The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. This Quarterly Report on Form 10-Q and other materials filed by us with the SEC (as well as information included in oral or other written statements made by us) contain statements that are forward-looking, including statements relating to business and real estate development activities, acquisitions, dispositions, future capital expenditures, financing sources, governmental regulation (including environmental regulation) and competition. We intend such forward-looking statements to be covered by the safe-harbor provisions of the 1995 Act. The words "anticipate," "believe," "estimate," "expect," "intend," "will," "should" and similar expressions, as they relate to us, are intended to identify forward-looking statements. 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 us or on our behalf. Factors that could cause actual results to differ materially from our expectations include, but are not limited to:
• the continuing impact of the global economic slowdown, which is having and may continue to have a negative effect on the following, among other things:

•         the fundamentals of our business, including overall market occupancy,
          demand for office space and rental rates;


•         the financial condition of our tenants, many of which are financial,
          legal and other professional firms, our lenders, counterparties to our
          derivative financial instruments and institutions that hold our cash
          balances and short-term investments, which may expose us to increased
          risks of default by these parties;


•         the availability of financing on attractive terms or at all, which may
          adversely impact our future interest expense and our ability to pursue
          acquisition and development opportunities and refinance existing debt;
          and


•         a decline in real estate asset valuations, which may limit our ability
          to dispose of assets at attractive prices or obtain or maintain debt
          financing secured by our properties or on an unsecured basis.


•       changes in local real estate conditions (including changes in rental
        rates and the number of properties that compete with our properties);


•       changes in the economic conditions affecting industries in which our
        principal tenants compete;

• the unavailability of equity and debt financing;

• our failure to lease unoccupied space in accordance with our projections;

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

• tenant defaults and the bankruptcy of major tenants;

• increases in interest rates;

• failure of interest rate hedging contracts to perform as expected and the effectiveness of such arrangements;

• failure of acquisitions to perform as expected;

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

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

• unanticipated costs associated with land development, including building moratoriums and inability to obtain necessary zoning, land-use, building, occupancy and other required governmental approvals, construction cost increases or overruns and construction delays;

• impairment losses;

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

• actual or threatened terrorist attacks;

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

• liability under environmental or other laws;

• failure or bankruptcy of real estate venture partners;

• inability of real estate venture partners to fund venture obligations;

• failure of dispositions to close in a timely manner;

• failure of buyers of our properties to comply with the terms of their financing agreements to us;

• earthquakes and other natural disasters;

• the unforeseen impact of climate change and compliance costs relating to laws and regulations governing climate change;

• risks associated with federal, state and local tax audits;

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

• the impact of newly adopted accounting principles on our accounting policies and on period-to-period comparisons of financial results.

Given these uncertainties, and the other risks identified in the "Risk Factors" section of our 2011 Annual Report on Form 10-K, 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.
The discussion that follows is based primarily on our consolidated financial statements as of September 30, 2012 and December 31, 2011 and for the three and nine-months ended September 30, 2012 and 2011 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, 2012, our 219 property portfolio consisted of 194 office properties, 19 industrial facilities, five mixed-use properties and one development property that contain an aggregate of approximately 24.5 million net rentable square feet. These 219 properties compose our core portfolio. As of September 30, 2012, we also held economic interests in 19 unconsolidated 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 7.0 million net rentable square feet.
As of September 30, 2012, we managed our portfolio within seven geographic segments: (1) Pennsylvania, (2) Philadelphia CBD, (3) Metropolitan Washington, D.C., (4) New Jersey/Delaware, (5) Richmond, Virginia, (6) Austin, Texas and
(7) California. The Pennsylvania segment includes properties in Chester, Delaware, and Montgomery counties in the Philadelphia suburbs. The Philadelphia CBD segment includes properties located in the City of Philadelphia in Pennsylvania. The Metropolitan Washington, D.C. segment includes properties in Northern Virginia and southern Maryland. The New Jersey/Delaware segment includes properties in Burlington, Camden and Mercer counties in New Jersey and in New Castle county in the state of Delaware. The Richmond, Virginia segment includes properties primarily in Albemarle, Chesterfield, Goochland and Henrico counties and one property in Durham, North Carolina. The Austin, Texas segment includes properties in Austin. The California segment includes properties in Oakland, Concord, Carlsbad and Rancho Bernardo. 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. Volatile economic conditions could result in a reduction of the availability of financing and potentially in higher borrowing costs. These factors, coupled with a sluggish economic recovery, have reduced the volume of real estate transactions and created credit stresses on most businesses. Vacancy rates may increase through 2012 and possibly beyond as the current economic climate negatively impacts tenants. We expect that the impact of the current state of the economy, including high unemployment and the continued volatility in the financial and credit markets, could continue to have a dampening effect on the fundamentals of our business, including potential

