UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)



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

For the quarterly period ended March 31, ~~2020~~2021



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

For the transition period from to

Brandywine Realty Trust

Brandywine Operating Partnership, L.P.

(Exact name of registrant as specified in its charter)

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

Maryland

(Brandywine Realty Trust)

001-9106

23-2413352

Delaware

(Brandywine Operating Partnership, L.P.)

000-24407

23-2862640

(State or Other Jurisdiction of Incorporation
or Organization)

(Commission file number)

(I.R.S. Employer Identification Number)

2929 Walnut Street

Suite 1700
Philadelphia,, PA19104
(Address of principal executive offices) (Zip Code)

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

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Shares of Beneficial Interest

BDN

NYSE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.



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

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



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

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

Brandywine Realty Trust:



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

Brandywine Operating Partnership, L.P.:



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

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

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



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

A total of ~~170,495,608~~170,858,857 Common Shares of Beneficial Interest, par value $0.01 per share of Brandywine Realty Trust, were outstanding as of April ~~23, 2020.~~28, 2021.

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EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the period ended March 31, ~~2020~~2021 of Brandywine Realty Trust (the “Parent Company”) and Brandywine Operating Partnership L.P. (the “Operating Partnership”). The Parent Company is a Maryland real estate investment trust, or REIT, that owns its assets and conducts its operations through the Operating Partnership, a Delaware limited partnership, and subsidiaries of the Operating Partnership. The Parent Company, the Operating Partnership and their consolidated subsidiaries are collectively referred to in this report as the “Company”. In addition, as used in this report, terms such as “we”, “us”, and “our” may refer to the Company, the Parent Company, or the Operating Partnership.

The Parent Company is the sole general partner of the Operating Partnership and, as of March 31, ~~2020,~~2021, owned a 99.4% interest in the Operating Partnership. The remaining 0.6% interest consists of common units of limited partnership interest issued by the Operating Partnership to third parties in exchange for contributions of properties to the Operating Partnership. As the sole general partner of the Operating Partnership, the Parent Company has full and complete authority over the Operating Partnership’s day-to-day operations and management.

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

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

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

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

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

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

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

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

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

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•Consolidated Financial Statements; and

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

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

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

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TABLE OF CONTENTS


			Page

PART I — FINANCIAL INFORMATION

			~~Page~~

~~PART I — FINANCIAL INFORMATION~~

Item 1. Financial Statements

Brandywine Realty Trust

Financial Statements of Brandywine Realty Trust			5

Consolidated Balance Sheets as of March 31, ~~2020~~2021 and December 31, ~~2019~~2020			5

Consolidated Statements of Operations for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020			6

Consolidated Statements of Comprehensive Income for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020			7

Consolidated Statements of Beneficiaries’ Equity for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020			8

Consolidated Statements of Cash Flows for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020			10

Brandywine Operating Partnership, L.P.

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

Consolidated Balance Sheets as of March 31, ~~2020~~2021 and December 31, ~~2019~~2020			11

Consolidated Statements of Operations for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020			12

Consolidated Statements of Comprehensive Income for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020			13

Consolidated Statements of Partners’ Equity for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020			14

Consolidated Statements of Cash Flows for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020			16

Notes to Unaudited Consolidated Financial Statements			17

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

Item 3. Quantitative and Qualitative Disclosures about Market Risk			4241

Item 4. Controls and Procedures			4342

PART II — OTHER INFORMATION			44

Item 1. Legal Proceedings			44

Item 1A. Risk Factors			44

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			44

Item 3. Defaults Upon Senior Securities			4544

Item 4. Mine Safety Disclosures			4544

Item 5. Other Information			4544

Item 6. Exhibits			4645

Signatures			4746

Filing Format

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

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PART I - FINANCIAL INFORMATION

Item 1. — Financial Statements

BRANDYWINE REALTY TRUST

CONSOLIDATED BALANCE SHEETS

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


	March 31, 2020			December 31, 2019				March 31, 2021		December 31, 2020
ASSETS							ASSETS
Real estate investments:							Real estate investments:
Operating properties	$	4,004,118		$	4,006,459		Operating properties	$	3,386,559	$	3,474,109
Accumulated depreciation	(992,997		)	(973,318		)	Accumulated depreciation	(900,167)		(896,561)
Right of use asset - operating leases, net	21,485			21,656			Right of use asset - operating leases, net	20,810		20,977
Operating real estate investments, net	3,032,606			3,054,797			Operating real estate investments, net	2,507,202		2,598,525
Construction-in-progress	193,160			180,718			Construction-in-progress	264,529		210,311
Land held for development	108,213			96,124			Land held for development	116,902		117,984
Prepaid leasehold interests in land held for development, net	39,490			39,592			Prepaid leasehold interests in land held for development, net	27,762		39,185
Total real estate investments, net	3,373,469			3,371,231			Total real estate investments, net	2,916,395		2,966,005
Assets held for sale, net	10,698			7,349			Assets held for sale, net	7,349		7,349
Cash and cash equivalents	52,702			90,499			Cash and cash equivalents	45,717		46,344
Accounts receivable, net of allowance of $284 as of both March 31, 2020 and December 31, 2019	16,928			16,363
Accrued rent receivable, net of allowance of $7,484 and $7,691 as of March 31, 2020 and December 31, 2019, respectively	175,277			174,144
Accounts receivable							Accounts receivable	14,665		13,536
Accrued rent receivable, net of allowance of $5,080 and $5,086 as of March 31, 2021 and December 31, 2020, respectively							Accrued rent receivable, net of allowance of $5,080 and $5,086 as of March 31, 2021 and December 31, 2020, respectively	159,175		155,372
Investment in Real Estate Ventures	119,998			120,294			Investment in Real Estate Ventures	433,046		401,327
Deferred costs, net	94,336			95,560			Deferred costs, net	83,839		84,856
Intangible assets, net	75,670			84,851			Intangible assets, net	43,883		48,570
Other assets	126,264			115,678			Other assets	185,844		176,747
Total assets	$	4,045,342		$	4,075,969		Total assets	$	3,889,913	$	3,900,106
LIABILITIES AND BENEFICIARIES' EQUITY							LIABILITIES AND BENEFICIARIES' EQUITY
Mortgage notes payable, net	$	312,001		$	313,812

Unsecured credit facility	50,000			—			Unsecured credit facility	$	13,000	$	0
Unsecured term loan, net	248,692			248,561			Unsecured term loan, net	249,215		249,084
Unsecured senior notes, net	1,581,907			1,582,045			Unsecured senior notes, net	1,581,378		1,581,511
Accounts payable and accrued expenses	109,755			113,347			Accounts payable and accrued expenses	119,208		121,982
Distributions payable	32,692			33,815			Distributions payable	32,763		32,706
Deferred income, gains and rent	34,673			35,284			Deferred income, gains and rent	22,416		21,396
Intangible liabilities, net	20,605			22,263			Intangible liabilities, net	17,073		18,448

Lease liability - operating leases	22,606			22,554			Lease liability - operating leases	22,810		22,758
Other liabilities	28,597			15,985			Other liabilities	49,796		47,573
Total liabilities	$	2,441,528		$	2,387,666		Total liabilities	$	2,107,659	$	2,095,458
Commitments and contingencies (See Note 15)
Commitments and contingencies (See Note 14)							Commitments and contingencies (See Note 14)	0		0
Brandywine Realty Trust's Equity:							Brandywine Realty Trust's Equity:
Common Shares of Brandywine Realty Trust's beneficial interest, $0.01 par value; shares authorized 400,000,000; 170,965,987 and 176,480,095 issued and outstanding as of March 31, 2020 and December 31, 2019, respectively	1,710			1,766
Common Shares of Brandywine Realty Trust's beneficial interest, $0.01 par value; shares authorized 400,000,000; 170,663,251 and 170,572,964 issued and outstanding as of March 31, 2021 and December 31, 2020, respectively							Common Shares of Brandywine Realty Trust's beneficial interest, $0.01 par value; shares authorized 400,000,000; 170,663,251 and 170,572,964 issued and outstanding as of March 31, 2021 and December 31, 2020, respectively	1,707		1,707
Additional paid-in-capital	3,140,194			3,192,158			Additional paid-in-capital	3,140,456		3,138,152
Deferred compensation payable in common shares	17,012			16,216			Deferred compensation payable in common shares	17,658		17,516
Common shares in grantor trust, 1,117,783 and 1,105,542 issued and outstanding as of March 31, 2020 and December 31, 2019, respectively	(17,012		)	(16,216		)
Common shares in grantor trust, 1,111,777 and 1,160,494 issued and outstanding as of March 31, 2021 and December 31, 2020, respectively							Common shares in grantor trust, 1,111,777 and 1,160,494 issued and outstanding as of March 31, 2021 and December 31, 2020, respectively	(17,658)		(17,516)
Cumulative earnings	812,578			804,556			Cumulative earnings	1,117,004		1,110,083
Accumulated other comprehensive loss	(10,195		)	(2,370		)	Accumulated other comprehensive loss	(6,469)		(7,561)
Cumulative distributions	(2,350,733		)	(2,318,233		)	Cumulative distributions	(2,480,811)		(2,448,238)
Total Brandywine Realty Trust's equity	1,593,554			1,677,877			Total Brandywine Realty Trust's equity	1,771,887		1,794,143
Noncontrolling interests	10,260			10,426			Noncontrolling interests	10,367		10,505
Total beneficiaries' equity	$	1,603,814		$	1,688,303		Total beneficiaries' equity	$	1,782,254	$	1,804,648
Total liabilities and beneficiaries' equity	$	4,045,342		$	4,075,969		Total liabilities and beneficiaries' equity	$	3,889,913	$	3,900,106

~~On April 2, 2020, we settled the purchase~~

Table of ~~604,283 common shares, which had a trade date of March 31, 2020, for an aggregate of $6.1 million.~~Contents

~~The recent outbreak of COVID-19 across many countries around the globe, including the U.S., has significantly slowed global~~

economic activity, caused significant volatility in financial markets, and resulted in unprecedented job losses causing many to fear an imminent global recession. The global impact of the outbreak has been rapidly evolving the responses of many countries, including the U.S., have included quarantines, restrictions on business activities, including construction activities, restrictions on group gatherings, and restrictions on travel. These actions are creating disruption in the global economy and supply chains and adversely impacting many industries, including owners and developers of office and mixed-use buildings. Moreover, there is significant uncertainty around the breadth and duration of business disruptions related to COVID-19, as well as its impact on the U.S. economy and consumer confidence. Demand for space at our properties is dependent on a variety of macroeconomic factors, such as employment levels, interest rates, changes in stock market valuations, rent levels and availability of competing space. These factors can be significantly adversely affected by a variety of factors beyond our control. The extent to which COVID-19 impacts our results will depend on future developments, many of which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions taken to contain it or treat its impact. If the outbreak continues, there will likely be continued negative economic impacts, market volatility, and business disruption which could negatively impact our tenants’ ability to pay rent, our ability to lease vacant space, and our ability to complete development and redevelopment projects, and these consequences, in turn, could materially impact our results of operations.

