BRANDYWINE OPERATING PARTNERSHIP LP /PA - 10-K Annual Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

For the fiscal year ended

December 31, 2004

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

For the transition period from __________________________ to ___________________

Commission file number

000-24407

Brandywine Operating Partnership, L.P.

(Exact name of registrant as specified in its charter)

Delaware		23-2862640

(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

401 Plymouth Road, Plymouth Meeting, Pennsylvania		19462

(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		Name of each exchange on which registered

Not Applicable		Not Applicable

Securities registered pursuant to Section 12(g) of the Act:

Units of General Partnership Interest

(Title of class)

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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. Yes No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes No

As of June 30, 2004, the aggregate market value of the 906,467 common units of limited partnership (“Units”) held by non-affiliates of the Registrant was $24.6 million based upon the last reported sale price of $27.19 per share on the New York Stock Exchange on June 30, 2004 of the commons shares of beneficial interest of Brandywine Realty Trust, a real estate investment trust and the sole general partner of the Registrant, for which the Units are redeemable under certain circumstances at the election of Brandywine Realty Trust. (For this computation, the Registrant has excluded the market value of all Units beneficially owned by Brandywine Realty Trust.)

Documents Incorporated By Reference

Portions of the information in the proxy statement for the Annual Meeting of Shareholders of Brandywine Realty Trust to be held May 2, 2005 are incorporated by reference into Part III, Items 10, 11,12, 13 and 14 of this Form 10-K.

TABLE OF CONTENTS

FORM 10-K

Page

PART I

Item 1. Business	4

Item 2. Properties	21

Item 3. Legal Proceedings	32

Item 4. Submission of Matters to a Vote of Security Holders	32

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	32

Item 6. Selected Financial Data	34

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations	35

Item 7A. Quantitative and Qualitative Disclosures About Market Risk	49

Item 8. Financial Statements and Supplementary Data	49

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	49

Item 9A. Controls and Procedures	49

Item 9B. Other Information	49

PART III

Item 10. Directors and Executive Officers of the Registrant	50

Item 11. Executive Compensation	50

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	50

Item 13. Certain Relationships and Related Transactions	50

Item 14. Principle Accountant Fees and Services	50

PART IV

Item 15. Exhibits and Financial Statement Schedules	50

SIGNATURES	59

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PART I

Item 1. Business

General

Brandywine Operating Partnership, L.P. (the “Partnership”) is the entity through which Brandywine Realty Trust (sometimes referred to as the “Company”), a self-administered and self-managed real estate investment trust (“REIT”), conducts its business and owns its assets. The Partnership’s activities include acquiring, developing, redeveloping, leasing and managing office and industrial properties. The Company’s common shares of beneficial interest, par value $0.01 per share, are listed on the New York Stock Exchange under the symbol “BDN.”

As of December 31, 2004, we owned 222 office properties, 23 industrial facilities and one mixed-use property (the “Properties”) containing an aggregate of approximately 19.2 million net rentable square feet. As of December 31, 2004, we held economic interests in nine unconsolidated real estate ventures that contain approximately 1.6 million net rentable square feet (the “Real Estate Ventures”). In addition, we own interests in two consolidated real estate ventures that own two office properties containing approximately 0.2 million net rentable square feet. We also own approximately 445 acres of undeveloped land. The Properties are located in the office and industrial markets in and surrounding Philadelphia, Pennsylvania; Wilmington, Delaware; Southern and Central New Jersey; and Richmond, Virginia. As of December 31, 2004, we were performing management and leasing services for 35 other properties containing an aggregate of 2.7 million net rentable square feet, excluding certain of the Real Estate Ventures which we manage.

Significant Transactions During 2004

Real Estate Acquisitions/Dispositions

In March 2004, we sold 1255 Broad Street, a property totaling 37,478 square feet located in Bloomfield, New Jersey, for a sales price of $4.0 million. We also sold 2201 Dabney Road, a property totaling 45,000 square feet located in Richmond, Virginia, for a sales price of $2.1 million.

In May 2004, we sold a land parcel containing 5.3 acres in Richmond, Virgina for a sales price of $1.2 million.

In June 2004, we sold 935 First Avenue, a property totaling 103,090 square feet located in King of Prussia, Pennsylvania, for a sales price of $17.0 million.

In July 2004, we acquired Five Greentree, a property totaling 169,534 square feet located in Marlton, New Jersey, for a purchase price of $18.4 million.

In July 2004, we completed the purchase and sale of a land parcel totaling 93 acres in two separate transactions with unrelated third parties. The purchase and sale resulted in a net gain of approximately $1.5 million. As part of the sale, we provided the purchaser $4.0 million of mortgage financing. Subsequent to the sale, the mortgage note was fully repaid.

In August 2004, we sold a land parcel totaling 19.4 acres in Mount Laurel, New Jersey for a sales price of $1.3 million.

In September 2004, we acquired a land parcel totaling 58.4 acres in Newtown, Pennsylvania for a purchase price of $4.5 million.

In September 2004, we acquired 100% of the partnership interests in The Rubenstein Company, L.P. (“TRC”). Through the acquisition, we acquired 14 office properties (the “TRC Properties”) located in Pennsylvania and Delaware that contain approximately 3.5 million net rentable square feet. The aggregate consideration was $630.5 million including $28.5 million of closing costs and debt prepayment penalties that are included in the basis of the assets acquired. The consideration was paid with $539.6 million of cash, $79.3 million of debt assumed, $1.6 million of other liabilities assumed and 343,006 Class A Units valued at $10.0 million. In addition, we agreed to issue to the sellers up to a maximum of $9.7 million of additional Class A Units if certain of the properties achieve at least 95% occupancy prior to September 21, 2007.

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In September 2004, we sold a land parcel containing 4.6 acres in Richmond, Virgina for a sales price of $0.3 million.

In December 2004, we sold 55 U.S. Avenue located in Gibbsboro, New Jersey, a property totaling 138,982 square feet, for a sales price of $5.5 million. As part of the sale, we provided the purchaser $4.4 million of mortgage financing.

Debt Financings

In May 2004, we replaced our then existing credit facility with a $450 million unsecured credit facility (the “Credit Facility”) that matures in May 2007, subject to a one-year extension option. We may elect to increase the Credit Facility to $600 million subject to the absence of any defaults and our ability to acquire additional commitments from our existing lenders or new lenders. The Credit Facility generally bears interest at LIBOR plus a spread over LIBOR ranging from 0.65% to 1.20% based on our unsecured senior debt rating.

In September 2004, we repaid all amounts due under our then existing $100.0 million unsecured term loan and obtained two additional unsecured term loans in the principal amounts of $320.0 million (the “2007 Term Loan”) and $113.0 million (the “2008 Term Loan”). The 2007 Term Loan was scheduled to mature in September 2007 and the 2008 Term Loan was scheduled to mature in September 2008. The 2007 and 2008 Term Loans were obtained to finance a portion of the TRC acquisition.

In October 2004, we issued $275.0 million of 2009 4.5% unsecured notes (the “2009 Notes”) and $250.0 million of 2014 5.4% unsecured notes (the “2014 Notes”) in an underwritten public offering. We received net proceeds, after discounts, of approximately $520.1 million. The Company and certain of our wholly-owned subsidiaries fully and unconditionally guaranteed the payment of principal and interest on the Notes. In anticipation of the issuance of the Notes, we entered into treasury lock agreements with notional amounts totaling $194.8 million with an expiration of five years at an all-in rate of 4.7% and with notional amounts totaling $188.0 million with an expiration of 10 years at an all-in rate of 5.6%. Upon issuance of the Notes, we terminated the treasury lock agreements at a total cost of $3.2 million that will be amortized to interest expense over the life of the respective Notes. The net proceeds of the 2009 Notes and 2014 Notes were used to repay the $320.0 million 2007 Term Loan, to settle the treasury lock agreements discussed above and to reduce borrowings outstanding under the Credit Facility.

In December 2004, we sold $113.0 million aggregate princinpal amount of 2008 unsecured notes (the “2008 Notes”) to a group of qualified institutional investors. The 2008 Notes bear interest from their date of issuance at the rate of 4.34% per annum and mature on December 14, 2008. The 2008 Notes do not provide for scheduled principal amortization prior to the maturity date. The Company and certain of our subsidiaries fully and unconditionally guaranteed the payment of principal and interest on the 2008 Notes. A former partner in TRC has also provided a guaranty of the 2008 Notes (although this guaranty does not in any way limit or diminish our obligations or the obligations arising under the guarantees that the Company and certain of our subsidiaries provided). The note purchase agreement for the 2008 Notes contains various affirmative and negative covenants, including covenants that limit our incurrence of additional indebtedness. The proceeds from the 2008 Notes were used to repay the 2008 Term Loan.

Equity Issuances

In January 2004, the Company sold 2,645,000 Common Shares for net proceeds of approximately $69.2 million, in an underwritten public offering, and contributed those proceeds to us in exchange for 2,645,000 GP Units (defined below). We used the proceeds to reduce the outstanding balance under our revolving credit facility.

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In February 2004, we redeemed all of our outstanding Series B Preferred Units for an aggregate price of $93.0 million, together with accrued but unpaid distributions from January 1, 2004. The Series B Preferred Units had an aggregate stated value of $97.5 million and accrued distributions at 7.25% per annum. We recorded a gain of $4.5 million related to the redemption.

In February 2004, the Company sold 2,300,000 Series D Preferred Shares for net proceeds of approximately $55.5 million, in an underwritten public offering, and contributed those proceeds to us in exchange for 2,300,000 Series E Preferred Mirror Units. We used the proceeds to reduce the outstanding balance under our revolving credit facility.

In March 2004, the Company sold 1,840,000 Common Shares for net proceeds of approximately $50.5 million, in an underwritten public offering, and contributed those proceeds to us in exchange for 1,840,000 GP Units. We used the proceeds to reduce the outstanding balance under our revolving credit facility.

In September 2004, the Company sold 7,750,000 Common Shares for net proceeds of approximately $217.0 million, in an underwritten public offering, and contributed those proceeds to us in exchange for 7,750,000 GP Units. We used the proceeds to acquire the TRC Properties and to reduce the outstanding balance under our revolving credit facility.

Organization

We were formed as a Delaware limited partnership and are controlled by Brandywine Realty Trust, our sole general partner.

Brandywine Realty Trust was organized and commenced its operations in 1986 as a Maryland REIT. As of December 31, 2004, Brandywine Realty Trust owned approximately 96.4% of our outstanding partnership units, excluding our Preferred Mirror Units. The Company’s structure as an “UPREIT” is designed, in part, to permit persons contributing properties to us to defer some or all of the tax liability they might otherwise incur in a sale of properties.

As of the date of this Form 10-K, we have the following classes of units (“Units” or “Partnership Units”) of partnership interest outstanding: units of Class A Limited Partnership Interest (“Class A Units”), units of General Partnership Interest (“GP Units”), Series D Preferred Mirror Units and Series E Preferred Mirror Units. Collectively, the GP Units and the Class A Units are referred to as Common Partnership Units. As of the date of this Form 10-K, there are 3,758,219 Class A Units outstanding, 2,061,459 of which are owned by outside limited partners and the balance of which are owned by Brandywine Realty Trust, and 53,891,312 GP Units outstanding, all of which are owned by Brandywine Realty Trust. In addition, Brandywine Realty Trust owns all of the Series D Preferred Mirror Units and Series E Preferred Mirror Units. Brandywine Realty Trust, as a holder of GP Units and Class A Units, as well as other holders of Class A Units, are entitled to share in cash distributions from, and in profits and losses of, the Partnership, in proportion to their respective percentage interests, subject to preferential distributions on the Series D Preferred Mirror Units and Series E Preferred Mirror Units.

Pursuant to our partnership agreement we are obligated to redeem the Class A Units, other than those held by the Company, tendered for redemption, for cash or Common Shares of the Company, at the option of the Company.

The 2,000,000 Series D Preferred Mirror Units outstanding have an aggregate liquidation preference of $50 million, or $25.00 per unit. Cumulative distributions on the Series D Preferred Mirror Units are payable quarterly at an annualized rate of 7.50% of the liquidation preference. In the event that any of the Series C Preferred Shares of Brandywine Realty Trust are redeemed, which may occur at the option of Brandywine Realty Trust at any time on or after December 30, 2008, then an equivalent number of Series D Preferred Mirror Units will be redeemed.

The 2,300,000 Series E Preferred Mirror Units outstanding have an aggregate liquidation preference of $57.5 million, or $25.00 per unit. Cumulative distributions on the Series E Preferred Mirror Units are payable quarterly at an annualized rate of 7.375% of the liquidation preference. In the event that any of the Series D Preferred Shares of Brandywine Realty Trust are redeemed, which may occur at the option of Brandywine Realty Trust at any time on or after February 27, 2009, then an equivalent number of Series E Preferred Mirror Units will be redeemed.

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Our executive offices and our Pennsylvania regional offices are located at 401 Plymouth Road, Suite 500, Plymouth Meeting, Pennsylvania 19462 and our telephone number is (610) 325-5600. The Company has an internet website at www.brandywinerealty.com. We are not incorporating by reference in this Form 10-K any material from the website. The reference to the website is an inactive textual reference to the uniform resource locator (URL) and is for your reference only. We also have regional offices in Mount Laurel, New Jersey; Philadelphia, Pennsylvania; and Richmond, Virginia.

Business Objective

Our business objective is to effectively deploy capital to maximize return on investment. To accomplish this objective we seek to:

	•	maximize cash flow through aggressive leasing strategies that we adapt to market conditions and that are designed to continue market outperformance and capture potential rental growth as rental rates increase and as below-market leases are renewed;

	•	attain a high tenant retention rate by providing a full array of property management and maintenance services and tenant service programs responsive to the varying needs of our diverse tenant base;

	•	increase the economic diversification of our tenant base while maximizing economies of scale;

	•	deploy our existing land inventory and seek new land parcels on which to develop high-quality office and industrial properties to service our tenant base, as warranted by market conditions;

	•	capitalize on our redevelopment expertise to selectively acquire, redevelop and reposition underperforming properties in desirable locations;

	•	acquire high-quality office and industrial properties and portfolios of such properties at attractive yields in selected submarkets in the Mid-Atlantic region that we expect will experience economic growth and provide barriers to entry;

	•	objectively assess alternative capital investment strategies including, but not limited to, joint venture opportunities with high-quality partners having attractive real estate holdings or significant financial resources; and

•

utilize our reputation as one of our region’s largest full-service real estate development and management organizations to identify new business opportunities that will expand our business and create long-term value.

We expect to continue to concentrate our real estate activities in submarkets within the Mid-Atlantic region where we believe that:

	•	barriers to entry (such as zoning restrictions, utility availability, infrastructure limitations, development moratoriums and limited developable land) will create supply constraints on office and industrial space;

	•	current market rents and absorption statistics justify limited new construction activity;

	•	we can maximize market penetration by accumulating a critical mass of properties and thereby enhance operating efficiencies; and

•

there is potential for economic growth.

We are also assessing entry into additional regions where we believe we can effectively further our business objective.

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Policies With Respect To Certain Activities

The following is a discussion of our investment, financing and other policies. These policies have been determined by the Company’s Board of Trustees and may be amended or revised from time to time by the Board of Trustees without a vote of our limited partners.

Investments in Real Estate or Interests in Real Estate

We may develop, purchase or lease income-producing properties for long-term investment, expand and improve theProperties presently owned or other properties purchased, or sell such properties, in whole or in part, as circumstances warrant. Although there is no limitation on the types of development activities that we may undertake, we expect that our development activities will generally be on a build-to-suit basis for particular tenants, or where a significant portion of the building is pre-leased before construction begins. We may also participate with other entities in property ownership through joint ventures or other types of co-ownership. Our equity investments may be subject to existing or future mortgage financing and other indebtedness that will have priority over our equity investments.

Investments in Real Estate Mortgages

While our current portfolio consists of, and our business objectives emphasize, equity investments in commercial real estate, we may, in the discretion of management or of the Board of Trustees, invest in other types of equity real estate investments, mortgages and other real estate interests. We do not presently intend to invest to a significant extent in mortgages or deeds of trust, but may invest in participating or convertible mortgages if we conclude that we may benefit from the cash flow or any appreciation in the value of the property.

Disposition

Our disposition of Properties is based upon management’s periodic review of our portfolio and the determination by management and the Company’s Board of Trustees that such action would be in the best interests of the Partnership.

Financing Policies

As a general policy, we intend, but are not obligated, to maintain a long-term average debt-to-market capitalization ratio of no more than 50%. Our mortgages, credit facilities and unsecured debt securities contain customary restrictions, requirements and other limitations on our ability to incur indebtedness. The Company's charter documents do not limit the amount or percentage of indebtedness that we may incur. We have not established any limit on the number or amount of mortgages that may be placed on any single property or on our portfolio as a whole.

We consider a number of factors when evaluating our level of indebtedness and when making decisions regarding the incurrence of indebtedness, including the purchase price of properties to be acquired with debt financing, the estimated market value of our properties upon refinancing and the ability of particular properties and the Partnership as a whole to generate cash flow to cover expected debt service.

