




<PAGE>

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

                                   FORM 10-Q

(Mark One)

     X    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
   ----
          Exchange Act of 1934

          For the quarterly period ended June 30, 1998
                                       or
   ____   Transition Report Pursuant to Section 13 or 15(d) of the Securities
          Exchange Act of 1934 (No Fee Required)

          For the transition period from ____________ to ___________

                         Commission file number 1-9106

                            Brandywine Realty Trust
                            -----------------------
            (Exact name of registrant as specified in its charter)

          Maryland                                       23-2413352
          --------                                       ----------
State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization
                                  

         
        16 Campus Boulevard, Newtown Square, Pennsylvania     19073
        -------------------------------------------------------------
          (Address of principal executive offices)          (Zip Code)

                                (610) 325-5600
                                --------------
                         Registrant's telephone number

         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 and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

         A total of 38,103,682 Common Shares of Beneficial Interest were
outstanding as of August 13, 1998.


<PAGE>

BRANDYWINE REALTY TRUST

                               TABLE OF CONTENTS

                        PART I - FINANCIAL INFORMATION

Item 1.      Financial Statements

             Consolidated Balance Sheets as of June 30, 1998 (unaudited) and
             December 31, 1997

             Consolidated Statements of Operations for the three months and
             six months ended June 30, 1998 (unaudited) and June 30, 1997
             (unaudited)

             Consolidated Statements of Cash Flow for the six months ended
             June 30, 1998 (unaudited) and June 30, 1997 (unaudited)

             Notes to Financial Statements

Item 2.      Management's Discussion and Analysis of Financial Condition and
             Results of Operations


                          PART II - OTHER INFORMATION



Item 1.      Legal Proceedings

Item 2.      Changes in Securities

Item 3.      Defaults Upon Senior Securities

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

Item 5.      Other Information

Item 6.      Exhibits and Reports on Form 8-K

             Signatures




                                      2

<PAGE>



PART I - FINANCIAL INFORMATION
Item 1. - Financial Statements

                            BRANDYWINE REALTY TRUST
                          CONSOLIDATED BALANCE SHEETS
                          (unaudited and in thousands)
<TABLE>
<CAPTION>
                                                                                 June 30,            December 31,
                                                                                   1998                  1997
                                                                               ------------          ------------
                                           ASSETS
<S>                                                                            <C>                    <C>     
Real estate investments   
     Operating properties                                                      $ 1,167,717            $   586,414
     Accumulated depreciation                                                      (39,723)               (22,857)
                                                                               -----------            -----------
                                                                                 1,127,994                563,557

Cash and cash equivalents                                                           42,394                 29,442
Escrowed cash                                                                        1,325                    212
Accounts receivable                                                                  6,971                  3,689
Due from affiliates                                                                   --                      214
Investment in management company                                                       149                     74
Investment in unconsolidated real estate ventures                                   11,965                  5,480
Deposits                                                                             1,300                 12,133
Deferred costs and other assets                                                      8,311                  6,680
                                                                               -----------            -----------

     Total assets                                                              $ 1,200,409            $   621,481
                                                                               ===========            ===========


                           LIABILITIES AND BENEFICIARIES' EQUITY

Mortgage notes payable                                                         $    71,567            $    48,731
Notes payable, Credit Facility                                                     351,825                115,233
Accrued interest                                                                     1,354                    857
Accounts payable and accrued expenses                                                4,266                  2,377
Distributions payable                                                               14,870                  8,843
Due to affiliates                                                                      239                   --
Tenant security deposits and deferred rents                                         11,489                  5,535
                                                                               -----------            -----------

     Total liabilities                                                             455,610                181,576
                                                                               -----------            -----------

Commitments and Contingencies

Minority interest                                                                   22,084                 14,377
                                                                               -----------            -----------

Beneficiaries' equity
     Shares of beneficial interest, $0.01 par value, 100,000,000
          common shares authorized, 38,103,682 and 24,087,315 shares
          issued and outstanding at  June 30, 1998 and December 31, 1997, 
          respectively                                                                 377                    241
     Additional paid-in capital                                                    753,066                446,054
     Share warrants                                                                    962                    962
     Cumulative earnings                                                            30,119                 11,753
     Cumulative distributions                                                      (61,809)               (33,482)
                                                                               -----------            -----------

     Total beneficiaries' equity                                                   722,715                425,528
                                                                               -----------            -----------

     Total liabilities and beneficiaries' equity                               $ 1,200,409            $   621,481
                                                                               ===========            ===========
</TABLE>

          The accompanying condensed notes are integral part of these
                      consolidated financial statements.

 
                                     3
<PAGE>



                            BRANDYWINE REALTY TRUST
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                 (in thousands, except per share information)
                                  (Unaudited)
<TABLE>
<CAPTION>

                                                                              Three Months                Six Months
                                                                              Ended June 30,            Ended June 30,
                                                                          ---------------------     ---------------------
                                                                            1998         1997         1998         1997
                                                                          --------     --------     --------     --------
<S>                                                                       <C>          <C>          <C>          <C>     
Revenue:
     Rents                                                                $ 37,058     $  9,890     $ 65,553     $ 16,889
     Tenant reimbursements                                                   5,583        1,958        9,406        3,285
     Other                                                                     489          272        1,273          544
                                                                          --------     --------     --------     --------
        Total revenue                                                       43,130       12,120       76,232       20,718
                                                                          --------     --------     --------     --------

Operating Expenses:
     Interest                                                                6,630        2,084       11,017        3,059
     Depreciation and amortization                                          10,480        3,465       18,193        5,775
     Amortization of deferred compensation costs                               372         --            744         --
     Property operating expenses                                            13,313        4,222       23,450        7,032
     Management fees                                                         1,551          442        2,882          757
     Administrative expenses                                                   363          261          627          430
                                                                          --------     --------     --------     --------
        Total operating expenses                                            32,709       10,474       56,913       17,053
                                                                          --------     --------     --------     --------

     Income before equity in income of management
        company, gains on sales, minority interest and extraordinary item   10,421        1,646       19,319        3,665
Equity in income of management company                                          40           92           75          217
                                                                          --------     --------     --------     --------
     Income before gains on sales, minority interest
        and extraordinary item                                              10,461        1,738       19,394        3,882
Gains on sale of interests in real estate                                      209         --            209         --
                                                                          --------     --------     --------     --------
     Income before minority interst and extraordinary item                  10,670        1,738       19,603        3,882
Minority interest in income                                                   (248)         (80)        (378)        (174)
                                                                          --------     --------     --------     --------
     Net income before extraordinary item                                   10,422        1,658       19,225        3,708
Extraordinary item                                                              --           --         (858)          --
                                                                          --------     --------     --------     --------
     Net income                                                             10,422        1,658       18,367        3,708
     Income allocated to Preferred Shares                                       --           --           --         (499)
                                                                          ========     ========     ========     ========
     Income allocated to Common Shares                                    $ 10,422     $  1,658     $ 18,367     $  3,209
                                                                          ========     ========     ========     ========

Earnings per Common Share:
     Basic                                                                $   0.28     $   0.17     $   0.53     $   0.37
                                                                          ========     ========     ========     ========
     Diluted                                                              $   0.28     $   0.15     $   0.53     $   0.36
                                                                          ========     ========     ========     ========
</TABLE>


             The accompanying condensed notes are an integral part
                 of these consolidated financial statements.


                                      4
<PAGE>

                            BRANDYWINE REALTY TRUST
                     CONSOLIDATED STATEMENTS OF CASH FLOW
                          (unaudited and in thousands)
<TABLE>
<CAPTION>
                                                                                        Six Months
                                                                                      Ended June 30,
                                                                             ------------------------------
                                                                                1998                1997
                                                                             ---------            ---------
<S>                                                                          <C>                  <C>      
Cash flows from operating activities:
       Net income                                                            $  18,367            $   3,708
          Adjustments to reconcile net income to net cash provided
          by operating activities:
             Minority interest                                                     378                  174
             Depreciation and amortization                                      18,193                5,775
             Equity in income of management company                                (75)                (216)
             Amortization of deferred compensation costs                           744                 --
             Issuance of shares to trustees                                         29                 --
             Amortization of discounted notes payable                              142                 --
             Gain on sale of interest in real estate                              (209)
             Extraordinary items                                                   858                 --
          Changes in assets and liabilities:
             Accounts receivable                                                (3,282)              (1,389)
             Affiliate receivable                                                  453                  224
             Other assets                                                          231                   69
             Accounts payable and accrued expenses                               1,975                  565
             Accrued mortgage interest                                             497                  193
             Other liabilities                                                   5,954                1,397
                                                                             ---------            ---------

                     Net cash provided by operating activites                   44,255               10,500
                                                                             ---------            ---------

