FOR IMMEDIATE RELEASE
Contact:
Press Contact: Investor Contact:
- -------------- -----------------
Michael Beckerman Gerard H. Sweeney
Beckerman Public Relations Christopher P. Marr
908-781-6420 Brandywine Realty Trust
michael@beckermanpr.com 610-325-5600
info@brandywinerealty.com
Brandywine Realty Trust Announces First Quarter 2003 Earnings
PLYMOUTH MEETING, PA, April 24, 2003 - Brandywine Realty Trust (BDN-NYSE)
announced today that fully diluted earnings per share (EPS) were $.30 for the
first quarter of 2003, a decrease of $.25 per share as compared to $.55 for the
first quarter of 2002. Net income was $13.9 million for the first quarter of
2003, a decrease of $9.6 million, as compared to $23.5 million for the first
quarter of 2002. The decrease in net income and EPS in the first quarter of 2003
as compared to the similar period in 2002 was primarily due to the net gain on
disposition of discontinued operations of $.6 million in 2003 as compared to
$8.4 million in 2002.
Fully diluted funds from operations (FFO) were $30.1 million or $.65 per share
for the first quarter 2003 compared to $32.4 million or $0.68 per share for the
first quarter of 2002. FFO represents a non generally accepted accounting
principle ("GAAP") financial measure. A table reconciling FFO to net income, the
GAAP measure that the Company believes to be most directly comparable, is within
the consolidated financial statements included in this release.
"We executed very well against our first quarter 2003 business plan in what
continues to remain a challenging leasing environment. Our occupancy at the end
of the quarter slightly exceeded our expectations. Our financial results,
particularly on a same store basis, were impacted by excessive snow removal
expenses. We continue to achieve high tenant retention and remain focused on our
tenant service platform. As expected, capital costs and lease rates remain under
pressure, however, our first quarter statistics were directly in line with our
business plan goals. Overall, we remain encouraged by our transaction flow and
the strength of our market position," commented Gerard H. Sweeney, Brandywine's
President and Chief Executive Officer.
Brandywine Realty Trust Summary Portfolio Performance
o FFO payout ratio was 68.2% for the quarter
o Quarterly rental rate decreases on new leases were 7.9% on a cash basis and
4.8% on a straight-line basis
o Quarterly rental rate decreases on renewals were 2.9% on a cash basis and .8%
on a straight-line basis
o Quarterly retention rate was 70.3%
o Portfolio was 90.0% occupied and 91.7% leased as of March 31, 2003
o Leases expired or were terminated for approximately 777,000 square feet
during the quarter
o Leases were renewed for 546,000 square feet during the quarter
o New leases were signed for 135,000 square feet during the quarter
401 Plymouth Road, Suite 500 o Plymouth Meeting, PA 19462
Phone: (610) 325-5600 o Fax: (610) 325-5622 o www.brandywinerealty.com
Distributions
On March 25, 2003, the Board of Trustees declared a regular quarterly dividend
distribution of $0.44 per common share that was paid on April 15, 2003 to
shareholders of record as of April 4, 2003.
2003 Financial Outlook
As a result of economic conditions in the Company's markets, we continue to
experience challenging operational conditions resulting in difficult earnings
visibility. Our expectations for 2003 are based on the following key
assumptions:
o Occupancy is expected to decline slightly from the levels achieved in 2002.
o Same-store net operating income is expected to decrease in the range of 1.5%
to 3.0%.
o Operating expenses (excluding snow removal) and real estate taxes and general
and administrative expenses as a percentage of revenues are expected to be
consistent with those experienced in 2002.
Based on these key assumptions and management's view of current and anticipated
market conditions, we affirm our guidance from our February 27, 2003 press
release and continue to expect the second quarter 2003 EPS to be $.26 - $.29 per
share and FFO to be $.65 - $.67 per share and full year 2003 EPS to be $1.11 to
$1.17 and FFO to be $2.62 - $2.69 per share.
