BRANDYWINE REALTY TRUST Above: 3025 JFK Blvd. Construction at Schuylkill Yards, Philadelphia, PA
Cover (from L to R from Top to Bottom): B+labs at Cira Centre, One Uptown at Uptown ATX, 3025 JFK Blvd. at Schuylkill Yards, Berwyn Park, and Day of Caring employee volunteer event
Table of Contents
Page | |
Executive Summary | 1 |
2023 Business Plan Trend Line | 3 |
Development Summary | 7 |
Balance Sheet and Liquidity | 13 |
Land Inventory | 14 |
Property Activity | 15 |
Net Operating Income Composition | 16 |
Regional Property Overview | 17 |
Leasing Activity | 18 |
Lease Expiration Analysis | 20 |
Top Twenty Tenants | 22 |
Portfolio Tenant Mix | 23 |
Income Statements | 24 |
Same Store Net Operating Income Comparison | 25 |
EBITDA and EBITDA Coverage Ratios | 27 |
Funds from Operations and Cash Available for Distribution | 28 |
Balance Sheets and Related Information | 30 |
Debt Schedules | 32 |
Unconsolidated Real Estate Ventures | 37 |
Analyst and Company Information | 40 |
Disclaimers and Other Information | 41 |
Q2 2023 Executive Summary (unaudited in millions, except square footage and acreage) | BRANDYWINE REALTY TRUST | Page 1 |
Quarterly Highlights
Joint Venture Activity
- On June 2, 2023 we refinanced the mortgage debt for our Commerce Square Venture, through a new $220.0 million mortgage loan. The new mortgage bears an all-in fixed interest rate of 7.7875% per annum and matures in June 2028. In connection with the financing transaction, the Company contributed $46.5 million to the Commerce Square Venture in exchange for an additional common equity interest and paid $4.1 million of loan closing costs on behalf of the joint venture.
Development Activity
- During the quarter, our 3025 JFK Boulevard real estate venture achieved its initial Temporary Certificate of Occupancy for the residential lobby, leasing center, and first group of residential units (four floors). The Residential marketing program (Avira Schuylkill Yards) was also launched. The building is on schedule for substantial completion in October 2023.
Sales Activity
- As of June 30, 2023, the Company was under an agreement to sell to an unaffiliated third party an office property located in Austin Texas for $53.3 million. The Company has determined that consummation of the sale is probable and has classified the property as held for sale on the consolidated balance sheets.
Uptown ATX - Block A Construction| 652,404 SF | Austin, TX | Leasing Activity | |||||||||
During the quarter (through July, 19, 2023) we executed leases totaling 567,968 square feet within the wholly owned portfolio and an | ||||||||||
additional 400,652 square feet in our joint venture portfolio. This combined activity of 968,620 | square feet outpaced 1st quarter leasing | |||||||||
activity by 61% and is detailed below: | ||||||||||
Wholly-Owned Portfolio | Q2 2023 | Q1 2023 | Q4 2022 | Q3 2022 | ||||||
New/Expansions (sq ft) | 176,829 | 178,717 | 120,159 | 301,162 | ||||||
Development (sq ft) | - | - | 22,103 | - | ||||||
Renewals (sq ft) | 391,139 | 178,542 | 83,503 | 211,958 | ||||||
Total lease activity (sq ft) | 567,968 | 357,259 | 225,765 | 513,120 | ||||||
Joint Venture Portfolio | Q2 2023 | Q1 2023 | Q4 2022 | Q3 2022 | ||||||
New/Expansions (sq ft) | 139,279 | 161,360 | 115,072 | 139,692 | ||||||
Renewals (sq ft) | 261,373 | 83,713 | 152,348 | 121,637 | ||||||
Total lease activity (sq ft) | 400,652 | 245,073 | 267,420 | 261,329 | ||||||
Total Combined lease | 968,620 | 602,332 | 493,185 | 774,449 | ||||||
- During 2Q 2023, the State of Texas who occupies 143,896 square feet at our ATX campus in Austin, Texas provided notice of their intent to terminate their lease effective August 31, 2023. We are still assessing if that notice was provided in accordance with the requirements of the lease. While we continue to make that assessment and determine if we are entitled to additional rent or remedies, we have assumed we will not receive rent after August. The impact will be a $14.4 million reduction in total forecasted rent over the remaining lease term through October 2026, including $1.5 million in 2023 and $4.4 million in 2024. To the extent the lease is effectively terminated, and in accordance with our ATX masterplan, that building will be taken out of service in September and not be available for re-leasing.
