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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): October 28, 2009
Brandywine
Realty Trust
Brandywine
Operating Partnership, L.P.
(Exact
name of registrant as specified in charter)
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MARYLAND
(Brandywine Realty Trust)
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001-9106
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23-2413352
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||
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DELAWARE
(Brandywine Operating Partnership, L.P.)
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000-24407
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23-2862640
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(State or Other Jurisdiction of Incorporation or
Organization)
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(Commission file number)
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(I.R.S. Employer
Identification Number)
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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):
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¨
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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¨
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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¨
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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¨
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item
2.02
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Results
of Operations and Financial
Condition
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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
October 28, 2009, we issued a press release announcing our financial results for
the three- and nine-months ended September 30, 2009. 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.
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Item
9.01
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Financial
Statements and Exhibits
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Exhibits
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99.1
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Brandywine
Realty Trust Press Release dated October 28,
2009
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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 | |||
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By:
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/s/ Howard M. Sipzner
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Howard
M. Sipzner
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|||
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Executive
Vice President and Chief
Financial
Officer
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|||
| Brandywine Operating Partnership, its sole | |||
| General Partner | |||
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By:
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/s/ Howard M. Sipzner
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Howard
M. Sipzner
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|||
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Executive
Vice President and Chief
Financial
Officer
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|||
Date:
October 29, 2009
EXHIBIT
INDEX
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Exhibit
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No.
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Description
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99.1
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Press
Release dated October 28,
2009
|
|
Investor/Press Contact:
Marge
Boccuti
Manager,
Investor Relations
610-832-7702
marge.boccuti@bdnreit.com
|
 |
Company Contact:
Howard
M. Sipzner
EVP
& CFO
610-832-4907
howard.sipzner@bdnreit.com
|
Brandywine
Realty Trust Announces Third Quarter 2009 Earnings,
Increases
Guidance for 2009, Provides Initial 2010 Guidance and Raises 2010
Dividend
Radnor, PA, October 28, 2009 —
Brandywine Realty Trust (NYSE:BDN), a real estate investment trust focused on
the ownership, management and development of Class A, suburban and urban office
properties in the mid-Atlantic region and other selected markets throughout the
United States, announced today its financial and operating results for the three
and nine-month periods ended September 30, 2009. The highlights are as
follows:
Financial Highlights - Third
Quarter
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|
§
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Net
income allocated to common shares totaled $5.1 million or $0.04 per
diluted share in the third quarter of 2009 compared to a net loss of
($0.5) million or ($0.01) per diluted share in the third quarter of
2008. Our weighted average diluted share count increased to 129.9
million shares in the third quarter of 2009 from 87.7 million shares in
the third quarter of 2008 due to our issuance of 40.25 million common
shares on June 2, 2009.
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|
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§
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Funds
from operations available to common shares and units (FFO) in the third
quarter of 2009 totaled $58.2 million or $0.44 per diluted share compared
to $52.3 million or $0.58 per diluted share in the third quarter of
2008. Our third quarter 2009 FFO payout ratio was 22.7% ($0.10
common share dividend paid / $0.44 FFO per share). Our weighted
average fully diluted share count for FFO (and CAD) calculations increased
to 132.7 million shares in the third quarter of 2009 from 91.0 million
shares in the third quarter of 2008 due to the aforementioned common share
issuance.
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|
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§
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In
the third quarter of 2009, we incurred $10.5 million of revenue
maintaining capital expenditures which along with our other adjustments to
FFO, resulted in $47.2 million of cash available for distribution (CAD) or
$0.36 per diluted share compared to $41.2 million of CAD or $0.45 per
diluted share in the third quarter of 2008 when we incurred $8.9 million
of revenue maintaining capital expenditures. Our third quarter 2009
CAD payout ratio was 27.8% ($0.10 common share dividend paid / $0.36 CAD
per share).
|
Financial Highlights – Nine
Months
|
|
§
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Net
income allocated to common shares totaled $5.8 million or $0.05 per
diluted share in the first nine months of 2009 compared to net income of
$16.1 million or $0.18 per diluted share in the first nine months of
2008. Our weighted average diluted share count increased to 107.2
million shares in the first nine months of 2009 from 87.4 million shares
in the first nine months of 2008 primarily due to the aforementioned
common share issuance.
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|
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§
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FFO
available to common shares and units in the first nine months of 2009
totaled $167.9 million or $1.53 per diluted share ($171.6 million or $1.56
per diluted share excluding a $3.7 million impairment provision) compared
to $163.3 million or $1.79 per diluted share in the first nine months of
2008 ($170.1 million or $1.87 per diluted share excluding a $6.9 million
impairment provision). Our FFO payout ratio for the first nine
months of 2009 was 32.7% ($0.50 common share dividend paid / $1.53 FFO per
share). Our weighted average fully diluted share count for FFO (and
CAD) calculations increased to 110.0 million shares for the first nine
months of 2009 from 91.0 million shares in the first nine months of 2008
primarily due to the aforementioned common share
issuance.
|
|
555
East Lancaster Avenue, Suite 100; Radnor,
PA 19087
|
Phone:
(610) 325-5600 • Fax: (610)
325-5622
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§
|
During
the first nine months of 2009, we incurred $31.9 million of revenue
maintaining capital expenditures which along with our other adjustments to
FFO, resulted in $136.0 million of CAD or $1.24 per diluted share compared
to $130.4 million of CAD or $1.43 per diluted share for the first nine
months of 2008 when we incurred $25.0 million of revenue maintaining
capital expenditures. Our CAD payout ratio for the first nine months
of 2009 was 40.3% ($0.50 common share dividend paid / $1.24 CAD per
share).
