Q2 2024 Brandywine Realty Trust Earnings Call

Good day and thank you for standing by. Welcome to Brandywine Realty Trust second 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.

Operator: Second Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode.

Operator: 2nd 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 will need to press Star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press Star 1-1 again.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. You will then hear an automated message advising that your hand is raised.

To ask a question during the session you will need to press star 1 1 on your telephone You will then hear an automated message advising your hand is raised

Operator: To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jerry Sweeney, President and CEO. Please go ahead. Gigi. Thank you very much. Good morning, everyone.

Operator: Please be advised that today's conference is being recorded.

To withdraw your question, please press star 11 again.

Operator: I would now like to hand the conference over to your speaker today, Jerry Sweeney, President and CEO. Please go ahead.

Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Jerry Sweeney, President and CEO . Please go ahead.

Jerry Sweeney: GG, thank you very much.

Gerard H. Sweeney: And thank you for participating in our second quarter 2024 earnings call. On today's call with me are George Johnstone, our Executive Vice President of Operations; Dan Palazzo, our Senior Vice President and 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 assurances that the anticipated results will be achieved.

Jerry Sweeney: Good morning, everyone. And thank you for participating in our 2nd quarter 2024 earnings call. On today's call with me are George Johnstone, our Executive Vice President of Operations, Dan Palazzo, our Senior Vice President and Chief Accounting Officer, and Tom Worth, our Executive Vice President and Chief Financial Officer.

Gerard H. Sweeney: Gigi, thank you very much. Good morning, everyone, and thank you for participating in our second quarter 2020 for earnings call.

Speaker Change: On today's call with me are George Johnstone, our Executive Vice President of Operations, Dan Palazzo, our Senior Vice President and Chief Accounting Officer, and Tom Wirth, our Executive Vice President and Chief Financial Officer.

Jerry 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 assurances that the anticipated results will be achieved. For further information on factors that could impact our anticipated results, please reference our press release, as well as our most recent annual and quarterly reports that we file with the SEC.

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 assurances that the anticipated results will be achieved.

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 that we file with the SEC. First and foremost, we hope that you and yours are doing well. Your summer's off to a great start, and we are looking forward to a successful and ever improving second half of 2024. During our prepared comments, we'll briefly review our results for the quarter and progress on our 2024 business. Tom will then briefly review second quarter financial results and frame out the key assumptions driving the balance of our 24 guidance. After that, Dan, George, Tom, and I are available to answer any questions.

Gerard H. Sweeney: For further information on factors that could impact our anticipated results, please reference our press release as well as our most recent annual and quarterly reports that we file with the SEC.

Jerry Sweeney: Well, first and foremost, we hope that you and yours are doing well. Your summer's off to a great start and are looking forward to a successful and ever-improving 2nd half of 2024. During our prepared comments, we'll briefly review our results for the quarter and progress on our 2024 business plan. Tom will then briefly review 2nd quarter financial results and frame out the key assumptions driving the balance of our 24 guidance.

Speaker Change: Well, first and foremost, we hope that you and yours are doing well, your summer's off to a great start, and are looking forward to a successful and ever-improving second half of 2024. During our prepared comments, we'll briefly review our results for the quarter and progress on our 2024 business plan.

Speaker Change: Tom will then briefly review second quarter financial results and frame out the key assumptions driving the balance of our 24 guidance. After that, Dan, George, Tom, and I are available to answer any questions.

Jerry Sweeney: After that, Dan, George, Tom, and I are available to answer any questions. Well, similar to last quarter's call, we want to start off by addressing the key themes that guide our thinking every day. Our focus remains on three key areas: liquidity, development lease-up, and portfolio stability.

Gerard H. Sweeney: Well, similar to last quarter's call, we want to start off by addressing the key themes that guide our thinking every day. Our focus remains on three key areas, liquidity, development lease-up, and portfolio stability. First on liquidity, you know, our recent bond issuance cleared the decks on any bond maturities through November of 2027. During the quarter, we fully redeemed our October 24 bonds.

Speaker Change: Well similar to last quarter's call, we want to start off by addressing the key themes that guide our thinking every day. Our focus remains on three key areas liquidity, development lease up, and portfolio stability.

Jerry Sweeney: First, on liquidity. Our recent bond issuance cleared the decks on any bond maturities through November of 2027. During the quarter, we fully redeemed our October 24 bonds. As such, we anticipate maintaining minimal balances on our line of credit over the next several years to ensure ample liquidity and believe it that liquidity will be further enhanced by our asset sales program and other deleveraging initiatives.

Speaker Change: First, on liquidity. You know, our recent bond issuance cleared the decks on any bond maturities through November of 2027.

Gerard H. Sweeney: As such, we anticipate maintaining minimal balances on our line of credit over the next several years to ensure ample liquidity and believe that that liquidity will be further enhanced by our asset sales program and other deleveraging initiatives. On our operating joint ventures, we have resolved two of our non-recourse mortgages. On our Sierra Square JV, we refinanced our existing mortgage that matured this month with a new $160 million mortgage, which now expires in June of 29.

Speaker Change: During the quarter, we fully redeemed our October 24 bonds.

Speaker Change: As such, we anticipate maintaining minimal balances on our line of credit over the next several years to ensure ample liquidity, and believe that that liquidity will be further enhanced by our asset sales program and other deleveraging initiatives.

Jerry Sweeney: On our operating joint ventures, we have resolved two of our non-recourse mortgages. On our Sierra Square JV, we refinanced our existing mortgage that would mature this month with a new $160 million mortgage, which now expires in June of '29. Each partner funded a provider share of the equity required to reduce the outstanding mortgage balance and put that prodges in a cash flow positive position.

Speaker Change: On our operating joint ventures, we have resolved two of our non-recourse mortgages. On our Sierra Square JV, we refinanced our existing mortgage that was matured this month with a new $160 million mortgage, which now expires in June of 29.

Gerard H. Sweeney: Each partner funded a pro-rata share of the equity required to reduce the outstanding mortgage balance and put that project in a cash flow positive position. On our MAP joint venture, a few things to highlight. We have reduced, restructured, and extended the existing leasehold mortgage. The mortgage was reduced by $26 million and extended through March of 2029.

Speaker Change: Each partner funded a pro-rata share of the equity required to reduce the outstanding mortgage balance and put that project in a cash flow positive position.

Jerry Sweeney: On our map joint venture, a few items to highlight. We have reduced, restructured, and extended the existing lease-sold mortgage. The mortgage was reduced by $26 million and extended through March of 2029. In addition, the amended loan provides a lender receives a 95% participation in the operating results, reducing our economic interest to 5%. The combined activity of the leveraging on CO2 and the restructuring of the MAP joint venture reduced our debt attribution by $101 million.

Speaker Change: On our MAP joint venture, a few items to highlight. We have reduced, restructured, and extended the existing leasehold mortgage.

Speaker Change: The mortgage was reduced by $26 million and extended through March of 2029.

Gerard H. Sweeney: In addition, the amended loan provides that the lender receives a 95% participation in the operating results, reducing our economic interest to 5%. The combined activity of the leveraging on Sero Square and the restructuring of the MAP joint venture reduced our debt attribution by $101 million. To facilitate that restructuring on MAP and to provide capital for the debt paydown of $26 million, Brandywine and the fee owner formed a joint venture to purchase 14 Flexin Industrial properties.

Speaker Change: In addition, the amended loan provides the lender receives a 95% participation in the operating results, reducing our economic interest to 5%.

Speaker Change: The combined activity of the leveraging on Sierra Square and the restructuring of the MAP joint venture reduced our debt attribution by $101 million.

Jerry Sweeney: To facilitate that restructuring on MAP and to provide capital for the debt paydown of $26 million, Brandywine and the Fiona formed a joint venture to purchase 14 flex and industrial properties. This new entity is completely unencumbered, and we are currently marking that portfolio for sale, and we anticipate being able to sell those profits over the next several quarters.

Speaker Change: To facilitate that restructuring on MAP and to provide capital for the debt paydown of $26 million, Brandywine and the fee owner formed a joint venture to purchase 14 flex and industrial properties.

Gerard H. Sweeney: This new entity is completely unencumbered, and we are currently marketing that portfolio for sale, and we anticipate being able to sell those properties over the next several quarters. Second, on development lease-up, the pipeline for all projects continues to build, with the number of tours and issued proposals increasing during the second quarter versus the first quarter. We are in the advanced stages of lease negotiations with approximately 200,000 square feet of tenants, with a strong pipeline building behind that. The residential components continue to perform on proforma in terms of both absorption and rent.

Speaker Change: This new entity is completely unencumbered and we are currently marketing that portfolio for sale and we anticipate being able to sell those properties over the next several quarters.

Jerry Sweeney: Second, on development lease-up, the pipeline on all projects continues to build, with the number of tours and issued proposals increasing during the second quarter versus the first quarter. We are in the advanced stages of lease negotiation with approximately 200,000 square feet of tenants, with a strong pipeline building behind that. The residential components continue to perform on-performance in terms of both absorption and rents. Each of these projects are top of market, attracted to a broad range of customers, and we remain confident of hitting our targets. We certainly recognize that both the earnings drag and balance sheet impact of carrying this non-revenue producing capital and continue our aggressive marketing campaign on each project.

Speaker Change: Second, on development lease up, the pipeline on all projects continues to build with the number of tours and issued proposals increasing during the second quarter versus the first quarter.

Speaker Change: We are in the advanced stages of lease negotiations with approximately 200,000 square feet of tenants, with a strong pipeline building behind that.

Speaker Change: The residential components continue to perform on pro forma in terms of both absorption and rents.

Gerard H. Sweeney: Each of these projects is top of the market, attractive to a broad range of customers, and we remain confident of hitting our target. We certainly recognize both the earnings drag and balance sheet impact of carrying this non-revenue-producing capital and continue our aggressive marketing campaign on each project. On the upside, upon stabilization, these projects will generate approximately $50 million of GAAP and $45 million of cash NOI, or a 15.5% increase to our existing income.

Speaker Change: Each of these projects are top of market, attractive to a broad range of customers, and we remain confident of hitting our targets.

Speaker Change: We certainly recognize that both the earnings drag and balance sheet impact of carrying this non-revenue producing capital and continue our aggressive marketing campaign on each project.

Jerry Sweeney: To the upside, upon stabilization, these projects will generate approximately $50 million of gap and $45 million of cash and a Y or 15 and a half percent increase to our existing income stream. So they do remain a key driver to our company, and we are crisply focused on reap having those projects reach their stabilization.

Speaker Change: To the upside, upon stabilization, these projects will generate approximately $50 million of GAAP and $45 million of cash NOI, or a 15.5% increase to our existing income stream.

Gerard H. Sweeney: So they do remain a key driver of our company, and we're crisply focused on having those projects reach their stabilization. And on to stability, certainly our portfolio stability is always top of mind. The strong operating metrics we posted again this quarter reflect the underlying stability of the core portfolio.

Speaker Change: So they do remain a key driver to our company, and we're crisply focused on having those projects reach their stabilization.

Jerry Sweeney: On this ability, certainly our portfolio stability is always top of line. The strong operating metrics we posted again this quarter reflect the underlying stability of the core portfolio. And while certainly our 80 percent occupied Austin portfolio still faces near-term challenges, fundamental growth dynamics in that market remain. In fact, activity levels and options have picked up a second consecutive quarter of positive is worth in that marketplace, and we plan to be a strong participant in that market's recovery. Philadelphia, which is one of the lowest vacancy rates among large cities in the country, continues to perform well, as evidenced by our 94 percent leasing level and occupant level of 91 percent.

Speaker Change: And on to stability, certainly our portfolio stability is always top of mind.

Speaker Change: The strong operating metrics we've posted again this quarter reflect the underlying stability of the core portfolio. And while certainly our 80% occupied Austin portfolio still faces near-term challenges, fundamental growth dynamics in that market remain.

Gerard H. Sweeney: And while certainly, our 80% occupied Austin portfolio still faces near-term challenges, fundamental growth dynamics in that market remain. In fact, activity levels in Austin have picked up a second consecutive quarter of positive absorption in that marketplace, and we plan to be a strong participant in that market's recovery. Philadelphia, which has one of the lowest vacancy rates among large cities in the country, continues to perform well, as evidenced by our 94% leasing level and our occupancy level of 91%.

Speaker Change: In fact, activity levels in Austin have picked up a second consecutive quarter of positive absorption in that marketplace, and we plan to be a strong participant in that market's recovery.

Speaker Change: Philadelphia, which is one of the lowest vacancy rates among large cities in the country, continues to perform well as evidenced by our 94 percent leasing level and occupancy level of 91 percent.

Jerry Sweeney: Looking ahead, we have less than 6 percent annual roll over through 2026, one of the lowest in the office sector. Our 2024 revenue plan is running ahead of schedule. As such, we have increased our speculative revenue range by a million dollars and also raised our annual retention range. Our market to market capital ratios and same-store numbers all continue to perform at relatively strong levels, as they have done over the last several years.

Gerard H. Sweeney: Looking ahead, we have less than 6% annual rental growth through 2026, one of the lowest in the office sector. Additionally, our 2024 revenue plan is running ahead of schedule. As such, we have increased our speculative revenue range by $1 million and also raised our annual retention. Our mark-to-market capital ratios and same-store numbers all continue to perform at relatively strong levels as they have done over the last several years. We fully recognize the liquidity and valuation challenges facing our sector, and indeed, the entire commercial real estate space, and continue to take steps necessary to ensure performance on our business plan and achieve all of our growth objectives.

Speaker Change: Looking ahead, we have less than 6% annual rollover through 2026, one of the lowest in the office sector. Our 2024 revenue plan is running ahead of schedule.

Speaker Change: As such, we have increased our speculative revenue range by $1 million and also raised our annual retention range.

Speaker Change: Our mark-to-market capital ratios and same-store numbers all continue to perform at relatively strong levels as they have done over the last several years.

Jerry Sweeney: We fully recognize the liquidity and valuation challenges facing our sector, in fact, the entire commercial real estate space, and continue to take steps necessary to ensure performance on our business plan and achieving all of our growth objectives. With that background, the momentum from the first quarter continued into the second quarter, and the result to a very solid start. All operating results are in line for above our 2024 business plan.

Speaker Change: We fully recognize the liquidity and valuation challenges facing our sector, in fact the entire commercial real estate space, and continue to take steps necessary to ensure performance on our business plan and achieving all of our growth objectives.

Gerard H. Sweeney: With that background, the momentum from the first quarter continued into the second quarter, and the year is off to a very solid start. All operating results are in line or above our 2024 business. Here are a few highlights.

Speaker Change: With that background, the momentum from the first quarter continued into the second quarter and the year is off to a very solid start. All operating results are in line or above our 2024 business plan.

Jerry Sweeney: A few highlights. We posted second quarter FFO of 22 cents per share in line with consensus. Our speculative revenue range, as I mentioned, of 24 to 25 million dollars has been increased to 25 to 26 million, with 25.6 million already executed. Our 24 bond maturity has been fully redeemed. Our combined leasing activity for the quarter told us 500,000 square feet. During the quarter, we executed 164,000 square feet of leases, including 101,000 square feet of new leases within our wholly owned portfolio. Based on our efforts during the first six months of the year, we have eliminated 163 million dollars of debt attribution from our joint ventures, which exceeds our 100 million dollar target.

Gerard H. Sweeney: We posted second quarter FFO of $0.22 per share in line with consensus. Our speculative revenue range, as I mentioned, of $24 to $25 million has been increased to $25 to $26 million with $25.6 million already executed. Our 24 bond maturity has been fully redeemed.

Speaker Change: A few highlights. We posted second quarter FFO of 22 cents per share in line with consensus.

Speaker Change: Our speculative revenue range, as I mentioned, of $24 million to $25 million has been increased to $25 million to $26 million, with $25.6 million already executed.

