Q2 2025 Brandywine Realty Trust Earnings Call

We are in a listen only mode. After the speaker's presentation, there will be a question and answer session and instructions will be given at that time. Please be advised that today's conference is being recorded I would now like to turn the conference over to Jerry Sweeney, President and CEO Sir please.

We're ahead.

Michelle Thank you very much.

Morning, everyone. Thank you for joining.

Our second quarter 2005 earnings call as usual on today's call with me are George Johnstone, Our executive Vice President of operations, Dan Palazzo our.

Operator: After the speaker's presentation, there will be a question and answer session, and instructions will be given at that time.

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

Senior Vice President and Chief Accounting Officer, and Tom Wirth, Our executive Vice President and Chief Financial Officer.

Operator: I would now like to turn the conference over to Gerard Sweeney, President and CEO. Sir, please go ahead. Michelle, thank you very much.

Prior to beginning certain information discussed on this call may constitute forward looking statements within the meaning of federal Securities law. Although we believe the estimates reflected in these statements are based on reasonable assumptions, we cannot give assurance that the anticipated results will be achieved for further information on factors that could impact our anticipated.

Ladies and gentlemen, thank you for standing by and welcome to Brandy. Wine realy trust second quarter 2025 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 and instructions will be given at that time. Please be advised, that today's conference is being recorded. I would now like to turn the conference over to Jerry Sweeney president and CEO sir. Please go ahead.

Gerard Sweeney: Good morning, everyone. Thank you for joining our second quarter 25 earnings call.

Gerard Sweeney: As usual, on today's call with me are George Johnstone, our Executive Vice President of Operations, Dan Palazzo, our Senior Vice President, Chief Accounting Officer, and Tom Wirth, our Executive Vice President and Chief Financial Officer.

Results. Please reference our press release as well as our most recent annual and quarterly reports that we filed with the SEC well first and foremost we hope that you and yours are doing well and enjoying the summer and during our prepared comments today I will briefly review our second quarter results and provide updates on our 2025 business plan.

Gerard Sweeney: Prior to beginning, certain information discussed on this call may constitute forward-looking statements within the meaning of federal securities law. Although we believe the estimates reflected in these statements are based on reasonable assumptions, we cannot give assurance that the anticipated results will be achieved. For further information on factors that could impact our anticipated results, please reference our press release, as well as our most recent annual and quarterly reports that we follow with the SEC.

Michelle, thank you very much. Uh, good morning everyone, thank you for joining uh our second quarter uh 25 erne call as usual on today's call with me are George Johnstone, our Executive Vice President of Operations, Dan Palazo our, our senior Vice President, Chief accounting officer and Tom, worth our Executive Vice President and Chief Financial Officer. Prior to the beginning, certain information. Discussed on this call. May constitute 4 looking statements Within

Speaker Change: After that Dan George Tom and I are available to answer any questions.

Speaker Change: We posted solid operating metrics again this quarter reinforcing the continued flight to quality our portfolio of strong market positioning and our asset quality.

Gerard Sweeney: Well, first and foremost, we hope that you and yours are doing well and enjoying the summer. And during our prepared comments today, we'll briefly review our second quarter results and provide updates on our 2025 business plan.

Speaker Change: As we will review we are increasing our business plan ranges on retention same store growth from both a cash and GAAP standpoint, our capital ratio and gap and combined mark to market. It.

Gerard Sweeney: After that, Dan, George, Tom, and I are available to answer any questions. We posted solid operating metrics again this quarter, reinforcing the continued flake to quality, our portfolio strong market positioning, and our asset quality. As we will review, we are increasing our business plan ranges on retention, same store growth from both the cash and gap standpoint, our capital ratio, and gap in combined mark to market. At the midpoint, we have now executed over 98% of our 2025 spec revenue target. Our quarterly retention rate was 82%. Leasing activity for the quarter approximated 460,000 square feet, including 233,000 square feet in our wholly owned portfolio and 226,000 square feet in our joint venture portfolio.

Speaker Change: At the midpoint, we have now executed over 98% of our 2025 spec revenue target our quarterly retention rate was 82% leased.

Then the meaning of federal Securities Law. Although we believe the estimates reflected in these statements are based on reasonable assumptions. We cannot give assurance that the anticipated results will be achieved for further information on factors that could impact our anticipated results. Please reference our press release as well as our most recent annual, and quarterly reports that we file with the SEC. Well, first and foremost, we hope that you and yours are doing well, and enjoying the summer and during our prepared comments today, will briefly review our second quarter results and provide updates on our 2025 business plan. After that, Dan, George Tom? And I are available to answer any questions.

Speaker Change: Leasing activity for the quarter approximated 460000 square feet, including 233000 square feet in our wholly owned portfolio and 226000 square feet in our joint venture portfolio.

We posted solid operating metrics. Again, this quarter reinforcing the continued flight to quality art portfolio, strong Market positioning, and our asset quality

Speaker Change: Quarter over quarter leasing activity increased 35% highlighted by our signing a 100000 square foot lease with an industry, leading tech company at our one Uptown joint venture development.

Speaker Change: For leases commencing after quarter end remains strong at 280000 square feet.

As we will review, we are increasing our business plan ranges on retention. Same store growth from both the cash and GAP standpoint, our Capital ratio, and GAP and combined Mark to Market at the midpoint we have now executed over 98% of our 2025 spec Revenue Target, our quarterly retention rate was 82%.

Speaker Change: Second quarter net absorption totaled 13000 square feet, we do expect positive net absorption in the third quarter as well.

Gerard Sweeney: Quarter over quarter, leasing activity increased 35%, highlighted by our signing 100,000 square foot lease with an industry leading tech company at our one Uptown joint venture development. Forward leasing commencing after quarter end remains strong at 280,000 square feet. Second quarter net absorption total 13,000 square feet. We do expect positive net absorption in the third quarter as well. As anticipated in our business plan, we ended the quarter at 88.6% occupied and 91.1% leased. The sequential increase in both our occupancy and lease percentage are primarily due to, as we outlined last quarter, reclassifying Thrunite Delaware into a redevelopment opportunity, the sale of Quarry Lake in Austin and an asset now held for sale in our Austin portfolio.

Speaker Change: As anticipated in our business plan, we ended the quarter at 88, 6% occupied and 91, 1% leased this sequential increase in both our occupancy and lease percentage.

Leasing activity for the quarter. Approximated 460,000 square feet including 233,000 square feet. In our wholly owned portfolio and 226,000 square feet in our joint venture portfolio.

Speaker Change: Primarily due to as we outlined last quarter reclassifying through new Delaware into a redevelopment opportunity the sale of quarry Lake in Austin and in asset now held for sale in our Austin portfolio.

Quarter over quarter, leasing activity, increased 35%, highlighted by our signing, a 100,000 square foot lease with an industry-leading tech company at our 1 Uptown joint venture development.

Ford leasing commencing after quarter end remains strong at 280,000 square feet.

Speaker Change: While we are 91% leased we expect negative absorption Q4 from a tenant move out in Austin and several small leasing slides for Q1 'twenty six.

Second quarter, net absorption total 13,000 square feet. We do expect positive net absorption in the third quarter as well.

As anticipated in our business plan, we ended the quarter at 88.6% occupied and 91.1% least.

Speaker Change: Holding our year end leasing range at 89% to 90%.

Speaker Change: In Philadelphia, we're 93, 5% occupied and 96, 5% leased during the second quarter, we captured 54% of all office deals done in the Central business district in pet in the Pennsylvania suburbs, where 88% occupied and 90% leased in Austin.

Gerard Sweeney: While we are 91% leased, we expect negative absorption Q4 from a tenant move out in Austin and several small leasing slides to Q126. So we're holding our year-end leasing range at 89% to 90%. In Philadelphia, we're 93.5% occupied and 96.5% leased. During the second quarter, we captured 54% of all office deals done in the central business district. In the Pennsylvania suburbs, we're 88% occupied and 90% leased. In Austin, that is now 78% leased and occupied up due to the sale of those two properties. Looking ahead, we have only 5.2% annual rollover through year-end 26, one of the lowest in the office sector, and only 7.5% through 2027.

Primarily due to, as we outline last quarter, reclassifying, 300 Delaware into a Redevelopment opportunity. The sale of Quarry Lake in Austin and an asset now held for sale in our Austin portfolio.

Speaker Change: <unk>.

Speaker Change: That is now 78% leased and occupied up due to the sale of those two properties.

Speaker Change: Looking ahead, we have only five 2% annual rollover through year end 'twenty six one of the lowest in the office sector and only seven 5% through 2027.

While we are 91% least, we expect negative absorption Q4 from a tenant, move out in Austin, and several small leasing slides. The q1 26. So you're holding our year-end, leasing range at 89 to 90%.

Speaker Change: For the quarter, our Mark to market was two 1% on a GAAP basis and negative on a cash basis, we are increasing our range on both of these metrics 50, and 75 basis points, respectively based on leases, we have already executed in both Philadelphia and the Pennsylvania suburbs.

In Philadelphia, we're 903.5% occupied and 96.5% least. During the second quarter, we captured 54% of all office deals, done in the central business district in P in the Pennsylvania suburbs were 88% occupied and 90% leased in Austin. Uh that is now 78% leased in occupied up due to the sale of those 2 properties.

Our capital ratio was four 1% well below our 25 business plan range, primarily due to continued capital control construction efficiencies and a number of ads as transactions as such we're improving our capital ratio by.

Gerard Sweeney: For the quarter, our mark to market was 2.1% on a gap basis and negative on a cash basis. We are increasing our range on both of these metrics, 50 and 75 basis points respectively, based on leases we have already executed in both Philadelphia and the Pennsylvania suburbs. Our capital ratio was 4.1%, well below our 25 business plan range, primarily due to continued capital control, construction efficiencies, and a number of as-is transactions. As such, we're improving our capital ratio by half a percentage point at the midpoint to now nine to ten percent, which is the lowest capital ratio range we've had in the past five years.

Looking ahead, we have only 5.2% annual rollover through the year. End 26 1 of the lowest in the office sector and only 7 and a half percent through 2027.

Speaker Change: Half a percentage point at the midpoint to now 9% to 10%, which is the lowest capital ratio range. We've had in the past five years.

Speaker Change: Tour activity continues to accelerate second quarter physical towards exceeded the first quarter by 29% and the square footage toward in the second quarter exceeded first quarter by 66%.

For the quarter or Mark to mark, it was 2.1% on a gap basis and negative on a cash basis. We are increasing our range on both of these metrics 50 and 75 basis points. Respectively, based on leases, we have already executed in both Philadelphia and the Pennsylvania suburbs.

Speaker Change: For the quarter on a wholly owned basis, 43% of new leases were the result of a flight to quality and we also as we always mentioned you don't have any tenant lease expirations greater than 1% of revenue through 2026.

Gerard Sweeney: Tour activity continues to accelerate. Second quarter physical tours exceeded the first quarter by 29%, and the square footage toured in the second quarter exceeded first quarter by 66%. For the quarter on a wholly owned basis, 43% of new leases were the result of a flight to quality. And we also, as we always mentioned, don't have any tenant lease expirations greater than 1% of revenue through 2026. Our operating portfolio leasing pipeline remains solid at 1.5 million square feet, which includes about 75,000 square feet in advanced stages of negotiation.

Our Capital ratio was 4.1%. Well below, our 25 business plan range primarily due to continued Capital control construction, efficiencies and a number of ads is transactions. As such, we're improving our Capital ratio by, uh, half a percentage point at the midpoint to now 9 to 10%, which is the lowest capital ratio range, we've had in the past 5 years.

Speaker Change: Our operating portfolio leasing pipeline remains solid at $1 5 billion square feet, which includes about 75000 square feet in advanced stages of negotiations.

We anticipate continued strong operating performance in our operating portfolio supported by limited rollover risk excellent capital control the ongoing strengthening of our markets and expanding lease pipeline.

Tour activity continues to accelerate second quarter physical tours, exceeded the first quarter by 29% and the square footage toward in the second quarter exceeded first quarter by 66%.

Speaker Change: From a balance sheet standpoint, we issued $150 million of unsecured bonds in June generating $150 million $159 million of gross proceeds at an effective yield to maturity of just over 7%.

For the quarter on a wholly owned basis. 43% of new leases, were the result of a flight to Quality. And we also, uh, as we always mentioned, you don't have any tenant lease expirations greater than 1% of Revenue through 2026.

Our operating portfolio leasing pipeline remains solid at 1.5 million square feet.

Gerard Sweeney: We anticipate continued strong operating performance in our operating portfolio, supported by limited rollover risk, excellent capital control, the ongoing strengthening of our markets, and expanding lease pipelines.

Speaker Change: We used a portion of these proceeds to repay the line of credit balance created by our pre paying the $70 million term loan last quarter.

Speaker Change: As a result, where we are now we have no outstanding balance on our $600 million unsecured line of credit and $123 million of cash on hand, we do plan in fact, just very recently.

Gerard Sweeney: From a balance sheet standpoint, we issued $150 million of unsecured bonds in June, generating $159 million of gross proceeds and an effective yield to maturity just over 7%. We used a portion of these proceeds to repay the line of credit balance created by our prepaying the $70 million term loan last quarter. As a result, where we are now, we have no outstanding balance in our $600 million unsecured line of credit and $123 million of cash on hand.

Which includes about 75,000 square feet in advanced stages of negotiations? We anticipate continued strong operating performance. In our operating portfolio, supported by limited rollover risk, excellent. Capital control the ongoing strengthening of our markets and expanding lease pipeline,

Speaker Change: Some of those proceeds to reduce our secured indebtedness by repaying our construction loan on 165 King of Prussia Road in Radnor and are in the process of prepaying a portion of our secured <unk> loan. We also have no unsecured bond maturities until November of 2007.

From a balance sheet standpoint, we should 150 million dollars of unsecured Bonds in June generating, a 150 million 159 million dollars of gross proceeds and an effective yield to maturity just over 7%.

We use the portion of these proceeds, to repay the line of credit balance created by our pre-paying, the $70 million Term Loan last quarter.

