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BRANDYWINE REALTY TRUST (BDN)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 printed mixed: FFO/share of $0.15 was in line with consensus, while GAAP EPS of -$0.51 missed on $63.4 million non-cash impairments tied to Austin assets; total revenue was resilient at $120.6 million, above S&P Global consensus, aided by improved leasing momentum .
  • Guidance was narrowed and lowered: 2025 FFO guidance to $0.60–$0.66 (midpoint $0.63) and loss per share to -$0.96–-0.90 as land-sale gains were removed given approval timing uncertainty .
  • Operating KPIs strengthened: core occupancy rose to 88.6% and leased to 91.1%; same-store NOI +1.0% (GAAP) and +6.3% (cash); tenant retention improved to 82% .
  • Liquidity improved via $150 million notes (7.039% YTM) and repaying the $43.6 million construction loan; no balance on the $600 million revolver, cash $122.6–$123 million .
  • Near-term catalysts: development leasing/recaps (Uptown ATX 100k sf signed; 3151 Market pipeline), disposition execution to $72.7 million, and possible dividend policy action as CAD coverage normalizes into 2026 .

What Went Well and What Went Wrong

What Went Well

  • Leasing momentum and pipeline: “Leasing activity… increased 35%,” with a 100,000 sf tech lease at One Uptown; company-wide tours up 66% QoQ; core portfolio now 91.1% leased .
  • Liquidity and balance sheet: Issued $150 million notes at a 7.039% yield; revolver undrawn; repaid a $43.6 million construction loan; cash $122.6–$123 million .
  • Dispositions and guidance execution: Sales target raised to $72.7 million (from $50 million midpoint), with $17.6 million completed and $55.1 million under agreement; speculative revenue target largely achieved .

What Went Wrong

  • GAAP loss and impairments: Net loss of -$89.0 million (-$0.51/share) driven by $63.4 million non-cash impairments in Austin; FFO/share down YoY to $0.15 (vs $0.22) .
  • Cash coverage/timing: CAD payout ratio elevated (176%) given deferred tenant allowances and accruing preferred JV dividends; management expects improvement as developments stabilize/recap in 2026 .
  • Guidance reset: 2025 FFO narrowed/lowered ($0.60–$0.66) and EPS loss widened (-$0.96–-0.90) after removing land-sale gains due to approval timing uncertainty .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Total Revenue ($USD Millions)$121.9 $121.5 $120.6
GAAP Diluted EPS ($)-$0.25 -$0.16 -$0.51
FFO per Share - Fully Diluted ($)$0.17 $0.14 $0.15
Net Income Margin % (GAAP)-35.5% (NI -$43.0 / Rev $121.9) -22.3% (NI -$27.4 / Rev $121.5) -73.8% (NI -$89.0 / Rev $120.6)
Same-Store NOI Growth % (GAAP)-1.6% -2.6% +1.0%
Same-Store NOI Growth % (Cash)+0.5% +2.3% +6.3%

YoY comparison (Q2 2025 vs Q2 2024):

MetricQ2 2024Q2 2025
Total Revenue ($USD Millions)$125.3 $120.6
GAAP Diluted EPS ($)$0.17 -$0.51
FFO per Share - Fully Diluted ($)$0.22 $0.15

KPIs and leasing metrics:

KPIQ4 2024Q1 2025Q2 2025
Core Occupancy %87.8% 86.6% 88.6%
Core Leased %89.9% 89.2% 91.1%
Tenant Retention %76% 55% 82%
Rental Rate Mark-to-Market (GAAP) %+5.9% +8.9% +2.1%
Rental Rate Mark-to-Market (Cash) %+1.1% +2.3% -4.7%

Regional snapshot (Q2 2025):

RegionOccupied %Leased %
Philadelphia93.5% 96.5%
Pennsylvania Suburbs88% 90%
Austin78% 78%

Non-GAAP highlights:

  • Same-store NOI excluding other items: +1.0% (GAAP) and +6.3% (cash) in Q2; cash NOI reflects reduced straight-line rent and amortization impacts .
  • FFO reconciliation: Q2 FFO/share $0.15 with impairments added back and JV impacts; payout ratio 100% in Q2 .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Loss per Share (GAAP)FY 2025-$0.56 to -$0.46 -$0.96 to -$0.90 Lowered
FFO per Share (REIT)FY 2025$0.61 to $0.71 $0.60 to $0.66 Lowered/Narrowed
Year-end Core Occupancy %FY 202588–89% 88–89% Maintained
Year-end Core Leased %FY 202589–90% 89–90% Maintained
Rental MTM (GAAP) %FY 20253–4% 3.8–4.2% Raised
Rental MTM (Cash) %FY 2025-3% to -2% -2.0% to -1.5% Raised
Same-Store NOI (GAAP) %FY 2025-1% to +1% 0% to +1% Raised
Same-Store NOI (Cash) %FY 2025+1% to +3% +2% to +3% Raised
Tenant Retention %FY 202559–61% 62–63% Raised
Property Sales (ex land)FY 2025$40–$60 million $72.7 million ($17.6 done; $55.1 under agreement) Raised
Speculative Revenue ($mm)FY 2025$27–$28 ($25.4 achieved) $27–$28 ($27.0 achieved) Achieved/Updated
Development StartsFY 2025One One; commenced Commenced
Financing ActivityFY 2025Refinance $50m construction loan $159m unsecured reissuance at 7.039% YTM; repaid $50m construction loan Executed
DividendsFY 2025$0.15 declared (Q4/Q1 cadence) $0.15 declared (Q2) Maintained
Share BuybacksFY 2025None None Maintained
Weighted Avg SharesFY 2025179.0 million 179.0 million Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Flight to quality & leasing2024: Spec revenue/retention exceeded plan; 2025 FFO guided $0.60–$0.72; core leased 89.9% . Q1: 92% of spec revenue target achieved; mark-to-market +8.9% (GAAP), +2.3% (cash) .Leasing +35% QoQ; tours +66%; core leased 91.1%; 100k sf tech lease at One Uptown .Improving momentum in leasing pipeline
Capital markets & liquidity2024: $300m+ dispositions; revolver undrawn; $90m cash . Q1: $70m term loan repaid; $65m revolver drawn; $29m cash .$150m notes (7.039% YTM); revolver undrawn; repaid $43.6m construction loan; ~$123m cash .Stronger liquidity; borrowing costs lower vs 2024
Development leasing & recaps2024: 3151 Market delivered; 783k sf announced; Avira at high occupancy . Q1: Avira 96% leased; forward leasing 306k sf .Uptown ATX 40% leased; 100k sf 10-year lease; Solaris 89% leased; recap plans in 2H25–2026 .Progressing; stabilization timelines into 2026
Dividend policy2024: $0.15 declared; FFO payout ~70.6% FY . Q1: payout 107% on $0.14 FFO/share .Board reviewing; flexibility to reduce without REIT issue; CAD coverage to improve in 2026 .Potential action contingent on sales/recaps
Austin market & asset actions2024: Barton Skyway sold; portfolio sales . Q1: pipeline growing; core portfolio 86.6% occupied .Austin 78% occupied/leased; impairments taken; River Place rezoning; another Austin property held for sale .Transitioning; repositioning via sales/conversions
Life science (3151 Market)2024: delivered Q4 . Q1: pipeline forming .Mix of office/life science tours; stabilization moved to Q4 2026 .Recovery in fundraising; longer lease execution cycles

Management Commentary

  • “We are pleased with progress on our 2025 business plan highlighted by achieving over 98% of our speculative revenue target… Tenant demand continues to improve… tour activity up 66%… signed a 100,000 square foot lease at our One Uptown office development… Solaris… is now 89% leased.” — Gerard H. Sweeney, CEO .
  • “With assets sold or under firm agreement, we are increasing our sales target… to $72.7 million… Our liquidity remains in excellent shape… no outstanding balance on our $600 million unsecured line… $123 million cash… revising our FFO range to $0.60 to $0.66.” — Gerard H. Sweeney, CEO .
  • “Our second quarter FFO totaled $26.1 million or $0.15… met consensus estimates… unsecured borrowing costs decreased ~20% vs 2024 issuance (8.875% vs 7.04% YTM).” — Tom Wirth, CFO .
  • “We are incurring $0.14 per share of negative carry in our development projects, including about $0.10 per share in non-cash charges for our preferred structures… our revised FFO range… midpoint still above consensus estimates.” — Gerard H. Sweeney, CEO .
  • “Hotel development… slightly less than $60 million… anticipate a 10% return on cost… exploring JV/equity partners or presale at/after stabilization.” — Gerard H. Sweeney, CEO .