Gerard H. Sweeney: Our combined leasing activity for the quarter totaled 500,000 square feet. During the quarter, we executed 164,000 square feet of leases, including 101,000 square feet of new leases within our wholly owned portfolio. Based on our efforts during the first six months of the year, we have eliminated $163 million of debt attribution from our joint ventures, which exceeds our $100 million target. And, as noted on page 13 in our SIP, our business plan anticipates having full availability on our $600 million line of credit at year-end. Along those lines, our consolidated debt is 95% fixed at a 6.2% rate. Our quarterly rental rate mark to market was 10.8% on a gap basis and negative 0.4% on a cash basis.

Speaker Change: Our 24 bond maturity has been fully redeemed.

Speaker Change: Our combined leasing activity for the quarter totaled 500,000 square feet. During the quarter, we executed 164,000 square feet of leases, including 101,000 square feet of new leases within our wholly owned portfolio.

Speaker Change: Based on our efforts during the first six months of the year, we have eliminated $163 million of debt attribution from our joint ventures which exceeds our $100 million target.

Jerry Sweeney: And as noted on page 13 in our SIPP, our business plan does anticipate having full availability on our 600 million dollar line of credit at year end 24. Along those lines, our consolidated debt is 95% fixed at a 6.2% rate. Our quarterly rental rate marked to market was 10.8% on a gap basis, and negative 0.4% on a cash basis. It's worth noting this metric for the quarter was impacted by a larger lease renewal we did in Austin, with a roll ban in rental rate, which we accepted in lieu of any tenant improvements. Our new leasing mark to market was a strong 28% and 15.5% on a gap in cash basis, respectively.

Speaker Change: And as noted on page 13 in our SIP, our business plan does anticipate having full availability on our $600 million line of credit at year-end 24.

Speaker Change: Along those lines, our consolidated debt is 95% fixed at a 6.2% rate. Our quarterly rental rate mark-to-market was 10.8% on a gap basis and negative 0.4% on a cash basis.

Gerard H. Sweeney: It's worth noting that this metric for the quarter was impacted by a larger lease renewal we did in Austin with a roll-down in rental rates, which we accepted in lieu of any tenant improvement. Our new leasing mark to market was a strong 28% and 15.5% on a gap in cash basis, respectively. We ended the quarter at 87.3% occupied and 88.5% leased, sequentially down from last quarter, but right in line with our 24 business plan projections. So the operating portfolio remains in solid shape. Our forward rollover exposure through 25 has been further reduced to 5.8% and is noted through 26 down to 5.7%.

Speaker Change: It's worth noting that this metric for the quarter was impacted by a larger lease renewal we did in Austin with a roll down in rental rate, which we accepted in lieu of any tenant improvements.

Speaker Change: Our new leasing mark to market was a strong 28% and 15.5% on a gap in cash basis, respectively.

Jerry Sweeney: We ended the quarter at 87.3% occupied in 88.5%, sequentially down from last quarter, but right in line with our 24 business plan projections. So the operating portfolio remains in solid shape. Our forward roll over exposure through 25 has been further reduced to 5.8%, and is noted through 26 down to 5.7%. Also, we do not have any tenant lease expiration greater than 1% of revenue through 2026. So we believe our asset quality, service delivery platform, and submarket positioning remain a key competitive advantage. Similar to prior quarters, the quality curve thesis continues to gain strength, as reflected in the overall pickup and leasing activity.

Speaker Change: We ended the quarter at 87.3% occupied and 88.5% leased, sequentially down from last quarter but right in line with our 24 business plan projections.

Speaker Change: So, the operating portfolio remains in solid shape. Our forward rollover exposure through 25 has been further reduced to 5.8 percent and is noted through 26 down to 5.7 percent. Also,

Gerard H. Sweeney: Also, we do not have any tenant lease expirations greater than 1% of revenue through 2026. Therefore, we believe our asset quality, service delivery platform, and sub-market positioning remain a key competitive advantage. Similar to prior quarters, the quality curve thesis continues to gain strength as reflected in the overall pickup and leasing activity. In addition, given some of the stress our competitive landlords are facing, we have, in several submarkets, seen our competitive set shrink, and the quality, operating, and financial stability of our platform has continued to separate us from the pack, both in the minds of prospective customers, existing tenants, and brokers. Along those lines, we continue to see encouraging signs on the leasing front, as evidenced by the following metrics. The increase in physical tour activity has been very positive.

Speaker Change: We do not have any tenant lease expirations greater than 1% of revenue through 2026.

Speaker Change: So we believe our asset quality, service delivery platform, and sub-market positioning remain a key competitive advantage.

Speaker Change: Similar to prior quarters, the quality curve thesis continues to gain strength as reflected in the overall pickup and leasing activity.

Jerry Sweeney: In addition, given some of the stress or competitive landlords are facing, we have, in several submarkets, seen our competitive set strength, and the quality, operating, and financial stability of our platform has continued to separate us from the pack, both in the minds of prospective customers, existing tenants, and brokers.

Speaker Change: In addition, given some of the stress our competitive landlords are facing, we have in several sub-markets

Speaker Change: seen our competitive set shrink, and the quality, operating, and financial stability of our platform has continued to separate us from the pack, both in the minds of prospective customers, existing tenants, and brokers.

Jerry Sweeney: Along those lines, we continue to see encouraging signs on the leasing front, as evidenced by the following metrics. The increase in physical tour activity has been very positive. Second quarter physical tours exceeded first quarter by 22%, and also exceeding our trailing four quarter average by over 11%. Also, tour activity remains above pre-pandemic levels by 27%. On a wholly owned basis during the second quarter, 68%, 68% of all new leases were resolved this flight to quality. Tenant expansions continued to outweigh tenant contractions during the quarter. Our executed renewal and expansion activity has enabled us to raise our annual retention range by 150 basis points from 57 to 59% to 59 to 60%.

Speaker Change: Along those lines we continue to see encouraging signs on leasing front as evidenced by the following metrics.

Gerard H. Sweeney: Second quarter physical tours exceeded first quarter by 22 percent and also exceeded our trailing four quarter average by over 11 percent. Also, tour activity remains above pre-pandemic levels by 27. On a wholly owned basis during the second quarter, 68% of all new leases were a result of this flight to quality. Tenant expansions continued to outweigh tenant contractions during the quarter. Our executed renewal and expansion activity has enabled us to raise our annual retention range by 150 basis points from 57 to 59 percent to 59 to 60 percent.

Speaker Change: The increase in physical tour activity has been very positive. Second quarter physical tours exceeded first quarter by 22 percent and also exceeding our trailing four-quarter average by over 11 percent.

Speaker Change: Also, tour activity remains above pre-pandemic levels by 27 percent.

Speaker Change: On a wholly owned basis during the second quarter, 68% of all new leases were a result of this flight to quality.

Speaker Change: Tenant expansions continue to outweigh tenant contractions during the quarter. Our executed renewal and expansion activity has enabled us to raise our annual retention range by 150 basis points from 57% to 59% to 59% to 60%.

Jerry Sweeney: The total leasing pipeline continues in a strong position. The operating portfolio leasing pipeline is up 100,000 square feet from last quarter and stands at 2.3 million square feet. This includes approximately 282,000 square feet in advanced stages of negotiations. Our development pipeline remains at the same levels as last quarter, and also 32% of our operating portfolio new deal pipeline are prospects looking to move up the quality curve.

Gerard H. Sweeney: The total leasing pipeline continues in a strong position. The operating portfolio leasing pipeline is up 100,000 square feet from last quarter and stands at 2.3 million square feet. This includes approximately 282,000 square feet in advanced stages of negotiation. Our development pipeline remains at the same levels as last quarter, and also 32% of our operating portfolio's new deal pipeline are prospects looking to move up the quality curve. Looking at EBITDA, our second-quarter net debt to EBITDA remained at 7.9 times compared to the first quarter, at the same level as increased investment in our development projects was offset by our JV recapitalization. Our core EBITDA metric ended the quarter at seven times, slightly above our current target range.

Speaker Change: The total leasing pipeline continues in a strong position. The operating portfolio leasing pipeline is up 100,000 square feet from last quarter and stands at 2.3 million square feet.

Speaker Change: This includes approximately 282,000 square feet in advanced stages of negotiations.

Speaker Change: Our development pipeline remains at the same levels as last quarter, and also 32% of our operating portfolio new deal pipeline are prospects looking to move up the quality curve.

Jerry Sweeney: Looking at EBITDA, our second quarter net debt to EBITDA remained at 7.9 times. Compared to the first quarter at the same level, as increased investment in our development projects was offset by our JV recapitizations, our core EBITDA metric ended at the quarter at seven times, slightly above our current target of range.

Speaker Change: Looking at EBITDA, our second quarter net debt to EBITDA remained at 7.9 times. Compared to the first quarter at the same level, as increased investment in our development projects was offset by our JV recapitalizations.

Speaker Change: Our core EBIDTA metric ended the quarter at 7x, slightly above our current targeted range.

Jerry Sweeney: Based on our operating results for the first half of the year, we have narrowed our 2024 FFO guidance from 90 to 97 cents per share to 91 to 96 cents per share. And also looking at the dividend based on our 60 cents per share dividend, our second quarter FFO and CAD payout ratios were covered at 68% and 97%, respectively. And at the midpoint, our first six-month CAD payout ratio was better than our 2000 business plan projection.

Gerard H. Sweeney: Based on our operating results for the first half of the year, we have narrowed our 2024 FFO guidance from $0.90 to $0.97 per share to $0.91 to $0.96 per share. And also, based on our $0.60 per share dividend, our second quarter FFO and CAD payout ratios were covered at 68% and 97%, respectively. And at the midpoint, our first six-month CAD payout ratio was better than our 2000 business plan projected. Looking at sales activity, our business plan does contemplate us executing between $80 and $100 million of sales. We had targeted these to occur in the fourth quarter.

Speaker Change: Based on our operating results for the first half of the year, we have narrowed our 2024 FFO guidance from $0.90 to $0.97 per share to $0.91 to $0.96 per share.

Speaker Change: and also looking at the dividend based on our $0.60 per share dividend, our second quarter FFO and CAD payout ratios were covered at 68% and 97% respectively and at the midpoint our first six-month CAD payout ratio was better than our 2000 business plan projection.

Jerry Sweeney: Looking at sales activity, our business plan does contemplate us executing between 80 and 100 million dollars of sales. We had targeted those to occur in the fourth quarter. We have about 200 million dollars of properties in the market for price discovery. Given the reaction to that activity thus far, we do anticipate posting actual results within our target of range.

Speaker Change: Looking at sales activity, our business plan does contemplate.

Gerard H. Sweeney: We have about $200 million of properties in the market for price discovery. Given the reaction to that activity thus far, we do anticipate posting actual results within our targeted range. And while we will also anticipate continuing to sell non-core land parcels, we did have several land agreements terminated during the quarter due to the buyer's inability to obtain financing. In looking at our developments, the development pipeline remains strong.

Speaker Change: It's executing between $80 and $100 million of sales. We had targeted those to occur in the fourth quarter.

Speaker Change: We have about 200 million dollars of properties in the market for price discovery.

Speaker Change: Given the reaction to that activity thus far, we do anticipate posting actual results within our targeted range. And while we will also anticipate continuing to sell non-core land parcels, we did have several land agreements terminated during the quarter due to buyers' inability to obtain financing.

Jerry Sweeney: And while we will also anticipate continuous sell non-core land parcels, we did have several land agreements terminated during the quarter through the buyer's inability to obtain financing.

Jerry Sweeney: In looking at our developments, the development pipeline remains strong. As of now, we have approximately 200,000 square feet in active lease negotiations, 900,000 square feet of proposals outstanding, and 300,000 square feet of space undergoing test fits. Tour of Velocity continues to pick up, and activity levels have continued to increase on our recently delivered project in One-Optam. Given the length of time to complete the space plans, I note at last quarter, we still need to obtain permits, construct space. Our 24 financial plan does not include any spec revenue coming from either one-optam or 3025JFK. To accelerate revenue recognition, however, we're nearly finished building out two floors of spec suites at One-Optam and one floor of spec suites at 3025.

Gerard H. Sweeney: As of now, we have approximately 200,000 square feet in active lease negotiation, 900,000 square feet of proposals outstanding, and 300,000 square feet of space undergoing test fits. Tour velocity continues to pick up, and activity levels have continued to increase on our recently delivered project at 1UP. Given the length of time to complete the space plans I noted last quarter, we still need to obtain permits, and construct space. Our 20-4 financial plan does not include any speculative revenue coming from either One Uptown or 3025 JFK.

Speaker Change: In looking at our developments, the development pipeline remains strong. As of now, we have approximately 200,000 square feet in active lease negotiations.

Speaker Change: 900,000 square feet of proposals outstanding and 300,000 square feet of space undergoing test fits.

Speaker Change: Tour velocity continues to pick up and activity levels have continued to increase on our recently delivered project at One Uptown.

Speaker Change: Given the length of time to complete the space plans I noted last quarter we still need to obtain permits, construct space. Our 24 financial plan does not include any spec revenue coming from either 1 up 10 or 3025 JFK.

Gerard H. Sweeney: To accelerate revenue recognition, however, we're nearly finished building out two floors of spec suites at One Uptown and one floor of spec suites at 3025. Looking at 3025, that property is fully delivered on the commercial component. We're currently 15 percent leased with an active pipeline and again, a hundred thousand square feet or so under active lease negotiations on the residential component. We continue to see steady traffic and leasing activity for that residential component, which we call Avira, has two hundred thirty seven thousand leases executed, or just shy of seventy three percent of the project. That's up significantly from last quarter's call.

Speaker Change: To accelerate revenue recognition, however, we are nearly finished building out two floors of spec suites at 1 Uptown and one floor of spec suites at 3025.

Jerry Sweeney: Looking at 3025, that property is fully delivered. When the commercial component were currently 15% at least, with an active pipeline and again 100,000 square feet or so under active lease negotiations. On the residential component, we continue to see steady traffic and leasing activity for that residence component, which we call a Vera, has 237,000 leases executed or just shy of 73% of the project. That's up significantly from last quarter's call. 151 of those leases have taken occupancy at pro-former rental rates. We still project this residential component will be between 80 and 85% at least by year 24.

Speaker Change: Looking at 3025, that property is fully delivered. On the commercial component, we're currently 15% leased.

Speaker Change: with an active pipeline and again 100,000 square feet or so under active lease negotiations.

Speaker Change: On the residential component, we continue to see steady traffic.

Speaker Change: And leasing activity for that residence component, which we call AVERA, has 237,000 leases executed or just shy of 73% of the project. That's up significantly from last quarter's call.

Speaker Change: 151 of those leases have taken occupancy, that's pro-former rental rates.

Speaker Change: We still project this residential component will be between 80% and 85% leased by year-end 24.

Jerry Sweeney: We have begun pre-leasing for one-optam's Blockade residential component called Solar House and continue to see steady traffic. We have 22 leases executed. No leases have taken occupancy as the first movements are scheduled for later in August, and we continue to project that project will be between 20 and 25% at least by year and 24.

Gerard H. Sweeney: One hundred fifty one of those leases have taken occupancy. That's the pro forma rental rate. We still project this residential component will be between 80 and 85 percent leased by year-end. We have begun pre-leasing for One Uptown's Block A residential component called Solaris House and continue to see steady traffic. We have 22 leases executed, but no leases have taken occupancy yet as the first move-ins are scheduled for later in August.

Speaker Change: We have begun pre-leasing for One Uptown's Block A residential component called Solaris House.

Speaker Change: and continue to see steady traffic.

Speaker Change: We have 22 leases executed. No leases have taken occupancy yet as the first move-ins are scheduled for later in August . And we continue to project that price will be between 20% and 25% lease by year-end 24.

Gerard H. Sweeney: And we continue to project that project will be between 20 and 25 percent leased by year end 24. 3151 Market is scheduled for delivery in the fourth quarter of this year. We have a leasing pipeline of over 350,000 square feet on that, with 110,000 square feet in lease negotiations. Uptown, ATX, and Office component.