On April 10, 2020, the Financial Accounting Standards Board (the "FASB") issued a Staff Q&A to respond to some frequently asked questions about accounting for lease concessions related to the effects of the COVID-19 pandemic. Consequently, for concessions related to the effects of the COVID-19 pandemic, an entity will not have to analyze each contract to determine whether enforceable rights and obligations for concessions exist in the contract and can elect to apply or not apply the lease modification guidance to those contracts. Entities may make the elections for any lessor-provided concessions related to the effects of the COVID-19 pandemic (e.g., deferrals of lease payments, cash payments made to the lessee, reduced future lease payments) as long as the concession does not result in a substantial increase in the rights of the lessor or the obligations of the lessee. The Company is currently working with tenants impacted by the COVID-19 pandemic to determine appropriate lease concessions. To date, the impact of lease concessions granted has not had a material effect on the financial statements. The Company will continue to evaluate the impact of lease concessions and the appropriate accounting for those concessions.

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

The Private Securities Litigation Reform Act of 1995 (the “1995 Act”) provides a “safe harbor” for forward-looking statements. This Quarterly Report on Form 10-Q and other materials filed by us with the SEC (as well as information included in oral or other written statements made by us) contain statements that are forward-looking, including statements relating to business and real estate development activities, acquisitions, dispositions, future capital expenditures, financing sources, governmental regulation (including environmental regulation) and competition. We intend such forward-looking statements to be covered by the safe-harbor provisions of the 1995 Act. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “will,” “should” and similar expressions, as they relate to us, are intended to identify forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be achieved. As forward-looking statements, these statements involve important risks, uncertainties and other factors that could cause actual results to differ materially from the expected results and, accordingly, such results may differ from those expressed in any forward-looking statements made by us or on our behalf. Factors that ~~could~~might cause actual results to differ materially from our expectations, ~~are set forth under the heading “Forward-Looking Statements” in our Annual Report on Form 10-K for the year ended December 31, 2019,~~ many of which may be more likely to impact us as a result of the ongoing ~~coronavirus (COVID-19) outbreak.~~

~~Given these uncertainties, and the other risks identified~~COVID-19 pandemic, are set forth in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, ~~2019 and in Part II, Item 1A of this Quarterly Report,~~2020. Accordingly, we caution readers not to place undue reliance on forward-looking statements. We assume no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

The discussion that follows is based primarily on our consolidated financial statements as of March 31, ~~2020~~2021 and December 31, ~~2019~~2020 and for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020 and should be read along with the consolidated financial statements and related notes appearing elsewhere in this report. The ability to compare one period to another may be significantly affected by acquisitions completed, development properties placed in service and dispositions made during those periods.

OVERVIEW

During the three months ended March 31, ~~2020,~~2021, we owned and managed properties within five ~~markets:~~segments: (1) Philadelphia Central Business District (“Philadelphia CBD”), (2) Pennsylvania Suburbs, (3) Austin, Texas, (4) Metropolitan Washington, D.C., and (5) Other. The Philadelphia CBD segment includes properties located in the City of Philadelphia in Pennsylvania. The Pennsylvania Suburbs segment includes properties in Chester, Delaware and Montgomery counties in the Philadelphia suburbs. The Austin, Texas segment includes properties in the City of Austin, Texas. The Metropolitan Washington, D.C. segment includes properties in Northern Virginia, Washington, D.C. and Southern Maryland. The Other segment includes properties in Camden County, New Jersey and New Castle County, Delaware. In addition to the five ~~markets,~~segments, our 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.

We generate cash and revenue from leases of space at our Properties and, to a lesser extent, from the management and development of properties owned by third parties and from investments in the Real Estate Ventures. Factors that we evaluate when leasing space include rental rates, costs of tenant improvements, tenant creditworthiness, current and expected operating costs, the length of the lease term, vacancy levels and demand for space. We also generate cash through sales of assets, including assets that we do not view as core to our business plan, either because of location or expected growth potential, and assets that are commanding premium prices from third party investors.

Our financial and operating performance is dependent upon the demand for office, residential, parking, and retail space in our markets, our leasing results, our acquisition, disposition and development activity, our financing activity, our cash requirements and economic and market conditions, including prevailing interest rates.

We are closely monitoring the impact of the COVID-19 pandemic on all aspects of our business, including how it is impacting our tenants, employees, and business partners. Adverse changes in economic conditions, including the ongoing effects of the global COVID-19 pandemic, could result in a reduction of the availability of financing and potentially in higher borrowing costs. Vacancy rates may increase, and rental rates and rent collection rates may decline, during the remainder of ~~2020~~2021 and possibly beyond as the current economic climate may negatively impact tenants.

Overall economic conditions, including but not limited to higher unemployment and deteriorating financial and credit markets, could have a dampening effect on the fundamentals of our business, including increases in past due accounts, tenant defaults, lower occupancy and reduced effective rents. The ongoing COVID-19 pandemic has significantly slowed global economic activity, caused significant volatility in financial markets, and resulted in unprecedented job losses. In addition, the government responses to control the pandemic are creating disruption in the global economy and supply chains and adversely impacting many industries, including owners and developers of office and mixed-use buildings. These adverse conditions ~~would negatively affect~~have impacted our ~~future~~ net income and cash flows and could have a material adverse effect on our financial condition. We believe that the quality of our assets and the strength of our balance sheet will enable us to raise debt capital, if necessary, in various forms and from

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different sources, including through secured or unsecured loans from banks, pension funds and life insurance companies. However, there can be no assurance that we will be able to borrow funds on terms that are economically attractive or at all.

We continue to seek revenue growth throughout our portfolio by increasing occupancy and rental rates. Occupancy at our Core Properties at March 31, ~~2020~~2021 was ~~93.3%~~90.3% compared to ~~92.1%~~93.3% at March 31, ~~2019.~~2020.

The table below summarizes selected operating and leasing statistics of our wholly owned properties for the three months ended March 31, ~~2020~~2021 and ~~2019:~~2020:


	Three Months Ended March 31,
	2021			2020
Leasing Activity
Core Properties (1):
Total net rentable square feet owned	12,949,078			15,978,965
Occupancy percentage (end of period)	90.3		%	93.3		%
Average occupancy percentage	90.4		%	93.0		%
Total Portfolio, less properties in development (2):
Tenant retention rate (3)	51.9		%	75.6		%
New leases and expansions commenced (square feet)	29,103			224,417
Leases renewed (square feet)	166,824			87,449
Net absorption (square feet)	(165,126)			62,507
Percentage change in rental rates per square feet (4):
New and expansion rental rates	8.7		%	21.1		%
Renewal rental rates	8.2		%	8.6		%
Combined rental rates	8.3		%	15.7		%
Capital Costs Committed (5):
Leasing commissions (per square feet)	$	2.93		$	6.28
Tenant Improvements (per square feet)	$	8.16		$	18.02
Weighted average lease term (years)	3.3			6.7
Total capital per square foot per lease year	$	3.25		$	3.96

Three Months Ended March 31,
2020 2019
Leasing Activity
Core Properties (1):
Total net rentable square feet owned 15,978,965
16,379,261
Occupancy percentage (end of period) 93.3 % 92.1 %
Average occupancy percentage 93.0 % 91.8 %
Total Portfolio, less properties in development (2):
Tenant retention rate (3) 75.6 % 66.2 %
New leases and expansions commenced (square feet) 224,417
404,925
Leases renewed (square feet) 87,449
412,123
Net absorption (square feet) 62,507
(65,796 )
Percentage change in rental rates per square feet (4):
New and expansion rental rates 21.1 % 13.6 %
Renewal rental rates 8.6 % 14.9 %
Combined rental rates 15.7 % 14.6 %
Capital Costs Committed (5):
Leasing commissions (per square feet) $ 6.28
$ 7.87
Tenant Improvements (per square feet) $ 18.02
$ 22.33
Weighted average lease term (years) 6.7
7.7
Total capital per square foot per lease year $ 3.96
$ 4.81
(1)Does not include properties under development, redevelopment, held for sale, or sold.


~~(1)~~	~~Does not include properties under development, redevelopment, held for sale, or sold.~~


~~(2)~~	~~Includes leasing related to completed developments and redevelopments, as well as sold properties.~~


~~(3)~~	~~Calculated as percentage of total square feet.~~


~~(4)~~	~~Includes base rent plus reimbursement for operating expenses and real estate taxes.~~


~~(5)~~	~~Calculated on a weighted average basis.~~

(2)Includes leasing related to completed developments and redevelopments, as well as sold properties.

(3)Calculated as percentage of total square feet.

(4)Includes base rent plus reimbursement for operating expenses and real estate taxes.

(5)Calculated on a weighted average basis.

In seeking to increase revenue through our operating, financing and investment activities, we also seek to minimize operating risks, including (i) tenant rollover risk, (ii) tenant credit risk and (iii) development risk.

