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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
     
þ   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2007
OR
     
o   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the transition period from                                          to                                         
         
Commission file number 001-9106 (Brandywine Realty Trust)
000-24407 (Brandywine Operating Partnership, L.P.)
 
Brandywine Realty Trust
Brandywine Operating Partnership, L.P.
(Exact name of registrant as specified in its charter)
     
MARYLAND (Brandywine Realty Trust)   23-2413352
DELAWARE (Brandywine Operating Partnership L.P.)   23-2862640
     
(State or other jurisdiction of   (I.R.S. Employer Identification No.)
Incorporation or organization)    
     
555 East Lancaster Avenue    
Radnor, Pennsylvania   19087
     
(Address of principal executive offices)   (Zip Code)
     
Registrant’s telephone number, including area code   (610) 325-5600
     
Securities registered pursuant to Section 12(b) of the Act:    
     
    Name of each exchange
Title of each class   on which registered
     
Common Shares of Beneficial Interest,   New York Stock Exchange
par value $0.01 per share    
(Brandywine Realty Trust)    
     
7.50% Series C Cumulative Redeemable   New York Stock Exchange
Preferred Shares of Beneficial Interest    
par value $0.01 per share    
(Brandywine Realty Trust)    
     
7.375% Series D Cumulative Redeemable   New York Stock Exchange
Preferred Shares of Beneficial Interest    
par value $0.01 per share    
(Brandywine Realty Trust)    
Securities registered pursuant to Section 12(g) of the Act:
Units of General Partnership Interest (Brandywine Operating Partnership, L.P.)
 
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
     
Brandywine Realty Trust
  Yes þ      No o
Brandywine Operating Partnership, L.P.
  Yes þ      No o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
     
Brandywine Realty Trust
  Yes o      No þ
Brandywine Operating Partnership, L.P.
  Yes o      No þ
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 þ      No o
Brandywine Operating Partnership, L.P.
  Yes þ      No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one):
Brandywine Realty Trust:
Large accelerated filer þ      Accelerated filer o      Non-accelerated filer o      Smaller reporting company o
(Do not check if a smaller reporting company)
Brandywine Operating Partnership, L.P.:
Large accelerated filer o      Accelerated filer þ      Non-accelerated filer o      Smaller reporting company o
(Do not check if a smaller reporting company)
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 o      No þ
Brandywine Operating Partnership, L.P.
  Yes o      No þ
The aggregate market value of the Common Shares of Beneficial Interest held by non-affiliates of Brandywine Realty Trust as of the last day of the registrant’s most recently completed second fiscal quarter was $2.5 billion. The aggregate market value has been computed by reference to the closing price of the Common Shares of Beneficial Interest on the New York Stock Exchange on such date. An aggregate of 87,054,956 Common Shares of Beneficial Interest were outstanding as of February 22, 2008.
As of June 30, 2007, the aggregate market value of the 2,143,021 common units of limited partnership (“Units”) held by non-affiliates of Brandywine Operating Partnership, L.P. was $61,247,543 million based upon the last reported sale price of $28.58 per share on the New York Stock Exchange on June 29, 2007 of the Common Shares of Beneficial Interest of Brandywine Realty Trust, the sole general partner of Brandywine Operating Partnership, L.P. (For this computation, the Registrant has excluded the market value of all Units beneficially owned by Brandywine Realty Trust.)
Documents Incorporated By Reference
Portions of the proxy statement for the 2008 Annual Meeting of Shareholders of Brandywine Realty Trust are incorporated by reference into Part III of this Form 10-K.
The exhibit index as required by Item 601(a) of Regulation S-K is included in Item 15 of Part IV of this report.
 
 

 


 

TABLE OF CONTENTS
FORM 10-K
         
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 List of Partners
 Statement re Computation of Ratios of Brandywine Realty Trust
 Statement re Computation of Ratios of Brandywine Operating Partnership, L.P.
 List of Subsidiaries
 Consent of PricewatehouseCoopers LLP, Brandywine Realty Trust
 Consent of PricewaterhouseCoopers LLP Brandywine Operating Partnership
 Certifications of the Chief Executive Officer
 Certifications of the Chief Financial Officer
 Certifications of the Chief Executive Officer
 Certifications of the Chief Financial Officer
 Certifications of the Chief Executive Officer required under Rule 13a-14(b)
 Certifications of the Chief Financial Officer under Rule 13a-14(b)
 Certifications of the Chief Executive Officer required by Rule 13a-14(b)
 Certifications of the Chief Financial Officer under Rule 13a-14(b)

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Filing Format
This combined Form 10-K is being filed separately by Brandywine Realty Trust and Brandywine Operating Partnership, L.P.
Forward-Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. This Annual Report on Form 10-K and other materials filed by us with the SEC (as well as information included in oral or other written statements made by us) contain statements that are forward-looking, including statements relating to business and real estate development activities, acquisitions, dispositions, future capital expenditures, financing sources, governmental regulation (including environmental regulation) and competition. We intend such forward-looking statements to be covered by the safe-harbor provisions of the 1995 Act. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “will,” “should” and similar expressions, as they relate to us, are intended to identify forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be achieved. As forward-looking statements, these statements involve important risks, uncertainties and other factors that could cause actual results to differ materially from the expected results and, accordingly, such results may differ from those expressed in any forward-looking statements made by us or on our behalf. Factors that could cause actual results to differ materially from our expectations include, but are not limited to:
    changes in general economic conditions;
 
    changes in local real estate conditions (including changes in rental rates and the number of properties that compete with our properties);
 
    changes in the economic conditions affecting industries in which our principal tenants compete;
 
    our failure to lease unoccupied space in accordance with our projections;
 
    our failure to re-lease occupied space upon expiration of leases;
 
    the bankruptcy of major tenants;
 
    changes in prevailing interest rates;
 
    the unavailability of equity and debt financing;
 
    failure of acquisitions to perform as expected;
 
    unanticipated costs associated with, and integration of, our acquisitions;
 
    unanticipated costs to complete and lease-up pending developments;
 
    impairment charges;
 
    increased costs for, or lack of availability of, adequate insurance, including for terrorist acts;
 
    demand for tenant services beyond those traditionally provided by landlords;
 
    potential liability under environmental or other laws;
 
    earthquakes and other natural disasters;
 
    complex regulations relating to our status as a REIT and to our acquisition, disposition and development activities;

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    inability to complete acquisitions that may be necessary to complete 1031 transactions or provide required tax protection under existing agreements;
 
    the adverse consequences of our failure to qualify as a REIT; and
 
    the impact of newly adopted accounting principles on our accounting policies and on period-to-period comparisons of financial results.
Given these uncertainties, and the other risks identified in the “Risk Factors” section and elsewhere in this Annual Report on Form 10-K, we caution readers not to place undue reliance on forward-looking statements. We assume no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

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PART I
Item 1. Business
Introduction
The terms “we,” “us,” “our” or the “Company” refer to Brandywine Realty Trust, a Maryland real estate investment trust, individually or together with its consolidated subsidiaries, including Brandywine Operating Partnership, L.P. (the “Operating Partnership”), a Delaware limited partnership.
We are a self-administered and self-managed real estate investment trust, or REIT, active in acquiring, developing, redeveloping, leasing and managing office and industrial properties. As of December 31, 2007, we owned 216 office properties, 23 industrial facilities and one mixed-use property (which we refer to collectively as the “Properties”) containing an aggregate of approximately 24.9 million net rentable square feet. We also have seven properties under development and seven properties under redevelopment containing an aggregate of 3.7 million net rentable square feet. As of December 31, 2007, we consolidated three office properties owned by real estate ventures containing 0.4 million net rentable square feet. Therefore, as of December 31, 2007 we own and consolidated 257 properties with an aggregate of 29.0 million net rentable square feet. As of December 31, 2007, we owned economic interests in 14 unconsolidated real estate ventures that contain approximately 4.4 million net rentable square feet (collectively, the “Real Estate Ventures”). In addition, as of December 31, 2007, we owned approximately 417 acres of undeveloped land. The Properties and the properties owned by the Real Estate Ventures are located in or nearby Philadelphia, PA, Wilmington, DE, Southern and Central New Jersey, Richmond, VA, Metropolitan Washington, D.C., Austin, TX and Oakland and San Diego, CA. In addition to managing properties that we own and consolidated, as of December 31, 2007, we were managing approximately 14.5 million square feet of office and industrial properties for third parties and Real Estate Ventures. Unless otherwise indicated, all references to square feet represent net rentable area.
Organization
Brandywine Realty Trust was organized and commenced its operations in 1986 as a Maryland REIT. Brandywine Realty Trust owns its assets and conducts its operations through the Operating Partnership and subsidiaries of the Operating Partnership. Brandywine Realty Trust controls the Operating Partnership as its sole general partner and as of December 31, 2007 owned a 95.8% interest in the Operating Partnership. The holders of the remaining interests in the Operating Partnership, consisting of Class A units of limited partnership interest, have the right to require redemption of their units at any time. At our option, we may satisfy the redemption either for an amount, per unit, of cash equal to the then market price of one Brandywine common share (based on the prior ten-day trading average) or for one Brandywine common share. Our structure as an “UPREIT” is designed, in part, to permit persons contributing properties to us to defer some or all of the tax liability they might otherwise incur in a sale of properties.
Our executive offices are located at 555 East Lancaster Avenue, Radnor, Pennsylvania 19087 and our telephone number is (610) 325-5600. We have regional offices in Mount Laurel, New Jersey; Philadelphia, Pennsylvania; Richmond, Virginia; Falls Church, Virginia; Austin, Texas; Dallas, Texas; Oakland, California; and Carlsbad, California. We have an internet website at www.brandywinerealty.com. We are not incorporating by reference into this Annual Report on Form 10-K any material from our website. The reference to our website is an inactive textual reference to the uniform resource locator (URL) and is for your reference only.
2007 Transactions
Real Estate Acquisitions/Dispositions
In 2007, we acquired seven office properties containing 1.6 million net rentable square feet and a 4.9 acre parcel of land and a 90 year ground lease interest in a 2.54 acre parcel of land. We also acquired the 49% minority interest in one of our previously consolidated real estate ventures that owned 10 office properties containing an aggregate of 1.1 million net rentable square feet. We sold 49 properties containing an aggregate of 5.2 million net rentable square feet and eight land parcels containing an aggregate 56.2 acres, as indicated below:

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    On December 19, 2007, the Company formed G&I Interchange Office LLC, a new joint venture (the “Venture”) with G&I VI Investment Interchange Office LLC (“G&I VI”), an investment vehicle advised by DRA Advisors LLC. The Venture included interests in 29 office properties which were located in various counties in Pennsylvania, containing an aggregate of 1,616,227 net rentable square feet. The Company transferred or contributed 100% interests in 26 properties and transferred to the Venture an 89% interest in three of the properties with the remaining 11% interest in the three properties subject to a put/call at fixed prices after three years. In connection with the formation, the Company effectively transferred an 80% interest in the venture to G&I IV for cash and the venture borrowed approximately $184.0 million in third party financing the aggregate proceeds of which were distributed to the Company. The Company used the net proceeds of approximately $230.9 million that it received in this transaction to reduce outstanding indebtedness under our unsecured revolving credit facility. The Company was hired by the Venture to perform property management and leasing services.
 
    On November 30, 2007, we sold 111/113 Pencader Drive, an office property located in Newark, Delaware containing 52,665 net rentable square feet, for a sales price of $5.1 million.
 
    On November 15, 2007, we sold 2490 Boulevard of the Generals, an office property located in West Norriton, Pennsylvania containing 20,600 net rentable square feet, for a sales price of $1.5 million.
 
    On September 7, 2007, we sold seven land parcels located in the Iron Run Business Park in Lehigh County, Pennsylvania containing an aggregate 51.5 acres of land, for an aggregate sales price of $6.6 million.
 
    On July 19, 2007, we acquired the United States Post Office building, an office property located in Philadelphia, Pennsylvania containing 862,692 net rentable square feet, for an aggregate purchase price of $28.0 million. We intend to redevelop the building into office space for lease to the Internal Revenue Service (“IRS”). As part of the acquisition, we also acquired a 90 year ground lease interest in an adjacent parcel of ground of approximately 2.54 acres, commonly referred to as the “postal annex”. We are currently demolishing the existing structure located on the postal annex and intend to rebuild a parking facility containing approximately 733,000 square feet that will be used primarily by the IRS employees upon their move into the planned space at the Post Office building. The remaining postal annex ground leased parcels can accommodate additional office, retail, hotel and residential development and we are currently in the planning stage with respect to these parcels.
 
    On July 19, 2007, we acquired five office properties containing 508,607 net rentable square feet and a 4.9 acre land parcel in the Boulders office park in Richmond, Virginia for an aggregate purchase price of $96.3 million. We funded a portion of the purchase price using the remaining proceeds from the sale of the 10 office properties located in Reading and Harrisburg, Pennsylvania in March 2007.
 
    On May 10, 2007, we acquired Lake Merritt Tower, an office property located in Oakland, California containing 204,278 net rentable square feet for an aggregate contracted purchase price of $72.0 million. A portion of the proceeds from the sale of 10 office properties located in Reading and Harrisburg, Pennsylvania in March 2007 was used to fully fund this purchase.
 
    On April 30, 2007, we sold Cityplace Center, an office property located in Dallas, Texas containing 1,295,832 net rentable square feet, for a sales price of $115.0 million.
 
    On March 30, 2007, we sold 10 office properties located in Reading and Harrisburg, Pennsylvania containing 940,486 net rentable square feet, for an aggregate sales price of $112.0 million. We structured this transaction to qualify as a like-kind exchange under Section 1031 of the Internal Revenue Code and the cash from the sale was held by a qualified intermediary for purposes of accomplishing the like-kind exchange as noted in the above transactions.
 
    On March 30, 2007, we sold 1007 Laurel Oak, an office property located in Voorhees, New Jersey containing 78,205 net rentable square feet, for a sales price of $7.0 million.

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    On March 1, 2007, we acquired the 49% minority interest in one of our previously consolidated real estate ventures that owned 10 office properties containing an aggregate of 1.1 million net rentable square feet for a purchase price of $63.7 million.
 
    On January 31, 2007, we sold George Kachel Farmhouse, an office property located in Reading, Pennsylvania containing 1,664 net rentable square feet, for a sales price of $0.2 million.
 
    On January 19, 2007, we sold four office properties located in Dallas, Texas containing 1,091,186 net rentable square feet and a 4.7 acre land parcel, for an aggregate sales price of $107.1 million.
 
    On January 18, 2007, we sold Norriton Office Center, an office property located in East Norriton, Pennsylvania containing 73,394 net rentable square feet, for a sales price of $7.8 million.
Developments
In 2007 we placed in service six office properties that we developed or redeveloped and that contain an aggregate of 1,048,409 net rentable square feet. We place a property in service at the earlier of (i) the date at which we estimate the property to be 95% occupied and (ii) one year from the project completion date. At December 31, 2007, we had 14 properties under development or redevelopment that contain an aggregate of 3.7 million net rentable square feet at an estimated total development cost of $718.3 million. We expect to place these projects in service at dates between the third quarter of 2008 and the third quarter of 2010.
Unsecured Debt Financings
On October 15, 2007, we entered into a term loan agreement that provides for an unsecured term loan in the amount of $150.0 million. We used the proceeds of this loan to pay down a portion of the outstanding amount on our revolving credit facility. The term loan matures on October 18, 2010 and may be extended at our option for two one-year periods but not beyond the maturity date of our revolving credit facility.
On June 29, 2007, we amended our $600.0 million unsecured revolving credit facility (the “Credit Facility”). The amendment extended the maturity date of the Credit Facility from December 22, 2009 to June 29, 2011 (subject to an extension of one year, at our option, upon our payment of an extension fee equal to 15 basis points of the committed amount under the Credit Facility). The amendment also reduced the per annum variable interest rate on outstanding balances from Eurodollar plus 0.80% to Eurodollar plus 0.725% per annum. In addition, the amendment reduced the quarterly facility fee from 20 basis points to 17.5 basis points per annum. The interest rate and facility fee are subject to adjustment upon a change in our unsecured debt ratings. The amendment also lowered to 7.50% from 8.50% the capitalization rate used in the calculation of several of the financial covenants; increased our swing loan availability from $50.0 million to $60.0 million; and increased the number of competitive bid loan requests available to us from two to four in any 30 day period. Borrowings are always available to the extent of borrowing capacity at the stated rates, however, the competitive bid feature allows banks that are part of the lender consortium under the Credit Facility to bid to make loans to us at a reduced Eurodollar rate. We have the option to increase the Credit Facility to $800.0 million subject to the absence of any defaults and our ability to acquire additional commitments from our existing lenders or new lenders.
On April 30, 2007, we consummated the public offering of $300 million aggregate principal amount of unsecured 5.70% Guaranteed Notes due 2017 and used the net proceeds from this offering to reduce borrowings under the Credit Facility.
In April 2007, we entered into a $20.0 million Sweep Agreement to be used for cash management purposes. Borrowings under the Sweep Agreement bear interest at one-month LIBOR plus 0.75%.
On November 29, 2006, we called for redemption of our $300 million Floating Rate Guaranteed Notes due 2009 and repaid these notes on January 2, 2007 in accordance with the November call using proceeds from our Credit Facility. As a result of the early repayment of these notes, we incurred accelerated amortization of $1.4 million in associated deferred financing costs in the fourth quarter 2006.
On October 4, 2006, we sold $300 million aggregate principal amount of unsecured 3.875% Exchangeable Guaranteed Notes due 2026 in reliance upon an exemption from registration rights under Rule 144A under the Securities Act of 1933 and sold an additional $45 million of 3.875% Exchangeable Guaranteed Notes due 2026 on October 16, 2006 to cover over-allotments. We have registered the resale of the exchangeable notes. At certain

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times and upon certain events, the notes are exchangeable for cash up to their principal amount and, with respect to the remainder, if any, of the exchange value in excess of such principal amount, cash or our common shares. The initial exchange rate is 25.4065 shares per $1,000 principal amount of notes (which is equivalent to an initial exchange price of $39.36 per share). We may not redeem the notes prior to October 20, 2011 (except to preserve our status as a REIT for U.S. federal income tax purposes), but we may redeem the notes at any time thereafter, in whole or in part, at a redemption price equal to the principal amount of the notes to be redeemed plus accrued and unpaid interest. In addition, on October 20, 2011, October 15, 2016 and October 15, 2021 as well as upon the occurrence of certain change in control transactions prior to October 20, 2011, holders of notes may require us to repurchase all or a portion of the notes at a purchase price equal to the principal amount of the notes to be purchased plus accrued and unpaid interest. We used net proceeds from the notes to repurchase approximately $60.0 million of common shares at a price of $32.80 per share and for general corporate purposes, including the repayment of outstanding borrowings under the Credit Facility.
On March 28, 2006, we consummated the public offering of $850 million of unsecured notes, consisting of (1) $300 million aggregate principal amount of Floating Rate Guaranteed Notes due 2009, (2) $300 million aggregate principal amount of 5.75% Guaranteed Notes due 2012 and (3) $250 million aggregate principal amount of 6.00% Guaranteed Notes due 2016. We used the net proceeds from this offering to repay a $750 million unsecured term loan and to reduce borrowings under the Credit Facility.
The Operating Partnership is the issuer of our unsecured notes, and Brandywine Realty Trust has fully and unconditionally guaranteed the payment of principal and interest on the notes.
Business Objective and Strategies for Growth
Our business objective is to deploy capital effectively to maximize our return on investment and thereby maximize our total return to shareholders. To accomplish this objective we seek to:
    maximize cash flow through leasing strategies designed to capture rental growth as rental rates increase and as below-market leases are renewed;
 
    attain a high tenant retention rate by providing a full array of property management and maintenance services and tenant service programs responsive to the varying needs of our diverse tenant base;
 
    increase the economic diversification of our tenant base while maximizing economies of scale;
 
    as warranted by market conditions, deploy our land inventory and seek new land parcels on which to develop high-quality office and industrial properties to service our tenant base;
 
    capitalize on our redevelopment expertise to selectively acquire, redevelop and reposition properties in desirable locations;
 
    acquire high-quality office and industrial properties and portfolios of such properties at attractive yields in markets that we expect will experience economic growth;
 
    form joint venture opportunities with high-quality partners having attractive real estate holdings or significant financial resources; and
 
    utilize our reputation as a full-service real estate development and management organization to identify opportunities that will expand our business and create long-term value.
We expect to concentrate our real estate activities in markets where we believe that:
    current and projected market rents and absorption statistics justify construction activity;
 
    we can maximize market penetration by accumulating a critical mass of properties and thereby enhance operating efficiencies;

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    barriers to entry (such as zoning restrictions, utility availability, infrastructure limitations, development moratoriums and limited developable land) will create supply constraints on office and industrial space; and
    there is potential for economic growth, particularly job growth and industry diversification.
Operating Strategy
We believe that we are well positioned in our current markets and have the expertise to take advantage of both development and acquisition opportunities in new markets that have healthy long-term fundamentals and strong growth projections. This capability, combined with what we believe is a conservative financial structure, allows us to concentrate our growth efforts towards selective development alternatives and acquisition opportunities. These abilities are integral to our strategy of having a geographically and physically diverse portfolio of assets, which will meet the needs of our tenants. We have also expanded our overall development pipeline and are pursuing acquisitions of sites on which we can capitalize on our own development and market expertise.
We expect that selective development of new office properties will continue to be important to the growth of our portfolio over the next several years. We use experienced on site construction superintendents, operating under the supervision of project managers and senior management, to control the construction process and mitigate the various risks associated with real estate development. We believe we understand and effectively manage the risks associated with development and construction, and these risks are justified by higher potential yields.
We expect to continue to operate in markets where we have a concentration advantage due to economies of scale. We believe that where possible, it is best to operate with a strong base of properties in order to benefit from the personnel allocation and the market strength associated with managing several properties in the same market. However, we intend to selectively dispose of properties and redeploy capital if we determine a property cannot meet long term earnings growth expectations. We believe that recycling capital is an important aspect of maintaining the overall quality of our portfolio.
Policies With Respect To Certain Activities
The following is a discussion of our investment, financing and other policies. These policies have been determined by our Board of Trustees and our Board may revise these policies without a vote of shareholders.
Investments in Real Estate or Interests in Real Estate
We may develop, purchase or lease income-producing properties for long-term investment, expand and improve the properties presently owned or other properties purchased, or sell such properties, in whole or in part, as circumstances warrant. Although there is no limitation on the types of development activities that we may undertake, we expect that our development activities will meet current market demand and will generally be on a build-to-suit basis for particular tenants, where a significant portion of the building is pre-leased before construction begins, or where we believe that market demand is strong enough to commence speculative developments. We continue to participate with other entities in property ownership through joint ventures or other types of co-ownership. Our equity investments may be subject to existing or future mortgage financing and other indebtedness that will have priority over our equity investments.
Securities of or Interests in Entities Primarily Engaged in Real Estate Activities and Other Issuers
Subject to the percentage of ownership limitations and gross income tests necessary for REIT qualification, we may invest in securities of other REITs, other entities engaged in real estate activities or securities of other issuers. We may enter into joint ventures or partnerships for the purpose of obtaining an equity interest in a particular property. We do not currently intend to invest in the securities of other issuers except in connection with joint ventures or acquisitions of indirect interests in properties.
Investments in Real Estate Mortgages

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While our current portfolio consists of, and our business objectives emphasize, equity investments in commercial real estate, we may, at the discretion of management or our Board of Trustees, invest in other types of equity real estate investments, mortgages and other real estate interests. We do not presently intend to invest to a significant extent in mortgages or deeds of trust, but may invest in participating mortgages if we conclude that we may benefit from the cash flow or any appreciation in the value of the property securing a mortgage.
Dispositions
Our disposition of properties is based upon management’s periodic review of our portfolio and the determination by management or our Board of Trustees that a disposition would be in our best interests.
Financing Policies
A primary objective of our financing policy has been to manage our financial position to allow us to raise capital from a variety of sources at competitive rates. Our mortgages, credit facilities and unsecured debt securities contain customary restrictions and limitations on our ability to incur indebtedness. Our charter documents do not limit the indebtedness that we may incur. Our financing strategy is to maintain a strong and flexible financial position by limiting our debt to a prudent level and minimizing our variable interest rate exposure. We intend to finance future growth with the most advantageous source of capital available to us at the time of an acquisition. These sources may include selling common stock, preferred stock, debt securities, depository shares or warrants through public offerings or private placements, utilizing availability under our unsecured revolving credit facilities or incurring additional indebtedness through secured or unsecured borrowings either or through mortgages with recourse limited to specific properties. To qualify as a REIT, we must distribute to our shareholders each year at least ninety percent of our net taxable income, excluding any net capital gain. This distribution requirement makes it unlikely that we will be able to fund future capital needs, including for acquisitions and developments, substantially from income from operations. Therefore, we expect to continue to rely on third party sources of capital to fund future capital needs.
Working Capital Reserves
We maintain working capital reserves and access to borrowings in amounts that our management determines to be adequate to meet our normal contingencies.
Policies with Respect to Other Activities
We expect to issue additional common and preferred shares of beneficial interest in the future and may authorize our Operating Partnership to issue additional common and preferred units of limited partnership interest, including to persons who contribute their interests in properties to us in exchange for such units. We have not engaged in trading, underwriting or agency distribution or sale of securities of unaffiliated issuers and we do not intend to do so. At all times, we intend to make investments consistent with our qualification as a REIT, unless because of circumstances or changes in the Internal Revenue Code of 1986, as amended (or the Treasury Regulations), our Board of Trustees determines that it is no longer in our best interests to qualify as a REIT. We may make loans to third parties, including to joint ventures in which we participate. We intend to make investments in such a way that we will not be treated as an investment company under the Investment Company Act of 1940.
Management Activities
We provide third-party real estate management services primarily through five subsidiaries (collectively, the “Management Companies”): Brandywine Realty Services Corporation (“BRSCO”), BTRS, Inc. (“BTRS”), Brandywine Properties I Limited, Inc. (“BPI”), BDN Brokerage LLC (“BBL”) and Brandywine Properties Management, L.P. (“BPM”). BRSCO, BTRS and BPI are taxable REIT subsidiaries. The Operating Partnership currently owns, directly and indirectly, 100% of each of BRSCO, BTRS, BPI, BBL and BPM.
As of December 31, 2007, the Management Companies were managing properties containing an aggregate of approximately 43.0 million net rentable square feet, of which approximately 28.5 million net rentable square feet related to Properties owned by us and approximately 14.5 million net rentable square feet of properties owned by third parties and unconsolidated Real Estate Ventures.

