Earnings call transcript Q1 2023

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Operator

Good day and thank you for standing by. Welcome to the Brandywine Realty Trust First Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there’ll be a question-and-answer session. [Operator Instructions] Please be advised that today’s call is being recorded.

the and to CEO. hand Jerry speaker to President Sweeney, like call your over today, I’d Please ahead. go

Gerard Sweeney

Good morning, call our Tom everyone, Vice Vice our Chief usual first President and and George Executive President thank you XXXX are Officer. Accounting Palazzo, Financial call. Vice for of earnings and Operations; President On our our Chief Wirth, today’s Johnstone, with Dan as quarter me Executive participating Senior in and Officer,

may information discussed statements during Prior constitute to today that law. forward-looking the call securities beginning, of meaning certain within our federal

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

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

results to year. review we’ll first XXXX plan. prepared that the Tom start will answer in the XXXX are balance of guidance driving to first Dan, for our after quarter financial frame any our off certainly review our So and and progress the I key Tom business and available of comments, questions. then George, assumptions And out some with results quarter

start, gotten to year first XXXX The has quarter in a results very line plan. off solid are business our with

new activity. we During XXX,XXX square the XXX,XXX executed square leasing quarter, feet feet including of of leases,

basis and a we quarter, first on posted rental a rate X.X% the GAAP XX.X% basis. For of mark-to-market cash on

XX% and Our mark-to-market full X% to XX% year X% cash. remains GAAP range to

activity. the quarter out known square plan, did XXX,XXX for of XXXX an feet negative move operating our absorption to in we outlined early termination As due have

forecasted on same-store we’re place our keeping ranges our plan some not as activity. quarterly business based same-store but underperformed While slightly executed commenced, as outperformed yet cash well in GAAP and leases ranges,

full of which below capital excellent of bottom first end was were plan anticipated. us, slightly XX% X% forecasts our the aligned fully tenant year for business with First our quarter, about was quarter costs retention this

we’re in range our million existing in complete our million million The Spec range approximately targets Core the or were with represents forecasted feet, $XX.X line which business million, square XXX,XXX $XX at of maintaining revenue feet square XX% XX% plan. levels. on achieved. lease midpoint with $XX remains done, speculative So that metric. X.X our to so occupancy is and revenue we’re

and and standpoint, continues leasing From our XX% to CBD, Washington, Philadelphia of cover leased. which occupied occupancy portfolio XX% are our NOI an suburbs underperform. and D.C. Austin our University City, Conversely, portfolios Pennsylvania XX%

a platform fundamentally stable with solid outlook. So operating is

to We rollover our X.X% through have through X.X%. forward exposure to XXXX reduced of average and an XXXX average an of

thesis very quality very, We to curve encouraging. volume physical tour play see continue has as our the been out

by in First think our great that also levels forward. going are quarter physical market our exceeded XXXX and pre-pandemic portfolio XX% some quarterly looking tenants portends exceeded things quality for the more by tours average our XX%, space, we for

we as ratio. Additionally, contractions projecting expansions during direct in flight quarter, feet outweigh expansion XXX,XXX tenant result Tenant a this first to quality. to XXXX positive the we had and by of continue contraction in the square quarter, to are

in up X.X total is has quarter our feet X our and feet on million square million so feet. development deal of of last in to pipeline, broken looking XXX,XXX Our advanced existing million leasing XXX,XXX stages XXX,XXX square square stands prospects quarter. feet at that up our lease square about feet pipeline pipeline feet. for That for are quality up foot The portfolio XX% is the quarter, which of projects, million on XX% down curve. the from portfolio, existing X.X Also quarter, pipeline move pipeline between negotiation. square includes last the the approximately X.X about from square And new

higher our further from joint decrease at quarter, increases times increase our spend from debt-to-EBITDA ratio net is its range. development development excluding will the transitionally but our with quarter targeted this to XXXX. And our business our in as spend during redevelopment first line again occupancy attribution, specify and point, debt and which due in that X.X always anticipate our EBITDA, This the to SIP. core debt is amplify operating our metric, and venture We within our ratio joint attribution plan fourth to business and EBITDA ended portfolio, at our looking note ventures. plan, quarter we and In range, and

points, on secure properties. borrower. January, secured remain uncertainty as route between we differences economic provisions XXXX. by as March secured market solely collateralized raising grade liquidity as With liquidity remain pricing closed rate significant of previously touch key X-year made as after free note, Tom Since to mind, X investment focal and and we while million to wholly-owned This In the And leasing took end, headstock due we and progress flexible we front. do million noted unsecured disclosed, over secured financing $XXX our provisions the the volatility and proceeds. release will payment of in $XXX our call, at top and plan unsecured previous in we year

bolster And a term we then our $XX February, liquidity. during million loan executed further unsecured to

our have XX% last financings maturities at no consolidated rate, and As our fixed XXXX debt million other done of year, we a result is debt until bond. October consolidated $XXX these and late X.X%

it’s dividends, of and cash full all leasing at year have on of development continue line million credit development our spend million and our unrestricted availability on $XX project end line projections, XX credit business XXXX. fully remaining that plan based execution, of TI we costs, availability And full in in approximately hand. after our We SIP, to funding on Page spend on on unsecured noted $XXX

dividend to ratio a the for range XX% be midpoint for payout quarter or spend capital In FFO terms now in dividends payout annual had we of our place. an $X.XX the We keeping quarter great per a quarter conservative CAD at controlling represented ratio. are XX% and $X.XX cash guidance are

