Brandywine Realty Trust (NYSE:BDN) today reported its financial and
operating results for the three and nine-month periods ended
September 30, 2023.
Management Comments
“During the third quarter, we made strong
progress on our 2023 business plan,” stated Gerard H. Sweeney,
President and Chief Executive Officer for Brandywine Realty Trust.
“We continued to experience positive mark-to-market rent increases
on an accrual and cash basis while controlling leasing capital
costs. Our same store portfolio has performed well and we
have increased our same store NOI ranges on both an accrual and
cash basis. We also made great progress on our development
projects highlighted by 3025 JFK Boulevard in Schuylkill
Yards with the opening of Avira, the multi-family portion of the
project, and the signing of our first office lease.
Turning to capital markets activity, we were able to raise
over $103 million through a $53.3 million asset sale in Austin,
Texas and a $50 million construction loan in Radnor, Pennsylvania.
Based on the progress made on our 2023 business plan, we are
narrowing our 2023 FFO range of $1.14 to 1.18 per share to $1.15 to
$1.17 per share.”
Third Quarter Highlights
Financial Results
- Net loss
available to common shareholders: $(21.7) million, or $(0.13) per
share. Those results include an $11.7 million, or $(0.07) per
share, non-cash impairment charge.
- Funds from
Operations (FFO): $50.6 million, or $0.29 per diluted share.
Portfolio Results
- Core Portfolio:
88.3% occupied and 90.4% leased.
- New and Renewal
Leases Signed: 351,000 square feet wholly-owned and 624,000 square
feet including our joint ventures.
- Tenant
Retention Ratio: 44%.
- Rental Rate
Mark-to-Market Increase: 2.8% on an accrual basis and 0.8% on a
cash basis.
- Same Store
Results: Increased 1.7% on an accrual basis and 7.0% on a cash
basis.
2023 Business Plan Changes
- Same Store NOI
Growth Range: Increased from 0-2% to 2-3% on an accrual basis and
increased from 2.5-4.5% to 5-6% on a cash basis.
- Same Store and
Core Year-End Occupancy: Decreased from 90-91% to 89-90%.
Disposition Activity
- We sold Three
Barton Skyway, a 173,302 square foot office building located at
1221 S. Mopac Expressway in Austin, Texas for $53.3 million, or
$307 per square foot. We closed on the sale during August 2023 and
we received net proceeds totaling $51.3 million. Net proceeds are
being used for general corporate purposes.
Finance Activity
- As previously
announced, we closed on a construction loan on our development
project located at 155 King of Prussia Rd. Construction commenced
during January 2023 and the scheduled completion is the fourth
quarter 2024. The $50.0 million construction loan bears interest at
2.50% over the secured overnight financing rate and has an initial
maturity date in August 2026. We anticipate our first draw on the
construction loan during the fourth quarter 2023.Located in Radnor,
Pennsylvania, 155 King of Prussia Rd. is a fully leased 144,685
square foot build-to-suit office property. The building will be the
North American Headquarters for Arkema S.A., a global supplier of
specialty materials.
- We had no
outstanding balance on our $600.0 million unsecured revolving
credit facility as of September 30, 2023.
- We had $47.9
million of cash and cash equivalents on-hand as of September 30,
2023.
Results for the Three and Nine-Month
Periods Ended September 30, 2023
Net loss allocated to common shares totaled
$(21.7) million or $(0.13) per share in the third quarter of 2023
compared to a net income of $13.3 million or $0.08 per diluted
share in the third quarter of 2022. The 2023 results include an
impairment loss totaling $11.7 million, or $(0.07) per share.
FFO available to common shares and units in the
third quarter of 2023 totaled $50.6 million or $0.29 per diluted
share versus $61.8 million or $0.36 per diluted share in the third
quarter of 2022. Our third quarter 2023 payout ratio ($0.19 common
share distribution / $0.29 FFO per diluted share) was 65.5%.
Net loss allocated to common shares totaled
$(39.9) million or $(0.23) per share for the first nine months of
2023 compared to net income of $23.8 million or $0.14 per diluted
share in the first nine months of 2022. The 2023 results include
impairment losses totaling $16.1 million, or $(0.09) per share.
Our FFO available to common shares and units for
the first nine months of 2023 totaled $151.0 million, or $0.87 per
diluted share compared to FFO available to common shares and units
of $182.5 million, or $1.06 per diluted share, for the first nine
months of 2022. Our first nine months 2023 FFO payout
ratio ($0.57 common share distribution / $0.87 FFO per diluted
share) was 65.5%.
Operating and Leasing
Activity
In the third quarter of 2023, our Net Operating
Income (NOI), excluding termination revenues, bad debt expense and
other income items, increased 1.7% on an accrual basis and 7.0% on
a cash basis for our 69 same store properties, which were 88.2% and
91.0% occupied on September 30, 2023 and 2022, respectively.
