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, ~~2019~~

2020

☐

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

For the transition period from to

~~Commission file number~~

~~001-9106 (Brandywine Realty Trust)~~

~~000-24407 (Brandywine Operating Partnership, L.P.)~~

Brandywine Realty Trust

Brandywine Operating Partnership, L.P.

(Exact name of registrant as specified in its charter)

~~MARYLAND (Brandywine Realty Trust)~~		~~23-2413352~~
~~DELAWARE (Brandywine Operating Partnership L.P.)~~		~~23-2862640~~
~~(State or other jurisdiction of~~		~~(I.R.S. Employer~~
~~incorporation or organization)~~		~~Identification No.)~~

~~2929 Walnut Street~~ ~~Suite 1700~~
~~Philadelphia, Pennsylvania~~		~~19104~~
~~(Address of principal executive offices)~~		~~(Zip Code)~~

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

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



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	~~Yes~~ ☒ No ☐
Brandywine Operating Partnership, L.P.	Yes	~~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	~~Yes~~ ☒ No ☐
Brandywine Operating Partnership, L.P.	Yes	~~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	~~Yes~~ ☐	☐ No ☒
Brandywine Operating Partnership, L.P.	Yes	~~Yes~~ ☐	☐ No ☒

A total of ~~176,137,761~~170,495,608 Common Shares of Beneficial Interest, par value $0.01 per share of Brandywine Realty Trust, were outstanding as of April ~~26, 2019.~~

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

23, 2020.

~~Title of each class~~		~~Trading Symbol(s)~~		~~Name of each exchange on which registered~~
~~Common Shares of Beneficial Interest~~		~~BDN~~		~~NYSE~~

This report combines the quarterly reports on Form 10-Q for the period ended March 31, ~~2019~~2020 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, ~~2019,~~2020, owned a 99.4% interest in the Operating Partnership. The remaining 0.6% interest consists of common units of limited partnership interest issued by the Operating Partnership to third parties in exchange for contributions of properties to the Operating Partnership. As the sole general partner of the Operating Partnership, the Parent Company has full and complete authority over the Operating Partnership’s day-to-day operations and management.

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

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

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

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, ~~and directly or indirectly holds~~including the Company's ownership interests in the ~~Company’s Real Estate Ventures.~~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.

•

~~Consolidated Financial Statements; and~~

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.

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

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,

December 31,

2019

2018

(unaudited)

ASSETS

Real estate investments:

Operating properties

$
4,015,879

$
3,953,319

Right of use asset - operating leases

22,175

-

Accumulated depreciation

(891,125
)

(865,462
)
Operating real estate investments, net

3,146,929

3,087,857

Construction-in-progress

112,176

150,263

Land held for development

88,047

86,401

Prepaid leasehold interests in land held for development, net

39,897

39,999

Total real estate investments, net

3,387,049

3,364,520

Assets held for sale, net

7,345

11,599

Cash and cash equivalents

14,449

22,842

Accounts receivable, net of allowance of $284 and $1,653 as of March 31, 2019 and December 31, 2018, respectively

21,780

16,394

Accrued rent receivable, net of allowance of $11,018 and $11,266 as of March 31, 2019 and December 31, 2018, respectively

168,781

165,243

Investment in Real Estate Ventures, equity method

161,568

169,100

Deferred costs, net

95,293

91,075

Intangible assets, net

119,903

131,348

Other assets

139,761

126,400

Total assets

$
4,115,929

$
4,098,521

LIABILITIES AND BENEFICIARIES' EQUITY

Mortgage notes payable, net

$
319,132

$
320,869

Unsecured credit facility

160,500

92,500

Unsecured term loan, net

248,168

248,042

Unsecured senior notes, net

1,366,997

1,366,635

Accounts payable and accrued expenses

112,375

125,696

Distributions payable

34,107

33,632

Deferred income, gains and rent

24,749

28,293

Acquired lease intangibles, net

29,813

31,783

Lease liability - operating leases

22,402

-

Other liabilities

16,194

18,498

Total liabilities

$
2,334,437

$
2,265,948

Commitments and contingencies (See Note 14)

Brandywine Realty Trust's Equity:

Common Shares of Brandywine Realty Trust's beneficial interest, $0.01 par value; shares authorized 400,000,000; 176,001,580 and 176,873,324 issued and outstanding as of March 31, 2019 and December 31, 2018, respectively

1,761

1,770

Additional paid-in-capital

3,187,312

3,200,850

Deferred compensation payable in common shares

14,640

14,021

Common shares in grantor trust, 1,012,542 and 977,120 issued and outstanding as of March 31, 2019 and December 31, 2018, respectively

(14,640
)

(14,021
)
Cumulative earnings

795,186

796,513

Accumulated other comprehensive income

2,560

5,029

Cumulative distributions

(2,217,469
)

(2,183,909
)
Total Brandywine Realty Trust's equity

1,769,350

1,820,253

Noncontrolling interests

12,142

12,320

Total beneficiaries' equity

$
1,781,492

$
1,832,573

Total liabilities and beneficiaries' equity

$
4,115,929

$
4,098,521



	March 31, 2020			December 31, 2019
ASSETS
Real estate investments:
Operating properties	$	4,004,118		$	4,006,459
Accumulated depreciation	(992,997		)	(973,318		)
Right of use asset - operating leases, net	21,485			21,656
Operating real estate investments, net	3,032,606			3,054,797
Construction-in-progress	193,160			180,718
Land held for development	108,213			96,124
Prepaid leasehold interests in land held for development, net	39,490			39,592
Total real estate investments, net	3,373,469			3,371,231
Assets held for sale, net	10,698			7,349
Cash and cash equivalents	52,702			90,499
Accounts receivable, net of allowance of $284 as of both March 31, 2020 and December 31, 2019	16,928			16,363
Accrued rent receivable, net of allowance of $7,484 and $7,691 as of March 31, 2020 and December 31, 2019, respectively	175,277			174,144
Investment in Real Estate Ventures	119,998			120,294
Deferred costs, net	94,336			95,560
Intangible assets, net	75,670			84,851
Other assets	126,264			115,678
Total assets	$	4,045,342		$	4,075,969
LIABILITIES AND BENEFICIARIES' EQUITY
Mortgage notes payable, net	$	312,001		$	313,812
Unsecured credit facility	50,000			—
Unsecured term loan, net	248,692			248,561
Unsecured senior notes, net	1,581,907			1,582,045
Accounts payable and accrued expenses	109,755			113,347
Distributions payable	32,692			33,815
Deferred income, gains and rent	34,673			35,284
Intangible liabilities, net	20,605			22,263
Lease liability - operating leases	22,606			22,554
Other liabilities	28,597			15,985
Total liabilities	$	2,441,528		$	2,387,666
Commitments and contingencies (See Note 15)
Brandywine Realty Trust's Equity:
Common Shares of Brandywine Realty Trust's beneficial interest, $0.01 par value; shares authorized 400,000,000; 170,965,987 and 176,480,095 issued and outstanding as of March 31, 2020 and December 31, 2019, respectively	1,710			1,766
Additional paid-in-capital	3,140,194			3,192,158
Deferred compensation payable in common shares	17,012			16,216
Common shares in grantor trust, 1,117,783 and 1,105,542 issued and outstanding as of March 31, 2020 and December 31, 2019, respectively	(17,012		)	(16,216		)
Cumulative earnings	812,578			804,556
Accumulated other comprehensive loss	(10,195		)	(2,370		)
Cumulative distributions	(2,350,733		)	(2,318,233		)
Total Brandywine Realty Trust's equity	1,593,554			1,677,877
Noncontrolling interests	10,260			10,426
Total beneficiaries' equity	$	1,603,814		$	1,688,303
Total liabilities and beneficiaries' equity	$	4,045,342		$	4,075,969

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

BRANDYWINE REALTY TRUST

CONSOLIDATED STATEMENTS OF OPERATIONS

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

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

BRANDYWINE REALTY TRUST

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited, in thousands)

Three-month periods ended

March 31,

2019

2018

Net income
$
4,066

$
44,705

Comprehensive income (loss):

Unrealized gain (loss) on derivative financial instruments

(2,689
)

4,696

Amortization of interest rate contracts (1)

206

312

Comprehensive income (loss):

(2,483
)

5,008

Comprehensive income

1,583

49,713

Comprehensive income attributable to noncontrolling interest

(43
)

(418
)
Comprehensive income attributable to Brandywine Realty Trust
$
1,540

$
49,295



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

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

BRANDYWINE REALTY TRUST

CONSOLIDATED STATEMENTS OF BENEFICIARIES’ EQUITY

~~For thethree-month period ended March 31, 2019~~

(unaudited, in thousands, except number of shares)

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

BRANDYWINE REALTY TRUST

CONSOLIDATED STATEMENT OF BENEFICIARIES’ EQUITY

~~For the three-month period ended March 31, 2018~~

(unaudited, in thousands, except number of shares)

Deferred Compensation

Comprehensive Income (Loss)

BRANDYWINE REALTY TRUST

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

Three-month periods ended March 31,

2019

2018

Cash flows from operating activities:

Net income

$
4,066

$
44,705

Adjustments to reconcile net income to net cash from operating activities:

Depreciation and amortization

51,980

43,291

Amortization of deferred financing costs

666

627

Amortization of debt discount/(premium), net

175

176

Amortization of stock compensation costs

3,449

3,265

Straight-line rent income

(4,165
)

(4,978
)
Amortization of acquired above (below) market leases, net

(1,805
)

(793
)
Straight-line ground rent expense

351

22

Provision for doubtful accounts

-

467

Net gain on real estate venture transactions

-

(37,263
)
Net gain on sale of interests in real estate

(1,001
)

(22
)
Income from Real Estate Ventures, net of distributions

1,159

2,209

Income tax provision

29

138

Changes in assets and liabilities:

Accounts receivable

(3,539
)

(646
)
Other assets

(39,088
)

(12,911
)
Accounts payable and accrued expenses

(10,822
)

(1,146
)
Deferred income, gains and rent

(3,148
)

2,295

Other liabilities

19,459

(738
)
Net cash provided by operating activities

17,766

38,698

Cash flows from investing activities:

Acquisition of properties

-

(24,946
)
Proceeds from the sale of properties

5,273

14,921

Proceeds from real estate venture sales

259

42,953

Proceeds from repayment of mortgage notes receivable

15

562

Capital expenditures for tenant improvements

(14,978
)

(16,569
)
Capital expenditures for redevelopments

(10,777
)

(2,429
)
Capital expenditures for developments

(18,645
)

(19,387
)
Advances for the purchase of tenant assets, net of repayments

(1,615
)

316

Investment in unconsolidated Real Estate Ventures

(182
)

(261
)
Deposits for real estate

3,152

(162
)
Capital distributions from Real Estate Ventures

1,851

1,951

Leasing costs paid

(5,696
)

(3,120
)
Net cash used in investing activities

(41,343
)

(6,171
)

Cash flows from financing activities:

Repayments of mortgage notes payable

(1,871
)

(1,317
)
Proceeds from credit facility borrowings

198,000

-

Repayments of credit facility borrowings

(130,000
)

-

Proceeds from the exercise of stock options

800

-

Proceeds from the issuance of common shares

-

416

Shares used for employee taxes upon vesting of share awards

(1,230
)

(942
)
Partner contributions to consolidated real estate venture

23

15

Partner distributions from consolidated real estate venture

-

(54
)
Repurchase and retirement of common shares

(17,282
)

-

Distributions paid to shareholders

(33,084
)

(32,173
)
Distributions to noncontrolling interest

(187
)

(266
)
Net cash provided by (used in) financing activities

15,169

(34,321
)
Decrease in cash and cash equivalents and restricted cash

(8,408
)

(1,794
)
Cash and cash equivalents and restricted cash at beginning of year

23,211

203,442

Cash and cash equivalents and restricted cash at end of period

$
14,803

$
201,648

Reconciliation of cash and cash equivalents and restricted cash:

Cash and cash equivalents, beginning of period

$
22,842

$
202,179

Restricted cash, beginning of period

369

1,263

Cash and cash equivalents and restricted cash, beginning of period

$
23,211

$
203,442

Cash and cash equivalents, end of period

$
14,449

$
200,813

Restricted cash, end of period

354

835

Cash and cash equivalents and restricted cash, end of period

$
14,803

$
201,648

Supplemental disclosure:

Cash paid for interest, net of capitalized interest during the three months ended March 31, 2019 and 2018 of $728 and $687, respectively

$
14,251

$
12,705

Cash paid for income taxes

-

7

Supplemental disclosure of non-cash activity:

Dividends and distributions declared but not paid

34,107

32,502

Change in investment in real estate ventures as a result of dispositions

-

(17,313
)

Change in operating real estate related to a non-cash acquisition of an operating property

-

(20,653
)
Change in intangible assets, net related to non-cash acquisition of an operating property

-

(3,144
)
Change in acquired lease intangibles, net related to non-cash acquisition of an operating property

-

182

Change in investments in joint venture related to non-cash acquisition of property

-

(2,042
)
Change in mortgage notes payable related to acquisition of an operating property

-

9,940

Change in capital expenditures financed through accounts payable at period end

(1,080
)

(1,112
)
Change in capital expenditures financed through retention payable at period end

(4,503
)

(792
)



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

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

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

BRANDYWINE OPERATING PARTNERSHIP, L.P.

CONSOLIDATED BALANCE SHEETS

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

March 31,

December 31,

2019

2018

(unaudited)

ASSETS

Real estate investments:

Operating properties

$
4,015,879

$
3,953,319

Right of use asset - operating leases

22,175

-

Accumulated depreciation

(891,125
)

(865,462
)
Operating real estate investments, net

3,146,929

3,087,857

Construction-in-progress

112,176

150,263

Land held for development

88,047

86,401

Prepaid leasehold interests in land held for development, net

39,897

39,999

Total real estate investments, net

3,387,049

3,364,520

Assets held for sale, net

7,345

11,599

Cash and cash equivalents

14,449

22,842

Accounts receivable, net of allowance of $284 and $1,653 as of March 31, 2019 and December 31, 2018, respectively

21,780

16,394

Accrued rent receivable, net of allowance of $11,018 and $11,266 as of March 31, 2019 and December 31, 2018, respectively

168,781

165,243

Investment in Real Estate Ventures, equity method

161,568

169,100

Deferred costs, net

95,293

91,075

Intangible assets, net

119,903

131,348

Other assets

139,761

126,400

Total assets

$
4,115,929

$
4,098,521

LIABILITIES AND PARTNERS' EQUITY

Mortgage notes payable, net

$
319,132

$
320,869

Unsecured credit facility

160,500

92,500

Unsecured term loan, net

248,168

248,042

Unsecured senior notes, net

1,366,997

1,366,635

Accounts payable and accrued expenses

112,375

125,696

Distributions payable

34,107

33,632

Deferred income, gains and rent

24,749

28,293

Acquired lease intangibles, net

29,813

31,783

Lease liability - operating leases

22,402

-

Other liabilities

16,194

18,498

Total liabilities

$
2,334,437

$
2,265,948

Commitments and contingencies (See Note 14)

Redeemable limited partnership units at redemption value; 982,871 issued and outstanding as of March 31, 2019 and December 31, 2018

15,421

12,520

Brandywine Operating Partnership, L.P.'s equity:

General Partnership Capital; 176,001,580 and 176,873,324 units issued and outstanding as of March 31, 2019 and December 31, 2018, respectively

1,761,580

1,813,136

Accumulated other comprehensive income

2,242

4,725

Total Brandywine Operating Partnership, L.P.'s equity

1,763,822

1,817,861

Noncontrolling interest - consolidated real estate ventures

2,249

2,192

Total partners' equity

$
1,766,071

$
1,820,053

Total liabilities and partners' equity

$
4,115,929

$
4,098,521



	March 31, 2020			December 31, 2019
ASSETS
Real estate investments:
Operating properties	$	4,004,118		$	4,006,459
Accumulated depreciation	(992,997		)	(973,318		)
Right of use asset - operating leases, net	21,485			21,656
Operating real estate investments, net	3,032,606			3,054,797
Construction-in-progress	193,160			180,718
Land held for development	108,213			96,124
Prepaid leasehold interests in land held for development, net	39,490			39,592
Total real estate investments, net	3,373,469			3,371,231
Assets held for sale, net	10,698			7,349
Cash and cash equivalents	52,702			90,499
Accounts receivable, net of allowance of $284 as of both March 31, 2020 and December 31, 2019	16,928			16,363
Accrued rent receivable, net of allowance of $7,484 and $7,691 as of March 31, 2020 and December 31, 2019, respectively	175,277			174,144
Investment in Real Estate Ventures	119,998			120,294
Deferred costs, net	94,336			95,560
Intangible assets, net	75,670			84,851
Other assets	126,264			115,678
Total assets	$	4,045,342		$	4,075,969
LIABILITIES AND PARTNERS' EQUITY
Mortgage notes payable, net	$	312,001		$	313,812
Unsecured credit facility	50,000			—
Unsecured term loan, net	248,692			248,561
Unsecured senior notes, net	1,581,907			1,582,045
Accounts payable and accrued expenses	109,755			113,347
Distributions payable	32,692			33,815
Deferred income, gains and rent	34,673			35,284
Intangible liabilities, net	20,605			22,263
Lease liability - operating leases	22,606			22,554
Other liabilities	28,597			$	15,985
Total liabilities	$	2,441,528		2,387,666
Commitments and contingencies (See Note 15)
Redeemable limited partnership units at redemption value; 981,634 issued and outstanding as of March 31, 2020 and December 31, 2019, respectively	9,981			15,388
Brandywine Operating Partnership, L.P.'s equity:
General Partnership Capital; 170,965,987 and 176,480,095 units issued and outstanding as of March 31, 2020 and December 31, 2019, respectively	1,603,314			1,674,539
Accumulated other comprehensive income	(10,584		)	(2,715		)
Total Brandywine Operating Partnership, L.P.'s equity	1,592,730			1,671,824
Noncontrolling interest - consolidated real estate ventures	1,103			1,091
Total partners' equity	$	1,593,833		$	1,672,915
Total liabilities and partners' equity	$	4,045,342		$	4,075,969

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

BRANDYWINE OPERATING PARTNERSHIP, L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS

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

Three-month periods ended

March 31,

2019

2018

Revenue

Rents
$
138,098

$
126,759

Third party management fees, labor reimbursement and leasing

3,955

7,674

Other

1,843

1,925

Total revenue

143,896

136,358

Operating expenses

Property operating expenses

39,481

39,332

Real estate taxes

15,783

12,422

Third party management expenses

2,117

4,750

Depreciation and amortization

51,980

43,291

General and administrative expenses

9,844

8,723

Total operating expenses

119,205

108,518

Gain on sale of real estate

Net gain on sale of undepreciated real estate

1,001

22

Total gain on sale of real estate

1,001

22

Operating income

25,692

27,862

Other income (expense):

Interest income

525

703

Interest expense

(20,357
)

(19,533
)
Interest expense - amortization of deferred financing costs

(666
)

(627
)
Equity in loss of Real Estate Ventures

(1,358
)

(825
)
Net gain on real estate venture transactions

259

37,263

Net income before income taxes

4,095

44,843

Income tax provision

(29
)

(138
)
Net income

4,066

44,705

Net income attributable to noncontrolling interests - consolidated real estate ventures

(34
)

(5
)
Net income attributable to Brandywine Operating Partnership

4,032

44,700

Nonforfeitable dividends allocated to unvested restricted unitholders

(119
)

(114
)
Net income attributable to Common Partnership Unitholders of Brandywine Operating Partnership, L.P.
$
3,913

$
44,586

Basic income per Common Partnership Unit
$
0.02

$
0.25

Diluted income per Common Partnership Unit
$
0.02

$
0.25

Basic weighted average common partnership units outstanding

176,840,229

179,875,324

Diluted weighted average common partnership units outstanding

177,447,089

181,268,110



	Three Months Ended March 31,
	2020			2019
Revenue
Rents	$	139,204		$	138,098
Third party management fees, labor reimbursement and leasing	4,954			3,955
Other	930			1,843
Total revenue	145,088			143,896
Operating expenses
Property operating expenses	37,461			39,500
Real estate taxes	16,787			15,783
Third party management expenses	2,662			2,117
Depreciation and amortization	52,038			51,444
General and administrative expenses	8,561			9,844
Total operating expenses	117,509			118,688
Gain on sale of real estate
Net gain on disposition of real estate	2,586			—
Net gain on sale of undepreciated real estate	—			1,001
Total gain on sale of real estate	2,586			1,001
Operating income	30,165			26,209
Other income (expense):
Interest income	575			525
Interest expense	(20,009		)	(20,357		)
Interest expense - amortization of deferred financing costs	(749		)	(666		)
Equity in loss of Real Estate Ventures	(1,891		)	(1,358		)
Net gain on real estate venture transactions	—			259
Net income before income taxes	8,091			4,612
Income tax provision	(4		)	(29		)
Net income	8,087			4,583
Net income attributable to noncontrolling interests - consolidated real estate ventures	(12		)	(34		)
Net income attributable to Brandywine Operating Partnership	8,075			4,549
Nonforfeitable dividends allocated to unvested restricted unitholders	(131		)	(119		)
Net income attributable to Common Partnership Unitholders of Brandywine Operating Partnership, L.P.	$	7,944		$	4,430


Basic income per Common Partnership Unit	$	0.04		$	0.03

Diluted income per Common Partnership Unit	$	0.04		$	0.02

Basic weighted average common partnership units outstanding	177,051,602			176,840,229
Diluted weighted average common partnership units outstanding	177,635,093			177,447,089

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

BRANDYWINE OPERATING PARTNERSHIP, L.P.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited, in thousands)

Three-month periods ended

March 31,

2019

2018

Net income
$
4,066

$
44,705

Comprehensive income (loss):

Unrealized gain (loss) on derivative financial instruments

(2,689
)

4,696

Amortization of interest rate contracts (1)

206

312

Comprehensive income (loss):

(2,483
)

5,008

Comprehensive income

1,583

49,713

Comprehensive income attributable to noncontrolling interest - consolidated real estate ventures

(34
)

(5
)
Comprehensive income attributable to Brandywine Realty Trust
$
1,549

$
49,708

~~(1)~~

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



	Three Months Ended March 31,
	2020			2019
Net income	$	8,087		$	4,583
Comprehensive loss:
Unrealized loss on derivative financial instruments	(8,057		)	(2,689		)
Amortization of interest rate contracts (1)	188			206
Total comprehensive loss	(7,869		)	(2,483		)
Comprehensive income	218			2,100
Comprehensive income attributable to noncontrolling interest - consolidated real estate ventures	(12		)	(34		)
Comprehensive income attributable to Brandywine Operating Partnership	$	206		$	2,066

(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.

