bdn-8k_20170131.htm

 

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): January 31, 2017

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

(Commission file number)

 

23-2862640

(I.R.S. Employer

Identification Number)

(State or Other Jurisdiction of

Incorporation or Organization)

 

 

 

 

 

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))

 

 

 


 

Item 2.02Results 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 January 31, 2017, we issued a press release announcing our financial results for the three and twelve-months ended December 31, 2016.  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 9.01Financial Statements and Exhibits

Exhibits

99.1    Brandywine Realty Trust Press Release dated January 31, 2017.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2


 

Signatures

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrants have duly caused this report to be signed on their 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: February 1, 2017

 

 

3

bdn-ex991_7.htm

 

Exhibit 99.1

 

Company / Investor Contact:

     Tom Wirth

     EVP & CFO

     610-832-7434

     tom.wirth@bdnreit.com

 

Brandywine Realty Trust Announces Fourth Quarter and Full Year 2016 Results

and Narrows 2017 Guidance

 

Radnor, PA, January 31, 2017 — Brandywine Realty Trust (NYSE:BDN) today reported its financial and operating results for the three and twelve-month periods ended December 31, 2016.

 

Management Comments

“The conclusion of 2016 has seen us achieve strong fourth quarter operating metrics in our same store portfolio and significant progress with our development projects,” stated Gerard H. Sweeney, President and Chief Executive Officer for Brandywine Realty Trust. “Our Core portfolio results were strong with accelerating same store cash NOI growth, rental rate mark-to-market and tenant retention. In addition, we made significant strides with our development pipeline especially at FMC Tower as we are now 96% leased with our office component, our residential component commenced operations this month and we announced signing a Michelin-rated chef to open a world-class 3,000 square foot restaurant in the next several months. While timing of our dispositions caused us to be below our 2016 target, we continue to experience strong investment sales demand and the anticipated 2016 transactions will occur in the first quarter of 2017 as we currently have $170 million either closed or under contract. Due to timing of these dispositions, we are increasing our 2017 net disposition guidance by $100 million from $100 million to $200 million. We continue to see improvement in our balance sheet metrics and we have excellent liquidity going into 2017 with a reduced development pipeline, full availability under our $600 million line of credit and $194 million of cash-on-hand.  As a result of the increased disposition guidance and the accelerated timing of those sales, we are narrowing our 2017 FFO guidance from $1.35-$1.45 to $1.35-$1.42.”

Fourth Quarter 2016 Highlights

Financial Results

 

Net loss allocated to common shareholders; ($14.1) million, or ($0.08) per diluted share.  Our fourth quarter results include impairment charges on real estate and unimproved land totaling $27.4 million, or ($0.16) per share.

 

Funds from Operations (FFO); $63.0 million, or $0.35 per diluted share.  Our fourth quarter results include a net gain, after impairments, on unimproved land totaling $3.5 million, or $0.01 per share.

Portfolio Results

 

Core portfolio was 93.9% occupied and 95.1% leased.

 

Signed approximately 1,389,000 square feet of new and renewal leases.

 

Achieved 87% tenant retention ratio.

 

Rental rate mark-to-market increased 12.9% on a GAAP basis and increased 4.0% on a cash basis.

 

Same store net operating income growth: 2.2% on a GAAP basis and 8.6% on a cash basis.

Recent Transaction Activity

 

On January 31, 2017, we sold our 50% ownership interest in an unconsolidated real estate venture known as the Parc at Plymouth for $100.5 million, receiving net cash proceeds of $27.2 million after closing costs and related debt pay-off.  The estimated gain on sale will be $14.6 million and since the land contribution on September 5, 2012, the real estate venture earned an annualized IRR of 18.6%.

 

 


 

 

On January 30, 2017, we completed the sale of 1.7 acres of land in Austin, Texas for a gross sales price of $3.5 million.

 

On December 2, 2016, we sold an acre of land known as Oakland Lot B in Oakland, California for a gross sales price of $13.8 million. The gain on sale, totaling $8.9 million, is included in FFO.

