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Item 1. Business

2022-02-24 compared with 2021-02-24 · 65 added, 64 removed, 76 unchanged (63% of the section changed)

We are a self-administered and self-managed real estate investment trust ("REIT") engaged in the acquisition, development, redevelopment, ownership, management, and operation of a portfolio of office and mixed-use properties.

During the twelve months ended December 31, 2021, we owned and managed properties within five markets:

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and Austin, Texas.

Our principal executive offices are located at 2929 Walnut Street, Suite 1700, Philadelphia, PA 19104, our telephone number is (610) 325-5600 and our website is www.brandywinerealty.com.

Our principal executive offices are located at 2929 Arch Street, Suite 1800, Philadelphia, PA 19104, our telephone number is (610) 325-5600 and our website is www.brandywinerealty.com.

The content on any website referred to in this Form 10-K is not incorporated by reference into this Form 10-K.

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Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and other information filed or furnished by us with the SEC are available, without charge, on our website, http://www.brandywinerealty.com, as soon as reasonably practicable after they are electronically filed or furnished with the SEC.

Copies are also available, free of charge, upon written request to Investor Relations, Brandywine Realty Trust, 2929 Walnut Street, Suite 1700, Philadelphia, PA 19104.

Copies are also available, free of charge, upon written request to Investor Relations, Brandywine Realty Trust, 2929 Arch Street, Suite 1800, Philadelphia, PA 19104.

Business Segments

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Joint venture partnerships provide us with additional sources of capital to share investment risk and fund capital requirements.

In some instances, joint venture partnerships provide us with additional local market or product type expertise.

In some instances, joint venture partnerships provide us with additional local market insight or product type expertise.

For information regarding our joint ventures, see Note 4, ''Investment in Unconsolidated Real Estate Ventures,” to our Consolidated Financial Statements.

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To accomplish this objective we seek to:

• concentrate on urban town centers and central business districts in selected regions, and be the best of class owner and developer in those markets with a full-service office in each of those markets providing property management, leasing, development, construction and legal expertise;

• maximize cash flow through leasing strategies designed to capture rental growth as rental rates increase and as leases are renewed;

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

• continue to cultivate long-term leasing relationships with a diverse base of high-quality and financially stable tenants;

• cultivate long-term leasing relationships with a diverse base of high-quality and financially stable tenants;

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

• form joint ventures with high-quality partners having attractive real estate holdings or significant financial resources;

• utilize our reputation as a full-service real estate development and management organization to identify acquisition and development opportunities that will expand our business and create long-term value;

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

• selectively dispose of properties that do not support our long-term business objectives and growth strategies.

We also consider the following to be important objectives:

• to develop and opportunistically acquire high-quality office properties at attractive yields in markets that we expect will experience economic growth and where we can achieve operating efficiencies;

• to monetize or deploy our land inventory for development of high-quality office properties, or rezone from office/industrial to life science/lab, residential, retail and hotel to align with market and demand shifts as appropriate;

• to control development sites, including sites under purchase options, that could support new office, life science/lab, retail and residential development within our core markets;

• to develop and opportunistically acquire high-quality office, life science/lab, residential, and mixed-use properties at attractive yields in markets that we expect will experience economic growth and where we can achieve operating efficiencies;

• to monetize or deploy our land inventory for development of high-quality office, life science/lab, residential, and mixed-use properties, or rezone from office/industrial to life science/lab, residential, retail and hotel to align with market and demand shifts as appropriate;

• to control development sites, including sites under purchase options, that could support high-quality office, life science/lab, residential, and mixed-use properties within our core markets;

• to capitalize on our redevelopment expertise to selectively develop, redevelop and reposition properties in desirable locations that other organizations may not have the resources to pursue;

• to own and develop high quality office and mixed-use real estate meeting the demands of today’s tenants who require sophisticated telecommunications and related infrastructure, support services, sustainable features and amenities, and to manage those facilities so as to continue to be the landlord of choice for both existing and prospective tenants;

• to own and develop high-quality office, life science/lab, residential, and mixed-use properties meeting the demands of today’s tenants who require sophisticated telecommunications and related infrastructure, support services, sustainable features and amenities, and to manage those facilities so as to continue to be the landlord of choice for both existing and prospective tenants;

• to strategically grow our portfolio through the development and acquisition of new product types that support our strategy of transient-oriented and amenity based mixed-use properties located in the central business district of Philadelphia, Pennsylvania;

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Austin, Texas;

and Washington, D.C.;

and Metropolitan Washington, D.C.;

• to secure third-party development contracts, which can be a significant source of revenue and enable us to utilize and grow our existing development and construction management resources.

