BRANDYWINE OPERATING PARTNERSHIP, L.P.

Previous wording

The Private Securities Litigation Reform Act of 1995 (the “1995 Act”) provides a “safe harbor” for forward-looking statements. This Form 10-Q and other materials filed by us with the SEC (as well as information included in oral or other written statements made by us) contain statements that are forward-looking, including statements relating to business and real estate development/redevelopment activities, acquisitions, dispositions, future capital expenditures, financing sources, governmental regulation (including environmental regulation) and competition. We intend such forward-looking statements to be covered by the safe-harbor provisions of the 1995 Act. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “will,” “should” and similar expressions, as they relate to us, are intended to identify forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be achieved. As forward-looking statements, these statements involve important risks, uncertainties and other factors that could cause actual results to differ materially from the expected results and, accordingly, such results may differ from those expressed in any forward-looking statements made by us or on our behalf. Factors that might cause actual results to differ materially from our expectations, including any impacts from the imposition of tariffs and changes to the U.S. trade policy, are set forth in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2024. Accordingly, we caution readers not to place undue reliance on forward-looking statements. We assume no obligation to update or supplement forward-looking statements that become untrue because of subsequent events except as required by law.

Current wording

The Private Securities Litigation Reform Act of 1995 (the “1995 Act”) provides a “safe harbor” for forward-looking statements. This Form 10-Q and other materials filed by us with the SEC (as well as information included in oral or other written statements made by us) contain statements that are forward-looking, including statements relating to business and real estate development/redevelopment activities, acquisitions, dispositions, future capital expenditures, financing sources, governmental regulation (including environmental regulation) and competition. We intend such forward-looking statements to be covered by the safe-harbor provisions of the 1995 Act. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “will,” “should” and similar expressions, as they relate to us, are intended to identify forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be achieved. As forward-looking statements, these statements involve important risks, uncertainties and other factors that could cause actual results to differ materially from the expected results and, accordingly, such results may differ from those expressed in any forward-looking statements made by us or on our behalf. Factors that might cause actual results to differ materially from our expectations, including any impacts from the imposition of tariffs and changes to the U.S. trade policy, are set forth in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2024. Accordingly, we caution readers not to place undue reliance on forward-looking statements. We assume no obligation to update or supplement forward-looking statements as a result of subsequent events, new information, changed circumstances or otherwise, except as required by law.

Previous wording

The discussion that follows is based primarily on our consolidated financial statements as of March 31, 2025 and December 31, 2024 and for the three months ended March 31, 2025 and 2024 and should be read along with the consolidated financial statements and related notes appearing elsewhere in this report. The ability to compare one period to another may be significantly affected by acquisitions completed, development/redevelopment properties placed in service and dispositions made during those periods.

Current wording

The discussion that follows is based primarily on our consolidated financial statements as of June 30, 2025 and December 31, 2024 and for the three and six months ended June 30, 2025 and 2024 and should be read along with the consolidated financial statements and related notes appearing elsewhere in this report. The ability to compare one period to another may be significantly affected by acquisitions completed, development/redevelopment properties placed in service and dispositions made during those periods.

Previous wording

During the three months ended March 31, 2025, we owned and managed properties within four segments: (1) Philadelphia CBD, (2) Pennsylvania Suburbs, (3) Austin, Texas, and (4) Other. The Philadelphia CBD segment includes properties located in the City of Philadelphia in Pennsylvania. The Pennsylvania Suburbs segment includes properties in Chester, Delaware and Montgomery counties in the Philadelphia suburbs. The Austin, Texas segment includes properties in the City of Austin, Texas. The Other segment includes properties located in the District of Columbia, Northern Virginia, Southern Maryland, Camden County, New Jersey and New Castle County, Delaware. In addition to the four segments, our corporate group is responsible for cash and investment management, development/redevelopment of certain properties during the construction period, and certain other general support functions.

Current wording

During the six months ended June 30, 2025, we owned and managed properties within four segments: (1) Philadelphia CBD, (2) Pennsylvania Suburbs, (3) Austin, Texas, and (4) Other. The Philadelphia CBD segment includes properties located in the City of Philadelphia, Pennsylvania. The Pennsylvania Suburbs segment includes properties in Chester, Delaware and Montgomery counties in the Philadelphia suburbs. The Austin, Texas segment includes properties in the City of Austin, Texas. The Other segment includes properties located in the District of Columbia, Northern Virginia, Southern Maryland, Camden County, New Jersey and New Castle County, Delaware. In addition to the four segments, our corporate group is responsible for cash and investment management, development/redevelopment of certain real estate properties during the construction period, and certain other general support functions.

