<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) February 19, 1998
BRANDYWINE REALTY TRUST
------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
MARYLAND 1-9106 23-2413352
-------- ------ ----------
<S> <C> <C>
(State or other jurisdiction (Commission file number) (I.R.S. Employer
of incorporation) Identification Number)
</TABLE>
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 5 pages
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On February 19, 1998, the Company consummated the acquisition of a
portfolio of 14 properties that contain an aggregate of approximately 941,471
net rentable square feet. The aggregate purchase price for these properties
was $55.5 million. The Company has provided additional information with
respect to this acquisition under the caption "RREEF Portfolio" in Item 5 of
a Current Report on Form 8-K filed with the Securities and Exchange
Commission on January 27, 1998.
ITEM 5. OTHER EVENTS
I. THREE CHRISTINA CENTRE
As of the date of this filing, the Company has determined that it is
probable that it will acquire, through Brandywine Operating Partnership, L.P.
("Operating Partnership"), an office property containing approximately
311,286 net rentable square feet ("Three Christina Centre"). The property is
located in Wilmington, Delaware.
As of February 23, 1998, Three Christina Centre was fully leased to 10
tenants. First USA Bank occupies 269,361 net rentable square feet, which is
more than 10% of the total net rentable area of the property.
The Company anticipates closing the purchase of Three Christina Centre
on or about March 5, 1998. The purchase price for Three Christina Centre is
anticipated to total approximately $50.6 million. The Operating Partnership
expects to pay the purchase price and closing expenses using borrowings under
its existing revolving credit facility.
The seller of Three Christina Centre, Advent Limited Partnership II, is
a party unaffiliated with the Company and the Operating Partnership. The
Company based its determination of the purchase price of the property on the
expected cash flow, physical condition, location, competitive advantages,
existing tenancies and opportunities to retain and attract additional
tenants. The purchase price was determined by arm's-length negotiation
between the Company and the seller.
The table set forth below shows certain information regarding rental
rates and lease expirations for Three Christina Centre.
-2-
<PAGE>
Scheduled Lease Expirations
(Three Christina Centre)
<TABLE>
<CAPTION>
Year of Number of Leases Rentable Square Final Annualized Percentage of Total
Lease Expiring Within Footage Subject Base Rent under Final Annualized Base Rent
Expiration the Year at (1) to Expiring Leases Expiring Leases (2) Under Expiring Leases
- ---------- ---------------- ------------------ ------------------- --------------------------
<S> <C> <C> <C> <C>
1998 5 8,663 $ 119,118 2.2%
1999 1 100 2,856 0.1%
2000 1 403 10,547 0.2%
2001 - - - -
2002 - - - -
2003 - - - -
2004 1 4,157 74,826 1.4%
2005 - - - -
2006 - - - -
2007 and
Thereafter 25 297,963 5,137,767 96.1%
-- ------- ---------- ------
Total 33 311,286 $5,345,114 100.0%
-- ------- ---------- ------
-- ------- ---------- ------
</TABLE>
(1) A lease is considered to expire if, and at any time, it is terminable by
the tenant without payment of penalty or premium.
(2) "Final Annualized Base Rent" for each lease scheduled to expire
represents the cash rental rate in the final month prior to expiration
multiplied by twelve.
After giving effect to the acquisition of Three Christina Centre, the
Company's portfolio will consist of 127 office properties and 28 industrial
properties (including an office property that is currently under construction
and that the Company has agreed to acquire upon its completion during the
first or second quarter of 1998) that contain an aggregate of approximately
10.4 million net rentable square feet.
II. FINANCIAL STATEMENTS
Financial statements for Three Christina Centre are included in this
Current Report under Item 7. After reasonable inquiry, the Company is not
aware of any material factors relating to the above mentioned properties that
would cause the reported financial information relating to such properties
not to be necessarily indicative of future operating results.
-3-
<PAGE>
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements.
The audited statement of revenue and certain operating expenses of
Three Christina Centre for the year ended December 31, 1996 and the
unaudited statement of revenue and certain operating expenses for
the nine months ended September 30, 1997 are included on pages
F-16 to F-19.
(b) Pro Forma Financial Information.
Pro forma financial information which reflects the Company's
acquisition Three Christina Centre as of and for the nine months ended
September 30, 1997 and for the year ended December 31, 1996 are
included on pages F-1 to F-15.
(c) Exhibits.
23.1 - Consent of Arthur Andersen LLP
-4-
<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: February 23, 1998 By: /s/ Gerard H. Sweeney
----------------- --------------------------------
Gerard H. Sweeney, President and
Chief Executive Officer
(Principal Executive Officer)
Date: February 23, 1998 By: /s/ Mark S. Kripke
----------------- --------------------------------
Mark S. Kripke, Chief Financial Officer
(Principal Financial and
Accounting Officer)
-5-
<PAGE>
BRANDYWINE REALTY TRUST
INDEX TO FINANCIAL STATEMENTS
I. UNAUDITED PRO FORMA CONDENSED CONSOLIDATING FINANCIAL INFORMATION
- - Pro Forma Condensed Consolidating Balance Sheet as of
September 30, 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 Nine Months Ended September 30, 1997.................. F-6
- - Notes and Management's Assumptions to Unaudited Pro Forma
Condensed Consolidating Financial Information................. F-7
II. THREE CHRISTINA CENTRE
- - 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 Nine Month
Period Ended September 30, 1997 (unaudited)................... F-17
- - Notes to Statements of Revenue and Certain Expenses........... F-18
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 September 30, 1997 and
the pro forma condensed consolidating statements of operations for the nine
months ended September 30, 1997 and for the year ended December 31, 1996.
The pro forma condensed consolidating financial information should be
read in conjunction with the historical financial statements of the Company
and those acquisitions deemed significant pursuant to the rules and
regulations of the Securities and Exchange Commission.
The unaudited pro forma condensed consolidating financial information is
presented as if the following events occurred on September 30, 1997 for
balance sheet purposes, and at the beginning of the period presented for
purposes of the statements of operations:
- - The Company acquired the properties described in Note 1 to these pro forma
financial statements.
- - The Company acquired its partnership interests in Brandywine Operating
Partnership, L.P. (the "Operating Partnership").
- - The Company issued 4,600,000 Common Shares at $16.50 per share, of which
600,000 shares related to the underwriter's exercise of the over-allotment
option (the "1996 Offering").
- - The Company issued 636,363 Common Shares at $16.50 per share to a voting
trust established for the benefit of the Pennsylvania State Employees
Retirement System ("SERS"), in exchange for $10.5 million (the "SERS
Offering") and contributed such proceeds to the Operating Partnership in
exchange for 636,363 units of general partnership interest ("GP Units") in
the Operating Partnership.
