Investor/Press Contact: Marge Boccuti Manager, Investor Relations 610-832-7702 marge.boccuti@bdnreit.com | | Company Contact: Howard M. Sipzner EVP & CFO 610-832-4907 howard.sipzner@bdnreit.com |
Brandywine Realty Trust Announces Third Quarter 2009 Earnings,
Increases Guidance for 2009, Provides Initial 2010 Guidance and Raises 2010 Dividend
Radnor, PA, October 28, 2009 — Brandywine Realty Trust (NYSE:BDN), a real estate investment trust focused on the ownership, management and development of Class A, suburban and urban office properties in the mid-Atlantic region and other selected markets throughout the United States, announced today its financial and operating results for the three and nine-month periods ended September 30, 2009. The highlights are as follows:
Financial Highlights - Third Quarter
| | § | Net income allocated to common shares totaled $5.1 million or $0.04 per diluted share in the third quarter of 2009 compared to a net loss of ($0.5) million or ($0.01) per diluted share in the third quarter of 2008. Our weighted average diluted share count increased to 129.9 million shares in the third quarter of 2009 from 87.7 million shares in the third quarter of 2008 due to our issuance of 40.25 million common shares on June 2, 2009. |
| | § | Funds from operations available to common shares and units (FFO) in the third quarter of 2009 totaled $58.2 million or $0.44 per diluted share compared to $52.3 million or $0.58 per diluted share in the third quarter of 2008. Our third quarter 2009 FFO payout ratio was 22.7% ($0.10 common share dividend paid / $0.44 FFO per share). Our weighted average fully diluted share count for FFO (and CAD) calculations increased to 132.7 million shares in the third quarter of 2009 from 91.0 million shares in the third quarter of 2008 due to the aforementioned common share issuance. |
| | § | In the third quarter of 2009, we incurred $10.5 million of revenue maintaining capital expenditures which along with our other adjustments to FFO, resulted in $47.2 million of cash available for distribution (CAD) or $0.36 per diluted share compared to $41.2 million of CAD or $0.45 per diluted share in the third quarter of 2008 when we incurred $8.9 million of revenue maintaining capital expenditures. Our third quarter 2009 CAD payout ratio was 27.8% ($0.10 common share dividend paid / $0.36 CAD per share). |
Financial Highlights – Nine Months
| | § | Net income allocated to common shares totaled $5.8 million or $0.05 per diluted share in the first nine months of 2009 compared to net income of $16.1 million or $0.18 per diluted share in the first nine months of 2008. Our weighted average diluted share count increased to 107.2 million shares in the first nine months of 2009 from 87.4 million shares in the first nine months of 2008 primarily due to the aforementioned common share issuance. |
| | § | FFO available to common shares and units in the first nine months of 2009 totaled $167.9 million or $1.53 per diluted share ($171.6 million or $1.56 per diluted share excluding a $3.7 million impairment provision) compared to $163.3 million or $1.79 per diluted share in the first nine months of 2008 ($170.1 million or $1.87 per diluted share excluding a $6.9 million impairment provision). Our FFO payout ratio for the first nine months of 2009 was 32.7% ($0.50 common share dividend paid / $1.53 FFO per share). Our weighted average fully diluted share count for FFO (and CAD) calculations increased to 110.0 million shares for the first nine months of 2009 from 91.0 million shares in the first nine months of 2008 primarily due to the aforementioned common share issuance. |
| 555 East Lancaster Avenue, Suite 100; Radnor, PA 19087 | Phone: (610) 325-5600 • Fax: (610) 325-5622 |
| | § | During the first nine months of 2009, we incurred $31.9 million of revenue maintaining capital expenditures which along with our other adjustments to FFO, resulted in $136.0 million of CAD or $1.24 per diluted share compared to $130.4 million of CAD or $1.43 per diluted share for the first nine months of 2008 when we incurred $25.0 million of revenue maintaining capital expenditures. Our CAD payout ratio for the first nine months of 2009 was 40.3% ($0.50 common share dividend paid / $1.24 CAD per share). |
Portfolio Highlights
| | § | In the third quarter of 2009, our net operating income (NOI) excluding termination revenues and other income items decreased 0.8% on a GAAP basis and 0.5% on a cash basis for our 232 same store properties which were 88.8% and 92.4% occupied on September 30, 2009 and September 30, 2008, respectively. |
| | § | During the third quarter of 2009, we completed 1,156,904 square feet of total leasing activity including 713,625 square feet of renewals, 261,761 square feet of new leases and 181,518 square feet of tenant expansions. We currently have an additional 1,752,243 square feet of executed leasing which will commence subsequent to September 30, 2009. During the third quarter of 2009, we achieved an 82.9% retention rate in our core portfolio with positive net absorption of 77,027 square feet excluding 105,344 square feet of early terminations, or 75.5% overall. During the third quarter of 2009, we experienced a 1.5% decline on our renewal rental rates and a 0.2% decline on our new lease and expansion rental rates, both on a GAAP basis. |
| | § | At September 30, 2009, our core portfolio was 88.4% occupied and 89.7% leased (reflecting leases which will commence after September 30, 2009). We owned 247 properties at September 30, 2009, encompassing 241 core properties aggregating 24.1 million square feet and six development/ redevelopment properties aggregating 2.0 million square feet. Two core properties and a portion of a redevelopment property were characterized as held-for-sale at September 30, 2009. |
Investment Highlights
| | § | We sold no properties in the third quarter of 2009. Subsequent to quarter end, we completed the previously disclosed sale of two properties in Trenton, New Jersey for an aggregate purchase price of $85.0 million ($22.5 million of which we deferred as a second mortgage loan to the buyer) and also completed a $7.9 million sale to the underlying tenant of a 40,508 square foot condominium interest in our 100 Lenox Drive redevelopment property in Lawrenceville, New Jersey. Our completed 2009 sales now total $129.5 million, or just over 89% of our $145 million sales goal. |