We leased approximately 351,000 square feet and
commenced occupancy on 175,000 square feet during the third quarter
of 2023. The third quarter occupancy activity includes 115,000
square feet of renewals, 34,000 square feet of new leases and
26,000 square feet of tenant expansions. We have an additional
256,000 square feet of executed new leasing scheduled to commence
subsequent to September 30, 2023.
We achieved a 44% tenant retention ratio in our
core portfolio with net negative absorption of (145,000) square
feet during the third quarter of 2023. Third quarter accrual rental
rate growth increased 2.8% on our renewal leasing.
At September 30, 2023 our core portfolio of 70
properties comprising 12.6 million square feet was 88.3% occupied
and we are 90.4% leased (reflecting new leases commencing after
September 30, 2023) as of October 20, 2023.
Distributions
On September 20, 2023, our Board of Trustees
declared a quarterly dividend distribution of $0.15 per common
share that was paid on October 18, 2023 to shareholders of record
as of October 4, 2023.
2023 Earnings and FFO
Guidance
Based on current plans and assumptions and
subject to the risks and uncertainties more fully described in our
Securities and Exchange Commission filings, we are increasing and
narrowing our 2023 loss per share guidance from ($0.16) - ($0.12)
per share to ($0.19) - ($0.17) per share due to property-level
impairments as well as projected higher depreciation and
amortization expense and we also are narrowing our 2023 FFO
guidance from $1.14 - $1.18 per diluted share to $1.15 - $1.17 per
diluted share. This guidance is provided for informational purposes
and is subject to change. The following is a reconciliation of the
calculation of 2023 FFO and earnings per diluted share:
Guidance for
2023 |
Range |
|
|
|
|
|
|
Loss per
share allocated to common shareholders |
($0.19) |
to |
($0.17) |
|
Plus: real estate
depreciation, amortization |
1.34 |
|
1.34 |
|
FFO per
diluted share |
$1.15 |
to |
$1.17 |
Our 2023 FFO key assumptions include:
- Year-end Core
Occupancy Range: Adjusted from 90-91% to 89-90%;
- Year-end Core
Leased Range: 91-92%;
- Rental Rate
Growth (accrual): 11-13%;
- Rental Rate
Growth (cash): 4-6%;
- Same Store
(accrual) NOI Growth Range: Adjusted from 0-2% to 2-3%;
- Same Store
(cash) NOI Growth Range: Adjusted from 2.5-4.5% to 5-6%;
- Speculative
Revenue Target: $17.0 - $19.0 million, $17.0 million achieved;
- Tenant
Retention Rate Range: 49-51%;
- Property
Acquisition Activity: None;
- Property Sales
Activity: $100 - $125 million; $53.3 million completed;
- Joint Venture
Activity: Our ownership interest in our Commerce Square joint
venture increased from 70% to 78%;
- Development
Starts: None;
- Financing
Activity: $245 Million Secured Financing (complete); $70.0 Million
2-Year Unsecured Term Loan (complete); $220.0 million secured
financing for Commerce Square (complete) and $50.0 million
Construction Loan at 155 King of Prussia Rd in Radnor, PA
(complete);
- Share Buyback
Activity: None;
- Annual
earnings and FFO per diluted share based on 173.5 million fully
diluted weighted average common shares.
About Brandywine Realty
Trust
Brandywine Realty Trust (NYSE: BDN) is one of
the largest, publicly traded, full-service, integrated real estate
companies in the United States with a core focus in the
Philadelphia and Austin markets. Organized as a real estate
investment trust (REIT), we own, develop, lease and manage an
urban, town center and transit-oriented portfolio comprising 160
properties and 22.6 million square feet as of September 30, 2023
which excludes assets held for sale. Our purpose is to shape,
connect and inspire the world around us through our expertise, the
relationships we foster, the communities in which we live and work,
and the history we build together. For more information, please
visit www.brandywinerealty.com.
Conference Call and Audio
Webcast
We will release our third quarter earnings after
the market close on Tuesday October 24, 2023 and will hold our
third quarter conference call on Wednesday October 25, 2023 at 9:00
a.m. Eastern. To access the conference call by phone, please visit
this link here, and you will be provided with dial in details. A
live webcast of the conference call will also be available on the
Investor Relations page of our website at
www.brandywinerealty.com.
Looking Ahead – Fourth Quarter 2023
Conference Call
We expect to release our fourth quarter 2023
earnings on Wednesday, January 31, 2024 after the market close and
will host our fourth quarter 2023 conference call on Thursday,
February 1, 2024 at 9:00 a.m. Eastern. We expect to issue a press
release in advance of these events to reconfirm the dates and times
and provide all related information.
