Brandywine Realty Trust · NYSE:BDN
Brandywine Realty Trust — Q4 2018 Earnings Presentation
54 slides from Brandywine Realty Trust's earnings presentation, Jan 31, 2019
Slide 1: Fourth Quarter 2018 Brandywine Realty Trust
Fourth Quarter brandy wine REALTY TRUST
Slide 2: Table of Contents
Table of Contents Page Executive Summary 3 2019 Business Plan Trend Line 5 Investor Day 2018 - 2021 Forward Guidance Ranges 6 2019 Business Plan Highlights 7 Sources and Uses of Cash and Cash Equivalents 8 Regional Property Overviews 9 Net Operating Income Composition 12 Development Activity 13 Land
Slide 3: Q4 2018 Executive Summary: Transaction Highlights
Q4 2018 Executive Summary (unaudited in millions, except square footage and acreage) BRANDYWINE REALTY TRUST | Page 3 Transaction Highlights Acquisitions On December 19, 2018, we acquired an office building containing 120,559 rentable square feet located at 4516 Seton Center Parkway, in Austin, Te
Slide 4: Q4 2018 Executive Summary: Leasing and Operating Metrics
Q4 2018 Executive Summary (unaudited in thousands, except per share data and square footage) BRANDYWINE REALTY TRUST | Page 4 Leasing Highlights Q4 2018 Q3 2018 Quarter end occupancy 93.3% 93.0% Current projected / Prior year end occupancy 93.3% 94-95% Leased as of January 23, 2019 / October 10, 201
Slide 5: Business Plan Trend Line
Business Plan Trend Line (unaudited) BRANDYWINE REALTY TRUST | Page 5 2019 Business Plan as of 2018 Business Plan as of Business Plan Component 1/11/2019 10/10/2018 Final Original Speculative Revenue $31.5 MM $31.0 MM $24.7 MM $25.3 MM (1) Executed 77% 65% 100% 49% Projected Tenant Retention (SF) 57
Slide 6: Investor Day 2018-2021 Forward Guidance Ranges
Investor Day (May 2017) 2018 - 2021 Forward Guidance Ranges (unaudited) BRANDYWINE REALTY TRUST | Page 6 2018 - 2021 2019 Business Plan 2018 Final Operations ■ Leased 95-96% 95-96% 95.5% ■ Annual Same Store Cash NOI Growth 2-5% 1-3% 0.7% ■ Capital Costs as a % of Lease Revenues 10-15% 13-15% 10.6% ■
Slide 7: 2019 Business Plan Highlights
2019 Business Plan Highlights (unaudited) BRANDYWINE REALTY TRUST | Page 7 2019 Speculative Leasing (Wholly Owned) Square Feet Targeted Executed Remaining Renewals 856,000 567,000 66% 289,000 34% New Leasing 842,000 494,000 59% 348,000 41% Total 1,698,000 1,061,000 62% 637,000 38% Revenue ($MM) Targ
Slide 8: Sources and Uses of Cash, Cash Equivalents and Restricted Cash
Sources and Uses of Cash, Cash Equivalents Restricted Cash (unaudited, in thousands) BRANDYWINE REALTY TRUST | Page 8 Sources and Uses of Cash Q4 2018 Q3 2018 Q2 2018 Q1 2018 Q4 2017 Q3 2017 Q2 2017 Q1 2017 Cash and cash equiv. and restricted cash as of Beg. of Quarter $ 71,185 $ 109,167 $ 201,648 $
Slide 9: Regional Property Overview
Regional Property Overview (unaudited, in thousands, except square footage) BRANDYWINE REALTY TRUST | Page 9 # of Wholly Square Feet % Leased Remaining Expirations Net Operating Income at 12/31/18 Owned % Occupied (1) Region Properties Total % of Total 2019 2020 Q4 2018 % of Total YTD 2018 % of Tota
Slide 10: Austin CBD Marketplace
Austin CBD Marketplace (unaudited) BRANDYWINE REALTY TRUST | Page 10 Austin Marketplace; the Star Texas Market (From L to R): River Place; Four Points; Barton Skyway Highlights The Austin Business-Cycle Index (a collection of employment and payroll Austin ranked #1 in percentage growth of housin
Slide 11: Philadelphia CBD Marketplace
Philadelphia CBD Marketplace (unaudited) BRANDYWINE REALTY TRUST | Page 11 Philadelphia Marketplace; Upward Trajectory Accelerates Highlights #1 millienial population growth compared to the 10 largest cities over the past ten years Limited Large Block Availability: Only 6 blocks greater than 100