| | § | At September 30, 2009, we were proceeding on two developments and four redevelopments with total project costs of $417.7 million of which a total of $192.4 million remained to be funded - $45.7 million in the remainder of 2009 and $146.7 million in 2010. These amounts include $355.5 million of total project costs for the combined 30th Street Post Office (100% leased to the Internal Revenue Service) and Cira South Garage (up to 94.3% leased to the Internal Revenue Service) in Philadelphia, Pennsylvania of which $174.2 million remained to be funded at September 30, 2009. We are also finishing the lease-up of four recently completed developments and three recently completed redevelopments for which we expect to spend up to an additional $16.3 million in late 2009 and early 2010. |
Capital Markets Highlights
| | § | During the third quarter of 2009, we closed a previously disclosed $250.0 million unsecured senior note financing due May 15, 2015 with a coupon rate of 7.50% and a yield to maturity of 7.625%, or 7.750% including the associated hedging costs. |
| | § | During the third quarter of 2009, we closed a previously disclosed $60.0 million first mortgage financing on One Logan Square, a previously unencumbered, 594,361 square foot, 99% leased, class A, office tower in Philadelphia, PA. The loan features a floating rate of LIBOR plus 350 basis points (subject to a LIBOR floor) and a seven-year term with three years interest only followed by a thirty-year principal amortization schedule at a 7.50% constant. |
| | § | During the third quarter of 2009, we repurchased a total of $203.3 million of our unsecured senior notes including $55.7 million of open-market transactions in our unsecured senior notes maturing in 2009, 2011 (our exchangeable notes due 2026 with a put date in October 2011), 2012 and 2014; a $47.6 million tender for a portion of our 2009 Notes and a $100.0 million tender for a portion of our 2012 Notes, generating aggregate gains of $5.1 million on the early extinguishment of debt. |
| | § | At September 30, 2009, our net debt to gross assets measured 46.4% compared to a peak of 54.3% at September 30, 2007, reflecting a cumulative $728.5 million reduction in our net debt over that two-year period. At September 30, 2009, we had a zero balance on our $600.0 million unsecured revolving credit facility with $568.8 million available for use and drawdown. |
| | § | We achieved a 2.9 EBITDA to interest coverage ratio for the quarter ended September 30, 2009 versus the 2.5 ratio we achieved for the quarter ended September 30, 2008. We recorded a 6.5 net debt to annualized quarterly EBITDA ratio for the quarter ended September 30, 2009. |
“Having completed a variety of successful capital market initiatives, we remain fully focused on maintaining strong operating metrics, aggressively pursuing all tenant prospects and completing our remaining development activities on time and on budget. While challenging operating conditions will persist through 2010, our capital capacity and inherent submarket competitive advantage will enable us to continue our long track record of market outperformance. Given our market position, we are also poised to take advantage of opportunities as they arise and ultimately position Brandywine for future growth,” stated Gerard H. Sweeney, President and Chief Executive Officer of Brandywine Realty Trust. “A positive result of our capital market activities and financial condition is our ability to raise our common share dividend distribution by 50% to a $0.15 quarterly rate beginning January 2010.”
Distributions
On September 16, 2009, our Board of Trustees declared a quarterly dividend distribution of $0.10 per common share that was paid in the fourth quarter on October 19, 2009 to shareholders of record as of October 5, 2009. Our Board also declared regular quarterly dividend distributions of $0.46875 per 7.50% Series C Cumulative Redeemable Preferred Share and $0.460938 per 7.375% Series D Cumulative Redeemable Preferred Share that were paid on October 15, 2009 to holders of record as of September 30, 2009 of the Series C and Series D Preferred Shares, respectively.
Our dividend policy is to match our aggregate distributions to our projected taxable income and to evaluate the mix of cash and common shares on an ongoing basis. We now believe that our year-to-date aggregate distributions are sufficient to match our projected 2009 taxable income and do not expect any further distributions to be made with respect to calendar year 2009.
For 2010, we anticipate that our quarterly common share distributions will increase to $0.15 per common share or $0.60 per common share on an annualized basis, subject to quarterly declaration by our Board of Trustees. This represents a 50% increase from the current distribution rate of $0.10 per common share.
2009 Earnings and FFO Guidance
Based on current plans and assumptions and subject to the risks and uncertainties more fully described in our Securities and Exchange Commission filings, we are increasing our previously issued guidance for full year 2009 FFO per diluted share to be in a range of $1.82 to 1.85 versus the prior guidance of $1.75 to $1.80 including impairment charges in both instances. When applicable, we will report our FFO with and without impairment charges. Our earnings and FFO guidance is provided for informational purposes and is subject to change. The following is a reconciliation of the calculation of 2009 earnings and FFO per diluted share:
| Guidance for 2009 | | Range or Value | |
| | | | | | | | | | |
| Earnings (loss) per diluted share allocated to common shareholders | | $ | (0.03 | ) | to | | $ | 0.00 | |
| Plus: real estate depreciation and amortization | | | 1.85 | | | | | 1.85 | |
| | | | | | | | | | |
| FFO per diluted share | | $ | 1.82 | | to | | $ | 1.85 | |
| | | | | | | | | | |
| Plus: impairment charges (incurred to date) | | | 0.03 | | | | | 0.03 | |
| | | | | | | | | | |
| Adjusted FFO per diluted share | | $ | 1.85 | | to | | $ | 1.88 | |
Our 2009 FFO guidance does not include income arising from future sales or impairments which may be taken in the future should the circumstances arise, does not include any income from the sale of undepreciated real estate in accordance with our current practice and is based on the expectation that our weighted average fully diluted shares for 2009 will be approximately 116.0 million.