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We currently expect to continue to operate in markets where we have a concentration advantage due to economies of scale.

We believe that where possible, it is best to operate with a strong base of properties in order to benefit from the personnel allocation and the market strength associated with managing multiple properties in the same market.

We also intend to

selectively dispose of properties and redeploy capital if we determine a property cannot meet our long term earnings growth expectations.

We believe that where possible, it is best to operate with a strong base of properties in order to benefit from the personnel

allocation and the market strength associated with managing multiple properties in the same market.

We also intend to selectively dispose of properties and redeploy capital if we determine a property cannot meet our long-term earnings growth expectations.

We believe that recycling capital is an important aspect of maintaining the overall quality of our portfolio.

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These abilities are integral to our strategy of having a diverse portfolio of assets, which will meet the needs of our tenants.

We use experienced on-site construction superintendents, operating under the supervision of project managers and senior management, to control the construction process and mitigate the various risks associated with real estate development.

We use experienced on-site construction superintendents, operating under the supervision of our project managers and senior management, to control the construction process and mitigate the various risks associated with real estate development.

In order to fund developments, redevelopments and acquisitions, as well as refurbish and improve existing properties, we primarily use proceeds from property dispositions, excess cash from operations after satisfying our dividend and other financing requirements, and external sources of debt and equity capital.

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Our properties compete for tenants with similar properties primarily on the basis of location, total occupancy costs (including base rent and operating expenses), services and amenities 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 REITs, life insurance companies, pension funds, partnerships and individual investors.

Additionally, our ability to compete depends upon trends in the economies of our markets, investment alternatives, financial condition and operating results of current and prospective tenants, availability and cost of capital, construction and renovation costs, land availability, our ability to obtain necessary construction approvals, taxes, governmental regulations, legislation and population trends.

As leases at our properties expire, we may encounter significant competition to renew or re-let space in light of the large number of competing properties within the markets in which we operate.

As a result, we may be required to provide rent concessions or abatements, incur charges for tenant improvements and other inducements, including early termination rights or below market renewal options, or we may not be able to timely lease vacant space.

In such cases, our financial condition, results of operations, cash flow, per share trading price of our common shares and ability to satisfy our debt service obligations and to pay dividends may be adversely affected.

We also face competition when attempting to acquire, sell or develop real estate, including competition from domestic and foreign financial institutions, other REITs, life insurance companies, pension funds, partnerships and individual investors.

Our competitors may be able to pay higher property acquisition prices, may have private access to opportunities not available to us and otherwise may be in a better position to acquire a property.

Competition may also have the effect of reducing the number of acquisition opportunities available to us, increasing the price required to consummate an acquisition opportunity and generally reducing the demand for office, retail, mixed-use and multifamily space in our markets.

Similarly, competition with sellers of similar properties to locate suitable purchasers may result in us receiving lower proceeds from a sale or in us not being able to dispose of a property at a time of our choosing due to the lack of an acceptable return.

Our ability to compete also depends upon trends in the economies of our markets, investment alternatives, financial condition and operating results of current and prospective tenants, availability and cost of capital, construction and renovation costs, land availability, our ability to obtain necessary construction approvals, taxes, governmental regulations, legislation and population trends.

Properties in our markets are subject to various laws, ordinances, and regulations, including regulations relating to common areas.

We believe we have the necessary permits and approvals to operate each of our properties.

Environmental Matters

Our business operations are subject to various federal, state, and local environmental laws and regulations governing land, water, and wetlands resources.

Among these are certain laws and regulations under which an owner or operator of real estate could become liable for the costs of removal or remediation of certain hazardous or toxic substances present on or in such property.

Such laws often impose liability without regard to whether the owner knew of, or was responsible for, the presence of such hazardous or toxic substances.

The presence of such substances, or the failure to properly remediate such substances, may subject the owner to substantial liability and may adversely affect the owner’s ability to develop the property or to borrow using such real estate as collateral.

We typically manage this potential liability through performance of Phase I Environmental Site Assessments and, as necessary, Phase II Environmental Site Assessments which include environmental sampling on properties we acquire or develop.

Even with these assessments and testings, no assurance can be given that environmental liabilities do not exist, that the reports revealed all environmental liabilities, or that no prior owner created or permitted any material environmental condition not known to us.

