Brandywine Realty Trust Announces $0.32 FFO per Diluted Share for the Second Quarter 2015, 2015 FFO Guidance Remains at $1.40 to $1.46 per Diluted Share, Share Repurchase Program and Increases Property Disposition Plan

RADNOR, Pa., July 22, 2015 /PRNewswire/ -- Brandywine Realty Trust BDN today reported its financial and operating results for the three and six-month periods ended June 30, 2015.

2nd Quarter Highlights

      Financial Results

• Funds from Operations (FFO); $57.4 million, or $0.32 per share.
• Net income available to common shareholders; $1.3 million, or $0.01 per share.

      Portfolio Results

• Core portfolio was 91.7% occupied and 94.4% leased.
• Signed 1,556,000 square feet of new and renewal leases.
• Achieved 78.2% tenant retention ratio.
• Rental rate market-to-market increased 6.7% / 1.5% on GAAP/Cash basis.
• Increased 2015 speculative revenue by $0.7 million, or 2.1%, and have completed 98% of revised target.

      Dispositions

• Sold seven office properties located in Delaware, Oakland, California and Richmond, Virginia for $119.2 million.  The seven properties totaled 765,000 square feet and were 71.0% occupied.

      Development / Investment Activity

• Delivering Encino Trace I, 160,000 square foot building located in Austin, Texas, 100% leased.
• Signed a new 228,000 square foot lease at our 1900 Market Street, Philadelphia, Pennsylvania redevelopment project.
• Increased our disposition target from $180.0 million to $300.0 million.  In addition, we have approximately $40 million of land under contract or letter of intent to sell.
• Acquired the remaining 50% ownership interest in Broadmoor Austin Associates and the underlying 66 acre fee interest for $92.6 million cash.  In addition, we assumed and repaid a secured mortgage totaling $51.2 million.
• Acquired land parcels located at the 2100 Market Street block in Philadelphia, Pennsylvania in July 2015 for $18.8 million.
• Entered into a joint venture arrangement with The JBG Companies to acquire a 70% interest in two vacant land parcels located in the NOMA sub-market of Washington, DC for $28.4 million.  Both Brandywine and The JBG Companies will have co-developer responsibilities.
• Acquired a land parcel in Capitol Riverfront submarket of Washington, DC in April 2015 for $20.0 million.  The site can accommodate a 271,000 square foot office building.  Subsequent to the acquisition, we contributed the property into a joint venture with Akridge serving as co-developer and having a 5% ownership interest.

      Finance / Capital Markets

• Extended our $600.0 million unsecured revolving credit facility through May 2019.
• Announces a Share Repurchase Program up to $100.0 million.
• No outstanding balance on our $600.0 million unsecured revolving credit facility.
• $124.0 million of cash and cash equivalents.

Management Comments
"During the second quarter, we continued to make excellent progress on our 2015 business plan," stated Gerard H. Sweeney, President and Chief Executive Officer of Brandywine Realty Trust.  "We continue to capitalize on improving market conditions and raised our speculative revenue target by 2.1% having already achieved 98% of our 2015 speculative revenue target.  We have also seen an acceleration in our portfolio disposition program and given the current strength of the investment market, have increased our sales goal to $300.0 million.  Given our strong operating results coupled with our accelerated dispositions, we are maintaining our 2015 FFO guidance range to $1.40 to $1.46 per diluted share."

Results for the Three and Six Month Period Ended June 30, 2015
FFO available to common shares and units in the second quarter of 2015 totaled $57.4 million or $0.32 per diluted share versus $57.3 million or $0.36 per diluted share in the second quarter of 2014.  Our second quarter 2015 payout ratio ($0.15 common share distribution / $0.32 FFO per diluted share) was 46.9%. 

Net income allocated to common shares totaled $1.3 million or $0.01 per diluted share in the second quarter of 2015 compared to a net income of $0.4 million or $0.00 per diluted share in the second quarter of 2014.

In the second quarter of 2015, our Net Operating Income (NOI) excluding termination revenues and other income items increased 1.7% on a GAAP basis and increased 1.3% on a cash basis for our 184 same store properties, which were 91.2% and 89.1% occupied on June 30, 2015 and June 30, 2014, respectively.

Our FFO available to common shares and units in the first six months of 2015 totaled $115.8 million or $0.64 per diluted share versus $110.9 million or $0.69 per diluted share in the first six months of 2014.  Our first six months 2015 FFO payout ratio ($0.30 common share distribution / $0.64 FFO per diluted share) was 46.9%.

Net income allocated to common shares totaled $8.0 million or $0.04 per diluted share in the first six months of 2015 compared to net loss of $3.7 million or ($0.02) per diluted share in the first six months of 2014.

