Brandywine Realty Trust Announces Third Quarter 2022

PHILADELPHIA, Oct. 20, 2022 (GLOBE NEWSWIRE) — Brandywine Realty Trust (NYSE:BDN) right this moment reported its monetary and working outcomes for the three and nine-month durations ended September 30, 2022.

Management Comments

“During the third quarter, we made excellent progress on our 2022 business plan highlighted by achieving 100% of our speculative revenue target based on the midpoint of our guidance,” said Gerard H. Sweeney, President and Chief Executive Officer for Brandywine Realty Trust. “We continued to experience positive mark-to-market rent increases of 16.5% and 6.9% on an accrual and cash basis.  Our portfolio experienced over 176,000 square feet of net absorption which we believe is the result of tenants currently preferring higher quality, well amenitized buildings and our average annual lease rollover through 2024 is currently 6.5%. We are excited to announce a new 100% leased build-to-suit development project in Radnor, Pa.  The project totals 145,000 square feet, will be leased to Arkema S.A., a global supplier of specialty materials and is scheduled for completion in the fourth quarter 2024. Based on the progress made on our 2022 business plan, we are maintaining our 2022 FFO range of $1.36 to $1.40 per share.”

Third Quarter Highlights

Financial Results

• Net earnings obtainable to frequent shareholders; $13.3 million, or $0.08 per diluted share. Those outcomes embrace a $8.7 million or $0.05 per share achieve associated to our three way partnership land contribution in Austin, Texas.
• Funds from Operations (FFO); $61.8 million, or $0.36 per diluted share.

Portfolio Results

• Core Portfolio: 90.8% occupied and 91.8% leased.
• New and Renewal Leases Signed: 513,000 sq. ft.
• Tenant Retention Ratio: 90%.
• Rental Rate Mark-to-Market Increase: 16.5% on an accrual foundation and 6.9% on a money foundation.
• Same Store Results: Increased 2.4% on an accrual foundation and a couple of.1% on a money foundation.

Recent Transaction Activity

Joint Venture and Development Activity

• On October 12, 2022, we introduced plans to start the event of a totally leased 145,000 sq. foot build-to-suit workplace constructing situated in Radnor, Pennsylvania. The constructing would be the North American Headquarters for Arkema S.A., a world provider of specialty supplies. Construction is scheduled to start throughout the fourth quarter 2022 and completion throughout the fourth quarter 2024. We plan to fund the event by a mix of a development mortgage, our line of credit score and money available.
• As beforehand introduced, we fashioned a three way partnership with a world institutional investor to start growth of 3151 Market Street in Philadelphia, Pennsylvania. The challenge price is roughly $308 million, and the three way partnership companion has agreed, topic to customary funding circumstances, to fund as much as roughly $55 million of the challenge prices in change for a forty five% most popular fairness curiosity within the enterprise. We anticipate securing a development mortgage totaling roughly $185 million, representing 60% of complete challenge prices.

Finance Activity

• On July 29, 2022, we closed on One Uptown development loans totaling $206.7 million. Subsequent to the closing of the development loans, we acknowledged achieve totaling $8.7 million for the contribution of 4.7 acres of land throughout the third quarter of 2022.
• We had $246.0 million excellent on our $600.0 million unsecured revolving credit score facility as of September 30, 2022.
• We had $31.2 million of money and money equivalents on-hand as of September 30, 2022.

Results for the Three and Nine-Month Periods Ended September 30, 2022

Net earnings allotted to frequent shares totaled $13.3 million or $0.08 per diluted share within the third quarter of 2022 in comparison with a web earnings of $0.9 million or $0.01 per diluted share within the third quarter of 2021.

FFO obtainable to frequent shares and items within the third quarter of 2022 totaled $61.8 million or $0.36 per diluted share versus $61.1 million or $0.35 per diluted share within the third quarter of 2021. Our third quarter 2022 payout ratio ($0.19 frequent share distribution / $0.36 FFO per diluted share) was 52.8%.

Net earnings allotted to frequent shares totaled $23.8 million or $0.14 per diluted share for the primary 9 months of 2022 in comparison with web earnings of $7.4 million or $0.04 per diluted share within the first 9 months of 2021.  

Our FFO obtainable to frequent shares and items for the primary 9 months of 2022 totaled $182.5 million, or $1.06 per diluted share in comparison with FFO obtainable to frequent shares and items of $177.2 million, or $1.02 per diluted share, for the primary 9 months of 2021.   Our first 9 months 2022 FFO payout ratio ($0.57 frequent share distribution / $1.06 FFO per diluted share) was 53.8%.