Working Capital Reserves

We will maintain working capital reserves (and when not sufficient, access to borrowings) in amounts that our management determines to be adequate to meet normal contingencies in connection with our business and investments.

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Policies with Respect to Other Activities

We expect the Company to issue additional common and preferred shares of beneficial interest in the future, and in turn we may issue additional common and preferred units of limited partnership interest to the Company in exchange for the net proceeds of such issuances or to persons who contribute their direct or indirect interests in properties to us in exchange for such units. We have not engaged in trading, underwriting or agency distribution or sale of securities of unaffiliated issuers and we do not intend to do so. We may make loans to third parties, including to joint ventures in which we participate. Our policies with respect to such activities may be reviewed and modified from time to time by the Company's Board of Trustees.

Management Activities

We conduct our third-party real estate management services business through Brandywine Realty Services Corporation (the “Management Company”), a taxable REIT subsidiary, which performs management and leasing services for 39 properties owned by third-parties and certain of the Real Estate Ventures. We own a 95% interest of the Management Company. The remaining 5% of the Management Company is owned by a partnership comprised of a current executive and former executive of the Company, each of whom is a member of the Company's Board of Trustees. As of December 31, 2004, the Management Company was managing properties containing an aggregate of approximately 22.7 million net rentable square feet, of which approximately 19.2 million net rentable square feet related to Properties owned by us and approximately 3.5 million net rentable square feet related to properties owned by third parties and certain of the Real Estate Ventures.

Geographic Segments

We currently manage our portfolio of Properties within five segments: (1) Pennsylvania–West, (2) Pennsylvania–North, (3) New Jersey, (4) Urban and (5) Virginia. The Pennsylvania–West segment includes properties in Chester, Delaware and Montgomery counties in the suburbs of Philadelphia, Pennsylvania. The Pennsylvania–North segment includes properties north of Philadelphia in Berks, Bucks, Cumberland, Dauphin, Lehigh and Montgomery counties. The New Jersey segment includes properties in Bucks County, Pennsylvania and counties in the southern part of New Jersey, including Burlington, Camden and Mercer counties. The Urban segment includes properties within the city of Philadelphia, Pennsylvania and in the state of Delaware. The Virginia segment includes properties primarily in Albemarle, Chesterfield and Henrico counties, the City of Richmond and Durham, North Carolina.

Competition

The real estate business is highly competitive. Our Properties compete for tenants with similar properties primarily on the basis of location, total occupancy costs (including base rent and operating expenses), services provided, and the design and condition of the improvements. We also face competition when attempting to acquire or develop real estate, including competition from domestic and foreign financial institutions, other REIT’s, life insurance companies, pension funds, partnerships and individual investors. Additionally, our ability to compete depends upon, among other factors, trends in the economies of our markets, investment alternatives, the financial condition and operating results of current and prospective tenants, availability and cost of capital, construction and renovation costs, land availability, satisfactory completion of construction approvals, taxes, governmental regulations, legislation and population trends.

Employees

As of December 31, 2004, we had 294 full-time employees, including 14 union employees.

Environmental Regulations

As an owner and operator of real estate, we are subject to various environmental laws of federal, state and local governments. Compliance with existing laws has not had a material adverse effect on our financial condition and results of operations, and management does not believe it will have such an impact in the future. However, we cannot predict the impact of unforeseen environmental contingencies or new or changed laws or regulations on our Properties, properties that we have sold or on properties that we may acquire in the future. See Item 1. Business-“Risk Factors – Environmental problems at the Properties are possible and may be costly.”

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Other

We do not have any foreign operations and our business is not seasonal. Our operations are not dependent on a single tenant or a few tenants and no single tenant accounted for more than 10% of our total 2004 revenue.

Code of Conduct

The Company maintains a Code of Business Conduct and Ethics applicable to the Company’s Board and all of its officers and employees, including its principal executive officer, principal financial officer, principal accounting officer, controller or persons performing similar functions. A copy of the Code of Business Conduct and Ethics is available on the Company’s website, www.brandywinerealty.com. In addition to being accessible through our website, copies of the Code of Business Conduct and Ethics can be obtained, free of charge, upon written request to Investor Relations, 401 Plymouth Road, Suite 500, Plymouth Meeting, PA 19462. Any amendments to or waivers of the Code of Business Conduct and Ethics that apply to the principal executive officer, the principal financial officer, the principal accounting officer, the controller or persons performing similar functions and that relate to any matter enumerated in Item 406(b) of Regulation S-K will be disclosed on our website. The reference to the website address does not constitute incorporation by reference of the information contained in the website and such information should not be considered to be part of this document.

Availability of SEC Reports

We file annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K and other information with the SEC. Members of the public may read and copy materials that we file with the SEC at the SEC’s Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. Members of the public may also obtain information on the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet web site that contains reports, proxy and information statements and other information regarding issuers, including us, that file electronically with the SEC. The address of that site is http://www.sec.gov. Our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K and other information filed by us with the SEC are available, without charge, on the Company’s Internet web site, http://www.brandywinerealty.com, as soon as reasonably practicable after they are filed electronically with the SEC. Copies are also available, without charge, from Secretary, Brandywine Realty Trust, 401 Plymouth Road, Suite 500, Plymouth Meeting, PA 19462.

Risk Factors

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. Certain information included in this Annual Report on Form 10-K and other materials filed by us with the SEC (as well as information included in oral statements or other written statements made or to be made by us) contain statements that are forward-looking, such as statements relating to business and real estate development activities, acquisitions, dispositions, future capital expenditures, financing sources and availability, and the effects of regulation (including environmental regulation) and competition. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be achieved. As forward-looking statements, these statements involve important risks, uncertainties and other factors that could cause actual results to differ materially from the expected results and, accordingly, such results may differ from those expressed in any forward-looking statements made by or on behalf of us. Factors that could cause actual results to differ materially from our expectations include, but are not limited to, changes in general economic conditions, changes in local real estate conditions (including changes in rental rates and the number of competing properties), changes in the economic conditions affecting industries in which our principal tenants compete, our failure to lease unoccupied space in accordance with our projections, our failure to re-lease occupied space upon expiration of leases, the bankruptcy of major tenants, changes in prevailing interest rates, the unavailability of equity and debt financing, unanticipated costs associated with the acquisition and integration of our acquisitions, unanticipated costs to complete and lease-up pending developments, increased costs for, or lack of availability of, adequate insurance, including for terrorist acts, demand for tenant services beyond those traditionally provided by landlords, potential liability under environmental or other laws, the existence of complex regulations relating to the Company’s status as a REIT and to our acquisition, disposition and development activities, the adverse consequences of the Company’s failure to qualify as a REIT and the other risks identified in this “Risk Factors” section and elsewhere in this Annual Report on Form 10-K. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. We assume no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

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Our performance is subject to risks associated with our Properties and with the real estate industry.

Our economic performance and the value of our real estate assets, and consequently the value of our securities, are subject to the risk that if our Properties do not generate revenues sufficient to meet our operating expenses, including debt service and capital expenditures, our cash flow and ability to pay distributions to our partners will be adversely affected. Events or conditions beyond our control that may adversely affect our operations or the value of our Properties include:

•

downturns in the national, regional and local economic climate;


	•	competition from other office, industrial and commercial buildings;


	•	local real estate market conditions, such as oversupply or reduction in demand for office, or other commercial or industrial space;


	•	changes in interest rates and availability of financing;


	•	vacancies, changes in market rental rates and the need to periodically repair, renovate and re-lease space;


	•	increased operating costs, including insurance expense, utilities, real estate taxes, state and local taxes and heightened security costs;


	•	civil disturbances, earthquakes and other natural disasters, or terrorist acts or acts of war which may result in uninsured or underinsured losses;


	•	significant expenditures associated with each investment, such as debt service payments, real estate taxes, insurance and maintenance costs which are generally not reduced when circumstances cause a reduction in revenues from a property; and


	•	declines in the financial condition of our tenants and our ability to collect rents from our tenants.

Our performance is dependent upon the economic conditions of the Mid-Atlantic markets in which our Properties are located.

Our properties are located primarily in and around Philadelphia, Pennsylvania; Wilmington, Delaware; Southern and Central New Jersey; and Richmond, Virginia. Because our Properties are not dispersed throughout a broad geographic area and nearly all of our revenues are derived from these core Mid-Atlantic markets, we are especially sensitive to adverse economic developments in any of these regions. Like other real estate markets, these markets have experienced economic downturns in the past, and have recently experienced a downturn similar to the broader economic slowdown in the U.S. Such a downturn can lead to lower occupancy rates and, consequently, downward pressure on rental rates. Difficult economic conditions can also cause companies to experience difficulty with their cash flow, which might cause them to delay or miss making their lease payments, or result in their insolvency or bankruptcy. Furthermore, such a climate might affect the timing of lease commitments by new tenants or lease renewals by existing tenants, as such parties delay or defer their leasing decisions in order to get the most current information possible about trends in their businesses or industries. A prolonged decline in the economies of one or more of our core real estate markets, or in the U.S. economy as a whole, could adversely affect our financial position, results of operations, cash flow and ability to make distributions to partners.

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We may experience increased operating costs, which might reduce our profitability.

Our Properties are subject to increases in operating expenses such as for cleaning, electricity, heating, ventilation and air conditioning, administrative costs and other costs associated with security, landscaping and repairs and maintenance of our Properties. In general, under our leases with tenants, we pass on all or a portion of these costs to them. We cannot assure you, however, that tenants will actually bear the full burden of these higher costs, or that such increased costs will not lead them, or other prospective tenants, to seek office space elsewhere. If operating expenses increase, the availability of other comparable office space in our core geographic markets might limit our ability to increase rents; if operating expenses increase without a corresponding increase in revenues, our profitability could diminish and limit our ability to make distributions to partners.

Our investment in property development or redevelopment may be more costly than we anticipate.

We intend to continue to develop properties where market conditions warrant such investment. As of December 31, 2004, we had six projects in development or redevelopment, including our construction of the Cira Centre in Philadelphia’s University City district. We expect our total investment in these developments to be approximately $221.3 million, of which $112.3 million had been incurred as of December 31, 2004.

Once made, our investments may not produce results in accordance with our expectations. Risks associated with our current and future development and construction activities include:

•

the unavailability of favorable financing alternatives in the private and public debt markets;


	•	construction costs exceeding original estimates due to rising interest rates and increases in the costs of materials and labor;


	•	construction and lease-up delays resulting in increased debt service, fixed expenses and construction or renovation costs;


	•	expenditure of funds and devotion of management’s time to projects that we do not complete;


	•	occupancy rates and rents at newly completed properties may fluctuate depending on a number of factors, including market and economic conditions, resulting in lower than projected rental rates and a corresponding lower return on our investment; and


	•	complications (including building moratoriums and anti-growth legislation) in obtaining necessary zoning, occupancy and other governmental permits.

For additional information on development risks, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Overview – Development Risk.”

We face risks associated with property acquisitions.

We have in the past acquired, and intend in the future to acquire, properties and portfolios of properties, including large portfolios that would increase our size and potentially alter our capital structure. We completed one such transaction in the third quarter of 2004 with our acquisition of a portfolio of 14 office properties located in Pennsylvania and Delaware for a purchase price of approximately $600 million which we financed through a combination of debt and equity issuances. Although we believe that our purchase of this office portfolio and other acquisitions that we have completed in the past and that we expect to undertake in the future have and will enhance our future financial performance, the success of such transactions is subject to a number of factors, including the risk that:

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• we may not be able to obtain financing for acquisitions on favorable terms;

• acquired properties may fail to perform as expected;

• the actual costs of repositioning or redeveloping acquired properties may be higher than our estimates;

• acquired properties may be located in new markets where we may have limited knowledge and understanding of the local economy, an absence of business relationships in the area or unfamiliarity with local governmental and permitting procedures; and

• we may not be able to efficiently integrate acquired properties, particularly portfolios of properties, into our organization and to manage new properties in a way that allows us to realize cost savings and synergies.

Acquired properties may subject us to unknown liabilities.

Properties that we acquire may be subject to unknown liabilities for which we would have no recourse, or only limited recourse, to the former owners of such properties. As a result, if a liability were asserted against us based upon ownership of an acquired property, we might be required to pay significant sums to settle it, which could adversely affect our financial results and cash flow. Unknown liabilities relating to acquired properties could include:

•

liabilities for clean-up of undisclosed environmental contamination;


	•	claims by tenants, vendors or other persons arising on account of actions or omissions of the former owners of the properties; and


	•	liabilities incurred in the ordinary course of business.

We have agreed not to sell certain of our Properties.

We have agreed not to sell several of our Properties, including all 14 of the TRC Properties that we acquired in the third quarter of 2004, for varying periods of time, in transactions that would trigger taxable income to their former owners, and we may enter into similar arrangements as a part of future property acquisitions. Some of these tax protection agreements are with affiliates of one of the trustees of the Company. These agreements generally provide that we may dispose of the subject Properties only in transactions that qualify as tax-free exchanges under Section 1031 of the Internal Revenue Code of 1986 (the “Code”) or in other tax deferred transactions. Such transactions can be difficult to complete and can result in the property acquired in exchange for the disposed of property inheriting the tax attributes (including tax protection covenants) of the disposed of property. Violation of these tax protection agreements would impose significant costs on us. As a result, we will be restricted with respect to decisions such as financing, encumbering, expanding or selling these Properties.

We may be unable to renew leases or re-lease space as leases expire.

If tenants do not to renew their leases upon expiration, we may be unable to re-lease the space. Even if the tenants do renew their leases or if we can re-lease the space, the terms of renewal or re-leasing (including the cost of required renovations) may be less favorable than current lease terms. Certain leases grant the tenants an early termination right upon payment of a termination penalty. For additional detail on the risk of non-renewal of expiring leases, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Overview – Tenant Rollover Risk.”

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We face significant competition from other real estate developers.

We compete with real estate developers, operators and institutions for tenants and acquisition and development opportunities. Some of these competitors have significantly greater financial resources than we do. Such competition may reduce the number of suitable investment opportunities offered to us, may interfere with our ability to attract and retain tenants and may increase vacancies, which could result in increased supply and lower market rental rates, reducing our bargaining leverage and adversely affecting our ability to improve our operating leverage. In addition, some of our competitors may be willing, because their properties may have vacancy rates higher than those for our Properties, to make space available at lower prices than available space in our Properties. We cannot assure you that this competition will not adversely affect our cash flow and ability to make distributions to partners.

Property ownership through joint ventures may limit our ability to act exclusively in our interests.

We intend to develop and acquire properties in joint ventures with other persons or entities when we believe circumstances warrant the use of such structures. We currently have investments in nine unconsolidated Real Estate Ventures and two additional real estate ventures that are consolidated in our financial statements. Our investments in these 11 ventures aggregated approximately $14.9 million (net of returns of investment amounts) as of December 31, 2004. We could become engaged in a dispute with one or more of our joint venture partners that might affect our ability to operate a jointly-owned property. Moreover, our joint venture partners may, at any time, have business, economic or other objectives that are inconsistent with our objectives, including objectives that relate to the appropriate timing and terms of any sale or refinancing of a property. In some instances, our joint venture partners may have competing interests in our markets that could create conflicts of interest. If the objectives of our joint venture partners are inconsistent with ours, we will not be able to act exclusively in our interests.

Because real estate is illiquid, we may not be able to sell Properties when appropriate.

Real estate investments generally, and in particular large office and industrial properties like those that we own, often cannot be sold quickly. Consequently, we may not be able to alter our portfolio promptly in response to changes in economic or other conditions. In addition, the Code limits our ability to sell Properties that we have held for fewer than four years without resulting in adverse consequences to our partners. Furthermore, Properties that we developed and have owned for a significant period of time or that we acquired in exchange for units often have a low tax basis. If we were to dispose of any of these Properties in a taxable transaction, the Company may be required under provisions of the Code applicable to REITs to distribute a significant amount of the taxable gain to its shareholders and this could, in turn, impact our cash flow and ability to make distributions to partners. In some cases, tax protection agreements prevent us from selling certain Properties without incurring substantial costs (see “Risk Factors-We have agreed not to sell certain of our Properties” above). In addition, purchase options and rights of first refusal held by tenants or partners in joint ventures may also limit our ability to sell certain Properties. All of these factors reduce our ability to respond to changes in the performance of our investments and could adversely affect our cash flow and ability to make distributions to partners as well as the ability of someone to purchase us, even if a purchase were in our partners’ best interests.

We may suffer adverse consequences due to the financial difficulties, bankruptcy or insolvency of our tenants.

If one or more of our tenants were to experience financial difficulties, including bankruptcy, insolvency or a general downturn of business, there could be an adverse effect on our financial performance and distributions to partners. We cannot assure you that any tenant that files for bankruptcy protection will continue to pay us rent. A bankruptcy filing by or relating to one of our tenants or a lease guarantor would bar all efforts by us to collect pre-bankruptcy debts from that tenant or lease guarantor, or their property, unless we receive an order permitting us to do so from the bankruptcy court. In addition, we cannot evict a tenant solely because of its bankruptcy. The bankruptcy of a tenant or lease guarantor could delay our efforts to collect past due balances under the relevant leases, and could ultimately preclude collection of these sums. If a lease is assumed by the tenant in bankruptcy, all pre-bankruptcy balances due under the lease must be paid to us in full. If, however, a lease is rejected by a tenant in bankruptcy, we would have only a general unsecured claim for damages. Any such unsecured claim would only be paid only to the extent that funds are available and only in the same percentage as is paid to all other holders of unsecured claims; restrictions under the bankruptcy laws further limit the amount of any other claims that we can make if a lease is rejected. As a result, it is likely that we would recover substantially less than the full value of any such unsecured claims that we might hold. For additional detail on tenant credit risk, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Overview – Tenant Credit Risk.”