BRANDYWINE OPERATING PARTNERSHIP, L.P.

CONSOLIDATED STATEMENTS OF PARTNERS’ EQUITY

~~For thethree-month period ended March 31, 2019~~

(unaudited, in thousands, except number of units)

General Partner Capital

Units

Amount

Accumulated Other Comprehensive Income (Loss)

Noncontrolling Interest - Consolidated Real Estate Ventures

Total Partners' Equity

BALANCE, December 31, 2018

176,873,324

$
1,813,136

$
4,725

$
2,192

$
1,820,053

Cumulative effect of accounting change

(5,336
)

(5,336
)
Net income

4,032

34

4,066

Other comprehensive income

(2,483
)

(2,483
)
Deferred compensation obligation

(458
)

-

Repurchase and retirement of LP units

(1,337,169
)

(17,281
)

(17,281
)
Issuance of partnership interest in consolidated real estate ventures

23

23

Share-based compensation activity

465,883

3,677

3,677

Adjustment of redeemable partnership units to liquidation value at period end

(3,088
)

(3,088
)
Distributions declared to general partnership unitholders (0.19 per unit)

(33,560
)

(33,560
)
BALANCE, March 31, 2019

176,001,580

$
1,761,580

$
2,242

$
2,249

$
1,766,071



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

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

BRANDYWINE OPERATING PARTNERSHIP, L.P.

CONSOLIDATED STATEMENT OF PARTNERS’ EQUITY

~~For the three-month period ended March 31, 2018~~

(unaudited, in thousands, except number of units)

General Partner Capital

Units

Amount

Accumulated Other Comprehensive Income

Noncontrolling Interest - Consolidated Real Estate Ventures

Total Partners' Equity

BALANCE, December 31, 2017

178,285,236

$
1,815,411

$
2,056

$
2,215

$
1,819,682

Net income

44,700

5

44,705

Other comprehensive income

5,008

5,008

Deferred compensation obligation

66,830

-

Issuance of LP Units

23,311

416

416

Issuance of partnership interest in consolidated real estate ventures

15

15

Distributions from consolidated real estate ventures

(54
)

(54
)
Share Choice Plan issuance

(1,285
)

-

Share-based compensation activity

68,425

3,075

3,075

Adjustment of redeemable partnership units to liquidation value at period end

3,604

3,604

Distributions declared to general partnership unitholders (0.18 per unit)

(32,259
)

$
(32,259
)
BALANCE, March 31, 2018

178,442,517

$
1,834,947

$
7,064

$
2,181

$
1,844,192



	General Partner Capital
	Units		Amount			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interest - Consolidated Real Estate Ventures		Total Partners' Equity
BALANCE, beginning of period	176,873,324		$	1,791,591		$	4,725		$	2,192	$	1,798,508
Cumulative effect of accounting change			(5,336		)						(5,336		)
Net income			4,549						34		4,583
Other comprehensive loss						(2,483		)			(2,483		)
Deferred compensation obligation	(458	)									—
Repurchase and retirement of LP units	(1,337,169	)	(17,281		)						(17,281		)
Issuance of partnership interest in consolidated real estate ventures									22		22
Share-based compensation activity	465,883		3,677								3,677
Adjustment of redeemable partnership units to liquidation value at period end			(3,088		)						(3,088		)
Distributions declared to general partnership unitholders ($0.19 per unit)			(33,560		)						(33,560		)
BALANCE, March 31, 2019	176,001,580		$	1,740,552		$	2,242		$	2,248	$	1,745,042

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

BRANDYWINE OPERATING PARTNERSHIP L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

Three-month periods ended March 31,

2019

2018

Cash flows from operating activities:

Net income

$
4,066

$
44,705

Adjustments to reconcile net income to net cash from operating activities:

Depreciation and amortization

51,980

43,291

Amortization of deferred financing costs

666

627

Amortization of debt discount/(premium), net

175

176

Amortization of stock compensation costs

3,449

3,265

Straight-line rent income

(4,165
)

(4,978
)
Amortization of acquired above (below) market leases, net

(1,805
)

(793
)
Straight-line ground rent expense

351

22

Provision for doubtful accounts

-

467

Net gain on real estate venture transactions

-

(37,263
)
Net gain on sale of interests in real estate

(1,001
)

(22
)
Income from Real Estate Ventures, net of distributions

1,159

2,209

Income tax provision

29

138

Changes in assets and liabilities:

Accounts receivable

(3,539
)

(646
)
Other assets

(39,088
)

(12,911
)
Accounts payable and accrued expenses

(10,822
)

(1,146
)
Deferred income, gains and rent

(3,148
)

2,295

Other liabilities

19,459

(738
)
Net cash provided by operating activities

17,766

38,698

Cash flows from investing activities:

Acquisition of properties

-

(24,946
)
Proceeds from the sale of properties

5,273

14,921

Proceeds from real estate venture sales

259

42,953

Proceeds from repayment of mortgage notes receivable

15

562

Capital expenditures for tenant improvements

(14,978
)

(16,569
)
Capital expenditures for redevelopments

(10,777
)

(2,429
)
Capital expenditures for developments

(18,645
)

(19,387
)
Advances for the purchase of tenant assets, net of repayments

(1,615
)

316

Investment in unconsolidated Real Estate Ventures

(182
)

(261
)
Deposits for real estate

3,152

(162
)
Capital distributions from Real Estate Ventures

1,851

1,951

Leasing costs paid

(5,696
)

(3,120
)
Net cash used in investing activities

(41,343
)

(6,171
)

Cash flows from financing activities:

Repayments of mortgage notes payable

(1,871
)

(1,317
)
Proceeds from credit facility borrowings

198,000

-

Repayments of credit facility borrowings

(130,000
)

-

Proceeds from the exercise of stock options

800

-

Proceeds from the issuance of common shares

-

416

Shares used for employee taxes upon vesting of share awards

(1,230
)

(942
)
Partner contributions to consolidated real estate venture

23

15

Partner distributions from consolidated real estate venture

-

(54
)
Repurchase and retirement of common shares

(17,282
)

-

Distributions paid to preferred and common partnership units

(33,271
)

(32,439
)
Net cash provided by (used in) financing activities

15,169

(34,321
)
Decrease in cash and cash equivalents and restricted cash

(8,408
)

(1,794
)
Cash and cash equivalents and restricted cash at beginning of year

23,211

203,442

Cash and cash equivalents and restricted cash at end of period

$
14,803

$
201,648

Reconciliation of cash and cash equivalents and restricted cash:

Cash and cash equivalents, beginning of period

$
22,842

$
202,179

Restricted cash, beginning of period

369

1,263

Cash and cash equivalents and restricted cash, beginning of period

$
23,211

$
203,442

Cash and cash equivalents, end of period

$
14,449

$
200,813

Restricted cash, end of period

354

835

Cash and cash equivalents and restricted cash, end of period

$
14,803

$
201,648

Supplemental disclosure:

Cash paid for interest, net of capitalized interest during the three months ended March 31, 2019 and 2018 of $728 and $687, respectively

$
14,251

$
12,705

Cash paid for income taxes

-

7

Supplemental disclosure of non-cash activity:

Dividends and distributions declared but not paid

34,107

32,502

Change in investment in real estate ventures as a result of dispositions

-

(17,313
)



	Three Months Ended March 31,
	2020			2019
Cash flows from operating activities:
Net income	$	8,087		$	4,583
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization	52,038			51,444
Amortization of deferred financing costs	749			666
Amortization of debt discount/(premium), net	(395		)	175
Amortization of stock compensation costs	2,349			3,449
Straight-line rent income	(2,183		)	(4,165		)
Amortization of acquired above (below) market leases, net	(1,495		)	(1,805		)
Ground rent expense	366			370
Provision for doubtful accounts	213			—
Net gain on sale of interests in real estate	(2,586		)	(1,001		)
Loss from Real Estate Ventures, net of distributions	1,890			1,159
Income tax provision	4			29
Changes in assets and liabilities:
Accounts receivable	(1,348		)	(3,539		)
Other assets	(14,548		)	(39,088		)
Accounts payable and accrued expenses	(1,213		)	(10,822		)
Deferred income, gains and rent	(230		)	(3,148		)
Other liabilities	3,360			19,459
Net cash provided by operating activities	45,058			17,766
Cash flows from investing activities:
Acquisition of properties	(11,432		)	—
Proceeds from the sale of properties	17,711			5,273
Proceeds from real estate venture sales	—			259
Proceeds from repayment of mortgage notes receivable	—			15
Capital expenditures for tenant improvements	(13,707		)	(14,978		)
Capital expenditures for redevelopments	(9,973		)	(10,777		)
Capital expenditures for developments	(19,426		)	(18,645		)
Advances for the purchase of tenant assets, net of repayments	585			(1,615		)
Investment in unconsolidated Real Estate Ventures	—			(182		)
Deposits for real estate	(1,011		)	3,152
Capital distributions from Real Estate Ventures	—			1,851
Leasing costs paid	(5,315		)	(5,696		)
Net cash used in investing activities	(42,568		)	(41,343		)
Cash flows from financing activities:
Repayments of mortgage notes payable	(1,945		)	(1,871		)
Proceeds from credit facility borrowings	66,000			198,000
Repayments of credit facility borrowings	(16,000		)	(130,000		)
Proceeds from the exercise of stock options	47			800
Shares used for employee taxes upon vesting of share awards	(722		)	(1,230		)
Partner contributions to consolidated real estate venture	—			23
Repurchase and retirement of common shares	(53,857		)	(17,282		)
Distributions paid to preferred and common partnership units	(33,809		)	(33,271		)
Net cash provided by (used in) financing activities	(40,286		)	15,169
Decrease in cash and cash equivalents and restricted cash	(37,796		)	(8,408		)
Cash and cash equivalents and restricted cash at beginning of year	91,170			23,211
Cash and cash equivalents and restricted cash at end of period	$	53,374		$	14,803

Reconciliation of cash and cash equivalents and restricted cash:
Cash and cash equivalents, beginning of period	$	90,499		$	22,842
Restricted cash, beginning of period	671			369
Cash and cash equivalents and restricted cash, beginning of period	$	91,170		$	23,211

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

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

~~BRANDYWINE REALTY TRUST AND BRANDYWINE OPERATING PARTNERSHIP, L.P.~~

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

~~March 31, 2019~~

1. ORGANIZATION OF THE PARENT COMPANY AND THE OPERATING PARTNERSHIP

~~The Parent Company~~

Brandywine Realty Trust (the "Parent Company") is a self-administered and self-managed real estate investment trust (“REIT”) ~~that provides leasing, property management,~~engaged in the acquisition, development, redevelopment, ~~acquisition~~ownership, management, and ~~other tenant-related services for~~operation of a portfolio of office ~~retail~~ and mixed-use properties. The Parent Company owns its assets and conducts its operations through ~~the~~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, ~~2019,~~2020, owned a 99.4% 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”.

The Parent Company, the Operating Partnership, and their consolidated subsidiaries are collectively referred to as the "Company".

As of March 31, ~~2019,~~2020, the Company owned 9694 properties that contained an aggregate of approximately ~~16.9~~16.6 million net rentable square feet (collectively, the “Properties”). The Company’s core portfolio of operating properties ~~as of March 31, 2019,~~ excludes ~~one~~ development ~~property and three~~properties, redevelopment properties, ~~under construction or committed~~and properties held for ~~construction (collectively, the~~sale (the “Core Properties”). The Properties were comprised of the following as of March 31, ~~2019:~~

2020:


	Number of Properties		Rentable Square Feet		Number of Properties	Rentable Square Feet
Office properties		88		15,719,636	85	15,319,340
Mixed-use properties		3		641,741	4	659,625
Retail property		1		17,884
Core Properties		92		16,379,261	89	15,978,965
Development property		1		204,108	1	204,108
Redevelopment properties		3		338,650	4	397,237
The Properties		96		16,922,019	94	16,580,310

In addition to the Properties, as of March 31, ~~2019,~~2020, the Company owned 242.5 acres of land held for development, ~~comprised of 234.7 acres of undeveloped land,~~ of which ~~35.2~~49.2 acres were held for ~~sale and 1.8 acres related to~~sale. The Company also held leasehold interests in ~~two~~2 land parcels totaling 1.8 acres, each acquired through prepaid 99-year ground leases, and held options to purchase approximately 55.5 additional acres of undeveloped land. As of March 31, ~~2019,~~2020, the total potential development that ~~these~~this inventory of land ~~parcels~~ could support under current zoning and entitlements, including the parcels under option, amounted to an estimated ~~14.2~~14.4 million square feet, of which ~~0.2~~0.3 million square feet relates to ~~35.2~~49.2 acres held for sale. As of March 31, ~~2019,~~2020, the Company also owned economic interests in ~~ten~~7 unconsolidated real estate ventures (collectively, the “Real Estate Ventures”) (see Note 4, ~~“Investment~~''Investment in Unconsolidated Real Estate ~~Ventures,”~~ Ventures”) for further information). The Properties and the properties owned by the Real Estate Ventures are located in or near Philadelphia, Pennsylvania; Austin, Texas; Metropolitan Washington, D.C.; Southern New ~~Jersey~~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, ~~2019,~~2020, the management company subsidiaries were managing properties containing an aggregate of approximately ~~24.9~~24.1 million net rentable square feet, of which approximately ~~16.9~~16.6 million net rentable square feet related to Properties owned by the Company and approximately ~~8.0~~7.5 million net rentable square feet related to properties owned by third parties and 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, ~~2019,~~2020, the results of its operations for the ~~three-month periods~~three months ended March 31, ~~2019~~2020 and ~~2018~~2019 and its cash flows for the ~~three-month periods~~three months ended March 31, ~~2019~~2020 and ~~2018 have been included.~~2019. 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 ~~2018~~2019 Annual Report on Form 10-K filed with the SEC on ~~February 22, 2019.~~

March 2, 2020.

The Company's Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 contains a discussion of our significant accounting policies under Note 2, ~~"Summary~~"Summary of Significant Accounting Policies". ~~Other than the adoption of ASU-2016-02, Leases (Topic 842),~~

~~there~~ There have been no significant changes in our significant accounting policies since December 31, ~~2018. Management discusses our significant accounting policies and management’s judgments and estimates with the Company's Audit Committee.~~2019.

~~Out of Period Adjustment~~

The Company recorded $0.8 million of depreciation expense during the three-month period ended March 31, 2019, which should have been recorded in the consolidated financial statements for the three and twelve-month periods ended December 31, 2018. Management concluded that this misstatement was not material to the consolidated financial statements as of and for the twelve-month period ended December 31, 2018 or the three-month period ended March 31, 2019.

~~Reclassifications~~

The Company reclassified tenant reimbursements and termination fees within the “Rents” caption on the consolidated statements of operations as a result of the adoption of Topic 842, Leases as of January 1, 2019. Tenant reimbursements and termination fees, which were reclassified retrospectively for all periods, were formerly presented separately in the “Tenant reimbursements” and “Termination fees” captions, respectively, on the consolidated statements of operations. The prior year reclassifications were made to conform to current-year presentation under Topic 842 and did not result in any change in total revenue.

~~Adoptions~~

Adoption of New Accounting Guidance

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), modifying the principles for the recognition, measurement, presentation, and disclosure of leases for both parties to a contract (i.e., lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification determines whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and lease liability for all leases with a term of greater than twelve months regardless of their classification. Leases with a term of twelve months or less will be accounted for in the same manner as operating leases under ASC 840, Leases. The new standard requires lessors to account for leases using an approach that is substantially equivalent to previous guidance for sales-type leases, direct financing leases, and operating leases. The guidance supersedes previously issued guidance under ASC 840.

The Company adopted Topic 842 effective January 1, 2019. In applying the modified retrospective transition method, the Company elected the package of practical expedients available for implementation, which allows for the following:

•

~~An entity need not reassess whether any expired or existing contracts are or contain leases;~~

•

~~An entity need not reassess the lease classification for any expired or existing leases; and~~

•

~~An entity need not reassess initial indirect costs for any existing leases.~~

Furthermore, the Company elected the optional transition method to make January 1, 2019 the initial application date of the standard. This package of practical expedients allows entities to account for their existing leases for the remainder of their respective lease terms following the previous accounting guidance.

The Company also elected to adopt the optional transition practical expedient provided in ASU 2018-01 to not evaluate under Topic 842 for existing or expired land easements prior to the application date to determine if they meet the definition of a lease.

The Company also elected to adopt the practical expedient offered in ASU 2018-11 that allows lessors to not allocate the total consideration to lease and nonlease components, such as tenant reimbursements, based on their relative standalone selling prices as the timing and pattern of revenue recognition of the combined single lease component is the same and the leases are classified as operating leases.

~~The Company elected to adopt ASU 2018-20, which allows lessors to not evaluate whether certain sal~~es taxes and other similar taxes are lessor costs or lessee costs. Instead, lessors will account for those costs as if they are lessee costs. All collections from lessees of taxes within the scope of the election are excluded from the consideration of the contract and from variable payments not included in the consideration of the contract.

~~Lessor accounting~~

The Company generates revenue under leases with tenants occupying the Properties. Generally, leases with tenants are accounted for as operating leases. As of March 31, 2019, the Company does not have any leases classified as direct-financing or sales-type leases. The operating leases have various expiration dates.