Slide 12: Q4 2018 Net Operating Income Composition
Q4 2018 Net Operating Income Composition (unaudited) BRANDYWINE REALTY TRUST | Page 12 YTD 2018 NOI - Wholly Owned (a) 2019 Projected NOI - Wholly Owned (a) Total Core Portfolio NOI: $290.7 MM 86% of NOI from our Core Markets (b) Other 2% Other 2% Austin 7% Metro D.C. Philadelphia Austin 18% 11%
Slide 13: Development Summary
Development Summary (unaudited, in thousands, except square feet) BRANDYWINE REALTY TRUST | Page 13 Equity Amount Remaining to Leased % Completion Stabilization Total Project Debt Projected Development (% owned) Location Type Square Feet Capitalization funded at be funded at @January Date Date Costs
Slide 14: Development Activity: 4040 Wilson
Development Activity (unaudited) BRANDYWINE REALTY TRUST | Page 14 4040 Wilson Development (50/50 Real Estate Venture) Design Overview Project Description A 22-level premier mixed-use development featuring 189,000 SF Located in the Ballston submarket of Arlington, Virginia of office space (level
Slide 15: Development Activity: Schuylkill Yards
Development Activity (unaudited) BRANDYWINE REALTY TRUST | Page 15 Schuylkill Yards Development - Philadelphia, PA Overview Project Status Brandywine is the master developer of Schuylkill On November 8, 2017, broke ground at Drexel Square with Yards, a 20-year multi-phase, mixed-use 14 acre/ 5.1
Slide 16: Q4 2018 Land Inventory
Q4 2018 Land Inventory (unaudited) BRANDYWINE REALTY TRUST | Page 16 Estimated Development Square Feet Acres Active/Pre-Development Projects Philadelphia CBD (a) (b) 57.3 5,700,000 Pennsylvania Suburbs 13.9 385,000 Metropolitan Washington, D.C. 0.8 245,000 Austin, Texas (c) 74.7 6,425,000 Total Acti
Slide 17: Property Activity
Property Activity (unaudited, in thousands, except square footage and acreage) BRANDYWINE REALTY TRUST | Page 17 Square Occupancy % Location Type Event Date Feet/Acres/Units Purchase/Sales Price @ Event Date 2018 PROPERTY ACTIVITY OFFICE ACQUISITION Quarry Lake II Austin, TX Office Building 12/19/20
Slide 18: Leasing Activity - Core Portfolio
Leasing Activity-Core Portfolio (1) (unaudited) BRANDYWINE REALTY TRUST | Page 18 Twelve Months Ended Three Months Ended 12/31/2018 12/31/2017 12/31/2018 09/30/2018 06/30/2018 03/31/2018 12/31/2017 09/30/2017 06/30/2017 03/31/2017 Total Property Count 93 87 93 78 86 88 87 87 94 97 Total Square Feet
Slide 19: Leasing Activity - Core Portfolio (Rent Growth)
Leasing Activity-Core Portfolio (1) (unaudited) BRANDYWINE REALTY TRUST | Page 19 Twelve Months Ended Three Months Ended 12/31/2018 12/31/2017 12/31/2018 09/30/2018 06/30/2018 03/31/2018 12/31/2017 09/30/2017 06/30/2017 03/31/2017 New Leases/Expansions (2): Cash Rent Growth Expiring Rate $ 32.22 $ 2
Slide 20: Lease Expiration Analysis
Lease Expiration Analysis (unaudited) BRANDYWINE REALTY TRUST | Page 20 Square Footage Annualized Rent of Expiring Leases (3) Acquired / Year of Lease Early Renewals (4) Vacated New Remaining % of Total Per Square Per Square Initial Expiring Sold / in Current Final Expiration Out In Leases Leases Ex
Slide 21: Regional Lease Expiration Analysis
Regional Lease Expiration Analysis (1) (unaudited, in thousands) BRANDYWINE REALTY TRUST | Page 21 2018 2019 2020 2021 2022 2023 2024 Thereafter Total Philadelphia CBD Square feet expiring (Net of Acquired/Sold) 349 403 545 496 766 226 504 2,695 5,985 Net leasing activity (342) (84) (151) 5 (25) 17
Slide 22: Top Twenty Tenants
Top Twenty Tenants (unaudited, annualized rent in thousands) BRANDYWINE REALTY TRUST | Page 22 % of Total Annualized Rent % of Total Top Twenty Tenants Annualized Rent (1) Annualized Rent (1) per Square Foot (1) Square Feet Occupied Square Feet IBM, Inc. $ 22,346 4.5% $ 26.61 839,652 5.5% Comcast Co