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Some potential losses are not covered by insurance.

We carry comprehensive liability, fire, extended coverage and rental loss insurance on all of our Properties. We believe the policy specifications and insured limits of these policies are adequate and appropriate. There are, however, types of losses, such as lease and other contract claims and terrorism and acts of war, that generally are not insured. We cannot assure you that we will be able to renew insurance coverage in an adequate amount or at reasonable prices. In addition, insurance companies may no longer offer coverage against certain types of losses, such as losses due to terrorist acts and mold, or, if offered, these types of insurance may be prohibitively expensive. Should an uninsured loss or a loss in excess of insured limits occur, we could lose all or a portion of the capital we have invested in a Property, as well as the anticipated future revenue from the Property. In such an event, we might nevertheless remain obligated for any mortgage debt or other financial obligations related to the Property. We cannot assure you that material losses in excess of insurance proceeds will not occur in the future. If any of our Properties were to experience a catastrophic loss, it could seriously disrupt our operations, delay revenue and result in large expenses to repair or rebuild the Property. Such events could adversely affect our cash flow and ability to make distributions to partners.

Terrorist attacks and other acts of violence or war may adversely impact our performance and may affect the markets on which our securities are traded.

Terrorist attacks against our Properties, or against the United States or its interests, may negatively impact our operations and the value of our securities. Attacks or armed conflicts could result in increased operating costs; for example, it might cost more in the future for building security, property/casualty and liability insurance, and property maintenance. Following the September 11, 2001 terrorist attacks, we increased the level of security at our Properties and we continue to reevaluate our security infrastructure. As a result of terrorist activities and other market conditions, the cost of insurance coverage for our Properties could also increase. We might not be able to pass along the increased costs associated with such increased security measures and insurance to our tenants, which could reduce our profitability and cash flow. Furthermore, any terrorist attacks or armed conflicts could result in increased volatility in or damage to the United States and worldwide financial markets and economy. Such adverse economic conditions could affect the ability of our tenants to pay rent, which could have a negative impact on our results.

Our ability to make distributions is subject to various risks.

Historically, we have paid quarterly distributions to our partners. Our ability to make distributions in the future will depend upon:

•

the operational and financial performance of our Properties;


	•	capital expenditures with respect to existing and newly acquired Properties;


	•	general and administrative costs associated with the Company’s operation as a publicly-held REIT;


	•	the amount of, and the interest rates on, our debt; and


	•	the absence of significant expenditures relating to environmental and other regulatory matters.

Certain of these matters are beyond our control and any significant difference between our expectations and actual results could have a material adverse effect on our cash flow and our ability to make distributions to partners.

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Changes in the law may adversely affect our cash flow.

Because increases in income and service taxes are generally not passed through to tenants under leases, such increases may adversely affect our cash flow and ability to make expected distributions to shareholders. The Properties are also subject to various regulatory requirements, such as those relating to the environment, fire and safety. Our failure to comply with these requirements could result in the imposition of fines and damage awards and default under some of our tenant leases. Moreover, the costs to comply with any new or different regulations could adversely affect our cash flow and our ability to make distributions. Although we believe that the Properties are currently in material compliance with all such requirements, we cannot assure you that these requirements will not change or that newly imposed requirements will not require significant unanticipated expenditures.

The terms and covenants relating to our existing indebtedness could adversely impact our economic performance.

Like other real estate companies which incur debt, we are subject to risks normally associated with debt financing, such as the insufficiency of cash flow to meet required debt service payment obligations and the inability to refinance existing indebtedness. If our debt cannot be paid, refinanced or extended at maturity, in addition to our failure to repay our debt, we may not be able to make distributions to shareholders at expected levels or at all. Furthermore, an increase in our interest expense could adversely affect our cash flow and ability to make distributions to partners. If we do not meet our debt service obligations, any Properties securing such indebtedness could be foreclosed on, which would have a material adverse effect on our cash flow and ability to make distributions and, depending on the number of Properties foreclosed on, could threaten our continued viability.

Our credit facility and the indenture governing our unsecured debt securities contain customary restrictions, requirements and other limitations on our ability to incur indebtedness, including total debt to asset ratios, secured debt to total asset ratios, debt service coverage ratios and minimum ratios of unencumbered assets to unsecured debt which we must maintain. Our continued ability to borrow under our credit facility is subject to our compliance with such financial and other covenants. In the event that we would fail to satisfy these covenants, we would be in default under the credit facility and indenture, and may be required to repay such debt with capital from other sources. Under such circumstances, other sources of capital may not be available to us, or be available only on unattractive terms.

As of December 31, 2004, we had outstanding borrowings of approximately $173.2 million bearing interest at variable rates. Increases in interest rates on variable rate indebtedness would increase our interest expense, which could adversely affect our cash flow and ability to make distributions to partners. Rising interest rates could also restrict our ability to refinance existing debt when it matures. In addition, an increase in interest rates could decrease the amounts that third parties are willing to pay for our assets, thereby limiting our ability to alter our portfolio promptly in relation to economic or other conditions. We may, from time to time, enter into agreements such as interest rate hedges, swaps, floors, caps and other interest rate hedging contracts with respect to a portion of our variable rate debt. Although these agreements may lessen the impact of rising interest rates on us, they also expose us to the risk that other parties to the agreements will not perform or that we cannot enforce the agreements.

Our degree of leverage could limit our ability to obtain additional financing or affect the market price of the Company’s common shares or our debt securities.

Our degree of leverage could affect our ability to obtain additional financing for working capital expenditures, development, acquisitions or other general corporate purposes. Our senior unsecured debt is currently rated investment grade by the three major rating agencies. We cannot, however, assure you that we will be able to maintain this rating. In the event that our senior unsecured debt were to be downgraded from its current rating, we would likely incur higher borrowing costs and the market prices of the Company’s common shares and our debt securities might decline. Our degree of leverage could also make us more vulnerable to a downturn in business or the economy generally.

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Environmental problems at the Properties are possible and may be costly.

Federal, state and local laws, ordinances and regulations may require a current or previous owner or operator of real estate to investigate and clean up hazardous or toxic substances or releases at such property. The owner or operator may be forced to pay for property damage and for investigation and clean-up costs incurred by others in connection with environmental contamination. Such laws typically impose clean-up responsibility and liability without regard to whether the owner or operator knew of or caused the presence of the contaminants. Even if more than one person may have been responsible for the contamination, each person subject to the environmental laws may be held responsible for all of the clean-up costs incurred. In addition, third parties may sue the owner or operator of a site for damages and costs resulting from environmental contamination emanating from that site. These costs may be substantial and the presence of such substances may adversely affect the owner’s ability to sell or rent such property or to borrow using such property as collateral.

Environmental laws that govern the presence, maintenance and removal of asbestos require that owners or operators of buildings containing asbestos properly manage and maintain the asbestos, notify and train those who may come into contact with asbestos and undertake special precautions, including removal or other abatement, if asbestos would be disturbed during renovation or demolition of a building. Such laws may impose fines and penalties on building owners or operators who fail to comply with these requirements and may allow third parties to seek recovery from owners or operators for personal injury associated with exposure to asbestos fibers.

Independent environmental consultants have conducted a standard Phase I or similar general environmental site assessment (“ESA”) for each of our Properties to identify potential sources of environmental contamination and assess environmental regulatory compliance. For a number of our Properties, the Phase I ESA either referenced a prior Phase II ESA obtained on such Property or prompted us to have a Phase II ESA of such Property conducted. A Phase II ESA generally involves invasive procedures, such as soil sampling and testing or the installation and monitoring of groundwater wells. Although the ESAs that have been conducted identified environmental contamination on a few of our Properties, they have not revealed any environmental contamination, liability or compliance concern that we believe would have a material adverse effect on our cash flow or ability to make distributions to partners. It is possible that the existing ESAs of our Properties do not reveal all environmental contaminations, liabilities or compliance concerns which currently exist, and it is also possible that the cost of remediating identified contamination may exceed current estimates. In addition, future properties which we acquire may be subject to environmental conditions.

Although we have an ongoing maintenance program in place to address indoor air quality, inquiries about indoor air quality may necessitate special investigation and, depending upon the results, remediation. Indoor air quality issues can stem from inadequate ventilation, chemical contaminants from indoor or outdoor sources, and biological contaminants such as molds, pollen, viruses and bacteria. Indoor exposure to chemical or biological contaminants above certain levels has been alleged to be connected to allergic reactions or other health effects and symptoms in susceptible individuals. If these conditions occur at one of our Properties, we may need to undertake a targeted remediation program, including without limitation, taking steps to increase indoor ventilation rates and eliminate sources of contaminants. Such remediation programs are costly and could necessitate the temporary relocation of some or all of the affected Property’s tenants or require rehabilitation of that Property.

Americans with Disabilities Act compliance could be costly.

The Americans with Disabilities Act of 1990 (“ADA”) requires that all public accommodations and commercial facilities, including office buildings, meet certain federal requirements related to access and use by disabled persons. Compliance with ADA requirements could involve the removal of structural barriers from certain disabled persons’ entrances which could adversely affect our financial condition and results of operations. Other federal, state and local laws may require modifications to or restrict further renovations of our Properties with respect to such accesses. Although we believe that our Properties are currently in material compliance with present requirements, noncompliance with the ADA or similar or related laws or regulations could result in the United States government imposing fines or private litigants being awarded damages against us. In addition, we do not know whether existing requirements will change or whether compliance with future requirements will require significant unanticipated expenditures. Such costs may adversely affect our cash flow and ability to make distributions to partners.

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Brandywine Realty Trust’s status as a REIT is dependent on compliance with federal income tax requirements.

Brandywine Realty Trust’s failure to qualify as a REIT would have serious adverse consequences to holders of our securities. We believe that since 1986 our general partner has qualified for taxation as a REIT for federal income tax purposes. Brandywine Realty Trust plans to continue to meet the requirements for taxation as a REIT. Many of these requirements are highly technical and complex. The determination that Brandywine Realty Trust is a REIT requires an analysis of various factual matters and circumstances that may not be totally within its or our control. For example, to qualify as a REIT, at least 95% of Brandywine Realty Trust’s gross income must come from certain sources that are itemized in the REIT tax laws. Brandywine Realty Trust is also required to distribute to shareholders at least 90% of its REIT taxable income (excluding net capital gains). The fact that Brandywine Realty Trust holds its assets through us and our subsidiaries further complicates the application of the REIT requirements. Even a technical or inadvertent mistake could jeopardize Brandywine Realty Trust’s REIT status. Furthermore, Congress and the IRS might change the tax laws and regulations, and the courts might issue new rulings that make it more difficult, or impossible, for Brandywine Realty Trust to remain qualified as a REIT. We do not believe, however, that any pending or proposed tax law changes would jeopardize Brandywine Realty Trust’s REIT status.

To maintain REIT status, a REIT may not own more than 10% of the securities of any corporation, except for a qualified REIT subsidiary (which must be wholly owned by the REIT), taxable REIT subsidiary or another REIT.

If Brandywine Realty Trust fails to qualify as a REIT, it would be subject to federal income tax at regular corporate rates. Also, unless the IRS granted Brandywine Realty Trust relief under certain statutory provisions, Brandywine Realty Trust would remain disqualified as a REIT for four years following the year it first failed to qualify. If Brandywine Realty Trust failed to qualify as a REIT, it would be required to pay significant income taxes which would directly and adversely impact the Partnership and substantially reduce funds available for distribution. This would likely have a material adverse effect on the value of our securities.

In order to make the distributions required to maintain its REIT status, Brandywine Realty Trust may need to borrow funds. To obtain the favorable tax treatment associated with REIT qualification, Brandywine Realty Trust generally will be required to distribute to its shareholders at least 90% of its annual REIT taxable income (excluding net capital gains). In addition, Brandywine Realty Trust will be subject to tax on its undistributed net taxable income and net capital gain and a 4% nondeductible excise tax on the amount, if any, by which certain distributions paid by it with respect to any calendar year are less than the sum of 85% of ordinary income plus 95% of capital gain net income for the calendar year, plus certain undistributed amounts from prior years.

Brandywine Realty Trust intends to make distributions to its shareholders to comply with the distribution provisions of the Code and to avoid income and other taxes. Its income will consist primarily of its share of the income of the Partnership and its cash flow will consist primarily of its share of distributions from the Partnership. Differences in timing between the receipt of income and the payment of expenses in arriving at taxable income (of the Partnership or Brandywine Realty Trust) and the effect of required debt amortization payments could require Brandywine Realty Trust to borrow funds on a short-term basis or to liquidate funds on adverse terms to meet the REIT qualification distribution requirements.

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Failure of the Partnership (or a subsidiary partnership) to be treated as a partnership would have serious adverse consequences to holders of our Units and other securities. If the IRS were to successfully challenge the tax status of the Partnership or any of its subsidiary partnerships for federal income tax purposes, the Partnership or the affected subsidiary partnership would be taxable as a corporation. In such event, Brandywine Realty Trust would cease to qualify as a REIT and the imposition of a corporate tax on the Partnership or a subsidiary partnership would reduce the amount of cash available for distribution from such partnership to us, our unit holders, and holders of other of our securities. This would directly and adversely impact the Partnership and substantially reduce the funds available for payment of distributions.

Even if Brandywine Realty Trust qualifies as a REIT, its required to pay certain federal, state and local taxes on its income and Properties. In addition, the Management Company is subject to federal, state and local income tax at regular corporate rates on its net taxable income derived from its management, leasing and related service business. If we have net income from a prohibited transaction, such income will be subject to a 100% tax.

One of our subsidiaries, Atlantic American Properties Trust (“AAPT”), that indirectly holds 22 of the Properties, elected to be taxed as a REIT for the year ended December 31, 1997. So long as we seek to maintain AAPT’s REIT status, AAPT will be subject to all the requirements and risks associated with maintaining REIT status summarized above, including the limitation on the ownership of more than 10% of the securities of any corporation (other than a qualified REIT subsidiary, taxable REIT subsidiary or another REIT).

We are dependent upon our key personnel.

We are dependent upon our key personnel whose continued service is not guaranteed. We are dependent on the Company’s executive officers for strategic business direction and real estate experience. Although we believe that we could find replacements for these key personnel, loss of their services could adversely affect our operations. Although we have an employment agreement with Gerard H. Sweeney, the President and Chief Executive Officer of the Company, for a term extending to May 7, 2008, this agreement does not restrict his ability to become employed by a competitor following the termination of his employment. We do not have key man life insurance coverage on the Company’s executive officers.

Certain limitations exist with respect to a third party’s ability to acquire the Company or effectuate a change in control of the Company, which could be detrimental to holders of our units.

Limitations imposed to protect Brandywine Realty Trust’s REIT status. In order to protect Brandywine Realty Trust against loss of its REIT status, its Declaration of Trust limits any shareholder from owning more than 9.8% in value of its outstanding shares, subject to certain exceptions. The ownership limit may have the effect of precluding acquisition of control of Brandywine Realty Trust. If anyone acquires shares in excess of the ownership limit, Brandywine Realty Trust may:

•

consider the transfer to be null and void;


	•	not reflect the transaction on its books;


	•	institute legal action to stop the transaction;


	•	not pay dividends or other distributions with respect to those shares;


	•	not recognize any voting rights for those shares; and


	•	consider the shares held in trust for the benefit of a person to whom such shares may be transferred.

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Limitation due to Brandywine Realty Trust’s ability to issue preferred shares. Brandywine Realty Trust’s Declaration of Trust authorizes its Board of Trustees to issue preferred shares, without limitation as to amount. The Company’s Board of Trustees may establish the preferences and rights of any preferred shares issued which could have the effect of delaying or preventing someone from taking control of Brandywine Realty Trust, even if a change in control were in its shareholders’ best interests.

Limitations imposed by the Maryland Business Combination Law. The Maryland General Corporation Law, as applicable to Maryland real estate investment trusts, establishes special restrictions against “business combinations” between a Maryland real estate investment trust and “interested shareholders” or their affiliates unless an exemption is applicable. An interested shareholder includes a person who beneficially owns, and an affiliate or associate of the trust who, at any time within the two-year period prior to the date in question, was the beneficial owner of, ten percent or more of the voting power of Brandywine Realty Trust’s then-outstanding voting shares. Among other things, the law prohibits (for a period of five years) a merger and certain other transactions between the trust and an interested shareholder unless the Board of Trustees approved the transaction before the party became an interested shareholder. The five-year period runs from the most recent date on which the interested shareholder became an interested shareholder. Thereafter, any such business combination must be recommended by the Board of Trustees and approved by two super-majority shareholder votes unless, among other conditions, the trust’s common shareholders receive a minimum price for their shares and the consideration is received in cash or in the same form as previously paid by the interested shareholder for its shares or unless the Board of Trustees approved the transaction before the party in question became an interested shareholder. The business combination statute could have the effect of discouraging offers to acquire Brandywine Realty Trust and of increasing the difficulty of consummating any such offers, even if the acquisition would be in the best interest of the shareholders of Brandywine Realty Trust. Brandywine Realty Trust was exempted any business combination involving Safeguard Scientifics, Inc., the Commonwealth of Pennsylvania State Employees’ Retirement System and a voting trust established for its benefit, Morgan Stanley Asset Management Inc. and two funds managed by it, Lazard Freres Real Estate Investors, L.L.C., Five Arrows Realty Securities III L.L.C., Gerard H. Sweeney (the President and Chief Executive Officer of Brandywine Realty Trust) and any of their respective affiliates or associates.

