Thu, 26 Oct 2006 16:45:00 PDT
RADNOR, PA -- (MARKET WIRE) -- 10/26/2006 -- Brandywine Realty Trust (
Diluted earnings (loss) per share (EPS) was $(0.02) for the third quarter of 2006 as compared to $0.24 for the third quarter of 2005. Net income was $0.6 million for the third quarter as compared to $15.8 million for the third quarter of 2005. A significant contribution to the change in net income in the third quarter of 2006 as compared to the third quarter of 2005 is the $40.0 million increase in depreciation and amortization expense. This increase is primarily the result of the depreciation/amortization of the tangible and intangible assets acquired in connection with the January 5, 2006 Prentiss transaction.
Brandywine President and Chief Executive Officer, Gerard H. Sweeney, commented, "Operating results for the quarter reflect continued improvement in overall market conditions. Our leasing, development and integration plans all remain on target. Our capital recycling program is ahead of schedule and we are in an excellent position to continue the successful execution of our business plan."
Brandywine Realty Trust Summary Portfolio Performance
-- FFO payout ratio was 65.2% for the quarter
-- Quarterly rental rates on renewals grew 0.3% on a straight-line basis
-- Quarterly retention rate was 73.4%
-- Portfolio was 91.3% occupied and 93.2% leased as of September 30, 2006
-- Leases expired or were terminated for approximately 1,138,000 square
feet during the quarter
-- Leases were renewed for approximately 835,000 square feet during the
quarter
-- New leases were signed for approximately 225,000 square feet during
the quarter
-- Acquired properties during the quarter totaled approximately 443,000
square feet for an aggregate purchase price of approximately $133.2 million
-- Sold properties during the quarter totaled approximately 823,000
square feet for an aggregate sale price of approximately $126.1 million
Distributions
On September 18, 2006, the Board of Trustees declared a regular quarterly dividend distribution of $0.44 per common share that was paid October 16, 2006 to shareholders of record as of October 5, 2006. The Board also declared a dividend for the third quarter of $0.46875 per 7.50% Series C Cumulative Redeemable Preferred Share and $0.460938 per 7.375% Series D Cumulative Redeemable Preferred Share that was paid on October 16, 2006 to holders of record of the Series C and Series D Preferred Shares as of September 30, 2006.
Sale of Exchangeable Guaranteed Notes and Repurchase of $60 Million Common Shares
On October 4, 2006, the Company's operating partnership issued $300 million aggregate principal amount of exchangeable guaranteed notes due October 15, 2026 with a coupon of 3.875%. On October 16, 2006, the Company's operating partnership issued an additional $45 million aggregate principal amount of notes to cover over-allotments.
The Company used the net proceeds from the sale of the notes to repurchase approximately $60 million of outstanding Brandywine common shares (1,829,000 common shares at a price of $32.80 per share); to repay approximately $180 million under the Company's revolving credit facility; and to invest the balance in short term securities pending redemption of the Operating Partnership's $300 million Floating Rate Guaranteed Notes due 2009 on January 2, 2007.
The notes will be exchangeable for cash and Brandywine common shares at an initial exchange rate of 25.4065 common shares per $1,000 principal amount of notes (equivalent to an initial exchange price of approximately $39.36 per common share). The initial exchange price represents a 20% premium to the last reported sales price for the common shares on the New York Stock Exchange on September 28, 2006. The exchange value will be based on the exchange rate and the then trading price of the common shares. The initial exchange rate is subject to adjustment in certain circumstances.
The repurchase of 1,829,000 common shares with a portion of the proceeds of the notes did not reduce the number of common shares that may be repurchased under the Company's Board-approved share repurchase program. As of September 30, 2006, the Company may purchase an additional 2,319,800 shares under the plan. Repurchases may be made from time to time in the open market or in privately negotiated transactions, subject to market conditions and compliance with legal requirements. The share repurchase program does not contain any time limitation and does not obligate the Company to repurchase any shares. The Company may discontinue the program at any time.
