Q1 2024 Brandywine Realty Trust Earnings Call

Operator: Good day, and thank you for standing by. Welcome to the Brandywine Realty Trust's first quarter 2024 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised.

Good day and thank you for standing box, you're welcome to the Brandywine Realty Trust first quarter 2024 earnings call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question during the session need to press star one on your telephone you will then hear an automated messages Boston. Your hand is raised to withdraw your question. Please first.

Operator: To withdraw your question, please press star 11 again. Please be advised today's conference is being recorded. I would now like to turn the conference over to your speaker today, Jerry Sweeney, President and CEO. Please go ahead. Kevin, thanks.

Darwin one again, please be advised today's conference is being recorded I would now like to turn the call. Some of your speaker today, Jerry Sweeney President and CEO. Please go ahead.

Gerard H. Sweeney: Kevin, thank you very much. Good morning everyone, and thank you for participating in our first quarter 2020 earnings call. On today's call with me are George Johnstone, our Executive Vice President of Operations; Dan Palazzo, Senior Vice President, Chief Accounting Officer; and Tom Wirth, our Executive Vice President and Chief Financial Officer. Before I begin, certain information discussed during our call may constitute forward-looking statements within the meaning of the Federal Securities Law. Although we believe estimates reflected in these statements are based on reasonable assumptions, we cannot give assurance that the anticipated results will be achieved.

Kevin Thank you very much.

Gerard H. Sweeney: Good morning, everyone and thank you for participating in our first quarter 2024 earnings call on today's call with me are George Johnstone, Our executive Vice President of operations.

Gerard H. Sweeney: Dan Palazzo Senior Vice President Chief Accounting Officer, Tom Wirth, our executive Vice President and Chief Financial Officer.

Gerard H. Sweeney: Prior to beginning certain information discussed during our call may constitute forward looking statements within the meaning of the federal Securities law. Although we believe 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.

Gerard H. Sweeney: For further information on factors that could impact our anticipated results, please refer to our press release, as well as our most recent annual and quarterly reports we file with the SEC. First and foremost, we thank you for participating and hope that you and yours are well and looking forward to a successful and ever-improving 2024. During our prepared comments, we'll briefly review first-quarter results and the progress in our 2024 business plan. Tom will then briefly review first-quarter financial results and frame out the key assumptions driving our 2024 guidance. After that, Dan, George, Tom, and I are available for any questions.

Gerard H. Sweeney: Please reference our press release as well as our most recent annual and quarterly reports, we filed with the SEC.

Gerard H. Sweeney: First and foremost.

Speaker Change: Thank you for participating and hope that you and yours are well and looking forward to a successful and ever improving 2024.

Speaker Change: During our prepared comments will briefly review first quarter results and the progress in our 24 business plan.

Speaker Change: Tom will then briefly review first quarter financial results and frame out the key assumptions driving our 2024 guidance after that Dan George Tom and I are available for any questions, but prior to addressing the quarter and our 24 business plan any detail. We did want to address the key themes that guide our thinking every day.

Gerard H. Sweeney: But prior to addressing the quarter in our 24 business plan in any detail, we did want to address the key themes that guide our thinking every day. From a business risk management standpoint, our focus is really on three key areas, liquidity, development lease up, and portfolio stability. First, on liquidity, as we will outline in both my comments and Tom's, our recent bond issuance cleared the decks on any additional bond maturities through 2027. As such, we do anticipate maintaining minimal balances on our line of credit over the next several years to ensure continued ample liquidity for the company.

Speaker Change: From a business risk management standpoint, our focus is really on three key areas liquidity development lease up and portfolio stability first on liquidity as we will outline in both my comments and Toms our recent bond issuance cleared the decks on any additional bond maturities too.

Speaker Change: 2027, as such we do anticipate maintaining minimal balances on our line of credit over the next several years to ensure continued ample liquidity for the company.

Gerard H. Sweeney: When we're operating joint ventures, we have several non-recourse mortgages still in negotiations. While those discussions are taking longer than we originally planned, we do anticipate constructive outcomes that will improve both our balance sheet and our revenue stream. Second, on development lease-up, we are within several quarters of having our entire development pipeline fully delivered. As I will note later, the pipeline on all projects continues to build, with both the number of tours and issued proposals increasing during the quarter.

Speaker Change: One of our operating joint ventures, we had several non recourse mortgages still in negotiations.

Speaker Change: Those discussions are taking longer than we originally planned we do anticipate constructive outcomes that will improve both our balance sheet and our revenue stream.

Speaker Change: On development lease up we are within several quarters of having our entire development pipeline fully delivered as I will note later the pipeline on all projects continues to build with both number of tours and issued proposals increasing during the quarter. Each of these projects are top of their market attract.

Gerard H. Sweeney: Each of these projects is top of their market, attractive to a broad range of customers, and we remain confident of hitting our target return on cost. We certainly recognize both the earnings drag and the balance sheet impact of carrying $260 million of non-revenue-producing capital and continue our aggressive marketing efforts on every project. On the upside, upon stabilization, these projects will generate approximately $54 million of additional GAAP NOI, or a 15.5% increase to our existing revenue stream, so they do remain a key growth driver for our company.

Speaker Change: It to a broad range of customers and we remain confident of hitting our targeted return on costs. We certainly recognize both the earnings drag in the balance sheet impact of carrying $260 million of non revenue producing capital and continue our aggressive marketing efforts on every.

Speaker Change: <unk> to the upside upon stabilization. These projects will generate approximately $54 million of additional GAAP NOI or 15, 5% increase to our existing revenue stream. So they do remain a key growth driver for our company.

Gerard H. Sweeney: Finally, looking at portfolio stability, continued strong operating metrics reflect the underlying stability of our core portfolio. While our 80% occupied Austin portfolio will face near-term challenges, fundamental growth dynamics in that market remain, and we will be a strong participant in that market's recovery. Philadelphia, which has one of the lowest vacancy rates among the largest cities in the country, continues to perform well, and our 94% leasing level and occupancy level of 91% reinforce that point.

Speaker Change: Finally, looking at portfolio of stability continued strong operating metrics reflect the underlying stability of our core portfolio, while our 80% occupied Austin portfolio will face near term challenges fundamental growth dynamics in that market remain and we will be a strong participant in that.

Speaker Change: <unk> recovery.

Speaker Change: Philadelphia, which has one of the lowest vacancy rates among the largest cities in the country continues to perform well and our 94% leasing level, an occupancy level of 91% reinforce that point.

Gerard H. Sweeney: Looking ahead, we have less than 6% annual revenue rollover through 2026. Our 2024 revenue plan is running ahead of schedule. Our mark to market capital ratios and same store numbers all continue to perform at relatively strong levels as they have done over the past couple of years. We fully recognize the challenges facing the commercial real estate space and have taken and will continue to take the steps necessary to ensure strong performance on our 24 business plan, as well as achieve our longer and intermediate term growth objectives. With that overview, the first quarter has gotten the year off to a great start.

Speaker Change: Looking ahead, we have less than 6% of annual rollover through 2026 or 2024 revenue plan is running ahead of schedule, our mark to market capital ratios in the same store numbers all continue to perform at relatively strong levels as they have done over the past couple of years.

Speaker Change: We fully recognize the challenges facing the commercial real estate space and have taken and will continue to take the steps necessary to ensure strong performance on our 24, our business plan as well as achieving our longer an intermediate term growth objectives.

Speaker Change: With that overview, the first quarter has gotten the year off to a great start results were in line with our 24 business plan a few quarterly highlights we posted first quarter <unk> 24 per share in line with consensus our speculative revenue range of 24% to $25 million is 98%.

Gerard H. Sweeney: Results are in line with our 24 business plan. A few quarterly highlights. We posted first quarter FFO of 24 cents per share, in line with consensus.

Gerard H. Sweeney: Our speculative revenue range of $24 to $25 million is 98% complete at the midpoint. As noted, we did resolve our 24 bond maturity, and as Tom will elaborate, we recently completed a $400 million five-year unsecured bond offering. Proceeds will pay off our outstanding bond due in October 2024, repay the small amount outstanding on our line of credit, and provide additional forward liquidity. Our combined leasing activity for the quarter totaled almost 500,000 square feet.

Speaker Change: <unk> complete at the midpoint as noted we did resolve our 24 bond maturity and as Tom will elaborate.

Speaker Change: Recently, we completed a $400 million five year unsecured bond offering.

Speaker Change: Proceeds will pay off our outstanding bond due October 22024.

Speaker Change: Repay the small amount outstanding on our line of credit and provide additional forward liquidity.

Speaker Change: Our combined leasing activity for the quarter totaled almost 500000 square feet during the quarter, we executed 359000 square feet of leases, including 101000 square feet of new leases within our wholly owned stabilized portfolio.

Gerard H. Sweeney: During the quarter, we executed 359,000 square feet of leases, including 101,000 square feet of new leases within our wholly owned stabilized portfolio. Based on recent efforts with two of our joint ventures, we have eliminated $61.6 million of debt attribution during the quarter, which contributes towards our goal of eliminating $100 million of venture debt attribution by year-end. And as noted on page 13 of our SIP, our 24 business plan anticipates having full availability of our line at year-end 2024. Consolidated debt is 94% fixed at a 6.1% rate.

Speaker Change: Based on recent efforts with two of our joint ventures, we have eliminated.

Speaker Change: $61 $6 million of debt attribution during the quarter, which contributes towards our goal of eliminating $100 million of venture debt attribution by year end 'twenty four.

Speaker Change: And as noted on page 13 of our Sip are 24 business plan anticipates, having full availability of our line at year end 2024 consolidated debt is 94% fixed at six 1% rate.

Gerard H. Sweeney: The quarterly rental rate marked to market was 16.9% on a gap basis and 3.3% on a cash basis. We did end the quarter 87.7% occupied and 89% leased, sequentially down from year end, but very much in line with our business plan expectations. Page four of the supplemental highlights the high occupancy of the majority of our portfolio. It does, however, identify seven properties that comprise over 50% of the company's vacancy. As noted on that page, these properties affect our occupancy numbers by over 400 basis points. We are implementing plans for each of the projects that we outlined on that page, ranging from accelerated leasing initiatives, capital investment programs, and conversion and sale opportunities. The operating portfolio remains in very solid shape.

Speaker Change: Rental rate Mark to market was 16, 9% on a GAAP basis, and three 3% on a cash basis. We did end the quarter 87, 7% occupied and 89% leased sequentially down from year end, but very much in line with our business plan expectations.

