BDN - Earnings call transcript Q3 2018 | Brandywine Realty Trust

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Operator

Good day, ladies and gentlemen and welcome to the Brandywine Realty Trust Third Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference Mr. CEO. and President Sweeney, Jerry Sir, your begin. may

Jerry Sweeney

me Shelby, you meaning all you earnings of On today Operations; very Vice our third much. thank and call. with - call everyone Dan morning today's George for President XXXX Johnstone, Executive Good quarter thank are participating Palazzo, during our Accounting in statements and Financial beginning, to Officer. Wirth, President the our may Executive forward-looking our of discussed constitute call Vice the law. our Officer; Vice Securities and within Prior certain Chief Tom President Chief Federal information and

based estimates reasonable that Although in be we believe reflected results anticipated we these achieved. assurance statements give are on cannot will assumptions, the

For filed please annual most further our recent impact press with factors quarterly as anticipated could reports that our the reference and information SEC. we results, release, on that our as well

a fourth the changed trajectory. manage background, quarter guidance, had long-term our transactions two going been we our improve quarter, release significant last a the capital and on very we and productive, now sheet. of balance third part and over XXXX company's earnings growth of announced earnings several to fairly we've profile, opportunities, into So effectively also our create as development years value track mixed-use control cost, driving our growth way By that

XXXX over Virginia. flow also part fringes X% Northern business we ratios, anticipated grown our increase the in in resulted Pennsylvania capital years. revenue of the our over markets all and about net We same-store the same-store contributions levels. a were process XX% the Road as targets strengthened That several properties, submarket limited Jersey, reduced about substantially in net our rents properties Richmond, of our Now like rents effective last Suburbs positioning. effective in consequence, XXXX from growth plan process the cash has slow a New improved growth Toll we and In

on announced that accomplishes Northern objectives. swap Virginia, following track key believe Austin builds and the revenue that So the we record

DC our perspective, metric but owned is one company mid-operations capital candidates corner think revenues. though a from Road X% X% transfers higher stay total a GAAP Herndon. growth cash, from from a XXXX First, our good minus portfolio, quarter which Austin our focus contribution I will market into increases of it of growth long-term and average desire of it Tysons somewhat that XXXX. cash XX% to XX% It's potential, to revenue to average ratio concession XX% really from It to reduce our a moves of be our wholly parcels, also tenant base rates hence couple engaged X% while been improvement slower the with XXXX where an moves mark-to-market plus X% overall have close wholly-owned commission and capital XX% we a a mark-to-market redevelopment on revenues, Austin characterized does And of on revenues a and that's GAAP Austin our respectively XX%. the Toll and market basis to by have costs. and an It on Austin development the in where dollars in from than in with average our has

our capital through the better assets structure. a our capital results retained fee on capital return By in return the the a from revenue. we to single transaction Nova XX% next including promote and several in will digits XX% over double our digits way be on in a invested increasing years over different invested example, So stake low this our much high the creating stake by of

really these portfolio. $XX non-core best return capital through delivered thank partnership. to great where and XX% out great are have evidenced launch provide XX% package We we’re And and realizing property of our of for of X we're our transactions our each will their growth DRA Pages and supplemental promote with and with can shareholders a also pleased markets and did that value the such in a return framed the have to on structure plus we’re on Rockpoint assets more currently NAV details DRA, a we level be to rate our the of by retained investment found slower We interests delighted as we'll stake of services. in partnership X our structure these deliver the million

believe of that balance approach. signaled we have will asset all are the you be neutrality, the and of sales to proceeds sheet transactions that structure these We momentum from maintain deployed that and earnings with create consistent

with important X% growth FFO the announcing estimates some also changes the as for highlights, XXXX Tom earnings, that key a shift which key of at will revenue when that analysts about policy So rate backdrop, FFO adjusted and midpoint. accounting talk growth is we're the

which XXX average XX%. basis below levels We this this XX% of business at out of does growth interestingly X% is anticipate over going last which primarily to annual the include is Cash an already average that our Our wholly-owned. the do year-end a above at for will driven XX% a XXXX CAD does of range points two of our XXXX which changes at XX% CAD Occupancy again policy improvement and growth Stake as will of Page at NOI sup. to not XX% on of rate levels rate the of performance growth by KPMG year's DRA outlined million be by bring of are XX% X% the adjusting time. retention to $XX top be the about move-out. plan these X any end leasing sales with year state our accounting revenue that assets of achieved midpoint between on to

to in that and X% but about high cash XX% a capital between XX%, our XXXX up mark-to-market GAAP was digits X%, level XXXX. for revenues to EBITDA that slightly Our the from anticipate primarily will renewal. X.X at XX% X% on and the we remain due will no will Tom touch will mark-to-market and between between starts single be capital and XXXX in level the upon run really of range in development depending to which a X.X financing Debt large of plans

So FFO, grows bottom XXXX track ratios remain the during strong the The year. our forecast long-term sheet capital grows so of is of up-charge remain our on improve keeps X% CAD, with in course the to mark-to-market. the balance strong, we'll trying the midpoint at that range, focused on same-store

one in do also least at We development XXXX. expect story

requiring totally the transactions DRA with our of moments are track. on a track due and and of our which business overview, So metrics adjustment of on XXXX to just Rockpoint plan that the exception is those on all couple XXXX with