Cash flows from investing activities:
       Purchase of properties                                                 (545,582)            (194,604)
       Sales of Properties                                                      14,704                 --
       Investment in real estate ventures                                       (6,485)                --
       Decrease (increase) in escrowed cash                                     (1,113)                 831
       Capital expenditures and leasing commissions paid                        (7,113)              (4,573)
                                                                             ---------            ---------

                     Net cash used in investing activities                    (545,589)            (198,346)
                                                                             ---------            ---------

Cash flows from financing activites:
       Proceeds from issuance of shares, net                                   301,336               45,404
       Distributions paid to shareholders                                      (22,482)              (5,975)
       Distributions paid to minority partners                                    (286)                (177)
       Proceeds from mortgage notes payable                                      5,708               13,277
       Repayment of mortgage notes payable                                      (5,090)              (2,961)
       Proceeds from notes payable, Credit Facility                            658,642              137,775
       Repayment of notes payable, Credit Facility                            (422,050)              (7,000)
       Other debt costs                                                         (1,492)                   1
                                                                             ---------            ---------

                     Net cash provided by financing activities                 514,286              180,344
                                                                             ---------            ---------

Increase (decrease) in cash and cash equivalents                                12,952               (7,502)
Cash and cash equivalents at beginning of period                                29,442               18,279
                                                                             ---------            ---------
Cash and cash equivalents at end of period                                   $  42,394            $  10,777
                                                                             =========            =========
</TABLE>
             The accompanying condensed notes are an integral part
                 of these consolidated financial statements.


                                      5
<PAGE>

                            BRANDYWINE REALTY TRUST

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

                                 JUNE 30, 1998


1.  ORGANIZATION AND NATURE OF OPERATIONS:

Brandywine Realty Trust (collectively with its subsidiaries, the "Company") is
a self-administered, self-managed and fully integrated real estate investment
trust (a "REIT") . The Company currently owns a portfolio of real estate
assets located primarily in the Mid-Atlantic Region. As of June 30, 1998, the
Company's portfolio included 151 office properties and 28 industrial
facilities (collectively, the "Properties") that contain an aggregate of
approximately 12.1 million net rentable square feet. As of June 30, 1998, the
Company also held economic interests in seven office development entities (the
"Development Entities").

The Company's interest in the Properties and the Development Entities is held
through Brandywine Operating Partnership, L.P. (the "Operating Partnership").
The Company is the sole general partner of the Operating Partnership and, as
of June 30, 1998, the Company held a 97.6 % interest in the Operating
Partnership. The Operating Partnership holds a 95% economic interest in
Brandywine Realty Services Corporation (the "Management Company") through its
ownership of 100% of the Management Company's non voting preferred stock and
5% of its voting common stock. As of June 30, 1998, the Management Company was
responsible for managing and leasing 177 of the Company's Properties and
additional properties on behalf of third parties.

A majority of the Properties are located within the suburban Philadelphia
office and industrial market. As such, a downturn in business activity in this
market could negatively impact the Company . Management believes that the
Philadelphia office and industrial market provides a well-diversified economic
base which helps to insulate the region from the types of market vicissitudes
that can adversely affect a single-sector economy.


2.  BASIS OF PRESENTATION:

The consolidated financial statements have been prepared by the Company without
audit except as to the balance sheet as of December 31, 1997 which has been
prepared from audited data, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote disclosures
normally included in the financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted pursuant
to such rules and regulations, although the Company believes that the included
disclosures are adequate to make the information presented not misleading. In
the opinion of the Company, all adjustments (consisting solely of normal
recurring matters) necessary to fairly present the financial position of the
Company as of June 30, 1998, the results of its operations for the three month
periods ended June 30, 1998 and 1997, and the results of its operations and its
cash flows for the six month periods ended June 30, 1998 and 1997 have been
included. The results of operations for such interim periods are not necessarily
indicative of the results for a full year. For further information, refer to the
Company's consolidated financial statements and footnotes thereto included in
the Annual Report on Form 10-K, as amended on Form 10-K/A, for the year ended
December 31, 1997.


3.  ACQUISITIONS OF REAL ESTATE INVESTMENTS:

Second Quarter - 1998

During the second quarter of 1998, the Company acquired 13 office properties
which contained an aggregate of approximately 796,150 net rentable square feet.
The aggregate purchase price of the 13 Properties was approximately $98.2
million, which was satisfied with approximately $87.9 million of cash,
approximately $1.0 million of debt assumed, and approximately $9.3 million in
Class A units of limited partner interest ("Class A Units" in the Operating
Partnership. Also, during the second quarter of 1998, the Company sold an office
property located in Cincinnati, Ohio which contains approximately 156,175 net
rentable square feet for a gross selling price of approximately $15.2 million.

                                      6
<PAGE>

First Quarter - 1998

During the first three months of 1998, the Company acquired 50 Properties (44
office properties and six industrial facilities) which contained an aggregate of
approximately 4.3 million net rentable square feet. The aggregate purchase price
of the 50 Properties was $492.7 million, which was satisfied with approximately
$468.10 million of cash, approximately $21.0 million of debt assumed, and 
approximately $3.6 million in Class A Units.

1997

During 1997, the Company acquired 80 Properties (61 office properties and 19
industrial facilities) which contained an aggregate of approximately 5.1
million net rentable square feet. The aggregate purchase price for the 1997
property acquisitions was $403.7 million, which was satisfied with $378.3
million of cash, $15.9 million of debt assumed and $9.5 million in Class A
Units.

The following unaudited pro forma financial information of the Company for the
six months ended June 30, 1998 and 1997 gives effect to the Properties
acquired through June 30, 1998 and the offerings of Common Shares of
beneficial interest, par value $0.01 per share ("Common Shares") during 1998
and 1997 as if the purchases and offerings had occurred on January 1, 1997.
<TABLE>
<CAPTION>
                                                                              Six Months Ended June 30,
                                                                     -----------------------------------------
                                                                             1998                  1997
                                                                     ------------------    -------------------
                                                                       (in thousands, except per share data)
                                                                                    (Unaudited)
<S>                                                                         <C>                  <C>    
Pro forma total revenues                                                    $87,776              $82,469
Pro forma net income before extraordinary items                             $20,042              $15,591
Diluted pro forma net income per Common Share before extraordinary items      $0.51                $0.42
</TABLE>

All acquisitions described above were accounted for by the purchase method.
The results of operations for each of the acquired properties have been
included from the respective purchase dates. All pro forma financial
information presented within this footnote is unaudited and is not necessarily
indicative of the results which actually would have occurred if acquisitions
had been consummated on the respective dates indicated, nor does the pro forma
information purport to represent the results of operations for future periods.

Probable Acquisitions

On July 11, 1998, the Company entered into an agreement with Donald E. Axinn
to acquire a portfolio of nine office properties and 20 industrial facilities
located in Long Island, New York and Northern New Jersey for an aggregate
purchase price of approximately $103.5 million.

Certain of the properties (seven office and 19 industrial) are scheduled to
close during the third quarter of 1998. The purchase price applicable to these
properties is approximately $83.4 million, of which $10.5 million will be
deferred until the fourth quarter and the balance will be satisfied through a
combination of cash and Class A Units. The seller has the right to elect the mix
of cash and Class A Units, provided that a minimum of $24.0 million must be
taken in Class A Units. The sellers have agreed to value the Class A Units at
$24.00.

On August 6, 1998, the Company entered into an agreement with certain entities
to acquire a portfolio of 44 office properties, 23 industrial facilities and
one retail property located in Pennsylvania, New Jersey and Virginia for an
aggregate purchase price of approximately $612.0 million (the "Lazard
Transaction"). For a more complete description of the Lazard Transaction, see
Item 5 of this Form 10-Q.


                                      7
<PAGE>

4.  INDEBTEDNESS

Notes Payable Credit Facility - The Company uses credit facility borrowings
for general business purposes, including the acquisition of office and
industrial properties and the repayment of certain outstanding debt. At
December 31, 1997, the Company had a $150.0 million secured credit facility (the
"1997 Credit Facility") . The 1997 Credit Facility was secured by 39 of the
Properties and bore interest at a per annum floating rate equal to the
Company's choice of 30, 60 or 90-day LIBOR, plus 175 basis points.

During the first six months of 1998, the Company replaced the 1997 Credit
Facility with a $330.0 million unsecured revolving credit facility (the "1998
Credit Facility"). The Company wrote off $858,000 of unamortized deferred
financing costs relating to the 1997 Credit Facility which has been accounted
for as an extraordinary item on the statement of operations. The new facility
enables the Company to borrow funds at a reduced interest rate equal to the
30, 60, 90 or 180-day LIBOR, plus, in each case, a range of 100 to 137.5 basis
points, depending on the Company's then existing leverage and debt rating.
Alternatively, the Company can borrow funds at a base rate equal to the higher
of (i) the Prime Rate or (ii) the Fed Funds Rate plus 50 basis points. The
1998 Credit Facility matures on January 5, 2001 and is extendible, under
certain circumstances, at the Company's option to January 5, 2002. As of June
30, 1998, the Company had $326.8 million of outstanding indebtedness under the
1998 Credit Facility.