increases in past due accounts, tenant defaults, lower occupancy and reduced effective rents. These conditions would negatively affect our future net income and cash flows and could have a material adverse effect on our financial condition. We believe that the quality of our assets and our strong balance sheet will enable us to raise debt capital, if necessary, in various forms and from different sources, including traditional term or secured loans from banks, pension funds and life insurance companies. However, there can be no assurance that we will be able to borrow funds on terms that are economically attractive or at all.
We seek revenue growth throughout our portfolio by increasing occupancy and rental rates. Occupancy at our wholly owned properties at September 30, 2012 was 86.3%.
The table below summarizes the key operating and leasing statistics of our wholly owned operating properties for the three months ended September 30, 2012:

                                                  Three-month period      Nine-month period
                                                         ended                  ended
                                                     September 30,          September 30,
                                                         2012                   2012
Leasing Activity:
Total net rentable square feet owned (1)                24,327,765              24,327,765
Occupancy percentage (end of period)                          86.3 %                  86.3 %
Average occupancy percentage                                  86.5 %                  86.5 %
New leases and expansions commenced (square
feet)                                                      510,718               1,326,839
Leases renewed (square feet)                               701,961               1,468,579
Net absorption (square feet) (2)                          (129,364 )               (32,860 )
Percentage change in rental rates per square
feet (3):
New and expansion rental rates                                 8.0 %                   2.9 %
Renewal rental rates                                           3.6 %                   1.5 %
Combined rental rates                                          4.3 %                   1.8 %
Capital Costs Committed (4):
Leasing commissions (per square feet)            $            4.20       $            4.96
Tenant Improvements (per square feet)            $            7.03       $           14.06

(1) For each period, includes all properties in the core portfolio that were not under development or redevelopment.

(2) Includes leasing related to current developments and redevelopments, and sold properties.

(3) Rental rates include base rent plus reimbursement for operating expenses and real estate taxes.

(4) Calculated on a weighted average basis.

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, will not be 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 0.7% of our aggregate final annualized base rents as of September 30, 2012 (representing approximately 0.8% of the net rentable square feet of the Properties) expire without penalty in 2012. We maintain an active dialogue with our tenants in an effort to maximize lease renewals. During the nine months ended September 30, 2012, we achieved a 65.0% retention rate in our core portfolio. If we are unable to renew leases or relet space under expiring leases, at anticipated rental rates, or if tenants terminate their leases early, 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 accounts receivable reserve policy in light of our tenant base and general and local economic conditions. Our accounts receivable allowance was $16.0 million or 10.9% of total receivables (including accrued rent receivables) as of September 30, 2012 compared to $15.5 million or 11.2% of total receivables (including accrued rent receivables) as of December 31, 2011.