Previous wording

Notwithstanding the challenging macroeconomic conditions, which have contributed to recent difficulties in asset dispositions at acceptable prices, leasing of vacant space at attractive rents and sourcing of capital for development projects at acceptable costs, as well as to impairments of assets, we believe that our portfolio or Properties and investments, and liquidity profile, will allow us to maintain stable operating performance. In our ongoing assessment of our Properties we consider both their quantitative and qualitative attributes, including in relation to other properties within a given submarket or adjacent submarkets that compete with our portfolio for tenants. The attributes that we consider in our assessment include the age and condition of the property, average asking rental rates, access to mass transit and highways, floorplate efficiencies, amenities within, and nearby, the property and availability of parking as well as market demographics such that bear on demand for space at our portfolio. We also believe that our portfolio and liquidity profile will enable us to raise capital, as necessary, in various forms and from different sources, including through secured or unsecured loans from banks, pension funds and life insurance companies. However, there can be no assurance that we will be able to borrow funds on terms that are economically attractive or at all.

Current wording

Notwithstanding the challenging macroeconomic conditions, which have contributed to recent difficulties in asset dispositions at acceptable prices, leasing of vacant space at attractive rents and sourcing of capital for development projects at acceptable costs, as well as to impairments of assets, we believe that our portfolio or Properties and investments, and liquidity profile, will allow us to maintain stable operating performance. In our ongoing assessment of our Properties we consider both their quantitative and qualitative attributes, including in relation to other properties within a given submarket or adjacent submarkets that compete with our portfolio for tenants. The attributes that we consider in our assessment include the age and condition of the property, average asking rental rates, access to mass transit and highways, floorplate efficiencies, amenities within, and nearby, the property and availability of parking as well as market demographics that bear on demand for space at our properties. We also believe that our portfolio and liquidity profile will enable us to raise capital, as necessary, in various forms and from different sources, including through secured or unsecured loans from banks, pension funds and life insurance companies. However, there can be no assurance that we will be able to borrow funds on terms that are economically attractive or at all.

Previous wording

We continue to seek revenue growth throughout our portfolio by increasing occupancy and rental rates. Occupancy at our Core Properties at March 31, 2025 was 86.6% compared to 87.7% at March 31, 2024.

Current wording

We continue to seek revenue growth throughout our portfolio by increasing occupancy and rental rates. Occupancy at our Core Properties at June 30, 2025 was 88.6% compared to 87.3% at June 30, 2024.

Previous wording

The table below summarizes selected operating and leasing statistics of our Core Properties for the three months ended March 31, 2025 and 2024:

Current wording

The table below summarizes selected operating and leasing statistics of our Core Properties for the three and six months ended June 30, 2025 and 2024:

Previous wording

(6)The decreases for the three months ended March 31, 2025 are primarily due to leases having a lower average lease terms and a lower percentage of new leases compared to renewals.

Current wording

(6)The decreases for the three and six months ended June 30, 2025 are primarily due to leases having a lower average lease terms and a lower percentage of new leases compared to renewals.

Previous wording

(8)Average annual rent represents total initial contractual rent under the applicable leases plus contractual fixed rent increases due under the applicable leases averaged over the total terms of the applicable leases.

Current wording

(8)Average annual rent represents total initial contractual rent under the applicable leases (as impacted by free rent) plus contractual fixed rent increases due under the applicable leases averaged over the total terms (without regard to extension options) of the applicable leases.