Forward-Looking Statements
This press release contains certain
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Such forward-looking
statements can generally be identified by our use of
forward-looking terminology such as “will,” “strategy,” “expects,”
“seeks,” “believes,” “potential,” or other similar words. Because
such statements involve known and unknown risks, uncertainties and
contingencies, actual results may differ materially from the
expectations, intentions, beliefs, plans or predictions of the
future expressed or implied by such forward-looking statements.
These forward-looking statements, including our 2023 guidance and
the progress of our projects under development, are based upon the
current beliefs and expectations of our management and are
inherently subject to significant business, economic and
competitive uncertainties and contingencies, many of which are
difficult to predict and not within our control. Such risks,
uncertainties and contingencies include, among others: risks
related to the impact of COVID-19 and other potential future
outbreaks of infectious diseases on our financial condition,
results of operations and cash flows and those of our tenants as
well as on the economy and real estate and financial markets;
reduced demand for office space and pricing pressures, including
from competitors, that could limit our ability to lease space or
set rents at expected levels or that could lead to declines in
rent; uncertainty and volatility in capital and credit markets,
including changes that reduce availability, and increase costs, of
capital or that delay receipt of our planned debt financings and
refinancings; the effect of inflation and interest rate
fluctuations, including on the costs of our planned debt financings
and refinancings; the potential loss or bankruptcy of tenants or
the inability of tenants to meet their rent and other lease
obligations; risks of acquisitions and dispositions, including
unexpected liabilities and integration costs; delays in completing,
and cost overruns incurred in connection with, our developments and
redevelopments; disagreements with joint venture partners;
unanticipated operating and capital costs; uninsured casualty
losses and our ability to obtain adequate insurance, including
coverage for terrorist acts; asset impairments; our dependence upon
certain geographic markets; changes in governmental regulations,
tax laws and rates and similar matters; unexpected costs of REIT
qualification compliance; and costs and disruptions as the result
of a cybersecurity incident or other technology disruption. The
declaration and payment of future dividends (both timing and
amount) is subject to the determination of our Board of Trustees,
in its sole discretion, after considering various factors,
including our financial condition, historical and forecast
operating results, and available cash flow, as well as any
applicable laws and contractual covenants and any other relevant
factors. Our Board’s practice regarding declaration of dividends
may be modified at any time and from time to time. Additional
information on factors which could impact us and the
forward-looking statements contained herein are included in our
filings with the Securities and Exchange Commission, including our
Form 10-K for the year ended December 31, 2022. We assume no
obligation to update or supplement forward-looking statements that
become untrue because of subsequent events except as required by
law.
Non-GAAP Supplemental Financial
Measures
We compute our financial results in accordance
with generally accepted accounting principles (GAAP). Although FFO
and NOI are non-GAAP financial measures, we believe that FFO and
NOI calculations are helpful to shareholders and potential
investors and are widely recognized measures of real estate
investment trust performance. At the end of this press release, we
have provided a reconciliation of the non-GAAP financial measures
to the most directly comparable GAAP measure.
Funds from Operations (FFO)
We compute FFO in accordance with standards
established by the National Association of Real Estate Investment
Trusts (NAREIT), which may not be comparable to FFO reported by
other REITs that do not compute FFO in accordance with the NAREIT
definition, or that interpret the NAREIT definition differently
than us. NAREIT defines FFO as net income (loss) before
non-controlling interests and excluding gains (losses) on sales of
depreciable operating property, impairment losses on depreciable
consolidated real estate, impairment losses on investments in
unconsolidated real estate ventures and extraordinary items
(computed in accordance with GAAP); plus real estate related
depreciation and amortization (excluding amortization of deferred
financing costs), and after similar adjustments for unconsolidated
joint ventures. Our calculation of FFO includes gains from sale of
undepreciated real estate and other assets, considered incidental
to our main business, to third parties or unconsolidated real
estate ventures. Net income, the GAAP measure that we
believe to be most directly comparable to FFO, includes
depreciation and amortization expenses, gains or losses on property
sales, extraordinary items and non-controlling interests. To
facilitate a clear understanding of our historical operating
results, FFO should be examined in conjunction with net income
(determined in accordance with GAAP) as presented in the financial
statements included elsewhere in this release. FFO does not
represent cash flow from operating activities (determined in
accordance with GAAP) and should not be considered to be an
alternative to net income (loss) (determined in accordance with
GAAP) as an indication of our financial performance or to be an
alternative to cash flow from operating activities (determined in
accordance with GAAP) as a measure of our liquidity, nor is it
indicative of funds available for our cash needs, including our
ability to make cash distributions to shareholders. We generally
consider FFO and FFO per share to be useful measures for
understanding and comparing our operating results because, by
excluding gains and losses related to sales of previously
depreciated operating real estate assets, impairment losses and
real estate asset depreciation and amortization (which can differ
across owners of similar assets in similar condition based on
historical cost accounting and useful life estimates), FFO and FFO
per share can help investors compare the operating performance of a
company’s real estate across reporting periods and to the operating
performance of other companies.
