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Published: 2022-04-27 00:00:00 ET

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_____________________________________________________________________________________________

FORM 10-Q

_____________________________________________________________________________________________

(Mark One)


☒			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2022


☐			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

_____________________________________________________________________________________________

Brandywine Realty Trust

Brandywine Operating Partnership, L.P.

(Exact name of registrant as specified in its charter)

_____________________________________________________________________________________________

Registrant’s telephone number, including area code (610) 325-5600

_____________________________________________________________________________________________

Maryland

(Brandywine Realty Trust)

001-9106

23-2413352

Delaware

(Brandywine Operating Partnership, L.P.)

000-24407

23-2862640

(State or Other Jurisdiction of Incorporation
or Organization)

(Commission file number)

(I.R.S. Employer Identification Number)

2929 Arch Street
Suite 1800
Philadelphia, PA 19104
(Address of principal executive offices) (Zip Code)

(610) 325-5600
(Registrant’s telephone number, including area code)

Securities registered pursuant to section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Shares of Beneficial Interest

BDN

NYSE

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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.


Brandywine Realty Trust	Yes	☒ No ☐
Brandywine Operating Partnership, L.P.	Yes	☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).


Brandywine Realty Trust	Yes	☒ No ☐
Brandywine Operating Partnership, L.P.	Yes	☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Brandywine Realty Trust:


Large accelerated filer	☒	Accelerated filer ☐	Non-accelerated filer ☐
Smaller reporting company	☐	Emerging growth company	☐

Brandywine Operating Partnership, L.P.:


Large accelerated filer ☐	Accelerated filer ☐	Non-accelerated filer	☒
Smaller reporting company ☐	Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).


Brandywine Realty Trust	Yes	☐	No ☒
Brandywine Operating Partnership, L.P.	Yes	☐	No ☒

A total of 171,383,912 Common Shares of Beneficial Interest, par value $0.01 per share of Brandywine Realty Trust, were outstanding as of April 19, 2022.

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EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the period ended March 31, 2022 of Brandywine Realty Trust (the “Parent Company”) and Brandywine Operating Partnership L.P. (the “Operating Partnership”). The Parent Company is a Maryland real estate investment trust, or REIT, that owns its assets and conducts its operations through the Operating Partnership, a Delaware limited partnership, and subsidiaries of the Operating Partnership. The Parent Company, the Operating Partnership and their consolidated subsidiaries are collectively referred to in this report as the “Company”. In addition, as used in this report, terms such as “we”, “us”, and “our” may refer to the Company, the Parent Company, or the Operating Partnership.

The Parent Company is the sole general partner of the Operating Partnership and, as of March 31, 2022, owned a 99.7% interest in the Operating Partnership. The remaining 0.3% interest consists of common units of limited partnership interest issued by the Operating Partnership to third parties in exchange for contributions of properties to the Operating Partnership. As the sole general partner of the Operating Partnership, the Parent Company has full and complete authority over the Operating Partnership’s day-to-day operations and management.

Management operates the Parent Company and the Operating Partnership as one enterprise. The management of the Parent Company consists of the same members as the management of the Operating Partnership.

As general partner with control of the Operating Partnership, the Parent Company consolidates the Operating Partnership for financial reporting purposes, and the Parent Company does not have significant assets other than its investment in the Operating Partnership. Therefore, the assets and liabilities of the Parent Company and the Operating Partnership are the same on their respective financial statements. The separate discussions of the Parent Company and the Operating Partnership in this report should be read in conjunction with each other to understand the results of the Company's operations on a consolidated basis and how management operates the Company.

The Company believes that combining the quarterly reports on Form 10-Q of the Parent Company and the Operating Partnership into a single report will:

•facilitate a better understanding by the investors of the Parent Company and the Operating Partnership by enabling them to view the business as a whole in the same manner as management views and operates the business;

•remove duplicative disclosures and provide a more straightforward presentation in light of the fact that a substantial portion of the disclosure applies to both the Parent Company and the Operating Partnership; and

•create time and cost efficiencies through the preparation of one combined report instead of two separate reports.

