Brandywine Realty Trust Announces Third Quarter 2005 Earnings.PLYMOUTH Plymouth, city, England Plymouth, city (1991 pop. 238,583) and district, Devon, SW England, on Plymouth Sound. The three towns that Plymouth has comprised since 1914 are Plymouth, Stonehouse, and Devonport. MEETING, Pa. -- Brandywine Realty Trust Brandywine Realty Trust (NYSE: BDN) is a real estate development trust (REIT) in the United States that buys, sells, leases and manages approximately 225 commercial properties, no more than 25 industrial parcels of land, mixed-use property, and over 200 acres of undeveloped (NYSE NYSE See: New York Stock Exchange :BDN BDN Borland Developer Network BDN Bangor Daily News (Maine, USA) BDN Business Development Network BDN Bell Data Network BDN Bulk Data Network BDN Busy Doing Nothing (band) BDN Buffered Delta Network ) announced today that diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of (EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. ) was $0.24 for the third quarter of 2005, as compared to $0.39 for the third quarter of 2004. Net income was $15.8 million for the third quarter, as compared to $21.2 million for the third quarter of 2004. Diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. EPS was $0.50 for the nine months ended September September: see month. 30, 2005, as compared to $1.07 per share for the nine months ended September 30, 2004. Net income was $34.1 million for the nine months ended September 30, 2005, as compared to $51.8 million for the nine months ended September 30, 2004. E[acute accent acute accent n. A mark (´) indicating: a. that a vowel is close or tense, as é in French été. b. that a vowel or syllable has a high or rising pitch, as in Chinese or Ancient Greek. c. ]The change in net income reflects increased depreciation and amortization expense of $10.3 million and $33.9 million for the three and nine months ended September 30, 2005, respectively as compared to similar periods in 2004. This non-cash increase is largely due to depreciation and amortization related to the 14 assets included in the Company's acquisition of The Rubenstein Rubenstein may refer to:
Divisions of a business that have been sold or written off and that no longer are maintained by the business. in the third quarter and nine months ended September 30, 2005 as compared to $4.2 million and $5.6 million in similar periods in 2004. During the nine months ended September 30, 2004, the Company recognized a $4.5 million gain on the redemption of preferred shares Preferred shares Preferred shares give investors a fixed dividend from the company's earnings and entitle them to be paid before common shareholders. See: Preferred stock. . E[acute accent]Funds from operations Funds From Operations (FFO) Used by real estate and other investment trusts to define the cash flow from trust operations; earnings with depreciation and amortization added back. (FFO FFO See: Funds from operations ) was $36.2 million or $0.62 per share for the third quarter 2005 compared to $33.7 million or $0.67 per share for the third quarter of 2004. FFO for the nine months ended September 30, 2005 was $107.7 million or $1.86 per share as compared to $95.0 million or $1.93 per share for the same period of 2004. E[acute accent]FFO represents a non-generally accepted accounting principle (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ) financial measure. A table reconciling FFO to net income, the GAAP measure that the Company believes to be most directly comparable, is within the consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge included in this release. E[acute accent]Brandywine Bran·dy·wine A creek of southeast Pennsylvania and northern Delaware. It was the site of a major defeat of the Continental Army on September 11, 1777, thus allowing British troops to enter Philadelphia on September 27. President and Chief Executive Officer, Gerard Gerard is a male forename of Germanic origin, variations of which exist in many Germanic and Romance languages. The name derives from Old Germanic 'ger' ('spear') and 'hard' ('hard/strong/brave'). Its meaning is 'strong/brave with the spear'. H. Sweeney Sweeney in poems by T. S. Eliot, symbolizes the sensual, brutal, and materialistic 20th-century man. [Br. Poetry, Benét, 978] See : Virility , commented, "We are pleased with our results in what remains a competitive leasing environment in the Philadelphia Philadelphia, ancient cities Philadelphia, name of several ancient cities. One was in Lydia, W Asia Minor (now W Turkey). At the foot of Mt. Tmolus and near the location of modern Alaşehir, it was founded in the 2d cent. B.C. suburban office market. GAAP rental rates on new leases continue to move in a positive direction and capital costs have begun to stabilize stabilize See peg. and move toward historical levels. Our team in Richmond Richmond, cities, United States Richmond. 