Net Operating Income (NOI)
NOI (accrual basis) is a financial measure equal
to net income available to common shareholders, the most directly
comparable GAAP financial measure, plus corporate general and
administrative expense, depreciation and amortization, interest
expense, non-controlling interest in the Operating Partnership and
losses from early extinguishment of debt, less interest income,
development and management income, gains from property
dispositions, gains on sale from discontinued operations, gains on
early extinguishment of debt, income from discontinued operations,
income from unconsolidated joint ventures and non-controlling
interest in property partnerships. In some cases we also present
NOI on a cash basis, which is NOI after eliminating the effects of
straight-lining of rent and deferred market intangible
amortization. NOI presented by us may not be comparable to NOI
reported by other REITs that define NOI differently. NOI should not
be considered an alternative to net income as an indication of our
performance or to cash flows as a measure of the Company's
liquidity or its ability to make distributions. We believe NOI is a
useful measure for evaluating the operating performance of our
properties, as it excludes certain components from net income
available to common shareholders in order to provide results that
are more closely related to a property's results of operations. We
use NOI internally to evaluate the performance of our operating
segments and to make decisions about resource allocations. We
concluded that NOI provides useful information to investors
regarding our financial condition and results of operations, as it
reflects only the income and expense items incurred at the property
level, as well as the impact on operations from trends in occupancy
rates, rental rates, operating costs and acquisition and
development activity on an unlevered basis.
Same Store Properties
In our analysis of NOI, particularly to make
comparisons of NOI between periods meaningful, it is important to
provide information for properties that were in-service and owned
by us throughout each period presented. We refer to properties
acquired or placed in-service prior to the beginning of the
earliest period presented and owned by us through the end of the
latest period presented as Same Store Properties. Same Store
Properties therefore exclude properties placed in-service,
acquired, repositioned, held for sale or in development or
redevelopment after the beginning of the earliest period presented
or disposed of prior to the end of the latest period presented.
Accordingly, it takes at least one year and one quarter after a
property is acquired for that property to be included in Same Store
Properties.
Core Portfolio
Our core portfolio is comprised of our
wholly-owned properties, excluding any properties currently in
development, re-development or re-entitlement.
BRANDYWINE REALTY TRUST |
CONSOLIDATED BALANCE SHEETS |
(unaudited, in thousands, except share and per share
data) |
|
|
|
September 30, 2023 |
|
December 31, 2022 |
ASSETS |
|
|
|
|
Real estate investments: |
|
|
|
|
Operating properties |
|
$ |
3,694,633 |
|
|
$ |
3,617,240 |
|
Accumulated depreciation |
|
|
(1,153,030 |
) |
|
|
(1,063,060 |
) |
Right of use asset - operating leases, net |
|
|
19,188 |
|
|
|
19,664 |
|
Operating real estate investments, net |
|
|
2,560,791 |
|
|
|
2,573,844 |
|
Construction-in-progress |
|
|
143,929 |
|
|
|
218,869 |
|
Land held for development |
|
|
76,058 |
|
|
|
76,499 |
|
Prepaid leasehold interests in land held for development, net |
|
|
27,762 |
|
|
|