In certain situations, we have also sought to avail ourselves of legal and regulatory protections offered by federal and state authorities to prospective purchasers of property.

Where applicable studies have resulted in the determination that remediation was required by applicable law, the necessary remediation is typically incorporated into the operational or development activity of the relevant property.

We are not aware of any environmental liability that we believe would have a material adverse effect on our business, assets, or results of operations.

Certain environmental laws impose liability on a previous owner of a property to the extent that hazardous or toxic substances were present during the prior ownership period.

A transfer of the property does not necessarily relieve an owner of such liability.

Thus, although we are not aware of any such situation, we may have such liabilities on properties previously sold.

We believe that we and our properties are in compliance in all material respects with applicable federal, state, and local laws, ordinances, and regulations governing the environment.

For additional information, see Item 1A.

Risk Factors – Regulatory Risk Factors – Potential liability for environmental contamination could result in substantial costs.

Information Security

We face risks associated with security breaches through cyber attacks, cyber intrusions or otherwise, as well as other significant disruptions of our information technology networks and related systems.

The Audit Committee of our Board (the "Audit Committee") and senior management receive and review quarterly reports on cybersecurity matters from our Chief Technology and Innovation Officer, including reports on documented incidents or violations of our IT and security policies.

Documented incidents or violations are discussed, and managers are notified for the appropriate follow-up with our human resources department or the employees involved in such incidents or violations, as needed.

Although we have not experienced a data or other cybersecurity breach in the past three years that resulted in a financial loss, our Board and the Audit Committee regularly evaluate our existing information technology and security policies and controls to address new and novel threats posed to the Company.

We have implemented a training program for employees that includes both proactive education modules, as well as reactive anti-phishing and testing modules designed to test the end-user’s ability to put what they have learned into practice.

Human Capital Resources

As of December 31, 2020, we had approximately 341 employees.

We are focused on creating a challenging, enriching, respectful, diverse, inclusive, collaborative and rewarding work environment for our employees whom we consider to be among our most valuable assets.

We offer the following policies and programs which we believe are illustrative of our continued commitment to our employees:

• A compensation program and benefits package which we consider to be competitive among our peers.

• An extensive Employee Safety Manual, and thoughtful operational protocols and other measures, which prioritize the health, safety and well-being of our employees.

• Our promotion of diversity and inclusion in our hiring practices.

As of December 31, 2021, we had approximately 324 full-time employees and 3 part-time employees.

We seek to maintain a challenging, enriching, respectful, diverse, inclusive, collaborative and rewarding work environment for our employees whom we consider to be among our most valuable assets.

We maintain policies and programs that we believe reflect our continued commitment to our employees, including:

• a competitive compensation program and benefits package.

• operational protocols which prioritize employee health, safety and well-being.

• promotion of diversity and inclusion in our hiring practices.

◦ In 2021, approximately 33% of all new hires were females and approximately 46% of all new hires were ethnic minorities.

• Regular training and career development opportunities and a tuition reimbursement program.

• The regular assessment of the engagement, satisfaction and retention of our employees.

• training and career development opportunities and a tuition reimbursement program.

• regular assessment of the engagement, satisfaction and retention of our employees.

• programs such as internally organized affinity groups which are intended to foster an atmosphere of collaboration and inclusion.

Environmental, Social, and Corporate Governance

In connection with our goal of achieving the highest principles of environment, social, and governance (ESG) standards, in 2020, we released our inaugural comprehensive Global Reporting Initiative (GRI) aligned Corporate Social Responsibility Report, which set forth 20 Goals and Key Performance Indicators aligned with the U.N.

Sustainable Development Goals and the early stages of our strategy to manage climate risk in alignment with the Task Force on Climate-Related Financial

Disclosures (TCFD).

In addition, we reset our reduction targets for energy, greenhouse gas emissions and water consumption to 15% by 2025 over our 2018 baseline.

The following tables provide our consumption and progress as of year-end 2019 on energy, water, and greenhouse gas emission reductions over our 2018 baseline.

This data represents energy and water consumption for Brandywine owned and managed buildings where data was available.

Data for the year ended 2020 is not yet available and is expected to be included in our annual Global Real Estate Sustainability Benchmark (“GRESB”) submission in the second quarter of 2021.