If economic conditions persist or deteriorate further, 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. Development Risk:
As of September 30, 2012, we owned approximately 424 acres of undeveloped land, and held options to purchase approximately 52 additional acres of undeveloped land. As market conditions warrant, we will seek to opportunistically dispose of those parcels that we do not anticipate developing. For parcels of land that we ultimately develop, we will be subject to risks and costs associated with land development, including building moratoriums and inability to obtain necessary zoning, land-use, building, occupancy and other required governmental approvals, construction cost increases or overruns and construction delays, and insufficient occupancy rates and rental rates.
We also entered into development agreements related to two of our land parcels under option for ground lease that require us to commence development by December 31, 2012. If we determine that construction cannot be started by the specified date, or that it is not in our best economic interest to develop either parcel or negotiate an extension of the development period, we will then write off the parcel-specific costs that we have incurred in preparing these parcels of land for development, as we will have lost our rights under the ground lease. These costs, amounting to $9.0 million as of September 30, 2012, would have to be written-off in the period that it is determined that the development would not be commenced. We are currently in negotiations to extend the development agreements related to these land parcels to December 31, 2015, and believe that an extension of these agreements is probable.

RECENT PROPERTY TRANSACTIONS
On September 5, 2012, we formed a joint venture, TB-BDN Plymouth Apartments, L.P., (the "Venture"), with Toll Brothers, Inc. ("Toll Brothers"), a residential home builder. We, along with Toll Brothers, each own a 50% interest in the Venture. The Venture owns a 20-acre parcel of land located in Plymouth Meeting, Pennsylvania, which we contributed to the Venture upon its formation. Concurrent with our contribution of the aforementioned land parcel, Toll Brothers contributed $15.5 million of cash to the venture, equivalent to the fair value of the land parcel we contributed. The cash contributed by Toll Brothers will be used to fund predevelopment costs to construct a 398 unit apartment complex. Based on the facts and circumstances at Venture formation, we have determined that the Venture is not a VIE in accordance with the accounting standard for the consolidation of VIEs. As a result, we used the voting interest model under the accounting standard for consolidation to determine if it will consolidate the Venture. Based on the provisions within the joint venture agreement, we, along with Toll Brothers, have significant participating rights, and we do not have exclusive control over the development or construction phases of the project. Since each partner has significant participating rights, we deconsolidated the land parcel contributed to the Venture, which is accounted for under the equity method of accounting. As of September 30, 2012, the carrying amount of our equity investment in this Venture amounted to $15.2 million, with an associated $0.3 million permanent basis adjustment accounting for the difference between the fair value and carrying amount of the said land parcel. This basis adjustment will remain unamortized until the property is sold to a third party or the Venture is dissolved, in accordance with the accounting standard for equity method investments.
On July 18, 2012, we sold a portfolio of 11 flex/office properties, totaling 466,719 square feet, in Exton, Pennsylvania, for a sales price of $52.7 million. These properties, collectively known as the Oaklands Corporate Center, were 81.6% occupied as of the date of sale.
On June 22, 2012, we sold Pacific Ridge Corporate Center, a 121,381 net rentable square feet, two-building office property located in Carlsbad, California, for a sales price of $29.0 million. The property was 83.7% occupied as of the sale date.
On March 22, 2012, we sold South Lake at Dulles Corner, a 268,240 net rentable square feet office property located in Herndon, Virginia, for a sales price of $91.1 million. The property was 100.0% occupied as of the date of sale. On January 17, 2012, we sold 304 Harper Drive, a 32,978 net rentable square feet office property located in Moorestown, New Jersey, for a sales price of $3.0 million. The property was 90.1% occupied as of the date of sale.
On January 6, 2012, we acquired a vacant office property containing 154,392 net rentable square feet in Plymouth Meeting, Pennsylvania known as 660 West Germantown Pike for $9.1 million. We are currently redeveloping this property. We funded the acquisition price through an advance under our Credit Facility, since repaid with available corporate funds. We also recognized $0.1 million of acquisition related costs that have been capitalized on our consolidated balance sheet, in accordance with guidance on asset acquisitions.

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 us and such losses could be material to our 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, 2011 contains a discussion of our critical accounting policies. There have been no significant changes in our critical accounting policies since December 31, 2011. See also Note 2 in our unaudited consolidated financial statements for the three and nine-month periods ended September 30, 2012 set forth herein. Management discusses our critical accounting policies and management's judgments and estimates with our Audit Committee.