Speaker Change: Going forward to ensure ample liquidity as Tom will further touch on we plan to maintain minimum balances on our line of credit.

Gerard Sweeney: We do plan, in fact, just very recently, use some of those proceeds to reduce our secured indebtedness by repaying our construction loan on 165 King and Pressure Road in Radnor, and are in the process of prepaying a portion of our secured CNBS loan. We also have no unsecured bond maturities until November of 27. Going forward, to ensure ample liquidity, as Tom will further touch on, we plan to maintain minimal balances on our line of credit.

Speaker Change: As noted previously our business plan is designed to return us to investment grade metrics over the next couple of years as such we will be looking to reduce overall levels of leverage while retiring secured debt through unsecured bank or future bond offerings.

Speaker Change: Stepping back a bit and looking at the larger picture.

Speaker Change: Real estate markets and overall sentiment continues to improve our operating and leasing teams have established a solid operating franchise to capitalize on improving market dynamics in particular pipeline activity continues to grow quarter over quarter tour volume remains at very healthy levels.

As a result where we are now we have no outstanding balance in our 600 million dollar, unscrewed line of credit and 123 million of cash on hand. We do plan. In fact, just very recently, uh, use some of those proceeds to reduce our secured indebtedness, by repaying our construction loan on 165, king of pressure Road, in Ragnar and are in the process of prepaying. A portion of our secured cnbs loan. We also have no unsecured Bond maturities until November of 27.

Gerard Sweeney: As noted previously, our business plan is designed to return us to investment-grade metrics over the next couple years. As such, we'll be looking to reduce overall levels of leverage while retiring secured debt through unsecured bank or future bond offerings.

Going forward to ensure. Ample liquidity as Tom will further touch on. We plan to maintain minimal balances on our line of credit.

As noted previously, our business plan is designed to return us to investment grade metrics over the next couple years.

Rent levels and concession packages remain fully in line with our business plan and in select sub markets and in select buildings, we're pushing both nominal and effective rents.

Gerard Sweeney: Stepping back a bit and looking at the larger picture. Real estate markets and overall sentiment continue to improve. Our operating and leasing teams have established a solid operating franchise to capitalize on improving market dynamics. In particular, pipeline activity continues to grow quarter over quarter. Tour volume remains at very healthy levels. Rent levels and concession packages remain fully in line with our business plan. And in select submarkets and in select and effective rents.

as such, we'll be looking to reduce overall levels of Leverage, while retiring secured debt through unsecured bank or future, Bond offerings,

Stepping back a bit and looking at the larger picture.

Speaker Change: Quality bifurcation continues in the office sector.

Speaker Change: As a way of example, Philadelphia as vacancy rates is about 18, 6%.

Speaker Change: Among 119 buildings, 50% of that vacancy is concentrated in just 14 buildings, while the top 10 vacancy buildings account for 40% of the city vacancy high quality buildings continued to outperform and push effective rent levels.

Real estate markets and overall sentiment continue to improve our operating, and leasing teams. Have established a solid operating franchise to capitalize on improving market dynamics. In particular pipeline activity, continues to grow quarter over quarter

Gerard Sweeney: The quality bifurcation continues in the office sector. As a way of example, Philadelphia's vacancy rate is about 18.6 percent. among 119 buildings. 50% of that vacancy is concentrated in just 14 buildings, while the top 10 vacancy buildings account for 40% of the city vacancy. High-quality buildings continue to outperform and push effective rent levels. Our competitive set, particularly in Philadelphia CBD and the suburbs, continues to narrow through both buildings being removed from office inventory for residential conversions and a select few assets continue to have financial issues, essentially removing them from the leasing market dynamic. In fact, our numbers show that potentially 10 buildings totaling several million square feet of office product is in the process of being removed from inventory for conversion to residential use.

Tour volume remains at very healthy levels. Rent levels in concession packages, remain fully in line with our business plan and in select some markets and in select buildings, we are pushing both nominal and effective rents.

Speaker Change: Our competitive set particularly in Philadelphia CBD in the suburbs continues to narrow through both buildings being removed from office inventory for residential conversions.

Uh, to as a way of example, Philadelphia's. Vacancy rates is about 18.6%.

Speaker Change: Select assets continue to have financial issues, essentially removing them from the leasing market dynamic.

Speaker Change: In fact, our numbers show that potentially 10 buildings totaling several million square feet of office product is in the process of being removed from inventory for conversion to residential uses.

Uh, among 119, buildings, 50% of that vacancy is concentrated in just 14 buildings. While the top 10 vacancy buildings account for 40% of the city, vacancy,

Speaker Change: As such our Brandywine team and assets remain in an ever improving competitive position.

Speaker Change: And looking at the city's life science sector, while early in the recovery phase that should remain a forward growth driver backed by strong regional health care ecosystem that includes a 1200 biotech and pharmaceutical firms along with 15 major health systems.

High quality buildings continue to outperform and push effective. Rent levels. Our competitive set, particularly in Philadelphia CBD and the suburbs continues to narrow through both buildings being removed from Office Inventory for residential conversions and a select few assets continue to have Financial issues. Essentially, removing them from the leasing Market dynamic.

Speaker Change: Green shoots on the capital raising front are emerging as evidenced by the recent $200 million raise by a local life science firm.

Gerard Sweeney: As such, our Brandywine team and assets remain in an ever-improving competitive position. In looking at the city's life science sector, while early in the recovery phase, that should remain a forward growth driver, backed by a strong regional health care ecosystem that includes the 1,200 biotech and pharmaceutical firms, along with 15 major health systems. Green shoots on the capital raising front are emerging as evidenced by the recent $200 million raise by a local life science firm.

Speaker Change: Boston, that's actually emerging from real estate market lows and remains a magnet for corporate expansion.

In fact, our numbers show that potentially 10 buildings totaling several million square feet of office product is in the process of being removed from inventory for conversion to residential uses as such our Brandy Wine team and assets remain in an Ever improving competitive position.

Speaker Change: Leasing momentum remains positive, particularly in the class a property with with Austin recording over 121 tenants actively seeking almost 4 million square feet of space as of July <unk>.

In looking at the city's life science sector while early in the recovery phase that should remain a forward growth driver, backed by strong Regional Health Care ecosystem, that includes a 1,200 biotech and pharmaceutical firms along with 15, major health systems.

Speaker Change: Positive momentum was driven by a revitalization of the tech sector. There's also a notable trend encouraging returned to work on a full time basis. So we are increasingly optimistic that Austin, we will see increased leasing activity as 2025 progresses.

Gerard Sweeney: Austin, that's actually emerging from real estate market lows and remains a magnet for corporate expansion. Leasing momentum remains positive, particularly in the Class A property, with Austin recording over 121 tenants, actively seeking almost 4 million square feet of space as of July. Positive momentum was driven by a revitalization of the tech sector. There's also a notable trend encouraging return to work on a full-time basis. So we are increasingly optimistic that Austin will see increased leasing activity as 2025 progresses.

Green shoots on the capitol. Raising front are emerging as evidenced by the recent, 200 million dollar raise by a local life science firm.

Austin. That's actually emerging from real estate market lows and remains a magnet for corporate expansion.

Speaker Change: As noted significant progress <unk> made on liquidity and our operating property performance.

Speaker Change: Performance earnings however remain impacted by the expensing of our noncash preferred accruals a negative carry on our JV development by way of illustration. We are incurring 14 per share of negative carry in our development projects, including about <unk> <unk> per share in non cash charges.

Leasing momentum remains positive, particularly in the class a property with all with Austin recording over 121 tenants actively seeking almost 4 million square feet of space. As of July,

Speaker Change: For our preferred structures on our JV developments.

Gerard Sweeney: As noted, significant progress has been made on liquidity and our operating property performance. Earnings, however, remain impacted by the expensing of our non-cash preferred accruals and negative carry on our JV development. By way of illustration, we are incurring $0.14 per share of negative carry in our development projects, including about $0.10 per share in non-cash charges for our preferred structures on our JV development. Looking at FFO or FFO for the quarter was $0.15 a share and in line with consensus estimates. One point to note that we highlighted in our supplemental package in the press release is our 2025 business plan contemplated three cents a share in gains from land sales.

Positive momentum was driven by a revitalization of the tech sector. There's also a notable Trend encouraging return to work on a full-time basis. So we are increasingly optimistic that Austin will see increased leasing activity as 2025 progresses,

Speaker Change: Looking at <unk> or <unk> for the quarter was 15 cents a share and in line with consensus estimates.

Speaker Change: One point to note that we highlighted in our supplemental package in the press release is our 2025 business plan contemplated three a share and gains from land sales. We did anticipate the sales work would occur in the second half of the year base.

Speaker Change: Based upon the length of time required to perfect full site approvals and that being a condition to achieve optimal pricing. We do not believe all required approvals can be obtained by year end.

As noted significant progress, has been made on on liquidity and our operating property per uh, performance earnings. However, remain impacted by the expensing of our 9 cash. Preferred approvals and negative carry on our JV development by way of illustration, we are incurring, 14, cents, per share of negative carrying our development projects, including about 10 cents, per share, and 9, cash charges for our preferred structures. On our JB developments.

Looking at ffo or ffo for the quarter was 15 cents, a share and in line with consensus estimates.

Speaker Change: As a result, we removed these gains from our 2025% forecast and as such our revised <unk> range is 60% to 66 per share, reflecting a midpoint still above consensus estimates.

Gerard Sweeney: We did anticipate these sales would occur in the second half of the year. Based upon the length of time required to perfect full site approvals, and that being a condition to achieve optimal pricing, we do not all required approvals can be obtained by year end. As a result, we removed these gains from our 2025 forecast, and as such, our revised FFO range is 60 to 66 cents per share, reflecting a midpoint still above consensus estimates.

1 point to note that we highlighted in our supplemental package in the press, release is our 2025 business, plan contemplated 3 cents a share in gains from land sales.

We did anticipate. These sales were would our second half of the year.

Speaker Change: Optimizing value in our development projects remains the top priority in the company and activity levels in all of our development projects significantly improved during the quarter, particularly at one uptown and $31 51.

Based upon the length of time required to Perfect full sight approvals and that thing a condition to achieve optimal pricing. We do not believe all required approvals can be obtained by year end.

Speaker Change: In fact, our overall development pipeline is up over 1 million square feet from last quarter.

Speaker Change: During the second quarter. We also had great success on residential developments at <unk>, which has reached 99% leased and Soliris now being 89% leased at.

Gerard Sweeney: Optimizing value in our development projects remains the top priority in the company, and activity levels in all of our development projects significantly improved during the quarter, particularly at 1 uptown and 3151. In fact, our overall development pipeline is up over 1 million square feet from last quarter. During the second quarter, we also had great success on residential developments at Avira, which has reached 99% leased, and Solaris now being 89% leased. At Schuylkill Yards, on our 3025 project, that commercial component is now 85% leased. To accelerate leasing on the one remaining floor, we are pre-building space for delivery by year-end and have a very good pipeline of smaller tenants.

As a result, we remove these gains from our 2025 forecasts. And as such our revised ffo range is 60 to 66 cents per share reflecting in midpoint still above consensus estimates.

Speaker Change: At Schuylkill yards on our 30 25 project that commercial component is now 85% leased to accelerate leasing on the one remaining floor. We're pre building space for delivery by year end and will have had a very good pipeline of smaller tenants.

optimizing value in our development, projects Remains the top priority in the company and activity levels in all of our development projects significantly improved during the the quarter, particularly at 1 Uptown and 3151

In fact, our overall development pipeline is up over 1 million square feet from last quarter.

Speaker Change: We have executed one retail lease and are in advanced and are in advanced negotiations on the final retail space. We continue to project that commercial component will stabilize in Q1 'twenty six shortly after our major tenant takes occupancy in January.

Speaker Change: A V or the residential component as I mentioned is 99% leased and approaching full economic stabilization.

Speaker Change: $31 51 market our life Science project was substantially delivered the first quarter of this year and we'll be in a capitalization phase III.

Gerard Sweeney: We have executed one retail lease and are in advanced negotiations on the final retail space. We continue to project the commercial component will stabilize in Q1-26, shortly after our major tenant takes occupancy in January. Avira, the residential component, as mentioned, is 99% leased and approaching full economic stabilization. 3151 market, our life science project, was substantially delivered the first quarter of this year and will be in a capitalization phase through 2025. That pipeline has grown significantly since last quarter, with advanced discussions underway with several prospects.

5 project that commercial component is now 85%, leased to excelerate leasing on the 1 remaining floor. We are pre-build space for delivery by year end, and we'll have it and have a very good pipeline of smaller tenants.

Speaker Change: 2025.

Speaker Change: That pipeline has grown significantly since last quarter with advanced discussions underway with several prospects.

We have executed 1 retail lease and are in advance and are in advanced negotiations on the final retail space.

Speaker Change: The life science market remains in a recovery mode impacted by a challenging fund raising climate and public policy uncertainty.

we continue to project, the commercial component will stabilize in q1, 26 shortly after our major tenant takes occupancy in January,

Speaker Change: Given the success of our $3 25 office project. We're also conducting tours with office users and as I mentioned last call. Despite the strong increase in office and life science traffic.

Avera. The residential component as I mentioned, is, is 99% leased and approaching full economic stabilization.

Speaker Change: Disability on lease executions and related build out timelines still remains a bit unclear. So we did move the stabilization of that project back quarter to Q4 'twenty six.

Gerard Sweeney: The life science market remains in a recovery mode, impacted by a challenging fundraising, climate, and public policy uncertainty. Given the success of our 3025 office project, we're also conducting tours with office users. As I mentioned at last call, despite the strong increase in office and life science traffic, visibility on lease executions and related build-out timelines still remains a bit unclear. So we did move the stabilization of that project back a quarter to Q4 22nd. At Uptown ATX, traffic improved significantly over the quarter, and as highlighted earlier, we signed a 100,000 square foot lease and are now 40% leased.

