• our failure to re-lease occupied space upon expiration of leases;

• tenant defaults and the bankruptcy of major tenants;

• changes in prevailing interest rates;

• the impact of unrealized hedging transactions;

• the unavailability of equity and debt financing;

• unanticipated costs associated with the acquisition, integration and operation of our acquisitions;

• unanticipated costs to complete, lease-up and operate our developments and redevelopments;

• impairment charges;

• increased costs for, or lack of availability of, adequate insurance, including for terrorist acts;

• risks associated with actual or threatened terrorist attacks;

• demand for tenant services beyond those traditionally provided by landlords;

• potential liability under environmental or other laws;

• earthquakes and other natural disasters;

• risks associated with state and local tax audits;

• complex regulations relating to our status as a REIT and the adverse consequences of our failure to qualify as a REIT;

• 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;

• changes in general economic conditions;

• the impact of newly adopted accounting principles on our accounting policies and on period-to-period comparisons of financial results and the other risks identified in the "Risk Factors" section and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2007.

We caution readers not to place undue reliance on forward-looking statements. We assume no obligation to update or supplement forward-looking statements that become untrue because of subsequent events except as required by law. The discussion that follows is based primarily on our consolidated financial statements as of September 30, 2008 and December 31, 2007 and for the three- and nine-months ended September 30, 2008 and 2007 and should be read along with the consolidated financial statements and related notes appearing elsewhere in this report. The ability to compare one period to another may be significantly affected by acquisitions completed, development properties placed in service and dispositions made during those periods.
OVERVIEW
As of September 30, 2008, our portfolio consisted of 211 office properties, 22 industrial facilities and one mixed-use property containing an aggregate of approximately 23.0 million net rentable square feet. In addition, we consolidate three office properties owned by real estate ventures containing 0.4 million net rentable square feet. These 237 properties make up our core portfolio. We also had five properties under development and six properties under redevelopment containing an aggregate 3.1 million net rentable square feet. As of September 30, 2008, the Company owned four office properties, one property under

redevelopment and one property under development containing an aggregate of approximately 2.1 million net rentable square feet designated as held for sale assets. Therefore, as of September 30, 2008, we consolidated 254 properties with an aggregate of 28.6 million net rentable square feet. As of September 30, 2008, we also held economic interests in 14 unconsolidated real estate ventures (the "Real Estate Ventures") that we formed with third parties to develop or own commercial properties. The properties owned by these Real Estate Ventures contain approximately 4.4 million net rentable square feet.
As of September 30, 2008 we managed our portfolio within seven geographic segments: (1) Pennsylvania, (2) New Jersey/Delaware, (3) Richmond, Virginia,
(4) California-North, (5) California-South, (6) Metropolitan Washington, D.C. and (7) Southwest. The Pennsylvania segment includes properties in Chester, Delaware, Bucks, Lehigh and Montgomery counties in the Philadelphia suburbs and the City of Philadelphia in Pennsylvania. The New Jersey/Delaware segment includes properties in counties in the southern and central part of New Jersey including Burlington, Camden and Mercer counties and the state of Delaware. The Richmond, Virginia segment includes properties primarily in Chesterfield and Henrico counties, the City of Richmond and Durham, North Carolina. The California-North segment includes properties in the City of Oakland and Concord. The California-South segment includes properties in the City of Carlsbad and Rancho Bernardo. The Metropolitan Washington, D.C. segment includes properties in Northern Virginia and suburban Maryland. The Southwest segment includes properties in Travis county of Texas. We generate cash and revenue from leases of space at our properties and, to a lesser extent, from the management of properties owned by third parties and from investments in the Real Estate Ventures. Factors that we evaluate when leasing space include rental rates, costs of tenant improvements, tenant creditworthiness, current and expected operating costs, the length of the lease, vacancy levels and demand for office and industrial space. We also generate cash through sales of assets, including assets that we do not view as core to our portfolio, either because of location or expected growth potential, and assets that are commanding premium prices from third party investors. Our financial and operating performance is dependent upon the demand for office, industrial and other commercial space in our markets, our leasing results, our acquisition, disposition and development activity, our financing activity, our cash requirements and economic and market conditions, including prevailing interest rates. Deteriorating economic conditions have resulted in a reduction of the availability of financing and overall higher borrowing rates. These factors, coupled with a slowing economy, have reduced the volume of real estate transactions and created credit stresses on most businesses. If economic conditions persist or deteriorate, we may experience increases in past due accounts, defaults, lower occupancy and reduced effective rents. This condition would negatively affect our future net income and cash flows and could have a material adverse effect on our financial condition. We seek revenue growth at our portfolio through an increase in occupancy and rental rates. Occupancy at our core portfolio at September 30, 2008 was 92.1%. Our overall occupancy at September 30, 2008, including our 11 properties under development or redevelopment, was 84.5%. In seeking to increase revenue through our operating, financing and investment activities, we also seek to minimize operating risks, including (i) tenant rollover risk, (ii) tenant credit risk and (iii) development risk. Tenant Rollover Risk:
We are subject to the risk that tenant leases, upon expiration, are not renewed, that space may not be relet, or that the terms of renewal or reletting (including the cost of renovations) may be less favorable to us than the current lease terms. Leases accounting for approximately 2.3% of our aggregate annualized base rents as of September 30, 2008 (representing approximately 2.1% of the net rentable square feet of the Properties) expire without penalty through the end of 2008. We maintain an active dialogue with our tenants in an effort to achieve a high level of lease renewals. Our retention rate for leases that were scheduled to expire in the nine-month period ended September 30, 2008 was 71.4%. If we were unable to renew leases for a substantial portion of the space under expiring leases, or to promptly relet this space, at anticipated rental rates, our cash flow would be adversely impacted.

