($10.00) and other
valuable consideration to it in hand paid by Assignee to Assignor, the
conveyance by Assignor to Assignee of all that certain real property being
particularly described on Schedule 1 attached hereto and incorporated herein by
this reference (the "Property"), more commonly known as 1974 Sproul Road,
Broomall, Pennsylvania, and the mutual covenants herein contained, the receipt
and sufficiency of the foregoing consideration being hereby acknowledged by the
parties hereto, Assignor hereby assigns, transfers, sets over and conveys to
Assignee all of Assignor's right, title and interest, to the extent assignable,
in, to and under any and all of the following, to wit:
(i) the contracts and agreements listed and described on Schedule 2
attached hereto and incorporated herein by this reference (the "Contracts"),
(ii) all existing warranties and guaranties (express or implied) issued to
Assignor in connection with the improvements or the personal property being
conveyed to Assignee by Bill of Sale on the date hereof,
(iii) all existing permits, licenses, approvals and authorizations
issued by any governmental authority in connection with the Property, and
(iv) the right to the name "1974 Sproul Road".
All items described in (ii), (iii) and (iv) above are hereinafter
collectively referred to as "Intangible Property".
Assignee does hereby assume and agree to perform all of Assignor's
obligations under the Contracts and Intangible Property accruing from and after
the date hereof. Assignee agrees to indemnify, protect, defend and hold
Assignor harmless from and against any and all liabilities, losses, costs,
damages and expenses (including reasonable attorneys' fees) directly or
indirectly arising out of or related to any breach or default in
<PAGE>
Assignee's obligations hereunder. Assignor shall remain liable for all of
Assignor's obligations under the Contracts and Intangible Property accruing
prior to the date hereof. Assignor agrees to indemnify, protect, defend and
hold Assignee harmless from and against any and all liabilities, losses,
costs, damages and expenses (including reasonable attorneys' fees) directly
or indirectly arising out of or related to any breach or default in
Assignor's obligations hereunder.
This Assignment shall be binding upon and inure to the benefit of Assignor
and Assignee and their respective heirs, executors, administrators, successors
and assigns.
This Assignment may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
IN WITNESS WHEREOF, Assignor and Assignee have each executed this
Assignment as of the date first written above.
ASSIGNOR:
METROPOLITAN LIFE INSURANCE COMPANY, by AEW Real
Estate Advisors, Limited Partnership, its duly authorized asset manager and
advisor
By:_____________________________________________
Name:___________________________________________
Title:__________________________________________
ASSIGNEE:
BRANDYWINE REALTY TRUST
By:_____________________________________________
Name:___________________________________________
Title:__________________________________________
<PAGE>
SCHEDULE 1
LEGAL DESCRIPTION
ALL THAT CERTAIN lot or piece of ground with the buildings and improvements
thereon erected, Situate in the Township of Marple, County of Delaware and
Commonwealth of Pennsylvania, bounded and described as follows, to wit:
BEGINNING at a point in the middle line of the Springfield Road, now known as
Sproul Road, at the distance of 625.96 feet measured North 16 degrees 27 minutes
West from the intersection of the middle line of Springfield Road, now known as
Sproul Road, with the middle line of Leedom Mills Road; thence extending along
the middle line of the said Springfield Road, now known as Sproul Road, North 16
degrees 27 minutes West, 283.42 feet to a point; thence continuing along the
middle line of the said Springfield Road, now known as Sproul Road, North 17
degrees West, 147.85 feet to a point (this point is South 17 degrees East 833.23
feet from corner of Lawrence Road); thence extending South 72 degrees 19 minutes
West, 519 feet to a point; thence extending South 17 degrees East, 147.85 feet
to a point; thence extending South 16 degrees 27 minutes East, 283.42 feet to a
point; thence extending North 72 degrees 19 minutes East 519 feet to the first
mentioned point and place of beginning.
CONTAINING 5 acres more or less.
Folio #25-00-4495-00.
<PAGE>
SCHEDULE 2
CONTRACTS
1. Agreement with Grinnell Fire Protection Systems Company (automatic
sprinkler equipment inspection).