Speaker Change: Page four of the supplemental highlights the high occupancy of art. The majority of our portfolio. It does identify seven properties that do comprise over 50% of the company's vacancy as noted on that page. These properties affect our occupancy numbers by over 400 basis points, we are implementing plans.

On each of the projects that we outlined on that page ranging from accelerated leasing initiatives capital investment programs and conversion in sale opportunities.

Speaker Change: The operating portfolio remains in very solid shape. Our forward rollover exposure through 25 has been further reduced to less than 6% and through 2020 is down to an average of five 8%.

Gerard H. Sweeney: Our forward rollover exposure through 25 has been further reduced to less than 6 percent and through 2026 is down to an average of 5.8 percent. And by renewing one of our largest near-term expiring tenants, we now have no tenant lease expiration greater than 1% of revenues through 2026. Therefore, our portfolio quality, service delivery platform, and sub-market positioning remain key competitive advantages.

By renewing one of our largest near term expiring tenants. We now have no tenant lease expiration greater than 1% of revenues through 2026.

Speaker Change: So our portfolio of quality service delivery platform and sub market positioning remain key competitive advantages and similar to recent quarters. The quality curve thesis continues to gain strength as reflected in the overall pick up in our leasing activity.

Gerard H. Sweeney: Similar to recent quarters, the quality curve thesis continues to gain strength as reflected in the overall pickup in our leasing activity. And we do continue to see encouraging signs on the leasing front, as evidenced by the following metrics. The physical tour increase has been very positive. First quarter physical tours exceeded fourth quarter tours by 20 percent and also exceeded our trailing four quarter average by 48 percent. And also, tour activity remains above pre-pandemic levels by over 38 percent.

Speaker Change: And we do continue to see encouraging signs on the leasing front as evidenced by the following metrics.

Speaker Change: Physical tours increase has been very positive first quarter physical tours exceeded fourth quarter tours by 20% also exceeded our trailing four quarters' average by 48% and also tour activity remains above pre pandemic levels by over 38% on a <unk>.

Gerard H. Sweeney: On a wholly owned basis, during the first quarter, 55% of all new leases were the result of this flight to quality. Tenant expansions continue to outweigh tenant contractions during the quarter. Our executed renewal and expansion progress has enabled us to raise our annual retention target by 600 basis points. For example, from 51% to 53% as a range to 57% to 59% as a new range.

Speaker Change: The owned basis during the first quarter, 55% of all new leases were the result of this flight to quality.

Speaker Change: Tenant expansions continue to outweigh tenant contractions during the quarter.

Speaker Change: <unk> executed renewal and expansion progress has enabled us to raise our annual retention target.

Speaker Change: By 600 basis points, so from 51% to 53% as a range to 57% to 59%, it's a new range.

Gerard H. Sweeney: Our total leasing pipeline is up for the fourth consecutive quarter and stands at 4.9 million square feet. Our leasing pipeline is up 400,000 square feet last quarter and stands at 2.4 million square feet on our wholly owned portfolio. On development projects, our pipeline is up 310,000 square feet from last quarter and stands at 2.5 million square feet. The existing portfolio pipeline also includes approximately 300,000 square feet in advanced stages of lease negotiation.

Speaker Change: Our total leasing pipeline is up for the fourth consecutive quarter and stands at $4 9 million square feet.

Speaker Change: Our leasing pipeline is up 400000 square feet last quarter and stands at $2 4 million square feet on our wholly owned portfolio on the development projects. Our pipeline is up 310000 square feet from last quarter and stands at two 5 million square feet the existing portfolio of pipes.

Speaker Change: Line also includes approximately 300000 square feet in advanced stages of lease negotiations.

Gerard H. Sweeney: Also, 38% of our operating portfolio's new deal pipeline are prospects looking to move up the quality curve. And in terms of pipeline staging, which is clearly very important, proposals outstanding are up 153,000 square feet over last quarter. So there are 900,000 square feet of outstanding lease proposals.

Speaker Change: Also 38% of our operating portfolio yield new deal pipeline, our prospects looking to move up the quality curve.

Speaker Change: And in terms of pipeline staging which is clearly very important proposals outstanding are up 153000 square feet over last quarter. So that 900000 square feet of outstanding lease proposals and we have leases in negotiation that are up 59000 square feet from last quarter as well so a very good positive trend.

Gerard H. Sweeney: And we have leases and negotiations that are up 59,000 square feet from the last quarter as well. So, very good positive trend lines on the leasing and deal conversion. Looking at our leverage, our first quarter net debt to EBITDA was up to 7.9 times, up from our fourth quarter number, primarily due to an increase in development and redevelopment costs and, as we always expect, a higher first quarter G&A and lower other income.

Speaker Change: Lines on the leasing and deal conversion front.

Speaker Change: Looking at our leverage our first quarter net debt to EBITDA was up to seven nine times up from our fourth quarter number primarily due to an increase in development or redevelopment cost and as always expected higher first quarter G&A and lower other income.

Gerard H. Sweeney: Our core EBITDA metric ended the quarter at 6.8 times and is currently within our target. Looking quickly at our joint ventures, as I mentioned, we did reduce our investment balance at year-end in one joint venture and at year-end in another joint venture, our basis was reduced to the scheduled first quarter cash distribution. As such, we have now eliminated both joint ventures from our operating reporting metrics and will record no further operating results.

Speaker Change: Our core EBITDA metric ended the quarter at six eight times and currently within our targeted range.

Speaker Change: Looking quickly at our joint ventures as I mentioned, we did reduce our investment balances at year end and one joint venture and at year end and other joint venture.

Speaker Change: Our base was reduced to the scheduled first quarter cash distribution of <unk>.

We have now eliminated both joint ventures from our operating reporting metrics and will record no further operating results.

Gerard H. Sweeney: This also eliminates the corresponding non-recourse debt, lowering our debt attribution by, as I mentioned previously, $61.6 million. And as we noted on page 37 in the SIP, we do have two other operating joint ventures with loan maturities during the first half of 24. Both of those loans are secured solely by the real estate and are non-recourse with no obligation for our partner or Brandywine to fund any additional money.

Speaker Change: This also eliminates the corresponding nonrecourse debt attribute nonrecourse debt lowering our debt attribution by as I mentioned previously $61 6 billion.

Speaker Change: And as we noted on page, 37% as Seth we do have two other operating joint ventures with loan maturities Jordan during the first half of 'twenty for.

Speaker Change: Both of those loans are secured solely by the real estate and our nonrecourse with no obligation for our partner or Brandywine to fund any additional money.

Gerard H. Sweeney: That being said, we do believe the ventures present valuable opportunities as the debt and real estate markets recover, and as such, along with our partners, we continue to be engaged in productive conversations with each lender. While these discussions are progressing slower than we originally anticipated, we do expect a full resolution within the next quarter. We did, as a side note, receive a three-month extension from our lender on Sierra Square and are working with our partners to refinance that property during the extension time.

Speaker Change: That being said, we do believe the debentures present valuable opportunity as the debt and real estate markets recover and as such along with our partners. We continue to be engaged in productive conversations with each lenders.

Speaker Change: While these discussions are progressing slower than we originally anticipated we do expect a full resolution within the next quarter.

Speaker Change: We did it.

Speaker Change: As a side note receive a three month extension from our lender on Sierra Square and are working with our partners to refinance that property during the extension timeframe.

Gerard H. Sweeney: In terms of guidance, as Tom will elaborate further, but as a result of our bond financing occurring three months early and being $50 million above our business plan target, we forecast an additional $0.03 per share of interest expense. Based on that higher expense, we have reduced the upper end of our FFO guidance by that $0.03. So our revised FFO guidance is now $0.90 to $0.97 per share as opposed to our initial FFO range of $0.90 to $1 per share.

Speaker Change: In terms of guidance as Tom will elaborate further but as a result of our bond financing occurring.

Speaker Change: Three months early and being $50 million above our business plan target, we forecast additional three cents per share of interest expense based on that higher expense, we haven't reduced the upper end of our <unk> guidance by that three so our revised <unk> guidance is down 90%.

Speaker Change: <unk> 97 per share as opposed to our initial <unk> range of 90 to $1 per share and based on that based on that.

Gerard H. Sweeney: And based on that revised range, our $0.60 per share dividend, our FFO and CAD payout ratios were at 63% and 86%, respectively. At the midpoint, our first quarter coverage ratios were better than our 2024 business plan forecast. We do still continue to expect to have between $80 and $100 million of sales during the year. As I mentioned last quarter, we do expect those sales to occur in the fourth quarter with minimal dilution.

Speaker Change: Our revised range of <unk> 60 per share dividend.

Speaker Change: Our <unk> CAD payout ratios were at 63, 86%, respectively at the midpoint of our first quarter coverage ratios were better than our 2024 business plan forecast. We do still continue to expect that between 80 and $100 million of sales during the year as I mentioned last year.

Speaker Change: We do expect those sales to occur in the fourth quarter with minimal dilution and during the year. We do plan to have about $200 million to $300 million of sales in the market for price discovery.

Gerard H. Sweeney: And during the year, we do plan to have about $200 to $300 million in sales in the market for price discovery. We are targeting sales in the Metropolitan DC and Pennsylvania suburban marketplaces, and we'll also continue to sell non-core land parcels that we did last year.

Speaker Change: We are targeting sales of the met DC and Pennsylvania suburban marketplaces, and we will also continue to sell non core land parcels that we did last year.

Gerard H. Sweeney: And looking at our developments, as I noted, our development leasing pipeline is 2.5 million square feet, which is up 14% from last quarter. We also saw an increase in the status of that pipeline. So as of now, we have 122,000 square feet under early lease negotiations, 900,000 square feet of proposals outstanding, and 300,000 square feet of undergoing space. Tour Velocity continues to pick up. The commercial components of 1UP, 10, and 3025 JFK are now delivered, and those activity levels continue to increase.

Speaker Change: And looking at our developments as I noted our development leasing pipeline is $2 5 million square feet, which is up 14% from last quarter. We also saw an increase in the status of that pipeline. So as of now we have 122000 square feet under early lease negotiations 900000 square feet.

Speaker Change: Proposals outstanding and 300000 square feet undergoing space planning tour velocity continues to pick up the commercial components of one up 10% and $30 25, Jack Haire JFK are now delivered and those activity levels continued to increase.

Gerard H. Sweeney: However, given the length of time to complete space plans, obtain permits, and construct the space, our 24th financial plan does not include any spec revenue coming from these two projects. To accelerate revenue recognition, however, we are building two floors of spec suites in each building that will be completed by midyear. In looking at the project specifically at 3025 JFK, on the commercial component, we remain 15% leased, but with an active pipeline totaling approximately 650,000 square feet. The delivery of the residential units continues. Activity levels on the residential front remain high.