Energy Consumption:

Year Energy Consumption Data Coverage as a % of Floor Area (a)

Total Energy Consumed by Floor Area with Data Coverage (MWh)

% of Energy Generated from Renewable Sources (b)

Same Store change in Energy Consumption of Floor Area with Data Coverage (c)

% of Eligible Portfolio that has Obtained an Energy Rating and is Certified to ENERGY STAR (d)

2018 89 % 447,814 49 % N/A 58 %

2019 90 % 405,446 49 % (10) % 35 %

Water Consumption:

Year Water Withdrawal Data Coverage as a % of Total Floor Area (a) Total water Withdrawn by Portfolio (m3) Same Store Change in Water Withdrawn for Floor Area with data Coverage (e)

2018 86 % 1,037,678 N/A

2019 88 % 1,036,805 — %

GHG Emissions:

Year Scope 1 & 2 GHG Data Coverage as % of Total Floor Area (f)

Scope 1 & 2 GHG Emissions (Tonnes CO2)

Same Store Change in Scope 1 & 2 GHG Emissions Data (g)

2018 88 % 145,652 N/A

2019 89 % 133,563 (8) %

(a) Represents the percentage of square footage where consumption data was obtained for the portfolio for the calendar year .

(b) Percentage of energy generated from renewable sources represents purchasing of green power direct from utilities to offset energy usage in deregulated energy markets.

(c) Same Store change in energy consumption compares usage only for the buildings with data available in both 2018 and 2019.

(d) Reduction is substantially the result of the Commercial Buildings Energy Consumption Survey updated modeling in 2019 and the resulting industry-wide drop in ENERGY STAR scores.

(e) Same Store change in water consumption compares usage only for the buildings with data available in both 2018 and 2019.

(f) Scope 1 emissions are calculated by measuring the on-site fuel consumption and combustion (e.g., natural gas consumption, company-owned vehicles), and Scope 2 emissions are calculated by measuring purchased electricity that is generated from off-site sources for the percentage of square footage where data was obtained for the portfolio for the calendar year.

(g) Same Store change in Scope 1 & 2 emissions is based on only comparing the emissions for buildings where comparable data was available for both 2018 and 2019.

In 2020, we earned the highest-level Governance score from ISS, continued to maintain an A rating from MSCI ESG Research, received our sixth annual GRESB Green Star ranking, and achieved Green Lease Leader’s Gold recognition from the Department of Energy and Institute for Market Transformation.

We are steadfast in our commitment to maintaining and implementing environment, social, and governance ("ESG”) standards while driving value through continual improvement of our operations, portfolio performance, and community impact.

Our reduction targets for energy, greenhouse gas emissions and water are to reduce consumption 15% by 2025 over our 2018 baseline.

In 2021, we earned the highest-level Governance score from ISS, continued to maintain an A rating from MSCI ESG Research, and received our seventh annual Global Real Estate Sustainability Benchmark (“GRESB”) Green Star ranking.

We were also recognized as the most committed building owner in the Philadelphia 2030 District initiative to achieve substantial reduction in energy use by the year 2030.

We have 21.9 million square feet of green building certifications across our portfolio, including the first UL Verified Healthy Building IAQ Verification Mark certified building in Philadelphia.

With all the challenges of 2020, we believe we responded to the COVID-19 pandemic with proactive plans for a safe and seamless “return to work” for our tenants and by giving back to the many needs of the local community.

We have 11.5 million square feet of green building certifications across our portfolio.

With all the challenges over the last two years, Brandywine continues to proactively plan and work to provide safe spaces for tenants to return to the office while deepening our commitment and culture of giving back to the local community.

Our volunteer efforts and financial contributions included over $20,000 collected by employees and matched by us to support 16 third-party employees in our extended family of vendors who were impacted by furloughs and layoffs.

Through a meals program in

partnership with several of our food and beverage tenants, we funded over 36,000 meals to Philadelphians in need.

We also donated $350,000 to the Enterprise Center to launch the Grow Philadelphia Small Business COVID-19 Resilience Fund, and provided $200,000 to the African American Chamber of Commerce to make low-interest loans available to Chamber members impacted by the COVID-19 pandemic and social unrest.

Through a meals program in partnership with several of our food and beverage tenants, we funded over 38,000 meals to Philadelphians in need.

We also donated $350,000 to the Enterprise Center to launch the Grow Philadelphia Small Business COVID-19 Resilience Fund and provided a loan guarantee of $200,000 to the African American Chamber of Commerce to make low-interest loans available to Chamber members impacted by the COVID-19 pandemic and social unrest.

For further information regarding our environmental, social, and governance strategies and policies, please visit the “Responsibility” section of our website.

The information contained on our website is not incorporated by reference into this Annual Report.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business