BRANDYWINE REALTY TRUST Q4 FY2024 earnings call

• 2024 was a solid year with strong operating metrics, high-quality portfolio. Wholly owned core portfolio occupancy/leased improved sequentially.
• Exceeded spec revenue and tenant retention targets. Leasing activity high, with Q4 being the highest in 2024.
• Low rollover risk through 2026, mark-to-market within plan. Tour activity well above pre-pandemic levels.
• Significant liquidity improvement with over $300 million in dispositions, $90 million cash on hand.
• Development projects: 3025 office lease with FS Investments, residential component of 3025 at 84% leased, life science project 3151 in capitalization period, Uptown ATX pipeline, Solaris House 30% occupied, Radnor project 100% leased.

The wholly owned core portfolio was 87.8% occupied and 89.9% leased, with sequential improvement. They exceeded the 2024 spec revenue target by 8%, generating $26.4 million. Tenant retention ended at 63% vs the original business plan target of 51%-53%. Leasing activity in 2024 approximated 2.3 million square feet. In Q4, 783,000 square feet of leases were executed, with 486,000 in the wholly owned portfolio and 297,000 in joint ventures. Mark-to-market was 12.6% on a GAAP basis and 1.8% on a cash basis. New leasing mark-to-market was strong at 18% GAAP and 4% cash. Tour activity was up, with 4Q physical tours 7% above 3Q and 22% above 2023. Flight to quality deals were 62% of Q4 leases and 8% of full-year new leasing. There are less than 5% annual rollover through 2026. Liquidity was strong, with over $300 million in dispositions, $90 million cash on hand, and no balance on the $600 million unsecured line of credit at year-end.

• 2025 FFO guidance: $0.60 to $0.72 per share, midpoint $0.66. GAAP NOI ~$18M below 2024, partially offset by 155 King of Prussia Road being fully operational.
• Spec revenue for 2025: $27-$28 million, up 4% from 2024. Cash and GAAP mark-to-market lower due to regional composition.
• Occupancy 88%-89%, lease level 89%-90%, retention 59%-61%. Same-store NOI growth: 1%-3% cash, -1% to +1% GAAP.
• $50 million of additional sales activity expected later in 2025.

• Development lease updates taking longer than anticipated.
• Potential delays in recapitalizing joint ventures affecting FFO.
• Macro uncertainty impacting tenant decision-making.
• Austin market weakness due to lease structures, higher TI costs potentially affecting yields if not offset by longer leases.

Q: Michael Lewis asks about repaying JV preferred obligations earlier and project stabilization.

A: Jerry Sweeney responds ongoing discussions with partners to minimize FFO impact, with active talks on recapitalizing preferred equity and debt sides.

Q: Michael Griffin asks about year-end asset sales cap rates and seller financing.

A: Jerry Sweeney responds cap rates ranged from low fives to ten plus, buyer pool includes owner occupants, family offices, syndicators, with some preferred equity financing.

Q: Michael Griffin asks about leasing 3151 to traditional office users.

A: Jerry Sweeney responds the building is still being finished, but they're seeing interest from office users and have a strong pipeline for life science, but open to office users if demand exists.