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, ~~2021~~2022


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

For the transition period from to

Brandywine Realty Trust

Brandywine Operating Partnership, L.P.

(Exact name of registrant as specified in its charter)

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

Maryland

(Brandywine Realty Trust)

001-9106

23-2413352

Delaware

(Brandywine Operating Partnership, L.P.)

000-24407

23-2862640

(State or Other Jurisdiction of Incorporation
or Organization)

(Commission file number)

(I.R.S. Employer Identification Number)

2929 ~~Walnut~~Arch Street

Suite ~~1700~~1800
Philadelphia, PA 19104
(Address of principal executive offices) (Zip Code)

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

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Shares of Beneficial Interest

BDN

NYSE

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


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

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


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

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

Brandywine Realty Trust:


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

Brandywine Operating Partnership, L.P.:


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

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

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


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

A total of ~~170,858,857~~171,383,912 Common Shares of Beneficial Interest, par value $0.01 per share of Brandywine Realty Trust, were outstanding as of April ~~28, 2021.~~19, 2022.

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EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the period ended March 31, ~~2021~~2022 of Brandywine Realty Trust (the “Parent Company”) and Brandywine Operating Partnership L.P. (the “Operating Partnership”). The Parent Company is a Maryland real estate investment trust, or REIT, that owns its assets and conducts its operations through the Operating Partnership, a Delaware limited partnership, and subsidiaries of the Operating Partnership. The Parent Company, the Operating Partnership and their consolidated subsidiaries are collectively referred to in this report as the “Company”. In addition, as used in this report, terms such as “we”, “us”, and “our” may refer to the Company, the Parent Company, or the Operating Partnership.

The Parent Company is the sole general partner of the Operating Partnership and, as of March 31, ~~2021,~~2022, owned a ~~99.4%~~99.7% interest in the Operating Partnership. The remaining ~~0.6%~~0.3% interest consists of common units of limited partnership interest issued by the Operating Partnership to third parties in exchange for contributions of properties to the Operating Partnership. As the sole general partner of the Operating Partnership, the Parent Company has full and complete authority over the Operating Partnership’s day-to-day operations and management.

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

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

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

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

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

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

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

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

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

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•Consolidated Financial Statements; and

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

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

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

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TABLE OF CONTENTS


			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, ~~2021~~2022 and December 31, ~~2020~~2021			5

Consolidated Statements of Operations for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021			6

Consolidated Statements of Comprehensive Income for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021			7

Consolidated Statements of Beneficiaries’ Equity for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021			8

Consolidated Statements of Cash Flows for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021			10

Brandywine Operating Partnership, L.P.

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

Consolidated Balance Sheets as of March 31, ~~2021~~2022 and December 31, ~~2020~~2021			11

Consolidated Statements of Operations for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021			12

Consolidated Statements of Comprehensive Income for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021			13

Consolidated Statements of Partners’ Equity for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021			14

Consolidated Statements of Cash Flows for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021			16

Notes to Unaudited Consolidated Financial Statements			17

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

Item 3. Quantitative and Qualitative Disclosures about Market Risk			4143

Item 4. Controls and Procedures			4244

PART II — OTHER INFORMATION			4445

Item 1. Legal Proceedings			4445

Item 1A. Risk Factors			4445

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			4445

Item 3. Defaults Upon Senior Securities			4445

Item 4. Mine Safety Disclosures			4445

Item 5. Other Information			4445

Item 6. Exhibits			4546

Signatures			4647

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, 2021		December 31, 2020			March 31, 2022		December 31, 2021
ASSETS	ASSETS					ASSETS
Real estate investments:	Real estate investments:					Real estate investments:
Operating properties	Operating properties	$	3,386,559	$	3,474,109	Operating properties	$	3,517,995	$	3,472,602
Accumulated depreciation	Accumulated depreciation	(900,167)		(896,561)		Accumulated depreciation	(980,860)		(957,450)
Right of use asset - operating leases, net	Right of use asset - operating leases, net	20,810		20,977		Right of use asset - operating leases, net	20,150		20,313
Operating real estate investments, net	Operating real estate investments, net	2,507,202		2,598,525		Operating real estate investments, net	2,557,285		2,535,465
Construction-in-progress	Construction-in-progress	264,529		210,311		Construction-in-progress	283,323		277,237
Land held for development	Land held for development	116,902		117,984		Land held for development	94,411		114,604
Prepaid leasehold interests in land held for development, net	Prepaid leasehold interests in land held for development, net	27,762		39,185		Prepaid leasehold interests in land held for development, net	27,762		27,762
Total real estate investments, net	Total real estate investments, net	2,916,395		2,966,005		Total real estate investments, net	2,962,781		2,955,068
Assets held for sale, net	Assets held for sale, net	7,349		7,349		Assets held for sale, net	25,205		562
Cash and cash equivalents	Cash and cash equivalents	45,717		46,344		Cash and cash equivalents	39,306		27,463
Accounts receivable	Accounts receivable	14,665		13,536		Accounts receivable	14,214		11,875
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		433,046		401,327
Accrued rent receivable, net of allowance of $4,081 and $4,133 as of March 31, 2022 and December 31, 2021, respectively						Accrued rent receivable, net of allowance of $4,081 and $4,133 as of March 31, 2022 and December 31, 2021, respectively	170,275		167,210
Investment in unconsolidated real estate ventures						Investment in unconsolidated real estate ventures	461,389		435,506
Deferred costs, net	Deferred costs, net	83,839		84,856		Deferred costs, net	87,652		86,862
Intangible assets, net	Intangible assets, net	43,883		48,570		Intangible assets, net	25,580		28,556
Other assets	Other assets	185,844		176,747		Other assets	148,493		133,094
Total assets	Total assets	$	3,889,913	$	3,900,106	Total assets	$	3,934,895	$	3,846,196
LIABILITIES AND BENEFICIARIES' EQUITY	LIABILITIES AND BENEFICIARIES' EQUITY					LIABILITIES AND BENEFICIARIES' EQUITY

Unsecured credit facility	Unsecured credit facility	$	13,000	$	0	Unsecured credit facility	$	156,000	$	23,000
Unsecured term loan, net	Unsecured term loan, net	249,215		249,084		Unsecured term loan, net	249,738		249,608
Unsecured senior notes, net	Unsecured senior notes, net	1,581,378		1,581,511		Unsecured senior notes, net	1,580,845		1,580,978
Accounts payable and accrued expenses	Accounts payable and accrued expenses	119,208		121,982		Accounts payable and accrued expenses	130,073		150,151
Distributions payable	Distributions payable	32,763		32,706		Distributions payable	32,814		32,765
Deferred income, gains and rent	Deferred income, gains and rent	22,416		21,396		Deferred income, gains and rent	24,758		23,849
Intangible liabilities, net	Intangible liabilities, net	17,073		18,448		Intangible liabilities, net	12,085		12,981

Lease liability - operating leases	Lease liability - operating leases	22,810		22,758		Lease liability - operating leases	23,014		22,962
Other liabilities	Other liabilities	49,796		47,573		Other liabilities	49,705		48,683
Total liabilities	Total liabilities	$	2,107,659	$	2,095,458	Total liabilities	$	2,259,032	$	2,144,977
Commitments and contingencies (See Note 14)		0		0
Commitments and contingencies (See Note 15)						Commitments and contingencies (See Note 15)	0		0
Brandywine Realty Trust's Equity:	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; 170,663,251 and 170,572,964 issued and outstanding as of March 31, 2021 and December 31, 2020, respectively		1,707		1,707
Common Shares of Brandywine Realty Trust's beneficial interest, $0.01 par value; shares authorized 400,000,000; 171,383,912 and 171,126,257 issued and outstanding as of March 31, 2022 and December 31, 2021, respectively						Common Shares of Brandywine Realty Trust's beneficial interest, $0.01 par value; shares authorized 400,000,000; 171,383,912 and 171,126,257 issued and outstanding as of March 31, 2022 and December 31, 2021, respectively	1,714		1,712
Additional paid-in-capital	Additional paid-in-capital	3,140,456		3,138,152		Additional paid-in-capital	3,147,231		3,146,786
Deferred compensation payable in common shares	Deferred compensation payable in common shares	17,658		17,516		Deferred compensation payable in common shares	19,386		18,491
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)
Common shares in grantor trust, 1,185,541 and 1,169,703 issued and outstanding as of March 31, 2022 and December 31, 2021, respectively						Common shares in grantor trust, 1,185,541 and 1,169,703 issued and outstanding as of March 31, 2022 and December 31, 2021, respectively	(19,386)		(18,491)
Cumulative earnings	Cumulative earnings	1,117,004		1,110,083		Cumulative earnings	1,128,465		1,122,372
Accumulated other comprehensive loss		(6,469)		(7,561)
Accumulated other comprehensive income (loss)						Accumulated other comprehensive income (loss)	1,920		(2,020)
Cumulative distributions	Cumulative distributions	(2,480,811)		(2,448,238)		Cumulative distributions	(2,611,294)		(2,578,583)
Total Brandywine Realty Trust's equity	Total Brandywine Realty Trust's equity	1,771,887		1,794,143		Total Brandywine Realty Trust's equity	1,668,036		1,690,267
Noncontrolling interests	Noncontrolling interests	10,367		10,505		Noncontrolling interests	7,827		10,952
Total beneficiaries' equity	Total beneficiaries' equity	$	1,782,254	$	1,804,648	Total beneficiaries' equity	$	1,675,863	$	1,701,219
Total liabilities and beneficiaries' equity	Total liabilities and beneficiaries' equity	$	3,889,913	$	3,900,106	Total liabilities and beneficiaries' equity	$	3,934,895	$	3,846,196

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

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BRANDYWINE REALTY TRUST

CONSOLIDATED STATEMENTS OF OPERATIONS

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


		Three Months Ended March 31,				Three Months Ended March 31,
		2021		2020				2022		2021
Revenue	Revenue						Revenue
Rents	Rents	$	113,484	$	139,204		Rents	$	115,901	$	113,484
Third party management fees, labor reimbursement and leasing	Third party management fees, labor reimbursement and leasing	6,651		4,954			Third party management fees, labor reimbursement and leasing	5,108		6,651
Other	Other	634		930			Other	6,496		634
Total revenue	Total revenue	120,769		145,088			Total revenue	127,505		120,769
Operating expenses	Operating expenses						Operating expenses
Property operating expenses	Property operating expenses	28,935		37,461			Property operating expenses	31,548		28,935
Real estate taxes	Real estate taxes	14,761		16,787			Real estate taxes	13,813		14,761
Third party management expenses	Third party management expenses	2,978		2,662			Third party management expenses	2,557		2,978
Depreciation and amortization	Depreciation and amortization	40,343		52,038			Depreciation and amortization	43,782		40,343
General and administrative expenses	General and administrative expenses	6,584		8,561			General and administrative expenses	10,000		6,584

Total operating expenses	Total operating expenses	93,601		117,509			Total operating expenses	101,700		93,601
Gain on sale of real estate	Gain on sale of real estate						Gain on sale of real estate
Net gain on disposition of real estate	Net gain on disposition of real estate	74		2,586			Net gain on disposition of real estate	—		74
Net gain on sale of undepreciated real estate	Net gain on sale of undepreciated real estate	1,993		0			Net gain on sale of undepreciated real estate	897		1,993
Total gain on sale of real estate	Total gain on sale of real estate	2,067		2,586			Total gain on sale of real estate	897		2,067
Operating income	Operating income	29,235		30,165			Operating income	26,702		29,235
Other income (expense):	Other income (expense):						Other income (expense):
Interest and investment income	Interest and investment income	1,674		575			Interest and investment income	440		1,674
Interest expense	Interest expense	(16,293)		(20,009)			Interest expense	(15,742)		(16,293)
Interest expense - amortization of deferred financing costs	Interest expense - amortization of deferred financing costs	(709)		(749)			Interest expense - amortization of deferred financing costs	(709)		(709)

Equity in loss of Real Estate Ventures		(6,924)		(1,891)
Equity in loss of unconsolidated real estate ventures							Equity in loss of unconsolidated real estate ventures	(4,563)		(6,924)

Net income before income taxes	Net income before income taxes	6,983		8,091			Net income before income taxes	6,128		6,983
Income tax provision	Income tax provision	(19)		(4)			Income tax provision	(27)		(19)
Net income	Net income	6,964		8,087			Net income	6,101		6,964
Net income attributable to noncontrolling interests	Net income attributable to noncontrolling interests	(43)		(65)			Net income attributable to noncontrolling interests	(8)		(43)
Net income attributable to Brandywine Realty Trust	Net income attributable to Brandywine Realty Trust	6,921		8,022			Net income attributable to Brandywine Realty Trust	6,093		6,921

Nonforfeitable dividends allocated to unvested restricted shareholders	Nonforfeitable dividends allocated to unvested restricted shareholders	(146)		(131)			Nonforfeitable dividends allocated to unvested restricted shareholders	(148)		(146)
Net income attributable to Common Shareholders of Brandywine Realty Trust	Net income attributable to Common Shareholders of Brandywine Realty Trust	$	6,775	$	7,891		Net income attributable to Common Shareholders of Brandywine Realty Trust	$	5,945	$	6,775

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

Diluted income per Common Share	Diluted income per Common Share	$	0.04	$	0.04		Diluted income per Common Share	$	0.03	$	0.04

Basic weighted average shares outstanding	Basic weighted average shares outstanding	170,624,741		176,069,968			Basic weighted average shares outstanding	171,294,949		170,624,741
Diluted weighted average shares outstanding	Diluted weighted average shares outstanding	171,636,120		176,653,459			Diluted weighted average shares outstanding	172,888,994		171,636,120

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

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BRANDYWINE REALTY TRUST

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited, in thousands)


		Three Months Ended March 31,				Three Months Ended March 31,
		2021		2020				2022		2021
Net income	Net income	$	6,964	$	8,087		Net income	$	6,101	$	6,964
Comprehensive income (loss):
Unrealized gain (loss) on derivative financial instruments		910		(8,057)
Comprehensive income:							Comprehensive income:
Unrealized gain on derivative financial instruments							Unrealized gain on derivative financial instruments	3,764		910

Amortization of interest rate contracts (1)	Amortization of interest rate contracts (1)	188		188			Amortization of interest rate contracts (1)	188		188
Total comprehensive income (loss)		1,098		(7,869)
Total comprehensive income							Total comprehensive income	3,952		1,098
Comprehensive income	Comprehensive income	8,062		218			Comprehensive income	10,053		8,062
Comprehensive income attributable to noncontrolling interest	Comprehensive income attributable to noncontrolling interest	(49)		(21)			Comprehensive income attributable to noncontrolling interest	(20)		(49)
Comprehensive income attributable to Brandywine Realty Trust	Comprehensive income attributable to Brandywine Realty Trust	$	8,013	$	197		Comprehensive income attributable to Brandywine Realty Trust	$	10,033	$	8,013

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

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

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BRANDYWINE REALTY TRUST

CONSOLIDATED STATEMENTS OF BENEFICIARIES’ EQUITY

(unaudited, in thousands, except number of shares)


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

BALANCE, December 31, 2021																						BALANCE, December 31, 2021		171,126,257		1,169,703		$	1,712	$	3,146,786	$	18,491	$	(18,491)	$	1,122,372	$	(2,020)	$	(2,578,583)	$	10,952	$	1,701,219
Net income	Net income											6,921						43		6,964			Net income														6,093						8		6,101
Other comprehensive income	Other comprehensive income													1,092				6		1,098			Other comprehensive income																3,940				12		3,952

Redemption of LP Units																						Redemption of LP Units																				(4,006)		(4,006)
Share-based compensation activity	Share-based compensation activity	108,345	12,719			2,502														2,502			Share-based compensation activity		277,061		68,540		2		1,653														1,655
Share Issuance from/(to) Deferred Compensation Plan	Share Issuance from/(to) Deferred Compensation Plan	(18,058)	(61,436)			(198)		142		(142)										(198)			Share Issuance from/(to) Deferred Compensation Plan		(19,406)		(52,702)				(249)		895		(895)										(249)

Distributions declared ($0.19 per share)																(32,573)		(187)		(32,760)
BALANCE, March 31, 2021		170,663,251	1,111,777	$	1,707	$	3,140,456	$	17,658	$	(17,658)	$	1,117,004	$	(6,469)	$	(2,480,811)	$	10,367	$	1,782,254
Reallocation of Noncontrolling interest																						Reallocation of Noncontrolling interest								(959)												959		—
Distributions declared $0.19 per share)																						Distributions declared $0.19 per share)																		(32,711)		(98)		(32,809)
BALANCE, March 31, 2022																						BALANCE, March 31, 2022		171,383,912		1,185,541		$	1,714	$	3,147,231	$	19,386	$	(19,386)	$	1,128,465	$	1,920	$	(2,611,294)	$	7,827	$	1,675,863

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

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BRANDYWINE REALTY TRUST

CONSOLIDATED STATEMENT OF BENEFICIARIES’ EQUITY

(unaudited, in thousands, except number of shares)

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

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


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

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

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

Table of Contents

BRANDYWINE REALTY TRUST

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)


		Three Months Ended March 31,					Three Months Ended March 31,
		2021		2020			2022		2021
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	6,964	$	8,087	Net income	$	6,101	$	6,964
Adjustments to reconcile net income to net cash from operating activities:	Adjustments to reconcile net income to net cash from operating activities:					Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization	Depreciation and amortization	40,343		52,038		Depreciation and amortization	43,782		40,343
Amortization of deferred financing costs	Amortization of deferred financing costs	709		749		Amortization of deferred financing costs	709		709
Amortization of debt discount/(premium), net	Amortization of debt discount/(premium), net	(488)		(395)		Amortization of debt discount/(premium), net	(488)		(488)
Amortization of stock compensation costs	Amortization of stock compensation costs	2,606		2,349		Amortization of stock compensation costs	3,280		2,606
Straight-line rent income	Straight-line rent income	(4,085)		(2,183)		Straight-line rent income	(3,149)		(4,085)
Amortization of acquired above (below) market leases, net	Amortization of acquired above (below) market leases, net	(1,350)		(1,495)		Amortization of acquired above (below) market leases, net	(875)		(1,350)
Ground rent expense	Ground rent expense	297		366		Ground rent expense	205		297
Provision for doubtful accounts	Provision for doubtful accounts	253		213		Provision for doubtful accounts	—		253

Net gain on sale of interests in real estate	Net gain on sale of interests in real estate	(2,067)		(2,586)		Net gain on sale of interests in real estate	(897)		(2,067)