The 1998 Credit Facility requires the Company to maintain ongoing compliance
with a number of customary financial and other covenants, including leverage
ratios based on gross implied asset value and debt service coverage ratios,
limitations on liens and distributions and a minimum net worth requirement. As
of June 30, 1998, the Company was in compliance with all debt covenants.

On May 7, 1998, the Company and the Operating Partnership entered into an
unsecured credit facility (the "Additional Facility") with NationsBank, N.A.
permitting advances of up to $150.0 million, subject to certain conditions.
The Additional Facility matures on November 7, 1998, subject to a two-month
extension under certain circumstances, and allows the Company to borrow funds
at an interest rate equal to LIBOR plus 150 basis points or, at the Company's
option, the Prime Rate plus 25 basis points. Amounts repaid by the Company
under the Additional Facility are not subject to reborrowing. The Additional
Facility incorporates the covenants contained in the 1998 Credit Facility. As
of June 30, 1998, the Company had $25.0 million of outstanding indebtedness 
under the Additional Facility.

The Company paid interest totaling $11.0 million during the six months ended
June 30, 1998 and $2.7 million during the six months ended June 30, 1997. As of
June 30, 1998, the fair values of mortgage notes payable and notes payable under
the 1998 Credit Facility and the Additional Facility approximate carrying costs.
During the six months ended June 30, 1998, the Company capitalized interest
totaling $568,392 related to development and redevelopment projects.

The Company has received a commitment from NationsBank N.A. to increase the 1998
Credit Facility to $550.0 million (or to replace it with a new $550.0 million
Credit Facility) as part of the Lazard Transaction. The interest rate to be
borne by the new revolving credit facility would be LIBOR plus 150 basis points
initially, subject to certain reductions and would mature three years from the
closing date of such financing. The Company has also received a commitment from
NationsBank Mortgage Capital Corp. for a $150.0 million bridge loan which would
bear interest at LIBOR plus 200 basis points and would be payable in full six
months from the closing date of such financing. For a more complete description
of such commitments, see Item 5 of this Form 10-Q.

As of June 30, 1998, the Company had entered into guaranties, and agreements
contemplating the provision of guaranties, for the benefit of unconsolidated
real estate ventures, aggregating approximately $33.3 million. Payment under
these guaranties would constitute loan obligations of, or preferred equity
positions in, the applicable unconsolidated real estate venture.

5.  ISSUANCE OF SHARES, WARRANTS AND OPTIONS:

The following table summarizes the Company's issuance of shares, warrants and
options during the periods presented:

                                      8
<PAGE>

<TABLE>
<CAPTION>
                                                              Number of             Number of
                                                  Date of      Common     Share      options/         Exercise     Proceeds (in
    Type of issuance         Investor             issuance     Shares     Price      warrants          Price       thousands)(1)
    ----------------         --------             --------    ---------   -----    ----------         --------     -------------
     1998 Activity through June 30, 1998
----------------------------------------------
<S>                        <C>                     <C>       <C>        <C>          <C>              <C>           <C>  
Trustee Fees (2)           Trustees                 5/8/98       1,248      -                -               -              -
Share offering             Public                  4/21/98     625,000   $ 24.00             -               -         14,250
Share offering (3)         Public                   3/6/98   1,000,000   $ 24.00             -               -         22,770
Share offering             Public                  2/27/98     629,921   $ 23.81             -               -         14,325
Share offering             Public                  2/18/98   1,012,820   $ 24.06             -               -         23,152
Share offering             Public                   2/4/98  10,000,000   $ 24.00             -               -        227,700
Unit redemptions (4)       Various                 6/30/98       1,434      -                -               -              -
Unit redemptions (4)       Scarborough             6/22/98      50,000      -                -               -              -
Unit redemptions (4)       Safeguard Scientifics    1/6/98     252,387      -                -               -              -
Employee share awards      Company employees        1/2/98     443,557      -                -               -         16,679
Employee share options     Company employees        1/2/98           -      -          748,874            $ 29.04           -
Employee share options     Company employees        1/2/98           -      -          740,796            $ 27.78           -
Employee share options     Company employees        1/2/98           -      -          554,034            $ 25.25           -
                                                            -----------           -------------                    ----------
                                                            14,016,367               2,043,704                      $ 304,626
                                                            -----------           -------------                    ==========
    Amounts outstanding at December 31, 1997
--------------------------------------------------
Shares outstanding         Various                12/31/97  24,087,315                       -               -              -
Options outstanding        Various                12/31/97           -                 762,105    $6.21 - $25.50            -
                                                            -----------           -------------
                                                            24,087,315                 762,105
                                                            -----------           -------------
Total outstanding as of June 30, 1998                       38,103,682               2,805,809
                                                            ===========           =============
</TABLE>

(1) Proceeds are net of underwriter's discounts and before deducting other
expenses, if any.
(2) The Company issued Common Shares as partial payment of annual fees to
non-employee Trustees.
(3) This offering was pursuant to the exercise of underwriters' over-allotment
options.
(4) Class A Unit Redemptions represent Common Shares issued upon redemption of
Class A Units.

On January 2, 1998, the Company awarded an aggregate of 443,557 "restricted"
Common Shares to six of the Company's executives. These restricted shares vest
over five to eight year periods and were valued at approximately $11.2 million
(based on the closing price of Common Shares on January 2, 1998). Also on
January 2, 1998, the Company awarded certain of its employees options
exercisable for an aggregate 2,043,704 Common Shares. Of the options awarded,
1,737,261 were granted subject to shareholder approval, which was obtained on
May 15, 1998. These options vest over two to five years and have exercise
prices ranging from $25.25 to $29.04. The Company has reserved, as of June 30,
1998, 2,805,809 Common Shares for issuance upon the exercise of options and
warrants described above. There were no options or warrants exercised or
canceled and no options or warrants expired from January 1, 1997 to June 30,
1998.

6.     DISTRIBUTIONS:

On June 10 , 1998 , the Company declared a distribution of $0.38 per share,
totaling approximately $14.5 million, which was paid on July 15 , 1998 to
shareholders of record as of June 22 , 1998 . The Operating Partnership
simultaneously declared a $0.38 per unit cash distribution to holders of Class
A Units totaling approximately $300,093.

7.     NET INCOME PER SHARE:

In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings per Share" ("SFAS 128"). SFAS 128 establishes standards for
computing and presenting earnings per share ("EPS"). Basic earnings per share
are based on the weighted average number of Common Shares outstanding during
the year. Diluted earnings per share are based on the weighted average number
of Common Shares outstanding during the year adjusted to give effect to common
share equivalents. All per share amounts for all periods presented have been
restated to conform to SFAS 128. A reconciliation between basic and diluted
EPS is shown below (in thousands, except share and per share data).

                                      9
<PAGE>
<TABLE>
<CAPTION>
                                                                        Three Months Ended June 30,
                                                  --------------------------------------------------------------
                                                               1998                             1997
                                                  ----------------------------      ----------------------------
                                                     Basic           Diluted           Basic           Diluted
                                                  -----------      -----------      -----------      -----------

<S>                                               <C>              <C>              <C>              <C>        
Net income                                        $    10,422      $    10,422      $     1,658      $     1,658
Income allocated to Preferred Shares                     --               --               --               --
                                                  -----------      -----------      -----------      -----------
Income available to common shareholders           $    10,422      $    10,422      $     1,658      $     1,658
                                                  -----------      -----------      -----------      -----------
Weighted average shares outstanding                37,475,025       37,475,025        9,817,412        9,817,412
Options and warrants                                     --            110,232             --             29,031
Common stock equivilants of Preferred Shares             --               --               --          1,189,889
                                                  -----------      -----------      -----------      -----------
Total weighted average shares outstanding          37,475,025       37,585,257        9,817,412       11,036,332
                                                  -----------      -----------      -----------      -----------
Earnings per share before extraordinary item      $      0.28      $      0.28      $      0.17      $      0.15
                                                  ===========      ===========      ===========      ===========
Earnings per share after extraordinary item       $      0.28      $      0.28      $      0.17      $      0.15
                                                  ===========      ===========      ===========      ===========



                                                                      Six Months Ended June 30,
                                                 ---------------------------------------------------------------
                                                              1998                              1997
                                                 -----------------------------     -----------------------------
                                                     Basic           Diluted           Basic           Diluted
                                                 ------------     ------------     ------------     ------------

