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Form 8-K BRANDYWINE REALTY TRUST For: Jul 22

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July 23, 2015 1:18 PM EDT



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 22, 2015

Brandywine Realty Trust
Brandywine Operating Partnership, L.P.
(Exact name of registrant as specified in charter)

MARYLAND
(Brandywine Realty Trust)
001-9106
23-2413352
DELAWARE
(Brandywine Operating Partnership, L.P.)
000-24407
23-2862640
(State or Other Jurisdiction of Incorporation or Organization)
(Commission file number)
(I.R.S. Employer Identification Number)

555 East Lancaster Avenue, Suite 100
Radnor, PA 19087
(Address of principal executive offices)

(610) 325-5600
(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


1


Item 2.02    Results of Operations and Financial Condition
The information in this Current Report on Form 8-K is furnished under Item 2.02 - “Results of Operations and Financial Condition.” Such information, including the exhibits attached hereto, shall not be deemed to be “filed” for any purpose, including for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information in this Current Report on Form 8-K shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act regardless of any general incorporation language in such filing.
On July 22, 2015, we issued a press release announcing our financial results for the three and six-months ended June 30, 2015. That press release is attached hereto as Exhibit 99.1 and is incorporated by reference herein.
The press release includes “non-GAAP financial measures” within the meaning of the Securities and Exchange Commission's Regulation G. With respect to such non-GAAP financial measures, we have disclosed in the press release the most directly comparable financial measure calculated and presented in accordance with generally accepted accounting principles (“GAAP”) and have provided a reconciliation of such non-GAAP financial measures to the most directly comparable GAAP financial measure.
Item 9.01    Financial Statements and Exhibits
Exhibits
99.1
Brandywine Realty Trust Press Release dated July 22, 2015.


2


Signatures

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
Brandywine Realty Trust


By: /s/ Thomas E. Wirth                
Thomas E. Wirth
Executive Vice President and Chief Financial Officer


Brandywine Operating Partnership L.P.,
By: Brandywine Realty Trust, its sole General Partner

    
By: /s/ Thomas E. Wirth                
Thomas E. Wirth
Executive Vice President and Chief Financial Officer

Date: July 22, 2015


3


 
Company / Investor Contact:
     Marge Boccuti
     Manager, Investor Relations
     610-832-7702


Brandywine Realty Trust Announces $0.32 FFO per Diluted Share for the Second Quarter 2015,
2015 FFO Guidance Remains at $1.40 to $1.46 per Diluted Share, Share Repurchase Program and Increases Property Disposition Plan


Radnor, PA, July 22, 2015 - Brandywine Realty Trust (NYSE: BDN) today reported its financial and operating results for the three and six-month periods ended June 30, 2015.

2nd Quarter Highlights
Financial Results
▪
Funds from Operations (FFO); $57.4 million, or $0.32 per share.
▪
Net income available to common shareholders; $1.3 million, or $0.01 per share.

Portfolio Results
▪
Core portfolio was 91.7% occupied and 94.4% leased.
▪
Signed 1,556,000 square feet of new and renewal leases.
▪
Achieved 78.2% tenant retention ratio.
▪
Rental rate market-to-market increased 6.7% / 1.5% on GAAP/Cash basis.
▪
Increased 2015 speculative revenue by $0.7 million, or 2.1%, and have completed 98% of revised target.

Dispositions
▪
Sold seven office properties located in Delaware, Oakland, California and Richmond, Virginia for $119.2 million. The seven properties totaled 765,000 square feet and were 71.0% occupied.

Development / Investment Activity
▪
Delivering Encino Trace I, 160,000 square foot building located in Austin, Texas, 100% leased.
▪
Signed a new 228,000 square foot lease at our 1900 Market Street, Philadelphia, Pennsylvania redevelopment project.
▪
Increased our disposition target from $180.0 million to $300.0 million. In addition, we have approximately $40 million of land under contract or letter of intent to sell.
▪
Acquired the remaining 50% ownership interest in Broadmoor Austin Associates and the underlying 66 acre fee interest for $92.6 million cash. In addition, we assumed and repaid a secured mortgage totaling $51.2 million.
▪
Acquired land parcels located at the 2100 Market Street block in Philadelphia, Pennsylvania in July 2015 for $18.8 million.
▪
Entered into a joint venture arrangement with The JBG Companies to acquire a 70% interest in two vacant land parcels located in the NOMA sub-market of Washington, DC for $28.4 million. Both Brandywine and The JBG Companies will have co-developer responsibilities.
▪
Acquired a land parcel in Capitol Riverfront submarket of Washington, DC in April 2015 for $20.0 million. The site can accommodate a 271,000 square foot office building. Subsequent to the acquisition, we contributed the property into a joint venture with Akridge serving as co-developer and having a 5% ownership interest.

