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

PART I — FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited consolidated financial statements for the Parent Company and its Operating Partnership for the quarter ended June 30, 2025 Financial Statements of Brandywine Realty Trust The Trust reported a net loss of $116.0 million for the six months ended June 30, 2025, driven by a significant impairment provision Financial Performance | Financial Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total Revenue | $242.1 million | $251.8 million | | Provision for Impairment | $63.4 million | $6.4 million | | Net Income (Loss) | $(116.0) million | $13.9 million | | Diluted EPS | $(0.67) | $0.08 | | Net Cash from Operating Activities | $40.7 million | $72.0 million | Balance Sheet Summary | Balance Sheet Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $3,394.3 million | $3,492.2 million | | Total Liabilities | $2,509.1 million | $2,447.6 million | | Total Beneficiaries' Equity | $885.2 million | $1,044.6 million | Financial Statements of Brandywine Operating Partnership, L.P. The Operating Partnership's financial results mirror the Parent Company's, reporting a net loss of $116.0 million for the six-month period Financial Performance | Financial Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total Revenue | $242.1 million | $251.8 million | | Net Income (Loss) | $(116.0) million | $13.9 million | | Diluted EPS (per unit) | $(0.67) | $0.08 | - The assets, liabilities, revenues, and expenses of the Operating Partnership are substantially the same as the Parent Company, reflecting the consolidated operational structure[12][45][47] Notes to Unaudited Consolidated Financial Statements Details significant events including $63.4 million in impairment losses, property sales, and a $150.0 million debt offering - As of June 30, 2025, the Company owned and consolidated 63 properties totaling approximately 11.8 million net rentable square feet, primarily office and mixed-use properties[60] - In Q2 2025, the company recognized impairment losses totaling $63.4 million on properties in the Austin, Texas segment due to changes in anticipated hold periods or sales considerations[69][70][71] - On June 27, 2025, the Operating Partnership completed an offering of an additional $150.0 million of its 8.875% Guaranteed Notes due 2029, bringing the total outstanding for this series to $550 million[87] Debt Summary | Debt Summary | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Secured Debt | $286.4 million | $275.3 million | | Total Unsecured Debt | $2,026.0 million | $1,937.5 million | | Total Debt Obligations | $2,312.4 million | $2,212.8 million | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management analyzes the impact of macroeconomic headwinds on Q2 2025 results, including decreased revenue and a net loss due to impairment - Macroeconomic conditions, including inflation, high interest rates, and remote work arrangements, have had a dampening effect on business fundamentals, reflected in increased borrowing costs and lower occupancy[135] - As of June 30, 2025, the company had $122.6 million in cash and cash equivalents and $560.8 million available under its Unsecured Credit Facility, which management believes is sufficient to fund capital requirements[189] Q2 2025 Performance Highlights | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total Revenue | $120.6 million | $125.3 million | | Net Income (Loss) | $(88.9) million | $30.3 million | | Diluted EPS | $(0.51) | $0.17 | | Core Properties Occupancy | 88.6% | 87.3% | Funds from Operations (FFO) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Funds from Operations (FFO) | $26.1 million | $38.0 million | | FFO per Diluted Share/Unit | $0.15 | $0.22 | Item 3. Quantitative and Qualitative Disclosures about Market Risk The company's primary market risk is interest rate risk, which is largely mitigated by a 98.1% fixed-rate debt portfolio - The primary market risk exposure is interest rate risk; as of June 30, 2025, 98.1% of the company's consolidated debt was fixed-rate, minimizing the impact of rate changes on interest expense[204][193] - A hypothetical 100-basis point change in interest rates would change the fair value of the company's unsecured notes by approximately $17.0 million[208] - The company uses derivative instruments, such as interest rate swaps, to manage interest rate risk on its variable-rate debt, and not for speculative purposes[206][209] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective with no material changes to internal controls during the quarter - Based on an evaluation as of the end of the reporting period, the principal executive officer and principal financial officer concluded that their respective disclosure controls and procedures are effective[213] - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, the internal controls[213] PART II — OTHER INFORMATION Item 1. Legal Proceedings The company reports no material legal proceedings during the period - There are no legal proceedings to report for the period[215] Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K - No material changes to the Risk Factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024, have occurred[216] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales of equity securities and no share repurchases during the quarter - No common shares were repurchased during the fiscal quarter ended June 30, 2025; $82.9 million remained available under the share repurchase program[220] Item 5. Other Information No company trustees or officers adopted, terminated, or modified a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement - No trustees or officers adopted, terminated, or modified a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the second quarter of 2025[219] Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including debt instruments and required officer certifications - Exhibits filed include the form of the 8.875% Guaranteed Note due 2029 and required CEO/CFO certifications for both Brandywine Realty Trust and Brandywine Operating Partnership, L.P[221]