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Brandywine Realty Trust Announces $0.36 FFO per Diluted Share for the Second Quarter 2014, a 16% Increase over the Second Quarter 2013

  (July 23, 2014)

RADNOR, Pa., July 23, 2014 /PRNewswire/ --Brandywine Realty Trust (NYSE: BDN), a real estate investment trust focused on the ownership, management and development of urban, town center and suburban office properties in the mid-Atlantic region and other select markets throughout the United States, today reported its financial and operating results for the three and six-month period ended June 30, 2014.

"Our second quarter performance demonstrated excellent progress towards achieving our 2014 business plan," stated Gerard H. Sweeney, President and Chief Executive Officer for Brandywine Realty Trust. "Our portfolio continued to produce strong results with improvements to NOI, same store growth and tenant retention. We remain excited about the ongoing recovery in our real estate market, our improving portfolio quality and our redevelopment initiatives. Reflecting our second quarter results, we are increasing the low end of our 2014 FFO guidance range by $0.01 from $1.42 to $1.48 per diluted share to $1.43 to $1.48 per diluted share."

Financial Highlights Second Quarter


  • Funds from Operations (FFO) available to common shares and units in the second quarter of 2014 totaled $57.3 million or $0.36 per diluted share versus $48.8 million or $0.31 per diluted share in the second quarter of 2013. FFO for the three months of 2013 was impacted by a $1.1 million loss on the early extinguishment of debt and $0.3 million of various transaction costs included within G&A expense. Our second quarter 2014 payout ratio ($0.15 common share distribution / $0.36 FFO per diluted share) was 41.7%.
  • Net Income allocated to common shares totaled $0.4 million or $0.00 per diluted share in the second quarter of 2014 compared to a net income of $5.3 million or $0.03 per diluted share in the second quarter of 2013.
  • In the second quarter of 2014, we incurred $22.9 million of revenue maintaining capital expenditures which along with other adjustments to FFO, resulted in $28.4 million or $0.18 per diluted share of Cash Available for Distribution (CAD). In the second quarter of 2013, we incurred $14.4 million of revenue maintaining capital expenditures that resulted in $30.3 million or $0.19 per diluted share of CAD. Our second quarter 2014 CAD payout ratio was 83.3% ($0.15 common share distribution / $0.18 CAD per diluted share).

Financial Highlights Six Months

  • Our FFO available to common shares and units in the first six months of 2014 totaled $110.9 million or $0.69 per diluted share versus $100.5 million or $0.66 per diluted share in the first six months of 2013. FFO for the first six months of 2014 was impacted by (i) G&A expense includes $0.6 million due to employee severance costs, (ii) $1.2 million gain on the sale of a vacant land parcel, (iii) $0.8 million of unrecovered weather-related costs, and (iv) $0.2 million of transaction costs included within G&A expense associated with the acquisition of a land development project in Austin, Texas. FFO for the six months of 2013 was impacted by a $1.1 million loss on the early extinguishment of debt and $0.3 million of various transaction costs included within G&A expense. Our first six months 2014 FFO payout ratio ($0.30 common share distribution / $0.69 FFO per diluted share) was 43.5%.
  • Net loss allocated to common shares totaled $3.7 million or ($0.02) per diluted share in the first six months of 2014 compared to net income of $7.4 million or $0.05 per diluted share in the first six months of 2013.
  • In the first six months of 2014, we incurred $37.6 million of revenue maintaining capital expenditures which along with other adjustments to FFO, resulted in $62.9 million or $0.39 per diluted share of CAD. In the first six months of 2013, we incurred $27.7 million of revenue maintaining capital expenditures which resulted in $63.4 million, or $0.42 per diluted share of CAD. Our first six months 2014 CAD payout ratio was 76.9% ($0.30 common share distribution / $0.39 CAD per diluted share).