Jerry Sweeney: 3151 Market is scheduled for delivery in the fourth quarter of this year. We have a leasing pipeline of over 350,000 square feet on that, with 110,000 square feet in lease negotiations. At Uptown, ATX, the office component, we had that in a joint venture and our leasing pipeline there approximates 1.2 million square feet with prospects range from 3,000 to 300,000 square feet. As I just said, we did complete a floor of spec suites, with the second floor underway, and things are moving on track there as well. Our next phase at B-Lad is the eighth floor of Sierra Center is well underway, and we remain in the final stage of negotiating a lease with a single tenant for that entire floor.

Speaker Change: 3151 Market is scheduled for delivery in the fourth quarter of this year. We have a leasing pipeline of over 350,000 square feet on that with 110,000 square feet in lease negotiations.

Speaker Change: and Uptown ATX, the office component.

Gerard H. Sweeney: We have that in a joint venture, and our leasing pipeline there approximates 1.2 million square feet, with prospects ranging from 3,000 to 300,000 square feet. As I just noted, we did complete a floor of spec suites, with the second floor underway, and things are moving on track there as well. Our next phase of B-Lab on the eighth floor of Sears Center is well underway, and we remain in the final stage of negotiating a lease with a single tenant for that entire floor. Tom will now provide an overview of our financial results. Thank you, Jerry, and good morning.

Speaker Change: We have that in a joint venture, and our leasing pipeline there approximates 1.2 million square feet.

Speaker Change: with prospects ranging from 3,000 to 300,000 square feet.

Speaker Change: As I just said, we did complete a floor of spec suites with the second floor underway.

Speaker Change: and things are moving on track there as well.

Speaker Change: Our next phase of B-Lab on the 8th floor of Sears Center is well underway, and we remain in the final stage of negotiating a lease with a single tenant for that entire floor.

Thomas E. Wirth: Our second quarter net income totaled $29.9 million, or $0.17 per share, and second quarter FFO totaled $38 million, or $0.22 per diluted share. Our second quarter net income results were impacted by a $53.8 million, or $0.31 per diluted share, one-time non-cash income gain from the restructuring of our MAP joint. Our FFO results met consensus, and we have some general observations regarding our second quarter, highlighting a couple variances compared to our first quarter guidance. Interest expense was $2.2 million below our re-forecast, primarily due to higher capitalized interest and lower projected borrowings on our unsecured line of credit.

Tom Worth: Tom will now provide an overview of our financial results. Thank you, Jerry. Good morning. Our second quarter net income total 29.9 million or 17 cents per share, and second quarter FFO total 38 million or 22 cents per diluted share. Our second quarter net income results were impacted by a $53.8 million, or 31 cent per diluted share, one-time non-cash income gain from the restructuring of our map joint venture. Our FFO results met consensus, and we have some general observations regarding our second quarter, highlighting a couple of variances compared to our first quarter guidance. Interest expense was 2.2 million below our reforcage, primarily due to higher capitalized interest and lower projected borrowings on our unsecured line of credit.

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

Thomas E. Wirth: Thank you, Jerry, and good morning. Our second quarter net income totaled $29.9 million, or $0.17 per share, and second quarter FFO totaled $38 million, or $0.22 per diluted share.

Thomas E. Wirth: Our second quarter net income results were impacted by a $53.8 million or $0.31 per diluted share one-time non-cash income gain from the restructuring of our MAP joint venture.

Thomas E. Wirth: Our FFO results met consensus, and we have some general observations regarding our second quarter, highlighting a couple variances compared to our first quarter guidance. Interest expense was $2.2 million below our re-forecast, primarily due to higher capitalized interest and lower projected borrowings.

Thomas E. Wirth: G&A totaled $8.9 million, $600,000 below or above our re-forecast, primarily due to compensation expense. This quarterly variance continues to be a timing variance, and we still anticipate the full-year number to be consistent with our guidance. Our first quarter debt service and interest coverage ratios were 2.2 and net debt to GDP was 45.2, both in line with projections. Our first quarter annualized core net debt to EBITDA was 7.0 and is two-tenths of a turn above our range, and our annualized combined net debt to EBITDA was 7.9, just above the high end of our range of 7.5 to 7.8.

Tom Worth: GNA total 89.8 million, 600,000 below or above our reforcage primarily due to compensation. This quarterly variance continues to be a timing variance, and we still anticipate the full year number to be consistent with our guidance. Our first quarter debt service and interest coverage ratios were 2.2 and net debt to GAB was 45.2, both in line with projections. Our first quarter annualized core net debt to Ividal was 7.0 and is two tenths of a turn above our range, and our annualized combined net debt Ividal was 7.9. Just about the high end of our range of 7.5 to 7.8.

Thomas E. Wirth: on our unsecured line of credit. G&A totaled $8.9 million, $600,000 above our re-forecast, primarily due to compensation expense.

Thomas E. Wirth: This quarterly variance continues to be a timing variance and we still anticipate the full year number to be consistent with our guidance.

Thomas E. Wirth: Our first quarter debt service and interest coverage ratios were 2.2 and net debt to GAV was 45.2, both in line with projections.

Thomas E. Wirth: Our first quarter annualized core net debt to EBITDA was $7.0 and is two tenths of a turn above our range. And our annualized combined net debt to EBITDA was $7.9, just above the high end of our range of $7.5 to $7.8.

Thomas E. Wirth: Regarding portfolio and joint venture changes, we have made no changes to our wholly owned core portfolio in this quarter. Financing activity, as Jerry highlighted, we completed a $400 million bond offering that closed on April 12th. And with this closing, we've eliminated a near-term maturity risk with no unsecured bonds maturing until November 2021. Our wholly owned debt is now just under 95% fixed with a weighted average maturity of 4.2 years. Regarding our 2024 joint venture maturities, as Jerry mentioned, we have made progress with our partners and lenders on the 2024 maturities. We refinanced our loan with Sera Square and set that maturity date for 2029.

Tom Worth: Regarding portfolio and joint venture changes, we have made no changes to our wholly owned core portfolio in this quarter.

Thomas E. Wirth: Regarding portfolio and joint venture changes, we have made no changes to our wholly owned core portfolio in this quarter.

Tom Worth: Financing activity is very highlighted. We completed a $400 million bond offering that closed on April 12th, and with this closing, we have eliminated a near term maturity risk with no unscored bonds maturing until November of 2027. Our wholly owned debt is now just under 95% fixed with a weighted average maturity of 4.2 years. Regarding our 2024 joint venture maturity, as Jerry mentioned, we have made progress with our partners and lenders on the 2024 maturities. We re-familized our loan with Sierra Square and setting that maturity date to 2029. We recapitalized the map joint venture by acquiring our partner's interest, reducing the existing loan by 24.5 million, and then executing a new loan through 2029.

Thomas E. Wirth: Financing activity, as Jerry highlighted, we completed a $400 million bond offering that closed on April 12th, and with this closing, we've eliminated a near-term maturity risk with no unsecured bonds maturing until November 2027.

Gerard H. Sweeney: Our wholly owned debt is now just under 95% fixed with a weighted average maturity of 4.2 years.

Gerard H. Sweeney: Regarding our 2024 joint venture maturities, as Jerry mentioned, we have made progress with our partners and lenders on the 2024 maturities.

Thomas E. Wirth: We recapitalized the MAP joint venture by acquiring our partner's interest, reducing the existing loan by $24.5 million, and then executing a new loan through 2029. These transactions continue our goal of reducing our investment exposure to our operating joint ventures and, just as importantly, also reducing the net debt attributed to these ventures by well over $100 million in this quarter. In addition, in connection with the MAPS recapitalization, we formed a 50-50 partnership with the current ground owner and acquired the leasehold interest in 14 property portfolios located in Richmond, Virginia, totaling approximately 642,000 square feet or $44 per square foot.

Speaker Change: We refinanced our loan with Sera Square and setting that maturity date for 2029. We recapitalized the MAP joint venture by acquiring our partner's interest.

Gerard H. Sweeney: Reducing the existing loan by $24.5 million and then executing a new loan through 2029.

Tom Worth: These transactions continue our goal of reducing our investment exposure to our operating joint ventures and, just as importantly, also reducing the net debt attributed to these ventures by well over 100 million in this quarter. In addition, in connection with the map recapitalization, reformed a 50-50 partnership with the current ground owner and acquired the leasehold interest in a 14 property portfolio located in Richmond, Virginia, totaling approximately 642,000 square feet for $44 per square foot. That is over 99% occupied. Portfolio is primary flexed industrial properties with a weighted average lease term of 7.5 years. Portfolio is 44% occupied by S&T, 500 biotechnology company.

Gerard H. Sweeney: These transactions continue our goal of reducing our investment exposure to our operating joint ventures and, just as importantly, also reducing the net debt attributed to these ventures by well over $100 million in this quarter.

Gerard H. Sweeney: In addition, in connection with the MAP recapitalization, we formed a 50-50 partnership with the current ground owner and acquired the leasehold interest in 14 property portfolio located in Richmond, Virginia, totaling approximately 642,000 square feet.

Thomas E. Wirth: That is over 99% off. Portfolio is primarily flexed industrial properties, with a weighted average lease term of 7.5 years. Portfolio is 44% occupied by an S&P 500 biotechnology company. We intend to market this portfolio for sale, and based on the profile of the portfolio assets, we expect to sell the assets within the next couple of quarters. The joint venture portfolio is unencumbered.

Gerard H. Sweeney: for $44 per square foot that is over 99% occupied.

Gerard H. Sweeney: Portfolio is primary flexed industrial properties with a weighted average lease term of 7.5 years.

Gerard H. Sweeney: The portfolio is 44% occupied by S&P 500 biotechnology company. We intend to market this portfolio for sale and based on the profile of the portfolio assets we expect to sell the assets within the next couple of quarters.

Tom Worth: We intend to market this portfolio for sale, and based on the profile of the portfolio assets, we expect to sell the assets within the next couple of quarters. The joint venture portfolio is unencumbered.

Tom Worth: Looking more closely at our third quarter, 2024, we have the following general assumptions. Our portfolio operating income will total approximately 75 million and roughly 1 million above our second quarter operating income number. FFL contribution from our unconsolidated joint ventures will total a negative $2 million, which again approximates our second quarter results. Our GNA for the third quarter will be up sequentially. That will be flat, sorry, at $9 million. Our interest expense will approximate $33 million, with capitalized interest of $3.5 million. Termination and other income will approximate $7.5 million in the third quarter. The sequential increase is due to anticipated transactional income that we forecasted in our full year guidance, which was $11 million.

Thomas E. Wirth: Looking more closely at our third quarter, 2024, we have the following general assumptions. Our portfolio operating income will total approximately $75 million, and roughly $1 million above our second quarter operating income number. FFL's contribution from our unconsolidated joint ventures will total negative $2 million, which again approximates our second quarter results. Our G&A for the third quarter will be up sequentially, although it will be flat, sorry, at $9 million. Our interest expense will approximate $33 million, with capitalized interest of $3.5 million. Termination and other income will approximate $7.5 million in the third quarter.

Gerard H. Sweeney: The joint venture portfolio is unencumbered.

Gerard H. Sweeney: Looking more closely at our third quarter, 2024, we have the following general assumptions. Our portfolio operating income

Gerard H. Sweeney: will total approximately $75 million and roughly $1 million above our second quarter operating income number. FFL contribution from our unconsolidated joint ventures will total a negative $2 million, which again approximates our second quarter results.

Gerard H. Sweeney: Our G&A for the third quarter will be up sequentially, or will be flat, sorry, at $9 million.

Gerard H. Sweeney: Our interest expense will approximate $33 million with capitalized interest of $3.5 million.

Thomas E. Wirth: The sequential increase is due to anticipated transactional income that we forecasted in our full year guidance, which was $11 million. Net management, leasing, and development fees will be $3 million for the quarter. We don't expect any land or tax provision to be material.

Gerard H. Sweeney: Termination and other income will approximate $7.5 million in the third quarter. The sequential increase is due to anticipated transactional income that we forecasted in our full year guidance, which was $11 million.

Tom Worth: of dollars. Net management leasing and development fees will be $3 million for the quarter. We don't expect any land or tax provision to be material. Interested investment income will total $300,000, or $1,000,000 sequentially below the second quarter. The second quarter had excess cash from the timing of the April bond offering, that's the bond tender and the final June bond redemption. Our share count will approximately $1,160,176,000,000 shares and for our capital plan.

Gerard H. Sweeney: Net management, leasing, and development fees will be $3 million for the quarter. We don't expect any land or tax provision to be material. Interest and investment income will total $300,000, or $1.2 million sequentially below the second quarter.

Thomas E. Wirth: Interest and investment income will total $300,000, or $1.2 million sequentially below the second quarter. The second quarter had excess cash from the timing of the April bond offering. Bond Tender, and the final June Bond Redemption. Our share count will approximately... 176 million shares, and for our capital plan, our capital plan is fairly straightforward: $180 million. Our CAD range remains at $90 million to $95 million, and uses for the remainder of the year are $55 million for development and redevelopment projects.

Gerard H. Sweeney: The second quarter had excess cash from the timing of the April bond offering, the bond tender, and the final June bond redemption.

Gerard H. Sweeney: Our share count will approximate 176 million shares. And for our capital plan...

Tom Worth: Our capital plan is fairly straightforward. $180,000,000,000 or CAD range remains at $90,000 to $95.00. Now, uses for this remainder of the year is $55,000,000 for development and redevelopment projects, $52,000,000 for common dividends, $28,000,000 of revenue-maintained capital, $20,000,000 of revenue-created capital, and $25,000,000 of equity contributions to our joint ventures. The primary sources are $77,000,000 of cash flow after interest payments, $90,000,000 of land sales, and $17,000,000 of construction loan proceeds related to 155 King of Prussian Road. Based on the capital planned out line above and cash on hand, we should have $4,000,000 of cash on hand and are lying undrawn at the end of the year.

Gerard H. Sweeney: Our capital plan is fairly straightforward. $180 million. Our CAD range remains at $90 million to $95 million. Uses for the remainder of the year is $55 million for development and redevelopment projects.

Thomas E. Wirth: $52 million for common dividends, $28 million of revenue to maintain capital, $20 million of revenue to create capital, and $25 million of equity contributions to our joint venture. The primary sources are $77 million of cash flow after interest payments, $90 million of land sales, and $17 million of construction loan proceeds related to 155 King of Crusher Road. Based on the capital planned out line above and cash on hand, we should have $4 million of cash on hand and our line undrawn at the end of the year.

Gerard H. Sweeney: $52 million for common dividends, $28 million of revenue maintained capital, $20 million of revenue create capital, and $25 million of equity contributions to our joint ventures.

Gerard H. Sweeney: The primary sources are $77 million of cash flow after interest payments, $90 million of land sales, and $17 million of construction loan proceeds related to 155 King of Crusher Road.

Gerard H. Sweeney: Based on the capital planned out line above and cash on hand, we should have $4 million of cash on hand and our line undrawn at the end of the year.

Thomas E. Wirth: We also project to have that debt to EBITDA ratio ranging between 7.5 and 7.8, and our debt to GAV will be approximately 45%. Our additional metric of core net debt to EBITDA was, and is still ranging between 6.5 and 6.8 and excludes primarily just our joint ventures as all of our active development projects will be completed.

Tom Worth: We also project to have that debt to Ibadah ratio ranging between $7.5 and $7.8, and our debt to GAV will approximately 45%. Our additional metric of core net debt to Ibadah is still ranging between $6.5 and $6.8, and excludes primarily just our joint ventures as all of our active development projects will be complete. We believe this core leverage metric better reflects the leverage of our core portfolio and eliminates our more highly levered joint ventures and our unsabilized development redevelopment projects. During 2025, our core net debt to Ibadah should begin to equal our consolidated net debt to Ibadah as our wholly owned development projects reach stabilization, and we continue to reduce our exposure to the current joint ventures.

Gerard H. Sweeney: We also project to have a debt to EBITDA ratio ranging between 7.5% and 7.8%, and our debt to GAV will be approximately 45%.

Gerard H. Sweeney: Our additional metric of core net debt to EBITDA was

Gerard H. Sweeney: is still ranging between 6.5 and 6.8 and excludes primarily just our joint ventures as all of our active development projects will be complete.