Tenant Credit Risk:
In the event of a tenant default, we may experience delays in enforcing our rights as a landlord and may incur substantial costs in protecting our investment. Our management regularly evaluates our allowance for accounts receivable in light of our tenant base and general and local economic conditions. Our accounts receivable allowances were $12.5 million or 11.1% of total receivables (including accrued rent receivable and amounts in assets held for sale, net) as of September 30, 2008 compared to $10.2 million or 9.2% of total receivables (including accrued rent receivable) as of December 31, 2007. Development Risk:
As of September 30, 2008, we had in development or redevelopment 11 sites aggregating approximately 3.1 million square feet. We estimate the total cost of these projects to be $608.7 million and we had incurred $362.6 million of these costs as of September 30, 2008. We are actively marketing space at these projects to prospective tenants but can provide no assurance as to the timing or terms of any leases of space at these projects. As of September 30, 2008, we had entered into leases covering 77.8% of the net rentable square feet at these projects. As of September 30, 2008, we owned approximately 414 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 zoning, land-use, building, occupancy and other required governmental approvals.
RECENT ACQUISITIONS AND DISPOSITIONS
During the nine-month period ended September 30, 2008, we sold three properties, containing an aggregate of 0.3 million net rentable square feet and one land parcel containing 3.24 acres. Specifically:
- On January 14, 2008, we sold 7130 Ambassador Drive, an office property located in Allentown, Pennsylvania containing 114,049 net rentable square feet, for a sales price of $5.8 million.
- On February 14, 2008, we sold a parcel of land located in Henrico, Virginia containing 3.24 acres, for a sales price of $0.4 million.
- On February 29, 2008, we sold 1400 Howard Boulevard, an office property located in Mount Laurel, New Jersey containing 75,590 net rentable square feet, for a sales price of $22.0 million.
- On April 25, 2008, we sold 100 Brandywine Boulevard, an office property located in Newtown, Pennsylvania containing 102,000 net rentable square feet, for a sales price of $28.0 million.
- On June 27, 2008, we entered into an agreement to sell five properties, totaling approximately 1.7 million net rentable square feet in Oakland, California for an aggregate sales price of $412.5 million (including debt assumption). These five properties continue to be designated as held for sale at September 30, 2008 and we completed this sale in the fourth quarter. As noted in the Results of Operations below we incurred an impairment charge of $6.85 million upon the classification of these properties as held for sale.
- On October 1, 2008, we sold Main Street Centre, a 0.4 million net rentable square feet office property located in Richmond, Virginia, for a sales price of $48.8 million. This property is newly designated as held for sale at September 30, 2008. We continually reassess our portfolio to determine properties that may be in our best interest to sell depending on strategic or economic factors. From time to time, the decision to sell properties in the short term could result in an impairment or other loss being taken by the Company and such losses could be material to the statement of operations.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Management's Discussion and Analysis of Financial Condition and Results of Operations discuss our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements in conformity with accounting principles generally accepted in the United States of America 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 revenue and expenses during the reporting period. Certain