555 East Lancaster Avenue, Suite 100, Radnor, PA 19087             Phone: (610) 325-5600 • Fax: (610) 325-5622



Finance / Capital Markets
▪
Extended our $600.0 million unsecured revolving credit facility through May 2019.
▪
Announces a Share Repurchase Program up to $100.0 million.
▪
No outstanding balance on our $600.0 million unsecured revolving credit facility.
▪
$124.0 million of cash and cash equivalents.

Management Comments
"During the second quarter, we continued to make excellent progress on our 2015 business plan,” stated Gerard H. Sweeney, President and Chief Executive Officer of Brandywine Realty Trust. “We continue to capitalize on improving market conditions and raised our speculative revenue target by 2.1% having already achieved 98% of our 2015 speculative revenue target. We have also seen an acceleration in our portfolio disposition program and given the current strength of the investment market, have increased our sales goal to $300.0 million. Given our strong operating results coupled with our accelerated dispositions, we are maintaining our 2015 FFO guidance range to $1.40 to $1.46 per diluted share.”

Results for the Three and Six Month Period Ended June 30, 2015
FFO available to common shares and units in the second quarter of 2015 totaled $57.4 million or $0.32 per diluted share versus $57.3 million or $0.36 per diluted share in the second quarter of 2014. Our second quarter 2015 payout ratio ($0.15 common share distribution / $0.32 FFO per diluted share) was 46.9%.
Net income allocated to common shares totaled $1.3 million or $0.01 per diluted share in the second quarter of 2015 compared to a net income of $0.4 million or $0.00 per diluted share in the second quarter of 2014.
In the second quarter of 2015, our Net Operating Income (NOI) excluding termination revenues and other income items increased 1.7% on a GAAP basis and increased 1.3% on a cash basis for our 184 same store properties, which were 91.2% and 89.1% occupied on June 30, 2015 and June 30, 2014, respectively.
Our FFO available to common shares and units in the first six months of 2015 totaled $115.8 million or $0.64 per diluted share versus $110.9 million or $0.69 per diluted share in the first six months of 2014. Our first six months 2015 FFO payout ratio ($0.30 common share distribution / $0.64 FFO per diluted share) was 46.9%.
Net income allocated to common shares totaled $8.0 million or $0.04 per diluted share in the first six months of 2015 compared to net loss of $3.7 million or ($0.02) per diluted share in the first six months of 2014.

Operating and Leasing Activity
We leased approximately 1,556,000 square feet and commenced occupancy on 506,000 square feet during the second quarter of 2015. The second quarter occupancy activity includes 123,000 square feet of renewals, 262,000 square feet of new leases and 121,000 square feet of tenant expansions. We have an additional 636,000 square feet of executed new leasing scheduled to commence subsequent to June 30, 2015.
We achieved a 78.2% tenant retention ratio in our core portfolio with net absorption of 194,000 square feet during the second quarter of 2015. Second quarter rental rate growth increased 6.7% as our renewal rental rates increased 9.5% and our new lease/expansion rental rates increased 3.6%, all on a GAAP basis.
At June 30, 2015, our core portfolio of 193 properties comprising 23.6 million square feet was 91.7% occupied and we are now 94.4% leased (reflecting new leases commencing after June 30, 2015).

Share Repurchase Program
The Company’s Board of Trustees approved a Share Repurchase Program authorizing the Company to repurchase up to $100 million of its outstanding common and preferred stock. The Repurchase Program will be funded through the Company’s existing cash.

- 2 -


Purchases made pursuant to the program will be made in either the open market or in privately negotiated transactions from time to time as permitted by federal securities laws and other legal requirements. The timing, manner, price and amount of any repurchases will be determined by the Company in its discretion and will be subject to economic and market conditions, stock price, applicable legal requirements and other factors. The program may be suspended or discontinued at any time.