Gerard H. Sweeney: We believe this 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.

Gerard H. Sweeney: During 2025, our core net debt to EBITDA should begin to equal our consolidated net debt to EBITDA as our wholly owned development projects reach stabilization and we continue to reduce our exposure to the current joint ventures.

Tom Worth: We anticipate our fixed charge and interest coverage ratios will approximately be 2.2, which is equal to the second quarter.

Gerard H. Sweeney: We anticipate our fixed charge and interest coverage ratios will approximately be 2.2, which is equal to the second quarter.

Thomas E. Wirth: We believe this 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 wholly owned development projects reach stabilization and we continue to reduce our exposure to the current joint venture. We anticipate our fixed charge and interest coverage ratios will be approximately 2.2, which is equal to the second quarter. I will now turn the call back over to Gerard.

Jerry Sweeney: I will now turn the call back over to Jerry.

Gerard H. Sweeney: Great, thanks, Tom. So the key takeaways are that the portfolio remains in very solid shape and average rollover exposure, as I mentioned, is one of the lowest in the sector.

Jerry Sweeney: Great, thanks, Tom. So the key takeaways are that the portfolio remains in very solid shape. Average rollover exposure, as I mentioned, is one of the lowest in the sector. Demonstrate ability to manage our capital spend and stable and accelerating lead thing velocity, including a proposal to converge and rate that continues to improve over our pre-pandemic levels. So we remain very focused on executing a business plan that continues to improve liquidity. Keeps our operating portfolio on a solid footing, with obviously a very clear and daily focus on leasing up our development projects to generate that forward earnings growth.

Gerard H. Sweeney: I will now turn the call back over to Gerard.

Jared: Great, thanks Tom. So the key takeaways are the portfolio remains in very solid shape, average rollover exposure.

Jared: As I mentioned, it's one of the lowest in the sector.

Jared: demonstrated ability to manage our capital spend and stable and accelerating leasing velocity, you know, including a proposal to convergent rate that continues to improve over our pre-pandemic levels.

Jared: So we remain very focused on executing a business plan that continues to improve liquidity.

Speaker Change: Keeps our operating portfolio on a solid footing with obviously a very clear and daily focus on leasing up our development projects to generate that forward earnings growth.

Gerard H. Sweeney: Demonstrated ability to manage our capital spend and stable and accelerating leasing velocity, including a proposal to conversion rate that continues to improve over our pre-pandemic levels. So we remain very focused on executing a business plan that continues to improve liquidity, keeps our operating portfolio on a solid footing, with obviously a very clear and daily focus on leasing up our development projects to generate that forward earnings growth. As usual, and this is where we started, we wish you and your families were doing well.

Operator: As usual, and where we started, we wish you and your families are doing well, and with that, we're delighted to open up the floor for questions. We do ask that, in the interest of time, you limit yourself to one question and a follow. Thank you. As a reminder to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again.

Speaker Change: As usual and where we started, we wish you and your families are doing well and with that we're delighted to open up the floor for questions. We do ask that in the interest of time you limit yourself to one question and a follow-up.

Operator: And with that, we're delighted to open up the floor for questions. We do ask, in the interest of time, you limit yourself to one question and a follow-up. Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Speaker Change: Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced.

Speaker Change: To withdraw your question, please press star 11 again.

Anthony Paolone: Our first question comes to the line of Anthony Paolone from JP Morgan. Thanks. Good morning.

Anthony Paolone: Our first question comes from the line of Anthony Paolone from J.P. Morgan. Thanks. Good morning.

Speaker Change: Our first question comes to the line of Anthony Paolone from J.P. Morgan.

Gerard H. Sweeney: Just, Jerry, maybe I want to go back to the leasing pipeline for the three commercial projects under development. If I go back a couple quarters, you know, it looked like 33025 had about 700,000 square feet, 3151, I think you guys talked about, 400,000 square feet, and ATX had a couple hundred thousand square feet. It sounds like you still have the pipeline, but the conversion to lease has been on the slow side.

Jerry Sweeney: Jerry, maybe you want to go back to the leasing pipeline for the three commercial projects under development. If I go back a couple quarters, it looked like 3-30-25 had about 700,000 square feet, 3151. I think he has talked about 400,000 square feet in ATX. He had a couple hundred thousand square feet. It sounds like you still have the pipeline, but the conversion to lease has been on the slow side.

Anthony Paolone: Thanks, good morning. Just, Jerry, maybe want to go back to the leasing pipeline for the three commercial projects under development. If I go back like a couple quarters

Anthony Paolone: You know, it looked like 33025 had about 700,000 square feet, 3151, I think you guys talked about 400,000 square feet in ATX.

Speaker Change: He had a couple hundred thousand square feet. It sounds like...

Gerard H. Sweeney: I mean, maybe you could talk a bit about, you know, if anything's really changed in terms of, you know, the prospective tenant behavior or just, you know, your confidence level on getting some of these things over the finish line? Yeah, Tony, good morning and great question. Thank you.

Jerry Sweeney: I mean, maybe can you talk a bit about, you know, if anything's really changed in terms of, you know, the prospective tenant behavior or just, you know, your confidence level on getting some of these things over the finish line, might be.

Speaker Change: You still have the pipeline, but the conversion to lease has been on the slow side. I mean, maybe can you talk a bit about, you know, if anything's really changed in terms of, you know, the prospective tenant behavior, or just, you know, your confidence level on getting some of these things over the finish line might be?

Jerry Sweeney: Yeah, Tony. Good morning and great question. Thank you. Yeah, look, I mean the pipeline has been pretty strong on these properties all the way through, which I think reflects the, if there's some market positioning, the quality of what we're delivering. You know, some of the buildings, you know, for 30-25, you know, the amenity floor wasn't done until the late last year. One up town, we actually had some significant infrastructure improvements being done off-site and limited access to the property. But they're both; they're both in excellent shape now. 31-51 is on track for a full delivery by the end of this year.

Gerard H. Sweeney: Yeah, look, I mean, the pipeline has been pretty strong on these properties all the way through, which I think reflects their sub-market positioning, the quality of what we're delivering, you know, some of the buildings, you know, for 3025, you know, the amenity floor wasn't done until late last year, one uptown, we actually had some significant infrastructure improvements being done off site that limited access to the property. But they're both in excellent shape now, and 3151 is on track for a full delivery by the end of this year. So the projects present themselves very well. Traffic, in terms of tour activity, remains very strong.

Speaker Change: Yeah, Tony, good morning and great question. Thank you. Yeah, look, I mean, the pipeline has been pretty strong on these properties all the way through, which I think reflect their sub-market positioning, the quality of what we're delivering.

Speaker Change: Some of the buildings, you know, for 3025, you know, the

Speaker Change: The amenity floor wasn't done until late last year, one up, and we actually had some significant infrastructure improvements being done off-site that limited access to the property, but they're both in excellent shape now, and 3151 is on track for...

Jerry Sweeney: So the projects present themselves very well. A traffic in terms of tour activity remains very strong. The, like the quality thesis, seems like it's, as I mentioned in our operating portfolio, seems to have a level of continued validity. It's just taking tenants long to make up their minds. I mean, we do have several larger leases under active lease negotiations. So we move from proposal to lease negotiations. I do think the pipeline for 30-25, Tony and 31-51 has remained fairly stable in terms of square footage. You know, moving tenants in, prospects in and out. I think the real pleasant surprise is in the last couple of quarters.

Speaker Change: full delivery by the end of this year. So the projects present themselves very well. Traffic in terms of tour activity remains very strong.

Speaker Change: The flight to quality thesis seems like, as I mentioned in our operating portfolio, to have a level of continued validity.

Gerard H. Sweeney: The flight to quality thesis seems like it's, as I mentioned, in our operating portfolios, to have a level of continued validity. It's just taking tenants a long time to make up their minds. I mean, we do have several larger leases under active lease negotiation. So we've moved from proposal to lease negotiation. I do think the pipeline for 3025, Tony, and 3151 has remained fairly stable in terms of square footage, you know, moving tenants and prospects in and out. I think the real pleasant surprise is that in the last couple quarters, we've seen a dramatic uptick in one uptown.

Speaker Change: It's just taking tenants long to make up their minds. I mean, we do have several larger leases under active lease negotiations, so we've moved from proposal to lease negotiations.

Speaker Change: I do think the pipeline for 3025, Tony, and 3151 has remained fairly stable in terms of square footage, you know, moving tenants and prospects in and out. I think the real pleasant surprise is in the last couple quarters.

Jerry Sweeney: We've seen a dramatic uptick in one uptown. With that building being delivered now, there's a real increase in the number of showings, the number of proposals are being issued, and the overall level of activity. In that market, we are seeing a return of a couple of larger tenants. Clearly, we're still in a market that is over 20% vacancy. We're still competing against other products and subtly spaced. But we're very pleased with the pickup and activity at One Uptown over the last couple quarters.

Gerard H. Sweeney: With that building being delivered now, there's a real increase in the number of showings, the number of proposals that are being issued, and the overall level of activity. In that market, we are seeing the return of a couple of larger tenants. Clearly, we're still in a market that is over 20% vacancy, we're still competing against other products and sublease space, but we're very pleased with the pickup in activity at One Uptown over the last couple of years.

Speaker Change: We've seen a dramatic uptick in one uptown.

Speaker Change: With that building being delivered now, there's a real increase in the number of showings, the number of proposals that are being issued, and the overall level of activity. In that market, we are seeing a return of a couple of larger tenants.

Speaker Change: Clearly we're still, in a market that is over 20% vacancy, we're still competing against other products and and sublease space, but we're very pleased with the pickup in activity at One Uptown over the last couple of quarters.

Jerry Sweeney: We still have work to do, and we're focused on that with active engagement by top management and our leasing team and all these tours. and Least Negotiations. I think on the residential front, I know you address that, but we continue to think to make very solid progress at 30, 25 with a good uptick and activity quarter over quarter. And when Salaris asks, really effectively rolls out the first occupancies later this month, we think we have a good building pipeline there as well.

Gerard H. Sweeney: We still have work to do, and we're focused on that with active engagement by top managers, and our leasing team, and all these tours. I think on the residential front, I know you didn't address that, but we continue to make very solid progress at 3025 with a good uptick in activity quarter over quarter. And when Solaris House really effectively rolls out with the first occupancies later this month, we think we'll have a good building pipeline. Okay, thanks for that.

Speaker Change: We still have work to do, and we're focused on that with active engagement by top management and our leasing team in all these tours and lease negotiations.

Speaker Change: I think on the residential front, I know you didn't address that, but we continue to make very solid progress at 3025 with good uptick in activity quarter over quarter, and when Solaris House really effectively rolls out with the first occupancies.

Gerard H. Sweeney: And then just follow up, you talked about the limited rollover in the next few years in the portfolio. And just given your historical level of leasing, it would seem like that sets up pretty well to absorb some vacancies. So just wondering what we should think of if there are any impediments to that being the case, whether it's lower retention or anything you're thinking about there that could stand in the way.

Jerry Sweeney: Ok, thanks for that. And then just follow up, you talked about the limited roll over in the next few years in the Portfolio, and just given your historical level of leasing, it would seem like that sets up pretty well to absorb some vacancies. So just wondering if you know what we should think of if there are any impediments to that being the case, whether it's lower retention or anything you're thinking about there that could stand in the way.

Speaker Change: Later this month, we think we'll get a good building pipeline there as well.

Speaker Change: Okay.

Speaker Change: Thanks for that. And then just follow up, you talked about the limited rollover in the next few years in the portfolio.

Speaker Change: And just given your historical level of leasing, it would seem like that sets up pretty well to absorb some vacancies. So just wondering if, you know, what we should think of if there are any impediments to that being the case, whether it's lower retention or anything you're thinking about there that could stand in the way.

Jerry Sweeney: You know, I think we feel like the Portfolio should be in the operating portfolio should be in a very solid shape going forward. You know, we clearly spike that a couple of higher vacancy projects and supplemental information package. And we continue to make progress on each of those projects. You know, Austin remains in the operating portfolio 80% lease, which is well below our historical one rate. Again, I guess we're looking at the level of tour activities increased in our properties quarter over quarter. The markets finally had two consecutive quarters of positive absorption and increase in leasing activity.

Gerard H. Sweeney: You know, I think we feel like the portfolio should be in very solid shape going forward. We clearly spiked out a couple of higher vacancy projects in the supplemental information package, and we continue to make progress on each of those projects. You know, Austin remains in the operating portfolio, 80% leased, which is well below our historical run rate. Again, I guess we're looking at the level of tour activity that's increased in our properties quarter over quarter. The market's finally had two consecutive quarters of positive absorption and an increase in leasing activity.

Speaker Change: You know, I think we feel like the portfolio should be, the operating portfolio should be in a very solid shape.

Speaker Change: going forward.

Speaker Change: in the Supplemental Information Package.

Speaker Change: and we continue to make progress on each of those projects.

Speaker Change: You know, Austin remains in the operating portfolio, 80% lease, which is well below our historical run rate. Again, I guess we're looking at the level of tour activity that's increased in our properties quarter over quarter.

Speaker Change: The markets finally had two consecutive quarters of positive absorption and an increase in leasing activity. That market seems to be getting...

George Johnstone: That market sees beginning some additional green shoots. But the other thing we take look at the Portfolio is no tenant with an expiration is greater than 1% of revenues.

Gerard H. Sweeney: That market seems to be getting some additional green shoots. But the other thing we take a look at the portfolio is that no tenant with an expiration is greater than 1% of revenues. But George, maybe you can add some color to that.

Speaker Change: some additional green shoots.

Speaker Change: But the other thing we take a look at the portfolio is no tenant with an expiration is greater than 1% of revenues. But George, maybe you can add some color to that. Yeah, I mean...

George Johnstone: But George, maybe you can add some others back. Yeah, I mean, staying on the theme of expiration. Our largest expiration in 2025 is 50,000 square foot tenant in Radner, which we have a lease issued to them and look to announce its execution in the third quarter. And then, as Jerry said, I mean, really the opportunity is with the Austin Portfolio and its 20% vacancy level. The current operating pipeline breaks down kind of 60% between Philadelphia and the Pennsylvania suburbs, and 40% in Austin. So, you know, we've had a number of move-outs over the last kind of five to seven quarters.

George D. Johnstone: Staying on the theme of expirations, our largest expiration in 2025 is... 50,000 square feet of tenant in Radnor, which we have a lease issued to them and look to announce. And then, as Jerry said, I mean, really, the opportunity is with the Austin portfolio and it's 20% vacancy level. The current operating pipeline breaks down kind of 60%. Philadelphia in the Pennsylvania suburbs and 40% in Austin.

George D. Johnstone: Staying on the theme of expirations, I mean our largest expiration in 2025 is

George D. Johnstone: 50,000 square foot tenant in Radnor, which we have a lease issued to them, and we look to announce this execution.

George D. Johnstone: in the third quarter. And then as Jerry said, I mean, really the opportunity is with the Austin.

Gerard H. Sweeney: And it's 20% vacancy level. The current operating pipeline breaks down kind of 60% between

Gerard H. Sweeney: Philadelphia in the Pennsylvania suburbs and 40% in in Austin. So you know we've had a number of move outs over the last kind of five to seven quarters. We think you know the end is close to being

George D. Johnstone: So, you know, we've had a number of move outs over the last kind of five to seven quarters. I think the end is close to being over for some of those rollouts, and now it's a matter of converting that New Deal pipeline to OCU. Okay, thank you.

George Johnstone: We think, you know, the end is close to being, you know, over for some of those roll outs, and now it's a matter of converting that new deal pipeline to occupancy.

George D. Johnstone: you know over for for some of those rollouts and and now it's a matter of converting that New Deal pipeline to occupancy.

Anthony Paolone: Okay, thank you.

Operator: Thank you. One moment for our next question.

Stephen Thomas Sakwa: Thank you. Thank you. One moment for our next question. Our next question comes from the line of Steve Sakwa from Evercore ISI. Thanks. Good morning.

George D. Johnstone: Okay, thank you.

Speaker Change: Thank you.