Forward-Looking Statements
Estimates of future earnings per share and FFO per share 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 the actual results, performance, achievements or
transactions of the Company and its affiliates 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: the Company's 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 and equity
financing, competition for real estate acquisitions and risks of acquisitions,
dispositions and developments, including the cost of construction delays and
cost overruns, unanticipated operating and capital costs, the Company's 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 the Company's tenants compete. Additional information on
factors which could impact the Company and the forward-looking statements
contained herein are included in the Company's filings with the Securities and
Exchange Commission, including the Company's Annual Reports on Form 10-K. The
Company assumes no obligation to update or supplement forward-looking statements
that become untrue because of subsequent events.
Non-GAAP Supplemental Financial Measures
Funds from Operations (FFO)
- ---------------------------
FFO is a widely recognized measure of REIT performance. Although FFO is a
non-GAAP financial measure, the Company believes that information regarding FFO
is helpful to shareholders and potential investors. The Company computes 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 the Company. NAREIT defines FFO
as net income (loss) before minority interest of unitholders (preferred and
common) and excluding gains (losses) on sales of depreciable operating property
and extraordinary items (computed in accordance with GAAP); plus real estate
related depreciation and amortization (excluding amortization of deferred
financing costs), and after adjustment for unconsolidated joint ventures. The
GAAP measure that the Company believes to be most directly comparable to FFO,
net income, includes depreciation and amortization expenses, gains or losses on
property sales and minority interest. In computing FFO, the Company eliminates
substantially all of these items because, in the Company's view, they are not
indicative of the results from the Company's property operations. To facilitate
a clear understanding of the Company's 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 generated from operating activities 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 the Company's financial
performance or to be an alternative to cash flow from operating activities
(determined in accordance with GAAP) as a measure of the Company's liquidity,
nor is it indicative of funds available for the Company's cash needs, including
its ability to make cash distributions to shareholders.
Cash Available for Distribution (CAD)
- -------------------------------------
Cash available for distribution, CAD, is a non-GAAP financial measure that is
not intended to represent cash flow for the period and is not indicative of cash
flow provided by operating activities as determined under GAAP. CAD is presented
solely as a supplemental disclosure with respect to liquidity because the
Company believes it provides useful information regarding the Company's ability
to fund its dividends. Because all companies do not calculate CAD the same way,
the presentation of CAD may not be comparable to similarly titled measures of
other companies.
BRANDYWINE REALTY TRUST
CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands, except per share information)
March 31, December 31,
2003 2002
------------ ------------
ASSETS
Real estate investments:
Operating properties $ 1,908,948 $ 1,886,329
Accumulated depreciation (255,743) (244,490)
------------ ------------
1,653,205 1,641,839
Construction-in-progress 39,371 58,127
Land held for development 43,797 43,075
------------ ------------
1,736,373 1,743,041
Cash and cash equivalents 8,543 26,801
Escrowed cash 17,473 16,318
Accounts receivable, net 4,454 3,657
Accrued rent receivable 29,824 28,320
Investment in marketable securities 11,840 11,872
Assets held for sale 8,853 10,648
Investment in joint ventures, at equity 14,911 14,842
Deferred costs, net 28,620 29,256
Other assets 31,984 34,533
------------ ------------
Total assets $ 1,892,875 $ 1,919,288
============ ============
LIABILITIES AND BENEFICIARIES' EQUITY
Mortgage notes payable $ 591,597 $ 597,729
Borrowings under Credit Facility 295,000 307,000
Unsecured term loan 100,000 100,000
Accounts payable and accrued expenses 23,153 27,576
Distributions payable 21,227 21,186
Tenant security deposits and deferred rents 22,843 22,237
Other liabilities 20,335 22,006
Liabilities related to assets held for sale 33 59
------------ ------------
Total liabilities 1,074,188 1,097,793
Minority interest 134,869 135,052
Beneficiaries' equity:
Preferred Shares:
7.25% Series A Preferred Shares, $0.01 par value;
shares authorized-10,000,000; issued and
outstanding-750,000 in 2003 and 2002 8 8
8.75% Series B Preferred Shares, $0.01 par value;
shares authorized-10,000,000; issued and
outstanding-4,375,000 in 2003 and 2002 44 44
Common Shares of beneficial interest, $0.01 par value;
shares authorized-100,000,000; issued and
