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Section 1: 8-K (8-K)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 29, 2020
BRANDYWINE REALTY TRUST
BRANDYWINE OPERATING PARTNERSHIP, L.P.
(Exact name of registrant as specified in charter)
Maryland
 
 
 
 
 
 
 
 
(Brandywine Realty Trust)
 
 
 
001-9106
 
 
 
23-2413352
Delaware
 
 
 
 
 
 
 
 
(Brandywine Operating Partnership, L.P.)
 
 
 
000-24407
 
 
 
23-2862640
(State or Other Jurisdiction of Incorporation
or Organization)
 
 
 
(Commission file number)
 
 
 
(I.R.S. Employer Identification Number)
2929 Walnut Street
Suite 1700
Philadelphia, PA 19104
(Address of principal executive offices) (Zip Code)
(610) 325-5600
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common Shares of Beneficial Interest
 
BDN
 
NYSE
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Brandywine Realty Trust:
Emerging growth company
Brandywine Operating Partnership, L.P.:
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Brandywine Realty Trust:
Brandywine Operating Partnership, L.P.:



Item 2.02 Results of Operations and Financial Condition
The information in this Item 2.02 - “Results of Operations and Financial Condition,” including the press release attached as an exhibit to this Current Report, is being furnished and shall not be deemed to be “filed” for any purpose, including for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, and shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act regardless of any general incorporation language in such filing.
On January 29, 2020, we issued a press release announcing our financial results for the year ended December 31, 2019. That press release is attached hereto as Exhibit 99.1 and is incorporated by reference herein.
The press release includes “non-GAAP financial measures” within the meaning of the Securities and Exchange Commission's Regulation G.  With respect to such non-GAAP financial measures, we have disclosed in the press release the most directly comparable financial measure calculated and presented in accordance with generally accepted accounting principles (“GAAP”) and have provided a reconciliation of such non-GAAP financial measures to the most directly comparable GAAP financial measure.
Item 9.01    Financial Statements and Exhibits
Exhibit
 
Description
99.1
 



Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
BRANDYWINE REALTY TRUST
 
 
 
 
 
 
By:
/s/ Thomas E. Wirth
 
 
 
Thomas E. Wirth
 
 
 
Executive Vice President and
 
 
 
Chief Financial Officer
 
 
 
 
 
 
 
 
 
BRANDYWINE OPERATING PARTNERSHIP, L.P.
 
 
 
 
 
 
BY:
BRANDYWINE REALTY TRUST, ITS GENERAL PARTNER
 
 
 
 
 
BY:
/s/ Thomas E. Wirth
 
 
 
Thomas E. Wirth
 
 
 
Executive Vice President and
 
 
 
Chief Financial Officer
 
Date: January 30, 2020

(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
Exhibit 99.1
402539667_brt003logorgb.jpg
 
Company / Investor Contact:
Tom Wirth
EVP & CFO
610-832-7434 




Brandywine Realty Trust Announces Fourth Quarter, Full Year 2019 Results
and Maintains 2020 Guidance


Philadelphia, PA, January 29, 2020 - Brandywine Realty Trust (NYSE:BDN) today reported its financial and operating results for the three and twelve-month periods ended December 31, 2019.
Management Comments
“We completed 2019 accomplishing many of our business key plan objectives,” stated Jerry Sweeney, President and Chief Executive Officer of Brandywine Realty Trust. “Our markets continue to improve which allowed us to achieve our 2019 speculative revenue target and generate strong rental rate growth throughout the year. Turning to 2020, we have already achieved 73% of our speculative revenue target and our 2020 business plan anticipates continued strong rental rate growth throughout our portfolio. In addition to strong market fundamentals, we continue to look for development opportunities and have two planned starts for 2020 that will accelerate our growth over the next several years. Based on the fourth quarter activity and our outlook for 2020, we are maintaining our current FFO guidance range of $1.41 to $1.51.”

Fourth Quarter 2019 Highlights
Financial Results
Net income allocated to common shareholders; $16.7 million, or $0.09 per diluted share.
Funds from Operations (FFO); $67.0 million, or $0.38 per diluted share.

Fourth Quarter Portfolio Results
Core Portfolio: 93.0% occupied and 95.5% leased.
New and renewal leases signed: 567,000 square feet.
Tenant Retention Ratio: 41% in fourth quarter and 66% for 2019.
Rental Rate Mark-to-Market: 10.0% on a GAAP basis and 3.1% on a cash basis.

