Brandywine Realty Trust (
, a real estate investment trust (REIT), reported its second
quarter 2012 FFO (funds from operations) of 30 cents per
share, in line with the Zacks Consensus Estimate. However, this
compares unfavorably with FFO of 32 cents in the year-earlier
BRANDYWINE RT (BDN): Free Stock Analysis Report
MACK CALI CORP (CLI): Free Stock Analysis
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In the second quarter, Brandywine reported FFO of $44.6 million or
30 cents per share in the second quarter of 2012 compared with
$47.5 million or 32 cents per share in the year-earlier quarter.
The company reported CAD (cash available for distribution) of $29.1
million or 20 cents per share compared with $20.5 million or 15
cents per share in the year-earlier quarter.
Total revenue during the reported quarter was $137.6 million, down
from $139.2 million in the year-ago quarter and beating the Zacks
Consensus Estimate of $137 million.
In the reported quarter, Brandywine's net operating income (NOI)
increased to $80.3 million from $79.6 million in year-earlier
quarter. NOI, excluding termination revenues and other income
items, upped 3.8% on a GAAP basis and 2.4% on a cash basis in the
Brandywine executed strong leasing activities during the reported
quarter. The company signed leasing agreements for approximately
600,485 square feet of space, comprising 175,229 square feet of new
leases, 80,021 square feet of tenant expansions and 345,235 square
feet of renewed leases. In addition, Brandywine signed new leases
for 527,721 square feet of space, with the leasing period
commencing after the second quarter.
The company achieved a tenant retention ratio of 73.3% with
positive net absorption of space spanning 19,957 square feet in its
core portfolio. As of June 30, 2012, Brandywine's core portfolio
comprising 218 properties and spanning 24.3 million square feet was
86.9% occupied and 89.0% leased, including new leases starting
subsequent to the end of the quarter.
Acquisitions and Dispositions
During the reported quarter, Brandywine completed the disposition
of Pacific Ridge Corporate Center, a two-building office property
in California spanning 121,381 square feet, for $29.0 million.
As of June 30, 2012, Brandywine had an urban town center and
suburban office portfolio of 305 properties spanning 34.5 million
square feet. This includes 230 properties spanning 24.9 million
square feet owned on a consolidated basis and 53 properties
spanning 6.5 million square feet owned in unconsolidated real
Subsequent to the end of the quarter, Brandywine's joint Venture
completed the acquisition of Station Square, a three-property
office portfolio in Maryland spanning 499,395 square feet for
$120.6 million. In addition, Brandywine completed the disposition
of Oaklands Corporate Center, a Pennsylvania-based eleven-property
office portfolio spanning 466,719 square feet for $52.7 million.
At the end of the quarter, the company had cash and cash
equivalents of $190.1 million and net debt to gross assets ratio of
42.8%. The company had no outstanding balance on its $600.0 million
unsecured revolving credit facility. Brandywine declared a dividend
of 15 cents per share in the reported quarter.
Brandywine raised its 2012 FFO guidance to the range of $1.32 to
$1.36 per share from the previous range of $1.30 to $1.35 per
share. The optimism reflects the strong leasing and disposition
activities in the reported quarter.
Based on Brandywine's significant leasing activity, strong balance
sheet and liquidity position, we expect analysts to revise their
estimates upward in coming days. Currently, the Zacks Consensus
Estimate for 2012 and 2013 are pegged at $1.33 and $1.39,
Brandywine carries a Zacks #3 Rank, implying a short-term Hold
rating. We also reiterate our long-term Neutral recommendation on
the stock. One of its competitors -
Mack-Cali Realty Corp. (
- carries a Zacks #4 Rank (short-term Sell rating).
Note: FFO, a widely accepted and reported measure of REIT's
performance, is derived by adding depreciation, amortization and
other non-cash expenses to net income. CAD, a measure to ascertain
a REIT's ability to generate cash, is derived by subtracting
straight-line rent and non-recurring real estate expenses from
funds from operations.