outstanding-35,301,820 in 2003 and 35,226,315 in 2002 353 352
Additional paid-in capital 843,682 841,659
Share warrants 401 401
Cumulative earnings 238,558 225,010
Accumulated other comprehensive loss (5,925) (6,402)
Cumulative distributions (393,303) (374,629)
------------ ------------
Total beneficiaries' equity 683,818 686,443
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Total liabilities and beneficiaries' equity $ 1,892,875 $ 1,919,288
============ ============
BRANDYWINE REALTY TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except share and per share data)
Quarter Ended March 31,
-------------------------
2003 2002
------------ ------------
Revenue
Rents $ 65,137 $ 59,962
Tenant reimbursements 8,686 7,453
Other 2,732 2,880
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Total revenue 76,555 70,295
Operating Expenses
Property operating expenses 21,843 18,446
Real estate taxes 6,708 5,832
Interest 15,306 15,730
Depreciation and amortization 15,002 12,461
Administrative expenses 3,514 4,036
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Total operating expenses 62,373 56,505
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Income from continuing operations before equity in income of real estate ventures,
net gain on sales of interests in real estate and minority interest 14,182 13,790
Equity in income of real estate ventures 158 464
------------ ------------
Income from continuing operations before net gain on sales of interests
in real estate and minority interest 14,340 14,254
Net gain on sales of interests in real estate 1,152 -
Minority interest attributable to continuing operations (2,332) (2,361)
------------ ------------
Income from continuing operations 13,160 11,893
Discontinued operations:
Income from discontinued operations 234 3,823
Net gain on disposition of discontinued operations 561 8,446
Minority interest (38) (693)
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Income from discontinued operations 757 11,576
------------ ------------
Net Income 13,917 23,469
Income allocated to Preferred Shares (2,976) (2,977)
------------ ------------
Income allocated to Common Shares $ 10,941 $ 20,492
============ ============
Earnings per Common Share after discontinued operations:
Basic income per Common Share $ 0.30 $ 0.56
============ ============
Basic weighted-average shares outstanding 35,300,142 35,700,964
============ ============
Diluted income per Common Share $ 0.30 $ 0.55
============ ============
Diluted weighted-average shares outstanding 35,369,883 35,749,669
============ ============
BRANDYWINE REALTY TRUST
FUNDS FROM OPERATIONS AND CASH AVAILABLE FOR DISTRIBUTION
(unaudited, in thousands, except share and per share data)
Quarter Ended March 31,
-------------------------
2003 2002
------------ ------------
Reconciliation of Net Income to Funds from Operations (FFO):
Net income $ 13,917 $ 23,469
Add (deduct):
Minority interest attributable to continuing operations 2,332 2,361
Net gain on sale of interests in real estate (1,152) -
Minority interest attributable to discontinued operations 38 693
Net gain on disposition of discontinued operations (561) (8,446)
------------ ------------
Income before net gains on sales of interests in real estate and minority interest 14,574 18,077
Add:
Depreciation:
Real property 13,388 12,353
Real estate ventures 493 581
Amortization of leasing costs 1,640 1,367
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Funds from operations (FFO) $ 30,095 $ 32,378
============ ============
Number of weighted-average Common Shares 46,626,668 47,358,998
============ ============
FFO per weighted-average Common Share - fully diluted $ 0.65 $ 0.68
============ ============
Dividend per Common Share $ 0.44 $ 0.44
Payout ratio of FFO (1) 68.2% 64.4%
EPS per weighted-average Common Share - fully diluted $ 0.30 $ 0.55
Cash Available for Distribution (CAD):
FFO $ 30,095 $ 32,378
Add (deduct):
Rental income from straight-line rents (1,484) (1,369)
Deferred market rental income (66) -
Amortization:
Deferred financing costs 495 525
Deferred compensation costs 812 889
Second generation capital expenditures (2):
Building and tenant improvements (5,317) (3,227)
Lease commissions (1,381) (1,623)
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Cash available for distribution $ 23,154 $ 27,573
============ ============
Number of weighted-average Common Shares 46,626,668 47,358,998
============ ============
Dividend per Common Share $ 0.44 $ 0.44
Cash flows from:
Operating activities $ 25,339 $ 23,499
Investing activities (6,601) 17,531
Financing activities (36,996) (24,039)
(1) Payout ratio is calculated by dividing dividend per Common Share by FFO per
weighted-average Common Share
(2) Represents expenditures incurred during the period (regardless if lease
commencement is after quarter end). Excludes first generation costs, which
consist of capital expenditures, tenant improvements and leasing
commissions associated with development and purchase price adjustments
relating to acquisitions (including seller escrows, purchase price
reduction or costs anticipated to initially lease-up acquired properties).