35,576 |
|
Total real estate investments, net |
|
|
2,808,540 |
|
|
|
2,904,788 |
|
Cash and cash equivalents |
|
|
47,872 |
|
|
|
17,551 |
|
Restricted cash and escrow |
|
|
10,745 |
|
|
|
— |
|
Accounts receivable |
|
|
23,130 |
|
|
|
11,003 |
|
Accrued rent receivable, net of allowance of $3,158 and $3,947 as
of September 30, 2023 and December 31, 2022, respectively |
|
|
185,135 |
|
|
|
179,771 |
|
Investment in unconsolidated real estate ventures |
|
|
638,096 |
|
|
|
567,635 |
|
Deferred costs, net |
|
|
98,049 |
|
|
|
96,639 |
|
Intangible assets, net |
|
|
8,539 |
|
|
|
18,451 |
|
Other assets |
|
|
102,557 |
|
|
|
78,667 |
|
Total assets |
|
$ |
3,922,663 |
|
|
$ |
3,874,505 |
|
LIABILITIES AND
BENEFICIARIES' EQUITY |
|
|
|
|
Secured term loan, net |
|
$ |
241,654 |
|
|
$ |
— |
|
Unsecured credit facility |
|
|
— |
|
|
|
88,500 |
|
Unsecured term loan, net |
|
|
318,282 |
|
|
|
248,168 |
|
Unsecured senior notes, net |
|
|
1,574,524 |
|
|
|
1,628,370 |
|
Accounts payable and accrued expenses |
|
|
132,731 |
|
|
|
132,440 |
|
Distributions payable |
|
|
26,018 |
|
|
|
32,792 |
|
Deferred income, gains and rent |
|
|
23,222 |
|
|
|
25,082 |
|
Intangible liabilities, net |
|
|
8,536 |
|
|
|
10,322 |
|
Lease liability - operating leases |
|
|
23,318 |
|
|
|
23,166 |
|
Other liabilities |
|
|
60,010 |
|
|
|
52,331 |
|
Total liabilities |
|
$ |
2,408,295 |
|
|
$ |
2,241,171 |
|
Brandywine Realty Trust's Equity: |
|
|
|
|
Common Shares of Brandywine Realty Trust's beneficial interest,
$0.01 par value; shares authorized 400,000,000; 172,097,661 and
171,569,807 issued and outstanding as of September 30, 2023
and December 31, 2022, respectively |
|
|
1,719 |
|
|
|
1,716 |
|
Additional paid-in-capital |
|
|
3,161,568 |
|
|
|
3,153,229 |
|
Deferred compensation payable in common shares |
|
|
19,965 |
|
|
|
19,601 |
|
Common shares in grantor trust, 1,194,127 and 1,179,643 issued and
outstanding as of September 30, 2023 and December 31,
2022, respectively |
|
|
(19,965 |
) |
|
|
(19,601 |
) |
Cumulative earnings |
|
|
1,136,686 |
|
|
|
1,176,195 |
|
Accumulated other comprehensive income |
|
|
8,125 |
|
|
|
3,897 |
|
Cumulative distributions |
|
|
(2,801,074 |
) |
|
|
(2,709,405 |
) |
Total Brandywine Realty Trust's equity |
|
|
1,507,024 |
|
|
|
1,625,632 |
|
Noncontrolling interests |
|
|
7,344 |
|
|
|
7,702 |
|
Total beneficiaries' equity |
|
$ |
1,514,368 |
|
|
$ |
1,633,334 |
|
Total liabilities and beneficiaries' equity |
|
$ |
3,922,663 |
|
|
$ |
3,874,505 |
|
BRANDYWINE REALTY TRUST |
CONSOLIDATED STATEMENTS OF OPERATIONS |
(unaudited, in thousands, except share and per share
data) |
|
|
Three months ended September 30, |
|
Nine Months Ended September 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Revenue |
|
|
|
|
|
|
|
Rents |
$ |
121,661 |
|
|
$ |
117,481 |
|
|
$ |
360,642 |
|
|
$ |
350,279 |
|
Third party management fees, labor reimbursement and leasing |
|
6,553 |
|
|
|
6,872 |
|
|
|
18,782 |
|
|
|
17,904 |
|
Other |
|
1,158 |
|
|
|
1,216 |
|
|
|
5,057 |
|
|
|
8,933 |
|
Total revenue |
|
129,372 |
|
|
|
125,569 |
|
|
|
384,481 |
|
|
|
377,116 |
|
Operating
expenses |
|
|
|
|
|
|
|
Property operating expenses |
|
31,123 |
|
|
|
32,624 |
|
|
|
96,608 |
|
|
|
97,283 |
|
Real estate taxes |
|
12,808 |
|
|
|
12,313 |
|
|
|
38,981 |
|
|
|
39,872 |
|
Third party management expenses |
|
2,468 |
|
|
|
2,549 |
|
|
|
7,664 |
|
|
|
7,898 |
|
Depreciation and amortization |
|
48,966 |
|
|
|
45,134 |
|
|
|
141,645 |
|
|
|
132,875 |
|
General and administrative expenses |
|
8,069 |
|
|
|
7,564 |
|
|
|
26,911 |
|
|
|
25,892 |
|
Provision for impairment |
|
