Executive Summary

Q3 2025 FFO per share was $0.16, a penny above consensus, while GAAP loss per share was $(0.15); total revenue was $121.4M. Management narrowed and lowered 2025 FFO guidance to $0.51–$0.53 (from $0.60–$0.66), reflecting a $0.07/share Q4 loss on debt extinguishment and slower-than-planned development recapitalizations .
Operationally resilient: core portfolio 88.8% occupied and 90.4% leased; same-store NOI rose 1.4% accrual and 2.1% cash; tenant retention 68%. Mark-to-market was negative in Q3 due to a single Austin renewal; excluding that, GAAP mark-to-market would have been +6.2% and cash +2.8% .
Balance sheet actions de-risked: issued $300M 6.125% unsecured notes, repaid a $245M secured term loan, unencumbering ~ $45M of NOI; ended Q3 with $75.5M cash and full availability on $600M revolver. Post-Q3, BDN acquired the partner’s preferred equity interest in 3025 JFK for $70.5M; 3025 JFK will be consolidated in Q4 with a path to materially higher 2026 NOI as occupancy ramps .
Stock reaction catalysts: guidance reset lower near-term; clear 2026 earnings bridge via stabilization/recaps (3025 JFK, Solaris, 1UPTOWN, 3151 JFK); fully unencumbered wholly owned operating portfolio improves financial flexibility and leasing competitiveness .

What Went Well and What Went Wrong

What Went Well
- “We continue to have one of the office sector’s lowest forward lease expiration schedule with only 4.9% of revenues expiring through 2026,” supporting visibility and reduced rollover risk .
- Strong leasing and pipeline: 343k sf signed including JVs (164k sf wholly owned), with 182k sf of executed leases commencing post-Q3; same-store NOI grew 1.4% accrual/2.1% cash .
- Balance sheet/portfolio quality improved: $300M unsecured bond issuance enabled repayment of $245M secured loan and unencumbered ~ $45M of NOI; no borrowings on the $600M revolver and $75.5M cash at quarter-end .
What Went Wrong
- Guidance cut: 2025 FFO guidance lowered to $0.51–$0.53 (from $0.60–$0.66), driven by Q4 debt extinguishment charge (~$0.07/share) and delayed development recapitalizations previously expected to contribute ~$0.04/share in 2H25 .
- Pricing pressure headline: portfolio mark-to-market declined (1.8)% GAAP and (4.8)% cash; management noted a single Austin renewal skewed results (ex-renewal, GAAP +6.2%, cash +2.8%) .
- Development stabilization slip: 3151 JFK and 1UPTOWN now expected to stabilize later than initially planned; negative carry and delayed recaps weigh on near-term FFO and leverage metrics into late 2025 .

Financial Results

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue ($USD Millions)	$121.5	$120.6	$121.4
GAAP Diluted EPS ($)	$(0.16)	$(0.51)	$(0.15)
FFO per Share – Diluted ($)	$0.14	$0.15	$0.16
EBIT Margin %	1.61%*	6.54%*	6.67%*
Net Income Margin %	(24.26%)*	(84.18%)*	(25.13%)*

Note: * Values retrieved from S&P Global.

KPIs and operating metrics

KPI	Q3 2025
Core Portfolio Occupancy	88.8%
Core Portfolio Leased	90.4%
New + Renewal Leases (Wholly Owned / Total incl. JVs)	164k sf / 343k sf
Tenant Retention	68%
Mark-to-Market (GAAP / Cash)	(1.8)% / (4.8)%
Same-Store NOI Growth (GAAP / Cash)	+1.4% / +2.1%

Consensus vs. Actual (S&P Global basis)

Metric	Q2 2025 Estimate	Q2 2025 Actual	Surprise	Q3 2025 Estimate	Q3 2025 Actual	Surprise
FFO / Share (REIT)	0.1482*	0.15	+0.00	0.1501*	0.16	+0.01
Primary EPS ($)	(0.1452)*	(0.1472)*	(0.00)	(0.1191)*	(0.1512)*	(0.03)
Revenue ($)	117.97M*	105.34M*	(12.63M)	118.28M*	103.14M*	(15.14M)

Note: S&P “Revenue” may exclude certain non-rental items; figures marked with * are values retrieved from S&P Global.