Transaction Activity
Dispositions
On October 29, 2019, the PJP Ventures, three real estate ventures, in which we own a 25%-30% interest, each sold their sole operating office properties totaling 204,000 square feet in Charlottesville, VA at a gross sales price of $51.0 million. We received net cash proceeds of $9.1 million after closing costs and related debt payoffs. Our share of the gain on the real estate venture transaction and loss on the early extinguishment of debt were $8.0 million and $0.3 million, respectively.

Finance Activity
As previously announced, on October 3, 2019, we priced a $200.0 million underwritten public offering consisting of $100.0 million of our 4.100% guaranteed notes due 2024 (the “2024 Notes”) and $100.0 million of our 4.550% guaranteed notes due 2029 (the “2029 Notes” and, together with the 2024 Notes, the “Notes”).
The net proceeds of the offering, after deducting underwriting discounts and estimated transaction expenses


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related to this offering and excluding accrued interest paid by the purchasers of the 2024 Notes and the 2029 Notes, were approximately $214.3 million. We used the net proceeds of the offering to reduce outstanding borrowings under our unsecured revolving credit facility and general corporate purposes.
We have no outstanding balance on our $600.0 million unsecured revolving credit facility as of December 31, 2019.

We have $90.5 million of cash and cash equivalents as of December 31, 2019.


Results for the Three and Twelve-Month Periods Ended December 31, 2019
Net income allocated to common shares totaled $16.7 million, or $0.09 per diluted share, in the fourth quarter of 2019 compared to net income of $120.8 million or $0.67 per diluted share in the fourth quarter of 2018. Our fourth quarter 2018 results include net gains on the sale of real estate totaling $107.9 million, or $0.60 per diluted share, a gain on promoted interest totaling $28.3 million, or $0.16 per diluted share and provisions for impairment on real estate totaling ($14.8) million, or ($0.08) per diluted share.
FFO available to common shares and units in the fourth quarter of 2019 totaled $67.0 million or $0.38 per diluted share versus $64.2 million or $0.36 per diluted share in the fourth quarter of 2018. Our fourth quarter 2019 FFO payout ratio ($0.19 common share distribution / $0.38 FFO per diluted share) was 50.0%.
Net income allocated to common shares totaled $33.9 million or $0.19 per diluted share for twelve months of 2019 compared to net income of $134.1 million or $0.75 per diluted share in the twelve months of 2018. 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 FFO available to common shares and units for the twelve months ended 2019 totaled $253.3 million, or $1.43 per diluted share, compared to our FFO available to common shares and units for the twelve months of 2018, which totaled $247.6 million, or $1.37 per diluted share. Our 2019 FFO payout ratio ($0.76 common share distribution / $1.43 FFO per diluted share) was 53.1%.
Operating and Leasing Activity
In the fourth quarter of 2019, our Net Operating Income (NOI) excluding termination revenues, write-off of prior straight-line rent receivables and other income items increased 1.9% on a GAAP basis and increased 0.6% on a cash basis for our 74 same store properties, which were 93.0% and 93.3% occupied on December 31, 2019 and 2018, respectively.
We leased approximately 567,000 square feet and commenced occupancy on 315,000 square feet during the fourth quarter of 2019. The fourth quarter occupancy activity includes 104,000 square feet of renewals, 159,000 square feet of new leases and 52,000 square feet of tenant expansions. We have an additional 410,000 square feet of executed new leasing scheduled to commence subsequent to December 31, 2019.
We experienced a 41% tenant retention ratio in our core portfolio with net negative absorption of (71,000) square feet during the fourth quarter of 2019. Fourth quarter rental rate growth increased 10.0% as our renewal rental rates increased 10.2% and our new lease/expansion rental rates increased 9.6%, all on a GAAP basis.
At December 31, 2019, our core portfolio of 90 properties comprising 16.1 million square feet was 93.0% occupied and we are now 95.5% leased (reflecting new leases commencing after December 31, 2019).
Distributions
On December 11, 2019, our Board of Trustees declared a quarterly dividend distribution of $0.19 per common share that was paid on January 22, 2020 to shareholders of record as of January 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


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and Exchange Commission filings, we are revising our 2020 net income guidance from $0.24 to $0.34 per diluted share to $0.26 to $0.36 per diluted share and our 2020 FFO guidance of $1.41 - $1.51 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 2020 FFO and earnings per diluted share:
Guidance for 2020
 