Speaker Change: However, given the length of time to complete space plans obtained permits and construct and construct this space are 24 financial plan does not include any spec revenue coming from these two projects.

Speaker Change: To accelerate revenue recognition. However, we are building two floors of spec suites and each building that will be completed by mid year.

Speaker Change: And looking at the projects specifically at 30 25 JFK.

On the commercial component, we remained 15% leased but with an active pipeline totaling approximately 650000 square feet.

Speaker Change: The delivery of the residential units continue activity levels on the residential front remained good towards are occurring daily and we currently have about 43% of the project leased.

Gerard H. Sweeney: Tours are occurring daily, and we currently have about 43% of the project leased, which is a nice step up from last quarter. 3151 Market, that building is scheduled for delivery later this year. We have a leasing pipeline that's up slightly from last quarter with 120,000 square feet in early lease negotiation. Uptown ATX Block A construction is on budget.

Speaker Change: <unk>.

Speaker Change: Is it a nice step up from last quarter $31 51 market.

Speaker Change: That building is scheduled for delivery later this year and we have a leasing pipeline is up slightly from last quarter with 120000 square feet and early lease negotiations.

Speaker Change: Uptown ATX block a construction.

Gerard H. Sweeney: We did slide the completion date into Q124 due to a slight delay in some perimeter infrastructure work that needed to be done and affected building accessibility. Our leasing pipeline is approximately 700,000 square feet, which includes a mix of prospects ranging from 5,000 square feet to 300,000 square feet. We did commence the floor spec suites and have a second floor under advanced stages of design. The multifamily component of that project of 341 units will begin phasing in during the third quarter of 2024, and we do anticipate the residential component will be about 50% pre-leased by year-end. Our next phase of B-Labs expansion at Sierra Center is underway and nearing completion.

Speaker Change: Is is on budget, we did slide the completion date into Q1 dollars 24 due to a slight delay in some perimeter infrastructure work that needed to be done and in fact that building accessibility. Our leasing pipeline is approximately 700000 square feet, which includes a mix of prospects ranging from five.

Speaker Change: Square feet to 300000 square feet, we did commence a core spec suites and have a second floor under advanced stages of design. The multifamily component of that project of 341 units will begin phase again during the third quarter of 2004, and we do anticipate the residential component will be about 50.

Speaker Change: Percent pre leased by year end.

Speaker Change: Our next phase of the labs expansion at <unk> Center is underway and nearing completion.

Gerard H. Sweeney: And we are in the final stage of lease negotiation with a single tenant for the entire eighth floor. Tom will now provide an overview of the financial results. Thank you, Gerard. Good morning.

Speaker Change: And we are the final stages of lease negotiation with a single tenant for the entire eighth floor.

Speaker Change: Tom will now provide an overview of our financial results.

Thomas E. Wirth: Thank you Jerry and good morning, our first quarter net loss totaled $16 7 million or <unk> 10 per share and first quarter <unk> totaled $41 2 million or <unk> 24 per diluted share.

Thomas E. Wirth: Our first quarter net loss totaled $16.7 million, or $0.10 per share, and first quarter FFO totaled $41.2 million, or $0.24 per diluted share. Our FFO results met consensus, and we have some general observations regarding the first quarter of 24, highlighting two variances compared to our fourth quarter guidance. Contributions from our joint ventures were $1.2 million above our re-forecast, primarily due to a one-time pickup at one of our joint venture projects. GNA totaled $11.1 million, $1.1 million above our re-forecast, primarily due to higher compensation expense recognition.

Thomas E. Wirth: <unk> results met consensus and we have some general observations regarding the first quarter of 'twenty four highlighting two variances compared to our fourth quarter guidance contributions from our joint ventures was $1 2 million above our re forecast primarily due to a onetime pickup at one of our joint venture projects.

Thomas E. Wirth: G&A totaled $11 1 million $1 1 million above our re forecast primarily due to higher compensation expense recognition. This quarterly variance is continues to be a timing variance and we anticipate the full year number to be relatively consistent with guidance.

Thomas E. Wirth: This quarterly variance continues to be a timing variance, and we anticipate the full-year number to be relatively consistent with guidance. Our first quarter debt service and interest coverage ratios were 2.5. And that, to GAV, was 44.1.

Thomas E. Wirth: Our first quarter debt service and interest coverage ratios were two five.

Thomas E. Wirth: And net debt to JV was $44 one.

Thomas E. Wirth: Our first quarter annualized core net debt to EBITDA was $6.9, and our annualized combined net debt was $7.9. Additionally, it was just above our range of $7.5 to $7.8. Portfolio and joint venture changes. Well, we made no changes to our core portfolio this quarter. We have removed two of our joint ventures from our reporting metric to reflect recent accounting treatment. The accounting treatment for those two ventures was based on the following considerations.

Thomas E. Wirth: Our first quarter annualized core net debt to EBITDA was $6 nine.

Thomas E. Wirth: And our annualized combined net debt was $7 nine also it was just above our range of seven five to seven eight.

Thomas E. Wirth: Portfolio and joint venture changes, while we've made no changes to our core portfolio. This quarter, we have removed two of our joint ventures from our reporting metrics to reflect recent accounting treatment. The accounting treatment for those two ventures was based on the following considerations as of 12 31, we wrote off our existing investment.

Thomas E. Wirth: As of 1231, we wrote off our existing investment balance. Because of the write-off, we will not recognize any future income or loss from those joint ventures, and that debt is nonrecurrent. For financing activities, as Jerry highlighted earlier, we completed a $400 million bond offering that closed on April 12th. And with this issuance, we were able to eliminate a material near-term maturity risk with no subsequent bond maturities until November 2027, improve liquidity by increasing the bond issuance to 400 million from our anticipated 350 million, enforcing our goal of remaining an unsecured borrower, and the higher proceeds help support our objective to have our outstanding line of balance close to zero.

Thomas E. Wirth: Balance because of the write off we will not recognize any future income or loss from those joint ventures and that debt is nonrecourse.

Thomas E. Wirth: Our financing activities as Gerry highlighted earlier, we completed a $400 million bond offering that closed on April 12, and the issue with this issuance we were able to eliminate a material near term maturity risk with no subsequent bond maturities until November 2027 improved liquidity.

Thomas E. Wirth: By increasing the bond issuance to $400 million from our anticipated 350 million enforcing our goal of remaining an unsecured borrower.

Thomas E. Wirth: And the higher proceeds helped support our objective to have our outstanding line of balance close to zero.

Thomas E. Wirth: We maintain a high percentage of our wholly-owned portfolio to be fixed, and after this issuance, we have 96% of our debt fixed at 6.1%, with a weighted average maturity of 4.6 years. We're in the process of tendering for our 2024 bonds, and we'll know those results this coming Friday. The balance of the bonds that are not tendered will then be redeemed in the next five to six weeks.

Thomas E. Wirth: We maintain a high percentage of our wholly owned portfolio to be fixed and after this issuance we have 96% of our debt fixed at six 1% with a weighted average maturity of four six years.

Thomas E. Wirth: We're in the process of tendering for our 2020 for bonds and will know those results. This coming Friday the balance of the bonds that are not tender will then be redeemed in the next five to six weeks.

Thomas E. Wirth: While the bond pricing was in line with our 2024 business plan.

Thomas E. Wirth: While the bond pricing was in line with our 2024 business plan, we increased this will increase interest expense by about $5 million or $0.03 per share, primarily to account for the timing of the new bond issuance and the increase of the interest rate curve for our floating rate debt. As such, we lowered the upper end of our FFO guidance by $0.03. With the bond transaction complete, at this point, we are not pursuing a secured financing transaction.

Thomas E. Wirth: We increased the <unk>.

Thomas E. Wirth: Increased this will increase interest expense by about $5 million or four or <unk> <unk> per share primarily to account for the timing of the new bond issuance and the increase of the interest rate curve.

Thomas E. Wirth: For our floating rate debt as such we lowered the upper end of our <unk> guidance by <unk>.

Thomas E. Wirth: With the bond transaction complete at this point, we are not pursuing a secured financing transaction.

Thomas E. Wirth: Regarding our 2024 joint venture debt maturities, as Jerry mentioned, we are working with our partners on the 2024 maturities to potentially extend the current dates with our existing lenders. We've commenced marketing efforts with other lenders and put certain properties on the market for sale to lower JV leverage. We did extend our maturing Sera Square Mortgage by 90 days through July.

Thomas E. Wirth: Regarding our 2024 joint venture debt maturities as Jerry mentioned, we are working with our partners on the 2024 maturities to potentially extend the current dates with our existing lenders, we commenced marketing efforts with other lenders and puts.

Thomas E. Wirth: Put certain properties on the market for sale to lower JV leverage we did extend our maturing cira square mortgage 90 days through July one.

Thomas E. Wirth: Looking more closely at the second quarter of 2024, we had the following general assumptions.

Thomas E. Wirth: Looking more closely at the second quarter of 2024, we have the following general assumptions. As a portfolio operating company, our portfolio level operating income will total approximately $74 million and be roughly in line with our first quarter results. Our FFO contribution from our unconsolidated joint ventures will total a negative $2 million in the second quarter. The sequential reduction is due to the one-time income pickup in the first quarter, and commencing late in the quarter are ATX residential operations.

Thomas E. Wirth: Portfolio operating company.

Thomas E. Wirth: Our portfolio level operating income will total approximately $74 million and be roughly in line with our first quarter results.

Thomas E. Wirth: Our <unk> contribution from our unconsolidated joint ventures.

Thomas E. Wirth: It will total of negative $2 million.

In in the second quarter, a sequential reduction is due to the onetime income pickup in the first quarter and commencing late in the quarter our ACX residential.

Thomas E. Wirth: G&A for the second quarter will decrease to $9.5 million. The sequential improvement is consistent with our prior years and is primarily due to the timing of deferred compensation expense recognition. Total interest expense will approximate $33 million, and capitalized interest will be $3 million. Termination fees and other income will total roughly $2 million.

Thomas E. Wirth: <unk> operations.

Thomas E. Wirth: G&A for the second quarter, we will decreased to $9 5 million. The sequential improvement is consistent with our prior years and is primarily due to the timing of deferred compensation expense recognition.

Thomas E. Wirth: Total interest expense will approximate $33 million capitalized interest will be $3 million.

Thomas E. Wirth: Termination fees and other income will total.

Thomas E. Wirth: $2 million.