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Geographic Segments
As of December 31, 2007 we were managing our portfolio within seven segments: (1) Pennsylvania, (2) New Jersey/Delaware, (3) Richmond, Virginia, (4) California—North, (5) California—South, (6) Metropolitan Washington D.C and (7) Southwest. The Pennsylvania segment includes properties in Chester, Delaware, Berks, Bucks, Cumberland, Dauphin, Lehigh and Montgomery counties in the Philadelphia suburbs and the City of Philadelphia in Pennsylvania. The New Jersey/Delaware segment includes properties in counties in the southern and central part of New Jersey including Burlington, Camden and Mercer counties and the state of Delaware. The Richmond, Virginia segment includes properties primarily in Albemarle, Chesterfield and Henrico counties, the City of Richmond and Durham, North Carolina. The California—North segment includes properties in the City of Oakland and Concord. The California—South segment includes properties in the City of Carlsbad and Rancho Bernardo . The Metropolitan Washington, D.C. segment includes properties in Northern Virginia and suburban Maryland. The Southwest segment includes properties in Travis county of Texas. Our corporate group is responsible for cash and investment management, development of certain real estate properties during the construction period and general support functions.
Competition
The real estate business is highly competitive. Our properties compete for tenants with similar properties primarily on the basis of location, total occupancy costs (including base rent and operating expenses), services provided, and the design and condition of the improvements. We also face competition when attempting to acquire or develop real estate, including competition from domestic and foreign financial institutions, other REITs, life insurance companies, pension funds, partnerships and individual investors. Additionally, our ability to compete depends upon trends in the economies of our markets, investment alternatives, financial condition and operating results of current and prospective tenants, availability and cost of capital, construction and renovation costs, land availability, our ability to obtain necessary construction approvals, taxes, governmental regulations, legislation and population trends.
Insurance
We maintain commercial general liability and “all-risk” property insurance on our properties. We intend to obtain similar coverage for properties we acquire in the future. There are certain types of losses, generally of a catastrophic nature, such as losses from war, terrorism, environmental issues, floods, hurricanes and earthquakes that may be subject to limitations in certain areas or which may be uninsurable risks. We exercise our discretion in determining amounts, coverage limits and deductibility provisions of insurance, with a view to maintaining appropriate insurance on our investments at a reasonable cost and on suitable terms. If we suffer a substantial loss, our insurance coverage may not be sufficient to pay the full current market value or current replacement cost of our lost investment. Inflation, changes in building codes and ordinances, environmental considerations and other factors also might make it impractical to use insurance proceeds to fully replace or restore a property after it has been damaged or destroyed.
Employees
As of December 31, 2007, we had 562 full-time employees, including 43 union employees.
Government Regulations Relating to the Environment
Many laws and governmental regulations relating to the environment apply to us and changes in these laws and regulations, or their interpretation by agencies and the courts, occur frequently and may adversely affect us.
Existing conditions at some of our Properties. Independent environmental consultants have conducted Phase I or similar environmental site assessments on our properties. We generally obtain these assessments prior to the acquisition of a property and may later update them as required for subsequent financing of the property or as requested by a tenant. Site assessments are generally performed to ASTM standards then existing for Phase I site assessments, and typically include a historical review, a public records review, a visual inspection of the surveyed site, and the issuance of a written report. These assessments do not generally include any soil samplings or subsurface investigations. Depending on the age of the property, the Phase I may have included an assessment of asbestos-containing materials. For properties where asbestos-containing materials were identified or suspected, an

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operations and maintenance plan was generally prepared and implemented. See Note 2 to our consolidated financial statements for our evaluation in accordance with FIN 47, Accounting for Conditional Asset Retirement Obligations.
Historical operations at or near some of our properties, including the operation of underground storage tanks, may have caused soil or groundwater contamination. We are not aware of any such condition, liability or concern by any other means that would give rise to material, uninsured environmental liability. However, the assessments may have failed to reveal all environmental conditions, liabilities or compliance concerns; there may be material environmental conditions, liabilities or compliance concerns that a review failed to detect or which arose at a property after the review was completed; future laws, ordinances or regulations may impose material additional environmental liability; and current environmental conditions at our Properties may be affected in the future by tenants, third parties or the condition of land or operations near our Properties, such as the presence of underground storage tanks. We cannot be certain that costs of future environmental compliance will not affect our ability to make distributions to our shareholders.
Use of hazardous materials by some of our tenants. Some of our tenants handle hazardous substances and wastes on our properties as part of their routine operations. Environmental laws and regulations may subject these tenants, and potentially us, to liability resulting from such activities. We generally require our tenants, in their leases, to comply with these environmental laws and regulations and to indemnify us for any related liabilities. These tenants are primarily involved in the life sciences and the light industrial and warehouse business. We are not aware of any material noncompliance, liability or claim relating to hazardous or toxic substances or petroleum products in connection with any of our Properties, and we do not believe that on-going activities by our tenants will have a material adverse effect on our operations.
Costs related to government regulation and private litigation over environmental matters. Under environmental laws and regulations, we may be liable for the costs of removal, remediation or disposal of hazardous or toxic substances present or released on our Properties. These laws could impose liability without regard to whether we are responsible for, or knew of, the presence or release of the hazardous materials. Government investigations and remediation actions may entail substantial costs and the presence or release of hazardous substances on a property could result in governmental cleanup actions or personal injury or similar claims by private plaintiffs.
Potential environmental liabilities may exceed our environmental insurance coverage limits. We carry what we believe to be sufficient environmental insurance to cover potential liability for soil and groundwater contamination, mold impact, and the presence of asbestos-containing materials at the affected sites identified in our environmental site assessments. Our insurance policies are subject to conditions, qualifications and limitations. Therefore, we cannot provide any assurance that our insurance coverage will be sufficient to cover all liabilities for losses.
Other
We do not have any foreign operations and our business is not seasonal. Our operations are not dependent on a single tenant or a few tenants and no single tenant accounted for more than 10% of our total 2007 revenue.
Code of Conduct
We maintain a Code of Business Conduct and Ethics applicable to our Board and all of our officers and employees, including our principal executive officer, principal financial officer, principal accounting officer, controller and persons performing similar functions. A copy of our Code of Business Conduct and Ethics is available on our website, www.brandywinerealty.com. In addition to being accessible through our website, copies of our Code of Business Conduct and Ethics can be obtained, free of charge, upon written request to Investor Relations, 555 East Lancaster Avenue, Suite 100, Radnor, PA 19087. Any amendments to or waivers of our Code of Business Conduct and Ethics that apply to our principal executive officer, principal financial officer, principal accounting officer, controller and persons performing similar functions and that relate to any matter enumerated in Item 406(b) of Regulation S-K promulgated by the SEC will be disclosed on our website.
Corporate Governance Principles and Board Committee Charters
Our Corporate Governance Principles and the charters of the Audit Committee, Compensation Committee and Corporate Governance Committee of the Board of Trustees of Brandywine Realty Trust and additional information regarding our corporate governance are available on our website, www.brandywinerealty.com. In addition to being

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accessible through our website, copies of our Corporate Governance Principles and charters of our Board Committees can be obtained, free of charge, upon written request to Investor Relations, 555 Lancaster Avenue, Radnor, PA 19087.
Availability of SEC Reports
We file annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K and other information with the SEC. Members of the public may read and copy materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Members of the public may also obtain information on the Public Reference Room by calling the SEC at 1-800-732-0330. The SEC also maintains an Internet web site that contains reports, proxy and information statements and other information regarding issuers, including us, that file electronically with the SEC. The address of that site is http://www.sec.gov. Our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K and other information filed by us with the SEC are available, without charge, on our Internet web site, http://www.brandywinerealty.com, as soon as reasonably practicable after they are filed electronically with the SEC. Copies are also available, without charge, from Secretary, Brandywine Realty Trust, 555 East Lancaster Avenue, Suite 100, Radnor, PA 19087.
Item 1A. Risk Factors
Our performance is subject to risks associated with our properties and with the real estate industry.
Our economic performance and the value of our real estate assets, and consequently the value of our securities, are subject to the risk that if our properties do not generate revenues sufficient to meet our operating expenses, including debt service and capital expenditures, our cash flow and ability to pay distributions to our shareholders will be adversely affected. Events or conditions beyond our control that may adversely affect our operations or the value of our properties include:
    downturns in the national, regional and local economic climate including increases in the unemployment rate and inflation;
 
    competition from other office, industrial and commercial buildings;
 
    local real estate market conditions, such as oversupply or reduction in demand for office, or other commercial or industrial space;
 
    changes in interest rates and availability of financing;
 
    vacancies, changes in market rental rates and the need to periodically repair, renovate and re-lease space;
 
    increased operating costs, including insurance expense, utilities, real estate taxes, janitorial costs, state and local taxes, labor shortages and heightened security costs;
 
    civil disturbances, earthquakes and other natural disasters, or terrorist acts or acts of war which may result in uninsured or underinsured losses;
 
    significant expenditures associated with each investment, such as debt service payments, real estate taxes, insurance and maintenance costs which are generally not reduced when circumstances cause a reduction in revenues from a property; and
 
    declines in the financial condition of our tenants and our ability to collect rents from our tenants.
We may experience increased operating costs, which might reduce our profitability.
Our properties are subject to increases in operating expenses such as for cleaning, electricity, heating, ventilation and air conditioning, administrative costs and other costs associated with security, landscaping and repairs and maintenance of our properties. In general, under our leases with tenants, we pass through all or a portion of these costs to them. We cannot assure you, however, that tenants will actually bear the full burden of these higher costs, or that such increased costs will not lead them, or other prospective tenants, to seek office space elsewhere. If operating expenses increase, the availability of other comparable office space in our core geographic markets might

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limit our ability to increase rents; if operating expenses increase without a corresponding increase in revenues, our profitability could diminish and limit our ability to make distributions to shareholders.
Our investment in property development or redevelopment may be more costly or difficult to complete than we anticipate.
We intend to continue to develop properties where market conditions warrant such investment. Once made, these investments may not produce results in accordance with our expectations. Risks associated with our development and construction activities include:
    the unavailability of favorable financing alternatives in the private and public debt markets;
 
    having debt capacity sufficient to pay development costs;
 
    unprecedented market volatility in the share price of REITs;
 
    dependence on the financial services sector as part of our tenant base;
 
    construction costs exceeding original estimates due to rising interest rates, diminished availability of materials and labor, and increases in the costs of materials and labor;
 
    construction and lease-up delays resulting in increased debt service, fixed expenses and construction or renovation costs;
 
    expenditure of funds and devotion of management’s time to projects that we do not complete;
 
    the unavailability or scarcity of utilities;
 
    occupancy rates and rents at newly completed properties may fluctuate depending on a number of factors, including market and economic conditions, resulting in lower than projected rental rates and a corresponding lower return on our investment;
 
    complications (including building moratoriums and anti-growth legislation) in obtaining necessary zoning, occupancy and other governmental permits; and
 
    increased use restrictions by local zoning or planning authorities limiting our ability to develop and impacting the size of developments.

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The disruption in the debt capital markets could adversely affect us.
Since mid-2007, there has been a marked deterioration in the credit markets affecting the availability of credit, the terms on which it can be sourced and the overall cost of debt capital. This could negatively affect us by:
    Reducing the availability of potential bidders to bid attractively for our for-sale properties or to close on sales at all;
    Increasing the cost of debt we use to finance our ongoing operations and fund our development and redevelopment activities, thereby increasing their costs and reducing the associated returns; and
    Preventing us from accessing necessary debt capital on a timely basis leading us to consider potentially more dilutive capital transactions such as undesirable sales of properties or securities.
We face risks associated with property acquisitions.
We have in the past acquired, and intend in the future to acquire, properties and portfolios of properties, including large portfolios that would increase our size and potentially alter our capital structure. Although we believe that the acquisitions that we have completed in the past and that we expect to undertake in the future have, and will, enhance our future financial performance, the success of such transactions is subject to a number of factors, including the risk that:
    we may not be able to obtain financing for acquisitions on favorable terms;
 
    acquired properties may fail to perform as expected;
 
    the actual costs of repositioning or redeveloping acquired properties may be higher than our estimates;
 
    acquired properties may be located in new markets where we may have limited knowledge and understanding of the local economy, an absence of business relationships in the area or unfamiliarity with local governmental and permitting procedures; and
 
    we may not be able to efficiently integrate acquired properties, particularly portfolios of properties, into our organization and manage new properties in a way that allows us to realize cost savings and synergies.
We acquired in the past and in the future may acquire properties or portfolios of properties through tax deferred contribution transactions in exchange for partnership interests in our Operating Partnership. This acquisition structure has the effect, among other factors, of reducing the amount of tax depreciation we can deduct over the tax life of the acquired properties, and typically requires that we agree to protect the contributors’ ability to defer recognition of taxable gain through restrictions on our ability to dispose of the acquired properties and/or the allocation of partnership debt to the contributors to maintain their tax bases. These restrictions on dispositions could limit our ability to sell an asset during a specified time, or on terms, that would be favorable absent such restrictions.
Acquired properties may subject us to known and unknown liabilities.
Properties that we acquire may be subject to known and unknown liabilities for which we would have no recourse, or only limited recourse, to the former owners of such properties. As a result, if a liability were asserted against us based upon ownership of an acquired property, we might be required to pay significant sums to settle it, which could adversely affect our financial results and cash flow. Unknown liabilities relating to acquired properties could include:
    liabilities for clean-up of pre-existing disclosed or undisclosed environmental contamination;
 
    claims by tenants, vendors or other persons arising on account of actions or omissions of the former owners of the properties; and
 
    liabilities incurred in the ordinary course of business.

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We agreed not to sell certain of our properties and to maintain indebtedness subject to guarantees.
We agreed not to sell some of our properties for varying periods of time, in transactions that would trigger taxable income to the former owners, and we may enter into similar arrangements as a part of future property acquisitions. One of these tax protection agreements is with one of our current trustees. These agreements generally provide that we may dispose of the subject properties only in transactions that qualify as tax-free exchanges under Section 1031 of the Internal Revenue Code or in other tax deferred transactions. Such transactions can be difficult to complete and can result in the property acquired in exchange for the disposed of property inheriting the tax attributes (including tax protection covenants) of the disposed of property. Violation of these tax protection agreements would impose significant costs on us. As a result, we are restricted with respect to decisions related to financing, encumbering, expanding or selling of these properties.
We have also entered into agreements that provide prior owners of properties with the right to guarantee specific amounts of indebtedness and, in the event that the specific indebtedness that they guarantee is repaid or reduced, we would be required to provide substitute indebtedness for them to guarantee. These agreements may hinder actions that we may otherwise desire to take to repay or refinance guaranteed indebtedness because we would be required to make payments to the beneficiaries of such agreements if we violate these agreements.
We may be unable to renew leases or re-lease space as leases expire; certain leases may expire early.
If tenants do not renew their leases upon expiration, we may be unable to re-lease the space. Even if the tenants do renew their leases or if we can re-lease the space, the terms of renewal or re-leasing (including the cost of required renovations) may be less favorable than current lease terms. Certain leases grant the tenants an early termination right upon payment of a termination penalty or if certain lease terms are not complied with.
We face significant competition from other real estate developers.
We compete with real estate developers, operators and institutions for tenants and acquisition and development opportunities. Some of these competitors have significantly greater financial resources than we have. Such competition may reduce the number of suitable investment opportunities available to us, may interfere with our ability to attract and retain tenants and may increase vacancies, which could result in increased supply and lower market rental rates, reducing our bargaining leverage and adversely affect our ability to improve our operating leverage. In addition, some of our competitors may be willing (e.g., because their properties may have vacancy rates higher than those for our properties) to make space available at lower rental rates or with higher tenant concession percentages than available space in our properties. We cannot assure you that this competition will not adversely affect our cash flow and our ability to make distributions to shareholders.
Changes in market conditions including capitalization rates applied in real estate acquisitions could impact our ability to grow through acquisitions.
We selectively pursue acquisitions in our core markets when long-term yields make acquisitions attractive. We compete with numerous property owners for the acquisition of real estate properties. Some of these competitors may be willing to accept lower yields on their investments impacting our ability to acquire real estate assets and thus limit our external growth. We cannot assure you that this competition will not adversely affect our cash flow and our ability to make distributions to shareholders.
Property ownership through joint ventures may limit our ability to act exclusively in our interest.
We develop and acquire properties in joint ventures with other persons or entities when we believe circumstances warrant the use of such structures. As of December 31, 2007, we had investments in 14 unconsolidated real estate ventures and three additional real estate ventures that are consolidated in our financial statements. Our investments in the 14 unconsolidated real estate ventures aggregated approximately $71.6 million (net of returns of investment amounts) as of December 31, 2007. We could become engaged in a dispute with one or more of our joint venture partners that might affect our ability to operate a jointly-owned property. Moreover, our joint venture partners may, at any time, have business, economic or other objectives that are inconsistent with our objectives, including objectives that relate to the appropriate timing and terms of any sale or refinancing of a property. In some instances, our joint venture partners may have competing interests in our markets that could create conflicts of interest. If the objectives of our joint venture partners or the lenders to our joint ventures are inconsistent with our own objectives, we may not be able to act exclusively in our interests.

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Because real estate is illiquid, we may not be able to sell properties when appropriate.
Real estate investments generally, and in particular large office and industrial/flex properties like those that we own, often cannot be sold quickly. Consequently, we may not be able to alter our portfolio promptly in response to changes in economic or other conditions. In addition, the Internal Revenue Code limits our ability to sell properties that we have held for fewer than four years without resulting in adverse consequences to our shareholders. Furthermore, properties that we have developed and have owned for a significant period of time or that we acquired in exchange for partnership interests in our operating partnership often have a low tax basis. If we were to dispose of any of these properties in a taxable transaction, we may be required under provisions of the Internal Revenue Code applicable to REITs to distribute a significant amount of the taxable gain to our shareholders and this could, in turn, impact our cash flow. In some cases, tax protection agreements with third parties will prevent us from selling certain properties in a taxable transaction without incurring substantial costs. In addition, purchase options and rights of first refusal held by tenants or partners in joint ventures may also limit our ability to sell certain properties. All of these factors reduce our ability to respond to changes in the performance of our investments and could adversely affect our cash flow and ability to make distributions to shareholders as well as the ability of someone to purchase us, even if a purchase were in our shareholders’ best interests.
We may suffer adverse consequences due to the financial difficulties, bankruptcy or insolvency of our tenants.
If one or more of our tenants were to experience financial difficulties, including bankruptcy, insolvency or a general downturn in their business, there could be an adverse effect on our financial performance and distributions to shareholders. We cannot assure you that any tenant that files for bankruptcy protection will continue to pay us rent. A bankruptcy filing by or relating to one of our tenants or a lease guarantor would bar efforts by us to collect pre-bankruptcy debts from that tenant or lease guarantor, or its property, unless we receive an order permitting us to do so from the bankruptcy court. In addition, we cannot evict a tenant solely because of bankruptcy. The bankruptcy of a tenant or lease guarantor could delay our efforts to collect past due balances under the relevant leases, and could ultimately preclude collection of these sums. If a lease is assumed by the tenant in bankruptcy, all pre-bankruptcy balances due under the lease must be paid to us in full. If, however, a lease is rejected by a tenant in bankruptcy, we would have only a general unsecured claim for damages. Any such unsecured claim would only be paid to the extent that funds are available and only in the same percentage as is paid to all other holders of unsecured claims. Restrictions under the bankruptcy laws further limit the amount of any other claims that we can make if a lease is rejected. As a result, it is likely that we would recover substantially less than the full value of the remaining rent during the term.
Some potential losses are not covered by insurance.
We currently carry comprehensive “all-risk” property, rental loss insurance and commercial general liability coverage on all of our properties. We believe the policy specifications and insured limits of these policies are adequate and appropriate. There are, however, types of losses, such as lease and other contract claims, biological, radiological and nuclear hazards and acts of war that generally are not insured. We cannot assure you that we will be able to renew insurance coverage in an adequate amount or at reasonable prices. In addition, insurance companies may no longer offer coverage against certain types of losses, such as losses due to earthquake, terrorist acts and mold, or, if offered, these types of insurance may be prohibitively expensive. Should an uninsured loss or a loss in excess of insured limits occur, we could lose all or a portion of the capital we have invested in a property, as well as the anticipated future revenue from the property. In such an event, we might nevertheless remain obligated for any mortgage debt or other financial obligations related to the property. We cannot assure you that material losses in excess of insurance proceeds will not occur in the future. If any of our properties were to experience a catastrophic loss, it could seriously disrupt our operations, delay revenue and result in large expenses to repair or rebuild the property. Such events could adversely affect our cash flow and ability to make distributions to shareholders.
Terrorist attacks and other acts of violence or war may adversely impact our performance and may affect the markets on which our securities are traded.
Terrorist attacks against our properties, or against the United States or our interests, may negatively impact our operations and the value of our securities. Attacks or armed conflicts could result in increased operating costs; for example, it might cost more in the future for building security, property and casualty insurance, and property maintenance. As a result of terrorist activities and other market conditions, the cost of insurance coverage for our properties could also increase. We might not be able to pass through the increased costs associated with such increased security measures and insurance to our tenants, which could reduce our profitability and cash flow.

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Furthermore, any terrorist attacks or armed conflicts could result in increased volatility in or damage to the United States and worldwide financial markets and economy. Such adverse economic conditions could affect the ability of our tenants to pay rent and our costs of capitals, which could have a negative impact on our results.
Our ability to make distributions is subject to various risks.
Historically, we have paid quarterly distributions to our shareholders. Our ability to make distributions in the future will depend upon:
    the operational and financial performance of our properties;
 
    capital expenditures with respect to existing, developed and newly acquired properties;
 
    general and administrative costs associated with our operation as a publicly-held REIT;
 
    the amount of, and the interest rates on, our debt; and
 
    the absence of significant expenditures relating to environmental and other regulatory matters.
Certain of these matters are beyond our control and any significant difference between our expectations and actual results could have a material adverse effect on our cash flow and our ability to make distributions to shareholders.
Changes in the law may adversely affect our cash flow.
Because increases in income and service taxes are generally not passed through to tenants under leases, such increases may adversely affect our cash flow and ability to make expected distributions to shareholders. Our properties are also subject to various regulatory requirements, such as those relating to the environment, fire and safety. Our failure to comply with these requirements could result in the imposition of fines and damage awards and could result in a default under some of our tenant leases. Moreover, the costs to comply with any new or different regulations could adversely affect our cash flow and our ability to make distributions. Although we believe that our properties are in material compliance with all such requirements, we cannot assure you that these requirements will not change or that newly imposed requirements will not require significant expenditures in order to be compliant.
The terms and covenants relating to our indebtedness could adversely impact our economic performance.
Like other real estate companies which incur debt, we are subject to risks associated with debt financing, such as the insufficiency of cash flow to meet required debt service payment obligations and the inability to refinance existing indebtedness. If our debt cannot be paid, refinanced or extended at maturity, we may not be able to make distributions to shareholders at expected levels or at all. Furthermore, an increase in our interest expense could adversely affect our cash flow and ability to make distributions to shareholders. If we do not meet our debt service obligations, any properties securing such indebtedness could be foreclosed on, which would have a material adverse effect on our cash flow and ability to make distributions and, depending on the number of properties foreclosed on, could threaten our continued viability.
Our credit facilities and the indenture governing our unsecured public debt securities contain (and any new or amended facility will contain) customary restrictions, requirements and other limitations on our ability to incur indebtedness, including total debt to asset ratios, secured debt to total asset ratios, debt service coverage ratios and minimum ratios of unencumbered assets to unsecured debt which we must maintain. Our ability to borrow under our credit facilities and our term loan is (and any new or amended facility will be) subject to compliance with such financial and other covenants. In the event that we fail to satisfy these covenants, we would be in default under the credit facilities and indenture and may be required to repay such debt with capital from other sources. Under such circumstances, other sources of capital may not be available to us, or may be available only on unattractive terms.
Increases in interest rates on variable rate indebtedness will increase our interest expense, which could adversely affect our cash flow and ability to make distributions to shareholders. Rising interest rates could also restrict our ability to refinance existing debt when it matures. In addition, an increase in interest rates could decrease the amounts that third parties are willing to pay for our assets, thereby limiting our ability to alter our portfolio promptly in relation to economic or other conditions. We entered into and may, from time to time, enter into agreements such

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as interest rate hedges, swaps, floors, caps and other interest rate hedging contracts with respect to a portion of our variable rate debt. Although these agreements may lessen the impact of rising interest rates on us, they also expose us to the risk that other parties to the agreements will not perform or that we cannot enforce the agreements.
Our degree of leverage could limit our ability to obtain additional financing or affect the market price of our equity shares or debt securities.
Our degree of leverage could affect our ability to obtain additional financing for working capital expenditures, development, acquisitions or other general corporate purposes. Our senior unsecured debt is currently rated investment grade by the three major rating agencies. We cannot, however, assure you that we will be able to maintain this rating. In the event that our unsecured debt is downgraded from the current rating, we would likely incur higher borrowing costs and the market prices of our common shares and debt securities might decline. Our degree of leverage could also make us more vulnerable to a downturn in business or the economy generally.
Potential liability for environmental contamination could result in substantial costs.
Under various federal, state and local laws, ordinances and regulations, we may be liable for the costs to investigate and remove or remediate hazardous or toxic substances on or in our properties, often regardless of whether we know of or are responsible for the presence of these substances. These costs may be substantial. While we do maintain environmental insurance, we can not be assured that our insurance coverage will be sufficient to protect us from all of the aforesaid remediation costs. Also, if hazardous or toxic substances are present on a property, or if we fail to properly remediate such substances, our ability to sell or rent the property or to borrow using that property as collateral may be adversely affected.
Additionally, we develop, manage, lease and/or operate various properties for third parties. Consequently, we may be considered to have been or to be an operator of these properties and, therefore, potentially liable for removal or remediation costs or other potential costs that could relate to hazardous or toxic substances.
An earthquake or other natural disasters could adversely affect our business.
Some of our properties are located in California which is a high risk geographical area for earthquakes or other natural disasters. Depending upon its magnitude, an earthquake could severely damage our properties which would adversely affect our business. We maintain earthquake insurance for our California properties and the resulting business interruption. We cannot assure you that our insurance will be sufficient if there is a major earthquake.
Americans with Disabilities Act compliance could be costly.
The Americans with Disabilities Act of 1990, as amended (“ADA”) requires that all public accommodations and commercial facilities, including office buildings, meet certain federal requirements related to access and use by disabled persons. Compliance with ADA requirements could involve the removal of structural barriers from certain disabled persons’ entrances which could adversely affect our financial condition and results of operations. Other federal, state and local laws may require modifications to or restrict further renovations of our properties with respect to such accesses. Although we believe that our properties are in material compliance with present requirements, noncompliance with the ADA or similar or related laws or regulations could result in the United States government imposing fines or private litigants being awarded damages against us. In addition, changes to existing requirements or enactments of new requirements could require significant expenditures. Such costs may adversely affect our cash flow and ability to make distributions to shareholders.
Our status as a REIT (or any of our REIT subsidiaries) is dependent on compliance with federal income tax requirements.
If we (or any of our REIT subsidiaries) fail to qualify as a REIT, we or the affected REIT subsidiaries would be subject to federal income tax at regular corporate rates. Also, unless the IRS granted us or our affected REIT subsidiaries, as the case may be, relief under certain statutory provisions, we or it would remain disqualified as a REIT for four years following the year it first failed to qualify. If we or any of our REIT subsidiaries fails to qualify as a REIT, we or they would be required to pay significant income taxes and would, therefore, have less money available for investments or for distributions to shareholders. This would likely have a material adverse effect on the value of the combined company’s securities. In addition, we or our affected REIT subsidiaries would no longer be required to make any distributions to shareholders.