[ANY OTHER OPERATING AGREEMENTS NOT TERMINATED PURSUANT TO SECTION 1.1(E)]
<PAGE>
EXHIBIT L
FORM OF TENANT NOTICE
TENANT NOTIFICATION LETTER
HAND DELIVERED
DATE:
TO: [Tenants at 1974 Sproul Road, Broomall, Pennsylvania]
RE: 1974 Sproul Road, Broomall, Pennsylvania (the "Property")
Notification Regarding Change of Ownership
This letter is to notify you as a Tenant at the Property that the Property
has been sold by Metropolitan Life Insurance Company, a New York corporation
("Seller"), to Brandywine Realty Trust, a Maryland real estate investment trust
("Purchaser"). As of the date hereof, your Lease has been assigned by Seller to
Purchaser. From the date of this letter, any and all unpaid rent as well as all
future rent, or any other amounts due under the terms of your Lease, shall be
directed as follows:
TO: __________________________________________
ATTN: __________________________________________
AT: __________________________________________
As part of the sale, all refundable tenant deposits, if any, actually held
by Seller with respect to the Property have been transferred to, and Seller's
obligations with respect to such deposits have been assumed by, Purchaser as of
the date of this letter. Any and all payments of rent (or other sums due under
your Lease) hereafter paid to any party other than Purchaser shall not relieve
you of the obligation of making said payment to Purchaser.
PURCHASER: SELLER:
BRANDYWINE REALTY TRUST METROPOLITAN LIFE INSURANCE COMPANY, by AEW Real
Estate Advisors, Limited Partnership, its duly authorized asset manager and
advisor
By:________________________________ By:________________________________
Name:______________________________ Name:______________________________
<PAGE>
Title:_____________________________ Title:_____________________________
Date:______________________________ Date:______________________________
<PAGE>
EXHIBIT M
FORM OF FIRPTA CERTIFICATE
CERTIFICATE REGARDING FOREIGN INVESTMENT IN REAL PROPERTY TAX ACT
(ENTITY TRANSFEROR)
Section 1445 of the Internal Revenue Code provides that a transferee
(purchaser) of a U.S. real property interest must withhold tax if the transferor
(seller) is a foreign person. To inform the transferee (purchaser) that
withholding of tax is not required upon the disposition of a U.S. real property
interest by METROPOLITAN LIFE INSURANCE COMPANY, a New York corporation
("Transferor"). Transferor hereby certifies:
1. Transferor is not a foreign corporation, foreign partnership, foreign
trust, or foreign estate (as those terms are defined in the Internal Revenue
Code and Income Tax Regulations).
2. Transferor's Federal Employer Identification Number is 13-5581829.
3. Transferor's office address is:
One Madison Avenue
New York, New York 10010; and
4. The address or description of the property which is the subject matter
of the disposition is 1974 Sproul Road, Broomall, Pennsylvania.
Transferor understands that this certification may be disclosed to the
Internal Revenue Service by transferee and that any false statement contained
herein could be punished by fine, imprisonment, or both.
Transferor declares that it has examined this certification and to the best
of its knowledge and belief, it is true, correct and complete, and further
declares that the individual executing this certification on behalf of
Transferor has full authority to do so.
METROPOLITAN LIFE INSURANCE COMPANY, by AEW Real
Estate Advisors, Limited Partnership, its duly authorized asset manager and
advisor
By: __________________________________________
Name: __________________________________________
<PAGE>
Title: __________________________________________
Date: __________________________________________
<PAGE>
EXHIBIT N
LIST OF CERTAIN TENANT COSTS AND COMMISSIONS
NONE
<PAGE>
EXHIBIT O
LIST OF BROKERAGE AGREEMENTS
NONE
<PAGE>
EXHIBIT P
LIST OF SPECIFIED LITIGATION
NONE
<PAGE>
EXHIBIT Q
LIST OF VIOLATION NOTICES
NONE
<PAGE>
EXHIBIT R
STATEMENT OF TENANT DELINQUENCIES
Per Schedule 1 attached hereto.
<PAGE>
EXHIBIT S
FORM OF SEC REPRESENTATION LETTER
_____________________________________, 1997
___________________________________________
___________________________________________
___________________________________________
Attention:_________________________________
Dear_______________________________________:
In connection with the audit by you on behalf of Brandywine Realty Trust or an
affiliate thereof, of the statement of revenues and certain expenses (the
"Statement") for the year ending December 31, 199______ of that certain real
property located at 1974 Sproul Road, Broomall, Pennsylvania (the "Property"),
which has been or is to be acquired by Brandywine Realty Trust or an affiliate
thereof from Metropolitan Life Insurance Company (hereinafter "we", "us" and
"our"), we recognize that obtaining the information contained in this letter is
significant in enabling you to form an opinion as to whether the Statement
fairly presents, in all material respects and in accordance with generally
accepted accounting principles, the results of the revenues in excess of certain
expenses of the Property. Accordingly, we advise you of the following, which is
true to the best of our knowledge.