3151 Market, our life science project was substantially delivered. The first quarter of this year and will be in the capitalization phase through. Uh, the 2025 that pipeline has grown significantly. Since last quarter with Advanced discussions underway with several prospects,

Speaker Change: Okay, and Uptown ATX traffic improved significantly over the quarter and as highlighted earlier, we signed 100000 square foot lease and are now 40% leased our remaining pipeline remains strong with tenant sizes ranging between six.

Speaker Change: 100000 square feet, including ongoing discussions and negotiations with several full floor users. We are also proceeding with building out.

the life science Market remains in a recovery mode impacted by a challenging fundraising climate and public policy uncertainty, given the success of our 3025 office project. We're also conducting tours with office users. And as I mentioned last call, despite the strong increase in office and life science traffic. Visibility on lease executions and related buildout timelines. Still Remains a bit unclear. So we did move the stabilization of that project back at quarter to Q4 20.

26.

Speaker Change: Spec space.

Speaker Change: <unk> space on one floor to accommodate the accelerated move in dates for several smaller prospects. Those suites will be completed in Q1 early Q1, 'twenty six Soliris, which opened 10 months ago is currently 77% occupied and 89% leased and we expect so.

Gerard Sweeney: Our remaining pipeline remains strong, with tenant sizes ranging between 6,000 and 100,000 square feet, including ongoing discussions and negotiations with several full floor users. We are also proceeding with building out spec space on one floor to accommodate the accelerated move-in dates for several smaller prospects. Those suites will be completed in early Q1-26. Solaris, which opened 10 months ago, is currently 77% occupied and 89% leased. We expect Solaris to fully stabilize in early Q4 of this year.

At Uptown ATX traffic and proof significantly over the quarter. And it's highlighted earlier, we signed a 100,000 square foot lease and are now 40% least.

Speaker Change: First the fully stabilized in early Q4 of this year.

Our remaining pipeline remains strong with 10, in sizes, ranging between 6,100,000 square feet, including ongoing discussions and negotiations with several full floor users.

Speaker Change: As noted in the past our development projects remain top of market.

Speaker Change: And attracted to a broad range of our customer targets. We continue to remain confident in their success and we will continue our aggressive marketing campaigns.

Speaker Change: Also as these projects stabilize they presented excellent opportunity for refinancing and recapitalization, we do anticipate making progress on this front.

Gerard Sweeney: As noted in the past, our development projects remain top of market and attracted to a broad range of our customer targets. We continue to remain confident in their success and will continue our aggressive marketing campaign. Also, as these projects stabilize, they present an excellent opportunity for refinancing and recapitalization. We do anticipate making progress on this front with at least one and possibly two projects being recapitalized in the second half of this year. We expect these recapitalizations to retire the preferred investments, recover invested capital, improve our financial metrics and earnings, and reduce overall leverage.

Speaker Change: With at least one and possibly two projects being recapitalized and the second half of this year. We expect these recapitalization is to retire the preferred investments recover invested capital improve our financial metrics and earnings and reduce overall leverage.

We also are also proceeding with building out uh uh species on spec space on 1 floor to accommodate the accelerated move in dates for several smaller. Prospects, those Suites will be completed in q1 early q1 26 Solaris, which opened 10 months ago is currently 77% occupied, and 80, 80? 809% least we expect Solaris to fully stabilized in early Q4 of this year.

As noted in the past, our development projects remain top of Market uh and attracted to a broad range of our customer targets, we continue to remain confident in their success and we'll continue our aggressive marketing campaigns.

Speaker Change: Our original 2025 business plan contemplate at one development start during the year.

Speaker Change: So during the second quarter, we did commence construction on the last component of our overall Roger mixed use complex at 121 room hotel situated adjacent to our $2 1 million square foot office life science portfolio and pens medical campus.

Also, as these projects stabilize, they present an excellent opportunity for refinancing and recapitalization.

Speaker Change: The project cost is slightly less than $60 million and we anticipate a 10% return on cost.

Gerard Sweeney: Our original 2025 business plan contemplated one development start during the year.

We do anticipate making progress on this front, uh, uh, with at least 1 and possibly 2 projects, being recapitalized. In the second half of this year. We expect these wreck capitalizations to retire, the preferred Investments recover invested, Capital, improve our financial metrics, and earnings and reduce overall Leverage.

Speaker Change: The hotel will serve as an excellent amenity for Brandywine tenant base and the joining universities and based on surveys with our existing tenant base, we anticipate over 25% of the demand will come from the existing Radnor tenant base. In addition, there are seven colleges within a five mile radius and an adjoining Penn medical complex.

Gerard Sweeney: So, during the second quarter, we did commence construction on the last component of our overall Radnor mixed-use complex, a 121-room hotel situated adjacent to our 2.1 million square foot office life science portfolio and Penn's medical campus. The project cost is slightly less than $60 million and we anticipate a 10% return on cost. The hotel will serve as an excellent amenity for our Brandywine tenant base and adjoining universities. And based on surveys with our existing tenant base, we anticipate over 25% of the demand will come from the existing Radnor tenant base. In addition, there are seven colleges within a five-mile radius and an adjoining Penn medical complex.

Our our original 2025 business plan contemplate at 1 development start during the year.

Speaker Change: The project will be flagged by one of the world's leading brands and full service managed by the world's leading.

So during the second quarter we did commence construction on the last component of our overall radar and mixed use complex 821 room Hotel situated, adjacent to our 2.1 million square foot office life science portfolio and pens, Medical Campus

Speaker Change: Third Party Hotel management company. Our plan is to finance these costs through the application of current and future sale proceeds and potentially a construction loan that project will be completed in Q2, 'twenty six and open for business shortly thereafter.

The project costs a slightly less than $60 million and we anticipate a 10% return on cost.

Speaker Change: Our 2025 business plan also anticipated $50 million of sales occurring in the second half of the year. We're pleased to report that we have sold or are firmly committed to sell almost $73 million of properties. The average cap rate on these sales was six 9% with a price per square.

Gerard Sweeney: The project will be flagged by one of the world's leading brands and full service managed by the world's leading third-party hotel management company.

Gerard Sweeney: Our plan is to finance these costs through the application of current and future sale proceeds and potentially a construction loan.

The hotel will serve as an excellent amenity for our Brandy Wine, tenant base and the joining universities, and based on surveys with our existing tenant base. We anticipate over 25% of the demand will come from the existing Radnor tenant base. In addition, there are 7, colleges within a 5-mile radius and an adjoining Penn. Medical complex. The project will be flagged by 1 of the world's leading Brands and full service managed by the world's leading.

Speaker Change: Our foot of $212, we will continue to market several select assets during the balance of the year, but at this time are not factoring any additional sales into our 25 plan.

Gerard Sweeney: The project will be completed in Q2-26 and open for business shortly thereafter.

Gerard Sweeney: Our 2025 business plan also anticipated $50 million of sales occurring in the second half of the year. We're pleased to report that we have sold or are firmly committed to sell almost $73 million of properties. The average cap rate on these sales was 6.9%, with a price per square foot of $212.

Third-party hotel management company. Our plan is to finance, these costs to the application of current and future sale proceeds, and potentially, a construction loan, the project will be completed in Q2, 26, and open for business, shortly thereafter.

Speaker Change: We had an excellent quarter controlling capital spend as evidenced by a tightening of our capital ratio to 9% to 10% of lease revenues as I alluded to earlier, our metrics. However remain impacted by deferred tenant allowances and the noncash expensing of the preferred dividends however, as NOI from.

Gerard Sweeney: We will continue to market several select assets during the balance of the year, but at this time are not factoring any additional sales into our 2025 plan.

Speaker Change: <unk> has come online and those projects are recapitalized, our plan contemplates to growing our both our <unk> and CAD results to bring our dividend payout ratio back to historic levels.

Gerard Sweeney: We had an excellent quarter controlling capital spend as evidenced by a tightening of our capital ratio to 90 to 10% of lease revenues. As I alluded to earlier, our metrics however remain impacted by deferred tenant allowances and the non-cash expensing of the preferred dividends. However, as NOI from development has come online and those projects are recapitalized, our planned conflicts growing are both our FFO and CAD results to bring our dividend payout ratio back to historic levels. During the second quarter, by way of reference, we recognized approximately 26% of the deferred tenant improvement costs totaling $5.5 million or $0.03 per share in our CAD ratio.

25 plan.

Speaker Change: During the second quarter by way of reference we recognized approximately 26% of the deferred tenant improvement costs totaling $5 5 million or <unk> <unk> per share in our CAD ratio. In addition, the cat ratio for the quarter included.

Speaker Change: Two or $3 8 million of accrued but unpaid preferred dividends, we do anticipate that a large majority of those preferred returns will be paid upon the recapitalization of these joint ventures and not from cash flow.

We had an excellent quarter controlling Capital spend as evidenced by tightening of our Capital ratio to 90 to 10% of lease revenues. As I alluded to earlier our metrics have remained impacted by deferred tenant allowances and the non-cash expensing of the preferred dividends. However, as noi from development has, come online and those projects are recapitalized. Our plan contemplates growing are both our ffo and CAD results to bring our dividend payout ratio back to Historic levels.

Speaker Change: Each quarter, we do assess the ability to return to historic CAD coverage ratios over the.

Speaker Change: Next is seeding four to six quarters as previously noted we carefully monitor the timing of NOI coming from development projects ongoing capital spend intermediate term coverage ratios and our plan to return to investment grade metrics in determining our quarterly dividend policy.

Gerard Sweeney: In addition, the CAD ratio for the quarter included $0.02 or $3.8 million of accrued but unpaid preferred dividends. We do anticipate that a large majority of those preferred returns will be paid upon the recapitalization of these joint ventures and not from cash flow.

Speaker Change: So with that overview, let me turn the floor over to Tom to review, our financial results for the second quarter and outlook for the balance of the year.

Gerard Sweeney: Each quarter, we do assess the ability to return historic CAD coverage ratios over the next succeeding four to six quarters. As previously noted, we carefully monitor the timing of NOI coming from development projects, ongoing capital spend, intermediate term coverage ratios, and our plan to return to investment grade metrics in determining our quarterly dividend policy.

During the second quarter by way of reference to recognize approximately 26% of the Deferred tenant Improvement, costs totaling, 5.5 million or 3 cents per share in our CAD ratio. In addition, the cad ratio for the quarter included uh, 2 cents or 3.8 million of recruitment. But unpaid preferred dividends, we do anticipate that a large, majority of those pre preferred returns will be paid upon the recapitalization of these joint ventures and not from cash flow.

Tom: Thank you Jerry and good morning, our second quarter net loss stood at $89 million or <unk> 51 per share and those results include several impairments in our Austin portfolio, serving $63 4 million or <unk> 37 per share.

Each quarter, we do assess the ability to return historic CAD coverage ratios over the next Nexus, seating 4 to 6 quarters as previously noted we carefully monitor the timing of noi coming from development projects, ongoing, Capital spend intermediate term coverage ratios and our

Tom: Our second quarter, <unk> totaled $26 1 million or <unk> 15 per diluted share, which met consensus consensus estimates.

Thomas Wirth: So with that overview, let me turn the floor over to Tom to review our financial results for the second quarter and outlook for the balance of the year. Thank you, Gerry, and good morning. Our second quarter net loss stood at $89 million or $0.51 per share, and those results include several impairments, and our Austin portfolio is hurting $63.4 million or $0.37 per share. Our second quarter FFO totaled $26.1 million, or $0.15 per diluted share, which met consensus estimates. Some general observations for the quarter, FFO contribution from our unconsolidated joint ventures totaled a negative $5.8 million, or $800,000 more than our $500,000, $5 million re-forecast.

Plan to return to investment grade metrics in determining, our quarterly dividend policy.

Tom: Some general observations for the quarter <unk> contribution from our unconsolidated joint ventures totaled a negative $5 8 million or.

So with that overview, let me turn the floor over to Tom to review our financial results for the second quarter and outlook for the balance of the year.

Tom: 800000, more than our $505 million for re forecast.

Tom: Thus was partially due to higher concessions at our Solaris house during lease up when we expect those to improve over time interest expense was zero point $5 million less than our re forecast primarily due to capitalized interest other forecasted quarterly results were generally in line.

Tom Worth: Thank you, Jerry and good morning. Our second quarter, net loss, stood at 89 million or 51 cents per share and those results include several impairments and our Austin portfolios, including 63.4 million or 37 cents per share.

Tom Worth: Our second quarter, ffo total 26.1 million or 15 cents per diluted share.

Tom Worth: Which met concessions consensus estimates.

some general observations for the quarter, ffo contribution from our unconsolidated joint ventures total to negative

Tom: Looking at our debt metrics second quarter debt service and interest coverage ratios were 2.0 sequentially.

Thomas Wirth: Loss was partially due to higher concessions at our Solaris house during lease-up, and we expect those to improve over time. Interest expense was $0.5 million, less than our re-forecast, primarily due to capitalized interest. Other forecasted quarterly results were generally in line. Looking at our debt metrics, second quarter debt service and interest coverage ratios were 2.0, sequentially 0.1 times from the first quarter. Our second quarter annualized combined and core net debt to EBITDA were 8.3 and 7.9, respectively, with both metrics within our business plan range.

Tom Worth: 5.8 million or uh, 800,000 more than our 500,000 5,000 for reforms.

Tom: 0.1%, one 0.1 times from the first quarter or second quarter annualized combined in core net debt to EBITDA were eight three and seven nine respectively with both metrics within our business plan range.

Tom: Looking at our core portfolio composition, we've made several changes as highlighted previously we are removing 300, Delaware from our core portfolio and placing it into redevelopment, which is anticipated to commence in 2026.

Loss was partially due to higher concessions at uh our Solaris house during lease up and we expect those to improve over time. Interest expense was 0.5 million less than our reforest. Primarily due to capitalized interest, other forecasted quarterly results were generally in line.

Tom: Seoul Korea Lake and we have one other Austin property held for sale.

Tom: During the third quarter, we will add our life science redevelopment project located in Radnor, Pennsylvania, 250, King of Prussia Road to the core portfolio as it will be stabilized.