2006 Financial Outlook
Our financial outlook for the remainder of 2006 is predicated upon operating metrics consistent with our previous guidance. In addition to these operating metrics, our 2006 financial outlook is predicated upon the following development and acquisition/disposition assumptions:
-- Completion of the previously announced development and re-development
projects
-- Impact of year-to-date dispositions totaling $385 million
-- Impact of year-to-date acquisitions (in addition to the Prentiss
acquisition) totaling $167 million
-- Net dispositions of approximately $125-175 million during the fourth
quarter of 2006
Based on these key assumptions, we are introducing fourth quarter 2006
guidance and expect FFO per share to be $0.64 to $0.66 and EPS to be
$(0.06) to $(0.04). These estimates may be positively or negatively
impacted primarily by the timing and terms of property acquisitions,
property dispositions, property leases, and actual operating expenses and
interest rates as compared to those used in our forecast.
2007 Financial Outlook
As of the date of this release, we expect our full year 2007 EPS to be $(0.18) to $(0.09) and FFO per share to be $2.55 to $2.65. Our projections are based on several key and variable assumptions and estimates, including the following:
Operating Portfolio Results
The Company's operating portfolio consists of two primary components: (1) the Same-Store portfolio, which represents properties that were owned throughout 2006 that are anticipated to be owned throughout 2007 (these properties represent 70.5% of total square footage owned and 62.0% of projected 2007 net operating income from the operating portfolio); and (2) the acquired Prentiss portfolio which represents the properties acquired in January 2006 that are anticipated to be owned throughout 2007 (these properties represent 29.5% of total square footage owned and 38.0% of projected 2007 net operating income from the operating portfolio). The Company's projections are based on achieving the following percentage changes from currently projected 2006 results:
% change 2006 - 2007
--------------------------------
Same-Store Acquired Prentiss
Portfolio Portfolio
--------- ---------
GAAP rent and reimbursements (Excluding
termination fees) 0.5% - 1.5% 3.0% - 4.0%
Expenses 5.0% - 5.5% 6.5% - 7.5%
NOI (2.0%) - (1.0%) 0.5% - 1.5%
Occupancy 0% - 1.0% 0.5% - 1.5%
The Company's projections for operating portfolio activity are based upon
competitive market conditions including: pressure on market rents;
increased operating expenses particularly in labor, real estate taxes and
energy costs; and lease terminations, settlements, and other similar items
consistent with historical levels.
Acquisitions, Dispositions, Development
Forecasting the timing and dollar amount of potential acquisitions and dispositions is challenging and these two variables have a high degree of sensitivity on forecasted results. While the acquisition market remains aggressively priced, we intend to use the financial capacity we created to take advantage of select opportunities. The 2007 outlook assumes:
-- $150-$200 million of acquisitions per quarter in 2007 at projected
yields ranging from 6.0% to 8.5%
-- Full year impact of $385 million of year to date 2006 dispositions
-- Full year impact of $125-$175 million of projected fourth quarter 2006
dispositions
-- Full year impact of an additional $125-$175 million of dispositions
The Company's outlook assumes the completion of all development projects
identified in its supplemental disclosure as of September 30, 2006.
Forward-Looking Statements
Estimates of future earnings per share and FFO per share and certain other statements in this release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance, achievements or transactions of the Company and its affiliates to be materially different from any future results, performance, achievements or transactions expressed or implied by such forward-looking statements. Such risks, uncertainties and other factors relate to, among others: the Company's ability to lease vacant space and to renew or relet space under expiring leases at expected levels, competition with other real estate companies for tenants, the potential loss or bankruptcy of major tenants, interest rate levels, the availability of debt and equity financing, competition for real estate acquisitions and risks of acquisitions, dispositions and developments, including the cost of construction delays and cost overruns, unanticipated operating and capital costs, the Company's ability to obtain adequate insurance, including coverage for terrorist acts, dependence upon certain geographic markets, and general and local economic and real estate conditions, including the extent and duration of adverse changes that affect the industries in which the Company's tenants compete.
Additional information on factors which could impact the Company and the forward-looking statements contained herein are included in the Company's filings with the Securities and Exchange Commission, including the Company's Annual Report for the year ended December 31, 2005. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events except as required by law.