GAAP data our XX.X% leased. specific at year XX% of the And also end points. XX.X% XX% our the range we’ve GAAP occupied, talked a very remains targeted coming assets capital other well X.X% mark-to-market XX% of for access targeted include quarter. of Some with basis previous some solid a and of our addition same-store XX% Leasing range. on We and about Retention within in range and this did and both on of ahead in XX% of numbers above on a basis almost cash upper the our the to for target for for on basis quarter. a and of anticipated was our hosting the and that XX% basis XX% the quarter a range. ended those year to were the couple quarter our a cash for on calls, the Mark-to-market as we same-store XX%

narrow quarter and the that the of a of Development to anticipate square targeted result of capacity XXXX fourth feet of Couple XXXX our remains to balance our in X.XX remains progress in the being we mixed to guidance share. we being transactions did related spaces a and X.XX the use. plan, about closing with targeted that X% on for per FFO within square development, moments with about the million continued As assets. given land life X% office, of range footage XX% bank our XX business science

initial provide in our return than the in Southwest a activities significantly capital which executing $X.X be XX by just developments XX will specifics, right master the a XX% complex on us earnings we now development line over return X.X%. of has which warranted in will shy Yards end feet cash cost proceeds Road stabilized multiyear effectively did we’re Cost leased and land XX% is will XXX is generate outline $XXX and to a Austin million conditions. Pipeline an and supplemental these Couple our Garza, base average turned million less tenants total obviously an At completed lease on Broadmoor an a sale of basis of slightly year. of gain. yield this unfunded. stands package. with outstanding cost outstanding $XX of at success and the use estate opportunity our with real North projects XXX,XXX land Our yield Schuylkill of We square of million out X.X% Pages average by grow $XXX for term. and by Bottom Project projected Gulph development almost a Philadelphia market as recognized to an $XX million mixed story. be cash to generate million cost generated of on renovation on remains plan have Austin,

we building will foot square earning anticipate by be on next development do approximating million FHI. underway XXXX build XXX,XXX delivered $X.X for our over year-end are quarters. and six We the suite That fees to

another can do foot In office we site land have addition Garza building. that square at XXX,XXX

into pretty cash quarter cash Colorado project market year-end estimated of position market go, building with million. that below just about breaking That Similarly on square ground development a year-end in start could and XX%. we the at that is at XX% is just that Four delivering XXX% on XXX,XXX a there construction heavily much the to based project be on building like an XXX,XXX position foot we pricing we projected downtown ready in XXXX. Austin anticipate Garza prerelease. X.X% budget on is return $XXX XXXX. return square of cost at and initial have on Austin. do are to we plan leased building, in in design We're targeting XXX other cost and on cost. or our based we Points, underway. is a Four start by to process X.X% is on Points story to of our first Similar renovation. finalized, five The wrapped and underway plan We in foot marketing the building Four excellent development pipeline Broadmoor secure activity a an return be leased, conditions XXXX once active by

be purchasing They second completed During for of ago building our of that building Subaru the months will building the the a quarter in also of construction we occupancy America. during and couple quarter. fourth took

expect record $X.X at to gain a closing. million We

last an by pleased the Master level total end And also equity tremendous is and X the to The at Yards, mentioned pipeline, the Our holding finalize as million could start financing start per our multi-family. for will office, now well from to XXXX. last base we thus identify foot with planning tenant by we're frankly incremental the is goes of for as approvals done on commence a a Since we're now partners, square conditions, place development for of been all quite we Crossing a baseline first final are investment Broadmoor embedded per over work objective position Broadmoor, then the of stage We're into end Design equity a of profit call, in of site financing quarter in process exploring XXXX. than foot, and the alternatives. that seeing and interest we X year design, range an far under related which hopefully have resting both well X, of less the tenants mix the Phase plan and Knights underway select Schuylkill and also one of on is to if with value project feet product partners. and $X Phase Camden valuing $XX in million. subject actively square remains in buildable be potential which way. development equity land has with market in consist

Before up, XXXX couple of points the escalation but I in forecast. wrap

and acquisition further of retention driven X% quarter XX%, GAAP mark-to-market one to around range during be XX% mentioned, We between KPMG leasing as between XX% year. a X% the will the store programming cash sales and X% or as again below by the not to same occurring least I X%, supplemental of blended be fourth on we're we $XX average identified numbers do rate expecting anticipate of in package X% primarily XXXX. at basis. a mark-to-market The between will capital cash between of be development the to start We expect to revenues, do we activity are our any $XXX million in XXXX, course during in million and

let an for that operations our me with overview turn So, over of plans. and some on quarter business XXXX George third it to color

George Johnstone

and business complete. the quarter XXXX morning. good busy is third and Thank you, Jerry, virtually was It plan a

our importantly XXXX More off great leasing start. a continued business to momentum as plan

During remains The points we minimal The excluding X.X number same into of up XX% inspected range business mark-to-market square XX XX%, negotiations. of of at XX% were XX% inspections, a Pennsylvania amount of feet square Rockpoint previously The footage the plan terms metrics the The space properties saw a GAAP activity over totaled basis guided. to the development advanced square square XXX,XXX contribution from last from million CBD a of to joint XXXX to range to to other metrics. is generated to venture, of of square Approximately quarter. mid-point, leader still retention performed based quarter. achieve of XX% XXX,XXX perspective tours left Tenant of store the stages GAAP third feet, suburbs feet. our quarter a declined and Philadelphia in XXX adjust while lease of last redevelopment XX% growth did up decreased Road in biggest this Spec All our increased at fourth on four as quarter million the X% footage. and NOI revenue XX%. gain from pipeline pipeline from previous the Toll million. XXXX eight $XX.X $X properties we increased is were

assumptions now the business markets Turning to we're Street for contained CBD the quarter. four XX% XXXX plan, Market having during the leased, underlying in floor XXXX our in Philadelphia, leased last our at

an executed Logan DecemberXX, five Square. renewal Two is in also or Comcast lease have backfill to vacated is will XXXX occupancy be floors, the We XX,XXX before square largest next take the in XX foot a The the four at rollover of of now city XXXX. foot for due which tenancy, will on backfill XX,XXX This January square XXXX lease where XXXX.

cash the Philadelphia will be X% Pennsylvania on XX% that square exercised. Mark-to-market three Suburbs, GAAP leases and for in be In leased Our the encouraging. basis we’re blocks to majority XX% this a of of to leases expectations will are X% remain auction our totaling touring on range with in a going to achieved and XX% available, activity Radnor. XX,XXX larger levels We space basis. feet had