Thomas E. Wirth: NOI from our net management leasing and development fees will be roughly $3 million and.

Thomas E. Wirth: Quarterly NOI from our net management, leasing, and development fees will be roughly $3 million, and we do expect interest and investment income to total approximately $1.2 million. That increase comes from the excess cash we will hold until the 24 bonds or are paid. On tender, we believe we'll generate a one-time net gain totaling roughly $800 to $1,000,000 by buying the bonds back at something less than par. The Land Sales Gains Tax Provision will be not material, and our share count will have crossed, approximately 176 million diluted shares.

Thomas E. Wirth: And we do expect interest and investment income.

Thomas E. Wirth: <unk> will total approximately $1 $2 million that increase coming from the excess cash we will hold until the 'twenty four bonds or.

Thomas E. Wirth: Our paid.

Thomas E. Wirth: On tender, we generate we believe we would generate a onetime net gain totaling roughly $802 million.

Thomas E. Wirth: To buying the bonds back at something less than par.

Thomas E. Wirth: Land sales gains tax provision will be not material and our share count will approximate.

Thomas E. Wirth: Our estimate of 106 to.

Thomas E. Wirth: 176 million diluted shares.

Thomas E. Wirth: Our capital plan is fairly straightforward and totals $580 million, and our CAD range remains at $90 to $95. In our capital plan, the primary uses are going to be $70 million of development and redevelopment costs and $80 million of common dividends. $35 million of revenue maintenance, $30 million of revenue creating CapEx, $25 million of contributions to our joint ventures, and the $340 million unsecured bond redemption. Our primary sources for these will be $105 million of cash flow after interest, $391 net secured loan proceeds from our bond offering, land sales at the midpoint of $90 million, and $25 million of construction loan proceeds related to 155 King and Prussia Road.

Our capital plan is fairly straightforward and totaled $580 million and our CAD range remains at 90 to 95.

Thomas E. Wirth: For our capital plan. The primary uses are going to be $70 million of development and redevelopment costs $80 million of common dividends.

Thomas E. Wirth: $35 million of revenue maintaining there.

Thomas E. Wirth: $30 million of revenue, creating capex.

Thomas E. Wirth: $25 million of contributions to our joint ventures.

Thomas E. Wirth: $340 million unsecured bond redemption.

Thomas E. Wirth: Primary sources for those will be $105 million of cash flow after interest three.

Thomas E. Wirth: 391, net secured loan proceeds from our bond offering.

Thomas E. Wirth: Land sales at the midpoint of $90 million.

Thomas E. Wirth: $25 million of construction loan proceeds related to $1 55, King of Prussia Road.

Thomas E. Wirth: Based on the capital plan outlined cash on hand should increase roughly $31 million and our line of credit and expect to end the year Undrawn, leaving full availability.

Thomas E. Wirth: Based on the capital plan outline, cash on hand should increase roughly $31 million, and our line of credit is expected to end the year undrawn, leaving full availability. We also project that our net debt to EBITDA will fall within the range of $75 to $78, with an increase primarily due to incremental capital expenditure on development projects with minimal project income by year-end. And our net debt to JAB will approximate $45. In addition to our core net debt, our metric of net debt to EBITDA, our core net debt range is 6.5 to 6.8 for the year and excludes primarily our joint ventures as well as all of our active development projects that will be completed shortly.

Thomas E. Wirth: We also project that our net debt to EBITDA will fall within the range of seven five to 708 with an increased primarily due to incremental capital spend on development projects with minimal pre.

Thomas E. Wirth: <unk> income by year end and our net.

Thomas E. Wirth: Net debt to Jay.

Thomas E. Wirth: <unk> will approximate 45%.

Thomas E. Wirth: And in addition to our core net debt.

Thomas E. Wirth: Our metric of net debt to EBITDA or core net debt range is 65 to six eight.

Thomas E. Wirth: For the year and excludes primarily our joint ventures as well as all of our active development projects.

Thomas E. Wirth: That will be completed shortly.

We believe the core leverage metric better reflects the leverage of our core portfolio and eliminates our more highly leveraged joint ventures at our unstable is development and redevelopment projects.

Thomas E. Wirth: During 2025, our core net debt to EBITDA should begin to equal our consolidated net debt to EBITDA as our development projects reach stabilization and we continue to reduce exposure to our current joint ventures.

Thomas E. Wirth: We believe the core leverage metric better reflects the leverage of our core portfolio and eliminates our more highly leveraged joint ventures and our unstabilized development and redevelopment projects. During 2025, our core net debt to EBITDA should begin to equal our consolidated net debt to EBITDA as our development projects reach stabilization and we continue to reduce exposure to our current joint venture. We anticipate our fixed charge and interest coverage ratios to be approximately 2.2, which represents a decrease from the first quarter, primarily due to the higher forecasted interest expense from our recent unsecured bond issuance.

Thomas E. Wirth: We anticipate our fixed charge and interest coverage ratios were approximately $2 two.

Thomas E. Wirth: Which represents a decrease from the first quarter, primarily due to the higher forecasted interest expense from our recent unsecured bond issuance.

Thomas E. Wirth: <unk> capital spend and the stabilization of our joint ventures.

Now I'll turn the call back over to Gerry Great. Tom Thank you very much.

Gerard H. Sweeney: So I guess the key takeaways.

Gerard H. Sweeney: Our portfolio remains in solid shape very minimal annual rollover exposure through 26, I think presents a.

Thomas E. Wirth: Projected Capital Spend, and the Stabilization of our Joint Venture. I now turn the call back over to Gerard. Great, Tom. Thank you very much.

Gerard H. Sweeney: A very solid foundation.

Gerard H. Sweeney: We anticipate having strong mark to markets continue to manage our capital spend effectively and we do it we do anticipate accelerating leasing velocity in both our development and our operating portfolio. So we're exiting a baseline business plan that continues to improve liquidity as evidenced by our acts.

Gerard H. Sweeney: So, I guess the key takeaway is, you know, if the portfolio remains in solid shape, a very minimal annual rollover exposure through 26, I think, presents a very solid foundation. We anticipate having strong mark-to-markets, continuing to manage our capital spend effectively, and we do anticipate accelerating leasing velocity in both our development and our operating portfolio. So, we're executing a baseline business plan that continues to improve liquidity, as evidenced by our actions in the past 30 days.

Gerard H. Sweeney: <unk> for the past 30 days keeps our portfolio operating portfolio and a very solid footing.

Gerard H. Sweeney: Recognizing the challenging leasing space, we have a great team of people both on the leasing the property management front that are in touch with our customers every day and the pipeline continues to build and a clear focus on leasing up our development projects to generate toward earnings growth. So as usual and where we started with that we wish you and your <unk>.

Gerard H. Sweeney: Keeps our portfolio, operating portfolio, on a very solid footing, recognizing the challenge in leasing space. We have a great team of people, both on the leasing and the property management front, that are in touch with our customers every day, and the pipeline continues to build, and a clear focus on leasing up our development projects to generate forward earnings growth.

Speaker Change: <unk>, well and with that we're delighted to open up the floor for questions. We ask that in the interest of time, you limit yourself to one question and a follow up so Kevin we are prepared to answer questions at this point.

Speaker Change: Ladies and gentlemen, if you have a question or comment at this time. Please press star one on your telephone. If your question has been answered. It we are seeing with yourself from the queue. Please press star one again, we will pause for a moment, while we compile the Q&A roster.

Gerard H. Sweeney: So, as usual, and where we started, in that we wish you and your families well, and with that, we are delighted to open up the floor for questions. We ask that, in the interest of time, you limit yourself to one question and a follow-up. So, Kevin, we're prepared to answer questions. Thank you, ladies and gentlemen. If you have a question or a comment at this time...

Speaker Change: Our first question comes from Steve <unk> with Evercore ISI. Your line is open.

Thanks, Good morning, everyone.

Steve: I guess first Jerry maybe could you just elaborate a little bit more on kind of the discussions you're having particularly on the development side.

Operator: Thank you, ladies and gentlemen. If you have a question or a comment at this time, please press star 1-1 on your telephone. If your question has been answered and you wish to remove yourself from the queue, please press star 1-1 again. We will pause for a moment while we compile our Q&A roster. Our first question comes from Steve Sakwa with Evercore ISI. Your line is open.

Steve: For Austin and the Schuylkill yards.

Steve: The projects I'm, just curious how corporates are thinking about the economy interest rates, we've seen in other sectors, there's a little bit of in decision, making and kind of pausing on leasing activity. So I'm just curious the proposals and pipelines have been pretty high but.

Steve: But obviously you haven't converted those and I'm just wondering kind of what the holdup is or is it getting those projects further to completion is it more just the squirrel leanness of the economy, that's keeping people a day.

Stephen Thomas Sakwa: Thanks. Good morning, everyone.

Speaker Change: Yes. Good morning, Steve. Good question. Thank you look I think it's a combination of a lot of the factors you mentioned I think there's no question that leasing velocity continues to accelerate and the higher quality properties of which obviously these developments are top of the market.

Gerard H. Sweeney: I guess first, Jerry, maybe you could just elaborate a little bit more on the kind of the discussions you're having, particularly on the development side, both for Austin and the Schuylkill Yards project. I'm just curious how corporations are thinking about the economy and interest rates. We've seen in other sectors that there's a little bit of indecisiveness and kind of pausing on leasing activity. So I'm just curious; the proposals and pipelines have been pretty high.

Speaker Change: And Thats also juxtaposed against what we're seeing is a decline in our competitive set because.

Speaker Change: Of those other building owners, having some financial difficulties in our and our strong financial stability is actually a magnet for bringing more traffic into our portfolio. So we feel very good about.

Gerard H. Sweeney: But obviously, you haven't converted those, and I'm just wondering kind of what the holdup is, or is it getting those projects further to completion? Is it more just the squirreliness of the economy that's keeping people at bay?

Speaker Change: The near and intermediate term outlook for generating additional leasing prospecting through our portfolio and our leasing teams have done an amazing job of.

Gerard H. Sweeney: Yeah, good morning Steve. A good question, thank you. Look, I think it's a combination of a lot of the factors you mentioned. I think there's no question that leasing velocity continues to accelerate in the higher quality properties, which obviously these developments are top of the market, and that's also juxtaposed against what we're seeing is a decline in our competitive set because of those other building owners having some financial difficulties, and our strong financial stability is actually a magnet for bringing more traffic into our portfolio

Speaker Change: Of outreach.

Speaker Change: Net working.

To make sure that we see every possible deal that's even whispered.

Speaker Change: Taking place at all of our core markets.