Steve Sackwell: Our next question comes from the line of Steve Sackwell from Evercore ISI. Thanks. Good morning.

Speaker Change: Thank you. One moment for our next question.

Stephen Thomas Sakwa: Our next question comes from the line of Steve Sakwa from Evercore ISI.

Gerard H. Sweeney: Maybe to follow up on Tony's question, Jerry, just as you think about the pipeline, can you help maybe frame out what percentage of the tenants or deals or square footage that you're talking to are kind of new-to-market tenants where they need to make a decision or need to pick space versus maybe those that are expiration-driven? You know, is there a real difference in the discussions you're having on the new side versus kind of the lease expiration-driven discussion? See this on the Operating Portfolio and the Development Portfolio or just the Development Portfolio. Sorry, I was really focused on the developments, Jerry.

Steve Sackwell: Maybe to follow up on Tony's question, Jerry, just as you think about the pipeline, can you help maybe frame out what percentage of the tenants or deals that you know square footage that you're talking to are kind of new to market tenants where they need to make a decision or. You know, need to take space versus maybe that are expiration driven, and you know, is there a real difference in the discussions you're having on the new side versus kind of the least expiration driven discussion.

Stephen Thomas Sakwa: Thanks, good morning. Maybe to follow up on Tony's question, Jerry, just as you think about the pipeline, can you help maybe frame out

Speaker Change: What percentage of the tenants or deals that you know square footage that you're talking to are kind of new to market tenants where they need to make a decision or

Speaker Change: you know need to pick space versus maybe that are exploration driven and you know is there a real difference in the discussions you're having on the new side versus kind of the lease exploration driven discussions?

Jerry Sweeney: on the operating portfolio and the development portfolio are just the developments. Sorry, I was really focused on the developments, Jerry. Okay. Now, look, I think a number of the prospects that we're talking about are in, let's say, scuical yards are pen and two, are existing in the market, but need significant expansion. So, there is some urgency on their timeline to accommodate that. We have a couple of tenants who are new to the market. And, you know, I'm always trying to figure out if new to the market means there's more, more of an urgent timeline where there's more, there's more deliberative steps they need to go through, but our experience has been the folks that we're talking to seem to have some urgency to making a decision.

Speaker Change: See this on the Operating Portfolio and the Development Portfolio or just the Developments.

Gerard H. Sweeney: Okay, look, I think you know, a number of the prospects that we're talking about are in, in, in, in, let's say, Schuylkill Yards, are tenants who are existing in the market but need significant, so there is some urgency on their timeline to accommodate. We have a couple of tenants who are new to the market. And, you know, I'm always trying to figure out if new to market means there's more of an urgent timeline, or there's more deliberative steps they need to go through.

Speaker Change: Sorry, I was really focused on the developments, Jerry. Okay. No, look, I think, you know, a number of the prospects that we're talking about are in, let's say, Schuylkill Yards, are tenants who are existing in the market but need significant expansion.

Speaker Change: So, there is some urgency on their timeline to accommodate that.

Speaker Change: We have a couple of tenants who are new to the market.

Speaker Change: And, you know, I'm always trying to figure out if new to the market means there's more of an urgent timeline or there's more deliberative steps they need to go through. But our experience has been the folks that we're talking to seem to have some urgency to making a decision.

Gerard H. Sweeney: But our experience has been the folks that we're talking to seem to have some urgency about making a decision. We are talking to a few, I'll call them institutional-type of tenants, which have a pressing need, but they tend to move slower. So we're staying very much in touch with them. And look, I think one of the things that we track is what proposals we have outstanding and how much square footage we have going through space plans. That's really where it starts to get very serious.

Jerry Sweeney: We are talking to a few called an institutional type of tenants, which have a pressing need, but they tend to move slower. So, we're saying very much in touch with them. And, look, I think one of the things that we track is, you know, you know, what proposals we have outstanding and how much work footage we have going through space planning. That's really where it starts to get very serious. And, we've seen some delays on the programmatic side where, you know, prospects are trying to figure out how much space they need with their people back three days a week, four days a week, should they, you know, have larger common areas, smaller common areas.

Speaker Change: We are talking to a few, I'll call them institutional type of tenants.

Speaker Change: which have a pressing need, but they tend to move slower.

Speaker Change: So we're staying very much in touch with them. And look, I think one of the things that we track is what proposals we have outstanding and how much square footage we have going through space planes. That's really where it starts to get very serious.

Gerard H. Sweeney: And we've seen some delays on the programmatic side where prospects are still trying to figure out how much space they need. Are people back three days a week, four days a week? Should they have larger common areas or smaller common areas? So the space planning process today is more protracted than it was pre-pandemic. And I think that's part of the delaying mechanism here. Again, at One Uptown, again, a number of tenants are, most of the prospects are in-market tenants who have pending maturities, so they do have significant pressure to make decisions.

Speaker Change: And we've seen some delays on the programmatic side, where prospects are still trying to figure out how much space they need, are people back three days a week, four days a week, should they have larger common areas, smaller common areas. So the space planning process today.

Jerry Sweeney: So, the space planning process today is more protracted than it was pre-pandemic. I think that's part of the delaying mechanism here. You know, again, at one uptown, again, a number of tenants are; most of the prospects are in market tenants who have pending maturities. So, they do have significant pressure to make decisions in the near term. Okay.

Speaker Change: is more protracted than it was pre-pandemic. And I think that's part of the delaying mechanism here. Down at One Uptown, again, a number of tenants are, most of the prospects are in-market tenants.

Speaker Change: who have pending maturities, so they do have significant pressure to make decisions in the near term.

Gerard H. Sweeney: Okay, and maybe just to follow up on the Schuylkill Yards, between the two different buildings, because you know, one's really geared to traditional office, and obviously, 3151 is life science. Just maybe on the life science front, you know, what are you seeing, kind of from both institutions and maybe traditional life science? Obviously, the funding environment's gotten better. We haven't seen as much, you know, public market IPO activity, but VC funding has gotten better. So just what are the discussions like for 3151 with that building delivering kind of later this year? Yeah, I think the discussions there are very constructive.

Jerry Sweeney: And maybe just to follow up on the scoop of yards, between the two different buildings, because, you know, one's really geared to traditional office and obviously 31-51's life science. Just maybe on the life science front, you know, what are you saying, kind of from both institutions and maybe traditional life science? Obviously, the funding environment has gotten better. We haven't seen as much, you know, public market IPO activity, but VC funding has gotten better. So, just, what are the discussions like for 31-51 with that building delivering kind of later this year? Yeah, I think the discussions there are very constructive.

Speaker Change: Okay, and maybe just to follow up on the on the Schuylkill Yards, between the two different buildings, because, you know, one's really geared to traditional office and obviously 3151 is life science.

Speaker Change: Maybe on the life science front, you know, what are you seeing Kind of from both institutions and maybe traditional life science. Obviously the funding environment's gotten better

Speaker Change: We haven't seen as much, you know, public market IPO activity, but VC funding has gotten better. So, just what are the discussions like for 3151 with that building delivering kind of later this year?

Gerard H. Sweeney: Again, we have a major prospect who we're in negotiations with, and that is a high growth potential tenant. And then a few of the institutions who are also prospects for 3151 again have pressing needs and are going through the space planning deliberative process that they're going through. I think overall, you know, we take a look at lab users in the market. You know, at the beginning of the year, there was about a million square feet of a million square feet of prospect floating through the various life science sub-markets in the region. That's now down to about 800,000.

Jerry Sweeney: Again, we have a major prospect who we're in negotiations with, and that's, that is a, a high growth potential tenant. And then a few of the institutions who are also prospects for 31-51, again, have pressing needs and are tracking through the space planning, deliberative processes are going through. I think overall, you know, we take a look at lab users in the market. You know, at the beginning of the year, there was about a million square feet of prospects floating through the various life science sub-marks in the region. That's now down to about 800,000. Now, some leaks have been executed, but we are very encouraged with the, we're hearing on the capital raising fund because we believe that that will generate some additional activity in the near term.

Speaker Change: Yeah, I think the discussions there are very constructive. Again, we have a major prospect who we're in negotiations with.

Speaker Change: And that is a high growth potential tenant, and then a few of the institutions who are also prospects for 3151, again, have pressing needs.

Speaker Change: and are tracking through the space planning.

Speaker Change: deliberative processes are going through. I think overall, you know, we take a look at lab users in the market. You know, at the beginning of the year there was about a million square feet of prospects.

Speaker Change: Floating through the various life science sub-marks in the

Gerard H. Sweeney: Now some leases have been executed, but we are very encouraged with what we're hearing on the capital raising front because we believe that that will generate some additional activity in the near term. Our B-Labs, Incubator, and Graduate Space Programs continue to perform well, so we're seeing a very healthy pipeline of there. And of course, their growth aspirations are really driven primarily by their ability to raise capital, so with more capital starting to come back into that market, we're hoping that we'll get some near-term growth opportunities coming out of B-Labs, Incubator, and B-Labs, Graduate Level. That's it for me.

Speaker Change: in the region. That's now down to about 800,000. Now, some leases have been executed, but we are very encouraged with what we're hearing on the capital raising front.

Jerry Sweeney: Our B-labs incubator and graduate space programs continue to form well. So, we're seeing a very healthy pipeline of there. And of course, you know, their growth aspirations are really driven primarily by their ability to raise capital. So, with more capital starting to come back into that market, we're hoping that we'll get some near-term growth options coming out of B-labs incubator and B-labs graduate level. and Michael Spaces.

Speaker Change: because we believe that that will generate some additional activity in the near term. Our B Labs, Incubator, and Graduate Space Programs continue to perform well.

Speaker Change: So we're seeing a very healthy pipeline of there, and of course, you know, their growth aspirations are really driven primarily by their ability to raise capital.

Speaker Change: So, with more capital starting to come back into that market, we're hoping that we'll get some near-term growth opportunities coming out of B-Lab's incubator and B-Lab's graduate level spaces.

Steve Sackwell: Great, that's it for me. Thanks. Thank you.

Stephen Thomas Sakwa: Thanks. Thank you. One moment for our next question. Our next question comes from the line of Michael Griffin from Citi. Great, thanks.

Speaker Change: Great, that's it for me, thanks.

Operator: One moment for our next question.

Stephen Thomas Sakwa: Thank you, Steve.

Michael Griffin: Our next question comes from the line of Michael Griffin from City. Great, thanks. Jerry, I think, do you kind of give some insight?

Speaker Change: Thank you. One moment for our next question.

Speaker Change: Our next question comes from the line of Michael Griffin from Citi.

Michael Anderson Griffin: Jerry, I think in your prepared remarks, you mentioned the tour activity is notably above where we were relative to pre-COVID. So I guess, can you kind of give some insight? I mean, is that greater demand for space that those tours are indicating? Or is it really just tenants out in the market looking for a better deal? Any help, any color there would be helpful.

Michael Anderson Griffin: Great, thanks. Jerry, I think in your prepared remarks, you mentioned the tour activity is notably above where we were relative to pre-COVID. So, I guess, can you kind of give some insight? I mean, is that

Jerry Sweeney: I mean, is that greater demand for space than those who are indicating, or is it really dependent out of the market looking for a better deal? Any help? Any color there would be helpful. Yeah, I think it's a combination of a couple of factors, and George, you know, I think one of the things that we're seeing, and we're seeing it statistically in the pipeline, is we're picking up a lot of additional activity because of the life, the quality of companies want to bring tenants back to high quality space. We're certainly seeing, as I alluded in the comments, I mean the competitive set shrinking a bit.

Speaker Change: Greater demand for space that those tours are indicating, or is it really just tenants out in the market looking for a better deal? Any help, any color there would be helpful.

Gerard H. Sweeney: Yeah, I think it's a combination of a couple of factors. And George, you and I can tag team this. I think one of the things that we're seeing, and we're seeing it statistically in the pipeline, is that we're picking up a lot of additional activity because of the flight to quality. Companies want to bring tenants back to high-quality space. We're certainly seeing, as I alluded in the comments, the competitive set shrinking a bit.

Gerard H. Sweeney: Yeah, I think it's a combination of a couple of factors, and George, you and I can tag team this. I think one of the things that we're seeing, and we're seeing it statistically in the pipeline, is we're picking up a lot of additional activity.

George D. Johnstone: because of the flight to quality. Companies want to bring tenants back to high quality space.

George D. Johnstone: We're certainly seeing, as I alluded in the comments, I mean the competitive set shrinking a bit.

Gerard H. Sweeney: So I think part of the pipeline activity, Michael, is not, I wouldn't necessarily categorize it as net new demand. I would indicate it as more shifting demand from lower to higher quality, and I think we're very well positioned to take advantage of it. I think even in the comments, we're looking at over 60% of our... lease executions during the quarter were tenants moving up the quality curve. I anticipate that accelerating in the near term. Just take a look at the details of our pipeline.

Jerry Sweeney: So, I think part of the pipeline activity, Michael, is not, I wouldn't necessarily categorize it as net new demand. I would indicate it is more shifting demand from lower to higher quality space. And I think we're very well positioned to take advantage of that. I think even in the comments we're looking over 60% of our least executions during the quarter were tenants moving up the quality. I anticipate that accelerating near term just taking a look at the detail of our pipeline. We are hearing from more and more prospects that they are concerned about the financial stability of their landlord.

George D. Johnstone: So, I think part of the pipeline activity, Michael, is not, I wouldn't necessarily categorize it as net new demand. I would indicate it as more shifting demand from lower to higher quality space.

George D. Johnstone: And I think we're very well positioned to take advantage of that. I think even in the comments, we're talking over 60% of our...

George D. Johnstone: lease executions during the quarter where tenants moving up the quality curve. I anticipate that accelerating near term. Just take a look at the detail of our pipeline. We are hearing from more and more prospects.

Gerard H. Sweeney: We are hearing from more and more prospects that they are concerned about the financial stability of their landlord. They're concerned about the financial structuring of the building they're in. Brokers, who tend to be fairly forward-thinking and aggressive in terms of making sure they get deals done, are very focused on getting paid.

Jerry Sweeney: They're concerned about the financial structuring of the building they're in. Brokers who tend to be fairly forward-thinking and aggressive in terms of making sure they get deals done are very focused on getting paid. So, we're seeing a number of more of these come out requiring some type of credit support for the I dollars being available. We're in a great position on all those fronts. So, when you combine that financial flexibility and the quality of our portfolio. And frankly, I think the quality of our onsite property management and leasing teams, we're presenting a much different, much safer, much higher quality presentation than a lot of our competitive set.

George D. Johnstone: that they are concerned about the financial stability of their landlord.

George D. Johnstone: They're concerned about the financial structuring of the building they're in.

George D. Johnstone: Brokers, who tend to be fairly forward-thinking and aggressive in terms of making sure they get deals done, are very focused on getting paid. So we're seeing a number of RFPs come out requiring some type of credit support.

Gerard H. Sweeney: So we're seeing a number of RFPs come out requiring some type of credit support for the brokerage commission, looking to get some additional underwriting support for TI dollars being available. We're in a great position on all those fronts. So when you combine that financial flexibility and the quality of our portfolio, and then, frankly, I think the quality of our on-site property management and leasing teams, we're presenting a much different, much safer, much higher quality presentation than a lot of our competitive set.

George D. Johnstone: for the Brokerage Commission, looking to get some additional underwriting support for TI dollars being available. We're in a great position on all those fronts.

Speaker Change: So, when you combine that financial flexibility and the quality of our portfolio, and frankly, I think the quality of our on-site property management and leasing.

Speaker Change: We're presenting a much different, much safer,

George Johnstone: And that really is predominantly in Philadelphia, CBD, University City, the Pennsylvania suburbs. And we're starting to see some of that in the other submarks when as well. So, I wouldn't say George; maybe you have a perspective on it. It's a tremendous increase in net new demand as opposed to a shifting within the marketplace. Yeah, Michael, I would agree.