Distributions
On May 28, 2015, our Board of Trustees declared a quarterly dividend distribution of $0.15 per common share that was paid on July 20, 2015 to shareholders of record as of July 6, 2015. Our Board also declared a quarterly dividend distribution of $0.43125 for each 6.90% Series E Cumulative Redeemable Preferred Share that was paid on July 15, 2015 to holders of record as of June 30, 2015.


2015 Earnings and FFO Guidance
Based on current plans and assumptions and subject to the risks and uncertainties more fully described in our Securities and Exchange Commission filings, we are maintaining our previously issued 2015 guidance of $1.40 to $1.46 per diluted share. This guidance is provided for informational purposes and is subject to change. The following is a reconciliation of the calculation of 2015 FFO and earnings per diluted share:
Guidance for 2015
   Range
Earnings per diluted share allocated to common shareholders    
$0.13
 to
$0.19
Plus: real estate depreciation and amortization
1.27
 
1.27
 
 
 
 
FFO per diluted share
$1.40
 to
$1.46
 
 
 
 
Less: non-cash tax credit financing income

$(0.11)
 
$(0.11)
 
 
 
 
Adjusted FFO per diluted share

$1.29
to
$1.35
Our 2015 FFO guidance does not include income arising from the sale of undepreciated real estate. Our 2015 earnings and FFO per diluted share each reflect $0.11 per diluted share of non-cash income attributable to the fifth of five annual recognitions of 20% of the net benefit of the rehabilitation tax credit financing and one-time non-cash income from a new market tax credit, which are related to the 30th Street Post Office and Cira South Garage respectively. Other key assumptions include:
•
Occupancy improving to a range of 92 - 93% by year-end 2015 with 93.5 - 94.5% leased;
•
7.0 - 8.0% GAAP increase in overall lease rates with a resulting 3.0 - 5.0% increase in 2015 same store NOI GAAP;
•
2.0 - 4.0% increase in 2015 same store cash NOI growth;
•
$250.0 million of aggregate acquisition activity at an assumed 7.0% GAAP capitalization rate;
•
$300.0 million of aggregate sales activity; and
•
FFO per diluted share based on 182.1 million fully diluted weighted average common shares.

About Brandywine Realty Trust
Brandywine Realty Trust is one of the largest, publicly traded, full-service, integrated real estate companies in the United States. Organized as a real estate investment trust and operating in select markets, Brandywine owns, leases and manages an urban, town center and transit-oriented office portfolio comprising 281 properties and 33.2 million square feet as of June 30, 2015. For more information, please visit www.brandywinerealty.com.

- 3 -


Conference Call and Audio Webcast
BDN management will discuss updated earnings guidance for fiscal 2015 on Thursday, July 23, 2015, during the company’s earnings call. The conference call will begin at 9:00 a.m. Eastern Time and will last approximately one hour. This call will be accessed by calling 1-800-683-1525 and referencing conference ID #41177682. Beginning two hours after the conference call, a taped replay of the call can be accessed 24 hours a day through Thursday, August 6, 2015 by calling 1-855-859-2056 and providing access code #41177682. In addition, the conference call can be accessed via a webcast located on our website at www.brandywinerealty.com.

Looking Ahead - Third Quarter 2015 Conference Call
We anticipate we will release our third quarter 2015 earnings on Wednesday, October 21, 2015, after the market close and will host our third quarter 2015 conference call on Thursday, October 22, 2015 at 9:00 a.m. Eastern Time. We expect to issue a press release in advance of these events to reconfirm the dates and times and provide all related information.
Forward-Looking Statements
Estimates of future earnings per share, FFO per share, common share dividend distributions and certain other statements in this release constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our and our affiliates’ actual results, performance, achievements or transactions to be materially different from any future results, performance, achievements or transactions expressed or implied by such forward-looking statements. Such risks, uncertainties and other factors relate to, among others: our ability to lease vacant space and to renew or relet space under expiring leases at expected levels; competition with other real estate companies for tenants; the potential loss or bankruptcy of major tenants; interest rate levels; the availability of debt, equity or other financing; risks of acquisitions, dispositions and developments, including the cost of construction delays and cost overruns; unanticipated operating and capital costs; our ability to obtain adequate insurance, including coverage for terrorist acts; dependence upon certain geographic markets; and general and local economic and real estate conditions, including the extent and duration of adverse changes that affect the industries in which our tenants operate. Additional information on factors which could impact us and the forward-looking statements contained herein are included in our filings with the Securities and Exchange Commission, including our Form 10-K for the year ended December 31, 2014. We assume no obligation to update or supplement forward-looking statements that become untrue because of subsequent events except as required by law.