~~Lease payments on non-cancellable leases at March 31, 2019 are as follows (in thousands):~~

Year

Lease payments

2019 (nine months remaining)

$
292,215

2020

377,088

2021

354,913

2022

309,125

2023

281,437

Thereafter

1,270,928

Total

$
2,885,706

~~Lease payments on non-cancellable leases at December 31, 2018 are as follows (in thousands):~~

Year

Lease payments

2019

$
392,058

2020

372,619

2021

349,160

2022

304,445

2023

277,388

Thereafter

1,265,810

Total

$
2,961,480

Fixed lease payments under tenant leases are recognized on a straight-line basis over the term of the related lease. The cumulative difference between lease revenue recognized under the straight-line method and contractual lease payments are recorded as “Accrued rent receivable” on the consolidated balance sheets. Variable lease payments are recognized as lease revenue in the period in which changes in facts and circumstances on which the variable lease payments are based occur.

In November 2018, the FASB issued ASU No. 2018-19, which clarifies that operating lease receivables are not within the scope of ASC 326-20 and should instead be accounted for under the new leasing standard, ASC 842. Topic 842 requires a binary approach to evaluating leases for collectability. Lessors are required to determine if it is probable that substantially all of the lease payments will be collected from the tenant over the lease term. Should the lessor determine that it is not probable that substantially all of the lease payments will be collected, the standard requires that the lessor writes off any accrued rent receivable and begin recognizing lease payments on a cash-basis. The Company has evaluated all leases for collectability and is recognizing lease payments for certain leases on a cash-basis as collectability of substantially all of the lease payments is not probable. As a result, during the quarter ended March 31, 2019, the write off of the accrued rent receivable of $0.7 million was recorded by the Company upon adoption of Topic 842 as a cumulative effect of accounting change adjustment to equity through the “Cumulative earnings” caption on the consolidated balance sheets. The Company maintains a general reserve of $11.3 million relating to leases that existed prior to adoption of Topic 842 for which the Company has determined that collectability of substantially all of lease payments remains probable as of March 31, 2019.

The Company’s lease revenue is impacted by the Company’s determination of whether improvements to the property, whether made by the Company or by the tenant, are landlord assets. The determination of whether an improvement is a landlord asset requires judgment. In making this judgment, the Company’s primary consideration is whether an improvement would be utilizable by another tenant upon move out of the improved space by the then-existing tenant. If the Company has funded an improvement that it determines not to be landlord assets, then it treats the cost of the improvement as a lease incentive. If the tenant has funded the improvement that the Company determines to be landlord assets, then the Company treats the costs of the improvement as deferred revenue and amortizes this costs into revenue over the lease term.

For certain leases, the Company also makes significant assumptions and judgments in determining the lease term, including assumptions when the lease provides the tenant with an early termination option or purchase option. The lease term impacts the period over which the Company determines and records lease payments and also impacts the period of which it amortizes lease-related costs. The Company considers all relevant factors that create an economic incentive for the lessee and uses judgement to determine if those factors,

~~considered together, signify that the lessee is reasonably certain to exercise the option.~~ For leases where a tenant executes a lease termination, termination fees are recognized over the modified term of the lease as rental income. Additionally, any deferred rents receivable are accelerated over the modified lease term.

The Company’s leases also typically provide for tenant reimbursement of a portion of common area maintenance expenses and other operating expenses to the extent that a tenant’s pro rata share of expenses exceeds a base year level set in the lease or to the extent that the tenant has a lease on a triple net basis. The Company also contracts with third-party vendors and suppliers for goods and services to fulfill certain of the Company’s obligations to tenants. Tenant reimbursement~~s are billed in the period in which the related expenses are incurred.~~

~~The table below sets forth the allocation of lease revenue recognized between fixed contractual payments and variable lease payments (in thousands):~~

Three Months Ended March 31,

Lease Revenue

2019

Fixed lease payments

$
108,033

Variable lease payments

30,064

Total

$
138,097

Fixed lease payments include contractual rents under lease agreements with tenants recognized on a straight-line basis over the lease term, including amortization of lease incentives and above or below market rent intangibles, and parking income that is fixed under a long-term contract. Variable lease payments include reimbursements billed to tenants, termination fees, bad debt expense, and parking income that is not fixed under a long-term contract.

~~Lessee Accounting~~

The Company is the lessee under six long-term ground leases classified as operating leases. While adoption of the practical expedient allows the Company to not revisit the classification of existing leases, the Company measured the present value of the future lease payments for each ground lease agreement and recognized a right of use asset and lease liability in the aggregate amount of $22.4 million, each as of January 1, 2019 in accordance with Topic 842. The right of use assets and lease liabilities are presented in the “Right of use asset – operating leases” and “Lease liability – operating leases” captions, respectively, on the consolidated balance sheets as of March 31, 2019.

The Company makes significant assumptions and judgements when determining the discount rate for the lease to calculate the present value of the lease payments. As the rate implicit in the lease is not readily determinable, the Company estimates the incremental borrowing rate (“IBR”) that it would need to pay to borrow on a collateralized basis over a similar lease term an amount equal to the lease payments in a similar economic environment. The Company utilized a market-based approach to estimate the IBR for each individual lease. The base IBR was estimated utilizing observable mortgage and corporate bond rates, which were then adjusted to account for considerations related to the Company’s credit rating and the lease term to select an incremental borrowing rate for each lease.

The lease liabilities and right of use assets are amortized on a straight-line basis over the lease term with the corresponding expense classified in the “Property operating expenses” caption on the consolidated statement of operations. Certain of the Company’s ground leases contain extension options. The Company has exercised judgment in considering all economic factors to determine that it is not reasonably certain to exercise the extension options and therefore has not included the extension period in the remaining lease term. With the exception of certain ground leases that are subject to rent increases periodically based on the CPI index, all lease payments under the ground lease are fixed. Topic 842 requires use of the most recent CPI adjustment when determining the present value of the lease payments for an indexed lease. As such, the 2018 CPI index was used to determine the right of use asset and corresponding lease liability as of January 1, 2019. Additional rent payments for amounts in excess of this estimated growth rate will be expensed on a cash basis as incurred and are considered variable lease costs.

~~The table below summarizes the Company’s operating lease cost (in thousands) recognized through the “Property operating expenses” caption on the consolidated statement of operations:~~

Three Months Ended March 31,

Lease Cost

2019

Fixed lease cost

$
525

Variable lease cost

14

Total

$
539

Weighted-average remaining lease term (years)

53.2

Weighted-average discount rate

6.3
%

~~Marine Piers Sublease Interest Sale~~

On March 15, 2017, the Company sold its sublease interest in the Piers at Penn’s Landing (the “Marine Piers”), which includes leasehold improvements containing 181,900 net rentable square feet, and a marina, located in Philadelphia, Pennsylvania, for an aggregate sales price of $21.4 million. On the closing date, the buyer paid $12.0 million in cash and the Company received cash proceeds of $11.2 million, after closing costs and prorations. The $9.4 million balance of the purchase is due on (a) January 31, 2020, in the event that the tenant at the Marine Piers does not exercise an option it holds to extend the term of the sublease or (b) January 15, 2024, in the event that the tenant does exercise the option to extend the term of the sublease. In accordance with ASU 2017-05, the Company determined that it is appropriate to recognize the sale of the sublease interest in the Marine Piers and to defer the amount of the pending payment due from the buyer because the Company cannot determine the collectability of the remaining $9.4 million balance due under the purchase and sale agreement. The net book value of the Marine Piers was $4.7 million, resulting in a gain on sale of $6.5 million. The remaining gain on sale of $9.4 million arising from the pending payment will be recognized at the earlier of: (i) the time that the Company determines collection of the deferred payment is probable or (ii) on the second purchase price installment date. Based on the facts and circumstances, revenue recognition under ASU 2017-05 coincides with the Company’s previous conclusion under ASC 360-20, and therefore no restatement of the consolidated financial statements is necessary as a result of implementing the guidance for the sale of nonfinancial assets. During the first quarter of 2019, the tenant at the Marine Piers exercised its option to extend the term of its sublease. Therefore, the Company expects to receive the $9.4 million balance on January 15, 2024.

~~Recent Accounting Pronouncements~~

In March 2019, the FASB issued ASU No. 2019-01, an amendment to the lease ASU to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing essential information about leasing transactions. The amendments in this update reinstate the exception in Topic 842 for lessors that are not manufacturers or dealers. The amendment is effective with Topic 842. Specifically, those lessors will use their cost, reflecting any volume or trade discounts that may apply, as the fair value of the underlying asset. However, if significant time lapses between the acquisition of the underlying asset and lease commencement, those lessors will be required to apply the definition of fair value (exit price) in Topic 820. The Company has evaluated the impact of this new guidance and determined that it will not have a material impact on its consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, ~~that~~Financial Instruments Credit Losses (Topic 326), which changes how entities measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The guidance replaces the current incurred loss model with an expected loss approach, resulting in more timely recognition of such losses. In November 2018, the FASB released ASU 2018-19, Codification Improvements to Topic 326, Financial Instrument - Credit Losses, which clarifies that receivables arising from operating leases are not within the scope of Subtopic 326-20. The guidance iswas effective for ~~fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted after December 2018.~~the Company as of January 1, 2020. The Company ~~is in~~adopted ASU 2016-13 effective January 1, 2020 and it did not have a material impact on the ~~process of evaluating the impact of this new guidance on reserves for notes receivable. The Company has not quantified the impact that this guidance will have on its~~ consolidated financial statements.

3. REAL ESTATE INVESTMENTS

As of March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, the gross carrying value of the operating properties was as follows (in thousands):

March 31, 2019

December 31, 2018

Land
$
509,503

$
508,363

Building and improvements

3,068,255

3,029,427

Tenant improvements

438,121

415,529

Total
$
4,015,879

$
3,953,319



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

~~Dispositions~~

Acquisitions

The ~~Company sold~~following table summarizes the ~~following land parcel and recognized a gain on a~~ property ~~sold in a prior year~~acquisitions during the ~~three-month period~~three months ended March 31, ~~2019~~2020 (dollars in thousands):

Disposition Date

Property/Portfolio Name

Location

Number of Parcels

Acres

Sales Price

Net Proceeds on Sale

Gain on Sale

March 15, 2019

9 Presidential Boulevard

Bala Cynwyd, PA

1

2.7

$
5,325

$
5,023

$
751

January 8, 2015

Libertyview

Cherry Hill, NJ

-

-

-

250

250

(a)
Total Dispositions

1

2.7

$
5,325

$
5,273

$
1,001

Property/Portfolio Name

Acquisition Date

Location

Property Type

Rentable Square Feet/Acres

Purchase Price

145 King of Prussia Road

February 27, 2020

Radnor, PA

Land

7.75 acres

11,250

Dispositions

~~(a)~~

As of January 2019, the Company will receive an additional $1.0 million of contingent consideration. The Company will recognize this consideration on a cash basis due to uncertainty of collectability. The $1.0 million consideration is payable to the Company in twelve equal installments, of which $0.3 million has been received during the three-month period ended March 31, 2019.

The ~~sale of land referenced above does not represent a strategic shift that has a major effect on the Company’s operations and financial results. Accordingly, the operating results of~~following table summarizes the property ~~remains classified within continuing operations for all periods presented.~~

dispositions during the three months ended March 31, 2020 (dollars in thousands):

Property/Portfolio Name

Disposition Date

Location

Property Type

Rentable Square Feet/Acres

Sales Price

Gain/(Loss) on Sale (a)

52 East Swedesford Road

March 19, 2020

Malvern, PA

Office

131,077

18,000

2,336


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

Held for Sale

As of March 31, ~~2019,~~2020, the Company determined that the sale of ~~two~~one parcel of land within the Pennsylvania Suburbs segment and 2 parcels of land ~~totaling 35.2 acres in~~within the Other segment totaling 49.2 acres was probable and classified these properties as held for ~~sale in accordance with applicable accounting standards for long-lived assets.~~sale. As ~~of March 31, 2019, $7.3~~such, $10.7 million was ~~reclassified from the “Land held for development” caption to the “Assets~~classified as "Assets held for sale, ~~net” caption~~net" on the consolidated balance sheets. ~~There were no other reclassifications related to these parcels of land.~~ As of March 31, ~~2019,~~2020, the fair value less the anticipated costs of sale of the properties exceeded the carrying values. ~~As a result, the Company expects to record gains on sale.~~ The fair value ~~measurement~~of the properties is based on the pricing in the purchase and sale ~~agreements.~~

~~The disposals~~agreement.

As of December 31, 2019, the Company determined that the sale of two parcels of land ~~referenced above do not represent a strategic shift that has a major effect~~within the Other segment totaling 35.2 acres was probable and classified these properties as held for sale. As such, $7.3 million was classified as “Assets held for sale, net” on the ~~operations and financial results of the Company. As a result, the operating results of the properties remain classified within continuing operations for all periods presented.~~

consolidated balance sheets.

4. INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTURES

As of March 31, ~~2019,~~2020, the Company held ownership interests in ~~ten~~7 unconsolidated ~~Real Estate Ventures~~real estate ventures for an aggregate investment balance of ~~$161.6 million. The Company formed or acquired interests~~$118.4 million, which includes a negative investment balance in ~~these Real Estate Ventures with unaffiliated third parties to develop or manage office, residential and/or mixed-use properties or to acquire land~~one unconsolidated real estate venture, reflected within 'Other liabilities' in ~~anticipation of possible development of office, residential and/or mixed-use properties.~~the consolidated balance sheets. As of March 31, ~~2019, six~~2020, 3 of the real estate ventures owned properties that ~~contain~~contained an aggregate of approximately ~~5.8~~5.4 million net rentable square feet of office space; ~~two~~2 real estate ventures

owned 1.4 acres of land held for development; ~~one~~1 real estate venture owned 1.3 acres of land in active development; and ~~one~~1 real estate venture owned a residential tower that ~~contains~~contained 321 apartment units.

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

cash.

The Company earned management fees from its Real Estate Ventures of $1.1 million ~~and $1.3 million~~ for each of the ~~three-month periods~~three months ended March 31, ~~2019~~2020 and ~~March 31, 2018, respectively.~~

2019.

The Company earned leasing commission income from its Real Estate Ventures of ~~$0.2~~$0.4 million and ~~$0.8~~$0.2 million for the ~~three-month periods~~three months ended March 31, 2020 and 2019, ~~and March 31, 2018,~~ respectively.

The Company had outstanding accounts receivable balances from its Real Estate Ventures of $0.9 million and $0.8 million as of ~~both~~ March 31, ~~2019~~2020 and December 31, ~~2018.~~

2019, respectively.

The amounts reflected in the following tables (except for the Company’s share of equity ~~and~~in income) are based on the financial information of the individual Real Estate Ventures. The Company does not record operating losses of a Real Estate Venture in excess of its investment balance unless the Company is liable for the obligations of the Real Estate Venture or is otherwise committed to provide financial support to the Real Estate Venture.

The following is a summary of the financial position of the Real Estate Ventures in which the Company held interests as of March 31, ~~2019~~2020 and December 31, ~~2018~~2019 (in thousands):

March 31, 2019

December 31, 2018

Net property
$
835,827

$
835,983

Other assets (a)

365,840

159,499

Other liabilities (a)

287,138

85,681

Debt, net (b)

490,840

365,707

Equity (c)

423,689

544,094



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



	December 31, 2019
	MAP Venture		Other		Total
Net property	$	192,582	$	641,785	$	834,367
Other assets	256,453		85,549		342,002
Other liabilities	266,200		23,871		290,071
Debt, net	181,525		403,543		585,068
Equity (a)	1,310		299,920		301,230

~~(a)~~

The increase in ‘Other assets’ and ‘Other liabilities’ for the period ended March 31, 2019 compared to the period ended December 31, 2018 is due to the recording of the right of use asset and lease liability of $197.1 million and $249.3 million, respectively, for the MAP Venture ground lease upon adoption of Topic 842, which was adopted by the venture on January 1, 2019.

~~(b)~~

(a)

This amount increased as a result of third-party debt financing received by Herndon Innovation Center Venture, an unconsolidated real estate venture on March 29, 2019. See “Herndon Innovation Center Metro Portfolio Venture” section below for further information.

~~(c)~~

~~This amount includes~~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~~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~~real estate ventures and upon the transfer of assets that were previously owned by the Company into a ~~Real Estate Venture.~~real estate venture. In addition, certain acquisition, transaction and other costs may not be reflected in the net assets at the ~~Real Estate Venture~~real estate venture level.

The following is a summary of results of operations of the Real Estate Ventures in which the Company held interests during the ~~three--month~~three-month periods ended March 31, ~~2019~~2020 and ~~2018, respectively~~2019 (in thousands):

Three-month period ended March 31, 2019

evo at Cira Centre South (a)

MAP Venture

Other

Total

Revenue
$
-

$
18,288

$
16,771

$
35,059

Operating expenses

-

(12,155
)

(6,563
)

(18,718
)
Interest expense, net

-

(2,536
)

(1,384
)

(3,920
)
Depreciation and amortization

-

(6,349
)

(7,363
)

(13,712
)
Net income (loss)
$
-

$
(2,752
)

$
1,461

$
(1,291
)
Ownership interest %

50
%

50
%

(b)

(b)

Company's share of net income (loss)
$
-

$
(1,376
)

$
64

$
(1,312
)
Basis adjustments and other

-

(56
)

10

(46
)
Equity in income (loss) of Real Estate Ventures
$
-

$
(1,432
)

$
74

$
(1,358
)

Three-month period ended March 31, 2018

evo at Cira Centre South (a)

MAP Venture

Other

Total

Revenue
$
995

$
17,080

$
24,746

$
42,821

Operating expenses

(250
)

(10,307
)

(10,211
)

(20,768
)
Interest expense, net

(388
)

(3,791
)

(3,947
)

(8,126
)
Depreciation and amortization

(376
)

(4,701
)

(9,307
)

(14,384
)
Loss on early extinguishment of debt

(718
)

-

-

(718
)
Net income (loss)
$
(737
)

$
(1,719
)

$
1,281

$
(1,175
)
Ownership interest %

50
%

50
%

(b)

(b)

Company's share of net income (loss)
$
(369
)

$
(860
)

$
523

$
(706
)
Basis adjustments and other

11

7

(137
)

(119
)
Equity in income (loss) of Real Estate Ventures
$
(358
)

$
(853
)

$
386

$
(825
)

~~(a)~~

~~The Company sold its 50% ownership interest in evo at Cira Centre South Venture during the first quarter of 2018.~~

~~(b)~~

The Company’s unconsolidated ownership interests ranged from 15% to 70% during the three-month periods ended March 31, 2019 and 25% to 70% during the three-month periods ended March 31, 2018, subject to specified priority allocations of distributable cash in certain of the Real Estate Ventures.



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



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

~~MAP Venture~~

~~MAP Ground Lease Venture LLC (the “MAP Venture”), an unconsolidated real estate venture in which~~

5. LEASES

Lessor Accounting

The table below sets forth the ~~Company holds a 50% ownership interest, is~~allocation of lease revenue between fixed contractual payments and variable lease payments for the ~~lessee under a 99-year ground lease of land parcels underlying 58 office properties owned by the MAP Venture. Upon adoption of Topic 842, Leases on January 1,~~three months ended March 31, 2020 and 2019 the MAP Venture determined that the carrying amount of the right of use asset was greater than the fair value of the underlying right of use asset. The fair value of the underlying right of use asset was determined using the purchase price paid by a third-party to acquire the ground lease. As a result, the venture recorded a $9.2 million cumulative effect of accounting change adjustment simultaneously with the recording of the right of use asset to reduce the value of the right of use asset to its estimated fair value. The Company recorded its $4.6 million proportionate share of the cumulative effect of accounting change adjustment through the "Cumulative earnings” caption on its consolidated balance sheets.