1 City (1990 pop. 87,425), Contra Costa co., W Calif., on San Pablo Bay, an inlet of San Francisco Bay; inc. 1905. has produced a strong performance with our owned portfolio 96.8% leased at the end of the quarter." Mr. Sweeney Mr. Sweeney (played by Don Creech) is Ned and Moze's evil science teacher in Ned's Declassified School Survival Guide, whose character has been toned down a bit since season one. He treats his students rather harshly, and many consider him insane. went on to state, "Our recent acquisitions in Conshohocken Conshohocken (kŏn'shəhŏk`ən), industrial borough (1990 pop. 8,064), Montgomery co., SE Pa., on the Schuylkill River; inc. 1850. Food, fabricated metals, and electronic products are produced. represent the tactical investments we will continue to make in our existing core markets. We look forward to the opportunity to create additional shareholder value by investing in developments and acquisitions in the three core markets we will be adding through our merger with Prentiss." E[acute accent]Brandywine Realty Trust Summary Portfolio Performance E[acute accent]--FFO payout ratio Payout Ratio The percentage of earnings paid out in dividends. It is calculated by dividing dividends per share by earnings per share. Notes: The payout ratio indicates how well earnings support the dividend payments: the lower the ratio, the more secure the dividend. was 71.0% for the quarter E[acute accent]--Quarterly rental rates on new leases declined 4.4% on a straight-line straight-line adj. 1. Lying in a straight line. 2. Relating to a device whose linkage produces or copies motion in straight lines. 3. basis E[acute accent]--Quarterly rental rates on renewals declined 1.3% on a straight-line basis E[acute accent]--Quarterly retention rate was 70.8% E[acute accent]--Portfolio was 90.2% occupied and 91.5% leased as of September 30, 2005 E[acute accent]--Leases expired ex·pire v. ex·pired, ex·pir·ing, ex·pires v.intr. 1. To come to an end; terminate: My membership in the club has expired. 2. or were terminated ter·mi·nate v. ter·mi·nat·ed, ter·mi·nat·ing, ter·mi·nates v.tr. 1. To bring to an end or halt: for approximately 1,223,000 square feet during the quarter E[acute accent]--Leases were renewed re·new v. re·newed, re·new·ing, re·news v.tr. 1. To make new or as if new again; restore: renewed the antique chair. 2. for approximately 866,000 square feet during the quarter E[acute accent]--New leases were signed for approximately 157,000 square feet during the quarter E[acute accent]Distributions E[acute accent]On September 20, 2005, the Board of Trustees board of trustees Politics The posse of thugs who oversee an institution's administration. See Board of directors. declared a regular quarterly dividend distribution of $0.44 per common share that was paid October October: see month. 17, 2005 to shareholders of record as of October 5, 2005. The Company also declared its dividend for the third quarter of $0.46875 per 7.50% Series C Cumulative Redeemable Redeemable Eligible for redemption under the terms of an indenture. Preferred Share and $0.46094 per 7.375% Series D Cumulative Redeemable Preferred Share that was paid on October 17, 2005 to holders of record of the Series C and Series D Preferred Shares as of September 30, 2005. E[acute accent]2005 Financial Outlook E[acute accent]Our outlook for the fourth quarter continues to be predicated upon the following key and variable assumptions: E[acute accent]--The same-store portfolio (which represents approximately 79% of total square footage and 77% of projected 2005 net operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. ) to achieve the following percentage changes from 2004 results: E[acute accent]--GAAP rents and reimbursements (not including termination fees termination fee The one-time charge for terminating or transferring an individual retirement account. If a financial institution charges a termination fee, the fee must be spelled out in the original agreement that is signed when the account is opened. ) to decline 0.50% to 1.50% E[acute accent]--Net operating income to range from unchanged to a decline of 2.0% E[acute accent]--Average occupancy Gaining or having physical possession of real property subject to, or in the absence of, legal right or title. In a fire insurance policy, for example, the term occupancy to range from an increase of 0.50% to a decrease of 0.50% E[acute accent]--The completion of all development projects in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with the estimates identified in our supplemental disclosure as of September 30, 2005. E[acute accent]Based on these key assumptions, we expect the fourth quarter EPS to be $0.11 to $0.12 and expect FFO per share to be $0.61 to $0.62. These estimates may be positively or negatively impacted primarily by the timing and terms of property leases, actual operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. and interest rates as compared to our forecast. E[acute accent]Our Merger with Prentiss Properties Trust E[acute accent]On October 3, 2005, we announced the execution of a merger agreement pursuant to which we agreed to acquire Prentiss Properties Trust in a transaction valued at approximately $3.3 billion. As part of the transaction, Prudential Prudential is the name of two different companies and buildings named after them: Companies:
PREI Path Remote Error Indicator ) has agreed to acquire a portfolio of Prentiss Properties with a value of approximately $753 million. We presently anticipate that the merger will be completed during the fourth quarter of 2005 or in the first quarter of 2006. Consummation CONSUMMATION. The completion of a thing; as the consummation of marriage; (q.v.) the consummation of a contract, and the like. 2. A contract is said to be consummated, when everything to be done in relation to it, has been accomplished. of the merger is subject to customary closing conditions, including approval of the merger by our shareholders and shareholders of Prentiss Properties. Prior to closing, Prentiss Properties intends to proceed with its previously announced Chicago Chicago, city, United States Chicago (shĭkä`gō, shĭkô`gō), city (1990 pop. 2,783,726), seat of Cook co., NE Ill., on Lake Michigan; inc. 1837. and Detroit Detroit, city, United States Detroit (dĭtroit`), city (1990 pop. 1,027,974), seat of Wayne co., SE Mich., on the Detroit River and between lakes St. Clair and Erie; inc. as a city 1815. divestitures. E[acute accent]Through the merger, we will acquire Prentiss Properties' assets in Washington Washington, town, England Washington, town (1991 pop. 48,856), Sunderland metropolitan district, NE England. Washington was designated one of the new towns in 1964 to alleviate overpopulation in the Tyneside-Wearside area. , D.C., northern and southern California Southern California, also colloquially known as SoCal, is the southern portion of the U.S. state of California. Centered on the cities of Los Angeles and San Diego, Southern California is home to nearly 24 million people and is the nation's second most populated region, , its properties in Austin Austin. 1 City (1990 pop. 21,907), seat of Mower co., SE Minn., on the Cedar River, near the Iowa line; inc. 1868. The commercial and industrial center of a rich farm region, it is noted as home to the Hormel meatpacking company, whose Spam Town museum and Dallas, Texas “Dallas” redirects here. For other uses, see Dallas (disambiguation). The City of Dallas (pronounced [ˈdæl.əs] or [ˈdæl. , as well as related land holdings. Upon completion of the merger, Brandywine will own/manage a portfolio of 49 million square feet of space. Brandywine and PREI have also entered into an agreement whereby Brandywine will provide management and leasing for the PREI assets with the exception of the Denver Denver, city (1990 pop. 467,610), alt. 5,280 ft (1,609 m), state capital, coextensive with Denver co., N central Colo., on a plateau at the foot of the Front Range of the Rocky Mts., along the South Platte River where Cherry Creek meets it; inc. 1861. market. E[acute accent]The total consideration payable in the merger (including proceeds from the sale to PREI and expected transaction expenses) will be approximately $3.3 billion, consisting of $2.2 billion in cash and assumption of Prentiss Properties debt and approximately 35.5 million Brandywine common shares and units. Each holder of Prentiss Properties common shares will receive $21.50 per share in cash and 0.690 Brandywine common shares for each Prentiss Properties common share. E[acute accent]We anticipate entering into a new revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility prior to the closing of the Prentiss transaction. In connection with this financing we would write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. approximately $1.8 million ($0.03 FFO per share) of costs associated with our existing line of credit. Our EPS and FFO per share guidance does not give effect to this estimated charge. E[acute accent]2006 Financial Outlook E[acute accent]Our 2006 financial outlook is being presented on a Brandywine stand-alone (jargon) stand-alone - Capable of operating without other programs, libraries, computers, hardware, networks, etc. Exactly what is absent is presumed to be obvious from context. "We only run Windows on stand-alone PCs because it's too dangerous to run it on networked ones." basis. We expect that the Prentiss transaction will be $0.04 to $0.06 additive additive In foods, any of various chemical substances added to produce desirable effects. Additives include such substances as artificial or natural colourings and flavourings; stabilizers, emulsifiers, and