Net income before extraordinary item             $     19,225     $     19,225     $      3,708     $      3,708
Income allocated to Preferred Shares                     --               --               (499)            --
                                                 ------------     ------------     ------------     ------------
Income available to common shareholder before
     extraordinary item                          $     19,225     $     19,225     $      3,209     $      3,708
Extraordinary Item                                       (858)            (858)            --               --
                                                 ------------     ------------     ------------     ------------
Net income available to common shareholders      $     18,367     $     18,367     $      3,209     $      3,708
                                                 ------------     ------------     ------------     ------------
Weighted average shares outstanding                34,524,113       34,524,113        8,790,971        8,790,971
Options and warrants                                     --            121,279             --             40,683
Common stock equivilants of Preferred Shares             --               --               --          1,383,801
                                                 ------------     ------------     ------------     ------------
Total weighted average shares outstanding          34,524,113       34,645,392        8,790,971       10,215,455
                                                 ------------     ------------     ------------     ------------
Earnings per share before extraordinary item     $       0.56     $       0.55     $       0.37     $       0.36
                                                 ============     ============     ============     ============

Earnings per share after extraordinary item      $       0.53     $       0.53     $       0.37     $       0.36
                                                 ============     ============     ============     ============
</TABLE>

8.  INCOME TAXES:

The Company is taxed as a REIT under Section 856(c) of the Internal Revenue Code
of 1986, as amended, and generally will not be subject to federal income tax to
the extent it distributes at least 95% of its REIT taxable income to its
stockholders and meets certain other requirements. If the Company fails to
qualify as a REIT in any taxable year, the Company will be subject to federal
income tax on its taxable income at regular corporate rates. The Company may
also be subject to certain state and local taxes on its income and property and
federal income and excise taxes on its undistributed taxable income. The Company
was and is in compliance with all REIT requirements and was not subject to
federal income taxes.

Item 2.  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. This Form 10-Q contains forward-looking
statements for purposes of the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended, and as such may involve known and
unknown risks, uncertainties and other factors that may cause the actual
results, performance or achievements of the Company to be materially different
from future results, performance or achievements expressed or implied by such
forward-looking statements. Although the Company 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. Factors that could cause actual results 

                                      10
<PAGE>

to differ materially from current expectations include, but are not limited
to, changes in general economic conditions, changes in local real estate
conditions, changes in industries in which the Company's principal tenants
compete, the failure to timely lease unoccupied space, the failure to timely
re-lease occupied space upon expiration of leases, the inability to generate
sufficient revenues to meet debt service payments and operating expenses, the
unavailability of equity and debt financing, unanticipated costs associated
with the acquisition and integration of the Company's recent and pending
acquisitions and the failure of the Company to manage its growth effectively.

OVERVIEW

The Company believes it has established an effective platform in the suburban
Philadelphia, Pennsylvania market that provides a foundation for achieving the
Company's goal of maximizing market penetration and operating economies of
scale. The Company believes this platform provides a basis to continue its
penetration into additional targeted markets in the Mid-Atlantic United States
through strategic acquisitions structured to increase cash available for
distribution and maximize shareholder value.

The Company continued its growth during the six months ended June 30, 1998 by
purchasing 57 office and six industrial properties for an aggregate purchase
price of approximately $590.8 million and investing approximately $6.5 million
in unconsolidated real estate ventures . These acquisitions increased the
Company's market share in the suburban Philadelphia office and industrial
market and expanded the Company's presence into several other markets within
the Mid-Atlantic Region. Also, the Company sold an office property in Ohio
which contains approximately 156,175 net rentable square feet for a sales
price of approximately $15.2 million. As of June 30, 1998, the Company's
portfolio consisted of 151 office and 28 industrial properties totaling
approximately 12.1 million net rentable square feet.

The acquisitions during the six months ended June 30, 1998, were financed
through a combination of proceeds received from four public offerings of an
aggregate of approximately 13.3 million Common Shares which raised net
proceeds of approximately $301.3 million, borrowings under the Company's
revolving credit facilities and the issuance of 543,400 Class A Units in the
Operating Partnership valued at approximately $12.9 million. These
acquisitions expanded the Company's presence into Maryland, Delaware, New
Jersey and Harrisburg, Pennsylvania while reinforcing the Company's presence
in suburban Philadelphia.

During the period June 30, 1998 through August 13, 1998, the Company entered
into two separate agreements to acquire 53 office properties, 43 industrial
facilities and one retail property containing an aggregate of approximately 6.9
million net rentable square feet for approximately $715.5 million. These
acquisitions will expand the Company's portfolio into the New York, Virginia,
and Harrisburg, Pennsylvania markets and strengthen the Company's presence in
the New Jersey market.

The Company receives income primarily from rental revenue (including tenant
reimbursements) from the Properties and, to a lesser extent, from the management
of certain properties owned by third parties. The Company expects that revenue
growth in the next two years will result primarily from additional
redevelopment, development and acquisition projects as well as from rent and
occupancy increases in its current portfolio.

RESULTS OF OPERATIONS

Comparison of the Three and Six Months Ended June 30, 1998 and June 30, 1997

Net income before extraordinary items for the three months and six months
ended June 30, 1998 was $10.4 million and $19.2 million compared with net
income of $1.7 million and $3.7 million for the corresponding periods in 1997.
The increases were primarily attributable to the operating results contributed
by the 143 properties acquired from January 1, 1997 through June 30, 1998 .

Revenues, which include rental income, recoveries from tenants and other
income, increased from $12.1 million to $43.1 million for the three months
ended June 30, 1997 to 1998 and increased from $20.7 million to $76.2 million
for the six months ended June 30, 1997 to 1998. These increases were primarily
as a result of property acquisitions and, 

                                      11
<PAGE>

to a lesser extent, increased occupancy. The impact of the straight-line rent
adjustment increased revenues by $2.5 million for the six months ended June
30, 1998 and $521,000 for the six months ended June 30, 1997.

Property operating expenses, depreciation and amortization and management fees
increased from $8.1 million to $25.7 million for the three months ended June
30, 1997 to 1998 and increased from $13.6 million to $45.3 million for the six
months ended June 30, 1997 to 1998. These increases were primarily as a result
of property acquisitions.

Property level operating income for the 70 properties owned as of June 30, 1997
increased from $12.6 million to $13.4 million for the six months ended June 30,
1997 to 1998, an increase of 5.5%. Occupancy for the 70 properties increased
from 92% to 95% driving revenue growth of 4.2% and causing expenses to increase
by 1.1%.

During the six month period ended June 30, 1998, 39 leases representing
96,585 square feet of office and industrial space commenced at an average rate
per square foot of $16.90 which was 16.9% higher than the average rate per
square foot on the expired leases.

Interest expense increased from $2.1 million to $6.6 million for the three
months ended June 30, 1997 to 1998 and increased from $3.1 million to $11.0
million for the six months ended June 30, 1997 to 1998. The increase in
interest expense was a result of additional indebtedness incurred to finance
certain of the Company's acquisitions.

Administrative expenses increased from $0.3 million to $0.4 million for the
three months ended June 30, 1997 to 1998 and increased from $0.4 million to
$0.6 million for the six months ended June 30, 1997 to 1998. These increases
are primarily a result of management and staffing additions to support the
Company's growth.

Minority Interest in the Operating Partnership relates to the interest in the
Operating Partnership that is not owned by the Company. Income allocated to
the minority interest is based on the weighted average percentage ownership
throughout the year. Persons contributing assets to the Operating Partnership
received Class A Units. The Operating Partnership will, at the request of a
Unitholder, be obligated to redeem each Class A Unit held by such Unitholder,
at the option of the Company, for cash or one Common Share at the time of
redemption. Such redemptions will cause the Company's percentage ownership in
the Operating Partnership to increase. As of June 30, 1998, the number of
issued and outstanding Class A Units held by Unitholders other than the
Company was 947,005 or approximately 2.4% of total Class A Units outstanding.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows


During the six months ended June 30, 1998, the Company generated $44.3 million
in cash flow from operating activities. Other sources of cash flow consisted of
(i) $658.6 million in net additional borrowings under the Company's revolving
credit facilities, (ii) $301.3 million in net proceeds from share issuances,
(iii) $14.7 million from a property sale and (iv) $5.7 million in proceeds from
additional borrowings under mortgage notes payable. During the six months ended
June 30, 1998, the Company used its cash to (i) finance the cash portion, $545.6
million, of the acquisition cost of 63 Properties, (ii) repay notes payable
under the credit facility of $422.1 million, (iii) invest $6.5 million in
unconsolidated real estate ventures, (iv) fund capital expenditures and leasing
commissions of $7.1 million, (v) pay distributions totaling $22.8 million to
shareholders and minority partners in the Operating Partnership, (vi) repay
mortgage notes payable of $5.1 million (vii) increase escrowed cash by $1.1
million, (viii) pay other debt costs of $1.5 million and (ix) increase existing
cash reserves by $13.0 million.