Maryland Control Share Acquisition Act. Maryland law provides that “control shares” of a real estate investment trust acquired in a “control share acquisition” shall have no voting rights except to the extent approved by a vote of two-thirds of the vote eligible to be cast on the matter under the Maryland Control Share Acquisition Act. “Control Shares” means shares that, if aggregated with all other shares previously acquired by the acquirer, would entitle the acquirer to exercise voting power in electing trustees within one of the following ranges of voting power: one-tenth or more but less than one-third, one-third or more but less than a majority or a majority or more of all voting power. A “control share acquisition” means the acquisition of control shares, subject to certain exceptions. If voting rights or control shares acquired in a control share acquisition are not approved at a shareholder’s meeting, then subject to certain conditions and limitations the issuer may redeem any or all of the control shares for fair value. If voting rights of such control shares are approved at a shareholder’s meeting and the acquirer becomes entitled to vote a majority of the shares entitled to vote, all other shareholders may exercise appraisal rights. Any control shares acquired in a control share acquisition which are not exempt under the bylaws of Brandywine Realty Trust will be subject to the Maryland Control Share Acquisition Act. Brandywine Realty Trust’s bylaws contain a provision exempting from the control share acquisition statute any and all acquisitions by any person of its shares. There can be no assurance that this provision will not be amended or eliminated at any time in the future.

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Item 2. Properties

Property Acquisitions

We acquired the following properties during the year ended December 31, 2004:

Month of Acquisition	Property/Portfolio Name	Location	# of Buildings	Rentable Square Feet/Acres		Purchase Price

						(in 000’s)
Office Properties:
Jul-04	Five Greentree	Marlton, NJ	1	169,534	$	18,353
Sep-04	TRC Properties	Radnor/ Philadelphia/ Wilmington	14	3,511,267		600,000

	Total Office Properties Acquired		15	3,680,801	$	618,353

Land Parcels:
Sep-04	Newtown Land	Newtown, PA	—	58.4	$	4,500

	Total Land Acquired		—	58.4	$	4,500

The purchase price above does not include transaction costs. Regarding the TRC portfolio, the purchase price does not include a maximum of $9.7 million of additional Class A Units that we agreed to issue if certain of the TRC Properties achieve at least 95% occupancy prior to September 21, 2007.

Development Properties Placed in Service

We placed in service the following properties during the year ended December 31, 2004:

Month Placed in Service	Property/Portfolio Name	Location	# of Buildings	Rentable Square Feet


Office Properties:
Jul-04	6990 Snowdrift Road (Bldg A)	Allentown, PA	1	44,200
Dec-04	7535 Windsor Drive.	Allentown, PA	1	128,061

	Total Properties Placed in Service		2	172,261

We place a property under development in service once a property reaches 95% occupancy or one year after the completion of shell construction, whichever is earlier.

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Property Sales and Dispositions

We sold or disposed of the following properties during the year ended December 31, 2004:

Month of Sale	Property/Portfolio Name	Location	# of Bldgs.	Rentable Square Feet/ Acres		Sales/Disposition Price

						(in 000’s)
Office Properties:
Mar-04	2201 Dabney Road	Richmond, VA	1	45,000	$	2,100
Mar-04	1255 Broad Street	Bloomfield, NJ	1	37,478		3,960
Jun-04	935 First Avenue	King of Prussia, PA	1	103,090		17,000
Dec-04	55 U.S. Avenue	Gibbsboro, NJ	1	138,982		5,550

	Total Office Properties Sold		4	324,550	$	28,610

Land Parcels:
May-04	Twin Hickory Land	Richmond, VA	—	5.3	$	1,242
Aug-04	East Gate Land	Mount Laurel, NJ	—	19.4		1,300
Sep-04	Dabney Plot B Land	Richmond, VA	—	4.6		341

	Total Land Sold		—	29.3	$	2,883

The above tables exclude a purchase and sale of a land parcel totaling 93 acres in two separate transactions with unrelated third parties. The purchase and sale resulted in a net gain of approximately $1.5 million.

Properties

As of December 31, 2004, we owned 222 office properties, 23 industrial facilities and one mixed-use property that contained an aggregate of approximately 19.2 million net rentable square feet. The properties are located in the markets in and surrounding Philadelphia, Pennsylvania; Wilmington, Delaware; Southern and Central New Jersey; and Richmond, Virginia. As of December 31, 2004, the Properties were approximately 92.7% leased to 1,179 tenants and had an average age of approximately 16.8 years. The office properties are primarily two to three story suburban office buildings containing an average of approximately 80,071 net rentable square feet. The industrial properties accommodate a variety of tenant uses, including light manufacturing, assembly, distribution and warehousing. We carry comprehensive liability, fire, extended coverage and rental loss insurance covering all of the Properties, with policy specifications and insured limits which we believe are adequate.

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We had the following projects in development or redevelopment as of December 31, 2004:

Project Name	Location		% Leased as of 12/31/04			Estimated Project Completion Date	Projected In-Service Date (a)		Total Cost Incurred as of 12/31/04		Estimated Total Development Cost (b)
		Rentable Square Feet



									(in 000's)

Under Development:
Cira Centre	Philadelphia, PA	727,725	65	%		Dec-05	Dec-06	$	89,121	$	177,642
6990 Snowdrift (Bldg B)	Allentown, PA	27,900	0	%	(c)	Jan-04	Jan-05		2,538		3,337
1400 Howard Blvd.	Mount Laurel, NJ	75,590	100	%		Aug-05	Sep-05		3,425		14,581
Bishops Gate	Mount Laurel, NJ	52,986	94	%		Jul-04	Jul-05		7,550		8,253

		884,201							102,634		203,813


Under Redevelopment:
855 Springdale Drive	West Whiteland, PA	50,750	0	%		Sep-05	Sep-06		200		4,678
501 Office Center Drive	Fort Washington, PA	114,778	35	%		Oct-04	Oct-05		9,479		12,795

		165,528							9,679		17,473

		1,049,729						$	112,313	$	221,286

(a)	Projected in-service date represents the earlier of (a) the date at which the property is estimated to be 95% occupied or (b) one year from the project completion date.
(b)	Total development cost includes land acquisition costs, land carry costs, hard and soft construction costs, tenant improvements and broker commissions.
(c)	A lease was signed in February 2005 for 27,900 square feet that commences in June 2005.

The following table sets forth information with respect to the Properties at December 31, 2004.

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Property Name		Location	State	Year Built	Net Rentable Square Feet	Percentage Leased as of December 31, 2004 (a)			Total Base Rent for the Twelve Months Ended December 31, 2004 (b) (000’s)		Average Annualized Rental Rate as of December 31, 2004 (c)

PENNSYLVANIA NORTH SEGMENT
100-300 Gundy Drive		Reading	PA	1970	452,918	99.9	%	$	7,000	$	15.63
401 Plymouth Road		Plymouth Meeting	PA	2001	201,528	100.0	%		5,541		30.36
300 Corporate Center Drive		Camp Hill	PA	1989	175,280	37.6	%		2,645		16.66
111 Presidential Boulevard		Bala Cynwyd	PA	1997	172,654	82.2	%		1,933		14.09
100 Katchel Blvd		Reading	PA	1970	131,082	100.0	%		2,960		21.67
7535 Windsor Drive		Allentown	PA	1988	128,061	54.5	%		995		16.22
501 Office Center Drive	(e)	Fort Washington	PA	1974	114,778	—			—		—
7130 Ambassador Drive	(i)	Allentown	PA	1991	114,049	100.0	%		88		—
7350 Tilghman Street		Allentown	PA	1987	111,500	100.0	%		1,976		19.81
181 Washington Street	(h)	Conshohocken	PA	1999	108,456	94.4	%		2,911		32.90
920 Harvest Drive		Blue Bell	PA	1990	104,505	100.0	%		2,100		20.87
500 Office Center Drive		Fort Washington	PA	1974	101,303	83.9	%		1,728		22.34
7450 Tilghman Street		Allentown	PA	1986	100,000	81.2	%		1,403		19.69
620 West Germantown Pike		Plymouth Meeting	PA	1990	90,169	95.1	%		2,006		28.32
610 West Germantown Pike		Plymouth Meeting	PA	1987	90,152	100.0	%		2,445		31.42
630 West Germantown Pike		Plymouth Meeting	PA	1988	89,925	86.2	%		1,787		19.47
600 West Germantown Pike		Plymouth Meeting	PA	1986	89,681	97.8	%		2,161		30.25
200 Barr Harbour Drive	(h)	Conshohocken	PA	1998	86,422	95.1	%		2,267		31.25
3331 Street Road -Greenwood Square		Bensalem	PA	1986	81,575	100.0	%		1,686		21.53
One Progress Avenue		Horsham	PA	1986	79,204	100.0	%		841		11.60
323 Norristown Road		Lower Gwyned	PA	1988	76,287	97.1	%		1,486		17.53
160 – 180 West Germantown Pike		East Norriton	PA	1982	73,394	93.2	%		926		13.70
500 Enterprise Road		Horsham	PA	1990	66,751	100.0	%		588		11.90
925 Harvest Drive		Blue Bell	PA	1990	63,663	88.4	%		1,126		21.15
980 Harvest Drive		Blue Bell	PA	1988	62,379	100.0	%		1,442		25.68
3329 Street Road -Greenwood Square		Bensalem	PA	1985	60,705	89.0	%		978		20.75
200 Corporate Center Drive		Camp Hill	PA	1989	60,000	100.0	%		1,059		16.25
321 Norristown Road		Lower Gwyned	PA	1988	59,994	100.0	%		1,124		19.12
2240/50 Butler Pike		Plymouth Meeting	PA	1984	52,229	100.0	%		886		21.26
1155 Business Center Drive		Horsham	PA	1990	51,388	100.0	%		712		18.77
800 Business Center Drive		Horsham	PA	1986	51,236	100.0	%		598		15.33
7150 Windsor Drive		Allentown	PA	1988	49,420	100.0	%		595		13.66
520 Virginia Drive		Fort Washington	PA	1987	48,122	100.0	%		902		20.75
6575 Snowdrift Road		Allentown	PA	1988	47,091	100.0	%		568		13.95
220 Commerce Drive		Fort Washington	PA	1985	46,080	81.9	%		812		21.21
6990 Snowdrift Road (A)		Allentown	PA	2003	44,200	100.0	%		630		16.27
7248 Tilghman Street		Allentown	PA	1987	43,782	84.9	%		568		17.33
7360 Windsor Drive		Allentown	PA	2001	43,600	100.0	%		935		23.73
300 Welsh Road – Building I		Horsham	PA	1980	40,042	31.0	%		322		18.70
7310 Tilghman Street		Allentown	PA	1985	40,000	92.6	%		483		15.35
150 Corporate Center Drive		Camp Hill	PA	1987	39,401	92.0	%		661		17.93
755 Business Center Drive		Horsham	PA	1998	38,050	100.0	%		576		24.45
7010 Snowdrift Road		Allentown	PA	1991	33,029	80.6	%		438		16.91
2260 Butler Pike		Plymouth Meeting	PA	1984	31,892	100.0	%		565		20.76

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Property Name		Location		State		Year Built		Net Rentable Square Feet		Percentage Leased as of December 31, 2004 (a)			Total Base Rent for the Twelve Months Ended December 31, 2004 (b) (000’s)		Average Annualized Rental Rate as of December 31, 2004 (c)

700 Business Center Drive			Horsham		PA		1986		30,773		100.0	%		350		11.29
120 West Germantown Pike			Plymouth Meeting		PA		1984		30,574		100.0	%		339		12.82
650 Dresher Road			Horsham		PA		1984		30,071		100.0	%		684		22.25
655 Business Center Drive			Horsham		PA		1997		29,849		100.0	%		376		18.52
630 Dresher Road			Horsham		PA		1987		28,894		100.0	%		689		24.47
140 West Germantown Pike			Plymouth Meeting		PA		1984		25,357		90.1	%		437		22.12
3333 Street Road -Greenwood Square			Bensalem		PA		1988		25,000		100.0	%		539		22.29
800 Corporate Circle Drive			Harrisburg		PA		1979		24,862		100.0	%		395		16.37
500 Nationwide Drive			Harrisburg		PA		1977		18,027		100.0	%		324		19.00
600 Corporate Circle Drive			Harrisburg		PA		1978		17,858		100.0	%		288		16.30
300 Welsh Road - Building II			Horsham		PA		1980		17,750		100.0	%		385		22.01
2404 Park Drive			Harrisburg		PA		1983		11,000		100.0	%		107		14.63
2401 Park Drive			Harrisburg		PA		1984		10,074		100.0	%		102		17.48
George Kachel Farmhouse			Reading		PA		2000		1,664		100.0	%		22		13.00
PENNSYLVANIA WEST SEGMENT
150 Radnor Chester Road	(f)		Radnor		PA		1983		339,544		—			—		—
201 King of Prussia Road	(f)		Radnor		PA		2001		251,372		—			—		—
555 Lancaster Avenue	(f)		Radnor		PA		1973		241,892		—			—		—
One Radnor Corporate Center			Radnor		PA		1998		185,166		94.0	%		1,457		32.56
Five Radnor Corporate Center			Radnor		PA		1998		164,577		78.9	%		1,289		34.86
Four Radnor Corporate Center			Radnor		PA		1995		163,517		74.9	%		629		16.93
751-761 Fifth Avenue			King Of Prussia		PA		1967		158,000		100.0	%		499		3.16
630 Allendale Road			King of Prussia		PA		2000		150,000		100.0	%		3,678		24.80
640 Freedom Business Center	(d)		King Of Prussia		PA		1991		132,000		92.0	%		3,109		26.95
52 Swedesford Square			East Whiteland Twp.		PA		1988		131,017		100.0	%		2,800		21.08
400 Berwyn Park			Berwyn		PA		1999		124,172		65.6	%		1,713		31.46
Three Radnor Corporate Center			Radnor		PA		1998		119,194		95.5	%		1,042		33.85
101 Lindenwood Drive			Malvern		PA		1988		118,121		96.2	%		2,515		21.38
300 Berwyn Park			Berwyn		PA		1989		109,919		80.1	%		1,906		22.81
50 Swedesford Square			East Whiteland Twp.		PA		1986		109,800		100.0	%		1,928		18.87
442 Creamery Way	(i)		Exton		PA		1991		104,500		100.0	%		598		6.64
Two Radnor Corporate Center			Radnor		PA		1998		100,973		67.1	%		609		32.10
301 Lindenwood Drive			Malvern		PA		1984		97,624		85.5	%		1,763		20.51
555 Croton Road			King of Prussia		PA		1999		96,909		97.3	%		2,732		30.58
500 North Gulph Road			King Of Prussia		PA		1979		93,082		82.8	%		1,396		19.93
630 Freedom Business Center	(d)		King Of Prussia		PA		1989		86,683		100.0	%		2,011		26.41
620 Freedom Business Center	(d)		King Of Prussia		PA		1986		86,570		72.7	%		796		23.21
1200 Swedsford Road			Berwyn		PA		1994		86,000		100.0	%		2,000		27.64
595 East Swedesford Road			Wayne		PA		1998		81,890		100.0	%		2,117		26.34
1050 Westlakes Drive			Berwyn		PA		1984		80,000		100.0	%		2,415		32.85
1060 First Avenue			King Of Prussia		PA		1987		77,718		51.9	%		871		21.76
741 First Avenue			King Of Prussia		PA		1966		77,184		100.0	%		580		8.00
1040 First Avenue			King Of Prussia		PA		1985		75,488		64.0	%		1,128		23.44
200 Berwyn Park			Berwyn		PA		1987		75,025		75.6	%		1,690		27.72
1020 First Avenue			King Of Prussia		PA		1984		74,556		100.0	%		1,642		22.03

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Property Name		Location		State		Year Built		Net Rentable Square Feet		Percentage Leased as of December 31, 2004 (a)			Total Base Rent for the Twelve Months Ended December 31, 2004 (b) (000’s)		Average Annualized Rental Rate as of December 31, 2004 (c)