NON-GAAP SUPPLEMENTAL FINANCIAL MEASURES
Funds from Operations (FFO)
FFO is a widely recognized measure of REIT performance. Although FFO is a non-GAAP financial measure, the Company believes that information regarding FFO is helpful to shareholders and potential investors. The Company computes FFO in accordance with standards established by the National Association of Real Estate Investment Trusts (NAREIT), which may not be comparable to FFO reported by other REITs that do not compute FFO in accordance with the NAREIT definition, or that interpret the NAREIT definition differently than the Company. NAREIT defines FFO as net income (loss) before minority interest of unit holders (preferred and common) and excluding gains (losses) on sales of depreciable operating property and extraordinary items (computed in accordance with GAAP); plus real estate related depreciation and amortization (excluding amortization of deferred financing costs), and after adjustment for unconsolidated joint ventures. The GAAP measure that the Company believes to be most directly comparable to FFO, net income, includes depreciation and amortization expenses, gains or losses on property sales and minority interest. In computing FFO, the Company eliminates substantially all of these items because, in the Company's view, they are not indicative of the results from the Company's property operations. To facilitate a clear understanding of the Company's historical operating results, FFO should be examined in conjunction with net income (determined in accordance with GAAP) as presented in the financial statements included elsewhere in this release. FFO does not represent cash generated from operating activities in accordance with GAAP and should not be considered to be an alternative to net income (loss) (determined in accordance with GAAP) as an indication of the Company's financial performance or to be an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of the Company's liquidity, nor is it indicative of funds available for the Company's cash needs, including its ability to make cash distributions to shareholders.
Cash Available for Distribution (CAD)
Cash available for distribution, CAD, is a non-GAAP financial measure that is not intended to represent cash flow for the period and is not indicative of cash flow provided by operating activities as determined under GAAP. CAD is presented solely as a supplemental disclosure with respect to liquidity because the Company believes it provides useful information regarding the Company's ability to fund its dividends. Because all companies do not calculate CAD the same way, the presentation of CAD may not be comparable to similarly titled measures of other companies.
Third Quarter Earnings Call and Supplemental Information Package
The Company will be hosting a conference call on Friday, October 27, 2006 at 11:00 a.m. EDT. The conference call can be accessed by calling 1-800-683-1525, reference conference ID #7941296. After the conference, a taped replay of the call can be accessed 24 hours a day through Friday, November 10, 2006 by calling 1-877-519-4471 -- access code 7941296. In addition, the conference call can be accessed via a webcast located on the Company's website at www.brandywinerealty.com.
The Company has prepared a Supplemental Information package that includes financial results and operational statistics to support the announcement of third quarter earnings. The Supplemental Information package is available through the Company's website at www.brandywinerealty.com.
The Supplemental Information package can be found in the "Investor Relations - Financial Reports" section of the web page.
About Brandywine Realty Trust
Brandywine Realty Trust (
For more information, visit Brandywine's website at www.brandywinerealty.com.
BRANDYWINE REALTY TRUST
CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)
September 30, December 31,
2006 2005
----------- -----------
ASSETS
Real estate investments:
Operating properties $ 4,871,978 $ 2,560,061
Accumulated depreciation (499,141) (390,333)
----------- -----------
4,372,837 2,169,728
Construction-in-progress 309,783 273,240
Land held for development 118,181 98,518
----------- -----------
4,800,801 2,541,486
Cash and cash equivalents 16,538 7,174
Escrowed cash 20,153 18,498
Accounts receivable, net 23,400 12,874
Accrued rent receivable, net 67,283 47,034
Investment in marketable securities 187,162 -
Investment in real estate ventures 78,288 13,331
Deferred costs, net 65,378 37,602
Intangible assets, net 325,119 78,097
Other assets 67,500 49,649
----------- -----------
Total assets $ 5,651,622 $ 2,805,745
=========== ===========