- - The Company issued 709,090 Common Shares at $16.50 per share to two
investment funds managed by Morgan Stanley Asset Management Inc. (the "Morgan
Stanley Offering") and contributed the proceeds to the Operating Partnership
in exchange for 709,090 GP Units.
- - The Operating Partnership repaid $49,805,000 of mortgage indebtedness and
$764,000 of loans made by Safeguard Scientifics, Inc. and paid a $500,000
prepayment penalty with a portion of the proceeds of the 1996 Offering, the
SERS Offering and the Morgan Stanley Offering.
- - The Company issued 2,375,500 Common Shares at $20.625 per share, of which
175,500 shares related to the underwriter's exercise of the over-allotment
option (the "March 1997 Offering").
- - The Company issued 11,500,000 Common Shares at $20.75 per share, of which
1,500,000 shares related to the underwriter's exercise of the over-allotment
option (the "July 1997 Offering"). The net proceeds from the July 1997
Offering were contributed to the Operating Partnership in exchange for
11,500,000 GP Units.
- - The Operating Partnership repaid $160,775,000 of indebtedness under the
Company's revolving credit facility using proceeds from the July 1997
Offering.
- - The Company issued 786,840 Common Shares at $22.31 per share (the
"September 1997 Offering"). The net proceeds from the September 1997
Offering were contributed to the Operating Partnership in exchange for
786,840 GP Units.
- - The Company issued 751,269 Common Shares at $24.63 per share (the "December
1997 Offering"). The net proceeds from the December 1997 Offering were
contributed to the Operating Partnership in exchange for 751,269 GP Units.
F-2
<PAGE>
- - The Company issued 10,000,000 Common Shares at $24.00 per share (the
"January 1998 Offering"). The net proceeds from the January 1998 Offering
were contributed to the Operating Partnership in exchange for 10,000,000 GP
Units.
- - The Company issued 1,012,820 Common Shares at $24.06 per share (the
"February 1998 Offering"). The net proceeds from the February 1998 Offering
were contributed to the Operating Partnership in exchange for 1,012,820 GP
Units
The pro forma condensed consolidating financial information is unaudited and
is not necessarily indicative of what the actual financial position would have
been at September 30, 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 SEPTEMBER 30, 1997 (Notes 1 and 2)
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
BRANDYWINE
REALTY RECENT OTHER
TRUST PUBLIC RECENT THREE
HISTORICAL OFFERINGS ACQUISITIONS CHRISTINA PRO FORMA
CONSOLIDATED (A) (B) (C) CENTRE (D) CONSOLIDATED
-------------------- ------------- --------------- ------------- -----------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Real estate investments,
net................... $ 462,772 $ -- $ 386,513 $ 51,662 $ 900,947
Cash and cash
equivalents........... 19,965 -- -- -- 19,965
Escrowed cash........... 348 -- -- -- 348
Accounts receivable..... 2,465 -- -- -- 2,465
Due from affiliates..... -- -- -- -- --
Investment in management
company............... 318 -- -- -- 318
Deferred costs and other
assets................ 8,470 -- -- -- 8,470
-------- ------------- --------------- ------------- --------
Total assets.......... 494,338 -- 386,513 51,662 932,513
-------- ------------- --------------- ------------- --------
-------- ------------- --------------- ------------- --------
LIABILITIES:
Mortgage notes payable.. 47,984 -- -- -- 47,984
Notes payable, Credit
Facility.............. 14,000 (267,970) 377,005 51,662 174,697
Accrued interest........ 303 -- -- -- 303
Accounts payable and
accrued expenses...... 4,128 -- -- -- 4,128
Distributions payable... 8,338 -- -- -- 8,338
Tenant security deposits
and deferred rents.... 3,960 -- -- -- 3,960
Tenant security deposits
and deferred rents.... 387 -- -- -- 387
-------- ------------- --------------- ------------- --------
Total liabilities..... 79,100 (267,970) 377,005 51,662 239,797
-------- ------------- --------------- ------------- --------
MINORITY INTEREST......... 4,894 -- 9,508 -- 14,402
-------- ------------- --------------- ------------- --------
BENEFICIARIES' EQUITY:
Common shares of
beneficial interest... 234 118 -- -- 352
Additional paid-in
capital............... 428,787 267,852 -- -- 696,639
Share warrants.......... 962 -- -- -- 962
Cumulative earnings..... 5,209 -- -- -- 5,209
Cumulative
distributions......... (24,848) -- -- -- (24,848)
-------- ------------- --------------- ------------- --------
Total beneficiaries'
equity.............. 410,344 267,970 -- -- 678,314
-------- ------------- --------------- ------------- --------
Total liabilities and
beneficiaries'
equity $ 494,338 $ -- $ 386,513 $ 51,662 $ 932,513
-------- ------------- --------------- ------------- --------
-------- ------------- --------------- ------------- --------
</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 1997 RECENT THREE TOTAL
HISTORICAL 1996 OTHER PUBLIC CHRISTINA PRO FORMA
CONSOLIDATED (A) EVENTS (B) SUBTOTAL EVENTS (C) OFFERINGS (E) CENTRE (F) CONSOLIDATED
---------------- ---------- -------- ---------- ------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUE:
Base rents............... $ 8,462 $ 12,646 $ 21,108 $ 79,446 $ -- $ 4,508 $ 105,062
Tenant reimbursements.... 1,372 2,838 4,210 10,397 -- 2,347 16,954
Other.................... 196 100 296 683 -- 14 993
---------- --------- -------- --------- -------- --------- ----------
Total Revenue.......... 10,030 15,584 25,614 90,526 -- 6,869 123,009
---------- --------- -------- --------- -------- --------- ----------
OPERATING EXPENSES:
Interest................. 2,751 513 3,264 31,009 (20,098) 3,875 18,050
Depreciation and
amortization........... 2,836 4,687 7,523 22,244 -- 1,653 31,420
Property expenses........ 3,709 6,830 10,539 37,477 -- 2,799 50,815
General and
administrative......... 825 148 973 -- -- -- 973
---------- --------- -------- --------- -------- --------- ----------
Total operating
expenses........... 10,121 12,178 22,299 90,730 (20,098) 8,327 101,258
---------- --------- -------- --------- -------- --------- ----------