1000 First Avenue			King Of Prussia		PA		1980		74,139		100.0	%		1,598		23.43
436 Creamery Way			Exton		PA		1991		72,300		89.1	%		603		10.64
130 Radnor Chester Road	(f)		Radnor		PA		1983		69,548		—			—		—
14 Campus Boulevard			Newtown Square		PA		1998		69,542		100.0	%		1,460		23.42
170 Radnor Chester Road	(f)		Radnor		PA		1983		67,869		—			—		—
575 East Swedesford Road			Wayne		PA		1985		66,503		100.0	%		1,750		30.16
429 Creamery Way			Exton		PA		1996		63,420		100.0	%		760		14.03
610 Freedom Business Center	(d)		King Of Prussia		PA		1985		62,991		92.0	%		1,350		26.47
426 Lancaster Avenue			Devon		PA		1990		61,102		100.0	%		1,107		18.34
1180 Swedesford Road			Berwyn		PA		1987		60,371		100.0	%		1,728		29.74
1160 Swedesford Road			Berwyn		PA		1986		60,099		100.0	%		1,374		23.21
100 Berwyn Park			Berwyn		PA		1986		57,731		85.3	%		725		16.52
440 Creamery Way			Exton		PA		1991		57,218		100.0	%		517		12.04
640 Allendale Road	(i)		King of Prussia		PA		2000		56,034		100.0	%		350		8.16
565 East Swedesford Road			Wayne		PA		1984		55,789		76.8	%		1,094		28.79
650 Park Avenue			King Of Prussia		PA		1968		54,338		49.2	%		54		2.81
680 Allendale Road			King Of Prussia		PA		1962		52,528		100.0	%		544		12.27
486 Thomas Jones Way			Exton		PA		1990		51,372		82.7	%		791		17.68
855 Springdale Drive	(e)		Exton		PA		1986		50,750		—			—		—
660 Allendale Road	(i)		King of Prussia		PA		1962		50,635		100.0	%		365		8.86
15 Campus Boulevard			Newtown Square		PA		2002		50,000		100.0	%		1,338		26.43
875 First Avenue			King Of Prussia		PA		1966		50,000		100.0	%		1,038		19.16
630 Clark Avenue			King Of Prussia		PA		1960		50,000		100.0	%		301		7.17
620 Allendale Road			King Of Prussia		PA		1961		50,000		79.8	%		893		19.26
479 Thomas Jones Way			Exton		PA		1988		49,264		87.3	%		643		17.01
17 Campus Boulevard			Newtown Square		PA		2001		48,565		100.0	%		1,224		26.40
11 Campus Boulevard			Newtown Square		PA		1998		47,700		100.0	%		1,077		23.93
456 Creamery Way			Exton		PA		1987		47,604		100.0	%		364		7.87
110 Summit Drive			Exton		PA		1985		43,660		100.0	%		395		12.32
585 East Swedesford Road			Wayne		PA		1998		43,635		100.0	%		1,259		29.81
1100 Cassett Road			Berwyn		PA		1997		43,480		100.0	%		1,106		26.81
467 Creamery Way			Exton		PA		1988		42,000		100.0	%		521		16.94
1336 Enterprise Drive			West Goshen		PA		1989		39,330		100.0	%		796		21.00
600 Park Avenue			King Of Prussia		PA		1964		39,000		100.0	%		530		15.84
412 Creamery Way			Exton		PA		1999		38,098		77.3	%		508		8.87
18 Campus Boulevard			Newtown Square		PA		1990		37,374		100.0	%		758		22.42
457 Creamery Way			Exton		PA		1990		36,019		47.5	%		178		—
100 Arrandale Boulevard			Exton		PA		1997		34,931		100.0	%		550		19.52
300 Lindenwood Drive			Malvern		PA		1991		33,000		100.0	%		747		23.17
468 Thomas Jones Way			Exton		PA		1990		28,934		100.0	%		543		18.79
1700 Paoli Pike			Malvern		PA		2000		28,000		100.0	%		505		18.28
2490 Boulevard of the Generals			King Of Prussia		PA		1975		20,600		100.0	%		431		20.40
481 John Young Way			Exton		PA		1997		19,275		100.0	%		405		21.95
100 Lindenwood Drive			Malvern		PA		1985		18,400		100.0	%		255		9.00
748 Springdale Drive			Exton		PA		1986		13,950		100.0	%		256		19.32
200 Lindenwood Drive			Malvern		PA		1984		12,600		65.3	%		71		17.00

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Property Name		Location		State		Year Built		Net Rentable Square Feet		Percentage Leased as of December 31, 2004 (a)			Total Base Rent for the Twelve Months Ended December 31, 2004 (b) (000’s)		Average Annualized Rental Rate as of December 31, 2004 (c)

111 Arrandale Road			Exton		PA		1996		10,479		100.0	%		191		23.64
NEW JERSEY SEGMENT
50 East State Street			Trenton		NJ		1989		305,884		92.3	%		5,195		27.07
1009 Lenox Drive			Lawrenceville		NJ		1989		180,460		96.0	%		4,674		26.83
10000 Midlantic Drive			Mt. Laurel		NJ		1990		179,098		100.0	%		3,028		23.75
525 Lincoln Drive West			Marlton		NJ		1986		169,534		68.9	%		1,007		21.58
33 West State Street			Trenton		NJ		1988		167,774		100.0	%		2,981		28.89
Main Street - Plaza 1000			Voorhees		NJ		1988		162,364		96.5	%		3,513		23.18
105 / 140 Terry Drive			Newtown		PA		1982		128,666		90.2	%		1,754		15.80
457 Haddonfield Road			Cherry Hill		NJ		1990		121,737		99.9	%		2,664		23.95
2000 Midlantic Drive			Mt. Laurel		NJ		1989		121,658		97.3	%		1,909		22.03
2000 Lenox Drive			Lawrenceville		NJ		2000		119,114		100.0	%		3,200		28.37
700 East Gate Drive			Mt. Laurel		NJ		1984		118,899		100.0	%		2,372		22.83
989 Lenox Drive			Lawrenceville		NJ		1984		112,055		96.6	%		2,712		28.70
993 Lenox Drive			Lawrenceville		NJ		1985		111,124		100.0	%		2,866		25.87
1000 Howard Boulevard			Mt. Laurel		NJ		1988		105,312		100.0	%		2,124		22.74
100 Brandywine Boulevard			Newtown		PA		2002		102,000		100.0	%		2,681		23.72
One South Union Place			Cherry Hill		NJ		1982		99,573		90.4	%		1,550		19.96
997 Lenox Drive			Lawrenceville		NJ		1987		97,277		100.0	%		2,335		25.05
1000 Atrium Way			Mt. Laurel		NJ		1989		97,158		62.6	%		1,564		23.17
1120 Executive Boulevard			Mt. Laurel		NJ		1987		95,278		100.0	%		2,081		25.86
15000 Midlantic Drive			Mt. Laurel		NJ		1991		84,056		96.5	%		1,476		23.02
220 Lake Drive East			Cherry Hill		NJ		1988		78,509		100.0	%		1,789		23.82
1007 Laurel Oak Road			Voorhees		NJ		1996		78,205		100.0	%		621		7.94
10 Lake Center Drive			Marlton		NJ		1989		76,359		100.0	%		1,701		23.90
200 Lake Drive East			Cherry Hill		NJ		1989		76,352		100.0	%		1,604		22.14
Three Greentree Centre			Marlton		NJ		1984		69,300		81.4	%		1,292		22.11
King & Harvard Avenue			Cherry Hill		NJ		1974		67,444		100.0	%		1,365		20.60
9000 Midlantic Drive			Mt. Laurel		NJ		1989		67,299		100.0	%		836		21.12
6 East Clementon Road			Gibbsboro		NJ		1980		66,236		92.7	%		1,015		16.96
701 East Gate Drive			Mt. Laurel		NJ		1986		61,794		100.0	%		1,102		21.12
210 Lake Drive East			Cherry Hill		NJ		1986		60,604		100.0	%		1,307		21.81
308 Harper Drive			Moorestown		NJ		1976		59,500		100.0	%		1,080		19.54
305 Fellowship Drive			Mt. Laurel		NJ		1980		56,824		100.0	%		1,117		24.55
Two Greentree Centre			Marlton		NJ		1983		56,075		100.0	%		1,039		21.96
309 Fellowship Drive			Mt. Laurel		NJ		1982		55,911		100.0	%		1,208		24.05
One Greentree Centre			Marlton		NJ		1982		55,838		95.7	%		987		21.30
8000 Lincoln Drive			Marlton		NJ		1997		54,923		67.1	%		720		20.84
307 Fellowship Drive			Mt. Laurel		NJ		1981		54,485		86.9	%		1,088		23.27
303 Fellowship Drive			Mt. Laurel		NJ		1979		53,848		99.9	%		904		21.23
1000 Lenox Drive			Lawrenceville		NJ		1982		52,264		100.0	%		1,656		23.25
2 Foster Avenue	(i)		Gibbsboro		NJ		1974		50,761		100.0	%		224		3.37
4000 Midlantic Drive			Mt. Laurel		NJ		1998		46,945		100.0	%		905		21.54
Five Eves Drive			Marlton		NJ		1986		45,564		100.0	%		767		18.33
161 Gaither Drive			Mount Laurel		NJ		1987		44,739		68.2	%		845		21.73

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Property Name		Location		State		Year Built		Net Rentable Square Feet		Percentage Leased as of December 31, 2004 (a)			Total Base Rent for the Twelve Months Ended December 31, 2004 (b) (000’s)		Average Annualized Rental Rate as of December 31, 2004 (c)

Main Street - Piazza			Voorhees		NJ		1990		44,708		100.0	%		679		16.52
30 Lake Center Drive			Marlton		NJ		1986		40,287		100.0	%		802		20.73
20 East Clementon Road			Gibbsboro		NJ		1986		38,260		84.4	%		661		18.99
Two Eves Drive			Marlton		NJ		1987		37,532		100.0	%		661		18.42
304 Harper Drive			Moorestown		NJ		1975		32,978		100.0	%		621		21.15
Main Street - Promenade			Voorhees		NJ		1988		31,445		86.0	%		420		17.03
Four B Eves Drive			Marlton		NJ		1987		27,011		82.8	%		315		19.13
815 East Gate Drive			Mt. Laurel		NJ		1986		25,500		33.3	%		166		18.91
817 East Gate Drive			Mt. Laurel		NJ		1986		25,351		38.5	%		190		14.24
Four A Eves Drive			Marlton		NJ		1987		24,687		100.0	%		349		16.10
1 Foster Avenue	(i)		Gibbsboro		NJ		1972		24,255		100.0	%		31		2.65
4 Foster Avenue	(i)		Gibbsboro		NJ		1974		23,372		100.0	%		139		6.06
7 Foster Avenue			Gibbsboro		NJ		1983		22,158		94.1	%		348		18.88
10 Foster Avenue			Gibbsboro		NJ		1983		18,651		97.1	%		218		14.70
305 Harper Drive			Moorestown		NJ		1979		14,980		100.0	%		124		8.98
5 U.S. Avenue	(i)		Gibbsboro		NJ		1987		5,000		100.0	%		22		4.40
50 East Clementon Road			Gibbsboro		NJ		1986		3,080		100.0	%		145		47.01
5 Foster Avenue			Gibbsboro		NJ		1968		2,000		100.0	%		7		—
URBAN SEGMENT
100 North 18th Street	(g)		Philadelphia		PA		1988		696,477		92.3	%		5,163		29.77
130 North 18th Street			Philadelphia		PA		1998		594,095		99.6	%		3,335		25.75
Philadelphia Marine Center	(d)		Philadelphia		PA		Various		181,900		100.0	%		1,390		5.79
300 Delaware Avenue			Wilmington		DE		1989		310,652		80.9	%		911		14.62
920 North King Street			Wilmington		DE		1989		203,088		99.1	%		1,223		24.76
400 Commerce Drive			Newark		DE		1997		154,086		100.0	%		2,268		15.32
One Righter Parkway	(d)		Wilmington		DE		1989		104,828		100.0	%		2,293		24.82
Two Righter Parkway	(d)		Wilmington		DE		1987		95,514		100.0	%		1,919		22.15
200 Commerce Drive			Newark		DE		1998		68,034		100.0	%		988		4.52
100 Commerce Drive			Newark		DE		1989		62,787		96.6	%		875		14.43
111/113 Pencader Drive			Newark		DE		1990		52,665		86.9	%		386		11.62
VIRGINIA SEGMENT
600 East Main Street			Richmond		VA		1986		424,618		85.4	%		5,775		18.92
300 Arboretum Place			Richmond		VA		1988		212,647		100.0	%		3,646		10.63
6802 Paragon Place			Richmond		VA		1989		143,450		78.6	%		1,749		15.31
2511 Brittons Hill Road	(i)		Richmond		VA		1987		132,103		85.6	%		396		4.98
2100-2116 West Laburnam Avenue			Richmond		VA		1976		126,809		100.0	%		1,741		15.30
1957 Westmoreland Street	(i)		Richmond		VA		1975		121,815		100.0	%		533		5.18
2201-2245 Tomlynn Street	(i)		Richmond		VA		1989		85,860		98.0	%		579		7.21
100 Gateway Centre Parkway			Richmond		VA		2001		74,585		100.0	%		1,470		20.62
9011 Arboretum Parkway			Richmond		VA		1991		72,932		100.0	%		1,245		17.18
4805 Lake Brooke Drive			Glen Allen		VA		1996		61,836		94.0	%		953		15.07
9100 Arboretum Parkway			Richmond		VA		1988		57,611		87.7	%		1,046		18.42
2812 Emerywood Parkway			Henrico		VA		1980		57,147		100.0	%		574		14.66
2277 Dabney Road	(i)		Richmond		VA		1986		50,400		100.0	%		259		6.71
9200 Arboretum Parkway			Richmond		VA		1988		49,542		90.3	%		540		11.72
9210 Arboretum Parkway			Richmond		VA		1988		48,012		89.5	%		544		12.26

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Property Name		Location		State		Year Built		Net Rentable Square Feet		Percentage Leased as of December 31, 2004 (a)			Total Base Rent for the Twelve Months Ended December 31, 2004 (b) (000’s)		Average Annualized Rental Rate as of December 31, 2004 (c)

2212-2224 Tomlynn Street	(i)		Richmond		VA		1985		45,353		100.0	%		220		6.88
2221-2245 Dabney Road	(i)		Richmond		VA		1994		45,250		100.0	%		273		7.74
2251 Dabney Road	(i)		Richmond		VA		1983		42,000		100.0	%		216		6.55
2161-2179 Tomlynn Street	(i)		Richmond		VA		1985		41,550		100.0	%		187		7.10
2256 Dabney Road	(i)		Richmond		VA		1982		33,600		100.0	%		182		6.87
2246 Dabney Road	(i)		Richmond		VA		1987		33,271		100.0	%		284		9.75
2244 Dabney Road	(i)		Richmond		VA		1993		33,050		100.0	%		298		10.00
9211 Arboretum Parkway			Richmond		VA		1991		30,791		100.0	%		385		12.38
2248 Dabney Road	(i)		Richmond		VA		1989		30,184		100.0	%		199		8.74
2130-2146 Tomlynn Street	(i)		Richmond		VA		1988		29,700		100.0	%		261		10.16
2120 Tomlyn Street	(i)		Richmond		VA		1986		23,850		100.0	%		141		7.72
2240 Dabney Road	(i)		Richmond		VA		1984		15,389		100.0	%		139		10.32
4364 South Alston Avenue			Durham		NC		1985		56,601		100.0	%		1,132		19.36

TOTAL ALL PROPERTIES / WEIGHTED AVG.									19,344,537		92.7	%

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(a)	Calculated by dividing net rentable square feet included in leases signed on or before December 31, 2004 at the property by the aggregate net rentable square feet of the Property.

(b)	“Total Base Rent” for the twelve months ended December 31, 2004 represents base rents received during such period, excluding tenant reimbursements, calculated in accordance with generally accepted accounting principles (GAAP) determined on a straight-line basis. Tenant reimbursements generally include payment of real estate taxes, operating expenses and common area maintenance and utility charges.

(c)	“Average Annualized Rental Rate” is calculated as follows: (i) for office leases written on a triple net basis, the sum of the annualized contracted base rental rates payable for all space leased as of December 31, 2004 (without giving effect to free rent or scheduled rent increases that would be taken into account under GAAP) plus the 2004 budgeted operating expenses excluding tenant electricity; and (ii) for office leases written on a full service basis, the annualized contracted base rent payable for all space leased as of December 31, 2004. In both cases, the annualized rental rate is divided by the total square footage leased as of December 31, 2004 without giving effect to free rent or scheduled rent increases that would be taken into account under GAAP.

(d)	This Property is subject to a ground lease with a third party.

(e)	These properties are under redevelopment and are excluded from the percentages for Weighted Average Percentage Leased and Average Annualized Rental Rate information.

(f)	These Properties represent “lease-up” assets that were acquired in September 2004 as part of the TRC acquisition. The assets have an expected stabilization date of September 2007. These properties are excluded from the percentages for Weighted Average Percentage Leased and Average Annualized Rental Rate information.

(g)	We hold our interest in Two Logan Square (100 North 18^th Street) primarily through our ownership of second and third mortgages that are secured by this property and that are junior to a first mortgage. Our ownership of these two mortgages currently provides us with all of the cash flows from Two Logan Square after the payment of operating expenses and debt service on the first mortgage.

(h)	Effective March 31, 2004, we consolidated these properties under the provisions of Financial Interpretation No. 46R. See “Real Estate Ventures” below. These properties are excluded from the percentage for Weighted Average Percentage Leased.