There are few differences between the Parent Company and the Operating Partnership, which are reflected in the footnote disclosures in this report. The Company believes it is important to understand the differences between the Parent Company and the Operating Partnership in the context of how these entities operate as an interrelated consolidated company. The Parent Company is a REIT, whose only material asset is its ownership of partnership interests of the Operating Partnership. As a result, the Parent Company does not conduct business itself, other than acting as the sole general partner of the Operating Partnership, issuing equity from time to time (and contributing the net proceeds of such issuances to the Operating Partnership) and guaranteeing the debt obligations of the Operating Partnership. The Operating Partnership holds substantially all the assets of the Company, including the Company's ownership interests in the real estate ventures described below. The Operating Partnership conducts the operations of the Company’s business and is structured as a partnership with no publicly traded equity. Except for net proceeds from equity issuances by the Parent Company, which are contributed to the Operating Partnership in exchange for partnership units, the Operating Partnership generates the capital required by the Company’s business through the Operating Partnership’s operations, by the Operating Partnership’s incurrence of indebtedness (directly and through subsidiaries) and through the issuance of partnership units of the Operating Partnership or equity interests in subsidiaries of the Operating Partnership.

The equity and non-controlling interests in the Parent Company and the Operating Partnership’s equity are the main areas of difference between the consolidated financial statements of the Parent Company and the Operating Partnership. The common units of limited partnership interest in the Operating Partnership are accounted for as partners’ equity in the Operating Partnership’s financial statements while the common units of limited partnership interests held by parties other than the Parent Company are presented as non-controlling interests in the Parent Company’s financial statements. The differences between the Parent Company and the Operating Partnership’s equity relate to the differences in the equity issued at the Parent Company and Operating Partnership levels.

To help investors understand the significant differences between the Parent Company and the Operating Partnership, this report presents the following as separate notes or sections for each of the Parent Company and the Operating Partnership:

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•Consolidated Financial Statements; and

•Notes to the Parent Company’s and Operating Partnership’s Equity.

This report also includes separate Item 4. (Controls and Procedures) disclosures and separate Exhibit 31 and 32 certifications for each of the Parent Company and the Operating Partnership in order to establish that the Chief Executive Officer and the Chief Financial Officer of each entity have made the requisite certifications and that the Parent Company and Operating Partnership are compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. § 1350.

In order to highlight the differences between the Parent Company and the Operating Partnership, the separate sections in this report for the Parent Company and the Operating Partnership specifically refer to the Parent Company and the Operating Partnership. In the sections that combine disclosures of the Parent Company and the Operating Partnership, this report refers to such disclosures as those of the Company. Although the Operating Partnership is generally the entity that directly or indirectly enters into contracts and real estate ventures and holds assets and incurs debt, reference to the Company is appropriate because the business is one enterprise and the Parent Company operates the business through the Operating Partnership.

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			Page

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Brandywine Realty Trust

Financial Statements of Brandywine Realty Trust			5

Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021			5

Consolidated Statements of Operations for the three months ended March 31, 2022 and 2021			6

Consolidated Statements of Comprehensive Income for the three months ended March 31, 2022 and 2021			7

Consolidated Statements of Beneficiaries’ Equity for the three months ended March 31, 2022 and 2021			8

Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021			10

Brandywine Operating Partnership, L.P.