Income (loss) before minority
interest and equity in
income (loss) of management
company.................. (91) 3,406 3,315 (204) 20,098 (1,458) 21,751
Equity in income (loss) of
management company....... (26) 66 40 1,291 -- 108 1,439
---------- --------- -------- --------- -------- --------- ----------
Income (loss) before
minority interest........ (117) 3,472 3,355 1,087 20,098 (1,350) 23,190
Minority interest in
(income) loss............ (45) (429) (474) 362 (198) 17 (293)
---------- --------- -------- --------- -------- --------- ----------
Net income (loss).......... (162) 3,043 2,881 1,449 19,900 (1,333) 22,897
(Income) loss allocated
to Preferred Shares...... (401) (1,847) (2,248) -- -- -- (2,248)
---------- --------- -------- --------- -------- --------- ----------
Income (loss) allocated
to Common Shares......... $ (563) $ 1,196 $ 633 $ 1,449 $ 19,900 $ (1,333) $ 20,649
---------- --------- -------- --------- -------- --------- ----------
---------- --------- -------- --------- -------- --------- ----------
Earnings (loss) per Common
Share.................... $ (0.43) $ 0.62
---------- ----------
---------- ----------
Weighted average number of
shares outstanding
including share
equivalents.............. 1,302,648 33,342,335
---------- ----------
</TABLE>
F-5
<PAGE>
BRANDYWINE REALTY TRUST
PRO FORMA CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 (Notes 1 and 3)
(Unaudited)
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
BRANDYWINE
REALTY
TRUST 1997 RECENT THREE TOTAL
HISTORICAL OTHER PUBLIC CHRISTINA PRO FORMA
CONSOLIDATED (A) EVENTS (D) OFFERINGS (E) CENTRE (F) CONSOLIDATED
-------------------- ------------- ----------------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
REVENUE:
Base rents.............. $ 32,290 $ 49,248 $ -- $ 3,474 $ 85,012
Tenant reimbursements... 5,731 5,801 -- 1,843 13,375
Other................... 818 402 -- 19 1,239
----------- ------------- ------- ------------- ----------------
Total Revenue......... 38,839 55,451 -- 5,336 99,626
----------- ------------- ------- ------------- ----------------
OPERATING EXPENSES:
Interest................ 4,899 20,668 (15,033) 2,898 13,432
Depreciation and
amortization.......... 10,051 13,463 -- 1,236 24,750
Property operating
expenses.............. 14,805 21,324 -- 2,113 38,242
Other expenses.......... 705 -- -- -- 705
----------- ------------- ------- ------------- ----------------
Total operating
expenses.......... 30,460 55,455 (15,033) 6,247 77,129
----------- ------------- ------- ------------- ----------------
Income (loss) before
equity income of
management company and
minority interest....... 8,379 (4) 15,033 (911) 22,497
Equity in income (loss) of
management company...... 332 871 -- 81 1,284
----------- ------------- ------- ------------- ----------------
Income (loss) before
minority interest....... 8,711 867 15,033 (830) 23,781
Minority interest in
(income) loss........... (256) (11) (43) 10 (300)
----------- ------------- ------- ------------- ----------------
Net income (loss)......... 8,455 856 14,990 (820) 23,481
(Income) loss allocated to
Preferred Shares........ (499) -- -- -- (499)
----------- ------------- ------- ------------- ----------------
Income (loss) allocated to
Common Shares........... $ 7,956 $ 856 $ 14,990 $ (820) $ 22,982
----------- ------------- ------- ------------- ----------------
----------- ------------- ------- ------------- ----------------
Earnings (loss) per Common
Share................... $ 0.65 $ 0.65
----------- ----------------
----------- ----------------
Weighted average number of
shares outstanding
including share
equivalents............. 12,285,557 35,146,845
----------- ----------------
</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 February 23, 1998, the Company owned 153 properties. The Company's
interest in all 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 February 23, 1998, the Company
held a 98.7% interest in the Operating Partnership.
These pro forma financial statements should be read in conjunction with the
historical financial statements and notes thereto of the Company, the SSI/TNC
Properties, the LibertyView Building, the nine properties (the "SERS
Properties") acquired in November 1996 from SERS and its subsidiaries, Delaware
Corporate Center I, 700/800 Business Center Drive, the Columbia Acquisition
Properties, the Main Street Acquisition Properties, the TA Properties, the Emmes
Properties, the Greentree Executive Campus Acquisition Properties, 748 & 855
Springdale Drive, the Green Hills Properties, the Berwyn Park Properties, 500 &
501 Office Center Drive, Metropolitan Industrial Center, Atrium 1, Bala Pointe
Office Centre, the Scarborough Properties, the GMH Properties, the RREEF
Properties and Three Christina Centre. In management's opinion, all adjustments
necessary to reflect the effects of the 1996 Offering, the SERS Offering, the
Morgan Stanley Offering, the March 1997 Offering, the July 1997 Offering, the
September 1997 Offering, the December 1997 Offering, the January 1998 Offering,
the February 1998 Offering, the acquisitions of the SSI/TNC Properties, the
LibertyView Building, the 1996 Additional Acquisition Properties (consisting of
the SERS Properties, Delaware Corporate Center I, 700/800 Business Center Drive
and 8000 Lincoln Drive), the Columbia Acquisition Properties, the Main Street
Acquisition Properties, 1336 Enterprise Drive, the Greentree Executive Campus,
Five Eves Drive, Kings Manor, the TA Properties, the Emmes Properties, 748 & 855
Springdale Drive, 1974 Sproul Road, the Green Hills Properties, the Berwyn Park
Properties, 500 & 501 Office Center Drive, Metropolitan Industrial Center,
Atrium 1, 5 & 6 Cherry Hill Executive Campus, 220 Commerce Drive, Provident
Place, the PECO Building, Bala Pointe Office Centre, the Scarborough Properties,
the GMH Properties, the RREEF Properties and Three Christina Centre by the
Company have been made.
2. ADJUSTMENTS TO PRO FORMA CONDENSED CONSOLIDATING BALANCE SHEET:
(A) Reflects the Company's historical consolidated balance sheet as of
September 30, 1997.