Portfolio Highlights

  • In the second quarter of 2014, our Net Operating Income (NOI) excluding termination revenues and other income items increased 3.5% on a GAAP basis and 6.7% on a cash basis for our 196 same store properties, which were 89.5% and 87.5% occupied on June 30, 2014 and June 30, 2013, respectively.
  • During the second quarter of 2014, we leased over 1.0 million square feet and commenced occupancy on 587,000 square feet. The second quarter occupancy activity includes 272,000 square feet of renewals, 148,000 square feet of new leases and 167,000 square feet of tenant expansions. We have an additional 564,000 square feet of executed new leasing scheduled to commence subsequent to June 30, 2014.
  • During the second quarter of 2014, we achieved a 77.9% tenant retention ratio in our core portfolio with net absorption of 23,000 square feet. Second quarter rental rate growth was 2.6% as our renewal rental rates increased 1.3% and our new lease/expansion rental rates increased 6.0%, both on a GAAP basis.
  • At June 30, 2014, our core portfolio of 201 properties comprising 24.0 million square feet was 89.3% occupied and we are now 91.7% leased (reflecting new leases commencing after June 30, 2014).

Investments

  • As previously announced, on April 3, 2014, we contributed two, Class A office buildings totaling 192,000 of net rentable square feet known as Four Points Centre in Austin, Texas to our existing Austin Joint Venture (the "Venture") with DRA Advisors, LLC ("DRA"). The contribution fair value of the properties total $41.5 million which equaled the acquisition price we paid in December 2013. In order for the Venture to purchase the properties DRA contributed $5.9 million, Brandywine equity contribution totaled $5.9 million, and the Venture borrowed $29.0 million. As a result, we received a cash distribution of $34.4 million from the Venture. The secured loan bears interest at a fixed rate of 4.50% and matures on April 6, 2019.

Investment Highlights

  • During the first quarter 2014, we acquired a 54 acre development site and land improvements in the southwest submarket in Austin, Texas known as Encino Trace for $14.0 million, representing a land value of $29.00 per buildable square foot. The site is fully entitled and permitted to develop two 4-story office buildings totaling 320,000 rentable square feet and a 1,375 space parking deck. One building, totaling 159,000 square feet, is 75% pre-leased to an anchor tenant and we commenced development during the first quarter 2014. During the second quarter 2014, we commenced construction of the second building totaling 161,000 square feet. We anticipate both buildings will be completed during the second quarter of 2015 and upon each building reaching stabilization, will be contributed to our existing Venture with DRA. Our total anticipated project costs are approximately $87.4 million with $18.7 million funded as of June 30, 2014. We anticipate funding the remaining development costs, totaling $68.8 million from available corporate funds resulting in an 8% yield on cost.
  • We are underway with the development of FMC Tower at Cira Centre South, a trophy class, mixed-use office tower designed by the architectural firms of Pelli Clark Pelli and Bower Lewis Thrower to be located at the southern-end of our Cira Centre complex in University City. Groundbreaking occurred on May 14, 2014 with completion scheduled for June 2016. Upon completion, we anticipate FMC Tower at Cira Centre South will approximate 870,000 rentable square feet comprising 635,000 square feet of office space, 4,000 square feet of retail space and 268 luxury apartment suites, of which up to 100 units will be fully furnished with concierge services and the balance to be market rate rental apartments. Given the increased size of the project, our total anticipated investment is approximately $385 million including costs to complete the furnished residential units. Brandywine has executed a 16-year lease with FMC for 280,000 square feet including their recent expansion and a 20-year lease with the University of Pennsylvania for 100,000 square feet, resulting in total office pre-leasing of 60%. Initial funding of the development will be from available corporate funds with a review underway of other institutional debt and/or equity sources.
  • We are continuing the $158.5 million development of evo at Cira Centre South, a 33-story, 850-bed student housing tower in the University City submarket of Philadelphia, Pennsylvania, which we are developing in a 30/30/40 joint venture with Campus Crest Communities, Inc. (30%) and Harrison Street Real Estate Capital (40%), with delivery by September 1, 2014. The partners have fulfilled their $60.7 million equity contributions and funding through the $97.8 million construction loan is underway with $60.1 million advanced as of June 30, 2014.
  • As previously announced, we and an affiliate of The Shooshan Company entered into a 50/50 joint venture to build 4040 Wilson Boulevard, a 426,900 square foot office building representing the final phase of the eight-building, mixed-use, Liberty Center complex developed by Shooshan in the Ballston submarket of Arlington, Virginia. Shooshan contributed its land parcel to the venture, and we will contribute up to $36.0 million of which $16.4 million has been funded as of June 30, 2014. The joint venture commenced construction of the 544-space garage in May 2014. The garage will cost approximately $21.0 million. Groundbreaking of the building will occur upon reaching certain pre-leasing levels, at which point the joint venture expects to seek third-party construction financing.
  • We are continuing the $77.0 million development of The Parc at Plymouth Meeting, a 398-unit multi-family project in Plymouth Meeting, Pennsylvania, in a 50/50 joint venture with Toll Brothers which we expect to complete by the end of 2015. The partners fully funded $31.0 million of initial project equity with our share fully satisfied by our contribution of the underlying land parcel. The remaining construction costs are being funded from a $56.0 million construction facility whose closing in December 2013 resulted in a $3.0 million return of capital to each partner. As of June 30, 2014, $28.0 million had been spent on the development of which $6.2 million has been funded by draws on the construction loan.

