Management Comments
“We accomplished or exceeded many of our 2023 business plan objectives including our same store results and rental rate mark-to-markets,” stated
Fourth Quarter Highlights
Financial Results
- Net loss available to common shareholders:
$(157.4) million , or$(0.91) per share. These results include a$(152.6) million , or$(0.89) per share, non-cash impairment charge related to four wholly-owned operating properties located in the metropolitan D.C. area and our unconsolidated joint ventures. - Funds from Operations (FFO) available to common shareholders:
$47.2 million , or$0.27 per diluted share.
Portfolio Results
- Operating Portfolio: 88.0% occupied and 89.6% leased.
- New and Renewal Leases Signed: 240,000 square feet in the fourth quarter and 1,517,000 square feet for the full year 2023 in our wholly-owned portfolio and including our joint ventures totaled 552,000 square feet in the fourth quarter and 2,746,000 square feet for the full year 2023.
- Rental Rate Growth: 13.4% on an accrual basis and 7.5% on a cash basis.
- Tenant Retention Ratio: 45% in fourth quarter and 49% for 2023.
- Same Store Results: Increased 1.2% on an accrual basis and 8.3% on a cash basis.
Transaction Activity
Disposition Activity
- On
October 31, 2023 , we sold a retail property, located at200 North Radnor Chester Road inRadnor, Pennsylvania for a gross sales price of$14.2 million or$794 per square foot. We received net cash proceeds of$13.8 million and recorded a gain of$7.7 million during the fourth quarter of 2023.
- On
December 1, 2023 , we sold an office property, located at8521 Leesburg Pike inVienna, Virginia for a gross sales price of$11.0 million or$73 per square foot. We received net cash proceeds of$10.2 million . Prior to the sale, we recognized an impairment loss of$12.3 million on the property based upon the executed purchase and sale agreement during the fourth quarter of 2023. - We owned an option to purchase 50 acres of land located at
15000 Roosevelt Blvd inPhiladelphia, Pennsylvania . DuringDecember 2023 , we sold that option for a gross sales price of$9.6 million and received net cash proceeds of$8.7 million and recorded income of$4.0 million during the fourth quarter of 2023.
Finance Activity
- During
December 2023 , we repurchased$10.0 million of our outstanding unsecured notes due 2024 at a price of$98.6 and paid accrued interest of$0.1 million . As a result of the repurchase, we recorded a gain from the early extinguishment of debt of$0.1 million . - We had no outstanding balance on our
$600.0 million unsecured revolving credit facility as ofDecember 31, 2023 . - We had
$58.3 million of cash and cash equivalents on-hand as ofDecember 31, 2023 .
Results for the Three and Twelve-Month Periods Ended
Net loss available to common shareholders totaled
FFO available to common shareholders and units in the fourth quarter of 2023 totaled
Net loss totaled
FFO available to common shareholders and units for the year ended 2023 totaled
Operating and Leasing Activity
In the fourth quarter of 2023, our Net Operating Income (NOI), excluding termination fees, bad debt expense and other income items increased 1.2% on an accrual basis and increased 8.3% on a cash basis for our 68 same store properties, which were 88.0% and 90.3% occupied on
We leased approximately 240,000 square feet and we commenced occupancy on 209,000 square feet during the fourth quarter of 2023. The fourth quarter occupancy activity includes 86,000 square feet of renewals, 88,000 square feet of new leases and 35,000 square feet of tenant expansions. We have an additional 195,000 square feet of executed new leases scheduled to commence subsequent to
We experienced 45% tenant retention ratio in our core portfolio with net negative absorption of (63,000) square feet during the fourth quarter of 2023. Fourth quarter rental rate growth increased 13.4% as our renewal rental rates increased 5.9% and our new lease/expansion rental rates increased 24.6%, all on an accrual basis.
For the year, our 2023 leasing activity totaled approximately 1,517,000 square feet and commenced occupancy on 767,000 square feet. Our 2023 occupancy activity includes 424,000 of renewals, 242,000 of new leases and 101,000 square feet of tenant expansions.