So I think the capture Sip is working very very effectively.

Speaker Change: I do think to some degree in the development projects Steve to your point is until the projects were really done it was really hard to generate either a sense of urgency or a sense of true excitement and.

Gerard H. Sweeney: So we feel very good about the near and intermediate-term outlook for generating additional leasing prospecting through our portfolio. Our leasing teams have done an amazing job of outreach and networking to make sure that we see every possible deal that's even whispered as taking place in all of our core markets. So I think the capture sieve is working very, very effectively.

Speaker Change: And I think that's why I mentioned, we are reaching the full delivery of a number of these projects now where the lobbies are completely done the premier landscaping is done.

Speaker Change: All of the amenity spaces are in their very final stages that captures the imagination of tenants and does create a sense of.

Speaker Change: Motivation on their part to kind of get leases on particularly when the pipelines.

Gerard H. Sweeney: I do think to some degree in the development projects, Steve, to your point is, you know, until the projects were really done, it was really hard to generate either a sense of urgency or a sense of true excitement. And I think that's why I mentioned we're reaching the full delivery of a number of these projects now, where the lobbies are completely done, the printer landscaping is done, and all the amenity spaces are in their very final stages.

Speaker Change: And to be as strong as they are.

Speaker Change: There is no question as we talked on the last call about.

Speaker Change: Macro uncertainty.

Speaker Change: Has continued to play into.

Speaker Change: The extended cycle times.

Speaker Change: That we're seeing on particularly the larger tenants the smaller tenants, we seem to not really be.

Speaker Change: Experienced that but.

Speaker Change: And the 100000 150000 square foot larger tenant certainly the macro climate.

Gerard H. Sweeney: That captures the imagination of tenants and does create a sense of motivation on their part to kind of get leases on, particularly when the pipelines tend to be as strong as they are. There is no question, however, that, as we talked about on the last call about, you know, the macro uncertainty really has continued to play into the extended cycle times that we're seeing, particularly with larger tenants. The smaller tenants, we seem to not really be experiencing that, but if you're in the 100,000, 150,000 square foot larger tenant, certainly the macro climate, the lack of clarity on the economic picture, where rates are going, certainly plays into that.

Speaker Change: The lack of clarity on the economic picture where rates are going.

Speaker Change: Certainly plays into that.

Speaker Change: That being said as we pointed out we're doing a lot more space planning this quarter than we did before the end of the year we have.

Speaker Change: A number of proposals outstanding that we think we'll gain some traction.

Speaker Change: So we do have hope.

In the near term, we can convert some of this pipeline to actually lease executions, even on the spec suites for building out we're seeing great activity on that because that tends to be a more compressed cycle time.

But I think we're happy with the level of activity, we're seeing through all three of the core development projects on the commercial side.

Gerard H. Sweeney: That being said, as we point out, we're doing a lot more space planning this quarter than we did before the end of the year. We have a number of proposals outstanding that we think will gain some traction. So we do hope that in the near term, we can convert some of this pipeline to actually lease executions. Even on the spec suites we're building out, we're seeing great activity on that because that tends to have a more compressed cycle time.

Speaker Change: Actually pushing every possible prospect to get leases across the finish line and actually are very happy with the level of velocity. We're staying on our R. 30, 25 residential component as we're kind of moving into key leasing season with the uptick in both tour activity.

And lease execution there.

Speaker Change: Okay. Thanks, and then just one follow up I don't know if you can really comment on this but I know IBM had.

Gerard H. Sweeney: But I think we're happy with the level of activity we're seeing through all three of the core development projects on the commercial side, anxiously pushing every possible prospect to get leases across the finish line. And actually, we are very happy with the level of velocity we're seeing on our 3025 residential component as we're kind of moving into key leasing season with the uptick in both tour activity and lease executions there.

Speaker Change: Signed a lease to move to a competitive project in the same submarket in Austin and.

Speaker Change: And I'm just wondering given the challenges of getting financing what are the prospects for chances that and maybe the timeline of maybe that deal not happening and I guess are there rising prospects that maybe IBM could stay in Uptown ATX.

Gerard H. Sweeney: Okay, thanks. And I just want to follow up. I don't know if you can really comment on this, but you know, I know, you know, IBM had signed a lease to move to a competitive project in the same submarket in Austin. And I'm just wondering, you know, given the challenges of getting financing, what are the prospects or chances that and maybe the timeline of maybe that deal not happening, and I guess are there rising prospects that maybe IBM could stay in Uptown ATX?

Speaker Change: Well look I, obviously cannot speak too.

Speaker Change: Either ibm's direct intentions or.

Speaker Change: Yes.

Speaker Change: The other developers financing efforts.

Speaker Change: Certainly theres a lot of rumors in the marketplace as to whether that deal will proceed or not.

Speaker Change: What I will say, Steve as we continue to track that.

Speaker Change: On a regular and active basis.

Speaker Change: Whether there is any change in the direction.

Speaker Change: With IBM in that new location remains to be seen.

Gerard H. Sweeney: Well look, I obviously cannot speak to either IBM's direct intentions or the other developers' financing. Certainly, there are a lot of rumors in the marketplace as to whether that deal will proceed or not. What I will say, Steve, is we continue to track that on a regular and active basis. Whether there's any change in direction with IBM in that new location remains to be seen. You know, the way I look at it, there are smart people on both sides of that table.

Speaker Change: The way I look at they're smart, they're smart people on both sides of that table, if theres a way to figure how to get that project finance, whether IBM takes more space. So they reduced the size of the building.

Speaker Change: I can't speak to specific motivations on that transaction, but from our perspective, we do remain in very close touch with IBM they've been a long time tenant of ours. Our local team has very rich and robust relationships would be with it with our senior leadership team. So we continue to monitor it and if there is an opportune.

Gerard H. Sweeney: If there's a way to figure out how to get that project financed, whether IBM takes more space or they reduce the size of the building, you know, I can't speak to specific motivations for that transaction, but from our perspective, you know, we do remain in very close touch with IBM. They have been a long-term tenant of ours. Our local team has very rich and robust relationships with the senior leadership team. So we continue to monitor it, and if there's an opportunity, rest assured that we'll be there to take advantage of it.

Speaker Change: <unk>.

Speaker Change: Rest assured that we'll be we'll be there to take advantage of it.

Speaker Change: Great. Thanks, that's it.

Speaker Change: One moment for our next question.

Speaker Change: Our next question comes from Anthony <unk> with Jpmorgan. Your line is open.

Anthony: Yes, thanks, good morning.

Anthony: Gerry you mentioned, some pretty specific stats around the flight to quality I think it was 55% moving up can you maybe just talk a bit about when youre seeing tenants move up the quality spectrum are they taking less space than they had before they are trying to keep their total rent dollars the same like it.

Operator: Great, thanks. That's it. One moment, one moment for our next.

Operator: One moment for our next question. Our next question comes from Anthony Filoni with J.P. Morgan. Your line is open.

Anthony: Or are they willing to take on more rant, just trying to understand that behavior a bit better.

Gerry: Yeah, and George and outside.

I think what we're seeing is a continued dynamic of.

Anthony Paolone: Yeah, thanks. Good morning.

Gerard H. Sweeney: Jerry, you mentioned some pretty specific stats around the flight to quality. I think it was 55% moving up. Can you maybe just talk a bit about, you know, when you're seeing tenants move up the quality spectrum, are they taking less space than they had before? Are they trying to keep their total rent dollars the same? Like, you know, are they willing to just take on, you know, more rent, just trying to understand that behavior a bit better? Yeah, I tried.

Gerry: Employers really want to bring their employees.

Gerry: Not just back was most of them are back at this point, what kind of really position.

Gerry: Their employees and quality workspace that helps define their brand and their culture are very very important habit the physical platform.

Gerry: Serve is that connective tissue between productivity brand and culture. So we think thats, an inescapable dynamic going forward and I think that's why you've seen such a disparity.

Gerry: And the performance of lower quality and kind of class a properties throughout out almost every market in the country and <unk> seen the same dynamic on rental rate increases youre, certainly seeing higher higher pressure on rental rates across the board and the higher quality properties, so real growth in effective rents.

Gerard H. Sweeney: Yeah, actually, and George and I will tag team, you know. I think what we're seeing is a continued dynamic of employers really wanting to bring their employees, not just back because most of them are back at this point, but kind of really position their employees in a quality workspace that helps define their brand and their culture. Very, very important to have the physical platform serve as that connective tissue between productivity, brand, and culture.

And a number of our markets.

Gerry: George maybe you can speak to some of the things that youre seeing on the on the leasing front I think Tony to the specific of your question I mean, I do think the prospects who are taking that flight.

George D. Johnstone: So we think that's an inescapable dynamic going forward, and I think that's why you've seen such a disparity in the performance of lower quality and kind of class A properties throughout almost every market in the country. And you've seen the same dynamic on rental rates. You're certainly seeing higher pressure on rental rates across the board in higher quality properties. So, real growth in effective rent. George, maybe you can speak to some of the things that you're seeing in the leasing fund.

George D. Johnstone: Our focus on getting the right footprint.

George D. Johnstone: Is kind of their primary objective.

George D. Johnstone: And if the rental.

George D. Johnstone: Rental expense for them remains the same there okay paying that higher per square foot to be in the better buildings with those better systems.

George D. Johnstone: So we're seeing that both downtown and our trophy set we're seeing that obviously in our in our Radnor portfolio.

George D. Johnstone: Yeah, I think, Tony, to the specific of your question, I mean, I do think the prospects who are taking that flight are focused on getting the right footprint is kind of their primary objective. And if the rental expense for them remains the same, they're okay paying that higher per square foot to be in the better building with those better facilities. So we're seeing that, you know, both downtown and in our trophy set, you know, we're seeing that obviously in our in our Radnor portfolio, you know, where we continue to see not only new new tenants coming into those buildings and markets, but we're also seeing, you know, a good number of expansions occurring at the same time. So, you know, this this quarter, we renewed a 40,000 square foot tenant in Radnor, who at the same time expanded by an additional 12,000 square feet. So.

George D. Johnstone: Where we continue to see.

George D. Johnstone: Not only new new tenants coming into.

George D. Johnstone: Those buildings and markets, but we're also seeing.

George D. Johnstone: A good number of expansions occurring at the same time so.

George D. Johnstone: This quarter, we renewed a 40000 square foot tenant in Radnor, who was at the same time expanded by an additional 12000 square feet. So so already in a high quality market.

George D. Johnstone: At a very good rental rate.

George D. Johnstone: For us and made the decision that they actually needed more space to get all of their people back and get them back in the way they one of them operate their business.

