Filed by Brandywine Operating Partnership pursuant to
Rule 425 under the Securities Act of 1933 and deemed filed pursuant to Rule 14a-12
Under the Securities Exchange Act of 1934
Subject Company: Prentiss Properties Trust
Commission File No.:1-14516
This filing relates to a proposed acquisition (the “Acquisition”) by Brandywine Realty Trust
(“Brandywine”) of Prentiss Properties Trust (“Prentiss”) pursuant to the terms of an Agreement
and Plan of Merger,
dated as of October 3, 2005 (the “Merger Agreement”), by and among Brandywine and Prentiss. The Merger
Agreement is on file with the Securities and Exchange Commission (the “Commission”) as an exhibit to
the Current
Report on Form 8-K filed by Brandywine on October 3, 2005. The Merger Agreement is incorporated by reference
into this filing.
The following is a series of slides presented as additional information by Brandywine on its website on
October 31, 2005 regarding the Acquisition and related matters.
October 31, 2005
Accelerated Growth . . .
The Post-Merger Brandywine Story
Safe Harbor
In addition to historical information, this presentation contains forward-
looking statements under the federal securities
laws. Because these
statements are based on current expectations, estimates and
projections about the industry and markets in which Brandywine and
Prentiss operate, management’s beliefs and assumptions made by
management, they involve uncertainties
that could significantly impact
financial results. Forward-looking statements are not guarantees of
future performance, involve certain risks, uncertainties and assumptions
that are difficult to predict. Actual operating results may be affected
by
changes in general economic conditions; increased or unanticipated
competitive market conditions; changes in financial markets, interest
rates and foreign currency exchange rates that could adversely affect
cost of capital, ability to meet
financing needs and obligations and
results of operations; the availability of private capital; geopolitical
concerns and uncertainties and therefore, may differ materially from
what is expressed or forecasted in this presentation.
Combined Company Growth Driven by
Opportunities in Place at Closing
The Growth Drivers:
Significantly higher same-store growth
$180 million incremental developmental pipeline
Staging in during 2007
Cira Centre execution
Radnor Financial Center lease up
Execution of market penetration strategy in key
sub-markets with high transaction velocity (both
developments and acquisitions)
Internal capital availability
1
Market Growth Comparisons
Philadelphia is steady and solid
New markets add depth, higher growth, greater cyclicality and economic diversity
Blending of markets creates higher annual growth, core stability, and cyclical opportunity
2.60%
2.44%
1.41%
0.24%
CAGR
16.65%
15.53%
8.77%
1.44%
% Change
OAK
AUS
N-VA
PHL
Projected Population Growth*
2.56%
3.04%
3.06%
2.28%
CAGR
16.4%
19.7%
19.8%
14.5%
% Change
OAK
AUS
N-VA
PHL
Projected Rental Rate Growth*
1.39%
3.36%
2.50%
0.96%
CAGR
8.66%
21.90%
16.0%
5.90%
% Change
OAK
AUS
N-VA
PHL
Projected Office Employment
Growth*
2
* Source: REIS Data 2004-2009
Combined Company Long-term
Growth Summary
Combined Company’s Business Strategy Creates Net Operating
Income Combined Annual Growth in Excess of 11%*
2006 2007 2008
Same Store Growth
BDN + PP
Cira Centre
Radnor Financial
Incremental Investment
Same Store Growth
BDN + PP
Cira Centre
Radnor Financial
Incremental Investment
Development Contribution
Same Store Growth
BDN + PP
Increased Development
Contribution
Increased Acquisition
Contribution
3
* CAGR 2005-2008
Short Term Outlook (2006-2008)
Growth rate in excess of Brandywine stand-alone with
Cira and Radnor
Fully funded business plan
Higher blended same store NOI
The Same-Store Comparison
4
3.85%-4.00%
PP Core**
1.15%-1.30%
BDN Core*
2005-2008 CAGR
Portfolio
Existing property NOI growth
* BDN existing assets without Cira Centre and Radnor Financial Center
** PP owned (D.C., Oakland, Austin, and Dallas) and Joint Venture assets being
acquired by BDN
The Same-Store Comparison Pro Forma
for the Dallas Recycling Strategy
5
4.50%-4.65%
PP Pro Forma Core**
2005-2008 CAGR
Portfolio
1.15%-1.30%
BDN Core*
Pro forma property NOI growth
* BDN existing assets without Cira Centre and Radnor Financial Center
** PP owned (D.C., Oakland, Austin, and Dallas) and Joint Venture assets being
acquired by BDN, pro forma as if $200mm of Dallas assets are sold (and
removed from the analysis)
Total Portfolio NOI Growth Accelerates
6
6.50%-6.65%
Combined BDN-PP Portfolio***
3.70%-3.85%
BDN Entire Portfolio**
2006-2008
CAGR*
Portfolio
Includes owned assets and known development only (see
Appendix I). No speculative acquisitions or other
developments have been included in the calculation.
Dallas proceeds used to fund additional development.
