Core Viewpoint - Brandywine Realty Trust has declared a quarterly cash dividend of $0.15 per common share, reflecting a commitment to returning value to shareholders [1] Company Overview - Brandywine Realty Trust is a major publicly traded real estate investment trust (REIT) focused on urban, town center, and transit-oriented properties, primarily in Philadelphia, PA, and Austin, TX [3] - As of March 31, 2025, the company owns, develops, leases, and manages a portfolio of 125 properties totaling 19.4 million square feet [3] Financial Information - The declared quarterly dividend translates to an annual rate of $0.60 per share, payable on July 17, 2025, to shareholders of record as of July 2, 2025 [1] - The second quarter earnings will be released after market close on July 23, 2025, followed by a conference call on July 24, 2025, at 9:00 a.m. Eastern Time [2]

Occupancy and Leasing - As of March 31, 2025, occupancy at Core Properties was 86.6%, down from 87.7% in the same period of 2024[148] - The tenant retention rate decreased to 55.4% in Q1 2025 from 67.3% in Q1 2024[148] - New leases and expansions commenced totaled 94,934 square feet, compared to 129,325 square feet in Q1 2024[148] - The average annual rent per square foot decreased to $36.68 from $44.21 year-over-year[148] - The percentage change in rental rates for new and expansion leases was 6.8%, down from 16.8% in the previous year[148] - Total net rentable square feet owned decreased to 11,930,549 from 12,698,115 year-over-year[148] - Same Store Occupancy remained stable at 86.0% for both Q1 2025 and Q1 2024[168] - Approximately 96% of the company's leases contain annual rent escalations, which are generally fixed between 2.0% to 3.0% per lease year[193] Financial Performance - Total revenue for Q1 2025 was $121.5 million, a decrease of 4.0% compared to $126.5 million in Q1 2024[168] - Net operating income (NOI) for Q1 2025 was $74.0 million, down 6.4% from $79.1 million in Q1 2024[168] - General and administrative expenses increased by 57.7% to $17.5 million in Q1 2025, compared to $11.1 million in Q1 2024[168] - Interest expense rose by 27.1% to $31.9 million in Q1 2025, up from $25.1 million in Q1 2024[168] - The company reported a net loss of $27.1 million in Q1 2025, a 65.2% increase from a net loss of $16.4 million in Q1 2024[168] - The company recognized a net gain of $3.1 million from the disposition of real estate in Q1 2025[171] - Funds from operations (FFO) for the three months ended March 31, 2025, were $24,663 thousand, down from $41,181 thousand in 2024, reflecting a decrease of 40%[198] - The company's operating margins decreased to 61.9% for the three months ended March 31, 2025, from 63.5% in the same period of 2024[194] Debt and Liquidity - The company issued $400 million in 8.875% Guaranteed Notes due 2029 in April 2024, with net proceeds of approximately $391.8 million[176] - The company expects to satisfy liquidity needs through cash flows from operations, financing activities, and real estate sales[175] - The company is in compliance with all debt covenants and requirement obligations as of March 31, 2025[175] - As of March 31, 2025, the Parent Company's unsecured debt obligations amounted to $1,943.6 million, while secured debt obligations were $283.4 million[181] - The total debt as of March 31, 2025, was $2,239.983 million, with 95.4% being fixed-rate debt[188] - The weighted-average interest rate for total debt was 6.2% as of March 31, 2025[188] - The company had $29.4 million in cash and cash equivalents and $495.8 million available under its unsecured credit facility as of March 31, 2025[183] - The company experienced a decrease in cash flows from operating activities by $17,496 thousand compared to the previous year[186] - The Operating Partnership is in compliance with all financial covenants as of March 31, 2025, including a leverage ratio not exceeding 60%[190] Interest Rate Risk - The total outstanding principal balance of variable rate debt was approximately $432.0 million, with a fair value of approximately $407.8 million[204] - A 100-basis point increase in market interest rates would decrease the fair value of the variable rate debt by approximately $11.2 million[204] - The fair value of unsecured notes was $1,524.7 million, with a 100-basis point change equating to a change of approximately $15.5 million[203] - If market rates increase by 100 basis points, the fair value of secured fixed rate debt would increase by approximately $6.2 million[202] - If market rates decrease by 100 basis points, the fair value of secured fixed rate debt would decrease by approximately $6.4 million[202] - The company has not experienced significant credit losses, but rising interest rates could lead to increased defaults and losses[199] - The company uses derivative instruments to manage interest rate risk exposures, not for speculative purposes[204] Internal Controls and Compliance - The evaluation of disclosure controls and procedures concluded that they are effective as of the end of the reporting period[210] - There were no changes in internal control over financial reporting that materially affected the company during the reporting period[210] Development Projects - Development projects include 3025 JFK Boulevard with estimated costs of $320,111,000 and completion expected in Q4 2023[160] - Approximately 2.6% of total square footage is scheduled to expire without penalty during the remainder of 2025[156] - The accrued rent receivable allowance was $0.9 million, representing 0.5% of the accrued rent receivable balance as of March 31, 2025[157]