 

As previously announced, on October 13, 2016, we sold 620, 640 and 660 Allendale Road located in King of Prussia, Pennsylvania for $12.8 million.  The three office/flex properties contain approximately 156,700 square feet.

 

During January, we agreed to sell two office properties known as the Concord Airport Plaza in Concord, California, containing approximately 350,300 net rentable square feet, for a gross sales price of $33.1 million. The estimated loss on sale of $11.5 million was recorded in the fourth quarter of 2016 and the properties are held-for-sale as of December 31, 2016.

 

During January, we agreed to sell three office properties located in Beltsville, Maryland containing approximately 313,800 square feet for a gross sale price of $11.2 million.  The estimated loss on sale of $3.0 million was recorded in the fourth quarter of 2016 and the properties are held-for-sale as of December 31, 2016.

2016 Finance / Capital Markets Activity

 

We have no outstanding balance on our $600.0 million unsecured revolving credit facility as of December 31, 2016.

 

 

We have $193.9 million of cash and cash equivalents on-hand as of December 31, 2016.

2017 Business Plan Revisions

 

Net Disposition Activity: Increased from $100.0 million to $200.0 million with a majority of sales occurring during the first six months of 2017.

Results for the Three and Twelve-Month Periods Ended December 31, 2016

Net loss allocated to common shares totaled ($14.1) million or ($0.08) per diluted share in the fourth quarter of 2016 compared to a net loss of ($63.9) million or ($0.37) per diluted share in the fourth quarter of 2015.  Our fourth quarter 2016 results included impairment charges on real estate and unimproved land totaling $27.4 million, or ($0.16) per share.  Our 2015 results included a provision for impairment on real estate totaling $79.7 million, or ($0.46) per share.

FFO available to common shares and units in the fourth quarter of 2016 totaled $63.0 million or $0.35 per diluted share versus $69.0 million or $0.39 per diluted share in the fourth quarter of 2015.  Our fourth quarter 2016 results included $3.5 million, or $0.01 per share, from a net gain, after impairments on unimproved land.  Our fourth quarter 2016 payout ratio ($0.16 common share distribution / $0.35 FFO per diluted share) was 45.7%.

Net income allocated to common shares totaled $33.0 million or $0.19 per diluted share for twelve months of 2016 compared to a net loss of ($37.6) million or ($0.21) per diluted share in the twelve months of 2015.  Our 2016 results included provisions for impairment of real estate totaling $40.5 million, or ($0.23) per share.  Our 2015 results included a provision for impairment on real estate totaling $82.2 million, or ($0.46) per share.

Our FFO available to common shares and units for the twelve months of 2016 totaled $167.0 million, or $0.94 per diluted share, which includes a $66.6 million, or $0.38 per share, charge for the early extinguishment of debt related to our sale of our Cira Square property located in Philadelphia, Pennsylvania and $3.5 million, or $0.01 per share, from net gains/impairments on undeveloped land.  Excluding the early extinguishment of debt and net gain, after impairments, on unimproved land, FFO available to common shares and units in the twelve months of 2016 totaled $230.1 million, or $1.30 per diluted share, versus $261.2 million or $1.45 per diluted share, in the twelve months of 2015.  Our 2016 FFO payout ratio ($0.63 common share distribution / $0.94 FFO per diluted share) was 67.0%.

 

-2-

 


 

Operating and Leasing Activity

In the fourth quarter of 2016, our Net Operating Income (NOI) excluding termination revenues and other income items increased 2.2% on a GAAP basis and increased 8.6% on a cash basis for our 101 same store properties, which were 93.9% and 94.5% occupied on December 31, 2016 and December 31, 2015, respectively.

We leased approximately 1,389,000 square feet and commenced occupancy on 270,000 square feet during the fourth quarter of 2016.  The fourth quarter occupancy activity includes 90,000 square feet of renewals, 73,000 square feet of new leases and 107,000 square feet of tenant expansions.  We have an additional 177,000 square feet of executed new leasing scheduled to commence subsequent to December 31, 2016.