thickeners; preservatives and humectants (moisture-retainers); and to our stand-alone FFO outlook. We will provide specific guidance for the combined Company following the closing of the transaction. E[acute accent]As of the date of this release, we expect our full year 2006 EPS to be $0.54 to $0.62 and FFO per share to be $2.55 to $2.63. The Company's projections are based on several key and variable assumptions and estimates, including the following: E[acute accent]Same-Store Results E[acute accent]In 2006, the Company expects its same-store portfolio (which represents 89% of total square footage owned and 80% of projected 2006 net operating income) to achieve the following percentage changes from currently projected 2005 results:
% change 2005 - 2006
--------------------
GAAP rent and reimbursements: 1.25% - 1.75%
(Not including termination fees)
Expenses: 5.5% - 6.0%
NOI: (2.00%) - (0.50%)
Occupancy: 0% - 1.0%
E[acute accent]The Company's projections for same-store activity are based upon competitive market conditions and continued pressure on market rents. The Company's projections for operating expenses include continued increases in real estate taxes and energy costs. E[acute accent]The Company's financial outlook for 2006 as presented above takes into account certain lease termination fees that management is currently able to forecast. During the first nine months of 2005 the Company recognized approximately $0.10 of FFO per share on account of lease terminations, settlements, and other similar items. E[acute accent]Acquisitions, Dispositions, Development E[acute accent]The Company's stand-alone 2006 outlook assumes a very limited amount of disposition activity. The Company's outlook assumes the completion of all development projects identified in its supplemental disclosure as of September 30, 2005. Accurately forecasting the timing and dollar amount of potential acquisitions is complex and these two variables have a high degree of sensitivity on forecasted results. While the acquisition market remains aggressively priced, we intend to use the financial capacity we have created to take advantage of select opportunities. Targeted acquisitions continue to be a component of the Company's strategy, but the low end of the above guidance does not assume any incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. contribution to FFO per share or EPS from acquisitions. E[acute accent]Financing Activity E[acute accent]The Company's stand-alone guidance assumes that we will term-out with long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. fixed rate debt $250 - $300 million of the outstanding borrowings under our line of credit. E[acute accent]Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. E[acute accent]Estimates of future earnings per share and FFO per share and certain other statements in this release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. E[acute accent]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 ex·pire v. ex·pired, ex·pir·ing, ex·pires v.intr. 1. To come to an end; terminate: My membership in the club has expired. 2. leases at expected levels, competition with other real estate companies for tenants, the potential loss or bankruptcy bankruptcy, in law, settlement of the liabilities of a person or organization wholly or partially unable to meet financial obligations. The purposes are to distribute, through a court-appointed receiver, the bankrupt's assets equitably among creditors and, in most of major tenants, interest rate levels, the availability of debt and equity financing Equity Financing The act of raising money for company activities by selling common or preferred stock to individual or institutional investors. In return for the money paid, shareholders receive ownership interests in the corporation. , competition for real estate acquisitions and risks of acquisitions, dispositions and developments, including the cost of construction delays and cost overruns Noun 1. cost overrun - excess of cost over budget; "the cost overrun necessitated an additional allocation of funds in the budget" cost - the total spent for goods or services including money and time and labor , 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. E[acute accent]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 Report for the year ended December December: see month. 31, 2004. The Company assumes no obligation to update or supplement forward-looking statements that become untrue un·true adj. un·tru·er, un·tru·est 1. Contrary to fact; false. 2. Deviating from a standard; not straight, even, level, or exact. 