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Portfolio
Highlights
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|
§
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In
the third quarter of 2009, our net operating income (NOI) excluding
termination revenues and other income items decreased 0.8% on a GAAP basis
and 0.5% on a cash basis for our 232 same store properties which were
88.8% and 92.4% occupied on September 30, 2009 and September 30, 2008,
respectively.
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|
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§
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During
the third quarter of 2009, we completed 1,156,904 square feet of total
leasing activity including 713,625 square feet of renewals, 261,761 square
feet of new leases and 181,518 square feet of tenant expansions. We
currently have an additional 1,752,243 square feet of executed leasing
which will commence subsequent to September 30, 2009. During the
third quarter of 2009, we achieved an 82.9% retention rate in our core
portfolio with positive net absorption of 77,027 square feet excluding
105,344 square feet of early terminations, or 75.5% overall. During
the third quarter of 2009, we experienced a 1.5% decline on our renewal
rental rates and a 0.2% decline on our new lease and expansion rental
rates, both on a GAAP basis.
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|
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§
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At
September 30, 2009, our core portfolio was 88.4% occupied and 89.7% leased
(reflecting leases which will commence after September 30, 2009). We
owned 247 properties at September 30, 2009, encompassing 241 core
properties aggregating 24.1 million square feet and six development/
redevelopment properties aggregating 2.0 million square feet. Two
core properties and a portion of a redevelopment property were
characterized as held-for-sale at September 30,
2009.
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Investment
Highlights
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§
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We
sold no properties in the third quarter of 2009. Subsequent to
quarter end, we completed the previously disclosed sale of two properties
in Trenton, New Jersey for an aggregate purchase price of $85.0 million
($22.5 million of which we deferred as a second mortgage loan to the
buyer) and also completed a $7.9 million sale to the underlying tenant of
a 40,508 square foot condominium interest in our 100 Lenox Drive
redevelopment property in Lawrenceville, New Jersey. Our completed
2009 sales now total $129.5 million, or just over 89% of our $145 million
sales goal.
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|
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§
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At
September 30, 2009, we were proceeding on two developments and four
redevelopments with total project costs of $417.7 million of which a total
of $192.4 million remained to be funded - $45.7 million in the remainder
of 2009 and $146.7 million in 2010. These amounts include $355.5
million of total project costs for the combined 30th
Street Post Office (100% leased to the Internal Revenue Service) and Cira
South Garage (up to 94.3% leased to the Internal Revenue Service) in
Philadelphia, Pennsylvania of which $174.2 million remained to be funded
at September 30, 2009. We are also finishing the lease-up of four
recently completed developments and three recently completed
redevelopments for which we expect to spend up to an additional $16.3
million in late 2009 and early
2010.
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Capital Markets
Highlights
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|
§
|
During
the third quarter of 2009, we closed a previously disclosed $250.0 million
unsecured senior note financing due May 15, 2015 with a coupon rate of
7.50% and a yield to maturity of 7.625%, or 7.750% including the
associated hedging costs.
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- 2
- -
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§
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During
the third quarter of 2009, we closed a previously disclosed $60.0 million
first mortgage financing on One Logan Square, a previously unencumbered,
594,361 square foot, 99% leased, class A, office tower in Philadelphia,
PA. The loan features a floating rate of LIBOR plus 350 basis points
(subject to a LIBOR floor) and a seven-year term with three years interest
only followed by a thirty-year principal amortization schedule at a 7.50%
constant.
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|
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§
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During
the third quarter of 2009, we repurchased a total of $203.3 million of our
unsecured senior notes including $55.7 million of open-market transactions
in our unsecured senior notes maturing in 2009, 2011 (our exchangeable
notes due 2026 with a put date in October 2011), 2012 and 2014; a $47.6
million tender for a portion of our 2009 Notes and a $100.0 million tender
for a portion of our 2012 Notes, generating aggregate gains of $5.1
million on the early extinguishment of
debt.
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|
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§
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At
September 30, 2009, our net debt to gross assets measured 46.4% compared
to a peak of 54.3% at September 30, 2007, reflecting a cumulative $728.5
million reduction in our net debt over that two-year period. At
September 30, 2009, we had a zero balance on our $600.0 million unsecured
revolving credit facility with $568.8 million available for use and
drawdown.
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|
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§
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We
achieved a 2.9 EBITDA to interest coverage ratio for the quarter ended
September 30, 2009 versus the 2.5 ratio we achieved for the quarter ended
September 30, 2008. We recorded a 6.5 net debt to annualized
quarterly EBITDA ratio for the quarter ended September 30,
2009.
|
“Having
completed a variety of successful capital market initiatives, we remain fully
focused on maintaining strong operating metrics, aggressively pursuing all
tenant prospects and completing our remaining development activities on time and
on budget. While challenging operating conditions will persist through
2010, our capital capacity and inherent submarket competitive advantage will
enable us to continue our long track record of market outperformance.