(in thousands):



	Three Months Ended March 31,		Three Months Ended March 31,
Lease Revenue	2020		2019
Fixed contractual payments	$	104,401	$	104,649
Variable lease payments	30,639		28,731
Total	$	135,040	$	133,380

~~Herndon Innovation Center Metro Portfolio Venture, LLC~~

On March 29, 2019, Herndon Innovation Center Metro Portfolio Venture, LLC (“Herndon Innovation Center Venture”), in which the Company holds a 15% ownership interest, obtained $134.1 million of third-party debt financing, secured by four properties within the venture, with an initial advance of $113.1 million. On April 1, 2019, the venture received $111.0 million in net cash proceeds from the financing, of which $16.7 million was distributed to the Company for its share in the venture. The loan bears interest at LIBOR + 1.95% capped at a total maximum interest rate of 5.45% - 6.45% over the term of the loan and matures on March 29, 2024.

~~Guarantees~~6. INTANGIBLE ASSETS AND LIABILITIES

As of March 31, 2019, the Real Estate Ventures had aggregate indebtedness of $498.2 million. These loans are generally mortgage or construction loans, most of which are nonrecourse to the Company, except for customary carve-outs. As of March 31, 2019, the loans to Real Estate Ventures for which there is recourse to the Company consist of the following: (i) a $0.3 million payment guarantee on a loan with a $3.7 million outstanding principal balance, provided to PJP VII; and (ii) up to a $41.3 million payment guarantee on a $150.0 million construction loan provided to 4040 Wilson. In addition, during construction undertaken by Real Estate Ventures, including 4040 Wilson, the Company has provided and expects to continue to provide cost overrun and completion guarantees, with rights of contribution among partners or members in the Real Estate Ventures, as well as customary environmental indemnities and guarantees of customary exceptions to nonrecourse provisions in loan agreements.

~~5. INTANGIBLE ASSETS AND LIABILITIES~~

~~As of March 31, 2019~~2020 and December 31, ~~2018,~~2019, the Company’s intangible assets/liabilities were comprised of the following (in thousands):

March 31, 2019

Total Cost

Accumulated Amortization

Intangible Assets, net

Intangible assets, net:

In-place lease value
$
179,979

$
(62,584
)

$
117,395

Tenant relationship value

9,564

(8,715
)

849

Above market leases acquired

4,966

(3,307
)

1,659

Total intangible assets, net
$
194,509

$
(74,606
)

$
119,903

Acquired lease intangibles, net:

Below market leases acquired
$
49,228

$
(19,415
)

$
29,813

December 31, 2018

Total Cost

Accumulated Amortization

Intangible Assets, net

Intangible assets, net:

In-place lease value
$
181,887

$
(53,376
)

$
128,511

Tenant relationship value

9,564

(8,551
)

1,013

Above market leases acquired

4,966

(3,142
)

1,824

Total intangible assets, net
$
196,417

$
(65,069
)

$
131,348

Acquired lease intangibles, net:

Below market leases acquired
$
49,655

$
(17,872
)

$
31,783



	March 31, 2020
	Total Cost		Accumulated Amortization			Intangible Assets, net
Intangible assets, net:
In-place lease value	$	153,328	$	(79,024	)	$	74,304
Tenant relationship value	5,142		(4,775		)	367
Above market leases acquired	4,866		(3,867		)	999
Total intangible assets, net	$	163,336	$	(87,666	)	$	75,670

	Total Cost		Accumulated Amortization			Intangible Liabilities, net
Intangible liabilities, net:
Below market leases acquired	$	43,302	$	(22,697	)	$	20,605



	December 31, 2019
	Total Cost		Accumulated Amortization			Intangible Assets, net
Intangible assets, net:
In-place lease value	$	167,357	$	(84,123	)	$	83,234
Tenant relationship value	5,268		(4,815		)	453
Above market leases acquired	4,956		(3,792		)	1,164
Total intangible assets, net	$	177,581	$	(92,730	)	$	84,851

	Total Cost		Accumulated Amortization			Intangible Liabilities, net
Intangible liabilities, net:
Below market leases acquired	$	44,757	$	(22,494	)	$	22,263

As of March 31, ~~2019,~~2020, the Company’s annual amortization for its intangible assets/liabilities, assuming no prospective early lease terminations, was as follows (dollars in thousands):

	Assets		Liabilities
2019 (nine months remaining)	$	30,532	$	5,433
2020		28,393		5,707

					Assets		Liabilities
2020 (nine months remaining)					$	18,801	$	3,665
2021		20,128		4,302	17,854		3,838
2022		12,791		2,654	12,043		2,257
2023		9,756		2,094	9,213		1,716
2024					6,294		1,428
Thereafter		18,303		9,623	11,465		7,701
Total	$	119,903	$	29,813	$	75,670	$	20,605

Table of contents

7. DEBT OBLIGATIONS

The following table sets forth information regarding the Company’s consolidated debt obligations outstanding at March 31, ~~2019~~2020 and December 31, ~~2018~~2019 (in thousands):


	March 31, 2019			December 31, 2018			Effective Interest Rate	Maturity Date	March 31, 2020			December 31, 2019			Effective Interest Rate	Maturity Date
MORTGAGE DEBT:
Two Logan Square	$	82,385		$	82,805		3.98%	May 2020	$	80,667		$	81,103		3.98%	August 2020
Four Tower Bridge		9,469			9,526		4.50%	Feb 2021	9,230			9,291			4.50%	February 2021
One Commerce Square		119,292			120,183		3.64%	Apr 2023	115,647			116,571			3.64%	April 2023
Two Commerce Square		110,014			110,518		4.51%	Apr 2023	107,948			108,472			4.51%	April 2023
Principal balance outstanding		321,160			323,032				313,492			315,437
Plus: fair market value premium (discount), net		(1,664	)		(1,759	)			(1,289		)	(1,383		)
Less: deferred financing costs		(364	)		(404	)			(202		)	(242		)
Mortgage indebtedness	$	319,132		$	320,869				$	312,001		$	313,812

UNSECURED DEBT
$600 million Unsecured Credit Facility	$	160,500		$	92,500		LIBOR + 1.10%	Jul 2022	$	50,000		$	—		LIBOR + 1.10%	July 2022
Seven-Year Term Loan - Swapped to fixed		250,000			250,000		2.87%	Oct 2022	250,000			250,000			2.87%	October 2022
$350.0M 3.95% Guaranteed Notes due 2023		350,000			350,000		3.87%	Feb 2023	350,000			350,000			3.87%	February 2023
$250.0M 4.10% Guaranteed Notes due 2024		250,000			250,000		4.33%	Oct 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		450,000			450,000		4.03%	Nov 2027	450,000			450,000			4.03%	November 2027
$250.0M 4.55% Guaranteed Notes due 2029		250,000			250,000		4.60%	Oct 2029
$350.0M 4.55% Guaranteed Notes due 2029									350,000			350,000			4.30%	October 2029
Indenture IA (Preferred Trust I)		27,062			27,062		LIBOR + 1.25%	Mar 2035	27,062			27,062			LIBOR + 1.25%	March 2035
Indenture IB (Preferred Trust I) - Swapped to fixed		25,774			25,774		3.30%	Apr 2035	25,774			25,774			3.30%	April 2035
Indenture II (Preferred Trust II) - Swapped to fixed		25,774			25,774		3.09%	Jul 2035
Indenture II (Preferred Trust II)									25,774			25,774			LIBOR + 1.25%	July 2035
Principal balance outstanding		1,789,110			1,721,110				1,878,610			1,828,610
Plus: original issue premium (discount), net		(4,015	)		(4,096	)			11,601			12,090
Less: deferred financing costs		(9,430	)		(9,837	)			(9,612		)	(10,094		)
Total unsecured indebtedness	$	1,775,665		$	1,707,177				$	1,880,599		$	1,830,606
Total Debt Obligations	$	2,094,797		$	2,028,046				$	2,192,600		$	2,144,418

~~As of both March 31, 2019 and December 31, 2018,~~
~~the Company’s weighted-average effective interest rates on its mortgage notes payable were 4.05%, respectively.~~

In addition to the debt described above, the Company utilizes borrowings under its unsecured revolving credit facility (the ~~“Credit~~“Unsecured Credit Facility”) for general business purposes, including to fund costs of acquisitions, developments and redevelopments of properties, fund share repurchases and to repay ~~from time to time~~ 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, ~~2019,~~2020, the weighted-average interest rate on Unsecured Credit Facility borrowings was 2.1% resulting in a nominal amount of interest expense. As of March 31, 2020, the effective interest rate on Credit Facility borrowings was ~~2.50% resulting in $1.3 million of interest expense. As of March 31, 2019, the effective interest rate on~~

2.1%.

~~Credit Facility borrowings was 3.60%. The Company had no borrowings under the Credit Facility as of and during the three-months ended March 31, 2018.~~

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.

8. FAIR VALUE OF FINANCIAL INSTRUMENTS

March 31, 2019

December 31, 2018

Carrying Amount (a)

Fair Value

Carrying Amount (a)

Fair Value

Unsecured notes payable
$
1,288,387

$
1,301,735

$
1,288,024

$
1,262,570

Variable rate debt
$
487,278

$
470,869

$
419,153

$
402,924

Mortgage notes payable
$
319,132

$
320,187

$
320,869

$
318,515

Notes receivable (b)
$
47,753

$
47,691

$
47,771

$
47,747



	March 31, 2020				December 31, 2019
	Carrying Amount (a)		Fair Value		Carrying Amount (a)		Fair Value
Unsecured notes payable	$	1,503,297	$	1,511,215	$	1,503,435	$	1,591,830
Variable rate debt	$	377,302	$	359,532	$	327,171	$	309,947
Mortgage notes payable	$	312,001	$	331,341	$	313,812	$	317,031
Notes receivable	$	44,430	$	46,640	$	44,430	$	43,322

For the Company’s ~~mortgage loans, the Company uses~~level 3 financial instruments for which fair value is disclosed, an ~~estimate based discounted cash flow analyses and its knowledge of the mortgage market. An~~ increase in the discount rate used ~~in the discounted cash flow model~~to determine fair value would result in a decrease to the fair ~~value of the Company’s long-term debt.~~value. Conversely, a decrease in the discount rate ~~used in the discounted cash flow model~~ would result in an increase to the fair ~~value of the Company’s long-term debt.~~

value.

9. ~~FAIR VALUE OF~~ DERIVATIVE FINANCIAL INSTRUMENTS

Hedge Product

Hedge Type

Designation

Notional Amount

Strike

Trade Date

Maturity Date

Fair value

3/31/2019

12/31/2018

3/31/2019

12/31/2018

Assets

Swap

Interest Rate

Cash Flow
(a)
$
250,000

$
250,000

2.868
%

October 8, 2015

October 8, 2022

$
4,522

$
7,008

Swap

Interest Rate

Cash Flow
(a)

25,774

25,774

3.300
%

December 22, 2011

January 30, 2021

185

292

Swap

Interest Rate

Cash Flow
(a)

25,774

25,774

3.090
%

January 6, 2012

October 30, 2019

151

183

$
301,548

$
301,548



Hedge Product	Hedge Type	Designation		Notional Amount				Strike		Trade Date	Maturity Date	Fair value
				3/31/2020		12/31/2019						3/31/2020			12/31/2019
Liabilities
Swap	Interest Rate	Cash Flow	(a)	$	250,000	$	250,000	2.868	%	October 8, 2015	October 8, 2022	$	(8,423	)	$	(562	)
Swap	Interest Rate	Cash Flow	(a)	$	25,774	$	25,774	3.300	%	December 22, 2011	January 30, 2021	(293		)	(94		)
				$	275,774	$	275,774

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

11. BENEFICIARIES' EQUITY OF THE PARENT COMPANY

Three-month periods ended March 31,

2019

2018

Basic

Diluted

Basic

Diluted

Numerator

Net income
$
4,066

$
4,066

$
44,705

$
44,705

Net income attributable to noncontrolling interests

(57
)

(57
)

(376
)

(376
)
Nonforfeitable dividends allocated to unvested restricted shareholders

(119
)

(119
)

(114
)

(114
)
Net income attributable to common shareholders
$
3,890

$
3,890

$
44,215

$
44,215

Denominator

Weighted-average shares outstanding

175,857,358

175,857,358

178,395,525

178,395,525

Contingent securities/Share based compensation

-

606,860

-

1,392,786

Weighted-average shares outstanding

175,857,358

176,464,218

178,395,525

179,788,311

Earnings per Common Share:

Net income attributable to common shareholders
$
0.02

$
0.02

$
0.25

$
0.25



	Three Months Ended March 31,
	2020						2019
	Basic			Diluted			Basic			Diluted
Numerator
Net income	$	8,087		$	8,087		$	4,583		$	4,583
Net income attributable to noncontrolling interests	(65		)	(65		)	(60		)	(60		)
Nonforfeitable dividends allocated to unvested restricted shareholders	(131		)	(131		)	(119		)	(119		)
Net income attributable to common shareholders	$	7,891		$	7,891		$	4,404		$	4,404
Denominator
Weighted-average shares outstanding	176,069,968			176,069,968			175,857,358			175,857,358
Contingent securities/Share based compensation	—			583,491			—			606,860
Weighted-average shares outstanding	176,069,968			176,653,459			175,857,358			176,464,218
Earnings per Common Share:
Net income attributable to common shareholders	$	0.04		$	0.04		$	0.03		$	0.02

~~11. PARTNERS’~~12. PARTNERS' EQUITY OF THE ~~OPERATING PARTNERSHIP~~PARENT COMPANY

Three-month periods ended March 31,

2019

2018

Basic

Diluted

Basic

Diluted

Numerator

Net income
$
4,066

$
4,066

$
44,705

$
44,705

Net income attributable to noncontrolling interests

(34
)

(34
)

(5
)

(5
)
Nonforfeitable dividends allocated to unvested restricted unitholders

(119
)

(119
)

(114
)

(114
)
Net income attributable to common unitholders
$
3,913

$
3,913

$
44,586

$
44,586

Denominator

Weighted-average units outstanding

176,840,229

176,840,229

179,875,324

179,875,324

Contingent securities/Share based compensation

-

606,860

-

1,392,786

Total weighted-average units outstanding

176,840,229

177,447,089

179,875,324

181,268,110

Earnings per Common Partnership Unit:

Net income attributable to common unitholders
$
0.02

$
0.02

$
0.25

$
0.25



	Three Months Ended March 31,
	2020						2019
	Basic			Diluted			Basic			Diluted
Numerator
Net income	$	8,087		$	8,087		$	4,583		$	4,583
Net income attributable to noncontrolling interests	(12		)	(12		)	(34		)	(34		)
Nonforfeitable dividends allocated to unvested restricted unitholders	(131		)	(131		)	(119		)	(119		)
Net income attributable to common unitholders	$	7,944		$	7,944		$	4,430		$	4,430
Denominator
Weighted-average units outstanding	177,051,602			177,051,602			176,840,229			176,840,229
Contingent securities/Share based compensation	—			583,491			—			606,860
Total weighted-average units outstanding	177,051,602			177,635,093			176,840,229			177,447,089
Earnings per Common Partnership Unit:
Net income attributable to common unitholders	0.04			0.04			0.03			0.02

~~12.~~13. SHARE BASED COMPENSATION

~~13.~~14. SEGMENT INFORMATION

Real estate investments, at cost:

March 31, 2019

December 31, 2018

Philadelphia CBD

$
1,683,406

$
1,670,388

Pennsylvania Suburbs

1,008,066

1,004,537

Austin, Texas

713,189

667,698

Metropolitan Washington, D.C.

524,385

524,190

Other

86,833

86,506

$
4,015,879

$
3,953,319

Right of use asset - operating leases (a)

$
22,175

$
-

Corporate

Construction-in-progress

$
112,176

$
150,263

Land held for development (b)

$
88,047

$
86,401

Prepaid leasehold interests in land held for development, net (c)

$
39,897

$
39,999



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

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

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

~~(b)~~

(a)

~~As of March 31, 2019, the Company categorized~~Does not include 49.2 acres and 35.2 acres of land ~~held for development, located in the Other segment,~~classified as held for sale in accordance with applicable accounting standards for long lived assets. As of December 31, 2018, the Company categorized 37.9 acres of land held for development, comprised of 2.7 acres and 35.2 acres, located in the Pennsylvania Suburbs segment and Other segment, respectively, as ~~held for sale in accordance with applicable accounting standards for long lived assets.~~ ~~See Note 3,~~ ~~“Real Estate Investments,” for further information.~~

~~(c)~~

As of March 31, ~~2019~~2020 and December 31, ~~2018, this caption comprised~~2019, respectively.


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

Three-month periods ended

March 31,

2019

2018

Total revenue

Operating expenses (a)

Net operating income (loss)

Total revenue

Operating expenses (a)

Net operating income (loss)

Philadelphia CBD
$
65,798

$
(25,185
)

$
40,613

$
62,602

$
(24,327
)

$
38,275

Pennsylvania Suburbs

35,627

(12,972
)

22,655

34,882

(12,964
)

21,918

Austin, Texas (b)

24,766

(9,076
)

15,690

8,364

(3,523
)

4,841

Metropolitan Washington, D.C. (c)

13,520

(6,204
)

7,316

23,059

(8,759
)

14,300

Other

3,182

(2,145
)

1,037

6,141

(4,965
)

1,176

Corporate

1,003

(1,799
)

(796
)

1,310

(1,966
)

(656
)
Operating properties
$
143,896

$
(57,381
)

$
86,515

$
136,358

$
(56,504
)

$
79,854



	Three Months Ended March 31,
	2020								2019
	Total revenue		Operating expenses (a)			Net operating income (loss)			Total revenue		Operating expenses (a)			Net operating income (loss)
Philadelphia CBD	$	65,915	$	(24,198	)	$	41,717		$	65,798	$	(25,185	)	$	40,613
Pennsylvania Suburbs	37,237		(12,678		)	24,559			35,627		(12,991		)	22,636
Austin, Texas	26,581		(10,145		)	16,436			24,766		(9,076		)	15,690
Metropolitan Washington, D.C.	10,754		(5,512		)	5,242			13,520		(6,204		)	7,316
Other	3,652		(2,693		)	959			3,182		(2,145		)	1,037
Corporate	949		(1,684		)	(735		)	1,003		(1,799		)	(796		)
Operating properties	$	145,088	$	(56,910	)	$	88,178		$	143,896	$	(57,400	)	$	86,496



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

~~(c)~~

On December 20, 2018, the Company contributed a portfolio of eight properties containing an aggregate of 1,293,197 square feet, located in its Metropolitan Washington, D.C. segment, known as the Rockpoint Portfolio, to the Herndon Innovation Center Venture. The Company and its partner own 15% and 85% interests in the Herndon Innovation Center Venture, respectively.

Unconsolidated real estate ventures (in thousands):

Investment in real estate ventures, at equity

Equity in income (loss) of real estate venture

As of

Three-month periods ended March 31,

March 31, 2019

December 31, 2018

2019

2018

Philadelphia CBD
$
19,325

$
19,897

$
78

$
(236
)
Metropolitan Washington, D.C. (a)

135,149

136,142

(175
)

(37
)
MAP Venture (b)

5,101

11,173

(1,367
)

(736
)
Other

1,993

1,888

106

104

Austin, Texas (c)

-

-

-

80

Total
$
161,568

$
169,100

$
(1,358
)

$
(825
)

~~(a)~~

~~On December 20, 2018, the Company formed the Herndon Innovation Center Venture. See footnote (b) to the “Net operating income” table above for further information regarding this transaction.~~

~~(b)~~

The MAP Venture represents a joint venture formed between the Company and MAP Ground Lease Holdings LLC, an affiliate of Och-Ziff Capital Management Group, LLC, on February 4, 2016. The MAP Venture’s business operations, including properties in Richmond, Virginia; Metropolitan Washington, D.C.; New Jersey/Delaware and Pennsylvania Suburbs, are centrally managed with the results reported to management of the Company on a consolidated basis. As a result, the investment in the MAP Venture is separately presented. All other unconsolidated real estate ventures are managed consistently with the Company’s regional segments.

~~(c)~~

On December 11, 2018, the Company acquired from DRA Advisors its 50% ownership interest in the G&I Austin Office LLC real estate venture. The DRA Austin Venture owned twelve office properties containing an aggregate 1,570,123 square feet, located in Austin, Texas. As a result of the acquisition, the Company acquired complete ownership of the Austin properties.