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Failure of the Operating Partnership (or a subsidiary partnership) to be treated as a partnership would have serious adverse consequences to our shareholders. If the IRS were to successfully challenge the tax status of the Operating Partnership or any of its subsidiary partnerships for federal income tax purposes, the Operating Partnership or the affected subsidiary partnership would be taxable as a corporation.  In such event we would cease to qualify as a REIT and the imposition of a corporate tax on the Operating Partnership or a subsidiary partnership would reduce the amount of cash available for distribution from the Operating Partnership to us and ultimately to our shareholders.
Even if we qualify as a REIT, we will be required to pay certain federal, state and local taxes on our income and properties.  In addition, our taxable REIT subsidiaries will be subject to federal, state and local income tax at regular corporate rates on their net taxable income derived from management, leasing and related service business. If we have net income from a prohibited transaction, such income will be subject to a 100% tax.
We face possible state and local tax audits.
Because we are organized and qualify as a REIT, we are generally not subject to federal income taxes, but are subject to certain state and local taxes. In the normal course of business, certain entities through which we own real estate either have undergone, or are currently undergoing, tax audits. Although we believe that we have substantial arguments in favor of our positions in the ongoing audits, in some instances there is no controlling precedent or interpretive guidance on the specific point at issue. Collectively, tax deficiency notices received to date from the jurisdictions conducting the ongoing audits have not been material. However, there can be no assurance that future audits will not occur with increased frequency or that the ultimate result of such audits will not have a material adverse effect on our results of operations.
Competition for skilled personnel could increase labor costs.
We compete with various other companies in attracting and retaining qualified and skilled personnel. We depend on our ability to attract and retain skilled management personnel who are responsible for the day-to-day operations of our company. Competitive pressures may require that we enhance our pay and benefits package to compete effectively for such personnel. We may not be able to offset such added costs by increasing the rates we charge tenants. If there is an increase in these costs or if we fail to attract and retain qualified and skilled personnel, our business and operating results could be harmed.
We are dependent upon our key personnel.
We are dependent upon our key personnel whose continued service is not guaranteed. We are dependent on our executive officers for strategic business direction and real estate experience. Although we believe that we could find replacements for these key personnel, loss of their services could adversely affect our operations.
Although we have an employment agreement with Gerard H. Sweeney, our President and Chief Executive Officer, for a term extending to February 9, 2010, this agreement does not restrict his ability to become employed by a competitor following the termination of his employment.  We do not have key man life insurance coverage on our executive officers.
Certain limitations will exist with respect to a third party’s ability to acquire us or effectuate a change in control.
Limitations imposed to protect our REIT status. In order to protect us against the loss of our REIT status, our Declaration of Trust limits any shareholder from owning more than 9.8% in value of our outstanding shares, subject to certain exceptions.  The ownership limit may have the effect of precluding acquisition of control of us. If anyone acquires shares in excess of the ownership limit, we may:
    consider the transfer to be null and void;
 
    not reflect the transaction on our books;
 
    institute legal action to stop the transaction;
 
    not pay dividends or other distributions with respect to those shares;

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    not recognize any voting rights for those shares; and
 
    consider the shares held in trust for the benefit of a person to whom such shares may be transferred.
Limitation due to our ability to issue preferred shares. Our Declaration of Trust authorizes our Board of Trustees to cause us to issue preferred shares, without limitation as to amount and without shareholder consent.  Our Board of Trustees is able to establish the preferences and rights of any preferred shares issued and these shares could have the effect of delaying or preventing someone from taking control of us, even if a change in control were in our shareholders’ best interests.
Limitation imposed by the Maryland Business Combination Law. The Maryland General Corporation Law, as applicable to Maryland REITs, establishes special restrictions against “business combinations” between a Maryland REIT and “interested shareholders” or their affiliates unless an exemption is applicable.  An interested shareholder includes a person who beneficially owns, and an affiliate or associate of the trust who, at any time within the two-year period prior to the date in question, was the beneficial owner of, ten percent or more of the voting power of our then-outstanding voting shares.  Among other things, Maryland law prohibits (for a period of five years) a merger and certain other transactions between a Maryland REIT and an interested shareholder unless the board of trustees had approved the transaction before the party became an interested shareholder.  The five-year period runs from the most recent date on which the interested shareholder became an interested shareholder.  Thereafter, any such business combination must be recommended by the board of trustees and approved by two super-majority shareholder votes unless, among other conditions, the common shareholders receive a minimum price for their shares and the consideration is received in cash or in the same form as previously paid by the interested shareholder for our shares or unless the board of trustees approved the transaction before the party in question became an interested shareholder.  The business combination statute could have the effect of discouraging offers to acquire us and of increasing the difficulty of consummating any such offers, even if the acquisition would be in our shareholders’ best interests.
Maryland Control Share Acquisition Act. Maryland law provides that “control shares” of a REIT acquired in a “control share acquisition” shall have no voting rights except to the extent approved by a vote of two-thirds of the vote eligible to be cast on the matter under the Maryland Control Share Acquisition Act.  “Control Shares” means shares that, if aggregated with all other shares previously acquired by the acquirer or in respect of which the acquirer is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquirer to exercise voting power in electing trustees within one of the following ranges of voting power: one-tenth or more but less than one-third, one-third or more but less than a majority or a majority or more of all voting power. Control shares do not include shares the acquiring person is then entitled to vote as a result of having previously obtained shareholder approval. A “control share acquisition” means the acquisition of control shares, subject to certain exceptions. If voting rights or control shares acquired in a control share acquisition are not approved at a shareholder’s meeting, then subject to certain conditions and limitations the issuer may redeem any or all of the control shares for fair value. If voting rights of such control shares are approved at a shareholder’s meeting and the acquirer becomes entitled to vote a majority of the shares entitled to vote, all other shareholders may exercise appraisal rights.  Any control shares acquired in a control share acquisition which are not exempt under our Bylaws are subject to the Maryland Control Share Acquisition Act. Our Bylaws contain a provision exempting from the control share acquisition statute any and all acquisitions by any person of our shares.  We cannot assure you that this provision will not be amended or eliminated at any time in the future.
Advance Notice Provisions for Shareholder Nominations and Proposals. Our bylaws require advance notice for shareholders to nominate persons for election as trustees at, or to bring other business before, any meeting of our shareholders. This bylaw provision limits the ability of shareholders to make nominations of persons for election as trustees or to introduce other proposals unless we are notified in a timely manner prior to the meeting.
Many factors can have an adverse effect on the market value of our securities.
A number of factors might adversely affect the price of our securities, many of which are beyond our control.  These factors include:
    increases in market interest rates, relative to the dividend yield on our shares.  If market interest rates go up, prospective purchasers of our securities may require a higher yield.  Higher market interest rates would not, however, result in more funds for us to distribute and, to the contrary, would likely increase our

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      borrowing costs and potentially decrease funds available for distribution.  Thus, higher market interest rates could cause the market price of our common shares to go down;
 
    anticipated benefit of an investment in our securities as compared to investment in securities of companies in other industries (including benefits associated with tax treatment of dividends and distributions);
 
    perception by market professionals of REITs generally and REITs comparable to us in particular;
 
    level of institutional investor interest in our securities;
 
    relatively low trading volumes in securities of REITs;
 
    our results of operations and financial condition; and
 
    investor confidence in the stock market generally.
The market value of our common shares is based primarily upon the market’s perception of our growth potential and our current and potential future earnings and cash distributions. Consequently, our common shares may trade at prices that are higher or lower than our net asset value per common share. If our future earnings or cash distributions are less than expected, it is likely that the market price of our common shares will diminish.
Additional issuances of equity securities may be dilutive to shareholders.
The interests of our shareholders could be diluted if we issue additional equity securities to finance future developments or acquisitions or to repay indebtedness. Our Board of Trustees may authorize the issuance of additional equity securities without shareholder approval. Our ability to execute our business strategy depends upon our access to an appropriate blend of debt financing, including unsecured lines of credit and other forms of secured and unsecured debt, and equity financing, including the issuance of common and preferred equity.
The issuance of preferred securities may adversely affect the rights of holders of our common shares.
Because our Board of Trustees has the power to establish the preferences and rights of each class or series of preferred shares, we may afford the holders in any series or class of preferred shares preferences, distributions, powers and rights, voting or otherwise, senior to the rights of holders of common shares. Our Board of Trustees also has the power to establish the preferences and rights of each class or series of units in Brandywine Operating Partnership, and may afford the holders in any series or class of preferred units preferences, distributions, powers and rights, voting or otherwise, senior to the rights of holders of common units.
The acquisition of new properties or the development of new properties which lack operating history with us may give rise to difficulties in predicting revenue potential.
We will continue to acquire additional properties and seek to develop our existing land holdings strategically. These acquisitions and developments could fail to perform in accordance with expectations. If we fail to accurately estimate occupancy levels, operating costs or costs of improvements to bring an acquired property or a development property up to the standards established for our intended market position, the performance of the property may be below expectations. Acquired properties may have characteristics or deficiencies affecting their valuation or revenue potential that we have not yet discovered. We cannot assure you that the performance of properties acquired or developed by us will increase or be maintained under our management.
Our performance is dependent upon the economic conditions of the markets in which our properties are located.
Our properties are located in Pennsylvania, New Jersey, Delaware, Maryland, Virginia, Texas, and California. Like other real estate markets, these commercial real estate markets have experienced economic downturns in the past, and future declines in 2008 in any of these economies or real estate markets could adversely affect cash available for distribution. Our financial performance and ability to make distributions to our shareholders will be particularly sensitive to the economic conditions in these markets. The local economic climate, which may be adversely impacted by business layoffs or downsizing, industry slowdowns, changing demographics and other factors, and local real estate conditions, such as oversupply of or reduced demand for office, industrial

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and other competing commercial properties, may affect revenues and the value of properties, including properties to be acquired or developed. We cannot assure you that these local economies will grow in the future.
Item 1B. Unresolved Staff Comments
None
Item 2. Properties
Property Acquisitions
We acquired the following properties during the year ended December 31, 2007:
                                 
Month of           # of     Rentable Square     Purchase  
Acquisition   Property/Portfolio Name   Location   Buildings     Feet/ Acres     Price  
                            (in 000’s)  
Office:  
 
                           
 
Mar-07  
Brandywine Office Investors, L.P.
  Various     10       1,098,340     $ 63,731  
May-07  
155 Grand Avenue
  Oakland, CA     1       204,278       72,000  
Jul-07  
The Boulders
  Richmond, VA     5       508,607       95,000  
Jul-07  
Post Office/IRS
  Philadelphia, PA     1       862,692       28,000  
Jul-07  
Cira South Garage
  Philadelphia, PA           733,000       (a)
   
 
                     
   
Total Office Properties Acquired
        17       3,406,917     $ 258,731  
   
 
                     
   
 
                           
Land Parcels:  
 
                           
Jul-07  
Boulders land
  Richmond, VA             4.9       1,250  
   
 
                     
   
Total Land Acquired
                4.9     $ 1,250  
   
 
                     
 
(a)   Property to be constructed by us on land subject to a ground lease
The purchase prices above do not include transaction costs.
Development Properties Placed in Service
We placed in service the following properties during the year ended December 31, 2007:
                         
Month Placed           # of     Rentable  
in Service   Property/Portfolio Name   Location   Buildings     Square Feet  
Office:  
 
                   
   
 
                   
Jun-07  
555 Lancaster Avenue
  Radnor, PA     1       242,099  
Sep-07  
150 Radnor Chester Road
  Radnor, PA     1       339,198  
Sep-07  
170 Radnor Chester Road
  Radnor, PA     1       69,787  
Sep-07  
Three Paragon Place
  Richmond, VA     1       74,604  
Dec-07  
130 Radnor Chester Road
  Radnor, PA     1       71,349  
Dec-06  
201 King of Prussia Road
  Radnor, PA     1       251,372  
   
 
               
   
Total Properties Placed in Service
        6       1,048,409  
   
 
               
We place a property under development in service on the earlier of (i) once a property reaches 95% occupancy and (ii) one year after the completion of shell construction.

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Property Sales
We sold the following properties during the year ended December 31, 2007:
                                 
Month of           # of     Rentable Square     Sales  
Sale   Property/Portfolio Name   Location   Bldgs.     Feet/ Acres     Price  
                            (in 000’s)  
Office:
                               
 
                               
Jan-07
  Norriton Office Center   East Norriton, PA     1       73,394     $ 7,785  
Jan-07
  Park West   Dallas, TX     4       1,091,186       105,000  
Jan-07
  George Kachel Farmhouse   Reading, PA     1       1,664       245  
Mar-07
  Reading/Harrisburg   Reading and Harrisburg, PA     10       940,486       112,000  
Mar-07
  1007 Laurel Oak   Voorhees, NJ     1       78,205       7,000  
Apr-07
  Cityplace   Dallas, TX     1       1,295,832       115,000  
Nov-07
  2490 Boulevard of the Generals   West Norriton, PA     1       20,600       1,458  
Nov-07
  111/113 Pencader Drive   Newark, DE     1       52,665       5,135  
Dec-07
  G&I VI Interchange Office, LLC   Various     29       1,616,227       242,150  
 
                         
 
  Total Office Properties Sold         49       5,170,259     $ 595,773  
 
                       
 
                               
Land Parcels:
                               
Jan-07
  Park West Land   Dallas, TX             4.7     $ 2,100  
Sep-07
  Iron Run Land Parcels   Lehigh County, PA             51.5       6,600  
 
                           
 
  Total Land Sold                 56.2     $ 8,700  
 
                           
Properties
As of December 31, 2007, we owned 216 office properties, 23 industrial facilities and one mixed-use property that contain an aggregate of approximately 24.9 million net rentable square feet. We also have seven properties under development and seven properties under redevelopment containing an aggregate 3.7 million net rentable square feet. The properties are located in and surrounding Philadelphia, PA, Wilmington, DE, Southern and Central New Jersey, Richmond, VA, Metropolitan Washington, D.C., Austin, TX, and Oakland and Rancho Bernardo, CA. As of December 31, 2007, the Properties were approximately 93.9% occupied by 1,650 tenants and had an average age of approximately 17.8 years. The office properties are primarily suburban office buildings containing an average of approximately 109,857 net rentable square feet. The industrial properties accommodate a variety of tenant uses, including light manufacturing, assembly, distribution and warehousing. We carry comprehensive liability, fire, extended coverage and rental loss insurance covering all of the Properties, with policy specifications and insured limits which we believe are adequate.
We had the following projects in development or redevelopment as of December 31, 2007:

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            %        
            Leased     Projected  
        Rentable   as of     In-Service  
Project Name   Location   Square Feet   12/31/07     Date (a)  
Under Development:
                       
 
                       
South Lake at Dulles Corner
  Herndon, VA   267,350     0.0 %     Q4’09  
Park on Barton Creek
  Austin, TX   213,255     30.7 %     Q2’09  
Metroplex I
  Plymouth Meeting, PA   120,877     9.3 %     Q1’09  
1200 Lenox Drive
  Lawrenceville, NJ   71,250     0.0 %     Q1’09  
2100 Franklin
  Oakland, CA   213,905     0.0 %     Q1’09  
Post Office/IRS
  Philadelphia, PA   862,692     100.0 %     Q3’10  
Cira South Garage
  Philadelphia, PA   733,000     66.7 %     Q3’10  
 
                       
 
      2,482,329                
 
                       
 
                       
Under Redevelopment:
                       
100 Lenox Drive
  Lawrenceville, NJ   92,980     0.0 %     Q2’09  
Atrium I
  Mount Laurel, NJ   97,158     50.9 %     Q4’08  
One Rockledge Associates
  Bethesda, MD   160,173     57.0 %     Q1’09  
Delaware Corporate Center II
  Wilmington, DE   95,514     67.4 %     Q3’08  
Radnor Corporate Center I
  Radnor, PA   190,219     65.9 %     Q1’09  
1333 Broadway
  Oakland, CA   239,830     72.5 %     Q1’09  
300 Delaware Avenue
  Wilmington, DE   298,071     78.0 %     Q2’09  
 
                       
 
      1,173,945                
 
                       
 
      3,656,274                
 
                       
 
(a)   Projected in-service date represents the earlier of (i) the date at which the property is estimated to be 95% occupied or (ii) one year from the project completion date.
As of December 31, 2007, the above 14 projects accounted for $249.8 million of the $402.3 million of construction in process on our consolidated balance sheet.
As of December 31, 2007, we expect our total development cost for these 14 projects, including an estimate of the tenant improvement costs, to be approximately $718.3 million.
The following table sets forth information with respect to our operating properties at December 31, 2007:

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                                                    Average  
                                            Total Base Rent     Annualized  
                            Net     Percentage     for the Twelve     Rental Rate  
                    Year     Rentable     Leased as of     Months Ended     as of  
                    Built/     Square     December 31,     December 31,     December 31,  
Property Name   Location   State     Renovated     Feet     2007 (a)     2007 (b) (000’s)     2007 (c)  
CALIFORNIA NORTH SEGMENT
                                                       
 
                                                       
1 Kaiser Plaza
  Oakland   CA     1970       530,850       94.0 %   $ 16,232     $ 35.04  
2101 Webster Street
  Oakland   CA     1985       464,424       93.7 %     12,210       30.86  
1901 Harrison Street
  Oakland   CA     1985       272,100       98.8 %     7,622       33.12  
155 Grand Avenue
  Oakland   CA     1990       204,278       98.0 %     4,088       35.90  
1220 Concord Avenue
  Concord   CA     1984       175,153       100.0 %     2,944       22.38  
1200 Concord Avenue
  Concord   CA     1984       175,103       100.0 %     4,155       24.99  
 
                                                       
CALIFORNIA SOUTH SEGMENT
                                                       
5780 & 5790 Feet Street
  Carlsbad   CA     1999       121,381       94.2 %     3,284       31.94  
5900 & 5950 La Place Court
  Carlsbad   CA     1988       80,506       96.4 %     1,881       24.26  
16870 West Bernardo Drive
  San Diego   CA     2002       68,708       82.4 %     2,032       33.63  
5963 La Place Court
  Carlsbad   CA     1987       61,587       65.5 %     1,191       25.96  
2035 Corte Del Nogal
  Carlsbad   CA     1991       53,982       100.0 %     1,158       23.26  
5973 Avendia Encinas
  Carlsbad   CA     1986       51,695       100.0 %     1,373       27.25  
 
                                                       
METROPOLITAN WASHINGTON D.C. REGION SEGMENT
                                                       
7101 Wisconsin Avenue
  Bethesda   MD     1975       223,054       95.4 %     5,073       26.54  
2273 Research Boulevard
  Rockville   MD     1999       147,689       98.4 %     3,967       26.28  
2275 Research Boulevard
  Rockville   MD     1990       147,650       88.6 %     3,545       13.10  
2277 Research Boulevard
  Rockville   MD     1986       137,045       100.0 %     3,099        
11720 Beltsville Drive
  Beltsville   MD     1987       128,903       78.6 %     2,013       19.70  
7735 Old Georgetown Road
  Bethesda   MD     1964/1997       122,543       95.0 %     3,168       31.07  
11700 Beltsville Drive
  Beltsville   MD     1981       96,843       68.6 %     1,431       21.59  
11710 Beltsville Drive
  Beltsville   MD     1987       81,281       67.6 %     860       23.52  
11740 Beltsville Drive
  Beltsville   MD     1987       6,783       100.0 %     153       22.76  
1676 International Drive
  McLean   VA     1999       299,388       100.0 %     9,283       33.01  
2340 Dulles Corner Boulevard
  Herndon   VA     1987       264,405       100.0 %     7,954       28.01  
2291 Wood Oak Drive
  Herndon   VA     1999       227,574       100.0 %     5,326       28.89  
1900 Gallows Road
  Vienna   VA     1989       202,684       100.0 %     4,244       23.99  
3130 Fairview Park Drive
  Falls Church   VA     1999       180,645       73.7 %     4,335       35.27  
3141 Fairview Park Drive
  Falls Church   VA     1988       180,611       96.9 %     4,458       25.65  
2355 Dulles Corner Boulevard
  Herndon   VA     1988       179,334       99.4 %     4,432       24.43  
2411 Dulles Corner Park
  Herndon   VA     1990       176,618       100.0 %     5,342       27.86  
1880 Campus Commons Drive
  Reston   VA     1985       172,448       100.0 %     3,112       20.57  
2121 Cooperative Way
  Herndon   VA     2000       161,274       91.4 %     4,329       28.45  
8260 Greensboro Drive
  McLean   VA     1980       159,498       100.0 %     3,722       24.64  
2251 Corporate Park Drive
  Herndon   VA     2000       158,016       100.0 %     5,425       35.44  
12015 Lee Jackson Memorial Highway
  Fairfax   VA     1985       153,255       97.1 %     3,478       24.50  
13880 Dulles Corner Lane
  Herndon   VA     1997       151,747       100.0 %     4,686       32.55  
8521 Leesburg Pike
  Vienna   VA     1984       149,743       97.9 %     3,236       25.88  
2201 Cooperative Way
  Herndon   VA     1990       138,806       100.0 %     3,829       29.84  
11781 Lee Jackson Memorial Highway
  Fairfax   VA     1982       130,935       96.1 %     3,021       23.54  
13825 Sunrise Valley Drive
  Herndon   VA     1989       104,150       100.0 %     2,484       25.99  
198 Van Buren Street
  Herndon   VA     1996       98,934       100.0 %     2,677       28.63  
196 Van Buren Street
  Herndon   VA     1991       97,781       66.6 %     1,885       29.68  
4401 Fair Lakes Court
  Fairfax   VA     1988       55,972       89.1 %     1,314       25.15  

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                                                            Average  
                                                    Total Base Rent     Annualized  
                                    Net     Percentage     for the Twelve     Rental Rate  
                            Year   Rentable     Leased as of     Months Ended     as of  
                            Built/   Square     December 31,     December 31,     December 31,  
Property Name           Location   State     Renovated   Feet     2007 (a)     2007 (b) (000’s)     2007 (c)  
PENNSYLVANIA SEGMENT
                                                               
2929 Arch Street
    (d )   Philadelphia   PA     2006       729,897       99.3 %     24,029       32.98  
100 North 18th Street
    (e )   Philadelphia   PA     1988       702,286       98.7 %     20,596       30.37  
130 North 18th Street
          Philadelphia   PA     1998       594,361       98.5 %     12,706       27.23  
150 Radnor Chester Road
          Radnor   PA     1983       339,198       100.0 %     7,999       18.94  
201 King of Prussia Road
          Radnor   PA     2001       251,372       84.1 %     5,066       23.83  
555 Lancaster Avenue
          Radnor   PA     1973       242,099       99.5 %     6,067       27.99  
401 Plymouth Road
          Plymouth Meeting   PA     2001       201,883       96.9 %     6,123       31.50  
Philadelphia Marine Center
    (d )   Philadelphia   PA   Various       181,900       91.2 %     1,479       4.56  
101 West Elm Street
          W. Conshohocken   PA     1999       175,009       95.8 %     3,805       23.74  
Four Radnor Corporate Center
          Radnor   PA     1995       165,138       93.3 %     2,944       21.74  
Five Radnor Corporate Center
          Radnor   PA     1998       164,577       83.1 %     4,417       30.85  
751-761 Fifth Avenue
          King Of Prussia   PA     1967       158,000       100.0 %     543       3.64  
630 Allendale Road
          King of Prussia   PA     2000       150,000       100.0 %     3,722       26.04  
640 Freedom Business Center
    (d )   King Of Prussia   PA     1991       132,000       65.3 %     1,757       23.37  
52 Swedesford Square
          East Whiteland Twp.   PA     1988       131,017       100.0 %     2,806       23.10  
400 Berwyn Park
          Berwyn   PA     1999       124,182       100.0 %     3,267       27.45  
Three Radnor Corporate Center
          Radnor   PA     1998       119,194       77.6 %     2,857       32.96  
101 Lindenwood Drive
          Malvern   PA     1988       118,121       85.5 %     2,337       21.02  
7130 Ambassador Drive
    (f )   Allentown   PA     1991       114,049       100.0 %     430       5.27  
300 Berwyn Park
          Berwyn   PA     1989       108,619       100.0 %     2,242       23.56  
442 Creamery Way
    (f )   Exton   PA     1991       104,500       100.0 %     598       6.71  
Two Radnor Corporate Center
          Radnor   PA     1998       100,973       91.4 %     2,498       30.99  
301 Lindenwood Drive
          Malvern   PA     1984       97,813       97.3 %     1,907       20.64  
1 West Elm Street
          W. Conshohocken   PA     1999       97,737       79.7 %     2,744       26.91  
555 Croton Road
          King of Prussia   PA     1999       96,909       79.4 %     2,226       31.51  
500 North Gulph Road
          King Of Prussia   PA     1979       93,082       76.5 %     838       18.26  
620 West Germantown Pike
          Plymouth Meeting   PA     1990       90,183       87.1 %     1,795       27.68  
610 West Germantown Pike
          Plymouth Meeting   PA     1987       90,152       91.1 %     1,610       28.41  
630 West Germantown Pike
          Plymouth Meeting   PA     1988       89,925       56.5 %     1,428       28.04  
600 West Germantown Pike
          Plymouth Meeting   PA     1986       89,681       83.3 %     1,795       26.02  
630 Freedom Business Center
    (d )   King Of Prussia   PA     1989       86,683       100.0 %     1,966       25.48  
620 Freedom Business Center
    (d )   King Of Prussia   PA     1986       86,570       100.0 %     1,760       22.50  
1200 Swedsford Road
          Berwyn   PA     1994       86,000       100.0 %     1,785       24.75  
595 East Swedesford Road
          Wayne   PA     1998       81,890       100.0 %     1,750       21.84  
1050 Westlakes Drive
          Berwyn   PA     1984       80,000       100.0 %     1,818        
One Progress Drive
          Horsham   PA     1986       79,204       100.0 %     841       13.45  
1060 First Avenue
          King Of Prussia   PA     1987       77,718       73.2 %     1,383       18.48  
741 First Avenue
          King Of Prussia   PA     1966       77,184       100.0 %     580       8.89  
1040 First Avenue
          King Of Prussia   PA     1985       75,488       78.7 %     1,416       21.99  
200 Berwyn Park
          Berwyn   PA     1987       75,025       100.0 %     1,585       24.10  
1020 First Avenue
          King Of Prussia   PA     1984       74,556       100.0 %     1,608       19.25  
1000 First Avenue
          King Of Prussia   PA     1980       74,139       87.7 %     1,057       20.17  
436 Creamery Way
          Exton   PA     1991       72,300       96.2 %     679       14.30  
130 Radnor Chester Road
          Radnor   PA     1983       71,349       100.0 %     583        
170 Radnor Chester Road
          Radnor   PA     1983       69,787       92.6 %     1,560       17.98  
14 Campus Boulevard
          Newtown Square   PA     1998       69,542       100.0 %     832        
500 Enterprise Road
          Horsham   PA     1990       66,751       0.0 %     495        
575 East Swedesford Road
          Wayne   PA     1985       66,265       89.8 %     1,168       22.79  
429 Creamery Way
          Exton   PA     1996       63,420       100.0 %     790       16.49  