 
 
Range
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per diluted share allocated to common shareholders
$
0.26

 
to
$
0.36

 
 
Plus: real estate depreciation, amortization
 
1.15

 
 
 
1.15

 
 
 
 
 
 
 
 
 
 
 
FFO per diluted share
$
1.41

 
to
$
1.51

 
Our 2020 FFO key assumptions include:
Core Occupancy improving to a range of 94-95% by year-end 2020 and 95-96% leased;
17-19% GAAP increase in overall lease rates;
8-10% cash increase in overall lease rates;
2-4% increase in 2020 same store GAAP NOI;
0-2% increase in 2020 same store cash NOI
Excluding 1676 International Drive, 2.5% to 4.5% increase in cash NOI;
Speculative Revenue Target: $31.0 million, 73% achieved;
Acquisition Activity: $20.0 million (250 King of Prussia Road, Radnor, PA)
Disposition Activity: none;
Two development starts; and
Annual earnings and FFO per diluted share based on 179.0 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 173 properties and 24.3 million square feet as of December 31, 2019, which excludes assets held for sale. Our purpose is to shape, connect and inspire the world around us through our expertise, the relationships we foster, the communities in which we live and work, and the history we build together. For more information, please visit www.brandywinerealty.com.
Conference Call and Audio Webcast
We will release our fourth quarter earnings after the market close on Wednesday, January 29, 2020, and will hold our fourth quarter conference call on Thursday, January 30, 2020 at 9:00 a.m. Eastern Time. The conference call can be accessed by dialing 1-833-818-6810 and providing conference ID: 9186939. Beginning two hours after the conference call, a taped replay of the call can be accessed through Friday, February 14, 2020, by calling 1-855-859-2056 and entering access code 9186939. The conference call can also be accessed via a webcast on our website at www.brandywinerealty.com.
Looking Ahead - First Quarter 2020 Conference Call
We anticipate we will release our first quarter 2020 earnings on Wednesday, April 22, 2020, after the market close and will host our first quarter 2020 conference call on Thursday, April 23, 2020 at 9:00 a.m. Eastern Time. We expect to


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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, 2018. 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)


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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.
























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BRANDYWINE REALTY TRUST
CONSOLIDATED BALANCE SHEETS
(unaudited and in thousands)
 
 
December 31, 2019
 
December 31, 2018
ASSETS
 
 
 
 
Real estate investments:
 
 
 
 
Operating properties
 
$
4,006,459

 
$
3,958,712

Accumulated depreciation
 
(973,318
)
 
(885,407
)
Right of use asset - operating leases, net
 
21,656

 

Operating real estate investments, net
 
3,054,797

 
3,073,305

Construction-in-progress
 
177,243

 
150,263

Land held for development
 
96,124

 
86,401

Prepaid leasehold interests in land held for development, net
 
39,592

 
39,999

Total real estate investments, net
 
3,367,756

 
3,349,968

Assets held for sale, net
 
7,349

 
11,599

Cash and cash equivalents
 
90,499

 
22,842

Accounts receivable, net of allowance of $284 and $1,653 as of December 31, 2019 and December 31, 2018, respectively
 
16,363

 
16,394

Accrued rent receivable, net of allowance of $7,691 and $11,266 as of December 31, 2019 and December 31, 2018, respectively
 
174,144

 
165,243

Investment in Real Estate Ventures
 
120,294

 
169,100

Deferred costs, net
 
95,560

 
91,075

Intangible assets, net
 
84,851

 
131,348

Other assets
 
115,678

 
119,407

Total assets
 
$
4,072,494

 
$
4,076,976

LIABILITIES AND BENEFICIARIES' EQUITY
 
 
 
 
Mortgage notes payable, net
 
$
313,812

 
$
320,869

Unsecured credit facility
 

 
92,500

Unsecured term loan, net
 
248,561

 
248,042

Unsecured senior notes, net
 
1,582,045

 
1,366,635

Accounts payable and accrued expenses
 
109,872

 
125,696

Distributions payable
 
33,815

 
33,632

Deferred income, gains and rent
 
35,284

 
28,293

Acquired lease intangibles, net
 
22,263

 
31,783

Lease liability - operating leases
 
22,554

 

Other liabilities
 
15,985

 
18,498

Total liabilities
 
$
2,384,191

 
$
2,265,948

Brandywine Realty Trust's Equity:
 
 
 