(B) Reflects the Company's recent public share offerings and the use of the
aggregate net proceeds to repay $268.0 million of indebtedness under the Credit
Facility, as summarized below:
<TABLE>
<CAPTION>
NET PROCEEDS
------------
<S> <C>
December 1997 Offering................ $ 17,593
January 1998 Offering................. 227,300
February 1998 Offering................ 23,077
------------
Total................................. $ 267,970
------------
------------
</TABLE>
F-7
<PAGE>
(C) Reflects the Company's acquisition of several property acquisitions for
cash and Operating Partnership units as follows:
<TABLE>
<CAPTION>
PROPERTY PURCHASE PRICE CLOSING COSTS TOTAL
-------- -------------- ------------- ---------
<S> <C> <C> <C>
Atrium I...................... $ 10,250 $ 45 $ 10,295
5 & 6 Cherry Hill Executive
Campus...................... 3,484 20 3,504
220 Commerce Drive............ 5,300 129 5,429
Provident Place............... 6,300 152 6,452
PECO Building................. 9,500 146 9,646
Bala Pointe Office Center..... 26,750 403 27,153
Scarborough Properties........ 37,075 122 37,197
GMH Properties................ 229,015 1,665 230,680
RREEF Properties.............. 55,500 657 56,157
-------------- ------------- ---------
Total....................... $ 383,174 $ 3,339 $ 386,513
-------------- ------------- ---------
-------------- ------------- ---------
</TABLE>
(D) Reflects the Company's acquisition of Three Christina Centre as follows:
<TABLE>
<S> <C>
Purchase Price............................................. $ 50,600
Closing Costs.............................................. 1,062
---------
$ 51,662
---------
---------
</TABLE>
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>
1996
SSI/TNC PRO FORMA
PROPERTIES AND DELAWARE 700/800 & OTHER TOTAL
LIBERTY VIEW SERS CORPORATE BUSINESS CENTER 8000 LINCOLN OFFERING PRO FORMA
BUILDING PROPERTIES CENTER DRIVE DRIVE ADJUSTMENTS 1996 EVENTS
------------- ---------- --------- --------------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUE:
Base rents............... $ 5,714 $ 4,008 $ 2,036 $ 651 $ 237 $ -- $ 12,646
Tenant reimbursements.... 2,511 249 -- 76 2 -- 2,838
Other.................... 100 -- -- -- -- -- 100
------------- ---------- --------- --------------- ------------ ----------- -----------
Total Revenue.......... 8,325 4,257 2,036 727 239 -- 15,584
OPERATING EXPENSES:
Interest................. 3,783 194 -- -- -- (3,464) 513
Depreciation and
amortization........... 2,819 818 374 212 89 375 4,687
Property expenses........ 2,831 2,217 552 270 231 729 6,830
General and
administrative......... 715 -- -- -- -- (567) 148
------------- ----------- --------- --------------- ------------ ----------- -----------
Total operating
expenses........... 10,148 3,229 926 482 320 (2,927) 12,178
Income (loss) before
management company and
minority interest........ (1,823) 1,028 1,110 245 (81) 2,927 3,406
Equity in income (loss) of
management company....... 75 -- -- -- -- (9) 66
------------- ----------- --------- --------------- ------------ ----------- -----------
Income (loss) before
minority interest........ (1,748) 1,028 1,110 245 (81) 2,918 3,472
Minority interest in
(income) loss............ 513 -- -- -- -- (942) (429)
------------- ----------- --------- --------------- ------------ ----------- -----------
Net income (loss).......... (1,235) 1,028 1,110 245 (81) 1,976 3,043
Income loss allocated
to Preferred Shares...... -- -- -- -- -- (1,847) (1,847)
------------- ----------- --------- --------------- ------------ ----------- -----------
Income (loss) allocated
to Common Shares......... $ (1,235) $ 1,028 $ 1,110 $ 245 $ (81) $ 129 $ 1,196
------------- ----------- --------- --------------- ------------ ----------- -----------
</TABLE>
F-8
<PAGE>
(C) Reflects the pro forma statements of operations of the Columbia
Acquisition Properties, the Main Street Acquisition Properties, 1336
Enterprise Drive, Kings Manor, Greentree Executive Campus, Five Eves Drive,
the TA Properties, the Emmes Properties, 748 & 855 Springdale Drive, 1974
Sproul Road, the Berwyn Park Properties, the Green Hills Properties, 500/501
Office Center Drive, Christiana Corporate Center, Metropolitan Industrial
Center, Atrium 1, 5 & 6 Cherry Hill Executive Campus, 220 Commerce Drive,
Provident Place, the PECO Building, Bala Pointe Office Centre, the
Scarborough Properties, the GMH Properties and the RREEF Properties for the
year ended December 31, 1996 and other pro forma adjustments to reflect the
March 1997 Offering, the July 1997 Offering and the September 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>
COLUMBIA MAIN STREET 1336 GREENTREE
ACQUISITION ACQUISITION ENTERPRISE EXECUTIVE
PROPERTIES PROPERTIES DRIVE KINGS MANOR CAMPUS
------------- ------------- ------------- --------------- -----------
<S> <C> <C> <C> <C> <C>
Revenue:
Base rents................................... $ 5,146 $ 3,141 $ 437 $ 411 $ 1,862
Tenant reimbursements........................ 359 347 75 107 175
Other........................................ 376 -- -- -- --
------ ------ ----- ----- -----------
Total revenue.............................. 5,881 3,488 512 518 2,037
------ ------ ----- ----- -----------
Operating Expenses:
Interest (i)................................. 1,680 -- -- -- 841
Depreciation and amortization (ii)........... 1,007 629 117 114 359
Property expenses............................ 1,979 2,194 107 170 1,018
General and administrative................... -- -- -- -- --
------ ------ ----- ----- -----------
Total operating expenses................... 4,666 2,823 224 284 2,218
------ ------ ----- ----- -----------
Income (loss) before equity in income of
management company and minority interest..... 1,215 665 288 234 (181)
Equity in income (loss) of management company
(iii)........................................ -- -- -- -- --
------ ------ ----- ----- -----------
Income (loss) before minority interest......... 1,215 665 288 234 (181)
Minority interest in (income) loss............. (15) (8) (4) (3) 2
------ ------ ----- ----- -----------
Net income..................................... $ 1,200 $ 657 $ 284 $ 231 $ (179)
------ ------ ----- ----- -----------
------ ------ ----- ----- -----------
</TABLE>
<TABLE>
<CAPTION>
FIVE EVES
DRIVE
-------------
<S> <C>
Revenue:
Base rents................................... $ 348
Tenant reimbursements........................ 39
Other........................................ 1
-----
Total revenue.............................. 388
-----
Operating Expenses:
Interest (i)................................. 254
Depreciation and amortization (ii)........... 108
Property expenses............................ 151
General and administrative................... --
-----
Total operating expenses................... 513
-----
Income (loss) before equity in income of
management company and minority interest..... (125)
Equity in income (loss) of management company
(iii)........................................ --
-----
Income (loss) before minority interest......... (125)
Minority interest in (income) loss............. 2
-----
Net income..................................... $ (123)
-----
-----
</TABLE>
<TABLE>
<CAPTION>
748 & 855
EMMES SPRINGDALE 1974 SPROUL MARCH 1997
TA PROPERTIES PROPERTIES DRIVE ROAD OFFERING
--------------- ----------- ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Revenue:
Base rents.................................. $ 5,102 $ 6,214 $ 940 $ 774 $ --
Tenant reimbursements....................... 735 2,681 -- 118 --
Other....................................... 9 10 -- -- --
------ ----------- ----- ------------- ---
Total revenue............................. 5,846 8,905 940 892 --
------ ----------- ----- ------------- ---
Operating Expenses:
Interest (i)................................ 3,168 4,987 400 -- (525)
Depreciation and amortization (ii).......... 1,352 2,128 171 134 --
Property expenses........................... 1,962 3,482 250 492 --
General and administrative.................. -- -- -- -- --
------ ----------- ----- ------------- ---
Total operating expenses.................. 6,482 10,597 821 626 (525)