General
We recognize that, as the owner of the Property, we are responsible for
directing the fair presentation of the Statement. We believe the Statement is
fairly presented in conformity with generally accepted accounting principles,
and we have made available to you and your representatives all financial records
and related data which you have asked to review for such purposes.
Internal Control Structure
To our knowledge, there are no material transactions that have not been properly
recorded in the accounting records underlying the Statement.
Minutes and Contracts
<PAGE>
We have made available to you all significant contracts and operating agreements
relating to the Property necessary for the fair presentation of the Statement.
To our knowledge, we have complied with all aspects of such contracts and
operating agreements that would have a material effect on the Statement in the
event of noncompliance.
Related Party Transaction
Transactions with related parties (affiliated companies, management and their
immediate families, principal owners, key employees, trust related to
management), if any and related amounts receivable or payable, including sales,
purchases, loans, transfers, leasing arrangements and guarantees, have been
properly recorded or disclosed in the Statement.
Contingent Liabilities
To our knowledge, there have been no violations or possible violations by us of
laws or regulations relating to the Property in any jurisdiction, the effects of
which should be considered for disclosure or as a basis for recording a loss
contingency in connection with the preparation of the Statement, which shall be
defined for these purposes as an existing condition, situation or set of
circumstances involving uncertainty as to possible loss of $__________________
individually or $________________________in the aggregate.
To our knowledge, there have been no communications from regulatory agencies or
government representatives concerning investigations or allegations of
noncompliance by us with laws or regulations relating to the Property in any
jurisdiction, or of deficiencies in financial reporting practices or other
matters that could have a material effect on the Statement.
To our knowledge, we have disclosed to you all known threatened or pending
litigation matters and materials liabilities affecting our ownership of the
Property.
Irregularities and Conflicts of Interest
To our knowledge, there have been no irregularities. "Irregularities" for these
purposes shall be defined as intentional misstatements or omissions of amounts
or disclosures in the Statement involving our employees who have significant
roles in the internal control structure relating to the Property.
Subsequent Events
<PAGE>
To our knowledge, no events or transactions that have not been disclosed to you
have occurred or have been pending since December 31, 199 that would have a
material effect on the Statement.
We understand from you that your audit of the Statement was conducted in
accordance with generally accepted auditing standards, as defined in described
by the American Institute of Certified Public Accountants, and that it was
designed primarily for the purpose of expressing an opinion on the Statement
taken as a whole, and that your tests of the accounting records and other
auditing procedures were limited to those you considered
necessary for that purpose.
For purposes of this letter, the phrase "to the best of our knowledge" shall
mean the actual knowledge of Designated Employee of Seller, as that term is
defined in Section 5.2 of that certain Sale Agreement dated as of __________,
1997 between us and Brandywine Realty Trust relating to the
sale and purchase of the Property.
This letter may not be relied on for any other purpose or by any other party
(including, but not limited to, Brandywine Realty Trust or its affiliates).
In the event the sale transaction contemplated by the aforesaid Sale Agreement
closes, our liability for a breach hereunder or an alleged misrepresentation
herein shall be subject to the monetary and survival limitations set forth in
Section 5.3 of the Agreement.
In the event the sale transaction contemplated by the Sale Agreement does not
close, the representations made by us herein shall automatically terminate,
without the need for any further action by us, and in such event we shall have
no monetary liabilities or obligations to you or to any other party for a breach
hereunder or an alleged misrepresentation herein.
METROPOLITAN LIFE INSURANCE COMPANY
By: _______________________________________________
Name: _______________________________________________
Title: _______________________________________________
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our report dated June 23, 1997 included in this Form 8-K, 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.,
June 26, 1997
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our report dated June 19, 1997 included in this Form 8-K, 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).
ZELENKOFSKE, AXELROD & CO., LTD.
Philadelphia, Pa.,
June 26, 1997