Group 1 - The commercial real estate market is currently facing significant turmoil due to economic, geopolitical, and public policy uncertainties [1] - These uncertainties have been impacting the market for several months, leading to a lack of clarity in future projections [1]

Core Viewpoint - Brandywine Realty Trust (NYSE: BDN) is identified as an office REIT that has been sold off excessively, suggesting potential undervaluation and investment opportunity [1]. Group 1: Company Overview - Brandywine Realty Trust operates as an office Real Estate Investment Trust (REIT) [1]. - The company is highlighted for its potential to provide stable passive income and possible mean reversion, aligning with value and income-focused investment strategies [1]. Group 2: Investment Perspective - The author emphasizes a focus on high-yield REITs, particularly during the COVID-19 pandemic, indicating a strategic shift towards identifying undervalued assets in the real estate sector [1]. - The investment approach is rooted in fundamental economic insights to assess market trends, which may benefit investors looking for stable income sources [1].

Company Overview - Brandywine Realty Trust (NYSE: BDN) has experienced a 30% decline since the beginning of 2025, resulting in a significant increase in its dividend yield, which was already in double digits at the end of 2024 [1] - The company recently declared a quarterly cash dividend of $0.15 per share [1] Market Context - The equity market is characterized by daily price fluctuations that can lead to substantial wealth creation or destruction over the long term [1] - Pacifica Yield is focused on long-term wealth creation by targeting undervalued high-growth companies, high-dividend stocks, REITs, and green energy firms [1]

Financial Performance - Net loss attributable to common shareholders was $27.4 million, or $0.16 per diluted share, compared to a net loss of $16.7 million, or $0.10 per diluted share in Q1 2024[7]. - Funds from operations (FFO) available to common shareholders for the first quarter of 2025 was $24,663, a decline of 40.0% from $41,181 in the first quarter of 2024[34]. - Basic loss per common share for the first quarter of 2025 was $(0.16), compared to $(0.10) in the first quarter of 2024[32]. - The company reported a net loss attributable to common shareholders of $(27,404) for the first quarter of 2025, compared to $(16,704) in the first quarter of 2024[34]. - The Company reported a net loss of $27.056 million in Q1 2025, compared to a net loss of $16.414 million in Q1 2024[38]. Revenue and Income - Total revenue for the first quarter of 2025 was $121,516, down 3.8% from $126,484 in the first quarter of 2024[32]. - Total revenue for Same Store Properties increased to $107.834 million in Q1 2025 from $107.139 million in Q1 2024, representing a year-over-year growth of 0.65%[38]. - Net operating income (NOI) for Same Store Properties decreased by 1.3% year-over-year to $67.118 million in Q1 2025 from $67.991 million in Q1 2024[38]. - Consolidated net operating income was $73.925 million in Q1 2025, down from $79.070 million in Q1 2024[38]. - Cash net operating income rose by 3.5% year-over-year to $67.224 million in Q1 2025, compared to $64.941 million in Q1 2024[38]. Occupancy and Leasing - Core portfolio occupancy was 86.6% and leased was 89.2% as of March 31, 2025[11]. - New and renewal leases signed totaled 235,000 square feet in the wholly-owned portfolio, with a total of 340,000 square feet including joint ventures[5]. - The tenant retention ratio was 55% for the first quarter of 2025[10]. - Same Store Properties occupancy rates were 86.4% in 2025, slightly down from 86.5% in 2024[38]. - The Schuylkill Yards residential development project Avira is now 96% leased, with stabilization anticipated later this quarter[2]. Guidance and Financial Ratios - The company narrowed its 2025 FFO guidance from $0.60 - $0.72 per diluted share to $0.61 - $0.71 per diluted share[13]. - The FFO payout ratio for the first quarter of 2025 was 107%, compared to 63% in the first quarter of 2024[34]. Assets and Liabilities - Total assets as of March 31, 2025, were $3,423,786, a decrease from $3,492,213 as of December 31, 2024[30]. - Total liabilities decreased to $2,424,390 as of March 31, 2025, from $2,447,626 as of December 31, 2024[30]. - Cash and cash equivalents decreased significantly to $29,428 as of March 31, 2025, from $90,229 as of December 31, 2024[30]. Expenses - Operating expenses for the first quarter of 2025 totaled $109,414, an increase from $103,560 in the first quarter of 2024[32]. - Interest expense increased to $31.845 million in Q1 2025 from $25.049 million in Q1 2024, reflecting a significant rise in financing costs[38]. - General and administrative expenses rose to $17.470 million in Q1 2025, up from $11.104 million in Q1 2024, indicating increased operational costs[38]. Operating Income - Same store net operating income (NOI) decreased by 2.6% on an accrual basis but increased by 2.3% on a cash basis[9]. - Net Operating Income (NOI) for the first quarter of 2025 was $15,161, a decrease of 33.8% compared to $22,924 in the same period of 2024[31].