Introduction of 2010 Earnings and FFO Guidance
Based on current plans and assumptions and subject to the risks and uncertainties more fully described in our Securities and Exchange Commission filings, we estimate that full year 2010 FFO per diluted share will be in a range of $1.23 to $1.34. This guidance is provided for informational purposes and is subject to change. The following is a reconciliation of the calculation of 2010 FFO per diluted share and earnings per diluted share:
| Guidance for 2010 | | Range or Value | |
| | | | | | | | | | |
| Earnings (loss) per diluted share allocated to common shareholders | | $ | (0.38 | ) | to | | $ | (0.27 | ) |
| Plus: real estate depreciation and amortization | | | 1.61 | | | | | 1.61 | |
| | | | | | | | | | |
| FFO per diluted share | | $ | 1.23 | | to | | $ | 1.34 | |
Our 2010 FFO guidance does not include income arising from future sales or impairments which may be taken in the future should the circumstances arise, does not include any income from the sale of undepreciated real estate in accordance with our current practice and is based on the expectation that our weighted average fully diluted shares for 2010 will be approximately 133.0 million.
Accounting Disclosures
On January 1, 2009, we adopted a newly issued accounting standard for convertible debt instruments which requires retrospective application. This adoption impacts our exchangeable notes due 2026 with a put date in 2011 that had an outstanding balance of $159.5 million as of September 30, 2009 and which were originally issued in October 2006. The retrospective treatment requires us to bifurcate the net proceeds of the exchangeable notes on a relative fair value basis (based on the then market "straight debt" interest rate) between unsecured debt and the equity conversion options issued in the transaction and affects previously recognized interest expense, capitalized interest and gain on extinguishment of debt associated with the convertible notes, and all related calculations such as net income per diluted share of the Company.
On January 1, 2009, we adopted a newly issued accounting standard for non-controlling interest. The accounting standard affects the classification and potential recognition of any non-controlling interest (formerly called minority interest) relating to Operating Partnership unit-holders and outside owners of our three consolidated real estate ventures. The non-controlling interests related to the Operating Partnership are reflected as a component of the Equity section of our Consolidated Balance Sheet, instead of within the "mezzanine" section. In addition, the non-controlling interests’ portion of earnings is now presented below net income. This presentation is applied retrospectively.
Non-GAAP Supplemental Financial Measures
We compute our financial results in accordance with generally accepted accounting principles (GAAP). Although FFO, NOI and CAD are non-GAAP financial measures, we believe that FFO, NOI and CAD calculations are helpful to shareholders and potential investors and are widely recognized measures of real estate investment trust performance. At the end of this press release, we have provided a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measure.
Funds from Operations (FFO)
We compute FFO in accordance with standards established by the National Association of Real Estate Investment Trusts (NAREIT), which may not be comparable to FFO reported by other REITs that do not compute FFO in accordance with the NAREIT definition, or that interpret the NAREIT definition differently than us. NAREIT defines FFO as net income (loss) before non-controlling interests and excluding gains (losses) on sales of property and extraordinary items (computed in accordance with GAAP); plus real estate related depreciation and amortization (excluding amortization of deferred financing costs), and after similar adjustments for unconsolidated joint ventures. Net income, the GAAP measure that we believe to be most directly comparable to FFO, includes depreciation and amortization expenses, gains or losses on property sales, extraordinary items and non-controlling interests. To facilitate a clear understanding of our historical operating results, FFO should be examined in conjunction with net income (determined in accordance with GAAP) as presented in the financial statements included elsewhere in this release. FFO does not represent cash flow from operating activities (determined in accordance with GAAP) and should not be considered to be an alternative to net income (loss) (determined in accordance with GAAP) as an indication of our financial performance or to be an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is it indicative of funds available for our cash needs, including our ability to make cash distributions to shareholders.
For information purposes, we also provide FFO adjusted for impairment charges. Although our calculation of FFO as adjusted differs from NAREIT’s definition of FFO and may not be comparable to that of other REITs and real estate companies, we believe it provides a meaningful supplemental measure of our operating performance because we believe that by excluding impairment charges, shareholders and potential investors are presented with an indicator of our operating performance that more closely achieves the objectives of the real estate industry in presenting FFO.
Net Operating Income (NOI)
NOI is a non-GAAP financial measure equal to net income available to common shareholders, the most directly comparable GAAP financial measure, plus corporate general and administrative expense, depreciation and amortization, interest expense, non-controlling interests and losses from early extinguishment of debt, less interest income, development and management income, gains from property dispositions, gains on sale from discontinued operations, gains on early extinguishment of debt, income from discontinued operations, income from unconsolidated joint ventures and non-controlling interests. In some cases, we also present NOI on a cash basis, which is NOI after eliminating the effect of straight-lining of rent and deferred market intangible amortization. NOI presented by us may not be comparable to NOI reported by other REITs that define NOI differently. NOI should not be considered an alternative to net income as an indication of our performance, or as an alternative to cash flow from operating activities as a measure of our liquidity or ability to make cash distributions to shareholders.
