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Brandywine Realty Trust Announces Second Quarter Results Narrows 2022 Guidance

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Brandywine Realty Trust
Brandywine Realty Trust

PHILADELPHIA, July 25, 2022 (GLOBE NEWSWIRE) -- Brandywine Realty Trust (NYSE:BDN) today reported its financial and operating results for the three and six-month periods ended June 30, 2022.

Management Comments

“We continue to see tenants prefer higher quality, well amentized buildings, a trend that will benefit both our operating portfolio and development projects,” stated Gerard H. Sweeney, President and Chief Executive Officer for Brandywine Realty Trust.  “During the second quarter, we made excellent progress on our 2022 business plan.  At the midpoint of our range, we have now achieved 96% of our speculative revenue target. During the quarter we continued to experience positive mark-to-market rent increases of 18.4% and 7.8% on an accrual and cash basis. We have commenced the redevelopment of 2340 Dulles Corner after signing a 221,000 square foot anchor tenant lease which represents the largest lease signed in Northern Virginia this year.  We are also excited to announce the commencement of 3151 Market Street, a 417,000 square foot life science building within our Schuylkill Yards master development, further expanding our relationship with an existing partner. We have also extended our $600 million line of credit to June 30, 2026 and extended our $250 million term loan to June 30, 2027 on favorable terms. Despite the progress made on our 2022 Business Plan, we are being impacted by rising interest rates. Based on this anticipated impact, we are adjusting and narrowing our 2022 FFO range from $1.37 to $1.45 per share to $1.36 to $1.40 per share.”

Second Quarter Highlights
Financial Results

  • Net Income to common shareholders: $4.5 million, or $0.03 per share.

  • Funds from Operations (FFO): $60.5 million, or $0.35 per share.

Portfolio Results

  • Core Portfolio: 89.6% occupied and 92.1% leased.

  • New and Renewal Leases Signed: 686,000 square feet

  • Rental Rate Mark-to-Market: Increased 18.4% / 7.8% on an accrual / cash basis

  • Same Store Net Operating Income: Decreased (1.2%) on an accrual basis and Increased 1.7% on a cash basis

  • Tenant Retention Ratio: 70%

2022 Business Plan Revisions

  • Interest Expense Range: Increased from $70-72 million to $75 – 76 million.

Recent Transaction Activity

Joint Venture and Development Activity

  • On July 14, 2022, we formed a joint venture with a global institutional investor to commence development of 3151 Market Street in Philadelphia, Pennsylvania. The project cost is approximately $307 million, and the joint venture partner has agreed, subject to customary funding conditions, to fund up to approximately $55 million of the project costs in exchange for a 45% preferred equity interest in the venture. We anticipate securing a construction loan totaling approximately $185 million, representing 60% of total project costs. The loan is expected to close in the fourth quarter of 2022. We commenced demolition of the site in June 2022 with substantial completion anticipated for the second quarter of 2024. The project is the second ground-up development in our Schuylkill Yards master planned development. The 12-story building will consist of 417,000 square feet of customizable life science/innovation office space, 18,000 square feet of retail amenity space, 6,000 square feet of outdoor terrace space, and 70 below grade parking spaces.

  • As previously announced, on May 24, 2022, we commenced the redevelopment of 2340 Dulles Corner Boulevard in Herndon, Virginia in Metro, DC, a 268,000 square foot office building. The redevelopment is commencing with execution of an anchor lease from a leading telecommunications company for 221,000 square feet representing 84% of the property. The 11-year lease will commence upon tenant occupancy which is planned for Q2 2023.

Disposition Activity

  • As previously announced, on April 14, 2022, we sold a land parcel located at 25 M Street in Washington, DC for a gross sales price of $29.7 million. We received net cash proceeds of $28.6 million and recorded a gain on sale of $3.4 million during the second quarter of 2022.

Financing Activity

  • On June 30, 2022, we entered into a restated credit facility agreement which extends the maturity dates of (1) our $600 million unsecured revolving credit facility (the “Revolving Credit Facility”) and (2) our $250 million unsecured term loan (the “Term Loan”). The Revolving Credit Facility has a scheduled maturity date of June 30, 2026, subject to two six-month extensions, and the Term Loan has a scheduled maturity date of June 30, 2027. The current borrowing spread for the Revolving Credit Facility is 1.05% over adjusted Term Secured Overnight Financing Rate (“SOFR”) and the borrowing spread for the Term Loan is 1.20% over adjusted SOFR.