projects of plan generate to gains. $XXX million that may business additional our $XXX activity million sales Additionally,

ratios. With our first liquidity target, $X.XX business needs kept address our as closely will market quarter. dividend levels as board activity progresses, Certainly dividend to forward. payout the monitor sale We going coverage liquidity, the progress activity underpinnings evaluate conditions, sale for and at substantially plan capital our our on cents overall the conservative they the

and an fully year. We also construction Science Yards Prussia one X in Life King additional in Schuylkill to this our of leased later from our liquidity enter year; into plan this enhancement Road project XXX% loans XXX

the have loans XXXX. maturing joint as non-recourse during we in SIP, the On two venture front, disclosed

those well loans. with are underway We efforts our refinancing for

in lender Commerce Square million This venture. loan XX% during we The with joint extension current over new a closing lower yield, levered is received a anticipate from the first $XXX our and existing financing have the is the quarter. short-term financing second a debt

joint The in well. and XX% there second maturity XXXX, are partner that as efforts again, refinancing occurs a in venture in we’re non-recourse August of underway

looking built pipeline, portfolio the development. In we XX% into million, with wholly-owned active Of capital our million life billion our pipeline $XX is our at remaining requirement $XXX This science development of is $X.X XX% and that, is currently plan. development wholly-owned development have which of leased, funding XXXX Office. under XX%

is development XX% venture life office. and joint residential, science XX% Our XX%

on to cost than more pending and $XX are position, Furthermore, call to more future as the of cap clarity joint funded venture fully development fully hold, I equity starts build-to-suit existing both on capital debt leasing the mentioned also and pipeline, point our on of rates. last be our by the opportunities, our to remaining million leased funded with equity now has other Brandywine partners.

ATX, given as ahead, XX% mix is Looking and nature of XX% Master though, retail of a other our on of and identified XX XX% Page office, support primarily Plan XX% and Science, expected SIP, pipeline are Yards mixed communities Uptown Life for uses. use Schuylkill residential, product

X.X% of science of footage. are certainly about grow our life And objective of our we plan is science, capital the tenant about subject completion, market footage XX% square conditions is science life overtime to projects that Upon demand our feet and so we’ll X have And space. develop million square our platform, to to in completed. existing about do drivers, when square life portfolio of

funding, and that have space, $XX million the a of of and plan. Just our stabilization leased, Life XX% pipeline a pipeline development date we our strong review pre-leased, Dulles remaining Road projects, Science in of our remaining Radnor have of remained Life feet and King is is capital we remaining for million is we $XX in are XX% XXXX. XXX% Science, Center quick projecting over square XXX Prussia specific XXXX a XXX,XXX QX still funding are

XXXX JFK, for delivery budget on is the year. our of tower residential time half and life this in on second office science

and construction feet That’s office is over from see lobby totaling XXX,XXX Hat square feet obviously now great progresses, current the that The life complete for as going science a We’ve XXX,XXX the pipeline continues Hard have up project project, superstructure quarter. tours. XXX in. activity last square to We active components. which finishes are done on

expect well. as half also residential delivery the so schedule the there this first start We second units of of in remains block all to on year,

Schuylkill life dedicated at science building Our Market. XXXX Yards

underway of XXX,XXX And a this that have again feet, loan of cost in to up have later project last year. loan That quarter. XXXX. square quarter plans will and a XX% delivered We pre-leasing pipeline we to second the from obtain construction range be

construction time is also A budget. Block Uptown at on Our on ATX and

noted pipeline on is square up our last our call on component, larger office putting with XXX,XXX is from the last tenants On leasing their This and hold. pipeline requirements some quarter, is feet.

is much We’re the pipeline prospects. now fruit multi-tenant as prospects range. XX,XXX on its approach focused foot beginning floor five square smaller That in our bear XX,XXX to also very to

in will already started our quarter That of we floor is conversion by Cira of Total the also next During million. completed expected project expansion gradual The yield quarter, pre-leased. cost Center XXXX. first space. $XX Xth be to lab is the XX%, we’re beginning and XX% at the about of phase our the B.Labs

Our includes million XXXX of to business dispositions. plan $XXX property $XXX million also

expect good year. of a expected. market still making activity challenging earlier progress half than second we the the in in to But of bulk the the occur sales We’re

to contract now, mentioned. solicitation we in and active $XX negotiations, with market of of nearing We moving as have $XXX the have $XXX several discovery, assets million bidders. price million end the process about the through million million bid I $XX for Right

sell the during continue and parcels land projects. to venture operating our plan do to joint non-core year We on

debt, from levels JVs. about or in operating EBITDA, noted with total of that of from As on of million debt I coming discussion XX% million about $XXX $XXX our our our JVs the coming

our opportunities, leveraged growth including redeploying higher generated commitments stock to reduce basis. used from debt to neutral activities remaining on and ventures have development ventures goal pipeline, plan of recapitalize Dollars discussions later attributed that several joint and joint with the $XXX XX%. operating from by to XXXX or million, debt in We reduce fund these underway be and will a to liquidity to these buybacks leverage

provide At now this financial our point, Tom results. will overview an of

Thomas Wirth

Thank good morning. you, and Jerry,

first totaled quarter or loss consensus totaled with line diluted and share FFO share, per $XX.X Our million in estimates. net $X.XX million $X.X $X.XX per and or

the first have Some call quarter general compared line quarter results, guidance. to observations several several results while we fourth regarding in moving pieces consensus, were the our variances with in

other Our quarter our income up termination $XXX income above one-time primarily some items. million million, and forecast, and totaled fourth do $X.X was

totaled primarily $XX.X higher is and below or expense million Interest $XXX,XXX our this due guidance quarter capitalized interest. to fourth

interest first Our anticipate X.X, development and projections $X.X we $XXX,XXX JV lease fees of debt to And of however, one quarter our occur quarter sale to we ratios and primarily delayed, to above that totaled $X.X leasing to were management, coverage in generate transaction was X.X was and was and forecasted those respectively, commission and And land gain, second the fourth debt million net XX.X%. income. service transaction million, due quarter.