Given our market position, we are also poised to take advantage of opportunities
as they arise and ultimately position Brandywine for future growth,” stated
Gerard H. Sweeney, President and Chief Executive Officer of Brandywine Realty
Trust. “A positive result of our capital market activities and financial
condition is our ability to raise our common share dividend distribution by 50%
to a $0.15 quarterly rate beginning January 2010.”
Distributions
On
September 16, 2009, our Board of Trustees declared a quarterly dividend
distribution of $0.10 per common share that was paid in the fourth quarter on
October 19, 2009 to shareholders of record as of October 5, 2009. Our
Board also declared regular quarterly dividend distributions of $0.46875 per
7.50% Series C Cumulative Redeemable Preferred Share and $0.460938 per 7.375%
Series D Cumulative Redeemable Preferred Share that were paid on October 15,
2009 to holders of record as of September 30, 2009 of the Series C and Series D
Preferred Shares, respectively.
Our
dividend policy is to match our aggregate distributions to our projected taxable
income and to evaluate the mix of cash and common shares on an ongoing
basis. We now believe that our year-to-date aggregate distributions are
sufficient to match our projected 2009 taxable income and do not expect any
further distributions to be made with respect to calendar year
2009.
For 2010,
we anticipate that our quarterly common share distributions will increase to
$0.15 per common share or $0.60 per common share on an annualized basis, subject
to quarterly declaration by our Board of Trustees. This represents a 50%
increase from the current distribution rate of $0.10 per common
share.
2009
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
increasing our previously issued guidance for full year 2009 FFO per diluted
share to be in a range of $1.82 to 1.85 versus the prior guidance of $1.75 to
$1.80 including impairment charges in both instances. When applicable, we
will report our FFO with and without impairment charges. Our earnings and
FFO guidance is provided for informational purposes and is subject to
change. The following is a reconciliation of the calculation of 2009
earnings and FFO per diluted share:
- 3
- -
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Guidance for 2009
|
Range or Value
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||||||||
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Earnings
(loss) per diluted share allocated to common shareholders
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$ | (0.03 | ) |
to
|
$ | 0.00 | |||
|
Plus:
real estate depreciation and amortization
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1.85 | 1.85 | |||||||
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FFO
per diluted share
|
$ | 1.82 |
to
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$ | 1.85 | ||||
|
Plus: impairment
charges (incurred to date)
|
0.03 | 0.03 | |||||||
|
Adjusted
FFO per diluted share
|
$ | 1.85 |
to
|
$ | 1.88 | ||||
Our 2009
FFO guidance does not include income arising from future sales or impairments
which may be taken in the future should the circumstances arise, does not
include any income from the sale of undepreciated real estate in accordance with
our current practice and is based on the expectation that our weighted average
fully diluted shares for 2009 will be approximately 116.0 million.
Introduction
of 2010 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 estimate
that full year 2010 FFO per diluted share will be in a range of $1.23 to
$1.34. This guidance is provided for informational purposes and is subject
to change. The following is a reconciliation of the calculation of 2010
FFO per diluted share and earnings per diluted share:
|
Guidance for 2010
|
Range or Value
|
||||||||
|
Earnings
(loss) per diluted share allocated to common shareholders
|
$ | (0.38 | ) |
to
|
$ | (0.27 | ) | ||
|
Plus:
real estate depreciation and amortization
|
1.61 | 1.61 | |||||||
|
FFO
per diluted share
|
$ | 1.23 |
to
|
$ | 1.34 | ||||
Our 2010
FFO guidance does not include income arising from future sales or impairments
which may be taken in the future should the circumstances arise, does not
include any income from the sale of undepreciated real estate in accordance
with our current practice and is based on the expectation that our weighted
average fully diluted shares for 2010 will be approximately 133.0
million.
Accounting
Disclosures
On
January 1, 2009, we adopted a newly issued accounting standard for convertible
debt instruments which requires retrospective application. This adoption
impacts our exchangeable notes due 2026 with a put date in 2011 that had an
outstanding balance of $159.5 million as of September 30, 2009 and which were
originally issued in October 2006. The retrospective treatment requires us
to bifurcate the net proceeds of the exchangeable notes on a relative fair value
basis (based on the then market "straight debt" interest rate) between unsecured
debt and the equity conversion options issued in the transaction and affects
previously recognized interest expense, capitalized interest and gain on
extinguishment of debt associated with the convertible notes, and all related
calculations such as net income per diluted share of the Company.
On
January 1, 2009, we adopted a newly issued accounting standard for
non-controlling interest. The accounting
standard affects the classification and potential recognition of any
non-controlling interest (formerly called minority interest) relating to
Operating Partnership unit-holders and outside owners of our three consolidated
real estate ventures. The non-controlling interests related to the
Operating Partnership are reflected as a component of the Equity section of our
Consolidated Balance Sheet, instead of within the "mezzanine" section. In
addition, the non-controlling interests’ portion of earnings is now presented
below net income. This presentation is applied
retrospectively.
- 4
- -
Non-GAAP
Supplemental Financial Measures
We
compute our financial results in accordance with generally accepted accounting
principles (GAAP). Although FFO, NOI and CAD are non-GAAP financial
measures, we believe that FFO, NOI and CAD 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 property 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 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.
For
information purposes, we also provide FFO adjusted for impairment charges.