We achieved an 87.0% tenant retention ratio in our core portfolio with net absorption of 44,000 square feet during the fourth quarter of 2016.  Fourth quarter rental rate growth increased 12.9% as our renewal rental rates increased 6.5% and our new lease/expansion rental rates increased 16.8%, all on a GAAP basis.

At December 31, 2016, our core portfolio of 101 properties comprising 15.4 million square feet was 93.9% occupied and we are now 95.1% leased (reflecting new leases commencing after December 31, 2016).

Distributions

On December 6, 2016, our Board of Trustees declared a quarterly dividend distribution of $0.16 per common share that was paid on January 25, 2017 to shareholders of record as of January 11, 2017.  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 January 17, 2017 to holders of record as of December 30, 2016.

2017 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 narrowing our previously released 2017 net income guidance from $0.24 to $0.34 per diluted share to $0.24 to $0.31 per diluted share and our previously issued 2017 FFO guidance from $1.35 to $1.45 per diluted share to $1.35 to $1.42 per diluted share.  This guidance is provided for informational purposes and is subject to change.  The following is a reconciliation of the calculation of 2017 FFO and earnings per diluted share:

Guidance for 2017

 

 

 

Range

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per diluted share allocated to common shareholders

$

0.24

 

to

$

0.31

 

 

Plus: real estate depreciation, amortization

 

1.11

 

 

 

1.11

 

 

 

 

 

 

 

 

 

 

 

FFO per diluted share

$

1.35

 

to

$

1.42

 

 

Our 2017 FFO guidance does not include income (loss) arising from the sale of unimproved real estate and excludes any refinancing charges.  Other key assumptions include:

 

Occupancy improving to a range of 94-95% by year-end 2017 with 95-96% leased;

 

5.0-7.0% GAAP increase in overall lease rates with a resulting 0.0-2.0% increase in 2017 same store GAAP NOI;

 

6.0-8.0% increase in 2017 same store cash NOI growth;

 

Speculative Revenue Target:  $28.7 million, 80% achieved;

 

$200.0 million of net sales activity;

 

One development start; and

 

Annual earnings and FFO per diluted share based on 178.3 million fully diluted weighted average common shares.

-3-

 


 

About Brandywine Realty Trust

Brandywine Realty Trust (NYSE: BDN) is one of the largest, publicly traded, full-service, integrated real estate companies in the United States with a core focus in the Philadelphia, Washington, D.C., and Austin markets.  Organized as a real estate investment trust (REIT), we own, develop, lease and manage an urban, town center and transit-oriented portfolio comprising 210 properties and 27.6 million square feet as of December 31, 2016, which excludes assets held for sale.  Our purpose is to shape, connect and inspire the world around us through our expertise, the relationships we foster, the communities in which we live and work, and the history we build together.  For more information, please visit www.brandywinerealty.com.

Conference Call and Audio Webcast

BDN management will discuss 2016 financial results and earnings guidance for fiscal 2017 on Wednesday, February 1, 2017, during the company’s earnings call.  The call will begin at 9:00 a.m. EST and will last approximately one hour.  The conference call can be accessed by dialing 1-800-683-1525 and providing conference ID: 26569080.  Beginning two hours after the conference call, a taped replay of the call can be accessed through Wednesday, February 15, 2017, by calling 1-855-859-2056 and entering access code 26569080. The conference call can also be accessed via a webcast on our website at www.brandywinerealty.com.

Looking Ahead - First Quarter 2017 Conference Call

We anticipate we will release our first quarter 2017 earnings on Wednesday, April 19, 2017, after the market close and will host our first quarter 2017 conference call on Thursday, April 20, 2017 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, 2015. 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.

