RADNOR, PA—Brandywine Realty Trust says its financial performance in the second quarter was largely flat compared with the same period last year. Funds from operations were $57.4 million or $0.32 per diluted share vs. $57.3 million or $0.36 per diluted share in the second quarter of 2014. Net income jumped to $1.3 million or $0.01 per diluted share in the second quarter of 2015 vs. $0.4 million or $0.00 per diluted share in the second quarter of 2014.
“During the second quarter, we continued to make excellent progress on our 2015 business plan,” says Gerard H. Sweeney, president and chief executive officer of Brandywine Realty Trust. “We continue to capitalize on improving market conditions and raised our speculative revenue target by 2.1 percent, having already achieved 98 percent of our 2015 speculative revenue target. We have also seen an acceleration in our portfolio disposition program and given the current strength of the investment market, have increased our sales goal to $300 million. Given our strong operating results coupled with our accelerated dispositions, we are maintaining our 2015 FFO guidance range to $1.40 to $1.46 per diluted share.”
Brandywine says it leased approximately 1.6 million square feet and commenced occupancy on 506,000 square feet during the second quarter of 2015. The second quarter occupancy activity includes 123,000 square feet of renewals, 262,000 square feet of new leases and 121,000 square feet of tenant expansions. Brandywine has an additional 636,000 square feet of executed new leasing scheduled to commence subsequent to June 30, 2015.
Brandywine achieved a 78.2 percent tenant retention ratio in its core portfolio with net absorption of 194,000 square feet during the second quarter of 2015. Second quarter rental rate growth increased 6.7 percent as renewal rental rates increased 9.5 percent and new lease/expansion rental rates increased 3.6 percent, all on a GAAP basis.
At June 30, 2015, the REIT’s core portfolio of 193 properties comprising 23.6 million square feet was 91.7 percent occupied and the company is now 94.4 percent leased (reflecting new leases commencing after June 30, 2015).
The company says it sold seven office properties located in Delaware, California and Virginia for $119.2 million. The seven properties totaled 765,000 square feet and were 71 percent occupied.
In new developments, Brandywine says Encino Trace I, a 160,000 square foot building located in Austin, TX, is 100 percent leased. It has signed a new 228,000 square foot lease at its 1900 Market Street, Philadelphia, PA redevelopment project.
The firm has also:
- Increased its disposition target from $180 million to $300 million, and has approximately $40 million of land under contract or letter of intent to sell.
- Acquired the remaining 50 percent ownership interest in Broadmoor Austin Associates and the underlying 66 acre fee interest for $92.6 million cash, while assuming and repaying a secured mortgage totaling $51.2 million.
- Acquired land parcels located at the 2100 Market Street block in Philadelphia for $18.8 million.
- Entered into a joint venture arrangement with The JBG Companies to acquire a 70 percent interest in two vacant land parcels located in the NOMA sub-market of Washington, DC for $28.4 million. Both Brandywine and The JBG Companies will have co-developer responsibilities.
- Acquired a land parcel in Capitol Riverfront submarket of Washington, DC in April 2015 for $20.0 million. The site can accommodate a 271,000 square foot office building. Subsequent to the acquisition, Brandywine contributed the property into a joint venture with Akridge serving as co-developer and having a five percent ownership interest.
FFO available to common shares and units in the second quarter of 2015 totaled $57.4 million or $0.32 per diluted share versus $57.3 million or $0.36 per diluted share in the second quarter of 2014. The second quarter 2015 payout ratio ($0.15 common share distribution / $0.32 FFO per diluted share) was 46.9 percent.
Net income allocated to common shares totaled $1.3 million or $0.01 per diluted share in the second quarter of 2015 compared to a net income of $0.4 million or $0.00 per diluted share in the second quarter of 2014.
In the second quarter of 2015, Net Operating Income (NOI) excluding termination revenues and other income items increased 1.7 percent on a GAAP basis and increased 1.3 percent on a cash basis for 184 same store properties, which were 91.2 percent and 89.1 percent occupied on June 30, 2015 and June 30, 2014, respectively.
FFO available to common shares and units in the first six months of 2015 totaled $115.8 million or $0.64 per diluted share versus $110.9 million or $0.69 per diluted share in the first six months of 2014. The first six months 2015 FFO payout ratio ($0.30 common share distribution / $0.64 FFO per diluted share) was 46.9 percent.
Net income allocated to common shares totaled $8.0 million or $0.04 per diluted share in the first six months of 2015 compared to net loss of $3.7 million or ($0.02) per diluted share in the first six months of 2014.