Q&A Highlights

  • Development recap appetite: Active discussions with private investors; aim to convert preferred JV structures, return capital, lower leverage; 1–2 recaps targeted in 2H25, broader impact in 2026 .
  • Dividend flexibility: Ability to reduce dividend without breaching REIT requirements, contingent on dispositions and tax outcomes; board reviewing in 2H25 .
  • Disposition market depth: Higher-quality office assets seeing robust bid lists; recent $73 million dispositions at ~6.9% cap; institutions re-engaging amid inventory reductions from conversions .
  • Austin leasing details: Uptown ATX 100k sf, 10-year lease commencing early 2026; optionality for tenant expansion; pipeline includes full-floor users; Austin showing demand revival .
  • Vacancy reduction plan: River Place targeted for rezoning to residential; selective sales; PA suburban assets progressing via renovations and leasing .

Estimates Context

Q2 2025 actuals vs S&P Global consensus:

MetricConsensus (Q2 2025)Actual (Q2 2025)Delta
Primary EPS (GAAP) ($)-0.14518*-0.51 Miss (impairments)
FFO / Share (REIT) ($)0.14818*0.15 In line/slight beat
Revenue ($USD Millions)117.97*120.57 Beat

Estimate metadata (S&P Global):

  • Primary EPS # of estimates: 4*; Revenue # of estimates: 5*; Target Price consensus mean: $4.53* with 6* estimates [functions.GetEstimates].

Values retrieved from S&P Global.*

Note: S&P Global “actual” revenue for Q2 is listed at $105.34 million in their dataset, which may reflect definitional differences; company-reported total revenue was $120.57 million per the 8-K. We use company-reported figures for actuals and S&P Global for consensus .

Key Takeaways for Investors

  • FFO resilience vs GAAP drag: The impairment-driven GAAP loss masks steadier FFO/share at $0.15; watch for continued alignment with consensus amid development carry .
  • Guidance reset is a sentiment headwind: Removal of land gains and narrower FFO guidance reduce 2025 upside; upside hinges on execution of recaps and dispositions in 2H25 .
  • Leasing traction supports medium-term NOI: Strength in Philadelphia and improving Austin demand underpin same-store cash NOI growth (+6.3% in Q2) and rising leased percentages .
  • Liquidity improved and cost of debt down: New 2029 notes at ~7.04% YTM, revolver undrawn, construction loan repaid; provides flexibility to selectively de-lever and fund capex .
  • Dividend optionality: Elevated CAD payout (~176% in Q2) and management commentary suggest possible dividend reduction to accelerate balance sheet repair; monitor 2H25 board decisions .
  • Recap catalysts: One-to-two JV recaps could return capital, reduce preferred accruals (~$0.10/share non-cash drag), and improve leverage metrics into 2026 .
  • Asset sales: Raised to $72.7 million with visibility on remaining transactions; supportive to liquidity and potential deleveraging .

Additional Data and Notes

  • Q2 2025 financial statements included: consolidated balance sheet and statements of operations; key balance sheet items: cash $122.6 million; unsecured notes $1.78 billion; total assets $3.39 billion .
  • Dividends: $0.15 per share declared May 21, paid July 17; Q2 payout ratio (on FFO/share) 100% .
  • Same-store NOI detail (Q2): GAAP NOI +2.6% and cash NOI +7.9%; excluding other items (termination/bad debt), GAAP +1.0% and cash +6.3% .

Citations:

  • Q2 2025 press release and 8-K: .
  • Q2 2025 earnings call: .
  • Prior quarters: Q1 2025 8-K/PR ; Q4 2024 PR .
  • Bond pricing/closing PRs: .