Development

The Company is in the process of developing five sites and redeveloping two
sites with anticipated completion at the end of 1998. These projects are in
various stages of development and there can be no assurance that any of these
projects will be completed or opened, or that there will not be delays in the
opening or completion of any development 

                                      12
<PAGE>

or redevelopment project. During the six months ended June 30, 1998, the Company
capitalized interest totaling $568,392 related to development and redevelopment
projects.

Capitalization

During the first six months of 1998, the Company replaced the 1997 Credit
Facility with the 1998 Credit Facility. The interest rate was reduced by 37.5
to 60 basis points depending on the Company's degree of leverage. The 1998
Credit Facility matures on January 5, 2001 and is extendible, under certain
circumstances, at the Company's option to January 5, 2002.

To provide for recent acquisitions, on May 7, 1998 the Company and the Operating
Partnership entered into a $150.0 million unsecured credit facility (the
"Additional Facility"). The Additional Facility matures on November 7, 1998,
subject to a two-month extension under certain circumstances, and allows the
Company to borrow funds at an interest rate equal to LIBOR plus 150 basis points
or, at the Company's option, the Prime Rate plus 25 basis points. Amounts repaid
by the Company under the Additional Facility are not subject to reborrowing. The
Additional Facility incorporates the covenants contained in the 1998 Credit
Facility.

As of June 30, 1998, the Company had approximately $423.4 million of debt
outstanding, consisting of mortgage loans totaling $71.6 million, notes payable
under the 1998 Credit Facility of $326.8 million and borrowings under the
Additional Facility of $25.0 million. The mortgage loans mature between July
1998 and November 2004. As of June 30, 1998, the Company had $3.2 million of
remaining availability under the 1998 Credit Facility, which provides for total
borrowings up to $330.0 million and bore interest at a per annum floating rate
equal to the 30, 60 or 90-day LIBOR, plus 137.5 basis points. As of June 30,
1998, the Company had $125.0 million of remaining availability under the
Additional Facility, which provides for total borrowings up to $150.0 million
and bore interest at an interest rate equal to LIBOR plus 150 basis points or,
at the Company's option, the Prime Rate plus 25 basis points. For the six months
ended June 30, 1998, the weighted average interest rate under the Company's
1998 Credit Facility and Additional Facility was 7.07%, and the weighted average
interest rate for borrowings under mortgage notes payable was 7.74%.

The Company's debt to market capitalization ratio was 32.5% as of June 30,
1998. As a general policy, the Company intends, but is not obligated, to
adhere to a policy of maintaining a long-term average debt to market
capitalization ratio of no more than 50%. This policy is intended to provide
the Company with financial flexibility to select what management believes to
be the optimal source of capital to finance the Company's growth.

To provide financing for the Lazard Transaction, the Company received a
commitment from NationsBank N.A. to increase the 1998 Credit Facility to $550.0
million (or to replace it with a new $550.0 million credit facility). The
interest rate to be borne by the new revolving credit facility would be LIBOR
plus 150 basis points initially, subject to reductions and would mature three
years from the closing date of such financing. The new revolving credit facility
would contain financial and operating convenants consistent with those contained
in the 1998 Credit Facility. The Company has also received a commitment from
NationsBank Mortgage Capital Corp. for a $150.0 million bridge loan in
connection with the Lazard Transaction. The new bridge loan would bear interest
at LIBOR plus 200 basis points and would be payable in full six months from the
closing date of such financing.

During the period January 1, 1998 through June 30, 1998, the Company sold an
aggregate 13.3 million Common Shares for net proceeds of $301.3 million
pursuant to four public offerings.

Short and Long Term Liquidity

The Company believes that its cash flow from operations is adequate to fund
its short-term liquidity requirements for the foreseeable future. Cash flow
from operations is generated primarily from rental revenues and operating
expense reimbursements from tenants and management services income from the
provision of services to third parties. The Company intends to use these funds
to meet its short-term liquidity needs, which are to fund operating expenses,
debt service requirements, recurring capital expenditures, tenant allowances,
leasing commissions and the minimum distribution required to maintain the
Company's REIT qualification under the Internal Revenue Code.

                                      13
<PAGE>

On June 10, 1998, the Company declared a distribution of $0.38 per share,
totaling $14.5 million, which was paid on July 15, 1998 to shareholders of
record as of June 22, 1998. The Operating Partnership simultaneously declared
a $0.38 per unit cash distribution to holders of Class A Units totaling
$300,093.

As of June 30, 1998, the Company had entered into guaranties, and agreements
contemplating the provision of guaranties, for the benefit of unconsolidated
real estate ventures, aggregating approximately $33.3 million. Payment under
these guaranties would constitute loan obligations of, or preferred equity
positions in, the applicable unconsolidated real estate venture.

The Company expects to meet its long-term liquidity requirements, such as for
property acquisitions, development, investments in unconsolidated real estate
ventures, scheduled debt maturities, renovations, expansions and other
non-recurring capital improvements, through the 1998 Credit Facility and other
long-term secured and unsecured indebtedness and the issuance of additional
Class A Units and other equity securities.

Funds from Operations

Management generally considers Funds from Operations ("FFO") as one measure of
REIT performance. The Company adopted the NAREIT definition of FFO in 1996 and
has used this definition for all periods presented in the financial statements
included herein. FFO is calculated as net income (loss) adjusted for
depreciation expense attributable to real property, amortization expense
attributable to capitalized leasing costs, gains on sales of real estate
investments and extraordinary and nonrecurring items. FFO may not be
calculated in the same manner for all companies and accordingly FFO presented
below may not be comparable to similarly titled measures by other companies.
FFO should not be considered an alternative to net income as an indication of
the Company's performance or to cash flows as a measure of liquidity.

FFO for the three months and six months ended June 30 , 1998 and 1997 is
summarized in the following table (in thousands, except share data).
<TABLE>
<CAPTION>
                                                              Three Months Ended June 30,          Six Months Ended June 30,
                                                            ---------------------------------   --------------------------------
                                                                 1998              1997              1998             1997
                                                            ---------------   ---------------   ---------------  ---------------
<S>                                                               <C>                <C>              <C>               <C>    
  Income before gains on sales, minority interest,
       and extraordinary item                                     $ 10,461           $ 1,738          $ 19,394          $ 3,882
  Add (Deduct):
    Depreciation attributable to real property                       9,801             3,124            17,101            5,093
    Amortization attributable to leasing costs                         493               160               736              339
    Minority interest not attributable to unit holders                   -                (5)                -              (16)
                                                            ---------------   ---------------   ---------------  ---------------
  Funds from Operations before minority interest                  $ 20,755           $ 5,017          $ 37,231          $ 9,298
                                                            ===============   ===============   ===============  ===============
  Weighted average Common Shares (including common
    share equivalents) and Operating Partnership units (1)      38,420,032        11,423,396        35,299,165       10,595,612
                                                            ===============   ===============   ===============  ===============
</TABLE>

(1) Includes the weighted average effect of Common Shares issued upon the
conversion of preferred shares for the period prior to conversion, the
weighted average effect of Common Shares issuable upon the conversion of Class
A Units.

Year 2000 Issue

The Company has recognized the need to ensure that its systems, equipment and
operations will not be adversely impacted by the change to the calendar year
2000. The Company has initiated the process of identifying potential areas of
risk and the related effects on planning, purchasing and daily operations. No
estimates can be made as to the potential adverse impact resulting from the
failure of third party suppliers and tenants to prepare for the year 2000.


                                      14
<PAGE>

However, the Company does not anticipate the cost of successfully converting
all internal systems, equipment and operations to the year 2000 to be
material.

Inflation

A majority of the Company's leases provide for separate escalations 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 or indexed escalations (based on the CPI or other measure). The
Company believes that inflationary increases in expenses will be significantly
offset by the expense reimbursement and contractual rent increases.




                                      15
<PAGE>


         Part II.    OTHER INFORMATION

Item 1.  Legal Proceedings

The Company is not currently involved (nor was it involved at June 30, 1998)
in any material legal proceedings nor, to the Company's knowledge, is any
material legal proceeding currently threatened against the company, other than
routine litigation arising in the ordinary course of business, substantially
all of which is expected to be covered by liability insurance.

Item 2.  Changes in Securities

(a)  Not applicable.

(b) Not applicable.

(c) Not applicable.

Item 3.  Defaults Upon Senior Securities

None.

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

Reference is made to the information contained in the Company's current report
on Form 8-K filed with the Securities and Exchange Commission on June 3, 1998.

