PLYMOUTH MEETING, PA-Third-quarter performance for two locally based REITs, Brandywine Realty Trust and Kramont Realty Trust, was mixed. Brandywine in particular had an unusually active quarter in which it closed on the capital structure for its $600-million acquisition of Philadelphia-based Rubenstein Co.

At Kramont, funds from operations rose 11% to $9.6 million in third quarter, compared with $8.6 million in the same quarter a year ago. Net income, however, fell 17% to $6.1 million in this third quarter compared with $7.4 million in third-quarter 2003.

The increase in FFO is attributed largely to a $1.2-million lease termination fee from a major tenant. A non-recurring charge of $17.7 million related to Kramont’s redemption of a series of preferred shares is the primary reason for the decline in net income. For the first nine months of the year, however, Kramont’s net income rose approximately 14% to $20.4 million this year, compared with $17.5 million for the first nine months of last year.

Brandywine’s third-quarter 2004 FFO dropped 2% to $33.7 million, down from $34.4 million in third-quarter 2003. However, net income in the most recent quarter rose 18% to $21.2 million, compared with $17.4 million in the comparable quarter a year ago.

This year’s third-quarter leasing activity was comparable at both companies. Rates for new leases rose while renewal rental rates dipped a bit. Kramont executed 21 new leases for previously leased space at an average base rent of $10.83 per sf, which is an increase of 2.8%. It renewed 22 leases at an average rental of $13.07 per sf, which was a decline of 0.7%, putting the REIT’s total rate increase at 1.1%. It executed six new leases at an average of $24.24 per sf.

Meanwhile, Brandywine reported that quarterly rental rate growth on new leases was a positive 1.3%, while rental rate growth on renewals was a negative 3.3%. The REIT’s portfolio ended third quarter 90.5% occupied and 91.5% leased.

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