Financial Data and Key Metrics Changes - The first quarter FFO was $0.14 per share, with a net loss of $27.4 million or $0.16 per share [7][37] - The capital ratio was 12.2%, slightly above the 2025 business plan range [12] - The CAD payout ratio for the first quarter was 169.4%, significantly elevated due to older tenant allowances and accrued preferred dividends [48] Business Line Data and Key Metrics Changes - The quarterly retention rate was 55%, with leasing activity approximating 340,000 square feet [8] - The operating portfolio ended the quarter at 86.6% occupied and 89.2% leased, with Philadelphia at 93% occupied and 96% leased [10] - The mark-to-market was 8.9% on a GAAP basis and 2.3% on a cash basis, both above business plan expectations [12] Market Data and Key Metrics Changes - The vacancy rate in Philadelphia is 18%, with 50% of that concentrated in just 14 buildings [18] - Austin recorded over 112 tenants actively seeking more than 3.7 million square feet of space, a 33% increase in demand over the fourth quarter of 2024 [20] - The Life Science sector continues to recover, supported by a strong regional healthcare ecosystem [19] Company Strategy and Development Direction - The company aims to stabilize its development projects, with a focus on the residential developments at 3025 JFK and One Uptown [23] - The development pipeline is projected to generate about $41 million of annualized NOI upon stabilization [30] - The company is exploring mixed-use developments and potential monetization strategies to address the current discount to NAV [102][106] Management's Comments on Operating Environment and Future Outlook - Management noted that macroeconomic uncertainty is affecting decision-making but has not significantly delayed larger prospects [60] - The operating platform remains stable with limited near-term rollover risk, and liquidity is in excellent shape [54] - The company is optimistic about capturing demand in both Philadelphia and Austin as the market improves [22] Other Important Information - The company has no unsecured bond maturities until November 2027, and 95.4% of wholly-owned debt is fixed [41] - The anticipated second quarter property-level operating income is approximately $70 million, slightly above the first quarter [42] - The company is not planning any property acquisitions or ATM activity for the year [45] Q&A Session Summary Question: Can you provide more color on the leasing pipeline, particularly in Austin? - Management noted increased tour activity and interest from technology and financial service companies, with a mix of smaller and larger space requirements [58][70] Question: How is the macro environment affecting decision-making? - Management indicated that while decision-making is slower, larger prospects have not paused due to macro uncertainty [60][61] Question: What is the status of the 300 Delaware conversion project? - The conversion is expected to yield around 7.5% with minimal NOI loss, as the property has been under-leased for years [81][84] Question: How has the buyer pool composition changed in the current market? - There is a reemergence of institutional buyers, with a significant increase in their participation in the office buying pool [91][92] Question: What is the strategy regarding recapitalizing development projects? - The company is exploring various options, including reducing equity stakes and potentially pooling assets for better value propositions [99][100] Question: Are tenants asking for more concessions or smaller spaces? - There has been no significant change; most tenants are maintaining their space, with some downsizing while upgrading to higher quality [115] Question: What is the status of the GSA as a tenant? - The GSA lease is active until 2030, with ongoing discussions about future plans, and they are utilizing all their parking spaces [120][121] Question: What is the impact of Spark Therapeutics' layoffs on the lease? - Spark, owned by Roche, has a strong credit lease with no early termination rights, and their research activities continue [129][130]

Q1 2025 Executive Summary (unaudited in millions, except square footage and acreage) BRANDYWINE REALTY TRUST | Page 1 3151 Market Street (dedicated life science building), Schuylkill Yards, Philadelphia, PA 2025 FIRST QUARTER S U P P L E M E N T A L INFORMATION PACKAGE QUALITY • INNOVATION • INTEGRITY • COMMUNITY Table of Contents | | Page | | --- | --- | | Executive Summary | 1 | | 2025 Business Plan Trend Line | 3 | | Development Summary | 8 | | Balance Sheet and Liquidity | 13 | | Land Inventory | 14 | | ...