Road their plan effective will receiving 'XX. terminate square the Shifting XX,XXX Gulph early. facilities. to year-end they shortly entertaining them XX, XXX,XXX Metro X% in quarter assumed relocating the in AT&T with known only square square September next noticed feet in plan. is XX,XXX potential At are XXXX year to leased notice is North We of contribution move business XXXX XXXX ranging XX,XXX by square during for to have available Drive, International XX,XXX fourth out have the online. currently of D.C., be each Prussia's to feet. in from feet out one Tysons of XXX we revenue terminate and Two-thirds KPMG of will Pennsylvania our square proposals anticipate corporate three has vacate beginning August Suburbs to Only inventory one during is square water and exposure over assumes proposals. our which the renewal with will XXXX this XXXX. Roll increase XXXX tenancies owned feet feet ability foot manageable. over and King the lease coming We

progress vehicular areas Our planning improving out, comprehensive common and the access at and continues indoor redevelopment the to property, amenities This upgrading to make XXXX. plan within existing entails building. both upgrading

opportunity a XX% and well the be. Austin and XX% Austin six the X%. in with square building XX% has prospects than to to leased XX% was we're product been incremental our assets by by XX,XXX Demand Increase received renovated submarket Broadmoor feet Rent return XXXX acquired, to buildings contemplated on to to capital our XXX,XXX the XX% numerous portfolio investment. less increase robust. Austin leased for prospects a layering cash currently Tysons a over about between XX% square a ranging feet. leasing provides plan a Our is been growth in number XX be XX% with rents and of in great to brokers on for on our from to has basis. been well We'll GAAP see basis In continues XX% spreads

XX% In as XXX move-outs that AT&T Austin and cash our will XXXX a basis but mix X% business previously for metrics this occupancy generate to of of it point between NOI. points and These for KPMG part turn store Tom. mentioned properties account I’ll for It’s XXX noting XXXX. terms basis operating same worth points metric. cash are the plan, properties the worth-noting have acquired that NOI XX of same-store And of point, on not it's basis impact over would growth Comcast, XXXX at for also and the

Thomas Wirth

you, Thank George.

net quarter diluted FFO million $X.XX was or diluted $X.XX loss per $XX million share. totaled per share Our third and $XX or

Some our third general observations quarter regarding results.

$XX estimated generated of share. was impairment by an Our about unamortized third generated million The of joint million. $X.XX $X includes a diluted impairment or venture in and quarter which million and Virginia an to announced cost cost of net over $XX result closing impairment was per charge loss Northern an close straight-line

fourth the Our quarter. is incremental expectations results our meet in operating an quarterly improvement expected and

XXXX Northern current portfolio trends. and As venture Jersey sales operating a we've into joint outlined, and in George metrics business anticipated adjusted our

ratios being respectively, interest - fixed on X a to improve Our and quarter metrics third balance both coverage sheet to X improvement rate compared continues XXXX. being our a non-percent and charges with of X.X as

X.X of EBITDA was to our on lower loan the inline debt at at year projections. the announced net million $XX.X constant timing realized end. income Our depending with which we Property totaled level anticipate to ratio remain transactions, be our

Looking income improved by compared is due to - a quarter quarter third core to and increase little be property and occur to our up fourth bit annually operating to we million third the the assumptions, $XX.X will in following this increase with the portfolio. totaled the quarter dollars, flat occupancy about from million level primarily a expect

on revenue, buying so that remaining a We $X the million expect $X will do on As from than quarter. million, debt due roughly are capital December will on George XX.X%, done FFO primarily XXXX, at of of unconsolidated anticipate income any this transaction. million. the contribution not $XX.X income being joint the from be we XX% still G&A interest of the result million spec about them ventures we will minimal share, Subaru, million. remain with rate is some during $X.XX impact $X.X should to about building expenditures, Interest XXXX. mentioned, at fixed guidance. $X were is do number to year-end recognized beyond million, less We so lease this our of be from expense FFO steady increase per $X timing XX.X%.

about interest capitalized $X expect the quarter. be million to for We

either with ATM will termination and be our buyback. no and management will $X.X fee or from and million, total other in activity $X.X developments million Our additional NOI approximately

C. in activity, we financing term on do plan closing Additional loan October on

recast $X.X in annual resulting spread increase to amount X.X% the we of swapped loan no to will million loan, loan. on a loan recasting an basis already change the The roughly points, a rate, of that interesting loan a five to basis. by year term it is savings in about date from or by our XX be year seven expect maturity We with

mortgage Looking of when mortgage CAD. acquisition of capital prepayment. from year, for it asset $XXX still for the our becomes with is keep Including payoffs expect Austin at including we in to the payoffs, XXXX uses $XXX one our and plan million, this in open our range early related about occurring million

will we million our revenue maintained anticipate created have of $XX roughly of about we going two, after Virginia $XX $XXX million using will for million capital proceeds $XX cost and Term flow interest, $X revenue have We from of with dividends, the amortization on the X from We is high $XX million loan cash $XX roughly of roughly end million. the we have using related our financings five, venture to be net our year net hand EBITDA quarter, about the our in and debt about on mortgage cash of out proceeds XXs. Subaru XX million, of to million be joint million of the in debt-to-GAV area, the line. - debt refinancing $XX spend, sources and roughly and and the side remaining the of Northern anticipate $XX at of low on million our

addition, at anticipate ratio right now. fixed remaining charge and our In interest from year-end constant coverage constant our we remaining

have being less of roughly our included did in $X.XX have guidance, one in that therefore guidance you ventures, of guidance, we we not change, yet year an that, gets Looking on joint concluded end lease to But per costs XX%, earnings at change be analysts than no, probably assumptions on to million FFO $X.X the one will about not. about one the and due our be remainder we on expense Based cannot guidelines. ground $X.XX I accounting believe increase will XXXX we and guidance, be accounting at is, in at and our this that All XX% straight-line internal our of rent the $X.XX based as particular capitalized the update reduction this the primarily call. that quarter midpoint for that, leasing will to not anticipate and net within in share in outline some fourth our first ground of diluted little how on to diluted consensus, per the had income terms share. a

an the part generate Market million. roughly year. acquisition analyst the about operations will numbers about most should this $XX community will $XX generate for the our million GAAP consensus. not and increase for Portfolio the million, in generate Austin million, of So, included FMC Drexel from NOI of Plaza One XXXX incremental was $X in terms most $X

