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PLYMOUTH MEETING, PA-Brandywine Realty Trust has entered a merger agreement under which it will acquire Dallas-based Prentiss Properties Trust in a transaction valued at approximately $3.3 billion. As part of the agreement, Parsippany, NJ-based Prudential Real Estate Investors will acquire a portfolio of Prentiss assets valued at about $753 million.

Brandywine assumes ownership of some Prentiss assets in Washington, DC, Northern and Southern California and all of them in Dallas and Austin, TX, along with a land inventory of eight million buildable sf. PREI’s acquisitions are the Prentiss assets in Denver, along with select ones in Washington, DC and Northern and Southern California.

Brandywine will manage the assets acquired by PREI for two years, an agreement that Gerard Sweeney, Brandywine’s president and CEO, said in a conference call will provide a revenue stream as it integrates operations and advances development opportunities. He said development over the next two years would be “in the $320-million to $350-million range.” He singled out developments in the company’s Byberry asset in Philadelphia and two New Jersey properties in its pre-merger portfolio, along with existing Prentiss development plans in Metropolitan DC, Northern California and Austin.

With the inclusion of the properties PREI is buying and some existing JVs, this transaction takes locally based Brandywine’s own/manage portfolio to 49 million sf. Without the PREI and JV properties, Brandywine’s portfolio will encompass 317 properties aggregating 32 million sf, according to Sweeney. He also said he anticipates “an increase in our revenues by about 70%” and $4 million in “synergy savings” from the deal.

Michael V. Prentiss, chairman, and Thomas F. August, Prentiss president and CEO, will join Brandywine’s board. During the joint conference call, Prentiss said, “it’s never easy to relinquish control of a company, particularly when your name’s on the front door, but I firmly believe in Jerry’s management and strategy for success, and I intend to retain my shares in the company.” Additional Prentiss executives will join Brandywine and it expects to absorb that Prentiss’ regional operations into its operating platform.

Funding for the acquisition will consist of $2.2 billion in cash and assumption of Prentiss’ $1-billion in debt, plus payment of $1 million in transaction costs. Each share of Prentiss common stock will be converted into the right to receive .69 of a share of Brandywine stock, priced at $31.16 a share, plus $21.50 in cash. The merger is expected to close during this year’s first quarter “or very, very early in 2006,” Sweeney said.

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