Non-GAAP Supplemental Financial Measures
We compute our financial results in accordance with generally accepted accounting principles (GAAP). Although FFO and NOI are non-GAAP financial measures, we believe that FFO and NOI calculations are helpful to shareholders and potential investors and are widely recognized measures of real estate investment trust performance. At the end of this press release, we have provided a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measure.

Funds from Operations (FFO)
We compute FFO in accordance with standards established by the National Association of Real Estate Investment Trusts (NAREIT), which may not be comparable to FFO reported by other REITs that do not compute FFO in accordance with the NAREIT definition, or that interpret the NAREIT definition differently than us. NAREIT defines FFO as net income (loss) before non-controlling interests and excluding gains (losses) on sales of depreciable operating property, impairment losses on depreciable consolidated real estate, impairment losses on investments in unconsolidated real estate ventures and extraordinary items (computed in accordance with GAAP); plus real estate related depreciation and amortization (excluding amortization of deferred financing costs), and after similar adjustments for unconsolidated joint ventures. Net income, the GAAP measure that we believe to be most directly comparable to FFO, includes depreciation and amortization expenses, gains or losses on property sales, extraordinary items and non-controlling interests. To facilitate a clear understanding of our historical operating results, FFO should be examined in conjunction

- 4 -


with net income (determined in accordance with GAAP) as presented in the financial statements included elsewhere in this release. FFO does not represent cash flow from operating activities (determined in accordance with GAAP) and should not be considered to be an alternative to net income (loss) (determined in accordance with GAAP) as an indication of our financial performance or to be an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is it indicative of funds available for our cash needs, including our ability to make cash distributions to shareholders.

Net Operating Income (NOI)
NOI is a non-GAAP financial measure equal to net income available to common shareholders, the most directly comparable GAAP financial measure, plus corporate general and administrative expense, depreciation and amortization, interest expense, non-controlling interests and losses from early extinguishment of debt, less interest income, development and management income, gains from property dispositions, gains on sale from discontinued operations, gains on early extinguishment of debt, income from discontinued operations, income from unconsolidated joint ventures and non-controlling interests. In some cases, we also present NOI on a cash basis, which is NOI after eliminating the effect of straight-lining of rent and deferred market intangible amortization. NOI presented by us may not be comparable to NOI reported by other REITs that define NOI differently. NOI should not be considered an alternative to net income as an indication of our performance, or as an alternative to cash flow from operating activities as a measure of our liquidity or ability to make cash distributions to shareholders.


- 5 -


BRANDYWINE REALTY TRUST
CONSOLIDATED BALANCE SHEETS
(in thousands)
 
 
 
 
 
 
 
June 30,
 
December 31,
 
 
2015
 
2014
 
 
(unaudited)
 
 
ASSETS
 
 
 
 
Real estate investments:
 
 
 
 
Operating properties
 
$
4,700,839

 
$
4,603,692

Accumulated depreciation
 
(1,088,681
)
 