At
Distributions
On
2024 Earnings and FFO Guidance
Based on current plans and assumptions and subject to the risks and uncertainties more fully described in our
Guidance for 2024 | Range | ||
Loss per diluted share allocated to common shareholders | to | ||
Plus: real estate depreciation, amortization | 1.26 | 1.26 | |
FFO per diluted share | to |
Our 2024 FFO key assumptions include:
Year-end Core Occupancy Range : 87-88%;Year-end Core Leased Range : 88-89%;- Rental Rate Growth (accrual): 11-13%;
- Rental Rate Growth (cash): 0-2%;
- Same Store (accrual)
NOI Growth Range : (1)-1%; - Same Store (cash)
NOI Growth Range : 1-3%; - Speculative Revenue Target:
$24.0 -$25.0 million ,$19.3 million achieved; Tenant Retention Rate Range : 51-53%;- Property Acquisition Activity: None;
- Property Sales Activity (excluding land):
$80 -$100 million ; - Joint Venture Activity: None;
- Development Starts: None;
- Financing Activity: Refinance our unsecured bonds due
October 2024 ($340 million outstanding); - Share Buyback Activity: None; and
- Annual earnings and FFO per diluted share based on 174.0 million fully diluted weighted average common shares.
About
Conference Call and Audio Webcast
We will release our fourth quarter earnings after the market close on
Looking Ahead – First Quarter 2024 Conference Call
We anticipate we will release our first quarter 2024 earnings on
Press Release
Our Complete press release and related financial statements and schedules are available on the Investor Relations page of our website at www.brandywinerealty.com
Forward-Looking Statements
This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as “will,” “strategy,” “expects,” “seeks,” “believes,” “potential,” or other similar words. Because such statements involve known and unknown risks, uncertainties and contingencies, actual results may differ materially from the expectations, intentions, beliefs, plans or predictions of the future expressed or implied by such forward-looking statements. These forward-looking statements, including our 2024 guidance and the progress of our projects under development, are based upon the current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and not within our control. Such risks, uncertainties and contingencies include, among others: risks related to the impact of COVID-19 and other potential future outbreaks of infectious diseases on our financial condition, results of operations and cash flows and those of our tenants as well as on the economy and real estate and financial markets; reduced demand for office space and pricing pressures, including from competitors, that could limit our ability to lease space or set rents at expected levels or that could lead to declines in rent; uncertainty and volatility in capital and credit markets, including changes that reduce availability, and increase costs, of capital or that delay receipt of our planned debt financings and refinancings; the effect of inflation and interest rate fluctuations, including on the costs of our planned debt financings and refinancings; the potential loss or bankruptcy of tenants or the inability of tenants to meet their rent and other lease obligations; risks of acquisitions and dispositions, including unexpected liabilities and integration costs; delays in completing, and cost overruns incurred in connection with, our developments and redevelopments; disagreements with joint venture partners; unanticipated operating and capital costs; uninsured casualty losses and our ability to obtain adequate insurance, including coverage for terrorist acts; additional asset impairments; our dependence upon certain geographic markets; changes in governmental regulations, tax laws and rates and similar matters; unexpected costs of REIT qualification compliance; and costs and disruptions as the result of a cybersecurity incident or other technology disruption. The declaration and payment of future dividends (both timing and amount) is subject to the determination of our
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 widely recognized measures of real estate investment trust performance. At the end of this press release, we have provided a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measure.
Funds from Operations (FFO)
We compute FFO in accordance with standards established by the
Net Operating Income (NOI)
NOI (accrual basis) is a financial measure equal to net income available to common shareholders, the most directly comparable GAAP financial measure, plus corporate general and administrative expense, depreciation and amortization, interest expense, non-controlling interest in the
In our analysis of NOI, particularly to make comparisons of NOI between periods meaningful, it is important to provide information for properties that were in-service and owned by us throughout each period presented. We refer to properties acquired or placed in-service prior to the beginning of the earliest period presented and owned by us through the end of the latest period presented as
Core Portfolio
Our core portfolio is comprised of our wholly-owned properties, excluding any properties currently in development, re-development, re-entitlement or recently completed and not stabilized.
Company / Investor Contact:
EVP & CFO
610-832-7434
tom.wirth@bdnreit.com
Source:
2024 GlobeNewswire, Inc., source