Thomas Wirth: Looking at our core portfolio composition, we've made several changes. As highlighted previously, we are removing 300 Delaware from our core portfolio and placing it into redevelopment, which is anticipated to commence in 2026. We have sold Quarry Lake and we have one other Austin property held for sale. During the third quarter, we will add our life science redevelopment project located in Radnor, Pennsylvania, 250 King of Prussia Road to the core portfolio as it will be stabilized.

Tom Worth: Looking at our debt metrics. Second quarter, Debt Service and interest coverage ratios were 2.0 sequentially. Uh, 0.1% 1 0.1 times from the first quarter, our second quarter annualized combined in quartet debt to ibida were 83 and 79 respectively with both metrics within our business plan range.

Speaker Change: Liquidity and financing activity as Jerry mentioned, we completed a follow on bond offering in June which generated gross proceeds of $159 million. The proceeds were used to repay our unsecured line of credit.

Speaker Change: And pay off our construction loan at $1 55, King of Prussia Road.

Tom Worth: Uh, looking at our core portfolio, composition, we've made several changes as highlighted previously, we are removing 300 Delaware from our core portfolio and placing it into Redevelopment which is anticipated to commence in 2026. We have sold Corey Lake and we have 1 other Austin Property health for sale.

Speaker Change: Which is 100% occupied and now paying cash rent we.

Speaker Change: We have worked with our <unk>, we are working with our service and to partially repay a portion of our secured term loan to increase our unencumbered asset pool is important to highlight that in April 2024, we executed an unsecured bond issuance at eight and 875% and this recent follow on issuance.

Thomas Wirth: Liquidity and financing activity. As Jerry mentioned, we completed a follow-on bond offering in June, which generated gross proceeds of $159 million. The proceeds were used to repair an unsecured line of credit and pay off our construction loan at 155 King of Prussia Road, which is 100% occupied and now paying cash rent. We are working with our servicers to partially repay a portion of our secured term loan to increase our unencumbered asset pool. It's important to highlight that in April 2024, we executed an unsecured bond issuance at 8.875%, and this recent follow-on issuance had a yield to maturity of 7.04%, representing a 20% decrease in our unsecured borrowing cost.

Tom Worth: During the third quarter, we will add our life science, Redevelopment project, located in rounder Pennsylvania, uh, 250 King of Prussia road to the core portfolio as it will be stabilized.

Tom Worth: Liquidity and financing activity. As Jerry mentioned. We completed a follow-on bond offering in June which generated gross proceeds of 159 million. The proceeds were used to repair on unsecured line of credit.

Speaker Change: Had a yield to maturity of seven point.

Speaker Change: 4%, representing a 20% decrease in our unsecured borrowing costs.

Speaker Change: We continue to make a strong liquidity position and we will use sales of refinance proceeds to reduce secured debt and to improve our credit profile and related credit outlook and rating.

Tom Worth: And pay off our construction loan, at 155, King of Prussia Road. Uh, which is 100% occupied, and now paying cash rent.

Speaker Change: We have time to work on this improvement with no unsecured bonds maturing until November 2027.

Speaker Change: Our wholly owned debt is 98, 1% fixed with a weighted average maturity of three three years.

Thomas Wirth: We continue to maintain a strong liquidity position, and we will use sales and refinance proceeds to reduce secure debt and to improve our credit profile and related credit outlook and rating. We have time to work on this improvement with no unsecured bonds maturing until November 2027. Our wholly owned debt is 98.1% fixed with a weighted average maturity of 3.3 years.

Speaker Change: As we highlighted we are adjusting and narrowing our guidance for 2025, the midpoint reduction of three <unk> per share is due to removing the anticipated land sales from our guidance and we also narrowed the guidance by four cents a share.

Speaker Change: As Jerry noted, we expect to recapitalize, the residential and commercial developments as our leasing percentages approached 90% either achieved or are reaching those levels with several project and we will commence those recapitalization efforts over the balance of the year.

Thomas Wirth: As we highlighted, we are adjusting and narrowing our guidance for 2025. The midpoint reduction of three cents per share is due to removing the anticipated land sales from our guidance, and we also narrow the guidance by four cents a share. As Jerry noted, we expect to recapitalize our residential and commercial developments as our leasing percentage has approached 90 percent. We either achieved or are reaching those levels with several projects, and we will commence those recapitalization efforts over the balance of the year. We are anticipating some benefit in the 2025 results, with full benefit being realized in 2026.

Speaker Change: Estimating some benefit in the 2025 results with full benefit being realized in 2026.

Speaker Change: Looking at the third quarter guidance property later property level operating income will total approximately $71 5 million and will approximate the second quarter results.

Speaker Change: <unk> contribution from our joint ventures will total of negative $5 million, which is consistent with our second quarter results.

Speaker Change: Our G&A expense for the third quarter will total approximately $8 5 million, representing a sequential decrease totaling $800000 consistent.

Thomas Wirth: Looking at the third quarter guidance, property level operating income will total approximately $71.5 million and will approximate the second quarter result. FFO contribution of our joint ventures will total a negative $5 million, which is consistent with our second quarter results. Our G&A expense for the third quarter will total approximately $8.5 million, representing a sequential decrease totaling $800,000. Consistent with prior years, the sequential decrease is primarily due to the timing of our equity compensation expense record. The interest expense will be approximately $34.5 million, and capitalized interest will be approximately $2.5 million. The sequential increase in interest is primarily due to the $150 million unsecured bond issuance partially offset by actual and anticipated debt paydown.

Speaker Change: With prior years, the sequential decrease is primarily due to the timing of our equity compensation expense recognition.

Speaker Change: The interest expense will be approximately $34 5 million and capitalized interest will be approximately $2 5 million.

Speaker Change: <unk> increase in interest is primarily due to the $150 million unsecured.

Speaker Change: Issuance, partially offset by actual and anticipated debt paydowns.

Speaker Change: Termination fees and other income will total about $1 5 million and net management and development fees will be about $2 million. The sequential decrease was primarily due to lower forecast of construction development fees.

Speaker Change: Due to lower capital costs being incurred at our development properties.

Speaker Change: Our previous 2025 business plan included speculative sales totaling $50 million, which we anticipated to be towards the second half of the U ear. Although we have other assets on the market. We are adjusting our disposition guidance of $72 $7 million, representing the sale in the second quarter and our anticipated sales in the third quarter.

Thomas Wirth: Termination fees and other income will total about $1.5 million, and net management and development fees will be about $2 million. The sequential decrease is primarily due to lower forecasted construction development fees due to lower capital costs being incurred at our development properties. Our previous 2025 business plan included speculative sales totaling $50 million, which we anticipated to be towards the second half of the year. Although we have other assets on the market, we are adjusting our disposition guidance to $72.7 million, representing the sale in the second quarter and our anticipated sale in the third quarter.

Speaker Change: We anticipate no property acquisitions, we anticipate no ATM, our buyback activity and our share count will be roughly 179 5 million shares.

Speaker Change: Turning to our capital plan, our capital plan for the balance of the year totaled $215 million in it.

Speaker Change: Fairly straightforward with it with some adjustments based on recent activity.

Speaker Change: Our 2025.

Speaker Change: CAD payout ratio for the second quarter was 176%. We recognize this is a very high elevated level compared to our historical average and our long term target as Jerry outlined our quarterly CAD.

Thomas Wirth: We anticipate no property acquisitions, we anticipate no ATM or buyback activity, and our share count will be roughly 179.5 million shares. Turning to our capital plan, our capital plan for the balance of the year totals $215 million and is fairly straightforward with some adjustments based on recent activity. Our 2025 CAD payout ratio for the second quarter was 176 percent. We recognize this is a very high elevated level compared to our historical average and our long-term target. As Jerry outlined, our quarterly CAD ratio was negatively impacted by older tenant allowances and unpaid preferred dividends in our unconsolidated development joint ventures.

Speaker Change: Our ratio was negatively impacted by older tenant allowances and unpaid preferred dividends in our unconsolidated development joint ventures long term as we complete these developments and experienced higher operating income we anticipate our CAD coverage ratios should decrease throughout 2026.

Speaker Change: Looking at the larger capital uses we have development spend totaling $55 million, which includes 200 250 King of Prussia Road.

Speaker Change: A food hall at one Drexel Plaza, and our recently announced development and 165 King of Prussia Road we.

Thomas Wirth: Long-term, as we complete these developments and experience higher operating income, we anticipate our CAD coverage ratios should decrease throughout 2026. Looking at the larger capital uses, we have development spend totaling $55 million, which includes $250 King of Prussia Road, a food hall at 1 Drexel Plaza, and our recently announced development at 165 King of Prussia Road. We have $52 million of common dividends, $15 million of revenue maintaining capital, and $20 million of revenue creating capital, with $30 million allocated to equity contributions to fund recently signed tenant leases in our joint venture. construction loan proceeds if we get a construction loan on 165 King of Prussia Road.

Speaker Change: We had $52 million of common dividends and $15 million of revenue, maintaining capital and $20 million of revenue creating capital.

Speaker Change: With $30 million.

Speaker Change: <unk> allocated to equity contributions to fund recently signed tenant leases in our joint ventures.

Speaker Change: The funding sources are $62 million of cash flow after interest payments asset sales.

Speaker Change: <unk>.

Speaker Change: Construction loan proceeds if we get a construction loan on 165 King of Prussia Road based.

Speaker Change: Based on the capital plan we.

Speaker Change: Anticipate using an incremental $81 million of cash during the balance of the year with $42 million of cash and no outstanding balance on our line of credit.

Speaker Change: We also protect our net debt to EBITDA at a range between eight two and eight four with an increase with the increase primarily due to losses from the joint ventures.

Speaker Change: Developments are debt debt to JV will approximately 48% we excluded the <unk> MBS payoff from our sources and uses so if we are successful in repaying a portion of the secured <unk> loan. We will have another use of cash and likely have a small line balance by the end of the year.

Thomas Wirth: Based on the capital plan, we anticipate using an incremental $81 million of cash during the balance of the year with $42 million of cash, and now I'm setting balance on a line of credit. We also predict our net debt to EBITDA to range between $8.2 and $8.4, with the increase primarily due to losses from the joint ventures. developments, our debt to GAV will approximate 48%. We excluded the CMBS payoff from our sources and uses, so if we are successful in repaying a portion of the secured CMBS loan, we will have another use of cash and likely have a small line balance by the end of the year.

Speaker Change: By the end of 2025, our core net debt to EBITDA range will be 77 to 79 and should come close to equaling our consolidated net debt to EBITDA, which excludes our joint ventures.

Speaker Change: We anticipate our fixed charge coverage and interest ratios will remain steady at 2.0 and with the incremental income the development projects. We expect these.

Speaker Change: Leverage levels will begin to improve as we go into next year.

Thomas Wirth: By the end of 2025, our core net debt to EBITDA range will be 7.7 to 7.9 and should come close to equalling our consolidated net debt to EBITDA, which excludes our joint venture. We anticipate our fixed charge coverage and interest ratios will remain steady at 2.0 and with incremental income, the development projects, we expect these leverage levels will begin to improve as we go into next year.

Speaker Change: I will now turn the call back over to Gerry.

Gerry: Thank you Tom.

Gerry: So as we look ahead the operating platform I think really puts us in a great position to capitalize on improving real estate market conditions and perform at a high level, we have been in the past couple of quarters.

Gerry: We're very encouraged by the significant increase this quarter and our pipeline for our development projects.

Gerry: And while we know that that pipeline has not yet translated into definitive earnings growth for the company. We're very focused on that so the groundwork has been laid and we are focused on continuing that.

Gerard Sweeney: I will now turn the call back over to Gerard. Thank you, Tom. So, as we look ahead, the operating platform, I think, really puts us in a great position to capitalize on improving real estate marketing conditions and perform at the high level we have been in the past couple of quarters. We're very encouraged by the significant increase this quarter in our pipeline for our development projects. And while we know that that pipeline has not yet translated into definitive earnings growth for the company, we're very focused on that. So, the groundwork has been laid and we are focused on continuing that prospecting and lease execution momentum in our development portfolio.

Gerry: <unk> and lease execution momentum in our development portfolio. The operating platform remains very stable with limited near term rollover, our liquidity as Tom outlined remains in excellent shape, and we're well positioned to take advantage of continued market improvement so with that Michelle we'd be happy to.

Gerry: Open the floor for questions. We do ask that as we always do in interest of time, you limit yourself to one question a follow up.

Gerry: Thank you to ask a question. Please press star one on your telephone and wait for your name to be announced and to withdraw. Your question. Please press star one again and the first question will come from SaaS <unk> with Citi. Your line is open.

Gerard Sweeney: The operating platform remains very stable with limited near-term rollover. Our liquidity, as Tom outlined, remains in excellent shape, and we're well positioned to take advantage of continued market improvement.

Operator: So, with that, Michelle, we'd be happy to open the floor for questions. We do ask that, as we always do, in the interest of time, you limit yourself to one question and a follow-up. Thank you.

SaaS <unk>: Hi, Thanks for taking my question.

SaaS <unk>: As you think about the recapitalization of the development projects can you just talk about.

Operator: To ask a question, please press star 11 on your telephone and wait for your name to be announced. And to withdraw your question, please press star 11 again.

SaaS <unk>: Capital provider appetite and how much you potentially.

SaaS <unk>: Or what that would look like.

SaaS <unk>: Yes, I think we have a lot of discussions underway and I think we're very pleased with the level of investor appetite that we've seen.

Seth Berge: And the first question will come from Seth Berge with Citi. Your line is open. Hi, thanks for taking my question. You know, as you think about the recapitalization of the development projects, can you just talk about capital provider appetite and how much you potentially look to encumber what that would look like? Yeah, I think we have a lot of discussions underway, and I think we're very pleased with the level of investor appetite that we've seen. I think that's that's the corollary to I think we've seen the overall investment market for office, which has been a really significant return of high quality private investors looking to take advantage of of improving market conditions.

SaaS <unk>: Thats it thats the corollary to I think what we've seen the overall investment market for office, which has been a really significant return of high quality.

SaaS <unk>: Private investors looking to take advantage of improving market conditions.

SaaS <unk>: Looking at all of these development joint ventures, right now are structured on a preferred basis.