3151 Market Street rendering (dedicated life science building), Schuylkill Yards, Philadelphia, PA
Note: Definitions for commonly used terms in this Supplemental Information Package are on pages 41 and 42 'Disclaimers and Other Information.'
Q2 2023 Executive Summary (unaudited in thousands, except per share data and square footage) | BRANDYWINE REALTY TRUST | Page 2 | |||
Wholly-Owned Leasing Highlights | Q2 2023 | Q1 2023 |
Quarter end occupancy | 89.4% | 89.0% | |
Leased as of July 19, 2023 / April 14, 2023 | 91.1% | 90.4% | |
New leases executed in quarter (sq ft) | 176,829 | 178,717 | |
Lease renewals executed in quarter (sq ft) | 391,139 | 178,542 | |
Total leases executed in quarter (sq ft) | 567,968 | 357,259 | |
New leases commenced (sq ft) | 73,625 | 46,464 | |
Expansions commenced (sq ft) | 19,590 | 19,787 | |
Leases renewed (sq ft) | 113,952 | 108,793 | |
Total lease activity (sq ft) | 207,167 | 175,044 | |
Average annual lease expirations through 2024 | 6.6% | 6.6% | |
Average annual lease expirations through 2025 | 7.5% | 7.7% | |
Average annual lease expirations through 2026 | 7.3% | 7.4% | |
Forward lease commencements (sq ft): | 54,746 | ||
Q3 2023 | |||
Q4 2023 | 78,757 | ||
2024 | 90,167 | ||
Total square feet of forward lease commencements: | 223,670 | ||
Key Operating Metrics | Q2 2023 | YTD 2023 | 07/19/23 Business |
Plan | |||
Same Store NOI Growth | 6.2% | 4.5% | 0.0% - 2.0% |
GAAP | |||
Cash | 6.6% | 5.5% | 2.5% - 4.5% |
The Bulletin Building | Philadelphia, PA
Financial Highlights | Q2 2023 | Q1 2023 | YTD 2023 |
Net income (loss) to common shareholders | ($12,900) | ($5,329) | ($18,229) |
Per diluted share | ($0.08) | ($0.03) | ($0.11) |
Rental Rate Mark to Market (a) | Common share distributions paid | $0.19 | $0.19 | $0.38 | ||||
New Leases/expansions | 30.1% | 21.1% | Funds From Operations (FFO) | $49,604 | $50,831 | $100,435 | ||
GAAP | Per diluted share | $0.29 | $0.29 | $0.58 | ||||
Cash | 13.4% | 8.2% | FFO - excl. capital market, transactional items and other | $49,604 | $50,050 | $99,654 | ||
Renewals | 13.0% | 14.4% | Per diluted share | $0.29 | $0.29 | $0.58 | ||
GAAP | FFO payout ratio - excl. capital market, trans. items and other | 65.5% | 65.5% | 65.5% | ||||
Cash | 2.8% | 3.8% | Cash Available for Distribution (CAD) | $39,168 | $40,462 | $79,630 | ||
Combined | 17.6% | 16.0% | 11.0% | - 13.0% | ||||
GAAP | CAD payout ratio (Distributions paid / CAD) | 84.1% | 81.1% | 82.6% | ||||
Cash | 5.8% | 4.8% | 4.0% | - 6.0% | Balance Sheet Highlights | Q2 2023 | Q1 2023 | Q4 2022 |
Average Lease Term (yrs) | 7.0 | 7.2 | 7 | |||||
Leasing Capital as a % of Lease Revenue | 12.5% | 9.8% | 11.0% | - 13.0% | Net debt to total gross assets | 41.7% | 41.1% | 39.7% |
Tenant Retention | 70.7% | 55.4% | 49% | - 51% | Ratio of net debt to annualized quarterly EBITDA | 7.6 | 7.4 | 7.0 |
Ratio of net debt to annualized quarterly EBITDA (b) | 6.5 | 6.4 | 6.2 | |||||
Cash on hand | $32,111 | $96,945 | $17,551 |
- Calculations based on revenue maintaining leasing activity. See definition on page 41.