3. Disloyal; unfaithful. because of subsequent events. E[acute accent]Non-GAAP Supplemental Financial Measures E[acute accent]Funds from Operations (FFO) E[acute accent]FFO is a widely recognized measure of REIT REIT See: Real Estate Investment Trust REIT See real estate investment trust (REIT). performance. Although FFO is a non-GAAP financial measure, the Company believes that information regarding FFO is helpful to shareholders and potential investors. The Company computes FFO in accordance with standards established by the National Association of Real Estate Investment Trusts (NAREIT NAREIT National Association of Real Estate Investment Trusts ), which may not be comparable to FFO reported by other REITs that do not compute To perform mathematical operations or general computer processing. For an explanation of "The 3 C's," or how the computer processes data, see computer. FFO in accordance with the NAREIT definition, or that interpret the NAREIT definition differently than the Company. NAREIT defines FFO as net income (loss) before minority interest of unit holders (preferred and common) and excluding gains (losses) on sales of depreciable depreciable Of, relating to, or being a long-term tangible asset that is subject to depreciation. operating property and extraordinary items (computed in accordance with GAAP); plus real estate related depreciation and amortization (excluding amortization of deferred financing costs), and after adjustment for unconsolidated joint ventures. The GAAP measure that the Company believes to be most directly comparable to FFO, net income, includes depreciation and amortization expenses, gains or losses on property sales and minority interest. In computing computing - computer FFO, the Company eliminates substantially all of these items because, in the Company's view, they are not indicative of the results from the Company's property operations. To facilitate a clear understanding of the Company's historical operating results, FFO should be examined in conjunction with net income (determined in accordance with GAAP) as presented in the financial statements included elsewhere in this release. FFO does not represent cash generated from operating activities in accordance with GAAP and should not be considered to be an alternative to net income (loss) (determined in accordance with GAAP) as an indication of the Company's financial performance or to be an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of the Company's liquidity, nor is it indicative of funds available for the Company's cash needs, including its ability to make cash distributions to shareholders. E[acute accent]Cash Available for Distribution (CAD CAD: see computer-aided design. (Computer-Aided Design) Using computers to design products. CAD systems are high-speed workstations or desktop computers with CAD software. ) E[acute accent]Cash available for distribution, CAD, is a non-GAAP financial measure that is not intended to represent cash flow for the period and is not indicative of cash flow provided by operating activities as determined under GAAP. CAD is presented solely as a supplemental disclosure with respect to liquidity because the Company believes it provides useful information regarding the Company's ability to fund its dividends. Because all companies do not calculate CAD the same way, the presentation of CAD may not be comparable to similarly titled measures of other companies. E[acute accent]Third Quarter Earnings Call and Supplemental Information Package E[acute accent]Brandywine President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , Gerard H. Sweeney, will be hosting a conference call on Wednesday Wednesday: see week. , November November: see month. 2, 2005 at 10:00 a.m. Eastern Time. Call 1-888-889-5602. After the conference, a taped replay of the call can be accessed 24 hours a day through Wednesday, November 16, 2005 by calling 1-877-519-4471 - access code 6579375. In addition, the conference call can be accessed via a webcast located on the Company's website at www.brandywinerealty.com. E[acute accent]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 at www.brandywinerealty.com. E[acute accent]The Supplemental Information package can be found in the "Investor Relations Investor relations The process by which the corporation communicates with its investors. - Financial Reports" section of the web page. E[acute accent]About Brandywine Realty Trust E[acute accent]Brandywine Realty Trust, with headquarters in Plymouth Meeting, PA and regional offices in Mt. Laurel Laurel, cities, United States Laurel. 