Tenant Rollover Risk

We are subject to the risk that tenant leases, upon expiration, will not be renewed, that space may not be relet, or that the terms of renewal or reletting (including the cost of renovations) may be less favorable to us than the current lease terms. Leases that accounted for approximately ~~5.5%~~2.9% of our aggregate final annualized base rents as of March 31, ~~2020~~2021 (representing approximately ~~5.7%~~3.5% of the net rentable square feet of the properties) are scheduled to expire without penalty in ~~2020.~~the remainder of 2021. We maintain an active dialogue with our tenants in an effort to maximize lease renewals. If we are unable to renew leases or relet space under expiring leases, at anticipated rental rates, or if tenants terminate their leases early, our cash flow would be adversely impacted.

Tenant Credit Risk

In the event of a tenant default, we may experience delays in enforcing our rights as a landlord and may incur substantial costs in protecting our investment. Our management evaluates our accounts receivable reserve policy in light of our tenant base and general and local economic conditions. Our accounts receivable allowance was ~~$7.8~~$5.1 million or ~~3.9%~~2.9% of total receivables (including accrued rent receivable) as of both March 31, ~~2020 compared to $8.0 million or 4.0% of total receivables (including accrued rent receivable) as of~~2021 and December 31, ~~2019.~~2020.

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If economic conditions deteriorate, including as a result of the ~~recent~~ongoing COVID-19 ~~outbreak,~~pandemic, we may experience increases in past due accounts, defaults, lower occupancy and reduced effective rents. This condition would negatively affect our future net income and cash flows and could have a material adverse effect on our financial condition.

Development Risk

Development projects are subject to a variety of risks, including construction delays, construction cost overruns, building moratoriums, inability to obtain financing on favorable terms, inability to lease space at projected rates, inability to enter into construction, development and other agreements on favorable terms, and unexpected environmental and other hazards.

As of March 31, ~~2020~~2021 the following active development and redevelopment projects remain under construction in progress and we were proceeding on the following activity (dollars, in thousands):


Property/Portfolio Name	Location	Expected Completion	Activity Type	Approximate Square Footage	Estimated Costs		Amount Funded

405 Colorado Street (a)	Austin, TX	Q2 2021	Development	205,803	$	122,000	$	73,000
3000 Market Street (b)	Philadelphia, PA	Q3 2021	Redevelopment	64,070	$	35,000	$	20,700

Property/Portfolio Name Location Expected Completion Activity Type Approximate Square Footage Estimated Costs Amount Funded
The Bulletin Building (a) Philadelphia, PA Q3 2020 Redevelopment 283,000
$ 84,800
$ 67,300
405 Colorado Street (b) Austin, TX Q1 2021 Development 204,000
116,000
38,800
426 W. Lancaster Avenue (c) Devon, PA Q1 2019 Redevelopment 56,000
14,900
13,100
3000 Market Street (d) Philadelphia, PA Q1 2021 Redevelopment 64,000
38,000
13,000
(a)Estimated costs include $2.1 million of existing property basis through a ground lease. Project includes 520 parking spaces.


~~(a)~~	~~Estimated costs include $37.8 million of building basis, representing the acquisition cost.~~


~~(b)~~	~~Estimated costs include $2.1 million of existing property basis through a ground lease. Project includes 520 parking spaces.~~


~~(c)~~	The property was vacated during the third quarter of 2017. Total project costs include $4.9 million of existing property basis. The renovation of the base building was substantially completed during the first quarter of 2019 and remaining costs as of March 31, 2020 primarily represent tenant improvements.


~~(d)~~	~~Estimated costs include $12.8 million of existing property basis.~~

(b)Estimated costs include $12.8 million of existing property basis.

In addition to the properties listed above, we have classified one office building in Radnor, Pennsylvania, one office building in Herndon, Virginia, and one parking facility in Philadelphia, Pennsylvania as redevelopment. ~~As of March 31, 2020, there has been no material construction spend on this project.~~

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Management’s Discussion and Analysis of Financial Condition and Results of Operations discuss our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The preparation of these financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Certain accounting policies are considered to be critical accounting policies, as they require management to make assumptions about matters that are highly uncertain at the time the estimate is made and changes in accounting estimate are reasonably likely to occur from period to period. Management bases its estimates and assumptions on historical experience and current economic conditions.

Our Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 contains a discussion of our critical accounting policies. There have been no significant changes in our critical accounting policies since December 31, ~~2019.~~2020.

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RESULTS OF OPERATIONS

The following discussion is based on our consolidated financial statements for the three months ended March 31, ~~2020~~2021 and ~~2019.~~2020. We believe that presentation of our consolidated financial information, without a breakdown by segment, will effectively present important information useful to our investors.

Net operating income (“NOI”) as presented in the comparative analysis below is a non-GAAP financial measure defined as total revenue less property operating expenses, real estate taxes and third party management expenses. Property operating expenses that are included in determining NOI consist of costs that are necessary and allocable to our operating properties such as utilities, property-level salaries, repairs and maintenance, property insurance, and management fees. General and administrative expenses that are not reflected in NOI primarily consist of corporate-level salaries, amortization of share awards and professional fees that are incurred as part of corporate office management. NOI is a non-GAAP financial measure that we use internally to evaluate the operating performance of our real estate assets by segment, as presented in Note ~~14,~~15, ''Segment Information," to our consolidated financial statements, and of our business as a whole. We believe NOI provides useful information to investors regarding our financial condition and results of operations because it reflects only those income and expense items that are incurred at the property

level. While NOI is a relevant and widely used measure of operating performance of real estate investment trusts, it does not represent cash flow from operations or net income as defined by GAAP and should not be considered as an alternative to those measures in evaluating our liquidity or operating performance. NOI does not reflect interest expenses, real estate impairment losses, depreciation and amortization costs, capital expenditures and leasing costs. We believe that net income, as defined by GAAP, is the most appropriate earnings measure. See Note ~~14,~~15, ''Segment Information” to our Consolidated Financial Statements for a reconciliation of NOI to our consolidated net income as defined by GAAP.

Comparison of the Three Months Ended March 31, ~~2020~~2021 and March 31, ~~2019~~2020

The following comparison for the three months ended March 31, ~~2020~~2021 to the three months ended March 31, ~~2019,~~2020, makes reference to the effect of the following:


~~(a)~~	“Same Store Property Portfolio,” which represents 88 properties containing an aggregate of approximately 15.8 million net rentable square feet, and represents properties that we owned for the three-month periods ended March 31, 2020 and 2019. The Same Store Property Portfolio includes properties acquired or placed in service on or prior to January 1, 2019 and owned through March 31, 2020,


~~(b)~~	~~“Total Portfolio,” which represents all properties owned by us during the three months ended March 31, 2020 and 2019,~~


~~(c)~~	~~"Recently Completed/Acquired Properties," which represents 1 property placed into service or acquired on or subsequent to January 1, 2019,~~


~~(d)~~	"Development/Redevelopment Properties," which represents 5 properties currently in development/redevelopment. A property is excluded from our Same Store Property Portfolio and moved into Development/Redevelopment in the period that we determine to proceed with development/redevelopment for a future development strategy, and


~~(e)~~	~~"Q1 2019 through Q1 2020 Dispositions," which represents 2 properties disposed of from the three months ended March 31, 2019 through the three months ended March 31, 2020.~~

(a)“Same Store Property Portfolio,” which represents 73 properties containing an aggregate of approximately 12.5 million net rentable square feet, and represents properties that we owned and consolidated for the three-month periods ended March 31, 2021 and 2020. The Same Store Property Portfolio includes properties acquired or placed in service on or prior to January 1, 2020 and owned and consolidated through March 31, 2021, excluding properties classified as held for sale,

(b)“Total Portfolio,” which represents all properties owned and consolidated by us during the three months ended March 31, 2021 and 2020,

(c)"Recently Completed/Acquired Properties," which represents three properties placed into service or acquired on or subsequent to January 1, 2020,

(d)"Development/Redevelopment Properties," which represents five properties currently in development/redevelopment. A property is excluded from our Same Store Property Portfolio and moved into Development/Redevelopment in the period that we determine to proceed with development/redevelopment for a future development strategy, and

(e)"Q1 2020 through Q1 2021 Dispositions," which represents 15 properties disposed of from January 1, 2020 through March 31, 2021.

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Comparison of three months ended March 31, ~~2020~~2021 to the three months ended March 31, ~~2019~~2020


	Same Store Property Portfolio										Recently Completed/Acquired Properties					Development/Redevelopment Properties				Other (Eliminations) (a)				Total Portfolio
(dollars and square feet in millions except per share amounts)	2021			2020			$ Change		% Change		2021			2020		2021		2020		2021		2020		2021		2020		$ Change		% Change
Revenue:
Rents	$	106.9		$	107.4		$	(0.5)	(0.5)	%	$	4.1		$	1.4	$	0.1	$	2.6	$	2.5	$	27.8	$	113.6	$	139.2	$	(25.6)	(18.4)	%
Third party management fees, labor reimbursement and leasing	—			—			—		—	%	—			—		—		—		6.7		5.0		6.7		5.0		1.7		34.0	%
Other	0.2			0.3			(0.1)		(33.3)	%	—			—		—		—		0.4		0.6		0.6		0.9		(0.3)		(33.3)	%
Total revenue	107.1			107.7			(0.6)		(0.6)	%	4.1			1.4		0.1		2.6		9.6		33.4		120.9		145.1		(24.2)		(16.7)	%
Property operating expenses	26.9			28.0			(1.1)		(3.9)	%	1.2			0.7		(0.5)		0.2		1.3		8.6		28.9		37.5		(8.6)		(22.9)	%
Real estate taxes	12.9			12.7			0.2		1.6	%	0.2			0.2		0.9		0.5		0.8		3.4		14.8		16.8		(2.0)		(11.9)	%
Third party management expenses	—			—			—		—	%	—			—		—		—		3.0		2.7		3.0		2.7		0.3		11.1	%
Net operating income	67.3			67.0			0.3		0.4	%	2.7			0.5		(0.3)		1.9		4.5		18.7		74.2		88.1		(13.9)		(15.8)	%
Depreciation and amortization	35.9			39.4			(3.5)		(8.9)	%	1.8			0.7		0.4		0.8		2.3		11.1		40.4		52.0		(11.6)		(22.3)	%
General & administrative expenses	—			—			—		—	%	—			—		—		—		6.6		8.6		6.6		8.6		(2.0)		(23.3)	%