Operating and Leasing Activity
We leased approximately 1,556,000 square feet and commenced occupancy on 506,000 square feet during the second quarter of 2015.  The second quarter occupancy activity includes 123,000 square feet of renewals, 262,000 square feet of new leases and 121,000 square feet of tenant expansions.  We have an additional 636,000 square feet of executed new leasing scheduled to commence subsequent to June 30, 2015.

We achieved a 78.2% tenant retention ratio in our core portfolio with net absorption of 194,000 square feet during the second quarter of 2015.  Second quarter rental rate growth increased 6.7% as our renewal rental rates increased 9.5% and our new lease/expansion rental rates increased 3.6%, all on a GAAP basis.

At June 30, 2015, our core portfolio of 193 properties comprising 23.6 million square feet was 91.7% occupied and we are now 94.4% leased (reflecting new leases commencing after June 30, 2015).

Share Repurchase Program
The Company's Board of Trustees approved a Share Repurchase Program authorizing the Company to repurchase up to $100 million of its outstanding common and preferred stock.  The Repurchase Program will be funded through the Company's existing cash.

Purchases made pursuant to the program will be made in either the open market or in privately negotiated transactions from time to time as permitted by federal securities laws and other legal requirements.  The timing, manner, price and amount of any repurchases will be determined by the Company in its discretion and will be subject to economic and market conditions, stock price, applicable legal requirements and other factors.  The program may be suspended or discontinued at any time.

Distributions
On May 28, 2015, our Board of Trustees declared a quarterly dividend distribution of $0.15 per common share that was paid on July 20, 2015 to shareholders of record as of July 6, 2015.  Our Board also declared a quarterly dividend distribution of $0.43125 for each 6.90% Series E Cumulative Redeemable Preferred Share that was paid on July 15, 2015 to holders of record as of June 30, 2015.

2015 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 maintaining our previously issued 2015 guidance of $1.40 to $1.46 per diluted share.  This guidance is provided for informational purposes and is subject to change.  The following is a reconciliation of the calculation of 2015 FFO and earnings per diluted share:

 

Our 2015 FFO guidance does not include income arising from the sale of undepreciated real estate.  Our 2015 earnings and FFO per diluted share each reflect $0.11 per diluted share of non-cash income attributable to the fifth of five annual recognitions of 20% of the net benefit of the rehabilitation tax credit financing and one-time non-cash income from a new market tax credit, which are related to the 30^th Street Post Office and Cira South Garage respectively.  Other key assumptions include:

• Occupancy improving to a range of 92 – 93% by year-end 2015 with 93.5 – 94.5% leased;
• 7.0 – 8.0% GAAP increase in overall lease rates with a resulting 3.0 – 5.0% increase in 2015 same store NOI GAAP;
• 2.0 – 4.0% increase in 2015 same store cash NOI growth;
• $250.0 million of aggregate acquisition activity at an assumed 7.0% GAAP capitalization rate;
• $300.0 million of aggregate sales activity; and
• FFO per diluted share based on 182.1 million fully diluted weighted average common shares.

About Brandywine Realty Trust
Brandywine Realty Trust is one of the largest, publicly traded, full-service, integrated real estate companies in the United States.  Organized as a real estate investment trust and operating in select markets, Brandywine owns, leases and manages an urban, town center and transit-oriented office portfolio comprising 281 properties and 33.2 million square feet as of June 30, 2015. For more information, please visit www.brandywinerealty.com.

Conference Call and Audio Webcast
BDN management will discuss updated earnings guidance for fiscal 2015 on Thursday, July 23, 2015, during the company's earnings call.  The conference call will begin at 9:00 a.m. Eastern Time and will last approximately one hour.  This call will be accessed by calling 1-800-683-1525 and referencing conference ID #41177682.  Beginning two hours after the conference call, a taped replay of the call can be accessed 24 hours a day through Thursday, August 6, 2015 by calling 1-855-859-2056 and providing access code #41177682.  In addition, the conference call can be accessed via a webcast located on our website at www.brandywinerealty.com.

Looking Ahead - Third Quarter 2015 Conference Call
We anticipate we will release our third quarter 2015 earnings on Wednesday, October 21, 2015, after the market close and will host our third quarter 2015 conference call on Thursday, October 22, 2015 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. 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, 2014. 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 non-GAAP 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 interests 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 interests.  In some cases, we also present NOI on a cash basis, which is NOI after eliminating the effect 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 as an alternative to cash flow from operating activities as a measure of our liquidity or ability to make cash distributions to shareholders.

 

 

 

 

 

 

 

 

 

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SOURCE Brandywine Realty Trust