Loss from Real Estate Ventures, net of distributions		6,924		1,890
Loss from unconsolidated real estate ventures, net of distributions						Loss from unconsolidated real estate ventures, net of distributions	4,563		6,924
Income tax provision	Income tax provision	19		4		Income tax provision	27		19
Changes in assets and liabilities:	Changes in assets and liabilities:					Changes in assets and liabilities:
Accounts receivable	Accounts receivable	(939)		(1,348)		Accounts receivable	(2,609)		(939)
Other assets	Other assets	(10,491)		(14,548)		Other assets	(9,208)		(10,491)
Accounts payable and accrued expenses	Accounts payable and accrued expenses	4,991		(1,213)		Accounts payable and accrued expenses	(14,550)		4,991
Deferred income, gains and rent	Deferred income, gains and rent	1,302		(230)		Deferred income, gains and rent	992		1,302
Other liabilities	Other liabilities	(3,812)		3,360		Other liabilities	632		(3,812)
Net cash provided by operating activities	Net cash provided by operating activities	41,176		45,058		Net cash provided by operating activities	28,515		41,176
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Acquisition of properties	Acquisition of properties	0		(11,432)		Acquisition of properties	(3,446)		—
Proceeds from the sale of properties	Proceeds from the sale of properties	79		17,711		Proceeds from the sale of properties	1,481		79

Capital expenditures for tenant improvements	Capital expenditures for tenant improvements	(7,202)		(13,707)		Capital expenditures for tenant improvements	(15,148)		(7,202)
Capital expenditures for redevelopments	Capital expenditures for redevelopments	(6,339)		(9,973)		Capital expenditures for redevelopments	(31,942)		(6,339)
Capital expenditures for developments	Capital expenditures for developments	(6,681)		(19,426)		Capital expenditures for developments	(30,455)		(6,681)
Advances for the purchase of tenant assets, net of repayments	Advances for the purchase of tenant assets, net of repayments	(443)		585		Advances for the purchase of tenant assets, net of repayments	270		(443)
Investment in unconsolidated Real Estate Ventures		(1,884)		0
Investment in unconsolidated real estate ventures						Investment in unconsolidated real estate ventures	(26,762)		(1,884)
Deposits for real estate	Deposits for real estate	0		(1,011)		Deposits for real estate	(2,550)		—

Capital distributions from Real Estate Ventures		3,934		0
Capital distributions from unconsolidated real estate ventures						Capital distributions from unconsolidated real estate ventures	3,010		3,934
Leasing costs paid	Leasing costs paid	(2,713)		(5,315)		Leasing costs paid	(5,245)		(2,713)
Net cash used in investing activities	Net cash used in investing activities	(21,249)		(42,568)		Net cash used in investing activities	(110,787)		(21,249)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Repayments of mortgage notes payable		0		(1,945)

Proceeds from credit facility borrowings	Proceeds from credit facility borrowings	33,000		66,000		Proceeds from credit facility borrowings	138,000		33,000
Repayments of credit facility borrowings	Repayments of credit facility borrowings	(20,000)		(16,000)		Repayments of credit facility borrowings	(5,000)		(20,000)

Proceeds from the exercise of stock options, net		(63)		47
Exercise of stock options, net						Exercise of stock options, net	—		(63)

Shares used for employee taxes upon vesting of share awards	Shares used for employee taxes upon vesting of share awards	(758)		(722)		Shares used for employee taxes upon vesting of share awards	(2,103)		(758)

Repurchase and retirement of common shares		0		(53,857)

Redemption of limited partnership units						Redemption of limited partnership units	(4,006)		—
Distributions paid to shareholders	Distributions paid to shareholders	(32,516)		(33,622)		Distributions paid to shareholders	(32,604)		(32,516)
Distributions to noncontrolling interest	Distributions to noncontrolling interest	(187)		(187)		Distributions to noncontrolling interest	(157)		(187)
Net cash used in financing activities		(20,524)		(40,286)
Decrease in cash and cash equivalents and restricted cash		(597)		(37,796)
Net cash provided by (used in) financing activities						Net cash provided by (used in) financing activities	94,130		(20,524)
Increase/(Decrease) in cash and cash equivalents and restricted cash						Increase/(Decrease) in cash and cash equivalents and restricted cash	11,858		(597)
Cash and cash equivalents and restricted cash at beginning of period	Cash and cash equivalents and restricted cash at beginning of period	47,077		91,170		Cash and cash equivalents and restricted cash at beginning of period	28,300		47,077
Cash and cash equivalents and restricted cash at end of period	Cash and cash equivalents and restricted cash at end of period	$	46,480	$	53,374	Cash and cash equivalents and restricted cash at end of period	$	40,158	$	46,480

Reconciliation of cash and cash equivalents and restricted cash:	Reconciliation of cash and cash equivalents and restricted cash:					Reconciliation of cash and cash equivalents and restricted cash:
Cash and cash equivalents, beginning of period	Cash and cash equivalents, beginning of period	$	46,344	$	90,499	Cash and cash equivalents, beginning of period	$	27,463	$	46,344
Restricted cash, beginning of period	Restricted cash, beginning of period	733		671		Restricted cash, beginning of period	837		733
Cash and cash equivalents and restricted cash, beginning of period	Cash and cash equivalents and restricted cash, beginning of period	$	47,077	$	91,170	Cash and cash equivalents and restricted cash, beginning of period	$	28,300	$	47,077
Cash and cash equivalents, end of period	Cash and cash equivalents, end of period	$	45,717	$	52,702	Cash and cash equivalents, end of period	$	39,306	$	45,717
Restricted cash, end of period	Restricted cash, end of period	763		672		Restricted cash, end of period	852		763
Cash and cash equivalents and restricted cash, end of period	Cash and cash equivalents and restricted cash, end of period	$	46,480	$	53,374	Cash and cash equivalents and restricted cash, end of period	$	40,158	$	46,480
Supplemental disclosure:	Supplemental disclosure:					Supplemental disclosure:
Cash paid for interest, net of capitalized interest during the three months ended March 31, 2021 and 2020 of $1,421 and $1,201, respectively		$	10,106	$	12,961
Cash paid for interest, net of capitalized interest during the three months ended March 31, 2022 and 2021 of $2,186 and $1,421, respectively						Cash paid for interest, net of capitalized interest during the three months ended March 31, 2022 and 2021 of $2,186 and $1,421, respectively	$	9,637	$	10,106
Cash paid for income taxes	Cash paid for income taxes	1		1		Cash paid for income taxes	1		1
Supplemental disclosure of non-cash activity:	Supplemental disclosure of non-cash activity:					Supplemental disclosure of non-cash activity:
Dividends and distributions declared but not paid	Dividends and distributions declared but not paid	32,763		32,692		Dividends and distributions declared but not paid	32,814		32,763

Change in investment in real estate ventures as a result of deconsolidation	Change in investment in real estate ventures as a result of deconsolidation	32,761		0		Change in investment in real estate ventures as a result of deconsolidation	—		32,761
Change in operating real estate from deconsolidation of operating properties	Change in operating real estate from deconsolidation of operating properties	(30,073)		0		Change in operating real estate from deconsolidation of operating properties	—		(30,073)

Change in other assets as a result of deconsolidation of operating properties	Change in other assets as a result of deconsolidation of operating properties	(2,688)		0		Change in other assets as a result of deconsolidation of operating properties	—		(2,688)
Change in capital expenditures financed through accounts payable at period end	Change in capital expenditures financed through accounts payable at period end	(4,827)		2,745		Change in capital expenditures financed through accounts payable at period end	(909)		(4,827)
Change in capital expenditures financed through retention payable at period end	Change in capital expenditures financed through retention payable at period end	(3,752)		23		Change in capital expenditures financed through retention payable at period end	(1,475)		(3,752)

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

Table of Contents

BRANDYWINE OPERATING PARTNERSHIP, L.P.

CONSOLIDATED BALANCE SHEETS

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


		March 31, 2021		December 31, 2020			March 31, 2022		December 31, 2021
ASSETS	ASSETS					ASSETS
Real estate investments:	Real estate investments:					Real estate investments:
Operating properties	Operating properties	$	3,386,559	$	3,474,109	Operating properties	$	3,517,995	$	3,472,602
Accumulated depreciation	Accumulated depreciation	(900,167)		(896,561)		Accumulated depreciation	(980,860)		(957,450)
Right of use asset - operating leases, net	Right of use asset - operating leases, net	20,810		20,977		Right of use asset - operating leases, net	20,150		20,313
Operating real estate investments, net	Operating real estate investments, net	2,507,202		2,598,525		Operating real estate investments, net	2,557,285		2,535,465
Construction-in-progress	Construction-in-progress	264,529		210,311		Construction-in-progress	283,323		277,237
Land held for development	Land held for development	116,902		117,984		Land held for development	94,411		114,604
Prepaid leasehold interests in land held for development, net	Prepaid leasehold interests in land held for development, net	27,762		39,185		Prepaid leasehold interests in land held for development, net	27,762		27,762
Total real estate investments, net	Total real estate investments, net	2,916,395		2,966,005		Total real estate investments, net	2,962,781		2,955,068
Assets held for sale, net	Assets held for sale, net	7,349		7,349		Assets held for sale, net	25,205		562
Cash and cash equivalents	Cash and cash equivalents	45,717		46,344		Cash and cash equivalents	39,306		27,463
Accounts receivable	Accounts receivable	14,665		13,536		Accounts receivable	14,214		11,875
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		433,046		401,327
Accrued rent receivable, net of allowance of $4,081 and $4,133 as of March 31, 2022 and December 31, 2021, respectively						Accrued rent receivable, net of allowance of $4,081 and $4,133 as of March 31, 2022 and December 31, 2021, respectively	170,275		167,210
Investment in unconsolidated real estate ventures						Investment in unconsolidated real estate ventures	461,389		435,506
Deferred costs, net	Deferred costs, net	83,839		84,856		Deferred costs, net	87,652		86,862
Intangible assets, net	Intangible assets, net	43,883		48,570		Intangible assets, net	25,580		28,556
Other assets	Other assets	185,844		176,747		Other assets	148,493		133,094
Total assets	Total assets	$	3,889,913	$	3,900,106	Total assets	$	3,934,895	$	3,846,196
LIABILITIES AND PARTNERS' EQUITY	LIABILITIES AND PARTNERS' EQUITY					LIABILITIES AND PARTNERS' EQUITY

Unsecured credit facility	Unsecured credit facility	$	13,000	$	0	Unsecured credit facility	$	156,000	$	23,000
Unsecured term loan, net	Unsecured term loan, net	249,215		249,084		Unsecured term loan, net	249,738		249,608
Unsecured senior notes, net	Unsecured senior notes, net	1,581,378		1,581,511		Unsecured senior notes, net	1,580,845		1,580,978
Accounts payable and accrued expenses	Accounts payable and accrued expenses	119,208		121,982		Accounts payable and accrued expenses	130,073		150,151
Distributions payable	Distributions payable	32,763		32,706		Distributions payable	32,814		32,765
Deferred income, gains and rent	Deferred income, gains and rent	22,416		21,396		Deferred income, gains and rent	24,758		23,849
Intangible liabilities, net	Intangible liabilities, net	17,073		18,448		Intangible liabilities, net	12,085		12,981

Lease liability - operating leases	Lease liability - operating leases	22,810		22,758		Lease liability - operating leases	23,014		22,962
Other liabilities	Other liabilities	49,796		$	47,573	Other liabilities	49,705		48,683
Total liabilities	Total liabilities	$	2,107,659	2,095,458		Total liabilities	$	2,259,032	$	2,144,977
Commitments and contingencies (See Note 14)		0		0
Redeemable limited partnership units at redemption value; 981,634 issued and outstanding as of March 31, 2021 and December 31, 2020		12,673		11,566
Commitments and contingencies (See Note 15)						Commitments and contingencies (See Note 15)	0		0
Redeemable limited partnership units at redemption value; 516,467 and 823,983 issued and outstanding as of March 31, 2022 and December 31, 2021, respectively						Redeemable limited partnership units at redemption value; 516,467 and 823,983 issued and outstanding as of March 31, 2022 and December 31, 2021, respectively	7,338		11,140
Brandywine Operating Partnership, L.P.'s equity:	Brandywine Operating Partnership, L.P.'s equity:					Brandywine Operating Partnership, L.P.'s equity:
General Partnership Capital; 170,663,251 and 170,572,964 units issued and outstanding as of March 31, 2021 and December 31, 2020, respectively		1,776,347		1,800,945
Accumulated other comprehensive loss		(6,837)		(7,935)
General Partnership Capital; 171,383,912 and 171,126,257 units issued and outstanding as of March 31, 2022 and December 31, 2021, respectively						General Partnership Capital; 171,383,912 and 171,126,257 units issued and outstanding as of March 31, 2022 and December 31, 2021, respectively	1,664,107		1,689,611
Accumulated other comprehensive income (loss)						Accumulated other comprehensive income (loss)	1,586		(2,366)
Total Brandywine Operating Partnership, L.P.'s equity	Total Brandywine Operating Partnership, L.P.'s equity	1,769,510		1,793,010		Total Brandywine Operating Partnership, L.P.'s equity	1,665,693		1,687,245
Noncontrolling interest - consolidated real estate ventures	Noncontrolling interest - consolidated real estate ventures	71		72		Noncontrolling interest - consolidated real estate ventures	2,832		2,834
Total partners' equity	Total partners' equity	$	1,769,581	$	1,793,082	Total partners' equity	$	1,668,525	$	1,690,079
Total liabilities and partners' equity	Total liabilities and partners' equity	$	3,889,913	$	3,900,106	Total liabilities and partners' equity	$	3,934,895	$	3,846,196

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

Table of Contents

BRANDYWINE OPERATING PARTNERSHIP, L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS

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


		Three Months Ended March 31,				Three Months Ended March 31,
		2021		2020				2022		2021
Revenue	Revenue						Revenue
Rents	Rents	$	113,484	$	139,204		Rents	$	115,901	$	113,484
Third party management fees, labor reimbursement and leasing	Third party management fees, labor reimbursement and leasing	6,651		4,954			Third party management fees, labor reimbursement and leasing	5,108		6,651
Other	Other	634		930			Other	6,496		634
Total revenue	Total revenue	120,769		145,088			Total revenue	127,505		120,769
Operating expenses	Operating expenses						Operating expenses
Property operating expenses	Property operating expenses	28,935		37,461			Property operating expenses	31,548		28,935
Real estate taxes	Real estate taxes	14,761		16,787			Real estate taxes	13,813		14,761
Third party management expenses	Third party management expenses	2,978		2,662			Third party management expenses	2,557		2,978
Depreciation and amortization	Depreciation and amortization	40,343		52,038			Depreciation and amortization	43,782		40,343
General and administrative expenses	General and administrative expenses	6,584		8,561			General and administrative expenses	10,000		6,584

Provision for impairment							Provision for impairment	—		—
Total operating expenses	Total operating expenses	93,601		117,509			Total operating expenses	101,700		93,601
Gain on sale of real estate	Gain on sale of real estate						Gain on sale of real estate
Net gain on disposition of real estate	Net gain on disposition of real estate	74		2,586			Net gain on disposition of real estate	—		74
Net gain on sale of undepreciated real estate	Net gain on sale of undepreciated real estate	1,993		0			Net gain on sale of undepreciated real estate	897		1,993
Total gain on sale of real estate	Total gain on sale of real estate	2,067		2,586			Total gain on sale of real estate	897		2,067
Operating income	Operating income	29,235		30,165			Operating income	26,702		29,235
Other income (expense):	Other income (expense):						Other income (expense):
Interest and investment income	Interest and investment income	1,674		575			Interest and investment income	440		1,674
Interest expense	Interest expense	(16,293)		(20,009)			Interest expense	(15,742)		(16,293)
Interest expense - amortization of deferred financing costs	Interest expense - amortization of deferred financing costs	(709)		(749)			Interest expense - amortization of deferred financing costs	(709)		(709)

Equity in loss of Real Estate Ventures		(6,924)		(1,891)
Equity in loss of unconsolidated real estate ventures							Equity in loss of unconsolidated real estate ventures	(4,563)		(6,924)

Net income before income taxes	Net income before income taxes	6,983		8,091			Net income before income taxes	6,128		6,983
Income tax provision	Income tax provision	(19)		(4)			Income tax provision	(27)		(19)
Net income	Net income	6,964		8,087			Net income	6,101		6,964
Net (income) loss attributable to noncontrolling interests - consolidated real estate ventures		1		(12)
Net loss attributable to noncontrolling interests - consolidated real estate ventures							Net loss attributable to noncontrolling interests - consolidated real estate ventures	2		1
Net income attributable to Brandywine Operating Partnership	Net income attributable to Brandywine Operating Partnership	6,965		8,075			Net income attributable to Brandywine Operating Partnership	6,103		6,965

Nonforfeitable dividends allocated to unvested restricted unitholders	Nonforfeitable dividends allocated to unvested restricted unitholders	(146)		(131)			Nonforfeitable dividends allocated to unvested restricted unitholders	(148)		(146)
Net income attributable to Common Partnership Unitholders of Brandywine Operating Partnership, L.P.	Net income attributable to Common Partnership Unitholders of Brandywine Operating Partnership, L.P.	$	6,819	$	7,944		Net income attributable to Common Partnership Unitholders of Brandywine Operating Partnership, L.P.	$	5,955	$	6,819

Basic income per Common Partnership Unit	Basic income per Common Partnership Unit	$	0.04	$	0.04		Basic income per Common Partnership Unit	$	0.03	$	0.04

Diluted income per Common Partnership Unit	Diluted income per Common Partnership Unit	$	0.04	$	0.04		Diluted income per Common Partnership Unit	$	0.03	$	0.04

Basic weighted average common partnership units outstanding	Basic weighted average common partnership units outstanding	171,606,375		177,051,602			Basic weighted average common partnership units outstanding	171,927,588		171,606,375
Diluted weighted average common partnership units outstanding	Diluted weighted average common partnership units outstanding	172,617,754		177,635,093			Diluted weighted average common partnership units outstanding	173,521,633		172,617,754

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

Table of Contents

BRANDYWINE OPERATING PARTNERSHIP, L.P.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited, in thousands)


		Three Months Ended March 31,				Three Months Ended March 31,
		2021		2020				2022		2021
Net income	Net income	$	6,964	$	8,087		Net income	$	6,101	$	6,964
Comprehensive income (loss):
Unrealized gain (loss) on derivative financial instruments		910		(8,057)
Comprehensive income:							Comprehensive income:
Unrealized gain on derivative financial instruments							Unrealized gain on derivative financial instruments	3,764		910

Amortization of interest rate contracts (1)	Amortization of interest rate contracts (1)	188		188			Amortization of interest rate contracts (1)	188		188
Total comprehensive income (loss)		1,098		(7,869)
Total comprehensive income							Total comprehensive income	3,952		1,098
Comprehensive income	Comprehensive income	8,062		218			Comprehensive income	10,053		8,062
Comprehensive (income) loss attributable to noncontrolling interest - consolidated real estate ventures		1		(12)
Comprehensive loss attributable to noncontrolling interest - consolidated real estate ventures							Comprehensive loss attributable to noncontrolling interest - consolidated real estate ventures	2		1
Comprehensive income attributable to Brandywine Operating Partnership	Comprehensive income attributable to Brandywine Operating Partnership	$	8,063	$	206		Comprehensive income attributable to Brandywine Operating Partnership	$	10,055	$	8,063

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

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

Table of Contents

BRANDYWINE OPERATING PARTNERSHIP, L.P.