Gerard H. Sweeney: And that really is predominantly in the Philadelphia CBD, University City, the Pennsylvania suburbs, and we're starting to even see some of that in the other submarkets we're in as well. So I wouldn't say, George, maybe you have a perspective on it, but it's a tremendous increase in net new demand as opposed to a shift within the market. Yeah, Michael, I would agree.

Speaker Change: much higher quality presentation than a lot of our competitive settings. And that really is predominantly in Philadelphia CBD, University City, the Pennsylvania suburbs, and we're starting to even see some of that in the other submarks we're in as well.

Speaker Change: So, I wouldn't say, George, maybe you have a perspective on it, but it's a tremendous increase in net new demand as opposed to a shifting within the marketplace.

George D. Johnstone: I think it's more rotational, and I think building ownership and Yeah, I appreciate it. That's helpful. And then just circling back on the development pipeline, you know, obviously, I think these projects are substantially completed. But, you know, if the leasing is not there, can we see stabilization dates pushed out or the expectation to realize expenses and stop capitalizing these things, you know, four or five quarters after completion? I'm sorry, Tom, but go ahead.

George Johnstone: I think it's more rotational, and I think building ownership and sponsorship is really, you know, one of the key drivers of what prospects are looking for. Yeah, I appreciate that you're thoughtful.

George D. Johnstone: Yeah, Michael, I would agree. I think it's more rotational, and I think building ownership and sponsorship is really, you know, one of the key drivers of success.

Michael Anderson Griffin: of what prospects are looking for.

Michael Griffin: And there's a circling back on these development pipeline. You know, obviously, I think these projects are substantially completed. But, you know, if the leasing is not there, community stabilization dates, a doubt for the expectations are realized expensive and stop capitalizing these things, you know, four or five quarters, effortlessly.

Michael Anderson Griffin: I appreciate it, Hillary. That's helpful. And then just circling back on the development pipeline, you know, obviously I think these projects are substantially completed, but

Speaker Change: You know, if the leasing is not there, could we see stabilization dates pushed out or the expectation to realize expenses and stop capitalizing these things, you know, four or five quarters after completion?

Tom Worth: I'm sorry, I'm good. On the capitalization, just so you know, our methodology, just, I believe it's pretty standard, is that once we hit our substantial completion date, and this is on the commercial side, we basically have a 12-month window where we continue to capitalize costs on the vacant space and that capitalized cost will be off. We have a lot of impacts as well as interest. Once, once the property hits that one year window, regardless of where it is on a stabilization basis, which we put it kind of the 95% range, we will still, at the end of the one year window from substantial completion.

Thomas E. Wirth: Hey, Michael, on capitalization, just so you know, our methodology, and I believe it's pretty standard, is that once we hit our substantial completion date, and this is on the commercial side, we basically have a 12-month window where we continue to capitalize costs on the vacant space, and that capitalized cost will be OPEC, as well as interest. Once the property hits that one-year window, regardless of where it is on a stabilization basis, which we put in kind of the 90-95% range, we will still be at the end of the one-year window from substantial completion.

Hillary: I'm sorry, Tom, go ahead. Hey, Michael. On the capitalization, just so, you know, our methodology just, and I believe it's pretty standard, is that we, once we hit our substantial completion date,

Speaker Change: And this is on the commercial side, we basically have a 12-month window where we continue to capitalize costs on the vacant space, and that capitalized cost will be OPEX.

Speaker Change: as well as interest.

Speaker Change: Once the property hits that one-year window, regardless of where it is on a stabilization basis, which we put in kind of the 90-95% range, we will still, at the end of the one-year window from substantial completion,

Jerry Sweeney: It becomes operational and therefore, interest in impacts that may have been capitalized while it was vacant will shift to being part of operations. Yeah, I think Michael, from a business standpoint, I think when you take a look at what our projected stabilization dates are, I'm not really being driven off of what, you know, the activity and discussions we're having with the existing pipeline of tenants. So, to the extent, for example, the tenant would accelerate their, their movement decision, that might accelerate one of those dates, or if they would delay it by a quarter or two, that might impact that as well.

Thomas E. Wirth: It becomes operational, and therefore, interest in OPEX that may have been capitalized while it was vacant will shift to being... And I think Michael, let me from a business standpoint. I think when you take a look at what our projected stabilization dates are, and that's really being driven off of what, you know, the activity and discussions we're having with the existing pipeline of tenants. So, to the extent, for example, that a tenant would accelerate their move-in decision, that might accelerate one of those dates, or if they would delay it by a quarter or two, that might impact that as well. But the key people we have right now are to get some of these leases and proposals executed so we have certainty that it ain't going to happen. Great, that's it for me. Thanks for your time.

Speaker Change: it becomes operational and therefore interest in OPEX that may have been capitalized while it was vacant will shift to to being part of operations.

Michael Anderson Griffin: And I think, Michael, I mean from a business standpoint, I think when you take a look at what our projected stabilization dates are, I mean that's really being driven off of what, you know, the activity and discussions we're having with the existing pipeline of tenants.

Speaker Change: So

Michael Anderson Griffin: To the extent, for example, that a tenant would accelerate their movement decision, that might accelerate one of those dates, or if they would delay it by a quarter or two.

Jerry Sweeney: But the key folks, however, right now, is to get some of these, these leases and proposals executed, so we have certain to that income stream coming in in 25 and 26.

Speaker Change: that might impact that as well. But the key folks we have right now is to get some of these these leases and proposals executed so we have certainty that income stream coming in in 25 and 26.

Michael Griffin: Great.

Michael Griffin: That's it for me.

Michael Griffin: Thanks for the time.

Speaker Change: Great, that's it for me. Thanks for the time.

Dylan Burzinski: Our next question comes from the line of Dylan Burzinski from Green Street. Hi guys. Thanks for taking the question.

Dylan Robert Burzinski: Our next question comes from the line of Dylan Burzinski from Green Street. Hi guys, thanks for taking the question. I guess just going back to sort of the decision on the mat front venture and continuing to own those assets, can you guys just kind of talk about the reasoning behind that as opposed to sort of just walking away from those assets? Sure, happy to.

Mark: Thank you, Michael.

Speaker Change: Thank you.

Mark: Our next question comes from the line of Dylan Burzinski from Green Street.

Dylan Burzinski: I guess it's just going back to sort of the decision on the math adventure and then continuing to own those assets.

Dylan Robert Burzinski: Hi guys, thanks for taking the question. I guess just going back to sort of the decision on the Matt Front Venture and continuing to own those assets, I guess, can you guys just kind of talk about the reasoning behind that as opposed to sort of just walking away from those assets?

Jerry Sweeney: I guess can you guys just kind of talk about the reasoning behind that opposed to sort of just walking away from those assets? Sure. Happy to look, I guess there's a way of background. This has been a fairly successful investment for us as evidenced by the fact that we, we recognize the $50 million plus nine cash income. So it's been a very fairly profitable transaction for us over the years. And I think they'll recall this was a structured transaction where the fee and the leasehold were separated. So it was a fairly complicated transaction. So as we were contemplating what the best path for us was, we felt that the debt reduction and restructuring provided a couple different pathways.

Gerard H. Sweeney: Look, I guess as a way of background, this has been a fairly successful investment for us, as evidenced by the fact that we recognize the $50 million plus non-cash income. So it's been a fairly profitable... Transaction Force over the years, and I think Dylan, recall this was a structured transaction where the fee and the leasehold were separated. So it was a fairly complicated transaction. So, as we were contemplating what the best path for us was,

Speaker Change: Sure, happy to. Look, I guess as a way of background, this has been a fairly successful investment for us as evidenced by the fact that we recognized the $50 million plus non-cash income, so it's been a very fairly profitable

Speaker Change: transaction for us over the years. And I think Dylan, recall this was a structured transaction where the fee and the leasehold were separated. So it was a fairly complicated transaction. So as we were contemplating what the best path for us was...

Gerard H. Sweeney: We felt that their debt reduction and restructuring provided a couple different paths. One was that we obtained a five-year period to reposition those assets and, as part of that plan, embark on a programmatic liquidation effort of assets over that five-year period of time. An important driver in that was creating a mechanism to ensure that both the leasehold and the fee ownership interests were aligned, so there was some embedded liquidity that was created by this restructuring that gave us the ability to kind of move assets out the door.

Dylan Robert Burzinski: We felt that that reduction and restructuring provided a couple different pathways.

Jerry Sweeney: One was we are paying the five year period to reposition those assets, and as part of that plan, embark on a programmatic liquidation effort of assets over that five year period of time. An important driver on that was creating a mechanism to ensure that both the leasehold and the fee ownership interest were aligned. So there was some embedded liquidity that was created by this restructuring that gave us the ability to kind of move assets out the door. It also provided a solid revenue stream for brand new wine from a management leasing construction management standpoint that would yield some upside potential for us while eliminating really the debt attribution.

Dylan Robert Burzinski: One, we obtained a five-year period to reposition those assets, and as part of that plan,

Dylan Robert Burzinski: embark on a programmatic liquidation effort of assets over that five-year period of time. An important driver in that

Dylan Robert Burzinski: was creating a mechanism to ensure that both the leasehold and the fee ownership interests were aligned. So there was some embedded liquidity that was created by this restructuring that gave us the ability to kind of move assets out the door.

Gerard H. Sweeney: It also provided, you know, a solid revenue stream for Brandywine from a management leasing and construction management standpoint that would yield some upside potential for us while eliminating, really, the debt attribution. I mean, one of our key issues in this restructuring was to reduce, you know, a significant amount of debt attribution, which is one of the trade-offs that were made with the lender in providing them with a cash flow participation. So it was really an effort to ensure that existing relationships were preserved, and there was no downside for Brandywine to doing this.

Dylan Robert Burzinski: It also provided a solid revenue stream for Brandywine from a management, leasing, construction management standpoint that would yield some upside potential for us while eliminating really the debt attribution. One of our key issues in this restructuring was to reduce

Jerry Sweeney: I mean, one of our key issues in this restructuring was to reduce a significant amount of debt attribution, which is one of the trade-offs that was made with the lender in providing them the cash flow participation. So it was really an effort to ensure that existing relations were preserved. There was no downside to Brandywine to doing this. It created a profit opportunity going forward. And I think the structure we wound up with, whereby we were able to achieve the $26 million debt paydown with the Fiona. So it's kind of Brandywine's a leasehold owner. The Fiona worked together to generate $26 million to pay down the mortgage.

Dylan Robert Burzinski: You know, a significant amount of debt attribution, which is one of the trade-offs that was made with the lender in providing them the cash flow participation. So, it was really an effort to ensure that...

Dylan Robert Burzinski: Existing relationships were preserved. There was no downside to Brandywine to doing this.

Gerard H. Sweeney: It created a profit opportunity going forward, and I think the structure we wound up with whereby we were able to, you know, achieve the $26 million debt paydown with the fee owner. Say it's kind of like Brandywine is a leasehold owner. The fee owner and I worked together to generate $26 million to pay down the mortgage.

Dylan Robert Burzinski: It created a profit opportunity going forward.

Dylan Robert Burzinski: And I think the structure we wound up with, whereby we were able to, you know, achieve the $26 million debt pay down.

Dylan Robert Burzinski: with the fee owner.

Dylan Robert Burzinski: Brandywine is a leasehold owner, the fee owner worked together to generate $26 million to pay down the mortgage.

Gerard H. Sweeney: I think it created a great runway. As Tom touched on, those assets are 99% leased, with a strong-weighted average lease term of over seven and a half years. The investment-based double-digit cap rate on the acquisition we think creates a positive spread recovery for us in the near term on that debt payday. So I think all those pieces fit together in terms of maintaining the relationship, ensuring there's no downside to Brandywine, creating a future profit opportunity, both through the program liquidation plan, the revenue stream from the property and leasing services, as well as the profitability that may come out of this new joint venture that's sitting there unencumbered, and those assets are entering the market. Appreciate that, Keller.

Jerry Sweeney: I think created a great one way. Tom touched on those assets are 99% at least a strong weighted average lease term of over 7.5 years. The investment base, double digit cap rate on the acquisition we think creates a positive spread recovery for us in the near term on that debt paydown. So I think all those pieces played into in terms of, you know, maintain the relationship, ensuring there's no downside to Brandywine creating a future profit opportunity both through the program liquidation plan, the revenue stream from the property and leasing services as well as the profitability that may come out of the new joint venture that's sitting there unencumbered in those assets or entering the market for sale today.

Dylan Robert Burzinski: I think created a great runway. As Tom touched on, those assets are 99% leased.

Speaker Change: strong-weighted average lease term of over seven and a half years. The investment-based double-digit cap rate on the acquisition we think creates a positive spread recovery for us in the near term on that debt pay down.

Speaker Change: So, I think all those pieces...

Speaker Change: played into in terms of maintaining the relationship, ensuring there's no downside to Brandywine, creating a future profit opportunity, both through the program liquidation plan, the revenue stream from the property and leasing services, as well as the profitability that may come out of this new joint venture that's...

Speaker Change: sitting there unencumbered and those assets are entering the market for sale today.

Dylan Burzinski: Appreciate that color.

Gerard H. Sweeney: And then, and then maybe one last one for me on the $200 million in assets that you guys are currently marketing. I know you guys have sort of been in the marketing process for, you know, a couple hundred million dollars of assets over the last 12 to 18 months. I'd just curious sort of how those discussions have changed over that time period and whether or not the bidding tents are, you know, more full today versus last year, same amount. Just curious how things have progressed on that front. Yeah, I think we've seen a slight uptick in buyer interest. And I think that's been primarily driven by a couple things.

Dylan Burzinski: And then maybe one last one for me on the $200 million that you guys are currently marketing. I know you guys have sort of been in the marketing process for a couple hundred million dollars of assets of the last 12 to 18 months.

Speaker Change: Appreciate that, Keller. And then maybe one last one for me. On the $200 million of assets that you guys are currently marketing, I know you guys have sort of been in the marketing process for, you know, a couple hundred million dollars of assets over the last...

Jerry Sweeney: Just curious sort of how those discussions have changed over that time period and whether or not sort of bidding tents are more full of the day versus last year's same amount just curious how things have progressed on that front. Yeah, I think we've seen a slight uptick in buy or interest, and I think that's been primarily driven by a couple things. One, I think the lending environment, which is still challenging, is getting marginally better, particularly for smaller size deals. So I think you know with the CMDS market to debt funds they're providing a regulated, unregulated source of capital that I think continues to improve quarter over quarter.

Speaker Change: 12 to 18 months. Just curious sort of how those discussions have changed over that time period and whether or not bidding tents are more full today versus last year. Same amount, just curious how things have progressed on that front.

Speaker Change: Yeah I think we've seen a slight uptick in buyer interest and I think that's been primarily driven by a couple things. One, I think the lending environment which is still challenging is getting marginally better.

Gerard H. Sweeney: One, I think the lending environment, which is still challenging, is getting marginally better, particularly for smaller-sized deals. So I think, you know, with the CMBS market, the debt funds, they're providing, you know, a regulated, unregulated source of capital that I think continues to improve quarter after quarter. We're seeing some of the light companies get back into the marketplace. So I think the financing market is marginally better. I think there's also that factor.

Speaker Change: particularly for smaller size deals. So I think, you know, with the CMBS market, the debt funds, they're providing, you know, a regulated and unregulated source of capital that I think continues to improve quarter over quarter.

Jerry Sweeney: We're seeing some of the life companies get back into the marketplace. So I think the financing market is marginally better. I think there's also that's one factor. The another factor is you know a number of office investors are sensing that a bottom's been hit in terms of valuation and you know they're saying the operating metrics across the across the sector not deteriorate as much as they were in previous quarters. So there seems to be a little bit more interest in trying to lock away good deals today. We are also seeing, as a third piece, a number of users who are looking to acquire assets, given that their cost of capital could be lower than their landlords', and they're able to effectively buy properties and reduce their ongoing occupancy costs.

Speaker Change: We're seeing some of the light companies get back into the marketplace. So I think the financing market is marginally better.