-4-

 


 

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 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 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 interest in the Operating Partnership 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 interest in property partnerships. In some cases we also present NOI on a cash basis, which is NOI after eliminating the effects 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 to cash flows as a measure of the Company's liquidity or its ability to make distributions. NOI is a useful measure for evaluating the operating performance of our properties, as it excludes certain components from net income available to common shareholders in order to provide results that are more closely related to a property's results of operations. NOI is used internally to evaluate the performance of our operating segments and to make decisions about resource allocations.  We concluded that NOI provides useful information to investors regarding our financial condition and results of operations, as it reflects only the income and expense items incurred at the property level, as well as the impact on operations from trends in occupancy rates, rental rates, operating costs and acquisition and development activity on an unlevered basis.

Core Portfolio

Our core portfolio is comprised of our wholly-owned properties, excluding any properties currently in development, re-development or re-entitlement.

-5-

 


 

BRANDYWINE REALTY TRUST

CONSOLIDATED BALANCE SHEETS

(in thousands)

 

 

December 31,

 

 

December 31,

 

 

 

2016

 

 

2015

 

ASSETS

 

(unaudited)

 

 

 

 

 

Real estate investments:

 

 

 

 

 

 

 

 

Operating properties

 

$

3,586,295

 

 

$

3,693,000

 

Accumulated depreciation

 

 

(852,476

)

 

 

(867,035

)

Operating real estate investments, net

 

 

2,733,819

 

 

 

2,825,965

 

Construction-in-progress

 

 

297,462

 

 

 

268,983

 

Land held for development

 

 

150,970

 

 

 

130,479

 

Total real estate investments, net

 

 

3,182,251

 

 

 

3,225,427

 

Assets held for sale, net

 

 

41,718

 

 

 

584,365

 

Cash and cash equivalents

 

 

193,919

 

 

 

56,694

 

Accounts receivable, net of allowance of $2,373 and $1,736 in 2016 and 2015, respectively

 

 

12,446

 

 

 

17,126

 

Accrued rent receivable, net of allowance of $13,743 and $14,442 in 2016 and 2015, respectively

 

 

149,624

 

 

 

145,092

 

Investment in real estate ventures, at equity

 

 

281,331

 

 

 

241,004

 

Deferred costs, net

 

 

91,342

 

 

 

101,419

 

Intangible assets, net

 

 

72,478

 

 

 

111,623

 

Other assets

 

 

74,104

 

 

 

71,761

 

Total assets

 

$

4,099,213

 

 

$

4,554,511

 

LIABILITIES AND BENEFICIARIES' EQUITY

 

 

 

 

 

 

 

 

Mortgage notes payable, net

 

 

321,549

 

 

 

545,753

 

Unsecured term loans, net

 

 

248,099

 

 

 

247,800

 

Unsecured senior notes, net

 

 

1,443,464

 

 

 

1,591,164

 

Accounts payable and accrued expenses

 

 

103,404

 

 

 

99,856

 

Distributions payable

 

 

30,032

 

 

 

28,249

 

Deferred income, gains and rent

 

 

31,620

 

 

 

30,413

 

Acquired lease intangibles, net

 

 

18,119

 

 

 

25,655

 

Liabilities related to assets held for sale

 

 

81

 

 

 

2,151

 

Other liabilities

 

 

19,408

 

 

 

31,379

 

Total liabilities

 

$

2,215,776

 

 

$

2,602,420

 

 

 

 

 

 

 

 

 

 

Brandywine Realty Trust's Equity:

 

 

 

 

 

 

 

 

Preferred Shares (shares authorized-20,000,000)

 

 

 

 

 

 

 

 

6.90% Series E Preferred Shares, $0.01 par value; issued and outstanding- 4,000,000 in 2016 and 2015

 

 

40

 

 

 

40

 

Common Shares of Brandywine Realty Trust's beneficial interest, $0.01 par value; shares authorized 400,000,000; 175,140,760 and 174,688,568 issued and outstanding in 2016 and 2015, respectively

 

 

1,752

 

 

 

1,747

 

Additional paid-in-capital

 

 

3,258,870

 

 

 

3,252,622

 

Deferred compensation payable in common shares

 

 

13,684

 

 

 

11,918

 

Common shares in grantor trust, 899,457 in 2016, 745,686 in 2015

 