CONSOLIDATED STATEMENTS OF PARTNERS’ EQUITY

(unaudited, in thousands, except number of units)


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

BALANCE, December 31, 2021											BALANCE, December 31, 2021	171,126,257	$	1,689,611	$	(2,366)	$	2,834	$	1,690,079
Net income	Net income		6,965				(1)		6,964		Net income		6,103				(2)		6,101
Other comprehensive income					1,098				1,098
Other comprehensive loss											Other comprehensive loss				3,952				3,952
Deferred compensation obligation	Deferred compensation obligation	(18,058)	(198)						(198)		Deferred compensation obligation	(19,406)	(249)						(249)

Repurchase and retirement of LP units											Repurchase and retirement of LP units	0	(4,006)						(4,006)
Share-based compensation activity	Share-based compensation activity	108,345	2,502						2,502		Share-based compensation activity	277,061	1,655						1,655
Adjustment of redeemable partnership units to liquidation value at period end	Adjustment of redeemable partnership units to liquidation value at period end		(1,294)						(1,294)		Adjustment of redeemable partnership units to liquidation value at period end		3,704						3,704
Distributions declared to general partnership unitholders ($0.19 per unit)	Distributions declared to general partnership unitholders ($0.19 per unit)		(32,573)						(32,573)		Distributions declared to general partnership unitholders ($0.19 per unit)		(32,711)						(32,711)
BALANCE, March 31, 2021		170,663,251	$	1,776,347	$	(6,837)	$	71	$	1,769,581
BALANCE, March 31, 2022											BALANCE, March 31, 2022	171,383,912	$	1,664,107	$	1,586	$	2,832	$	1,668,525

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

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BRANDYWINE OPERATING PARTNERSHIP, L.P.

CONSOLIDATED STATEMENT OF PARTNERS’ EQUITY

(unaudited, in thousands, except number of units)


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

Net income	Net income		8,075				12		8,087		Net income		6,965				(1)		6,964
Other comprehensive loss					(7,869)				(7,869)
Other comprehensive income											Other comprehensive income				1,098				1,098
Deferred compensation obligation	Deferred compensation obligation	(12,376)	(193)						(193)		Deferred compensation obligation	(18,058)	(198)						(198)
Repurchase and retirement of LP units		(5,644,200)	(53,858)						(53,858)

Share-based compensation activity	Share-based compensation activity	142,468	2,031						2,031		Share-based compensation activity	108,345	2,502						2,502
Adjustment of redeemable partnership units to liquidation value at period end	Adjustment of redeemable partnership units to liquidation value at period end		5,220						5,220		Adjustment of redeemable partnership units to liquidation value at period end		(1,294)						(1,294)
Distributions declared to general partnership unitholders ($0.19 per unit)	Distributions declared to general partnership unitholders ($0.19 per unit)		(32,500)						(32,500)		Distributions declared to general partnership unitholders ($0.19 per unit)		(32,573)						(32,573)
BALANCE, March 31, 2020		170,965,987	$	1,603,314	$	(10,584)	$	1,103	$	1,593,833
BALANCE, March 31, 2021											BALANCE, March 31, 2021	170,663,251	$	1,776,347	$	(6,837)	$	71	$	1,769,581

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

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BRANDYWINE OPERATING PARTNERSHIP L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)


		Three Months Ended March 31,					Three Months Ended March 31,
		2021		2020			2022		2021
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	6,964	$	8,087	Net income	$	6,101	$	6,964
Adjustments to reconcile net income to net cash from operating activities:	Adjustments to reconcile net income to net cash from operating activities:					Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization	Depreciation and amortization	40,343		52,038		Depreciation and amortization	43,782		40,343
Amortization of deferred financing costs	Amortization of deferred financing costs	709		749		Amortization of deferred financing costs	709		709
Amortization of debt discount/(premium), net	Amortization of debt discount/(premium), net	(488)		(395)		Amortization of debt discount/(premium), net	(488)		(488)
Amortization of stock compensation costs	Amortization of stock compensation costs	2,606		2,349		Amortization of stock compensation costs	3,280		2,606
Straight-line rent income	Straight-line rent income	(4,085)		(2,183)		Straight-line rent income	(3,149)		(4,085)
Amortization of acquired above (below) market leases, net	Amortization of acquired above (below) market leases, net	(1,350)		(1,495)		Amortization of acquired above (below) market leases, net	(875)		(1,350)
Ground rent expense	Ground rent expense	297		366		Ground rent expense	205		297
Provision for doubtful accounts	Provision for doubtful accounts	253		213		Provision for doubtful accounts	—		253

Net gain on sale of interests in real estate	Net gain on sale of interests in real estate	(2,067)		(2,586)		Net gain on sale of interests in real estate	(897)		(2,067)

Loss from Real Estate Ventures, net of distributions		6,924		1,890
Loss from unconsolidated real estate ventures, net of distributions						Loss from unconsolidated real estate ventures, net of distributions	4,563		6,924
Income tax provision	Income tax provision	19		4		Income tax provision	27		19
Changes in assets and liabilities:	Changes in assets and liabilities:					Changes in assets and liabilities:
Accounts receivable	Accounts receivable	(939)		(1,348)		Accounts receivable	(2,609)		(939)
Other assets	Other assets	(10,491)		(14,548)		Other assets	(9,208)		(10,491)
Accounts payable and accrued expenses	Accounts payable and accrued expenses	4,991		(1,213)		Accounts payable and accrued expenses	(14,550)		4,991
Deferred income, gains and rent	Deferred income, gains and rent	1,302		(230)		Deferred income, gains and rent	992		1,302
Other liabilities	Other liabilities	(3,812)		3,360		Other liabilities	632		(3,812)
Net cash provided by operating activities	Net cash provided by operating activities	41,176		45,058		Net cash provided by operating activities	28,515		41,176
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Acquisition of properties	Acquisition of properties	0		(11,432)		Acquisition of properties	(3,446)		—
Proceeds from the sale of properties	Proceeds from the sale of properties	79		17,711		Proceeds from the sale of properties	1,481		79

Capital expenditures for tenant improvements	Capital expenditures for tenant improvements	(7,202)		(13,707)		Capital expenditures for tenant improvements	(15,148)		(7,202)
Capital expenditures for redevelopments	Capital expenditures for redevelopments	(6,339)		(9,973)		Capital expenditures for redevelopments	(31,942)		(6,339)
Capital expenditures for developments	Capital expenditures for developments	(6,681)		(19,426)		Capital expenditures for developments	(30,455)		(6,681)
Advances for the purchase of tenant assets, net of repayments	Advances for the purchase of tenant assets, net of repayments	(443)		585		Advances for the purchase of tenant assets, net of repayments	270		(443)
Investment in unconsolidated Real Estate Ventures		(1,884)		0
Investment in unconsolidated real estate ventures						Investment in unconsolidated real estate ventures	(26,762)		(1,884)
Deposits for real estate	Deposits for real estate	0		(1,011)		Deposits for real estate	(2,550)		—

Capital distributions from Real Estate Ventures		3,934		0
Capital distributions from unconsolidated real estate ventures						Capital distributions from unconsolidated real estate ventures	3,010		3,934
Leasing costs paid	Leasing costs paid	(2,713)		(5,315)		Leasing costs paid	(5,245)		(2,713)
Net cash used in investing activities	Net cash used in investing activities	(21,249)		(42,568)		Net cash used in investing activities	(110,787)		(21,249)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Repayments of mortgage notes payable		0		(1,945)

Proceeds from credit facility borrowings	Proceeds from credit facility borrowings	33,000		66,000		Proceeds from credit facility borrowings	138,000		33,000
Repayments of credit facility borrowings	Repayments of credit facility borrowings	(20,000)		(16,000)		Repayments of credit facility borrowings	(5,000)		(20,000)

Proceeds from the exercise of stock options, net		(63)		47
Exercise of stock options, net						Exercise of stock options, net	—		(63)

Shares used for employee taxes upon vesting of share awards	Shares used for employee taxes upon vesting of share awards	(758)		(722)		Shares used for employee taxes upon vesting of share awards	(2,103)		(758)

Repurchase and retirement of common shares		0		(53,857)

Redemption of limited partnership units						Redemption of limited partnership units	(4,006)		—
Distributions paid to preferred and common partnership units	Distributions paid to preferred and common partnership units	(32,703)		(33,809)		Distributions paid to preferred and common partnership units	(32,761)		(32,703)
Net cash used in financing activities		(20,524)		(40,286)
Decrease in cash and cash equivalents and restricted cash		(597)		(37,796)
Net cash provided by (used in) financing activities						Net cash provided by (used in) financing activities	94,130		(20,524)
Increase/(Decrease) in cash and cash equivalents and restricted cash						Increase/(Decrease) in cash and cash equivalents and restricted cash	11,858		(597)
Cash and cash equivalents and restricted cash at beginning of period	Cash and cash equivalents and restricted cash at beginning of period	47,077		91,170		Cash and cash equivalents and restricted cash at beginning of period	28,300		47,077
Cash and cash equivalents and restricted cash at end of period	Cash and cash equivalents and restricted cash at end of period	$	46,480	$	53,374	Cash and cash equivalents and restricted cash at end of period	$	40,158	$	46,480

Reconciliation of cash and cash equivalents and restricted cash:	Reconciliation of cash and cash equivalents and restricted cash:					Reconciliation of cash and cash equivalents and restricted cash:
Cash and cash equivalents, beginning of period	Cash and cash equivalents, beginning of period	$	46,344	$	90,499	Cash and cash equivalents, beginning of period	$	27,463	$	46,344
Restricted cash, beginning of period	Restricted cash, beginning of period	733		671		Restricted cash, beginning of period	837		733
Cash and cash equivalents and restricted cash, beginning of period	Cash and cash equivalents and restricted cash, beginning of period	$	47,077	$	91,170	Cash and cash equivalents and restricted cash, beginning of period	$	28,300	$	47,077

Cash and cash equivalents, end of period	Cash and cash equivalents, end of period	$	45,717	$	52,702	Cash and cash equivalents, end of period	$	39,306	$	45,717
Restricted cash, end of period	Restricted cash, end of period	763		672		Restricted cash, end of period	852		763
Cash and cash equivalents and restricted cash, end of period	Cash and cash equivalents and restricted cash, end of period	$	46,480	$	53,374	Cash and cash equivalents and restricted cash, end of period	$	40,158	$	46,480
Supplemental disclosure:	Supplemental disclosure:					Supplemental disclosure:
Cash paid for interest, net of capitalized interest during the three months ended March 31, 2021 and 2020 of $1,421 and $1,201, respectively		$	10,106	$	12,961
Cash paid for interest, net of capitalized interest during the three months ended March 31, 2022 and 2021 of $2,186 and $1,421, respectively						Cash paid for interest, net of capitalized interest during the three months ended March 31, 2022 and 2021 of $2,186 and $1,421, respectively	$	9,637	$	10,106
Cash paid for income taxes	Cash paid for income taxes	1		1		Cash paid for income taxes	1		1
Supplemental disclosure of non-cash activity:	Supplemental disclosure of non-cash activity:					Supplemental disclosure of non-cash activity:
Dividends and distributions declared but not paid	Dividends and distributions declared but not paid	32,763		32,692		Dividends and distributions declared but not paid	32,814		32,763

Change in investment in real estate ventures as a result of deconsolidation	Change in investment in real estate ventures as a result of deconsolidation	32,761		0		Change in investment in real estate ventures as a result of deconsolidation	—		32,761
Change in operating real estate from deconsolidation of operating properties	Change in operating real estate from deconsolidation of operating properties	(30,073)		0		Change in operating real estate from deconsolidation of operating properties	—		(30,073)

Change in other assets as a result of deconsolidation of operating properties	Change in other assets as a result of deconsolidation of operating properties	(2,688)		0		Change in other assets as a result of deconsolidation of operating properties	—		(2,688)
Change in capital expenditures financed through accounts payable at period end	Change in capital expenditures financed through accounts payable at period end	(4,827)		2,745		Change in capital expenditures financed through accounts payable at period end	(909)		(4,827)
Change in capital expenditures financed through retention payable at period end	Change in capital expenditures financed through retention payable at period end	(3,752)		23		Change in capital expenditures financed through retention payable at period end	(1,475)		(3,752)

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

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION OF THE PARENT COMPANY AND THE OPERATING PARTNERSHIP

Brandywine Realty Trust (the "Parent Company") is a self-administered and self-managed real estate investment trust (“REIT”) engaged in the acquisition, development, redevelopment, ownership, management, and operation of a portfolio of office and mixed-use properties. The Parent Company owns its assets and conducts its operations through Brandywine Operating Partnership, L.P. (the "Operating Partnership") and subsidiaries of the Operating Partnership. The Parent Company is the sole general partner of the Operating Partnership and, as of March 31, ~~2021,~~2022, owned a ~~99.4%~~99.7% interest in the Operating Partnership. The Parent Company’s common shares of beneficial interest are publicly traded on the New York Stock Exchange under the ticker symbol ~~“BDN”.~~“BDN.” The Parent Company, the Operating Partnership, and their consolidated subsidiaries are collectively referred to as the ~~"Company".~~"Company."

As of March 31, ~~2021,~~2022, the Company owned 81 properties that contained an aggregate of approximately 13.7 million net rentable square feet (collectively, the “Properties”). The Company’s core portfolio of operating properties (the “Core Properties”) excludes development properties, redevelopment properties, and properties held for sale. The Properties were comprised of the following as of March 31, ~~2021:~~2022:


		Number of Properties	Rentable Square Feet		Number of Properties	Rentable Square Feet
Office properties	Office properties	71	12,006,744	Office properties	72	12,097,300
Mixed-use properties	Mixed-use properties	5	942,334	Mixed-use properties	5	942,334

Core Properties	Core Properties	76	12,949,078	Core Properties	77	13,039,634
Development property	Development property	1	204,000	Development property	1	205,803
Redevelopment properties	Redevelopment properties	4	498,318	Redevelopment properties	3	432,699

The Properties	The Properties	81	13,651,396	The Properties	81	13,678,136

In addition to the Properties, as of March 31, ~~2021,~~2022, the Company owned ~~228.5~~169.4 acres of land held for development, of which ~~35.2~~0.8 acres were held for sale. The Company also held a leasehold interest in 1 land parcel totaling 0.8 acres, acquired through a prepaid 99-year ground lease, and held options to purchase approximately 55.5 additional acres of undeveloped land. As of March 31, ~~2021,~~2022, the total potential development that this inventory of land could support under current zoning and entitlements, including the parcels under option, amounted to an estimated ~~13.9~~13.4 million square feet, of which 0.2 million square feet relates to ~~35.2~~the 0.8 acres held for sale.

As of March 31, ~~2021,~~2022, the Company also owned economic interests in 10 unconsolidated real estate ventures ~~(collectively, the “Real Estate Ventures”)~~ (see Note 4, ''Investment in Unconsolidated Real Estate Ventures” for further information). The Properties and the properties owned by the ~~Real Estate Ventures~~unconsolidated real estate ventures are primarily located in or near Philadelphia, Pennsylvania; Austin, Texas; Metropolitan Washington, D.C.; Southern New Jersey; and Wilmington, Delaware.

The Company conducts its third-party real estate management services business primarily through wholly-owned management company subsidiaries. As of March 31, ~~2021,~~2022, the management company subsidiaries were managing properties containing an aggregate of approximately ~~24.5~~23.1 million net rentable square feet, of which approximately 13.7 million net rentable square feet related to Properties owned by the Company and approximately ~~10.8~~9.4 million net rentable square feet related to properties owned by third parties and ~~Real Estate Ventures.~~unconsolidated real estate ventures.

Unless otherwise indicated, all references in this Form 10-Q to square feet represent net rentable area.

2. BASIS OF PRESENTATION

Basis of Presentation

The consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim financial statements. Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments consist solely of normal recurring matters, and result in a fair statement of the financial position of the Company as of March 31, ~~2021,~~2022, the results of its operations for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021 and its cash flows for the three months ended March 31, ~~2021~~2022 and ~~2020.~~2021. The results of operations for such interim periods are not necessarily indicative of the results for a full year. These consolidated financial statements should be read in conjunction with the Parent Company’s and the Operating Partnership’s consolidated financial statements and footnotes included in their combined Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 filed with the SEC on February 24, ~~2021.~~2022.

Table of Contents

The consolidated balance sheet at December 31, ~~2020~~2021 has been derived from the audited financial statements as of that date but does not include all the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

~~Table of Contents~~

The Company's Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 contains a discussion of its significant accounting policies under Note 2, "Summary of Significant Accounting Policies". There have been no significant changes in the Company's significant accounting policies since December 31, ~~2020.~~2021.

Recent Accounting Pronouncements

In March 2020, the FASB issued ASU 2020-04 Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments provide practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance is optional and is effective between March 12, 2020 and December 31, 2022. The guidance may be elected over time as reference rate reform activities occur. The Company continues to evaluate the impact of the guidance and may apply elections as applicable as additional changes in the market occur.

3. REAL ESTATE INVESTMENTS

As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, the gross carrying value of the operating properties was as follows (in thousands):


		March 31, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Land	Land	$	391,344	$	407,514	Land	$	410,103	$	410,144
Building and improvements	Building and improvements	2,592,548		2,665,232		Building and improvements	2,696,233		2,653,492
Tenant improvements	Tenant improvements	402,667		401,363		Tenant improvements	411,659		408,966

Total	Total	$	3,386,559	$	3,474,109	Total	$	3,517,995	$	3,472,602

Acquisitions

The following table summarizes the property acquisitions during the three months ended March 31, 2022 (dollars in thousands):

Property/Portfolio Name

Acquisition Date

Location

Property Type

Rentable Square Feet/Acres

Purchase Price

631 Park Avenue

January 21, 2022

King of Prussia, PA

Land

3.3 acres

3,650

Dispositions

The following table summarizes the property dispositions during the three months ended March 31, 2022 (dollars in thousands):

Property/Portfolio Name

Disposition Date

Location

Property Type

Rentable Square Feet/Acres

Sales Price

Gain/(Loss) on Sale (a)

Gateway G & H

January 20, 2022

Richmond, VA

Land

10.0 acres

1,600

897

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

One Uptown Venture

On ~~February 2,~~December 1, 2021, the Company ~~contributed its investment~~entered into 2 joint venture agreements with affiliates of Canyon Partners Real Estate to commence development of One Uptown, a $328.4 million mixed-used project in Austin, Texas. One Uptown has been designed to deliver 348,000 square feet of Class-A workspace and 15,000 square feet of street-level retail space (through the "office" joint venture) and 341 apartment residences and a ~~99-year prepaid leasehold~~public park (through the "multifamily" joint venture) and a six-story parking garage to be shared by the 2 joint ventures. The Company's partner in each of the 2 joint ventures has agreed, subject to customary funding conditions, including closing of the applicable construction loan, to fund approximately $57.5 million of the combined project costs in exchange for a 50% preferred equity interest in each of the 2 joint ventures, with the Company retaining a ~~1-acre land parcel held~~50% common equity interest in each. The Company is in the process of securing a construction loan for ~~development at 3025 JFK Boulevard in Philadelphia, Pennsylvania to a newly formed~~each of the 2 joint ventures that would total approximately $213.4 million, representing 65% of the combined project costs. Under the terms of each of the joint venture ~~with an unaffiliated third party. The project is part~~agreements, the joint venture partner has no obligation to fund any portion of the ~~Schuylkill Yards master development. The transaction valued~~applicable

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project costs until the ~~Company's investment in the project at $34.8 million and resulted in deconsolidation~~closing of the ~~property and conversion~~applicable construction loan. This right prevents the Company from meeting the sale recognition criteria of ~~Brandywine Opportunity Fund, L.P. to a real estate venture ("3025 JFK Venture"). The Company recorded its investment at fair value and recognized a gain~~ASC 606 until the applicable closings of ~~$2.0 million in "Net gain on sale of undepreciated real estate" on~~ the ~~Consolidated Statements of Operations. See Note 4, "Investment in Unconsolidated Real Estate Ventures," for further information.~~

construction loans.