Gerard H. Sweeney: Another factor is, you know, a number of office investors are sensing that a bottom's been hit in terms of valuation, and they're seeing the operating metrics across the sector not deteriorate as much as they were in previous quarters. So there seems to be a little bit more interest in trying to lock away good deals today. We are also seeing, as a third piece, a number of users who are looking to acquire assets. [inaudible] some of our larger prospects, larger users, looking to buy assets versus. Hopefully, that's helpful. No, that was extremely helpful.

Speaker Change: I think there's also, that's one factor, another factor is, you know, a number of office investors are sensing that a bottom's been hit in terms of valuation.

Speaker Change: and you know they're saying the operating metrics across the across the sector not deteriorate as much as they were in previous quarters so there seems to be a little bit more interest in trying to lock away good deals today.

Speaker Change: We are also seeing, as a third piece, a number of users.

Speaker Change: who are looking to acquire assets.

Speaker Change: given that their cost of capital could be lower than their landlord's.

Speaker Change: and they're able to effectively buy properties.

Jerry Sweeney: So I think lending environment getting marginally better, the psychology beginning to shift towards the market bottom and I think the relative cost of capital that we're seeing. between some of our larger prospects, larger users looking to buy assets versus enter into leases. Hopefully, that's helpful.

Speaker Change: and reduce their ongoing occupancy costs. So I think lending environment getting marginally better, the psychology beginning to shift towards the market bottom, and I think just the relative cost of capital that we're seeing between.

Speaker Change: Some of our larger prospects, larger users looking to buy assets versus entering to leases.

Dylan Burzinski: No, that is extremely helpful, so I appreciate that detail.

Gerard H. Sweeney: So I appreciate that detail. Thank you. Thank you. Our next question comes from the line of Omotayo Okusanya from DeutschFang. Hi, good morning.

Speaker Change: Hopefully that's helpful.

Speaker Change: No, that was extremely helpful, so I appreciate that detail.

Omotayo Okusanya: Thank you. Our next question comes to the line of Omotayo Okusanya from George Fank.

Speaker Change: Thank you.

Speaker Change: Thank you.

Speaker Change: Our next question comes to the line of Omotayo Okusanya from Deutsche Bank.

Omotayo Tejumade Okusanya: Just wanted to follow up on the MAP-DB question. Again, all the restructuring doesn't seem like it's having a huge impact on your 2024 guidance numbers, but I'm hoping you can give us a sense of kind of on a going forward basis, how one can kind of quantify what the potential kind of upside is from a numbers perspective on this restructuring. The effect on our earnings was not that significant for two reasons.

Omotayo Okusanya: Hey, good morning. Just wanted to follow up on the map to be questioned. Again, you know, with all the restructuring, doesn't seem like it's having a huge impact on your 2024 guidance numbers.

Omotayo Tejumade Okusanya: Hi, yes, good morning. Just wanted to follow up on the MAP-DB question. Again, you know, with all the restructuring doesn't seem like it's having a huge impact on your 2024 guidance numbers, but hoping you can give us a sense of kind of on a going forward basis,

Tom Worth: But hoping you can give us a sense of kind of on the going forward basis, how long to kind of quantify what the potential kind of upside is from a numbers perspective on this restructuring. The effect on our earnings was not that significant for two reasons. One is where the portfolio was standing at the time, as well as with the full debt in place, we were not recognizing a large amount of FFO. So the fact that we have now lowered that percentage of the FFO, but then lowered the debt, has kind of put us in the same place.

Speaker Change: how one can kind of quantify what the potential kind of upside is from a numbers perspective on this restructuring.

Speaker Change: The effect on our earnings was not that significant for two reasons. One is where the portfolio was standing at the time, as well as with the full debt in place, we were not recognizing a large amount of FFO.

Thomas E. Wirth: One is where the portfolio was standing at the time, as well as with the full debt in place, we were not recognizing a large amount of FFO. So the fact that we have now lowered that percentage of the FFO, but then lowered the debt, has kind of put us in the same place. So the effect of having less SFO is a percentage of the JV, but it was kind of at a break-even spot as it was.

Speaker Change: So, the fact that we have now lowered that percentage of the FFO, but then lowered the debt, has kind of put us in the same place. So the effect of...

Tom Worth: So the effect of having less SFO is a percentage of the JV, but it was kind of at a break even spot as it was. So our hope is, you know, now that we have restructured, we're going to be putting, you know, we're going to have more cash flow with a lower loan balance that, with the, we will be able to then put some that free cash flow back into the property. So for 24, it was a, it was a demand and exchange to our, to our FFO results from the, you know, from the joint ventures.

Speaker Change: of having less SFO as a percentage of the JV, but it was kind of at a break-even spot as it was. So our hope is, you know, now that we have restructured, we're gonna be putting, you know, we're gonna have more cashflow with a lower loan balance.

Thomas E. Wirth: So our hope is now that we have restructured, we're going to have more cash flow with a lower loan balance that we will be able to then put some of that free cash flow back into the property. So for 24, it was a de minimis change to our FFO results from the joint. But on a going forward basis, is there a way one can quantify how it can help 25 and beyond?

Speaker Change: that we will be able to then put that free cash flow back into the property. So for 24, it was a de minimis change to our FFO results from the joint ventures.

Tom Worth: But on a going forward basis, there were one can quantify what I, I was going to help 25 and beyond. So the way it could help 25 and beyond is if we do start doing leasing and get some of the assets stabilized, we will see the FFO increase. I think it will also, as Jerry mentioned, we are going to be doing the leasing, construction, development, and management of the properties. And so we think 25; they could give us some uplift if we start to see the leasing occur. Again, we'll be managing and leasing the projects, and that should help our third party revenue stream.

Speaker Change: But on a going forward basis, is there a way one can quantify how it can help 25 and beyond?

Thomas E. Wirth: The way it could help 25 and beyond is if we do start doing leasing and get some of the assets stabilized, we will see the FFO increase. I think it will also, as Jerry mentioned, we are going to be doing the leasing, construction, development, and management of the properties. And so we think 25, it could give us some uplift if we start to see the leasing occur. Again, we'll be managing and leasing the projects, and that should help our third-party revenue stream.

Speaker Change: The way it could help 25 and beyond is if we do start doing leasing and get some of the assets stabilized, we will see the FFO increase. I think you'll also, as Jerry mentioned, we are going to be doing the leasing, construction, development, and management of the properties. And so we think...

Speaker Change: 25 it could give us some uplift if we start to see the leasing occur again We'll be managing and leasing the projects and and that should help our third-party revenue stream again not much this year since we just Completed the restructuring we have to get back into the market with some of these properties

Tom Worth: Again, not much this year since we just completed the restructuring. We have to get back into the market with some of these properties. And we think that could be an uplift in 25, but I'm not ready to say how much that may be, but I do expect some marginal improvement as we get into 25.

Thomas E. Wirth: Again, not much this year since we just completed the restructuring. We have to get back into the market with some of these properties. And we think that could be an uplift in 25, but I'm not ready to say how much that may be. But I do expect some marginal improvement as we get into 20. That's helpful.

Speaker Change: and we think that could be an uplift in 25 but I'm not ready to say how much that may be but I do expect some marginal improvement as we get into 25.

Tom Worth: That's helpful. And then with the dividend outlook again, but the CAD payout we should got tighter again this quarter. I think you did kind of lay out the plans in terms of sources and use of a capital going forward, but again, how does one kind of think about the dividend just kind of given the CAD tighter. You know, some of your sources next year or this coming year include asset sales and these other very tough transactions market. And this is on a net basis that, you know, the dividend could be an attractive source of capital, but I'm just kind of curious how many of them is thinking about that going forward.

Gerard H. Sweeney: And then with the dividend outlook, again, the CAD payout ratio got tighter again this quarter. I think you did kind of lay out the plans in terms of sources and uses of capital going forward. But again, how does one kind of think about the dividend, just kind of given the CAD tighter? You know, some of your sources next year or this coming year include asset sales, and we still have a very tough transactions market.

Speaker Change: That's helpful. And then with the dividend outlook again, the CAD payout ratio got tighter again this quarter.

Speaker Change: I think you did kind of lay out the plans in terms of sources and uses of capital going forward, but again, how does one kind of think about the dividend, just kind of given the CADs tighter, you know, some of your sources next year or this coming year include asset fails, I mean, you still have a very tough transactions market.

Gerard H. Sweeney: And just on a net basis, you know, the dividend could be an attractive source of capital, but I'm just kind of curious how management is thinking about that going forward. Yeah, Jerry, we look at that every quarter.

Speaker Change: And just on a net basis, you know, the dividend could be an attractive source of capital, but I'm just kind of curious how management is thinking about that going forward.

Gerard H. Sweeney: And I think when the question comes up in these quarterly calls, we always provide the same answer, which is that it's something that we keep a close eye on. And the components there really are, you know, what the forward capital spend for the company is. And I think that's one of the reasons we track so carefully the capital ratios on all of our leases. Our development pipeline, as indicated in the supplemental package, our remaining funding there is less than $6 million, so it's pretty much all fully funded.

Tom Worth: We look at that every quarter, and I think when the question comes up in these quarterly calls, we always provide the same answer, which is something that we keep a close eye on. The components there really are, you know, what the forward capital spend for the company is, and I think that's one of the reasons we track so carefully the capital ratios on all of our leasing. In the case, in the supplemental package, our remaining funding there is less than $6 million, so it's pretty much all fairly funded. We do, as we were talking about in the call, have a, I think, a very good pipeline of pending lease execution in the development pipeline that will provide some income certainly over the next several years, and a good growth platform for us.

Speaker Change: Yeah, I'd say...

Speaker Change: Jerry, we look at that every quarter, and I think when the question comes up in these quarterly calls, we always provide the same answer, which is, it's something that we keep a close eye on, and the components there really are

Speaker Change: you know what the forward capital spend for the company is and I think that's one of the reasons we track so carefully the capital ratios on all of our leasing.

Speaker Change: Our Development Pipeline, as indicated in this image,

Speaker Change: [inaudible]

Gerard H. Sweeney: We do, as we were talking about on the call, have a, I think, a very good pipeline of pending lease executions in the development pipeline that will provide some income, certainly over the next several years, and provide a good growth platform for us. The portfolio stability, we think is one of the best in the office sector, the rollover, our lower capital ratios, our positive mark to markets, and we feel that provides a very solid foundational point for the organization.

Speaker Change: some income certainly over the next several years.

Tom Worth: The portfolio stability, we think, is one of the best in the office sector in terms of a rollover; our lower capital ratios, our positive mark to markets, and we feel that provides a very solid foundational point for the organization. So, we feel, evaluate each of those factors, you know, puts us aboard in the management team in a very good place to have clarity as to what we think our forward capital spend will be, and while the CAD ratio, you know, was higher this quarter, year to date, we're actually below our targeted range. So, we're actually performing better against certain CAD ratio, but, you know, we never lose sight of the fact that every dollar is precious; every dollar has a relative cost to it.

Speaker Change: and it provides a good growth platform for us. The portfolio stability, we think, is one of the best in the office sector in terms of the rollover, our lower capital ratios, our positive mark-to-markets.

Speaker Change: And we feel that provides a very solid foundational point for the organization.

Gerard H. Sweeney: So we feel evaluating each of those factors puts the board and the management team in a very good place to have clarity as to what we think our forward capital spend will be. And while the CAD ratio, you know, was higher this quarter, year to date, we're actually below our targeted range. So we're actually performing better against our CAD ratio. But, you know, we never lose sight of the fact that every dollar is precious. Every dollar has a relative cost attached to it.

Speaker Change: So we feel at evaluating each of those factors

Speaker Change: You know, puts the board and the management team in a very good place to have clarity as to what we think our forward capital spend will be. And while the CAD ratio, you know, was higher this quarter, year-to-date, we're actually below our targeted range. So we're actually performing better against our planned CAD ratio.

Speaker Change: But, you know, we never lose sight of the fact that every dollar is precious.

Tom Worth: So, we certainly want to balance our business plan execution with making a good payout to our shareholders and recognize that the value they have invested in the company as well.

Gerard H. Sweeney: So we certainly want to balance our business plan execution with making, you know, a good payout to our shareholders and recognize the value they have invested. Thank you. Thank you. Thank you.

Speaker Change: Every dollar has a relative cost to it, so we certainly want to balance our business plan execution with making a good payout to our shareholders and recognize the value they have invested in the company as well.

Operator: Thank you.

Michael Robert Lewis: One moment for our next question. Our next question comes from the line of Michael Lewis from Truist Securities. Great, thank you.

Speaker Change: Thank you.

Operator: One moment for our next question.

Speaker Change: Thank you.

Michael Lewis: Our next question comes from the line of Michael Lewis from Truest Securities. Great. Thank you.

Speaker Change: Thank you. One moment for our next question.

Speaker Change: Our next question comes from the line of Michael Lewis from Truist Securities.

Gerard H. Sweeney: Back to the MAP-JV, you know, the decision to put in the $26 million to pay down debt and take these 14 properties, you know. Can we assume that you're going to sell these? You expect to sell these and get, you know, at least your $26 million back on the sales? And then, you know, the decision to keep the 5%, you know? I think if the assets were all like Philly CBD assets, it would be clearer to me. You know, you mentioned there's no downside.

Michael Lewis: Back to the math, JV. You know, the decision to put in the 26 million paid on debt, take these 14 properties. You know, can we assume that you're going to sell these, you expect to sell these and get, you know, at least your 26 million back on the sales?

Michael Robert Lewis: Great, thank you. Back to the MAP JV, you know, the decision to put in the $26 million to pay down debt and take these 14 properties

Michael Robert Lewis: you know, can we assume that you're going to sell these, you expect to sell these and get, you know, at least your 26 million back on the sales. And then, you know, the decision to keep the 5%

Michael Lewis: And then, you know, the decision to keep the 5%, you know, I think if the apps that were all like silly CBD app, it would be clearer to me. You know, you mentioned there's no downside. I just wonder, you know, what's the upside for the effort here for keeping the interest?

Speaker Change: You know, I think if the assets were all like silly CBD assets, it would be clearer to me. You know, you mentioned there's no downside. I just wonder, you know, what's the upside for the effort here for keeping the interest?

Gerard H. Sweeney: I just wonder, you know, what's the upside for the effort here for keeping the interest? Yeah, hey, Michael. The answer to your first question is, most assuredly. And the answer to the second question is that, you know, the 5% interest. Again, it was really part of our reduction in debt. We do believe that given the programmatic liquidation plan we are putting in place for this portfolio will generate upsides for the company.

Jerry Sweeney: Yeah, Michael. The answer to your first question is yes, most assuredly. And the answer to the second question is that, you know, the 5% interest, again, was really part of our reduction of debt attribution. We do believe that, given the programmatic liquidation plan we are putting in place for this portfolio, will generate upside for this. Company. In the meantime, it's time alluded. We think there's going to be a positive return for us on the on the on the the property services we provide. So I think it was really those two factors that that weighed into the tissue go to the floor.

Speaker Change: Hey Michael, the answer to your first question is yes, most assuredly, and the answer to the second question is that, you know, the five percent interest

Speaker Change: again was really part of our reduction of debt attribution.

Speaker Change: We do believe that given the programmatic liquidation plan we are putting in place for this portfolio will generate upside for the company.

Gerard H. Sweeney: In the meantime, as Tom alluded, we think there's going to be a positive return for us on the property services we provide. So I think it was really those two factors that weighed into the decision to go to the 5%. And certainly the lender and the CEO wanted to make sure that Brandywine had some level of notional commitment in the portfolio by maintaining a share of the ownership.

Speaker Change: In the meantime, as Tom alluded, we think there's going to be a positive return for us.

Thomas E. Wirth: on the property services we provide. So I think it was really those two factors.

Jerry Sweeney: And certainly the lender and the Fiona want to make sure that for anyone had some level of notional commitment to this work followed by maintaining a share of the ownership state.

Speaker Change: that weighed into the decision to go to the 5%. And certainly the lender and the fee owner wanted to make sure that Brandywine had some level of notional commitment to this portfolio by maintaining a share of the ownership stake.

Gerard H. Sweeney: And then, you know, you talked a lot about the leasing pipeline and the TOR volume. I think during the quarter in the second quarter, you executed 164,000 square feet of leases. That seemed low to me.