RESULTS OF OPERATIONS
The following discussion is based on our Consolidated Financial Statements for the three and nine-month periods ended September 30, 2012 and 2011. We believe that presentation of our consolidated financial information, without a breakdown by segment, will effectively present important information useful to our investors.
Net operating income ("NOI") as presented in the comparative analysis below is defined as total revenue less property operating expenses, real estate taxes and third party management expenses. Property operating expenses that are included in determining NOI consist of costs that are necessary and allocable to our operating properties such as utilities, property-level salaries, repairs and maintenance, property insurance, management fees and bad debt expense. General and administrative expenses that are not reflected in NOI primarily consist of corporate-level salaries, amortization of share awards and professional fees that are incurred as part of corporate office management. NOI is a non-GAAP financial measure that we use internally to evaluate the operating performance of our real estate assets by segment, as presented in Note 16 to the consolidated financial statements, and of our business as a whole. We believe NOI provides useful information to investors regarding our financial condition and results of operations because it reflects only those income and expense items that are incurred at the property level. While NOI is a relevant and widely used measure of operating performance of real estate investment trusts, it does not represent cash flow from operations or net income as defined by GAAP and should not be considered as an alternative to those measures in evaluating our liquidity or operating performance. NOI also does not reflect general and administrative expenses, interest expenses, real estate impairment losses, depreciation and amortization costs, capital expenditures and leasing costs. Trends in development and construction activities that could materially impact our results from operations are also not included in NOI. We believe that net income, as defined by GAAP, is the most appropriate earnings measure. See Note 16 to the Consolidated Financial Statements for a reconciliation of NOI to our consolidated net income (loss).
Comparison of the Three-Month Periods Ended September 30, 2012 and 2011 The table below shows selected operating information for the "Same Store Property Portfolio" and the "Total Portfolio." The Same Store Property Portfolio consists of 216 properties containing an aggregate of approximately 24.1 million net rentable square feet, and represents properties that we owned for the entire three-month periods ended September 30, 2012 and 2011. The Same Store Property Portfolio includes properties acquired or placed in service on or prior to January 1, 2011 and owned through September 30, 2012. The Total Portfolio includes the effects of other properties that were either placed into service, acquired or redeveloped after July 1, 2011 or disposed prior to September 30, 2012. A property is excluded from our Same Store Property Portfolio and moved into the redevelopment column in the period that we determine that a redevelopment would be the best use of the asset, and when said asset is taken out of service. 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, 2012 and 2011) by providing information for the properties which were acquired, placed into service, under development or redevelopment

and administrative/elimination information for the three-month periods ended September 30, 2012 and 2011 (in thousands).
The Total Portfolio net income presented in the table is equal to the net income of the Parent Company and the Operating Partnership.
Comparison of three-months ended September 30, 2012 to the three-months ended

September 30, 2011
                                                                      Recently Completed                                                Other
                            Same Store Property Portfolio               Properties (a)            Development Properties          (Eliminations) (b)                   Total Portfolio

(dollars in                                          Increase/                                                                                                                          Increase/
thousands)               2012           2011        (Decrease)        2012          2011            2012              2011        2012          2011         2012          2011        (Decrease)
Revenue:
Cash rents           $   107,667     $ 106,953     $       714     $    573       $   332     $           -         $    -     $    (741 )   $  2,295     $ 107,499     $ 109,580     $    (2,081 )
Straight-line rents        4,420         5,045            (625 )        185            39               303              -             -          201         4,908         5,285            (377 )
Above/below market
rent amortization          1,429         1,247             182          153           102                 -              -             -           37         1,582         1,386             196
Total rents              113,516       113,245             271          911           473               303              -          (741 )      2,533       113,989       116,251          (2,262 )
Tenant
reimbursements            20,345        18,857           1,488          219             6                19              -           112          147        20,695        19,010           1,685
Termination fees             931           157             774            -             -                 -              -             -            -           931           157             774
Third party
management fees,
labor reimbursement
and leasing                    -             -               -            -             -                 -              -         3,007        3,028         3,007         3,028             (21 )
. . .