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CST: 20/10/2019 21:17:33   

Brandywine Realty Trust Announces Fourth Quarter and Full Year 2018 Results

263 Days ago

PHILADELPHIA, Jan. 30, 2019 (GLOBE NEWSWIRE) -- Brandywine Realty Trust (NYSE:BDN) today reported its financial and operating results for the three and twelve-month periods ended December 31, 2018.

Management Comments

“We had a very active and successful final quarter of 2018 as we closed several significant transactions while achieving or exceeding many of our 2018 business plan goals,” stated Jerry Sweeney, President and Chief Executive Officer for Brandywine Realty Trust.  “In addition to the previously announced transactions, we continued to increase our presence in Austin through the acquisition of a 121,000 square foot office property in close proximity to our Broadmoor campus.  Also consistent with our business strategy, we sold a 510,000 square foot portfolio located in Silver Spring, Maryland that was owned in a joint venture.  We are excited to announce the commencement of our development of 405 Colorado, a 200,000 square foot office building located in the heart of Austin’s CBD.  With the additional net sales activity, we used that liquidity to opportunistically repurchase over 3.0 million common shares at a weighted-average price of $12.76 per share which is well below our current net asset value.  Based on the fourth quarter activity and our outlook for 2019, we are maintaining our current FFO guidance range of $1.37 to $1.47.”

Fourth Quarter 2018 Highlights

Financial Results

  • Net income allocated to common shareholders; $121.8 million, or $0.68 per diluted share.  Our fourth quarter results include net gains on sale of real estate totaling $107.9 million, or $0.60 per diluted share.
  • Funds from Operations (FFO); $64.3 million, or $0.36 per diluted share.

Fourth Quarter Portfolio Results

  • Core Portfolio:  93.3% occupied and 95.5% leased.
  • Signed approximately 613,000 square feet of new and renewal leases.
  • Tenant Retention Ratio:  83% in fourth quarter and 73% for 2018.
  • Rental Rate Mark-to-Market:  10.8% on a GAAP basis and (4.1%) on a cash basis.
  • Same Store Net Operating Income Growth:  2.3% on a GAAP basis and 8.7% on a cash basis.

2019 Business Plan Revisions

  • Speculative Revenue:  An increase from $31.0 million to $31.5 million, 77% achieved.

Transaction Activity

Austin Acquisitions

  • As previously announced, we acquired our partner’s entire 50% interest in the 12 remaining buildings within the DRA Austin real estate venture (“Austin Portfolio”) containing approximately 1,570,000 square feet, located in Austin, Texas, valuing the portfolio at a gross sales price of $537.0 million, or $342 per square foot.  The transaction closed on December 11, 2018 and all existing mortgages were paid off.  This joint venture generated a 27% internal rate of return to our shareholders and we recorded a $103.8 million gain and $28.3 million gain on our promoted interest during the fourth quarter.  We funded the transaction using cash-on-hand, proceeds from our Northern Virginia Joint Venture and our unsecured line of credit.

  • On December 19, 2018, we acquired an office building containing 120,559 rentable square feet located at 4516 Seton Center Parkway, in Austin, Texas, known as Quarry Lake II for a gross purchase price of $39.5 million.  The building was 100% occupied at closing.  We funded the transaction using cash on hand and our unsecured line of credit.

Dispositions

Northern Virginia Joint Venture

  • As previously announced on October 16, 2018, we entered into an agreement with the Rockpoint Group to sell a portfolio of 8 properties (the “Portfolio”) containing approximately 1,294,000 square feet, located in the Northern Virginia, for a sales price of $312.0 million.  We retained a 15% equity interest in the Portfolio through an unconsolidated real estate venture (the “JV”).  The transaction closed on December 20, 2018 without mortgage financing and we received net cash proceeds totaling $262.5 million.  The JV intends to obtain mortgage financing during the first quarter of 2019.