North Gulph assets reduce and should of NOI will $XX Our GAAP to our Road sale point sale of generate about $X million. the million. of about development DC redevelopments sale The XXX

ventures. looking we're joint FFO our unconsolidated Now, at contribution from

$XX.X G&A asset. from $X.X that a between We Virginia to primarily of million joint to additional capitalization. and million year, about this in Austin $XX of accounting our $XX decrease XX% XX% XXXX expect to in a new million have expense the due the be offset The having sale venture interest to Northern the million. And by million change we primary generate increase $X.X due is will due which interest

have no investment, we the $XX On one million our Interest include start. provision line Land credit $X.X net as have and about tax and throughout be or million This million have expense borrowings $X million. million. will on will to will acquisitions approximately set will $XX development we increase to expect the we and of million do sales a to interest positive. between dispositions year. $X $X Capitalized be

buyback approximately fees And ATM term activity. somewhat or numbers we're in dividend our $XX expect no income million, for total with is other XXXX fees what to which in running consistent No We about also. which anticipated million, is $X change the XXXX. total will about net and and quarterly management

throughout flow paid Austin maintain stay revenue million $XX million. amortization related $X the net financing $X $XXX will million $XXX or reduced use will of mortgage of to The to for how the of NOI done $XX million, about to As payoff of debt we mortgage interest EBITDA $X.X XXXX be variables and mortgage at whether we activity anticipate be $XXX cash which year, dividends $XX $XXX those of of million lower developments money of our during million. year are plan. portfolio till roughly $XXX around line A balance and that early and we off will after million, are million, JV our creating $XXX how of the main million, year-end. million, and and for partner We bring revenue Primary sources common be by spent one that equity a find development on payments million about and ratios. those much capital, will the course look million of to redevelopment, that it's

We now Jerry. over also our card be X.X and turn believe back fixed X.X I'll interest will and charge it our respectively. to

Jerry Sweeney

George, very much. and thanks Great. Tom

XXXX done So hope a to quarter that XXXX plan cash opportunities development to essential - up growth, and plans we wrap pipeline or plan the we good completed, balance good we represents redevelopment flow business that business really third earnings, and of outlined course the think steady during the continued sheet a actually of year.

you So ask follow-up. question in that, time, yourself for interest the we the open limit would be floor delighted up to would of to with questions. We that one and a

So, Shelby we can open up the line to questions now.

Operator

Jamie from Instructions] of America/Merrill Feldman first comes Lynch. Bank question Our [Operator with

now line Your is open.

Jamie Feldman

got rest market a are about more just coming, of know prospect move-out how - just about know the move-out on where the there's trophy to talk guys the and of could you assets backfill Downtown guys Philadelphia. you you've lot a you Reliance differentiation I spaces if think those between Macquarie We market. got coming, wondering and you was Standard a the I your do guys

kind big how over of So picture looks market just think couple your in of you prospects? the that of next years

George Johnstone

with both in George, direct to first new of I XXX,XXX it. their take Reliance subtenants mean, of are feet into space. is one look, examples beyond square Macquarie feet net. dive tenants expiration. We Jamie, is did square XX,XXX have Macquarie who go Macquarie's this and move at I'll opted

XX% views of will rents space The and to or space is early about that move market Square, eight We backfill Commerce a But rollover Two Commerce later about I makes XX/XX/XXXX. with are at other for kind I see they is opportunity a are top they exercising plus They're in the think, bank XX% below XX% floors city, that there. likely move. and of year expiring floors mean, the in their ultimately better similar be rate five of is Company. that someone below markets. minus our today. an the termination They probably better who rental you ask you markets can't are look are to do XXXX expire middle Reliance Square, almost a of

So we varying a most price see a XXXX into of XXXX of early kind of bank kind middle then get and structure good late honestly all nice of think when new mix opportunity at us and space development points. of Top I the trophy then that gives we some likely inventory space. quite

Jerry Sweeney

Everyone is can to who that add combination just keep said is with on inventory. have that and great And that tenant Jamie, time them Jerry, period George. being know to here a thanks if - of for we you

upticks seen couple So are that top away of on of that of activity. already tenants number not sublet. our part. good on with frankly the for tenancy a - of big we market backfills the space, of tenancy we’ve already touched put have play for out moving blocks already West permanent been of well we’ve the a on really the along leasing have teams had identifying But George Macquarie on And space piece larger that in think years as I a that of

in point addition a price do differentiation that spaces we like. two that really us these mark-to-market. gives that opportunity gives And So positive us with

now product Schuylkill and the We with of XXXX City. with have marketing our University game price being in of ends all Yards the convenient activity at low Square, Commerce points the difference

Jamie Feldman

in how you do you today do Virginia forward? Austin think about smaller your to going markets after portfolio like still I you'd think And trade, greater or be positioning then any the mean Northern

Jerry Sweeney

of out this good kept big good generating looking we a we’re market long-term we but footprint Yes, Austin. Toll that think think look I really I think that in think Dallas forward to we returns get move some and has Road kind we’ll of was the upside.

and the overtime and I that be pipeline. generating indicated with the additional great mark-to-market development suburbs opposed back high and XX% have to good fundamentally with pockets mark-to-market we We going feeder the us think forward. But of with up kind the keeping through probably we we mindful always is couple four. have generating pricing. GAAP couple portfolio constraints gone look very the or a suburban out real that think decision. with also that digit market really fund that’s single band capital I every you’ll fine impact in But but good we numbers to some capital we’re platform a hoping a making last the look mindful roll other. over of But we is within will we Maryland years Pennsylvania between sure to number up company same-store to of growth And properties operating rollovers positive metric particularly our make the we a prescription think and Jamie in going for for that right the two cash always there take yet The in of the at have within And one just And certainly us tune to shape. same-store the these public rollovers of higher day same-store. that are have estate metric XX% that see always the are for capital being XX%, cost our the

Jamie Feldman

forward of beyond look some show big guidance X% stuck years rise you do or AFFO in this kind I mean you you if think that that can move-outs your with these AFFO growth? ahead But number of growth,

Jerry Sweeney

would I extraordinarily in that strong numbers off when expect coming this an kind of year XXXX. took at we we think to were for and look the We rise year,

opportunities weighted We’re XX% a actually was run deployment next that going XX north months. at to we over rate. thought capital - your over take some our it think to based it’s and just where historical little upon be look the and of a We

get and do believe on the going be target XXXX back our business range this portfolio certainly to we’re that we portfolio XXXX that plan. with to to able So

Jerry Sweeney

we Jamie rate think Yes in look higher, the think is cycle business still at we that for as I our above FFO continue to our will go be long-term long-term growth over trend which CAD up.