Held for Sale

As of March 31, ~~2021 and December 31, 2020,~~2022, the Company determined that the sale of ~~2 parcels~~1 parcel of land within the ~~Other~~Metropolitan Washington, D.C. segment totaling ~~35.2~~0.8 acres was probable and classified ~~these properties~~the property as held for sale. As such, ~~$7.3~~$25.2 million was classified as “Assets held for sale, net” on the consolidated balance ~~sheets.~~sheet. The Company closed on the sale of the parcel of land on April 14, 2022 for an aggregate sales price of $29.7 million.

4. INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTURES

As of March 31, ~~2021,~~2022, the Company held ownership interests in 10 unconsolidated real estate ventures for a net aggregate investment balance of ~~$415.8~~$434.6 million, which includes a negative investment balance in 1 unconsolidated real estate venture of ~~$17.2~~$26.8 million, reflected within "Other liabilities" on the consolidated balance sheets. As of March 31, ~~2021,~~2022, 5 of the real estate ventures owned properties that contained an aggregate of approximately ~~8.4~~9.1 million net rentable square feet of office space; 2 real estate ventures owned 1.4 acres of land held for development; 1 real estate venture owned 1.0 acres of land in active development; 1 real estate venture owned a mixed used tower comprised of 250 apartment units and 0.2 million net rentable square feet of office/retail space; and 1 real estate venture owned a residential tower that contained 321 apartment units.

The Company accounts for its interests in the ~~Real Estate Ventures,~~unconsolidated real estate ventures, which range from 15% to 70%, using the equity method. Certain of the ~~Real Estate Ventures~~unconsolidated real estate ventures are subject to specified priority allocations of distributable cash.

The Company earned management fees from the ~~Real Estate Ventures~~unconsolidated real estate ventures of ~~$2.0~~$1.9 million and ~~$1.1~~$2.0 million for the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, respectively.

The Company earned leasing commissions from the ~~Real Estate Ventures~~unconsolidated real estate ventures of ~~$1.3~~$0.4 million and ~~$0.4~~$1.3 million for the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, respectively.

~~Table of Contents~~

The Company had outstanding accounts receivable balances from the ~~Real Estate Ventures~~unconsolidated real estate ventures of ~~$2.1~~$2.6 million and ~~$1.2~~$2.5 million as of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

The amounts reflected in the following tables (except for the Company’s share of equity in income) are based on the financial information of the individual ~~Real Estate Ventures.~~unconsolidated real estate ventures.

The following is a summary of the financial position of the ~~Real Estate Ventures~~unconsolidated real estate ventures in which the Company held interests as of March 31, ~~2021~~2022 and December 31, ~~2020~~2021 (in thousands):


		March 31, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Net property	Net property	$	1,550,425	$	1,520,804	Net property	$	1,939,193	$	1,563,263
Other assets	Other assets	473,771		488,805		Other assets	519,361		434,687
Other liabilities	Other liabilities	325,162		333,049		Other liabilities	403,715		331,947
Debt, net	Debt, net	956,208		956,688		Debt, net	1,210,476		956,668
Equity (a)	Equity (a)	742,826		719,872		Equity (a)	844,363		709,335

(a)This amount does not include the effect of the basis difference between the Company's historical cost basis and the basis recorded at the real estate venture level, which is typically amortized over the life of the related assets and liabilities. Basis differentials occur from the impairment of investments, purchases of third party interests in existing real estate ventures and upon the transfer of assets that were previously owned by the Company into a real estate venture. In addition, certain acquisition, transaction and other costs may not be reflected in the net assets at the real estate venture level.

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The following is a summary of results of operations of the ~~Real Estate Ventures~~unconsolidated real estate ventures in which the Company held interests during the three month periods ended March 31, ~~2021~~2022 and ~~2020~~2021 (in thousands):


	Three Months Ended March 31,
	2022		2021
Revenue	$	53,216	$	53,357
Operating expenses	(28,592)		(28,987)
Interest expense, net	(7,469)		(7,374)
Depreciation and amortization	(21,283)		(24,893)


Net loss	$	(4,128)	$	(7,897)
Ownership interest %	Various		Various
Company's share of net loss	$	(4,617)	$	(6,541)

Basis adjustments and other	54		(383)
Equity in loss of unconsolidated real estate ventures	$	(4,563)	$	(6,924)

Three Months Ended March 31,
2021 2020
Revenue $ 53,357 $ 31,151
Operating expenses (28,987) (17,961)
Interest expense, net (7,374) (4,989)
Depreciation and amortization (24,893) (12,523)
Net loss $ (7,897) $ (4,322)
Ownership interest % Various Various
Company's share of loss $ (6,541) $ (1,862)
Basis adjustments and other (383) (29)
Equity in loss of Real Estate Ventures $ (6,924) $ (1,891)

~~3025 JFK~~Cira Square Venture

On ~~February 2, 2021,~~March 17, 2022, the Company ~~contributed its investment in~~formed a ~~99-year prepaid leasehold interest in a 1-acre land parcel held~~joint venture, Cira Square REIT, LLC (“Cira Square Venture”), for ~~development~~the purpose of acquiring Cira Square, an office property located at ~~3025 JFK Boulevard~~2970 Market Street in Philadelphia, Pennsylvania ~~to the 3025 JFK Venture. The Company's initial investment in this real estate venture at February 2, 2021 was $34.8~~containing 862,692 rentable square feet for a gross purchase price of $383.0 million. The ~~real estate venture was formed to develop~~Company owns a 570,000 square foot mixed-use building at property under the long-term ground lease. The estimated project cost is approximately $287 million, and the joint venture partner has agreed, subject to customary funding conditions, to fund up to approximately $45 million of the project costs in exchange for a 45% preferred20% common equity interest in ~~the venture~~Cira Square Venture and ~~the Company will retain a 55% preferred equity interest. In addition to its $34.8 million credit for~~provided an initial capital contribution of $28.6 million on the ~~leasehold~~closing date.

On the closing date, Cira Square Venture also obtained $257.7 million of third-party debt financing secured by the property. The loan bears interest at ~~3025 JFK Venture, the Company has agreed to fund an estimated $20.2 million of project costs. The foregoing capital~~

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~~commitment targets are predicated upon receipt by the 3025 JFK Venture of a construction loan~~3.50% over one-month term Secured Overnight Financing Rate ("SOFR") per annum and matures in ~~the approximate amount of $187.0 million and actual amounts may vary.~~March 2024.

Based on the facts and circumstances at the formation of ~~the 3025 JFK~~Cira Square Venture, the Company determined that the venture is not a variable interest ~~entity.~~entity ("VIE") in accordance with the accounting standard for the consolidation of VIEs. As a result, the Company used the voting interest model under the accounting standard for consolidation in order to determine whether to consolidate ~~the 3025 JFK~~Cira Square Venture. Based upon each member's substantive participating rights over the activities of ~~the 3025 JFK~~Cira Square Venture under the operating and related agreements, it is not consolidated by the Company, ~~does not have a controlling interest in the project as the third party investor holds substantive participating rights in the property. Therefore, the Company deconsolidated the project~~ and ~~the venture~~ is accounted for under the equity method of accounting. As a result, the Company measured its equity interest at fair value based on the fair value of the project. Since the Company retains a non-controlling interest in the 3025 JFK Venture and there are no other facts and circumstances that preclude sale recognition, the contribution qualifies as the sale of a nonfinancial asset under the relevant guidance.

5. ~~DEBT AND PREFERRED EQUITY INVESTMENTS~~

As of March 31, 2021, the Company held 1 debt investment and 1 preferred equity investment in entities owning real estate assets. The Company accounts for these mandatorily redeemable investments as notes receivable, which are included within “Other assets” on the consolidated balance sheets. As of March 31, 2021, all debt and preferred equity investments were performing in accordance with their respective terms and remain on accrual status.

~~Austin Preferred Equity Investment~~

On December 31, 2020, the Company invested $50.0 million in exchange for a preferred equity interest in a single-purpose entity that owns 2 stabilized office buildings located in Austin, Texas. The preferred equity interest accrues a 9.0% annual return, compounded and paid monthly. The investment is required to be redeemed no later than December 31, 2023 (subject to a one-year extension option).

~~1919 Venture Note Receivable~~

During 2018, each of the Company and the other equity partner in 1919 Venture, an unconsolidated real estate venture, provided a $44.4 million mortgage loan to 1919 Venture and, as a result, the Company recorded a $44.4 million related-party note receivable from 1919 Venture. The loan bears interest at a fixed 4.0% per annum interest rate with a scheduled maturity on June 25, 2023. 1919 Venture used the proceeds from the loans to repay its then outstanding $88.8 million construction loan.

6. LEASES

Lessor Accounting

The table below sets forth the allocation of lease revenue between fixed contractual payments and variable lease payments for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021 (in thousands):


		Three Months Ended March 31,				Three Months Ended March 31,
Lease Revenue	Lease Revenue	2021		2020			Lease Revenue	2022		2021
Fixed contractual payments	Fixed contractual payments	$	86,380	$	104,401		Fixed contractual payments	$	88,763	$	86,380
Variable lease payments	Variable lease payments	24,148		30,639			Variable lease payments	24,331		24,148
Total	Total	$	110,528	$	135,040		Total	$	113,094	$	110,528

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7.6. INTANGIBLE ASSETS AND LIABILITIES

As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company’s intangible assets/liabilities were comprised of the following (in thousands):


		March 31, 2021							March 31, 2022
		Total Cost		Accumulated Amortization		Intangible Assets, net			Total Cost		Accumulated Amortization		Intangible Assets, net
Intangible assets, net:	Intangible assets, net:							Intangible assets, net:
In-place lease value	In-place lease value	$	87,946	$	(44,427)	$	43,519	In-place lease value	$	63,601	$	(38,245)	$	25,356
Tenant relationship value	Tenant relationship value	1,737		(1,615)		122		Tenant relationship value	167		(98)		69
Above market leases acquired	Above market leases acquired	486		(244)		242		Above market leases acquired	486		(331)		155

Total intangible assets, net	Total intangible assets, net	$	90,169	$	(46,286)	$	43,883	Total intangible assets, net	$	64,254	$	(38,674)	$	25,580

		Total Cost		Accumulated Amortization		Intangible Liabilities, net			Total Cost		Accumulated Amortization		Intangible Liabilities, net
Intangible liabilities, net:	Intangible liabilities, net:							Intangible liabilities, net:
Below market leases acquired	Below market leases acquired	$	30,736	$	(13,663)	$	17,073	Below market leases acquired	$	24,485	$	(12,400)	$	12,085


		December 31, 2020							December 31, 2021
		Total Cost		Accumulated Amortization		Intangible Assets, net			Total Cost		Accumulated Amortization		Intangible Assets, net
Intangible assets, net:	Intangible assets, net:							Intangible assets, net:
In-place lease value	In-place lease value	$	91,552	$	(43,400)	$	48,152	In-place lease value	$	72,376	$	(44,066)	$	28,310
Tenant relationship value	Tenant relationship value	2,091		(1,938)		153		Tenant relationship value	167		(97)		70
Above market leases acquired	Above market leases acquired	530		(265)		265		Above market leases acquired	486		(310)		176

Total intangible assets, net	Total intangible assets, net	$	94,173	$	(45,603)	$	48,570	Total intangible assets, net	$	73,029	$	(44,473)	$	28,556

		Total Cost		Accumulated Amortization		Intangible Liabilities, net			Total Cost		Accumulated Amortization		Intangible Liabilities, net
Intangible liabilities, net:	Intangible liabilities, net:							Intangible liabilities, net:
Below market leases acquired	Below market leases acquired	$	31,263	$	(12,815)	$	18,448	Below market leases acquired	$	27,025	$	(14,044)	$	12,981

As of March 31, ~~2021,~~2022, the Company’s annual amortization for its intangible assets/liabilities, assuming no prospective early lease terminations, was as follows (dollars in thousands):


		Assets		Liabilities			Assets		Liabilities
2021 (nine months remaining)		$	11,931	$	3,576
2022		10,050		2,682
2022 (nine months remaining)						2022 (nine months remaining)	$	6,665	$	1,691
2023	2023	7,440		1,642		2023	6,724		1,540
2024	2024	5,215		1,425		2024	4,433		1,321
2025	2025	4,027		1,148		2025	3,255		1,044
2026						2026	1,195		754
Thereafter	Thereafter	5,220		6,600		Thereafter	3,308		5,735

Total	Total	$	43,883	$	17,073	Total	$	25,580	$	12,085

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8.7. DEBT OBLIGATIONS

The following table sets forth information regarding the Company’s consolidated debt obligations outstanding as of March 31, ~~2021~~2022 and December 31, ~~2020~~2021 (in thousands):


		March 31, 2021		December 31, 2020		Effective Interest Rate	Maturity Date		March 31, 2022		December 31, 2021		Effective Interest Rate	Maturity Date

UNSECURED DEBT	UNSECURED DEBT							UNSECURED DEBT
$600 million Unsecured Credit Facility	$600 million Unsecured Credit Facility	$	13,000	$	0	LIBOR + 1.10%	July 2022	$600 million Unsecured Credit Facility	$	156,000	$	23,000	LIBOR + 1.10%	July 2022	(a)
Seven-Year Term Loan - Swapped to fixed		250,000		$	250,000	2.87%	October 2022
Term Loan - Swapped to fixed								Term Loan - Swapped to fixed	250,000		250,000		2.87%	October 2022
$350.0M 3.95% Guaranteed Notes due 2023	$350.0M 3.95% Guaranteed Notes due 2023	350,000		350,000		3.87%	February 2023	$350.0M 3.95% Guaranteed Notes due 2023	350,000		350,000		3.87%	February 2023
$350.0M 4.10% Guaranteed Notes due 2024	$350.0M 4.10% Guaranteed Notes due 2024	350,000		350,000		3.78%	October 2024	$350.0M 4.10% Guaranteed Notes due 2024	350,000		350,000		3.78%	October 2024
$450.0M 3.95% Guaranteed Notes due 2027	$450.0M 3.95% Guaranteed Notes due 2027	450,000		450,000		4.03%	November 2027	$450.0M 3.95% Guaranteed Notes due 2027	450,000		450,000		4.03%	November 2027
$350.0M 4.55% Guaranteed Notes due 2029	$350.0M 4.55% Guaranteed Notes due 2029	350,000		350,000		4.30%	October 2029	$350.0M 4.55% Guaranteed Notes due 2029	350,000		350,000		4.30%	October 2029
Indenture IA (Preferred Trust I)	Indenture IA (Preferred Trust I)	27,062		27,062		LIBOR + 1.25%	March 2035	Indenture IA (Preferred Trust I)	27,062		27,062		LIBOR + 1.25%	March 2035
Indenture IB (Preferred Trust I)	Indenture IB (Preferred Trust I)	25,774		25,774		LIBOR + 1.25%	April 2035	Indenture IB (Preferred Trust I)	25,774		25,774		LIBOR + 1.25%	April 2035
Indenture II (Preferred Trust II)	Indenture II (Preferred Trust II)	25,774		25,774		LIBOR + 1.25%	July 2035	Indenture II (Preferred Trust II)	25,774		25,774		LIBOR + 1.25%	July 2035
Principal balance outstanding	Principal balance outstanding	1,841,610		1,828,610				Principal balance outstanding	1,984,610		1,851,610
Plus: original issue premium (discount), net	Plus: original issue premium (discount), net	9,650		10,137				Plus: original issue premium (discount), net	7,699		8,187
Less: deferred financing costs	Less: deferred financing costs	(7,667)		(8,152)				Less: deferred financing costs	(5,726)		(6,211)
Total unsecured indebtedness	Total unsecured indebtedness	$	1,843,593	$	1,830,595			Total unsecured indebtedness	$	1,986,583	$	1,853,586

(a)The Company has the right to extend the term of the Unsecured Credit Facility until July 2023 through 2 successive six-month extension options. The extension fees amount to 0.0625% and 0.0750% of the $600.0 million borrowing capacity for the first and second six-month extension, respectively.

The Company utilizes borrowings under its unsecured ~~revolving~~ credit facility (the “Unsecured Credit Facility”) for general business purposes, including to fund costs of acquisitions, developments and redevelopments of properties, fund share repurchases and repay other debt. The Unsecured Credit Facility provides for borrowings of up to $600.0 million and the per annum variable interest rate on borrowings is LIBOR plus 1.10%. The interest rate and facility fee are subject to adjustment upon a change in the Company’s unsecured debt ratings. During the three months ended March 31, ~~2021,~~2022, the weighted-average interest rate on Unsecured Credit Facility borrowings was ~~1.2%~~1.30% resulting in ~~a nominal amount~~$0.3 million of interest expense.

The Parent Company unconditionally guarantees the unsecured debt obligations of the Operating Partnership (or is a co-borrower with the Operating Partnership) but does not by itself incur unsecured indebtedness. The Parent Company has no material assets other than its investment in the Operating Partnership.

The Company was in compliance with all financial covenants as of March 31, ~~2021.~~2022. Certain of the covenants restrict the Company’s ability to obtain alternative sources of capital.

As of March 31, ~~2021,~~2022, the aggregate scheduled principal payments on the Company's debt obligations were as follows (in thousands):
2021 (nine months remaining) $ 0
2022 263,000
2023 350,000
2024 350,000
2025 0
Thereafter 878,610
Total principal payments 1,841,610
Net unamortized premiums/(discounts) 9,650
Net deferred financing costs (7,667)
Outstanding indebtedness $ 1,843,593


2022 (nine months remaining)	$	406,000
2023	350,000
2024	350,000
2025	—
2026	—
Thereafter	878,610
Total principal payments	1,984,610
Net unamortized premiums/(discounts)	7,699
Net deferred financing costs	(5,726)
Outstanding indebtedness	$	1,986,583

9.8. FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial assets and liabilities recorded on the consolidated balance sheets are categorized based on the inputs to the valuation techniques as follows:

•Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access;

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•Level 2 inputs are inputs, other than quoted prices included in Level 1, which are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals; and

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•Level 3 inputs are unobservable inputs for the asset or liability, which is typically based on an entity’s own assumptions, as there is little, if any, related market activity or information.