Operating and Leasing Activity

In the third quarter of 2022, our Net Operating Income (NOI), excluding termination revenues, dangerous debt expense and different earnings gadgets, elevated 2.4% on an accrual foundation and a couple of.1% on a money foundation for our 71 identical retailer properties, which have been 90.7% and 90.2% occupied on September 30, 2022 and 2021, respectively.

We leased roughly 513,000 sq. ft and commenced occupancy on 612,000 sq. ft throughout the third quarter of 2022. The third quarter occupancy exercise consists of 241,000 sq. ft of renewals, 219,000 sq. ft of recent leases and 152,000 sq. ft of tenant expansions. We have an extra 122,000 sq. ft of executed new leasing scheduled to start subsequent to September 30, 2022.

We achieved a 90% tenant retention ratio in our core portfolio with web absorption of 176,000 sq. ft throughout the third quarter of 2022. Third quarter rental price progress elevated 16.5% as our renewal rental charges elevated 7.2% and our new lease/enlargement rental charges elevated 26.3%, all on an accrual foundation.

At September 30, 2022 our core portfolio of 72 properties comprising 12.8 million sq. ft was 90.8% occupied and we’re 91.8% leased (reflecting new leases commencing after September 30, 2022) as of October 14, 2022.

Distributions

On September 13, 2022, our Board of Trustees declared a quarterly dividend distribution of $0.19 per frequent share that was paid on October 20, 2022 to shareholders of file as of October 6, 2022.

2022 Earnings and FFO Guidance

Based on present plans and assumptions and topic to the dangers and uncertainties extra totally described in our Securities and Exchange Commission filings, we’re persevering with our 2022 earnings per share steerage of $0.13 – $0.17 per diluted share and our 2022 FFO steerage of $1.36 – $1.40 per diluted share. This steerage is supplied for informational functions and is topic to vary. The following is a reconciliation of the calculation of 2022 FFO steerage and earnings per diluted share steerage:

Our 2022 FFO key assumptions embrace:

• Speculative Revenue Target: $34.0 – $36.0 million, as of October 14, 2022, $35.0 million achieved from a leasing plan of 1.8 million sq. ft, 1.7 million sq. ft achieved;
• Year-end Core Occupancy Range: 91-93%;
• Year-end Core Leased Range: 92-94%;
• Tenant Retention Rate Range: 58-60%;
• Rental Rate Growth (accrual): 16-18%;
• Rental Rate Growth (money): 8-10%;
• Same Store (accrual) NOI Range: 0-2%;
• Same Store (money) NOI Range: 0-2%;
  • Timing of occupancy and free hire on 200,000 sq. ft in Philadelphia CBD would equate to a rise in our vary by roughly 3.0%;
• Acquisition Activity: None;
• Sales Activity: None, nevertheless we categorised one asset as held-for-sale and one other potential sale has a agency purchaser dedication; each gross sales are topic to closing circumstances.
• Joint Venture Activity: Acquired a 20% frequent fairness curiosity in 2970 Market Street, Philadelphia, PA and closed our 50% three way partnership representing a 4.7 acre growth challenge at One Uptown in Austin, Texas.
• Development/Redevelopment Starts: Three begins. We have commenced 2340 Dulles Corner, 3151 Market Street, and 155 King of Prussia Rd (Radnor, PA).
• Financing Activity: Completed the refinance of our $600 million unsecured line of credit score and our $250 million unsecured time period mortgage;
• Share Buyback Activity: Our present projections don’t embrace any share buyback exercise.
• Annual earnings and FFO per diluted share primarily based on 173.0 million totally diluted weighted common frequent shares.

About Brandywine Realty Trust

Brandywine Realty Trust (NYSE: BDN) is likely one of the largest, publicly traded, full-service, built-in actual property corporations within the United States with a core focus within the Philadelphia, Austin and Washington, D.C. markets. Organized as an actual property funding belief (REIT), we personal, develop, lease and handle an city, city middle and transit-oriented portfolio comprising 164 properties and 23.0 million sq. ft as of September 30, 2022. which excludes belongings held on the market. Our objective is to form, join and encourage the world round us by our experience, the relationships we foster, the communities during which we stay and work, and the historical past we construct collectively. For extra data, please go to www.brandywinerealty.com.

Conference Call and Audio Webcast

We will launch our third quarter earnings after the market shut on Thursday, October 20, 2022, and can maintain our third quarter convention name on Friday, October 21, 2022 at 9:00 a.m. Eastern. To entry the convention name by cellphone, please go to this hyperlink right here, and you can be supplied with dial in particulars. A stay webcast of the convention name can even be obtainable on the Investor Relations web page of our web site at www.brandywinerealty.com.

Looking Ahead – Fourth Quarter 2022 Conference Call

We anticipate we’ll launch our fourth quarter 2022 earnings on Wednesday, February 1, 2023, after the market shut and can host our fourth quarter 2022 convention name on Thursday, February 2, 2023 at 9:00 a.m. Eastern Time. We anticipate to subject a press launch prematurely of those occasions to reconfirm the dates and instances and supply all associated data.