------ ----------- ----- ------------- ---
Income (loss) before equity in income of
management company and minority interest.... (636) (1,692) 119 266 525
Equity in income (loss) of management company
(iii)....................................... 105 65 23 22 --
------ ----------- ----- ------------- ---
Income (loss) before minority interest........ (531) (1,627) 142 288 525
Minority interest in (income) loss............ 7 21 (2) (4) 350
------ ----------- ----- ------------- ---
Net income.................................... $ (524) $ (1,606) $ 140 $ 284 $ 875
------ ----------- ----- ------------- ---
------ ----------- ----- ------------- ---
</TABLE>
<TABLE>
<CAPTION>
JULY 1997
OFFERING
-----------
<S> <C>
Revenue:
Base rents.................................. $ --
Tenant reimbursements....................... --
Other....................................... --
-----------
Total revenue............................. --
-----------
Operating Expenses:
Interest (i)................................ (12,058)
Depreciation and amortization (ii).......... --
Property expenses........................... --
General and administrative.................. --
-----------
Total operating expenses.................. (12,058)
-----------
Income (loss) before equity in income of
management company and minority interest.... 12,058
Equity in income (loss) of management company
(iii)....................................... --
-----------
Income (loss) before minority interest........ 12,058
Minority interest in (income) loss............ (90)
-----------
Net income.................................... $ 11,968
-----------
-----------
</TABLE>
F-9
<PAGE>
<TABLE>
<CAPTION>
CHRISTIANA METROPOLITAN
BERWYN PARK GREEN HILLS 500/501 OFFICE CORPORATE INDUSTRIAL
PROPERTIES PROPERTIES (IV) CENTER DRIVE CENTER CENTER
------------- --------------- --------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Revenue:
Base rents............................. $ 3,815 $ 7,700 $ 1,754 $ 768 $ 1,811
Tenant reimbursements.................. 720 -- 1,358 61 406
Other.................................. 108 -- 43 2 9
------ ------ ------ ----- ------
Total revenue........................ 4,643 7,700 3,155 831 2,226
------ ------ ------ ----- ------
Operating Expenses:
Interest (i)........................... -- 1,200 1,125 430 1,238
Depreciation and amortization (ii)..... 1,205 1,294 547 183 528
Property expenses...................... 1,991 3,419 1,561 337 678
General and administrative............. -- -- -- -- --
------ ------ ------ ----- ------
Total operating expenses............. 3,196 5,913 3,233 950 2,444
------ ------ ------ ----- ------
Income (loss) before equity in income of
management company and minority
interest............................... 1,447 1,787 (78) (119) (218)
Equity in income (loss) of management
company (iii).......................... 166 (115) 76 5 53
------ ------ ------ ----- ------
Income (loss) before minority interest... 1,613 1,672 (2) (114) (165)
Minority interest in (income) loss....... (20) (21) -- 1 2
------ ------ ------ ----- ------
Net income............................... $ 1,593 $ 1,651 $ (2) $ (113) $ (163)
------ ------ ------ ----- ------
------ ------ ------ ----- ------
</TABLE>
<TABLE>
<CAPTION>
ATRIUM 1
-----------
<S> <C>
Revenue:
Base rents............................. $ 1,226
Tenant reimbursements.................. 33
Other.................................. 26
-----------
Total revenue........................ 1,285
-----------
Operating Expenses:
Interest (i)........................... 772
Depreciation and amortization (ii)..... 329
Property expenses...................... 755
General and administrative............. --
-----------
Total operating expenses............. 1,856
-----------
Income (loss) before equity in income of
management company and minority
interest............................... (571)
Equity in income (loss) of management
company (iii).......................... 31
-----------
Income (loss) before minority interest... (540)
Minority interest in (income) loss....... 7
-----------
Net income............................... $ (533)
-----------
-----------
</TABLE>
<TABLE>
<CAPTION>
5 & 6 CHERRY
SEPTEMBER HILL EXECUTIVE 220 COMMERCE PROVIDENT PECO
1997 OFFERING CAMPUS DRIVE PLACE BUILDING (V)
----------------- ----------------- ----------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Revenue:
Base rents............................... $ -- $ 152 $ 572 $ 756 $ 1,017
Tenant reimbursements.................... -- -- -- 105 --
Other.................................... -- -- -- 8 --
----------------- ----------------- ----------------- ----------- -------------
Total revenue.......................... -- 152 572 869 1,017
----------------- ----------------- ----------------- ----------- -------------
Operating Expenses:
Interest (i)............................. -- 263 407 484 723
Depreciation and amortization (ii)....... -- 112 174 206 309
Property expenses........................ -- 169 194 333 --
General and administrative............... -- -- -- -- --
----------------- ----------------- ----------------- ----------- -------------
Total operating expenses............... -- 544 775 1,023 1,032
----------------- ----------------- ----------------- ----------- -------------
Income (loss) before equity in income of
management company and minority
interest................................. -- (392) (203) (154) (15)
Equity in income (loss) of management
company (iii)............................ -- -- 12 18 --
----------------- ----------------- ----------------- ----------- -------------
Income (loss) before minority interest..... -- (392) (191) (136) (15)
Minority interest in (income) loss......... 10 5 2 2 --
----------------- ----------------- ----------------- ----------- -------------
Net income................................. $ 10 $ (387) $ (189) $ (134) $ (15)
----------------- ----------------- ----------------- ----------- -------------
----------------- ----------------- ----------------- ----------- -------------
</TABLE>
F-10
<PAGE>
<TABLE>
<CAPTION>
BALA POINTE SCARBOROUGH GMH RREEF TOTAL OTHER
OFFICE CENTRE PROPERTIES PROPERTIES PROPERTIES 1997 EVENTS
--------------- ------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenue:
Base rents.................................... $ 3,572 $ 4,971 $ 22,906 $ 4,051 $ 79,446
Tenant reimbursements......................... 21 239 2,175 643 10,397
Other......................................... 35 -- 56 -- 683
------ ------ ----------- ----------- -----------
Total revenue............................... 3,628 5,210 25,137 4,694 90,526
------ ------ ----------- ----------- -----------
Operating Expenses:
Interest (i).................................. 2,036 2,071 17,301 4,212 31,009
Depreciation and amortization (ii)............ 869 1,190 7,382 1,797 22,244
Property expenses............................. 1,559 2,424 10,964 1,288 37,477
General and administrative.................... -- -- -- -- --
------ ------ ----------- ----------- -----------
Total operating expenses.................... 4,464 5,685 35,647 7,297 90,730
------ ------ ----------- ----------- -----------
Income (loss) before equity in income of
management company and minority interest...... (836) (475) (10,510) (2,603) (204)
Equity in income (loss) of management company
(iii)......................................... 64 119 550 97 1,291
------ ------ ----------- ----------- -----------
Income (loss) before minority interest.......... (772) (356) (9,960) (2,506) 1,087
Minority interest in (income) loss.............. 10 (49) 125 32 362
------ ------ ----------- ----------- -----------
Net income...................................... $ (762) $ (405) $ (9,835) $ (2,474) $ 1,449
------ ------ ----------- ----------- -----------
------ ------ ----------- ----------- -----------
</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 adjustments for the
March 1997 Offering and the July 1997 Offering represent interest savings
related to the payoff of $7 million and $160.8 million, respectively, of
credit facility borrowings at an effective rate of 7.5%.