within X.X XXXX quarter first range net our times annualized X.X combined to guidance X.X. was X and annualized our above and net Our was our core range debt-to-EBITDA X.X of debt-to-EBITDA turn

the the as we And financing outlined, in continue anticipate we quarter stabilizes. it financing second side, front. into to that bring far as As XXX we the Jerry as changes, on make will progress the portfolio portfolio core on

execution $XX ensure the the of operations an begin the to $XXX projects drawn cash line that million transactions, that provided in a of term NOI. whether closed including term commence loan option, XX us to additional on liquidity we to months, provide and the some loan million extension In incremental credit development and matures remains announced on previously addition redevelopment

financing, challenges to successful in this within we continue weren’t the we market. While see financing obtaining

loan office as some are allocating such originations traditional allocating certain in see we the little fully very build-to-suit we think be new to to the banks, except provide them elite that portfolios. for performing lenders new flexible In will market extensions on will – be properties. and loan and We situations

Bank slow. and Valley Silicon Signature Bank been very With concerns the has market the CMBS

level Life average are picked a loan lower underwriting to longer has have and terms. preference activity transactions office loans focus new lease been However, up a for value selective and to on on with lower also companies assets. loan value and focused weighted

Regarding loan, which working on our joint expect we currently maturity, will Square – our debt, including our later Commerce we active to close completion this venture quarter. an are XXXX of occur

extend We on our working partners dates are asset possibly maturities lower some maturity to the while lenders, also with with existing the our also XX leverage. current sales to considering

XXX share For million XXXX as half and dilution year the activity for acquisitions, or in property assumptions buyback share occur the the this our Jerry diluted is year, guidance, to second no general of count sales, mentioned, business no plan scheduled with the approximate ATM shares. the property anticipated will minimal

of balance have level million million will interest XXX assumptions, the income FFO the be primarily first the general the Prussia King of [indiscernible] higher due Colorado, total ahead to due and Looking the to ventures primarily joint XXX Square. at second we decrease terms more following expense the from occupancy due $X.X to operating and million the about sequential second at anticipated with refinancing to for $XX the The quarter, property quarter, primarily is contribution $X.X closely quarter. in our the totaled from forecast Commerce portfolio. and

and first second a the and last be fee $X.X decrease Total first items call. had million, million $X.X. several primarily we from million, to expense million $X.X quarter total one-time due the that quarter $XX.X for G&A will interest income quarter slightly approximately will first will on will approximate interest Termination quarter. capitalized below the highlighted $X other the

and This quarter Net will million. the leasing million management $X.X gains provision fee sequential be and commission tax land primarily sale our million. lower decrease at leasing And net will for volume. is due $X development to $X.X

being due we plan forecasted leasing business capital a our range. payout capital better below of primarily at to plan, experienced costs ratio than Looking cash XX%, our

XX% we experienced first quarter XXXX our cap movement XXX%. some annual to at remain While was that lower range

million $XX ventures. plan Our and currently of $XXX the create million is It’s common of and redevelopment, $XX it’s $XX million of contributions revenue million $XX our the of dividends of capital very balance capital comprised development revenue of capital, straightforward million year. joint of equity for to maintain

and full million cash cash based Note current The interest will sales. payments, land above $XXX cap had flow $XXX outlined and we availability be of of million by year sources primary that we property after of end. on plan million no project $XX use line on hand having – the capital

incremental our We spent projects. primarily X range also projected to X.X, to the EBITDA net be an of in increase the will debt capital development due with on to

our the And GAV to X.X excludes [ph] ventures joint our XX development debt the year, projects. be our X.X net Our will net of core in to and EBITDA XX. range of at of to active the end

of developments believe our that’s decrease these to which back for interest towards our eliminate core and some highly core pipeline reflects this coverage and but our higher projects. believe are ratios We growing are will development these a decrease, metric our portfolio rates. to on the our will charge potential stabilized, leverage once elevated year, joint primarily anticipate ratio. redevelopment ventures more and development leveraged approximately we leverage interest of represents unstabilized fixed the and believe We due that X.X leverage continue We processes core and

that, With back it over Jerry. turn I’ll to

Gerard Sweeney

you, Thank Great. Tom.

leasing But also a is the I in through The a XX our through advancing office with stages within efforts takeaways average our of nice portfolio significantly in up pipeline position various shape, stable pace. facing at in mentioned some rollovers clearly only is key very is solid of headwinds activity So portfolio market. and X.X%.