Previous wording

The table below summarizes occupancy statistics of our Core Properties by segment for the three months ended March 31, 2025 and 2024:

Current wording

The table below summarizes occupancy statistics of our Core Properties by segment for the six months ended June 30, 2025 and 2024:

Previous wording

The table below summarizes the occupancy statistics of our Properties, broken down by property types for the three months ended March 31, 2025 and 2024:

Current wording

The table below summarizes the occupancy statistics of our Properties, broken down by property types for the six months ended June 30, 2025 and 2024:

Previous wording

We are subject to the risk that tenant leases, upon expiration, will not be renewed, that space may not be relet, or that the terms of renewal or reletting (including the cost of renovations) may be less favorable to us than the current lease terms. Leases that accounted for approximately 2.6% of our total square footage as of March 31, 2025 (representing approximately 3.1% of the occupied rentable square feet of the properties) are scheduled to expire without penalty during the remainder of 2025. We maintain an active dialogue with our tenants in an effort to maximize lease renewals. If we are unable to renew leases or relet space under expiring leases, at anticipated rental rates, or if our tenants terminate their leases early, our cash flow would be adversely impacted.

Current wording

We are subject to the risk that tenant leases, upon expiration, will not be renewed, that space may not be relet, or that the terms of renewal or reletting (including the cost of renovations) may be less favorable to us than the current lease terms. Leases that accounted for approximately 1.9% of our total square footage as of June 30, 2025 (representing approximately 2.2% of the occupied rentable square feet of the properties) are scheduled to expire without penalty during the remainder of 2025. We maintain an active dialogue with our tenants in an effort to maximize lease renewals. If we are unable to renew leases or relet space under expiring leases, at anticipated rental rates, or if our tenants terminate their leases early, our cash flow would be adversely impacted.

Previous wording

In the event of a tenant default, we may experience delays in enforcing our rights as a landlord and may incur substantial costs in protecting our investment. Our management evaluates our accrued rent receivable reserve policy in light of our tenant base and general and local economic conditions. Our accrued rent receivable allowance was $0.9 million or 0.5% of our accrued rent receivable balance as of March 31, 2025, compared to $0.9 million or 0.5% of our accrued rent receivable balance as of December 31, 2024.

Current wording

In the event of a tenant default, we may experience delays in enforcing our rights as a landlord and may incur substantial costs in protecting our investment. Our management evaluates our accrued rent receivable reserve policy in light of our tenant base and general and local economic conditions. Our accrued rent receivable allowance was $0.7 million, or 0.4%, of our accrued rent receivable balance as of June 30, 2025, compared to $0.9 million, or 0.5%, of our accrued rent receivable balance as of December 31, 2024.

Previous wording

(a)Mixed used building with 428,000 rentable square feet consisting of 200,000 square feet of life science/innovation office, 219,000 square feet of residential (326 units), and 9,000 square feet of retail. Projected residential stabilization is Q2 2025. Projected commercial stabilization is Q1 2026.

Current wording

(a)Mixed used building with 428,000 rentable square feet consisting of 200,000 square feet of life science/innovation office, 219,000 square feet of residential (326 units), and 9,000 square feet of retail. Residential component stabilized in Q2 2025. Projected commercial stabilization is Q1 2026.

Previous wording

As of the date of this Form 10-Q, the 3151 Market Street Venture has not secured financing. Under the partnership agreement with our partner in this real estate venture, after our partner has funded the remaining balance of its capital commitment, as shown in the table above, then, until financing has been obtained, we will be obligated to fund the balance of construction costs incurred in the project development.

Current wording

As of the date of this Form 10-Q, the 3151 Market Street Venture has not secured financing. Under the partnership agreement with our partner in this real estate venture, after our partner has funded its capital commitment, which it has already funded, as discussed in Note 14, "Commitments and Contingencies" to our consolidated financial statements, then, until third-party financing has been obtained, we will continue to be obligated to fund the balance of construction costs incurred in the project development.

Previous wording

The following discussion is based on our consolidated financial statements for the three months ended March 31, 2025 and 2024. We believe that presentation of our consolidated financial information, without a breakdown by segment, will effectively present important information useful to our investors.

Current wording

The following discussion is based on our consolidated financial statements for the three and six months ended June 30, 2025 and 2024. We believe that presentation of our consolidated financial information, without a breakdown by segment, will effectively present important information useful to our investors.