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Table of Contents

                                                                 
                                                            Average  
                                                    Total Base Rent     Annualized  
                                    Net     Percentage     for the Twelve     Rental Rate  
                            Year     Rentable     Leased as of     Months Ended     as of  
                            Built/     Square     December 31,     December 31,     December 31,  
Property Name           Location   State     Renovated     Feet     2007 (a)     2007 (b) (000’s)     2007 (c)  
610 Freedom Business Center
    (d )   King Of Prussia   PA     1985       62,991       54.9 %     1,386       22.23  
925 Harvest Drive
          Blue Bell   PA     1990       62,957       96.1 %     1,207       21.30  
980 Harvest Drive
          Blue Bell   PA     1988       62,379       100.0 %     1,383       23.19  
426 Lancaster Avenue
          Devon   PA     1990       61,102       100.0 %     1,213       18.48  
1180 Swedesford Road
          Berwyn   PA     1987       60,371       100.0 %     1,847       32.41  
1160 Swedesford Road
          Berwyn   PA     1986       60,099       100.0 %     1,451       25.04  
100 Berwyn Park
          Berwyn   PA     1986       57,731       100.0 %     1,103       22.95  
440 Creamery Way
          Exton   PA     1991       57,218       100.0 %     648       14.10  
640 Allendale Road
    (f )   King of Prussia   PA     2000       56,034       100.0 %     350       8.01  
565 East Swedesford Road
          Wayne   PA     1984       55,979       98.6 %     985       20.44  
650 Park Avenue
          King Of Prussia   PA     1968       54,338       97.1 %     796       16.08  
855 Springdale Drive
          Exton   PA     1986       53,500       73.5 %     324       16.71  
910 Harvest Drive
          Blue Bell   PA     1990       52,611       100.0 %     1,040       19.11  
680 Allendale Road
          King Of Prussia   PA     1962       52,528       100.0 %     544       13.34  
2240/50 Butler Pike
          Plymouth Meeting   PA     1984       52,229       100.0 %     1,119       21.48  
920 Harvest Drive
          Blue Bell   PA     1990       51,875       100.0 %     971       19.99  
486 Thomas Jones Way
          Exton   PA     1990       51,372       92.0 %     716       18.77  
660 Allendale Road
    (f )   King of Prussia   PA     1962       50,635       100.0 %     365       9.45  
875 First Avenue
          King Of Prussia   PA     1966       50,000       100.0 %     1,038       21.41  
630 Clark Avenue
          King Of Prussia   PA     1960       50,000       100.0 %     301       8.19  
620 Allendale Road
          King Of Prussia   PA     1961       50,000       100.0 %     988       22.59  
15 Campus Boulevard
          Newtown Square   PA     2002       49,621       100.0 %     1,018       21.77  
479 Thomas Jones Way
          Exton   PA     1988       49,264       100.0 %     795       16.90  
17 Campus Boulevard
          Newtown Square   PA     2001       48,565       100.0 %     1,224       28.48  
11 Campus Boulevard
          Newtown Square   PA     1998       47,699       100.0 %     1,009       23.62  
456 Creamery Way
          Exton   PA     1987       47,604       100.0 %     363       8.16  
585 East Swedesford Road
          Wayne   PA     1998       43,683       100.0 %     1,001       25.40  
1100 Cassett Road
          Berwyn   PA     1997       43,480       100.0 %     1,106       29.74  
467 Creamery Way
          Exton   PA     1988       42,000       77.3 %     422       16.70  
1336 Enterprise Drive
          West Goshen   PA     1989       39,330       100.0 %     796       23.04  
600 Park Avenue
          King Of Prussia   PA     1964       39,000       100.0 %     545       15.15  
412 Creamery Way
          Exton   PA     1999       38,098       100.0 %     769       22.06  
18 Campus Boulevard
          Newtown Square   PA     1990       37,374       100.0 %     601       22.67  
457 Creamery Way
          Exton   PA     1990       36,019       100.0 %     386       15.85  
100 Arrandale Boulevard
          Exton   PA     1997       34,931       100.0 %     456       15.71  
300 Lindenwood Drive
          Malvern   PA     1991       33,000       100.0 %     216       21.90  
2260 Butler Pike
          Plymouth Meeting   PA     1984       31,892       100.0 %     663       21.16  
120 West Germantown Pike
          Plymouth Meeting   PA     1984       30,574       100.0 %     459       21.38  
468 Thomas Jones Way
          Exton   PA     1990       28,934       100.0 %     550       18.50  
1700 Paoli Pike
          Malvern   PA     2000       28,000       100.0 %     505       22.22  
140 West Germantown Pike
          Plymouth Meeting   PA     1984       25,357       89.6 %     513       24.22  
481 John Young Way
          Exton   PA     1997       19,275       100.0 %     405       22.88  
100 Lindenwood Drive
          Malvern   PA     1985       18,400       100.0 %     319       20.38  
748 Springdale Drive
          Exton   PA     1986       13,950       77.7 %     197       19.52  
200 Lindenwood Drive
          Malvern   PA     1984       12,600       65.3 %     123       19.17  
111 Arrandale Road
          Exton   PA     1996       10,479       100.0 %     198       18.72  

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Table of Contents

                                                                 
                                                            Average  
                                                    Total Base Rent     Annualized  
                                    Net     Percentage     for the Twelve     Rental Rate  
                            Year     Rentable     Leased as of     Months Ended     as of  
                            Built/     Square     December 31,     December 31,     December 31,  
Property Name           Location   State     Renovated     Feet     2007 (a)     2007 (b) (000’s)     2007 (c)  
NEW JERSEY/DELAWARE SEGMENT
                                               
50 East State Street
          Trenton   NJ     1989       305,884       91.3 %     5,240       30.51  
10000 Midlantic Drive
          Mt. Laurel   NJ     1990       182,931       96.4 %     2,519       24.41  
1009 Lenox Drive
          Lawrenceville   NJ     1989       180,460       92.2 %     4,248       29.66  
33 West State Street
          Trenton   NJ     1988       167,774       99.6 %     2,976       32.00  
525 Lincoln Drive West
          Marlton   NJ     1986       165,956       95.1 %     3,250       24.03  
Main Street — Plaza 1000
          Voorhees   NJ     1988       162,364       93.9 %     3,274       24.87  
457 Haddonfield Road
          Cherry Hill   NJ     1990       121,737       100.0 %     2,751       24.89  
2000 Midlantic Drive
          Mt. Laurel   NJ     1989       121,658       100.0 %     1,913       24.77  
700 East Gate Drive
          Mt. Laurel   NJ     1984       119,272       93.5 %     2,135       25.14  
2000 Lenox Drive
          Lawrenceville   NJ     2000       119,114       100.0 %     3,209       31.75  
989 Lenox Drive
          Lawrenceville   NJ     1984       112,055       100.0 %     2,626       29.50  
993 Lenox Drive
          Lawrenceville   NJ     1985       111,124       100.0 %     2,882       29.84  
1000 Howard Boulevard
          Mt. Laurel   NJ     1988       105,312       100.0 %           23.17  
100 Brandywine Boulevard
          Newtown   PA     2002       102,000       100.0 %     2,681       26.36  
997 Lenox Drive
          Lawrenceville   NJ     1987       97,277       100.0 %     2,390       27.98  
1120 Executive Boulevard
          Mt. Laurel   NJ     1987       95,278       97.4 %     1,485       22.28  
15000 Midlantic Drive
          Mt. Laurel   NJ     1991       84,056       100.0 %     1,215       20.69  
220 Lake Drive East
          Cherry Hill   NJ     1988       78,509       87.3 %     1,272       23.69  
10 Lake Center Drive
          Marlton   NJ     1989       76,359       94.1 %     1,339       21.41  
200 Lake Drive East
          Cherry Hill   NJ     1989       76,352       88.1 %     1,462       25.26  
1400 Howard Boulevard
          Mt. Laurel   NJ     1995/2005       75,590       100.0 %     1,431       23.60  
Three Greentree Centre
          Marlton   NJ     1984       69,300       98.6 %     1,360       24.07  
9000 Midlantic Drive
          Mt. Laurel   NJ     1989       67,299       100.0 %     836       25.27  
6 East Clementon Road
          Gibbsboro   NJ     1980       66,236       87.1 %     862       19.22  
701 East Gate Drive
          Mt. Laurel   NJ     1986       61,794       93.5 %     1,093       19.99  
210 Lake Drive East
          Cherry Hill   NJ     1986       60,604       97.3 %     1,218       23.38  
308 Harper Drive
          Moorestown   NJ     1976       59,500       79.5 %     935       23.47  
305 Fellowship Drive
          Mt. Laurel   NJ     1980       56,824       100.0 %     1,122       23.06  
Two Greentree Centre
          Marlton   NJ     1983       56,075       64.6 %     710       22.94  
309 Fellowship Drive
          Mt. Laurel   NJ     1982       55,911       96.9 %     1,194       26.82  
One Greentree Centre
          Marlton   NJ     1982       55,838       95.4 %     1,046       21.63  
8000 Lincoln Drive
          Marlton   NJ     1997       54,923       100.0 %     1,003       19.30  
307 Fellowship Drive
          Mt. Laurel   NJ     1981       54,485       92.1 %     1,020       25.28  
303 Fellowship Drive
          Mt. Laurel   NJ     1979       53,768       90.6 %     1,003       23.40  
1000 Bishops Gate
          Mt. Laurel   NJ     2005       53,281       100.0 %     1,208       23.51  
1000 Lenox Drive
          Lawrenceville   NJ     1982       52,264       100.0 %     1,329       29.60  
2 Foster Avenue
    (f )   Gibbsboro   NJ     1974       50,761       100.0 %     167       5.39  
4000 Midlantic Drive
          Mt. Laurel   NJ     1998       46,945       100.0 %     657       23.22  
Five Eves Drive
          Marlton   NJ     1986       45,564       100.0 %     828       20.64  
161 Gaither Drive
          Mount Laurel   NJ     1987       44,739       75.1 %     484       21.62  
Main Street — Piazza
          Voorhees   NJ     1990       44,708       89.6 %     695       20.56  
30 Lake Center Drive
          Marlton   NJ     1986       40,287       100.0 %     526       18.95  

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Table of Contents

                                                                 
                                                            Average  
                                                    Total Base Rent     Annualized  
                                    Net     Percentage     for the Twelve     Rental Rate  
                            Year   Rentable     Leased as of     Months Ended     as of  
                            Built/   Square     December 31,     December 31,     December 31,  
Property Name           Location   State     Renovated   Feet     2007 (a)     2007 (b) (000’s)     2007 (c)  
20 East Clementon Road Name
          Gibbsboro   NJ     1986       38,260       93.5 %     540       16.13  
Two Eves Drive
          Marlton   NJ     1987       37,532       88.3 %     568       19.18  
304 Harper Drive
          Moorestown   NJ     1975       32,978       100.0 %     686       24.51  
Main Street — Promenade
          Voorhees   NJ     1988       31,445       86.8 %     442       19.22  
Four B Eves Drive
          Marlton   NJ     1987       27,011       99.4 %     395       16.63  
815 East Gate Drive
          Mt. Laurel   NJ     1986       25,500       100.0 %     240       17.80  
817 East Gate Drive
          Mt. Laurel   NJ     1986       25,351       78.5 %     142       15.73  
Four A Eves Drive
          Marlton   NJ     1987       24,687       100.0 %     361       16.28  
1 Foster Avenue
    (f )   Gibbsboro   NJ     1972       24,255       100.0 %     62       4.75  
4 Foster Avenue
    (f )   Gibbsboro   NJ     1974       23,372       100.0 %     156       9.19  
7 Foster Avenue
          Gibbsboro   NJ     1983       22,158       100.0 %     387       22.23  
10 Foster Avenue
          Gibbsboro   NJ     1983       18,651       92.9 %     249       18.12  
305 Harper Drive
          Moorestown   NJ     1979       14,980       100.0 %     127       9.85  
5 U.S. Avenue
    (f )   Gibbsboro   NJ     1987       5,000       100.0 %     24       4.40  
50 East Clementon Road
          Gibbsboro   NJ     1986       3,080       100.0 %     148       56.41  
5 Foster Avenue
          Gibbsboro   NJ     1968       2,000       100.0 %     7        
920 North King Street
          Wilmington   DE     1989       203,328       96.7 %     4,495       25.93  
400 Commerce Drive
          Newark   DE     1997       154,086       100.0 %     2,274       15.07  
One Righter Parkway
    (d )   Wilmington   DE     1989       104,761       98.4 %     2,412       22.57  
200 Commerce Drive
          Newark   DE     1998       68,034       100.0 %     1,327       18.95  
100 Commerce Drive
          Newark   DE     1989       62,787       99.8 %     1,190       20.51  
 
                                                               
SOUTHWEST SEGMENT
                                                               
 
                                                               
1250 Capital of Texas Highway South
          Austin   TX     1984       269,759       93.3 %     3,377       22.52  
1301 Mopac Expressway
          Austin   TX     2001       222,815       100.0 %     4,369       30.45  
1501 South Mopac Expressway
          Austin   TX     1999       198,872       98.3 %     2,782       25.24  
1601 Mopac Expressway
          Austin   TX     2000       195,639       100.0 %     3,032       25.48  
1221 Mopac Expressway
          Austin   TX     2001       173,302       97.8 %     3,440       31.52  
1801 Mopac Expressway
          Austin   TX     1999       58,576       100.0 %     989       29.86  
 
                                                               
RICHMOND, VA SEGMENT
                                                               
 
                                                               
600 East Main Street
          Richmond   VA     1986       420,575       92.7 %     6,974       19.24  
300 Arboretum Place
          Richmond   VA     1988       212,647       96.1 %     3,801       19.55  
6800 Paragon Place
          Richmond   VA     1986       145,127       95.7 %     2,757       19.85  
6802 Paragon Place
          Richmond   VA     1989       143,585       100.0 %     2,282       16.23  
7501 Boulders View Drive
          Richmond   VA     1990       136,942       91.5 %     1,111       19.90  
2511 Brittons Hill Road
    (f )   Richmond   VA     1987       132,548       100.0 %     674       6.40  
2100-2116 West Laburnam Avenue
          Richmond   VA     1976       127,142       80.7 %     1,824       15.49  
1957 Westmoreland Street
    (f )   Richmond   VA     1975       121,815       100.0 %     1,102       8.44  
7300 Beaufont Springs Drive
          Richmond   VA     2000       120,665       100.0 %     1,148       19.96  
1025 Boulders Parkway
          Richmond   VA     1994       93,143       97.9 %     808       19.09  
2201-2245 Tomlynn Street
    (f )   Richmond   VA     1989       85,860       89.0 %     509       7.92  
7401 Beaufont Springs Drive
          Richmond   VA     1998       82,639       87.3 %     631       19.42  
7325 Beaufont Springs Drive
          Richmond   VA     1999       75,218       100.0 %     682       19.81  
6806 Paragon Place
          Richmond   VA     2007       74,604       95.9 %     1,395       22.17  
100 Gateway Centre Parkway
          Richmond   VA     2001       74,585       53.6 %     12       8.50  
9011 Arboretum Parkway
          Richmond   VA     1991       73,174       100.0 %     1,140       17.88  

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                                                            Average  
                                                    Total Base Rent     Annualized  
                                    Net     Percentage     for the Twelve     Rental Rate  
                            Year   Rentable     Leased as of     Months Ended     as of  
                            Built/   Square     December 31,     December 31,     December 31,  
Property Name           Location   State     Renovated   Feet     2007 (a)     2007 (b) (000’s)     2007 (c)  
4805 Lake Brooke Drive
          Glen Allen   VA     1996       61,249       100.0 %     853       16.65  
9100 Arboretum Parkway
          Richmond   VA     1988       57,917       96.3 %     917       18.00  
2812 Emerywood Parkway
          Henrico   VA     1980       56,984       100.0 %     841        
2277 Dabney Road
    (f )   Richmond   VA     1986       50,400       100.0 %     266       7.49  
9200 Arboretum Parkway
          Richmond   VA     1988       49,542       71.4 %     486       14.65  
9210 Arboretum Parkway
          Richmond   VA     1988       48,012       100.0 %     676       14.42  
2212-2224 Tomlynn Street
    (f )   Richmond   VA     1985       45,353       100.0 %     220       7.21  
2221-2245 Dabney Road
    (f )   Richmond   VA     1994       45,250       86.2 %     267       7.83  
2251 Dabney Road
    (f )   Richmond   VA     1983       42,000       100.0 %     184       6.00  
2161-2179 Tomlynn Street
    (f )   Richmond   VA     1985       41,550       100.0 %     256       7.86  
2256 Dabney Road
    (f )   Richmond   VA     1982       33,413       100.0 %     218       8.02  
2246 Dabney Road
    (f )   Richmond   VA     1987       33,271       100.0 %     285       10.64  
2244 Dabney Road
    (f )   Richmond   VA     1993       33,050       100.0 %     298       10.86  
9211 Arboretum Parkway
          Richmond   VA     1991       30,791       89.9 %     376       14.23  
2248 Dabney Road
    (f )   Richmond   VA     1989       30,184       94.8 %     163       8.48  
2130-2146 Tomlynn Street
    (f )   Richmond   VA     1988       29,700       100.0 %     258       10.85  
2120 Tomlyn Street
    (f )   Richmond   VA     1986       23,850       100.0 %     144       8.13  
2240 Dabney Road
    (f )   Richmond   VA     1984       15,389       100.0 %     139       11.20  
4364 South Alston Avenue
          Durham   NC     1985       56,601       100.0 %     1,132       20.54  
 
                                                               
 
                                                               
SUBTOTAL FULLY OWNED      PROPERTIES / WEIGHTED AVG.                             24,883,344       94.7 %                
 
                                                               
 
                                                               
1177 East Belt Line Road
          Coppell   TX     1998       150,000       100.0 %     1,833       12.87  
181 Washington Street
          Conshohocken   PA     1999       115,122       88.2 %     3,020       28.95  
200 Barr Harbour Drive
          Conshohocken   PA     1998       86,425       100.0 %     2,098       33.08  
 
                                                               
SUBTOTAL CONSOLIDATED JOINT      VENTURES / WEIGHTED AVG.                             351,547       96.1 %                
 
                                                               
300 Delaware Avenue
          Wilmington   DE     1989       298,071       78.0 %     3,046       17.22  
1333 Broadway
          Oakland   CA     1972       237,246       72.5 %     4,555       26.33  
One Radnor Corporate Center
          Radnor   PA     1998       185,166       65.9 %     3,983       34.69  
6600 Rockledge Drive
    (d )   Bethesda   MD     1981       160,173       57.7 %     1,192        
1000 Atrium Way
          Mt. Laurel   NJ     1989       97,158       50.9 %     847       20.14  
Two Righter Parkway
    (d )   Wilmington   DE     1987       95,514       67.4 %     186        
100 Lenox Drive
          Lawrenceville   NJ     1991       92,980       0.0 %            
SUBTOTAL REDEVELOPMENT      PROPERTIES / WEIGHTED AVG.                             1,166,308       62.8 %                
 
                                                               

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(a)   Calculated by dividing net rentable square feet included in leases signed on or before December 31, 2007 at the property by the aggregate net rentable square feet of the property.
 
(b)   “Total Base Rent” for the twelve months ended December 31, 2007 represents base rents received during such period, excluding tenant reimbursements, calculated in accordance with generally accepted accounting principles (GAAP) determined on a straight-line basis.
 
(c)   “Average Annualized Rental Rate” is calculated as follows: (i) for office leases written on a triple net basis, the sum of the annualized contracted base rental rates payable for all space leased as of December 31, 2007 plus the 2007 budgeted operating expenses excluding tenant electricity; and (ii) for office leases written on a full service basis, the annualized contracted base rent payable for all space leased as of December 31, 2007. In both cases, the annualized rental rate is divided by the total square footage leased as of December 31, 2007 without giving effect to free rent or scheduled rent increases that would be taken into account under GAAP.
 
(d)   These properties are subject to a ground lease with a third party.
 
(e)   We hold our interest in Two Logan Square (100 North 18th Street) primarily through our ownership of second and third mortgages that are secured by this property and that are junior to a first mortgage with a third party. Our ownership of these two mortgages currently provides us with all of the cash flows from Two Logan Square after the payment of operating expenses and debt service on the first mortgage.
 
(f)   These properties are industrial facilities.
The following table shows information regarding rental rates and lease expirations for the Properties at December 31, 2007 and assumes that none of the tenants exercise renewal options or termination rights, if any, at or prior to scheduled expirations:
                                                 
                            Final   Percentage    
            Rentable   Final   Annualized   of Total Final    
    Number of   Square   Annualized   Base Rent   Annualized    
Year of   Leases   Footage   Base Rent   Per Square   Base Rent    
Lease   Expiring   Subject to   Under   Foot Under   Under    
Expiration   Within the   Expiring   Expiring   Expiring   Expiring   Cumulative
December 31,   Year   Leases   Leases (a)   Leases   Leases   Total
2008
    406       2,893,658       $57,606,004       $19.91       9.9 %     9.9 %
2009
    353       3,384,497       76,409,406       22.58       13.1 %     23.0 %
2010
    320       3,744,780       84,549,839       22.58       14.5 %     37.5 %
2011
    242       3,371,149       77,695,968       23.05       13.3 %     50.8 %
2012
    221       2,445,311       61,109,061       24.99       10.5 %     61.2 %
2013
    92       1,429,059       33,865,946       23.70       5.8 %     67.0 %
2014
    75       1,540,578       37,747,376       24.50       6.5 %     73.5 %
2015
    37       1,393,137       33,395,384       23.97       5.7 %     79.2 %
2016
    38       845,779       19,878,591       23.50       3.4 %     82.6 %
2017
    44       1,405,511       40,341,917       28.70       6.9 %     89.6 %
2018 and thereafter
    43       2,157,325       60,950,626       28.25       10.4 %     100.0 %
 
                                               
 
                                               
 
    1,871       24,610,784       $583,550,118       $23.71       100.0 %        
 
                                               
 
(a)   “Final Annualized Base Rent” for each lease scheduled to expire represents the cash rental rate of base rents, excluding tenant reimbursements, in the final month prior to expiration multiplied by 12. Tenant reimbursements generally include payment of real estate taxes, operating expenses and common area maintenance and utility charges.

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At December 31, 2007, the Properties were leased to 1,650 tenants that are engaged in a variety of businesses. The following table sets forth information regarding leases at the Properties with the 20 tenants with the largest amounts leased based upon Annualized Base Rent as of December 31, 2007:
                                                 
            Weighted
Average
  Aggregate   Percentage   Annualized   Percentage of
Aggregate
    Number   Remaining   Leased   of Aggregate   Base   Annualized
    of   Lease Term   Square   Leased   Rent (in   Base
Tenant Name (a)   Leases   in Months   Feet   Square Feet   000) (b)   Rent
Kaiser Foundation Health Plan
    2       35       483,893       2.0 %   $ 15,395       3.0 %
Northrop Grumman Corporation
    6       82       533,873       2.2 %     14,677       2.9 %
Pepper Hamilton LLP
    2       82       305,198       1.2 %     9,981       2.0 %
State of New Jersey
    7       152       441,488       1.8 %     8,945       1.8 %
Dechert LLP
    2       127       242,288       1.0 %     7,833       1.5 %
Wells Fargo Bank, N.A.
    6       34       376,721       1.5 %     7,832       1.5 %
Verizon
    6       34       410,035       1.7 %     7,633       1.5 %
Bearingpoint, Inc.
    3       74       269,431       1.1 %     7,570       1.5 %
Wachovia Corporation
    11       97       274,749       1.1 %     7,430       1.5 %
Lockheed Martin
    9       38       548,579       2.2 %     7,193       1.4 %
General Services Administration — U.S. Govt.
    18       34       348,699       1.4 %     6,663       1.3 %
Computer Associates International
    2       35       255,572       1.0 %     5,968       1.2 %
AT&T
    7       15       270,732       1.1 %     5,730       1.1 %
Blank Rome LLP
    1       169       239,236       1.0 %     4,548       0.9 %
Marsh USA, Inc.
    3       18       154,797       0.6 %     4,532       0.9 %
Computer Sciences
    5       59       252,765       1.0 %     4,341       0.9 %
Omnicare Clinical Research
    1       31       150,000       0.6 %     3,749       0.7 %
Deltek Systems, Inc.
    3       51       116,172       0.5 %     3,516       0.7 %
Woodcock Washburn, LLC
    1       168       109,323       0.4 %     3,498       0.7 %
KPMG, LLP
    2       31       95,690       0.4 %     3,466       0.7 %
 
                                           
 
                                               
Consolidated Total/Weighted Average
    97       67       5,879,241       23.8 %   $ 140,500       27.7 %
 
                                               
 
(a)   The identified tenant includes affiliates in certain circumstances.
 
(b)   Annualized Base Rent represents the monthly Base Rent, excluding tenant reimbursements, for each lease in effect at December 31, 2007 multiplied by 12. Tenant reimbursements generally include payment of real estate taxes, operating expenses and common area maintenance and utility charges.
Real Estate Ventures
As of December 31, 2007, we had an aggregate investment of approximately $71.6 million in 14 unconsolidated Real Estate Ventures (net of returns of investment). We formed these ventures with unaffiliated third parties, or acquired them, to develop office properties or to acquire land in anticipation of possible development of office properties or properties we owned. Ten of the Real Estate Ventures own 44 office buildings that contain an aggregate of approximately 4.4 million net rentable square feet, one Real Estate Venture developed a hotel property that contains 137 rooms, one Real Estate Venture constructed and sold condominiums in Charlottesville, VA and two Real Estate Ventures are in the planning stages of office developments in Conshohocken, PA and Charlottesville, VA.
As of December 31, 2007, we also had investments in three Real Estate Ventures that are considered to be variable interest entities under FIN 46R and of which we are the primary beneficiary. The financial information for these three real estate ventures is consolidated into our financial statements as of December 31, 2007.
We account for our remaining non-controlling interests in the Real Estate Ventures using the equity method. Our non-controlling ownership interests range from 5% to 50%, subject to specified priority allocations in certain of the Real Estate Ventures. Our investments, initially recorded at cost, are subsequently adjusted for our share of the Real Estate Ventures’ income or loss and contributions to capital and distributions.
As of December 31, 2007, we had guaranteed repayment of approximately $0.3 million of loans for the Real Estate Ventures. We also provide customary environmental indemnities and completion guarantees in

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connection with construction and permanent financing both for our own account and on behalf of the Real Estate Ventures.
Item 3. Legal Proceedings
We are involved from time to time in litigation, including tenant disputes and disputes arising out of agreements to purchase or sell properties. Given the nature of our business activities, we generally consider these lawsuits to be routine to the conduct of our business. Because of the very nature of litigation, including its adversarial nature and the jury system, we cannot predict the result of any lawsuit.
Lawsuits have been brought against owners and managers of multifamily and office properties that assert claims of personal injury and property damage caused by the presence of mold in the properties. We have been named as a defendant in two lawsuits in the State of New Jersey that allege personal injury as a result of the presence of mold. In 2005, one of these lawsuits was dismissed by way of summary judgment with prejudice. The plaintiffs seek unspecified damages in the remaining lawsuit. We referred this lawsuit to our environmental insurance carrier and, as of the date of this Form 10-K, the insurance carrier is continuing to defend this claim.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of our shareholders during the fourth quarter of the year ended December 31, 2007.
PART II
Item 5. Market for Registrant’s Common Equity and Related Shareholder Matters and Issuer Purchases of Equity Securities
Our common shares are traded on the New York Stock Exchange (“NYSE”) under the symbol “BDN.” There is no established trading market for the Class A units of the Operating Partnership. On February 22, 2008, there were 702 holders of record of our common shares and 49 holders of record of the Class A units (in addition to Brandywine Realty Trust). On February 22, 2008, the last reported sales price of the common shares on the NYSE was $16.71. The following table sets forth the quarterly high and low closing sales price per common share reported on the NYSE for the indicated periods and the distributions paid by us with respect to each such period.
                         