Forward-Looking Statements

This press launch comprises sure forward-looking statements throughout the that means 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 usually be recognized by our use of forward-looking terminology similar to “will,” “strategy,” “expects,” “seeks,” “believes,” “potential,” or different related phrases. Because such statements contain recognized and unknown dangers, uncertainties and contingencies, precise outcomes might differ materially from the expectations, intentions, beliefs, plans or predictions of the longer term expressed or implied by such forward-looking statements. These forward-looking statements, together with our 2022 steerage, are primarily based upon the present beliefs and expectations of our administration and are inherently topic to important business, financial and aggressive uncertainties and contingencies, lots of that are tough to foretell and never inside our management. Such dangers, uncertainties and contingencies embrace, amongst others: dangers associated to the impression of COVID-19 and different potential future outbreaks of infectious illnesses on our monetary situation, outcomes of operations and money flows and people of our tenants in addition to on the economy and actual property and monetary markets; decreased demand for workplace area and pricing pressures, together with from rivals, that might restrict our capability to lease area or set rents at anticipated ranges or that might result in declines in hire; uncertainty and volatility in capital and credit score markets, together with modifications that scale back availability, and enhance prices, of capital or that delay receipt of our deliberate debt financings and refinancings; the impact of inflation and rate of interest fluctuations, together with on the prices of our deliberate debt financings and refinancings; the potential loss or chapter of tenants or the shortcoming of tenants to satisfy their hire and different lease obligations; dangers of acquisitions and tendencies, together with sudden liabilities and integration prices; delays in finishing, and value overruns incurred in reference to, our developments and redevelopments; disagreements with three way partnership companions; unanticipated working and capital prices; uninsured casualty losses and our capability to acquire satisfactory insurance, together with protection for terrorist acts; asset impairments; our dependence upon sure geographic markets; modifications in governmental rules, tax legal guidelines and charges and related issues; sudden prices of REIT qualification compliance; and prices and disruptions as the results of a cybersecurity incident or different expertise disruption. The declaration and fee of future dividends (each timing and quantity) is topic to the willpower of our Board of Trustees, in its sole discretion, after contemplating numerous elements, together with our monetary situation, historic and forecast working outcomes, and obtainable money circulation, in addition to any relevant legal guidelines and contractual covenants and another related elements. Our Board’s apply relating to declaration of dividends could also be modified at any time and occasionally. Additional data on elements which might impression us and the forward-looking statements contained herein are included in our filings with the Securities and Exchange Commission, together with our Form 10-Okay for the yr ended December 31, 2021. We assume no obligation to replace or complement forward-looking statements that grow to be unfaithful due to subsequent occasions besides as required by legislation.

Non-GAAP Supplemental Financial Measures

We compute our monetary leads to accordance with usually accepted accounting rules (GAAP). Although FFO and NOI are non-GAAP monetary measures, we imagine that FFO and NOI calculations are useful to shareholders and potential traders and are well known measures of actual property funding belief efficiency. At the tip of this press launch, we now have supplied a reconciliation of the non-GAAP monetary measures to essentially the most straight comparable GAAP measure.

Funds from Operations (FFO)

We compute FFO in accordance with requirements established by the National Association of Real Estate Investment Trusts (NAREIT), which is probably not akin to FFO reported by different REITs that don’t compute FFO in accordance with the NAREIT definition, or that interpret the NAREIT definition in a different way than us. NAREIT defines FFO as web earnings (loss) earlier than non-controlling pursuits and excluding beneficial properties (losses) on gross sales of depreciable working property, impairment losses on depreciable consolidated actual property, impairment losses on investments in unconsolidated actual property ventures and extraordinary gadgets (computed in accordance with GAAP); plus actual property associated depreciation and amortization (excluding amortization of deferred financing prices), and after related changes for unconsolidated joint ventures. Our calculation of FFO consists of beneficial properties from sale of undepreciated actual property and different belongings, thought of incidental to our foremost business, to 3rd events or unconsolidated actual property ventures.   Net earnings, the GAAP measure that we imagine to be most straight akin to FFO, consists of depreciation and amortization bills, beneficial properties or losses on property gross sales, extraordinary gadgets and non-controlling pursuits. To facilitate a transparent understanding of our historic working outcomes, FFO ought to be examined at the side of web earnings (decided in accordance with GAAP) as introduced within the monetary statements included elsewhere on this launch. FFO doesn’t signify money circulation from working actions (decided in accordance with GAAP) and shouldn’t be thought of to be an alternative choice to web earnings (loss) (decided in accordance with GAAP) as a sign of our monetary efficiency or to be an alternative choice to money circulation from working actions (decided in accordance with GAAP) as a measure of our liquidity, neither is it indicative of funds obtainable for our money wants, together with our capability to make money distributions to shareholders. We usually take into account FFO and FFO per share to be helpful measures for understanding and evaluating our working outcomes as a result of, by excluding beneficial properties and losses associated to gross sales of beforehand depreciated working actual property belongings, impairment losses and actual property asset depreciation and amortization (which might differ throughout homeowners of comparable belongings in related situation primarily based on historic price accounting and helpful life estimates), FFO and FFO per share will help traders examine the working efficiency of an organization’s actual property throughout reporting durations and to the working efficiency of different corporations.