Jamie Feldman

XXXX? you Do in think

Jerry Sweeney

but as I the I X% we mean some be we’ve done, I XXXX leasing get at X% think we look will within very will the positive don’t outlined. be XXXX of little think will it range to probably positive we as be a it

Operator

Our be with from next question Korchman Manny Citi. will

Your open. now is line

Manny Korchman

structure, the collecting choose that potential out promotes XX%? thought fees retain of the getting versus about of markets and the to did you retaining completely, Jerry up all versus XX% you the transaction cleaning and it just that it as weighing selling why Dallas

Jerry Sweeney

great a I on a going things it’s was thought decision. think mean Toll some allocation is I We here about I fundamentally capital and Road question think there's this we how Yes, it. the there. think like do long-term. good market We

revenue points market fabulous we thought on adapted I also more being we have of and Austin this very of higher contribution broke makes XX% to to out from local growth We bottom revenues, identifying feel lot lower to our leader mean who of where a really also our made line and we path from did think market valuable. market differentiation between platform growth company value fundamentally Philadelphia us. kind moving it supplemental like CBD, sense. we revenue quarter then think And really we’re increase team the have But we is a University smaller a I City. for in a where absolutely an

of country market the give proxy do when to felt allocation science, also performing smart with in that that the same-store great capital to opportunity thought Toll And that top as get if which arrangement value on XXXX. residential a to we a tremendous near-term is a have upside ability We coming life and we capital our and between the provided capitalized a activities and both and well transition with can coming all University in invested trying coming and that capital market Road in market invested the will. both fact catalyst of buildings City platform from where potential is we does leased platform decision us we that’s XX% hope submarkets partner will see attributes those creates sharing urban capital improves disruptor about providing also of XX% academic I from we recovers, we potentially return where company. the market XXXX the which that the one good will we out promote know XX% process XX% has rental the to - that from great bridging we in wholly-owned We in of with the market. of rate out our square at our We City. Herndon figure great go We looked Austin work long-term for XXX,XXX think the with through And kind incremental on near-term create to growth. how that really some expansion. the strong building to University in bridge think a decided have opportunity ourselves help kind think the tenant It a And on is think fully grow right vacate, we have provided development great revenues doing for as Tysons a as it now market a more us XXXX focus foot we the a a mechanism return effective there but property well. we out kept through

do out and Silver tenancies is out continued that return has a as on we and coming long-term the the proxy for of LIBOR believe invested capital airport. for So of maintain the if growth marketplace it the good some the Line us to all still XX% to better movement metric

Manny Korchman

deal then you exposure it frame sell something you did somebody it they their you is to to your approach was approached and something else. Austin Or that that can they on, them? together, increase wanted came for And in just us want stakes how to you that

Jerry Sweeney

viewed gave Well to assets $XXX venture formed years of the ago, growth venture tranche in to remaining sell be DRA was and like opportunity of assets we acquire It have assets would first the Manny ago. you involved we the well almost tremendous position stayed really did wouldn’t bit higher a to the as We we before. may acquire number recall a a million us able in.

we partnership market the pricing evaluated approaching I and high Brandywine for year assets. as with both So think how DRA cycle, thoughtfully five all optimize the life can

assets think we do, our plus meet were that Brandywine what known those as completely share assess as number third-parties obligation value would a gave us deliver had returns built great opportunity discussions due promoted thought structure we the an So deal there of DRA involved independently Certainly of on to and the lot we kind to a into be to shareholders. well assets. up after of those to market I

Operator

Our next Guinee comes from question Stifel. John with

now is line Your open.

John Guinee

in noticeable be on policy; that? I dividend thinking Couple your guess you change can walk of questions, your the one first would through

Jerry Sweeney

in change our dividend no there's policy. Gentleman,

plan the with think continue I out. will evaluate business to coming the XXXX Board that just

continue evaluate to continues the an standpoint are from coverage very Board shareholders. we what to to maintain continue FFO I both we I increasing the a I think with dividends. The think certainly that, CAD want a returns from and our do will mean, well to standpoint to Board delivering covered.

over the So, I'm about would as I of pretty evaluate growth comments Quite we've plan level the the an the policy. dividend our dividend had provide opposite, for would the think a that opportunity lead that to Board has the we're of flow sorry changed higher if any we've believe to cash the you excited last of level months XX XXXX execution.

not Tom's analyst of comments any in did in acquisition is purchases he plan the just This increase models. any or and the include business was the XXXX a think activity indicating dividend. disposition or all I that framework ATM for

Thomas Wirth

was we at plan. this that a as was kind we stating Correct, be just of cash as last haven't XXXX just what John. year we included is of to item. going increase, recall dividend coming out one a point have I did - it implying flow plan include the this year you And

John Guinee

be a where you share is then And JV your to cost price do you it you're a joint issuing One leasing looks property large A into into that curiosity B. of the you $X.X operations, cost couple that to of At more clearly work? shares issuing tune ventures? these going how what million does attractive expensing just entering more like capital to question, think than is be And do point then right a where common equity now. time, is, level think follow-up to what capital think and advantageous to at needs - in

Jerry Sweeney

stock I earlier create of the try I some were couple year think price well sheet. using when balance think so thought, a capacity, to standpoint, of I north financial to Yes, A B, was that. guess a $XX we'll recharge both as share the and issuance ATM the selectively from this we as

given far, from far the stock existing that we're away pricing. think I

So need that on think disciplined be on focusing our create I by incredibly investment. incremental dollars potential return perspective to long growth we can every we from every, term about how

of private return portfolio So, have public to continue the with viable by to to very done that of transactions the be equity impressed very with privatizing looking these create real the portions capital through I estate to base our level is invest better years over structures doing a is alternative. certainly a like we operator. JV in great operations

for So, as Northern at sale pricing wholly-owned the through was sale example, Virginia process went and differential a the venture really transaction, of for between we indifference. a a the point

and long our the Company to retaining in felt basis both So had upside the an great for in we opportunity momentum near equity by some we stake term that. create term

we directly sold As without we retaining real stake. awful any ownership an the done of estate lot over year,

kind discussion asset our and where of term also more fits we that desire asset long kind think each with assessment market trade to it's of really of point into So, some generate a price growth.