(ii) Pro forma depreciation expense is presented assuming an 80% building and
20% land allocation of the purchase price and capitalized closing costs
and assumes a useful life of 25 years.
(iii) Pro forma equity in income of management company is presented based on
management fees less incremental costs estimated to be incurred.
(iv) Pro forma property expenses of the Green Hill Properties exclude $666,000
from historical amounts. Such amount represents expected salary savings.
(v) Pro forma base rents for the Peco Building are based on the lease in place
as of November 25, 1997 as historically the property was owner occupied
and was not an operating property. All property expenses are paid directly
by the tenant.
(D) Reflects the pro forma adjustments relating to the Columbia
Acquisition Properties, the Main Street Acquisition Properties, 1336
Enterprise Drive, Kings Manor, Greentree Executive Campus, Five Eves Drive,
the TA Properties, the Emmes Properties, 748 & 855 Springdale Drive, 1974
Sproul Road, the Berwyn Park Properties, the Green Hills Properties, 500/501
Office Center Drive, Christiana Corporate Center, Metropolitan Industrial
Center, Atrium 1, 5 & 6 Cherry Hill Executive Campus, 220 Commerce Drive,
Provident Place, the PECO Building, Bala Pointe Office Centre, the
Scarborough Properties, the GMH Properties and the RREEF Properties for the
nine months ended September 30, 1997 and other pro forma adjustments to
reflect the March 1997 Offering, the July 1997 Offering and the September
1997 Offering for the nine months ended September 30, 1997. The operating
results reflected below include the historical results and related pro forma
adjustments to reflect the period January 1, 1997 through the earlier of the
respective acquisition date or September 30, 1997.
F-11
<PAGE>
<TABLE>
<CAPTION>
COLUMBIA MAIN STREET 1336 GREENTREE
ACQUISITION ACQUISITION ENTERPRISE EXECUTIVE
PROPERTIES PROPERTIES DRIVE KINGS MANOR CAMPUS
------------- --------------- --------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
Revenue:
Base rents................................... $ 338 $ 542 $ 78 $ 105 $ 602
Tenant reimbursements........................ 24 60 13 27 17
Other........................................ 25 -- -- -- --
----- ----- --- ----- -----
Total revenue.............................. 387 602 91 132 619
----- ----- --- ----- -----
Operating Expenses:
Interest (i)................................. 110 -- -- -- 249
Depreciation and amortization (ii)........... 66 109 21 29 106
Property expenses............................ 130 379 19 43 272
General and administrative................... -- -- -- -- --
----- ----- --- ----- -----
Total operating expenses................... 306 488 40 72 627
----- ----- --- ----- -----
Income (loss) before equity in income of
management company and minority interest..... 81 114 51 60 (8)
Equity in income (loss) of management company
(iii)........................................ -- -- -- -- --
----- ----- --- ----- -----
Income (loss) before minority interest......... 81 114 51 60 (8)
Minority interest in (income) loss............. (1) (1) (1) (1) --
----- ----- --- ----- -----
Net income..................................... $ 80 $ 113 $ 50 $ 59 $ (8)
----- ----- --- ----- -----
----- ----- --- ----- -----
</TABLE>
<TABLE>
<CAPTION>
FIVE EVES
DRIVE
-------------
<S> <C>
Revenue:
Base rents................................... $ 103
Tenant reimbursements........................ 12
Other........................................ --
-----
Total revenue.............................. 115
-----
Operating Expenses:
Interest (i)................................. 75
Depreciation and amortization (ii)........... 32
Property expenses............................ 45
General and administrative................... --
-----
Total operating expenses................... 152
-----
Income (loss) before equity in income of
management company and minority interest..... (37)
Equity in income (loss) of management company
(iii)........................................ --
-----
Income (loss) before minority interest......... (37)
Minority interest in (income) loss............. --
-----
Net income..................................... $ (37)
-----
-----
</TABLE>
<TABLE>
<CAPTION>
748 & 855
EMMES SPRINGDALE 1974 SPROUL MARCH 1997
TA PROPERTIES PROPERTIES DRIVE ROAD OFFERING
--------------- ----------- ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Revenue:
Base rents.................................. $ 2,053 $ 2,570 $ 414 $ 354 $ --
Tenant reimbursements....................... 299 1,130 -- 54 --
Other....................................... 6 2 -- -- --
------ ----------- ----- ------ ---
Total revenue............................. 2,358 3,702 414 408 --
------ ----------- ----- ------ ---
Operating Expenses:
Interest (i)................................ 1,241 2,049 171 -- (91)
Depreciation and amortization (ii).......... 530 875 73 61 --
Property expenses........................... 698 1,332 99 225 --
General and administrative.................. -- -- -- -- --
------ ----------- ----- ------ ---
Total operating expenses................ 2,469 4,256 343 286 (91)
------ ----------- ----- ------ ---
Income (loss) before equity in income of
management company and minority interest.... (111) (554) 71 122 91
Equity in income (loss) of management company
(iii)....................................... 41 27 10 10 --
------ ----------- ----- ------ ---
Income (loss) before minority interest........ (70) (527) 81 132 91
Minority interest in (income) loss............ 1 7 (1) (2) (50)
------ ----------- ----- ------ ---
Net income.................................... $ (69) $ (520) $ 80 $ 130 $ 41
------ ----------- ----- ------ ---
------ ----------- ----- ------ ---
JULY 1997
OFFERING
-----------
<S> <C>
Revenue:
Base rents.................................. $ --
Tenant reimbursements....................... --
Other....................................... --
-----------
Total revenue............................. --
-----------
Operating Expenses:
Interest (i)................................ (6,904)
Depreciation and amortization (ii).......... --
Property expenses........................... --
General and administrative.................. --
-----------
Total operating expenses.................. (6,904)
-----------
Income (loss) before equity in income of
management company and minority interest.... 6,904
Equity in income (loss) of management company
(iii)....................................... --
-----------
Income (loss) before minority interest........ 6,904
Minority interest in (income) loss............ 74
-----------
Net income.................................... $ 6,978
-----------
-----------