Silver Spring, Maryland

  • On December 28, 2018, the Allstate DC JV, in which we own a 50% interest, sold its interest in a portfolio of three office buildings containing approximately 510,000 rentable square feet located in Silver Spring, Maryland, known as Station Square, for a gross sales price of $107.0 million.  After repayment of the first mortgage, our share of the cash received at closing totaled $17.4 million.

Camden, New Jersey

  • As previously announced, on May 18, 2018, Subaru exercised its option to purchase the National Training Center in Camden, New Jersey.  During the third quarter 2018, we placed the National Training Center into service and Subaru took occupancy.  The sale closed on December 21, 2018 and we received net cash proceeds totaling $44.9 million and recorded a $2.6 million gain on sale.

Development

Austin, Texas

  • We will commence the development of 405 Colorado located in the Austin, Texas CBD during the first quarter of 2019.  The project is comprised of a 200,000 square foot office building above a structured parking garage containing 520 parking spaces.  We are currently in negotiations with an anchor tenant that will occupy approximately 35% of the project and total estimated cost to develop is $114.0 million.  We intend to fund the project with cash-on-hand and our unsecured line of credit.

Radnor, Pennsylvania

  • Penn Medicine has named Brandywine as the designated developer of a 250,000 square foot state-of-the-art multi-specialty outpatient facility located in Radnor, Pennsylvania.  Construction of the facility commenced during the fourth quarter 2018 and is scheduled for completion in the first half of 2020.  In connection with the agreement, we will acquire adjacent land that can accommodate a 150,000 square foot building and a 125-room hotel.  Once the new facility is complete, we will purchase Penn Medicine’s existing medical office building.

Finance / Capital Markets Activity

  • During the fourth quarter of 2018 and the first quarter of 2019, we acquired approximately 3.07 million common shares through our market buyback program at an average price of $12.76 per share, or $39.1 million.
  • During the fourth quarter of 2018, we redeemed 496,928 operating partnership units for $7.0 million of cash.
  • We have $92.5 million outstanding on our $600.0 million unsecured revolving credit facility as of December 31, 2018.
  • We have refinanced our $250 million Term Loan C, reducing our effective interest rate by 55 basis points.
  • We have $22.8 million of cash and cash equivalents on-hand as of December 31, 2018.

Results for the Three and Twelve-Month Periods Ended December 31, 2018

Net income allocated to common shares totaled $121.8 million, or $0.68 per diluted share, in the fourth quarter of 2018 compared to net income of $73.1 million or $0.41 per diluted share in the fourth quarter of 2017.  Our fourth quarter 2018 results include net gains on the sale of real estate totaling $107.9 million, or $0.60 per diluted share and a gain on promoted interest totaling $28.3 million, or $0.16 per diluted share.  Our fourth quarter 2017 results include net gains on the sale of real estate totaling $75.4 million, or $0.43 per diluted share.

FFO available to common shares and units in the fourth quarter of 2018 totaled $64.3 million or $0.36 per diluted share versus $53.7 million or $0.30 per diluted share in the fourth quarter of 2017.  Our fourth quarter 2017 results include one-time charges related to liability management totaling $3.9 million for early extinguishment of 2018 bonds, incremental interest totaling $0.8 million related to the make-whole provisions of our 2018 bonds, and $1.3 million charge for the early extinguishment of debt related to the sale of properties in our joint venture located in Austin, Texas.  Our fourth quarter 2018 FFO payout ratio ($0.18 common share distribution / $0.36 FFO per diluted share) was 50.0%.

Net income allocated to common shares totaled $136.0 million or $0.76 per diluted share for twelve months of 2018 compared to net income of $115.3 million or $0.65 per diluted share in the twelve months of 2017.  Our 2018 results include net gains on the sale of real estate totaling $145.2 million, or $0.81 per diluted share and a gain on promoted interest totaling $28.3 million, or $0.16 per share and provisions for impairment on real estate totaling ($71.7) million, or ($0.40) per diluted share.  Our 2017 results include net gains on the sale of real estate totaling $112.2 million, or $0.63 per diluted share.