Cash Available for Distribution (CAD)
CAD is a non-GAAP financial measure that is not intended as an alternative to cash flow from operating activities as determined under GAAP. CAD is presented solely as a supplemental disclosure with respect to liquidity because we believe it provides useful information regarding our ability to fund our distributions. Because other companies do not necessarily calculate CAD the same way as we do, our presentation of CAD may not be comparable to similarly titled measures provided by other companies.
Revenue Maintaining Capital Expenditures
Revenue maintaining capital expenditures, a non-GAAP financial measure, are a component of our CAD calculation and represent the portion of capital expenditures required to maintain our current level of funds available for distribution. Revenue maintaining capital expenditures include current tenant improvement and allowance expenditures for all tenant spaces that have been owned for at least one year, and that were not vacant during the twelve-month period prior to the date that the tenant improvement or allowance expenditure was approved. Revenue maintaining capital expenditures also include other expenditures intended to maintain our current revenue base. Accordingly, we exclude capital expenditures related to development and redevelopment projects, as well as certain projects at our core properties that are intended to attract prospective tenants in order to increase revenues and/or occupancy rates.
Third Quarter Earnings Call and Supplemental Information Package
We will host a conference call on Thursday, October 29, 2009 at 12:00 noon EDT. The conference call can be accessed by calling 1-800-683-1525 and referencing conference ID #27619074. Beginning two hours after the conference call, a taped replay of the call can be accessed 24 hours a day through Thursday, November 12, 2009 by calling 1-800-642-1687 and providing access code 27619074. In addition, the conference call can be accessed via a webcast located on our website at www.brandywinerealty.com.
We have prepared a supplemental information package that includes financial results and operational statistics related to the third quarter earnings report. The supplemental information package is available in the “Investor Relations – Financial Reports” section of our website at www.brandywinerealty.com.
Looking Ahead - Fourth Quarter 2009 Conference Call
We anticipate that we will release our fourth quarter 2009 earnings on Wednesday, February 24, 2010, after the market close and will host our fourth quarter 2009 conference call on Thursday, February 25, 2010, at 11:00 a.m. EST. We expect to issue a press release in advance of these events to confirm the dates and times and provide all related information.
About Brandywine Realty Trust
Brandywine Realty Trust is one of the largest, publicly traded, full-service, integrated real estate companies in the United States. Organized as a real estate investment trust and operating in select markets, Brandywine owns, develops and manages a primarily Class A, suburban and urban office portfolio aggregating approximately 36.1 million square feet, including 25.6 million square feet which it currently owns on a consolidated basis. For more information, visit our website at www.brandywinerealty.com.
Forward-Looking Statements
Estimates 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. 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, 2008. We assume no obligation to update or supplement forward-looking statements that become untrue because of subsequent events except as required by law.
BRANDYWINE REALTY TRUST
CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)
| | | September 30, | | | December 31, | |
| | | 2009 | | | 2008 | |
| ASSETS | | | | | | |
| Real estate investments: | | | | | | |
| Operating properties | | $ | 4,513,378 | | | $ | 4,608,320 | |
| Accumulated depreciation | | | (695,870 | ) | | | (639,688 | ) |
| | | | 3,817,508 | | | | 3,968,632 | |
| Construction-in-progress | | | 229,259 | | | | 122,219 | |
| Land inventory | | | 97,390 | | | | 100,516 | |
| | | | 4,144,157 | | | | 4,191,367 | |
| | | | | | | | | |
| Cash and cash equivalents | | | 3,296 | | | | 3,924 | |
| Cash in escrow | | | - | | | | 31,385 | |
| Accounts receivable, net | | | 7,282 | | | | 11,762 | |
| Accrued rent receivable, net | | | 85,708 | | | | 86,362 | |
| Assets held for sale, net | | | 74,006 | | | | - | |
| Investment in real estate ventures | | | 75,929 | | | | 71,028 | |
| Deferred costs, net | | | 109,503 | | | | 89,327 | |
| Intangible assets, net | | | 114,080 | | | | 145,757 | |
| Notes receivable | | | 49,114 | | | | 48,048 | |
| Other assets | | | 58,227 | | | | 59,008 | |
| | | | | | | | | |
| Total assets | | $ | 4,721,302 | | | $ | 4,737,968 | |
| | | | | | | | | |
| LIABILITIES AND EQUITY | | | | | | | | |
| Mortgage notes payable, including premiums | | $ | 554,616 | | | $ | 487,525 | |