(1,067,829
)
Rental property, net
 
3,612,158

 
3,535,863

Construction-in-progress
 
263,772

 
201,360

Land inventory
 
119,995

 
90,603

Real estate investments, net
 
3,995,925

 
3,827,826

Cash and cash equivalents
 
123,982

 
257,502

Accounts receivable, net
 
22,294

 
18,757

Accrued rent receivable, net
 
138,905

 
134,051

Assets held for sale, net
 
—

 
18,295

Investment in real estate ventures, at equity
 
201,034

 
225,004

Deferred costs, net
 
126,567

 
125,224

Intangible assets, net
 
137,290

 
99,403

Note receivable
 
—

 
88,000

Other assets
 
68,313

 
65,111

Total assets
 
$
4,814,310

 
$
4,859,173

 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
Mortgage notes payable
 
$
646,512

 
$
654,590

Unsecured term loans
 
200,000

 
200,000

Unsecured senior notes, net of discounts
 
1,597,267

 
1,596,718

Accounts payable and accrued expenses
 
98,897

 
96,046

Distributions payable
 
29,021

 
28,871

Deferred income, gains and rent
 
54,595

 
59,452

Acquired lease intangibles, net
 
31,565

 
26,010

Liabilities related to assets held for sale
 
—

 
602

Other liabilities
 
40,647

 
37,558

Total liabilities
 
2,698,504

 
2,699,847

 
 
 
 
 
Brandywine Realty Trust's equity:
 
 
 
 
Preferred shares - Series E
 
40

 
40

Common shares
 
1,799

 
1,793

Additional paid-in capital
 
3,317,751

 
3,314,693

Deferred compensation payable in common stock
 
11,996

 
6,219

Common shares held in grantor trust
 
(11,996
)
 
(6,219
)
Cumulative earnings
 
541,079

 
529,487

Accumulated other comprehensive loss
 
(5,651
)
 
(4,607
)
Cumulative distributions
 
(1,758,294
)
 
(1,700,579
)
Total Brandywine Realty Trust's equity
 
2,096,724

 
2,140,827

 
 
 
 
 
Non-controlling interests
 
19,082

 
18,499

Total equity
 
2,115,806

 
2,159,326

 
 
 
 
 
Total liabilities and equity
 
$
4,814,310

 
$
4,859,173


- 6 -


BRANDYWINE REALTY TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except share and per share data)
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30,
 
 
Six Months Ended June 30,
 
 
2015
 
2014
 
 
2015
 
2014
Revenue
 
 
 
 
 
 
 
 
 
Rents
 
$
119,127

 
$
121,622

 
 
$
239,537

 
$
243,293

Tenant reimbursements
 
19,799

 
20,502

 
 
42,453

 
43,962

Termination fees
 
828

 
3,349

 
 
1,464

 
5,552

Third party management fees, labor reimbursement and leasing
 
4,659

 
4,187

 
 
8,531

 
8,337

Other
 
1,235

 
840

 
 
4,069

 
1,470

Total revenue
 
145,648

 
150,500

 
 
296,054

 
302,614

 
 
 
 
 
 
 
 
 
 
Operating Expenses
 
 
 
 
 
 
 
 
 
Property operating expenses
 
42,704

 
43,136

 
 
89,281

 
89,937

Real estate taxes
 
11,968

 
12,841

 
 
24,513

 
26,298

Third party management expenses
 
1,677

 
1,730

 
 
3,253

 
3,446

Depreciation and amortization
 
50,930

 
52,587

 
 
102,041

 
105,157

General & administrative expenses
 
6,791

 
6,005

 
 
15,427

 
14,186

Total operating expenses
 
114,070

 
116,299

 
 
234,515

 
239,024

 
 
 
 
 
 
 
 
 
 
Operating income
 
31,578

 
34,201

 
 
61,539

 
63,590

 
 
 
 
 
 
 
 
 
 
Other income (expense)
 
 
 
 
 
 
 
 
 
Interest income
 
313

 
385

 
 
1,063

 
770

Interest expense
 
(27,895
)
 
(31,512
)
 
 
(56,071
)
 
(63,356
)
Amortization of deferred financing costs
 
(1,288
)
 
(1,197
)
 
 
(2,367
)
 
(2,386
)
Interest expense - financing obligation
 
(324
)
 
(316
)
 
 
(610
)
 
(588
)
Equity in loss of real estate ventures
 
(873
)
 
(489
)
 
 
(742
)
 
(247
)
Net gain on disposition of real estate
 
1,571

 
—

 
 
10,590

 
—

Net gain (loss) on sale of undepreciated real estate
 
—

 
(3
)
 
 
—

 
1,184

Net gain from remeasurement of investment in real estate ventures
 
758

 
458

 
 
758

 
458

Net loss on real estate venture transactions
 
—

 
(282
)
 
 
—

 
(417
)
Provision for impairment on assets held for sale/sold
 
(782
)
 
—

 
 
(2,508
)
 