Financial Data and Key Metrics Changes - The first quarter FFO was $0.14 per share, with a net loss of $27.4 million or $0.16 per share [5][23] - The capital ratio was 12.2, slightly above the business plan range for 2025 [9] - The CAD payout ratio for the first quarter was 169.4%, significantly elevated due to deferred tenant improvement allowances and accrued preferred dividends [30][21] Business Line Data and Key Metrics Changes - The quarterly retention rate was 55%, with leasing activity approximating 340,000 square feet [6] - The operating portfolio ended the quarter at 86.6% occupied and 89.2% leased, with Philadelphia at 93% occupied and 96% leased [7][8] - The mark to market was 8.9% on a GAAP basis and 2.3% on a cash basis, both above business plan expectations [8] Market Data and Key Metrics Changes - In Austin, occupancy is at 75%, impacted by early terminations [8] - The life science sector is recovering, with a strong regional healthcare ecosystem supporting growth [13] - The demand for high-quality office space is increasing, with a notable flight to quality trend [12] Company Strategy and Development Direction - The company aims to stabilize its development projects, with significant progress made in residential developments [15] - The focus is on maintaining minimal balances on the line of credit and ensuring ample liquidity [10] - The company plans to capitalize on improving real estate market conditions and has a strong pipeline of leasing activity [11][34] Management's Comments on Operating Environment and Future Outlook - Management noted that macroeconomic uncertainty is affecting decision-making but has not significantly delayed larger prospects [40] - The company remains optimistic about increased leasing activity in Austin as the tech sector revitalizes [14] - The overall sentiment in real estate markets is improving, with a solid operating foundation established [10][34] Other Important Information - The company anticipates no property acquisitions and plans to recapitalize developments as they approach stabilization [29] - The projected capital plan for the year totals $180 million, focusing on development and redevelopment projects [30] - The company is targeting a midpoint of $50 million in sales for the year, with a mix of institutional and private equity buyers showing interest [62] Q&A Session Summary Question: Pipeline details, particularly in Austin - Management noted increased tour activity and interest from technology and financial service companies, with a mix of smaller and larger space requirements [38] Question: Decision-making process amid macro uncertainty - Management indicated that while decision-making is slower, larger prospects have not paused due to macro conditions [40] Question: Leasing pipeline breakdown - The operating portfolio pipeline is between 1.7 and 1.8 million square feet, with strong leasing activity in Philadelphia [46] Question: Economics of the office to residential conversion at 300 Delaware - The conversion is expected to yield around 7.5%, with minimal NOI loss due to the property being under-leased [54][56] Question: Changes in buyer pool composition and pricing - The buyer pool has shifted towards institutional quality buyers, with a significant increase in their market share [62] Question: Capital provider appetite for multifamily projects - There is a higher visibility and depth in the market for residential properties compared to office products [68] Question: Impact of Spark Therapeutics layoffs - Management confirmed that Spark has no early termination rights on their lease, and the company remains committed to its operations [88]

Financial Performance - For the quarter ended March 2025, Brandywine Realty Trust reported revenue of $121.52 million, down 3.9% year-over-year, with an EPS of $0.14 compared to -$0.10 in the same quarter last year [1] - The reported revenue exceeded the Zacks Consensus Estimate of $121.06 million by 0.38%, while the EPS fell short of the consensus estimate of $0.15 by 6.67% [1] Revenue Breakdown - Revenue from rents was $114.43 million, surpassing the two-analyst average estimate of $113.35 million, reflecting a year-over-year decline of 3.9% [4] - Revenue from third-party management fees, labor reimbursement, and leasing was $5.83 million, exceeding the average estimate of $5.26 million, with a year-over-year change of -1.1% [4] - Revenue from other sources was $1.26 million, significantly below the estimated $5.25 million, representing a year-over-year decline of 20.4% [4] Stock Performance - Shares of Brandywine Realty Trust have returned -17.6% over the past month, compared to a -8.9% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]