"We do expect fundamentals to continue firming," said Gerard Sweeney, president and chief executive officer, during the company's first-quarter conference call. "We believe the worst is generally behind us."
Brandywine's year-over-year occupancy rate fell to 87.8% during the quarter from 91.2%. The office REIT recorded a net loss of $2.5 million, better than Q1 2009's $2.8 million drop, and FFO fell to $45.6 million from $50.5 million.
Most of Brandywine's 241 assets are on the East Coast, but it does own 11 in California that it is looking to sell, and for good reason. The buildings there have a 77.4% occupancy rate.
Other trouble spots are the markets of New Jersey and Delaware, where the company controls 63 assets. At the end of its Q1, occupancy was at 85.5%, but management expects further deterioration in the coming year, and it could hit as low as 73% as tenants vacate space.
Downtown Philadelphia, where it owns two million square feet, performed the best with a 99% rate, followed by all Pennsylvania properties, 93 in total, which come in at 91.3%. Meanwhile, Metro Washington, DC, where it holds 30 assets, came in at 87.6%.
Management is obviously banking more on the good than the bad. It upped the company's full-year guidance from between $1.25 to $1.34 per share to from $1.27 to $1.34.
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