    Share Price   Share Price   Distributions
    High   Low   Declared For Quarter
First Quarter 2006
  $ 31.90     $ 28.94     $ 0.44  
Second Quarter 2006
  $ 32.17     $ 27.65     $ 0.44  
Third Quarter 2006
  $ 33.83     $ 30.98     $ 0.44  
Fourth Quarter 2006
  $ 35.37     $ 31.55     $ 0.44  
First Quarter 2007
  $ 36.14     $ 32.04     $ 0.44  
Second Quarter 2007
  $ 33.79     $ 28.43     $ 0.44  
Third Quarter 2007
  $ 28.58     $ 23.35     $ 0.44  
Fourth Quarter 2007
  $ 26.86     $ 17.78     $ 0.44  
For each quarter during 2007 and 2006, the Operating Partnership paid a cash distribution to holders of its Class A units equal in amount to the dividends paid on the Company’s common shares for such quarter.
In connection with our January 5, 2006 merger with Prentiss Properties Trust, we declared a dividend of $0.02 per common share on December 21, 2005, paid on January 17, 2006 to shareholders of record on January 4, 2006.

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In order to maintain the status of Brandywine Realty Trust as a REIT, we must make annual distributions to shareholders of at least 90% of our taxable income (not including net capital gains). Future distributions will be declared at the discretion of our Board of Trustees and will depend on our actual cash flow, our financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Internal Revenue Code of 1986 and such other factors as our Board deems relevant.
The following table provides information as of December 31, 2007 with respect to compensation plans under which our equity securities are authorized for issuance:
                         
            (c)  
            Number of securities  
    (a)     (b)     remaining available for  
    Number of securities to be     Weighted-average     future issuance under  
    issued upon exercise of     exercise price of     equity compensation plans  
    outstanding options,     outstanding options,     (excluding securities  
Plan category   warrants and rights     warrants and rights     reflected in column (a))  
Equity compensation plans approved by security holders (1)
    1,070,099     $ 26.13 (2)     4,168,364  
Equity compensation plans not approved by security holders
                 
Total
    1,070,099     $ 26.13       4,168,364  
 
(1)   Relates to our Amended and Restated 1997 Long-Term Incentive Plan. In May 2007, the Company’s shareholders approved an amendment to the Company’s Amended and Restated 1997 Long-Term Incentive Plan (the “1997 Plan”). The amendment provided for the merger of the Prentiss Properties Trust 2005 Share Incentive Plan (the “Prentiss 2005 Plan”) with and into the 1997 Plan, thereby transferring into the 1997 Plan all of the shares that remained available for award under the Prentiss 2005 Plan. The Company had previously assumed the Prentiss 2005 Plan, together with other Prentiss incentive plans, as part of the Company’s January 2006 acquisition of Prentiss Properties Trust (“Prentiss”). The 1997 Plan reserves 500,000 common shares solely for awards under options and share appreciation rights that have an exercise or strike price at least equal to the market price of the common shares on the date of award and the remaining shares under the 1997 Plan are available for any type of award, including restricted share and performance share awards and options. Incentive stock options may not be granted with an exercise price that is lower than the market price of the common shares on the grant date. All options awarded by the Company to date are non-qualified stock options that generally had an initial vesting schedule that ranged from two to ten years.
 
(2)   Weighted-average exercise price of outstanding options; excludes restricted common shares.

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    The following table presents information related to our share repurchases:
                                 
                           
                    Purchased as Part of   Shares that May Yet Be
    Total Number of   Average Price Paid   Publicly Announced   Purchased Under the
     Period   Shares Purchased   per Share   Plans or Programs   Plans or Programs (a)
 
                            (in thousands)
January 2007
    39,957 (b)   $ 32.65             2,319,800  
February 2007
                      2,319,800  
March 2007
    1,301,000       34.34       1,301,000       1,018,800  
April 2007
    265,000       33.38       265,000       753,800  
May 2007
                      753,800  
June 2007
    1,128 (b)     29.47             753,800  
July 2007
    214,600       27.50       214,600       539,200  
August 2007
                      539,200  
September 2007
                      539,200  
October 2007
                      539,200  
November 2007
                      539,200  
December 2007
                      539,200  
 
                               
Total
    1,821,685               1,780,600          
 
                               
 
(a)   On May 2, 2006, our Board of Trustees authorized an increase in the number of common shares that we may repurchase, whether in open-market or privately negotiated transactions. The Board authorized us to purchase up to an aggregate of 3,500,000 common shares (inclusive of remaining share repurchase availability under the Board’s prior authorization from September 2001). There is no expiration date on the share repurchase program and the Board can cancel this program at any time.
 
(b)   Represents Common Shares cancelled by the Company upon vesting of restricted Common Shares previously awarded to Company employees in satisfaction of tax withholding obligations.

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SHARE PERFORMANCE GRAPH
The Securities and Exchange Commission requires us to present a chart comparing the cumulative total shareholder return on the common shares with the cumulative total shareholder return of (i) a broad equity index and (ii) a published industry or peer group index. The following chart compares the cumulative total shareholder return for the common shares with the cumulative shareholder return of companies on (i) the S&P 500 Index (ii) the Russell 2000 and (iii) the NAREIT ALL-REIT Total Return Index as provided by NAREIT for the period beginning December 31, 2002 and ending December 31, 2007.
(PERFORMANCE GRAPH)
                                                 
    Period Ending  
Index   12/31/02     12/31/03     12/31/04     12/31/05     12/31/06   12/31/07  
 
Brandywine Realty Trust
    100.00       131.76       153.70       155.32       192.74       110.30  
S&P 500
    100.00       128.68       142.69       149.70       173.34       182.86  
Russell 2000
    100.00       147.25       174.24       182.18       215.64       212.26  
NAREIT All Equity REIT Index
    100.00       137.13       180.44       202.38       273.34       230.45  

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Item 6. Selected Financial Data
The following table sets forth selected financial and operating data and should be read in conjunction with the financial statements and related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in this Annual Report on Form 10-K. The selected data have been revised to reflect the reclassification of losses from early extinguishments of debt, in accordance with SFAS No. 145, and the disposition of all properties since January 1, 2003, which have been reclassified as discontinued operations for all periods presented in accordance with SFAS No. 144.
Brandywine Realty Trust
(in thousands, except per common share data and number of properties)
                                         
Year Ended December 31,   2007   2006   2005   2004   2003
     
Operating Results
                                       
Total revenue
  $ 683,972     $ 630,285     $ 364,435     $ 299,618     $ 274,809  
Income (loss) from continuing operations
    28,761       (18,729 )     32,778       49,559       65,424  
Net income
    56,453       10,482       42,767       60,301       86,678  
Income allocated to Common Shares
    48,461       2,490       34,775       55,081       54,174  
Income from continuing operations per Common Share
                                       
Basic
  $ 0.24     $ (0.30 )   $ 0.44     $ 0.94     $ 0.85  
Diluted
  $ 0.24     $ (0.30 )   $ 0.44     $ 0.93     $ 0.85  
Earnings per Common Share                                        
Basic
  $ 0.56     $ 0.03     $ 0.62     $ 1.15     $ 1.43  
Diluted
  $ 0.55     $ 0.03     $ 0.62     $ 1.15     $ 1.43  
Cash distributions declared per Common Share
  $ 1.76     $ 1.76     $ 1.78  (a)   $ 1.76     $ 1.76  
 
                                       
Balance Sheet Data
                                       
Real estate investments, net of accumulated depreciation
  $ 4,656,925     $ 4,739,726     $ 2,541,486     $ 2,363,865     $ 1,695,355  
Total assets
    5,214,099       5,509,018       2,805,745       2,633,984       1,855,776  
Total indebtedness
    3,100,969       3,152,230       1,521,384       1,306,669       867,659  
Total liabilities
    3,386,745       3,487,101       1,663,022       1,444,116       950,431  
Minority interest
    84,119       123,991       37,859       42,866       133,488  
Convertible preferred shares
                            37,500  
Beneficiaries’ equity
    1,743,235       1,897,926       1,104,864       1,147,002       771,857  
 
                                       
Other Data
                                       
Cash flows from:
                                       
Operating activities
    219,817       241,566       125,147       152,890       118,793  
Investing activities
    44,473       (915,794 )     (252,417 )     (682,652 )     (34,068 )
Financing activities
    (284,069 )     692,433       119,098       536,556       (102,974 )
 
                                       
Property Data
                                       
Number of properties owned at year end
    257       313       251       246       234  
Net rentable square feet owned at year end
    28,888       31,764       19,600       19,150       15,733  
 
(a)   Includes $0.02 special distribution declared in December 2005 for shareholders of record for the period January 1, 2006 through January 4, 2006 (pre-Prentiss merger period).

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Brandywine Operating Partnership, L.P.
(in thousands, except per unit data and number of properties)
                                         
Year Ended December 31,   2007   2006   2005   2004   2003
     
Operating Results
                                       
Total revenue
  $ 683,972     $ 630,285     $ 364,435     $ 299,618     $ 274,809  
Income (loss) from continuing operations
    29,672       (19,975 )     33,667       51,930       74,367  
Net income
    58,599       10,626       44,013       63,081       96,467  
Income from continuing operations per Common Partnership Unit
                                       
Basic
  $ 0.24     $ (0.30 )   $ 0.44     $ 0.93     $ 0.87  
Diluted
  $ 0.24     $ (0.30 )   $ 0.44     $ 0.93     $ 0.87  
Earnings per Common Partnership Units
                                       
Basic
  $ 0.56     $ 0.03     $ 0.62     $ 1.15     $ 1.43  
Diluted
  $ 0.55     $ 0.03     $ 0.62     $ 1.14     $ 1.43  
Cash distributions declared per Common Partnership Unit
  $ 1.76     $ 1.76     $ 1.78   (a)   $ 1.76     $ 1.76  
 
                                       
Balance Sheet Data
                                       
Real estate investments, net of accumulated depreciation
  $ 4,656,925       4,739,726       2,541,486       2,363,865       1,695,355  
Total assets
    5,214,099       5,509,018       2,805,745       2,633,984       1,855,776  
Total indebtedness
    3,100,969       3,152,230       1,521,384       1,306,669       867,659  
Total liabilities
    3,386,745       3,487,101       1,662,967       1,443,934       951,484  
Series B Preferred Units
                            97,500  
Redeemable limited partnership units
    68,819       131,711       54,300       60,586       46,505  
Partners’ equity
    1,758,535       1,855,770       1,088,478       1,129,464       760,287  
 
                                       
Other Data
                                       
Cash flows from:
                                       
Operating activities
    219,817       241,566       125,147       152,890       118,793  
Investing activities
    44,473       (915,794 )     (252,417 )     (682,652 )     (34,068 )
Financing activities
    (284,069 )     692,433       119,098       536,556       (102,974 )
 
                                       
Property Data
                                       
Number of properties owned at year end
    257       313       251       246       234  
Net rentable square feet owned at year end
    28,888       31,764       19,600       19,150       15,733  
 
(a)   Includes $0.02 special distribution declared in December 2005 for unitholders of record for the period January 1, 2006 through January 4, 2006 (pre-Prentiss merger period).

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the consolidated financial statements appearing elsewhere herein and is based primarily on our consolidated financial statements for the years ended December 31, 2007, 2006 and 2005.
OVERVIEW
As of December 31, 2007 we managed our portfolio within seven geographic segments: (1) Pennsylvania, (2) New Jersey/Delaware, (3) Richmond, Virginia, (4) California—North, (5) California—South, (6) Metropolitan Washington, D.C. and (7) Southwest. The Pennsylvania segment includes properties in Chester, Delaware, Berks, Bucks, Cumberland, Dauphin, Lehigh and Montgomery counties in the Philadelphia suburbs and the City fo Philadelphia in Pennsylvania. The New Jersey/Delaware segment includes properties in counties in the southern and central part of New Jersey including Burlington, Camden and Mercer counties and the state of Delaware. The Richmond, Virginia segment includes properties primarily in Albemarle, Chesterfield and Henrico counties, the City of Richmond and Durham, North Carolina. The California—North segment includes properties in the City of Oakland and Concord. The California—South segment includes properties in the City of Carlsbad and Rancho Bernardo. The Metropolitan Washington, D.C. segment includes properties in Northern Virginia and suburban Maryland. The Southwest segment includes properties in Travis county of Texas.
We receive income primarily from rental revenue (including tenant reimbursements) from our properties and, to a lesser extent, from the management of properties owned by third parties and from investments in the Real Estate Ventures.
Our financial performance is dependent upon the demand for office, industrial and other commercial space in our markets and prevailing interest rates.
As we seek to increase revenue through our operating activities, our management also seeks to minimize operating risks, including (i) tenant rollover risk, (ii) tenant credit risk and (iii) development risk.
Tenant Rollover Risk:
We are subject to the risk that tenant leases, upon expiration, are not renewed, that space may not be relet, or that the terms of renewal or reletting (including the cost of renovations) may be less favorable to us than the current lease terms. Leases accounting for approximately 9.9% of our aggregate final annualized base rents as of December 31, 2007 (representing approximately 10.0% of the net rentable square feet of the Properties) expire without penalty in 2008. We maintain an active dialogue with our tenants in an effort to maximize lease renewals. Our retention rate for leases that were scheduled to expire in 2007 was 72.8%. If we are unable to renew leases or relet space under expiring leases, at anticipated rental rates, or if tenants terminate their leases early, our cash flow would be adversely impacted.
Tenant Credit Risk:
In the event of a tenant default, we may experience delays in enforcing our rights as a landlord and may incur substantial costs in protecting our investment. Our management regularly evaluates our accounts receivable reserve policy in light of our tenant base and general and local economic conditions. Our accounts receivable allowance was $10.2 million or 9.2% of total receivables (including accrued rent receivable) as of December 31, 2007 compared to $9.3 million or 9.0% of total receivables (including accrued rent receivable) as of December 31, 2006.
Development Risk:
As of December 31, 2007, we had in development or redevelopment 14 sites aggregating approximately 3.7 million square feet. We estimate the total cost of these projects to be $718.3 million and we had incurred $425.1 million of these costs as of December 31, 2007. We are actively marketing space at these projects to prospective tenants but can provide no assurance as to the timing or terms of any leases of space

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at these projects. As of December 31, 2007, we owned approximately 417 acres of undeveloped land. Risks associated with development of this land include construction cost increases or overruns and construction delays, insufficient occupancy rates, building moratoriums and inability to obtain necessary zoning, land-use, building, occupancy and other required governmental approvals.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the reporting periods. Certain accounting policies are considered to be critical accounting policies, as they require management to make assumptions about matters that are highly uncertain at the time the estimate is made and changes in the accounting estimate are reasonably likely to occur from period to period. Management believes the following critical accounting policies reflect our more significant judgments and estimates used in the preparation of our consolidated financial statements. For a summary of all of our significant accounting policies, see Note 2 to our consolidated financial statements included elsewhere in this report.
Revenue Recognition
We recognize rental revenue on the straight-line basis from the later of the date of the commencement of the lease or the date of acquisition of the property subject to existing leases, which averages minimum rents over the terms of the leases. Certain lease agreements contain provisions that require tenants to reimburse a pro rata share of real estate taxes and common area maintenance costs.
Real Estate Investments
Real estate investments are carried at cost. We record acquisition of real estate investments under the purchase method of accounting and allocate the purchase price to land, buildings and intangible assets on a relative fair value basis. Depreciation is computed using the straight-line method over the useful lives of buildings and capital improvements (5 to 55 years) and over the shorter of the lease term or the life of the asset for tenant improvements. Direct construction costs related to the development of Properties and land holdings are capitalized as incurred. We expense routine repair and maintenance expenditures and capitalize those items that extend the useful lives of the underlying assets.
Real Estate Ventures
When we obtain an economic interest in an entity, we evaluate the entity to determine if the entity is deemed a variable interest entity (“VIE”), and if we are deemed to be the primary beneficiary, in accordance with FASB Interpretation No.46R, “Consolidation of Variable Interest Entities” (“FIN 46R”). If the entity is not deemed to be a VIE, and we serve as the general partner within the entity, we evaluate to determine if our presumed control as the general partner is overcome by the “kick out” rights and other substantive participating rights of the limited partners in accordance with EITF 04-05, “Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights (“EITF 04-05”).
We consolidate (i) entities that are VIEs and of which we are deemed to be the primary beneficiary and (ii) entities that are non-VIEs which we control. Entities that we account for under the equity method (i.e., at cost, increased or decreased by our share of earnings or losses, less distributions) include (i) entities that are VIEs and of which we are not deemed the primary beneficiary and (ii) entities that are non-VIEs which we do not control, but over which we have the ability to exercise significant influence. We will reconsider our determination of whether an entity is a VIE and who the primary beneficiary is if events occur that are likely to cause a change in the original determinations.

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Impairment of Long-Lived Assets
Our management reviews investments in real estate and real estate ventures for impairment if facts and circumstances indicate that the carrying value of such assets may not be recoverable. Measurement of any impairment loss is based on the fair value of the asset, determined using customary valuation techniques, such as the present value of expected future cash flows.
In accordance with SFAS No. 144 (“SFAS 144”), Accounting for the Impairment or Disposal of Long-Lived Assets, long-lived assets, such as real estate investments and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. The assets and liabilities relating to assets classified as held-for-sale would be presented separately in the appropriate asset and liability sections of the balance sheet.
Income Taxes
The Company has elected to be treated as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”). In addition, the Company has several subsidiary REITs. In order to maintain their qualification as a REIT, the Company and each of its REIT subsidiaries are required to, among other things, distribute at least 90% of their REIT taxable income to its stockholders and meet certain tests regarding the nature of its income and assets. As REITs, the Company and its REIT subsidiaries are not subject to federal income tax with respect to the portion of its income that meets certain criteria and is distributed annually to the stockholders. Accordingly, no provision for federal income taxes is included in the accompanying consolidated financial statements with respect to the operations of these REITs. The Company and its REIT subsidiaries intend to continue to operate in a manner that allows them to continue to meet the requirements for taxation as REITs. Many of these requirements, however, are highly technical and complex. If the Company or one of its REIT subsidiaries were to fail to meet these requirements, the Company would be subject to federal income tax. The Company is subject to certain state and local taxes. Provision for such taxes has been included in general and administrative expenses in the Company’s Consolidated Statements of Operations and Comprehensive Income.
The Company may elect to treat one or more of its subsidiaries as a taxable REIT subsidiary (“TRS”). In general, a TRS of the Company may perform additional services for our tenants and generally may engage in any real estate or non-real estate related business (except for the operation or management of health care facilities or lodging facilities or the provision to any person, under a franchise, license or otherwise, of rights to any brand name under which any lodging facility or health care facility is operated). A TRS is subject to corporate federal income tax. The Company has elected to treat certain of its corporate subsidiaries as TRSs, these entities provide third party property management services and certain services to tenants that could not otherwise be provided. At December 31, 2007, our TRSs had tax net operating loss (“NOL”) carryforward of approximately $2.5 million, expiring from 2013 to 2020. We have ascribed a full valuation allowance to our net deferred tax assets.
We adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109 (“FIN 48”) on January 1, 2007. As a result of the implementation of FIN 48, we recognized no material adjustments regarding our tax accounting treatment. We expect to recognize interest and penalties, to the extent incurred related to uncertain tax positions, if any, as income tax expense, which would be included in general and administrative expense.
Allowance for Doubtful Accounts
We maintain an allowance for doubtful accounts that represents an estimate of losses that may be incurred from the inability of tenants to make required payments. The allowance is an estimate based on two calculations that are combined to determine the total amount reserved. First, we evaluate specific accounts

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where we have determined that a tenant may have an inability to meet its financial obligations. In these situations, we use our judgment, based on the facts and circumstances, and records a specific reserve for that tenant against amounts due to reduce the receivable to the amount that we expect to collect. These reserves are re-evaluated and adjusted as additional information becomes available. Second, a reserve is established for all tenants based on a range of percentages applied to receivable aging categories. If the financial condition of our tenants were to deteriorate, additional allowances may be required.
Deferred Costs
We incur direct costs related to the financing, development and leasing of our properties. Management exercises judgment in determining whether such costs meet the criteria for capitalization or must be expensed. Capitalized financing fees are amortized over the related loan term and capitalized leasing costs are amortized over the related lease term. Management re-evaluates the remaining useful lives of leasing costs as the creditworthiness of our tenants and economic and market conditions change.
Purchase Price Allocation
We allocate the purchase price of properties to net tangible and identified intangible assets acquired based on fair values. Above-market and below-market in-place lease values for acquired properties are recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) our estimate of the fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancellable term of the lease. Capitalized above-market lease values are amortized as a reduction of rental income over the remaining non-cancellable terms of the respective leases. Capitalized below-market lease values are amortized as an increase of rental income over the remaining non-cancellable terms of the respective leases, including any fixed-rate renewal periods.
Other intangible assets also include amounts representing the value of tenant relationships and in-place leases based on our evaluation of the specific characteristics of each tenant’s lease and our overall relationship with the respective tenant. We estimate the cost to execute leases with terms similar to the remaining lease terms of the in-place leases, include leasing commissions, legal and other related expenses. This intangible asset is amortized to expense over the remaining term of the respective leases. We estimate fair value through methods similar to those used by independent appraisers or by using independent appraisals. Factors that we consider in our analysis include an estimate of the carrying costs during the expected lease-up periods considering current market conditions and costs to execute similar leases. We also consider information obtained about each property as a result of our pre-acquisition due diligence, marketing and leasing activities in estimating the fair value of the tangible and intangible assets acquired. In estimating carrying costs, we include real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods, which primarily range from three to twelve months.
Characteristics that we consider in allocating value to our tenant relationships include the nature and extent of our business relationship with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit quality and expectations of lease renewals. The value of tenant relationship intangibles is amortized over the remaining initial lease term and expected renewals, but in no event longer than the remaining depreciable life of the building. The value of in-place leases is amortized over the remaining non-cancellable term of the respective leases and any fixed-rate renewal periods.
In the event that a tenant terminates its lease, the unamortized portion of each intangible, including market rate adjustments, in-place lease values and tenant relationship values, would be charged to expense.

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RESULTS OF OPERATIONS
Comparison of the Year Ended December 31, 2007 to the Year Ended December 31, 2006
The table below shows selected operating information for the Same Store Properties and the Total Portfolio. The Same Store Properties consists of 228 properties containing an aggregate of approximately 22.5 million net rentable square feet that we owned for the entire twelve-month periods ended December 31, 2007 and substantially all of the period ended December 31, 2006. We consider the properties that we acquired in the Prentiss merger on January 5, 2006 as part of our Same Store Portfolio and, therefore, the results of operations for the year ended December 31, 2006 do not include four days of activity. This table also includes a reconciliation from the Same Store Properties to the Total Portfolio (i.e., all properties owned by us as of December 31, 2007 and 2006) by providing information for the properties which were acquired, under development, redevelopment or placed into service and administrative/elimination information for the years ended December 31, 2007 and 2006.
The Total Portfolio net income presented in the table agrees to the net income of Brandywine Realty Trust. The only difference between the reported net income of Brandywine Realty Trust and Brandywine Operating Partnership is the allocation of the minority interest attributable to continuing and discontinued operations for limited partnership units of the Operating Partnership that is reflected in the statement of operations for Brandywine Realty Trust.

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                          Acquired/Completed     Development/Redevelopment     Other        
    Same Store Properties   Properties     Properties (a)     (Eliminations) (b)     All Properties
                    Increase/                                                                     Increase/  
(dollars in thousands)   2007     2006     (Decrease)     2007     2006     2007     2006     2007     2006     2007     2006     (Decrease)  
Revenue:
                                                                                               
Cash rents
  $ 422,709     $ 417,427     $ 5,282     $ 66,306     $ 25,311     $ 13,142     $ 21,756     $ 20,979     $ 20,188     $ 523,136     $ 484,682     $ 38,454  
Straight-line rents
    12,808       15,214       (2,406 )     13,367       11,558       1,122       532       626       82       27,923       27,386       537  
Rents — FAS 141
    8,561       7,331       1,230       1,388       584       1,506       (701 )                 11,455       7,214       4,241  
 
                                                                       
Total rents
    444,078       439,972       4,106       81,061       37,453       15,770       21,587       21,605       20,270       562,514       519,282       43,232  
Tenant reimbursements
    72,521       69,378       3,143       5,675       2,370       3,298       3,260       3,910       3,809       85,404       78,817       6,587  
Termination fees
    9,137       6,625       2,512       809       100       238       506       52             10,236       7,231       3,005  
Third party management fees, labor reimbursement and leasing
                                              19,691       19,453       19,691       19,453       238  
Other
    2,488       2,815       (327 )     361       121       (31 )     58       3,309       2,508       6,127       5,502       625  
 
                                                                       
 
                                                                                               
Total revenue
    528,224       518,790       9,434       87,906       40,044       19,275       25,411       48,567       46,040       683,972       630,285       53,687  
 
Operating Expenses:
                                                                                               
Property operating expenses
    159,265       154,340       4,925       24,105       13,547       8,944       9,640       (3,184 )     (5,603 )     189,130       171,924       17,206  
Real estate taxes
    52,227       51,311       916       6,438       3,531       2,408       2,219       3,822       3,747       64,895       60,808       4,087  
Management expenses
                                              10,361       10,675       10,361       10,675       (314 )
 
                                                                       
Subtotal
    211,492       205,651       5,841       30,543       17,078       11,352       11,859       10,999       8,819       264,386       243,407       20,979  
Net operating income
    316,732       313,139       3,593       57,363       22,966       7,923       13,552       37,568       37,221       419,586       386,878       32,708  
Administrative expenses
                                              28,144             28,182       29,644       (1,462 )
Depreciation and amortization
    178,561       180,081       (1,520 )     37,543       15,539       11,459       12,167       14,749       22,923       242,312       230,710       11,602  
 
                                                                       
Operating Income (loss)
  $ 138,171     $ 133,058     $ 5,113     $ 19,820     $ 7,427     $ (3,536 )   $ 1,385     $ (5,325 )   $ 14,298     $ 149,092     $ 126,524     $ 22,568  
         
Number of properties
    225                       18               14                               257                  
Square feet (in thousands)
    21,943                       3,292               3,653                               28,888                  
Other Income (Expense):
                                                                                               
Interest income
                                                                            4,040       9,513       (5,473 )
Interest expense
                                                                            (162,675 )     (171,177 )     8,502  
Interest expense — Deferred financing costs
                                                                            (4,496 )     (4,607 )     111  
Loss on settlement of treasury lock agreements
                                                                            (3,698 )           (3,698 )
Equity in income of real estate ventures
                                                                            6,955       2,165       4,790  
Net gain on disposition of depreciated real estate
                                                                            40,498             40,498  
Net gain on disposition of undepreciated real estate
                                                                            421       14,190       (13,769 )
Gain on termination of purchase contract
                                                                                  3,147       (3,147 )
 
                                                                                         
Income (loss) before minority interest
                                                                            30,137       (20,245 )     50,382  
Minority interest — partners’ share of consolidated real estate ventures
                                                                            (465 )     270       (735 )
Minority interest attributable to continuing operations — LP units
                                                                            (911 )     1,246       (2,157 )
 
                                                                                         
Income (loss) from continuing operations
                                                                            28,761       (18,729 )     47,490  
Income (loss) from discontinued operations
                                                                            27,692       29,211       (1,519 )
 
                                                                                         
Net Income (loss)
                                                                          $ 56,453     $ 10,482     $ 45,971  
 
                                                                                         
Earnings per common share
                                                                          $ 0.56     $ 0.03     $ 0.53  
 
                                                                                         
         
EXPLANATORY NOTES
 
(a) -  Results include: seven developments and seven redevelopment properties.
 