Slide 23: Q4 2018 Portfolio Tenant Mix
Q4 2018 Portfolio Tenant Mix (by square footage) BRANDYWINE REALTY TRUST | Page 23 Health Services - 2% Transportation/Public Utilities - 3% Engineering & Misc. Services - 6% Management Services - 12% Real Estate - 5% Other - 3% Finance - 14% Wholesale Trade - 2% Manufacturing - 8% Business Services
Slide 24: Income Statements
Income Statements (unaudited, in thousands, except share data) BRANDYWINE REALTY TRUST | Page 24 Twelve Months Ended Three Months Ended 12/31/2018 12/31/2017 12/31/2018 09/30/2018 06/30/2018 03/31/2018 12/31/2017 09/30/2017 06/30/2017 03/31/2017 Revenue Rents $ 430,656 $ 412,333 $ 109,059 $ 107,580
Slide 25: Q4 2018 Same Store Net Operating Income
Q4 2018 Same Store Net Operating Income (unaudited, in thousands) BRANDYWINE REALTY TRUST | Page 25 Recently Completed/ Development/ Other/ Same Store Portfolio Acquired (1) Redevelopment (2) Eliminations (3) All Properties Fourth Quarter Fourth Quarter Fourth Quarter Fourth Quarter Fourth Quarter F
Slide 26: YTD 2018 Same Store Net Operating Income
YTD 2018 Same Store Net Operating Income (unaudited, in thousands) BRANDYWINE REALTY TRUST | Page 26 Recently Completed/ Development/ Other/ Same Store Portfolio Acquired (1) Redevelopment (2) Eliminations (3) All Properties Year to Date Year to Date Year to Date Year to Date Year to Date Year to Da
Slide 27: EBITDA and EBITDA Coverage Ratios
EBITDA and EBITDA Coverage Ratios (unaudited, in thousands) BRANDYWINE REALTY TRUST | Page 27 Twelve Months Ended Three Months Ended 12/31/2018 12/31/2017 12/31/2018 09/30/2018 06/30/2018 03/31/2018 12/31/2017 09/30/2017 06/30/2017 03/31/2017 Net income (loss) $ 137,289 $ 121,859 $ 122,710 $ (43,262
Slide 28: Funds from Operations
Funds from Operations (unaudited, in thousands, except share data) BRANDYWINE REALTY TRUST | Page 28 Twelve Months Ended Three Months Ended 12/31/2018 12/31/2017 12/31/2018 09/30/2018 06/30/2018 03/31/2018 12/31/2017 09/30/2017 06/30/2017 03/31/2017 Net income attributable to common shareholders $ 1
Slide 29: Cash Available for Distribution
Cash Available for Distribution (unaudited, in thousands, except share data) BRANDYWINE REALTY TRUST | Page 29 Twelve Months Ended Three Months Ended 12/31/2018 12/31/2017 12/31/2018 09/30/2018 06/30/2018 03/31/2018 12/31/2017 09/30/2017 06/30/2017 03/31/2017 Funds from operations available to commo
Slide 30: Balance Sheets
Balance Sheets (unaudited, in thousands) BRANDYWINE REALTY TRUST | Page 30 12/31/2018 09/30/2018 06/30/2018 03/31/2018 12/31/2017 09/30/2017 06/30/2017 03/31/2017 Assets Real estate investments Operating properties $ 3,953,319 $ 3,429,048 $ 3,864,629 $ 3,864,706 $ 3,832,348 $ 3,769,067 $ 3,769,678 $
Slide 31: Liquidity, Leverage and Market Capitalization
Liquidity, Leverage and Market Capitalization (unaudited, in thousands, except shares and per share data) BRANDYWINE REALTY TRUST | Page 31 12/31/2018 09/30/2018 06/30/2018 03/31/2018 12/31/2017 09/30/2017 06/30/2017 03/31/2017 High closing price of common shares $ 15.47 $ 17.12 $ 16.96 $ 18.15 $ 18
Slide 32: Balance Sheet Information/Debt Statistics
Balance Sheet Information/Debt Statistics (unaudited, in thousands) BRANDYWINE REALTY TRUST | Page 32 12/31/2018 09/30/2018 06/30/2018 03/31/2018 12/31/2017 09/30/2017 06/30/2017 03/31/2017 Fixed rate debt $ 1,623,032 $ 1,624,886 $ 1,626,721 $ 1,628,540 $ 1,620,107 $ 1,396,357 $ 1,397,595 $ 1,698,82
Slide 33: Debt Schedules
Debt Schedules (unaudited, in thousands) BRANDYWINE REALTY TRUST | Page 33 12/31/2018 Maturity Stated Effective 12/31/2018 12/31/2017 Debt Instrument Percent of total Date Rate (1) Rate (1) Balance Balance indebtedness Unsecured senior notes payable $350 MM Notes due 2023 February 15, 2023 3.950% 3.