Brandywine Awards

  • In April 2014, the U.S. Environmental Protection Agency recognized Brandywine as a 2014 ENERGY STAR Partner of the Year for strategically managing and improving the energy efficiency of our entire portfolio. Through our partnership with the ENERGY STAR program, we have improved our energy performance, reduced consumption, saved money, and helped to protect the environment for future generations. The 2014 Partner of the Year Awards are given to a variety of organizations to recognize their contributions to reducing greenhouse gas emissions through superior energy efficiency. The award winners are selected from the 16,000 partners that participate in the ENERGY STAR program.
  • In June 2014, NAIOP, the Commercial Real Estate Development Association, announced the selection of Brandywine as the 2014 Developer of the Year the association's highest honor. "Brandywine's unique ability to adapt to changing market conditions coupled with its financial stability, longstanding record of community engagement, commitment to the environment by establishing an award-winning sustainability program and dedication to industry service and leadership make it 'the' company to emulate across our industry and one in which we are proud to recognize as the 2014 Developer of the Year," said Thomas J. Bisacquino, NAIOP President and CEO. The 2014 Developer of the Year award will be presented on October 28th at NAIOP's Development '14: The Meeting for Commercial Real Estate in Denver, Colorado. Brandywine was selected from an impressive slate of nominees and was evaluated by a team of seasoned developers on the following criteria: outstanding quality of projects and services; active support of the industry through NAIOP; financial consistency and stability; ability to adapt to market conditions; and support of the local community.

Capital Markets Highlights

  • At June 30, 2014, our net debt to gross assets measured 42.8%, reflecting no outstanding balance on our $600.0 million unsecured revolving credit facility and $234.8 million of cash and cash equivalents on hand.
  • For the quarter ended June 30, 2014, we had a 2.8 EBITDA to interest coverage ratio and a 6.9 ratio of net debt to annualized quarterly consolidated EBITDA.

Distributions

On May 29, 2014, our Board of Trustees declared a quarterly dividend distribution of $0.15 per common share that was paid on July 21, 2014 to shareholders of record as of July 7, 2014. 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, 2014 to holders of record as of June 30, 2014.

2014 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 previously issued 2014 guidance of $1.42 to $1.48 FFO per diluted share to $1.43 to $1.48 per diluted share. This guidance is provided for informational purposes and is subject to change. The following is a reconciliation of the calculation of 2014 FFO and earnings per diluted share:







Guidance for 2014

Range or Value




Earnings per diluted share allocated to common shareholders

$

0.02

to

$

0.07


Plus: real estate depreciation and amortization


1.41



1.41









FFO per diluted share

$

1.43

to

$

1.48








Our 2014 FFO guidance does not include income arising from the sale of undepreciated real estate. Our 2014 earnings and FFO per diluted share each reflect $0.075 per diluted share of non-cash income attributable to the fourth of five annual recognitions of 20% of the net benefit of the rehabilitation tax credit financing on the 30th Street Post Office. Other key assumptions include:

  • Occupancy improving to a range of 91 92% by year-end 2014 with 93 94% leased;
  • 6.0% 8.0% GAAP increase in overall lease rates with a resulting 3.0% 5.0% increase in 2014 same store GAAP NOI;
  • Solely for the purpose of computing guidance, no equity or debt capital markets activity, including no share issuances under our ATM Program, and no acquisition activity;
  • $150.0 million of net sales activity at an 8.5% capitalization rate weighted to the second half of 2014; and
  • FFO per diluted share based on 160.2 million fully diluted weighted average common shares.