Net gain on disposition of real estate																								(0.1)		(2.6)		2.5		(96.2)	%
Net gain on sale of undepreciated real estate																								(2.0)		—		(2.0)		—	%
Operating income (loss)	$	31.4		$	27.6		$	3.8	13.8	%	$	0.9		$	(0.2)	$	(0.7)	$	1.1	$	(4.4)	$	(1.0)	$	29.3	$	30.1	$	(0.8)	(2.7)	%
Number of properties	73			73							3					5								81
Square feet	12.5			12.5							0.5					0.7								13.9
Core Occupancy % (b)	90.1		%	93.0		%					94.6		%
Other Income (Expense):
Interest and investment income																								1.7		0.6		1.1		183.3	%
Interest expense																								(16.3)		(20.0)		3.7		(18.5)	%
Interest expense — Deferred financing costs																								(0.7)		(0.7)		—		—	%

Equity in loss of Real Estate Ventures																								(6.9)		(1.9)		(5.0)		263.2	%





Net income																								$	7.1	$	8.1	$	(1.0)	(12.3)	%
Net income attributable to Common Shareholders of Brandywine Realty Trust																								$	0.04	$	0.04	$	—	—	%

(a)Represents certain revenues and expenses at the corporate level as well as various intercompany costs that are eliminated in consolidation, third-party management fees, provisions for impairment, and changes in the accrued rent receivable allowance. Other/(Eliminations) also includes properties sold and properties classified as held for sale.

Same Store Property Portfolio Recently Completed/Acquired Properties Development/Redevelopment Properties Other (Eliminations) (a) Total Portfolio
(dollars and square feet in millions except per share amounts) 2020 2019 $ Change % Change 2020 2019 2020 2019 2020 2019 2020 2019 $ Change % Change
Revenue:
Rents $ 132.8
$ 129.6
$ 3.2
2.5 % $ 1.8
$ 1.0
$ 1.5
$ 2.7
$ 3.1
$ 4.8
$ 139.2
$ 138.1
$ 1.1
0.8 %
Third party management fees, labor reimbursement and leasing —
—
—
— % —
—
—
—
5.0
4.0
5.0
4.0
1.0
25.0 %
Other 0.3
0.4
(0.1 ) (25.0 )% —
—
—
—
0.6
1.4
0.9
1.8
(0.9 ) (50.0 )%
Total revenue 133.1
130.0
3.1
2.4 % 1.8
1.0
1.5
2.7
8.7
10.2
145.1
143.9
1.2
0.8 %
Property operating expenses 35.4
36.2
(0.8 ) (2.1 )% 0.3
—
0.6
1.1
1.1
2.2
37.4
39.5
(2.1 ) (5.2 )%
Real estate taxes 15.5
14.8
0.7
4.7 % 0.4
0.2
0.4
0.3
0.5
0.4
16.8
15.7
1.1
7.0 %
Third party management expenses —
—
—
— % —
—
—
—
2.7
2.1
2.7
2.1
0.6
28.6 %
Net operating income 82.2
79.0
3.2
4.0 % 1.1
0.8
0.5
1.3
4.4
5.5
88.2
86.6
1.6
1.8 %
Depreciation and amortization 48.2
46.3
1.9
4.1 % 0.5
0.2
1.0
1.4
2.3
3.6
52.0
51.5
0.5
1.0 %
General & administrative expenses —
—
—
— % —
—
—
—
8.6
9.8
8.6
9.8
(1.2 ) (12.2 )%
Net gain on disposition of real estate (2.6 ) —
(2.6 ) — %
Net gain on sale of undepreciated real estate —
(1.0 ) 1.0
(100.0 )%
Operating income (loss) $ 34.0
$ 32.7
$ 1.3
3.9 % $ 0.6
$ 0.6
$ (0.5 ) $ (0.1 ) $ (6.5 ) $ (7.9 ) $ 30.2
$ 26.3
$ 3.9
14.6 %
Number of properties 88
88
1
5
94

Square feet 15.8
15.8
0.2
0.6
16.6

Core Occupancy % (b) 93.3 % 92.2 % 100.0 %
Other Income (Expense):
Interest income 0.6
0.5
0.1
20.0 %
Interest expense (20.0 ) (20.4 ) 0.4
(2.0 )%
Interest expense — Deferred financing costs (0.7 ) (0.7 ) —
— %
Equity in loss of Real Estate Ventures (1.9 ) (1.4 ) (0.5 ) 35.7 %
Net gain on real estate venture transactions —
0.3
(0.3 ) (100.0 )%
Net income $ 8.2
$ 4.6
$ 3.6
77.2 %
Net income attributable to Common Shareholders of Brandywine Realty Trust $ 0.04
$ 0.02
$ 0.02
100.0 %
(b)Pertains to Core Properties.


~~(a)~~	Represents certain revenues and expenses at the corporate level as well as various intercompany costs that are eliminated in consolidation, third-party management fees, provisions for impairment, and changes in the accrued rent receivable allowance. Other/(Eliminations) also includes properties sold and properties classified as held for sale.


~~(b)~~	~~Pertains to Core Properties.~~

Total Revenue

Rents from the Total Portfolio ~~increased by $1.1 million during the first quarter of 2020 compared to the first quarter of 2019. The increase in Rents is~~decreased primarily driven by a $3.2 million increase across the Same Store Portfolio due to increased occupancy at several properties within the Philadelphia CBD Segment and a $1.3 million increase in termination fee income, as well as a ~~$0.8~~result of the following:

•$24.3 million ~~increase related to leasing activity at the Recently Completion/Acquired Properties. These increases are partially offset by a~~ decrease ~~of $1.6 million~~ related to the Q1 ~~2019~~2020 through Q1 ~~2020 Dispositions and a~~2021 Dispositions;

•$2.4 million decrease ~~of $1.2 million~~ related to ~~redevelopments included~~a property that has been vacated and placed into redevelopment in ~~Development/Redevelopment~~the Metropolitan Washington D.C. segment;

•$0.9 million decrease related to reduced parking income as a result of the COVID-19 pandemic;

•$0.9 million decrease related to the move out of a large tenant at an office property in our Pennsylvania Suburbs segment at the end of 2020; and,

•$2.7 million offsetting increase related to the Recently Completed/Acquired Properties.

Third party management fees, labor reimbursement, and leasing income increased byprimarily due to $1.0 million ~~during~~of fees earned from the ~~first~~Mid-Atlantic Office Venture formed in the fourth quarter of 2020 ~~compared to~~and $0.7 million of fees earned from the ~~first~~Commerce Square Venture formed in the third quarter of ~~2019 primarily due to an increase general contractor management services provided to MAP Venture.~~

2020.

Property Operating Expenses

Property operating expenses across our Total Portfolio decreased ~~$2.1~~primarily as a result of the following:

•$7.5 million ~~for the three months ended March 31, 2020 compared~~decrease related to the ~~three months ended March 31, 2019, of which $0.8~~Q1 2020 through Q1 2021 Dispositions; and

•$1.1 million ~~relates to decreases~~decrease across our Same Store Property Portfolio ~~$0.5 million relates to decreases~~primarily due to ~~vacancies at~~decreased use of our ~~Development/Redevelopment Properties in advance~~properties by the tenants during the COVID-19 pandemic.

Table of ~~beginning redevelopment activities, and $0.4 million relates to the Q1 2019 through Q1 2020 Dispositions.~~Contents

Real Estate Taxes

The decrease in Real estate taxes ~~increased $1.1~~is primarily driven by a $2.7 million ~~for the first quarter of 2020 compared~~decrease related to the ~~first quarter of 2019, of which~~Q1 2020 through Q1 2021 Dispositions. The offsetting $0.7 million ~~related to~~increase is primarily the result of acquisition of 250 King of Prussia Road in our ~~Same Store Property Portfolio~~Pennsylvania Suburbs Segment and ~~$0.2 million relates to~~miscellaneous increases in tax assessments across our ~~Recently Completed/Acquired Properties.~~Total Portfolio.

Depreciation and Amortization

Depreciation and amortization expense ~~increased by $0.5~~decreased primarily as a result of the following:

•$9.0 million ~~for the first quarter of 2020 compared~~decrease related to the ~~first quarter of 2019, of which $1.9~~Q1 2020 through Q1 2021 Dispositions;

•$3.5 million ~~relates to~~decrease at the Same Store Property Portfolio, ~~primarily~~largely due to the ~~write off~~completion of ~~assets for a terminated tenant in the Philadelphia CBD Segment~~amortization of acquired in-place lease intangibles; and ~~$0.3~~

•$0.4 million ~~relates to our Recently Completed/Acquired Properties. This increase was offset by a~~ decrease ~~of $0.8 million related to 650 Park Avenue, which was demolished in July 2019, $0.6 million related to the Q1 2019 through Q1 2020 Dispositions and $0.4 million~~ related to the Development/Redevelopment ~~Properties.~~properties primarily related to a property in our Philadelphia CBD segment that was taken out of service for redevelopment.

These decreases were partially offset by a $1.1 million increase related to the Recently Completed/Acquired properties.

General and Administrative

~~The $1.2~~General and administrative expense decreased primarily as a result of a $2.4 million ~~decrease for~~recovery of previously expensed legal fees incurred in pursuit of a settlement that was received in the first quarter of ~~2020 compared to the first quarter of 2019~~2021. The offsetting $0.4 million is primarily related to increased stock compensation expense as a ~~$1.8 million decrease in compensation related expenses, which is driven by~~result of changes to the vesting period offor retirement eligible officers ~~for~~beginning with the 2020 ~~Restricted Performance Share Unit awards compared to the 2019 Restricted Performance Share Unit~~ awards. ~~This was partially offset by a $0.3 million increase due to an increase in capitalized general and administrative costs.~~

Net Gain on Disposition of Real Estate

The gain of $2.6 million recognized during the three months ended March 31, 2020 is primarily related to the disposition of 52 East Swedesford Road, an office property in our Pennsylvania Suburbs Segment.