11,666 |
|
|
|
— |
|
|
|
16,134 |
|
|
|
— |
|
Total operating expenses |
|
115,100 |
|
|
|
100,184 |
|
|
|
327,943 |
|
|
|
303,820 |
|
Gain on sale of real
estate |
|
|
|
|
|
|
|
Net gain on disposition of real estate |
|
— |
|
|
|
8,669 |
|
|
|
— |
|
|
|
8,813 |
|
Net gain on sale of undepreciated real estate |
|
— |
|
|
|
2,983 |
|
|
|
781 |
|
|
|
8,007 |
|
Total gain on sale of real estate |
|
— |
|
|
|
11,652 |
|
|
|
781 |
|
|
|
16,820 |
|
Operating
income |
|
14,272 |
|
|
|
37,037 |
|
|
|
57,319 |
|
|
|
90,116 |
|
Other income
(expense): |
|
|
|
|
|
|
|
Interest and investment income |
|
293 |
|
|
|
498 |
|
|
|
1,318 |
|
|
|
1,387 |
|
Interest expense |
|
(24,355 |
) |
|
|
(17,061 |
) |
|
|
(70,677 |
) |
|
|
(49,144 |
) |
Interest expense - amortization of deferred financing costs |
|
(1,110 |
) |
|
|
(745 |
) |
|
|
(3,251 |
) |
|
|
(2,259 |
) |
Equity in income of
unconsolidated real estate ventures |
|
(10,739 |
) |
|
|
(6,260 |
) |
|
|
(24,504 |
) |
|
|
(15,804 |
) |
Net gain on real estate venture transactions |
|
— |
|
|
|
— |
|
|
|
181 |
|
|
|
— |
|
Net income (loss)
before income taxes |
|
(21,639 |
) |
|
|
13,469 |
|
|
|
(39,614 |
) |
|
|
24,296 |
|
Income tax benefit (provision) |
|
3 |
|
|
|
9 |
|
|
|
(35 |
) |
|
|
(66 |
) |
Net income
(loss) |
|
(21,636 |
) |
|
|
13,478 |
|
|
|
(39,649 |
) |
|
|
24,230 |
|
Net income attributable to
noncontrolling interests |
|
82 |
|
|
|
(37 |
) |
|
|
140 |
|
|
|
(59 |
) |
Net income (loss)
attributable to Brandywine Realty Trust |
|
(21,554 |
) |
|
|
13,441 |
|
|
|
(39,509 |
) |
|
|
24,171 |
|
Nonforfeitable dividends
allocated to unvested restricted shareholders |
|
(159 |
) |
|
|
(105 |
) |
|
|
(433 |
) |
|
|
(351 |
) |
Net income (loss)
attributable to Common Shareholders of Brandywine Realty
Trust |
$ |
(21,713 |
) |
|
$ |
13,336 |
|
|
$ |
(39,942 |
) |
|
$ |
23,820 |
|
PER SHARE
DATA |
|
|
|
|
|
|
|
Basic income (loss) per Common
Share |
$ |
(0.13 |
) |
|
$ |
0.08 |
|
|
$ |
(0.23 |
) |
|
$ |
0.14 |
|
Basic weighted average shares
outstanding |
|
172,097,661 |
|
|
|
171,569,807 |
|
|
|
171,912,552 |
|
|
|
171,464,936 |
|
Diluted income (loss) per
Common Share |
$ |
(0.13 |
) |
|
$ |
0.08 |
|
|
$ |
(0.23 |
) |
|
$ |
0.14 |
|
Diluted weighted average
shares outstanding |
|
172,097,661 |
|
|
|
172,152,256 |
|
|
|
171,912,552 |
|
|
|
172,435,153 |
|
BRANDYWINE REALTY TRUST |
FUNDS FROM OPERATIONS |
(unaudited, in thousands, except share and per share
data) |
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net income (loss)
attributable to common shareholders |
$ |
(21,713 |
) |
|
$ |
13,336 |
|
|
$ |
(39,942 |
) |
|
$ |
23,820 |
|
Add (deduct): |
|
|
|
|
|
|
|
Net income (loss) attributable to noncontrolling interests - LP
units |
|
(84 |
) |
|
|
38 |
|
|
|
(141 |
) |
|
|
64 |
|
Nonforfeitable dividends allocated to unvested restricted
shareholders |
|
159 |
|
|
|
105 |
|
|
|
433 |
|
|
|
351 |
|
Net gain on real estate venture transactions |
|
— |
|
|
|
— |
|
|
|
(181 |
) |
|
|
— |
|
Net gain on disposition of real estate |
|
— |
|
|
|
(8,669 |
) |
|
|
— |
|
|
|
(8,813 |
) |
Provision for impairment |
|
11,666 |
|
|
|
— |
|
|
|
16,134 |
|
|
|
— |
|
Depreciation and amortization: |
|
|
|
|
|
|
|
Real property |
|
40,493 |
|
|
|
38,095 |
|
|
|
118,242 |
|
|
|
110,888 |
|
Leasing costs including acquired intangibles |
|
7,594 |
|
|
|
6,244 |
|
|
|
20,837 |
|
|
|
19,835 |
|
Company’s share of unconsolidated real estate ventures |
|
12,840 |
|
|
|
12,804 |
|
|
|
36,549 |
|
|
|
37,002 |
|
Partners’ share of consolidated real estate ventures |
|
(4 |
) |
|
|
(4 |
) |
|
|
(12 |
) |
|
|
(14 |
) |
