Brandywine Realty Trust Announces Third Quarter 2002 Earnings FFO of $0.66 Per Share.

Business Editors

PLYMOUTH MEETING, Pa.--(BUSINESS WIRE)--Oct. 29, 2002

Brandywine Realty Trust (BDN-NYSE) announced today that fully diluted funds from operations (FFO) were $30.7 million or $0.66 per share for the third quarter 2002 compared to $33.0 million or $0.70 per share for the third quarter 2001.

The third quarter of 2001 included gains on the sale of land totaling $840,000 or $0.02 of FFO per share. In addition, the Company has been actively recycling capital and, during the twelve-month period ended September 30, 2002, has had asset sales, net of acquisitions, of $102.6 million.

For the nine-month period ended September 30, 2002, the Company reported FFO of $94.7 million or $2.01 per share compared to $94.7 million or $2.00 per share for the comparable period of 2001.

Fully diluted earnings per share (EPS) was $0.30 for the third quarter 2002, an increase of $0.11 per share or 57.9% as compared to $0.19 for the third quarter of 2001. Net income was $14.0 million for the third quarter of 2002, an increase of $3.7 million, as compared to $10.3 million for the third quarter of 2001. The increase in net income and EPS was primarily due to a decrease in depreciation and amortization expense resulting from the change in the estimated useful lives of various buildings from 25 years to 40 years.

Fully diluted EPS was $1.13 for the nine-month period ended September 30, 2002, an increase of $0.66 per share or 140.4%, as compared to $0.47 for the nine-month period ended September 30, 2001. Net income was $50.2 million for the nine-month period ended September 30, 2002, an increase of $23.4 million, as compared to $26.8 million for the nine-month period ended September 30, 2001. The increase was the result of net gains on the sale of real estate of $8.1 million in 2002 versus $1.3 million in 2001, the $1.1 million write-off of unamortized deferred financing costs primarily related to the Company's refinancing of its revolving credit facility during the second quarter of 2001 and decreased depreciation and amortization of $9.0 million.

"In spite of a difficult economic environment our Company was able to deliver numerous positive results across its operating platform. We credit our programs designed to achieve the highest levels of customer satisfaction for our 71.0% retention rate and our approximately one million square feet of leasing activity during the quarter. We believe our focus on our tenants and our concentration in our markets have us well positioned for the challenging operating conditions we foresee for the balance of 2002 and into 2003," commented Gerard H. Sweeney, Brandywine's President and Chief Executive Officer.

Brandywine Realty Trust Summary Portfolio Performance

-- Earnings before interest, taxes, depreciation and amortization (EBITDA) was $48.6 million for the quarter and $148.1 million YTD

-- FFO payout ratio was 67.0% for the quarter and 65.6% YTD

-- Cash available for distribution (CAD) payout ratio was 81.4% for the quarter and 81.0% YTD

-- Decrease in same-store net operating income (NOI) of 3.2% on cash basis and 4.4% on GAAP basis (based on 225 properties or 93.2% of the portfolio)

-- Quarterly rental rate decreases on new leases were 9.8% on a cash basis and 6.5% on a GAAP basis

-- Quarterly rental rate increases on renewals were 2.4% on a cash basis and 7.6% on a GAAP basis

-- YTD rental rate increases on new leases were 1.2% on a cash basis and 5.4% on a GAAP basis

-- YTD rental rate increases on renewals were 4.6% on a cash basis and 8.3% on a GAAP basis

-- Quarterly retention rate was 71.0% and YTD retention rate was 76.1%

-- Portfolio was 90.2% occupied and 90.7% leased as of September 30, 2002

-- Leases expired or were terminated for approximately 1.2 million square feet during the quarter

-- Leases were renewed for 837,000 square feet during the quarter

-- New leases were signed during the quarter for 149,000 square feet and for 475,680 square feet YTD

-- Quarterly repurchases of 463,000 shares of Common Stock ($22.43 average price per share) and 89,000 Class A units of limited partnership interest ($21.00 average price per share)

-- YTD repurchases of 491,000 shares of Common Stock ($22.51 average price per share) and 364,000 Class A units of limited partnership interest ($23.44 average price per share)

-- 834,000 shares remaining under share repurchase program

Capital Transactions

During the third quarter of 2002, the Company sold seven office properties located in Newark, DE containing 288,000 net rentable square feet for an aggregate of $22.7 million. In addition, the Company acquired two office properties located in Lawrenceville, NJ and Whitpain, PA containing 115,000 net rentable square feet and one parcel of land containing 9.0 acres for an aggregate of $17.2 million.