Item 5.  Other Information

(i) Lazard Transaction. On August 6, 1998, Brandywine Realty Trust (the "Trust")
and the Operating Partnership entered into an agreement (the "Lazard Acquisition
Agreement") with Prometheus AAPT Holdings, L.L.C. ("Prometheus"), LF Strategic
Realty Investors L.P., Commonwealth Atlantic Operation Properties Inc.,
Commonwealth Atlantic Land IV Inc., Commonwealth Atlantic Land II Inc.,
Commonwealth Atlantic Development Inc. and Commonwealth Atlantic Land Company
(the "CAP Sellers," and together with Prometheus, the "Sellers") to acquire a
portfolio of 44 office properties, 23 industrial facilities and one retail
property located in Pennsylvania, New Jersey and Virginia (collectively, the
"Lazard Properties") that contain an aggregate of approximately 5.6 million net
rentable square feet. As part of the Lazard Transaction, the Company will also
acquire approximately 172 acres of undeveloped land which management estimates
can accommodate approximately 1.4 million square feet of commercial space. The
aggregate acquisition price for the Lazard Properties is approximately $612.0
million. A copy of the Acquisition Agreement is attached hereto as Exhibit 10.1.

The Company expects to pay, at closing, approximately (i) $237.0 million of
the acquisition price through the assumption of mortgage debt secured by 62 of
the Lazard Properties, (ii) $240.0 million of the acquisition price in cash,
(iii) $37.5 million of the acquisition price through the issuance of $37.5 in
liquidation value of the Trust's Series A Preferred Shares (as defined below)
and (iv) $97.5 million of the acquisition price through the issuance of $97.5
in liquidation value of the Operating Partnership's Series B Preferred Units
(as defined below).

In anticipation of the Lazard Transaction, the Company has received a
commitment letter from NationsBank, N.A. to provide financing in an amount up
to $550.0 million in the form of a revolving credit facility and a commitment
letter from NationsBank Mortgage Capital Corp. to provide short-term financing
in an amount up to $150.0 million as more fully described below.

As of August 1, 1998, the Lazard Properties were approximately 94% leased to
421 tenants. The following table identifies the location and net rentable
square feet of the Lazard Properties.

                                      16
<PAGE>

         PROPERTY                                                  NET RENTABLE
      IDENTIFICATION                      LOCATION                 SQUARE FEET
                                                                              
VIRGINIA INDUSTRIAL
1.  Dabney I                             Richmond, VA                 33,600 
2.  Dabney II                            Richmond, VA                 42,000
3.  Dabney III                           Richmond, VA                 23,850
4.  Dabney IV                            Richmond, VA                 41,550 
5.  Dabney V                             Richmond, VA                 45,353
6.  Dabney VI                            Richmond, VA                 50,400
7.  Dabney VII                           Richmond, VA                 33,419
8.  Dabney VIII                          Richmond, VA                 29,700 
9.  Dabney IX                            Richmond, VA                 30,263
10. Dabney X                             Richmond, VA                 85,844
11. Dabney XI                            Richmond, VA                 45,250
12. Dabney A-1                           Richmond, VA                 15,389
13. 2511 Brittons Hill Road              Richmond, VA                132,103
14. 1957 Westmoreland Street             Richmond, VA                121,815
15. 2201 Dabney Street                   Richmond, VA                 45,000
16. 2110 Tomlynn Street                  Richmond, VA                 15,910
                                                                     -------
                  Subtotal            Virginia Industrial            791,446
                                                                     -------
VIRGINIA OFFICE                                                      
17. 1970 Chainbridge Road                Greenway, VA                203,084
18. Oakwood Center                       Fairfax, VA                 128,383
19. Greenwood Center                     Fairfax, VA                 150,358
20. 1880 Campus Commons Drive            Reston, VA                  172,448
21. 8260 Greensboro Drive                McLean, VA                  154,155
22. Dabney A-2                           Richmond, VA                 33,050
23. 2812 Emerywood Parkway               Henrico, VA                  56,076
24. 4805 Lake Brooke Drive               Henrico, VA                  61,632
25. 2100-2108 West Laburnum              Richmond, VA                127,327
26. Arboretum I                          Richmond, VA                 58,167
27. Arboretum II                         Richmond, VA                 49,542
28. Arboretum III                        Richmond, VA                214,282
29. Arboretum V                          Richmond, VA                 47,943
30. Arboretum VI                         Richmond, VA                 73,195
31. Arboretum VII                        Richmond, VA                 30,791
32. 600 East Main Street                 Richmond, VA                423,062
                                                                   ---------
                  Subtotal              Virginia Office            1,983,495
                                                                   ---------
NEW JERSEY OFFICE                                          
33. 700 East Gate Drive                  Mt. Laurel, NJ              121,114
34. 701 East Gate Drive                  Mt. Laurel, NJ               61,434
35. 815 East Gate Drive                  Mt. Laurel, NJ               25,500
36. 817 East Gate Drive                  Mt. Laurel, NJ               25,351
37. 303 Fellowship Road                  Mt. Laurel, NJ               53,848
38. 305 Fellowship Road                  Mt. Laurel, NJ               55,511
39. 307 Fellowship Road                  Mt. Laurel, NJ               55,286
40. 309 Fellowship Road                  Mt. Laurel, NJ               55,351
41. 304 Harper Drive                     Moorestown, NJ               29,537
42. 305 Harper Drive                     Moorestown, NJ               14,981
43. 308 Harper Drive                     Moorestown, NJ               59,500
                                                                     -------
                  Subtotal             New Jersey Office             557,413
                                                                     -------
                                      17
<PAGE>

       PROPERTY                                                  NET RENTABLE
      IDENTIFICATION                      LOCATION               SQUARE FEET
                                                                             

PENNSYLVANIA INDUSTRIAL
44. 7055 Ambassador Drive                Allentown, PA               153,600 
45. 6670 Grant Way                       Allentown, PA                72,885 
46. 6690 Grant Way                       Allentown, PA                88,000 
47. 6755 Snowdrift Road                  Allentown, PA               125,000 
48. 6845 Snowdrift Road                  Allentown, PA                93,000 
49. 7010 Snowdrift Road                  Allentown, PA                33,029 
50. 7020 Snowdrift Road                  Allentown, PA                41,390 
51. 6810 Tilghman Street                 Allentown, PA                54,844
                                                                     -------
                  Subtotal            Pennsylvania Industrial        661,748
                                                                     -------

PENNSYLVANIA OFFICE
52. E-M Venture I-Keystone Park          Bristol, PA                  22,500 
53. E-M Venture II-Keystone Park         Bristol, PA                  96,000 
54. 50 Swedesford Square                 Frazer, PA                  109,800 
55. 52 Swedesford Square                 Frazer, PA                  131,017 
56. Maschellmac I                        King of Prussia, PA          74,140 
57. Maschellmac II                       King of Prussia, PA          74,556 
58. Maschellmac III                      King of Prussia, PA          75,488 
59. Maschellmac IV                       King of Prussia, PA          77,718 
60. 1720 Walton Road                     Blue Bell, PA                15,918 
61. Masons Mill Business Park            Bryn Athyn, PA              211,753 
62. 1760 Market Street                   Philadelphia, PA            130,416 
63. 7350 Tilghman Street                 Allentown, PA               111,500 
64. 7450 Tilghman Street                 Allentown, PA               100,000 
65. 7150 Windsor Drive                   Allentown, PA                49,420 
66. 7535 Windsor Drive                   Allentown, PA               128,351 
                                                                   --------- 
                  Subtotal            Pennsylvania Office          1,408,577
                                                                   ---------
PENNSYLVANIA RETAIL
67. Philadelphia Marine Center        Philadelphia, PA               167,760 
                                                                   ---------
                  Subtotal            Pennsylvania Retail            167,760
                                                                   ---------
                 
NORTH CAROLINA OFFICE
68. Westpark South Alston Avenue         Durham, NC                   56,601  
                                                                   ---------
                  Subtotal              North Carolina Office         56,601
                                                                   ---------

TOTAL LAZARD PROPERTIES                                            5,627,040
                                                                   =========

                                      18

<PAGE>

The table set forth below shows scheduled lease expirations for leases in
place at August 1, 1998 for the Lazard Properties for each of the next ten
years beginning August 1, 1998, assuming none of the tenants exercise renewal
options or termination rights, if any, at or prior to scheduled expirations:
<TABLE>
<CAPTION>


                                                       Final Annualized    Percentage of
                                                            Base            Total Final
                  Number of                               Rent From        Annualized Base
 Year of           Leases       Net Rentable Square    Properties Under      Rent From       Cumulative      
  Lease        Expiring Within  Footage Subject to         Expiring        Properties Under 
Expiration        the Year        Expiring Leases          Leases(1)          Leases              % 
----------        --------         ---------------         ---------          ------             --

<S>                  <C>              <C>                <C>                 <C>              <C>  
1998                 54               721,530            8,548,043           11.8%            11.8%
1999                103               689,721            8,005,643           11.0%            22.8%
2000                 82               811,356            9,656,406           13.3%            36.1%
2001                 69               688,764            8,742,935           12.0%            48.1%
2002                 62               570,595            7,312,538           10.1%            58.1%
2003                 42               577,134            9,273,272           12.8%            70.9%
2004                 21               235,356            4,253,878            5.9%            76.8%
2005                  9               275,042            4,247,468            5.8%            82.6%
2006                  7                81,371            1,597,134            2.2%            84.8%
2007                 10               265,259            5,703,442            7.8%            96.6%
2008 and thereafter  11               328,731            5,346,617            7.4%           100.0%
                     --               -------            ---------           -----           ------
Consolidated Total  470             5,244,859           72,687,376          100.0%
                    ===             =========           ==========          =====
</TABLE>                      
                                                                              
---------------------                                             

(1)      "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
         twelve. Tenant reimbursements generally include payments on account
         of real estate taxes, operating expense escalations and common area
         utility charges.