Net Gain on Sale of Undepreciated Real Estate

The gain of ~~$1.0~~$2.0 million recognized during the three months ended March 31, 2021 is due to the formation of the 3025 JFK Venture, which resulted in deconsolidation of the project and recognition of our investment in the real estate venture at fair value.

Interest and Investment Income

Interest income increased primarily due to $1.2 million of preferred return earned during the first quarter of ~~2019 was~~2021 from our Austin Preferred Equity Investment, which closed on December 31, 2020.

Interest Expense

The decrease in interest expense is primarily driven by the following:

•$2.2 million decrease due to deconsolidation of One Commerce Square and Two Commerce Square and the associated mortgage loans on July 21, 2020;

•$0.8 million reduction to prior period accretions of interest expense on account of a contingent payment to an unaffiliated third party, a portion of which contingent payment ceased to be probable in the third quarter of fiscal 2020 due to the then anticipated purchase of the Two Logan Square mortgage; and,

•$0.2 million decrease due to capitalized interest on our investment in 3025 JFK Venture.

The remaining decrease is primarily related to lower interest rates during the ~~a $0.8~~three months ended March 31, 2021 compared to the three months ended March 31, 2020.

Equity in loss of Real Estate Ventures

Equity in loss of Real Estate Ventures increased primarily due to the following:

•$4.2 million ~~gain from the disposition of 9 Presidential Boulevard.~~in net losses associated with our Commerce Square Venture formed on July 21, 2020; and

~~Net Income~~

~~Net income increased~~•$0.9 million increase related to our MAP Venture due to lower revenues driven by ~~$3.6 million for~~lower occupancy during the first quarter of ~~2020 compared to the first quarter~~2021 than 2020.

Table of ~~2019 as a result of the factors described above.~~Contents

~~Net Income per Common Share – fully diluted~~

~~Net income per share was $0.04 for the first quarter of 2020 as compared to net income per share of $0.02 for the first quarter of 2019 as a result of the factors described above.~~

LIQUIDITY AND CAPITAL RESOURCES

General

Our principal liquidity funding needs for the next twelve months are as follows:

•normal recurring expenses;

•capital expenditures, including capital and tenant improvements and leasing costs;

•debt service and principal repayment obligations;

•current development and redevelopment costs;

•commitments to unconsolidated real estate ventures;

•distributions to shareholders to maintain our ~~Parent Company’s~~ REIT status;

•possible acquisitions of properties, either directly or indirectly through the acquisition of equity interest therein; and

•possible common share repurchases.

We expect to satisfy these needs using one or more of the following:

•cash flows from operations;

•distributions of cash from our unconsolidated real estate ventures;

•cash and cash equivalent balances;

•availability under our unsecured Credit Facility;

•secured construction loans and long-term unsecured indebtedness;

•sales of real estate or contributions of interests in real estate to joint ventures; and

•issuances of Parent Company equity securities and/or units of the Operating ~~Partnership; and~~

~~sales of real estate.~~Partnership.

As of March 31, ~~2020,~~2021, the Parent Company owned a 99.4% interest in the Operating Partnership. The remaining interest of approximately 0.6% pertains to common limited partnership interests owned by non-affiliated investors who contributed property to the Operating Partnership in exchange for their interests. As the sole general partner of the Operating Partnership, the Parent Company has full and complete responsibility for the Operating Partnership’s day-to-day operations and management. The Parent Company’s source of funding for its dividend payments and other obligations is the distributions it receives from the Operating Partnership.

As summarized above, we believe that our liquidity needs will be satisfied through available cash balances and cash flows from operations, financing activities and real estate sales. Rental revenue and other income from operations are our principal sources of cash to pay operating expenses, debt service, recurring capital expenditures and the minimum distributions required to maintain our REIT qualification. We seek to increase cash flows from our properties by maintaining quality standards for our properties that promote high occupancy rates and permit increases in rental rates while reducing tenant turnover and controlling operating expenses. Our revenue also includes third-party fees generated by our property management, leasing, development and construction businesses. We believe that our revenue, together with proceeds from property sales and debt financings, will continue to provide funds for our short-term liquidity needs. However, material changes in our operating or financing activities may adversely affect our net cash flows. With uncertain economic conditions, vacancy rates may increase, effective rental rates on new and renewed leases may decrease and tenant installation costs, including concessions, may increase in most or all of our markets during ~~2020~~2021 and possibly beyond. As a result, our revenues and cash flows could be insufficient to cover operating expenses, including increased tenant installation costs, pay debt service or make distributions to shareholders over the short-term. If this situation were to occur, we expect that we would finance cash deficits through borrowings under our unsecured revolving credit facility and other sources of debt and equity financings. In addition, a material adverse change in cash provided by operations could adversely affect our compliance with financial performance covenants under our unsecured revolving credit facility, including unsecured term loans and unsecured notes. As of March 31, ~~2020~~2021 we were in compliance with all of our debt covenants and requirement obligations.

In addition, we are continuing to monitor the ~~outbreak of the novel coronavirus (“COVID-19”)~~ongoing COVID-19 pandemic and the related economic impacts, market volatility, and business disruption, and its impact on our tenants. The severity and duration of the pandemic and its impact on our operations and liquidity is uncertain ~~as this~~and continues to evolve globally. However, if the ~~outbreak~~pandemic continues, there will likely be continued negative economic impacts, market volatility, and business disruption which could negatively impact our tenants’ ability to pay rent, our ability to lease vacant space, and our ability to complete development and redevelopment projects, and these consequences, in turn, could materially impact our results of operations. ~~Approximately 96%~~We collected 98.9% of ~~April~~ total cash-based rent ~~has been received~~due from ~~our~~ tenants during the first quarter of 2021, which reflects a ~~97%~~99.1% collection rate from our office tenants.

We have ~~received~~granted rent relief requests primarily ~~from~~to our co-working and retail ~~tenants, who represent approximately 2.1% and 1.6% of April billings, respectively.~~tenants. The relief requests have substantially all been in the form of rent deferral for varying lengths of time, but were/are primarily being repaid in 2020 and ~~we are currently assessing the merits of each request.~~2021. For those tenants we believe require rent relief, we ~~expect to grant~~have granted deferrals and, in some instances, ~~seek~~rent abatements while receiving extended lease terms through favorable lease extensions. To date, we have provided $4.9 million of rent relief to 65 tenants approximating 0.9 million square feet. The deferrals represent approximately 1.0% of annualized revenue. We continue to

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assess the merits of rent deferral requests and can give no assurances on the outcomes of these ongoing negotiations, the amount and nature of the rent relief packages and ultimate recovery of the amounts deferred.

We use multiple financing sources to fund our long-term capital needs. When needed, we use borrowings under our unsecured revolving credit facility for general business purposes, including to meet debt maturities and to fund distributions to shareholders as well as development and acquisition costs and other expenses. In light of the volatility in financial markets and economic uncertainties, it is possible, that one or more lenders under our unsecured revolving credit facility could fail to fund a borrowing request. Such an event could adversely affect our ability to access funds under our unsecured credit facility when needed to fund distributions or pay expenses.

Our ability to incur additional debt is dependent upon a number of factors, including our credit ratings, the value of our unencumbered assets, our degree of leverage and borrowing restrictions imposed by our lenders. If one or more rating agencies were to downgrade our unsecured credit rating, our access to the unsecured debt market would be more limited and the interest rate under our unsecured credit facility and unsecured term ~~loans~~loan would increase.

The Parent Company unconditionally guarantees the Operating Partnership’s ~~secured and~~ unsecured obligations, which, as of March 31, ~~2020,~~2021, amounted to ~~$313.5 million and $1,878.6 million, respectively.~~

$1,841.6 million. We did not have any secured debt obligations as of March 31, 2021.

Capital Markets

The Parent Company issues equity from time to time, the proceeds of which it contributes to the Operating Partnership in exchange for additional interests in the Operating Partnership, and guarantees debt obligations of the Operating Partnership. The Parent Company’s ability to sell common shares and preferred shares is dependent on, among other things, general market conditions for REITs, market perceptions about the Company as a whole and the current trading price of the Parent Company’s shares. The Parent Company ~~generally~~ maintains a shelf registration statement that covers the offering and sale of common shares, preferred shares, depositary shares, warrants and unsecured debt securities. Subject to our ongoing compliance with securities laws, and if warranted by market conditions, we may offer and sell equity and debt securities from time to time under the shelf registration statement or in transactions exempt from registration.

See Note ~~11,~~12, ''Beneficiaries' Equity of the Parent Company” to our Consolidated Financial Statements for further information related to our share repurchase ~~program during the three months ended March 31, 2020.~~program. We expect to fund any additional share repurchases with a combination of available cash balances and availability under our unsecured revolving credit facility. The timing and amounts of any repurchases will depend on a variety of factors, including market conditions, regulatory requirements, share prices, capital availability and other factors as determined by our management team. The repurchase program does not require the purchase of any minimum number of shares and may be suspended or discontinued at any time without notice.

Capital Recycling

The Operating Partnership also considers net sales of selected properties and recapitalization of unconsolidated real estate ventures as additional sources of managing its liquidity. During the three months ended March 31, ~~2020,~~2021, we ~~sold one office~~did not have any property dispositions with the exception of our contribution of an investment in a 99-year prepaid leasehold interest in a one-acre land parcel held for ~~net cash proceeds of $17.5 million.~~development to 3025 JFK Venture.