1 Town (1990 pop. 19,438), Prince Georges co., central Md., about halfway between Washington, D.C., and Baltimore; patented in the late 1600s, inc. 1870. , NJ, Philadelphia, PA and Richmond, VA, is one of the Mid-Atlantic Adj. 1. mid-Atlantic - of a region of the United States generally including Delaware; Maryland; Virginia; and usually New York; Pennsylvania; New Jersey; "mid-Atlantic states" middle Atlantic region's largest full service real estate companies. Brandywine owns, manages or has an ownership interest in 299 office and industrial properties, aggregating 24.2 million square feet. E[acute accent]For more information, visit Brandywine's website at www.brandywinerealty.com. E[acute accent]Note: Certain 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 or industry results 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, the potential loss of major tenants, interest rate levels, the availability and terms of debt and equity financing, competition with other real estate companies for tenants and acquisitions, risks of real estate acquisitions, dispositions and developments, including cost overruns and construction delays, unanticipated operating costs operating costs npl → gastos mpl operacionales and the effects of general and local economic and real estate conditions. Additional information or 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. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events. E[acute accent]Additional Information about the Merger and Where to Find It E[acute accent]This press release does not constitute an offer of any securities for sale. In connection with the proposed transaction, Brandywine and Prentiss Properties filed See configuration file. a joint proxy See proxy server. (networking) proxy - A process that accepts requests for some service and passes them on to the real server. A proxy may run on dedicated hardware or may be purely software. statement/prospectus as part of a registration statement on Form S-4 and other documents regarding the proposed merger with the Securities and Exchange Commission. INVESTORS AND SECURITY HOLDERS OF BRANDYWINE AND PRENTISS ARE URGED TO READ THE MATERIALS BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT BRANDYWINE, PRENTISS AND THE MERGER. Investors and security holders may obtain a free copy of the definitive proxy statement/prospectus and other documents filed by Brandywine and Prentiss with the SEC at the SEC's website at www.sec.gov See .gov and GovNet. (networking) gov - The top-level domain for US government bodies. . The definitive joint proxy statement/prospectus and other relevant documents may also be obtained, free of cost by directing a request to Brandywine Realty Trust, 401 Plymouth Road, Suite 500, Plymouth Meeting, PA 19462, Attention Investor Relations, (telephone 610-325-5600) or Prentiss Properties Trust, 3890 W. Northwest Highway Northwest Highway is the name of several highways in the United States:
A document containing the information that a company is required by the SEC to provide to shareholders so they can make informed decisions about matters that will be brought up at an annual stockholder meeting. , prospectus and other relevant material when they become available before making any voting or investment decisions with respect to the merger. E[acute accent]Brandywine and Prentiss and their respective trustees and executive officers may be deemed to be participants in the solicitation solicitation In criminal law, the act of asking, inducing, or directing someone to commit a crime. The person soliciting another becomes an accomplice to the crime. The term also refers to the act of obtaining bribes, as well as to the crime of a prostitute who offers sexual of proxies from the shareholders of Brandywine and Prentiss Properties in connection with the merger. Information about Brandywine and its trustees and executive officers, and their ownership of Brandywine securities, is set forth in the proxy statement for Brandywine's 2005 Annual Meeting of Shareholders, which was filed with the SEC on April 1, 2005. Information about Prentiss Properties and its trustees and executive officers, and their ownership of Prentiss Properties securities, is set forth in the proxy statement for the 2005 Annual Meeting of Shareholders of Prentiss Properties, which was filed with the SEC on April 5, 2005. Additional information regarding the interests of those persons may be obtained by reading the proxy statement/prospectus. E[acute accent]This communication shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. .
BRANDYWINE REALTY TRUST
CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)
September 30, December 31,
2005 2004
---------- ----------
ASSETS
Real estate investments:
Operating properties $2,568,070 $2,483,134
Accumulated depreciation (373,127) (325,802)
---------- ----------
2,194,943 2,157,332
Construction-in-progress 240,749 145,016
Land held for development 86,086 61,517
---------- ----------
2,521,778 2,363,865
Cash and cash equivalents 23,340 15,346
Escrowed cash 16,174 17,980
Accounts receivable, net 7,955 11,999
Accrued rent receivable, net 42,977 32,641
Investment in marketable securities - 423
Investment in real estate ventures 13,335 12,754
Deferred costs, net 34,624 34,449
Intangible assets, net 81,275 101,056
Other assets 52,457 43,471
---------- ----------
Total assets $2,793,915 $2,633,984
