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Table of Contents

 
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Amendment No. 1
(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)
DELAWARE (Brandywine Operating Partnership L.P.)
  23-2413352
23-2862640
     
(State or other jurisdiction of
Incorporation or organization)
  (I.R.S. Employer Identification No.)
     
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,
par value $0.01 per share
(Brandywine Realty Trust)
  New York Stock Exchange
     
7.50% Series C Cumulative Redeemable
Preferred Shares of Beneficial Interest
par value $0.01 per share
(Brandywine Realty Trust)
  New York Stock Exchange
     
7.375% Series D Cumulative Redeemable
Preferred Shares of Beneficial Interest
par value $0.01 per share
(Brandywine Realty Trust)
  New York Stock Exchange
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
Brandywine Operating Partnership, L.P.:
Large accelerated filer o     Accelerated filer þ     Non-accelerated filer o     Smaller reporting company o
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

PART II
Item 8. Financial Statements and Supplementary Data
PART IV
Item 15. Exhibits and Financial Statement Schedules
SIGNATURES
Consent of Pricewaterhouse Coopers LLP, Brandywine Realty Trust
Consent of Pricewaterhouse Coopers LLP, Brandywine Operating Partnership
Consent of Pricewaterhouse Coopers LLP, G&I Interchange Office LLC
Certification dated March 31, 2008 of the Chief Executive Officer of Brandywine Realty Trust
Certification dated March 31, 2008 of the Chief Financial Officer of Brandywine Realty Trust
Certification dated March 31, 2008 of the Chief Executive Officer of Brandywine Realty Trust
Certification dated March 31, 2008 of the Chief Financial Officer of Brandywine Realty Trust
Certification dated March 31, 2008 of the Chief Executive Officer of Brandywine Realty Trust required under Rule 13a-14(b)
Certification dated March 31, 2008 of the Chief Financial Officer of Brandywine Realty Trust required by Rule 13a-14(b)
Certification dated March 31, 2008 of the Chief Executive Officer of Brandywine Realty Trust required by Rule 13a-14(b)
Certification dated March 31, 2008 of the Chief Financial Officer of Brandywine Realty Trust required by Rule 13a-14(b)


Table of Contents

This Annual Report on Form 10-K for Brandywine Realty Trust and Brandywine Operating Partnership, L.P. for the year ended December 31, 2007 is being amended to revise Part II, Item 8 and Part IV, Item 15 (c)(1) to include audited financial statements for G&I Interchange Office LLC.
PART II
Item 8. Financial Statements and Supplementary Data
See Item 15: “Exhibits and Financial Statement Schedules.”
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, L.P. 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  
 
       
Consolidated Balance Sheets as of December 31, 2007 and 2006
    F-3  
 
       
Consolidated Statements of Operations for the Years Ended December 31, 2007, 2006 and 2005
    F-4  
 
       
Consolidated Statements of Other Comprehensive (Loss) Income for the Years Ended December 31, 2007, 2006 and 2005
    F-5  
 
       
Consolidated Statements of Beneficiaries’ Equity for the Years Ended December 31, 2007 2006 and 2005
    F-6  
 
       
Consolidated Statements of Cash Flows for the Years Ended December 31, 2007, 2006 and 2005
    F-7  
 
       
Notes to Consolidated Financial Statements
    F-8  
 
       
Schedule II – Valuation and Qualifying Accounts
    F-42  
 
       
Schedule III — Real Estate and Accumulated Depreciation
    F-43  
BRANDYWINE OPERATING PARTNERSHIP, L.P.
         
    Page  
Report of Independent Registered Public Accounting Firm
    F-48  
 
       
Consolidated Balance Sheets as of December 31, 2007 and 2006
    F-50  
 
       
Consolidated Statements of Operations for the Years Ended December 31, 2007, 2006 and 2005
    F-51  
 
       
Consolidated Statements of Other Comprehensive (Loss) Income for the Years Ended December 31, 2007, 2006 and 2005
    F-52  
 
       
Consolidated Statements of Partner’s Equity for the Years Ended December 31, 2007 2006 and 2005
    F-53  
 
       
Consolidated Statements of Cash Flows for the Years Ended December 31, 2007, 2006 and 2005
    F-54  
 
       
Notes to Consolidated Financial Statements
    F-55  
 
       
Schedule II – Valuation and Qualifying Accounts
    F-91  
 
       
Schedule III — Real Estate and Accumulated Depreciation
    F-92  
 
       
(c)(1) Financial Statements of G&I Interchange Office LLC
    F-97  

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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)
 
   
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)

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Table of Contents

     
Exhibits No.   Description
 
   
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. (filed with Brandywine Realty Trust and Brandywine Operating Partnership’s Annual Report on Form 10-K on February 28, 2008)
 
   
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)
 
   
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)

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Table of Contents

     
Exhibits No.   Description
 
   
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)
 
   
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)

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Table of Contents

     
Exhibits No.   Description
 
   
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)
 
   
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)

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Exhibits No.   Description
 
   
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 (previously filed with Brandywine Realty Trust and Brandywine Operating Partnership’s Annual Report on Form 10-K on February 28, 2008 and incorporated herein by reference)
 
   
12.2
  Statement re Computation of Ratios of Brandywine Operating Partnership, L.P. (previously filed with Brandywine Realty Trust and Brandywine Operating Partnership’s Annual Report on Form 10-K on February 28, 2008 and incorporated herein by reference)
 
   
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 (previously filed with Brandywine Realty Trust and Brandywine Operating Partnership’s Annual Report on Form 10-K on February 28, 2008 and incorporated herein by reference)
 
   
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.
 
   
23.3
  Consent of PricewaterhouseCoopers LLP relating to financial statements of G&I Interchange Office LLC
 
   
31.1
  Certifications dated February 28, 2008 of the Chief Executive Officer of Brandywine Realty Trust required by Rule 13a-14(a) under the Securities Exchange Act of 1934 (previously filed with Brandywine Realty Trust and Brandywine Operating Partnership’s Annual Report on Form 10-K on February 28, 2008 and incorporated herein by reference).
 
   
31.2
  Certifications dated February 28, 2008 of the Chief Financial Officer of Brandywine Realty Trust required by Rule 13a-14(a) under the Securities Exchange Act of 1934 (previously filed with Brandywine Realty Trust and Brandywine Operating Partnership’s Annual Report on Form 10-K on February 28, 2008 and incorporated herein by reference).
 
   
31.3
  Certifications dated February 28, 2008 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 (previously filed with Brandywine Realty Trust and Brandywine Operating Partnership’s Annual Report on Form 10-K on February 28, 2008 and incorporated herein by reference).
 
   
31.4
  Certifications dated February 28, 2008 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 (previously filed with Brandywine Realty Trust and Brandywine Operating Partnership’s Annual Report on Form 10-K on February 28, 2008 and incorporated herein by reference).
 
   
31.5
  Certifications dated March 31, 2008 of the Chief Executive Officer of Brandywine Realty Trust required by Rule 13a-14(a) under the Securities Exchange Act of 1934.
 
   
31.6
  Certifications dated March 31, 2008 of the Chief Financial Officer of Brandywine Realty Trust required by Rule 13a-14(a) under the Securities Exchange Act of.
 
   
31.7
  Certifications dated March 31, 2008 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.
 
   
31.8
  Certifications dated March 31, 2008 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 dated February 28, 2008 of the Chief Executive Officer of Brandywine Realty Trust required under Rule 13a-14(b) of the Securities Exchange Act of 1934 (previously filed with Brandywine Realty Trust and Brandywine Operating Partnership’s Annual Report on Form 10-K on February 28, 2008 and incorporated herein by reference).
 
   
32.2
  Certifications dated February 28, 2008 of the Chief Financial Officer of Brandywine Realty Trust required by Rule 13a-14(b) under the Securities Exchange Act of 1934 (previously filed with Brandywine Realty Trust and Brandywine Operating Partnership’s Annual Report on Form 10-K on February 28, 2008 and incorporated herein by reference).
 
   
32.3
  Certifications dated February 28, 2008 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 (previously filed with Brandywine Realty Trust and Brandywine Operating Partnership’s Annual Report on Form 10-K on February 28, 2008 and incorporated herein by reference).
 
   
32.4
  Certifications dated February 28, 2008 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 (previously filed with Brandywine Realty Trust and Brandywine Operating Partnership’s Annual Report on Form 10-K on February 28, 2008 and incorporated herein by reference).
 
   
32.5
  Certifications dated March 31, 2008 of the Chief Executive Officer of Brandywine Realty Trust required under Rule 13a-14(b) of the Securities Exchange Act of 1934.
 
   
32.6
  Certifications dated March 31, 2008 of the Chief Financial Officer of Brandywine Realty Trust required by Rule 13a-14(b) under the Securities Exchange Act of 1934.
 
   
32.7
  Certifications dated March 31, 2008 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.
 
   
32.8
  Certifications dated March 31, 2008 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.

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**   Management contract or compensatory plan or arrangement.
 
(b)   Financial Statement Schedule:
 
See Item 15 (a)(1) and (2) above.
 
(c)(1)   Financial Statements of G&I Interchange Office LLC on page F-97

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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: March 31, 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    March 31, 2008
 
       
/s/ Gerard H. Sweeney
 
Gerard H. Sweeney
  President, Chief Executive Officer and Trustee
(Principal Executive Officer)
  March 31, 2008
 
       
/s/ Howard M. Sipzner
 
Howard M. Sipzner
  Executive Vice President and Chief Financial Officer (Principal Financial Officer)   March 31, 2008
 
       
/s/ Darryl M. Dunn
 
Darryl M. Dunn
  Vice President, Chief Accounting Officer & Treasurer
(Principal Accounting Officer)
  March 31, 2008
 
       
/s/ D. Pike Aloian
 
D. Pike Aloian
  Trustee    March 31, 2008
 
       
/s/ Donald E. Axinn
 
Donald E. Axinn
  Trustee    March 31, 2008
 
       
/s/ Wyche Fowler
 
Wyche Fowler
  Trustee    March 31, 2008
 
       
/s/ Michael J. Joyce
 
Michael J. Joyce
  Trustee    March 31, 2008
 
       
/s/ Anthony A. Nichols, Sr.
 
Anthony A. Nichols, Sr.
  Trustee    March 31, 2008
 
       
/s/ Charles P. Pizzi
 
Charles P. Pizzi
  Trustee    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 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: March 31, 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    March 31, 2008
 
       
/s/ Gerard H. Sweeney
 
Gerard H. Sweeney
  President, Chief Executive Officer and Trustee
(Principal Executive Officer)
  March 31, 2008
 
       
/s/ Howard M. Sipzner
 
Howard M. Sipzner
  Executive Vice President and Chief Financial Officer (Principal Financial Officer)   March 31, 2008
 
       
/s/ Darryl M. Dunn
 
Darryl M. Dunn
  Vice President, Chief Accounting Officer & Treasurer
(Principal Accounting Officer)
  March 31, 2008
 
       
/s/ D. Pike Aloian
 
D. Pike Aloian
  Trustee    March 31, 2008
 
       
/s/ Donald E. Axinn
 
Donald E. Axinn
  Trustee    March 31, 2008
 
       
/s/ Wyche Fowler
 
Wyche Fowler
  Trustee    March 31, 2008
 
       
/s/ Michael J. Joyce
 
Michael J. Joyce
  Trustee    March 31, 2008
 
       
/s/ Anthony A. Nichols, Sr.
 
Anthony A. Nichols, Sr.
  Trustee    March 31, 2008
 
       
/s/ Charles P. Pizzi
 
Charles P. Pizzi
  Trustee    March 31, 2008

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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 )             (39 )
Vesting of Restricted Stock
                                    69,746       1       1,539                                               1,540  
Conversion of LP units to common shares
                                    107,692       1       2,584                                               2,585  
Issuance of trustee/bonus shares
                                    3,204             90                                               90  
Payment of employee stock loans
                                                                    50                               50  
Exercise of warrants/options
                                    705,681       7       18,999                                               19,006  
Preferred Share distributions
                                                                                            (7,992 )     (7,992 )
Distributions ($1.78 per share)
                                                                                            (100,145 )     (100,145 )
 
                                                                               
 
                                                                                                       
BALANCE, December 31, 2005
    2,000,000     $ 20       2,300,000     $ 23       56,179,075     $ 562     $ 1,370,284     $     $ (371 )   $ 413,282     $ (3,169 )   $ (675,767 )   $ 1,104,864  
 
                                                                                                       
Net income
                                                                            10,482                       10,482  
Other comprehensive income
                                                                                    4,745               4,745  
Vesting of Restricted Stock
                                    81,142       1       1,886                                               1,887  
Conversion of LP units to common shares
                                    14,700             488                                               488  
Issuance of Common Shares
                                    34,542,151       345       1,021,828                                               1,022,173  
Repurchase of Common Shares
                                    (3,009,200 )     (30 )     (94,443 )                                             (94,473 )
Issuance of trustee/bonus shares
                                    3,257             90                                               90  
Payment of employee stock loans
                                                                    371                               371  
Exercise of warrants/options
                                    515,916       5       11,408                                               11,413  
Preferred Share distributions
                                                                                            (7,992 )     (7,992 )
Distributions ($1.76 per share)
                                                                                            (156,122 )     (156,122 )
 
                                                                               
 
                                                                                                       
BALANCE, December 31, 2006
    2,000,000     $ 20       2,300,000     $ 23       88,327,041     $ 883     $ 2,311,541     $     $     $ 423,764     $ 1,576     $ (839,881 )   $ 1,897,926  
 
                                                                                                       
Net income
                                                                            56,453                       56,453  
Other comprehensive income
                                                                                    (3,461 )             (3,461 )
Vesting of Restricted Stock
                                    66,086       1       2,097                                               2,098  
Conversion of LP units to common shares
                                    21,951             716                                               716  
Minority interest reclassification
                                                (2,828 )                                             (2,828 )
Repurchase of Common Shares in Treasury and for deferred comp plan
                                    (1,780,600 )     (18 )           (59,408 )                                     (59,426 )
Common Shares used for deferred comp plan
                                    172,565       2             5,959                                       5,961  
Issuance of trustee/bonus shares
                                    1,664             53                                               53  
Deferred compensation obligation
                                                                                         
Exercise of warrants/options
                                    206,893       2       7,831                                               7,833  
Preferred Share distributions
                                                                                            (7,992 )     (7,992 )
Distributions ($1.76 per share)
                                                                                            (154,098 )     (154,098 )
 
                                                                               
 
                                                                                                       
BALANCE, December 31, 2007
    2,000,000     $ 20       2,300,000     $ 23       87,015,600     $ 870     $ 2,319,410     $ (53,449 )   $     $ 480,217     $ (1,885 )   $ (1,001,971 )   $ 1,743,235  
 
                                                                               
The accompanying notes are an intergral part of these consolidated financial statements.

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BRANDYWINE REALTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
                         
    Years ended December 31,  
    2007     2006     2005  
Cash flows from operating activities:
                       
Net income
  $ 56,453     $ 10,482     $ 42,767  
Adjustments to reconcile net income to net cash from operating activities:
                       
Depreciation
    179,724       186,454       84,561  
Amortization:
                       
Deferred financing costs
    4,497       4,607       3,721  
Deferred leasing costs
    15,672       12,258       8,895  
Acquired above (below) market leases, net
    (12,225 )     (9,034 )     (1,542 )
Acquired lease intangibles
    51,669       66,317       18,573  
Deferred compensation costs
    4,672       3,447       2,764  
Straight-line rent
    (28,304 )     (31,326 )     (14,952 )
Provision for doubtful accounts
    3,147       3,510       792  
Real estate venture income in excess of distributions
    (55 )     (15 )     (769 )
Net gain on sale of interests in real estate
    (66,662 )     (34,433 )     (6,820 )
Gain on termination of purchase contract
          (3,147 )      
Minority interest
    2,611       2,113       1,400  
Changes in assets and liabilities:
                       
Accounts receivable
    6,448       1,365       (598 )
Other assets
    (6,268 )     (4,855 )     (11,810 )
Accounts payable and accrued expenses
    (10,524 )     (1,154 )     (2,407 )
Tenant security deposits and deferred rents
    12,634       29,209       (40 )
Other liabilities
    6,328       5,768       612  
 
                 
Net cash from operating activities
    219,817       241,566       125,147  
 
                       
Cash flows from investing activities:
                       
Acquisition of Prentiss
          (935,856 )      
Acquisition of properties
    (88,890 )     (231,244 )     (92,674 )
Acquisition of minority interest in consolidated real estate venture
    (63,732 )            
Sales of properties, net
    472,590       347,652       29,428  
Proceeds from termination of purchase contract
          3,147        
Capital expenditures
    (267,103 )     (242,516 )     (177,035 )
Investment in marketable securities
          181,556       423  
Investment in unconsolidated Real Estate Ventures
    (897 )     (753 )     (269 )
Restricted cash
    4,898       (2,981 )     (518 )
Cash distributions from unconsolidated Real Estate Ventures in excess of equity in income
    3,711       3,762       462  
Leasing costs
    (16,104 )     (38,561 )     (12,234 )
 
                 
Net cash from (used in) investing activities
    44,473       (915,794 )     (252,417 )
 
                       
Cash flows from financing activities:
                       
Proceeds from Credit Facility borrowings
    959,602       726,000       372,142  
Repayments of Credit Facility borrowings
    (888,875 )     (756,000 )     (434,142 )
Proceeds from mortgage notes payable
          20,520        
Repayments of mortgage notes payable
    (272,027 )     (213,338 )     (23,457 )
Proceeds from term loan
    150,000       750,000        
Repayments of term loan
          (750,000 )      
Proceeds from unsecured notes
    300,000       1,193,217       299,976  
Repayments of unsecured notes
    (299,925 )            
Net settlement of of hedge transactions
    (2,712 )     3,266        
Repayments on employee stock loans
          371       50  
Debt financing costs
    (4,474 )     (14,319 )     (4,026 )
Exercise of stock options
    6,011       11,414       18,999  
Repurchases of Common Shares and minority interest units
    (59,426 )     (94,472 )     (239 )
Distributions paid to shareholders
    (162,368 )     (151,102 )     (106,608 )
Distributions to minority interest holders
    (9,875 )     (33,124 )     (3,597 )
 
                 
Net cash used in (from) financing activities
    (284,069 )     692,433       119,098  
 
                 
Increase (decrease) in cash and cash equivalents
    (19,779 )     18,205       (8,172 )
Cash and cash equivalents at beginning of period
    25,379       7,174       15,346  
 
                 
Cash and cash equivalents at end of period
  $ 5,600     $ 25,379     $ 7,174  
 
                 
Supplemental disclosure:
                       
Cash paid for interest, net of capitalized interest
  $ 182,790     $ 154,258     $ 53,450  
Supplemental disclosure of non-cash activity:
                       
Common shares issued in the Prentiss acquisition
          1,022,173        
Operating Partnership units issued in Prentiss acquisitions
          64,103        
Operating Partnership units issued in property acquistions
          13,819        
Debt, minority interest and other liabilities, net, assumed in the Prentiss acquisition
          679,520        
The accompanying notes are an integral part of these consolidated financial statements.

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BRANDYWINE REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007, 2006 AND 2005
1. ORGANIZATION AND NATURE OF OPERATIONS
Brandywine Realty Trust, a Maryland real estate investment trust, or REIT, is a self-administered and self-managed real estate investment trust, or REIT, active in acquiring, developing, redeveloping, leasing and managing office and industrial properties. Brandywine Realty Trust owns its assets and conducts its operations through Brandywine Operating Partnership, L.P. a Delaware limited partnership (the “Operating Partnership”) and subsidiaries of the Operating Partnership. Brandywine Realty Trust, the Operating Partnership and their consolidated subsidiaries are collectively referred to below as the “Company.”
As of December 31, 2007, the Company owned 216 office properties, 23 industrial facilities and one mixed-use property (collectively, the “Properties”) containing an aggregate of approximately 24.9 million net rentable square feet. The Company also has seven properties under development and seven properties under redevelopment containing an aggregate 3.7 million net rentable square feet. As of December 31, 2007, the Company consolidates three office properties owned by real estate ventures containing 0.4 million net rentable square feet. Therefore, the Company owns and consolidates 257 properties with an aggregate of 29.0 million net rentable square feet. As of December 31, 2007, the Company 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, the Company owned approximately 417 acres of undeveloped land. The Properties and the properties owned by the Real Estate Ventures 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. In addition to managing properties that the Company owns, as of December 31, 2007, the Company was managing approximately 14.5 million net rentable square feet of office and industrial properties for third parties.
All references to building square footage, acres, occupancy percentage and the number of buildings are unaudited.
Brandywine Realty Trust is the sole general partner of the Operating Partnership and, as of December 31, 2007, owned a 95.8% interest in the Operating Partnership. The Company conducts its third-party real estate management services business primarily through five management companies (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”). Each of BRSCO, BTRS and BPI is a taxable REIT subsidiary. The Operating Partnership owns, directly and indirectly, currently 100% of each of BRSCO, BTRS, BPI, BBL and BPM.
Prior to December 2007, 5% of BRSCO, one of the consolidated management services companies, was owned by a partnership comprised of a current executive and former executive of the Company, each of whom is a member of the Company’s Board of Trustees, In December 2007, the Operating Partnership bought out this interest for a nominal amount and BRSCO is now wholly owned.
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 the Company and approximately 14.5 million net rentable square feet related to properties owned by third parties and Real Estate Ventures.
As more fully described in Note 3, on January 5, 2006, the Company acquired Prentiss Properties Trust (“Prentiss”) pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) that the Company entered into with Prentiss on October 3, 2005.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
     When the Company obtains an economic interest in an entity, the Company evaluates the entity to determine if the entity is deemed a variable interest entity (“VIE”), and if the Company is deemed to be the primary beneficiary, in accordance with FASB Interpretation No. 46R, “Consolidation of Variable Interest

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Entities” (“FIN 46R”). When an entity is not deemed to be a VIE, the Company considers the provisions of 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”). The Company consolidates (i) entities that are VIEs and of which the Company is deemed to be the primary beneficiary and (ii) entities that are non-VIEs which the Company controls and the limited partners do not have the ability to dissolve the entity or remove the Company without cause nor substantive participating rights. Entities that the Company accounts for under the equity method (i.e., at cost, increased or decreased by the Company’s share of earnings or losses, plus contributions, less distributions) include (i) entities that are VIEs and of which the Company is not deemed to be the primary beneficiary (ii) entities that are non-VIEs which the Company does not control, but over which the Company has the ability to exercise significant influence and (iii) entities that are non-VIE’s that the Company controls through its general partner status, but the limited partners in the entity have the substantive ability to dissolve the entity or remove the Company without cause or have substantive participating rights. The Company will reconsider its determination of whether an entity is a VIE and who the primary beneficiary is, and whether or not the limited partners in an entity have substantive rights, if certain events occur that are likely to cause a change in the original determinations. The portion of these entities not owned by the Company is presented as minority interest as of and during the periods consolidated. All intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates
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 and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Management makes significant estimates regarding revenue, impairment of long-lived assets, allowance for doubtful accounts and deferred costs.
Operating Properties
Operating properties are carried at historical cost less accumulated depreciation and impairment losses.
The cost of operating properties reflects their purchase price or development cost. Costs incurred for the acquisition and renovation of an operating property are capitalized to the Company’s investment in that property. Ordinary repairs and maintenance are expensed as incurred; major replacements and betterments, which improve or extend the life of the asset, are capitalized and depreciated over their estimated useful lives. Fully-depreciated assets are removed from the accounts.
Purchase Price Allocation
The Company allocates 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) the Company’s estimate of the fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of the lease. Capitalized above-market lease values are amortized as a reduction of rental income over the remaining non-cancelable terms of the respective leases. Capitalized below-market lease values are amortized as an increase to rental income over the remaining non-cancelable terms of the respective leases, including any below market fixed-rate renewal periods.
Other intangible assets also include amounts representing the value of tenant relationships and in-place leases based on the Company’s evaluation of the specific characteristics of each tenant’s lease and the Company’s overall relationship with the respective tenant. The Company estimates the cost to execute leases with terms similar to the remaining lease terms of the in-place leases, including leasing commissions, legal and other related expenses. This intangible asset is amortized to expense over the remaining term of the respective leases. Company estimates of value are made using methods similar to those used by independent appraisers or by using independent appraisals. Factors considered by the Company in this

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analysis include an estimate of the carrying costs during the expected lease-up periods considering current market conditions and costs to execute similar leases. In estimating carrying costs, the Company includes 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. The Company also considers information obtained about each property as a result of its pre-acquisition due diligence, marketing and leasing activities in estimating the fair value of the tangible and intangible assets acquired. The Company also uses the information obtained as a result of its pre-acquisition due diligence as part of its consideration of FIN 47, Accounting for Conditional Asset Retirement Obligations (“FIN 47”) and when necessary, will record a conditional asset retirement obligation as part of its purchase price.
Characteristics considered by the Company in allocating value to its tenant relationships include the nature and extent of the Company’s business relationship with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit quality and expectations of lease renewals, among other factors. 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-cancelable 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 (above or below), in-place lease values and tenant relationship values, would be charged to expense and market rate adjustments would be recorded to revenue.
Depreciation and Amortization
The costs of buildings and improvements are depreciated using the straight-line method based on the following useful lives: buildings and improvements (five to 55 years) and tenant improvements (the shorter of the lease term or the life of the asset).
Construction in Progress
Project costs directly associated with the development and construction of a real estate project are capitalized as construction in progress. In addition, interest, real estate taxes and other expenses that are directly associated with the Company’s development activities are capitalized until the property is placed in service. Internal direct construction costs totaling $4.8 million in 2007, $4.9 million in 2006 and $3.4 million in 2005 and interest totaling $17.5 million in 2007, $9.5 million in 2006 and $9.6 million in 2005 were capitalized related to development of certain Properties and land holdings.
Impairment of Long-Lived Assets
Statement of Financial Accounting Standard No. 144 (“SFAS 144”), Accounting for the Impairment or Disposal of Long-Lived Assets, provides a single accounting model for long-lived assets as held-for-sale, broadens the scope of businesses to be disposed of that qualify for reporting as discontinued operations and changes the timing of recognizing losses on such operations.
In accordance with SFAS 144, 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 group 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 are 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 other assets and liabilities related to assets classified as held-for-sale are presented separately in the consolidated balance sheet. The Company had no properties classified as held for sale at December 31, 2007. As of December 31, 2006, Company had two properties classified as held for sale.

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Cash and Cash Equivalents
Cash and cash equivalents are highly-liquid investments with original maturities of three months or less. The Company maintains cash equivalents in financial institutions in excess of insured limits, but believes this risk is mitigated by only investing in or through major financial institutions.
Restricted Cash
Restricted cash consists of cash held as collateral to provide credit enhancement for the Company’s mortgage debt, cash for property taxes, capital expenditures and tenant improvements. Restricted cash is included in other assets as discussed below.
Accounts Receivable
Leases with tenants are accounted for as operating leases. Minimum annual rentals under tenant leases are recognized on a straight-line basis over the term of the related lease. The cumulative difference between lease revenue recognized under the straight-line method and contractual lease payment terms is recorded as “accrued rent receivable, net” on the accompanying balance sheets. Included in current tenant receivables are tenant reimbursements which are comprised of amounts recoverable from tenants for common area maintenance expenses and certain other recoverable expenses that are recognized as revenue in the period in which the related expenses are incurred. As of December 31, 2007, no tenant represented more than 10% of accounts receivable. As of December 31, 2006, one tenant represented approximately 17% of accounts receivable, a significant portion of which is for reimbursements in connection with a tenant improvement project.
Tenant receivables and accrued rent receivables are carried net of the allowances for doubtful accounts of $3.8 million and $6.4 million in 2007, respectively, and $4.5 million and $4.8 million in 2006, respectively. The allowance is an estimate based on two calculations that are combined to determine the total amount reserved. First, the Company evaluates specific accounts where it has determined that a tenant may have an inability to meet its financial obligations. In these situations, the Company uses its 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 the Company expects to collect. These reserves are reevaluated 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. These percentages are based on historical collection and write-off experience. If the financial condition of the Company’s tenants were to deteriorate, additional allowances may be required.
Investments in Unconsolidated Real Estate Ventures
The Company accounts for its investments in unconsolidated Real Estate Ventures under the equity method of accounting as it is not the primary beneficiary (for VIE’s) and the Company exercises significant influence, but does not control these entities under the provisions of the entities’ governing agreements pursuant to EITF 04-05. These investments are recorded initially at cost, as Investments in Real Estate Ventures, and subsequently adjusted for equity in earnings and cash contributions and distributions.
On a periodic basis, management assesses whether there are any indicators that the value of the Company’s investments in unconsolidated Real Estate Ventures may be other than temporarily impaired. An investment is impaired only if the value of the investment, as estimated by management, is less than the carrying value of the investment. To the extent impairment has occurred, the loss shall be measured as the excess of the carrying amount of the investment over the value of the investment, as estimated by management.
To the extent that the Company acquires an interest in or contributes assets to a Real Estate Venture project, the difference between the Company’s cost basis in the investment in venture and in the assets, intangibles and liabilities of the Real Estate Venture is amortized over the life of the related assets, intangibles and liabilities and such adjustment is included in the Company’s share of equity in income of unconsolidated ventures.

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Deferred Costs
Costs incurred in connection with property leasing are capitalized as deferred leasing costs. Deferred leasing costs consist primarily of leasing commissions and internal leasing costs that are amortized on the straight-line method over the life of the respective lease which generally ranges from one to 15 years. Management re-evaluates the remaining useful lives of leasing costs as economic and market conditions change.
Costs incurred in connection with debt financing are capitalized as deferred financing costs and charged to interest expense over the terms of the related debt agreements. Deferred financing costs consist primarily of loan fees which are amortized over the related loan term. Management re-evaluates the remaining useful lives of financing costs as economic and market conditions change.
Other Assets
As of December 31, 2007, other assets included prepaid real estate taxes of $8.0 million, prepaid insurance of $5.6 million, marketable securities of $3.2 million, deposits on properties expected to be purchased in 2008 totaling $1.6 million, a tenant allowance totalling $8.0 million, cash surrender value of life insurance of $7.7 million, furniture, fixtures and equipment of $7.2 million, restricted cash of $17.2 million and $16.0 million of other assets. Also included in this balance are a $3.1 million note receivable with a 20 year amortization period for principal and interest (balloon payment in March 2008) that bears interest at 8.5% and a $7.8 million note receivable with a 20 year amortization period for principal and interest (balloon payment in December 2008) that bears interest at 8.5%.
As of December 31, 2006, other assets included a direct financing lease of $14.6 million, prepaid real estate taxes of $9.7 million, prepaid insurance of $4.4 million, marketable securities of $6.8 million, deposits on properties expected to be purchased in 2007 totaling $2.2 million, cash surrender value of life insurance of $11.6 million, furniture, fixtures and equipment of $6.8 million, restricted cash of $22.6 and $18.4 million of other assets. Also included in this balance are a $4.3 million note receivable with a 20 year amortization period for principal and interest (balloon payment in March 2008) that bears interest at 8.5% and an $8.0 million note receivable with a 20 year amortization period for principal and interest (balloon payment in December 2008) that bears interest at 8.5%.
Revenue Recognition
Rental revenue is recognized 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. The cumulative difference between lease revenue recognized under this method and contractual lease payment terms is recorded as “accrued rent receivable” on the accompanying balance sheets. The straight-line rent adjustment increased revenue by approximately $25.0 million in 2007, $31.3 million in 2006 and $15.0 million in 2005. Deferred rents on the balance sheet represent rental revenue received prior to their due dates and amounts paid by the tenant for certain improvements considered to be landlord assets that will remain the Company’s property at the end of the tenant’s lease term. The amortization of these amounts paid by the tenant for such improvements is calculated on a straight-line basis over the term of the tenant’s lease and is a component of straight-line rental income and increased revenue by $3.3 million in 2007 and $1.3 million in 2006. Leases also typically provide for tenant reimbursement of a portion of common area maintenance and other operating expenses to the extent that a tenant’s pro rata share of expenses exceeds a base year level set in the lease. Other income is recorded when earned and is primarily comprised of termination fees received from tenants, bankruptcy settlement fees, third party leasing commissions, and third party management fees. During 2007, 2006, and 2005, the Company earned $10.2 million, $7.8 million, and $6.1 million in termination fees.
No tenant represented greater than 10% of the Company’s rental revenue in 2007, 2006 or 2005.
Income Taxes
The Company has elected to be treated as a REIT under Sections 856 through 860 of the Internal Revenue

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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 its REIT subsidiaries are required to, among other things, distribute at least 90% of its 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 entities. 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 tax basis in the Company’s assets was $4.5 billion as of December 31, 2007 and $4.2 billion as of December 31, 2006.
The Company is subject to a 4% federal excise tax if sufficient taxable income is not distributed within prescribed time limits. The excise tax equals 4% of the annual amount, if any, by which the sum of (a) 85% of the Company’s ordinary income and (b) 95% of the Company’s net capital gain exceeds cash distributions and certain taxes paid by the Company. No excise tax was incurred in 2007, 2006, or 2005.
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 tenants of the Company 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, the Company’s TRSs had tax net operating loss (“NOL”) carryforwards of approximately $2.5 million, expiring from 2013 to 2027. The Company has ascribed a full valuation allowance to its net deferred tax assets.
The Company 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, the Company recognized no material adjustments regarding our tax accounting treatment. The Company expects to recognize interest and penalities, to the extent incurred related to uncertain tax positions, if any, as income tax expense, which would be included in general and administrative expense.
Earnings Per Share
Basic earnings per share is calculated by dividing income allocated to Common Shares by the weighted-average number of shares outstanding during the period. Diluted earnings per share includes the effect of common share equivalents outstanding during the period.
Stock-Based Compensation Plans
The Company maintains shareholder-approved equity incentive plans. The Compensation Committee of the Company’s Board of Trustees authorizes awards under these plans. 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. As of December 31, 2007, approximately 4.1 million common shares remained available for future award under the 1997 Plan (including the 500,000 shares that are limited to option

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awards as described above, and without giving effect to any shares that would become available for awards if and to the extent that outstanding awards lapse, expire or are forfeited).
On January 1, 2002, the Company began to expense the fair value of stock-based compensation awards granted subsequent to January 1, 2002, over the applicable vesting period as a component of general and administrative expenses in the Company’s consolidated Statements of Operations. The Company recognized stock-based compensation expense of $4,672,000 in 2007, $3,447,000 in 2006 and $2,764,000 in 2005.
Comprehensive Income
Comprehensive income or loss is recorded in accordance with the provisions of SFAS 130 (“SFAS 130”), Reporting Comprehensive Income. SFAS 130 establishes standards for reporting comprehensive income and its components in financial statements. Comprehensive income includes unrealized gains and losses on available-for-sale securities and the effective portions of changes in the fair value of derivatives.
Accounting for Derivative Instruments and Hedging Activities
The Company accounts for its derivative instruments and hedging activities under SFAS No. 133 (“SFAS 133”), Accounting for Derivative Instruments and Hedging Activities, and its corresponding amendments under SFAS No. 138, Accounting for Certain Derivative Instruments and Hedging Activities – An Amendment of SFAS 133. SFAS 133 requires the Company to measure every derivative instrument (including certain derivative instruments embedded in other contracts) at fair value and record them in the balance sheet as either an asset or liability. For derivatives designated as fair value hedges, the changes in fair value of both the derivative instrument and the hedged item are recorded in earnings. For derivatives designated as cash flow hedges, the effective portions of changes in the fair value of the derivative are reported in other comprehensive income. Changes in fair value of derivative instruments and ineffective portions of hedges are recognized in earnings in the current period. During 2007, the Company recognized $0.2 million in the statement of operations for the ineffective portion of its cash flow hedges and $3.7 million upon termination of certain of its cash flow hedges. For the years ended December 31, 2006 and 2005, the Company was not party to any derivative contract designated as a fair value hedge and there are no ineffective portions of our cash flow hedges. See Note 8.
The Company actively manages its ratio of fixed-to-floating rate debt. To manage its fixed and floating rate debt in a cost-effective manner, the Company, from time to time, enters into interest rate swap agreements as cash flow hedges, under which it agrees to exchange various combinations of fixed and/or variable interest rates based on agreed upon notional amounts. See Note 8.
Reclassifications
Certain amounts have been reclassified in prior years to conform to the current year presentation. The reclassifications are primarily due to the treatment of sold properties as discontinued operations on the statement of operations for all periods presented and the reclassification of labor reimbursements received under our third party contracts to a gross presentation.
New Pronouncements
In December 2007, the FASB issued Statement No. 141 (revised 2007), “Business Combinations” (“SFAS 141(R)”), which establishes principles and requirements for how the acquirer shall recognize and measure in its financial statements the identifiable assets acquired, liabilities assumed, any noncontrolling interest in the acquiree and goodwill acquired in a business combination. This statement is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company is currently assessing the potential impact that the adoption of SFAS 141(R) will have on its financial position and results of operations.
In December 2007, the FASB issued Statement No. 160, “Noncontrolling Interests in Consolidated Financial Statements — an Amendment of ARB No. 51” (“SFAS 160”), which establishes and expands

