BDN

Brandywine Realty Trust stock barely moved on Friday, up just 0.3% around US$2.96, yet the Q3 2026 release was anything but flat. The trust delivered core Funds From Operations per share right in line with guidance while still reporting a net loss of US$22.3 million, which leaves the headline story looking mixed if you focus only on the quarter. The real action sits on the balance sheet. A heavy 2026 asset sale program has already taken a meaningful bite out of debt, reset interest costs and now forces investors to weigh a modest short-term move in Brandywine Realty Trust against a multi-year effort to repair leverage and valuation strain. Like the balance sheet clean-up story at Brandywine Realty Trust but concerned about the ongoing net loss and leverage risk? Compare it with real estate stocks from our list of solid balance sheet and fundamentals stocks (26 results). - Revenue (Q3 2026 vs Q3 2025): US$125.6 million vs. US$103.1 million (higher year on year) - Net Loss (Q3 2026 vs Q3 2025): US$22.3 million loss vs. US$26.2 million loss (narrower quarterly loss) - Basic EPS (Q3 2026 vs Q3 2025): US$0.13 loss per share vs. US$0.15 loss per share (smaller loss per share) - Funds From Operations (FFO, Q3 2026 vs Q3 2025): US$23.6 million vs. US$28.0 million (lower FFO) Brandywine's big 2026 asset sales rapidly cut leverage and interest costs. Ask Charlie what Brandywine gave up to slash debt so fast. The bullish view argues Brandywine Realty Trust can turn project execution and recycling into a cleaner balance sheet and healthier earnings profile. "The main factor that has to go right is the execution of the balance sheet plan, which pairs over US$300m of asset sales at around 8% cap rates with debt reduction and high coupon bond repurchases, while Austin occupancy and life science leasing gradually improve." On that score, the trust has hit several milestones. 2026 sale guidance was lifted to US$681m and fully completed. Around US$390m of debt was repaid, including roughly US$140m of bonds with coupons near 8.7%. This cuts interest costs and brings net debt to EBITDA toward the guided 7.8 to 8.0x year end range. Not everyone reads the same price the same way. → See the higher figure this Narrative lands on, and how it gets there. Bearish views hinge on the idea that even with asset sales, Brandywine Realty Trust stays boxed in by heavy borrowing and tight coverage. "While the company has contracted or closed around US$305 million of 2026 asset sales at roughly 8% cap rates and plans to repurchase higher coupon bonds with a portion of the proceeds, guidance still points to core net debt to EBITDA of about 8.0 to 8.4x and combined leverage of 8.4 to 8.8x with fixed charge coverage of only 1.8 to 2.0x, which leaves limited room for error and could constrain earnings growth if cash flow from developments lags." Latest numbers show real progress, with combined net debt to EBITDA now around 7.6x and year end guided to 7.8 to 8.0x, plus US$175 million of cash and an undrawn revolver. Even so, a Q3 CAD payout ratio of 103% and ongoing net losses keep the margin for error slim, so the concern about constrained flexibility is weakened but not removed. Brandywine Realty Trust just reported earnings that highlight how a cleaner balance sheet may not resolve every concern in its market. The potential opportunity is identifying stocks that could be undervalued before the market reassesses them. - Company 1 - 27% below our estimate - supplies liquid cooling and power systems that handle dense GPU data center configurations. - Company 2 - 38% below our estimate - expands digital payment infrastructure by integrating with major online merchants across developing payment channels. - Company 3 - 50% below our estimate - develops fee-focused banking services enabled by a recent acquisition that broadens commercial and household relationships. Three companies from the same screener. Open every one of the 29 undervalued companies on it → This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include BDN. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

This article first appeared on GuruFocus. - Net Loss: $22.3 million, or $0.13 per share, in Q3 2026. - Core FFO: $24.6 million, or $0.14 per diluted share, in line with guidance and consensus; full-year midpoint maintained at $0.55 per share. - Q4 Core FFO Guidance: $0.16 to $0.18 per share. - Property NOI: $68.5 million in Q3, $1.1 million below forecast due to lower retail and residential income; Q4 expected at ~$68 million. - Same-Store Results: -0.6% GAAP, +1.7% cash basis, both within guidance ranges. - Leasing Activity: 558,000 sq ft in Q3 (highest of the year), including 372,000 sq ft wholly owned; 163,000 sq ft commenced after quarter-end. - Portfolio Occupancy: Wholly owned portfolio 90.5% leased and 89% occupied; negative net absorption of ~7,000 sq ft. - Tenant Retention: 50% in Q3; full-year midpoint target raised to 54%. - Capital Ratio: 8.9% for the quarter; 2026 range narrowed and lowered to 11%12%. - Mark-to-Market: GAAP +10.8%, cash +5.7%; full-year GAAP guidance narrowed to 5%6%. - Speculative Revenue: Target raised by $1 million to $19.5 million, 100% achieved (~12% above initial 2026 plan). - Asset Sales: 2026 sales guidance raised from $305 million to $681 million, 100% achieved and funded; weighted average cap rate 4.7% cash / 4.9% GAAP; reduced forward capital commitments by ~$79 million. - Debt Reduction: $390 million repaid in Q3 (>13% of combined debt), $218 million above initial 2026 target; ~$24 million annual interest expense savings wholly owned; additional $100 million planned in Q4. - Net Debt to EBITDA: 7.6x annualized in Q3 (down from 9.0x in Q2); year-end midpoint lowered to 7.8x8.0x. - Interest Coverage: Debt service and interest coverage ratios both 1.7x in Q3. - Liquidity: $175 million cash on hand and no outstanding balance on unsecured line of credit after early October payoff. - G&A Expense: $0.5 million above forecast in Q3 on compensation; Q4 expected ~$7 million; full-year range $36$37 million. - Third-Party Fees: $2.1 million in Q3, $0.5 million above forecast on third-party leasing fees. - Interest Expense: Q4 expected ~$35 million (including $400,000 capitalized interest); full-year range lowered by $3 million at midpoint. - CAD Payout Ratio: 103% in Q3. - Debt Extinguishment Costs: ~$9.2 million incurred in Q3, excluded from core FFO; $6.2 million loss on early extinguishment of the $57.3 million CPACE loan tied to 3151 Market Street. - Share Count: Q4 diluted share count expected ~177 million, reflecting Q3 buyback. - Warning! GuruFocus has detected 7 Warning Signs with BDN. - Is BDN fairly valued? Test your thesis with our free DCF calculator. Release Date: October 22, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. - Brandywine Realty Trust (NYSE:BDN) exceeded or met its 2026 business plan for capital markets, operations, and liquidity in Q3. - The company increased its 2026 sales guidance from $305 million to $681 million, achieving 100% of its sales target. - Debt reduction of $390 million (over 13% of combined debt) was completed, lowering net debt to EBITDA from 9.0x in Q2 to 7.6x in Q3. - Leasing activity was the highest for the year at 558,000 square feet, with strong tour volume and conversion rates. - Liquidity improved significantly with no outstanding balance on the line of credit and $175 million of cash on hand. - Same-store results were negative 0.6% on a GAAP basis, indicating a decline in property-level profitability. - Austin portfolio occupancy is only 66%, dragging down overall company occupancy by about 400 basis points. - The upcoming IBM lease expiration in 2027 will result in an $11 million net NOI impact. - CAD payout ratio was 103%, higher than desired, due to increased tenant renewals and revenue-maintaining capital expenditures. - FFO per share of $0.14 was only in line with guidance, showing limited growth, and full-year FFO guidance midpoint was maintained at $0.55, not increased. Q: Why did Brandywine decide to sell 3151 Market Street rather than lease it up, and what does that say about life science leasing dynamics in the Philadelphia CBD? A: CEO Gerard H. Sweeney explained that life science demand has become "much more muted" than when construction began, and the company pivoted to a mixed life science/office strategy without gaining traction. Selling allowed Brandywine to bring a Fortune 500 company with over 2,000 employees to Schuylkill Yards, eliminate roughly $80 million of forward capital spend on a building that would have yielded in the mid-7% range, and redeploy proceeds into buying back bonds yielding over 8%. He called it "a financial decision" that was easy given the goal of reaching investment-grade metrics. Q: With the disposition program complete, how should investors think about pricing for the roughly $200 million of potential 2027 sales, and what are office cap rates doing for stabilized assets? A: CEO Gerard H. Sweeney noted that excluding 3151 Market Street, the remaining 2026 sales blended to a mid-8% cap rate. He said rising debt costs have a corresponding impact on pricing, so the company will stay close to investment market feedback on timing and composition of 2027 sales, and will again weigh sale proceeds against the cost of debt repurchased. Q: What is the status of the IBM lease expiration in 2027 and the redevelopment pipeline for those buildings? A: CEO Gerard H. Sweeney said the IBM roll will impact about $11 million of net NOI in 2027. Since announcing the redevelopment initiative, the pipeline has risen to about 1.5 million square feet, with prospects ranging from 20,000-30,000 square feet up to several hundred thousand square feet, mostly technology and financial services tenants in the Austin market. The first building is 157,000 square feet, and assuming pre-leasing, Brandywine expects to deliver a renovated building by year-end 2027 at returns in the mid-80s to 9% range on cost. Q: Excluding IBM, do you expect occupancy to move up in 2027, and are there other pockets of downtime in the portfolio? A: CFO Thomas E. Wirth said the company expects continued absorption next year, noting only two tenants over 30,000 square feet expire in 2027 and both are expected to renew. CEO Gerard H. Sweeney added that Brandywine is actively pursuing early renewals across the 2027, 2028 and 2029 maturity curve to de-risk the portfolio, citing a growing scarcity of high-quality, well-run landlord space in its key markets. Q: How is the company assessing dividend coverage given the full-year impact of dispositions and the IBM move-out? A: CEO Gerard H. Sweeney said coverage is higher than desired, having started the year between 70% and 90%, largely because successful renewals drove additional revenue-maintaining CapEx. He said the company is in its 2027 planning process and will weigh interest savings against projected absorption and the IBM roll, reviewing the dividend quarterly with the Board. "Right now, we're feeling very good about where the dividend is," he said. Q: Why keep 5% to 10% of net proceeds earmarked for share buybacks rather than applying nearly all proceeds to deleveraging? A: CEO Gerard H. Sweeney said the allocation provides additional flexibility, but stressed the major focus is reducing leverage and improving credit metrics to return to investment grade. He noted Brandywine has bought back much less than that range, with the vast majority of proceeds applied to debt reduction, including construction and secured loans and bond retirements. Q: With One Uptown now 97% leased, what is the appetite to recapitalize that asset? A: CEO Gerard H. Sweeney said Brandywine is already talking to potential partners and will take a hard look at a recap in the first quarter. CFO Thomas E. Wirth said the recap was pushed from Q4 2026 to Q1 2027 due to leasing timing, and is expected to provide about $25 million of net proceeds and reduce debt attribution by about $50 million in 2027. Q: How is Brandywine positioning its Austin portfolio, and what are the long-term plans there? A: CEO Gerard H. Sweeney said the primary Austin focus is Uptown ATX, where a new train station expected to be the second busiest on the line will be fully operational early next year and was a major draw for tenants. At Four Point Center the company is pursuing prospects, and at River Place it is evaluating converting one of two pods to residential, aided by new Texas legislation accelerating office-to-residential conversions, and is testing the market to gauge developer interest. Q: What is the status of future phases at Uptown ATX, such as Block B and D, and how does that fit capital allocation? A: CEO Gerard H. Sweeney said planning is underway for Block B and D, primarily retail and multifamily with a potential hospitality component, but Brandywine will not proceed without firm lease and financial commitments. Near term, capital deployment will focus on renovating the 900 series building subject to pre-leasing, with other phases dependent on capital market conditions. Q: What drove the increase in the 2026 sales target and how were the transactions received in a choppy capital market? A: CEO Gerard H. Sweeney said the 2026 sales target rose to $681 million, highlighted by the $240 million sale of 3151 Market Street and the Solaris House partnership interest, and is now 100% achieved and funded. He said the team closed all transactions without any retrade of pricing and on schedule, with typical marketing processes drawing 7 to 10 qualified bids from users, institutional managers, private REITs and private capital. Q: How much debt has Brandywine retired, and what is the impact on leverage and interest expense? A: CEO Gerard H. Sweeney said the company paid off $390 million, or over 13% of combined outstanding debt, a $218 million increase over the initial 2026 target, lowering the year-end net debt to EBITDA midpoint from 8.8 times to 7.8-8.0 times. CFO Thomas E. Wirth said the For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Image source: The Motley Fool. Oct. 