SaaS <unk>: Our objective going into it is <unk>.

SaaS <unk>: <unk> is the majority owner and those are objective going to these recapitalization is to obviously harvest as much value as we can at the point of transaction closing convert either sell some of the properties or convert some to Parry pursue joint ventures that will both return capital to us and lower overall <unk>.

Gerard Sweeney: Look, you know, all these development joint ventures right now are structured on a preferred basis. Our objective going into it is, and Brandywine's the majority owner in those, our objective going to these recapitalizations is to obviously harvest as much value as we can at the point of transaction closing, convert, either sell some of the properties or convert some to pari-pursuit joint ventures that will both return capital to us and lower overall level of leverage and reduce the earnings drag coming off a couple of these properties. So, live discussions underway as Tom touched on, we're really waiting for a couple of these projects to really get to quantitative stabilization to really start to engage in detailed discussion with potential investors.

SaaS <unk>: <unk> of leverage and reduce the earnings drag coming off a couple of these properties so lie.

SaaS <unk>: A lot of discussions underway as Tom touched on we're really waiting for a couple of these projects to really get too quantitative stabilization to really start to engage in detailed discussions with potential investors, but I think overall the plan of getting one and maybe two of them done. This year remains on track and I think we've.

SaaS <unk>: Remained very encouraged by the overall breadth of activity that we're seeing and the number of inquiries you're getting from private investors about wanting to work with us on these development projects going forward.

Mike: Thanks for that and then ask Mike.

SaaS <unk>: Follow up.

SaaS <unk>: Development, something you'd like to own longer term or would you kind of pumped.

Gerard Sweeney: But I think overall, the plan of getting one and maybe two of them done this year remains on track. And I think we remain very encouraged by the overall breadth of activity that we're seeing and the number of inquiries you're getting from private investors about wanting to work with us on these development projects going forward. Thanks for that.

SaaS <unk>: Upon completion look to sell.

SaaS <unk>: Monetize at some way.

SaaS <unk>: Yes, no I think Thats, a great question and look on the hotel.

SaaS <unk>: From a cost of capital standpoint, I mean, starting the project was a bit of a challenge and call for us but from that perspective.

SaaS <unk>: The factors that went into it were as.

Gerard Sweeney: And then, you know, as my follow up, you know, is a hotel development something you'd like to own longer term? Or would you kind of, you know, upon completion, look to sell or, you know, monetize that in some way? Yeah, no, I think that's a great question. And look, on the hotel, from a cost of capital standpoint, I mean, starting the project was a bit of a challenging call for us. But from that perspective, I think the factors that went into it were, as we've talked on the call, you know, our liquidity is in excellent shape with ample capacity.

SaaS <unk>: As we've talked on the call our liquidity is in excellent shape with ample capacity and I think certainly exceeding our sales target for the year and doing it earlier further improved liquidity and intermediate term capacity.

SaaS <unk>: When we look over the next several quarters.

SaaS <unk>: To follow up on your initial question the recapitalization of our JV developments.

SaaS <unk>: We're going to result in lowering our overall leverage and improving our overall credit metrics.

SaaS <unk>: We believe those efforts will also improve overall liquidity by as I mentioned, returning some capital to us and that process is underway.

Tom Worth: As we've talked on the call our liquidity is in excellent shape with ample capacity and I think certainly exceeding our sales target for the year and doing it earlier further improved liquidity and intermediate term capacity.

Gerard Sweeney: And I think certainly exceeding our sales target for the year and doing it earlier further improved liquidity and intermediate term capacity. When we look over the next several quarters, to follow up on your initial question, you know, the recapitalization of our JV development. are going to result in lowering our overall leverage and improving our overall credit metrics. We believe those efforts will also improve overall liquidity by, as I mentioned, returning some capital to us, and that process is underway. You know, and we remain focused on remaining on a track to return to investment grade metrics.

SaaS <unk>: And we remain focused on remaining on track to return to investment grade metrics. We know the operating platform will continue to perform.

Tom Worth: When we look over the next several quarters.

Tom Worth: To follow up on your initial question the recapitalization of our JV developments.

SaaS <unk>: Perform well developed leasing continues to make good progress with four of the five projects on a clear path to stabilization and recapitalization.

Tom Worth: I'm going to result in lowering our overall leverage and improving our overall credit metrics.

Tom Worth: We believe those efforts will also improve overall liquidity by as I mentioned, returning some capital to us and that process is underway.

SaaS <unk>: And you go to your core question I think as the hotel project progresses, we will certainly look for additional equity partners or JV or an early sale to further reduce the overall dollar exposure but.

Tom Worth: And we remain focused on remaining on track to return to investment grade metrics. We know the operating platform will continue to.

SaaS <unk>: Looking at those cost of capital considerations. We also wanted to balance that with what we viewed was an outstanding real estate opportunity.

Gerard Sweeney: We know the operating platform will continue to perform well. Development leasing continues to make good progress at the five projects on that clear path to stabilization and recapitalization. And to go to your core question, I think, you know, as the hotel project progresses, we'll certainly look for additional equity partners or JV or an early sale to further reduce the overall dollar exposure. But, you know, looking at those cost of capital considerations, we also wanted to balance that with what we viewed was an outstanding real estate opportunity. You know, Radnor is one of our top performing submarkets in one of the most desirable areas in the region.

Tom Worth: Perform well developed leasing continues to make good progress with four of the five <unk> on a clear path to stabilization and recapitalization.

SaaS <unk>: Radnor is.

SaaS <unk>: One of our top performing Submarkets and one of the most desirable areas in the region.

SaaS <unk>: Our tenant base. There is some leading corporations that have responded incredibly well to previous retail offerings and have been asking for more hospitality ops.

Tom Worth: And you go to your core question I think as the hotel project progresses, we will certainly look for additional equity partners or JV or an early sale to further reduce the overall dollar exposure but.

Tom Worth: Looking at those cost of capital considerations. We also wanted to balance that with what we viewed was an outstanding real estate opportunity.

SaaS <unk>: Options in the marketplace and at a broader sampling in a market condition remain very positive there is a great window for companies like Brandywine to continue to differentiate our tenant service delivery platform.

Tom Worth: Radnor is.

Tom Worth: One of our top performing Submarkets and one of the most desirable areas in the region.

SaaS <unk>: And tenants will view. This hotel addition to our portfolio as a significant value add to the service platform and after talking to since we think at least 25% of the demand will come right from those.

Gerard Sweeney: Our tenant base there has some leading corporations that have responded incredibly well to previous retail offerings and have been asking for more hospitality options in the marketplace. And at a broader standpoint, market conditions have been very positive. There's a great window for companies like Brandywine to continue to differentiate our tenant service delivery platform. And tenants will view this hotel addition to our portfolio as a significant value add to the service platform. And after talking to tenants, we think, you know, at least 25% of the demand will come right from those local tenants. And to kind of mitigate some of the operational risk, while we've co-developed a hotel in Contra Hoc in a number of years ago and developed a hotel at FMC Tower, it's a business segment that's really non-core to us.

Tom Worth: Our tenant base. There is some leading corporations that have responded incredibly well to previous retail offerings and have been asking for more hospitality opt.

SaaS <unk>: Those local tenants and to kind of mitigate some of the operational risks while we've co developed the hotel in Conshohocken, a number of years ago and developed the hotel at FMC Tower. It's a business segment Thats really non core to us so to address that will flag the hotel with one of the world's leading brands we've engaged the world's largest.

Tom Worth: Options in the marketplace and at a broader sampling in a market. This year remains very positive there is a great window for companies like Brandywine to continue to differentiate our tenant service delivery platform.

Tom Worth: And tenants will view. This hotel addition to our portfolio as a significant value add to the service platform and after talking to guys. We think at least 25% of the demand will come right from those.

SaaS <unk>: Just third party hotel management company to handle the marketing Preopening and operations for Us and I think as all of those pieces come together.

Tom Worth: Those local tenants and they kind of mitigate some of the operational risks while we've co developed the hotel in Conshohocken, a number of years ago and developed a hotel at FMC tower. It's a business segment Thats really non core to us so to address that will flag the hotel with one of the world's leading brands we've engaged the world's largest.

SaaS <unk>: Got it.

SaaS <unk>: To answer your question I think we remain very open to bring additional partners in on this joint venturing. It we're doing early presale upon stabilization.

Gerard Sweeney: So, you know, to address that, we'll flag the hotel with one of the world's leading brands. We've engaged the world's largest third-party hotel management company to handle the marketing, pre-opening, and operations for us. And I think as all those pieces come together, to go to a specific answer to your question, I think we remain very open to bringing additional partners in on this, joint venturing it. We're doing early pre-sale upon stabilization. We really viewed it as a real significant addition to our amenity program. Thank you.

SaaS <unk>: We really viewed it as a real significant addition to our amenity program. Thank you.

Speaker Change: Thank you and our next question will come from maintenance feedback with Evercore. Your line is open.

Tom Worth: Just third party hotel management company to handle the marketing Preopening and operations for Us and I think as all of those pieces come together.

Speaker Change: Yes, good morning, and thanks for taking the question.

Speaker Change: Congrats first of all on the deciding upon 1000 square feet at <unk> I was just wondering if you could talk maybe a little bit about the deal economics there.

Tom Worth: Specific to answer your question I think we remain very open to bring additional partners in on this joint venturing. It we're doing early pre sale upon stabilization.

Speaker Change: Maybe better or in line as how you expected at the end to kind of like come in getting signed and if theres any interest funded tenant potentially to further grow their footprint or your kind of how you sized it up and if you could maybe touch on in case, you can disclose it.

Tom Worth: We really viewed it as a real significant addition to our amenity program. Thank you.

Manus Ebeck: And the next question will come from Manus Ebeck with Evercore. Your line is open. Yeah, good morning. And thanks for taking the question.

Speaker Change: Thank you and our next question will come from maintenance E back with Evercore. Your line is open.

Speaker Change: When do you expect that lease to commence and start actually seeing like rent for the attendant can be paid here.

Speaker Change: Yes, good morning, and thanks for taking the question.

Manus Ebeck: Congrats, first of all, on the signing of 100,000 square feet at Uptown ATX. I was just wondering if you could talk maybe a little bit about the deal economics there, if there was maybe better or in line as how you expected at the end to kind of like come and getting signed. And if there's any interest for the tenant potentially to further grow their footprint there, or you kind of how you like size it up. And if you could maybe touch on, in case you can disclose it, when you expect that lease to commence and start actually seeing like rent for the tenant to be paid here.

Speaker Change: Congrats first of all on the signing of 500000 square feet at <unk> I was just wondering if you could talk maybe a little bit about the deal economics there.

Speaker Change: Alright.

Speaker Change: Share with you what we can.

Speaker Change: It's a 10 year lease.

Speaker Change: Maybe better or.

Speaker Change: The tenant taken occupancy early early 'twenty six.

Speaker Change: In line as how you expected at the end to kind of like come in getting signed and if theres any interest funded tenant potentially to further grow their footprint there or are you kind of how you sized it up and if you could maybe touch on in case, you can disclose it.

Speaker Change: The economics were very much in line with our 10 year projections capital costs were a little bit above our initial budget, but the overall length of the lease and the economics of the term of the lease compensated for that.

Speaker Change: When do you expect that lease to commence and start actually seeing like rent for the attendant to be paid here.

Speaker Change: We certainly hope the tenant would continue to grow they have.

Gerard Sweeney: Right. Well, I'll share with you what we can. It's, you know, a 10-year lease. We anticipate the tenant taking occupancy early 2026. The economics were very much in line with our 10-year projections. Capital costs were a little bit above our initial budget, but the overall length of the lease and the economics of the lease compensated us for that. We certainly hope the tenant would continue to grow. They have a good footprint in Austin. They certainly indicate they continue to want to grow their presence in Austin. The lease has been structured to give them a right on some space in the building, but also then an ongoing right to match other deals that we bring to the table.

Speaker Change: Alright.

Speaker Change: Share with you what we can.

Speaker Change: A good footprint in Austin, They certainly indicated they continue to want to grow their presence in Austin.

Speaker Change: It's a 10 year lease.

Speaker Change: So say the tenants take occupancy early early 'twenty six.

Speaker Change: Lease has been structured to give them a right on.

Speaker Change: The economics were very much in line with our 10 year projections capital costs were a little bit above our initial budget, but the overall length of the lease and the economics of the term of the lease compensate us for that.

Speaker Change: On some space in the building, but also then an ongoing right to match other deals that we bring to the table. So we've created some optionality for them to do some near term growth. But then also further optionality for them to accelerate their growth curve by taking advantage of the right offer they have on spaces that were.

We certainly hope the tenant would continue to grow they have.

Speaker Change: A good footprint in Austin, They certainly indicated they continue to want to grow their presence in Austin.

Speaker Change: Ready to lease to third parties. So all in all we think.

Speaker Change: Lease has been structured.

Speaker Change: A very very good outcome for us for a project Austin, We think having this named company as part of our Uptown development will certainly accelerates.

Speaker Change: Give them a right on.

Speaker Change: On some space in the building, but also then an ongoing right to match other deals that we bring to the table. So we've created some optionality for them to do some near term growth. But then also further optionality for them to accelerate their growth curve by taking advantage of the right offer they have on spaces that were.

Gerard Sweeney: So, we've created some optionality for them to do some near-term growth, but then also further optionality for them to accelerate their growth curve by taking advantage of the right of offer they have on spaces that we're ready to lease to third parties. So, all in all, we think a very, very good outcome for our project Austin. We think having this named company as part of our uptown development will certainly accelerate additional tenants wanting to move into our complex. So, we're very happy with the result, and we've already seen, with that word leaking out into the marketplace, an uptick in activity through our uptown pipeline.

Speaker Change: Additional tenants wanting to move into our complex. So we're very happy with the result that we've already seen with that words leaking out into the marketplace and uptick in activity.

Speaker Change: Through our Uptown pipeline. So good result for us.

Speaker Change: Ready to at least the third parties. So all in all we think.

Speaker Change: A very very good outcome for for for our project Austin, We think having this named company as part of our Uptown development will certainly accelerate.