Financial Statements of Brandywine Operating Partnership, L.P.			11

Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021			11

Consolidated Statements of Operations for the three months ended March 31, 2022 and 2021			12

Consolidated Statements of Comprehensive Income for the three months ended March 31, 2022 and 2021			13

Consolidated Statements of Partners’ Equity for the three months ended March 31, 2022 and 2021			14

Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021			16

Notes to Unaudited Consolidated Financial Statements			17

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			31

Item 3. Quantitative and Qualitative Disclosures about Market Risk			43

Item 4. Controls and Procedures			44

PART II — OTHER INFORMATION			45

Item 1. Legal Proceedings			45

Item 1A. Risk Factors			45

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			45

Item 3. Defaults Upon Senior Securities			45

Item 4. Mine Safety Disclosures			45

Item 5. Other Information			45

Item 6. Exhibits			46

Signatures			47

Filing Format

This combined Form 10-Q is being filed separately by Brandywine Realty Trust and Brandywine Operating Partnership, L.P.

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PART I - FINANCIAL INFORMATION

Item 1. — Financial Statements

BRANDYWINE REALTY TRUST

CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands, except share and per share information)


	March 31, 2022		December 31, 2021
ASSETS
Real estate investments:
Operating properties	$	3,517,995	$	3,472,602
Accumulated depreciation	(980,860)		(957,450)
Right of use asset - operating leases, net	20,150		20,313
Operating real estate investments, net	2,557,285		2,535,465
Construction-in-progress	283,323		277,237
Land held for development	94,411		114,604
Prepaid leasehold interests in land held for development, net	27,762		27,762
Total real estate investments, net	2,962,781		2,955,068
Assets held for sale, net	25,205		562
Cash and cash equivalents	39,306		27,463
Accounts receivable	14,214		11,875
Accrued rent receivable, net of allowance of $4,081 and $4,133 as of March 31, 2022 and December 31, 2021, respectively	170,275		167,210
Investment in unconsolidated real estate ventures	461,389		435,506
Deferred costs, net	87,652		86,862
Intangible assets, net	25,580		28,556
Other assets	148,493		133,094
Total assets	$	3,934,895	$	3,846,196
LIABILITIES AND BENEFICIARIES' EQUITY

Unsecured credit facility	$	156,000	$	23,000
Unsecured term loan, net	249,738		249,608
Unsecured senior notes, net	1,580,845		1,580,978
Accounts payable and accrued expenses	130,073		150,151
Distributions payable	32,814		32,765
Deferred income, gains and rent	24,758		23,849
Intangible liabilities, net	12,085		12,981

Lease liability - operating leases	23,014		22,962
Other liabilities	49,705		48,683
Total liabilities	$	2,259,032	$	2,144,977
Commitments and contingencies (See Note 15)
Brandywine Realty Trust's Equity:
Common Shares of Brandywine Realty Trust's beneficial interest, $0.01 par value; shares authorized 400,000,000; 171,383,912 and 171,126,257 issued and outstanding as of March 31, 2022 and December 31, 2021, respectively	1,714		1,712
Additional paid-in-capital	3,147,231		3,146,786
Deferred compensation payable in common shares	19,386		18,491
Common shares in grantor trust, 1,185,541 and 1,169,703 issued and outstanding as of March 31, 2022 and December 31, 2021, respectively	(19,386)		(18,491)
Cumulative earnings	1,128,465		1,122,372
Accumulated other comprehensive income (loss)	1,920		(2,020)
Cumulative distributions	(2,611,294)		(2,578,583)
Total Brandywine Realty Trust's equity	1,668,036		1,690,267
Noncontrolling interests	7,827		10,952
Total beneficiaries' equity	$	1,675,863	$	1,701,219
Total liabilities and beneficiaries' equity	$	3,934,895	$	3,846,196

The accompanying notes are an integral part of these consolidated financial statements.