—

Net gain (loss) from continuing operations
 
3,058

 
1,245

 
 
11,652

 
(992
)
 
 
 
 
 
 
 
 
 
 
Discontinued operations:
 
 
 
 
 
 
 
 
 
Income from discontinued operations
 
—

 
26

 
 
—

 
18

Net gain on disposition of discontinued operations
 
—

 
903

 
 
—

 
903

Total discontinued operations
 
—

 
929

 
 
—

 
921

 
 
 
 
 
 
 
 
 
 
Net income (loss)
 
3,058

 
2,174

 
 
11,652

 
(71
)
 
 
 
 
 
 
 
 
 
 
Net income from discontinued operations attributable to non-controlling interests - LP units
 
—

 
(10
)
 
 
—

 
(10
)
Net loss attributable to non-controlling interests - partners' share of consolidated real estate ventures
 
5

 
24

 
 
5

 
12

Net (income) loss from continuing operations attributable to non-controlling interests - LP units
 
(7
)
 
5

 
 
(65
)
 
49

Net (income) loss attributable to non-controlling interests
 
(2
)
 
19

 
 
(60
)
 
51

 
 
 
 
 
 
 
 
 
 
Net income (loss) attributable to Brandywine Realty Trust
 
3,056

 
2,193

 
 
11,592

 
(20
)
Preferred share distributions
 
(1,725
)
 
(1,725
)
 
 
(3,450
)
 
(3,450
)
Nonforfeitable dividends allocated to unvested restricted shareholders
 
(76
)
 
(83
)
 
 
(177
)
 
(186
)
Net income (loss) attributable to common shareholders
 
$
1,255

 
$
385

 
 
$
7,965

 
$
(3,656
)
 
 
 
 
 
 
 
 
 
 
PER SHARE DATA
 
 
 
 
 
 
 
 
 
Basic income (loss) per common share
 
$
0.01

 
$
—

 
 
$
0.04

 
$
(0.02
)
 
 
 
 
 
 
 
 
 
 
Basic weighted-average shares outstanding
 
179,860,284

 
157,037,348

 
 
179,712,428

 
156,916,356

 
 
 
 
 
 
 
 
 
 
Diluted income (loss) per common share
 
$
0.01

 
$
—

 
 
$
0.04

 
$
(0.02
)
 
 
 
 
 
 
 
 
 
 
Diluted weighted-average shares outstanding
 
180,538,887

 
157,037,348

 
 
180,599,265

 
156,916,356


- 7 -


BRANDYWINE REALTY TRUST
FUNDS FROM OPERATIONS
(unaudited, in thousands, except share and per share data)
 
 
 
 
 
 
 
 
Three Months Ended June 30,
 
 
Six Months Ended June 30,
 
 
2015
 
2014
 
 
2015
 
2014
 
 
 
 
 
 
 
 
 
 
Reconciliation of Net Income to Funds from Operations:
 
 
 
 
 
 
 
 
 
Net income (loss) attributable to common shareholders
 
$
1,255

 
$
385

 
 
$
7,965

 
$
(3,656
)
 
 
 
 
 
 
 
 
 
 
Add (deduct):
 
 
 
 
 
 
 
 
 
Net income (loss) attributable to non-controlling interests - LP units
 
7

 
(5
)
 
 
65

 
(49
)
Nonforfeitable dividends allocated to unvested restricted shareholders
 
76

 
83

 
 
177

 
186

Net loss on real estate venture transactions
 
—

 
282

 
 
—

 
417

Net income from disc ops attributable to non-controlling interests - LP units
 
—

 
10

 
 
—

 
10

Net gain on disposition of real estate
 
(1,571
)
 
—

 
 
(10,590
)
 
—

Net gain on disposition of discontinued operations
 
—

 
(903
)
 
 
—

 
(903
)
Net gain from remeasurement of investment in real estate ventures
 
(758
)
 
(458
)
 
 
(758
)
 
(458
)
Provision for impairment on assets held for sale/sold
 
782

 
—

 
 
2,508

 
—

 
 
 
 
 
 
 
 
 
 
Depreciation and amortization:
 
 
 
 
 
 
 
 
 
Real property - continuing operations
 
39,294

 
40,964

 
 