 

(13,684

)

 

 

(11,918

)

Cumulative earnings

 

 

539,319

 

 

 

499,086

 

Accumulated other comprehensive loss

 

 

(1,745

)

 

 

(5,192

)

Cumulative distributions

 

 

(1,931,892

)

 

 

(1,814,378

)

Total Brandywine Realty Trust's equity

 

 

1,866,344

 

 

 

1,933,925

 

Non-controlling interests

 

 

17,093

 

 

 

18,166

 

Total beneficiaries' equity

 

 

1,883,437

 

 

 

1,952,091

 

Total liabilities and beneficiaries' equity

 

$

4,099,213

 

 

$

4,554,511

 

 


-6-

 


 

BRANDYWINE REALTY TRUST

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except share and per share data)

 

 

Three Months Ended December 31,

 

 

Twelve Months Ended December 31,

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rents

$

103,181

 

 

$

122,931

 

 

$

421,505

 

 

$

486,731

 

Tenant reimbursements

 

17,314

 

 

 

21,716

 

 

 

70,629

 

 

 

85,722

 

Termination fees

 

880

 

 

 

2,236

 

 

 

2,339

 

 

 

4,797

 

Third party management fees, labor reimbursement and leasing

 

8,983

 

 

 

5,959

 

 

 

26,674

 

 

 

18,764

 

Other

 

1,728

 

 

 

1,150

 

 

 

4,316

 

 

 

6,617

 

Total revenue

 

132,086

 

 

 

153,992

 

 

 

525,463

 

 

 

602,631

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property operating expenses

 

38,718

 

 

 

47,995

 

 

 

152,926

 

 

 

181,170

 

Real estate taxes

 

11,319

 

 

 

12,991

 

 

 

46,252

 

 

 

50,623

 

Third party management expenses

 

3,098

 

 

 

1,436

 

 

 

10,270

 

 

 

6,294

 

Depreciation and amortization

 

46,940

 

 

 

58,674

 

 

 

189,676

 

 

 

219,029

 

General and administrative expenses

 

5,885

 

 

 

7,852

 

 

 

26,596

 

 

 

29,406

 

Provision for impairment

 

27,448

 

 

 

79,700

 

 

 

40,517

 

 

 

82,208

 

Total operating expenses

 

133,408

 

 

 

208,648

 

 

 

466,237

 

 

 

568,730

 

Operating income

 

(1,322

)

 

 

(54,656

)

 

 

59,226

 

 

 

33,901

 

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

266

 

 

 

35

 

 

 

1,236

 

 

 

1,224

 

Tax credit transaction income

 

-

 

 

 

8,102

 

 

 

-

 

 

 

19,955

 

Interest expense

 

(20,374

)

 

 

(26,746

)

 

 

(84,708

)

 

 

(110,717

)

Interest expense - amortization of deferred financing costs

 

(633

)

 

 

(1,180

)

 

 

(2,696

)

 

 

(4,557

)

Interest expense - financing obligation

 

-

 

 

 

(331

)

 

 

(679

)

 

 

(1,237

)

Equity in income (loss) of Real Estate Ventures

 

(2,180

)

 

 

1,024

 

 

 

(11,503

)

 

 

(811

)

Net gain on disposition of real estate

 

2,358

 

 

 

3,823

 

 

 

116,983

 

 

 

20,496

 

Net gain on sale of undepreciated real estate

 

9,044

 

 

 

-

 

 

 

9,232

 

 

 

3,019

 

Net gain from remeasurement of investments in real estate ventures

 

-

 

 

 

-

 

 

 

-

 

 

 

758

 

Net gain on real estate venture transactions

 

471

 

 

 

7,229

 

 

 

20,000

 

 

 

7,229

 

Loss on early extinguishment of debt

 

-

 

 

 

-

 

 

 

(66,590

)

 

 

-

 

Net income (loss)

 

(12,370

)

 

 

(62,700

)

 

 

40,501

 

 

 

(30,740

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (income) loss attributable to non-controlling interests

 

115

 

 

 

560

 

 

 

(310

)

 

 

339

 

Net income (loss) attributable to Brandywine Realty Trust

 

(12,255

)

 

 

(62,140

)

 

 

40,191

 

 

 

(30,401

)

Distribution to preferred shareholders

 

(1,725

)

 

 

(1,725

)

 

 

(6,900

)

 

 

(6,900

)

Nonforfeitable dividends allocated to unvested restricted shareholders

 

(78

)

 

 

(76

)

 

 

(341

)

 

 

(329

)

Net income (loss) attributable to Common Shareholders of Brandywine Realty Trust

$

(14,058

)

 

$

(63,941

)

 

$

32,950

 

 

$

(37,630

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PER SHARE DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic income (loss) per common share

$

(0.08

)

 

$

(0.37

)

 

$

0.19

 

 

$

(0.21

)

Basic weighted average shares outstanding

 

175,140,760

 

 

 

175,086,298

 

 

 

175,018,163

 

 

 

178,162,160

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted income (loss) per common share

$

(0.08

)

 

$

(0.37

)

 

$

0.19

 

 

$

(0.21

)

Diluted weighted average shares outstanding

 

175,140,760

 

 

 

175,086,298

 

 

 

176,010,814

 

 

 

178,162,160

 

 


-7-

 


 

BRANDYWINE REALTY TRUST

FUNDS FROM OPERATIONS

(unaudited, in thousands, except share and per share data)

 

Three Months Ended December 31,

 

 

 

Twelve Months Ended December 31,

 

 

2016

 

 

2015

 

 

 

2016

 

 

2015

 

Reconciliation of Net Income to Funds from Operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to common shareholders

$

(14,058

)

 

$

(63,941

)

 

 

$

32,950

 

 

$

(37,630

)

Add (deduct):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to non-controlling interests - LP units

 

(118

)

 

 

(561

)

 

 

 

295

 

 

 

(336

)

Nonforfeitable dividends allocated to unvested restricted shareholders

 

78

 

 

 

76

 

 

 

 

341

 

 

 

329

 

Net gain on real estate venture transactions

 

(471

)

 

 

(7,229

)

 

 

 

(20,000

)

 

 

(7,229

)

Net gain on disposition of real estate

 

(2,358

)

 

 

(3,823

)

 

 

 

(116,983

)

 

 

(20,496

)

Net gain from remeasurement of investments in Real Estate Ventures

 

-

 

 

 

-

 

 

 

 

-

 

 

 

(758

)

Provision for impairment

 

21,860

 

 

 

79,081

 

 

 

 

34,929

 

 

 

81,589

 

Company's share of impairment of an unconsolidated real estate venture

 

-

 

 

 

-

 

 

 

 

5,238

 

 

 

-

 

Depreciation and amortization:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real property

 

34,171

 

 

 

41,361

 

 

 

 

135,094

 

 

 

161,610

 

Leasing costs including acquired intangibles

 

12,667

 

 

 

17,205

 

 

 

 

54,195

 

 

 

57,034

 

Company’s share of unconsolidated real estate ventures

 

11,427

 

 

 

7,111

 

 

 

 

41,612

 

 

 

28,707

 

Partners’ share of consolidated real estate ventures

 

(59

)

 

 

(57

)

 

 

 

(235

)

 

 

(225

)

Funds from operations

$

63,139

 

 

$

69,223

 

 

 

$

167,436

 

 

$

262,595

 

Funds from operations allocable to unvested restricted shareholders

 

(176

)

 

 

(199

)

 

 

 

(457

)

 

 

(802

)

Funds from operations available to common share and unit holders (FFO)

$

62,963

 

 

$

69,024

 

 

 

$

166,979

 

 

$

261,793

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO per share - fully diluted

$

0.35

 

 

$

0.39

 

 

 

$

0.94

 

 

$

1.45

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares/units outstanding - fully diluted

 

177,491,208

 

 

 

177,213,113

 

 

 

 

177,516,451

 

 

 

180,438,141

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distributions paid per common share

$

0.16

 

 

$

0.15

 

 

 

$

0.63

 

 

$

0.60

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO payout ratio (distributions paid per common share/FFO per diluted share

 

45.7

%

 

 

38.5

%

 

 

 

67.0

%

 

 

41.4

%

 


-8-

 


 

BRANDYWINE REALTY TRUST

SAME STORE OPERATIONS – 4th QUARTER

(unaudited and in thousands)

 

 

Of the 113 properties owned by the Company as of December 31, 2016, a total of 101 properties ("Same Store Properties") containing an aggregate of 15.4 million net rentable square feet were owned for the entire three-month periods ended December 31, 2016 and 2015. Average occupancy for the Same Store Properties was 93.6% during 2016 and 93.8% during 2015. The following table sets forth revenue and expense information for the Same Store Properties:

 

Three Months Ended December 31,

 

 

 

2016

 

 

2015

 

Revenue

 

 

 

 

 

 

 

 

Rents

 

$

95,172

 

 

$

93,271

 

Tenant reimbursements

 

 

16,735

 

 

 

15,304

 

Termination fees

 

 

347

 

 

 

2,011

 

Other

 

 

458

 

 

 

573

 

Total revenue

 

 

112,712

 

 

 

111,159

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

Property operating expenses

 

 

33,196

 

 

 

32,112

 

Real estate taxes

 

 

10,253

 

 

 

9,804

 

Net operating income

 

$

69,263

 

 

$

69,243

 

 

 

 

 

 

 

 

 

 

Net operating income - percentage change over prior year

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Net operating income, excluding net termination fees & other

 

$

68,458

 

 

$

66,983

 

 

 

 

 

 

 

 

 

 

Net operating income, excluding net termination fees & other - percentage change over prior year

 

 

2.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Net operating income

 

$

69,263

 

 

$

69,243

 

Straight line rents & other

 

 

(3,100

)

 

 

(5,497

)

Above/below market rent amortization

 

 

(1,451

)

 

 

(2,100

)

Amortization of tenant inducements

 

 

730

 

 

 

359

 

Non-cash ground rent

 

 

22

 

 

 

22

 

Cash - Net operating income

 

$

65,464

 

 

$

62,027

 

 

 

 

 

 

 

 

 

 

Cash - Net operating income - percentage change over prior year

 

 

5.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash - Net operating income, excluding net termination fees & other

 

$

64,548

 

 

$

59,443

 

 

 

 

 

 

 

 

 

 

Cash - Net operating income, excluding net termination fees & other - percentage change over prior year

 

 

8.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

 

 

2016

 

 

2015

 

Net loss

 

$

(12,370

)

 

$

(62,700

)

Add/(deduct):

 

 

 

 

 

 

 

 

Interest income

 

 

(266

)

 

 

(35

)

Tax credit transaction income

 

 

-

 

 

 

(8,102

)

Interest expense

 

 

20,374

 

 

 

26,746

 

Interest expense - amortization of deferred financing costs

 

 

633

 

 

 

1,180

 

Interest expense - financing obligation

 

 

-

 

 

 

331

 

Equity in (income) loss of real estate ventures

 

 

2,180

 

 

 

(1,024

)

Net gain on real estate venture transactions

 

 

(471

)

 

 

(7,229

)

Net gain on disposition of real estate

 

 

(2,358

)

 

 

(3,823

)

Net gain on sale of undepreciated real estate

 

 

(9,044

)

 

 

-

 

Depreciation and amortization

 

 

46,940

 

 

 

58,674

 

General & administrative expenses

 

 

5,885

 

 

 

7,852

 

Provision for impairment

 

 

27,448

 

 

 

79,700

 

Consolidated net operating income

 

 

78,951

 

 

 

91,570

 

Less: Net operating income of non-same store properties and elimination of non-property specific operations

 

 

(9,688

)

 

 

(22,327

)

Same store net operating income

 

$

69,263

 

 

$

69,243

 

 

 


-9-

 


 

BRANDYWINE REALTY TRUST

SAME STORE OPERATIONS – TWELVE MONTHS

(unaudited and in thousands)

 

 

Of the 113 properties owned by the Company as of December 31, 2016, a total of 94 properties ("Same Store Properties") containing an aggregate of 14.5 million net rentable square feet were owned for the entire twelve-month periods ended December 31, 2016 and 2015. Average occupancy for the Same Store Properties was 93.2% during 2016 and 92.1% during 2015. The following table sets forth revenue and expense information for the Same Store Properties:

 

 

Twelve Months Ended December 31,

 

 

 

2016

 

 

2015

 

Revenue

 

 

 

 

 

 

 

 

Rents

 

$

358,188

 

 

$

349,612

 

Tenant reimbursements

 

 

60,922

 

 

 

56,816

 

Termination fees

 

 

693

 

 

 

4,372

 

Other

 

 

1,934

 

 

 

3,415

 

Total revenue

 

 

421,737

 

 

 

414,215

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

Property operating expenses

 

 

128,584

 

 

 

124,851

 

Real estate taxes

 

 

36,683

 

 

 

35,717

 

Net operating income

 

$

256,470

 

 

$

253,647

 

 

 

 

 

 

 

 

 

 

Net operating income - percentage change over prior year

 

 

1.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Net operating income, excluding net termination fees & other

 

$

253,843

 

 

$

247,061

 

 

 

 

 

 

 

 

 

 

Net operating income, excluding net termination fees & other - percentage change over prior year

 

 

2.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Net operating income

 

$

256,470

 

 

$

253,647

 

Straight line rents & other

 

 

(18,251

)

 

 

(19,184

)

Above/below market rent amortization

 

 

(2,446

)

 

 

(3,494

)

Amortization of tenant inducements

 

 

1,773

 

 

 

1,316

 

Non-cash ground rent

 

 

88

 

 

 

88

 

Cash - Net operating income

 

$

237,634

 

 

$

232,373

 

 

 

 

 

 

 

 

 

 

Cash - Net operating income - percentage change over prior year

 

 

2.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash - Net operating income, excluding net termination fees & other

 

$

234,446

 

 

$

224,586

 

 

 

 

 

 

 

 

 

 

Cash - Net operating income, excluding net termination fees & other - percentage change over prior year

 

 

4.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve Months Ended December 31,

 

 

 

2016

 

 

2015

 

Net income (loss):

 

$

40,501

 

 

$

(30,740

)

Add/(deduct):

 

 

 

 

 

 

 

 

Interest income

 

 

(1,236

)

 

 

(1,224

)

Tax credit transaction income

 

 

-

 

 

 

(19,955

)

Interest expense

 

 

84,708

 

 

 

110,717

 

Interest expense - amortization of deferred financing costs

 

 

2,696

 

 

 

4,557

 

Interest expense - financing obligation

 

 

679

 

 

 

1,237

 

Equity in loss of real estate ventures

 

 

11,503

 

 

 

811

 

Net gain on real estate venture transactions

 

 

(20,000

)

 

 

(7,229

)

Net gain on disposition of real estate

 

 

(116,983

)

 

 

(20,496

)

Net gain on sale of undepreciated real estate

 

 

(9,232

)

 

 

(3,019

)

Net gain from remeasurement of investments in real estate ventures

 

 

-

 

 

 

(758

)

Loss on early extinguishment of debt

 

 

66,590

 

 

 

-

 

Depreciation and amortization

 

 

189,676

 

 

 

219,029

 

General & administrative expenses

 

 

26,596

 

 

 

29,406

 

Provision for impairment

 

 

40,517

 

 

 

82,208

 

Consolidated net operating income

 

 

316,015

 

 

 

364,544

 

Less: Net operating income of non-same store properties and elimination of non-property specific operations

 

 

(59,545

)

 

 

(110,897

)

Same store net operating income

 

$

256,470

 

 

$

253,647

 

 

 

-10-