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BRANDYWINE REALTY TRUST

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except share and per share information)


	Three Months Ended March 31,
	2022		2021
Revenue
Rents	$	115,901	$	113,484
Third party management fees, labor reimbursement and leasing	5,108		6,651
Other	6,496		634
Total revenue	127,505		120,769
Operating expenses
Property operating expenses	31,548		28,935
Real estate taxes	13,813		14,761
Third party management expenses	2,557		2,978
Depreciation and amortization	43,782		40,343
General and administrative expenses	10,000		6,584

Total operating expenses	101,700		93,601
Gain on sale of real estate
Net gain on disposition of real estate	—		74
Net gain on sale of undepreciated real estate	897		1,993
Total gain on sale of real estate	897		2,067
Operating income	26,702		29,235
Other income (expense):
Interest and investment income	440		1,674
Interest expense	(15,742)		(16,293)
Interest expense - amortization of deferred financing costs	(709)		(709)

Equity in loss of unconsolidated real estate ventures	(4,563)		(6,924)




Net income before income taxes	6,128		6,983
Income tax provision	(27)		(19)
Net income	6,101		6,964
Net income attributable to noncontrolling interests	(8)		(43)
Net income attributable to Brandywine Realty Trust	6,093		6,921


Nonforfeitable dividends allocated to unvested restricted shareholders	(148)		(146)
Net income attributable to Common Shareholders of Brandywine Realty Trust	$	5,945	$	6,775

Basic income per Common Share	$	0.03	$	0.04

Diluted income per Common Share	$	0.03	$	0.04

Basic weighted average shares outstanding	171,294,949		170,624,741
Diluted weighted average shares outstanding	172,888,994		171,636,120

The accompanying notes are an integral part of these consolidated financial statements.

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BRANDYWINE REALTY TRUST

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited, in thousands)


	Three Months Ended March 31,
	2022		2021
Net income	$	6,101	$	6,964
Comprehensive income:
Unrealized gain on derivative financial instruments	3,764		910



Amortization of interest rate contracts (1)	188		188
Total comprehensive income	3,952		1,098
Comprehensive income	10,053		8,062
Comprehensive income attributable to noncontrolling interest	(20)		(49)
Comprehensive income attributable to Brandywine Realty Trust	$	10,033	$	8,013

(1)Amounts reclassified from comprehensive income to interest expense within the Consolidated Statements of Operations.

The accompanying notes are an integral part of these consolidated financial statements.

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BRANDYWINE REALTY TRUST

CONSOLIDATED STATEMENTS OF BENEFICIARIES’ EQUITY

(unaudited, in thousands, except number of shares)


	Number of Common Shares	Number of Rabbi Trust/Deferred Compensation Shares	Common Shares of Brandywine Realty Trust's beneficial interest		Additional Paid-in Capital		Deferred Compensation Payable in Common Shares		Common Shares in Grantor Trust		Cumulative Earnings		Accumulated Other Comprehensive Income (Loss)		Cumulative Distributions		Noncontrolling Interests		Total
BALANCE, December 31, 2021	171,126,257	1,169,703	$	1,712	$	3,146,786	$	18,491	$	(18,491)	$	1,122,372	$	(2,020)	$	(2,578,583)	$	10,952	$	1,701,219
Net income											6,093						8		6,101
Other comprehensive income													3,940				12		3,952

Redemption of LP Units																	(4,006)		(4,006)
Share-based compensation activity	277,061	68,540	2		1,653														1,655
Share Issuance from/(to) Deferred Compensation Plan	(19,406)	(52,702)			(249)		895		(895)										(249)
Reallocation of Noncontrolling interest					(959)												959		—
Distributions declared $0.19 per share)															(32,711)		(98)		(32,809)
BALANCE, March 31, 2022	171,383,912	1,185,541	$	1,714	$	3,147,231	$	19,386	$	(19,386)	$	1,128,465	$	1,920	$	(2,611,294)	$	7,827	$	1,675,863

The accompanying notes are an integral part of these consolidated financial statements.