(b) -  Represents certain revenues and expenses at the corporate level as well as various intercompany costs that are eliminated in consolidation and third-party management fees. Also included are revenues and expenses from the 29 DRA properties.

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Total Revenue
Cash rents from the Total Portfolio increased by $38.5 million from 2006 to 2007, primarily reflecting:
  1)   An additional $5.3 million at the Same Store Portfolio from increased occupancy and increased rents received on lease renewals.
 
  2)   An additional $41.0 million from six properties that we acquired during 2007 and six development/redevelopment properties (including additional occupancy at Cira Centre) that we completed and placed in service in 2007 and two that were placed in service in December 2006.
 
  3)   These increases were offset by the decrease of $8.6 million in cash rents at our development/redevelopment properties primarily as a result of six buildings, which are now included in redevelopment, that were occupied during 2006.
Our rents at the Total Portfolio that we recognized from the net amortization of above and below market leases at acquired properties, in conformity with SFAS No. 141, increased by $4.2 million primarily as a result of $1.2 million of above market leases in our Same Store Portfolio being fully amortized and the acquisition of eight properties during 2007. Two of these properties are included in the Development/Redevelopment properties.
Tenant reimbursements at the Total Portfolio increased by $6.6 million primarily as a result of increased operating expenses of $21.0 million.
Operating Expenses and Real Estate Taxes
Property operating expenses, including real estate taxes, at the Total Portfolio increased by $21.0 million from 2006 to 2007, primarily reflecting:
  1)   An increase of $5.8 million at the Same Store Portfolio, primarily due to increased occupancy and real estate tax reassessments. Increased occupancy at our properties causes an increase in the amount of expense incurred for utilities, security, and janitorial services.
 
  2)   The incurrence of $13.5 million of property operating expenses for six of the properties acquired during 2007 and eight development/redevelopment properties that we completed and placed in service during or after December 2006.
Depreciation and Amortization Expense
Depreciation and amortization increased by $11.6 million in 2007 compared to 2006, primarily reflecting:
  1)   The incurrence of $22.0 million of depreciation and amortization expense on account of six properties that we acquired during 2007 and eight development/redevelopment properties (including additional occupancy at Cira Centre) that we completed and placed in service during or after December 2006.
 
  2)   This increase was offset by $11.9 million of accelerated depreciation expense for one of our properties (50 E. Swedesford Road) which was demolished as part of an office park development in suburban Philadelphia during 2006. This property is included in Development/Redevelopment Properties.
 
  3)   The increase is also offset by a decrease of $1.5 million in our Same Store Portfolio. This decrease is the result of assets within our Same Store Portfolio being fully amortized subsequent to 2006.
Administrative Expenses
Our administrative expenses decreased by approximately $1.5 million in 2007 compared to 2006, primarily reflecting higher costs that we incurred in 2006 as part of our integration activities following our January 2006 merger with Prentiss partially offset by the severance costs incurred in the third quarter of 2007.
Interest Income/ Expense

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We used our investment in marketable securities to pay down defeased debt in the fourth quarter of 2006. This pay down caused a decrease $6.0 million in interest income. This decrease was partially offset by the amount of interest income earned on funds held in escrow with a qualified intermediary as part of completed 1031 like-kind transactions.
Interest expense decreased by $8.5 million primarily due to an increase in capitalized interest of $7.9 million during 2007 compared to 2006. The increased amount of capitalized interest is the result of a greater number of development and redevelopment projects and increased project funding for those projects that are under development in both periods. At December 31, 2007, we had seven projects under development and seven projects under redevelopment with total project costs on which we are presently capitalizing interest of $249.8 million. As of December 31, 2006, we had six projects under development and three projects under redevelopment with total project costs on which we were capitalizing interest through that date of $141.2 million.
This decrease was offset by increased interest expense on our unsecured debt based on the timing of the issuances of unsecured debt during 2007 and 2006 as noted in the liquidity and capital resources section below.
Loss on Settlement of Treasury Lock Agreements
In July 2007, in anticipation of an expected debt offering, we entered into four treasury lock agreements. The treasury lock agreements were designated as cash flow hedges on interest rate risk and qualified for hedge accounting. The agreements were settled on September 21, 2007, the original termination date of each agreement, at a total cost of $3.7 million. During the fourth quarter of 2007, we determined that the planned debt issuance was not probable and recorded $3.7 million as an expense for the residual balance of $3.7 million.
Equity in income of Real Estate Ventures
The increase of $4.8 million over 2006 is primarily due to a distribution of $3.9 million received as a result of our residual profit interest in a Real Estate Venture and the completion of an office property that was placed in service by a Real Estate Venture during 2007.
Net gain on disposition of depreciated real estate
As more fully discussed in Note 3 to our Consolidated Financial Statements, we recognized a gain on the partial transfer of interests in properties to which we retained a significant continuing involvement with the properties through our joint venture interest and our management and leasing services. As a result of this continuing involvement, we have determined that the gain on disposition and the operations of the properties should not be included in discontinued operations.
Net gain on disposition of undepreciated real estate
This line represents the gain recorded in each year for undeveloped land parcels that were sold. The parcels are not included in discontinued operations since they were not developed prior to sale. We sold seven land parcels in 2007 and three in 2006.
Gain on termination of purchase contract
We held a fifty percent economic interest in an approximately 141,724 square foot office building located at 101 Paragon Drive, Montvale, New Jersey. The remaining fifty percent interest was held by Donald E. Axinn, one of the Company’s Trustees. Although we and Mr. Axinn had each committed to provide one half of the $11 million necessary to repay the mortgage loan secured by this property at the maturity of the loan, in February 2006 an unaffiliated third party entered into an agreement to purchase this property for $18.3 million. As a result of the purchase by an unaffiliated third party during August 2006, we recognized a $3.1 million gain on termination of our under a 1998 contribution agreement, modified in 2005, that entitled us to the fifty percent interest in the joint venture to operate the property.

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Minority Interest-partners’ share of consolidated Real Estate Ventures
Minority interest-partners’ share of consolidated Real Estate Ventures represents the portion of income from our consolidated Real Estate Ventures that is allocated to our minority interest partners.
As of December 31, 2007 we held an ownership interest in three properties through consolidated Real Estate Ventures, compared to 14 properties owned by consolidated Real Estate Ventures at December 31, 2006.
On March 1, 2007, we acquired the 49% minority interest in one of our consolidated real estate ventures that owned 10 office properties containing an aggregate of 1.1 million net rentable square feet for a purchase price of $63.7 million.
Minority Interest attributable to continuing operations — LP units
Minority interest attributable to continuing operations — LP units, represents the equity in loss (income) attributable to the portion of the Operating Partnership not owned by us. Minority interests owned 4.2% and 4.6% of the Operating Partnership as of December 31, 2007 and 2006, respectively.
Discontinued Operations
During 2007, we sold one property in East Norriton, PA, five properties in Dallas, TX, 11 properties in Reading and Harrisburg, PA, one in Voorhees, NJ, one property in West Norriton, PA and one property in Newark, DE. These properties had total revenue of $14.6 million, operating expenses of $11.4 million, gains on sale of $25.7 million and minority interest attributable to discontinued operations of $1.2 million.
The December 31, 2006 amount is reclassified to include the operations of the properties sold during 2007, as well as the 23 properties that were sold during the year ended December 31, 2006. Therefore, the discontinued operations amount for the year-ended 2006 includes 43 properties with total revenue of $92.7 million, operating expenses of $79.3 million, interest expense of $0.8 million and minority interest of $1.9 million. The eight properties that were sold in the first quarter of 2006 did not have gains on sale since such properties were acquired as part of the Prentiss merger and the value ascribed to those properties in purchase accounting was approximately the fair value amount for which the properties were sold.
Net Income
Net income increased by $47.5 million from 2006 primarily as a result of an increase of $22.6 million in Operating Income and the gain on disposition of depreciated real estate of $40.5 million noted above. These increases are offset by the gain on sale of undepreciated real estate of $14.2 million and gain on termination of our purchase contract of $3.1 million earned in 2006. Net income is significantly impacted by depreciation of operating properties and amortization of acquired intangibles. These charges do not affect our ability to pay dividends and may not be comparable to those of other real estate companies. Such charges can be expected to continue until the values ascribed to the lease intangibles are fully amortized. These intangibles are amortizing over the related lease terms or estimated duration of the tenant relationship.
Earnings per Common Share
Earnings per share (diluted and basic) were $0.56 for 2007 as compared to (diluted and basic) of $0.03 for 2006 as a result of the factors described above and a decrease in the average number of common shares outstanding. The decrease in the average number of common shares outstanding is the result of 1.8 million shares repurchased in 2007 and 1.2 million shares that we repurchased in 2006. This decrease in the number of shares was partially offset by the issuance of shares upon option exercises and restricted share vesting.

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RESULTS OF OPERATIONS
Comparison of the Year Ended December 31, 2006 to the Year Ended December 31, 2005
The table below shows selected operating information for the Same Store Properties and the Total Portfolio. The Same Store Properties consists of 234 properties containing an aggregate of approximately 17.5 million net rentable square feet that we owned for the entire twelve-month periods ended December 31, 2006 and 2005. This table also includes a reconciliation from the Same Store Properties to the Total Portfolio (i.e., all properties owned by us as of December 31, 2006 and 2005) by providing information for the properties which were acquired, sold, or placed into service and administrative/elimination information for the years ended December 31, 2006 and 2005.
The Total Portfolio net income presented in the table agrees to the net income of Brandywine Realty Trust. The only difference between the reported net income of Brandywine Realty Trust and Brandywine Operating Partnership is the allocation of the minority interest attributable to continuing and discontinued operations for limited partnership units of the Operating Partnership that is reflected in the statement of operations for Brandywine Realty Trust.

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                            Acquired     Development     Other/      
    Same Store Properties   Properties     Properties (a)     Eliminations (b)     All Properties
                    Increase/                                                                     Increase/  
(dollars in thousands)   2006     2005     (Decrease)     2006     2005     2006     2005     2006     2005     2006     2005     (Decrease)  
Revenue:
                                                                                               
Cash rents
  $ 296,811     $ 292,439     $ 4,372     $ 200,753     $ 1,342     $ 24,163     $ 8,400     $ (912 )   $ 297     $ 520,815     $ 302,478     $ 218,337  
Straight-line rents
    8,636       11,141       (2,505 )     9,111       165       11,504       2,984                   29,251       14,290       14,961  
Rents - FAS 141
    2,713       1,546       1,167       7,405       (33 )     (249 )     (243 )     1       180       9,870       1,450       8,420  
 
                                                                       
Total rents
    308,160       305,126       3,034       217,269       1,474       35,418       11,141       (911 )     477       559,936       318,218       241,718  
Tenant reimbursements
    48,086       46,705       1,381       28,698       98       3,007       1,130       679       629       80,470       48,562       31,908  
Other (c)
    9,499       8,153       1,346       2,195             108       613       10,593       5,078       22,395       13,844       8,551  
 
                                                                       
Total revenue
    365,745       359,984       5,761       248,162       1,572       38,533       12,884       10,361       6,184       662,801       380,624       282,177  
 
                                                                                               
Operating Expenses:
                                                                                               
Property operating expenses
    114,455       112,656       1,799       72,798       552       14,454       7,614       (13,706 )     (9,630 )     188,001       111,192       76,809  
Real estate taxes
    36,682       34,387       2,295       24,422       190       4,124       3,320       356       283       65,584       38,180       27,404  
 
                                                                       
Subtotal
    151,137       147,043       4,094       97,220       742       18,578       10,934       (13,350 )     (9,347 )     253,585       149,372       104,213  
         
Net operating income
    214,608       212,941       1,667       150,942       830       19,955       1,950       23,711       15,531       409,216       231,252       177,964  
         
Administrative expenses
                                              29,647       17,982       29,647       17,982       11,665  
Depreciation and amortization
    113,247       101,074       12,173       117,175       461       15,313       5,326       2,394       2,257       248,129       109,118       139,011  
 
                                                                       
         
Operating Income (loss)
  $ 101,361     $ 111,867     $ (10,506 )   $ 33,767     $ 369     $ 4,642     $ (3,376 )   $ (8,330 )   $ (4,708 )   $ 131,440     $ 104,152     $ 27,288  
 
                                                                                               
Number of properties
    234                       62               17                               313                  
Square feet (in thousands)
    17,533                       11,261               2,970                               31,764                  
 
                                                                                               
Other Income (Expense):
                                                                                               
Interest income
                                                                            9,513       1,370       8,143  
Interest expense
                                                                            (171,177 )     (70,152 )     (101,025 )
Interest expense — Deferred Financing Costs
                                                                            (4,607 )     (3,766 )     (841 )
Equity in income of real estate ventures
                                                                            2,165       3,172       (1,007 )
Net gain on sales of interests in real estate
                                                                            14,190       4,640       9,550  
Gain on termination of purchase contract
                                                                            3,147             3,147  
 
                                                                                         
Income (loss) before minority interest
                                                                            (15,329 )     39,416       (54,745 )
Minority interest - partners’ share of consolidated real estate ventures
                                                                            270             270  
Minority interest attributable to continuing operations — LP units
                                                                            1,028       (1,237 )     2,265  
 
                                                                                         
Income (loss) from continuing operations
                                                                            (14,031 )     38,179       (52,210 )
Income (loss) from discontinued operations
                                                                            24,513       4,588       19,925  
 
                                                                                         
Net Income (loss)
                                                                          $ 10,482     $ 42,767     $ (32,285 )
 
                                                                                         
Earnings per common share
                                                                          $ 0.03     $ 0.62     $ (0.59 )
 
                                                                                         
 
EXPLANATORY NOTES
 
(a)   - Results include: nine developments/redevelopments, four lease-up assets and three properties placed in service
 
(b)   - Represents certain revenues and expenses at the corporate level as well as various intercompany costs that are eliminated in consolidation and third-party management fees
 
(c)   - Includes net termination fee income of $6,133 for 2006 and $5,583 for 2005 for the same store property portfolio and $948 for 2006 for the acquired properties

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Total Revenue
Revenue increased by $282.2 million primarily due to the acquired properties (primarily Prentiss), which represents $246.6 million of this increase. The increase is also the result of 4 properties placed in service, including Cira Centre, which contributed $25.7 million to this increase.
The increase in total revenue from our same store properties of $5.8 million is primarily attributable to increased occupancy as well as increased tenant reimbursements resulting from higher property operating expenses.
Operating Expenses and Real Estate Taxes
Property operating expenses increased by $76.3 million primarily due to the acquisition of Prentiss and other properties, which represents $72.2 million of this increase. Property operating expenses attributable to the increased occupancy of Cira Centre and other completed developments resulted in an additional $6.8 million of property operating expense.
Real estate taxes increased by $27.4 million primarily due to the acquisition of Prentiss and other properties, which represents $24.2 million of this increase. The remainder of the increase primarily is the result of increased real estate tax assessments in our same store portfolio and properties placed in service.
Depreciation and Amortization Expense
Depreciation and amortization increased by $139.0 million primarily due to the acquisition of Prentiss and other properties, which increased total portfolio depreciation expense by $116.7 million. A significant portion of the increase, $11.9 million, is also due to accelerated depreciation expense associated with the demolition of one of our properties as part of an office park development in suburban Philadelphia. This property was part of our same store portfolio; therefore the remaining increase in depreciation and amortization for our same store portfolio is $0.3 million. This increase resulted from the timing of assets being placed in service upon completion of tenant improvement and capital improvement projects subsequent to the end of the nine month period ending September 30, 2005. The depreciation and amortization for our development properties increased by $10.0 million as a result of timing of the properties being completed and placed into service.
Administrative Expenses
Administrative expenses increased by approximately $11.9 million primarily due to the acquisition of Prentiss. Of this increase, $3.6 million was primarily attributable to increased payroll and related costs associated with employees that we hired as part of the acquisition of Prentiss. We also incurred an additional $4.1 million in professional fees in connection with our merger integration activities. The remainder of the increase reflects other increased costs of the combined companies which includes an increase in deferred compensation expense of $2.2 million.
Interest Income/ Expense
Interest expense and deferred financing costs increased by approximately $101.9 million primarily as a result of 14 fixed rate mortgages, three unsecured notes, and one note secured by U.S. treasury notes (“PPREFI debt”) that we assumed or entered into to finance the Prentiss merger. The mortgages assumed have maturity dates ranging from 2009 through 2016 and the unsecured notes have maturities ranging from 2008 through 2035.
The PPREFI debt had a maturity of February 2007, but we elected to prepay this debt in November 2006.
The PPREFI debt was defeased by Prentiss in the fourth quarter of 2005 and was secured by an investment in U.S. treasury notes. The interest earned on the treasury notes is included in interest income and

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substantially offsets the amount of interest expense incurred on the PPREFI debt, resulting in an immaterial amount of net interest expense incurred. The increase of $8.1 million in interest income is primarily attributable to the interest income earned on these treasury notes.
See the Notes to Consolidated Financial in Part IV, Item 15 for details of our mortgage indebtedness and unsecured notes outstanding.
Gain on termination of purchase contract
We held a fifty percent economic interest in an approximately 141,724 square foot office building located at 101 Paragon Drive, Montvale, New Jersey. The remaining fifty percent interest was held by Donald E. Axinn, one of the Company’s Trustees. Although we and Mr. Axinn had each committed to provide one half of the $11 million necessary to repay the mortgage loan secured by this property at the maturity of the loan, in February 2006 an unaffiliated third party entered into an agreement to purchase this property for $18.3 million. As a result of the purchase by an unaffiliated third party during August 2006, we recognized a $3.1 million gain on termination of our rights under a 1998 contribution agreement, modified in 2005, that entitled us to the fifty percent interest in the joint venture to operate the property.
Minority Interest-partners’ share of consolidated real estate ventures
Minority interest-partners’ share of consolidated real estate ventures represents the portion of income from our consolidated joint ventures that is allocated to our minority interest partners.
As of December 31, 2006 we held an ownership interest in 15 properties through consolidated Real Estate Ventures, compared to two properties owned by consolidated Real Estate Ventures at December 31, 2005.
Minority Interest attributable to continuing operations — LP units
Minority interest attributable to continuing operations — LP units represents the equity in loss (income) attributable to the portion of the Operating Partnership not owned by us. The increase from the prior year is primarily the result of the fact that at December 31, 2006 the LP units share in our net loss from continuing operations compared to their share of net income from continuing operations in the prior year. Minority interests owned 4.6% and 3.4% of the Operating Partnership as of December 31, 2006 and 2005, respectively. The change in minority interest ownership is primarily the result of the Class A units that we issued in the Prentiss acquisition.
Discontinued Operations
Income from discontinued operations increased by $19.9 million from the prior year as a result of the sale of eight properties in Chicago, IL, five in Dallas, TX, and one in Allen, TX that we acquired in the Prentiss acquisition. We also sold five properties that were previously included in our same store portfolio. These 19 properties combined had net income of $7.7 million and gain on sale of $20.2 million during the year ended December 31, 2006 before minority interest. Included in the gain on sale amount was $1.8 million attributable to minority interest in the Chicago property that was sold by one of our consolidated Real Estate Ventures.
Net Income
Net income declined by $32.3 million in the year ended December 31, 2006, compared to the same period in 2005 as increased revenues in 2006 were offset by increases in operating expenses (primarily depreciation and amortization) and financing costs. All major financial statement captions increased as a result of our acquisition of Prentiss and the related financing required to complete the transaction. A significant element of these increases relate to additional depreciation and amortization charges from the significant property additions (including both the TRC acquisition in 2004 and the Prentiss acquisition) and the values ascribed to related acquired intangibles (e.g., in-place leases). These charges do not affect our

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ability to pay dividends and may not be comparable to those of other real estate companies that have not made such acquisitions. Such charges can be expected to continue until the values ascribed to the lease intangibles are fully amortized. These intangibles are amortizing over the related lease terms or estimated tenant relationship. In addition, a significant portion of the decrease in net income is attributable to the $11.9 million in depreciation expense described in the Depreciation and Amortization Expense section above.
Earnings per Common Share
Earnings per common share of $0.03 for the year ended December 31, 2006 as compared to earnings per common share of $0.62 in 2005 declined as a result of the factors described in “Net Income” above and an increase in the average number of common shares outstanding. We issued 34.6 million common shares in our acquisition of Prentiss.
LIQUIDITY AND CAPITAL RESOURCES
General
Our principal liquidity needs for the next twelve months are as follows:
    fund normal recurring expenses,
 
    fund capital expenditures, including capital and tenant improvements and leasing costs,
 
    fund development and redevelopment costs,
 
    fund new property acquisitions, and
 
    fund distributions declared by our Board of Trustees, including the minimum distribution required to maintain our REIT qualification under the Internal Revenue Code.
We believe that our liquidity needs will be satisfied through cash flows generated by our operating and financing activities. Rental revenue, expense recoveries from tenants, and other income from operations are our principal sources of cash that we use to pay operating expenses, debt service, recurring capital expenditures and the minimum distributions required to maintain our REIT qualification. We seek to increase cash flows from our properties by maintaining quality standards for our properties that promote high occupancy rates and permit increases in rental rates while reducing tenant turnover and controlling operating expenses. Our revenue also includes third-party fees generated by our property management, leasing, development and construction businesses. We believe our revenue, together with proceeds from equity and debt financings, will continue to provide funds for our short-term liquidity needs. However, material changes in our operating or financing activities may adversely affect our net cash flows. Such changes, in turn, would adversely affect our ability to fund distributions, debt service payments and tenant improvements. In addition, a material adverse change in our cash provided by operations would affect the financial performance covenants under our unsecured credit facility and unsecured notes.
Our principal liquidity needs for periods beyond twelve months are for costs of developments, redevelopments, property acquisitions, scheduled debt maturities, major renovations, expansions, leasing commissions, tenant improvements and capital improvements. We draw on multiple financing sources to fund our long-term capital needs. We use our credit facility for general business purposes, including the acquisition, development and redevelopment of properties and the repayment of other debt. In October 2007, we entered into a $150.0 million unsecured term loan, in April 2007 and March 2006, we sold $300.0 million and $850.0 million, respectively of unsecured notes and in September and October 2006, we sold an aggregate of $345.0 million of exchangeable unsecured notes. As of December 31, 2007 we also had approximately $611.9 million of mortgage loans. We expect to continue to use the debt and equity markets for our long-term capital needs.
Our ability to incur additional debt is dependent upon a number of factors, including our credit ratings, the value of our unencumbered assets, our degree of leverage and borrowing restrictions imposed by our current lenders. We currently have investment grade ratings for prospective unsecured debt offerings from

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three major rating agencies. If a rating agency were to downgrade our credit rating, our access to capital in the unsecured debt market would be more limited and the interest rate under our existing credit facility and term loan would increase.
Our ability to sell common and preferred shares is dependent on, among other things, general market conditions for REITs, market perceptions about our company and the current trading price of our shares. We regularly analyze which source of capital is most advantageous to us at any particular point in time. The equity markets may not be consistently available on terms that we consider attractive.
The asset sales during 2006 and 2007 have also been a significant source of cash. During 2007, we sold 49 properties containing an aggregate of 5.2 million net rentable square feet and eight land parcels containing an aggregate 56.2 acres for aggregate proceeds of $604.5 million. We have several options for the use of proceeds from asset sales, including the acquisition of assets in our core markets, repayment of debt and repurchase of our shares.
Cash Flows
The following summary discussion of our cash flows is based on the consolidated statement of cash flows included in our consolidated financial statements and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented.
As of December 31, 2007 and 2006, we maintained cash and cash equivalents of $5.6 million and $25.4 million, respectively. This $19.8 million decrease was the result of the following changes in cash flow from our various activities:
                         
Activity
  2007     2006     2005  
Operating
  $ 219,817     $ 241,566     $ 125,147  
Investing
    44,473       (915,794 )     (252,417 )
Financing
    (284,069 )     692,433       119,098  
 
                 
Net cash flows
  $ (19,779 )   $ 18,205     $ (8,172 )
 
                 
Our principal source of cash flows is from the operation of our properties. The decrease in cash flows from operating activities was primarily the result of the timing of the cash receipts from our tenants and cash expenditures in the normal course of operations of our properties. The decrease in cash from operations is also a result of the timing of property sales during the year. As we have sold more properties than we have acquired in 2007, our cash related to property operations has decreased.
The decrease in cash outflows from investing activities was primarily attributable to our acquisition of Prentiss on January 5, 2006 and other property acquisitions during year ended December 31, 2006 resulting in a cash outflow of $1,167.1 million compared to the $88.9 million outflow we incurred during the year ended December 31, 2007 for acquisitions. During 2007, we acquired the ownership interest of our minority interest partner in a previously consolidated real estate venture for $63.7 million. These outflows were offset by net proceeds on property sales of $472.6 million and $347.7 million for the years ended December 31, 2007 and 2006, respectively.
Decreased cash flow from financing activities was primarily attributable to our repurchase of 1.8 million shares for $59.4 million during the year ended December 31, 2007 compared to our issuance of $850.0 million of unsecured notes for the same period in 2006. During the year ended December 31, 2007, we repaid our $300.0 million 2009 three year floating rate note, issued in March 2006, using proceeds from our Credit Facility. We also issued $300.0 million of unsecured notes during the year ended December 31, 2007 and used those proceeds to pay-down indebtedness on our Credit Facility. We also used the proceeds from the unsecured term loan of $150.0 million that we entered into in October 2007 to pay-down indebtedness on our Credit Facility.