accounting policies are considered to be critical accounting policies, as they require management to make assumptions about matters that are highly uncertain at the time the estimate is made and changes in accounting policies are reasonably likely to occur from period to period. Management bases its estimates and assumptions on historical experience and current economic conditions. On an on-going basis, management evaluates its estimates and assumptions including those related to revenue, impairment of long-lived assets and the allowance for doubtful accounts. Actual results may differ from those estimates and assumptions.
Our Annual Report on Form 10-K for the year ended December 31, 2007 contains a discussion of our critical accounting policies. There have been no significant changes in our critical accounting policies since December 31, 2007. See also Note 2 in our unaudited consolidated financial statements for the nine-month period ended September 30, 2008 set forth herein. Management discusses our critical accounting policies and management's judgments and estimates with our Audit Committee.

RESULTS OF OPERATIONS
Comparison of the Three-Month Periods Ended September 30, 2008 and 2007 The table below shows selected operating information for the "Same Store Property Portfolio" and the "Total Portfolio." The Same Store Property Portfolio consists of 226 properties containing an aggregate of approximately 21.9 million net rentable square feet that we owned for the entire three-month periods ended September 30, 2008 and 2007, excluding the properties held for sale as of September 30, 2008. This table also includes a reconciliation from the Same Store Property Portfolio to the Total Portfolio net income (i.e., all properties owned by us during the three-month periods ended September 30, 2008 and 2007) by providing information for the properties which were acquired, under development (including lease-up assets) or placed into service and administrative/elimination information for the three-month periods ended September 30, 2008 and 2007 (in thousands).
We have a significant continuing involvement in the G&I Interchange Office LLC joint venture through our 20% ownership interest and the management and leasing services we provide for the venture. Accordingly, under EITF 03-13, "Applying the Conditions in Paragraph 42 of FASB Statement No. 144 in Determining Whether to Report Discontinued Operations", we have determined that the operations of the properties owned by the joint venture (the "G&I properties") should not be included in discontinued operations. This determination is reflected in the income statement comparisons below as we recognized revenue and expenses during the third quarter of 2007 for our 100% ownership interest and such information related to the G&I properties is included in the Other (Eliminations) column. The Total Portfolio net income presented in the table is equal to the net income of Brandywine Realty Trust. The only difference between the reported net income of Brandywine Realty Trust and Brandywine Operating Partnership is the allocation of the minority interest attributable to continuing and discontinued operations for limited partnership units that is on the statement of operations for Brandywine Realty Trust.

Comparison of three-months ended September 30, 2008 to the three-months ended

September 30, 2007

                                                                                        Acquired/Completed                Development/Redevelopment                      Other
                                      Same Store Property Portfolio                         Properties                         Properties (a)                      (Eliminations) (b)                           Total Portfolio
                                                                  Increase/                                                                                                                                                         Increase/
(dollars in thousands)           2008             2007           (Decrease)            2008             2007              2008                 2007               2008             2007            2008             2007           (Decrease)
Revenue:
Cash rents                    $  109,541        $ 107,848        $     1,693        $    6,997         $ 5,007        $      3,442         $      2,139        $     (578 )      $  5,550        $ 119,402        $ 120,544        $    (1,142 )
Straight-line rents                1,006            3,785             (2,779 )             865           1,570                 491                 (143 )               -              41            2,362            5,253             (2,891 )
Rents - FAS 141                    1,317            2,009               (692 )              64              41                 426                  430                 -               -            1,807            2,480               (673 )

Total rents                      111,864          113,642             (1,778 )           7,926           6,618               4,359                2,426              (578 )         5,591          123,571          128,277             (4,706 )
Tenant reimbursements             17,963           18,380               (417 )             372             416                 997                  711               400           1,018           19,732           20,525               (793 )
Termination fees                     338            7,699             (7,361 )               -               -                   -                   50                 -            (100 )            338            7,649             (7,311 )
Third party management
fees, labor
reimbursement and
leasing                                -                -                  -                 -                                   -                    -             4,390           4,415            4,390            4,415                (25 )
Other                                529              842               (313 )              12               2                  13                    3               230           1,427              784            2,274             (1,490 )

Total revenue                    130,694          140,563             (9,869 )           8,310           7,036               5,369                3,190             4,442          12,351          148,815          163,140            (14,325 )