| Borrowings under credit facilities | | | - | | | | 153,000 | |
| Unsecured term loan | | | 183,000 | | | | 183,000 | |
| Unsecured senior notes, net of discounts | | | 1,771,903 | | | | 1,917,970 | |
| Accounts payable and accrued expenses | | | 96,877 | | | | 74,824 | |
| Distributions payable | | | 15,238 | | | | 29,288 | |
| Tenant security deposits and deferred rents | | | 52,012 | | | | 58,692 | |
| Acquired lease intangibles, net | | | 39,639 | | | | 47,626 | |
| Other liabilities | | | 61,539 | | | | 63,545 | |
| Liabilities related to assets held for sale | | | 666 | | | | - | |
| Total liabilities | | | 2,775,490 | | | | 3,015,470 | |
| | | | | | | | | |
| Brandywine Realty Trust's equity: | | | | | | | | |
| Preferred shares - Series C | | | 20 | | | | 20 | |
| Preferred shares - Series D | | | 23 | | | | 23 | |
| Common shares | | | 1,286 | | | | 882 | |
| Additional paid-in capital | | | 2,609,212 | | | | 2,351,428 | |
| Deferred compensation payable in common stock | | | 5,549 | | | | 6,274 | |
| Common shares in treasury | | | (7,893 | ) | | | (14,121 | ) |
| Common shares held in grantor trust | | | (5,549 | ) | | | (6,274 | ) |
| Cumulative earnings | | | 505,468 | | | | 498,716 | |
| Accumulated other comprehensive loss | | | (10,349 | ) | | | (17,005 | ) |
| Cumulative distributions | | | (1,191,352 | ) | | | (1,150,406 | ) |
| Total Brandywine Realty Trust's equity | | | 1,906,415 | | | | 1,669,537 | |
| | | | | | | | | |
| Non-controlling interests | | | 39,397 | | | | 52,961 | |
| Total equity | | | 1,945,812 | | | | 1,722,498 | |
| | | | | | | | | |
| Total liabilities and equity | | $ | 4,721,302 | | | $ | 4,737,968 | |
BRANDYWINE REALTY TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except share and per share data)
| | | Three Months Ended September 30, | | | Nine Months Ended September 30, | |
| | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
| Revenue | | | | | | | | | | | | |
| Rents | | $ | 119,599 | | | $ | 120,285 | | | $ | 359,513 | | | $ | 362,342 | |
| Tenant reimbursements | | | 19,164 | | | | 18,553 | | | | 56,853 | | | | 55,920 | |
| Termination fees | | | 1,764 | | | | 338 | | | | 2,840 | | | | 4,462 | |
| Third party management fees, labor reimbursement and leasing | | | 5,194 | | | | 4,390 | | | | 14,055 | | | | 15,239 | |
| Other | | | 872 | | | | 772 | | | | 2,323 | | | | 2,348 | |
| Total revenue | | | 146,593 | | | | 144,338 | | | | 435,584 | | | | 440,311 | |
| | | | | | | | | | | | | | | | | |
| Operating Expenses | | | | | | | | | | | | | | | | |
| Property operating expenses | | | 40,050 | | | | 39,143 | | | | 122,857 | | | | 118,032 | |
| Real estate taxes | | | 14,248 | | | | 14,522 | | | | 43,059 | | | | 44,376 | |
| Third party management expenses | | | 2,256 | | | | 1,790 | | | | 6,339 | | | | 6,417 | |
| Depreciation and amortization | | | 51,422 | | | | 50,019 | | | | 155,852 | | | | 151,627 | |
| General & administrative expenses | | | 5,018 | | | | 6,863 | | | | 15,491 | | | | 17,902 | |
| Total operating expenses | | | 112,994 | | | | 112,337 | | | | 343,598 | | | | 338,354 | |
| | | | | | | | | | | | | | | | | |
| Operating income | | | 33,599 | | | | 32,001 | | | | 91,986 | | | | 101,957 | |
| | | | | | | | | | | | | | | | | |
| Other income (expense) | | | | | | | | | | | | | | | | |
| Interest income | | | 473 | | | | 221 | | | | 1,695 | | | | 603 | |
| Interest expense | | | (31,455 | ) | | | (36,037 | ) | | | (102,045 | ) | | | (109,822 | ) |
| Deferred financing costs | | | (1,579 | ) | | | (1,092 | ) | | | (4,725 | ) | | | (3,798 | ) |
| Recognized hedge activity | | | (1,517 | ) | | | - | | | | (1,822 | ) | | | - | |
| Equity in income of real estate ventures | | | 1,331 | | | | 1,059 | | | | 3,450 | | | | 3,838 | |
| Net (loss) on disposition of undepreciated real estate | | | - | | | | - | | | | - | | | | (24 | ) |
| Gain on early extinguishment of debt | | | 5,073 | | | | - | | | | 23,724 | | | | 3,106 | |
| Income (loss) from continuing operations | | | 5,925 | | | | (3,848 | ) | | | 12,263 | | | | (4,140 | ) |
| | | | | | | | | | | | | | | | | |
| Discontinued operations: | | | | | | | | | | | | | | | | |
| Income from discontinued operations | | | 1,390 | | | | 5,594 | | | | 4,690 | | | | 13,145 | |
| Net (loss) gain on disposition of discontinued operations | | | (6 | ) | | | - | | | | (1,037 | ) | | | 21,401 | |
| Provision for impairment | | | - | | | | - | | | | (3,700 | ) | | | (6,850 | ) |
| Total discontinued operations | | | 1,384 | | | | 5,594 | | | | (47 | ) | | | 27,696 | |
| | | | | | | | | | | | | | | | | |
| Net income (loss) | | | 7,309 | | | | 1,746 | | | | 12,216 | | | | 23,556 | |
| | | | | | | | | | | | | | | | | |
| Net (loss) income from discontinued operations attributable to non-controlling interests - LP units | | | (30 | ) | | | (202 | ) | | | 14 | | | | (1,094 | ) |