Speaker Change: A long time to get there, but we're there and moving forward and well.

Speaker Change: We'll be up and running in early 'twenty six.

Speaker Change: Perfect and maybe a quick follow on just on the office components of the JV assets I understand it's still further out in the future of course, but like what lease percentage are you kind of targeting before even a recap of those office components would come into play as well understanding. This is further out in the future.

Speaker Change: Additional tenants wanting to move into our complex. So we're very happy with the result that we've already seen with that word leaking out into the marketplace and uptick in activity.

Gerard Sweeney: So, good result.

Gerard Sweeney: It took us a long time to get there, but we're there and moving forward, and we'll be up and running in early 2026.

Speaker Change: Through our Uptown a pipeline. So good result took us a long time to get there, but we're there and moving forward.

Speaker Change: Yes.

Speaker Change: Great question I think we're looking at your 30, 25, obviously getting to 85% leased with a real with a real visible path to getting north of 90% leased.

Speaker Change: We'll be up and running in early 'twenty six.

Gerard Sweeney: Perfect. And maybe a quick follow on just on these office components, the JV assets, I understand it's still further out in the future, of course, but like what these percentage are you kind of targeting before even a recap of those office components would come into play as well. Understanding this is further out in the future. Yeah, no, it's a great question. You know, I think we're looking at, you know, 30, 25, obviously getting to 85% lease with a real, with a real visible path to getting north and 90% leased in the next couple quarters is certainly a target right now that we're looking at from a recapitalization standpoint.

Speaker Change: Perfect and maybe a quick follow on just unused office components of the JV assets I understand it's still further out in the future of course, but like what lease percentage are you kind of targeting for even a recap of those office components would come into play as well understanding. This is further out in the future.

Speaker Change: And the next couple of quarters is certainly a target right now that we're looking at from a recapitalization standpoint.

Speaker Change: <unk> commercial Soliris house, now being 99% leased.

Speaker Change: Moving.

Speaker Change: To the high <unk> on occupancy in the next couple of months.

Speaker Change: Yes.

Speaker Change: Great question I think we're looking at your 30, 25, obviously getting to 85% leased with a real with a real visible path to getting north of 90% leased.

Speaker Change: Certainly presents I think a recap opportunity for us when we look at <unk> town and $31 51, I think were looking for getting into the into the 60% to 70% leased range, but with visibility for bringing those properties as stabilization.

Speaker Change: And the next couple of quarters is certainly a target right now that we're looking at from a recapitalization standpoint.

Gerard Sweeney: Well, yes, commercial, I mean, Solaris House now being 99% leased, you know, moving to the high 80s on occupancy in the next couple months. That certainly presents, I think, a recap opportunity for us. When we look at one uptown and 3151, I think we're looking for getting, you know, into the 60 to 70% lease range, but with visibility for bringing those properties to stabilization before we start really engaging significantly with direct private equity sources.

Speaker Change: Before we start really engaging significantly with with direct private equity sources.

Speaker Change: Yes, commodity Solaris house, now being 99% leased.

Speaker Change: Perfect much appreciate it thank you.

Speaker Change: Moving.

Speaker Change: To the high <unk> on occupancy in the next couple of months.

Speaker Change: Okay.

Anthony <unk>: And the next question will come from Anthony <unk> with Jpmorgan. Your line is open.

Speaker Change: Certainly presents I think a recap opportunity for us when we look at one Uptown and $31 51, I think we're looking for getting into the into the $60 to 70% leased range, but with visibility for bringing those properties as stabilization.

Anthony <unk>: Great. Thank you and good morning.

Anthony <unk>: Jerry.

Speaker Change: You made some comments around the dividend and I understand this aboard decision, but he has also been pretty clear about just improving the balance sheet and the focus there.

Before we start really engaging significantly with with direct private equity sources.

Speaker Change: Do you have to pay a dividend right now like what kind of flexibility do you have in <unk>.

Gerard Sweeney: Perfect.

Gerard Sweeney: Much appreciated.

Gerard Sweeney: Thank you.

Speaker Change: Perfect much appreciate it thank you.

Anthony Paolone: And the next question will come from Anthony Paolone with J.P. Morgan. Your line is open. Great. Thank you. Good morning. Jerry, you made some comments around the dividend, and I understand it's a board decision, but you guys have also been pretty clear about just improving the balance sheet and the focus there. So just, like, do you have to pay a dividend right now? Like, what kind of flexibility do you have, and, you know, how are you thinking about it? Yeah, great question. Look, I think it continues to be, you know, a topic we review with the board on an ongoing basis.

Speaker Change: Okay.

Speaker Change: How are you thinking about it.

Speaker Change: And the next question will come from Anthony <unk> with Jpmorgan. Your line is open.

Speaker Change: Yes, great.

Speaker Change: Great question.

Speaker Change: It continues to be.

Speaker Change: A topic, we review with the board on an ongoing basis.

Anthony: Great. Thank you good morning.

Speaker Change: Jerry.

Speaker Change: You made some comments around the dividend and I understand the support decision, but he has also been pretty clear about just improving the balance sheet and the focus there.

Speaker Change: And just by way of background I think that the factors that we really key in on.

Speaker Change: <unk>.

Speaker Change: The core portfolio performance looks like.

Speaker Change: In the 26, which we have some good visibility on.

Speaker Change: Do you have to pay a dividend right now like what kind of flexibility do you have in <unk>.

Speaker Change: The timing of when the NOI from developments come online and the impact that has on 26.

Speaker Change: How are you thinking about it.

Speaker Change: Yes, great.

Speaker Change: Great question.

Speaker Change: Burn off rates for the tenant fit out dollars for those leases that were signed as early as 2020, we do anticipate most of that burning off this year, if not all of it.

Speaker Change: It continues to be.

Speaker Change: A topic, we review with the board on an ongoing basis.

Gerard Sweeney: And just by way of background, I think that the factors that we really key in are, you know, what the core portfolio performance looks like in the 26, which we have some good visibility on. The timing of when the NLI from developments come online and the impact that has on 26. the burn-off rate. for the tenant fit-out dollars for those leases that were signed, you know, as early as 2020. We do anticipate most of that burning off this year, if not all of it. And then most importantly, or perhaps most importantly, you know, the execution timeline on the development project recaps that eliminate that preferred return charge to earnings.

Speaker Change: And just by way of background I think that the factors that we really key in on.

Speaker Change: And then most importantly, or perhaps most importantly, the execution timeline.

Speaker Change: <unk>.

Speaker Change: What the core portfolio performance looks like.

Speaker Change: In the 26, which we have some good visibility on.

Speaker Change: On the development project recaps that eliminate that preferred return charge to earnings.

Speaker Change: The timing of when the NOI from developments come online and the impact that has on 26.

Speaker Change: And as I mentioned.

Speaker Change: A bit ago, I mean, we do anticipate the second half of the year.

Speaker Change: Burn off rate for the tenant fit out dollars for those leases that were signed as early as 2020, we do anticipate most of that burning off this year, if not all of it.

Speaker Change: Being really key in those recapitalization efforts as well as making a dividend decision and then certainly our view on how.

Speaker Change: And then most importantly, or perhaps most importantly, the execution timeline.

Speaker Change: The capital market conditions.

Speaker Change: And how that impacts our projected timeline to return to investment grade metrics. So I think as we look at go into the second half of the year, we certainly run a lot more clarity on how these recaps will take place and what the impact is on the balance sheets, our earnings and financial metrics overall leverage levels.

Speaker Change: On the development project recaps that eliminate that preferred return charge to earnings.

Gerard Sweeney: And as I mentioned a bit ago, I mean, we do anticipate, you know, the second half of the year being really key in those recapitalization efforts, as well as making a dividend decision. And then certainly our view on, you know, how the capital market conditions and how that impacts our projected timeline to return to investment grade metrics. So, you know, I think as we look at going to the second half of the year, we certainly are going to get a lot more clarity on how these recaps will take place and what the impact is on the balance sheet, our earnings and financial metrics, overall leverage levels.

Speaker Change: And as I mentioned.

Speaker Change: A big I mean, we do anticipate the second half of the year.

Speaker Change: Being really key in those recapitalization efforts as well as making a dividend decision and then certainly our view on how.

Speaker Change: And I think that'll be a defining moment for us to decide what we want to do with the dividend.

Speaker Change: Okay.

Speaker Change: The capital market conditions.

Speaker Change: Like what is the flexibility that would just even besides the sort of bigger picture decisions like just what do you have to pay out at this point or whats your taxable look like.

Speaker Change: And how that impacts our projected timeline to return to investment grade metrics. So I think as we look at going into the second half of the year, we certainly run a lot more clarity on how these recaps will take place and what the impact is on the balance sheet, our earnings and financial metrics overall leverage levels.

Speaker Change: Yes.

Tony: Hi, Tony our dividend.

Tony: We will be dictated partially on some of the sales and whether we incur some losses, but we do have room to move the dividend down.

Gerard Sweeney: And I think that'll be a defining moment for us to decide what we want to do with the dividend. Okay, and do you like what is the flexibility, though, just even besides the sort of like, bigger picture decisions, like just what do you have to pay out at this point? Or what's your taxable look like? Our dividend will be dictated partially on some of the sales and whether we incur some losses, but we do have room to move the dividend down without having a trigger on our REIT requirements. So it can go pretty low without hitting that, but I do want to point out that depends on getting the sales done because some of that is predicated on us getting some of these deals done.

Speaker Change: And I think that'll be a defining moment for us to decide what we want to do with the dividend.

Tony: Without having a trigger on our REIT requirements. So it can go pretty low without hitting that but I do want to point out that depends on us getting the sales done because some of that is predicated on us getting some of these deals done and as you know we took an impairment, but we will also subsequently have a tax loss so that gives us some flexibility.

Speaker Change: Okay.

Speaker Change: Like what is the flexibility that would just even besides the sort of bigger picture decisions like just what do you have to pay out at this point or whats your taxable look like.

Speaker Change: Okay.

Speaker Change: Sorry.

Speaker Change: Our dividend.

Tony: <unk> that the dividend can be can be reduced if we decided to go that way.

Speaker Change: Will be dictated partially on some of the sales and whether we incur some losses, but we do have room to move the dividend down.

Speaker Change: Okay and then just my other question relates to just general liquidity for for office assets in the market. I mean, you talked about a six to nine cap on the $73 million of disposition seems seemed pretty decent and just can you talk to depth of market. What can be sold these days, where can't where cap rates might be.

Speaker Change: Without having a trigger on our REIT requirements. So it can go pretty low without hitting that but I do want to point out that depends on us getting the sales done because some of that is predicated on us getting some of these deals done and as you know we took an impairment, but we will also subsequently have a tax loss so that gives us some flexibility.

Gerard Sweeney: And then as you know, we took an impairment, but we will also subsequently have a tax loss. So that gives us some flexibility that the dividend can be reduced if we decide to go that way.

Tony: So forth.

Tony: Yes, I mean look I think one of the things that's been very encouraging I think.

Speaker Change: <unk> that the dividend can be can be reduced if we decided to go that way.

Tony: Nationally office sales.

Gerard Sweeney: Okay, and then just my other question relates to just general liquidity for for office assets in the market. I mean, you talked about a 6-9 cap on the $73 million of disposition seems seems pretty decent. And just, can you talk to depth of market? What can be sold these days? What can't? Where cap rates might be? So forth. Yeah, I mean, look, I think one of the things that's been very encouraging, I think that, you know, the nationally office sales have exceeded last year's numbers by a nice margin. And that's really been driven by some significant, the return of some significant private investors looking to buy high quality assets.

Tony: Have exceeded last years <unk>.

Speaker Change: Okay and then just my other question relates to just general liquidity for for office assets in the market. I mean, you talked about a six nine cap on the $73 million of disposition seems seems pretty decent and just can you talk to depth of market. What can be sold these days, where can't where cap rates might be.

Tony: Numbers by a nice margin and Thats really been driven by some significant.

Tony: The return of some significant private investors looking to buy high high quality assets. So it's been kind of interesting is.

Tony: When I look at 'twenty, three and 'twenty four a lot of the office assets that were trading.

Speaker Change: Fourth.

Tony: I'll say ones that were either either distressed or lower quality.

Speaker Change: Yes, I mean look I think one of the things that's been very encouraging I think.

Tony: I think.

Speaker Change: Nationally office sales of.

Tony: What we're starting to see is it higher quality assets are coming to the marketplace and that those bid lists are getting fairly significant with a range from not just stick indicators and family offices, but also.

Speaker Change: Have exceeded last years.

Speaker Change: Numbers by a nice margin and Thats really been driven by some significant.

Speaker Change: The return of some significant private investors looking to buy high quality assets. So it's been kind of interesting is.

Gerard Sweeney: So it's been kind of interesting is, you know, when I look at 23 and 24, you know, a lot of the office assets that we're trading were, I'll say, ones that were either distressed or lower quality. What we're starting to see is that higher quality assets are coming to the marketplace and that those bid lists are getting fairly significant with a range from not just signators and family offices, but also, you know, Tier 1 and Tier 2 institutions who are looking to take advantage of what they view as a recovery in the office market, as well as what we're seeing in a lot of markets where there's not going to be a lot of additions.

Tony: Tier one and tier two institutions, who are looking to fill it.

Speaker Change: When I look at 'twenty three 'twenty four.

Tony: To take advantage with a view as a recovery in the office market as well as what we're seeing a lot of markets, where there's not going to be a lot of additions in fact, there could be a lot of subtractions from the existing office inventory due to residential conversions. So I don't have a real read on exactly where cap rates will be but I think the higher quality assets will be we're getting well.

Speaker Change: The office assets that were trading.

Speaker Change: I will say ones that were either either distressed or lower quality.

Speaker Change: I think.

Speaker Change: What we're starting to see is it higher quality assets are coming to the marketplace and that those bid lists are getting fairly significant with a range from not just stick indicators and family offices, but also.

Tony: Getting somewhat back to what the cap rates were.

Tony: A number of years ago.

Speaker Change: Tier one and tier two institutions, who are looking to that.

Tony: Okay. Thanks for the time.