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Capitalization
Indebtedness
On October 15, 2007, we entered into a term loan agreement that provides for an unsecured term loan in the amount of $150.0 million. We used the proceeds to reduce outstanding indebtedness under our revolving credit facility. The term loan matures on October 18, 2010 and may be extended at our option for two one-year periods but not beyond the maturity date of our revolving credit facility.
On June 29, 2007, we amended our $600.0 million unsecured revolving credit facility (the “Credit Facility”). The amendment extended the maturity date of the Credit Facility from December 22, 2009 to June 29, 2011 (subject to an extension of one year, at our option, upon our payment of an extension fee equal to 15 basis points of the committed amount under the Credit Facility). The amendment also reduced the per annum variable interest rate on outstanding balances from Eurodollar plus 0.80% to Eurodollar plus 0.725% per annum. In addition, the amendment reduced the quarterly facility fee from 20 basis points to 17.5 basis points per annum. The interest rate and facility fee are subject to adjustment upon a change in our unsecured debt ratings. The amendment also lowered to 7.50% from 8.50% the capitalization rate used in the calculation of several of the financial covenants; increased our swing loan availability from $50.0 million to $60.0 million; and increased the number of competitive bid loan requests available to us from two to four in any 30 day period. Borrowings are always available to the extent of borrowing capacity at the stated rates, however, the competitive bid feature allows banks that are part of the lender consortium under the Credit Facility to bid to make loans to us at a reduced Eurodollar rate. We have the option to increase the Credit Facility to $800.0 million subject to the absence of any default and our ability to acquire additional commitments from our existing lenders or new lenders.
On April 30, 2007, we consummated the public offering of $300.0 million aggregate principal amount of unsecured 5.70% Guaranteed Notes due 2017 and used the net proceeds from this offering to reduce borrowings under the Credit Facility.
In April 2007, we entered into a $20.0 million Sweep Agreement to be used for cash management purposes. Borrowings under the Sweep Agreement bear interest at one-month LIBOR plus 0.75% per annum.
On November 29, 2006, we called for redemption of our $300.0 million Floating Rate Guaranteed Notes due 2009 and repaid these notes on January 2, 2007 in accordance with the November call using proceeds from our Credit Facility. As a result of the early repayment of these notes, we incurred accelerated amortization of $1.4 million in associated deferred financing costs in the fourth quarter 2006. We funded the prepayments of these notes from borrowings under our Credit Facility and there were no penalties associated with these prepayments.
On October 4, 2006, we sold $300.0 million aggregate principal amount of unsecured 3.875% Exchangeable Guaranteed Notes due 2026 in reliance upon an exemption from registration rights under Rule 144A under the Securities Act of 1933 and sold an additional $45.0 million of 3.875% Exchangeable Guaranteed Notes due 2026 on October 16, 2006 to cover over-allotments. We have registered the resale of the exchangeable notes. At certain times and upon certain events, the notes are exchangeable for cash up to their principal amount and, with respect to the remainder, if any, of the exchange value in excess of such principal amount, cash or our common shares. The initial exchange rate is 25.4065 shares per $1,000 principal amount of notes (which is equivalent to an initial exchange price of $39.36 per share). We may not redeem the notes prior to October 20, 2011 (except to preserve our status as a REIT for U.S. federal income tax purposes), but we may redeem the notes at any time thereafter, in whole or in part, at a redemption price equal to the principal amount of the notes to be redeemed plus accrued and unpaid interest. In addition, on October 20, 2011, October 15, 2016 and October 15, 2021 as well as upon the occurrence of certain change in control transactions prior to October 20, 2011, holders of notes may require us to repurchase all or a portion of the notes at a purchase price equal to the principal amount of the notes to be purchased plus accrued and unpaid interest. We used net proceeds from the notes to repurchase

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approximately $60.0 million of common shares at a price of $32.80 per share and for general corporate purposes, including the repayment of outstanding borrowings under the Credit Facility.
On March 28, 2006, we consummated the public offering of $850.0 million of unsecured notes, consisting of (1) $300.0 million aggregate principal amount of Floating Rate Guaranteed Notes due 2009, (2) $300.0 million aggregate principal amount of 5.75% Guaranteed Notes due 2012 and (3) $250.0 million aggregate principal amount of 6.00% Guaranteed Notes due 2016. We used the net proceeds from this offering to repay a $750.0 million unsecured term loan and to reduce borrowings under the Credit Facility.
The Operating Partnership is the issuer of our unsecured notes, and Brandywine Realty Trust has fully and unconditionally guaranteed the payment of principal and interest on the notes.
As of December 31, 2007, we had approximately $3.1 billion of outstanding indebtedness. The table below summarizes our mortgage notes payable, our unsecured notes, and our revolving credit facility at December 31, 2007 and 2006:
                 
    December 31  
    2007     2006  
    (dollars in thousands)  
Balance:
               
Fixed rate
  $ 2,741,632     $ 2,718,171  
Variable rate
    359,337       439,162  
 
           
Total
  $ 3,100,969     $ 3,157,333  
 
           
         
Percent of Total Debt:
               
Fixed rate
    88.4 %     86.1 %
Variable rate
    11.6 %     13.9 %
 
           
Total
    100 %     100 %
 
           
Weighted-average interest rate at period end:
               
Fixed rate
    5.5 %     5.6 %
Variable rate
    5.8 %     6.0 %
Total
    5.6 %     5.7 %
The variable rate debt shown above generally bears interest based on various spreads over a LIBOR term periodically selected by us.
We use credit facility borrowings for general business purposes, including the acquisition, development and redevelopment of properties and the repayment of other debt. We have an option to increase the maximum borrowings under the Credit Facility to $800 million subject to the absence of any defaults and our ability to obtain additional commitments from our existing or new lenders.
Our interest rate incurred under our revolving credit facility and term loan is subject to modification depending on our rating status with qualified agencies.
As of December 31, 2007, we had $120 million of borrowings and $13.5 million of letters of credit outstanding under the Credit Facility, leaving $466.5 million of unused availability. For the years ended December 31, 2007 and 2006, our weighted average interest rates, including the effects of interest rate hedges discussed in Note 9 to the consolidated financial statements included herein, and including both the new Credit Facility and prior credit facility, were 6.25% and 5.93 % per annum, respectively.

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The Credit Facility contains financial and non-financial covenants, including covenants that relate to our incurrence of additional debt; the granting of liens; consummation of mergers and consolidations; the disposition of assets and interests in subsidiaries; the making of loans and investments; and the payment of dividends. The restriction on dividends permits us to pay dividends to the greater of (i) an amount required for us to retain our qualification as a REIT and (ii) otherwise limits dividends to 95% of our funds from operations. The Credit Facility also contains financial covenants that require us to maintain an interest coverage ratio, a fixed charge coverage ratio, an unsecured debt ratio and an unencumbered cash flow ratio above certain specified minimum levels; to maintain net worth above an amount determined on a specified formula; and to maintain a leverage ratio and a secured debt ratio below certain maximum levels. Another financial covenant limits the ratio of unsecured debt to unencumbered properties. We were in compliance with all financial covenants as of December 31, 2007.
The indenture under which we issued our unsecured notes, and the note purchase agreement that governs an additional $113.0 million of 4.34% unsecured notes that mature in December 2008, contain financial covenants, including (1) a leverage ratio not to exceed 60%, (2) a secured debt leverage ratio not to exceed 40%, (3) a debt service coverage ratio of greater than 1.5 to 1.0 and (4) an unencumbered asset value of not less than 150% of unsecured debt. We were in compliance with all covenants as of December 31, 2007.
We have mortgage loans that are collateralized by certain of our properties. Payments on mortgage loans are generally due in monthly installments of principal and interest, or interest only.
We intend to refinance or repay our mortgage loans as they mature, primarily through the use of unsecured debt or equity.
Our charter documents do not limit the amount or form of indebtedness that we may incur, and our policies on debt incurrence are solely within the discretion of our Board, subject to financial covenants in the Credit Facility, indenture and other credit agreements.
As of December 31, 2007, we had guaranteed repayment of approximately $0.3 million of loans on behalf of certain Real Estate Ventures. See Item 2. Properties — Real Estate Ventures. We also provide customary environmental indemnities and completion guarantees in connection with construction and permanent financing both for our own account and on behalf of certain of the Real Estate Ventures.
Share Repurchases
We maintain a share repurchase program under which our Board has authorized us to repurchase our common shares from time to time. Our Board initially authorized this program in 1998 and has periodically replenished capacity under the program, including, most recently, on May 2, 2006 when our Board restored capacity to 3.5 million common shares. During 2007, we repurchased approximately 1.8 million common shares under this program at an average price of $33.36 per share, leaving approximately 0.5 million shares in remaining capacity at December 31, 2007. Our Board has not limited the duration of the program; however, it may be terminated at any time.
Off-Balance Sheet Arrangements
We are not dependent on any off-balance sheet financing arrangements for liquidity. Our off-balance sheet arrangements are discussed in Note 4 to the financial statements, “Investment in Unconsolidated Real Estate Ventures”. Additional information about the debt of our unconsolidated Real Estate Ventures is included in “Item 2 — Properties”.

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Shelf Registration Statement
We maintain a shelf registration statement for the issuance of common shares, preferred shares, depositary shares and warrants and unsecured debt securities. Subject to our ongoing compliance with securities laws, and if warranted by market conditions, we may offer and sell equity and debt securities from time to time under the registration statement.
Short- and Long-Term Liquidity
We believe that our cash flow from operations is adequate to fund our short-term liquidity requirements. Cash flow from operations is generated primarily from rental revenues and operating expense reimbursements from tenants and management services income from providing services to third parties. We intend to use these funds to meet short-term liquidity needs, which are to fund operating expenses, debt service requirements, recurring capital expenditures, tenant allowances, leasing commissions and the minimum distributions required to maintain our REIT qualification under the Internal Revenue Code.
We expect to meet our long-term liquidity requirements, such as for property acquisitions, development, investments in real estate ventures, scheduled debt maturities, major renovations, expansions and other significant capital improvements, through cash from operations, borrowings under the Credit Facility, additional unsecured and secured indebtedness, the issuance of equity securities, contributions from joint venture investors and proceeds from asset dispositions.
Inflation
A majority of our leases provide for reimbursement of real estate taxes and operating expenses either on a triple net basis or over a base amount. In addition, many of our office leases provide for fixed base rent increases. We believe that inflationary increases in expenses will be partially offset by expense reimbursement and contractual rent increases.
Commitments and Contingencies
The following table outlines the timing of payment requirements related to our contractual commitments as of December 31, 2007.
                                         
    Payments by Period (in thousands)  
            Less than                     More than  
    Total     1 Year     1-3 Years     3-5 Years     5 Years  
Mortgage notes payable (a)
  $ 601,833     $ 22,278     $ 230,145     $ 183,313     $ 166,097  
Revolving credit facility
    130,727       10,727             120,000        
Unsecured term loan
    150,000             150,000              
Unsecured debt (a,
    2,211,610       113,000       575,000       645,000       878,610  
Ground leases (b)
    302,096       1,736       4,304       4,636       291,420  
Interest expense
    917,108       161,258       284,222       236,432       235,196  
Development contracts (c)
    22,188       15,941       6,247                  
Other liabilities
    1,798             1,110             688  
 
                             
 
  $ 4,337,360     $ 324,940     $ 1,251,028     $ 1,189,381     $ 1,572,011  
 
                             
 
(a)   Amounts do not include unamortized discounts and/or premiums.
 
 
(b)   Future minimum rental payments under the terms of all non-cancelable ground leases under which we are the lessee are expensed on a straight-line basis regardless of when payments are due. Certain of the land leases provide for prepayment of rent on a present value basis using a fixed discount rate. Further, certain of the land lease for properties (currently under development) provide for contingent rent participation by the lessor in certain capital transactions and net operating cash flows of the property after certain returns are achieved by us. Such amounts if any, will be reflected as contingent rent when incurred. The leases also provide for payment by us of certain operating cost relating to the land, primarily real estate taxes. The above schedule of future minimum rental payments does not included any contingent rent amounts nor any reimbursed expenses.
 
(c)   Represents contractual obligations for certain development projects and does not contemplate all costs expected to be incurred for such developments.
As part of our September 2004 acquisition of a portfolio of properties from The Rubenstein Company (which we refer to as the TRC acquisition), we agreed to issue to the sellers up to a maximum of $9.7 million of Class A Units of the Operating Partnership if certain of the acquired properties achieve at least 95% occupancy prior to September 21, 2007. The maximum number of Units that we agreed to issue declined monthly and as of December 31, 2007 we had no further obligation whatsoever.

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As part of the TRC acquisition, we acquired our interest in Two Logan Square, a 696,477 square foot office building in Philadelphia, primarily through our ownership of a second and third mortgage secured by this property. This property is consolidated as the borrower is a variable interest entity and we, through our ownership of the second and third mortgages are the primary beneficiary. We currently do not expect to take title to Two Logan Square until, at the earliest, September 2019. If we take fee title to Two Logan Square upon a foreclosure of our mortgage, we have agreed to pay an unaffiliated third party that holds a residual interest in the fee owner of this property an amount equal to $0.6 million (if we must pay a state and local transfer upon taking title) and $2.9 million (if no transfer tax is payable upon the transfer).
As part of our 2006 acquisition of Prentiss Properties Trust, the TRC acquisition in 2004 and several of our other transactions, we agreed not to sell certain of the properties we acquired in transactions that would trigger taxable income to the former owners. In the case of the TRC acquisition, we agreed not to sell acquired properties for periods up to 15 years from the acquisition date as follows: 201 King of Prussia Road, 555 East Lancaster Avenue and 300 Delaware Avenue (January 2008); One Rodney Square and 130/150/170 Radnor Financial Center (January 2015); and One Logan Square, Two Logan Square and Radnor Corporate Center (January 2020). In the Prentiss acquisition, we assumed the obligation of Prentiss not to sell Concord Airport Plaza before March 2018 and 6600 Rockledge before July 2008. We also agreed not sell 14 other properties that contain an aggregate of 1.2 million square feet for periods that expire by the end of 2008. Our agreements generally provide that we may dispose of the subject properties only in transactions that qualify as tax-free exchanges under Section 1031 of the Internal Revenue Code or in other tax deferred transactions. If we were to sell a restricted property before expiration of the restricted period in a non-exempt transaction, we would be required to make significant payments to the parties who sold us the applicable property on account of tax liabilities triggered to them.
We invest in our properties and regularly incur capital expenditures in the ordinary course to maintain the properties. We believe that such expenditures enhance our competitiveness. We also enter into construction, utility and service contracts in the ordinary course of business which may extend beyond one year. These contracts typically provide for cancellation with insignificant or no cancellation penalties.
Interest Rate Risk and Sensitivity Analysis
The analysis below presents the sensitivity of the market value of our financial instruments to selected changes in market rates. The range of changes chosen reflects our view of changes which are reasonably possible over a one-year period. Market values are the present value of projected future cash flows based on the market rates chosen.
Our financial instruments consist of both fixed and variable rate debt. As of December 31, 2007, our consolidated debt consisted of $61.2 million in fixed rate mortgages, $120 million borrowings under our Credit Facility, $11 million of swing line borrowings, $150 million borrowings in an unsecured term loan and $2.1 billion in unsecured notes (net of discounts) of which $2.0 billion are fixed rate borrowings and $79 million are variable rate borrowings. All financial instruments were entered into for other than trading purposes and the net market value of these financial instruments is referred to as the net financial position. Changes in interest rates have different impacts on the fixed and variable rate portions of our debt portfolio. A change in interest rates on the fixed portion of the debt portfolio impacts the net financial instrument position, but has no impact on interest incurred or cash flows. A change in interest rates on the variable portion of the debt portfolio impacts the interest incurred and cash flows, but does not impact the net financial instrument position.
In November 2007, we entered into an interest rate swap agreement that is designated as a cash flow hedge of interest rate risk and qualified for hedge accounting. The interest rate swap is for a notional amount of $25.0 million at a fixed rate of 3.747% with a maturity date of October 18, 2010 and will be used to hedge the risk of interest cash outflows on unsecured variable rate debt.
In October 2007, we entered into an interest rate swap agreement that is designated as a cash flow hedge of interest rate risk and qualified for hedge accounting. The interest rate swap is for a notional amount of $25.0 million at a fixed rate of 4.415% with a maturity date of October 18, 2010 and will be used to hedge the risk of interest cash outflows on unsecured variable rate debt. The fair value of the hedge at December 31, 2007 was $(0.5) million and is included in other liabilities and accumulated other comprehensive income in the accompanying consolidated balance sheet.
In September 2007, we entered into an interest rate swap agreement that is designated as a cash flow hedge of interest rate risk and qualified for hedge accounting. The interest rate swap has a starting notional amount of $63.7 million increasing to a maximum amount of $155.0 million, at a fixed rate of 4.709% with a maturity date of October 18, 2010 and will be used to hedge the risk of interest cash outflows on unsecured variable rate debt. The fair value of the hedge at December 31, 2007 was $(2.7) million and is included in other liabilities and accumulated other comprehensive income in the accompanying consolidated balance sheet.
If market rates of interest on our variable rate debt increase by 1%, the increase in annual interest expense on our variable rate debt would decrease future earnings and cash flows by approximately $2.5 million net of the hedged portion of variable rate debt. If market rates of interest on our variable rate debt decrease by 1%, the decrease in interest expense on our variable rate debt would increase future earnings and cash flows by approximately $2.5 million net of the hedged portion of variable rate debt.
If market rates of interest increase by 1%, the fair value of our outstanding fixed-rate debt would decrease by approximately $86.9 million. If market rates of interest decrease by 1%, the fair value of our outstanding fixed-rate mortgage debt would increase by approximately $92.1 million.

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As of December 31, 2007, based on prevailing interest rates and credit spreads, the fair value of our unsecured notes and fixed rate mortgages was $2.6 billion.
Item 7A. Quantitative and Qualitative Disclosure About Market Risk
See discussion in Management’s Discussion and Analysis included in Item 7 herein.
Item 8. Financial Statements and Supplementary Data
The financial statements and supplementary financial data of Brandywine Realty Trust and Brandywine Operating Partnership, L.P. and the reports thereon of PricewaterhouseCoopers LLP with respect thereto are listed under Item 15(a) and filed as part of this Annual Report on Form 10-K. See Item 15.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None
Item 9A. Controls and Procedures
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
Under the supervision and with the participation of each registrant’s management, including its principal executive officer and principal financial officer, each registrant’s management conducted an evaluation of the registrant’s disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act). Based on this evaluation, the principal executive officer and the principal financial officer of each registrant concluded that each registrant’s disclosure controls and procedures were effective as of the end of the period covered by this annual report.
Management’s Report on Internal Control Over Financial Reporting
The management of each registrant is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f).
Under the supervision and with the participation of each registrant’s management, including its principal executive officer and principal financial officer, each registrant’s management conducted an evaluation of the effectiveness of the registrant’s internal control over financial reporting based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation under the framework in Internal Control — Integrated Framework, each registrant’s management concluded that the registrant’s internal control over financial reporting was effective as of December 31, 2007.
Management of each registrant has excluded our investments in Four and Six Tower Bridge Associates from its evaluation of the effectiveness of internal control over financial reporting as of December 31, 2007 because we do not have the right or authority to assess the internal controls of the individual entities and we also lack the ability, in practice, to make the assessment. Four and Six Tower Bridge Associates are two real estate partnerships, created prior to December 15, 2003, which we consolidate under Financial Accounting Standards Board Interpretation (FIN) 46R, “Consolidation of Variable Interest Entities.” The total assets and total revenue of Four and Six Tower Bridge Associates represent, in the aggregate, less than 1% of our consolidated total assets and consolidated total revenue as of and for the year ended December 31, 2007.

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The effectiveness of each registrant’s internal control over financial reporting as of December 31, 2007 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their reports which are included herein.
Changes in Internal Control over Financial Reporting.
There have not been any changes in either registrant’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, either registrant’s internal control over financial reporting.
Item 9B. Other Information
None
PART III
Item 10. Directors and Executive Officers of the Registrant
Incorporated herein by reference to the Company’s definitive proxy statement to be filed with respect to its 2008 Annual Meeting of Shareholders.
Item 11. Executive Compensation
Incorporated herein by reference to the Company’s definitive proxy statement to be filed with respect to its 2008 Annual Meeting of Shareholders.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
Incorporated herein by reference to the Company’s definitive proxy statement to be filed with respect to its 2008 Annual Meeting of Shareholders.
Item 13. Certain Relationships and Related Transactions
Incorporated herein by reference to the Company’s definitive proxy statement to be filed with respect to its 2008 Annual Meeting of Shareholders.
Item 14. Principal Accountant Fees and Services
Incorporated herein by reference to the Company’s definitive proxy statement to be filed with respect to its 2008 Annual Meeting of Shareholders.
PART IV
Item 15. Exhibits and Financial Statement Schedules.
      (a) 1. and 2. Financial Statements and Schedules
The financial statements and schedules of Brandywine Realty Trust and Brandywine Operating Partnership listed below are filed as part of this annual report on the pages indicated.

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Table of Contents

Index to Financial Statements and Schedules
BRANDYWINE REALTY TRUST
         
    Page  
Report of Independent Registered Public Accounting Firm
    F-1  
 
       
    F-3  
 
       
    F-4  
 
       
    F-5  
 
       
    F-6  
 
       
    F-7  
 
       
    F-8  
 
       
    F-42  
 
       
    F-43  
BRANDYWINE OPERATING PARTNERSHIP, L.P.
         
    Page  
Report of Independent Registered Public Accounting Firm
    F-48  
 
       
    F-50  
 
       
    F-51  
 
       
    F-52  
 
       
    F-53  
 
       
    F-54  
 
       
    F-55  
 
       
    F-91  
 
       
    F-92  

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Table of Contents

3. Exhibits
     
Exhibits No.   Description
 
2
  Agreement and Plan of Merger dated as of October 3, 2005 by and among Brandywine Realty Trust, Brandywine Operating Partnership, L.P., Brandywine Cognac I, LLC, Brandywine Cognac II, LLC, Prentiss Properties Trust and Prentiss Properties Acquisition Partners, L.P. (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated October 4, 2005 and incorporated herein by reference)
 
   
3.1.1
  Amended and Restated Declaration of Trust of Brandywine Realty Trust (amended and restated as of May 12, 1997) (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated June 9, 1997 and incorporated herein by reference)
 
   
3.1.2
  Articles of Amendment to Declaration of Trust of Brandywine Realty Trust (September 4, 1997) (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated September 10, 1997 and incorporated herein by reference)
 
   
3.1.3
  Articles of Amendment to Declaration of Trust of Brandywine Realty Trust (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated June 3, 1998 and incorporated herein by reference)
 
   
3.1.4
  Articles Supplementary to Declaration of Trust of Brandywine Realty Trust (September 28, 1998) (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated October 13, 1998 and incorporated herein by reference)
 
   
3.1.5
  Articles of Amendment to Declaration of Trust of Brandywine Realty Trust (March 19, 1999) (previously filed as an exhibit to Brandywine Realty Trust’s Form 10-K for the fiscal year ended December 31, 1998 and incorporated herein by reference)
 
   
3.1.6
  Articles Supplementary to Declaration of Trust of Brandywine Realty Trust (April 19, 1999) (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated April 26, 1999 and incorporated herein by reference)
 
   
3.1.7
  Articles Supplementary to Declaration of Trust of Brandywine Realty Trust (December 30, 2003) (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-A dated December 29, 2003 and incorporated herein by reference)
 
   
3.1.8
  Articles Supplementary to Declaration of Trust of Brandywine Realty Trust (February 5, 2004) (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-A dated February 5, 2004 and incorporated herein by reference)
 
   
3.1.9
  Articles of Amendment to Declaration of Trust of Brandywine Realty Trust (October 3, 2005) (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated October 4, 2005 and incorporated herein by reference)
 
   
3.1.10
  Second Amended and Restated Partnership Agreement of Brandywine Realty Services Partnership (previously filed as an exhibit to Brandywine Realty Trust’s Registration statement of Form S-11 (File No. 33-4175) and incorporated herein by reference)
 
   
3.1.11
  Amended and Restated Articles of Incorporation of Brandywine Realty Services Corporation (previously filed as an exhibit to Brandywine Realty Trust’s Form 10-K for the fiscal year ended December 31, 2002 and incorporated herein by reference)
 
   
3.1.12
  Amended and Restated Agreement of Limited Partnership of Brandywine Operating Partnership, L.P. (the “Operating Partnership”) (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated December 17, 1997 and incorporated herein by reference)
 
   
3.1.13
  First Amendment to Amended and Restated Agreement of Limited Partnership of Brandywine Operating Partnership, L.P. (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated December 17, 1997 and incorporated herein by reference)
 
   
3.1.14
  Second Amendment to the Amended and Restated Agreement of Limited Partnership Agreement of Brandywine Operating Partnership, L.P. (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated April 13, 1998 and incorporated herein by reference)
 
   
3.1.15
  Third Amendment to the Amended and Restated Agreement of Limited Partnership of Brandywine Operating Partnership, L.P. (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated May 14, 1998 and incorporated herein by reference)
 
   
3.1.16
  Fourth Amendment to the Amended and Restated Agreement of Limited Partnership of Brandywine Operating Partnership, L.P. (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated October 13, 1998 and incorporated herein by reference)
 
   
3.1.17
  Fifth Amendment to the Amended and Restated Agreement of Limited Partnership of Brandywine Operating Partnership, L.P. (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated October 13, 1998 and incorporated herein by reference)
 
   
3.1.18
  Sixth Amendment to the Amended and Restated Agreement of Limited Partnership of Brandywine Operating Partnership, L.P. (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated October 13, 1998 and incorporated herein by reference)
 
   
3.1.19
  Seventh Amendment to the Amended and Restated Agreement of Limited Partnership of Brandywine Operating Partnership, L.P. (previously filed as an exhibit to Brandywine Realty Trust’s Form 10-K for the fiscal year ended December 31, 2003 and incorporated herein by reference)
 
   
3.1.20
  Eighth Amendment to the Amended and Restated Agreement of Limited Partnership of Brandywine Operating Partnership, L.P. (previously filed as an exhibit to Brandywine Realty Trust’s Form 10-K for the fiscal year ended December 31, 2003 and incorporated herein by reference)

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Table of Contents

     
Exhibits No.   Description
 
   
3.1.21
  Ninth Amendment to the Amended and Restated Agreement of Limited Partnership of Brandywine Operating Partnership, L.P. (previously filed as an exhibit to Brandywine Realty Trust’s Form 10-K for the fiscal year ended December 31, 2003 and incorporated herein by reference)
 
   
3.1.22
  Tenth Amendment to the Amended and Restated Agreement of Limited Partnership of Brandywine Operating Partnership, L.P. (previously filed as an exhibit to Brandywine Realty Trust’s Form 10-K for the fiscal year ended December 31, 2003 and incorporated herein by reference)
 
   
3.1.23
  Eleventh Amendment to the Amended and Restated Agreement of Limited Partnership of Brandywine Operating Partnership, L.P. (previously filed as an exhibit to Brandywine Realty Trust’s Form 10-K for the fiscal year ended December 31, 2003 and incorporated herein by reference)
 
   
3.1.24
  Twelfth Amendment to the Amended and Restated Agreement of Limited Partnership of Brandywine Operating Partnership, L.P. (previously filed as an exhibit to Brandywine Realty Trust’s Form 10-K for the fiscal year ended December 31, 2003 and incorporated herein by reference)
 
   
3.1.25
  Thirteenth Amendment to the Amended and Restated Agreement of Limited Partnership of Brandywine Operating Partnership, L.P. (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated September 21, 2004 and incorporated herein by reference)
 
   
3.1.26
  Fourteenth Amendment to the Amended and Restated Agreement of Limited Partnership of Brandywine Operating Partnership, L.P. (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated January 10, 2006 and incorporated herein by reference)
 
   
3.1.27
  Fifteenth Amendment to the Amended and Restated Agreement of Limited Partnership of Brandywine Operating Partnership, L.P. (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated August 18, 2006 and incorporated herein by reference)
 
   
3.1.28
  List of partners of Brandywine Operating Partnership, L.P.
 
   
3.2
  Amended and Restated Bylaws of Brandywine Realty Trust (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated October 14, 2003 and incorporated herein by reference)
 
   
4.1
  Form of 7.50% Series C Cumulative Redeemable Preferred Share Certificate (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-A dated December 29, 2003 and incorporated herein by reference)
 
   
4.2
  Form of 7.375% Series D Cumulative Redeemable Preferred Share Certificate (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-A dated February 5, 2004 and incorporated herein by reference)
 
   
4.3.1
  Indenture dated October 22, 2004 by and among Brandywine Operating Partnership, L.P., Brandywine Realty Trust, certain subsidiaries of Brandywine Operating Partnership, L.P. named therein and The Bank of New York, as Trustee (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated October 22, 2004 and incorporated herein by reference)
 
   
4.3.2
  First Supplemental Indenture dated as of May 25, 2005 by and among Brandywine Operating Partnership, L.P., Brandywine Realty Trust, certain subsidiaries of Brandywine Operating Partnership, L.P. named therein and The Bank of New York, as Trustee (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated May 26, 2005 and incorporated herein by reference)
 
   
4.3.3
  Second Supplemental Indenture dated as of October 4, 2006 by and among Brandywine Operating Partnership, L.P., Brandywine Realty Trust and the Bank of New York, as Trustee (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated October 4, 2006 and incorporated herein by reference)
 
   
4.4
  Form of $275,000,000 4.50% Guaranteed Note due 2009 (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated October 22, 2004 and incorporated herein by reference)
 
   
4.5
  Form of $250,000,000 5.40% Guaranteed Note due 2014 (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated October 22, 2004 and incorporated herein by reference)
 
   
4.6
  Form of $300,000,000 5.625% Guaranteed Note due 2010 (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated December 20, 2005 and incorporated herein by reference)
 
   
4.7
  Form of $300,000,000 aggregate principal amount of Floating Rate Guaranteed Note due 2009 (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated March 28, 2006 and incorporated herein by reference).
 