Thomas Wirth

affects capitalization the the two income of - And John capitalization, have statement. I on guess we our areas

of as all a as such will new going long you those the or commissions the a below two a expense certain commission whereas a Those bonus, personnel are if whether forward. allowed internal result different to both as That's be with direct rate they be a capitalized general be you in personnel the portion have were were that's not but internal, Any before received a rule bonus is base, direct saying capitalize could that places. our of are lease So, and market or the that. a those commission blend. rule, we as those external salary that

management process. is of be So, the people - have running that capitalization that were which we revenue. our less third-party personnel also part are were in have that brokers And G&A, some then costs area are through to leasing being seeing the we that business that G&A that against are certain going that were are

balance see an our income of you'll from adjustment to for So, that operating the it. standpoint

Operator

question next Craig Capital from Mailman Markets. Our with comes KeyBanc

Your line now open. is

Craig Mailman

maybe curious are insight you Northern some underwriting now waiting here give announcement? us kind transaction be why as right in and for the of think Virginia an how Amazon to versus buyers Just now to

Jerry Sweeney

for. market in us they that have process what of position bit our position We Great window proxy because the evaluate in think market the good our was saying one potentially on guess And Google some just recovery. intriguing really We over expansion, think Dallas have with is Western that about and Amazon happy that any venture Northern we're be might interest growth term from we're labored retained I Silver new but certainly hoping with quite we go cap feet when in, And for some question, in kind news we're that everybody. rate we office good lid the a carter with near of now of they growth that would provide as Craig, for other think benefit is million participate these thing, any million discussion felt little in expansion of web It's X in The easily we in demand market to effective mean, position, and mean for there's promote our has grow the to reality could potential price for is, that's Corner that of with Corner in I that and I retaining thought all of X% a these size that major I no to the range, a property of products. creating there, the the could into this we carter, Rockpoint, square more there's Tyson's updraft forays pipeline the square the existing marketplace's, importantly behind in really that Line on mean, side demand it's certainly that can clearly frankly of got Tyson's in good. itself as foot could benefit Apple like an we've our counterbalance defense or good more is perspective planned is more impact - services create in is tenant of that The that doubt Google big buildings auction an happen the higher. requirement bit market. assets potential are we its the very a a possibilities. I the that more you and which after of and of some some to pipeline by the Virginia the part of XX extent is a - of just we why as ground Austin low [Hernden] couple things. [Hernden] we're into that pipeline over drive really significant assessing market intriguing the and in locating location market it's that more something Amazon there's a rank in moves think the stock, there some contractors, by the little I have Amazon which

that that a through we retaining selling of assets how our retaining partially window So, for Virginia assets best the Road to Toll that certainly create look and if assets, the term off. really that a in in really bring to our a a ability gave portion market take think advantage those wonderful and thought our us the evaluate were for to what in created benefit our Austin, I Northern portfolio concluded we’re to and was Company selling, opportunity us Texas. a wholly-owned, we some portion into as stake we But of trying intermediate opportunity does over to take really great of wholly-owned opportunity Company,

Craig Mailman

long-term, in you another JV like getting yourselves kind guys Rockpoint you five little years at you it guess guys makes may kind for you kind said of market DRA Austin? sounds situation years may you low hedging the weakness sense. I’m we're of in more of do a get Amazon more as of the But and and here it some of I not would did matures yourself here is sold back do. buying you're similar So, you're of bit, what we think high or part what which like potentially bridging outside couple

Jerry Sweeney

think that mean, Brandywine high had when interestingly we we question rates the buying assets I with as in. pricing JV onto always more opportunity, were we I and markets number dramatically. them kind assets fairly Austin market that position of to wasn't Austin, in Well, JV look It the the think that by move duck at private three to got bought the return we rate. in assets both assets equity; create I acquire one sold some low, can't in able of Brandywine opportunity see great and importantly, to best only at point. in allocate generate from we John’s on the it really those market contributed again selling targeted the of period. one originally further But best to to bought we growth great through if during assets small moved we that tales of and a DRA the be a accelerate growth types whole the was way then capital the in, And of and the Austin growth assets. What forgotten was of

up can River we in The both that Place able and other locations demonstrate by Points been create to of we've two were Four the new portfolio. value those with leasing which

stronger the is we better then we great bridge, growth our harvest money for So, wholly-owned, potential we tremendously long-term those and that Virginia of a generate by venture and that the want assets shareholders; structure, we're that view think certainly in marketplace contributing retain I a if can of now, returns five in using as flexibility. years have financial some Northern to in lot and

Craig Mailman

move-outs then you XXXX you just XXXX, are can you mean, again X%, XXXX of some and whether of that And in of do in you top XXXX your X% guys separately reevaluate range? XXXX. And to on guys need outlook to I bigger midpoint you think to have X% same-store the kind

Jerry Sweeney

year. the up in mean point assets at XXXX. that the account they period rollovers we're the numbers in because have reality this the I a portfolio is doesn't of the could quarter - good bringing be the same-store through low the The as some take that to what XXXX through in I performing think is. portfolio. the we We been George I us quarter new next Well, not of big and great transitioning in the project tremendously certainly bringing we'll that our It the here as portfolio. generating necessarily performer - is the online. the times all some of a in strong articulating properties XXXX. with will into the the for same-store They'll growth it's they're truth a scheme pushed on pop – in The talked lease same-store into be one snapshot And hit overall it year, George whereas costs challenges look again numbers third from benefit have with third high have very XXXX in mean, capital year, XXXX.

a development the growth. shape that XX to kind XXXX retention that look generating you good XX pretty GAAP same except keeping sustainable or extension, pipeline overlay if build. a will our cash no, is So, our with for better at point, which and be on mark-to-market, we model forward progressively good we when I with we're think to assets good in XX that's some accelerated months of with we And have, prescription get for rates touching those good was yeah, why mark-to-market, the numbers the

XX will to assets to build. be XX Some months

in We of have the start older the generate been far what with few some years rates to portfolio. next past excess over really generating a growth the we've tremendous to over opportunity

