Brandywine Realty Trust Announces Second Quarter Results, Joint Venture of One and Two Commerce Square And Narrows 2020 Guidance

Wednesday, 22. July 2020 22:53

PHILADELPHIA, July 22, 2020 (GLOBE NEWSWIRE) -- Brandywine Realty Trust (NYSE:BDN) today announced the closing of a joint venture on One and Two Commerce Square, located in Philadelphia, PA and reported its financial and operating results for the three and six-month periods ended June 30, 2020.

Management Comments

“As our economy slowly begins to open and people return to the workplace, we are continually monitoring the pandemic and its impact on the health and safety of our employees, tenants, and other stakeholders, while executing our business plan strategy,” stated Gerard H. Sweeney, President and Chief Executive Officer for Brandywine Realty Trust.  “Our operating and financial platform remains strong and secure, we have a well-covered dividend and excellent liquidity with approximately $584 million of liquidity as of June 30, 2020, comprised of $45 million in cash and $539 million of availability under our unsecured line of credit.  Regarding our 2020 business plan, we are making excellent progress, including being 99% complete with speculative revenue and mark-to-market rents achieving strong increases of 10.3% and 19.4% on a cash and accrual basis, respectively.  Turning to the capital markets, we are delighted to welcome a high-quality institutional partner at Commerce Square.  This transaction creates a valuable partnership with one of the world’s top real estate investors, marking their first direct office investment in downtown Philadelphia.  This investment reaffirms the positive investor sentiment surrounding Philadelphia, especially among international audiences, and demonstrates the strength of Brandywine’s reputation as a best-in-class operating partner.  The transaction also positions Commerce Square for continued growth, while generating $100 million of additional liquidity to accelerate the execution of our business plan.  After an active second quarter, we are narrowing our current 2020 FFO guidance range from $1.37-$1.45 to $1.38-$1.44.”

Second Quarter Highlights

Financial Results

  • Net income to common shareholders: $3.9 million, or $0.02 per share.
  • Funds from Operations (FFO): $57.7 million, or $0.34 per share.

Portfolio Results (excluding Commerce Square)

  • Core Portfolio: 90.7% occupied and 93.8% leased.
  • New and Renewal Leases Signed: 401,000 square feet
  • Rental Rate Mark-to-Market: Increased 19.4% / 10.3% on accrual/cash basis
  • Same Store Net Operating Income:   (0.1%) on an accrual basis and (0.9%) on a cash basis
  • Tenant Retention Ratio: 37%

2020 Business Plan Revisions

  • Same Store Net Operating Income (accrual):  0-2% as compared to previous 1-3%.  The change is primarily due to reduced parking income within our Philadelphia CBD operations.
  • Same Store Net Operating Income (cash):  (2)-0% as compared to previous (1)-1%.  The change is primarily due to reduced parking income within our Philadelphia CBD operations.
  • Capital as % of Lease Revenue:  11-12% as compared to previous 12-13%.

COVID-19 Update

We continue to monitor events related to COVID-19 and are taking steps to mitigate the potential impact and risks to Brandywine.  While the duration and economic impact of the COVID-19 pandemic remains unknown, as of the date of this press release, we believe that the impact of COVID-19 has been reflected in our updated 2020 business plan and earnings estimates.  We will continue to assess the ongoing effects of the pandemic to our business plan, our tenants and earnings estimates.

The following is a summary of our second quarter and July consolidated cash base rent collections as of July 20, 2020:

  • 99.6% of total cash-based rent has been received from our tenants during the second quarter 2020.
  • We have granted rent relief requests primarily to our co-working and retail tenants, totaling approximately 1.0% of annualized billings.  The relief requests have substantially all been in the form of rent deferrals that are primarily being repaid in 2020 and 2021. 

For July, approximately 98% of total cash-based rent has been received from our tenants which reflects 99% collection rate from our office tenants.

Recent Transaction Activity

Joint Venture Activity

  • One and Two Commerce, Philadelphia, PA

    We announced today the closing of a $600 million joint venture for One and Two Commerce Square, selling a 30% preferred equity interest to a global institutional investor for $115 million.  As part of this transaction, both Brandywine and the investor have each committed to investing an additional $20 million of preferred equity in the property.  The transaction is subject to the existing $222 million mortgage, and we have raised approximately $100 million in net cash proceeds as part of the transaction.  Brandywine will continue in its role as Property Manager and Leasing Agent for the properties.  We will record a gain on the transaction during the third quarter that we estimate to be in excess of $270 million subject to final closing settlements.

    The Commerce Square complex is an entire city block fronting Market Street between 20th & 21st Streets in Center City, Philadelphia, and consists of two 40-story, identical, Trophy Class office towers, totaling 1.9 million square feet, along with a 519-space underground parking garage, and a stunning central courtyard of 30,000 square feet.  The towers were designed by renowned architects, IM Pei & Partners, and have individual floorplates between 15K and 34K SF to accommodate a variety of flexible, modern workspaces, while providing unobstructed panoramic views.

2020 Finance / Capital Markets Activity

  • We have $61.0 million outstanding on our $600.0 million unsecured revolving credit facility as of June 30, 2020.
  • We have $44.8 million of cash and cash equivalents on-hand as of June 30, 2020.

Results for the Three and Six Month Periods Ended June 30, 2020

Net income allocated to common shares totaled $3.9 million or $0.02 per diluted share in the second quarter of 2020 compared to net income of $6.1 million or $0.03 per diluted share in the second quarter of 2019.

FFO available to common shares and units totaled $57.7 million or $0.34 per diluted share in the second quarter of 2020 as compared to $62.2 million, or $0.35 per diluted share for the second quarter of 2019.  Our results for 2019 results include a gain on the sale of land totaling $1.5 million.  Our second quarter 2020 payout ratio ($0.19 common share distribution / $0.34 FFO per diluted share) was 55.9%. 

Net income allocated to common shares totaled $11.8 million or $0.07 per diluted share in the first six months of 2020 compared to net income of $10.5 million or $0.06 per diluted share in the first six months of 2019.

Our FFO available to common shares and units for the first six months of 2020 totaled $119.0 million or $0.68 per diluted share versus $122.3 million, or $0.69 per diluted share in the first six months of 2019.

Operating and Leasing Activity

In the second quarter of 2020, our Net Operating Income (NOI) excluding termination revenues and other income items decreased (0.1%) on an accrual basis and decreased (0.9%) on a cash basis for our 87 same store properties, which were 90.6% and 93.0% occupied on June 30, 2020 and 2019, respectively.

We leased approximately 401,000 square feet and commenced occupancy on 237,000 square feet during the second quarter of 2020.  The second quarter occupancy activity includes 195,000 square feet of renewals, 32,000 square feet of new leases and 10,000 square feet of tenant expansions.  We have an additional 456,000 square feet of executed new leasing scheduled to commence subsequent to June 30, 2020.

Our second quarter tenant retention ratio was 37% in our core portfolio with net negative absorption of (315,000) square feet during the second quarter of 2020.  Second quarter rental rate growth increased 19.4% as our renewal rental rates increased 18.9% and our new lease/expansion rental rates increased 29.8%, all on an accrual basis.

Following the Commerce Square joint venture, our core portfolio now totals 88 properties comprising 14.4 million square feet.  As of June 30, 2020, our core portfolio was 90.7% occupied and we are currently 93.8% leased (reflecting new leases commencing after June 30, 2020).

Distributions

On May 20, 2020, our Board of Trustees declared a quarterly dividend distribution of $0.19 per common share that is payable on July 22, 2020 to shareholders of record as of July 8, 2020.

2020 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 2020 net income guidance of $0.16 - $0.24 to $1.73 - $1.81 per diluted share and our 2020 FFO guidance of $1.37 - $1.45 to $1.38 - $1.44 per diluted share.  This guidance is provided for informational purposes and is subject to change.  The following is a reconciliation of the calculation of 2020 FFO and earnings per diluted share:

Guidance for 2020

    Range   
        
 Earnings per diluted share allocated to common shareholders$ 1.73 to$ 1.81  
 Plus: real estate depreciation, amortization1.20  1.20  
 Less: gain on remeasurement of real estate(1.55) (1.57 
        
 FFO per diluted share$ 1.38 to$ 1.44  

 

Our 2020 FFO key assumptions include:

  • Year-end Core Occupancy Range:  92-93%;
  • Year-end Core Leased Range:  94-95%;
  • Rental Rate Mark-to-Market (accrual):  17-19%;
  • Rental Rate Mark-to-Market (cash):  8-10%;
  • Same Store (accrual) NOI Range:  0-2%;
  • Same Store (cash) NOI Range:  (2)-0%;
  • Speculative Revenue Target:  $26.0 million, 99% achieved;
  • Tenant Retention Rate:  52%;
  • $0.19 per share quarterly dividend;
  • Property Acquisition Activity:  250 King of Prussia Road, Radnor, Pennsylvania scheduled during the second half of 2020;
  • Property Sales Activity:  $18.0 million, 100% achieved;
  • Joint Venture Activity:  Sold 30% interest in a new joint venture for $115.0 million;
  • One Development/Redevelopment Start:  3000 Market Street, Philadelphia, Pennsylvania;
  • Share Buyback Activity:  6,248,483 shares repurchased during first quarter 2020;
  • Annual earnings and FFO per diluted share based on 174.0 million fully diluted weighted average common shares.

2021 Earnings, Business Plan and FFO Guidance

We normally provide 2021 earnings, business plan and FFO guidance during our third quarter 2020 earnings cycle.  Based on the current COVID-19 pandemic creating an uncertain business climate, we do not plan on providing our 2021 guidance during our third quarter earnings cycle, however, we plan to issue that guidance no later than our fourth quarter earnings cycle.

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 172 properties and 24.1 million square feet as of June 30, 2020.  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, including the supplemental financial information, please visit www.brandywinerealty.com.

Conference Call and Audio Webcast

BDN management will discuss 2020 financial results and earnings guidance for fiscal 2020 on Thursday, July 23, 2020 at 9:00 a.m. Eastern Time.  The conference call can be accessed by dialing 1-833-818-6810 and providing conference ID: 1490094.  Beginning two hours after the conference call, a taped replay of the call can be accessed through Thursday, August 6, 2020, by calling 1-855-859-2056 and entering access code 1490094.  The conference call can also be accessed via a webcast on our website at www.brandywinerealty.com.

Looking Ahead – Third Quarter 2020 Conference Call

We anticipate we will release our third quarter 2020 earnings on Wednesday, October 21, 2020, after the market close and will host our third quarter 2020 conference call on Thursday, October 22, 2020 at 9:00 a.m. Eastern Time.  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 2020 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 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; unanticipated operating and capital costs; uninsured casualty losses and in 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, 2019 and our Form 10-Q for the quarter ended March 31, 2020.  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 and in thousands)
 
  June 30, 2020 December 31, 2019
ASSETS    
Real estate investments:    
Operating properties $3,650,521  $4,006,459 
Accumulated depreciation (957,189) (973,318)
Right of use asset - operating leases, net 21,315  21,656 
Operating real estate investments, net 2,714,647  3,054,797 
Construction-in-progress 235,475  180,718 
Land held for development 112,420  96,124 
Prepaid leasehold interests in land held for development, net 39,389  39,592 
Total real estate investments, net 3,101,931  3,371,231 
Assets held for sale, net 300,483  7,349 
Cash and cash equivalents 44,819  90,499 
Accounts receivable, net of allowance of $0 and $284 as of June 30, 2020 and December 31, 2019, respectively 18,823  16,363 
Accrued rent receivable, net of allowance of $6,844 and $7,691 as of June 30, 2020 and December 31, 2019, respectively 177,124  174,144 
Investment in Real Estate Ventures 118,558  120,294 
Deferred costs, net 87,811  95,560 
Intangible assets, net 55,262  84,851 
Other assets 117,959  115,678 
Total assets $4,022,770  $4,075,969 
LIABILITIES AND BENEFICIARIES' EQUITY    
Mortgage notes payable, net $89,435  $313,812 
Unsecured credit facility 61,000   
Unsecured term loan, net 248,823  248,561 
Unsecured senior notes, net 1,581,777  1,582,045 
Accounts payable and accrued expenses 113,826  113,347 
Distributions payable 32,747  33,815 
Deferred income, gains and rent 24,984  35,284 
Intangible liabilities, net 18,577  22,263 
Liabilities related to assets held for sale, net 225,993   
Lease liability - operating leases 22,655  22,554 
Other liabilities 32,104  15,985 
Total liabilities $2,451,921  $2,387,666 
Brandywine Realty Trust's Equity:    
Common Shares of Brandywine Realty Trust's beneficial interest, $0.01 par value; shares authorized
400,000,000; 170,573,159 and 176,480,095 issued and outstanding as of June 30, 2020 and December 31, 2019, respectively
 1,707  1,766 
Additional paid-in-capital 3,135,590  3,192,158 
Deferred compensation payable in common shares 17,516  16,216 
Common shares in grantor trust, 1,160,689 and 1,105,542 issued and outstanding as of June 30, 2020 and December 31, 2019, respectively (17,516) (16,216)
Cumulative earnings 816,574  804,556 
Accumulated other comprehensive loss (9,970) (2,370)
Cumulative distributions (2,383,273) (2,318,233)
Total Brandywine Realty Trust's equity 1,560,628  1,677,877 
Noncontrolling interests 10,221  10,426 
Total beneficiaries' equity 1,570,849  1,688,303 
Total liabilities and beneficiaries' equity $4,022,770  $4,075,969 
         


 
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,
 2020 2019 2020 2019
Revenue       
Rents$132,180  $137,787  $271,384  $275,885 
Third party management fees, labor reimbursement and leasing4,061  5,148  9,015  9,103 
Other596  1,216  1,526  3,059 
Total revenue136,837  144,151  281,925  288,047 
Operating expenses       
Property operating expenses33,292  38,684  70,753  78,184 
Real estate taxes16,815  16,089  33,602  31,872 
Third party management expenses2,375  2,449  5,037  4,566 
Depreciation and amortization49,743  51,667  101,781  103,111 
General and administrative expenses8,343  8,399  16,904  18,243 
Total operating expenses110,568  117,288  228,077  235,976 
Gain on sale of real estate       
Net gain on disposition of real estate    2,586   
Net gain on sale of undepreciated real estate201  250  201  1,251 
Total gain on sale of real estate201  250  2,787  1,251 
Operating income26,470  27,113  56,635  53,322 
Other income (expense):       
Interest income445  553  1,020  1,078 
Interest expense(20,191) (20,516) (40,200) (40,873)
Interest expense - amortization of deferred financing costs(731) (666) (1,480) (1,332)
Equity in loss of Real Estate Ventures(2,203) (1,491) (4,094) (2,849)
Net gain on real estate venture transactions  1,276    1,535 
Net income before income taxes3,790  6,269  11,881  10,881 
Income tax (provision) benefit230  (17) 226  (46)
Net income4,020  6,252  12,107  10,835 
Net income attributable to noncontrolling interests(24) (47) (89) (107)
Net income attributable to Brandywine Realty Trust3,996  6,205  12,018  10,728 
Nonforfeitable dividends allocated to unvested restricted shareholders(93) (93) (224) (212)
Net income attributable to Common Shareholders of Brandywine Realty Trust$3,903  $6,112  $11,794  $10,516 
PER SHARE DATA       
Basic income per Common Share$0.02  $0.03  $0.07  $0.06 
Basic weighted average shares outstanding170,518,095  176,143,206  173,294,031  176,001,071 
Diluted income per Common Share$0.02  $0.03  $0.07  $0.06 
Diluted weighted average shares outstanding170,770,078  176,690,824  173,605,948  176,578,140 
            


 
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,
 2020 2019 2020 2019
Reconciliation of Net Income to Funds from Operations:       
Net income attributable to common shareholders$3,903  $6,112  $11,794  $10,516 
Add (deduct):       
Net income attributable to noncontrolling interests - LP units14  34  67  60 
Nonforfeitable dividends allocated to unvested restricted shareholders93  93  224  212 
Net gain on real estate venture transactions      (259)
Net gain on disposition of real estate    (2,586)  
Depreciation and amortization:       
Real property37,194  36,532  75,547  72,138 
Leasing costs including acquired intangibles12,045  14,698  25,244  30,104 
Company’s share of unconsolidated real estate ventures4,630  4,974  9,229  10,015 
Partners’ share of consolidated real estate ventures(59) (54) (119) (107)
Funds from operations$57,820  $62,389  $119,400  $122,679 
Funds from operations allocable to unvested restricted shareholders(167) (174) (357) (388)
Funds from operations available to common share and unit holders (FFO)$57,653  $62,215  $119,043  $122,291 
FFO per share - fully diluted$0.34  $0.35  $0.68  $0.69 
Weighted-average shares/units outstanding - fully diluted171,751,712  177,672,683  174,587,582  177,560,502 
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)55.9% 54.3% 55.9% 55.1%
            


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

Of the 94 properties owned by the Company as of June 30, 2020, a total of 87 properties ("Same Store Properties") containing an aggregate of 14.1 million net rentable square feet were owned for the entire three months ended June 30, 2020 and 2019. As of June 30, 2020, one property was recently completed/acquired, and four properties were in development/redevelopment. Average occupancy for the Same Store Properties was 90.9% and 92.5% during the three-month periods ended June 30, 2020 and 2019, respectively. The following table sets forth revenue and expense information for the Same Store Properties:

  Three Months Ended June 30,
  2020 2019
Revenue    
Rents $113,403  $114,969 
Other 274  324 
Total revenue 113,677  115,293 
Operating expenses    
Property operating expenses 28,447  30,320 
Real estate taxes 13,744  13,273 
Net operating income $71,486  $71,700 
Net operating income - percentage change over prior year (0.3)%  
Net operating income, excluding net termination fees & other $70,904  $70,992 
Net operating income, excluding net termination fees & other - percentage change over prior year (0.1)%  
Net operating income $71,486  $71,700 
Straight line rents & other (2,388) (1,868)
Above/below market rent amortization (1,096) (1,378)
Amortization of tenant inducements 236  200 
Non-cash ground rent 209  212 
Cash - Net operating income $68,447  $68,866 
Cash - Net operating income - percentage change over prior year (0.6)%  
Cash - Net operating income, excluding net termination fees & other $67,420  $68,012 
Cash - Net operating income, excluding net termination fees & other - percentage change over prior year (0.9)%  
  Three Months Ended June 30,
  2020 2019
Net income: $4,020  $6,252 
Add/(deduct):    
Interest income (445) (553)
Interest expense 20,191  20,516 
Interest expense - amortization of deferred financing costs 731  666 
Equity in loss of Real Estate Ventures 2,203  1,491 
Net gain on real estate venture transactions   (1,276)
Net gain on sale of undepreciated real estate (201) (250)
Depreciation and amortization 49,743  51,667 
General & administrative expenses 8,343  8,399 
Income tax provision (benefit) (230) 17 
Consolidated net operating income 84,355  86,929 
Less: Net operating income of non-same store properties and elimination of non-property specific operations (12,869) (15,229)
Same store net operating income $71,486  $71,700 
         


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

Of the 94 properties owned by the Company as of June 30, 2020, a total of 86 properties ("Same Store Properties") containing an aggregate of 13.9 million net rentable square feet were owned for the entire six months ended June 30, 2020 and 2019. As of June 30, 2020, two properties were recently completed/acquired, and four properties were in development/redevelopment. Average occupancy for the Same Store Properties was 91.6% during 2020 and 92.2% during 2019. The following table sets forth revenue and expense information for the Same Store Properties:

  Six Months Ended June 30,
  2020 2019
Revenue    
Rents $228,242  $227,397 
Other 572  657 
Total revenue 228,814  228,054 
Operating expenses    
Property operating expenses 58,592  61,233 
Real estate taxes 26,823  25,913 
Net operating income $143,399  $140,908 
Net operating income - percentage change over prior year 1.8%  
Net operating income, excluding other items $140,965  $139,561 
Net operating income, excluding other items - percentage change over prior year 1.0%  
Net operating income $143,399  $140,908 
Straight line rents & other (4,024) (3,765)
Above/below market rent amortization (2,391) (2,756)
Amortization of tenant inducements 494  383 
Non-cash ground rent 420  427 
Cash - Net operating income $137,898  $135,197 
Cash - Net operating income - percentage change over prior year 2.0%  
Cash - Net operating income, excluding other items $134,488  $133,608 
Cash - Net operating income, excluding other items - percentage change over prior year 0.7%  
  Six Months Ended June 30,
  2020 2019
Net income: $12,107  $10,835 
Add/(deduct):    
Interest income (1,020) (1,078)
Interest expense 40,200  40,873 
Interest expense - amortization of deferred financing costs 1,480  1,332 
Equity in loss of Real Estate Ventures 4,094  2,849 
Net gain on real estate venture transactions   (1,535)
Net gain on disposition of real estate (2,586)  
Net gain on sale of undepreciated real estate (201) (1,251)
Depreciation and amortization 101,781  103,111 
General & administrative expenses 16,904  18,243 
Income tax provision (benefit) (226) 46 
Consolidated net operating income 172,533  173,425 
Less: Net operating income of non-same store properties and elimination of non-property specific operations (29,134) (32,517)
Same store net operating income $143,399  $140,908 
         

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

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