We of our strong our well. continue posting longstanding capital managing track mark-to-markets, record spend very

sheet, liquidity needs, wholly-owned leasing that a position plan with business accelerating strong some the well. last both on $XX we’ve the and line solid of mentioned, our on a of pipeline progress very portfolio made our improve of XXXX I near-term in will operating as development footing. cash liquidity our as visibility zero portfolio significant liquidity And operating in executing very velocity drawn and Since the a strong million keep credit, in ourselves and increasingly quarter, balance put and

usual, we a And limit that and one well. delighted as the yourself families your question always and wish and we you you. at all we where So, for point, Thank in time you started, interest we’re Michelle, up open of follow-up. to in of this to questions, ask

Operator

JPMorgan. Thank you. from Anthony [Operator with question first Instructions] And our comes Paolone

Your line is open.

Anthony Paolone

mean, good at to situation see my to versus going sort just guess, just, thank trying it the likely first I cash over and seems the bit, to most you relates Office from out two be in bridge sentiment I at you. looking think, the are you stocks question with that decline occupancy years to whatever on the contractions pretty Jerry, next gave that The or I one that of may Great, pipeline. or forward. growth thinking expansions people’s you. be? indication quite the least to some stats flows But how just a there. are

Gerard Sweeney

winners head.” driven mean, shift by Tony. some are conventional so But, strong there’s look, the that a up, no that and there increased losers. as blowing and I through, is no wake be there’s hair space headwinds preferences, significant, the be it is some “Hey, and mobility, think question going I back to days I employee going question thinking in was my off office shift Hi, will

stability quality, driven building, amenities. over to location, of expect for will quality long-term next demand of their of priority seeing continue by up tenant, increasingly that and we believe superstructure, And drivers landlord on selective more more to our the in their ownership definitely its of couple improvements a lot we presentation ability and and terms years. So that are be reputation, fund the tenants. Increasingly, we’re focus more checklist that

X.X take out state with perform demand the office well. shifts I look sector, slowing lot we there we as good brokerage lot report that secular muting in square X would still to office XX% economy, guess, premium guess, identifying of even top good, being from I of United the of the consumers. So position very inventory about kind that billion, we’ll a look States information cost and of billion And, office And obsolete. be at and believe be a the a in it, seem competitive about very out on total or firms the attractive at they being effective the need when market. a against about XX% conscious there’s top-middle have then the balance recent of feet, there there a garnering was XX% quality functionally on repositioning being reports of to of to rents, upgrades kind the you standpoint, good it,

We of two inventories believe our top all tiers. in the

it good we to So to enough it’s going the the given where investment compete garner made. rents, location is premium

We built be to our unless drivers inventory. demand driven that improve position cycle of the going existing specific by also that much competitive think is not will the over

demand the disparities I gets between some So statistically, and to B space. the we even think, quality stronger think starting secular headwinds, And with that even of the rent inventory, A supply their that competitive with high the position see you’re and to balance. due

the last we over excellent in no continue our premiums portfolio, costs. the than in years have with [ph] XX% cash statistics XX%. seeing we’re And assets occupancy are there’s And to some leasing after in and rent suburbs, older to to control has performing inventory. of X which certainly mark-to-market But than from capital on even Class forecast we years stability, own better macro A our good national, new rent assets doubled XX.X% leases greater rates the even close two portfolio

while new trophy date. the where years, So last were class the Class at A in down they’re when you the couple class CBD up XX% in take a look rents assets X.X%, over of

the in and older the rents down about on in X.X%, assets Newer quality are inventory. average X% suburbs, about

what the other types, the clear we product years that saw a think in longer is sector of was ago, state-of-the-art. shift, of do office no going it’s some through we very XX-foot state-of-the-art, number a So an similar warehouse

higher the be them in for on of certainly accelerated the there’ll a return a be that will higher pay some back a very major national tenants quality to some of sector, in tenants that some seeing pronounced the across office the minimal much statistically portfolio. to bringing bringing been hoteling in overall the wealth work, obsolescence, to We seems that effect also will or higher rents our news rates have continue to be corporations office demand, continue put hot-desking think and on see we Certainly portfolio, capture more throughout muting position but significant it to there’s to in trend people workplace. portfolios,

there’s back company question is deal to the positioning no conventional office heels. thinking we’re that on its really So dynamic. And is that with

our increased existing campaign, increased our marketing of investment assets. our We’ve some we’ve

seen evidence the couple of months. fruit to interchange. that think last increase just through our in touring into some for pay is I through past being is pipeline That again RFPs we’ve of the the to advancing that response in beginning bear pipeline of

that we’ve think put that we dozen to macro But repositioning that and also So has we portfolio we’re company higher position the to challenging conditions cognizant years, strong as have objectives, done into very do. fully our the of the foundational the that. weather a last work it’s together George, fact platform environment, pulled a really market that are which growth the business improved. add to plan spring storm to I’ll conservatively in anything use achieve and over

George Johnstone

and depending holdings mean, research at a And, joint vacancy about in factor our we’ve Square even a Philadelphia couple occupancy that Commerce great overall in in and the mean, X.X% think the including XX% sub our market. things, on market terms XX% of – a No, we’re of about got as compared the commentary, I I suburbs, would Philadelphia, market house. Pennsylvania that’s in to venture brokerage in just every outperforming in I downtown between

of there. moving have the portfolio So, do of plan, guidance well business own the us range. situated people our terms our quality to curve. of And good is trend path accommodate get think occupancy the outperformance to a to in up levels I we

keep small Delaware the holdings Jerry mind in impacting have by overall are occupancy mentioned our the we amount and company in But Northern Wilmington, about commentary, XXX note in still his basis Virginia of that in prepared points.