 
Common Shares of Brandywine Realty Trust's beneficial interest, $0.01 par value; shares authorized 400,000,000; 176,480,095 and 176,873,324 issued and outstanding as of December 31, 2019 and December 31, 2018, respectively
 
1,766

 
1,770

Additional paid-in-capital
 
3,192,158

 
3,200,312

Deferred compensation payable in common shares
 
16,216

 
14,021

Common shares in grantor trust, 1,105,542 and 977,120 issued and outstanding as of December 31, 2019 and December 31, 2018, respectively
 
(16,216
)
 
(14,021
)
Cumulative earnings
 
804,556

 
775,625

Accumulated other comprehensive income
 
(2,370
)
 
5,029

Cumulative distributions
 
(2,318,233
)
 
(2,183,909
)
Total Brandywine Realty Trust's equity
 
1,677,877

 
1,798,827

Noncontrolling interests
 
10,426

 
12,201

Total beneficiaries' equity
 
1,688,303

 
1,811,028

Total liabilities and beneficiaries' equity
 
$
4,072,494

 
$
4,076,976





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BRANDYWINE REALTY TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except share and per share data)
 
 
Three Months Ended December 31,
 
Year Ended December 31,
 
2019
 
2018
 
2019
 
2018
Revenue
 
 
 
 
 
 
 
Rents
$
139,552

 
$
132,723

 
$
554,665

 
$
515,044

Third party management fees, labor reimbursement and leasing
5,585

 
5,026

 
19,626

 
22,557

Other
1,902

 
1,454

 
6,126

 
6,744

Total revenue
147,039

 
139,203

 
580,417

 
544,345

Operating expenses
 
 
 
 
 
 
 
Property operating expenses
37,819

 
39,739

 
154,361

 
154,848

Real estate taxes
15,118

 
14,069

 
62,237

 
51,341

Third party management expenses
2,213

 
2,305

 
9,248

 
11,910

Depreciation and amortization
51,267

 
44,369

 
210,005

 
176,000

General and administrative expenses
6,939

 
5,593

 
32,156

 
27,802

Provision for impairment

 
14,842

 

 
71,707

Total operating expenses
113,356

 
120,917

 
468,007

 
493,608

Gain on sale of real estate
 
 
 
 
 
 
 
Net gain on disposition of real estate

 
2,967

 
356

 
2,932

Net gain on sale of undepreciated real estate
519

 
181

 
2,020

 
3,040

Total gain on sale of real estate
519

 
3,148

 
2,376

 
5,972

Operating income
34,202

 
21,434

 
114,786

 
56,709

Other income (expense):
 
 
 
 
 
 
 
Interest income
682

 
2,139

 
2,318

 
4,703

Interest expense
(20,239
)
 
(20,108
)
 
(81,512
)
 
(78,199
)
Interest expense - amortization of deferred financing costs
(742
)
 
(626
)
 
(2,768
)
 
(2,498
)
Equity in loss of Real Estate Ventures
(5,108
)
 
(14,049
)
 
(9,922
)
 
(15,231
)
Net gain on real estate venture transactions
8,045

 
104,970

 
11,639

 
142,233

Gain on promoted interest in unconsolidated real estate venture

 
28,283

 

 
28,283

Loss on early extinguishment of debt

 
(105
)
 

 
(105
)
Net income before income taxes
16,840

 
121,938

 
34,541

 
135,895

Income tax (provision) benefit
34

 
(265
)
 
(12
)
 
(423
)
Net income
16,874

 
121,673

 
34,529

 
135,472

Net income attributable to noncontrolling interests
(107
)
 
(792
)
 
(262
)
 
(954
)
Net income attributable to Brandywine Realty Trust
16,767

 
120,881

 
34,267

 
134,518

Nonforfeitable dividends allocated to unvested restricted shareholders
(91
)
 
(89
)
 
(396
)
 
(369
)
Net income attributable to Common Shareholders of Brandywine Realty Trust
$
16,676

 
$
120,792

 
$
33,871

 
$
134,149

PER SHARE DATA
 
 
 
 
 
 
 
Basic income per Common Share
$
0.09

 
$
0.68

 
$
0.19

 
$
0.75

Basic weighted average shares outstanding
176,330,079

 
178,530,890

 
176,132,941

 
178,519,748

Diluted income per Common Share
$
0.09

 
$
0.67

 
$
0.19

 
$
0.75

Diluted weighted average shares outstanding
176,836,658

 
179,300,321

 
176,686,813

 
179,641,492














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BRANDYWINE REALTY TRUST
FUNDS FROM OPERATIONS
(unaudited, in thousands, except share and per share data)
 