	Three Months Ended March 31,
	2020			2019
Net income	$	8,087		$	4,583
Plus:
Interest expense	20,009			20,357
Interest expense - amortization of deferred financing costs	749			666
Depreciation and amortization	52,038			51,444
General and administrative expenses	8,561			9,844
Equity in loss of Real Estate Ventures	1,891			1,358
Less:
Interest income	575			525
Income tax provision	(4		)	(29		)
Net gain on disposition of real estate	2,586			—
Net gain on sale of undepreciated real estate	—			1,001
Net gain on real estate venture transactions	—			259
Consolidated net operating income	$	88,178		$	86,496

Three-month periods ended March 31,

2019

2018

Net income
$
4,066

$
44,705

Plus:

Interest expense

20,357

19,533

Interest expense - amortization of deferred financing costs

666

627

Depreciation and amortization

51,980

43,291

General and administrative expenses

9,844

8,723

Equity in loss of Real Estate Ventures

1,358

825

Less:

Interest income

525

703

Income tax provision

(29
)

(138
)
Net gain on sale of undepreciated real estate

1,001

22

Net gain on real estate venture transactions

259

37,263

Consolidated net operating income
$
86,515

$
79,854

~~14.~~15. COMMITMENTS AND CONTINGENCIES

Year

Lease Payments

2019 (nine months remaining)

$
905

2020

1,217

2021

1,232

2022

1,248

2023

1,263

Thereafter

111,757

Total lease payments

$
117,622

Less: Imputed interest

(95,220
)
Present value of operating lease liabilities

$
22,402

Year

Lease Payments

2019

$
1,222

2020

1,222

2021

1,222

2022

1,222

2023

1,222

Thereafter

55,689

Total

$
61,799

In connection with the acquisition, the Company is required to spend no less than $8.0 million in capital improvements to the property. As of March 31, 2019, $1.7 million of the funding related to this requirement had been met. The Company estimates that it will incur $37.3 million in excess of this funding requirement and expects to complete the redevelopment of The Bulletin Building during the second quarter of 2020 at an estimated aggregate cost of $83.1 million, inclusive of the acquisition cost of $37.8 million.

Also on October 13, 2017, the Company acquired a leasehold interest in the land parcel at 3001 Market Street in Philadelphia, Pennsylvania (“Drexel Square”). During the fourth quarter of 2017, the Company broke ground on the construction of a public park on the site, marking the commencement of construction at our Schuylkill Yards Project with Drexel. Under the terms of the Development Agreement with Drexel University, the Company has until July 2019 to complete development of Drexel Square. If the Company is unable to complete such development within this timeframe, it may be subject to damages under the Development Agreement. As of March 31, 2019, the development of Drexel Square is substantially complete.

~~During the fourth quarter of 2017, in~~ connection with the Schuylkill Yards Project, the Company entered into a neighborhood engagement program and, as of March 31, ~~2019,~~2020, had ~~$2.7~~$8.4 million of future fixed contractual obligations. ~~In addition,~~The Company is also committed to make additional

contributions under the program. As of March 31, 2020, the Company estimates ~~$0.6 million of potential~~that these additional contributions, ~~for~~ which are not fixed under the terms of agreement, will be $2.7 million.

16. SUBSEQUENT EVENTS

On April ~~11, 2019, Herndon Innovation Center Venture,~~2, 2020, we settled the purchase of 604,283 common shares, which had a trade date of March 31, 2020, for an ~~unconsolidated real estate venture~~aggregate of $6.1 million.

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

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

On April 10, 2020, the Financial Accounting Standards Board (the "FASB") issued a ~~15% ownership interest, obtained $115.3 million~~Staff Q&A to respond to some frequently asked questions about accounting for lease concessions related to the effects of ~~third-party debt financing secured by four properties within~~ the ~~venture. The loan bears interest at LIBOR + 1.80% capped at~~COVID-19 pandemic. Consequently, for concessions related to the effects of the COVID-19 pandemic, an entity will not have to analyze each contract to determine whether enforceable rights and obligations for concessions exist in the contract and can elect to apply or not apply the lease modification guidance to those contracts. Entities may make the elections for any lessor-provided concessions related to the effects of the COVID-19 pandemic (e.g., deferrals of lease payments, cash payments made to the lessee, reduced future lease payments) as long as the concession does not result in a ~~total maximum interest rate~~substantial increase in the rights of ~~6.3% and matures on April 11, 2024.~~the lessor or the obligations of the lessee. The Company ~~received $13.8 million~~is currently working with tenants impacted by the COVID-19 pandemic to determine appropriate lease concessions. To date, the impact of lease concessions granted has not had a material effect on the financial statements. The Company will continue to evaluate the impact of lease concessions and the appropriate accounting for ~~its share of the cash proceeds from the financing on April 12, 2019.~~

those concessions.

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

OVERVIEW

As of March 31, 2019, we owned 96 properties that contained an aggregate of approximately 16.9 million net rentable square feet (collectively, the “Properties”). Our core portfolio of operating properties, as of March 31, 2019, excludes one development property and three redevelopment properties under construction or committed for construction (collectively, the “Core Properties”). The Properties were comprised of the following as of March 31, 2019:

Three Months Ended March 31,

2019

2018

Leasing Activity

   Core Properties (1):

     Total net rentable square feet owned

16,379,261

15,669,487

     Occupancy percentage (end of period)

92.1
%

92.3
%
     Average occupancy percentage

91.8
%

92.2
%
   Total Portfolio, less properties in development (2):

     Retention rate

66.2
%

51.3
%
     New leases and expansions commenced (square feet)

404,925

131,032

     Leases renewed (square feet)

412,123

171,204

     Net absorption (square feet)

(65,796
)

(95,356
)
     Percentage change in rental rates per square feet (3):

       New and expansion rental rates

13.6
%

11.9
%
       Renewal rental rates

14.9
%

9.7
%
       Combined rental rates

14.6
%

10.5
%
     Capital Costs Committed (4):

       Leasing commissions (per square feet)
$
7.87

$
7.68

       Tenant Improvements (per square feet)
$
22.33

$
16.10

       Weighted average lease term (years)

7.7

7.4

       Total capital per square foot per lease year
$
4.81

$
2.84



	Three Months Ended March 31,
	2020			2019
Leasing Activity
Core Properties (1):
Total net rentable square feet owned	15,978,965			16,379,261
Occupancy percentage (end of period)	93.3		%	92.1		%
Average occupancy percentage	93.0		%	91.8		%
Total Portfolio, less properties in development (2):
Tenant retention rate (3)	75.6		%	66.2		%
New leases and expansions commenced (square feet)	224,417			404,925
Leases renewed (square feet)	87,449			412,123
Net absorption (square feet)	62,507			(65,796		)
Percentage change in rental rates per square feet (4):
New and expansion rental rates	21.1		%	13.6		%
Renewal rental rates	8.6		%	14.9		%
Combined rental rates	15.7		%	14.6		%
Capital Costs Committed (5):
Leasing commissions (per square feet)	$	6.28		$	7.87
Tenant Improvements (per square feet)	$	18.02		$	22.33
Weighted average lease term (years)	6.7			7.7
Total capital per square foot per lease year	$	3.96		$	4.81

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

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


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

~~(4)~~
(5)	Calculated on a weighted average basis.

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

If economic conditions deteriorate, including as a result of the recent COVID-19 outbreak, 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.

As of March 31, ~~2019,~~2020 the following development and redevelopment projects remain under construction in progress and we were proceeding on the following activity (dollars, in thousands):

Construction Commencement Date

Expected Completion

Activity Type

Property/Portfolio Name

Location

Number of Buildings

Square Footage/ Units

Estimated Costs

Amount Funded

Q2 2019

Q2 2020

Redevelopment

The Bulletin Building

Philadelphia, PA

1

283,000

$
83,100

(a)
$
49,100

Q1 2019

Q4 2020

Development

405 Colorado Street

Austin, TX

1

200,000

114,000

(b)

6,700

Q2 2018

Q1 2019

Redevelopment

426 W. Lancaster Avenue

Devon, PA

1

56,000

14,900

(c)

11,400

Total

3

539,000

$
212,000

$
67,200

Property/Portfolio Name

Location

Expected Completion

Activity Type

Approximate Square Footage

Estimated Costs

Amount Funded

The Bulletin Building (a)

Philadelphia, PA

Q3 2020

Redevelopment

283,000

84,800

67,300

405 Colorado Street (b)

Austin, TX

Q1 2021

Development

204,000

116,000

38,800

426 W. Lancaster Avenue (c)

Devon, PA

Q1 2019

Redevelopment

56,000

14,900

13,100

3000 Market Street (d)

Philadelphia, PA

Q1 2021

Redevelopment

64,000

38,000

13,000

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

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

In addition to the ~~final phase of the eight building, mixed-use, Liberty Center complex located~~properties listed above, we have classified one parking facility in the Ballston submarket of Arlington, Virginia. The project is being constructed on a 1.3-acre land parcel contributed by Ashton Park to 4040 Wilson. During the fourth quarter of 2017, 4040 Wilson achieved pre-leasing levels that enabled the venture to obtain a secured construction loan with a total borrowing capacity of $150.0 million for the remainder of the project costs. The total estimated project costs are $224.8 million, which we expect will be financed through approximately $74.8 million of partner capital contributions and $150.0 million in proceeds from the secured construction loan.Philadelphia, Pennsylvania as redevelopment. As of March 31, 2019, $72.3 million had been advanced under the construction loan, and the venture had commenced construction of the mixed-use building. If construction costs were to exceed estimates, our equity method investment in 4040 Wilson could become other than temporarily impaired.

~~Schuylkill Yards Project~~

~~As of March 31, 2019, we remain in the planning and development phase of our master developer agreement (the “Development Agreement”) with~~ ~~Drexel University, a Pennsylvania non-profit corporation, and an affiliate of Drexel University, (collectively “Drexel”)~~ ~~for the Schuylkill Yards Project. For further information relating to this development, including an overview of the project, see Item 1.,~~ ~~"Business – Other Development Activities"~~ included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018. See the table above for information relating to progress at the Bulletin Building, a redevelopment that is part of the Schuylkill Yards Project, as of March 31, 2019.

~~For information regarding the 2018 acquisitions within the scope of the Schuylkill Yards project, see Item 1.,~~ ~~“Business – 2018 Transactions,”~~ ~~in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018. For information regarding the 2017 acquisitions within the scope of the Schuylkill Yards project, see Item 1.,~~ ~~“Business – 2017 Transactions,”~~ ~~in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017.~~

~~Reference is made to our Annual Report on Form 10-K for the year ended December 31, 2018 for project overviews, as well as risks associated with these development projects. See~~ ~~"Liquidity and Capital Resources – Contractual Obligations"~~ ~~below for contractual commitments relating to our ongoing development projects.~~

~~Land Holdings~~

As of March 31, 2019, we owned approximately 234.7 acres of undeveloped land, of which 35.2 acres were held for sale and 1.8 acres related to leasehold interests in two land parcels, each acquired through prepaid 99-year ground leases, and held options to purchase approximately 55.5 additional acres of undeveloped land. As market conditions warrant, we will seek to opportunistically dispose of those parcels that we do not anticipate developing. For parcels of land that we ultimately develop, we will be subject to risks and costs associated with land development, including building moratoriums and the inability to obtain necessary zoning, land-use, building, occupancy and other required governmental approvals, construction cost increases or overruns and construction delays, and insufficient occupancy and rental rates. As of March 31, 2019, the total potential development that these land parcels could support amounted to 14.2 million square feet of development, of which 0.2 million square feet relates to 35.2 acres held for sale.

~~Impairments and Disposal of Long-Lived Assets~~

We review our long-lived assets for impairment following the end of each quarter using cash flow projections and estimated fair values for each of the properties included within our impairment analysis. We update leasing and other assumptions regularly, paying particular attention to properties where2020, there is an event or change in circumstances that indicates an impairment in value. Additionally, we consider strategic decisions regarding the future development plans for property under development and other market factors. For long-lived assets to be held and used, we analyze recoverability based on the estimated undiscounted future cash flows expected to be generated from the operations and eventual disposition of the assets over, in most cases, a 10-year hold period. If there is significant possibility that we will dispose of assets earlier, we analyze the recoverability using a probability weighted analysis of the undiscounted future cash flows expected to be generated from the operations and eventual disposition of each asset using various possible hold periods. If the recovery analysis indicates that the carrying value of the tested property is not recoverable, the property is written down to its fair value and an impairment loss is recognized. In such case, an impairment loss is recognized in the amount of the excess of the carrying amount of the asset over its fair value. If and when our plans change, we revise our recoverability analysis to use cash flows expected from operations and eventual disposition of each asset using hold periods that are consistent with our revised plans.

Estimated cash flows used in such analysis are based on our plans for the property and our views of market economic conditions. The estimates consider factors such as current and future rental rates, occupancies for the tested property and comparable properties, estimated operating and capital expenditures and recent sales data for comparable properties. Most of these factors are influenced by market data obtained from real estate leasing and brokerage firms and our direct experience with the properties and their markets.

~~We generally consider assets to be “held for sale” when the transaction~~ has been ~~approved by our Board of Trustees, or by officers vested with authority to approve the transaction and there are~~ no known significant contingencies relating to the sale of the property within one year of the consideration date and the consummation of the transaction is otherwise considered probable. When a property is designated as held for sale, we stop depreciating the property and estimate the property’s fair value, net of selling costs. If the determination is made that the estimated fair value, net of selling costs, is less than the net book value of the property, an impairment loss is recognized equal to the difference and reduces the net book value of the property. For periods in which a property is classified as held for sale, we classify the assets of the property as held for salematerial construction spend on ~~the consolidated balance sheet for such periods.~~

The relevant accounting guidance for impairments requires that qualifying assets and liabilities and the results of operations that have been sold, or otherwise qualify as “held for sale,” be presented as discontinued operations in all periods presented if the disposal represents a strategic shift that has, or will have, a major effect on our operations and financial results. If deemed a discontinued operation, then the components of the property’s net income that are reflected as discontinued operations include net gain (or loss) on disposition of real estate, operating results, depreciation and interest expense (if the property is subject to a secured loan).

~~Impairments of Land Held for Development~~

When demand for development declines and the ability to sell land held for development deteriorates, or other market factors indicate a possible impairment in the recoverability of land held for development, it is reviewed for impairment by comparing its fair value to its carrying value. If the estimated sales value is less than the carrying value, the carrying value is written down to its estimated fair value.

~~Equity Method Investments in Unconsolidated Real Estate Ventures~~

Under the equity method, investments in unconsolidated Real Estate Ventures are recorded initially at cost, as Investments in unconsolidated Real Estate Ventures, and subsequently adjusted for equity in earnings, cash contributions, distributions and impairments. For Real Estate Ventures that are constructing assets to commence planned principal operations, we capitalize interest expense using our weighted average interest rate of consolidated debt and our investment balance as a basis. Planned principal operations commence when a property is available to lease and at that point in time we cease capitalizing interest to our investment basis. During the three-month periods ended March 31, 2019 and 2018, no interest expense was capitalized.

On a periodic basis, management also assesses whether there are any indicators that the value of our investments in unconsolidated real estate ventures may be other than temporarily impaired. An investment is impaired only if the value of the investment, as estimated by management, is less than the carrying value of the investment and the decline is other than temporary. To the extent impairment has occurred, the loss shall be measured as the excess of the carrying amount of the investment over the fair value of the investment, as estimated by management. Estimates of value for each investment are based on a number of assumptions that are subject to economic and market uncertainties including, among others, demand for space, competition for tenants, changes in market rental rates, and operating costs. These factors are difficult to predict and are subject to future events that may alter management’s assumptions; accordingly, the values estimated by management in our impairment analyses may not be realized.

~~RECENT PROPERTY TRANSACTIONS~~

~~Dispositions~~

~~We sold the following land parcel during the three-month period ended March 31, 2019 (dollars in thousands):~~

~~(a)~~

As of January 2019, we will receive an additional $1.0 million of contingent consideration. We will recognize this consideration on a cash basis due to constraints on collectability. The $1.0 million consideration is payable in twelve equal installments, of which $0.3 million has been received during the three-month period ended March 31, 2019.

~~Held for Sale~~

As of March 31, 2019, we determined that the sale of two parcels of land totaling 35.2 acres in the Other segment was probable and classified these properties as held for sale in accordance with applicable accounting standards for long lived assets. As of March 31, 2019, $7.3 million was reclassified from the “Land held for development” caption to the “Assets held for sale, net” caption on the consolidated balance sheets. There were no other reclassifications related to these parcels of land. As of March 31, 2019, the fair value less the anticipated costs of sale of the properties exceeded the carrying values. As a result, we expect to record gains on sale. The fair value measurement is based on the pricing in the purchase and sale agreements.

The disposals of properties referenced above do not represent a strategic shift that has a major effect on our operations and financial results. As a result, the operating results of the properties remain classified within continuing operations for all periods presented.

~~MAP Venture~~

During the three-month period ended March 31, 2019, MAP Venture, an unconsolidated real estate venture in which we hold a 50% ownership interest, is the lessee under a 99-year ground lease of land parcels underlying 58 office properties owned by the MAP Venture. Upon adoption of Topic 842, Leases on January 1, 2019, the venture determined that the carrying amount of the right of use asset was greater than the fair value of the underlying right of use asset. As a result, the venture recorded a $9.2 million cumulative effect of accounting change adjustment simultaneously with the recording of the right of use asset to reduce the value of the right of use asset to its estimated fair value. Our $4.6 million proportionate share of this amount was recorded as a cumulative effect of accounting change adjustment through the "Cumulative earnings” caption on our consolidated balance sheets. See Note 4, ~~“Investment in Unconsolidated Real Estate Ventures,”~~ ~~to our consolidated financial statements for further information.~~

~~Herndon Innovation Center Metro Portfolio Venture, LLC~~

On March 28, 2019, Herndon Innovation Center Metro Portfolio Venture, LLC (“Herndon Innovation Center Venture”), an unconsolidated real estate venture in which we hold a 15% ownership interest, obtained $134.1 million of third-party debt financing, secured by four properties within the venture, with an initial advance of $113.1 million. On April 1, 2019, the venture received $111.0 million in net cash proceeds from the financing, of which $16.7 million was distributed to us for our share. The loan bears interest at LIBOR + 1.95% capped at a total maximum interest rate of 5.45% - 6.45% over the term of the loan and matures on March 29, 2024.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Management’s Discussion and Analysis of Financial Condition and Results of Operations discuss our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The preparation of these financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Certain accounting policies are considered to be critical

accounting policies, as they require management to make assumptions about matters that are highly uncertain at the time the estimate is made and changes in accounting estimate are reasonably likely to occur from period to period. Management bases its estimates and assumptions on historical experience and current economic conditions.

Our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 contains a discussion of our critical accounting policies. There have been no significant changes in our critical accounting policies since December 31, ~~2018with the exception of the adoption of ASC 842, Leases. See also Note 2, "Basis of Presentation," in our unaudited consolidated financial statements for the three-month period ended March 31, 2019, set forth herein.~~

2019.

RESULTS OF OPERATIONS

The following discussion is based on our consolidated financial statements for the ~~three-month periods~~three months ended March 31, ~~2019~~2020 and ~~2018.~~2019. 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 ~~13, "Segment~~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 ~~13, "Segment Information~~,"14, ''Segment Information” to our ~~consolidated financial statements~~Consolidated Financial Statements for a reconciliation of NOI to our consolidated net income as defined by GAAP.