* Portfolio property NOI growth
** BDN Core + Cira Centre + Radnor Financial Center lease-up + in process BDN
development
*** BDN Entire Portfolio combined with PP Pro Forma Core + known incremental PP
development
New Markets Provide Enhanced
Investment Opportunities
New markets have significant breadth and depth
DC area is 2nd largest US office market with over 350 million
square
feet with 200 million square feet in key targeted
submarkets
Bay area is 4th largest US office market with over 200 million
square
feet with 80 million square feet in key targeted
submarkets
DC and Bay area are the 4th
and 5th most populous PMSA’s in
the US
Austin is projected to have the highest employment growth
rate in the country
7
Beyond our Fully Funded Short-term
Commitments, the Growth Potential is Dramatic
8
$11.9 million
($19.2 million NOI x 62% ownership from existing BDN shareholders)
Combined Company (per annum)
$240 million @ 8.0% yield
4.5% of asset base
+ 86.7%
% Additional NOI to Existing BDN Shareholders
$6.4 million
BDN Stand Alone (per annum)
$75 million @ 8.5% yield
2.5% of asset base
2007 NOI for existing BDN shareholders
Illustrative scenario:
Development
Acquisition
$11.6 million
($18.8 million NOI x 62% ownership from existing BDN shareholders)
Combined Company
$250 million
7.5% cap rate
+ 45.3%
% Additional NOI to Existing BDN Shareholders
$8.0 million
BDN Stand Alone
$100 million
8.0% cap rate
2007 NOI for existing BDN shareholders
Illustrative scenario:
Summary
2006-2008, on a diluted basis, existing BDN shareholders receive
more NOI from their investment in the combined company than
owning BDN on a stand alone basis
After factoring in the expected incremental NOI from Cira Centre
and Radnor Financial Center- existing BDN shareholders will
participate in greater NOI growth within the combined company
versus
BDN stand alone
BDN existing markets expected to grow at one third the rate of
the PP markets the combined company will focus on long-term
Depth of new markets creates opportunities for acquisition and
development program expansion over the next three years
9
Appendix I
47.7
2
$
043
1,
Total
06
-
Jan
65.4
$
217
Oakland
2101 Webster Expansion
6
0
-
Jan
$70.0
265
Dulles
South Lake at Dulles Corner
6
0
-
Jan
$44.0
211
Austin
The Park at Barton Creek
05
-
Dec
25.0
$
110
New Jersey
Mount Laurel
05
-
Dec
17.0
$
75
New Jersey
Princeton Pike
06
-
Jan
.0
14
$
64
Philadelphia
Newtown Bucks County
5
0
-
Aug
$12.3
101
Philadelphia
500 Office Center Dr.
Start date
($millions)
Projected cost
(000's)
Square footage
Location
starts
term
-
Near
10
Development pipeline
FORWARD LOOKING STATEMENTS: Certain statements in this presentation constitute forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and
unknown risks, uncertainties and other factors that may cause the actual results, performance, achievements or
transactions of Brandywine, Prentiss Properties and their affiliates or industry results or the
benefits of the proposed merger
to be materially different from any future results, performance, achievements or transactions expressed or implied by
such forward-looking statements. Such risks, uncertainties and other factors relate to,
among others, difficulties
encountered in integrating the companies, approval of the transaction by the shareholders of the companies, the
satisfaction of closing conditions to the transaction,
the companies’ ability to lease vacant space and to renew or relet
space under expiring leases at expected levels, the potential loss
of major tenants, interest rate levels, the availability and
terms of debt and equity financing, competition with other real estate companies for tenants and acquisitions, risks of
real estate acquisitions, dispositions and developments, including cost
overruns and construction delays, unanticipated
operating costs and the effects of general and local economic and real estate conditions. Additional information or
factors which could impact the companies and the forward-looking statements
contained herein are included in each
company’s filings with the Securities and Exchange Commission. The companies assume
no obligation to update or
supplement forward-looking statements that become untrue because of subsequent events.
Additional Information about the Merger and Where to Find It
This presentation does not constitute an offer of any securities for sale. In connection with the proposed transaction,
Brandywine and Prentiss Properties filed a joint proxy statement/prospectus
as part of a registration statement on Form S-
4 and other documents regarding the proposed merger with the Securities and Exchange Commission. Investors and
security holders are urged to read the join proxy statement/prospectus because it
will contain important information
about Brandywine and Prentiss Properties and the proposed merger. A definitive proxy statement/prospectus will be
sent to shareholders of Brandywine and Prentiss Properties seeking their approval of the
transaction. Investors and
security holders may obtain a free copy of the definitive proxy statement/prospectus (when available) and other
documents filed by Brandywine and Prentiss Properties with the SEC at the SEC’s website at www.sec.gov. The
definitive
joint proxy statement/prospectus and other relevant documents may also be obtained, when available, free of cost by
directing a request to Brandywine Realty Trust, 401 Plymouth Road, Suite 500, Plymouth Meeting, PA 19462, Attention
Investor
Relations, (telephone 610-325-5600) or Prentiss Properties Trust, 3890 W. Northwest Highway, Suite 400, Dallas,
Texas 75220, Attention: Investor Relations (telephone 214-654-0886). Investors and security holders are urged to read the
proxy
statement, prospectus and other relevant material when they become available before making any voting or
investment decisions with respect to the merger.
Brandywine and Prentiss Properties and their respective trustees and executive officers may be deemed to be
participants in the solicitation of proxies from the shareholders of Brandywine and Prentiss Properties
in connection with
the merger. Information about Brandywine and its trustees and executive officers, and their ownership of Brandywine
securities, is set forth in the proxy statement for Brandywine’s 2005 Annual Meeting of Shareholders,
which was filed with
the SEC on April 1, 2005. Information about Prentiss Properties and its trustees and executive officers, and their
ownership of Prentiss Properties securities, is set forth in the proxy statement for the 2005 Annual Meeting
of Shareholders
of Prentiss Properties, which was filed with the SEC on April 5, 2005. Additional information regarding the interests of those
persons may be obtained by reading the proxy statement/prospectus when it becomes available.
This communication shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to
buy any securities, nor shall there be any sale of securities in any jurisdiction
in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities
shall be made except by means of a prospectus meeting the requirements
of Section 10 of the Securities Act of 1933, as
amended.