Although our calculation of FFO as adjusted differs from NAREIT’s definition of
FFO and may not be comparable to that of other REITs and real estate companies,
we believe it provides a meaningful supplemental measure of our operating
performance because we believe that by excluding impairment charges,
shareholders and potential investors are presented with an indicator of our
operating performance that more closely achieves the objectives of the real
estate industry in presenting FFO.
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.
Cash Available for
Distribution (CAD)
CAD is a
non-GAAP financial measure that is not intended as an alternative to cash flow
from operating activities as determined under GAAP. CAD is presented
solely as a supplemental disclosure with respect to liquidity because we believe
it provides useful information regarding our ability to fund our
distributions. Because other companies do not necessarily calculate CAD
the same way as we do, our presentation of CAD may not be comparable to
similarly titled measures provided by other companies.
- 5
- -
Revenue Maintaining Capital
Expenditures
Revenue
maintaining capital expenditures, a non-GAAP financial measure, are a component
of our CAD calculation and represent the portion of capital expenditures
required to maintain our current level of funds available for
distribution. Revenue maintaining capital expenditures include current
tenant improvement and allowance expenditures for all tenant spaces that have
been owned for at least one year, and that were not vacant during the
twelve-month period prior to the date that the tenant improvement or allowance
expenditure was approved. Revenue maintaining capital expenditures also
include other expenditures intended to maintain our current revenue base.
Accordingly, we exclude capital expenditures related to development and
redevelopment projects, as well as certain projects at our core properties that
are intended to attract prospective tenants in order to increase revenues and/or
occupancy rates.
Third
Quarter Earnings Call and Supplemental Information Package
We will
host a conference call on Thursday, October 29, 2009 at 12:00 noon EDT.
The conference call can be accessed by calling 1-800-683-1525 and referencing
conference ID #27619074. Beginning two hours after the conference call, a
taped replay of the call can be accessed 24 hours a day through Thursday,
November 12, 2009 by calling 1-800-642-1687 and providing access code
27619074. In addition, the conference call can be accessed via a webcast
located on our website at www.brandywinerealty.com.
We have
prepared a supplemental information package that includes financial results and
operational statistics related to the third quarter earnings report. The
supplemental information package is available in the “Investor Relations –
Financial Reports” section of our website at www.brandywinerealty.com.
Looking
Ahead - Fourth Quarter 2009 Conference Call
We
anticipate that we will release our fourth quarter 2009 earnings on Wednesday,
February 24, 2010, after the market close and will host our fourth quarter 2009
conference call on Thursday, February 25, 2010, at 11:00 a.m. EST. We
expect to issue a press release in advance of these events to confirm the dates
and times and provide all related information.
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, develops and
manages a primarily Class A, suburban and urban office portfolio aggregating
approximately 36.1 million square feet, including 25.6 million square feet which
it currently owns on a consolidated basis. For more information, visit our
website at www.brandywinerealty.com.
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,
2008. We assume no obligation to update or supplement forward-looking
statements that become untrue because of subsequent events except as required by
law.
- 6
- -
BRANDYWINE
REALTY TRUST
CONSOLIDATED
BALANCE SHEETS
(unaudited,
in thousands)
|
September 30,
|
December 31,
|
|||||||
|
2009
|
2008
|
|||||||
|
ASSETS
|
||||||||
|
Real
estate investments:
|
||||||||
|
Operating
properties
|
$ | 4,513,378 | $ | 4,608,320 | ||||
|
Accumulated
depreciation
|
(695,870 | ) | (639,688 | ) | ||||
| 3,817,508 | 3,968,632 | |||||||
|
Construction-in-progress
|
229,259 | 122,219 | ||||||
|
Land
inventory
|
97,390 | 100,516 | ||||||
| 4,144,157 | 4,191,367 | |||||||
|
Cash
and cash equivalents
|
3,296 | 3,924 | ||||||
|
Cash
in escrow
|
- | 31,385 | ||||||
|
Accounts
receivable, net
|
7,282 | 11,762 | ||||||
|
Accrued
rent receivable, net
|
85,708 | 86,362 | ||||||
|
Assets
held for sale, net
|
74,006 | - | ||||||
|
Investment
in real estate ventures
|
75,929 | 71,028 | ||||||
|
Deferred
costs, net
|
109,503 | 89,327 | ||||||
|
Intangible
assets, net
|
114,080 | 145,757 | ||||||
|
Notes
receivable
|
49,114 | 48,048 | ||||||
|
Other
assets
|
58,227 | 59,008 | ||||||
|
Total
assets
|
$ | 4,721,302 | $ | 4,737,968 | ||||
|
LIABILITIES
AND EQUITY
|
||||||||
|
Mortgage
notes payable, including premiums
|
$ | 554,616 | $ | 487,525 | ||||
|
Borrowings
under credit facilities
|
- | 153,000 | ||||||
|
Unsecured
term loan
|
183,000 | 183,000 | ||||||
|
Unsecured
senior notes, net of discounts
|
1,771,903 | 1,917,970 | ||||||
|
Accounts
payable and accrued expenses
|
96,877 | 74,824 | ||||||
|
Distributions
payable
|
15,238 | 29,288 | ||||||
|
Tenant
security deposits and deferred rents
|
52,012 | 58,692 | ||||||
|
Acquired
lease intangibles, net
|
39,639 | 47,626 | ||||||
|
Other
liabilities
|
61,539 | 63,545 | ||||||
|
Liabilities
related to assets held for sale
|
666 | - | ||||||
|
Total
liabilities
|
2,775,490 | 3,015,470 | ||||||
|
Brandywine
Realty Trust's equity:
|
||||||||
|
Preferred
shares - Series C
|
20 | 20 | ||||||
|
Preferred
shares - Series D
|
23 | 23 | ||||||
|
Common
shares
|
1,286 | 882 | ||||||
|
Additional
paid-in capital
|
2,609,212 | 2,351,428 | ||||||
|
Deferred
compensation payable in common stock
|
5,549 | 6,274 | ||||||
|
Common
shares in treasury
|
(7,893 | ) | (14,121 | ) | ||||
|
Common
shares held in grantor trust
|
(5,549 | ) | (6,274 | ) | ||||
|
Cumulative
earnings
|
505,468 | 498,716 | ||||||
|
Accumulated
other comprehensive loss
|
(10,349 | ) | (17,005 | ) | ||||
|
Cumulative
distributions
|
(1,191,352 | ) | (1,150,406 | ) | ||||
|
Total
Brandywine Realty Trust's equity
|
1,906,415 | 1,669,537 | ||||||
|
Non-controlling
interests
|
39,397 | 52,961 | ||||||
|
Total
equity
|
1,945,812 | 1,722,498 | ||||||
|
Total
liabilities and equity
|
$ | 4,721,302 | $ | 4,737,968 | ||||
- 7
- -
BRANDYWINE
REALTY TRUST
CONSOLIDATED
STATEMENTS OF OPERATIONS
(unaudited,
in thousands, except share and per share data)
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
Revenue
|
||||||||||||||||
|
Rents
|
$ | 119,599 | $ | 120,285 | $ | 359,513 | $ | 362,342 | ||||||||
|
Tenant
reimbursements
|
19,164 | 18,553 | 56,853 | 55,920 | ||||||||||||
|
Termination
fees
|
1,764 | 338 | 2,840 | 4,462 | ||||||||||||
|
Third
party management fees, labor reimbursement and leasing
|
5,194 | 4,390 | 14,055 | 15,239 | ||||||||||||
|
Other
|
872 | 772 | 2,323 | 2,348 | ||||||||||||
|
Total
revenue
|
146,593 | 144,338 | 435,584 | 440,311 | ||||||||||||
|
Operating
Expenses
|
||||||||||||||||
|
Property
operating expenses
|
40,050 | 39,143 | 122,857 | 118,032 | ||||||||||||
|
Real
estate taxes
|
14,248 | 14,522 | 43,059 | 44,376 | ||||||||||||
|
Third
party management expenses
|
2,256 | 1,790 | 6,339 | 6,417 | ||||||||||||
|
Depreciation
and amortization
|
51,422 | 50,019 | 155,852 | 151,627 | ||||||||||||
|
General
& administrative expenses
|
5,018 | 6,863 | 15,491 | 17,902 | ||||||||||||
|
Total
operating expenses
|
112,994 | 112,337 | 343,598 | 338,354 | ||||||||||||
|
Operating
income
|
33,599 | 32,001 | 91,986 | 101,957 | ||||||||||||
|
Other
income (expense)
|
||||||||||||||||
|
Interest
income
|
473 | 221 | 1,695 | 603 | ||||||||||||
|
Interest
expense
|
(31,455 | ) | (36,037 | ) | (102,045 | ) | (109,822 | ) | ||||||||
|
Deferred
financing costs
|
(1,579 | ) | (1,092 | ) | (4,725 | ) | (3,798 | ) | ||||||||
|
Recognized
hedge activity
|
(1,517 | ) | - | (1,822 | ) | - | ||||||||||
|
Equity
in income of real estate ventures
|
1,331 | 1,059 | 3,450 | 3,838 | ||||||||||||
|
Net
(loss) on disposition of undepreciated real estate
|
- | - | - | (24 | ) | |||||||||||
|
Gain
on early extinguishment of debt
|
5,073 | - | 23,724 | 3,106 | ||||||||||||
|
Income
(loss) from continuing operations
|
5,925 | (3,848 | ) | 12,263 | (4,140 | ) | ||||||||||
|
Discontinued
operations:
|
||||||||||||||||
|
Income
from discontinued operations
|
1,390 | 5,594 | 4,690 | 13,145 | ||||||||||||
|
Net
(loss) gain on disposition of discontinued operations
|
(6 | ) | - | (1,037 | ) | 21,401 | ||||||||||
|
Provision
for impairment
|
- | - | (3,700 | ) | (6,850 | ) | ||||||||||
|
Total
discontinued operations
|
1,384 | 5,594 | (47 | ) | 27,696 | |||||||||||
|
Net
income (loss)
|
7,309 | 1,746 | 12,216 | 23,556 | ||||||||||||
|
Net
(loss) income from discontinued operations attributable to non-controlling
interests - LP units
|
(30 | ) | (202 | ) | 14 | (1,094 | ) | |||||||||
|
Net
income (loss) attributable to non-controlling interests - partners' share
of consolidated real estate ventures
|
(47 | ) | (39 | ) | (69 | ) | (117 | ) | ||||||||
|
Net
income (loss) attributable to non-controlling interests - LP
units
|
(84 | ) | 192 | (179 | ) | 334 | ||||||||||
|
Net
(loss) income attributable to non-controlling interests
|
(161 | ) | (49 | ) | (234 | ) | (877 | ) | ||||||||
|
Net
income (loss) attributable to Brandywine Realty Trust
|
7,148 | 1,697 | 11,982 | 22,679 | ||||||||||||
|
Preferred
share dividends
|
(1,998 | ) | (1,998 | ) | (5,994 | ) | (5,994 | ) | ||||||||
|
Amount
allocated to unvested restricted shareholders
|
(73 | ) | (226 | ) | (183 | ) | (620 | ) | ||||||||
|
Net
income (loss) available to Common Shareholders
|
$ | 5,077 | $ | (527 | ) | $ | 5,805 | $ | 16,065 | |||||||
|
PER
SHARE DATA
|
||||||||||||||||
|
Basic
income per Common Share
|
$ | 0.04 | $ | (0.01 | ) | $ | 0.05 | $ | 0.18 | |||||||
|
Basic
weighted-average shares outstanding
|
128,582,498 | 87,695,892 | 106,273,509 | 87,423,108 | ||||||||||||
|
Diluted
income per Common Share
|
$ | 0.04 | $ | (0.01 | ) | $ | 0.05 | $ | 0.18 | |||||||
|
Diluted
weighted-average shares outstanding
|
129,926,110 | 87,695,892 | 107,206,551 | 87,437,133 | ||||||||||||
- 8
- -
BRANDYWINE
REALTY TRUST
FUNDS
FROM OPERATIONS AND CASH AVAILABLE FOR DISTRIBUTION
(unaudited,
in thousands, except share and per share data)
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
|||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
Reconciliation
of Net Income (Loss) to Funds from Operations:
|
||||||||||||||||
|
Net
income (loss) available to common shareholders
|
$ | 5,077 | $ | (527 | ) | $ | 5,805 | $ | 16,065 | |||||||
|
Add
(deduct):
|
||||||||||||||||
|
Net
income (loss) attributable to non-controlling interests - LP
units
|
84 | (192 | ) | 179 | (334 | ) | ||||||||||
|
Amount
allocated to unvested restricted shareholders
|
73 | 226 | 183 | 620 | ||||||||||||
|
Net
loss on disposition of undepreciated real estate
|
- | - | - | 24 | ||||||||||||
|
Net
(loss) income from discontinued operations attributable to non-controlling
interests - LP units
|
30 | 202 | (14 | ) | 1,094 | |||||||||||
|
Net
loss (gain) on disposition of discontinued operations
|
6 | - | 1,037 | (21,401 | ) | |||||||||||
|
Depreciation
and amortization:
|
||||||||||||||||
|
Real
property - continuing operations
|
38,441 | 36,382 | 116,290 | 109,573 | ||||||||||||
|
Leasing
costs (includes acquired intangibles) - continuing
operations
|
12,571 | 13,063 | 38,176 | 40,292 | ||||||||||||
|
Real
property - discontinued operations
|
473 | 1,280 | 1,755 | 8,847 | ||||||||||||
|
Leasing
costs (includes acquired intangibles) - discontinued
operations
|
39 | 347 | 403 | 3,603 | ||||||||||||
|
Company's
share of unconsolidated real estate ventures
|
1,917 | 2,054 | 5,624 | 6,377 | ||||||||||||
|
Partners'
share of consolidated real estate ventures
|
(184 | ) | (217 | ) | (624 | ) | (661 | ) | ||||||||
|
Funds
from operations
|
$ | 58,527 | $ | 52,618 | $ | 168,814 | $ | 164,099 | ||||||||
|
Funds
from operations allocable to unvested restricted
shareholders
|
(332 | ) | (296 | ) | (952 | ) | $ | (835 | ) | |||||||
|
Funds
from operations available to common share and unit holders
(FFO)
|
$ | 58,195 | $ | 52,322 | $ | 167,862 | $ | 163,264 | ||||||||
|
FFO
per share - fully diluted
|
$ | 0.44 | $ | 0.58 | $ | 1.53 | $ | 1.79 | ||||||||
|
FFO,
excluding provision for impairments
|
$ | 58,195 | $ | 52,322 | $ | 171,562 | $ | 170,114 | ||||||||
|
FFO
per share, excluding provision for impairments - fully
diluted
|
$ | 0.44 | $ | 0.58 | $ | 1.56 | $ | 1.87 | ||||||||
|
Weighted-average
shares/units outstanding - fully diluted
|
132,742,731 | 90,985,002 | 110,023,172 | 90,957,841 | ||||||||||||
|
Distributions
paid per Common Share
|
$ | 0.10 | $ | 0.44 | $ | 0.50 | $ | 1.32 | ||||||||
|
Payout
ratio of FFO (Dividends paid per Common Share divided / FFO per
Share)
|
22.7 | % | 75.9 | % | 32.7 | % | 73.7 | % | ||||||||
|
Payout
ratio of FFO, excluding provision for impairments
|
22.7 | % | 75.9 | % | 32.1 | % | 70.6 | % | ||||||||
|
CASH
AVAILABLE FOR DISTRIBUTION (CAD):
|
||||||||||||||||
|
Funds
from operations available to common share and unit holders
|
$ | 58,195 | $ | 52,322 | $ | 167,862 | $ | 163,264 | ||||||||
|
Add
(deduct):
|
||||||||||||||||
|
Rental
income from straight-line rent, including discontinued
operations
|
(2,684 | ) | (2,497 | ) | (7,037 | ) | (13,730 | ) | ||||||||
|
Deferred
market rental income, including discontinued operations
|
(1,530 | ) | (1,807 | ) | (5,017 | ) | (6,493 | ) | ||||||||
|
Company's
share of unconsolidated real estate ventures' straight-line and deferred
market rent
|
205 | 129 | 414 | 284 | ||||||||||||
|
Partners'
share of consolidated real estate ventures' straight-line and deferred
market rent
|
(1 | ) | (40 | ) | (5 | ) | (118 | ) | ||||||||
|
Operating
expense from straight-line rent
|
370 | 383 | 1,103 | 1,149 | ||||||||||||
|
Net
(loss) on disposition of undepreciated real estate
|
- | - | - | (24 | ) | |||||||||||
|
Provision
for impairment of discontinued operations
|
- | - | 3,700 | 6,850 | ||||||||||||
|
Deferred
compensation costs
|
1,039 | 1,265 | 3,567 | 3,839 | ||||||||||||
|
Fair
market value amortization - mortgage notes payable
|
(363 | ) | (676 | ) | (1,151 | ) | (2,854 | ) | ||||||||
|
Recognized
hedge activity
|
1,517 | - | 1,822 | - | ||||||||||||
|
Debt
discount amortization - exchangeable notes
|
866 | 1,100 | 2,632 | 3,282 | ||||||||||||
|
Revenue
maintaining capital expenditures
|
||||||||||||||||
|
Building
improvements
|
(1,973 | ) | (957 | ) | (4,292 | ) | (2,536 | ) | ||||||||
|
Tenant
improvements
|
(5,854 | ) | (5,253 | ) | (16,956 | ) | (13,604 | ) | ||||||||
|
Lease
commissions
|
(2,637 | ) | (2,721 | ) | (10,655 | ) | (8,905 | ) | ||||||||
|
Total
revenue maintaining capital expenditures
|
(10,464 | ) | (8,931 | ) | (31,903 | ) | (25,045 | ) | ||||||||
|
Cash
available for distribution
|
$ | 47,150 | $ | 41,248 | $ | 135,987 | $ | 130,404 | ||||||||
|
CAD
per share - fully diluted
|
$ | 0.36 | $ | 0.45 | $ | 1.24 | $ | 1.43 | ||||||||
|
Weighted-average
shares/units outstanding - fully diluted
|
132,742,731 | 90,985,002 | 110,023,172 | 90,957,841 | ||||||||||||
|
Distributions
per Common Share
|
$ | 0.10 | $ | 0.44 | $ | 0.50 | $ | 1.32 | ||||||||
|
Payout
ratio of CAD (Dividends paid per Common Share / CAD per
Share)
|
27.8 | % | 97.8 | % | 40.3 | % | 92.3 | % | ||||||||
- 9
- -
BRANDYWINE
REALTY TRUST
SAME
STORE OPERATIONS - 3rd QUARTER
(unaudited
and in thousands)
Of the
245 properties owned by the Company as of September 30, 2009, a total of 232
properties ("Same Store Properties") containing an aggregate of 22.6 million net
rentable square feet were owned for the entire three-month periods ended
September 30, 2009 and 2008. Average occupancy for the Same Store
Properties was 89.0% during 2009 and 92.4% during 2008. The following table sets
forth revenue and expense information for the Same Store
Properties:
|
Three Months Ended September
30,
|
||||||||
|
2009
|
2008
|
|||||||
|
Revenue
|
||||||||
|
Rents
|
$ | 113,429 | $ | 116,664 | ||||
|
Tenant
reimbursements
|
18,044 | 17,154 | ||||||
|
Termination
fees
|
548 | 338 | ||||||
|
Other
|
598 | 527 | ||||||
| 132,619 | 134,683 | |||||||
|
Operating
expenses
|
||||||||
|
Property
operating expenses
|
39,545 | 41,013 | ||||||
|
Real
estate taxes
|
13,200 | 13,437 | ||||||
|
Net
operating income
|
$ | 79,874 | $ | 80,233 | ||||
|
Net
operating income - percentage change over prior year
|
-0.4 | % | ||||||
|
Net
operating income, excluding termination fees & other
|
$ | 78,728 | $ | 79,368 | ||||
|
Net
operating income, excluding termination fees & other - percentage
change over prior year
|
-0.8 | % | ||||||
|
Net
operating income
|
$ | 79,874 | $ | 80,233 | ||||
|
Straight
line rents
|
(1,395 | ) | (1,747 | ) | ||||
|
Above/below
market rent amortization
|
(1,464 | ) | (1,366 | ) | ||||
|
Non-cash
ground rent
|
370 | 383 | ||||||
|
Cash
- Net operating income
|
$ | 77,385 | $ | 77,503 | ||||
|
Cash
- Net operating income - percentage change over prior year
|
-0.2 | % | ||||||
|
Cash
- Net operating income, excluding termination fees &
other
|
$ | 76,239 | $ | 76,638 | ||||
|
Cash
- Net operating income, excluding termination fees & other -
percentage change over prior year
|
-0.5 | % | ||||||
The
following table is a reconciliation of Net Income to Same Store net operating
income:
|
Three Months Ended September
30,
|
||||||||
|
2009
|
2008
|
|||||||
|
Net
income
|
$ | 7,309 | $ | 1,746 | ||||
|
Add/(deduct):
|
||||||||
|
Interest
income
|
(473 | ) | (221 | ) | ||||
|
Interest
expense
|
31,455 | 36,037 | ||||||
|
Deferred
financing costs
|
1,579 | 1,092 | ||||||
|
Recognized
hedge activity
|
1,517 | - | ||||||
|
Equity
in income of real estate ventures
|
(1,331 | ) | (1,059 | ) | ||||
|
Depreciation
and amortization
|
51,422 | 50,019 | ||||||
|
Gain
on early extinguishment of debt
|
(5,073 | ) | - | |||||
|
General
& administrative expenses
|
5,018 | 6,863 | ||||||
|
Total
discontinued operations
|
(1,384 | ) | (5,594 | ) | ||||
|
Consolidated
net operating income
|
90,039 | 88,883 | ||||||
|
Less: Net
operating income of non same store properties
|
(5,415 | ) | (2,654 | ) | ||||
|
Less: Eliminations
and non-property specific net operating income
|
(4,750 | ) | (5,996 | ) | ||||
|
Same
Store net operating income
|
$ | 79,874 | $ | 80,233 | ||||
- 10
- -
BRANDYWINE
REALTY TRUST
SAME
STORE OPERATIONS - YEAR
(unaudited
and in thousands)
Of the
245 properties owned by the Company as of September 30, 2009, a total of 232
properties ("Same Store Properties") containing an aggregate of 22.6 million net
rentable square feet were owned for the entire nine month periods ended
September 30, 2009 and 2008. Average occupancy for the Same Store
Properties was 90.2% during 2009 and 92.8% during 2008. The following
table sets forth revenue and expense information for the Same Store
Properties:
|
Nine Months Ended September
30,
|
||||||||
|
2009
|
2008
|
|||||||
|
Revenue
|
||||||||
|
Rents
|
$ | 345,444 | $ | 352,821 | ||||
|
Tenant
reimbursements
|
53,684 | 52,350 | ||||||
|
Termination
fees
|
1,625 | 4,462 | ||||||
|
Other
|
1,312 | 1,425 | ||||||
| 402,065 | 411,058 | |||||||
|
Operating
expenses
|
||||||||
|
Property
operating expenses
|
118,367 | 118,378 | ||||||
|
Real
estate taxes
|
39,765 | 41,497 | ||||||
|
Net
operating income
|
$ | 243,933 | $ | 251,183 | ||||
|
Net
operating income - percentage change over prior year
|
-2.9 | % | ||||||
|
Net
operating income, excluding termination fees & other
|
$ | 240,996 | $ | 245,296 | ||||
|
Net
operating income, excluding termination fees & other - percentage
change over prior year
|
-1.8 | % | ||||||
|
Net
operating income
|
$ | 243,933 | $ | 251,183 | ||||
|
Straight
line rents
|
(4,293 | ) | (11,829 | ) | ||||
|
Above/below
market rent amortization
|
(4,809 | ) | (4,376 | ) | ||||
|
Non-cash
ground rent
|
1,103 | 1,149 | ||||||
|
Cash
- Net operating income
|
$ | 235,934 | $ | 236,127 | ||||
|
Cash
- Net operating income - percentage change over prior year
|
-0.1 | % | ||||||
|
Cash
- Net operating income, excluding termination fees &
other
|
$ | 232,997 | $ | 230,240 | ||||
|
Cash
- Net operating income, excluding termination fees & other -
percentage change over prior year
|
1.2 | % | ||||||
The
following table is a reconciliation of Net Income to Same Store net operating
income:
|
Nine Months Ended September
30,
|
||||||||
|
2009
|
2008
|
|||||||
|
Net
Income
|
$ | 12,216 | $ | 23,556 | ||||
|
Add/(deduct):
|
||||||||
|
Interest
income
|
(1,695 | ) | (603 | ) | ||||
|
Interest
expense
|
102,045 | 109,822 | ||||||
|
Deferred
financing costs
|
4,725 | 3,798 | ||||||
|
Recognized
hedge activity
|
1,822 | - | ||||||
|
Equity
in income of real estate ventures
|
(3,450 | ) | (3,838 | ) | ||||
|
Depreciation
and amortization
|
155,852 | 151,627 | ||||||
|
Net
loss on sale of undepreciated real estate
|
- | 24 | ||||||
|
Gain
on early extinguishment of debt
|
(23,724 | ) | (3,106 | ) | ||||
|
General
& administrative expenses
|
15,491 | 17,902 | ||||||
|
Total
discontinued operations
|
47 | (27,696 | ) | |||||
|
Consolidated
net operating income
|
263,329 | 271,486 | ||||||
|
Less: Net
operating income of non same store properties
|
(9,158 | ) | (7,187 | ) | ||||
|
Less: Eliminations
and non-property specific net operating income (loss)
|
(10,238 | ) | (13,116 | ) | ||||
|
Same
Store net operating income
|
$ | 243,933 | $ | 251,183 | ||||
- 11
- -