XX% at Austin, XX%, of suburbs portfolio Texas, So lease at think I Pennsylvania is headline. basically Philadelphia, really the in

Anthony Paolone

all for any into tenants labs more just just Thanks wondering Great. prospective It’s tenants the any you’re it’s question those sciences if broader that. developments leasing? to science or the other with point into life comments other relates Schuylkill converting component of my on where Yards or at a early at of your point just this are life too if

Gerard Sweeney

Yeah, tenants a there’s or conversion, who interested one Tony, in dynamics the We of quite a immediate some occupy of We new looking an Frankly, that tenants space number at those at stage building. that B.Labs additional question. growth them the do. But that new XXXX think were remain are tenant would where driving at need and we in currently a had good was XXXX. as underwrite a credit weren’t for floor ninth financial capacity. of the at they

and part around success agreement we which viability some an we scientific front, of tenants. careful Biotech lifestyle of couple on as the So we’ve how had calls, these the decades, much Council, the parcel a helping has do we’re us very of for partnership of operating They’re as our life advisory being financial PA talked on underwriting very about been science with previous a board.

we the the delivery see is with of But the on growth success I the Schuylkill high to that think is as the continued that emblematic taking of Yards. full track return getting, record occupancy costs B.Labs forward certainly we at in place move building we’re

Anthony Paolone

you. Thank it. Got

Gerard Sweeney

you, Thank Tony.

Operator

Thank you. from And comes our with Nick Citigroup. next question Joseph

is Your line open.

Nick Joseph

the provide a making you I mentioned if could of wondering very had you Jerry, in in and the much. the dispositions, some more thus pool thank and composition pricing size there. progress the comments just indications, on far, the any was color on you you process, bitter kind additional Great,

Gerard Sweeney

pipeline, properties Yeah, getting CBD, a – is like now of sure, in Pennsylvania Nick, have is a fairly you? I $XXX to are expect, of in I tenant, who put been which deal as that in Philadelphia, Texas. range, a million the visibility Virginia, protracted. buyer we negotiations while $XX has that building for we’re as and market Northern we of an should getting discovery, that how timing mean, million million Yeah, an investment bids one And as say $XXX the moving Austin, But contract group still number some as we have would well that’s right the through range.

So we will think year. transaction first the the that get of across in half finish the line

kind prospects are we reach then, Philadelphia evaluating will That of suburban different on the And a bids from a X on complex. conclusion that in next weeks. several

the to $XXX certainly point. $XX around advanced, at million getting feel the we it pretty pretty million that, now level are somewhere advanced though seems is So this right

pleasant until because of forecasting, that’s the surprise much cap us, to So the year. second a weren’t half really we

on in what’s of out was and the foray profits first outlined this appetite So see of really kind just the we market, the last call test there. as

fronts, progress the think feedback we’re to I a so in slowed making happy with certainly, of at been pretty come has number So far. we’re

other in has financing on not candor, you the that all We bidders, feedback have primarily Virginia, challenges. a market really performed waiting moving couple of we’re well in market is in potential then for that slower anyway, some layer by driven a bit at process that properties that Northern that some

slower, little a have to how least would getting but year. we’re with the expected and deal that we visibility As at in bit dynamic later

Nick Joseph

maybe to the on of lower the I financial walk market, on just helpful. CMBS loan as kind well. very the know That’s side what’s then Thanks. And through happening you values

touch keep that unsecured you debt? Just pricing secured and now between the current right difference see on

Thomas Wirth

Tom. Nick, Hi, this is

the I Hard debt to say debt. think is. now, be that where for will secured unsecured the of think, right I us inside

see the basis right how I and to market it’s on I looking CMBS As we’re least were opening up, transactions the will mentioned is but think banks we slowdown pricing don’t at now. at the closing. points, being from some you that having with XXX But XXX out of come some

Gerard Sweeney

I I on I bank relationship the public unsecured market. of kind And lending. that, just think, than think is the was, the Yeah, think, add it unsecured constrained bond market to and while market given more certainly market, the really bank

I that now great The gapped of finish wider versus in unsecured $XX job bond to line. a think financing the terms much did public the spreads getting out right be banks. team much, across market million is

couple that of see plays next quarters. over the out how So we’ll

Nick Joseph

Thank you very much.

Gerard Sweeney

welcome. You’re

Operator

Thank you.

Our Truist. next question comes from Michael Lewis with

open. Your line is

Michael Lewis

that asked Jerry, you. you question some at the kind first talk, of Thank combat Tony Great. perceptions. investor you

another think I financial. buildings but about perception market JV maturities think that are talked is instructive. the I your bit, office not you financing little a And are investor

you mentioned like sounds done. Commerce below it’s MAP and full. Rockpoint The occupied, next the Commerce of LTV close Venture yet XX% XX Square You months. XX% and occupied, course, Square is for

extensions, of kind get mentioned you So, will some refinanced. possible

the I more everything question loan do is you portfolio, [ph], extend? a some we’ll of GSV the you so that universe. pressure Do defaults and put then broadly, guess and was extensions, I think of during rest you of specific you it’s lot lot we’ll blend my in that the have and your of to a And applicable see I remember to you here think see kind on of mean, think values?