LIABILITIES AND BENEFICIARIES' EQUITY
Mortgage notes payable $ 892,935 $ 494,777
Secured note payable 181,759 -
Borrowings under credit facilities 249,998 90,000
Unsecured senior notes, net of discounts 1,863,188 936,607
Accounts payable and accrued expenses 124,814 52,635
Distributions payable 43,752 28,880
Tenant security deposits and deferred rents 57,799 20,953
Acquired lease intangibles, net 107,122 34,704
Other liabilities 14,927 4,466
----------- -----------
Total liabilities 3,536,294 1,663,022
Minority interest 145,832 37,859
-
Beneficiaries' equity:
Preferred shares - Series C 20 20
Preferred shares - Series D 23 23
Common shares 901 562
Additional paid-in capital 2,368,460 1,369,913
Cumulative earnings 399,647 413,282
Accumulated other comprehensive (income) loss 1,038 (3,169)
Cumulative distributions (800,593) (675,767)
----------- -----------
Total beneficiaries' equity 1,969,496 1,104,864
----------- -----------
2,115,328 1,142,723
----------- -----------
Total liabilities and beneficiaries' equity $ 5,651,622 $ 2,805,745
=========== ===========
BRANDYWINE REALTY TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except share and per share data)
Three Months Ended Nine Months Ended
---------------------- ----------------------
September September September September
30, 30, 30, 30,
2006 2005 2006 2005
---------- ---------- ---------- ----------
Revenue
Rents $ 149,374 $ 80,288 $ 437,913 $ 241,207
Tenant reimbursements 23,802 11,710 58,203 34,716
Other 8,418 3,029 17,456 11,813
---------- ---------- ---------- ----------
Total revenue 181,594 95,027 513,572 287,736
Operating Expenses
Property operating
expenses 53,465 26,664 149,828 83,679
Real estate taxes 18,220 9,744 51,203 28,763
Depreciation and
amortization 68,277 28,230 199,275 83,983
Administrative expenses 6,490 4,486 22,704 13,616
---------- ---------- ---------- ----------
Total operating
expenses 146,452 69,124 423,010 210,041
---------- ---------- ---------- ----------
Operating income 35,142 25,903 90,562 77,695
Other income (expense)
Interest income 2,479 304 7,702 966
Interest expense (45,402) (17,762) (128,869) (53,366)
Equity in income of real
estate ventures 370 746 1,798 2,297
Net gain on sale of
interests in real
estate - 4,640 2,608 4,640
Gain on termination of
purchase contract 3,147 - 3,147 -
Income (loss) before
minority interest (4,264) 13,831 (23,052) 32,232
Minority interest -
partners' share of
consolidated real estate
ventures 279 - 560 -
Minority interest
attributable to continuing
operations - LP units 276 (442) 1,267 (1,121)
---------- ---------- ---------- ----------
Income (loss) from
continuing operations (3,709) 13,389 (21,225) 31,111
Discontinued operations:
Income from discontinued
operations 1,150 294 5,018 941
Net gain on disposition
of discontinued
operations 5,188 2,196 5,188 -
Minority interest -
partners' share of
consolidated real
estate venture (1,857) - (2,239) 2,196
Minority interest
attributable to
discontinued operations
- LP units (208) (84) (376) (108)
---------- ---------- ---------- ----------
4,273 2,406 7,591 3,029
---------- ---------- ---------- ----------
Net income (loss) 564 15,795 (13,634) 34,140
Income allocated to
Preferred Shares (1,998) (1,998) (5,994) (5,994)
---------- ---------- ---------- ----------
Income (loss) allocated to
Common Shares $ (1,434) $ 13,797 $ (19,628) $ 28,146
========== ========== ========== ==========
PER SHARE DATA
Basic income (loss) per
Common Share $ (0.02) $ 0.25 $ (0.22) $ 0.51
========== ========== ========== ==========
Basic weighted-average
shares outstanding 90,042,270 56,071,973 89,963,541 55,734,114
Diluted income (loss) per
Common Share $ (0.02) $ 0.24 $ (0.22) $ 0.50
========== ========== ========== ==========
Diluted weighted-average
shares outstanding 90,042,270 56,372,013 90,327,288 55,968,657
BRANDYWINE REALTY TRUST
FUNDS FROM OPERATIONS AND CASH AVAILABLE FOR DISTRIBUTION
(unaudited, in thousands, except share and per share data)
Three Months Ended
------------------------
9/30/06 9/30/05
----------- -----------
Reconciliation of Net Income to Funds from
Operations (FFO):
Net income (loss) $ 564 $ 15,795
Add (deduct):
Minority interest attributable to continuing
operations - LP units (276) 442
Net gains on sale of interests in real estate - (4,640)
Minority interest attributable to discontinued
operations - LP units 208 84
Net gains on disposition of discontinued
operations (5,188) (2,196)
Minority Interest - partners' share of net
gain on sale 1,757 -
----------- -----------
Income (loss) before net gains on sale of
interests in real estate and minority interest (2,935) 9,485
Add:
Depreciation:
Real property - continuing operations 48,204 21,210