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BRANDYWINE REALTY TRUST

CONSOLIDATED STATEMENT OF BENEFICIARIES’ EQUITY

(unaudited, in thousands, except number of shares)


	Number of Common Shares	Number of Rabbi Trust/Deferred Compensation Shares	Common Shares of Brandywine Realty Trust's beneficial interest		Additional Paid-in Capital		Deferred Compensation Payable in Common Shares		Common Shares in Grantor Trust		Cumulative Earnings		Accumulated Other Comprehensive Income (Loss)		Cumulative Distributions		Noncontrolling Interests		Total
BALANCE, December 31, 2020	170,572,964	1,160,494	$	1,707	$	3,138,152	$	17,516	$	(17,516)	$	1,110,083	$	(7,561)	$	(2,448,238)	$	10,505	$	1,804,648

Net income											6,921						43		6,964
Other comprehensive income													1,092				6		1,098


Share-based compensation activity	108,345	12,719			2,502														2,502
Share Issuance from/(to) Deferred Compensation Plan	(18,058)	(61,436)			(198)		142		(142)										(198)

Distributions declared ($0.19 per share)															(32,573)		(187)		(32,760)
BALANCE, March 31, 2021	170,663,251	1,111,777	$	1,707	$	3,140,456	$	17,658	$	(17,658)	$	1,117,004	$	(6,469)	$	(2,480,811)	$	10,367	$	1,782,254

The accompanying notes are an integral part of these consolidated financial statements.

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BRANDYWINE REALTY TRUST

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)


	Three Months Ended March 31,
	2022		2021
Cash flows from operating activities:
Net income	$	6,101	$	6,964
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization	43,782		40,343
Amortization of deferred financing costs	709		709
Amortization of debt discount/(premium), net	(488)		(488)
Amortization of stock compensation costs	3,280		2,606
Straight-line rent income	(3,149)		(4,085)
Amortization of acquired above (below) market leases, net	(875)		(1,350)
Ground rent expense	205		297
Provision for doubtful accounts	—		253


Net gain on sale of interests in real estate	(897)		(2,067)


Loss from unconsolidated real estate ventures, net of distributions	4,563		6,924
Income tax provision	27		19
Changes in assets and liabilities:
Accounts receivable	(2,609)		(939)
Other assets	(9,208)		(10,491)
Accounts payable and accrued expenses	(14,550)		4,991
Deferred income, gains and rent	992		1,302
Other liabilities	632		(3,812)
Net cash provided by operating activities	28,515		41,176
Cash flows from investing activities:
Acquisition of properties	(3,446)		—
Proceeds from the sale of properties	1,481		79





Capital expenditures for tenant improvements	(15,148)		(7,202)
Capital expenditures for redevelopments	(31,942)		(6,339)
Capital expenditures for developments	(30,455)		(6,681)
Advances for the purchase of tenant assets, net of repayments	270		(443)
Investment in unconsolidated real estate ventures	(26,762)		(1,884)
Deposits for real estate	(2,550)		—

Capital distributions from unconsolidated real estate ventures	3,010		3,934
Leasing costs paid	(5,245)		(2,713)
Net cash used in investing activities	(110,787)		(21,249)
Cash flows from financing activities:

Proceeds from credit facility borrowings	138,000		33,000
Repayments of credit facility borrowings	(5,000)		(20,000)

Exercise of stock options, net	—		(63)

Shares used for employee taxes upon vesting of share awards	(2,103)		(758)



Redemption of limited partnership units	(4,006)		—
Distributions paid to shareholders	(32,604)		(32,516)
Distributions to noncontrolling interest	(157)		(187)
Net cash provided by (used in) financing activities	94,130		(20,524)
Increase/(Decrease) in cash and cash equivalents and restricted cash	11,858		(597)
Cash and cash equivalents and restricted cash at beginning of period	28,300		47,077
Cash and cash equivalents and restricted cash at end of period	$	40,158	$	46,480

