Brandywine Realty Trust (BDN) to Dispose of Five Office Properties for ~$389M, ex. Development Site

Brandywine Realty Trust (NYSE: BDN), announced a series of disposition transactions for five office properties that contain an aggregate of 1,216,800 rentable square feet and are currently 82% leased and a 1.6 acre development site. The property dispositions, excluding the development site, total $389.0 million, or $320 per square foot, representing a capitalization rate of 5.2% for both cash and GAAP based on net operating income.

Disposition Transactions

• We have entered into an agreement to dispose of our interests in Cira Square located in the University City submarket of Philadelphia, Pennsylvania for $354.0 million, or $410 per square foot. The property totals 862,700 square feet and is 100% leased to the General Services Administration and occupied by the Internal Revenue Service. We anticipate this transaction closing, subject to customary closing conditions, in the first half of the first quarter 2016. In connection with the anticipated sale, we plan to prepay the current mortgage totaling $177.4 million. After the transaction, Brandywine will continue to provide management services at the property. In a related transaction, we anticipate prepaying the Cira Centre South Garage mortgage totaling $35.5 million unencumbering our 1,662 space facility.

• We have sold three office properties located in Carlsbad, California for $30.4 million, or $155 per square foot. The three properties total 196,100 square feet and are 65% leased.

• We have sold a 1.6 acre development site located at the corner of 2nd and King Streets in Wilmington, Delaware for $6.5 million.

• We have sold a flex/office property located in King of Prussia, Pennsylvania for $4.6 million, or $29 per square foot. The property totals 158,000 square feet and will be 100% vacant on January 1, 2016 and is being purchased by an owner/occupant.

Brandywine expects these transactions to result in a net gain of approximately $96.7 million. After paying off $212.9 million in mortgage debt, we expect to receive $124.5 million of net proceeds. The prepayment of the mortgages will result in an estimated $51.2 million cash charge for the early extinguishment of debt and an estimated $13.4 million charge for the write-off of unamortized debt costs. Brandywine expects to use the net proceeds to fund current development commitments, reduce debt and general corporate purposes.

"The transactions reinforce our stated goals of prefunding our development pipeline and further improving our financial capacity through accelerated dispositions," stated Gerard H. Sweeney, President and Chief Executive Officer of Brandywine Realty Trust. "The sale of Cira Square reflects our ability to both create and harvest value and will generate a significant gain to our shareholders. We acquired the historic post office building in 2007, embarked on a multi-year renovation of this iconic Philadelphia landmark and rebranded it as Cira Square. The other asset sales represent our continued efforts to reduce our ownership in non-core assets and markets. As evidenced by these transactions, the current investment market remains strong and, consistent with our 2016 guidance, we anticipate additional sales between now and the first half of 2016."

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