Segment breakdown: Not applicable (BDN reports consolidated office portfolio metrics and same-store NOI rather than discrete operating segments) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
FFO per Share (Diluted)	FY2025	$0.60 – $0.66	$0.51 – $0.53	Lowered
GAAP Loss per Share	FY2025	$(0.96) – $(0.90)	$(1.05) – $(1.03)	Lowered
Year-End Core Occupancy	FY2025	88% – 89%	88% – 89%	Maintained
Year-End Core Leased	FY2025	89% – 90%	89% – 90%	Maintained
Rental Rate Mark-to-Market (GAAP)	FY2025	3.8% – 4.2%	3.8% – 4.2%	Maintained
Rental Rate Mark-to-Market (Cash)	FY2025	(2.0)% – (1.5)%	(2.0)% – (1.5)%	Maintained
Same-Store NOI (GAAP)	FY2025	0% – 1%	0% – 1%	Maintained
Same-Store NOI (Cash)	FY2025	2% – 3%	2% – 3%	Maintained
Speculative Revenue Target (Achieved)	FY2025	$27.0 – $28.0M ($27.0M achieved)	$27.0 – $28.0M ($27.3M achieved)	Slightly higher achieved
Property Sales (ex land)	FY2025	$72.7M target	$72.7M complete	Completed
Quarterly Dividend per Share	3Q/4Q 2025	$0.15 (Q2)	$0.08 (Q3 declared)	Reduced
Capital Markets	FY2025	$150M tap at 7.039% yield (June)	$300M 5-yr at 6.125%; repay $245M secured; Q4 ~$0.07/share loss on extinguishment	Executed; Q4 charge

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2 2025)	Current Period (Q3 2025)	Trend
Development recapitalizations	Narrowed FY25 FFO range; discussed bond issuance and debt management; no specific recap execution yet	3025 JFK partner preferred buyout in Oct; recaps slipped by 1–2 quarters; prior expectation of ~$0.04/share FFO benefit in 2H25 now pushed into 2026	Slower than planned near-term; clearer 2026 uplift
Leasing and “flight to quality”	Positive mark-to-market 8.9% GAAP/2.3% cash in Q1; tenant demand improved in Q2; leasing up 35% QoQ	51% of new leases were flight-to-quality; tours up; pipeline 1.7M sf; excluding one Austin renewal, MTM was positive	Strengthening in higher quality assets
Philadelphia supply/demand	n/a	Potential 11 buildings (5.1M sf) being removed for residential conversions; narrowing competitive set	Structural supply tailwind
Austin market recovery	Sold under-leased assets; pipeline improvement noted	108 tenants seeking 3.5M sf; Q3 leasing +70% QoQ; Domain submarket ~96% occupied; train station underway (1H27) catalyzing demand	Improving demand, esp. Class A/Domain
Dividend & capital allocation	Q1/Q2 paid $0.15 quarterly	Dividend reduced to $0.08 to conserve ~$50M capital; aim to reset CAD payout and reinvest; potential to grow dividend as NOI ramps	Lower near-term, optionality preserved
Balance sheet strategy	Repaid $70M term loan; $150M bond at 7.039% yield	$300M at 6.125%; repaid $245M CMBS; unencumbered ~$45M NOI; target investment-grade metrics over time	Improving flexibility; path to IG reiterated

Management Commentary

“We continue to have one of the office sectors lowest forward lease expiration schedule with only 4.9% of revenues expiring through 2026.” – Gerard H. Sweeney, CEO .
“We recently issued $300 million of 5 year unsecured notes at 6.125% and used the majority of those proceeds to prepay a $245 million secured loan… we unencumbered approximately $45 million of net operating income and… have a fully unencumbered wholly owned operating portfolio.” .
“Our FFO for the quarter was $0.16 a share, or one penny above consensus… we will be recording in the fourth quarter an earnings charge totaling $0.07 per share related to the early prepayment of our secured notes.” .
“Due to… slower stabilization… and slower than anticipated interest rate decreases, [recaps] are occurring a quarter or two behind schedule… our revised FFO range… is $0.51 to $0.53.” .
On 3025 JFK: “The $8 million of annualized NOI for the fourth quarter will increase to over $20 million in the first quarter and grow from there.” – Tom Wirth, CFO .