Slide 34: Debt Schedules (Mortgage Notes)
Debt Schedules (unaudited, in thousands) BRANDYWINE REALTY TRUST | Page 34 12/31/2018 Maturity Stated Effective 12/31/2018 12/31/2017 Debt Instrument Percent of total Date Rate (1) Rate (1) Balance Balance indebtedness Mortgage notes payable Two Logan Square May 1, 2020 3.980% 3.980% $ 82,805 $ 84,4
Slide 35: Debt Maturities
Debt Maturities (8) (unaudited, in thousands) BRANDYWINE REALTY TRUST | Page 35 Secured Debt Unsecured Debt Maturity Schedule Scheduled Balloon Percent of Weighted Bank Facilities Senior Notes Total By Year Amortization Payments Debt Maturing Average Interest (9) 2019 $ 7,595 $ - $ - $ - $ 7,595 0.5
Slide 36: Debt Maturities Chart
Debt Maturities (unaudited, in thousands) BRANDYWINE REALTY TRUST | Page 36 $600,000 Bank Facilities $500,000 Unsecured Notes Balloon Payments $400,000 Scheduled Amortization $300,000 $200,000 $100,000 $0 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Thereafter % of total 0.1% 0.4% 4.5% 0.8% 13.
Slide 37: Debt Covenant Compliance
Debt Covenant Compliance (unaudited, in millions) BRANDYWINE REALTY TRUST | Page 37 Revolving Credit Agreement dated July 17, 2018 and Amended and Restated Term Loan C Agreement dated December 13, 2018 Covenant Required 12/31/2018 9/30/2018 6/30/2018 03/31/2018 12/31/2017 9/30/2017 06/30/2017 03/31/
Slide 38: JV Property Overview
JV Property Overview (unaudited, in thousands, except square footage) BRANDYWINE REALTY TRUST | Page 38 As of December 31, 2018 BDN's Share BDN Net Net Gross Asset Investment Operating BDN Operating Unconsolidated Real Project Value Value @ @ Number of Income Rentable Percent Percent Ownership Incom
Slide 39: JV Debt Schedule
JV Debt Schedule (unaudited, in thousands) BRANDYWINE REALTY TRUST | Page 39 12/31/2018 BDN Ownership Stated 12/31/2018 BDN Share Debt Instrument Percentage Maturity Date Rate (1) Balance of Venture Debt Office Properties Allstate DC JV (2) 50% January 1, 2022 4.650% $ 26,111 $ 13,056 MAP Venture 50
Slide 40: JV Debt Summary
JV Debt Summary (unaudited, in thousands) BRANDYWINE REALTY TRUST | Page 40 Secured Debt Maturity Percent of Weighted Average Scheduled Balloon Partners' Schedule Total BDN Share BDN Share Interest Rate of Amortization Payments Share By Year Maturing Maturing Debt (a) 2019 $ 1,372 $ 3,626 $ 4,998 $
Slide 41: Q4 2018 Analyst and Company Information
Q4 2018 Analyst and Company Information BRANDYWINE REALTY TRUST | Page 41 Equity Research Coverage Argus Research D.A. Davidson & Co. JP Morgan Stifel Nicolaus & Company, Inc. Jacob Kilstein Barry Oxford Anthony Paolone John Guinee / Aaron Wolf 646-747-5447 212-240-9871 212-622-6682 443-224-1307 / 4
Slide 42: Q4 2018 Disclaimers and Other Information
Q4 2018 Disclaimers and Other Information BRANDYWINE REALTY TRUST | Page 42 Non-GAAP Measures We believe that the measures defined below that are not determined in accordance with generally accepted accounting principles (“GAAP”) are helpful to investors in measuring our performance and comparing it
Slide 43: Disclaimers and Other Information (continued)
Q4 2018 Disclaimers and Other Information (continued) BRANDYWINE REALTY TRUST | Page 43 Net Operating Income (NOI) (continued) 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 ord
Slide 44: Brandywine Realty Trust Announces Fourth Quarter and Full Year 2018 Results
