Filed by Brandywine Operating Partnership pursuant to
Rule 425 under the Securities Act of 1933 and deemed filed pursuant to Rule 14a-12
Under the Securities Exchange Act of 1934
Subject Company: Prentiss Properties Trust
Commission File No.: 1-14516
This filing relates to a proposed acquisition (the “Acquisition”) by Brandywine Realty Trust (“Brandywine”)
of Prentiss Properties Trust (“Prentiss”) pursuant to the terms of an Agreement
and Plan of Merger, dated as of
October 3, 2005 (the “Merger Agreement”), by and among Brandywine and Prentiss. The Merger Agreement is on file
with the Securities and Exchange Commission (the “Commission”) as an exhibit to
the Current Report on Form 8-K filed
by Brandywine on October 3, 2005. The Merger Agreement is incorporated by reference into this filing.
The following is a series of slides presented as additional information by Brandywine on its website on
October 12, 2005 regarding the Acquisition and related matters.
October 12, 2005
Supplemental Materials
Strategic Rationale
Brandywine gains a focused expansion into three dynamic markets with
experienced Prentiss management teams
Metro Washington, D.C.
Oakland, CA
Austin, TX
The Company’s relationships with Prudential and ABP create a profitable
means to evaluate opportunities in the San Diego area
Leverages strong regional office platform with third-party fees
Limited capital exposure
Dallas market serves as a capital recycling opportunity, reducing the
combined Company’s reliance on public equity for future growth
These markets combined with the stability of our Philadelphia markets
result in accelerated growth
1
Why this transaction?
Brandywine’s new markets possess higher rental rate and job
growth characteristics than its current markets
Brandywine will have significant positions and strong operating
teams in high-priority sub-markets
Dulles Toll Road - suburban Washington D.C.
Oakland - CBD
Austin – Southwest quadrant
Philadelphia platform and experienced management team
represents further opportunity
Tactical in–fill acquisitions
Monetization of development pipeline
2
Brandywine’s markets have strong
projected long-term growth . . .
Source: REIS Research
2005-2009 projected CAGR %
2005-2009 projected CAGR %
Office Rent
Job Growth
3
. . . as well as for 2006
Source: REIS Research
1 Rates based on projected 2006 rent per square foot growth
Projected 2006 growth rate by market¹
4
Development will have a more significant impact
on Brandywine going forward . . .
54.7%
5
Note: Data excludes Cira Center
¹ Gross assets for Brandywine as of June 30, 2005
7,987
3,001
4,986
)
000’s
(
Buildable square feet
%
4.7
%
7.3
%
4
2.
Percentage
247.7
$
179.4
$
8.3
$6
term development opportunities
-
Near
289
$5,
475
$2,
2,814
$
¹
Gross assets
Pro forma
Brandywine
Standalone
Prentiss
Standalone
Brandywine
($millions)
Development pipeline
Near
-
term
starts
Location
Square footage
(000's)
Projected cost
($millions)
Start date
500 Office Center Dr.
Philadelphia
101
$12.3
Aug
-
0
5
Newtown Bucks County
Philadelphia
64
$
14
.0
Jan
-
06
Princeton Pike
New Jersey
75
$
17.0
Dec
-
05
Mount Laurel
New Jers
ey
110
$
25.0
Dec
-
05
The Park at Barton Creek
Austin
211
$44.0
Jan
-
0
6
South Lake at Dulles Corner
Dulles
265
$70.0
Jan
-
0
6
2101 Webster Expansion
Oakland
217
$
65.4
Jan
-
06
Total
1,
043
$
2
47.7
. . . and is weighted toward Metro Washington
and Oakland
6
Land held for development
67.4%
Region
Allocated
value
($mm)
% of total
Oakland, CA
23.7
37.7%
Metro Washington
18.7
29.7%
Dallas, TX
14.1
22.4%
Austin, TX
6.4
10.2%
Total
62.9
100.0%
Prentiss Properties is much different today than
it was in 2000
Prentiss- June 2000 national market strategy
Prentiss- Pro forma 2006 targeted market strategy
7
Key statistics
Key statistics
¹ Assumes 1.5 million square feet of initial Dallas disposition
43.8
Total
24.7
Managed sq. ft. (mm)
4.0
(mm)
Industrial sq. ft.
1
15.
(mm)
Office sq. ft.
14
Number of markets
San Diego, CA
Austin, TX
Oakland, CA
Dallas/Ft. Worth, TX
Washington, D.C.
23.5
Total
13.2
Managed sq. ft. (mm)
0
Industrial sq. ft. (mm)
3
10.
¹
(mm)
Office sq. ft.
5
Number of markets
Washington, D.C.
Chicago, IL
Dallas/Ft. Worth, TX
Los Angeles, CA
Philadelphia, PA
Oakland, CA
Austin, TX
Houston, TX
Atlanta, GA
San Diego, CA
Denver, CO
Sacramento, CA
Detroit, MI
Tucs
o
n, AZ
What this transaction is not
This is not an attempt to create a national office platform
This is not the first of several consolidation transactions
Markets have the depth to provide significant opportunities
No additional strategic corporate acquisitions required
In-fill acquisitions and development drive future growth
This transaction is not a leveraging of the Company
All three rating agencies have affirmed
Moody’s- affirmed, stable
S&P- affirmed, stable
Fitch- affirmed, positive
Pro forma financing comprised of long-term fixed rate debt
1 Pro forma for proposed initial Dallas disposition
8
National
Office REIT
s
Capitalization
($Billions)
Square feet
(millions)
# of
markets
% sq ft in top 5
markets
% sq ft in top 3
markets
Equity Office
$27.3
117.9
26
44.2
%
29.1%
Trizec Properties
$6.0
37.3
1
0
73.4
%
47.0
%
CarrAmerica
$4.1
21.0
1
3
68.0
%
56.0
%
Brandywine (owned)
$5.9
29.9
6
99.3%
87.8%
Brandywine
¹
(total)
$5.9
47.2
6
95.3
%
79.7
%
Washington D.C. and Philadelphia will
comprise 72% of the Company . . .