Previous wording

NOI as presented in the comparative analysis below is a non-GAAP financial measure defined as total revenue less property operating expenses, real estate taxes and third party management expenses. Property operating expenses that are included in determining NOI consist of costs that are necessary and allocable to our operating properties such as utilities, property-level salaries, repairs and maintenance, property insurance, and management fees. General and administrative expenses that are not reflected in NOI primarily consist of corporate-level salaries, amortization of share awards and professional fees that are incurred as part of corporate office management. NOI is a non-GAAP financial measure that we use internally to evaluate the operating performance of our real estate assets by segment, as presented in Note 14“Segment Information,” to our consolidated financial statements, and of our business as a whole. We believe NOI provides useful information to investors regarding our financial condition and results of operations because it reflects only those income and expense items that are incurred at the property level. While NOI is a relevant and widely used measure of operating performance of real estate investment trusts, it does not represent cash flow from operations or net income as defined by GAAP and should not be considered as an alternative to those measures in evaluating our liquidity or operating performance. NOI does not reflect interest expenses, real estate impairment losses, depreciation and amortization costs, capital expenditures and leasing costs. We believe that net income, as defined by GAAP, is the most appropriate earnings measure. See Note 14“Segment Information,” to our Consolidated Financial Statements for a reconciliation of NOI to our consolidated net income as defined by GAAP.

Current wording

NOI as presented in the comparative analysis below is a non-GAAP financial measure defined as total revenue less property operating expenses, real estate taxes and third party management expenses. Property operating expenses that are included in determining NOI consist of costs that are necessary and allocable to our operating properties such as utilities, property-level salaries, repairs and maintenance, property insurance, and management fees. General and administrative expenses that are not reflected in NOI primarily consist of corporate-level salaries, amortization of share awards and professional fees that are incurred as part of corporate office management. NOI is a non-GAAP financial measure that we use internally to evaluate the operating performance of our real estate assets by segment, as presented in Note 13, “Segment Information,” to our Consolidated Financial Statements, and of our business as a whole. We believe NOI provides useful information to investors regarding our financial condition and results of operations because it reflects only those income and expense items that are incurred at the property level. While NOI is a relevant and widely used measure of operating performance of real estate investment trusts, it does not represent cash flow from operations or net income as defined by GAAP and should not be considered as an alternative to those measures in evaluating our liquidity or operating performance. NOI does not reflect interest expenses, real estate impairment losses, depreciation and amortization costs, capital expenditures and leasing costs. We believe that net income (loss), as defined by GAAP, is the most appropriate earnings measure. See Note 13, “Segment Information,” to our consolidated financial statements for a reconciliation of NOI to our consolidated net income as defined by GAAP.

Previous wording

(a)“Same Store Property Portfolio,” which represents 62 properties containing an aggregate of approximately 11.8 million net rentable square feet, and represents properties that we owned and consolidated for the three-month periods ended March 31, 2025 and 2024. The Same Store Property Portfolio includes properties acquired or placed in service on or prior to January 1, 2024 and owned and consolidated through March 31, 2025, excluding properties classified as held for sale;

Current wording

(a)“Same Store Property Portfolio,” which represents 59 properties containing an aggregate of approximately 11.1 million net rentable square feet, and represents properties that we owned and consolidated for the three-month periods ended June 30, 2025 and 2024. The Same Store Property Portfolio includes properties acquired or placed in service on or prior to April 1, 2024 and owned and consolidated through June 30, 2025, excluding properties classified as held for sale;

Previous wording

(d)“Development/Redevelopment Properties,” which represents zero properties currently in development/redevelopment. A property is excluded from our Same Store Property Portfolio and moved into Development/Redevelopment Properties in the period that we determine to proceed with development/redevelopment for a future development strategy; and

Current wording

(d)“Development/Redevelopment Properties,” which represents two properties currently in development/redevelopment. A property is excluded from our Same Store Property Portfolio and moved into Development/Redevelopment Properties in the period that we determine to proceed with development/redevelopment for a future development strategy; and

Previous wording

(e)“Q1 2024 through Q1 2025 Dispositions,” which represents seven properties disposed of from January 1, 2024 through March 31, 2025.

Current wording

(e)“Q2 2024 through Q2 2025 Dispositions,” which represents eight properties disposed of from April 1, 2024 through June 30, 2025.

Previous wording

•$3.4 million decrease due to the sale of five Class B office properties in the Plymouth Meeting Executive Center in Plymouth Meeting, PA in the third quarter of 2024;

Current wording

•$3.4 million decrease due to the sale of five office properties in the Plymouth Meeting Executive Center in Plymouth Meeting, PA in the third quarter of 2024;

Previous wording

•$3.2 million decrease due to the sale of One and Two Barton Skyway, Austin, TX in the fourth quarter of 2024; and

Current wording

•$3.5 million decrease due to the sale of One and Two Barton Skyway, Austin, TX in the fourth quarter of 2024; and

Previous wording

•$1.8 million increase related to our Recently Completed/Acquired Property, 155 King of Prussia Road, Radnor, PA.