   
4.8
  Form of $300,000,000 aggregate principal amount of 5.75% Guaranteed Note due 2012 (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated March 28, 2006 and incorporated herein by reference).
 
   
4.9
  Form of $250,000,000 aggregate principal amount of 6.00% Guaranteed Note due 2016 (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated March 28, 2006 and incorporated herein by reference).
 
   
4.10
  Form of 3.875% Exchangeable Guaranteed Notes due 2026 (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated October 4, 2006 and incorporated herein by reference)
 
   
4.11
  Form of $300,000,000 aggregate principal amount of 5.70% Guaranteed Notes due 2017 (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated April 30, 2007 and incorporated herein by reference)
 
   
10.1
  Second Amended and Restated Revolving Credit Agreement dated as of June 29, 2007 (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated June 29, 2007 and incorporated herein by reference)
 
   
10.2
  Term Loan Agreement dated as of October 15, 2007 (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated October 16, 2007 and incorporated herein by reference)
 
   
10.3
  Term Loan Agreement dated as of January 5, 2006 (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated January 10, 2006 and incorporated herein by reference)
 
   
10.4
  Note Purchase Agreement dated as of November 15, 2004 (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated November 15, 2004 and incorporated herein by reference)

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Table of Contents

     
Exhibits No.   Description
 
   
10.5
  Tax Indemnification Agreement dated May 8, 1998, by and between Brandywine Operating Partnership, L.P. and the parties identified on the signature page (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated May 14, 1998 and incorporated herein by reference)
 
   
10.6
  Contribution Agreement dated as of July 10, 1998 (with Donald E. Axinn) (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated July 30, 1998 and incorporated herein by reference)
 
   
10.7
  First Amendment to Contribution Agreement (with Donald E. Axinn) (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated October 13, 1998 and incorporated herein by reference)
 
   
10.8
  Form of Donald E. Axinn Options** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated July 30, 1998 and incorporated herein by reference)
 
   
10.9
  Modification Agreement dated as of June 20, 2005 between Brandywine Operating Partnership, L.P. and Donald E. Axinn (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated June 21, 2005 and incorporated herein by reference)
 
   
10.10
  Contribution Agreement dated August 18, 2004 with TRC Realty, Inc.-GP, TRC-LB LLC and TRC Associates Limited Partnership (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated August 19, 2004 and incorporated herein by reference)
 
   
10.11
  Registration Rights Agreement (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated September 21, 2004 and incorporated herein by reference)
 
   
10.12
  Tax Protection Agreement (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated September 21, 2004 and incorporated herein by reference)
 
   
10.13
  Registration Rights Agreement dated as of October 3, 2005 (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated October 4, 2005 and incorporated herein by reference)
 
   
10.14
  Letter to Cohen & Steers Capital Management, Inc. (previously filed as an exhibit to Brandywine Realty Trust’s Form 10-Q for the quarter ended June 30, 2003 and incorporated herein by reference)
 
   
10.15
  Sales Agreement with Brinson Patrick Securities Corporation (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated November 29, 2004 and incorporated herein by reference)
 
   
10.16
  Registration Rights Agreement dated as of October 4, 2006 relating to 3.875% Exchangeable Guaranteed Notes due 2026 (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated October 4, 2006 and incorporated herein by reference)
 
   
10.17
  Common Share Delivery Agreement (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated October 4, 2006 and incorporated herein by reference)
 
   
10.18
  2006 Amended and Restated Agreement dated as of January 5, 2006 with Anthony A. Nichols, Sr.** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated January 10, 2006 and incorporated herein by reference)
 
   
10.19
  Amended and Restated Employment Agreement dated as of February 9, 2007 of Gerard H. Sweeney** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated February 14, 2007 and incorporated herein by reference)
 
   
10.20
  Employment Agreement with Howard M. Sipzner** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated December 12, 2006 and incorporated herein by reference)
 
   
10.21
  Employment Agreement with Darryl M. Dunn** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated January 10, 2007 and incorporated herein by reference)
 
   
10.22
  Consulting Agreement with Michael V. Prentiss** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated January 10, 2006 and incorporated herein by reference)
 
   
10.23
  Consulting Agreement with Thomas F. August** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated January 10, 2006 and incorporated herein by reference)
 
   
10.24
  Third Amended and Restated Employment Agreement with Michael V. Prentiss**(previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated January 10, 2006 and incorporated herein by reference)
 
   
10.25
  First Amendment to the Third Amended and Restated Employment Agreement with Michael V. Prentiss** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated January 10, 2006 and incorporated herein by reference)
 
   
10.26
  Second Amendment to the Third Amended and Restated Employment Agreement with Michael V. Prentiss** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated January 10, 2006 and incorporated herein by reference)
 
   
10.27
  Amended and Restated Employment Agreement with Thomas F. August** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated January 10, 2006 and incorporated herein by reference)
 
   
10.28
  First Amendment to the Amended and Restated Employment Agreement with Thomas F. August** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated January 10, 2006 and incorporated herein by reference)
 
   
10.29
  Second Amendment to the Amended and Restated Employment Agreement with Thomas F. August** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated January 10, 2006 and incorporated herein by reference)
 
   
10.30
  Employment Letter Agreement with Robert K. Wiberg dated January 15, 2008**(previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated January 22, 2008 and incorporated herein by reference)
 
   
10.31
  Change in Control and Severance Protection Agreement with Robert K. Wiberg**(previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated January 22, 2008 and incorporated herein by reference)
 
   
10.32
  Form of Acknowledgment and Waiver Agreement** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated January 10, 2006 and incorporated herein by reference)

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Table of Contents

     
Exhibits No.   Description
 
   
10.33
  Amended and Restated 1997 Long-Term Incentive Plan** (previously filed as an exhibit to Brandywine Realty Trust’s Form 10-Q for the quarter ended March 31, 2007 and incorporated herein by reference)
 
   
10.34
  Amended and Restated Executive Deferred Compensation Plan effective March 25, 2004** (previously filed as an exhibit to Brandywine Realty Trust’s Form 10-Q for the quarter ended March 31, 2004 and incorporated herein by reference)
 
   
10.35
  Amended and Restated Executive Deferred Compensation Plan effective January 1, 2006** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated December 26, 2006 and incorporated herein by reference)
 
   
10.36
  2007 Non-Qualified Employee Share Purchase Plan** (previously filed as an exhibit to Brandywine Realty Trust’s Form 10-Q for the quarter ended March 31, 2007 and incorporated herein by reference)
 
   
10.37
  2004 Restricted Share Award to Gerard H. Sweeney** (previously filed as an exhibit to Brandywine Realty Trust’s Form 10-Q for the quarter ended March 31, 2004 and incorporated herein by reference)
 
   
10.38
  Form of 2004 Restricted Share Award to executive officers (other than the President and Chief Executive Officer)** (previously filed as an exhibit to Brandywine Realty Trust’s Form 10-Q for the quarter ended March 31, 2004 and incorporated herein by reference)
 
   
10.39
  Form of 2004 Restricted Share Award to non-executive trustee (Wyche Fowler)** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated December 22, 2004 and incorporated herein by reference)
 
   
10.40
  2005 Restricted Share Award to Gerard H. Sweeney** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated February 15, 2005 and incorporated herein by reference)
 
   
10.41
  Form of 2005 Restricted Share Award to executive officers (other than the President and Chief Executive Officer)** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated February 15, 2005 and incorporated herein by reference)
 
   
10.42
  Form of 2005 Restricted Share Award to non-executive trustees** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated May 26, 2005 and incorporated herein by reference)
 
   
10.43
  2006 Restricted Share Award to Gerard H. Sweeney** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated February 15, 2006 and incorporated herein by reference)
 
   
10.44
  Form of 2006 Restricted Share Award to executive officers (other than the President and Chief Executive Officer)** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated February 15, 2006 and incorporated herein by reference)
 
   
10.45
  Form of 2006 Restricted Share Award to non-executive trustees** (previously filed as an exhibit to Brandywine Realty Trust’s Form 10-Q for the quarter ended March 31, 2006 and incorporated herein by reference)
 
   
10.46
  Form of 2007 Restricted Share Award to non-executive trustee**(previously filed as an exhibit to Brandywine Realty Trust’s Form 10-Q for the quarter ended March 31, 2007 and incorporated herein by reference)
 
   
10.47
  Performance Share Award to Howard M. Sipzner ** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated December 12, 2006 and incorporated herein by reference)
 
   
10.48
  2007 Performance Share Award to Gerard H. Sweeney** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated February 14, 2007 and incorporated herein by reference)
 
   
10.49
  Form of 2007 Performance Share Award to executive officers (other than the President and Chief Executive Officer)** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated February 14, 2007 and incorporated herein by reference)
 
   
10.50
  Form of Severance Agreement for executive officers** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated February 15, 2005 and incorporated herein by reference)
 
   
10.51
  Change of Control Agreement with Howard M. Sipzner** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated December 12, 2006 and incorporated herein by reference)
 
   
10.52
  Summary of Trustee Compensation** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated March 17, 2006 and incorporated herein by reference)
 
   
10.53
  Prentiss Properties Trust 1996 Share Incentive Plan** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated January 10, 2006 and incorporated herein by reference)
 
   
10.54
  First Amendment to the Prentiss Properties Trust 1996 Share Incentive Plan**(previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated January 10, 2006 and incorporated herein by reference)
 
   
10.55
  Second Amendment to the Prentiss Properties Trust 1996 Share Incentive Plan**(previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated January 10, 2006 and incorporated herein by reference)
 
   
10.56
  Amendment No. 3 to the Prentiss Properties Trust 1996 Share Incentive Plan**(previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated January 10, 2006 and incorporated herein by reference)
 
   
10.57
  Fourth Amendment to the Prentiss Properties Trust 1996 Share Incentive Plan** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated January 10, 2006 and incorporated herein by reference)
 
   
10.58
  Amendment No. 5 to the Prentiss Properties Trust 1996 Share Incentive Plan** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated January 10, 2006 and incorporated herein by reference)
 
   
10.59
  Sixth Amendment to the Prentiss Properties Trust 1996 Share Incentive Plan** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated January 10, 2006 and incorporated herein by reference)
 
   
10.60
  Prentiss Properties Trust 2005 Share Incentive Plan** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated January 10, 2006 and incorporated herein by reference)
 
   
10.61
  Amended and Restated Prentiss Properties Trust Trustees’ Share Incentive Plan**(previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated January 10, 2006 and incorporated herein by reference)

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Table of Contents

     
Exhibits No.   Description
 
   
10.62
  Amendment No. 1 to the Amended and Restated Prentiss Properties Trust Trustees’ Share Incentive Plan** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated January 10, 2006 and incorporated herein by reference)
 
   
10.63
  Second Amendment to the Amended and Restated Prentiss Properties Trust Trustees’ Share Incentive Plan** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated January 10, 2006 and incorporated herein by reference)
 
   
10.64
  Form of Restricted Share Award** (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated January 10, 2006 and incorporated herein by reference)
 
   
10.65
  2006 Long-Term Outperformance Compensation Program (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated September 1, 2006 and incorporated herein by reference)
 
   
12.1
  Statement re Computation of Ratios of Brandywine Realty Trust
 
   
12.2
  Statement re Computation of Ratios of Brandywine Operating Partnership, L.P.
 
   
14.1
  Code of Business Conduct and Ethics (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated December 22, 2004 and incorporated herein by reference)
 
   
21
  List of subsidiaries
 
   
23.1
  Consent of PricewaterhouseCoopers LLP relating to financial statements of Brandywine Realty Trust
 
   
23.2
  Consent of PricewaterhouseCoopers LLP relating to financial statements of Brandywine Operating Partnership, L.P.
 
   
31.1
  Certifications of the Chief Executive Officer of Brandywine Realty Trust required by Rule 13a-14(a) under the Securities Exchange Act of 1934.
 
   
31.2
  Certifications of the Chief Financial Officer of Brandywine Realty Trust required by Rule 13a-14(a) under the Securities Exchange Act of 1934.
 
   
31.3
  Certifications of the Chief Executive Officer of Brandywine Realty Trust in its capacity as the general partner of Brandywine Operating Partnership, L.P., required by Rule 13a-14(a) under the Securities Exchange Act of 1934.
 
   
31.4
  Certifications of the Chief Financial Officer of Brandywine Realty Trust, in its capacity as the general partner of Brandywine Operating Partnership, L.P., required by Rule 13a-14(a) under the Securities Exchange Act of 1934.
 
   
32.1
  Certifications of the Chief Executive Officer of Brandywine Realty Trust required under Rule 13a-14(b) of the Securities Exchange Act of 1934.
 
   
32.2
  Certifications of the Chief Financial Officer of Brandywine Realty Trust required by Rule 13a-14(b) under the Securities Exchange Act of 1934.
 
   
32.3
  Certifications of the Chief Executive Officer of Brandywine Realty Trust, in its capacity as the general partner of Brandywine Operating Partnership, L.P., required by Rule 13a-14(b) under the Securities Exchange Act of 1934.
 
   
32.4
  Certifications of the Chief Financial Officer of Brandywine Realty Trust, in its capacity as the general partner of Brandywine Operating Partnership, L.P., required by Rule 13a-14(b) under the Securities Exchange Act of 1934.
 
**   Management contract or compensatory plan or arrangement.
 
(c)(1)
  The Financial Statements of G & I Interchange Office, LLC will be filed on Form 10-K/A by March 31, 2008.

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SIGNATURES
     Pursuant to the requirements of Section 13 or 15(d) 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
 
 
  By:   /s/ Gerard H. Sweeney    
    Gerard H. Sweeney   
    President and Chief Executive Officer   
 
Date: February 28, 2008
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
         
Signature   Title   Date
/s/ Walter D’Alessio
 
  Chairman of the Board and Trustee    February 28, 2008
Walter D’Alessio
       
 
       
/s/ Gerard H. Sweeney
 
Gerard H. Sweeney
  President, Chief Executive Officer and Trustee (Principal Executive Officer)   February 28, 2008
 
     
/s/ Howard M. Sipzner
 
Howard M. Sipzner
  Executive Vice President and Chief Financial Officer (Principal Financial Officer)   February 28, 2008
 
       
/s/ Darryl M. Dunn
 
Darryl M. Dunn
  Vice President, Chief Accounting Officer & Treasurer (Principal Accounting Officer)   February 28, 2008
 
       
/s/ D. Pike Aloian
  Trustee   February 28, 2008
D. Pike Aloian
       
 
       
/s/ Donald E. Axinn
  Trustee   February 28, 2008
Donald E. Axinn
       
 
       
/s/ Wyche Fowler
  Trustee   February 28, 2008
Wyche Fowler
       
 
       
/s/ Michael J. Joyce
  Trustee   February 28, 2008
Michael J. Joyce
       
 
       
/s/ Anthony A. Nichols, Sr.
  Trustee   February 28, 2008
Anthony A. Nichols, Sr.
       
 
       
/s/ Charles P. Pizzi
  Trustee   February 28, 2008
Charles P. Pizzi
       

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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 OPERATING PARTNERSHIP, L.P.
 
 
  By:   Brandywine Realty Trust, its General Partner    
       
     
  By:   /s/ Gerard H. Sweeney    
    Gerard H. Sweeney   
    President and Chief Executive Officer   
Date: February 28, 2008
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
         
Signature   Title   Date
/s/ Walter D’Alessio
 
Walter D’Alessio
  Chairman of the Board and Trustee    February 28, 2008
 
       
/s/ Gerard H. Sweeney
 
Gerard H. Sweeney
  President, Chief Executive Officer and Trustee (Principal Executive Officer)   February 28, 2008
 
       
/s/ Howard M. Sipzner
 
Howard M. Sipzner
  Executive Vice President and Chief Financial Officer (Principal Financial Officer)   February 28, 2008
 
       
/s/ Darryl M. Dunn
 
Darryl M. Dunn
  Vice President, Chief Accounting Officer & Treasurer (Principal Accounting Officer)   February 28, 2008
 
       
/s/ D. Pike Aloian
  Trustee   February 28, 2008
D. Pike Aloian
       
 
       
/s/ Donald E. Axinn
  Trustee   February 28, 2008
Donald E. Axinn
       
 
       
/s/ Wyche Fowler
  Trustee   February 28, 2008
Wyche Fowler
       
 
       
/s/ Michael J. Joyce
  Trustee   February 28, 2008
Michael J. Joyce
       
 
       
/s/ Anthony A. Nichols, Sr.
  Trustee   February 28, 2008
Anthony A. Nichols, Sr.
       
 
       
/s/ Charles P. Pizzi
  Trustee   February 28, 2008
Charles P. Pizzi
       

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Report of Independent Registered Public Accounting Firm
To Board of Trustees and Shareholders of Brandywine Realty Trust:
In our opinion, the consolidated financial statements listed in the index appearing under Item 15(a)(1) present fairly, in all material respects, the financial position of Brandywine Realty Trust and its subsidiaries (the "Company") at December 31, 2007 and 2006, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2007 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedules listed in the index appearing under Item 15(a)(2) present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these financial statements and financial statement schedules, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on these financial statements, on the financial statement schedules, and on the Company's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of

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financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
As described in Management’s Report on Internal Control Over Financial Reporting, management has excluded the Company’s investments in Four and Six Tower Bridge Associates from its assessment of internal control over financial reporting as of December 31, 2007 because the Company does not have the right and authority to assess the internal control over financial reporting of the individual entities and it lacks the ability to influence or modify the internal control over financial reporting of the individual entities. Four and Six Tower Bridge Associates are two real estate partnerships, created prior to December 13, 2003, which the Company started consolidating under Financial Accounting Standards Board Interpretation No. 46R, “Consolidation of Variable Interest Entities” on March 31, 2004. We have also excluded Four and Six Tower Bridge Associates from our audit of internal control over financial reporting. The total assets and total revenue of Four and Six Tower Bridge Associates represent, in the aggregate less than 1% and 1%, respectively, of the Company’s consolidated financial statement amounts as of and for the year ended December 31, 2007.
/s/ PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
February 27, 2008

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BRANDYWINE REALTY TRUST
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share information)
                 
    December 31,  
    2007     2006  
ASSETS
               
Real estate investments:
               
Operating properties
  $ 4,813,563     $ 4,927,305  
Accumulated depreciation
    (558,908 )     (515,698 )
 
           
Operating real estate investments, net
    4,254,655       4,411,607  
Development land and construction-in-progress
    402,270       328,119  
 
           
Total real estate invesmtents, net
    4,656,925       4,739,726  
Cash and cash equivalents
    5,600       25,379  
Accounts receivable, net
    17,057       19,957  
Accrued rent receivable, net
    83,098       71,589  
Asset held for sale
          126,016  
Investment in real estate ventures, at equity
    71,598       74,574  
Deferred costs, net
    87,123       73,708  
Intangible assets, net
    218,149       281,251  
Other assets
    74,549       96,818  
 
           
Total assets
  $ 5,214,099     $ 5,509,018  
 
           
LIABILITIES AND BENEFICIARIES’ EQUITY
               
Mortgage notes payable
  $ 611,898     $ 883,920  
Unsecured term loan
    150,000        
Unsecured notes
    2,208,344       2,208,310  
Unsecured credit facility
    130,727       60,000  
Accounts payable and accrued expenses
    80,732       108,400  
Distributions payable
    42,368       42,760  
Tenant security deposits and deferred rents
    65,241       55,697  
Acquired below market leases, net of accumulated amortization of $36,544 and $26,009
    67,281       92,527  
Other liabilities
    30,154       14,661  
Mortgage notes payable and other liabilities held for sale
          20,826  
 
           
Total liabilities
    3,386,745       3,487,101  
Minority interest — partners’ share of consolidated real estate ventures
          34,428  
Minority interest — LP units
    84,119       89,563  
Commitments and contingencies (Note 19)
               
Beneficiaries’ equity:
               
Preferred Shares (shares authorized-20,000,000):
               
7.50% Series C Preferred Shares, $0.01 par value; issued and outstanding- 2,000,000 in 2007 and 2006
    20       20  
7.375% Series D Preferred Shares, $0.01 par value; issued and outstanding- 2,300,000 in 2007 and 2006
    23       23  
Common Shares of beneficial interest, $0.01 par value; shares authorized 200,000,000; 88,623,635 and 88,327,041 issued in 2007 and 2006, respectively and 87,015,600 and 88,327,041 outstanding in 2007 and 2006, respectively
    870       883  
Additional paid-in capital
    2,319,410       2,311,541  
Common shares in treasury, at cost, 1,599,637 shares at December 31, 2007
    (53,449 )      
Cumulative earnings
    480,217       423,764  
Accumulated other comprehensive income (loss)
    (1,885 )     1,576  
Cumulative distributions
    (1,001,971 )     (839,881 )
 
           
Total beneficiaries’ equity
    1,743,235       1,897,926  
 
           
Total liabilities, minority interest and beneficiaries’ equity
  $ 5,214,099     $ 5,509,018  
 
           
The accompanying notes are an integral part of these consolidated financial statements.

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BRANDYWINE REALTY TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share information)
                         
    Years ended December 31,  
    2007     2006     2005  
Revenue:
                       
Rents
  $ 562,514     $ 519,282     $ 302,530  
Tenant reimbursements
    85,404       78,817       48,069  
Termination fees
    10,236       7,231       6,083  
Third party management fees, labor reimbursement and leasing
    19,691       19,453       3,582  
Other
    6,127       5,502       4,171  
 
                 
Total revenue
    683,972       630,285       364,435  
 
                       
Operating Expenses:
                       
Property operating expenses
    189,130       171,924       103,968  
Real estate taxes
    64,895       60,808       36,356  
Management expenses
    10,361       10,675       1,394  
Depreciation and amortization
    242,312       230,710       106,175  
Administrative expenses
    28,182       29,644       17,982  
 
                 
Total operating expenses
    534,880       503,761       265,875  
 
                 
Operating income
    149,092       126,524       98,560  
Other Income (Expense):
                       
Interest income
    4,040       9,513       1,370  
Interest expense
    (162,675 )     (171,177 )     (70,380 )
Interest expense - Deferred financing costs
    (4,496 )     (4,607 )     (3,540 )
Loss on settlement of treasury lock agreements
    (3,698 )            
Equity in income of real estate ventures
    6,955       2,165       3,171  
Net gain on sale of interests in depreciated real estate
    40,498              
Net gain on sale of interests in undepreciated real estate
    421       14,190       4,640  
Gain on termination of purchase contract
          3,147        
 
                 
Income (loss) before minority interest
    30,137       (20,245 )     33,821  
Minority interest - partners’ share of consolidated real estate ventures
    (465 )     270        
Minority interest attributable to continuing operations - LP units
    (911 )     1,246       (1,043 )
 
                 
Income (loss) from continuing operations
    28,761       (18,729 )     32,778  
Discontinued operations:
                       
Income from discontinued operations
    3,184       12,597       8,150  
Net gain on disposition of discontinued operations
    25,743       20,243       2,196  
Minority interest - partners’ share of consolidated real estate ventures
          (2,239 )      
Minority interest attributable to discontinued operations - LP units
    (1,235 )     (1,390 )     (357 )
 
                 
Income from discontinued operations
    27,692       29,211       9,989  
 
                 
Net income
    56,453       10,482       42,767  
Income allocated to Preferred Shares
    (7,992 )     (7,992 )     (7,992 )
 
                 
Income allocated to Common Shares
  $ 48,461     $ 2,490     $ 34,775  
 
                 
 
                       
Basic earnings per Common Share:
                       
Continuing operations
  $ 0.24     $ (0.30 )   $ 0.44  
Discontinued operations
    0.32       0.33       0.18  
 
                 
 
  $ 0.56     $ 0.03     $ 0.62  
 
                 
Diluted earnings per Common Share:
                       
Continuing operations
  $ 0.24     $ (0.30 )   $ 0.44  
Discontinued operations
    0.32       0.32       0.18  
 
                 
 
  $ 0.55     $ 0.03     $ 0.62  
 
                 
Dividends declared per common share
  $ 1.76     $ 1.76     $ 1.78  
 
                       
Basic weighted average shares outstanding
    87,272,148       89,552,301       55,846,268  
 
                       
Diluted weighted average shares outstanding
    87,321,276       90,070,825       56,104,588  
The accompanying notes are an integral part of these consolidated financial statements.

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BRANDYWINE REALTY TRUST
CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE (LOSS) INCOME
(in thousands)
                         
    Years ended December 31,  
    2007     2006     2005  
Net income
  $ 56,453     $ 10,482     $ 42,767  
 
                       
Other comprehensive income:
                       
Unrealized gain (loss) on derivative financial instruments
    (3,600 )     1,330       (713 )
Less: minority interest - consolidated real estate venture partner’s share of unrealized gain (loss) on derivative financial instruments
          (302 )      
Settlement of treasury locks
    (3,860 )            
Settlement of forward starting swaps
    1,148       3,266       240  
Reclassification of realized (gains)/losses on derivative financial instruments to operations, net
    3,436       122       450  
Unrealized gain (loss) on available-for-sale securities
    (585 )     328       (16 )
 
                 
Total other comprehensive income (loss)
    (3,461 )     4,744       (39 )
 
                 
Comprehensive income
  $ 52,992     $ 15,226     $ 42,728  
 
                 
The accompanying notes are an integral part of these consolidated financial statements.

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BRANDYWINE REALTY TRUST
CONSOLIDATED STATEMENTS OF BENEFICIARIES’ EQUITY
For the years ended December 31, 2007, 2006 and 2005
(in thousands, except number of shares)
                                                                                                         
                                                                                    Accumulated          
    Number of   Par Value of     Number of     Par Value of             Par Value of                                     Other              
    Preferred C   Preferred C     Preferred D     Preferred D     Number of     Common     AdditionalPaid-in     Common Shares in     Employee     Cumulative     Comprehensive     Cumulative        
    Shares   Shares     Shares     Shares     Common Shares     Shares     Capital     Treasury     Stock Loans     Earnings     Income (Loss)     Distributions     Total  
BALANCE, December 31, 2004
    2,000,000     $ 20       2,300,000     $ 23       55,292,752     $ 553     $ 1,347,072     $     $ (421 )   $ 370,515     $ (3,130 )   $ (567,630 )   $ 1,147,002  
 
                                                                                                       
Net income
                                                                            42,767                       42,767  
Other comprehensive income
                                                                                    (39 )