SOURCE: Brandywine Realty Trust

June 30, 2008 09:05 ET

Brandywine Announces $412.5 Million Sale of Oakland Portfolio

RADNOR, PA--(Marketwire - June 30, 2008) - Brandywine Realty Trust (NYSE: BDN) announced today that it has entered into a definitive agreement to sell five properties totaling approximately 1.7 million net rentable square feet in Oakland, California for an aggregate price of $412.5 million (including debt assumption). The five properties are One Kaiser Plaza (The Ordway), 1901 Harrison Street, 1333 Broadway, 2101 Webster Street and 2100 Franklin Street, the first four of which were 88.7% occupied as of May 31, 2008, while 2100 Franklin is an unleased, recently completed, ground-up development. The purchase also includes Brandywine's condominium interest in a parking garage at 2353 Webster Street. The buyer of the portfolio, an affiliate of the CIM Group, has posted a non-refundable deposit towards the closing which is expected to occur in the third quarter of 2008.

Under the terms of the sale, the buyer will assume three existing mortgage loans expected to total approximately $95.6 million at August 31, 2008. $40.0 million of the $316.9 million cash proceeds due at the closing has been deferred as a two-year interest free loan to the buyer from Brandywine secured by 2100 Franklin Street and 2101 Webster Street. Brandywine has also agreed to grant the buyer a 15-year purchase option for the Two Kaiser Plaza land parcel adjacent to The Ordway and has committed to lease to the buyer 150 parking spaces on that same parcel for the benefit of Ordway's tenants. As a result of entering into this transaction, Brandywine will record a non-cash impairment charge of approximately $7.0 million in the second quarter of 2008 or approximately $0.08 per share on a fully diluted basis. $3.2 million of the approximately $7.0 million non-cash impairment charge is attributable to imputed interest on the $40.0 million loan, while $0.5 million is attributable to the value assigned to the purchase option.

Assuming approximately $7.0 million in transaction costs and an August 31, 2008 closing, Brandywine expects to realize approximately $269.9 million of cash proceeds at the closing adjusted for customary closing prorations, and an additional $40.0 million of cash proceeds on August 2, 2010 upon repayment of the loan. The proceeds of the sale will be used for the repayment of existing debt and to provide cash balances for general corporate purposes. An affiliate of Brandywine will manage and lease the five properties for an initial one-year period following the closing.

"We are pleased to achieve the sale of these assets in a challenging market," stated Jerry Sweeney, President and Chief Executive Officer of Brandywine Realty Trust. "The sale proceeds will strengthen our balance sheet, reduce our overall and secured leverage and provide additional capital availability for our ongoing investment activities. Recycling capital from non-core assets to our target markets remains an integral part of our overall funding strategy. This sale demonstrates our commitment and ability to execute on the key components of our previously announced business plan."

Lazard Frères & Co. acted as financial advisor to Brandywine in this transaction. The Company also engaged CBRE to assist in the portfolio's marketing efforts.

Following the closing of the transaction, Brandywine will continue to operate in the northern California market as the owner of three office properties totaling 554,534 square feet and two land parcels, and as a property manager and leasing agent under a series of third-party contracts.

2008 Earnings and Funds from Operations (FFO) Guidance

Based on current plans and assumptions and subject to the risks and uncertainties more fully described in Brandywine's reports filed with the Securities and Exchange Commission, we are revising our previously announced guideline for full year 2008 FFO per diluted share to be in a range of $2.40 to $2.50 versus the prior range of $2.46 to $2.56, reflecting the expected dilutive impact of this transaction in 2008 following the closing and the add-back of the $7.0 million impairment charge or $0.08 per diluted share. Going forward, we will report our FFO both with and without impairment charges. This guidance is provided for informational purposes and is subject to change.

The following is a reconciliation of the calculation of FFO per diluted share and earnings per diluted share:

     Guidance for 2008                                  Range or Value
     -----------------                                 -----------------

     Earnings per diluted share allocated to common
      shareholders                                     $(0.01) to $ 0.09
     Less:   gains on the sale of real estate           (0.09)     (0.09)
     Plus:   real estate depreciation and amortization   2.42       2.42
                                                       ------     ------

     FFO per diluted share                             $ 2.32  to $ 2.42

     Plus:   impairment charges                          0.08       0.08

     Adjusted FFO per diluted share                    $ 2.40  to $ 2.50
                                                       ======     ======

For guidance purposes, we have not considered any future gains or impairments from the sale of real estate not previously disclosed. Our 2008 FFO guidance does not include any income from the sale of undepreciated real estate, in accordance with our current practice. The dilution from this sale arises from the use of proceeds to repay our unsecured credit facility and from the cash balances we expect to hold during the balance of 2008 following the closing.

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 40 million square feet, including 29 million square feet which it owns on a consolidated basis. For more information, visit our website at www.brandywinerealty.com.

NON-GAAP SUPPLEMENTAL FINANCIAL MEASURES

We compute our financial results in accordance with generally accepted accounting principles (GAAP). Although FFO is a non-GAAP financial measure, we believe that FFO is helpful to shareholders and potential investors and is a widely recognized measure of real estate investment trust performance. We have included in this press release a reconciliation of FFO to the most directly comparable GAAP measure.

Funds from Operations (FFO)

We compute FFO in accordance with standards established by the National Association of Real Estate Investment Trusts (NAREIT), which may not be comparable to FFO reported by other REITs that do not compute FFO in accordance with the NAREIT definition, or that interpret the NAREIT definition differently than us. NAREIT defines FFO as net income (loss) before minority interest of unit holders (preferred and common) and excluding gains (losses) on sales of property and extraordinary items (computed in accordance with GAAP); plus real estate related depreciation and amortization (excluding amortization of deferred financing costs), and after similar adjustments for unconsolidated joint ventures. Net income, the GAAP measure that we believe to be most directly comparable to FFO, includes depreciation and amortization expenses, gains or losses on property sales, extraordinary items and minority interest. To facilitate a clear understanding of our 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 flow from operating activities (determined 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 our financial performance or to be an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is it indicative of funds available for our cash needs, including our ability to make cash distributions to shareholders.

For information purposes, we also provide FFO adjusted for impairment charges. Although our calculation of FFO as adjusted differs from NAREIT's definition of FFO and may not be comparable to that of other REITs and real estate companies, we believe it provides a meaningful supplemental measure of our operating performance because we believe that by excluding impairment charges, shareholders and potential investors are presented with an indicator of our operating performance that more closely achieves the objectives of the real estate industry in presenting FFO.

Forward-Looking Statements

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 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.

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