22, 2026 - President and CEO - Jerry Sweeney - Senior Vice President and Chief Accounting Officer - Dan Palazzo - Executive Vice President and Chief Financial Officer - Tom Wirth Operator: Thank you for standing by, and welcome to the Brandywine Realty Trust Third Quarter 2026 Earnings Conference Call. At this time, all participants are in listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. If your question has been answered and you would like to remove yourself from the queue, simply press star one again. As a reminder, today's program is being recorded. I would like to introduce your host for today's program, Jerry Sweeney, President and CEO. Please go ahead, sir. Jerry Sweeney: Jonathan, thank you very much. Good morning, everyone. Thank you for participating in our third quarter 2026 earnings call. On today's call with me today are Dan Palazzo, our Senior Vice President and Chief Accounting Officer, and Tom Wirth, our Executive Vice President and Chief Financial Officer. Just to note, prior to beginning, certain information discussed on the call today may constitute forward-looking statements within the meaning of the federal securities laws. Although we believe the estimates reflected in these statements are based on reasonable assumptions, we cannot give assurance that the anticipated results will be achieved. For further information on factors that could impact our anticipated results, please reference our press release as well as our most recent annual and quarterly reports that we file with the SEC. During our prepared comments today, Tom and I will briefly review third quarter results and frame out our key assumptions that drive our guidance for the balance of the year. After that, Dan, Tom, and I are available to answer any questions. From a capital markets operating and liquidity standpoint, the third quarter produced results that exceeded or were in line with our 2026 business plan. Since our last call, we have made significant progress on our capital markets plan, primarily on asset sales and debt reduction. Quarterly highlights include we increased our 2026 sales guidance from $305 million to $681 million, highlighted by the sale of 3151 Market Street and our partnership interest in Solaris House in Austin, Texas. The 3151 sale was for $240 million, or $544 per square foot. It is important to note, as we identified in the SIP, that sale also eliminated our forward capital spend of almost $80 million. On our sales target, we are 100% achieved and fully funded. Our speculative revenue target increased by an additional $1 million, and we are 100% achieved at $19.5 million, with basically nothing left to do for the balance of 2026 on that target. This marks the second increase to our speculative revenue target this year, and is now almost 12% higher than our initial 2026 business plan. Third quarter FFO of $0.14 per share was in line with management guidance and estimates. We are maintaining our $0.55 per share full year midpoint and have narrowed our full year FFO guidance range. Our core FFO results, as Tom will articulate, exclude losses on early extinguishment of debt that we incurred during the quarter. With the increased sales achieved, we had paid off $390 million, or over 13% of our outstanding combined debt. This is a $218 million increase over our initial 2026 debt reduction target. That does include the payoff of the loan securing both 3151 Market and Solaris House. Accelerating these debt paydowns lowered our year-end net debt to EBITDA midpoint from 8.4x-8.8x down to 7.8x-8x, about an 8% reduction at the midpoint, and reduced our quarterly run rate from 9.0x in Q2 to 7.6x in the third quarter. From an operating standpoint, solid operating metrics during the quarter reinforced our strong market position, and what we're continuing to see is a tenant's preference for very high quality office space. Our wholly owned portfolio is 90.5% leased and 89% occupied. We had very small negative net absorption of about 7,000 sq ft during the quarter. Our year-end occupancy and lease percentages will improve through year-end, and we will have positive net absorption for the first time in several years, I think as additional evidence of our pipeline continuing to build and our portfolio quality. Leasing activity for the quarter was our highest for the year, totaling 558,000 sq ft, including 372,000 sq ft in our wholly owned portfolio. Also included in that number is about 114,000 sq ft that we leased at One Uptown since our last call, bringing that property to 97% leased. Forward leasing commencing after the quarter totals 163,000 sq ft, with 111,000 sq ft taking occupancy this year. Tenant retention was 50%, resulting in our raising our full year midpoint retention target to 54%. This raise was mainly due to unbudgeted renewals and expansions in both the Philadelphia CBD and Pennsylvania marketplaces. Our capital ratio for the quarter was 8.9%. It allowed us to narrow and lower our 2026 business plan range from 12%-13% to 11%-12%. Our GAAP mark to market was 10.8%. We're narrowing our full year guidance range to 5%-6% versus 5%-7%. Cash mark to market was 5.7%. The adjustment to the guidance are a result of executing lower cost capital renewals with existing tenants. As a result, this quarter, our CAD number was higher than planned due to a number of those unbudgeted renewals that temporarily increased our revenue-maintaining CapEx run rate. Same store results were a negative 0.6% on a GAAP basis and a positive 1.7% on a cash basis, both within our current guidance ranges. Tour volume in the third quarter remained very strong, slightly below the high volume we saw in Q2, with higher tour volumes in our CBD and University City markets, slightly lower in the Pennsylvania suburbs, and the same levels quarter-over-quarter in Austin. We also continue to experience very good tour conversion rates. For the trailing four quarters, 54% of tours converted to a proposal. From proposal, 49% converted to an execute lease. Both are running ahead of our historical averages. Just a few additional comments regarding market dynamics. In Philadelphia, we're now 95% occupied and 96% leased, with only 7% rolling annually through 2028. We continued our outperformance trend in the CBD and University City during the first nine months of this year, with 60% of all new leasing signed in our CBD and University City submarkets being at a Brandywine property. As I noted on previous calls, significantly exceeding our 15% market share. Office-to-residential conversion activity now aggregates in Philadelphia CBD over 5 million sq ft, which is about 11% of Philadelphia's inventory, and we believe that dynamic will continue and further improve our competitive market position. In the Pennsylvania suburbs, we're 93% leased, and we continue to see solid levels of pipeline prospects for the existing vacancies, particularly in our Radnor submarket. Austin, at 66% occupancy, continues to lag the rest of the portfolio and does create about a 400 basis point drop in our overall company occupancy numbers. The operating portfolio leasing pipeline remains stable at 2 million sq ft, and this pipeline includes about 300,000 sq ft in very advanced stages of negotiation. Shifting to the balance sheet, our liquidity position improved significantly during the quarter. While we had a $137 million balance outstanding on our line of credit at quarter end, upon receipt of quarter-end sale proceeds, we paid off that balance in early October. As such, there's no outstanding balance on our line of credit, and we have $175 million of cash on hand. As I noted previously, during the third quarter, we reduced outstanding debt by almost $400 million, resulting in total, including wholly owned and joint venture, about $27.2 million of interest savings, and included in those amounts are about $140 million of bond retirements that we retired on an average interest cost of 8.7%. Obviously, the vast majority of our sale proceeds consistent with our business plan, were used to reduce leverage and improve credit metrics. We will continue to use our cash balances and any subsequent sale proceeds to further reduce debt, including repurchasing bonds in the fourth quarter, and to a much lesser extent, to the extent dictated by the market, repurchasing shares. As we noted on previous calls, until we make significant progress on all of our leverage targets, we anticipate using only 5%-10% of net proceeds to purchase shares. Our plan remains returning to investment-grade metrics. We will maintain minimal balances on our line of credit, and the execution of the sales program this year has been an excellent catalyst to reduce leverage and further improve all of our credit metrics. With our sales activity now complete and debt reduction underway, as I noted previously, we expect a significant improvement to our net-to-EBITDA. The year-end target we have identified in the SIP does assume we continue to apply that $100 million of cash on hand to further reduce outstanding debt during the fourth quarter. On One Uptown, which is the only remaining development project, we made significant progress during the quarter, and as I noted, we are now 97% leased. We expect this project to stabilize in the third quarter, slightly behind schedule due to build-out times with lease executions, but at a slightly higher pro forma yield. What's interesting to note is the Uptown submarket where our projects are located is now about 95%-plus leased, with a vacancy rate, including sublease space, of less than 5%, and really no large available blocks of space. As noted previously, in anticipation of our 2027 IBM lease expiration, that will have an impact of about $11 million of net NOI on us, we plan to commence the redevelopment of at least one of those existing buildings upon achieving pre-leasing activity. Since announcing this redevelopment initiative, the pipeline has risen to about 1.5 million sq ft, with all those prospects having lease commencement dates between late 2027 and 2030. The market response continues to be exceptional. The first building consists of 157,000 sq ft. Again, assuming pre-leasing, and we are in significant discussion with some prospects, we expect to deliver a renovated building by year-end 2027. Also, as prospective tenants' requirements advance, we do have planning underway to do similar renovations at some of the other buildings. As we discussed on our last call, our hope was to sell Solaris, our 340-unit residential project in Austin. That sale closed in September. We received net proceeds after paying off the $76 million construction loan and paying off our preferred investor. That project was held in a joint venture with Brandywine owning about 57% and was sold at a sub 4% cap rate. As we have already highlighted, we have increased our 2026 business plan target to $681 million, and we are frankly delighted to have achieved this increased sales target, particularly in light of the very choppy capital markets. Our team did a wonderful job of getting all those transactions closed without any retrade of pricing and on schedule. The response from the market for the asset sales, even with the choppy market conditions, was fairly strong. We had some considerable interest, and the typical marketing process had between 7 to 10 qualified bids. All buyer types were engaged, including users, institutional investment managers, private REITs, and significant interest from private capital. With that overview and our clear priority to continue to lower leverage and return to investment-grade metrics, I will turn the floor over to Tom Wirth to review financial results for the second quarter and the outlook for the balance of the year. Tom Wirth: Thank you, Jerry, and good morning. Our third quarter net loss was $22.3 million, or $0.13 per share, and our core FFO, which excludes debt extinguishment charges, totaled $15.4 million, or $0.09 per share, totaling $24.6 million, or $0.14 per diluted share, and met the second quarter guidance and consensus estimates. Some general observations for the third quarter. Property NOI was 68.5, or $1.1 million below our forecast due to lower retail and residential income. We anticipate improvement in those areas in the fourth quarter. G&A expense was above our reforecast by half a million dollars, primarily due to compensation expense. Third quarter fees were $2.1 million, or half a million above reforecast, primarily due to third-party leasing fees. Quarterly JV FFO interest expense and other income were generally in line with the forecast. Looking at debt metrics, third quarter debt service and interest coverage ratios were 1.7x, both equal to our second quarter results. We expect those coverage ratios to improve in the fourth quarter as we experience the full quarter impact of our bond purchases. Our third quarter annualized combined net debt to EBITDA was 7.6x, reflecting proceeds from our sales and corresponding debt repayments. During the fourth quarter, we expect these coverage ratio levels to increase slightly based on having the full quarter impact of sold properties in the fourth quarter cash flow. During the third quarter, we had no significant changes to our core portfolio since the properties that were sold during the quarter were either held for sale or classified as development. After looking at liquidity and financing, after the line of credit was paid off in early October, we had a solid liquidity position of $175 million of cash and no outstanding balance on our unsecured line of credit. As Jerry mentioned on sales activity, we increased our target to $545 million on a wholly owned basis, which is 100% achieved and funded. The weighted average cap rate on those sales was 4.7% on a cash basis and 4.9% on a GAAP basis. In addition, the sales reduced our forward capital commitments, as Jerry mentioned, by around $79 million. A majority of these proceeds have been used to reduce debt and will continue on our path back to investment grade. We also have a portion of those sales being used for share buybacks. Looking at our unsecured bonds, our planned buyback of existing unsecured bonds focused on bonds with higher coupons that will have a more immediate impact on our coverage ratios. During the quarter, we purchased $140 million of unsecured bonds, representing $50 million of the 2028 bonds and $90 million of the 2029 bonds, reducing annual interest expense by $12.5 million. We incurred debt extinguishment costs of about $9.2 million. However, we did not include those in our second half FFO guidance as we discussed in the previous call. Our C-PACE loan in connection with the sale of 3151 Market, we prepaid our $57.3 million loan with a 7.3 interest rate that collateralized the property. The early prepayment resulted in a $6.2 million loss on the early extinguishment of debt. As outlined on page one of our supplemental, during the quarter, we reduced debt, including the line of credit, by $390 million, which resulted in $24 million of annual interest expense savings on a wholly owned basis. The $24 million reduction represents approximately 18% of our second quarter 2026 midpoint guidance for annual interest expense. We anticipate using another $100 million of cash on hand to further reduce debt during the fourth quarter. Our unsecured line of credit had an initial maturity date of June of 2026 with two six-month extension options through June of 2027. With our sales program now complete and our debt reduction program almost complete, we will work with our bank group to try and extend the line of credit this quarter. As we mentioned, recapitalization of our joint ventures, we have made significant progress toward recapitalizing the final two preferred equity development projects located in Austin, Texas. We have sold Solaris for $136 million and received over $16 million of cash after repaying our partner an existing construction loan, and we reduced the debt attribution from that by $43.6 million. We are now 97% done at One Uptown on the leasing front, our office project, and we plan to recap that asset in the first quarter of 2027, rather than the fourth quarter of 2026, based on the timing of the leasing. We expect that transaction to provide about $25 million in net proceeds and reduce our debt attribution by about $50 million in 2027. Property level income. Now let's look at the fourth quarter. Property level income for the quarter should be about $68 million and will be about half a million below the third quarter. The incremental decrease is primarily due to the sold properties between the NOI in the third quarter versus the zero NOI in the fourth quarter, and that decrease will be about $2 million. Offsetting that $2 million is improvement in the Radnor Hotel, which commenced operations earlier this year and is producing an incremental $800,000 of NOI between the third and the fourth quarters, and improved operating results at 3025 JFK, which also has $800,000 of improvement between the third and the fourth quarter. FFO contributions from our joint ventures will be about half a million dollars. G&A expense for the fourth quarter will total about $7 million. The sequential decrease is consistent with prior years, and our full year range is still $36 million-$37 million. Interest expense, including deferred financing costs, will approximately be $35 million, which includes $400,000 of capitalized interest. We have lowered our full year expense range by $3 million at the midpoint to account for the lower debt balances. As previously mentioned, in connection with potentially retiring additional debt, we may incur additional debt extinguishment costs during the fourth quarter that are not currently in our FFO or core FFO guidance. Termination fees and other income will total about $2.5 million. Net third-party fees will be about $2 million. Interest income will total about $1 million with the cash we currently have on hand. And our diluted share count for the quarter should be about 177 million shares, reflecting the share buyback we did in the third quarter. For clarity, the fourth quarter forecast will then result in core FFO range of $0.16-$0.18 per share. Turning to the capital market plan for the fourth quarter, which is pretty straightforward and totals about $165 million. Our third quarter CAD payout ratio was 103%. We have adjusted the CAD payout ratio to account for increased tenant renewals and revenue maintained capital that is being incurred, as well as some of the older capital that dates back to pre-2024. Looking at the larger uses, development spend will total $20 million. We will then have $14 million of common dividends, $10 million of revenue maintaining capital, $11 million of revenue creating the capital, and $10 million of equity contributions to our joint ventures. The sources are going to be $20 million of cash flow after interest and using $145 million of our cash on hand. Based on the capital plan, we anticipate having a small amount of cash and no outstanding balance on our line of credit. We anticipate our net debt EBITDA range to be 7.8-8.0 and our fixed charge ratio to between 1.8 and 2.0. Implicit in these ratios is further reducing debt by another $100 million during the quarter. While the increase to 2026 sales has accelerated our deleveraging program, we are focused on additional sales in 2027 as we continue our goal to improve our pricing in public market debt and in our ratings. I will turn the call back over to Jerry. Jerry Sweeney: Tom, thanks very much. As we look ahead, our asset quality and operating teams will really enable us to continue capitalizing on improving real estate market conditions. We do expect overall market conditions from a leasing standpoint to continue to improve as we move into 2027. I think the success of our sales program has resulted in significant debt reduction well ahead of plan, improved liquidity, lower forward capital costs, which is a very key point that we are focused on, and really the complete elimination of our forward development risk. The groundwork has been laid through the 2026 business plan execution so far. We plan on building on that continuing momentum to drive long-term value. With that, Jonathan, we are delighted to open up the floor for questions. As we always do, we ask that in the interest of time, you limit yourself to one question and a follow-up. Thank you very much. Operator: Thank you. Our first question for today comes from the line of Nick Joseph from Citi. Your question please. Nick Joseph: Thanks. Jerry, you outlined obviously a lot of the progress that you've made over the quarter and the year. I guess just as I think about the capital plan going forward, you mentioned still a 5%-10% to buy back shares. Why is that the right level versus using almost all the proceeds to continue the deleveraging plan? Jerry Sweeney: Yeah, I think it just provides us some additional flexibility. Frankly, as we set the target at the 5%-10% we announced it on last quarter call, we've bought back much less than that. I think the major focus, and I'm glad you raised the question, it's nuanced. Our major focus is continuing to reduce our overall leverage and improving all of our key credit metrics to get back on the path towards investment grade. Hopefully that clarifies. We keep that flexibility out there, based upon what we're seeing in the marketplace. But the reality is that the vast majority, almost without exception, is being applied to reduce debt, whether that be some of the construction secured loans we have or continuing to get in the marketplace to retire bonds. Nick Joseph: Thanks. Then with one Uptown now 97% leased, what's the appetite to recap that asset? Jerry Sweeney: I think we're going to take a hard look at that. We're already starting to talk to some potential partners to recap that and improve our balance sheet metrics. As Tom outlined, now with that project fully leased, and some of those leases quite honestly, were in the process for a long period of time, but I think this quarter we were able to get all of them across the finish line. The build-out periods are underway for most of those tenants, and we expect all that capital to be spent the first part of the year. So we're very keen, as Tom outlined, on fully vetting and exploring a recap option for that property in the first quarter. Nick Joseph: Thank you. Operator: Thank you. Our next question comes from the line of Dylan Burzinski from Green Street. Your question, please. Dylan Burzinski: Hi, guys. Good morning. Thanks for taking this question. Maybe just touching on Austin, because it seems like if you look at the portfolio, the Philly stuff is largely leased up fully today, and maybe with little room for improvement on the suburb side of things. But just looking at Austin, it appears that's going to be sort of the major driver that sort of gets you guys over the hump into the total portfolio occupancy range of low 90%. I mean, this is a portfolio that you continue to see a leasing pipeline grow. Do you guys feel like your assets are well-positioned? Maybe if you can kind of just talk about your overall long-term plans in Austin, that would be helpful. Jerry Sweeney: Yeah, a great question. Thank you. As I mentioned on previous calls, our major focus really within Austin is on our Uptown ATX development. There, we're really happy that early next year, the train station will be fully operational. They expect that to be the second busiest train station along that line. I will tell you truly, that was a major draw for us to attract a number of these tenants to One Uptown. It's not a singular focus in Austin Uptown, but that's our primary focus. Where we have vacancy in Austin right now, we have Four Points Center. One of those buildings that we continue to see a building pipeline there and hope to get some traction. We are actually pursuing a couple of prospects currently. In River Place, which really consists of two individual pods, we are actually evaluating converting one of those pods to residential development. There was some state legislation passed in Austin or in Texas that accelerates the ability to do office to residential conversions. The sub-market dynamics where River Place is, Dylan, have changed a little bit more towards residential versus office. So we are carefully assessing the outcome of at least taking one of those pods and moving into a residential redevelopment process. The first part of that we will be putting some of that on the market to see what other developers in that marketplace value that site at, so we can evaluate what we think our appropriate next steps are. Dylan Burzinski: That is helpful. Jerry Sweeney: Hopefully that is helpful. Dylan Burzinski: Maybe just, yeah, no, that is extremely helpful, Jerry. I appreciate that. Maybe just one last one. Thinking about the solid execution and the successful execution of the disposition plan in 2026, I mean, how do you sort of think about the portfolio today? Do you feel like you still have a large percentage of not what you would deem non-core assets? How should we sort of think about potential additional proceeds over the next, call it two, three, four quarters? Jerry Sweeney: Yeah, I think, obviously, we're not announcing anything relative to 2027 at this point. But as Tom and I both touched on, we do anticipate about another $200 million, maybe more in sales next year. Some of those, Dylan, will be in-market assets. Some of those will be in what we consider to be some of our non-core markets. And some of that may frankly be land parcels. We're taking a hard look at our land inventory to figure out what parcels we want to liquidate and more effectively deploy that capital. So one of the interesting things is given kind of the capital market volatility, it's really given us an opportunity to kind of take a look at where we want to sell assets, and then how we use those proceeds, as we have thus far in 2026, to really reduce leverage, reduce our forward capital calls, and improve financial flexibility. Dylan Burzinski: Great. Thanks for the time, Jerry. Jerry Sweeney: Thank you. Operator: Thank you. As a reminder, ladies and gentlemen, if you do have a question at this time, please press star one on your telephone. Our next question comes from the line of Michael Lewis from Truist Securities. Your question, please. Michael Lewis: Thank you. I was just going to ask any additional details or color regarding progress on the 2027 lease expirations, other than IBM, obviously, which we know about. Excluding IBM, do you expect occupancy to move up next year, or are there other pockets of downtime in the portfolio? Jerry Sweeney: Yeah. Michael, thanks for the question. We are very actively going out into our forward maturity curve, for both 2027, 2028, and 2029, looking to kind of get some early renewals done across our portfolio. We've been successful in getting a couple done this quarter and have a few underway. One of our objectives is to really minimize that rollover, particularly in 2028, 2029, down to the levels we were experiencing in 2025 and 2026. We think the market's constructive for that business approach. There's clearly a recognition by both our customer base, both existing and prospective, as well as the brokerage community, that there is an increasing dearth of really high quality, well-run, good landlord space in our key markets. We're using that to our maximum advantage. I think generally speaking, from a business plan standpoint, we are moving very expeditiously on all of those forward renewals, and we do expect to be able to further de-risk our operating portfolio over the next several quarters. I mean, Tom, do you have anything to add to that? Tom Wirth: Yeah. Michael, as we look at 2027, again, putting aside IBM, as you asked, I think we will see some continued absorption next year, as Jerry mentioned. We only have two tenants in the portfolio over 30,000 sq ft that are expiring next year, and we think both of those tenants will renew. Then you go down below 30,000 on other tenants that closer to their renewal date are going to start talking with them, which we are now. But it's fairly low in terms of any other large tenants expiring in 2027. Michael Lewis: Okay. Jerry Sweeney: I'm sorry, Michael. The dynamics are actually improving significantly, just in terms of when we take a look really at CBD, University City, and particularly Radnor. We think there's room to get early renewals done there and accelerate the absorption of some of our existing vacancy. Michael Lewis: Okay. Appreciate that. For my second question, you mentioned the $200 million of potential dispositions next year. I guess I'm going to ask about pricing, right? The 4.7% cap rate on the dispositions, obviously you have one large property, 3151, basically at zero, and you had Solaris in there. Is there any more color you could give on what's happening to office cap rates for stabilized assets, given the change in the cost of capital? Jerry Sweeney: Yeah, great question. Actually, let me amplify it. If you would exclude 3151 from our calculation of cap rates, the remaining property sold right around our projected mid-8 cap rate. Some lower, a little bit higher, but blended was about in the mid-8s. The last 30-60 days with interest rate volatility, the new inflation numbers, I think it certainly at least short term changed dynamics. We were really happy, Michael, to get all of our sales done and locked away before all this increased market volatility. Look, the reality is that as debt costs go up, it has a corresponding impact on pricing. As we start to look at what our sales program will be for 2027, we're going to stay very close to what we're hearing back from the investment market on both the timing and composition of those sales. We're certainly very mindful that when we sell a property, we lose income. I think that the success this year of being able to sell on a blended basis properties well below the cost of debt that we've repurchased was very additive to our balance sheet and to our income stream. I think we're going to be taking a hard look at that same metric of being applied in 2027 as well. Michael Lewis: Thank you. Tom Wirth: Thanks, Mike. Operator: Thank you. Our next question comes from the line of Manus Ebbecke from Evercore ISI. Your question, please. Manus Ebbecke: Great. Good morning. Thanks for taking the question. Could you expand on your commentary around the tenant demand for the IBM buildings? Give some color maybe on what type of tenants are looking there, if there are current existing tenants in the market expanding or new to market tenants. I am just curious about economics you kind of target for those redevs. Jerry Sweeney: Yeah. Thank you for the question. The pipeline, as I mentioned, is about 1.5 million sq ft. Those size tenants range from a low of 20,000 to 30,000 sq ft up to several hundred thousand square feet. It is actually a fairly good mix between technology and financial service companies. Most of the tenants are in market, and I will use the term market being all of Austin, and a number are looking for expansion or consolidation opportunities. As I alluded to a few moments ago, we are, I think, beginning to reap the marketing benefits of access to this train station. That employee mobility, traffic congestion, affordable housing have all been issues that have really risen to the fore in Austin. I think Uptown ATX, given its location in Northwest, but also proximity to the far northern suburbs and easy access to downtown, I think really creates a very valuable marketing platform for us. As I mentioned on the previous calls, we are planning to deliver these buildings somewhere in the mid 8%-9% return on cost. We will really only proceed with the planning and the execution once we get a much higher level of visibility and leases done with some of these prospects. But we think that is a good runway for us over the next couple of years. Certainly, as we take a look at the IBM role, and the income, that $11 million or so we will lose in income next year, we are certainly very mindful of how we start to replace that revenue stream, while at the same time, building a very effective neighborhood at One Uptown that will deliver longer-term value for us. Manus Ebbecke: Got it. I appreciate it. Thank you. Maybe the quick follow-up just on whether the high demand that you have been seeing in that sub-market has already resulted in some interest for future phases of ATX, for example, phase B or anything else, and how that kind of triangulates with your thoughts on just general capital allocation and de-leveraging. Jerry Sweeney: Yeah, look, I think that we continue to see a high level of broad-based activity in that marketplace. As you know from our previous calls, we do have planning underway for block B and D. Block B and D are primarily retail and multi-family, with potentially a hospitality component. While we are going through the planning processes, there is no desire on our part to proceed with those until there is firm lease commitments, firm financial commitments, and it layers very nicely into our overall balance sheet strategy. So right now we are planning. The approval process down there can be a bit protracted getting some of those pieces pulled together. From a capital deployment standpoint, what we are seeing in the intermediate term is moving forward the renovation of the 900 series building subject to pre-leasing, and then we will see what the capital market conditions present to us as we think about any other future phases. Manus Ebbecke: Got it. Thank you. Jerry Sweeney: Thank you. Operator: Thank you. Our next question comes to the line of Upal Rana from KeyBanc Capital Markets. Your question please. Upal Rana: Great. Thank you for taking my question. Jerry, maybe you can talk a little bit about your decision to sell 3151 Market. Last quarter you mentioned negotiating with a multi-floor tenant at the property, but ultimately you decided to sell. Any color there would be helpful, especially on life science leasing dynamics in the Philadelphia CBD would be helpful. Thank you. Jerry Sweeney: Thank you for the question. Look, on 3151, our goal was to deliver a very high-quality building that would be very additive to both our portfolio and to our Schuylkill Yards neighborhood. Clearly, the life science market changed since we commenced construction of that project, where demand drivers are still there, but they are much more muted than the demand levels were several years ago. As a consequence of that, as you know, about a year or so ago, we pivoted to a mixed life science office leasing strategy. We were getting traction on that. I think the decision for us came down to this. We had the ability through that building to bring a Fortune 500 company with over 2,000 employees as a base to Schuylkill Yards, and to further cement Schuylkill Yards as the place to be with mass transit access in the city. When we took a look at the timeline to lease up the balance of that building, and as Tom and I both touched on, the $80 million or so future capital commitment to deliver a building that will yield in the mid 7% range to us. The capital markets actually presented an amazing opportunity for us to sell that building, again, bring a big employment base into the city, into Schuylkill Yards, eliminate that forward capital spend, obviate the lag time to get income in place, and sell that property and buy back bonds at over an 8% yield. From our perspective, it was really a financial decision to say we can generate significant liquidity, generate proceeds, immediately redeploy those proceeds back into buying back higher priced debt, and that higher priced debt was yielding more on retirement to us than the stabilized return on the property would be. It was a challenging real estate decision because we felt it could create some great value there. But from a financial planning standpoint, given the current capital marketing conditions and our penultimate goal to get to investment-grade metrics, it was an easy decision. Upal Rana: Got it. That was really helpful. Thank you. Last one from me would be just on the dividend. With the full year impact of all the dispositions you have done and plan to do, as well as the IBM move out next year, how are you assessing the dividend coverage today? I guess how much lease commencements need to come online and interest savings need to occur to support the current payout? Thank you. Jerry Sweeney: Yeah. We are going through our 2027 planning process right now. Certainly, from our perspective, as we are looking at the dividend coverage, it is higher than we want it to be at the beginning of this year. We targeted between 70% and 90%. We are a lot more successful in getting a lot of renewals done that generated the need for additional revenue maintaining CapEx, which kind of drove that percentage up. We are going to take a hard look at that run rate, take a hard look at what our overall, the net impact of our interest rate savings is, versus what we project the absorption to be in 2027, getting impacted by the IBM rollout. Then we will make a decision. We review that every quarter with the board. Right now, we are feeling very good about where the dividend is. We are certainly hoping that the stock price recovers, so the dividend yield goes down. That is a source of capital that is always on the table as we review our business plan and business plan progression with the board on a quarterly basis. Upal Rana: Okay, great. Thank you so much. Jerry Sweeney: Thank you. Operator: Thank you. This does conclude the question and answer session of today's program. I would like to hand the program back to Jerry Sweeney for any further remarks. Jerry Sweeney: Great, Jonathan. Thanks for your help today, and thank you all for participating in our third quarter conference call. We wish you the best as we head into the end of the year and the holiday season, and look forward to providing an update on our 2027 business plan early next year. Thank you very much. Operator: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day. Before you buy stock in Brandywine Realty Trust, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Brandywine Realty Trust wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. 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As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Brandywine Realty (BDN) Q3 2026 Earnings Call Transcript was originally published by The Motley Fool

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. - Management significantly expanded the 2026 sales target from $305 million to $681 million, successfully closing transactions without price retrades despite volatile capital market conditions. - The sale of 3151 Market Street was a strategic financial pivot, prioritizing immediate debt retirement at 8%+ yields over the long-term 7% stabilized yield of the property while eliminating $80 million in forward capital spend. - Portfolio performance is increasingly driven by a 'flight to quality' among tenants, evidenced by the company capturing 60% of all new leasing in the Philadelphia CBD and University City submarkets. - Operational metrics showed resilience with the highest leasing activity of the year at 558,000 square feet, leading to an increased full-year tenant retention target of 54%. - The Austin portfolio continues to be a drag on overall occupancy, the Austin portfolio's 66% occupancy level creates a 400 basis point reduction in the company's total occupancy numbers, though the One Uptown project reached 97% leased. - Management is leveraging Philadelphia's office-to-residential conversion trend, which has removed 11% of city inventory, to improve the competitive positioning of their remaining high-quality office assets. - The company anticipates an additional $200 million or more in asset sales for 2027, targeting non-core markets and land parcels to further improve credit metrics. - Management is proactively addressing the 2027 IBM lease expiration, which carries an $11 million NOI impact, by advancing a 1.5 million square foot redevelopment pipeline at Uptown ATX. - Guidance assumes the application of $100 million in cash on hand to further reduce outstanding debt during the fourth quarter of 2026. - The company plans to recapitalize the One Uptown asset in Q1 2027, expecting approximately $25 million in net proceeds and a $50 million reduction in debt attribution. - Future development at Uptown ATX blocks B and D will remain in the planning phase with no commencement until firm lease and financial commitments are secured. - The company incurred $15.4 million in losses on early extinguishment of debt during the quarter, which were excluded from core FFO results. - The CAD payout ratio reached 103% due to unbudgeted renewals and expansions that temporarily increased revenue-maintaining capital expenditures. - A $6.2 million loss was recognized from the early prepayment of a 7.3% interest rate C-PACE loan associated with the 3151 Market sale. - Management noted that while they have authorization for share buybacks, they will limit this to 5%-10% of net proceeds until significant progress is made on leverage targets. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. - Management explained the sale was a financial decision to eliminate $80 million in future CapEx and immediately redeploy proceeds into retiring debt yielding over 8%. - The move also secured a Fortune 500 tenant for the Schuylkill Yards neighborhood, cementing the area's status as a premier transit-oriented hub. - Management is evaluating converting portions of the River Place asset in Austin to residential use due to shifting sub-market dynamics and supportive state legislation. - The primary focus in Austin remains the Uptown ATX development, which is benefiting from the upcoming operational train station. - Management acknowledged the dividend payout ratio is currently higher than the 70%-90% target range due to high renewal-related CapEx. - The board reviews the dividend quarterly, weighing interest savings from debt reduction against the projected income loss from the 2027 IBM expiration.

- Interested in Brandywine Realty Trust? Here are five stocks we like better. - Brandywine accelerated asset sales and debt reduction: It raised its 2026 sales guidance to $681 million and repaid $390 million of debt in the quarter, lowering its year-end net debt-to-EBITDA target to 7.8x–8.0x. - Liquidity and earnings outlook improved: Debt paydowns are expected to save approximately $24 million in annual interest expense, while full-year FFO guidance remained centered at $0.55 per share and fourth-quarter core FFO is projected at $0.16–$0.18 per share. - Leasing remained mixed across markets: The portfolio was 90.5% leased and 89% occupied, with One Uptown in Austin reaching 97% leased, but Austin overall remained weak at 66% occupancy. Brandywine expects at least $200 million of additional asset sales in 2027. Brandywine Realty Trust (NYSE:BDN) said its third-quarter results met management guidance as the office landlord accelerated asset sales and debt repayments, improving liquidity and lowering its leverage outlook for year-end. President and CEO Jerry Sweeney said the company increased its 2026 sales guidance to $681 million, including the $240 million sale of 3151 Market Street in Philadelphia and the sale of its partnership interest in Solaris House, a residential project in Austin, Texas. The 3151 Market sale equated to $544 per square foot and eliminated nearly $80 million of future capital spending, Sweeney said. → Aurora Rejects Curaleaf's Higher Bid, But the Takeover Fight Isn't Over The company said it has fully achieved and funded its sales target and raised its speculative revenue target by $1 million to $19.5 million, nearly 12% above its initial 2026 business plan. Brandywine repaid $390 million of debt during the quarter, representing more than 13% of its combined outstanding debt and exceeding its initial 2026 debt-reduction target by $218 million. The paydowns included loans secured by 3151 Market Street and Solaris House. → Could Quantinuum's Breakthrough Make Its Sell-Off a Bargain? The company lowered its year-end net debt-to-EBITDA target range to 7.8x to 8.0x, from a prior midpoint range of 8.4x to 8.8x. Its annualized combined net debt-to-EBITDA ratio was 7.6x in the third quarter, compared with a quarterly run rate of 9.0x in the second quarter. Chief Financial Officer Tom Wirth said the debt reduction produced $24 million of annual interest expense savings on a wholly owned basis. During the quarter, Brandywine purchased $140 million of unsecured bonds, including $50 million of 2028 bonds and $90 million of 2029 bonds, reducing annual interest expense by $12.5 million. The company incurred approximately $9.2 million of debt extinguishment costs associated with the bond purchases. → IonQ's Bold Expansion Could Leave Shareholders Paying the Price Brandywine also prepaid a $57.3 million C-PACE loan collateralized by 3151 Market Street, resulting in a $6.2 million loss on early debt extinguishment. At quarter-end, the company had $137 million outstanding on its line of credit, but repaid that balance in early October after receiving sale proceeds. It subsequently reported $175 million of cash and no balance outstanding on the unsecured line. Wirth said Brandywine expects to use another $100 million of cash to reduce debt during the fourth quarter. Sweeney said debt reduction remains the company's central capital-allocation priority, while share repurchases are expected to account for only 5% to 10% of net proceeds until Brandywine makes further progress toward investment-grade credit metrics. Brandywine reported a third-quarter net loss of $22.3 million, or $0.13 per share. The company said FFO totaled $24.6 million, or $0.14 per diluted share, in line with management guidance and consensus estimates. It maintained its full-year FFO midpoint of $0.55 per share while narrowing its full-year guidance range. Property net operating income was $68.5 million, about $1.1 million below the company's forecast because of lower retail and residential income. Wirth said Brandywine expects improvement in those areas in the fourth quarter. General and administrative expense exceeded the reforecast by $500,000, primarily because of compensation expense, while third-party leasing fees were $500,000 above forecast. For the fourth quarter, the company expects property-level income of roughly $68 million, with sold properties reducing quarterly NOI by about $2 million. That decline is expected to be partly offset by improvements at the Radnor Hotel and 3025 JFK, which are each projected to contribute approximately $800,000 of sequential NOI improvement. Brandywine expects fourth-quarter core FFO of $0.16 to $0.18 per share. It lowered its full-year interest-expense range by $3 million at the midpoint to reflect lower debt balances. The company's wholly owned portfolio was 90.5% leased and 89% occupied at quarter-end. Net absorption was slightly negative by approximately 7,000 square feet, though Sweeney said Brandywine expects occupancy and leasing levels to improve by year-end and expects positive net absorption for the first time in several years. Quarterly leasing activity totaled 558,000 square feet, including 372,000 square feet in the wholly owned portfolio. Leasing at One Uptown in Austin totaled approximately 114,000 square feet since the prior earnings call, bringing the development to 97% leased. - Tenant retention was 50%, prompting Brandywine to raise its full-year midpoint retention target to 54%. - GAAP mark-to-market was 10.8%, while cash mark-to-market was 5.7%. - Same-store results were down 0.6% on a GAAP basis and up 1.7% on a cash basis. - The operating portfolio leasing pipeline remained at 2 million square feet, including about 300,000 square feet in advanced negotiations. Sweeney said Philadelphia was 95% occupied and 96% leased, while Pennsylvania suburbs were 93% leased. Austin remained the weakest market in the portfolio at 66% occupancy, reducing overall company occupancy by about 400 basis points. Brandywine expects One Uptown to stabilize in the third quarter of 2027, slightly behind schedule because of tenant build-out timing but at a somewhat higher projected yield. The company plans to explore a recapitalization of the project in the first quarter of 2027, which it expects could provide about $25 million of net proceeds and reduce debt attribution by approximately $50 million. The company is also preparing for the 2027 expiration of an IBM lease that represents roughly $11 million of net NOI. Sweeney said Brandywine has a 1.5 million-square-foot pipeline of prospects for redevelopment of the IBM buildings, with potential lease commencements between late 2027 and 2030. The first potential renovation would involve a 157,000-square-foot building, contingent on preleasing, with delivery targeted for year-end 2027. In Austin's River Place area, the company is evaluating whether to convert one office pod to residential use, citing changes in local submarket conditions and state legislation intended to accelerate office-to-residential conversions. Looking ahead, Sweeney said Brandywine anticipates approximately $200 million or more of additional asset sales in 2027, potentially including properties in core and non-core markets as well as land parcels. He said the company will weigh future dispositions against market conditions, property income lost through sales, debt costs and the potential benefits of using proceeds to further reduce leverage. Brandywine Realty Trust is a self-administered and self-managed real estate investment trust that owns, develops, leases and manages office, mixed-use and other commercial properties. The company focuses on well-located properties in urban, town-center and suburban settings, offering workspace, retail, residential and hospitality components within selected developments. Brandywine's principal concentration is the Philadelphia region, including Philadelphia and surrounding communities in Pennsylvania and New Jersey. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Brandywine Realty Trust Q3 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for October 2026.

Adjusts 2026 Guidance PHILADELPHIA, Oct. 21, 2026 (GLOBE NEWSWIRE) -- Brandywine Realty Trust (NYSE:BDN) today reported its financial and operating results for the three and nine-month periods ended September 30, 2026. Management Comments "We are pleased with our 2026 business plan progress highlighted by raising the midpoint of our speculative revenue target for the second time this year to $19.5 million, or 11.4% higher than our initial business plan," said Gerard H. Sweeney, President and Chief Executive Officer of Brandywine Realty Trust. "Our capital markets plan is completed and we have executed $681 million of sales versus our $305 million business plan target. Sales activity also includes the $136 million sale of Solaris, our residential project in Austin, Texas. We are also pleased to report that One Uptown is now 97% leased. During the quarter, we reduced our combined debt by $390 million primarily by repurchasing $140 million of our 2028 and 2029 Bonds at a weighted-average rate of 8.67%. Following these closings, we had $176 million of cash on hand and no outstanding balance on our $600 million unsecured line of credit. Our leverage metrics have continued to improve including our Net Debt/EBITDA which was 7.6x at the end of the quarter compared to 9.0x in the previous quarter. In addition to using sales proceeds to reduce debt, we purchased 4.7 million shares of our common stock during the quarter. Based on our capital markets activity and operating results, we are adjusting our 2026 FFO guidance range from $0.53 to $0.57 per diluted share to a Core FFO range of $0.54 to $0.56 per diluted share, which excludes losses on the early extinguishment of debt totaling $15.4 million, or $0.09 per share." Third Quarter Highlights Financial Results - Net loss available to common shareholders: $(22.3) million, or $(0.13) per share. Our results include an impairment charge totaling $29.1 million, or $(0.17) per share, net gains on the disposition of real estate totaling $55.7 million, or $0.32 per share and $(15.4) million loss on the early extinguishment of debt, or $(0.09) per share. - Core Funds from Operations (Core FFO): $24.5 million, or $0.14 per diluted share. Our Core FFO results represent FFO excluding a $(15.4) million, or $(0.09) per share, loss on the early extinguishment of debt. Portfolio Results - Core Portfolio: 89.0% occupied and 90.5% leased. - New and Renewal Leases Signed: 372,000 square feet in our wholly owned portfolio and 558,000 square feet including our joint ventures. - Tenant Retention Ratio: 50%. - Rental Rate Mark-to-Market: Increased 10.8% on an accrual basis and 5.7% on a cash basis. - Same Store Net Operating Income (NOI): Decreased (0.6)% on an accrual basis and increased 1.7% on a cash basis. Disposition Activity - As previously announced, on July 1, 2026, we completed the sale of a wholly owned office property in King of Prussia, Pennsylvania for a gross sales price of $41.5 million, or $412 per square foot, and we received net cash proceeds of $37.8 million. The property was 100% occupied at the time of sale. - As previously announced, on July 9, 2026, we completed the sale of a wholly owned office property in Austin, Texas for a gross sales price of $151.0 million, or $734 per square foot, and we received net cash proceeds of $146.1 million. The property was 100% occupied at the time of sale. - On September 10, 2026, we completed the combined sale of two wholly owned office properties in McLean, Virginia for a gross sales price of $97.1 million, or $207 per square foot, and we received net cash proceeds of $92.9 million. The properties on average were 88.6% occupied at the time of sale. - On September 30, 2026, we completed the sale of a wholly owned office property located in Philadelphia, Pennsylvania for a gross sales price of $240.0 million, or $544 per square foot, and we received net cash proceeds of $233.7 million. The property was 3.9% occupied at the time of sale. Joint Venture Activity - On September 30, 2026, we sold Solaris, our residential property with a 341 unit luxury apartment building in Austin, Texas for a gross sales price of $136.0 million. We owned 57% of the project and received net cash proceeds of $16.3 million for our share in the venture after repayment of the $76.5 million construction loan and our preferred partner. The property was 90.3% occupied at the time of sale. - As of October 21, 2026, our Uptown office venture in Austin, Texas is now 97% leased. Finance/Capital Markets Activity - During the quarter, we retired $50 million of our 8.80% Guaranteed Notes Due 2028 (the "2028 Bonds") and $90 million of our 8.875% Guaranteed Notes Due 2029 (the "2029 Bonds") and recorded $9.2 million loss on extinguishment of debt. - On September 29, 2026, we repaid our $57.3 million Commercial Property Assessed Clean Energy ("C-PACE") loan prior to the disposition of the encumbered wholly owned office property in Philadelphia, Pennsylvania, and recorded a $6.3 million loss on extinguishment of debt. - During the quarter, we repurchased approximately 4.7 million common shares at an average price of $3.19 per share, totaling $14.9 million. The annual savings on dividend payments is approximately $1.5 million. - As of September 30, 2026, we had a $137 million outstanding balance on our $600.0 million unsecured revolving credit facility. - As of September 30, 2026, we had $313 million of cash and cash equivalents on-hand. Results for the Three and Nine-Month Periods Ended September 30, 2026 Net loss allocated to common shareholders and unitholders totaled $(22.3) million or $(0.13) per share in the third quarter of 2026 compared to a net loss of $(26.2) million or $(0.15) per diluted share in the third quarter of 2025. Our 2026 results include a non-cash impairment charge totaling $29.1 million, or $(0.17) per share, net gain on the disposition of real estate totaling $55.7 million, or $0.32 per share, and $15.4 million loss on the early extinguishment of debt, or $(0.09) per share. Core FFO available to common shareholders and unitholders in the third quarter of 2026 totaled $24.5 million or $0.14 per diluted share versus $28.0 million or $0.16 per diluted share in the third quarter of 2025. Our Core FFO results exclude a $(15.4) million, or $(0.09) per share, loss on the early extinguishment of debt. Our third quarter 2026 payout ratio ($0.08 common share distribution / $0.14 Core FFO per diluted share) was 57.1%. Net loss allocated to common shareholders and unitholders totaled $(102.8) million or $(0.59) per share for the first nine months of 2026 compared to net loss of $(142.6) million or $(0.82) per diluted share in the first nine months of 2025. Our 2026 results include a non-cash impairment charge totaling $41.0 million, or $(0.24) per share, net gain on the disposition of real estate totaling $55.8 million, or $0.32 per share and $(15.4) million loss on the early extinguishment of debt, or $(0.09) per share. Our 2025 results include non-cash impairment charges totaling $63.4 million, or $(0.37) per share, related to portfolio assets located in Austin, Texas. Core FFO available to common shareholders and unitholders for the first nine months of 2026 totaled $68.2 million, or $0.38 per diluted share compared to Core FFO available to common shareholders and units of $78.8 million, or $0.44 per diluted share, for the first nine months of 2025. Our Core FFO results exclude a $15.4 million, or $(0.09) per share, loss on the early extinguishment of debt. Our first nine months 2026 Core FFO payout ratio ($0.24 common share distribution / $0.38 Core FFO per diluted share) was 63.2%. Operating and Leasing Activity In the third quarter of 2026, our Net Operating Income (NOI), excluding termination revenues, bad debt expense and other income items, decreased (0.6)% on an accrual basis and increased 1.7% on a cash basis for our 55 same store properties, which were 88.8% and 89.8% occupied on September 30, 2026 and 2025, respectively. We leased approximately 372,000 square feet and commenced occupancy on 192,000 square feet during the third quarter of 2026. The third quarter occupancy activity includes 73,000 square feet of renewals, 26,000 square feet of expansions and 93,000 square feet of new leases. We have an additional 163,000 square feet of executed new leasing scheduled to commence subsequent to September 30, 2026. Our tenant retention ratio was 50% in our core portfolio with negative net absorption of (7,000) square feet during the third quarter of 2026. Third quarter accrual rental rate growth increased 8.4% on our renewal leasing and increased 13.5% on new leasing. At September 30, 2026, our core portfolio of 58 properties comprising 10.8 million square feet was 89.0% occupied and 90.5% leased (reflecting new leases commencing after September 30, 2026). Distributions On September 15, 2026, our Board of Trustees declared a quarterly dividend distribution of $0.08 per common share that will be paid on October 22, 2026 to shareholders of record as of October 8, 2026. 2026 Earnings and FFO Guidance Based on current plans and assumptions and subject to the risks and uncertainties more fully described in our Securities and Exchange Commission filings, we are adjusting our 2026 loss per share guidance from $(0.45) - $(0.41) per share to $(0.64) – $(0.62) per share and we are also adjusting our previous 2026 FFO guidance from $0.53 - $0.57 per diluted share to a Core FFO range of $0.54 - $0.56 per diluted share which excludes losses on the early extinguishment of debt. Our adjustment to guidance for the 2026 loss per share is primarily due to the loss associated with the $240 million sales transaction in Philadelphia, Pennsylvania and the loss on the early extinguishment of debt recorded in the third quarter. This guidance is provided for informational purposes and is subject to change. The following is a reconciliation of the calculation of 2026 FFO, 2026 Core FFO and earnings per diluted share: Guidance for 2026 | Range | | | | | Loss per share allocated to common shareholders | $(0.64 | ) | to | $(0.62 | ) Plus: real estate depreciation, amortization | 1.18 | | | 1.18 | Less: real estate gains and losses, net | (0.32 | ) | | (0.32 | ) Plus: real estate impairments | 0.23 | | | 0.23 | FFO per diluted share | $0.45 | | to | $0.47 | Plus: loss on the early extinguishment of debt | 0.09 | | | 0.09 | Core FFO per diluted share | $0.54 | | to | $0.56 | Our 2026 FFO and 2026 Core FFO key assumptions include: - Year-end Core Occupancy Range: 89-90%; - Year-end Core Leased Range: 90-91%; - Rental Rate Mark-to-Market (accrual): 5-6%; - Rental Rate Mark-to-Market (cash): (2)-0%; - Same Store (accrual) NOI Range: (1)-1%; - Same Store (cash) NOI Range: 0-2%; - Speculative Revenue Target: $19.5 million, 100% achieved; - Tenant Retention Rate Range: 53-54%; - Property Acquisition Activity: None; - Property Sales Activity: $545 million, 100% achieved; - Development Starts: Redevelopment of one existing Uptown ATX building in Austin, Texas; - Financing Activity: Repaid our $178 million 3025 JFK Construction Loan maturing in July 2026, financed Avira with a $90 million secured loan and extended the maturity date of our unsecured credit facility to December 31, 2026. Repaid our $57.3 million mortgage secured by 3151 Market Street; - Share Buyback and Bond Repurchase Activity: $120 – 140 million to be executed primarily during third and fourth quarters of 2026 based on current sales activity. $140 million of bond purchases and $14.9 million of common share repurchases achieved; - Annual earnings and FFO and Core FFO per diluted share based on 178.0 million fully diluted weighted average common shares. Except as outlined in our 2026 Business Plan, which can be located on the Investor Relations page of our website, our estimates do not include (1) possible future gains or losses or the impact on operating results from other possible future property acquisitions or dispositions, (2) the impacts of any other capital markets activity, (3) future write-offs or reinstatements of accounts receivable and accrued rent balances, or (4) future impairment charges. EPS estimates may fluctuate based on several factors, including changes in the recognition of depreciation and amortization expense, impairment losses on depreciable real estate, and any gains or losses associated with disposition activity. Management is not able to assess at this time the potential impact of these factors on projected EPS. By definition, FFO and Core FFO do not include real estate-related depreciation and amortization, impairment losses on depreciable real estate, or gains or losses associated with disposition activities or depreciable real estate. For a complete definition of Core FFO and FFO and statements of the reasons why management believes Core FFO and FFO provide useful information to investors, see page 37 in our third quarter Supplemental Information Package. There can be no assurance that our actual results will not differ materially from the estimates set forth above. Our 2026 Business Plan is included in our Supplemental Information Package which can be located on the Investor Relations page of our website. About Brandywine Realty Trust Brandywine Realty Trust (NYSE: BDN) is one of the largest, publicly traded, full-service, integrated real estate companies in the United States with a core focus in Philadelphia, PA and Austin, TX. Organized as a real estate investment trust (REIT), we own, develop, lease and manage an urban, town center and transit-oriented portfolio comprising 107 properties and 18.0 million square feet as of September 30, 2026. Our purpose is to shape, connect and inspire the world around us through our expertise, the relationships we foster, the communities in which we live and work, and the history we build together. For more information, please visit www.brandywinerealty.com. Conference Call and Audio Webcast After releasing our third quarter earnings after the market close on Wednesday, October 21, 2026, we will hold our third quarter conference call on Thursday, October 22, 2026 at 9:00 a.m. Eastern Time. To access the conference call by phone, please visit this link here, and you will be provided with dial-in details. A live webcast of the conference call will also be available on the Investor Relations page of our website at www.brandywinerealty.com. Supplemental Information We produce a Supplemental Information Package that includes details regarding the performance of the portfolio, financial information, non-GAAP financial measures, same-store information and other useful information for investors. The Supplemental Information Package is available via our website, www.brandywinerealty.com, through the "Investor Relations" section. Looking Ahead – Fourth Quarter 2026 Conference Call We expect to release our fourth quarter 2026 earnings on Wednesday, February 3, 2027 after the market close and expect to host our fourth quarter 2026 conference call on Thursday, February 4, 2027 at 9:00 a.m. Eastern Time. We expect to issue a press release in advance of these events to reconfirm the dates and times and provide all related information. 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 2026 Guidance and our 2026 Business Plan and expectations for timing and terms of developments, sales, capital activities, bond repurchases and common share buybacks, 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: reduced demand for office space and pricing pressures, including from competitors, changes to tenant work patterns 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 future 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; impacts from changes to U.S. trade and foreign relations policies, including the imposition of tariffs; impacts of a U.S. government shutdown; unexpected costs of REIT qualification compliance; costs and disruptions as the result of a cybersecurity incident or other technology disruption; reliance on key personnel; and failure to maintain an effective system of internal control, including internal control over financial reporting. The declaration and payment of future dividends (both timing and amount) is subject to the determination of our Board of Trustees, in its sole discretion, after considering various factors, including our financial condition, historical and forecast operating results, and available cash flow, as well as any applicable laws and contractual covenants and any other relevant factors. Our Board's practice regarding declaration of dividends may be modified at any time and from time to time. Additional information on factors which could impact us and the forward-looking statements contained herein are included in our filings with the Securities and Exchange Commission, including our Form 10-K for the year ended December 31, 2025. Given the uncertainties, we caution readers not to place undue reliance on forward-looking statements. We assume 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 We compute our financial results in accordance with generally accepted accounting principles (GAAP). Although FFO, Core FFO and NOI are non-GAAP financial measures, we believe that Core FFO, 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) and Core Funds from Operations ("Core FFO") We compute 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 us. NAREIT defines FFO as net income (loss) before non-controlling interests of common unitholders and excluding gains (losses) on sales of depreciable operating property, impairment losses on depreciable consolidated real estate, impairment losses on investments in unconsolidated real estate ventures and extraordinary items (computed in accordance with GAAP); plus real estate related depreciation and amortization (excluding amortization of deferred financing costs), and after similar adjustments for unconsolidated joint ventures. Core FFO is a computation made by analysts and investors to measure a real estate company's operating performance by removing the effect of items that do not reflect ongoing property operations, including items such as (gains) losses from sales of non-depreciable land and debt extinguishment costs from the determination of FFO. Our calculation of Core FFO may differ from the methodology used for calculating Core FFO by other REITs and, accordingly, our Core FFO may not be comparable to Core FFO reported by other REITs. To facilitate a clear understanding of our historical operating results, FFO and Core 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. Neither FFO nor Core FFO represent cash flow from operating activities (determined 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 our financial performance or to be an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor are they indicative of funds available for our cash needs, including our ability to make cash distributions to shareholders. We generally consider FFO, Core FFO, FFO per share and Core FFO per share to be useful measures for understanding and comparing our operating results because they facilitate an understanding of our operating performance after adjustment for certain non-recurring items that are required by GAAP to be expensed but may not necessarily be indictive of current operating performance and our operating performance between periods. Furthermore, although FFO, Core FFO and other supplemental performance measures are defined in various ways throughout the REIT industry, we believe that FFO and Core FFO may provide us and our investors with an additional useful measure to compare our financial performance to certain other REITs. Net Operating Income (NOI) NOI (accrual basis) is a Non-GAAP 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 Operating Partnership and losses from early extinguishment of debt, less interest income, development and management income, gains from property dispositions, gains on sale from discontinued operations, gains on early extinguishment of debt, income from discontinued operations, income from unconsolidated joint ventures and non-controlling interest in property partnerships. In some cases we also present NOI on a cash basis, which is NOI after eliminating the effects of straight-lining of rent and deferred market intangible amortization. NOI presented by us may not be comparable to NOI reported by other REITs that define NOI differently. NOI should not be considered an alternative to net income as an indication of our performance or to cash flows as a measure of the Company's liquidity or its ability to make distributions. We believe 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 order to provide results that are more closely related to a property's results of operations. We use NOI internally to evaluate the performance of our operating segments and to make decisions about resource allocations. We concluded that NOI provides useful information to investors regarding our financial condition and results of operations, as it reflects only the income and expense items incurred at the property level, as well as the impact on operations from trends in occupancy rates, rental rates, operating costs and acquisition and development activity on an unlevered basis. Same Store Properties 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 Same Store Properties. Same Store Properties therefore exclude properties placed in-service, acquired, repositioned, held for sale or in development or redevelopment after the beginning of the earliest period presented or disposed of prior to the end of the latest period presented. Accordingly, it takes at least one year and one quarter after a property is acquired for that property to be included in Same Store Properties. Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) EBITDA is a non-GAAP financial measure. The Company computes EBITDA in accordance with standards established by NAREIT, which may not be comparable to EBITDA reported by other REITs that do not compute EBITDA in accordance with the NAREIT definition, or that interpret the NAREIT definition differently than the Company. EBITDA is defined as net income (loss) (computed in accordance with GAAP), plus interest expense, plus income tax expense (if any), plus depreciation and amortization, plus (minus) losses and gains on the disposition of depreciated property, plus impairment write-downs of depreciated property and investments in unconsolidated real estate ventures, plus adjustments to reflect the Company's share of EBITDA of unconsolidated real estate ventures. EBITDA is not intended to represent cash flow for the period, is not presented as an alternative to operating income as an indicator of operating performance, should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP and is not indicative of operating income or cash provided by operating activities as determined under GAAP. EBITDA 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 service or incur debt. Core Portfolio Our core portfolio is comprised of our wholly owned properties, excluding any properties currently in development, re-development or recently completed, not yet stabilized or held for sale. Speculative Revenue Speculative Revenue represents the amount of rental revenue the Company projects to be recorded during the current calendar year from new and renewal leasing activity in its core portfolio that has yet to be executed as of the beginning of the year. This revenue is primarily attributable to the absorption of core portfolio square footage that was either vacant at the beginning of the year or the renewal of existing tenants due to expire during the current year. BRANDYWINE REALTY TRUST CONSOLIDATED BALANCE SHEETS (unaudited, in thousands, except share and per share data) | | | | September 30, 2026 | | December 31, 2025 ASSETS | | | Real estate investments: | | | Operating properties | $ | 3,300,851 | | | $ | 3,753,780 | Accumulated depreciation | | (1,263,796 | ) | | | (1,259,090 | ) Prepaid ground leases, net | | 6,944 | | | | 51,399 | Right of use asset - operating leases, net | | 12,145 | | | | 17,806 | Operating real estate investments, net | | 2,056,144 | | | | 2,563,895 | Construction-in-progress | | 82,518 | | | | 118,543 | Land held for development | | 80,403 | | | | 70,405 | Prepaid leasehold interests in land held for development, net | | 27,762 | | | | 27,762 | Total real estate investments, net | | 2,246,827 | | | | 2,780,605 | Cash and cash equivalents | | 312,743 | | | | 32,284 | Restricted cash and escrow | | 954 | | | | 30,018 | Accounts receivable | | 17,146 | | | | 22,154 | Accrued rent receivable, net of allowance of $369 and $424 as of September 30, 2026 and December 31, 2025, respectively | | 169,047 | | | | 182,651 | Investment in unconsolidated real estate ventures | | 306,663 | | | | 314,326 | Deferred costs, net | | 68,566 | | | | 79,549 | Intangible assets, net | | 11,579 | | | | 22,426 | Other assets | | 143,186 | | | | 122,227 | Total assets | $ | 3,276,711 | | | $ | 3,586,240 | LIABILITIES AND BENEFICIARIES' EQUITY | | | Secured debt, net | $ | 88,009 | | | $ | 234,079 | Unsecured credit facility | | 137,000 | | | | — | Unsecured term loan, net | | 249,695 | | | | 249,389 | Unsecured senior notes, net | | 1,934,858 | | | | 2,073,394 | Accounts payable and accrued expenses | | 143,612 | | | | 143,826 | Distributions payable | | 13,819 | | | | 14,108 | Deferred income, gains and rent | | 22,346 | | | | 22,569 | Intangible liabilities, net | | 5,889 | | | | 12,713 | Lease liability - operating leases | | 17,052 | | | | 23,720 | Other liabilities | | 13,294 | | | | 14,588 | Total liabilities | $ | 2,625,574 | | | $ | 2,788,386 | Brandywine Realty Trust's Equity: | | | Common Shares of Brandywine Realty Trust's beneficial interest, $0.01 par value; shares authorized 400,000,000; 170,026,338 and 173,699,039 issued and outstanding as of September 30, 2026 and December 31, 2025, respectively | | 1,694 | | | | 1,733 | Additional paid-in-capital | | 3,191,409 | | | | 3,199,838 | Deferred compensation payable in common shares | | 25,467 | | | | 23,069 | Common shares in grantor trust, 2,288,739 and 1,583,000 issued and outstanding as of September 30, 2026 and December 31, 2025, respectively | | (25,467 | ) | | | (23,069 | ) Cumulative earnings | | 503,217 | | | | 605,252 | Accumulated other comprehensive income (loss) | | 5,262 | | | | (1,437 | ) Cumulative distributions | | (3,055,059 | ) | | | (3,012,654 | ) Total Brandywine Realty Trust's equity | | 646,523 | | | | 792,732 | Noncontrolling interests | | 4,614 | | | | 5,122 | Total beneficiaries' equity | $ | 651,137 | | | $ | 797,854 | Total liabilities and beneficiaries' equity | $ | 3,276,711 | | | $ | 3,586,240 | BRANDYWINE REALTY TRUST CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited, in thousands, except share and per share data) | Three Months Ended September 30, | | Nine Months Ended September 30, | | 2026 | | | | 2025 | | | | 2026 | | | | 2025 | Revenue | | | | | | | Rents | $ | 118,661 | | | $ | 114,742 | | | $ | 362,016 | | | $ | 343,366 | Third party management fees, labor reimbursement and leasing | | 3,975 | | | | 4,540 | | | | 12,763 | | | | 15,242 | Other | | 3,002 | | | | 2,135 | | | | 6,783 | | | | 4,896 | Total revenue | | 125,638 | | | | 121,417 | | | | 381,562 | | | | 363,504 | Operating expenses | | | | | | | Property operating expenses | | 39,232 | | | | 31,412 | | | | 116,326 | | | | 96,303 | Real estate taxes | | 10,982 | | | | 11,647 | | | | 33,988 | | | | 34,586 | Third party management expenses | | 1,884 | | | | 2,350 | | | | 6,317 | | | | 7,467 | Depreciation and amortization | | 45,088 | | | | 43,005 | | | | 142,068 | | | | 131,120 | General and administrative expenses | | 7,954 | | | | 7,841 | | | | 29,552 | | | | 34,636 | Provision for impairment | | 29,057 | | | | — | | | | 40,966 | | | | 63,369 | Total operating expenses | | 134,197 | | | | 96,255 | | | | 369,217 | | | | 367,481 | Gain on sale of real estate | | | | | | | Net gain on disposition of real estate | | 55,689 | | | | 35 | | | | 55,752 | | | | 3,008 | Total gain on sale of real estate | | 55,689 | | | | 35 | | | | 55,752 | | | | 3,008 | Operating income (loss) | | 47,130 | | | | 25,197 | | | | 68,097 | | | | (969 | ) Other income (expense): | | | | | | | Interest and investment income | | 702 | | | | 1,238 | | | | 2,436 | | | | 3,274 | Interest expense | | (39,035 | ) | | | (32,914 | ) | | | (121,855 | ) | | | (97,104 | ) Interest expense - amortization of deferred financing costs | | (1,322 | ) | | | (1,336 | ) | | | (4,054 | ) | | | (3,763 | ) Equity in loss of unconsolidated real estate ventures | | (14,157 | ) | | | (18,183 | ) | | | (31,597 | ) | | | (43,526 | ) Net gain on real estate venture transactions | | — | | | | — | | | | — | | | | 183 | Loss on early extinguishment of debt | | (15,417 | ) | | | — | | | | (15,441 | ) | | | — | Net loss before income taxes | | (22,099 | ) | | | (25,998 | ) | | | (102,414 | ) | | | (141,905 | ) Income tax provision | | (43 | ) | | | — | | | | (67 | ) | | | (85 | ) Net loss | | (22,142 | ) | | | (25,998 | ) | | | (102,481 | ) | | | (141,990 | ) Net loss attributable to noncontrolling interests | | 108 | | | | 79 | | | | 446 | | | | 427 | Net loss attributable to Brandywine Realty Trust | | (22,034 | ) | | | (25,919 | ) | | | (102,035 | ) | | | (141,563 | ) Nonforfeitable dividends allocated to unvested restricted shareholders | | (228 | ) | | | (313 | ) | | | (794 | ) | | | (1,064 | ) Net loss attributable to Common Shareholders of Brandywine Realty Trust | $ | (22,262 | ) | | $ | (26,232 | ) | | $ | (102,829 | ) | | $ | (142,627 | ) PER SHARE DATA | | | | | | | Basic loss per Common Share | $ | (0.13 | ) | | $ | (0.15 | ) | | $ | (0.59 | ) | | $ | (0.82 | ) Basic weighted average shares outstanding | | 172,010,229 | | | | 173,699,312 | | | | 173,377,458 | | | | 173,385,330 | Diluted loss per Common Share | $ | (0.13 | ) | | $ | (0.15 | ) | | $ | (0.59 | ) | | $ | (0.82 | ) Diluted weighted average shares outstanding | | 172,010,229 | | | | 173,699,312 | | | | 173,377,458 | | | | 173,385,330 | BRANDYWINE REALTY TRUST FUNDS FROM OPERATIONS (unaudited, in thousands, except share and per share data) | Three Months Ended September 30, | | Nine Months Ended September 30, | | 2026 | | | | 2025 | | | | 2026 | | | | 2025 | Net loss attributable to common shareholders | $ | (22,262 | ) | | $ | (26,232 | ) | | $ | (102,829 | ) | | $ | (142,627 | ) Add (deduct): | | | | | | | Net loss attributable to noncontrolling interests - LP units | | (73 | ) | | | (78 | ) | | | (314 | ) | | | (426 | ) Nonforfeitable dividends allocated to unvested restricted shareholders | | 228 | | | | 313 | | | | 794 | | | | 1,064 | Net (gain) loss on real estate venture transactions | | (5,027 | ) | | | 305 | | | | (4,287 | ) | | | 107 | Net gain on disposition of real estate | | (55,689 | ) | | | (35 | ) | | | (55,752 | ) | | | (3,008 | ) Provision for impairment | | 29,057 | | | | — | | | | 40,966 | | | | 63,369 | Company's share of impairment of an unconsolidated real estate venture | | 10,559 | | | | — | | | | 10,559 | | | | — | Depreciation and amortization: | | | | | | | Real property | | 38,767 | | | | 37,786 | | | | 122,626 | | | | 114,878 | Leasing costs including acquired intangibles | | 4,964 | | | | 4,439 | | | | 16,099 | | | | 13,842 | Company's share of unconsolidated real estate ventures | | 8,830 | | | | 11,876 | | | | 26,035 | | | | 32,657 | Partners' share of consolidated real estate ventures | | (55 | ) | | | (6 | ) | | | (207 | ) | | | (13 | ) Funds from operations | | 9,299 | | | | 28,368 | | | $ | 53,690 | | | $ | 79,843 | Funds from operations allocable to unvested restricted shareholders | | (161 | ) | | | (337 | ) | | | (966 | ) | | | (1,037 | ) Funds from operations available to common share and unitholders (FFO) | $ | 9,138 | | | $ | 28,031 | | | $ | 52,724 | | | $ | 78,806 | FFO per share - fully diluted | $ | 0.05 | | | $ | 0.16 | | | $ | 0.29 | | | $ | 0.44 | Plus: Capital market, transactional items and other | $ | 15,417 | | | $ | — | | | $ | 15,441 | | | $ | — | Core FFO | $ | 24,555 | | | $ | 28,031 | | | $ | 68,165 | | | $ | 78,806 | Core FFO per share – fully diluted | $ | 0.14 | | | $ | 0.16 | | | $ | 0.38 | | | $ | 0.44 | Weighted-average shares/units outstanding — fully diluted | | 179,426,959 | | | | 178,984,473 | | | | 180,485,496 | | | | 178,630,855 | Distributions paid per common share | $ | 0.08 | | | $ | 0.15 | | | $ | 0.24 | | | $ | 0.45 | | | | | | | | | | | | | | | | BRANDYWINE REALTY TRUST SAME STORE OPERATIONS – 3rd QUARTER (unaudited and in thousands) Of the 59 properties owned by the Company as of September 30, 2026, a total of 55 properties ("Same Store Properties") containing an aggregate of 10.4 million net rentable square feet were owned for the entire three months ended September 30, 2026 and 2025. As of September 30, 2026, three properties were recently completed and one property was in development/redevelopment. The Same Store Properties were 88.8% and 89.8% occupied as of September 30, 2026 and 2025, respectively. The following table sets forth revenue and expense information for the Same Store Properties: | Three Months Ended September 30, | 2026 | | 2025 Revenue | | | Rents | $ | 99,762 | | | | $ | 97,372 | | Other | | 332 | | | | | 243 | | Total revenue | | 100,094 | | | | | 97,615 | | Operating expenses | | | Property operating expenses | | 27,904 | | | | | 25,952 | | Real estate taxes | | 9,662 | | | | | 9,679 | | Other | | | Net operating income | $ | 62,528 | | | | $ | 61,984 | | Net operating income - percentage change over prior year | | 0.9 | | % | | Net operating income, excluding other items (1) | $ | 61,304 | | | | $ | 61,678 | | Net operating income, excluding other items - percentage change over prior year | | (0.6 | ) | % | | | | | Net operating income | $ | 62,528 | | | | $ | 61,984 | | Straight line rents & other | | 1,917 | | | | | 340 | | Above/below market rent amortization | | (160 | ) | | | | (164 | ) | Amortization of tenant inducements | | 232 | | | | | 190 | | Non-cash ground rent expense | | 184 | | | | | 188 | | Cash - Net operating income | $ | 64,701 | | | | $ | 62,538 | | Cash - Net operating income - percentage change over prior year | | 3.5 | | % | | Cash - Net operating income, excluding other items (1) | $ | 63,086 | | | | $ | 62,055 | | Cash - Net operating income, excluding other items - percentage change over prior year | | 1.7 | | % | | | Three Months Ended September 30, | 2026 | | 2025 Net loss: | $ | (22,142 | ) | | | $ | (25,998 | ) | Add/(deduct): | | | Interest and investment income | | (702 | ) | | | | (1,238 | ) | Interest expense | | 39,035 | | | | | 32,914 | | Interest expense - amortization of deferred financing costs | | 1,322 | | | | | 1,336 | | Equity in loss of unconsolidated real estate ventures | | 14,157 | | | | | 18,183 | | Net (gain) loss on disposition of real estate | | (55,689 | ) | | | | (35 | ) | Gain on early extinguishment of debt | | 15,417 | | | | | — | | Depreciation and amortization | | 45,088 | | | | | 43,005 | | General & administrative expenses | | 7,954 | | | | | 7,841 | | Income tax provision | | 43 | | | | | — | | Provision for impairment | | 29,057 | | | | | — | | Consolidated net operating income | | 73,540 | | | | | 76,008 | | Less: Net operating income of non-same store properties and elimination of non-property specific operations | | (11,012 | ) | | | | (14,024 | ) | Same store net operating income | $ | 62,528 | | | | $ | 61,984 | | | | | (1) - Other items represent termination fees and bad debt expense and other income. BRANDYWINE REALTY TRUST SAME STORE OPERATIONS – NINE MONTHS (unaudited and in thousands) Of the 59 properties owned by the Company as of September 30, 2026, a total of 55 properties ("Same Store Properties") containing an aggregate of 10.4 million net rentable square feet were owned for the entire nine months ended September 30, 2026 and 2025. As of September 30, 2026, three properties were recently completed, and one property was in development/redevelopment. The Same Store Properties were 88.8% and 89.8% occupied as of September 30, 2026 and 2025, respectively. The following table sets forth revenue and expense information for the Same Store Properties: | Nine Months Ended September 30, | 2026 | | 2025 Revenue | | | Rents | $ | 297,446 | | | | $ | 288,683 | | Other | | 806 | | | | | 713 | | Total revenue | | 298,252 | | | | | 289,396 | | Operating expenses | | | Property operating expenses | | 84,919 | | | | | 78,107 | | Real estate taxes | | 28,800 | | | | | 27,720 | | Net operating income | $ | 184,533 | | | | $ | 183,569 | | Net operating income - percentage change over prior year | | 0.5 | | % | | Net operating income, excluding other items (1) | $ | 182,316 | | | | $ | 182,178 | | Net operating income, excluding other items - percentage change over prior year | | 0.1 | | % | | Net operating income | $ | 184,533 | | | | $ | 183,569 | | Straight line rents & other | | 3,027 | | | | | (704 | ) | Above/below market rent amortization | | (479 | ) | | | | (492 | ) | Amortization of tenant inducements | | 683 | | | | | 569 | | Non-cash ground rent expense | | 557 | | | | | 569 | | Cash - Net operating income | $ | 188,321 | | | | $ | 183,511 | | Cash - Net operating income - percentage change over prior year | | 2.6 | | % | | Cash - Net operating income, excluding other items (1) | $ | 185,397 | | | | $ | 181,536 | | Cash - Net operating income, excluding other items - percentage change over prior year | | 2.1 | | % | | | Nine Months Ended September 30, | 2026 | | 2025 Net loss: | $ | (102,481 | ) | | | $ | (141,990 | ) | Add/(deduct): | | | Interest income | | (2,436 | ) | | | | (3,274 | ) | Interest expense | | 121,855 | | | | | 97,104 | | Interest expense - amortization of deferred financing costs | | 4,054 | | | | | 3,763 | | Equity in loss of unconsolidated real estate ventures | | 31,597 | | | | | 43,526 | | Net gain on real estate venture transactions | | — | | | | | (183 | ) | Net loss on disposition of real estate | | (55,752 | ) | | | | (3,008 | ) | Gain on early extinguishment of debt | | 15,441 | | | | | — | | Depreciation and amortization | | 142,068 | | | | | 131,120 | | General & administrative expenses | | 29,552 | | | | | 34,636 | | Income tax provision | | 67 | | | | | 85 | | Provision for impairment | | 40,966 | | | | | 63,369 | | Consolidated net operating income | | 224,931 | | | | | 225,148 | | Less: Net operating income of non-same store properties and elimination of non-property specific operations | | (40,398 | ) | | | | (41,579 | ) | Same store net operating income | $ | 184,533 | | | | $ | 183,569 | | | | | (1) - Other items represent termination fees and bad debt expense and other income. Company / Investor Contact: Tom Wirth EVP & CFO 610-832-7434 [email protected]

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management attributed the second quarter outperformance to better-than-expected tenant renewals and expansions, particularly within the Philadelphia CBD and University City submarkets. The company is executing a 'balance sheet strengthening program' by exceeding its original asset sale targets, aiming to use proceeds primarily to reduce leverage and return to investment-grade metrics. Operational success is being driven by a flight-to-quality trend, with Brandywine capturing 54% of all new leases in the Philadelphia CBD despite representing a smaller portion of total market inventory. Management highlighted that Philadelphia's market fundamentals are improving as approximately 11% of total office inventory is being monitored for conversion to residential use, reducing future office supply. Austin remains a significant drag on overall portfolio occupancy, lagging at 67% occupied, which management is addressing through strategic dispositions like 405 Colorado and targeted redevelopment at Uptown ATX. The leasing pipeline grew 13% sequentially to nearly 2 million square feet, which management views as a durable indicator of firming market conditions and high tour-to-lease conversion rates. Full-year FFO guidance was narrowed to a $0.55 midpoint, assuming the successful closing of the remaining $305 million in asset sales by the end of the third quarter. Management plans to recapitalize the final two preferred equity development projects in Austin during the second half of 2026 to recover capital and lower debt attribution. The company intends to commence redevelopment of the IBM buildings at Uptown ATX, targeting a cash yield north of 8% by offering renovated space at a 15% to 20% discount to new construction rents. Capital allocation will prioritize debt reduction, specifically targeting bonds with coupons above 8.8%, with only 5% to 10% of net proceeds allocated for opportunistic share repurchases. Guidance for the third quarter assumes a $5 million reduction in NOI due to assets held for sale, partially offset by the stabilization of the Radnor Hotel and 250 King of Prussia Road. The company successfully unencumbered the office component of 3025 JFK by securing a $90 million loan on the residential portion, adding $13 million of GAAP income to the balance sheet. Management noted that while bonds trade at a premium, they will incur one-time debt extinguishment costs to retire high-coupon debt, which are not currently included in FFO guidance. The Radnor Hotel development opened on schedule, already booking 99% of its 2026 occupancy projections within the first three months of operation. A 400-basis-point drag on total company occupancy is attributed specifically to the Austin portfolio's current vacancy levels. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management confirmed a multi-floor client is in advanced lease negotiations and noted a 10% increase in the project's overall pipeline. The life science market is seeing a 'durable' rebound, supported by new state-level financing initiatives like the $125 million Innovate 2.0 plan in Pennsylvania. The primary objective is achieving investment-grade metrics; buying back bonds with 8.8% coupons is viewed as a faster accelerant for credit improvement than share repurchases. Share buybacks are intended as an 'adjunct' to maintain earnings neutrality following the dilutive impact of asset sales. The sale of 405 Colorado achieved pricing north of $700 per square foot (approximately an 8% cap rate), reflecting strong institutional interest despite Austin's supply overhang. Management expects a high probability of a 'very good cap rate' transaction for the Solaris residential project within 60 to 90 days due to continued job growth and in-migration. Future sales will be a mix of stabilized core assets and under-leased properties where the capital required for stabilization yields a low return on invested capital. Management is also actively marketing non-earning land parcels to generate liquidity and improve the company's overall growth profile.

This article first appeared on GuruFocus. Speculative Revenue: Increased by $1 million at the guidance midpoint. FFO (Funds From Operations): $0.13 per share for Q2, $0.01 below consensus. Asset Sales: $208 million completed, with a target of $305 million by Q3 end. Leasing Activity: 353,000 square feet leased in Q2. Tenant Retention: 85% for the quarter, full-year midpoint raised to 51%-53%. Same-Store Results: Positive 0.5% on a GAAP basis, 1.9% on a cash basis. Net Loss: $31.7 million or $0.18 per share for Q2. Debt Metrics: Core net debt to EBITDA at 8.1 times. Occupancy: 90.6% leased, 89.1% occupied in wholly owned portfolio. Liquidity: $35 million cash on hand, no outstanding balance on line of credit. Hotel Performance: 8,400 room nights booked, achieving 99% of 2026 occupancy projections. Warning! GuruFocus has detected 8 Warning Signs with BDN. Is BDN fairly valued? Test your thesis with our free DCF calculator. Release Date: July 23, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Brandywine Realty Trust (NYSE:BDN) exceeded or met its business plan expectations for the second quarter, with speculative revenue increasing by $1 million at the guidance midpoint. The company achieved 99% of its speculative revenue at the revised guidance midpoint and reported a second quarter FFO of $0.13 per share, ahead of management guidance. Brandywine Realty Trust (NYSE:BDN) completed $208 million in asset sales, with remaining sales under agreement and scheduled to close in the third quarter, raising its sale guidance to $305 million. The wholly owned portfolio is 90.6% leased and 89.1% occupied, with 88,000 square feet of positive net absorption during the quarter. The Radnor Hotel development opened on schedule and has already booked over 8,400 hotel room nights, achieving almost 99% of its 2026 occupancy projections. Brandywine Realty Trust (NYSE:BDN) reported a net loss of $31.7 million or $0.18 per share for the second quarter. The company's Austin portfolio continues to lag with only 67% occupancy, negatively impacting overall company occupancy by more than 400 basis points. Cash mark-to-market declined during the quarter, although improvement is anticipated in the next two quarters. The second quarter CAD payout ratio was 103%, indicating a higher payout than the business plan range. The company's leverage ratios remain elevated, with core net debt to EBITDA projected to be in the range of 8 to 8.4 times by year-end. Q: Could you provide more color on the 3,151 building, particularly regarding the nature of the tenancy and any improvements in the life sciences sector? A: Gerard Sweeney, President and CEO, explained that they have a multi-floor client in advanced lease negotiations, which is promising. The pipeline has increased by 10% from the last quarter, indicating positive momentum. The life sciences market is rebounding, supported by Pennsylvania's $125 million Innovate 2.0 initiative, which should accelerate growth and capital structures for life science companies. Q: Can you discuss the demand for Austin assets, particularly in light of the oversupply in the apartment market? A: Gerard Sweeney noted strong activity for 405 Colorado, with high-quality institutions showing interest. The sale of 405 Colorado was completed at over $700 per square foot, aligning with guidance. Despite Austin's oversupply, the absorption pace remains significant, and they expect a good cap rate transaction for Solaris within 60 to 90 days. Q: What is the thought process behind the split between debt repayments and stock buybacks? A: Gerard Sweeney emphasized the primary goal of achieving investment-grade metrics by reducing debt, particularly bonds with high coupon rates. The stock buyback is seen as an adjunct to maintain earnings neutrality, targeting 5% to 10% of proceeds for buybacks. CFO Thomas Wirth added that this level of buyback would not significantly impact leverage levels. Q: What is the demand for the IBM space that will be vacated, and what pre-leasing would you require to start renovations? A: Gerard Sweeney mentioned that the pipeline for the IBM space is encouraging, driven by the upcoming train station and the ability to deliver renovated office space at a discount to new construction costs. The first building is 157,000 square feet, and they hope to secure leases during the construction process. Q: After completing $300 million in dispositions this year, what are the plans for further asset sales? A: Gerard Sweeney stated that they plan to continue asset sales, with a focus on enhancing the balance sheet. They expect sales in the couple of hundred million dollar range over the next four to six quarters. The sales will include a mix of stabilized core-like assets and those with current or looming vacancies. For the complete transcript of the earnings call, please refer to the full earnings call transcript.