79,790

 
81,641

Leasing costs including acquired intangibles - continuing operations
 
11,536

 
11,578

 
 
22,074

 
23,437

Company's share of unconsolidated real estate ventures
 
6,969

 
5,586

 
 
15,082

 
10,794

Partners' share of consolidated joint ventures
 
(59
)
 
(52
)
 
 
(113
)
 
(101
)
 
 
 
 
 
 
 
 
 
 
Funds from operations
 
$
57,531

 
$
57,470

 
 
$
116,200

 
$
111,318

Funds from operations allocable to unvested restricted shareholders
 
(162
)
 
(201
)
 
 
(380
)
 
(436
)
 
 
 
 
 
 
 
 
 
 
Funds from operations available to common share and unit holders (FFO)
 
$
57,369

 
$
57,269

 
 
$
115,820

 
$
110,882

 
 
 
 
 
 
 
 
 
 
FFO per share - fully diluted
 
$
0.32

 
$
0.36

 
 
$
0.64

 
$
0.69

 
 
 
 
 
 
 
 
 
 
Weighted-average shares/units outstanding - fully diluted
 
182,073,989

 
160,330,365

 
 
182,134,367

 
160,130,850

 
 
 
 
 
 
 
 
 
 
Distributions paid per common share
 
$
0.15

 
$
0.15

 
 
$
0.30

 
$
0.30

 
 
 
 
 
 
 
 
 
 
FFO payout ratio (distributions paid per common share/ FFO per diluted share)
 
46.9%
 
41.7%
 
 
46.9%
 
43.5%
 
 
 
 
 
 
 
 
 
 

- 8 -


BRANDYWINE REALTY TRUST
SAME STORE OPERATIONS - 2ND QUARTER
(unaudited and in thousands)
Of the 199 properties owned by the Company as of June 30, 2015, a total of 184 properties ("Same Store Properties") containing an aggregate of 22.3 million net rentable square feet were owned for the entire three-month periods ended June 30, 2015 and 2014. Average occupancy for the Same Store Properties was 90.9% during 2015 and 89.1% during 2014. The following table sets forth revenue and expense information for the Same Store Properties:
 
 
Three Months Ended June 30,
 
 
2015
 
2014
Revenue
 
 
 
 
Rents
 
$
114,602

 
$
112,084

Tenant reimbursements
 
19,041

 
18,618

Termination fees
 
828

 
3,349

Other
 
714

 
529

Total revenue
 
135,185

 
134,580

 
 
 
 
 
Operating expenses
 
 
 
 
Property operating expenses
 
42,007

 
40,601

Real estate taxes
 
11,177

 
11,521

Net operating income
 
$
82,001

 
$
82,458

 
 
 
 
 
Net operating income - percentage change over prior year
 
(0.6
)%
 
 
 
 
 
 
 
Net operating income, excluding net termination fees & other
 
$
80,844

 
$
79,491

 
 
 
 
 
Net operating income, excluding net termination fees & other - percentage change over prior year
 
1.7
 %
 
 
 
 
 
 
 
Net operating income
 
$
82,001

 
$
82,458

Straight line rents
 
(4,882
)
 
(3,437
)
Above/below market rent amortization
 
(942
)
 
(1,498
)
Non-cash ground rent
 
22

 
22

Cash - Net operating income
 
$
76,199

 
$
77,545

 
 
 
 
 
Cash - Net operating income - percentage change over prior year
 
(1.7
)%
 
 
 
 
 
 
 
Cash - Net operating income, excluding net termination fees & other
 
$
74,657

 
$
73,667

 
 
 
 
 
Cash - Net operating income, excluding net termination fees & other - percentage change over prior year
 
1.3
 %
 
 
 
 
 
 
 
The following table is a reconciliation of Net Income to Same Store net operating income:
 
 
 
 
Three Months Ended June 30,
 
 
2015
 
2014
Net income:
 
$
3,058

 
$
2,174

Add/(deduct):
 
 
 
 
Interest income
 
(313
)
 
(385
)
Interest expense
 
27,895

 
31,512

Amortization of deferred financing costs
 
1,288

 
1,197

Interest expense - financing obligation
 
324

 
316

Equity in loss of real estate ventures
 
873

 
489

Net gain on disposition of real estate
 
(1,571
)
 