| Net income (loss) attributable to non-controlling interests - partners' share of consolidated real estate ventures | | | (47 | ) | | | (39 | ) | | | (69 | ) | | | (117 | ) |
| Net income (loss) attributable to non-controlling interests - LP units | | | (84 | ) | | | 192 | | | | (179 | ) | | | 334 | |
| Net (loss) income attributable to non-controlling interests | | | (161 | ) | | | (49 | ) | | | (234 | ) | | | (877 | ) |
| | | | | | | | | | | | | | | | | |
| Net income (loss) attributable to Brandywine Realty Trust | | | 7,148 | | | | 1,697 | | | | 11,982 | | | | 22,679 | |
| Preferred share dividends | | | (1,998 | ) | | | (1,998 | ) | | | (5,994 | ) | | | (5,994 | ) |
| Amount allocated to unvested restricted shareholders | | | (73 | ) | | | (226 | ) | | | (183 | ) | | | (620 | ) |
| | | | | | | | | | | | | | | | | |
| Net income (loss) available to Common Shareholders | | $ | 5,077 | | | $ | (527 | ) | | $ | 5,805 | | | $ | 16,065 | |
| | | | | | | | | | | | | | | | | |
| PER SHARE DATA | | | | | | | | | | | | | | | | |
| Basic income per Common Share | | $ | 0.04 | | | $ | (0.01 | ) | | $ | 0.05 | | | $ | 0.18 | |
| | | | | | | | | | | | | | | | | |
| Basic weighted-average shares outstanding | | | 128,582,498 | | | | 87,695,892 | | | | 106,273,509 | | | | 87,423,108 | |
| | | | | | | | | | | | | | | | | |
| Diluted income per Common Share | | $ | 0.04 | | | $ | (0.01 | ) | | $ | 0.05 | | | $ | 0.18 | |
| | | | | | | | | | | | | | | | | |
| Diluted weighted-average shares outstanding | | | 129,926,110 | | | | 87,695,892 | | | | 107,206,551 | | | | 87,437,133 | |
BRANDYWINE REALTY TRUST
FUNDS FROM OPERATIONS AND CASH AVAILABLE FOR DISTRIBUTION
(unaudited, in thousands, except share and per share data)
| | | Three Months Ended September 30, | | | Nine Months Ended September 30, | |
| | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
| | | | | | | | | | | | | |
| Reconciliation of Net Income (Loss) to Funds from Operations: | | | | | | | | | | | | |
| Net income (loss) available to common shareholders | | $ | 5,077 | | | $ | (527 | ) | | $ | 5,805 | | | $ | 16,065 | |
| | | | | | | | | | | | | | | | | |
| Add (deduct): | | | | | | | | | | | | | | | | |
| Net income (loss) attributable to non-controlling interests - LP units | | | 84 | | | | (192 | ) | | | 179 | | | | (334 | ) |
| Amount allocated to unvested restricted shareholders | | | 73 | | | | 226 | | | | 183 | | | | 620 | |
| Net loss on disposition of undepreciated real estate | | | - | | | | - | | | | - | | | | 24 | |
| Net (loss) income from discontinued operations attributable to non-controlling interests - LP units | | | 30 | | | | 202 | | | | (14 | ) | | | 1,094 | |
| Net loss (gain) on disposition of discontinued operations | | | 6 | | | | - | | | | 1,037 | | | | (21,401 | ) |
| | | | | | | | | | | | | | | | | |
| Depreciation and amortization: | | | | | | | | | | | | | | | | |
| Real property - continuing operations | | | 38,441 | | | | 36,382 | | | | 116,290 | | | | 109,573 | |
| Leasing costs (includes acquired intangibles) - continuing operations | | | 12,571 | | | | 13,063 | | | | 38,176 | | | | 40,292 | |
| Real property - discontinued operations | | | 473 | | | | 1,280 | | | | 1,755 | | | | 8,847 | |
| Leasing costs (includes acquired intangibles) - discontinued operations | | | 39 | | | | 347 | | | | 403 | | | | 3,603 | |
| Company's share of unconsolidated real estate ventures | | | 1,917 | | | | 2,054 | | | | 5,624 | | | | 6,377 | |
| Partners' share of consolidated real estate ventures | | | (184 | ) | | | (217 | ) | | | (624 | ) | | | (661 | ) |
| | | | | | | | | | | | | | | | | |
| Funds from operations | | $ | 58,527 | | | $ | 52,618 | | | $ | 168,814 | | | $ | 164,099 | |
| Funds from operations allocable to unvested restricted shareholders | | | (332 | ) | | | (296 | ) | | | (952 | ) | | $ | (835 | ) |
| | | | | | | | | | | | | | | | | |
| Funds from operations available to common share and unit holders (FFO) | | $ | 58,195 | | | $ | 52,322 | | | $ | 167,862 | | | $ | 163,264 | |
| | | | | | | | | | | | | | | | | |
| FFO per share - fully diluted | | $ | 0.44 | | | $ | 0.58 | | | $ | 1.53 | | | $ | 1.79 | |
| | | | | | | | | | | | | | | | | |
| FFO, excluding provision for impairments | | $ | 58,195 | | | $ | 52,322 | | | $ | 171,562 | | | $ | 170,114 | |
| | | | | | | | | | | | | | | | | |
| FFO per share, excluding provision for impairments - fully diluted | | $ | 0.44 | | | $ | 0.58 | | | $ | 1.56 | | | $ | 1.87 | |
| | | | | | | | | | | | | | | | | |
| Weighted-average shares/units outstanding - fully diluted | | | 132,742,731 | | | | 90,985,002 | | | | 110,023,172 | | | | 90,957,841 | |
| | | | | | | | | | | | | | | | | |
| Distributions paid per Common Share | | $ | 0.10 | | | $ | 0.44 | | | $ | 0.50 | | | $ | 1.32 | |
| | | | | | | | | | | | | | | | | |
| Payout ratio of FFO (Dividends paid per Common Share divided / FFO per Share) | | | 22.7 | % | | | 75.9 | % | | | 32.7 | % | | | 73.7 | % |
