PHILADELPHIA, Jan. 29, 2020 (GLOBE NEWSWIRE) — 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 key business 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 HighlightsFinancial ResultsNet 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 ResultsCore 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 ActivityDispositionsOn 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 ActivityAs 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 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, 2019Net 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 ActivityIn 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).DistributionsOn 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 GuidanceBased on current plans and assumptions and subject to the risks and uncertainties more fully described in our Securities 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: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 NOIExcluding 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; andAnnual earnings and FFO per diluted share based on 179.0 million fully diluted weighted average common shares.About Brandywine Realty TrustBrandywine 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 WebcastWe 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 CallWe 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 issue a press release in advance of these events to reconfirm the dates and times and provide all related information.Forward-Looking StatementsEstimates 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
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