</TABLE>
F-12
<PAGE>
<TABLE>
<CAPTION>
CHRISTIANA METROPOLITAN
BERWYN PARK GREEN HILLS 500/501 OFFICE CORPORATE INDUSTRIAL
PROPERTIES PROPERTIES (IV) CENTER DRIVE CENTER CENTER
------------- --------------- --------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Revenue:
Base rents............................... $ 2,492 $ 4,567 $ 1,106 $ 615 $ 1,395
Tenant reimbursements.................... 376 -- 919 22 306
Other.................................... 36 -- 48 45 33
------ ------ ------ ----- ------
Total revenue............................ 2,904 4,567 2,073 682 1,734
------ ------ ------ ----- ------
Operating Expenses:
Interest (i)............................. -- 690 700 309 926
Depreciation and amortization (ii)....... 700 745 340 131 395
Property expenses........................ 1,073 2,059 971 218 472
General and administrative............... -- -- -- -- --
------ ------ ------ ----- ------
Total operating expenses................. 1,773 3,494 2,011 658 1,793
------ ------ ------ ----- ------
Income (loss) before equity in income of
management company and minority
interest............................... 1,131 1,073 62 24 (59)
Equity in income (loss) of management
company (iii).......................... 95 (66) 44 4 40
------ ------ ------ ----- ------
Income (loss) before minority interest... 1,226 1,007 106 28 (19)
Minority interest in (income) loss....... (15) (13) (1) -- --
------ ------ ------ ----- ------
Net income............................... $ 1,211 $ 994 $ 105 $ 28 $ (19)
------ ------ ------ ----- ------
------ ------ ------ ----- ------
<CAPTION>
ATRIUM 1
-----------
<S> <C>
Revenue:
Base rents............................. $ 962
Tenant reimbursements.................. 33
Other.................................. 26
-----
Total revenue........................ 1,021
-----
Operating Expenses:
Interest (i)........................... 577
Depreciation and amortization (ii)..... 246
Property expenses...................... 555
General and administrative............. --
-----
Total operating expenses............. 1,378
-----
Income (loss) before equity in income of
management company and minority
interest............................... (357)
Equity in income (loss) of management
company (iii).......................... 23
-----
Income (loss) before minority interest... (334)
Minority interest in (income) loss....... 4
-----
Net income............................... $ (330)
-----
-----
</TABLE>
<TABLE>
<CAPTION>
5 & 6 CHERRY
SEPTEMBER HILL EXECUTIVE 220 COMMERCE PROVIDENT PECO
1997 OFFERING CAMPUS DRIVE PLACE BUILDING (V)
----------------- ----------------- ----------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Revenue:
Base rents............................... $ -- $ 114 $ 525 $ 567 $ 762
Tenant reimbursements.................... -- -- -- 79 --
Other.................................... -- -- -- 6 --
--- ----- ----- ----- -----
Total revenue.......................... -- 114 525 652 762
--- ----- ----- ----- -----
Operating Expenses:
Interest (i)............................. -- 197 304 362 541
Depreciation and amortization (ii)....... -- 84 130 154 231
Property expenses........................ -- 126 164 249 --
General and administrative................. -- -- -- -- --
--- ----- ----- ----- -----
Total operating expenses................... -- 407 598 765 772
--- ----- ----- ----- -----
Income (loss) before equity in income of
management company and minority
interest................................. -- (293) (73) (113) (10)
Equity in income (loss) of management
company (iii)............................ -- -- 9 13 --
--- ----- ----- ----- -----
Income (loss) before minority interest..... -- (293) (64) (100) (10)
Minority interest in (income) loss......... 26 4 1 1 --
--- ----- ----- ----- -----
Net income................................. $ 26 $ (289) $ (63) $ (99) $ (10)
--- ----- ----- ----- -----
--- ----- ----- ----- -----
</TABLE>
F-13
<PAGE>
<TABLE>
<CAPTION>
BALA POINTE SCARBOROUGH GMH RREEF TOTAL OTHER
OFFICE CENTRE PROPERTIES PROPERTIES PROPERTIES 1997 EVENTS
--------------- ------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenue:
Base rents.................................... $ 2,837 $ 4,292 $ 18,735 $ 3,120 $ 49,248
Tenant reimbursements......................... 27 425 1,449 529 5,801
Other......................................... 28 17 130 -- 402
------ ------ ----------- ----------- -----------
Total revenue............................... 2,892 4,734 20,314 3,649 55,451
------ ------ ----------- ----------- -----------
Operating Expenses:
Interest (i).................................. 1,523 1,549 12,940 3,150 20,668
Depreciation and amortization (ii)............ 650 890 5,521 1,344 13,463
Property expenses............................. 1,243 1,834 8,179 939 21,324
General and administrative.................... -- -- -- -- --
------ ------ ----------- ----------- -----------
Total operating expenses.................... 3,416 4,273 26,640 5,433 55,455
------ ------ ----------- ----------- -----------
Income (loss) before equity in income of
management company and minority interest...... (524) 461 (6,326) (1,784) (4)
Equity in income (loss) of management company
(iii)......................................... 48 89 411 73 871
------ ------ ----------- ----------- -----------
Income (loss) before minority interest.......... (476) 550 (5,915) (1,711) 867
Minority interest in (income) loss.............. 6 (146) 75 22 (11)
------ ------ ----------- ----------- -----------
Net income...................................... $ (470) $ 404 $ (5,840) $ (1,689) $ 856
------ ------ ----------- ----------- -----------
------ ------ ----------- ----------- -----------
</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 adjustments for the
March 1997 Offering and the July 1997 Offering represent interest savings
related to the payoff of $7 million and $160.8 million, respectively, of
credit facility borrowings at an effective rate of 7.5%.
(ii) Pro forma depreciation expense is presented assuming an 80% building and
20% land allocation of the purchase price and capitalized closing costs
and assumes a useful life of 25 years.
(iii) Pro forma equity in income of management company is presented based on
management fees less incremental costs estimated to be incurred.
(iv) Pro forma property expenses for the Green Hill Properties exclude $333,000
from historical amounts. Such amount represents expected salary savings.
(v) Pro forma base rents for the Peco Building are based on the lease in place
as of November 25, 1997 as historically the property was owner occupied
and was not an operating property. All property expenses are paid directly
by the tenant.
