Brandywine Realty Trust(BDN) - 2025 Q2 - Quarterly Results

Overview and Highlights Management Comments Management achieved 98% of speculative revenue targets, enhanced liquidity, and increased asset sales, but revised 2025 FFO guidance due to land sale timing - Achieved over 98% of the speculative revenue target for the 2025 business plan[3] - Leasing activity in the second quarter surpassed the first quarter by 35%, and development project tour activity increased by 66% over Q1[3] - Asset sales target was increased from a midpoint of $50 million to $72.7 million, reflecting assets already sold or under firm agreement[3] - Liquidity remains strong with $123 million in cash and no outstanding balance on the $600 million unsecured line of credit after a $150 million bond issuance[3] - Revised 2025 FFO guidance to a range of $0.60 to $0.66 per share, primarily due to the removal of land sales gains from the business plan[3] Second Quarter Highlights Q2 2025 reported a $(89.0) million net loss due to a $63.4 million impairment, with FFO at $26.1 million, and the core portfolio 91.1% leased Q2 2025 Key Financial and Operating Metrics | Metric | Value | Notes | | :--- | :--- | :--- | | Net Loss | $(89.0) million | Includes $63.4M non-cash impairment charge | | Net Loss per Share | $(0.51) | Includes $0.37 per share from impairment | | Funds from Operations (FFO) | $26.1 million | - | | FFO per Share | $0.15 | - | | Core Portfolio Occupied | 88.6% | - | | Core Portfolio Leased | 91.1% | - | | New/Renewal Leases Signed | 234,000 sq. ft. | Wholly-owned portfolio | | Total Leases Signed (incl. JVs) | 461,000 sq. ft. | Including unconsolidated joint ventures | Financial Performance Results for the Three and Six Month Periods Ended June 30, 2025 Q2 2025 reported a $(89.0) million net loss and $26.1 million FFO, a decline from Q2 2024, with H1 2025 also showing a $(116.4) million net loss and $50.8 million FFO Q2 Financial Performance Comparison (2025 vs. 2024) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Income (Loss) | $(89.0)M | $29.9M | | Diluted EPS | $(0.51) | $0.17 | | FFO | $26.1M | $38.0M | | FFO per Diluted Share | $0.15 | $0.22 | Six-Month Financial Performance Comparison (2025 vs. 2024) | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net Income (Loss) | $(116.4)M | $13.2M | | Diluted EPS | $(0.67) | $0.08 | | FFO | $50.8M | $79.2M | | FFO per Diluted Share | $0.28 | $0.45 | - The Q2 2025 FFO payout ratio was 100% ($0.15 dividend / $0.15 FFO per share), while the payout ratio for the first half of 2025 was 107.1% ($0.30 dividend / $0.28 FFO per share)[9][11] Consolidated Financial Statements Consolidated financial statements show total assets decreased to $3.39 billion, liabilities increased to $2.51 billion, and a significant net loss for H1 2025, driven by impairment and lower revenue Consolidated Balance Sheets As of June 30, 2025, total assets decreased to $3.39 billion, liabilities increased to $2.51 billion, and beneficiaries' equity declined to $885.2 million Balance Sheet Summary (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $3,394,339 | $3,492,213 | | Cash and cash equivalents | $122,645 | $90,229 | | Assets held for sale, net | $53,886 | $— | | Total Liabilities | $2,509,097 | $2,447,626 | | Unsecured senior notes, net | $1,776,851 | $1,618,527 | | Total Beneficiaries' Equity | $885,242 | $1,044,587 | Consolidated Statements of Operations Q2 2025 total revenues were $120.6 million, operating expenses rose to $161.8 million due to impairment, resulting in a $(89.0) million net loss Statement of Operations - Three Months Ended June 30 (in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Total Revenue | $120,571 | $125,346 | | Total Operating Expenses | $161,812 | $105,869 | | Provision for impairment | $63,369 | $6,427 | | Operating Income (Loss) | $(41,327) | $19,477 | | Net Income (Loss) Attributable to Common Shareholders | $(88,991) | $29,896 | | Diluted EPS | $(0.51) | $0.17 | Funds From Operations (FFO) Q2 2025 net loss of $(89.0) million reconciled to FFO of $26.1 million, with FFO per diluted share at $0.15, resulting in a 100% payout ratio FFO Reconciliation - Three Months Ended June 30 (in thousands) | Line Item | 2025 | 2024 | | :--- | :--- | :--- | | Net income (loss) attributable to common shareholders | $(88,991) | $29,896 | | Add: Provision for impairment | $63,369 | $6,427 | | Add: Real property depreciation & amortization | $38,363 | $38,368 | | Add: Company's share of unconsolidated ventures D&A | $9,345 | $12,294 | | Funds from operations available to common share and unit holders (FFO) | $26,112 | $38,028 | | FFO per share - fully diluted | $0.15 | $0.22 | FFO Payout Ratio | Period | 2025 | 2024 | | :--- | :--- | :--- | | Q2 | 100% | 68% | | H1 | 107% | 67% | Operational Performance Portfolio and Leasing Activity Q2 saw 234,000 sq ft leased, an 82% tenant retention ratio, and 2.1% rental rate growth (accrual), with the core portfolio 88.6% occupied and 91.1% leased - Leased approximately 234,000 square feet and commenced occupancy on 303,000 square feet in Q2 2025[14] - The tenant retention ratio for the core portfolio was 82% in the second quarter[15] Q2 2025 Leasing Metrics | Metric | Value | | :--- | :--- | | Rental Rate Growth (Accrual) | +2.1% | | Rental Rate Growth (Cash) | -4.7% | | Tenant Retention Ratio | 82% | | Core Portfolio Occupancy | 88.6% | | Core Portfolio Leased | 91.1% | Same Store Operations Q2 2025 Same Store NOI increased by 1.0% (accrual) and 6.3% (cash), while H1 saw a 0.4% decrease (accrual) but 4.7% growth (cash), with occupancy at 88.5% Q2 Same Store NOI Growth (YoY) | Basis | Growth Rate (Excluding other items) | | :--- | :--- | | Accrual | +1.0% | | Cash | +6.3% | Six-Month Same Store NOI Growth (YoY) | Basis | Growth Rate (Excluding other items) | | :--- | :--- | | Accrual | -0.4% | | Cash | +4.7% | - The Same Store portfolio of 59 properties was 88.5% occupied as of June 30, 2025, compared to 87.1% on June 30, 2024[41][42] Capital Activities and Outlook Recent Transaction Activity The company sold an Austin property for $17.6 million, has another under agreement for $55.1 million, issued $150 million in notes, and maintains strong liquidity - Sold a wholly-owned office property in Austin, Texas for $17.6 million in June 2025[12] - An additional office property in Austin is under agreement to be sold for $55.1 million and is classified as held for sale[12] - Issued $150.0 million of 8.875% guaranteed notes due 2029, raising gross proceeds of $159 million, used to repay the line of credit and a $43.6 million construction loan[12] - As of June 30, 2025, the company had no outstanding balance on its $600.0 million unsecured line of credit and held $122.6 million in cash[12] Dividend Distributions The Board declared a quarterly dividend of $0.15 per common share, paid on July 17, 2025, maintaining the previous quarter's level - A quarterly dividend of $0.15 per common share was declared on May 21, 2025, and paid on July 17, 2025[17] 2025 Earnings and FFO Guidance The company adjusted its 2025 full-year guidance, forecasting a net loss per share of $(0.96) - $(0.90) and FFO of $0.60 - $0.66 per diluted share, with core occupancy at 88-89% Revised 2025 Full-Year Guidance | Metric | Previous Guidance | Revised Guidance | | :--- | :--- | :--- | | Loss per Diluted Share | $(0.56) - $(0.46) | $(0.96) - $(0.90) | | FFO per Diluted Share | $0.61 - $0.71 | $0.60 - $0.66 | 2025 Key Operating Assumptions | Assumption | Range | | :--- | :--- | | Year-end Core Occupancy | 88 - 89% | | Year-end Core Leased | 89 - 90% | | Same Store (accrual) NOI | 0 - 1% | | Same Store (cash) NOI | 2 - 3% | | Property Sales Activity | $72.7 million | Supplemental Information Conference Call Information The Q2 2025 conference call is scheduled for July 24, 2025, and the Q3 2025 earnings release and call are set for October 22-23, 2025 - The Q2 2025 conference call is scheduled for July 24, 2025, at 9:00 a.m. Eastern Time[22] - The Q3 2025 earnings release is expected on October 22, 2025, with the conference call on October 23, 2025[23] Non-GAAP Financial Measures and Definitions This section defines key non-GAAP financial measures like FFO, NOI, Same Store Properties, Core Portfolio, and Speculative Revenue, crucial for understanding operating performance - Funds from Operations (FFO): Defined by NAREIT as net income excluding gains/losses on property sales, impairment losses, and real estate depreciation, providing a measure of operating performance[28][29] - Net Operating Income (NOI): A measure of property-level performance that excludes corporate G&A, depreciation, and interest expense to show unlevered operating results[30] - Same Store Properties: Includes properties owned and in-service for the entirety of both comparison periods to allow for meaningful analysis of NOI changes[31] Forward-Looking Statements This report contains forward-looking statements, including 2025 guidance, subject to significant business, economic, and competitive risks that may cause actual results to differ materially - The report contains forward-looking statements, including 2025 guidance, which are subject to risks and uncertainties that could cause actual results to differ materially[26] - Key risks include reduced demand for office space, capital market volatility, tenant credit risk, inflation, and interest rate fluctuations[26]