Our FFO available to common shares and units for the twelve months ended 2018 totaled $247.7 million, or $1.37 per diluted share, compared to our FFO available to common shares and units for the twelve months of 2017, which totaled $229.2 million, or $1.29 per diluted share.  Our 2017 results include one-time charges related to liability management totaling $3.9 million for early extinguishment of 2018 bonds, incremental interest totaling $0.8 million related to the make-whole provisions of our 2018 bonds, and $1.3 million charge for the early extinguishment of debt related to the sale of properties in our joint venture located in Austin, Texas.  Our 2018 FFO payout ratio ($0.72 common share distribution / $1.37 FFO per diluted share) was 52.6%.

Operating and Leasing Activity

In the fourth quarter of 2018, our Net Operating Income (NOI) excluding termination revenues, write-off of prior straight-line rent receivable and other income items increased 2.3% on a GAAP basis and increased 8.7% on a cash basis for our 76 same store properties, which were 93.2% and 93.3% occupied on December 31, 2018 and 2017, respectively.

We leased approximately 613,000 square feet and commenced occupancy on 638,000 square feet during the fourth quarter of 2018.  The fourth quarter occupancy activity includes 409,000 square feet of renewals, 142,000 square feet of new leases and 87,000 square feet of tenant expansions.  We have an additional 353,000 square feet of executed new leasing scheduled to commence subsequent to December 31, 2018.

We achieved an 83% tenant retention ratio in our core portfolio with net absorption of 38,000 square feet during the fourth quarter of 2018.  Fourth quarter rental rate growth increased 10.8% as our renewal rental rates increased 6.4% and our new lease/expansion rental rates increased 29.5%, all on a GAAP basis.

At December 31, 2018, our core portfolio of 93 properties comprising 16.3 million square feet was 93.3% occupied and we are now 95.5% leased (reflecting new leases commencing after December 31, 2018).

5.6% Dividend Increase

On December 6, 2018, our Board of Trustees declared a quarterly cash dividend of $0.19 per common share and OP Unit payable on January 22, 2019 to holders of record on January 8, 2019.  The quarterly dividend is equivalent to an annual rate of $0.76 per common share representing a 5.6% increase from the previous annual dividend rate of $0.72 per common share.

2019 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, our 2019 net income guidance of $0.36 - $0.46 per diluted share has been adjusted to $0.29 - $0.39 per diluted share and 2019 FFO guidance of $1.37 - $1.47 per diluted share remains unchanged.  This guidance is provided for informational purposes and is subject to change.  The following is a reconciliation of the calculation of 2019 FFO and earnings per diluted share:

Guidance for 2019  Range
Earnings per diluted share allocated to common shareholders $0.29   to   $0.39
Plus: real estate depreciation, amortization 1.08       1.08
FFO per diluted share $1.37   to   $1.47
           

Our 2019 FFO key assumptions to include:

  • Core Occupancy improving to a range of 94-95% by year-end 2019 and 95-96% leased;
  • 8-10% GAAP increase in overall lease rates;
  • 2-4% cash increase in overall lease rates;
  • 0-2% increase in 2019 same store GAAP NOI;
  • 1-3% increase in 2019 same store cash NOI;
  • Speculative Revenue Target:  $31.5 million, 77% achieved;
  • Change in Lease Accounting Treatment:  $7.9 million decrease to earnings, or $0.04 per diluted share;
  • $0.19 per share quarterly dividend;
  • Acquisition Activity:  none
  • Sales Activity:  none
  • One development start; 405 Colorado
  • Annual earnings and FFO per diluted share based on 178.4 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, Washington, D.C., 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 181 properties and 24.8 million square feet as of December 31, 2018, 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

BDN management will discuss 2018 financial results and earnings guidance for fiscal 2019 on Thursday, January 31, 2019 at 9:00 a.m. EST.  The conference call can be accessed by dialing 1-833-818-6810 and providing conference ID: 2863846.  Beginning two hours after the conference call, a taped replay of the call can be accessed through Friday, February 15, 2019, by calling 1-855-859-2056 and entering access code 2863846.  The conference call can also be accessed via a webcast on our website at www.brandywinerealty.com.