Company / Investor Contact: Tom Wirth EVP & CFO 610-832-7434 tom.wirth@bdnreit.com Brandywine Realty Trust Announces Fourth Quarter and Full Year 2018 Results Philadelphia, PA, January 30, 2019 — Brandywine Realty Trust (NYSE:BDN) today reported its financial and operating results for the three and
Slide 45: Transaction Activity
Transaction Activity Austin Acquisitions As previously announced, we acquired our partner’s entire 50% interest in the 12 remaining buildings within the DRA Austin real estate venture (“Austin Portfolio”) containing approximately 1,570,000 square feet, located in Austin, Texas, valuing the portfol
Slide 46: Radnor Development and Finance/Capital Markets Activity
Radnor, Pennsylvania Penn Medicine has named Brandywine as the designated developer of a 250,000 square foot state-of- the-art multi-specialty outpatient facility located in Radnor, Pennsylvania. Construction of the facility commenced during the fourth quarter 2018 and is scheduled for completion
Slide 47: Operating and Leasing Activity
Operating and Leasing Activity In the fourth quarter of 2018, our Net Operating Income (NOI) excluding termination revenues, write-off of prior straight-line rent receivable and other income items increased 2.3% on a GAAP basis and increased 8.7% on a cash basis for our 76 same store properties, whi
Slide 48: Looking Ahead – First Quarter 2019
Acquisition Activity: none Sales Activity: none One development start; 405 Colorado Annual earnings and FFO per diluted share based on 178.4 million fully diluted weighted average common shares. About Brandywine Realty Trust Brandywine Realty Trust (NYSE: BDN) is one of the largest, publicly
Slide 49: Non-GAAP Supplemental Financial Measures
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 wid
Slide 50: Consolidated Balance Sheets
BRANDYWINE REALTY TRUST CONSOLIDATED BALANCE SHEETS (in thousands) December 31, December 31, 2018 2017 ASSETS (unaudited) Real estate investments: Operating properties $ 3,953,319 $ 3,832,348 Accumulated depreciation (865,462 ) (895,091 ) Operating real estate investments, net 3,087,857 2,937,257 Co
Slide 51: Consolidated Statements of Operations
BRANDYWINE REALTY TRUST CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited, in thousands, except share and per share data) Twelve Months Ended Three Months Ended December 31, December 31, 2018 2017 2018 2017 Revenue Rents $ 109,059 $ 104,887 $ 430,656 $ 412,333 Tenant reimbursements 23,531 18,808 82,6
Slide 52: Funds From Operations Reconciliation
BRANDYWINE REALTY TRUST FUNDS FROM OPERATIONS (unaudited, in thousands, except share and per share data) Three Months Ended Twelve Months Ended December 31, December 31, 2018 2017 2018 2017 Reconciliation of Net Income to Funds from Operations: Net income attributable to common shareholders $ 121,82
Slide 53: Same Store Operations – 4th Quarter
BRANDYWINE REALTY TRUST SAME STORE OPERATIONS – 4th QUARTER (unaudited and in thousands) Of the 97 properties owned by the Company as of December 31, 2018, a total of 76 properties ("Same Store Properties") containing an aggregate of 14.2 million net rentable square feet were owned for the entire th
Slide 54: Same Store Operations – Twelve Months
BRANDYWINE REALTY TRUST SAME STORE OPERATIONS – TWELVE MONTHS (unaudited and in thousands) Of the 97 properties owned by the Company as of December 31, 2018, a total of 73 properties ("Same Store Properties") containing an aggregate of 13.0 million net rentable square feet were owned for the entire
Brandywine Realty Trust — Q4 2018 Earnings Presentation on 6ix