Reconciliation of cash and cash equivalents and restricted cash:
Cash and cash equivalents, beginning of period	$	27,463	$	46,344
Restricted cash, beginning of period	837		733
Cash and cash equivalents and restricted cash, beginning of period	$	28,300	$	47,077
Cash and cash equivalents, end of period	$	39,306	$	45,717
Restricted cash, end of period	852		763
Cash and cash equivalents and restricted cash, end of period	$	40,158	$	46,480
Supplemental disclosure:
Cash paid for interest, net of capitalized interest during the three months ended March 31, 2022 and 2021 of $2,186 and $1,421, respectively	$	9,637	$	10,106
Cash paid for income taxes	1		1
Supplemental disclosure of non-cash activity:
Dividends and distributions declared but not paid	32,814		32,763










Change in investment in real estate ventures as a result of deconsolidation	—		32,761
Change in operating real estate from deconsolidation of operating properties	—		(30,073)


Change in other assets as a result of deconsolidation of operating properties	—		(2,688)
Change in capital expenditures financed through accounts payable at period end	(909)		(4,827)
Change in capital expenditures financed through retention payable at period end	(1,475)		(3,752)

The accompanying notes are an integral part of these consolidated financial statements.

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BRANDYWINE OPERATING PARTNERSHIP, L.P.

CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands, except unit and per unit information)


	March 31, 2022		December 31, 2021
ASSETS
Real estate investments:
Operating properties	$	3,517,995	$	3,472,602
Accumulated depreciation	(980,860)		(957,450)
Right of use asset - operating leases, net	20,150		20,313
Operating real estate investments, net	2,557,285		2,535,465
Construction-in-progress	283,323		277,237
Land held for development	94,411		114,604
Prepaid leasehold interests in land held for development, net	27,762		27,762
Total real estate investments, net	2,962,781		2,955,068
Assets held for sale, net	25,205		562
Cash and cash equivalents	39,306		27,463
Accounts receivable	14,214		11,875
Accrued rent receivable, net of allowance of $4,081 and $4,133 as of March 31, 2022 and December 31, 2021, respectively	170,275		167,210
Investment in unconsolidated real estate ventures	461,389		435,506
Deferred costs, net	87,652		86,862
Intangible assets, net	25,580		28,556
Other assets	148,493		133,094
Total assets	$	3,934,895	$	3,846,196
LIABILITIES AND PARTNERS' EQUITY

Unsecured credit facility	$	156,000	$	23,000
Unsecured term loan, net	249,738		249,608
Unsecured senior notes, net	1,580,845		1,580,978
Accounts payable and accrued expenses	130,073		150,151
Distributions payable	32,814		32,765
Deferred income, gains and rent	24,758		23,849
Intangible liabilities, net	12,085		12,981

Lease liability - operating leases	23,014		22,962
Other liabilities	49,705		48,683
Total liabilities	$	2,259,032	$	2,144,977
Commitments and contingencies (See Note 15)
Redeemable limited partnership units at redemption value; 516,467 and 823,983 issued and outstanding as of March 31, 2022 and December 31, 2021, respectively	7,338		11,140
Brandywine Operating Partnership, L.P.'s equity:
General Partnership Capital; 171,383,912 and 171,126,257 units issued and outstanding as of March 31, 2022 and December 31, 2021, respectively	1,664,107		1,689,611
Accumulated other comprehensive income (loss)	1,586		(2,366)
Total Brandywine Operating Partnership, L.P.'s equity	1,665,693		1,687,245
Noncontrolling interest - consolidated real estate ventures	2,832		2,834
Total partners' equity	$	1,668,525	$	1,690,079
Total liabilities and partners' equity	$	3,934,895	$	3,846,196

The accompanying notes are an integral part of these consolidated financial statements.