Current wording

•Partially offset by $2.2 million increase related to our Recently Completed/Acquired Properties, which are comprised of 155 King of Prussia Road, Radnor, PA and 250 King of Prussia Road, Radnor, PA.

Previous wording

During first quarter of 2025, the Company recognized a gain of $3.1 million from installment proceeds received from the buyer of a property, located in Philadelphia, Pennsylvania, that the Company sold in March 2017. In March 2017, the Company sold the property for a gross sales price of $21.4 million. At the settlement, the Company received a partial payment of $12.0 million and recognized a corresponding gain on sale of $6.5 million. The remainder of the payment of $9.4 million was deferred and was initially contingent upon termination or expiration of a lease at the property with an existing tenant. In 2024, the deferred contingent payment obligation was changed to a fixed payment obligation, and the $6.3 million remaining deferred payment, together with interest thereon at 11% per annum, is due in February 2026 and will be recognized as a gain if and when cash is received.

Current wording

During the first quarter of 2025, the Company recognized a gain of $3.1 million from installment proceeds received from the buyer of a property, located in Philadelphia, Pennsylvania, that the Company sold in March 2017. In March 2017, the Company sold the property for a gross sales price of $21.4 million. At the settlement, the Company received a partial payment of $12.0 million and recognized a corresponding gain on sale of $6.5 million. The remainder of the payment of $9.4 million was deferred and was initially contingent upon termination or expiration of a lease at the property with an existing tenant. In 2024, the deferred contingent payment obligation was changed to a fixed payment obligation, and the $6.3 million remaining deferred payment, together with interest thereon at 11% per annum, is due in February 2026 and will be recognized as a gain if and when cash is received.

Previous wording

Interest expense increased primarily due to our issuance of $400 million aggregate principal amount of our 8.875% Guaranteed Notes due 2029 (the “2029 Notes”) in April 2024, partially offset by the redemption of our 4.10% Guaranteed Notes due 2024. Additionally, during the second quarter of 2024, Moody's downgraded our senior unsecured credit rating from Ba1 to Ba2. As a result of the downgrade, the interest rate on the 2028 Notes increased 25 basis points to 8.30% in April 2024 due to the coupon adjustment provisions within the 2028 Notes.

Current wording

Interest expense increased primarily due to our issuance of $400 million aggregate principal amount of 2029 Notes in April 2024 and our issuance of an additional $150 million aggregate principal amount of 2029 Notes in June 2025, partially offset by the redemption of our 2024 $350.0 million 4.10% Guaranteed Notes. Additionally, during the first quarter of 2024, S&P downgraded our senior unsecured credit rating from BBB- to BB+. As a result of the downgrade, the interest rate on the 2028 Notes increased to 8.05% in March 2024 due to the coupon adjustment provisions within the 2028 Notes. During the second quarter of 2024, Moody's downgraded our senior unsecured credit rating from Ba1 to Ba2. As a result of the downgrade, the interest rate on the 2028 Notes increased 25 basis points to 8.30% in April 2024 due to the coupon adjustment provisions within the 2028 Notes.

Previous wording

On April 12, 2024, we completed an underwritten offering of $400.0 million aggregate principal amount of the 2029 Notes. The 2029 Notes were priced at approximately 99.51% of their face amount. We received approximately $391.8 million of net proceeds after the deduction for underwriting discounts and offering expenses.

Current wording

We issued the Initial 2029 Notes on April 12, 2024 in an underwritten offering. The Initial 2029 Notes were priced at approximately 99.51% of their face amount. We received approximately $391.8 million of net proceeds from our issuance of the Initial 2029 Notes after the deduction for underwriting discounts and offering expenses.

Previous wording

The Parent Company unconditionally guarantees the Operating Partnership’s unsecured debt obligations, which, as of March 31, 2025, amounted to $1,943.6 million. The Operating Partnership’s secured debt obligations as of March 31, 2025, amounted to $283.4 million

Current wording

The Parent Company unconditionally guarantees the Operating Partnership’s unsecured debt obligations, which, as of June 30, 2025, amounted to $2,028.6 million. The Operating Partnership’s secured debt obligations as of June 30, 2025, amounted to $288.4 million.