The Company determined the fair values disclosed below using available market information and discounted cash flow analyses as of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. The discount rate used in calculating fair value is the sum of the current risk free rate and the risk premium on the date of measurement of the instruments or obligations. Considerable judgment is necessary to interpret market data and to develop the related estimates of fair value. Accordingly, the estimates presented are not necessarily indicative of the amounts that the Company could realize upon disposition. The use of different estimates and valuation methodologies may have a material effect on the fair value amounts shown. The Company believes that the carrying amounts reflected in the consolidated balance sheets at March 31, ~~2021~~2022 and December 31, ~~2020~~2021 approximate the fair values for cash and cash equivalents, accounts receivable, other assets and liabilities, accounts payable and accrued expenses because they are short-term in duration. The following are financial instruments for which the Company’s estimates of fair value differ from the carrying amounts (in thousands):


		March 31, 2021				December 31, 2020					March 31, 2022				December 31, 2021
		Carrying Amount (a)		Fair Value		Carrying Amount (a)		Fair Value			Carrying Amount (a)		Fair Value		Carrying Amount (a)		Fair Value
Unsecured notes payable	Unsecured notes payable	$	1,502,768	$	1,597,295	$	1,502,901	$	1,607,310	Unsecured notes payable	$	1,502,235	$	1,515,265	$	1,502,368	$	1,588,780
Variable rate debt	Variable rate debt	$	340,825	$	322,044	$	327,694	$	308,838	Variable rate debt	$	484,348	$	466,999	$	351,218	$	344,754

Notes receivable (b)	Notes receivable (b)	$	94,430	$	97,076	$	94,430	$	97,372	Notes receivable (b)	$	44,430	$	44,862	$	44,430	$	45,230

(a)Net of deferred financing costs of ~~$6.9~~$5.5 million and ~~$7.2~~$5.8 million for unsecured notes payable and ~~$0.8~~$0.3 million and ~~$0.9~~$0.4 million for variable rate debt as of March 31, ~~2021~~2022 and December 31, ~~2020~~2021.

(b)For further detail, refer to Note 5,, ''Debt and Preferred Equity Investments."

On June 26, 2018, the Company provided a $44.4 million mortgage loan to Brandywine 1919 Ventures, an unconsolidated real estate venture in which the Company holds a 50% ownership interest, and recorded a related party note receivable of $44.4 million within 'Other assets' on the consolidated balance sheets. Refer to Note 5, ''Debt and Preferred Equity Investments" to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 for further detail regarding this financing.

The Company used quoted market prices as of March 31, ~~2021~~2022 and December 31, ~~2020~~2021 to value the unsecured notes payable and, as such, categorized them as Level 2.

The inputs utilized to determine the fair value of the Company’s ~~mortgage notes payable and~~ variable rate debt are categorized as Level 3. The fair value of the variable rate debt was determined using a discounted cash flow model that considered borrowing rates available to the Company for loans with similar terms and characteristics. The fair value of the mortgage notes payable was determined using a discounted cash flow model that considered the contractual interest and principal payments discounted at a blended market rate for loans with similar terms, maturities and loan-to-value. These inputs have been categorized as Level 3 because the Company considers the rates used in the valuation techniques to be unobservable.

The inputs utilized to determine fair value of the Company's notes receivable are unobservable and, as such, were categorized as Level 3. Fair value was determined using a discounted cash flow model that considered the contractual interest and principal payments discounted at a blended interest rate of the notes receivable.

For the Company’s ~~level~~Level 3 financial instruments for which fair value is disclosed, an increase in the discount rate used to determine fair value would result in a decrease to the fair value. Conversely, a decrease in the discount rate would result in an increase to the fair value.

Disclosure about the fair value of financial instruments is based upon pertinent information available to management as of March 31, ~~2021~~2022 and December 31, ~~2020.~~2021. Although management is not aware of any factors that would significantly affect the fair value amounts, such amounts were not comprehensively revalued for purposes of these financial statements since March 31, ~~2021.~~2022. Current estimates of fair value may differ from the amounts presented herein.

~~10.~~9. DERIVATIVE FINANCIAL INSTRUMENTS

The following table summarizes the terms and fair values of the Company’s derivative financial instruments as of March 31, ~~2021~~2022 and December 31, ~~2020.~~2021. The notional amounts provide an indication of the extent of the Company’s involvement in these instruments at that time, but do not represent exposure to credit, interest rate or market risks (amounts presented in thousands).

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

~~(a)Hedging unsecured variable rate debt.~~

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Hedge Product	Hedge Type	Designation		Notional Amount				Strike		Trade Date	Maturity Date	Fair value
				3/31/2022		12/31/2021						3/31/2022		12/31/2021



Liabilities
Swap	Interest Rate	Cash Flow	(a)	$	250,000	$	250,000	2.868	%	October 8, 2015	October 8, 2022	$	(545)	$	(2,461)
				$	250,000	$	250,000

~~(b)~~(a)~~On January 30, 2021, the interest~~Hedging unsecured variable rate ~~hedge contract for this swap expired.~~debt.

The Company measures its derivative instruments at fair value and records them in “Other assets” and (“Other liabilities”) on the Company’s consolidated balance sheets.

Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. The Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company has determined that the inputs utilized to determine the fair value of derivative instruments are classified in Level 2 of the fair value hierarchy.

Disclosure about the fair value of derivative instruments is based upon pertinent information available to management as of March 31, 2021 and December 31, 2020. Although management is not aware of any factors that would significantly affect the fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since March 31, 2021. Current estimates of fair value may differ from the amounts presented herein.

~~11.~~10. LIMITED PARTNERS' NONCONTROLLING INTERESTS IN THE PARENT COMPANY

Noncontrolling interests in the Parent Company’s financial statements relate to redeemable common limited partnership interests in the Operating Partnership held by parties other than the Parent Company and properties which are consolidated but not wholly owned by the Operating Partnership.

Operating Partnership

During the three months ended March 31, 2022, 307,516 Class A units of limited partnership interest held by unaffiliated third parties were redeemed for a total cash payment of $4.0 million.

The aggregate book value of the noncontrolling interests associated with the redeemable common limited partnership interests in the accompanying consolidated balance sheet of the Parent Company was ~~$10.3~~$5.0 million and ~~$10.5~~$8.2 million as of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. Under the applicable accounting guidance, the redemption value of limited partnership units are carried at fair value. The Parent Company believes that the aggregate settlement value of these interests (based on the number of units outstanding and the average closing price of the common shares onduring the ~~balance sheet date)~~last five business days of the quarter) was approximately ~~$12.7~~$7.3 million and ~~$11.7~~$11.1 million as of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

~~12.~~11. BENEFICIARIES' EQUITY OF THE PARENT COMPANY

Earnings per Share (EPS)

The following table details the number of shares and net income used to calculate basic and diluted earnings per share (in thousands, except share and per share amounts; results may not add due to rounding):


		Three Months Ended March 31,									Three Months Ended March 31,
		2021				2020					2022				2021
		Basic		Diluted		Basic		Diluted			Basic		Diluted		Basic		Diluted
Numerator	Numerator									Numerator
Net income	Net income	$	6,964	$	6,964	$	8,087	$	8,087	Net income	$	6,101	$	6,101	$	6,964	$	6,964
Net income attributable to noncontrolling interests	Net income attributable to noncontrolling interests	(43)		(43)		(65)		(65)		Net income attributable to noncontrolling interests	(8)		(8)		(43)		(43)
Nonforfeitable dividends allocated to unvested restricted shareholders	Nonforfeitable dividends allocated to unvested restricted shareholders	(146)		(146)		(131)		(131)		Nonforfeitable dividends allocated to unvested restricted shareholders	(148)		(148)		(146)		(146)

Net income attributable to common shareholders	Net income attributable to common shareholders	$	6,775	$	6,775	$	7,891	$	7,891	Net income attributable to common shareholders	$	5,945	$	5,945	$	6,775	$	6,775
Denominator	Denominator									Denominator
Weighted-average shares outstanding	Weighted-average shares outstanding	170,624,741		170,624,741		176,069,968		176,069,968		Weighted-average shares outstanding	171,294,949		171,294,949		170,624,741		170,624,741
Contingent securities/Share based compensation	Contingent securities/Share based compensation	—		1,011,379		—		583,491		Contingent securities/Share based compensation	—		1,594,045		—		1,011,379
Weighted-average shares outstanding	Weighted-average shares outstanding	170,624,741		171,636,120		176,069,968		176,653,459		Weighted-average shares outstanding	171,294,949		172,888,994		170,624,741		171,636,120
Earnings per Common Share:	Earnings per Common Share:									Earnings per Common Share:
Net income attributable to common shareholders	Net income attributable to common shareholders	$	0.04	$	0.04	$	0.04	$	0.04	Net income attributable to common shareholders	$	0.03	$	0.03	$	0.04	$	0.04

Redeemable common limited partnership units totaling ~~981,634~~516,467 at March 31, ~~2021~~2022 and 981,634 at March 31, ~~2020,~~2021, were excluded from the diluted earnings per share computations because they are not dilutive.

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Unvested restricted shares are considered participating securities which require the use of the two-class method for the computation of basic and diluted earnings per share. For the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, earnings representing nonforfeitable dividends as noted in the table above were allocated to the unvested restricted shares issued to the Company’s executives and other employees under the Company's shareholder-approved long-term incentive plan.

Common Shares

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On February ~~24, 2021,~~23, 2022, the Parent Company declared a distribution of $0.19 per common share, totaling $32.8 million, which was paid on April ~~21, 2021~~20, 2022 to shareholders of record as of April ~~7, 2021.~~6, 2022.

The Parent Company maintains a common share repurchase program under which the Board of Trustees has authorized the Parent Company to repurchase common shares. On January 3, 2019, the Board of Trustees authorized the repurchase of up to $150.0 million common shares from and after January 3, 2019. During the three months ended March 31, 2022 and March 31, 2021, the Company did not repurchase any common shares. ~~During the three months ended March 31, 2020, the Company repurchased and retired 5,644,200 common shares at an average price of $9.54 per share, totaling $53.9 million.~~

~~13.~~12. PARTNERS' EQUITY OF THE PARENT COMPANY

Earnings per Common Partnership Unit

The following table details the number of units and net income used to calculate basic and diluted earnings per common partnership unit (in thousands, except unit and per unit amounts; results may not add due to rounding):


		Three Months Ended March 31,									Three Months Ended March 31,
		2021				2020					2022				2021
		Basic		Diluted		Basic		Diluted			Basic		Diluted		Basic		Diluted
Numerator	Numerator									Numerator
Net income	Net income	$	6,964	$	6,964	$	8,087	$	8,087	Net income	$	6,101	$	6,101	$	6,964	$	6,964
Net (income) loss attributable to noncontrolling interests		1		1		(12)		(12)
Net loss attributable to noncontrolling interests										Net loss attributable to noncontrolling interests	2		2		1		1
Nonforfeitable dividends allocated to unvested restricted unitholders	Nonforfeitable dividends allocated to unvested restricted unitholders	(146)		(146)		(131)		(131)		Nonforfeitable dividends allocated to unvested restricted unitholders	(148)		(148)		(146)		(146)

Net income attributable to common unitholders	Net income attributable to common unitholders	$	6,819	$	6,819	$	7,944	$	7,944	Net income attributable to common unitholders	$	5,955	$	5,955	$	6,819	$	6,819
Denominator	Denominator									Denominator
Weighted-average units outstanding	Weighted-average units outstanding	171,606,375		171,606,375		177,051,602		177,051,602		Weighted-average units outstanding	171,927,588		171,927,588		171,606,375		171,606,375
Contingent securities/Share based compensation	Contingent securities/Share based compensation	—		1,011,379		—		583,491		Contingent securities/Share based compensation	—		1,594,045		—		1,011,379
Total weighted-average units outstanding	Total weighted-average units outstanding	171,606,375		172,617,754		177,051,602		177,635,093		Total weighted-average units outstanding	171,927,588		173,521,633		171,606,375		172,617,754
Earnings per Common Partnership Unit:	Earnings per Common Partnership Unit:									Earnings per Common Partnership Unit:
Net income attributable to common unitholders	Net income attributable to common unitholders	0.04		0.04		0.04		0.04		Net income attributable to common unitholders	$	0.03	$	0.03	$	0.04	$	0.04

Unvested restricted units are considered participating securities which require the use of the two-class method for the computation of basic and diluted earnings per ~~share.~~unit. For the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, earnings representing nonforfeitable dividends were allocated to the unvested restricted units issued to the Parent Company's executives and other employees under the Parent Company's shareholder-approved long-term incentive plan.

Common Partnership Units

On February ~~24, 2021,~~23, 2022, the Operating Partnership declared a distribution of $0.19 per common partnership unit, totaling $32.8 million, which was paid on April ~~21, 2021~~20, 2022 to unitholders of record as of April ~~7, 2021.~~6, 2022.

In connection with the Parent Company’s common share repurchase program, 1 common unit of the Operating Partnership is retired for each common share repurchased. During the three months ended March 31, 2022 and March 31, 2021, the Company did not repurchase any units. During the three months ended March 31, 2020, the Company retired 5,644,200 common partnership units at an average price of $9.54 per unit, totaling $53.9 million, in connection with an equal number of share repurchases.

~~14.~~13. SHARE BASED COMPENSATION

Restricted Share Rights Awards

As of March 31, ~~2021, 770,988~~2022, 777,423 restricted share rights ("Restricted Share Rights") were outstanding under the Company's long term equity incentive plan. These Restricted Share Rights vest over one to three years from the initial grant dates. The remaining compensation expense to be recognized with respect to these awards at March 31, ~~2021~~2022 was ~~$3.3~~$3.5 million and is expected to be recognized over a weighted average remaining vesting period of ~~2.01~~1.15 years. During the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, the amortization related to outstanding Restricted Share Rights was ~~$2.3~~$2.5 million (of which $0.3 million was capitalized) and ~~$1.9~~$2.3 million (of which $0.3 million was capitalized), respectively. Compensation expense related to outstanding Restricted Share Rights is included in general and administrative expense.

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The following table summarizes the Company’s Restricted Share Rights activity during the three months ended March 31, ~~2021:~~2022:


		Shares	Weighted Average Grant Date Fair Value			Shares	Weighted Average Grant Date Fair Value
Non-vested at January 1, 2021		488,735	$	15.19
Non-vested at January 1, 2022					Non-vested at January 1, 2022	474,978	$	13.51
Granted	Granted	301,545	$	12.58	Granted	306,555	$	13.30
Vested	Vested	(17,734)	$	14.96	Vested	(3,440)	$	13.30
Forfeited	Forfeited	(1,558)	$	14.99	Forfeited	(670)	$	14.96
Non-vested at March 31, 2021		770,988	$	14.18
Non-vested at March 31, 2022					Non-vested at March 31, 2022	777,423	$	13.43

On March ~~4, 2021,~~3, 2022, the Compensation Committee of the Parent Company’s Board of Trustees awarded to officers of the Company an aggregate of ~~252,278~~258,427 Restricted Share Rights, which vest over three years from the grant date. Each Restricted Share Right entitles the holder to 1 common share upon settlement. The Parent Company pays dividend equivalents on the Restricted Share Rights prior to the settlement date. Vesting and/or settlement would accelerate if the recipient of the award were to die, become disabled or, in the case of certain of such Restricted Share Rights, retire in a qualifying retirement prior to the vesting or settlement date. Qualifying retirement generally means the recipient’s voluntary termination of employment after reaching at least age 57 and accumulating at least 15 years of service with the Company. In addition, vesting would also accelerate if the Parent Company were to undergo a change of control and, on or before the first anniversary of the change of control, the recipient’s employment were to cease due to a termination without cause or resignation with good reason.

The Restricted Share Rights granted in 2022, 2021, ~~2020,~~ and ~~2019~~2020 to certain senior executives include an “outperformance feature” whereby additional shares may be earned, up to 200% of the shares subject to the basic award, based on the Company’s achievement of earnings-based targets and development, or investment, based targets during a three-year performance period with an additional ~~two years~~366 days of service generally required to fully vest. In addition to the basic award, up to an aggregate of 406,179, 388,840, ~~316,236,~~ and ~~228,858~~316,236 shares may be awarded under the outperformance feature for the 2022, 2021, ~~2020,~~ and ~~2019~~2020 awards, respectively, to those senior officers whose Restricted Share Rights awards include the "outperformance feature." As of March 31, ~~2021,~~2022, the Company has ~~recognized a 0minal amount of compensation expense related to the outperformance feature for the 2021 award, has 0t~~not recognized any compensation expense related to the outperformance feature for the ~~2020 award and has recognized $0.2 million related to the outperformance feature for the 2019 award.~~2020-2022 awards. The Company will continue to evaluate progression towards achievement of the performance metrics on a quarterly basis and recognize compensation expense for the outperformance feature of these awards should it be determined that achievement of these metrics is probable.

In addition, on ~~February 23, 2021,~~March 3, 2022, the Compensation Committee awarded non-officer employees an aggregate of ~~49,267~~48,128 Restricted Share Rights that generally vest in 3 equal annual installments. Vesting of these awards is subject to acceleration upon death, disability or termination without cause within one year following a change of control.

In accordance with the accounting standard for share-based compensation, the Company amortizes share-based compensation costs through the qualifying retirement dates for those executives and Trustees who meet the conditions for qualifying retirement during the scheduled vesting period and whose award agreements provide for vesting upon a qualifying retirement.

Restricted Performance Share Units Plan

The Compensation Committee of the Parent Company’s Board of Trustees has granted performance share-based awards (referred to as Restricted Performance Share Units, or RPSUs) to officers of the Parent Company. The RPSUs are settled in common shares, with the number of common shares issuable in settlement determined based on the Company’s total shareholder return over specified measurement periods compared to total shareholder returns of comparative groups over the measurement periods. The table below presents certain information as to unvested RPSU awards.

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		RPSU Grant Date								RPSU Grant Date
		2/21/2019		3/5/2020		3/5/2021		Total		3/5/2020		3/5/2021		3/3/2022		Total
(Amounts below in shares, unless otherwise noted)	(Amounts below in shares, unless otherwise noted)								(Amounts below in shares, unless otherwise noted)
Non-vested at January 1, 2021		206,069		319,600		0		525,669
Non-vested at January 1, 2022									Non-vested at January 1, 2022	314,055		374,161		—		688,216
Granted	Granted	0		0		380,957		380,957	Granted	—		—		516,852		516,852

Non-vested at March 31, 2021		206,069		319,600		380,957		906,626
Non-vested at March 31, 2022									Non-vested at March 31, 2022	314,055		374,161		516,852		1,205,068
Measurement Period Commencement Date	Measurement Period Commencement Date	1/1/2019		1/1/2020		1/1/2021			Measurement Period Commencement Date	1/1/2020		1/1/2021		1/1/2022
Measurement Period End Date	Measurement Period End Date	12/31/2021		12/31/2022		12/31/2023			Measurement Period End Date	12/31/2022		12/31/2023		12/31/2024
Granted	Granted	213,728		319,600		380,957			Granted	319,600		380,957		516,852
Fair Value of Units on Grant Date (in thousands)	Fair Value of Units on Grant Date (in thousands)	$	4,627	$	5,389	$	6,389		Fair Value of Units on Grant Date (in thousands)	$	5,389	$	6,389	$	7,551

The Company values each RPSU on its grant date using a Monte Carlo simulation. The fair values of each award are being amortized over the three year performance period. ~~During~~For the ~~performance period,~~2020 and 2021 awards, dividend equivalents are credited as additional RPSUs during the performance period, subject to the same terms and conditions as the original RPSUs. The performance period will be abbreviated and the determination and delivery of earned shares will be accelerated in the event of a change in control or if the recipient of the award were to die, become disabled or retire in a qualifying retirement prior to the end of the otherwise applicable three year performance period; provided that, in the case of qualifying retirement for the March 2022, 2021 and 2020 grants, the number of shares deliverable will be pro-rated based on the portion of the performance period actually worked before retirement. In accordance with the accounting standard for share-based compensation, the Company amortizes stock-based compensation costs for the February 2019 grant through the qualifying retirement date for those executives who meet the conditions for qualifying retirement during the scheduled vesting period.