Non-GAAP Supplemental Financial Measures

We compute our financial results in accordance with generally accepted accounting principles (GAAP). Although FFO, NOI and CAD are non-GAAP financial measures, we believe that FFO, NOI and CAD 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.

Cash Available for Distribution (CAD)

CAD is a non-GAAP financial measure that is not intended as an alternative to cash flow from operating activities as determined under GAAP. CAD is presented solely as a supplemental disclosure with respect to liquidity because we believe it provides useful information regarding our ability to fund our distributions. Because other companies do not necessarily calculate CAD the same way as we do, our presentation of CAD may not be comparable to similarly titled measures provided by other companies.

Revenue Maintaining Capital Expenditures

Revenue maintaining capital expenditures, a non-GAAP financial measure, are a component of our CAD calculation and represent the portion of capital expenditures required to maintain our current level of funds available for distribution. Revenue maintaining capital expenditures include current tenant improvement and allowance expenditures for all tenant spaces that have been owned for at least one year, and that were not vacant during the twelve-month period prior to the date that the tenant improvement or allowance expenditure was incurred. Revenue maintaining capital expenditures also include other expenditures intended to maintain our current revenue base. Accordingly, we exclude capital expenditures related to development and redevelopment projects, as well as certain projects at our core properties that are intended to attract prospective tenants in order to increase revenues and/or occupancy rates.

Second Quarter Earnings Call and Supplemental Information Package

We will host a conference call on Thursday, July 24, 2014 at 9:00 a.m. EDT. The conference call can be accessed by calling 1-800-683-1525 and referencing conference ID #14727649. Beginning two hours after the conference call, a taped replay of the call can be accessed 24 hours a day through Thursday, August 7, 2014 by calling 1-855-859-2056 and providing access code #14727649. In addition, the conference call can be accessed via a webcast located on our website at www.brandywinerealty.com.

We have prepared a supplemental information package that includes financial results and operational statistics related to the second quarter earnings report. The supplemental information package is available in the "Investor Relations Financial Reports" section of our website at www.brandywinerealty.com.

Looking Ahead - Third Quarter 2014 Conference Call

We anticipate we will release our third quarter 2014 earnings on Wednesday, October 22, 2014, after the market close and will host our third quarter 2014 conference call on Thursday, October 23, at 9:00 a.m. EDT. We expect to issue a press release in advance of these events to reconfirm the dates and times and provide all related information.

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 suburban office portfolio comprising 284 properties and 33.7 million square feet as of June 30, 2014. For more information, please visit www.brandywinerealty.com.

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, 2013. We assume no obligation to update or supplement forward-looking statements that become untrue because of subsequent events except as required by law.

BRANDYWINE REALTY TRUST

CONSOLIDATED BALANCE SHEETS

(in thousands)












June 30,


December 31,





2014


2013





(unaudited)



ASSETS





Real estate investments:







Operating properties


$ 4,689,892


$ 4,669,289



Accumulated depreciation


(1,045,016)


(983,808)



Rental property, net


3,644,876


3,685,481



Construction-in-progress


92,713


74,174



Land inventory


90,266


93,351

Real estate investments, net


3,827,855


3,853,006








Cash and cash equivalents


234,836


263,207

Accounts receivable, net


21,622


17,389

Accrued rent receivable, net


131,280


126,295

Investment in real estate ventures, at equity


186,042


180,512

Deferred costs, net


123,592


122,954

Intangible assets, net


112,140


132,329

Other assets


66,806


69,403










Total assets


$ 4,704,173


$ 4,765,095








LIABILITIES AND EQUITY





Mortgage notes payable, including premiums


$ 662,478


$ 670,151

Unsecured term loans


450,000


450,000

Unsecured senior notes, net of discounts


1,475,772


1,475,230

Accounts payable and accrued expenses


83,114


83,693

Distributions payable


25,588


25,584

Deferred income, gains and rent


70,519


71,635

Acquired lease intangibles, net


29,116


34,444

Other liabilities


37,144


32,923



Total liabilities


2,833,731


2,843,660








Brandywine Realty Trust's equity:






Preferred shares - Series E


40


40


Common shares


1,571


1,566


Additional paid-in capital


2,975,070


2,971,596


Deferred compensation payable in common stock


6,303


5,407


Common shares held in grantor trust


(6,303)


(5,407)