George D. Johnstone: And just a final point on that timing, but theres. No question tenants are really assessing how much space they need and we're really not seeing a lot of hot desking or office sharing.

Gerard H. Sweeney: So, you know, already in a high-quality market at a very good rental rate for us, and they made the decision that they actually needed more space to get all their people back and get them back in the way they wanted them to operate. You know, and just a final point on that: there's no question that tenants are really assessing how much space they need. And we're really not seeing a lot of hot desking or office sharing or a reduction in workstation sizes.

Or reduction in workstation sizes, I think one of the contributing factors that you see some time. So we certainly seen that in particularly in CBD Philadelphia is Joe when tenants are moving from some of the older buildings.

George D. Johnstone: The efficiency of the floor place that we have.

George D. Johnstone: Are so much better than where they are moving out hub do they can actually fit the same number of people with the same amount of square feet per people and kind of less almost less space than they had before.

Gerard H. Sweeney: I think one of the contributing factors that you see sometimes, we've certainly seen that, particularly in CBD Philadelphia, is that when tenants are moving from some of the older buildings, the efficiency of the four plates that we have is so much better than where they're moving out of that they can actually fit the same number of people with the same amount of square feet per person in kind of less, almost less space than they had before because of the efficiency of the floor plate. So look, there's no question we've seen a number of tenants, particularly law firms, contract in size and that, you know, they don't need the size of law libraries; they're changing some of their office space configuration. So there's clearly that dynamic taking place, but I do think some of the situations we've seen are really a function of floor plate and overall building efficiency and Better Control Over Operating Expenses.

George D. Johnstone: Because of the efficiency of the floor plate. So look there's no question, we've seen a number of tenants, particularly law firms contract in size.

George D. Johnstone: And that.

George D. Johnstone: They don't need the size law libraries, they are changing some of their office space configuration. So there's clearly that dynamic taking place, but I do think some of the situations. We've seen it's really a function of <unk>.

George D. Johnstone: For plate and overall building efficiency.

George D. Johnstone: And better control over operating expenses have been a major driver in this space.

Speaker Change: Okay, great. That's good color. Thank you.

Speaker Change: And then just.

Speaker Change: My follow ups, maybe for Tom just trying to understand on the guidance for the year understand interest costs taken the top end down just wondering again if you can.

Speaker Change: Just crystallize why the bottom is.

Thomas E. Wirth: Okay, great, that's a lot of good color. Thank you. And then just my follow-up question is maybe for Tom, just kind of understand the guidance for the year, understand interest costs, taking the top end down, just wondering, again, if you could just crystallize why the bottom is staying where it is and also whether or not, you know, if I look at your speculative revenue, you know, it's still pretty early in the year, and you guys have basically knocked it out. Like, is there any upside from this?

Speaker Change: <unk>, where it is and also whether or not.

Speaker Change: Your speculative revenue, it's still pretty early in the year and you guys have basically knocked it out like is there any upside from there.

Thomas E. Wirth: Well I'll, let I'll, let George handle the spec revenue, but I think on the on the guidance I think we.

Thomas E. Wirth: We just wanted to be at least look at the range and say, we want to take one side of it down and the interest expense was fairly <unk>.

Thomas E. Wirth: Calculable.

Thomas E. Wirth: This quarter, specifically is going to have some double interest and that's really what's driving it I mean, there may be a little if we use the line and we do have a couple of floating rate instruments.

Thomas E. Wirth: Well, I'll let George handle the spec revenue, but I think on the guidance, I think we just wanted to be, at least, you know, look at the range and say we want to take one side of it down, and the interest expense was fairly calculable. You know, this quarter, specifically, is going to have some double interest, and that's really what's driving it. I mean, there may be a little, if we use the line, and we do have a couple floating rate instruments, you know, the rate curve has certainly moved out a little bit, showing less.

Thomas E. Wirth: The rate curve has certainly moved out a little bit showing less.

Thomas E. Wirth: Less rate cuts if any this year. So we kind of left it alone for now Tony and then we'll see we'll see how the year progresses.

Thomas E. Wirth: We do have as part of our business plan, some sort of transactional activity. So we just wanted to leave the range, where it was for now and see how it plays out going into next quarter.

Thomas E. Wirth: Yes, Tony It's George again, I think on spec revenue as we've touched on we're 98% at the midpoint kind of 96% at the top end of the range I think to kind of outperform that top end a couple of opportunities for us one would be that tenants that.

Thomas E. Wirth: [inaudible] Yeah, Tony, it's George again. I think on, you know, spec revenue, you know, as we touched on, we're 98% of the midpoint kind of 96% at the top end of the range. I think, you know, to kind of outperform that top end, there are a couple of opportunities for us. One would be that tenants that have expressed the likelihood to not renew ultimately decide to maybe.

Thomas E. Wirth: Have expressed a likelihood to not renew ultimately.

Thomas E. Wirth: Decided to maybe kick the can.

Thomas E. Wirth: Even if it's only for another year or.

Thomas E. Wirth: So we can kind of bridge some of what was perceived to be downtime. The other thing is we've got a number of spec suites already in the portfolio.

George D. Johnstone: We kick the can, you know, even if it's only for another year, so we can kind of bridge some of, you know, what was perceived.

George D. Johnstone: We've got a number of spec suites already in the portfolio. Every region has maybe four to five existing spec suites that are basically plug-and-play. All we need somebody to do is select the building, and they can immediately move in and start to generate revenue for us, as opposed to normal vacancy where we're going to have to go through a permitting process, a build process, after we get the prospect and negotiate the lease. And already, kind of being, call it May 1st, the calendar is quickly closing in terms of additional revenue. Got it. Thank you.

Thomas E. Wirth: Every region has.

Thomas E. Wirth: Maybe four to five existing spec suites that are basically plug and play. So all we need somebody to do is select the building and they can immediately move in and start to generate revenue for us as opposed to normal vacancy, where we're going to have to go through a permitting process a build process.

Thomas E. Wirth: <unk>.

Thomas E. Wirth: After we get the prospect and negotiate the lease.

Thomas E. Wirth: Already kind of being call. It may one the calendars quickly closing in terms of additional revenue for 2024.

Operator: One moment for our next question. Our next question comes from Michael Griffin with Citi. Your line is open.

Speaker Change: Got it thank you.

Speaker Change: One moment. Please next question.

Speaker Change: Our next question comes from Michael Griffin with Citi. Your line is open.

Michael Anderson Griffin: Great, thanks. I wanted to go back to Uptown ATX for a bit. I saw in the supplemental that the stabilization was pushed out by a quarter. Can you maybe give some more color as to why this was the case? And the property is about 350,000 square feet or so. What size tenant would you need to see take down a large chunk of space to kind of justify your thoughts around hitting those stabilized yields?

Michael Anderson Griffin: Great. Thanks.

Michael Anderson Griffin: Wanted to go back to Uptown ATX for a bit I saw in the supplemental the stabilization was pushed out.

Michael Anderson Griffin: By a quarter.

Michael Anderson Griffin: We give some more color as to why this was the case in the.

Michael Anderson Griffin: Property is about 350000 square feet or so.

Michael Anderson Griffin: What size tenants would you need to see take down a large chunk of space to kind of justify your thoughts around hitting those stabilized yields.

Gerard H. Sweeney: Well, as I mentioned, the pipeline now is, Michael, has tenants ranging from, you know, 5,000 square feet up to several hundred thousand square feet. So certainly, you know, the larger the tenants it signs, the quicker we can stabilize. But I think, you know, given the pipeline that we are seeing, the increase in tour velocity, the number of proposals we have issued, we do think that that's a realistic goal for us to achieve.

Michael Anderson Griffin: Well as I mentioned the pipeline now is.

Michael Anderson Griffin: Michael has tenants ranging from.

Michael Anderson Griffin: 5000 square feet up to several hundred thousand square feet. So certainly.

Michael Anderson Griffin: The larger the tentative signs of the quicker we can stabilize but I think given the pipeline that we are seeing.

Michael Anderson Griffin: <unk>.

Michael Anderson Griffin: The increase in tour velocity.

Michael Anderson Griffin: Number of proposals, we put we have we have issued.

Michael Anderson Griffin: We do think that that's.

Michael Anderson Griffin: A realistic goal for us to achieve.

Gerard H. Sweeney: Obviously, we'll continue to monitor that. The marketplace is clearly in disequilibrium right now between a lot of supply coming online and a real pullback in demand. I mean, you know, this is the first quarter in a few where there's actually been positive absorption in the marketplace, but a decided pickup in tour activity during the first quarter versus the third and fourth quarters of 24.

Michael Anderson Griffin: Obviously, we will continue to monitor that the marketplace is clearly.

Michael Anderson Griffin: In disequilibrium right now between a lot of supply coming online and a real pullback in demand.

Michael Anderson Griffin: This is the first quarter and a few where there has actually been positive absorption in the marketplace.

Michael Anderson Griffin: But decided pick up in tour activity.

Michael Anderson Griffin: During the first quarter versus last versus the third and fourth quarter of 2004. So we.

Gerard H. Sweeney: So, you know, we are encouraged by the fact that a couple of large users have surfaced for that project, which we won't be around at the end of the year. But look, it's going to be a challenge to get space leased in Austin given the overall dynamics in that market. We do believe that the fundamental demand drivers are very strong there, so we're comfortable with continuing to invest money in Austin. Last year, I think there were still about 135 or so people a day that moved into Austin.

Michael Anderson Griffin: We are encouraged by the fact that a couple of large users have surface for that project, which were not around at the end of the year.

Michael Anderson Griffin: But look it's going to be a challenge to get the space leased in Austin and given the overall dynamics in that market. We do believe that the fundamental demand drivers are very strong there. So we're comfortable with continuing to invest money in Austin.

Michael Anderson Griffin: Last year I think there is still about 135 or so people data moving into Austin.

Gerard H. Sweeney: The business development group is analyzing a number of more than 50 different relocations. So that is a market that is high beta, but it can change very quickly. And we think our project is top of the market in terms of its presentation, efficiency, amenity package, and location. So we feel very confident that with that project now being complete, the amenity floor is done, the residential opening up soon, that that neighborhood creation that we aspire to is actually going to become a reality, and that will generate some additional leasing.

Michael Anderson Griffin: The business development group is analyzing a number of more than 50 different relocation. So that is a market that is high beta but can change very quickly and we think our project is this.

Michael Anderson Griffin: This type of market in terms of its presentation efficiency amenity package and location. So we feel very confident that.