Looking Ahead – First Quarter 2019 Conference Call

We anticipate we will release our first quarter 2019 earnings on Wednesday, April 24, 2019, after the market close and will host our first quarter 2019 conference call on Thursday, April 25, 2019 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

Estimates of future earnings per share, FFO per share, common share dividend distributions and certain other statements in this release constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our and our affiliates’ actual results, performance, achievements or transactions to be materially different from any future results, performance, achievements or transactions expressed or implied by such forward-looking statements.  Such risks, uncertainties and other factors relate to, among others: our ability to lease vacant space and to renew or relet space under expiring leases at expected levels; competition with other real estate companies for tenants; the potential loss or bankruptcy of major tenants; interest rate levels; the availability of debt, equity or other financing; risks of acquisitions, dispositions and developments, including the cost of construction delays and cost overruns; unanticipated operating and capital costs; our ability to obtain adequate insurance, including coverage for terrorist acts; dependence upon certain geographic markets; and general and local economic and real estate conditions, including the extent and duration of adverse changes that affect the industries in which our tenants operate.  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 the Company's 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.  The Company's practice regarding payment 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, 2017.  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.

Net Operating Income (NOI)

NOI 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.  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.  NOI is used 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.

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
(in thousands)

    December 31,     December 31,  
    2018     2017  
ASSETS   (unaudited)          
Real estate investments:                
Operating properties   $ 3,953,319     $ 3,832,348  
Accumulated depreciation     (865,462 )     (895,091 )
Operating real estate investments, net     3,087,857       2,937,257  
Construction-in-progress     150,263       121,188  
Land held for development     86,401       98,242  
Prepaid leasehold interests in land held for development, net     39,999       -  
Total real estate investments, net     3,364,520       3,156,687  
Assets held for sale, net     11,599       392  
Cash and cash equivalents     22,842       202,179  
Accounts receivable, net of allowance of $1,653 and $3,467 as of December 31, 2018 and December 31, 2017, respectively     16,394       17,938  
Accrued rent receivable, net of allowance of $11,266 and $13,645 as of December 31, 2018 and December 31, 2017, respectively     165,243       169,760  
Investment in real estate ventures, at equity     169,100       194,621  
Deferred costs, net     91,075       96,695  
Intangible assets, net     131,348       64,972  
Other assets     126,400       92,204  
Total assets   $ 4,098,521     $ 3,995,448  
LIABILITIES AND BENEFICIARIES' EQUITY                
Mortgage notes payable, net   $ 320,869     $ 317,216  
Unsecured credit facility     92,500       -  
Unsecured term loan, net     248,042       248,429  
Unsecured senior notes, net     1,366,635       1,365,183  
Accounts payable and accrued expenses     125,696       107,074  
Distributions payable     33,632       32,456  
Deferred income, gains and rent     28,293       42,593  
Acquired lease intangibles, net     31,783       20,274  
Other liabilities     18,498       15,623  
Total liabilities   $ 2,265,948     $ 2,148,848  
                 
