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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A NO. 1
(Mark One)
X Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 1997
or
Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (No Fee Required)
For the transition period from to
Brandywine Realty Trust
(Exact name of registrant as specified in its charter)
Maryland 23-2413352
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
(610) 325-5600
Registrant's Telephone number
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
A total of 9,570,062 Common Shares of Beneficial Interest were outstanding
as of May 5, 1997.
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS
Comparison of the Three Months Ended March 31, 1997 to the Three Months
Ended March 31, 1996. Primarily as a result of the Company's acquisition
program during 1996 and 1997, total revenue increased by approximately $7.6
million or 723% and property operating and management fee expenses increased by
approximately $2.7 million or 576% for the three months ended March 31, 1997 as
compared to the three months ended March 31, 1996.
Depreciation and amortization expense increased by approximately $2.1
million or 855% for the three months ended March 31, 1997 as compared to the
three months ended March 31, 1996, primarily as a result of the Company's
acquisition of real estate during 1996 and 1997. Interest expense increased by
approximately $768,000 or 371% primarily as a result of additional indebtedness
associated with certain of the Company's acquisitions. Administrative expenses
increased by $47,000 or 38.5% primarily as a result of the increase in
management personnel associated with the Company's growth.
As a result of the foregoing, the Company's consolidated net income was
approximately $2.1 million, and, after income allocated to Preferred Shares of
approximately $499,000, the Company's income allocated to Common Shares was
approximately $1.6 million or $0.20 per share for the three months ended March
31, 1997 compared to consolidated net income of $10,000 or $0.02 per share for
the three months ended March 31, 1996.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1997 and December 31, 1996, cash and cash equivalents
totaled $18.4 million and $18.3 million, respectively. During the first quarter
of 1997, net cash provided by operating activities totaled approximately $5.1
million. On March 4, 1997, the Company consummated the 1997 Offering generating
net proceeds of approximately $45.5 million. During the first quarter of 1997,
the Company used its cash sources primarily: (i) to acquire additional
Properties totaling approximately $58.1 million using cash of approximately
$36.5 million and approximately $21.6 million in additional indebtedness; (ii)
to repay approximately $9.6 million in debt; (iii) to fund approximately $2.1
million in distributions paid to shareholders; and (iv) to fund approximately
$2.3 million in capital expenditures and leasing commissions, using cash of
approximately $1.7 million and additional borrowings and escrowed cash reserves
totaling $607,000 available for such expenditures.
As of March 31, 1997, the Company had approximately $46.8 million of debt
outstanding consisting of mortgage loans totaling $43.5 million and deferred
payments totaling $3.8 million (which amount has been discounted, as of March
31, 1997 to $3.3 million based on its terms).
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The mortgages mature between December 1997 and November 2004. For the three
months ended March 31, 1997, the weighted average interest on the Company's debt
was 8.0%.
The Company's Properties require periodic investments of capital for tenant
related capital expenditures and for general capital improvements. For the
three months ended March 31, 1997, such expenditures totaled $2.3 million.
Sources covering these expenditures included approximately $115,000 in financing
pursuant to an existing commitment from the lender on one of the Properties and
approximately $492,000 in escrowed cash reserves in connection with eleven of
the Company's Properties.
The Company's primary sources of cash available for distribution will be
from rental revenues and operating expense reimbursements from tenants and the
management services income from providing services to third parties. The
Company intends to use these funds to pay operating expenses, pay debt service,
fund recurring capital expenditures, fund tenant allowances and pay regular
quarterly distributions to shareholders.
For the quarter ended March 31, 1997, the Company declared distributions
totaling $0.35 per Common Share amounting to approximately $3.3 million. In
addition, during this period, the Company declared distributions to Preferred
Shares totaling approximately $499,000.
The Company expects to meet its short-term liquidity requirements generally
through its working capital and net cash provided by operations. The Company
believes that its net cash provided by operations will be sufficient to allow
the Company to make distributions necessary to enable the Company to continue to
remain qualified as a REIT. The Company also believes that the foregoing
sources of liquidity will be sufficient to fund its short-term liquidity needs
for the foreseeable future.
The Company expects to meet its long-term liquidity requirements, such as
for property acquisitions, scheduled debt maturities, renovations, expansions
and other non-recurring capital improvements, through long-term secured and
unsecured indebtedness and the issuance of additional equity securities. The
Company also expects to use funds available under the Credit Facility to finance
acquisitions and capital improvements on an interim basis.
CASH FLOWS
Comparison of the Three Months Ended March 31, 1997 to the Three Months
Ended March 31, 1996. Net cash provided by operating activities increased in
the three months ended March 31, 1997 by $4.9 million in comparison to the three
months ended March 31, 1996. The increase was primarily attributable to
operating activities of the 46 Properties acquired by the Company during 1996
and through March 31, 1997.
Net cash used in investing activities increased in the three months ended
March 31, 1997 by $60.0 million in comparison to the three months ended March
31, 1996. The increased cash
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use was primarily attributable to the Company's acquisition of 13 Properties
during the first three months of 1997 and capital expenditures and leasing costs
associated with the Company's Properties.
Net cash provided by financing activities increased by $54.7 million in the
three months ended March 31, 1997 in comparison to the three months ended March
31, 1996. The increase was primarily attributable to net proceeds received in
connection with the 1997 Offering and proceeds from mortgage notes in connection
with certain of the Properties acquired by the Company during 1997, offset, in
part, by the repayment of certain mortgage loans and distributions to
shareholders.
FUNDS FROM OPERATIONS
Management generally considers Funds from Operations as one measure of REIT
performance. The Company adopted the NAREIT definition of Funds from Operations
in 1996 and has used this definition for all periods presented in the financial
statements included herein. Funds from Operations is calculated as net income
(loss) adjusted for depreciation expense attributable to real property,
amortization expense attributable to capitalized leasing costs, tenant
allowances and improvements, gains on sales of real estate investments and
extraordinary and nonrecurring items. Funds from Operations should not be
considered as an alternative to net income as an indication of the Company's
performance or to cash flows as a measure of liquidity.
Funds from Operations for the three months ended March 31, 1997 and March
31, 1996 is summarized in the following table (in thousands, except share and
per share data).
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<TABLE>
Three Months Three Months
Ended Ended
March 31, 1996 March 31, 1997
FUNDS FROM OPERATIONS
<S> <C> <C>
Income before minority interest and equity in income
of management company $ 2,019 $ 12
Add (Deduct):
Depreciation attributable to real property 1,969 202
Amortization attributable to leasing costs, tenant
allowances and improvements 179 32
Equity in income of management company 125 --
Minority interest not attributable to unit holders (11) (2)
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Funds from Operations before Minority Interest $ 4,281 $ 244
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Weighted average Common Shares outstanding, including
common share equivalents(1) 9,758,066 625,648
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Funds from Operations, per share $0.44 $0.39
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(1) Includes the weighted average effect of 1,424,737 Common Shares
issuable upon the conversion of the Preferred Shares, the weighted average
effect of 399,567 Common Shares issuable upon the conversion of 399,567
Operating Partnership units and 762,104 Common Shares reserved for issuance
upon the exercise of outstanding warrants and options.
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BRANDYWINE REALTY TRUST
SIGNATURES OF REGISTRANT
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
(Registrant)
Date: July 21, 1997 By:/s/ Gerard H. Sweeney
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Gerard H. Sweeney, President and
Chief Executive Officer
(Principal Executive Officer)
Date: July 21, 1997 By:/s/ Mark S. Kripke
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Mark S. Kripke, Chief Financial Officer
and Secretary
(Principal Financial and Accounting
Officer)
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