Michael Anderson Griffin: With that project now being complete amenity fluor's done residential opening up soon that that neighborhood creation that we aspired to was actually become a reality and that will generate some additional leasing activity.

Gerard H. Sweeney: Yeah, and then I guess the first part of our question, why was the stabilization quarter pushed out one quarter relative to the last?

Speaker Change: Yes, and then I guess the first part of my question why was the stabilization.

Speaker Change: Quarter pushed out one.

Gerard H. Sweeney: Yeah, I think it's just our best guess at this point on how we're seeing some of these tenants sequence in, given the amount of time to get permits done and the amount of time to build out the space.

Speaker Change: One quarter relative to last quarter.

Speaker Change: Yes, I think I just saw.

Speaker Change: Our best guess at this point on how we're seeing some of these tenants sequence.

Okay, given the amount of time to get permits and the amount of time to build out the space.

Gerard H. Sweeney: Gotcha. That's helpful. And then maybe just on the JV properties that were restructured, I believe it was Mid-Atlantic and Rock Point. Should we think about this as handing back the keys? And I think you talked about some other potential JVs that you could see debt attribution from later this year. Should we read that as the MAP venture or what, which of those JVs should we keep an eye on?

Speaker Change: Gotcha that's.

Speaker Change: That's helpful. And then maybe just on the JV properties that were restructured I believe it was mid Atlantic.

Speaker Change: Rock point should we think about this is handing back the keys.

Speaker Change: I think you've talked about some other potential.

Speaker Change: JV <unk> JV that you could see that contribution from later this year should we read that as the map venture or what which of those JV should we keep an eye on.

Gerard H. Sweeney: You know, actually, a great question, and it doesn't necessarily mean that there will not be a successful restructuring of that debt on the two ventures that we won't be recognizing operating results on going forward. Discussions are still underway.

Speaker Change: Yes.

Speaker Change: Actually a great question and it doesn't necessarily mean that there will not be a successful restructuring of that debt.

Speaker Change: On the two ventures that we.

Speaker Change: We wont be recognizing operating results of ongoing forward discussions are still underway.

Gerard H. Sweeney: We're not sure exactly where they will go, but as we assess the situation at the end of 24, you may recall we wrote our basis in those properties down, given that no investment has been made by Brandywine, the fact that the mortgages are completely non-recourse, and discussions are still underway. We thought it was appropriate not to recognize those as continued operations for us. That could change to the extent that there is a recapitalization that makes sense for us.

Speaker Change: We're not sure exactly where they will go but as we assess the situation at the end of 'twenty four you may recall we.

Speaker Change: We wrote our basis in those properties down.

Speaker Change: Given that.

No investment base by Brandywine. The fact that the mortgages are completely nonrecourse discussions are still underway.

Speaker Change: That we thought it was appropriate to not recognize those as continued operations for us that could change to the extent that there is a recapitalization and makes sense for us.

Gerard H. Sweeney: And I think in terms of the other venture you mentioned, MAP, discussions with the lender there continue. They're moving at a slower pace than we would like, but I think the same dynamics are at play there. There, we have a negative investment base. We've made a significant amount of profits over the years, but until that debt restructuring is completed or we conclude collectively that it cannot be completed, I think we would continue to recognize that as an operating issue.

Speaker Change: And I think in terms of the other venture you mentioned map discussions with the lender there continue theyre moving at.

Speaker Change: At a slower pace than we would like but I think the same dynamics are at play there.

We have a negative investment base, we agreed to gift minute profits over the years.

Speaker Change: But until that.

Speaker Change: That restructuring is completed or we conclude collectively it cannot be completed I think we would continue to recognize that as an operating concern.

Michael Anderson Griffin: Great, that's it for me. Thanks for the time. Thank you. One moment for our next question.

Speaker Change: Great. That's it for me thanks for the time.

Speaker Change: Thank you.

Operator: Our next question comes from Dylan Burzinski with Green Street. Your line is open.

Speaker Change: Enrollment for our next question.

Dylan Robert Burzinski: Our next question comes from Joe and Brzezinski with Green Street. Your line is open.

Dylan Robert Burzinski: Hi guys, thanks for taking the question. I guess just sort of going back to the questions on the development pipeline, as we think about the projected cash yields that you guys put in your supplemental, I mean, given the lack of leasing volume thus far, do you guys see those at risk of going lower as you start to sign leases? Or how should we be thinking about that?

Dylan Robert Burzinski: Hi, guys. Thanks for taking the question I guess, just sort of going back to the questions on the development pipeline as we think about the projected cash yields that you guys put in your supplemental I mean, given the lack of leasing volume thus far.

You guys see those at risk of going lower as you start to sign leases or how should we be thinking about that.

Gerard H. Sweeney: Yeah, great question. Look, we assess that with every lease transaction or every proposal we put out. And I think at this point, you know, we still feel confident that those yields will hold firm. You know, we're seeing a slight uptick in potential TI costs. But right now, we're able to project out in our proposal that we'll get compensated for that additional rental rate. But, you know, the assessment we've made is that yes, we will achieve those yields.

Speaker Change: Yeah, Great question look we assess that with every lease transaction every proposal, we put out and I think at this point.

Speaker Change: We still feel confident that those yields will hold firm.

Speaker Change: We're seeing a slight uptick on.

Speaker Change: On potential Ti costs, but right now we're able to.

Speaker Change: Rejected our proposal will get compensated for that additional rental rates, but.

Speaker Change: The assessment, we've made is that yes, we will achieve those yields.

Gerard H. Sweeney: Certainly, we need to make sure that as we start to execute leases, we reevaluate what the level of TI is to get those transactions done. But as of right now, given the visibility we have on all the prospects that are in the pipeline for each of those three commercial properties, we feel comfortable with those.

Speaker Change: Certainly we need to make sure that as we as we start to execute leases we reevaluate.

Speaker Change: What's the level of Ti is to get those transactions done.

Speaker Change: But as of right now given the visibility we have on all the prospects that are in that.

Speaker Change: And the pipeline for each of those three commercial properties, we feel comfortable with those yields.

Gerard H. Sweeney: And appreciate the comment sort of on the leasing pipeline and the increases you've seen there over the last several quarters. I guess, just pairing that with your comments on a lack of large lease maturities over the next few years. It sounds like you guys anticipate occupancy bobbing sometime in 2024. Is that sort of a fair characterization, or are we missing something?

Speaker Change: And I appreciate the comments on the leasing pipeline and the increases you've seen there over the last several quarters and I guess just pairing that with your comment on the lack of large.

Speaker Change: Lease maturities over the next few years. It sounds like you guys anticipate occupancy bobbing sometime in 2024 is that sort of a fair characterization or are we missing something.

Gerard H. Sweeney: I'm sorry, Dylan. You said I-

Speaker Change: I'm, sorry, you said occupancy.

Gerard H. Sweeney: Occupancy bottoming in 2020, sometime in 2024. Yeah, apologies. Yeah, I think so. I mean, I think, you know, on a couple of different fronts. Number one, those properties that are depicted on page four, we do expect something to happen with those and they've got, you know, a 400 base, uh... impact on on occupancy today but uh... again as noted you know the large move out uh... not you know have fortunately been kind of put in the rear view mirror for us uh... you know our our largest rollover in twenty five is the fifty five thousand square foot tenant that were currently speaking with about renewal and we have nothing over fifty thousand square feet in two thousand and So I think it should only be a rising tide at this point, both from where the core portfolio is today and kind of ideally moving some of these conversion and or sale candidates kind of off.

Speaker Change: Occupancy bottoming in 2020, but sometimes it's bottoming.

Speaker Change: Yes, apologies, yes, I think so I mean I think.

Speaker Change: On a couple of different fronts number one those properties that are depicted on page four we do expect something to happen with those and they've got a 400 basis points.

Speaker Change: Impact on occupancy today, but again as noted the large move outs.

Speaker Change: Fortunately been kind of put in the rearview mirror for us.

Speaker Change: Our largest rollover in 'twenty five as the 55000 square foot tenant that were currently speaking with about renewal and we have nothing over 50000 square feet in 2026.

Speaker Change: So.

Speaker Change: I think.

Speaker Change: It should only be.

Speaker Change: Rising tide at this point both from the core portfolio is today and kind of ideally moving some of these conversion <unk> sale candidates kind of off the books.

Speaker Change: Thanks for the color.

Operator: One moment for our next question. Our next question comes from Omotayo Okusanya with Deutsche Bank. Your line is open. Yes, good morning. A quick question about the 3151 development.

Speaker Change: One moment for our next question.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Our next question comes from Matteo <unk> with Deutsche Bank. Your line is open.

Matteo: Hi, Yes. Good morning, a quick question about the $31 51 development just curious about the status of getting the construction loan on that.

Matteo: If it turns out that you may not be successful in getting that kind of thoughts about future funding.

Thomas E. Wirth: Sure, this is Tom. I think about the 3151 financing. We had started a process to look at financing, and the market for construction loans has been difficult. However, you know, I think that, as we've talked about, we have a very good pipeline. And as we look at some of the opportunities for an initial lease, we think that that will give us room to then get that financing done. We talked to a number of institutions that love the project.

Speaker Change: Due to project.

Thomas E. Wirth: Sure. This is Tom.

I think on the $31 51 financing.

Thomas E. Wirth: We had started a process to look at our financing in the market for construction loans has been difficult.

Thomas E. Wirth: However, I think that as we've talked about we have a very good pipeline and as we look at some of the opportunities for an initial lease we think that that will give us.

Thomas E. Wirth: Room to then go get that.

Thomas E. Wirth: In answering John we talked to a number of institutions that love the project. They just need to see a little bit of leasing done they need to CSI realize the rents as someone asked how is the yield look and I think then we will be able to get get alone. We put it in at 55% I still feel that thats, a reasonable loan to cost. So we can achieve.

Thomas E. Wirth: They just need to see a little bit of leasing done. They need to see us realize the rents, as someone asked, what is the yield like? And I think then we'll be able to get a loan. We put it in at 55%.

Thomas E. Wirth: I still feel that that's a reasonable loan, the cost that we can achieve. And we are starting to see a little bit of lending going on in the construction area. So we're hopeful, you know, the building will be CO'd, and we may get a lease or two done, and that'll give us enough room to then get financing done. Again, the project looks great, and the lenders that we showed it to previously were very interested. They just think that a pre-lease will help them get it financed in turn. That's helpful.

Thomas E. Wirth: And we are starting to see a little bit of.

Thomas E. Wirth: Lending going on in the construction area. So we are hopeful that the lease the building will be code and we may get a lease or two done and that will give us enough.