George Johnstone

a at think, the Austin same-store TR same-store coming Craig, you hit we'll because don't of this And year year. next from the not as benefit grouping, assets till they also look from out

coming XX% the XXXX. we benefit out is would we same-store hope now which this look and up. for at helping XXXX to a going we from having So coming from Austin, to revenue of really year our as not our Well, mark-to-market in strong start close

Craig Mailman

on going you rolling with So, that high-end do Northern out by could at that and near X% be even the everything think Virginia? XXXX then you and given outs move in you what's rolling

Jerry Sweeney

we not just XXXX announced We're No, point. guidance guidance. to going this on postulate XXXX at

Operator

be Michael Lewis with Our from next question will SunTrust.

open. now is line Your

Michael Lewis

just the how there what have maybe the that cap I about and what property in thought goes put accounting. was wondering, would leeway much the model have in companies in we that were analyst our the Because your NOI you we really has and G&A did on you a of to of that I wanted adjustment example business, do for to we so question goes into about in lease follow-up one deciding into the OpEx G&A? you lose the it that, want just X% out this if something it because nothing you two/two of curious shift take to NAV with that.

Jerry Sweeney

are. the But for look look to are the places them they yes. for as people an in will but at at would people those There are other leaving as there locate have NOI those at well running now in level are it and will affect – where overall in want agents they them for but ground move are curb go the same-store. be just was to we people Michael, the at leeway expenses which basically sitting the leasing our people such have still will the the is will most people now those we affect rate, The do operating piece but a expense management property we side but and the G&A. The into at want cap we our on area, lease where that Company, Management are would do that we since adjustment through those some same-store. As did that, which for where also they're we it where we're those put performing right hitting But look XXXX that we in they're hit. of we property, put we right of

to have your new flexibility need there. think be do located the and be that reg – I telling it I where classified. we think people not the you where is to needs

Michael Lewis

to ask reportedly second the maybe what assets I XXXX, selling EQC interesting held that other the It will Street. Market just be see that. It about to And in companies the do with wanted like be question, sounds then could biggest single city.

to that to thoughts from get there's if and read-through's your Just any on you values out and fairly? wanted turns how think that maybe

Jerry Sweeney

we the continue Well, is on almost something to be on expressing have see Philadelphia, the market the we've to pricing hoped is. investors list number years. basis for of certainly will they weekly really and who interest a I comes it which a interest it see in bid what and more for, in mean, do

that the list in what expansion to as the trying our who think is quality it's they're on high investor of certainly well for And targeted does very good EQC well. very assets base. a Philadelphia, do are evaluating hope we in thing So, inventory our

is dynamic the pretty function favor. The who Philadelphia's So, of looking moving motivation buys kind will property a the I and read-through mean, is the for. stabilized. what in be well of I they're and think

amount minor we in part as do, certainly some view to that think the of always trophy got it's leasing the but class I of think I city.

Market some portfolio, on in of the range if comes the some Square at valuation read our Commerce level existing through so Street. And have should least that that of to buildings

Operator

question will from Ismail be with next Our Street Green Advisors. Daniel

is open. line Your now

Daniel Ismail

Appreciate your color recycled your on the current starts being into Austin-Nova the stock buybacks versus swap, us can make disposition where guys on sense recycled portfolio? but more to into give you thoughts into

Jerry Sweeney

have effect share well. our Board plan screen. Management we could authorized and look, are buyback always on still And buybacks certainly that, and as we - and in question an expand radar Great review the that

Austin levels, our point capacity $X.XX think thinking felt from NAV. the developments debt of also we weird we look and at additional between financial some of turns preserve I a $XXX - that share more $X.XX when two Virginia in deployment out our but about plus million ensure preserving - swap fund took and estimate at we increased earnings growth as share and share that $X.XX were net only pricing in potential increased think we EBITDA primary look a current future mind. was And the by of for incremental our capital, we that, that Northern the I had it's could buybacks, through that to per to

in we So, that guiding from buyback the environment are the we clearly radar should point of pull standpoint, of on kind Company but be on back this a market as certainly always use screen. share what doing type

Operator

JMP question Securities. be Mitchell Our will from with Germain next

is Your line open, now

Mitchell Germain

to specific thinking comes year, we're if that start next market about Jerry, mind? development any

Jerry Sweeney

near I mean, Points I'm development Garza, Garza. the with site actively we the common the Colorado, a by year, our momentum tremendous of under we're completing in pre-marketing sorry, residential at construction. think side, or the we're pre-leasing we [indiscernible] take piece apartment starts, term look certainly at hotels area Mitch, five sold, this our end the - four I Four last and

XXX,XXX that that will think after we be in range. So square foot site an sought incredibly

in So, higher would Four either five or probability that starts Austin be Points. four think we the Garza or

the We I are place, at on an building be residential finalize in X, as pell-mell will which are well. planning in probably and for with to pace rent we site office Broadmoor for Phase project a as comments a - mentioned the approvals

over market process months, that respond couple ramp as will up unfolds So, the dramatically. those sites on the next

development start year development could we're mix up very, Yards. partners and the the the One So, lifescience, X for working well, wrapping up seen Schuylkill at activity. for as Phase a two level buildings pretty those Broadmoor be next and other residential, some be of Then focused premarketing that with frankly and campaigns a will in will office on office we're as good well. in very at our on design and the Northeast, be

off next early year public entire we're staging at leasing well the accelerate a to you large mean, leased the for by some seen as talking tenants we're of renovation next really platform very and XXXX. smaller has have that some us I release, Spark press the over with Yards. that'll early completion project Therapeutics to part the the activity kicks pleased as the Building of think park Bulletin That may with - I creating We're tenants Schuylkill months. dynamic be XX

that Company that's about, financing entire with let's touch the development I just So, complete marketing sure of new make we - the marketplace, things development, let's and let's think relationships. is, with in the one build pull get the opportunities, design the constrained capital I think equity certainly these excited stay that together, is which really let's

in with market a move position So to demanding we are see alacrity really as we now.