Brandywine Realty Trust's Equity:                
Common Shares of Brandywine Realty Trust's beneficial interest, $0.01 par value; shares authorized 400,000,000; 176,873,324 and 178,285,236 issued and outstanding as of December 31, 2018 and December 31, 2017, respectively     1,770       1,784  
Additional paid-in-capital     3,200,850       3,218,564  
Deferred compensation payable in common shares     14,021       12,445  
Common shares in grantor trust, 977,120 and 894,736 issued and outstanding as of December 31, 2018 and December 31, 2017, respectively     (14,021 )     (12,445 )
Cumulative earnings     796,513       660,174  
Accumulated other comprehensive income     5,029       2,399  
Cumulative distributions     (2,183,909 )     (2,053,741 )
Total Brandywine Realty Trust's equity     1,820,253       1,829,180  
Noncontrolling interests     12,320       17,420  
Total beneficiaries' equity     1,832,573       1,846,600  
Total liabilities and beneficiaries' equity   $ 4,098,521     $ 3,995,448  
                 

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

  Three Months Ended December 31,     Twelve Months Ended December 31,  
  2018     2017     2018     2017  
Revenue                              
Rents $ 109,059     $ 104,887     $ 430,656     $ 412,333  
Tenant reimbursements   23,531       18,808       82,625       72,620  
Termination fees   133       357       1,763       2,370  
Third party management fees, labor reimbursement and leasing   5,026       7,862       22,557       28,345  
Other   1,454       1,430       6,744       4,825  
Total revenue   139,203       133,344       544,345       520,493  
Operating expenses:                              
Property operating expenses   39,720       39,888       154,772       150,835  
Real estate taxes   14,069       11,142       51,341       45,204  
Third party management expenses   2,305       2,569       11,910       9,960  
Depreciation and amortization   43,351       46,773       174,259       179,357  
General and administrative expenses   5,593       6,741       27,802       28,538  
Provision for impairment   14,842       -       71,707       3,057  
Total operating expenses   119,880       107,113       491,791       416,951  
Operating income   19,323       26,231       52,554       103,542  
Other income (expense):                              
Interest income   2,139       478       4,703       1,113  
Interest expense   (20,108 )     (20,413 )     (78,199 )     (81,886 )
Interest expense - amortization of deferred financing costs   (626 )     (628 )     (2,498 )     (2,435 )
Equity in loss of Real Estate Ventures   (14,049 )     (2,919 )     (15,231 )     (8,306 )
Net gain on disposition of real estate   2,967       23,246       2,932       31,657  
Net gain on sale of undepreciated real estate   181       -       3,040       953  
Net gain on real estate venture transactions   104,970       52,186       142,233       80,526  
Gain on promoted interest in unconsolidated real estate venture   28,283       -       28,283       -  
Loss on early extinguishment of debt   (105 )     (3,933 )     (105 )     (3,933 )
Net income before income taxes   122,975       74,248       137,712       121,231  
Income tax (provision) benefit   (265 )     (404 )     (423 )     628  
Net income   122,710       73,844       137,289       121,859  
Net income attributable to noncontrolling interests   (798 )     (625 )     (965 )     (1,009 )
Net income attributable to Brandywine Realty Trust   121,912       73,219       136,324       120,850  
Distribution to preferred shareholders   -       -       -       (2,032 )
Preferred share redemption charge   -       -       -       (3,181 )
Nonforfeitable dividends allocated to unvested restricted shareholders   (89 )     (82 )     (369 )     (327 )
Net income attributable to Common Shareholders of Brandywine Realty Trust $ 121,823     $ 73,137     $ 135,955     $ 115,310  
                               
PER SHARE DATA                              
Basic income per Common Share $ 0.68     $ 0.42     $ 0.76     $ 0.66  
Basic weighted average shares outstanding   178,530,890       175,985,156       178,519,748       175,484,350  
                               
Diluted income per Common Share $ 0.68     $ 0.41     $ 0.76     $ 0.65  
Diluted weighted average shares outstanding   179,300,321       177,426,365       179,641,492       176,808,166  
                               