Comparison of the ~~Three-Month Periods~~Three Months Ended March 31, ~~2019~~2020 and March 31, ~~2018~~2019

The ~~table below shows selected operating information~~following comparison for the “Same Store Property Portfolio” and the “Total Portfolio.” The Same Store Property Portfolio consists of 74 properties containing an aggregate of approximately 14.1 million net rentable square feet, and represents properties that we owned for the entire three-month periodsthree months ended March 31, ~~2019 and 2018. The Total Portfolio includes the effects of other properties that were either placed into service, acquired or redeveloped after January 1, 2018 and disposed of prior~~2020 to March 31, 2019 or classified as held for sale as of March 31, 2019. A property is excluded from our Same Store Property Portfolio and moved into the redevelopment column in the period that we determine to proceed with development/redevelopment for a future development strategy. This table also includes a reconciliation from the Same Store Property Portfolio to the Total Portfolio net income (i.e., all properties owned by us during the three-month periods ended March 31, 2019 and 2018) by providing information for the properties which were acquired, placed into service, under development or redevelopment and administrative/elimination information for the three-month periods ended March 31, 2019 and 2018.

~~During~~ the three months ended March 31, 2019, ~~a property containing 5,000 rentable square feet, located in our Other segment, was removed from~~makes reference to the Same Store Property Portfolio and was reclassified as land. In addition, 650 Park Avenue, located in our Pennsylvania Suburbs segment, was removed from the Same Store Property Portfolio in advance of plans to demolish the building and redevelop the property. For detaileffect of the ~~properties comprising the Same Store Property Portfolio, as of December 31, 2018, see the Item 2.~~ ~~“Properties”~~ ~~section of our Annual Report on Form 10-K for the year ended December 31, 2018.~~

~~The Total Portfolio net income presented in the table is equal to the net income of the Parent Company and the Operating Partnership.~~

following:


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


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


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


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


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

Comparison of three months ended March 31, ~~2019~~2020 to the three months ended March 31, ~~2018~~2019

Same Store Property Portfolio

Recently Completed/Acquired Properties (a)

Development/Redevelopment Properties (b)

Other/(Eliminations) (c)

Total Portfolio

(dollars and square feet in thousands)

2019

2018

Increase/ (Decrease)

2019

2018

2019

2018

2019

2018

2019

2018

Increase/ (Decrease)

Revenue:

Rents

$
112,709

$
111,664

$
1,045

$
20,451

$
2,080

$
2,595

$
1,556

$
2,343

$
11,459

$
138,098

$
126,759

$
11,339

Third party management fees, labor reimbursement and leasing

-

-

-

-

-

-

-

3,955

7,674

3,955

7,674

(3,719
)
Other

373

305

68

46

(16
)

5

11

1,419

1,625

1,843

1,925

(82
)
Total revenue

113,082

111,969

1,113

20,497

2,064

2,600

1,567

7,717

20,758

143,896

136,358

7,538

Property operating expenses

32,867

32,820

(47
)

4,094

606

913

1,102

1,607

4,804

39,481

39,332

(149
)
Real estate taxes

11,627

10,301

(1,326
)

3,666

347

257

239

233

1,535

15,783

12,422

(3,361
)
Third party management expenses

-

-

-

-

-

-

-

2,117

4,750

2,117

4,750

2,633

Net operating income

68,588

68,848

(260
)

12,737

1,111

1,430

226

3,760

9,669

86,515

79,854

6,661

Depreciation and amortization

35,124

35,558

434

12,328

976

986

982

3,542

5,775

51,980

43,291

(8,689
)
General & administrative expenses

-

-

-

-

-

-

-

9,844

8,723

9,844

8,723

(1,121
)
Net gain on sale of undepreciated real estate

(1,001
)

(22
)

979

Operating income (loss)

$
33,464

$
33,290

$
174

$
409

$
135

$
444

$
(756
)

$
(9,626
)

$
(4,829
)

$
25,692

$
27,862

$
(2,170
)
Number of properties

74

74

18

4

96

Square feet

14,134

14,134

2,245

543

16,922

Core Occupancy % (d)

92.2
%

92.8
%

91.3
%

Other Income (Expense):

Interest income

525

703

(178
)
Interest expense

(20,357
)

(19,533
)

(824
)
Interest expense — Deferred financing costs

(666
)

(627
)

(39
)
Equity in loss of Real Estate Ventures

(1,358
)

(825
)

(533
)
Net gain on real estate venture transactions

259

37,263

(37,004
)
Income tax provision

(29
)

(138
)

109

Net income

$
4,066

$
44,705

$
(40,639
)
Net income attributable to Common Shareholders of Brandywine Realty Trust

$
0.02

$
0.25

$
(0.23
)

~~EXPLANATORY NOTES~~



	Same Store Property Portfolio											Recently Completed/Acquired Properties					Development/Redevelopment Properties						Other (Eliminations) (a)						Total Portfolio
(dollars and square feet in millions except per share amounts)	2020			2019			$ Change			% Change		2020			2019		2020			2019			2020			2019			2020			2019			$ Change			% Change
Revenue:
Rents	$	132.8		$	129.6		$	3.2		2.5	%	$	1.8		$	1.0	$	1.5		$	2.7		$	3.1		$	4.8		$	139.2		$	138.1		$	1.1		0.8	%
Third party management fees, labor reimbursement and leasing	—			—			—			—	%	—			—		—			—			5.0			4.0			5.0			4.0			1.0			25.0	%
Other	0.3			0.4			(0.1		)	(25.0	)%	—			—		—			—			0.6			1.4			0.9			1.8			(0.9		)	(50.0	)%
Total revenue	133.1			130.0			3.1			2.4	%	1.8			1.0		1.5			2.7			8.7			10.2			145.1			143.9			1.2			0.8	%
Property operating expenses	35.4			36.2			(0.8		)	(2.1	)%	0.3			—		0.6			1.1			1.1			2.2			37.4			39.5			(2.1		)	(5.2	)%
Real estate taxes	15.5			14.8			0.7			4.7	%	0.4			0.2		0.4			0.3			0.5			0.4			16.8			15.7			1.1			7.0	%
Third party management expenses	—			—			—			—	%	—			—		—			—			2.7			2.1			2.7			2.1			0.6			28.6	%
Net operating income	82.2			79.0			3.2			4.0	%	1.1			0.8		0.5			1.3			4.4			5.5			88.2			86.6			1.6			1.8	%
Depreciation and amortization	48.2			46.3			1.9			4.1	%	0.5			0.2		1.0			1.4			2.3			3.6			52.0			51.5			0.5			1.0	%
General & administrative expenses	—			—			—			—	%	—			—		—			—			8.6			9.8			8.6			9.8			(1.2		)	(12.2	)%
Net gain on disposition of real estate																													(2.6		)	—			(2.6		)	—	%
Net gain on sale of undepreciated real estate																													—			(1.0		)	1.0			(100.0	)%
Operating income (loss)	$	34.0		$	32.7		$	1.3		3.9	%	$	0.6		$	0.6	$	(0.5	)	$	(0.1	)	$	(6.5	)	$	(7.9	)	$	30.2		$	26.3		$	3.9		14.6	%
Number of properties	88			88								1					5												94
Square feet	15.8			15.8								0.2					0.6												16.6
Core Occupancy % (b)	93.3		%	92.2		%						100.0		%
Other Income (Expense):
Interest income																													0.6			0.5			0.1			20.0	%
Interest expense																													(20.0		)	(20.4		)	0.4			(2.0	)%
Interest expense — Deferred financing costs																													(0.7		)	(0.7		)	—			—	%
Equity in loss of Real Estate Ventures																													(1.9		)	(1.4		)	(0.5		)	35.7	%
Net gain on real estate venture transactions																													—			0.3			(0.3		)	(100.0	)%
Net income																													$	8.2		$	4.6		$	3.6		77.2	%
Net income attributable to Common Shareholders of Brandywine Realty Trust																													$	0.04		$	0.02		$	0.02		100.0	%

~~(a)~~

~~Includes: three properties recently completed, and 15 acquisitions.~~

~~(b)~~

(a)

~~Includes: one development and three redevelopment properties.~~

~~(c)~~

~~Includes~~Represents certain revenues and expenses at the corporate level as well as various intercompany costs that are eliminated in consolidation, third-party management fees, ~~and~~ provisions for ~~impairment.~~impairment, and changes in the accrued rent receivable allowance. Other/(Eliminations) also includes properties sold ~~that do not qualify as discontinued operations~~ and properties classified as held for sale. ~~Also includes the retail and residential components of FMC Tower.~~

~~(d)~~
(b)	Pertains to Core ~~Properties (i.e. not under development or redevelopment).~~ Properties.

Rents from the Total Portfolio increased by ~~$11.3~~$1.1 million during the first quarter of ~~2019~~2020 compared to the first quarter of ~~2018,~~2019. The increase in Rents is primarily ~~attributable to an $8.4~~driven by a $3.2 million increase ~~from tenant reimbursements & billings,~~across the Same Store Portfolio due to increased occupancy at several properties within the Philadelphia CBD Segment and a ~~$3.1~~$1.3 million increase ~~from cash rents and~~in termination fee income, as well as a ~~$1.0~~$0.8 million increase ~~from deferred market rent.~~related to leasing activity at the Recently Completion/Acquired Properties. These increases ~~were~~are partially offset by a ~~$0.9~~decrease of $1.6 million ~~decrease~~related to ~~straight-line rents~~the Q1 2019 through Q1 2020 Dispositions and a ~~$0.2~~decrease of $1.2 million ~~decrease~~related to ~~termination fee income.~~

redevelopments included in Development/Redevelopment Properties.

•

~~$1.3 million increase in interest expense related to the Credit Facility, due to increased borrowings during the year ended March 31, 2019 compared to the three months ended March 31, 2018.~~

•

~~$0.4 million decrease related to the refinance of the seven-year term loan on December 13, 2018, which reduced the effective interest rate by 0.55%.~~

•

$0.5 million increase primarily due to increased ground rent expense at the MAP Venture during the first quarter of 2019 compared to the first quarter of 2018 as a result of the adoption of Topic 842, Leases; and

three months ended March 31, 2020 compared to the three months ended March 31, 2019, of which $0.8 million relates to decreases across our Same Store Property Portfolio, $0.5 million relates to decreases due to vacancies at our Development/Redevelopment Properties in advance of beginning redevelopment activities, and $0.4 million relates to the Q1 2019 through Q1 2020 Dispositions.

•

~~$25.7 million from the sale of the evo at Cira Centre South Venture; and~~

•

~~$11.6 million gain recognized on the exchange of our 20% interest in the Seven Tower Bridge Venture for the remaining 35% interest in the Four Tower Bridge Venture.~~

•

~~fund normal recurring expenses;~~

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 flows from operations;

•

~~cash and cash equivalent balances;~~

•

~~availability under our unsecured Credit Facility;~~

distributions of cash from our unconsolidated real estate ventures;

•

~~secured construction loans and long-term unsecured indebtedness;~~

cash and cash equivalent balances;

•

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

availability under our unsecured Credit Facility;

•

~~sales of real estate.~~

secured construction loans and long-term unsecured indebtedness;

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

sales of real estate.

As of March 31, ~~2019,~~2020, the Parent Company owned a 99.4% interest in the Operating Partnership. The remaining interest of approximately 0.6% pertains to common limited partnership interests owned by non-affiliated investors who contributed property to the Operating Partnership in exchange for their interests. As the sole general partner of the Operating Partnership, the Parent Company has full and complete responsibility for the Operating Partnership’s day-to-day operations and management. The Parent Company’s source of funding for its dividend payments and other obligations is the distributions it receives from the Operating Partnership.

As summarized above, we believe that our liquidity needs will be satisfied through available cash balances and cash flows from operations, financing activities and real estate sales. Rental revenue and other income from operations are our principal sources of cash to pay operating expenses, debt service, recurring capital expenditures and the minimum distributions required to maintain our REIT qualification. We seek to increase cash flows from our properties by maintaining quality standards for our properties that promote high occupancy rates and permit increases in rental rates while reducing tenant turnover and controlling operating expenses. Our revenue also includes third-party fees generated by our property management, leasing, development and construction businesses. We believe that our revenue, together with proceeds from property sales and debt financings, will continue to provide funds for our short-term liquidity needs. However, material changes in our operating or financing activities may adversely affect our net cash flows. With uncertain economic conditions, vacancy rates may increase, effective rental rates on new and renewed leases may decrease and tenant installation costs, including concessions, may increase in most or all of our markets during ~~2019~~2020 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, ~~2019~~2020 we were in compliance with all of our debt covenants and requirement obligations.

In addition, we are continuing to monitor the outbreak of the novel coronavirus (“COVID-19”) and the related economic impacts, market volatility, and business disruption, and its impact on our tenants. The severity and duration of the pandemic and its impact on our operations and liquidity is uncertain as this continues to evolve globally. However, if the outbreak continues, there will likely be continued negative economic impacts, market volatility, and business disruption which could negatively impact our tenants’ ability to pay rent, our ability to lease vacant space, and our ability to complete development and redevelopment projects, and these consequences, in turn, could materially impact our results of operations. Approximately 96% of April total cash-based rent has been received from our tenants which reflects a 97% collection rate from our office tenants. We have received rent relief requests primarily from our co-working and retail tenants, who represent approximately 2.1% and 1.6% of April billings, respectively. The relief requests have substantially all been in the form of rent deferral for varying lengths of time and we are currently assessing the merits of each request. For those tenants we believe require rent relief, we expect to grant deferrals and, in some instances, seek extended lease terms through favorable lease extensions. We 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 ~~from~~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~~loans would increase.

See Note 11, ''Beneficiaries' Equity of the ~~Securities Act until January 10, 2020. From initial sales activity under the Offering Program on December 13, 2017 through~~ March 31, 2019, we generated approximately $51.6 million from the issuance of 2,882,302 common shares under the Offering Program at an average price per share of $18.19 after payment of approximately $0.8 million of commissionsParent Company” to the sales agents and before offering expenses. During the three months ended March 31, 2019, we did not sell any shares under the Offering Program. At March 31, 2019, 13,117,698 common shares remained availableour Consolidated Financial Statements for ~~future sale under the Offering Program.~~

~~The Parent Company maintains a common~~further information related to our 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 replenished this program by authorizing the Parent Company to repurchase up to $150 ~~million common shares under the program from and after January 3, 2019. The Company repurchased and retired 1,337,169 common shares at an average price of $12.92 per share, totaling $17.3 million~~ during the three months ended March 31, ~~2019. There were no shares repurchased during the three months ended March 31, 2018.~~2020. 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.

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, ~~2019,~~2020, we sold ~~2.7 acres of undeveloped land~~one office property for net cash proceeds of ~~$5.0 million and received an additional $0.3 million related to contingent consideration related to an operating property that we sold in a prior year.~~

$17.5 million.

As of March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, we maintained cash and cash equivalents and restricted cash of ~~$14.8~~$53.4 million and ~~$23.2~~$91.2 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):

Three Months Ended March 31,

Activity

2019

2018

Operating

$
17,766

$
38,698

Investing

(41,343
)

(6,171
)
Financing

15,169

(34,321
)
Net cash flows

$
(8,408
)

$
(1,794
)



	Three Months Ended March 31,
Activity	2020			2019			(Decrease) Increase
Operating	$	45,058		$	17,766		$	27,292
Investing	(42,568		)	(41,343		)	(1,225		)
Financing	(40,286		)	15,169			(55,455		)
Net cash flows	$	(37,796	)	$	(8,408	)	$	(29,388	)

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 net decrease~~

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 ~~$20.9 million~~our development, leasing, financing, and property management skills and invest in ~~cash from operating activities for~~existing buildings that meet our investment criteria. During the three months ended March 31, ~~2019~~2020, when compared to the three months ended March 31, ~~2018 is~~2019, the change in investing cash flows was due to the ~~timing~~following activities (in thousands):



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

We generally fund our investment activity through the sale of ~~cash receipts~~real estate, property-level financing, credit facilities, senior unsecured notes, convertible or exchangeable securities, and ~~cash expenditures in~~construction loans. From time to time, we may issue common or preferred shares of beneficial interest, or the ~~normal course~~Operating Partnership may issue common or preferred units of ~~operations.~~

~~The net decrease of $35.2 million in cash from investing activities during~~limited partnership interest. During the three months ended March 31, ~~2019~~2020, when compared to the three months ended March 31, ~~2018 primarily relates to property portfolio repositioning efforts which resulted~~2019, the change in ~~more net sales activity in the first quarter of 2018 compared~~financing cash flows was due to the ~~first quarter~~following activities (in thousands):



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

•

~~$42.7 million decrease in proceeds from real estate venture sales as a result of the proceeds of $43.0 million from the sale of the evo at Cira Centre South Ventureduring the three months ended March 31, 2018 compared to $0.3 million in proceeds received during the three months ended March 31, 2019 related to the evo at Cira Centre South Venture~~ ~~sale in 2018~~;

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

•

$9.6 million decrease in proceeds from the disposition of two land parcels during the three months ended March 31, 2018 compared to the disposition of one land parcel and the receipt of proceeds related to contingent consideration received during the three months ended March 31, 2019;

•

$6.0 million decrease in cash from increased capital expenditures for tenant improvements, developments/redevelopments and leasing commissions, which primarily relates to ongoing development and redevelopment projects;

•

~~$2.6 million decrease in cash from increased leasing costs paid during the three months ended March 31, 2019 compared to the three months ended March 31, 2018;~~

•

~~$1.9 million decrease due to advances made for the purchase of tenant assets, net of repayments;~~

•

~~$0.5 million decrease from the repayment of a mortgage notes receivable; and~~

•

~~$0.1 million decrease in cash distributed from unconsolidated Real Estate Ventures in excess of cumulative equity in income.~~

•

$24.9 million increase in cash from the purchase of 3001-3003 JFK Boulevard in Philadelphia, Pennsylvania during the three months ended March 31, 2018 with no comparable acquisition in the first quarter of 2019; and

Capitalization

•

~~$198.0 million in net borrowings under the unsecured revolving credit facility;~~

Indebtedness

•

~~$0.1 million decrease in distributions to noncontrolling interests; and~~

•

~~$0.1 million decrease in partner distributions from consolidated real estate ventures.~~

•

~~$130.0 million in net repayments under the unsecured revolving credit facility~~ ~~during the three months ended March 31, 2019~~;

•

~~$17.3 million increase in cash used to repurchase and retire common shares, with no such activity during the first quarter of 2018;~~

•

~~$0.7 million increase in cash used due to the increase of dividends paid from $0.18 per share during the three months ended March 31, 2018 to $0.19 per share for the three months ended March 31, 2019;~~

•

~~$0.6 million increase from the repayment of mortgage notes payable;~~

•

~~$0.4 million decrease in proceeds from the issuance of common shares, as there were no share issuances during the first quarter of 2019; and~~

•

~~$0.3 million increase in shares used for employee taxes upon vesting of share awards.~~

March 31, 2019

December 31, 2018

(dollars in thousands)

Balance: (a)

Fixed rate
$
1,922,708

$
1,924,580

Variable rate - unhedged

187,562

119,562

Total
$
2,110,270

$
2,044,142

Percent of Total Debt:

Fixed rate

91.1
%

94.2
%
Variable rate - unhedged

8.9
%

5.8
%
Total

100.0
%

100.0
%
Weighted-average interest rate at period end:

Fixed rate

3.9
%

3.9
%
Variable rate - unhedged

3.7
%

3.6
%
Total

3.9
%

3.9
%
Weighted-average maturity in years:

Fixed rate

6.3

6.6

Variable rate - unhedged

2.4

4.0

Total

6.0

6.4

2019:



	March 31, 2020			December 31, 2019
	(dollars in thousands)
Balance: (a)
Fixed rate	$	2,089,266		$	2,091,211
Variable rate - unhedged	102,836			52,836
Total	$	2,192,102		$	2,144,047
Percent of Total Debt:
Fixed rate	95.3		%	97.5		%
Variable rate - unhedged	4.7		%	2.5		%
Total	100.0		%	100.0		%
Weighted-average interest rate at period end:
Fixed rate	3.9		%	3.9		%
Variable rate - unhedged	2.6		%	3.2		%
Total	3.8		%	3.8		%
Weighted-average maturity in years:
Fixed rate	5.3			5.6
Variable rate - unhedged	9.0			15.6
Total	5.5			5.9

Period

Scheduled amortization

Principal maturities

Total

Weighted Average Interest Rate of Maturing Debt

2019

$
5,723

$
-

$
5,723

3.98
%
2020

6,705

80,521

87,226

3.98
%
2021

6,142

9,001

15,143

4.28
%
2022

6,332

410,500

416,832

3.17
%
2023

1,620

555,116

556,736

3.94
%
2024

-

250,000

250,000

4.33
%
2025

-

-

-

0.00
%
2026

-

-

-

0.00
%
2027

-

450,000

450,000

4.03
%
2028

-

-

-

0.00
%
Thereafter

-

328,610

328,610

4.34
%
Totals

$
26,522

$
2,083,748

$
2,110,270

3.92
%



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

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, ~~2019.~~

2020.