that? So on do you have thoughts any

Gerard Sweeney

and have we’re Hi, who dilemma of lenders, Yeah. refinancing think, approaching relationships we’re the discussions, of these joint venture great each Michael. I to as concern. None as question. we that with portfolio the Great talking about the all Look, of is effort performance our to portfolio is of be the operating lack of dilemma facing more tend partners, they macro facing. a by Brandywine the

over to has we of where every exactly certainly So term lease wherever the their gone loan. articulate dollar can lenders those

and some do a what to a of Brandywine in ultimate will think a up a I opportunity wind applicable doing and rates. is Michael, structure, B be be of outcome borrower to kind think one, of A, banks, that appraisals. extension sure best do from the by like they value reset borrower, And for that degree, the of take a our to will additional the and window the our whether providing situations those track the is to partners invest perspective And where whether drive That’s will venture lender short-term for do number joint they’re bank’s situations. the and be solution capital will the B any I get I they supported proposition note think, back. return agree simply ventures. property But that the outcome I’m priority not likely note, there’ll and the a

money not borrower’s an over the mindset the encumbered. there’s given invests that’s The of of borrower of portfolio capital, priority the may unless additional additional Unless can the recovered mechanism a levered quality easy that clarity be the as incremental to invest be the there’s situation.

what So lot depends they with borrowers. the I think a through of that the that work approach determine will structures certainly banks take upon the

and From between joint partners venture relationships. very our have our extensive transparent great standpoint, operated partners Brandywine, on a we have we always We’ve basis. forthright

the there’s work guys it portfolio to work lenders you think again, for high economic mutuality is.” all wasn’t view are really we not if might lender as for between of our the doing the right and performing parties. program. us of and that as think reach But a has I So both it interest well borrower So as be to “Hey, if landlord, quality a

each these right and to going to positive through we’re So want discussions work being and constructive is of result. the

for mortgages, made a as has a investment negative these are anyone of plenty levels. either capital you marginal course, Michael of account, are non-recourse All property of we’ve know,

committees. with we’ll capital specific, and way be that that can both and business general provides an our and systemic, structure that the not I But the estate, there’s recognized its own to banks. we’ll the the what get economic decision, But they within the degree, win. their extended, investment certainly, will works be a loans how the through of and deal for a So by is for is And get that that opportunity them lender see issue company. the process. on commercial restructured decision, is banks to perspective real borrower reputational these some mentioned, make right approach that the credit how crunch for to both as And, driven

Thomas Wirth

is Hey, Michael, this Tom.

we that level I normalized, us if they’ve also, a for may can our kind if the again, they they going may an of stress of to to that decision see where then they at as interest in of are, opportunity more and that a the sort think rates the XXXX peak hit and well. making may talk see clarity have that some loans a of little the lenders the feel, give some to in see help think, as – banks, process we talking maybe is rates this I where hit of rates interest peak, more

Michael Lewis

soon. second start a that they than Yeah, like might yield sense. curve help bit little the about rather pretty here Those is My question makes looks dividends. to

I elsewhere, You the you’ve ever the the in website reduced the company’s XXXX, dividend time history. lowered I dividend only last your checked think that’s in and

very it if makes might we But to look apologize found that long. to years, known the yield as more one you cut that attractive. for as pay as feel bring back, that nobody yield a makes not think, I’ve XX% XX be I to But going that this that I apparently reason up that dividend because dividend It going there old. maybe a we is thinks argued I I’m and pay company So an around only stick wrong long if be it. to Brandywine covered going it’s is is

about could do know, is, cash those the do it, of you things? as any capital do is Or you that balancing you so view isn’t I long pay And by doing And How that my as you guess high that kind continue covered is retain you yield to your dividend you think at dividend favors? look it? question that as anyway. flow,

Gerard Sweeney

relates levels, of income to share we that fair the existing to any plan taxable our maybe is question. impact on dividend set reflect is discussion, a continue the look, kind think business of very to our $X.XX how the in and think I before range. we level per $X.XX And Michael, progressing, sales, how of our

would annually. that range low savings the million $XX be million $XX So of to kind

maybe could the taxable gains think losses, sales some have of also taxable We there’ll be some – too. be might

to gains what some losses clarity on have. that So will sales and we’re waiting get and of sell we’ll what more

for We very in XXXX. plan may ratios, capital we’ve I And our typically see strong have think, as well operating we a and conservatively constructed improvement seen. do some baseline

XX%. to was For up opening at XX%. example, cap we range a last our tier year, XX% And of ratio round

the So quarter, in even XX%. in came first we at

challenge variable in question continue a is that we your as well in is answer that capital is dividend. paying the I it think market want think the so board dividend this strictly to the covered, in to I happens directly, which be So will to beyond control type The of conditions. what long is mindset landscape, because our the

we the metrics, sheet, we want So, keep liquidity of and to credit preserve the liquidity and forward mindful how plan to generate balance both forward. moving deliver be and disciplined additional very very business good

answer digits. is So, to question but of other on keep it keep things we’ve honestly yes, to in average investment face other look is, we the we us mind office control. and having. the the double way think price, stock our eye shareholders at your necessarily I The low And philosophically we low despite want our is the are in to that irrationally can’t bigger that picture pragmatically, got of companies

is range. to the in at the to X% level dividend current the X% them So return

very to focus much a and the make who even us we have as results, spot generate addressing to both inculcate sure external of in fully higher, given sales counting that base the a through to are dividend investment liquidity So additional financial covered. pricing shareholders our to on reasonable keep it’s actually discipline liquidity range though on right the the is forward

an happened So what’s shows time. the we our really board think we know to kind office to shareholders, we to impacted the due and obligation return value question markets, to period happening we not. don’t very owners our continue work if or macro I how during our business So to moving much plan Brandywine. keeping I just negativity management as adversely and try we But challenging credit of your for happened to I and shareholders we, economy? assess what’s feel do say not the forward, been tone of our office have But and think the all answers where of and this that can office, are. that’s as to what’s I

Michael Lewis

No, that’s you. Thank helpful.