As part of the Lazard Transaction, the Company acquired an option to purchase
an approximately 294,000 net rentable square foot office property currently
under construction in Tyson's Corner, Virginia. The purchase price under this
option, which is exercisable on or before March 31, 1999, is $68.0 million. As
of the date hereof, leases or lease commitment covering approximately 95% of
the space of this property have been executed, and the Company expects to
exercise the option.

In connection with the Lazard Transaction, the Trust has agreed to designate
750,000 of its authorized and unissued preferred shares of beneficial
interest, par value $.01 per share, as 7.25% Series A Cumulative Convertible
Preferred Shares (the "Series A Preferred Shares"). Each Series A Preferred
Share will have a stated value (the "Stated Value") of $50 and will be
convertible into Common Shares at the option of the holder at a conversion
price (the "Conversion Price") of $28. The Conversion Price will be reduced to
$26.50 if the average closing price of the Common Shares during the 60-trading
day period ending on December 31, 2003 is $23 or lower. At any time that the
average market price of the Common Shares is equal to or greater than 120% of
the Conversion Price for 60 consecutive trading days, the Trust will have the
right to redeem all or any part of the outstanding Series A Preferred Shares
for an amount in cash equal to the aggregate Stated Value of the Series A
Preferred Shares to be redeemed (plus accrued and unpaid distributions) or for

                                      19
<PAGE>

a number of Common Shares equal to the aggregate Stated Value of the Series A
Preferred Shares to be redeemed divided by the Conversion Price (plus accrued
and unpaid distributions). In addition, at any time after six years following
the issuance of the Series A Preferred Shares, the Trust will have the right
to redeem all or any part of the outstanding Series A Preferred Shares for an
amount in cash equal to the aggregate Stated Value of the Series A Preferred
Shares to be redeemed (plus accrued and unpaid distributions) or, in the event
that the average closing price of the Common Shares is equal to or greater
than 110% of the Conversion Price for 60 consecutive trading days, for a
number of Common Shares equal to the aggregate Stated Value of the Series A
Preferred Shares to be redeemed divided by the Conversion Price (plus accrued
and unpaid distributions). Each Series A Preferred Share will accrue
distributions, payable in cash, in an amount equal to the greater of (i)
$0.9063 per quarter (equivalent to $3.625 per annum) or (ii) the cash
distributions paid or payable for the most recent quarter on the number of
Common Shares into which a Series A Preferred Share is convertible. The
holders of Series A Preferred Shares will have no voting rights except (i)
with respect to actions which would have a material and adverse effect on the
rights of such holders and (ii) in the event quarterly distributions on the
Series A Preferred Shares are in arrears for six or more quarters. In the
event the quarterly distributions are so in arrears, the holders of the Series
A Preferred Shares will have the right, voting together as a single class with
any other class of the Trusts's preferred shares of beneficial interest
ranking on a parity with the Series A Preferred Shares, to elect two
additional members to the Board of Trustees of the Trust (the "Board"). A copy
of the form of Articles Supplementary with respect to the Series A Preferred
Shares is attached hereto as Exhibit 3.1.

In exchange for the Trust's contribution to the Operating Partnership of the
properties acquired by the Trust in exchange for the issuance of the Series A
Preferred Shares, the Operating Partnership will issue to the Trust $37.5
million in liquidation value of a newly created class of limited partner
interest (the "Series A Preferred Mirror Units"). The preferences of the
Series A Preferred Mirror Units will "mirror" those of the Series A Preferred
Shares. Upon conversion of Series A Preferred Shares into Common Shares, an
equal number of Series A Preferred Mirror Units will be converted into an
equal number of Class A Units. Upon redemption of Series A Preferred Shares
for cash, an equal number of Series A Preferred Mirror Units will be canceled.
Upon redemption of Series A Preferred Shares for Common Shares, an equal
number of Series A Preferred Mirror Units will be redeemed for an equal number
of Class A Units. Each Class A Unit will be redeemable, at the option of the
holder, for either an amount of cash equal to the trading price of one Common
Share at the time of the redemption or, at the option of the Trust, for one
Common Share. A copy of the form of amendment to the Amended and Restated
Agreement of Limited Partnership of the Operating Partnership creating the
Series A Preferred Mirror Units is attached hereto as Exhibit 10.2.
<PAGE>

In connection with the Lazard Transaction, the Operating Partnership has
agreed to create Series B Preferred Units of limited partner interest (the
"Series B Preferred Units"). Each Class B Preferred Unit will have a Stated
Value of $50 and will be convertible into Class A Units at the option of the
holder at the Conversion Price. The Conversion Price is subject to reduction
from $28.00 to $26.50 under the circumstances identified above. At any time
that the average market price of the Common Shares is equal to or greater than
120% of the Conversion Price for 60 consecutive trading days, the Operating
Partnership will have the right to redeem all or any part of the outstanding
Series B Preferred Units for an amount in cash equal to the aggregate Stated
Value of the Series B Preferred Shares to be redeemed (plus accrued and unpaid
distributions), or for a number of Class A Units equal to the aggregate Stated
Value the Series B Preferred Shares to be redeemed divided by the Conversion
Price (plus accrued and unpaid distributions). In addition, at any time after
six years following the issuance of the Series B Preferred Units, the
Operating Partnership will have the right to redeem all or any part of the
outstanding Series B Preferred Units for an amount in cash equal to the
aggregate Stated Value the Series B Preferred Shares to be redeemed (plus
accrued and unpaid distributions) or, in the event that the average closing
price of the Common Shares is equal to or greater than 110% of the Conversion
Price for 60 consecutive trading days, for a number of Class A Units equal to
the aggregate Stated Value the Series B Preferred Shares to be redeemed
divided by the Conversion Price (plus accrued and unpaid distributions). Each
Class B Preferred Unit will accrue distributions, payable in cash, in an
amount equal to the greater of (i) $0.9063 per quarter (equivalent to $3.625
per annum) or (ii) the cash distributions paid or payable on the number of
Class A Units, or portion thereof, into which a Class B Preferred Unit is
convertible. The holders of Series B Preferred Units will have no voting
rights except (i) with respect to actions which would have a material and
adverse effect on the rights of such holders and (ii) in the event quarterly
distributions on the Series B Preferred Units are in arrears for six or more
quarters. In the event quarterly distributions are so in arrears, holders of
Series B Preferred Units will have the right, voting separately as a class, to
nominate two individuals who will vote as a group with the Board in connection
with any action to be taken by the Operating Partnership at the direction of
the Trust, as general partner, and as to which the Trust may act only upon
authorization by its Board. Except for transfers to affiliates of the Sellers
or upon the prior written consent of the Company, none of the Series B
Preferred Units, the Class A Units issuable upon redemption or conversion of
the Series B Preferred Units (the "Underlying Class A Units") nor the Common
Shares issuable upon redemption of the Underlying Class A Units may be
transferred prior to January 2, 2004. A copy of the form of amendment to the
Amended and Restated Agreement of Limited Partnership of the Operating
Partnership creating the Series B Preferred Units is attached hereto as
Exhibit 10.3.
                                      20
<PAGE>

None of the securities to be issued in connection with the Lazard Transaction
nor the securities issuable upon the redemption or conversion thereof have
been registered under the Securities Act of 1933, as amended, or any state
securities laws and none of such securities may be offered and sold in the
United States absent registration or an applicable exemption from
registration. The Company has agreed to file registration statements
registering the resale of the Series A Preferred Shares, the Common Shares
issuable upon the redemption or conversion of the Series A Preferred Shares
and the Common Shares issuable upon redemption of the Underlying Class A
Units. Copies of the forms of Registration Rights Agreements relating to such
securities are attached hereto as Exhibits 10.4 and 10.5.