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accounting and reporting standards for minority interests, which will be recharacterized as noncontrolling interests, in a subsidiary and the deconsolidation of a subsidiary. SFAS 160 is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. This statement is effective for fiscal years beginning on or after December 15, 2008. The Company is currently assessing the potential impact that the adoption of SFAS 160 will have on its financial position and results of operations.
In June 2007, the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants (“AICPA”) issued Statement of Position 07-1, “Clarification of the Scope of the Audit and Accounting Guide Investment Companies and Accounting by Parent Companies and Equity Method Investors for Investments in Investment Companies” (“SOP 07-1”). SOP 07-1 addresses when the accounting principles of the AICPA Audit and Accounting Guide “Investment Companies” must be applied by an entity and whether investment company accounting must be retained by a parent company in consolidation or by an investor in the application of the equity method of accounting. In addition, SOP 07-1 includes certain disclosure requirements for parent companies and equity method investors in investment companies that retain investment company accounting in the parent company’s consolidated financial statements or the financial statements of an equity method investor. On February 14, 2008, FSP No. SOP 07-1-1 was issued to delay indefinitely the effective date of SOP 07-1 and prohibit adoption of SOP 07-1 for an entity that has not early adopted SOP 07-1 before issuance of the final FSP. The Company is currently evaluating the impact and believes that the adoption of this standard will not have a material effect on its financial position and results of operations.
In February 2007, the FASB issued Statement No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”), which gives entities the option to measure eligible financial assets, financial liabilities and firm commitments at fair value on an instrument-by-instrument basis, that are otherwise not permitted to be accounted for at fair value under other accounting standards. The election to use the fair value option is available when an entity first recognizes a financial asset or financial liability or upon entering into a firm commitment. Subsequent changes (i.e., unrealized gains and losses) in fair value must be recorded in earnings. Additionally, SFAS 159 allows for a one-time election for existing positions upon adoption, with the transition adjustment recorded to beginning retained earnings. This statement is effective for fiscal years beginning after November 15, 2007. The Company is currently assessing the potential impact that the adoption of SFAS 159 will have on its financial position and results of operations.
In September 2006, the FASB issued Statement No. 157, Fair Value Measurements (“SFAS No. 157”). SFAS No. 157 provides guidance for using fair value to measure assets and liabilities. This statement clarifies the principle that fair value should be based on the assumptions that market participants would use when pricing the asset or liability. SFAS No. 157 establishes a fair value hierarchy, giving the highest priority to quoted prices in active markets and the lowest priority to unobservable data. SFAS No. 157 applies whenever other standards require assets or liabilities to be measured at fair value. SFAS No. 157 also provides for certain disclosure requirements, including, but not limited to, the valuation techniques used to measure fair value and a discussion of changes in valuation techniques, if any, during the period. This statement is effective in fiscal years beginning after November 15, 2007, except for nonfinancial assets and nonfinancial liabilities that are not recognized or disclosed at fair value on a recurring basis, for which the effective date is fiscal years beginning after November 15, 2008. The Company is currently evaluating the impact and believes that the adoption of this standard will not have a material effect on its financial position and results of operations.
3. REAL ESTATE INVESTMENTS
As of December 31, 2007 and 2006, the gross carrying value of the Company’s Properties was as follows:

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    December 31,  
    2007     2006  
    (amounts in thousands)  
Land
  $ 727,979     $ 756,400  
Building and improvements
    3,672,638       3,807,040  
Tenant improvements
    412,946       363,865  
 
           
 
  $ 4,813,563     $ 4,927,305  
 
           
Acquisitions and Dispositions
The Company’s acquisitions were accounted for by the purchase method. The results of each acquired property are included in the Company’s results of operations from their respective purchase dates.
2007
DRA Joint Venture
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 interest 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 these transactions of approximately $230.9 million that it received in this transaction to reduce outstanding indebtedness under the Company’s unsecured revolving credit facility.
The Company was hired by the Venture to perform property management and leasing services. The joint venture agreements provide for certain control rights and participation as a joint venture partner and, based on an evaluation of control rights, the Company will not consolidate the Venture subsequent to its formation.
In connection with these transactions, the Company recorded a gain as a partial sale of $40.5 million. The Company’s continuing involvement with the properties through its joint venture interest and management fees and leasing commissions represents a significant continuing involvement in the properties. Accordingly, under EITF 03-13, “Applying the Conditions in Paragraph 42 of FASB Statement No. 144 in Determining Whether to Report Discontinued Operations”, the Company has determined that the gain on sale and the operations of the properties should not be included in discontinued operations.
Other 2007 Acquisitions and Dispositions
On November 30, 2007, the Company 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, the Company 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, the Company 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, the Company 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. The Company intends to redevelop the building into office space for the Internal Revenue Service (“IRS”). As part of this acquisition, the Company 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”. The

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Company is currently demolishing the existing structure located on the postal annex and intends to rebuild a parking facility containing approximately 733,000 square feet that will primarily be used by the IRS employees upon their move into the planned office space at the Post Office building. The remaining postal annex ground leased parcels can also accommodate additional office, retail, hotel and residential development and the Company is currently in the planning stage with respect to these parcels and is seeking specific zoning authorization related thereto.
On July 19, 2007, the Company 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. The Company funded $36.6 million 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, the Company acquired Lake Merritt Tower, an office property located in Oakland, California containing 204,278 net rentable square feet for an aggregate purchase price of $72.0 million. A portion of the proceeds from the sale of the 10 office properties located in Reading and Harrisburg, Pennsylvania in March 2007 was used to fully fund this purchase.
On April 30, 2007, the Company 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, the Company 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. The Company 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, the Company 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.
On March 1, 2007, the Company acquired the remaining 49% interest in a consolidated real estate venture previously owned by Stichting Pensioenfonds ABP containing ten office properties for a purchase price of $63.7 million. The Company owned a 51% interest in this real estate venture through the acquisition of Prentiss in January 5, 2006 and had already consolidated this venture. This purchase was accounted for as a step acquisition and the difference between the purchase price of the minority interest and the carrying value of the pro rata share of the assets of the real estate venture was allocated to the real estate venture’s assets and liabilities based on their relative fair value.
On January 31, 2007, the Company 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, the Company 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, the Company 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.
2006
Prentiss Acquisition
On January 5, 2006, the Company acquired Prentiss pursuant to the Merger Agreement that the Company entered into with Prentiss on October 3, 2005. In conjunction with the Company’s acquisition of Prentiss, designees of The Prudential Insurance Company of America (“Prudential”) acquired certain of Prentiss’ properties that contain an aggregate of approximately 4.32 million net rentable square feet for a total consideration of approximately $747.7 million. Through its acquisition of Prentiss (and after giving effect to the Prudential acquisition of certain of Prentiss’ properties), the Company acquired a portfolio of 79

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office properties (including 13 properties that are owned by consolidated Real Estate Ventures and 7 properties that are owned by an unconsolidated Real Estate Venture) that contain an aggregate of 14.0 million net rentable square feet. The results of the operations of Prentiss have been included in the Company’s condensed consolidated financial statements since January 5, 2006.
The Company funded the approximately $1.05 billion cash portion of the merger consideration, related transaction costs and prepayments of approximately $543.3 million in Prentiss mortgage debt at the closing of the merger through (i) a $750 million unsecured term loan that matured on January 4, 2007; (ii) approximately $676.5 million of cash from Prudential’s acquisition of certain of the Prentiss properties; and (iii) approximately $195.0 million through borrowing under a revolving credit facility.
The following table summarizes the fair value of the assets acquired and liabilities assumed at the date of acquisition (in thousands):
         
    At January 5, 2006  
Real estate investments
       
Land — operating
  $ 282,584  
Building and improvements
    1,942,728  
Tenant improvements
    120,610  
Construction in progress and land inventory
    57,329  
 
     
Total real estate investments acquired
    2,403,251  
Rent receivables
    6,031  
Other assets acquired:
       
Intangible assets:
       
In-place leases
    187,907  
Relationship values
    98,382  
Above-market leases
    26,352  
 
     
Total intangible assets acquired
    312,641  
Investment in real estate ventures
    66,921  
Investment in marketable securities
    193,089  
Other assets
    8,868  
 
     
Total other assets
    581,519  
 
     
Total assets acquired
    2,990,801  
 
       
Liabilities assumed:
       
Mortgage notes payable
    532,607  
Unsecured notes
    78,610  
Secured note payable
    186,116  
Security deposits and deferred rent
    6,475  
Other liabilities:
       
Below-market leases
    78,911  
Other liabilities
    43,995  
 
     
Total other liabilities assumed
    122,906  
Total liabilities assumed
    926,714  
Minority interest
    104,658  
 
     
Net assets acquired
  $ 1,959,429  
 
     
In the acquisition of Prentiss, each then outstanding Prentiss common share was converted into the right to receive 0.69 of a Brandywine common share and $21.50 in cash (the “Per Share Merger Consideration”) except that 497,884 Prentiss common shares held in the Prentiss Deferred Compensation Plan converted solely into 720,737 Brandywine common shares. In addition, each then outstanding unit (each, a “Prentiss OP Unit”) of limited partnership interest in the Prentiss operating partnership subsidiary was, at the option of the holder, converted into Prentiss Common Shares with the right to receive the Per Share Merger Consideration or 1.3799 Class A Units of the Operating Partnership (“Brandywine Class A Units”). Accordingly, based on 49,375,723 Prentiss common shares outstanding and 139,000 Prentiss OP Units electing to receive merger consideration at closing of the acquisition, the Company issued 34,541,946

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Brandywine common shares and paid an aggregate of approximately $1.05 billion in cash to the accounts of the former Prentiss shareholders. Based on 1,572,612 Prentiss OP Units outstanding at closing of the acquisition that did not elect to receive merger consideration, the Operating Partnership issued 2,170,047 Brandywine Class A Units. In addition, options issued by Prentiss that were exercisable for an aggregate of 342,662 Prentiss common shares were converted into options exercisable for an aggregate of 496,037 Brandywine common shares at a weighted average exercise price of $22.00 per share. Through its acquisition of Prentiss the Company also assumed approximately $611.2 million in aggregate principal amount of Prentiss debt.
Each Brandywine Class A Unit that was issued in the merger is subject to redemption at the option of the holder. The Operating Partnership may, at its option, 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.
For purposes of computing the total purchase price reflected in the financial statements, the common shares, operating units, restricted shares and options that were issued in the Prentiss transaction were valued based on the average trading price per Brandywine common share of $29.54. The average trading price was based on the average of the high and low trading prices for each of the two trading days before, the day of and the two trading days after the merger was announced (i.e., September 29, September 30, October 3, October 4 and October 5).
The Company considered the provisions of FIN 47 for these acquisitions and, where necessary, recorded a conditional asset retirement obligation as part of the purchase price. The aggregate asset retirement obligation recorded in connection with the Prentiss acquisition was approximately $2.7 million.
Pro forma information relating to the acquisition of Prentiss is presented below as if Prentiss was acquired and the related financing transactions occurred on January 1, 2006 and 2005. These pro forma results are not necessarily indicative of the results which actually would have occurred if the acquisition had occurred on the first day of the periods presented, nor does the pro forma financial information purport to represent the results of operations for future periods (in thousands, except per share amounts):
                 
    December 31,  
    2006     2005  
    (unaudited)  
Pro forma revenue
  $ 633,689     $ 626,834  
 
               
Pro forma loss from continuing operations
    (18,379 )     (25,072 )
 
               
Pro forma loss allocated to common shares
    2,840       (23,075 )
 
               
Earnings per common share from continuing operations
               
Basic — as reported
  $ (0.30 )   $ 0.44  
 
           
Basic — as pro forma
  $ (0.29 )   $ (0.37 )
 
           
Diluted — as reported
  $ (0.30 )   $ 0.44  
 
           
Diluted — as pro forma
  $ (0.29 )   $ (0.37 )
 
           
 
               
Earnings per common share
               
Basic — as reported
  $ 0.03     $ 0.62  
 
           
Basic — as pro forma
  $ 0.03     $ (0.26 )
 
           
Diluted — as reported
  $ 0.03     $ 0.62  
 
           
Diluted — as pro forma
  $ 0.03     $ (0.26 )
 
           
Subsequent to its acquisition of Prentiss and the related sale of certain properties to Prudential, the Company sold seventeen of the acquired properties that contain an aggregate of 2.9 million net rentable square feet and one parcel of land containing 10.9 acres.

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Other 2006 Acquisitions and Dispositions
In addition to the acquisition and disposition activity related to Prentiss, during 2006, the Company did the following:
On December 18, 2006, the Company sold 105/140 Terry Drive, an office property located in Newtown, Pennsylvania containing 128,666 net rentable square feet, for a sales price of $16.2 million.
On December 1, 2006, the Company sold a parcel of land located in Newtown, Pennsylvania containing 59.0 acres, for a sales price of $19.0 million.
On November 16, 2006, the Company acquired 2251 Corporate Park Drive, an office property located in Herndon, Virginia containing 158,016 net rentable square feet, for a purchase price of $59.0 million.
On November 15, 2006, the Company sold 5 and 6 Cherry Hill Executive Campus, two office properties located in Cherry Hill, New Jersey containing an aggregate of 167,017 net rentable square feet, for an aggregate sales price of $17.6 million.
On August 28, 2006, the Company sold 111 Presidential Boulevard, an office property located in Bala Cynwyd, Pennsylvania containing 172,894 net rentable square feet, for a sales price of $34.9 million.
On August 21, 2006, the Company acquired 2340 and 2355 Dulles Corner Boulevard, two office properties located in Herndon, Virginia containing an aggregate of 443,581 net rentable square feet, for an aggregate purchase price of $133.2 million.
On July 12, 2006, the Company sold 110 Summit Drive, an office property located in Exton, Pennsylvania containing 43,660 net rentable square feet, for a sales price of $3.7 million.
On June 27, 2006, the Company acquired a parcel of land located in Goochland County, Virginia containing 23.2 acres, for a purchase price of $4.6 million.
On June 21, 2006, the Company sold a parcel of land located in Westampton, New Jersey containing 5.5 acres, for a sales price of $0.4 million.
On April 21, 2006, the Company acquired a parcel of land located in Newtown, Pennsylvania containing 5.5 acres, for a purchase price of $1.9 million.
On April 20, 2006, the Company sold a parcel of land located in Radnor, Pennsylvania containing 1.3 acres, for a sales price of $4.5 million.
On April 17, 2006, the Company acquired a parcel of land located in Mount Laurel, New Jersey containing 47.9 acres, for a purchase price of $6.7 million.
On April 4, 2006, the Company acquired One Paragon Place, an office property located in Richmond, Virginia containing 145,127 net rentable square feet, for a purchase price of $24.0 million.
On February 1, 2006, the Company acquired 100 Lenox Drive, an office property located in Lawrenceville, New Jersey containing 92,980 net rentable square feet, for a purchase price of $10.2 million.
2005
During 2005, the Company acquired one industrial property containing 385,884 net rentable square feet, two office properties containing 283,511 net rentable square feet and 36.4 acres of developable land for an aggregate purchase price of $94.5 million. The Company sold the industrial property acquired during 2005 containing 385,884 net rentable square feet and three parcels of land containing 18.0 acres for an aggregate $30.2 million, realizing net gains totaling $6.8 million.

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4. INVESTMENT IN UNCONSOLIDATED 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. 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.
The Company also has investments in three Real Estate Ventures that are variable interest entities under FIN 46R and of which the Company is the primary beneficiary, and one investment in a Real Estate Venture for which the Company serves as the general partner and the limited partner does not have substantive participating rights. These entities are consolidated by the Company.
The Company accounts for its unconsolidated interests in its Real Estate Ventures using the equity method. Unconsolidated interests range from 5% to 50%, subject to specified priority allocations in certain of the Real Estate Ventures.
The amounts reflected in the following tables (except for carrying amount and the Company’s share of equity and income) are based on the historical financial information of the individual Real Estate Ventures. One of the Real Estate Ventures, acquired in connection with the Prentiss acquisition, had a negative equity balance on a historical cost basis as a result of historical depreciation and distribution of excess financing proceeds. The Company reflected its acquisition of this Real Estate Venture interest at its relative fair value as of the date of the purchase of Prentiss. The difference between allocated cost and the underlying equity in the net assets of the investee is accounted for as if the entity were consolidated (i.e., allocated to the Company’s relative share of assets and liabilities with an adjustment to recognize equity in earnings for the appropriate additional depreciation/amortization).
The Company’s investment in Real Estate Ventures as of December 31, 2007 and the Company’s share of the Real Estate Ventures’ income (loss) for the year ended December 31, 2007 was as follows (in thousands):

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                    Company’s Share            
                    of 2007 Real Estate   Real Estate   Current    
    Ownership   Carrying   Venture   Venture   Interest   Debt
    Percentage (1)   Amount   Income (Loss)   Debt at 100%   Rate   Maturity
     
Two Tower Bridge Associates
    35 %   $ 2,287     $ (344 )   $ 11,816       6.82 %   May-08
Five Tower Bridge Associates
    15 %     162             29,260       6.77 %   Feb-09
Seven Tower Bridge Associates
    10 %     299                   N/A   N/A 
Eight Tower Bridge Associates
    5.5 %     (198 )           68,464       7.68 %   Feb-12
1000 Chesterbrook Boulevard
    50 %     2,333       669       26,410       6.88 %   Nov-11
PJP Building Two, LC
    30 %     177       124       5,107       6.12 %   Nov-23
PJP Building Three, LC
    25 %     (26 )                 N/A       N/A  
PJP Building Five, LC
    25 %     148       54       6,380       6.47 %   Aug-19
PJP Building Six, LC
    25 %     96       21       8,033       6.35 %   Jun-09
PJP Building Seven, LC
    25 %     75             1,296       6.35 %   Oct-10
Macquarie BDN Christina LLC
    20 %     2,854       1,228       74,500       4.62 %   Jan-09
Broadmoor Austin Associates
    50 %     62,775       680       109,020       5.79 %   Apr-11
Residence Inn Tower Bridge
    50 %     616       472       14,480       5.63 %   Feb-16
G&I Interchange Office LLC (DRA) (2)
  20 %                 184,000       5.78 %   Jan-15
Invesco, L.P. (3)
    35 %           4,051             N/A       N/A    
                             
 
          $ 71,598     $ 6,955     $ 538,766                  
                             
 
(1)   Ownership percentage represents the Company’s entitlement to residual distributions after payments of priority returns, where applicable.
 
(2)   See Note 3 — Real Estate Investments for description of formation of the Venture. The Company retained a 20% interest and received distributions from financing in excess of its basis. The Company has no commitment to fund and no expectation of operating losses, accordingly, the Company’s carrying value has not been reduced below zero.
 
(3)   The Company’s interest consists solely of a residual profits interest. This distribution represents the Company’s final distribution from the Venture and, therefore, it is no longer included in our total real estate venture count.
The following is a summary of the financial position of the unconsolidated Real Estate Ventures in which the Company had investment interests as of December 31, 2007 and 2006 (in thousands):
                 
    December 31,
    2007   2006
Net property
  $ 630,327     $ 365,168  
Other assets
    63,458       52,935  
Other Liabilities
    34,149       28,764  
Debt
    538,766       332,589  
Equity
    120,870       56,888  
Company’s share of equity (Company basis)
    71,598       74,574  
The following is a summary of results of operations of the unconsolidated Real Estate Ventures in which the Company had interests as of December 31, 2007, 2006 and 2005 (in thousands):
                         
    Year ended December 31,
    2007   2006   2005
Revenue
  $ 75,541     $ 70,381     $ 59,346  
Operating expenses
    25,724       26,878       29,387  
Interest expense, net
    21,442       21,711       12,324  
Depreciation and amortization
    15,526       17,808       9,359  
Net income
    12,849       5,176       8,276  
Company’s share of income (Company basis)
    6,955       2,165       3,172  
As of December 31, 2007, the aggregate principal payments of non-recourse debt payable to third-parties is as follows (in thousands):

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2008
  $ 16,653  
2009
    121,684  
2010
    11,105  
2011
    106,505  
2012
    69,280  
Thereafter
    213,539  
 
     
 
  $ 538,766  
 
     
As of December 31, 2007, the Company had guaranteed repayment of approximately $0.3 million of loans on behalf of certain Real Estate Ventures. The Company also provides customary environmental indemnities in connection with construction and permanent financing both for its own account and on behalf of its Real Estate Ventures. For certain of the Real Estate Ventures with construction projects, the Company’s expectation is that it will be required to fund approximately $10.6 million of the construction costs through capital calls.
5. DEFERRED COSTS
As of December 31, 2007 and 2006, the Company’s deferred costs were comprised of the following (in thousands):
                         
    December 31, 2007  
            Accumulated     Deferred Costs,  
    Total Cost     Amortization     net  
Leasing Costs
  $ 99,077     $ (31,259 )   $ 67,818  
Financing Costs
    27,597       (8,292 )     19,305  
 
                 
Total
  $ 126,674     $ (39,551 )   $ 87,123  
 
                 
                         
    December 31, 2006  
            Accumulated     Deferred Costs,  
    Total Cost     Amortization     net  
Leasing Costs
  $ 83,629     $ (28,278 )   $ 55,351  
Financing Costs
    24,648       (6,291 )     18,357  
 
                 
Total
  $ 108,277     $ (34,569 )   $ 73,708  
 
                 
During 2007, 2006 and 2005, the Company capitalized internal direct leasing costs of $8.2 million, $8.3 million and $4.7 million, respectively, in accordance with SFAS No. 91 and related guidance.
6. INTANGIBLE ASSETS AND LIABILITIES
As of December 31, 2007 and 2006, the Company’s intangible assets/liabilities were comprised of the following (in thousands):

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    December 31, 2007  
            Accumulated     Deferred Costs,  
    Total Cost     Amortization     net  
In-place lease value
  $ 180,456     $ (65,742 )   $ 114,714  
Tenant relationship value
    121,094       (32,895 )     88,199  
Above market leases acquired
    29,337       (14,101 )     15,236  
 
                 
Total
  $ 330,887     $ (112,738 )   $ 218,149  
 
                 
 
                       
Below market leases acquired
  $ 103,825     $ (36,544 )   $ 67,281  
 
                 
                         
    December 31, 2006  
            Accumulated     Deferred Costs,  
    Total Cost     Amortization     net  
In-place lease value
  $ 207,513     $ (52,293 )   $ 155,220  
Tenant relationship value
    124,605       (19,572 )     105,033  
Above market leases acquired
    32,667       (11,669 )     20,998  
 
                 
Total
  $ 364,785     $ (83,534 )   $ 281,251  
 
                 
 
                       
Below market leases acquired
  $ 118,536     $ (26,009 )   $ 92,527  
 
                 
For the years ended December 31, 2007, 2006, and 2005 the Company wrote-off $4.1 million, $1.2 million, and $1.1 million, respectively of intangible assets as a result of tenant move-outs prior to the end of the associated lease terms. During 2007, the Company wrote off approximately $0.4 and approximately $0.1 million of intangible liabilities as a result of tenant move-outs in each of the years ending December 31, 2006, and 2005.
As of December 31, 2007, the Company’s annual amortization for its intangible assets/liabilities are as follows (in thousands, assumes no early terminations):
                 
    Assets     Liabilities  
2008
  $ 48,725     $ 14,904  
2009
    42,377       11,984  
2010
    35,344       9,567  
2011
    27,358       7,841  
2012
    21,067       6,899  
Thereafter
    43,278       16,086  
 
           
Total
  $ 218,149     $ 67,281  
 
           
7. DEBT OBLIGATIONS
The following table sets forth information regarding the Company’s mortgage indebtedness outstanding at December 31, 2007 and 2006 (in thousands):

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MORTGAGE DEBT:
                                         
                      Effective                
    December 31,     December 31,       Interest             Maturity  
Property / Location   2007     2006       Rate             Date  
Interstate Center
  $     $ 552       6.19%             Mar-07
The Bluffs
          10,700       6.00% (a)         Apr-07
Pacific Ridge
          14,500       6.00% (a)         Apr-07
Pacific View/Camino
          26,000       6.00% (a)           Apr-07
Computer Associates Building
          31,000       6.00% (a)           Apr-07
Presidents Plaza
          30,900       6.00% (a)           Apr-07
440 & 442 Creamery Way
          5,421       8.55%             May-07
Grande A
          59,513       7.48%             Jul-07
Grande B
          77,535       7.48%             Jul-07
481 John Young Way
          2,294       8.40%             Dec-07
400 Commerce Drive
    11,575       11,797       7.12%             Jun-08
Two Logan Square
    70,124       71,348       5.78% (a)           Jul-09
200 Commerce Drive
    5,765       5,841       7.12% (a)           Jan-10
1333 Broadway
    23,997       24,418       5.18% (a)           May-10
The Ordway
    45,509       46,199       7.95% (a)           Aug-10
World Savings Center
    27,142       27,524       7.91% (a)           Nov-10
Plymouth Meeting Exec.
    43,470       44,103       7.00% (a)           Dec-10
Four Tower Bridge
    10,518       10,626       6.62%             Feb-11
Arboretum I, II, III & V
    22,225       22,750       7.59%             Jul-11
Midlantic Drive/Lenox Drive/DCC I
    61,276       62,678       8.05%             Oct-11
Research Office Center
    41,527       42,205       7.64% (a)           Oct-11
Concord Airport Plaza
    37,570       38,461       7.20% (a)           Jan-12
Six Tower Bridge
    14,472       14,744       7.79%             Aug-12
Newtown Square/Berwyn Park/Libertyview
    62,125       63,231       7.25%             May-13
Coppell Associates
    3,512       3,737       6.89%             Dec-13
Southpoint III
    4,426       4,949       7.75%             Apr-14
Tysons Corner
    100,000       100,000       4.84% (a)           Aug-15
Coppell Associates
    16,600       16,600       5.75%             Feb-16
 
                                   
         
Principal balance outstanding
    601,833       869,626                          
         
Plus: unamortized fixed-rate debt premiums, net
    10,065       14,294                          
 
                                   
Total mortgage indebtedness
  $ 611,898     $ 883,920                          
 
                                   
 
                                       
UNSECURED DEBT:
                                       
Sweep Agreement Line
    10,727           Libor + 0.75%         Mar-08
Private Placement Notes due 2008
    113,000       113,000       4.34%             Dec-08
2009 Three Year Notes
          300,000     Libor + 0.45%         Apr-09
2009 Five Year Notes
    275,000       275,000       4.62%             Nov-09
Bank Term Loan
    150,000           Libor + 0.80%         Oct-10
2010 Five Year Notes
    300,000       300,000       5.61%             Dec-10
Line-of-Credit
    120,000       60,000     Libor + 0.725%         Jun-11
3.875% Exchangeable Notes
    345,000       345,000       3.87%           Oct-11
2012 Six Year Notes
    300,000       300,000       5.77%           Apr-12
2014 Ten Year Notes
    250,000       250,000       5.53%           Nov-14
2016 Ten Year Notes
    250,000       250,000       5.95%           Apr-16
2017 Ten Year Notes
    300,000             5.72%           May-17
Indenture IA (Preferred Trust I)
    27,062       27,062     Libor + 1.25%         Mar-35
Indenture IB (Preferred Trust I)
    25,774       25,774     Libor + 1.25%         Apr-35
Indenture II (Preferred Trust II)
    25,774       25,774     Libor + 1.25%         Jul-35
 
                                   
Principal balance outstanding
    2,492,337       2,271,610                          
Plus: unamortized fixed-rate debt discounts, net
    (3,266 )     (3,300 )                        
 
                                   
Total unsecured indebtedness
  $ 2,489,071     $ 2,268,310                          
 
                                   
Total Debt Obligations
  $ 3,100,969     $ 3,152,230                          
 
                                   
 
(a)   Loans were assumed upon acquisition of the related property. Interest rates presented above reflect the market rate at the time of acquisition.
The mortgage note payable balance of $5.1 million for Norriton Office Center as of December 31, 2006, not included in the table above, is included in Mortgage notes payable and other liabilities held for sale on the balance sheet. This property was held for sale at December 31, 2006 and sold in January 2007.

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During 2007, 2006 and 2005, the Company’s weighted-average interest rate on its mortgage notes payable was 6.74%, 6.57% and 7.17%, respectively. As of December 31, 2007 and 2006, the net carrying value of the Company’s Properties that are encumbered by mortgage indebtedness was $1,003.5 million and $1,498.9 million, respectively.
On April 30, 2007, the Operating Partnership completed an underwritten public offering of $300 million aggregate principal amount of 5.70% unsecured notes due 2017 (the “2017 Notes”). Brandywine Realty Trust guaranteed the payment of principal and interest on the 2017 Notes. The Company used proceeds from these notes to reduce borrowings under the Company’s revolving credit facility.
On November 29, 2006, the Company irrevocably called for redemption of the $300 million aggregate principal amount of unsecured floating rate notes due 2009 (the “2009 Notes”) 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, the Company incurred accelerated amortization of $1.4 million in associated deferred financing costs in the fourth quarter 2006.
On October 4, 2006, the Operating Partnership 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 million of 3.875% Exchangeable Guaranteed Notes due 2026 on October 16, 2006 to cover over-allotments. The Operating Partnership has 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 the Company’s 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). The Operating Partnership may not redeem the notes prior to October 20, 2011 (except to preserve the Company’s 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 the Company to repurchase all or a portion of the notes at a purchase price equal to the principal amount plus accrued and unpaid interest. The Operating Partnership used net proceeds from the notes to repurchase approximately $60.0 million of the Company’s common stock 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, the Operating Partnership completed an underwritten public offering of (1) the 2009 Notes, (2) $300 million aggregate principal amount of 5.75% unsecured notes due 2012 (the “2012 Notes”) and (3) $250 million aggregate principal amount of 6.00% unsecured notes due 2016 (the “2016 Notes”). Brandywine Realty Trust guaranteed the payment of principal and interest on the 2009 Notes, the 2012 Notes and the 2016 Notes. The Company used proceeds from these notes to repay a term loan obtained to finance a portion of the consideration paid in the Prentiss merger and to reduce borrowings under the Company’s revolving credit facility.
The Operating Partnership’s indenture relating to unsecured notes contains financial restrictions and requirements, 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. In addition, the note purchase agreement relating to the Operating Partnership’s $113 million principal amount unsecured notes due 2008 contains covenants that are similar to the covenants in the indenture.
On October 15, 2007, the Company entered into a term loan agreement (the “Term Loan Agreement”) that provides for an unsecured term loan (the “Term Loan”) in the amount of $150.0 million . The Company used the proceeds to pay down a portion of the outstanding amount on its $600.0 million unsecured revolving credit facility. The Term Loan matures on October 18, 2010 and may be extended at the Company’s option for two, one-year periods but not beyond the maturity date of its revolving credit facility. There is no scheduled principal amortization of the Term Loan and the Company may prepay borrowings in whole or in part without premium or penalty. Portions of the Term Loan bear interest at a

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per annum floating rate equal to: (i) the higher of (x) the prime rate or (y) the federal funds rate plus 0.50% per annum or (ii) a London interbank offered rate that is the rate at which Eurodollar deposits for one, two, three or six months are offered plus between 0.475% and 1.10% per annum (the “Libor Margin”), depending on the Company’s debt rating. The Term Loan Agreement contains financial and operating covenants. Financial covenants include minimum net worth, fixed charge coverage ratio, maximum leverage ratio, restrictions on unsecured and secured debt as a percentage of unencumbered assets and other financial tests. Operating covenants include limitations on the Company’s ability to incur additional indebtedness, grant liens on assets, enter into affiliate transactions, and pay dividends.
The Company utilizes credit facility borrowings for general business purposes, including the acquisition, development and redevelopment of properties and the repayment of other debt. On June 29, 2007, the Company amended its $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 the Company’s option, upon its 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 facility fee paid quarterly 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 the Company’s 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 the Company 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 the Company at a reduced Eurodollar rate. The Company has the option to increase the Credit Facility to $800.0 million subject to the absence of any defaults and the Company’s ability to acquire additional commitments from its existing lenders or new lenders. As of December 31, 2007, the Company had $120.0 million of borrowings and $13.5 million of letters of credit outstanding under the Credit Facility, leaving $466.5 million of unused availability. As of December 31, 2007 and 2006, the weighted-average interest rate on the Credit Facility, including the effect of interest rate hedges, was 6.25% and 5.93%, respectively.
The Credit Facility requires the maintenance of ratios related to minimum net worth, debt-to-total capitalization and fixed charge coverage and includes non-financial covenants.
In April 2007, the Company entered into a $20.0 million Sweep Agreement (the “Sweep Agreement”) to be used for cash management purposes. Borrowings under the Sweep Agreement bear interest at one-month LIBOR plus 0.75%. As of December 31, 2007 the Company had $10.7 million of borrowing outstanding under the Sweep Agreement, leaving $9.3 million of unused availability.
As of December 31, 2007, the Company’s aggregate principal payments, are as follows (in thousands):
         
2008
  $ 146,005  
2009
    354,955  
2010
    600,189  
2011
    597,261  
2012
    351,053  
Thereafter
    1,044,707  
 
     
Total principal payments
  $ 3,094,170  
Net unamortized premiums/discounts
    6,799  
 
     
Outstanding indebtedness
  $ 3,100,969  
 
     
8. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following fair value disclosure was determined by the Company using available market information and discounted cash flow analyses as of December 31, 2007 and 2006, respectively. The discount rate used in calculating fair value is the sum of the current risk free rate and the risk premium on the date of acquiring or assuming the instruments or obligations. Considerable judgment is necessary to interpret

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market data and to develop the related estimates of fair value. Accordingly, the estimates presented are not necessarily indicative of the amounts that the Company could realize upon disposition. The use of different estimation methodologies may have a material effect on the estimated fair value amounts. The Company believes that the carrying amounts reflected in the Consolidated Balance Sheets at December 31, 2007 and 2006 approximate the fair values for cash and cash equivalents, accounts receivable, other assets, accounts payable, accrued expenses and borrowings under variable rate debt instruments.
The following are financial instruments for which the Company estimates of fair value differ from the carrying amounts (in thousands):
                                 
    December 31, 2007   December 31, 2006
    Carrying   Fair   Carrying   Fair
    Amount   Value   Amount   Value
Mortgage payable, net of premiums
  $ 611,898     $ 597,287     $ 888,470     $ 859,490  
Unsecured notes payable, net of discounts
  $ 2,129,734     $ 1,996,475     $ 1,829,701     $ 1,826,357  
9. RISK MANAGEMENT AND USE OF FINANCIAL INSTRUMENTS
Risk Management
In the normal course of its on-going business operations, the Company encounters economic risk. There are three main components of economic risk: interest rate risk, credit risk and market risk. The Company is subject to interest rate risk on its interest-bearing liabilities. Credit risk is the risk of inability or unwillingness of tenants to make contractually required payments. Market risk is the risk of declines in the value of properties due to changes in rental rates, interest rates or other market factors affecting the valuation of properties held by the Company.
Use of Derivative Financial Instruments
The Company’s use of derivative instruments is limited to the utilization of interest rate agreements or other instruments to manage interest rate risk exposures and not for speculative purposes. The principal objective of such arrangements is to minimize the risks and/or costs associated with the Company’s operating and financial structure, as well as to hedge specific transactions. The counterparties to these arrangements are major financial institutions with which the Company and its affiliates may also have other financial relationships. The Company is potentially exposed to credit loss in the event of non-performance by these counterparties. However, because of the high credit ratings of the counterparties, the Company does not anticipate that any of the counterparties will fail to meet these obligations as they come due. The Company does not hedge credit or property value market risks through derivative financial instruments.
The Company formally assesses, both at inception of the hedge and on an on-going basis, whether each derivative is highly-effective in offsetting changes in cash flows of the hedged item. If management determines that a derivative is not highly-effective as a hedge or if a derivative ceases to be a highly-effective hedge, the Company will discontinue hedge accounting prospectively.
Outstanding Derivatives
In November 2007, the Company 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. The hedge had a nominal fair value at December 31, 2007 that is included in other liabilities and accumulated other comprehensive income in the accompanying consolidated balance sheet.
In October 2007, the Company 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.

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In September 2007, the Company 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.
Terminated Derivatives
In July 2007, in anticipation of an expected debt offering, the Company 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 treasury lock agreements have an expiration of 5 years with the following trade dates, notional amounts and all-in rates:
                 
Trade Date
  Notional Amount   All-in Rate
July 10, 2007
  $50.0 million     4.984 %
July 18, 2007
  $50.0 million     4.915 %
July 20, 2007
  $25.0 million     4.848 %
July 25, 2007
  $25.0 million     4.780 %
The agreements were settled on September 21, 2007, the original termination date of each agreement, at a total cost of $3.9 million. During the fourth quarter upon completion of the DRA transaction, the Company determined it was probable that the forecasted transaction would not occur and accordingly, recorded an expense for the residual balance of $3.7 million. During the quarter ended September 30, 2007, the Company recorded the ineffective portion of these agreements, totaling $0.2 million, in the accompanying consolidated statement of operations.
In March 2007, in anticipation of the offering of 2017 Notes, the Company entered into two treasury lock agreements. The treasury lock agreements were designated as cash flow hedges on interest rate risk and qualified for hedge accounting. Each of the treasury lock agreements were for notional amounts of $75.0 million for an expiration of 10 years at all-in rates of 4.5585% and 4.498%. The agreements were settled in April 2007 upon completion of the offering of the 2017 Notes at a total benefit of $1.1 million, with nominal ineffectiveness. This benefit was recorded as a component of accumulated other comprehensive income in the accompanying consolidated balance sheet and is being amortized over the term of the 2017 Notes.
In March 2006, in anticipation of the offering of the 2009 Notes, the 2012 Notes and the 2016 Notes, the Company entered into forward starting swaps. The forward starting swaps were designated as cash flow hedges of interest rate risk and qualified for hedge accounting. The forward starting swaps were for notional amounts totaling $200.0 million at an all-in-rate of 5.2%. Two of the forward starting swaps had a nine year maturity date and one had a ten year maturity date. The forward starting swaps were settled in March 2006 upon the completion of the offering of the 2009, 2012, and 2016 Notes at a total benefit of approximately $3.3 million with nominal ineffectiveness. The benefit was recorded as a component of accumulated other comprehensive income in the accompanying consolidated balance sheet and is being amortized to interest expense over the term of the unsecured notes.
The Company entered into two interest rate swaps in January 2006 aggregating $90 million in notional amount as part of its acquisition of Prentiss. The instruments were used to hedge the risk of interest cash outflows on secured variable rate debt on properties that were included as part of the real estate venture in which the Company purchased the remaining 49% of the minority interest partner’s share in March 2007. One of the swaps with a notional amount of $20 million had a maturity date of February 1, 2010 at an all-in rate of 4.675%. The other, with a notional amount of $70 million, had a maturity date of August 1, 2008 at an all in rate of 4.675%. The agreements were settled in April 2007 in connection with the repayment of five mortgage notes, at a total benefit of $0.4 million with nominal ineffectiveness.