(i)	These properties are industrial facilities.

The following table shows certain information regarding rental rates and lease expirations for the Properties at December 31, 2004, assuming none of the tenants exercises renewal options or termination rights, if any, at or prior to scheduled expirations:

Year of Lease Expiration December 31,	Number of Leases Expiring Within the Year		Rentable Square Footage Subject to Expiring Leases		Final Annualized Base Rent Under Expiring Leases (a)		Final Annualized Base Rent Per Square Foot Under Expiring Leases		Percentage of Total Final Annualized Base Rent Under Expiring Leases			Cumulative Total

2005		366		2,671,416		51,979,927	$	19.46		15.5	%		15.5	%
2006		249		1,969,249		36,252,324		18.41		10.8	%		26.3	%
2007		214		2,055,113		39,889,883		19.41		11.9	%		38.2	%
2008		196		2,056,274		44,104,922		21.45		13.2	%		51.4	%
2009		186		2,214,250		45,809,034		20.69		13.6	%		65.0	%
2010		81		1,588,802		37,917,785		23.87		11.3	%		76.3	%
2011		35		825,332		14,132,910		17.12		4.2	%		80.5	%
2012		21		780,586		16,568,805		21.23		4.9	%		85.4	%
2013		14		305,945		7,742,204		25.31		2.3	%		87.7	%
2014		30		779,856		12,793,333		16.40		3.8	%		91.5	%
2015 and thereafter		25		1,297,030		28,438,401		21.93		8.5	%		100.0	%

		1,417		16,543,853	$	335,629,528	$	20.29		100.0	%

(a)

“Final Annualized Base Rent” for each lease scheduled to expire represents the cash rental rate of base rents, excluding tenant reimbursements, in the final month prior to expiration multiplied by 12. Tenant reimbursements generally include payment of real estate taxes, operating expenses and common area maintenance and utility charges.

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At December 31, 2004, the Properties were leased to 1,179 tenants that are engaged in a variety of businesses. The following table sets forth information regarding leases at the Properties with the 20 tenants with the largest amounts leased based upon Annualized Escalated Rent from the Properties as of December 31, 2004:

Tenant Name (a)	Number of Leases	Weighted Average Remaining Lease Term in Months	Aggregate Square Feet Leased	Percentage of Aggregate Leased Square Feet			Annualized Escalated Rent (in 000) (b)	Percentage of Aggregate Annualized Escalated Rent

State of New Jersey	7	56	454,347	2.7	%	$	13,610	3.7	%
Pepper Hamilton LLP	5	112	291,431	1.7	%		9,889	2.7	%
Penske Truck Leasing	1	192	337,925	2.0	%		5,971	1.6	%
Computer Sciences	5	27	277,250	1.7	%		5,868	1.6	%
Drinker Biddle & Reath	3	109	200,437	1.2	%		5,346	1.5	%
Blank Rome LLP	2	40	220,941	1.3	%		5,291	1.4	%
Verizon	5	32	237,126	1.4	%		5,269	1.4	%
Marsh USA, Inc.	2	55	145,566	0.9	%		4,705	1.3	%
Lockheed Martin	7	11	332,950	2.0	%		4,282	1.2	%
Omnicare Clinical Research	1	67	150,000	0.9	%		4,047	1.1	%
KPMG LLP	4	63	108,475	0.6	%		4,023	1.1	%
First Consulting Group	1	40	118,138	0.7	%		3,843	1.0	%
Hartford Life	4	32	169,170	1.0	%		3,755	1.0	%
Parsons	1	63	172,939	1.0	%		3,575	1.0	%
Aventis Behring	1	34	143,025	0.9	%		3,453	0.9	%
Gemstar – T.V. Guide	1	91	163,517	1.0	%		3,076	0.8	%
ICT Group	2	122	121,651	0.7	%		3,042	0.8	%
General Electric	4	10	120,758	0.7	%		2,998	0.8	%
Automotive Rentals	5	68	131,554	0.8	%		2,956	0.8	%
Covance Periapproval Services	2	7	87,224	0.5	%		2,829	0.8	%

Consolidated Total/Weighted Average	63	66	3,984,424	23.7	%	$	97,828	26.5	%

(a)	The identified tenant includes affiliates in certain circumstances.

(b)	Annualized Escalated Rent represents the monthly Escalated Rent for each lease in effect at December 31, 2004 multiplied by 12. Escalated Rent represents fixed base rental amounts plus tenant reimbursements which include payment of real estate taxes, operating expenses and common area maintenance and utility charges. The Company estimates operating expense reimbursements based on historical amounts and comparable market data.

The following table sets forth the year-end occupancy percentages of our Properties for the last five years (based on Properties owned by us as of such year end dates and excluding five “lease-up” assets acquired as part of the TRC acquisition):

Year ended December 31,		Occupancy %

2004		91.8%
2003		90.7%
2002		91.0%
2001		92.2%
2000		95.6%

Our occupancy percentage at December 31, 2004, including the five “lease-up” assets, was 87.7%

Real Estate Ventures

As of December 31, 2004, we had an aggregate investment of approximately $12.8 million in nine Real Estate Ventures (net of returns of investment). We formed these ventures with unaffiliated third parties to develop office properties or to acquire land in anticipation of possible development of office properties. Seven of the Real Estate Ventures own eight office buildings that contain an aggregate of approximately 1.6 million net rentable square feet, one Real Estate Venture developed a hotel property that contains 137 rooms and one Real Estate Venture is developing an office property located in Charlottesville,Virginia.

We also have investments in two real estate ventures that are considered to be variable interest entities under FIN No. 46 and of which we are the primary beneficiary. The financial information for these two real estate ventures (Four and Six Tower Bridge) were consolidated into our consolidated financial statements effective March 31, 2004. Prior to March 31, 2004, we accounted for our investment in these two ventures under the equity method.

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We account for our non-controlling interests in the Real Estate Ventures using the equity method. Non-controlling ownership interests range from 6% to 50%, subject to specified priority allocations in certain of the Real Estate Ventures. Our investments, initially recorded at cost, are subsequently adjusted for our share of the Real Estate Ventures’ income or loss and cash contributions and distributions.

As of December 31, 2004, we had guaranteed repayment of approximately $0.6 million of loans for the Real Estate Ventures. We also provide customary environmental indemnities in connection with construction and permanent financing both for its own account and on behalf of the Real Estate Ventures.

Item 3. Legal Proceedings

We are involved from time to time in litigation on various matters, which include disputes with tenants and disputes arising out of agreements to purchase or sell properties. Given the nature of our business activities, these lawsuits are considered routine to the conduct of its business. The result of any particular lawsuit cannot be predicted, because of the very nature of litigation, the litigation process and its adversarial nature, and the jury system.

There have been recent reports of lawsuits against owners and managers of multifamily and office properties asserting claims of personal injury and property damage caused by the presence of mold in residential units or office space. We have been named as a defendant in two lawsuits in the State of New Jersey that allege personal injury as a result of the presence of mold. In 2005, one lawsuit was dismissed by way of summary judgment with predjudice. Unspecified damages are sought in the remaining lawsuit. We have referred this lawsuit to our environmental insurance carrier and, as of the date of this Form 10-K, the insurance carrier is tendering a defense to this claim.

Item 4. Submission of Matters to a Vote of Security Holders

We did not submit any matters to a vote of security holders in the fourth quarter of the fiscal year ended December 31, 2004.

PART II

Item 5. Market for Registrant’s Common Equity and Related Shareholder Matters

There is no established trading market for our Units. As of the date of this Form 10-K, there is one holder of record of the GP Units, Brandywine Realty Trust, and there are 31 holders of record of the Class A Units.

The following table sets forth the quarterly distributions per Common Partnership Unit declared by us with respect to each such period.

Quarter Ended		Distribution
December 31, 2004		$ 0.44
September 30, 2004		$ 0.44
June 30, 2004		$ 0.44
March 31, 2004		$ 0.44

December 31, 2003		$ 0.44
September 30, 2003		$ 0.44
June 30, 2003		$ 0.44
March 31, 2003		$ 0.44

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We currently intend to continue to make regular quarterly distributions to holders of our Common Partnership Units. Any future distributions will be declared at the discretion of the Board of Trustees of Brandywine Realty Trust, and will depend on our cash flow, financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Internal Revenue Code of 1986, as amended, and such other factors as the Board of Trustees may deem relevant.

As of the date of this Form 10-K, (i) there are no Units of partnership interest subject to outstanding options or warrants; (ii) there are no securities outstanding which are convertible into our Units; (iii) there are no Units that are eligible to be sold pursuant to Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”); and (iv) there are no Units that have been, or are proposed to be, publicly offered by us. Generally, Class A Units may be transferred without the consent and approval of Brandywine Realty Trust, as our general partner.

The following table provides information as of December 31, 2004 with respect to compensation plans under which the Company’s equity securities are authorized for issuance:


	(a)	(b)	(c)


Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))

Equity compensation plans approved by security holders (1)	2,278,060	$ 26.70 (2)	1,228,681

Equity compensation plans not approved by security holders	—	—	—

Total	2,278,060	$ 26.70 (2)	1,228,681

(1)	Relates to Brandywine Realty Trust’s 1997 Long-Term Incentive Plan. Under the 1997 Long-Term Incentive Plan, the Company’s Compensation Committee may make awards of restricted Common Shares, options to acquire Common Shares and performance units or other instruments that have a value tied to the Company’s Common Shares. Subject to the maximum number of shares that may be issued or made the subject of awards under the Plan, the Plan does not limit the number of any specific type of award that may be made under the Plan.

(2)	Weighted-average exercise price of outstanding options; excludes the Company’s restricted Common Shares.

During the year ended December 31, 2004, we repurchased 18,750 Class A Units at an average price of $26.34 per Class A Unit.

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Item 6. Selected Financial Data

The following table sets forth selected financial and operating data, on a historical consolidated basis, which has been revised for the reclassification of losses from early extinguishments of debt, in accordance with SFAS No. 145 and the disposition of all properties since January 1, 2002 which have been reclassified as discontinued operations for all periods presented in accordance with SFAS No. 144. The following information should be read in conjunction with the financial statements and related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in this Annual Report on Form 10-K.

(in thousands, except per Common Partnership Unit data and number of properties)

			Year Ended December 31,

			2004			2003			2002			2001			2000


Operating Results
Total revenue		$	323,592		$	301,464		$	286,712		$	265,838		$	249,141
Net income			63,081			96,467			73,136			42,344			61,756
Earnings per Common Partnership Unit:
	Basic	$	1.15		$	1.43		$	1.41		$	0.58		$	1.12
	Diluted	$	1.14		$	1.43		$	1.40		$	0.58		$	1.12
Cash distributions declared,
	per Common Partnership Unit	$	1.76		$	1.76		$	1.76		$	1.70		$	1.62

Balance Sheet Data
Real estate investments, net of
	accumulated depreciation	$	2,363,865		$	1,695,355		$	1,745,981		$	1,812,909		$	1,674,341
Total assets			2,633,984			1,855,776			1,919,288			1,960,203			1,821,103
Total indebtedness			1,306,669			867,659			1,004,729			1,009,165			866,202
Total liabilities			1,443,934			951,484			1,098,846			1,109,266			923,961
Series B Preferred Units			—			97,500			97,500			97,500			97,500
Redeemable limited partnership units			60,586			46,505			38,984			45,335			44,611
Partners’ equity			1,129,464			760,287			683,958			708,102			755,031

Other Data
Cash flows from:
	Operating activities	$	153,183		$	118,793		$	128,836		$	152,116		$	103,123
	Investing activities		(682,945	)		(34,068	)		5,038			(123,736	)		(32,372	)
	Financing activities		536,556			(102,974	)		(120,532	)		(30,961	)		(60,403	)

Property Data
Number of Properties owned at period end			246			234			238			270			250
Net rentable square feet owned at period end			19,150			15,733			16,052			17,312			16,471

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the financial statements appearing elsewhere herein. The results of operations and cash flows of the Partnership include the historical results of operations of the Properties held by the Partnership during the years ended December 31, 2004, 2003 and 2002. This Annual Report on Form 10-K contains forward-looking statements for purposes of the Securities Act of 1933 and the Securities Exchange Act of 1934 and as such may involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Partnership to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Although the Partnership believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, there can be no assurance that these expectations will be realized. See Ite m 1. Business – Risk Factors.

OVERVIEW

The Partnership currently manages its portfolio within five geographic segments: (1) Pennsylvania–West, (2) Pennsylvania–North, (3) New Jersey, (4) Urban and (5) Virginia. The Partnership believes it has established an effective platform in these office and industrial markets that provides a foundation for achieving its goals of maximizing market penetration, optimizing operating economies of scale and creating long-term investment value.

The Partnership receives income primarily from rental revenue (including tenant reimbursements) from the Properties and, to a lesser extent, from the management of properties owned by third parties and from investments in the Real Estate Ventures.

The Partnership’s financial performance is dependent upon the demand for office and other commercial space in its markets. Current economic conditions, including recessionary pressures and capital market volatility, have enhanced the challenges facing the Partnership.

In the current economic climate, the Partnership continues to seek revenue growth through an increase in occupancy of its portfolio (91.8% at December 31, 2004 or 87.7% including five lease-up assets acquired as part of the TRC acquisition) and the development of new properties.

As the Partnership seeks to increase revenue, management also focuses on strategies to minimize operating risks, including (i) tenant rollover risk, (ii) tenant credit risk and (iii) development risk.

Tenant Rollover Risk:
The Partnership is subject to the risk that, upon expiration, leases may not be renewed, the space may not be relet, or the terms of renewal or reletting (including the cost of renovations) may be less favorable than the current lease terms. Leases accounting for approximately 15.4% of the aggregate annualized base rents from the Properties as of December 31, 2004 (representing approximately 14.8% of the net rentable square feet of the Properties) expire without penalty in 2005. The Partnership maintains an active dialogue with its tenants in an effort to achieve a high level of lease renewals. The Partnership’s retention rate for leases that were scheduled to expire in the year ended December 31, 2004 was 79.2%. If the Partnership is unable to renew leases for a substantial portion of the space under expiring leases, or to promptly relet this space, at anticipated rental rates, the Partnership’s cash flow could be adversely impacted.

Tenant Credit Risk:
In the event of a tenant default, the Partnership may experience delays in enforcing its rights as a landlord and may incur substantial costs in protecting its investment. Management regularly evaluates its accounts receivable reserve policy in light of its tenant base and general and local economic conditions. The accounts receivable allowance was $4.1 million or 8.4% of total receivables (including accrued rent receivable) as of December 31, 2004 compared to $4.0 million or 11.2% of total receivables (including accrued rent receivable) as of December 31, 2003.

Development Risk:
The Partnership currently has in development or redevelopment seven sites aggregating approximately 1.0 million square feet. The total cost of these projects is estimated to be $221.3 million, of which $112.3 million was incurred as of December 31, 2004. While the Partnership is actively marketing space at these projects to prospective tenants, management cannot provide assurance as to the timing or terms of any leases of such space. As of December 31, 2004, the Partnership owned approximately 445 acres of undeveloped land. Risks associated with development of this land include construction cost increases or overruns and construction delays, insufficient occupancy rates, building moratoriums and inability to obtain necessary zoning, land-use, building, occupancy and other required governmental approvals.

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses the Partnership’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements 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 revenues and expenses during the reporting period.

The Partnership’s significant accounting policies are described in Note 2 to the consolidated financial statements included this Annual Report on Form 10-K. While the estimates and judgments associated with the application of these accounting policies may be affected by different assumptions or conditions, the Partnership believes the estimates and judgments associated with the reported amounts are appropriate in the circumstances. The following identifies critical accounting policies that are used in preparing the Partnership’s consolidated financial statements, including those policies which require significant judgment and estimates:

Real Estate Investments
Real estate investments are carried at cost. The Partnership records acquisition of real estate investments under the purchase method of accounting and allocates the purchase price to land, buildings and intangible assets on a relative fair value basis. Depreciation is computed using the straight-line method over the useful lives of buildings and capital improvements (5 to 40 years) and over the shorter of the lease term or the life of the asset for tenant improvements. Direct construction costs related to the development of Properties and land holdings are capitalized as incurred. The Partnership expenses routine repair and maintenance expenditures.

Impairment of Long-Lived Assets
Management reviews investments in real estate and real estate ventures for impairment if facts and circumstances indicate that the carrying value of such assets may not be recoverable. Measurement of any impairment loss will be based on the fair value of the asset, determined using customary valuation techniques, such as the present value of expected future cash flows.

In accordance with SFAS No. 144 (“SFAS 144”), Accounting for the Impairment or Disposal of Long-Lived Assets, long-lived assets, such as real estate investments and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. The assets and li abilities relating to assets classified as held-for-sale would be presented separately in the appropriate asset and liability sections of the balance sheet.

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Income Taxes
No federal or state income taxes are payable by the Partnership, and accordingly, no provision for taxes has been made in the accompanying consolidated financial statements. The partners are to include their respective share of the Partnership’s profits or losses in their individual tax returns. The Partnership’s tax returns and the amount of allocable Partnership profits and losses are subject to examination by federal and state taxing authorities. If such examination results in changes to Partnership profits or losses, then the tax liability of the partners would be changed accordingly.