The Operating Partnership has mortgage loans that are collateralized by certain of its ~~properties.~~Properties. Payments on mortgage loans are generally due in monthly installments of principal and interest, or interest only. The Operating Partnership intends to refinance or

repay its indebtedness as it matures, subject to tax guarantees, through the use of proceeds from selective property sales and secured or unsecured borrowings. However, in the current and expected future economic environment one or more of these sources may not be available on attractive terms or at all.

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.

~~Inflation~~

~~A majority~~ See Note 11, ''Beneficiaries' Equity of the Parent Company,” to our ~~leases provide~~Consolidated Financial Statements for tenant reimbursement of real estate taxes and operating expenses either on a triple net basis or over a base year or stop amount. In addition, many of our office leases provide for fixed base rent increases. We believe that inflationary increases in expenses will be partially offset by expense reimbursement and contractual rent increases.

~~Contractual Obligations~~

~~The following table outlines the timing of payment requirements~~further information related to our ~~contractual obligations as~~dividends declared for the first quarter of ~~March 31, 2019:~~

Payments by Period (in thousands)

Less than

More than

Total

1 Year

1-3 Years

3-5 Years

5 Years

Mortgage notes payable (a)
$
321,160

$
7,670

$
101,984

$
211,506

$
-

Unsecured credit facility

160,500

-

160,500

-

-

Unsecured term loan (a)

250,000

-

-

250,000

-

Unsecured debt (a)

1,378,610

-

-

350,000

1,028,610

Ground leases (b)

63,288

1,250

2,500

2,500

57,038

Development contracts (c)

182,482

179,488

2,374

620

-

Tenant improvements (d)

71,262

63,020

8,242

-

-

Interest expense (e)

475,625

77,063

134,888

104,043

159,631

Other liabilities (f)

33,052

3,441

16,103

10,179

3,329

$
2,935,979

$
331,932

$
426,591

$
928,848

$
1,248,608

~~(a)~~

~~Amounts are gross of deferred financing costs and do not include unamortized discounts and/or premiums.~~

2020.

~~(b)~~

~~Rental payments under the terms of all non-cancelable ground leases under which we are the lessee are expensed on a straight-line basis regardless of when payments are due.~~

Contractual Obligations

~~(c)~~

~~Represents contractual obligations for wholly-owned development projects and does not contemplate all costs expected~~Refer to ~~be incurred for such developments. This table does not include contractual obligations for~~ our ~~real estate venture developments, which are referenced below.~~

~~(d)~~

~~Represents cash commitments under signed leases and excludes tenant-funded improvements. The timing of these expenditures may fluctuate.~~

~~(e)~~

~~Variable rate debt future interest expense commitments are calculated using March 31,~~ 2019 ~~interest rates.~~

~~(f)~~

Other liabilities consists of: (i) our deferred compensation liability; (ii) the interest accretion on the anticipated transfer tax liability on Two Logan Square in Philadelphia, Pennsylvania; (iii) the contingent consideration associated with the purchase of 618 Market Street in Philadelphia, Pennsylvania; and (iv) a payment to a tenant under a profit sharing arrangement.

~~The above table does not include amounts related to the 4040 Wilson development in Arlington, Virginia. For further discussion of this development, see Item 1. “Business – Developments,” included in our~~ Annual Report on Form 10-K for ~~the fiscal year ended December 31, 2018 and section “Overview – Development Risk,”~~ ~~above, for further details.~~

~~We provide customary guarantees for certain development projects~~a discussion of our ~~unconsolidated real estate ventures. See Note 4, "Investment in Unconsolidated Real Estate Ventures," and Note 14,~~ ~~“Commitments and Contingencies,”~~ contractual obligations. There have been no material changes, outside the ordinary course of business, to these contractual obligations during the ~~consolidated financial statements for further details on payment guarantees provided on the behalf of real estate ventures.~~

~~As of~~three months ended March 31, ~~2019, we expect to incur $2.3 million for capital improvements to operating properties, which are not included in the above table. We expect that most of these improvements will be paid by March 31,~~ 2020.

On October 13, 2017, we acquired a leasehold interest in the office building known as The Bulletin Building, in Philadelphia, Pennsylvania. In connection with the acquisition, we are required to spend no less than $8.0 million in capital improvements to the property. As of March 31, 2019, $1.7 million related to ~~this requirement had been funded.~~ ~~As the timing of the capital improvements has not yet been determined, these costs are not included in the above table within the ‘Development contracts’ caption.~~ ~~See Note 14,~~ ~~“Commitments and Contingencies,”~~ ~~to the consolidated financial statements for further information.~~

During the fourth quarter of 2017, in connection with the Schuylkill Yards Project, we entered into a neighborhood engagement program and, as of March 31, 2019, we had contractual obligations under this program for $2.7 million of future payments, which are included in the table above within the ‘Development contracts’ caption. In addition, we estimate $0.6 million of potential additional contributions under this program for which we are not currently contractually obligated. As such, these costs are ~~not included in the above table. See Note 14,~~ ~~“Commitments and Contingencies,”~~ ~~to the consolidated financial statements for further information.~~

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 related depreciation and amortization, and after similar adjustments for unconsolidated 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 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.

Three-month periods ended

March 31, 2019

March 31, 2018

(amounts in thousands, except share information)

Net income attributable to common unitholders

$
3,913

$
44,586

Add (deduct):

Amount allocated to unvested restricted unitholders

119

114

Net gain on real estate venture transactions

(259
)

(37,263
)
Depreciation and amortization:

Real property

36,142

34,608

Leasing costs including acquired intangibles

15,406

8,306

Company’s share of unconsolidated real estate ventures

5,041

7,164

Partners’ share of consolidated real estate ventures

(53
)

(55
)
Funds from operations

$
60,309

$
57,460

Funds from operations allocable to unvested restricted shareholders

(214
)

(203
)
Funds from operations available to common share and unit holders (FFO)

$
60,095

$
57,257

Weighted-average shares/units outstanding — basic (b)

176,840,229

179,875,324

Weighted-average shares/units outstanding — fully diluted (b)

177,447,089

181,268,110



	Three Months Ended March 31,
	2020			2019
	(amounts in thousands, except share information)
Net income attributable to common unitholders	$	7,944		$	4,430
Add (deduct):
Amount allocated to unvested restricted unitholders	131			119
Net gain on real estate venture transactions	—			(259		)
Net gain on disposition of real estate	(2,586		)	—
Depreciation and amortization:
Real property	38,353			35,606
Leasing costs including acquired intangibles	13,199			15,406
Company’s share of unconsolidated real estate ventures	4,599			5,041
Partners’ share of consolidated real estate ventures	(60		)	(53		)
Funds from operations	$	61,580		$	60,290
Funds from operations allocable to unvested restricted shareholders	(190		)	(214		)
Funds from operations available to common share and unit holders (FFO)	$	61,390		$	60,076
Weighted-average shares/units outstanding — basic (a)	177,051,602			176,840,229
Weighted-average shares/units outstanding — fully diluted (a)	177,635,093			177,447,089

~~(b)~~

(a)

Includes common share and partnership units outstanding through the three months ended March 31, 2020 and 2019, ~~and 2018,~~ 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 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, ~~2019,~~2020, our consolidated debt consisted of mortgage loans with an outstanding principal balance of ~~$321.2~~$313.5 million and unsecured notes with an outstanding principal balance of ~~$1,300.0~~$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 balance of ~~$160.5~~$50.0 million and an unsecured term loan with an outstanding principal balance of $250.0 million, all of which have been swapped to fixed rates, except for ~~one~~two trust preferred ~~security~~securities with an outstanding principal balance of ~~$27.1 million.~~$52.8 million and our unsecured credit facility. 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.

If market rates of interest increase by 100 basis points, the fair value of our outstanding fixed-rate mortgage debt would decrease by approximately ~~$9.1~~$7.0 million. If market rates of interest decrease by 100 basis points, the fair value of our outstanding fixed-rate mortgage debt would increase by approximately ~~$9.4~~$7.2 million.

As of March 31, ~~2019,~~2020, based on prevailing interest rates and credit spreads, the fair value of our unsecured notes was ~~$1,301.7~~$1,511.2 million. For sensitivity purposes, a 100-basis point change in the discount rate equates to a change in the total fair value of our unsecured notes of approximately ~~$12.9~~$15.1 million at March 31, ~~2019.~~

2020.

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 ~~$489.1~~$378.6 million and ~~$421.1~~$328.6 million at March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively. The total fair value of our debt was ~~approximately $470.9~~approximately$359.5 million and ~~$402.9~~$309.9 million at March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively. 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 ~~$19.6~~$14.0 million at March 31, ~~2019.~~2020. If market rates of interest decrease by 100 basis points the fair value of our outstanding variable rate debt would increase by approximately ~~$21.0~~$15.2 million.

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 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.

Part II. OTHER INFORMATION

Item 1.Legal Proceedings

None.

Item 1A. Risk Factors

~~There are no material~~

The risks set out below represent changes ~~from~~to risk factors ~~as previously~~ disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~

2019. The information in this Quarterly Report on Form 10-Q should be read in conjunction with the other factors described in "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2019.

The ongoing coronavirus (“COVID-19”) pandemic and measures intended to prevent its spread present material uncertainty and risk and could have a material adverse effect on our business, results of operations, cash flows and financial condition.

The recent outbreak of COVID-19 across many countries around the globe, including the U.S., has significantly slowed global economic activity, caused significant volatility in financial markets, and resulted in unprecedented job losses causing many to fear an imminent global recession. The global impact of the outbreak has been rapidly evolving and the responses of many countries, including the U.S., have included quarantines, restrictions on business activities, including construction activities, restrictions on group gatherings, and restrictions on travel. These actions are creating disruption in the global economy and supply chains and adversely impacting many industries, including owners and developers of office and mixed-use buildings. Moreover, there is significant uncertainty around the breadth and duration of business disruptions related to COVID-19, as well as its impact on the U.S. economy and consumer confidence. Demand for space at our properties is dependent on a variety of macroeconomic factors, such as employment levels, interest rates, changes in stock market valuations, rent levels and availability of competing space. These factors can be significantly adversely affected by a variety of factors beyond our control. The extent to which COVID-19 impacts our results will depend on future developments, many of which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions taken to contain it or treat its impact. The impact of COVID-19 could negatively impact our business in a number of ways, including: (i) deterioration in the financial condition of our tenants and in their ability to pay rents; (ii) reduction in demand for space in our portfolio; (iii) costs associated with construction delays and cost overruns at our development and redevelopment projects; (iv) reduction in availability of, and increased costs of, capital; and (v) failure of our contract counterparties, including partners in Real Estate Ventures, to meet their obligations. The ongoing situation presents material uncertainty and risk and could have a material adverse effect on our business, results of operations, cash flows and financial condition.

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

~~(a)~~
(a)	None.

~~(b)~~
(b)	Not applicable.

~~(c)~~

(c)

~~Issuer Purchases~~Our Board of ~~Equity Securities.~~Trustees has authorized a share repurchase program under which we may repurchase up to $150.0 million of our outstanding common shares. We may repurchase shares from time to time on the open market or in privately negotiated transactions or otherwise, depending on market prices and other conditions. During the fiscal quarter ended March 31, 2020, we repurchased 5,644,200 common shares at an average price of $9.54 per share for a total of approximately $53.9 million. As of March 31, 2020, $89.0 million remained available for repurchases under our share repurchase program. For each common share repurchased, one of our units in the Operating Partnership was redeemed. Repurchases of common shares were financed with general corporate funds, including borrowings under our unsecured Credit Facility. On April 2, 2020, we settled the purchase of an additional 604,283 shares at an average price of $10.17 per share, which had a trade date of March 31, 2020, for an aggregate of $6.1 million.

Our Board of Trustees has authorized a share repurchase program under which we may repurchase up to $150.0 million of our outstanding common shares. We may repurchase shares from time to time on the open market or in privately negotiated transactions or otherwise, depending on market prices and other conditions. During the three month period ended March 31, 2019, we repurchased 1,337,169 common shares at an average price of $12.92 per share for a total of approximately $17.3 million. As of March 31, 2019, $132.7 million remained available under the repurchase program. For each common share repurchased, one of our units in the Operating Partnership was redeemed. Repurchases of common shares were financed with general corporate funds, including borrowings under our unsecured Credit Facility.

A summary of our repurchases of common shares for the three month period ended March 31, ~~2019~~2020 is as follows:

Period

Total number of shares (or units) purchased

Average price paid per share (or unit)

Total number of shares (or units) purchased as part of publicly announced plans or programs

Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs
January 1, 2019 - Januarty 31, 2019

Open Market Purchases

1,337,169

$
12.92

1,337,169

February 1, 2019 - February 28, 2019

Open Market Purchases

-

-

-

March 1, 2019 - March 31, 2019

Open Market Purchases

-

-

-

Totals

1,337,169

$
12.92

1,337,169

$132.7 million



Period	Total number of shares (or units) purchased	Average price paid per share (or unit)		Total number of shares (or units) purchased as part of publicly announced plans or programs	Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs
January 1, 2020 - January 31, 2020
Open Market Purchases	—	$	—	—
February 1, 2020 - February 29, 2020
Open Market Purchases	—	—		—
March 1, 2020 - March 31, 2020
Open Market Purchases	5,644,200	9.54		5,644,200
Totals	5,644,200	$	9.54	5,644,200	$89.0 million

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

~~None.~~

Exhibit 99.1 (Material Federal Income Tax Considerations) filed with this Form 10-Q replaces Exhibit 99.1 (Material Federal Income Tax Considerations) to the Annual Report on Form 10-K for the fiscal year ended December 31, 2019 to reflect recent legislative changes under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was signed into law on March 27, 2020.

Item 6. Exhibits

~~(a)~~

~~Exhibits~~

~~Exhibits No.~~				~~Description~~

(a)	Exhibits
~~10.1~~	Exhibits No.		Description
	10.1		Form of 2020-2022 Performance Unit Award Agreement (previously filed as an exhibit to Brandywine Realty Trust’s ~~Current Report on~~ Form 8-K ~~dated February 25, 2019~~filed on March 11, 2020 and incorporated herein by reference)**
	10.2
~~10.2~~		~~2019-2021~~2020-2022 Performance Share Unit Program (previously filed as an exhibit to Brandywine Realty Trust’s ~~Current Report on~~ Form 8-K ~~dated February 25, 2019~~filed on March 11, 2020 and incorporated herein by reference)**
	10.3
~~10.3~~		Form of ~~Three-Year~~ Restricted Common Share Rights Award (with outperformance ~~features)~~feature) (previously filed as an exhibit to Brandywine Realty Trust’s ~~Current Report on~~ Form 8-K ~~dated February 25, 2019~~filed on March 11, 2020 and incorporated herein by reference)**
	31.1
~~10.4~~		Form of Two-Year Restricted Common Share Rights Award (previously filed as an exhibit to Brandywine Realty Trust’s Current Report on Form 8-K dated February 25, 2019 and incorporated herein by reference)*

~~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
~~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
~~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
~~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
~~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
~~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
~~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
~~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)
	99.1		Material Federal Income Tax Considerations (filed herewith)
~~101.1~~	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, ~~2019~~2020 formatted in ~~XBRL (eXtensible~~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.

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 2, 2019~~ April 28, 2020	By:	/s/ Gerard H. Sweeney
			Gerard H. Sweeney, President and Chief Executive Officer
			(Principal Executive Officer)

Date:	~~May 2, 2019~~ April 28, 2020	By:	/s/ Thomas E. Wirth
			Thomas E. Wirth, Executive Vice President and Chief Financial Officer
			(Principal Financial Officer)

Date:	~~May 2, 2019~~ April 28, 2020	By:	/s/ Daniel Palazzo
			Daniel Palazzo, Vice President and Chief Accounting Officer
			(Principal Accounting Officer)

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 2, 2019~~ April 28, 2020	By:	/s/ Gerard H. Sweeney
			Gerard H. Sweeney, President and Chief Executive Officer
			(Principal Executive Officer)

Date:	~~May 2, 2019~~ April 28, 2020	By:	/s/ Thomas E. Wirth
			Thomas E. Wirth, Executive Vice President and Chief Financial Officer
			(Principal Financial Officer)

Date:	~~May 2, 2019~~ April 28, 2020	By:	/s/ Daniel Palazzo
			Daniel Palazzo, Vice President and Chief Accounting Officer
			(Principal Accounting Officer)

			~~Page~~

	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, ~~2019~~2020 and December 31, ~~2018~~2019		5

Consolidated Statements of Operations for the ~~three-month periods~~three months ended March 31, ~~2019~~2020 and ~~2018~~2019		6

Consolidated Statements of Comprehensive Income for the ~~three-month periods~~three months ended March 31, ~~2019~~2020 and ~~2018~~2019		7

Consolidated Statements of Beneficiaries’ Equity for the ~~three-month periods~~three months ended March 31, ~~2019~~2020 and ~~2018~~2019		8

Consolidated Statements of Cash Flows for the ~~three-month periods~~three months ended March 31, ~~2019~~2020 and ~~2018~~2019		10

Brandywine Operating Partnership, L.P.