- This ratio excludes the EBITDA related to our development and redevelopment projects.
Business Plan Trend Line (unaudited) | BRANDYWINE REALTY TRUST | Page 3 |
2023 Business Plan as of | ||||||||
Business Plan Component | 07/19/2023 | 4/14/2023 | Original | |||||
Speculative Revenue / SF | $17.0 - $19.0 MM / 1.1M SF | $17.0 - $19.0 MM / 1.1M SF | $17.0 - $19.0 MM / 1.1M SF | |||||
Executed / SF | $16.1 MM / 787K SF | $12.8 MM / 643K SF | $10.0 MM / 456K SF | |||||
Projected Tenant Retention (SF) | 49% | - 51% | 49% | - 51% | 49% | - 51% | ||
Same Store NOI Increase | ||||||||
• GAAP | 0.0% | - 2.0% | 0.0% | - 2.0% | 0.0% | - 2.0% | ||
• Cash | 2.5% | - 4.5% | 2.5% | - 4.5% | 2.5% | - 4.5% | ||
Capital as a % of lease revenue | 11.0% | - 13.0% | 11.0% | - 13.0% | 11.0% | - 13.0% | ||
Average Lease Term | 7 years | 7 years | 7 years | |||||
Net Income (Loss) Attributable to Common Shareholders per share | $(0.16) | - $(0.12) | $(0.15) | - $(0.07) | $(0.12) | - $(0.04) | ||
Funds from Operations per share - fully diluted | $1.14 | - $1.18 | $1.12 | - $1.20 | $1.12 | - $1.20 | ||
Cash Available for Distribution Payout Ratio Annualized | 100% - 90% | 105% - 95% | 105% - 95% | |||||
Rental Rate Increase / (Decline) | ||||||||
Combined | Combined | Combined | ||||||
• GAAP | 11.0% | - 13.0% | 11.0% | - 13.0% | 11.0% | - 13.0% | ||
• Cash | 4.0% | - 6.0% | 4.0% | - 6.0% | 4.0% | - 6.0% | ||
Year-end SS Occupancy | 90-91% | 90-91% | 90-91% | |||||
Year-end Core Occupancy | 90-91% | 90-91% | 90-91% | |||||
Year-end Core Leased | 91-92% | 91-92% | 91-92% | |||||
-Issued $245.0 MM secured term | -Issued $245.0 MM secured term | -Issued $245.0 MM secured term | ||||||
loan | loan | |||||||
Financing/Liability Management | -Issued $70 MM unsecured term | -Issued $70 MM unsecured term | loan | |||||
loan | loan | |||||||
- Execute construction loan at 155 | ||||||||
- Execute construction loan at 155 | - Execute construction loan at 155 | |||||||
King of Prussia Road ($48.0MM) | ||||||||
King of Prussia Road ($48.0MM) | King of Prussia Road ($48.0MM) | |||||||
Equity Issuance/Share Repurchase Program | None Incorporated | None Incorporated | None Incorporated | |||||
Dispositions (excluding land) | $100.0 - $125.0 MM | $100.0 - $125.0 MM | $100.0 - $125.0 MM | |||||
Acquisitions (excluding land) | None Incorporated | None Incorporated | None Incorporated | |||||
Development/Redevelopment Starts | No starts | No starts | No starts | |||||
General & Administrative Expenses | $34.0 - $35.0 MM | $34.0 - $35.0 MM | $34.0 - $35.0 MM | |||||
Interest Expense, Net | $103.0 - $107.0 MM | $103.0 - $107.0 MM | $103.0 - $107.0 MM | |||||
Net Gain on the Sale of Undepreciated Real Estate | $2.0 - $4.0 MM | $2.0 - $4.0 MM | $2.0 - $4.0 MM | |||||
Net Debt to EBITDA - Combined | 7.0 - 7.3x | 7.0 - 7.3x | 7.0 - 7.3x | |||||
Net Debt to EBITDA - Core (1) | 6.2 - 6.5x | 6.2 - 6.5x | 6.2 - 6.5x | |||||
(1) Excludes the net debt and related EBITDA from our unconsolidated joint ventures and our active development/redevelopment projects.
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Disclaimer
Brandywine Realty Trust published this content on 25 July 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 25 July 2023 21:01:31 UTC.