We expect that our primary uses of capital during the remainder of 2020 will be to fund our current development and redevelopment projects and also to repay $80.5 million in principal due upon maturity of the mortgage note for Two Logan Square, in Philadelphia, Pennsylvania, in August 2020, if not refinanced or extended. As of March 31, ~~2020,~~2021, we had ~~$52.7~~$45.7 million of cash and cash equivalents and ~~$548.3~~$585.7 million of available borrowings under our ~~Credit Facility,~~unsecured revolving credit facility, net of ~~$1.7~~$1.3 million in letters of credit outstanding. Based on the foregoing, as well as cash flows from operations net of dividend requirements, we believe we have sufficient capital to fund our remaining capital requirements on existing development and redevelopment projects and pursue additional attractive investment opportunities. We expect that our primary uses of capital during the remainder of 2021 will be to fund our current development and redevelopment projects.

Cash Flows

The following discussion of our cash flows is based on the consolidated statement of cash flows and is not meant to be a comprehensive discussion of the changes in our cash flows for the periods presented.

As of March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, we maintained cash and cash equivalents and restricted cash of ~~$53.4~~$46.5 million and ~~$91.2~~$47.1 million, respectively. We report and analyze our cash flows based on operating activities, investing activities, and financing activities. The following table summarizes changes in our cash flows (in thousands):

Table of Contents


	Three Months Ended March 31,										Three Months Ended March 31,
Activity	2020			2019			(Decrease) Increase			Activity	2021		2020		(Decrease) Increase
Operating	$	45,058		$	17,766		$	27,292		Operating	$	41,176	$	45,058	$	(3,882)
Investing	(42,568		)	(41,343		)	(1,225		)	Investing	(21,249)		(42,568)		21,319
Financing	(40,286		)	15,169			(55,455		)	Financing	(20,524)		(40,286)		19,762
Net cash flows	$	(37,796	)	$	(8,408	)	$	(29,388	)	Net cash flows	$	(597)	$	(37,796)	$	37,199

Our principal source of cash flows is from the operation of our Properties. Our Properties provide a relatively consistent stream of cash flows that provides us with the resources to fund operating expenses, debt service and quarterly dividends.

Cash is used in investing activities to fund acquisitions, development, or redevelopment projects and recurring and nonrecurring capital expenditures. We selectively invest in new projects that enable us to take advantage of our development, leasing, financing, and property management skills and invest in existing buildings that meet our investment criteria. During the three months ended March 31, ~~2020,~~2021, when compared to the three months ended March 31, ~~2019,~~2020, the change in investing cash flows was due to the following activities (in thousands):

Acquisitions of real estate $ (11,432 )
Capital expenditures and capitalized interest 1,294
Capital improvements/acquisition deposits/leasing costs (1,582 )
Joint venture investments (77 )
Distributions from joint ventures (1,851 )
Proceeds from the sale of properties 12,438
Proceeds from notes receivable (15 )
Increase in net cash used in investing activities $ (1,225 )


	(Decrease) Increase
Acquisitions of real estate	$	11,432
Capital expenditures and capitalized interest	22,884
Capital improvements/acquisition deposits/leasing costs	2,585
Joint venture investments	(1,884)
Distributions from joint ventures	3,934
Proceeds from the sale of properties	(17,632)

Decrease in net cash used in investing activities	$	21,319

We generally fund our investment activity through the sale of real estate, property-level financing, credit facilities, senior unsecured notes, ~~convertible or exchangeable securities,~~ and construction loans. From time to time, we may issue common or preferred shares of beneficial interest, or the Operating Partnership may issue common or preferred units of limited partnership interest. During the three months ended March 31, ~~2020,~~2021, when compared to the three months ended March 31, ~~2019,~~2020, the change in financing cash flows was due to the following activities (in thousands):


	(Decrease) Increase
Proceeds from debt obligations	$	(33,000)
Repayments of debt obligations	(2,055)
Proceeds from the exercise of stock options, net	(110)
Repurchase and retirement of common shares	53,857
Other financing activities	(36)
Dividends and distributions paid	1,106
Decrease in net cash used in financing activities	$	19,762

Proceeds from debt obligations $ (132,000 )
Repayments of debt obligations 113,926
Proceeds from the exercise of stock options (753 )
Repurchase and retirement of common shares (36,575 )
Other financing activities 485
Dividends and distributions paid (538 )
Increase in net cash used in financing activities $ (55,455 )

~~Off-Balance Sheet Arrangements~~

AsTable of March 31, 2020, we did not have any off-balance sheet arrangements that have, or are reasonably likely to have, a material current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.Contents

Capitalization

Indebtedness

The table below summarizes indebtedness under our mortgage notes payable and our unsecured debt at March 31, ~~2020~~2021 and December 31, ~~2019:~~2020:


	March 31, 2021			December 31, 2020
	(dollars in thousands)
Balance: (a)
Fixed rate	$	1,750,000		$	1,775,774
Variable rate - unhedged	91,610			52,836
Total	$	1,841,610		$	1,828,610
Percent of Total Debt:
Fixed rate	95.0		%	97.1		%
Variable rate - unhedged	5.0		%	2.9		%
Total	100.0		%	100.0		%
Weighted-average interest rate at period end:
Fixed rate	3.8		%	3.8		%
Variable rate - unhedged	1.6		%	1.5		%
Total	3.7		%	3.8		%
Weighted-average maturity in years:
Fixed rate	4.8			5.2
Variable rate - unhedged	12.5			14.6
Total	5.2			5.4

March 31, 2020 December 31, 2019
(dollars in thousands)
Balance: (a)

Fixed rate $ 2,089,266
$ 2,091,211
Variable rate - unhedged 102,836
52,836
Total $ 2,192,102
$ 2,144,047
Percent of Total Debt:
Fixed rate 95.3 % 97.5 %
Variable rate - unhedged 4.7 % 2.5 %
Total 100.0 % 100.0 %
Weighted-average interest rate at period end:
Fixed rate 3.9 % 3.9 %
Variable rate - unhedged 2.6 % 3.2 %
Total 3.8 % 3.8 %
Weighted-average maturity in years:
Fixed rate 5.3
5.6
Variable rate - unhedged 9.0
15.6
Total 5.5
5.9
(a)Consists of unpaid principal and does not reflect premium/discount or deferred financing costs.


~~(a)~~	~~Consists of unpaid principal and does not reflect premium/discount or deferred financing costs.~~

Scheduled principal payments and related weighted average annual effective interest rates for our debt as of March 31, ~~2020~~2021 were as follows ~~(in~~(dollars in thousands):


Period	Scheduled amortization		Principal maturities		Total		Weighted Average Interest Rate of Maturing Debt		Period	Principal maturities		Weighted Average Interest Rate of Maturing Debt
2020 (nine months remaining)	$	4,760	$	80,521	$	85,281	3.98	%
2021	6,142		9,001		15,143		4.28	%
2021 (nine months remaining)									2021 (nine months remaining)	$	—	—	%
2022	6,332		300,000		306,332		2.76	%	2022	263,000		2.84	%
2023	1,620		555,116		556,736		3.94	%	2023	350,000		3.87	%
2024	—		350,000		350,000		3.78	%	2024	350,000		3.78	%
2025	—		—		—		—	%	2025	—		—	%
2026	—		—		—		—	%	2026	—		—	%
2027	—		450,000		450,000		4.03	%	2027	450,000		4.03	%
2028	—		—		—		—	%	2028	—		—	%
2029	—		350,000		350,000		4.30	%	2029	350,000		4.30	%
2030									2030	—		—	%
Thereafter	—		78,610		78,610		3.18	%	Thereafter	78,610		1.47	%
Totals	$	18,854	$	2,173,248	$	2,192,102	3.80	%	Totals	$	1,841,610	3.72	%


	Three Months Ended March 31,							Three Months Ended March 31,
	2020			2019				2021		2020
Revenue							Revenue
Rents	$	139,204		$	138,098		Rents	$	113,484	$	139,204
Third party management fees, labor reimbursement and leasing	4,954			3,955			Third party management fees, labor reimbursement and leasing	6,651		4,954
Other	930			1,843			Other	634		930
Total revenue	145,088			143,896			Total revenue	120,769		145,088
Operating expenses							Operating expenses
Property operating expenses	37,461			39,500			Property operating expenses	28,935		37,461
Real estate taxes	16,787			15,783			Real estate taxes	14,761		16,787
Third party management expenses	2,662			2,117			Third party management expenses	2,978		2,662
Depreciation and amortization	52,038			51,444			Depreciation and amortization	40,343		52,038
General and administrative expenses	8,561			9,844			General and administrative expenses	6,584		8,561

Total operating expenses	117,509			118,688			Total operating expenses	93,601		117,509
Gain on sale of real estate							Gain on sale of real estate
Net gain on disposition of real estate	2,586			—			Net gain on disposition of real estate	74		2,586
Net gain on sale of undepreciated real estate	—			1,001			Net gain on sale of undepreciated real estate	1,993		0
Total gain on sale of real estate	2,586			1,001			Total gain on sale of real estate	2,067		2,586
Operating income	30,165			26,209			Operating income	29,235		30,165
Other income (expense):							Other income (expense):
Interest income	575			525
Interest and investment income							Interest and investment income	1,674		575
Interest expense	(20,009		)	(20,357		)	Interest expense	(16,293)		(20,009)
Interest expense - amortization of deferred financing costs	(749		)	(666		)	Interest expense - amortization of deferred financing costs	(709)		(749)

Equity in loss of Real Estate Ventures	(1,891		)	(1,358		)	Equity in loss of Real Estate Ventures	(6,924)		(1,891)
Net gain on real estate venture transactions	—			259

Net income before income taxes	8,091			4,612			Net income before income taxes	6,983		8,091
Income tax provision	(4		)	(29		)	Income tax provision	(19)		(4)
Net income	8,087			4,583			Net income	6,964		8,087
Net income attributable to noncontrolling interests	(65		)	(60		)	Net income attributable to noncontrolling interests	(43)		(65)
Net income attributable to Brandywine Realty Trust	8,022			4,523			Net income attributable to Brandywine Realty Trust	6,921		8,022