Three Months Ended December 31,
 
Year Ended December 31,
 
2019
 
2018
 
2019
 
2018
Reconciliation of Net Income to Funds from Operations:
 
 
 
 
 
 
 
Net income attributable to common shareholders
$
16,676

 
$
120,792

 
$
33,871

 
$
134,149

Add (deduct):
 
 
 
 
 
 
 
Net income attributable to noncontrolling interests - LP units
96

 
783

 
193

 
899

Nonforfeitable dividends allocated to unvested restricted shareholders
91

 
89

 
396

 
369

Net gain on real estate venture transactions
(8,045
)
 
(104,970
)
 
(10,363
)
 
(142,233
)
Net gain on disposition of real estate

 
(2,967
)
 
(356
)
 
(2,932
)
Gain on promoted interest in unconsolidated real estate venture

 
(28,283
)
 

 
(28,283
)
Provision for impairment

 
14,842

 

 
71,707

Other than temporary impairment of equity method investment

 
4,076

 

 
4,076

Company's share of impairment of an unconsolidated real estate venture
2,832

 
10,416

 
2,832

 
10,416

Depreciation and amortization:
 
 
 
 
 
 
 
Real property
36,767

 
33,681

 
149,600

 
139,202

Leasing costs including acquired intangibles
14,015

 
10,283

 
58,493

 
35,215

Company’s share of unconsolidated real estate ventures
4,842

 
5,717

 
19,657

 
25,947

Partners’ share of consolidated real estate ventures
(58
)
 
(52
)
 
(226
)
 
(218
)
Funds from operations
$
67,216

 
$
64,407

 
$
254,097

 
$
248,314

Funds from operations allocable to unvested restricted shareholders
(183
)
 
(169
)
 
(750
)
 
(697
)
Funds from operations available to common share and unit holders (FFO)
$
67,033

 
$
64,238

 
$
253,347

 
$
247,617

FFO per share - fully diluted
$
0.38

 
$
0.36

 
$
1.43

 
$
1.37

Weighted-average shares/units outstanding - fully diluted
177,818,284

 
180,620,723

 
177,668,804

 
181,081,114

Distributions paid per common share
$
0.19

 
$
0.18

 
$
0.76

 
$
0.72

FFO payout ratio (distributions paid per common share/FFO per diluted share)
50.0
%
 
50.0
%
 
53.1
%
 
52.6
%


































- 8 -




BRANDYWINE REALTY TRUST
SAME STORE OPERATIONS – 4th QUARTER
(unaudited and in thousands)
  
Of the 95 properties owned by the Company as of December 31, 2019, a total of 74 properties ("Same Store Properties") containing an aggregate of 14.0 million net rentable square feet were owned for the entire three months ended December 31, 2019 and 2018. As of December 31, 2019, 16 properties were recently completed/acquired, and five properties were in development/redevelopment. Average occupancy for the Same Store Properties was 92.5% and 93.2% during the three-month periods ended December 31, 2019 and 2018, respectively. The following table sets forth revenue and expense information for the Same Store Properties:
 
 
 
Three Months Ended December 31,
 
 
2019
 
2018
Revenue
 
 
 
 
Rents
 
$
113,014

 
$
112,561

Other
 
701

 
418

Total revenue
 
113,715

 
112,979

Operating expenses
 
 
 
 
Property operating expenses
 
32,267

 
33,567

Real estate taxes
 
11,301

 
11,195

Net operating income
 
$
70,147

 
$
68,217

Net operating income - percentage change over prior year
 
2.8
%
 
 
Net operating income, excluding net termination fees & other
 
$
68,940

 
$
67,666

Net operating income, excluding net termination fees & other - percentage change over prior year
 
1.9
%
 
 
Net operating income
 
$
70,147

 
$
68,217

Straight line rents & other
 
(1,879
)
 
(1,285
)
Above/below market rent amortization
 
(335
)
 
(366
)
Amortization of tenant inducements
 
225

 
226

Non-cash ground rent
 
211

 
41

Cash - Net operating income
 
$
68,369

 
$
66,833

Cash - Net operating income - percentage change over prior year
 
2.3
%
 
 
Cash - Net operating income, excluding net termination fees & other
 
$
66,619

 
$
66,220

Cash - Net operating income, excluding net termination fees & other - percentage change over prior year
 
