SOURCE: Brandywine Realty Trust

November 08, 2007 17:21 ET

Brandywine Realty Trust Agrees to Sell a Philadelphia Suburban Office Portfolio Valued at $245.4 Million to a Joint Venture With DRA Advisors LLC

RADNOR, PA--(Marketwire - November 8, 2007) - Brandywine Realty Trust (NYSE: BDN), a real estate investment trust focused on the ownership, management and development of Class A, suburban and urban office properties in selected markets throughout the United States, announced today that it has signed a definitive agreement to enter into a joint venture with DRA Advisors LLC. Under the terms of the agreement, the joint venture will acquire 29 suburban Philadelphia office properties in a transaction valued at approximately $245.4 million, representing a capitalization rate of approximately 7.4% GAAP and 7.2% cash based on trailing twelve month net operating income through September 30, 2007 and approximately a 7.9% cash yield based on 2008 projections.

The 29 properties, which are listed below, comprise approximately 1.6 million square feet and were 95.3% occupied and 96.4% leased (reflecting future executed leases) as of September 30, 2007. The transaction is expected to close by year-end 2007, and is subject to customary closing conditions, as well as the joint venture's completion of approximately $184 million of secured property financing. As a result of the transaction and certain associated financial transactions, Brandywine expects to realize total proceeds of approximately $235.2 million less transaction expenses and will receive a 20% interest in the joint venture at the closing of the transaction. Brandywine will use the net proceeds from the transaction to reduce outstanding indebtedness under its unsecured revolving credit facility. A subsidiary of Brandywine will be responsible for the management and leasing of the joint venture properties under a separate agreement. Assuming a 2007 closing, Brandywine does not currently expect that it will declare a special distribution on account of this transaction, subject to a final review of its calendar year 2007 taxable income.

"We are thrilled to undertake this transaction with DRA Advisors," stated Gerard H. Sweeney, President and Chief Executive Officer of Brandywine Realty Trust. "DRA is a high-quality financial institution with an extremely strong track record. Our team did an outstanding job to structure this co-investment vehicle which will allow us to recycle capital to higher growth opportunities in our target markets with a particular emphasis on our current and planned development projects. By retaining a 20% ownership stake and managing the properties, we will share in the upside from this portfolio and contribute to its future success. We believe that this transaction creates significant value for our stockholders with both a meaningful gain on sale and the retention of a significant amount of net cash proceeds."

The Philadelphia office of CB Richard Ellis served as Brandywine's exclusive marketing advisor for the transaction. Three properties, aggregating 260,000 square feet, were excluded from the joint venture transaction and will be retained by Brandywine.

About DRA Advisors LLC

DRA Advisors LLC is a New York-based registered investment advisor specializing in real estate investment management services for institutional and private investors, including pension funds, university endowments, foundations, and insurance companies. Founded in 1986, the firm currently manages over $9 billion in assets, consisting of over 20 million square feet of office / industrial space, 32 million square feet of retail space and over 19,000 residential units. Additional information about DRA can be found on the company's website at www.draadvisors.com.

About Brandywine Realty Trust

Brandywine Realty Trust is one of the largest, publicly-traded, full-service, integrated real estate companies in the United States. Organized as a real estate investment trust and operating in select markets, Brandywine owns, develops and manages a primarily Class A, suburban and urban office portfolio aggregating approximately 44.1 million square feet, including 30.6 million square feet which it owns on a consolidated basis. For more information, visit our website at www.brandywinerealty.com.

Net Operating Income (NOI)

NOI is a non-GAAP (generally accepted accounted principles) financial measure equal to net income available to common shareholders, the most directly comparable GAAP financial measure, plus corporate general and administrative expense, depreciation and amortization, interest expense, minority interest in Operating Partnership and losses from early extinguishment of debt, less interest income, development and management income, gains from property dispositions, gains on sale from discontinued operations, income from discontinued operations, income from unconsolidated joint ventures and minority interest in property partnerships. In some cases we also present NOI on a cash basis, which is NOI after eliminating the effects of straight-lining of rent and deferred market intangible amortization. NOI presented by us may not be comparable to NOI reported by other REITs that define NOI differently. NOI should not be considered an alternative to net income as an indication of our performance or to cash flows as a measure of our liquidity or ability to make distributions.

Forward-Looking Statements

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 of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our and our affiliates' actual results, performance, achievements or transactions 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: our 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, equity or other financing; competition for real estate acquisitions; risks of acquisitions, dispositions and developments, including the cost of construction delays and cost overruns; unanticipated operating and capital costs; our 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 our tenants operate.

Additional information on factors which could impact us and the forward-looking statements contained herein are included in our filings with the Securities and Exchange Commission, including our Annual Report for the year ended December 31, 2006. We assume no obligation to update or supplement forward-looking statements that become untrue because of subsequent events except as required by law.


Properties to Be Acquired by the Joint Venture



             Property                Location     Square Feet
             --------                --------     -----------


630 DRESHER ROAD                 Horsham, PA               28,894
650 DRESHER ROAD                 Horsham, PA               30,071
700 BUSINESS CENTER DRIVE        Horsham, PA               30,773
800 BUSINESS CENTER DRIVE        Horsham, PA               51,236
300 WELSH ROAD - BUILDING I      Horsham, PA               40,042
300 WELSH ROAD - BUILDING II     Horsham, PA               17,750
1155 BUSINESS CENTER DRIVE       Horsham, PA               51,388
655 BUSINESS CENTER DRIVE        Horsham, PA               29,933
755 BUSINESS CENTER DRIVE        Horsham, PA               38,050
                                                    -------------
  subtotal                                                318,137


SPRINGHOUSE CORPORATE CENTER 1   Ft Washington, PA         59,994
SPRINGHOUSE CORPORATE CENTER 2   Ft Washington, PA         76,287
500 OFFICE CENTER DRIVE          Ft Washington, PA        104,303
501 OFFICE CENTER DRIVE          Ft Washington, PA        114,795
220 COMMERCE DRIVE               Ft Washington, PA         46,080
520 VIRGINIA DRIVE               Ft Washington, PA         56,454
                                                    -------------
  subtotal                                                457,913

ONE GREENWOOD SQUARE             Bensalem, PA              60,705
TWO GREENWOOD SQUARE             Bensalem, PA              81,575
THREE GREENWOOD SQUARE           Bensalem, PA              25,000
                                                    -------------
  subtotal                                                167,280

7010 SNOWDRIFT ROAD              Allentown, PA             33,029
7350 TILGHMAN STREET             Allentown, PA            111,500
7450 TILGHMAN STREET             Allentown, PA            100,000
7150 WINDSOR DRIVE               Allentown, PA             49,420
7535 WINDSOR DRIVE               Allentown, PA            132,375
7360 WINDSOR DRIVE               Allentown, PA             43,600
6990 SNOWDRIFT ROAD BLDG A       Allentown, PA             44,200
6990 SNOWDRIFT ROAD BLDG B       Allentown, PA             27,900
7248 TILGHMAN STREET             Allentown, PA             43,782
6575 SNOWDRIFT ROAD              Allentown, PA             47,091
7310 TILGHMAN STREET             Allentown, PA             40,000
                                                    -------------
  subtotal                                                672,897

                                                    -------------
Total (29 properties)                                   1,616,227
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