For the three months ended March 31, ~~2021,~~2022, the Company recognized amortization of the ~~2020, 2019~~2022, 2021 and ~~2018~~2020 RPSU awards of ~~$0.8~~$1.2 million, of which $0.1 million was capitalized consistent with the Company’s policies for capitalizing eligible portions of employee compensation. For the three months ended March 31, ~~2020,~~2021, amortization for the ~~2019, 2018~~2021, 2020 and ~~2017~~2019 RPSU awards was ~~$0.6~~$0.8 million, of which $0.1 million was capitalized consistent with the Company’s policies for capitalizing eligible portions of employee compensation.

The remaining compensation expense to be recognized with respect to the non-vested RPSUs at March 31, ~~2021~~2022 was approximately ~~$10.0~~$12.6 million and is expected to be recognized over a weighted average remaining vesting period of ~~2.29~~2.01 years.

The Company issued ~~82,513~~277,061 common shares on February 1, ~~2021~~2022 in settlement of RPSUs that had been awarded on February ~~28, 2018~~21, 2019 (with a three-year measurement period ended December 31, ~~2020~~2021). Holders of these RPSUs also received a cash dividend of $0.19 per share for these common shares on January ~~20, 2021.~~19, 2022.

~~15.~~14. SEGMENT INFORMATION

As of March 31, ~~2021,~~2022, the Company owns and manages properties within 5 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, 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 the District of Columbia, Northern Virginia and Southern Maryland. The Other segment includes properties located in Camden County, New Jersey and New Castle County, Delaware. In addition to the 5 segments, the corporate group is responsible for cash and investment management, development of certain real estate properties during the construction period, and certain other general support functions. Land held for development and construction in progress is transferred to operating properties by region upon completion of the associated construction or project.

The following tables provide selected asset information and results of operations of the Company's reportable segments (in thousands):

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Real estate investments, at cost:	Real estate investments, at cost:					Real estate investments, at cost:
		March 31, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Philadelphia CBD	Philadelphia CBD	$	1,429,695	$	1,433,927	Philadelphia CBD	$	1,494,819	$	1,460,510
Pennsylvania Suburbs	Pennsylvania Suburbs	870,403		871,530		Pennsylvania Suburbs	859,470		866,223
Austin, Texas	Austin, Texas	728,702		728,741		Austin, Texas	791,600		778,145
Metropolitan Washington, D.C.	Metropolitan Washington, D.C.	270,582		352,794		Metropolitan Washington, D.C.	285,386		280,921
Other	Other	87,177		87,117		Other	86,720		86,803

Operating Properties	Operating Properties	$	3,386,559	$	3,474,109	Operating Properties	$	3,517,995	$	3,472,602

Corporate	Corporate					Corporate
Right of use asset - operating leases, net	Right of use asset - operating leases, net	$	20,810	$	20,977	Right of use asset - operating leases, net	$	20,150	$	20,313
Construction-in-progress	Construction-in-progress	$	264,529	$	210,311	Construction-in-progress	$	283,323	$	277,237
Land held for development	Land held for development	$	116,902	$	117,984	Land held for development	$	94,411	$	114,604
Prepaid leasehold interests in land held for development, net	Prepaid leasehold interests in land held for development, net	$	27,762	$	39,185	Prepaid leasehold interests in land held for development, net	$	27,762	$	27,762

Net operating income:


		Three Months Ended March 31,													Three Months Ended March 31,
		2021						2020							2022						2021
		Total revenue		Operating expenses (a)		Net operating income		Total revenue		Operating expenses (a)		Net operating income (loss)			Total revenue		Operating expenses (a)		Net operating income		Total revenue		Operating expenses (a)		Net operating income
Philadelphia CBD	Philadelphia CBD	$	51,227	$	(17,411)	$	33,816	$	65,915	$	(24,198)	$	41,717	Philadelphia CBD	$	53,471	$	(19,743)	$	33,728	$	51,227	$	(17,411)	$	33,816
Pennsylvania Suburbs	Pennsylvania Suburbs	31,740		(10,694)		21,046		37,237		(12,678)		24,559		Pennsylvania Suburbs	31,807		(10,158)		21,649		31,740		(10,694)		21,046
Austin, Texas	Austin, Texas	26,175		(9,720)		16,455		26,581		(10,145)		16,436		Austin, Texas	24,915		(10,293)		14,622		26,175		(9,720)		16,455
Metropolitan Washington, D.C.	Metropolitan Washington, D.C.	4,675		(4,199)		476		10,754		(5,512)		5,242		Metropolitan Washington, D.C.	5,195		(3,428)		1,767		4,675		(4,199)		476
Other	Other	3,213		(2,282)		931		3,652		(2,693)		959		Other	3,604		(2,010)		1,594		3,213		(2,282)		931
Corporate	Corporate	3,739		(2,368)		1,371		949		(1,684)		(735)		Corporate	8,513		(2,286)		6,227		3,739		(2,368)		1,371
Operating properties	Operating properties	$	120,769	$	(46,674)	$	74,095	$	145,088	$	(56,910)	$	88,178	Operating properties	$	127,505	$	(47,918)	$	79,587	$	120,769	$	(46,674)	$	74,095

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


Unconsolidated real estate ventures:	Unconsolidated real estate ventures:											Unconsolidated real estate ventures:
		Investment in real estate ventures				Equity in income (loss) of real estate venture				Investment in real estate ventures			Equity in income (loss) of real estate venture
		As of				Three Months Ended March 31,					As of				Three Months Ended March 31,
		March 31, 2021		December 31, 2020		2021		2020					March 31, 2022		December 31, 2021		2022		2021
Philadelphia CBD	Philadelphia CBD	$	300,694	$	268,562	$	(4,279)	$	78			Philadelphia CBD	$	343,502	$	317,959	$	(2,772)	$	(4,279)
Metropolitan Washington, D.C.	Metropolitan Washington, D.C.	99,617		99,769		(417)		(449)				Metropolitan Washington, D.C.	85,976		85,867		(186)		(417)
Mid-Atlantic Office JV	Mid-Atlantic Office JV	32,735		32,996		207		0				Mid-Atlantic Office JV	31,911		31,680		418		207
MAP Venture	MAP Venture	(17,223)		(11,516)		(2,435)		(1,520)				MAP Venture	(26,834)		(24,396)		(2,023)		(2,435)

Total	Total	$	415,823	$	389,811	$	(6,924)	$	(1,891)			Total	$	434,555	$	411,110	$	(4,563)	$	(6,924)

Net operating income (“NOI”) is a non-GAAP financial measure, which we define 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 presented by the Company may not be comparable to NOI reported by other companies that define NOI differently. NOI is the primary measure that is used by the Company’s management to evaluate the operating performance of the Company’s real estate assets by segment. The Company believes NOI provides useful information to investors regarding the 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. The

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Company believes that net income (loss), as defined by GAAP, is the most appropriate earnings measure. The following is a reconciliation of consolidated net income (loss), as defined by GAAP, to consolidated NOI, (in thousands):


		Three Months Ended March 31,				Three Months Ended March 31,
		2021		2020				2022		2021
Net income	Net income	$	6,964	$	8,087		Net income	$	6,101	$	6,964
Plus:	Plus:						Plus:
Interest expense	Interest expense	16,293		20,009			Interest expense	15,742		16,293
Interest expense - amortization of deferred financing costs	Interest expense - amortization of deferred financing costs	709		749			Interest expense - amortization of deferred financing costs	709		709

Depreciation and amortization	Depreciation and amortization	40,343		52,038			Depreciation and amortization	43,782		40,343
General and administrative expenses	General and administrative expenses	6,584		8,561			General and administrative expenses	10,000		6,584
Equity in loss of Real Estate Ventures		6,924		1,891
Equity in loss of unconsolidated real estate ventures							Equity in loss of unconsolidated real estate ventures	4,563		6,924

Less:	Less:						Less:
Interest and investment income	Interest and investment income	1,674		575			Interest and investment income	440		1,674
Income tax provision	Income tax provision	(19)		(4)			Income tax provision	(27)		(19)

Net gain on disposition of real estate	Net gain on disposition of real estate	74		2,586			Net gain on disposition of real estate	—		74
Net gain on sale of undepreciated real estate	Net gain on sale of undepreciated real estate	1,993		0			Net gain on sale of undepreciated real estate	897		1,993

Consolidated net operating income	Consolidated net operating income	$	74,095	$	88,178		Consolidated net operating income	$	79,587	$	74,095

~~16.~~15. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

The Company is involved from time to time in litigation on various matters, including disputes with tenants, vendors and disputes arising out of agreements to purchase or sell properties. Given the nature of the Company’s business activities, these lawsuits are considered routine to the conduct of its business. The result of any particular lawsuit cannot be predicted, because of the very nature of litigation, the litigation process and its adversarial nature, and the jury system. The Company will establish reserves for specific legal proceedings when it determines that the likelihood of an unfavorable outcome is probable and when the amount of loss is reasonably estimable. The Company does not expect that the liabilities, if any, that may ultimately result from such legal actions will have a material adverse effect on the consolidated financial position, results of operations or cash flows of the Company.

Environmental

As an owner of real estate, the Company is subject to various environmental laws of federal, state, and local governments. The Company’s compliance with existing laws has not had a material adverse effect on its financial condition and results of operations, and the Company does not believe it will have a material adverse effect in the future. However, the Company cannot predict the impact of unforeseen environmental contingencies or new or changed laws or regulations on its current Properties or on properties that the Company may acquire.

Debt Guarantees

As of March 31, ~~2021,~~2022, the Company’s ~~Real Estate Ventures~~unconsolidated real estate ventures had aggregate indebtedness of ~~$961.9~~$1,217.2 million. These loans are generally mortgage or construction loans, most of which are nonrecourse to the Company, except for customary recourse carve-outs. As of March 31, 2021, the $150.0 million construction loan obtained by 4040 Wilson, located in Arlington, Virginia, for which the Company has a payment guarantee up to $41.3 million, is recourse to the Company. In addition, during construction undertaken by the ~~Real Estate Ventures,~~unconsolidated real estate ventures, including ~~4040 Wilson,~~the 3025 JFK Venture, the Company has provided, and expects to continue to provide, cost overrun and completion guarantees, as well as customary environmental indemnities and guarantees of customary exceptions to nonrecourse provisions in loan agreements. In the agreement with its partner in the 3025 JFK Venture, the Company agreed to provide cost overrun and completion guaranties for the project under development. With respect to the construction loan obtained by 3025 JFK Venture on July 23, 2021, the Company has also provided a carry guarantee and limited payment guarantee up to 25% of the principal balance of the $186.7 million construction loan.

Impact of Natural Disasters and Casualty

The Company carries liability insurance to mitigate its exposure to certain losses, including those relating to property damage. The Company records the estimated amount of expected insurance proceeds for property damage and other losses incurred as an asset (typically a receivable from the insurer) and income up to the amount of the losses incurred when receipt of insurance proceeds is deemed probable. Any amount of insurance recovery in excess of the amount of the losses is considered a gain contingency and is not recorded until the proceeds are received.

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In February 2021, 1 of the Company's properties in Austin, Texas sustained damage from the winter storms and resulting power grid failures. As a result of the damage, during the ~~three months~~year ended ~~March~~December 31, 2021, the Company recorded a fixed

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asset write-off totaling $1.2 ~~million. During the three months ended March 31, 2021, the Company has~~million and recorded an estimated ~~$6.4~~$7.2 million of restoration costs, of which ~~are~~$1.9 million is included in Accounts payable and accrued expenses on the consolidated balance ~~sheets.~~sheets as of December 31, 2021. The Company also sustained business interruption loss of $3.9 million related to unpaid rent, which is also fully covered under the insurance policy. During the year ended December 31, 2021, the Company received $15.3 million of insurance proceeds, resulting in full recovery of the costs incurred to date. The $3.0 million of insurance proceeds received in excess of the fixed asset write-off, total business interruption, and total estimated restoration cost during the year ended December 31, 2021 is included in Other income on the consolidated statement of operations. During the three months ended March 31, ~~2021,~~2022, the Company ~~has~~recognized a $0.8 million reduction of the previously estimated restoration costs and also received ~~$4.0~~$2.4 million of additional insurance proceeds. The reduction of the restoration costs and additional insurance proceeds ~~and recognized an insurance receivable of $3.6 million, which is~~are included in Other ~~assets~~income on the consolidated ~~balance sheets.~~statement of operations.

Other Commitments or Contingencies

Under the terms of each of the One Uptown joint venture agreements, the joint venture partner is not required to fund project costs until the closing of the applicable construction loans. In the event that the Company does not close on the applicable construction loan for each of the joint ventures by June 30, 2022, the joint venture partner could elect to assign its interest in the project to the Company and have no obligation to fund the project costs. In addition, the Company has provided cost overrun and completion guarantees, as well as customary environmental indemnities, in favor of the joint venture partner, for each of the One Uptown joint ventures.

In connection with the Schuylkill Yards Project, the Company entered into a neighborhood engagement program and, as of March 31, ~~2021,~~2022, had ~~$7.6~~$7.0 million of future fixed contractual obligations. The Company also committed to fund additional contributions under the program. As of March 31, ~~2021,~~2022, the Company estimates that these additional contributions, which are not fixed under the terms of agreement, will be ~~$2.5~~$2.3 million.

In connection with the formation of the Commerce Square Venture, the Company has committed to investing an additional $20.0 million of preferred equity in the properties on a pari passu basis with its joint venture partner of which ~~$2.1~~$4.7 million has been contributed by the Company as of March 31, ~~2021.~~2022.

The Company invests in its properties and regularly incurs capital expenditures in the ordinary course of business to maintain the properties. The Company believes that such expenditures enhance its competitiveness. The Company also enters into construction, utility and service contracts in the ordinary course of business which may extend beyond one year. These contracts typically provide for cancellation with insignificant or no cancellation penalties.

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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 might cause actual results to differ materially from our expectations, many of which may be more likely to impact us as a result of the ongoing 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, ~~2020.~~2021. 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, ~~2021~~2022 and December 31, ~~2020~~2021 and for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021 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, ~~2021,~~2022, we owned and managed properties within five 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 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.~~unconsolidated 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 continue to seek revenue growth throughout our portfolio by increasing occupancy and rental rates. 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.

Adverse changes in economic conditions, including the ongoing effects of the global COVID-19 pandemic and inflation, could result in a reduction of the availability of financing and higher borrowing costs. We ~~are~~continue to closely ~~monitoring~~monitor 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 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 long-term impact of 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~~on the global ~~economic activity, caused significant volatility in financial markets,~~economy and ~~resulted in unprecedented job losses.~~our tenants and prospective tenants remains uncertain and will depend on new information which may emerge concerning the severity of COVID-19, new variants of COVID-19 and the actions taken to contain it or treat its impact. 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.

Overall economic conditions, including but not limited to labor shortages, supply chain constraints, 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. These adverse conditions ~~have impacted~~could impact our 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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the strength of our balance sheet will enable us to raise capital, if necessary, in various forms and from 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, 2021 was 90.3% compared to 93.3% at March 31, 2020.

The table below summarizes selected operating and leasing statistics of our wholly owned properties for the three months ended March 31, ~~2021~~2022 and ~~2020:~~2021:


		Three Months Ended March 31,						Three Months Ended March 31,
		2021			2020					2022			2021
Leasing Activity	Leasing Activity								Leasing Activity
Core Properties (1):	Core Properties (1):								Core Properties (1):
Total net rentable square feet owned	Total net rentable square feet owned	12,949,078			15,978,965				Total net rentable square feet owned	13,039,634			12,949,078
Occupancy percentage (end of period)	Occupancy percentage (end of period)	90.3		%	93.3		%		Occupancy percentage (end of period)	89.4		%	90.3		%
Average occupancy percentage	Average occupancy percentage	90.4		%	93.0		%		Average occupancy percentage	89.9		%	90.4		%
Total Portfolio, less properties in development (2):
Total Portfolio, less properties in development/redevelopment (2):									Total Portfolio, less properties in development/redevelopment (2):
Tenant retention rate (3)	Tenant retention rate (3)	51.9		%	75.6		%		Tenant retention rate (3)	55.9		%	51.9		%
New leases and expansions commenced (square feet)	New leases and expansions commenced (square feet)	29,103			224,417				New leases and expansions commenced (square feet)	112,097			29,103
Leases renewed (square feet)	Leases renewed (square feet)	166,824			87,449				Leases renewed (square feet)	382,355			166,824
Net absorption (square feet)	Net absorption (square feet)	(165,126)			62,507				Net absorption (square feet)	(252,364)			(165,126)
Percentage change in rental rates per square feet (4):
Percentage change in rental rates per square foot (4):									Percentage change in rental rates per square foot (4):
New and expansion rental rates	New and expansion rental rates	8.7		%	21.1		%		New and expansion rental rates	7.3		%	8.7		%
Renewal rental rates	Renewal rental rates	8.2		%	8.6		%		Renewal rental rates	21.3		%	8.2		%
Combined rental rates	Combined rental rates	8.3		%	15.7		%		Combined rental rates	20.4		%	8.3		%
Weighted average lease term for leases commenced (years)									Weighted average lease term for leases commenced (years)	8.5			3.3
Capital Costs Committed (5):	Capital Costs Committed (5):								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
Leasing commissions (per square foot)									Leasing commissions (per square foot)	$	13.02		$	2.93
Tenant Improvements (per square foot)									Tenant Improvements (per square foot)	$	33.12		$	8.16
Total capital per square foot per lease year	Total capital per square foot per lease year	$	3.25		$	3.96			Total capital per square foot per lease year	$	4.16		$	3.25

(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.~~basis for leases commenced during the quarter. Does not include properties under development/redevelopment.

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 ~~2.9%~~7.3% of our aggregate final annualized base rents as of March 31, ~~2021~~2022 (representing approximately ~~3.5%~~5.4% of the net rentable square feet of the properties) are scheduled to expire without penalty in the remainder of ~~2021.~~2022. 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~~accrued rent receivable reserve policy in light of our tenant base and general and local economic conditions. Our ~~accounts~~accrued rent receivable allowance was ~~$5.1~~$4.1 million or ~~2.9%~~2.3% of ~~total receivables (including~~our accrued rent ~~receivable)~~receivable balance as of ~~both~~ March 31, ~~2021 and~~2022 compared to $4.1 million or 2.4% of our accrued rent receivable balance as of December 31, ~~2020.~~2021.