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Concentration of Credit Risk
Concentrations of credit risk arise when a number of tenants related to the Company’s investments or rental operations are engaged in similar business activities, or are located in the same geographic region, or have similar economic features that would cause their inability to meet contractual obligations, including those to the Company, to be similarly affected. The Company regularly monitors its tenant base to assess potential concentrations of credit risk. Management believes the current credit risk portfolio is reasonably well diversified and does not contain any unusual concentration of credit risk. No tenant accounted for 10% or more of the Company’s rents during 2007, 2006 and 2005.
10. DISCONTINUED OPERATIONS
For the years ended December 31, 2007, 2006 and 2005, income from discontinued operations relates to 44 properties containing approximately 7,304,131 million net rentable square feet that the Company has sold since January 1, 2005.
The following table summarizes revenue and expense information for the 44 properties sold since January 1, 2005 (in thousands):
                         
    Years Ended December 31,  
    2007     2006     2005  
Revenue:
                       
Rents
  $ 12,844     $ 84,064     $ 25,750  
Tenant reimbursements
    1,531       6,967       1,503  
Termination fees
          529        
Other
    214       1,151       49  
 
                 
Total revenue
    14,589       92,711       27,302  
 
                       
Expenses:
                       
Property operating expenses
    5,013       33,660       9,691  
Real estate taxes
    1,644       10,921       3,140  
Depreciation & amortization
    4,748       34,706       5,882  
 
                 
Total operating expenses
    11,405       79,287       18,713  
 
                       
Operating income
    3,184       13,424       8,589  
Interest income
          13       6  
Interest expense
          (840 )     (445 )
 
                 
Income from discontinued operations before gain on sale of interests in real estate and minority interest
    3,184       12,597       8,150  
         
Net gain on sale of interests in real estate
    25,743       20,243       2,196  
Minority interest — partners’ share of net gain on sale
          (1,757 )      
Minority interest — partners’ share of consolidated real estate venture
          (482 )      
Minority interest attributable to discontinued operations — LP units
    (1,235 )     (1,390 )     (357 )
 
                 
Income from discontinued operations
  $ 27,692     $ 29,211     $ 9,989  
 
                 
Discontinued operations have not been segregated in the consolidated statements of cash flows. Therefore, amounts for certain captions will not agree with respective data in the consolidated statements of operations.
11. MINORITY INTEREST IN OPERATING PARTNERSHIP AND CONSOLIDATED REAL ESTATE VENTURES
Operating Partnership
As of December 31, 2007 and 2006, the aggregate book value of the minority interest associated with these units in the accompanying consolidated balance sheet was $81.2 million and $89.6 million, respectively and the Company believes that the aggregate settlement value of these interests was approximately $68.8 million and $131.7 million, respectively. This amount is based on the number of units outstanding and the closing share price on the balance sheet date.

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During the year ended December 31, 2006, 424,608 Class A units were issued in connection with the acquisitions of a property. These Class A units were subsequently redeemed for $13.5 million and this amount is included in distributions to minority interest holders on the consolidated statement of cash flows.
Consolidated Real Estate Ventures
As of December 31, 2007, the Company owned interests in three consolidated real estate ventures that own three office properties containing approximately 0.4 million net rentable square feet. As of December 31, 2006, the Company owned interests in four consolidated real estate ventures that owned 15 office properties containing approximately 1.5 million net rentable square feet.
On March 1, 2007, the Company acquired the remaining 49% interest in a real estate venture previously owned by Stichting Pensioenfonds ABP containing ten office properties for a purchase price of $63.7 million. The Company owned a 51% interest in this real estate venture through the acquisition of Prentiss on January 5, 2006. Minority interest in Real Estate Ventures represents the portion of these consolidated real estate ventures not owned by the Company.
For the remaining consolidated joint ventures, the minority interest is reflected at zero carrying amount as a result of accumulated losses and distributions in excess of basis.
The minority interests associated with certain of the Real Estate Ventures, that have finite lives under the terms of the partnership agreements represent mandatorily redeemable interests as defined in SFAS 150. As of December 31, 2007 and 2006, the aggregate book value of these minority interests in the accompanying consolidated balance sheet was $0 and the Company believes that the aggregate settlement value of these interests was approximately $8.1 million. This amount is based on the estimated liquidation values of the assets and liabilities and the resulting proceeds that the Company would distribute to its Real Estate Venture partners upon dissolution, as required under the terms of the respective partnership agreements. Subsequent changes to the estimated fair values of the assets and liabilities of the consolidated Real Estate Ventures will affect the Company’s estimate of the aggregate settlement value. The partnership agreements do not limit the amount that the minority partners would be entitled to in the event of liquidation of the assets and liabilities and dissolution of the respective partnerships.
12. BENEFICIARIES’ EQUITY
Earnings per Share (EPS)
The following table details the number of shares and net income used to calculate basic and diluted earnings per share (in thousands, except share and per share amounts; results may not add due to rounding):

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    For the years ended December 31,  
    2007     2006     2005  
    Basic     Diluted     Basic     Diluted     Basic     Diluted  
Income (loss) from continuing operations
  $ 28,761     $ 28,761     $ (18,729 )   $ (18,729 )   $ 32,778     $ 32,778  
Income from discontinued operations
    27,692       27,692       29,211       29,211       9,989       9,989  
Income allocated to Preferred Shares
    (7,992 )     (7,992 )     (7,992 )     (7,992 )     (7,992 )     (7,992 )
 
                                   
 
  $ 48,461     $ 48,461     $ 2,490     $ 2,490     $ 34,775     $ 34,775  
 
                                   
 
Weighted-average shares outstanding
    87,272,148       87,272,148       89,552,301       89,552,301       55,846,268       55,846,268  
Options, warrants and unvested restricted stock
          49,128             518,524             258,320  
 
                                   
Total weighted-average shares outstanding
    87,272,148       87,321,276       89,552,301       90,070,825       55,846,268       56,104,588  
 
                                   
 
Earnings per Common Share:
                                               
Continuing operations
  $ 0.24     $ 0.24     $ (0.30 )   $ (0.30 )   $ 0.44     $ 0.44  
Discontinued operations
    0.32       0.32       0.33       0.32       0.18       0.18  
 
                                     
Total
  $ 0.56     $ 0.55     $ 0.03     $ 0.03     $ 0.62     $ 0.62  
 
                                   
Securities (including Series A Preferred Shares of the Company and Class A Units of the Operating Partnership) totaling 3,838,229 in 2007, 3,961,235 in 2006 and 1,945,267 in 2005 were excluded from the earnings per share computations because their effect would have been antidilutive.
Common and Preferred Shares
On December 11, 2007, the Company declared a distribution of $0.44 per Common Share, totaling $38.5 million, which was paid on January 18, 2008 to shareholders of record as of December 30, 2007. On December 11, 2006, the Company declared distributions on its Series C Preferred Shares and Series D Preferred Shares to holders of record as of January 4, 2008. These shares are entitled to a preferential return of 7.50% and 7.375%, respectively. Distributions paid on January 15, 2007 to holders of Series C Preferred Shares and Series D Preferred Shares totaled $0.9 million and $1.1 million, respectively.
Common Share Repurchases
The Company maintains a share repurchase program under which the Board has authorized us to repurchase our common shares from time to time. The Board initially authorized this program in 1998 and has periodically replenished capacity under the program. On May 2, 2006 the Company’s Board restored capacity to 3.5 million common shares.
The Company repurchased 1.8 million shares during the year ended December 31, 2007 for aggregate consideration of $59.4 million under its share repurchase program. As of December 31, 2007, the Company may purchase an additional 0.5 million shares under the plan. 1.6 million of these shares are held in treasury to give the Company the ability to reissue such shares and are reflected as shares held in treasury on the consolidated balance sheet. 0.2 million of these shares were repurchased as part of the Company’s deferred compensation program and are not included as shares held in treasury on the consolidated balance sheet.
During the year ended December 31, 2006, the Company repurchased approximately 1.2 million common shares under this program at an average price of $29.22 per share. The shares repurchased in 2006 were retired and therefore are not included as shares held in treasury on the balance sheet.
Repurchases may be made from time to time in the open market or in privately negotiated transactions, subject to market conditions and compliance with legal requirements. The share repurchase program does not contain any time limitation and does not obligate the Company to repurchase any shares. The Company may discontinue the program at any time.

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On October 4, 2006 the Company repurchased 1.8 million common shares with a portion of the proceeds of our 3.875% Exchangeable Guaranteed Notes at an average purchase price of $32.80 per share (approximately $60.0 million in aggregate). The Company repurchased these shares under a separate Board authorization that provided that the shares repurchased did not reduce capacity under the share repurchase program.
Share Based Compensation
In December 2004, the FASB issued SFAS No. 123(R), “Share-Based Payment” (“SFAS 123(R)”). SFAS 123(R) is an amendment of SFAS 123 and requires that the compensation cost relating to share-based payment transactions be recognized in the financial statements. The cost is required to be measured based on the fair value of the equity or liability instruments issued. SFAS 123(R) also contains additional minimum disclosures requirements including, but not limited to, the valuation method and assumptions used, amounts of compensation capitalized and modifications made. The effective date of SFAS 123(R) was subsequently amended by the SEC to be as of the beginning of the first interim or annual reporting period of the first fiscal year that begins on or after December 15, 2005, and allows several different methods of transition. The Company adopted SFAS 123(R) using the prospective method on January 1, 2006. This adoption did not have a material effect on our consolidated financial statements.
Stock Options
At December 31, 2007, the Company had 1,070,099 options outstanding under its shareholder approved equity incentive plan. No options were unvested as of December 31, 2007 and therefore there is no remaining unrecognized compensation expense associated with these options. Option activity as of December 31, 2007 and changes during the twelve months ended December 31, 2007 were as follows:
                                 
            Weighted   Weighted Average    
            Average   Remaining Contractual   Aggregate Intrinsic
    Shares   Exercise Price   Term (in years)   Value (in 000’s)
Outstanding at January 1, 2007
    1,286,075     $ 26.45       1.50     $ 8,739  
Exercised
    (198,495 )   $ 28.80       0.87     $ 1,171  
Forfeited
    (17,481 )                  
 
                               
 
                               
Outstanding at December 31, 2007
    1,070,099     $ 26.13       0.54     $ (8,775 )
 
                               
 
                               
Vested at December 31, 2007 (1)
    1,070,099     $ 26.13       0.54     $ (8,775 )
Exercisable at December 31, 2007 (1)
    1,070,099     $ 26.13       0.54     $ (8,775 )
 
(1)   There were 825,389 options that expired unexercised on January 1, 2008.
                                                 
    Years ended December 31,
    2006   2005
                    Weighted                   Weighted
                    Average                   Average
            Weighted   Remaining           Weighted   Remaining
            Average   Contractual           Average   Contractual
            Exercise   Term           Exercise   Term
    Shares   Price   (in Years)   Shares   Price   (in Years)
Outstanding at beginning of year
    1,276,722     $ 26.82               2,008,022     $ 26.89          
 
                                               
Prentiss options converted to Company options as part of the Prentiss acquisition (See Note 3)
    496,037     $ 22.00                              
Exercised
    (486,684 )   $ 22.88               (705,678 )   $ 26.94          
Forfeited/Expired
                        (25,622 )   $ 28.80          
Outstanding at end of year
    1,286,075     $ 26.45       1.50       1,276,722     $ 26.82       1.97  
 
                                               
Exercisable at end of year
    1,286,075     $ 26.45               1,276,722     $ 26.82          
 
                                               

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401(k) Plan
The Company sponsors a 401(k) defined contribution plan for its employees. Each employee may contribute up to 100% of annual compensation, subject to specific limitations under the Internal Revenue Code. At its discretion, the Company can make matching contributions equal to a percentage of the employee’s elective contribution and profit sharing contributions. Employees vest in employer contributions over a three-year service period. The Company contributions were $0.6 million in 2007, $1.1 million in 2006, and $1.0 million in 2005.
Restricted Share Awards
The Company’s primary form of share-based compensation has been restricted shares issued under a shareholder approved equity incentive plan that authorizes various equity-based awards. As of December 31, 2007, 409,282 restricted shares were unvested. The vesting period for these shares ranges from three to seven years from the initial grant date. The remaining compensation expense to be recognized for the 409,282 restricted shares unvested at December 31, 2007 was approximately $10.7 million. That expense is expected to be recognized over a weighted average remaining vesting period of 2.8 years. For the year ended December 31, 2007, the Company recognized $3.3 million of compensation expense related to unvested restricted shares which is included in administrative expenses. The following table summarizes the Company’s restricted share activity for the twelve-months ended December 31, 2007:
                 
            Weighted  
            Average Grant  
    Shares     Date Fair value  
Non-vested at January 1, 2007
    338,860     $ 28.23  
Granted
    227,709       34.94  
Vested
    (107,143 )     26.45  
Forfeited
    (50,144 )     32.28  
 
           
Non-vested at December 31, 2007
    409,282     $ 31.91  
 
           
Outperformance Program
On August 28, 2006, the Compensation Committee of the Company’s Board of Trustees adopted a long-term incentive compensation program (the “outperformance program”). The Company will make payments (in the form of common shares) to executive-participants under the outperformance program only if the Company’s total shareholder return exceeds percentage hurdles established under the outperformance program. The dollar value of any payments will depend on the extent to which our performance exceeds the hurdles. The Company established the outperformance program under the 1997 Plan.
If the total shareholder return (share price appreciation plus cash dividends) during a three-year measurement period exceeds either of two hurdles (with one hurdle keyed to the greater of a fixed percentage and an industry-based index, and the other hurdle keyed to a fixed percentage), then the Company will fund an incentive compensation pool in accordance with a formula and make pay-outs from the compensation pool in the form of vested and restricted common shares. The awards issued are accounted for in accordance with SFAS 123(R). The fair value of the awards on August 28, 2006, as adjusted for estimated forfeitures, was approximately $5.6 million and will be amortized into expense over the five-year period beginning on the date of grant using a graded vesting attribution model. The fair value of $5.6 million on the date of the initial grant represents approximately 86.5% of the total that may be awarded; the remaining amount available will be valued when the awards are granted to individuals. In January 2007, the Company awarded an additional 4.5% under the outperformance program. The fair value of the additional award is $0.3 million and will be amortized over the remaining portion of the 5 year period. On the date of each grant, the awards were valued using a Monte Carlo simulation. For the years ended December 31, 2007 and 2006, the Company recognized $1.4 million and $0.5 million, respectively, of compensation expense related to the outperformance program.

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Employee Share Purchase Plan
On May 9, 2007, the Company’s shareholders approved the 2007 Non-Qualified Employee Share Purchase Plan (the “ESPP”). The ESPP is intended to provide eligible employees with a convenient means to purchase common shares of the Company through payroll deductions and voluntary cash purchases at an amount equal to 85% of the average closing price per share for a specified period. The maximum participant contribution for any plan year is limited to the lesser of 20% of compensation or $25,000. The number of shares reserved for issuance under the ESPP is 1.25 million. Employees will be eligible to make purchases under the ESPP beginning in January 2008, accordingly there were no purchases made during the year ended December 31, 2007.
13. PREFERRED SHARES
In 2003, the Company issued 2,000,000 7.50% Series C Cumulative Redeemable Preferred Shares (the “Series C Preferred Shares”) for net proceeds of $48.1 million. The Series C Preferred Shares are perpetual. The Company may not redeem Series C Preferred Shares before December 30, 2008 except to preserve its REIT status. On or after December 30, 2008, the Company, at its option, may redeem the Series C Preferred Shares, in whole or in part, by paying $25.00 per share plus accrued but unpaid dividends.
In 2004, the Company issued 2,300,000 7.375% Series D Cumulative Redeemable Preferred Shares (the “Series D Preferred Shares”) for net proceeds of $55.5 million. The Series D Preferred Shares are perpetual. The Company may not redeem Series D Preferred Shares before February 27, 2009 except to preserve its REIT status. On or after February 27, 2009, the Company, at its option, may redeem the Series D Preferred Shares, in whole or in part, by paying $25.00 per share plus accrued but unpaid dividends.
14. DISTRIBUTIONS
                         
    Years ended December 31,  
    2007     2006     2005  
Common Share Distributions:
                       
Ordinary income
  $ 1.16     $ 1.33     $ 1.37  
Capital gain
    0.46       0.30       0.08  
Split year dividend (a)
          0.13       0.31  
Non-taxable distributions
    0.14              
 
                 
Distributions per share (b)
  $ 1.76     $ 1.76     $ 1.76  
 
                 
Percentage classified as ordinary income
    65.9 %     75.6 %     77.8 %
Percentage classified as capital gain
    26.1 %     17.0 %     4.6 %
Percentage classified as split year dividend
    0.0 %     7.4 %     17.6 %
Percentage classified as non-taxable distribution
    8.0 %     0.0 %     0.0 %
 
                       
Preferred Share Distributions:
                       
Total distributions declared
  $ 7,992,000     $ 7,992,000     $ 7,992,000  
 
(a)   Split year dividend amount shown for 2006 was taxable in 2005 and paid in 2006.
 
(b)   The Company also declared a special distribution of $0.02, in addition to the $1.76, in December 2005 for shareholders of record for the period January 1, 2006 through January 4, 2006.
15. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The following table details the components of accumulated other comprehensive income (loss) as of and for the three years ended December 31, 2007 (in thousands):

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    Unrealized Gains     Cash Flow     Accumulated Other  
    (Losses) on Securities     Hedges     Comprehensive Loss  
Balance at January 1, 2005
  $ 16     $ (3,146 )   $ (3,130 )
 
Change during year
    241       (713 )     (472 )
Settlement of treasury locks
          240       240  
Reclassification adjustments for losses reclassified into operations
    (257 )     450       193  
 
                 
Balance at December 31, 2005
          (3,169 )     (3,169 )
 
Change during year
          1,331       1,331  
Minority interest — consolidated real estate venture partner’s share of unrealized (gains)/losses on derivative financial instruments
          (302 )     (302 )
Settlement of forward starting swaps
          3,266       3,266  
Reclassification adjustments for (gains) losses reclassified into operations
    328       122       450  
 
                 
Balance at December 31, 2006
    328       1,248       1,576  
 
Change during year
          (3,600 )     (3,600 )
Minority interest — consolidated real estate venture partner’s share of unrealized (gains)/losses on derivative financial instruments
                 
Settlement of treasury locks
          (3,860 )     (3,860 )
Settlement of forward starting swaps
          1,148       1,148  
Reclassification adjustments for (gains) losses reclassified into operations
    (585 )     3,436       2,851  
 
                 
 
Balance at December 31, 2007
  $ (257 )   $ (1,628 )   $ (1,885 )
 
                 
Over time, the unrealized gains and losses held in Accumulated Other Comprehensive Income (“AOCI”) will be reclassified to earnings in the same period(s) in which hedged items are recognized in earnings. The current balance held in AOCI is expected to be reclassified to earnings over the lives of the current hedging instruments, or for realized losses on forecasted debt transactions, over the related term of the debt obligation, as applicable. As of December 31, 2007, AOCI includes unrealized losses of ($2.7) million and net realized gains of $1.1 million on cash flow hedges.
During the years ending December 31, 2007 and 2006, the Company reclassified approximately ($0.1) million and $0.1 million, respectively, to interest expense associated with treasury lock agreements and forward starting swaps previously settled (see Note 7).
16. SEGMENT INFORMATION
As of December 31, 2007, the Company currently manages its 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. The corporate group is responsible for cash and investment management, development of certain real estate properties during the construction period, and certain other general support functions. Land held for development and construction in progress are transferred to operating properties by region upon completion of the associated construction or project.

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     Segment information for the three years ended December 31, 2007, 2006 and 2005 is as follows (in thousands):
                                                                         
            New Jersey     Richmond,     California -     California -     Metropolitan,                    
    Pennsylvania     /Delaware     Virginia     North     South     D.C.     Southwest     Corporate     Total  
2007:                                                                        
Real estate investments, at cost:
                                                                       
Operating properties
  $ 1,682,839     $ 663,503     $ 348,310     $ 472,818     $ 106,303     $ 1,302,833     $ 236,957     $     $ 4,813,563  
Developed land and construction-in-progress
  $     $     $     $     $     $     $     $ 402,270     $ 402,270  
Total revenue
  $ 275,626     $ 120,461     $ 39,140     $ 64,989     $ 13,565     $ 134,596     $ 37,855     $ (2,260 )   $ 683,972  
Property operating expenses and real estate taxes
    104,393       53,382       14,445       26,565       5,571       47,032       16,440       (3,442 )     264,386  
 
                                                     
Net operating income
  $ 171,233     $ 67,079     $ 24,695     $ 38,424     $ 7,994     $ 87,564     $ 21,415     $ 1,182     $ 419,586  
 
                                                     
 
                                                                       
2006:
                                                                       
Real estate investments, at cost:
                                                                       
Operating properties
  $ 1,814,592     $ 681,574     $ 244,592     $ 414,856     $ 118,265     $ 1,265,818     $ 387,608     $     $ 4,927,305  
Developed land and construction-in-progress
  $     $     $     $     $     $     $     $ 328,119     $ 328,119  
Total revenue
  $ 246,422     $ 117,548     $ 33,317     $ 60,679     $ 14,326     $ 119,807     $ 33,586     $ 4,600     $ 630,285  
Property operating expenses and real estate taxes
    99,085       49,871       12,441       24,494       5,435       39,981       11,951       149       243,407  
 
                                                     
Net operating income
  $ 147,337     $ 67,677     $ 20,876     $ 36,185     $ 8,891     $ 79,826     $ 21,635     $ 4,451     $ 386,878  
 
                                                     
 
                                                                       
2005:
                                                                       
Total revenue
  $ 215,840     $ 117,606     $ 29,794     $     $     $     $     $ 1,195     $ 364,435  
Property operating expenses and real estate taxes
    84,110       47,242       11,732                               (1,366 )     141,718  
 
                                                     
Net operating income
  $ 131,730     $ 70,364     $ 18,062     $     $     $     $     $ 2,561     $ 222,717  
 
                                                     

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Net operating income is defined as total revenue less property operating expenses and real estate taxes. Segment net operating income includes revenue, real estate taxes and property operating expenses directly related to operation and management of the properties owned and managed within the respective geographical region. Segment net operating income excludes property level depreciation and amortization, revenue and expenses directly associated with third party real estate management services, expenses associated with corporate administrative support services, and inter-company eliminations. Below is a reconciliation of consolidated net operating income to consolidated income from continuing operations:
                         
    Year Ended December 31,  
    2007     2006     2005  
    (amounts in thousands)  
Consolidated net operating income (loss)
  $ 419,586     $ 386,878     $ 222,717  
Less:
                       
Interest expense
    (162,675 )     (171,177 )     (70,380 )
Deferred financing costs
    (4,496 )     (4,607 )     (3,540 )
Loss on settlement of treasury lock agreements
    (3,698 )            
Depreciation and amortization
    (242,312 )     (230,710 )     (106,175 )
Administrative expenses
    (28,182 )     (29,644 )     (17,982 )
Minority interest — partners’ share of consolidated real estate ventures
    (465 )     270        
Minority interest attributable to continuing operations — LP units
    (911 )     1,246       (1,043 )
Plus:
                       
Interest income
    4,040       9,513       1,370  
Equity in income of real estate ventures
    6,955       2,165       3,171  
Net gain on sales of interests in depreciated real estate
    40,498              
Net gain on sales of interests in undepreciated real estate
    421       14,190       4,640  
Gain on termination of purchase contract
          3,147        
 
                 
Income (loss) from continuing operations
    28,761       (18,729 )     32,778  
Income (loss) from discontinued operations
    27,692       29,211       9,989  
 
                 
Net income (loss)
  $ 56,453     $ 10,482     $ 42,767  
 
                 
17. RELATED-PARTY TRANSACTIONS
In 1998, the Board authorized the Company to make loans totaling up to $5.0 million to enable employees of the Company to purchase Common Shares at fair market value. The loans have five-year terms, are full recourse, and are secured by the Common Shares purchased. The Company made loans under this program in 1998, 1999 and 2001. Interest, payable quarterly, accrues on the loans at the lower of the interest rate borne on borrowings under the Company’s Credit Facility or a rate based on the dividend payments on the Common Shares. As of December 31, 2005, the interest rate was 4.18% per annum. The loans are payable at the earlier of the stated maturity date or 90 days following the employee’s termination. As of December 31, 2005, the outstanding balance of the loan totaled $0.3 million and was secured by an aggregate of 18,803 Common Shares. These loans were repaid in full by December 31, 2006.
The Company 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 the Company 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, the Company recognized a $3.1 million gain on termination of its rights under a 1998 contribution agreement, modified in 2005, that entitled the Company to the 50% interest in the joint venture to operate the property. This gain is shown separately on the Company’s income statement as a gain on termination of purchase contract.
The Company owned 384,615 shares of Cypress Communications, Inc. (“Cypress”) Common Stock. These shares were redeemed in July 2005 for $0.3 million. The redemption was the result of Cypress’s merger with another company. Prior to this merger, an officer of the Company held a position on Cypress’s Board of Directors.

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18. OPERATING LEASES
The Company leases properties to tenants under operating leases with various expiration dates extending to 2030. Minimum future rentals on non-cancelable leases at December 31, 2007 are as follows (in thousands):
         
    Year   Minimum Rent
2008
  $ 515,156  
2009
    467,402  
2010
    402,579  
2011
    337,340  
2012
    277,940  
Thereafter
    1,323,580  
Total minimum future rentals presented above do not include amounts to be received as tenant reimbursements for operating costs.
19. COMMITMENTS AND CONTINGENCIES
Legal Proceedings
The Company is involved from time to time in litigation on various matters, including disputes with tenants and disputes arising out of agreements to purchase or sell properties. Given the nature of the Company’s business activities, these lawsuits are considered routine to the conduct of its business. The result of any particular lawsuit cannot be predicted, because of the very nature of litigation, the litigation process and its adversarial nature, and the jury system. The Company does not expect that the liabilities, if any, that may ultimately result from such legal actions will have a material adverse effect on the consolidated financial position, results of operations or cash flows of the Company.
There have been recent reports of lawsuits against owners and managers of multifamily and office properties asserting claims of personal injury and property damage caused by the presence of mold in residential units or office space. The Company has 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 lawsuit was dismissed by way of summary judgment with prejudice. Unspecified damages are sought on the remaining lawsuit. The Company has referred this lawsuit to its environmental insurance carrier and, as of the date of this Form 10-K, the insurance carrier is continuing to tender a defense to this claim.
Letters-of-Credit
Under certain mortgages, the Company has funded required leasing and capital reserve accounts for the benefit of the mortgage lenders with letters-of-credit which totaled $13.5 million at December 31, 2007. The Company is also required to maintain escrow accounts for taxes, insurance and tenant security deposits and these accounts aggregated $7.5 million at December 31, 2007. Tenant rents at properties that secure these mortgage loans are deposited into the loan servicer’s depository accounts, which are used to fund debt service, operating expenses, capital expenditures and the escrow and reserve accounts, as necessary. Any excess cash is included in cash and cash equivalents.
Ground Rent
Future minimum rental payments under the terms of all non-cancelable ground leases under which the Company is the lessee are expensed on a straight-line basis regardless of when payments are due. Minimum future rental payments on non-cancelable leases at December 31, 2007 are as follows (in thousands):

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2008
  $ 1,736  
2009
    1,986  
2010
    2,318  
2011
    2,318  
2012
    2,318  
Thereafter
    291,420  
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 the Company. Such amounts, if any, will be reflected as contingent rent when incurred. The leases also provide for payment by the Company of certain operating costs relating to the land, primarily real estate taxes. The above schedule of future minimum rental payments do not include any contingent rent amounts nor any reimbursed expenses.
Other Commitments or Contingencies
As of December 31, 2007, the Company owned 417 acres of land for future development.
As part of the Company’s September 2004 acquisition of a portfolio of properties from The Rubenstein Company (which the Company refers to as the TRC acquisition), the Company 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 achieved at least 95% occupancy prior to September 21, 2007. The maximum number of Units that the Company agreed to issue declined monthly and expired on September 21, 2007 with no additional obligation.
As part of the TRC acquisition, the Company acquired its interest in Two Logan Square, a 696,477 square foot office building in Philadelphia, primarily through its ownership of a second and third mortgage secured by this property. This property is consolidated as the borrower is a variable interest entity and the Company, through its ownership of the second and third mortgages, is the primary beneficiary. The Company currently does not expect to take title to Two Logan Square until, at the earliest, September 2019. If the Company takes fee title to Two Logan Square upon a foreclosure of its mortgage, the Company has 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 the Company’s 2006 acquisition of Prentiss Properties Trust, the TRC acquisition in 2004 and several of our other transactions, the Company agreed not to sell certain of the properties it acquired in transactions that would trigger taxable income to the former owners. In the case of the TRC acquisition, the Company 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, the Company assumed the obligation of Prentiss not to sell Concord Airport Plaza before March 2018 and 6600 Rockledge before July 2008. The Company 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. The Company’s agreements generally provide that it 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 the Company were to sell a restricted property before expiration of the restricted period in a non-exempt transaction, the Company would be required to make significant payments to the parties who sold it the applicable property on account of tax liabilities attributed to them.
The Company invests in its properties and regularly incur capital expenditures in the ordinary course to maintain the properties. The Company believes that such expenditures enhance our competitiveness. The Company also enters 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.
20. SUBSEQUENT EVENT
On January 14, 2008, the Company sold 7130 Ambassador Drive, an office property located in Allentown, Pennsylvania containing an aggregate of 114,049 net rentable square feet, for an aggregate sales price of $5.8 million.

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21. SUMMARY OF QUARTERLY RESULTS (UNAUDITED)
The following is a summary of quarterly financial information as of and for the years ended December 31, 2007 and 2006 (in thousands, except per share data):
                                 
    1st   2nd   3rd   4th
    Quarter   Quarter   Quarter   Quarter
2007:
                               
Total revenue
  $ 165,429     $ 166,637     $ 177,748     $ 174,158  
Net income
    19,372       1,204       2,367       33,510  
Income (loss) allocated to Common Shares
    17,374       (794 )     369       31,512  
 
Basic earnings (loss) per Common Share
  $ 0.20     $ (0.01 )   $     $ 0.36  
Diluted earnings (loss) per Common Share
  $ 0.19     $ (0.01 )   $     $ 0.36  
 
                               
2006:
                               
Total revenue
  $ 146,749     $ 153,347     $ 164,284     $ 165,905  
Net income (loss)
    (2,642 )     (11,556 )     564       24,116  
Income (loss) allocated to Common Shares
    (4,640 )     (13,554 )     (1,434 )     22,118  
 
Basic earnings (loss) per Common Share
  $ (0.05 )   $ (0.15 )   $ (0.02 )   $ 0.25  
Diluted earnings per (loss) Common Share
  $ (0.05 )   $ (0.15 )   $ (0.02 )   $ 0.25  
The summation of quarterly earnings per share amounts do not necessarily equal the full year amounts. The above information was updated to reclassify amounts to discontinued operations. See Note 10.

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Brandywine Realty Trust
Schedule II
Valuation and Qualifying Accounts
(in thousands)
                                 
    Balance at                     Balance  
    Beginning                     at End  
Description   of Period     Additions     Deductions (2)     of Period  
Allowance for doubtful accounts:
                               
 
                               
Year ended December 31, 2007
  $ 9,311     $ 2,147     $ 1,296     $ 10,162  
 
                       
Year ended December 31, 2006 (1)
  $ 4,877     $ 4,434     $     $ 9,311  
 
                       
Year ended December 31, 2005
  $ 4,085     $ 792     $     $ 4,877  
 
                       
 
(1)   The 2006 additions includes $3.5 million of current year expense and $0.9 million of allowances against receivables assumed in the Prentiss acquisition.
 
(2)   Deductions represent amounts that the Company had fully reserved for in prior periods and pursuit of collection of such amounts was ceased during the period.

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BRANDYWINE REALTY TRUST
Schedule III
Real Estate and Accumulated Depreciation - December 31, 2007
(in thousands)
                                                                                                 
                                            Gross Amount at Which Carried                    
                    Initial Cost     December 31, 2007                    
                                    Net                                                  
                                    Improvements                             Accumulated                    
                                    (Retirements)                             Depreciation at                    
            Encumberances at             Building and     Since             Building and             December 31,     Year of     Year     Depreciable  
    City   State   December 31, 2007     Land     Improvements     Acquisition     Land     Improvements     Total (a)     2007 (b)     Construction     Acquired     Life  
CALIFORNIA NORTH
                                                                                               
 
                                                                                               
1 Kaiser Plaza
  Oakland   CA     48,359       15,034       107,422       3,748       15,318       110,886       126,204       6,801       1978       2006       46  
2101 Webster Street
  Oakland   CA     23,950       13,051       89,728       2,753       13,298       92,235       105,532       7,075       1985       2006       44  
155 Grand Avenue
  Oakland   CA           13,556       54,266       2       13,556       54,268       67,824       822       1990       2007       40  
1901 Harrison Street
  Oakland   CA     29,046       5,442       59,920       1,065       5,545       60,882       66,427       2,954       1985       2006       48  
1333 Broadway
  Oakland   CA           4,519       35,235       3,700       4,781       38,673       43,454       2,412       1972       2006       40  
1200 Concord Avenue
  Concord   CA     19,826       6,395       24,664       629       6,515       25,173       31,688       3,268       1984       2006       34  
1220 Concord Avenue
  Concord   CA     19,834       6,476       24,966       242       6,476       25,208       31,683       3,360       1984       2006       34  
 
                                                                                               
CALIFORNIA SOUTH
                                                                                               
 
                                                                                               
5780 & 5790 Fleet Street
  Carlsbad   CA           7,073       22,907       3,211       7,516       25,675       33,191       1,871       1999       2006       55  
16870 W Bernardo Drive
  San Diego   CA           2,979       15,896       1,818       3,154       17,539       20,693       1,316       2002       2006       56  
5900 & 5950 La Place Court
  Carlsbad   CA           3,706       11,185       1,547       3,955       12,483       16,438       1,008       1988       2006       48  
5963 La Place Court
  Carlsbad   CA           2,824       9,413       1,595       2,999       10,833       13,832       722       1987       2006       55  
5973 Avenida Encinas
  Carlsbad   CA           2,121       8,361       1,163       2,256       9,389       11,645       890       1986       2006       45  
2035 Corte Del Nogal
  Carlsbad   CA           3,261       6,077       1,164       3,499       7,003       10,502       729       1991       2006       39  
 
                                                                                               
METROPOLITAN WASHINGTON, D.C.
                                                                                               
 
                                                                                               
1676 International Drive
  Mclean   VA     63,259       18,437       97,538       1,013       18,785       98,203       116,988       4,590       1999       2006       55  
2340 Dulles Corner Boulevard
  Herndon   VA           16,345       65,379       14,950       16,467       80,206       96,674       3,652       1987       2006       40  
2291 Wood Oak Drive
  Herndon   VA           8,243       52,413       7,018       8,782       58,892       67,674       7,483       1999       2006       55  
7101 Wisconsin Avenue
  Bethesda   MD           9,634       48,402       3,542       9,816       51,762       61,577       3,287       1975       2006       45  
3130 Fairview Park Drive
  Falls Church   VA           6,576       51,605       1,539       6,700       53,020       59,720       2,656       1999       2006       53  
196/198 Van Buren Street
  Herndon   VA           7,931       43,812       6,887       8,348       50,282       58,630       3,713       1991       2006       53  
2251 Corporate Park Drive
  Herndon   VA           11,472       45,893       30       11,472       45,923       57,395       1,339       2000       2006       40  
1900 Gallows Road
  Vienna   VA           7,797       47,817       874       7,944       48,544       56,488       3,218       1989       2006       52  
2355 Dulles Corner Boulevard
  Herndon   VA           10,365       43,876       593       10,365       44,469       54,834       2,001       1988       2006       40  
2411 Dulles Corner Park
  Herndon   VA           7,279       46,340       586       7,417       46,789       54,205       3,188       1990       2006       50  
3141 Fairview Park Drive
  Falls Church   VA           5,918       40,981       656       6,050       41,506       47,556       2,243       1988       2006       51  
13880 Dulles Corner Lane
  Herndon   VA           7,236       39,213       395       7,373       39,470       46,843       2,337       1997       2006       55  
2121 Cooperative Way
  Herndon   VA           5,598       38,639       710       5,795       39,152       44,946       2,254       2000       2006       54  
6600 Rockledge Drive
  Bethesda   MD                 37,421       6,303             43,725       43,725       1,654       1981       2006       50  
8260 Greensboro Drive
  Mclean   VA     34,063       7,952       33,964       645       8,102       34,459       42,561       2,150       1980       2006       52  
2201 Cooperative Way
  Herndon   VA           4,809       34,093       333       4,809       34,426       39,236       2,976       1990       2006       54  
2273 Research Boulevard
  Rockville   MD     15,285       5,167       31,110       2,890       5,237       33,929       39,166       2,140       1999       2006       45  
8521 Leesburg Pike
  Vienna   VA           4,316       30,885       668       4,397       31,472       35,869       2,052       1984       2006       51  
2275 Research Boulevard
  Rockville   MD     15,240       5,059       29,668       966       5,154       30,539       35,693       1,896       1990       2006       45  
1880 Campus Commons Drive
  Reston   VA           6,164       28,114       86       6,281       28,083       34,364       1,223       1985       2006       52  
2277 Research Boulevard
  Rockville   MD     14,181       4,649       26,952       (251 )     4,733       26,616       31,350       1,215       1986       2006       45  
7735 Old Georgetown Road
  Bethesda   MD           4,370       23,192       (76 )     4,453       23,034       27,487       1,372       1997       2006       45  
12015 Lee Jackson Memorial Highway
  Fairfax   VA           3,770       22,895       819       3,842       23,643       27,484       1,616       1985       2006       42  
11720 Beltsville Drive
  Beltsville   MD           3,831       16,661       4,891       3,904       21,479       25,382       1,434       1987       2006       46  
13825 Sunrise Valley Drive
  Herndon   VA           3,794       19,365       197       3,866       19,491       23,357       2,180       1989       2006       46  
11781 Lee Jackson Memorial Highway
  Fairfax   VA           3,246       19,836       176       3,307       19,951       23,259       1,532       1982       2006       40  
11700 Beltsville Drive
  Beltsville   MD           2,808       12,081       635       2,863       12,661       15,524       829       1981       2006       46  
4401 Fair Lakes Court
  Fairfax   VA           1,569       11,982       (81 )     1,599       11,872       13,471       599       1988       2006       52  
11710 Beltsville Drive
  Beltsville   MD           2,278       11,100       (867 )     2,321       10,190       12,511       651       1987       2006       46  
3141 Fairview Park Drive
  Falls Church   VA           733       4,939       (32 )     733       4,906       5,640       230       1988       2006       51  
3141 Fairview Park Drive
  Falls Church   VA           297       1,964       0       297       1,964       2,261       80       1988       2006       51  
11740 Beltsville Drive
  Bethesda   MD           198       870       18       202       884       1,086       23       1987       2006       46  
 
                                                                                               
PENNSYLVANIA
                                                                                               
 
                                                                                               