| | | | | | | | | | | | | | | | | |
| Payout ratio of FFO, excluding provision for impairments | | | 22.7 | % | | | 75.9 | % | | | 32.1 | % | | | 70.6 | % |
| | | | | | | | | | | | | | | | | |
| CASH AVAILABLE FOR DISTRIBUTION (CAD): | | | | | | | | | | | | | | | | |
| Funds from operations available to common share and unit holders | | $ | 58,195 | | | $ | 52,322 | | | $ | 167,862 | | | $ | 163,264 | |
| | | | | | | | | | | | | | | | | |
| Add (deduct): | | | | | | | | | | | | | | | | |
| Rental income from straight-line rent, including discontinued operations | | | (2,684 | ) | | | (2,497 | ) | | | (7,037 | ) | | | (13,730 | ) |
| Deferred market rental income, including discontinued operations | | | (1,530 | ) | | | (1,807 | ) | | | (5,017 | ) | | | (6,493 | ) |
| Company's share of unconsolidated real estate ventures' straight-line and deferred market rent | | | 205 | | | | 129 | | | | 414 | | | | 284 | |
| Partners' share of consolidated real estate ventures' straight-line and deferred market rent | | | (1 | ) | | | (40 | ) | | | (5 | ) | | | (118 | ) |
| Operating expense from straight-line rent | | | 370 | | | | 383 | | | | 1,103 | | | | 1,149 | |
| Net (loss) on disposition of undepreciated real estate | | | - | | | | - | | | | - | | | | (24 | ) |
| Provision for impairment of discontinued operations | | | - | | | | - | | | | 3,700 | | | | 6,850 | |
| Deferred compensation costs | | | 1,039 | | | | 1,265 | | | | 3,567 | | | | 3,839 | |
| Fair market value amortization - mortgage notes payable | | | (363 | ) | | | (676 | ) | | | (1,151 | ) | | | (2,854 | ) |
| Recognized hedge activity | | | 1,517 | | | | - | | | | 1,822 | | | | - | |
| Debt discount amortization - exchangeable notes | | | 866 | | | | 1,100 | | | | 2,632 | | | | 3,282 | |
| Revenue maintaining capital expenditures | | | | | | | | | | | | | | | | |
| Building improvements | | | (1,973 | ) | | | (957 | ) | | | (4,292 | ) | | | (2,536 | ) |
| Tenant improvements | | | (5,854 | ) | | | (5,253 | ) | | | (16,956 | ) | | | (13,604 | ) |
| Lease commissions | | | (2,637 | ) | | | (2,721 | ) | | | (10,655 | ) | | | (8,905 | ) |
| Total revenue maintaining capital expenditures | | | (10,464 | ) | | | (8,931 | ) | | | (31,903 | ) | | | (25,045 | ) |
| | | | | | | | | | | | | | | | | |
| Cash available for distribution | | $ | 47,150 | | | $ | 41,248 | | | $ | 135,987 | | | $ | 130,404 | |
| | | | | | | | | | | | | | | | | |
| CAD per share - fully diluted | | $ | 0.36 | | | $ | 0.45 | | | $ | 1.24 | | | $ | 1.43 | |
| | | | | | | | | | | | | | | | | |
| Weighted-average shares/units outstanding - fully diluted | | | 132,742,731 | | | | 90,985,002 | | | | 110,023,172 | | | | 90,957,841 | |
| | | | | | | | | | | | | | | | | |
| Distributions per Common Share | | $ | 0.10 | | | $ | 0.44 | | | $ | 0.50 | | | $ | 1.32 | |
| | | | | | | | | | | | | | | | | |
| Payout ratio of CAD (Dividends paid per Common Share / CAD per Share) | | | 27.8 | % | | | 97.8 | % | | | 40.3 | % | | | 92.3 | % |
BRANDYWINE REALTY TRUST
SAME STORE OPERATIONS - 3rd QUARTER
(unaudited and in thousands)
Of the 245 properties owned by the Company as of September 30, 2009, a total of 232 properties ("Same Store Properties") containing an aggregate of 22.6 million net rentable square feet were owned for the entire three-month periods ended September 30, 2009 and 2008. Average occupancy for the Same Store Properties was 89.0% during 2009 and 92.4% during 2008. The following table sets forth revenue and expense information for the Same Store Properties:
| | | Three Months Ended September 30, | |
| | | 2009 | | | 2008 | |
| | | | | | | |
| Revenue | | | | | | |
| Rents | | $ | 113,429 | | | $ | 116,664 | |
| Tenant reimbursements | | | 18,044 | | | | 17,154 | |
| Termination fees | | | 548 | | | | 338 | |
| Other | | | 598 | | | | 527 | |
| | | | 132,619 | | | | 134,683 | |
| | | | | | | | | |
| Operating expenses | | | | | | | | |
| Property operating expenses | | | 39,545 | | | | 41,013 | |
| Real estate taxes | | | 13,200 | | | | 13,437 | |
| | | | | | | | | |
| Net operating income | | $ | 79,874 | | | $ | 80,233 | |
| | | | | | | | | |
| Net operating income - percentage change over prior year | | | -0.4 | % | | | | |
| | | | | | | | | |
| Net operating income, excluding termination fees & other | | $ | 78,728 | | | $ | 79,368 | |
| | | | | | | | | |
| Net operating income, excluding termination fees & other - percentage change over prior year | | | -0.8 | % | | | | |
| | | | | | | | | |
| Net operating income | | $ | 79,874 | | | $ | 80,233 | |
| Straight line rents | | | (1,395 | ) | | | (1,747 | ) |
| Above/below market rent amortization | | | (1,464 | ) | | | (1,366 | ) |
| Non-cash ground rent | | | 370 | | | | 383 | |
| | | | | | | | | |
| Cash - Net operating income | | $ | 77,385 | | | $ | 77,503 | |
| | | | | | | | | |
| Cash - Net operating income - percentage change over prior year | | | -0.2 | % | | | | |
| | | | | | | | | |