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

  Three Months Ended December 31,     Twelve Months Ended December 31,  
  2018     2017     2018     2017  
Reconciliation of Net Income to Funds from Operations:                              
Net income attributable to common shareholders $ 121,823     $ 73,137     $ 135,955     $ 115,310  
Add (deduct):                              
Net income attributable to noncontrolling interests - LP units   789       621       910       980  
Nonforfeitable dividends allocated to unvested restricted shareholders   89       82       369       327  
Net gain on real estate venture transactions   (104,970 )     (52,186 )     (142,233 )     (80,526 )
Net gain on disposition of real estate   (2,967 )     (23,246 )     (2,932 )     (31,657 )
Gain on promoted interest in unconsolidated real estate venture   (28,283 )     -       (28,283 )     -  
Provision for impairment   14,842       -       71,707       2,730  
Other than temporary impairment of equity method investment   4,076       -       4,076       4,844  
Company's share of impairment of an unconsolidated real estate venture   10,416       -       10,416       -  
Depreciation and amortization:                              
Real property   32,663       38,208       137,461       142,548  
Leasing costs including acquired intangibles   10,283       8,207       35,215       35,920  
Company’s share of unconsolidated real estate ventures   5,717       9,117       25,947       39,622  
Partners’ share of consolidated real estate ventures   (52 )     (54 )     (218 )     (231 )
Funds from operations $ 64,426     $ 53,886     $ 248,390     $ 229,867  
Funds from operations allocable to unvested restricted shareholders   (169 )     (137 )     (697 )     (648 )
Funds from operations available to common share and unit holders (FFO) $ 64,257     $ 53,749     $ 247,693     $ 229,219  
                               
FFO per share - fully diluted $ 0.36     $ 0.30     $ 1.37     $ 1.29  
                               
Weighted-average shares/units outstanding - fully diluted   180,620,723       178,906,164       181,081,114       178,287,965  
                               
Distributions paid per common share $ 0.18     $ 0.16     $ 0.72     $ 0.64  
                               
FFO payout ratio (distributions paid per common share/FFO per diluted share)   50.0 %     53.3 %     52.6 %     49.6 %
                               

BRANDYWINE REALTY TRUST
SAME STORE OPERATIONS – 4th QUARTER
(unaudited and in thousands)

Of the 97 properties owned by the Company as of December 31, 2018, a total of 76 properties ("Same Store Properties") containing an aggregate of 14.2 million net rentable square feet were owned for the entire three-month periods ended December 31, 2018 and 2017. As of December 31, 2018, 17 properties were recently completed/acquired, one property was in development and three properties were in redevelopment. Average occupancy for the Same Store Properties was 93.1% during 2018 and 92.8% during 2017. The following table sets forth revenue and expense information for the Same Store Properties:

    Three Months Ended December 31,  
    2018     2017  
Revenue                
Rents   $ 92,880     $ 91,847  
Tenant reimbursements     20,581       17,876  
Termination fees     133       357  
Other     435       389  
Total revenue     114,029       110,469  
                 
Operating expenses                
Property operating expenses     33,749       32,937  
Real estate taxes     11,297       9,205  
Net operating income   $ 68,983     $ 68,327  
                 
Net operating income - percentage change over prior year     1.0 %        
                 
Net operating income, excluding net termination fees & other   $ 69,142     $ 67,581  
                 
Net operating income, excluding net termination fees & other - percentage change over prior year     2.3 %        
                 
Net operating income   $ 68,983     $ 68,327  
Straight line rents & other     (1,223 )     (5,618 )
Above/below market rent amortization     (369 )     (456 )
Amortization of tenant inducements     240       338  
Non-cash ground rent     22       22  
Cash - Net operating income   $ 67,653     $ 62,613  
                 
Cash - Net operating income - percentage change over prior year     8.0 %        
                 
Cash - Net operating income, excluding net termination fees & other   $ 67,023     $ 61,664  
                 
Cash - Net operating income, excluding net termination fees & other - percentage change over prior year     8.7 %        
                 
    Three Months Ended December 31,  
    2018     2017  
Net income:   $ 122,710     $ 73,844  
Add/(deduct):                
Interest income     (2,139 )     (478 )
Interest expense     20,108       20,413  
Interest expense - amortization of deferred financing costs     626       628  
Equity in loss of Real Estate Ventures     14,049       2,919  
Net gain on real estate venture transactions     (104,970 )     (52,186 )
Net gain on disposition of real estate     (2,967 )     (23,246 )
Net gain on sale of undepreciated real estate     (181 )     -  
Gain on promoted interest in unconsolidated real estate venture     (28,283 )     -  
Loss on early extinguishment of debt     105       3,933  
Depreciation and amortization     43,351       46,773  
General & administrative expenses     5,593       6,741  
Income tax provision     265       404  
Provision for impairment     14,842       -  
Consolidated net operating income     83,109       79,745  
Less: Net operating income of non-same store properties and elimination of non-property specific operations     (14,126 )     (11,418 )
Same store net operating income   $ 68,983     $ 68,327  
                 

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

Of the 97 properties owned by the Company as of December 31, 2018, a total of 73 properties ("Same Store Properties") containing an aggregate of 13.0 million net rentable square feet were owned for the entire twelve-month periods ended December 31, 2018 and 2017. As of December 31, 2018, 20 properties were recently completed/acquired, one property was in development and three properties were in redevelopment. Average occupancy for the Same Store Properties was 93.0% during 2018 and 94.1% during 2017. The following table sets forth revenue and expense information for the Same Store Properties:

    Twelve Months Ended December 31,  
    2018     2017  
Revenue                
Rents   $ 330,036     $ 331,647  
Tenant reimbursements     68,073       64,389  
Termination fees     1,763       1,893  
Other     1,617       1,803  
Total revenue     401,489       399,732  
                 
Operating expenses                
Property operating expenses     118,776       116,704  
Real estate taxes     40,903       35,759  
Net operating income   $ 241,810     $ 247,269  
                 
Net operating income - percentage change over prior year     -2.2 %        
                 
Net operating income, excluding net termination fees & other   $ 239,157     $ 243,573  
                 
Net operating income, excluding net termination fees & other - percentage change over prior year     -1.8 %        
                 
Net operating income   $ 241,810     $ 247,269  
Straight line rents & other     (462 )     (5,933 )
Above/below market rent amortization     (1,628 )     (2,694 )
Amortization of tenant inducements     732       966  
Non-cash ground rent     89       89  
Cash - Net operating income   $ 240,541     $ 239,697  
                 
Cash - Net operating income - percentage change over prior year     0.4 %        
                 
Cash - Net operating income, excluding net termination fees & other   $ 236,436     $ 234,868  
                 
Cash - Net operating income, excluding net termination fees & other - percentage change over prior year     0.7 %        
                 
    Twelve Months Ended December 31,  
    2018     2017  
Net income:   $ 137,289     $ 121,859  
Add/(deduct):                
Interest income     (4,703 )     (1,113 )
Interest expense     78,199       81,886  
Interest expense - amortization of deferred financing costs     2,498       2,435  
Equity in loss of real estate ventures     15,231       8,306  
Net gain on real estate venture transactions     (142,233 )     (80,526 )
Net gain on disposition of real estate     (2,932 )     (31,657 )
Net gain on sale of undepreciated assets     (3,040 )     (953 )
Gain on promoted interest in unconsolidated real estate venture     (28,283 )     -  
Loss on early extinguishment of debt     105       3,933  
Depreciation and amortization     174,259       179,357  
General & administrative expenses     27,802       28,538  
Income tax provision (benefit)     423       (628 )
Provision for impairment     71,707       3,057  
Consolidated net operating income     326,322       314,494  
Less: Net operating income of non-same store properties and elimination of non-property specific operations     (84,512 )     (67,225 )
Same store net operating income   $ 241,810     $ 247,269  
                 


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

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