2929 Arch Street
  Philadelphia   PA                 208,570       12,901             221,471       221,471       15,903       2005       N/A       40  
130 North 18th Street
  Philadelphia   PA           14,496       107,736       5,375       14,473       113,134       127,607       13,985       1998       2004       23  
100 North 18th Street
  Philadelphia   PA     71,564       16,066       100,255       4,676       16,066       104,931       120,997       12,388       1988       2004       33  
150 Radnor Chester Road
  Radnor   PA           11,925       36,986       9,248       11,897       46,262       58,159       6,204       1983       2004       29  
555 Lancaster Avenue
  Radnor   PA           8,014       16,508       25,073       8,609       40,985       49,595       3,720       1973       2004       24  
201 King of Prussia Road
  Radnor   PA           8,956       29,811       5,854       8,949       35,671       44,621       4,931       2001       2004       25  
401 Plymouth Road
  Plymouth Meeting   PA           6,198       16,131       15,998       6,199       32,129       38,327       6,028       2001       2000       40  
One Radnor Corporate Center
  Radnor   PA           7,323       28,613       (43 )     7,323       28,570       35,893       3,891       1998       2004       29  
Four Radnor Corporate Center
  Radnor   PA           5,406       21,390       7,731       5,705       28,822       34,527       3,895       1995       2004       30  
Five Radnor Corporate Center
  Radnor   PA           6,506       25,525       1,835       6,578       27,288       33,866       3,046       1998       2004       38  
101 West Elm Street
  W. Conshohocken   PA           6,251       25,209       1,192       6,251       26,401       32,652       1,781       1999       2005       40  
Three Radnor Corporate Center
  Radnor   PA           4,773       17,961       787       4,791       18,730       23,521       2,476       1998       2004       29  
400 Berwyn Park
  Berwyn   PA           2,657       4,462       15,922       2,657       20,384       23,041       4,524       1999       1999       40  
555 Croton Road
  King of Prussia   PA           4,486       17,943       478       4,486       18,422       22,907       3,351       1999       2001       40  
640 Freedom Business Center
  King Of Prussia   PA           4,222       16,891       1,644       4,222       18,535       22,757       5,963       1991       1998       40  
630 Allendale Road
  King of Prussia   PA           2,836       4,028       15,509       2,636       19,737       22,373       5,713       2000       2000       40  
101 Lindenwood Drive
  Malvern   PA           4,152       16,606       1,496       4,152       18,103       22,254       3,547       1988       2001       40  
52 Swedesford Square
  East Whiteland Twp.   PA           4,241       16,579       263       4,241       16,842       21,083       4,382       1988       1998       40  
Two Radnor Corporate Center
  Radnor   PA           3,937       15,484       1,265       3,942       16,743       20,686       2,195       1998       2004       29  

F - 43


Table of Contents

BRANDYWINE REALTY TRUST
Schedule III
Real Estate and Accumulated Depreciation - December 31, 2007
(in thousands)
                                                                                                 
                                            Gross Amount at Which Carried                    
                    Initial Cost     December 31, 2007                    
                                    Net                                                  
                                    Improvements                             Accumulated                    
                                    (Retirements)                             Depreciation at                    
            Encumberances at             Building and     Since             Building and             December 31,     Year of     Year     Depreciable  
    City   State   December 31, 2007     Land     Improvements     Acquisition     Land     Improvements     Total (a)     2007 (b)     Construction     Acquired     Life  
600 West Germantown Pike
  Plymouth Meeting   PA     11,441       3,652       15,288       1,470       3,652       16,758       20,410       2,698       1986       2002       40  
620 West Germantown Pike
  Plymouth Meeting   PA     11,212       3,572       14,435       1,938       3,572       16,373       19,945       3,103       1990       2002       40  
630 West Germantown Pike
  Plymouth Meeting   PA     11,060       3,558       14,743       1,383       3,558       16,125       19,684       2,700       1988       2002       40  
610 West Germantown Pike
  Plymouth Meeting   PA     11,083       3,651       14,514       1,488       3,651       16,001       19,653       2,639       1987       2002       40  
300 Berwyn Park
  Berwyn   PA     12,375       2,206       13,422       3,196       2,206       16,618       18,824       5,604       1989       1997       40  
200 Barr Harbour Drive
  Conshohocken   PA     14,472       2,827       15,525       (148 )     2,827       15,377       18,204       4,992       1999       2004       40  
1050 Westlakes Drive
  Berwyn   PA           2,611       10,445       5,001             18,057       18,057       2,841       1984       1999       40  
1 West Elm Street
  W. Conshohocken   PA           3,557       14,249             3,557       14,249       17,806       802       1999       2005       40  
181 Washington Street
  Conshohocken   PA     10,518       2,672       14,221       241       2,673       14,462       17,134       5,430       1998       2004       40  
620 Freedom Business Center
  King Of Prussia   PA           2,770       11,014       3,188       2,770       14,202       16,972       4,123       1986       1998       40  
1000 First Avenue
  King Of Prussia   PA           2,772       10,936       2,272       2,772       13,208       15,980       3,311       1980       1998       40  
301 Lindenwood Drive
  Malvern   PA           2,729       10,915       2,301       2,729       13,216       15,945       2,644       1984       2001       40  
1060 First Avenue
  King Of Prussia   PA           2,712       10,953       1,890       2,712       12,843       15,555       3,383       1987       1998       40  
1020 First Avenue
  King Of Prussia   PA           2,168       8,576       4,755       2,168       13,331       15,499       2,690       1984       1998       40  
1040 First Avenue
  King Of Prussia   PA           2,860       11,282       1,041       2,860       12,323       15,183       3,488       1985       1998       40  
595 East Swedesford Road
  Wayne   PA           2,729       10,917       1,482       2,729       12,398       15,128       1,245       1998       2003       40  
630 Freedom Business Center
  King Of Prussia   PA           2,773       11,144       993       2,773       12,137       14,910       3,561       1989       1998       40  
100 Brandywine Boulevard
  Newtown   PA           1,784       9,811       3,007       1,784       12,818       14,602       2,541       2002       2000       40  
1200 Swedesford Road
  Berwyn   PA     4,427       2,595       11,809       1       2,595       11,809       14,405       324       1994       2001       40  
980 Harvest Drive
  Blue Bell   PA           2,079       7,821       4,235       2,079       12,056       14,135       2,133       1988       2002       40  
170 Radnor Chester Road
  Radnor   PA           2,514       8,147       3,446       2,509       11,598       14,107       1,106       1983       2004       25  
920 Harvest Drive
  Blue Bell   PA           2,433       9,738       1,573       2,433       11,312       13,744       3,225       1990       1998       40  
200 Berwyn Park
  Berwyn   PA     9,250       1,533       9,460       1,935       1,533       11,395       12,928       3,791       1987       1997       40  
1180 Swedesford Road
  Berwyn   PA           2,086       8,342       1,191       2,086       9,533       11,619       1,798       1987       2001       40  
575 East Swedesford Road
  Wayne   PA           2,178       8,712       456       2,178       9,168       11,346       1,060       1985       2003       40  
130 Radnor Chester Road
  Radnor   PA           2,573       8,338       163       2,567       8,506       11,074       846       1983       2004       25  
610 Freedom Business Center
  King Of Prussia   PA           2,017       8,070       542       2,017       8,612       10,629       2,529       1985       1998       40  
565 East Swedesford Road
  Wayne   PA           1,872       7,489       868       1,872       8,357       10,229       1,072       1984       2003       40  
1160 Swedesford Road
  Berwyn   PA           1,781       7,124       1,269       1,781       8,394       10,174       1,604       1986       2001       40  
100 Berwyn Park
  Berwyn   PA     6,765       1,180       7,290       1,557       1,180       8,847       10,027       3,102       1986       1997       40  
925 Harvest Drive
  Blue Bell   PA           1,671       6,606       1,114       1,671       7,720       9,391       2,189       1990       1998       40  
14 Campus Boulevard
  Newtown Square   PA     5,026       2,244       4,217       2,694       2,244       6,911       9,155       914       1998       1998       40  
426 Lancaster Avenue
  Devon   PA           1,689       6,756       369       1,689       7,126       8,814       2,108       1990       1998       40  
650 Park Avenue
  King Of Prussia   PA           1,916       4,378       2,502       1,916       6,880       8,796       2,215       1968       1998       40  
1100 Cassett Road
  Berwyn   PA           1,695       6,779       (0 )     1,695       6,779       8,474       1,144       1997       2001       40  
500 North Gulph Road
  King Of Prussia   PA           1,303       5,201       1,386       1,303       6,587       7,890       2,393       1979       1996       40  
855 Springdale Drive
  Exton   PA           838       3,370       3,501       838       6,870       7,709       1,423       1986       1997       40  
2930 Chestnut Street
  Philadelphia   PA                 7,688       0             7,688       7,688       96       #N/A       2007       40  
2240/2250 Butler Pike
  Plymouth Meeting   PA           1,104       4,627       1,558       1,104       6,185       7,289       2,235       1984       1996       40  
One Progress Drive
  Horsham   PA           1,399       5,629       230       1,399       5,859       7,258       2,075       1986       1996       40  
412 Creamery Way
  Exton   PA           1,195       4,779       911       1,195       5,690       6,885       1,279       1999       2001       40  
429 Creamery Way
  Exton   PA           1,368       5,471       19       1,368       5,490       6,858       934       1996       2001       40  
585 East Swedesford Road
  Wayne   PA           1,350       5,401       32       1,350       5,433       6,783       569       1998       2003       40  
741 First Avenue
  King Of Prussia   PA           1,287       5,151       219       1,287       5,369       6,657       1,661       1966       1998       40  
875 First Avenue
  King Of Prussia   PA           618       2,473       3,257       618       5,729       6,348       1,661       1966       1998       40  
17 Campus Boulevard
  Newtown Square   PA     4,914       1,108       5,155       46       1,108       5,201       6,309       1,597       2001       1997       40  
440 Creamery Way
  Exton   PA           982       3,927       1,313       982       5,240       6,222       875       1991       2001       40  
479 Thomas Jones Way
  Exton   PA           1,075       4,299       679       1,075       4,979       6,053       1,096       1988       2001       40  
11 Campus Boulevard
  Newtown Square   PA     4,498       1,112       4,067       825       1,112       4,892       6,004       1,104       1998       1999       40  
620 Allendale Road
  King Of Prussia   PA           1,020       3,839       989       1,020       4,828       5,848       2,009       1961       1998       40  
500 Enterprise Drive
  Horsham   PA           1,303       5,188       (659 )     1,303       4,529       5,832       1,545       1990       1996       40  
15 Campus Boulevard
  Newtown Square   PA     5,622       1,164       3,896       672       1,164       4,568       5,732       769       2002       2000       40  
300 Lindenwood Drive
  Malvern   PA           848       3,394       1,316       849       4,710       5,558       652       1991       2001       40  
436 Creamery Way
  Exton   PA           994       3,978       583       994       4,560       5,555       789       1991       2001       40  
751-761 Fifth Avenue
  King Of Prussia   PA           1,097       4,391       31       1,097       4,422       5,519       1,298       1967       1998       40  
467 Creamery Way
  Exton   PA           906       3,623       882       906       4,505       5,411       826       1988       2001       40  
Philadelphia Marine Center
  Philadelphia   PA           532       2,196       2,680       628       4,780       5,408       755     Various     1998       40  
600 Park Avenue
  King Of Prussia   PA           1,012       4,048       336       1,012       4,384       5,396       1,203       1964       1998       40  
100 Arrandale Boulevard
  Exton   PA           970       3,878       274       970       4,152       5,122       691       1997       2001       40  
442 Creamery Way
  Exton   PA           894       3,576       391       894       3,967       4,861       835       1991       2001       40  
1700 Paoli Pike
  Malvern   PA           458       559       3,746       488       4,275       4,763       1,063       2000       2000       40  
18 Campus Boulevard
  Newtown Square   PA     3,168       787       3,312       571       787       3,883       4,670       1,354       1990       1996       40  
2260 Butler Pike
  Plymouth Meeting   PA           661       2,727       1,092       662       3,818       4,480       1,262       1984       1996       40  
120 West Germantown Pike
  Plymouth Meeting   PA           685       2,773       887       685       3,661       4,345       1,552       1984       1996       40  
486 Thomas Jones Way
  Exton   PA           806       3,256       194       806       3,450       4,256       1,306       1990       1996       40  
457 Creamery Way
  Exton   PA           777       3,107       306       777       3,413       4,190       679       1990       2001       40  
680 Allendale Road
  King Of Prussia   PA           689       2,756       678       689       3,434       4,123       1,267       1962       1998       40  
7130 Ambassador Drive
  Allentown   PA           761       3,046       160       761       3,206       3,967       780       1991       1999       40  
1336 Enterprise Drive
  West Goshen   PA           731       2,946       51       731       2,997       3,728       995       1989       1997       40  
456 Creamery Way
  Exton   PA           635       2,548       (48 )     635       2,500       3,135       885       1987       1996       40  
140 West Germantown Pike
  Plymouth Meeting   PA           481       1,976       475       482       2,450       2,932       994       1984       1996       40  
468 Thomas Jones Way
  Exton   PA           526       2,112       163       527       2,274       2,801       843       1990       1996       40  
100 Lindenwood Drive
  Malvern   PA           473       1,892       376       473       2,268       2,741       622       1985       2001       40  

F - 44


Table of Contents

BRANDYWINE REALTY TRUST
Schedule III
Real Estate and Accumulated Depreciation - December 31, 2007
(in thousands)
                                                                                                 
                                            Gross Amount at Which Carried                    
                    Initial Cost     December 31, 2007                    
                                    Net                                                  
                                    Improvements                             Accumulated                    
                                    (Retirements)                             Depreciation at                    
            Encumberances at             Building and     Since             Building and             December 31,     Year of     Year     Depreciable  
    City   State   December 31, 2007     Land     Improvements     Acquisition     Land     Improvements     Total (a)     2007 (b)     Construction     Acquired     Life  
630 Clark Avenue
  King Of Prussia   PA           547       2,190       0       547       2,190       2,737       643       1960       1998       40  
481 John Young Way
  Exton   PA           496       1,983       0       496       1,984       2,479       335       1997       2001       40  
640 Allendale Road
  King of Prussia   PA           439       432       1,480       439       1,912       2,351       327       2000       2000       40  
660 Allendale Road
  King of Prussia   PA           396       3,343       (1,637 )     396       1,706       2,102       745       1962       1998       40  
200 Lindenwood Drive
  Malvern   PA           324       1,295       242       324       1,537       1,861       382       1984       2001       40  
351 Plymouth Road
  Plymouth Meeting   PA           1,043       555             1,043       555       1,598       38       N/A       2000       40  
748 Springdale Drive
  Exton   PA           236       931       275       236       1,206       1,442       387       1986       1997       40  
111 Arrandale Road
  Exton   PA           262       1,048       125       262       1,173       1,435       198       1996       2001       40  
922 Swedesford Road
  Berwyn   PA           218                   218             218             N/A       N/A       40  
 
                                                                                               
NEW JERSEY/DELAWARE
                                                                                               
 
                                                                                               
50 East State Street
  Trenton   NJ           8,926       35,735       1,987       8,926       37,723       46,648       10,866       1989       1998       40  
33 West State Street
  Trenton   NJ           6,016       24,091       27       6,016       24,119       30,134       7,019       1988       1998       40  
920 North King Street
  Wilmington   DE           6,141       21,140       438       6,141       21,578       27,719       2,834       1989       2004       30  
1009 Lenox Drive
  Lawrenceville   NJ           4,876       19,284       3,326       5,057       22,430       27,486       7,222       1989       1998       40  
525 Lincoln Drive West
  Marlton   NJ           3,727       17,620       2,647       3,727       20,267       23,994       3,513       1986       2004       40  
300 Delaware Avenue
  Wilmington   DE           6,368       13,739       1,513       6,369       15,251       21,620       2,404       1989       2004       23  
989 Lenox Drive
  Lawrenceville   NJ           3,701       14,802       1,390       3,812       16,081       19,893       1,744       1984       2003       40  
700 East Gate Drive
  Mt. Laurel   NJ           3,569       14,436       1,565       3,569       16,001       19,570       4,513       1984       1998       40  
10000 Midlantic Drive
  Mt. Laurel   NJ           3,206       12,857       2,442       3,206       15,298       18,505       4,879       1990       1997       40  
Main Street — Plaza 1000
  Voorhees   NJ           2,732       10,942       4,274       2,732       15,216       17,948       5,626       1988       1997       40  
2000 Lenox Drive
  Lawrenceville   NJ     13,236       2,291       12,221       3,155       2,648       15,019       17,667       5,115       2000       2000       40  
One Righter Parkway
  Wilmington   DE     9,853       2,545       10,195       4,820       2,545       15,015       17,560       4,415       1989       1996       40  
993 Lenox Drive
  Lawrenceville   NJ     11,379       2,811       17,996       (5,155 )     2,922       12,729       15,652       4,067       1985       1998       40  
15000 Midlantic Drive
  Mt. Laurel   NJ           3,061       12,254       170       3,061       12,424       15,485       4,008       1991       1997       40  
100 Brandywine Boulevard
  Newtown   PA           1,784       9,811       3,007       1,784       12,818       14,602       2,541       2002       2000       40  
1400 Howard Boulevard
  Mt. Laurel   NJ           443             13,014       1,447       12,009       13,457       375       2005       2000       40  
997 Lenox Drive
  Lawrenceville   NJ     9,277       2,410       9,700       1,191       2,507       10,794       13,301       3,101       1987       1998       40  
1000 Howard Boulevard
  Mt. Laurel   NJ           2,297       9,288       1,316       2,297       10,604       12,901       3,778       1988       1997       40  
1120 Executive Boulevard
  Marlton   NJ           2,074       8,415       2,238       2,074       10,652       12,727       3,423       1987       1997       40  
220 Lake Drive East
  Cherry Hill   NJ           2,144       8,798       1,063       2,144       9,862       12,005       1,865       1988       2001       40  
400 Commerce Drive
  Newark   DE     11,575       2,528       9,220       86       2,528       9,306       11,834       1,699       1997       2002       40  
457 Haddonfield Road
  Cherry Hill   NJ     10,505       2,142       9,120       391       2,142       9,511       11,653       3,538       1990       1996       40  
2000 Midlantic Drive
  Mt. Laurel   NJ     8,959       2,202       8,823       528       2,203       9,351       11,553       3,213       1989       1997       40  
1000 Atrium Way
  Mt. Laurel   NJ           2,061       8,180       1,143       2,061       9,323       11,384       2,956       1989       1997       40  
200 Lake Drive East
  Cherry Hill   NJ           2,069       8,275       894       2,069       9,169       11,238       1,781       1989       2001       40  
10 Lake Center Drive
  Marlton   NJ           1,880       7,521       1,515       1,880       9,035       10,916       1,730       1989       2001       40  
701 East Gate Drive
  Mt. Laurel   NJ           1,736       6,877       828       1,736       7,705       9,441       2,457       1986       1998       40  
Two Righter Parkway
  Wilmington   DE           2,802       11,217       (4,688 )     2,802       6,529       9,331       41       1987       2001       40  
210 Lake Drive East
  Cherry Hill   NJ           1,645       6,579       827       1,645       7,407       9,051       1,405       1986       2001       40  
309 Fellowship Drive
  Mt. Laurel   NJ           1,518       6,154       1,205       1,518       7,359       8,877       2,545       1982       1998       40  
308 Harper Drive
  Moorestown   NJ           1,643       6,663       497       1,644       7,159       8,803       2,223       1976       1998       40  
305 Fellowship Drive
  Mt. Laurel   NJ           1,421       5,768       1,262       1,421       7,030       8,451       1,897       1980       1998       40  
307 Fellowship Drive
  Mt. Laurel   NJ           1,565       6,342       481       1,565       6,824       8,388       1,878       1981       1998       40  
303 Fellowship Drive
  Mt. Laurel   NJ           1,493       6,055       617       1,494       6,671       8,165       1,904       1979       1998       40  
1000 Lenox Drive
  Lawrenceville   NJ           1,174       4,696       2,163       1,226       6,806       8,033       1,390       1982       2002       40  
1000 Bishops Gate
  Mt. Laurel   NJ           934       6,287             953       6,812       7,764       927       2005       2000       40  
9000 Midlantic Drive
  Mt. Laurel   NJ     5,662       1,472       5,895       109       1,472       6,005       7,476       1,952       1989       1997       40  
6 East Clementon Road
  Gibbsboro   NJ           1,345       5,366       457       1,345       5,823       7,168       1,826       1980       1997       40  
100 Commerce Drive
  Newark   DE           1,160       4,633       1,156       1,160       5,789       6,949       1,970       1989       1997       40  
Three Greentree Centre
  Marlton   NJ           323       6,024       558       324       6,582       6,905       4,473       1984       1986       40  
200 Commerce Drive
  Newark   DE     5,765       911       4,414       1,018       911       5,432       6,343       1,004       1998       2002       40  
30 Lake Center Drive
  Marlton   NJ           1,043       4,171       932       1,043       5,104       6,146       865       1986       2001       40  
161 Gaither Drive
  Mount Laurel   NJ           1,016       4,064       585       1,016       4,649       5,665       817       1987       2001       40  
Two Greentree Centre
  Marlton   NJ           264       4,693       600       264       5,293       5,557       3,522       1983       1986       40  
One Greentree Centre
  Marlton   NJ           345       4,440       613       345       5,054       5,398       3,015       1982       1986       40  
Two Eves Drive
  Marlton   NJ           818       3,461       56       818       3,517       4,335       1,201       1987       1997       40  
Five Eves Drive
  Marlton   NJ           703       2,819       771       703       3,590       4,293       1,269       1986       1997       40  
4000 Midlantic Drive
  Mt. Laurel   NJ     2,911       714       5,085       (1,524 )     714       3,561       4,275       1,079       1998       1997       40  
20 East Clementon Road
  Gibbsboro   NJ           769       3,055       437       769       3,492       4,261       1,195       1986       1997       40  
8000 Lincoln Drive
  Marlton   NJ           606       2,887       659       606       3,545       4,152       1,405       1997       1996       40  
304 Harper Drive
  Moorestown   NJ           657       2,674       448       657       3,122       3,779       910       1975       1998       40  
Main Street — Piazza
  Voorhees   NJ           696       2,802       225       696       3,027       3,723       1,047       1990       1997       40  
815 East Gate Drive
  Mt. Laurel   NJ           636       2,584       307       636       2,891       3,527       796       1986       1998       40  
Four B Eves Drive
  Marlton   NJ           588       2,369       381       588       2,749       3,338       921       1987       1997       40  
817 East Gate Drive
  Mt. Laurel   NJ           611       2,426       152       611       2,578       3,189       697       1986       1998       40  
Four A Eves Drive
  Marlton   NJ           539       2,168       243       539       2,411       2,950       855       1987       1997       40  
Main Street — Promenade
  Voorhees   NJ           531       2,052       151       532       2,203       2,734       759       1988       1997       40  
10 Foster Avenue
  Gibbsboro   NJ           244       971       225       244       1,196       1,440       394       1983       1997       40  
7 Foster Avenue
  Gibbsboro   NJ           231       921       121       231       1,041       1,273       332       1983       1997       40  
305 Harper Drive
  Moorestown   NJ           223       913       0       223       913       1,136       248       1979       1998       40  
50 East Clementon Road
  Gibbsboro   NJ           114       964       3       114       967       1,081       293       1986       1997       40  
4 Foster Avenue
  Gibbsboro   NJ           183       726       84       183       811       993       279       1974       1997       40  

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BRANDYWINE REALTY TRUST
Schedule III
Real Estate and Accumulated Depreciation - December 31, 2007
(in thousands)
                                                                                                 
                                            Gross Amount at Which Carried                    
                    Initial Cost     December 31, 2007                    
                                    Net                                                  
                                    Improvements                             Accumulated                    
                                    (Retirements)                             Depreciation at                    
            Encumberances at             Building and     Since             Building and             December 31,     Year of     Year     Depreciable  
    City   State   December 31, 2007     Land     Improvements     Acquisition     Land     Improvements     Total (a)     2007 (b)     Construction     Acquired     Life  
2 Foster Avenue
  Gibbsboro   NJ           185       730       42       185       772       957       246       1974       1997       40  
1 Foster Avenue
  Gibbsboro   NJ           93       364       63       93       428       520       129       1972       1997       40  
5 U.S. Avenue
  Gibbsboro   NJ           21       81       3       21       84       105       25       1987       1997       40  
5 Foster Avenue
  Gibbsboro   NJ           9       32       26       9       58       67       16       1968       1997       40  
 
                                                                                               
SOUTHWEST
                                                                                               
 
                                                                                               
1250 Capital of Texas Hwy South
  Austin   TX           5,152       37,928       3,512       5,250       41,343       46,593       3,024       1984       2006       52  
1301 Mopac Expressway
  Austin   TX           4,188       41,229       481       4,250       41,648       45,898       2,165       2001       2006       55  
1601 Mopac Expressway
  Austin   TX           3,538       34,346       2,267       3,605       36,547       40,151       2,524       2000       2006       54  
1501 South Mopac Expressway
  Austin   TX           3,698       34,912       1,150       3,768       35,992       39,759       3,433       1999       2006       53  
1221 Mopac Expressway
  Austin   TX           3,290       31,548       652       3,369       32,120       35,489       1,926       2001       2006       55  
1177 East Beltline Road
  Coppell   TX     20,112       1,516       14,895       8       1,517       14,903       16,420       1,246       1998       2006       42  
1801 Mopac Expressway
  Austin   TX           1,227       10,959       460       1,250       11,395       12,646       553       1999       2006       53  
 
                                                                                               
RICHMOND
                                                                                               
 
                                                                                               
600 East Main Street
  Richmond   VA           9,808       38,255       5,632       9,808       43,887       53,695       13,231       1986       1998       40  
300 Arboretum Place
  Richmond   VA     13,513       5,450       21,892       1,864       5,450       23,757       29,206       7,061       1988       1998       40  
7501 Boulders View Drive
  Richmond   VA           4,925       19,699       257       5,181       19,700       24,881       206       1990       2007       40  
7300 Beaufont Springs Drive
  Richmond   VA           4,922       19,689       251       5,172       19,690       24,862       205       2000       2007       40  
6800 Paragon Place
  Richmond   VA           4,552       18,414       236       4,552       18,650       23,202       626       1986       2006       40  
6802 Paragon Place
  Richmond   VA           2,917       11,454       2,530       2,917       13,984       16,901       2,665       1989       2002       40  
1025 Boulders Parkway
  Richmond   VA           2,824       11,297       251       3,074       11,298       14,372       118       1994       2007       40  
2100-2116 West Laburnam Avenue
  Richmond   VA           2,482       8,846       2,278       2,482       11,124       13,606       3,064       1976       1998       40  
7401 Beaufont Springs Drive
  Richmond   VA           2,599       10,396       251       2,849       10,397       13,246       108       1998       2007       40  
7325 Beaufont Springs Drive
  Richmond   VA           2,594       10,377       251       2,844       10,378       13,222       108       1999       2007       40  
9011 Arboretum Parkway
  Richmond   VA           1,857       7,702       892       1,857       8,594       10,451       2,228       1991       1998       40  
6806 Paragon Place
  Richmond   VA                 10,288       0             10,288       10,288       415       2007       2005       40  
4805 Lake Brooke Drive
  Glen Allen   VA           1,640       6,567       1,312       1,640       7,879       9,519       2,023       1996       1998       40  
4364 South Alston Avenue
  Durham   NC           1,622       6,419       910       1,581       7,370       8,951       2,182       1985       1998       40  
2511 Brittons Hill Road
  Richmond   VA           1,202       4,820       1,863       1,202       6,683       7,885       1,762       1987       1998       40  
9100 Arboretum Parkway
  Richmond   VA     3,425       1,362       5,489       834       1,362       6,323       7,685       1,665       1988       1998       40  
2812 Emerywood Parkway
  Henrico   VA           1,069       4,281       1,902       1,069       6,183       7,252       2,302       1980       1998       40  
9210 Arboretum Parkway
  Richmond   VA     2,840       1,110       4,474       581       1,110       5,055       6,165       1,551       1988       1998       40  
100 Gateway Centre Parkway
  Richmond   VA           391       5,410       123       391       5,533       5,924       812       2001       1998       40  
1957 Westmoreland Street
  Richmond   VA           1,061       4,241       234       1,061       4,475       5,536       1,276       1975       1998       40  
2201-2245 Tomlynn Street
  Richmond   VA           1,020       4,067       391       1,020       4,458       5,478       1,255       1989       1998       40  
9200 Arboretum Parkway
  Richmond   VA     2,447       985       3,973       142       985       4,115       5,100       1,148       1988       1998       40  
9211 Arboretum Parkway
  Richmond   VA           582       2,433       243       582       2,677       3,258       758       1991       1998       40  
2248 Dabney Road
  Richmond   VA           512       2,049       304       512       2,354       2,865       684       1989       1998       40  
2221-2245 Dabney Road
  Richmond   VA           530       2,123       176       530       2,299       2,829       659       1994       1998       40  
2244 Dabney Road
  Richmond   VA           550       2,203       37       550       2,240       2,790       617       1993       1998       40  
2212-2224 Tomlynn Street
  Richmond   VA           502       2,014       157       502       2,171       2,673       595       1985       1998       40  
2277 Dabney Road
  Richmond   VA           507       2,034       15       507       2,049       2,556       563       1986       1998       40  
2161-2179 Tomlynn Street
  Richmond   VA           423       1,695       269       423       1,964       2,387       559       1985       1998       40  
2246 Dabney Road
  Richmond   VA           455       1,822       18       455       1,840       2,295       504       1987       1998       40  
2130-2146 Tomlynn Street
  Richmond   VA           353       1,416       288       353       1,704       2,057       571       1988       1998       40  
2256 Dabney Road
  Richmond   VA           356       1,427       271       356       1,698       2,054       469       1982       1998       40  
2251 Dabney Road
  Richmond   VA           387       1,552       111       387       1,662       2,050       503       1983       1998       40  
2120 Tomlynn Street
  Richmond   VA           281       1,125       251       281       1,377       1,657       417       1986       1998       40  
2240 Dabney Road
  Richmond   VA           264       1,059       10       264       1,069       1,334       293       1984       1998       40  
 
                                                                               
Total:
          $ 611,898     $ 720,198     $ 3,705,120     $ 387,701     $ 727,979     $ 4,085,584     $ 4,813,563     $ 558,908                          
 
                                                                               

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(a)   Reconciliation of Real Estate:
     The following table reconciles the real estate investments from January 1, 2005 to December 31, 2007 (in thousands):
                         
    2007     2006     2005  
Balance at beginning of year
  $ 4,927,305     $ 2,560,061     $ 2,483,134  
 
                       
Additions:
                       
Acquisitions
    158,399       2,370,241       71,783  
Capital expenditures
    179,691       334,238       47,732  
 
                       
Less:
                       
Dispositions
    (451,832 )     (229,824 )     (42,588 )
Assets transferred to held-for-sale
          (107,411 )      
 
                       
 
                 
Balance at end of year
  $ 4,813,563     $ 4,927,305     $ 2,560,061  
 
                 
     The aggregate cost for federal income tax purposes is $4.5 billion as of December 31, 2007.
(b)   Reconciliation of Accumulated Depreciation:
     The following table reconciles the accumulated depreciation on real estate investments from January 1, 2005 to December 31, 2007 (in thousands):
                         
    2007     2006     2005  
Balance at beginning of year
  $ 515,698     $ 390,333     $ 325,802  
 
                       
Additions:
                       
Depreciation expense — continued operations
    167,160       162,503       78,465  
Depreciation expense — discontinued operations
    4,748       12,305       171  
Acquisitions
          1,037        
 
                       
Less:
                       
Dispositions
    (128,698 )     (44,430 )     (14,105 )
Assets transferred to held-for-sale
          (6,050 )      
 
                       
 
                 
Balance at end of year
  $ 558,908     $ 515,698     $ 390,333  
 
                 

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Report of Independent Registered Public Accounting Firm
To the Partners of Brandywine Operating Partnership, L.P.:
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 Operating Partnership and its subsidiaries (the “Partnership”) 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 Partnership 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 Partnership’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 Partnership’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 Partnership’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 Partnership 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 Partnership 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 Partnership’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 OPERATING PARTNERSHIP, L.P.
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 investments, 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 unconsolidated ventures
    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 PARTNERS’ 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  
 
               
Commitments and contingencies (Note 18)
               
Redeemable limited partnership units at redemption value; 3,838,229 and 3,961,235 issued and outstanding in 2007 and 2006, respectively
    68,819       131,718  
 
               
Partners’ equity:
               
7.50% Series D Preferred Mirror Units; 2,000,000 issued and outstanding in 2006 and 2005
    47,912       47,912  
7.375% Series E Preferred Mirror Units; 2,300,000 issued and outstanding in 2006 and 2005
    55,538       55,538  
General Partnership Capital, 87,015,600 and 88,327,041 units issued and outstanding in 2007 and 2006, respectively
    1,656,970       1,750,745  
Accumulated other comprehensive loss
    (1,885 )     1,576  
 
           
Total partners’ equity
    1,758,535       1,855,771  
 
           
Total liabilities, minority interest, and partners’ equity
  $ 5,214,099     $ 5,509,018  
 
           
The accompanying notes are an integral part of these consolidated financial statements.

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BRANDYWINE OPERATING PARTNERSHIP, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(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       (154 )
 
                 
Income (loss) from continuing operations
    29,672       (19,975 )     33,667  
 
                       
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 )      
 
                 
Income from discontinued operations
    28,927       30,601       10,346  
 
                 
Net income
    58,599       10,626       44,013  
Income allocated to Preferred Units
    (7,992 )     (7,992 )     (7,992 )
 
                 
Income allocated to Common Partnership Units
  $ 50,607     $ 2,634     $ 36,021  
 
                 
 
                       
Basic earnings per Common Partnership Units:
                       
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 Partnership Units:
                       
Continuing operations
  $ 0.24     $ (0.30 )   $ 0.44  
Discontinued operations
    0.32       0.32       0.18  
 
                 
 
  $ 0.55     $ 0.03     $ 0.62  
 
                 
 
                       
Basic weighted average common partnership units outstanding
    91,170,209       93,703,601       57,852,842  
 
                       
Diluted weighted average common partnership units outstanding
    91,219,337       94,222,125       58,111,162  
The accompanying notes are an integral part of these consolidated financial statements.

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BRANDYWINE OPERATING PARTNERSHIP, L.P.
CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE (LOSS) INCOME
(in thousands)
                         
    Years ended December 31,  
    2007     2006     2005  
Net income
  $ 58,599     $ 10,626     $ 44,013  
 
                       
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
  $ 55,138     $ 15,370     $ 43,974  
 
                 
The accompanying notes are an integral part of these consolidated financial statements.

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BRANDYWINE OPERATING PARTNERSHIP, L.P.
CONSOLIDATED STATEMENT OF PARTNERS’ EQUITY
(in thousands, except Units)
                                                                                 
    Series A Preferred Mirror     Series D Preferred Mirror     Series E Preferred Mirror                     Accumulated Other     Total  
    Units     Units     Units     General Partner Capital     Comprehensive     Partner’s  
    Units     Amount     Units     Amount     Units     Amount     Units     Amount     Income     Equity  
Balance, December 31, 2004
                2,000,000       47,912       2,300,000       55,538       55,292,752       1,029,144       (3,130 )     1,129,464  
Net income
                                              44,013             44,013  
Net income allocable to redeemable partnership units
                                              (276 )           (276 )
Other comprehensive income:
                                                    (39 )     (39 )
Conversion of LP units to common shares
                                        107,692       2,584             2,584  
Vesting of restricted units
                                        72,950       1,630             1,630  
Exercise of warrants/options to purchase general partnership units
                                        705,681       18,999             18,999  
Repayment of employee stock loans
                                              50             50  
Adjustment of redeemable partnership units to liquidation value at period end
                                              190             190  
Distributions to Preferred Mirror Units
                                              (7,992 )           (7,992 )
Distributions to general partnership unit holder
                                              (100,145 )           (100,145 )
 
                                                           
 
                                                                               
Balance, December 31, 2005
                2,000,000       47,912       2,300,000       55,538       56,179,075       988,197       (3,169 )     1,088,478  
Net income
                                              10,626             10,626  
Repurchase of common partnership units
                                        (3,009,200 )     (94,473 )           (94,473 )
Other comprehensive income:
                                                    4,745       4,745  
Conversion of LP units to common shares
                                        14,700       488             488  
Issuance of common partnership units
                                        34,542,151       1,022,173             1,022,173  
Vesting of restricted units
                                        81,142       1,887             1,887  
Issuance of trustee/bonus shares
                                        3,257       90             90  
Exercise of warrants/options to purchase general partnership units
                                        515,916       11,413             11,413  
Repayment of employee stock loans
                                              371             371  
Adjustment of redeemable partnership units to liquidation value at period end
                                              (25,913 )           (25,913 )
Distributions to Preferred Mirror Units
                                              (7,992 )           (7,992 )
Distributions to general partnership unit holder
                                              (156,122 )           (156,122 )
 
                                                           
 
                                                                               
 
                                                                             
Balance, December 31, 2006
                2,000,000       47,912       2,300,000       55,538       88,327,041       1,750,745       1,576       1,855,771  
Net income
                                              58,599             58,599  
Repurchase of common partnership units in treasury and for deferred comp plan
                                        (1,780,600 )     (59,426 )           (59,426 )
Common partnership units used for deferred comp plan
                                        172,565       5,684             5,684  
Other comprehensive income:
                                                    (3,461 )     (3,461 )
Conversion of LP units to common shares
                                        21,951       716             716  
Issuance of common partnership units
                                                           
Vesting of restricted units
                                        66,086       2,097             2,097  
Issuance of trustee/bonus shares
                                        1,664       55             55  
Exercise of warrants/options to purchase general partnership units
                                        206,893       8,113             8,113  
Minority interest reclassification
                                              (2,828 )           (2,828 )
Repayment of employee stock loans
                                                           
Adjustment of redeemable partnership units to liquidation value at period end
                                              55,306             55,306  
Distributions to Preferred Mirror Units
                                              (7,992 )           (7,992 )
Distributions to general partnership unit holder
                                              (154,099 )           (154,099 )
 
                                                           
 
                                                                               
Balance, December 31, 2007
        $       2,000,000     $ 47,912       2,300,000     $ 55,538       87,015,600     $ 1,656,970     $ (1,885 )   $ 1,758,535  
 
                                                           
The accompanying notes are an integral part of these consolidated financial statements.