Tony: Thank you.

Speaker Change: To take advantage with a view as a recovery in the office market as well as what we're seeing a lot of markets, where there's not going to be a lot of additions in fact, there could be a lot of subtractions from the existing office inventory due to residential conversions. So I don't have a real read on exactly where cap rates will be but I think the higher quality assets will be we're getting.

Speaker Change: And the next question will come from Matteo Okusanya with Deutsche Bank. Your line has been.

Gerard Sweeney: In fact, there could be a lot of subtractions from the existing office inventory due to residential conversions. So, I don't have a real read on exactly where cap rates will be, but I think the higher quality assets will be getting somewhat back to what cap rates were a number of years ago.

Matteo Okusanya: Yes, good morning, everyone.

Matteo Okusanya: Wanted to focus a little bit on the $41 51.

Matteo Okusanya: It's also a little bit about kind of coring activity.

Speaker Change: Getting somewhat back to what cap rates were.

Matteo Okusanya: At that asset, but curious what the mix between the kind of life science touring versus.

Speaker Change: A number of years ago.

Gerard Sweeney: Okay, thanks for the time.

Speaker Change: Okay. Thanks for the time.

Matteo Okusanya: Kind of.

Omotayo Okusanya: And the next question will come from Omotayo Okusanya with Dorsey Bank. Your line is open. Oh, yes. Good morning, everyone.

Matteo Okusanya: With tenants and if you do end up doing a little bit more office in that building than initially anticipated what the potential implications will be for the stabilized yields.

Speaker Change: Thank you.

Speaker Change: And the next question will come from Matteo Okusanya with Deutsche Bank. Your line is I've been.

Omotayo Okusanya: Let me just focus a little bit on 3151. I know you kind of talked a little bit about kind of touring activity. at that asset. But curious what the mix is between the kind of life science touring versus kind of other potential tenants. And if you do end up doing a little bit more office in that building and initially anticipated what the potential implications will be for the stabilized yields. Yeah, good morning. Yeah, the pipeline actually has a couple of larger office requirements in it right now that have surfaced in the last quarter that are kind of in the 60 to 100,000 square foot range.

Speaker Change: Hi, Yes, good morning, everyone.

Matteo Okusanya: Yes.

Matteo Okusanya: Good morning.

Speaker Change: Wanted to focus a little bit on $41 51, I know, you've kind of talked a little bit about kind of coring activity.

Matteo Okusanya: The pipeline actually has a couple of larger office requirements in it right now that have surfaced in the last quarter.

Matteo Okusanya: There are kind of in the six months to 100000 square foot range.

Speaker Change: At that asset, but curious what the mix between kind of life science touring versa.

Matteo Okusanya: But the.

Matteo Okusanya: The majority of the pipeline remains.

Speaker Change: And of the potential tenants and if you do end up doing a little bit more office in that building than initially anticipated what the potential implications will be for the stabilized yields.

Matteo Okusanya: Institutional.

Matteo Okusanya: Academic and life science and.

Matteo Okusanya: A lot of the life science companies, we're talking to.

Speaker Change: Yes.

Matteo Okusanya: Are very very interested in the building.

Speaker Change: Yes, the pipeline actually has a couple of larger office requirements in it right now that have surfaced in the last quarter.

Matteo Okusanya: But they need to raise some capital before either parties comfortable moving forward. So I think the recent announcement on the.

Speaker Change: There are kind of in the 6% to 100000 square foot range.

Gerard Sweeney: But the majority of the pipeline remains institutional, academic, and life science. And you know, a lot of the life science companies we're talking to are very, very interested in the building. But they need to raise some capital before either party's comfortable moving forward. So I think the recent announcement on a life science company locally being able to raise capital has been very, very positive. But I think when we take a look at the economics, the economics between the life science officer are not that different because the capital requirements are lower. So we get a lower rent on the office, but a much lower capital cost number.

Matteo Okusanya: Our life Science company locally being able to raise capital has been very very positive.

Speaker Change: But the.

Speaker Change: The majority of the pipeline remains.

Speaker Change: Institutional.

Matteo Okusanya: But I think when we take a look at the economics the economics between the life Science officer are not that different because the capital requirements are lower so we can get a lower rent on the office, but a much lower capital cost number.

Speaker Change: Academic and life science and.

Speaker Change: The life science companies, we're talking to.

Speaker Change: Are very very interested in the building.

Speaker Change: But they need to raise some capital before either parties comfortable moving forward. So I think the recent announcement on.

Matteo Okusanya: We're still trying to get between seven and 10 year deals couple of transaction, we're looking at it or beyond that but.

Matteo Okusanya: But from an economic equivalency standpoint, they're pretty much in the same range.

Speaker Change: Life Science company locally being able to raise capital has been very very positive.

Matteo Okusanya: Gotcha Thats helpful.

Speaker Change: But I think when we take a look at the economics the economics between the life Science. The officer are not that different because the capital requirements are lower so we can get a lower rent on the office, but a much lower capital cost number.

Matteo Okusanya: And the <unk>.

Matteo Okusanya: Potential recap activity in the second half of 2005.

Speaker Change: Tom I believe you mentioned that.

Speaker Change: You could potentially have some impact in 2025 with the full impact for a positive impact on 2006, but just curious if any of that built into 25 guidance or not.

Gerard Sweeney: You know, we're still trying to get between seven and 10-year deals. A couple of the transactions we're looking at are beyond that. But from an economic equivalency standpoint, they're pretty much in the same range.

We're still trying to get between seven and 10 year deals couple of transaction. We're looking at are beyond that but.

Speaker Change: But from an economic equivalency standpoint, they're pretty much in the same range.

Speaker Change: There is a little bit of guidance improvement, if we get them done and we didn't really highlight exactly when and where in the calculations, but we do have a couple of cents of of improvement that we think could come from getting the recaps done sooner rather than later again that also is dependent on on the timing of getting that kind of a transaction.

Gerard Sweeney: Gotcha, that's helpful.

Thomas Wirth: And then the potential recap activity in the second half of 25. Tom, I believe you mentioned that, you know, you could potentially have some impact on 25 with the full impact, full positive impact on 26, but just curious if any of that is built into 25 guidance or not? There is a little bit of guidance improvement if we get them done. We didn't really highlight exactly when and where in the calculations, but we do have a couple cents of improvement that we think could come from getting the recaps done sooner rather than later. Again, that also is dependent on the timing of getting that kind of a transaction done.

Speaker Change: Gotcha Thats helpful.

Speaker Change: And then the <unk>.

Speaker Change: Potential recap activity in the second half of 'twenty five Palm I believe you mentioned that.

Speaker Change: You could potentially have some impact in 2025 with the full impact full positive impact in 2006, but just curious if any of that built into 25 guidance or not.

Speaker Change: If it takes a little longer obviously that encap could be muted.

Speaker Change: Gotcha.

Speaker Change: So indulge me for one more please the move outs in the fourth quarter of 'twenty. Five that you guys mentioned can you just talk a little bit about <unk>.

Speaker Change: There is a little bit of guidance improvement, if we get them done and we didn't really highlight exactly when and where in the calculations, but we do have a couple of cents of of improvement that we think could come from getting the recaps done sooner rather than later again that also is dependent on on the timing of getting that kind of a transaction.

Speaker Change: Total size of that.

Speaker Change: Again.

Speaker Change: Locations for occupancy as you kind of begin 2020. Thanks.

Georgia: Sure Tayo good morning, it's Georgia.

Thomas Wirth: If it takes a little longer, obviously that in-cap could be muted. Gotcha.

Speaker Change: It's a 70000 square foot tenant.

Speaker Change: And if it takes a little longer obviously that encap could be muted.

Speaker Change: Who had an early termination right, which they have exercised.

George Johnstone: And if you just indulge me for one more, please, the move out in fourth quarter of 25 that you guys mentioned, just talk a little bit about, you know, the overall size of that, you know, again, just the implications for occupancy as you kind of begin 2020. Sure, Tayo, good morning. It's George. It's a 70,000 square foot tenant who had an early termination right, which they have exercised, and they will vacate in October. Tenant was taking advantage of a sublease opportunity for a much smaller footprint than what they had with us. So we will see fourth quarter retention, you know, kind of below our annual range.

Speaker Change: Gotcha.

Speaker Change: Indulge me for one more please the move outs in the fourth quarter of 'twenty. Five that you guys mentioned can you just talk a little bit about.

Speaker Change: And they will they will vacate in October.

Speaker Change: Tenant was taking advantage of sub lease opportunity.

Speaker Change: Overall size of that again.

Speaker Change: For a much smaller.

Speaker Change: Footprint.

Speaker Change: Locations for occupancy is kind of begins 2020. Thanks.

Speaker Change: And what they had with us.

Speaker Change: So we will see fourth quarter retention.

Georgia: Sure Tayo good morning, it's Georgia.

Georgia: It's a 70000 square foot tenant.

Speaker Change: Below our annual range.

Speaker Change: We're still projecting to be between 88% 89% occupied.

Georgia: Who had an early termination right, which they have exercised.

Georgia: And they will they will vacate in October.

Speaker Change: Come year end.

Speaker Change: And again, our forward leases that we've already have executed.

Georgia: Tenant was taking advantage of sub lease opportunity.

Speaker Change: Kind of keep us keep us in that range and then some of those will also commence in 2006.

Georgia: For a much smaller.

Georgia: Footprint.

Georgia: Than what they had with us.

Georgia: So we will see fourth quarter retention.

Speaker Change: As Jerry had mentioned in his commentary we had a number of slides that we thought we would get occupied in the fourth quarter, but the commencement date will be early first quarter.

Georgia: Below our annual range.

George Johnstone: We're still projecting to be between 88% and 89% occupied come year end, and again, our forward leases that we've already have executed, you know, kind of keep us in that range. And then some of those will also commence in 26. As Jerry had mentioned in his commentary, we had a number of slides that we thought we would get occupied in the fourth quarter, but the commencement date will be early first quarter. Sounds good.

Georgia: We're still projecting to be between 88% 89% occupied.

Georgia: Come year end.

Speaker Change: Sounds good thank you.

Georgia: And again, our forward leases that we've already have executed.

Speaker Change: Thank you.

Pavan: And our next question will come from new Pavan <unk> with Keybanc capital markets. Your line is open.

Georgia: Kind of keep us keep us in that range and then some of those will also commence in 2006.

Pavan <unk>: Great. Thank you.

Pavan <unk>: Tony TX Jerry you mentioned there continues to be a healthy pipeline. There could you give us some additional color on that pipeline and are you trading paper on any of them.

Georgia: As Jerry had mentioned in his commentary we had a number of slides that we thought we would get occupied in the fourth quarter, but the commencement date will be early first quarter.

Pavan <unk>: We're trading paper on a couple of them in George when I walk through the pipeline, yes, I mean, the pipeline is really a mix of companies financial service.

George Johnstone: Thank you.

Georgia: Sounds good thank you.

Upal Rana: And our next question will come from Upal Rana with KeyBank Capital Markets. Your line is open. Great, thank you. Uptown ETX, Jerry, you mentioned there continues to be a healthy pipeline there. Could you give us some additional color on that pipeline and are you trading paper on any of them? We are trading paper on a couple of them, and George, want to walk through the pipeline? Yeah, I mean, the pipeline is really a mix of companies, financial service, you know, professional service organizations, not too much additional tech, a few tech companies. We're at kind of advanced stages with two or three of those right now.

Georgia: Thank you.

And our next question will come from new Pavan <unk> with Keybanc capital markets. Your line is open.

Pavan <unk>: Professional service organizations not.

Pavan <unk>: Not not too much additional tech.

Georgia: Great. Thank you.

Speaker Change: Tony Etfs, Australia, you mentioned there continues to be a healthy pipeline there could you give us some additional color on that pipeline and are you trading paper on any of them.

Pavan <unk>: <unk> Tec.

Pavan <unk>: Companies were at the kind of advanced stages.

Pavan <unk>: With two or three of those right now.

Pavan <unk>: One is.

Speaker Change: We're trading paper on a couple of them in George when I walk through the pipeline, yes, I mean, the pipeline is really a mix of companies financial service.

Pavan <unk>: Is likely to be a full floor user.

Pavan <unk>: So again.

Pavan <unk>: Tore levels are good proposals issued have increased and as I said, we've got one that.

Speaker Change: Professional service organizations not.

Pavan <unk>: We are hopefully close on on wrapping things up with.

Speaker Change: Not not too much additional tech.

Speaker Change: <unk> Tec.

Pavan <unk>: Okay, Great that was helpful and then.

Speaker Change: Companies were at kind of advanced stages.

Pavan <unk>: With 300, Delaware and quarry Lake content care of you only have a handful of assets still impacting your portfolio vacancy if.

Speaker Change: With two or three of those right now.

George Johnstone: One is likely to be a full floor user. So again, you know, tour levels are good, proposals issued have increased. And as I said, we've got one that, you know, we're hopefully close on wrapping things up with. Okay, great. That was helpful.

Speaker Change: One is.

Speaker Change: Is likely to be a full floor user.

Speaker Change: Could you give us an update on the other five properties.

Speaker Change: So again.

Speaker Change: And your plan to reduce vacancy there.

Speaker Change: Tore levels are good proposals issued have increased and as I said, we've got one that.

Speaker Change: Sure.

Speaker Change: We can tag team this one.

Speaker Change: The one we're really crisply focused on right now in terms of impact is our river place.

Speaker Change: We are hopefully close on on wrapping things up with.

George Johnstone: And then, you know, now with 300 Delaware and Aquaria Lake kind of taken care of, you know, you only have a handful of assets still impacting your portfolio vacancy. Yeah, could you give us an update on the other five properties that and your plan to reduce vacancy there? Sure. and tag team this, but I mean, the one we're really crisply focused on right now in terms of impact is River Place. And I think River Place is a two-pod complex, six buildings that has been under-leased for some time. It's really suffered from a number of tenant move-outs and lease expirations.

Speaker Change: Okay, Great that was helpful and then.

Speaker Change: And I think river places it is two Pi complex six buildings that has been under leased for some time, we really suffered from a number of tenant move outs.