Thomas E. Wirth: Room to then get a.

Thomas E. Wirth: Our financing done again, the project looks great and the lenders that we showed it to previously.

Thomas E. Wirth: We're very interested they just they just think that the.

Thomas E. Wirth: A pre lease will help them.

Get it get it financed internally.

Gerard H. Sweeney: And then could you just talk a little bit about how you're thinking about the dividend at this point, just kind of given some of the capital needs versus sources of capital as well? Yes, look, certainly I think, you know, the board reviews that on a regular basis along with management. And, you know, we did reduce it down to 60 cents a share. So that's $80 million a year in total.

Speaker Change: That's helpful. And then can you just talk a little bit about how you're thinking about the dividend at this point just kind of given some of the capital need.

Speaker Change: Yes.

Speaker Change: Our sources of capital as well.

Speaker Change: Yes look certainly I think the board reviews that on a regular basis, along with management and.

Speaker Change: We did reduce it down to <unk> 60, a share so about $80 million a year in total payments I think.

Gerard H. Sweeney: I think as we looked at the decision back then and certainly as we view it today, one of the key variables was ensuring that we had clear runway on the loan maturity front. And I think the bond transaction did a couple things. One, it reinforced the fact that we would run the company with ample liquidity for the foreseeable future, keeping that line of credit close to zero. Second, it really did reinforce to all of our fixed income stakeholders on the unsecured side that Brandywine is committed to the unsecured marketplace.

Speaker Change: As we've looked at that decision back then and certainly as we view it today.

Speaker Change: One of the key variables was ensuring.

Speaker Change: That we had clear.

Speaker Change: Clear runway on the loan maturity fronts, and I think the bond transaction did a couple of things one it reinforced the fact that we can run the company with ample liquidity for the.

For the foreseeable future given that line of credit close to zero.

Speaker Change: Second it really did reinforce to all of our.

Speaker Change: Our fixed income stakeholders on the unsecured side.

Speaker Change: <unk> is committed to the unsecured marketplace.

Gerard H. Sweeney: And our hope is as conditions improve, as the debt mark to market becomes positive versus negative, we'll be able to restore our investment grade rating, and that we wind up in a very good position both from a liquidity and a balance sheet improvement standpoint. So I think one of the key issues we should take a look at is liquidity. Second, was portfolio stability. You know, what is going to be the ongoing consumption of capital?

Speaker Change: And our hope is as the conditions improve.

Speaker Change: As the debt Mark to market becomes positive versus negative, we'll be able to restore our investment grade rating.

Speaker Change: And that we wind up in a very good position both from a liquidity and a balance sheet improving standpoint. So I think one of the key issues, we take a look at it with that liquidity.

Speaker Change: It was portfolio stability, what is going to be the ongoing consumption of capital.

Gerard H. Sweeney: And as we've talked about with other questions on the call, we have very little rollover going forward. We think it is a very stable platform. And then when we look at the development pipeline, there's really very little left to fund. And even to the question on the 3151 construction loan, I mean, the vast majority of money is already invested to kind of deliver that build to core and shell condition. The additional capital required is, as we say in the business, good news capital by the leasing activity.

Speaker Change: And as we've talked with other question on the call we have very little rollover going forward and we think a very stable platform and then when we look at the development pipeline, there's really very little left to fund and even to the question on the $31 51 construction loan.

The vast majority of moneys already invested to kind of deliver that build into core and shell condition.

Speaker Change: The additional capital required is as we say in the business. Good news capital tied to leasing activity. So I think those three elements are our top of mind for the board as they think about.

Gerard H. Sweeney: So I think those three elements are top of mind for the board as it thinks about how to balance delivering a good quarterly return to our shareholders despite the travails of the capital markets and its impact on our stock price, as well as what the visibility is on liquidity and alternative investment opportunities.

Speaker Change: Had a balanced delivering.

Speaker Change: A good quarterly return to our shareholders. Despite the travails of the capital markets.

Speaker Change: Its impact on our stock price as well as.

Speaker Change: What the visibility is on liquidity and alternative investment opportunities within the company.

Operator: Great, thank you. Thank you. Thank you. One moment for our next question.

Speaker Change: Great. Thank you.

Speaker Change: Thank you thanks to one moment for our next question.

Operator: One moment for our next question. Our next question comes from Upal Rana with KeyBank. Your line is open.

Speaker Change: Yes.

Speaker Change: Our next question comes from your Colorado with Keybanc. Your line is open.

Upal Dhananjay Rana: Great, thanks for taking my question. Could you give us some color on how the lease up at 3025 JFK Resi is going and what you anticipate for 1Uptown when it comes online in 3Q?

Colorado: Alright, Thanks for taking my question could.

Colorado: Could you give us some color on how the lease up at $3 25 case.

Colorado: He is going in and what you anticipate for one off power when it comes online in <unk>.

Gerard H. Sweeney: Yeah, great question. I think we're pretty pleased with the acceleration of activity in the 30-25 residential project. I mean, we're, you know, kind of doing 20 units a month, which is very much in line with our plan. The effective rents we're holding. And the demographic of the tenant mix we're seeing in that building is pretty much in line with what we were hoping for. So we think that that demographic will continue to view the project very favorably. And we do anticipate that, you know, by the end of this year, we'll be in the 80 to 85 percent leased range. And that's built into our financing.

Colorado: Yes, a great question I think we're pretty pleased with the acceleration of activity in that $30 25 residential project I mean, where we are.

Colorado: During 2020 units a month, which is very much in line with our plan effective rents are holding.

Colorado: And.

Colorado: The demographic of the tenant mix, we are seeing that building, it's pretty much in line with you were hoping for so we think that that demographic will continue to view the project very favorably.

Colorado: And we do anticipate that by the end of this year will kind of be in the 80% to 85%.

Colorado: Leased range next going into our financial plan.

Gerard H. Sweeney: Down at Uptown ATX, you know, those units won't really start coming online until later in the second quarter or early third quarter. But the marketing plan and marketing launch have taken place. We're already starting to do hardhat tours.

Colorado: Dan It Uptown ATX.

Colorado: Those units won't really start coming online until later in the second quarter early third quarter.

Colorado: The marketing plan and marketing launch has taken place.

Colorado: We're already starting to do hard hat tours.

Gerard H. Sweeney: We have a couple of leases out for Signature already, but we do anticipate, given the delivery timeline of that project, that we'll be kind of in that 50% occupied range by the end of the year. Both the residential market in Philadelphia as well as in Austin is very competitive, so we're keeping a close eye on concession packages, and I mentioned here in Avira that we seem to be doing very well versus our budget.

Colorado: We have a couple of leases out for signature already but we do anticipate given the deliberate excuse me the delivery timeline of that project that.

Colorado: We will be kind of in that 50% occupied range by the ended the year.

Colorado: Both the residential market in Philadelphia as well as in Austin is very competitive.

Colorado: So we're keeping a close eye on concession packages and I mentioned up adhere and a bureau, we seem to be doing very well versus our budget, we'll keep a close eye on that down in Austin.

Gerard H. Sweeney: We'll keep a close eye on that down in Austin. We do think we have the quality advantage based on some of our direct competition both in Philadelphia and in Austin, but we'll see how the actual traction and the lease executions go on both properties going forward.

Colorado: We do think we have the quality advantage based on some of our direct competition, both in Philadelphia and in Austin, but we'll see how the actual traction and the lease executions going both properties going forward.

Gerard H. Sweeney: Great, that was helpful. And then, you know, going back to your renewals and your retention rate, you felt comfortable increasing that expectation. And, you know, what's really driving the comfort that you have? And do you anticipate higher levels of renewals to get you to positive net absorption in the near term? You know, I know you mentioned you expect occupancy at the bottom at some point this year, but maybe a little timing, or when do you expect occupancy to be?

Speaker Change: Great that was helpful.

Speaker Change: Yes, going back to your renewal and retention rate and you felt comfortable increasing that expectation.

Speaker Change: Whats really driving the comfort that you have and do you anticipate the higher level of renewals to get you to positive.

Speaker Change: Net absorption in the near term I know you mentioned you expect occupancy to bottom at some point this year, but.

Speaker Change: Maybe a little timing.

Speaker Change: When do you expect on timing.

Gerard H. Sweeney: Yeah, I think, you know, our ability to move the retention range was really based on the fact that we've executed the renewals necessary to make that change. So there is very little speculative renewal left to kind of get to that new target.

Speaker Change: Yes, I think.

Speaker Change: Our ability to move the retention range was really.

Speaker Change: Based on the fact that we've executed the renewals necessary to make that change so very little speculative renal left to kind of get to that new target.

Gerard H. Sweeney: You know, it was primarily driven by a couple of leases.

Speaker Change: It was primarily driven.

Gerard H. Sweeney: Early indications were that the tenant may not renew, and that's kind of how our original business plan was compiled, and then when we got clarity on the fact that they did, in fact, renew, we, obviously, were able to make the adjustment.

Speaker Change: By a couple of leases where.

Speaker Change: Early indications were that the tenant may not renew and that's kind of how our original business plan was compiled and then when we got clarity on the fact that they did in fact renew.

Speaker Change: We obviously were able to make the adjustments so even moving that range just further solidifies our comfort that we deliver year end occupancy within the original business plan range.

Gerard H. Sweeney: Even moving that range just further solidifies, you know, our comfort that we...

Gerard H. Sweeney: Just further solidifies, you know, our comfort that we will deliver year-end occupancy within the original business plan range.

Operator: And I'm not showing any further requests at this time. I'd like to turn the call back over to Jerry for any closing remarks.

Speaker Change: Great. Thank you that's all for me.

Speaker Change: And then Mike if and I'm not showing any further questions at this time I'd like to turn the call back over to Jerry for any closing remarks great.

Gerard H. Sweeney: Great, Kevin. Thank you. Look, thank you all again for participating in our first quarter 24 earnings call. We look forward to updating you on our business plan activities during our second quarter earnings call in the summer. So, have a great day, and thank you again for participating.

Gerard H. Sweeney: Great Kevin. Thank you look thank you all again for participating in our first quarter 'twenty four earnings call and we look forward to updating on our business plan activities on our second quarter earnings call in the summer so have a great day and thank you again for participating.

Operator: Ladies and gentlemen, this concludes today's presentation. You may now disconnect and have a wonderful day.

Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.

Gerard H. Sweeney: Okay.

Gerard H. Sweeney: Yes.

Gerard H. Sweeney: Okay.

Gerard H. Sweeney: Okay.

Gerard H. Sweeney: Okay.