The Company obtained a $100 million unsecured term loan from members of the bank group under the Company's existing $500 million revolving credit facility. The term loan matures in 2005 and the Company has two one-year extension elections at its option. The term loan bears interest at a rate of 105 to 190 basis points (165 as of September 30, 2002) over LIBOR (based on the Company's leverage ratio). Proceeds of the term loan were used to repay other indebtedness, increasing availability under the Company's existing revolving credit facility.

Property Development

As of September 30, 2002, the Company's development pipeline consisted of approximately 428,000 square feet with a projected cost of $83.7 million, of which $72.8 million has already been funded. These projects are 41% pre-leased in aggregate, and management expects them to generate a yield of 11.7% upon stabilization.

Distributions

On September 23, 2002, the Board of Trustees declared a regular quarterly dividend distribution of $0.44 per common share that was paid on October 15, 2002 to shareholders of record as of October 4, 2002.

2002 Earnings Guidance

As a result of economic conditions in the Company's markets, we continue to experience challenging operational conditions resulting in difficult earnings visibility. Our expectations for the fourth quarter of 2002 are based on the following key factors:

-- A slight decline in physical occupancy from our September 30,

2002 level of 90.2%

-- A decrease in same-store net operating income for the fourth

quarter comparable to the decrease experienced in the third

quarter of 2002.

-- Operating margins and general and administrative margins

consistent with those experienced in the third quarter of

2002.

Based on these key assumptions, we expect the fourth quarter 2002 FFO to be $0.66 - $0.67 per share and EPS to be $0.30 - $0.31 per share. These estimates reflect management's view of current market conditions and certain assumptions with regard to rental rates, occupancy levels and various other assumptions and projections. The estimates for the fourth quarter may be positively or negatively impacted primarily by the timing and terms of property leases.

2003 Financial Outlook

As of the date of this release, the Company believes that it can achieve funds from operations per share (FFO) for the first quarter of 2003 of approximately $0.64 to $0.66 and $2.62 to $2.69 for the full year 2003. The projections are based on a number of key and variable assumptions and estimates, including the following:

Same-Store Results

In 2003, the Company expects its same-store portfolio (which represents 91.4% of total owned square feet and 89.8% of projected 2003 net operating income) to achieve the following percentage changes from its projected 2002 results:

                          % change 2002-2003
                          ------------------

GAAP rent and reimbursements:     0.7%-1.2% increase

Expenses:                         3.5%-4.0% increase

NOI:                              1.7%-2.6% decrease

Occupancy:                        0.5%-1.0% decrease in annual average
                                             physical occupancy

The Company's projections for same-store activity are based upon competitive market conditions and continued downward pressure on market rents. The Company's projections for operating expenses include significant increases in insurance expense (a 69% increase in this line item which accounts for 28% of the total projected increase in expenses) and modest increases in utilities, real estate taxes, and snow removal.

The Company's financial outlook and related range of FFO per share for 2003 as stated above does not include any amounts assumed for lease termination fees as these amounts are impossible to forecast with any reliability and accuracy as to timing and amount. During the first nine months of 2002 the Company recognized $2.2 million of revenue related to these types of fees.

Development

The Company currently has three assets in the development stage as of September 30, 2002. Two of these assets will be placed in service during the first quarter of 2003 and the last during the third quarter of 2003. Based on current forecasts these assets are not expected to reach stabilized occupancy of 95% until 2004. The Company expects to have minimal new development activity in 2003. The Company, however, expects to undertake significant renovations on at least two buildings during 2003.

Acquisitions, Dispositions, Financings

The Company finds the market for high quality suburban office buildings located in the Company's core markets to be highly competitive and priced at levels the Company currently does not find attractive. As such, the earnings guidance outlined above considers no acquisition activity in 2003. The Company expects to finance its operations in 2003 through borrowings under its variable rate line of credit and to refinance its debt maturities either through secured or unsecured borrowings depending upon market factors in place at the time. The Company assumes that the assets identified for sale in its consolidated balance sheets at September 30, 2002 are disposed of in 2003 at capitalization rates consistent with those achieved on sales thus far in 2002.