Speaker Change: With 300, Delaware and quarry Lake content care of you only have a handful of assets still impacting your portfolio vacancy if.

Speaker Change: Could you give us an update on the other five properties.

Speaker Change: And lease explorations.

Speaker Change: And your plan to reduce vacancy there.

Speaker Change: We're not actively leasing a couple of the buildings. There now we have fought a rezoning permit application.

Speaker Change: Sure.

Speaker Change: We can tag team this but I mean.

Speaker Change: <unk>.

Speaker Change: We expect to get final zoning approval.

Speaker Change: The one we're really crisply focused on right now in terms of impact is our river place.

Speaker Change: In the next.

Speaker Change: Within this quarter.

Speaker Change: We have plans moving forward for <unk>.

Speaker Change: And I think river places it is two Pi complex six buildings that has been under leased for some time, we really suffered from a number of tenant move outs.

Speaker Change: Several hundred apartment units so as a result, we shortened our hold period.

Speaker Change: We're actively pursuing that we're working we have a great team working on it in Austin, who is very very tied into the local community and local politics and working through all those dynamics at this point.

George Johnstone: We're not actively leasing a couple of the buildings there now. We have thought of rezoning permit application. We expect to get final zoning approval in the next, within this quarter. We have plans moving forward for several hundred apartment units. So as a result, we shortened our hold period. We're actively pursuing that. We're working, we have a great team working on it in Austin who's very, very tied into the local community, the local politics, and working through all those dynamics at this point. There's also been a state bill passed that accelerates the rezoning of commercial to residential.

Speaker Change: And lease explorations.

Speaker Change: We're not actively leasing a couple of the buildings. There now we have fought a rezoning permit application.

Speaker Change: There's also been a state bill passed that accelerates the rezoning of commercial to resident residential so we're seeing how that plays out locally.

Speaker Change: We expect to get final zoning approval.

Speaker Change: In the next.

Speaker Change: Within this quarter.

Speaker Change: We have plans moving forward for <unk>.

Speaker Change: But that that would be something that.

Speaker Change: Several hundred apartment units so as a result, we shortened our hold period.

Speaker Change: If we achieve the zoning approval that we think we can then I think we'll progress with the full development plans and work our way through this site approval process.

Speaker Change: We're actively pursuing that we're working we have a great team working on it in Austin, who is very very tied into the local community and local politics and working through all those dynamics at this point.

Speaker Change: We believe the support of the local.

Speaker Change: The local stakeholders.

Speaker Change: Four points is is under lease right now we continue to market that.

Speaker Change: There's also been a.

Speaker Change: State Bill passed that accelerates the rezoning of commercial to resident residential so we're seeing how that plays out locally.

George Johnstone: So we're seeing how that plays out locally. But that would be something that, you know, if we achieve the zoning approval that we think we can, then I think we'll progress with the full development plans and work our way through the site approval process with, we believe, the support of the local stakeholders. You know, 4Points is under leased right now. We continue to market that. We do have that property on the market for sale, and we'll see if there's any bidders that come that way. The Acira Center, you know, we have some life science exposure there.

Speaker Change: We do have that property on this on the market for sale and we will see if there is any bidders that come that way.

Speaker Change: But that would be something that.

Speaker Change: The <unk> center.

Speaker Change: If we achieve the zoning approval that we think we can then I think well progressed with the full development plans and work our way through this site approval process with with we believe the support of the local.

Speaker Change: Some life science exposure there we have the graduate labs are working on we have a couple of good prospects. So we think that we think that takes care of itself over.

Speaker Change: The local stakeholders.

Speaker Change: The next couple of quarters.

Speaker Change: Four points is is under lease right now we continue to market that.

Speaker Change: And then river place building one that is a building we are actively leasing we are exploring the sale of the office part of river place. So.

Speaker Change: We do have that property on this on the market for sale and we will see if there is any bidders that come that way.

Speaker Change: We'll see how the market responds to that and 101 West Elm is a building that we recently completed a major lobby renovation in one of our core marks of conshohocken, they're making they're making progress every quarter on leasing that space up. So we think that's on a good track to eliminate that.

Speaker Change: The <unk> center.

George Johnstone: We have the graduate labs we're working on. We have a couple of good prospects. So we think that takes care of itself over the next couple of quarters. And then Riverplace Building 1, that is a building we are actively leasing. We are exploring the sale of the office pod of Riverplace, so we'll see how the market responds to that. And 101 West Delma is a building that we recently completed a major lobby renovation in one of our core marks of Koch-Hawken. They're making progress every quarter on leasing that space up, so we think that's on a good track to eliminate that 60,000 square feet or so of vacancy as well.

Speaker Change: Some life science exposure there we had the graduate labs are working on we have a couple of good prospects. So we think that we think that takes care of itself over.

Speaker Change: The next couple of quarters.

Speaker Change: And then river place building one that is a building we are actively leasing we are exploring the sale of the office part of river place. So.

Speaker Change: 60000 square feet or so of vacancy as well.

Speaker Change: Okay, great. Thank you.

Speaker Change: Yes for sure. Thank you.

Speaker Change: We'll see how the market response to that and 101 West Elm. It's a building that we recently completed a major lobby renovation in one of our core markets of conshohocken, they're making they're making progress every quarter on leasing that space up. So we think that's on a good track to eliminate that.

Speaker Change: And our next question will come from Dylan Brzezinski with Green Street. Your line is open.

Speaker Change: <unk>.

Dylan Brzezinski: Hi, guys. Thanks for taking the call.

Speaker Change: On some of the.

Speaker Change: Can you dig reasons why you guys started the hotel development, but I guess just from a.

Speaker Change: A financial perspective, I mean part of the reason you guys as shares trade and where they do is because you guys have started.

Speaker Change: 60000 square feet or so of vacancy as well.

George Johnstone: Okay, great. Thank you. Yeah, no, for sure. Thank you.

Speaker Change: Okay, great. Thank you.

Speaker Change: Such developments over the last several years that in an opportune time, and obviously still working through some of those headaches. So I guess.

Speaker Change: Yes for sure. Thank you.

Dylan Burzinski: And our next question will come from Dylan Burzinski with Green Street. Your line is open. Hi guys, thanks for taking the call. And I know you guys kind of guided to potentially start a new development, but to us, it seems surprising that you guys would actually go forward with this new project in light of where shares are and in light of the development woes that you guys are already facing. So I guess can kind of just talk about, you know, the financial reasons for that in light of some of the stuff I mentioned, as well as the fact that capital is scarce for Brandywine today.

Speaker Change: And our next question will come from Dylan Brzezinski with Green Street. Your line is open.

Speaker Change: And I know you guys kind of guided to potentially start a new development, but to us. It seems surprising that you guys would actually go forward with this new project in light of where shares are and in light of the development Wells and you guys are already facing so I guess can you kind of just talk about.

Dylan Brzezinski: Hey, guys. Thanks for taking the call and then touch on some of the strategic reasons. Why you guys started the hotel development, but I guess just from a.

Dylan Brzezinski: Financial perspective, I mean part of the reason your Guys's shares traded at where they do is because you guys have started so much developments over the last several years that is an opportune time in and obviously still working through some of those headaches. So I guess.

Speaker Change: The financial reasons for that in light of some of the stuff I mentioned as well as the fact that capital is scarce for Brandywine today and so the more sales you get in the door why not just use that capital for share buybacks or further deleveraging of the company.

Speaker Change: I know you guys kind of guided to potentially starting new development, but to us. It seems surprising that you guys would actually go forward with this new project in light of where our shares are and in light of the development. You guys are already facing so I guess can you kind of just talk about that.

Speaker Change: Yes look a fair observation I think.

Speaker Change: On a previous question I kind of walk through.

Speaker Change: The thought process from a cost of capital standpoint, and I do think that <unk>.

Speaker Change: Given the level of success, we think we will have with this development that we will have some capital options available to us to reduce our financial exposure over the near term. So it was really kind of balancing the.

Speaker Change: The financial reasons for that in light of some of the stuff I mentioned as well as the fact that capital is scarce for Brandywine today and so the more sales you get in the door why not just use that capital for share buybacks or further deleveraging of the company.

Gerard Sweeney: And so the more sales you get in the door, why not just use that capital for share buybacks or further deleveraging of the company?

Speaker Change: The returns we thought we could get on this.

Gerard Sweeney: You know, look, a fair observation. I think one of the previous questions I kind of walked through, you know, the thought process from a cost of capital standpoint. And I do think that given the level of success we think we'll have with this development, that we will have some capital options available to us to reduce our financial exposure over the near term. So it was really kind of balancing the returns we thought we could get on this, what we view as a really strong window of opportunity to create a valuable piece of real estate that really does play into the requests from a lot of our tenants in that marketplace.

Speaker Change: Yes look a fair observation I think.

Speaker Change: What we view as a really strong window of opportunity to create a valuable piece of real estate that really does play into.

Speaker Change: One of the previous question I kind of walked through.

Speaker Change: The thought process from a cost of capital standpoint, and I do think that given the level of success. We think we will have with this development that we will have some capital options available to us to reduce our financial exposure over the near term. So it was really kind of balancing the.

Speaker Change: The request from a lot of our tenants in that marketplace. So balancing from a tenant service platform and certainly we would expect to continue.

Speaker Change: Marketing properties for sale.

Speaker Change: Just walk through and continuing to.

Speaker Change: The returns we thought we could get on this.

Speaker Change: Lease up the development pricing, but I think I think one of the big variables right. Now is the level of the level of success that we think we will have with these recapitalization. So I think with the with really for the five projects, having a visible path to stabilization and capital market conditions can.

Speaker Change: What we view as a really strong window of opportunity to create a valuable piece of real estate that really does play into.

Speaker Change: The request from a lot of our tenants in that marketplace.

Gerard Sweeney: So balancing from a tenant service platform. And certainly, you know, we would expect to continue marketing properties for sale as we just walked through and continuing to lease up the development project. I think one of the big variables right now is, you know, the level of success that we think we will have with these recapitalizations. So I think with really four of the five projects having a visible path to stabilization and capital market conditions continue to improve, more investors coming back into the market both for office and residential, we think that we'll be in a very, very good position to address the financial consideration.

Speaker Change: So balancing from a tenant service platform and certainly we would expect to continue.

Speaker Change: Turning to improve.

Speaker Change: Marketing properties for sale.

Speaker Change: More investors coming back into the market both for office and residential we think that will be in a very very good position to address the financial considerations here.

Speaker Change: As we just walked through and continuing to.

Speaker Change: Lease up the development pricing I think I think one of the big variables right. Now is the level of the level of success that we think we will have with these recapitalization. So I think with with really for the five projects, having a visible path to stabilization and capital market conditions.

Speaker Change: Thank you for your observation.

Speaker Change: I guess why not just just just sell the land off to hotel developer like why does brand you might need to sort of do this deal as opposed to just selling the land often monetizing them today.

Speaker Change: Without running the risk of potentially delivering at.

Speaker Change: At an opportune time, but who knows where the macro economies and I know you mentioned that.

Speaker Change: To improve.

Speaker Change: More investors coming back into the market both for office and residential we think that will be in a very very good position to address the financial considerations here.

Speaker Change: Lot of the demand is potentially coming from the office and life science tenants.

Speaker Change: Tenants, there, but wanted to sell the land today.

Gerard Sweeney: But thank you for your observation.

Speaker Change: But thank you for your observation.

Speaker Change: Yes that was.

Gerard Sweeney: I guess why not just just just sell the land off to a hotel developer, like why does Brandywine need to sort of do this deal as opposed to just selling the land off and monetizing it today without running the risk of potentially delivering at an opportune time? Who knows what the macro economy is? And I know you mentioned that a lot of the demand is potentially coming from the office and life science and tenants there, but why not just sell the land today? Yeah, look, that was certainly something we thought about. And again, I think as we as we go through the development cycle, I think we'll have a range of capital opportunities that we can explore.

Speaker Change: Certainly something we thought about and again I think as we go through the development cycle. I think we will have a range of capital opportunities that will that we can explore.

Speaker Change: I guess why not just just just sell the land off to hotel developer like why does brandywine need to sort of do this deal as opposed to just selling Atlanta, often monetizing them today without running the risk of potentially delivering.

Speaker Change: Okay. Thanks, guys.

Speaker Change: At an opportune time, but who knows where the macro economies and I know you mentioned that a lot of the demand is potentially coming from the office and life science tenants.

Speaker Change: Thank you.

Speaker Change: I am showing no further questions in the queue at this time I would now like to turn the call back over to Jerry Sweeney for closing remarks.

Speaker Change: Tenants, there, but wanted to sell the land today.

Jerry Sweeney: Okay. Michele Thank you and thank you all for participating in our second quarter earnings call. We look forward to updating on our business plan activities and progress on the next quarterly call. Thank you all very much.

Speaker Change: Yes.

Speaker Change: Certainly something we thought about and again I think as we as they go through the development cycle I think we will have a range of capital opportunities that.

Speaker Change: So we can explore.

Jerry Sweeney: This concludes today's conference call. Thank you for participating and you may now disconnect.

Operator: Okay, thanks guys. Thank you.

Speaker Change: Okay. Thanks, guys.

Operator: I am showing no further questions in the queue at this time.

Speaker Change: Thank you.

Speaker Change: Hi, I'm showing no further questions in the queue at this time I would now like to turn the call back over to Jerry Sweeney for closing remarks.

Gerard Sweeney: I would now like to turn the call back over to Gerard Sweeney for closing remarks. Great, Michelle. Thank you. And thank you all for participating in our second quarter earnings call. We look forward to updating our business plan activities and progress on the next quarterly call. Thank you all very much.

Jerry Sweeney: Okay. Michele Thank you and thank you all for participating in our second quarter earnings call. We look forward to updating on our business plan activities and progress on the next quarterly call. Thank you all very much.

Operator: This concludes today's conference call. Thank you for participating and you may now disconnect.

Jerry Sweeney: This concludes today's conference call. Thank you for participating and you may now disconnect.

Jerry Sweeney: Okay.

Jerry Sweeney: [music].