Real property - discontinued operations 319 348
Company's share of unconsolidated real
estate ventures 1,651 497
Partners' share of consolidated real estate
ventures (1,474) -
Amortization of leasing costs (includes
acquired intangibles) 19,952 6,612
Perpetual Preferred Share distributions (1,998) (1,998)
----------- -----------
Funds from operations (FFO) $ 63,719 $ 36,154
=========== ===========
FFO per share - fully diluted $ 0.67 $ 0.62
=========== ===========
Weighted-average shares/units outstanding - fully
diluted 94,489,619 58,340,692
EPS - diluted $ (0.02) $ 0.24
=========== ===========
Weighted-average shares outstanding - fully
diluted 90,042,270 56,372,013
Dividend per Common Share $ 0.44 $ 0.44
=========== ===========
Payout ratio of FFO (Dividend per Common Share
divided by FFO per Share) 65.2% 71.0%
CASH AVAILABLE FOR DISTRIBUTION (CAD):
FFO $ 63,719 $ 36,154
Add (deduct):
Rental income from straight-line rents (7,568) (4,316)
Deferred market rental income (2,160) (263)
Amortization:
Deferred financing costs 789 483
Deferred compensation costs 887 685
Second generation capital expenditures (1):
Building improvements (2) (5,214) -
Tenant improvements (7,512) (9,355)
Lease commissions (3,461) (757)
----------- -----------
Cash available for distribution $ 39,480 $ 22,631
=========== ===========
Weighted-average shares/units outstanding - fully
diluted 94,489,619 58,340,692
Dividend per Common Share $ 0.44 $ 0.44
=========== ===========
Cash flows from:
Operating activities $ 90,113 $ 41,262
Investing activities (99,034) (79,813)
Financing activities (917) 52,571
(1) Represents expenditures incurred during the period (regardless if
lease commencement is after quarter end). Excludes first generation
costs, which consist of capital expenditures, tenant improvements and
leasing commissions associated with development and purchase price
adjustments relating to acquisitions (including seller escrows,
purchase price reduction or costs anticipated to initially lease-up
acquired properties).
(2) Building improvements and tenant improvements are combined for all
periods prior to 3/31/06.
BRANDYWINE REALTY TRUST
SAME STORE OPERATIONS - QUARTER
(unaudited and in thousands)
Of the 316 Properties owned by the Company as of September 30, 2006, a
total of 238 Properties ("Same Store Properties") containing an aggregate
of 17.8 million net rentable square feet were owned for the entire three-
month periods ended September 30, 2006 and 2005. Average occupancy for the
Same Store Properties was 92.1% during 2006 and 91.1% during 2005. The
following table sets forth revenue and expense information for the Same
Store Properties:
Quarter Ended
September 30,
------------------
2006 2005
-------- --------
Revenue
Rents (a) $ 77,629 $ 77,527
Tenant reimbursements 14,026 11,397
Other (b) 5,127 1,176
-------- --------
96,782 90,100
Operating expenses
Property operating expenses 30,856 27,748
Real estate taxes 9,619 8,851
-------- --------
40,475 36,599
-------- --------
Net operating income $ 56,307 $ 53,501
======== ========
(a) Includes straight-line rental income of $1,272 for 2006 and $3,461
for 2005
(b) Includes net termination fee income of $4,338 for 2006 and $510 for
2005
The following table is a reconciliation of Net Income to Same Store net
operating income:
Quarter Ended
September 30,
------------------
2006 2005
-------- --------
Net Income (loss) $ 564 $ 15,795
Add/(deduct):
Interest income (2,479) (304)
Interest expense 45,402 17,762
Equity in income of real estate ventures (370) (746)
Depreciation and amortization 68,277 28,230
Net gain on sale of interests in real estate
discontinued operations - (4,640)
Gain on termination of purchase contract (3,147) -
Minority interest - partners' share of consolidated
real estate ventures (279) -
Minority interest attributable to continuing
operations - LP units (276) 442
Income from discontinued operations (4,273) (2,406)
-------- --------
Consolidated net operating income (loss) 103,419 54,133
Less: Net operating income of non same store
properties (49,049) (1,153)
Less: Eliminations and non-property specific net
operating income (loss) 1,937 521
-------- --------
Same Store net operating income (loss) $ 56,307 $ 53,501
======== ========
Contact: Press Contact: Amy Biemiller Director of Communications Brandywine Realty Trust 610-832-7705 amy.biemiller@bdnreit.com Investor Contact: Gerard H. Sweeney Timothy M. Martin Brandywine Realty Trust 610-325-5600 info@brandywinerealty.com
A Stock Cloud is a tag cloud like display of stock ticker symbols. The larger the ticker symbol the more frequent that company distributes press releases.