—

Net loss on sale of undepreciated real estate
 
—

 
3

Net gain from remeasurement of investment in real estate ventures
 
(758
)
 
(458
)
Net loss on real estate venture transactions
 
—

 
282

Provision for impairment on assets held for sale/sold
 
782

 
—

Depreciation and amortization
 
50,930

 
52,587

General & administrative expenses
 
6,791

 
6,005

Total discontinued operations
 
—

 
(929
)
Consolidated net operating income
 
89,299

 
92,793

Less: Net operating income of non same store properties
 
(2,524
)
 
(2,121
)
Less: Eliminations and non-property specific net operating income
 
(4,774
)
 
(8,214
)
Same Store net operating income
 
$
82,001

 
$
82,458



- 9 -


BRANDYWINE REALTY TRUST
SAME STORE OPERATIONS - SIX MONTHS
(unaudited and in thousands)
Of the 199 properties owned by the Company as of June 30, 2015, a total of 184 properties ("Same Store Properties") containing an aggregate of 22.3 million net rentable square feet were owned for the entire six-month periods ended June 30, 2015 and 2014. Average occupancy for the Same Store Properties was 90.8% during 2015 and 88.8% during 2014. The following table sets forth revenue and expense information for the Same Store Properties:
 
 
Six Months Ended June 30,
 
 
2015
 
2014
Revenue
 
 
 
 
Rents
 
$
228,601

 
$
223,456

Tenant reimbursements
 
40,646

 
39,581

Termination fees
 
1,464

 
5,552

Other
 
2,363

 
934

Total revenue
 
273,074

 
269,523

 
 
 
 
 
Operating expenses
 
 
 
 
Property operating expenses
 
86,599

 
84,153

Real estate taxes
 
22,773

 
23,409

Net operating income
 
$
163,702

 
$
161,961

 
 
 
 
 
Net operating income - percentage change over prior year
 
1.1
 %
 
 
 
 
 
 
 
Net operating income, excluding net termination fees & other
 
$
160,581

 
$
157,334

 
 
 
 
 
Net operating income, excluding net termination fees & other - percentage change over prior year
 
2.1
 %
 
 
 
 
 
 
 
Net operating income
 
$
163,702

 
$
161,961

Straight line rents
 
(11,034
)
 
(6,739
)
Above/below market rent amortization
 
(1,867
)
 
(3,132
)
Non-cash ground rent
 
44

 
44

Cash - Net operating income
 
$
150,845

 
$
152,134

 
 
 
 
 
Cash - Net operating income - percentage change over prior year
 
(0.8
)%
 
 
 
 
 
 
 
Cash - Net operating income, excluding net termination fees & other
 
$
147,018

 
$
145,648

 
 
 
 
 
Cash - Net operating income, excluding net termination fees & other - percentage change over prior year
 
0.9
 %
 
 
 
 
 
 
 
The following table is a reconciliation of Net Income (Loss) to Same Store net operating income:
 
 
 
 
Six Months Ended June 30,
 
 
2015
 
2014
Net income (loss):
 
$
11,652

 
$
(71
)
Add/(deduct):
 
 
 
 
Interest income
 
(1,063
)
 
(770
)
Interest expense
 
56,071

 
63,356

Amortization of deferred financing costs
 
2,367

 
2,386

Interest expense - financing obligation
 
610

 
588

Equity in loss of real estate ventures
 
742

 
247

Net gain on disposition of real estate
 
(10,590
)
 
—

Net gain on sale of undepreciated real estate
 
—

 
(1,184
)
Net gain from remeasurement of investment in real estate ventures
 
(758
)
 
(458
)
Net loss on real estate venture transactions
 
—

 
417

Provision for impairment on assets held for sale/sold
 
2,508

 
—

Depreciation and amortization
 
102,041

 
105,157

General & administrative expenses
 
15,427

 
14,186

Total discontinued operations
 
—

 
(921
)
Consolidated net operating income
 
179,007

 
182,933

Less: Net operating income of non same store properties
 
(4,792
)
 
(4,151
)
Less: Eliminations and non-property specific net operating income
 
(10,513
)
 
(16,821
)
Same Store net operating income
 
$
163,702

 
$
161,961


- 10 -

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