Cumulative earnings


522,520


522,528


Accumulated other comprehensive loss


(6,105)


(2,995)


Cumulative distributions


(1,643,241)


(1,592,515)



Total Brandywine Realty Trust's equity


1,849,855


1,900,220








Non-controlling interests


20,587


21,215



Total equity


1,870,442


1,921,435










Total liabilities and equity


$ 4,704,173


$ 4,765,095

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,





2014


2013



2014


2013

Revenue











Rents


$ 121,622


$ 116,064



$ 243,293


$ 230,672


Tenant reimbursements


20,502


19,560



43,962


39,901


Termination fees


3,349


410



5,552


906


Third party management fees, labor reimbursement and leasing


4,187


3,153



8,337


6,389


Other


840


1,457



1,470


2,330



Total revenue


150,500


140,644



302,614


280,198













Operating Expenses











Property operating expenses


43,136


39,433



89,937


78,782


Real estate taxes


12,841


14,177



26,298


28,472


Third party management expenses


1,730


1,363



3,446


2,788


Depreciation and amortization


52,587


49,241



105,157


98,717


General & administrative expenses


6,005


7,336



14,186


13,887



Total operating expenses


116,299


111,550



239,024


222,646













Operating income


34,201


29,094



63,590


57,552













Other income (expense)











Interest income


385


122



770


180


Interest expense


(31,512)


(30,437)



(63,356)


(61,351)


Amortization of deferred financing costs


(1,197)


(1,183)



(2,386)


(2,344)


Interest expense - financing obligation


(316)


(211)



(588)


(429)


Equity in income (loss) of real estate ventures


(489)


1,508



(247)


3,043


Net gain (loss) on sale of undepreciated real estate


(3)


-



1,184


-


Net gain from remeasurement of investment in real estate ventures


458


7,847



458


7,847


Net gain (loss) on real estate venture transactions


(282)


3,683



(417)


3,683


Loss on early extinguishment of debt


-


(1,113)



-


(1,116)













Net gain (loss) from continuing operations


1,245


9,310



(992)


7,065













Discontinued operations:











Income from discontinued operations


26


129



18


989


Net gain (loss) on disposition of discontinued operations


903


(2,259)



903


3,045

Total discontinued operations


929


(2,130)



921


4,034













Net income (loss)


2,174


7,180



(71)


11,099













Net (income) loss from discontinued operations attributable











to non-controlling interests - LP units


(10)


25



(10)


(53)

Net loss attributable to non-controlling interests - partners' share











of consolidated real estate ventures


24


-



12


-

Net (income) loss from continuing operations attributable to











non-controlling interests - LP units


5


(87)



49


(37)

Net (income) loss attributable to non-controlling interests


19


(62)



51


(90)













Net income (loss) attributable to Brandywine Realty Trust


2,193


7,118



(20)


11,009

Preferred share distributions


(1,725)


(1,725)



(3,450)


(3,450)

Nonforfeitable dividends allocated to unvested restricted shareholders


(83)


(85)



(186)


(193)













Net income (loss) attributable to common shareholders


$ 385


$ 5,308



$ (3,656)


$ 7,366













PER SHARE DATA










Basic income (loss) per common share


$ 0.00


$ 0.03



$ (0.02)


$ 0.05













Basic weighted-average shares outstanding


157,037,348


155,347,384



156,916,356


149,508,957





.








Diluted income (loss) per common share


$ 0.00


$ 0.03



$ (0.02)


$ 0.05













Diluted weighted-average shares outstanding


158,566,626


156,691,201



156,916,356


150,666,245













BRANDYWINE REALTY TRUST

FUNDS FROM OPERATIONS AND CASH AVAILABLE FOR DISTRIBUTION

(unaudited, in thousands, except share and per share data)

















Three Months Ended June 30,



Six Months Ended June 30,





2014


2013



2014


2013













Reconciliation of Net Income to Funds from Operations:










Net income (loss) attributable to common shareholders


$ 385


$ 5,308



$ (3,656)


$ 7,366













Add (deduct):











Net income (loss) attributable to non-controlling interests - LP units


(5)


87



(49)


37


Nonforfeitable dividends allocated to unvested restricted shareholders


83


85



186


193


Net (gain) loss on real estate venture transactions


282


(3,683)



417


(3,683)


Net income (loss) from disc ops allocated to non-controlling interests - LP units