Suburban
Washington, D.C.
Philadelphia Region
9
Note: Values are after initial Dallas disposition
1 Includes Suburban Virginia
1 Includes Philadelphia, PA North, PA West, and New Jersey
2 Includes Philadelphia, PA North, PA West, New Jersey and Delaware
3 Excludes Cira Center
Suburban Washington, D.C. (000’s)
4,235
Developable square feet³
20,300
Total
2,916
Square feet managed²
,384
17
Square feet owned¹
Philadelphia Region (000’s)
Square feet owned¹
5,799
Square feet managed¹
7,655
Total
13
,
454
Developable square feet
1,216
. . . while California will comprise
approximately 16%
10
Oakland
San Diego
San Diego Region (000’s)
976
Developable square feet
31
8
3,
Total
,091
2
Square feet managed
,739
1
Square feet owned
Oakland Region (000’s)
Square feet owned
223
Square feet managed
3,
554
Total
3,
777
Developable square feet
0
Dallas and Austin will comprise 12% of
the Company after initial dispositions
11
¹ Assumes Dallas sales of 25% to 30% of square footage in 12 to
18 months
Austin
Dallas/Fort Worth
Austin Region (000’s)
,349
1
Developable square feet
3,576
Total
496
Square feet managed
)
1,538
(
Square feet to be sold¹
,618
4
Square feet owned
Dallas/Fort Worth Region (000’s)
Square feet owned
1,672
Square feet managed
559
Total
2,231
Developable square feet
211
Dallas capital recycling is
facilitated by market liquidity
$1.25 billion of Class A office transaction volume in the trailing six
quarters ended June 30, 2005
Average Class A cap rate of 6.58% for first half of 2005
Price per square foot for high quality office assets above $200
High profile asset sales characterized by multiple qualified bids
Continuation of plan already under consideration by Prentiss
Sale proceeds targeted to development pipeline
12
Brandywine’s five core markets
Core markets -- square footage (000’s)
Dallas market -- square footage (000’s)
13
Austin
5.1%
Oakland
8.8%
San Diego
8.7%
Philadelphia
46.6%
Washington, D.C.
30.8%
1 Includes Philadelphia, PA North, PA West, New Jersey and Delaware
2 Includes Richmond Virginia asset managed by Brandywine
3 Assumes Dallas sales of 25% to 30% of square footage in 12 to 18 months
4 Excludes Dallas
593
43,
777
3,
31
2,2
3,831
454
13,
20,300
Total
775
16,
554
3,
9
55
2,091
7,655
2,916
Managed
6,819
2
223
1,672
1,739
5,799
17,384
Owned
Total
San Diego
Austin
Oakland
Washington D.C.²
Metro
region¹
Philadelphia
Owned and managed core market sq. ft.4
576
3,
Total
496
Managed
3,080
Owned
after
3
Dallas
Dallas
b
efore
Owned
4,618
Managed
496
Total
5
,
114
Credit ratings affirmed
14
Moody’s
“ Moody’s Investors Service has affirmed the Baa3 senior unsecured debt rating of Brandywine. . . “
“. . . the Prentiss transaction will bring increased size and geographic diversity to Brandywine. . .”
“. . . a large portion of the acquired assets are in Washington D.C., a market familiar to Brandywine, and the transaction
should boost Brandywine’s market leadership.”
S&P
“ On Oct. 3, 2005, Standard & Poor’s Ratings Services affirmed its ratings of Brandywine Realty Trust Inc.”
“ This leverage neutral transaction will materially broaden Brandywine’s operating platform and tenant base.”
“Brandywine intends to finance the $2.5 billion purchase price in a manner that will preserve appropriate credit metrics for
the rating.”
Fitch
“Fitch Ratings views Brandywine Realty Trust’s expected acquisition of approximately 77% of the assets of Prentiss Properties
Trust as a credit positive for Brandywine.”
“The acquisition of the Prentiss assets will materially add to the geographic diversification of BDN’s portfolio.”
“ Fitch also anticipates that BDN’s expected size will enhance its access to capital and potentially lower its financing costs.”
Pro forma credit statistics
Total debt / gross assets
51.1%
EBITDA/Interest expense
2.53x
EBITDA/Interest expense + preferred distributions
2.41x
Mitigating integration risk –
effective capital deployment
15
Mike Prentiss and Tom August to join Brandywine’s Board of Trustees
Provide guidance to Board on capital deployment
Tom August to enter into a two-year consulting agreement to assist in
overall integration efforts
Corporate management depth strengthened by three Prentiss
executives
Bob Wiberg – EVP of Operations
Greg Imhoff – Chief Administrative Officer
Scott Fordham – VP and Chief Accounting Officer
To ensure continuity of operations Prentiss regional managers will enter
into two-year employment agreements
All regions to be run by teams reporting to Bob Wiberg
Takeaways
Regional focus -- Brandywine becomes a regionally focused REIT with
several attractive capital deployment options
Strong platform -- platform can effectively respond to demand drivers in
new markets
Increased growth -- Projected EBITDA growth rates from new markets
exceed expected growth rates from the Philadelphia region
Market outperformance -- Brandywine is well positioned to outperform in
the Philadelphia Region
Experienced management -- Combined management team ranks best-
in-class and has the depth and scope to replicate Brandywine’s market
concentration
strategy
Balance sheet flexibility -- Expanded balance sheet allows Brandywine
the opportunity to increase development pipeline and strategically
pursue
property acquisitions
16