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BRANDYWINE OPERATING PARTNERSHIP, L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except unit and per unit information)


	Three Months Ended March 31,
	2022		2021
Revenue
Rents	$	115,901	$	113,484
Third party management fees, labor reimbursement and leasing	5,108		6,651
Other	6,496		634
Total revenue	127,505		120,769
Operating expenses
Property operating expenses	31,548		28,935
Real estate taxes	13,813		14,761
Third party management expenses	2,557		2,978
Depreciation and amortization	43,782		40,343
General and administrative expenses	10,000		6,584
Provision for impairment	—		—
Total operating expenses	101,700		93,601
Gain on sale of real estate
Net gain on disposition of real estate	—		74
Net gain on sale of undepreciated real estate	897		1,993
Total gain on sale of real estate	897		2,067
Operating income	26,702		29,235
Other income (expense):
Interest and investment income	440		1,674
Interest expense	(15,742)		(16,293)
Interest expense - amortization of deferred financing costs	(709)		(709)

Equity in loss of unconsolidated real estate ventures	(4,563)		(6,924)




Net income before income taxes	6,128		6,983
Income tax provision	(27)		(19)
Net income	6,101		6,964
Net loss attributable to noncontrolling interests - consolidated real estate ventures	2		1
Net income attributable to Brandywine Operating Partnership	6,103		6,965


Nonforfeitable dividends allocated to unvested restricted unitholders	(148)		(146)
Net income attributable to Common Partnership Unitholders of Brandywine Operating Partnership, L.P.	$	5,955	$	6,819

Basic income per Common Partnership Unit	$	0.03	$	0.04

Diluted income per Common Partnership Unit	$	0.03	$	0.04

Basic weighted average common partnership units outstanding	171,927,588		171,606,375
Diluted weighted average common partnership units outstanding	173,521,633		172,617,754

The accompanying notes are an integral part of these consolidated financial statements.

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BRANDYWINE OPERATING PARTNERSHIP, L.P.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited, in thousands)


	Three Months Ended March 31,
	2022		2021
Net income	$	6,101	$	6,964
Comprehensive income:
Unrealized gain on derivative financial instruments	3,764		910



Amortization of interest rate contracts (1)	188		188
Total comprehensive income	3,952		1,098
Comprehensive income	10,053		8,062
Comprehensive loss attributable to noncontrolling interest - consolidated real estate ventures	2		1
Comprehensive income attributable to Brandywine Operating Partnership	$	10,055	$	8,063

(1)Amounts reclassified from comprehensive income to interest expense within the Consolidated Statements of Operations.

The accompanying notes are an integral part of these consolidated financial statements.

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BRANDYWINE OPERATING PARTNERSHIP, L.P.

CONSOLIDATED STATEMENTS OF PARTNERS’ EQUITY

(unaudited, in thousands, except number of units)


	General Partner Capital
	Units	Amount		Accumulated Other Comprehensive Income		Noncontrolling Interest - Consolidated Real Estate Ventures		Total Partners' Equity
BALANCE, December 31, 2021	171,126,257	$	1,689,611	$	(2,366)	$	2,834	$	1,690,079
Net income		6,103				(2)		6,101
Other comprehensive loss				3,952				3,952
Deferred compensation obligation	(19,406)	(249)						(249)
Repurchase and retirement of LP units		(4,006)						(4,006)
Share-based compensation activity	277,061	1,655						1,655
Adjustment of redeemable partnership units to liquidation value at period end		3,704						3,704
Distributions declared to general partnership unitholders ($0.19 per unit)		(32,711)						(32,711)
BALANCE, March 31, 2022	171,383,912	$	1,664,107	$	1,586	$	2,832	$	1,668,525

The accompanying notes are an integral part of these consolidated financial statements.

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BRANDYWINE OPERATING PARTNERSHIP, L.P.

CONSOLIDATED STATEMENT OF PARTNERS’ EQUITY

(unaudited, in thousands, except number of units)


	General Partner Capital
	Units	Amount		Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interest - Consolidated Real Estate Ventures		Total Partners' Equity
BALANCE, December 31, 2020	170,572,964	$	1,800,945	$	(7,935)	$	72	$	1,793,082

Net income		6,965				(1)		6,964
Other comprehensive income				1,098				1,098
Deferred compensation obligation	(18,058)	(198)						(198)


Share-based compensation activity	108,345	2,502