BRANDYWINE REALTY TRUST
SAME STORE OPERATIONS
(unaudited)
Of the 238 properties owned by the Company as of March 31, 2003, a total of 225
properties ("Same Store Properties") containing an aggregate of 14.8 million net
rentable square feet were owned for the entire three-month periods ended March
31, 2003 and 2002. Average occupancy for the Same Store Properties during the
three-month periods ended March 31, was 90.6% during 2003 and 92.0% during 2002.
The following table sets forth revenue and expense information for the Same
Store Properties:
Quarter Ended March 31,
---------------------- Dollar Percent
2003 2002 Change Change
----------- ---------- ---------- -----------
(amounts in thousands)
Revenue
Rents (a) $ 57,714 $ 57,960 $ (246) -0.4%
Tenant reimbursements 8,267 7,991 276 3.5%
Other 1,210 1,174 36 3.1%
----------- ---------- ----------
Total revenue 67,191 67,125 66 0.1%
Operating Expenses
Property operating expenses (b) 22,337 18,882 3,455 18.3%
Real estate taxes 6,147 5,808 339 5.8%
----------- ---------- ----------
Total property operating expenses 28,484 24,690 3,794 15.4%
----------- ---------- ----------
Net operating income $ 38,707 $ 42,435 $ (3,728) -8.8%
=========== ========== ==========
(a) Includes straight-line rental income of $1,070,000 for 2003 and
$1,204,000 for 2002
(b) Includes snow removal costs of $3.6 million in 2003 and $.7 million
in 2002
The following table is a reconciliation of income from continuing operations to
Same Store net operating income:
Quarter Ended March 31,
-------------------------
2003 2002
------------ ------------
(amounts in thousands)
Income from continuing operations $ 13,160 $ 11,893
Add/(deduct):
Interest expense 15,306 15,730
Depreciation and amortization 15,028 13,720
Administrative expenses 3,514 4,036
Equity in income of real estate ventures (158) (464)
Net gain on sale of interests in real estate (1,152) -
Minority interest attributable to continuing operations 2,332 2,361
Income from discontinued operations 234 3,823
------------ ------------
Consolidated net operating income 48,264 51,099
Less: Net operating income of non same store properties (9,557) (8,664)
------------ ------------
Same Store Net Operating Income $ 38,707 $ 42,435
============ ============
First Quarter Earnings Call and Supplemental Information Package
Brandywine President and CEO, Gerard H. Sweeney, will be hosting a conference
call on Friday, April 25, 2003 at 1:00 p.m. EST. Call 1-877-679-9045. After the
conference, a taped replay of the call can be accessed 24 hours a day through
Friday, May 9, 2003 by calling 1-800-615-3210 - access code 97355.
The Company has prepared a Supplemental Information package that includes
financial results and operational statistics to support the announcement of
first quarter earnings. The Supplemental Information package is available
through the Company's website @ brandywinerealty.com. The Supplemental
Information Package will be found in both the "About The Company" section and
the "Investor Relations - Annual Reports" section of the web page.
Brandywine Realty Trust, with headquarters in Plymouth Meeting, PA and regional
offices in Mount Laurel, NJ and Richmond, VA, is one of the Mid-Atlantic
Region's largest full-service real estate companies. Brandywine owns, manages or
has an ownership interest in 290 office and industrial properties, aggregating
20.5 million square feet.
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