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If economic conditions deteriorate, including as a result of the ongoing COVID-19 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, ~~2021~~2022 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

Property/Portfolio Name

Location

Expected Completion Date

Activity Type

Approximate Square Footage

Estimated Costs

Amount Funded

405 Colorado Street (a)

Austin, TX

Q2 2021 (c)

Development

205,803

121,864

96,808

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

250 King of Prussia Road (b)

Radnor, PA

Q2 2022

Redevelopment

168,294

82,854

39,018

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

(b)~~Estimated~~Total project costs ~~include $12.8~~includes $20.6 million of existing property basis.

(c)The parking garage and occupied portions of the office building were placed into service during 2021.

In addition to the properties listed above, we have classified one office building in ~~Radnor, Pennsylvania, one office building in~~ Herndon, Virginia that has yet to incur significant redevelopment costs, and one parking facility in Philadelphia, Pennsylvania as redevelopment.

On December 1, 2021, we entered into two joint venture agreements to develop One Uptown, a $328.4 million mixed-used project in Austin, Texas. Construction of the project commenced during the fourth quarter of 2021 and we have funded $56.8 million of the total estimated project costs as of March 31, 2022. Under the joint venture agreement, we are required to fund an additional $9.8 million of the project costs. The remaining $261.8 million of the estimated total project costs is expected to be funded by our joint venture partner and proceeds of an expected $213.4 million in construction loans. We expect to recognize the formation of the joint ventures and deconsolidate the projects upon closing of the applicable construction loans. See Note 3, ''Real Estate Investments” to our Consolidated Financial Statements for additional information regarding the project.

As of March 31, 2022 the following active unconsolidated real estate venture development projects remain under construction in progress and we were proceeding on the following activity (dollars, in thousands):

Property/Portfolio Name

Location

Expected Completion Date

Approximate Square Footage

Estimated Costs

Amount Funded

Construction Loan Financing

Our Share Remaining to be Funded

3025 JFK Boulevard (55%)

Philadelphia, PA

Q3 2023

(a)

287,272

76,935

186,727

—

(b)

(a)Mixed used building with 428,000 rentable square feet consisting of 200,000 SF of life science/innovation office, 219,000 SF of residential (326 units), and 9,000 SF of retail.

(b)We have fully funded our equity commitment. The remaining amount of the estimated costs to be funded of $210.3 million will be funded by our joint venture partner and the available borrowings under the $186.7 million construction loan.

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.

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Our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 contains a discussion of our critical accounting policies. There have been no significant changes in our critical accounting policies since December 31, ~~2020.~~2021.

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RESULTS OF OPERATIONS

The following discussion is based on our consolidated financial statements for the three months ended March 31, ~~2021~~2022 and ~~2020.~~2021. 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 ~~15,~~14, ''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 ~~15,~~14, ''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, ~~2021~~2022 and March 31, ~~2020~~2021

The following comparison for the three months ended March 31, ~~2021~~2022 to the three months ended March 31, ~~2020,~~2021, makes reference to the effect of the following:

(a)“Same Store Property Portfolio,” which represents 7376 properties containing an aggregate of approximately ~~12.5~~12.9 million net rentable square feet, and represents properties that we owned and consolidated for the three-month periods ended March 31, ~~2021~~2022 and ~~2020.~~2021. The Same Store Property Portfolio includes properties acquired or placed in service on or prior to January 1, ~~2020~~2021 and owned and consolidated through March 31, ~~2021,~~2022, 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~~2022 and ~~2020,~~2021,

(c)"Recently Completed/Acquired ~~Properties,~~Property," which represents ~~three properties~~one property placed into service or acquired on or subsequent to January 1, ~~2020,~~2021,

(d)"Development/Redevelopment Properties," which represents ~~five~~four 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, ~~2021~~2022 to the three months ended March 31, ~~2020~~2021


		Same Store Property Portfolio										Recently Completed/Acquired Properties					Development/Redevelopment Properties				Other (Eliminations) (a)					Total Portfolio									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)	(dollars and square feet in millions except per share amounts)	2021			2020			$ Change		% Change		2021			2020		2021		2020		2021		2020			2021		2020		$ Change		% Change		(dollars and square feet in millions except per share amounts)	2022			2021			$ Change		% Change		2022		2021		2022			2021			2022			2021				2022		2021		$ Change		% Change
Revenue:	Revenue:																																	Revenue:
Rents	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)	%	Rents	$	110.8		$	111.0		$	(0.2)	(0.2)	%	$1.2		$	—	$	1.1		$	0.1		$	2.8		$	2.4			$	115.9	$	113.5	$	2.4	2.1	%
Third party management fees, labor reimbursement and leasing	Third party management fees, labor reimbursement and leasing	—			—			—		—	%	—			—		—		—		6.7		5.0			6.7		5.0		1.7		34.0	%	Third party management fees, labor reimbursement and leasing	—			—			—		—	%	—		—		—			—			5.1			6.7				5.1		6.7		(1.6)		(23.9)	%
Other	Other	0.2			0.3			(0.1)		(33.3)	%	—			—		—		—		0.4		0.6			0.6		0.9		(0.3)		(33.3)	%	Other	0.3			0.2			0.1		50.0	%	—		—		—			—			6.2			0.4				6.5		0.6		5.9		983.3	%
Total revenue	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)	%	Total revenue	111.1			111.2			(0.1)		(0.1)	%	1.2		—		1.1			0.1			14.1			9.5				127.5		120.8		6.7		5.5	%
Property operating expenses	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)	%	Property operating expenses	28.9			28.1			0.8		2.8	%	0.1		(0.1)		0.3			(0.4)			2.2			1.3				31.5		28.9		2.6		9.0	%
Real estate taxes	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)	%	Real estate taxes	13.2			13.1			0.1		0.8	%	0.1		0.1		0.2			0.8			0.3			0.8				13.8		14.8		(1.0)		(6.8)	%
Third party management expenses	Third party management expenses	—			—			—		—	%	—			—		—		—		3.0		2.7			3.0		2.7		0.3		11.1	%	Third party management expenses	—			—			—		—	%	—		—		—			—			2.6			3.0				2.6		3.0		(0.4)		(13.3)	%
Net operating income	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)	%	Net operating income	69.0			70.0			(1.0)		(1.4)	%	1.0		—		0.6			(0.3)			9.0			4.4				79.6		74.1		5.5		7.4	%
Depreciation and amortization	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)	%	Depreciation and amortization	40.0			37.7			2.3		6.1	%	0.6		—		0.4			0.4			2.8			2.3				43.8		40.4		3.4		8.4	%
General & administrative expenses	General & administrative expenses	—			—			—		—	%	—			—		—		—		6.6		8.6			6.6		8.6		(2.0)		(23.3)	%	General & administrative expenses	—			—			—		—	%	—		—		—			—			10.0			6.6				10.0		6.6		3.4		51.5	%

Net gain on disposition of real estate	Net gain on disposition of real estate																									(0.1)		(2.6)		2.5		(96.2)	%	Net gain on disposition of real estate																												—		(0.1)		0.1		(100.0)	%
Net gain on sale of undepreciated real estate	Net gain on sale of undepreciated real estate																									(2.0)		—		(2.0)		—	%	Net gain on sale of undepreciated real estate																												(0.9)		(2.0)		1.1		(55.0)	%
Operating income (loss)	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)	%	Operating income (loss)	$	29.0		$	32.3		$	(3.3)	(10.2)	%	$0.4		$	—	$	0.2		$	(0.7)		$	(3.8)		$	(4.5)			$	26.7	$	29.2	$	(2.5)	(8.6)	%
Number of properties	Number of properties	73			73							3					5									81								Number of properties	76			76							1				4													81
Square feet	Square feet	12.5			12.5							0.5					0.7									13.9								Square feet	12.9			12.9							0.1				0.6													13.9
Core Occupancy % (b)	Core Occupancy % (b)	90.1		%	93.0		%					94.6		%																				Core Occupancy % (b)	89.3		%	90.3		%					100.0	%
Other Income (Expense):	Other Income (Expense):																										Other Income (Expense):
Interest and investment income	Interest and investment income																									1.7		0.6		1.1		183.3	%	Interest and investment income																												0.4		1.7		(1.3)		(76.5)	%
Interest expense	Interest expense																									(16.3)		(20.0)		3.7		(18.5)	%	Interest expense																												(15.7)		(16.3)		0.6		(3.7)	%
Interest expense — Deferred financing costs	Interest expense — Deferred financing costs																									(0.7)		(0.7)		—		—	%	Interest expense — Deferred financing costs																												(0.7)		(0.7)		—		—	%

Equity in loss of Real Estate Ventures																										(6.9)		(1.9)		(5.0)		263.2	%
Equity in loss of unconsolidated real estate ventures																									Equity in loss of unconsolidated real estate ventures																										(4.6)			(6.9)			2.3			(33.3)	%

Net income	Net income																									$	7.1	$	8.1	$	(1.0)	(12.3)	%	Net income																												$	6.1	$	7.0	$	(0.9)	(12.9)	%
Net income attributable to Common Shareholders of Brandywine Realty Trust	Net income attributable to Common Shareholders of Brandywine Realty Trust																									$	0.04	$	0.04	$	—	—	%	Net income attributable to Common Shareholders of Brandywine Realty Trust																												$	0.03	$	0.04	$	(0.01)	(25.0)	%

(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 ~~decreased~~increased primarily as a result of the following:

•$~~24.3 million decrease related to the Q1 2020 through Q1 2021 Dispositions;~~

•~~$2.4~~1.2 million decrease related to a property that has been vacated and ~~placed into redevelopment~~taken out of service for future demolition in ~~the Metropolitan Washington D.C.~~our Austin, Texas segment;

•$~~0.9~~1.2 million ~~decrease~~increase related to ~~reduced parking income as a result~~the residential and hotel components at the FMC Tower in our Philadelphia CBD segment related to higher occupancy partially due to the lifting of ~~the~~ COVID-19 ~~pandemic;~~pandemic restrictions;

•$~~0.9~~1.2 million ~~decrease~~increase related to ~~the move out of a large tenant at an office property in~~ our ~~Pennsylvania Suburbs segment at the end of 2020;~~Recently Completed/Acquired Property; and

•$~~2.7~~1.0 million ~~offsetting~~ increase related to a development property in our Austin, Texas segment that was partially placed into service during the ~~Recently Completed/Acquired Properties.~~third quarter of 2021.

Third party management fees, labor reimbursement, and leasing income ~~increased~~decreased primarily due to ~~$1.0~~a $0.8 million ofdecrease in fees earned from ~~the Mid-Atlantic Office~~our MAP Venture ~~formed~~primarily related to decreases in leasing commissions and construction management fees, $0.5 million decrease related to a third party management contract terminated in the fourth quarter of ~~2020~~2021, and ~~$0.7~~$0.1 million decrease as a result of the sale of the final property at our Allstate Venture during the fourth quarter of 2021.

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Other income increased primarily as a result of the following:

•$3.4 million in excess insurance proceeds primarily related to a property in our Austin, Texas segment;

•$2.2 million of ~~fees earned~~settlement proceeds received from a general contractor for liquidated damages as a result of a construction delay at a property in our Austin, Texas segment; and

•$0.2 million increase in income from the ~~Commerce Square Venture formed in~~restaurant component of FMC Tower as a result of the ~~third quarter~~lifting of ~~2020.~~COVID-19 pandemic restrictions.

Property Operating Expenses

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

•$~~7.5~~0.6 million ~~decrease~~increase related to a development property in our Austin, Texas segment that was partially placed into service during the third quarter of 2021;

•$0.4 million increase related to the ~~Q1 2020 through Q1 2021 Dispositions;~~commencement of operations of B.Labs, a life science incubator lab in our Philadelphia CBD segment, during the first quarter of 2022; and

•$~~1.1 million decrease across our Same Store Property Portfolio primarily due to decreased use of our properties by the tenants during the COVID-19 pandemic.~~

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~~Real Estate Taxes~~

~~The decrease in Real estate taxes is primarily driven by a $2.7 million decrease related to the Q1 2020 through Q1 2021 Dispositions. The offsetting $0.7~~0.7 million increase ~~is primarily~~at the ~~result~~hotel and restaurant components of ~~acquisition of 250 King of Prussia Road in our Pennsylvania Suburbs Segment and miscellaneous increases in tax assessments across our Total Portfolio.~~

~~Depreciation and Amortization~~

~~Depreciation and amortization expense decreased~~FMC Tower primarily as a result of the ~~following:~~lifting of COVID-19 pandemic restrictions.

•~~$9.0~~The remaining increase of $0.9 million is primarily related to miscellaneous increases in property operating expenses across our Total Portfolio, primarily driven by increases in property-related employee compensation expenses, marketing expenses, and repairs and maintenance.

Real Estate Taxes

Real estate taxes decreased primarily due to a $0.6 million decrease ~~related to the Q1 2020 through Q1 2021 Dispositions;~~across properties in our Pennsylvania Suburbs segment as a result of tax reassessments.

Depreciation and Amortization

•Depreciation and amortization expense ~~$3.5~~increased primarily as a result of a $3.3 million ~~decrease at the Same Store Property Portfolio, largely~~increase in depreciation expense due to the ~~completion~~reassessment of ~~amortization~~the estimated useful life of ~~acquired in-place lease intangibles; and~~

•~~$0.4 million decrease related to the Development/Redevelopment~~seven properties ~~primarily related to a property~~ in our ~~Philadelphia CBD~~Austin, Texas segment ~~that was taken out~~pursuant to future demolition plans as part of ~~service for redevelopment.~~

~~These decreases were partially offset by a $1.1 million increase related to~~our Broadmoor master development plan beginning in the ~~Recently Completed/Acquired properties.~~second quarter of 2021.

General and Administrative

General and administrative expense ~~decreased~~increased primarily as a result of a $2.4 million recovery of previously expensed legal fees incurred in pursuit of a settlement that was received in the first quarter of 2021. ~~The offsetting $0.4~~In addition, $0.7 million of the increase is ~~primarily~~ related to increased ~~stock~~non-cash compensation expense ~~as a result~~during the first quarter of ~~changes~~2022 compared to the ~~vesting period for retirement eligible officers beginning with the 2020 awards.~~first quarter of 2021.

Net Gain on ~~Disposition~~Sale of Undepreciated Real Estate

The gain of ~~$2.6~~$0.9 million recognized during the three months ended March 31, ~~2020~~2022 is ~~primarily~~ related to the ~~disposition~~sale of ~~52 East Swedesford Road, an office property~~two parcels of land in our ~~Pennsylvania Suburbs~~Other Segment.

~~Net Gain on Sale of Undepreciated Real Estate~~

The gain of $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 and investment income ~~increased~~decreased primarily as a result of a $1.2 million decrease related to our preferred equity interest in an entity that owned two stabilized office buildings located in Austin, Texas, which was redeemed prior to maturity during September, 2021.

Equity in loss of unconsolidated real estate ventures

Equity in loss of unconsolidated real estate ventures decreased primarily due to ~~$1.2 million of preferred return earned during the first quarter of 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~~1.2 million decrease associated with our Commerce Square Venture primarily 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~~decrease in the ~~third quarter~~amortization 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~~in-place lease intangibles during the three months ended March 31, ~~2021~~2022 compared to the three months ended March 31, ~~2020.~~2021;

~~Equity in loss of Real Estate Ventures~~

~~Equity in loss of Real Estate Ventures increased~~•$0.4 million decrease related to our MAP Venture primarily due to a decrease in depreciation expense during the ~~following:~~

•~~$4.2 million in net losses associated with our Commerce Square Venture formed on July 21, 2020;~~three months ended March 31, 2022 than the three months ended March 31, 2021; and

•$~~0.9~~0.3 million ~~increase related to~~decrease associated with our ~~MAP Venture due to lower revenues driven by lower occupancy during the first quarter of 2021 than 2020.~~1919 Market Venture.

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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 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~~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.

As of March 31, ~~2021,~~2022, the Parent Company owned a ~~99.4%~~99.7% interest in the Operating Partnership. The remaining interest of approximately ~~0.6%~~0.3% 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 ~~2021~~2022 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, ~~2021~~2022 we were in compliance with all of our debt covenants and requirement obligations.

Our $600 million Unsecured Credit Facility is scheduled to expire in July 2022. Although the Unsecured Credit Facility has two six-month extension options, we intend to renew and extend the facility for an additional four year term at similar economics. In addition, our Term Loan is scheduled to mature in October 2022 and we plan to extend the maturity date for an additional five-year term on similar terms. The Term Loan is currently swapped to a fixed rate of 2.87% and we have yet to determine if we intend to swap the loan to a fixed rate; however, based on the current interest rate environment, we anticipate the new effective interest rate will be above the current fixed rate.

In addition, we are continuing to monitor the 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 and continues to evolve globally. However, if the 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. ~~We collected 98.9%~~

Table of ~~total cash-based rent due from tenants during the first quarter of 2021, which reflects a 99.1% collection rate from our office tenants.~~Contents

We have granted rent relief requests primarily to our co-working and retail tenants. The relief requests have substantially all been in the form of rent deferral for varying lengths of time, but ~~were/are~~were primarily ~~being~~ repaid in 2020 and 2021. For those tenants we believe require rent relief, we have granted deferrals and, in some instances, 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 loan would increase.

The Parent Company unconditionally guarantees the Operating Partnership’s unsecured debt obligations, which, as of March 31, ~~2021,~~2022, amounted to ~~$1,841.6~~$1,984.6 million. We did not have any secured debt obligations on our wholly-owned portfolio as of March 31, ~~2021.~~2022.

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 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 ~~12,~~11, ''Beneficiaries' Equity of the Parent ~~Company”~~Company,” to our Consolidated Financial Statements for further information related to our share repurchase 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, ~~2021,~~2022, we ~~did not have any property dispositions with~~closed on the ~~exception~~sale of ~~our contribution~~two parcels of ~~an investment in a 99-year prepaid leasehold interest in a one-acre~~ land ~~parcel held~~ for ~~development to 3025 JFK Venture.~~net cash proceeds of $10.2 million.

As of March 31, ~~2021,~~2022, we had ~~$45.7~~$39.3 million of cash and cash equivalents and ~~$585.7~~$442.8 million of available borrowings under our unsecured ~~revolving~~ credit facility, net of ~~$1.3~~$1.2 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~~2022 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, ~~2021~~2022 and December 31, ~~2020,~~2021, we maintained cash and cash equivalents and restricted cash of ~~$46.5~~$40.2 million and ~~$47.1~~$28.3 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):

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		Three Months Ended March 31,							Three Months Ended March 31,
Activity	Activity	2021		2020		(Decrease) Increase		Activity	2022		2021		(Decrease) Increase
Operating	Operating	$	41,176	$	45,058	$	(3,882)	Operating	$	28,515	$	41,176	$	(12,661)
Investing	Investing	(21,249)		(42,568)		21,319		Investing	(110,787)		(21,249)		(89,538)
Financing	Financing	(20,524)		(40,286)		19,762		Financing	94,130		(20,524)		114,654
Net cash flows	Net cash flows	$	(597)	$	(37,796)	$	37,199	Net cash flows	$	11,858	$	(597)	$	12,455

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. The decrease in operating cash flows is primarily due to the timing of operating expense payments.