(E) Represents interest expense savings from debt repayments upon the
application of the net proceeds from the December 1997 Offering, the January
1998 Offering and the February 1998 Offering.
(F) Reflects the pro forma statements of operations of Three Christina
Centre for the nine months ended September 30, 1997 and for the year ended
December 31, 1996. All amounts represent historical operations except for the
pro forma adjustments noted:
<PAGE>
<TABLE>
<CAPTION>
- - For the nine months ended September 30, 1997:
THREE CHRISTINA
CENTRE
-----------------
<S> <C>
Revenue:
Base rents..................................................................................... $ 3,474
Tenant reimbursements.......................................................................... 1,843
Other.......................................................................................... 19
------
Total revenue................................................................................ 5,336
------
Operating Expenses:
Interest (i)................................................................................... 2,898
Depreciation and amortization (ii)............................................................. 1,236
Property expenses.............................................................................. 2,113
General and administrative..................................................................... --
------
Total operating expenses..................................................................... 6,247
------
Income (loss) before equity in income of management company and minority interest................ (911)
Equity in income (loss) of management company (iii).............................................. 81
------
Income (loss) before minority interest........................................................... (830)
Minority interest in (income) loss............................................................... 10
------
Net income....................................................................................... $ (820)
------
------
</TABLE>
- -For the year ended December 31, 1996:
<TABLE>
<CAPTION>
THREE CHRISTINA
CENTRE
-----------------
<S> <C>
Revenue:
Base rents..................................................................................... $ 4,508
Tenant reimbursements.......................................................................... 2,347
Other.......................................................................................... 14
------
Total revenue................................................................................ 6,869
------
Operating Expenses:
Interest (i)................................................................................... 3,875
Depreciation and amortization (ii)............................................................. 1,653
Property expenses.............................................................................. 2,799
General and administrative..................................................................... --
------
Total operating expenses................................................................... 8,327
------
Income (loss) before equity in income of management company and minority interest................ (1,458)
Equity in income (loss) of management company (iii).............................................. 108
------
Income (loss) before minority interest........................................................... (1,350)
Minority interest in (income) loss............................................................... 17
------
Net income....................................................................................... $ (1,333)
------
------
</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.
(iii) Pro forma equity in income of management company is presented based on
management fees less incremental costs estimated to be incurred.
F-15
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Brandywine Realty Trust:
We have audited the statement of revenue and certain expenses of Three
Christina Centre described in Note 1, for the year ended December 31, 1996.
This financial statement is the responsibility of the Property's 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 statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. 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 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 8-K of Brandywine Realty
Trust, as described in Note 1, and is not intended to be a complete
presentation of Three Christina Centre'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 Three Christina
Centre for the year ended December 31, 1996, in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
Philadelphia, Pa.,
January 23, 1998
F-16
<PAGE>
THREE CHRISTINA CENTRE
STATEMENT OF REVENUE AND CERTAIN EXPENSES (NOTE 1)
<TABLE>
<CAPTION>
FOR THE NINE
FOR THE MONTHS ENDED
YEAR ENDED SEPTEMBER 30,
DECEMBER 31, 1997
1996 (UNAUDITED)
------------ -------------
<S> <C> <C>
REVENUE:
Minimum rent (Note 2)............................................................. $4,508,000 $ 3,474,000
Tenant reimbursements............................................................. 2,347,000 1,843,000
Other Income...................................................................... 14,000 19,000
------------ -------------
Total revenue................................................................... 6,869,000 5,336,000
------------ -------------
CERTAIN EXPENSES:
Maintenance and other operating expenses.......................................... 1,456,000 1,073,000
Utilities......................................................................... 929,000 705,000
Real estate taxes................................................................. 414,000 335,000
------------ -------------
Total certain expenses........................................................ 2,799,000 2,113,000
------------ -------------
REVENUE IN EXCESS OF CERTAIN EXPENSES............................................... $4,070,000 $ 3,223,000
------------ -------------
------------ -------------
</TABLE>
The accompanying notes are an integral part of this financial statement.
F-17
<PAGE>
THREE CHRISTINA CENTRE
NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES
DECEMBER 31, 1996
1. BASIS OF PRESENTATION:
This statement of revenue and certain expenses reflects the operations of
Three Christina Centre (the "Property") as of December 31, 1996. The Property
is expected to be acquired in January 1998 by Brandywine Realty Trust (the
"Company") under a sales agreement with TA Associates Realty. The Properties
have an aggregate net rentable area of approximately 311,193 square feet (99%
leased as of December 31, 1996). The expected purchase price is approximately
$50.6 million. This statement of revenue and certain expenses is to be
included in the Company's current report on Form 8-K, as the above described
transaction has been deemed significant pursuant to the rules and regulations
of the Securities and Exchange Commission.
The accounting records of the Property are maintained on an cash basis.
Adjusting entries have been made to present the accompanying financial
statements in accordance with generally accepted accounting principles. The
accompanying financial statements exclude certain expenses such as interest,
depreciation and amortization, and other costs not directly related to the
future operations of the Property.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. The
actual results could differ from those estimates.
The statement of revenue and certain expenses for the nine months ended
September 30, 1997 is unaudited; however, in the opinion of management, all
adjustments (consisting solely of normal recurring adjustments) necessary for
the fair presentation of the statement of revenue and certain expenses for
the interim period have been included. The results of the interim periods are
not necessarily indicative of the results for the full year.
F-18
<PAGE>
2. OPERATING LEASES:
Base rents presented for the year ended December 31, 1996, include
straight-line adjustments for rental revenue increases in accordance with
generally accepted accounting principles. The aggregate rental revenue
increases resulting from the straight-line adjustment for the year ended
December 31, 1996 and the nine months ended September 30, 1996 were $
289,000 and $237,000, (unaudited), respectively.
The following tenants had minimum rental payments greater than 10% of the
total minimum rent in 1996: First USA Bank $3,245,000
The Properties are leased to tenants under operating leases with expiration
dates extending to the year 2012. 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....................................... $4,101,000
1998....................................... 3,904,000
1999....................................... 3,744,000
2000....................................... 3,747,000
2001....................................... 3,766,000
Thereafter................................. 39,731,000
-----------
$58,993,000
-----------
-----------
</TABLE>
Certain leases also include provisions requiring tenants to reimburse the
Property for management costs and other operating expenses up to stipulated
amounts.
3. RELATED PARTY TRANSACTIONS:
The Property paid management fees of $165,000 to Flynn Management Company, a
related party, based on 2.5% of cash receipts as defined in the management
agreement. These management fees are included within maintenance and other
operating expenses in the statement of revenue and certain expenses.
F-19
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our report dated January 23, 1998 in this Form 8-K on the combined statement
of revenue and certain expenses of Three Christina Centre into the Company's
previously filed Registration Statements on Forms S-3 (File No. 333-46647,
File No. 333-39155 and File No. 333-20999) and Forms S-8 (File No. 333-14243
and File No. 333-28427).
ARTHUR ANDERSEN LLP
Philadelphia, Pa.,
February 23, 1998