Nonforfeitable dividends allocated to unvested restricted shareholders	(131		)	(119		)	Nonforfeitable dividends allocated to unvested restricted shareholders	(146)		(131)
Net income attributable to Common Shareholders of Brandywine Realty Trust	$	7,891		$	4,404		Net income attributable to Common Shareholders of Brandywine Realty Trust	$	6,775	$	7,891

Basic income per Common Share	$	0.04		$	0.03		Basic income per Common Share	$	0.04	$	0.04

Diluted income per Common Share	$	0.04		$	0.02		Diluted income per Common Share	$	0.04	$	0.04

Basic weighted average shares outstanding	176,069,968			175,857,358			Basic weighted average shares outstanding	170,624,741		176,069,968
Diluted weighted average shares outstanding	176,653,459			176,464,218			Diluted weighted average shares outstanding	171,636,120		176,653,459



	Three Months Ended March 31,
	2020			2019
Net income	$	8,087		$	4,583
Comprehensive loss:
Unrealized loss on derivative financial instruments	(8,057		)	(2,689		)
Amortization of interest rate contracts (1)	188			206
Total comprehensive loss	(7,869		)	(2,483		)
Comprehensive income	218			2,100
Comprehensive income attributable to noncontrolling interest	(21		)	(44		)
Comprehensive income attributable to Brandywine Realty Trust	$	197		$	2,056



	Number of Common Shares		Number of Rabbi Trust/Deferred Compensation Shares		Common Shares of Brandywine Realty Trust's beneficial interest			Additional Paid-in Capital			Deferred Compensation Payable in Common Shares		Common Shares in Grantor Trust			Cumulative Earnings		Accumulated Other Comprehensive Income (Loss)			Cumulative Distributions			Noncontrolling Interests			Total
BALANCE, beginning of period	176,480,095		1,105,542		$	1,766		$	3,192,158		$	16,216	$	(16,216	)	$	804,556	$	(2,370	)	$	(2,318,233	)	$	10,426		$	1,688,303
Net income																8,022								65			8,087
Other comprehensive loss																		(7,825		)				(44		)	(7,869		)
Repurchase and retirement of Common Shares of Beneficial Interest	(5,644,200	)			(57		)	(53,801		)																	(53,858		)
Share-based compensation activity	142,468		50,967		1			2,030																			2,031
Share Issuance from/(to) Deferred Compensation Plan	(12,376	)	(38,726	)				(193		)	796		(796		)												(193		)
Distributions declared ($0.19 per share)																					(32,500		)	(187		)	(32,687		)
BALANCE, March 31, 2020	170,965,987		1,117,783		$	1,710		$	3,140,194		$	17,012	$	(17,012	)	$	812,578	$	(10,195	)	$	(2,350,733	)	$	10,260		$	1,603,814



	Number of Common Shares		Number of Rabbi Trust/Deferred Compensation Shares		Common Shares of Brandywine Realty Trust's beneficial interest			Additional Paid-in Capital			Deferred Compensation Payable in Common Shares		Common Shares in Grantor Trust			Cumulative Earnings			Accumulated Other Comprehensive Income (Loss)			Cumulative Distributions			Noncontrolling Interests			Total
BALANCE, beginning of period	176,873,324		977,120		$	1,770		$	3,200,312		$	14,021	$	(14,021	)	$	775,625		$	5,029		$	(2,183,909	)	$	12,201		$	1,811,028
Cumulative effect of accounting change																(5,336		)										(5,336		)
Net income																4,523									60			4,583
Other comprehensive loss																			(2,469		)				(14		)	(2,483		)
Repurchase and retirement of Common Shares of Beneficial Interest	(1,337,169	)			(13		)	(17,268		)																		(17,281		)
Issuance of partnership interest in consolidated real estate ventures																									22			22
Share-based compensation activity	465,883		41,342		4			3,673																				3,677
Share Issuance from/(to) Deferred Compensation Plan	(458	)	(5,920	)							619		(619		)													—
Reallocation of Noncontrolling interest								57																	(57		)	—
Distributions declared ($0.19 per share)																						(33,560		)	(187		)	(33,747		)
BALANCE, March 31, 2019	176,001,580		1,012,542		$	1,761		$	3,186,774		$	14,640	$	(14,640	)	$	774,812		$	2,560		$	(2,217,469	)	$	12,025		$	1,760,463



	Three Months Ended March 31,
	2020			2019
Cash flows from operating activities:
Net income	$	8,087		$	4,583
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization	52,038			51,444
Amortization of deferred financing costs	749			666
Amortization of debt discount/(premium), net	(395		)	175
Amortization of stock compensation costs	2,349			3,449
Straight-line rent income	(2,183		)	(4,165		)
Amortization of acquired above (below) market leases, net	(1,495		)	(1,805		)
Ground rent expense	366			370
Provision for doubtful accounts	213			—
Net gain on sale of interests in real estate	(2,586		)	(1,001		)
Loss from Real Estate Ventures, net of distributions	1,890			1,159
Income tax provision	4			29
Changes in assets and liabilities:
Accounts receivable	(1,348		)	(3,539		)
Other assets	(14,548		)	(39,088		)
Accounts payable and accrued expenses	(1,213		)	(10,822		)
Deferred income, gains and rent	(230		)	(3,148		)
Other liabilities	3,360			19,459
Net cash provided by operating activities	45,058			17,766
Cash flows from investing activities:
Acquisition of properties	(11,432		)	—
Proceeds from the sale of properties	17,711			5,273
Proceeds from real estate venture sales	—			259
Proceeds from repayment of mortgage notes receivable	—			15
Capital expenditures for tenant improvements	(13,707		)	(14,978		)
Capital expenditures for redevelopments	(9,973		)	(10,777		)
Capital expenditures for developments	(19,426		)	(18,645		)
Advances for the purchase of tenant assets, net of repayments	585			(1,615		)
Investment in unconsolidated Real Estate Ventures	—			(182		)
Deposits for real estate	(1,011		)	3,152
Capital distributions from Real Estate Ventures	—			1,851
Leasing costs paid	(5,315		)	(5,696		)
Net cash used in investing activities	(42,568		)	(41,343		)
Cash flows from financing activities:
Repayments of mortgage notes payable	(1,945		)	(1,871		)
Proceeds from credit facility borrowings	66,000			198,000
Repayments of credit facility borrowings	(16,000		)	(130,000		)
Proceeds from the exercise of stock options	47			800
Shares used for employee taxes upon vesting of share awards	(722		)	(1,230		)
Partner contributions to consolidated real estate venture	—			23
Repurchase and retirement of common shares	(53,857		)	(17,282		)
Distributions paid to shareholders	(33,622		)	(33,084		)
Distributions to noncontrolling interest	(187		)	(187		)
Net cash provided by (used in) financing activities	(40,286		)	15,169
Decrease in cash and cash equivalents and restricted cash	(37,796		)	(8,408		)
Cash and cash equivalents and restricted cash at beginning of year	91,170			23,211
Cash and cash equivalents and restricted cash at end of period	$	53,374		$	14,803

Reconciliation of cash and cash equivalents and restricted cash:
Cash and cash equivalents, beginning of period	$	90,499		$	22,842
Restricted cash, beginning of period	671			369
Cash and cash equivalents and restricted cash, beginning of period	$	91,170		$	23,211
Cash and cash equivalents, end of period	$	52,702		$	14,449
Restricted cash, end of period	672			354
Cash and cash equivalents and restricted cash, end of period	$	53,374		$	14,803
Supplemental disclosure:
Cash paid for interest, net of capitalized interest during the three months ended March 31, 2020 and 2019 of $1,201 and $728, respectively	$	12,961		$	14,251
Cash paid for income taxes	1			—
Supplemental disclosure of non-cash activity:
Dividends and distributions declared but not paid	32,692			34,107
Change in capital expenditures financed through accounts payable at period end	2,745			(1,080		)
Change in capital expenditures financed through retention payable at period end	23			(4,503		)


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



	General Partner Capital
	Units		Amount			Accumulated Other Comprehensive Income			Noncontrolling Interest - Consolidated Real Estate Ventures		Total Partners' Equity
BALANCE, beginning of period	176,480,095		$	1,674,539		$	(2,715	)	$	1,091	$	1,672,915
Net income			8,075						12		8,087
Other comprehensive loss						(7,869		)			(7,869		)
Deferred compensation obligation	(12,376	)	(193		)						(193		)
Repurchase and retirement of LP units	(5,644,200	)	(53,858		)						(53,858		)
Share-based compensation activity	142,468		2,031								2,031
Adjustment of redeemable partnership units to liquidation value at period end			5,220								5,220
Distributions declared to general partnership unitholders ($0.19 per unit)			(32,500		)						(32,500		)
BALANCE, March 31, 2020	170,965,987		$	1,603,314		$	(10,584	)	$	1,103	$	1,593,833



	Number of Properties	Rentable Square Feet
Office properties	85	15,319,340
Mixed-use properties	4	659,625
Core Properties	89	15,978,965
Development property	1	204,108
Redevelopment properties	4	397,237
The Properties	94	16,580,310



	March 31, 2020		December 31, 2019
Land	$	485,420	$	489,702
Building and improvements	3,044,461		3,049,395
Tenant improvements	474,237		467,362
Total	$	4,004,118	$	4,006,459


~~(a)~~	~~Gain/(Loss) on Sale is net of closing and other transaction related costs.~~


	March 31, 2021		December 31, 2020
Net property	$	1,550,425	$	1,520,804
Other assets	473,771		488,805
Other liabilities	325,162		333,049
Debt, net	956,208		956,688
Equity (a)	742,826		719,872



	March 31, 2020
	MAP Venture			Other		Total
Net property	$	189,953		$	650,323	$	840,276
Other assets	256,904			87,201		344,105
Other liabilities	266,798			21,188		287,986
Debt, net	181,768			419,352		601,120
Equity (a)	(1,709		)	296,984		295,275