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BRANDYWINE OPERATING PARTNERSHIP, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
                         
    Years ended December 31,  
    2007     2006     2005  
Cash flows from operating activities:
                       
Net income
  $ 58,599     $ 10,626     $ 44,013  
Adjustments to reconcile net income to net cash from operating activities:
                       
Depreciation
    179,724       186,454       84,561  
Amortization:
                       
Deferred financing costs
    4,497       4,607       3,721  
Deferred leasing costs
    15,672       12,258       8,895  
Acquired above (below) market leases, net
    (12,225 )     (9,034 )     (1,542 )
Acquired lease intangibles
    51,669       66,317       18,573  
Deferred compensation costs
    4,672       3,447       2,764  
Straight-line rent
    (28,304 )     (31,326 )     (14,952 )
Provision for doubtful accounts
    3,147       3,510       792  
Real estate venture income in excess of distributions
    (55 )     (15 )     (769 )
Net gain on sale of interests in real estate
    (66,662 )     (34,433 )     (6,820 )
Gain on termination of purchase contract
          (3,147 )      
Minority interest
    465       1,969       154  
Changes in assets and liabilities:
                       
Accounts receivable
    6,448       1,365       (598 )
Other assets
    (6,268 )     (4,855 )     (11,810 )
Accounts payable and accrued expenses
    (10,524 )     (1,154 )     (2,407 )
Tenant security deposits and deferred rents
    12,634       29,209       (40 )
Other liabilities
    6,328       5,768       612  
 
                 
Net cash from operating activities
    219,817       241,566       125,147  
 
                       
Cash flows from investing activities:
                       
Acquisition of Prentiss
          (935,856 )      
Acquisition of properties
    (88,890 )     (231,244 )     (92,674 )
Acquisition of minority interest in consolidated real estate venture
    (63,732 )            
Sales of properties, net
    472,590       347,652       29,428  
Proceeds from termination of purchase contract
          3,147        
Capital expenditures
    (267,103 )     (242,516 )     (177,035 )
Investment in marketable securities
          181,556       423  
Investment in unconsolidated Real Estate Ventures
    (897 )     (753 )     (269 )
Restrcited cash
    4,898       (2,981 )     (518 )
Cash distributions from unconsolidated Real Estate Ventures in excess of equity in income
    3,711       3,762       462  
Leasing costs
    (16,104 )     (38,561 )     (12,234 )
 
                 
Net cash from (used in) investing activities
    44,473       (915,794 )     (252,417 )
 
                       
Cash flows from financing activities:
                       
Proceeds from Credit Facility borrowings
    959,602       726,000       372,142  
Repayments of Credit Facility borrowings
    (888,875 )     (756,000 )     (434,142 )
Proceeds from mortgage notes payable
          20,520        
Repayments of mortgage notes payable
    (272,027 )     (213,338 )     (23,457 )
Proceeds from term loan
    150,000       750,000        
Repayments of term loan
          (750,000 )      
Proceeds from unsecured notes
    300,000       1,193,217       299,976  
Repayments of unsecured notes
    (299,925 )            
Net settlement of hedge transactions
    (2,712 )     3,266        
Repayments on employee stock loans
          371       50  
Debt financing costs
    (4,474 )     (14,319 )     (4,026 )
Exercise of stock options
    6,011       11,414       18,999  
Repurchases of common partnership and minority interest units
    (59,426 )     (94,472 )     (239 )
Distributions paid to preferred and common partnership unitholders
    (172,243 )     (175,947 )     (110,205 )
Distributions to minority interest holders — consolidated real estate ventures
          (8,279 )      
 
                 
Net cash (used in) from financing activities
    (284,069 )     692,433       119,098  
 
                 
Increase (decrease) in cash and cash equivalents
    (19,779 )     18,205       (8,172 )
Cash and cash equivalents at beginning of period
    25,379       7,174       15,346  
 
                 
Cash and cash equivalents at end of period
  $ 5,600     $ 25,379     $ 7,174  
 
                 
 
                       
Supplemental disclosure:
                       
Cash paid for interest, net of capitalized interest
  $ 182,790     $ 154,258     $ 53,450  
Supplemental disclosure of non-cash activity:
                       
Common shares issued in the Prentiss acquisition
          1,022,173        
Operating Partnership units issued in Prentiss acquisition
          64,103        
Operating Partnership units issued in propety acquistions
          13,819        
Debt, minority interest and other liabilities, net assumed in the Prentiss acquisition
          679,520        
The accompanying notes are an integral part of these consolidated financial statements.

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BRANDYWINE OPERATING PARTNERSHIP, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007, 2006 AND 2005
1. ORGANIZATION AND NATURE OF OPERATIONS
Brandywine Operating Partnership, L.P. (referred to herein as “we”, “us” or the “Partnership’) is the entity through which Brandywine Realty Trust, a Maryland real estate investment trust (the “Company”), a self-administered and self-managed real estate investment trust, conducts its business and own its assets. The Partnership’s activities include acquiring, developing, redeveloping, leasing and managing office and industrial properties. The Company’s common shares of beneficial interest are publicly traded on the New York Stock Exchange under the ticker symbol “BDN”.
As of December 31, 2007, the Partnership owned 216 office properties, 23 industrial facilities and one mixed-use property (collectively, the “Properties”) containing an aggregate of approximately 24.9 million net rentable square feet. The Partnership also has seven properties under development and seven properties under redevelopment containing an aggregate 3.7 million net rentable square feet. As of December 31, 2007, the Partnership consolidates three office properties owned by real estate ventures containing 0.4 million net rentable square feet. Therefore, the Partnership owns and consolidates 257 properties with an aggregate of 29.0 million net rentable square feet. As of December 31, 2007, the Partnership 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, the Partnership owned approximately 417 acres of undeveloped land. The Properties and the properties owned by the Real Estate Ventures 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 Bermardo, CA. In addition to managing properties that the Partnership owns, as of December 31, 2007, the Partnership was managing approximately 14.5 million net rentable square feet of office and industrial properties for third parties.
All references to building square footage, acres, occupancy percentage and the number of buildings are unaudited.
Brandywine Realty Trust is the sole general partner of the Operating Partnership and, as of December 31, 2007, owned a 95.8% interest in the Operating Partnership. The Partnership conducts its third-party real estate management services business primarily through five management companies (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”). Each of BRSCO, BTRS and BPI is a taxable REIT subsidiary. The Operating Partnership owns, directly and indirectly, currently 100% of each of BRSCO, BTRS, BPI, BBL and BPM.
Prior to December 2007, 5% of BRSCO, one of the consolidated management services companies, was owned by a partnership comprised of a current executive and former executive of the Company, each of whom is a member of the Comapny’s Board of Trustees. In December 2007, the operating Partnership bought out this interest for a nominal amount and BRSCO is now wholly owned.
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 the Partnership and approximately 14.5 million net rentable square feet related to properties owned by third parties and Real Estate Ventures.
As more fully described in Note 3, on January 5, 2006, the Partnership acquired Prentiss Properties Trust (“Prentiss”) pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) that the Partnership entered into with Prentiss on October 3, 2005.

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
When the Partnership obtains an economic interest in an entity, the Partnership evaluates the entity to determine if the entity is deemed a variable interest entity (“VIE”), and if the Partnership is deemed to be the primary beneficiary, in accordance with FASB Interpretation No. 46R, “Consolidation of Variable Interest Entities” (“FIN 46R”).  When an entity is not deemed to be a VIE, the Partnership considers the provisions of 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”). The Partnership consolidates (i) entities that are VIEs and of which the Partnership is deemed to be the primary beneficiary and (ii) entities that are non-VIEs which the Partnership controls and the limited partners do not have the ability to dissolve the entity or remove the Partnership without cause nor substantive participating rights.  Entities that the Partnership accounts for under the equity method (i.e. at cost, increased or decreased by the Partnership’s share of earnings or losses, plus contributions, less distributions) include (i) entities that are VIEs and of which the Partnership is not deemed to be the primary beneficiary (ii) entities that are non-VIEs which the Partnership does not control, but over which the Partnership has the ability to exercise significant influence and (iii) entities that are non-VIE’s that the Partnership controls through its general partner status, but the limited partners in the entity have the substantive ability to dissolve the entity or remove the Partnership without cause or have substantive participating rights.  The Partnership will reconsider its determination of whether an entity is a VIE and who the primary beneficiary is, and whether or not the limited partners in an entity have substantive rights, if certain events occur that are likely to cause a change in the original determinations. The portion of these entities not owned by the Partnership is presented as minority interest as of and during the periods consolidated. All intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates
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 and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Management makes significant estimates regarding revenue, impairment of long-lived assets, allowance for doubtful accounts and deferred costs.
Operating Properties
Operating properties are carried at historical cost less accumulated depreciation and impairment losses. The cost of operating properties reflects their purchase price or development cost. Costs incurred for the acquisition and renovation of an operating property are capitalized to the Partnership’s investment in that property. Ordinary repairs and maintenance are expensed as incurred; major replacements and betterments, which improve or extend the life of the asset, are capitalized and depreciated over their estimated useful lives. Fully-depreciated assets are removed from the accounts.
Purchase Price Allocation
The Partnership allocates 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) the Partnership’s estimate of the fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of the lease. Capitalized above-market lease values are amortized as a reduction of rental income over the remaining non-cancelable terms of the respective leases. Capitalized below-market lease values are amortized as an increase to rental income over the remaining non-cancelable terms of the respective leases, including any below market fixed-rate renewal periods.

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Other intangible assets also include amounts representing the value of tenant relationships and in-place leases based on the Partnership’s evaluation of the specific characteristics of each tenant’s lease and the Partnership’s overall relationship with the respective tenant. The Partnership estimates the cost to execute leases with terms similar to the remaining lease terms of the in-place leases, including leasing commissions, legal and other related expenses. This intangible asset is amortized to expense over the remaining term of the respective leases. Partnership estimates of value are made using methods similar to those used by independent appraisers or by using independent appraisals. Factors considered by the Partnership in this analysis include an estimate of the carrying costs during the expected lease-up periods considering current market conditions and costs to execute similar leases. In estimating carrying costs, the Partnership includes 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. The Partnership also considers information obtained about each property as a result of its pre-acquisition due diligence, marketing and leasing activities in estimating the fair value of the tangible and intangible assets acquired. The Partnership also uses the information obtained as a result of its pre-acquisition due diligence as part of its consideration of FIN 47, Accounting for Conditional Asset Retirement Obligation (“FIN 47”) and when necessary, will record a conditional asset retirement obligation as part of its purchase price.
Characteristics considered by the Partnership in allocating value to its tenant relationships include the nature and extent of the Partnership’s business relationship with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit quality and expectations of lease renewals, among other factors. 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-cancelable 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 (above or below), in-place lease values and tenant relationship values, would be charged to expense and market rate adjustments would be recorded to revenue.
Depreciation and Amortization
The costs of buildings and improvements are depreciated using the straight-line method based on the following useful lives: buildings and improvements (five to 55 years) and tenant improvements (the shorter of the lease term or the life of the asset).
Construction in Progress
Project costs directly associated with the development and construction of a real estate project are capitalized as construction in progress. In addition, interest, real estate taxes and other expenses that are directly associated with the Partnership’s development activities are capitalized until the property is placed in service. Internal direct construction costs totaling $4.8 million in 2007, $4.9 million in 2006 and $3.4 million in 2005 and interest totaling $17.5 million in 2007, $9.5 million in 2006 and $9.6 million in 2005 were capitalized related to development of certain Properties and land holdings.
Impairment of Long-Lived Assets
Statement of Financial Accounting Standard No. 144 (“SFAS 144”), Accounting for the Impairment or Disposal of Long-Lived Assets, provides a single accounting model for long-lived assets as held-for-sale, broadens the scope of businesses to be disposed of that qualify for reporting as discontinued operations and changes the timing of recognizing losses on such operations.
In accordance with SFAS 144, 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 group 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

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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 are 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 other assets and liabilities related to assets classified as held-for-sale are presented separately in the consolidated balance sheet. The Partnership had no properties classified as held for sale at December 31, 2007. As of December 31, 2006, the Partnership had two properties classified as held for sale.
Cash and Cash Equivalents
Cash and cash equivalents are highly-liquid investments with original maturities of three months or less. The Partnership maintains cash equivalents in financial institutions in excess of insured limits, but believes this risk is mitigated by only investing in or through major financial institutions.
Restricted Cash
Restricted cash consists of cash held as collateral to provide credit enhancement for the Partnership’s mortgage debt, cash for property taxes, capital expenditures and tenant improvements. Restricted cash is included in other assets discussed below.
Accounts Receivable
Leases with tenants are accounted for as operating leases. Minimum annual rentals under tenant leases are recognized on a straight-line basis over the term of the related lease. The cumulative difference between lease revenue recognized under the straight-line method and contractual lease payment terms is recorded as “accrued rent receivable, net” on the accompanying balance sheets. Included in current tenant receivables are tenant reimbursements which are comprised of amounts recoverable from tenants for common area maintenance expenses and certain other recoverable expenses that are recognized as revenue in the period in which the related expenses are incurred. As of December 31, 2007, no tenant represented more than 10% of accounts receivable. As of December 31, 2006, one tenant represented approximately 17% of accounts receivable, a significant portion of which is for reimbursements in connection with a tenant improvement project.
Tenant receivables and accrued rent receivables are carried net of the allowances for doubtful accounts of $3.8 million and $6.4 million in 2007, respectively, and $4.5 million and $4.8 million in 2006, respectively. The allowance is an estimate based on two calculations that are combined to determine the total amount reserved. First, the Partnership evaluates specific accounts where it has determined that a tenant may have an inability to meet its financial obligations. In these situations, the Partnership uses its 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 the Partnership expects to collect. These reserves are reevaluated 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. These percentages are based on historical collection and write-off experience. If the financial condition of the Partnership’s tenants were to deteriorate, additional allowances may be required.
Investments in Unconsolidated Real Estate Ventures
The Partnership accounts for its investments in unconsolidated Real Estate Ventures under the equity method of accounting as it is not the primary beneficiary (for VIE’s) and the Partnership exercises significant influence, but does not control these entities under the provisions of the entities’ governing agreements pursuant to EITF 04-05. These investments are recorded initially at cost, as Investments in Real Estate Ventures, and subsequently adjusted for equity in earnings and cash contributions and distributions.
On a periodic basis, management assesses whether there are any indicators that the value of the Partnership’s investments in unconsolidated Real Estate Ventures may be other than temporarily impaired. An investment is impaired only if the value of the investment, as estimated by management, is less than the

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carrying value of the investment. To the extent impairment has occurred, the loss shall be measured as the excess of the carrying amount of the investment over the value of the investment, as estimated by management.
To the extent that the Partnership acquires an interest in or contributes assets to a Real Estate Venture project, the difference between the Partnership’s cost basis in the investment in venture and in the assets, intangibles and liabilities of the Real Estate Venture is amortized over the life of the related assets, intangibles and liabilities and such adjustment is included in the Partnership’s share of equity in income of unconsolidated ventures.
Deferred Costs
Costs incurred in connection with property leasing are capitalized as deferred leasing costs. Deferred leasing costs consist primarily of leasing commissions and internal leasing costs that are amortized on the straight-line method over the life of the respective lease which generally ranges from one to 15 years. Management re-evaluates the remaining useful lives of leasing costs as economic and market conditions change.
Costs incurred in connection with debt financing are capitalized as deferred financing costs and charged to interest expense over the terms of the related debt agreements. Deferred financing costs consist primarily of loan fees which are amortized over the related loan term. Management re-evaluates the remaining useful lives of financing costs as economic and market conditions change.
Other Assets
As of December 31, 2007, other assets included prepaid real estate taxes of $8.0 million, prepaid insurance of $5.7 million, marketable securities of $3.2 million, deposits on properties expected to be purchased in 2008 totaling $1.6 million, a tenant allowance totalling $8.0 million, cash surrender value of life insurance of $7.7 million, furniture, fixtures and equipment of $7.2 million, restricted cash of $17.2 million and $16.0 million of other assets. Also included in this balance are a $3.1 million note receivable with a 20 year amortization period for principal and interest (balloon payment in March 2008) that bears interest at 8.5% and an $7.8 million note receivable with a 20 year amortization period for principal and interest (balloon payment in December 2008) that bears interest at 8.5%.
As of December 31, 2006, other assets included a direct financing lease of $14.6 million, prepaid real estate taxes of $9.7 million, prepaid insurance of $4.4 million, marketable securities of $6.8 million, deposits on properties expected to be purchased in 2007 totaling $2.2 million, cash surrender value of life insurance of $11.6 million, furniture, fixtures and equipment of $6.8 million, restricted cash of $22.6 and $18.4 million of other assets. Also included in this balance are a $4.3 million note receivable with a 20 year amortization period for principal and interest (balloon payment in March 2008) that bears interest at 8.5% and an $8.0 million note receivable with a 20 year amortization period for principal and interest (balloon payment in December 2008) that bears interest at 8.5%.
Revenue Recognition
Rental revenue is recognized 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. The cumulative difference between lease revenue recognized under this method and contractual lease payment terms is recorded as “accrued rent receivable” on the accompanying balance sheets. The straight-line rent adjustment increased revenue by approximately $25.0 million in 2007, $31.3 million in 2006 and $15.0 million in 2005. Deferred rents on the balance sheet represent rental revenue received prior to their due dates and amounts paid by the tenant for certain improvements considered to be landlord assets that will remain the Partnership’s property at the end of the tenant’s lease term. The amortization of these amounts paid by the tenant for such improvements is calculated on a straight-line basis over the term of the tenant’s lease and is a component of straight-line rental income and increased revenue by $3.3 million in 2007 and $1.3 million in 2006. Leases also typically provide for tenant reimbursement of a portion of common area maintenance and other operating expenses to the extent

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that a tenant’s pro rata share of expenses exceeds a base year level set in the lease. Other income is recorded when earned and is primarily comprised of termination fees received from tenants, bankruptcy settlement fees, third party leasing commissions, and third party management fees. During 2007, 2006, and 2005, the Partnership earned $10.2 million, $7.8 million, and $6.1 million in termination fees.
No tenant represented greater than 10% of the Partnership’s rental revenue in 2007, 2006 or 2005.
Income Taxes
No federal or state income taxes are payable by the Partnership, and accordingly, no provision for taxes has been made in the accompanying consolidated financial statements. The partners are to include their respective share of the Partnership’s profits or losses in their individual tax returns. The Partnership’s tax returns and the amount of allocable Partnership profits and losses are subject to examination by federal and state taxing authorities. If such examination results in changes to Partnership profits or losses, then the tax liability of the partners would be changed accordingly.
The Partnership has several subsidiary real estate investment trusts (“REITs”) that have elected to be treated as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”). In order to maintain their qualification as a REIT, the REIT subsidiaries are required to, among other things, distribute at least 90% of its REIT taxable income to its stockholders and meet certain tests regarding the nature of its income and assets. The 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 entities. The 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 one of the REIT subsidiaries were to fail to meet these requirements, the REIT subsidiaries would be subject to federal income tax. The Partnership is subject to certain state and local taxes. Provision for such taxes has been included in general and administrative expenses in the Partner’s Consolidated Statements of Operations and Comprehensive Income.
The tax basis in the Partnership’s assets was $4.5 billion as of December 31, 2007 and $4.2 billion as of December 31, 2006.
The Company is subject to a 4% federal excise tax if sufficient taxable income is not distributed within prescribed time limits. The excise tax equals 4% of the annual amount, if any, by which the sum of (a) 85% of the Company’s ordinary income and (b) 95% of the Company’s net capital gain exceeds cash distributions and certain taxes paid by the Company. No excise tax was incurred in 2007, 2006, or 2005.
The Partnership may elect to treat one or more of its subsidiaries as a taxable REIT subsidiary (“TRS”). In general, a TRS of the Partnership may perform additional services for tenants of the Partnership 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 Partnership 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, the Partnership’s TRSs had tax net operating loss (“NOL”) carryforwards of approximately $2.5 million, expiring from 2013 to 2027. The Partnership has ascribed a full valuation allowance to its net deferred tax assets.
The Operating Partnership adopted the provisions of FASB interpretation No. 48, Accounting for Uncertainity 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, the Operating Partnership recognized no material adjustments regarding our tax accounting treatment. The Operating Partnership expects to recognize interest and penalties, to the extent incurred related to uncertion tax positions if any, as income tax expense, which would de included in general and administrative expense.
Earnings Per Share
Basic earnings per Common Partnership Unit is calculated by dividing income allocated to Common Partnership Unit by the weighted-average number of units outstanding during the period. Diluted earnings per Common Partnership Unit includes the effect of common partnership unit equivalents outstanding during the period.

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Stock-Based Compensation Plans
The Partnership Agreement provides for the issuance by the Partnership to its general partner, the Company, of a number of Common Partnership Units equal to the number of common shares issued by the Company, the net proceeds of which are contributed to the Partnership.  When the Company issues common shares under its equity-based compensation plan, the Partnership issues to the Company an equal number of Common Partnership Units. The Company maintains shareholder-approved equity incentive plans. The Compensation Committee of the Company’s Board of Trustees authorizes awards under these plans. 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. As of December 31, 2007, approximately 4.1 million common shares remained available for future award under the 1997 Plan (including the 500,000 shares that are limited to option awards as described above, and without giving effect to any shares that would become available for awards if and to the extent that outstanding awards lapse, expire or are forfeited).
On January 1, 2002, the Partnership began to expense the fair value of stock-based compensation awards granted subsequent to January 1, 2002, over the applicable vesting period as a component of general and administrative expenses in the Partnership’s consolidated Statements of Operations. The Partnership recognized stock-based compensation expense of $4,672,000 in 2007, $3,447,000 in 2006 and $2,764,000 in 2005.
Comprehensive Income
Comprehensive income or loss is recorded in accordance with the provisions of SFAS 130 (“SFAS 130”), Reporting Comprehensive Income. SFAS 130 establishes standards for reporting comprehensive income and its components in financial statements. Comprehensive income includes unrealized gains and losses on available-for-sale securities and the effective portions of changes in the fair value of derivatives.
Accounting for Derivative Instruments and Hedging Activities
The Partnership accounts for its derivative instruments and hedging activities under SFAS No. 133 (“SFAS 133”), Accounting for Derivative Instruments and Hedging Activities, and its corresponding amendments under SFAS No. 138, Accounting for Certain Derivative Instruments and Hedging Activities – An Amendment of SFAS 133. SFAS 133 requires the Partnership to measure every derivative instrument (including certain derivative instruments embedded in other contracts) at fair value and record them in the balance sheet as either an asset or liability. For derivatives designated as fair value hedges, the changes in fair value of both the derivative instrument and the hedged item are recorded in earnings. For derivatives designated as cash flow hedges, the effective portions of changes in the fair value of the derivative are reported in other comprehensive income. Changes in fair value of derivative instruments and ineffective portions of hedges are recognized in earnings in the current period. During 2007, the Partnership recognized $0.2 million in the statement of operations for the ineffective portion of its cash flow hedges and $3.7 million upon termination of certain of its cash flow hedges. For the years ended December 31, 2006 and 2005, the Partnership was not party to any derivative contract designated as a fair value hedge and there are no ineffective portions of our cash flow hedges. See Note 8.

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The Partnership actively manages its ratio of fixed-to-floating rate debt. To manage its fixed and floating rate debt in a cost-effective manner, the Partnership, from time to time, enters into interest rate swap agreements as cash flow hedges, under which it agrees to exchange various combinations of fixed and/or variable interest rates based on agreed upon notional amounts. See Note 8.
Reclassifications
Certain amounts have been reclassified in prior years to conform to the current year presentation. The reclassifications are primarily due to the treatment of sold properties as discontinued operations on the statement of operations for all periods presented and the reclassification of labor reimbursements received under our third party contracts to a gross presentation.
New Pronouncements
In December 2007, the FASB issued Statement No. 141 (revised 2007), “Business Combinations” (“SFAS 141(R)”), which establishes principles and requirements for how the acquirer shall recognize and measure in its financial statements the identifiable assets acquired, liabilities assumed, any noncontrolling interest in the acquiree and goodwill acquired in a business combination. This statement is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Partnership is currently assessing the potential impact that the adoption of SFAS 141(R) will have on its financial position and results of operations.
In December 2007, the FASB issued Statement No. 160, “Noncontrolling Interests in Consolidated Financial Statements — an Amendment of ARB No. 51” (“SFAS 160”), which establishes and expands accounting and reporting standards for minority interests, which will be recharacterized as noncontrolling interests, in a subsidiary and the deconsolidation of a subsidiary. SFAS 160 is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. This statement is effective for fiscal years beginning on or after December 15, 2008. The Partnership is currently assessing the potential impact that the adoption of SFAS 160 will have on its financial position and results of operations.
In June 2007, the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants (“AICPA”) issued Statement of Position 07-1, “Clarification of the Scope of the Audit and Accounting Guide Investment Companies and Accounting by Parent Companies and Equity Method Investors for Investments in Investment Companies” (“SOP 07-1”). SOP 07-1 addresses when the accounting principles of the AICPA Audit and Accounting Guide “Investment Companies” must be applied by an entity and whether investment company accounting must be retained by a parent company in consolidation or by an investor in the application of the equity method of accounting. In addition, SOP 07-1 includes certain disclosure requirements for parent companies and equity method investors in investment companies that retain investment company accounting in the parent company’s consolidated financial statements or the financial statements of an equity method investor. On February 14, 2008, FSP No. SOP 07-1-1 was issued to delay indefinitely the effective date of SOP 07-1 and prohibit adoption of SOP 07-1 for an entity that has not early adopted SOP 07-1 before issuance of the final FSP. The Partnership is currently evaluating the impact and believes that the adoption of this standard will not have a material effect on its financial position and results of operations.
In February 2007, the FASB issued Statement No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”), which gives entities the option to measure eligible financial assets, financial liabilities and firm commitments at fair value on an instrument-by-instrument basis, that are otherwise not permitted to be accounted for at fair value under other accounting standards. The election to use the fair value option is available when an entity first recognizes a financial asset or financial liability or upon entering into a firm commitment. Subsequent changes (i.e., unrealized gains and losses) in fair value must be recorded in earnings. Additionally, SFAS 159 allows for a one-time election for existing positions upon adoption, with the transition adjustment recorded to beginning retained earnings. This statement is effective for fiscal years beginning after November 15, 2007. The Partnership is currently assessing the potential impact that the adoption of SFAS 159 will have on its financial position and results of operations.

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In September 2006, the FASB issued Statement No. 157, Fair Value Measurements (“SFAS No. 157”). SFAS No. 157 provides guidance for using fair value to measure assets and liabilities. This statement clarifies the principle that fair value should be based on the assumptions that market participants would use when pricing the asset or liability. SFAS No. 157 establishes a fair value hierarchy, giving the highest priority to quoted prices in active markets and the lowest priority to unobservable data. SFAS No. 157 applies whenever other standards require assets or liabilities to be measured at fair value. SFAS No. 157 also provides for certain disclosure requirements, including, but not limited to, the valuation techniques used to measure fair value and a discussion of changes in valuation techniques, if any, during the period. This statement is effective in fiscal years beginning after November 15, 2007, except for nonfinancial assets and nonfinancial liabilities that are not recognized or disclosed at fair value on a recurring basis, for which the effective date is fiscal years beginning after November 15, 2008. The Partnership is currently evaluating the impact and believes that the adoption of this standard will not have a material effect on its financial position and results of operations.
3. REAL ESTATE INVESTMENTS
As of December 31, 2007 and 2006, the gross carrying value of the Partnership’s Properties was as follows:
                 
    December 31,  
    2007     2006  
    (amounts in thousands)  
Land
  $ 727,979     $ 756,400  
Building and improvements
    3,672,638       3,807,040  
Tenant improvements
    412,946       363,865  
 
           
 
  $ 4,813,563     $ 4,927,305  
 
           
Acquisitions and Dispositions
The Partnership’s acquisitions were accounted for by the purchase method. The results of each acquired property are included in the Partnership’s results of operations from their respective purchase dates.
2007
DRA Joint Venture
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 interest 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 sold 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 these transactions of approximately $230.9 million that it received in this transaction to reduce outstanding indebtedness under the Company’s unsecured revolving credit facility.
The company was hired by the Venture to perform property management and leasing services. The joint venture agreements provide for certain control rights and participation as a joint venture partner and, based on an evaluation of control rights, the Company will not consolidate the venture subsequent to its formation.
In connection with these transactions, the Company recorded a gain as a partial sale of $40.5 million. The Company’s continuing involvement with the properties through its joint venture interest and management fees and leasing commissions represents a significant continuing involvement in the properties. Accordingly, under EITF 03-13, “Applying the Conditions in Paragraph 42 of FASB Statement No. 144 in

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Determining Whether to Report Discontinued Operations”, the Company has determined that the gain on sale and the operations of the properties should not be included in discontinued operations.
Other 2007 Acquisitions and Dispositions
On November 30, 2007, the Partnership 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, the Partnership 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, the Partnership sold Iron Run Land, seven land parcels located 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, the Partnership 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. The Partnership intends to redevelop the building into office space for the Internal Revenue Service (“IRS”). As part of this acquisition, the Partnership 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”. The Partnership intends to demolish the existing structure located on the postal annex and to rebuild a parking facility containing approximately 733,000 square feet that will primarily be used by the IRS employees upon their move into the planned office space at the Post Office building. The remaining postal annex ground leased parcels can also accommodate additional office, retail, hotel and residential development and the Partnership is currently in the planning stage with respect to these parcels and is seeking specific zoning authorization related thereto.
On July 19, 2007, the Partnership 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. The Partnership funded $36.6 million 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, the Partnership acquired Lake Merritt Tower, an office property located in Oakland, California containing 204,278 net rentable square feet for an aggregate purchase price of $72.0 million. A portion of the proceeds from the sale of the 10 office properties located in Reading and Harrisburg, Pennsylvania in March 2007 was used to fully fund this purchase.
On April 30, 2007, the Partnership 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, the Partnership 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. The Partnership 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, the Partnership 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.
On March 1, 2007, the Partnership acquired the remaining 49% interest in a consolidated real estate venture previously owned by Stichting Pensioenfonds ABP containing ten office properties for a purchase price of $63.7 million. The Partnership owned a 51% interest in this real estate venture through the acquisition of Prentiss in January 5, 2006 and had already consolidated this venture. This purchase was accounted for as a step acquisition and the difference between the purchase price of the minority interest and the carrying value of the pro rata share of the assets of the real estate venture was allocated to the real estate venture’s assets and liabilities based on their relative fair value.

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On January 31, 2007, the Partnership 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, the Partnership 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, the Partnership 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.
2006
Prentiss Acquisition
On January 5, 2006, the Partnership acquired Prentiss pursuant to the Merger Agreement that the Partnership entered into with Prentiss on October 3, 2005. In conjunction with the Partnership’s acquisition of Prentiss, designees of The Prudential Insurance Partnership of America (“Prudential”) acquired certain of Prentiss’ properties that contain an aggregate of approximately 4.32 million net rentable square feet for a total consideration of approximately $747.7 million. Through its acquisition of Prentiss (and after giving effect to the Prudential acquisition of certain of Prentiss’ properties), the Partnership acquired a portfolio of 79 office properties (including 13 properties that are owned by consolidated Real Estate Ventures and 7 properties that are owned by an unconsolidated Real Estate Venture) that contain an aggregate of 14.0 million net rentable square feet. The results of the operations of Prentiss have been included in the Partnership’s condensed consolidated financial statements since January 5, 2006.
The Partnership funded the approximately $1.05 billion cash portion of the merger consideration, related transaction costs and prepayments of approximately $543.3 million in Prentiss mortgage debt at the closing of the merger through (i) a $750 million unsecured term loan that matured on January 4, 2007; (ii) approximately $676.5 million of cash from Prudential’s acquisition of certain of the Prentiss properties; and (iii) approximately $195.0 million through borrowing under a revolving credit facility.
The following table summarizes the fair value of the assets acquired and liabilities assumed at the date of acquisition (in thousands):

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    At January 5, 2006  
Real estate investments
       
Land - operating
  $ 282,584  
Building and improvements
    1,942,728  
Tenant improvements
    120,610  
 
     
Construction in progress and land inventory
    57,329  
 
     
Total real estate investments acquired
    2,403,251  
 
       
Rent receivables
    6,031  
Other assets acquired:
       
Intangible assets:
       
In-place leases
    187,907  
Relationship values
    98,382  
Above-market leases
    26,352  
 
     
Total intangible assets acquired
    312,641  
Investment in real estate ventures
    66,921  
Investment in marketable securities
    193,089  
Other assets
    8,868  
 
     
Total other assets
    581,519  
 
     
Total assets acquired
    2,990,801  
 
       
Liabilities assumed:
       
Mortgage notes payable
    532,607  
Unsecured notes
    78,610  
Secured note payable
    186,116  
Security deposits and deferred rent
    6,475  
Other liabilities:
       
Below-market leases
    78,911  
Other liabilities
    43,995  
 
     
Total other liabilities assumed
    122,906  
Total liabilities assumed
    926,714  
Minority interest
    104,658  
 
     
Net assets acquired
  $ 1,959,429  
 
     
In the acquisition of Prentiss, each then outstanding Prentiss common share was converted into the right to receive 0.69 of a Brandywine common share and $21.50 in cash (the “Per Share Merger Consideration”) except that 497,884 Prentiss common shares held in the Prentiss Deferred Compensation Plan converted solely into 720,737 Brandywine common shares. In addition, each then outstanding unit (each, a “Prentiss OP Unit”) of limited partnership interest in the Prentiss operating partnership subsidiary was, at the option of the holder, converted into Prentiss Common Shares with the right to receive the Per Share Merger Consideration or 1.3799 Class A Units of the Operating Partnership (“Brandywine Class A Units”). Accordingly, based on 49,375,723 Prentiss common shares outstanding and 139,000 Prentiss OP Units electing to receive merger consideration at closing of the acquisition, the Partnership issued 34,541,946 Brandywine common shares and paid an aggregate of approximately $1.05 billion in cash to the accounts of the former Prentiss shareholders. Based on 1,572,612 Prentiss OP Units outstanding at closing of the acquisition that did not elect to receive merger consideration, the Operating Partnership issued 2,170,047 Brandywine Class A Units. In addition, options issued by Prentiss that were exercisable for an aggregate of 342,662 Prentiss common shares were converted into options exercisable for an aggregate of 496,037 Brandywine common shares at a weighted average exercise price of $22.00 per share. Through its acquisition of Prentiss the Partnership also assumed approximately $611.2 million in aggregate principal amount of Prentiss debt.
Each Brandywine Class A Unit that was issued in the merger is subject to redemption at the option of the holder. The Operating Partnership may, at its option, 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.

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For purposes of computing the total purchase price reflected in the financial statements, the common shares, operating units, restricted shares and options that were issued in the Prentiss transaction were valued based on the average trading price per Brandywine common share of $29.54. The average trading price was based on the average of the high and low trading prices for each of the two trading days before, the day of and the two trading days after the merger was announced (i.e., September 29, September 30, October 3, October 4 and October 5).
The Partnership considered the provisions of FIN 47 for these acquisitions and, where necessary, recorded a conditional asset retirement obligation as part of the purchase price. The aggregate asset retirement recorded in connection with the Prentiss acquisition was approximately $2.7 million.
Pro forma information relating to the acquisition of Prentiss is presented below as if Prentiss was acquired and the related financing transactions occurred on January 1, 2006 and 2005. These pro forma results are not necessarily indicative of the results which actually would have occurred if the acquisition had occurred on the first day of the periods presented, nor does the pro forma financial information purport to represent the results of operations for future periods (in thousands, except per share amounts):
                 
    December 31,  
    2006     2005  
    (unaudited)  
Pro forma revenue
  $ 633,689     $ 628,084  
 
               
Pro forma loss from continuing operations
    (19,610 )     (24,912 )
 
               
Pro forma loss allocated to common shares
    2,999       (22,558 )
 
               
Earnings per common share from continuing operations
               
Basic — as reported
  $ 0.30     $ 0.44  
 
           
Basic — as pro forma
  $ 0.29     $ (0.36 )
 
           
Diluted — as reported
  $ 0.30     $ 0.44  
 
           
Diluted — as pro forma
  $ 0.29     $ 0.36  
 
           
 
               
Earnings per common share
               
Basic — as reported
  $ 0.03     $ 0.62  
 
           
Basic — as pro forma
  $ 0.03     $ 0.25  
 
           
Diluted — as reported
  $ 0.03     $ 0.62  
 
           
Diluted — as pro forma
  $ 0.03     $ 0.24  
 
           
Subsequent to its acquisition of Prentiss and the related sale of certain properties to Prudential, the Partnership sold seventeen of the acquired properties that contain an aggregate of 2.9 million net rentable square feet and one parcel of land containing 10.9 acres.
Other Acquisitions and Dispositions
In addition to the acquisition and disposition activity related to Prentiss, during 2006, the Partnership did the following:
On December 18, 2006, the Partnership sold 105/140 Terry Drive, an office property located in Newtown, Pennsylvania containing 128,666 net rentable square feet, for a sales price of $16.2 million.
On December 1, 2006, the Partnership sold a parcel of land located in Newtown, Pennsylvania containing 59.0 acres, for a sales price of $19.0 million.
On November 16, 2006, the Partnership acquired 2251 Corporate Park Drive, an office property located in Herndon, Virginia containing 158,016 net rentable square feet, for a purchase price of $59.0 million.