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, ~~2021,~~2022, when compared to the three months ended March 31, ~~2020,~~2021, the change in investing cash flows was due to the following activities (in thousands):


	(Decrease) Increase
Acquisitions of real estate	$	~~11,432~~ (3,446)
Capital expenditures and capitalized interest	~~22,884~~ (57,323)
Capital improvements/acquisition deposits/leasing costs	~~2,585~~ (4,369)
Joint venture investments	~~(1,884)~~
~~Distributions from joint ventures~~	~~3,934~~ (24,878)
Proceeds from the sale of properties	~~(17,632)~~1,402
Capital distributions from unconsolidated real estate ventures	(924)


~~Decrease~~Increase in net cash used in investing activities	$	~~21,319~~ (89,538)

We generally fund our investment activity through the sale of real estate, property-level financing, credit facilities, senior unsecured notes, 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, ~~2021,~~2022, when compared to the three months ended March 31, ~~2020,~~2021, the change in financing cash flows was due to the following activities (in thousands):


	(Decrease) Increase
Proceeds from debt obligations	$	~~(33,000)~~105,000
Repayments of debt obligations	~~(2,055)~~15,000
~~Proceeds from the exercise~~Redemption of ~~stock options, net~~limited partnership units	~~(110)~~(4,006)
~~Repurchase and retirement of common shares~~	~~53,857~~
~~Other financing activities~~	~~(36)~~
Dividends and distributions paid	~~1,106~~ (58)
~~Decrease~~Other financing activities	(1,282)
Increase in net cash ~~used in~~provided by financing activities	$	~~19,762~~114,654

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Capitalization

Indebtedness

The table below summarizes indebtedness under our ~~mortgage notes payable and our~~ unsecured debt at March 31, ~~2021~~2022 and December 31, ~~2020:~~2021:


		March 31, 2021			December 31, 2020				March 31, 2022			December 31, 2021
		(dollars in thousands)							(dollars in thousands)
Balance: (a)	Balance: (a)							Balance: (a)
Fixed rate	Fixed rate	$	1,750,000		$	1,775,774		Fixed rate	$	1,750,000		$	1,750,000
Variable rate - unhedged	Variable rate - unhedged	91,610			52,836			Variable rate - unhedged	234,610			101,610
Total	Total	$	1,841,610		$	1,828,610		Total	$	1,984,610		$	1,851,610
Percent of Total Debt:	Percent of Total Debt:							Percent of Total Debt:
Fixed rate	Fixed rate	95.0		%	97.1		%	Fixed rate	88.2		%	94.5		%
Variable rate - unhedged	Variable rate - unhedged	5.0		%	2.9		%	Variable rate - unhedged	11.8		%	5.5		%
Total	Total	100.0		%	100.0		%	Total	100.0		%	100.0		%
Weighted-average interest rate at period end:	Weighted-average interest rate at period end:							Weighted-average interest rate at period end:
Fixed rate	Fixed rate	3.8		%	3.8		%	Fixed rate	3.8		%	3.8		%
Variable rate - unhedged	Variable rate - unhedged	1.6		%	1.5		%	Variable rate - unhedged	1.5		%	1.3		%
Total	Total	3.7		%	3.8		%	Total	3.6		%	3.7		%
Weighted-average maturity in years:	Weighted-average maturity in years:							Weighted-average maturity in years:
Fixed rate	Fixed rate	4.8			5.2			Fixed rate	3.8			4.0
Variable rate - unhedged	Variable rate - unhedged	12.5			14.6			Variable rate - unhedged	4.7			10.6
Total	Total	5.2			5.4			Total	3.9			4.4

(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, ~~2021~~2022 were as follows (dollars in thousands):


Period	Period	Principal maturities		Weighted Average Interest Rate of Maturing Debt		Period	Principal maturities		Weighted Average Interest Rate of Maturing Debt
2021 (nine months remaining)		$	—	—	%
2022		263,000		2.84	%
2022 (nine months remaining)						2022 (nine months remaining)	$	406,000	2.35	%
2023	2023	350,000		3.87	%	2023	350,000		3.87	%
2024	2024	350,000		3.78	%	2024	350,000		3.78	%
2025	2025	—		—	%	2025	—		—	%
2026	2026	—		—	%	2026	—		—	%
2027	2027	450,000		4.03	%	2027	450,000		4.03	%
2028	2028	—		—	%	2028	—		—	%
2029	2029	350,000		4.30	%	2029	350,000		4.30	%
2030	2030	—		—	%	2030	—		—	%
2031						2031	—		—	%
Thereafter	Thereafter	78,610		1.47	%	Thereafter	78,610		1.52	%
Totals	Totals	$	1,841,610	3.72	%	Totals	$	1,984,610	3.56	%

We anticipate refinancing our $350 million 3.95% Guaranteed Notes prior to the February 2023 maturity with similar guaranteed notes that will likely have a term between five and ten years. In the current interest rate environment, we anticipate the new guaranteed notes will have an effective interest rate that is above the current effective interest rate.

Unsecured Debt

The Operating Partnership is the issuer of our unsecured notes which are fully and unconditionally guaranteed by the Parent Company. The indenture under which the Operating Partnership issued its unsecured notes contains financial covenants, including: (i) a leverage ratio not to exceed 60%; (ii) a secured debt leverage ratio not to exceed 40%; (iii) a debt service coverage ratio of greater than 1.5 to 1.0; and (iv) an unencumbered asset value of not less than 150% of unsecured debt. The Operating Partnership is in compliance with all covenants as of March 31, ~~2021.~~2022.

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The charter documents of the Parent Company and Operating Partnership do not limit the amount or form of indebtedness that the Operating Partnership may incur, and its policies on debt incurrence are solely within the discretion of the Parent Company’s Board of Trustees, subject to the financial covenants in the Credit Facility, indenture and other credit agreements.

Equity

In order to maintain its qualification as a REIT, the Parent Company is required to, among other things, pay dividends to its shareholders of at least 90% of its REIT taxable income. See Note ~~12,~~11, ''Beneficiaries' Equity of the Parent Company,” to our Consolidated Financial Statements for further information related to our dividends declared for the first quarter of ~~2021.~~

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2022.

Contractual Obligations

Refer to our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 for a discussion of our contractual obligations.

There have been no material changes, outside the ordinary course of business, to these contractual obligations during the three months ended March 31, ~~2021.~~2022.

Funds from Operations (FFO)

Pursuant to the revised definition of FFO adopted by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”), we calculate FFO by adjusting net income/(loss) attributable to common unit holders (computed in accordance with GAAP) for gains (or losses) from sales of properties, impairment losses on depreciable consolidated real estate, impairment losses on investments in unconsolidated real estate ventures driven by a measurable decrease in the fair value of depreciable real estate held by the unconsolidated ~~Real Estate Ventures,~~real estate ventures, real estate related depreciation and amortization, and after similar adjustments for unconsolidated ~~Real Estate Ventures.~~real estate ventures. FFO is a non-GAAP financial measure. We believe that the use of FFO combined with the required GAAP presentations, has been beneficial in improving the understanding of operating results of REITs among the investing public and making comparisons of REITs’ operating results more meaningful. We consider FFO to be a useful measure for reviewing comparative operating and financial performance because, by excluding property impairments, gains or losses related to sales of previously depreciated operating real estate assets and real estate depreciation and amortization, FFO can help the investing public compare the operating performance of a company’s real estate between periods or as compared to other companies. Our computation of FFO may not be comparable to FFO reported by other REITs or real estate companies that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently.

We consider net income, as defined by GAAP, to be the most comparable earnings measure to FFO. While FFO and FFO per unit are relevant and widely used measures of operating performance of REITs, FFO does not represent cash flow from operations or net income as defined by GAAP and should not be considered as alternatives to those measures in evaluating our liquidity or operating performance. We believe that to further understand our performance, FFO should be compared with our reported net income/(loss) attributable to common unit holders and considered in addition to cash flows in accordance with GAAP, as presented in our consolidated financial statements.

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The following table presents a reconciliation of net income attributable to common ~~unit holders~~unitholders to FFO for the three months ended March 31, ~~2021~~2022 and ~~2020:~~2021:


		Three Months Ended March 31,					Three Months Ended March 31,
		2021		2020					2022		2021
		(amounts in thousands, except share information)				(amounts in thousands, except share information)
Net income attributable to common unitholders	Net income attributable to common unitholders	$	6,819	$	7,944			Net income attributable to common unitholders	$	5,955	$	6,819
Add (deduct):	Add (deduct):							Add (deduct):
Amount allocated to unvested restricted unitholders	Amount allocated to unvested restricted unitholders	146		131				Amount allocated to unvested restricted unitholders	148		146

Net gain on disposition of real estate	Net gain on disposition of real estate	(74)		(2,586)				Net gain on disposition of real estate	—		(74)

Depreciation and amortization:	Depreciation and amortization:							Depreciation and amortization:
Real property	Real property	31,534		38,353				Real property	36,162		31,534
Leasing costs including acquired intangibles	Leasing costs including acquired intangibles	8,280		13,199				Leasing costs including acquired intangibles	6,994		8,280
Company’s share of unconsolidated real estate ventures	Company’s share of unconsolidated real estate ventures	13,731		4,599				Company’s share of unconsolidated real estate ventures	11,295		13,731
Partners’ share of consolidated real estate ventures	Partners’ share of consolidated real estate ventures	(5)		(60)				Partners’ share of consolidated real estate ventures	(5)		(5)
Funds from operations	Funds from operations	$	60,431	$	61,580			Funds from operations	$	60,549	$	60,431
Funds from operations allocable to unvested restricted shareholders	Funds from operations allocable to unvested restricted shareholders	(213)		(190)				Funds from operations allocable to unvested restricted shareholders	(238)		(213)
Funds from operations available to common share and unit holders (FFO)	Funds from operations available to common share and unit holders (FFO)	$	60,218	$	61,390			Funds from operations available to common share and unit holders (FFO)	$	60,311	$	60,218
Weighted-average shares/units outstanding — basic (a)	Weighted-average shares/units outstanding — basic (a)	171,606,375		177,051,602				Weighted-average shares/units outstanding — basic (a)	171,927,588		171,606,375
Weighted-average shares/units outstanding — fully diluted (a)	Weighted-average shares/units outstanding — fully diluted (a)	172,617,754		177,635,093				Weighted-average shares/units outstanding — fully diluted (a)	173,521,633		172,617,754

(a)Includes common ~~share~~shares and partnership units outstanding through the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, respectively.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Market risk is the exposure to loss resulting from changes in interest rates, commodity prices and equity prices. In pursuing our business plan, the primary market risk to which we are exposed is interest rate risk. Changes in the general level of interest rates

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prevailing in the financial markets may affect the spread between our yield on invested assets and cost of funds and, in turn, our ability to make distributions or payments to our shareholders. While we have not experienced any significant credit losses, in the event of a significant rising interest rate environment and/or continued economic slowdown, defaults could increase and result in losses to us which would adversely affect our operating results and liquidity.

Interest Rate Risk and Sensitivity Analysis

The analysis below presents the sensitivity of the market value of the Operating Partnership’s financial instruments to selected changes in market rates. The range of changes chosen reflects its view of changes which are reasonably possible over a one-year period. Market values are the present value of projected future cash flows based on the market rates chosen.

Our financial instruments consist of both fixed and variable rate debt. As of March 31, ~~2021,~~2022, our consolidated debt consisted of unsecured notes with an outstanding principal balance of $1,500.0 million, all of which are fixed rate borrowings. We also have variable rate debt consisting of trust preferred securities with an outstanding principal balance of $78.6 million, a $600.0 million Credit Facility with an outstanding ~~principal~~ balance of ~~$13.0~~$156.0 million and an unsecured term loan with an outstanding principal balance of $250.0 million. The unsecured term loan has been swapped to a fixed rate. All financial instruments were entered into for other than trading purposes and the net market value of these financial instruments is referred to as the net financial position. Changes in interest rates have different impacts on the fixed and variable rate portions of our debt portfolio. A change in interest rates on the fixed portion of the debt portfolio impacts the net financial instrument position, but has no impact on interest incurred or cash flows. A change in interest rates on the variable portion of the debt portfolio impacts the interest incurred and cash flows, but does not impact the net financial instrument position.

As of March 31, ~~2021,~~2022, based on prevailing interest rates and credit spreads, the fair value of our unsecured notes was ~~$1,597.3~~$1,515.3 million. For sensitivity purposes, a 100-basis point change in the discount rate equates to a change in the total fair value of our debt of approximately ~~$16.0~~$15.2 million at March 31, ~~2021.~~2022.

From time to time or as the need arises, we use derivative instruments to manage interest rate risk exposures and not for speculative or trading purposes. The total outstanding principal balance of our variable rate debt was approximately ~~$341.6~~$484.5 million ~~and $328.6 million at~~as of March 31, ~~2021 and December 31, 2020, respectively.~~2022. The total fair value of our variable rate debt was approximately ~~$322.0 million and $308.8~~$467.0 million at March 31, ~~2021 and December 31, 2020, respectively.~~2022. For sensitivity purposes, if market rates of interest increase by 100 basis points the fair value of our variable rate debt would decrease by approximately ~~$11.0~~$8.2 million at March 31, ~~2021.~~2022. If market rates of interest decrease by 100 basis points the fair value of our outstanding variable rate debt would increase by approximately ~~$12.1 million.~~$9.0 million at March 31, 2022.

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These amounts were determined solely by considering the impact of hypothetical interest rates on our financial instruments. Due to the uncertainty of specific actions we may undertake to minimize possible effects of market interest rate increases, this analysis assumes no changes in our financial structure.

Item 4. Controls and Procedures

Controls and Procedures (Parent Company)

(a)Evaluation of disclosure controls and procedures. Under the supervision and with the participation of its management, including its principal executive officer and principal financial officer, the Parent Company conducted an evaluation of its disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act), as of the end of the period covered by this quarterly report. Based on this evaluation, the Parent Company’s principal executive officer and principal financial officer have concluded that the Parent Company’s disclosure controls and procedures are effective as of the end of the period covered by this quarterly report.

(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.

Controls and Procedures (Operating Partnership)

(a)Evaluation of disclosure controls and procedures. Under the supervision and with the participation of its management, including its principal executive officer and principal financial officer, the Operating Partnership conducted an evaluation of its disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Exchange Act as of the end of the period covered by this quarterly report. Based on this evaluation, the Operating Partnership’s principal executive officer and

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principal financial officer have concluded that the Operating Partnership’s disclosure controls and procedures are effective as of the end of the period covered by this quarterly report.

(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.

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Part II. OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

As of March 31, ~~2021~~2022 there have been no material changes to the Risk Factors disclosed in "Part I. Item 1A. Risk Factors" in ~~the Company's~~our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

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

(a)None.

(b)Not applicable.

(c)There were no common share repurchases under the Parent Company’s share repurchase program ~~or other repurchases of equity securities of the Parent Company or the Operating Partnership,~~ during the fiscal quarter ended March 31, ~~2021.~~2022. As of March 31, ~~2021,~~2022, $82.9 million remained available for repurchases under our share repurchase program.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits


(a)	Exhibits
	Exhibits No.	Description
	10.1	Form of ~~2021-2023 Performance Unit~~2022 Restricted Common Share Rights Award Agreement ~~(previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated March 10, 2021 and incorporated herein by reference).~~(with outperformance feature) (filed herewith)**
	10.2	~~2021-2023~~Form of 2022-2024 Restricted Performance Share Unit ~~Program (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated March 10, 2021 and incorporated herein by reference).~~Award Agreement (filed herewith)**
	10.3	~~Form of~~2022-2024 Restricted ~~Common~~Performance Share ~~Rights Award (previously filed as an exhibit to Brandywine Realty Trust’s Form 8-K dated March 10, 2021 and incorporated herein by reference).~~Unit Program (filed herewith)**
	31.1	Certification of the Chief Executive Officer of Brandywine Realty Trust pursuant to 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934 (filed herewith)
	31.2	Certification of the Chief Financial Officer of Brandywine Realty Trust pursuant to 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934 (filed herewith)
	31.3	Certification of the Chief Executive Officer of Brandywine Realty Trust, in its capacity as the general partner of Brandywine Operating Partnership, L.P., pursuant to 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934 (filed herewith)
	31.4	Certification of the Chief Financial Officer of Brandywine Realty Trust, in its capacity as the general partner of Brandywine Operating Partnership, L.P., pursuant to 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934 (filed herewith)
	32.1	Certification of the Chief Executive Officer of Brandywine Realty Trust pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)
	32.2	Certification of the Chief Financial Officer of Brandywine Realty Trust pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)
	32.3	Certification of the Chief Executive Officer of Brandywine Realty Trust, in its capacity as the general partner of Brandywine Operating Partnership, L.P., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)
	32.4	Certification of the Chief Financial Officer of Brandywine Realty Trust, in its capacity as the general partner of Brandywine Operating Partnership, L.P., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)
	101.1	The following materials from the Quarterly Reports on Form 10-Q of Brandywine Realty Trust and Brandywine Operating Partnership, L.P. for the quarter ended March 31, ~~2021~~2022 formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statement of Equity, (iv) the Consolidated Statements of Cash Flows, and (v) Notes to Consolidated Financial Statements, detailed tagged and filed herewith.
	104	Cover Page Interactive Data File – the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

** Management contract or compensatory plan or arrangement.

Exhibits 32.1, 32.2, 32.3 and 32.4 are being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liability of that section, nor shall any of such exhibits be deemed to be incorporated by reference in any filing of Brandywine Realty Trust or Brandywine Operating Partnership, L.P. under the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise stated in such filing.

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SIGNATURES OF REGISTRANT

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

BRANDYWINE REALTY TRUST
(Registrant)

Date:

~~May 5, 2021~~April 27, 2022

By:

/s/ Gerard H. Sweeney

Gerard H. Sweeney, President and
Chief Executive Officer

(Principal Executive Officer)

Date:

~~May 5, 2021~~April 27, 2022

By:

/s/ Thomas E. Wirth

Thomas E. Wirth, Executive Vice President
and Chief Financial Officer

(Principal Financial Officer)

Date:

~~May 5, 2021~~April 27, 2022

By:

/s/ Daniel Palazzo

Daniel Palazzo, Vice President and
Chief Accounting Officer

(Principal Accounting Officer)

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SIGNATURES OF REGISTRANT

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

BRANDYWINE OPERATING PARTNERSHIP, L.P.
(Registrant)
BRANDYWINE REALTY TRUST,
as general partner

Date:

~~May 5, 2021~~April 27, 2022

By:

/s/ Gerard H. Sweeney

Gerard H. Sweeney, President and
Chief Executive Officer

(Principal Executive Officer)

Date:

~~May 5, 2021~~April 27, 2022

By:

/s/ Thomas E. Wirth

Thomas E. Wirth, Executive Vice President
and Chief Financial Officer

(Principal Financial Officer)

Date:

~~May 5, 2021~~April 27, 2022

By:

/s/ Daniel Palazzo

Daniel Palazzo, Vice President and
Chief Accounting Officer

(Principal Accounting Officer)

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