Funds from operations |
$ |
50,951 |
|
|
$ |
61,949 |
|
|
$ |
151,919 |
|
|
$ |
183,133 |
|
Funds from operations allocable to unvested restricted
shareholders |
|
(347 |
) |
|
|
(198 |
) |
|
|
(880 |
) |
|
|
(590 |
) |
Funds from operations
available to common share and unit holders (FFO) |
$ |
50,604 |
|
|
$ |
61,751 |
|
|
$ |
151,039 |
|
|
$ |
182,543 |
|
FFO per share - fully
diluted |
$ |
0.29 |
|
|
$ |
0.36 |
|
|
$ |
0.87 |
|
|
$ |
1.06 |
|
Weighted-average shares/units
outstanding — fully diluted |
|
173,236,769 |
|
|
|
172,668,723 |
|
|
|
172,954,267 |
|
|
|
172,989,918 |
|
Distributions paid per common
share |
$ |
0.19 |
|
|
$ |
0.19 |
|
|
$ |
0.57 |
|
|
$ |
0.57 |
|
FFO payout ratio
(distributions paid per common share/FFO per diluted share) |
|
66 |
% |
|
|
53 |
% |
|
|
66 |
% |
|
|
54 |
% |
BRANDYWINE REALTY TRUST |
SAME STORE OPERATIONS – 3rd QUARTER |
(unaudited and in thousands) |
|
Of the 74 properties owned by the Company as of September 30,
2023, a total of 69 properties ("Same Store Properties") containing
an aggregate of 12,393 million net rentable square feet were owned
for the entire three months ended September 30, 2023 and 2022. As
of September 30, 2023, 2 properties were recently completed,
and 3 properties were in development/redevelopment. Average
occupancy for the Same Store Properties was 88.2% and 91.0% during
the three-month periods ended September 30, 2023 and 2022,
respectively. The following table sets forth revenue and expense
information for the Same Store Properties: |
|
|
|
Three Months Ended September 30, |
|
|
|
2023 |
|
|
|
2022 |
|
Revenue |
|
|
|
|
Rents |
|
$ |
108,229 |
|
|
$ |
108,628 |
|
Other |
|
|
238 |
|
|
|
241 |
|
Total revenue |
|
|
108,467 |
|
|
|
108,869 |
|
Operating
expenses |
|
|
|
|
Property operating expenses |
|
|
27,929 |
|
|
|
29,138 |
|
Real estate taxes |
|
|
11,609 |
|
|
|
10,921 |
|
Net operating income |
|
$ |
68,929 |
|
|
$ |
68,810 |
|
Net operating income - percentage change over prior
year |
|
|
0.2 |
% |
|
|
Net operating income, excluding other items |
|
$ |
69,253 |
|
|
$ |
68,077 |
|
Net operating income, excluding other items - percentage
change over prior year |
|
|
1.7 |
% |
|
|
Net operating
income |
|
$ |
68,929 |
|
|
$ |
68,810 |
|
Straight line rents & other |
|
|
(362 |
) |
|
|
(3,546 |
) |
Above/below market rent amortization |
|
|
(268 |
) |
|
|
(367 |
) |
Amortization of tenant inducements |
|
|
175 |
|
|
|
159 |
|
Non-cash ground rent expense |
|
|
196 |
|
|
|
200 |
|
Cash - Net operating income |
|
$ |
68,670 |
|
|
$ |
65,256 |
|
Cash - Net operating income - percentage change over prior
year |
|
|
5.2 |
% |
|
|
Cash - Net operating income, excluding other
items |
|
$ |
68,233 |
|
|
$ |
63,777 |
|
Cash - Net operating income, excluding other items -
percentage change over prior year |
|
|
7.0 |
% |
|
|
|
|
Three Months Ended September 30, |
|
|
|
2023 |
|
|
|
2022 |
|
Net income (loss): |
|
$ |
(21,636 |
) |
|
$ |
13,478 |
|
Add/(deduct): |
|
|
|
|
Interest income |
|
|
(293 |
) |
|
|
(498 |
) |
Interest expense |
|
|
24,355 |
|
|
|
17,061 |
|
Interest expense - amortization of deferred financing costs |
|
|
1,110 |
|
|
|
745 |
|
Equity in loss of unconsolidated real estate ventures |
|
|
10,739 |
|
|
|
6,260 |
|
Net gain on disposition of real estate |
|
|
— |
|
|
|
(8,669 |
) |
Net gain on sale of undepreciated real estate |
|
|
— |
|
|
|
(2,983 |
) |
Depreciation and amortization |
|
|
48,966 |
|
|
|
45,134 |
|
General & administrative expenses |
|
|
8,069 |
|
|
|
7,564 |
|
Income tax provision (benefit) |
|
|
(3 |
) |
|
|
(9 |
) |
Provision for impairment |
|
|
11,666 |
|