Financial Statements of Brandywine Operating Partnership, L.P.		12 11

Consolidated Balance Sheets as of March 31, ~~2019~~2020 and December 31, ~~2018~~2019		12 11

Consolidated Statements of Operations for the ~~three-month periods~~three months ended March 31, ~~2019~~2020 and ~~2018~~2019		13 12

Consolidated Statements of Comprehensive Income for the ~~three-month periods~~three months ended March 31, ~~2019~~2020 and ~~2018~~2019		14 13

Consolidated Statements of Partners’ Equity for the ~~three-month periods~~three months ended March 31, ~~2019~~2020 and ~~2018~~2019		15 14

Consolidated Statements of Cash Flows for the ~~three-month periods~~three months ended March 31, ~~2019~~2020 and ~~2018~~2019		17 16

Notes to Unaudited Consolidated Financial Statements		19 17

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		39 31

Item 3. Quantitative and Qualitative Disclosures about Market Risk		54 42

Item 4. Controls and Procedures		55 43

PART II — OTHER INFORMATION		56 44

Item 1. Legal Proceedings		56 44

Item 1A. Risk Factors		56 44

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		56 44

Item 3. Defaults Upon Senior Securities		56 45

Item 4. Mine Safety Disclosures		56 45

Item 5. Other Information		56 45

Item 6. Exhibits		57 46

Signatures		59

		47

	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		Cumulative Distributions			Noncontrolling Interests			Total
BALANCE, December 31, 2017		178,285,236			894,736	$	1,784	$	3,218,564		$	12,445	$	(12,445	)	$	660,174	$	2,399	$	(2,053,741	)	$	17,420		$	1,846,600
Net income																	44,329							376			44,705
Other comprehensive income																			4,966					42			5,008
Issuance of Common Shares of Beneficial Interest		23,311							416																		416
Issuance of partnership interest in consolidated real estate ventures																								15			15
Distributions from consolidated real estate ventures																								(54	)		(54	)
Share-based compensation activity		68,425					1		3,072								3										3,076
Share Issuance from/(to) Deferred Compensation Plan		66,830			53,856							1,061		(1,061	)												-
Share Choice Plan issuance		(1,285	)																								-
Reallocation of Noncontrolling interest									(5	)														5			-
Distributions declared (0.18 per share)																					(32,259	)		(266	)		(32,525	)
BALANCE, March 31, 2018		178,442,517			948,592	$	1,785	$	3,222,047		$	13,506	$	(13,506	)	$	704,506	$	7,365	$	(2,086,000	)	$	17,538		$	1,867,241



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)

	March 31,			December 31,
	2019			2018
	(unaudited)
ASSETS
Real estate investments:
Operating properties	$	4,015,879		$	3,953,319
Right of use asset - operating leases		22,175			-
Accumulated depreciation		(891,125	)		(865,462	)
Operating real estate investments, net		3,146,929			3,087,857
Construction-in-progress		112,176			150,263
Land held for development		88,047			86,401
Prepaid leasehold interests in land held for development, net		39,897			39,999
Total real estate investments, net		3,387,049			3,364,520
Assets held for sale, net		7,345			11,599
Cash and cash equivalents		14,449			22,842
Accounts receivable, net of allowance of $284 and $1,653 as of March 31, 2019 and December 31, 2018, respectively		21,780			16,394
Accrued rent receivable, net of allowance of $11,018 and $11,266 as of March 31, 2019 and December 31, 2018, respectively		168,781			165,243
Investment in Real Estate Ventures, equity method		161,568			169,100
Deferred costs, net		95,293			91,075
Intangible assets, net		119,903			131,348
Other assets		139,761			126,400
Total assets	$	4,115,929		$	4,098,521
LIABILITIES AND BENEFICIARIES' EQUITY
Mortgage notes payable, net	$	319,132		$	320,869
Unsecured credit facility		160,500			92,500
Unsecured term loan, net		248,168			248,042
Unsecured senior notes, net		1,366,997			1,366,635
Accounts payable and accrued expenses		112,375			125,696
Distributions payable		34,107			33,632
Deferred income, gains and rent		24,749			28,293
Acquired lease intangibles, net		29,813			31,783
Lease liability - operating leases		22,402			-
Other liabilities		16,194			18,498
Total liabilities	$	2,334,437		$	2,265,948
Commitments and contingencies (See Note 14)
Brandywine Realty Trust's Equity:
Common Shares of Brandywine Realty Trust's beneficial interest, $0.01 par value; shares authorized 400,000,000; 176,001,580 and 176,873,324 issued and outstanding as of March 31, 2019 and December 31, 2018, respectively		1,761			1,770
Additional paid-in-capital		3,187,312			3,200,850
Deferred compensation payable in common shares		14,640			14,021
Common shares in grantor trust, 1,012,542 and 977,120 issued and outstanding as of March 31, 2019 and December 31, 2018, respectively		(14,640	)		(14,021	)
Cumulative earnings		795,186			796,513
Accumulated other comprehensive income		2,560			5,029
Cumulative distributions		(2,217,469	)		(2,183,909	)
Total Brandywine Realty Trust's equity		1,769,350			1,820,253
Noncontrolling interests		12,142			12,320
Total beneficiaries' equity	$	1,781,492		$	1,832,573
Total liabilities and beneficiaries' equity	$	4,115,929		$	4,098,521


	Three-month periods ended
	March 31,						Three Months Ended March 31,
	2019			2018			2020			2019
Revenue
Rents	$	138,098		$	126,759		$	139,204		$	138,098
Third party management fees, labor reimbursement and leasing		3,955			7,674		4,954			3,955
Other		1,843			1,925		930			1,843
Total revenue		143,896			136,358		145,088			143,896
Operating expenses
Property operating expenses		39,481			39,332		37,461			39,500
Real estate taxes		15,783			12,422		16,787			15,783
Third party management expenses		2,117			4,750		2,662			2,117
Depreciation and amortization		51,980			43,291		52,038			51,444
General and administrative expenses		9,844			8,723		8,561			9,844
Total operating expenses		119,205			108,518		117,509			118,688
Gain on sale of real estate
Net gain on disposition of real estate							2,586			—
Net gain on sale of undepreciated real estate		1,001			22		—			1,001
Total gain on sale of real estate		1,001			22		2,586			1,001
Operating income		25,692			27,862		30,165			26,209
Other income (expense):
Interest income		525			703		575			525
Interest expense		(20,357	)		(19,533	)	(20,009		)	(20,357		)
Interest expense - amortization of deferred financing costs		(666	)		(627	)	(749		)	(666		)
Equity in loss of Real Estate Ventures		(1,358	)		(825	)	(1,891		)	(1,358		)
Net gain on real estate venture transactions		259			37,263		—			259
Net income before income taxes		4,095			44,843		8,091			4,612
Income tax provision		(29	)		(138	)	(4		)	(29		)
Net income		4,066			44,705		8,087			4,583
Net income attributable to noncontrolling interests		(57	)		(376	)	(65		)	(60		)
Net income attributable to Brandywine Realty Trust		4,009			44,329		8,022			4,523
Nonforfeitable dividends allocated to unvested restricted shareholders		(119	)		(114	)	(131		)	(119		)
Net income attributable to Common Shareholders of Brandywine Realty Trust	$	3,890		$	44,215		$	7,891		$	4,404

Basic income per Common Share	$	0.02		$	0.25		$	0.04		$	0.03

Diluted income per Common Share	$	0.02		$	0.25		$	0.04		$	0.02

Basic weighted average shares outstanding		175,857,358			178,395,525		176,069,968			175,857,358
Diluted weighted average shares outstanding		176,464,218			179,788,311		176,653,459			176,464,218

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



	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

	Three-month periods ended March 31,
	2019			2018
Cash flows from operating activities:
Net income	$	4,066		$	44,705
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization		51,980			43,291
Amortization of deferred financing costs		666			627
Amortization of debt discount/(premium), net		175			176
Amortization of stock compensation costs		3,449			3,265
Straight-line rent income		(4,165	)		(4,978	)
Amortization of acquired above (below) market leases, net		(1,805	)		(793	)
Straight-line ground rent expense		351			22
Provision for doubtful accounts		-			467
Net gain on real estate venture transactions		-			(37,263	)
Net gain on sale of interests in real estate		(1,001	)		(22	)
Income from Real Estate Ventures, net of distributions		1,159			2,209
Income tax provision		29			138
Changes in assets and liabilities:
Accounts receivable		(3,539	)		(646	)
Other assets		(39,088	)		(12,911	)
Accounts payable and accrued expenses		(10,822	)		(1,146	)
Deferred income, gains and rent		(3,148	)		2,295
Other liabilities		19,459			(738	)
Net cash provided by operating activities		17,766			38,698

Cash flows from investing activities:
Acquisition of properties		-			(24,946	)
Proceeds from the sale of properties		5,273			14,921
Proceeds from real estate venture sales		259			42,953
Proceeds from repayment of mortgage notes receivable		15			562
Capital expenditures for tenant improvements		(14,978	)		(16,569	)
Capital expenditures for redevelopments		(10,777	)		(2,429	)
Capital expenditures for developments		(18,645	)		(19,387	)
Advances for the purchase of tenant assets, net of repayments		(1,615	)		316
Investment in unconsolidated Real Estate Ventures		(182	)		(261	)
Deposits for real estate		3,152			(162	)
Capital distributions from Real Estate Ventures		1,851			1,951
Leasing costs paid		(5,696	)		(3,120	)
Net cash used in investing activities		(41,343	)		(6,171	)

Cash flows from financing activities:
Repayments of mortgage notes payable		(1,871	)		(1,317	)
Proceeds from credit facility borrowings		198,000			-
Repayments of credit facility borrowings		(130,000	)		-
Proceeds from the exercise of stock options		800			-
Proceeds from the issuance of common shares		-			416
Shares used for employee taxes upon vesting of share awards		(1,230	)		(942	)
Partner contributions to consolidated real estate venture		23			15
Partner distributions from consolidated real estate venture		-			(54	)
Repurchase and retirement of common shares		(17,282	)		-
Distributions paid to shareholders		(33,084	)		(32,173	)
Distributions to noncontrolling interest		(187	)		(266	)
Net cash provided by (used in) financing activities		15,169			(34,321	)
Decrease in cash and cash equivalents and restricted cash		(8,408	)		(1,794	)
Cash and cash equivalents and restricted cash at beginning of year		23,211			203,442
Cash and cash equivalents and restricted cash at end of period	$	14,803		$	201,648

Reconciliation of cash and cash equivalents and restricted cash:
Cash and cash equivalents, beginning of period	$	22,842		$	202,179
Restricted cash, beginning of period		369			1,263
Cash and cash equivalents and restricted cash, beginning of period	$	23,211		$	203,442

Cash and cash equivalents, end of period	$	14,449		$	200,813
Restricted cash, end of period		354			835
Cash and cash equivalents and restricted cash, end of period	$	14,803		$	201,648

Supplemental disclosure:
Cash paid for interest, net of capitalized interest during the three months ended March 31, 2019 and 2018 of $728 and $687, respectively	$	14,251		$	12,705
Cash paid for income taxes		-			7

Supplemental disclosure of non-cash activity:
Dividends and distributions declared but not paid		34,107			32,502
Change in investment in real estate ventures as a result of dispositions		-			(17,313	)

Change in operating real estate related to a non-cash acquisition of an operating property	-		(20,653	)
Change in intangible assets, net related to non-cash acquisition of an operating property	-		(3,144	)
Change in acquired lease intangibles, net related to non-cash acquisition of an operating property	-		182
Change in investments in joint venture related to non-cash acquisition of property	-		(2,042	)
Change in mortgage notes payable related to acquisition of an operating property	-		9,940
Change in capital expenditures financed through accounts payable at period end	(1,080	)	(1,112	)
Change in capital expenditures financed through retention payable at period end	(4,503	)	(792	)

Year	Lease payments
2019 (nine months remaining)	$	292,215
2020		377,088
2021		354,913
2022		309,125
2023		281,437
Thereafter		1,270,928
Total	$	2,885,706

	Three Months Ended March 31,
Lease Cost	2019
Fixed lease cost	$	525
Variable lease cost		14
Total	$	539

Weighted-average remaining lease term (years)		53.2
Weighted-average discount rate		6.3	%

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

	Three-month period ended March 31, 2018
	evo at Cira Centre South (a)			MAP Venture			Other			Total
Revenue	$	995		$	17,080		$	24,746		$	42,821
Operating expenses		(250	)		(10,307	)		(10,211	)		(20,768	)
Interest expense, net		(388	)		(3,791	)		(3,947	)		(8,126	)
Depreciation and amortization		(376	)		(4,701	)		(9,307	)		(14,384	)
Loss on early extinguishment of debt		(718	)		-			-			(718	)
Net income (loss)	$	(737	)	$	(1,719	)	$	1,281		$	(1,175	)
Ownership interest %		50	%		50	%	(b)			(b)
Company's share of net income (loss)	$	(369	)	$	(860	)	$	523		$	(706	)
Basis adjustments and other		11			7			(137	)		(119	)
Equity in income (loss) of Real Estate Ventures	$	(358	)	$	(853	)	$	386		$	(825	)

2019 (nine months remaining)	$	5,723
2020		87,226

2020 (nine months remaining)				$	85,281
2021		15,143		15,143
2022		416,832		306,332
2023		556,736		556,736
2024				350,000
Thereafter		1,028,610		878,610
Total principal payments		2,110,270		2,192,102
Net unamortized premiums/(discounts)		(5,679	)	10,312
Net deferred financing costs		(9,794	)	(9,814		)
Outstanding indebtedness	$	2,094,797		$	2,192,600

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

~~(a)~~	~~The carrying amounts presented in the table above are net~~
(a)	Net of deferred financing costs of ~~$7.6~~$8.3 million and ~~$7.9~~$8.7 million for unsecured notes payable, ~~$1.8~~$1.3 million and ~~$5.1~~$1.4 million for variable rate debt and ~~$0.4~~$0.2 million for mortgage notes payable as of both March 31, ~~2019~~2020 and December 31, ~~2018, respectively.~~ 2019.

	Shares			Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value
Non-vested at January 1, 2019		466,439		$	14.93	$	70,677

								Shares		Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value (in thousands)
Non-vested at January 1, 2020								479,144		$	15.90	$	44.7
Granted		196,667			15.61		3,070	224,678		$	14.66	$	—
Vested		(33,020	)		15.15		298	(12,718	)	$	15.60	$	—
Forfeited		(3,437	)		15.34		-	(1,920	)	$	15.63	$	—
Non-vested at March 31, 2019		626,649			15.13		9,939
Non-vested at March 31, 2020								689,184		$	15.50	$	—


	RPSU Grant
	3/1/2017			2/28/2018			2/21/2019		Total			RPSU Grant
												2/28/2018		2/21/2019		3/5/2020		Total
(Amounts below in shares, unless otherwise noted)
Non-vested at January 1, 2019		169,525			206,025			-		375,550
Non-vested at January 1, 2020												190,296		206,069		—		396,365
Units Granted		-			-			213,728		213,728		—		—		319,600		319,600
Units Vested		(8,420	)		-			-		(8,420	)
Units Cancelled		-			(8,975	)		-		(8,975	)
Non-vested at March 31, 2019		161,105			197,050			213,728		571,883

Non-vested at March 31, 2020												190,296		206,069		319,600		715,965
Measurement Period Commencement Date	1/1/2017			1/1/2018			1/1/2019					1/1/2018		1/1/2019		1/1/2020
Measurement Period End Date	12/31/2019			12/31/2020			12/31/2021					12/31/2020		12/31/2021		12/31/2022
Units Granted		174,854			209,193			213,728				209,193		213,728		319,600
Fair Value of Units on Grant Date (in thousands)	$	3,735		$	4,276		$	4,627				$	4,276	$	4,627	$	5,389

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

Unconsolidated real estate ventures (in thousands):
	Investment in real estate ventures, at equity				Equity in income (loss) of real estate venture
	As of				Three-month periods ended March 31,
	March 31, 2019		December 31, 2018		2019			2018
Philadelphia CBD	$	19,325	$	19,897	$	78		$	(236	)
Metropolitan Washington, D.C. (a)		135,149		136,142		(175	)		(37	)
MAP Venture (b)		5,101		11,173		(1,367	)		(736	)
Other		1,993		1,888		106			104
Austin, Texas (c)		-		-		-			80
Total	$	161,568	$	169,100	$	(1,358	)	$	(825	)

	Number of Properties		Rentable Square Feet		Percentage Occupied	Percentage Leased
Office properties		88		15,719,636
Mixed-use properties		3		641,741
Retail property		1		17,884
Core Properties		92		16,379,261	92.1%	95.0%
Development property		1		204,108
Redevelopment properties		3		338,650
The Properties		96		16,922,019

~~(1)~~	~~Includes all Core Properties and does~~
(1)	Does not include properties under development, redevelopment, or held for sale, or sold.

Construction Commencement Date	Expected Completion	Activity Type	Property/Portfolio Name	Location	Number of Buildings	Square Footage/ Units		Estimated Costs			Amount Funded
Q2 2019	Q2 2020	Redevelopment	The Bulletin Building	Philadelphia, PA	1		283,000	$	83,100	(a)	$	49,100
Q1 2019	Q4 2020	Development	405 Colorado Street	Austin, TX	1		200,000		114,000	(b)		6,700
Q2 2018	Q1 2019	Redevelopment	426 W. Lancaster Avenue	Devon, PA	1		56,000		14,900	(c)		11,400
		Total			3		539,000	$	212,000		$	67,200

~~(a)~~
(a)	Estimated costs include $37.8 million of building basis, representing the acquisition cost. ~~The amount funded, as of March 31, 2019, includes $1.7 million related to an $8.0 million funding commitment required through the ground lease. See~~ ~~"Liquidity and Capital Resources – Contractual Obligations"~~ ~~for further information regarding this commitment.~~


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

	Same Store Property Portfolio									Recently Completed/Acquired Properties (a)						Development/Redevelopment Properties (b)					Other/(Eliminations) (c)						Total Portfolio
(dollars and square feet in thousands)	2019			2018			Increase/ (Decrease)			2019			2018			2019		2018			2019			2018			2019			2018			Increase/ (Decrease)
Revenue:
Rents	$	112,709		$	111,664		$	1,045		$	20,451		$	2,080		$	2,595	$	1,556		$	2,343		$	11,459		$	138,098		$	126,759		$	11,339
Third party management fees, labor reimbursement and leasing		-			-			-			-			-			-		-			3,955			7,674			3,955			7,674			(3,719	)
Other		373			305			68			46			(16	)		5		11			1,419			1,625			1,843			1,925			(82	)
Total revenue		113,082			111,969			1,113			20,497			2,064			2,600		1,567			7,717			20,758			143,896			136,358			7,538
Property operating expenses		32,867			32,820			(47	)		4,094			606			913		1,102			1,607			4,804			39,481			39,332			(149	)
Real estate taxes		11,627			10,301			(1,326	)		3,666			347			257		239			233			1,535			15,783			12,422			(3,361	)
Third party management expenses		-			-			-			-			-			-		-			2,117			4,750			2,117			4,750			2,633
Net operating income		68,588			68,848			(260	)		12,737			1,111			1,430		226			3,760			9,669			86,515			79,854			6,661
Depreciation and amortization		35,124			35,558			434			12,328			976			986		982			3,542			5,775			51,980			43,291			(8,689	)
General & administrative expenses		-			-			-			-			-			-		-			9,844			8,723			9,844			8,723			(1,121	)
Net gain on sale of undepreciated real estate																												(1,001	)		(22	)		979
Operating income (loss)	$	33,464		$	33,290		$	174		$	409		$	135		$	444	$	(756	)	$	(9,626	)	$	(4,829	)	$	25,692		$	27,862		$	(2,170	)
Number of properties	74			74						18						4											96
Square feet		14,134			14,134						2,245						543											16,922
Core Occupancy % (d)		92.2	%		92.8	%					91.3	%
Other Income (Expense):
Interest income																												525			703			(178	)
Interest expense																												(20,357	)		(19,533	)		(824	)
Interest expense — Deferred financing costs																												(666	)		(627	)		(39	)
Equity in loss of Real Estate Ventures																												(1,358	)		(825	)		(533	)
Net gain on real estate venture transactions																												259			37,263			(37,004	)
Income tax provision																												(29	)		(138	)		109
Net income																											$	4,066		$	44,705		$	(40,639	)
Net income attributable to Common Shareholders of Brandywine Realty Trust																											$	0.02		$	0.25		$	(0.23	)


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

	Payments by Period (in thousands)
			Less than						More than
	Total		1 Year		1-3 Years		3-5 Years		5 Years
Mortgage notes payable (a)	$	321,160	$	7,670	$	101,984	$	211,506	$	-
Unsecured credit facility		160,500		-		160,500		-		-
Unsecured term loan (a)		250,000		-		-		250,000		-
Unsecured debt (a)		1,378,610		-		-		350,000		1,028,610
Ground leases (b)		63,288		1,250		2,500		2,500		57,038
Development contracts (c)		182,482		179,488		2,374		620		-
Tenant improvements (d)		71,262		63,020		8,242		-		-
Interest expense (e)		475,625		77,063		134,888		104,043		159,631
Other liabilities (f)		33,052		3,441		16,103		10,179		3,329
	$	2,935,979	$	331,932	$	426,591	$	928,848	$	1,248,608

	Three-month periods ended
	March 31, 2019			March 31, 2018
	(amounts in thousands, except share information)
Net income attributable to common unitholders	$	3,913		$	44,586
Add (deduct):
Amount allocated to unvested restricted unitholders		119			114
Net gain on real estate venture transactions		(259	)		(37,263	)
Depreciation and amortization:
Real property		36,142			34,608
Leasing costs including acquired intangibles		15,406			8,306
Company’s share of unconsolidated real estate ventures		5,041			7,164
Partners’ share of consolidated real estate ventures		(53	)		(55	)
Funds from operations	$	60,309		$	57,460
Funds from operations allocable to unvested restricted shareholders		(214	)		(203	)
Funds from operations available to common share and unit holders (FFO)	$	60,095		$	57,257
Weighted-average shares/units outstanding — basic (b)		176,840,229			179,875,324
Weighted-average shares/units outstanding — fully diluted (b)		177,447,089			181,268,110