10


(25)



10


53


Net (gain) loss on disposition of disc ops


(903)


2,259



(903)


(3,045)


Net gain from remeasurement of investment in RE ventures


(458)


(7,847)



(458)


(7,847)














Depreciation and amortization:












Real property - continuing operations


40,964


40,267



81,641


80,300



Leasing costs including acquired intangibles - continuing operations


11,578


8,943



23,437


18,350



Real property - discontinued operations


-


337



-


1,844



Leasing costs including acquired intangibles - discontinued operations


-


1



-


2



Company's share of unconsolidated real estate ventures


5,586


3,234



10,794


7,383



Partners' share of consolidated joint ventures


(52)


-



(101)


-













Funds from operations


$ 57,470


$ 48,966



$ 111,318


$ 100,953


Funds from operations allocable to unvested restricted shareholders


(201)


(176)



(436)


(435)













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


$ 57,269


$ 48,790



$ 110,882


$ 100,518













FFO per share - fully diluted


$ 0.36


$ 0.31



$ 0.69


$ 0.66













Weighted-average shares/units outstanding - fully diluted


160,330,365


158,475,513



160,130,850


152,481,101













Distributions paid per common share


$ 0.15


$ 0.15



$ 0.30


$ 0.30













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


41.7%


48.4%



43.5%


45.5%

























CASH AVAILABLE FOR DISTRIBUTION (CAD):










Funds from operations available to common share and unit holders


$ 57,269


$ 48,790



$ 110,882


$ 100,518













Add (deduct):











Rental income from straight-line rent, including discontinued operations


(3,591)


(5,734)



(7,183)


(11,250)


Financing Obligation - 3141 Fairview Drive


(264)


(155)



(491)


(305)


Deferred market rental income, including discontinued operations


(1,754)


(1,793)



(3,698)


(3,588)


Company's share of unconsol. RE ventures' straight-line & deferred market rent


(765)


(330)



(1,475)


(718)


Straight-line ground rent and deferred market ground rent expense activity


22


427



44


925


Stock-based compensation costs


708


2,053



3,118


3,904


Fair market value amortization - mortgage notes payable


(434)


91



(867)


182


Losses from early extinguishment of debt


-


1,113



-


1,116


Acquisition-related costs


109


290



212


301

Sub-total certain items


(5,969)


(4,038)



(10,340)


(9,433)

Less:

Revenue maintaining capital expenditures:












Building improvements


(338)


(868)



(600)


(1,722)



Tenant improvements


(15,770)


(9,994)



(27,944)


(16,622)



Lease commissions


(6,823)


(3,542)



(9,082)


(9,320)



Total revenue maintaining capital expenditures


(22,931)


(14,404)



(37,626)


(27,664)













Cash available for distribution (CAD)


$ 28,369


$ 30,348



$ 62,916


$ 63,421













CAD per share - fully diluted


$ 0.18


$ 0.19



$ 0.39


$ 0.42













Weighted-average shares/units outstanding - fully diluted


160,330,365


158,475,513



160,130,850


152,481,101













Distributions paid per common share


$ 0.15


$ 0.15



$ 0.30


$ 0.30













CAD payout ratio (Distributions paid per common share / CAD per diluted share)


83.3%


78.9%



76.9%


71.4%













BRANDYWINE REALTY TRUST

SAME STORE OPERATIONS - 2nd QUARTER

(unaudited and in thousands)













Of the 205 properties owned by the Company as of June 30, 2014, a total of 196 properties ("Same Store Properties") containing an aggregate of 21.8 million net rentable square feet were owned for the entire three-month periods ended June 30, 2014 and 2013. Average occupancy for the Same Store Properties was 89.4% during 2014 and 87.7% during 2013. The following table sets forth revenue and expense information for the Same Store Properties:










Three Months Ended June 30,




2014


2013







Revenue





Rents

$ 109,536


$ 107,945


Tenant reimbursements

15,890


14,925


Termination fees

2,965


410


Other

500


926




128,891


124,206







Operating expenses





Property operating expenses

38,496


36,949


Real estate taxes

10,911


11,733








Net operating income

$ 79,484


$ 75,524








Net operating income - percentage change over prior year

5.2%










Net operating income, excluding net termination fees and other

$ 76,809


$ 74,203








Net operating income, excluding net termination fees and other - percentage change over prior year