Forward-Looking Statements 

Estimates of future FFO per share and certain other statements in this release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance, achievements or transactions of the Company and its affiliates to be materially different from any future results, performance, achievements or transactions expressed or implied by such forward-looking statements. Such risks, uncertainties and other factors relate to, among others: the Company's ability to lease vacant space and to renew or relet space under expiring leases at expected levels, competition with other real estate companies for tenants, the potential loss or bankruptcy of major tenants, interest rate levels, the availability of debt and equity financing, competition for real estate acquisitions and risks of acquisitions, dispositions and developments, including the cost of construction delays and cost overruns, unanticipated operating and capital costs, the Company's ability to obtain adequate insurance, including coverage for terrorist acts, dependence upon certain geographic markets, and general and local economic and real estate conditions, including the extent and duration of adverse changes that affect the industries in which the Company's tenants compete. Additional information on factors which could impact the Company and the forward-looking statements contained herein are included in the Company's filings with the Securities and Exchange Commission, including the Company's Annual Reports on Form 10-K. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

Funds From Operations

Management believes FFO should be considered in conjunction with net income and cash flows to facilitate a clear understanding of our operating results. FFO should not be considered as an alternative to net income, as a measure of our financial performance or as an alternative to cash flows from operating activities as a measure of liquidity. FFO does not represent cash generated from operating activities in accordance with generally accepted accounting principles and is not necessarily indicative of cash available to fund cash needs. The Company follows the National Association of Real Estate Investment Trust's definition of FFO, which may differ from the methodology for computing FFO used by other REIT's, and accordingly, the Company's calculation of FFO may not be comparable to such other REIT's.

                       BRANDYWINE REALTY TRUST
                     CONSOLIDATED BALANCE SHEETS
                      (unaudited, in thousands)

                                           September 30, December 31,
                                               2002          2001
                                           ------------- -------------

                  ASSETS
Real estate investments:
  Operating properties                       $1,882,256    $1,883,459
  Accumulated depreciation                     (233,874)     (229,622)
                                           ------------- -------------
                                              1,648,382     1,653,837
  Construction-in-progress                       58,691       111,378
  Land held for development                      42,242        39,285
                                           ------------- -------------
                                              1,749,315     1,804,500

Cash and cash equivalents                        21,209        13,459
Escrowed cash                                    14,731        16,311
Accounts receivable, net                          1,712         6,394
Accrued rent receivable                          27,161        25,089
Investment in marketable securities              10,775        10,735
Assets held for sale                              8,525         8,572
Investment in joint ventures, at equity          15,935        19,067
Deferred costs, net                              27,365        24,259
Other assets                                     37,204        31,817
                                           ------------- -------------

    Total assets                             $1,913,932    $1,960,203
                                           ============= =============


   LIABILITIES AND BENEFICIARIES' EQUITY

Mortgage notes payable                         $593,577      $614,840
Borrowings under Credit Facility                307,000       394,325
Unsecured term loan                             100,000             -
Accounts payable and accrued expenses            29,958        39,678
Distributions payable                            21,187        21,525
Tenant security deposits and deferred rents      21,798        22,270
Other liabilities                                13,610        15,555
Liabilities related to assets held for sale          20            20
                                           ------------- -------------
    Total liabilities                         1,087,150     1,108,213

Minority interest                               135,259       143,834

Beneficiaries' equity:
  Preferred Shares:
   7.25% Series A Preferred Shares, $0.01
    par value; shares authorized-
    10,000,000; issued and outstanding-
    750,000 in 2000 and 1999                          8             8
   8.75% Series B Preferred Shares, $0.01
    par value; shares authorized-
    10,000,000; issued and outstanding-
    4,375,000 in 2000 and 1999                       44            44
  Common Shares of beneficial interest,
   $0.01 par value; shares authorized-
   100,000,000; issued and outstanding-
   35,226,315 in 2002 and 35,640,935
   in 2001                                          350           355
  Additional paid-in capital                    841,249       848,214
  Share warrants                                    401           401
  Cumulative earnings                           212,630       163,502
  Accumulated other comprehensive loss           (7,167)       (4,587)
  Cumulative distributions                     (355,992)     (299,781)
                                           ------------- -------------
    Total beneficiaries' equity                 691,523       708,156
                                           ------------- -------------

  Total liabilities and beneficiaries'
   equity                                    $1,913,932    $1,960,203
                                           ============= =============


                       BRANDYWINE REALTY TRUST
                       SELECTED FINANCIAL DATA
           (unaudited, in thousands, except per share data)

                           Quarter Ended             Year Ended
                            September 30,           September 30,
                       ----------------------- -----------------------
                          2002        2001        2002        2001
                       ----------- ----------- ----------- -----------

Revenue
    Rents                 $64,619     $59,802    $187,685    $175,757
    Tenant
     reimbursements         8,718       8,361      24,370      25,324
    Other                   2,451       2,602       8,091       6,921
                       ----------- ----------- ----------- -----------
      Total revenue        75,788      70,765     220,146     208,002