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On November 15, 2006, the Partnership sold 5 and 6 Cherry Hill Executive Campus, two office properties located in Cherry Hill, New Jersey containing an aggregate of 167,017 net rentable square feet, for an aggregate sales price of $17.6 million.
On August 28, 2006, the Partnership sold 111 Presidential Boulevard, an office property located in Bala Cynwyd, Pennsylvania containing 172,894 net rentable square feet, for a sales price of $34.9 million.
On August 21, 2006, the Partnership acquired 2340 and 2355 Dulles Corner Boulevard, two office properties located in Herndon, Virginia containing an aggregate of 443,581 net rentable square feet, for an aggregate purchase price of $133.2 million.
On July 12, 2006, the Partnership sold 110 Summit Drive, an office property located in Exton, Pennsylvania containing 43,660 net rentable square feet, for a sales price of $3.7 million.
On June 27, 2006, the Partnership acquired a parcel of land located in Goochland County, Virginia containing 23.2 acres, for a purchase price of $4.6 million.
On June 21, 2006, the Partnership sold a parcel of land located in Westampton, New Jersey containing 5.5 acres, for a sales price of $0.4 million.
On April 21, 2006, the Partnership acquired a parcel of land located in Newtown, Pennsylvania containing 5.5 acres, for a purchase price of $1.9 million.
On April 20, 2006, the Partnership sold a parcel of land located in Radnor, Pennsylvania containing 1.3 acres, for a sales price of $4.5 million.
On April 17, 2006, the Partnership acquired a parcel of land located in Mount Laurel, New Jersey containing 47.9 acres, for a purchase price of $6.7 million.
On April 4, 2006, the Partnership acquired One Paragon Place, an office property located in Richmond, Virginia containing 145,127 net rentable square feet, for a purchase price of $24.0 million.
On February 1, 2006, the Partnership acquired 100 Lenox Drive, an office property located in Lawrenceville, New Jersey containing 92,980 net rentable square feet, for a purchase price of $10.2 million.
2005
During 2005, the Partnership acquired one industrial property containing 385,884 net rentable square feet, two office properties containing 283,511 net rentable square feet and 36.4 acres of developable land for an aggregate purchase price of $94.5 million. The Partnership sold the industrial property acquired in 2005 containing 385,884 net rentable square feet and three parcels of land containing 18.0 acres for an aggregate $30.2 million, realizing net gains totaling $6.8 million.
4. INVESTMENT IN UNCONSOLIDATED 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. 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.
The Partnership also has investments in three Real Estate Ventures that are variable interest entities under FIN 46R and of which the Partnership is the primary beneficiary, and one investment in a Real Estate

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Venture for which the Partnership serves as the general partner and the limited partner does not have substantive participating rights. These entities are consolidated by the Partnership.
The Partnership accounts for its unconsolidated interests in its Real Estate Ventures using the equity method. Unconsolidated interests range from 5% to 50%, subject to specified priority allocations in certain of the Real Estate Ventures.
The amounts reflected in the following tables (except for carrying amount and the Partnership’s share of equity and income) are based on the historical financial information of the individual Real Estate Ventures. One of the Real Estate Ventures, acquired in connection with the Prentiss acquisition, had a negative equity balance on a historical cost basis as a result of historical depreciation and distribution of excess financing proceeds. The Partnership reflected its acquisition of this Real Estate Venture interest at its relative fair value as of the date of the purchase of Prentiss. The difference between allocated cost and the underlying equity in the net assets of the investee is accounted for as if the entity were consolidated (i.e., allocated to the Partnership’s relative share of assets and liabilities with an adjustment to recognize equity in earnings for the appropriate additional depreciation/amortization).
The Partnership’s investment in Real Estate Ventures as of December 31, 2007 and the Partnership’s share of the Real Estate Ventures’ income (loss) for the year ended December 31, 2007 was as follows (in thousands):
                                                 
                    Partnership’s Share            
                    of 2007 Real Estate   Real Estate   Current    
    Ownership   Carrying   Venture   Venture   Interest   Debt
    Percentage (1)   Amount   Income (Loss)   Debt at 100%   Rate   Maturity
Two Tower Bridge Associates
    35 %   $ 2,287     $ (344 )   $ 11,816       6.82 %   May-08
Five Tower Bridge Associates
    15 %     162             29,260       6.77 %   Feb-09
Seven Tower Bridge Associates
    10 %     299                   N/A       N/A  
Eight Tower Bridge Associates
    5.5 %     (198 )           68,464       7.68 %   Feb-12
1000 Chesterbrook Boulevard
    50 %     2,333       669       26,410       6.88 %   Nov-11
PJP Building Two, LC
    30 %     177       124       5,107       6.12 %   Nov-23
PJP Building Three, LC
    25 %     (26 )                 N/A       N/A  
PJP Building Five, LC
    25 %     148       54       6,380       6.47 %   Aug-19
PJP Building Six, LC
    25 %     96       21       8,033       6.35 %     6/1/2009  
PJP Building Seven, LC
    25 %     75             1,296       6.35 %   Oct-10
Macquarie BDN Christina LLC
    20 %     2,854       1,228       74,500       4.62 %   Jan-09
Broadmoor Austin Associates
    50 %     62,775       680       109,020       5.79 %   Apr-11
Residence Inn Tower Bridge
    50 %     616       472       14,480       5.63 %   Feb-16
G&I Interchange Office LLC (DRA) (2)
    20 %                 184,000       5.78 %   Jan-15
Invesco, L.P. (3)
    35 %           4,051             N/A       N/A  
                             
 
          $ 71,598     $ 6,955     $ 538,766                  
                             
 
(1)   Ownership percentage represents the Partnership’s entitlement to residual distributions after payments of priority returns, where applicable.
 
(2)   See Note 3 - Real Estate Investments for description of formation of the Venture. The Partnership retained a 20% interest and received distributions from financing in excess of its basis. The Partnership has no commitment to fund and no expectation of operating losses, accordingly, the Partnership’s carrying value has not been reduced below zero.
 
(3)   The Partnership’s interest consists solely of a residual profits interest. This distribution represents the Partnership’s final distribution from the Venture and, therefore, it is no longer included in our total real estate venture count.
The following is a summary of the financial position of the unconsolidated Real Estate Ventures in which the Partnership had investment interests as of December 31, 2007 and 2006 (in thousands):

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    December 31,
    2007   2006
Net property
  $ 630,327     $ 365,168  
Other assets
    63,458       52,935  
Other Liabilities
    34,149       28,764  
Debt
    538,766       332,589  
Equity
    120,870       56,888  
Company’s share of equity (Company basis)
    71,598       74,574  
The following is a summary of results of operations of the unconsolidated Real Estate Ventures in which the Partnership had interests as of December 31, 2007, 2006 and 2005 (in thousands):
                         
    Year ended December 31,
    2007   2006   2005
Revenue
  $ 75,541     $ 70,381     $ 59,346  
Operating expenses
    25,724       26,878       29,387  
Interest expense, net
    21,442       21,711       12,324  
Depreciation and amortization
    15,526       17,808       9,359  
Net income
    12,849       5,176       8,276  
Company’s share of income (Company basis)
    6,955       2,165       3,172  
As of December 31, 2007, the aggregate principal payments of non-recourse debt payable to third-parties is as follows (in thousands):
         
2008
  $ 16,653  
2009
    121,684  
2010
    11,105  
2011
    106,505  
2012
    69,280  
Thereafter
    213,539  
 
     
 
  $ 538,766  
 
     
As of December 31, 2007, the Partnership had guaranteed repayment of approximately $0.3 million of loans on behalf of certain Real Estate Ventures. The Partnership also provides customary environmental indemnities in connection with construction and permanent financing both for its own account and on behalf of its Real Estate Ventures. For certain of the Real Estate Ventures with construction projects, the Partnership’s expectation is that it will be required to fund approximately $10.6 million of the construction costs through capital calls.
5. DEFERRED COSTS
As of December 31, 2007 and 2006, the Partnership’s deferred costs were comprised of the following (in thousands):

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    December 31, 2007  
            Accumulated     Deferred Costs,  
    Total Cost     Amortization     net  
Leasing Costs
  $ 99,077     $ (31,259 )   $ 67,818  
Financing Costs
    27,597       (8,292 )     19,305  
 
                 
Total
  $ 126,674     $ (39,551 )   $ 87,123  
 
                 
                         
    December 31, 2006  
            Accumulated     Deferred Costs,  
    Total Cost     Amortization     net  
Leasing Costs
  $ 83,629     $ (28,278 )   $ 55,351  
Financing Costs
    24,648       (6,291 )     18,357  
 
                 
Total
  $ 108,277     $ (34,569 )   $ 73,708  
 
                 
During 2007, 2006 and 2005, the Partnership capitalized internal direct leasing costs of $8.2 million, $8.3 million and $4.7 million, respectively, in accordance with SFAS No. 91 and related guidance.
6. INTANGIBLE ASSETS AND LIABILITIES
As of December 31, 2007 and 2006, the Partnership’s intangible assets/liabilities were comprised of the following (in thousands):
                         
    December 31, 2007  
            Accumulated     Deferred Costs,  
    Total Cost     Amortization     net  
In-place lease value
  $ 180,456     $ (65,742 )   $ 114,714  
Tenant relationship value
    121,094       (32,895 )     88,199  
Above market leases acquired
    29,337       (14,101 )     15,236  
 
                 
Total
  $ 330,887     $ (112,738 )   $ 218,149  
 
                 
 
                       
Below market leases acquired
  $ 103,825     $ (36,544 )   $ 67,281  
 
                 
                         
    December 31, 2006  
            Accumulated     Deferred Costs,  
    Total Cost     Amortization     net  
In-place lease value
  $ 207,513     $ (52,293 )   $ 155,220  
Tenant relationship value
    124,605       (19,572 )     105,033  
Above market leases acquired
    32,667       (11,669 )     20,998  
 
                 
Total
  $ 364,785     $ (83,534 )   $ 281,251  
 
                 
 
                       
Below market leases acquired
  $ 118,536     $ (26,009 )   $ 92,527  
 
                 
For the years ended December 31, 2007, 2006, and 2005 the Partnership wrote-off $4.1 million, $1.2 million, and $1.1 million, respectively of intangible assets as a result of tenant move-outs prior to the end of the associated lease terms. During 2007, the Partnership wrote off approximately $0.4 million and approximately $0.1 million of intangible liabilities as a result of tenant move-outs in each of the years ending December 31, 2006, and 2005.
As of December 31, 2007, the Partnership’s annual amortization for its intangible assets/liabilities are as follows (in thousands, assumes no early terminations):

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    Assets     Liabilities  
2008
  $ 48,725     $ 14,904  
2009
    42,377       11,984  
2010
    35,344       9,567  
2011
    27,358       7,841  
2012
    21,067       6,899  
Thereafter
    43,278       16,086  
 
           
Total
  $ 218,149     $ 67,281  
 
           
7. DEBT OBLIGATIONS
The following table sets forth information regarding the Partnership’s mortgage indebtedness outstanding at December 31, 2007 and 2006 (in thousands):

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MORTGAGE DEBT:
                                 
                    Effective        
    December 31,     December 31,     Interest     Maturity  
Property / Location   2007     2006     Rate     Date  
Interstate Center
  $     $ 552       6.19%     Mar-07
The Bluffs
          10,700       6.00% (a)   Apr-07
Pacific Ridge
          14,500       6.00% (a)   Apr-07
Pacific View/Camino
          26,000       6.00% (a)   Apr-07
Computer Associates Building
          31,000       6.00% (a)   Apr-07
Presidents Plaza
          30,900       6.00% (a)   Apr-07
440 & 442 Creamery Way
          5,421       8.55%   May-07
Grande A
          59,513       7.48%   Jul-07
Grande B
          77,535       7.48%   Jul-07
481 John Young Way
          2,294       8.40%   Dec-07
400 Commerce Drive
    11,575       11,797       7.12%   Jun-08
Two Logan Square
    70,124       71,348       5.78% (a)   Jul-09
200 Commerce Drive
    5,765       5,841       7.12% (a)   Jan-10
1333 Broadway
    23,997       24,418       5.18% (a)   May-10
The Ordway
    45,509       46,199       7.95% (a)   Aug-10
World Savings Center
    27,142       27,524       7.91% (a)   Nov-10
Plymouth Meeting Exec.
    43,470       44,103       7.00% (a)   Dec-10
Four Tower Bridge
    10,518       10,626       6.62%   Feb-11
Arboretum I, II, III & V
    22,225       22,750       7.59%   Jul-11
Midlantic Drive/Lenox Drive/DCC I
    61,276       62,678       8.05%   Oct-11
Research Office Center
    41,527       42,205       7.64% (a)   Oct-11
Concord Airport Plaza
    37,570       38,461       7.20% (a)   Jan-12
Six Tower Bridge
    14,472       14,744       7.79%   Aug-12
Newtown Square/Berwyn Park/Libertyview
    62,125       63,231       7.25%   May-13
Coppell Associates
    3,512       3,737       6.89%   Dec-13
Southpoint III
    4,426       4,949       7.75%   Apr-14
Tysons Corner
    100,000       100,000       4.84% (a)   Aug-15
Coppell Associates
    16,600       16,600       5.75%   Feb-16
 
                           
Principal balance outstanding
    601,833       869,626                  
 
                               
Plus: unamortized fixed-rate debt premiums, net
    10,065       14,294                  
 
                           
Total mortgage indebtedness
  $ 611,898     $ 883,920                  
 
                           
 
                               
UNSECURED DEBT:
                               
Sweep Agreement Line
    10,727           Libor + 0.75%   Mar-08
Private Placement Notes due 2008
    113,000       113,000       4.34%   Dec-08
2009 Three Year Notes
          300,000     Libor + 0.45%   Apr-09
2009 Five Year Notes
    275,000       275,000       4.62%   Nov-09
Bank Term Loan
    150,000           Libor + 0.80%   Oct-10
2010 Five Year Notes
    300,000       300,000       5.61%   Dec-10
Line-of-Credit
    120,000       60,000     Libor + 0.725%   Jun-11
3.875% Exchangeable Notes
    345,000       345,000       3.87%   Oct-11
2012 Six Year Notes
    300,000       300,000       5.77%   Apr-12
2014 Ten Year Notes
    250,000       250,000       5.53%   Nov-14
2016 Ten Year Notes
    250,000       250,000       5.95%   Apr-16
2017 Ten Year Notes
    300,000             5.72%   May-17
Indenture IA (Preferred Trust I)
    27,062       27,062     Libor + 1.25%   Mar-35
Indenture IB (Preferred Trust I)
    25,774       25,774     Libor + 1.25%   Apr-35
Indenture II (Preferred Trust II)
    25,774       25,774     Libor + 1.25%   Jul-35
 
                           
Principal balance outstanding
    2,492,337       2,271,610                  
 
                               
Plus: unamortized fixed-rate debt discounts, net
    (3,266 )     (3,300 )                
 
                           
Total unsecured indebtedness
  $ 2,489,071     $ 2,268,310                  
 
                           
 
Total Debt Obligations
  $ 3,100,969     $ 3,152,230                  
 
                           
 
(b)   Loans were assumed upon acquisition of the related property. Interest rates presented above reflect the market rate at the time of acquisition.
The mortgage note payable balance of $5.1 million for Norriton Office Center as of December 31, 2006, not included in the table above, is included in Mortgage notes payable and other liabilities held for sale on the balance sheet. This property was held for sale at December 31, 2006 and sold in January 2007.

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During 2007, 2006 and 2005, the Partnership’s weighted-average interest rate on its mortgage notes payable was 6.74%, 6.57% and 7.17%, respectively. As of December 31, 2007 and 2006, the net carrying value of the Partnership’s Properties that are encumbered by mortgage indebtedness was $1,003.5 million and $1,498.9 million, respectively.
On April 30, 2007, the Operating Partnership completed an underwritten public offering of $300.0 million aggregate principal amount of 5.70% unsecured notes due 2017 (the “2017 Notes”). Brandywine Realty Trust guaranteed the payment of principal and interest on the 2017 Notes. The Partnership used proceeds from these notes to reduce borrowings under the Partnership’s revolving credit facility.
On November 29, 2006, the Partnership irrevocably called for redemption of the $300 million aggregate principal amount of unsecured floating rate notes due 2009 (the “2009 Notes”) 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, the Partnership incurred accelerated amortization of $1.4 million in associated deferred financing costs in the fourth quarter 2006.
On October 4, 2006, the Operating Partnership 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 million of 3.875% Exchangeable Guaranteed Notes due 2026 on October 16, 2006 to cover over-allotments. The Operating Partnership has 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 the Company’s 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). The Operating Partnership may not redeem the notes prior to October 20, 2011 (except to preserve the Company’s 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 the Company to repurchase all or a portion of the notes at a purchase price equal to the principal amount plus accrued and unpaid interest. The Operating Partnership used net proceeds from the notes to repurchase approximately $60.0 million of the Company’s common stock 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, the Operating Partnership completed an underwritten public offering of (1) the 2009 Notes, (2) $300 million aggregate principal amount of 5.75% unsecured notes due 2012 (the “2012 Notes”) and (3) $250 million aggregate principal amount of 6.00% unsecured notes due 2016 (the “2016 Notes”). Brandywine Realty Trust guaranteed the payment of principal and interest on the 2009 Notes, the 2012 Notes and the 2016 Notes. The Company used proceeds from these notes to repay a term loan obtained to finance a portion of the consideration paid in the Prentiss merger and to reduce borrowings under the Company’s revolving credit facility.
The Operating Partnership’s indenture relating to unsecured notes contains financial restrictions and requirements, 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. In addition, the note purchase agreement relating to the Operating Partnership’s $113 million principal amount unsecured notes due 2008 contains covenants that are similar to the covenants in the indenture.
On October 15, 2007, the Partnership entered into a term loan agreement (the “Term Loan Agreement”) that provides for an unsecured term loan (the “Term Loan”) in the amount of $150.0 million. The Partnership used the proceeds to pay down a portion of the outstanding amount on its $600.0 million unsecured revolving credit facility. The Term Loan matures on October 18, 2010 and may be extended at the Partnership’s option for two one-year periods but not beyond the maturity date of its revolving credit facility. There is no scheduled principal amortization of the Term Loan and the Partnership may prepay borrowings in whole or in part without premium or penalty. Portions of the Term Loan bear interest at a

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per annum floating rate equal to: (i) the higher of (x) the prime rate or (y) the federal funds rate plus 0.50% per annum or (ii) a London interbank offered rate that is the rate at which Eurodollar deposits for one, two, three or six months are offered plus between 0.475% and 1.10% per annum (the “Libor Margin”), depending on the Partnership’s debt rating. The Term Loan Agreement contains financial and operating covenants. Financial covenants include minimum net worth, fixed charge coverage ratio, maximum leverage ratio, restrictions on unsecured and secured debt as a percentage of unencumbered assets and other financial tests. Operating covenants include limitations on the Partnership’s ability to incur additional indebtedness, grant liens on assets, enter into affiliate transactions, and pay dividends.
The Partnership utilizes credit facility borrowings for general business purposes, including the acquisition, development and redevelopment of properties and the repayment of other debt. On June 29, 2007, the Partnership amended its $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 the Partnership’s option, upon its 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 facility fee paid quarterly 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 the Partnership’s 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 the Partnership 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 the Partnership at a reduced Eurodollar rate. The Partnership has the option to increase the Credit Facility to $800.0 million subject to the absence of any defaults and the Partnership’s ability to acquire additional commitments from its existing lenders or new lenders. As of December 31, 2007, the Partnership had $120.0 million of borrowings and $13.5 million of letters of credit outstanding under the Credit Facility, leaving $466.5 million of unused availability. As of December 31, 2007 and 2006, the weighted-average interest rate on the Credit Facility, including the effect of interest rate hedges, was 6.25% and 5.93%, respectively.
The Credit Facility requires the maintenance of ratios related to minimum net worth, debt-to-total capitalization and fixed charge coverage and includes non-financial covenants.
In April 2007, the Partnership entered into a $20.0 million Sweep Agreement (the “Sweep Agreement”) to be used for cash management purposes. Borrowings under the Sweep Agreement bear interest at one-month LIBOR plus 0.75%. As of December 31, 2007 the Partnership had $10.7 million of borrowing outstanding under the Sweep Agreement, leaving $9.3 million of unused availability.
As of December 31, 2007, the Partnership’s aggregate principal payments are as follows (in thousands):
         
2008
  $ 146,005  
2009
    354,955  
2010
    600,189  
2011
    597,261  
2012
    351,053  
Thereafter
    1,044,707  
 
     
Total principal payments
  $ 3,094,170  
Net unamortized premiums/discounts
    6,799  
 
     
Outstanding indebtedness
  $ 3,100,969  
 
     
8. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following fair value disclosure was determined by the Partnership using available market information and discounted cash flow analyses as of December 31, 2007 and 2006, respectively. The discount rate used in calculating fair value is the sum of the current risk free rate and the risk premium on the date of acquiring or assuming the instruments or obligations. Considerable judgment is necessary to interpret market data and to develop the related estimates of fair value. Accordingly, the estimates presented are not

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necessarily indicative of the amounts that the Partnership could realize upon disposition. The use of different estimation methodologies may have a material effect on the estimated fair value amounts. The Partnership believes that the carrying amounts reflected in the Consolidated Balance Sheets at December 31, 2007 and 2006 approximate the fair values for cash and cash equivalents, accounts receivable, other assets, accounts payable, accrued expenses and borrowings under variable rate debt instruments.
The following are financial instruments for which the Partnership estimates of fair value differ from the carrying amounts (in thousands):
                                 
    December 31, 2007   December 31, 2006
    Carrying   Fair   Carrying   Fair
    Amount   Value   Amount   Value
Mortgage payable, net of premiums
  $ 611,898     $ 597,287     $ 888,470     $ 859,490  
Unsecured Notes payable, net of discounts
  $ 2,129,734     $ 1,996,475     $ 1,829,701     $ 1,826,357  
9. RISK MANAGEMENT AND USE OF FINANCIAL INSTRUMENTS
Risk Management
In the normal course of its on-going business operations, the Partnership encounters economic risk. There are three main components of economic risk: interest rate risk, credit risk and market risk. The Partnership is subject to interest rate risk on its interest-bearing liabilities. Credit risk is the risk of inability or unwillingness of tenants to make contractually required payments. Market risk is the risk of declines in the value of properties due to changes in rental rates, interest rates or other market factors affecting the valuation of properties held by the Partnership.
Use of Derivative Financial Instruments
The Partnership’s use of derivative instruments is limited to the utilization of interest rate agreements or other instruments to manage interest rate risk exposures and not for speculative purposes. The principal objective of such arrangements is to minimize the risks and/or costs associated with the Partnership’s operating and financial structure, as well as to hedge specific transactions. The counterparties to these arrangements are major financial institutions with which the Partnership and its affiliates may also have other financial relationships. The Partnership is potentially exposed to credit loss in the event of non-performance by these counterparties. However, because of the high credit ratings of the counterparties, the Partnership does not anticipate that any of the counterparties will fail to meet these obligations as they come due. The Partnership does not hedge credit or property value market risks through derivative financial instruments.
The Partnership formally assesses, both at inception of the hedge and on an on-going basis, whether each derivative is highly-effective in offsetting changes in cash flows of the hedged item. If management determines that a derivative is not highly-effective as a hedge or if a derivative ceases to be a highly-effective hedge, the Partnership will discontinue hedge accounting prospectively.
Outstanding Derivatives
In November 2007, the Partnership 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. The hedge had a nominal fair value at December 31, 2007 that is included in other liabilities and accumulated other comprehensive income in the accompanying consolidated balance sheet.
In October 2007, the Partnership 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.

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In September 2007, the Partnership 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.
Terminated Derivatives
In July 2007, in anticipation of an expected debt offering, the Partnership 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 treasury lock agreements have an expiration of 5 years with the following trade dates, notional amounts and all-in rates:
                 
Trade Date   Notional Amount   All-in Rate
       July 10, 2007
  $50.0 million     4.984 %
       July 18, 2007
  $50.0 million     4.915 %
       July 20, 2007
  $25.0 million     4.848 %
       July 25, 2007
  $25.0 million     4.780 %
The agreements were settled on September 21, 2007, the original termination date of each agreement, at a total cost of $3.9 million. During the fourth quarter upon completion of the DRA transaction, the Partnership determined it was probable that the forecasted transaction would not occur and accordingly, recorded an expense for the residual balance of $3.7 million. During the quarter ended September 30, 2007, the Partnership recorded the ineffective portion of these agreements, totaling $0.2 million, in the accompanying consolidated statement of operations.
In March 2007, in anticipation of the offering of 2017 Notes, the Partnership entered into two treasury lock agreements. The treasury lock agreements were designated as cash flow hedges on interest rate risk and qualified for hedge accounting. Each of the treasury lock agreements were for notional amounts of $75.0 million for an expiration of 10 years at all-in rates of 4.5585% and 4.498%. The agreements were settled in April 2007 upon completion of the offering of the 2017 Notes at a total benefit of $1.1 million, with nominal ineffectiveness. This benefit was recorded as a component of accumulated other comprehensive income in the accompanying consolidated balance sheet and is being amortized over the term of the 2017 Notes.
In March 2006, in anticipation of the offering of the 2009 Notes, the 2012 Notes and the 2016 Notes, the Partnership entered into forward starting swaps. The forward starting swaps were designated as cash flow hedges of interest rate risk and qualified for hedge accounting. The forward starting swaps were for notional amounts totaling $200.0 million at an all-in-rate of 5.2%. Two of the forward starting swaps had a nine year maturity date and one had a ten year maturity date. The forward starting swaps were settled in March 2006 upon the completion of the offering of the 2009, 2012, and 2016 Notes at a total benefit of approximately $3.3 million with nominal ineffectiveness. The benefit was recorded as a component of accumulated other comprehensive income in the accompanying consolidated balance sheet and is being amortized to interest expense over the term of the unsecured notes.
The Partnership entered into two interest rate swaps in January 2006 aggregating $90 million in notional amount as part of its acquisition of Prentiss. The instruments were used to hedge the risk of interest cash outflows on secured variable rate debt on properties that were included as part of the real estate venture in which the Partnership purchased the remaining 49% of the minority interest partner’s share in March 2007. One of the swaps with a notional amount of $20 million had a maturity date of February 1, 2010 at an all-in rate of 4.675%. The other, with a notional amount of $70 million, had a maturity date of August 1, 2008 at an all in rate of 4.675%. The agreements were settled in April 2007 in connection with the repayment of five mortgage notes, at a total benefit of $0.4 million with nominal ineffectiveness.

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Concentration of Credit Risk
Concentrations of credit risk arise when a number of tenants related to the Partnership’s investments or rental operations are engaged in similar business activities, or are located in the same geographic region, or have similar economic features that would cause their inability to meet contractual obligations, including those to the Partnership, to be similarly affected. The Partnership regularly monitors its tenant base to assess potential concentrations of credit risk. Management believes the current credit risk portfolio is reasonably well diversified and does not contain any unusual concentration of credit risk. No tenant accounted for 10% or more of the Partnership’s rents during 2007, 2006 and 2005.
10. DISCONTINUED OPERATIONS
For the years ended December 31, 2007, 2006 and 2005, income from discontinued operations relates to 44 properties containing approximately 7,304,131 million net rentable square feet that the Partnership has sold since January 1, 2005.
The following table summarizes revenue and expense information for the 44 properties sold since January 1, 2005 (in thousands):
                         
    Years Ended December 31,  
    2007     2006     2005  
Revenue:
                       
Rents
  $ 12,844     $ 84,064     $ 25,750  
Tenant reimbursements
    1,531       6,967       1,503  
Termination fees
          529        
Other
    214       1,151       49  
 
                 
Total revenue
    14,589       92,711       27,302  
 
                       
Expenses:
                       
Property operating expenses
    5,013       33,660       9,691  
Real estate taxes
    1,644       10,921       3,140  
Depreciation & amortization
    4,748       34,706       5,882  
 
                 
Total operating expenses
    11,405       79,287       18,713  
 
                       
Operating income
    3,184       13,424       8,589  
 
                       
Interest income
          13       6  
Interest expense
          (840 )     (445 )
 
                 
 
                       
Income from discontinued operations before gain on sale of interests in real estate and minority interest
    3,184       12,597       8,150  
 
                       
Net gain on sale of interests in real estate
    25,743       20,243       2,196  
Minority interest - partners’ share of net gain on sale
          (1,757 )      
Minority interest - partners’ share of consolidated real estate venture
          (482 )      
 
                 
Income from discontinued operations
  $ 28,927     $ 30,601     $ 10,346  
 
                 
Discontinued operations have not been segregated in the consolidated statements of cash flows. Therefore, amounts for certain captions will not agree with respective data in the consolidated statements of operations.
11. MINORITY INTEREST IN CONSOLIDATED REAL ESTATE VENTURES
As of December 31, 2007, the Partnership owned interests in three consolidated real estate ventures that own three office properties containing approximately 0.4 million net rentable square feet. As of December 31, 2006, the Partnership owned interests in four consolidated real estate ventures that owned 15 office properties containing approximately 1.5 million net rentable square feet. On March 1, 2007, the Partnership acquired the remaining 49% interest in a real estate venture previously owned by Stichting Pensioenfonds ABP containing ten office properties for a purchase price of $63.7 million. The Partnership owned a 51% interest in this real estate venture through the acquisition of Prentiss on January 5, 2006. Minority interest in Real Estate Ventures represents the portion of these consolidated real estate ventures not owned by the Partnership.

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The minority interests associated with certain of the Real Estate Ventures, that have finite lives under the terms of the partnership agreements represent mandatorily redeemable interests as defined in SFAS 150. As of December 31, 2007 and 2006, the aggregate book value of these minority interests in the accompanying consolidated balance sheet was $0 and the Partnership believes that the aggregate settlement value of these interests was approximately $8.1 million. This amount is based on the estimated liquidation values of the assets and liabilities and the resulting proceeds that the Partnership would distribute to its Real Estate Venture partners upon dissolution, as required under the terms of the respective partnership agreements. Subsequent changes to the estimated fair values of the assets and liabilities of the consolidated Real Estate Ventures will affect the Partnership’s estimate of the aggregate settlement value. The partnership agreements do not limit the amount that the minority partners would be entitled to in the event of liquidation of the assets and liabilities and dissolution of the respective partnerships.
12. PARTNERS’ EQUITY
Earnings per Common Partnership Unit
The following table details the number of units and net income used to calculate basic and diluted earnings per common partnership unit (in thousands, except unit and per unit amounts; results may not add due to rounding):
                                                 
    For the years ended December 31,  
    2007     2006     2005  
    Basic     Diluted     Basic     Diluted     Basic     Diluted  
Income from continuing operations
  $ 29,672     $ 29,672     $ (19,975 )   $ (19,975 )   $ 33,667     $ 33,667  
Income from discontinued operations
    28,927       28,927       30,601       30,601       10,346       10,346  
Income allocated to Preferred Units
    (7,992 )     (7,992 )     (7,992 )     (7,992 )     (7,992 )     (7,992 )
 
                                   
 
  $ 50,607     $ 50,607     $ 2,634     $ 2,634     $ 36,021     $ 36,021  
 
                                   
 
                                               
Weighted-average common partnership units outstanding
    91,170,209       91,170,209       93,703,601       93,703,601       57,852,842       57,852,842  
Options, warrants and unvested restricted stock
          49,128             518,524             258,320  
 
                                   
Total weighted-average units outstanding
    91,170,209       91,219,337       93,703,601       94,222,125       57,852,842       58,111,162  
 
                                   
 
                                               
Earnings per Common Partnership Unit
                                               
Continuing operations
  $ 0.24     $ 0.24     $ (0.30 )   $ (0.30 )   $ 0.44     $ 0.44  
Discontinued operations
    0.32       0.32       0.33       0.32       0.18       0.18  
 
                                   
Total
  $ 0.56     $ 0.55     $ 0.03     $ 0.03     $ 0.62     $ 0.62  
 
                                   
Common Partnership Unit and Preferred Mirror Units
The Company is the sole general partner of the Partnership and conducts substantially all its business and owns its assets through the Partnership and as a result does not have any significant assets, liabilities or operations, other than its investment in the Partnership’s Units, nor does it have any employees of its own. Pursuant to the Partnership Agreement, the Partnership reimburses the Company for all expenses incurred on behalf of its operations.
The Partnership issues partnership units to the Company in exchange for the contribution of the net proceeds of any equity security issuance by the Company. The number and terms of such partnership units correspond in number and terms of the related equity securities issued by the Company. In addition, the Partnership may also issue separate classes of partnership units. Historically, the Partnership has had the following types of partnership units outstanding (i) Preferred Partnership Units which have been issued to parties other than the Company (ii) Preferred Mirror Partnership Units which have been issued to the Company and (iii) Common Partnership Units which include both interests held by the Company and those held by other limited partners. Each of these interests are described in more detail below.

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Preferred Mirror Partnership Units
In exchange for the proceeds received in corresponding offerings by the Company of preferred shares of beneficial interest, the Partnership has issued to the Company a corresponding amount of Preferred Mirror Partnership Units with terms consistent with that of the preferred securities issued by the Company.
On December 30, 2003, the Partnership issued 2,000,000 Series D Preferred Mirror Units to Brandywine Realty Trust in exchange for its contribution of the proceeds of its Series C Preferred Shares. The 2,000,000 Series D Preferred Mirror Units outstanding have an aggregate liquidation preference of $50 million, or $25.00 per unit. Cumulative distributions on the Series D Preferred Mirror Units are payable quarterly at an annualized rate of 7.50% of the liquidation preference. In the event that any of the Series C Preferred Shares of Brandywine Realty Trust are redeemed, which may occur at the option of Brandywine Realty Trust at any time on or after December 30, 2008, then an equivalent number of Series D Preferred Mirror Units will be redeemed.
On February 27, 2004, the Partnership issued 2,300,000 Series E Preferred Mirror Units to Brandywine Realty Trust in exchange for its contribution of the net proceeds of its Series D Preferred Shares. The 2,300,000 Series E Preferred Mirror Units outstanding have an aggregate liquidation preference of $57.5 million, or $25.00 per unit. Cumulative distributions on the Series E Preferred Mirror Units are payable quarterly at an annualized rate of 7.375% of the liquidation preference. In the event that any of the Series D Preferred Shares of Brandywine Realty Trust are redeemed, which may occur at the option of Brandywine Realty Trust at any time on or after February 27, 2009, then an equivalent number of Series E Preferred Mirror Units will be redeemed.
Common Partnership Units (Redeemable and General)
The Partnership has two classes of Common Partnership Units: (i) Class A Limited Partnership Interest which are held by both the Company and outside third parties and (ii) General Partnership Interests which are held by the Company. (Collectively, the Class A Limited Partnership Interest and General Partnership Interests are referred to as “Common Partnership Units”). The holders of the Common Partnership Units are entitled to share in cash distributions from, and in profits and losses of, the Partnership, in proportion to their respective percentage interests, subject to preferential distributions on the preferred mirror units and the preferred units.
The Common Partnership Units held by the Company (comprised of both General Partnership Units and Class A Limited Partnership Units) are presented as partner’s equity in the consolidated financial statements. Class A Limited Partnership Interest held by parties other than the Company are redeemable at the option of the holder for a like number of common shares of the Company, or cash, or a combination thereof, at the election of the Company. Because the form of settlement of these redemption rights are not within the control of the Partnership, these Common Partnership Units have been excluded from partner’s equity and are presented as redeemable limited partnership units measured at the potential cash redemption value as of the end of the periods presented based on the closing market price of the Company’s common shares at December 31, 2007, 2006 and 2005, which was $17.93, $33.25 and $27.91 respectively. As of December 31, 2007 and 2006, 3,838,230 and 3,961,235 Class A Units were outstanding and owned by outside limited partners of the Partnership.
During the year ended December 31, 2006, 424,608 Class A units were issued in connection with the acquisitions of a property. These Class A units were subsequently redeemed for $13.5 million and this amount is included in distributions to minority interest holders on the consolidated statement of cash flows.
On December 11, 2007, the Partnership declared a distribution of $0.44 per Common Share, totaling $38.5 million, which was paid on January 18, 2008 to shareholders of record as of December 30, 2007. On December 11, 2006, the Partnership declared distributions on its Series C Preferred Shares and Series D Preferred Shares to holders of record as of January 4, 2008. These shares are entitled to a preferential return of 7.50% and 7.375%, respectively. Distributions paid on January 15, 2007 to holders of Series C Preferred Shares and Series D Preferred Shares totaled $0.9 million and $1.1 million, respectively.