0.6
%
 
 
 
 
Three Months Ended December 31,
 
 
2019
 
2018
Net income:
 
$
16,874

 
$
121,673

Add/(deduct):
 
 
 
 
Interest income
 
(682
)
 
(2,139
)
Interest expense
 
20,239

 
20,108

Interest expense - amortization of deferred financing costs
 
742

 
626

Equity in loss of Real Estate Ventures
 
5,108

 
14,049

Net gain on real estate venture transactions
 
(8,045
)
 
(104,970
)
Net gain on disposition of real estate
 

 
(2,967
)
Net gain on sale of undepreciated real estate
 
(519
)
 
(181
)
Gain on promoted interest in unconsolidated real estate venture
 

 
(28,283
)
Loss on early extinguishment of debt
 

 
105

Depreciation and amortization
 
51,267

 
44,369

General & administrative expenses
 
6,939

 
5,593

Income tax provision (benefit)
 
(34
)
 
265

Provision for impairment
 

 
14,842

Consolidated net operating income
 
91,889

 
83,090

Less: Net operating income of non-same store properties and elimination of non-property specific operations
 
(21,742
)
 
(14,873
)
Same store net operating income
 
$
70,147

 
$
68,217









- 9 -




BRANDYWINE REALTY TRUST
SAME STORE OPERATIONS – TWELVE MONTHS
(unaudited and in thousands)  
Of the 95 properties owned by the Company as of December 31, 2019, a total of 73 properties ("Same Store Properties") containing an aggregate of 13.9 million net rentable square feet were owned for the entire twelve months ended December 31, 2019 and 2018. As of December 31, 2019, 17 properties were recently completed/acquired, and five properties were in development/redevelopment. Average occupancy for the Same Store Properties was 92.5% during 2019 and 92.9% during 2018. The following table sets forth revenue and expense information for the Same Store Properties: 
 
 
Year Ended December 31,
 
 
2019
 
2018
Revenue
 
 
 
 
Rents
 
$
443,212

 
$
442,671

Other
 
1,824

 
1,648

Total revenue
 
445,036

 
444,319

Operating expenses
 
 
 
 
Property operating expenses
 
126,732

 
128,467

Real estate taxes
 
45,166

 
41,816

Net operating income
 
$
273,138

 
$
274,036

Net operating income - percentage change over prior year
 
(0.3
)%
 
 
Net operating income, excluding other items
 
$
269,357

 
$
270,625

Net operating income, excluding other items - percentage change over prior year
 
(0.5
)%
 
 
Net operating income
 
$
273,138

 
$
274,036

Straight line rents & other
 
(5,253
)
 
(10,050
)
Above/below market rent amortization
 
(1,406
)
 
(1,654
)
Amortization of tenant inducements
 
897

 
968

Non-cash ground rent
 
850

 
165

Cash - Net operating income
 
$
268,226

 
$
263,465

Cash - Net operating income - percentage change over prior year
 
1.8
 %
 
 
Cash - Net operating income, excluding other items
 
$
263,216

 
$
259,329

Cash - Net operating income, excluding other items - percentage change over prior year
 
1.5
 %
 
 
 
 
Year Ended December 31,
 
 
2019
 
2018
Net income:
 
$
34,529

 
$
135,472

Add/(deduct):
 
 
 
 
Interest income
 
(2,318
)
 
(4,703
)
Interest expense
 
81,512

 
78,199

Interest expense - amortization of deferred financing costs
 
2,768

 
2,498

Equity in loss of Real Estate Ventures
 
9,922

 
15,231

Net gain on real estate venture transactions
 
(11,639
)
 
(142,233
)
Net gain on disposition of real estate
 
(356
)
 
(2,932
)
Net gain on sale of undepreciated real estate
 
(2,020
)
 
(3,040
)
Gain on promoted interest in unconsolidated real estate venture
 

 
(28,283
)
Loss on early extinguishment of debt
 

 
105

Depreciation and amortization
 
210,005

 
176,000

General & administrative expenses
 
32,156

 
27,802

Income tax provision
 
12

 
423

Provision for impairment
 

 
71,707

Consolidated net operating income
 
354,571

 
326,246

Less: Net operating income of non-same store properties and elimination of non-property specific operations
 
(81,433
)
 
(52,210
)
Same store net operating income
 
$
273,138

 
$
274,036




- 10 -
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