Jerry Sweeney: And then you know you talked a lot about the leasing pipeline and the tour of volume. I think during the quarter and the second quarter you executed 164,000 square feet of leases. That seemed low to me. Was that lower than you expected? Is that number you know not a concern? I just wonder if it speaks to you know converting the pipeline and you know are you seeing something that's shifting the leasing environment or I realize there's a danger in reading into one quarter but just curious your thoughts on that.

Speaker Change: And then, you know, you talked a lot about the leasing pipeline and the TOR volume.

Speaker Change: I think during the quarter, in the second quarter, you executed 164,000 square feet of leases.

Gerard H. Sweeney: Was that lower than you expected? Is that number, you know, not a concern? I just wonder if it speaks to, you know, converting the pipeline and, you know, are you seeing something that's shifting in the leasing environment? Or I realize there's a danger in reading into one quarter, but just curious about your thoughts. Yeah, look, I think George can add much more color.

Speaker Change: That seemed low to me. Was that lower than you expected? Is that number...

Speaker Change: You know, not a concern. I just wonder, you know, if it speaks to, you know, converting the pipeline and, you know, are you, are you seeing something that's shifting the leasing environment? Or I realize there's a danger in reading into one quarter, but just curious your thoughts on that.

Jerry Sweeney: Yeah, look, I think the and George again and add much more color. But look, I guess as I look at the, you know, we can never release enough space. So as yours will tell, I'm always disappointed whenever the numbers come in, but we have great teamwork on across the company. But as I looked at it for, you know, new leasing activity, you know, we're actually up quarter over quarter. The range was really the spread, and the range really was on the renewables. We had a couple large renewals last quarter versus this quarter, but you know what we do track, Michael, like our conversions. And you know, like our conversions from proposal leases is actually running right in line with our 23, and it's up from our 22 and pre-pandemic business plans.

Gerard H. Sweeney: But I guess as I looked at it, you know, we can never lease enough space. So, as George will tell you, I'm always disappointed whenever the numbers come in. But we have a great, great team working across the company. But as I looked at it for, you know, new leasing activity, we're actually up quarter over quarter, the, the, the range was really the spread, and the range really was on the renewals.

Speaker Change: Yeah, look, I think, and George can add much more color, but I guess as I look at it, we can never lease enough space.

Gerard H. Sweeney: We had a couple of large renewals in the last quarter versus this quarter. But, you know, we do track, Michael, like our conversions and, you know, like our conversions from proposal leases are actually running right in line with our 23 and is up from our 22 and pre-pandemic business plan. So I think we really stayed very focused every day on getting leases done. And again, I was tongue in cheek. I'm never happy with the level.

George D. Johnstone: was really the spread and the range really was on the renewables. We had a couple large renewables in the last quarter versus this quarter, but you know what we do track, Michael, like our conversions.

Speaker Change: And, you know, like our conversions from proposal leases is actually running right in line with our 23 and is up from our 22 in pre-pandemic business plans. So, I think...

Jerry Sweeney: So I think we really stayed very focused every day on getting leases done. And again I was talking cheek. I'm never happy with the level. We always want more leasing done. So we always want to move that conversion right up, but we also want to do that and make money while we're doing the leasing too. So you know we have been very focused on maintaining our capital ratios, growing our net effective rents, doing the best we can to get, you know, two and a half to three percent rent bomb. So, so we recognize that there's some properties like a few down in Austin where we're really purely a price taker, and part of our decision is to cover some costs and create longer term value.

Speaker Change: We really stay very focused every day on getting leases done.

Gerard H. Sweeney: We always want more leasing done, so we always want to move that conversion rate up. But we also want to do that and make money while we're doing the leasing too. So, you know, we have been very focused on maintaining our capital ratios, growing our net effective rents, and doing the best we can to get, you know, a two and a half to 3% rent bump. So we recognize that there are some properties, like a few down in Austin, where we're really purely a price taker.

Speaker Change: And again, I was tongue-in-cheek, I'm never happy with the level. We always want more leasing done, so we always want to move that conversion rate up. But we also want to do that and make money while we're doing the leasing, too.

Speaker Change: So, you know, we have been very focused on maintaining our capital ratios, growing our net effective rents.

Speaker Change: doing the best we can to get, you know, two and a half to three percent rent bumps. So we recognize that there's some properties, like a few down in Austin.

Gerard H. Sweeney: And part of our decision is to cover some costs and create longer-term value. But a number of other properties, you know, I think we hold pretty firm to what the rent levels we require, what our capital spend commitment needs to be, because there we feel we're in a much better position to drive near-term effectiveness. Yeah, and Michael, this is George.

Speaker Change: where we're really purely a price taker and part of our decision is to cover some cost and create longer term value.

Jerry Sweeney: But a number of other properties you know I think we hold pretty firm to what the rent levels we require or what our capital spend communities to be because there we feel we're in a much better position to drive near term effective rent growth.

Speaker Change: but a number of other properties.

Speaker Change: You know, I think we hold pretty firm to what the rent levels we require, what our capital spend commitment needs to be, because there we feel we're in a much better position to drive near-term effective rent growth.

George Johnstone: Yeah, and Michael, this is George. I mean, you know one of the lumpiness in that number quarter over quarter oftentimes is the renewals, and you know we've done such a good job in getting out in front of 25 and 26. We put a lot of those to bed. So the opportunities set on some of the 25 and 25, 25 and 26 Sweeney is shrinking. So again, I think a lot of times we look at it in the context of what was newly seen. For the second quarter at 100,000 square feet, that was comparable to the first quarter on the Holyo portfolio.

George D. Johnstone: I mean, you know, one of the lumpinesses in that number quarter over quarter oftentimes is the renewals. And, you know, we've done such a good job of getting out in front of 25 and 26. We've put a lot of those to bed. So the opportunity set on some of the 25 and 25, 25 and 26 renewals is shrinking.

Speaker Change: Yeah, and Michael, this is George. I mean, you know, one of the lumpiness in that number, quarter over quarter, oftentimes is the renewals and, you know, we've done such a good job in getting out in front of

Michael: 25 and 26 we put a lot of those to bed so the the opportunity set on some of the 25 and 25 25 and 26 renewals

George D. Johnstone: So again, I think, you know, a lot of times we look at it in the context of what we were newly saying, you know, for the second quarter at 100,000 square feet, that was comparable to the first quarter on the wholly owned portfolio. So, and the other factor really is kind of Austin, I think, you know, while the pipeline, Thank you. Thank you, Michael. Thank you. Our next question comes from the line of Upal Rana from Key Bank Capital Markets. Hi, this is Gabby Horvath on behalf of Upal Rana. Could you provide any update on the properties you had identified prior to help reduce vacancy in the portfolio? I'm sorry; you cut out a little bit.

Michael: is shrinking.

Speaker Change: So again, I think, you know, a lot of times we look at it in the context of what was newly seen.

Speaker Change: You know, for the second quarter at 100,000 square feet, that was comparable.

George Johnstone: And the other factor really is kind of often, I think while the pipeline continues to build, the decision-making has been a little bit slower there. There's a lot of options for tenants in that market. So, you know, we just continue to work that pipeline; ultimately, you know, looking to convert.

Speaker Change: to the first quarter on the wholly owned portfolio. So, and the other factor really is kind of Austin. I think, you know, while the pipeline continues to build.

Speaker Change: You know, the decision-making has been a little bit slower there.

Speaker Change: There's a lot of options.

Speaker Change: [inaudible]

Michael Lewis: Thank you.

Michael Lewis: Thank you, Michael. Thank you.

Speaker Change: Thank you.

Gabrielle Horvath: Our next question comes to the line of Upal Rana from KeyBank Capital Markets. Hi, this is Gabrielle Horvath on for Upal. Could you provide any update on the properties you had identified prior to help reduce vacancy in the portfolio?

Speaker Change: Thank you, Michael.

Michael: Thank you.

Michael: Our next question comes from the line of Upal Rana from Key Bank Capital Markets.

Michael: Hi, this is Gabby Horvath on for Upal. Could you provide any update on the properties you had identified prior to help reduce vacancy in the portfolio?

Jerry Sweeney: I'm sorry, you cut out a little bit. Were you referencing the progress for making on our higher vacancy properties? Yes, that's correct. Oh, okay, great. Sorry, sorry. It just didn't come through clear.

Upal Dhananjay Rana: Were you referencing the progress we're making on our higher vacancy properties? Yes, that's correct. Oh, okay, great. Sorry, sorry, it just didn't come through clearly.

Speaker Change: I'm sorry, you cut out a little bit. Were you referencing the progress we're making on our higher vacancy properties?

Gerard H. Sweeney: Look, I think in terms of, and I'm referencing page four, Gabby, in our SIPP, we have, you know, River Place and Delaware; we are advancing our thought process on residential conversions there. And I think we're going through the design development, the engineering, and the political approval process to ensure that that pathway on those properties is viable. Plymouth Meeting, you know, we're looking to market that property for sale, and we hope to have some good progress on that. The building in Contra Hocan, which is 101 West Elm, that lobby renovation is close to completion.

George Johnstone: Look, I think in terms of, and I'm referencing page four, Gabby in our, in our SIP. I mean, we have, you know, River Place and Delaware. We are advancing our thought process on residential conversions there. And I think we're going through the design development, the engineering, and the political approval process to ensure that pathway on those properties is viable. Employment meeting, you know, we're looking to market that property for sale. And we hope that's some good progress on that. The building in Concha Hocken, which is 101 West Elm, that lobby renovation is close to completion, so that's been completely repositioned, so we're anticipating a pickup in leasing activity there.

Speaker Change: Yes, that's correct.

Speaker Change: Oh, okay, great. Sorry, sorry, it just didn't come through clear. Look, I think in terms of, and I'm referencing page four, Gabby, in our SIPP, I mean, we have...

Speaker Change: You know, River Place and Delaware, we are advancing our thought process on residential conversions there, and I think we're going through the design development, the engineering.

Speaker Change: and the political approval process to ensure that that pathway on those properties is

Speaker Change: is viable. Plymouth Meeting, you know, we're looking to market that property for sale.

Speaker Change: And we hope to have some good progress on that. The building in Conchahokin, which is 101 West Elm, that lobby renovation is close to completion.

Gerard H. Sweeney: So that's been completely repositioned, and we're anticipating a pickup and leasing activity there. Sierra Center really is the expansion of our life science space.

Speaker Change: so that's been completely repositioned so we're anticipating a pickup and leasing activity there. Sierra Center really is the is the expansion of our life science space. We expect George to deliver

George Johnstone: Sear Ascender really is the expansion of our life science space. We expect George's liver. Yeah, we've got a full tenant user for, you know, just shy of 30,000 square feet. They've got a lease in hand, so that lease will actually take zero center off of this lift. And then the last three, two of which are in Austin, and then 401 Plymouth Road, you know, we're actively leasing those. We're seeing, you know, good volumes of tour and pipeline, and just really, again, need to, you know, convert some of those opportunities into executed leases. But, you know, I think as Jerry started, you know, the top of the little lift is certainly more impactful to that overall vacancy level.

Gerard H. Sweeney: We expect George to deliver. Yeah, we've got, you know, a full tenant user for, you know, just shy of 30,000 square feet. They've got a lease in hand. So that [inaudible] and our offices. And in the last three, two of which are in Austin and then 401 Plymouth Road, you know, we're actively leasing those. We're seeing, you know, good volumes of tour and pipeline, and we can convert some of those. You know, I think as Jerry started, you know, on the top of the list, more impactful to that overall. Everything's still tracking.

George D. Johnstone: Yeah, we've got, you know, a full tenant user for, you know, just shy of 30,000 square feet. They've got a lease in hand, so that would help.

George D. Johnstone: That lease will actually take Xero Center off of this list.

Speaker Change: And in the last three, two of which are in Austin and then 401 Plymouth Road, you know, we're actively leasing those. We're seeing, you know, good volumes of tour and pipeline engines.

Speaker Change: really again need to, you know, convert some of those opportunities into executed leases.

Speaker Change: You know, I think as Jerry started, the top of the list is certainly more impactful to that overall vacancy level.

George Johnstone: And, you know, everything, everything's still tracking as noted on the page.

Speaker Change: and you know everything everything's still tracking as as noted on the page.

Gabrielle Horvath: Great, thank you.

Gerard H. Sweeney: Great, thank you. And then, as a follow-up, do you anticipate any impact from the mandate in Philadelphia for government employees to return to the office full time? We actually have, they have returned as of mid-July. The mayor has required all city employees to return to work.

Jerry Sweeney: And then, as a follow-up, do you anticipate any impact from the mandate in Philadelphia for government employees to return to the office full-time? We actually have returned as of mid-July. The mayor has required all city employees to come back to work. We think that's a very positive messaging. I think the mayor is fully on board and focused on rejuvenating Center City and sending a great message to the private business community. I think we've seen some other businesses based on her leadership, move tens, move employees back to the office on a more regular basis. So we do that as a very, very positive announcement for not just Still Adult, but also for the region as well.

Speaker Change: Great, thank you. And then as a follow-up, do you anticipate any impact from the mandate in Philadelphia for government employees to return to the office full-time?

Speaker Change: We actually have, they have returned as of mid-July. The mayor has required all city employees to come back to work. We think that's a very positive message.

Gerard H. Sweeney: We think that's very positive messaging. I think the mayor is fully on board and focused on rejuvenating Center City and sending a great message to the private business community. I think we've seen, you know, some other businesses based on her leadership move tenants and move employees back to the office on a more regular basis. So we do that as a very, very positive announcement for not just Philadelphia but also for the region as well. So, I think the impact has been very positive in terms of perception, in terms of increasing street traffic, and in terms of moving towards a more safe, clean, and green environment in the center city area.

Speaker Change: I think the mayor is is fully on board and focused on

Speaker Change: rejuvenating Center City and sending a great message to the private business community. I think we've seen, you know, some other businesses based on her leadership.

Speaker Change: move employees back to the office on a more regular basis. So we view that as a very, very positive announcement for not just Philadelphia, but also for the region as well.

Jerry Sweeney: So I think the impact has been very positive in terms of perception, in terms of increasing street traffic, in terms of moving towards a more safe, clean, and green environment in the center city area. So nothing but kudos to our mayor for her leadership on making that very strong decision.

Speaker Change: So, I think the impact has been very positive in terms of perception.

Speaker Change: in terms of increasing street traffic, in terms of, you know, moving towards a more safe, clean, and green environment in the center city area. So, nothing but kudos to our mayor for her leadership on making that very strong decision.

Gerard H. Sweeney: So, nothing but kudos to our mayor for her leadership on making that very strong. Great, that's all for me. Thank you for your time. Thank you. Thank you, and I am not showing any further questions at this time. I'd like to turn the call back over to Jerry for any closing remarks. Yeah, Gigi, thank you for your help today. And to all of you, thank you for participating in our second quarter earnings call.

Gabrielle Horvath: Great, that's all from me.

Operator: Thank you for your time.

Operator: Thank you.

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

Jerry Sweeney: Thank you, and I am not showing any further questions at this time. I like to turn the call back over to Jerry for any closing remarks. Yeah, GG, thank you for your help today, and to all of you, thank you for participating in our second quarter earnings call. We look forward to updating you on our 24 business plan progress in the fall. Our best wishes to you and your families for an enjoyable bounce of the summer. Thank you very much.

Speaker Change: Thank you.

Speaker Change: Thank you. And I am not showing any further questions at this time. I'd like to turn the call back over to Jerry for any closing remarks.

Gerard H. Sweeney: And we look forward to updating you on our 24 business plan progress in the fall. Our best wishes to you and your families for an enjoyable bounce. Thank you very much. Ladies and gentlemen, this concludes today's presentation. You may now disconnect and have a wonderful day.

Gerard H. Sweeney: Gigi, thank you for your help today and to all of you, thank you for participating in our second quarter earnings call and we look forward to updating you on our 24 business plan progress in the fall. Our best wishes to you and your families for an enjoyable balance of the summer. Thank you very much.

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

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