Property operating
expenses                          40,485           39,979                506             2,290           1,344               1,811                1,300            (3,608 )           787           40,978           43,410             (2,432 )
Real estate taxes                 13,269           13,095                174               781             775                 907                  473               191             889           15,148           15,232                (84 )
Third party management
expenses                               -                -                  -                 -               -                   -                    -             1,790           2,508            1,790            2,508               (718 )
Subtotal                          76,940           87,489            (10,549 )           5,239           4,917               2,651                1,417             6,069           8,167           90,899          101,990            (11,091 )

General & administrative
expenses                               -                -                  -                 -               -                   -                    -             6,863           7,402            6,863            7,402               (539 )
Depreciation and
amortization                      45,205           48,845             (3,640 )           2,982           2,396               1,785                1,768             1,088           3,867           51,060           56,876             (5,816 )

Operating Income (loss)       $   31,735        $  38,644        $    (6,909 )      $    2,257         $ 2,521        $        866         $       (351 )      $   (1,882 )      $ (3,102 )      $  32,976        $  37,712        $    (4,736 )

Number of properties                 226              226                                   11              11                  11                   11                                                248              248
Square feet                       21,939           21,939                                1,436           1,436               3,085                3,085                                             26,460           26,460

Other Income (Expense):
Interest income                                                                                                                                                                                        221            1,054               (833 )
Interest expense                                                                                                                                                                                   (35,039 )        (39,496 )            4,457
Interest expense -
Deferred financing costs                                                                                                                                                                            (1,092 )         (1,058 )              (34 )
Equity in income of real
estate ventures                                                                                                                                                                                      1,059              763                296
Net gain on disposition
of undepreciated assets                                                                                                                                                                                  -              421               (421 )

Income (loss) before
minority interest                                                                                                                                                                                   (1,875 )           (604 )           (1,271 )
Minority interest -
partners' share of
consolidated real estate
ventures                                                                                                                                                                                               (39 )              5                (44 )
Minority interest
attributable to
continuing operations -
LP units                                                                                                                                                                                               141              116                 25

Income (loss) from
continuing operations                                                                                                                                                                               (1,773 )           (483 )           (1,290 )
Income from discontinued
operations                                                                                                                                                                                           4,452            2,902              1,550

Net Income                                                                                                                                                                                       $   2,679        $   2,419        $       260

Earnings per common
share                                                                                                                                                                                            $    0.01        $    0.00        $      0.01

EXPLANATORY NOTES

(a) - Results include: five developments and six redevelopment properties.

(b) - Represents certain revenues and expenses at the corporate level as well as various intercompany costs that are eliminated in consolidation and third-party management fees. Also included are revenues and expenses from the 29 DRA properties.

Total Revenue
Cash rents from the Total Portfolio decreased by $1.1 million from third quarter 2007 to third quarter 2008, primarily reflecting:
1) An additional $1.7 million at the Same Store Portfolio from increased occupancy, increased rents received on lease renewals and free rent periods converting to cash rent subsequent to the second quarter of 2007. This free rent conversion is the primary reason for the decrease in Total Portfolio straight-line rental income.

2) An additional $2.0 million from five properties that we acquired and six development/redevelopment properties that we completed and placed in service subsequent to the third quarter of 2007.

3) An additional $1.3 million of rental income due to increased occupancy at 11 development/redevelopment properties in the third quarter of 2008 in comparison to 2007.

4) The increase was offset by the decrease of $6.8 million of rental income earned from our G&I properties in the third quarter of 2007.

Tenant reimbursements for the Total Portfolio decreased by $0.8 million primarily as a result of decreased operating expenses of $2.5 million (excluding third party management fees) as compared to the third quarter of 2007. Property Operating Expenses
Property operating expenses, including real estate taxes and third party management expenses, at the Total Portfolio decreased by $3.2 million from third quarter 2007 to third quarter 2008, primarily due to $3.1 million of such expenses for G&I properties in the third quarter of 2007. Depreciation and Amortization Expense
Depreciation and amortization decreased by $5.8 million from third quarter 2007 to third quarter 2008, primarily due to $2.9 million of depreciation and amortization expense recorded on the G&I properties during the third quarter of 2007 and a $3.6 million decrease at the Same Store Portfolio due to assets within the Same Store Portfolio being fully amortized subsequent to September 30, 2007. The decrease was offset by an increase in depreciation and amortization from five properties that we acquired and six development/redevelopment properties that we completed and placed in service subsequent to the third quarter of 2007. . . .