|
|
— |
|
Consolidated net operating income |
|
|
82,973 |
|
|
|
78,083 |
|
Less: Net operating income of
non-same store properties and elimination of non-property specific
operations |
|
|
(14,044 |
) |
|
|
(9,273 |
) |
Same store net operating income |
|
$ |
68,929 |
|
|
$ |
68,810 |
|
|
|
|
|
|
BRANDYWINE REALTY TRUST |
SAME STORE OPERATIONS – NINE MONTHS |
(unaudited and in thousands) |
|
Of the 74 properties owned by the Company as of September 30,
2023, a total of 69 properties ("Same Store Properties") containing
an aggregate of 12,393 million net rentable square feet were owned
for the entire nine months ended September 30, 2023 and 2022. As of
September 30, 2023, 2 properties were recently completed, and
3 properties were in development/redevelopment. Average occupancy
for the Same Store Properties was 88.2% and 91.0% during the
nine-month periods ended September 30, 2023 and 2022,
respectively. The following table sets forth revenue and expense
information for the Same Store Properties: |
|
|
|
Nine Months Ended September 30, |
|
|
|
2023 |
|
|
|
2022 |
|
Revenue |
|
|
|
|
Rents |
|
$ |
326,528 |
|
|
$ |
322,905 |
|
Other |
|
|
772 |
|
|
|
809 |
|
Total revenue |
|
|
327,300 |
|
|
|
323,714 |
|
Operating
expenses |
|
|
|
|
Property operating expenses |
|
|
85,848 |
|
|
|
85,615 |
|
Real estate taxes |
|
|
34,640 |
|
|
|
35,697 |
|
Net operating income |
|
$ |
206,812 |
|
|
$ |
202,402 |
|
Net operating income - percentage change over prior
year |
|
|
2.2 |
% |
|
|
Net operating income, excluding other items |
|
$ |
206,933 |
|
|
$ |
199,832 |
|
Net operating income, excluding other items - percentage
change over prior year |
|
|
3.6 |
% |
|
|
Net operating
income |
|
$ |
206,812 |
|
|
$ |
202,402 |
|
Straight line rents & other |
|
|
(4,138 |
) |
|
|
(8,151 |
) |
Above/below market rent amortization |
|
|
(839 |
) |
|
|
(1,063 |
) |
Amortization of tenant inducements |
|
|
511 |
|
|
|
494 |
|
Non-cash ground rent expense |
|
|
593 |
|
|
|
605 |
|
Cash - Net operating income |
|
$ |
202,939 |
|
|
$ |
194,287 |
|
Cash - Net operating income - percentage change over prior
year |
|
|
4.5 |
% |
|
|
Cash - Net operating income, excluding other
items |
|
$ |
200,938 |
|
|
$ |
189,771 |
|
Cash - Net operating income, excluding other items -
percentage change over prior year |
|
|
5.9 |
% |
|
|
|
|
Nine Months Ended September 30, |
|
|
|
2023 |
|
|
|
2022 |
|
Net income: |
|
$ |
(39,649 |
) |
|
$ |
24,230 |
|
Add/(deduct): |
|
|
|
|
Interest income |
|
|
(1,318 |
) |
|
|
(1,387 |
) |
Interest expense |
|
|
70,677 |
|
|
|
49,144 |
|
Interest expense - amortization of deferred financing costs |
|
|
3,251 |
|
|
|
2,259 |
|
Equity in loss of unconsolidated real estate ventures |
|
|
24,504 |
|
|
|
15,804 |
|
Net gain on real estate venture transactions |
|
|
(181 |
) |
|
|
— |
|
Net gain on disposition of real estate |
|
|
— |
|
|
|
(8,813 |
) |
Net gain on sale of undepreciated real estate |
|
|
(781 |
) |
|
|
(8,007 |
) |
Depreciation and amortization |
|
|
141,645 |
|
|
|
132,875 |
|
General & administrative expenses |
|
|
26,911 |
|
|
|
25,892 |
|
Income tax provision |
|
|
35 |
|
|
|
66 |
|
Provision for impairment |
|
|
16,134 |
|
|
|
— |
|
Consolidated net operating income |
|
|
241,228 |
|
|
|
232,063 |
|
Less: Net operating income of
non-same store properties and elimination of non-property specific
operations |
|
|
(34,416 |
) |
|
|
(29,661 |
) |
Same store net operating income |
|
$ |
206,812 |
|
|
$ |
202,402 |
|
Company / Investor Contact:Tom WirthEVP & CFO610-832-7434
tom.wirth@bdnreit.com
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