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Common Share Repurchases
The Company maintains a share repurchase program under which the Board has authorized us to repurchase our common shares from time to time. The Board initially authorized this program in 1998 and has periodically replenished capacity under the program. On May 2, 2006 the Company’s Board restored capacity to 3.5 million common shares.
The Company repurchased 1.8 million shares during the year ended December 31, 2007 for aggregate consideration of $59.4 million under its share repurchase program. As of December 31, 2007, the Company may purchase an additional 0.5 million shares under the plan. 1.6 million of these shares are held in treasury to give the Company the ability to reissue such shares and are reflected as shares held in treasury on the consolidated balance sheet. 0.2 million of these shares were repurchased as part of the Company’s deferred compensation program and are not included as shares held in treasury on the consolidated balance sheet.
During the year ended December 31, 2006, the Company repurchased approximately 1.2 million common shares under this program at an average price of $29.22 per share. The shares repurchased in 2006 were retired and therefore are not included as shares held in treasury on the balance sheet.
Repurchases may be made from time to time in the open market or in privately negotiated transactions, subject to market conditions and compliance with legal requirements. The share repurchase program does not contain any time limitation and does not obligate the Company to repurchase any shares. The Company may discontinue the program at any time.
On October 4, 2006 the Company repurchased 1.8 million common shares with a portion of the proceeds of our 3.875% Exchangeable Guaranteed Notes at an average purchase price of $32.80 per share (approximately $60.0 million in aggregate). The Company repurchased these shares under a separate Board authorization that provided that the shares repurchased did not reduce capacity under the share repurchase program.
Share Based Compensation
In December 2004, the FASB issued SFAS No. 123(R), “Share-Based Payment” (“SFAS 123(R)”). SFAS 123(R) is an amendment of SFAS 123 and requires that the compensation cost relating to share-based payment transactions be recognized in the financial statements. The cost is required to be measured based on the fair value of the equity or liability instruments issued. SFAS 123(R) also contains additional minimum disclosures requirements including, but not limited to, the valuation method and assumptions used, amounts of compensation capitalized and modifications made. The effective date of SFAS 123(R) was subsequently amended by the SEC to be as of the beginning of the first interim or annual reporting period of the first fiscal year that begins on or after December 15, 2005, and allows several different methods of transition. The Company adopted SFAS 123(R) using the prospective method on January 1, 2006. This adoption did not have a material effect on our consolidated financial statements.
Stock Options
At December 31, 2007, the Company had 1,070,099 options outstanding under its shareholder approved equity incentive plan. No options were unvested as of December 31, 2007 and therefore there is no remaining unrecognized compensation expense associated with these options. Option activity as of December 31, 2007 and changes during the twelve months ended December 31, 2007 were as follows:

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            Weighted   Weighted Average    
            Average   Remaining Contractual   Aggregate Intrinsic
    Shares   Exercise Price   Term (in years)   Value (in 000’s)
Outstanding at January 1, 2007
    1,286,075     $ 26.45       1.50     $ 8,739  
Exercised
    (198,495 )   $ 28.80       0.87     $ 1,171  
Forfeited
    (17,481 )                  
 
                               
 
                               
Outstanding at December 31, 2007
    1,070,099     $ 26.13       0.54     $ (8,775 )
 
                               
 
                               
Vested at December 31, 2007 (1)
    1,070,099     $ 26.13       0.54     $ (8,775 )
Exercisable at December 31, 2007 (1)
    1,070,099     $ 26.13       0.54     $ (8,775 )
 
(1)   There were 825,389 options that expired unexercised on January 1, 2008.
                                                 
    Years ended December 31,
    2006   2005
                    Weighted                   Weighted
                    Average                   Average
            Weighted   Remaining           Weighted   Remaining
            Average   Contractual           Average   Contractual
            Exercise   Term           Exercise   Term
    Shares   Price   (in Years)   Shares   Price   (in Years)
Outstanding at beginning of year
    1,276,722     $ 26.82               2,008,022     $ 26.89          
 
                                               
Prentiss options converted to Company options as part of the Prentiss acquisition (See Note 3)
    496,037     $ 22.00                              
Exercised
    (486,684 )   $ 22.88               (705,678 )   $ 26.94          
Forfeited/Expired
                        (25,622 )   $ 28.80          
 
                                               
Outstanding at end of year
    1,286,075     $ 26.45       1.50       1,276,722     $ 26.82       1.97  
 
                                               
Exercisable at end of year
    1,286,075     $ 26.45               1,276,722     $ 26.82          
 
                                               
401(k) Plan
The Company sponsors a 401(k) defined contribution plan for its employees. Each employee may contribute up to 100% of annual compensation, subject to specific limitations under the Internal Revenue Code. At its discretion, the Company can make matching contributions equal to a percentage of the employee’s elective contribution and profit sharing contributions. Employees vest in employer contributions over a three-year service period. The Company contributions were $0.6 million in 2007, $1.1 million in 2006, and $1.0 million in 2005.
Restricted Share Awards
The Company’s primary form of share-based compensation has been restricted shares issued under a shareholder approved equity incentive plan that authorizes various equity-based awards. As of December 31, 2007, 409,282 restricted shares were unvested. The vesting period for these shares ranges from three to seven years from the initial grant date. The remaining compensation expense to be recognized for the 409,282 restricted shares unvested at December 31, 2007 was approximately $10.7 million. That expense is expected to be recognized over a weighted average remaining vesting period of 2.8 years. For the year ended December 31, 2007, the Company recognized $3.3 million of compensation expense related to unvested restricted shares which is included in administrative expenses. The following table summarizes the Company’s restricted share activity for the twelve-months ended December 31, 2007:

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    Shares     Weighted
Average Grant
Date Fair value
 
Non-vested at January 1, 2007
    338,860     $ 28.23  
Granted
    227,709       34.94  
Vested
    (107,143 )     26.45  
Forfeited
    (50,144 )     32.28  
 
           
Non-vested at December 31, 2007
    409,282     $ 31.91  
 
           
Outperformance Program
On August 28, 2006, the Compensation Committee of the Company’s Board of Trustees adopted a long-term incentive compensation program (the “outperformance program”). The Company will make payments (in the form of common shares) to executive-participants under the outperformance program only if the Company’s total shareholder return exceeds percentage hurdles established under the outperformance program. The dollar value of any payments will depend on the extent to which our performance exceeds the hurdles. The Company established the outperformance program under the 1997 Plan.
If the total shareholder return (share price appreciation plus cash dividends) during a three-year measurement period exceeds either of two hurdles (with one hurdle keyed to the greater of a fixed percentage and an industry-based index, and the other hurdle keyed to a fixed percentage), then the Company will fund an incentive compensation pool in accordance with a formula and make pay-outs from the compensation pool in the form of vested and restricted common shares. The awards issued are accounted for in accordance with SFAS 123(R). The fair value of the awards on August 28, 2006, as adjusted for estimated forfeitures, was approximately $5.6 million and will be amortized into expense over the five-year period beginning on the date of grant using a graded vesting attribution model. The fair value of $5.6 million on the date of the initial grant represents approximately 86.5% of the total that may be awarded; the remaining amount available will be valued when the awards are granted to individuals. In January 2007, the Company awarded an additional 4.5% under the outperformance program. The fair value of the additional award is $0.3 million and will be amortized over the remaining portion of the 5 year period. On the date of each grant, the awards were valued using a Monte Carlo simulation. For the years ended December 31, 2007 and 2006, the Company recognized $1.4 million and $0.5 million, respectively, of compensation expense related to the outperformance program.
Employee Share Purchase Plan
On May 9, 2007, the Company’s shareholders approved the 2007 Non-Qualified Employee Share Purchase Plan (the “ESPP”). The ESPP is intended to provide eligible employees with a convenient means to purchase common shares of the Company through payroll deductions and voluntary cash purchases at an amount equal to 85% of the average closing price per share for a specified period. The maximum participant contribution for any plan year is limited to the lesser of 20% of compensation or $25,000. The number of shares reserved for issuance under the ESPP is 1.25 million. Employees will be eligible to make purchases under the ESPP beginning in January 2008, accordingly there were no purchases made during the year ended December 31, 2007.

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13. DISTRIBUTIONS
                         
    Years ended December 31,
    2007   2006   2005 (a)
Common Partnership Unit Distributions:
                       
Total distributions per unit
  $ 1.76     $ 1.76     $ 1.78  
 
                       
Preferred Unit Distributions:
                       
Total distributions declared
  $ 7,992,000     $ 7,992,000     $ 7,992,000  
 
(a)   Includes a $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).
14. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The following table details the components of accumulated other comprehensive income (loss) as of and for the three years ended December 31, 2007 (in thousands):
                         
    Unrealized Gains     Cash Flow     Accumulated Other  
    (Losses) on Securities     Hedges     Comprehensive Loss  
Balance at January 1, 2005
  $ 16     $ (3,146 )   $ (3,130 )
 
                       
Change during year
    241       (713 )     (472 )
Settlement of treasury locks
          240       240  
Reclassification adjustments for losses reclassified into operations
    (257 )     450       193  
 
                 
 
                       
Balance at December 31, 2005
          (3,169 )     (3,169 )
 
                       
Change during year
          1,331       1,331  
Minority interest — consolidated real estate venture partner’s share of unrealized (gains)/losses on derivative financial instruments
          (302 )     (302 )
Settlement of forward starting swaps
          3,266       3,266  
Reclassification adjustments for (gains) losses reclassified into operations
    328       122       450  
 
                 
 
                       
Balance at December 31, 2006
    328       1,248       1,576  
 
                       
Change during year
          (3,600 )     (3,600 )
Minority interest — consolidated real estate venture partner’s share of unrealized (gains)/losses on derivative financial instruments
                 
Settlement of treasury locks
          (3,860 )     (3,860 )
Settlement of forward starting swaps
          1,148       1,148  
Reclassification adjustments for (gains) losses reclassified into operations
    (585 )     3,436       2,851  
 
                 
 
                       
Balance at December 31, 2007
  $ (257 )   $ (1,628 )   $ (1,885 )
 
                 
Over time, the unrealized gains and losses held in Accumulated Other Comprehensive Income (“AOCI”) will be reclassified to earnings in the same period(s) in which hedged items are recognized in earnings. The current balance held in AOCI is expected to be reclassified to earnings over the lives of the current hedging instruments, or for realized losses on forecasted debt transactions, over the related term of the debt obligation, as applicable. As of December 31, 2007, AOCI includes unrealized losses of ($2.7) million and net realized gains of $1.1 million on cash flow hedges.
During the years ending December 31, 2007 and 2006, the Partnership reclassified approximately ($0.1) million and $0.1 million, respectively, to interest expense associated with treasury lock agreements and forward starting swaps previously settled (see Note 7).

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15. SEGMENT INFORMATION
As of December 31, 2007, the Company currently manages its 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. The corporate group is responsible for cash and investment management, development of certain real estate properties during the construction period, and certain other general support functions. Land held for development and construction in progress are transferred to operating properties by region upon completion of the associated construction or project.

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Segment information for the three years ended December 31, 2007, 2006 and 2005 is as follows (in thousands):
                                                                         
            New Jersey     Richmond,     California -     California -     Metropolitan,                    
    Pennsylvania     /Delaware     Virginia     North     South     D.C.     Southwest     Corporate     Total  
2007:
                                                                       
Real estate investments, at cost:
                                                                       
Operating properties
  $ 1,682,839     $ 663,503     $ 348,310     $ 472,818     $ 106,303     $ 1,302,833     $ 236,957     $     $ 4,813,563  
Developed land and construction-in-progress
  $     $     $     $     $     $     $     $ 402,270     $ 402,270  
 
                                                                       
Total revenue
  $ 275,626     $ 120,461     $ 39,140     $ 64,989     $ 13,565     $ 134,596     $ 37,855     $ (2,260 )   $ 683,972  
Property operating expenses and real estate taxes
    104,393       53,382       14,445       26,565       5,571       47,032       16,440       (3,442 )     264,386  
 
                                                     
Net operating income
  $ 171,233     $ 67,079     $ 24,695     $ 38,424     $ 7,994     $ 87,564     $ 21,415     $ 1,182     $ 419,586  
 
                                                     
 
                                                                       
2006:
                                                                       
Real estate investments, at cost:
                                                                       
Operating properties
  $ 1,814,592     $ 681,574     $ 244,592     $ 414,856     $ 118,265     $ 1,265,818     $ 387,608     $     $ 4,927,305  
Developed land and construction-in-progress
  $     $     $     $     $     $     $     $ 328,119     $ 328,119  
 
                                                                       
Total revenue
  $ 246,422     $ 117,548     $ 33,317     $ 60,679     $ 14,326     $ 119,807     $ 33,586     $ 4,600     $ 630,285  
Property operating expenses and real estate taxes
    99,085       49,871       12,441       24,494       5,435       39,981       11,951       149       243,407  
 
                                                     
Net operating income
  $ 147,337     $ 67,677     $ 20,876     $ 36,185     $ 8,891     $ 79,826     $ 21,635     $ 4,451     $ 386,878  
 
                                                     
 
                                                                       
2005:
                                                                       
Total revenue
  $ 215,840     $ 117,606     $ 29,794     $     $     $     $     $ 1,195     $ 364,435  
Property operating expenses and real estate taxes
    84,110       47,242       11,732                               (1,366 )     141,718  
 
                                                     
Net operating income
  $ 131,730     $ 70,364     $ 18,062     $     $     $     $     $ 2,561     $ 222,717  
 
                                                     

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Net operating income is defined as total revenue less property operating expenses and real estate taxes. Segment net operating income includes revenue, real estate taxes and property operating expenses directly related to operation and management of the properties owned and managed within the respective geographical region. Segment net operating income excludes property level depreciation and amortization, revenue and expenses directly associated with third party real estate management services, expenses associated with corporate administrative support services, and inter-company eliminations. Below is a reconciliation of consolidated net operating income to consolidated income from continuing operations:
                         
    Year Ended December 31,  
    2007     2006     2005  
    (amounts in thousands)  
Consolidated net operating income (loss)
  $ 419,586     $ 386,878     $ 222,717  
Less:
                       
Interest expense
    (162,675 )     (171,177 )     (70,380 )
Deferred financing costs
    (4,496 )     (4,607 )     (3,540 )
Loss on settlement of treasury lock agreements
    (3,698 )            
Depreciation and amortization
    (242,312 )     (230,710 )     (106,175 )
Administrative expenses
    (28,182 )     (29,644 )     (17,982 )
Minority interest — partners’ share of consolidated real estate ventures
    (465 )     270       (154 )
Plus:
                       
Interest income
    4,040       9,513       1,370  
Equity in income of real estate ventures
    6,955       2,165       3,171  
Net gain on sales of interests in depreciated real estate
    40,498              
Net gain on sales of interests in undepreciated real estate
    421       14,190       4,640  
Gain on termination of purchase contract
          3,147        
 
                 
Income (loss) from continuing operations
    29,672       (19,975 )     33,667  
Income (loss) from discontinued operations
    28,927       30,601       10,346  
 
                 
Net income (loss)
  $ 58,599     $ 10,626     $ 44,013  
 
                 
16. RELATED-PARTY TRANSACTIONS
In 1998, the Board authorized the Company to make loans totaling up to $5.0 million to enable employees of the Partnership to purchase Common Shares at fair market value. The loans have five-year terms, are full recourse, and are secured by the Common Shares purchased. The Company made loans under this program in 1998, 1999 and 2001. Interest, payable quarterly, accrues on the loans at the lower of the interest rate borne on borrowings under the Partnership’s Credit Facility or a rate based on the dividend payments on the Common Shares. As of December 31, 2005, the interest rate was 4.18% per annum. The loans are payable at the earlier of the stated maturity date or 90 days following the employee’s termination. As of December 31, 2005, the outstanding balance of the loan totaled $0.3 million and was secured by an aggregate of 18,803 Common Shares. These loans were repaid in full by December 31, 2006.
The Partnership 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 the Partnership 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, the Partnership recognized a $3.1 million gain on termination of its rights under a 1998 contribution agreement, modified in 2005, that entitled the Partnership to the 50% interest in the joint venture to operate the property. This gain is shown separately on the Partnership’s income statement as a gain on termination of purchase contract.
The Partnership owned 384,615 shares of Cypress Communications, Inc. (“Cypress”) Common Stock. These shares were redeemed in July 2005 for $0.3 million. The redemption was the result of Cypress’s merger with another company. Prior to this merger, an officer of the Company held a position on Cypress’s Board of Directors.

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17. OPERATING LEASES
The Partnership leases properties to tenants under operating leases with various expiration dates extending to 2030. Minimum future rentals on non-cancelable leases at December 31, 2007 are as follows (in thousands):
         
Year   Minimum Rent
2008
  $ 515,156  
2009
    467,402  
2010
    402,579  
2011
    337,340  
2012
    277,940  
Thereafter
    1,323,580  
Total minimum future rentals presented above do not include amounts to be received as tenant reimbursements for operating costs.
18. COMMITMENTS AND CONTINGENCIES
Legal Proceedings
The Partnership is involved from time to time in litigation on various matters, including disputes with tenants and disputes arising out of agreements to purchase or sell properties. Given the nature of the Partnership’s business activities, these lawsuits are considered routine to the conduct of its business. The result of any particular lawsuit cannot be predicted, because of the very nature of litigation, the litigation process and its adversarial nature, and the jury system. The Partnership does not expect that the liabilities, if any, that may ultimately result from such legal actions will have a material adverse effect on the consolidated financial position, results of operations or cash flows of the Partnership.
There have been recent reports of lawsuits against owners and managers of multifamily and office properties asserting claims of personal injury and property damage caused by the presence of mold in residential units or office space. The Partnership has 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 lawsuit was dismissed by way of summary judgment with prejudice. Unspecified damages are sought on the remaining lawsuit. The Partnership has referred this lawsuit to its environmental insurance carrier and, as of the date of this Form 10-K, the insurance carrier is tendering a defense to this claim.
Letters-of-Credit
Under certain mortgages, the Partnership has funded required leasing and capital reserve accounts for the benefit of the mortgage lenders with letters-of-credit which totaled $13.5 million at December 31, 2007. The Partnership is also required to maintain escrow accounts for taxes, insurance and tenant security deposits and these accounts aggregated $7.5 million at December 31, 2007. Tenant rents at properties that secure these mortgage loans are deposited into the loan servicer’s depository accounts, which are used to fund debt service, operating expenses, capital expenditures and the escrow and reserve accounts, as necessary. Any excess cash is included in cash and cash equivalents.
Ground Rent
Future minimum rental payments under the terms of all non-cancelable ground leases under which the Partnership is the lessee are expensed on a straight-line basis regardless of when payments are due. Minimum future rental payments on non-cancelable leases at December 31, 2007 are as follows (in thousands):

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2008
  $ 1,736  
2009
    1,986  
2010
    2,318  
2011
    2,318  
2012
    2,318  
Thereafter
    291,420  
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 the Operating Partnership. Such amounts, if any, will be reflected as contingent rent when incurred. The leases also provide for payments by the Operating Partnership of certain operating costs relating to the land, primarily real estate taxes. The above schedule of future minimum rental payments do not include any contingent rent amounts nor any reimbursed expenses.
Other Commitments or Contingencies
As of December 31, 2007, the Partnership owned 417 acres of land for future development.
As part of the Partnership’s September 2004 acquisition of a portfolio of properties from The Rubenstein Company (which the Partnership refers to as the TRC acquisition), the Partnership 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 achieved at least 95% occupancy prior to September 21, 2007. The maximum number of Units that the Partnership agreed to issue declined monthly and expired on September 21, 2007 and the Partnership had no obligation.
As part of the TRC acquisition, the Partnership acquired its interest in Two Logan Square, a 696,477 square foot office building in Philadelphia, primarily through its ownership of a second and third mortgage secured by this property. This property is consolidated as the borrower is a variable interest entity and the Partnership, through its ownership of the second and third mortgages, is the primary beneficiary. The Partnership currently does not expect to take title to Two Logan Square until, at the earliest, September 2019. If the Partnership takes fee title to Two Logan Square upon a foreclosure of its mortgage, the Partnership has 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 the Partnership’s 2006 acquisition of Prentiss Properties Trust, the TRC acquisition in 2004 and several of our other transactions, the Partnership agreed not to sell certain of the properties it acquired in transactions that would trigger taxable income to the former owners. In the case of the TRC acquisition, the Partnership 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, the Partnership assumed the obligation of Prentiss not to sell Concord Airport Plaza before March 2018 and 6600 Rockledge before July 2008. The Partnership 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. The Partnership’s agreements generally provide that it 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 the Partnership were to sell a restricted property before expiration of the restricted period in a non-exempt transaction, the Partnership would be required to make significant payments to the parties who sold it the applicable property on account of tax liabilities attributed to them.
The Partnership invests in its properties and regularly incur capital expenditures in the ordinary course to maintain the properties. The Partnership believes that such expenditures enhance our competitiveness. The Partnership also enters 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.
19. SUBSEQUENT EVENT
On January 14, 2008, the Partnership sold 7130 Ambassador Drive, an office property located in Allentown, Pennsylvania containing an aggregate of 114,049 net rentable square feet, for an aggregate sales price of $5.8 million.

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20. SUMMARY OF QUARTERLY RESULTS (UNAUDITED)
The following is a summary of quarterly financial information as of and for the years ended December 31, 2007 and 2006 (in thousands, except per share data):
                                 
    1st   2nd   3rd   4th
    Quarter   Quarter   Quarter   Quarter
2007:
                               
Total revenue
  $ 165,429     $ 166,637     $ 177,748     $ 174,158  
Net income
    20,147       1,168       2,383       34,901  
Income (loss) allocated to Common Partnership Units
    18,149       (830 )     385       32,903  
 
                               
Basic earnings (loss) per Common Partnership Units
  $ 0.20     $ (0.01 )   $     $ 0.36  
Diluted earnings (loss) per Common Partnership Units
  $ 0.19     $ (0.01 )   $     $ 0.36  
 
                               
2006:
                               
Total revenue
  $ 146,749     $ 153,347     $ 164,284     $ 165,905  
Net income (loss)
    (2,850 )     (12,171 )     496       25,151  
Income (loss) allocated to Common Partnership Units
    (4,848 )     (14,169 )     (1,502 )     23,153  
 
                               
Basic earnings (loss) per Common Partnership Units
  $ (0.05 )   $ (0.15 )   $ (0.02 )   $ 0.25  
Diluted earnings (loss) per Common Partnership Units
  $ (0.05 )   $ (0.15 )   $ (0.02 )   $ 0.25  
The summation of quarterly earnings per share amounts do not necessarily equal the full year amounts. The above information was updated to reclassify amounts to discontinued operations. See Note 10.

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Brandywine Operating Partnership, L.P.
Schedule II
Valuation and Qualifying Accounts
(in thousands)
                                 
    Balance at                     Balance  
    Beginning                     at End  
Description   of Period     Additions     Deductions (2)     of Period  
Allowance for doubtful accounts:
                               
 
                               
Year ended December 31, 2007
  $ 9,311     $ 2,147     $ 1,296     $ 10,162  
 
                       
Year ended December 31, 2006 (1)
  $ 4,877     $ 4,434     $     $ 9,311  
 
                       
Year ended December 31, 2005
  $ 4,085     $ 792     $     $ 4,877  
 
                       
 
(1)   The 2006 additions includes $3.5 million of current year expense and $0.9 million of allowances against receivables assumed in the Prentiss acquisition.
 
(2)   Deductions represent amounts that the Company had fully reserved for in prior periods and pursuit of collection of such amounts was ceased during the period.

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BRANDYWINE OPERATING PARTNERSHIP, L.P.
Schedule III
Real Estate and Accumulated Depreciation - December 31, 2007
(in thousands)
                                                                                     
                          Gross Amount at Which Carried              
                    Initial Cost     December 31, 2007              
                                    Net                    
                                    Improvements                             Accumulated              
                                    (Retirements)                             Depreciation at              
            Encumberances at             Building and     Since             Building and             December 31,     Year of   Year   Depreciable
    City   State   December 31, 2007     Land     Improvements     Acquisition     Land     Improvements     Total (a)     2007 (b)     Construction   Acquired   Life
CALIFORNIA NORTH                                                                                    
 
                                                                                   
1 Kaiser Plaza
  Oakland   CA     48,359       15,034       107,422       3,748       15,318       110,886       126,204       6,801     1978   2006   46
2101 Webster Street
  Oakland   CA     23,950       13,051       89,728       2,753       13,298       92,235       105,532       7,075     1985   2006   44
155 Grand Avenue
  Oakland   CA           13,556       54,266       2       13,556       54,268       67,824       822     1990   2007   40
1901 Harrison Street
  Oakland   CA     29,046       5,442       59,920       1,065       5,545       60,882       66,427       2,954     1985   2006   48
1333 Broadway
  Oakland   CA           4,519       35,235       3,700       4,781       38,673       43,454       2,412     1972   2006   40
1200 Concord Avenue
  Concord   CA     19,826       6,395       24,664       629       6,515       25,173       31,688       3,268     1984   2006   34
1220 Concord Avenue
  Concord   CA     19,834       6,476       24,966       242       6,476       25,208       31,683       3,360     1984   2006   34
 
                                                                                   
CALIFORNIA SOUTH
                                                                                   
 
                                                                                   
5780 & 5790 Fleet Street
  Carlsbad   CA           7,073       22,907       3,211       7,516       25,675       33,191       1,871     1999   2006   55
16870 W Bernardo Drive
  San Diego   CA           2,979       15,896       1,818       3,154       17,539       20,693       1,316     2002   2006   56
5900 & 5950 La Place Court
  Carlsbad   CA           3,706       11,185       1,547       3,955       12,483       16,438       1,008     1988   2006   48
5963 La Place Court
  Carlsbad   CA           2,824       9,413       1,595       2,999       10,833       13,832       722     1987   2006   55
5973 Avenida Encinas
  Carlsbad   CA           2,121       8,361       1,163       2,256       9,389       11,645       890     1986   2006   45
2035 Corte Del Nogal
  Carlsbad   CA           3,261       6,077       1,164       3,499       7,003       10,502       729     1991   2006   39
 
                                                                                   
METROPOLITAN WASHINGTON, D.C.
                                                                                   
 
                                                                                   
1676 International Drive
  Mclean   VA     63,259       18,437       97,538       1,013       18,785       98,203       116,988       4,590     1999   2006   55
2340 Dulles Corner Boulevard
  Herndon   VA           16,345       65,379       14,950       16,467       80,206       96,674       3,652     1987   2006   40
2291 Wood Oak Drive
  Herndon   VA           8,243       52,413       7,018       8,782       58,892       67,674       7,483     1999   2006   55
7101 Wisconsin Avenue
  Bethesda   MD           9,634       48,402       3,542       9,816       51,762       61,577       3,287     1975   2006   45
3130 Fairview Park Drive
  Falls Church   VA           6,576       51,605       1,539       6,700       53,020       59,720       2,656     1999   2006   53
196/198 Van Buren Street
  Herndon   VA           7,931       43,812       6,887       8,348       50,282       58,630       3,713     1991   2006   53
2251 Corporate Park Drive
  Herndon   VA           11,472       45,893       30       11,472       45,923       57,395       1,339     2000   2006   40
1900 Gallows Road
  Vienna   VA           7,797       47,817       874       7,944       48,544       56,488       3,218     1989   2006   52
2355 Dulles Corner Boulevard
  Herndon   VA           10,365       43,876       593       10,365       44,469       54,834       2,001     1988   2006   40
2411 Dulles Corner Park
  Herndon   VA           7,279       46,340       586       7,417       46,789       54,205       3,188     1990   2006   50
3141 Fairview Park Drive
  Falls Church   VA           5,918       40,981       656       6,050       41,506       47,556       2,243     1988   2006   51
13880 Dulles Corner Lane
  Herndon   VA           7,236       39,213       395       7,373       39,470       46,843       2,337     1997   2006   55
2121 Cooperative Way
  Herndon   VA           5,598       38,639       710       5,795       39,152       44,946       2,254     2000   2006   54
6600 Rockledge Drive
  Bethesda   MD                 37,421       6,303             43,725       43,725       1,654     1981   2006   50
8260 Greensboro Drive
  Mclean   VA     34,063       7,952       33,964       645       8,102       34,459       42,561       2,150     1980   2006   52
2201 Cooperative Way
  Herndon   VA           4,809       34,093       333       4,809       34,426       39,236       2,976     1990   2006   54
2273 Research Boulevard
  Rockville   MD     15,285       5,167       31,110       2,890       5,237       33,929       39,166       2,140     1999   2006   45
8521 Leesburg Pike
  Vienna   VA           4,316       30,885       668       4,397       31,472       35,869       2,052     1984   2006   51
2275 Research Boulevard
  Rockville   MD     15,240       5,059       29,668       966       5,154       30,539       35,693       1,896     1990   2006   45
1880 Campus Commons Drive
  Reston   VA           6,164       28,114       86       6,281       28,083       34,364       1,223     1985   2006   52
2277 Research Boulevard
  Rockville   MD     14,181       4,649       26,952       (251 )     4,733       26,616       31,350       1,215     1986   2006   45
7735 Old Georgetown Road
  Bethesda   MD           4,370       23,192       (76 )     4,453       23,034       27,487       1,372     1997   2006   45
12015 Lee Jackson Memorial Highway
  Fairfax   VA           3,770       22,895       819       3,842       23,643       27,484       1,616     1985   2006   42
11720 Beltsville Drive
  Beltsville   MD           3,831       16,661       4,891       3,904       21,479       25,382       1,434     1987   2006   46
13825 Sunrise Valley Drive
  Herndon   VA           3,794       19,365       197       3,866       19,491       23,357       2,180     1989   2006   46
11781 Lee Jackson Memorial Highway
  Fairfax   VA           3,246       19,836       176       3,307       19,951       23,259       1,532     1982   2006   40
11700 Beltsville Drive
  Beltsville   MD           2,808       12,081       635       2,863       12,661       15,524       829     1981   2006   46
4401 Fair Lakes Court
  Fairfax   VA           1,569       11,982       (81 )     1,599       11,872       13,471       599     1988   2006   52
11710 Beltsville Drive
  Beltsville   MD           2,278       11,100       (867 )     2,321       10,190       12,511       651     1987   2006   46
3141 Fairview Park Drive
  Falls Church   VA           733       4,939       (32 )     733       4,906       5,640       230     1988   2006   51
3141 Fairview Park Drive
  Falls Church   VA           297       1,964       0       297       1,964       2,261       80     1988   2006   51
11740 Beltsville Drive
  Bethesda   MD           198       870       18       202       884       1,086       23     1987   2006   46
 
                                                                                   
PENNSYLVANIA
                                                                                   
 
                                                                                   
2929 Arch Street
  Philadelphia   PA                 208,570       12,901             221,471       221,471       15,903     2005   N/A   40
130 North 18th Street
  Philadelphia   PA           14,496       107,736       5,375       14,473       113,134       127,607       13,985     1998   2004   23
100 North 18th Street
  Philadelphia   PA     71,564       16,066       100,255       4,676       16,066       104,931       120,997       12,388     1988   2004   33
150 Radnor Chester Road
  Radnor   PA           11,925       36,986       9,248       11,897       46,262       58,159       6,204     1983   2004   29
555 Lancaster Avenue
  Radnor   PA           8,014       16,508       25,073       8,609       40,985       49,595       3,720     1973   2004   24
201 King of Prussia Road
  Radnor   PA           8,956       29,811       5,854       8,949       35,671       44,621       4,931     2001   2004   25
401 Plymouth Road
  Plymouth Meeting   PA           6,198       16,131       15,998       6,199       32,129       38,327       6,028     2001   2000   40
One Radnor Corporate Center
  Radnor   PA           7,323       28,613       (43 )     7,323       28,570       35,893       3,891     1998   2004   29
Four Radnor Corporate Center
  Radnor   PA           5,406       21,390       7,731       5,705       28,822       34,527       3,895     1995   2004   30
Five Radnor Corporate Center
  Radnor   PA           6,506       25,525       1,835       6,578       27,288       33,866       3,046     1998   2004   38
101 West Elm Street
  W. Conshohocken   PA           6,251       25,209       1,192       6,251       26,401       32,652       1,781     1999   2005   40
Three Radnor Corporate Center
  Radnor   PA           4,773       17,961       787       4,791       18,730       23,521       2,476     1998   2004   29
400 Berwyn Park
  Berwyn   PA           2,657       4,462       15,922       2,657       20,384       23,041       4,524     1999   1999   40
555 Croton Road
  King of Prussia   PA           4,486       17,943       478       4,486       18,422       22,907       3,351     1999   2001   40
640 Freedom Business Center
  King Of Prussia   PA           4,222       16,891       1,644       4,222       18,535       22,757       5,963     1991   1998   40
630 Allendale Road
  King of Prussia   PA           2,836       4,028       15,509       2,636       19,737       22,373       5,713     2000   2000   40
101 Lindenwood Drive
  Malvern   PA           4,152       16,606       1,496       4,152       18,103       22,254       3,547     1988   2001   40
52 Swedesford Square
  East Whiteland Twp.   PA           4,241       16,579       263       4,241       16,842       21,083       4,382     1988   1998   40
Two Radnor Corporate Center
  Radnor   PA           3,937       15,484       1,265       3,942       16,743       20,686       2,195     1998   2004   29

F - 92


Table of Contents

BRANDYWINE OPERATING PARTNERSHIP, L.P.
Schedule III
Real Estate and Accumulated Depreciation - December 31, 2007
(in thousands)
                                                                                     
                          Gross Amount at Which Carried              
                    Initial Cost     December 31, 2007              
                                    Net                    
                                    Improvements                             Accumulated              
                                    (Retirements)                             Depreciation at              
            Encumberances at             Building and     Since             Building and             December 31,     Year of   Year   Depreciable
    City   State   December 31, 2007     Land     Improvements     Acquisition     Land     Improvements     Total (a)     2007 (b)     Construction   Acquired   Life
600 West Germantown Pike   Plymouth Meeting   PA     11,441       3,652       15,288       1,470       3,652       16,758       20,410       2,698     1986   2002   40
620 West Germantown Pike
  Plymouth Meeting   PA     11,212       3,572       14,435       1,938       3,572       16,373       19,945       3,103     1990   2002   40
630 West Germantown Pike
  Plymouth Meeting   PA     11,060       3,558       14,743       1,383       3,558       16,125       19,684       2,700     1988   2002   40
610 West Germantown Pike
  Plymouth Meeting   PA     11,083       3,651       14,514       1,488       3,651       16,001       19,653       2,639     1987   2002   40
300 Berwyn Park
  Berwyn   PA     12,375       2,206       13,422       3,196       2,206       16,618       18,824       5,604     1989   1997   40
200 Barr Harbour Drive
  Conshohocken   PA     14,472       2,827       15,525       (148 )     2,827       15,377       18,204       4,992     1999   2004   40
1050 Westlakes Drive
  Berwyn   PA           2,611       10,445       5,001             18,057       18,057       2,841     1984   1999   40
1 West Elm Street
  W. Conshohocken   PA           3,557       14,249             3,557       14,249       17,806       802     1999   2005   40
181 Washington Street
  Conshohocken   PA     10,518       2,672       14,221       241       2,673       14,462       17,134       5,430     1998   2004   40
620 Freedom Business Center
  King Of Prussia   PA           2,770       11,014       3,188       2,770       14,202       16,972       4,123     1986   1998   40
1000 First Avenue
  King Of Prussia   PA           2,772       10,936       2,272       2,772       13,208       15,980       3,311     1980   1998   40
301 Lindenwood Drive
  Malvern   PA           2,729       10,915       2,301       2,729       13,216       15,945       2,644     1984   2001   40
1060 First Avenue
  King Of Prussia   PA           2,712       10,953       1,890       2,712       12,843       15,555       3,383     1987   1998   40
1020 First Avenue
  King Of Prussia   PA           2,168       8,576       4,755       2,168       13,331       15,499       2,690     1984   1998   40
1040 First Avenue
  King Of Prussia   PA           2,860       11,282       1,041       2,860       12,323       15,183       3,488     1985   1998   40
595 East Swedesford Road
  Wayne   PA           2,729       10,917       1,482       2,729       12,398       15,128       1,245     1998   2003   40
630 Freedom Business Center
  King Of Prussia   PA           2,773       11,144       993       2,773       12,137       14,910       3,561     1989   1998   40
100 Brandywine Boulevard
  Newtown   PA           1,784       9,811       3,007       1,784       12,818       14,602       2,541     2002   2000   40
1200 Swedesford Road
  Berwyn   PA     4,427       2,595       11,809       1       2,595       11,809       14,405       324     1994   2001   40
980 Harvest Drive
  Blue Bell   PA           2,079       7,821       4,235       2,079       12,056       14,135       2,133     1988   2002   40
170 Radnor Chester Road
  Radnor   PA           2,514       8,147       3,446       2,509       11,598       14,107       1,106     1983   2004   25
920 Harvest Drive
  Blue Bell   PA           2,433       9,738       1,573       2,433       11,312       13,744       3,225     1990   1998   40
200 Berwyn Park
  Berwyn   PA     9,250       1,533       9,460       1,935       1,533       11,395       12,928       3,791     1987   1997   40
1180 Swedesford Road
  Berwyn   PA           2,086       8,342       1,191       2,086       9,533       11,619       1,798     1987   2001   40
575 East Swedesford Road
  Wayne   PA           2,178       8,712       456       2,178       9,168       11,346       1,060     1985   2003   40
130 Radnor Chester Road
  Radnor   PA           2,573       8,338       163       2,567       8,506       11,074       846     1983   2004   25
610 Freedom Business Center
  King Of Prussia   PA           2,017       8,070       542       2,017       8,612       10,629       2,529     1985   1998   40
565 East Swedesford Road
  Wayne   PA           1,872       7,489       868       1,872       8,357       10,229       1,072     1984   2003   40
1160 Swedesford Road
  Berwyn   PA           1,781       7,124       1,269       1,781       8,394       10,174       1,604     1986   2001   40
100 Berwyn Park
  Berwyn   PA     6,765       1,180       7,290       1,557       1,180       8,847       10,027       3,102     1986   1997   40
925 Harvest Drive
  Blue Bell   PA           1,671       6,606       1,114       1,671       7,720       9,391       2,189     1990   1998   40
14 Campus Boulevard
  Newtown Square   PA     5,026       2,244       4,217       2,694       2,244       6,911       9,155       914     1998   1998   40
426 Lancaster Avenue
  Devon   PA           1,689       6,756       369       1,689       7,126       8,814       2,108     1990   1998   40
650 Park Avenue
  King Of Prussia   PA           1,916       4,378       2,502       1,916       6,880       8,796       2,215     1968   1998   40
1100 Cassett Road
  Berwyn   PA           1,695       6,779       (0 )     1,695       6,779       8,474       1,144     1997   2001   40
500 North Gulph Road
  King Of Prussia   PA           1,303       5,201       1,386       1,303       6,587       7,890       2,393     1979   1996   40
855 Springdale Drive
  Exton   PA           838       3,370       3,501       838       6,870       7,709       1,423     1986   1997   40
2930 Chestnut Street
  Philadelphia   PA                 7,688       0             7,688       7,688       96     #N/A   2007   40
2240/2250 Butler Pike
  Plymouth Meeting   PA           1,104       4,627       1,558       1,104       6,185       7,289       2,235     1984   1996   40
One Progress Drive
  Horsham   PA           1,399       5,629       230       1,399       5,859       7,258       2,075     1986   1996   40
412 Creamery Way
  Exton   PA           1,195       4,779       911       1,195       5,690       6,885       1,279     1999   2001   40
429 Creamery Way
  Exton   PA           1,368       5,471       19       1,368       5,490       6,858       934     1996   2001   40
585 East Swedesford Road
  Wayne   PA           1,350       5,401       32       1,350       5,433       6,783       569     1998   2003   40
741 First Avenue
  King Of Prussia   PA           1,287       5,151       219       1,287       5,369       6,657       1,661     1966   1998   40
875 First Avenue
  King Of Prussia   PA           618       2,473       3,257       618       5,729       6,348       1,661     1966   1998   40
17 Campus Boulevard
  Newtown Square   PA     4,914       1,108       5,155       46       1,108       5,201       6,309       1,597     2001   1997   40
440 Creamery Way
  Exton   PA           982       3,927       1,313       982       5,240       6,222       875     1991   2001   40
479 Thomas Jones Way
  Exton   PA           1,075       4,299       679       1,075       4,979       6,053       1,096     1988   2001   40
11 Campus Boulevard
  Newtown Square   PA     4,498       1,112       4,067       825       1,112       4,892       6,004       1,104     1998   1999   40
620 Allendale Road
  King Of Prussia   PA           1,020       3,839       989       1,020       4,828       5,848       2,009     1961   1998   40
500 Enterprise Drive
  Horsham   PA           1,303       5,188       (659 )     1,303       4,529       5,832       1,545     1990   1996   40
15 Campus Boulevard
  Newtown Square   PA     5,622       1,164       3,896       672       1,164       4,568       5,732       769     2002   2000   40
300 Lindenwood Drive
  Malvern   PA           848       3,394       1,316       849       4,710       5,558       652     1991   2001   40
436 Creamery Way
  Exton   PA           994       3,978       583       994       4,560       5,555       789     1991   2001   40
751-761 Fifth Avenue
  King Of Prussia   PA           1,097       4,391       31       1,097       4,422       5,519       1,298     1967   1998   40
467 Creamery Way
  Exton   PA           906       3,623       882       906       4,505       5,411       826     1988   2001   40
Philadelphia Marine Center
  Philadelphia   PA           532       2,196       2,680       628       4,780       5,408       755     Various   1998   40
600 Park Avenue
  King Of Prussia   PA           1,012       4,048       336       1,012       4,384       5,396       1,203     1964   1998   40
100 Arrandale Boulevard
  Exton   PA           970       3,878       274       970       4,152       5,122       691     1997   2001   40
442 Creamery Way
  Exton   PA           894       3,576       391       894       3,967       4,861       835     1991   2001   40
1700 Paoli Pike
  Malvern   PA           458       559       3,746       488       4,275       4,763       1,063     2000   2000   40
18 Campus Boulevard
  Newtown Square   PA     3,168       787       3,312       571       787       3,883       4,670       1,354     1990   1996   40
2260 Butler Pike
  Plymouth Meeting   PA           661       2,727       1,092       662       3,818       4,480       1,262     1984   1996   40
120 West Germantown Pike
  Plymouth Meeting   PA           685       2,773       887       685       3,661       4,345       1,552     1984   1996   40
486 Thomas Jones Way
  Exton   PA           806       3,256       194       806       3,450       4,256       1,306     1990   1996   40
457 Creamery Way
  Exton   PA           777       3,107       306       777       3,413       4,190       679     1990   2001   40
680 Allendale Road
  King Of Prussia   PA           689       2,756       678       689       3,434       4,123       1,267     1962   1998   40
7130 Ambassador Drive
  Allentown   PA           761       3,046       160       761       3,206       3,967       780     1991   1999   40
1336 Enterprise Drive
  West Goshen   PA           731       2,946       51       731       2,997       3,728       995     1989   1997   40
456 Creamery Way
  Exton   PA           635       2,548       (48 )     635       2,500       3,135       885     1987   1996   40
140 West Germantown Pike
  Plymouth Meeting   PA           481       1,976       475       482       2,450       2,932       994     1984   1996   40
468 Thomas Jones Way
  Exton   PA           526       2,112       163       527       2,274       2,801       843     1990   1996   40
100 Lindenwood Drive
  Malvern   PA           473       1,892       376       473       2,268       2,741       622     1985   2001   40