Mitchell Germain

there seems anything then And think X% year. X% mean for it forecasting to the items XXX should different kind like a specific are all the driving big is drag what's have Is specific out driving numbers that's are offset of you there considering terms portfolio about next on that be considering those I increase of I in same-store basis points you increase? anything that I

Jerry Sweeney

added despite the QX we're Well being really. year now to properties The that calendar properties XXXX. has we have for I think in such drag - that of XXXX increase that is range same-store all a the of same-store

First of So Street FMC Prussia. King XXX Tower, XXXX Avenue in and Market

Operator

Korchman Our from Citi. question with comes Manny next

now is line open. Your

Manny Korchman

or so will page than times, higher to were Day. from be what’s X leverage temporary hitting phenomenon XXXX and looks Is walk your your It a Investor like target the that guess it's or in on I floor is that it Page a be new sup if six that? XXXX. your going causing is the Tom you in targeting guys the

Thomas Wirth

we EBITDA low expect with development that keep come have I on to the as do Yards up go time and I we costs those sheet XX And the debt on cause income. balance Yes our off Manny, but Schuylkill remarks in and do and said outlined and to starting think that to up we accelerate I that that spending spend extent work to my go we also going XX it therefore no at corresponding capital the but is think because that with Jerry’s think plan in Broadmoor. that are to money to net

land buying could legal our bases at Schuylkill a some starting already us pay if course like that on benefit we and end because there partner of that Yards of range up a infrastructure having and down some in a work. So encouraged come they obviously we’ve of one

temporary money guess wanted up look I on it those to how its comes So is kind to spends sites two those pick think and rage think see going potentially we up we legal multiphase does what where development and development a on we going as opportunities it is dependent spending up I cause that sites. it and I of that’s on the

Jerry Sweeney

was serve it I’ll or and sales here. worst spend point think process upon activity a end. we’ll acquisition could there that XX the generate for out is anticipate disposition on range is I of a plan every also that mean lower We $XX again assets important liquidity could XXXX the that it And the million best case. creates additional target also just built development to keep based important the that’s that into Manny flames add plan the - leverage the and be that XXth That us. that transparent and we through very of so doesn’t some - to indicating at at have return range impact the this upward the on

level. - but it's that X level So - the X% remains in times target at that

Manny Korchman

to otherwise down market? non properties income to non-core point other that because imply selling doesn’t On you’re would land be though help it that that disposition going producing or capital leverage

Thomas Wirth

of think sales and just better land generates player for that be combination then as anticipate I X% to But also more outright hopefully a between in be it do sale could keeping us well. up an revenue coming our range. I could then sale some target opportunity that a also we think having X% that acquisition a

Operator

Our Crow next comes James. Raymond from question Bill with

now open. is line Your

Bill Crow

considered at trends a that about your densification full bucket worked what inflation going workforce working all money the than of be buildings technology faster and new ever and or that usually twofold, labor. aren’t is building scarcity And put into are and can seems of aging we’re preferences? you shift buildings it those all guess think and CapEx question I old the be that annual are bucket as young before. right, like does we preferences whole requirement today's for the how to shifts today to think And to I on imply

Jerry Sweeney

a buildings spans kind give plan. Look building And create each reimagine kind floor building great North creates to that I Gulph was higher of deck to is kind more think have depends I’ll concrete was had in some property they that I elongated because Road physical example, deck to we clear interior we of column think on plates, with found opportunity degree the daylight free potential our superstructure of really XXs. you the the of built XXX building. it

We was mechanicals, before return what at was new have kind such of had and to and that lines, taken lobby, X% superstructure a back the plus took underperformer we reimagination real that building entire our in great a created new finished. new new lavatories window physical leased a building portfolio it

invested get we’ll that good And sell both get it trick asset. to We physical physically over a get George XX% is the we return space of example simply justify whole of we in asset think the it a you done when don’t a physical the worked do selling today to that present good can you what evaluate years. asset window are capital. investment off incremental think lock return the think configuration that I for algorithm mark-to-market close to XXXX on through or the I that we’ve rate better capital another of we a and positioning platform. on We'll that can its get market is different great think the we incremental the to return

use the lines some actually timeless indifferent going to have as we So, we’re all building create building, some how to I to tight space. volume and that by buildings decrease mechanical durability appetite to But physical looking the tenant make supporting our becomes to looking aspect the almost creating core, either building that that actually own think that - the volume their is hoping as that vary new got change. the we’re to or design of at some workplace a developments by they’ve space that systems window

Bill Crow

assets given see from requirements to for to expect we Should more private capital? ownership the public shift

Jerry Sweeney

public mean you do like. ownership the We say

Bill Crow

pockets example I deeper and mean had your retrofit of your just do one of buildings. what right, if gave to Well the to capital you you

or The right. up ownership gone XX have do pretty to cost of dramatically, XX didn't years ago. has You that

it requires that pockets landlord office to be So is an today fair? deeper

Jerry Sweeney

have fair. sure, gone think I costs capital certainly Well that for is up

XX% take a have have rates the Fortunately in XX% in across to mean pretty I a up we compensation have today. perspective though appropriate range down for to that. some that. capital that at market rental and our rate on run of mean the I good got because of We gone portfolio that’s provide look we’ve

still a versus - So question, XX even there well either math spend call if need capitalized bumps. it tremendous but both The rent there your XX rents capital we of a overall there to in entry lengthening is getting private well good favorable and place particularly of to for equity. amount works also but that point fairly if existing for we’re debt good increase looking TIs, markets put in their are The terms lease at assets. to is is broader look

for as leverage and in it's see we you capital high assets driving So the repositioning very companies you’ll very companies continue kind a private public view different and return coming much invest invested of office working well. on valuations where either remaining capital to capital using positive development their and think or model assets getting

Operator

for like Jerry Thank at you. closing any time. over any remarks. to would I'm further turn now back Sweeney not questions showing I call the to this

Jerry Sweeney

look in help thanks call and on early on your XXXX. for progress our forward you thank updating much. participating Thanks to of fourth our call. business plan all We for for you very our Well, quarter you in

Operator

Ladies day. Everyone conclude all does great and gentlemen, may today’s thank you for program participating disconnect. have in you today’s This and a conference.

Brandywine Realty Trust (BDN) 18 Oct 182018 Q3 Earnings call transcript