Operator

Thank from our with And Credit Suisse. Okusanya you. question next Tayo comes

line is open. Your

Gerard Sweeney

Hello?

Omotayo Okusanya

Hello, can hear me? you

Gerard Sweeney

can you. How are We hear you?

Omotayo Okusanya

talk how of come stuff longer – Oh, just a of you to some just start can conversion of about kind lot the expect you? GV about sort where asset leasing final you are of kind leases see perfect. assets. the because talk So of development about new pipeline actually expanding, question project, final quick for actual and Hi, some we to pipelines guys like those look you

Gerard Sweeney

And, lease direct little how through have bit, You of think we a of the of have. question relation the look, of probability pipeline from is I kind to think, lease the kind amount I a we a pipeline move execution but is to execution? the

in a definitive we our to get second. present And I’ll that. shareholders. we that to on we back working are So, wish you while I leasing, – we’re and had think,

of I think, generally, the pleased levels activity. team is increased the very with

the are finally projects is think it that generating new we I of talented of these have that of in think, is, also construct, buildings I walk can worked quality through flight of activity, part part to teams, is Now tremendously on these people the old them. part leasing getting terms

to those lobby the at general elevator market, at important the the a as you the leasing building given its unless want pre-lease, to the really typically, a things higher looked have and rental we’ve significant So of than it’s like of in lines, the completion, don’t at as minds, activities after that creating place desk, cycles security the that’s what see their all value are start, turnstile, a X construction. the cabs, in window it’s the time occur months least pre-lease completed. them most rate looks at proposition in they by if nears in past, tenants Because you again, the kind do new the a

in I the the from seen Yards our through XXX So, mentioned, has the significantly. that Hard I has think, progression very, we’ve encouraging. been pipeline Schuylkill standpoint, Again, Hat very pipeline grown tours, that project

including our doing can, with them properties, C transaction Brandywine everything with tenants. senior of of we member we and executives top a including of of a Tom with great myself, a executives prospect providing get a do executives, and is get tours all their their to meeting So becoming we the some we dealing their level enamored what out have our reaching to family we of broker, do them top virtual once

and strong have We plan very, much lot out a can people internal construction of planning faster can space very very within a in-house a turn days, good competition. folks a that that of plan couple space price our

I to doing all everything process can. to we do things get execution, the So the can them to we’re control the lease think, that we

climate, are the capital tenants trigger on size to, larger talking pull large making today’s organizations. simply are slower just to the for long-term were particularly tenants In commitment a their

evolving companies to are view the for some more years plan visibility before several the pull business of they these on waiting degree, over their some next they So trigger. how

can, a people doughnut, process them range as have we information So as quickly can push I get got It’s to make a they a your question. their button finish not across because it’s don’t so full know the answers their decision of if to of making decisions. the element and line that process make every hard giving we by we’ve

year side when science XXXX is pipeline in than and under flip back and it at a ago, it is we construction, was much the under looked life even XXXX that, actual XXXX, is lower pre-development in for Philadelphia, property if you looked construction market The on delivery the XXXX. that at in or

market lined of is the tenants up. they level, hold, the clear requirements market get universe and some remained they financing in put about FDA competitive product on the same until their the their the lower, So of in tenants approval, those has

on line finish they most So leases these balance reasons decision. demand us seems But supply part that in favorable all to some executed. for and the getting make the projects would that prospects pretty across getting these the the of natural

Omotayo Okusanya

helpful. That’s

board follow-up, it appropriate really dividend, just to yield Tom, think what to wouldn’t going, mean, one about I kind the to is massive close just think dividend dividend what consider forward. into regards think, does when about the SAV is today, payout the I going level XXX%. dividend but Dive the comes in [ph] how of again, exactly appears. to

Thomas Wirth

key One focus on have the Number from of we is plan do think data our progressing how is two, on will how what achieving an operating standpoint? a business couple And I business on board plan? very what the in and capital is ahead is visibility current both Yeah, financing XXXX the addressing XXXX points. take financing liquidity of overall think requirements. a at needs. to and view going of to sales start look campaign And their conditions, and terms three, we forward then market as

joint from macro should pudding risk one think one ventures the as what financing for those, and evaluate position our management will the terms again, the question in fairly that controllable what management some will in the getting is company. some first proof deliver a management these certainly the So is the of and second third in terms of team; we sale board of proceeds be can be about we one, the line; the of finish the across

Omotayo Okusanya

Thank very you much.

Gerard Sweeney

welcome. You’re

Operator

Thank you.

question from Brzezinski] Green comes with [ph] next Our Street. [Dylan

Your line is open.