	Three Months Ended March 31, 2020
	MAP Venture			Other			Total
Revenue	$	17,313		$	13,838		$	31,151
Operating expenses	(12,228		)	(5,733		)	(17,961		)
Interest expense, net	(2,047		)	(2,942		)	(4,989		)
Depreciation and amortization	(6,058		)	(6,465		)	(12,523		)
Net loss	$	(3,020	)	$	(1,302	)	$	(4,322	)
Ownership interest %	50		%	Various			Various
Company's share of net loss	$	(1,510	)	$	(352	)	$	(1,862	)
Basis adjustments and other	(10		)	(19		)	(29		)
Equity in loss of Real Estate Ventures	$	(1,520	)	$	(371	)	$	(1,891	)



	Three Months Ended March 31, 2019
	MAP Venture			Other			Total
Revenue	$	18,288		$	16,771		$	35,059
Operating expenses	(12,155		)	(6,563		)	(18,718		)
Interest expense, net	(2,536		)	(1,384		)	(3,920		)
Depreciation and amortization	(6,349		)	(7,363		)	(13,712		)
Net income (loss)	$	(2,752	)	$	1,461		$	(1,291	)
Ownership interest %	50		%	Various			Various
Company's share of net income (loss)	$	(1,376	)	$	64		$	(1,312	)
Basis adjustments and other	(56		)	10			(46		)
Equity in income (loss) of Real Estate Ventures	$	(1,432	)	$	74		$	(1,358	)


	Three Months Ended March 31,
Lease Revenue	2021		2020
Fixed contractual payments	$	86,380	$	104,401
Variable lease payments	24,148		30,639
Total	$	110,528	$	135,040


	March 31, 2021
	Total Cost		Accumulated Amortization		Intangible Assets, net
Intangible assets, net:
In-place lease value	$	87,946	$	(44,427)	$	43,519
Tenant relationship value	1,737		(1,615)		122
Above market leases acquired	486		(244)		242


Total intangible assets, net	$	90,169	$	(46,286)	$	43,883

	Total Cost		Accumulated Amortization		Intangible Liabilities, net
Intangible liabilities, net:
Below market leases acquired	$	30,736	$	(13,663)	$	17,073


	Assets		Liabilities
2021 (nine months remaining)	$	11,931	$	3,576
2022	10,050		2,682
2023	7,440		1,642
2024	5,215		1,425
2025	4,027		1,148
Thereafter	5,220		6,600


Total	$	43,883	$	17,073



	March 31, 2020			December 31, 2019			Effective Interest Rate	Maturity Date
MORTGAGE DEBT:
Two Logan Square	$	80,667		$	81,103		3.98%	August 2020
Four Tower Bridge	9,230			9,291			4.50%	February 2021
One Commerce Square	115,647			116,571			3.64%	April 2023
Two Commerce Square	107,948			108,472			4.51%	April 2023
Principal balance outstanding	313,492			315,437
Plus: fair market value premium (discount), net	(1,289		)	(1,383		)
Less: deferred financing costs	(202		)	(242		)
Mortgage indebtedness	$	312,001		$	313,812

UNSECURED DEBT
$600 million Unsecured Credit Facility	$	50,000		$	—		LIBOR + 1.10%	July 2022
Seven-Year Term Loan - Swapped to fixed	250,000			250,000			2.87%	October 2022
$350.0M 3.95% Guaranteed Notes due 2023	350,000			350,000			3.87%	February 2023
$350.0M 4.10% Guaranteed Notes due 2024	350,000			350,000			3.78%	October 2024
$450.0M 3.95% Guaranteed Notes due 2027	450,000			450,000			4.03%	November 2027
$350.0M 4.55% Guaranteed Notes due 2029	350,000			350,000			4.30%	October 2029
Indenture IA (Preferred Trust I)	27,062			27,062			LIBOR + 1.25%	March 2035
Indenture IB (Preferred Trust I) - Swapped to fixed	25,774			25,774			3.30%	April 2035
Indenture II (Preferred Trust II)	25,774			25,774			LIBOR + 1.25%	July 2035
Principal balance outstanding	1,878,610			1,828,610
Plus: original issue premium (discount), net	11,601			12,090
Less: deferred financing costs	(9,612		)	(10,094		)
Total unsecured indebtedness	$	1,880,599		$	1,830,606
Total Debt Obligations	$	2,192,600		$	2,144,418


	March 31, 2021				December 31, 2020
	Carrying Amount (a)		Fair Value		Carrying Amount (a)		Fair Value
Unsecured notes payable	$	1,502,768	$	1,597,295	$	1,502,901	$	1,607,310
Variable rate debt	$	340,825	$	322,044	$	327,694	$	308,838

Notes receivable (b)	$	94,430	$	97,076	$	94,430	$	97,372


~~(a)~~	Net of deferred financing costs of $8.3 million and $8.7 million for unsecured notes payable, $1.3 million and $1.4 million for variable rate debt and $0.2 million for mortgage notes payable as of both March 31, 2020 and December 31, 2019.


Hedge Product	Hedge Type	Designation		Notional Amount				Strike		Trade Date	Maturity Date	Fair value
				3/31/2021		12/31/2020						3/31/2021		12/31/2020



Liabilities
Swap	Interest Rate	Cash Flow	(a)	$	250,000	$	250,000	2.868	%	October 8, 2015	October 8, 2022	$	(5,600)	$	(6,627)
Swap	Interest Rate	Cash Flow	(b)	0		25,774		3.300	%	December 22, 2011	January 30, 2021	0		(120)
				$	250,000	$	275,774



	Shares		Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value (in thousands)
Non-vested at January 1, 2020	479,144		$	15.90	$	44.7
Granted	224,678		$	14.66	$	—
Vested	(12,718	)	$	15.60	$	—
Forfeited	(1,920	)	$	15.63	$	—
Non-vested at March 31, 2020	689,184		$	15.50	$	—


	Shares	Weighted Average Grant Date Fair Value
Non-vested at January 1, 2021	488,735	$	15.19
Granted	301,545	$	12.58
Vested	(17,734)	$	14.96
Forfeited	(1,558)	$	14.99
Non-vested at March 31, 2021	770,988	$	14.18



	RPSU Grant
	2/28/2018		2/21/2019		3/5/2020		Total
(Amounts below in shares, unless otherwise noted)
Non-vested at January 1, 2020	190,296		206,069		—		396,365
Units Granted	—		—		319,600		319,600
Non-vested at March 31, 2020	190,296		206,069		319,600		715,965
Measurement Period Commencement Date	1/1/2018		1/1/2019		1/1/2020
Measurement Period End Date	12/31/2020		12/31/2021		12/31/2022
Units Granted	209,193		213,728		319,600
Fair Value of Units on Grant Date (in thousands)	$	4,276	$	4,627	$	5,389


	RPSU Grant Date
	2/21/2019		3/5/2020		3/5/2021		Total
(Amounts below in shares, unless otherwise noted)
Non-vested at January 1, 2021	206,069		319,600		0		525,669
Granted	0		0		380,957		380,957


Non-vested at March 31, 2021	206,069		319,600		380,957		906,626
Measurement Period Commencement Date	1/1/2019		1/1/2020		1/1/2021
Measurement Period End Date	12/31/2021		12/31/2022		12/31/2023
Granted	213,728		319,600		380,957
Fair Value of Units on Grant Date (in thousands)	$	4,627	$	5,389	$	6,389



Real estate investments, at cost:
	March 31, 2020		December 31, 2019
Philadelphia CBD	$	1,733,987	$	1,726,299
Pennsylvania Suburbs	991,788		1,003,890
Austin, Texas	722,873		721,255
Metropolitan Washington, D.C.	468,416		468,035
Other	87,054		86,980
Operating Properties	$	4,004,118	$	4,006,459

Right of use asset - operating leases, net	$	21,485	$	21,656

Corporate
Construction-in-progress	$	193,160	$	180,718
Land held for development (a)	$	108,213	$	96,124
Prepaid leasehold interests in land held for development, net (b)	$	39,490	$	39,592


~~(a)~~	~~Does not include 49.2 acres and 35.2 acres of land classified as held for sale as of March 31, 2020 and December 31, 2019, respectively.~~


~~(b)~~	~~Includes leasehold interests in prepaid 99-year ground leases at 3025 and 3001-3003 JFK Boulevard, in Philadelphia, Pennsylvania as of March 31, 2020 and December 31, 2019.~~


~~(a)~~	~~Includes property operating expenses, real estate taxes and third party management expense.~~



Unconsolidated real estate ventures:
	Investment in real estate ventures						Equity in income (loss) of real estate venture
	As of						Three Months Ended March 31,
	March 31, 2020			December 31, 2019			2020			2019
Philadelphia CBD	$	17,602		$	17,524		$	78		$	78
Metropolitan Washington, D.C.	102,396			102,840			(449		)	(175		)
MAP Venture (a)	(1,590		)	(70		)	(1,520		)	(1,367		)
Other	—			—			—			106
Total	$	118,408		$	120,294		$	(1,891	)	$	(1,358	)


~~(a)~~	~~Included in Other liabilities on the consolidated balance sheets.~~



Proceeds from debt obligations	$	(132,000	)
Repayments of debt obligations	113,926
Proceeds from the exercise of stock options	(753		)
Repurchase and retirement of common shares	(36,575		)
Other financing activities	485
Dividends and distributions paid	(538		)
Increase in net cash used in financing activities	$	(55,455	)


~~(a)~~	~~Includes common share and partnership units outstanding through the three months ended March 31, 2020 and 2019, respectively.~~


~~(b)~~	Changes in internal control over financial reporting. There was no change in the Parent Company’s internal control over financial reporting that occurred during the period covered by this quarterly report that has materially affected, or is reasonably likely to materially affect, the Parent Company’s internal control over financial reporting.


~~(b)~~	~~Changes in internal control over financial reporting.~~ There was no change in the Operating Partnership’s internal control over financial reporting that occurred during the period covered by this quarterly report that has materially affected, or is reasonably likely to materially affect, the Operating Partnership’s internal control over financial reporting.