In connection with the Lazard Transaction, the Company has received two
financing commitments. One commitment, from NationsBank, N.A., is for a $550.0
million revolving credit facility which will take the form of either an increase
to the Company's current $330.0 million 1998 Credit Facility or a new,
substantially similar revolving credit facility to replace the 1998 Credit
Facility. The new revolving credit facility will be used to repay the Additional
Facility, to pay a portion of the cash purchase price for the Lazard
Transaction, for ongoing working capital and to provide letters of credit. The
interest rate to be borne by the new revolving credit facility will be LIBOR
plus 150 basis points initially, with the spread over LIBOR subject to
reductions of from 12.5 to 35 basis points, based on the Company's leverage. The
spread over LIBOR may also be reduced to either 115 or 100 basis points in
connection with the Company's long term debt rating. Rates based on the federal
funds rate and the bank's prime rate are also available. The new revolving
credit facility will mature three years from the closing date. Initially the new
revolving credit facility will be unsecured, but will convert to a secured
borrowing if certain leverage requirements are not met. The new revolving credit
facility will contain financial and operating covenants consistent with those
contained in the 1998 Credit Facility with certain definitional and
computational modifications. The principal condition to the closing of the new
revolving credit facility is the closing of the Lazard Transaction.

The second commitment, from NationsBank Mortgage Capital Corp., is for a
$150.0 million bridge loan to be used to pay a portion of the cash purchase
price of the Lazard Transaction. The new bridge loan will bear interest at
LIBOR plus 200 basis points, and will be payable in full six months from the
closing date. The new bridge loan will be unsecured, and will contain
financial and operating covenants as well as closing conditions identical to
those applicable to the new revolving credit facility described above.

The Company estimates that, after giving effect to the consummation of the
Lazard Transaction and the previously announced scheduled third quarter closing
from the Axinn transaction, its debt to market capitalization ratio (based on
the closing price of the Common Shares on June 30, 1998 of $22.75) will be
approximately 47.8%.

The Acquisition Agreement provides that at closing (the "Closing Date"), Murry
N. Gunty (or another person selected by certain of the Sellers and reasonably
acceptable to the Board) will become a member of the Board, which individual
will serve until the next annual meeting of shareholders of the Trust. In
addition, at closing and pursuant to a letter in substantially the form as
Exhibit 10.6 attached hereto, the Trust will agree to use commercially
reasonable efforts, during the Term (as defined below), to cause Mr. Gunty (or
another person selected by certain of the Sellers and reasonably acceptable to
the Trust's Board of Trustees) to be nominated for election to the Board at
each annual meeting of shareholders of the Trust and, if elected, to serve
until the next annual meeting of shareholders of the Trust. The "Term" means
the period of time commencing on the Closing Date and ending on the earliest
to occur of the following: (i) the date that LF Strategic Realty Investors,
L.P. ceases to own, directly or indirectly, any combination of (a) the Series
A Preferred Shares, (b) the Common Shares issuable upon redemption or
conversion of the Series A Preferred Shares, (c) the Series B Preferred Units,
(b) the Underlying Class A Units and (c) the Common Shares issuable upon
redemption of the Underlying Class A Units, having an aggregate value at least
equal to 60% of the value of the Series A Preferred Shares and the Series B
Preferred Units issued on the Closing Date and (ii) the occurrence of a change
in control of the Trust.

The portfolio acquisition provided for in the Acquisition Agreement has been
structured as the acquisition by the Company of (i) substantially all of the
equity interests in Atlantic American Properties Trust ("AAPT"), a private
real estate investment trust organized under sections 856 through 859 (the
"REIT Provisions") of the Internal Revenue Code of 1986, as amended, which
owns, through wholly-owned subsidiaries, 37 of the Lazard Properties and (ii)
fee title to 31 of the Lazard Properties. The Company intends to hold and
operate AAPT in accordance with the REIT Provisions and the rules and
regulations promulgated thereunder.
                                      21
<PAGE>


In the Acquisition Agreement, the Company agreed not to sell certain of the
Lazard Properties prior to January 2, 2004 and to maintain approximately $88.0
million in debt allocable to the CAP Sellers. In the event the Company were to
breach these agreements, the Company would be required to pay certain tax
liabilities that would be incurred by the CAP Sellers.

In connection with the Lazard Transaction and in accordance with the Maryland
General Corporation Law (the "MGCL"), the Board has exempted any future
business combination involving the Sellers (and their affiliates and
associates) and the Company from the "business combination" restrictions set
forth in the MGCL. Absent an exemption, the business combination restrictions
would have restricted certain types of future transactions (such as asset
transfers and issuances of equity securities) between the Company and the
Sellers.

The Sellers are unaffiliated with the Company and, accordingly, the
acquisition price was determined by arm's-length negotiation between the
Company and the Sellers. Following an extensive due diligence review of the
Lazard Properties, the Company based its determination of the acquisition
price on the Lazard Properties' expected cash flow, physical condition,
location, existing tenancies and opportunities to retain and attract
additional tenants. Prior to final approval of the Lazard Transaction, the
Board of Trustees received an opinion from NationsBanc Montgomery Securities
LLC, its financial advisor in the Lazard Transaction, that the Lazard
Transaction was fair, from a financial point of view, to the Company.

Consummation of the Lazard Transaction is subject to customary closing
conditions, including receipt of third party consents. Accordingly, no
assurance can be given that all or part of the Lazard Transaction will be
consummated or that, if consummated, it would follow all of the terms set
forth in the Acquisition Agreement.

Item 6. Exhibits and Reports on Form 8-K

(a)  Exhibits:

 3.1 Form of Articles Supplementary                                           
10.1 Contribution and Purchase Agreement
10.2 Form of Amendment to the Amended and Restated Agreement of Limited        
     Partnership of the Operating Partnership creating the Series A Preferred
     Mirror Units
10.3 Form of Amendment to the Amended and Restated Agreement of Limited 
     Partnership of the Operating Partnership creating the Series B Preferred 
     Units.
10.4 Form of Registration Rights Agreement
10.5 Form of Registration Rights Agreement
10.6 Form of Board of Trustees Designation Letter
27.1 Financial Data Schedule (electronic filers)

(b)  Reports on Form 8-K:

During the three months ended June 30, 1998, and through August 13, 1998, the
Company filed the following:

(i) Current Report on Form 8-K filed April 13, 1998 (reporting under Items 2
and 7). Item 2 of this current report referenced the DKM acquisition.

(ii) Current Report on Form 8-K/A No. 1 filed April 16, 1998 (reporting under
Items 5 and 7). This Amendment No. 1 included (i) an audited statement of
revenue and certain expenses of the DKM Properties for the year ended December
31, 1997 and (ii) an audited statement of revenue and certain expenses of
Three Christina Centre for the year ended December 31, 1997. This Amendment
No. 1 also included pro forma financial information for the year ended
December 31, 1997.
                                      22
<PAGE>


(iii) Current Report on Form 8-K filed April 17, 1998 (reporting under Items 5
and 7). Item 5 of this current report references the Underwriting agreement
entered into with Legg Mason Wood Walker Item 7 includes the agreement and
consent.

(iv) Current Report on Form 8-K filed May 14, 1998 (reporting under Items 2, 5
and 7). This Current Report included an audited combined statement of revenue
and certain expenses of the First Commercial Properties for the year ended
December 31, 1997 and an audited statement of revenue and certain expenses of
One Christina Centre for the year ended December 31, 1997. This Current Report
also included pro forma financial information for the year ended December 31,
1997.

(v) Current Report on Form 8-K filed June 3, 1998 (reporting under Items 5 and
7). This report includes votes at the Annual Shareholders Meeting held May 15,
1998.

(vi) Current Report on Form 8-K/A No. 1 filed July 30, 1998 (reporting under
Item 7). This amendment included (i) an audited financial statement of revenue
and certain expenses of the First Commercial Properties for the year ended
December 31, 1997 and (ii) an audited financial statement of revenue and
certain expenses of One Christina Centre for the year ended December 31, 1997.
This Amendment No. 1 also included pro forma information for the year ended
December 31, 1997.

(vii) Current Report on Form 8-K filed July 30, 1998 (reporting under Items 5
and 7). This Current Report included an audited combined statement of revenue
and certain expenses of the Axinn Properties for the year ended December 31,
1997 and a unaudited combined statement of revenue and certain expenses of the
Axinn Properties for the three months ended March 31, 1998. This Current
Report also included pro forma financial information for the three months
ended March 31, 1998 and year ended December 31, 1997.

                                      23
<PAGE>

                                      

                            BRANDYWINE REALTY TRUST

                           SIGNATURES OF REGISTRANT


Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                            BRANDYWINE REALTY TRUST
                                 (Registrant)


Date: August 13, 1998               By: /s/ Gerard H. Sweeney
      ------------------                -----------------------
                                    Gerard H. Sweeney, President and
                                    Chief Executive Officer
                                    (Principal Executive Officer)



Date:  August 13, 1998              By: /s/ Mark S. Kripke
       ------------------               --------------------
                                    Mark S. Kripke, Chief Financial Officer
                                    (Principal Financial and Accounting Officer)