We own a subsidiary real estate investment trust (“REIT”) that has elected to be taxed as a real estate investment trust under Sections 856-860 of the Internal Revenue Code. In management’s opinion, the requirements to maintain this election are being met. Our REIT subsidiary is subject to a 4% Federal excise tax, if sufficient taxable income is not distributed within prescribed time limits. The excise tax equals 4% of the annual amount, if any, by which the sum of (a) 85% of the subsidiary’s ordinary income and (b) 95% of the subsidiary’s net capital gain exceeds cash distributions and certain taxes paid by the subsidiary.

Allowance for Doubtful Accounts
The Partnership maintains an allowance for doubtful accounts that represents an estimate of losses that may be incurred from the inability of tenants to make required payments. The allowance is an estimate based on two calculations that are combined to determine the total amount reserved. First, the Partnership evaluates specific accounts where it has determined that a tenant may have an inability to meet its financial obligations. In these situations, the Partnership uses its judgment, based on the facts and circumstances, and records a specific reserve for that tenant against amounts due to reduce the receivable to the amount that the Partnership expects to collect. These reserves are reevaluated and adjusted as additional information becomes available. Second, a reserve is established for all tenants based on a range of percentages applied to receivable aging categories. These percentages are based on historical collection and write-off experience. If the financial condi tion of the Partnership’s tenants were to deteriorate, additional allowances may be required.

Deferred Costs
The Partnership incurs direct costs related to the financing, development and leasing of the Properties. Management exercises judgment in determining whether such costs meet the criteria for capitalization or must be expensed. Capitalized financing fees are amortized over the related loan term and capitalized leasing costs are amortized over the related lease term. Management re-evaluates the remaining useful lives of leasing costs as the creditworthiness of the Partnership’s tenants and economic and market conditions change.

Purchase Price Allocation
The Partnership allocates the purchase price of properties to net tangible and identified intangible assets acquired based on fair values. Above-market and below-market in-place lease values for acquired properties are recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) the Partnership’s estimate of the fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancellable term of the lease. Capitalized above-market lease values are amortized as a reduction of rental income over the remaining non-cancellable terms of the respective leases. Capitalized below-market lease values are amortized as an increase of rental income over the remaining non-cancellable terms of the respective leases, including any fixed-rate renewal periods.

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Other intangible assets also include amounts representing the value of tenant relationships and in-place leases based on the Partnership’s evaluation of the specific characteristics of each tenant’s lease and the Partnership’s overall relationship with the respective tenant. The Partnership estimates the cost to execute leases with terms similar to the remaining lease terms of the in-place leases, include leasing commissions, legal and other related expenses. This intangible asset is amortized to expense over the remaining term of the respective leases. Partnership estimates of fair value are made using methods similar to those used by independent appraisers or by using independent appraisals. Factors considered by the Partnership in their analysis include an estimate of the carrying costs during the expected lease-up periods considering current market conditions and costs to execute similar leases. The Partnership also considers information obtai ned about each property as a result of its pre-acquisition due diligence, marketing and leasing activities in estimating the fair value of the tangible and intangible assets acquired. In estimating carrying costs, the Partnership includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods, which primarily range from three to twelve months.

Characteristics considered by the Partnership in allocating value to its tenant relationships include the nature and extent of the Partnership’s business relationship with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit quality and expectations of lease renewals, among other factors. The value of tenant relationship intangibles is amortized over the remaining initial lease term and expected renewals, but in no event longer than the remaining depreciable life of the building. The value of in-place leases is amortized over the remaining non-cancellable term of the respective leases and any fixed-rate renewal periods.

In the event that a tenant terminates its lease, the unamortized portion of each intangible, including market rate adjustments, in-place lease values and tenant relationship values, would be charged to expense.

RESULTS OF OPERATIONS

Comparison of the Year Ended December 31, 2004 to the Year Ended December 31, 2003

The table below shows selected operating information for the Same Store Property Portfolio and the Total Portfolio. The Same Store Property Portfolio consists of 221 Properties containing an aggregate of approximately 14.7 million net rentable square feet that were owned for the entire twelve-month periods ended December 31, 2004 and 2003. This table also includes a reconciliation from the Same Store Property Portfolio to the Total Portfolio (i.e. all properties owned by us as of December 31, 2004 and 2003) by providing information for the properties which were acquired, sold or placed into service and administrative/elimination information for the years ended December 31, 2004 and 2003.

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		Same Store Property Portfolio									Properties Acquired			Properties Sold (a)				Development Properties				Administrative/ Eliminations (b)					Total Portfolio

(dollars in thousands)		2004		2003		Increase/ (Decrease)		% Change			2004		2003	2004		2003		2004			2003	2004		2003			2004			2003			Increase/ (Decrease)		% Change

Revenue:
Rents	$	240,248	$	240,165	$	83		0	%	$	32,615	$	1,308	—	$	12,286	$	2,768		$	2,857	—		—		$	275,631		$	256,616		$	19,015		7	%
Tenant reimbursements		32,803		31,021		1,782		6	%		4,511		174	—		6,086		258			237	—		—			37,572			37,518			54		0	%
Other		2,337		2,900		(563	)	-19	%		332		4	—		—		54			5	7,666		4,421			10,389			7,330			3,059		42	%

Total revenue		275,388		274,086		1,302		0	%		37,458		1,486	—		18,372		3,080			3,099	7,666		4,421			323,592			301,464			22,128		7	%

Operating Expenses:
Property operating expenses		85,302		83,506		1,796		2	%		11,542		590	—		6,705		1,504			1,398	(8,491	)	(11,955	)		89,857			80,244			9,613		12	%
Real estate taxes		26,493		24,975		1,518		6	%		3,699		363	—		1,655		870			688	—		—			31,062			27,681			3,381		12	%
Depreciation and amortization		61,166		55,854		5,312		10	%		16,157		449	—		1,808		1,312			912	1,269		1,309			79,904			60,332			19,572		32	%
Administrative expenses																						15,100		14,464			15,100			14,464			636		4	%

Total property operating expenses		172,961		164,335		8,626		5	%		31,398		1,402	—		10,168		3,686			2,998	7,878		3,818			215,923			182,721			33,202		18	%

Operating Income		102,427		109,751		(7,324	)	-7	%		6,060		84	—		8,204		(606	)		101	(212	)	603			107,669			118,743			(11,074	)	-9	%

Other Income (Expense):
Interest income																											2,469			3,629			(1,160	)	-32	%
Interest expense																											(55,061	)		(57,835	)		2,774		5	%
Equity in income of real estate ventures																											2,024			52			1,972		100	%
Net gain on sales of interest in real estate																											2,975			20,537			(17,562	)	-86	%

Income before minority interest																											60,076			85,126			(25,050	)	-29	%
Minority interest attributable to
continuing operations																											205			—			205		100	%

Income from continuing operations																											60,281			85,126			(24,845	)	-29	%
Income from discontinued operations																											2,800			11,341			(8,541	)	-75	%

Net Income																											63,081			96,467			(33,386	)	-35	%

(a)	Includes properties sold during the period that are not included in discontinued operations as they did not meet the critieria under SFAS No. 144 (“SFAS 144”), Accounting for the Impairment or Disposal of Long-Lived Assets.
(b)	Represents certain revenue and expenses at the corporate level as well as various intercompany costs that are eliminated in consolidation.

Revenue

Revenue increased by $22.1 million primarily due to properties that were acquired in 2004, offset by decreased occupancy and revenue from properties sold during 2003. Revenue for Same Store Properties increased by $1.3 million due to increased tenant reimbursement revenue resulting from increased property operating expenses in 2004 as compared to 2003. Average occupancy for the Same Store Properties decreased to 91.0% in 2004 from 91.1% in 2003. Other revenue represents lease termination fees, bankruptcy settlement proceeds, leasing commissions and third-party management fees. Total Portfolio other revenue increased by $3.1 million in 2004 primarily due to the settlement of a previously disclosed litigation in 2004 ($1.0 million plus accrued interest on the Partnership’s security deposit that was released and $0.9 million from the settlement of an accrued liability associated with a 1998 acquisition.

Operating Expenses and Real Estate Taxes

Property operating expenses increased by $9.6 million in 2004 primarily due to increased repairs and maintenance costs and additional properties in 2004. Property operating expenses for the Same Store Properties increased by $1.8 million in 2004 due to increased repairs and maintenance costs at various Same Store Properties.

Real estate taxes increased by $3.4 million primarily due to increased real estate tax assessments in 2004 and additional properties in 2004. Real estate taxes for the Same Store Properties increased by $1.5 million in 2004 as a result of higher tax rates and property assessments.

Interest Expense

Interest expense decreased by $2.8 million in 2004 primarily due to decreased interest rates on the Partnership’s unsecured line of credit borrowings and term loans, expiration of the Partnership’s interest rate swap agreements in June 2004, offset by interest expense associated with the increased debt from the Partnership’s fixed rate unsecured notes issued in the fourth quarter of 2004.

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Depreciation and Amortization Expense

Depreciation and amortization expense increased by $19.6 million in 2004 primarily due to properties acquired in 2004, a full year of depreciation and amortization of properties acquired during 2003 and additional amortization from tenant improvements and leasing commissions paid during 2004.

Administrative Expenses

Administrative expenses increased by $0.6 million in 2004 primarily due to increased payroll and related costs associated with employees hired as part of the TRC acquisition in September 2004 and increased professional fees associated with the audit of the Partnership for the 2003, 2002, and 2001 fiscal years. The audit was completed in connection with the Partnership’s registration statement on Form 10 with the SEC in June 2004.

Equity in Income of Real Estate Ventures

Equity in income of Real Estate Ventures increased by $2.0 million in 2004 as a result of increased net income from the Real Estate Ventures and an impairment charge recorded during 2003 associated with the write-down by the Partnership of its investment in a non-operating joint venture of $0.9 million.

Gains on Sales of Real Estate

Gains on sales of real estate decreased by $17.6 million during 2004 from gains on sales recorded in 2003 of $20.5 million. This decrease was partially offset by a gain on the purchase and sale of a land parcel to two separate third parties during 2004 in which the Partnership recorded a gain of approximately $1.5 million.

Minority Interest

Minority interest from continuing operations represents the income attributable to the interest of the outside joint venture partners in the net income (loss) of the Partnership’s two consolidated real estate ventures. These two real estate ventures were consolidated effective March 31, 2004.

Discontinued Operations

Discontinued operations decreased by $8.5 million in 2004 primarily due to the timing of property sales for assets included in discontinued operations in 2004 as compared to 2003. Additionally, the Partnership sold four properties and three land parcels in 2004 realizing net gains of $3.1 million and sold nine properties in 2003 realizing a net gain of $9.6 million.

Comparison of the Year Ended December 31, 2003 to the Year Ended December 31, 2002

The table below shows selected operating information for the Same Store Property Portfolio and the Total Portfolio. The Same Store Property Portfolio consists of 211 Properties containing an aggregate of approximately 13.6 million net rentable square feet that were owned for the entire twelve-month periods ended December 31, 2003 and 2002. This table also includes a reconciliation from the Same Store Property Portfolio to the Total Portfolio (i.e. all properties owned by us as of December 31, 2004 and 2003) by providing information for the properties which were acquired, sold or placed into service and administrative/elimination information for the years ended December 31, 2003 and 2002.

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		Same Store Property Portfolio									Properties Acquired			Properties Sold (a)				Development Properties			Administrative/ Eliminations (b)					Total Portfolio

(dollars in thousands)		2003		2002		Increase/ (Decrease)		% Change			2003		2002	2003		2002		2003		2002	2003		2002			2003			2002			Increase/ (Decrease)		% Change

Revenue:
Rents	$	213,143	$	211,079	$	2,064		1	%	$	28,195	$	19,408	12,286	$	13,127	$	2,992	$	3,736	—		—		$	256,616		$	247,350		$	9,266		4	%
Tenant reimbursements		28,945		25,304		3,641		14	%		2,224		1,212	6,086		6,235		263		310	—		—			37,518			33,061			4,457		13	%
Other		2,743		2,896		(153	)	-5	%		159		73	—		3		6		131	4,422		3,198			7,330			6,301			1,029		16	%

Total revenue		244,831		239,279		5,552		2	%		30,578		20,693	18,372		19,365		3,261		4,177	4,422		3,198			301,464			286,712			14,752		5	%

Operating Expenses:
Property operating expenses		76,047		70,470		5,577		8	%		7,929		5,370	6,705		7,485		1,519		1,558	(11,956	)	(10,068	)		80,244			74,815			5,429		7	%
Real estate taxes		22,638		21,611		1,027		5	%		2,674		1,279	1,655		1,627		714		502	—		—			27,681			25,019			2,662		11	%
Depreciation and amortization		48,090		47,038		1,052		2	%		8,092		4,707	1,808		1,949		1,006		1,200	1,336		1,031			60,332			55,925			4,407		8	%
Administrative expenses																					14,464		14,804			14,464			14,804			(340	)	-2	%

Total property operating expenses		146,775		139,119		7,656		6	%		18,695		11,356	10,168		11,061		3,239		3,260	3,844		5,767			182,721			170,563			12,158		7	%

Operating Income		98,056		100,160		(2,104	)	-2	%		11,883		9,337	8,204		8,304		22		917	578		(2,569	)		118,743			116,149			2,594		2	%

Other Income (Expense):
Interest income																										3,629			3,399			230		7	%
Interest expense																										(57,835	)		(63,522	)		5,687		9	%
Equity in income of real estate ventures																										52			987			(935	)	-95	%
Net gain on sales of interest in real estate																										20,537			5			20,532		100	%

Income from continuing operations																										85,126			57,018			28,108		49	%
Income from discontinued operations																										11,341			16,118			(4,777	)	-30	%

Net Income																										96,467			73,136			23,331		32	%

(a) -	Includes properties sold during the period that are not included in discontinued operations as they did not meet the critieria under SFAS No. 144 (“SFAS 144”), Accounting for the Impairment or Disposal of Long-Lived Assets.
(b) -	Represents certain revenue and expenses at the corporate level as well as various intercompany costs that are eliminated in consolidation.

Revenue

Revenue increased by $14.8 million primarily due to increased rental rates and properties acquired in 2003 and 2002, offset by decreased occupancy and revenue from properties sold during 2003 and 2002. Revenue for Same Store Properties increased by $5.6 million due to increased rental rates and occupancy as well as increased tenant reimbursements from higher operating expenses in 2003 as compared to 2002. Average occupancy for the Same Store Properties increased to 91.0% in 2003 from 90.9% in 2002. Other revenue represents lease termination fees, bankruptcy settlement proceeds, leasing commissions and third-party management fees. Total Portfolio other revenue increased by $1.0 million in 2003 primarily due to income from various termination agreements.

Operating Expenses and Real Estate Taxes

Property operating expenses increased by $5.4 million in 2003 primarily due to increased snow removal costs and additional properties in 2003. Property operating expenses for the Same Store Properties increased by $5.6 million in 2003 primarily due to increased snow removal in 2003 as compared to 2002.

Real estate taxes increased by $2.7 million primarily due to increased real estate tax assessments in 2003 over 2002 and additional properties in 2003. Real estate taxes for the Same Store Properties increased by $1.0 million in 2003 as a result of higher tax rates and property assessments.

Interest Expense

Interest expense decreased by $5.7 million in 2003 primarily due to decreased interest rates on the Partnership’s unsecured line of credit borrowings and term loan and decreased average borrowings during 2003.

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Depreciation and Amortization Expense

Depreciation and amortization expense increased by $4.4 million in 2003 primarily due to properties acquired in 2003, a full year of depreciation and amortization of properties acquired during 2002 and additional amortization from tenant improvements and leasing commissions incurred during 2003.

Administrative Expenses

Administrative expenses decreased by $0.3 million in 2003 primarily due decreased amortization on unvested restricted stock.

Equity in Income of Real Estate Ventures

Equity in income of Real Estate Ventures decreased by $0.9 million in 2003 primarily due to an impairment charge recorded during 2003 associated with the write-down the Partnership’s investment in a non-operating joint venture of $0.9 million.

Gains on Sales of Real Estate

Gains on sales of real estate increased by $20.5 million during 2003 primarily due to the Partnership’s sale of two office properties in December 2003 for $112.8 million that generated a gain of approximately $18.5 million. The Partnership sold the properties to a real estate venture in which it maintains a 20% interest. As a result, the results of operations of the properties are included in continuing operations.

Discontinued Operations

Discontinued operations decreased by $4.8 million in 2003 primarily due to the timing of property sales for assets included in discontinued operations.

LIQUIDITY AND CAPITAL RESOURCES

General

Our principal liquidity needs for the next twelve months are as follows:

•

fund normal recurring expenses,

•

meet debt service requirements,

•

fund capital expenditures, including capital and tenant improvements and leasing costs,

•

fund current development costs, including $88 million expected to fund continued development of Cira Centre in University City, Philadelphia, and

•

fund distributions declared by our general partner.