Q&A Highlights

Recap timeline and mechanics: Preferred structures created an earnings drag via accrued but unpaid returns; 3025 JFK buyout eliminates ~$0.04/share 2026 drag; refinancing the ~8% construction loan with unsecured/agency debt could save ~~200 bps (~~$4M interest). Solaris recap targeted 1H26 as concessions burn off; 3151 JFK partner buyout targeted by Q1 2026; 1UPTOWN likely late 1H–early 2H 2026 recap post more leasing .
Debt strategy: Swapped CMBS for unsecured despite only ~25 bps rate difference to unencumber assets for leasing and capital flexibility; reset bond curve at par following a costly June tap at premium .
Dividend reset: Lowered to $0.08 to internally fund ~$50M given public cost of capital; board views new level as sustainable with potential to grow as NOI ramps in 2026 .
IBM 2027 Austin move-out: Estimated ~$12M revenue headwind; plan to offset via development NOI growth and renovations of 902/904/906 Uptown buildings timed with move-outs; zoning increases (FAR to 12.1) provide flexibility .

Estimates Context

Q3 vs S&P consensus: FFO/share beat by ~$0.01 ($0.16 vs $0.1501); GAAP EPS missed (–$0.151 vs –$0.119); S&P “Revenue” missed ($103.1M vs $118.3M). Note: S&P Revenue definition differs from GAAP “total revenue” ($121.4M GAAP) .
- S&P data points: FFO/share 0.1501 (est); EPS (GAAP) –0.119 (est), –0.151 (act); Revenue $118.28M (est), $103.14M (act). Values retrieved from S&P Global.
Forward Q4 2025: S&P consensus FFO/share ~0.0865; near-term Street numbers likely drift lower given updated FY guide ($0.51–$0.53) and Q4 extinguishment charge; 2026 estimates may need upward revision as 3025 JFK, Solaris and other developments contribute higher NOI. Values retrieved from S&P Global .

Key Takeaways for Investors

Near-term reset, medium-term inflection: 2025 FFO cut embeds Q4 extinguishment cost and delayed recaps; 2026 earnings bridge is credible with 3025 JFK consolidating and NOI ramping from >$8M annualized in Q4 to >$20M in Q1 2026, plus additional development stabilization .
Balance sheet flexibility improved: Fully unencumbered wholly owned operating portfolio and ample liquidity (no revolver borrowings; $75.5M cash) should support leasing and capital options despite higher-for-longer rates .
Operating resilience with limited rollover: Only 4.9% of revenues expiring through 2026; same-store NOI growth positive; flight-to-quality benefits BDN’s assets, particularly in Philadelphia CBD .
Market structure tailwind: Philadelphia office conversions (potential ~11 buildings, 5.1M sf) reduce competitive set; Domain submarket in Austin remains tight, with improving tech demand and transit catalyst (station delivery 1H27) .
Watch catalysts: Finalize additional recaps (3151 JFK, 1UPTOWN), refinance 3025 JFK construction debt, incremental leasing at 1UPTOWN and 3151 JFK, and potential selective disposals in 2026 .
Dividend floor set: $0.08 quarterly prioritizes internal funding and deleveraging; upside hinges on execution and NOI ramp across developments .
Risk checks: Austin renewal pricing drag (albeit idiosyncratic), 3151 JFK lease-up timing, IBM 2027 move-out mitigation, and fixed charge coverage headwinds until refinancing tailwinds kick in .

Appendix: Additional Details

Other notable Q3 items

Asset sales: Sold 223k sf Austin property for $55.1M ($247/sf), 70% occupied .
3025 JFK JV change: Redeemed partner’s preferred equity for $70.5M; assuming $178M construction loan (matures July 2026). Office 92% leased/24% occupied; residential 98% occupied .
Capital activity: $300M 6.125% unsecured notes (closed Oct 3); repaid $245M secured term loan (Oct 6), incurring Q4 loss on extinguishment ~~$12.3M (~~$0.07/share) .
Dividend: Declared $0.08 per share payable Oct 23, 2025 (record Oct 9) .

Citations:

Q3 2025 8-K and press release: .
Q2 2025 8-K: .
Q1 2025 8-K: .
Q3 2025 Earnings Call: .
S&P Global estimates: Values marked with * are retrieved from S&P Global.

BRANDYWINE REALTY TRUST (BDN)·Q3 2025 Earnings Summary