Previous wording

As of March 31, 2025, we had $29.4 million of cash and cash equivalents and $495.8 million of available borrowings under our unsecured credit facility, net of $39.2 million in letters of credit outstanding. Based on the foregoing, as well as cash flows from operations net of dividend requirements, we believe we have sufficient capital to fund our remaining capital requirements on existing development and redevelopment projects and pursue additional attractive investment opportunities. We expect that our primary uses of capital during the remainder of 2025 will be to fund our current development and redevelopment projects.

Current wording

As of June 30, 2025, we had $122.6 million of cash and cash equivalents and $560.8 million of available borrowings under our Unsecured Credit Facility, net of $39.2 million in letters of credit outstanding. Based on the foregoing, as well as cash flows from operations net of dividend requirements, we believe we have sufficient capital to fund our remaining capital requirements on existing development and redevelopment projects and pursue additional attractive investment opportunities. We expect that our primary uses of capital during the remainder of 2025 will be to fund our current development and redevelopment projects.

Previous wording

As of March 31, 2025 and December 31, 2024, we maintained cash and cash equivalents and restricted cash of $31.5 million and $96.2 million, respectively. We report and analyze our cash flows based on operating activities, investing activities, and financing activities. The following table summarizes changes in our cash flows (in thousands):

Current wording

As of June 30, 2025 and December 31, 2024, we maintained cash and cash equivalents and restricted cash of $123.8 million and $96.2 million, respectively. We report and analyze our cash flows based on operating activities, investing activities, and financing activities. The following table summarizes changes in our cash flows (in thousands):

Previous wording

Our principal source of cash flows is from the leasing of space at of our Properties. Our Properties provide a relatively consistent stream of cash flows that provides us with the resources to fund operating expenses, debt service and quarterly dividends.

Current wording

Our principal source of cash flows is from the leasing of space at our Properties. Our Properties provide a relatively consistent stream of cash flows that provides us with the resources to fund operating expenses, debt service and quarterly dividends.

Previous wording

Cash is used in investing activities to fund acquisitions, development, or redevelopment projects and recurring and nonrecurring capital expenditures. We selectively invest in new projects that we expect will enable us to take advantage of our development/redevelopment, leasing, financing, and property management skills and invest in existing buildings that meet our investment criteria for additional capital. During the three months ended March 31, 2025, when compared to the three months ended March 31, 2024, the change in investing cash flows was due to the following activities (in thousands):

Current wording

Cash is used in investing activities to fund acquisitions, development, or redevelopment projects and recurring and nonrecurring capital expenditures. We selectively invest in new projects that we expect will enable us to take advantage of our development/redevelopment, leasing, financing, and property management skills and invest in existing buildings that meet our investment criteria for additional capital. During the six months ended June 30, 2025, when compared to the six months ended June 30, 2024, the change in investing cash flows was due to the following activities (in thousands):

Previous wording

We generally fund our investment activity through the sale of real estate, property-level financing, unsecured and secured credit facilities, senior unsecured notes, and construction loans. From time to time, we may issue common or preferred shares of beneficial interest, or the Operating Partnership may issue common or preferred units of limited partnership interest. During the three months ended March 31, 2025, when compared to the three months ended March 31, 2024, the change in financing cash flows was due to the following activities (in thousands):

Current wording

We generally fund our investment activity through the sale of real estate, property-level financing, unsecured and secured credit facilities, senior unsecured notes, and construction loans. From time to time, we may issue common or preferred shares of beneficial interest, or the Operating Partnership may issue common or preferred units of limited partnership interest. During the six months ended June 30, 2025, when compared to the six months ended June 30, 2024, the change in financing cash flows was due to the following activities (in thousands):

Previous wording

The Operating Partnership is the issuer of our unsecured notes which are fully and unconditionally guaranteed by the Parent Company. The indenture under which the Operating Partnership issued its unsecured notes contains financial covenants, including: (i) a leverage ratio not to exceed 60%; (ii) a secured debt leverage ratio not to exceed 40%; (iii) a debt service coverage ratio of greater than 1.5 to 1.0; and (iv) an unencumbered asset value of not less than 150% of unsecured debt. The Operating Partnership is in compliance with all covenants as of March 31, 2025.