Net Operating Income (NOI)

NOI (accrual foundation) is a monetary measure equal to web earnings obtainable to frequent shareholders, essentially the most straight comparable GAAP monetary measure, plus company basic and administrative expense, depreciation and amortization, curiosity expense, non-controlling curiosity within the Operating Partnership and losses from early extinguishment of debt, much less curiosity earnings, growth and administration earnings, beneficial properties from property tendencies, beneficial properties on sale from discontinued operations, beneficial properties on early extinguishment of debt, earnings from discontinued operations, earnings from unconsolidated joint ventures and non-controlling curiosity in property partnerships. In some circumstances we additionally current NOI on a money foundation, which is NOI after eliminating the results of straight-lining of hire and deferred market intangible amortization. NOI introduced by us is probably not akin to NOI reported by different REITs that outline NOI in a different way. NOI shouldn’t be thought of an alternative choice to web earnings as a sign of our efficiency or to money flows as a measure of the Company’s liquidity or its capability to make distributions. We imagine NOI is a helpful measure for evaluating the working efficiency of our properties, because it excludes sure elements from web earnings obtainable to frequent shareholders with a view to present outcomes which can be extra intently associated to a property’s outcomes of operations. We use NOI internally to guage the efficiency of our working segments and to make choices about useful resource allocations. We concluded that NOI offers helpful data to traders relating to our monetary situation and outcomes of operations, because it displays solely the earnings and expense gadgets incurred on the property degree, in addition to the impression on operations from traits in occupancy charges, rental charges, working prices and acquisition and growth exercise on an unlevered foundation.

Same Store Properties

In our evaluation of NOI, notably to make comparisons of NOI between durations significant, it is very important present data for properties that have been in-service and owned by us all through every interval introduced. We seek advice from properties acquired or positioned in-service previous to the start of the earliest interval introduced and owned by us by the tip of the newest interval introduced as Same Store Properties. Same Store Properties due to this fact exclude properties positioned in-service, acquired, repositioned, held on the market or in growth or redevelopment after the start of the earliest interval introduced or disposed of previous to the tip of the newest interval introduced. Accordingly, it takes a minimum of one yr 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 presently in growth, re-development or re-entitlement.

Company / Investor Contact:
Tom Wirth
EVP & CFO
610-832-7434
[email protected]

BRANDYWINE REALTY TRUST
CONSOLIDATED BALANCE SHEETS
(unaudited, in 1000’s, besides share and per share information)

BRANDYWINE REALTY TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in 1000’s, besides share and per share information)

BRANDYWINE REALTY TRUST
FUNDS FROM OPERATIONS
(unaudited, in 1000’s, besides share and per share information)

BRANDYWINE REALTY TRUST
SAME STORE OPERATIONS – third QUARTER
(unaudited and in 1000’s)  

Of the 78 properties owned by the Company as of September 30, 2022, a complete of 71 properties (“Same Store Properties”) containing an mixture of 12.7 million web rentable sq. ft have been owned for your complete three months ended September 30, 2022 and 2021. As of September 30, 2022, two properties have been just lately accomplished/acquired, and 4 properties have been in growth/redevelopment. Average occupancy for the Same Store Properties was 90.6% and 90.1% throughout the three-month durations ended September 30, 2022 and 2021, respectively. The following desk units forth income and expense data for the Same Store Properties:

BRANDYWINE REALTY TRUST
SAME STORE OPERATIONS – NINE MONTHS
(unaudited and in 1000’s)  

Of the 78 properties owned by the Company as of September 30, 2022, a complete of 71 properties (“Same Store Properties”) containing an mixture of 12.7 million web rentable sq. ft have been owned for your complete 9 months ended September 30, 2022 and 2021. As of September 30, 2022, two properties have been just lately accomplished/acquired, and 4 properties have been in growth/redevelopment. Average occupancy for the Same Store Properties was 89.7% and 90.3% throughout the nine-month durations ended September 30, 2022 and 2021, respectively. The following desk units forth income and expense data for the Same Store Properties: