Friday, April 26, 2013

Brandywine Touts Development Projects in First Quarter Highlights

n reporting its financial and operating results for the first quarter, Brandywine Realty Trust highlighted several new development projects it started throughout the region. 

Brandywine is nearly finished with its redevelopment of 660 West Germantown Pike, a 154,392-square-foot office building it acquired vacant in the first quarter of 2012 for $9.1 million. The REIT has invested $14.8 million of the $18.5 million project, with the remaining $3.7 million to cover lease-up expenses. As of March 31, 2013, the property was 58.2% occupied and 77.5% leased. 

Next up in Plymouth Meeting, the Radnor, PA-based REIT expects to begin construction this quarter on its 50/50 joint venture with Toll Brothers on a $77 million, 398-unit multifamily development. Completion is expected by the end of 2015. 

In Philadelphia, Brandywine is developing a 33-story, 850-bed student housing tower called The Grove at Cira South in a 30/30/40 joint venture with Campus Crest Communities and Harrison Street Real Estate Capital. Total cost of the new development is pegged at $158.5 million. Approximately $8.5 million of Brandywine's $18.2 million, 30% share of the equity commitment will be satisfied by its contribution of the underlying ground lease parcel. Construction is underway with completion targeted for the third quarter of 2014. 

The REIT is also building a small, 17,884-square-foot retail center adjoining its various office properties in Radnor to provide additional services and restaurant options for existing tenants. 

Other significant highlights from the first quarter include the $87 million sale of One and Three Christina Center, a two-building, 632,797-square-foot office project in Wilmington, DE, by the joint venture in which Brandywine was a 20% partner. The pair of buildings were occupied by an affiliate of JPMorgan Chase, which bought them. 

Also during the first quarter, Brandywine completed the sale of Princeton Pike Corporate Center, an eight-building, 800,546-square-foot office park in Lawrenceville, N.J., for $121 million. The REIT used net proceeds from that sale to fund the remaining investment balance in One and Two Commerce Square, the massive two-building, 1,896,142-square-foot office complex in Philadelphia's Center City controlled by affiliates of the Thomas Properties Group. 

With the first quarter sales of the Princeton Pike portfolio in central New Jersey and One/Three Christina in Wilmington Brandywine is already 63% towards its goal of selling $221 million in assets in 2013 as it transitions its investments to a higher quality, more urban-oriented office portfolio. 

"During the first quarter of 2013, we continued to achieve outstanding results on operations, transactional activity and balance sheet management," Brandywine President and CEO Gerard H. Sweeney said in a statement announcing the REIT's results. "We achieved particularly strong results on same store NOI growth, rental rate increases and forward leasing, which reinforce our confidence in the 2013 business plan. 

It appears Brandywine has plenty of capital available for investment. In early April, the REIT raised $181.7 million in net proceeds through the offering of 12.65 million in common shares. To offset the dilution from the unplanned equity offering, Brandywine revised its FFO guidance for 2013 to a range of $1.35 to $1.42 per diluted share versus the prior range of $1.41 to $1.48. 

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