Current wording

The Operating Partnership is the issuer of our unsecured notes which are fully and unconditionally guaranteed by the Parent Company. The indenture under which the Operating Partnership issued its unsecured notes contains financial covenants, including: (i) a leverage ratio not to exceed 60%; (ii) a secured debt leverage ratio not to exceed 40%; (iii) a debt service coverage ratio of greater than 1.5 to 1.0; and (iv) an unencumbered asset value of not less than 150% of unsecured debt. The Operating Partnership was in compliance with all covenants as of June 30, 2025.

Previous wording

In order to maintain its qualification as a REIT, the Parent Company is required to, among other things, pay dividends to its shareholders of at least 90% of its REIT taxable income. See Note 11“Beneficiaries' Equity of the Parent Company,” to our Consolidated Financial Statements for further information related to our dividends declared for the first quarter of 2025.

Current wording

In order to maintain its qualification as a REIT, the Parent Company is required to, among other things, pay dividends to its shareholders of at least 90% of its REIT taxable income. See Note 11, “Beneficiaries' Equity of the Parent Company,” to our consolidated financial statements for further information related to our dividends declared for the second quarter of 2025.

Previous wording

Substantially all our leases are structured as base year or triple net leases which provide for reimbursement billings for operating expense pass-through charges, real estate tax and insurance reimbursements on a per square-foot basis, or in some cases, annual reimbursement of operating expenses above certain per square-foot allowances. In addition, as of March 31, 2025, approximately 96% of our leases (as a percentage of the aggregate net rentable square feet of our wholly-owned portfolio) contain annual rent escalations that are either fixed (generally ranging from 2.0% to 3.0% per lease year) or indexed based on a consumer price index or other indices. We believe such lease provisions mitigate adverse impacts of inflation on our earnings from real estate operations. However, recent inflation and higher interest rates have caused an increase in our borrowing costs, including on our variable rate debt, and on our operating expenses that are not subject to the lease pass-through provisions.

Current wording

Substantially all our leases are structured as base year or triple net leases which provide for reimbursement billings for operating expense pass-through charges, real estate tax and insurance reimbursements on a per square-foot basis, or in some cases, annual reimbursement of operating expenses above certain per square-foot allowances. In addition, as of June 30, 2025, approximately 97% of our leases (as a percentage of the aggregate net rentable square feet of our wholly-owned portfolio) contain annual rent escalations that are either fixed (generally ranging from 2.0% to 3.0% per lease year) or indexed based on a consumer price index or other indices. We believe such lease provisions mitigate adverse impacts of inflation on our earnings from real estate operations. However, recent inflation and higher interest rates have caused an increase in our borrowing costs, including on our variable rate debt, and on our operating expenses that are not subject to the lease pass-through provisions.

Previous wording

We have experienced increased inflation in our Same Store Property Portfolio, as our operating margins decreased to 61.9% for the three months ended March 31, 2025 from 63.5% for the three months ended March 31, 2024. The expense reimbursement provisions in our leases resulted in Same Store Property Portfolio operating expense recovery rates of 53.0% and 52.9% for the three months ended March 31, 2025 and 2024, respectively.

Current wording

We have experienced increased inflation in our Same Store Property Portfolio, as our operating margins decreased to 63.5% and 63.1% for the three and six months ended June 30, 2025, respectively from 63.9% and 63.3% for the three and six months ended June 30, 2024, respectively. The expense reimbursement provisions in our leases resulted in Same Store Property Portfolio operating expense recovery rates of 53.9% and 51.6% for the three months ended June 30, 2025 and 2024, respectively and 53.6% and 52.64% for the six months ended June 30, 2025 and 2024, respectively.

Previous wording

The following table presents a reconciliation of net income attributable to common shares and common unitholders to FFO for the three months ended March 31, 2025 and 2024:

Current wording

The following table presents a reconciliation of net income attributable to common shares and common unitholders to FFO for the three and six months ended June 30, 2025 and 2024:

Previous wording

(a)Includes common shares and partnership units outstanding through the three months ended March 31, 2025 and 2024, respectively.

Current wording

(a)Includes common shares and partnership units outstanding through the three and six months ended June 30, 2025 and 2024, respectively.