Operating Expenses
    Property operating
     expenses              19,353      18,250      56,354      54,410
    Real estate taxes       6,816       6,062      18,904      17,357
    Interest               16,329      17,346      48,164      50,269
    Depreciation and
     amortization          13,844      17,422      43,293      52,297
    Administrative
     expenses               3,971       3,445      11,812      11,716
                       ----------- ----------- ----------- -----------
      Total operating
       expenses            60,313      62,525     178,527     186,049
                       ----------- ----------- ----------- -----------

Income from continuing
 operations before
 equity in income of
 real estate ventures,
 net gain on sales of
 interests in real
 estate, minority
 interest and
 extraordinary item        15,475       8,240      41,619      21,953
Equity in income of
 real estate ventures         359         235       1,052       2,223
                       ----------- ----------- ----------- -----------
Income from continuing
 operations before net
 gain on sales of
 interests in real
 estate, minority
 interest and
 extraordinary item        15,834       8,475      42,671      24,176
Net gain on sales of
 interests in real
 estate                         -         929           -       1,297
Minority interest
 attributable to
 continuing operations     (2,378)     (2,083)     (6,950)     (6,039)
                       ----------- ----------- ----------- -----------
Income from continuing
 operations                13,456       7,321      35,721      19,434
Income from
 discontinued
 operations, net of
 minority interest            512       2,950       6,437       8,511
Net gain on disposition
 of discontinued
 operations, net of
 minority interest              -           -       8,079           -
                       ----------- ----------- ----------- -----------
Income before
 extraordinary item        13,968      10,271      50,237      27,945
Extraordinary item              -           -           -      (1,111)
                       ----------- ----------- ----------- -----------
Net Income                 13,968      10,271      50,237      26,834

Income allocated to
 Preferred Shares          (2,976)     (2,977)     (8,930)     (8,931)
                       ----------- ----------- ----------- -----------
Income allocated to
 Common Shares            $10,992      $7,294     $41,307     $17,903
                       =========== =========== =========== ===========

Earnings per Common
 Share after
 discontinued
 operations:
Basic income per Common
 Share                      $0.30       $0.19       $1.13       $0.47
Basic weighted-average
 shares outstanding    35,449,414  35,629,980  35,610,699  35,679,941

Diluted income per
 Common Share               $0.30       $0.19       $1.13       $0.47
Diluted weighted-
 average shares
 outstanding           35,484,395  35,675,527  35,647,690  35,711,356

Funds From Operations
 (FFO):
Income before gains on
 sales of interests in
 real estate and
 minority interest:
  Continuing operations   $15,834      $8,475     $42,671     $24,176
  Discontinued
   operations                 539       3,128       6,810       9,025
                       ----------- ----------- ----------- -----------

Income before gains on
 sales and minority
 interest                  16,373      11,603      49,481      33,201

Add:
  Depreciation:
    Real property          12,544      18,526      39,419      55,528
    Real estate
     ventures                 463         816       1,783       2,280
  Amortization of
   leasing costs            1,300       1,255       4,006       3,559
  Gain on sale of land
   interests                    -         840           -         881
Less:
  Gain included in
   equity in income of
   real estate ventures         -           -           -        (785)
                       ----------- ----------- ----------- -----------
Funds from operations     $30,680     $33,040     $94,689     $94,664
                       =========== =========== =========== ===========

Number of weighted-
 average Common Shares 46,751,866  47,296,710  47,069,717  47,334,935
                       =========== =========== =========== ===========

FFO per weighted-
 average Common Share       $0.66       $0.70       $2.01       $2.00
                       =========== =========== =========== ===========

Third Quarter Earnings Call and Supplemental Information Package

Brandywine President and CEO, Gerard H. Sweeney, will be hosting a conference call on Wednesday, October 30, 2002 at 1:00 p.m. EST . Call 1-877-679-9051. After the conference, a taped replay of the call can be accessed 24 hours a day through Wednesday, November 13, 2002 by calling 1-800-615-3210 - access code 6224438.

The Company has prepared a Supplemental Information package that includes financial results and operational statistics to support the announcement of third quarter earnings. The Supplemental Information package is available through the Company's website @ brandywinerealty.com. The Supplemental Information Package will be found in both the "About The Company" section and the "Investor Relations - Annual Reports" section of the web page.

Brandywine Realty Trust, with headquarters in Plymouth Meeting, PA and regional offices in Mount Laurel, NJ and Richmond, VA, is one of the Mid-Atlantic Region's largest full-service real estate companies. Brandywine owns, manages or has an ownership interest in 288 office and industrial properties, aggregating 19.9 million square feet.