| Cash - Net operating income, excluding termination fees & other | | $ | 76,239 | | | $ | 76,638 | |
| | | | | | | | | |
| Cash - Net operating income, excluding termination fees & other - percentage change over prior year | | | -0.5 | % | | | | |
The following table is a reconciliation of Net Income to Same Store net operating income:
| | | Three Months Ended September 30, | |
| | | 2009 | | | 2008 | |
| | | | | | | |
| Net income | | $ | 7,309 | | | $ | 1,746 | |
| Add/(deduct): | | | | | | | | |
| Interest income | | | (473 | ) | | | (221 | ) |
| Interest expense | | | 31,455 | | | | 36,037 | |
| Deferred financing costs | | | 1,579 | | | | 1,092 | |
| Recognized hedge activity | | | 1,517 | | | | - | |
| Equity in income of real estate ventures | | | (1,331 | ) | | | (1,059 | ) |
| Depreciation and amortization | | | 51,422 | | | | 50,019 | |
| Gain on early extinguishment of debt | | | (5,073 | ) | | | - | |
| General & administrative expenses | | | 5,018 | | | | 6,863 | |
| Total discontinued operations | | | (1,384 | ) | | | (5,594 | ) |
| | | | | | | | | |
| Consolidated net operating income | | | 90,039 | | | | 88,883 | |
| Less: Net operating income of non same store properties | | | (5,415 | ) | | | (2,654 | ) |
| Less: Eliminations and non-property specific net operating income | | | (4,750 | ) | | | (5,996 | ) |
| | | | | | | | | |
| Same Store net operating income | | $ | 79,874 | | | $ | 80,233 | |
BRANDYWINE REALTY TRUST
SAME STORE OPERATIONS - YEAR
(unaudited and in thousands)
Of the 245 properties owned by the Company as of September 30, 2009, a total of 232 properties ("Same Store Properties") containing an aggregate of 22.6 million net rentable square feet were owned for the entire nine month periods ended September 30, 2009 and 2008. Average occupancy for the Same Store Properties was 90.2% during 2009 and 92.8% during 2008. The following table sets forth revenue and expense information for the Same Store Properties:
| | | Nine Months Ended September 30, | |
| | | 2009 | | | 2008 | |
| | | | | | | |
| Revenue | | | | | | |
| Rents | | $ | 345,444 | | | $ | 352,821 | |
| Tenant reimbursements | | | 53,684 | | | | 52,350 | |
| Termination fees | | | 1,625 | | | | 4,462 | |
| Other | | | 1,312 | | | | 1,425 | |
| | | | 402,065 | | | | 411,058 | |
| | | | | | | | | |
| Operating expenses | | | | | | | | |
| Property operating expenses | | | 118,367 | | | | 118,378 | |
| Real estate taxes | | | 39,765 | | | | 41,497 | |
| | | | | | | | | |
| Net operating income | | $ | 243,933 | | | $ | 251,183 | |
| | | | | | | | | |
| Net operating income - percentage change over prior year | | | -2.9 | % | | | | |
| | | | | | | | | |
| Net operating income, excluding termination fees & other | | $ | 240,996 | | | $ | 245,296 | |
| | | | | | | | | |
| Net operating income, excluding termination fees & other - percentage change over prior year | | | -1.8 | % | | | | |
| | | | | | | | | |
| Net operating income | | $ | 243,933 | | | $ | 251,183 | |
| Straight line rents | | | (4,293 | ) | | | (11,829 | ) |
| Above/below market rent amortization | | | (4,809 | ) | | | (4,376 | ) |
| Non-cash ground rent | | | 1,103 | | | | 1,149 | |
| | | | | | | | | |
| Cash - Net operating income | | $ | 235,934 | | | $ | 236,127 | |
| | | | | | | | | |
| Cash - Net operating income - percentage change over prior year | | | -0.1 | % | | | | |
| | | | | | | | | |
| Cash - Net operating income, excluding termination fees & other | | $ | 232,997 | | | $ | 230,240 | |
| | | | | | | | | |
| Cash - Net operating income, excluding termination fees & other - percentage change over prior year | | | 1.2 | % | | | | |
The following table is a reconciliation of Net Income to Same Store net operating income:
| | | Nine Months Ended September 30, | |
| | | 2009 | | | 2008 | |
| | | | | | | |
| Net Income | | $ | 12,216 | | | $ | 23,556 | |
| Add/(deduct): | | | | | | | | |
| Interest income | | | (1,695 | ) | | | (603 | ) |
| Interest expense | | | 102,045 | | | | 109,822 | |
| Deferred financing costs | | | 4,725 | | | | 3,798 | |
| Recognized hedge activity | | | 1,822 | | | | - | |
| Equity in income of real estate ventures | | | (3,450 | ) | | | (3,838 | ) |
| Depreciation and amortization | | | 155,852 | | | | 151,627 | |
| Net loss on sale of undepreciated real estate | | | - | | | | 24 | |
| Gain on early extinguishment of debt | | | (23,724 | ) | | | (3,106 | ) |
| General & administrative expenses | | | 15,491 | | | | 17,902 | |
| Total discontinued operations | | | 47 | | | | (27,696 | ) |
| | | | | | | | | |
| Consolidated net operating income | | | 263,329 | | | | 271,486 | |
| Less: Net operating income of non same store properties | | | (9,158 | ) | | | (7,187 | ) |
| Less: Eliminations and non-property specific net operating income (loss) | | | (10,238 | ) | | | (13,116 | ) |
| | | | | | | | | |
| Same Store net operating income | | $ | 243,933 | | | $ | 251,183 | |