========== ==========
LIABILITIES AND BENEFICIARIES' EQUITY
Mortgage notes payable $ 504,669 $ 518,234
Borrowings under credit facilities 340,000 152,000
Unsecured senior notes, net of discounts 636,582 636,435
Accounts payable and accrued expenses 60,294 49,242
Distributions payable 27,712 27,363
Tenant security deposits and deferred rents 21,621 20,046
Acquired lease intangibles, net 36,013 39,271
Other liabilities 3,825 1,525
---------- ----------
Total liabilities 1,630,716 1,444,116
Minority interest 38,333 42,866
Beneficiaries' equity:
Preferred shares - Series C 20 20
Preferred shares - Series D 23 23
Common shares 562 553
Additional paid-in capital 1,370,197 1,346,651
Cumulative earnings 404,656 370,515
Accumulated other comprehensive loss (2,810) (3,130)
Cumulative distributions (647,782) (567,630)
---------- ----------
Total beneficiaries' equity 1,124,866 1,147,002
---------- ----------
1,163,199 1,189,868
---------- ----------
Total liabilities and beneficiaries'
equity $2,793,915 $2,633,984
========== ==========
BRANDYWINE REALTY TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except share and per share data)
Three Months Ended Nine Months Ended
------------------------- -------------------------
September September September September
30, 30, 30, 30,
2005 2004 2005 2004
----------- ----------- ----------- -----------
Revenue
Rents $ 81,348 $ 66,528 $ 244,232 $ 194,524
Tenant
reimbursements 11,803 9,612 34,922 25,663
Other 2,627 2,555 10,612 7,921
----------- ----------- ----------- -----------
Total revenue 95,778 78,695 289,766 228,108
Operating Expenses
Property
operating
expenses 27,078 21,890 84,652 64,094
Real estate
taxes 9,866 7,648 29,121 21,375
Depreciation and
amortization 28,535 18,280 84,790 50,913
Administrative
expenses 4,486 3,534 13,616 10,977
----------- ----------- ----------- -----------
Total
operating
expenses 69,965 51,352 212,179 147,359
----------- ----------- ----------- -----------
Operating income 25,813 27,343 77,587 80,749
Other income
(expense)
Interest income 707 763 2,174 1,815
Interest expense (17,762) (11,474) (53,366) (35,526)
Equity in income
of real estate
ventures 745 665 2,296 1,573
Net gain on sale
of interests in
real estate 4,640 1,753 4,640 2,901
----------- ----------- ----------- -----------
Income before
minority interest 14,143 19,050 33,331 51,512
Minority interest
attributable to
continuing
operations (452) (254) (1,160) (2,139)
----------- ----------- ----------- -----------
Income from
continuing
operations 13,691 18,796 32,171 49,373
Discontinued
operations:
(Loss) income
from
discontinued
operations (19) (27) (159) (241)
Net gain on
disposition of
discontinued
operations 2,196 2,486 2,196 2,735
Minority
interest (74) (89) (69) (91)
----------- ----------- ----------- -----------
2,103 2,370 1,968 2,403
----------- ----------- ----------- -----------
Net income 15,794 21,166 34,139 51,776
Income allocated
to Preferred
Shares (1,998) (2,677) (5,994) (7,372)
Preferred Share
redemption gain
(charge) - - - 4,500
----------- ----------- ----------- -----------
Income allocated
to Common Shares $ 13,796 $ 18,489 $ 28,145 $ 48,904
=========== =========== =========== ===========
PER SHARE DATA
Basic income per
Common Share $ 0.25 $ 0.39 $ 0.50 $ 1.07
=========== =========== =========== ===========
Basic weighted-
average shares
outstanding 56,071,973 46,929,049 55,734,114 45,565,650
Diluted income per
Common Share $ 0.24 $ 0.39 $ 0.50 $ 1.07
=========== =========== =========== ===========
Diluted weighted-
average shares
outstanding 56,372,013 47,169,893 55,968,657 45,803,996
BRANDYWINE REALTY TRUST
FUNDS FROM OPERATIONS AND CASH AVAILABLE FOR DISTRIBUTION
(unaudited, in thousands, except share and per share data)
Three Months Ended Nine Months Ended
------------------------- -------------------------
9/30/05 9/30/04 9/30/05 9/30/04
----------- ----------- ----------- -----------
Reconciliation of
Net Income to
Funds from
Operations (FFO):
Net income $ 15,794 $ 21,166 $ 34,139 $ 51,776
Add (deduct):
Minority
interest
attributable to
continuing
operations 452 254 1,160 2,139
Net gains on
sale of
interests in
real estate (4,640) (1,753) (4,640) (2,901)
Minority
interest
attributable to
discontinued
operations 74 89 69 91
Net gains on
disposition of
discontinued
operations (2,196) (2,486) (2,196) (2,735)
----------- ----------- ----------- -----------
Income before net
gains on sale of
interests in real
estate and
minority interest 9,484 17,270 28,532 48,370
Add:
Depreciation:
Real property 21,558 15,073 62,463 42,724
Real estate
ventures 498 364 1,428 1,607
Amortization of
leasing costs 6,612 2,972 21,263 7,615
Perpetual
Preferred Share
distributions (1,998) (1,998) (5,994) (5,334)
Preferred Share
redemption gain
(charge) - - - 4,500
----------- ----------- ----------- -----------
Funds from
operations (FFO) $ 36,154 $ 33,681 $ 107,692 $ 99,482
=========== =========== =========== ===========
FFO, excluding
non-recurring
items (1) $ 36,154 $ 33,681 $ 107,692 $ 94,982
=========== =========== =========== ===========
FFO per share -
fully diluted $ 0.62 $ 0.67 $ 1.86 $ 2.02
=========== =========== =========== ===========
FFO per share -
fully diluted,
excluding non-
recurring items
(1) $ 0.62 $ 0.67 $ 1.86 $ 1.93
=========== =========== =========== ===========
Weighted-average
shares/units
outstanding -
fully diluted 58,340,692 50,261,196 57,995,891 49,338,183
EPS - diluted $ 0.24 $ 0.39 $ 0.50 $ 1.07
=========== =========== =========== ===========
Weighted-average
shares
outstanding -
fully diluted 56,372,013 47,169,893 55,968,657 45,803,996
Dividend per
Common Share $ 0.44 $ 0.44 $ 1.32 $ 1.32
=========== =========== =========== ===========
Payout ratio of
FFO (Dividend per
Common Share
divided by FFO
per Common Share) 71.0% 65.7% 71.1% 65.5%
Payout ratio of
FFO, excluding
non recurring
items (1) 71.0% 65.7% 71.1% 68.6%
CASH AVAILABLE FOR
DISTRIBUTION
(CAD):
FFO, excluding
non-recurring
items (1) $ 36,154 $ 33,681 $ 107,692 $ 94,982
Add (deduct):
Rental income
from straight-
line rents (4,316) (1,043) (10,816) (3,881)
Deferred market
rental income (263) 3 (1,051) 120
Amortization:
Deferred
financing
costs 483 527 1,451 1,559
Deferred
compensation
costs 685 520 2,072 1,647
Second
generation
capital
expenditures
(2):
Building and
tenant
improvements (9,355) (8,671) (25,100) (23,542)
Lease
commissions (757) (1,598) (2,749) (3,461)
----------- ----------- ----------- -----------
Cash available for
distribution $ 22,631 $ 23,419 $ 71,499 $ 67,424
=========== =========== =========== ===========
Weighted-average
shares/units
outstanding -
fully diluted 58,340,692 50,261,196 57,995,891 49,338,183
Dividend per
Common Share $ 0.44 $ 0.44 $ 1.32 $ 1.32
=========== =========== =========== ===========
Cash flows from:
Operating
activities $ 41,262 $ 26,826 $ 103,767 $ 100,710
Investing
activities (79,813) (603,071) (206,150) (634,716)
Financing
activities 52,571 575,563 110,378 535,317
(1) Represents FFO excluding a gain of $4.5 million related to the
Series B Preferred Unit redemption in February 2004.
(2) Represents expenditures incurred during the period (regardless if
lease commencement is after quarter end). Excludes first
generation costs, which consist of capital expenditures, tenant
improvements and leasing commissions associated with development
and purchase price adjustments relating to acquisitions
(including seller escrows, purchase price reduction or costs
anticipated to initially lease-up acquired properties).
BRANDYWINE REALTY TRUST
SAME STORE OPERATIONS - QUARTER
(unaudited and in thousands)
Of the 251 Properties owned by the Company as of September 30, 2005, a
total of 226 Properties ("Same Store Properties") containing an
aggregate of 15.0 million net rentable square feet were owned for the
entire three-month periods ended September 30, 2005 and 2004. Average
occupancy for the Same Store Properties was 90.9% during 2005 and
90.7% during 2004. The following table sets forth revenue and expense
information for the Same Store Properties:
Quarter Ended
September 30,
---------------------
2005 2004
--------- --------
Revenue
Rents (a) $ 60,973 $ 62,004
Tenant reimbursements 8,023 8,093
Other (b) 658 277
--------- --------
69,654 70,374
Operating expenses
Property operating expenses 21,776 22,406
Real estate taxes 7,254 7,107
--------- --------
29,030 29,513
--------- --------
Net operating income $ 40,624 $ 40,861
========= ========
(a) Includes straight-line rental income of $1,262 for 2005 and $964
for 2004
(b) Includes net termination fee income of $433 for 2005 and $36
for 2004
The following table is a reconciliation of Net Income to Same Store
net operating income:
Quarter Ended
September 30,
---------------------
2005 2004
--------- --------
Net Income $ 15,794 $ 21,166
Add/(deduct):
Interest income 707 763
Interest expense 17,762 11,474
Administrative expenses 4,486 3,534
Equity in income of real estate ventures (745) (665)
Depreciation and amortization -- continuing
operations 28,535 18,280
Depreciation and amortization -- discontinued
operations 43 26
Net gain on sale of interests in real estate --
continued operations (4,640) (1,753)
Net gain on sale of interests in real estate --
discontinued operations (2,196) (2,486)
Minority interest attributable to continuing
operations 452 254
Minority interest attributable to discontinued
operations 74 89
--------- --------
Consolidated net operating income 60,272 50,682
Less: Net operating income of non same store
properties (13,805) (2,026)
Less: Eliminations and non-property specific net
operating income (5,843) (7,795)
--------- --------
Same Store net operating income $ 40,624 $ 40,861
========= ========
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