3.5%









Net operating income

$ 79,484


$ 75,524



Straight line rents

(2,732)


(5,156)



Above/below market rent amortization

(1,421)


(1,432)



Non-cash ground rent

22


498








Cash - Net operating income

$ 75,353


$ 69,434








Cash - Net operating income - percentage change over prior year

8.5%










Cash - Net operating income, excluding net termination fees and other

$ 72,678


$ 68,113








Cash - Net operating income, excl. net termination fees and other - percentage change over prior year

6.7%









The following table is a reconciliation of Net Income to Same Store net operating income:













Three Months Ended June 30,




2014


2013







Net income:

$ 2,174


$ 7,180

Add/(deduct):





Interest income

(385)


(122)


Interest expense

31,512


30,437


Amortization of deferred financing costs

1,197


1,183


Interest expense - financing obligation

316


211


Equity in income of real estate ventures

489


(1,508)


Net loss on sale of undepreciated real estate

3


-


Net gain from remeasurement of investment in RE ventures

(458)


(7,847)


Net (gain) loss on real estate venture transactions

282


(3,683)


Loss on early extinguishment of debt

-


1,113


Depreciation and amortization

52,587


49,241


General & administrative expenses

6,005


7,336


Total discontinued operations

(929)


2,130









Consolidated net operating income

92,793


85,671

Less: Net operating income of non same store properties

(9,690)


(1,968)

Less: Eliminations and non-property specific net operating income

(3,619)


(8,179)









Same Store net operating income

$ 79,484


$ 75,524

BRANDYWINE REALTY TRUST

SAME STORE OPERATIONS - SIX MONTHS

(unaudited and in thousands)













Of the 205 properties owned by the Company as of June 30, 2014, a total of 196 properties ("Same Store Properties") containing an aggregate of 21.8 million net rentable square feet were owned for the entire six-month periods ended June 30, 2014 and 2013. Average occupancy for the Same Store Properties was 89.1% during 2014 and 87.7% during 2013. The following table sets forth revenue and expense information for the Same Store Properties:










Six Months Ended June 30,




2014


2013







Revenue





Rents

$ 218,295


$ 214,698


Tenant reimbursements

34,382


31,049


Termination fees

5,168


906


Other

879


1,547




258,724


248,200







Operating expenses





Property operating expenses

80,189


74,912


Real estate taxes

22,229


23,555








Net operating income

$ 156,306


$ 149,733








Net operating income - percentage change over prior year

4.4%










Net operating income, excluding net termination fees and other

$ 152,176


$ 147,381








Net operating income, excluding net termination fees and other - percentage change over prior year

3.3%









Net operating income

$ 156,306


$ 149,733



Straight line rents

(5,372)


(9,813)



Above/below market rent amortization

(2,847)


(2,869)



Non-cash ground rent

44


925








Cash - Net operating income

$ 148,131


$ 137,976








Cash - Net operating income - percentage change over prior year

7.4%










Cash - Net operating income, excluding net termination fees and other

$ 144,001


$ 135,624








Cash - Net operating income, excl. net termination fees and other - percentage change over prior year

6.2%









The following table is a reconciliation of Net Income to Same Store net operating income:













Six Months Ended June 30,




2014


2013







Net income (loss):

$ (71)


$ 11,099

Add/(deduct):





Interest income

(770)


(180)


Interest expense

63,356


61,351


Amortization of deferred financing costs

2,386


2,344


Interest expense - financing obligation

588


429


Equity in income of real estate ventures

247


(3,043)


Net gain on sale of undepreciated real estate

(1,184)


-


Net gain from remeasurement of investment in RE ventures

(458)


(7,847)


Net (gain) loss on real estate venture transactions

417


(3,683)


Loss on early extinguishment of debt

-


1,116


Depreciation and amortization

105,157


98,717


General & administrative expenses

14,186


13,887


Total discontinued operations

(921)


(4,034)









Consolidated net operating income

182,933


170,156

Less: Net operating income of non same store properties

(18,921)


(3,654)

Less: Eliminations and non-property specific net operating income

(7,706)


(16,769)









Same Store net operating income

$ 156,306


$ 149,733

SOURCE Brandywine Realty Trust

Copyright 2014 PR Newswire. All Rights Reserved


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