Unidentified Analyst

question. for Good morning, guys. Thanks the taking

how use curious, as time leverage that reducing you you plan, lower a those? of should line? mentioned dispositions any there about horizon? leverage on in finish Is Just desire of are thinking the some these to you guys targets have a get business You term longer sort of capital, possible XXXX those to

Gerard Sweeney

at and our leverage of core some And plan look coming where office term, game range kind recovery the is developments our particularly some it in EBITDA our we certainly, number targets, to of the Yeah, leverage debt the longer our I these is in I overall hopefully, as net in company online, mean, of think, to get low-XXs. market.

joint to, below years. more is, as they times the course be over ventures working continue on We we’re next getting of some exiting alluded that the to tools target on was the to highly levered. touched of and of immediate tend these Dylan one X Certainly, several Tom I

XX% tool added have ventures million lifecycle are debt our from their the to our to those us, ranges we that, that joint with attribution some coming powerful natural deleveraging a over at of ownership by the reducing disposal, very So of of $XXX XX%. end

ventures they candidates in every us even exit way to can the several as So joint as each that become capital we’re reduce have we those leveraging, one ownership the as over to in a for years, package us and marketplace. or for of how stake next evaluating accelerate de the a your a identified supplemental constrained

Unidentified Analyst

just helpful. dispositions. on Thanks. That’s then And staying the

nines, Is several to the think, you’re that line I with guidance the expectations low last obviously, with million cap had anywhere that today? on with you’re still highest you already in $XXX from just relatively depending market assets. given market, in pricing rates targeting the that quarter, mentioned sixes

Gerard Sweeney

thought it so. sub-X think be. mean, next with I rate, project kind might one cap the of where is the the we’re sales, one is we the I forward Yeah, this, moving which

The other X% it’s necessarily the range. of portfolio. reflecting one kind not of upon based kind out place, of in X% in what roll But leases might we is think the

think, look, that our today. not as as what to So, as we frankly, connection that we net view there us getting was us. we across with reality But those a long do pricing are the I on asset for present to the price, are And we and holding that think that line is, pricing tradable are clarity levels pricing consistent levels better with board, NPV, it’s what hoping is expectation view the between be was, but that value in I made much for assets. is the offer internal of point very

Unidentified Analyst

for it. the color. appreciate I Great. Thanks

Gerard Sweeney

Thank you.

Operator

Thank you.

Sakwa comes ISI. from Evercore Steve question Our with next

open. Your line is

Steve Sakwa

Yeah, capitalize for pipeline I’m of through projects you deliver, thanks. extent trying a that payout little and coverage just leases, know to going on to color executed. Austin reason the I’m can interest these recognizing if ratio, more the on maybe pressure wanted start before the And the to they and then get the think leasing you Jerry, speaks the are or putting asking is, those could the office I to timing ratio kind you for some long the of so have to at dividend. further point just to only income provide building like which

of get and ratios, realistically timing some how a CAD we when think the the a about XXXX? lease for as the tenants, yield, sort get to and could So trying timing, of size these signed that sense of affect might and just the the

Gerard Sweeney

on, we very the pipeline prospects XXXX. critically Yeah, Look, of generate The insulate on projecting obviously, are certainly revenue well, ourselves we sure project it’s at of forward. the and our about year, that we’re that some of second great going pressure across question, is some deliver as capitalized upon our at to be a Uptown clearly from point this interest numbers of second the focused a half will months out Steve. to be these consideration point in going that getting that we risk. that point so conditioned of to downside But will of the half start make finish essentially look XX that That ATX a line. revenue

know, you great, is Austin growth And long-term it while has as I mean, potential. great

slow, there’s with marketplace looking being the prospects, over today, as feet. headquarters marketplace, XX,XXX square or relocation. of regional are about There’s XXX,XXX even new seven as market tenants new the over In about and fact, at you XX Austin know, either feet, square XX to the a that

pipeline So forward looks the good.

a focused pullback, very tenants meandering of they across team companies but that in some like your if a some we larger make the to on, sublease line, of answers to get kind our all these tenants space. And moving. rather think the of We’re decision for much I I that’s through, way can just how we’re quantitatively, been somatically do. one our what know the what’s finish some very, than the want on tech is increased waiting of smaller direction don’t question major totally

Steve Sakwa

mostly the need more they delayed. dead I sense explorations of to just versus to pipeline, to to horse finish lease tenants just decision, of maybe on things decision? Or maybe not for have But ability here. have line continue a to don’t guess beat to Jerry, they I tenants kind new a the these a the are trying kind that market they things So make existing, over to a Austin get to get and guess, get where make natural

Gerard Sweeney

expiration, mentioned, tenants kind XX,XXX is square existing of the feet. those prospects in kind XX,XXX of Yeah, that market I they’re lease that I of timeline mean, with They’re to mentioned. all role

Steve Sakwa

in this there occupancy, there and occupancy then, more those. anything at in I I on was definitely weakness specific just think in some backfill Radnor, of kind And at Conshohocken guess, terms to guess opportunities just Right. looking note sequentially, quarter, potential the of change the of I declined

George Johnstone

foot foot is that shape looking then, we some Meeting, Sure, Conshohocken. we tenants XX,XXX back in sure. your Steve. was had of Radnor, was And to it space we at Plymouth really square did not great to where concern Yeah, one Good issued when and morning. to yeah, a largest. had In Radnor get have already more we XX,XXX proposals the square that in got and kind so additional vacate. already two we’ve foot move outs space. the we’ve But back. got square get really inventory one XX,XXX or pipeline point,

Steve Sakwa

Great. Thank you.

Gerard Sweeney

Steve. Thank you,

Operator

for to remarks. to are like Sweeney questions. There the back turn you. I’d Thank further no over closing call Jerry

Gerard Sweeney

on updating for We earnings our you on very to you you business much. Thank in Thank our XXXX forward call. call. very much progression look plan all participating earnings our next

Operator

conference today’s concludes disconnect. you call. you now may This you. Thank and for Thank participating

Brandywine Realty Trust (BDN) 20 Apr 232023 Q1 Earnings call transcript