We believe that these needs will be satisfied using cash flows generated by operations and provided by financing activities. Rental revenue, recovery income from tenants, and other income from operations are our principal sources of cash used to pay operating expenses, debt service, recurring capital expenditures and the minimum distribution required to maintain the Company’s REIT qualification. We seek to increase cash flows from our existing 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 sources of revenue also include third-party fees generated by our property management, leasing, development and construction businesses. Consequently, we believe our revenue, together with proceeds from financing activities, will continue to provide the necessary funds for our short-term liquidity needs. However, mater ial changes in these factors may adversely affect our net cash flows. Such changes, in turn, would adversely affect our ability to fund distributions, debt service payments and tenant improvements. In addition, a material adverse change in our cash provided by operations may affect the financial performance covenants under our unsecured Credit Facility and unsecured notes.

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Our principal liquidity needs for periods beyond twelve months are for the costs of developments, redevelopments, property acquisitions, scheduled debt maturities, major renovations, expansions and other non-recurring capital improvements. We draw on multiple financing sources to fund our long-term capital needs. Our Credit Facility is utilized for general business purposes, including the acquisition, development and redevelopment of properties and the repayment of other debt. In the fourth quarter of 2004 we completed two offerings of unsecured notes and expect to utilize the debt market and equity issuances as capital sources for other long-term capital needs.

Cash Flows

The following summary discussion of our cash flows is based on the consolidated statement of cash flows and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented.

As of December 31, 2004 and 2003, we maintained cash and cash equivalents of $15.3 million and $8.5 million, an increase of $6.8 million. This increase was the result of the following changes in cash flow from our various activities:

Activity		2004			2003			2002

Operating	$	153,183		$	118,793		$	128,836
Investing		(682,945	)		(34,068	)		5,038
Financing		536,556			(102,974	)		(120,532	)

Net cash flows	$	6,794		$	(18,249	)	$	13,342

Our principal source of cash flows is from the operation of our Properties. Our increased cash flow from operating activities is primarily attributable to the net cash flow received from the operations of the TRC Properties acquired in 2004. Additionally, over the past two years, we sold various properties and raised proceeds from equity issuances and unsecured debt financings.

We increased our investing activities in 2004 as compared to historical periods. Increased investing activity was comprised of our acquisition of the TRC Properties ($539.6 million), construction costs related to our Cira Centre development project ($89.1 million) and various other capital and tenant improvement projects (totaling $132.0 million in 2004).

We increased our financing activities in 2004 as compared to historical periods. Increased financing activity was comprised of common and preferred unit issuances (for aggregate net proceeds of $392.2 million) and proceeds from our unsecured note issuances in October and December 2004 (aggregate of $633.0 million net of discounts and issuance costs). These proceeds were used to repay existing indebtedness, redemption of preferred units, and to fund the investment activity discussed above.

Capitalization

Indebtedness

As of December 31, 2004, we had approximately $1.3 billion of outstanding indebtedness. The table below summarizes our mortgage notes payable, our unsecured notes, our unsecured term loan and our revolving credit facility at December 31, 2004 and 2003:

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				December 31

				2004			2003

				(dollars in thousands)

*Balance:*
	Fixed rate (A)		$	1,133,513		$	605,321
	Variable rate			173,156			262,338

		Total	$	1,306,669		$	867,659

*Percent of Total Debt:*
	Fixed rate (A)			87	%		70	%
	Variable rate			13	%		30	%

		Total		100	%		100	%

*Weighted-average interest rate at period end:*
	Fixed rate (A)			5.9	%		7.0	%
	Variable rate			3.5	%		2.6	%

		Total		5.6	%		5.5	%

(A) Amounts include the hedged portion of our variable rate debt in 2003.

The variable rate debt shown above generally bears interest based on various spreads over LIBOR.

Unsecured Credit Facility

The Partnership utilizes credit facility borrowings for general business purposes, including the acquisition, development and redevelopment of properties and the repayment of other debt. In May 2004, the Partnership replaced its then existing credit facility with a $450 million unsecured credit facility (the “Credit Facility”) that matures in May 2007, subject to a one year extension option upon payment of a fee and absence any defaults at the time of the extension. Borrowings under the new Credit Facility generally bear interest at LIBOR (LIBOR was 2.4% as of December 31, 2004) plus a spread over LIBOR ranging from 0.65% to 1.20% based on the Partnership’s unsecured senior debt rating. The Partnership has an option to increase its maximum borrowings under the Credit Facility to $600 million subject to the absence of any defaults and our ability to acquire additional commitments from our existing lenders or new lenders. The Credit Facility con tains various financial and non-financial covenants. As of December 31, 2004, the Partnership was in compliance with all such covenants.

As of December 31, 2004, the Partnership had $152.0 million of borrowings and $10.7 million of letters of credit outstanding under the Credit Facility, leaving $287.3 million of unused availability. For the years ended December 31, 2004 and 2003, the Partnership’s average interest rates, including the effects of interest rate hedges as discussed in Note 9 to the financial statements included herein and including both the new Credit Facility and prior credit facility, were 3.8% and 4.6% per annum.

The Credit Facility contains provisions limiting: the incurrence of additional debt; the granting of liens; the consummation of mergers and consolidations; the disposition of assets and interests in subsidiaries; the making of loans and investments; and the payment of dividends. The restriction on dividends permits us to make distributions sufficient to enable the Company to pay dividends in the amount required for it to retain its qualification as a REIT under the Internal Revenue Code of 1986, and otherwise limits dividends to 90% of the Partnership’s funds from operations, as defined in the Credit Facility.

The Credit Facility also contains financial covenants that require us to maintain a debt service coverage ratio, an interest coverage ratio, a fixed charge coverage ratio, an unsecured debt ratio and an unencumbered cash flow ratio above certain specified minimum levels; to maintain net worth above an amount determined on a specified formula; and to maintain a leverage ratio and a secured debt ratio below certain maximum levels. Another financial covenant limits the percentage of our total assets (on a consolidated basis) that can be held by subsidiaries not party to the Credit Facility.

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The initial proceeds of the Credit Facility were used to repay all borrowings outstanding under our predecessor revolving credit facility, which was scheduled to mature in June 2004.

Unsecured Notes

During 2004, we issued an aggregate of $638 million of unsecured long-term debt, primarily to complete the financing of the TRC Properties and to repay a portion of our Credit Facility, in the following offerings:

	•	On October 22, 2004, we completed a public offering of $525 million in unsecured notes. The offering was completed through the issuance of $275 million in aggregate principal amount 4.5% unsecured notes due November 1, 2009 (the “2009 Notes”) and $250 million in aggregate principal amount 5.4% unsecured notes due November 1, 2014 (the “2014 Notes”). The 2009 Notes were priced at 99.87% of their principal amount to yield 4.5% and the 2014 Notes were priced at 99.50% of their principal amount to yield 5.4%. The net proceeds of the Notes were used to repay the $320 million 2007 Term Loan, to settle treasury lock agreements for $3.2 million and to reduce borrowings outstanding under the Credit Facility.

•

On December 26, 2004, we sold $113 million in aggregate principal amount of 4.34% unsecured notes (the “2008 Notes”) due December 31, 2008 to a group of qualified institutional investors. The proceeds from these notes were used to repay our $113 million Term Loan.

The indenture relating to the 2009 and 2014 unsecured notes contains various financial restrictions and requirements, including (1) a leverage ratio not to exceed 60%, (2) a secured debt leverage ratio not to exceed 40%, (3) an debt service coverage ratio of greater than 1.5 to 1.0, and (4) an unencumbered asset value of not less than 150% of unsecured debt. In addition, the note purchase agreement relating to the 2008 Notes contains covenants that are similar to the above covenants. At December 31, 2004, we were in compliance with each of these financial restrictions and requirements.

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Mortgage Indebtedness

The following table sets forth information regarding our mortgage indebtedness outstanding at December 31, 2004 and 2003:

Property / Location			Carrying value (in 000's)			Effective Interest Rate(a)		Maturity Date

			December 31,		December 31,

			2004		2003

Grande B		$	80,429	$	81,704	7.48	%	Jul-27
Two Logan Square			78,793		—	5.78	%	Jul-09
Newtown Square/Berwyn Park/Libertyview			65,442		66,000	7.25	%	May-13
Midlantic Drive/Lenox Drive/DCC I			64,942		65,993	8.05	%	Oct-11
Grande A			62,177		63,526	7.48	%	Jul-27
Plymouth Meeting Exec.			47,513		48,299	7.00	%	Dec-10
Arboretum I, II, III & V			23,690		24,109	7.59	%	Jul-11
Grande A			17,157		20,000	5.17	%	Jul-27
Six Tower Bridge			15,394		—	7.79	%	Aug-12
400 Commerce Drive			12,175		12,346	7.12	%	Jun-08
Four Tower Bridge			10,890		—	6.62	%	Feb-11
Croton Road			6,100		6,209	7.81	%	Jan-06
200 Commerce Drive			6,051		6,165	7.12	%	Jan-10
Southpoint III			5,877		6,257	7.75	%	Apr-14
440 & 442 Creamery Way			5,728		5,862	8.55	%	Jul-07
Norriton Office Center			5,270		5,342	8.50	%	Sep-07
429 Creamery Way			3,087		3,235	8.30	%	Sep-06
Grande A			3,040		3,684	5.34	%	Jul-27
481 John Young Way			2,420		2,475	8.40	%	Nov-07
111 Arrandale Blvd			1,100		1,152	8.65	%	Aug-06
Interstate Center			959		1,131	3.94	%	Mar-07
630 Allendale Road			—		19,797	—		—
400 Berwyn Park			—		15,726	—		—
1000 Howard Boulevard			—		3,647	—		—

	Total mortgage indebtedness	$	518,234	$	462,659


(a)	For loans that bear interest at a variable rate, the rates in effect at December 31, 2004 have been presented.

Guaranties. As of December 31, 2004, we had guaranteed repayment of approximately $0.6 million of loans on behalf of certain Real Estate Ventures. See Item 2. Properties – Real Estate Ventures. We also provide customary environmental indemnities in connection with construction and permanent financing both for our own account and on behalf of Real Estate Ventures.

Equity Financing

In January 2004, the Company sold 2,645,000 Common Shares for net proceeds of approximately $69.2 million, in an underwritten public offering, and contributed those proceeds to us in exchange for 2,645,000 GP Units. We used the proceeds to reduce the outstanding balance under our revolving credit facility.

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The Company’s Board of Trustees has approved a share repurchase program authorizing the Company to repurchase up to 4,000,000 of its outstanding Common Shares. Through December 31, 2004, the Company had repurchased 3.2 million of its Common Shares at an average price of $17.75 per share. Under the share repurchase program, the Company has the authority to repurchase an additional 762,000 shares. No time limit has been placed on the duration of the share repurchase program. The following table summarizes the share repurchases during the three years ended December 31, 2004:

	Year ended December 31,

		2004		2003		2002


Repurchased amount (shares)		—		—		491,074
Repurchased amount ($, in thousands)	$	—	$	—	$	11,053
Average price per share	$	—	$	—	$	22.51

Off-Balance Sheet Arrangements

The Partnership is not dependent on the use of any off-balance sheet financing arrangements for liquidity. The Partnership’s off-balance sheet arrangements are discussed in Note 4 to the financial statements: “Investment in Unconsolidated Real Estate Ventures”. Additional information about the debt of the Partnership’s unconsolidated Real Estate Ventures is included in “Item 2 – Properties”.

Inflation

A majority of the Partnership’s leases provide for reimbursement of real estate taxes and operating expenses either on a triple net basis or over a base amount. In addition, many of the office leases provide for fixed base rent increases. The Partnership believes that inflationary increases in expenses will be significantly offset by expense reimbursement and contractual rent increases.

Commitments

The following table outlines the timing of payment requirements related to the Partnership’s commitments as of December 31, 2004:

	Payments by Period (in thousands)

		Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years



Mortgage notes payable (a)	$	510,526	$	8,643	$	43,078	$	99,645	$	359,160
Revolving credit facility		152,000		—		152,000		—		—
Unsecured debt (a)		638,000		—		—		388,000		250,000
Purchase commitments		11,000		11,000		—		—		—
Ground leases		107,505		1,435		2,870		2,870		100,330
Other liabilities		1,525		837		—		—		688

	$	1,420,556	$	21,915	$	197,948	$	490,515	$	710,178

(a) Amounts do not include unamortized discounts and/or premiums.

The Partnership intends to refinance its mortgage notes payable as they become due or repay those that are secured by properties being sold. The Partnership expects to renegotiate its Credit Facility prior to maturity or extend its term.

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In 1998, we acquired a portfolio of properties from Donald E. Axinn and affiliates. Upon completion of our acquisition, Mr. Axinn joined the Board of the Company. The 1998 acquisition agreement provides for our acquisition in September 2005 of an approximately 141,724 square foot office building located at 101 Paragon Drive, Montvale, New Jersey for $11.0 million from an entity primarily owned and controlled by Mr. Axinn.

As part of our purchase of the TRC Properties in September 2004, we agreed to issue to the sellers up to a maximum of $9.7 million of Class A Units if certain of the acquired properties achieve at least 95% occupancy prior to September 21, 2007.

As part of the TRC Properties, we acquired our interest in Two Logan Square, a 696,477 square foot office building in Philadelphia, primarily through a second and third mortgage secured by this property. We currently do not expect to take title to Two Logan Square until, at the earliest, September 2019. In the event that we take title to Two Logan Square upon a foreclosure of our mortgage, we have agreed to make a payment to an unaffiliated third party with a residual interest in the fee owner of this property. The amount of the payment would be $0.6 million if we must pay a state and local transfer upon taking title, and $2.9 million if no transfer tax is payable upon the transfer.

As part of the TRC Properties and several of our other acquisitions, we agreed not to sell the acquired properties. In the case of the TRC Properties, we agreed not to sell the acquired properties for periods ranging from three to 15 years from the acquisition date as follows: 201 Radnor Financial Center, 555 Radnor Financial Center and 300 Delaware Avenue (three years); One Rodney Square and 130/150/170 Radnor Financial Center (10 years); and One Logan Square, Two Logan Square and Radnor Corporate Center (15 years). We also own 14 properties that aggregate 1.0 million square feet and have agreed not to sell these properties for periods that expire through 2008. These agreements generally provide that we may dispose of the subject properties only in transactions that qualify as tax-free exchanges under Section 1031 of the Code or in other tax deferred transactions. In the event that we sell any of the properties within the applicable restricted period in non-ex empt transactions, we have agreed to pay significant tax liabilities that would be incurred by the parties who sold us the applicable property.

We invest in our Properties and regularly incur capital expenditures in the ordinary course to maintain the Properties. We believe that such expenditures enhance the competitiveness of the Properties. We also enter into construction, utility and service contracts in the ordinary course of business which may extend beyond one year. These contracts include terms that provide for cancellation with insignificant or no cancellation penalties.

Interest Rate Risk and Sensitivity Analysis

The analysis below presents the sensitivity of the market value of the Partnership’s financial instruments to selected changes in market rates. The range of changes chosen reflects the Partnership’s 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.

The Partnership’s financial instruments consist of both fixed and variable rate debt. As of December 31, 2004, the Partnership’s consolidated debt consisted of $497.1 million in fixed rate mortgages and $21.2 million in variable rate mortgage notes, $152.0 million borrowings under its Credit Facility and $636.4 million in unsecured notes (net of discounts). 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 the Partnership’s 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, bu t does not impact the net financial instrument position.

If market rates of interest on our variable rate debt increase by 1%, the increase in annual interest expense on our variable rate debt would decrease future earnings and cash flows by approximately $1.7 million. If market rates of interest on our variable rate debt decrease by 1%, the decrease in interest expense on our variable rate debt would increase future earnings and cash flows by approximately $1.7 million.

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If market rates of interest increase by 1%, the fair value of our outstanding fixed-rate mortgage debt would decrease by approximately $30.9 million. If market rates of interest decrease by 1%, the fair value of our outstanding fixed-rate mortgage debt would increase by approximately $34.0 million.

As of December 31, 2004, based on prevailing interest rates and credit spreads, the fair value of our unsecured notes was $633.7 million.

Item 7A. Quantitative and Qualitative Disclosure About Market Risk

See discussion in Management’s Discussion and Analysis included in Item 7 herein.

Item 8. Financial Statements and Supplementary Data

The financial statements and supplementary financial data and the report thereon of PricewaterhouseCoopers LLP with respect thereto are listed under Item 15(a) and filed as part of this Annual Report on Form 10-K. See Item 15.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our 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). Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this annual report. There were no changes in the Partnership’s internal control over financial reporting that occurred during the three-month period ended December 31, 2004 that have materially affected, or are reasonably likely to materially affect, the Partnership’s internal control over financial reporting.

Item 9B. Other Information

On November 10, 2004, the Company issued 50,000 Common Shares (at a price per share of $24.00) upon exercise of warrants that the Company issued in April 1999 to Five Arrows Realty Securities III L.L.C. (“Five Arrows”). On each of November 12, 2004 and December 1, 2004, the Company issued to Five Arrows 100,000 Common Shares (at a price of $24.00 per share) upon exercise of the remaining balance of these warrants. The Company issued these shares in reliance on an exemption from registration under Section 4(2) of the Securities Act of 1933. In exchange for the net proceeds from these issuances, the Partnership issued 250,000 GP Units to the Company.

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PART III

Item 10. Trustees and Executive Officers of the Registrant.