2022 Finance / Capital Markets Activity

  • We have $214.0 million outstanding on our $600.0 million unsecured revolving credit facility as of June 30, 2022.

  • We have $28.8 million of cash and cash equivalents on-hand as of June 30, 2022.

Results for the Three and Six Month Periods Ended June 30, 2022

Net income allocated to common shares totaled $4.5 million or $0.03 per diluted share in the second quarter of 2022 compared to a net loss of ($0.3) million or less than ($0.01) per diluted share in the second quarter of 2021.

FFO available to common shares and units totaled $60.5 million or $0.35 per diluted share in the second quarter of 2022 as compared to $55.9 million, or $0.32 per diluted share for the second quarter of 2021. Our second quarter 2022 payout ratio ($0.19 common share distribution / $0.35 FFO per diluted share) was 54.3%.

Net income allocated to common shares totaled $10.5 million or $0.06 per diluted share in the first six months of 2022 compared to net income of $6.5 million or $0.04 per diluted share in the first six months of 2021.

Our FFO available to common shares and units for the first six months of 2022 totaled $120.8 million or $0.70 per diluted share versus $116.1 million, or $0.67 per diluted share in the first six months of 2021. Our payout ratio for the first half 2022 ($0.38 common share distribution / $0.70 FFO per diluted share) was 54.3%.

Operating and Leasing Activity

In the second quarter of 2022, our same store Net Operating Income (NOI) excluding termination revenues and other income items decreased (1.2%) on an accrual basis and increased 1.7% on a cash basis for our 73 same store properties, which were 89.5% and 90.5% occupied on June 30, 2022 and 2021, respectively.

We leased approximately 686,000 square feet and commenced occupancy on 385,000 square feet during the second quarter of 2022. The second quarter occupancy activity includes 137,000 square feet of renewals, 134,000 square feet of new leases and 114,000 square feet of tenant expansions. We have an additional 331,000 square feet of executed new leasing scheduled to commence subsequent to June 30, 2022.

Our second quarter tenant retention ratio was 70% in our core portfolio with net absorption of 27,000 square feet during the second quarter of 2022. Second quarter rental rate growth increased 18.4% as our renewal rental rates increased 8.3% and our new lease/expansion rental rates increased 26.2%, all on an accrual basis.

As of June 30, 2022, our core portfolio of 74 properties comprise 13.0 million square feet. As of June 30, 2022, our core portfolio was 89.6% occupied and we are currently 92.1% leased (reflecting new leases commencing after June 30, 2022).

Distributions

On May 18, 2022, our Board of Trustees declared a quarterly dividend distribution of $0.19 per common share that was paid on July 20, 2022 to shareholders of record as of July 6, 2022.

2022 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 adjusting our 2022 earnings per share guidance of $0.17 - $0.25 per diluted share to $0.13 - $0.17 per diluted share and adjusting our 2022 FFO guidance of $1.37 - $1.45 per diluted share to $1.36 - $1.40 per diluted share. This guidance is provided for informational purposes and is subject to change. The following is a reconciliation of the calculation of 2022 FFO guidance and earnings per diluted share guidance:

Guidance for 2022

Range

 

Earnings per diluted share allocated to common shareholders

$0.13

to

$0.17

 

Plus: real estate depreciation, amortization

1.23

 

1.23

 

FFO per diluted share

$1.36

to

$1.40

 

 

 

 

 

Our 2022 FFO key assumptions include:

  • Speculative Revenue Target: $34.0 - $36.0 million, as of July 19, 2022, $33.7 million achieved from a leasing plan of 1.8 million square feet, 1.6 million square feet 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 (cash): 8-10%;

  • Same Store (accrual) NOI Range: 0-2%;

  • Same Store (cash) NOI Range: 0-2%;

    • Timing of occupancy and free rent on 200,000 square feet in Philadelphia CBD would equate to an increase in our range by approximately 3.0%;

  • Property Acquisition Activity: None;

  • Property Sales Activity: None;

  • Joint Venture Activity: Acquired a 20% common equity interest in 2970 Market Street, Philadelphia, PA;

  • Development / Redevelopment Starts: Three starts.   We have commenced two starts in 2022 located at 2340 Dulles Corner and 3151 Market Street;

  • Financing Activity: Completed the anticipated refinance of our $600 million unsecured line of credit and our $250 million term loan;

  • Share Buyback Activity: None;

  • Annual earnings and FFO per diluted share based on 174.0 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, Austin and Washington, D.C. markets. Organized as a real estate investment trust (REIT), we own, develop, lease and manage an urban, town center and transit-oriented portfolio comprising 165 properties and 23.0 million square feet as of June 30, 2022 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 hold our second quarter conference call on Tuesday, July 26, 2022 at 9:00 a.m. Eastern. The conference call can be accessed by dialing 1-866-374-5140 and providing conference ID: 56699036. Beginning two hours after the conference call, a taped replay of the call can be accessed through Tuesday, August 9, 2022, by calling 1-855-859-2056 and entering access code 2999390. The conference call can also be accessed via a webcast on our website at www.brandywinerealty.com.

Looking Ahead – Third Quarter 2022 Conference Call

We expect to release our third quarter 2022 earnings on Thursday, October 20 2022 after the market close and will host our third quarter 2022 conference call on Friday, October 21, 2022 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 2022 guidance, 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 generally 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; the effect of inflation and interest rate fluctuations, including on the costs of our planned debt refinancing; 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, 2021. 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. 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)

 

June 30, 2022

 

December 31, 2021

ASSETS

 

 

 

Real estate investments:

 

 

 

Operating properties

$

3,545,102

 

 

$

3,472,602

 

Accumulated depreciation

 

(1,009,108

)

 

 

(957,450

)

Right of use asset - operating leases, net

 

19,988

 

 

 

20,313

 

Operating real estate investments, net

 

2,555,982

 

 

 

2,535,465

 

Construction-in-progress

 

366,823

 

 

 

277,237

 

Land held for development

 

93,887

 

 

 

114,604

 

Prepaid leasehold interests in land held for development, net

 

35,576

 

 

 

27,762

 

Total real estate investments, net

 

3,052,268

 

 

 

2,955,068

 

Assets held for sale, net

 

 

 

 

562

 

Cash and cash equivalents

 

28,849

 

 

 

27,463

 

Accounts receivable

 

13,584

 

 

 

11,875

 

Accrued rent receivable, net of allowance of $4,049 and $4,133 as of June 30, 2022 and December 31, 2021, respectively

 

172,076

 

 

 

167,210

 

Investment in unconsolidated real estate ventures

 

458,840

 

 

 

435,506

 

Deferred costs, net

 

93,570

 

 

 

86,862

 

Intangible assets, net

 

23,015

 

 

 

28,556

 

Other assets

 

124,486

 

 

 

133,094

 

Total assets

$

3,966,688

 

 

$

3,846,196

 

LIABILITIES AND BENEFICIARIES' EQUITY

 

 

 

Unsecured credit facility

$

214,000

 

 

$

23,000

 

Unsecured term loan, net

 

248,047

 

 

 

249,608

 

Unsecured senior notes, net

 

1,580,712

 

 

 

1,580,978

 

Accounts payable and accrued expenses

 

131,669

 

 

 

150,151

 

Distributions payable

 

32,800

 

 

 

32,765

 

Deferred income, gains and rent

 

21,195

 

 

 

23,849

 

Intangible liabilities, net

 

11,277

 

 

 

12,981

 

Lease liability - operating leases

 

23,066

 

 

 

22,962

 

Other liabilities

 

52,359

 

 

 

48,683

 

Total liabilities

$

2,315,125

 

 

$

2,144,977

 

Brandywine Realty Trust's Equity:

 

 

 

Common Shares of Brandywine Realty Trust's beneficial interest, $0.01 par value; shares authorized 400,000,000; 171,575,280 and 171,126,257 issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

 

1,716

 

 

 

1,712

 

Additional paid-in-capital

 

3,149,146

 

 

 

3,146,786

 

Deferred compensation payable in common shares

 

19,601

 

 

 

18,491

 

Common shares in grantor trust, 1,202,385 and 1,169,703 issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

 

(19,601

)

 

 

(18,491

)

Cumulative earnings

 

1,133,102

 

 

 

1,122,372

 

Accumulated other comprehensive income (loss)

 

3,849

 

 

 

(2,020

)

Cumulative distributions

 

(2,643,999

)

 

 

(2,578,583

)

Total Brandywine Realty Trust's equity

 

1,643,814

 

 

 

1,690,267

 

Noncontrolling interests

 

7,749

 

 

 

10,952

 

Total beneficiaries' equity

$

1,651,563

 

 

$

1,701,219

 

Total liabilities and beneficiaries' equity

$

3,966,688

 

 

$

3,846,196

 

 

 

 

 

 

 

 

 

BRANDYWINE REALTY TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except share and per share data)

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Revenue

 

 

 

 

 

 

 

Rents

$

116,897

 

 

$

111,235

 

 

$

232,798

 

 

$

224,719

 

Third party management fees, labor reimbursement and leasing

 

5,924

 

 

 

6,627

 

 

 

11,032

 

 

 

13,278

 

Other

 

1,221

 

 

 

2,240

 

 

 

7,717

 

 

 

2,874

 

Total revenue

 

124,042

 

 

 

120,102

 

 

 

251,547

 

 

 

240,871

 

Operating expenses

 

 

 

 

 

 

 

Property operating expenses

 

33,111

 

 

 

29,264

 

 

 

64,659

 

 

 

58,199

 

Real estate taxes

 

13,746

 

 

 

14,602

 

 

 

27,559

 

 

 

29,363

 

Third party management expenses

 

2,792

 

 

 

3,561

 

 

 

5,349

 

 

 

6,539

 

Depreciation and amortization

 

43,959

 

 

 

42,785

 

 

 

87,741

 

 

 

83,128

 

General and administrative expenses

 

8,328

 

 

 

8,356

 

 

 

18,328

 

 

 

14,940

 

Total operating expenses

 

101,936

 

 

 

98,568

 

 

 

203,636

 

 

 

192,169

 

Gain on sale of real estate

 

 

 

 

 

 

 

Net gain on disposition of real estate

 

144

 

 

 

68

 

 

 

144

 

 

 

142

 

Net gain on sale of undepreciated real estate

 

4,127

 

 

 

 

 

 

5,024

 

 

 

1,993

 

Total gain on sale of real estate

 

4,271

 

 

 

68

 

 

 

5,168

 

 

 

2,135

 

Operating income

 

26,377

 

 

 

21,602

 

 

 

53,079

 

 

 

50,837

 

Other income (expense):

 

 

 

 

 

 

 

Interest and investment income

 

449

 

 

 

1,677

 

 

 

889

 

 

 

3,351

 

Interest expense

 

(16,341

)

 

 

(15,490

)

 

 

(32,083

)

 

 

(31,783

)

Interest expense - amortization of deferred financing costs

 

(805

)

 

 

(709

)

 

 

(1,514

)

 

 

(1,418

)

Equity in loss of unconsolidated real estate ventures

 

(4,981

)

 

 

(7,240

)

 

 

(9,544

)

 

 

(14,164

)

Net income (loss) before income taxes

 

4,699

 

 

 

(160

)

 

 

10,827

 

 

 

6,823

 

Income tax provision

 

(48

)

 

 

(15

)

 

 

(75

)

 

 

(34

)

Net income (loss)

 

4,651

 

 

 

(175

)

 

 

10,752

 

 

 

6,789

 

Net (income) loss attributable to noncontrolling interests

 

(14

)

 

 

8

 

 

 

(22

)

 

 

(35

)

Net income (loss) attributable to Brandywine Realty Trust

 

4,637

 

 

 

(167

)

 

 

10,730

 

 

 

6,754

 

Nonforfeitable dividends allocated to unvested restricted shareholders

 

(98

)

 

 

(94

)

 

 

(246

)

 

 

(240

)

Net income (loss) attributable to Common Shareholders of Brandywine Realty Trust

$

4,539

 

 

$

(261

)

 

$

10,484

 

 

$

6,514

 

PER SHARE DATA

 

 

 

 

 

 

 

Basic income per Common Share

$

0.03

 

 

$

 

 

$

0.06

 

 

$

0.04

 

Basic weighted average shares outstanding

 

171,527,031

 

 

 

170,848,894

 

 

 

171,411,631

 

 

 

170,737,437

 

Diluted income per Common Share

$

0.03

 

 

$

 

 

$

0.06

 

 

$

0.04

 

Diluted weighted average shares outstanding

 

172,260,429

 

 

 

170,848,894

 

 

 

172,575,408

 

 

 

171,996,119

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BRANDYWINE REALTY TRUST
FUNDS FROM OPERATIONS
(unaudited, in thousands, except share and per share data)

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2022

 

2021

 

2022

 

2021

Reconciliation of Net Income to Funds from Operations:

 

 

 

 

 

 

 

Net income (loss) attributable to common shareholders

$

4,539

 

 

$

(261

)

 

$

10,484

 

 

$

6,514

 

Add (deduct):

 

 

 

 

 

 

 

Net income (loss) attributable to noncontrolling interests - LP units

 

16

 

 

 

(7

)

 

 

26

 

 

 

37

 

Nonforfeitable dividends allocated to unvested restricted shareholders

 

98

 

 

 

94

 

 

 

246

 

 

 

240

 

Net gain on disposition of real estate

 

(144

)

 

 

(68

)

 

 

(144

)

 

 

(142

)

Depreciation and amortization:

 

 

 

 

 

 

 

Real property

 

36,631

 

 

 

34,294

 

 

 

72,793

 

 

 

65,828

 

Leasing costs including acquired intangibles

 

6,597

 

 

 

7,954

 

 

 

13,591

 

 

 

16,234

 

Company’s share of unconsolidated real estate ventures

 

12,903

 

 

 

14,060

 

 

 

24,198

 

 

 

27,791

 

Partners’ share of consolidated real estate ventures

 

(5

)

 

 

(5

)

 

 

(10

)

 

 

(10

)

Funds from operations

$

60,635

 

 

$

56,061

 

 

$

121,184

 

 

$

116,492

 

Funds from operations allocable to unvested restricted shareholders

 

(154

)

 

 

(150

)

 

 

(392

)

 

 

(363

)

Funds from operations available to common share and unit holders (FFO)

$

60,481

 

 

$

55,911

 

 

$

120,792

 

 

$

116,129

 

FFO per share - fully diluted

$

0.35

 

 

$

0.32

 

 

$

0.70

 

 

$

0.67

 

Weighted-average shares/units outstanding - fully diluted

 

172,776,896

 

 

 

173,289,294

 

 

 

173,149,640

 

 

 

172,958,591

 

Distributions paid per common share

$

0.19

 

 

$

0.19

 

 

$

0.38

 

 

$

0.38

 

FFO payout ratio (distributions paid per common share/FFO per diluted share)

 

54.3

%

 

 

59.4

%

 

 

54.3

%

 

 

56.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BRANDYWINE REALTY TRUST
SAME STORE OPERATIONS – 2nd QUARTER
(unaudited and in thousands)

Of the 78 properties owned by the Company as of June 30, 2022, a total of 73 properties ("Same Store Properties") containing an aggregate of 12.9 million net rentable square feet were owned for the entire three months ended June 30, 2022 and 2021. As of June 30, 2022, one property was recently completed/acquired, and four properties were in development/redevelopment. Average occupancy for the Same Store Properties was 88.8% and 90.4% during the three-month periods ended June 30, 2022 and 2021, respectively. The following table sets forth revenue and expense information for the Same Store Properties:

 

Three Months Ended June 30,

 

2022

 

2021

Revenue

 

 

 

Rents

$

110,120

 

 

$

108,984

 

Other

 

266

 

 

 

263

 

Total revenue

 

110,386

 

 

 

109,247

 

Operating expenses

 

 

 

Property operating expenses

 

29,261

 

 

 

27,504

 

Real estate taxes

 

13,108

 

 

 

13,324

 

Net operating income

$

68,017

 

 

$

68,419

 

Net operating income - percentage change over prior year

   

(0.6

)%

 

 

Net operating income, excluding other items

$

66,940

 

 

$

67,719

 

Net operating income, excluding other items - percentage change over prior year

 

(1.2

)%

 

 

Net operating income

$

68,017

 

 

$

68,419

 

Straight line rents & other

 

(1,568

)

 

 

(3,462

)

Above/below market rent amortization

 

(789

)

 

 

(1,222

)

Amortization of tenant inducements

 

180

 

 

 

263

 

Non-cash ground rent expense

 

201

 

 

 

205

 

Cash - Net operating income

$

66,041

 

 

$

64,203

 

Cash - Net operating income - percentage change over prior year

 

2.9

%

 

 

Cash - Net operating income, excluding other items

$

64,453

 

 

$

63,349

 

Cash - Net operating income, excluding other items - percentage change over prior year

 

1.7

%

 

 

 

Three Months Ended June 30,

 

2022

 

2021

Net income (loss):

$

4,651

 

 

$

(175

)

Add/(deduct):

 

 

 

Interest income

 

(449

)

 

 

(1,677

)

Interest expense

 

16,341

 

 

 

15,490

 

Interest expense - amortization of deferred financing costs

 

805

 

 

 

709

 

Equity in loss of unconsolidated real estate ventures

 

4,981

 

 

 

7,240

 

Net gain on disposition of real estate

 

(144

)

 

 

(68

)

Net gain on sale of undepreciated real estate

 

(4,127

)

 

 

 

Depreciation and amortization

 

43,959

 

 

 

42,785

 

General & administrative expenses

 

8,328

 

 

 

8,356

 

Income tax provision

 

48

 

 

 

15

 

Consolidated net operating income

 

74,393

 

 

 

72,675

 

Less: Net operating income of non-same store properties and elimination of non-property specific operations

 

(6,376

)

 

 

(4,256

)

Same store net operating income

$

68,017

 

 

$

68,419

 

 

 

 

 

 

 

 

 

BRANDYWINE REALTY TRUST
SAME STORE OPERATIONS – SIX MONTHS
(unaudited and in thousands)

Of the 78 properties owned by the Company as of June 30, 2022, a total of 73 properties ("Same Store Properties") containing an aggregate of 12.9 million net rentable square feet were owned for the entire six months ended June 30, 2022 and 2021. As of June 30, 2022, one property was recently completed/acquired, and four properties were in development/redevelopment. Average occupancy for the Same Store Properties was 89.4% and 90.5% during the six-month periods ended June 30, 2022 and 2021, respectively. The following table sets forth revenue and expense information for the Same Store Properties:

 

Six Months Ended June 30,

 

2022

 

2021

Revenue

 

 

 

Rents

$

220,822

 

 

$

219,865

 

Other

 

569

 

 

 

475

 

Total revenue

 

221,391

 

 

 

220,340

 

Operating expenses

 

 

 

Property operating expenses

 

58,044

 

 

 

55,504

 

Real estate taxes

 

26,236

 

 

 

26,390

 

Net operating income

$

137,111

 

 

$

138,446

 

Net operating income - percentage change over prior year

 

(1.0

)%

 

 

Net operating income, excluding other items

$

135,272

 

 

$

135,500

 

Net operating income, excluding other items - percentage change over prior year

 

(0.2

)%

 

 

Net operating income

$

137,111

 

 

$

138,446

 

Straight line rents & other

 

(4,399

)

 

 

(7,642

)

Above/below market rent amortization

 

(1,664

)

 

 

(2,573

)

Amortization of tenant inducements

 

369

 

 

 

456

 

Non-cash ground rent expense

 

405

 

 

 

413

 

Cash - Net operating income

$

131,822

 

 

$

129,100

 

Cash - Net operating income - percentage change over prior year

 

2.1

%

 

 

Cash - Net operating income, excluding other items

$

128,783

 

 

$

125,861

 

Cash - Net operating income, excluding other items - percentage change over prior year

 

2.3

%

 

 

 

Six Months Ended June 30,

 

2022

 

2021

Net income:

$

10,752

 

 

$

6,789

 

Add/(deduct):

 

 

 

Interest income

 

(889

)

 

 

(3,351

)

Interest expense

 

32,083

 

 

 

31,783

 

Interest expense - amortization of deferred financing costs

 

1,514

 

 

 

1,418

 

Equity in loss of unconsolidated real estate ventures

 

9,544

 

 

 

14,164

 

Net gain on disposition of real estate

 

(144

)

 

 

(142

)

Net gain on sale of undepreciated real estate

 

(5,024

)

 

 

(1,993

)

Depreciation and amortization

 

87,741

 

 

 

83,128

 

General & administrative expenses

 

18,328

 

 

 

14,940

 

Income tax provision

 

75

 

 

 

34

 

Consolidated net operating income

 

153,980

 

 

 

146,770

 

Less: Net operating income of non-same store properties and elimination of non-property specific operations

 

(16,869

)

 

 

(8,324

)

Same store net operating income

$

137,111

 

 

$

138,446

 

 

 

 

 

 

 

 

 

Company / Investor Contact:
Tom Wirth
EVP & CFO
610-832-7434
tom.wirth@bdnreit.com