F - 93


Table of Contents

     
BRANDYWINE OPERATING PARTNERSHIP, L.P.
Schedule III
Real Estate and Accumulated Depreciation - December 31, 2007
(in thousands)
                                                                                     
                          Gross Amount at Which Carried              
                    Initial Cost     December 31, 2007              
                                    Net                    
                                    Improvements                             Accumulated              
                                    (Retirements)                             Depreciation at              
            Encumberances at             Building and     Since             Building and             December 31,     Year of   Year   Depreciable
    City   State   December 31, 2007     Land     Improvements     Acquisition     Land     Improvements     Total (a)     2007 (b)     Construction   Acquired   Life
630 Clark Avenue   King Of Prussia   PA           547       2,190       0       547       2,190       2,737       643     1960   1998   40
481 John Young Way
  Exton   PA           496       1,983       0       496       1,984       2,479       335     1997   2001   40
640 Allendale Road
  King of Prussia   PA           439       432       1,480       439       1,912       2,351       327     2000   2000   40
660 Allendale Road
  King of Prussia   PA           396       3,343       (1,637 )     396       1,706       2,102       745     1962   1998   40
200 Lindenwood Drive
  Malvern   PA           324       1,295       242       324       1,537       1,861       382     1984   2001   40
351 Plymouth Road
  Plymouth Meeting   PA           1,043       555             1,043       555       1,598       38     N/A   2000   40
748 Springdale Drive
  Exton   PA           236       931       275       236       1,206       1,442       387     1986   1997   40
111 Arrandale Road
  Exton   PA           262       1,048       125       262       1,173       1,435       198     1996   2001   40
922 Swedesford Road
  Berwyn   PA           218                   218             218           N/A   N/A   40
 
                                                                                   
NEW JERSEY/DELAWARE
                                                                                   
 
                                                                                   
50 East State Street
  Trenton   NJ           8,926       35,735       1,987       8,926       37,723       46,648       10,866     1989   1998   40
33 West State Street
  Trenton   NJ           6,016       24,091       27       6,016       24,119       30,134       7,019     1988   1998   40
920 North King Street
  Wilmington   DE           6,141       21,140       438       6,141       21,578       27,719       2,834     1989   2004   30
1009 Lenox Drive
  Lawrenceville   NJ           4,876       19,284       3,326       5,057       22,430       27,486       7,222     1989   1998   40
525 Lincoln Drive West
  Marlton   NJ           3,727       17,620       2,647       3,727       20,267       23,994       3,513     1986   2004   40
300 Delaware Avenue
  Wilmington   DE           6,368       13,739       1,513       6,369       15,251       21,620       2,404     1989   2004   23
989 Lenox Drive
  Lawrenceville   NJ           3,701       14,802       1,390       3,812       16,081       19,893       1,744     1984   2003   40
700 East Gate Drive
  Mt. Laurel   NJ           3,569       14,436       1,565       3,569       16,001       19,570       4,513     1984   1998   40
10000 Midlantic Drive
  Mt. Laurel   NJ           3,206       12,857       2,442       3,206       15,298       18,505       4,879     1990   1997   40
Main Street — Plaza 1000
  Voorhees   NJ           2,732       10,942       4,274       2,732       15,216       17,948       5,626     1988   1997   40
2000 Lenox Drive
  Lawrenceville   NJ     13,236       2,291       12,221       3,155       2,648       15,019       17,667       5,115     2000   2000   40
One Righter Parkway
  Wilmington   DE     9,853       2,545       10,195       4,820       2,545       15,015       17,560       4,415     1989   1996   40
993 Lenox Drive
  Lawrenceville   NJ     11,379       2,811       17,996       (5,155 )     2,922       12,729       15,652       4,067     1985   1998   40
15000 Midlantic Drive
  Mt. Laurel   NJ           3,061       12,254       170       3,061       12,424       15,485       4,008     1991   1997   40
100 Brandywine Boulevard
  Newtown   PA           1,784       9,811       3,007       1,784       12,818       14,602       2,541     2002   2000   40
1400 Howard Boulevard
  Mt. Laurel   NJ           443             13,014       1,447       12,009       13,457       375     2005   2000   40
997 Lenox Drive
  Lawrenceville   NJ     9,277       2,410       9,700       1,191       2,507       10,794       13,301       3,101     1987   1998   40
1000 Howard Boulevard
  Mt. Laurel   NJ           2,297       9,288       1,316       2,297       10,604       12,901       3,778     1988   1997   40
1120 Executive Boulevard
  Marlton   NJ           2,074       8,415       2,238       2,074       10,652       12,727       3,423     1987   1997   40
220 Lake Drive East
  Cherry Hill   NJ           2,144       8,798       1,063       2,144       9,862       12,005       1,865     1988   2001   40
400 Commerce Drive
  Newark   DE     11,575       2,528       9,220       86       2,528       9,306       11,834       1,699     1997   2002   40
457 Haddonfield Road
  Cherry Hill   NJ     10,505       2,142       9,120       391       2,142       9,511       11,653       3,538     1990   1996   40
2000 Midlantic Drive
  Mt. Laurel   NJ     8,959       2,202       8,823       528       2,203       9,351       11,553       3,213     1989   1997   40
1000 Atrium Way
  Mt. Laurel   NJ           2,061       8,180       1,143       2,061       9,323       11,384       2,956     1989   1997   40
200 Lake Drive East
  Cherry Hill   NJ           2,069       8,275       894       2,069       9,169       11,238       1,781     1989   2001   40
10 Lake Center Drive
  Marlton   NJ           1,880       7,521       1,515       1,880       9,035       10,916       1,730     1989   2001   40
701 East Gate Drive
  Mt. Laurel   NJ           1,736       6,877       828       1,736       7,705       9,441       2,457     1986   1998   40
Two Righter Parkway
  Wilmington   DE           2,802       11,217       (4,688 )     2,802       6,529       9,331       41     1987   2001   40
210 Lake Drive East
  Cherry Hill   NJ           1,645       6,579       827       1,645       7,407       9,051       1,405     1986   2001   40
309 Fellowship Drive
  Mt. Laurel   NJ           1,518       6,154       1,205       1,518       7,359       8,877       2,545     1982   1998   40
308 Harper Drive
  Moorestown   NJ           1,643       6,663       497       1,644       7,159       8,803       2,223     1976   1998   40
305 Fellowship Drive
  Mt. Laurel   NJ           1,421       5,768       1,262       1,421       7,030       8,451       1,897     1980   1998   40
307 Fellowship Drive
  Mt. Laurel   NJ           1,565       6,342       481       1,565       6,824       8,388       1,878     1981   1998   40
303 Fellowship Drive
  Mt. Laurel   NJ           1,493       6,055       617       1,494       6,671       8,165       1,904     1979   1998   40
1000 Lenox Drive
  Lawrenceville   NJ           1,174       4,696       2,163       1,226       6,806       8,033       1,390     1982   2002   40
1000 Bishops Gate
  Mt. Laurel   NJ           934       6,287             953       6,812       7,764       927     2005   2000   40
9000 Midlantic Drive
  Mt. Laurel   NJ     5,662       1,472       5,895       109       1,472       6,005       7,476       1,952     1989   1997   40
6 East Clementon Road
  Gibbsboro   NJ           1,345       5,366       457       1,345       5,823       7,168       1,826     1980   1997   40
100 Commerce Drive
  Newark   DE           1,160       4,633       1,156       1,160       5,789       6,949       1,970     1989   1997   40
Three Greentree Centre
  Marlton   NJ           323       6,024       558       324       6,582       6,905       4,473     1984   1986   40
200 Commerce Drive
  Newark   DE     5,765       911       4,414       1,018       911       5,432       6,343       1,004     1998   2002   40
30 Lake Center Drive
  Marlton   NJ           1,043       4,171       932       1,043       5,104       6,146       865     1986   2001   40
161 Gaither Drive
  Mount Laurel   NJ           1,016       4,064       585       1,016       4,649       5,665       817     1987   2001   40
Two Greentree Centre
  Marlton   NJ           264       4,693       600       264       5,293       5,557       3,522     1983   1986   40
One Greentree Centre
  Marlton   NJ           345       4,440       613       345       5,054       5,398       3,015     1982   1986   40
Two Eves Drive
  Marlton   NJ           818       3,461       56       818       3,517       4,335       1,201     1987   1997   40
Five Eves Drive
  Marlton   NJ           703       2,819       771       703       3,590       4,293       1,269     1986   1997   40
4000 Midlantic Drive
  Mt. Laurel   NJ     2,911       714       5,085       (1,524 )     714       3,561       4,275       1,079     1998   1997   40
20 East Clementon Road
  Gibbsboro   NJ           769       3,055       437       769       3,492       4,261       1,195     1986   1997   40
8000 Lincoln Drive
  Marlton   NJ           606       2,887       659       606       3,545       4,152       1,405     1997   1996   40
304 Harper Drive
  Moorestown   NJ           657       2,674       448       657       3,122       3,779       910     1975   1998   40
Main Street — Piazza
  Voorhees   NJ           696       2,802       225       696       3,027       3,723       1,047     1990   1997   40
815 East Gate Drive
  Mt. Laurel   NJ           636       2,584       307       636       2,891       3,527       796     1986   1998   40
Four B Eves Drive
  Marlton   NJ           588       2,369       381       588       2,749       3,338       921     1987   1997   40
817 East Gate Drive
  Mt. Laurel   NJ           611       2,426       152       611       2,578       3,189       697     1986   1998   40
Four A Eves Drive
  Marlton   NJ           539       2,168       243       539       2,411       2,950       855     1987   1997   40
Main Street — Promenade
  Voorhees   NJ           531       2,052       151       532       2,203       2,734       759     1988   1997   40
10 Foster Avenue
  Gibbsboro   NJ           244       971       225       244       1,196       1,440       394     1983   1997   40
7 Foster Avenue
  Gibbsboro   NJ           231       921       121       231       1,041       1,273       332     1983   1997   40
305 Harper Drive
  Moorestown   NJ           223       913       0       223       913       1,136       248     1979   1998   40
50 East Clementon Road
  Gibbsboro   NJ           114       964       3       114       967       1,081       293     1986   1997   40
4 Foster Avenue
  Gibbsboro   NJ           183       726       84       183       811       993       279     1974   1997   40

F - 94


Table of Contents

BRANDYWINE OPERATING PARTNERSHIP, L.P.
Schedule III
Real Estate and Accumulated Depreciation - December 31, 2007
(in thousands)
                                                                                     
                          Gross Amount at Which Carried              
                    Initial Cost     December 31, 2007              
                                    Net                    
                                    Improvements                             Accumulated              
                                    (Retirements)                             Depreciation at              
            Encumberances at             Building and     Since             Building and             December 31,     Year of   Year   Depreciable
    City   State   December 31, 2007     Land     Improvements     Acquisition     Land     Improvements     Total (a)     2007 (b)     Construction   Acquired   Life
2 Foster Avenue   Gibbsboro   NJ           185       730       42       185       772       957       246     1974   1997   40
1 Foster Avenue
  Gibbsboro   NJ           93       364       63       93       428       520       129     1972   1997   40
5 U.S. Avenue
  Gibbsboro   NJ           21       81       3       21       84       105       25     1987   1997   40
5 Foster Avenue
  Gibbsboro   NJ           9       32       26       9       58       67       16     1968   1997   40
 
                                                                                   
SOUTHWEST
                                                                                   
 
                                                                                   
1250 Capital of Texas Hwy South
  Austin   TX           5,152       37,928       3,512       5,250       41,343       46,593       3,024     1984   2006   52
1301 Mopac Expressway
  Austin   TX           4,188       41,229       481       4,250       41,648       45,898       2,165     2001   2006   55
1601 Mopac Expressway
  Austin   TX           3,538       34,346       2,267       3,605       36,547       40,151       2,524     2000   2006   54
1501 South Mopac Expressway
  Austin   TX           3,698       34,912       1,150       3,768       35,992       39,759       3,433     1999   2006   53
1221 Mopac Expressway
  Austin   TX           3,290       31,548       652       3,369       32,120       35,489       1,926     2001   2006   55
1177 East Beltline Road
  Coppell   TX     20,112       1,516       14,895       8       1,517       14,903       16,420       1,246     1998   2006   42
1801 Mopac Expressway
  Austin   TX           1,227       10,959       460       1,250       11,395       12,646       553     1999   2006   53
 
                                                                                   
RICHMOND
                                                                                   
 
                                                                                   
600 East Main Street
  Richmond   VA           9,808       38,255       5,632       9,808       43,887       53,695       13,231     1986   1998   40
300 Arboretum Place
  Richmond   VA     13,513       5,450       21,892       1,864       5,450       23,757       29,206       7,061     1988   1998   40
7501 Boulders View Drive
  Richmond   VA           4,925       19,699       257       5,181       19,700       24,881       206     1990   2007   40
7300 Beaufont Springs Drive
  Richmond   VA           4,922       19,689       251       5,172       19,690       24,862       205     2000   2007   40
6800 Paragon Place
  Richmond   VA           4,552       18,414       236       4,552       18,650       23,202       626     1986   2006   40
6802 Paragon Place
  Richmond   VA           2,917       11,454       2,530       2,917       13,984       16,901       2,665     1989   2002   40
1025 Boulders Parkway
  Richmond   VA           2,824       11,297       251       3,074       11,298       14,372       118     1994   2007   40
2100-2116 West Laburnam Avenue
  Richmond   VA           2,482       8,846       2,278       2,482       11,124       13,606       3,064     1976   1998   40
7401 Beaufont Springs Drive
  Richmond   VA           2,599       10,396       251       2,849       10,397       13,246       108     1998   2007   40
7325 Beaufont Springs Drive
  Richmond   VA           2,594       10,377       251       2,844       10,378       13,222       108     1999   2007   40
9011 Arboretum Parkway
  Richmond   VA           1,857       7,702       892       1,857       8,594       10,451       2,228     1991   1998   40
6806 Paragon Place
  Richmond   VA                 10,288       0             10,288       10,288       415     2007   2005   40
4805 Lake Brooke Drive
  Glen Allen   VA           1,640       6,567       1,312       1,640       7,879       9,519       2,023     1996   1998   40
4364 South Alston Avenue
  Durham   NC           1,622       6,419       910       1,581       7,370       8,951       2,182     1985   1998   40
2511 Brittons Hill Road
  Richmond   VA           1,202       4,820       1,863       1,202       6,683       7,885       1,762     1987   1998   40
9100 Arboretum Parkway
  Richmond   VA     3,425       1,362       5,489       834       1,362       6,323       7,685       1,665     1988   1998   40
2812 Emerywood Parkway
  Henrico   VA           1,069       4,281       1,902       1,069       6,183       7,252       2,302     1980   1998   40
9210 Arboretum Parkway
  Richmond   VA     2,840       1,110       4,474       581       1,110       5,055       6,165       1,551     1988   1998   40
100 Gateway Centre Parkway
  Richmond   VA           391       5,410       123       391       5,533       5,924       812     2001   1998   40
1957 Westmoreland Street
  Richmond   VA           1,061       4,241       234       1,061       4,475       5,536       1,276     1975   1998   40
2201-2245 Tomlynn Street
  Richmond   VA           1,020       4,067       391       1,020       4,458       5,478       1,255     1989   1998   40
9200 Arboretum Parkway
  Richmond   VA     2,447       985       3,973       142       985       4,115       5,100       1,148     1988   1998   40
9211 Arboretum Parkway
  Richmond   VA           582       2,433       243       582       2,677       3,258       758     1991   1998   40
2248 Dabney Road
  Richmond   VA           512       2,049       304       512       2,354       2,865       684     1989   1998   40
2221-2245 Dabney Road
  Richmond   VA           530       2,123       176       530       2,299       2,829       659     1994   1998   40
2244 Dabney Road
  Richmond   VA           550       2,203       37       550       2,240       2,790       617     1993   1998   40
2212-2224 Tomlynn Street
  Richmond   VA           502       2,014       157       502       2,171       2,673       595     1985   1998   40
2277 Dabney Road
  Richmond   VA           507       2,034       15       507       2,049       2,556       563     1986   1998   40
2161-2179 Tomlynn Street
  Richmond   VA           423       1,695       269       423       1,964       2,387       559     1985   1998   40
2246 Dabney Road
  Richmond   VA           455       1,822       18       455       1,840       2,295       504     1987   1998   40
2130-2146 Tomlynn Street
  Richmond   VA           353       1,416       288       353       1,704       2,057       571     1988   1998   40
2256 Dabney Road
  Richmond   VA           356       1,427       271       356       1,698       2,054       469     1982   1998   40
2251 Dabney Road
  Richmond   VA           387       1,552       111       387       1,662       2,050       503     1983   1998   40
2120 Tomlynn Street
  Richmond   VA           281       1,125       251       281       1,377       1,657       417     1986   1998   40
2240 Dabney Road
  Richmond   VA           264       1,059       10       264       1,069       1,334       293     1984   1998   40
 
                                                                   
 
  Total:       $ 611,898     $ 720,198     $ 3,705,120     $ 387,701     $ 727,979     $ 4,085,584     $ 4,813,563     $ 558,908              
 
                                                                   

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(a)   Reconciliation of Real Estate:
 
    The following table reconciles the real estate investments from January 1, 2005 to December 31, 2007 (in thousands):
                         
    2007     2006     2005  
Balance at beginning of year
  $ 4,927,305     $ 2,560,061     $ 2,483,134  
 
                       
Additions:
                       
Acquisitions
    158,399       2,370,241       71,783  
Capital expenditures
    179,691       334,238       47,732  
 
                       
Less:
                       
Dispositions
    (451,832 )     (229,824 )     (42,588 )
Assets transferred to held-for-sale
          (107,411 )      
 
                       
 
                 
Balance at end of year
  $ 4,813,563     $ 4,927,305     $ 2,560,061  
 
                 
The aggregate cost for federal income tax purposes is $4.5 billion as of December 31, 2007.
 
(b)   Reconciliation of Accumulated Depreciation:
 
    The following table reconciles the accumulated depreciation on real estate investments from January 1, 2005 to December 31, 2007 (in thousands):
                         
    2007     2006     2005  
Balance at beginning of year
  $ 515,698     $ 390,333     $ 325,802  
 
                       
Additions:
                       
Depreciation expense — continued operations
    167,160       162,503       78,465  
Depreciation expense — discontinued operations
    4,748       12,305       171  
Acquisitions
          1,037        
 
                       
Less:
                       
Dispositions
    (128,698 )     (44,430 )     (14,105 )
Assets transferred to held-for-sale
          (6,050 )      
 
                       
 
                 
Balance at end of year
  $ 558,908     $ 515,698     $ 390,333  
 
                 

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G&I INTERCHANGE OFFICE LLC
CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2007

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Report of Independent Registered Public Accounting Firm
To the Members of
G&I Interchange Office, LLC:
In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of income, Members’ equity, and cash flows present fairly, in all material respects, the financial position of G&I Interchange Office, LLC (the “Company”) at December 31, 2007, and the results of its operations and its cash flows for the period from October 24, 2007 (“Inception”) to December 31, 2007, in conformity with accounting principles generally accepted in the United States of America. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
March 27, 2008

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G&I INTERCHANGE OFFICE LLC
CONSOLIDATED BALANCE SHEET
(in thousands)
         
    December 31, 2007  
ASSETS
       
Real estate investments:
       
Land
  $ 36,741  
Building and improvements
    148,468  
Tenant improvements
    19,058  
 
     
 
    204,267  
Accumulated depreciation
    (388 )
 
     
Real estate investments, net
    203,879  
 
       
Accrued rent receivable
    41  
Deferred costs, net of accumulated amortization of $7
    1,285  
Intangible assets, net of accumulated amortization of $421 (Note 3)
    48,485  
Related party assets (Note 7)
    8,011  
Other assets
    1,237  
 
     
 
       
Total assets
  $ 262,938  
 
     
 
       
LIABILITIES AND MEMBERS’ EQUITY
       
Mortgage notes payable (Note 4)
  $ 184,000  
Accounts payable and accrued expenses
    154  
Security deposits and deferred rents
    1,606  
Acquired below market leases, net of accumulated amortization of $53 (Note 3)
    6,539  
 
     
Total liabilities
    192,299  
 
       
Minority interest (See Note 1)
    3,205  
 
       
Commitments and contingencies (Note 8)
       
 
       
Members’ equity (Note 5)
    67,434  
 
     
 
       
Total liabilities, minority interest, and Members’ equity
  $ 262,938  
 
     
The accompanying notes are an integral part of these consolidated financial statements.

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G&I INTERCHANGE OFFICE LLC
CONSOLIDATED STATEMENT OF INCOME
(in thousands)
         
    Period from Inception  
    (October 24, 2007) to  
    December 31, 2007  
Revenue
       
Rental income
  $ 991  
Tenant reimbursements
    82  
 
     
Total revenues
    1,073  
 
     
 
       
Expenses
       
Property operating expenses
    236  
Real estate taxes
    111  
Interest
    385  
Depreciation and amortization
    767  
 
     
Total expenses
    1,499  
 
     
 
       
Loss before minority interest
    (426 )
Minority interest
     
 
     
Net loss
  $ (426 )
 
     
The accompanying notes are an integral part of these consolidated financial statements.

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G&I INTERCHANGE OFFICE LLC
CONSOLIDATED STATEMENT OF MEMBERS’ EQUITY
For the Period from Inception (October 24, 2007) to December 31, 2007
(in thousands)
                         
    G&I VI Investment     Brandywine Operating        
    Interchange Office LLC     Partnership, L.P.     Total  
Balance at Inception (October 24, 2007)
  $     $     $  
Contributions
    54,288       13,572       67,860  
Net loss
    (341 )     (85 )     (426 )
 
                 
Balance at December 31, 2007
    53,947       13,487       67,434  
 
                 
The accompanying notes are an integral part of these consolidated financial statements.

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G&I INTERCHANGE OFFICE LLC
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
         
    Period from Inception  
    (October 24, 2007) to  
    December 31, 2007  
CASH FLOWS FROM OPERATING ACTIVITIES
       
Net loss
  $ (426 )
Adjustments to reconcile net loss to net cash from operating activities
       
Depreciation and amortization
    767  
Straight line rents and amortization of above/below market intangibles
    (51 )
Deferred financing cost amortization
    7  
Other assets
    (1,237 )
Accounts payable and accrued expenses
    154  
 
     
Net cash used in operating activities
    (786 )
 
     
 
       
CASH FLOWS FROM INVESTING ACTIVITIES
       
Cash paid for property acquisitions
    (229,806 )
Property advance
    (3,205 )
Construction receivable from affiliate of member
    (3,200 )
 
     
Net cash used in investing activities
    (236,211 )
 
     
 
       
CASH FLOWS FROM FINANCING ACTIVITIES
       
Mortgage notes payable
    184,000  
Payment of deferred financing costs
    (1,291 )
Contributions from member
    54,288  
 
     
Net cash from financing activities
    236,997  
 
     
NET CHANGE IN CASH AND CASH EQUIVALENTS
     
CASH AND CASH EQUIVALENTS — Beginning of period
     
 
     
CASH AND CASH EQUIVALENTS — End of period
     
 
     
 
       
SUPPLEMENTAL DISCLOSURE:
       
Cash paid during the year for interest
  $ 379  
 
       
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITY:
       
Contributions from member
    13,572  
Tenant security deposits and deferred rents
    1,606  
Related party assets
    (1,606 )
The accompanying notes are an integral part of these consolidated financial statements.

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G&I INTERCHANGE OFFICE LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007
(in thousands of dollars, except square footage)
1. ORGANIZATION AND NATURE OF OPERATIONS
G&I Interchange Office LLC (the “Company”) was formed on October 24, 2007 (the “Inception Date”), as a Delaware Limited Liability Company. Two wholly-owned subsidiaries of Brandywine Operating Partnership, L.P. (collectively, “Brandywine”) were admitted as members of the Company on December 19, 2007. The other member of the Company is G&I VI Investment Interchange Office LLC (“G&I VI”), an investment vehicle advised by DRA Advisors LLC. Neither G&I VI nor DRA Advisors LLC is affiliated with Brandywine.
The Company was formed for the purpose of acquiring, owning, leasing and managing 29 office buildings (collectively, the “Properties”) totaling approximately 1,616,000 net rentable square feet. The Properties are located in the Montgomery, Bucks, and Lehigh counties in Pennsylvania.
On December 19, 2007, Brandywine transferred to the Company 100% of its ownership interests in 26 of the Properties and transferred to the Company an 89% ownership interest in three of the Properties (“89/11 Properties”) with Brandywine’s remaining 11% ownership interest reflected as minority interest on the consolidated balance sheet of the Company.
As of December 31, 2007, G&I VI and Brandywine maintain an 80% and 20% interest in the Company, respectively.
The Company engaged Brandywine to perform property management and leasing services for the Properties (See Note 7).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting and Principles of Consolidation
The consolidated financial statements are prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. The accompanying consolidated financial statements include the financial position, results of operations, and cash flows of the Company and the Properties in which the Company has a controlling interest.
When the Company obtains an economic interest in an entity, the Company evaluates the entity to determine if the entity is deemed a variable interest entity (“VIE”), and if the Company is deemed to be the primary beneficiary, in accordance with FASB Interpretation No. 46R, “Consolidation of Variable Interest Entities” (“FIN 46R”).  When an entity is not deemed to be a VIE, the Company considers the provisions of 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”). The Company consolidates (i) entities that are VIEs and of which the Company is deemed to be the primary beneficiary and (ii) entities that are non-VIEs which the Company controls and in which the limited partners do not have the ability to dissolve the entity or remove the Company without cause nor substantive participating rights.  The 89/11 Properties are considered VIEs of which the Company is the primary beneficiary and therefore these properties are consolidated.  The Company will reconsider its determination of whether an entity is a VIE and who the primary beneficiary is, and whether or not the limited partners in an entity have substantive rights, if certain events occur that are likely to cause a change in the original determinations. The portion of the 89/11 Properties not owned by the Company is presented as minority interest as of December 31, 2007. All intercompany accounts and transactions have been eliminated in consolidation.

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Use of Estimates
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 and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Management makes significant estimates regarding revenue, impairment of long-lived assets, allowance for doubtful accounts and deferred costs.
Real Estate Investments
Real estate investments are carried at historical cost less accumulated depreciation and impairment losses, if any. The cost of real estate investments reflects their purchase price or development cost. Costs incurred for the acquisition and renovation of an operating property are capitalized to the Company’s investment in that property. Ordinary repairs and maintenance are expensed as incurred; major replacements and betterments, which improve or extend the life of the asset, are capitalized and depreciated over their estimated useful lives. Fully-depreciated assets are removed from the accounts.
The cost of buildings and improvements are depreciated using the straight-line method based on the following useful lives: buildings and improvements (five to 51 years) and tenant improvements (the shorter of the lease term or the life of the asset).
In accordance with SFAS 144, 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 group 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 are 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 other assets and liabilities related to assets classified as held-for-sale are presented separately in the consolidated balance sheet. The Company had no properties classified as held for sale at December 31, 2007.
Purchase Price Allocation
The Company allocates the purchase price of properties to net tangible and identified intangible assets acquired based on fair values. Above-market and below-market 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) the Company’s estimate of the fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of the lease. Capitalized above-market lease values are amortized as a reduction of rental income over the remaining non-cancelable terms of the respective leases. Capitalized below-market lease values are amortized as an increase to rental income over the remaining non-cancelable terms of the respective leases, including any below market fixed-rate renewal periods.
Other intangible assets also include amounts representing the value of tenant relationships and in-place leases based on the Company’s evaluation of the specific characteristics of each tenant’s lease and the Company’s overall relationship with the respective tenant. The Company estimates the cost to execute leases with terms similar to the remaining lease terms of the in-place leases, including leasing commissions, legal and other related expenses. This intangible asset is amortized to expense over the remaining term of the respective leases. The Company estimates of value are made using methods similar to those used by independent appraisers or by using independent appraisals. Factors considered by the

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Company in this analysis include an estimate of the carrying costs during the expected lease-up periods considering current market conditions and costs to execute similar leases. In estimating carrying costs, the Company includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods, which primarily approximate six months. The Company also considers information obtained about each property as a result of its pre-acquisition due diligence, marketing and leasing activities in estimating the fair value of the tangible and intangible assets acquired. The Company also uses the information obtained as a result of its pre-acquisition due diligence as part of its consideration of FIN 47 Accounting for Conditional Asset Retirement Obligations (“FIN 47”), and when necessary, will record a conditional asset retirement obligation as part of its purchase price.
Characteristics considered by the Company in allocating value to its tenant relationships include the nature and extent of the Company’s business relationship with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit quality and expectations of lease renewals, among other factors. 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-cancelable term of the respective leases and any below market fixed-rate renewal periods.
In the event that a tenant terminates its lease, the unamortized portion of each intangible, including market rate adjustments (above or below), in-place lease values and tenant relationship values, would be charged to expense and market rate adjustments would be recorded to revenue.
Deferred Costs
The Company has capitalized as deferred costs certain expenditures related to the leasing and financing of the Properties. Deferred leasing commissions are amortized, on a straight-line basis, over the terms of the related leases. Deferred financing costs are charged to interest expense over the terms of the related debt.
Revenue Recognition
Rental income from leases is recognized on a straight-line basis regardless of when payments are due. The cumulative difference between rental income recognized and contractual lease payments is recorded as “accrued rent receivable” on the accompanying balance sheet. For the period from the Inception Date to December 31, 2007, the straight-line rent adjustment increased revenue by $41.
Certain lease agreements also contain provisions that require tenants to reimburse a pro-rata share of real estate taxes and certain common area maintenance costs subject to their proportionate share of increases over their respective base year amounts. These amounts are included in tenant reimbursements on the accompanying consolidated statement of income and are recorded when earned.
Other Assets
As of December 31, 2007, other assets included prepaid real estate taxes of $1,217 and prepaid service contracts of $20.
Deferred Rent
Deferred rent represents revenue received from tenants prior to their due dates.
Income Taxes
The Company has elected to be treated as a partnership for federal tax purposes and is therefore not taxed directly. The taxable income or loss of the Company is included in the income tax returns of the members; accordingly, no provision for income tax expense or benefit is reflected in the accompanying consolidated financial statements.

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The Company’s tax returns and the amount of allocable Company profit and losses are subject to examination by federal and state taxing authorities. If such examination results in changes to Company profits or losses, then the tax liability of the partners would be changed accordingly.
3. INTANGIBLE ASSETS and LIABILITIES
As of December 31, 2007, the Company’s intangible assets and liabilities are comprised of the following:
         
Customer relationship value
  $ 22,334  
Value of in-place leases
    21,891  
Above-market lease assets
    4,681  
 
     
Total intangible assets
    48,906  
 
       
Less: Accumulated amortization
    (421 )
 
     
Intangible assets, net
  $ 48,485  
 
     
 
       
Acquired lease liability (below market rent)
  $ 6,592  
 
       
Less: Accumulated amortization
    (53 )
 
     
Acquired lease liability, net
  $ 6,539  
 
     
As of December 31, 2007, the Company’s annual amortization for its intangible assets/liabilities are as follows (in thousands, assumes no early terminations):
                 
    Assets   Liabilities
                 
2008
  $ 10,958     $ 1,494  
2009
    7,920       1,284  
2010
    6,759       1,009  
2011
    5,842       893  
2012
    4,557       567  
Thereafter
    12,449       1,292  
 
           
Total
  $ 48,485     $ 6,539  
 
           
4. MORTGAGE NOTES PAYABLE
On December 19, 2007, the Company obtained four mortgage notes payable aggregating $184,000 to finance the Properties, each with a maturity date of January 1, 2015. The mortgage notes payable require interest only payments through January 1, 2011 at an interest rate of 5.78% per annum and, after that date, interest and principal payments based on a 30 year amortization schedule through December 1, 2014. All unpaid principal is due upon maturity. The mortgages are collateralized by a first lien mortgage and an assignment of rents and leases on the Properties owned by the Company.
The mortgage notes are not prepayable for the first two years. Thereafter, the loans may be prepaid in whole or in part subject to prepayment penalties. A partial prepayment to release one or more of the properties from the lien is based on specifically allocated loan balance by property, subject to certain financial covenants with respect to the remaining properties.
The Company believes that the carrying amount of the mortgage notes payable as of December 31, 2007 approximates the fair value based on the fact the mortgage notes payable were entered into on December 19, 2007.
As of December 31, 2007, the Company’s aggregate principal payments are as follows (in thousands):
         
2008
  $  
2009
     
2010
     
2011
    2,152  
2012
    2,482  
Thereafter
    179,366  
 
     
 
       
Total
  $ 184,000  
 
     

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5. MEMBERS’ EQUITY
Allocation of Net Income (Loss)
Net income (loss) is allocated to the members in accordance with the provisions of the Operating Agreement. Losses are generally allocated ratably. Certain incentives are provided to Brandywine to maximize the performance of the Company. Accordingly, the relative percentage of the total distributions actually received by Brandywine and G&I VI will vary depending on Company income.
Distributions of Cash Flows from Operations
Distributions of cash flows from operations, as defined in the operating agreement of the Company, are to be made quarterly to the members in accordance with their percentage interests.
Distributions of Net Proceeds from Capital Transactions
Distributions of net proceeds from a capital transaction are to be made, first, to return capital contributions of the members, pro rata in accordance with the percentage interests of the members, then to each member pro rata in accordance with their percentage until an internal rate of return hurdle has been achieved, and thereafter in accordance with an adjusted percentage that reflects Brandywine’s residual profits interest in the Company.
6. LEASING ARRANGEMENTS
The Company leases the Properties to tenants under operating leases with expiration dates extending to the year 2018. Future minimum rentals under noncancelable operating leases, excluding tenant reimbursements of operating costs, as of December 31, 2007, are as follows:
         
Year   Minimum Rent
2008
  26,406  
2009
    22,953  
2010
    20,940  
2011
    17,892  
2012
    13,690  
Thereafter
    33,859  
The Company may also receive reimbursements from tenants for certain property operating expenses, including but not limited to, common area maintenance costs, insurance and real estate taxes.
7. RELATED PARTY TRANSACTIONS
An affiliate of Brandywine provides management services to the Properties and in return receives a management fee equal to 3% of the monthly Effective Gross Revenue (as defined in the Operating Agreement). For the period from December 19, 2007 to December 31, 2007, the Company incurred approximately $10 for these services which is included in accounts payable and accrued expenses in the accompanying consolidated balance sheet.
In addition, other payroll and administrative costs, based on a Property per square foot amount, are allocated from Brandywine to the Company. For the period from December 19, 2007 to December 31, 2007, the Company incurred approximately $37 for these services which is included in accounts payable and accrued expenses in the accompanying consolidated balance sheet.
Brandywine occupies approximately 6,700 square feet of office space in the Properties for approximately $11 in monthly rent.

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Upon transfer of certain of the Properties to the Company, Brandywine received $3,200 in exchange for the execution and delivery of an agreement related to future capital expenditures of the Company. This agreement requires Brandywine to fund $3,200 of the first $6,000 of capital expenditures incurred by the Company. The amount paid to Brandywine is included in related party assets on the accompanying consolidated balance sheet.
Upon transfer of certain of the Properties on December 19, 2007, the Company advanced Brandywine $3,205 which Brandywine expects to repay together with interest at 8.5% per annum in approximately 3 years. The amount paid to Brandywine is included in related party assets on the accompanying consolidated balance sheet.
As a condition to transferring the Properties, Brandywine is required to fund the amount of tenant security deposits received from tenants prior to December 19, 2007 to the Company. The total amount of tenant security deposits is $1,287 and is included in related party assets since this amount is receivable by the Company at December 31, 2007. This amount is also included in security deposits and deferred rents on the accompanying consolidated balance sheet to reflect the amount of security deposits funded by tenants to Brandywine prior to December 19, 2007.
Certain of the Properties’ tenants prepaid their January 2008 rent by making payments to Brandywine rather than to the Company. The total prepayments made by tenants to Brandywine is $319 and is included in related party assets since this amount is a receivable to the Company at December 31, 2007. This amount is also included in security deposits and deferred rents on the accompanying consolidated balance sheet to reflect the prepayment of January 2008 rents made by the Properties’ tenants.
A summary of related party receivables as of December 31, 2007 is as follows:
         
Capital expenditure receivable
  3,200  
Property advance
    3,205  
Tenant security deposit receivable
    1,287  
Deferred rent receivable
    319  
 
     
 
  8,011  
 
       
8. COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Company may, from time to time, enter into contracts or agreements with tenants and other vendors that commit the Company to specific or contingent liabilities. As of December 31, 2007, there were no contracts or agreements with tenants or vendors that management considers significant (either individually or in the aggregate) to the financial position or results of operations of the Company. The Company is also subject to legal claims in the ordinary course of business as a property owner.
As an owner and operator of real estate, the Company is subject to various environmental laws of federal, state, and local governments. Compliance with these laws has not had a material effect on the financial statements and management does not believe it will have such an impact in the future.

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